Bruce Tulloch: Beyond these roles, I’m passionate about improving outcomes in education with creative use of technologies, for learning in the fields of science and technology, engineering, arts and maths are often referred to as STEAM, sometimes STEM.

Bruce Tulloch: Via a BitScope we collaborate with Raspberry Pi Foundation, developing products and services to teach coding and projects of that sort. And we also use them in industrial applications and more recently also with BitScope, I launched and developed a platform to seed or start the ecosystem in Australian hardware, manufacturing businesses. So in a nutshell, that’s who I am and what I do at the moment.

Adam Spencer: Have you ever worked with John Lincoln in the past? Cause he said, he told me that he was the founder or something of Fairlight and I saw that Fairlight was on your LinkedIn. 

Bruce Tulloch: Yeah, so John’s not the founder of Fairlight. 

Adam Spencer: Or CEO maybe I don’t remember.

Bruce Tulloch: Yeah, he was the CEO of Fairlight in the USA. Fairlight was an Australian company founded by Peter Vogel and Kim Ryrie, two young engineers in the late seventies. And I joined Fairlight in the mid-eighties. And a large part of my early career was both working for Fairlight initially and then in joint venture in a company that I set up where we developed audio post-production systems for the film and television industry in conjunction with Fairlight. They developed editing systems, we developed dubbing systems and the highlight of that was we successfully got quite a presence throughout Hollywood, the major film studios, and we secured a academy award in science technology award in 2001 for as they put it, I think transforming the way Hollywood makes sound for picture.

Bruce Tulloch: And that was the development of a 24 and 48 track digital audio dubbing system that replaced building sized rooms full of older equipment. That was what we spent most of the nineties doing. John at that time was the CEO or the managing director of Fairlight in the United States based in initially Cola City and subsequently elsewhere, close to Hollywood in Los Angeles.

Adam Spencer: Talking about the studio, what drew you to being involved? 

Bruce Tulloch: It was sort of partly by accident and quite serendipitous in a way. Shantelle is someone I’ve known since school days, but we had for about three decades gone our separate ways. And we bumped into each other through mutual friends using my partner. And she was talking about the desire to establish an incubator and accelerator platform for businesses in the media and creative technology space, because such a thing did not exist. And she’d done her master’s thesis exploring how Warner Brothers had done it in the US and said, let’s set one up here. And she invited me based on my experience in the audio post production and music industries from the eighties and the nineties too, to join her. 

Bruce Tulloch: And so I joined the studio as a member when we founded the organization, when it was just a series of PowerPoint slides. And then it was an interesting story, the way the studio was created because Shantelle had a very powerful vision. She pulled together a number of people, myself included, put together an advisory group, but then started building through a media mailing list and then through regular events that were hosted at Fishburners, a large community. And then off the back of that pitched for, and was one of the four successful respondents to the state government’s request for those interested in establishing incubators in what was to become the startup hub.

Bruce Tulloch: And the only startup for startups in the Sydney Startup Hub. And so we were founded in 2018, opened by then treasurer and our prime minister, Scott Morrison. And we commenced operations when the Sydney Startup Hub commenced operations, and we’ve grown from zero to 90% within a year.

Bruce Tulloch: And we’ve now managed to, well as of the last financial final report incubated more than about 150 startups collectively raised more than 41 million. I think it’s closer to about 80 now. Created hundreds of jobs across New South Wales. And helped that time more than 300 internal, and external events, activities, workshops, master classes, established women’s studio, women’s network pitch to invest in nights, founders, forum.

Bruce Tulloch: All these sorts of things are key to the operation of any incubator. But I think the interesting thing about the studio is bootstrapping something like that from the ground up in a very short space of time, was an interesting exercise. And my role at the moment has been for the last two years is as chair of that organization.

Adam Spencer: I’m sure we’ll come back to the studio and Sydney Startup Hub a little bit. But when would you say you first really got involved in startup land as it were?

Bruce Tulloch: Probably around 2010, 2011? Prior to that, certainly, I mean, I BitScope is the second business that I had founded. And so I had done this before. I would consider Fairlight itself back in the eighties Australia’s first hardware incubator, even though it was a company. The number of founders that have come from employees at that organization to successful businesses since then is quite stellar. 

Bruce Tulloch: But in terms of my direct involvement with the Australian startup ecosystem. It really came in through the door of education. So BitScope has always been a company that developed products, where we published pretty much everything we do and how we do it. We were encouraging others to join us in a development capacity.

Bruce Tulloch: We focused on those working in research development, universities, engineers working in R and D departments in large corporations. That’s what we did since the company was founded in 1999, but in 2011 or 12, we heard about this interesting little gadget appearing in the UK called the Raspberry Pi.

Bruce Tulloch: A little credit card sized computer developed by a guy called Eben Upton to in his, mission was to improve educational outcomes in computing in the UK. And that turned out to be a radically successful business. They’ve gone through four iterations and we’re partners with them. And I’ve done a lot of work in developing technological solution based on Raspberry Pi or, and associated with it. 

Bruce Tulloch: And that brought us into contact with a lot of educational applications because the Raspberry Pi Foundation is specifically a foundation focused on improving education school through tertiary. But the Australian side of things seem to be like a wasteland as far as I could tell in terms of any coordinated efforts or solid ecosystem there wasn’t really one at that stage.

Adam Spencer: 2010 was about from, you know, various people that I’ve spoken to about really the start of things. Nothing much really happened before then, but it was still a very nascent period. 2010, 2011, 2012, when Fishburners opened in 2012. From your point of view, if you could, you know, what was happening community size, were there, what kind of other programs or support?

Bruce Tulloch: So I would say to the extent there were programs or solutions available, they were associated closely with universities. And they were to do with what universities then in a very shall we say nascent way, trying to develop the outbound opportunities for students and encourage or create opportunities that weren’t just going into a job for an existing company, in other words, more of the entrepreneurial track. 

Bruce Tulloch: But they took a long time in my view to really cottoned onto both the opportunities and as I see it, their responsibilities to reduce the barriers between the, you know, coming out of an education system and into a vocational world. And I think prior to 2010, on the industry side, you had as you do now, but maybe had more then are local contract based manufacturers and other businesses that built stuff and did stuff. I should add that my focus is very much in hardware, startup ecosystems, the whole cloud native software and SaaS business world hadn’t really taken off. 

Bruce Tulloch: The internet hadn’t developed that far. The concept of apps on devices was developing, but it was still very, shall we say not well formed. But I’d say around 2010, 2011, you started getting other companies beginning to jump on the bandwagon that Apple had pioneered with the iPhone, the idea that you had mobile computing first, as opposed to desktop computing, the rise of mobile devices, tablets versus desktop computers that all started happening around about then.

Bruce Tulloch: And then you had things like Raspberry Pi appearing in 2012. And from our perspective in the industries we operate, that’s when you started seeing a lot of change and more players, government, education and industry were beginning to say, look, there’s these opportunities we’re going to have to innovate to catch up or to maintain our competitive edge.

Bruce Tulloch: But our structures as corporations and governments is not well suited to that. And that’s when you started and I think some of these ideas came from looking overseas, about the idea of incubators or the idea of accelerators, the whole VC model from Silicon Valley of which I have had some direct experience has sort of been exported and transformed in various places.

Bruce Tulloch: And Australia has its unique take on that as far as I can tell now, but it took me, yeah, I’d say seven years or so. I would say 2010’s still pretty early. It would be 2013 onwards is when it really started to pick up.

Adam Spencer: Can you tell me more about that? You know, that direct experience that you’ve had with VCs? 

Bruce Tulloch: So mostly with Fairlight with the joint venture business we had with Fairlight. Our very early experience in the eighties was with the pitfalls. They weren’t called VCs then they were called the MICs, management investment corporations. And we learned firsthand what a stock market crash can do to the owners of a business that are fairly highly leveraged.

Bruce Tulloch: So Fairlight Instruments, as it was then went out of business and I became unemployed. In fact, that’s what launched me into my career now is that I took a bunch of mates who were in the R and D, set up a company and offered contracting to develop ABC Radio’s systems in the transformation of the ABC from east Sydney through to the Ultimo complex.

Bruce Tulloch: So in a sense, it was a lucky break for me and those who saw the opportunity, but also it was an interesting insight to see what happens when a company that was very successful, Fairlight was very successful. They had a huge order book that they couldn’t fulfill for lack of capital, because the MICs that own them were struggling from the wake of the 87 stock market crash.

Bruce Tulloch: And it highlighted to me how closely related market action can have for shall we say high risk investors in that case, MICs. So in more recent times, the experience with venture capital has been through JetPack. JetPack Aviation went through the Y Combinator program and managed to raise capital, which is funding, what it’s doing now.

Bruce Tulloch: And that was a very interesting, very American process. I would say it’s not something that translates to Australia very much at all. But the whole ecosystem, which really involves not just sources of funding, but incubation acceleration. It’s very important to have mentorship and experienced because young founders in my experience, personally back then, and now, as I see is there’s a lot of unknown unknowns.

Bruce Tulloch: They don’t know what they don’t know. And I think the idea of an ecosystem is to plug a lot of those holes without them having to reinvent every error that those who’ve gone before them have made. But it also means matching skills and education with appropriate roles within startups, and then developing the sort of economic model that is attractive and appeals, and that changes too, a lot over time.

Bruce Tulloch: And so I think in the Australian system and also looked at the Israeli system, particularly in relation to what the studio has been doing. How much, sometimes very heavy government support and involvement. Other times it’s much more private equity or venture capital driven. In other cases around crypto economics, it’s, you know, in 2017, there was the ICO craze and more recently people have seen a lot of stuff happening in that space.

Bruce Tulloch: So you gotta be agile and dynamic to understand where the opportunities lie. And what is should we say vaporware or a bit of a mirage versus something more substantial.

Adam Spencer: Do you know Alex? 

Bruce Tulloch: Yes, I know Alex. I like what he’s doing.

Adam Spencer: If you had to guess what he was referring to, the best parts of the ecosystem, what would you say they were? 

Bruce Tulloch: Probably to do with, I put a lot of effort into building relationships and trying to make it easier for founders to find the context. And I don’t just mean who’s got money to invest or which grants to go after they’re important things. The hardware ecosystem project page has a sort of overview of what it is or where my views are, where my interest lies.

Bruce Tulloch: And I would say a lot of what I’m interested in doing rhymes with what Chad does. The difference is that Chad is very comprehensive in his data gathering and data that he generates from the ecosystem. Whereas I tend to be more about what are the best models, what are the best ways to form relationships online and offline?

Bruce Tulloch: It’s one of the reasons I immediately took to what Alex had set up with the Guild, because although I think there are a lot of challenges ahead and that’s a long term play. The concept is an important one. We’ve done it in a small scale within the studio with the founder circle and the idea is that in keeping the signal noise ratio high and developing those relationships. So it’s all about trust in those relationships without having to invest a lot of time backwards and forwards and meetings to develop that trust. 

Bruce Tulloch: How do you create a, not just a platform, but an environment in which people who have very commonly aligned interests, even though they might be working in very different fields can share in a way where they avoid each other’s mistakes by sharing tips and ideas about how to avoid them, but also how they might then collaborate because there’s a lot of opportunity for startups, particularly to work together in a way that is collaborative whilst they might even in some senses, be competitive with one another. Overcoming those barriers is one of the things I’m most keen to try and find solutions for.

Adam Spencer: I want to talk more about the hardware side of things in just a moment, but one quick question about, you mentioned the challenges that we’re going to face moving forward. Were you talking specifically in relation to the Guild or generally in terms of the ecosystem?

Bruce Tulloch: No, generally in terms of the ecosystem and some of that is reflected and indeed Alex’s intent I think, is to experiment with solutions because I don’t think anyone’s got the answers to solving a lot of these problems. And in many ways you have to experiment and try. Fundamentally it’s a question of economics for anyone who participates, how much do I have to put in and what do I get out of it?

Bruce Tulloch: And any business that’s going to succeed your income has to exceed your outgoings or your upkeep becomes the downfall. And I think the perspective from startups is often they’re so focused on what they’re doing that a lot of the other parts that make for a successful business, which is knowing the customer, knowing and the opportunity, working out the runway and the ramps and the investment required to get there. 

Bruce Tulloch: Not just, this is a great thing, everyone will want it, but actually getting the due diligence and the opportunities in market verticals to actually seed and grow a business. Those sorts of things are areas where I think there’s a lot of gaps in the knowledge that young founders have and there are gaps in what the ecosystem in Australia at least can provide to fill them.

Adam Spencer: In terms of the hardware space within this ecosystem, would you say it’s the less sexy version? It doesn’t get as much time in the media. Is that true? And if so, why? 

Bruce Tulloch: Look, there’s a variety of issues, a hardware business, or business, as I like to call them, a business that has hardware as a key part of its value proposition. So it’s not necessarily building widgets, but it might have widgets as part of what it offers. 

Bruce Tulloch: When you compare that, most VC money in this country and around the world go into two main forms of startups, SaaS place, SaaS businesses, and biomedical technologies and so on. In terms of hardware, the problem with hardware is that unlike SaaS platforms, which can explode in value if they hit the right streak. It attracts risk capital in a way that they can realistically expect 5 to 10X returns in three to five years. And you get some big money that way, making big bets on SaaS plays and they can scale really quickly. 

Bruce Tulloch: Hardware businesses don’t. They scale more slowly, they have unit costs that software businesses have they have upfront certification and manufacturer risk and R and D risk. That said if they are successful, they can become entrenched. They can become very solid cash producers down the track.

Bruce Tulloch: But getting to that point requires different mindset to investment. And I think one of the best models in Australia limited in scope though it is, is the Medical Devices Fund the chief scientist in New South Wales overseas that. And the model, I won’t go into the details of it, but suffice to say it’s a longer range, deeper pocketed model to invest in technologies that might take longer to grow. But when they do, they become, you know, very dominant. 

Bruce Tulloch: I think that’s the problem or the, shall we say, the missing link in terms of hardware based businesses. So in a nutshell, they have unit cost that software businesses don’t have, they grow more slowly, but they can get vendor locking in a much stronger way than software businesses if they’re successful, they have much larger upfront costs and R and D risks that software businesses tend not to have.

Adam Spencer: What do you think as a community, generally speaking, what do you think we’re doing really well? Slash, what makes the Australian startup ecosystem unique? 

Bruce Tulloch: So I think we have a few big advantages and bear in mind that my commentary will come from my areas of interest, which tends to be hardware focused businesses. But I’d say the tyranny of distance is much less of an issue than it used to be. And our geographic location in Asia, places us in a really good position for where the growth is likely to occur globally. That’s one thing, proximity to Asia and our relationship with Asian nations. So whilst I’m very keen to develop the Australian hardware ecosystem, I also think a key part of that is working very effectively with our Asian neighbors and partners in achieving that. 

Bruce Tulloch: But another area that applies across all startups, I would say is a deep resource of talent that is culturally aware on a global basis. Western Sydney, for example, is basically a melting pot of people from all cultures and places and corners of the globe. I think this is something that Australian businesses can leverage in a way that perhaps other nations are not so able to.

Bruce Tulloch: And I think that’s probably quite an advantage for us. In terms of anything else I don’t know that Australia does have a lot of advantages. We’ve had advantages in the past, in my experience, in terms of the quality of the educational outcome and raw talent. I think and this is not a comment on the students going through more I think my view, a bit of a debasement of the education system over the last 25, 30 years. 

Bruce Tulloch: We don’t have such an advantage in that respect where we used to but think that’s probably one of the negatives, but in terms of the positives, they’d be the two most significant I would side.

Adam Spencer: Do you have any unpopular opinions about the Australian startup ecosystem?

Bruce Tulloch: I would say that there is a degree of short-termism in the investment mindset that precludes success for many startups that might have a global vision and a really good idea. And a lot of them will find funding and support overseas, not in Australia because the view here is very myopic.

Bruce Tulloch: If you look at the way corporates view startups, they say, well, we’re not interested in the early ones. It’s too risky. And the bigger ones we’re not interested in paying what they’re really worth and only if they can actually solve a particular problem that we’ve got rather than looking at more scalable let’s actually create a new business.

Bruce Tulloch: There are some exceptions, I would say Telstra with Telstra Ventures and the way they spun that out is one change in a good direction. But the other big challenge is the utter lack of consistency. And like you can’t rely on it for a long time in terms of government policy, towards a startup ecosystem, it chops and changes with the weather.

Bruce Tulloch: You get grants and then that’s it. There’s no sustainable support. Even now more recently and this came out of discussions we had directly with the New South Wales Government through the Sydney Startup Hub, they asked us what’s one of the biggest problems faced by startups. Well we said, customers, where did they get the customers from? In Australia particularly, we recommended quite strongly in a series of papers and round tables that government use its purchasing power, its procurement power to create markets for startups based on problems government needs to solved.

Bruce Tulloch: And since then you have the accelerating R and D New South Wales initiative and the procurement initiatives that had come out as a direct result of that. Small, but good changes in the right direction. So I’ve had to say to the big things about the ecosystem is it’s fragmented. 

Bruce Tulloch: The critical mass we’re not quite there, I would agree with Peter in saying we haven’t quite got an ecosystem in a sense that they exist elsewhere in the world. I would say the fickle nature of corporate involvement and the, as an engineer, I would call it the impedance mismatch between corporate mindset and startup mindset hasn’t been bridged effectively in Australia. And the inconsistent and shall we say intermittent support that government gives to the ecosystem.

Adam Spencer: If there’s one thing, just one thing that we could be doing better as a community, what would that be?

Bruce Tulloch: I guess restructuring the way government provides support to the ecosystem in a way that is less prone to the vagaries of day-to-day political objectives, I suppose decoupling it from politics and putting it more as a sort of institutional pillar.

Bruce Tulloch: And for examples of what that means, I would cite the likes of Israel as having a very vibrant startup ecosystem and scaleup ecosystem for two main reasons. One is the level of government support without government saying, okay, and what’s our cut, our take, our ROI on this. They need to be focused on KPIs that are to do with jobs and business creation.

Bruce Tulloch: Not what state can we get out, or what money is going to come back. The short term-ism is too strong. So I would say that probably would be one of the biggest things you could do to support the ecosystem, but there are a myriad others. 

Adam Spencer: In the very early years like that first decade, can you remember a thing, like just something that happened that made you go wow, things are really rolling now?

Bruce Tulloch: So 2018 is when we opened our doors. 2017 is when we’re doing fit outs and stuff. So I would say that in those early years, nothing really springs to mind as being a, sort of pivotal development. When Fishburners were founded, they were at the sort of leading edge of that idea, the idea of an incubator and a coworking space.

Bruce Tulloch: I would say if you look at some of Australia’s unicorn, like one of its oldest Atlassian. They were just a bunch of guys solving problems for customers very effectively. And they grew organically with those customers, but there was no sense of support or ecosystem around them. They developed their own.

Bruce Tulloch: There wasn’t anything in support of them doing that sort of thing. So I don’t think there really was anything. But what I would say, and this is very much to the state government’s credit, the experiment that is and remains the Sydney Startup Hub is an excellent one because effectively what they’re doing is saying, what would it take to get critical mass in a physical location with enough businesses together to actually produce a net positive of significant outcomes for new business and startups. 

Bruce Tulloch: The money they put in the vision around the project has been a very good one. Now it’s been really seriously challenged by COVID. And the idea of physical co-working spaces is something that needs to be well reinvented.

Bruce Tulloch: It’s still very important to have it. In fact, it’s critical, but then it needs to be tied into a broader, online virtual and that’s why things like the Guild things like Venture Cafe and other online resources, like the one we’re talking through now, for example becoming more important, but they’re still very fragmented.

Adam Spencer: If a brand new entrepreneur, founder, and whatever come to you tomorrow, given everything that you’ve learned, all your mistakes all your lessons, if you give them one piece of advice that would slightly increase the chances of success, what would you tell them? 

Bruce Tulloch:  I would say before you endeavor to develop your great idea or whatever, find out and know in concrete terms, who your customers are, where your market’s going to be. And what is the true, unfair advantage of what it is you’re developing? That means you’ll succeed where others have failed. Everything else flows from that, but most important is who’s your customer and why do they want your great idea.

Bruce Tulloch: We’re in very challenging times in, well, I hope the short term in terms of the disruption of the pandemic, but more long-term, there are some huge changes which will impact the way startups operate. In fact, the way business and the society at large operates and they relate to disruptive technologies.

Bruce Tulloch: Often cited is automation, robotics, AI, those sorts of things. But I would among them, I would also very much cite crypto technologies as in not cryptocurrencies, but more distributed technologies and the impact they’re going to have on what funding models for new business will arise in the future.

Bruce Tulloch: And I am interested in and have invested in and worked with a number of projects that work in that space. And they’re turning on its head, the thinking around what makes, not just for successful business, but an investible one. I think there needs to be some transformative thinking around how you develop a business in the future, because the way you develop them in the past, doesn’t work in the future in my view.

Bruce Tulloch: So I would say we’re at quite a transformative point in terms of startups and that applies again particularly to businesses that have hardware as a key part of what they do.

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