Malcolm Turnbull


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Malcolm Turnbull discusses innovation in the political sphere

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Malcolm Turnbull was the 29th Prime Minister of Australia between 2015 – 2018, in which time he launched the National Innovation and Science Agenda (NISA), which aimed to drive innovation and Australia’s startup ecosystem. Malcolm also has a long history of investing in and founding companies, having established an investment banking firm in 1987, as well as becoming a partner of Goldman Sachs in 1998. Since leaving parliament in 2018, Malcolm has returned to the world of business, and has joined the board of directors of Kasada, an Australian cybersecurity company. In his conversation with Adam, Malcolm discusses his belief that innovation has become a “no-no word” in Australian federal politics over the last several years, and what he would do to promote innovation were he to have a second shot as prime minister.


Malcolm Turnbull’s website: https://www.malcolmturnbull.com.au/

Kasada: https://www.kasada.io/

Malcolm on Twitter: https://twitter.com/TurnbullMalcolm


Adam Spencer: Hi, I’m Adam Spencer. And Welcome to Day One, the podcast that spotlights Australian startups, founders, and the organizations that empower Australian entrepreneurship. We go back to the beginning to tell a story of Australia’s most inspiring founders and how they built their companies. You’re listening to a special interview series, as part of a documentary W2D1 is producing, about the history of the Australian startup ecosystem. On the episode today, we have…


Malcolm Turnbull: Hi, I’m Malcolm Turnbull, and I’m delighted to be here talking with you, Adam, for this podcast.

Malcolm Turnbull: The first tech company that I was involved with, was a company called Future Technology Resources, or For The Record, which produced proprietary hardware and software systems, for digitally recording and managing hearing room proceedings. And that was in the early ’90s. And no one had talked about startup ecosystems, or anything like that in those days. And we financed that ourselves and ultimately, we backed it into a public listed company. But, I started getting involved in the tech sector in the early ’90s. The most significant company was, of course, OzEmail, which Sean Howard founded with the support of myself and Trevor Kennedy. And that was in ’94. And at that time, there was no money available for tech at all. In fact, we showed OzEmail to a bunch of people and the internet was just getting going and they turned it down.

Malcolm Turnbull: We had a very memorable meeting with Kerrie Packer in which he dismissed the idea and said, he wasn’t impressed with the internet, that it would only be used for gambling and porn. And I must say, when we got out of the meeting, we looked at each other and said, “Well, even if he’s right, it’s still going to be a pretty big thing, isn’t it?” So, yeah. So, there just wasn’t any money there. Interestingly, it wasn’t because Australians were lacking in risk appetite, because clearly we’ve got a very vibrant tradition of investing in the mining sector. And so, Sean used to say to me, “How is it, Malcolm, that we can’t raise money in Australia for OzEmail, which is a real business with real customers and real revenues? It’s a Telco, small Telco that stage, whereas you can raise money to finance a gold mine in Siberia for heaven’s sake.” And it was true, that’s why we took OzEmail public in the US in ’96, because we just simply couldn’t raise money in any serious quantity, or at any reasonable valuation in Australia.

Adam Spencer: At the risk of jumping forward too quickly. What do you think changed that?

Malcolm Turnbull: Well, look, I mean, ultimately people saw that money was being made in tech, and by the late ’90s, you were starting to get more interest in it. And OzEmail was obviously, one company. You had LookSmart, was looking pretty smart for a while, until it failed. But, I think, the tech wreck in 2001 knocked a lot of confidence out of investors in the tech sector in Australia. And so, it took a while to build up again.

Adam Spencer: Just jumping backwards to the early ’90s, ’94 OzEmail. Where did your interest for starting companies, especially in the tech sector and internet, where did that come from? Why did you want to get into that space early in your career?

Adam Spencer: Oh, I’ve always been involved in starting. I mean, I’ve started a lot of companies in my life. 

Malcolm Turnbull: Gosh, I’m going to say it’s more than a dozen. I don’t know whether it’s 20, I’ve never done a list, but a lot. And they have included tech companies obviously, mining companies, financial services, businesses I probably started, or co-founded, half a dozen in that area alone. Yeah. So, I’m a serial entrepreneur, or have been. And I really do like the whole business of innovation. I think it’s exciting. I like the people you’re dealing with. So yeah, I’ve always found it fun. I mean, I’ve started a lot of companies and some of them have done very well. Some of them have done okay, and produced a respectable return. And some of them have been complete duds.

Adam Spencer: How early on in your life did you know that you wanted to get into business, to actually be starting companies? Because, I’ve listened… I will admit that I have not finished your autobiography, but I have listened to a fair bit of it.

Malcolm Turnbull: It’s a long book.

Adam Spencer: And you this young kid, when did the change happen? When did you grow up and go, “Business is where I’m going to put a lot of my energy”?

Malcolm Turnbull: Well, look, yeah, I was always interested in business. I’d come back from England. I’d gone to the bar, then I’d gone down and worked for Packer. And I had set up a legal firm. I’d done the Spy Catcher trial with Lucy, so that was this amazingly exciting court case. David and Goliath type of thing, very big global case and a huge, gigantic win. And I thought after that, I thought, “Well, this is about as good as it’s ever going to get in the law. I’m never going to get a bigger case than this one. And I could be spending the rest of my legal career in a long, lucrative anti-climax.” And so, I really wanted to do something different. I’d always enjoyed business and I did want to make a quid. For me, financial independence was always very important. It wasn’t greedy, I don’t think. But, I did want to be financially independent, so I didn’t have to work for someone else. Not that there’s anything wrong for working for other people, obviously, but that was what drove me.

Malcolm Turnbull: So, I set up an investment banking business in ’87, when I said it was really a corporate finance business with Nick Whitlam and Neville Wran. And Nick peeled off after a couple of years, but Neville and I and him, we had lots of other partners and colleagues and that, over the decade. But, that business operated. But, we did do a lot of what you would now call private equity. We co-founded a bunch of businesses, invested in a number of startups.

Malcolm Turnbull: We were actually, well advanced in getting ready to raise a fund. Today, you’d call it a growth fund, rather than a early stage VC Fund. And we well advanced in doing that. And I only say that, because I found all the draft information memoranda in some old files, I was cleaning out the other day. And then, in ’97, the opportunity to join Goldman Sachs came along. And so, I sold Turnbull & Partners, as it was then called, to Goldman and became a partner of Goldman Sachs. And they did that for the next four years. And then, after that… But, I’d left Goldman at the end of 2001, and then started a bunch of companies then, about four businesses, financial services businesses, maybe four, or five.

Malcolm Turnbull: Several of which are still around, Pengana, the asset management company is still around. I’m obviously, no longer shareholder in that. And Centric, or CenterStone, a private wealth management business, we started. Centric is now part of the Findex group. And we started a couple of others as well. Yeah, so I did that. And then, I went into parliament in 2004, but after I left Goldman, I was pretty focused on getting in to politics.

Malcolm Turnbull: In your political career. At what point did you really start to focus on, or at least, think about it in the back of your mind, bringing innovation forward and making that a focus?

Malcolm Turnbull: Well, it was always a very strong interest, but obviously, as prime minister, I was in a really good position to do something of about it. Yeah, no, I always saw innovation as being absolutely critical and I felt that our innovation ecosystem… Well, really the money, the venture, the financial side of it, was very underdone. Australians, because they’re very mobile. I mean, we grow up in a multi-cultural society. We speak English more, or less. The English probably don’t always agree, but we are very mobile, Aussies are very mobile. And so, particularly for, someone nowadays in their 20s, or 30s, or 40s, they would think moving from Sydney to San Francisco, or London, or New York, or Hong Kong, or whatever, is the way my generation would’ve thought about moving from Sydney to Melbourne, or maybe, the geography and distance have become quite irrelevant now. Of course, Covid’s put another gloss on that. And so, that’s made Australians very mobile and of course, it made it very easy for Australian enterprise and innovation to basically, move to California and of course, that’s where the money was.

Malcolm Turnbull: So, I just felt that our tech sector was underdone, given the extent of the talent here. Now, obviously there’re many exceptions to that, Atlassian and others, plenty of other companies too. So, that’s why, when I became PM, one of my key agendas was to rev up the innovation story. And so, we had the national innovation and science agenda.

Adam Spencer: What were your grandest aspirations for NIS? In the perfect world, yeah, what were you hoping for it to do it?

Malcolm Turnbull: Well, I mean, the object of NISA was to really create the boom that could go forever, which was the ideas boom. Mining booms, commodity booms, come and go, but human ingenuity is perennial. There’ll always be someone coming up with a better way to do whatever you were doing yesterday, right? And you’ve got to encourage that cultural attitude. You’ve got a culture of innovation. I mean, that’s as simple as that. And I didn’t think there was nearly enough of that in Australia. And so, the NISA was a lot of different measures, tax, investment, research, all sorts of things. But, they were all part of a package, that was designed to increase the innovation ecosystem. And look, to be honest, I think it worked. I said at the time. I remember when I launched the NISA, someone said to me, “Do you guarantee this will work?” And I said, “No, I can assure you that some of it will not work. And whatever doesn’t work, we’ll dump and whatever does work, we’ll do more of. And if we find someone who’s achieving the same objective more efficiently, we will shamelessly plagiarize them.”

Malcolm Turnbull: There’s just a massive increase in the amount of money invested in, since the NISA. Massive increase in the amount of money invested in startups and the amount of venture capital that’s available. You wouldn’t have an OzEmail type experience today, if you had a new company with a rapid growth and literally, couldn’t get anyone to invest in it.

Adam Spencer: Yeah.

Malcolm Turnbull: I mean, so there’s plenty of money around.

Adam Spencer: Well, looking back on what you’ve achieved there with the NISA, is there any one thing, aside from funding, I guess, that you are most proud of?

Malcolm Turnbull: Well, I mean, it was a package. There are some parts of the NISA that are enduring, like the tax breaks, the funds, the CSIRO main sequence ventures fund, of course, is one of the funds that I started, the biomedical translation fund is ongoing. So, I think, the NISA worked very well. I mean, I can’t think of anything in there, that’s been regarded as having been a failure. But, I do feel that the most important thing I did in many ways, was talking about innovation, and talking it up and legitimizing it. And just generally, I don’t know, making it a hot topic. And also, starting new things. I mean, the Digital Transformation Agency was a very important innovation at government level. Now, I think a lot of people feel it hasn’t fulfilled its full purpose… Full promise, that may be true. One of the problems with not being a prime minister, for a bit longer than I was, was that the commitment and the passion that I had for innovation simply didn’t continue.

Adam Spencer: Mm.

Malcolm Turnbull: I’m not saying that Morrison & co. are against innovation, but they certainly don’t like talking about it.

Adam Spencer: Yeah. I’ve got-

Malcolm Turnbull: Everything I hear from Canberra, is that innovation is a no-no word, because-

Adam Spencer: Yeah. Why?

Malcolm Turnbull: [crosstalk] is told… Well, someone has said that, “When people say innovation, voters think that means some kid with a laptop’s going to steal my job.” Right?

Adam Spencer: Yeah, right.

Malcolm Turnbull: And so, all the focus, all the government rhetoric, instead of being on innovation and science and technology, is on tradies and utes.

Adam Spencer: Mm.

Malcolm Turnbull: Now, there’s nothing wrong with tradies and utes, so [inaudible] . But, we’ve got to be realistic. I mean, many of the jobs of the future do not exist today. And we’ve got to make sure that as many of those new jobs are a developed by and occupied by Australians here.

Adam Spencer: I’ve got a quote here that says, “You always wanted to see a second wave of NISA.” What did you mean?

Malcolm Turnbull: Yeah, no, no, there was that. Well, absolutely. We definitely would’ve done a NISA stage two. I mean, it isn’t a set and forget. I mean, there’s not a lot that’s set and forget in public life, or public policy.

Adam Spencer: Mm.

Malcolm Turnbull: I mean, you might build a road between A and B. Maybe, you don’t need to build a second road between A and B, but with something like innovation, what my intention was. And I think it was quite stated explicitly at the time, was that, you do the NISA, you review it in a few years. See, what worked well? What didn’t? And then, you do the next stage. You just have to keep at it. And it’s the same with things like cybersecurity. I had first national cybersecurity strategy.

Malcolm Turnbull: Now, my cybersecurity strategy in 2016, was very focused on the private sector. Not exclusively, of course, not at all. But, I recognized that cybersecurity was a national enterprise, which had to involve everybody. And in particular, we wanted to encourage a innovative cybersecurity ecosystem. In other words, that there were lots of people doing cybersecurity, building cybersecurity companies in Australia and applications and so forth. I mean, one of those I invested in, and a director of, KASADA, which is Sam Crowther’s company. So, cyber was one. We did that in 2016. A year, or so ago, there was a second cybersecurity strategy, or review of it. And it was very, very government-focused. There wasn’t anywhere the indication of the importance of innovation at a private sector, corporate level. So, that’s a weakness, I guess. But, I have a very strong passion for this.

Adam Spencer: I believe, we only have a few minutes left and I’d love to circle back around to the government stuff in a second, if we have time, but-

Malcolm Turnbull: Sure.

Adam Spencer: Just looking at today, the ecosystem today.

Malcolm Turnbull: Mm.

Adam Spencer: What do you think we’re getting right? And do you think, we’re on the right track?

Malcolm Turnbull: Yeah, I do. I think the tech sector in Australia is very, very lively. I mean, I have one friend who I co-invest with, because he’s got an innovation fund and he thinks our tech scene is comparable to that of Israel, which is amazing. But, he operates in both markets. So, he’s in a better position. Well, he’s in a position to speak about it in a way I’m not. Look, I think it’s very lively. There’s plenty of money around. I mean, we don’t have a big office in the family office, that, where we operate from. I mean, I don’t run a fund. I’ve worked with a number of funds, but I haven’t raised a fund of my own, only I guess, because I haven’t really got the… Anyway, that’s another story.

Malcolm Turnbull: I mean, I easily could do. I’ve been offered a lot of money, but I’m just quite happy at the moment just, investing our own resources. But, we’ve done over 20 deals in the last two years and almost all of them are Australian, but not all of them. We do a lot in cybersecurity, a lot in renewable energy, clean tech, we’re always on the lookout, yeah. And I work very closely with the few funds, obviously KKR, that’s really, a big private equity firm, a big investment firm, does a lot more than private equity, of course. But, I also work closely with a specialist cybersecurity investment fund in the Valley called Ten Eleven Capital. And we’re investors with them in KASADA and some other companies as well.

Adam Spencer: Over the next five or 10 years. And mine might be a bit cheekier as well, by saying, if you had another shot at being prime minister of innovation, what else would you do?

Malcolm Turnbull: I think, from a government point of view, I don’t think there is a great need for more government funds. I think, there’s a lot of money in the private sector now, in terms of venture capital. Where the government should be putting more money, is in pure research. I do think, we need to spend more on pure science, deep science, if you like. And that’s obviously, mostly done by university, CSIRO and so for forth. So, I think we need to spend more there, but clearly, you’ve got to make sure you’re getting, the first class output for the investment. So, I’d say, more research. I think, there remains a cultural problem in government, where there’s a reluctance to use, or acquire Australian technology. Now, I pushed very hard on this, but it’s quite hard even, for a prime minister, to change the embedded conservative cultures in the public service.

Malcolm Turnbull: But, one thing we should be doing, is a lot more proof of concepts. I didn’t describe it this way when I was PM, but if I was PM tomorrow, one of the things I’d be giving as a KPI, is for government agencies to be doing proof of concepts with Australian technology providers. Do a certain number every year, or whatever, just force them do it. You’re not forcing anyone to buy stuff, but just forcing them to in effect, give Australian innovators a hearing. Sometimes, just too comfortable, just to lean back and the warm embrace of one of the big global systems integrators, while they siphon all the cash out of your pockets. I think, we just have to be more forward-leaning in that regard.

Adam Spencer: I’d love to have more time with you Malcolm, but to ask a whole lot of follow up questions, but I’ve just been conscious of time.

Malcolm Turnbull: Okay.

Adam Spencer: The last question that I ask everybody-

Malcolm Turnbull: Yes.

Adam Spencer: Keeping in mind, that what we’re trying to do with all of these interviews is to create a six part audio documentary about the history and the future of the Australian startup ecosystem. We want founders, investors, academics, policy makers, to hear this story. Any one of those categories, or all of them, what’s top of mind? What do you want to tell them? Do you want to give them a kick up the bum? Do you want to give them a congratulations?

Malcolm Turnbull: Yeah. Let me give you the distilled reason why innovation is important. There are literally, only winners in an innovation sector, in a startup sector, okay? The only people that lose anything, sometimes often, are the investors. But, they will always learn something. If they invest in five companies and two are no good, they’ll learn a lot from those unsuccessful investments and make better ones in the future. The people that start the companies, learn an enormous amount. The people that work for them, learn an enormous amount. They all pay tax. They’re not being paid in cash, or black money, or something like that. So, basically a startup sector increases the experience, the knowledge, the research, the science, for the benefit of the whole community. Some people that go and start companies will grow them into great, huge multi-billion dollar enterprises, but let’s face it, most don’t.

Malcolm Turnbull: Some of them will do that. They’ll have that great experience. And then, they might go and work for a big company. Or, they’ll go and start another company, that might be more successful than the one before. I struggle to see any downside in supporting and encouraging a startup sector. It’s just such a massive multiplier. And in a world, which the key descriptor of, is change at a scale and pace unprecedented in all of human history. In other words, the world is changing faster than it has ever changed. And it is changing at a much greater scale than it ever has. And so, all of that means that, if you want to win, whether you are an individual, or company, or country, you have got to be able to turn that environment of rapid change to your advantage.

Malcolm Turnbull: And so, you’ve got to be innovative. You can’t get out of bed every day and say, “I’m going to do today, exactly what I did yesterday.” You’ve got to be somebody that is challenging the old ways of doing things. Now, a lot of people don’t like that. I mean, they want to be told, “Life is going to go on exactly the same way.” I mean, look at the by-election in the New South Wales seat of Upper Hunter last year, where you had all the major parties competing with each other, to assure the people of the Upper Hunter, that coal mining was going to continue forever and nothing was going to change. And don’t worry about climate change. I mean, it was sick. And even the miners were saying to the politicians, “Come on, this isn’t real. What’s your plan for post-coal?”

Malcolm Turnbull: “Oh, don’t worry about that. Don’t listen to Malcolm Turnbull and all those dreadful people who want to talk about global warming.” I mean, there is a political industry, which I was never very good at, at telling people what they want to hear, or what politicians think they want to hear. It’s like saying to someone, “Don’t worry, keep smoking. It’s not going to do any harm. My grandfather lived to 98 and he smoked a carton of Rothmans every day,” or some bullshit like that. So, you’ve got to recognize, that we’re living in a time of very rapid change. Be upfront with people about it, and then say, “So, okay. So, how do we deal with that?” Well, we deal with that by being agile, innovative and take advantage of these disruptions and rapid changes, so that we can stay at the front of the pack. Simple as that.

Adam Spencer: I hope you enjoyed that interview. More interviews are on the way. Follow the podcast, wherever you’re listening right now. Stay tuned for more interviews, with many, many more amazing people from the Australian startup ecosystem. Thanks for listening and see you next time.


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