Adam Spencer: So Mark, how did you first get involved in this startup world?

Mark Pesce: So when I left MIT, this is 1982, I immediately went to work in my first startup to a startup called Contact Systems, which was making vehicle fleet, dispatching systems, but my boss got a very good brainwave one night and then directed me to work on a prototype with him which would became, what is now known as the SecurID card, which is this access control system. That’s part of RSA Data Security, and it’s used very broadly in industry.

Mark Pesce: And at the time this is 1983, when we were doing the work, I certainly had no idea that it would be everywhere now, that was the first startup. So the first place I ever went to work was a startup and I said, I think there’s probably been a couple of exceptions in my career about when I’ve worked for larger companies, but almost every company that I’ve worked for when I worked for a company, if it wasn’t a university it was a startup.

Adam Spencer: What is it about the startup community ecosystem, whatever you want to call it. What, what drew you to this space in the very beginning?

Adam Spencer: Are you passionate? Uh, About about startups?

Mark Pesce: Am I passionate about startups? Was I in 1982? I don’t think so. Because also I think the idea of a startup wasn’t as easily constrained around a word back in 1982. I mean, yes, there was a young technology business and we would call that a startup today. But that back then, I think we just called it the young technology business.

Mark Pesce: The point there being that I was always allowing me to work on these edge of what was developing and that is certainly where I have found my strengths lie. I have quite a career now as a professional futurist, in addition to all the other podcasting work, because I have developed a really good sense for understanding how new innovations will affect existing businesses and how I can work with those businesses to help them to make those innovations work for them.

Adam Spencer: What was it that, that prompted the move to Australia back in 2003. Did you come over here to, to start a startup or, um, what, what, what was it exactly that brought you over here and, and secondly, when you moved to Australia in 2003, What, uh, what did the ecosystem look like then. 

Adam Spencer: What did the community look like? What was the size of the community? What kind of organizations and, uh, infrastructure was around at that point in time? 

Mark Pesce: So to answer your first question. No, I came over here to start a program at the national film school at the Australian Film, Television and Radio School, and did that for a few years and then was recruited by the ABC to be on the new inventors as one of their panelists. 

Mark Pesce: So my entry into Australia was very formal in that sense, but you’re right there was very little startup activity. I think really, Daniel Petre was doing some stuff and this other guy named Ian Gardiner was doing some stuff and I met Ian through mutual contacts and they had this little Vio Corp, which is again, one of the first real sort of tech startups there. 

Mark Pesce: There were some conferences such as web directions where people who were kind of web-y kind of startup-y would also get together. So there were pockets of places that you could think of as startup-y, but there was nothing formal. There was no formal venture capital infrastructure. There was no way really to get a seed money or angel money into the country. Even angel wasn’t really even a word at that point in time. But everything was not just immature, but basically so immature so as to be basically non-existent.

Adam Spencer: So you say, uh, that. Everything was so immature. So. So it has to be. Basically non-existent what do you think happened? To really kick things off. Um, What number of things kind of would have been the catalyst was Fishburners starting in what? 2011, 2012. Do you think that, uh, helped or got things going. 

Adam Spencer: Or was there something else? 

Mark Pesce: Fishburners becoming a thing is part of that and there were a group of people, Murray was one of them and Peter, the guy who was in early in PayPal, Peter Davison was clearly early in that there were a couple of people who were working on making things good for technology startups and all of that’s happening, what, 2009, 2010, 2011?

Mark Pesce: And of course that’s after the GFC and you know, you have to realize also when I came here in 2003, this was after the tech wreck, right? The tech market had completely imploded. And it wasn’t until you start to see companies like Facebook emerge in that sort of post-tech wreck landscape that people start thinking about startups again, as I guess, viable business opportunities, maybe the way to think of it.

Mark Pesce: And that was the period of time that I think the Australia needed to be able to start to put some basic elements in place about how do you nurture at least the very first ideas. You also have, like the 500 startups in the Y Combinator is also coming out of America. So you have these different models of how you can nurture many startups into being.

Mark Pesce: And I think all of those ideas filtered through both in Sydney and in Melbourne to be able to create communities like the York Butter Factory and Fishburners. These places that could become a kind of connection point. You know, there was also Mobile Monday Sydney, which was just a working group that would meet like a professional group that would meet I think first Monday of the month. 

Mark Pesce: There were these meeting points and I think it’s out of those meeting points that things began to cohere, but there was nothing that felt very formal about that. I think it’s all quite, accidental and quite gentle around this and people would get a good idea and go off and do it. 

Mark Pesce: And, I gave a keynote at the web directions in 2006. And I remember talking to this guy afterward, who had this young company, and he wanted me to come and talk to the company about some of the web stuff that I was talking about; that was Mike Cannon-Brooks. Right so, you know, and he’s got like sort of 15 employees working with him at Atlassian. So that’s how it was none of us thought of this very formally. It was just stuff that we were all doing. And, so to think about it, as well as that startup land, yes. But there was no consciousness of that. 

Mark Pesce: And I think when you start to get to a Fishburners and a York Butter Factory, and I remember there was a period of time and I’d have to go look at my calendar, but because I was a judge on the new inventors, people were getting me to judge startup competitions, which was great. Cause I know about how to do that and I know how to be a good judge. And so there was a period of time, 2009, 2010, and that were just start-up competitions, pitching competitions, this competition, that competition, weekend build something competition. All of those things really started to explode at around the same time.

Mark Pesce: It is both very mature in certain respects and very young in certain respects. So there’s a lot of high quality mentoring, but in terms of the number of people, one of the things that’s happened is there are now generations of people in say, Silicon Valley who have cashed out and gone back to nurture the community and put money in and do all of the infrastructure building that needs to happen for that to become a virtuous cycle.

Mark Pesce: We’re only in the first generation of that, and the same thing is true for venture capital, where we were very good at doing seed and angel capitalization 10 years ago. And very bad at doing Series A, Series B, Series C. Now, in fact, we have a whole bunch of funds that can do your Series B and Series A and we actually are lacking in funds that can do seed and pre-seed and all of that. And as we’ve grown, because we’ve grown as a unit, the entire structure has shifted toward being able to do bigger deals, but that’s now left us weak and being able to do smaller ones.

Adam Spencer: Having been exposed to, you know, Ecosystems outside of the Australian startup ecosystem. What would you say is the, uh, makes our ecosystem unique or, or what are some of the competitive advantages that, that you see that our ecosystem has. 

Mark Pesce: I mean, ecosystems have different levels of depth. I think that Australia’s ecosystem lacks certain kinds of depth, but has enormous other kinds of depth. You know, we are really good at mentoring in ways that it felt like the Americans took a lot longer because Americans by their nature are much more go it alone types.

Mark Pesce: It’s a national character thing for Americans to be able sort of, you know, I’m entirely self-made, as false as that is in any situation. There’s a myth around that. And I think Australians are much more willing to be helpful to one another around that. So the community here has always, I think, been much more in it together than the Americans who are much more in it for themselves. And there’s just one of the big quality, cultural differences between the two countries. 

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

Mark Pesce: Do I have unpopular opinions? Look, you know, it’s funny cause I have guests on the show, Dean Darell being one of them who will just bag on the government all the time, the government should be getting out of the way, this or that.

Mark Pesce: And, I can see the government messing things up, but I can also see the government helping. And so I always think that stuff is a wash. And I don’t know if that’s an unpopular opinion. Entrepreneurs tend to be fairly libertarian in their views around these things like that. I think coming out of America, I’m less libertarian about it because I’ve seen where that can go in the longterm.

Adam Spencer: So do you think we’re on the right track as far as the direction that we’re going with the ecosystem as a whole? 

Mark Pesce: It is very hard, I think because of the pandemic to get a good view of how we’re doing versus anyone else, because everything has been so disrupted. And so, I think in 2019, I probably would have said, look we’re starting to understand the things that we’re really good at. And some of it’s a little FinTech, some of it’s a lot of robots and, you know, AgriTech and MiningTech and things like that, RegTech. You know, it felt like we were finding things that we were good at and starting to go after them to expect that we’re going to be good at everything, is I think probably not wise. But we’re going to have certain things that we are clearly quite good at. And then we’re going to have certain standards, like a Canva or an Atlassian, or an, a Culture Amp, things like that.

Mark Pesce: We’re going to have specific instances, SportsTech as well, Catapult, who were an early guest on the show, right? So there’s really good, specific instances of things that Australia, because of its culture and its history are going to be really good at. And it makes sense to lean into those things, to the degree that we can. And it felt like we were getting good at that. 

Mark Pesce: One of the turning points for me is saying, I’ll go to Perth now once to twice a year. And I love Perth. And there was a certain point where all of a sudden it was like someone flipped a switch and it was just all a birth, a St George Place and all that stuff down there.

Mark Pesce: It just was all startups. Like startup accelerator this that the other thing, mining accelerator, blah, blah, blah, blah, blah. And I would be able to go to Perth and I’d be able to spend three days doing startup stuff in Perth, which who knew.

Mark Pesce:  And it feels like we’ve just turned the temperature down, everything’s gone on to I think a low simmer right now. And it’s hard for us to know as we come out, what that landscape looks like. I don’t think we’ve lost ground in that sense. But I do think that it’s going to take time to get back up to speed.

Adam Spencer: And just to switch gears for a second. I’m curious, how did you get, how did you get involved or started with, with the podcast that you, that you do This Week in Startups Australia?

Mark Pesce: So this was the request from Jason Calacanis. He does This Week in Startups in America. I’ve known Jason for almost 30 years now. And he came to me and said, Mark, we really want to take the show international. We’d be delighted if you were the first one. And I think some of it was to test the idea out.

Mark Pesce: But the other thing was that for me, that was very attractive. I’d already done a little bit of podcasting back the very first generation in 2005 or not, when it was just like a brand new word, this isn’t podcasting was just coming back and it seemed like a great idea. And it also, because of the way things worked, Fishburners had moved into its building on Harris street, recording studio downstairs that Murray showed me and said, you can make the show here. I was like, oh my God, not only can I make this great show, but I can make this great show in the hub of startups in Australia. So things fell into place to make it both a good idea and a timely idea. And it was exactly the moment that I think that people in startup land in Australia needed to start to hear stories about themselves.

Mark Pesce: Because that’s really important. I think because we are, even when you know, you’re working in this big community are still mostly working by yourself. You want to know those stories. You want to know that there is a community there that’s pulling with you.

Adam Spencer: So Mark, I wanted to ask, ah, this question, which I ask everybody, it’s the advice question. If a brand new founder came to you tomorrow, uh, what one piece of advice would you give them that would, that would help increase their chances of success? 

Mark Pesce: It’s funny because you know, on this series with This Week in Startups Australia, I’m asking everyone what their insight around success is. And this is a slightly different question. I always think from my point of view of having been a founder, right with Moore’s Cloud in 2013 and 2014, that the hardest thing for me was the emotional roller coaster around being a leader in a startup. And it feels to me that people need to do the most to support their own emotional resilience. That in fact, if they do that right then whatever the ride throws at them, they’re going to be okay.

Adam Spencer: I want to take a moment. Um, to just first to take a bit of a look at the investment landscape here in Australia and, and how you’ve seen that, uh, change and develop over the last decade or so. 

Mark Pesce: I think the question is how did we stumble into a functioning venture capital ecosystem because that is how it felt. When I saw Ian at Vio Corp and he was basically doing it on his own. He was doing well, but this is of course why he also started Innovation Bay because he could realize that other companies really couldn’t get any seed or startup capital to get going. So he formed Innovation Bay basically to fill that gap. 

Mark Pesce: And then as soon as you fill that gap and you’re like, okay, who’s doing the Series A funding? And then we’ve got a couple of small funds that then grew because Blackbird was really only doing Series A to begin with. But then as they succeeded and cashed out and whatever they become now funds that can do bigger. 

Mark Pesce: So it was all very organic and all quite accidental. And because of that, it has a very different look to it I think than in America, where it’s more institutionalized in a lot of ways or in Europe, I think it’s probably a lot more sort of family funds. Australia’s capitalization infrastructure is very unique and I think very reflective of Australia.

Mark Pesce: And we need to take a look at how it accidentally happened in order to understand how we can tune it, to make it really good going forward, because it feels like there are still gaps there. And those gaps are probably slowing the rate of startups that are getting funded at the early stages, because really what we want is as many early stage startups that will either go zero or one in say 18-to-24 months so that people can then, okay, we didn’t get product market fit there we have to put that to bed. People have lost their money, they haven’t lost a lot of money, but we can now go on to the next thing.

Adam Spencer: So Mark this last question I have is, is almost the same every for every single interview. And that is. Um, not really a question. I really just want to open up the floor to you to talk, talk about whatever is top of mind. For you like whatever you’re thinking about on a regular basis, keeping in mind that what we’re trying to achieve here with this series is we’re trying to, um, tell the story of the Australian startup ecosystem and how we got to where we are today. 

Adam Spencer: Um, And keeping in mind that we want founders. We want policymakers, we want investors. We want people from all corners of the startup ecosystem to hear this series, to hear the documentary, to hear this interview. Um so what would you tell them what comes to mind?

Mark Pesce: Look, one of the best things that has happened and I have certainly tried to front burner, but I think everyone else has, is to make the community as diverse as possible. I think particularly with respect to women coming in to startup land, we’re not perfect at it, but we are so much better than we were even just a few years ago.

Mark Pesce: That is amazing, it makes me very happy. Yes, there is still more work to do, but oh my goodness. We can at least acknowledge that we’re on the way.

Mark Pesce: What is it going to take to get it the rest of the way? Right? Cause we’re not at parity yet. We still aren’t. I try to be really good with guests on This Week in Startups, I’m still probably two thirds on and how do we get to 50-50 on. You know, it was at the end of series six or series seven in TWISTA, it basically was only women for the second half of the series. I didn’t tell the listeners. Cause we just had all these fantastic interviews with women, but I was just sort of like, let’s just push this. All right? I’m going only going to interview women entrepreneurs and venture capitalists for the second half of the series.

Mark Pesce: No one noticed there were no complaints. The shows were all great. And then at the end of the series, I was like, so this is what I’ve just done, because guess what? This is where we’ve got to be.

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