Rohan McDougall highlights the current risks to Western Australia’s economy
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Rohan McDougall is the director of commercialisation at Curtin University, where his team work to identify business opportunities for new products and services that arise research conducted at the university. Rohan has over a decade of experience working as company director or chairman of a variety of technology startups, including Renergi, a renewable energy technologies company, and Icetana, a company producing AI video analytics tools to assist in security surveillance. In his conversation with Adam, Rohan discusses how the dot com boom and bust affected Australia’s startup ecosystem, and why the Western Australian economy is at risk at having all its eggs in one basket with its heavy investment into the mining industry.
Curtin University’s Commercialisation team: https://research.curtin.edu.au/work-with-us/commercialisation/
Adam Spencer: Hi, I’m Adam Spencer. And welcome to Day One, the podcast that spotlight’s 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…
Rohan McDougall: Hi, I’m Rohan McDougall. I’m the director of commercialization at Curtin University. We are involved in technology transfer out of the university, but also run a range of entrepreneurship promotion development programs here at Curtin.
Adam Spencer: So when would you say you first got involved in what we call the startup ecosystem?
Rohan McDougall: I started my career in a patents’ office in Canberra in 1990, and very quickly, moved from there to UNSW and worked in technology commercialization there. And part of that role was on startups as we called it then, but it was probably different terminology in that time, more around deeper technology, heavy infrastructure types of startups. So medical technology startups were some of the things that I was involved in at that point. It was a different time, it was pre-Google and pre some of the web platforms and pre-app platforms that we have available today. And so, to start a company was a different proposition, you really needed access to infrastructure. And so, universities were doing it, but it was probably more on a smaller scale than you’re certainly seeing today.
Adam Spencer: The commercialization side of things, I hear a lot about that. Can you give me a bit of a 40,000-foot view of what that’s all about and that process?
Rohan McDougall: Yeah, so we are trying to identify opportunities for new products and services that arise from research conducted at the university. So researchers may be conducting, say, medical research or some kind of process engineering research that identifies an improvement that can be made. And so, we look at, well, is it solving a problem that’s of interest to industry? Can it be demonstrated at a level that’s of interest to industry? So can it work at scale? Can it be implemented in an economic way? So is it going to cost a million dollars every time you try and implement the solution? So can it be done economically at scale? These are the things we look at. We look at whether or not there’s intellectual property protection that can be put in place to try and incentivize investment into the development.
Rohan McDougall: So the reality with a lot of transfer tech commercialization work is that the opportunities we see are very early. So they may have had some proof of concept in a well-accepted academic model, but that’s usually a reasonable distance from a robust commercial proof of concept. So there’s usually work that needs to be done on developing commercial proof of concept, working with industry existing players in the marketplace to try and turn it into something that more resembles a commercial product or service. And that can take some time and it’s reasonably high risk because at those early stages, these opportunities usually don’t have well-established proof of principle as I said, they don’t have experienced management on board. There’s usually researchers who understand the depth of knowledge around the scientific field, but don’t necessarily understand how it would be implemented in a market. So there’s a lot of gaps that need to be filled to turn it into something that’s an investible proposition and we work on trying to do that.
Adam Spencer: Yeah, these days, there’s a lot of programs around to help the scientifically-minded be able to communicate their solution to a bigger market. How was that done 20 years ago?
Rohan McDougall: Well, there weren’t the same sort of level of scale of programs, but there was certainly and have been people working in this field for decades in various universities with varying degrees of support depending on the institution and the flavor of the time. So there’s a really reasonable level of expertise, knowledge involved in being able to work closely with academic research staff who often do talk in deep technical terms, and then trying to translate that into something that can be appealing to someone who’s interested in, “How does that turn into revenue generation in my business.” So brokerage on both of those sides to try and bring those two together is a reasonably specific skill.
Rohan McDougall: There is organizations in Australia that promote that sort of activity. There’s an organization, Knowledge Commercialisation Australia that is a representative body of technology transfer professionals across Australia and most of the universities are members to that. But it’s probably a little known field and certainly has been taken over by the more general startup community as we know it today. And that’s really about just lowering of the barriers and hurdles to being able to start a company and to build a product. So that’s some of the things that we’ve seen with the platforms that have been developed that enable you to access a market, an international marketplace, to build a product and be able to sell it and generate revenue and distribute it without really having to build significant infrastructure.
Adam Spencer: You’ve spent a large part of your career in the commercialization space and more recently the startup ecosystem. Why? Yeah, what interests you about it?
Rohan McDougall: I like the variation, so it’s never boring. There’s always a new… We cross so many different marketplaces, products and services. So it really goes to the extent of the areas of interest and research of the university. Opportunities come from all areas, so that ranges from things in the humanities to medical as I talked about earlier, engineering, business. You see different markets, different customer bases, different technologies. So you’re always learning across a broad range of different fields so it keeps it very interesting.
Adam Spencer: What’s been maybe one or a couple of the biggest changes you’ve observed over the last, I don’t know, let’s say, 20 years?
Rohan McDougall: Yeah. Well, I think that main change, as I mentioned earlier, was the lowering of the barriers to people being able to start and scale businesses has been transformational. So when I first started out in my career, the focus was on medical technology, medical devices. So some of the companies that were around at that time were companies like Telectronics, which was a pacemaker device that was developed in Australia, Cochlear in its early days. And these were funded by big manufacturing businesses, so Pacific Dunlop, which has now been transformed into a company, into Ansell, but early on was a tire maker. So these big manufacturing bases were looking at transformation into technology, but still had the advantage of those manufacturing bases that they could turn to some of these, or thought at least they could turn to some of these hardware products.
Rohan McDougall: That was the beginning, but still needed quite significant investments in production and distribution and sales forces and things like this that you required tens, if not hundreds of millions of dollars, to get off the ground to even test whether or not there was a business there. So significant hurdles to entry. Then we had the Dot-com era where some of those issues went away. You could access global marketplaces through the web, there was an ability to generate revenue through the web so distribution became less of an issue. And so, you had companies coming out like realestate.com and carsales.com and this led to the boom in internet companies in 2000 that probably, or did in fact get ahead of itself in that the platforms and the distribution, probably, weren’t up to what the promise was. So that went sideways for a while.
Rohan McDougall: And then, there’s the app economy that really started in around 2008, nine. Again, significant reduction of hurdles to being able to get a business up, so a product and service up and in front of millions of customers around the world with a reasonably low investment and barrier to entry. So that just then set the scene for significant numbers of companies to be able to establish and scale quickly, which they have.
Adam Spencer: Just sticking around that kind of late ’90s, early 2000s timeframe for a minute, I know you mentioned a bunch of companies just then that were around at that time, but can you comment on, what did the community look like? What did the landscape look like? It wasn’t the startup ecosystem, obviously, that we know today, but were there any kind of whispers or something around that was a precursor to what we see today?
Rohan McDougall: Well, there was certainly a lot of flash and excitement in Dot-com era, there was a lot of people making a lot of money without really much to show for it in terms of substantial business and generation of revenue. So there was a lot of excitement and a lot of commentary about the world being transformed by the worldwide web, which it was, but perhaps got a little bit ahead of itself in that people sort of ran off with ideas that maybe didn’t necessarily have a customer base or a demand or hadn’t been tested fully. Perhaps also, the timing wasn’t quite right in that some people hadn’t caught up with the technology and access to it and the usability of it. And so, people with the ideas and the technology got ahead of the marketplace in some respects and that sort of led to the downturn.
Rohan McDougall: As far as support systems, there were support systems around and networks and meetups and associations, but they had a little bit of a different look. For example, startup competitions that we see today were probably more represented by business planning competitions in business schools. So there was people working away on an MBA and they might develop a business plan for a particular market sector or business without necessarily having the ability to build a product around it but the conceptual idea of what that business might look like. And so, there was more of a focus on large, thick documents of what a business might look like if it could be developed around a particular product and service, and then trying to test that by face-to-face surveys and things like that. So, again, access to people and market and opinions and trends was more difficult in those times because you just didn’t have the same communication platforms and systems and access that you do today.
Adam Spencer: Jumping forward to your time at Curtin, you’ve been director of commercialization there since 2008. That kind of puts you in a great vantage point to see, I think, the startup ecosystem that we see today kind of start to emerge, because I feel like that was around early 2010 that we started to see that. What was that like from your point of view?
Rohan McDougall: Well, again, so Curtin did have some investment in startups when I arrived here, so there was a small portfolio and they had established a small seed fund to fund opportunities that were based on Curtin intellectual property, usually, deeply technical opportunities that needed seed funding to get to prototyping, pilot trial and proof of concept. And that was really our core focus.
Rohan McDougall: But what we’ve seen over the last 10 years is really an expansion of the thinking around what it takes to start a business and thinking about, well, it’s not just the idea and the technology, it is now, all the time, it’s about the team and the capability and the access to market and access to skilled people to scale. So trying to bring all of those elements together is something that’s become more of a focus for us here. And how do we develop each part of that system to encourage more businesses to form and be successful and scale quickly?
Rohan McDougall: So we think about things like capability building around entrepreneurship, about inspiring people to even consider entrepreneurial career pathways by providing them with rewards or recognition or access to people who are skilled at it and have successful at it. To provide aspirational stories. Providing that sort of early-stage seed funding and access to networks who can help companies scale globally if they’re at the right time to do so. So building out those networks, formalizing those networks into more of a cohesive pipeline. So people can enter at different points, but if they have something, they can get the support they need at the right time to move forward more quickly than perhaps they could have some time ago. So that’s really been the focus that we’ve had over the last 10 years here.
Rohan McDougall: And really, broadening our view about, it’s not just the deep tech opportunities that we have access to here at Curtin, but how do we use and leverage the resources of the university to help even students or alumni start, build, scale businesses? And so, we are thinking now about things like how we provide access to the university infrastructure so people who have technical issues or technical questions they need solving can we make infrastructure at the university available to them? Because we do, as an institution of this size, have significant infrastructure that’s not available to general startups. Can we make expertise of the institution available for those startups in a more fluid way?
Rohan McDougall: And can we open up access to students? So if a startup has a need for coders, for example, to scale more rapidly, can we identify some of the better or the best computer science graduates coming through Curtin, match them with a startup company that has a particular coding need? That student gets training opportunities in the company and potentially a future job opportunity. The startup gets access to skilled people early and increases its ability to scale. So using the capture, the resources, the infrastructure of the university to really focus down on how we can make these companies move more quickly
Adam Spencer: Looking at today, what are the main programs that you guys run to help support new founders?
Rohan McDougall: Yeah, our programs follow the line that I just laid it out. So it really starts with a program we’ve have that’s running tomorrow, in fact. The Curtin Innovation Awards we call it. It’s run for over 10 years. And it’s really focused on identifying new product and service opportunities that are arising from the community at Curtin. So it’s researchers, students, alumni, if they come up with an idea for a new product or service, they can apply for these awards. There’s cash for prizes. And then, they also get recognition at an event tomorrow. We’ve got, I think, around 350 people coming along from the local innovation community here at Perth. And we showcase the finalist of those awards, providing them with an opportunity to get in front of a broad range of people that perhaps can help them move ahead with what they’re doing.
Rohan McDougall: So that process is really about cultural change within the institution. And it’s become quite a significant program at Curtin now and has good recognition across the institution. So it’s demonstrating that that is an activity that’s valued at Curtin, that it’s something that we want to see happen and we want to reward. So that’s front of the pipeline if you like.
Rohan McDougall: The ideas are coming in, a lot of those ideas are pretty early, so they may just be an idea. It hasn’t really been tested from a commercial perspective or market perspective or even a technical perspective. So we then have the rest of our programs are around trying to mature those opportunities come through. So we have one that’s called Curtin Ignition, which is a week-long business concept development program. So if someone comes in with an idea, they get content around business model development and marketing finance, pitching to a commercial audience, those sorts of topics, and hopefully come out at the end of that program with a better communication piece that they can put in front of potential partners, customers, investors, or they come out at the end realizing that maybe that idea’s not going to fly, perhaps go back and think of another one. But at least they’ve got some framework and context to be able to assess the next opportunity from a commercial perspective.
Rohan McDougall: So we had 70-odd people go through that this year. That’s open to the general public, so it’s not just a Curtin program, people can pay to come along to that. But we send around 20 scholars from Curtin who are staff or students to help build that capability in the early stages.
Rohan McDougall: If they’re looking perspective from there, we have a program called Accelerate, which is more taking something that has got a proof of concept or a prototype that you can go in front of customers and you’re really then looking for, can it be turned into a sustainable business model? So can you generate revenue sufficient to sustain a company? And that’s more of a bespoke program where we provide 10 weeks of structured mentoring that’s really tailored to the stage of development in the market sector of the businesses that go through it, trying to match them with network and people that can help them depending on the problems or the challenges or the stage that they’re at. And they get $5,000 to help them build out that concept. So we had, this year, around 19 go through that.
Rohan McDougall: Then we have a program called Kickstart, which is early-stage seed investment so we can invest. We have $500,000 a year we can invest in early-stage seed funding and a cap of 500,000 per project. So over the years, we’ve invested in 22 companies. Of those companies, we’ve exited six for some return. We’ve closed six, the rest are still going in some way, shape or form. We’ve returned a multiple on the money, it’s not huge multiple, but it’s certainly our money back plus, and it’s operating at a very early-stage seed so we are reasonably happy with the returns the companies have generated. Around 200 million of follow-on funding and 200 million plus of sales.
Rohan McDougall: The other program we are running is a program called West Tech Fest. So that’s really for national, international network. So Perth is a reasonably isolated marketplace and so what that we wanted to do is provide an opportunity for local startups [inaudible] , particularly, but more generally, the community here to access national, global expertise in tech entrepreneurship. And so, over the years, we’ve evolved an event that now is a week-long festival around technology entrepreneurship. And in normal times, we get people from the East Coast, but also from the US and Europe and Asia to come down here and local startups can connect with them and hopefully generate relationships that may lead them to either investment or access to expertise they may not normally have or other connections that help them scale globally. So that’s also now moved into a relationship with a global competition called Extreme Tech Challenge, which is through our connection with Bill Tai. And that is a similar sort of platform to enable companies to make global connections and scale.
Rohan McDougall: The ethos of the event is really trying to provide multiple opportunities to form relationships with people. So we try and be as low as possible on the formal side of conferencey-type events, providing as many opportunities as possible for people to meet in more informal environments so they can really build relationships that might last, that they can follow through. And one of the things that we’ve certainly seen is that people who grasp those opportunities to form relationships are the ones that really get the most advantage out of and go on to further success. So if you’re willing to grab those opportunities of meeting people who can help you with both hands then it can really benefit you.
Adam Spencer: You mentioned that one of the challenges that Perth and Western Australia face is an isolated ecosystem. Going a bit deeper on that, what are some of the ways you see that maybe the Perth, Western Australia ecosystem is different, has different challenges, has different advantages than maybe other parts of the ecosystem?
Rohan McDougall: Yeah, well, so to build a company, you really need a few elements, you need access to skilled people, you need access to experienced management, you need access to customers and you need access to risk capital. And in Western Australia, we have those things in the mining industry, so all of those things are present here. And so, that’s why there’s such a successful mining industry here, we have all of those elements. And a number of startups out of Perth have been very successful servicing the mining industry, so there’s probably some of the world-leading mining software houses here.
Rohan McDougall: Now, we have those elements less in a lot of other sectors, which is the reality. So a lot of what we he do is try to build out more experience and provide opportunities for access to more talent and more experience in those areas outside of mining in the attempt to try and diversify the economy here, because it’s reasonably obvious that we’re at risk of having all of our eggs in one basket.
Rohan McDougall: And it’s often talked about that we have a lot of risk capital here in Perth, but it’s risk capital applied to a particular field. So there’s a lot of people who are willing to put money into a mining tenement or an exploration deal here that has very high risk and low prospects of success, but less so on putting money into a tech startup. And it’s really about comfort factor and what people’s knowledge base is. So a lot of people just don’t understand as much about what it takes to develop a successful tech product, or say, for example, a successful medical device or a successful pharmaceutical, than they do what it takes to be successful in the mining game. So we try and also breed familiarity, provide more examples of companies that are being successful in those other sectors so that people can see it’s possible to generate wealth in those, so they become more familiar with the process of how the product or service is developed and you get more comfort and people are willing to take more risk. So it’s about building awareness and knowledge across a reasonably broad field.
Adam Spencer: This next question, feel free to answer it on a national level or just from a WA perspective, but what are some of the biggest gaps that you kind of see in our ecosystem today?
Rohan McDougall: Yeah, I think the gaps, really, there’s still a pretty undeveloped early-stage risk capital in Australia. It’s certainly better than it ever has been, particularly if we think about the tech sector, if we’re talking about tech as software and SaaS business models and app development, there is a lot more funding available for that. And there’s even some of the bigger funds now being established that are looking at deeper technical solutions, so Main Sequence comes to mind and the others. And companies like Blackbird are looking at deeper tech opportunities as well.
Rohan McDougall: But on that very early stage where we operate, so we are talking, say, half a million to two million level of investment, it’s still a little bit of a struggle, and there’s not really very well-developed systems or businesses willing to invest in that early stage. I mean, a lot of the big venture groups will say that they’ll go early, but they won’t go early very often. And I think what we probably need as a nation, and certainly as a state here in WA is for more money to go into that very early stage if we want to shift the dial and see more come out the other end.
Rohan McDougall: There is going to be a lot of failures, but I think if everyone goes into it with eyes open and there’s some risk mitigation, perhaps, or some incentives from government that are increased in that very, very early risk area, then I see that’s an area that we could do some more work on putting more funding in to early-stage opportunities, trying to see more that can come through to be investable at that next level, of, say, five to 10 million where there’s now reasonably well established VC market out there that can take things up. If they’ve got reasonable proof of concept in the marketplace, or they’ve got at least reasonable proof of concept on their technical solution. So early-stage risk capital, I think, is still an issue.
Adam Spencer: I ask everybody this question, which is the advice question, if a brand new founder came to you tomorrow, do you have one piece of advice that you would give them to help them succeed?
Rohan McDougall: Yeah. Look, I think the main piece of advice relates to something I said earlier is really take the opportunities that you have access to. So what I like to say about the programs we run is that we don’t pick winners, we let winners pick themselves. And what I mean by that is that the people who are going to succeed, if you provide them with access to resources, say, the infrastructure that I talked about, or you provide them with access to people, so connections, those that really grab hold of that opportunity, follow through, and form relationships with those people and follow up and are responsive and listen to advice and again, come back once jobs are done and provide feedback and show that they’re making progress, they’re the ones that are successful in the long term.
Rohan McDougall: I mean, it’s hard work, but you’ve got to grasp the opportunities that are available. There are ways now for startups in the various support platforms and programs, and there’s so many of them as you’ve come to find out, Adam, by just running this series. If you want to succeed, there’s a lot of resources out there for you, but you’ve got to really grab them with both hands and run with them.
Adam Spencer: I really like that. Let winners pick themselves, I love that line. The last few minutes of this interview, this question isn’t so much a question, it’s just an opportunity for you to get something out that’s been on your mind a lot, keeping in mind that we’re trying to create a documentary here that chronicles the history of the Australian startup ecosystem with founders, academics, investors, policy makers, hopefully listening to this series. What do you want to tell them? Any one of those categories or all of them, what do they need to hear? Yeah, what’s just on your mind?
Rohan McDougall: Well, I think, generally, in Australia, we have a habit of beating ourselves up about this sector and perhaps focusing on the negatives or under-performance, or perceived under-performance relative to, say, peers in other markets. We often hear people talk about, why can’t we be like Israel or why can’t we be like Silicon Valley or why can’t we be like somewhere else? I think that there’s limited value in that kind of comparison because there’s so many differences between what we have here and the environment we have here and environments in other places. And what I would like to encourage people to do is think about what other positives that we have here that we can really, really grasp and push forward.
Rohan McDougall: Well, even though I said that the venture market’s undeveloped, it’s certainly making progress. There’s a number of companies now that are really showing significant potential as international businesses, so they’re showing that there’s major wealth generation that can be generated as a result of this tech sector. We need to really celebrate those wins and shine a national light on some of those wins so that it inspires that next generation of people to think about alternative career pathways. And we really want more people to think about tech as a career pathway to ensure that this country is going be as good as it is now into the future.
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.