Australia's Silicon Beach is a wipeout “If only Australia were more like Silicon Valley,” the entrepreneuriat declaims: “Our startups would be more like theirs, and we'd have home-grown Googles or Apples!” I've heard this for years, and I'm uncomfortable with it. It's not hard to find these sentiments: posts like this one by Freelancer.com founder Matt Barrie …
I'd love to write about them more often, but know my time is more wisely invested in other fare you'll actually read
Then you should do, Simon ... I'm sure The-Powers-That-Be can afford the ink & paper ;-) ... Not doing so is probably part of the problem?
Once up on a time (2000/01 I think), as a UK-based webby-business our sales people took one of our products to the States (formed a separate company, and all that) to try to tap into their greater willingness to fund fairly-useless-rubbish. We had a few tyre kickers, but never really much solid interest in investing. Plenty of interest in the product, plenty of interest in the team, plenty of interest from the vertical the product was to be sold into ... No interest at all, from investors.
And it is not just startups, or even just technology businesses. Cracking the US is hard for almost every foriegn entity that tries it. The Americans are very good at supporting their own*.
Our thing wasn't IPO material, it was fairly small-stuff. And I think that was part of the problem. And is probably part of the problem here too? Too much here is not designed (or pitched) to be global. Too much is thinking small (but secretly hoping big). Too much is designed to be niche. Under the US model; niche isn't much good at all. There are parallels with that and your comments on a more unequal society ... which is not a bad thing, as far as (most of) the US is concerned.
Over the 18-months that we persisted, I did get a very good view of the enormous difference between investment in the US and everywhere else I have lived/worked/sold-to. Failure. If I had to characterise it in one word, that word be the word. And the longer phrase would be: No fear of failure. Indeed; failure is cool. Even a bad track record is better than no track record. It is better to have tried and failed than never to have tried at all (I am probably paraphasing!); is - in my experience - most true in the USA.
And most importantly, they have a home-market of over 250-million people. They speak the language of business (English) and their creative industries already lead the world (music, film and tv) in making money (if not necessarily in the eye of the beholder).
In Australia, only 1 of those 3 things is present. If the national-language over here was Arabic, even fewer people would have heard of the place. But the home-market is tiny (really tiny) and the other creative industries lack much prominence on the world stage (and often, the finance behind what does leave-the-country isn't home grown).
IT is a creative industry, or at least the way webby startups are seen in the US is creative. But as you rightly note, much of IT - the vast majority of it - is not sexy at all (here or in the States). And for that reason - as again, you note - no one wants to read about MYOB, when they can instead read about the latest whizz idea to entertain the masses now Cat Videos have gone mainstream. Much of real IT is duller than dirt.
A good article, Simon ... One whose subject was often written about in the late 90s and early 00s in the UK (and probably still is). If only someone would chuck several trillion dollars at us, we too could have IPOd based on the number of registrations for our Blog-About-Your-Cat platform.
To a great extent, the US makes money out of thin air ... or at least the hot air generated by lots of people in nice clothes banging on and on about something that you never knew you needed (and then found out you didn't, after it IPOd). I once had a boss (ever so long ago) who would tell me that the problem with cracking the US was that foriegners could never quite believe how naive Americans are. And he may have been right; but that doesn't stop some of them making a fortune out of what everyone else perceives as naiviety.
* - Supporting Your Own (protectionism). From the limited time I've been over here, I would say Aussies are also quite good at this. Is this attitude under exploited, over here?
From my local reading (I'm in Western Australia which often feels like yet another country) and occasional discussions, I'm pretty sure that we do NOT have a protectionist policy. One of the frustrations often voiced by people trying to sell local major IT products to government is that there's a distinct preference for US products over local, regardless of quality.
In the field of contracts to supply services, most are structured in such a way that only the multinational consultancies are able to tender.
What little "creative IT" exists in Australia is for niche vertical markets.
Where pools of talent have existed in particular areas, various governments have managed to dry up in short order. There's a large cargo-cult mentality operating in Australia whereby only foreign technology can be good or innovative*.
(* exceptions being know-nothing government folk who see some lame local implementation of 15 year old shareware and pronounce it as a Microsoft killer )
“If only Australia were more like Silicon Valley,”
Well, once we Australians had our own 'Silicon Valley'! Certainly the beginnings of one anyway.
* We had AWA in Rydalmere in Sydney making silicon integrated circuitsin the late '60s; and before solid state, AWA made all sorts of electron valves and hi-tech electronic components.
* AWA also made hi-tech equipment too--from military electronics to telephone exchanges to microwave links to precision test equipment to mobile radios to radio and television broadcast transmitters, and much more.
(I still have an AWA F242 Distortion and Noise Meter and a G232 and G233 ultra low distortion oscillators. These world-class products were made over 40 years ago and even by today's standards they're still state of the art instrumentation. ...And this is no bullshit either, for example, the G233's distortion is typically below 0.0003% across the audio spectrum (even today that's damn hard to beat).
* And we Australians let AWA die because some slimy currency trader sent the company broke whilst gambling with the company's financial assets. If it is was not so tragic then not even Monty Python could dream up something so outrageous.
* In Melbourne as far back as about 1966 we had Fairchild Semiconductors making silicon Field Effect Transistors (FETs) both N and P-channel types (even by world standards of the time this was a big deal).
Remember: Fairchild is the company that spawned the 'Fair children'--Noyce, Moore et al who went on to found Intel. Right, albeit in a small way, we were in there at the beginning. Now we've nought.
* We even had space industry at the Weapons Research Establishment in South Australia, it put the Blue Streak rockers into space in the 1960s. (I even applied for a cadetship there which unfortunately I didn't get.)
* We had a first class-steel industry, now it's almost defunct (despite the B/S you'll hear). At Wollongong NSW as a kid I watched iron being poured from BHP's furnaces then followed the whole steel-making process through to the Lysaght's Flat Products Division next door. Here, red-hot steel from BHP was turned into finished (completely tinned) tinplate--all in one operation. Right again, this involved two companies cooperating side-by-side with the production line starting in one company and ending up in the other.
* During WWII we made aircraft in large numbers, we made Bristol Beaufort bombers at Chullora NSW. In fact, my father worked in this aircraft factory and as a protected/war industry, it took him over a year to be released so he could join the Navy.
* Also during WWII, Australia made parts for the famous Spitfire fighters. I've seen boxes of machine tools and cutters used for this purpose left over from the war (in fact I've a HSS machine tool cutter that was once used in manufacture of the Spitfire's Merlin engine which I now use as a doorstop)!
* The latest crisis is that our vehicle manufacturing industry is being dismantled, and we're now importing rail locomotives from China, once we used to manufacture large quantities of these ourselves.
* And that's only the beginning--I've not even discussed Australian inventions such as Interscan navigation for aircraft, Wi-Fi that you all use today in your iPhones etc.—technology that we've effectively given away as we do not have the wit to manufacture it (or even licence it properly). And don't give me any bullshit that we're too small a manufacturing base to do so—look at what Nokia did in Finland with only 1/3rd Australia's population.
* Now, we've SFA manufacturing left, it's all been nuked by successive government polices and sleazy trade deals.
Australia's population NOW hasn't a clue how to anything with its hands—handle a lathe or milling machine etc. let alone a machining workstation or operate high-tech electronic equipment. And forget all that hi-tech manufacturing: an understanding of many hi-tech manufacturing processes was once commonplace across the community, now this strategic knowledge has all but been entirely lost from the culture. Over several generations we've axed manufacturing almost completely—in Australia you can hardly give machine tools away nowadays--precision boring machines, mills in perfect working condition etc. are being sold to India for scrap value or scrap iron!!
* The demise of Australia's manufacturing and hi-tech industries over the last 40 or so years is simply tragic. What successive Australian governments and their crony advisers have done essentially amounts to (a) a complete deskilling of the Australian workforce with respect to key industrial processes, (b) the elimination of strategic industries essential to the running of the country in both war and peacetime.
Heaven help us if things ever turned sour and there was another war--we'd be a walkover as we can hardly manufacture firecrackers let alone something as sophisticated as an M60 or AK47. And you can completely forget the more sophisticated weaponry--we've forgotten how to do all that stuff (remember, in WWII we just about made everything used in the war effort).
We even once had Jindivick—a drone aircraft produced as far back as 1952 by the Australian Government Aircraft Factory (GAF). That's 60 years ago—if we'd kept developing the product we'd now be world leaders in drones and cruise missiles:
http://en.wikipedia.org/wiki/GAF_Jindivik
...Arhhh, but there goes another Oz fuckup!
* What successive governments have done over the last 40 years or so is essentially commit treason against the Australian people by conning them that hi-tech and manufacturing is NOT for them—and that they won't have to get their hands dirty if they enter and embrace the 'lovely' do-nothing-truly-productive service sector.
If such anti-tech mantra had ever been uttered in Communist Russia or Nazi Germany then those who'd committed the treason would be the first up against the wall--no questions asked. Of course, here in Oz, even if pollies understood the issues, they'd be bought off by multinationals who see local self-sufficient industries as competition--thus we end up buying, say, cheap plastic buckets from China whose handles fall off before we get them home and we do so knowing full well that we're sending the local high-quality, last-forever metal galvanised bucket industry to the wall. It's sheer madness; as they say Australians are bloody-mined sheep (and there's the proof).
Now tourism is preferred over manufacturing. And when that goes sour we've SFA to fall back on.
This is what happens when governments are completely devoid of politicians who've no hands-on experience in manufacturing, engineering or science. We've now governments full of accountants, economists and lawyers who're easily led by charlatans and carpetbaggers—people (usually from large multinationals—who understand how to make—err sorry—con a dollar but who wouldn't know one end of a screwdriver from another). They're quite happy to con stupid governments to sign away a country's knowledge and skill base by entering into trade treaties and deals for their own advantage. And Australia is a sitting duck. Of course, in all such negotiations, there's not a techie to be seen anywhere.
But who cares, soon it won't matter. Eventually China and Asia Inc. will buy us out, they've sense and know what really has to be done.
By then the Oz locals will be relegated to the trash heap. And it will serve us right.
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