How to create more NZ Unicorns
Callaghan Innovation group manager of digital Bruce Jarvis
Sir Paul Callaghan talked about 100 inspired entrepreneurs turning the country around. The ‘how’ of that is harder to pin down.
With a line-up of smart folk in Auckland for Callaghan Innovation’s Southern SaaS event recently, we conscripted an impromptu ‘business brains trust’ to figure out how we can create more billion-dollar unicorns.
Identifying the obstacles and accelerants that can determine success for New Zealand companies is a challenge that has occupied thousands of business leaders, political think tanks and roundtables for decades.
Our group of business founders, investors, leaders and mentors was given a couple of hours on a Tuesday. The rule for this meeting of minds was that after sharing their ideas and observations the group had to find points of consensus. A few ideas quickly rose above the rest.
Elite startup academy
There was a strong consensus that New Zealand needs to do more to support and develop the talent it already has – something Sir Paul Callaghan also suggested.
There were two ideas for supporting our existing talent that resonated strongly with the group. The first was an elite academy that focused, funded and coached New Zealand’s top-performing mid-stage startups, providing wraparound support in the same way it’s provided for the country’s elite athletes.
Distinct from incubators that nurture startup companies showing early signs of promise and needing help to commercialise, the elite academy would pick companies with runs on the board and aim to supercharge their success. Entry criteria might include the top 100 companies with up to $10 million in revenue and the fastest quarter-on-quarter growth rate.
The second idea was to give local talent greater access to smart, qualified international advisers, either through a programme that saw global venture capital firms sending their entrepreneurs in residence to do New Zealand tours of duty or by looking for opportunities to plug into the existing Endeavor.orgnetwork of vetted business innovators and advisers.
Improving our attitude to sales
One of the most striking points of consensus was on an unusual roadblock that New Zealand needs to address: a bad attitude toward sales.
The expatriates, visiting experts and Kiwi-based talent all agreed there is a contradictory divide inside most New Zealand businesses – sales is viewed as a ‘dirty word’ and a task that sits solely with the sales team, rather than an integral function of business and a focus for founders and management.
More commercially minded founders with an understanding of sales and marketing were high on the group’s wish list, along with a rethink of the way businesses approach sales into global markets.
“There’s still an idea in New Zealand that, when it comes time to sell things, you give your sales guy a presentation and some supporting material and just send him out. It’s a really strange way to do business and, generally speaking, it’s not successful.”
Outdated business education
Better training and education about sales were recommended as a solution but business education was also seen by the group as an area where New Zealand is lagging, with a curriculum that needs to catch up to the realities of business and innovation.
Getting new course materials into programmes or introducing curriculum changes through NCEA is too slow and arduous according to several of the brains trust with knowledge of the process.
At a tertiary level, with the exception of a couple of specialised offerings, the group saw New Zealand programmes as being slow to shift from a focus on traditional models of business and sales – leaving graduates ready to work in businesses but, arguably, ill-equipped to build one of their own.
Shallow VC market
Surprising no one, there was universal agreement over New Zealand’s “very shallow VC market” and the obstacles presented by a dearth of available capital. A few possible solutions were offered, including more ambitious, coordinated public-private investment partnerships, a fixed 5% of foreign direct investment into risk funds in New Zealand and a regulatory environment that is generally less geared toward property investment. New Zealand startups also need to get better at going out and seeking capital.
Being small has advantages
Awkward time zones, distance to markets and New Zealand’s size all rated passing mentions as both negatives and positives but there was agreement on the advantages offered by such a small market. New Zealand’s “no degrees of separation” makes it easy to get in touch with people and reach out for advice and support from other founders and companies with experience of the same challenges.
People in New Zealand are extremely generous with their time and sharing their knowledge and expertise, it was agreed.
The country’s size also makes it an easy test market, “where people are two calls away from decision makers.” Size, ready access to decision makers and a high standard of living all make it a strong contender as a tech testbed. “I like that New Zealand is an incubation nation where you can test the market without sinking a ship on a global stage.”
With major players such as Pushpay and Vesta already running teams of engineers and developers in New Zealand, while expanding their businesses into the US, the group agreed there is more scope for our companies to attract high-quality talent, and even an opportunity for the country to invest in becoming an exemplar for remote working.
Other big ideas from the brains trust:
• celebrate high-integrity failures and lose the stigma for entrepreneurs who fail;
• be less conservative: less conservative with investment, less conservative about adopting New Zealand-made products and services over international incumbents; and
• think bigger, work harder, aim higher.
Setting out to produce any meaningful answers in a single afternoon was incredibly ambitious but it worked. This was fitting really because the group had one other common conclusion about what New Zealand needs if it’s going to yield unicorns: ambition.
Bruce Jarvis is Callaghan Innovation’s digital group manager.