Could Adelaide become a tech startup hub?

[Prince George]

I'm an occasional reader of Paul Graham's blog, which has been increasingly talking about the culture and economics of technology startups. Recently he's been throwing around the idea that it may be possible for a location to become a "tech hub", like Silicon Valley or Boston, and proposing programs for how it could be done. Basically, he presents two options:

1. The long traditional way - make a world class (ie really top tier) university with the kind of academic programs that attracts brainy people. The investors are a tricky bit; you need them because the good ones do a much better job than governments do at identifying the startups worth funding. He suggests getting some of them on-board as consultants may bridge that gap.
2. The quicker, riskier route - pay a bunch of startups to relocate. You need enough of them in your city for a virtuous cycle - good startups attract brainy people and investors, that in turn encourages new startups. This sounds like madness to me, but Graham has been right on strange bets before.

I like the idea of an economy riding more on smaller businesses like startups, rather than being held hostage by large corporations (like the car manufacturers). So, who's got a lazy hundred million to start trying this out?

[Howie]

They've been throwing this idea around since the MFP. Adelaide was meant to be a silicon valley for this region of the world. But if you have a look at the competition in this region, you've got Singapore, Malaysia, Hong Kong ... and they've already got well established companies such as Lenovo, Dell, Intel, and thousands of other tech companies. We we're on the right track with Motorola, but even that ended with Premier Olsen being booted out from the top job. As for top universities pumping out high end jobs, Carnegie Mellon uni opened here and has failed to make a significant impact to the South Australian economy. In terms of Software Engineering CMU is as good as it gets in the world... though i'm yet to find someone who's paid the 50-odd thousand dollars per year to study there.

In terms of support from the government for tech startups... we've had excellent SA based startups, but most of them have either been bought out by larger American companies or simply shutdown. Anyone remember Ratbag software? I think there's a massive opportunity for SA companies involved in next generation Internet technologies such as geoinformational systems, 3d modelling, cloud technologies.. but without the support from the government they may end up being like every other software startup to come out of Adelaide. If you goto our front page you'll notice, i've been plugging a company called Holopoint... what they do with modelling is incredible, though they've only been established for a year or so, they're failing to attract the big investors and support from the government that they so seriously need to make it in this field. Hence why we try to support good startups on our site whenever we can.

[Howie]

Though some positive moves of late on the national level.

INFORMATION TECHNOLOGY INDUSTRY INNOVATION COUNCIL ESTABLISHED

A new Information Technology Industry Innovation Council will be established to support Australia's $98 billion information technology (IT) industry, employing over 400,000 Australians.

The council will be chaired by Mr John Grant, Managing Director, Data#3 Pty Ltd. It will promote the IT sector in its own right and as an enabler of innovation, productivity and sustainable development for the economy as a whole.

Innovation Minister, Senator Kim Carr, said the new IT council, the fourth Industry Innovation Council established by the Rudd Government, will champion IT-enabled innovation for economic, social and environmental benefits.

"The IT revolution has fuelled our nation's productivity and will make an even greater impact in the years ahead," Senator Carr said.

"IT is a pervasive enabling and transforming technology for all industries.

"IT underpins logistics chains and is increasingly embedded in goods such as cars and home appliances. IT supplies enterprise software, has applications in medical, spatial, transactional and other spheres, and is fundamental to data management.

"As with the other Industry Innovation Councils, the IT council will create links with stakeholders to identify opportunities for innovation, wealth creation, IT capability and entrepreneurialism.

"The council will mobilise talented industry, education and research representatives to advise the Government on innovation issues and will be a champion of IT innovation in the wider community.

"It will work closely across Government on issues of common interest to ensure we realise the benefits that will flow from Australia's new National Broadband Network."

Council members will be appointed from a broad and highly talented group of candidates across business, unions and government, and will meet for the first time before the end of the financial year.

source: [email protected]

[Howie]

On a state level, we should be tendering for the NBN company Headquarters. The Victorian Government, Tasmanian Government and Queensland Government have all put their hands up to HQ the new National Broadband Network company... that's a $43 billion dollar contract to deliver Fibre to the home. I would've thought with Internode and Opticomm's expertise in delivering FTTH, that the SA government would help support a HQ or at very least a secondary base for the NBNC. The opportunities are already there, we just need our leaders to jump in and bat for us.

[Wayno]

The best chance we have (IMHO) is for SA to become a hi-tech defence hub - there will be lots of start-up opportunities generated with the Subs and Ships. Also, the mining industry is rife with opportunities and there's no true "hi-tech mining startup hub" anywhere in australia yet!

Maybe i'm wrong, but the "classic silicon valley IT hub" concept is slowly dying worldwide, ironically because the internet is getting better at dissolving the issue of distance! Sure, many big cities worldwide have enough people to declare a zone as being a start-up hub, but in reality it's just a branding exercise...

[Prince George]

They've been throwing this idea around since the MFP. Adelaide was meant to be a silicon valley for this region of the world. But if you have a look at the competition in this region, you've got Singapore, Malaysia, Hong Kong ... and they've already got well established companies such as Lenovo, Dell, Intel, and thousands of other tech companies. We we're on the right track with Motorola, but even that ended with Premier Olsen being booted out from the top job. As for top universities pumping out high end jobs, Carnegie Mellon uni opened here and has failed to make a significant impact to the South Australian economy. In terms of Software Engineering CMU is as good as it gets in the world... though i'm yet to find someone who's paid the 50-odd thousand dollars per year to study there.

Actually, that kinda thing was mentioned in one of those articles

Not Buildings
If you go to see Silicon Valley, what you'll see are buildings. But it's the people that make it Silicon Valley, not the buildings. I read occasionally about attempts to set up "technology parks" in other places, as if the active ingredient of Silicon Valley were the office space. An article about Sophia Antipolis bragged that companies there included Cisco, Compaq, IBM, NCR, and Nortel. Don't the French realize these aren't startups?

The big-name global companies are looking for warm bodies and low overheads - and they have the funds to be totally mobile to chase them. Singapore is expensive and feeling the pressure from neighbours like Vietnam and the Phillipines; western Europe were chased by eastern Europe; increasingly US companies are opening centres Brazil. Attracting these companies just turns into a race for the bottom. And they contribute so little in return - in all the years that Motorola were in Adelaide, how many other businesses were started as a result of them being here? The only ones I can think of were as a result of them closing up shop. (*)

That's also how I feel about things like the NBN, mining, or defence - I'm not really excited by single big companies or projects if they aren't going to spark much activity outside of themselves. Big companies do big global deals with other big companies, smaller companies do more for other small companies in their own region. And they tend to attract each other, while IBM doesn't much care if Intel are just down the road (or rather they might if they perceive them as a threat to their staffing).

(*) Full disclosure - I was at Motorola/Freescale for almost six years and was there when they closed. I still think about what happened when we were all made redundant - here were a couple of hundred brainy people being given a substantial severance pay, and practically no-one struck out on their own.

[fabricator]

In order to have high tech startup companies, you need to first have well paid jobs for the smart people to work in BEFORE they can start their own company.

Lets say for example your an expert in TV transmission equipement, your not going to find much work in Adelaide as we only have a handful of big transmitters and they are all in the same location, the TV studios here are also a shadow of their former self. Your not going to earn much money in Adelaide anyway.

Biggest problem IMHO is that Sydney, Melbourne, Brisbane are only too happy to steal contract from Adelaide, but we have trouble getting the reverse. This then creates a brain drain, the smart people have to leave just to get jobs, and buyouts of SA companies usually result in relocation of work to Sydney.

[chrism4549]

Actually, that kinda thing was mentioned in one of those articles

That was interesting.

Part of why entrepreneurship is so successful in the US is cultural. I don't know if that can be replicated. On the other hand, before 9/11 it was extremely easy for someone to collaborate and get resources. A lot of immigrants came into the country and set up shop and joined these companies and contributed. It was (and is, I guess it can still be argued) easy for the best and brightest to do that. For the most part, it still is. I'd argue even now that it's easier for an Australian to get into the US via an E-3 visa than for an American to get to Oz.

Look at some of these guys who started up companies here:

Mark Zuckerberg, CEO of Facebook - college dropout, wouldn't qualify for a Oz visa
Chad Hurley, co-founder of Youtube - degree in Fine Arts, not recognized by Oz probably wouldn't qualify for visa
Mark Cuban, founder of two companies - only has a business degree, not recognized by Oz probably wouldn't qualify for visa

So how do you expect to get good talented people to your city to do this stuff?

Just looking at the legal infrastructure, it takes about the same amount of time to do business. Not sure about the bankruptcy laws (eg. what's the risking of taking on a startup there?)

Australia has a pretty educated workforce.

So it might come down to getting a diverse group of people together and helping facilitate them taking some risks. Given the economy, the gov't might need to seed this to get it started.

Interestingly, New Zealand has a new immigration policy that they are developing that would pretty much allow skilled workers in the country with very few limits. If I'm a programmer or marketer, I can just hop right in. Maybe the SA gov't helps create a portal that puts these people and ideas together and with reduced restrictions this takes off. Just help foster the appropriate environement.
http://www.workingin-newzealand.com/info/1051

Now is a good time to recruit people. Show them the promise of Australia. You guys have had a historic run economically (until recently, like everybody else). You've got one of the best cities to live in the world according to the rankings. Just make it easier for it all to come together. Without all the diversity that we had historically, we would have never had a silicon valley, Boston, or New York city (fortunately this new administration recognizes this). If you're just trying to get a guy to come from Perth, well, that probably won't do much, IMO. What new perspective will he offer? What new skill?

Anyway, just my thoughts on the subject after poking my head in after a few months.

[Howie]

Thanks chrism4549, great post!

[Prince George]

I agree with Chris that the big difference between the states and Oz (in this field, at least) is cultural. Among those 300+ redundancies from Moto/Freescale, there was little even by way of consideration of starting something ourselves. That was one of the reasons for coming over here, seeing what happens over here from up close.

And, contrary to Fabricator's remark about high-paying jobs as a prerequisite, I'd say that's possibly something that stiffles, rather than encourage, the startup mentality. If anyone reading this is at university and has a half an idea that they toy around with pursuing, consider doing it while you've got little if any commitments. Getting a job tends to coincide with getting car loans, mortgages, and a taste for a lifestyle that takes some money to support. That makes people feel pretty risk-averse, it's a big call to forgo a steady income and put your house at risk for an unknowable outcome. Unless you've earned enough to be "independently wealthy", that is.