Rachel Lebihan has written a piece in the Australian Financial Review covering my submission to the Australian Federal Government’s review of the state of entrepreneurship and venture capital.

I’ve uploaded a scan of the article here and here.

It’s one thing to say, “Where there is a will, there is a way,” but another thing to go out there and put it into practice. The team didn’t want to be another startup that complains about how difficult it is to raise capital. We wanted to take matters into our own hands and do something about it. The need to stay alive was also very motivating.

We’re a strong team, and not only do we know what we have been capable of doing in the past, we know what we can do in the future, and to what extent we are willing to go to make things happen.

Yesterday, Eric Ries spoke to another, much larger, audience on his Lean Startup theories. The auditorium at the Australian Technology Park hasn’t buzzed like that since the heady days of 1999!

Eric’s thesis that we should be measuring and managing startups in a much more sophisticated way totally resonates with me. I have been calling for a science of startups for a while now and in fact included this as one of my main points in a submission I put forward to the Australian Federal Government earlier this week. They had put out an Issues Paper calling for submissions (I understand this was targeted at certain people and organisations) on the state of entrepreneurship and venture capital in the country.

My submission (you can read the entire thing here) spoke to the establishment of an Australian Centre for Entrepreneurship & Venture Capital (ACEVC). This Centre will include an Entrepreneurship Conservatory that is focused on developing a results-based set of training programs for upskilling entrepreneurs using a real time, interactive pedagogy that will form the basis for a ‘science of startups’.

I also call for a VC College that can provide real life experiential training on the job for successive generations of Australian venture capitalists – an initiative designed to build up a true venture capital industry.

I believe that ACEVC is transportable to many other geographies so for all metarand readers from other parts of the world than Australia: feel free to adopt these ideas for your own country.

Besides Eric’s push for lean startups another great evangelist for the science of startups is Steve Blank with his recently released book, The Startup Owner’s Manual. I highly recommend both books for entrepreneurs.

Should/when ACEVC gets up and running, it will draw heavily on the the great work Eric and Steve have done so far to codify the science of startups.

It really excited me for two reasons. Firstly, I find myself formally and informally mentoring entrepreneurs on a regular basis. It is something I’d like to formalise more into a wholistic entrepreneurial coaching program. Given this, many of the points made in the article resonate with me.

The second reason for my excitement is that I am a big believer in creating truly matrixed entrepreneurial ecosystems. I’ve experienced first hand how Silicon Valley, for example, works and one of my passion areas is fostering such an ecosystem in Sydney and across the region. Sydney is currently where Boston was circa 2010. We have a solid level of entrepreneurial activity bubbling up and some high profile wins. We also have successful serial entrepreneurs returning to our positive economic climate. But we are not sufficiently matrixed.

I was talking with a colleague yesterday who, having returned from a stint working in Silicon Valley, found Sydney to be bubbling with pockets of activity, but no true connection between them and unless she was looking hard these pockets were easy to miss completely.

This article explains beautifully just what is required to create a more matrixed ecosystem. It was only once:

Boston’s start-up “ecosystem” began to deeply interconnect – like some massive neural network…the community is nurturing, embracing, and considerate of its entire being…what was once an environment of competition and posturing has been replaced by one of cultivation and brotherhood.

Are you starting to get the picture?

The momentum that’s brought Boston into 2012 is irrefutable. Everywhere you turn new nodes are being created and synapses are firing.

Similarly, Sydney can benefit from the approaches Dave and Jennifer are advocating, namely spiderweb mentorship and horizontal entrepreneurism.

The crux of the piece is around spiderweb mentorship, which they illuminate on as such:

This is about creating the strongest start-up “web” possible, by weaving an incredible tapestry of ideas and connections, allowing for random new offshoots, connecting divided webs, and oscillating the whole entrepreneurial ecosystem into action.

How can this be achieved?

They argue, and I wholeheartedly agree, that this occurs when experienced veterans (mentors) focus not on making each individual entrepreneur better, but on making the system as a whole stronger. Mentors must be open and willing to (a) connect with people beyond only those with the right “credentials” and (b) focus on the development of “web-like” interconnectivity to other mentors and entrepreneurs.

There are 5 critical behaviors mentors need to follow in order to achieve this:

1. Take the unknown meetings with ambiguous agendas.

Yes, I do this, but will counter that while I’m a big believer in serendipity it can sometimes prove frustrating and one does have to balance the number of such meetings versus those with specific business agendas.

2. Follow the law of three introductions

I like this. I’m always looking for connections across my network and love watching synapses occur when like minds meet.

3. Be constructive – and critical

Indeed. Enough said.

4. If you’re a spider, show up!

I agree that corporate execs should be more prepared to mentor.

5. Start your own web

Looking back 15 years – it was the best thing I ever did!

As you may know I’ve been a big fan if curation for a number of years (see the 2009 Seggr Report) and the rise of curation sites such as Pinterest, Snip.It and Fab.com are validation that this is a growing area.

I particularly agree with David King’s point (as highlighted by Elad) that structured curation is not only creating a major point of differentiation for Pinterest et al, but is also blocking the big short formers like Facebook from swallowing their curations.

Elad titles his post How Pinterest Will Transform the Web in 2012: Social Content Curation As The Next Big Thing and he may well be right. But I’d like to posit that the really, really interesting area is one step beyond social curation. Social media for social’s sake is fast becoming passé. Social media needs to find a purpose and do so fast. So here is my prediction: goal-oriented curation is the killer app for social media.

In some respects Pinterest is a precursor to goal-oriented curation, but I’d argue that is does not go far enough. Just over the horizon sites like StyleSays are pointing the way.

StyleSays sees itself as “Pinterest for fashion and beauty products”. A user gets to save items into wish lists from any online store and then share those with friends who they trust and ultimately influence, in much the same way they would do when out shopping together in the bricks and mortar retail environment.

But let’s go one step further. I believe a really interesting application of goal-oriented curation awaits within the health and wellness arena. I can see how a well crafted site could both curate and influence positive behavioural change. A “Pinterest for health and wellness” may just be the next big thing!

Asher Moses has written a wonderfully inspirational piece in the Sydney Morning Herald regarding the rise and rise of Australian entrepreneurial talent. In it he explores how well some of the Internet-focused startups born in Australia are doing in sourcing Silicon Valley venture capital.

It is a great story and touches on much of my experience over the past 15 years. Australia and, closer to home – Sydney, has an incredible wealth of entrepreneurs. But in Asher’s story there is also a hint at the dark side. Let me paint the picture in three ways:

1. Financial arrogance

While I was living in Silicon Valley I assisted a startup to raise its first round of funding from a tier one VC firm, in two weeks and right in the middle of the GFC. Fast forward to today and as Asher has eruditely pointed out, tier one VC’s from Sandhill Road are currently falling over themselves to get the attention of Australia web startups.

Against this backdrop, picture me meeting with a senior executive at one of Australia’s most successful investment banks in the past fortnight. In that meeting I was told how incredibly hard it is to find funding for technology businesses, how no-one is investing in this space in Australia and blah blah. Can you see the disconnect here?

I personally believe Australian ‘investors’ have a heightened level of financial arrogance driven by an absolute ignorance of technology and also tainted in their financial risk profiling by resource-based investing (mining etc).

As long as this position remains I can fully understand why Australian entrepreneurs are US-centric. For Australia though this amounts to a major loss as we are not only losing talent in droves, but also access to ROI as our entrepreneurs grow great businesses with other people’s money!

2. Technological bias

For as long as I can remember Australian government granting schemes and venture firms have had a bias against Internet-related companies. They have preferred to back biotech businesses and other science-heavy companies that are notoriously hard to scale globally and which usually have a hard time getting international attention due to the tyranny of distance.

It is heartening to see this position starting to shift and that web-focused ventures are in fact now getting more access to schemes like Commercialisation Australia.

3. Web-centrism

While I am ecstatic about Australia’s well deserved recognition (finally) for great entrepreneurial talent, I am somewhat concerned that we get seen as only producing web-centric talent and intellectual property.

The Australian Federal government pours some $9.8 billion into public research and there is incredible technology floating around within the countries 43 universities and even more public research institutes (by contrast the US only has 41 universities). However, most of this never sees the light of day. It gets locked up in over-protective tech transfer quagmires and/or stuck in the valley of death between research proof of principle and commercial proof of concept due to a massive lack of funding for this gap.

In contrast, in the UK companies like Imperial Innovations and the IP Group, and Allied Minds in the US, are absolutely going gangbusters building businesses around research intensive technologies and assisting IP through the valley of death.

Australia desperately needs a similar business and it is on my to do list for 2012 to see that one forms. We need to not only continue to support our web-centric entrepreneurs, but also inspire generations of Australians to become tech entrepreneurs in areas that can have major global impact such as energy and health!

But it’s not all a numbers game. According to Robert Behunin, their VP of Commercialization & Regional Development, their focus is “fewer, deeper“.

Full-scale commercialisation efforts at USU may result in fewer companies spun-off from university- developed technologies, but those companies to come out of USU have industry support, by way of partnerships, and capital raised.

He says they seek good science and good solutions that have a relevant place in the market. It’s a program in which everybody wins…

They are currently pursuing close to 60 active commercialisation projects and have a pipeline of 40 earlier stage projects.

Very impressive!

The key take out for me is that they are focused. Rather than working on a myriad of low impact activities in a process heavy, reactively-driven way, they are focused on fewer, higher impact projects that can link them much closer together with the demands of industry in a symbiotic partnership from which all players can create and extract maximum value.

Professor Sir Peter Gluckman, the Chief Science Advisor to the New Zealand Prime Minister, gave a talk on Monday, 5th December titled Innovation through science: the pathway to economic prosperity–a conversation with Auckland.

Much of what he has to say about Auckland could very easily be transposed and repeated largely and boldly in capital letters about Sydney.

His talk is about innovation, of the science and knowledge and based variety,  and how it can be used to boost the economy of a particular city or region through the creation of a well-developed ecosystem.

He defines innovation as being about using knowledge, research and experimental data to generate a product or service which has impact, generally by way of producing something to sell.

He points out that there are two myths that need to be overcome when discussing and developing a thorough understanding of innovation.

The first myth is that innovation is achieved by individuals working as backyard inventors. He rightly points out that the bulk of innovation emanates from multidisciplinary interactions. The reason for this is that innovation is first and foremost about doing things differently and as such requires a major shift from reductionist linear thinking. Such shifts mostly take place when disciplinary boundaries are crossed.

He points out that one of the attractions of big science projects is that they can become the nucleus and focal point for disparate disciplines to work together, leading to great new ideas. He uses the World Wide Web and wireless broadband as examples of incredible innovations that came out of such big science projects.

The second myth is that innovation takes place within a linear process moving in an orderly fashion from basic research to applied research to development to sales that is predictable in direction and time and readily divisible into these four categories. He very correctly points out that in science-based innovation, at least half the products that are developed and sold originate in research in an area of activity well away from that that started it.

He points out that science-based innovation requires at least two major components–firstly a sufficiency of ideas flow and secondly an ecosystem that’s allows the market and scientist to get close together. Statistically, he states that the Israelis believe that they need to evaluate at least 100 ideas that are thought to be of value in order to see one that actually justifies investment. As he says, this gives you an idea of the ecosystem we have to build.

And this is where we can start transposing because he points out that the Israelis don’t have any more researchers than New Zealand, just a better linked up system. The same can be said about Australia.

There are, of course, other components required to create a complete innovation ecosystem, as he points out these include access to capital, to professional expertise in capital raising, in IP management, experts in dealing with regulatory affairs and skills in managing an innovation company–as these are markedly different to the skills required to run a property investment company or, equally relevant to the Australian context, a mining, professional services or agricultural company.

He pauses for a moment to reflect on how New Zealand came to be in the position that it is in. He feels that their failure to move as far as other small countries in developing a knowledge economy is  partly a function of their cultural history. Australia has been called the lucky country and he could very well have been speaking directly about this country, as opposed to New Zealand, when he states: we have been a lucky country, able to live off of farming. Of course, in Australia we would add mining to this picture.

He feels that the lack of a sense of crisis and urgency led to an undervaluation of the role of intellectual activity and science, and contrasts this to countries like Israel and Singapore where a real sense of crisis led them to invest heavily in knowledge and science and science-based innovation. They had to use the only natural resource they really had–the combined intellectual horsepower of their well-educated populations.

We do not yet have a sense of acute crisis but things are starting to change. We cannot get rich by carrying on doing what we do now, and yet there are enormous demands for a better social system, for higher wages, for a cleaner environment. Clearly we have to be richer to achieve these things. And what is our unexploited asset–the very asset other small countries have recognised–we have a good education system and we have clever people, we have a stable society, we are corruption free–we are good place from which to make new knowledge, protect it, exploit it and export it. Even if we were in better shape than we are, there is another reason to invest more in the knowledge economy–we need to diversify, since diversified economies are more robust.

Ditto Australia.

He repeatedly used the term ecosystem in his talk. He did this intentionally. In Australia, as in his country, they have a habit of believing in single interventions rather than integrated systemwide approaches.  He notes that in every country that they looked at as a potential comparator and which has done well, that country has both recognised and acted on multiple points across the whole system simultaneously.

This is a point I have repeatedly made about Australia as well. We have had some great programs over the years but these have been provided from the stance of a single intervention strategy rather than viewing the ecosystem as the complex system that it is.

MULTI-LAYERED INNOVATION ECOSYSTEMS

This part of his talk is music to my ears:

Key to all of what I have been saying is a need to have a multi-layered innovation ecosystem. It has many components. It has to have local government committed to promoting, encouraging and if necessary, part-financing an “innovation city”. It needs the development of technology parks clustering academia and entrepreneurs along with support services. It needs institutions–hospitals, universities, technical institutes–to cooperate rather than compete. It needs venture capital. It needs a commitment to work together and to attract the best and brightest to want to live in Auckland (transpose SYDNEY). We cannot leave it all to central government even though their role is critical–the evidence is clear, local government must play a role.

 We have several academic precincts and we need to work out how to integrate and use each to maximal advantage without destroying their individuality.

WHAT WILL DRIVE MORE INNOVATION?

Four things matter, according to the Israeli experts he has spoken to, in driving more innovation. These are education, basic research, a holistic approach and a risk-taking attitude.

He goes on to talk about the Israeli model for incubators that are owned jointly between investors and the local authority or between the local authority and the local university. He points out that this model is based on a high ideas flow, and aggressive culling, high levels of investment and international management and technology input from the start. New ventures are supported with loans, not grants, to encourage entrepreneurial activity – written off if the product does not make it. Auckland has to work as “Auckland Inc.” to attract more risk capital to Auckland. It is uniquely placed to create an environment for this type of innovation.

Again, ditto Sydney.

KEEPING IT LOCAL

Much like Sydney, and the rest of Australia for that matter,  Auckland suffers from a major brain drain. All too often  we/they lose great entrepreneurs and scientists to other parts of the world. Recognizing this he highlights that while it’s one thing to build knowledge-based businesses, it’s quite another to keep them locally. Essential to doing that is to create an environment that keeps the R&D function in our city.

We have to build a city and a country that really values knowledge and science and entrepreneurship. We need technology parks, we need an intertwining of researchers, in the public and private sector, we need a world-class university and a vibrant knowledge-based ecosystem.

Spot on, and ditto Sydney.

The investment needed is partly fiscal, but so much more of it is psychological and motivational. Let us do the things that enable Auckland to brand itself as a city of innovation; a smart city in a smart nation.

Well said, Sir Peter!

At one point Sydney seemed to be heading in the right direction. We had a focus on brand Sydney, but I think we’ve lost the way – let’s focus laser-like on Sydney Inc or we will soon be shown up by our southerly neighbours!

So when they announce a new partnership I take notice – big time. Lift sounds really interesting and I’m looking forward to hearing and exploring it in more detail in due course.

My main inspiration for this post, though, were the comments made by Obvious regarding their ongoing journey in crystallising out their engagement model. In my view, these terms should be adopted by all companies as their core mission statement:

It’s important never to delude ourselves into thinking that technology changes the world. People are responsible for change – technology just helps out. At Obvious, our goal is to foster systems that help people work together to improve the world.

If you aren’t improving the world, get out of the way and let those who are do their work!!!

The video is an hour long, but it contains some real nuggets of entrepreneurial wisdom.

The part that resonates most for me is when he talks about creating value, before you ask for value back. That for me is the number one rule for entrepreneurs: VALUE FIRST!

Chris continues this meme, “If you are insightful and helpful, people will gravitate to you.”

Foundation 07 // Chris Sacca from Kevin Rose on Vimeo.