Every Australian startup scene suffers from Australia's heavy cyclical nature.
Look at movies. I bet it works like this - there's a single hit, then everyone goes nuts for the segment. Lots of funding gets poured in, and more hits come out (because they are well funded). But the returns aren't so good (because of the higher investment) and the funding dries up. And then all the talent goes overseas.
Hollywood can churn out lots of films, and some of them will be hits. This gives the studios more predicable returns. More importantly, they don't have crazy irrational expectations of massive returns, or nothing but flops.
A patient investor could arbitrage this. Fund lots of stuff over a number of years, and simply accept that they'll only get a big hit every now and then. But investors aren't that rational, no-one is.
I think the base of the problem you're describing is the small population base and (less so) tyranny of distance.
If you're in the US and come up with a product there are lots of options for accessing new markets fast. If you're in Japan then you have a much larger audience, captive, most of it in close proximity. Australia has low population. It's heavily concentrated in the cities, but they're a significant distance apart.
I became aware of this when I read "Barbarians at the Gate". Early on, it describes the rise of RJR Reynolds. I found it amazing that you could just get on your horse and ride on to the next city with your capital and ideas and make acquisitions and expand.
Australia could chase edge by becoming a low-tax or low-red-tape capital. But never does :)
>Australia could chase edge by becoming a low-tax or low-red-tape capital.
Although our country was founded and grew up with a "low red-tape" mentality, the last 30 years of global-scale mining boom has forever removed that possibility from our environment. Combining socialised welfare, healthcare and (finally!) decent network infrastructure with the Western selfish love of toys, there's not a chance we are ever going to return to a low-tax, low-red-tape society.
Comments
Every Australian startup scene suffers from Australia's heavy cyclical nature.
Look at movies. I bet it works like this - there's a single hit, then everyone goes nuts for the segment. Lots of funding gets poured in, and more hits come out (because they are well funded). But the returns aren't so good (because of the higher investment) and the funding dries up. And then all the talent goes overseas.
Hollywood can churn out lots of films, and some of them will be hits. This gives the studios more predicable returns. More importantly, they don't have crazy irrational expectations of massive returns, or nothing but flops.
A patient investor could arbitrage this. Fund lots of stuff over a number of years, and simply accept that they'll only get a big hit every now and then. But investors aren't that rational, no-one is.
I think the base of the problem you're describing is the small population base and (less so) tyranny of distance.
If you're in the US and come up with a product there are lots of options for accessing new markets fast. If you're in Japan then you have a much larger audience, captive, most of it in close proximity. Australia has low population. It's heavily concentrated in the cities, but they're a significant distance apart.
I became aware of this when I read "Barbarians at the Gate". Early on, it describes the rise of RJR Reynolds. I found it amazing that you could just get on your horse and ride on to the next city with your capital and ideas and make acquisitions and expand.
Australia could chase edge by becoming a low-tax or low-red-tape capital. But never does :)
>Australia could chase edge by becoming a low-tax or low-red-tape capital.
Although our country was founded and grew up with a "low red-tape" mentality, the last 30 years of global-scale mining boom has forever removed that possibility from our environment. Combining socialised welfare, healthcare and (finally!) decent network infrastructure with the Western selfish love of toys, there's not a chance we are ever going to return to a low-tax, low-red-tape society.