Act soon or it’s all ideas, no boom

For Perth to become an innovation hub, in a global context, there will need to be a step-change from a range of stakeholders – the startup community and its funders, schools and universities, and, importantly, the state government – in order to support the structural change needed to achieve significant success.

I returned to Perth 30 months ago after living in the US and working for Dropbox and a handful of other tech firms. Since I’ve been back, it has been great to see a ramping up of interest in the startup way of business.

The local landscape is flourishing with supportive communities. Spacecubed, Unearthed, Innovation Bay, Vocus UpStart, Just Start IT, StartupWA and many others are poised to help entrepreneurs realise their ideas and dreams.

Further to this, companies all over the city, such as SEQTA & HealthEngine, are piquing the interest of big-name investors and funders.

Perth is slowly but surely expanding its innovation horizons. However, we are not doing enough to help deliver an ideas boom.

Learn from mining, oil & gas

Entrepreneur-led exploration businesses in the mining, oil and gas sector are common practice in Western Australia and, for the most part, Perth has become synonymous with these types of businesses.

It would be fantastic to see innovation startups developing that same kind of reputation beyond WA. This doesn’t mean the businesses need to be pitted against one another, but instead lessons should be taken and successes observed in order to give innovation startups the same launching ground. In reality, there are many parallels in the way resources and technology startups develop through their key stages.

Resources: Prospecting/exploration

Startups: Ideation/concept/research

The possibility that something has the potential for new value to be created from it. In the mining, oil and gas world, this is a plot of land. In startups, this is an idea that needs unearthing.

Resources: Discovery/advanced exploration

Startups: Validation/min. viable product/iteration

The testing of the potential. In mining, oil and gas, this is done by drilling, scanning and testing. For a startup, this means validating the idea, and creating a minimum viable product to validate the size and value of the opportunity to commercialise.

Resources: Development/construction

Startups: Growth/scale

Bringing on the capabilities and resources required, and gearing up and executing on growth into the national and international market, to effectively deliver the valuable commodity to the market. Traditionally, this commodity may be from the earth, but in the tech world this is an extraordinary piece of design, an innovation, or a digital product or service.

Resources: Operation/production

Startup: Establish/realise

The length of operational life is equal to the practicality and quality of the entity. For instance, the length of time a mine is in production depends on the viability, amount and quality of its output. For a startup, the ability to scale, and the competitive advantage to continue to create value are crucial.

Differences

One of the key differences between mining, oil and gas businesses versus innovation-led startups is that innovation does not require any land assets or tenements to be held. Subsequently, startups are much more portable and susceptible to market forces (funding, tax, incentives, access to key skills, reduced costs, etc.). These forces ultimately drive decisions on things such as the primary location for staff, R&D investment, as well as where to launch new offices due to expansion.

For WA, in particular, while mining was largely undertaken on our terms, innovation has strong global competition.

Historically, federally and state governments have taken the view that if a company wants to develop operations in mining, oil and gas in Australia it can do so on the terms set by the government. Startups are different, and if we use the same approach, we risk leaving WA far behind the rest of the innovation world.

Government investment

There are three things we can do. However, they will require assistance from the state government in order to help Perth to lead the pack in a very competitive global

innovation race.

 • We need to keep local startup head offices based in Perth

This is the hardest to do, as it has many variables. However, from the conversations I have had, it’s not just funding that’s a problem, it’s not a shortage of office space (this now in oversupply) and it’s not from external pressure on costs. Perth’s greatest problem in this regard compared with other, competing locations is the lack of talent, applicable experience, and industry connections required to scale into a global company from Perth.

• We need to attract key global innovation startups to locate their Australasian hub in Perth

When a large late-stage startup moves into our region, this is what typically happens. They arrive with a landing team of six to 12 experienced staff that requires advisory services, offices, visas, housing, schooling, and the like. Shortly after the business has become established it normally expands, hiring anywhere from 12 to hundreds of staff to be trained, which lifts the skill set of local employees and bridges the local knowledge gap.

Perth is well positioned to be a prime location for Asia-Pacific office hubs given our proximity and stability within Asia and the Indian Ocean Rim.

However we have forgotten to communicate Perth’s value proposition or assist companies through the selection and inbound assistance needed to spin up local infrastructure.

WA needs a state economic development plan, with appropriate allocation in the budget to undertake research, marketing, and potential government ‘assistance’. This will ensure that we are competitive and successful against other similar locations in the Asia-Pacific.

The government can also assist in refocusing the significant private sector advisory experience from the mining boom to needs of the potential ideas boom.

• We need to attract key startups’ skill sets to relocate to Perth

While you would imagine that, with the end of the mining boom, large numbers of engineers are available for startups, unfortunately the experiences, while similar, are not the same.

Perth has huge experience gaps in areas such as product management, global platform architecture, integrations and marketplace, online user community, software as a service sales, large market experience, and ultra-rapid growth.

One answer is to get our children ready for these jobs of the future. Between now and then we could start promoting, assisting and drawing in the best startup individuals to spend six months on a ‘workation’, or entice them to permanently relocate to Perth as home. 

A state economic development plan and appropriate allocation in the budget is required in order to coordinate a local business effort. The purpose of this is to boost the marketing of Perth to meet the needs of our startups.

If we don’t act soon, we may have all the ideas but no boom.

Make no mistake, the ‘ideas boom’ is a global competition to attract and retain talented companies and their people. It’s time for the WA government to take its place at the table if it wants to stop the innovation train from missing Perth and heading straight to places like Sydney, Melbourne, New Zealand or Singapore.

As of today, other places are doing a better job at fighting for the long-term benefits of their local economies, adding to their key exports, increasing tax revenue, helping current industries become more productive, securing more jobs for the future and, ultimately, improving their children’s way of life.

Why should Perth be any different?