I was at a meeting last night with a number of senior people in our ICT industry. One of the discussion threads was what aspirational goals should we have as industry.
Buoyed by the broadband discussion last year I think we’ve seen that you can actually change things if you get coordinated.
Some of the general themes we’d like as an industry would be around
- Encouraging more people into the industry
- Certification programs
But what would be some specific and measurable things we could achieve if we worked together?
Here are some that I’ve been thinking of.
- Establishment of an ICT procurement ombudsman, so that procurement issues can be raised without the vendor being penalized in the market.
- A work visa program between New Zealand and Silicon Valley so that we can send our talented people up to work there for a few years and bring experts down here tightening the relationship between ourselves and the center of the tech universe.
- R&D tax credits limits lifted if you are exporting products developed from that R&D.
- The industry supporting Government initiatives on Online Identity Management for individuals and businesses facilitating electronic commerce. We could lead the world here.
What do you think? What else could/should we do?Ponoko makes Wired
The Jeffrey Wegesin furniture maker is our UI wiz at Xero. Cool!
Nice one Ponoko.Ezidoesit
Frequent commenter Dermott has just gone public with his new task management product ezidoesit.
Great to see another slick looking software product come out of New Zealand.Ponoko makes the New York Times
Congrats Dave5 and Derek.Picking a market
Greetings from Timaru. Been a busy travel week so far. Sydney Monday, Wellington Tuesday morning, Hamilton Tuesday afternoon, Dunedin Tuesday night for a breakfast session this morning and NZTE Beaachheads meeting.Â Now in Timaru for the National Chambers of Commerce Conference.
I haven’t done many beachheads meeting this year as I have to focus on my day job but I was really excited to see a number of great companies from Otago today.Â All had fantastic, passionate and credible founders.
A couple of themes came through.Â The companies had lots of options and were jumping around their markets based on opportunities - chasing cashflow. The beachheads presentations are probably one of the few times they get a chance to present and have external people look hard at their business.
It was obvious, to them as well, that they needed to pick one of those market opportunities and put their heads down and go for it.
Another theme was getting ready for capital.Â Most companies should be looking at putting in place at least a year of funding so they have the time get their business to the next level.
I was excited to see some great unpolished diamonds.Â With aÂ bit of coaching they have the capability to create significant businesses.Refreshingly non-PC
In Sydney for the day I immediately saw 3 examples of how much more aggressive things are in Australia. Business is much more direct.
- Coming up to the election the TV adverts pull no punches. I look to the carpet when they come on such are our New Zealand sensitivities.
- The scheme proposed for Boy Racers. Strike 1 your car is impounded for 3 months. Strike 2 your car is put forward for crash testing and put on YouTube. Brilliant.
- Front of the business section in ‘The Australian’, they bag rivals AFR for not covering the proposed Rio Tinto merger in detail. “Unrivalled coverage of Australia’s Mega-Merger”
I still remember Al Munro at CeBit a couple of years ago saying. There is no New Zealand word like ‘un-australian’. It’s a different speed over here.DOC huts in London?
Great post from Dave5.
I’ll raise that at the next Beachheads meeting.Â Excellent!PlanHQ in Canada
I’m really proud of Tim and the PlanHQ team.
Back in January I posted about getting to the big events. Tim committed to last months Demo conference and made a real splash. While he was there he was active in making things happen. One example of that is this interview which aired on Canadian TV a couple of nights ago.
PlanHQ is such a small investment. A few 100 grand that has funded a team of 7 people to build an awesome bit of software that is getting international attention. We could do hundreds of these from New Zealand. And with a bit more investment do even more significant applications.
I hope others see Tim as an inspiration. PlanHQ is a great example of the weightless economy. Tim has built a great team, is out there doing it and having a lot of fun.On a world stage
I’ve been really proud to follow two excellent companies from Wellington start their global journey over the past few weeks.
I’m involved with PlanHQ and been enjoying getting the daily reports back from Tim. He’s just presented at the prestigious DEMO conference and I think done us all proud.
I’ve been watching Tim mature over the last six months as a technology leader and this high pressure 6 minute presentation on the global stage is world class. Tim and the PlanHQ team having been working hard in New Zealand with several hundred early customers getting the product ready for a full international launch. They mapped out a strategy to get global exposure and completely nailed it.
Great coverage on the influential Techcrunch and ZDNet.
Ponoko is another great Wellington example, making the TechCrunch 40.
These are companies funded with small amounts of investment and sweat equity from talented and passionate founders. This is so repeatable. Tim and Dave5 are the next generation of New Zealand software entrepreneurs and it will be fun to watch them succeed with their ventures.The national business case for Broadband
The New Zealand Institute has just published a draft of their latest report.
As mentioned I’ve been involved with this and believe it is an important document for a number of reasons.
- It readily determines national economic benefits of over $2.7b annually
- For the first time that I’ve heard, it makes the point that high speed access - to connect New Zealand to the rest of the world from key locations - is more important than broad penetration across the whole country.
- It points out there is a significant cost of inaction
Congratulations to the New Zealand Institute team on pulling this together and doing the heavy lifting required to move the debate forward.
My own thoughts have evolved publishing my paper ‘Securing our Digital Trade Routes‘ in February. My purpose was to start a discussion on whether there was a business case for the people of NZ owning the base infrastructure - because no company could build a business case to do it.
As I’ve learned more and listened to the debate, my position has evolved to break the argument into two steps.
- I believe that Infrastructure investment is a completely different business model to retail telecommunications services. Ideally the market itself would separate. Infrastructure investment should provide a safe and low yielding return - this type of investment product is even more so in demand as the ‘flight to quality’ occurs following the fallout of the finance companies. Retail telecommunications suit share market funding where companies can quickly raise funds and compete with innovative services and marketing. I truly believe that everyone wins under this separation, especially the existing carriers.
- Once separated, the decision of whether the state should invest at the infrastructure level becomes less emotional. I believe they should invest for a number of reasons.
- It is a good safe investment
- There is a lack of significant sized local investments they could make with the significant kiwi saver money that is accumulating
- A broadband infrastructure investment has substantial national economic benefits in addition to the return on capital
- It can drive the Internet in New Zealand to a cost plus, rather than revenue maximizing, model
The timing of this report is excellent considering the upcoming Digital Strategy 2.0 conference in late November.
David Cunliffe has a press conference at 9:00 on separation. Be interesting to see which way it will go.Software Research and Development
I enjoyed speaking at the launch of the Auckland Centre for Software Innovation (CSI) Extenda program tonight. Extenda provides ICT companies with the understanding and tools needed to exploit Research and Development (R&D) activities in their business.
There was a good crowd in attendance and nice to catch up with friends and colleagues across the industry.
I started off comparing R&D for software companies against the inputs that traditional manufacturing companies require to create goods and services. Traditional companies require plant, materials as well as R&D. In software we donâ€™t really require significant investment in plant or materials. The raw materials for software is R&D. In software:
R&D = Talented People + Time
Another contrast is the relationship between costs and revenue. In traditional businesses:
costs + a reasonable margin = revenue
In software there is the potential for almost no relationship between cost and revenue. For example, is there is no relationship between what the Microsoft Office team costs compared to the worldwide revenues they create.
Investing in R&D provides the opportunity to create this desirable dichotomy.
In New Zealand we seldom give ourselves time to do R&D. You cannot separate R&D from investment.
This lack of investment means that we do not invest in R&D to create digital assets, rather we fall back to capital-light service type businesses where our valuable talent is deployed to simply charge time. This is an inefficient use of our most precious natural resource.
The bottom line is that as an industry we are inexperienced in R&D. The Extenda program provides an academic framework and peer discussion opportunity to accelerate your R&D program. There are only 10 slots and at least 4 have gone so register quickly if you are interested.
A bonus of my evening was meeting Falafulu Fisi - a frequent commenter on my blog who just astounds me and the Xero team with the depth of his knowledge. Great to meet you Falafulu and I hope we see you in Wellington soon. I hope you start your own blog because we all enjoy hearing what you have to say.
Good to catch up with Mark and Owen on the way home doing the late night Auckland to Wellington shuffle. (Fortunately Iâ€™d already learned not to book that last Qantas flight.)Australia needs Fibre to the Home
(From Simon) An academic in Australia goes a big step further …
Australia needs fibre to the home
By Dr Nicholas Beaumont
June 13, 2007.
Australia faces an important decision: should we build a national optical fibre network?
There are four questions:
*Is the demand real or just blue sky?
*Should we choose fibre to the node (FTTN) or fibre to the home (FTTH)?
*Who should control the network?
*How much will it cost, who will pay for it, and what should users pay?
The demand is probably real.
The Internet has been more quickly accepted than any other technology. There is huge demand for technology that enhances personal contact (the mobile phone and SMS). Emails have been augmented by instant messaging, photos and videos (youtube.com), videophone telephony will become the norm. The Internet is a universal encyclopaedia and convenient way of transacting.
Business is moving advertising, transactions and relationships from paper to the Internet. E-education and e-health (eg monitoring people in their own homes, instead of their occupying expensive hospital beds) are emerging applications. Telephony should be moved from Telstra’s copper network to optical fibre, saving appreciable network maintenance costs.
Tomorrow’s child may enjoy a birthday party in a room of which one wall shows life-sized three-dimensional images of besotted grandparents projected from another hemisphere. In 2015, households will use the Internet to tune in to any one of the world’s thousands of television stations and wonder at a world in which most people could receive only four channels.
We should choose FTTH. The FTTN model requires Telstra’s copper to join homes to the node. Aside from technical limitations, this would give Telstra an effective monopoly. Prices would remind remain high and innovative uses would be stifled.
A national network should be treated as infrastructure and controlled by a body different from, and independent of entrepreneurs using the network to provide products (phones, PDAs, home security systems, software) services (VOIP, downloading films, Internet access, TV, multi-person games, video conferencing, , e-education etc).
The cost of a national FTTH network might approximate $A20 billion. The Government should pay for it and charge little or nothing for its use. In particular, national phone calls should be free. Public utility will be maximised if (as is the case for education and to some extent for roads and health) we pay for it through taxes rather than for use. Put this figure in perspective by noting that in FY2005-6 Telstra’s ordinary operations reaped $25 billion or about $1,200 from every man woman and child in Australia. Every year the Federal Government alone allocates about $3-4 billion to roads.
A FTTH network would cost serious money to build, little to manage and almost nothing to use. Social and business utility will be maximised if every residents’ and business premise was connected. There should be a modest connection fees and a modest annual fee covering maintenance and administration.
Consider the social benefit of elderly and immobile people being able to telephone their friends, participate in chat groups, see real-time images of their grandchildren, and access education and health services for free. Society as a whole would be poorer if less well off households were excluded.
- Dr Nicholas Beaumont, Department of Management, Faculty of Business and Economics, Monash University
I think this is ‘a bridge too far’ and free is not necessary as business and consumers are, I believe, happy to pay for the Internet. But we want tomorrows Internet, not yesterdays. We know that all developed countries are looking at this issue and my fear is that we get left behind. Wouldn’t it be great to lead the world in this technical and social policy, exploiting our small size to get coordinated.
I presented with David Skilling in Napier last week. It was disturbing that by any measure New Zealand is disengaging from the Global Economy. A key statistic was the amount of Foreign Direct Investment from New Zealand which really nailed our inward focus.Capital Gains Tax on Investment Property
On the radio on the way into work this morning there was the ongoing discussion of interest rates to control housing that was in turn pushing up the Exchange Rate.
David Cunliffe (with his immigration hat on) was being hassled about immigrants causing the demand. Classic New Zealand logic. Lets stop immigration and that will solve our problems. Pah. We are so short of skills.
Then Barry Curtis said that raw land prices were to blame and that the answer is a new town where the land prices were state controlled. Hmmmm.
The real problem is New Zealands systemic investment in property. Rather than rearrange the deckchairs, for New Zealand to grow, we need to encourage investment in businesses. New Zealanders need to be motivated to grow personal wealth by the value of their businesses or dividend returns. We need to move away from this millstone of non productive investment into investment that grows our national cake.
The Reserve Bank really only has interest rates to play with. We need to think about other mechanisms. The taboo of a capital gains tax on investment property is the unspoken spectre lurking just behind the discussion, but it’s going to take something like that. Maybe that is not the answer but right now the discussion can’t even be had.
Politically unpalletable but lets get it up for discussion. If it’s raised as potentially cross party policy then the discussion can at least be had.
Time for more leadership please.Lunch with Claire
Senior Microsoft UK exec and good buddy Claire O’Halloran is down in New Zealand spending time with Xero next week. We have a tight schedule but would like to invite other New Zealand software companies close to working in the UK to come to a brown bag lunch on Friday to hear about partnering with Microsoft UK and the programs they have in place for international companies.
Places will be limited. Priority given to those closest to market. 12-1 sharp. Please contact email@example.com if you would like to come along.
Claire with warm up speaker in Hanoi last week.
Some background on Claire:
Claire has spent thirteen years in Sales, Marketing and Business Development in IT and Telecoms and has a substantial network encompassing public sector, private sector, media and academia.
For the past two and a half years at Microsoft, she has applied her energy and passion to creating a vision for growth for the software developer and independent software vendor (ISV) channel â€“ which has resulted in numerous best practices and awards.
With a remit to create a strategy for Partnering for the Future and â€˜next generationâ€™ partnerships, Claire has pioneered initiatives around off-shore development helping UK companies partner with others in SE Asia, gaining sponsorship from UK Trade and Investment and foreign governments. She is a spokesperson for Microsoft UK on Globalisation.
Her work with the Emerging Business Team, which actively partners with the Venture Capital community, focuses on helping â€˜high potentialâ€™ start-up and young companies from the UK and Overseas. Driving the Cross Border strategy, partnerships with Enterprise Ireland and Investment New Zealand have seen incremental business for Microsoft UK and overseas ISV partners.Thanks Wales!
Wow what a week. Great result at the end, but the real benefit was being able to spend time in market and start building relationships that are going to be so valuable over the next few years.
The week has been stimulating but great fun. I’ve laughed hard all week. The Welsh people are so like New Zealanders and I felt a real sense of sadness leaving new found friends.
Thank you Claire, Eleanor, Ian, Jonothan (red socks), Jackie, Vicky, Natalie, Steve, Mike, Andy, Meurig, Gareth, Robert, Tom, Gary, Darryn, David, Mark (I hope I haven’t forgotten anyone). I especially enjoyed hanging out with my South African Eyeslices buddies - Kerryne and Michael who I shall continue to be a WOMA for.
They are not selling eye treatment. It’s 5 minutes of me time. A better gift you could not give.
Each of the finalist companies had a fantastic program set up for them during the week. That takes a lot of work to organise. Thank you IBW. The companies that came to meet us sent senior staff and were very generous with their time and advice. Thank you. It was especially cool that each of the finalists found significant opportunities that will work for them.
My final impressions of Wales are these:
- How Wales is acting on a vertically integrated and coordinated strategy for economic development to transform themselves.
- Like New Zealand, the depth of relationships in Wales was notable. That provides competitive advantage for smaller countries.
- Their common sense approach to inward investment, creating a win-win for companies wanting to use Wales as their European launch pad.
- The level of sophistication of thought we saw right across the board. From the practical, pragmatic (and colorful) academics at Newport Business School - to the Technium incubators.
- The importance of infrastructure investment.
- How Rugby is an important cultural link between Wales and NZ. Xavier Rush is Cardiff Blue’s captain so NZ’ers are have good profile in Wales.
- Wine street in Swansea. An anthropologists dream.
Bottom Line. Wales has had to reinvent itself over the last 20 years. The Welsh Assembly Government has put strategies in place and is leading a transformation. It’s been a good week for Xero, but also a big week for thinking about what we have to do in New Zealand. The status quo means we are drifting backwards. Wales provides a very relevant case study for New Zealand, and a natural partner to help us Go Global.
For other New Zealand companies I would encourage you to engage with International Business Wales. This has been a very, very rewarding week for me.What is a Technium?
The Technium network is 9 themed innovation centers funded by the Welsh Assembly. They provide a starting point for new businesses.
A Technium is like a next generation business incubator.
My impressions of incubators I’ve seen to date are that they are fringe and for primarily high tech and risky new businesses (though fashion incubators seem to be going well in NZ).
The Welsh spin is that these types of new businesses are the norm rather than the exception. The Techniums bring incubation into the mainstream.
In New Zealand, when you start a small business you pretty much do it all yourself. Find some property, sign a scary 3-6 year lease (without any real feel as to what your company will look like in 12 months), get broadband in the building, buy equipment, build a presentation and meeting room, and try to find some people who have done it before to tap for advice. It is hard.
The Techniums are distributed around Wales, and provide a unified and integrated approach to assisting new businesses. They provide focus for growth services like Intellectual Property, Funding, Marketing, Recruitment and so on. They make it very easy for any new business to just on with their core operations. There have a program of moving you through as you grow and finally graduate.
Graduating tenants of the Swansea Technium have got coordinated and are building their own facility close by so they can stay in the area.
I’ve learnt a lot on this trip. For Xero market entry of course, but also seeing how a country like Wales has taken a coordinated and integrated approach to economic development. New Zealand can definitely learn a lot from Wales.The Budget: Good I think
I’m normally more blue leaning these days but happy to take a chocolate out of every box and be socialist when it suits - especially a digital one.
I have to admit that my first reaction to Cullen’s Budget is positive.
- R&D tax credits are good. (This will need policing). I would have liked an export component in here as well so that we are not just focussed to playing with things, but actually generating export revenue. Still, this is a good step.
- Company Tax Rate drop to 30%. Good, though tightly related to the next point.
- Compulsory Super Scheme. Very good. Even though the net effect of the tax cut is largely negated by employee savings contributions I think this is very good for business as savings lead to investment. Businesses shouldn’t thrive or die on a tax rate change. But creating a culture of savings is something we just need as a country. Some will say that it is an additional cost on business but I think that salary levels will come to take into account these contributions and they will net out.
It really irks me when they say that Tax cuts cost money. If you decrease tax rates that may lead to more investment and potentially the net tax take may actually increase. It does not make sense that changing Tax policy has single direct effect on the total tax take.
In Export Year I would have liked to have seen more focus on exporting. We are too inwardly focussed as a country.
The new blue team under John Key has had good running for the last few months, but there is a lot for business to like under this so it will be interesting to see how they respond.
In summary, a positive step forward, but I’d like to see more focus on growing the size of the pie, rather than how it is sliced up.
What do you think?Lo-fi digital stories
Crazy busy week, sorry for lack of posts.
I saw the efforts of our team and other companies in producing short, low fidelity, animations to tell a story at the Gold Awards.
There is a real art to this. Visuals helps cement communications. 42 Below uses this with humor for viral marketing. The same production skills can create stories, educate, lobby, entertain and mobilize.
When we think of what opportunities BroadBand and the Internet provide here is another great example where design firms from over New Zealand can create digital content for international consumption and provide exported services.
There are low barriers to acquire the skills and equipment to play in this space. It’s all about creativity.
Love to see more examples: Post links into comments.PlanHQ Review
It’s a brilliant bit of software. Intuitive, very well designed, and comprehensive without being overwhelming.
PlanHQ is an example of what I call the ‘0 to 60′ model. A relatively small amount of money thrown at a small amount of very smart people. Starting from 0, designing a product, building a brand, a team and getting to first revenues.
As I’ve been flat out with Xero I haven’t spent a lot of time on PlanHQ since we envisaged the concept so it’s a real credit to the team to have launched, get first customers and good reviews.
Like Xero, PlanHQ is a Software as a Service (SaaS) product. Based on customer feedback it can be continuously improved. PlanHQ has no country specific features so is global from day one. All marketing is web and community based (budget = $0), so reviews are key to the strategy. There is no limit to how big/fast it can go. It’s going to be fascinating to see if/when it takes off.
PlanHQ is an example of a ‘new economy’ company. A few young, passionate and talented people, with a relatively small amount of capital, building a business designed to immediately earn export revenue.
These businesses are the future of New Zealand. A small change of R&D treatment, a small amount of investment, and we could have thousands of these little businesses exploiting global niches.
Congrats Tim, Nat, Koz, Ben, Oliver and Nik.Vincent has been thinking