Let’s talk… success
“What is the biggest growth barrier Australian startups are facing?” That’s the question Dynamic Business put to more than 20 entrepreneurs and industry experts, this week, for our exclusive “Let’s Talk…”, exploring success (and barriers to achieving it).
Some commentators pointed to environmental factors such as a scarcity of local capital, customers and talent as well as a shortage of women in STEM, recent visa changes and Australia’s remoteness from global markets. Others pointed to problems within the founding team – these included not having a clear business plan, failing to think global, an inadequate focus on company culture, relying on conventional growth tactics, neglecting to learn new tricks, failing to consider market fit when fine-tuning the product and buying into the perception that Australian startups are held back.
Read on for further insights, advice and some hard-hitting truths from this week’s line-up…
“What is the biggest growth barrier Australian startups are facing?”
Alex McCauley, CEO, StartupAUS: “Access to global talent is the biggest barrier to growth facing Australian startups currently. There’s whole series of new job types being born in the digital economy, and Australian companies need to be able to tap into the international talent pool. As it is, startups got left behind in the recent visa changes, and we need to do a fair bit of work to help our best young companies access the world-class people they need to become globally successful.”
Terry Gold, Managing Director, Techstars: “To my mind, the biggest barrier Australian startup founders are facing is one that has long been a challenge; namely, reaching customers and partners in international markets. When it comes to growing a tech startup, your most dangerous competitor is as likely to be in Berlin as Brisbane. Consequently, to truly reach your growth potential, you need to be able to scale and win quickly abroad, not just at home.
“As an example, just look at the taxi and transportation app market where several high-profile Australian transportation startups came into direct competition with Uber here, and really struggled to keep growing.
“Australia has some great startups that truly have the potential to be global companies. That’s why connecting local startups to global networks is so important. Accelerators like Muru-D, Startmate, and Techstars are playing a really important role in helping Australian startups take the leap to global markets.”
Colin McNeil, Director (M&A), EY & Board Member, Heads Over Heels: “Commonly and rather unsurprisingly, we find a barrier to growth for Australian start-ups is accessing the capital to seed concepts, fund commercialisation and support expansion. Despite an increase in VC funds and a growing pool of private investors, we find start-ups need support in being able to both open doors to funders well as in articulating and presenting the opportunity to get them ‘on the hook’.
“The Australian market is still maturing for early-stage investing and the level of on-the-ground support (for both entrepreneurs and would-be investors) does not meet the demand. Start-ups should not be afraid to leverage their networks to unlock support and introductions to investors. Don’t be afraid to ask for advice and mentorship from those that have experience which could prove invaluable in your own growth journey.”
Rafael Niesten, Co-founder, Bricks + Agent: “Two key factors in the growth of Aussie startups: the size as well as the amount of capital available in our market. That’s also compounded by an oft, insular viewpoint and small-minded thinking in terms of how we spend or money. Australia is a massive land with very few people, which in turn means much lower income possibilities compared to other countries with hundreds of millions or billions of people.
“Our pond is small and geographically very spread out. All this makes capital much harder to come by as investors are willing to invest amounts commensurate with the size of our market. Thinking global is admirable but not an easy thing to do, so reach for the stars by all means but bear in mind you only have access to a few of them.”
Anny Havercroft, Head of Brand, Yahoo7: “The Australian startup scene is thriving given the increase in government-backed incubator support initiatives, accelerator programs available and new tax incentives for early stage investors. However, the biggest barrier to growth for startups in Australia is the lack of understanding on how to successfully market or ‘growth-hack’ their product or service. In fact, recent research published by Startup Muster indicates that marketing is the top skill founders wished they had in their founding team.
“The ability to position and drive demand for a product or service is a matter of survival for any business starting out. Talented startup marketers (or growth-hackers) are as rare as unicorns. They are resourceful in taking advantage of low or no cost opportunities while constantly testing new channels or formats to generate better return. But for those who don’t have this skill, it’s about finding the right partner or guide.”
“Executing a successful marketing campaign is an early indicator of scalability that potential investors and venture capitalists find highly desirable.”
Jonathan Englert, Founder, AndironGroup: “This is going to sound funny coming from someone in communications but not only is the perception of Australian startups being held back wrong, it doesn’t even matter. When it comes to building a successful company, perception is critical; but when it comes to building successful communities and systems, I’m not so sure perception matters nearly as much as we often think it does.
“Business builders focus on fairly specific and narrow challenges and respond to the reality of the market. If the business builder is sufficiently motivated to build something and the market sufficiently favourable, then growth will happen no matter what, incubators, accelerators, government policy be damned. This is what I think is happening now in Australia. In sector after sector, I see Australian startups punching above their weight and visionaries putting together world-beating offerings. It’s not that every startup will be successful, it’s that if you fail here, don’t blame Australia.”
Cassandra Do Carmo, Strategist, Atomic 212º Group: “Growth barriers depend on what stage a start-up is at and how they are funded, but if I had to put it down categorically I see two barriers…
“Chasing growth before having product market fit: This one sounds like a no brainer, but if there is no need or want for your product or it doesn’t work as promised all the marketing in the world won’t allow you to grow (or your growth will be very short lived!). I’m not saying your first iteration of the product/service needs to be perfect for your initial users, but if you are going to start to scale make sure your initial users love it, would be sad to see it disappear and would recommend it to a friend.
“Having the right people to grow: Aussie start-ups need to overcome the pressure to use conventional growth tactics. Hiring an ex-corporate, or fancy marketing executive may seem like a safe bet, but chances are they will give you a set of rules to follow based on what has been successful for their cash-laden, resource heavy clients in the past. Instead, how about tapping into people who are ready to throw the rules out the window – data crunches, engineers or creatives. The people who can help you to test, learn and bring new ways of thinking to grow your start up.”
Mark Gustowski, CEO, QUT Creative Enterprise Australia: “Access to customers is always an issue for Australian startups. We don’t have the large markets of North America, Europe or Asia knocking on our door step, so most Aussie startups need to be thinking about accessing international markets almost immediately. It’s expensive and time consuming to build international channels which is why partnering is so important to help startups gain traction in larger markets.”
Will On, Co-Founder & Joint CEO, Shippit: “Talent. As a founder, I’ve moved from doing the work, to becoming a full-time recruiter and growing/running a successful business. It’s inspirational to see how Shippit has transitioned from finding it extremely challenging to hire key talent to now finding it easier to attract leaders in the industry as our employer brand and our product offering is strong. However, after reviewing 1,000+ resumes and conducting over 200 interviews, convincing mid-senior level talent to leave their high-paying corporate job to work for a startup that’s not Atlassian or Canva (both of which are informed risks) is no easy task, nor is finding technical resources where there is a technical shortage in Australia.”
Jeff McAlister, CEO, Trybooking: “All startups need to scale quickly in order to succeed. The size of the Australian market means that local startups could find themselves stuck in a middle ground in regards to size. This is a major barrier for local startups. If a US company succeeds in its local market it is going to have scale purely due to the size of its local market. On the flip side, startups in smaller countries like New Zealand or Israel cannot survive by just focussing on their local markets – this means they need to go global from day one, effectively another way to scale.”
Natalie Goldman, CEO, FlexCareers: “Funding. Australia has a limited pool of funding available for investment, and there are a growing number of start-ups seeking money. This becomes even more evident when you compare it with the US, where there is so much more funding available to startups.
“Being a small marketplace. Compared to other markets, we are very small. However, the upside to this is that testing in a small market could potentially save you $$$ in the long run.
“Distance. When dealing with overseas markets, doing business in person can be very costly, both from monterey and time perspectives. Shipping products overseas only compounds this.”
Sarah Moran, Co-founder & CEO, Girl Geek Academy: “We need more women. More women founders, more women investors, more women employees. No-one wants to work in a company that’s full of dudes – it’s a boring way to change the world. Having spent time on the ground in Silicon Valley, I can safely say that Australia’s startup ecosystem is leagues ahead in terms of gender diversity – but there’s still room for improvement.
“We need to review our education system and culture to make sure more girls are engaging in STEM subjects from primary school age, and keep them engaged and included through to graduation. We must secure more women STEM graduates should we aspire to be creating startups that build genuinely useful products for society – and not just cater to one segment of the population. Creating a world-renowned, inclusive startup ecosystem in Australia will also entice more overseas talent and money to our shores.”
Tanya Titman, Founder, Acceler8: “Aussie startups and SMEs have opposite growth barriers in some ways. Startups are great at having the confidence to think about world domination but they often need more structure around their financial planning. SMEs need to have the confidence to think in a bigger way about their ability to scale and grow. The common denominator for both is financial literacy.”
Read more here.