It’s a global race and one we cannot afford to lose – the sprint to establish viable digital startup ecosystems capable of fostering thriving technology firms that could become Australia’s Google or Tesla. The road to success, however, can be fraught with uncertainty and complexity.
With the ICT sector growing at roughly twice the rate of other industries, and ICT companies dominating lists of the world’s largest and fastest growing businesses, most developed and developing nations are investing substantial money and resources to emulate the success of Silicon Valley. Not only did it birth major players like Tesla, Facebook, Google and Apple, but Australian success stories like Upguard and BugCrowd have also chosen to relocate there.
The undeniable leader in the global start-up space with 12,700-15,600 active startups, Silicon Valley outperforms all other start-up ecosystems on funding, performance, market reach and start-up experience, according to the 2017 Global Startup Ecosystem Report released last month.
However, the report suggests Asia is gaining ground with Singapore taking over the reins for technical talent, Beijing moving up to take 4th position overall and Shanghai at number eight. Are the Asian tigers and dragons transitioning to take over the reins for start-up ecosystems?
By comparison, Australia’s highest ranking start-up ecosystem at 17 is Sydney with 1,300-2,100 active tech startups and punching above its weight on funding, talent and market reach. However it performs well below higher ranking ecosystems in North America, Europe, Israel and Singapore.
In seeking to maximise the success of our local tech start-up ecosystem, we must identify and play to our unique strengths.
Silicon Valley developed over more than six decades of investment and collaboration, starting with established industry players like Hewlett Packard and leveraging the educational and research capabilities of Stanford University and UC Berkeley.
Australia doesn’t have the luxury of 60 or even 20 years to build up successful start-up ecosystems. While recognising the positive impacts of recent policy and funding initiatives from federal and state governments, there is still much to be done to ensure our future success.
Elements for start-up success
In his book, 'The Next Step: Guiding You From Idea to Startup', serial entrepreneur Michael “Luni” Libes suggests six core components for building a successful start-up ecosystem:
- Talent – not just entrepreneurship but also design, marketing, sales, legal and more;
- Education – links to universities and other institutions to seed the ecosystem with new knowledge;
- Locations and events – where start-ups can meet and share ideas;
- Mentorship – to share insights, limit mistakes and maximise successes;
- Incubators and accelerators – to draw in talent, focus resources and speed time to market; and
- Funding – to underpin growth, enhance profitability and enable successful entrepreneurs to guide start-ups.
According to Libes, “when these six components are combined, a virtuous cycle begins wherein new entrepreneurs find the training, help and funding required to get started. They in turn help their peers and the next generations of entrepreneurs, who continue the cycle forward.”
A culture of resilience is also critical, since this often plays a determining factor in the success or failure of an organisation or ecosystem.
A technology ecosystem is not unlike a natural ecosystem – whether it’s rainforest or a coral reef – where all the ingredient elements in the ecosystem have a highly symbiotic relationship. Any disruption to any ingredient can easily upset the entire ecosystem.
In the same way, a technology ecosystem must have the right balance between start-up firms, professional services and mentoring, international linkages, funding, incubators, researchers and educators, as well as a policy framework that encourages growth and innovation.
A different style of education
In 'The Second Machine Age', the authors highlighted research undertaken by Sugata Mitra on the British Empire’s success in globalising an educational system designed to produce a “a global computer made up of people” to service “the bureaucratic administrative machine” across the Empire.
This Victorian-England style of education might be less appropriate in today’s digital economy, as it produces workforce for an administrative machine “that no longer exists”. Instead, self-directed learning and a curiosity-driven approach, such as that encouraged in Montessori schools, is perhaps more effective in stimulating creativity and innovation.
As proof, the authors cite Montessori alumni such as the founders of Google (Larry Page and Sergey Brin) and Amazon (Jeff Bezos) as well as noting that a disproportionate number of prominent innovators interviewed in a major research project also attended Montessori schools.
The next five to 10 years will increasingly see robots, learning algorithms and artificial intelligence increasingly taking over the repetitive and administrative tasks the Victorian-style of education was functionally designed to service.
Jobs of the future will instead demand greater ingenuity, creativity and resilience – an ability to think outside the box and do the things that robots currently cannot.
Today, I will be presenting in Borneo at the 'Transitioning Sarawak through Digital Economy' Conference. What will be the right ingredients for Sarawak?
Anthony Wong is President of the ACS and Chief Executive of AGW Consulting P/L, a multidisciplinary ICT, Intellectual Property Legal and Consulting Practice.