The Moxie Sessions: We don’t need no incubation: what the tech sector needs to learn from farmers

Opinion

Vaughn Davis

Rowan Simpson

Open the pages of any business magazine, or indeed any business-themed website and you’d be forgiven for thinking New Zealand is just one big high tech incubator.

Accelerate this, ice that… any day now they’ll be sending fact-finding missions from Silicon Valley to see how we do it, right?

The truth, of course, is a little more down to earth, with not just dairy, but tourism, forestry, meat, wool and quite possibly green-lipped mussel exports all making equally chunky contributions to the export pie.

But at some level, we’ve known for years that an economy based on rain, sunshine and the odd photogenic hill will only get us so far. How, then, do we turn the tech sector’s potential, media buzz and God-help-me-endless-award-ceremonies into even more money in the collective bank?

It was not without irony that the Moxie Sessions once again convened to tackle the issue at startup co-working space GridAKL. Kicking off the discussion were Lillian Grace, Victoria Crone and Rowan Simpson.  

For Figure.NZ poobah Lillian Grace, starting with an outcome rather than a technology is the way to go. “I think we need to ask ourselves what the world’s big problems are, then ask whether our tech companies are helping the world face those problems.”

Ignoring people’s real needs, Lillian says, puts the tech sector at risk of serving its own interests and no one else’s. “We’re in danger of a small group of companies and the people who work for them just creating apps for each other.” For example, she says, there is no shortage of project planning and to-do list apps – not something in hot demand in communities wondering how to feed, clothe and house themselves.

Ms Grace’s business, Figure.NZ, is an example of purpose leading to a product. Figure’s mission to make public data easily accessible and understood has led to a platform that’s now attracting commercial interest – even though this “accidental product” wasn’t the plan when the company started. 

Rowan Simpson was an early employee and shareholder at Trade Me [NZX: TME] and until recently chaired cloud point of sale platform Vend. As someone who’s been involved in many of our most successful tech companies, Rowan has strong opinions on what they need to do to make a difference. 

Controversially, as we’re meeting tonight in the heart of Auckland’s “innovation hub,” he’s not a big fan of governments focusing on innovation or tech ecosystems. “What you tend to end up with is a beautiful motorway but no cars to drive on it.”

He’s no supporter of incubators or accelerators and their emphasis on speed, either, pointing out that many of our most successful companies grew steadily, rather than spectacularly.

Coincidentally, the Deloitte “Fast 50” had just been announced, which led some of the group to ask where the awards for slow growth and sustained success are. In our focus on speed, are we rewarding the “found and flick” mentality?

For Victoria Crone, the road to tech sector success leads not down State Highway 1 but offshore to markets not traditionally tackled by New Zealand companies. While the US and Silicon Valley in particular are popular focuses for growing tech companies, she sees Asia and the Middle East as equally attractive but overlooked sources of both customers and investors. As one Moxie member pointed out, everyone in the tech community knows that NZ8 goes to SFO but hardly anyone could rattle off the flight number to Singapore, Hong Kong or Guangzhou.

As well as looking to the physical horizon, Ms Crone reiterates the common theme that for tech to really pull its economic weight, founders need to expand their financial horizons. For many, an exit at $5-10m is considered enough to buy that bach, boat and BMW … but that doesn’t do much for the sustained success of the sector, especially if the IP is sold offshore. (Not everyone agreed on this point, Rowan Simpson pointing out that plenty of founders have sold out at that level and used the funds to reinvest in other startups.)

Finally, when tech companies do succeed, she would like the media to make more of those stories, rather than focusing on plummeting share prices and burgeoning burn rates. 

Meet a real need, focus on businesses rather than ecosystems and take a long view both geographically and financially… funnily enough, when you spell it out like that it seems the tech sector could learn from the primary industries it’s meant to be replacing, or at least supplementing. 

Dairy farmers, for example, don't make gadgets for other dairy farmers* – they make protein, fat and permeate (whatever the hell that is) for the approximately seven billion hungry mouths scattered across the planet. 

Banks don’t fund forestry incubators, or market-gardening startup weekends. They back good people running businesses that look as if they’ll succeed over time.

Farmers don’t, at least typically, set up a farm with an exit strategy involving overseas investors. They take a long view, looking to improve their land over time and create something to pass on to the next generation. Produce exporters look to diverse markets too, and have done since Mother England forced them to in the 1970s.

There’s little doubt that Sir Paul Callaghan and Shaun Hendy were right: our economy does need to get off the grass. But maybe the way to do that will be by learning from the people who’ve spent the last 200 years growing it. 

Every month, The Moxie Sessions brings together a small group of business thinkers to discuss ways New Zealand can take advantage of the Internet to boost its national competitiveness. For more, see http://themoxiesessions.co.nz. This month, we returned to technology and innovation precinct Grid AKL to discuss how the tech sector could contribute more to the New Zealand economy.

Thanks to Alcatel Lucent and its ng Connect programme for their generous sponsorship that helps to make The Moxie Sessions possible.

*OK, smarty-pants, Bill Gallagher did invent the electric fence that one time.

If you are travelling by Air New Zealand this week, remember Koru Lounge wi-fi provides you with FREE access to NBR ONLINE premium content.


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A tech group trying to talk about farmers - with no farmer in the group.

Arrogant trash.

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Hi Anonymous (and can I just say I LOVE the stuff you've done recently in your cyber-war on ISIS!)... I haven't checked the others' agricultural credentials but I farm goats, sheep and chickens on the side just north of Auckland and have done for six years – although my column would have been just as awesome even if that wasn't the case. Do you happen to have anything to say about the points I make?

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A hobby farmer. Excellent. Seriously.

Many (most?) commercial farmers in New Zealand have a business model that sees them achieve low income for a large number of years - then take a (hopefully large) capital gain on their land, usually at or close to retirement. That is, much commercial farming in NZ is a real estate play. I am not criticising that business model - it comes from a number of business, economic, and tax factors present in NZ - just noting this. But I am not sure that many farmers necessarily have a high value for non-financial stewardship of their land and passing it on to the next generation, as you claim. Farming is a business deal, a tough one, and farmers make commercial decisions aimed at maxing their capital gain on land one day. Part of this is a financially sensible stewardship of their land.

It seems that some businesses in the "real" tech industry (I refer now to SIlicon Valley and similar in other places in the world) follow a similar business model to NZ farmers. In this case, the capital gains uplift on land is replaced by an IPO. As I think you know, the general idea is for start-ups to position their financing and operations to be able to achieve their IPO target and cash out. After the IPO, the actual business may or may not be in good shape and sustainable into the future. Like farmers with land stewardship, I doubt there are many start-ups who are driven solely by the love of their products and wanting to see them successful for the next generation. Tech start-ups are financially driven, similar to NZ farmers.

In NZ, tech start-ups of necessity target a "trade sale" as a close substitute for an IPO.

So I don't see NZ farming as being any kind of model or philsophy that is suitable - or different that what goes on now in tech businesses. At least not the large "real" tech businesses overseas. I cannot see a viable alternative for NZ tech start-ups to cash out other than the trade sale option. The NZ sharemarket is hopeless for most companies and shareholders - particularly for start-ups - and will remain so until it is bought by a larger sharemarket operator or radically changes its business model.

I thank you for your support of our work at Anonymous, especially that aimed at ISIS. The US government is full of clowns and seems not to have a clue how to disrupt ISIS' online presence. Allies of the US are not much better. Somebody has to take action on these ISIS cretins, so we do. Cheers.

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