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I can totally relate to the points made in this article. I have worked in 6 different startups in the past 4 years in Australia (Brisbane and Sydney) as an Engi

I can totally relate to the points made in this article. I have worked in 6 different startups in the past 4 years in Australia (Brisbane and Sydney) as an Engineer - All at different stages of growth. I also hang out with the startup crowd in Sydney (I've been invited to a couple of events and was able to talk with founders/CEOs and engineers of some of these startups). One thing that really stands out about Australia is that tech startups here last a long time (they don't seem to ever 'run out of money'). Investors are patient and they invest cautiously; in fact, if they like your idea, they will 'keep tabs' on you and they won't invest a single dollar until you have some meaningful numbers to show them - And by numbers that means either decent revenue (yes, REVENUE) or exceptional user growth (coupled with a clear monetization plan). That's both good and bad. It means it's very difficult for early starters to get funding in Australia, but it means that once you do get that funding, you can expect the investor to stick around. I have worked for 2 startups which had been operating on a modest loss for 5+ years - One of them had almost no growth and little potential (in my opinion), the other had modest growth but high potential. These startups don't seem to have problems raising further rounds of capital year after year. I found that Australian startups are lean and have a low marketing budget - They tend to spend everything on the product and generally don't like hiring sales people or paying for advertising unless it gives them an immediate, measurable return - They don't spend money just to create hype. Australian founders tend to dismiss the importance of advertising - They believe that if they put all the focus on product development, that eventually, the product will become so good that it will just blow away the competition (who have wasted all of their funding on advertising). US startups generate a massive amount of noise in the market - Spending on advertising at the moment would just create more white-noise - You won't get a return on that. At least that's the general belief.

danieltillett 11y ago
You raise a great number of points here that I can really relate to especially the reliance on the product selling itself. I am pretty sure that this is a mistake, but it is hard to try and compete against all the noise when you are running a lean startup.
solve 11y ago
In other words, lifestyle businesses, i.e. businesses that plan to direct nearly all profits and investment capital to the founders / employees / other expenses while the investors end up getting nothing (unless they do something extractive to the company e.g. via seizing control and extracting value for themselves via that) -- versus "non-lifestyle" where the company optimizes for a big exit through which investors can be compensated. Remember, tech startups nearly never pay dividends. Making a ton of profit but no exit = good for founders and employees, big problem for investors.
- danieltillett 11y ago
  There is nothing wrong with lifestyle businesses :) The problem basically comes about because almost all startups here are forced to bootstrap for a long time before they even get the possibility of raising funds from an investor. If as a founder you have managed to get your business to profitability by bootstrapping why would you take on any outside investor who you expect will try and screw you over?
  - pyrophane 11y ago
    You are right, there's nothing with lifestyle businesses, but the previous comment is still correct: they aren't good or investors. If you can bootstrap one and only need to take on small amounts of funding (i.e. via a business loan or from family members), then they are fantastic, but if you are trying to seek larger sums from outside investors the are problematic for the reason mentioned.
    - danieltillett 11y ago
      There is a bit of a chicken-and-the-egg problem with startup here in Australia. Without a viable investor infrastructure founders won’t create the sort of businesses that will generate returns for investors (i.e they will create bootstrapped lifestyle businesses) and without the right type of businesses being created investors will avoid putting their money into start-ups since the type on offer are the lifestyle businesses that they can’t get the money out of. Someone needs to break this cycle and they only side that can do it is the investors - they need to start putting money into really early startup and supporting the types of companies that will generate returns for investors.
vacri 11y ago
The feeling I get is that it's more about being distant from the "startup" world of SV, which is something of a religion. Investors here are more interested in businesses. A startup is a particular kind of small business - and if you are going to invest in a business, you want it to be sound. Just a guess. I work for a 'startup', but I'm nowhere near the money machines. I've just always been amused at watching people discuss startups like they're completely unrelated to the more mundane world of small businesses. :)
simonswords82 11y ago
Interestingly I'd say a lot of your points are true for the investors here in the UK. Investors want to see growth, they want a business/marketing plan, ideally they want traction...overall they're simply more cautious than our American cousins.
deleted 11y ago
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danieltillett 11y ago

You raise a great number of points here that I can really relate to especially the reliance on the product selling itself. I am pretty sure that this is a mistake, but it is hard to try and compete against all the noise when you are running a lean startup.

solve 11y ago

In other words, lifestyle businesses, i.e. businesses that plan to direct nearly all profits and investment capital to the founders / employees / other expenses while the investors end up getting nothing (unless they do something extractive to the company e.g. via seizing control and extracting value for themselves via that) -- versus "non-lifestyle" where the company optimizes for a big exit through which investors can be compensated. Remember, tech startups nearly never pay dividends. Making a ton of profit but no exit = good for founders and employees, big problem for investors.

danieltillett 11y ago
There is nothing wrong with lifestyle businesses :) The problem basically comes about because almost all startups here are forced to bootstrap for a long time before they even get the possibility of raising funds from an investor. If as a founder you have managed to get your business to profitability by bootstrapping why would you take on any outside investor who you expect will try and screw you over?
- pyrophane 11y ago
  You are right, there's nothing with lifestyle businesses, but the previous comment is still correct: they aren't good or investors. If you can bootstrap one and only need to take on small amounts of funding (i.e. via a business loan or from family members), then they are fantastic, but if you are trying to seek larger sums from outside investors the are problematic for the reason mentioned.
  - danieltillett 11y ago
    There is a bit of a chicken-and-the-egg problem with startup here in Australia. Without a viable investor infrastructure founders won’t create the sort of businesses that will generate returns for investors (i.e they will create bootstrapped lifestyle businesses) and without the right type of businesses being created investors will avoid putting their money into start-ups since the type on offer are the lifestyle businesses that they can’t get the money out of. Someone needs to break this cycle and they only side that can do it is the investors - they need to start putting money into really early startup and supporting the types of companies that will generate returns for investors.

vacri 11y ago

The feeling I get is that it's more about being distant from the "startup" world of SV, which is something of a religion. Investors here are more interested in businesses. A startup is a particular kind of small business - and if you are going to invest in a business, you want it to be sound. Just a guess. I work for a 'startup', but I'm nowhere near the money machines. I've just always been amused at watching people discuss startups like they're completely unrelated to the more mundane world of small businesses. :)

simonswords82 11y ago

Interestingly I'd say a lot of your points are true for the investors here in the UK. Investors want to see growth, they want a business/marketing plan, ideally they want traction...overall they're simply more cautious than our American cousins.

deleted 11y ago

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