Sydney as the next Silicon Valley

SYDNEY AS THE NEXT SILICON VALLEY: AN INTERVIEW WITH ROB CHAN 

By Emily Cong

9/12/20

In this second part of our two-part series with UNSW Business School alumni and 2010 BSOC President Rob Chan, we delve into the future of technology in Australia. Recently, the NSW government announced plans to invest $48.2 million in funding to revitalise the area between Central Station to Camperdown and create 50 thousand square metres of affordable space for start-up and scale-up businesses. Beyond being a world-class innovation and technology precinct, it is predicted to bring up to 25,000 new jobs to NSW, further strengthening the state’s economic recovery from COVID-19.

Experts have also coined this project the ‘next Silicon Valley’, inciting discussion about the current tech and entrepreneurial scene in Sydney. Read on to hear Rob’s thoughts on the growing tech scene in Australia, the parallels between tech companies worldwide and the current state of affairs given COVID-19. 

Contents

1. Technology Landscape - globally vs Australia
2. US vs Australia
3. Business amidst COVID-19
4. Tech Central - thoughts and future outlook
5. How does this affect us?

What are your thoughts on the technology landscape globally, and in Australia?

I grapple with this a lot. There’s now a fragmentation to the tech landscape that wasn’t around when I graduated ten years ago. Fundamentally, the landscape has changed on the consumer side. 

Tracing back to how today’s definition of ‘tech’ has been formed, it’s worth acknowledging the backdrop of manufacturing, processor development and financing that have paved the way for today’s modern ‘tech’ industry. Microsoft was founded in 1975, Apple 1976. Gates/Jobs built machines and sold them to households like interactive TVs. The internet then was ‘founded’ with the world wide web in 1989. Browser Wars were then launched and the mobile revolution came with the iPhone in 2008. Facebook was founded in 2004 and social media as an advertising platform exploded in 2012 after Facebook acquired Instagram. There’s a certain magic to technology that has only increased in recent years.

Analysing the global tech landscape, it’s clear that historically US companies have dominated the Tech space and have curated a highly US-centric perception of technology today. However, in recent years there has been a huge growth in Chinese-based unicorns, European niche markets and India’s IT talent. In China, large ambitions, willingness and capability to export, and a highly protected domestic market have fostered the rise of huge companies such as Tencent, ByteDance and Huawei. In Europe, companies such as Spotify, Gitlab, Oatly and Skype have seen global success, dominating niche markets. India also has huge IT talent, and is a tech labour hub. 

Now looking at Australia and New Zealand. I do think that the ANZ tech landscape can succeed, so long as we figure out what differentiates us from other countries. What are the competitive advantages we can capitalise upon? We don’t have a huge domestic market, so we’ll need to export things others need too. But we should build to solve our problems. I think we should also play ‘up the chain’ and not be too fixated by being a brand name with consumer technology. Immediately, I think towards green and sustainable technology as an industry where Australia can pave the way. We’re good at building solar panels. We have lots of land and sunshine! I think it’s important for Australian entrepreneurs to consider what we are good at and how we can leverage that. Looking at the ANZ businesses that have been successful in recent years - Canva, Atlassian, Xero and Nearmap, to name a few, it’s interesting to think about what unique factors facilitated their growth. Xero’s success in compliance tech capitalised upon the stable finance industry in Australia, allowing improvements to payroll and accounting services, whilst inspiration from Australia’s clear skies and abundance of land is evident in the concept behind Nearmap, a company focusing on aerial imagery. Cultural nuances like this do play a big part!

How have your experiences working in both the States and Australia varied, and what are your takeaways from moving to the US?

Before moving to the US, I had been told that ‘work culture’ is different. While I was initially sceptical about this, it is indeed the case. I do think ‘mateship’ exists in Australian work culture a lot more - a sense of coming together and just getting it done. In America, I think the ‘exceptionalism’ of ideas needs to prevail first before people come together to get things done. 

It’s also been a weird year in 2020. Massive global events such as COVID-19, the Black Lives Matter movement, the Californian Fires and the US presidential election have exacerbated differences. The American experience itself is very varied - each city has its own experience, bubble, culture. Travelling to Washington DC, it was very obvious that politics as an industry permeated every business and lifestyle while things were very different in the deserts of Utah.

Given the current context, how do you see COVID-19 as an opportunity for tech companies to grow or adapt?

Overall, there’s a lot of uncertainty. We’re not sure what consumer habits or business trends will be long-lasting vs temporal, yet companies cannot afford to remain static for fear of being ‘out-competed’. As evident in the swarming of literature from strategy consultants advising CEOs on the shifting landscape and possibilities for the future, there are too many ‘theories’ as to how to respond to the pandemic. Right now, we’re seeing early glimpses of what is likely to succeed, but it’s going to take a couple of years to fully understand what’s temporary versus structural. 

There have been pockets of opportunity in industries such as delivery (Amazon, Instacart, UberEats, DoorDash), video conferencing (Zoom) and home entertainment (Netflix, Disney+, Amazon Prime). Taking a look at Uber specifically, we were primarily a mobility business before COVID-19. Luckily, we pivoted pretty quickly to delivery and now see the fruits of that investment. 

Health and education tech is another interesting sector. I think there will be a lot of investment in both physical and mental health technology. With the shift to working from home, it is a struggle. Many new challenges have come about - collaboration is conducted so differently today and we will see new technologies emerging to support these changes. With people and communities unable to physically come together, companies investing in larger and larger mega-campuses have significantly slowed down. 

Interesting point about ‘mega-campuses’, what are your thoughts on the future of work and do you still see value in building these ‘tech hubs’? 

The suburbs of Mountain View, Menlo Park and Cupertino - mega campuses owned by Google, Facebook and Apple respectively, were designed to facilitate a culture of open-plan working and collaboration. They have their benefits which I don’t believe will go away, but having experienced WFH, I don’t know if everyone needs to be there on the same day, every day. And I’m not sure if that concentration of innovation jobs within a city necessarily makes that city more liveable. Here in San Francisco, we’re seeing a lot of tech workers leave the city because they no longer need to physically be at work. This has second-order effects for traffic and congestion. I don’t think they need to physically be together and create community yet the need for humans to want to be together is innate. I think in future it will just be more deliberate - teams will come together with a greater sense of purpose. After the pandemic, perhaps we will see the repurposing of these campuses more towards creating shared value with the community.

In light of recent plans confirming the development of ‘Tech Central’, a world-class innovation and technology precinct comparable to “the next Silicon Valley, what are your thoughts?

Overall, the introduction of ‘tech hubs’ has influenced a lot of big companies to think about workplace design and its relationship with talent acquisition and productivity. These trends transcend industry verticals and people managing workplaces in every industry have looked towards Tech for insights on why and how they have been successful. From that, I can see why the City of Sydney is thinking of Tech Central. Throughout the past decade or so, there’s been discussion about how we can accelerate the growth of the Australian tech startup ecosystem, and minimise the barriers for entrepreneurs. Actions for growth mention enhancing culture and community engagement, building the right skill set, opening up markets, gaining early-stage funding and improving the regulatory environment. 

It does depend on the industry you’re working in and the product you’re building. In things like physical manufacturing and hardware, it’s really hard to accumulate enough money to buy the equipment and so the ability to share equipment is a major value add there. I can see how for those who are trying to build startups that have a tangible asset and trying to create physical products it would be really attractive to be a part of some sort of campus culture. Sharing the experience with a ‘cohort’ of other founders would be great. The founder journey is pretty lonely and uncertain, and being able to share that with others can accelerate growth. 

Whether Tech Central will present a viable alternative versus founders moving overseas is a tricky one because a lot of the decision making is specific to the company’s core products, the market need and investment approach. Firstly, can the  founder access the market for feedback and iterate their product to find product-market fit, and secondly, will the founder gain access to sufficient finance capital to scale their product and operations. Investment into this scene is needed, and anything that will support founders and decrease the barriers to success will be beneficial. 

All in all, I think Tech Central is a great idea. We need more storytellers, builders, engineers. However I think Australia has very different competitive advantages to the rest of the world and we should proudly embrace them. We have a great way of life and we should export how liveable Sydney is. Talent isn’t just going to where the money is, but also where there’s heart and adventure. And in building a tech hub, we don’t have to use the same mould as other countries. Rather than creating a “copy and paste” of the Bay Area, where physical proximity helps accelerate creativity, we should find pathways and bridges - ways to collide with others in Oceania who are on the same mission. I think the key to success lies in being collaborative and not forgetting to build with other hubs - build with Auckland and Wellington, build with Adelaide, Melbourne and Brisbane. 

Tying it back to student life and how these changes affect us as students, how do see Tech Central as a means of incentivising start-up culture amongst younger generations? 

That I don’t know for sure. There’s always that battle between an established corporate ladder progression path versus going out on your own. I do hope this encourages people to look at alternate career paths out of uni because while there is immense value in going through the corporate ladder, it would be good to see more teams of like-minded and passionate young people building something from the ground up. It depends on the risk appetite of founders and to an extent even the city itself. There's a very vibrant Brisbane and Adelaide tech startup scene. Why? Big employers don't tend to base themselves out of those cities. This doesn't mean the startup scene won't boom in Sydney, I think it is - but I think the nature of startups will differ. It'll be a lot more intertwined with the current processes, business practices, systems. There’ll be a lot of variety to the startup scene, and I look forward to coming back and seeing a thriving community.