Are the udders of cows more valuable than the heads of kiwis?

by Daniel Batten on December 21, 2017




Yes, NZ’s economic success lies in the tech sector, but not where you think.

First – let’s get clear on what we know.

Tourism is our number one export earner. This is bad news for us because as Sir Paul Callaghan demonstrated some years back, it earns very little GDP per capita. That’s a fancy way of saying “A Tourist-dependent economy is a low wage economy”.
Dairy is our number two export earner. This is bad news for us too – because 30 years ago as anyone who went to high-school in the 80s will remember – your fourth form social studies teacher probably introduced you to the word “diversification” and said that for NZ to survive it had to wean itself off butter sales to the UK (one of our hugest export earners of the day). Well, we did – kinda. But we weaned ourselves onto milk-solid exports to China. Not exactly diversification – as we are still reliant on a primary-industry commodity, with all that entails (international price volatility and high environmental impact). Let’s be blunt – dairy is the reason we have dirty rivers. We all care about clean water. But we want a great economy too. So what to do.
Our number three exporter is technology. This is great news for us. It is rising fast, and it’s our new hope. It’s the sign that since the 1980s we have done some things differently.

However, we’re not moving anywhere near fast enough as a nation – if we wish to be known for much more than our sporting successes internationally, and if wish to reverse the damage we’ve done to our clean green brand.

Last month I published a post about how founders these tech companies must stop being just innovators and start being great value communicators – if we were to lift technology from #3 to #1 export earner.

There is another part of the puzzle though: we need a more founder-friendly way to do investment. I’ve seen several founders fall over in the last two years – plummeting the fortunes of their company with them. This happened because their major investor shareholder(s):

did not understand the difference between tech-investment and other types of investment
demanded that the founders run their startup the way a larger company gets run
sacked the founder and replaced a CEO from a corporate background (nearly always went disastrously)
spent no effort trying to grow the skill-base of the founding team
placed all the emphasis on the technical aspects of the business (the technology, path to market, market validation, competitive differentiation) and almost zero attention on the people side of the business

didn’t share the values and vision of the founders, only their desire for commercial returns.
Interestingly – this stuff is a lot rarer in Silicon Valley. They almost always try to grow the founder. They invest heavily in improving the sales and leadership acumen of tech-founders – and understand that in almost all cases the worst thing you can do is separate the birth-parent (founder) from the child (technology).

So what’s the answer for New Zealand?

The same as the answer always is – disruption: start another investment fund that operates by a different set of principles, and make it 10x more successful by the commercial metrics that other investment funds measure (return on investment).

If we get this right – this will be a great chapter in the story we’ll tell the next generation of kiwis in 2030 about how we took technology from our #3 to our #1 export earner in under 12 years.

Watch this space!

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