In September of 2018, The Economist published a fascinating article entitled: “Why startups are leaving Silicon Valley”.
As a 20-year resident of Silicon Valley, it certainly caught my eye (as well as most of my VC peers). I moved to the Valley in 2002 from the New York area after having just finished a 16-year run at IBM®. After starting in the company’s legendary Research Division, I left as one of the top 35 executives at IBM to lead a small startup. Risky — and as it turned out, the startup failed in the shadow of the 9/11 disaster.
Moving to Silicon Valley soon after the dot.com bubble had burst, I found a vibrant community of innovators, some of whom were also licking their wounds, but most of whom had an optimistic view of the future. I discovered a very different culture from that which I was used to on the East Coast. There was very little ‘zero sum game’ mentality — rather, most people wanted to grow the pie for all the players and take their share of it en masse.
Since then, I have spent the past 20 years as CTO in a number of large tech companies such as Symantec® and have remained (mostly) optimistic about the present and future of Silicon Valley. As my career now enters its newest phase as a venture capitalist, I have been watching the venture world change and evolve with keen interest. Funds have grown to enormous sizes; more and more companies are guided toward unicorn status and the game seems to have changed to more of a “Lotto” mentality.
When I left my most recent corporate CTO role, I decided to try something marrying two of my great passions — building companies and combining it with my interest in New Zealand, where I have owned a vineyard since 2000. The common stereotype of the country is that it’s the home of more sheep than people (true) and that it’s the locale for all of “The Lord of the Rings” movies (also true). That said, there is so much more to this fascinating and beautiful country — especially in the burgeoning tech scene there!
The startup community in New Zealand in 2018 reminds me so much of the way things were post-2000 in Silicon Valley. There is a severe shortage of capital, but despite that the entrepreneurs are deeply passionate about their ideas. The word ‘unicorn’ doesn’t come up in every conversation.
In the past three months I have talked with NZ founders who want to revolutionize the launching of small satellites, completely change the way enterprise data is managed, create a new platform for innovation in the blockchain economy, as well as apply deep knowledge and expertise from New Zealand’s agricultural sector in unique ways.
A common thread is what New Zealander’s call the ‘number 8 wire mentality’: a turn-of-phrase that comes from their shared farming past. It is nothing less than the absolute belief that anything can be fixed with a ‘bit of number 8 wire’. The companies I see in New Zealand are not short on global ambition, but they are used to getting things done with less. They are supremely capital-efficient and focused, but remain starved for funding — a situation I hope to rectify in early 2019.
Uniquely, New Zealand has five research universities that rank in the top 5% globally — this from a country that is roughly the size of the San Francisco Bay Area! Historically, young New Zealanders left home on their OE (Overseas Experience) after university due to the lack of jobs outside the tourism and agricultural sector. Frequently, they don’t return for many years, though thankfully this is changing rapidly. The vibrant startup scene (~1500 new tech companies per year) is enabling more of them to remain in New Zealand and practice their trade.
New Zealand is beyond any doubt a place to watch in the global innovation economy. It punches far above its weight, with nary a wooly sheep or equally wooly hobbit in sight.