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Can you make money and save the environment?

It’s no secret that fashion isn’t my strong suit. In fact, I have as much interest in it as watching paint dry. So when Anna Walsh walked into the Tank to spruik her clothing business, I braced myself for an unfamiliar ride.

Anna started Bodypeace Bamboo Clothing six years ago which makes a range of eco-friendly apparel from shirts to dresses and even jeans.

For years she ran boutiques that dabbled mainly in cotton but in an effort to “go green” the Byron Bay native began researching different materials and realised that cotton actually uses more chemicals than any other crop.

She was seeking $90,000 for a 15 per cent stake, valuing her business at $600,000.

And why should we invest in her company? Her big pitch was that because bamboo was good for the planet.

She wasn’t clear how the funds would help and would defer to the investor for advice.

This was early in the piece and I was sceptical that it was a viable business (although the products were good quality). Anna didn’t do herself any favours when she couldn’t answer a simple but important question: what’s your revenue?

I was quite surprised. When pitching your business for investment, you have to get your numbers down pat: profit, loss, sales, margins … the basics of any business.

To her credit Anna later redeemed herself and revealed that the business had registered revenues of $1.7 million, was up 83 per cent every year and making $150,000 in net profit.

Perhaps her temporary blackout was a result of first time jitters in the Tank but those figures really impressed me.

When asked if she wanted to have run a big business or save the world, Anna replied “both”. She openly stood by her convictions despite being grilled by potential investors. That’s a good lesson for entrepreneurs – if you don’t believe in what you’re doing or what you can achieve, why should I invest in you?

Anna surprised me yet again when she somewhat rejected my $90,000 for 25 per cent offer, saying she felt her business was undervalued at $600,000.

She held her ground and that really impressed me. It’s important to know what you’re worth and not let anyone devalue you or your business.

I revised my offer to give her exactly what she wanted, followed by Janine Allis’s $90,000 for 20 per cent proposition. Anna wanted both Sharks in the mix and we settled on $180,000 for 30 per cent in total ($90,000 for 15 per cent each).

What did we learn from Anna? A solid business with good returns coupled with unwavering faith in your enterprise will surely whet the appetite of potential investors.

Four Queenslanders walk into a bar …

Speaking of appetite, Friday Beers came about when co-founder Lee Mathers was too busy to stock up the fridge on a Friday afternoon. He dispatched his friend Keegan Sard to the bottle shop but the beer selection left much to be desired.

They pondered over what could be and the idea to deliver craft beer at your work place on Friday afternoons was born.

Friday Beers wanted $25,000 in return for a 10 per cent stake, making it worth $250,000. Operating in Brisbane, it had plans to expand to Sydney and Melbourne.

The beer was of high quality, and a great way to usher in the weekend. No lock-in contracts, hidden fees and you can start and stop as you like.

More importantly, the company was already looking to diversify into wine, cider and food to cater to office parties and other occasions.

The Sharks were told the two-month old company could easily manage 5000 deliveries around the country.

It was an impressive potential pipeline of well-heeled corporates which got me doing my numbers and thinking of the bigger picture: at $50,000 a week, Friday Beers would be hitting $2.5 million a year by selling beer alone. But yearly sales could probably double as the company expands its range of offerings.

This proved that Friday Beers wasn’t a one trick pony – an important factor when I decided to provide the capital required since delivering beer isn’t new and the model could be replicated by others.

Investors need to be able to visualise a rosy future and Friday Beers had the right value proposition to make me drink up!

Steve Baxter is an entrepreneur and investor, founder of technology startup hub River City Labs, founding director of StartupAUS and a Shark on Shark Tank Australia.

Missed an episode of Shark Tank? Watch full episodes here.

This article was originally published on Linkedin. Read the article here.

How these startups made us all bite on Shark Tank

On the surface there couldn’t be more stark of a contrast between the two founders I chose to invest in on Shark Tank last night – Mick D from The Adventure Group (TAG) and Michael Timbs of Betswaps.com.

But when you look deeper both shared common traits that had more than one Shark circling. In the end the thing that led to the quality of the outcome for the entrepreneur was the fact that multiple sharks competed for the deal. This drove up the valuation from initial low-ball offers. He who has the gold sets the rules; if you NEED investment and only one investor wants in then your chance of a cracking result are low indeed.

It’s hard enough to whet the appetite of one investor, let alone two or three at one go. Getting them to fight over you is really no mean feat. So what made them so special?
TAG.

Mick came into the tank looking for $100,000 in return for a 20 per cent stake in his company, valuing his business at $500,000.

TAG offers high-quality, unique and adventurous outdoor experiences for clients alongside some of Australia’s former special forces operators (like Mick, a 20+ year armed forces veteran serving in the Australian and British Special Air Services units). I had previously invested in two of his comrades from the Australian Special Air Service Regiment (Indoor Sky Diving Australia ASX:IDZ – a great investment that will return my fund), as such I know that that unit tends to select and then train individuals who have a low tolerance for mission failure – I already knew the calibre of the individuals involved.

We were told that TAG offered “unique sensory experiences with a strong special forces flavour”. I can believe that from the memorable entrance – first impressions count and are quite helpful. Being ex-Army myself that got me intrigued (to be honest the sight of special forces soldiers rappelling from up high at the beginning of Mick’s pitch was quite exciting).

TAG aims to build resilience, teamwork, and leadership through two “experiences”: the Cave consists of the ex-Special Ops forces teaching small groups of people skills that could save lives.

SOE simulates what it’s like to be on a real mission. It comprises seven different high-end experiences where a small team of clients are taught how to plan, prepare and carry out a mission including hostage rescue, and escape evasion recovery.

Depending on which mission is chosen, it typically involves parachuting, planes, trains, automobiles, and boats.

I thought this was clever – it meant TAG could upsell customers six other times after they’d done it (SOE) once. I was sitting back thinking, “I’m liking this already”. But there were lots of reasons not to like it, including:

– The main risk – whilst Mick uses and will bring on more ex-special forces personnel to the deliver the authentic experience to customers he is fronting the business

– It is a body shop – you leverage people to get extra revenue and that is tough – it can be done and lots of businesses do it but if you had the choice you wouldn’t.

TAG’s conservative revenue for next year was $500,000, and triple that a year later.

Fellow Shark Andrew Banks got the ball rolling an offer $100,000 for a 35 per cent stake.

While I liked it, I felt there were many moving parts with the business but was willing to go in halves with Andrew ($50,000 each for 17.5 per cent apiece). Andrew is a great investment partner in this business, the target market for the flagship product are senior executive with decent disposable income looking for an experience they can get nowhere else – Andrew has amazing exposure to that space.

Naomi Simson then decided to throw her hat into the ring with a $100,000 offer for 25 per cent of TAG — plus a business manager — conditional on her being able to list it on her online platform.

The advice to Mick was to decide who he wanted to do business with before negotiating.

Mick’s gut feel was two sharks would be better than one so he asked Andrew and I to reconsider for $100K for 30 per cent, which we agreed.

FIRST IMPRESSIONS

One of the biggest mistakes an investor (or anyone for that matter) can make is to judge a book by its cover.

Thankfully, I did no such thing when the baby-faced Michael Timbs walked into the tank. The 24-year-old turned out to be a shrewd businessman – four sharks ended up taking the bait before a deal was finally done.

Unlike TAG, there was no sensational entrance for Betswaps … just a screen and a portable poster.

Betswaps is touted as the world’s first sports tipping marketplace. It essentially sells information. Michael was asking for $200,000 for 10 per cent equity, valuing his startup at $2 million.

Betswaps is not an online bookmaker – which I’ve got a real issue with. It sells tips or information for more than 40 different sports and over 100,000 different betting markets.

For example, if you’re a novice punter on Melbourne Cup day, Betswaps allows you to compare top horse racing tippers, see their win-loss record, profit and return on investment (for those who followed their tips).

Customers can then see who has tips available for sale and securely purchase them.

Michael was confident in his pitch and knew his numbers well: $100,000 in revenue, including $25,000 last month alone. It’s forecast to pass the $1 million sales mark next year.

Most of the revenue comes from selling advertising.

I was first out of the gate with a $200,000 offer for 35 per cent. I wanted to get this into play, I knew it had legs and wanted to smoke out any other interest.

Michael was resolute. He refused to budge, saying he was set firmly on 10 per cent and I was asking for too much.

Andrew came in with 30 per cent for the same amount while Naomi heated things up at 20 per cent.

New Shark Glen Richards made the playing field very uneven, agreeing to take 15 per cent equity for $200,000.

I lowered my 35 per cent offer by 5 per cent but to avail. Michael just stuck to his guns. It was annoying but I respected that. He could only do that (with confidence) because he had forced four of us on the hook.

He revealed that Betswaps had recently started raising capital and was overwhelmed with interest. A common tactic in this process but I was not surprised, if it was not true it sure worked as a negotiating ploy.

At that point I could have taken a punt or let it slide. Every investor knows they’re taking a risk in these situations and that you win some and lose some but I was confident that Michael and his team could deliver the goods.

In the end Glen and I agreed to take a 15 per cent stake for $200,000 in Betswaps. Michael got a great result only because he left lots of sharks in the game – if you are selling you want an auction with lots of bidders – the vendor always does better in that situation.

Unlike TAG, Betswaps gets to leverage network, software and a marketplace, its revenue is not proportional to its staff count. These businesses are enticing, they are the ones you want to own, run by good, capable and eager founders in an area they have a head start in.

Both TAG and Betswaps were successful on the day because they had the basic ingredients to succeed: a compelling offering, good business acumen and a passion for their venture.

It’s important to stick to your guns and have a clear plan when negotiating – always have a bottom line, middle and walkaway point. Otherwise you might give up too much equity and live to regret it.

Steve Baxter is an entrepreneur and investor, founder of technology startup hub River City Labs, founding director of StartupAUS and a Shark on Shark Tank Australia.

Missed an episode of Shark Tank? Watch them here.

This article was originally published on Linkedin. Read the article here.

If innovation really counts

I watched a debate recently on innovation on Q&A on the ABC that descended into an expert-free, free-for-all on NBN, where a quantum physicist had the ‘best’ opinion – where the desire for people to have the nation subsidise their internet connection came through loud and clear. I do not like the NBN, it was foisted onto us by dishonesty and naivety, it has proved very hard to unpick but there is maybe a way we can turn it to the good for our economic future. Before we try that – how about we all try to understand it ?

How much do we really care for innovation in Australia? I hope you can continue reading to the end as this is really important, there is tech and economics in this as there has to be. There is no quick understanding of the issues around NBN but if people are to have a debate they need to be better informed and as a nation we need a goal for such an undertaking as the NBN. If we are going to pour tens of billions of dollars into this maybe we should be even braver yet – stay tuned to the end please.

If the goal is ‘to have fast internet’ then we are missing the bigger picture. The NBN in Australia needs to be turned into a network that will ensure that innovation and enterprise in Australia is that well positioned that we will reap the benefits of it over the decades to come. No current NBN proposal from either side does this. The NBN we are getting will not allow that – it needs to change. And none of this has to do with fibre versus copper, vendor, Telstra or anything else.

Journalists who, in the same the article, decry that they do not understand this topic due to its technical nature but then bay for the NBN construction without any clue or understanding into what is being forced onto us carry much of the blame for the state of the debate. This is a complicated topic and unless you get it then you actually shouldn’t have an opinion – not when tens of billions are at stake not to mention the shape of the most important infrastructure we are yet to have. There are too many parts to this puzzle to pick and choose which bits you want to understand. There is no easy button on this one. You need to understand the technology and the ramifications of the new competitive landscape if you are to have a voice in this debate. Simple ‘fibre versus copper’ sound bites have led us into where we are today.

There are many other things you can do to fix competitive telecoms in Australia before you bring back a monopoly owner, things like straightening out land access for network build to prevent gaming including road, rail, power utility carve outs; regulate facilities access and similar competitive regulations to prevent richer carriers gaming them; undertake a re-costing exercise of duct and facilities access; the number and location of network interconnection points, concentrating on outside metro areas where service levels and choices are diabolical – but given some recent press and a looming election campaign I will stick to access related issues around NBN.

I encourage people who want to be informed to research these topics – where research isn’t reading the blogs of pundits! I am out of the telco game and have no dog in this fight – I just want a real debate fuelled by facts where experts get to supply the facts, not politicians, theorists, academics and those NBN fans who want ‘NBN or bust’ because ‘NBN and bust’ is an option here.

Before you start you need to know a few things about networks. If you own a network that has a certain amount of capacity – say 100mbit/sec then the cost to operate that network (not the price charged to the user) is materially the same between 1% of utilisation and near 100% utilisation.

Before NBN, a broadband provider could build a network out, connect up customers based on relevant technology for their product offering, the technology would vary based on local issues and market factors. But the provider would make its own investment decision, own the network and have a fixed cost to operate regardless if it operated at 1% or 95%. The cost to service the customer for access was fixed, the only time you really started adding incremental costs was when you had to purchase capacity from outside your own network (international Internet capacity or networks you didn’t own for example, this term is transiting off network).

What’s more, adding capacity later is usually cheaper than the original construction because telecommunications equipment has reduced in price per unit of capacity in line with Moore’s Law for the last thirty years. There is no sign of this slowing in the foreseeable future.

Network ownership is great as the upside leverage is huge. So why price in scarcity when it does not exist?

If you build and own a network it has a fixed cost to operate – so why would you bother to set speed hurdles for customers to access it? Sure there are some contention issues in the network – the FTTH network has about 80Mbit/sec to each house[i] – not bad; where you have an xDSL last few hundred metre FTTN solution there is no sharing but the headline speed may be lower[ii]. The point is – why do we have access product speeds such as 12/1, 25/5, 50/20, 100/40 when the network operational cost for everybody to run at top speed (up to 80Mbit/sec on FTTH) does not increase[iii]?

People will say a few things on this – if you use more it must cost more? Wrong. We are just talking about using the NBN here – not transiting off it and using the internet in general where real expenses add up pretty fast. This is just about going from your home on NBN to the edge where NBN hands you off to your ISP. There is zero incremental cost in this if it is engineered correctly[iii] – it sounds illogical but it does not cost any more if it stays on network. If we can keep all of the network traffic inside of Australia there are further cost and economic benefits as well – see interconnection points further down.

Other will say – but it should cost you more – if you use it more then you should pay more – that is just fair right? Why? I pay one charge to use the road for my car – registration, a little more through petrol but I can regulate that through fuel efficiency choices. I do not get charged more if I travel at 100km/hr instead of 85km/hr, nor do I get charged more if I fill all 5 seats instead of just one. Why don’t we have this approach to the network ? Why can’t we view NBN more as a road network in the way it is paid for, used and charged for?

The next mind warping feature NBN has baked into it is the Connectivity Virtual Circuit charge – the CVC. This is a fee levied onto your ISP to connect to NBN concentration points, it is a fee charged per megabit per sec (Mbit/sec) per month and currently stands at $17.50 which in volume can come down[iv] to $11 (if you average 1.5M per user per connection point under a current 2 year trial). ISPs gets to aggregate this across all users at a connection point but if you use 1mbit/sec for one month (320G downloaded in one month is 1Mbit/sec) then you will cost your ISP at least $11 and generally around $16 with various standard volume discounts[v]. They will have to recoup that or go broke – economics. Right now, under a temporary fast start plan each ISP gets 150Mbit/sec CVC thrown in, this has led to the cramming of users into this free allocation, it doesn’t take very many users to overflow 150Mbit/sec – 2 technically who enjoy a 100Mbit/sec home connection. This is temporary.

Under the previous, non NBN, competitively owned setup this did not exist at all. Operational expense was present in the form of aggregated and average fixed costs to operate a network but the operator got to set those costs through investment decisions in many cases and a competitive market for backhaul[vi]. It would come in costing a lot less on average and it would be fixed and known, this cost to the ISP was closer to $1 per month[vii] if you were to calculate it.

CVC was included in order to induce a commercial return to ensure the cost of NBN stayed off the budget as it was a ‘commercial’ return – and that is the hard part about changing it – monkey with that and the build cost goes onto the budget. Mind you we are still borrowing and paying interest on NBN capital – we just ignore it for the most part as if it is irrelevant. Magic puddings taste great.

Netflix, Stan and others have brought the realities of the broken NBN model into clear focus. No longer is it if we will use heaps of data across a modern broadband network because we are, every day we seem to get more ways to view, download, post, update etc – more data usage is a given. What does 1Mbit/sec mean – it means 320 gigabytes per month if you use it 100% flat out every last second of the month. For the most part we do not use our internet connections that way but the rise over the last decade of the Silicon Cockroach (a term invented by John Sidgmore[viii]) whereby things, programs, software will, at all hours of the day and night tend to our needs has increased the average ‘noise floor’ of home minimum usage at all hours of the day. Think of your iCloud, Drobox and other similar things constantly syncing up files or transferring our sleeping/walking habits etc to the cloud. Lay on top of that the multiple devices we own, the rich media that we now want streamed (and are finally being allowed to acquire legally) in ever increasing numbers, to ever more rooms in the house… we need the speed a modern broadband network can offer and we need the ability to move traffic over it at an economically rational cost to us. Having a network charge us at least $11 extra for every new increment of traffic/speed is not that network.

For every 320G of extra data you need 1Mbit/sec ($11 to $17.50 per month under NBN), if you download that faster than every 30 days you need more. It is also true that not everybody uses all of that speed all of the time and some efficiencies can come due to the distribution of usage patterns but, and the introduction of Netflix is testament to this, users are starting to use more and more. We get around this currently by the data quota – how much we are allowed to download before some form of extra tariff or some technical means of speed limits come into place. If the network costs no more to operate then why charge more to the end user, why do we ration a service that has no coupled cost for additional use ?

Now for the really innovative bit.

Open the ports, remove restrictions – give us all the highest speed the network will allow for – not the solution the budget needs to hide the cost from us. Opening the ports means no speed tiers (you connect at maximum speed for your technology) and no data usage charge (no CVC) therefore no quotas for downloads. Will it cost more to build? – Not materially, if at all[ix]. Will it cost more to operate? – No. Will it charge customers less? – No it shouldn’t, if the requirement to meet NBN Co operational expenses is not coupled to usage of the network (NBN expense does not materially rise for usage) it can generate the same revenue but allow end users to grow their Internet use so Australia can be more productive after its introduction, don’t link price to variable usage. Will customers use it more? – Yes, and isn’t that the idea. Remember that the way the NBN tariffs are currently structured means that if you have a 6 seat vehicle you pay more than a 5 seat vehicle and if you drive that vehicle at 100km/hr instead of 80km/hr you also pay more.

This is for using the NBN only – as soon as you transit off NBN[x] there will be external charges but this would also give a non-incrementally charged data path between every Australian on NBN. This is how it essentially works now under a non NBN model – an ISP has a fixed low cost to operate their network but a high variable (in many cases) cost as soon as traffic goes to another network.

Without artificial speed and data transfer constraints the NBN would be a world leading innovation fostering tool that would see us actually be able to hold our heads high in these stakes, it would be the equivalent of a 4 lane road on every street with accompanying highways to handle the load – a revolution.

While we are at we need to fix interconnection – this is how ISPs in Australia exchange traffic between themselves, sometime separated by mere metres in a data centre, many times this can cost more than to buy internet access from overseas – ridiculous. Through a small enquiry and regulatory instrument the government could make modification to carrier licences and service provider conditions to mandate that they interconnect and exchange traffic on a more equitable basis. This has improved over the years but needs to be streets better. As part of a license to connect customers to the Internet there needs to be a mandate to interconnect more rationally – maybe as a requirement to connect to NBN as an ISP. If this is done right we will also assist in the building of more local content for these NBN wide open customer connections to consume.

Why is it we can have a Hume or Bruce Highway without per kilometre per hour levies, kilometre travelled fees or toll gates that restrict shape, colour and speed of vehicle. We seem to be content to understand that the cost of the road will be paid for in time with an increase is economic activity, community benefits and subsequent lift in the revenue base – we do not restrict their use because that makes no sense. We do tax vehicles through registration and fuel excise but the spending on roads has been decoupled from the revenue for some years and the cost to build them does squarely sit on the budget. When the amazing positive upside of an NBN style network is actually clear to all in the debate why don’t we take a highways style approach?

Many dangers lie ahead with proceeding on the NBN even on the terms I am proposing, let’s not see a repeat of the regulated return on asset shambles that have dogged the power industry, where gold plating is seen as a way to increase the asset value and therefore allowing for a greater actual revenue take based on the asset value. Putting a network in the hands of a monopoly provider WILL lead to monopoly behaviour, fibre networks will fail and need repair, their failure mode is different to copper but if the owner of the NBN displays as much care for the asset as Telstra showed for its copper network then it will break and this problem will just be kicked down the road.

There are real risks with this more utopian style NBN but the reward can be amazing, if we build it for innovation instead of as a way to win an election then we can start to realise the benefits of what could be a truly world leading network.

NBN is currently about the monopolisation of the telecommunications access networks in Australia, it is the emasculation of facilities based competition and in return we are getting the world’s most expensive and commercially inflexible network – if we are truly going to reregulate ourselves into this corner let’s at least make the prize worth the pain.

If the answer is to build a new monopoly – did we really understand the issues and then ask the right question?

[i] FTTH based on a 2.5G GPON drop, 32 homes using 2.5G equates to about 80Mbit/sec each

[ii] FTTN speeds average 46M – up to 100mbit/sec if close.

[iii] Work in the core of a network may be required to ensure large capacity throughput in the entire network such as increasing trunk capacity.

[iv] $11-$17.50 bracket is a two year trial of dimension-based discount tiers

[v] As of March 2016 a mbit/sec/month of internet from LA to Sydney cost less than $5/mbit/sec/month – under NBN that same traffic transmitted from your local NBN exchange will cost between $11 and $17.50!

[vi] Backhaul is the carriage of data between different location on a network

[vii] Highly depend on user penetration, technology choice and other factors and could include a variety of other costs such as end customer access, depreciation for build, exchange access costs and many others.

[viii] http://whatis.techtarget.com/definition/silicon-cockroach

[ix] This will depend if intra NBN trunk routes need to be re-engineered to remove contention in the core

[x] Transit is when your internet data leaves one network to go to another, in the NBN context when your data leaves NBN and goes overseas to (say) Facebook, it would also mean when you exchange data between to an Optus user if you are a Telstra user.

Stephen Baxter (@sbxr) is a telecoms and Internet Entrepreneur with over 20 years actual and successful experience in ISP and telecommunications companies, he foundered early Internet Service Provider SE Net; co-foundered PIPE Networks – a wholesale provider of data centre, internet interconnection, backhaul fibre networks, submarine fibre networks and more; he worked with Google Inc in California building multi terabit networks across North America before becoming an early stage investor in tech startups and foundered Brisbane tech startup co-working space River City Labs, foundered and underwrite the Startup Catalyst program; he has been on the boards of listed carriers including Vocus Telecoms; he has been heavily involved in the early days or founding of numerous industry groups and forums such as the South Australian Internet Association, SAIX, ADNA, AuDA, INTIAA, IIA, AusBone and AusNOG.

[I want to get across some core concepts and realities in this article but I have deliberately tried to mainstream many technical concepts, probably not well enough but too much for some, to help the reader so I apologise to my former industry colleagues for some parts of this, I thank JSL and others for the proof read – all mistakes are mine not theirs]

This article was originally published on Linkedin. Read the article here.

Dream big or go home

This week, the StartupAUS Crossroads report underlined the pressing need to fix our start-up eco-system, or risk losing out on the huge opportunity presented by high growth technology companies such as Atlassian, Freelancer and 99designs.

We know Australia’s economy is far too reliant on our all-too-finite resources and tourism industries. These are plagued by fluctuating commodity prices and currencies, and weather — factors that we have little positive control over. High-growth tech start-ups could account for $US109 billion and 540,000 new jobs by 2033. To say it is a huge opportunity is an understatement.

So what’s holding Australia back?

While the Crossroads report outlines a whole heap of areas, there is one area which for me is vital. And it’s all too simple: We just don’t have enough young people willing to dream big, give it a go and start up their own venture.

In Australia, a large share of our first-time entrepreneurs (in the high-tech global growth potential area otherwise known as ‘tech start-ups’) are in their 30s and 40s. In fact, far too few young Australian’s start their own venture. In the US and Israel — two leading countries when it comes to high-growth tech firms — a large proportion of entrepreneurs launch their business directly following their undergraduate degree. At Caltech, Stanford and Berkeley, it is estimated that 20 per cent of all graduates form a start-up before they even graduate.

Yet here in Australia (see table below) our leading universities are spawning just a handful of start-up founders compared to other nations.

infographic - startup founders by university

A main part of the problem is that the Australian education system is geared towards preparing students for the workforce, not towards equipping them with the skills, knowledge and encouragement to start their own business. We need to imbue them with wanderlust for a life of beating their own path and leading the world from our great nation.

The first step to reverse this actually starts younger than you might think. It is essential that we encourage kids, parents and teachers to view business creation as a valid career path rather than the current expectation that kids will get a good education in order to get a good job.

Australia is held back by the limited exposure the general public has to entrepreneurship, combined with a culture that does not celebrate or promote an entrepreneurial mindset.

Entrepreneurship is seen as an unusual career path, and even when children are exposed to the notion of starting their own company they are generally guided toward small business creation, and not towards the idea of creating the next Google, Facebook or Apple.

Currently there are no widely implemented entrepreneurship programs in Australian high schools — this needs to change. The creation of an entrepreneurship elective in high schools would put Australia on par with the education systems in much of Europe, the US and Singapore where entrepreneurship is increasingly seen as an essential component of the secondary curriculum. In the US it has been found that up to 20 per cent of students who participate in an entrepreneurship training program in secondary school will later start their own company — a rate about five times that of the general population.

In addition to opening the minds of our younger generations, and opening up our wallets to support them, we also need to focus on providing students with the core technical skills they need to build technology. Australia is currently facing a significant skills shortage in the ICT sector, with demand for ICT workers having doubled over the period 1999 to 2012, whilst applications for tertiary ICT courses have dropped by approximately 60.

A number of promising initiatives are underway in Australia to try to boost participation of students in ICT education, but these are at a small scale and with little co-ordination. If we are going to actually make an impact, we need to make some serious changes:

The government needs formally adopt and extend the updated Digital Technologies Curriculum to make computer science and computational thinking a mandatory component running to year 10, and an elective subject in years 11 and 12.This would help bring Australia up to speed with countries like New Zealand, the Netherlands and Vietnam.
We need a campaign to drive awareness of the value of computer science. Particular effort should go to engaging girls in high school, as girls currently comprise only 12 per cent of university computer science students.
If Australia is going to avoid missing out on the global tech revolution and really build a diverse and strong economy, we need to do something now to give our kids the push they need to start their own business.

As I found out myself when I launched my first tech start-up in 1994 (almost 24 years old), when you’re young you are far more willing to take the risks you need to succeed. We need to equip our own young people with the drive and desire and technical skills to be the next Bill Gates or Mark Zuckerberg.

We’ve got to dream big, or go home.

This article first appeared on BusinessSpectator. View the original here.