The Australian boys who built a $1b company in the cloud (opens in new tab)

The current tax law is a nightmare for those AU startups wishing to dole out equity.

100% true

Lack of talent, the majority of students have steered clear of tech disciplines in university after the dot-com bust, the effect of this is being felt now as engineering talent is needed.

There is talent around if you know where to look.

The government is not focused on the needs of startups preferring to invest heavily in pie in the sky ideas or just digging the dirt out of the ground. There is no decisive strategy from the opposition nor the current gov in power.

Mostly untrue. I've done work for two local startups in the last 18 months, and both received significant government help, to the point where my services were at least partially funded by gov programs. Yes, getting government help can be a slow process, but I doubt anyone would except anything else.

The Shoes of Prey guys spoke specially about this recently at the Google startup event in Sydney. They praised the tax concessions and other gov funding available to startups.

Lack of funding. There are just not enough investors in Australia looking to fund in Australian tech startups.

Mostly untrue. There are plenty of YC-Style accelerator programs giving seed funding, and a decent number of individual investors interested. The VC funds don't seem to be playing the same game as Silicon Valley VCs though (but then - Boston VCs aren't playing that same game either).

A local Australian startup I've done some work for raised a $2 million angle round recently[1] and didn't seem to have a lot of trouble with it.

[1] http://delimiter.com.au/2012/02/23/australian-web-2-0-start-...

Bollocks. There is a massive amount of self-promotional noise coming from a medium-sized group of people going over to the US, not all of whom are that much or a loss to Australia.

Certainly Australia has its problems. And moving to the Bay Area to start a startup is obviously a good idea from many parts of the world. That being said, having a bit of a whinge in the SMH about how lousy Australia is is a great way to get some free media coverage for your startup.

They have an entire agency devoted to commercialisation and so forth -- Innovation Australia[1].

The problem is that despite the flowery language, it still moves, quacks and shits like a government department[2].

[1] http://www.innovation.gov.au/Pages/default.aspx [2] http://chester.id.au/2012/04/05/on-communicating-with-the-co...

Very much so in QLD from experience. I'm studying [software] engineering at the University of Queensland and they give seemingly all their attention towards mining and civil majors.

It's a good read, and to me it highlights just how difficult it is to get funding in Australia. To put it in perspective, they are a well established company with solid founders and a proven business model, and they still had a great deal of difficulty raising money.

Could you elaborate?

And the fault lies with the incubators/VCs who are pushing and pushing these startups/entrepreneurs to go to the US so they can exit profitably.

They are basically trading off the long term health of the industry for short term personal gain. They are a disgrace.

Several things are killing Australian non-resource workers at the moment.

1. Dollar strength : used to be you could make software or movies in Australia at a decent discount to doing it in the US for roughly the same quality. Not any more. This is unikely to change anytime soon.

2. Hostile government : the current rhetoric is about 'tax the rich' and 'pay your fair share'. For now, it's mostly aimed at Mining and Banking companies, but the overall tone is very negative when it comes to creating wealth. Whatever your thoughts about this as a political strategy, it's not exactly conducive to attracting capital either domestically or internationally.

3. Extreme housing + other living costs. Just taking a family out for a modest meal can easily push a C-note when you're all done. Adding movies onto that is going to be a buck fifty. Moving cities for another job is pretty much out of the question unless you get a $100k bonus to do so.

The one good thing Australia has going for it is the health insurance side of things. A startup doesn't have to take out health insurance for it's employees - if it does, it doesn't cost the earth. Whatever risks one might take in signing up with a small company, healthcare isn't one of the issues.

Some US places like the Bay Area or Manhattan might have high rent, but other costs are much, much lower.

But the overriding fact is : you're more likely to meet Australian tech entrepreneurs at a USA conference than somewhere in Australia. Conferences and the like are dominated by enterprise employees and talk of starting new things is relatively rare.

Perth is not that expensive if you're prepared to put up with a 40 minute commute (O horrors).

The town I grew up in, Darwin, is now regularly amongst the most expensive capitals in the world for rent. And food, petrol etc is a helluva lot more expensive there than it is here in Perth.

Getting investment in Perth is tricky though. Investors in Perth understand the mining lifecycle. If you see something interesting on a map, you can round up some geologists and drillers and raise $10 million in a few weeks. It's basically the Silicon Valley of mining.

But god help you if you want to launch a software business. There's one venture fund and so far they've invested in one (1) software venture -- and that was Filter Squad, after Discovr was successful.

All the Australian action is happening over east. And there's nothing much there either.

If I could up stumps, right now, and move to the US, I would.

Instead of raising capital, use early customers to fund the development.

One of the biggest advantages IMHO we have over other states in Australia (that I believe makes up for most of the distance factor) is the more relaxed atmosphere which is very conducive to, lacking a better description, "Getting shit done".

Rent is very high across the board, but more frustratingly getting houses is becoming harder and harder - When I was looking a while ago it was almost impossible to find a single bedroom apartment between Mosman Park and Mount Lawley (admittedly, a reasonably expensive area) for under $350, even if they were old, undermaintained places. The demand for them was significant (most viewings had a fair amount of people) - From the people I've talked to searching for places since, that demand has only gone up further - Driving the prices even higher.

With all of that said and done, Perth is finally getting into the swing of having a startup scene - over the last year and even more focused the last six months, there have been more and more startups popping up in Perth (not just as side projects, but as actual companies working full time on products) and there has been a surge of interested. We're still behind other Australian cities, but it is definitely ramping up in a noticeable way.

One thing I've noticed is that people here tend to aim for services rather than products. You can make money a lot faster contracting for a big mining company than you can trying to develop a product, fund it, market it, and make profit off it.

I'd even go as far as to say it's cultural - we're less likely to take the risk - probably because the big reward (anything to do with the mining industry) is so low risk to begin with. You even see it in other sectors - for example musicians over here are more likely to try making a living in a related service (music teaching etc) with guaranteed income than "risk" investing in their own music and trying to get big selling a product.

Tempted to move to NYC now and follow your lead!

So in other words, it's exactly like the SF bay area except without the tech scene?

Just do a simple, back of a envelope style calculation. A typical car has about 25 electronic modules, ranging from simple seat beat controllers and complex controllers like engine management units and instrument clusters. Assuming that each modules have about 250K line of code, that would take it up to 6.25M line of code. That goes up if we start to consider high end cars like BMWs and Mercs.

Let's not forget about the development infrastructure around the code development, that is another story..