| Apr 07, 2015
Author: Caitlin Fitzsimmons
Source: Australian Financial Review
Date: 2 April, 2015
As Australia frets about where to turn after the mining boom, here are five smart businesses building the future,
‘Innovate or perish’ could well be the new mandate for Australia in the 21st century.
With the resources sector in a slump and the Reserve Bank considering yet another rate cut, the Australian economy is at a turning point.
But it’s not all doom and gloom. Innovation has moved higher up the corporate agenda: last year saw a record number of large companies entering the BRW Most Innovative awards.
The charge is being led by small to medium companies – entrepreneurs with a bright idea and oodles of passion and determination. In this feature, we profile Australian companies doing amazing things in diverse fields, from electric skateboards to quantum computing.
Blue-chip companies are also investing in innovation, with chief executives no longer complacent about the threat from digital disruptors and aware that irrelevance could lie just around the corner.
For example, companies like Telstra and NRMA run their own start-up accelerator programmes, Westpac has invested in a potential competitor in the form of peer-to-peer lending business SocietyOne, and there seems to be a corporate hackathon (where techies compete to build corporate apps) on every other day.
But this focus on innovation is translating into results. The annual Global Innovation Index conducted by WIPO and global business schools INSEAD and Cornell University ranked Australia 17th for innovation in 2014, up from 19 in 2013 and only 23 in 2012.
Yet the challenges are immense.
Jeff and Fluer Anning, the Gold Coast-based couple behind Evolve Skateboards, say they would love to make an Australian-made product but are forced to manufacture in China because the cost of materials is ‘ludicrous’ in Australia and because China is a distribution hub to chip the finished product to a global market.
“If we hadn’t done that, the product would be out of reach and no one would buy it,” says Jeff Anning. At least the design and intellectual property is all Australian owned, with the company spreading production between different sites to guard against copying.
Andrew Maxwell of Global Kinetics and Mike Giuffrida of NGA.NET both identify lack of venture capital or other recurrent funding sources as the biggest factor thwarting innovation in Australia.
Meanwhile, for smart sparrow founder Dror Ben-Naim, who grew up in Israel but is an Australian citizen, it is all about culture.
“Innovation is in many ways about breaking the status quo and often the rules,” Ben-Naim says. “This can’t happen if we’re too trained in thinking inside the box. Let’s teach our kids that sometimes it’s healthy to challenge authority, otherwise how will they dare to change the world?”
Smart Sparrow e-learning platform takes wing
Name: Dror Ben-Naim
What did you want to do when you were a kid: Astronaut (age 8), basketball player (age 11), technology entrepreneur (age 15 onwards)
What do you do now: Founder and chief executive of Smart Sparrow
Ben Naim couldn’t focus on the lab work he was doing as part of his science degree – “It was like following a cooking show recipe” – so he started building software for a virtual laboratory that would “make it easy to create rich, interactive and adaptive learning experiences”. That has now become a software program called smart Sparrow that has captured the attention of educators in the United States.
The software gives students a personal education experience, adapting to their level of knowledge, their learning style and their responses, and giving teachers crucial and immediate feedback on where students are struggling.
After his initial foray into his “virtual lab”, Ben-Naim turned the idea into a PhD, and in 2011 he and his research collaborators founded the company with $2 million from local venture capital investors Uniseed and OneVentures. A UK private equity form Yellow Brick Capital Advisors threw in $10 millon in 2013.
Now Smart Sparrow employs 45 people and has opened a second office in san Francisco to take on the notoriously competitive US market. As well as working with US Universities, the firm has a contract from the Bill and Melinda Gates Foundation to build a platform to improve science learning for disadvantages students. “I got to pitch the idea to Bill Gates himself,” Ben-Naim says.
He chose Australia to start his company over his native Israel where he grew up and where high-tech start-up firms are generously nurtured – firstly because there was money on the table from Australian investors and secondly, Smart Sparrow’s early adopters were Australian academics and his strategy was to “work closely with our early users, figure out what their needs are and build solutions that delight them”.
Ben-Naim, an Australian citizen, says he had a final reason for doing it here. “Anyone who’s ever played the board game ‘Risk’ knows that the best move is to take over Australia, and protect it with all you’ve got and then plan an outward invasion.”