Mick Liubinskas & James Woollard
Mick is the 'Entrepreneur-in-residence' at muru-D, Telstra's start-up accelerator. In 2008 after a role as Chief Marketing Officer for music disrupter Kazaa, Mick co-founded Pollenizer with Phil Morle, the start-up advisory that developed 'start-up science' – a scalable and repeatable way to incubate new ideas into business models. In the last ten years Mick has worked with nearly 50 technology start-up companies evaluating their ideas, building first products, launching in the US, raising angel and venture capital and exiting profitably.
James is the Business Development Manager for muru-D. His role is to connect the dots between the muru-D start-ups, Telstra and its partners and customers. James' background is in marketing communications and employee engagement.
'muru' means 'road' or 'path to' in the Eora language and the D stands for 'digital'.
Q. Please tell us about muru-D
Mick: muru-D is a technology accelerator focused on building globally innovative businesses. It's backed by Telstra, a 100 percent owned subsidiary, and we invest $40,000 for 6 percent equity. We give the start-up companies a six month program of mentoring, personal development, office space and collaborative development. We are into our second batch now, we had 180 applications for the 10 spots available.
The first priority of muru-D is to make better entrepreneurs; many first businesses fail – if we can make entrepreneurs better they'll try again and they'll succeed. The next priority is to grow the businesses successfully and if we have to go overseas we go overseas. One of the other goals for muru-D is to grow the entrepreneur innovation base wherever Telstra is so we've been to China and we're looking at setting up in Singapore now.
Q. James you're the glue between Telstra corporate and muru-D. How does that work?
James: It's a two way value exchange. On one side is mentoring; identifying opportunities where Telstra experts can provide advice on anything from marketing through to finance and pricing. Making those connections can be really powerful, just half an hour of an expert's time can completely transform the way the start-up looks at a particular problem. Then from a product perspective, if a Telstra customer or partner is aligned with one of our muru-D businesses, we make an introduction.
The second part is bringing Telstra people through muru-D to ensure we're sharing the experience more broadly. Some use it as an offsite environment where they can get their hands dirty. We're also starting to see some good traction with our large enterprise customers. Corporations in Australia are becoming interested in this space [accelerators] and are exploring if they should do something similar or if there is a partnering opportunity.
Q. What skills from the Telstra mentors are most sought after by your start-ups?
James: It works best when there is an industry alignment. That may play to the mentor's corporate life but quite often it may be relevant to an extracurricular passion. For example Soccer Brain is a company building a platform to help soccer coaches teach teams. There are a couple of Telstra people involved now who are weekend soccer coaches.
Q. How would you describe the level of innovation in Australia generally?
Mick: I think the quality of innovation is quite good. The ability to convert that into commercial success is more varied. In Australia we are a large geography but a small population, so the geography fools us to think we're a big market. New Zealand creates more $100 million businesses than we do because they don't spend 10 years trying to qualify their domestic market, it's too small. Israel is the same. Israeli and New Zealand companies go global within their first 12 months whereas most Australian companies don't. There are two issues with that. You are less likely to get cash flow positive and less likely to convince an investor to part with their money for a domestic only play.
Q. How do we address that in Australia?
Mick: Getting people on a plane... that's the key. You can raise money in Australia if you have a global proof point. If you have one customer in the US, China, Europe, even New Zealand it's actually better than 20 customers in Australia because it proves you can sell in another market. Last year [with the first muru-D cohort] we got on a plane to San Francisco and LA and one of the companies came back with a customer and an investor in LA. Now those three guys in their twenties are based there.
Q. What are the biggest challenges start-ups in Australia face?
Mick: People get the wrong idea about what it takes. They watch the Facebook movie [The Social Network] and think someone gives you a million dollars. If you read the Australian media it's the same thing. Only the capital raise or the exit is considered newsworthy. The real story is, 'entrepreneur works 80 hour weeks for two years. Watch them working on spreadsheets or going through conversion funnels'!
One of the hardest things too is finding a technical cofounder. Banks, Atlassian and everyone else pay developers lots of money and you [the start-up] are asking them to quit their safe job, come and get paid in equity – which the Government wants to tax you on upfront, but that's another story – in the hope that maybe one day you'll get a couple million bucks.
Then there's funding. It's fairly easy in Australia to get 20 to 50k [thousand dollars] from a successful aunt or the market or an accelerator to get started; it's pretty cheap to start these companies nowadays. The next phase – getting half a million dollars – is much harder. There's not much capital and those who control it are in a dominant position so they are very patient. Entrepreneurs expect it to be easier than it is and people with the capital sit back and wait for the really good stuff to survive and get through. Many entrepreneurs over emphasise capital raising, which is hard because our market is just way too small.
Q. What would help resolve the difficulty of finding a tech co-founder?
Mick: Solve the share options problem where options are taxed up front on their full valuation in the financial year they are received. Say I [a start-up] do a really go job with my 40k from muru-D, I raise one million dollars at a five million dollar valuation, I hire a really good CTO and offer them 10 percent of my company. They would have to pay something like $200,000 tax up front because one day those options might be worth something.
Q. What are the biggest impediments for big businesses to be more innovative?
James: Whilst start-ups are able to test lots of small things and learn by failing, it's quite different in a large enterprise. We are definitely seeing more parts of the business being given the freedom to try things out and operate in a way that allows them to behave and think more like a start-up. A good example is a new product accelerator, which looks at a particular problem the business is facing and runs a short – one week – design sprint. Typically that process could last anywhere between three to six months or more. The key is ensuring all the right people are in the room.
Q. In the couple of years you have run muru-D what have been the highlights for you?
Mick: Every company in the first batch  ended up with paying customers, three with international customers. Open Learning made a capital raise, they were one of the faster growing companies. With the first batch we had a goal of getting one or two advisors for every single company, we pushed them to do that, and the ones that did were more successful. In the second batch we made that mandatory – by the half way point you must have at least one but preferably three mentors or advisors who invest $5,000 each into your company. The mentors came from a number of different sources including the tech entrepreneur space, traditional businesses, a few came from Telstra – senior staff – which was great.
Q. How did they find those investors/mentors?
Mick: A few came from being out in the market but the majority came from us introducing them. We ran an event which brought a lot of Telstra corporate people in, it was a dating process. We also mine tech entrepreneurs' networks. Just between these two avenues, we've been able to introduce over 200 people to our start-ups.
Q. What sectors do you find exciting because of their innovation potential?
Mick: When I was in Israel they focused for about fifteen years on three areas – medical, defence and security – and that was really successful. I came back to Australia and asked all the international investors I knew, 'What is Australia good at?' They said, 'business software and market-places', there was no third thing. So I started working on education and technology. Education is one of Australia largest export services. We have successful education technology companies. [At muru-D] six out of 20 companies are in education technology and a very wide range – so no overlaps at all.
We also have a couple of market-place businesses; a couple of internet of things businesses, for example in farming; we have a mix of hardware and software; and we have three sports businesses.
Q. Where are the hubs of innovation around the world and what can we learn from them?
Mick: Obviously Silicon Valley but that's such an outlier – they have done so many laps, they are doing laps on laps – hence it's silly to try and replicate it. If you look at other areas like LA, Vancouver, even Waterloo in Canada where Blackberry was based, they are in the top 20 in the world. Auckland as well is significantly more impressive because of their global businesses. Israel, Barcelona, Berlin, London and Colorado have all now progressed.
Q. What are they doing right?
Mick: One key is proximity, they really intensely co-locate them. Go to Colorado, it's really only three blocks and everyone is in the same space; walking distance matters. In the first two years of any innovation it's about a thousand small conversations and no communication tool could match that, you need conversations and white boards.
Q. Do you have a piece of advice for innovators or companies that want to be more innovative?
James: It can't just be one thing. Telstra has muru-D but it's only one piece of the puzzle. Don't be scared to try something out. It doesn't have to be big or successful. That's something we preach here on a daily basis.
Mick: I suggest just take lots of small actions. It's harder to take risks the larger you get – the innovator's dilemma – so lots of small actions can build towards innovation.
A couple years ago we realised that Australian corporates have an immediate [negative] connotation to the word 'fail' so we made up an alternate word – 'flearn' – to learn through failure. Every entrepreneur will make 100 mistakes before they have a successful business and as long as you learn from them and move forward then it's good. Keep flearning.