Greetings from Middle Earth!
That’s where I live: New Zealand. Known for sheep and hobbits. Also inventing the jet boat (Hamilton), summiting Everest (Hillary), and splitting the atom (Rutherford).
Not so much known for tech startups -- although there are a few notable exceptions. TradeMe, the Kiwi version of Ebay, sold to Fairfax Media in 2006 for NZ $700 million (roughly U.S. $575 million). Xero, an online accounting firm, just raised another $49 million, bringing its total funding to $94.2 million. Still, true high-flyers are rare here; the scene is low-key enough that even big-talking pretenders are rare.
Which is why it was so interesting to be visited by the Geeks on a Plane crew last week. Created by Dave McClure and 500 Startups, GoaP has been roaming the world, connecting folks like LivingSocial’s Aaron Batalion, Cheezburger’s Todd Sawicki, and blissmo’s Sundeep Ahuja with local startups, geeks, and investors.
The cultural juxtaposition is evident. Remember a minute ago, when I told you about TradeMe’s U.S. $575 million exit? LivingSocial has raised over $800 million in venture funding -- this is before they get to the exit. Mohr Davidow, an institutional fund represented at GoaP by General Partner Katherine Barr, manages $1.85 billion in funds; an investment that returns $100 million doesn’t even move the needle for them. Christchurch’s largest private-sector employer has 630 staff members; Aaron blithely referenced his first 2,000 employees.
It’s easy, in that kind of environment, to be lulled into believing that bigger is better. It’s easy to draw a flawed but understandable conclusion: that the path to entrepreneurial success is singular -- start a company, raise a bunch of money, and go public.
But that path is only one of infinite possibilities. Your choice of strategy depends on many factors: the structure of and possibilities for your company, the kind of life you want to lead, the scale and type of impact you want to have on the world.
On one topic at least, the GoaP panelists were unanimous: Know where you want to go before you seek investment. Not every company is aiming for the billion-dollar exit -- and if you’re not, don’t bother with Mohr Davidow. Not every company is looking for a 5 or 10 or 30X return -- and if you’re not, don’t partner with an investor who is.
TechCrunch’s Ryan Lawler, who was on the tour, was kind but unimpressed with New Zealand’s tech entrepreneur scene. Among other memes, he references the threat of the boat, the bach (beach house), and the Beamer: the idea that Kiwi entrepreneurs tend to gain just enough to become comfortable and then stall out, rather than continuing to pursue global domination.
But there are more things in heaven and earth than the binary options of multi-billion-dollar IPO vs. lifestyle business. What I took away from those panelists is an appreciation for the wide spectrum of entrepreneurial possibility. There are those who seek to change the world. Those who seek to own a niche market worth a couple hundred million. Those who will never scale and don’t want to. Those who choose to focus locally. Those who prefer bootstrapping. Those who prefer investment. Each of these is valid, but each might indicate a different strategy.
One of my favorite local companies is Felt, founded by my friend Lucy Arnold. Felt is New Zealand’s Etsy equivalent. They haven’t taken capital. They aren’t looking to IPO. And they aren’t in business for the boat, the bach, or the Beamer. But their relentless obsession with quality and personal service is seeing them steadily grow a community of thousands of craft makers and sellers.
Felt sit happily on the spectrum of entrepreneurial possibility. Where do you sit?
I’m off for the next two weeks. Hope your holidays are joyful and see you again on the 11th!