It’s crunch time for Ollo Wearables’ CEO Hugh Geiger, who recently bid adieu to Australian shores and moved his company to San Francisco. The Brisbane start-up, which specialises in wearable 3G devices for the elderly and children, has finally crossed the rubicon, and there’s plenty of heavy lifting ahead.
For Geiger, the change has been a long time coming. Migrating the business out of Australia is just the latest chapter in what has been an incredible two-year ride, filled with amazing highs and precipitous lows.While Ollo Wearables (formerly Ollo Mobile) has taken its time to get to where it is now, Geiger is relieved that the business has managed to get there at all.
That is, it’s in San Francisco, has the backing from the venture funds of at least two multinationals, and is in the middle of another funding round.
With manufacturing and distributions partnerships in the offing as well, Geiger’s finally a long way from sitting in Brisbane with a good idea and not much more than a healthy appetite for risk.
So how did Ollo get there? It’s worth looking at because every time an Australian company pulls up stumps and relocates to Silicon Valley or New York or London or some other fabulous and exotic destination, there’s an assumption that the move is a proof-point of policy failure, that Australia is hopeless for innovative start-ups.
While I don’t subscribe to that view, there’s no doubt that it’s a difficult and perplexing policy area.
Why Ollo made the move
Geiger was in Australia recently and used the opportunity to articulate his reasons for leaving and what Australia would need to look like for him to have stayed.
Ollo is a star in local start-up circles but the decision to relocate wasn’t simply a question of swimming in a bigger ocean. It left because it couldn’t find people who understood what it was trying to do, and who had the skills to help it do it.
This is partly because of the business Ollo is in: it began life to build a one-button wearable mobile device as a safety for the elderly. It was hardware, it was firmware, it was consumer-facing. Basically, it was a lot of weird stuff that Australians are allergic to.
So the Ollo case is a little bit exceptional. You can win all the pitch-fests on offer, but you’re still going to struggle in this country if you want to build something in tech.
Geiger is at pains to make sure he doesn’t come across as bitter (because he isn’t.) But it’s hard to articulate a reality in this country without coming off as a hater.
For the record: Geiger is no hater. He is engaged and interested and supportive and even optimistic about Australian start-ups. But his optimism is qualified by reality.
Here are some out-takes from his 'exit interview'. For people already involved in the sector the themes are instantly recognisable.
The shallow end of the pool
The talent pool is shallow. That doesn’t mean people working in the sector don't have talent, it's just that there’s not that many of them around. And because there are fewer of them, there aren’t that many inhabiting important niches.
This is as true of the technical side of the business as it is of the investor side. In fact, the talent problem on the investor side and the business advisory side is the bigger problem in Australia.
There are probably 20 to 25 people in Australia who can really drive an outcome for a start-up in Australia. That’s a tiny number. If you can’t convince one of them to get on board, or worse, if they say negative things about your company at a pitch event, your start-up is going to struggle.
It is a simple reality that the Australian start-up sector has a select few gatekeepers.
Show me the money
The pool of available venture capital dollars is tiny and this is not a problem that can be solved merely by making more money available. Without very specific, professional and niche investment skills, those dollars are not going to end up in the right place or be adequately leveraged.
There’s general agreement about a lack of professionalism among investors in Australia. There’s more money than in the past at the very early stage -- but the investors aren’t necessarily bringing the business skills or the business networks into the deal.
Network connectivity is sub-optimum. Networks are critical to start-ups. The Australian networks -- the fabled ecosystem -- is small and as a result missing many critical components.
If an ecosystem is about de-risking -- and it is, up to a point -- Australia’s clunkiness is obviously an issue. Combine that with a shallow talent pool and fewer sources of capital and the risk-reward ratio doesn’t look that compelling.
Ollo Wearables just completed the TechStars program in Kansas City (which was done in conjunction with the Sprint Accelerator. (Sprint is, of course, the third largest telco in the US. Who knew it was headquartered in Kansas City? Not me.)
The TechStars Sprint Accelerator was niche-focused on Mobile Health. Of the ten start-ups in the program, only one was from outside of the US: Ollo (and virtually all the rest were from Ivy league alumni -- MIT, Harvard, Stanford etc.) Through this process Sprint became an equity investor.
Geiger talks about the top-end accelerators as de-risking engines. The real value in the US of these programs is that the VCs trust the screening process. And so the company is moving over to San Francisco and the funding round is underway.
And through Sprint the company has also built a relationship with Japan’s Softbank. In fact through the TechStars program, the company has built solid connections into the right VC interests.
Qualcomm Ventures was already an investor (after Ollo won the OzApp Awards in Western Australia.) Rackspace is still a sponsor of the company, and Robert Scoble is a big fan (after Ollo won the Rackspace Small Teams, Big Impact competition in Australia.)
Since Ollo won the CeBIT Startup pitchfest in Sydney in May last year, it has attracted a lot of interest from potential investors. It has won numerous other awards. But it could not build the business here. Either it could not get the right money from the right people, or the right people simply were not in Australia.
There is so much about the tech sector in Australia that’s right. There’s tremendous creativity, and there’s tremendous enthusiasm. As more of our successful overseas tech entrepreneurs and investors return to this country, there is a growing base of core skills.
One day Hugh Geiger will be one of those returning successes and we hope he won’t have lost his appetite for risk when does.
I have no doubt that he will be back, because there’s a lament in Geiger’s voice about not being able to fully give life to Ollo in Australia.
“In terms of a place to live, the US just doesn’t compare [to Australia]. But in terms of building our business, we regret that we didn’t leave sooner,” he said.
You’ve got to be realistic about these things.
James Riley has covered technology and innovation issues in Australia and Asia as a writer and commentator for 25 years. Read more from James Riley at www.InnovationAus.com or follow him @888riley on Twitter.