The Business of TechRowan Simpson has been part of most of NZ's most well known and loved software startups: TradeMe, Xero, Vend, Timely and many more.
Peter sits down with Simpson to talk about his new book, his advice for founders, and how NZ can light a fire under its startup scene.
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Think of the best known e commerce and software startups that New Zealand has produced.
The zero Trade me then timely just to name four of them.
Well, there's one tech entrepreneur and investor who has been heavily involved in all four of the ones you mentioned and many more.
Rowan Simpson is one of the most successful serial tech entrepreneurs in the country, and he's distilled what he's learned into a new book, How to Be Wrong, A Crash Course in startup success.
The biggest successes in tech companies did not invent the technologies that they are famous for. By Apple, the biggest technology company, did not need any of the things that they are most famous for. But they did work out what all of those things were for, and man, they worked out how to make us want them and to pay top dollar for And so the really valuable part has not been the first to have the idea. The really valuable part has been the one who works out how to sell that to somebody in a way that they will pay for.
Coming up on the Business of Tech by two Degrees Business, Rowan Simpson on learning lessons, the hard Way, measuring Everything and near death moments and startups.
I'm Ben Moore and I'm Peter Griffin and some very articulate commentary about the state of innovation in New Zealand coming up. Rowan's interview has lots of great nuggets of advice. Try things, make mistakes, but learn from them and he's definitely done that, going on to enjoy major success in New Zealand startup sector.
So here's Rowan Simpson talking to Peter about failing pivoting and the importance of having a beginner's mind.
Rowan Simpson, Welcome to the business of Tech. Great to see you again and thanks for coming on.
Thanks for having menu. It's great opportunity.
It's incredible, you know when you think of the legacy that you have had in New Zealand in the startup community. We talk about trade me obviously zero ven timely so nice sex and one capacity, whether on staff, as part of an executive team or as an investor as well. Probably not a lot of key wes know your face, like a Sam Morgan or a Rod Drury. You're just interested to start really what your approach has been. Did you ever want to be that sort of founder that had all the intention or were you more happy being a support person part of a team.
I mean, I play my role, and I mean it's important, I guess that there is a person to front these companies. One of the things I write about in the book is this what I call the myth of the lone genius. We tend to attach one name to any successful company, and Sam and Rode a great examples, so that vorn at vend would be another. But there's always a team, there's always a big group of people that sit behind any successful business like that, and I guess I'm just one of those. So yeah, it's maybe useful for people who might fill those roles themselves to get that perspective.
You start the book very clearly talking about some of the near death experiences off those four companies. They all had great exits or in Zero's case, listed in multi billion dollar business that now, but each one of those companies had massive challenges. You talk about trade Me in two thousand and one, you said the business model was not working at left us hanging by a thread. I planned to provide free online classified supported by advertising, had failed to generate revenue, and it was that successfully that you added that saved the business. But for a time there it was looking like, I mean, you guys went overseas, you've basically left it behind.
Yeah, Sam, his sister Jess, who was the second employee before me, and myself, we were all in London at the same time in two thousand and one Year's Eve two thousand and one, So yeah, I mean we literally had billboards back in those days which said only Turkey's pay for classifieds. That was the tagline for trade me. So we were quite wrong about the business model. And yeah, I mean this is a repeated pattern, So I would think about that across all four Like the stories we tell about startups tend not to be actually honest or accurate or detailed stories, and there's a good reason for that, Like the honest story is messy, convoluted, doesn't fit so nicely into soundbites. But the airbrushed versions of these stories, in my opinion, kind of skip all the interesting bit and often most of the important lessons as well. So yeah, I think it's I think it is useful to tell those stories. I was really determined in the book to start with those four near death moments. It's easy to retrospectively look back on those four companies and say, you know they were great successes, but that's not how they felt when we were actually in those moments. Like when I left to go to the UK, if I'm honest, I didn't think there'd be a trade me to come back to well. And you know, that's the experience of working in those companies day to day, and for people working on their own startups today, like understanding that experience is way more interesting than just reading the headline success stories.
Yeah, you take Timely another great company that had a fantastic exit as well, But and Covid obviously that that particular product for hairdresser is you know, small businesses for managing timing and scheduling and all that sort of stuff went out the window when people went into to lockdown. That company almost went to the wall.
Yeah, I mean, you know, all of our customers were health and beauty businesses. They take their bookings week by week, and we saw those numbers go very quickly to zero as the world shut down. Where customers all around the world, so it was sort of different in different places depending on how those lockdowns worked. But that required a really quick kind of you know pivot for the business. If you're like we had to respond very quickly to that or we would have been dead. And yet it was a relatively short period of time after that twenty twenty one when we exited the business for you know, one hundred million plus, and so you know again that experience sort of being in that moment where the company felt very tenuous, and you know, we had to make some very quick, difficult decisions about how we were going to adjust the cost model or the business around that too. Only you know, a year or so later, you know that excitement of selling the company. If you only hear about the exit, you kind of miss a lot of the interesting bits of that story and that journey.
You call the book How to Be Wrong, you know. So, and it's very clear that all of these lessons and mistakes that you've made along the way and as part of these companies, have built a confidence in you. You know, you talk about vend in the book, another great company but was burning cash twenty fifteen, close to shutting it all down. You came back, camped out in a hotel room in Auckland and went to work with the team there to try and save it, which was painful cutting jobs, Yeah.
Especially painful because a lot of those folks who were let go in twenty fifteen were the ones who had been you know, on the steep curve up and had done the hard yards, so that was especially painful. And yeah, I had a lot of very direct conversations with our investors too, because you know, at that point, because of the mistakes we've made Wet, we weren't going to be able to raise external capital. So if we were going to keep the company alive, we need to get support from our existing investors. So those are crunchy discussions, you know, And yeah, I think it is. I think again it's interesting to share those stories so that people can sort of appreciate what that's actually like.
Yeah, because there are you know, probably a lot of startup founders and even just small business owners at the moment who are in one of those near death experiences. We've already seen some of our startups that had a lot of exposure sort of fail in the last couple of years, sunfed Ubco, great electric bike company, even solar Machines, you know, Gred Crofts, fantastic innovative companies run in to trouble with its business model. So a lot of people in these businesses are thinking, if I make a mistake here, the business is over, what do you do? I guess it's hard to give advice. Every situation is different. But what have you learned the confidence that you've built up to tackle these problems over successive crises in startups? What's your advice?
Yeah? So, I mean, as you say, call the book how to be So maybe let me just run through the three ways to be wrong, because there's actually only three, which surprises some people. The first way is to not even ask the question, So don't even measure your results, don't even ask if it's working or not. And I think that's the first piece of advice. I would go, like, be inside the business at least be very inquisitive about whether it's working and how you will know. You can do a lot of work to really understand how much of the story you're telling externally actually is true internally, So it's the first way. Second way is just to make an error. Like we're all human, we have our own biases, especially when you're a young company, Like the feedback you get from your first few customers can sometimes be quite misleading as you expand to a broader range of customers. So those sorts of things. You just have to be consciously and continuously aware that you might be wrong. And I think it's always better to kind of have that mindset, assume you're wrong and look for the ways you're wrong so that you can correct them quickly, rather than kind of assume your right, which is I think the sort of behavior more of an encouraging founders. And then the last way is just to lie, which you know kind of sounds facetious but actually is surprisingly common. And I told a few of those stories in this book too, like you, where people know that something's not working, but it kind of doesn't serve them to be honest about that, especially externally, and so they just sort of plow on. And I think, you know, so all three of those things, whether it's you know, omitting to actually measure, or making a mistake or just being dishonest, like, there are easy things you can do to avoid all three of those mistakes. And if you really consciously avoid those three things, you give yourself a chance to be right. There's no guarantee. These are startups we're talking about, but I think those behaviors are you know, the things that I would pin my advice on.
You talk about the value of curiosity and continuous learning. That's a continuous theme actually through the book. You're on a journey, but you're learning from every interaction you have with the founded team. When you investigate a company with a view to investing, you talk down I think it was you know, Steve Jobs quote about having this beginner's mind as technology evolves, and I think that's really pertinent at the moment where we have, you know, the biggest technology that's attracting investment and hype at the moment is generative AI. Trying to as a company reinvent yourself to incorporate this technology, because we're being told if you don't, you won't be competitive anymore. What's been your approach in a fast moving technology landscape. Sure, you're an expert in software as a service those types of business models, but everything from accounting software to and voiceing so nice sex very different type of business. How have you kept fresh, kept curious, and kept learning.
I mean, that's definitely a moment right now, isn't it. And I guess old enough to have seen a few of these waves with the you know, trade me road, the breaking wave of the internet really as that became broadly adopted, and then in between then and now we've had the mobile wave, you know, with the iPhone and two thousand and seven and Normwalds and so you know, it often surprises people, for example when I tell them that zero iPod before the iPhone was released, which is kind of crazy to think, but so, you know, I think all you need to do, really and I think this is the behavior that we need to kind of really try and encourage the kids especially is to understand how things work, like be curious about how things work, like try and deconstruct that because everything, everything was made by somebody. So generative AI is a great example, like you show, you know, the average person what that technology can do and it feels magical, like they type in, you know, a simple command and the machine responds in a very human kind of way and it feels magical. But you can deconstruct that, you can understand how that works. I'm about four and a half hours into a five and a half hour podcast you recommended better on this, which is like you know, dense with information about that. You know how they underlying technologies have evolved and been built up and all those things. So yeah, if you are curious to understand and those are things you can inquire about and learn and discover for yourselves. And then the next step is to realize that you can you can build those things. You don't just have to consume those things. And so you know, for me, that was the real switch that flipped when I was at university and the Internet wave was breaking. So when I was in second year was when the first web browser was released, Mosaic, and you know it would it would have been easy to see that as a consumption media and a lot of people consume the Internet, but you can also build them. And so yeah, having that mindset of being a writer as well as a reader, I think is part of that curiosity.
One of the things you've written in many LinkedIn posts and probably got a bit of flat for as well, because we do love in this country in the startup community, our meetups and startup founders, talking to startup founders, and one of your bits of advice which has stuck with me is don't spend time talking to other startup founders. Go out there and talk to your customers. If you're doing software for a cement company, go and talk to cement makers and go to their conferences. And that's about that learning and that curiosity about what is actually going to improve your product and not make you feel better as a founder because you're hanging out with a bunch of people drinking beer.
Yeah. I mean to be clear, I don't say don't hang out with startup founders. That's fine, Yeah, And I think it's probably important too, like to have peers who can relate to the things that you're working on experiencing. But my advices, don't spend all your time in that community because your customers aren't there. And this was a real lesson from Timing. Actually, like when we first started Timely, we thought ourselves we thought of ourselves as a technology company that was providing technology software effectively to the health and beauty sector. And eventually, over time we realized that we were wrong about that and we wear ourselves a health and beauty business and our product was technology services. And as soon as we made that switch mentally, it totally changed the way that we thought about selling and marketing the product. Like, as you say, we started hanging out at health and beauty conferences, not at startup conferences. It was very hard to get Ryan and scoff to come to startup events. It wasn't their scene, and you know, it's part of part of the success I think of that business was really getting to know the customers deeply and well. And yeah, like going back to those hard moments you were talking about earlier, I think that that allowed us to respond better because we had that connection. We even had we even had people on the board who were health and beauty people, not technology people, not investors, and so they were able to you know, they were able to see the right way to respond in those moments.
Yeah, you've obviously learned a lot about investing as well as a beautiful anecdote you're telling you Sam Morgan very hard nosed, an investor, very experienced. Now so nice sex. You know, you were saying, oh, that was a good return. He was going, Nah, I think we could have done much better out of that. What have you learned and how how have you did your approach to investing based on the success but also maybe some of the things that didn't work out the way you wanted to.
Yeah, I was really fortunate in that Zero was a nice hybrid for me. Like I was an employee at Zero but also an investor pre IPO. So in many ways, my first kind of investment post trade me was a very easy one, and the next couple that followed after that definitely punched me in the face. And I tell those stories, but I think the key lesson I took away from that was for me, at least, what made me happy was being closer to the founders, being part of the business, and really understanding what was working in those businesses, what wasn't working in you know, that sort of quick iteration in the very early stages especially was invigorating. But also where I could add the most, like just being an investor sitting on the sidelines and kind of cheering them on, didn't wasn't you know, wasn't giving me any happy points. And Sin of Sex is a great example, like I doubled my money on that, but I learned almost nothing from it. And so yeah, the ones that came after that were really heavily informed by that experience, and thankfully a lot of those have gone very well.
Yeah, and we're seeing more cases of sort of hands on investors who have all this experience, people who've gone through two or three startups now who are willing to this is.
How ecosystems grow. And I've been saying this for a while. We talk about building an ecosystem, but actually ecosystems grow, and it's awesome now. Like I would say, if you define the ecosystem as just the collective noun of startups, we're in as strong a position now probably as we've ever been. And there's a really easily understood reason for that, and that is a lot of people who have spun out of drave Mee and zero and Vened and Timing and lots of other companies that have had successes and are doing their next thing, either either directly you starting the new company themselves, or they're investing or advising. Ryan at Timley is doing exactly what I did ten years ago and has handpicked two or three companies to work closely with and is trying to make them as good as poss like that's exactly what grows an ecosystem.
We're going to close really discussing the state of the ecosystem and the state of sort of tech in New Zealand as well, but keind of drill into building teams in company culture. You write in the book, first, we need to accept that being excellent at just one thing is often insufficient. Then we need to think harder about the skills we have that can be combined. This is true for individuals, but especially true for the team. So I mean, these days, I think you play an incredibly valuable role in looking at a team. You've learned from the early days of trade me through to zero, what actually makes for a good team, especially in those early days when you may only have five or six people. What have you learned about that? And have we got better at doing this? Building startup teams in New Zealand.
I think the metaphor I like to use as a rugby team because New Zealanders kind of understand this. Like when you think about selecting a rugby team, you've got a lot of different positions to fill. You know, you need to props, you need some locks, you need a half back, you need to fall back. And same time with startup teams, like going back to the myth of the lone genius, it's kind of alluring to think if you just have you know, a team of those crazy, you know, inspirational leaders, then then magic could happen. But actually you need you need some props, and you need a half back to complement the fleshy winger, you know, And so yeah, that's I think the mindset that people should have is, like, is what are all the skills we need? And those those extend well beyond just product as well, like thinking about the business model, thinking about sales and distribution, like those are not strengths in New Zealand, but they are skills that are vital to any successful company. So yeah, like, I mean, you know, one of the one of the mantras that we had at trade Me actually was a's higher a's, b's higher cs. And so the whole mindset was trying to hire people who were better than us, and thankfully I managed to do that in a couple of instances so that by the time I left Trade Me, they more or less didn't miss me. But it's easy to do the opposite. It's easy to kind of to not think carefully about the people that you're bringing into the team, especially in those early days, who really set the culture and set the trajectory for the business. So hiring intentionally is a huge part of.
That, I guess as a founder and as a CEO, knowing when to step aside or as the CEO and you've had that with Vorn and people like that throughout the history of some of these companies have gone I'm a software guy, I'm a CTO type person. So I guess that's really pivotal and this is where investors can help. Look, you're still integral to the business, but not necessarily in an operational role.
Yeah, I mean, i'd include myself in that as much as anything. I'm also a generalist. I think that I am best suited to those early stages of the business, but everyone will have their own life cycle in these companies. Some people can see it all the way through. Others will be more suited to certain ages and stages of the business. And that's fine. It's not something I think you need to get too stressed about. It's just understanding what you can contribute to the business at the staf age it's at right now.
Yeah, you've been at times a bit skeptical of things like accelerator programs, you know, startup incubators. We've got one Creative HQ here in Wellington that's done reasonably well. There's some others around the country in terms of bringing young budding entrepreneurs together and trying to sort of flesh out those teams and find their way and where they add value to a startup. What is the best approach? What is the best way to go about that? We've got You know a lot of people coming out of universities and they will typically look to go into some of these incubators. Is there a better way?
One hundred percent there's a better way? I mean, I'm interested. You say that's worked quite well. I don't. I don't know how well.
I guess got a start in those places, but exactly how do you measure would they have done it any better or worse if they hadn't gone through the HQ.
The Cheesease founders came out of zero and Kivybanks, So I'd probably ascribe more of the success to that. To be honest, I mean you need to ask them, But I mean, there's one hundred percent a better way, which is like the best way to get an apprenticeship on a startup and learn is to learn by doing. Like, all of these companies are desperately short of people, and they will hire smart people quite readily into roles where you will learn a huge amount and a very compressed period of time and be paid for it, And for me, that's a much smarter route for somebody who's interested in startups rather than an incubator program or an innovation hard or or whatever else where where most of the advice is going to come from people who have never done it themselves, like learn by doing, by getting into a startup, and even if you want to spend a couple of years there, you'll come out the end of that with so much experience and so many lessons that you can apply to whatever you want to do next that will be so much more valuable than any of those programs. So that's like, individually, I think, much smarter advice for somebody, and then collectively, I think it goes back to what we were just talking about before about the difference between building and growing system. We've invested enormous amounts of money, billions of dollars over ten fifteen years and trying to build an ecosystem from the top down, and the measurable results of that are pretty hard to find, you know, certainly if you look at the highest kind of level economic indicators productivity per capita GDP, all those headline things that we're supposed to improve as a result of us investing that much in these things haven't improved at all. In most cases have deteriorated, So, you know, I think collectively again, the smart way is to try and build these companies up one at a time. So if you're somebody who really wants to contribute to an ecosystem, choose one company and go and work on it, or invest in it, or get close to it and make it as great as you can. And if enough of us did that, the ecosystem would be much bigger and stronger.
Yeah, and actually what you say about the Sharesas team is really pertinent, and it goes for like the guys behind first AML, they came out of the financial sect, and you see this a lot in fintech people who work in banks, insurance companies. There's a frustration. They come up against it in their work and they go, I'm going to go and find a better way of doing this.
One hundred percent. Discontent is the one one of the rare things that all founders have in common. So, yeah, that's your apprenticeship, you know.
So rather than come out of university, look for an incubator type opportunity where you might get thrown a little bit of money usually in exchange for some equity, go into the industry that you're passionate about or want to learn about.
That's your apprenticeship. And if you don't know yet, like there's some great programs for students too, Summer of Tech here in Wellington and it's just a fantastic program, been running for many years and some great examples of people like you know Amanda and Nicco too, people we hired at south Gate Labs back in the day who've gone on to work on multiple of these successful companies. Amanda was part of the design team timely is now at a new company called Connectworks. So you know, you see those sort of dots connected through the ecosystem when people take those opportunities and yeah, it's it's the only way to lard.
This leads us really to discussing the ecosystem where we are at the moment in New Zealand. You know, there's been a lot of discussion in the wake of the Science Sector Advisory Group report from Sir Peter Gluckman and his team of advisors has been put out quite disruptive for R and D and innovation sector, particularly the winding down of Callahan Innovation. You devote quite a lot of space in the book to talking about Sir Paul Callahan. You obviously have a lot of respect for him and some of the ideas. You disagree with some of them as well. But pretty sad to think twelve years on that we are winding down something that had his esteemed name on it. What is your sort of summary off the legacy of Sir Paul and how do we need to adapt that now?
Yeah, it's kind of devastating how it's ended up, to be honest. So I was lucky enough to be in the room when he gave that lecture in twenty eleven, which included so many of the lines that we still repeat all the time, like, you know, New Zealand needs to be the place where Tellent wants to live, and the things that we're going to be great at will be niche in confusing and surprising and so on and so forth. Had he had all the answers in twenty eleven, and sadly we stood something up in his name that kind of did the opposite, you know, it tried to pick winners when he explicitly said that we're going to be surprised by these things. So it is kind of devastating to think that we've spent so much and have so little to show for it in that sense, and I do have a lot of respect for him. I think I think a lot of his ideas were right. I think I mean one that we've already talked about where he maybe didn't quite see the future, where he said it would only take one hundred inspired founders to turn this country around. Yeah, and like the reality of that is not right. Like it's true, we probably do need a hundred Peter Becks, but every Peter Beck needs one hundred or a thousand people whose names you don't know to build those companies out. So we actually need tens of thousands of people, and that's the real constraint now. So yeah, I mean, it's it's a necessary reset. In my opinion, what's happened at Callahan Innovation. I think they got bogged down, especially in recent years, doing too many things and again with very little measurable impact. So it's awful for all those folks who are directly impacted by that. But I actually hope that some of them at least will take the opportunity now to go and work directly on startups. Rather than working on a bureaucracy that's sort of an umbrella over the top of these companies. Every single one of those companies that they've been supporting through Callahan will needs to hire more people. Yeah, and that's the constraint that I keep coming back to.
And there will be a new what was a Crown Research Institute, they call it Public Research Organization. It will focus on artificial intelligence, quantum technologies, and synthetic biology. What's your take on that. Having written about this recently, a lot of people from the business community and the startup world is saying this is doomed to fail. If you really want to move quickly and grow the economy, as Christopher Laxon is saying he wants to do, actually invest in startups that find the best AI experts in the country, don't put them under a roof of a bureaucracy. Actually tell them what you want to do and see if they can solve the problems.
Yeah, and again I don't necessarily think government will solve this problem from the top down. I guess I don't have a very informed view on the pure science aspects of that. It probably is one of the parts of Callahan that actually has been successful, ironically, and hopefully there is a way that that values retained in the system. But what you're talking about with that area is much more invention than execution or innovation. Innovation. For me, the definition I like to use at least is fresh thinking applied to create value. And I think often we get bogged down in the first part of that, which is the inventing part of it, and New Zealand has a pretty good track record of being the first to think of things, But it's the applied to create value part that we just continue to struggle with, and I think that's where we need to probably focus our energies and efforts. And that's sort of bad news because to be inventive, you just need to have one novel idea. To be graad at, execution in these businesses requires thousands of little things to go right repeatedly over time and for years, and that's much harder work, and it requires a big team, and again our constrainers that there's just not that many of us. So yeah, like I think, you know, the sorts of things that are going to ultimately lead to the success that the Prime Minister and others talk about is in my mind quite disconnected from that pure science end, which is not to say we don't need it, but it's maybe a useful precurs rather than the silver bullet.
Yeah. I mean, if you look at something like synthetic biology, we've really wound down that capability in New Zealand. So it's going to take a decade for the pure science to build up something that we're going to be able to add value in.
But remember the biggest successes in tech companies did not invent the technologies that they are famous for. Apple, the biggest technology company, did not mean any of the things that they are most famous for, but they did work out what all of those things were for, and man, they worked out how to make us want them and to pay top dollar for them. And so the really valuable part is not being the first to have the idea. The really valuable part is being the one who works out how to sell that to somebody in a way that they will pay for. And that's a repeated padn across all of these companies that I've worked in, and in fact across every big tech company. Google wasn't the first big search engine. Netflix wasn't the first streaming service. Zoom wasn't the first video.
And I think that goes for AI in particular. We're never going to be able to compete on large language models, even with deep seeks, you know, cutting the costs. It's the application of AI, whether it's law view making legal papers easier to assemble, So it's the application.
One hundred percent. I think. I think my personal view on AI is that it will always be imminent, like, because the things that actually work will We'll just think that they're features of the products that we use. Auto correct is the best example I have of that. Suddenly, after years have been quite crap, Auto crep got quite good recently, have you noticed, And that's because it's now using AI under the covers, right, And so yeah, we'll just consider those things to be features of the products and services we use. I'll give you another example of innovation, which is completely fieled. New Zealander basically invented pop up. We were the first country in the world to do that format of talent reality.
Nigel Stanford's business.
No it wasn't Nigel, it was another guy, but you might remember Troopliss, the Girls band, And then we can the inventor of that completely failed to capitalize on that. Other people around the world were the ones who captured the value of that. So yeah, I think we over index on invention and massively under it index on execution.
Yeah, in terms of that talent, In terms of that talent constraint, I mean, we've got sort of token things the government's just thrown out in the last couple of weeks visa changes to try and get both investors but also digital nomad's people working here and that sort of thing. That's only going to go so far.
So far, all those things are fine, but yeah, none of them are a silver bullet. They are long term investments unfortunately, Like the best time to pine a tree is twenty years ago. And if you look at the number of STEM grads we have, for example, coming out of New Zealand universities, it's pretty woful. So we're not we're not in a strong position really to capitalize on these things. Sadly. We need to probably really change our mindset of how we invest in that pipeline.
Yeah, the domestic talent pipeline. Labor had the Digital Industry Transformation Plan that's been spiked by the government. There just seems to be a big gap around how we get the pipeline really going get businesses offering apprenticeships and things like that. I think until we solve that problem, we're going to be reliant on an overseas tech workforce trying to lure them here for lifestyle reasons.
Yeah. I mean. Another thing that's a little depressing about the active investor visa announcements in the last week or so as we record this is it. It's that mindset of importing foreign solutions, and I mean we do this, we do this with capital as well. We're desperate for international investors to come and invest in New Zealand. And again, I think we could shift our mindset on this, Like we have been very tentative on compulsory savings in New Zealand, and politicians like to compare us to Singapore and other countries like that, Australia even you know, those countries all have a much more aggressive superannuation scheme, you know, for all of their people, which builds a huge pool of capital that then gets invested. And so let me make that really practical and specific. Like when vend was sold in twenty twenty one, about fifty percent of the ownership of that company was New Zealanders or New Zealand Funds, and fifty percent were overseas investors who'd invested large amounts of capital. We've took in about seventy million dollars of capital into that business over the years and one of the biggest, I think the biggest investor in vent that exit was Squarepeg Capital, which is a big venture fund in Melbourne. You know, their investors are the Australian superfunds, and so if you think about it that way, like the value that was created at the end that was returned to shareholders when we solved the business ultimately went back to benefit Australian supernuation funds, So all Australians that were invested in those funds. That's the way we should be capitalizing on the ecosystem that we're growing, but we just don't do it. We're very tentative about even making Kebsaber compulsory alone, let alone at the high levels that is sort of mandated in countries like Australia or Singapore.
So we've got some challenges, but you're passionate about this country. It's very clear from the book that you're optimistic for the future as well. What's on the cards for you this year? Are you sort of living to dream of investing in companies? You've had a great track record, so having you on board as a director and as an investor, you must be getting opportunities all the time.
Yeah, I mean I see a lot. The biggest constraint I have continues to be time. There's only so there's only so many hours every day. It doesn't matter how much money you have. And I like to be close to these companies that I work with, and so that's the constraint for me. There's a small handful of companies that I pick pretty carefully to work with. But I look around and think that there was a time when I felt like I was an investor in all of the good companies in New Zealand, and that's definitely no longer true. Like there's now a wide list of companies that are doing great things, and so yeah, for me, the state of the ecosystem from the bottom up has kind of never been better. I think there's things we need to think about and configure differently from the top down. I think we need to do a much better job of connecting the dots from these companies that are successful. How does that actually benefit all New Zealanders. I don't think we've told that story particularly well at all. But on an individual company level, like if you're somebody who's working on or investing in one great company at the moment, things are good for you at the moment you and there's lots of opportunities.
Really interesting book How to Be Wrong, and it sort of resonates as we were talking about being AI some of the difficulties that early stage companies go through. Rowan talks in the book about a fate worse than failure for a startup, which he describes as being basically living dead, and he says there are a few features off it. It has some customers and associated revenues, but few who really love it. Because people don't feel strongly about it one way or other, it's difficult to get really good feedback product where crawls to a standstill and it just sort of spirals into failure. But it takes a long time and a lot of money is lost along the way.
I think what really underpins that idea of living death is what you mentioned in that quote, which is that the love and the passion and you know, really startups require people who are going to pour everything to the point where it may cost them, you know, personally into that business, and that that's a hard thing to ask for. I think sometimes I think maybe Ruin in your conversation, I think maybe he underestimates how large the leap can be for people. It's all very well and good to say, you know, these people out of Callahan, they should go and get into startups and throw themselves into the ecosystem. It's like, well, you know what, maybe some of them can't do that. Maybe that their life does not you know, allow for that kind of risk. Maybe they don't have the capital or the capability to do that right now.
So yeah, that is true. Having said that, he sort of has lived that experience himself, albeit starting at a young age, and trade me it's easier to do this as a young person, but has then gone on to add a lot of value to other startups who have young teams as well. So that's great. One of the key takeaways for me is this idea that Royan has around, you know, rather than innovation, execution is everything, and maybe that's where we've fallen down. He said, if we have an agency supporting startups in this country, it should be it should have been probably Callahan execution rather than Callahan innovation, because he's basically saying that being first isn't the most important thing. He pointed out in the book. Google wasn't the first search engine, Facebook wasn't the first social network. Amazon wasn't the first online store, but it did something in the application of it, of doing its own version of those things that gave it the edge. And sometimes the innovation isn't the product itself, but it's the distribution channel, or it's the revenue model. If you take Zoom for instance, you know it wasn't by any means the first video conferencing tool, but it, especially during COVID, became the one everyone wanted to use. So I think that's a really important takeaway is that we focus very much in New Zealand on the inventor sort of mindset where you need to create your IP and all the value will come from that. But and this is really important for the world of artificial intelligence. Being first or or having something that is completely unique is very difficult for us. But applying that in a very innovative way, which goes to what David McDonald's trying to do with with its treehouse concept. This sort of broker of APIs for the AI agents, you know, that could be the way forward. That's the sort of thinking we need. But it's all about execution.
Yeah, and it goes into something that I read somebody post somewhere a while ago and it stuck with me, but unfortunately I can't remember who it was. But there's the you know, actually New Zealand needs to start to step away from the number eight wire mentality. Yeah, because realistically what people now want is, like you said, execution. They want really clean user interface. They want it to be you know, well processed, have a clear path, and to be you know, really focused on what are the outcomes going to be for that company, for investors and for the customers, how it's going to you know, impact their outcomes and deliver value. And I guess, you know, just using a bit of number eight wire to make a fuse or fix a railing is a little bit of a different approach and maybe not quite right for the current state of startups.
I think we've actually left that behind quite a while ago in the software space. Anyway, that mindset they've got quite good at at all of those things, but the constraints, as Ron points out to really nail that execution, talent and capital were really constrained on both fronts, and there's no great answers there. The government is tinkering with investment and visas and all that sort of thing, but we're well behind. Until we have great people and a pipeline of people to go into these startups, and until we have more capital from sovereign wealth funds, our own capital, not just international capital, we're really going to be constrained. So those are the two things that are standing in a way off the sort of world that we want, which is the knowledge economy, all the things that so Paul Callahan talked about, which are still as valid as ever, but we just haven't really got as close to as we need to.
And if I may climb up on my soapbox slightly for a moment, I think that we do need to create an environment where people can try really hard and veil and it's not going to ruin them, you know, because if people don't have security, if people don't have you know, like at least some semblance that if they fail, it's going to you know, ruin everything, because when you're young, like you say, you can do that, but if you want a pipeline of people, we can't only be focusing on young people. We need to be enabling people who are not just those who are already wealthy and comfortable, but maybe people who are willing to take a bit of a risk, but maybe not their entire life, you know, maybe that's just you know, maybe there are some social structures that we could put in place there.
But yeah, and that's what Silicon Valley is really really good at. Actually, and there are older founders there as well. There isn't necessarily a safety net for them. The reward is great if they succeed, but there isn't a stigma there if you fail. You could do two or three ventures before you have a successful startup, and they don't do living dead over there. You know, you very quickly die or succeed and move on to the next thing if need be. So that's still something we need to take some lessons from.
Yeah, definitely.
So thanks to Ron Simpson for coming on. His book How to Be Wrong at Crash Course and Startup Success is out now. Links to where to find it are in the show notes at Businessdesk dot co dot NZ. You just check out the podcast section for them.
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