Banks need better IT nous to support Kiwi start-ups

'Brierley Investments [BIL] has formed an Asian alliance with US technology investment firm Madrona Investment Group. New chief executive Greg Terry said BIL would put an initial $A20 million into a Madrona fund, though he would expect that amount to grow markedly. Brierley ... would have first rights in Asia to pursue those e-commerce opportunities, Terry said.' New Zealand Herald, October 18, 1999.

"Brierley Investments [BIL] has formed an Asian alliance with US technology investment firm Madrona Investment Group. New chief executive Greg Terry said BIL would put an initial $A20 million into a Madrona fund, though he would expect that amount to grow markedly. Brierley … would have first rights in Asia to pursue those e-commerce opportunities, Terry said." New Zealand Herald, October 18, 1999. If only that was a Kiwi company out there making waves. Oh wait, BIL used to be one, didn’t it? Just like Bendon used to be "New Zealand based". Just like Sausage Software was held up as an example of Kiwi know-how, can-do and all the other endearments we’ve come to know and love, or at least put up with. What is it about New Zealand that means these companies can’t flourish here? Putting aside the issue of Bendon for a moment, why isn’t New Zealand capable of supporting a high-tech start-up and an investment firm that wants to go high-tech? One of the problems — and it affects other aspects of the New Zealand economy beyond the IT market — is a lack of trained people and I’m not just talking about people with coding skills. I’m talking about a lack of training and understanding about IT at a much more fundamental level. What response does a start-up company get from a banking institute when it’s looking for seed money? The answer I’ve been hearing is less than impressive. Banks, and their like, want to see companies with buildings and equipment. They like to see the company producing something they know can be sold off in the event of a business failure. Quantifiable seems to be the name of the game, and IT start-ups just don’t sit well in that world. Intellectual property is a bit too airy-fairy for investors — you can’t really auction it off at a mortgagee sale and you can’t use it yourself without quite a bit of help from those people who have the knowledge tied up in their heads but who couldn’t sell the product. Sure, there are some venture capital firms out there giving it a go, but they are few and far between. Understanding IT needs to run beyond the industry itself and into mainstream life as well. We’re told New Zealanders are traditionally early adopters of technology, so I would have thought this was already happening but if it is, it’s a bit slow off the mark. The other side of the training coin is, of course, getting the requisite number of people into the industry to do the job in the first place. Motorola is talking about setting up shop here in New Zealand — either Auckland or Christchurch last I heard — but there’s a problem. In order to adhere to Motorola’s hiring policy the company would need to interview every IT graduate we produce for the year before making a selection. Think about the logistics of that process. Think about what that means for the rest of the IT industry. Last week I spoke with Eagle Technology’s Trevor Eagle about hiring staff and the problems associated with it. He had just come back from a trip to India and he spoke of one city, with a population of three million, that had over 150 tertiary institutions. Even if you take into account the number of people in the catchment area that’s still an incredible number of tertiary students being churned out per head of population compared with New Zealand’s total. We don’t have the culture that encourages people into tertiary education on that scale and I think that’s terrible — not just for the IT industry but for both society and the individual. I would rather live in a country where education is encouraged than one where it is treated as a luxury. New Zealand can’t afford to fall into the latter category — it will be too expensive in the long run. Of course, the danger is that we will train thousands of people in IT and they will all cry: "Hurrah! It’s off to Europe and the US for me. I can earn three times my weight in gold if I hurry", but since they’re doing that already I don’t see that as a problem. At best they will spend a few years learning skills and gaining experience and then come home, hopefully laden with riches to start up high-tech companies of their own. And hopefully by then we’ll have an investment regime in place that encourages them. Kirstin Mills will investigate training and education issues surrounding the Knowledge-based economy in our special KBE issue on November 8. Paul Brislen is Computerworld’s Y2K reporter, phone: 0-9-377 9902. For publication copy letters to cw_letters@idg.co.nz paul_brislen@idg.co.nz

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