Q: What do you think are the biggest challenges facing the industry in the next couple of years?
CK: The number one challenge has to do with the ability to scale for companies that are growing in this market and looking at expanding and exporting increasing, their capabilities in terms of their R&D and just becoming bigger companies.
Xero started with Rod and a couple of people in their living rooms, to becoming this company that is a juggernaut internationally. Can’t we replicate that environment? One of the hardest things for Rod in the early days was finding the right people, the right team. Now they have got a brand, they can attract talent.
But we have also got hundreds of smaller high growth companies that have not become brands. They don’t have the funding and they don’t have the availability to actually scale rapidly in this market. If you look at that as a number one issue, there are a whole bunch of others that come off it such as seed funding, growth capital, governance, structure, export capability and skills and talents.
New Zealand is a very niche country. The products and the companies that we create are often in areas that are overlooked by other countries or companies because they perceive them as too small an opportunity. We don’t build databases and mobile phones, for example. We build companies that do funky stuff with databases, and we build companies that do funky stuff with apps.
We fly into the radar in many areas and we come up with some interesting innovations in agriculture and cloud space and that sort of thing. On one hand it is very good and it provides us with a neat little collection of eclectic companies. But on the other hand it is also very difficult in many ways to scale those companies.
While scale is one area, the second area is that we are so used to playing in these niche, fixed little backyard areas that sometimes it is hard to get that niche idea to be a multi million dollar company. But if we start looking at other opportunities and competing with some of the bigger bolder ideas, we can go a long way.
That’s a tricky balance to achieve. For every big company, there needs to be innumerable small firms. We need those. But we have got tonnes of small and niche companies. What we don’t really have enough of are the big ones. We have got a few of them, but we need more of those. The ones that you name off they have become audacious companies in their own right and that was because the founders had the vision. I think we need a few more to be financially able to back those really big goals and dreams to create the next mobile phone or perhaps or the next Navman of the industry. We need more of them now and I don’t see a lot of them coming through.
We are a small population, without a lot of money, without heavy deep skilled talent, we are far from our markets and we talk kind of funny to Americans. If you can think of all the things that work in your favour when you have an office in Silicon Valley, we are just the opposite of that.
But we still manage to have some amazing success stories and to win despite the odds, which is fantastic.
Q: Why do young Kiwis not see technology as a good career choice and how should this be addressed?
CK: Look at the education and kids. They are in these amazing little bubbles of creativity and imagination and they are encouraged to draw and finger paint and expand every ounce of their horizon. However, once they start down the path of traditional education, it rapidly becomes walking in a certain way, staying within the lines and listening to people talk about only certain possible solutions to problems. All of a sudden the creativity gets channelled into process. You need that, you need a baseline education, not everybody can be an artist all of their lives.
With technology and the people I have met, who have been incredibly successful entrepreneurs, especially with developers, it is much more of an art than a science in many ways. A creative bend of thinking, looking at how to do things differently and a keen problem solving ability – that is all part of their personalities.
Without chastising the education sector, I think a lot of that is taught out of kids. Technology is taught in a very process-oriented manner that can be nauseatingly constrained and boring, rather than being approached as this amazing creative environment where you can actually have fun, do design, and think outside the box in terms of problem solving. So it is the way it is taught, rather than what is taught.
Take Frances Valentine of the Media Design School. She is kind of the Joan of Arc of education, in the sense she is working to change the way it is done, and – as a one woman show – encourage youth and kids to become passionate and excited about technology.
I have been there for a lesson involving robotics to seven-year-olds. They were learning about motherboards, while having absolute fun. It was amazing. Imagine if you could take that sort of learning and put it into mainstream schools. How exciting it would be and how fun.
It really does come down to teaching teachers how to teach – giving them incentives to change. If you look at the average age of teachers in NZ, it is over 50 years. And they have been doing it for 25 years, so why would they want to change now? They are closer to retirement so they would rather do what they have been doing.
The other half of it is giving them the right tools and structure around different subjects. It is not just about a course in technology. It is about teaching chemistry, about maths and geography, and technology as part of that.
Q: How are you working as an association to improve educational offerings?
CK: We have taken the approach to work with the institutes themselves – the universities and polytechnics. The low hanging fruit is to help them understand what they need to change about curriculum and then put pressure on the government. We don’t have enough people in the industry today. That we need to fix as a matter of urgency.
There’s two ways you can do that: The first is Immigration NZ, which is the fastest – just get the people into the country that already know what to do. The second is to try and up-skill the kids who are enrolling or about to enrol in degree programs and will become a product our industry in the next few years.
After that you work backwards to high schools and elementary schools, and work down that way. Immigration NZ is fantastic and supportive. They have already got this worked into the program. It is just a matter of us working together to find some more solutions.
The second aspect is working with the universities and the polytechnics to update and change the curriculum.
The third step is pressuring government to look at changing policy around how teaching is funded at universities and increase the number of available seats.
It is a matter of push and pull. We need to push the kids to generate interest. We need to pull the levers with the government to open up available seats. Going forward, we also need to work with education facilities from middle school and high school all the way through to help them understand where technology is going.
In NZ, the universities are funded based on their research, and not necessarily on how or what they teach. In other countries such as the US and Europe, they are funded based on what they teach and how they actually get their students through it. Ideally we would start moving towards that funding mechanism in the future, particularly for science and technology subjects. It is a hard change to bring about, but one that we need to move towards.