How conservative corporate culture is holding Australia’s startup sector back

The conservatism of Australian business has had a major impact on the startup industry, from the way it supports young startups to the way it rips them off.

Large companies and the technology industry are focused on driving investment and talent to drive growth and productivity. Our elusive corporate culture must also be discussed.

This can’t be The Last Dance

As a PR professional for technology and energy startups, I am well aware of the importance that large corporate clients and partners play in the emergence of a young company.

Founders are told to be “focused,” “patient,” “loud,” and “brave” when pursuing business partners. But location and culture are also important.

While there is no “willingness to partner with a startup” index to refer to, the entrepreneurial culture is a good substitute. Australia is ranked number 23 according to the World Economic Forum’s 2019 Global Competitiveness Report.

This lines up with the anecdotal evidence I’ve experienced in this industry since I started as a tech reporter in 2009. US companies are much more willing to partner with untried Australian startups compared to big companies back home.

Australian corporate culture: loud, different, unusual

Everyone wants technology and big companies to get along. The relatively new Technology Council of Australia, a long-overdue addition to Australia’s policy landscape, wants one million jobs in the technology sector by 2025.

Meanwhile, the Business Council of Australia, which primarily represents Australia’s largest companies, has been complaining about Australia’s poor productivity for decades.

As the federal government enters its second year, the House of Representatives standing committee on economics is conducting a study on promoting economic dynamism, competition and business formation. Both the BCA and TCA have submitted comments that have a lot to do with growth and productivity.

Both organizations point to increasing investment and talent, which would suggest there is some kind of alignment between the two that should be welcomed. But not much policy thinking is given to the more elusive concept of culture. Perhaps the hope is that it will sort itself out.

To the BMA’s credit, this phenomenon is somewhat recognized in its column ‘Increasing Risk Aversion and Cautious Attitude to Risk’.

“…companies may not be inclined to invest, innovate, hire new employees or otherwise be more creative if managers are concerned about policy uncertainty and possible changes in their work environment or global conditions,” the entry reads.

The BCA then blames the “scarring effects” of crises.

“People typically become more risk averse during and after times of crisis, saving money and delaying decisions about employment and major purchases,” the BCA said.

“This phenomenon was apparent after the GFC and the COVID-19 pandemic may have produced a similar effect.”

It should be emphasized that the BMA is mainly concerned with other matters. But Australia’s conservative corporate culture predates all that.

It’s also worth noting that Australia never even entered a technical recession during the GFC and we may have had a better time economically during the pandemic, although some may disagree.

Hard to get the word out

This difference in company culture is observable when startups want to promote their relationships with major Australian companies.

A major financial services firm recently bullied the co-founder of a sustainability startup I know into resigning after a journalist only mentioned their brand.

The story was positive and unrelated to the brand, they were mentioned as part of the startup’s recent background that the journalist deemed relevant. In the PR world, this is absolutely ridiculous, and the big companies knew it, but for the start-up phase, it was very scary.

Another financial services company forced a startup I know to pressure a journalist to remove their brand name from a headline for a story promoting the relationship.

How so? Back to the plague again. This is not poor stakeholder management from a small team. It’s bullying, simple as that.

Perhaps because stories like this spread like wildfire in Australia’s tightly knit founder community, many startups just don’t even ask. They don’t want to “jeopardize the relationship”.

I’m not suggesting that American corporate culture is incapable of this kind of behavior. It just seems more like something down here.

Failure is success practice

Imagine for a moment if Milkrun failed instead in the US, where failure is the practice of success.

A percentage of the company’s investors would reassure the founders to approach them if they have a new idea because “I like the way you’re taking it.” An unknown number of investors who did not participate this time would similarly mark the talent.

But Milkrun failed in Australia. It has been argued that the company’s collapse is symbolic of reckless VCs, rookie founders, a lack of fundamentals, and even the media for creating a frothy industry that talks long and delivers little, pardon the pun.

Undoubtedly, some of these criticisms are justified. But this company delivered in so many ways.

Shouldn’t we ask Milkrun’s founders what they would do differently next time?

What lessons have they learned? Where do they see the next opportunity?

Unfortunately, that’s not the focus here as we wonder what’s next for Aussie startups.

That’s too bad. Because the best answers to that question probably lie with founders who have just learned some of this industry’s hardest lessons.

  • Alexander Liddington Cox is a technology and energy communications consultant at The Media Distillery.