October 9, 2024 • 52 mins
This week's guest, venture capitalist, founder of PhaseOne and former early employee of Canva Mahesh Muralidhar, shares invaluable insights into the necessity for New Zealand's software startups to expand into the lucrative US market.
He discusses the unique benefits of Kiwi founders on the global stage and some of the cultural things that might be holding them back.
Plus, the Auckland teen caught smishing with specialised hardware and how China exploited backdoors that US telcos were made to leave open due to regulation.
The Business of Tech is sponsored by 2degrees for Business.
See omnystudio.com/listener for privacy information.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
The USA the holy grail of markets for entrepreneurs all
over the world.
Speaker 2 (00:05):
While we Kiwis have many cultural distinctions that separate us
from our western piers, we also have a huge number
of similarities.
Speaker 1 (00:13):
This fact, as well as the sheer amount of money
and the number of people, make the US market a
golden goose for local entrepreneurs.
Speaker 2 (00:20):
Our guest this week is Mahesh Moralda, a venture capitalist
who was the twenty fifth employee at Australian unicorn startup Canva,
and he has strong feelings about the need for New
Zealand companies, especially tech and software companies, to expand beyond
New Zealand.
Speaker 1 (00:35):
With his deep experience in the VC world, maheshkiv's advice
to startups on how to capture some of that American cash,
as well as his view on why it's so important
for New Zealand businesses to break into the US market.
Speaker 3 (00:48):
QUI founders who make it to the US are better
than the top tier American founders because American founders they're like, hey,
if this doesn't work out, I'll be fine. We founder
who makes the US knows and believes they have one shot,
and then they go.
Speaker 2 (01:05):
All that's coming up later in this week's episode of
the Business of Tech, Howard by two Degrees for business.
But first, Peter, have you ever been smashed?
Speaker 1 (01:14):
I haven't been successfully smashed, but I got to say,
literally last week I almost fell for one for the
first time, which was a message from supposedly from New
Zealand Post about a package that hadn't been delivered, had
been held up. I needed to give some more information
and I literally was waiting for a package that had
(01:38):
been held up. So I was like, finally they've got
in touch with me. It clicked through to it looked
just a little bit off, didn't look like the New
Zealand Post website, and then I looked at the URL
and it was not ented post dot code into ed. So,
I mean a lot of people will be familiar with
these smashing text messages. It's basically SMS fishing, which is
(02:01):
an attempt to get you to divulge sensitive information or
to click a link to download some malware onto your phone.
That's often the case as well, so I think kiwis
are quite familiar with this. But a case that's just
been uncovered that played out earlier in the year was
a smashing campaign that didn't just rely on the existing
(02:24):
networks of two degrees or one end Z or a spark.
What these people did is a lot more sophisticated. They
set up effectively a fake mobile base station in Auckland
to try and get people to connect to that base
station automatically thinking they were on a regular network, and
then they sent them dodgy SMS messages. And the reason
(02:48):
they would go to all that trouble is to bypass
all the sort of filtering systems that the other legitimate
networks have in place to try and weed out a
lot of these smishing messages. And then they could basically
tailor messages with their own phone numbers from this fake
base station and communicate with these people who thought they
(03:08):
were responding to legitimate messages. It's incredible how far they
went to make this happen. You've been very few examples
of this, mainly out of China where this sort of
level of sophistication of smishing messages has been seen.
Speaker 2 (03:25):
Yeah, I mean it's almost kind of cool in a
way when you look at the technology that's involved, and
it's kind of this very ad hoc thrown together thing.
You can see the picture in the article will link,
but to kind of know there's some teenage amateur engineer
out there who's throwing together one of these things in
an attempt to defraud people. Obviously terrible behavior and not
(03:49):
something to be encouraged at all, but at the same
time kind of amazing that they were managed to get
the kit, put it together and successfully actually do this.
Speaker 1 (04:00):
Yeah, and I wonder if there is a China link here,
either Chinese students in New Zealand doing this or someone
working with people in China to get the equipment here.
It was a operation by the police Operation ORCA. Funnily enough,
they had a bit of a sense of humor around
that one, and the Department of Internal Affairs was made
(04:22):
aware of the scam in July. I don't know whether
she was dabbed in or what happened, but they've been
on the case. These fake base stations, they call them
base transceiver stations BTS towers, and there is in China
again malware called swearing Trojan, which is Android based banking
(04:43):
malware which have been used in conjunction with these BTS towers,
which ultimately have a range. According to reports out of China,
off ten to twenty kilometers, so you could have a
lot of people. What I don't understand is how they
get you know, my phone, I'm on the skinny network
on a skinny sim. How they get my phone and
(05:05):
my sim to connect to their network. There must be
some authentication that there's somehow mimicking or bypassing there for
that to happen.
Speaker 2 (05:15):
Yeah, because they talk about it just auto connecting as well.
Your phone will auto connect and you won't even know
that it's done it because and it will use I
think like a two G network as well, rather than
the three G or four G because for whatever reason,
it tricks your phone into thinking it's the network that
it should be connected to. There's some instructions where you
(05:37):
can actually disable the two G network on your phone
to be able to make sure you can avoid these
kinds of things. But realistically, the smishing is no more
sophisticated than any other text fishing, and they can be
pretty convincing. You know, you're not the only one who's
definitely clicked on one of these links and then gone,
oh no, that's actually not something I should be clicking on.
Speaker 1 (06:00):
Yeah, And I think obviously a lot of those messages
still get through, because I got one just last week,
so that the networks aren't doing enough to keep up
with this deluge of smashing messages. But to go to
the next step of installing some physical hardware, you know
there must be a real incentive to do that, which
(06:21):
is and I think it is when you're on that
fake base station that's down the road from you or whatever,
they can tailor official looking numbers, They can create their
own basically their own phone number network to send you
official looking text numbers and phone numbers, which then you
might make you think, oh, okay, this is legitimate, but
(06:43):
ultimately they're still going to send you to a dodgy website.
So all the same preventative measures are in place. Is
it the right url? Are they asking for information my
bank normally wouldn't ask for over email or via a
web form? All those things come into play again, and
which should hopefully eliminate ninety nine percent of the chance
(07:04):
of you actually getting schmished.
Speaker 2 (07:08):
I know it sounds like it's something you might want,
but trust me, you don't want to get smished.
Speaker 1 (07:13):
Definitely not.
Speaker 2 (07:14):
And of course cybercrime isn't just restricted to teenagers in Auckland.
There are nation state actors as well, and China, it
turns out, has been able to take advantage of backdoors
in telecommunications companies which were left open to meet US
federal regulations. That was a really interesting story that you
(07:35):
sent me on this one. Basically a bunch of professionals going,
we told you these backdoors were a bad idea, that
there were a weakness in the armor, and it turns
out that that some hackers have found those weaknesses.
Speaker 1 (07:50):
Yeah, we talked earlier in the year about this vault
Typhoon hacking group again out of China. That was leaving
were packages and critical infrastructure the likes of power stations
and water infrastructure companies in the US, and this happened
several years ago, but the US governments and the Five
(08:12):
Eyes partners, including New Zealand, came out earlier this year
and said you need if you run critical infrastructure, you
need to go in and check your systems because this
vault Typhoon group is through a lot of companies in
the US. So fast forward sort of nine months, we've
got Salt Typhoon, and this is apparently a slightly different
(08:33):
group of hackers who have been very much focusing on
the wire tapping infrastructure that the US requires big telecommunications
and internet companies in the US to maintain by law.
So that's a law from about thirty years ago that says,
you need to make your network's interception capable, and there's
some little black box that hangs off the back of
(08:54):
your network that we need to be able to connect to.
We have that here in New Zealand as well. Most
countries do that, and when you get a warrant, then
that will activate the ability to use the y tapping
method to either infiltrate or listen to calls as well
as Internet traffic. So you know that is effectively a
(09:16):
backdoor in the network that the FEDS in the US
can access. Well, it turns out, according to the Wall
Street Journal, which reported this on Friday massive story, the
likes of AT and T and Verizon and Lumen Networks
formerly century Link have all been compromised. These y tapping
(09:36):
facilities have been compromised, potentially exposing customer data to these hackers. Now,
if that's the case, if we're talking about huge volumes
of traffic that go through the likes of AT and
T and Verizon, if that's the case. You know, that's
one of the biggest exploits in many years. It hearkens
(09:58):
back to the Edward snow and revelations of twenty thirteen
when he basically revealed and all the documents he leaked
a mass surveillance effort underway by the US government that
even some of the telcos and internet companies didn't really
know what was happening. Yeah. Effectively, that infrastructure still exists
(10:19):
to some extent, but has been cleaned up a lot
so that the tech companies are more aware of what's
going on, and you need sort of legal permission to
utilize that technology. But it's been found to be insecure,
and I guess it really sort of highlights that whole
point of the tech sect has been making about encryption
(10:41):
and back doors, and if you put a back door
in encryption, you're going to have this problem to an
even greater degree.
Speaker 2 (10:47):
It reminds me of the telegram story from not long ago. Yeah, yeah,
you know, with the founder was at risk of getting
arrested by the French or did get arrested by the French.
Speaker 1 (10:57):
Authority, still sitting there.
Speaker 2 (10:58):
So the question then becomes like it's that age or
question of is it more important to have privacy or
is it more important to have a governmental oversight and
access into communications. It's difficult to find that balance.
Speaker 1 (11:14):
Yeah, and I think this legislation which was introduced about
thirty years ago, it's called the Communications Assistance for Law
Enforcement Act ninety ninety four, that came into effect just
as sort of cell phones were starting to take off
and the Internet was in its infancy. But then after
September eleven we had a lot of wire tapping, huge
(11:36):
ramp up in wire tapping activity, so this was really
called on. But the interesting thing about that legislation, if
your network is fully encrypted, you obviously don't have to
comply with that. You can say, well, my mobile network
is end to end encrypted, I can't help you with
a wiretap. Sorry about that. Most of the telcos and
(11:58):
internet providers have an encrypted their networks, while they have
other security measures, and they facilitate their customers encrypting their
own data. A lot of traffic isn't and a lot
of that metadata obviously isn't as well. So I think
the next step will be Okay, the likes of Horizon
and AT and T will go well, this was really
(12:19):
embarrassing and this hurt us. We're going to encrypt our
entire network, and it's probably quite a lot of work
doing that, even on mobile networks and five G modern infrastructure,
encrypting the whole thing so that we can literally say
to the authorities so we don't have the ability to
(12:40):
wy tap our customers anymore. And that's really where the
likes of Meta and Signal and others have gone with
messaging apps.
Speaker 2 (12:48):
It's just an absurd bureaucratic difference, isn't it really at
the end of the day, where you know, you just say, well,
if you spend a little bit more money and make
sure that everything is super secret, then we won't ask it.
We can't. You know, it just feels a little bit arbitrary.
But I suppose at the same time it's just going
to push everybody towards more encryption, which maybe at the
end of the day is beneficial for privacy and security.
Speaker 1 (13:09):
Yeah. Well, the alternative is that you capitulate to the
FBI and the US administration and say, okay, we're going
to build a back door into encryption, and it turns out,
as has been the case here, that your customers are
even more vulnerable to foreign interference and terror, terrorism and
the like because of that back door and encryption systems.
(13:32):
And I think that's why it hasn't progressed any mandate
because they know that things are not secure. There's always
going to be a way in and if you building
that back door, someone is going to come through it.
Speaker 2 (13:46):
Yeah. Signal president Meredith Whittaker is quoted in this tech
Crunch article saying there is no way to build a
backdoor that only the good guys can use. It's pretty
much like the summary, there isn't it.
Speaker 3 (13:59):
Yeah.
Speaker 2 (14:00):
Keeping an eye on what that might mean for the
future of regulation around privacy and encryption, But what isn't
going to change anytime soon is the fact there are
a whole lot of people and businesses in the USA.
Speaker 1 (14:11):
Definitely. We've seen a bunch of New Zealand companies grow
really quickly once they break into the US, like startup
Parkable and INSIDEX listed Black Pearl Group.
Speaker 2 (14:21):
Mahesh Moeralda is a venture capitalist and startup advisor who
runs Phase One.
Speaker 1 (14:27):
His experience across New Zealand, Australia and the US has
led him to become a massive advocate for the potential
for New Zealand's economy offered by the US market, particularly
when it comes to software. Ben you spoke to him
about what needs to happen to see that potential realized.
Speaker 2 (14:43):
Yeah, he's got some strong feelings about the topic and
we're more than happy to share them. So let's have
a listen to that interview now. Hi, Mahesh, thank you
so much for joining us on the Business of Tech podcast.
How are you today?
Speaker 3 (15:00):
I am feeling pumped, really excited, great, energized.
Speaker 2 (15:03):
Excellent, and I'm assuming that's related to your recent trip
to the US and what you've seen over there.
Speaker 1 (15:09):
Yeah.
Speaker 3 (15:09):
Yeah, it was a very powerful, informative, insightful trip.
Speaker 2 (15:14):
Give us a little bit of information about your backgrounds.
What's your interest in the innovation VC startup scene in
New Zealand.
Speaker 3 (15:21):
Yeah, quick story, right, So I came to New Zealand
on my own when I was fourteen from Singapore in
the mid nineties when Nape boys from which is a
very good cultural grounding. And you grew up in Auckland
City and started work here. After that, I had a
career professional services and NBA and then had my own
startup in the early twenty tens in Sydney en route
(15:45):
coming back home somewhat successful, but then was fortunate enough
to be invited to be one of the first leaders
at Canva. So number twenty five, I think business was
probably about twenty mil and obviously now it's two thousand
plus strong, well north of twenty billion. And then I
was a C suite in a few other major startups
(16:05):
and Ossie came back home. And what I've done for
the last three years is cultivate a group of an
early stage founder community called Phase one Phase one Ventures,
and the target we have is six unicorns from that
community community, right, and a key part of that is
global ambition, right, and how we need to be braver
(16:27):
and boulder because to be honest, we're an entrepreneurial country,
two islands and the corner of the world. You have
to be. But the truth is we haven't been able
to see scale. And that's all we've got to do.
We've just got to start reaching up and looking up
and seeing that our skills and experience applied to the
(16:48):
world's problems drives incredible even more innovation.
Speaker 2 (16:52):
So you've been part of the venture system in various
places throughout the world, and you mentioned Canva there considered
one of the world's you know start up. Darling's really
an incredible success story. What are you seeing in terms
of New Zealand's space at the moment.
Speaker 3 (17:09):
Yeah, incredible opportunity and perhaps over the last couple of decades,
perhaps we haven't taken advantage of the of our foundational
entrepreneurial zeal And then some early wins like Navman and
a few others, you know, we started. We've always been
(17:29):
an entrepreneur and we actually have had a very strong
electrical engineering background, which ellen electrical engineering is a base
for software engineering. But for a variety of reasons, we
didn't really hook into the software engineering and software and
SaaS growth curve. And you need role models, right, So
(17:53):
when I give a speech in Sydney, three hundred people
show up and I'm there answering questions for two hours
because there's a whole bunch of people who want to
be the next Melanie Perkins from Canvas and safety culture
and culture app we've got zero. We've had then to
a certain extent, but we haven't had that role modeling,
which then doesn't allow investor class to believe that Canvas
(18:15):
secondary sale of two billion dollars of Aussie flooding back
into the Sydney market last year this year can happen here, right,
So you need those role models just both for founders
and for the investor class so that it's really exciting
companies like Tracksuit, Next Work, Kiki, there's a whole bunch
of now New Quodis new new software scale ups that
(18:40):
are startups that are coming through. So we need that
role modeling. So we need a few winners to really supercharge,
a few more winners to supercharge.
Speaker 2 (18:49):
Yeah, for sure. That's obviously, you know, a difficult thing,
right because as they say, the hardest part of getting
the boulder rolling is that first push. And in some
ways we've kind of had that. We had a zero
as you mentioned, and we've had trade me and are
you starting to see the Jacob happening, do you think?
(19:11):
Or are we still still kind of trying to get
that first push.
Speaker 3 (19:15):
No, it's going to be an incredibly exciting time in
the next ten to fifteen years, right, and it is
well started as well. Started that likes of gd one
and Samantha Wong from Blackbird coming into New Zealand and
going hey, let's play like a global game and New
Zealand VCS ice House has been an incredible pioneer in
(19:40):
kicking off the space but having global counterparts. So Vicnation
from GD one came from Apple in the US as
Kiri come back home and I think your question regards
to one is the Jacob happening? Absolutely? It is? How
do why is that happening? It's not a surprise a
group of overseas Kiwis who've gone overseas and done some
(20:05):
stuff and seeing some stuff coming back home and going hey,
so maybe we could do this differently. We can have
a different horizon, a different We need to think about
early stage differently, like myself. Right, So when I came
back home three years ago, all I've done for the
last three years, and I started in a living room,
is give free strategic support to a group of early
(20:27):
stage founders, going hey, let's get the foundations and fundamentals
right if you really want to go big. So that
ecosystem is now expanding with a Kiwi diaspora that's coming
back home and a group of early founders listening, what
could we do to help is actually make even more
space for that Kii diaspora to come in because sometimes
(20:49):
in a small country, when you hit the ceiling, there
is a desire to maintain that ceiling. You know, that's
a normal thing. So if we can be more open
to hey, people overseas and you've come back home, let's
listen a bit more and understand what you've seen that
I think would accelerate things even further.
Speaker 2 (21:09):
What are us What would you say are some of
those key things you mentioned? You know, there are things
people have seen an experience and they're bringing that home.
What you what are the lessons that you've seen overseas
or that you've seen other people bring back that are
really important that we should be capitalizing on.
Speaker 3 (21:25):
Yeah, and we discussed this just before we chat it. Right,
like a tech company, you could argue, let's break it
up into three tiers, right, a tech company that wants
to reach some sort of exit or ceiling at one two,
one hundred mil, right, and then you have the one
hundred mil to a billion ceilings second swim lane, and
then the third swim lane is a billion two billion
(21:46):
north right. And it's very important that any one of
those swim lanes is equally cool, right, But it's they're
different founders with different constraints and different ambitions that work
in each of those swim lanes. And it's really important.
There's a set of different conditions. But let's talk about
that last swim lane, right, like that two billion north
(22:06):
world changing company. And again I can't state this enough.
The other two swim lanes and entrepreneurs are equally cool.
What's cool is doing what's right by you. But that
last swim lane, what's important is a founder that wants
to change the world that has unheralded like ambition, right,
I want to six fix a global problem. Right. So
(22:29):
something conversation I have with all the Phase one founders
is you know what's your why, and you know when
you as you as you gain in influence and so forth,
what are you going to do with that? And you
have that conversation early on. Outside of that what's really important?
So and you actually have to have a US from
day one customer approach because it's the largest homogeneous market
(22:51):
that works. And finally you have to build. You have
to have customer and problem obsession, right, because you're trying
to build a love product that scales the world, and
the only way you do that is by having an
incredible thesis on a deep problem with this huge ambition
(23:14):
that said, and that delta is really hard to manage.
Does that make sense?
Speaker 2 (23:18):
Yeah, yeah, definitely a couple of things that I want
to pick up on there. The first is that you
said you need to be US from day one, and
traditionally we've very you know, talked about it in terms
of being global from day one. Obviously, you know, you
pointed out the benefits of the US that the homogeneity
the last size of the market. But is it the
(23:40):
only option? Like, obviously you've got the UK and Europe
as well, where if the Europe has a really large
English speaking group and the UK is a great entry point,
you've got Australia which is a great launching pad for scaling,
So why the US.
Speaker 3 (23:57):
So there's a few reasons for that. So global from
day one is effectively either US, China, India and Russia. Right,
it's a large market. And let's discuss the homogeneity piece.
So Europe doesn't offer homogeneity right the minute you solve
(24:18):
for let's say it's a problem for real estate agents
of this size, of this size and some workflow automation tool,
or it's for couples who have this sort of lifestyle
problem issue. Right the minute, say you're operating in the
United Kingdom. Oh wait, if you want to scale to Italy,
(24:41):
to France, to Czech Republic, suddenly the rules, regulations, culture, food,
everything changes. So then there's additional cost to manage that change.
Right while say you just operated in India, US India
or China or US Russia for example, or Brazil, maybe
(25:03):
then there is still a culturally, there is a homogeneity,
and US of those options is the only one that
offers sort of law contracts signaling. All of that works
to a large extent. Now, the other question is, but
when we have a launch in Australia fest right or
(25:24):
United Kingdom. First the issue is if the truth of
the matter is, hey, we're building a global business and
part of that we have to win. Well, we're only
able to win build a global business if we win
the US, right, and we're talking about software scale ups generally. Right,
Oh the minute you have any other entity like an Australian,
(25:45):
United Kingdom and d that's in the back of your
mind because that's starting to put food on the table
for some early employees, etc. When if you want to
go global, I have to go all in on this,
and I need to put one hundred and fifty of
my thought and energy, the CEO's thought and energy on this,
and I can't carve out any other energy because the
(26:07):
minute you do that, you're defeating that first priority goal
of hey, we need that large foundation and there's nothing
wrong in launching in Australia. But I then founders and
entrepreneurs need to be circumspect and investors need to understand, Okay,
so this is going to be This may de risk
the venture, but it risks scale right right. So then
(26:31):
from a strategic and commercial perspective, you can make sure
you manage expectations even better. The wonderful thing that we
have is culturally Kiwi's and Aussies are even the American
culture is incredibly accessible to us. That truly, we are
absolutely comfortable and confident with a US cultural base. In
(26:55):
my recent trip to the US, a learning was capital
is easy, talent's easy, and QWE founders who make it
to the US are better than the top tier American
founders because American founders feel they have optionality right because
they are like, hey, if this doesn't work out, I'll
(27:15):
go work in big tech or I'll start something else
and I know that credit's kind of easy and I'll
be fine, while a QWI founder who makes the US
knows and believes they have one shot and then they
go all in. Like there were countless times I was
working with Toby Thomas Smith from KIKI over the weekend
for three weeks on end and we'd be the only
(27:36):
people and the we work, I was stunned. And there
were you know, the iconic Y Combinator founders all around,
and they were not around, and I was like, wait
a second, what's going on? And I have conversations with them,
and I was like no, Like, I know a huge
group of QI founders that are hungrier, better and even
more purposeful. So that's really exciting.
Speaker 2 (27:57):
Yeah yeah, cool. Capital is easy in the US and
you know, more available and more plentiful. The question is
how do we get US investors who might be used
to investing in the US companies because it's easy. You
don't have to worry about where's my money going into
(28:18):
this country in the South Pacific. How do we bridge
that gap? How do we say, as a first time founder,
you can trust me with your money, mister San Francisco.
Speaker 3 (28:29):
Yeah, yeah, yeah. I think it's a few things. Firstly,
I think your first check is coming from Australian New
Zealand and that's the truth of the matter, right, So
then what do you need next? You need again role modeling,
And there's an increasing number of founders who have gone
to the US, who've been successful that are now through
back channels and cultural norms going no, no, you can
(28:50):
do this, let me connect you. Lastly, I think there
is a real opportunity and the likes of GD one, Blackbird,
ice House are doing this like ice House in San
Francisco when I was there, where they are making sure
that they are partnering with US VC firms. Right, So
then the vcs here have a part to play in
regards to hey, let's nurture and then who are we
(29:13):
partnering with? Who are us counterparts? And I've seen again
the likes of GD one, Blackburn and ice House do
that around hey, how do we like nurture our founders?
And then in some ways like shake hands to shake
hands with another venture part venture player going hey, okay,
you're now playing it even larger capital. How do we
(29:35):
pass the song?
Speaker 2 (29:35):
If you will, how do you tap into it? If
you're a founder. I mean, are you relying on your
VC investors to go and make those introductions? Do you
know You've got like the likes of nz NTE, but
they've got limited resources as well, So you know, how
do you actually make those connections to these other founders,
to the to these experienced kiwis these you know, because
(29:57):
there is still a limited number compared to.
Speaker 3 (29:59):
Yeah, I can tell you this. It's actually being quite
pointed about the questions you ask and who you ask,
who you hang out with. So how many QII founders
who want to go on this global journey are actually going?
Who has been on this global journey? And I want
to speak to those people because one of the things
that's quite distracting is there are so many people with
(30:22):
the best of intentions that start offering support, advice and guidance.
Speaker 2 (30:26):
Right.
Speaker 3 (30:26):
So for example, somebody who is currently a senior marketing
leader at Meta a, Facebook or Google does not have
this experience. That is a different experience like AKII is
doing that, right, that's big tech, that's a large company experience.
How many other is a KII founder going. I'm looking
(30:48):
to speak to other kiris who have gone through this
early seed to scale up experience either as a founder,
as an early breader, or as an investor. And I
know the connections, the language, et cetera. So if that's
(31:09):
be my biggest advice to keep founders going on this journey,
one of around, please be quite clear about the question
you're asking and who you're asking it too, because most
of us have the best of intentions, but then really
tap into those with the legitimate experience that you are seeking.
Speaker 2 (31:33):
Yeah, that can be kind of a cultural thing with Kiwi.
Sometimes we don't want to ask the direct question, right Like,
we don't want to say, hey, I know you did this,
how did you do that? There was a sense of
a transactional nature about that in terms of I'm willing
to share with you what I know, but we're gonna
it's gonna be purposeful. In New Zealand, maybe doesn't quite
(31:55):
have that meeting oriented perspective to those kinds of things.
Speaker 3 (32:00):
Right, But I'd frame it a little bit differently, right So,
I think again, because we're a small country, we don't
have we don't know how to signal security safety excellence
through very well formed badges. Right Like, so someone who's
(32:21):
worked who's run a division at g Capital or Boeing
or Canvas, et cetera. Oh, I can see that badge
and I know what you've done and I know what
you experience it. So that's a small country thing, and
it's not a bad thing. It's not a negative. It
is what it is. So then we want to sit down,
let's get to know you as a person. While in
a large country you can look at the discrete signals
(32:42):
and you can form opinions. You can see the stories
much faster. Right, and so if a KIP founder wants
to go play that game, Okay, so this is the
context that culture that you're now executing on. Let's be
a little bit clearer. I'm here for this. There's my background.
It's made this and I have to kind of explain
because most Americans won't know much about New Zealm. Yeah,
(33:05):
but they're really curious. So share some tidbits, get them excited.
They trust it. It's Western, etc. They've heard of the
All Blacks and the America's Cup and thank God for
the Lord of the Rings. So they're like, Okay, we
know this, So now what would you like?
Speaker 2 (33:21):
Yeah, gotcha? Yeah, So I guess like being in the
same way that you have, like an elevator pitch for
your company, have an elevator pitch for you as a
person that you can just drop in fifteen twenty seconds
and then be like, now it's a business guy.
Speaker 3 (33:36):
Absolutely. Absolutely.
Speaker 2 (33:38):
The other thing that I wanted to ask you about
is the dials in New Zealand's innovation ecosystem. So what
do we need in terms of the support around it
to actually make it sing? And one of those things
is the conversation on going around ESOPs. And recently the
government came out and said they're going to up the
(33:59):
threshold about five thousand to seven and a half thousand dollars.
Do you think that's enough?
Speaker 3 (34:04):
Yeah, And as you're aware, I ran for the National
Party in the recent election and excited about furthering that
journey another day. And let's be clear to all the listeners.
ESOP is the equity share program that high tech companies,
especially high growth companies, need to offer, because the argument is, hey,
(34:27):
take a discount on your salary and instead a big
part of your conversation that will be equity. So yes,
we do need to reimagine equity visas Erica Stanfords come
out talking about this as well, So there is an
opportunity to reimagine all of this. The government's obviously dealing
(34:48):
with a few different priorities, so taking one thing at
a time, and I'm excited to see that progression in
that space as well as be part of that conversation.
Speaker 2 (35:00):
In summary, I guess on the ups in particular, you
said it was a good first step, but you do
think it needs to gook further.
Speaker 3 (35:08):
Oh of course. I mean, if you want billionaire unicorn
businesses coming from New Zealand, it has to be like
there's a template, like there's no, this is not like
a crazy idea like ye, yes, yeah.
Speaker 2 (35:23):
I mean I mean because the thing is as well,
it's going from five k to seven and a half
k year, which is nothing really in the grand scheme
of things. When you're talking about if you're bringing on
a CTO and you know you want to say, well,
we're going to pay you niney K and no you
could go and get one hundred and fifty k elsewhere,
but we're going to try and top you up with
some of that. Like seven grand a year is pittance
(35:46):
for them. So but your your argument is that is
a signal that they're taking it seriously and just working
through things.
Speaker 3 (35:54):
Of course, I mean the country has seen better days
and we are working through quite a few things to
get us to a better place. And government's been obviously
very good with getting stuff done, and nobody's denying that
(36:14):
in regards to hey, we said we're going to do
this in one, two, three, four, So as part of
a long to do list, I definitely appreciate the signaling.
But definitely if the ambition is to have more high
powered software and high goro tech companies, this needs to change.
But to be fair, this is not the most important thing.
(36:35):
The most important thing is a group of more and
more Kiwi entrepreneurs believing that they can go big.
Speaker 2 (36:49):
So if I'm a business leader, what are some actions
that I can take as a business leader in New
Zealand to actually help this progress.
Speaker 3 (36:55):
That's actually a really interesting question. I think first, almost
acknowledging your risk profile and risk framework right, which is
absolutely okay, right, and because it's really important you have
so many employees and things your vital entity and and
and and really be really happy about that. The other
(37:16):
pieces do you want to tackle global markets right? I
was recently of speaking to one of the head of
strategy at one of the energy companies and and uh
and they were like, you know, but you know, our
board may not want to you know, grow right. I
think there's an opportunity to know that middle and large
(37:39):
New Zealm companies. If we do not grow our GDP
per capita in New Zealand, we can't have the imagination
that we have of ourselves of being done. Marks we
to nowhere, right, and we have a desperate desire to
address inequity small country compassion, Absolutely, we are compassion our call.
But we have to all a GDP per capita. We
(38:02):
have to for us to have the hospitals and schools
and all of this stuff. Okay, so then as a
as a as a as a middling company. Wait, maybe
we have a responsibility to tap into global markets. How
do we tap into global markets? Maybe we should set
like a higher revenue goal. What could we do there?
(38:25):
Could we send services? Could we start a services arm
and me let's start off with Australia. Let's do it
like a pilot thing. Could we could we maybe extend
our products to one other niche tier in the US.
And can we set aside a small little amount of money,
even if it's two hundred k a finer k just
(38:46):
as an experiment. Actually you don't do it with even less.
Start super lean and can we get one overseas customer,
two overseas customers in the pursuit that building more powerful small,
medium sized and large businesses in New Zealand with a
global perspective is valuable for all of us. Right, So
(39:09):
it's hard, This is a hard thing. It requires leadership
within those businesses. But my only pitch is, hey, if
you guys become more valuable and start to have a
few more global customers, it's actually good for all of
us because suddenly your employees, your productivity because now the
(39:32):
dollar of our effort that you're putting in is being
spread across a few towns in the US, you know,
and suddenly productivity levels, everything goes up. Right, So I
think that's a good pitch.
Speaker 2 (39:47):
So the idea is in the same way that you
might put aside, you know, whatever one percent of revenue
for R and D, do the same thing for global efforts,
like just say this is part of how we operate.
As you know, we got a little bit of money
where we're trying to build new products or trying new things.
Now we're going to have a little bit of money
(40:07):
where we're actually trying to target new markets as well.
Speaker 3 (40:10):
That's exactly right. And my suggestion if you were to
do that is focus on revenue. Like with five dollars,
we need to generate revenue. With ten dollars, we need
to generate revenue. The most powerful thing you can do
is not research, is win a customer. I don't care
(40:34):
how you do it. Just win one customer, because in
the pursuit of winning that customer, the amount you learn
is so much more than Hey, let's just understand the market.
Let's go hang out. No, just win one customer, h
then win two, then win three. Do the unscalable things.
Do not worry about scale. Right, cool, we wrap up.
Speaker 2 (41:00):
Let's talk a little bit about your time in Canvas.
So you said you were employee number twenty five. That's
very early in a massive company's journey. How long were
you there.
Speaker 3 (41:10):
Altogether closing in and around just around three years?
Speaker 2 (41:15):
Around three years, I mean in the growth of Canva
was extraordinarily quick, so you would have seen quite a
lot in those three years. What did you learn? What
is the most valuable thing that you learned from your
time inside a company growing that quickly.
Speaker 3 (41:29):
That you have to have a love product. I remember
even when I joined on Twitter, it was I love camera,
love can I love Cana love Cana love camera like
you could hear the customer voice singing its praises right,
and which is why I keep saying one of the
most important things is customer and problem obsession like mail
(41:50):
for mail, people who designed was her tribe. These were
the people she lived for and when it gets to
solving that problem the other pieces. I remember walking to Canva,
a small group of people and walking to the office
the first time, and I had my own tech startup
at that point, and I remember straight away thinking something
(42:12):
was different, and looking back now is that everything was intentional, right,
So where the laptop was that Cliff, who is co
founder and Mel's partner and a billionaire, was the first
canvas for chef. He would make the meals and it
was intentional that from twelve to one everybody came back
(42:36):
and had had a meal together. How we celebrated birthdays,
It was a very peculiar ritual, fun amusing ritual that
we did and a quick story. So I was responsible
once on a Sunday to do. We were like at
about seventy or nearly closing it, one hundred people about
making sure that a company riorg was done properly. So
(42:56):
I'd worked through the weekend and about Sunday two o'clock
I'd come up with a plan and I'd said, okay,
so people would come in and then there's clear instructions.
They'd moved their laptops from here to here, right. And
mel walked in at about two thirty on a Sunday,
and you know, she was happy with the work and
all the thinking that had been done. And they said, oh,
(43:17):
what do you mean people are going to come in
and you know, move stuff, And I said, yeah, I
mean it's the most efficient thing. So no, that's not
the experience camera team members get when they come in.
They should feel like, hey, like we are here for them. Right.
So for the next four to six hours, Cliff mel Zach,
(43:40):
who's one of the top leaders of Canvan still is
and myself spent wiping down the tables, moving each laptop,
connecting each thing, making sure everything was done properly. She
was so clear and intentional, this is my house, this
is my farey and this is how it's going to be, right, So,
(44:03):
and I think there's there's an opportunity again when you
think about these global founders, this takes a lot of
like internal thesis around like who am I, what do
I want? Et cetera. Right, So, uh, it's it's again
that you know again that customer obsession and that like
who are you? Because if you're going to play in
the global markets, the market's going to ask, right, so
(44:24):
you really have to have that thinking done. Now, that's
that didn't require any money. But when when an early
team member gets that, that is such powerful cultural signaling around, Hey,
this is really meaningful to me, and I want to
share this with you. It's not it's not a fast
you know, table tennis table you know it is. This
(44:47):
is important. You are important, We are doing great things.
Let's do this. My suspicion is Team New Zealand the
All Blacks talk about cleaning the sheds, right. It's those
like very intentional, time consuming, unscalable things initially they then
scales so powerfully as stories and signals.
Speaker 2 (45:10):
Yeah, it's interesting. I think the key you said there
is time consuming, right, Like yeah, and there's that old
adage with kids. Don't give them your money, give them
your time, right, that's what they really want. And it
sounds like that's a very similar thing to what you're
saying about employees, is that obviously a good compensation is nice,
and having a table ten and stable is nice, but
(45:30):
at the end of the day, they want to know
that they're being thought of as humans with needs and
support it and made it be comfortable.
Speaker 3 (45:39):
Absolutely, the single most important thing, in my opinion for
a great culture is that it's winning. Right. Everybody that's
a mess. You have a bunch of humans together, it's
going to be challenging, right, everybody's good opinions insecurity is
a whole bunch of stuff.
Speaker 1 (45:55):
Right.
Speaker 3 (45:56):
But if as a team you go, hey, these are goals,
and you continuously surpass the goals, then people come into
the team go, oh great, when I do work, which
is the primary point of this activity, it is valuable
and that is the leader's base level responsibility, right, And
(46:21):
then are you being treated fairly, is it a safe environment,
et cetera. And to do what I've just said at
world class levels is hard, right, but that's all you
got to do. You got to make sure it's winning
and an a startup that's like a hockey stick curve, right,
it's a love product go nuts, and then it's it's safety,
(46:44):
growth and the added Are you being treated fairly right
from a compensation term external perspective? And again all of
that requires deep work, not frills and short term cash.
Speaker 2 (46:58):
But a nice coffee machine also helps, a.
Speaker 3 (47:00):
Scaby machine and you know the occasional night out.
Speaker 1 (47:03):
It's good, fantastic entrepreneur and great you know to have
him here with Phase one and New Zealand, this sort
of network for startup founders as well as the investment fund.
Interesting that political career that hasn't quite come to fruition yet,
but he is really a sort of a blue green
(47:24):
sort of guy. He really likes the environmental aspect and
he's trying to marry that obviously with tech and entrepreneurship
and innovation. And he has been very close to the nets,
helping them with their tech strategy.
Speaker 2 (47:37):
Yeah. I do actually think what he was saying about
the potential for New Zealand's economy taking some of that
you know, sweet us money and bringing it back home.
I think that is a very apt thing. And I've
often spoken to people who are like, you know, we
focus too much on the US. You know, we need
to look at Europe, we need to look at Southeast Asia.
(47:58):
But his argument for the US fairly convincing.
Speaker 1 (48:03):
Yeah, well, we spent a lot of time in Silicon
Valley in San Francisco, obviously was very early in Canva,
the biggest success in recent years in this part of
the world. And you can tell from his discussion here
he's really interested in founder talent and how to foster it,
how to identify it, how to foster it, and how
(48:24):
to tap into that diaspora of key we talent overseas,
how to bring some of that money and capital human
capital as well that they have access to and bring
it back to New Zealand. So a lot of this
is real music to my years and years being. You know,
we took to Black Pearl group on the podcast recently
and they were saying exactly the same thing. We went
(48:45):
straight to the US market because that has the homoganity
to allow you to go wide and broad very quickly.
Speaker 2 (48:53):
And then Black Pearl just raised a huge investment around
in New Zealand, specifically with New zeal Island investors. So
they raised ten million and off market and then they've
got another two and a half million and share placement
foreign existing investors in New Zealand. So a really clear
example of how that can really work for people.
Speaker 1 (49:14):
Yeah, so phase one is a great addition to the
startup ecosystem. I think he talked about the ESOP thing,
you know, the share schemes for startups, which Judith Coms
I believe is working on, so some action will happen there.
He's also quite an advocate for reform of the Foreign
Investment Fund taxation, which is this I don't quite understand it,
(49:38):
but basically, if you're an investor and you have overseas investments,
if you're in New Zealand and have overseas investments, they
can effectively tax you five percent of the unrealized gains
of that investment. Which, say you're a big American tycoon,
you come and live in New Zealand, you've got tens
of millions of dollars in investments overseas, that's going to
(49:59):
be not a very attract of things. So he's basically
saying if we reform that, we're going to be more
likely to get these high networth individuals locating here and
investing in New Zealand, so saying a lot of I
think quite sensible things, and clearly he wrote a really
good column we'll link to in the New Zealand Herald
back in March, and I think he's got an eye
(50:20):
on the next election, and who knows, by then, Judith
might be sick of having seven or eight portfolios and
maybe she'll be thinking of someone else for the tech portfolio.
Speaker 2 (50:33):
Could be Yeah, yeah, he could be a candidate, that's
for sure. I don't know his view on the ESOPs,
saying that what they have put in place with that
seven thousand dollars cap increase is just the beginning. I
hope so, and I'd like to believe that, but I
do also know that it's a government that is kind
(50:54):
of struggling for money at the moment that it would
be interesting to see whether they can really do what
needs to be done with those ESOPs in the long run.
Speaker 1 (51:04):
I mean, it wouldn't be great if we had a
Canva like success. And I think he's obviously so inspired
by what he saw there working with that founder group
that he is going to try his hardest to do it.
But you know, really, when it comes back to it,
reading that founder story. It was the passion of the
founders for that particular thing, making graphic design simpler. They
(51:29):
designed a whole way up to tackle the problems they
were facing. It really comes back to that problem solving.
What is the problem that you're trying to identify and
is a market for it? And that's just universal. And
I've got to say a lot of our entrepreneurs have
become a lot more laser focused on that so called
product market fit and identifying the problem and validating the
(51:53):
market for solving that problem. So I think we're getting
a lot more sophisticated. But having people who've actually been
in these really successful unicorms coming to New Zealand living here,
spending time and willing to impart that knowledge is really valuable.
Speaker 2 (52:11):
Yeah. Absolutely, bring on the hockey stick growth.
Speaker 1 (52:13):
I say absolutely. Well that's us for another week.
Speaker 2 (52:18):
It is, And thanks very much to Mahash morale Da
for coming on the Business Off Tech.
Speaker 1 (52:22):
You can find the stories we talked about today and
links to other interesting tech stories over on Business Desk
dot co dot nz and you can subscribe and listen
to all episodes of the podcast over on iHeartRadio or
wherever you get your podcasts.
Speaker 2 (52:36):
Drop us a line with suggestions for future guests. Can
email me Ben at business desk dot co dot nz.
We'll find both of us on LinkedIn and ax.
Speaker 1 (52:44):
And another episode coming your way next Thursday.
Speaker 2 (52:48):
Until then, have a great week,
The USA the holy grail of markets for entrepreneurs all
over the world.
Speaker 2 (00:05):
While we Kiwis have many cultural distinctions that separate us
from our western piers, we also have a huge number
of similarities.
Speaker 1 (00:13):
This fact, as well as the sheer amount of money
and the number of people, make the US market a
golden goose for local entrepreneurs.
Speaker 2 (00:20):
Our guest this week is Mahesh Moralda, a venture capitalist
who was the twenty fifth employee at Australian unicorn startup Canva,
and he has strong feelings about the need for New
Zealand companies, especially tech and software companies, to expand beyond
New Zealand.
Speaker 1 (00:35):
With his deep experience in the VC world, maheshkiv's advice
to startups on how to capture some of that American cash,
as well as his view on why it's so important
for New Zealand businesses to break into the US market.
Speaker 3 (00:48):
QUI founders who make it to the US are better
than the top tier American founders because American founders they're like, hey,
if this doesn't work out, I'll be fine. We founder
who makes the US knows and believes they have one shot,
and then they go.
Speaker 2 (01:05):
All that's coming up later in this week's episode of
the Business of Tech, Howard by two Degrees for business.
But first, Peter, have you ever been smashed?
Speaker 1 (01:14):
I haven't been successfully smashed, but I got to say,
literally last week I almost fell for one for the
first time, which was a message from supposedly from New
Zealand Post about a package that hadn't been delivered, had
been held up. I needed to give some more information
and I literally was waiting for a package that had
(01:38):
been held up. So I was like, finally they've got
in touch with me. It clicked through to it looked
just a little bit off, didn't look like the New
Zealand Post website, and then I looked at the URL
and it was not ented post dot code into ed. So,
I mean a lot of people will be familiar with
these smashing text messages. It's basically SMS fishing, which is
(02:01):
an attempt to get you to divulge sensitive information or
to click a link to download some malware onto your phone.
That's often the case as well, so I think kiwis
are quite familiar with this. But a case that's just
been uncovered that played out earlier in the year was
a smashing campaign that didn't just rely on the existing
(02:24):
networks of two degrees or one end Z or a spark.
What these people did is a lot more sophisticated. They
set up effectively a fake mobile base station in Auckland
to try and get people to connect to that base
station automatically thinking they were on a regular network, and
then they sent them dodgy SMS messages. And the reason
(02:48):
they would go to all that trouble is to bypass
all the sort of filtering systems that the other legitimate
networks have in place to try and weed out a
lot of these smishing messages. And then they could basically
tailor messages with their own phone numbers from this fake
base station and communicate with these people who thought they
(03:08):
were responding to legitimate messages. It's incredible how far they
went to make this happen. You've been very few examples
of this, mainly out of China where this sort of
level of sophistication of smishing messages has been seen.
Speaker 2 (03:25):
Yeah, I mean it's almost kind of cool in a
way when you look at the technology that's involved, and
it's kind of this very ad hoc thrown together thing.
You can see the picture in the article will link,
but to kind of know there's some teenage amateur engineer
out there who's throwing together one of these things in
an attempt to defraud people. Obviously terrible behavior and not
(03:49):
something to be encouraged at all, but at the same
time kind of amazing that they were managed to get
the kit, put it together and successfully actually do this.
Speaker 1 (04:00):
Yeah, and I wonder if there is a China link here,
either Chinese students in New Zealand doing this or someone
working with people in China to get the equipment here.
It was a operation by the police Operation ORCA. Funnily enough,
they had a bit of a sense of humor around
that one, and the Department of Internal Affairs was made
(04:22):
aware of the scam in July. I don't know whether
she was dabbed in or what happened, but they've been
on the case. These fake base stations, they call them
base transceiver stations BTS towers, and there is in China
again malware called swearing Trojan, which is Android based banking
(04:43):
malware which have been used in conjunction with these BTS towers,
which ultimately have a range. According to reports out of China,
off ten to twenty kilometers, so you could have a
lot of people. What I don't understand is how they
get you know, my phone, I'm on the skinny network
on a skinny sim. How they get my phone and
(05:05):
my sim to connect to their network. There must be
some authentication that there's somehow mimicking or bypassing there for
that to happen.
Speaker 2 (05:15):
Yeah, because they talk about it just auto connecting as well.
Your phone will auto connect and you won't even know
that it's done it because and it will use I
think like a two G network as well, rather than
the three G or four G because for whatever reason,
it tricks your phone into thinking it's the network that
it should be connected to. There's some instructions where you
(05:37):
can actually disable the two G network on your phone
to be able to make sure you can avoid these
kinds of things. But realistically, the smishing is no more
sophisticated than any other text fishing, and they can be
pretty convincing. You know, you're not the only one who's
definitely clicked on one of these links and then gone,
oh no, that's actually not something I should be clicking on.
Speaker 1 (06:00):
Yeah, And I think obviously a lot of those messages
still get through, because I got one just last week,
so that the networks aren't doing enough to keep up
with this deluge of smashing messages. But to go to
the next step of installing some physical hardware, you know
there must be a real incentive to do that, which
(06:21):
is and I think it is when you're on that
fake base station that's down the road from you or whatever,
they can tailor official looking numbers, They can create their
own basically their own phone number network to send you
official looking text numbers and phone numbers, which then you
might make you think, oh, okay, this is legitimate, but
(06:43):
ultimately they're still going to send you to a dodgy website.
So all the same preventative measures are in place. Is
it the right url? Are they asking for information my
bank normally wouldn't ask for over email or via a
web form? All those things come into play again, and
which should hopefully eliminate ninety nine percent of the chance
(07:04):
of you actually getting schmished.
Speaker 2 (07:08):
I know it sounds like it's something you might want,
but trust me, you don't want to get smished.
Speaker 1 (07:13):
Definitely not.
Speaker 2 (07:14):
And of course cybercrime isn't just restricted to teenagers in Auckland.
There are nation state actors as well, and China, it
turns out, has been able to take advantage of backdoors
in telecommunications companies which were left open to meet US
federal regulations. That was a really interesting story that you
(07:35):
sent me on this one. Basically a bunch of professionals going,
we told you these backdoors were a bad idea, that
there were a weakness in the armor, and it turns
out that that some hackers have found those weaknesses.
Speaker 1 (07:50):
Yeah, we talked earlier in the year about this vault
Typhoon hacking group again out of China. That was leaving
were packages and critical infrastructure the likes of power stations
and water infrastructure companies in the US, and this happened
several years ago, but the US governments and the Five
(08:12):
Eyes partners, including New Zealand, came out earlier this year
and said you need if you run critical infrastructure, you
need to go in and check your systems because this
vault Typhoon group is through a lot of companies in
the US. So fast forward sort of nine months, we've
got Salt Typhoon, and this is apparently a slightly different
(08:33):
group of hackers who have been very much focusing on
the wire tapping infrastructure that the US requires big telecommunications
and internet companies in the US to maintain by law.
So that's a law from about thirty years ago that says,
you need to make your network's interception capable, and there's
some little black box that hangs off the back of
(08:54):
your network that we need to be able to connect to.
We have that here in New Zealand as well. Most
countries do that, and when you get a warrant, then
that will activate the ability to use the y tapping
method to either infiltrate or listen to calls as well
as Internet traffic. So you know that is effectively a
(09:16):
backdoor in the network that the FEDS in the US
can access. Well, it turns out, according to the Wall
Street Journal, which reported this on Friday massive story, the
likes of AT and T and Verizon and Lumen Networks
formerly century Link have all been compromised. These y tapping
(09:36):
facilities have been compromised, potentially exposing customer data to these hackers. Now,
if that's the case, if we're talking about huge volumes
of traffic that go through the likes of AT and
T and Verizon, if that's the case. You know, that's
one of the biggest exploits in many years. It hearkens
(09:58):
back to the Edward snow and revelations of twenty thirteen
when he basically revealed and all the documents he leaked
a mass surveillance effort underway by the US government that
even some of the telcos and internet companies didn't really
know what was happening. Yeah. Effectively, that infrastructure still exists
(10:19):
to some extent, but has been cleaned up a lot
so that the tech companies are more aware of what's
going on, and you need sort of legal permission to
utilize that technology. But it's been found to be insecure,
and I guess it really sort of highlights that whole
point of the tech sect has been making about encryption
(10:41):
and back doors, and if you put a back door
in encryption, you're going to have this problem to an
even greater degree.
Speaker 2 (10:47):
It reminds me of the telegram story from not long ago. Yeah, yeah,
you know, with the founder was at risk of getting
arrested by the French or did get arrested by the French.
Speaker 1 (10:57):
Authority, still sitting there.
Speaker 2 (10:58):
So the question then becomes like it's that age or
question of is it more important to have privacy or
is it more important to have a governmental oversight and
access into communications. It's difficult to find that balance.
Speaker 1 (11:14):
Yeah, and I think this legislation which was introduced about
thirty years ago, it's called the Communications Assistance for Law
Enforcement Act ninety ninety four, that came into effect just
as sort of cell phones were starting to take off
and the Internet was in its infancy. But then after
September eleven we had a lot of wire tapping, huge
(11:36):
ramp up in wire tapping activity, so this was really
called on. But the interesting thing about that legislation, if
your network is fully encrypted, you obviously don't have to
comply with that. You can say, well, my mobile network
is end to end encrypted, I can't help you with
a wiretap. Sorry about that. Most of the telcos and
(11:58):
internet providers have an encrypted their networks, while they have
other security measures, and they facilitate their customers encrypting their
own data. A lot of traffic isn't and a lot
of that metadata obviously isn't as well. So I think
the next step will be Okay, the likes of Horizon
and AT and T will go well, this was really
(12:19):
embarrassing and this hurt us. We're going to encrypt our
entire network, and it's probably quite a lot of work
doing that, even on mobile networks and five G modern infrastructure,
encrypting the whole thing so that we can literally say
to the authorities so we don't have the ability to
(12:40):
wy tap our customers anymore. And that's really where the
likes of Meta and Signal and others have gone with
messaging apps.
Speaker 2 (12:48):
It's just an absurd bureaucratic difference, isn't it really at
the end of the day, where you know, you just say, well,
if you spend a little bit more money and make
sure that everything is super secret, then we won't ask it.
We can't. You know, it just feels a little bit arbitrary.
But I suppose at the same time it's just going
to push everybody towards more encryption, which maybe at the
end of the day is beneficial for privacy and security.
Speaker 1 (13:09):
Yeah. Well, the alternative is that you capitulate to the
FBI and the US administration and say, okay, we're going
to build a back door into encryption, and it turns out,
as has been the case here, that your customers are
even more vulnerable to foreign interference and terror, terrorism and
the like because of that back door and encryption systems.
(13:32):
And I think that's why it hasn't progressed any mandate
because they know that things are not secure. There's always
going to be a way in and if you building
that back door, someone is going to come through it.
Speaker 2 (13:46):
Yeah. Signal president Meredith Whittaker is quoted in this tech
Crunch article saying there is no way to build a
backdoor that only the good guys can use. It's pretty
much like the summary, there isn't it.
Speaker 3 (13:59):
Yeah.
Speaker 2 (14:00):
Keeping an eye on what that might mean for the
future of regulation around privacy and encryption, But what isn't
going to change anytime soon is the fact there are
a whole lot of people and businesses in the USA.
Speaker 1 (14:11):
Definitely. We've seen a bunch of New Zealand companies grow
really quickly once they break into the US, like startup
Parkable and INSIDEX listed Black Pearl Group.
Speaker 2 (14:21):
Mahesh Moeralda is a venture capitalist and startup advisor who
runs Phase One.
Speaker 1 (14:27):
His experience across New Zealand, Australia and the US has
led him to become a massive advocate for the potential
for New Zealand's economy offered by the US market, particularly
when it comes to software. Ben you spoke to him
about what needs to happen to see that potential realized.
Speaker 2 (14:43):
Yeah, he's got some strong feelings about the topic and
we're more than happy to share them. So let's have
a listen to that interview now. Hi, Mahesh, thank you
so much for joining us on the Business of Tech podcast.
How are you today?
Speaker 3 (15:00):
I am feeling pumped, really excited, great, energized.
Speaker 2 (15:03):
Excellent, and I'm assuming that's related to your recent trip
to the US and what you've seen over there.
Speaker 1 (15:09):
Yeah.
Speaker 3 (15:09):
Yeah, it was a very powerful, informative, insightful trip.
Speaker 2 (15:14):
Give us a little bit of information about your backgrounds.
What's your interest in the innovation VC startup scene in
New Zealand.
Speaker 3 (15:21):
Yeah, quick story, right, So I came to New Zealand
on my own when I was fourteen from Singapore in
the mid nineties when Nape boys from which is a
very good cultural grounding. And you grew up in Auckland
City and started work here. After that, I had a
career professional services and NBA and then had my own
startup in the early twenty tens in Sydney en route
(15:45):
coming back home somewhat successful, but then was fortunate enough
to be invited to be one of the first leaders
at Canva. So number twenty five, I think business was
probably about twenty mil and obviously now it's two thousand
plus strong, well north of twenty billion. And then I
was a C suite in a few other major startups
(16:05):
and Ossie came back home. And what I've done for
the last three years is cultivate a group of an
early stage founder community called Phase one Phase one Ventures,
and the target we have is six unicorns from that
community community, right, and a key part of that is
global ambition, right, and how we need to be braver
(16:27):
and boulder because to be honest, we're an entrepreneurial country,
two islands and the corner of the world. You have
to be. But the truth is we haven't been able
to see scale. And that's all we've got to do.
We've just got to start reaching up and looking up
and seeing that our skills and experience applied to the
(16:48):
world's problems drives incredible even more innovation.
Speaker 2 (16:52):
So you've been part of the venture system in various
places throughout the world, and you mentioned Canva there considered
one of the world's you know start up. Darling's really
an incredible success story. What are you seeing in terms
of New Zealand's space at the moment.
Speaker 3 (17:09):
Yeah, incredible opportunity and perhaps over the last couple of decades,
perhaps we haven't taken advantage of the of our foundational
entrepreneurial zeal And then some early wins like Navman and
a few others, you know, we started. We've always been
(17:29):
an entrepreneur and we actually have had a very strong
electrical engineering background, which ellen electrical engineering is a base
for software engineering. But for a variety of reasons, we
didn't really hook into the software engineering and software and
SaaS growth curve. And you need role models, right, So
(17:53):
when I give a speech in Sydney, three hundred people
show up and I'm there answering questions for two hours
because there's a whole bunch of people who want to
be the next Melanie Perkins from Canvas and safety culture
and culture app we've got zero. We've had then to
a certain extent, but we haven't had that role modeling,
which then doesn't allow investor class to believe that Canvas
(18:15):
secondary sale of two billion dollars of Aussie flooding back
into the Sydney market last year this year can happen here, right,
So you need those role models just both for founders
and for the investor class so that it's really exciting
companies like Tracksuit, Next Work, Kiki, there's a whole bunch
of now New Quodis new new software scale ups that
(18:40):
are startups that are coming through. So we need that
role modeling. So we need a few winners to really supercharge,
a few more winners to supercharge.
Speaker 2 (18:49):
Yeah, for sure. That's obviously, you know, a difficult thing,
right because as they say, the hardest part of getting
the boulder rolling is that first push. And in some
ways we've kind of had that. We had a zero
as you mentioned, and we've had trade me and are
you starting to see the Jacob happening, do you think?
(19:11):
Or are we still still kind of trying to get
that first push.
Speaker 3 (19:15):
No, it's going to be an incredibly exciting time in
the next ten to fifteen years, right, and it is
well started as well. Started that likes of gd one
and Samantha Wong from Blackbird coming into New Zealand and
going hey, let's play like a global game and New
Zealand VCS ice House has been an incredible pioneer in
(19:40):
kicking off the space but having global counterparts. So Vicnation
from GD one came from Apple in the US as
Kiri come back home and I think your question regards
to one is the Jacob happening? Absolutely? It is? How
do why is that happening? It's not a surprise a
group of overseas Kiwis who've gone overseas and done some
(20:05):
stuff and seeing some stuff coming back home and going hey,
so maybe we could do this differently. We can have
a different horizon, a different We need to think about
early stage differently, like myself. Right, So when I came
back home three years ago, all I've done for the
last three years, and I started in a living room,
is give free strategic support to a group of early
(20:27):
stage founders, going hey, let's get the foundations and fundamentals
right if you really want to go big. So that
ecosystem is now expanding with a Kiwi diaspora that's coming
back home and a group of early founders listening, what
could we do to help is actually make even more
space for that Kii diaspora to come in because sometimes
(20:49):
in a small country, when you hit the ceiling, there
is a desire to maintain that ceiling. You know, that's
a normal thing. So if we can be more open
to hey, people overseas and you've come back home, let's
listen a bit more and understand what you've seen that
I think would accelerate things even further.
Speaker 2 (21:09):
What are us What would you say are some of
those key things you mentioned? You know, there are things
people have seen an experience and they're bringing that home.
What you what are the lessons that you've seen overseas
or that you've seen other people bring back that are
really important that we should be capitalizing on.
Speaker 3 (21:25):
Yeah, and we discussed this just before we chat it. Right,
like a tech company, you could argue, let's break it
up into three tiers, right, a tech company that wants
to reach some sort of exit or ceiling at one two,
one hundred mil, right, and then you have the one
hundred mil to a billion ceilings second swim lane, and
then the third swim lane is a billion two billion
(21:46):
north right. And it's very important that any one of
those swim lanes is equally cool, right, But it's they're
different founders with different constraints and different ambitions that work
in each of those swim lanes. And it's really important.
There's a set of different conditions. But let's talk about
that last swim lane, right, like that two billion north
(22:06):
world changing company. And again I can't state this enough.
The other two swim lanes and entrepreneurs are equally cool.
What's cool is doing what's right by you. But that
last swim lane, what's important is a founder that wants
to change the world that has unheralded like ambition, right,
I want to six fix a global problem. Right. So
(22:29):
something conversation I have with all the Phase one founders
is you know what's your why, and you know when
you as you as you gain in influence and so forth,
what are you going to do with that? And you
have that conversation early on. Outside of that what's really important?
So and you actually have to have a US from
day one customer approach because it's the largest homogeneous market
(22:51):
that works. And finally you have to build. You have
to have customer and problem obsession, right, because you're trying
to build a love product that scales the world, and
the only way you do that is by having an
incredible thesis on a deep problem with this huge ambition
(23:14):
that said, and that delta is really hard to manage.
Does that make sense?
Speaker 2 (23:18):
Yeah, yeah, definitely a couple of things that I want
to pick up on there. The first is that you
said you need to be US from day one, and
traditionally we've very you know, talked about it in terms
of being global from day one. Obviously, you know, you
pointed out the benefits of the US that the homogeneity
the last size of the market. But is it the
(23:40):
only option? Like, obviously you've got the UK and Europe
as well, where if the Europe has a really large
English speaking group and the UK is a great entry point,
you've got Australia which is a great launching pad for scaling,
So why the US.
Speaker 3 (23:57):
So there's a few reasons for that. So global from
day one is effectively either US, China, India and Russia. Right,
it's a large market. And let's discuss the homogeneity piece.
So Europe doesn't offer homogeneity right the minute you solve
(24:18):
for let's say it's a problem for real estate agents
of this size, of this size and some workflow automation tool,
or it's for couples who have this sort of lifestyle
problem issue. Right the minute, say you're operating in the
United Kingdom. Oh wait, if you want to scale to Italy,
(24:41):
to France, to Czech Republic, suddenly the rules, regulations, culture, food,
everything changes. So then there's additional cost to manage that change.
Right while say you just operated in India, US India
or China or US Russia for example, or Brazil, maybe
(25:03):
then there is still a culturally, there is a homogeneity,
and US of those options is the only one that
offers sort of law contracts signaling. All of that works
to a large extent. Now, the other question is, but
when we have a launch in Australia fest right or
(25:24):
United Kingdom. First the issue is if the truth of
the matter is, hey, we're building a global business and
part of that we have to win. Well, we're only
able to win build a global business if we win
the US, right, and we're talking about software scale ups generally. Right,
Oh the minute you have any other entity like an Australian,
(25:45):
United Kingdom and d that's in the back of your
mind because that's starting to put food on the table
for some early employees, etc. When if you want to
go global, I have to go all in on this,
and I need to put one hundred and fifty of
my thought and energy, the CEO's thought and energy on this,
and I can't carve out any other energy because the
(26:07):
minute you do that, you're defeating that first priority goal
of hey, we need that large foundation and there's nothing
wrong in launching in Australia. But I then founders and
entrepreneurs need to be circumspect and investors need to understand, Okay,
so this is going to be This may de risk
the venture, but it risks scale right right. So then
(26:31):
from a strategic and commercial perspective, you can make sure
you manage expectations even better. The wonderful thing that we
have is culturally Kiwi's and Aussies are even the American
culture is incredibly accessible to us. That truly, we are
absolutely comfortable and confident with a US cultural base. In
(26:55):
my recent trip to the US, a learning was capital
is easy, talent's easy, and QWE founders who make it
to the US are better than the top tier American
founders because American founders feel they have optionality right because
they are like, hey, if this doesn't work out, I'll
(27:15):
go work in big tech or I'll start something else
and I know that credit's kind of easy and I'll
be fine, while a QWI founder who makes the US
knows and believes they have one shot and then they
go all in. Like there were countless times I was
working with Toby Thomas Smith from KIKI over the weekend
for three weeks on end and we'd be the only
(27:36):
people and the we work, I was stunned. And there
were you know, the iconic Y Combinator founders all around,
and they were not around, and I was like, wait
a second, what's going on? And I have conversations with them,
and I was like no, Like, I know a huge
group of QI founders that are hungrier, better and even
more purposeful. So that's really exciting.
Speaker 2 (27:57):
Yeah yeah, cool. Capital is easy in the US and
you know, more available and more plentiful. The question is
how do we get US investors who might be used
to investing in the US companies because it's easy. You
don't have to worry about where's my money going into
(28:18):
this country in the South Pacific. How do we bridge
that gap? How do we say, as a first time founder,
you can trust me with your money, mister San Francisco.
Speaker 3 (28:29):
Yeah, yeah, yeah. I think it's a few things. Firstly,
I think your first check is coming from Australian New
Zealand and that's the truth of the matter, right, So
then what do you need next? You need again role modeling,
And there's an increasing number of founders who have gone
to the US, who've been successful that are now through
back channels and cultural norms going no, no, you can
(28:50):
do this, let me connect you. Lastly, I think there
is a real opportunity and the likes of GD one, Blackbird,
ice House are doing this like ice House in San
Francisco when I was there, where they are making sure
that they are partnering with US VC firms. Right, So
then the vcs here have a part to play in
regards to hey, let's nurture and then who are we
(29:13):
partnering with? Who are us counterparts? And I've seen again
the likes of GD one, Blackburn and ice House do
that around hey, how do we like nurture our founders?
And then in some ways like shake hands to shake
hands with another venture part venture player going hey, okay,
you're now playing it even larger capital. How do we
(29:35):
pass the song?
Speaker 2 (29:35):
If you will, how do you tap into it? If
you're a founder. I mean, are you relying on your
VC investors to go and make those introductions? Do you
know You've got like the likes of nz NTE, but
they've got limited resources as well, So you know, how
do you actually make those connections to these other founders,
to the to these experienced kiwis these you know, because
(29:57):
there is still a limited number compared to.
Speaker 3 (29:59):
Yeah, I can tell you this. It's actually being quite
pointed about the questions you ask and who you ask,
who you hang out with. So how many QII founders
who want to go on this global journey are actually going?
Who has been on this global journey? And I want
to speak to those people because one of the things
that's quite distracting is there are so many people with
(30:22):
the best of intentions that start offering support, advice and guidance.
Speaker 2 (30:26):
Right.
Speaker 3 (30:26):
So for example, somebody who is currently a senior marketing
leader at Meta a, Facebook or Google does not have
this experience. That is a different experience like AKII is
doing that, right, that's big tech, that's a large company experience.
How many other is a KII founder going. I'm looking
(30:48):
to speak to other kiris who have gone through this
early seed to scale up experience either as a founder,
as an early breader, or as an investor. And I
know the connections, the language, et cetera. So if that's
(31:09):
be my biggest advice to keep founders going on this journey,
one of around, please be quite clear about the question
you're asking and who you're asking it too, because most
of us have the best of intentions, but then really
tap into those with the legitimate experience that you are seeking.
Speaker 2 (31:33):
Yeah, that can be kind of a cultural thing with Kiwi.
Sometimes we don't want to ask the direct question, right Like,
we don't want to say, hey, I know you did this,
how did you do that? There was a sense of
a transactional nature about that in terms of I'm willing
to share with you what I know, but we're gonna
it's gonna be purposeful. In New Zealand, maybe doesn't quite
(31:55):
have that meeting oriented perspective to those kinds of things.
Speaker 3 (32:00):
Right, But I'd frame it a little bit differently, right So,
I think again, because we're a small country, we don't
have we don't know how to signal security safety excellence
through very well formed badges. Right Like, so someone who's
(32:21):
worked who's run a division at g Capital or Boeing
or Canvas, et cetera. Oh, I can see that badge
and I know what you've done and I know what
you experience it. So that's a small country thing, and
it's not a bad thing. It's not a negative. It
is what it is. So then we want to sit down,
let's get to know you as a person. While in
a large country you can look at the discrete signals
(32:42):
and you can form opinions. You can see the stories
much faster. Right, and so if a KIP founder wants
to go play that game, Okay, so this is the
context that culture that you're now executing on. Let's be
a little bit clearer. I'm here for this. There's my background.
It's made this and I have to kind of explain
because most Americans won't know much about New Zealm. Yeah,
(33:05):
but they're really curious. So share some tidbits, get them excited.
They trust it. It's Western, etc. They've heard of the
All Blacks and the America's Cup and thank God for
the Lord of the Rings. So they're like, Okay, we
know this, So now what would you like?
Speaker 2 (33:21):
Yeah, gotcha? Yeah, So I guess like being in the
same way that you have, like an elevator pitch for
your company, have an elevator pitch for you as a
person that you can just drop in fifteen twenty seconds
and then be like, now it's a business guy.
Speaker 3 (33:36):
Absolutely. Absolutely.
Speaker 2 (33:38):
The other thing that I wanted to ask you about
is the dials in New Zealand's innovation ecosystem. So what
do we need in terms of the support around it
to actually make it sing? And one of those things
is the conversation on going around ESOPs. And recently the
government came out and said they're going to up the
(33:59):
threshold about five thousand to seven and a half thousand dollars.
Do you think that's enough?
Speaker 3 (34:04):
Yeah, And as you're aware, I ran for the National
Party in the recent election and excited about furthering that
journey another day. And let's be clear to all the listeners.
ESOP is the equity share program that high tech companies,
especially high growth companies, need to offer, because the argument is, hey,
(34:27):
take a discount on your salary and instead a big
part of your conversation that will be equity. So yes,
we do need to reimagine equity visas Erica Stanfords come
out talking about this as well, So there is an
opportunity to reimagine all of this. The government's obviously dealing
(34:48):
with a few different priorities, so taking one thing at
a time, and I'm excited to see that progression in
that space as well as be part of that conversation.
Speaker 2 (35:00):
In summary, I guess on the ups in particular, you
said it was a good first step, but you do
think it needs to gook further.
Speaker 3 (35:08):
Oh of course. I mean, if you want billionaire unicorn
businesses coming from New Zealand, it has to be like
there's a template, like there's no, this is not like
a crazy idea like ye, yes, yeah.
Speaker 2 (35:23):
I mean I mean because the thing is as well,
it's going from five k to seven and a half
k year, which is nothing really in the grand scheme
of things. When you're talking about if you're bringing on
a CTO and you know you want to say, well,
we're going to pay you niney K and no you
could go and get one hundred and fifty k elsewhere,
but we're going to try and top you up with
some of that. Like seven grand a year is pittance
(35:46):
for them. So but your your argument is that is
a signal that they're taking it seriously and just working
through things.
Speaker 3 (35:54):
Of course, I mean the country has seen better days
and we are working through quite a few things to
get us to a better place. And government's been obviously
very good with getting stuff done, and nobody's denying that
(36:14):
in regards to hey, we said we're going to do
this in one, two, three, four, So as part of
a long to do list, I definitely appreciate the signaling.
But definitely if the ambition is to have more high
powered software and high goro tech companies, this needs to change.
But to be fair, this is not the most important thing.
(36:35):
The most important thing is a group of more and
more Kiwi entrepreneurs believing that they can go big.
Speaker 2 (36:49):
So if I'm a business leader, what are some actions
that I can take as a business leader in New
Zealand to actually help this progress.
Speaker 3 (36:55):
That's actually a really interesting question. I think first, almost
acknowledging your risk profile and risk framework right, which is
absolutely okay, right, and because it's really important you have
so many employees and things your vital entity and and
and and really be really happy about that. The other
(37:16):
pieces do you want to tackle global markets right? I
was recently of speaking to one of the head of
strategy at one of the energy companies and and uh
and they were like, you know, but you know, our
board may not want to you know, grow right. I
think there's an opportunity to know that middle and large
(37:39):
New Zealm companies. If we do not grow our GDP
per capita in New Zealand, we can't have the imagination
that we have of ourselves of being done. Marks we
to nowhere, right, and we have a desperate desire to
address inequity small country compassion, Absolutely, we are compassion our call.
But we have to all a GDP per capita. We
(38:02):
have to for us to have the hospitals and schools
and all of this stuff. Okay, so then as a
as a as a as a middling company. Wait, maybe
we have a responsibility to tap into global markets. How
do we tap into global markets? Maybe we should set
like a higher revenue goal. What could we do there?
(38:25):
Could we send services? Could we start a services arm
and me let's start off with Australia. Let's do it
like a pilot thing. Could we could we maybe extend
our products to one other niche tier in the US.
And can we set aside a small little amount of money,
even if it's two hundred k a finer k just
(38:46):
as an experiment. Actually you don't do it with even less.
Start super lean and can we get one overseas customer,
two overseas customers in the pursuit that building more powerful small,
medium sized and large businesses in New Zealand with a
global perspective is valuable for all of us. Right, So
(39:09):
it's hard, This is a hard thing. It requires leadership
within those businesses. But my only pitch is, hey, if
you guys become more valuable and start to have a
few more global customers, it's actually good for all of
us because suddenly your employees, your productivity because now the
(39:32):
dollar of our effort that you're putting in is being
spread across a few towns in the US, you know,
and suddenly productivity levels, everything goes up. Right, So I
think that's a good pitch.
Speaker 2 (39:47):
So the idea is in the same way that you
might put aside, you know, whatever one percent of revenue
for R and D, do the same thing for global efforts,
like just say this is part of how we operate.
As you know, we got a little bit of money
where we're trying to build new products or trying new things.
Now we're going to have a little bit of money
(40:07):
where we're actually trying to target new markets as well.
Speaker 3 (40:10):
That's exactly right. And my suggestion if you were to
do that is focus on revenue. Like with five dollars,
we need to generate revenue. With ten dollars, we need
to generate revenue. The most powerful thing you can do
is not research, is win a customer. I don't care
(40:34):
how you do it. Just win one customer, because in
the pursuit of winning that customer, the amount you learn
is so much more than Hey, let's just understand the market.
Let's go hang out. No, just win one customer, h
then win two, then win three. Do the unscalable things.
Do not worry about scale. Right, cool, we wrap up.
Speaker 2 (41:00):
Let's talk a little bit about your time in Canvas.
So you said you were employee number twenty five. That's
very early in a massive company's journey. How long were
you there.
Speaker 3 (41:10):
Altogether closing in and around just around three years?
Speaker 2 (41:15):
Around three years, I mean in the growth of Canva
was extraordinarily quick, so you would have seen quite a
lot in those three years. What did you learn? What
is the most valuable thing that you learned from your
time inside a company growing that quickly.
Speaker 3 (41:29):
That you have to have a love product. I remember
even when I joined on Twitter, it was I love camera,
love can I love Cana love Cana love camera like
you could hear the customer voice singing its praises right,
and which is why I keep saying one of the
most important things is customer and problem obsession like mail
(41:50):
for mail, people who designed was her tribe. These were
the people she lived for and when it gets to
solving that problem the other pieces. I remember walking to Canva,
a small group of people and walking to the office
the first time, and I had my own tech startup
at that point, and I remember straight away thinking something
(42:12):
was different, and looking back now is that everything was intentional, right,
So where the laptop was that Cliff, who is co
founder and Mel's partner and a billionaire, was the first
canvas for chef. He would make the meals and it
was intentional that from twelve to one everybody came back
(42:36):
and had had a meal together. How we celebrated birthdays,
It was a very peculiar ritual, fun amusing ritual that
we did and a quick story. So I was responsible
once on a Sunday to do. We were like at
about seventy or nearly closing it, one hundred people about
making sure that a company riorg was done properly. So
(42:56):
I'd worked through the weekend and about Sunday two o'clock
I'd come up with a plan and I'd said, okay,
so people would come in and then there's clear instructions.
They'd moved their laptops from here to here, right. And
mel walked in at about two thirty on a Sunday,
and you know, she was happy with the work and
all the thinking that had been done. And they said, oh,
(43:17):
what do you mean people are going to come in
and you know, move stuff, And I said, yeah, I
mean it's the most efficient thing. So no, that's not
the experience camera team members get when they come in.
They should feel like, hey, like we are here for them. Right.
So for the next four to six hours, Cliff mel Zach,
(43:40):
who's one of the top leaders of Canvan still is
and myself spent wiping down the tables, moving each laptop,
connecting each thing, making sure everything was done properly. She
was so clear and intentional, this is my house, this
is my farey and this is how it's going to be, right, So,
(44:03):
and I think there's there's an opportunity again when you
think about these global founders, this takes a lot of
like internal thesis around like who am I, what do
I want? Et cetera. Right, So, uh, it's it's again
that you know again that customer obsession and that like
who are you? Because if you're going to play in
the global markets, the market's going to ask, right, so
(44:24):
you really have to have that thinking done. Now, that's
that didn't require any money. But when when an early
team member gets that, that is such powerful cultural signaling around, Hey,
this is really meaningful to me, and I want to
share this with you. It's not it's not a fast
you know, table tennis table you know it is. This
(44:47):
is important. You are important, We are doing great things.
Let's do this. My suspicion is Team New Zealand the
All Blacks talk about cleaning the sheds, right. It's those
like very intentional, time consuming, unscalable things initially they then
scales so powerfully as stories and signals.
Speaker 2 (45:10):
Yeah, it's interesting. I think the key you said there
is time consuming, right, Like yeah, and there's that old
adage with kids. Don't give them your money, give them
your time, right, that's what they really want. And it
sounds like that's a very similar thing to what you're
saying about employees, is that obviously a good compensation is nice,
and having a table ten and stable is nice, but
(45:30):
at the end of the day, they want to know
that they're being thought of as humans with needs and
support it and made it be comfortable.
Speaker 3 (45:39):
Absolutely, the single most important thing, in my opinion for
a great culture is that it's winning. Right. Everybody that's
a mess. You have a bunch of humans together, it's
going to be challenging, right, everybody's good opinions insecurity is
a whole bunch of stuff.
Speaker 1 (45:55):
Right.
Speaker 3 (45:56):
But if as a team you go, hey, these are goals,
and you continuously surpass the goals, then people come into
the team go, oh great, when I do work, which
is the primary point of this activity, it is valuable
and that is the leader's base level responsibility, right, And
(46:21):
then are you being treated fairly, is it a safe environment,
et cetera. And to do what I've just said at
world class levels is hard, right, but that's all you
got to do. You got to make sure it's winning
and an a startup that's like a hockey stick curve, right,
it's a love product go nuts, and then it's it's safety,
(46:44):
growth and the added Are you being treated fairly right
from a compensation term external perspective? And again all of
that requires deep work, not frills and short term cash.
Speaker 2 (46:58):
But a nice coffee machine also helps, a.
Speaker 3 (47:00):
Scaby machine and you know the occasional night out.
Speaker 1 (47:03):
It's good, fantastic entrepreneur and great you know to have
him here with Phase one and New Zealand, this sort
of network for startup founders as well as the investment fund.
Interesting that political career that hasn't quite come to fruition yet,
but he is really a sort of a blue green
(47:24):
sort of guy. He really likes the environmental aspect and
he's trying to marry that obviously with tech and entrepreneurship
and innovation. And he has been very close to the nets,
helping them with their tech strategy.
Speaker 2 (47:37):
Yeah. I do actually think what he was saying about
the potential for New Zealand's economy taking some of that
you know, sweet us money and bringing it back home.
I think that is a very apt thing. And I've
often spoken to people who are like, you know, we
focus too much on the US. You know, we need
to look at Europe, we need to look at Southeast Asia.
(47:58):
But his argument for the US fairly convincing.
Speaker 1 (48:03):
Yeah, well, we spent a lot of time in Silicon
Valley in San Francisco, obviously was very early in Canva,
the biggest success in recent years in this part of
the world. And you can tell from his discussion here
he's really interested in founder talent and how to foster it,
how to identify it, how to foster it, and how
(48:24):
to tap into that diaspora of key we talent overseas,
how to bring some of that money and capital human
capital as well that they have access to and bring
it back to New Zealand. So a lot of this
is real music to my years and years being. You know,
we took to Black Pearl group on the podcast recently
and they were saying exactly the same thing. We went
(48:45):
straight to the US market because that has the homoganity
to allow you to go wide and broad very quickly.
Speaker 2 (48:53):
And then Black Pearl just raised a huge investment around
in New Zealand, specifically with New zeal Island investors. So
they raised ten million and off market and then they've
got another two and a half million and share placement
foreign existing investors in New Zealand. So a really clear
example of how that can really work for people.
Speaker 1 (49:14):
Yeah, so phase one is a great addition to the
startup ecosystem. I think he talked about the ESOP thing,
you know, the share schemes for startups, which Judith Coms
I believe is working on, so some action will happen there.
He's also quite an advocate for reform of the Foreign
Investment Fund taxation, which is this I don't quite understand it,
(49:38):
but basically, if you're an investor and you have overseas investments,
if you're in New Zealand and have overseas investments, they
can effectively tax you five percent of the unrealized gains
of that investment. Which, say you're a big American tycoon,
you come and live in New Zealand, you've got tens
of millions of dollars in investments overseas, that's going to
(49:59):
be not a very attract of things. So he's basically
saying if we reform that, we're going to be more
likely to get these high networth individuals locating here and
investing in New Zealand, so saying a lot of I
think quite sensible things, and clearly he wrote a really
good column we'll link to in the New Zealand Herald
back in March, and I think he's got an eye
(50:20):
on the next election, and who knows, by then, Judith
might be sick of having seven or eight portfolios and
maybe she'll be thinking of someone else for the tech portfolio.
Speaker 2 (50:33):
Could be Yeah, yeah, he could be a candidate, that's
for sure. I don't know his view on the ESOPs,
saying that what they have put in place with that
seven thousand dollars cap increase is just the beginning. I
hope so, and I'd like to believe that, but I
do also know that it's a government that is kind
(50:54):
of struggling for money at the moment that it would
be interesting to see whether they can really do what
needs to be done with those ESOPs in the long run.
Speaker 1 (51:04):
I mean, it wouldn't be great if we had a
Canva like success. And I think he's obviously so inspired
by what he saw there working with that founder group
that he is going to try his hardest to do it.
But you know, really, when it comes back to it,
reading that founder story. It was the passion of the
founders for that particular thing, making graphic design simpler. They
(51:29):
designed a whole way up to tackle the problems they
were facing. It really comes back to that problem solving.
What is the problem that you're trying to identify and
is a market for it? And that's just universal. And
I've got to say a lot of our entrepreneurs have
become a lot more laser focused on that so called
product market fit and identifying the problem and validating the
(51:53):
market for solving that problem. So I think we're getting
a lot more sophisticated. But having people who've actually been
in these really successful unicorms coming to New Zealand living here,
spending time and willing to impart that knowledge is really valuable.
Speaker 2 (52:11):
Yeah. Absolutely, bring on the hockey stick growth.
Speaker 1 (52:13):
I say absolutely. Well that's us for another week.
Speaker 2 (52:18):
It is, And thanks very much to Mahash morale Da
for coming on the Business Off Tech.
Speaker 1 (52:22):
You can find the stories we talked about today and
links to other interesting tech stories over on Business Desk
dot co dot nz and you can subscribe and listen
to all episodes of the podcast over on iHeartRadio or
wherever you get your podcasts.
Speaker 2 (52:36):
Drop us a line with suggestions for future guests. Can
email me Ben at business desk dot co dot nz.
We'll find both of us on LinkedIn and ax.
Speaker 1 (52:44):
And another episode coming your way next Thursday.
Speaker 2 (52:48):
Until then, have a great week,
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