Social Distancing in Victorian Melbourne…

At the time of writing Victorians, like most of Australia, are living under a Covid19 “stay at home and practise social distancing” regime in attempt to “flatten the curve” and reduce the spread of this contagion. I have been working from home for 3 weeks, only going out for essential food shopping and a daily walk for exercise (since my gym is closed). This perambulation has revealed some lesser-seen aspects of Melbourne (apart from the empty streets), including the way the modern city’s 19th century founders went about their approach to urban design – including some examples of built-in social distancing.

The first example is the number of public parks and gardens close to the CBD that were established in the 1800s, and which have managed to survive the onslaught of developers. As we know, public parks, with their trees and green spaces act as the lungs of the city, and provide a place to exercise, relax and get some fresh air. So we need these facilities more than ever in times like these. (Strange why the Victorian Government still insists in allowing vehicles to use the culturally and historically significant Yarra Park as a public car park on so many days, with all the horticultural and environmental damage that this causes…)

Second, the decision to incorporate lane-ways into the grid design of the CBD, as well as throughout the 19th century expansion of the inner city suburbs. While their design was mainly pragmatic (ease of access for night carts, storm drainage), the result is that in densely-built areas such as Richmond, Carlton, East Melbourne, Fitzroy and Collingwood, lane-ways mean even terraced houses can have ample space between them and the next block, allowing for better ventilation, natural light and reduced risk of disease. (For an example of the lane-ways importance to Melbourne’s character and psyche, check out Daniel Crooks’ video, “An Embroidery of Voids”.)

Third, the decision not to build right up to the urban banks of the Yarra River (and the straightening and leveling of the river itself) has left them accessible to the public, both as a means of cycling and walking to/from work, and for recreational purposes. In many cities, riverfront access has largely been blocked off as adjacent land has been appropriated for private, commercial and industrial use.

At a time like this, I truly appreciate the foresight of Melbourne’s Victorian town planners – I just hope we can continue to enjoy their legacy in the coming weeks and months!

Next week: #Rona19 – beyond the memes

 

The State of PropTech

Among the many strands of X-Tech that we have come to hear about, PropTech is currently emerging as something of a hot topic, judging by a recent Meetup in Melbourne organised by MessageMedia. With the ambitious goal of exploring the “Past, Present and Future of PropTech in Australia”, it was clear that the field can mean very different things to different audiences.

Facilitated by Bec Martin, the panel comprised Shelli Trung, APAC lead for the Reach PropTech Incubator; Mark Armstrong, CEO of RateMyAgent; Alan Tsen, seed round investor with a focus on disruptive FinTech startups; and Nigel Dalton – ex-REA Group, who also gave a key note address.

Given the format and nature of the discussion, I won’t attribute specific comments to particular individuals. Instead, here are some of the panel’s observations (in no particular order), including some pitfalls for the industry, and key points that all market participants will need to consider.

  • In light of recent events, it was perhaps unsurprising to hear the view expressed that WeWork is “not very prop, not very tech”, as its business model and funding challenges became apparent. Generally, the view was that the co-working space fad has had its day (although Melbourne still manages to support numerous co-working spaces and models, not all like WeWork, since the local demand is there?).
  • We face significant local economic challenges (low inflation leading to minimal GDP growth and negative interest rates; declining wages/purchasing power in real terms; falling retail spending; over-extended household debt; and underemployment in the wider job market).
  • On the other hand, Australia still hasn’t had a recession since 1991, and house prices have just seen the biggest monthly increase since 2003, yet banks are imposing more stringent lending criteria.
  • Depending on which economic theories you favour, this either means easier access for first time buyers thanks to lower interest rates; or more rent arrears, increased mortgage stress and greater homelessness because of a lack of affordability and/or deteriorating lower cost housing options.
  • PropTech is not just two-sided online residential market places (although data analytics and digital marketing capabilities are integral to that particular segment).
  • PropTech should also embrace sustainability in terms of environmental efficiency and affordability. Social impact will likely mean adjusting home owner expectations in terms of dwelling size and carbon footprint. Equally, smart cities and more mixed use development is also being increasingly factored into urban planning and infrastructure design.
  • The increase in higher rise and higher density housing has also led to cost cutting in the choice of materials (flammable cladding), and deregulation and other factors have exacerbated structural defects where there is inadequate insurance protection for home owners.
  • What is happening where PropTech and FinTech intersect, such as the notion of fractional ownership? While this is something that is increasingly more likely (especially with Blockchain technology and tokenisation) if first time buyers have no other way to access the property market, what should be the appropriate licensing regime for these new financial products? What should be the credit risk criteria, lending models, prospectus design, funding structure and tax & accounting treatment? What if such developments include social and inter-generational housing? Or achieve the highest environmental standards/lowest greenhouse emissions?
  • For Australian PropTech startups wanting to go global, there were some warnings about the lack of cross-border tech transfer, and an absence of cultural awareness and curiosity by founders.
  • Meanwhile, on some measure, Facebook is probably the largest residential rental marketplace in the USA. What does that signify for future markets and property transactions?
  • Despite the success of real estate market places in Australia, the model does not easily transfer or scale in other countries. Equally, models from overseas might not work here. There was some scepticism about the so-called “iBuyer” model, and also the agency aggregation approach by firms like Compass (“you can’t buy relationships”). Plus, even local brands can go sour (e.g., Run Property and its subsequent merger with Little Residential to form LITTLE Real Estate).
  • IoT-enabled solutions are a growing theme, especially in aged care, and where AI learning patterns are being applied to energy efficiency, for example, or to improve facilities management (another PropTech segment ripe for disruption). This also links to the use of and intersection between On-line/Off-line data, such as CAD and 3D modelling, and “digital twins” (real-time databases of building design files) for mapping and monitoring physical structures. While in the UK, the concept of, and need for, Digital Twins has led to a raft of industry-wide initiatives and collaboration.
  • Despite Australia’s impressive work in creating standard data structures for residential property, there is still a lack of transparency when it comes to the results of private auctions (but isn’t that the idea – they are “private”?). According to the panel, similar data overseas is considered to be quite “dirty” (unstructured and non-standard).
  • The panel anticipated new PropTech opportunities for those companies offering “high touch/high end” services, and those providing “low touch / high tech” solutions.
  • One common data and infrastructure management challenge is dealing with legacy information systems, and sluggish internet speeds (despite, or because of, the NBN), meaning there will inevitably be some bifurcation in service and quality, depending on building design, purpose, age, location, value etc.
  • Finally, there were concerns that as security data and facial recognition technology becomes increasingly algo-based, it raises questions of privacy and misuse of personal and confidential data.

Next week: Pitch X – Launch Into A New Decade

 

 

Notes from Auckland

Over the past couple of years, I’ve been fortunate to make several trips to Auckland, as part of the work I do with Techemy and Brave New Coin. Although I had been to New Zealand a few times before these latest visits, it was only recently that I understood why Maori call it Aotearoa – “Land of the Long White Cloud” – as you can see from this photo I took from the office window.

To anyone from Australia who has spent time in New Zealand, it is quickly apparent that Maori culture and language are far more respected and recognised than idigenous identity is across the Tasman. From the bilingual signage and national anthem to the Haka performed prior to every All Blacks game, Maori identity is more visible and celebrated.

On my most recent visit a couple of weeks ago, this was reinforced during a guided tour of the University of Auckland’s art collection, as part of Artweek. First, the guide used Maori words for local place names. Second, he drew attention to some of the challenges that he and the other curators face when dealing with Taonga objects – which also opens up the debate about art vs craft. Third, he acknowledged that in his own early studies, he was influenced and even encouraged by his tutors to incorporate elements of Moari art into his own work – even though as someone of European (Pakeha) descent he did not really understand what these images represented. Finally, this form of appropriation can lead to questions about whether an artist’s identity (cultural or otherwise) should define their work and whether that work should only be interpreted through their identity. For example, can “maori art” only be produced by artists who are ethnically Moari? The artist Gordon Walters deployed images of Koru in his most famous work, which can divide critics and academics.

In many ways, Auckland is very similar to Sydney – both are their country’s largest city, but neither is the capital. Both are formed and defined by their respective harbours – and this in turn very much influences how people engage with their city: based on where they live, and their commute to work. Likewise, both Auckland (Albert Street) and Sydney (George Street) are trying to play catch-up with their public transport systems, which have not kept pace with the rate of urban and population growth. And, no doubt connected, both cities have very expensive property markets.

One of the things that I always notice in Auckland is how many buildings in the CBD are polyhedron in shape. Some of them even display an element of “Pacific Brutalism” which seems to be very popular in public and municipal architecture, from Hawaii to Singapore and beyond. It could be that polyhedral structures are more earthquake prone – or because Auckland is very hilly, giving rise to “creative” building designs.

To overcome the topography (and the limitations of the public transport system), a number of hire companies offer electric scooters for getting around the city. While it seems a great (and environmentally friendly) idea, the fact that there are no fixed pick-up and drop-off points, users can leave them anywhere – and many are even to be found lying across the pavement, causing something of an obstruction.

Finally, no visit to Auckland is complete without a ferry ride to Waihiki Island, for lunch and/or wine-tasting at one of the many cellar doors.

Next week: Startup Vic’s Pitch Night for Migrant and First Generation Founders

 

 

 

Digital Richmond

How significant is one suburb’s contribution to the startup ecosystem in Melbourne, if not Victoria or even Australia? Well, if the recent panel on Digital Richmond (plus the Victorian Minister for Small Business, Innovation & Trade) are to be believed, VIC 3121 is the epicentre of all things startup.

According to the event description, Richmond (and the adjoining area of Cremorne) is “the stomping ground of choice for Melbourne’s established tech companies and aspiring start-ups alike”.

Hosted in the offices of 99Designs (celebrating bringing their HQ back to Richmond), a panel representing some of the biggest names among Australia’s tech companies (and all local heroes) explored what makes “Digital Richmond” tick – but also identified some of the challenges of growing and sustaining scale-up ventures beyond the confines of a few co-working spaces in converted warehouses and textile factories….

Facilitated by Rachel Neumann former MD of Eventbrite Australia (whose Australian HQ is in Melbourne), and briefly head of 500 Melbourne, the panel comprised some key Richmond/Cremorne tenants: Patrick Llewellyn, CEO at 99designs; Jodie Auster, General Manager for UberEATS in Melbourne; Cameron McIntyre, CEO of Carsales; Nigel Dalton, Chief Inventor at REA Group; and Eloise Watson, Investment Manager at VC fund Rampersand.

To set the scene, mention was made of other established Australian tech-based companies also HQ’d in Melbourne (MYOB and SEEK, the latter of which is also relocating its offices to Richmond), recent local successes such as Rome2Rio and CultureAmp (both born in Richmond), and the steady stream of global tech brands that have come to call 3121 their regional/national home, such as Stripe, Slack, Square and Etsy.

It was evident that each of the panel have previous business connections with one or more of their fellow panelists – so maybe there is simply value in being in close proximity to each other. Success begets success, especially when people are more willing to share connections and introduce new contacts into their networks. (Although, what might this say about diversity? And does it reinforce the notion that “it’s not what you know, it’s who you know”?)

Despite the number of co-working spaces and tech companies based locally, there are very few substantial, modern office buildings in the area, and only one business park of note. Local startups that need more space will likely have to relocate elsewhere.

Property aside, the panel considered other local infrastructure is generally conducive to success – access to public transport (although Richmond and East Richmond stations are both in serious need of an upgrade), a solid talent base, great coffee shops and proximity to the CBD.

On the downside, there was criticism at the lack of NBN access in such a concentrated pocket of tech companies and startups (with the associated numbers of contractors, freelancers and other members of the gig economy who live in the area and work from home). Car parking was also an issue, although with Richmond being a major public transport hub, I was surprised that this came up. A lack of child care facilities was also mentioned.

Being an inner city suburb, with strict planning laws and designated “heritage overlay” regulations, there are limits to the amount of development that can take place, especially as Richmond and Cremorne are also established residential areas, with medium to high population density. Getting the balance right between economic growth, urban renewal, modernisation and local community preservation is tricky – pity that the organisers had not thought to invite anyone from the local council.

The panel also bemoaned the absence of any tertiary education facilities in the area (by implication, does that mean the Kangan Institute campus in Cremorne doesn’t meet local requirements?). But maybe there are other ways to connect with academia?

The panel discussion then moved on to topics that are beyond the control of the local council or even the State government, yet each has an impact on the startup economy: corporate tax rates; employment visas; the schooling system; vocational education and training; and the need for inter-disciplinary and inter-generational hiring. (They may as well have added industrial relations laws, the productivity debate and smart cities – oh, and the National Innovation and Science Agenda.)

I was also surprised at one of the reasons given for 99Designs bringing their global HQ back to Australia – the appeal of an ASX listing. I know that Australia has one of the largest pools of pension funds in the world, and nearly every person in Australia has direct or indirect investments in Australian equities within their superannuation portfolio. But despite being ranked 15th by market capitalisation, the ASX represents less than 2% of the global market, and even after 25 years without a recession, Australia’s capital markets risk being left behind. If we are to grow the local tech sector, there needs to be much more alignment between where (and what type of) capital is needed, and where the pension funds and other institutional investors like to put their money.

Finally, I always get worried when the likes of Carsales, REA Group, MYOB and SEEK are held up as poster children for the local tech and startup sectors – great businesses, sure, but all about to be totally disrupted by the next wave of startups, and not quite the high-tech sectors that the Victorian government wants to champion (FinTech, MedTech, BioTech, NanoTech, AgriTech, Cyber Security, Smart Manufacturing, EduTech….).

Next week: The NAB SME Hackathon