Born global best for NZ start-ups

Hong Kong’s AcceleratorHK co-founder Stephen Forte says if NZ start-ups have one advantages over their overseas counterparts it is that they are “born global“.

By this he means companies founded in New Zealand know they must export from day one. He says they have little choice given the tiny size of the local market, but that it is a good thing.

He says the smart strategy for a New Zealand-based start-up is to begin by “Conquering the English-speaking market. You need to exploit the fact that you’re in an English-speaking country”.

Forte says usually that means heading for Australia first then catching a plane to the West Coast of the US or to London.

NZ start-ups must grab revenue, not land

Forte’s second tip for Kiwi tech entrepreneurs is go for revenue straight away. This may seem obvious, but he says that’s not how US-based start-ups operate.

On the east side of the Pacific Ocean, there’s a well-worn path for start-ups operating in the shadow of the Silicon Valley venture capital machine.

There, conventional wisdom says first you need to go for what Forte calls the ‘land grab’. Financiers are looking for momentum, so the idea is that you need give your product or service away then increase the number of users by around 10 percent each week until you hit around a million customers. At that point you have to find ways to turn that user base into money.

Alienation

Forte says that process often means alienating many of the customers who contributed to the growth. Actually he used the term “pisses people off”.

He points at Instagram saying it’s not a pure example because the company was purchased by Facebook. However, it perfectly illustrates the principle.

Instagram got big by being the cool photo-sharing app. It was free. Before Facebook acquired the business it had 20 million users. Today that number is closer to 150 million. Facebook has decided Insgtagram will now start showing advertisements. That will make money, but the service faces the risk of losing many of its customers along the way.

NZ start-up culture somewhere between Asia and the US

The entrepreneur and investor was in New Zealand to speak at Microsoft’s TechEd conference last week. Forte is cosmopolitan. He is American by birth, was partly educated in the UK, runs a software business in Bulgaria and a start-up accelerator in Hong Kong. He is also active elsewhere in Asia.

He says Asian start-up culture is different from the US. Whereas American’s focus on web services, the main interest in Hong Kong is on mobile apps – the territory is the world’s most saturated mobile market. On the other hand Taiwanese start-ups tend to focus more on hardware.

Forte says, like New Zealand, start-ups in Asia are focused on exports and are more interested in see the cash-flow from the outset than building huge numbers of followers.