A few years ago, I spoke at the Accel APX conference, and our core topic was about how startups are fundamentally using other startups as their building blocks to create a core value proposition.
For example, it would have been a lot harder to build Uber from "the ground up " without Braintree for payments, Twilio for SMS and messaging and Google Maps for well... maps. Every single one of those areas is a massive company on its own and if we'd had to create each of them from scratch, we'd still be working on it.
To me, that's one of the things that makes America a place where companies can focus on what makes them special from Day 1. At a simplistic level, it's a question of build or buy. And when it comes to core infrastructural things, it makes no sense to build that up from scratch as a startup. The question might become more complicated as a company scales. Being big can be expensive, but it can also lead to volume discounts. And when you ask yourself where your engineers, designers and product managers should be spending their time, it's rarely on the things that have already been built. As they say, if it ain't broke, don't fix it.
Having come from that kind of environment, I've found it challenging to accomplish some of the same things in building out our company in Australia. There are some fabulous companies who have strong global products (thank you Intercom and Twilio!), but there are a number of platforms where the API solutions are incredibly expensive, or require onerous applications or don't even exist. As a result, I think it stunts the ability of Australian startups to actually deliver on their promise.
I think there are two fundamental issues here:
- lack of companies building platforms that support Australian needs
- companies treating APIs as only "enterprise" solutions
On 1, there's a sense that Australia is a small market, which is why it doesn't seem to factor as highly in global expansion. I don't think that this is a well-informed or complete point of view. I'll point you to my co-founder's post on this for more details, but will leave you with one stat.
“In 2015, Australian GDP was over USD$1.3T, yet total venture capital investment was ~$300M. India, with GDP of USD$2.0T did 12x that investment in the third quarter.”
But either way, if global companies aren't in a position to build this out now, there's an opportunity for Australian companies to do better. For example, our company requires a mobile payments API solution with direct debit, which is a primary method of payment in Australia. I feel like people are completely used to giving out their bank account numbers and BSBs (routing numbers if you're in America) without batting an eyelid.
I've only found two companies that have this kind of API, but was rejected outright by one of the companies because I didn't want to provide them with:
- A 20 page business plan
- Detailed screenshots
- All our requirements documentation
- A Sydney office address
Fortunately, I had an alternative, which is slightly more expensive but open to working with startups, and has public API documentation. If this company didn't exist, our company wouldn't.
I'll save my comments on point 2 for the next post. Fundamentally, I think this layer of companies that provide the building blocks for startups is a critical component to creating a thriving startup ecosystem.