Growing the entrepreneurial spirit, in Australia and worldwide
Posted on March 28, 2019
3 min read
I’m sure I won’t have a hard time convincing you of the value of entrepreneurialism. This spirit is what drives people to open a new business, to innovate and invent new technology, and invest in those willing to try.
But while we might agree on the incredibly high value of this spirit, we might disagree on the current state of things in Australia and what, if anything, we should do about it.
One of the measures of the future health of our business environment is the quantity and quality of new businesses started each year. On this front, Australia is performing well. When it comes to the rate of technology innovation, though, Australia is not performing nearly as well as it could. According to the 2018 Global Innovation Index, we rank 20th in the world – not a bad result, but we are not as successful as we could be.
What is really interesting is that this report shows we rank 11th in the world when looking at the inputs for innovation – such as the average number of years young people receive formal education, easy access to credit, and a high level of government services being available online – but we rank 31st when looking at outputs like the value of our patents, creation of new goods and services, and our foreign investment outflow.
Clearly something is not working the way it should.
Where were you when the dot-com bubble burst?
It’s almost 20 years since that rise and fall of many companies and the entrepreneurs behind them. While a very small number of people who invested heavily in tech stocks managed to get through that period with their finances intact, the most common outcome was lots of money burned.
Twenty years later the NASDAQ has climbed to all-time highs and is now at over 7,500. Sure the bubble burst, but many technology firms in the US have grown and many new ones have been established. In fact, many of the most successful entrepreneurs of our time were made better by the experience.
For example, Jeff Bezos opened an online bookstore in 1994. It was a disruptive move to take on a saturated market. His often-repeated mantra about being obsessed with providing the best possible customer experience, irrespective of what Amazon was selling and where it was selling it, enabled him to ride out the dot-com bust and build a company that, in 2018, had more than US$232 billion in revenue.
In Australia, the dot com boom gave rise to some serious success stories. REA Group listed on the ASX in December 1999 at $1.11 per share. Today you’d be paying close to $80 per share. Carsales.com was founded in 1997. It listed on the ASX twelve years later and today has a market cap of over $3 billion. And other businesses like Wotif, Lastminute.com, Seek and others have achieved sustainable long-term growth. However, their success has had nowhere near the impact on the Australian economy as technology companies have had in the US.
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