The Government did not fail your startup

- March 31, 2016 6 MIN READ

When Gary Elphick from Disrupt contacted me on Tuesday to tell me of the news that Chris Baily, his cofounder and COO, had been deported by Australian Border Force back to the UK, my initial reaction was that it was really shitty news – I immediately sympathised with what that meant for both Baily and Elphick, their company, and its plans for the remainder of this year.

It would be easy to jump on the bandwagon as it seems a vast majority of the Australian startup ecosystem has and blame the government; pump my fist in the air at how unfair it is to rip one half of the founding team from what I believe is one of the country’s most promising SportsTech startups right now. But after sitting on it for a day, I can’t do that.

For the record, I love Disrupt – it is probably one of my favourite startups to come out of the muru-D program so far.

Australian startups, however, need to stop thinking that Federal, State or Local legislation does not apply to them. Disruption and Innovation mean pushing boundaries, but that does not mean it is ok to break the law. I have said this many times before about the way Australian startups engage with interns.

For the record, in the original Linkedin post that spurred the news cycle about Baily’s deportation, Elphick was very clear that himself and Baily recognise the illegality of his actions and takes responsibility for them;

Our COO chose to tell immigration that he had completed his fruit-picking as the only way he could continue to work here, to be clear he was in the wrong and fully accepts responsibility.

However rather than take it as an opportunity to say to the startup community, “We made a huge mistake – don’t do this,” it has been used as a platform to criticise the Australian Government’s policies around visas and immigration laws, and to call into question Turnbull’s party commitment to startups. Frankly, it’s spin-doctoring at its finest.

I have been fascinated with the Australian startup community’s reactions to certain events in recent weeks, and how we seem to react like we are an underprivileged minority group when one of us is caught out for something we did wrong. The community’s comments around Adelaide startup Sociabl, for example, quite frankly puzzled me; I agree that we shouldn’t kick people while they are down, but we should never pretend actions like deliberate deceptive conduct that contravene the Trade Practices Act are “rookie mistakes.”

Likewise, we should not even entertain the conversation that the cofounder of Disrupt was left with no other option in the world than to commit migration fraud, and that somehow the Australian Government assisted in causing it.

Opinions like the two above have been labelled recently as examples of tall poppy syndrome within the Australian startup community. Let’s look at what the phrase tall poppy syndrome actually means according to the latest issue of The Collins Dictionary:

a tendency to disparage any person who has achieved great prominence or wealth

Now go to the search bar and type in Disrupt or in fact any name of any other startup in Australia. You will not find one example where I go after a startup or call into question their skills or knowledge or right to be successful. What I will do however is call out behaviours of founders, conduct of businesses, and community concerns raised to our publication about people, workplaces, and events that happen in the ecosystem.

I am always more than happy to own up to our own mistakes and wrongdoings as a business. A solid startup community should not be afraid to call each other out on their shit.

The situation with Disrupt came about because of a conscious decision that was made where the consequences, if caught, are extreme. The fault therefore is with the individual and relevant senior management within the Disrupt business.

An important conversation

Australian laws around entry and working requirements within the country are very clear. For example, on a working holiday visa it is actually illegal to launch your own business within Australia. In his Linkedin post, Elphick said that the Australian Government refused to recognise Disrupt as a business, meaning that the 457 Visa was not an option for Baily.

Because as a start-up the government refuses to recognise us a business (for the purpose of sponsoring highly skilled individuals on temporary work visas), despite the fact that he has been personally approved already. The advice from immigration that his only opportunity to work on Disrupt is to first ‘add value to the economy’ by picking Bananas for three months? And even then he would only be allowed to work here for six months.

Just to be clear, Australian startups are able to apply to be a Standard Business Sponsor. The process is paperwork and process heavy – but it is possible. Laws also changed not too long ago to make it easy for fast growth businesses in their first year of operation to be able to take advantage of the 457 Visa as well. It is important for me to note that not everyone is approved, however.

On paper, if the stats and milestones that Disrupt claim to have, such as annualised revenue of $1 million etc, unless their margins are super-tight or the founders are both working for wages well below the minimal $53,900 requirement to be eligible  (that is a strong possibility in startup land), I am surprised that the company was not approved as a Standard Business Sponsor.

Much smaller operations (startups included) with much less revenue are often approved, as long as they meet certain criteria such as being a lawful operating business, have the financial ability to meet their obligations under the 457 program, meet or can demonstrate a plan to meet certain training benchmarks, that the position they are hiring for is present on the Consolidated Sponsors Occupation List, the salary being paid is at market rate, and that the person being sponsored meets all their requirements.

From past conversations with Disrupt, I am inclined to believe that they have been told their business is not eligible for the 457 visa option. Based on the presumption that this is accurate, it raises a couple of important questions and observations around further gaps that need to be addressed around policies and processes around startups when it comes to legislation.

  • What stopped Disrupt being approved as a Standard Business Sponsor?
  • Is the process consistent across the board for determining eligibility for the 457 program?
  • Will a potential new Entrepreneurs Visa prevent this issue from ever happening again to an Australian startup?
  • How can we make it more cost effective for pre-revenue and seed stage startups to either start tech companies here or recruit international talent into the ecosystem?

It has nothing to do with fruit picking and whether or not that adds value to our nation’s economy. That is a condition of one particular visa, that in this case was not the correct visa for the applicant’s true purpose of being in Australia. 

Danny King, owner and director of specialist employment legal practice, Danny King Legal, spoke to Startup Daily this afternoon about why certain visas have certain conditions and the importance of founders understanding the additional risks they may open their company to if they choose to ignore those conditions.

“With immigration in particular, I can see the reasons why we would have a requirement for fruit picking in regional areas to be a condition in certain visas. That is a community need that has to be fulfilled. Country areas are shrinking so it is clear to understand the policy reason behind that,” said King. 

However she was also quick to address the fact that there is a need for the Australian Government to seriously look at the impact that an entrepreneur-friendly visa would have on the country.

“Now that we are talking about the ideas boom and the focus towards creating industries, if we are serious about growth in Australia it would be fantastic to see some type of Entrepreneurs Visa,” said King. 

“There are some fantastic policy reasons around jobs, industry growth, and community needs for the Government to support that.”

On the matter of dodging the system though, until a better system is in place more conducive to your circumstances, King said it very clearly is just not worth the risk.

“The penalties are steep and the consequences are significant,” King said. 

“The penalties under migration law are in addition to and separate from workplace laws, therefore it is a double up of liability. Founders need to be mindful that the employer is the one with the obligation, and that even in a situation where an employee breaches their visa unknowingly to them, they as the founder and employer can still get in trouble for that.”

It is very clear that there is a lot of work to be done in the area of policy around visas when it comes to the Australian startup ecosystem. That is true. I am all for being very loud when it comes to having that conversation about how critical those reforms will be to the local startup ecosystem.

In the meantime we should be mindful that, while terrible policy inevitably will contribute to issues within our startup companies, bad decisions by founders on how we choose to handle dealing with those issues are where the blame lies – because the terrible policy existed before you made a conscious decision to ignore it.

Image: Team Disrupt