How conservative corporate culture is holding back Australia's startup sector

The conservatism of Australian business profoundly shapes its startup industry from the way it supports young startups to the way it tears them down.

Big business and the technology industry are focussed on boosting investment and talent to achieve growth and productivity. Our more elusive business culture should also be up for discussion.

This can’t be The Last Dance

As a PR professional for technology and energy startups, I’m keenly aware of the importance big corporate customers and partners play in a young company’s rise.

Founders are told to be “targeted,” “patient,” “loud” and “brave” when chasing corporate partners. But location and culture matter, too.

While there isn’t a ‘willingness to partner with a startup’ index to point to, entrepreneurial culture is a fair substitute. According to the World Economic Forum’s Global Competitiveness Report of 2019, Australia comes in at number 23.

This aligns with the anecdotal evidence that I’ve experienced in this industry since I started as a tech reporter back in 2009. US businesses are much more willing to partner with untried Australian startups compared to major companies at home.

Australian business culture: noice, different, unusual

Everyone wants tech and big business to get along. The relatively new Technology Council of Australia, a long overdue addition to the Australian policy landscape, wants one million tech sector jobs by 2025.

Meanwhile, the Business Council of Australia, which mostly represents Australia’s largest companies, has been complaining about Australia’s poor productivity for what must be decades now.

As the Federal Government enters its second year, the House of Representatives Standing Committee on Economics is holding an inquiry into promoting economic dynamism, competition and business formation. Both the BCA and TCA have made submissions, much to do about growth and productivity.

Both organisations point to increasing investment and talent, which would suggest there’s an alignment of sorts between the two that should be welcomed. But there isn’t much policy thought being put into the more elusive concept of culture. Perhaps the hope is that it just sorts itself out.

To its credit, the BCA recognises this phenomenon somewhat in its ‘Rising risk aversion and cautious attitudes to risk’ section.

“…firms may be disinclined to invest, innovate, hire new workers and otherwise be more creative if managers are worried about policy uncertainty and possible changes to their operating environment or global circumstances,” the submission said.

The BCA goes on to blame the “scarring effects” of crises.

“People typically become more risk averse during and after times of crisis, preserving cash and delaying decisions about employment and significant purchases,” the BCA said.

“This phenomenon was evident after the GFC, and the COVID-19 pandemic may have triggered a similar effect.”

It should be emphasised here that the BCA is mostly concerned with other matters. But Australia’s conservative corporate culture predates all of that.

It’s also worth mentioning that Australia never even entered a technical recession during the GFC and we arguably had a better time of it economically during the pandemic, although some may disagree.

Hard to get the word out

This difference in business cultures is observable when startups look to promote their relationships with big Australian companies.

One major financial services company recently bullied the co-founder of a sustainability startup I’m familiar with to such an extent that they resigned after a journalist merely mentioned their brand.

The story was positive and unrelated to the brand, they were mentioned as part of the startup’s recent background that the journalist deemed relevant. In the PR world this is absolutely taking the piss, and the big corporate knew it, but to the early-stage startup it was very scary.

Another financial services company forced a startup I know to pressure a journalist to remove their brand name from a headline for a story that promoted the relationship.

Huh? Again, taking the piss. This isn’t poor stakeholder management from a small team. It’s bullying, plain and simple.

Perhaps because stories such as these spread like wildfire in Australia’s intimately connected founder community, many startups just don’t even ask. They don’t want to “jeopardise the relationship”.

I’m not suggesting US corporate culture isn’t capable of this kind of behaviour. It just seems more of a thing down here.

Failure is success practice

Just imagine for a moment that Milkrun failed in the US instead, where failure is success practice.

A percentage of the company’s investors would be reassuring the founders to approach them when they have a new idea, because “I like the way you go about it”. An unknown number of investors that didn’t participate this time would be similarly flagging the talent.

But Milkrun failed in Australia. It’s been argued that the company’s collapse is emblematic of reckless VCs, rookie founders, a lack of fundamentals and even the media for creating a frothy industry that’s long on talk and short on delivery, pardon the pun.

No doubt, some of that criticism has merit. But this company did deliver in so many ways.

Shouldn’t we be asking Milkrun’s founders what they’d do differently next time?

What lessons have they learned? Where do they see the next opportunity?

Sadly, that’s not the focus here as we ask ourselves what’s next for Aussie startups.

That’s a shame. Because the best answers to that question probably lie with founders that have just learned some of this industry’s harshest lessons.