In this episode, we get the chance to catch up with Anne-Marie Perret, an independent advisor and significant contributor to the Canberra innovation ecosystem through her roles as mentor and board member with several ventures. Anne-Marie is also an active member of the Griffin Accelerator (which works alongside the Canberra Innovation Network) as advisor, board member and angel investor.
I was particularly keen to explore the importance of advice and governance with Anne-Marie and discuss how this adjusts through different phases of a venture. We framed the discussion around ‘small g’ governance and ‘big G’ governance as needs change through scale and sophistication of investors, markets and stakeholders. We speculate that the inflection point for transition was where capital raising moves beyond friends and family and the importance of due diligence from all parties as new capital comes into a firm.
We also discuss the concept of being ready for a board, with the associated benefits of discipline, mentoring and networks and the countervailing loss of control that may be felt by the founding team. Anne-Marie reflects on engaging with mentors and advisors, the discipline of always asking the second question and being interested in the answer and not always being in ‘pitch mode’.
With the recent AICD Australian Governance Summit and the increasing interest in innovation governance, management and strategy, I hope that this podcast presents a timely set of insights.
Transcript
CB: Hello everyone, and welcome to Tech Transfer Talk. My name is Cameron Begley, Managing Director of Spiegare. And joining us today is one of my local colleagues from Canberra, actually, whom I’ve had the great pleasure of many coffees and conversations with, and I’ve been really keen to get her onto the podcast to talk about some of the mechanics of governance and risk. Anne-Marie Perrett, welcome to the podcast.
AMP: Thank you, Cameron, it’s good to be here today.
CB: Fantastic. Thanks for joining us. Anne-Marie, we’ve had many conversations about this and I’m really keen to explore these governance and risk dimensions with you. These are themes that have come through many conversations we’ve had. But before we launch in, Anne-Marie, how did you end up in this universe of tech transfer and innovation and the governance piece that we’re going to talk about today?
AMP: Well, I’d have to say it definitely was serendipity. I had a background, business and law was my background. Banking in Hong Kong found myself back in Canberra and ended up doing something I never thought I’d do in Big Four in a tax practice at EY in Canberra. My knowledge of tax at the time was infinitesimal. I couldn’t even do my own tax return. But I was brought in to look at the GST, because it was new, it was coming in and it was all about transactions and all about law and all about business. All of which was my background. That led me to develop a really good understanding of government and government transactions, given that I was here in Canberra, and it also led to the partner that I was working with asking me if I’d take on the R&D tax concessions at the time.
CB: Aha.
AMP: And little did I know that he was setting me on my path to find my true passion, which was innovation and technology. I couldn’t invent anything myself, but I discovered that I was a decent technology translator. So, combined with my knowledge of government and government grants and government transactions and what government is looking for and that client-base, and then, you know, sort of juxtaposing that with my R&D tax concession, as it was, client-base, which was anything from small to very large clients doing research and development in Australia. I also got involved in a program, that EY was running called Entrepreneur of the Year. I remember at one stage someone telling me that these entrepreneurial personalities are very addictive. And it was actually, it never was a truer word spoken, because I discovered that that’s where I really got my most enjoyment, in terms of advising and supporting and consulting. And so, once I left Big Four, I immersed myself in the innovation space wholeheartedly through, not only still consulting on R&D governance, but also being involved in Canberra Innovation Network, Griffin Accelerator, mentoring companies, and in the last ten years as a qualified board director and a board director on some very exciting companies. So, that’s my background and that’s how I made it from my original degrees into technology, when, as I said, I couldn’t invent a thing to save my life. But I did find that I had a lot of value in helping companies grow and in helping companies, hopefully, realise what they want out of their technology.
CB: Anne-Marie, that’s a really fascinating trajectory. And just to grab a couple of thoughts there, the, you know, you said a couple of times I can’t even add anything. I think that whilst we all get very excited about the notion of invention and discovery, the truth is that the hard work is actually long after that moment. And, to that extent, the fact that you can’t invent anything but the fact that you can identify things and package them up is a really important skill set. So, I think that’s really laudable as opposed to actually problem.
AMP: And in actual fact, I am, what I didn’t mention is, although I’m, haven’t done as many in recent times, I am an angel investor as well. And as an angel investor, and having had lots of companies pitch to me, I can tell you that ideas are everywhere; it’s the execution that really matters. The execution builds a company.
CB: Yeah, absolutely. And it’s interesting, just the notion of you being an angel investor, that sort of strikes me as tying back into that triggering moment of being involved in Entrepreneur of the Year, where you start to feel the passion and you start to feel, you know, these inventors or founders or, you know, folks that start these companies up, these entrepreneurs. And the passion bubbles through. And as an angel investor, of course, there’s this interesting tightrope, I imagine of, I’m really excited, but I need to apply the discipline.
AMP: Yes, definitely. Definitely. And that’s the secret sauce. That’s the secret sauce. Angel investors, investors of any type, will tell you that they will invest in a good entrepreneur over a good idea. So, you can have a mediocre idea in the hands of a brilliant entrepreneur, and it’ll go gangbusters. You can have a fantastic idea in the hands of a mediocre entrepreneur, and it’ll end up going nowhere. So, you need both really, to have the sense, the canvas and the like of the world. You need both.
CB: So, that opened up a very interesting point of discussion. So, what’s a good entrepreneur? I reckon that would be a very contested notion. I’m very interested in your, what are the characteristics in the Anne-Marie Perrett view of the world.
AMP: For me, a good entrepreneur is somebody who is passionate, who does really believe in what they’re doing. Yes, they’d like to make money out of it there, but their belief is beyond the making money. Their belief is a real belief in their business idea or their technology or how they’re going to change the world. But they also need to be able to listen to people. So, I remember one of the best entrepreneurs. And look, ultimately the company I’m talking about failed. But in terms of a skill for the entrepreneur, the entrepreneur was a sort of person who, when presenting the idea to someone. You know, as an entrepreneur in the early stage, you get a lot of people telling you your baby’s ugly. A lot of entrepreneurs, a lot of early-stage people take great offence at that and pull back and be very defensive. This particular gentleman, he happened to be a former professional rugby player. So, I think he was used to being coached and used to being told that his performance was less than satisfactory.
CB: And possibly used to being beaten up too.
AMP: Yes. So, instead of taking that defensive approach, he’d say, ‘No, that’s interesting. Well, how would I make my baby more beautiful?’ Now that’s coachability. You don’t want to have mental whiplash where you just follow what the last mentor told you. But you do want someone who will listen, who’s prepared to challenge, who’s prepared to look at things differently, who’s prepared to say ‘okay’ and prepared to be able to change when something’s not working.
CB: Yeah, that’s a really fantastic set of characteristics. And they do have echoes of some other conversations we’ve been having on the podcast. So, it’s…but I think what you’ve done there Anne-Marie is distilled a whole lot of pieces of thought and discussion into some really nice characteristics. That the belief beyond money is something that was really discussed at a bit of length with John Bloomer a couple of months ago, and I get the sense from you, and reflecting on the conversation we have with him that, almost a calling beyond the financial return is a necessary condition for success. You’ve got to believe you’re making a difference; not just believe you’re going to make money.
AMP: If someone came to me and just said, ‘We’re doing a startup because we want to make lots of money’ and then are searching for an idea, that’s a real alarm bell for me, because I don’t believe they will have the stamina to last the distance, because there’s going to be highs and lows.
CB: Yeah, absolutely.
AMP: Very, very rare that something just takes off and goes. So, you need someone who really believes in what they’re doing. But they need to believe it in a way, not that they think everybody else is wrong, but they need to believe it in a way that they’re constantly wanting to perfect what they’re doing. So, they do want to listen. They do want to understand. They want to do all the things that we tell startups you have to do. Fail fast, test the market, MVP, you know, all those sorts of things. They have to be prepared to listen and learn.
CB: Yeah, that idea of wanting to perfect is very interesting. Alan Finkle described it as the ‘relentless pursuit of quality’.
AMP: Mhm. Yes.
CB: So, I think, really, I mean, both of those things work quite closely with each other of course, but it is a persistence. And a drive that needs to continue on. So…
AMP: Having said that, there’s only one caveat to that. You do need to get it in the hand of users. So, when you get it. So, you shouldn’t be internally trying to make it perfect before you test it in the market, you should be testing it in the market until it’s perfect in the market.
CB: Perfection in the eye of the customer, rather than perfection in the eye of the inventor.
AMP: Yes.
CB: It’s a very important distinction, I think a very important distinction. So, we have our good entrepreneur at hand, and I’m really curious to explore now, the governance conversation. And we’ve got this jar of lightning ready to fire the minute we take the lid off the jar. I’m very lucky I get to hang out with people like that, as I suspect you do, too. How do we govern the lightning? How do we put some control systems around this so it doesn’t just take off?
AMP: Well, it’s an interesting question because a lot of early-stage entrepreneurs are so excited about their technology. They’re so excited about the ideas they’re producing. They’re so excited about how they’re going to change the world. They actually forget they have a company to run, or at least, that’s very secondary. And so, in terms of if we’re talking governance, we’re actually talking a range of things. We’re talking what I’ll call ‘big G’ governance, which is boards, the dreaded boards when you have them, when you set them up, etc. But we’re also talking at operational level about governance. R&D governance. Are you spending your money the right way? Are you continually funding a pathway that’s not ever going to get anywhere? So, you’re throwing good money after bad. Are you actually sitting down and understanding what went wrong, and how you can direct your resources differently to not make the same mistake. But then even more boringly, there’s cash flow governance, back-office governance, the governance of running a company. When are you going to run out of money? Lots of great ideas have never come to fruition because they’ve run out of money. When we talk governance, we’re talking, you know, a range of areas within the business, some operational and then others, strategic.
CB: I think. I think it’s great how you’ve broken out into big and little G. And I’m going to take a bit of a run, a little G to start with, on the assumption; and I’d be interested if you would challenge this starting point, because the little G almost comes first as we’re setting off on the journey. We’re not necessarily going to wrap a formal board around the startup on day one. We may have some advisors, hopefully we do, that are sitting on our shoulder and best do this, best do that. But if we start with that little G. You referred to most boringly, I think being cash flow, I will now counter that with most critically, cash flow.
AMP: Well, when you’re doing the exciting stuff, you don’t necessarily want to worry about that, but you have to. So, you know, you’re right. When you’re very little, a board, you know, to set up a company in Australia, you need a director that’s going to be the founder or the co-founders, and that’s going to be it for some time. Or maybe if Auntie Mary and Uncle Jimmy thought you were a good kid and gave you some money, they might be brought on as directors, whether they know it or not, which is a rather dangerous situation for Auntie Mary and Uncle Jimmy. But that’s the reality. Early stage. Definitely, it’s about, ‘How much money do I have? How am I spending it? How do I know, how am I? What am I doing with my back-office systems?’ It could be as simple as needing to have a decent accountant and getting Xero in place. Not a plug for Xero, it’s just the first accounting package that popped into my head.
CB: And David Thodey would be pleased you mentioned it.
AMP: So, in that sense, you know, it might be starting with who are the advisers that I need to have around me. An accountant might be, a lawyer, whatever, if you’re setting up various things. But it’s also about, ‘If I am going to be doing this technology’, we talked about the R&D governance, the first question a lot of people ask, and given my background in grants and R&D tax concessions in the early days and tax incentives these days, the first question is, ‘How do I get government money?’ Well…
CB: Well. That’s interesting. Do you mean government money in the form of the R&D tax concession, right, as opposed to a government grant or…?
AMP: It could be a grant. They always want to know what grants are out there. But initially, if they’re doing technology it’s going to be the R&D tax incentive now. Well, I’m not going to get into a discussion on the R&D tax incentive. There’s lots of things about early stage. Are you paying yourself, you know, you might not be spending enough to get it, etc., etc. so we’ll leave that alone.
CB: Thank you.
AMP: But in terms of those sorts of things, if you’re starting to look for money from external sources, be it the government, be it capital raising, etc. You kind of need to show that you’re making good decisions. And that’s what governance is at the end of the day. It’s good decisions. So, you need to be able to show that, well, I know what I’m doing in this, technology. This is what we’re doing it we’re doing it in a systematic way. We are moving beyond tinkering in the garage to actually taking it seriously. We are looking at what our expenses are and when we can earn revenue, and how we can earn revenue, how we can get money in. And when you’re starting out a company and building especially, you know, we’ve been talking technology here because this podcast is about tech transfer. But I’d actually broaden it to say, you know, if you’re adopting an innovative business model, the same kind of questions can be asked. I mean, let’s face it, Airbnb and Uber, they were not high-tech companies. They were innovative business models that leveraged technology to achieve what they wanted to achieve.
AMP: So, you’re going to need money to grow that. There’s not a lot of those types of companies that have a customer straight up. You’ve got to build something before you’re going to get a customer.
CB: Yeah, absolutely. I’m interested, just to unpick this a little bit further. So, you spoke earlier about focus and reviews, and are we spending money on the right things and those sorts of questions. So, just momentarily suspending the discussion about the actual numbers and the systems that allow us to keep track of our cash burn? I’m interested in just exploring something we touch on quite regularly with folks that come on the podcast, and that is the idea of or the ability to say ‘no’. So, one of my observations, is that we aren’t particularly good at saying ‘no’ in Australia when it comes to our innovation system. We don’t stop things well or effectively. In this context, we’re early stage, we’re small G governance, and we’ve got to make decisions about where to put those resources. Are you seeing that phenomena with our passionate lightning in a bottle founders that just have to do the other, the next experiment, the next improvement, etc., etc.?
AMP: Absolutely. And companies that are later on in their lives, the same thing. Except often later on in their lives have more resources, so maybe they can afford to do that. Look, when you’ve got someone who’s passionate and driven, or a group of founders who are passionate, driven and believe in a technology, it’s very hard for them to see that they’re off track. And that’s exactly why, you know, this leads to the big G question. But before you go to a big G and to a board, there’s an interim step that, that can continue for the rest of the company’s life, called an advisory committee, advisory board or an advisory group. And often those particular people are really good for you to test your ideas. One thing I’d say to early-stage founders, and this is about building the company, but it’s also about the governance of your company. You don’t have a lot of resources internally, so ask questions all the time. Seek out founders. One of the most impressive entrepreneurs that I’ve ever had the good fortune to meet is Doctor Sam Prince, who started Zambrero, and he has gone on to do so many other things. And I remember when Sam was a young doctor talking to me as I took him through the Entrepreneur of the Year program, and saying, ‘You always ask the second question, Anne-Marie’. I’m on a flight, I’m talking to someone, I find out they’re interesting, I ask another question. So many of the relationships that I’ve developed, so many of the things that I’ve learnt about business, have come from asking those questions, having those conversations. And he was always asking me to connect him with experienced entrepreneurs, and so many of those relationships from those meetings he had, those cups of coffee he had, led him to getting advice from some of the best in the country.
CB: Yeah, that’s a really lovely way of putting it, Anne-Marie. The idea, always ask the second question. It’s a really, really nice way of putting it because, I think, we ask the question we have in mind and then, can occasionally satisfy ourselves that we’ve answered the question we had in mind. But being curious would drive that second and subsequent questions. And I must thank my partner for this particular piece of learning, is that as you ask more questions, people get more engaged. And, the relationship, whatever that relationship is, deepens as a consequence of your curiosity.
AMP: Absolutely. And being curious and actually wanting to understand the other person, being interested in the other person. Not just being interested in what you’re doing, but interested in their wisdom, interested in their experience. There’s not a lot of really successful entrepreneurs. I mean, obviously they’ve got to have the time, who won’t sit down and have a cup of coffee with somebody to help them understand how you do this. And, you know, I often say to people, entrepreneurs, ‘Go and meet this particular person. Don’t pitch to him or her. Go talk to them. Talk to them about what you’re doing. Ask them for their advice in you, soft pitching to them. Ask them for their thoughts, their feedback.’ And then, you learn a lot and that can help you question those decisions you’re making. So, we’re going back to how do you question yourself, going back to that soft governance? How do you question the decisions you’re making? Well, if you’re in your own little bubble, that’s very, very difficult. You’ve got to get these outside views. So, that could be outside views in terms of testing and in the hands of potential users. Or that could be outside views from going to somebody who’s done it all before and saying, ‘This is what I’m doing. I would really appreciate buying you a cup of coffee, spending an hour of your time and getting you to question me on it. Give me your feedback.’
CB: This is really interesting. We started with transitioning this idea of a mezzanine solution of an advisory board or group. But as we’ve just been talking, what strikes me is you’re describing building an advisory network through a curiosity, and through that drive to make whatever it is you’re doing better or more fit for purpose. Well, we can describe that in many ways, but it’s-
AMP: How to get it to market. What’s the market? Test the market. I always say to entrepreneurs, ‘You don’t want to be a solution looking for a problem. You want to be a solution that is solving a problem – but get it to market.’ Where are you going to get your first customers from? You know, really experienced entrepreneurs can do that. And you’re absolutely right. We started at the end point. So, the end point was, you build up a network or an advisory group. It could be as formal as a board. It could be informal as mentors who you meet with from time-to-time to refresh the idea. But that is how you build those connections with the people who go on to be your advisors or potential board members. And Sam Prince did that amazingly well.
CB: It’s that ability to listen and, to come back to an earlier thought you had, that of coachability.
AMP: So, to me, it’s those sorts of things that build up those outside views that allow you to test your ideas, test what you’re doing and learn. And potentially build the relationships that will turn into more formal advisor relationships. And when I say advisor, I don’t mean advisor in the sense of an accountant or a lawyer. I mean advisor as in a mentor, as in someone who can help you with those big decisions that you need to make.
CB: Yeah, sure. I’d like to turn our minds back towards that big G. So, we’ve had a great discussion around starting with the little G and working through that mezzanine advisory network, which I think has been a great conversation. But now to that, I think as you describe, you know, the big board question and the formalities that come with that, the first question that strikes me to get us rolling through the big G is, ‘Is there a best time for the formal board to emerge?’
AMP: Well, the good lawyer in me is going to say ‘that depends’. If you’re building a company that is just going to sort of tootle along and you’re self-funding it, you might do quite well, get to a certain size and be very happy with that, with that size, without a formal board, without anything more than you and, and a couple of your, you know, senior executives and that might be fine. Because your goal is a company that sustains a lifestyle, does some great things in the market, but you’re not looking for the next unicorn or the next, you know, $100 million company. Normally, the pressure to have a board in a startup company, if you’re lucky enough to be able to bootstrap, this pressure doesn’t arise. But when you’ve got a technology or an innovative business model that’s got to get to market quickly, that’s capital intensive, it’s very rare that you don’t have to raise money.
CB: Yeah.
AMP: As soon as you start asking somebody else for their money, you’re going to have to have something in place that governs how you spend that money. And you’ve got people to answer to. So, for most early-stage companies, and when a board becomes, something they have to consider is when they are raising capital. It’s not uncommon that the first real board members that a technology company would have, is some of their investors, their angel investors. And they will often be the first board members for a company along with the founder or the co-founders. And they’ll be the first ones to really bring that sort of outside thinking to the company. You’ve got to remember that being a director is not only a big responsibility, it’s a big liability. So, you’re not really going to get people putting up their hands to be a director of a very highly risky venture early on, and you don’t even have the money to pay them. So, that’s why it’s, the most likely first couple of board directors you have are your investors,
CB: Investors, yeah. So, the first turning point or inflection point here seems to be when ‘other people’s money’ or opium, as we refer to it, a nice acronym. And interestingly, Anne-Marie, we’ve dealt with the Hopium, which is the lightning in the bottle. So now we’ve got Hopium and opium, and the opium now is ‘other people’s money’. And quite reasonably, the investors want to keep an eye on how that money is getting invested to ultimately generate a return alongside all the good deeds that everyone wants to achieve. So, you touched on the directors have responsibility and liabilities, which is a very live conversation. I know through your activities with the Australian Institute of Company Directors, what timing would there be around this notion of non-executive directors? Those that are professional board members coming into this, you know, raise hi-tech space, when does the non-executive director, do you think, comes on the stage?
AMP: Again, that’s an interesting question because with, depending on the angel groups that you’re dealing with, if I look at Capital Angels, the angel group in, in Canberra, a lot of those, angel investors would also be experienced directors and potentially non-executive directors on other boards. I am, for example. So, you might be getting that with your investors, you may not. Where you would probably…Well, first of all, if you’re going to have a non-executive director, you’ve got to have some money to pay them. They’re not going to do that pro bono. It’s too much risk for them. Now, you might be paying them cash. You may be paying them ESOP. So, you may be paying them in shares or options really. So, it’s one or the other those things. So, it comes at a point, in a way, what you can pay for. And I don’t want to make it sound like directors are, you know, just there for the money, they’re not. Early directors in early-stage companies, are there, again for the same reason as angel investors or other investors are. They’re there because they think it’s an exciting opportunity. It’s an exciting company. It’s going to change the world. But the reality is, you’ve got to compensate them for their time and their risk.
CB: Yep, yep, yep. I understand.
AMP: the expertise they bring. So, I think, that’s often the case. Now, if I think about a company that I’m on the board of, it’s technologies that spun out of UNSW, the original board was, because it spun out of UNSW, there was a part of their shareholding by the university. So, their original board was the founders and a representative from UNSW. And they asked someone who was relevant to their industry to come in. They paid him and be part of that. As it grew, early on they asked me to come on in an advisory committee capacity, which I did. And, after a while they asked me to join the board as the non-executive director. The point that I joined the board was just as we were going… they’d raised capital before, but we were just about to go for a major capital raise.
CB: Ah, okay.
AMP: It was just before that, that they really wanted to get their governance in order, and they recognised that they needed to bring someone in from outside, and they needed someone who had those governance experience, but also understood the landscape of growing technology companies and raising capital. And that’s when I came on board.
CB: So, if I was to artificially create a rule, not so much a rule perhaps but a point of guidance. What I’m sensing here, Anne-Marie, is that the non-executive director role, it’s when you can afford it is an important criteria. That’s the cash flow thing we were talking about earlier. It seems that certainly in the experience you described, it’s an evolution of a relationship. It’s less likely to be a, you know, a random parachuting in of someone unless there are particular circumstances.
AMP: And it’s a particular skill set you’re looking for.
CB: Yeah. And a particular skill set. Excellent point. But the other the other thing that strikes me here is, that we’re talking about a moment in time where we’re moving to sort of, high seven and eight digits of money, of opium coming into the company. It sounds to me like you’re not doing this when you’ve got half a million or $1 million of other people’s money, the ending is emerging much later.
AMP: It could be because remembering that in those early stages, if you’re incentivising your directors with some options as well, you’re not necessarily paying them hundreds of thousands of dollars. I mean, you know, startups aren’t paying ASX listed company directors yet. They might be paying, you know. 20, 30, 40,000 a year. But it’s also, comes with some options to make it…
CB: Into the future.
AMP: Into the future. Yeah. So, those are the sorts of things to consider. But the other thing, you’ve got to be ready for a board because boards come with pluses and with minuses. When I say minuses, I actually think it’s all pluses. But if you’re sitting in the CEO role, you might think it’s a minus.
CB: Particularly for the CEO and the founder, you might see it as a very imposing experience.
AMP: Because it does bring discipline. I mean, boards add a lot. Why would a company want a board? You want a board…It’s lonely being a CEO, making all the decisions. It’s good to have a brains trust. It’s good to be challenged. It’s good to be mentored. And a good board will do all of those things. A good board will bring skills that you don’t already have in the company. Will bring networks, will bring expertise that you don’t already have in the company. So, a board can add a lot of value. But if you’re sitting as a CEO, you lose some control by having a board. You lose some control by taking investment. So, you’re already starting to give away control by taking investment. But you’ve got to be prepared for the fact that the board might not always agree with you.
CB: Yeah. And I think what you’re describing here is the mindset. I think the upside is really compelling, Anne-Marie. But if the mindset is not right amongst the executive, the management team, I’m reading that this can go awry quite quickly because they’re not open to the discipline, not open to the opportunity. It’s more, becomes a bit of a turf war, in some respects.
AMP: It gets back to that comment we made very early on in the day, are you a founder CEO who says, “Oh, you think my baby’s ugly? How do I make my baby more beautiful?’ Or whether you whip it away and say, ‘I’m not talking to you anymore because you disagree with me.’ So, it’s about, if you’re a CEO who wants to learn, who wants that support, boards can be a great thing. The other thing I would say, and this comes back to investors and to directors, but it starts with investors. We spend a lot of time telling investors, ‘You’ve got to look for good entrepreneurs. You’ve got to look for good this. You’ve got to look for good companies and good ideas.’ We should also be saying to companies, ‘When you are looking for investors, you should do as much due diligence on the investor as they do on you,’ Because a toxic investor can kill a company really quickly.
CB: And I suspect we’ve both got case studies in that direction.
AMP: We’ve both got case studies in that direction. And so, if you’re, those investors are also your first board members, it’s going to be really tricky. So, a good working relationship is really important to the success of the company, to the success of the board, to the success of the idea of the market opportunity, etc., etc., etc.
CB: It introduces a component which we haven’t really spent a lot of time on, but just to sort of touch on as we bring things towards the end, it’s that issue of risk and due diligence. And I think it’s a terrific point that everyone’s got to do due diligence and assessment of risk on all aspects, including the relationships. And poorly aligned money, with a particular intent goes wrong. You even see that at scale, I would contend, Anne-Marie, where large M&A takes place, and you get misalignment of culture and the alleged value creation doesn’t materialise. So, I think I think that due diligence piece is really important.
AMP: I’m talking as a director here. A functional board is one where people can talk, can discuss, can challenge ideas. And it shouldn’t just be a rubber stamp. So, if you are trying to pick board members who were just going to agree with you, you are not going to get the value out of a board that you should. You should be prepared. Not, I don’t want outright war. I don’t want politics in the boardroom. I don’t want people being rude to each other. But I do want people to challenge ideas and ask the dumb questions. I do want people to ask the dumb questions. So, I think that that’s a really important thing to consider. If you’re just putting a board in place purely because somebody said you have to have one, and so you’re just surrounding yourself with people that you think you can control, you’re not going to get the value out of the board. What’s the point? Not all of the companies in, who went through Griffin Accelerator have been successful, but we don’t measure our success by having everyone successful, because we now have a much larger cohort of entrepreneurs in this town who might have failed in their first venture, but have learnt a lot for their second and third. So, the fact that we are having such a vibrant innovation scene in Canberra, has not been by accident. It has been something that has been actively pursued for years by a big group of people and is on the cusp of some real greatness. There’s some fantastic stories.
CB: And you did mention the failure word there, and it’s interesting. Everyone talks about ‘fast failing’ and failure as part of the journey. I have argued for a little while that we don’t need to be good at ‘fast failing’. We need to be good at ‘fast learning’. So, it doesn’t matter if, you know, evidencing that you fail is perhaps interesting, but it’s more important that you evidence that you learnt from the failure.
AMP: And I can give you some examples of some of the best companies in the ACT who’ve done that. Seeing Machines. Such an exciting company, selling globally, profiled so many times. I started working with Seeing Machines in 2000, in 2000 city-wide, doing R&D presentations. From working with that company that they had their peaks and troughs. They started in mining and sorry, started in automotive. And then because of the global economy, automotive became really difficult. So, they’ve pivoted to mining. They did really well in mining, had great, great relationships with Caterpillar. They have gone on to such huge success, but theirs was ‘fast learning’. Because they could be dead-in-a-ditch early on over automotive, they could have been dead-in-a-ditch. Around about 2005, 2007, if they hadn’t learnt fast and learnt how to apply their technology in other areas. And now, you know, they are really not just one of Canberra’s success stories, they’re one of Australia’s success stories. Another wonderful one: Instaclustr who, you know, the guys behind Instaclustr are personal friends. I remember first conversations around the kitchen bench of one of the founders talking about the R&D they were doing in a particular area. They were working in this particular area. They had an issue because they couldn’t stand up to databases quickly. So, they decided to scratch that itch. Their original idea, they’ve left behind. That setting up those databases, those Cassandra databases became Instaclustr and they sold, was it last year or the year…?
CB: Last year, I think it was.
AMP: To NetApp for 700 million USD, you know, in ten years. So, their original pursuit, and they still sit back and say, ‘Ah, that’s still a good idea.’ But doing what they were trying to do, they found a real problem. So that’s that ‘fast learning’. That first idea didn’t go anywhere, but they learnt pretty quickly and drove the second one to success.
CB: Really interesting. They had a good idea but they found a market for another idea. And then, but they’ve still got the good idea in the back of their minds. That’s, I quite like that actually. That’s the tech guy coming out in me. Anne-Marie, this has been a terrific conversation. I’d like to draw it to a close, sadly, but I’d like to draw it to a close. Just getting your final thoughts around the journey of big G, little G, and the things that are needed to bring entrepreneurs and bring these new ventures forward.
AMP: I think I would always start with what I’ve said previously. If you’ve got a new venture, you’ve got an idea, start talking to people. Building your business is not going to be just about getting your clever idea to market. It’s going to be about all the constructs that a business has, all those disciplines that you’re going to have to develop. You don’t have to have them all in place from day one. And even your first board will be board governance light. But understanding what you need to do to keep yourself on top of, keeping your business solvent at the end of the day…
CB: Yes.
AMP: And evolve that as you have the resources and as you have the need in each step along the way. You start with the soft, the sort of small letter G, the soft G, as you were calling it. That is quite important to start to get right relatively early. The bigger G. The capital G. Where the board in place, is going to evolve as you raise money and as you move along the path, to going from a startup to a mature company. Building a technology company from scratch, it’s it takes a village to raise a child; it takes a village to grow a technology or a high growth, innovative company. And that means, but, you know, starting with testing your ideas. So many people want to hide, hold their idea, close, test it, test it, test it. Tell everybody.
CB: Yeah. And that village that you referred to here is, is that broader mental network, that we touched on earlier. And while a village raises a family, perhaps it’s a network of mentor mentors and a broad, sweeping set of conversations, which raises a new venture and, and an entrepreneurial endeavor to the heights it seeks to reach. Anne-Marie, it’s been terrific talking with you. Really appreciate your thoughts around governance. And I’ve enjoyed the conversation enormously. I look forward to the next chance we get to have a chat. Thanks for coming on the podcast.
AMP: It’s my pleasure, Cameron. Thank you for having me. And if I’ve been able to impart any words of wisdom, I’m very grateful.
CB: You certainly have. Thank you.