Government is irrelevant for tech startups: Matt Barrie

Despite industry outcry following the Australian federal government’s budget cuts this year to programs backing the startup sector, government support is "basically irrelevant" to technology startups, according to Freelancer.com chief executive, Matt Barrie.
Written by Leon Spencer, Contributor

Given the outcry from industry groups in the wake of the Australian federal government's budgetary cuts this year to programs supporting the country's startup sector, you could be forgiven for thinking that government funding was the make-or-break factor for such endeavours to succeed.

For Freelancer.com chief executive Matt Barrie, however, government support is irrelevant, given that the cost of entry into the market for startup hopefuls is approaching zero, thanks to the rise of new and emerging technologies.

"Government's basically irrelevant," Barrie told ZDNet at the G20 Young Entrepreneurs' Alliance Summit in Sydney on 19 July. "You know, technology just goes out there and when there's a will there's a way.

"Government does things, and a lot of the time when government does things they can over-regulate and inhibit industries, and that’s happened for centuries. You just have to go out there and do it irrelevant of government," he said.

While Barrie, who has built his own business up with the help of venture capital partners and other private sector sources, firmly believes that a startup can take off without any government intervention, he does concede that, occasionally, legislative frameworks can assist young tech entrepreneurs.

"If government does something great, then that’s fantastic," he said. "Often there will be legislative change which will allow disruptive innovation to occur — because when you have disruptive innovation, you need to have not just the technological advances, but sometimes you've got to have legislative change and social change, but for the most part, I tend to not really worry about what government does and just go out there and just do it."

Barrie made his comments on the second day of the four-day summit, aimed at championing the importance of young entrepreneurs to the G20 member nations. It runs in partnership with the annual B20 Summit, which also took place this week — both in the lead up to the G20 Summit in Brisbane later this year.

For Barrie, the rise of mobile device technology and infrastructure plays one of the largest roles at present in the rapid development of new business expansion opportunities and emerging sectors globally.

"A lot of it is driven by mobile," he said. "If you look at the prevalence of mobile phone technology, and smartphones coming out — they're saying that by 2020, five billion people will be connected and that will be primarily driven by mobile tech. So, it's happening at an astonishing rate."

Already, according to Barrie, information technology and software development, along with mobile technology, has transformed a large and rapidly growing number of industry sectors.

"Every industry is waking up, somewhat disrupted, to now discover that it's dominated by a software business," he said. "The largest direct marketing company in the world today is a software company, it's Google. The fastest-growing telecommunications marketing company in the world today is a software company: it's Skype — which is Microsoft. The biggest bookseller, the biggest shoe-seller in the world is a software company, it's Amazon."

Also contributing to the ease of entry for startup ventures is the accessibility of tools that used to be hard to obtain and expensive to use. Now, just about anyone with an internet connection can start a business for almost nothing, according to Barrie.

"Thanks to the internet anyone can be an entrepreneur, the entire global economy is being re-mapped and re-shaped, to create opportunities to create wealth," he said. "You don’t need $5 million to finance a startup anymore. Incubators are doing it for $20,000 these days. You can do the litmus test very, very quickly these days."

From Barrie's perspective, the next industry sector to be transformed by this technology will be education, which is already undergoing dramatic changes, with universities around the world putting their courses online.

"Education's so important and that's why I'm really pleased to see there's absolutely a revolution occurring right now in education that's going to have a dramatic impact in the developing world," he said. "The cat's out of the bag here, this is the way that education is going to happen in the future. It's all going to move online."

Although enabling technology has already spread far and wide around the globe, it still has a long way to go, according to Barrie, meaning there is still an enormous amount of growth yet to occur.

"Of the world population of 7.1 billion people on the planet, there are 2.4 billion people on the internet, 4 to 5 billion people are yet to come," he said. "That other 4 to 5 billion people are coming in at an absolutely tremendous rate. The internet is connecting up the entire world."

Rod Drury, chief executive of New Zealand cloud-based accounting company, Xero, also sees the internet as one of the key agents of change for startups and small to medium businesses in general.

"In the internet world where distribution has fundamentally changed, I think it's levelled the playing field. Certainly, you can build businesses from all parts of the world now, and quite often you will get the bulk of the funding capital from the US," said Drury, who also spoke at the event over the weekend.

Xero, which is listed on both the Australian Securities Exchange and the New Zealand Exchange, has made substantial inroads into the international market over the past few years, meeting with particular success in the United Kingdom and the United States.

For Drury, while the company was well supported by its public listings in New Zealand and Australia, the move offshore saw the company really take flight, with Xero receiving substantial backing from investors in the US.

"What we've found is that, when it comes to a small market, you have to get offshore really early," he said. "We funded Xero as a New Zealand public company. New Zealand made an investment, and quite quickly we had Australian investors. Then last year we had a US$150 million round from US investors. So, I think it's always harder outside of the US."

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