Speaker 1: This week on the Business of Tech powered by two
Speaker 1: Degrees Business, the big tech news that define twenty twenty
Speaker 1: four and what may lay ahead for twenty twenty five.
Speaker 2: It was just like thousands of hours of work and
Speaker 2: millions of dollars fielding a bed that was ultimately unsuccessful.
Speaker 3: The industry's gone from a kind of a boom time
Speaker 3: to a time where we're seeing the potential for some
Speaker 3: kind of brain drain happening nuclear fusion.
Speaker 4: It's almost this hubristic level of ambition, right.
Speaker 5: Are you not concerned in the displacement of New Zealand
Speaker 5: companies to non tax paying tech companies? Am I crazy here?
Speaker 5: Or is this a bigger problem?
Speaker 6: We're joined by the leading journalists who have covered some
Speaker 6: of the big tech stories from AI installed government IT projects,
Speaker 6: to takeover attempts, and some big exits for our startups.
Speaker 1: I'm Ben Moore and I'm Peter Griffin with our eightieth
Speaker 1: episode of the Business of Tech and our penultimate episode
Speaker 1: for the year. Ben, Who've we got on the show
Speaker 1: this week?
Speaker 6: We've got four journalists, each with unique perspectives on a
Speaker 6: particular aspect of tech. We've got our business desk colleague
Speaker 6: Rebecca Stevenson. She's the senior markets journalist who has been
Speaker 6: keeping an eye on our listed tech companies this year.
Speaker 6: There's Rob O'Neil, senior writer for Reseller News on the
Speaker 6: big movements in the enterprise tech space. Finn Hogan who
Speaker 6: writes for Caffeine Daily and also does some work for
Speaker 6: dig a tech focused PR company, and he's wrapping up
Speaker 6: what twenty twenty four held for our tech startups. And
Speaker 6: finally Duncan Greeve, founder and media writer at The Spinoff,
Speaker 6: who has been keeping a close eye on big tech
Speaker 6: this year.
Speaker 1: Yeah, great lineup, and we were initially intending to have
Speaker 1: them all into ended MEHQ for one big conversation until
Speaker 1: we realize the challenging logistics of doing that. So instead
Speaker 1: we've got four short, sharp segments featuring this week's guests
Speaker 1: on various aspects of tech in twenty twenty four. Where
Speaker 1: shall we start, Ben.
Speaker 6: Let's start with the z X and a couple of
Speaker 6: listed tech companies that have been on Rebecca Stevenson's radar
Speaker 6: this year. So you are the markets reporter, extraordinary business desk.
Speaker 6: If I say to you that what is the biggest
Speaker 6: story enlisted tech of the year in New Zealand. What's
Speaker 6: the first thing that pops into your mind, Well.
Speaker 7: It would have to be two things.
Speaker 2: I'm afraid break on Who's the advanced still high tech
Speaker 2: manufacturer of all sorts of interesting bits that go inside
Speaker 2: high tech systems and it's failed takeover bid was a
Speaker 2: huge story for listed tech companies this year. And then
Speaker 2: on the flip side we had gen Track, which is
Speaker 2: the utility software provider, which was also listed on the exchange.
Speaker 2: It just seems to be going from strength to strength
Speaker 2: and continually I guess, surpassing analysts expectations, winning customers, increasing
Speaker 2: revenue and doing incredibly well. So it's blasted into the
Speaker 2: ZX fifty last year and people thought, you know, well,
Speaker 2: maybe it would start to sort of top out sometime soon,
Speaker 2: not at all. It recently reported its full year result
Speaker 2: which was very strong, increased its revenue by about twenty
Speaker 2: five percent, and that sat its share price spike up
Speaker 2: really quite high on the day, up to about fourteen
Speaker 2: dollars at one point, I think. And then now its
Speaker 2: market cap is more than one point four billion, and
Speaker 2: it started the day while under that, so a couple
Speaker 2: one hundred million in a few days for gen Track.
Speaker 6: Yeah, yeah, I think it's a We had Gentrack CTO
Speaker 6: new CTO Mark Ree, a former CTO of Zero, on
Speaker 6: the podcast not long ago, and the market for what
Speaker 6: they are producing globally, I think is really strong because
Speaker 6: there are so many of these utilities companies that are
Speaker 6: needing to upgrade their systems and get something modern, digital
Speaker 6: and flexible to meet the changing demands.
Speaker 5: You know.
Speaker 6: And that sounds like I'm literally spouting gen track pr
Speaker 6: but actually it's also true. So what is what has
Speaker 6: been the news and market response to Genrack's success. I'd
Speaker 6: imagine there'd be quite a bit of buzz. Yeah. I think.
Speaker 2: Look, it's just the best performing share on the exchange,
Speaker 2: you know, and you really can date it back to
Speaker 2: the leadership of Gary Miles. I was crunching the numbers
Speaker 2: actually today and he started in October twenty twenty, and
Speaker 2: I think the shares are up more than nine hundred
Speaker 2: percent since he joined. So it's just been extraordinary, just
Speaker 2: a crazy ride in the share price since. And then
Speaker 2: somewhat ironically, perhaps that's also created some blowback, a little
Speaker 2: bit of blowback around his remuneration and the incentives for
Speaker 2: the senior leadership as I put it, they've kind of
Speaker 2: been hoist on their own petard a little bit because
Speaker 2: of the success of the share price they had to
Speaker 2: reach about ten dollars, Well it's gone way past that,
Speaker 2: trading today at about thirteen dollars ninety ish, and also
Speaker 2: had some earnings per shares targets that Gary Miles and
Speaker 2: the other senior leaders had to hit to get some shares,
Speaker 2: more than nine million shares vested to them for hitting
Speaker 2: these targets. But there's been a little bit of criticism
Speaker 2: about that from the New Zealand Shareholders Association, who.
Speaker 7: Felt the thresholds were too low.
Speaker 2: However, you know, as Gentrek would say, well, we certainly
Speaker 2: didn't think that last year. And you know when Gary started,
Speaker 2: Gary Miles started, I think the shares we wrote about
Speaker 2: a dollar seventy. So to be saying ten dollars was
Speaker 2: too high or too low, now, you know, it's the
Speaker 2: benefit of hindsight perhaps.
Speaker 6: Yeah, that is interesting, the idea that you set these
Speaker 6: targets that you see as kind of almost outlandish, like
Speaker 6: had they ever reached that level, and then when you
Speaker 6: have a runaway success, you do end up with shareholders going, oh,
Speaker 6: hang on a minute, we hoped for this, but now
Speaker 6: we've got to clamp down and make sure that we're
Speaker 6: not spending too much where we're not supposed to be.
Speaker 6: Is that a common story enlisted companies or is this
Speaker 6: something that hasn't really been too much of a problem before.
Speaker 2: Well, you have to be in it to win it,
Speaker 2: I guess, you know. And so in Genrack's case, they
Speaker 2: did have a special general meeting in September last year
Speaker 2: specifically for this issue and to change some of the
Speaker 2: sort of triggers around and the sort of rules around
Speaker 2: whether or not Gary Miles and the senior leadership team
Speaker 2: would be able to get those incentives and those new shares.
Speaker 2: Andy Green, who was the chair, basically said that we
Speaker 2: believe that we need to do this to keep them
Speaker 2: to perform well for the next three financial years. So
Speaker 2: this is for the twenty twenty four financial year, twenty
Speaker 2: twenty five and twenty twenty six, so it's not all
Speaker 2: a one hit wonder. They have hit the first earnings
Speaker 2: per year target for twenty twenty four because they just reported,
Speaker 2: but they're still twenty twenty five and twenty twenty six
Speaker 2: to come, and obviously it sort of ramps up from there.
Speaker 2: They have to hit higher targets to get that full whack.
Speaker 2: What Gary Mayles said to me when I met up
Speaker 2: with him recently was that they're in a really competitive
Speaker 2: environment for talent and private firms can pay higher. You know,
Speaker 2: they are public firms get the scrutiny and are benchmarked
Speaker 2: like this and everybody can see what they get. But
Speaker 2: also gen Track is competing in this global talent poll
Speaker 2: where you know, public tech companies can offer you know,
Speaker 2: really generous incentives. So he said that they're trying to
Speaker 2: strike a balance, and they say they've gone basically in
Speaker 2: the middle of what sort of a public firm perhaps
Speaker 2: benchmark New Zealand listing incentive scheme would be, and between
Speaker 2: a private equity listing because they want to get the
Speaker 2: best talent because, as you said, this is a massive
Speaker 2: global transformation program that's happening for utilities providers and they
Speaker 2: really they want to be number one here. They want
Speaker 2: to win all these contracts, they want to win across
Speaker 2: the world.
Speaker 7: And all these different countries.
Speaker 2: So you know, they believe they need to yeah, really
Speaker 2: be attractive and have those incentives in place.
Speaker 6: And that's a big conversation generally, but in tech specifically,
Speaker 6: this idea of private companies being able to just splash
Speaker 6: around more money on talent compared to public companies. And
Speaker 6: I think it's especially true of New Zealand, where salaries
Speaker 6: are generally a little bit lower than globally in tech
Speaker 6: as well. So definitely worth keeping an eye on to
Speaker 6: get a sense of how that pressure is impacting a
Speaker 6: New Zealand company. Yeah, let's look now at the other
Speaker 6: story you talked about, which was Racon and they had
Speaker 6: a difficult time with a takeover offer. But companies get
Speaker 6: takeover offers all the time, right, and some work out
Speaker 6: and some don't. What made this one so controversial.
Speaker 2: Well, it was a little bit fraught from the start.
Speaker 2: I mean it sort of popped up in December when
Speaker 2: we were lots of us were on holiday, and they
Speaker 2: felt that their hand had been forced, that they were
Speaker 2: forced by media reports in Austria E to make the
Speaker 2: bid public and then they were basically a sort of
Speaker 2: on record and they had a lot of pressure from
Speaker 2: shareholders to keep them updated because this was quite a
Speaker 2: juicy premium, you know. I think it was valued them
Speaker 2: at about a dollar seventy per share. Well, Raycon shares
Speaker 2: have been trading at about fifty nine cents lately, so
Speaker 2: you can understand why people wanted to know what was
Speaker 2: going on with this bit. Now, this sort of rolled
Speaker 2: on for a few months, this kind of not much
Speaker 2: going on in terms of updates. Raycon said, you know, look,
Speaker 2: when we know something, will tell you. But it was
Speaker 2: a difficult and expensive process for the business. You know,
Speaker 2: the chair got up at their own your general meeting
Speaker 2: and said, it was incredibly onerous going through this process
Speaker 2: with what we think was a Nasdaq listed Apple supply,
Speaker 2: a huge company called Skyworks, and basically they had to
Speaker 2: bring in consultants, they needed legal advice, yes, just management
Speaker 2: had to be available, you know.
Speaker 7: The CEO, the board.
Speaker 2: It was just like thousands of hours of work and
Speaker 2: millions of dollars actually as well that it cost Raycon
Speaker 2: and Fielding a bid that was ultimately unsuccessful. Since then,
Speaker 2: the share price has just been falling away really because
Speaker 2: you know, it felt a little bit like the one
Speaker 2: that got away. People were like, well, why did it fail?
Speaker 2: Raycon said it was material complexities were uncovered as part
Speaker 2: of the process, so really a bit of a question
Speaker 2: mark there about I guess potentially the future of Raycon.
Speaker 2: You know, a lot of people say it is really
Speaker 2: a good acquisition target now and it should perhaps be
Speaker 2: bought by someone bigger. However, you know they'll want the
Speaker 2: price to be right.
Speaker 6: What does material complexities actually mean? Because in my understanding,
Speaker 6: if there is a material issue with a company, it
Speaker 6: needs to be disclosed if they're listed. So how does
Speaker 6: that interact with this concept of material complexities that prevented
Speaker 6: a takeover?
Speaker 2: The thing is, we really we don't know much. You know,
Speaker 2: Raycon just continues to say that, you know, they're keeping
Speaker 2: the market informed of anything that they need to know. Basically,
Speaker 2: I mean, we don't know. There's been a lot of
Speaker 2: speculation about why this deal actually fell over. One person
Speaker 2: that I spoke to who has knowledge of these sorts
Speaker 2: of deals, pointed to just the general complexities of the
Speaker 2: markets that Raycon operates and you know, and sort of
Speaker 2: pointed me to the fact that, you know, we have
Speaker 2: a chip war going on between the US and China,
Speaker 2: and you know, Raycon is obviously active in those sorts
Speaker 2: of industries and it is incredibly complex, you know, tense,
Speaker 2: sort of secretive. People are worried about their IP and
Speaker 2: then you've just got this idea of you know, who
Speaker 2: owns the check apps as well at the heart of
Speaker 2: it all. So they said, you know, it's a really complex,
Speaker 2: difficult sort of agreement to get across the line when
Speaker 2: you're trying to sell a business like Raycon that is highly,
Speaker 2: highly technical, highly secretive, you know, customers, we're not even
Speaker 2: allowed to you know, they don't talk about their customers
Speaker 2: a lot of time or name them. You know, everybody's
Speaker 2: trying to protect their patch and protect their competitive advantage.
Speaker 2: You know, particularly, I guess with the rise and rise
Speaker 2: of artificial intelligence, cloud computing, data centers and all of that.
Speaker 2: You know, Raycon really wants to be playing in that
Speaker 2: sphere and be an important player. So there's a lot
Speaker 2: of commercial sensitivities and non disclosure agreements and things. So yes,
Speaker 2: they said, yes, it is materially complex.
Speaker 7: The whole thing.
Speaker 6: Interesting. Well just by out of time unfortunately, because there's
Speaker 6: so many more companies that we could talk about. Obviously,
Speaker 6: there was the big listing of being AI this year
Speaker 6: and some material complexities going on as we speak with
Speaker 6: being AI, so we'll hopefully get some stories about that
Speaker 6: coming out in the near term. Any other companies that
Speaker 6: you think are particularly worth a shout out on the
Speaker 6: tech listed front before we wrap up.
Speaker 2: Well, look, I mean Spark has absorbed a lot of
Speaker 2: energy this year, which you're probably closer to, you know,
Speaker 2: than I am, But I think they're a classic example
Speaker 2: of perhaps some of the things that have also been
Speaker 2: affecting Raycon as well. You know, we saw the sort
Speaker 2: of infantry stock piling and a lot of expenditure throughout
Speaker 2: COVID as you know, mobile networks providers and things were
Speaker 2: worried about not having parts, so you saw Raycon and
Speaker 2: people like that, you know, get a bit of a blip.
Speaker 7: From that, but all that has retrenched now.
Speaker 2: So the global economic sort of pullback has really been
Speaker 2: affecting a lot of tech companies. In terms of a
Speaker 2: little company that I keep an eye on, there's our Frio,
Speaker 2: which is the refrigeration sensor and software company, which someone
Speaker 2: sort of perhaps sarcastically said to me, you know, if
Speaker 2: you had sort of a dollar for every time they
Speaker 2: said they were going to be making it, you know,
Speaker 2: you'd probably be quite wealthy. But you've got to admire
Speaker 2: the persistence of that business. But they've got some really
Speaker 2: interesting things happening as well, and kind of like similar
Speaker 2: to gen Track in a way. It's that, you know,
Speaker 2: looking at energy use and energy consumption.
Speaker 7: Is a really a big theme. I think that's running
Speaker 7: through for a lot of these sort of listed.
Speaker 2: Companies in tech companies, and how you can create savings
Speaker 2: cost savings and give customers more information about how they're
Speaker 2: using energy and how they can save energy. I think
Speaker 2: is going to be a huge trend for like a Freo,
Speaker 2: gen Track, et cetera in the coming years.
Speaker 6: Yeah, and Eerod's another one who similar in terms of
Speaker 6: driving down costs around transportation duration and those kinds of areas.
Speaker 8: Cool.
Speaker 6: Well, thank you very much, Rebecca. It's super interesting and
Speaker 6: I look forward to seeing some more in the adventures
Speaker 6: of the zet X from you in the next year.
Speaker 6: It's tumultuous year for tech companies and speaking to Beck's later,
Speaker 6: she also said Vista Group had quite a bit of
Speaker 6: drama at the board level, which is worth reading about
Speaker 6: and you can check out Rebecca's excellent reporting on that
Speaker 6: at Business Desk as well.
Speaker 1: Sort of mixed bag for our listed tech companies and
Speaker 1: that really went for the whole enterprise. It space to
Speaker 1: the big tech projects in the corporate world and in
Speaker 1: the government sector. Here's Rob O'Neil on some of the
Speaker 1: big developments he covered at reseller News this year. Rob O'Neil,
Speaker 1: Welcome back to the Business off Tech, the man who
Speaker 1: likes to get down in the weeds in enterprise tech,
Speaker 1: coming to us from fong Array. How are you doing.
Speaker 8: Good? Good, good to be here, Pete. Thanks for inviting me.
Speaker 1: Yeah, and we just spent some time together in California
Speaker 1: recently we went to a SpaceX launch together. So busy
Speaker 1: end to the year and a busy year for enterprise tech,
Speaker 1: which is really all about what companies are doing with technology.
Speaker 1: So what are your big picks for the big developments
Speaker 1: in enterprise tech this year?
Speaker 8: Well, I mean the first one will come as no surprise.
Speaker 8: It's AI. It's not so much that AI is new.
Speaker 3: It's been developing quite strongly over the last few years,
Speaker 3: but it has kind of reached that inflection point during
Speaker 3: this year where people are really starting to roll it
Speaker 3: out and develop use cases for it. But the real
Speaker 3: reason why there's been this breakthrough an adoption is because
Speaker 3: the vendors have developed the tools. You know, It's not
Speaker 3: like companies are trying to develop their own AIS or
Speaker 3: which some were you know, even just a few years ago,
Speaker 3: but the tools are now available, so you know, it's
Speaker 3: become much more achievable. Like with any I system, there
Speaker 3: will be integration challenges if you want to apply AI
Speaker 3: across systems and across processes. I think it's called multimodal AI,
Speaker 3: for instance, maybe incorporating sensors and IoT devices as part
Speaker 3: of that network. You know, that's really where things are
Speaker 3: going to be heading and trying to do that in
Speaker 3: a safe way, in a controlled environment where you don't
Speaker 3: get hallucinating AIS contaminated with external data of some sort.
Speaker 3: I think those are the things that will be going
Speaker 3: on right now.
Speaker 1: We've heard so much about the supposed productivity gains that
Speaker 1: come with using the likes of Microsoft Co Pilots. Apart
Speaker 1: from the vendors who all quote great progress in this
Speaker 1: area because they're pushing their own services, have we seen
Speaker 1: any real evidence among our own companies that they I
Speaker 1: seeing those productivity gains. We saw report out from the
Speaker 1: Australian government which did a trial of Copilot and said
Speaker 1: actually the public servants using it saving you know, for
Speaker 1: thirty or forty minutes a day. Have we seen any
Speaker 1: more evidence like that, particularly here in New Zealand, that
Speaker 1: it's actually delivering return on investment.
Speaker 3: You hear it anecdotally, don't you. And I think there's
Speaker 3: always the problem. You're going to get people who just
Speaker 3: want it now, you know, the early adopters, and they
Speaker 3: will build it into their.
Speaker 8: Own work habits very very quickly.
Speaker 3: And then you've got other people who maybe are not
Speaker 3: quite as quick on the on the uptake and need
Speaker 3: to be guided a little bit more.
Speaker 1: Now.
Speaker 3: It's the other thing about all of these software tools
Speaker 3: is that they bring creative possibilities. How the application is
Speaker 3: applied is a is a creative challenge for the user,
Speaker 3: and that's where some real innovation can happen because of
Speaker 3: course the users are the ones who are most familiar
Speaker 3: with the with the value as in the data, where
Speaker 3: the problems are, the need to be solved, what the
Speaker 3: problems are, and how to do that safely. So I think, yeah,
Speaker 3: those will be the sorts of issues that have been
Speaker 3: being grappled with now. The impact on jobs, of course
Speaker 3: is the is the follow on from that, and that's
Speaker 3: actually part of something we'd like to maybe like to
Speaker 3: talk about next.
Speaker 1: Yeah, So talking about jobs particularly, one of the big
Speaker 1: trends this year really in New Zealand has been the
Speaker 1: head count reduction in the public sector. We've just seen
Speaker 1: in the last couple of weeks, you know, the proposals
Speaker 1: to really slash headcount again at health which will impact
Speaker 1: the data and dig division there, huge reduction. What's your
Speaker 1: take on how this is sort of playing out in
Speaker 1: terms of affecting government's ability to digitally transform. It's got
Speaker 1: a aggressive roadmap DEIA just put it out at Service
Speaker 1: Modernization Roadmap. It wants to do all of this sort
Speaker 1: of stuff. Do we actually have the resources to push
Speaker 1: this through now?
Speaker 3: They've also come up with another one market lad initiatives,
Speaker 3: which will allow players in the market to suggest projects
Speaker 3: that might might improve service, so you don't necessarily have
Speaker 3: to go through a full tender process when you go
Speaker 3: through that. So they are greasing the wheels of innovation,
Speaker 3: you can say, with some of that within the public service.
Speaker 3: Let's just get some numbers on the public service cuts.
Speaker 3: For starters twenty two there were sixty two forty three
Speaker 3: public servants twenty three there were sixty three, five hundred
Speaker 3: and thirty seven and As of yesterday, eight hundred and
Speaker 3: sixty five layoffs had been reported. Right now, that's still
Speaker 3: relatively early days, but as you can see, it doesn't
Speaker 3: actually take us down below the twenty twenty two number.
Speaker 3: So everything's a matter of perspective.
Speaker 2: Really.
Speaker 3: I believe that some of those I haven't quite worked
Speaker 3: up the exact relationship, but some of those positions that
Speaker 3: are being vacated are not filled at the moment.
Speaker 8: Anyway.
Speaker 3: It could be an anticipation of these losses that the
Speaker 3: agencies have already decided to allow head counter shrink naturally
Speaker 3: when they have an opportunity to do that. That's probably
Speaker 3: my reading of it. But yeah, I mean, we think
Speaker 3: of them as huge cuts, and they could well be
Speaker 3: in the future huge cuts, but right at this point
Speaker 3: in time, it's not appearing that huge.
Speaker 8: Still early days, We'll wait and see.
Speaker 1: We heard so much at the start of the coalition
Speaker 1: government's term. They stopped three Waters, that was a big
Speaker 1: IT project, tip the Kinger. They sort of unwound that
Speaker 1: MSD has big transformation project on the go. What's really
Speaker 1: your sense on the state of some of these big
Speaker 1: government tech projects. There has been sort of freezing of
Speaker 1: some budget and that some of those big ticket items
Speaker 1: still rolling along the likes of three Waters.
Speaker 8: Three Waters is basically pretty much right off.
Speaker 3: It had advanced quite a bay, but not to the
Speaker 3: point where it could really be rolled out anymore. So
Speaker 3: you're looking at a two hundred and two hundred million
Speaker 3: right off of three Waters. In terms of TEA the
Speaker 3: King of they've they're still working on the project there.
Speaker 3: They've rejigged it so it's able to be a deployed individually,
Speaker 3: almost like a SaaS application, I guess, with an instance
Speaker 3: for each institution, and for the ability for institutions, the
Speaker 3: smaller institutions to group together and share an application like that,
Speaker 3: So you might have three smaller regional training organizations deciding
Speaker 3: to join forces and run on one set of financial
Speaker 3: systems and so forth. So that's really what's happening with
Speaker 3: TIFA Kinger. The right offs there have been very small. Yeah,
Speaker 3: of course, all of the stuff, you know, the loss
Speaker 3: of staff, they're clamped down on spending. The change in
Speaker 3: these two big keynote projects has a wash on effect
Speaker 3: into the industry, right so in things like employment within
Speaker 3: the tech industry. I was just having look at some
Speaker 3: staff numbers for data Coom. For instance, twenty twenty two,
Speaker 3: data Com had nearly seven thousand employees and in twenty
Speaker 3: twenty four they had six thousand, one hundred and thirty one.
Speaker 3: So that's pretty much a ten percent reduction in the
Speaker 3: space of two years. And I don't think that's stopped,
Speaker 3: so we might see some more news on that in
Speaker 3: twenty twenty five. So yeah, that's quite a deep cut.
Speaker 3: And the industry's gone from a kind of a boom
Speaker 3: time it was very very hard to find people to
Speaker 3: a time where we're seeing I guess the potential for
Speaker 3: some kind of brain drain happening.
Speaker 6: Yeah.
Speaker 1: So yeah, we're facing that sort of crunch on funding
Speaker 1: in the private sect there, amidst that, we've got transformation
Speaker 1: projects rolling on, some of them not going particularly to plan.
Speaker 1: Might A ten probably a big one that's got a
Speaker 1: lot of publicity this year for its sort of struggling
Speaker 1: SAP implementation.
Speaker 3: Yeah, yeah, I mean it's one of a long line,
Speaker 3: and I guess on this topic, I've put it under
Speaker 3: the headline persistent project failure. So not particularly picking on
Speaker 3: MINA ten, but MITO ten is quite a spectacular example,
Speaker 3: and it's also the one that I think was hard
Speaker 3: to see coming. So it's been in trouble for a
Speaker 3: couple of years now. But I guess, I guess everything
Speaker 3: that I'm hearing is that the AS is part of
Speaker 3: the project understanding the processes that were actually being used
Speaker 3: in the stores and in the warehouses before you start
Speaker 3: rolling out software, before you even procure your software, that
Speaker 3: that might have been underdone. That's the story I've heard, right,
Speaker 3: and so that in that sense you could almost call
Speaker 3: it human error rather than take technology eraor.
Speaker 1: In terms of green shoots sort of stuff. That's optimistic.
Speaker 1: I mean, this is the year finally after a lot
Speaker 1: of hype and talk that one of the hyperscalias is
Speaker 1: rolling out of data center region in New Zealand. Microsoft
Speaker 1: we saw from their accounts from recently doing very well
Speaker 1: in New Zealand one point three billion in revenue, but
Speaker 1: also spent the best part of a billion dollars on
Speaker 1: building these data centers in the New Ukan region.
Speaker 8: Yeah.
Speaker 3: Yeah, no, I mean this is this is potentially a
Speaker 3: big boon for New Zealand. You know, I think everybody
Speaker 3: likes the model of having your data within easy reach,
Speaker 3: within your own legal system and your own protections and
Speaker 3: that kind of stuff and still having the kind of
Speaker 3: backup of a company like Microsoft or AWS or whoever
Speaker 3: SAP for instance, if you on your ERP applications. So yeah,
Speaker 3: I mean it's finally happening. I mean it's been a
Speaker 3: long time, hasn't it. We've been reporting on these these
Speaker 3: deals for ages. And there's a bunch of other ones
Speaker 3: as well. You know, those are the headline ones. You know,
Speaker 3: there's a bunch of other data center players in there,
Speaker 3: including data com So it's an exciting time. The AWS
Speaker 3: one appears to be suffering from a few setbacks. They
Speaker 3: had a bit of a water problem on the site.
Speaker 3: It's a bit damp. You don't really want that around
Speaker 3: your computers. So I think they've done some engineering to
Speaker 3: get past that and they're underway again. So we'll just
Speaker 3: wait for them to come on stream as well. But yeah,
Speaker 3: I mean first mover advantage. That looks like it's going
Speaker 3: to be Microsoft.
Speaker 1: And finally rob Looking to twenty twenty five, if there's
Speaker 1: sort of one thing that's going to be big in
Speaker 1: tech and in enterprise tech as well, what's your pick.
Speaker 3: I'm really interested in the emerging battle between satellite and
Speaker 3: terrestrial broadband. You know, investment in fiber has been huge,
Speaker 3: obviously in New Zealand and around the world and still ongoing,
Speaker 3: but there is at least in the US a bit
Speaker 3: of a disinformation I think going on at the moment
Speaker 3: around fiber. You know, if people connected with Elon Musk
Speaker 3: perhaps sort of suggesting why are we spending all this
Speaker 3: money on Fiver when you've got satellite now, that there
Speaker 3: is a pretty good reason for that. It's that is
Speaker 3: that Fiver is still the gold standard. You may be
Speaker 3: getting very good service on your satellite connection now, but
Speaker 3: what happens when another one hundred thousand or two hundred
Speaker 3: thousand people decide to.
Speaker 8: Go that way. The early adopters of Starlink.
Speaker 3: And New Zealand, a lot of them in rural areas,
Speaker 3: were cocker hoop about it, and quite rightly so, because
Speaker 3: I mean, you know, they didn't have an option and
Speaker 3: it performed really well. But we just have to be
Speaker 3: a little bit circumspect, I think, And this is where
Speaker 3: that market lead lead development.
Speaker 8: Things thing comes in.
Speaker 3: You know, we had John Hannah from Tuaali First Fiber,
Speaker 3: which deals with a lot of remote customers, welcoming that
Speaker 3: idea that that somebody like Tuatari could propose very specific
Speaker 3: fiber rollouts and directly to government and get support for
Speaker 3: that outside of the UFB structure for instance. Okay, so
Speaker 3: that's that's one possibility for extending fiber further in the future,
Speaker 3: and it would be led to some extent by the
Speaker 3: by the telcos involved, and they would be able they're
Speaker 3: in the best position to work out how they can
Speaker 3: make a service like that, which might otherwise be marginal
Speaker 3: a profitable one one worth doing within the with fiber
Speaker 3: through a commercial construct or actually they might decide to
Speaker 3: use satellite technologies as well, who knows, but it'll be
Speaker 3: horses for courses, i'd imagine.
Speaker 5: Yeah.
Speaker 8: So yeah, that's that's an exciting time.
Speaker 3: I mean, I think the disruptive potential of star Wars
Speaker 3: Staralink is obviously significant. We've got some numbers on that
Speaker 3: now they've become subject to the Telecommunications development and that
Speaker 3: means we know that they are only three point eight
Speaker 3: million in revenue in New Zealand starlink Wow in the
Speaker 3: twenty four year and they got thirty seven k customers
Speaker 3: at the end of the twenty four year, so that's
Speaker 3: very significant.
Speaker 8: Growth from zero over maybe a couple of years. Yeah,
Speaker 8: hustlers keep it, keep an eye on that.
Speaker 3: And of course that changes the way you can network things,
Speaker 3: you know, for instance, evasive networking, which which will become
Speaker 3: one of the fees that goes into the AIS we
Speaker 3: talked about earlier, where you have IoT devices distributed all
Speaker 3: over the country, monitoring and possibly connected to systems that
Speaker 3: can take remote action over infrastructure, for instance, when things
Speaker 3: start going wrong. So I mean, I think that's going
Speaker 3: to be open a world of possibilities.
Speaker 6: A difficult year for enterprise and government tech twenty twenty
Speaker 6: four was there rather underwhelming year for capital raising for
Speaker 6: startups internationally, with venture funding down fifteen percent year on
Speaker 6: year by tech Crunch's estimate, But it actually wasn't a
Speaker 6: terrible year for our own startups. Here's Finn Hogan from
Speaker 6: Caffeine Daily and dig pr on some of the highlights. Hello,
Speaker 6: Finn Hogan, Welcome to the Business of Tech podcast. Thanks
Speaker 6: for joining us.
Speaker 4: Always a pleasure to chat with you.
Speaker 6: Ben. The first thing I'm kind of interested in, I
Speaker 6: guess is for you, what is the most interesting story
Speaker 6: of twenty twenty four in the startup world.
Speaker 4: Well, there's so much to kind of chat through there, right,
Speaker 4: if you want to talk about like the big deals
Speaker 4: in any sense of the word, I feel like Kami
Speaker 4: or Trade to Phi has to be mentioned just in
Speaker 4: terms of like the amount of capital getting injected back
Speaker 4: into the system. You know, KARMI getting valued at that
Speaker 4: three hundred million dollar mark, sort of record returns for
Speaker 4: New Zealand Growth Capital partner Trade Phi over one hundred
Speaker 4: MILLI as well, just sort of really gave a boost
Speaker 4: in the arm of the ecosystem, really sets that confidence
Speaker 4: moving forward after what's been a pretty rough year across
Speaker 4: the board and the kind of macroeconomic climate. If you
Speaker 4: just want to talk about like the interesting nerdy heck
Speaker 4: stuff always which is exactly and I'm so glad you
Speaker 4: got me in for this, I think the open staff
Speaker 4: for me just has to be mentioned. Because nuclear fusion,
Speaker 4: it's almost this hubristic level of ambition, right, you're kind
Speaker 4: of harnessing the power of the sun and the palm
Speaker 4: of your hand. Literally. The plot of Spider Man two
Speaker 4: and the fact that New Zealand has a company that's
Speaker 4: actually taking genuine strides in that with some kind of
Speaker 4: really fascinating bits of engineering, and obviously I have done
Speaker 4: some work with them through my work with dig PR.
Speaker 4: So if anyone wants to just disregard everything I say
Speaker 4: as being a shell, absolutely understand. But I will back
Speaker 4: myself because I've been covering these guys for years, particularly
Speaker 4: since my time at news Hub, and I think their
Speaker 4: reactor design is fascinating. It's built on some work that
Speaker 4: happened previously overseas, but they've really innovated it. And the
Speaker 4: fact that they got first plasma this year and we
Speaker 4: actually got to see it, we got to see that
Speaker 4: bright purple flash. I think that was a really spectacular
Speaker 4: moment and it really speaks to the kind of ambition
Speaker 4: that the startup community is capable of.
Speaker 6: Yeah, I think that that's been a fascinating story to
Speaker 6: watch play out. Seeing the video of those first sparks
Speaker 6: is pretty amazing. And you know, some people have said,
Speaker 6: you know, it's such a long shot, and the kind
Speaker 6: of response to that is, well, deep tech is a
Speaker 6: long shot, like it's supposed to be a long shot,
Speaker 6: but if it pays off, man, is it going to
Speaker 6: pay off exactly?
Speaker 4: I mean, the concept of unlimited energy, carbon free for
Speaker 4: everyone forever is obviously sounds like a pipe dream, and yes,
Speaker 4: of course Fusion's always been thirty years away. But when
Speaker 4: you look globally now at the moves, it's not just
Speaker 4: open style. There's genuine momentum in this direction, and the
Speaker 4: idea that New Zealand has a hand on that ball
Speaker 4: on any level is.
Speaker 6: Just Spectator absolutely a very cool company. So what were
Speaker 6: the things that happened in the startup scene this year
Speaker 6: that were maybe surprising to you? I mean, obviously the
Speaker 6: big strides in tech are surprising, but was there anything
Speaker 6: that you saw happened that you weren't expecting.
Speaker 4: I think what surprised me just from twenty twenty four
Speaker 4: perspective was when I spoke to founders. When I'm interviewing
Speaker 4: people for CAFM, there's this real sense of carimaraderie and
Speaker 4: community in the startup scene, and there's this kind of
Speaker 4: willingness to help each other that I wasn't necessarily expecting
Speaker 4: when I came in. There's this this idea that this
Speaker 4: quite sharp elbows, that we're competing for relatively limited funds
Speaker 4: and so we're going to be really we're going to
Speaker 4: harbor our secrets and we're going to be competing in
Speaker 4: a zero S game, but every single person I speak
Speaker 4: to was just gushing with praise for another person in
Speaker 4: the community that helped them on their path and talked.
Speaker 4: Every time I asked them of who helped you, they
Speaker 4: would just rattle off a list of names from sometimes
Speaker 4: competitive company, saying, well, this person was so useful. This
Speaker 4: person connected me with this person, And it made me
Speaker 4: realize that the startup community in New Zealand is this
Speaker 4: lovely mixture of small enough to be a village, but
Speaker 4: large enough to sort of steed be a shining city
Speaker 4: on a hill, sort of vibe of that we've got
Speaker 4: these large, spectacular successes that get eyeballs on the community,
Speaker 4: but it's small enough that it can still have that
Speaker 4: community vibe of collaborating together and helping each other. And
Speaker 4: so I think that's what surprised me most year talking.
Speaker 6: On that kind of concept. That small village thing can
Speaker 6: really be a benefit, but it can also have its
Speaker 6: downsides in terms of people don't want to talk about
Speaker 6: bad experiences, people don't want to kind of get on
Speaker 6: the wrong side of the village and kind of end
Speaker 6: up excommunicated. Have you had any sense of the darker
Speaker 6: side of the close knit community.
Speaker 4: Yeah, I think that positive side is in some ways
Speaker 4: a shadow of what you're talking about. Right, Everyone is
Speaker 4: extremely positive about each other because they worry that if
Speaker 4: they say something negative, it's going to very quickly get
Speaker 4: back to that person.
Speaker 6: Yeah.
Speaker 4: So yes, I think, as often happens, a positive trait
Speaker 4: is in some way a shadow of the negative trait.
Speaker 4: And so I think you're absolutely right and on that
Speaker 4: kind of And I think the other element, in terms
Speaker 4: of that sort of small kiwi community that we have
Speaker 4: in the startup scene, it can work against people as well.
Speaker 4: And I was speaking to the guys from a grow
Speaker 4: Ai which recently closed a record breaking pre seed round,
Speaker 4: about how they went straight to San Francisco to get
Speaker 4: that raise, and they talked about how to do that.
Speaker 4: They really had to cast off this sort of reflexive
Speaker 4: village humility that New Zealand sometimes has, because it's such
Speaker 4: a baked in part of our DNA that we are
Speaker 4: reflexively humble, that tall poppy synd your own clean you know,
Speaker 4: insert cliche here, And they realized how much that would
Speaker 4: work against them when they're sort of fishing in that
Speaker 4: money pool in sand fram and they talked a lot
Speaker 4: about how harnessing our key weness, you can take the
Speaker 4: good parts of it, of the novelty. People are going
Speaker 4: to be fascinated by you. You know, insert Lord of
Speaker 4: the Rings joke, hare whatever. But you've really got to
Speaker 4: cast off that we've come from the small pool and
Speaker 4: we've just come in here on our jendles and please
Speaker 4: give us money. If you actually walk in boldly and
Speaker 4: back yourself, people are going to take you seriously. People
Speaker 4: already take New Zealand seriously, and you really need to
Speaker 4: take yourself seriously at the same time, otherwise going to
Speaker 4: do yourself at a service.
Speaker 6: Unfortunately, New Zealand sometimes has its constraints when it comes
Speaker 6: to raising capital. And we saw a massive spike and
Speaker 6: raising and like twenty twenty one, and then we saw
Speaker 6: a real constraint after that. Where are we starting to
Speaker 6: sit now, How are people feeling in the industry about
Speaker 6: their ability to raise money, where that money's coming from,
Speaker 6: and you know that their outlook on the success if
Speaker 6: they do start something well.
Speaker 4: I mean, obviously the macroeconomic climate has not been great
Speaker 4: just in terms of raising money for the past couple
Speaker 4: of years, but I think we're starting to see the
Speaker 4: kind of green shoots of that. Obviously, as the top
Speaker 4: tier interest rate comes down, money starts to get a
Speaker 4: little bit cheaper. But yes, every founder I've spoken to
Speaker 4: this year has talked about the difficulties of raising and
Speaker 4: it genuinely is a sense in the community that it's
Speaker 4: been a very, very tough year. People are watching their
Speaker 4: money very very closely. I think there is also a
Speaker 4: bit of a concern around that top tier, that top
Speaker 4: stream level of funding, which is usually taxpayer funded. We're
Speaker 4: coming from grants and coming from research institutions because that
Speaker 4: pool of money has been drying up over the last
Speaker 4: few years, and I think something that not a lot
Speaker 4: of people will be aware of in terms of the
Speaker 4: deep tech area, so much of that relies on sort
Speaker 4: of deep tech research funding that comes from government. Fundamentally,
Speaker 4: it comes from research institutions, whether it's counterhand or anything else.
Speaker 4: And I think, particularly with the moves we have seen
Speaker 4: from government recently putting those different criteria on the MARS
Speaker 4: and fund really cutting down on the ability of people
Speaker 4: to have that blue sky kind of thinking. I think
Speaker 4: companies that rely on having that before investors are even
Speaker 4: going to have a look at them that kind of
Speaker 4: research that is only ever going to be funded. From
Speaker 4: a university perspective, I think there is a real concern
Speaker 4: that some of that deep tech technology is going to
Speaker 4: really struggle to get off the ground because at that
Speaker 4: top end of the stream, that money's drying out.
Speaker 6: Yeah, it reminds me of a company Captivate Technology. They're
Speaker 6: a carbon capture startup. Still, I think pre Seed and
Speaker 6: the founder came out of a university. He just kind
Speaker 6: of stumbled across this metal framework called muff sixteen. Tried
Speaker 6: to convince them it needs a name change. They weren't
Speaker 6: having it.
Speaker 4: Idy talking about it.
Speaker 6: That's great, but muff sixteen which captures carbon dioxide, right,
Speaker 6: And it was only because he was experimenting with these
Speaker 6: frameworks that he found it. It wasn't like he was like,
Speaker 6: I'm going to go and search for a carbon capture technology.
Speaker 6: And so that's that representation of how blue sky can
Speaker 6: actually lead to major breakthroughs, which there are plenty of.
Speaker 6: So yeah, it is sad to see. Well, it's important
Speaker 6: that we do have a focus on commercializing some of
Speaker 6: the technologies. I wonder if implementing that at the base
Speaker 6: stage of funding is probably that maybe the wrong place
Speaker 6: to put it. Well exactly, I'm opining here though.
Speaker 4: No, I yeah, I think that's exactly right. I think
Speaker 4: so many of these innovations come from stumbling across something
Speaker 4: or having to front load proving where the benefit of
Speaker 4: this technology comes from. Is putting the cart before the horse?
Speaker 8: Yeah?
Speaker 6: Yeah, So we're at the end of twenty twenty four,
Speaker 6: twenty twenty five, what are we expecting to see. What
Speaker 6: is the perspective that you're hearing from the people you're
Speaker 6: talking to in the sector.
Speaker 4: I feel like we're going to start seeing the rubber
Speaker 4: meat the road in terms of actual AI applications that
Speaker 4: really start generating value. I think a speaking to arcaneum AI.
Speaker 4: I think they're in a really interesting example of where
Speaker 4: a gentic AI or AI that's starting to act a
Speaker 4: little bit more autonomously is going to start proving itself
Speaker 4: as an actual real value creator and boosting productivity. And
Speaker 4: I think as these underlying models are improving at pace,
Speaker 4: even if that pace slows down, even if we see
Speaker 4: a modest increase in capabilities next year, most people applying
Speaker 4: this technology are still scrambling to harness the full potential
Speaker 4: of technology that existed six months ago, let alone what
Speaker 4: happens in six months down the line. So I think
Speaker 4: agentic AI is going to start becoming a bigger part
Speaker 4: of the conversation in twenty twenty five. I also think
Speaker 4: mid tech as well. I think when we saw the
Speaker 4: bio Aura getting their funding and looking to build a
Speaker 4: facility in christ Church, I mean there was some very
Speaker 4: very big numbers thrown around a quarter of a billion
Speaker 4: dollars added to GDP. But even if we don't take
Speaker 4: that seriously, I think the combination of advances and underlying
Speaker 4: technologies in the mid tech space, combined with the government
Speaker 4: looking to loosen some restrictions, particularly around advances in gene
Speaker 4: therapy and gene editing techniques, I think that's anaria that's
Speaker 4: going to be really interesting. I think mid tech overall
Speaker 4: is really undervalued. I think mid tech is such a
Speaker 4: massive growth industry, and I think it also from an
Speaker 4: investor perspective, is quite de risked because there's the underlying technology,
Speaker 4: There is so much R and D, there is so
Speaker 4: many hurdles that they have to get through from a
Speaker 4: regulatory perspective that I think it's not like a drug
Speaker 4: company just of this drug works. It either does or
Speaker 4: it doesn't. The technology itself has so much value and
Speaker 4: is dear risk because of so many regulations it has
Speaker 4: to clear before it can even get to market. So
Speaker 4: I think like a Cadear Health for example, looking at
Speaker 4: their rays this year, that was an incredible piece of technology,
Speaker 4: world first microcomputer brain implant, and they're very focused on
Speaker 4: a very specific illness, but the at potential applications of
Speaker 4: that underlying tech are incredibly broad, and so I really
Speaker 4: think the medtech space and our advances in that area
Speaker 4: are going to be a big story in twenty twenty five.
Speaker 5: Cool.
Speaker 6: Yeah, that is I think an area that has a
Speaker 6: lot of potential for New Zealand because we have a
Speaker 6: really strong med tech underpinning and bioengineering underpinning that people
Speaker 6: don't actually really know, so it'd be really exciting to
Speaker 6: see that grow super well. And that's about the time
Speaker 6: that we have, so thank you so much for joining us,
Speaker 6: Finn Hogan on the Business of Tech podcast. It's been
Speaker 6: a pleasure to talk to you and chat startups.
Speaker 4: It's always a pleasure having back anytime.
Speaker 6: Fantastic.
Speaker 1: So we're going from startups to what they can become
Speaker 1: when left to their own devices, which is big tech companies,
Speaker 1: and between the battle for supremacy in AI and antitrust
Speaker 1: action against them in the US and Europe, they've dominated
Speaker 1: tech news once again. Duncan Greeve has done some great
Speaker 1: stories this year looking at the ways that they are
Speaker 1: increasingly influencing the digital economy in New Zealand and how
Speaker 1: little we really are doing to put checks on their power.
Speaker 1: It's been a busy year for you, Duncan and the
Speaker 1: spin off, a bit of a challenging year for anyone
Speaker 1: in the media. You've been really busy with the Fold,
Speaker 1: your own podcast about the media. You've also been keeping
Speaker 1: a pretty close eye on big tech companies, and a
Speaker 1: lot has happened this year. A lot of antitrust activity
Speaker 1: in the US really yet to bear fruition, but definitely
Speaker 1: some seismic changes potentially underway in the home country off
Speaker 1: these big tech companies, less so in our part of
Speaker 1: the world. You wrote a couple of weeks ago that
Speaker 1: the tough approach of Australia's regulators and policymakers towards big
Speaker 1: tech is paying off for its citizens, who are getting
Speaker 1: far stronger protections than New Zealanders. That was in relation
Speaker 1: to a move over there. The Australian government said that
Speaker 1: if you want to advertise on Facebook over there, you
Speaker 1: will have to verify your identity so have government issued
Speaker 1: ID to actually place adverts, which will potentially do away
Speaker 1: with a lot of the scams and fraud that goes
Speaker 1: on on that platform and other platforms as well. But
Speaker 1: really this year, I think what you've been tapping into
Speaker 1: in your stories is really just that dichotomy that there's
Speaker 1: all this activity going on just across the Tasman in
Speaker 1: comparison we're doing so little.
Speaker 5: Yeah, it feels like the whole story of the year
Speaker 5: to me that you kind of have these two countries
Speaker 5: that you know, we've got a common economic zone and
Speaker 5: we like to think of ourselves as kind of siblings
Speaker 5: in a lot of ways. Big technology feels like it's
Speaker 5: the sort of signal challenge of our time is how
Speaker 5: you as a country retain your sort of sovereignty, take
Speaker 5: the good of what they do, and try and deal
Speaker 5: with the externalities that come with them. And yet Australia
Speaker 5: is arguably the global leader. You know, maybe the EU
Speaker 5: could could could be kind of considered that too. But
Speaker 5: suddenly as a global leader in dealing with them in
Speaker 5: a sort of joined up, in multifaceted way in New Zealand.
Speaker 5: Is just it's close to a zero, which is it's
Speaker 5: it's quite a hard thing when you're sitting here in
Speaker 5: one of the sectors that's impacted, but one means the
Speaker 5: only one to kind of watch with envy, to be
Speaker 5: honest at what's happening across the Tasman and see that
Speaker 5: there's just so little energy or interest from our politics
Speaker 5: and regulators over here.
Speaker 1: In some of your pieces, you've sort of tried to
Speaker 1: get to the height of that. Is it a resourcing issue?
Speaker 1: John Smaller said, Look, we just don't have the budgets
Speaker 1: of the a triple seed to go after big tech,
Speaker 1: which has the best lawyers in the world. This is
Speaker 1: an expensive undertaking. We don't have the expertise to do it.
Speaker 1: But I mean we could have piggybacked on a lot
Speaker 1: of what the Aussies were doing this year. Maybe we
Speaker 1: would have had a lot more critical mass if we
Speaker 1: sort of joined force. It's not necessarily on everything. The
Speaker 1: social media ban, for instance, I think this terrible legislation
Speaker 1: and ram through in the last week of pil so
Speaker 1: we can pick and choose. But on the anti competitive stuff,
Speaker 1: I mean, Australia is about to potentially put a bill
Speaker 1: through which would mean that a company, at big tech
Speaker 1: company that was preventing a customer from switching to another
Speaker 1: platform or being anti competitive fifty million dollar fine. So
Speaker 1: they're going out with a really big stick on anti
Speaker 1: competitive activity in the digital economy. I mean, what's to
Speaker 1: stop us teaming up and going after this together.
Speaker 5: Yeah, it seems really strange, right, because these are complex issues.
Speaker 5: I don't want to kind of downplay that. You know,
Speaker 5: the we've signed a lot of you know, free trade
Speaker 5: agreements which again, like so much of our legislation didn't
Speaker 5: imagine how just how borderless commerce and communication was going
Speaker 5: to become, and probably had we been able to do that,
Speaker 5: we would have taken note of the impact on our
Speaker 5: you know, just how complicated it would make legislating in
Speaker 5: some respects. But the the response of Australia is, you know, yes,
Speaker 5: maybe some of the tax ideas are going to be difficult,
Speaker 5: but at least we can try and find them into
Speaker 5: altering their behavior. And even sometimes you don't even have
Speaker 5: to get that far. Sometimes you can just assure a
Speaker 5: report that makes something plain and start the process of
Speaker 5: looking at it and magically things change, you know. You
Speaker 5: see that with Netflix, for example, which has got an
Speaker 5: ANZ office. It's tided to commission big Australian shows, but
Speaker 5: it's only doing that for Australia, and it's only doing
Speaker 5: that because the government made the fact of it's doing
Speaker 5: none of the local content stuff that TV networks are
Speaker 5: doing such a political issue that we'll try and get
Speaker 5: out ahead of it. Now that's an imperfect process, it's
Speaker 5: not finished, but it's transparently a better outcome for Australia
Speaker 5: the nothing, which is what we have with Netflix in
Speaker 5: New Zealand. And you can see the same thing with
Speaker 5: the scams, which are a massive problem here, you know,
Speaker 5: somewhere between two hundred million and two billion dollars a year.
Speaker 5: And yet Meta is almost kind of making fun of us,
Speaker 5: right like they're doing the absolute bare minimum, which is
Speaker 5: trying to verify that people advertising financial services in Australia
Speaker 5: are in fact Australian businesses. And when I ask them directly,
Speaker 5: are you going to do the same thing here? You know,
Speaker 5: would be a very easy thing to do. Google is
Speaker 5: doing it. They've just said no plans. You know that
Speaker 5: they will eventually, But the fact that we could be
Speaker 5: having just the most basic levels of consumer protections here,
Speaker 5: were we just to be talking about it publicly is
Speaker 5: It's shocking to me that it continues to be something
Speaker 5: that our ministers, our government, even our opposition parties, to
Speaker 5: be honest, don't seem to be making a big thing
Speaker 5: out of it.
Speaker 1: Yeah. I mean, we've got this permissive environment here, you know,
Speaker 1: and I think a lot of MP's would argue that
Speaker 1: that encourages innovation, but we haven't seen all the innovation
Speaker 1: from big tech. They do the bare minimum here, They
Speaker 1: have a bare number of people here. They give us
Speaker 1: the same sort of vanilla offering that everyone else gets,
Speaker 1: but they don't have to jump through nearly as many hoops.
Speaker 1: And I guess the one area this year that there's
Speaker 1: actually been some activity and is the Digital News Bargaining Bill,
Speaker 1: which showed some promise bilateral sort of support for that.
Speaker 1: With the new government coming in, they took that up
Speaker 1: and ran with it. But by the end of the
Speaker 1: year it looks like it's very much in jeopardy that
Speaker 1: this thing is actually going to happen. What's your take
Speaker 1: on that this was one.
Speaker 5: Of the most flawed in terms of not necessarily so
Speaker 5: early its intention, but the way it has played out,
Speaker 5: because what you've seen in Australia is that those initial
Speaker 5: deals that were struck between Meta and Google and no
Speaker 5: one else, which is one of the issues, they expired
Speaker 5: after three years. Google began the process of renewing, but
Speaker 5: Meta didn't, so it became effectively a single company tax
Speaker 5: and it wasn't a tax because you didn't have any
Speaker 5: transparency around what the scale of those deals was. There
Speaker 5: has been within media a bit of a divide about
Speaker 5: whether to sort of push through the legislation and see
Speaker 5: if Google, which has said it will pull out of
Speaker 5: news distribution and break all its seals, see if they're
Speaker 5: being honest about that or if they're bluffing, or others
Speaker 5: who say, actually, that's quite a dangerous thing to do
Speaker 5: in many respects. But it's by no means the only
Speaker 5: legislation over them, so they could have picked up other
Speaker 5: things and said that these can advance at different speeds.
Speaker 5: But the biggest thing, I think, the biggest reason that
Speaker 5: Australia has made so much progress is actually through the
Speaker 5: a Triple C, which has got a kind of a
Speaker 5: constantly operating sort of survey of digital spheres and competition
Speaker 5: in the same way that we do with telecommunications, with
Speaker 5: electricity and now increasingly with supermarkets. To me, it's so
Speaker 5: obvious that is a sphere that needs to be scrutinized
Speaker 5: in the same way as those other ones, arguably more
Speaker 5: than for example, tele communications, and yet the ComCom have
Speaker 5: said we're just out resourced or mandated to do it,
Speaker 5: so we're not going to do it.
Speaker 1: Yeah, you've called for a Minister of Big Tech, which
Speaker 1: I absolutely agree with. Do you think anything is going
Speaker 1: to change under this government?
Speaker 5: They're a year old, right, and you know I've spoken
Speaker 5: extensively to Andrew Bailey, who's the so called Minister for scams,
Speaker 5: met with and spoken with Paul Goldsmith who's the Media
Speaker 5: and Communications Minister, on multiple occasions. But they're not unaware
Speaker 5: of the issues here. So I'm not without hope that
Speaker 5: this could kind of raise up the political agenda.
Speaker 1: On the social media ban. I mean you can relate
Speaker 1: to this. I guess you ran a harrowing story feature
Speaker 1: article about a young woman in Wellington and her horrendous
Speaker 1: experien parents with basically a stalker who was able to
Speaker 1: carry this on for years through online platforms, and just
Speaker 1: a woeful response from those online platforms which she repeatedly
Speaker 1: complained about it. So I guess we can all sort
Speaker 1: of relate to this and see the harm that is
Speaker 1: being done. But really, is this a workable solution technically
Speaker 1: and even costs wise. I mean, our government has been
Speaker 1: very reluctant to spend anything in enforcing any sort of
Speaker 1: rules in this area. That's going to be an expensive
Speaker 1: undertaking for the Aussies having a third party company running
Speaker 1: potentially a digital identity verification system. It's going to cost
Speaker 1: tens of millions of dollars.
Speaker 5: Yeah, I think this is the hardest part, right is that?
Speaker 5: Think about YouTube and TV and zed as functionally, both
Speaker 5: of them have video content on their websites and they
Speaker 5: make their money by selling advertising that sits between that
Speaker 5: video content. TV and zaid employees. Well, it's less by
Speaker 5: the day, but it's around six hundred people. When it
Speaker 5: makes a profit, which it hasn't been this year, it
Speaker 5: pays company tax on the whole of that profit. And
Speaker 5: I just think it's a kind of a perfect little
Speaker 5: encapsulation of the way that the contributors to the economy,
Speaker 5: to the tax base, to the employment base have a
Speaker 5: huge amount of rules and both unspoken and literal legislative
Speaker 5: that they operate by. And then you have the big
Speaker 5: tech companies, which contribute no tax create all these problems
Speaker 5: which the tax paying companies ultimately have to fund. And
Speaker 5: I sort of just very hands off about those sort
Speaker 5: of externalities. And that's where, you know, one of the
Speaker 5: things I was trying to stand up earlier this year
Speaker 5: was trying to speak to the Minister of Revenue about
Speaker 5: this because I'm like, if nothing else, is there not
Speaker 5: a are you not concerned from our tax based perspective
Speaker 5: in the displacement of New Zealand companies to non tax
Speaker 5: paying tech companies, And you can't get people interested in
Speaker 5: At a certain point you're like, am I crazy here?
Speaker 5: Or is this a bigger problem than you're litting on?
Speaker 1: No, You're not crazy, And you know, just finally dunk
Speaker 1: and looking to twenty twenty five, we've seen in the
Speaker 1: US a lot of antitrust action play out. The Department
Speaker 1: of Justice over there has taken suits against Google and others.
Speaker 1: Google was found to have a monopoly in digital search,
Speaker 1: and there's a decision pending on its digital advertising business.
Speaker 1: It also lost the Blizzard case around its app stores,
Speaker 1: so that may have to be opened up. Is a
Speaker 1: lot of this stuff and the frustrations we have going
Speaker 1: to sort of be overrun by bigger events in the
Speaker 1: US that may see some structural answers to this, or
Speaker 1: is do you think it's just going to roll on
Speaker 1: and on in court and appeals for years to come.
Speaker 5: Court action remains probably the most likely source of sort
Speaker 5: of structural change in the industry. You can see that
Speaker 5: with it's not strictly court action, but courts have confirmed
Speaker 5: it with the TikTok ban, which could still happen in
Speaker 5: a bit over a month in the US, which would
Speaker 5: be an enormous change. But I think that that also
Speaker 5: points to one of the big problems, and it is
Speaker 5: that this is both a trade and a geopolitical issue
Speaker 5: as well, and that if you're the US, you know
Speaker 5: that these companies are behaving in ways that are anti
Speaker 5: competitive and using their scale and the opacity of their
Speaker 5: sort of systems and the ways that they can kind
Speaker 5: of combine their different audiences and products in a way
Speaker 5: that is kind of quite overwhelming, but on a sort
Speaker 5: of a the fact that those companies are global and everywhere,
Speaker 5: but still based in the US, so you derive enormous
Speaker 5: benefits to the fact that your share markets hold those
Speaker 5: companies to the vast bulk of their most and your
Speaker 5: employees are in your country, and that when they finally
Speaker 5: do repatriate money, it comes into this very dynamic in
Speaker 5: a very innovative economy that you still have. So do
Speaker 5: you accept some harm in your domestic interest because you're
Speaker 5: you know, your overall geopolitical interests or advanced. This is
Speaker 5: the thing that especially with you know, one of the
Speaker 5: great entrepreneurs of history right next to the administration, Elon Musk,
Speaker 5: I'm still not quite sure that they have an answer
Speaker 5: to that. So even with these cases going forward, I'm
Speaker 5: not one hundred percent sure that that won't kind of
Speaker 5: lead to it just a continuation of the sclerosis that
Speaker 5: we see, you know, around the world with a lot
Speaker 5: of this stuff.
Speaker 6: So there we have it. In many ways, I think
Speaker 6: it's been a bit of a landmark year for technology
Speaker 6: in a lot of ways, everything from AI and these
Speaker 6: big enterprise companies that have had to do a lot
Speaker 6: of restructuring, the continued growth of startups in New Zealand
Speaker 6: and the startup industry, Big tex can virtial power being questioned,
Speaker 6: and the ups and downs of our nzat X listed tech.
Speaker 6: So overall, it's been an interesting year to be following tech.
Speaker 1: Yeah, and I'm really interested to see what happens with
Speaker 1: the Trump two point zero administration. You've got I think
Speaker 1: I read somewhere his cabinet which has a lot of
Speaker 1: sort of tech related people in there, the likes of
Speaker 1: David Sachs, one of the PayPal mafia, is going to
Speaker 1: be his crypto advisor. I read somewhere that their combined
Speaker 1: net worth if you include Maska, isn't in cabinet, he's
Speaker 1: the doge Master, is about three hundred and forty billion dollars,
Speaker 1: so by far the richest cabinet ever. And these are
Speaker 1: all super smart, super ambitious, egocentric people, and a lot
Speaker 1: of them have very firm views about technology. They're techno optimists.
Speaker 1: They think tech is the answered to most things, and
Speaker 1: that unfettered innovation is the answer to climate change and
Speaker 1: all of these problems that we face in the world.
Speaker 1: So how is that going to manifest itself in policy
Speaker 1: in the Trump administration over the next four years. What
Speaker 1: will it mean for all of those lawsuits that are
Speaker 1: happening against the big tech companies. Is bees as going
Speaker 1: to be able to, for instance, influence Trump to the
Speaker 1: extent that he orders the Department of Justice to sort
Speaker 1: of dial back its action against Amazon. These are sorts
Speaker 1: of questions I think are going to be answered quite
Speaker 1: quickly in twenty twenty five. And then the other one
Speaker 1: really is where is AI going to go? We've got
Speaker 1: chat GPT five has sort of been delayed the technology
Speaker 1: underpinning that. There's a lot of talk in the industry
Speaker 1: that these large language models, the transformer technology is sort
Speaker 1: of running out of steam in terms of their capability.
Speaker 1: They've hit some walls in terms of what it's capable of,
Speaker 1: So there's a bit of worry about that. How are
Speaker 1: they going to overcome that. We've got Sora and things
Speaker 1: like that that are just now being released. So we
Speaker 1: will see the impact of AI generated video probably a
Speaker 1: lot more in twenty twenty five, and of course the
Speaker 1: rise of AI agents, which has been talked about and
Speaker 1: hyped up a lot in the second half of this year,
Speaker 1: but we haven't really seen them in action yet, So
Speaker 1: next year we will see them rolled out because a
Speaker 1: lot of them, the way they're designing them at Microsoft
Speaker 1: and Salesforce and others is to just drag and drop.
Speaker 1: You don't need to code or anything. If you've got
Speaker 1: the data, you can feed those into an AI agent
Speaker 1: to automate a sales process or a conversation. Companies will
Speaker 1: definitely be taking those up next year. Yeah.
Speaker 6: I had a story just go up recently about the
Speaker 6: kind of expectations of the timeframe of a generative AI
Speaker 6: being integrated into enterprise company systems. I think it's something
Speaker 6: we need to keep in mind as well. You know,
Speaker 6: they are drag and drop, so you can just kind
Speaker 6: of feed them data. But at the same time, there
Speaker 6: is a certain level of integration work and data cleaning
Speaker 6: and all those things that you actually need to do
Speaker 6: to make them functional. So we're starting to learn a
Speaker 6: lot more about how the implementation of these technologies is
Speaker 6: going to what that's going to look like. I think
Speaker 6: it's been similar to kind of cloud migration. You know,
Speaker 6: it's going to take time and people are going to
Speaker 6: have to figure out how to do it and where
Speaker 6: the challenges are and what's actually most impactful. But once
Speaker 6: we get into it and things get rolling, we are
Speaker 6: going to start to see some pretty drastic changes.
Speaker 1: Yeah, the in terms of some of the sort of
Speaker 1: ticky stuff next year, you know, I think the driverless cays,
Speaker 1: we've seen so much progress this year in the US
Speaker 1: in particular and China, so we're just going to see
Speaker 1: a lot more that, maybe in the UK an official
Speaker 1: launch there. We've got Kiwi Alex Kendall who's taking his
Speaker 1: technology to the US. We're just going to see that
Speaker 1: really start to hit critical mass. I think we'll also
Speaker 1: see some of the first prototype small modular reactors. Nuclear
Speaker 1: reactors go into development and maybe production in conjunction with
Speaker 1: the big tech companies that are funding them because they
Speaker 1: need more energy to run their data centers. And literally
Speaker 1: today Microsoft launched its own data center region in New Zealand.
Speaker 1: So we will see if that pays off for them,
Speaker 1: what demand is, like, is their good uptake off those services?
Speaker 1: They certainly think there will be. They put a billion
Speaker 1: dollars of investment into that, and speaking to them, they
Speaker 1: say it's going to be a slow burns. This is
Speaker 1: a long term commitment for them, but to what extent
Speaker 1: our company is going to accelerate their migration to the
Speaker 1: cloud as a result of having this hyperscale infrastructure on
Speaker 1: their doorsteps. And what is it going to mean for
Speaker 1: the economy? Will those productivity gains were so desperate to
Speaker 1: achieve start to be realized as a result of having
Speaker 1: all this great infrastructure. Won't happen in twenty twenty five,
Speaker 1: but will we start to see some really great use
Speaker 1: cases emerging that inspire others in corporate New Zealand to
Speaker 1: adopt it as well.
Speaker 6: Yeah, I mean there are some big promises that big
Speaker 6: tech has to keep in terms of the return to
Speaker 6: the economy. Billions and billions of dollars, the numbers they've
Speaker 6: thrown around around how much this is actually going to
Speaker 6: benefit New Zealand Inc. So hopefully we start to see
Speaker 6: some of that playing out and keep an eye on
Speaker 6: whether that is actually happening to what extent. So, Yeah,
Speaker 6: in particular, those productivity gains are going to be highly anticipated,
Speaker 6: I would imagine by many people, So let's see if
Speaker 6: we can get there.
Speaker 1: Yeah, we'll definitely be keeping an eye on all of
Speaker 1: that every week here on the Business of Tech. So
Speaker 1: that's it for this week. Thanks to resellers Rob O'Neil,
Speaker 1: Rebecca Stevenson from Business Desk, Finn Hogan from Caffeine Daily,
Speaker 1: and a spinoffs Dunk and gree for joining us links
Speaker 1: to some of the big tech stories they've covered in
Speaker 1: the show notes at Business desk dot co dot ezed.
Speaker 1: Head straight to the podcast section to find them.
Speaker 6: You can stream the podcast there as well as on
Speaker 6: iHeartRadio or of course, your podcast platform of joyce and.
Speaker 1: Get in touch with your feedback, ideas, suggestions for topics
Speaker 1: and guests for twenty twenty five. Email Ben on Ben
Speaker 1: at Business desk dot co, dot.
Speaker 6: Zed Our final episode will be next Thursday. It will
Speaker 6: just be me and Peter are reflecting on some of
Speaker 6: the best, worst, most interesting, ridiculous technologies that we got
Speaker 6: our hands on in twenty twenty four, and.
Speaker 1: We'd really like to hear your picks for the best
Speaker 1: gadgets you bought or test drove in twenty twenty four,
Speaker 1: the ones that were absolutely worth the money in your view.
Speaker 1: Head to the Business of Tech LinkedIn page to tell
Speaker 1: us what tech absolutely brought you joy or made your
Speaker 1: life easier.
Speaker 6: Have a great week and we'll catch you one last
Speaker 6: time for twenty twenty four, Next Thursday.
Speaker 1: See you next week.