Speaker 1: Kyoder, this has been just popping in at the top
Speaker 1: to let you know that next week our episode will
Speaker 1: be a day late. It'll come out on Friday instead
Speaker 1: of Thursday. So if you get to Thursday and your
Speaker 1: episode is not in the feed where you expect it,
Speaker 1: don't panic. Just wait twenty four more hours and you'll
Speaker 1: find it there. Onto the episode. The all important US market.
Speaker 1: It's where every key we startup founder dreams of making
Speaker 1: it big, because everything's bigger in America.
Speaker 2: Which is exactly why our featured guest on the podcast
Speaker 2: this week is squarely focused on the US market and
Speaker 2: advisors and other founders to also set their sights on
Speaker 2: the US from day one.
Speaker 3: Scales. The problem, kiwis we do a lot of things
Speaker 3: amazingly well, but we don't understand scale. There's maybe seven
Speaker 3: hundred thousand businesses in New Zealand and ninety something percent
Speaker 3: of them are micro businesses. In the US mark of
Speaker 3: we're focused in there is twenty five million smeak businesses,
Speaker 3: is a five p five million EMI businesses, half a
Speaker 3: million new businesses every year that scale.
Speaker 1: Welcome to the Business of Tech powered by two Degrees Business.
Speaker 2: I'm Ben Moore and I'm Peter Griffin. You just heard
Speaker 2: there from Nick Lassett, the founder and CEO of Black
Speaker 2: Pearl Group, an INZX listed tech company with operations in
Speaker 2: Wellington and Tempe, Arizona.
Speaker 1: Black Pearl just reported a revenue increase of one hundred
Speaker 1: and eighty three percent to four point one million dollars
Speaker 1: for the year to March, with the vast majority of
Speaker 1: that growth in the US market.
Speaker 2: We'll hear Nick talking about the ups and downs office
Speaker 2: efforts to crack the US market shortly.
Speaker 1: But first, Peter, you've been given a briefing on the
Speaker 1: new surface devices from Microsoft, which are the first wave
Speaker 1: of so called Copilot plus PCs. What does that mean.
Speaker 2: There are plenty of surface devices that every sort of
Speaker 2: year micro Soft releasesm Typically I wouldn't pay too much
Speaker 2: attention to that because it's all very iterative, but there's
Speaker 2: certainly something different going on with this debut of Microsoft
Speaker 2: surface devices, the laptops and the more sort of tablets
Speaker 2: that you can sort of turn into a laptop with
Speaker 2: the attached keyboard, and the big difference this year is
Speaker 2: building in a so called neural processing unit into the
Speaker 2: ARM based chip architecture in those devices. So they've done
Speaker 2: a deal with Qualcom to use this ARM architecture, which
Speaker 2: is really a bit of a slap in the face
Speaker 2: for Intel and AMD, the big sort of traditional giants
Speaker 2: in the chip world. ARM, the originally British company, has
Speaker 2: done a great job of architecting chips, particularly for lightweight
Speaker 2: portable devices like smartphones and laptops. And what they've done
Speaker 2: now is integrate copilot features that Microsoft has developed in
Speaker 2: conjunction with open AI, actually building that into the device itself,
Speaker 2: so all the AI workloads are done on the device
Speaker 2: rather than constantly going to the cloud. So I saw
Speaker 2: that in Sydney last week. I first look at some
Speaker 2: of the features, including the controversial recall feature, which got
Speaker 2: a lot of criticism. Security researchers how to look at
Speaker 2: that and found failings in that. Microsoft actually the day
Speaker 2: I was in Sydney put out a release tightening up
Speaker 2: how they're dealing with recall to answer some of those
Speaker 2: security concerns. So you'll hear more about that in the
Speaker 2: interview with Tim Meerzak that I did. But this is
Speaker 2: really the start of the AI PC revolution and we're
Speaker 2: going to see Dell and HP and everyone else incorporating
Speaker 2: this copilot stuff into their hardware as well, and I
Speaker 2: guess yeah, there are lots of benefits to that, such
Speaker 2: as the security aspect of having everything on the device
Speaker 2: rather than it constantly going to the cloud.
Speaker 1: Yeah, it's the new wave of hardware, isn't it, having
Speaker 1: just the next level of processing unit on the on
Speaker 1: the on the hardware itself. I think what we need
Speaker 1: to think about is actually what is the what is
Speaker 1: the result of this? So it sounds like the marketing
Speaker 1: hype of We're putting AI in your computer, and it's like,
Speaker 1: actually doesn't mean anything. What we need to understand is
Speaker 1: what is that actually, what are the results of that?
Speaker 1: What are the uses that people are going to get
Speaker 1: from that? And your interviewee, Tim Mirzak, he speaks a
Speaker 1: little bit to that in the interview. You've got to
Speaker 1: try and kind of listen between his marketing hype a
Speaker 1: little bit as you listen to this interview. But there
Speaker 1: is some interesting gems in there as well.
Speaker 2: Yeah, there's the things that Microsoft is doing and the
Speaker 2: start of it as things like recall and live translation
Speaker 2: and you know, some of that stuff we've seen elsewhere.
Speaker 2: But the bit which is is going to be most significant,
Speaker 2: I think to users is all of these third party
Speaker 2: app developers. And this is similar to the conversation we
Speaker 2: had about Apple Intelligence last week where they are also
Speaker 2: putting AI into their devices, so it's all done natively.
Speaker 2: And they talked in Sydney about Adobe putting this into
Speaker 2: light Room and all of their products. So the speed
Speaker 2: that you can render things, how you can apply the
Speaker 2: AI tools that Adobe is rolling out on the device
Speaker 2: disconnected from the cloud, that's pretty cool. So once we
Speaker 2: start to see these companies and Microsoft is compatible now
Speaker 2: I think with three hundred software makers they're developing for
Speaker 2: this new chipset. Once we start seeing those roll out,
Speaker 2: I think that's when people will go wow. You know,
Speaker 2: so this little app I use for my work on
Speaker 2: the Windows platform is now suddenly infused with with AI
Speaker 2: without me having to rely on going to the cloud.
Speaker 2: That's when I think we'll be interesting.
Speaker 1: Absolutely. Well, let's have a listen to your interview with
Speaker 1: Tim Meerzak.
Speaker 2: Yeah, this is Tim. He heads up the Surface business
Speaker 2: across Australia and New Zealand. Tim, thanks so much for
Speaker 2: being on the business of tech. Now you head up
Speaker 2: the surface business for Microsoft in Australia and New Zealand.
Speaker 2: Lots of surface laptops and surface pro devices are used
Speaker 2: in New Zealand and I've just seen the latest iteration
Speaker 2: off those and huge performance improvements in some cases up
Speaker 2: to ninety percent based on the previous iteration, which is
Speaker 2: pretty incredible and interesting your views on what was done
Speaker 2: to achieve that. But these are the first line of
Speaker 2: co pilot plus PCs, so called AI PCs, with a
Speaker 2: new processor in the PC that is dedicated to those
Speaker 2: AI processes. Explained to us the difference between that world
Speaker 2: in the cloud and taking that onto the PC and
Speaker 2: what that actually means.
Speaker 3: YEA, certainly, Peter.
Speaker 4: All the current stuff that we've been doing from an
Speaker 4: AI workload has all been in the cloud and we've
Speaker 4: integrated it in with our applications to make people more
Speaker 4: productive than ever. The difference between copilot plus PC is
Speaker 4: you can do all of that stuff, but then there's
Speaker 4: so much more. And by that is we're taking amazing
Speaker 4: AI experiences that run natively on the device itself, and
Speaker 4: that is the biggest difference that we have here. We've
Speaker 4: already started to talk about some of those experiences in
Speaker 4: Recall Live captioning co Create, for example, which are amazing
Speaker 4: experiences that are exclusive to Copilot plus PCs. In order
Speaker 4: to be classed as copilot plus PCs, you need three
Speaker 4: key things. The first one is RAM sixteen gigs. You
Speaker 4: need a two five six gig SSD hard drive. And
Speaker 4: then one of the real key components is a neural
Speaker 4: processing unit or as we call it NPU. And what
Speaker 4: an MPU is designed to do is to do all
Speaker 4: of that ALI grub work and do it very efficiently.
Speaker 4: And on these devices, the parameters to be classed as
Speaker 4: a copilot PC is more than forty trillion operations per
Speaker 4: second and that's what we're going to be launching in
Speaker 4: New Zealand on the sixth of August. The way I
Speaker 4: like to look at it is think of just a processor.
Speaker 4: You've just got one big chip and on that you
Speaker 4: have the CPU, the GPU, and now this NPU on
Speaker 4: there right. So the CPU and the GPUs not anything new,
Speaker 4: and they can do a lot of these AI tasks,
Speaker 4: but they can't do it as efficiently. So with the NPU,
Speaker 4: this is a leapfrog in terms of the amount of
Speaker 4: processing power that the NPU can do, which takes off
Speaker 4: the burden on the CPU and GPU. So this is
Speaker 4: why not only are you able to to have these
Speaker 4: incredible AI experiences that you've never been able to have before,
Speaker 4: but you're starting to see benefits in places like battery life.
Speaker 4: For example. I don't mean an extra hour. I'm talking
Speaker 4: about doubling the battery life. And that's just something that
Speaker 4: you don't see through different generations of a particular.
Speaker 2: Product, some when those users have already been introduced to
Speaker 2: some aspects of AI. What we saw today was about
Speaker 2: three features that really draw on that neural processing unit
Speaker 2: and AI functionality. Quickly take us through some of as.
Speaker 2: Let's start with recall, which is one that's had most attention.
Speaker 2: What is recall?
Speaker 4: Think of it as a giving everyone a photographic memory.
Speaker 3: I have a bad memory.
Speaker 4: I'll say it.
Speaker 1: I won't beat around the walls.
Speaker 4: I have a bad memory, but I can remember certain
Speaker 4: aspects of things that I've seen. So think if I
Speaker 4: had seen if got an email or a WhatsApp message
Speaker 4: on my device and it had a red flower in there,
Speaker 4: and that's all I remember. I don't know where it
Speaker 4: came from, but I remember the red flower. I can
Speaker 4: simply type that in and ll pull up that image
Speaker 4: and whatever was surrounding that image, So it gives everyone
Speaker 4: a photographic memory. Why that's really important is a lot
Speaker 4: of people spend a lot of time trying to find things.
Speaker 4: Imagine if you can just put in a natural language,
Speaker 4: just as I did there talking about a red flower,
Speaker 4: and then straightaway it comes in and it gives you
Speaker 4: exactly what you're looking for. And to me, that's what
Speaker 4: recall is all about.
Speaker 2: And what it's doing. It's I think every five or
Speaker 2: ten seconds, it's taking a snapshot of what's on your screen.
Speaker 2: Doesn't matter what browser you're in. Everything that's on your
Speaker 2: screen there has been captured every five to ten seconds.
Speaker 2: But you have the ability to set the parameters what
Speaker 2: is recorded and if it's recorded at all. I mean,
Speaker 2: this is now a opten system, right, it's not switched
Speaker 2: on by default.
Speaker 4: Think of it as, yes, taking a picture every five seconds,
Speaker 4: but it does a little bit more than that. It
Speaker 4: takes the picture, takes the visual components, puts that into
Speaker 4: text so that it is searchable. So think of it
Speaker 4: as creating an index of your photos that's also fully
Speaker 4: encrypted so it's safe, and it is also kept on
Speaker 4: the device, so that's one thing. Now you mentioned opt in,
Speaker 4: we have made an announcement. It is hot off the
Speaker 4: press today. So we have made an update to the
Speaker 4: recall feature where it will now be part of our
Speaker 4: Windows Insider program.
Speaker 2: What is that?
Speaker 4: So Windows Insider program are a group of people that
Speaker 4: want to trial and test and give feedback on the
Speaker 4: latest and greatest Microsoft developments within the operating system. You
Speaker 4: can simply log into Microsoft dot com and you can
Speaker 4: joining the inside up program should you wish, There is
Speaker 4: an option to do that. And the reason why it's
Speaker 4: really important to go into that environment is because we
Speaker 4: want more feedback. We're hearing what customers are saying and
Speaker 4: we're wanting to act and make sure that they've got
Speaker 4: the very best experience. But more importantly that they're at
Speaker 4: the center and we're talking to their concerns they may
Speaker 4: have around recall.
Speaker 2: Everyone can see the utility off this recall, the convenience
Speaker 2: that it brings to your computing environment, but will be
Speaker 2: a honeypop for hackers and that as well, so security
Speaker 2: has to be central to that. There's been some criticism
Speaker 2: which led to this decision. I think to do Windows
Speaker 2: Insiders so that you can make sure this is water
Speaker 2: tight before everyone gets their hands on it. It's also
Speaker 2: Windows Hello, which is the main security interface for your devices.
Speaker 2: It has to go through that as well, which is
Speaker 2: pretty robust.
Speaker 4: There's a few secure elements that we are making sort
Speaker 4: of mandatory on Copilot plus pieces, which I think is
Speaker 4: probably important to mention. Firstly, we have secure boot, which
Speaker 4: is often just afforded to scenarios where there's a high
Speaker 4: amount of customer sensitive data, so think finance institutions, think
Speaker 4: medical practices, etc. So that is on by default on
Speaker 4: Copilot plus PCs. We then have the biometrics piece that
Speaker 4: you talked about, and that is a requirement for recall
Speaker 4: because we don't want to just give access to people
Speaker 4: that say they are who they are. We need to
Speaker 4: be one hundred percent sure. And then the last piece
Speaker 4: is around the Pluton process, where we're working very very
Speaker 4: closely with our silicon providers to make sure that we
Speaker 4: have an additional layer. And all of this sort of
Speaker 4: stuff is usually afforded to highly sensitive data devices and
Speaker 4: we've brought that into our consumer space with Copilot plus PC.
Speaker 4: The one last thing I'll mention on recall is all
Speaker 4: of that work, all of that functionality is on the device,
Speaker 4: and this is really important. Recall is always on the device.
Speaker 4: The user is at the center. They decide what they
Speaker 4: want Recall to take images of. They can go back
Speaker 4: in time and say I don't want that image recorded.
Speaker 4: I don't want that record and so on and so forth.
Speaker 4: You can pause it, you can stop it because at
Speaker 4: the end of the day, Microsoft's built on trust and
Speaker 4: we want our consumers to trust us as well.
Speaker 2: A couple of other features, what's this co create? How
Speaker 2: is that drawing on AI? And what does it do?
Speaker 4: I get asked all the time the question around will
Speaker 4: why buy a surface? And I actually use co create
Speaker 4: as my example. I can draw a stick person and
Speaker 4: that's about it. But co create turns me into an artist.
Speaker 4: And by that I mean I can put in a
Speaker 4: little prompt, say a castle on a hill with a tree,
Speaker 4: and then I can just start drawing with my slim
Speaker 4: pen and then I can decide, well, how realistic do
Speaker 4: I want it to look or do I want it
Speaker 4: to look closer to how I'm inputting it. You can
Speaker 4: have that experience on co pilot through the cloud. But
Speaker 4: the real key difference here is the speed you get
Speaker 4: near zero latency when you do that, because nothing goes
Speaker 4: off your device has to be processed in the cloud
Speaker 4: and then comes back to the device. It is all
Speaker 4: managed on the device itself and it is unlocked by
Speaker 4: that NPU that on the new Qualcom chips can deliver
Speaker 4: forty five trillion operations per second.
Speaker 2: We also saw live translation. You know, we've seen a
Speaker 2: lot of this and various guys is typically it's usually
Speaker 2: in the cloud, so you might go to Microsoft Translator
Speaker 2: or a Google translator, whatever and does a reasonable Job's
Speaker 2: got for good these services, but that there's a bit
Speaker 2: of lag there. While it goes to the cloud, it
Speaker 2: thinks about it and it sends it back. What we
Speaker 2: saw today is live translation Spanish to English and back,
Speaker 2: all on the device. None of that dialogue goes anywhere else,
Speaker 2: stays encrypted on the device.
Speaker 4: It comes down to latency, which creates a better experience,
Speaker 4: so you're not waiting to catch up with what someone's saying.
Speaker 4: So I only unfortunately speak one language, and when when
Speaker 4: we saw today a colleague of my speaking Spanish and
Speaker 4: then another colleague speaking French, it was just incredible that
Speaker 4: they could just speak in a conversational tone at pace
Speaker 4: and immediately I saw it translated in English, so I
Speaker 4: wasn't missing part of the conversation, and I feel that
Speaker 4: that's really inclusive.
Speaker 2: It is a real fundamental shift, isn't it. We've heard
Speaker 2: so much in the last couple of years about large
Speaker 2: language models chat GPT made by open Ai, which is
Speaker 2: a big partner of Microsoft, and this whole narrative around
Speaker 2: the capacity required to train those large language models and
Speaker 2: service all of those people typing queries and prompts into
Speaker 2: chat GPT and stable diffusion and all the others. It's
Speaker 2: a big load. But fundamentally, once there are hundreds of
Speaker 2: millions of these types of devices out there, a lot
Speaker 2: of that load is going to be done on the
Speaker 2: device because all your software partners will create their software
Speaker 2: to work with that NPU on a copilot plus PC.
Speaker 2: So that's going to be a massive shift, isn't it.
Speaker 2: At the moment, it's very cloud centric. This is taking
Speaker 2: it ultimately right into the heart of the consumer's device,
Speaker 2: doing it there instead of doing it into cloud.
Speaker 4: And that's great. We've talked a little bit about latency today,
Speaker 4: but it's also very resource hungry. It's not as efficient
Speaker 4: as being able to do it on the device itself,
Speaker 4: so when you bring it over there, there's also a
Speaker 4: sustainability angle here, so it's not just an amazing customer
Speaker 4: experience and a unique experience, but it's also better for
Speaker 4: the environment. So yes, you're one hundred percent right. We've
Speaker 4: been on a journey here. We started with open AI
Speaker 4: and chat GPT, and then we started bringing through co
Speaker 4: Pilot all of that AI stuff into our applications, and
Speaker 4: then this is the next iteration.
Speaker 2: It's not as say you're paying a massive price premium
Speaker 2: for instance, the Copilot plus, the NPU and all that
Speaker 2: sort of thing. It's basically similarly priced to what the
Speaker 2: you know, these surface pro and surface laptops were in
Speaker 2: the last iteration, Peter.
Speaker 4: It's even better than that. In fact, our devices spect
Speaker 4: for spec twenty to twenty five percent cheaper with the
Speaker 4: launch of these Copilot plus pieces.
Speaker 2: And that's going to be reflected in the New Zealand
Speaker 2: pre reflected in New Zealand pricing as well.
Speaker 4: I have had many meetings with the biggest retail partners
Speaker 4: over there in New Zealand as well. They're just as
Speaker 4: excited as we are.
Speaker 2: Well, can't wait to get my hands on one to
Speaker 2: have a play as well, So Tim, we'll see where
Speaker 2: it goes. Thanks so much for being on the show.
Speaker 3: Thank you, Peter.
Speaker 2: So as Tim said, they're the surface range of co
Speaker 2: Pilot plus PC's debut here on August sixth, many other
Speaker 2: Copilot plus PCs are now heading the market from the
Speaker 2: likes of Aser, Dell, HP and Lenovo. So that's what
Speaker 2: you will pretty much be presented with now if you're
Speaker 2: buying a sort of a higher end new Windows PC,
Speaker 2: a device with a neural processing unit built into it
Speaker 2: that does the AI workloads on the device.
Speaker 1: And we will report back once we've spent a bit
Speaker 1: of time playing with these new devices trying out recall
Speaker 1: and other AI features.
Speaker 2: Moving on, Ben to your interview with Black pearls Nick Lassett. Now,
Speaker 2: Black Pearl is listed on the Interdex with a market
Speaker 2: capitalization of around thirty seven million as we record this,
Speaker 2: but because it's primarily focused on the US market, it
Speaker 2: doesn't have much of for a profile here. What does
Speaker 2: Black Pearl actually do well?
Speaker 1: Like you said, it's an nz X listed tech company
Speaker 1: and it mainly supplies software for marketing and lead generation
Speaker 1: and their flagship product is called Pearl Diver, which unearth's
Speaker 1: data about website visitors for sales and marketing, which has
Speaker 1: traditionally been done using cookies, which you'll probably be familiar
Speaker 1: with at this point. But Black Pearl claim to be
Speaker 1: prepared for the impending cookie apocalypse, which is when browsers
Speaker 1: will no longer support kind of standardized cross site collection
Speaker 1: of user data by default. It's been coming for some time.
Speaker 1: It's been delayed, but we've been promised cookies are on
Speaker 1: the way out now. From what I understand, Black Pearl
Speaker 1: use their own bespoke tracking software code which links with
Speaker 1: data that has shared among partners in a data cooperative.
Speaker 1: So if you filled out a form with Company A,
Speaker 1: they can link your data with Black Pearls tracker, and
Speaker 1: if that track is used by Company B and you
Speaker 1: visit Company b's website, then they will know that you've
Speaker 1: been there and maybe get a bit of information about you.
Speaker 1: I believe that's how it works. They also have some
Speaker 1: clever kind of AI algorithm stuff there to help with
Speaker 1: getting more of that information and confirming people who they
Speaker 1: say they are and all those kinds of things as well.
Speaker 2: Nick is definitely a go big or go home kind
Speaker 2: of guy, as you'll realize that you listen to the interview.
Speaker 2: So here it is Ben's interview with Black Pearl Groups
Speaker 2: Nick Lissett.
Speaker 1: Hi, Nick, welcome to the Business of Tech podcast. Thanks
Speaker 1: for joining us.
Speaker 3: Thank you very much for having me be.
Speaker 1: So you are the head of Black Pearl Group, a
Speaker 1: company that listed in late twenty twenty two on the
Speaker 1: z X and has since gone on to realize a
Speaker 1: bit of success. You want to give us a brief
Speaker 1: intro about yourself.
Speaker 3: Well, I'm definitely the ugly head. We've got much better
Speaker 3: looking aheads here. So unfortunately I was nominated as the face,
Speaker 3: the founder and CEO here at Blackbild Group. And just
Speaker 3: for those that don't know who we are or what
Speaker 3: we do, we're a data technology company and we specialise
Speaker 3: in building data, lead sales and marketing solutions, specifically for
Speaker 3: the US smaller medium sized business market.
Speaker 1: So you are obviously US focused. But you're based in
Speaker 1: New Zealand, you're listed on the zat X and being
Speaker 1: in business in New Zealand for a while now, you've
Speaker 1: noticed that there are some challenges to starting a business
Speaker 1: in New Zealand that you know is aiming to become
Speaker 1: a big global success or a unicorn, as like to
Speaker 1: call them.
Speaker 3: Yes, scale scales the problem right, and kiwis we do
Speaker 3: a lot of things amazingly well, but we don't understand
Speaker 3: scale typically. So you know, if you look at even
Speaker 3: the fact you mentioned before, we're focused on the US market.
Speaker 3: Why are we focused on the US market? Because I
Speaker 3: think there's maybe seven hundred thousand businesses in New Zealand
Speaker 3: and ninety something percent of them are micro businesses. In
Speaker 3: the US market we're focused in there is twenty five
Speaker 3: million SMI businesses and five point five million emy businesses
Speaker 3: and half half a million new businesses every year. That's scale,
Speaker 3: you know.
Speaker 1: To be able to dig into that US market. There
Speaker 1: are a lot of boundaries barriers, I should say, for
Speaker 1: New Zealand companies. So you know, like you say, a
Speaker 1: lot of the QWI companies are very small companies, just
Speaker 1: a few heads. So if you're planning to scale, the
Speaker 1: only real way is to raise capital, right, to go
Speaker 1: to a venture or to have something that's just so
Speaker 1: massively successful immediately that revenue starts pouring in, which is
Speaker 1: almost impossible.
Speaker 3: That's definitely the preferable way of I cracked that one
Speaker 3: I'll leave, you.
Speaker 1: Know, So what so what do we do, like how
Speaker 1: do we get New Zealand businesses to find this success?
Speaker 1: New Zealander is by nature small, BC is hard to
Speaker 1: come by. It's complicated. So it's a big one question.
Speaker 3: Yeah, you know, I mean, well, you know, we're talking
Speaker 3: about scale and it's interesting. Why just take a step
Speaker 3: back and talk about ourselves for a second, because of
Speaker 3: course that's what we like talking about. But like with this,
Speaker 3: like maybe twenty five million dollars in our core technology
Speaker 3: platform and everyone's like, wow, you know, there's a huge
Speaker 3: amount of money and wow, it's a lot of investment.
Speaker 3: Well to put that on context, that's fifteen million dollars
Speaker 3: US right over the lifetime of our company that we've
Speaker 3: put into it. In the US are typical in like
Speaker 3: Silicon Valley, which is a little distorted, but you know,
Speaker 3: Technology Hub, their seed rounds are three million US, their
Speaker 3: A rounds are ten million US, their B rounds are
Speaker 3: one hundred million US. That is the kind of capital
Speaker 3: that you're competing against. And if you are after a
Speaker 3: New Zealand company trying to take on a global market,
Speaker 3: you're after people that are ten x in or twenty
Speaker 3: eggs in the amount of capital that you have to compete.
Speaker 3: That capital does not exist in New Zealand. That thinking
Speaker 3: does not exist in New Zealand. So if we want
Speaker 3: to have companies that succeed, then we have to invest
Speaker 3: on them to get off shore and get a sugar
Speaker 3: money quickly. And if you do like what we've done
Speaker 3: in Black Pearl, bring that back into New Zealand, which
Speaker 3: obviously is hugely beneficial for the economy. So the secret
Speaker 3: what we did is we took existing all the small
Speaker 3: amounts of capital we raised up front and we just
Speaker 3: shot off to America and I didn't leave until I
Speaker 3: got value add investment capital from there. And it's tough,
Speaker 3: but we wouldn't be where we are today as a
Speaker 3: company if we didn't deploy those tactics.
Speaker 1: You said that we don't have the capital, that's reasonably
Speaker 1: easy to understand. That makes sense. It was only five
Speaker 1: and a half million of us after all. Then you
Speaker 1: also said we don't have the thinking. What do you
Speaker 1: mean by that?
Speaker 3: So I started my first company at twenty four because
Speaker 3: I was too ugly and stupid to actually get a
Speaker 3: proper job, so to do my own thing and so
Speaker 3: I'm no stranger to raise in capital, which typically you
Speaker 3: need to do to grow. And the traditional thinking here
Speaker 3: is simply I'll get a few New Zealand customers or
Speaker 3: then go to Australia. Well, again you're engineering at that point,
Speaker 3: your thinking is already wrong. You're engineering a product for
Speaker 3: a micro market again, so small seven hundred thousand businesses,
Speaker 3: and then you're burning time and capital. And then you're
Speaker 3: getting to Australia, which is, you know, still small comparative
Speaker 3: to the USC. You actually burn a lot of capital
Speaker 3: by burning time, by just not making an immediate decision
Speaker 3: to go, okay, well we've just got to go off
Speaker 3: after the bigger market. So that thinking every investor kind
Speaker 3: of they want to put it in the bear amount,
Speaker 3: which is normal, like they're trying to mistigate risk. You
Speaker 3: put in the beer amount and send a few KPIs
Speaker 3: which are achievable with your small amount of money. But
Speaker 3: those KPIs are typically out of alignment with what you
Speaker 3: need to actually create a unicorn, to create a true
Speaker 3: international company. They're just different things.
Speaker 1: So where is the thinking wrong here? Is it with
Speaker 1: the founders or is it with the investment? Are we
Speaker 1: do we have investors in New Zealand who are wanting
Speaker 1: to replicate what they do in the US but actually
Speaker 1: not realizing that there needs to be a significant difference
Speaker 1: if you're investing in New Zealand, and that difference is
Speaker 1: getting out first.
Speaker 3: Yeah, I think it's always going to I mean it's
Speaker 3: a bit of both, is your answer. So, and reflecting
Speaker 3: on that question as you ask me that, you know,
Speaker 3: one of the things I wish i'd done is actually
Speaker 3: stuck to my guns a little bit more in earlier
Speaker 3: on in Black Pearl and said no, this is what
Speaker 3: we're doing. And typically what you're doing is you're trying
Speaker 3: to get money and you make compromises. You go, you've
Speaker 3: got a plan as an entrepreneur and you're going to
Speaker 3: do all this, and you need X amount of capital
Speaker 3: to do it, and then you only get half that
Speaker 3: capital or a quarter of their capital. That typically the
Speaker 3: capital doesn't come in one time, it's dragged out over
Speaker 3: a period of time an early startup, and so you're
Speaker 3: always compromising on your business plan and then things don't
Speaker 3: work out. You think, ah, maybe it could work if
Speaker 3: this and this and this, then I can still hurt
Speaker 3: my targets. But you set yourself up to fail. So
Speaker 3: the entrepreneurs are blame through not communicating the market opportunity
Speaker 3: and properly to investors and sticking to your guns. And
Speaker 3: so that's on that side. And on the other side
Speaker 3: you often see investors and they're really trying to de
Speaker 3: risk it and they go half it and a getting
Speaker 3: caught in the middle of the road is nowhere to
Speaker 3: be unless you feel Collins he did well in the
Speaker 3: middle of the road. Everyone else you don't want to
Speaker 3: be there. And so I kind of would say from
Speaker 3: an investor point of view, when you're going in, then
Speaker 3: going going properly back to the company, back and back
Speaker 3: that person and really get them behind them and don't yeah,
Speaker 3: don't do things by half measures and try and de
Speaker 3: risk yourself because you're actually setting yourself up for failure
Speaker 3: by doing that.
Speaker 1: One of the things that I've heard quite a lot
Speaker 1: about the appeal of New Zealand businesses is that they
Speaker 1: are able to do more with less and that makes
Speaker 1: them a really attractive investment for vcs or other investors
Speaker 1: in New Zealand and internationally. Is what you're saying that
Speaker 1: that view of New Zealanders is kind of a limiting
Speaker 1: view or do you think that that is a useful
Speaker 1: thing that we should say, well, yes, we can do
Speaker 1: more with less, but we can also do more than
Speaker 1: more with more. Yeah, excuse that.
Speaker 3: The expector of Kiwi's on doing being really innovative and
Speaker 3: doing lots with little is one of out is one
Speaker 3: of our war our best attribute. And like so you
Speaker 3: see example of like I'm not into into yachting at all,
Speaker 3: but like I've always fascinated by so the Americas carpan
Speaker 3: on that. So twenty and seventeen we're up against you know,
Speaker 3: it was an oracle. You know, I had all about
Speaker 3: that money in behind them, like huge, unlike open checkbook
Speaker 3: on building a boat, and we did not. We had
Speaker 3: very little amount of money, but we innovated and there's
Speaker 3: that cycle technology that was put in and we ended
Speaker 3: up cleaning up and you go, wow, it doesn't matter
Speaker 3: if we don't have much money. We can win the
Speaker 3: day with our innovation. But if you're relying on that day,
Speaker 3: andy it up to compete. There's an unrealistic expectation of
Speaker 3: our superpower and so the advance. So what you've got
Speaker 3: to do is kind of balance the two. You want
Speaker 3: to keep that superpower. You want to run lean, you
Speaker 3: want to you know, I had that speed and ability
Speaker 3: of changing and innovating and thinking. But you still also
Speaker 3: have to have the capital to support some more traditional
Speaker 3: ways of winning as well. And so it's getting that
Speaker 3: right blend. And to come back to your question in
Speaker 3: New Zealand, this is a very attractive country for offshore investment,
Speaker 3: especially from America. In New Zealand actually done a really
Speaker 3: good job of making investment relatively simple for offshore vestors
Speaker 3: and a state or economy and you understand the legal system.
Speaker 3: So it's actually really attractive option given your other options,
Speaker 3: which are Europe you know, UK at the moment, which
Speaker 3: is not that stable, or Australia you know which why
Speaker 3: would you want to do that? Sorry, I.
Speaker 1: Mean that's all good, you know, it's all good and
Speaker 1: well to say that that the US has this massive opportunity.
Speaker 1: We know it has a massive opportunity, but one of
Speaker 1: the difficulties is tapping into that opportunity. And we've seen
Speaker 1: multiple companies in New Zealand try and butt their head
Speaker 1: up against the wall and even zero right. New Zealand's
Speaker 1: biggest success story arguably have struggled in that US market
Speaker 1: as well. So is it just a matter of capital,
Speaker 1: Is it just that you need more money to be
Speaker 1: able to get into the US or what is it?
Speaker 3: Well, firstly, they like from Zero's interview, of which I
Speaker 3: know expert and whatsoever, are obviously a huge fanboy of
Speaker 3: what they've done, being you know, the shining example of
Speaker 3: the SaaS company going off shore. But their initial product
Speaker 3: was not engineered for the US market, right, it was
Speaker 3: engineered for here and then maybe Australia and UK or
Speaker 3: whatever the batting order was, and then the US. Well
Speaker 3: you go look at accounting in the US. It's not
Speaker 3: one country, right, It's like it is one country, it's
Speaker 3: a republic. There's a whole lot of states with all
Speaker 3: their own laws and their own tax laws and everything.
Speaker 3: Right then, like if you not just have that ingrained
Speaker 3: in the cultural difference, well, of course it's going to
Speaker 3: be hard from our point of view. Yeah, it was
Speaker 3: really really hard breaking into America. You know the story.
Speaker 3: I give you the whole story because because it's my
Speaker 3: best story and it's too long, But essentially I knew
Speaker 3: we had to get offshore, like an American value add investor,
Speaker 3: there's American money, and there's American money that is going
Speaker 3: to help you win over there, and that's rare thing.
Speaker 3: So I took off over the States right I was
Speaker 3: literally I booked. I had to book a return trip
Speaker 3: because you know s Divisa only last three months. But
Speaker 3: I will promise you I had no intention of returning.
Speaker 3: I would have overstayed. I was not leaving until I
Speaker 3: got a value out investor. I got zero help from
Speaker 3: New Zealand Trade and Enterprise. They didn't want to introduce
Speaker 3: me to anyone. I had zero assistance from literally anyone.
Speaker 3: I think one person gave me one introduction to someone
Speaker 3: in San Francisco and I flew over and I took
Speaker 3: that meeting and they were no assistants, and then I
Speaker 3: asked for introductions. I was there. I was eating rubbish foods,
Speaker 3: staying in dodgy like I had a two year old son.
Speaker 3: I hadn't you know, my wife's at home. That is
Speaker 3: what you have to do to win. So my made mistake.
Speaker 3: No one is going to give you money if you
Speaker 3: don't put in the effort. And the reason I got
Speaker 3: backed from the guy it's down by business partner, it's
Speaker 3: in Crown after all this, after almost three months of
Speaker 3: just taking a beat down, homesick and not socializing anyone,
Speaker 3: I got introduced to a guy that turned out to
Speaker 3: be the founder and current chairman of Insight Enterprises, which
Speaker 3: is a Fortune five hundred company on the Nasdaq technology company.
Speaker 3: And this guy is like the business partner you dream
Speaker 3: of getting, and everyone goes, oh, you're lucky to get him. Man,
Speaker 3: that's what happens when preparation meets opportunity. I just put
Speaker 3: myself through hell and my family and you know what,
Speaker 3: and I hadn't got home, still wasn't coming home. So
Speaker 3: you got to put yourself in there to win.
Speaker 1: What year was that you were over.
Speaker 3: In the US five six years ago?
Speaker 1: So I guess like one thing that you might, you know,
Speaker 1: need to consider is that the the US tech scene
Speaker 1: is a very different place post post COVID, right, Like
Speaker 1: they're not just the tech scene, but San Francisco is
Speaker 1: a different place. Like there's still opportunity, but it's it's
Speaker 1: it can be more difficult to find those centers of networking,
Speaker 1: the hubs. It's less physical in person. This is what
Speaker 1: I've been hearing. So is that is that accurate? Is
Speaker 1: that making things more challenging now than it was then.
Speaker 3: I think it's the reverse, but like San Francisco, absolutely,
Speaker 3: it's not what it was. Yeah, And I didn't actually
Speaker 3: enjoy it very much when I was there, for all
Speaker 3: the hype I found, you know that when I got
Speaker 3: some meetings with vcs and stuff over there, I didn't
Speaker 3: like the way they thought about things at all. Like
Speaker 3: it didn't gel with me that my business partners from
Speaker 3: Arizona they're like, you know, that's a cowboys state, baby,
Speaker 3: They're like they're way more aligned with Kiwis and the
Speaker 3: kind of that pioneering spirit so different. You know, like
Speaker 3: there are a whole lot of Every state's got its
Speaker 3: own flavor and you got to find one that I
Speaker 3: think works for you a little bit. Yeah that I mean,
Speaker 3: I got some stats the other day I reckon that
Speaker 3: the technology sector is going to go from all trillion
Speaker 3: to twenty trillion valuation, and I want to say by
Speaker 3: twenty thirty. So, like you want to know about growth
Speaker 3: an opportunity over there right now? I don't think there's
Speaker 3: ever been more like now is the time to go.
Speaker 1: So how do you convince an investor in New Zealand?
Speaker 1: Then that that is the right thing. Say you've got
Speaker 1: a startup, you've got seed funding, and now you're saying like,
Speaker 1: I want to go big in the US. I want
Speaker 1: to spend this money that you've given me on spending
Speaker 1: my time in the US selling there rather than put
Speaker 1: on product.
Speaker 3: And he's going wherever you do, don't do it the
Speaker 3: way I did it. Well. The answer is every investor,
Speaker 3: if you actually put out a very like, well thought
Speaker 3: through kind of battle plan for how you're going to
Speaker 3: go around things, then you're giving your communicating. So communication,
Speaker 3: come back to communication. Every time there's been like with
Speaker 3: me an investor and like they haven't been on board
Speaker 3: with something, that's my fault for not communicating properly. And
Speaker 3: if you actually communicate accurately, then you know the chance
Speaker 3: of them being on board with you're a lot higher.
Speaker 3: But the one thing I'd say is like the revenue,
Speaker 3: like revenue really does make life a lot easier for you.
Speaker 3: And there lies the.
Speaker 1: Catch twenty two.
Speaker 3: Yeah, that's the catch twenty two is that you kind
Speaker 3: of everyone wants to see that revenue and so the
Speaker 3: cheapest revenue to getters from News Zealand. But that's the
Speaker 3: wrong revenue to get so again, you know, you've got
Speaker 3: to stick to your gums, put out your plan, show
Speaker 3: the size of the market. How are you going to
Speaker 3: do it? On by the way, if the answer is
Speaker 3: you don't know, then be clearer and understand that you're
Speaker 3: investing to learn over there and try and get the
Speaker 3: investor over the line. That way, transparency, good communication.
Speaker 1: What else you think is not being done right in
Speaker 1: New Zealand When we're looking at these tech companies that
Speaker 1: are maybe have solid product, have good founders, but are
Speaker 1: failing to scale, I guess in the way that they should.
Speaker 3: Yeah, tech seems pretty limited at the moment, like there's
Speaker 3: not a huge layers, just not really the flavor of
Speaker 3: the month, is it at the moment? Like you look
Speaker 3: at successful tech companies and everyone says zero and then
Speaker 3: you go, oh, then what.
Speaker 1: I mean, we've just got to We've just had gen
Speaker 1: Track has become.
Speaker 3: Doing super well. But you have to think, you know,
Speaker 3: like but the average New Zealand though they don't know
Speaker 3: gin Track you know, or Diligence or anyone why you know,
Speaker 3: just those names like who are they? You know? But
Speaker 3: again we're still very centered you know on land and property,
Speaker 3: and no matter what we've done with rule changes and
Speaker 3: mortgage changes, the average key with psychology is around owning
Speaker 3: as much land as possible. The trouble around that is
Speaker 3: then is that that there is is very low risk
Speaker 3: and typically safe return. So you know, like why would
Speaker 3: you not don't hate the player, hate the game. And
Speaker 3: the challenge for New Zealand is then we're not actually
Speaker 3: really adding value bringing in external money into the country,
Speaker 3: just passing money around ourselves and that doesn't help the
Speaker 3: country as a whole. So I don't know, I don't know.
Speaker 3: You know, it's funny asking me these questions. And it's
Speaker 3: so interesting because no matter what is happening in government
Speaker 3: or in the world or anything, I don't care. Like
Speaker 3: that is what it is. I just got to get
Speaker 3: on and regardless of what the conditions are in the market.
Speaker 3: It's like it's like sports, It's like, yeah, they're all black,
Speaker 3: so I'm going to go, oh, it's rainy today, and
Speaker 3: you know we're not going to do well, Like who cares,
Speaker 3: get out there and whatever it is, you got to
Speaker 3: do it. You know, me, long enough, I'd rather die
Speaker 3: than lose a black earl, because I'd never want to
Speaker 3: look at myself in the mirror and think, ah, you
Speaker 3: know what a for eyes. I'm lucky because there's no excuses.
Speaker 3: I don't care. I'm just there to win. And if
Speaker 3: you don't have that psychology, I don't know how you're
Speaker 3: going to win in this And you know.
Speaker 1: In business, Yeah, it's interesting so because you know, on
Speaker 1: one hand, you're saying that, like, it really is all
Speaker 1: about mindset. It's about founder mindset, entrepreneurial mindset, that and
Speaker 1: that drive and that is the most important thing. But
Speaker 1: then on the other hand you're saying, well, we also
Speaker 1: do have all these disincentives in New Zealand that work
Speaker 1: against it, you know, So how do we reconcile that,
Speaker 1: Like do we need fundamental policy shifts in order to
Speaker 1: create that mindset or do we just need to like
Speaker 1: do any cultural shift.
Speaker 3: So I would say this, my job has been a
Speaker 3: lot easier because of Zero. So if I look back
Speaker 3: at some of the challenges that zero must have had
Speaker 3: with getting people to even understand forward revenues like and
Speaker 3: your recurring revenue even now for me, some people are
Speaker 3: a bit like, oh, how does that work? You know?
Speaker 3: What about next month sales? Was like they're already banked. Baby,
Speaker 3: that's recurring, you know, but like they just were trying
Speaker 3: to ship a whole mindset. And then to a degree,
Speaker 3: you know, other technology companies like Black Pearl and the
Speaker 3: others there with recurring revenue SaaS models get to stand
Speaker 3: on you know, Rodgery's shoulders and the wider zero team,
Speaker 3: And the more success you get, the more people that
Speaker 3: port it and understand it, and then you get to
Speaker 3: tipping point, you become undeniable. It's not up to the
Speaker 3: government to make changes on things. I'm sure they could,
Speaker 3: and if you wait around for that, you'll go broke.
Speaker 3: You know, it's up to you as the entrepreneur to
Speaker 3: understand that whatever the conditions are or the conditions, and
Speaker 3: then over time, if there's more Zeros, more gen tracks,
Speaker 3: more Black Pearls out there winning, then it just creates
Speaker 3: momentum and then then you get over the tipping points
Speaker 3: and then people actually go, well, I could buy my
Speaker 3: third investment property, or I could put some money into
Speaker 3: some tech stock because they seem to have a higher return. Sure,
Speaker 3: more risk, but you know, it could be a game
Speaker 3: changer for us. So the more you win, the more
Speaker 3: people get behind you. The easiest way to change is
Speaker 3: by winning.
Speaker 1: So Nicholas that, as you can tell, the guy is
Speaker 1: a hustler in the way that he was speaking, He's
Speaker 1: got some big ideas and I think the key message
Speaker 1: that he repeated a few times and there was that
Speaker 1: you need to be hitting the biggest market or one
Speaker 1: of the biggest markets in the world hard and fast
Speaker 1: and early if you want to be if you want
Speaker 1: to be able to scale big. What's your thought on that, Deake.
Speaker 2: I totally agree with what he's saying. And in the
Speaker 2: current economic climate, I think a lot of New Zealand companies,
Speaker 2: early stage companies will be looking around going, oh my god,
Speaker 2: this is tough going here. Maybe we need to accelerate up,
Speaker 2: not try and find a proof of concepts sort of
Speaker 2: user here, who's going to champion us. Let's maybe knock
Speaker 2: on some doors overseas. And as next said, you know
Speaker 2: he didn't get much joy out of Nzte when he
Speaker 2: went on that mission himself to the US. He had
Speaker 2: to do it himself, do the hard yard, sleeping in
Speaker 2: cheap motels and all of that stuff. I love that
Speaker 2: sort of storytelling from founders, so good on him for
Speaker 2: doing it. The breakthrough really seemed to be coming across
Speaker 2: Tim Crown from Insight Enterprise is a very well established
Speaker 2: tech company. Tim is now the chair of Black Pearl
Speaker 2: Group and very successful entrepreneur and very well connected in
Speaker 2: Arizona and around the US. So I think that has been,
Speaker 2: as Nick pointed out, a real strength. And if you
Speaker 2: just look at the numbers, as Nick was saying, seven
Speaker 2: hundred thousand businesses in New Zealand, most of them smeeths,
Speaker 2: sme small medium sized enterprises, twenty five million in the US.
Speaker 2: So if you can set up there, establish a beachhead,
Speaker 2: develop a great product, your chance of getting hold with
Speaker 2: it is going to be that much greater.
Speaker 1: Yeah, And I thought it was fascinating when I said
Speaker 1: to him, well, you know what about Zero, for example,
Speaker 1: and he was like, well, Zero didn't start with it.
Speaker 1: They didn't start at the US. They built something that
Speaker 1: worked for New Zealand, Australia and even Europe to a
Speaker 1: certain extent, but they weren't. It's almost like he would
Speaker 1: have had to start in a state in the US,
Speaker 1: go really strong in there and then build momentum out
Speaker 1: from there. So which is what he, I guess, is
Speaker 1: trying to do with as doing with Black Pearl as well.
Speaker 1: And I think it's something that, like you said, it's
Speaker 1: going to have to be a real thinker for founders,
Speaker 1: especially of software at the moment. Where are they going
Speaker 1: to start? How long are they going to spend in
Speaker 1: the New Zealand market before they just go after those
Speaker 1: bigger markets.
Speaker 2: Yeah, it's interesting how Zero did it because you do
Speaker 2: have all of that complexity of different regulation and everything.
Speaker 2: In the US, it's a much more complex market to
Speaker 2: try and serve as a small company. What would have
Speaker 2: happened if Zero had put all its early capital and
Speaker 2: resources into California and built a bridgehead there and then
Speaker 2: spread to other states. Who knows, in hindsight, maybe in
Speaker 2: some way have been on the radar off into it
Speaker 2: the big competitor a lot earlier and would have been squashed,
Speaker 2: so they may not have been a Zero. So look,
Speaker 2: I don't know. It is our most successful software startup
Speaker 2: continues to be has a pretty successful global footprint. But
Speaker 2: I think Nick's sort of approach is ultimately the numbers
Speaker 2: bear it out. The right approach is get to the
Speaker 2: US as quickly as you can, particularly for these software
Speaker 2: as a service type plays where you are going to
Speaker 2: have a lot of businesses that are looking for a
Speaker 2: competitive edge. So if they can use Black Pearls tools
Speaker 2: to convert leads into actual business customers, you know that
Speaker 2: that is something that's going to happen more in the
Speaker 2: US than anywhere else.
Speaker 1: As much as I advocate for New Zealand and I
Speaker 1: think that it is a fantastic place, and I think
Speaker 1: that we have a lot to offer. At the end
Speaker 1: of the day, if you want to be a software business,
Speaker 1: you have to have scale. It's just so important. It's
Speaker 1: the thing you hear over and over again when you
Speaker 1: talk to software founders. It's the importance of scale. So yeah,
Speaker 1: there's nowhere else to scale quite like the US.
Speaker 2: Absolutely all right.
Speaker 1: Thank you so much to Nicholae black Pearl for coming
Speaker 1: on the show to talk about gaining a foothold in
Speaker 1: the US.
Speaker 2: And thanks also to Tim Muzak from Microsoft for inviting
Speaker 2: me to Sydney to check out the new range of
Speaker 2: Copilot Plus surface devices from Microsoft. Show notes in the
Speaker 2: Tech section at Businessdesk dot Co dot Nz with more
Speaker 2: info about Black Pearl Group and Copilot Plus PCs.
Speaker 1: You'll also find our reading list there. Featuring the tech
Speaker 1: stories that caught our attention this week, and the Business
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Speaker 2: Absolutely and get in touch with your feedback ideas, topic suggestions,
Speaker 2: and guest suggestions as well. Email Ben on Ben at
Speaker 2: business deesk, dot co, dot e zet. We'll find both
Speaker 2: of us on LinkedIn and occasionally.
Speaker 1: X very occasionally. For me, I'm afraid, but I do
Speaker 1: check innicapable. We'll be back next Thursday with another dose
Speaker 1: of the Business I'll tech Delanne.
Speaker 4: Have a great week.