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Speaker 1: And inside for you now into what this country could be.

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Speaker 1: The government talks a lot about growth. Of course, we

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Speaker 1: talk a lot about productivity. What we talk about though

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Speaker 1: and what has been real are two very different things.

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Speaker 1: As we were mentioning with Adrian or a couple of

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Speaker 1: moments ago. So what do we need for success? How

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Speaker 1: do we grow companies? Can we start and grow large

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Speaker 1: successful companies? Ryan Simpson was one of the founding members

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Speaker 1: and investors and trade Me and Zero. His new book

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Speaker 1: is out money. It's called How to Be Wrong, and

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Speaker 1: so presumably uniquely placed to give us a little bit

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Speaker 1: of advice this morning. Rowan currently is chair of what's

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Speaker 1: called the Hoku Group, which I will explain in the moment. Anyway,

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Speaker 1: run Simson with us. Ryan morning, Hey Mike, how are

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Speaker 1: you very well? Indeed? So Hoku finds ideas. How many

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Speaker 1: ideas are out there? And of those ideas that are

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Speaker 1: out there, how many are nuts and how many are real?

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Speaker 2: Well? Yeah, I mean there are there are lots that

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Speaker 2: are not investable, but there's more than enough for us

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Speaker 2: to invest in that I had great potential, and you

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Speaker 2: know I've written about four of those companies. There was

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Speaker 2: a point in time where I thought I was an

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Speaker 2: investor in most of the good companies, but that's certainly

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Speaker 2: not true. Now there's hundreds.

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Speaker 1: What's the gap between a good idea and making it work.

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Speaker 2: Well? It's ultimately that it comes down to people. For

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Speaker 2: a long time, we've talked about there being a shortage

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Speaker 2: of capital in New Zealand, and through that whole time,

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Speaker 2: great companies have been out there raising tens of millions

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Speaker 2: of dollars to grow. And you know, again the companies

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Speaker 2: that I've written about are great examples of that, but

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Speaker 2: there's many others. Hold Her as one that raised an

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Speaker 2: eighty five million dollar around the time last year. So

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Speaker 2: there's no shortage of capital. I think we need to

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Speaker 2: get over that. What happens though, with these companies as

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Speaker 2: soon as they raise that capital, they then have to

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Speaker 2: spend it, and they spend in it on people. And

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Speaker 2: that's what We're desperately short off, people who can work

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Speaker 2: on and grow these companies.

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Speaker 1: And does that, at this present point in time make

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Speaker 1: life even more difficult? My assessment of what's going on

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Speaker 1: in this country is, you know, is well written and

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Speaker 1: well understood, but the immigration story we don't seem to

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Speaker 1: be as cool as we once were. Is that fear

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Speaker 1: or not?

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Speaker 2: I don't know if that is fear. To be honest,

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Speaker 2: I think that you know, like New Zealand's reputation is

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Speaker 2: probably as good as has been amongst the engineers and

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Speaker 2: the folks that we actually need to come and work

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Speaker 2: and live in this company and make these companies great.

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Speaker 2: I think one of the things that happens when we

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Speaker 2: think about immigration is again we get distracted by capital.

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Speaker 2: We think we need to attract wealthy people to bring

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Speaker 2: their money here and invest here. And it's I don't know,

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Speaker 2: it's a little bit like imagine mirror second Division three

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Speaker 2: andthrugby team and we just need to hire the next

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Speaker 2: retired all Black help us win a championship. What we

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Speaker 2: really need are the people who who want to come

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Speaker 2: and live here and work here and do the hard

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Speaker 2: that do the hard yards on them helping these companies grow.

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Speaker 1: Okay, and saying what you just said to you against

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Speaker 1: what the government announced the other day, and that is

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Speaker 1: to attract wealthy foreigners to come here with their money.

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Speaker 2: I think it's fine. I know some of those folks,

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Speaker 2: and there's a few of them that really desperately do

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Speaker 2: want to help the Zealand companies grow And that's great,

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Speaker 2: but you know that's certainly not the silver bullets.

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Speaker 1: Are you dealing with in general terms? Once again, I'm

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Speaker 1: sort of looking at these things macro. So the country's

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Speaker 1: got a whole lot of problems. A lot of kids

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Speaker 1: don't turn up to school, those who do turn up

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Speaker 1: to school, don't pass exams, all that sort of stuff

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Speaker 1: we talk about regularly. Are you dealing with a microcosm

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Speaker 1: of people within a population who are always going to

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Speaker 1: be bright, always going to be achieved, is always going

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Speaker 1: to be go getters, and those are the ones you're

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Speaker 1: picking off? Is that what we're dealing with?

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Speaker 2: I mean, there's an irrationality to starting a business like

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Speaker 2: these companies that grow to become big. So you know,

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Speaker 2: we're all lucky actually that the crazy founders of these

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Speaker 2: companies are a little bit irrational, because otherwise they wouldn't start.

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Speaker 2: But it's a myth too that we just need those folks,

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Speaker 2: like every crazy Rodgery or Peter Beett needs to hire

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Speaker 2: teams and then hundreds of people to help them grow

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Speaker 2: those businesses. So yeah, ultimately we need to grow that

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Speaker 2: pool much wider, you know, and that's all of those

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Speaker 2: things you talk about, investments and education and all those

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Speaker 2: things feed into that.

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Speaker 1: Is the money out there at globally. Certainly it seems

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Speaker 1: to me that if you've got some idea, especially around

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Speaker 1: things like climate change, you can get money. Is that

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Speaker 1: fair or not?

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Speaker 2: The pool of capital for these companies is effectively infinite.

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Speaker 2: You know, there's now hundreds of millions of dollars of

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Speaker 2: InChI capital available for investment in New Zealand. There's billions

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Speaker 2: of dollars of inch capital in Australia. So you know,

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Speaker 2: like the constraint is certainly not around money for any

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Speaker 2: of these folks. So yeah, I think you know, there's

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Speaker 2: been a lot of evidence of international investors been more

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Speaker 2: than willing to invest in based companies.

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Speaker 1: What is driving that? Is that a passion project for

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Speaker 1: many people? Or is it I'm looking for good return?

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Speaker 2: These folks are called venture capitalists, like they're looking for

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Speaker 2: returns and you know, their job literally is to find

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Speaker 2: the these companies in the world and to invest in them.

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Speaker 2: And so the challenge for us in New Zealand is

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Speaker 2: to be good enough, frankfully, to attract that investment. Are

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Speaker 2: we well we are? You look at the You know, again,

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Speaker 2: the companies I've written about have proven that we can

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Speaker 2: grow these sorts of companies here, you know, Trade Me

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Speaker 2: with a great domestic success, But there are in the

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Speaker 2: end and timely in the others that I've worked on

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Speaker 2: an investment and have all been global companies. And so yeah,

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Speaker 2: there's there's no question we can do it here. We

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Speaker 2: just need to do it more in The question we

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Speaker 2: should really be asking is what's the constraints to that?

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Speaker 1: Yeah, I'll ask that question in a moment. But before

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Speaker 1: I forget Trade Me, what I I didn't understand about

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Speaker 1: trade me when you were in there in the start.

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Speaker 1: It eventually leaded lead to money that went up for

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Speaker 1: a whole bunch of other startups. So it's very existence

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Speaker 1: helped others. I don't know that many people would necessarily

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Speaker 1: understand that, would they?

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Speaker 2: No? I mean, you know we sold that. We sold

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Speaker 2: Trade Me in two thousand and six, so it's a

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Speaker 2: long time ago now. That company was sold for seven

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Speaker 2: hundred and fifty million dollars. That capital was all Australian money,

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Speaker 2: was a Fairfax, Australian media company that border and the

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Speaker 2: vast majority of that has been reinvested in the next

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Speaker 2: in the next wave of the company. The only reason

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Speaker 2: I was able to be an investor in zero was

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Speaker 2: because of that outcome. And each generation builds on there

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Speaker 2: on the previous one.

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Speaker 1: All right, So take us through the specifics. You saw

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Speaker 1: what in trade me right at the very start, or

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Speaker 1: you didn't quite know.

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Speaker 2: I was actually hired originally as the engineer to help

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Speaker 2: Sam and Jess's sister, who had just hired to build

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Speaker 2: build the site in the beginning, So you know my

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Speaker 2: route into that was was as a software engineer. Really,

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Speaker 2: and yeah, I mean we were we were crazy, like

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Speaker 2: I was just describing. We thought we could create something

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Speaker 2: from enough and gave it a good crack.

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Speaker 1: And you did, Ryan. You talk about barries before I

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Speaker 1: get to zero. You talked about barriers and what are

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Speaker 1: the barriers? What do we need to do?

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Speaker 2: Well, as I said to you earlier, as people really

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Speaker 2: ultimately all the careful that's raised by these company spinion's salaries.

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Speaker 2: So you know, that's where we're desperately short. We're an

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Speaker 2: underpopulated large set of islands.

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Speaker 1: Yes, okay, and what do you do to change that?

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Speaker 2: Well, I mean there's no single answer to that. There's

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Speaker 2: certainly no silver bullet answer, but it's all the little

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Speaker 2: things that add up. So, you know, we need to

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Speaker 2: train more people. If you look at the number of

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Speaker 2: science graduates and engineers, especially in twenty twenty three, I

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Speaker 2: think there are only five hundred and ninety engineers graduated

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Speaker 2: in New Zealand. So you know, we're woefully short of

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Speaker 2: of the people we need in terms of the ones

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Speaker 2: we train. And as we were talking about immigration as

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Speaker 2: part of the solution.

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Speaker 1: Too, yeah, exactly. And so the engineer is just this

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Speaker 1: very weekend or the beginning of the week said there

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Speaker 1: are engineers leaving the country left, right and center because

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Speaker 1: there's no pipeline. I'm assuming somebody somewhere in Wellington who

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Speaker 1: runs the place are aware of all of this or not.

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Speaker 2: That's what they are. I mean, we've we've spent hundreds

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Speaker 2: and hundreds of millions of dollars over the years on

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Speaker 2: this on this problem, Mike. I mean, I heard the

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Speaker 2: text that you read out before, so of so you know,

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Speaker 2: we need to invest in innovative businesses and move away

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Speaker 2: from dairy and tourism. Like this is not a new idea.

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Speaker 2: We've been talking about that for decades and decades, and yeah, unfortunately,

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Speaker 2: all of that money that's been spent is a little

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Speaker 2: bit like pouring petrol onto the roof of a car

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Speaker 2: and hoping some of it ends up in the tank.

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Speaker 2: There haven't really been much accountability or systems and feed

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Speaker 2: that groups around that in terms of working out if

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Speaker 2: it's actually working.

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Speaker 1: So you come out of try me to go to zero?

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Speaker 1: Did Zero seem obvious or not?

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Speaker 2: I mean, it was an exciting potential, but it was

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Speaker 2: far from obvious. I mean I start, I started the

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Speaker 2: book actually with the four stories near this moments for

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Speaker 2: these companies, Like it's very easy to retrospectively look back

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Speaker 2: when a company's a big success like Zero's become and

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Speaker 2: imagine that it was always on that path. But that's

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Speaker 2: not the experience of working in these companies day to day.

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Speaker 2: Often the exact opposite. So yeah, I mean, my time

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Speaker 2: at zero coincided with the IPO. We floated the company

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Speaker 2: at a dollar per year. Some people maybe old enough

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Speaker 2: to remember that, but for a long time after that,

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Speaker 2: the year price was lower than the dollar. You know,

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Speaker 2: if you did look at this company, now, that's worth

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Speaker 2: I think it's getting close to thirty billion Australian dollars now,

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Speaker 2: but there was a long period of time where that

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Speaker 2: family wasn't obvious.

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Speaker 1: You talk also about how much startup advice is dangerously wrong.

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Speaker 1: Why is it wrong?

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Speaker 2: Well, we wrapped a lot of mythology around startups, and

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Speaker 2: I think part of it's what we were just talking about,

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Speaker 2: Like a lot of it is retrospective. But what happens

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Speaker 2: often is the messy bits get kind of ebrushed out

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Speaker 2: of the stories. And for me, those are the most

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Speaker 2: interesting moments. Like, you know, the two moments you ten

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Speaker 2: to hear about startups and the media is when they

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Speaker 2: are when they started or when they raise capital, and

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Speaker 2: then when they're sold, And those are kind of the

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Speaker 2: book ends. But all of the interesting stuff happens in

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Speaker 2: the middle, and we're not so good at telling those

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Speaker 2: stories frankly. And yeah, as part of the motivation and

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Speaker 2: writing this book is to to kind of peel back

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Speaker 2: those layers a little bit and describe what it's actually like.

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Speaker 2: Good and yeah, hopefully people who are working on these

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Speaker 2: buiness is all thinking about it and interested in it

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Speaker 2: can get a bit of sense of that.

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Speaker 1: When Tim Brown is mentioned in the book, he speaks

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Speaker 1: very well of you, but I follow him with a

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Speaker 1: great deal of interest. So he's an entrepreneurial New Zealander.

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Speaker 1: All Birds does not work, It has not worked. It

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Speaker 1: loses money. Will it? Do you think work or not?

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Speaker 2: I mean, I'm not an investor in All Birds. I

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Speaker 2: haven't followed the economic prospects of that company especially well.

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Speaker 2: But you know, it is an example of a company

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Speaker 2: that went through a through a big hype cycle. Benefited

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Speaker 2: a lot from that on the upside, and I guess

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Speaker 2: I've been hurt from it, hurt by it on the downside.

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Speaker 2: But you know of tims of smart guy is a

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Speaker 2: very patriotic New Zealander. I have every confidence in him

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Speaker 2: and how he thinks about the future. So what's the space.

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Speaker 1: It's interesting, isn't it, because it's that old thing about

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Speaker 1: To be a truly successful entrepreneur, you need to have

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Speaker 1: failed a bunch of times. Is that true?

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Speaker 2: Well, I think we do over glamorize failure a little bit.

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Speaker 2: I've also worked on an invest than startups that have sailed,

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Speaker 2: and I'll tell you it's really painful. I wouldn't I

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Speaker 2: wouldn't encourage anybody or recommend that approach. I think a

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Speaker 2: much smarter mindset. The one I write about is like

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Speaker 2: lots of small little failures constantly every day. Like if

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Speaker 2: you go in with the assumption that you're wrong and

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Speaker 2: then and be constantly on the lookout for that, and

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Speaker 2: you're much more likely to spot those areas and adjust

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Speaker 2: for them and fix them before they hurt you. Yeah,

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Speaker 2: And that's really a much smarter way to think about it. Yeah.

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Speaker 2: I mean the second part, which you are much more dangerous,

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Speaker 2: is to lie. Like we do this a lot, especially

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Speaker 2: unfortunately in the ecosystem where government invests. It's kind of

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Speaker 2: uncomfortable to admit that you're wrong, and so it's easier

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Speaker 2: to pretend that it's working even though you know that

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Speaker 2: it's not.

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Speaker 1: Do you have any answers around productivity just in general,

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Speaker 1: this broad based conversation that we're no good at productivity

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Speaker 1: in this country if you put it down on a

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Speaker 1: piece of paper and explain the equation, but for whatever reason,

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Speaker 1: we just don't.

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Speaker 2: Do it well. I Mean, I'm pretty simple, so I

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Speaker 2: think about it just in terms of simple mass. When

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Speaker 2: we sold trade Me in two thousand and six, there

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Speaker 2: were fifty three of us working on that company. It

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Speaker 2: was about six hundred thousand dollars of revenue per employee.

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Speaker 2: So that's pretty remarkable in a New Zealand context. It's

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Speaker 2: not really remarkable in a global tech context. You know.

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Speaker 2: Zero I think it's over two hundred thousand dollars per employee,

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Speaker 2: and they have a lot more employees than we have.

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Speaker 2: You know, they'll get probably closer to two undred and

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Speaker 2: fifty thousand. We may announce their next results. So you know,

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Speaker 2: we've proven we can build these sorts of companies in

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Speaker 2: New Zealand. It's not a question of whether or not

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Speaker 2: it's possible. It's just a question of scale. How do

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Speaker 2: we do it and how do we do more of it?

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Speaker 1: Fantastic Ryan, good to meet and talk with. You appreciate

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Speaker 1: it very much. Good luck with the book, and I

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Speaker 1: hope it's out there and people read the stories and

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Speaker 1: learn something from them. How to Be Wrong is the book.

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Speaker 1: Rowan Simpson is the author. For more from the Mic

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Speaker 1: Asking Breakfast, listen live to news talks it'd be from

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Speaker 1: six am weekdays, or follow the podcast on iHeartRadio.