San Francisco and Sydney… twins separated by time: Startup stories from San Fran, part eight

Security Colony was one of six cybersecurity companies selected by Austrade & AustCyber to take part in the Federal Government’s Landing Pad program in San Francisco. In this exclusive series for Dynamic Business, Nick Ellsmore, co-founder of Security Colony shares his journey as he builds his second business (the first sold to BAE Systems) and introduces an Australian-built cybersecurity solution into the global market against the backdrop of the Californian startup and investment scene.

Diary Entry Eight

In 2016, a Sydney mum gave birth to twins 31 days apart in what is apparently a very rare medical scenario known as a “delayed interval delivery”.  For some strange reason, that fact stuck with me, and came to mind when I was considering the many similarities between San Francisco and Sydney.  Driving through wine country towards Sonoma, I drove past a strip of shops.

Starbucks.

Anytime Fitness.

Subway.

It could be any strip mall, anywhere in the world.  This convergence on a big bland future isn’t exciting anyone I know of.

But then for the similarities, there are just as many differences.  Shark Tank, as a reality TV show, is in terms of “reality” probably wedged somewhere between “I’m a Celebrity Get Me Out of Here” and “One Born Every Minute”.  It’s clearly not the real world, but at the same time it’s not entirely contrived.

Those who consume the Australian variant of Shark Tank would no doubt be familiar with almost every negotiation that seems to occur.  The entrepreneur asks for $100K for 10%, and ends up getting offered $100K for 50%.  In many ways, our Shark Tank is a much better reflection of the show’s title than the US version.  In our Shark Tank, the hapless minnows swim into a tank full of sharks who are focused on getting fed with the least possible risk.  The US variant is starkly different.  Certainly there are situations where the negotiation is just as aggressive, but there are also a multitude of situations where the sharks will over-deliver to try to win the deal.  The entrepreneur asks for $100K for 10%, and ends up taking $100K for 5% and a holiday in the Bahamas.  The reason is simple – the US sharks aren’t looking at the downside, they’re looking at the upside.  They don’t want a business that muddles along; and for the right business, getting in at a valuation of $1 million, or $2 million, is a meaningless difference if it goes on to a hundred million dollar or billion dollar valuation.

I’ve returned to Australia now, and coming back has been more of a culture shock than I’d anticipated.  Much of it is comfortable and enjoyable – like the fact there are some six hundred plausible coffee shops within a couple of blocks of our office, and they don’t take 15 minutes to make a latte – but other parts are perplexing and frustrating.  George St is busted, clearly.  Getting the train in the morning is uncomfortable at best, and impossible at worst with packed trains opening their doors just so the sardines already inside can look at you standing on the platform with “please don’t try to squeeze in here” eyes.  In San Francisco I regularly took the BART (a train system reasonably similar to ours), the MUNI (a tram system), the CalTrain (inter-city trains down the Silicon Valley) and the MUNI buses, pretty regularly.  The MUNI buses were truly horrific and basically urinals on wheels, but everything else – in my limited 3-month-long experience – was efficient, frequent, uncrowded, safe and timely.

Even driving in San Francisco was a whole lot more pleasant than Sydney.  Drivers are polite and understanding, and despite huge swathes of the city having no traffic lights and only “all way stop” intersections, the system works.  (An “all way stop” intersection genuinely has a scenario where cars from all four directions arrive at the same time, and in such a scenario there are no rules other for someone to go first and everyone to play nice).

Having been hit in the face with the plight of the homeless of San Francisco over my time there (yes, here I go again… I know some of my SF colleagues find my constant ranting about homelessness a bit tedious… but stick with me), I have also found it interesting to be back in Sydney and seeing more of it here than I remember from before.  Is there really more, or am I just more aware of it?  Did it perhaps just take seeing the extreme of San Francisco, to recognise that we could easily be heading down the same path if we don’t do more about it?  I really hope not.

With my family here, I would rather be here than there.  But equally it would be disingenuous to suggest that Sydney doesn’t have many of the same problems, and many different problems of its own.  They are both unquestionably beautiful cities, with a cost of living inaccessible to many essential workers, an increasing homelessness problem, and a lot of people who want something different to what we’re currently getting, but seem unable to get it through normal election cycles and State politics.

The AusTrade Landing Pad experience has definitely changed and accelerated Security Colony as a product.  We are now better at explaining what it is and why it exists, and are more able to communicate the value of Security Colony to people overseas who don’t have the benefit of knowing Hivint to contextualise the system.  It may perhaps be a simplistic analogy, but it’s much easier to sell an Armani suit if the person buying it knows who Armani is.  Without that knowledge, the sales strategy has to be fundamentally different – unless you’re willing to go through the long and painful road of trying to educate the market.  We don’t have the time, or the budget, to go down that path, so needed to find a way to get the message across.

In the end, it was painfully simple: product demos.  What we have is great; we just need people to see it.  As much as the random person on the Internet finding our site and punching in a credit card is a thrill – and always will be – the reality is that most people want to have some level of engagement or relationship before dropping a few thousand dollars on cyber security resources.  We have that process now, and it led almost immediately to a doubling of our monthly revenue and signup numbers.

The critical question, then, is whether we – or more accurately, whether I – could have figured that out without the three month stint in the US.  I probably could have, but I also probably wouldn’t have.  It’s the same reason people have their off-site strategy meetings, off-site.  The sheer fact of being somewhere else, without the ability to fall back on comfortable routine, forces a more open mind and creates situations from which to learn.  The team at AusTrade, the team at AustCyber, and my new friends from Cog, SIEMonster, VideoMyJob, CaveWire, Randtronics, Verrency, AgDNA and BankVault Online, all made it a great experience, and I would genuinely recommend it for anyone who is looking to accelerate their business overseas, or even just to get some more tools from overseas to deploy into the domestic market here.

Now where’s my Vegemite…

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