Transcript - 'This Week in Startups Australia S05E02 - Paul Shetler,' This Week in Start-Ups Australia (February 2017)
Claire Connelly: Hello, listeners, my name is Claire Connelly, and welcome to This Week in Start-Ups Australia. It’s a new year, and I am your new co-host. Mark Pesce very generously invited me to join him in the studio. So we’ll be with you here for the next twelve months, to try to help make you sense of this wild, wild world that is start-ups in Australia. We’re starting the year off with a bang, interviewing Paul Shetler, former of the Digital Transformation Office, or what we now call the DTA. Paul and I discuss the role of government in digital transformation and takes us through a few of the lessons we almost learn about sustaining our own ‘Ideas Boom’.
Claire Connelly: Today on the show we have Paul Shetler, formerly of the DTO, the Digital Transformation Office. We are so happy to have him on the couch this afternoon. Thank you for joining us.
Paul Shetler: Thanks, Claire. It’s great to be here.
Claire Connelly: So we’re going to have a little bit of a state of the union about the state of start-ups and digital transformation in Australia. It’s been about - give or take - two years-ish since we first started to hear things like ‘Innovation’ and ‘Ideas Boom’. You know, the last, let’s say 18 months or so, you know, there’s been a lot of different start-ups calling for government attention and for press coverage, but there’s this idea that maybe the availability of capital isn’t quite what it was maybe even six months ago. I’d love to get your perspective on this.
Paul Shetler: I think it’s an interesting thing. So, I mean, I definitely - you’re hearing a little bit less, I think in terms of buzz, a little bit. I don’t think that’s an unhealthy thing. Actually, I think that’s quite a good thing in many ways, because that means that there’s less froth, it means it’s a bit more real. I think in terms of whether - you know, looking at government and what is the government going to do, I wouldn’t be so concerned about that, actually. To me, that’s not the most important thing, actually. I think the most important thing is, culturally, you know, do we have people who actually have a vision, who want to then go to market for that, who really see an opportunity and say, ‘Wow, this is a great opportunity, I want to take this forward,’ right? ‘I want to go, and I want to win, and we’re winning and taking our deals forward, and doing so is a good thing.’ I think that’s massively important. And you don’t need government for that. Actually, I just think government isn’t required for that. Government can help, it can get in the way. But at the end of the day, really, it’s not going to make the difference.
Claire Connelly: Why is it do you think over the last few years, that there seems to have been this idea that maybe the start-up industry needed more government attention than your standard business or company? Why do - well, first of all, do start-ups need or deserve special treatment? If they have been getting it, is that sort of creating a bit of a cocoon for them that’s been protecting them from market forces? And do we need to kind of get over this over-reliance on legislation and regulation to make a start-up into a proper business?
Paul Shetler: Yeah, I think that’s a really good question. I mean it’s something which I’ve thought about quite a bit since I’ve been here, because I’ve noticed an awful lot of discussion about how the government needs to foster the growth of the start-up sector and so on and so forth. And, you know, it’s undeniably the case that if you look at the United States you can sort of see really the huge amount of technology spending by government, in military and defence, which, of course, led to lots of companies starting up and so on and so forth. So there was demand, there was a customer, you know? And there are people who are going through all that machinery, who have skills and have ideas, and think, ‘Well, I can do something else with it as well’. So you have this sort of way of creating this whole ecosystem off the back of that. But to some extent, at least what struck me about Australia was, the idea that it would be largely the creation of a government policy. And I don’t, again, I don’t really think that’s the case. I think if I look back at London, if I look back at the United States, you know, government policy can make things easier, it definitely can make things easier. But it doesn’t actually create anything by itself. You know, it’s actually the people who have the ideas and the drive to take it to market and who are willing to take the risk, and who actually have a high appetite for risk, that are the ones who are going to do that do that. And even if the government doesn’t make it easy, if they still have that appetite for that, they can still do it, and they will do it. I don’t think the government thing is quite as important as I’ve heard quite frequently here. I just don’t think so.
Claire Connelly: How do the three markets compare? You’ve obviously - you’ve got a lot to compare to. You’ve worked in the US, you’ve worked in the UK, and now in Australia. Is there something that’s more distinct about the Australian market, or lessons that can be taken from other markets that maybe aren’t quite as obvious here?
Paul Shetler: Well, if you look at - I think what’s interesting about the United Kingdom was - I used to live in Shoreditch. I moved there in 2006, before the GFC, so that was still when it was relatively crusty, and most of the people I knew there were musicians and DJs and people like that. What was really fascinating was sort of the boom of the start-up sector there was how you had a collision of different cultures. You know, because it was right at the very edge of the city of London. In fact, when I first moved to London 2002, whenever I went to Silicon Roundabout, as it’s now called, it was to meet with small risk-management companies, who were doing stuff for the City, right? These relatively small companies who were doing stuff for the financial sector. But then you also had like a huge amount of musicians who were working in electronic music, you had a lot of people who were working on interesting stuff with data, you had people who were doing, you know, graphics, in that area. You sort of had a whole confluence of different skills and cultures, all appearing in a really tight space, at a time of economic crisis. And people are talking to each other, they’re going to the same pubs, they’re going to the same bars, they’re going to the same restaurants. They’re hearing each other’s conversations. And ideas are popping up. You know, it’s not an Ideas Boom. I mean, that’s how it actually happens. It’s not created by policy. It’s created by material circumstances. And material circumstance there was you had an awful lot of creative, intelligent, and ambitious people who had either been displaced, or who were seeing new opportunities in a very tight space. And they were seeing each other all the time. And a whole bunch of stuff happened as a result of that. I think that’s a really important thing, whenever you talk about the development of the start-up sector. The same thing really happened in Silicon Valley, right? It was a very similar kind of thing. I think in Australia what struck me a little bit was just that it’s a bit more dispersed. You just don’t have the same concentration. Shoreditch is really small, you know? San Jose is not big. Here, it’s a bit more spread out, so it’s hard to get that same level of intensity, which is one of the reasons why things like, you know, a Fishburners, a Stone & Chalk, and so on and so forth, are so important, because they create that concentration.
Claire Connelly: Speaking of geography, you know, there are about, you know, let’s say between seven and eight million Australians that do not live in a capital city, and who either are unemployed or underemployed, or just there’s another million who just aren’t counted towards unemployment statistics at all, simply because they either haven’t started a job in the last 4 weeks, or they cannot begin one within the next week, and so they neither appear within unemployment or underemployment statistics. How important - about a year ago, maybe two, you know, Malcolm Turnbull was discuss the benefits of having a hub, say in Sydney or Melbourne - versus trying to create some sort of ecosystem that actually takes advantage of geography? Now that never really came to fruition, and as you say, it doesn’t have to be through government. But in what way can the start-up sector actually address Australian unemployment, and also economic insecurity?
Paul Shetler: That’s a really tough question. You see the same thing in the United States, I mean that was one of the big issues in the Presidential campaign, was that although the official unemployment numbers were ‘X’, numbers of people who had given up looking for work were so much higher, and they just weren’t being counted. So it gave you a very misleading, you know, conception about prosperity and the distribution of wealth in the country. Again, what I’ve seen is that geographical concentration tends to work. It’s just sort of the dynamic for how you get ideas out there, and multiple different points of view on something, frankly, you know? Even in DTO, we also used to talk about building multi-functional teams, for the simple reason that everybody brings a different perspective, you have a researcher, you have a designer, you have a dev, a WebOps engineer, a product manager, a delivery manager, they’re going to look at the exact same problem from a number of different points of view. And it’s the same thing sort of, it’s the same thing, really in the same ecosystem. I think it’s a real problem, a real problem. Australia’s got a relatively low population, it’s got a very widely dispersed and relatively shallow digital talent pool. And I think a lot of the time when we talk about start-ups - I just - I tend to think of digital when we talk about start-ups, right? That’s not really strictly speaking correct, because any company that’s starting up is a start-up, but when we think about what’s really important for the future of Australia to be able to compete on the world stage, it’s going to be those digital industries, right? Those are going to be the ones who will take us forward. I think one of the biggest problems we have is a lack of skills. It’s a lack of digital skills. You know, we don’t have a lot of digital product managers in Australia. It’s not - it’s not a widely-known profession. You know, in London you would find quite a few, and it made my life a lot easier, when I was working in government, they were almost on tap. And there were so many really good ones, you know, lots of conferences, a strong community. It was very difficult when I first came here to find people with those skill sets. I think - I think that’s the thing to really focus on, is building up digital skills.
Claire Connelly: That was actually going to be my next question for you. You know, I was talking to a development expert, who kind of - who has toured different factories across rural and regional Australia. And he related this story of this guy who was working in a factory that made springs for trains and mattresses and other stuff where springs are needed. And he said, you know, ‘Do you know how difficult it is to train a guy to look at a dial and write down that number on a piece of paper? How are we supposed to know if the batches are working correctly, how are we supposed to know if the machines are overheating, how are we supposed to know if we’re meeting our production targets, if we cannot have a staff that have skills that are transferable and that are properly trained, right?’ Now over the last couple of years we’ve had these big discussions with the likes of Atlassian, and start-ups, although I would very much question whether you would consider Atlassian a start-up at this stage. But they’ve been pushing very hard just to have more migration into Australia simply because they cannot get the skills and the pool of skills that they need to recruit locally. I guess what I’m saying is, we have 8 million people who want to work and who have the ability to work if only someone would actually give them the time of day to get training. What do start-ups, and what do industry need to do, to be able to source local talent before we start looking abroad?
Paul Shetler: I fully agree. I think that’s a huge issue, and it’ll wind up becoming a political issue if it’s not actually addressed. You can’t try to solve your capacity and your capability issues by ignoring your native population, basically - again, unless you want to wind up having Brexits and Trumps and everything else all over the place, you have to address that. I mean, that was one of the root causes of what you’re seeing in world politics now now. That is one area where some of the non-profit sector as well as government can and probably should be involved in helping to develop those skills, right? You have organisations like Code for Australia and others who are trying to sort of train people up, and I do think frankly that that’s one area where government could probably do a huge amount of good training up people like that as well. I think it’s difficult to say the start-up sector’s going to be able to do that, because of the competitive pressures when you’re a start-up. When you’re a start-up, you know, the most important thing for you is to get the product out of the door and to sell it, and to keep on evolving it and everything else, so it’s difficult for the start-up itself to do that. It might be easier for an accelerator or a hub or something like that to do that. So I think we need to sort of think about who would do these things, but I do think it’s quite important to do that.
Claire Connelly: We’re going to take a quick break, and we’ll be right back.
Claire Connelly: And we’re back. We’ve been to the bathroom, we’ve had a cold beer, it’s about 40 degrees in Sydney today, so just bear with us listeners. We’re going to return to our chat with Paul Shetler in a moment. Paul, is it possible to have a digital transformation in the private sector without having a digital transformation in the government sector?
Paul Shetler: Yes. I think it’s quite possible. I think that if you look at - if you look at - it’s already happening, right? It’s already happening. It’s happening in lots of countries, and all over the place. I think it’s a lot better if the government does it itself, because in many ways - this might sound paradoxical, but - in many ways the government’s best-placed to do that, because the government can actually take some of the ideas about user-centred design and agility, and so on and so forth, and actually really do them, for real. If you look at the work we did in the UK, we were really proud of the fact - we got some brilliant talent - because a lot of times in the private sector - not always - but sometimes in the private sector, people would say, ‘We really care about our customers. Customers first, you know. We’re going to focus on user needs, and this and that.’ Actually, not necessarily. Not necessarily, right? Sometimes there’s a bit of ‘Dark UX’ going on there, to get the customer to do something that actually might not even necessarily be quite what they want to do, what they should be doing. We were able to get people who were brilliant designers, brilliant coders, brilliant product managers, who really did want to develop things for the user, that were the best things for the user, that wanted to develop things in a lean way and in an agile way, not sort of this broken half-agile, half-waterfall-ish way where somebody does some, you know, somebody does some designs and then hands them off to some coders and their job is done. You know, we melded them all together in a team. And that was unusual even for the UK, and it was government that did that. What we then saw was a lot of people working in government took the same methodologies and the same ways we worked there, and brought them back into the private sector. So I think it’s actually really a really helpful thing to have government doing best practice, showing how to really do digital, how to really do it at pace, how to do it inexpensively, and how to really meet user needs. And then those people who go through government can then go back into the private sector. And I think actually that would be really helpful in Australia. I mentioned earlier sort of the talent pool, and the methodologies that are used. It would be really helpful to sort of kick-start things.
Claire Connelly: I mean, what we’re seeing in the Australian public sector maybe doesn’t - I think it would be generous to say it doesn’t necessarily reflect that agility? While we’ve seen a lot of buzzwords - and you’ve talked briefly about in the private sector maybe there’s UX that encourages people to do things that are not necessarily in their best interests, I mean the the first things that comes to mind for me is maybe paying debt I don’t owe, if I were somebody that used the Centrelink system. Without getting into specifics, what lessons do we need to skill up in in the public sector to be able to take those skills and put them in the private sector?
Paul Shetler: Well look, I think, you know, you need to also look at some of the other stuff that’s happened. This may sound a horrible thing, but it’s true, right? So you look at DTO, now DTA - did some great work. We did six exemplars, six digital exemplars, those were all done in twenty weeks. They’re beautifully designed. They were very inexpensive. You know, we did a digital marketplace, which is expanding, you know, which has more and more people coming onto it, and it makes it very easy for start-ups to do business with government. And I was just at a meeting the other day where a number of people from the private sector was talking about how slow it is for them to go through the tendering process, how difficult it is to get things done, how hard it is for them to work with start-ups. And I said, well, you know, why don’t you consider using something like the DTA Marketplace? Because now somebody in government can get somebody very very quickly. And we do work with start-ups. You know, we are priming that pump. So there’s great examples, actually, of stuff that has happened in government. So it’s not all, it’s not all one way, you know? And I think the way to sort of keep that going is to, you know, obviously keep DTA going, and have teams like that sort of spreading throughout all of government. Now, in the UK, initially there was GDS, and they were up and running in the Cabinet Office, and as part of cleaning up of the whole digital estate, we had hundreds and hundreds and hundreds of websites, almost as many as Australia. Australia has, I think, almost 2,200 at the federal level now. So it’s insane, right? I mean, how do you find what you need to do, when you need to do it? You can’t get it from government. And to do that kind of transformation - to do that clean-up, there were digital teams formed in every department. Those teams first did the migration, and then they said, ‘Wow, we have all these services we’re offering to the public. Let’s fix them. And let’s fix them using the same methodologies, let’s fix them using the same approach.’ So all across the British Government, you started seeing product managers - you never saw those in government before - you started seeing user researchers - you never saw user researchers in government before - you never saw people actually doing that kind of thing, and it was done at scale. And it’s still being done at scale. It hasn’t stopped, it’s just picked up pace. It keeps getting on bigger and bigger. And those people, of course, after the Cabinet Office - the tour of duty’s usually about, and once they’ve done they, they go elsewhere. So Mike Bracken and a lot of his co-workers have gone off to Co-Op, for instance, you know? Others have gone off to other places. And they’ve taken those lessons. Sort of like what I said earlier, it’s a way of sort of seeding the best practice, growing the best practice, and then spreading it out. And I think, I do think, I do think, that that will happen in Australia.
Claire Connelly: I’m not familiar with how coming up with a concept for a digital transformation idea would work when you’re in government. Does the government have the capacity to commercialise their ideas? Is that already happening? And can that happen more than it is already, if it is indeed happening at all?
Paul Shetler: Well government does charge for certain services, when you’re talking about commercialisation, you know, whenever government charges you for a service, it’s selling something in some way, and that’s one model. So I guess the simple answer is, yes, it could be. And there could be more of that. On the other hand, people pay taxes. And so there’s an expectation that, you know, if you pay tax, you’re going to get something back for it. And that’s kind of - it’s kind of the reason why we used to make a distinction between customers and users. We used to always, you know, say, the people who we work with, the people who we do stuff for in government, we didn’t call them our customers, because we felt that was patronising. And the reason we felt that was patronising was because they didn’t have a choice. They really had no choice, they had to go to government because only government offered that service, and so therefore it wasn’t the commercial, sort of contractual thing we were doing with them, it was more of an ethical obligation they had already paid for, that we had to deliver the best possible thing. And we framed things in those terms. Whereas, in the private sector, someone could always walk away, and say, ‘Well, I don’t like this kind of beer, I’m going to get another one,’ and there are so many different kinds, right? You can’t do that with government. You’ve only got one choice. And that’s government.
Claire Connelly: So say - you know, let’s say you build a database that manages things for - let’s say land and property and house blueprints and all that kind of stuff, and you’ve built some kind of fandangled amazing database, and okay, you have a client or a customer that that is essentially for, but what would stop the department from taking the skeleton code of that and re-implementing it either as a consumer piece of technology or selling it to the private sector to give it a broader use case? Would that create contractual conflicts? Would that provide revenue to the government to do other important stuff with?
Paul Shetler: Typically, when people talk about things like that, they would usually sort of spin things off. In the UK they would - they looked at mutualising things sometimes, and saying, ‘Wow, you know, we’re going to spin this off as a separate company’. So the land registry, for instance, or something like that, has been a really great example of that. And I think actually in Australia there have been similar discussions and similar, similar things happening with things like land registries, so those definitely can happen, and those are cases where, you know, there’s clearly a market for the service, and where it makes sense for the government to do that, in terms of, you know, what it’s getting for it, in terms of its value, versus its risk and so on and so forth, it may be worth it do that.
Claire Connelly: Has somebody crunched the numbers on the revenue opportunities of those kinds of ideas?
Paul Shetler: I don’t think there’s been any comprehensive look at that. I think in lots of cases, and I’m not necessarily qualified to speak on all these sorts of things, but I think that usually what winds up happening on cases like that, at least in the UK, was that it was people doing the work who realised, ‘Wow, this could be spun off, this could be mutualised. We could do that.’ And then there was a case made for that.
Claire Connelly: Can we talk about, let’s sort of jump around a little bit off the government sector for a second, and just talk a little bit more about start-ups/let’s just say the tech industry generally, because as you say, not all start-ups are tech, and not all tech are start-ups, but let’s just create a broad space for discussion.
Paul Shetler: Awesome.
Claire Connelly: Can we talk about some of - I don’t know, maybe some of the sort of lessons or misconceptions that are widely held in the market that we can maybe do away with in 2017? Is there anything that comes to mind?
Paul Shetler: I think that - well, look, one thing I said recently, because I was talking with somebody from the AFR, I said that I felt that there was a huge amount of emphasis on collaboration, which is, you know, important - I’m not denying that that’s an important part of what happens. Obviously, things like this, like Fishburners, depend on that. But I’ve not heard much - I’ve not heard enough, to my view, about competition, right? That it’s almost sometimes viewed as like a bad thing to talk about. But actually it’s - you know, it is actually the rule of a marketplace that’s Darwinian that you either survive, or you get eaten by somebody else, right? And that’s really just how it works. That’s the nature of the capitalist system that we live in. And that is competitive. That is a competitive process. I think one of the biggest concerns I have is that there’s not enough emphasis on the competitive aspect of what we need to do here. There’s a lot on the collaborative aspect, which i think to some extent, to some extent, is also a result of sort of the industrial policy and the competition policy we’ve had, which has sort of fostered oligopolistic industries. Which makes it really difficult, makes it really difficult, to have a competitive start-up sector, because actually a lot of those start-ups want to knock those incumbents off, and that’s competitive. But if competition is not really viewed as a great thing, then that’s really great for the incumbents, because they won’t be knocked off their pedestals.
Claire Connelly: There does seem to be a bit of a culture of sort of legitimised anti-trust going on in Australia. Like you say, we talk a lot about collaboration, and I don’t think we hear anywhere near as much just the word ‘competition’ as you would in the US or the UK. What does that do for the market, when companies have the ability to ‘collaborate’ by eliminating all the things that make doing business difficult? Is that creating like a sort of petri dish, or a dome where you’re sort of protected from all of these market forces, or --
Paul Shetler: I think it does, right? I think it creates a cocoon, it’s a cocoon which ultimately won’t last, because, you know, when there’s a breach - when that cocoon is breached - there’s nothing to defend you. You don’t - you don’t have the natural impulses then, you don’t have the natural reactions then. One of the things that I think about, you know, up until now, or up until very soon, Amazon isn’t really existing here, so people don’t really talk about, ‘Oh, what will be the effect of Amazon?’ ‘Let’s keep our existing retail sector the way that it is.’ Well, that’s cool, everything is fine. And I’ve read some interviews recently where people are saying, ‘Oh, everything is great.’ And it sort of reminded me of that diagram with the dog in the burning house saying, you know, ‘This is fine. This is fine.’ I’m thinking, you know, it really won’t be fine once Amazon comes here and opens up Prime. You know, they - Amazon is one of those companies that is sort of red in tooth and claw. And they are a killing machine. You know, anyone who has seen sort of the effect they’ve had in the United States on the retail market will tell you that. And I just wonder, you know, what will the effect be in Australia when these things happen? This is one of the reasons why I’ve been saying, I think it’s really important to start building up in the psyche of people that actually competition is a good thing too, you do need to sometimes be aggressive, you do need to sometimes be competitive, because if you won’t, other people still will be. You know, Leon Trotsky said, you know, ‘You might not be interested in war, but war is interested in you,’ you know? It’s one of those things where you can say you can close your eyes, but actually, it’s out there.
Claire Connelly: This brings up so many good questions for me. So, you know, Amazon’s kind of got two or three claws out. There’s Cloud, which I imagine is going to be an increasingly competitive space. And then there’s retail. Now what if something like Amazon Dash becomes more broadly available here, and Australians can order something at the click of a mouse and have it delivered to their house within three hours, are you expecting to see a pushback from the retail market to try and block Amazon from having entry at all into this space?
Paul Shetler: There may very well try to be a pushback, but I think that - the problem is, once people sort of see what you can do with that, it’s really hard to push back. So if you look at Uber, you know, that’s a great example for me. You know, there was all this, there was this huge pushback, you know, people saying, ‘It’s a bad thing,’ and ‘You can’t have it,’ but actually everyone has it on their phone, right? And even when it wasn’t supposed to be used, people still had it on their phone and they were still using it. And it was kind of audacious, to say the least, of Uber, the way they treated regulation. I was really kind of surprised by that. But they did, right? And I think that that’s - once people understand what they’re going to get for that, it’s very difficult to keep entrants out, and I think that’s what is going to happen.
Claire Connelly: What would it take to keep a competitor out? Does that happen at a government level, does that happen with private sector pushing back?
Paul Shetler: There’s lots of different ways, there’s lots of different ways you can put up barriers to entry. You can do licensing, you can do legislation, you can do all kinds of things, all the classic things that people do. You can - you know, branding is an attempt to sort of decommodify what you offer and pretend it’s something unique. But generally speaking, what I think is going to wind up happening in this particular case is that people will probably go running to government. Which again, as I was saying all throughout this whole thing, I don’t think government is the answer to these things.
Claire Connelly: Can we just talk about Cloud for a second? We had a number of, let’s say, ‘Acts of God’ that created a series of problems in a series of different databases across Australia, that were meant to be providing cloud services, that were meant to have back-up and redundancy systems in the event of, you know, crazy acts of weather, that didn’t activate when they were supposed to, and therefore a lot of different users, including government but also in the private sector, were left without any kind of database for weeks at a time. What happened when Amazon Web Service becomes a really competitive player - because they’re already in the Australian market, but I’m kind of at a loss for why more people don’t use it already, for a start - but what happens when really ramps up its cloud offering in Australia?
Paul Shetler: It’ll be a great thing. It’ll be a really wonderful thing. It’ll be a really wonderful thing. I mean, Amazon Microsoft and Google all have really brilliant cloud services. And if you look at, ‘Where are all the Intel chips going?’ They’re all going to those three companies. They’re not going to, you know, computer manufacturers anymore. Those guys make all their own - they make everything and they - all the computing capacity basically worldwide now is being consumed by the cloud providers. And it’s because they exist that you could have all these start-ups. You know, when I started my companies up in London, if I had to actually buy servers, if I had to actually buy licenses, if I had to buy Oracle licenses and Microsoft licenses and this and that, that would’ve been a huge capital expenditure, that I just couldn’t afford, right? I was actually able to take risks because I didn’t have to that. I could just spin up some instances on Amazon and pay really low prices basically on Amazon and Heroku for what I wanted to do, and I could spend all the rest of my time and all the rest of my money doing user research and design and development, right? So it lowered the barriers to entry tremendously. We were talking earlier about competing and market forces and oligopoly. What Cloud does is it really lowers the barriers to entry. It makes it a lot easier for people who have interesting ideas to really think those ideas through, and to test them, and to experiment. It doesn’t cost much to experiment. It costs hardly anything to experiment. You actually can do that. You can reduce all your cycles, you can do things much more quickly, and much more cheaply, so I think, I think they’re a brilliant thing.
Claire Connelly: How many public services in Australia do not use cloud currently and are still running their own databases?
Paul Shetler: Oh, the vast majority.
Claire Connelly: In your opinion, should that be run in the Cloud?
Paul Shetler: Well, the thing is, it’s sort of difficult to take existing workloads and just dump them into the Cloud, just because of what they’re on, and everything else. You can actually, you know, move an awful lot to the Cloud, you can migrate an awful lot to the Cloud. This is not something you do with a click of your fingers. But new services, in particular, I find it weird that anybody would be developing a new service and not putting it on the Cloud, I just find that bizarre. I’ve always felt, you know, if you have to have a data centre policy, the very simplest policy is, ‘Don’t build any more, and migrate your existing workloads to the Cloud wherever possible’. That’s actually the best policy for data centres. Because they - they enforce really poor ways of working, data centres do. You know, situations where you have to wait six months between release cycles, versus doing hundreds of releases per day, you know? What’s more risky? Well, obviously waiting six months, and having this weird testing regime, which will probably never catch everything. If you release the thing hundreds of times a day, you can just roll something back instantly when it’s a problem. Your risk just goes down tremendously, and your cost goes down tremendously. So that’s what we need.
Claire Connelly: 2016 did seem to be sort of the year of cloud migration, or at least the year when companies started realising, ‘Oh, maybe we should do one’. Why is there still such a reliance on sort of second-tier cloud providers, and why, when we have seen that a lot of them are clearly not capable of backing up and of having the redundancy when it is most urgently required - and yet, particularly in the public sector, continue to go back to those particular providers? Why?
Paul Shetler: I couldn’t really answer that except to say that I think it really goes back to the question of capability in the public sector. It’s something I’ve been banging the drum on quite a bit, and I do know it’s not terribly popular of me to say that. But I do think that the technical and digital capabilities in the public sector are relatively low, compared to the private sector, and are low compared to what you see in other countries, and I was really delighted for instance, you know, yesterday, to see that, you know, the British government came out with their new ‘Government Transformation’ strategy. You know, it’s no longer called a ‘Digital Transformation’ strategy, it’s called a ‘Government Transformation’ strategy. And one of the most important pieces of it was to really upskill the public service, right? Uber don’t outsource all their development. You know, no start-up outsources all their development. That’s crazy --
Claire Connelly: And the risk to intellectual property would be huge!
Paul Shetler: Exactly! You just don’t do that, right? You know, Mark Andreessen says, ‘Software’s eating the world’. What does that mean? It means that every company that is doing stuff on the internet is a software company! Companies need to realise that what we’re doing is services, we’re a software company, and we need to have those skills. And I think that’s the question, really, to me, I think. It’s, ‘How do we bring those skills inside, not only government, actually, but also insurance firms, brokerages, banks, all the large institutions, hospitals, that we rely on for the rest of our life?’ Those should be - because they’re so important, because they’re so central - those should be the ones that have the best technology, the best people, because they serve the most people, and, again, in many cases, you know, there’s not a huge amount of choice. So I think those are really where we want to look.
Claire Connelly: So if we can end on one lesson for the people listening to take away from this, what is a lesson for 2017? You know, it’s February now, we’re really back into the swing of things in earnest. If there’s like one big mistake, or one big - I don’t know, cultural proclivity that people have that they need to let go of, what would you go out to market and tell them?
Paul Shetler: Well, I’d say a few things. So, you know, first off, the idea that sort of because the government is not paying quite as much attention to, or is not - that’s not fair, that’s not a fair way of saying it - that because the government is not proclaiming things like ‘Ideas Boom’ and so on and so forth, that start-ups are over, is kind of silly. That wasn’t the reason for having start-ups, and that’s not going to kill start-ups. There are material circumstances that have happened which are quite irrelevant to all that. So I think, first off, the idea, you know, that it’s as good a time to be a start-up as any, to paraphrase somebody, ‘This is the most exciting time to be a start-up,’ I think is actually true. And that won’t stop. I think that to do that, and to be successful, you know, again, the idea of being in it to win, long-term as well, not just to sell out immediately, but, you know, if you really believe in your vision, believe in your vision! You know, take the risk! And take it forward and execute on it. And try to take over the world, because that’s what you really should be trying to do if you’re a start-up. I’d say those are the main two things.
Claire Connelly: Those are two good - really good questions to end on. So thank you so much for coming in here to talk to us.
Paul Shetler: Thank you. I enjoyed it.
Claire Connelly: Well, we’ve covered a lot of ground in this interview, from government to start-ups to the economy more broadly. Australia’s start-up industry is only in its infancy, but it has already changed pretty vastly even over the last 12-18 months. And I think we can all agree that we still have a lot to learn and perhaps require a little more self-reliance and less focus on regulating ourselves into existence. And I might add that while we’re trying to grow this industry, let’s remember the value they bring to the economy, and the opportunity they present to grow our knowledge and skills base. There are 7 million unemployed people living outside of major capital cities in this country, and there’s another 1 million that are underemployed or not starting work within the next fortnight. That’s 8 million opportunities for Australian businesses, and that’s not even counting inner-city employment. There is a skills shortage in this country that could be addressed almost overnight if only industry could find the money to train them. We’re on the edge of a new economy, and it is in our best interests to have the best-educated, the best-skilled and most competitive workers. We can only do that if we take more people with us. We’d like to say thank you again to API Day and Spaceship for sponsoring this episode, and thank you as always to Felix [indecipherable] and analogcabin.net, for his hard work in creating a podcast that we hope is a joy to listen to. And thank you again to Paul Shetler for making the time to come onto our special to talk about government and industry. And in a fortnight we’ll be back in this studio to talk with former Junior Innovation Minister Wyatt Roy, to have a very frank chat about life after government. We hope that you will tune in for that. This is Claire Connelly, and thank you for tuning in to This Week in Startups Australia.