- BRW Lists
Published 27 September 2012 04:42, Updated 30 January 2013 21:58
In knocking Nathan Tinkler off the top of the BRW Young Rich list, technology entrepreneur Mike Cannon-Brookes has some advice for the coal baron: “Keep going champ.”
A cynic would regard this as cocky or tinged with schadenfreude but from Cannon-Brookes, who with his Atlassian co-founder Scott Farquhar has snatched the top ranking with their combined wealth of $480 million, the offhand comment is based on respect.
In the mining magnate, the software developer sees “a deal maker” and praises his willingness to “put it all on the line”. Cannon-Brookes wants to make it clear he’s not up to speed with all the finer details but says of Tinkler: “From reading about it, he seems to double down with everything he has. He’s willing to let it all ride, which is the mark of an amazing type of entrepreneur.”
Cannon-Brookes is reluctant to discuss his and Farquhar’s personal wealth, derived mostly from their controlling share of Atlassian, but he recognises the significance of being the first technology entrepreneurs to top the list. “It would be great for the industry,” he says. “I’ve always said I think it’s fascinating how many tech people there are on the Young Rich list and how few there are on the old rich list. There’s a handful [on the BRW Rich 200]. But I think it’s great, it reflects the future of the industry and more importantly the future of the country, right? We can only go pulling stuff out of the ground at super-inflated prices for so long.”
Farquhar and Cannon-Brookes are leading the charge of a generation of entrepreneurs trying to put Australia on the technology business map. They are by no means on their own but they are certainly the furthest progressed of the current generation and the most lauded globally (not to mention they are the heroes for a generation coming through the ranks).
But one star does not a constellation make and Cannon-Brookes recognises this. “As an industry we need a pyramid of companies of various sizes and we’re really getting there now,” the 32 year old wrote earlier this month, in response to a blog on BRW.com.au.
So if Atlassian sits towards the pointy end, who is filling the rest of the pyramid? There’s certainly momentum at the most embryonic stages of start-up land. The boom in co-working spaces, incubators and accelerators has created a voluminous base of young guys and girls building, testing and launching. Although they may have grand intentions, these founders are a few years off (at least) from making the Young Rich. The bit in the middle of the pyramid, however, is evident on this year’s list.
Young Rich debutants Mitchell Harper and Eddie Machaalani built the software-as-a-service platform Bigcommerce that powers the back end of 30,000 online stores. The duo welcome the idea that they may be “the next Atlassian”.
“It’s awesome,” Harper says of the comparison. “Mike and Scott, they’ve set a lot of the standards for what an Aussie company can be. They’ve just done an amazing job and they cultivated a lot of what’s happening now. They laid a lot of the seed.”
Investors and executives can be discouraging of technology founders trying to build a company based out of Australia, Machaalani says. “Having someone like Atlassian ... makes it so much easier for us because we can turn around and say, ‘Look Atlassian has done it before’.”
The Sydneysiders have stormed into the top 10 of the Young Rich with estimated combined wealth of $110 million from their majority stake in Bigcommerce. Like Atlassian, which scored $60 million from Silicon Valley venture fund Accel Partners in July 2010, the duo has also attracted interest from a US venture capital company. General Catalyst Partners signed on for a Series B funding round of $20 million in early September, which followed its initial stake of $15 million in July 2011.
Since the initial capital raising, Harper and Machaalani have gone about putting together a crack team of executives and building up manpower. “We’re big believers in you don’t go and get someone that you hope can do a role, you get someone who’s done it numerous times before,” Machalanni says.
Eddie Machaalani and Mitchell Harper have stormed into the top 10 of the Young Rich with estimated combined wealth of $110 million from their majority stake in BigCommerce.Photo: Nic Walker
Their executive team now lists former PayPal, ReachLocal and Travelocity.com names. They even snagged Atlassian’s former vice-president of engineering, Soren Harner.
The similarities between Atlassian and Bigcommerce continue. Both were bootstrapped for a number of years before they pulled in outside capital. “The day we launched the first bit of software, we made the first sales,” Machaalani says of Interspire, the software development company from which they spun out Bigcommerce.
“I think the term now is hustle,” Harper says. “We were both just hustling back then, before the term was cool.”
“There’s also a term now called ‘lean start-up’,” Machaalani says of the entrepreneur’s gospel popularised by author Eric Ries. “It makes us laugh because it wasn’t a model back then. It was just what we did because [we didn’t] have money.”
And like Atlassian, which has acquired three companies since its Accel Partners capital injection, the newly cashed-up Bigcommerce pair is also on the lookout for acquisitions to add functionality for the merchants using their platform to power their online stores. Bigcommerce expects to turn over $20 million in 2012 and has a 160-person strong workforce in offices in Sydney and Austin, Texas.
Bigcommerce is not the only company sitting just below Atlassian on the pyramid. The Melbourne founders of construction management software company Aconex, Leigh Jasper and Rob Phillpot, also feature on the Young Rich, valued at $70 million in 2012, their sixth year on the list. The company picked up $107.5 million from venture capital fund Francisco Partners in 2008 and has offices based around the world.
Jasper says the “lean” phenomenon has stoked the ambitions of Australian technology founders. When raising their first “couple of million” in the early 2000s, Jasper and Phillpot were “just two guys with a business plan”. “These days you can build stuff [cheaply],” he says. “Back then you couldn’t. You had to raise $2 million just to build a system.”
Closely behind the relatively established business software players Bigcommerce and Aconex are buzzing, frothy consumer plays. Debuting on this year’s Young Rich list are Matt Barrie, who is behind global outsourcing marketplace Freelancer.com, and Shainiel Deo of Brisbane mobile game developer Halfbrick Studios, which developed the hugely popular game Fruit Ninja. BRW’s Young Entrepreneur of the Year from 2012, Mark Harbottle returns to the list for the second year.
And the online retailers’ presence is noted, as both Ruslan Kogan, of Kogan and Milan Direct, and Hezi Leibovich, of the Catch of the Day Group, move into the top 10.
Many technology entrepreneurs on the BRW Young Rich list have already sold out. But although their ventures, often subsumed by a US parent, no longer add to a local technology ecosystem, they join support systems. In a scarce capital environment, the former entrepreneurs are doing their best to hold up the pyramid.
Fifth-ranked Simon Clausen, whose $230 million fortune came from security company PC Tools, now backs ventures through his seed fund Startive Ventures (a backer of Barrie’s Freelancer.com). Bevan Clark and Guy King may have sold their discount coupon website RetailMeNot.com but their influence is still felt. The pair are investors in Melbourne transport itinerary tracking start-up rome2rio.
San Francisco-based debutant Bardia Housman has built and sold two technology companies, including Business Catalyst to Adobe in 2009, but now backs a co-working location in the city, Startup House, to house and mentor fledgling company founders.
And Cannon-Brookes and Farquhar, not only invest as individuals (both participated in an angel round for Ninja Blocks and Cannon-Brookes was instrumental in luring investors to a $3 million capital raising for Shoes of Prey) but are the two biggest names to join a new, local founders’ fund, Blackbird Ventures.
Cannon-Brookes reckons Australia needs a pyramid of companies to become a global technology hub, with many start-ups at its base, tapering up to a few companies of significant size and stature towards the peak. But as the founders of those bigger companies inject start-ups with their capital and advice, the picture begins to look quite circular, too.