The New Zealand start up scene has only really been around for the last decade or so.
The benefits of a start up can take a long time, but the pay off when a kiwi idea is picked up overseas is huge for the players and for the economy, says start-up guru Dave Moskovitz
Dave Moskovitz tells Simon Morton why 2017 was a boom year for startups in New Zealand.
He says this is no bad thing for New Zealand’s innovator economy.
“That investor's capital will get recycled in New Zealand, that’s already started to happen.”
The start-up scene didn’t really take off in New Zealand until the mid-noughties and he says we’re now starting to see results.
“It takes a long time for a start up to produce value and the start up ecosystem in New Zealand really only got under way in the mid-2000s.”
But what is a start up as opposed to any other new business venture?
“Moskovitz says a start up is a temporary organisation seeking a “scalable and repeatable business model”.
“Until you achieve product market fit, until you get that scalable repeatable business model, you’re start up.”
Beyond that stage, if a success, the business becomes a scale up, he says.
The process of scaling up is where many New Zealand companies come undone.
“They’re tempted to scale prematurely because they’re operating in the New Zealand market and develop a model that’s repeatable and scaleable in New Zealand.
"They say ‘Ah! We’ve got the formula! We’re ready to go big time overseas.’ And then they take it overseas and find out market conditions overseas are completely different."
Doing business in New Zealand is pretty easy, he says.
“You can do business with anybody. It’s a very flat structure. You can ring any CEO of any NZ company and probably get an appointment with them within a week.”
This is not the case in most overseas markets, he says. Distribution is the key to finding success overseas and Kiwi entrepreneurs ignore that at their peril.
He had his “aha!” moment back in 2009 when he decided to take copies of his friend’s book to Los Angeles. The book had been a success in New Zealand and he saw potential in the US.
“Stefan Korn published a book called Call Me Dad about being an active father and raising kids and this book was fantastic had the front display at Dymocks in Lambton Quay.
"I thought I’m going to LA, I’ll take some of these books and sell them in bookshops.”
When he arrived, he discovered there were only two independent book shops – one was a children’s bookshop.
He showed up and the owner was interested in the book and asked him which distributor he was using. When he told her none, she lost interest.
“She told me the book industry didn’t work like that in the US and she bought all her books from one of two distributors that she got on consignment.”
Any books she hadn’t sold she returned and got a refund.
She also had no interest in dealing with multiple suppliers.
“I realised it wasn’t only books that worked like this, it’s everything.”
Moskovitz is an adherent of the lean start up model
“The idea is figure out the problem you’re trying to solve and who you’re trying to solve that problem for before you worry about the solution or product.
“If you fall in love with that problem for specific sets of customers then you have more chance of finding some bit of gold, something of value.”
While he says anything up to 70 percent of start ups will fail, they are the engine of job creation.
“Young company formation is the source of job growth. Virtually all job growth in the past 30 years in the US has come from start ups.”
Dave Muskovitz's resources:
Startup Nations Summit:
Lean Policy Canvas:
Government Innovation Manifesto: