Silicon Welly

BY TOM FITZSIMONS
Last updated 15:48 11/10/2010
David ten Have
ANDREW GORRIE/The Dominon Post

David ten Have is the founder of Ponoko, a website that takes people's designs for anything from jewellery to tables

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When David ten Have, a Wellington web entrepreneur, talks to people in San Francisco about where he lives, they usually don't believe him.

To be able to walk to any meeting in 15 minutes doesn't make sense to them, he says. Neither does a similar amble home. "It doesn't compute. There's this element of science fiction."

Ten Have is the founder of Ponoko, a website that takes people's designs for anything from jewellery to tables, lets them choose a material and then laser- cuts and ships a physical product back to them. It's more or less a factory for the modern world, designed so products are made as close as possible to when they arrive in the letterbox. It has more than 30,000 users, mostly in the United States.

It has been backed by Movac, an investment group whose directors once put their money on another promising local venture, Trade Me.

Despite being headquartered in an ageing building in Wellington's Dixon St, it has big plans for expansion. The main reason ten Have talks to people in San Francisco is that Ponoko has opened an office there with three full-time employees.

When Brian Calhoun, an American software developer who had spent more than a decade working in Silicon Valley, decided he wanted to live somewhere new, Wellington appealed straight away. He and his wife wanted somewhere with a healthy web community, English speakers and a strong social scene.

"We realised what we were looking for was a smaller version of San Francisco. We found it. It's right here. It's Wellington."

Now, he is chief executive of Silverstripe, a web firm that specialises in open-source software and has grown from six employees to 37 since he joined in 2006.

When Melissa Clark-Reynolds, another web entrepreneur, decided to shift her headquarters from Christchurch to Wellington, she was thinking about two things - the solid local infrastructure and her carbon-conscious employees.

"One of the main reasons we did it was that we could get an office with fibre and a bus stop."

Her venture, Minimonos, is "a sort of Facebook for green kids" - with social networking, games and monkey characters. So far, 40,000 kids are on board, mostly young Americans. She hopes to have a million by the end of next year.

"It's very welcoming," she says of Wellington. "It's warm and supportive."

These are just three Wellington web stories, but they illustrate what most in the sector agree on: the city is now home to a vibrant, dynamic technology scene. From small start-ups to giants such as Trade Me, from boutique design outfits to big-time bloggers, from IT service companies to software developers, Wellington is a site for all sorts of virtual activity.

How did this happen?

A couple of weeks ago, at the Paramount movie theatre on Courtenay Place, more than 100 Wellington geeks got together and started drinking. ("Geek", by the way, is not an insult in such a circle - it has been reclaimed as a badge of identity.) The hum of voices was loud. The beers were flying out of the fridge. Everyone knew someone else.

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The gathering was a launch party for Webstock, an annual conference about the internet that draws trailblazing speakers from around the world. This was essentially a taster of next year's lineup. As soon as the big reveal started - a trailer of names accompanied by upbeat music - the whoops went up from the crowd. So did the online banter and Twitter posts. The only problem for most people was how to get their bosses to shout them the conference's $1000 ticket price.

All this is to say two things: that Wellington hosts every year a showcase of the biggest names on the web, and that Wellington's geeks are an unusually social, interconnected bunch.

"I think we've got a reputation as one of the best conferences of our sort in the world," says Webstock co-founder Mike Brown. The sentiment was echoed across the sector - with one person calling it the web equivalent of "a revivalist meeting at a Southern Gospel church, without the bigotry".

Webstock began in 2006, and by last year was drawing a crowd of 650 people. Brown says there's a sort of symbiotic relationship between the conference and the Wellington tech scene.

"I don't think it would work anywhere else. There's a cause and effect thing - partly it works well because there is a community here, and the community gets a lot out of it too."

The idea of a community, of a hopping social scene, is part of almost everyone's take on Wellington. Its members dress casually, swear liberally, know each other well, and feel exuberant about their industry.

Richard MacManus runs ReadWriteWeb, consistently judged one of the world's most popular blogs, from his house in Petone. He says people here are smart and enthusiastic.

"I'd rate Wellington as the best city in New Zealand for a web business - due to that."

Luke Pierson, creative director of Heyday, a digital agency formerly known as Doubleclique, says Wellington companies work together better than their Auckland counterparts.

"We've got this really collaborative heart. Lots of little agencies, and even bigger agencies, will work together and play together very nicely."

Some of Wellington's big fish agree. Rod Drury, possibly Wellington's biggest evangelist, is a "serial entrepreneur", whose successes include selling his email archiving system AfterMail for $65 million in 2006 and founding Xero, an online accounting service that is doing a roaring business. He once described Wellington as "a geek version of the Dunedin music scene".

"It's a very social city," he says, "and software loves that - the ability to form multi-discipline teams and network with other people slightly out of your workplace. You see a lot of entrepreneurial activity from that."

Mike O'Donnell, Trade Me's head of operations, agrees there's something special about the culture. One of the reasons the company has announced it will offer free Wi-Fi on Wellington's waterfront is that the city has been such a good base, he says. "There's a great kind of 'Let's catch up for coffee and do a diagram on a napkin' sort of culture in Wellington, and it works really well."

Taken together, Drury and O'Donnell have what is basically a complete theory of why Wellington works for the web. It starts with the laying of fibre-optic cables around the city in the mid-1990s, thanks to the vision of then Wellington City Council IT manager Richard Naylor. The network was "peered", which means it was shared without bias among customers, making it quick and efficient. "There was actually brilliant internet from an early stage, and it was all fibre-based," O'Donnell says.

Both emphasise the topography, too - the city wedged between hills and water, everyone working within a few blocks of each other.

That compares favourably to Auckland, says Nat Torkington, an open source advocate who ran the first web server in New Zealand and now lives north of the city in Leigh. "There are fewer accidental meetings and it doesn't feel like you're surrounded by like- minded souls," he says of Auckland.

Drury even thinks Wellington's bad weather is a help. "It's an indoors place. With that kind of weather culture, and being in a tight city, people tend to go out after work and hang around."

Perhaps predictably, he has now shifted his family to Hawke's Bay, for the better weather and provincial lifestyle.

Being the capital helps too, he says. "Because it's a Government town, there's always money in IT to be spent every year. So most people kick off inside services businesses, and learn their trade by working for companies that do lots of Government projects. That creates a nice pool of skills."

One firm that gets singled out for its influence is services firm Glazier Systems, which grew rapidly in the late 1990s, before being sold to a bigger outfit. The set of entrepreneurs, including Drury, who emerged from the company have been tagged the "Glazier Mafia".

Local government has played a role too, O'Donnell says. For instance, Trade Me's waterfront Wi-Fi project happened so quickly - it launches in December - because it was backed by the council.

"I would put to you that you try doing that in any other local government environment in New Zealand, and it would be glacial in comparison."

Another initiative singled out for praise is Grow Wellington's Summer of Tech programme, which links promising students with companies. Torkington calls it Wellington's secret weapon.

"This gives them a taste of life outside the big corporate gig that most computer science students opt for. They're doing more than offering summer jobs. They're opening minds."

Others emphasise a feature of Wellington not usually associated with the web world: its strong arts scene. Social Capital's Tim Norton, founder of a string of small web start-ups, says he hires video producers, designers and photographers. "The web's increasingly about design and experience."

Minimonos' Clark-Reynolds agrees, especially for game-developers. "It is the creative capital, regardless of what Aucklanders might say. We want to hire people who can draw and code. We want to hire people who can tell a story and figure out the trajectory of a flying monkey."

Finally, there is one more, very helpful factor that has supercharged the local scene in the past few years - millionaires. The success of firms such as Trade Me and Xero, as well as investors like Movac, has produced a handful of people who are knowledgeable, passionate and rich.

"I think the scene is quite mature," McDavitt says. "Looking at Trade Me, people are coming out and doing start- ups. It's that second-generation, third- generation thing."

Ponoko's ten Have says they've also still got plenty of energy. "A lot of successful guys aren't terribly old. They're not retiring. They've got another 40 or 50 years ahead of them."

Despite all the progress, there are gripes. Our Wi-Fi situation, says ReadWriteWeb's MacManus, is bad. It should be plentiful and free.

Pierson agrees. "Imagine being able to meet a client in a cafe with your laptop or iPad or whatever you happen to have, and be online.

"I think that would lift just general productivity in Wellington. It would lift it immensely."

Many people are calling for better broadband, especially linking New Zealand to the United States. Such a project, Pacific Fibre, is currently being led by Drury and The Warehouse founder Stephen Tindall.

Clark-Reynolds is one of several entrepreneurs who chooses to physically host her website overseas, but she says that doesn't have to continue. "We have to decide we'd like to be a First-World economy and put fibre everywhere."

There's also concern about a lack of capital, despite the moneyed entrepreneurs. Norton put $300,000 into his first venture and saw another, Plan HQ, turn out smaller than he had hoped. He wants start-ups that are more focused and investors with more willingness to take a risk. "We've obviously mastered the art of building innovation on low cash. Now it needs some scale."

Trent Mankelow is co-founder of Optimal Usability, a successful company with 21 staff that studies how people use the internet to make more functional websites.

He is a big fan of Wellington, but says founding his previous venture was so difficult - he spent 18 months on it only to watch it fold before launching.

"I think a lot of start-ups are chronically under-funded. You get a bunch of young guys and you can survive on two- minute noodles for only so long, before you go, 'Screw it, it's too hard'."

Then there are people who are sceptical about the idea of Wellington as a unique technology hub. Rowan Simpson, an early investor and developer at Trade Me, has since invested in a range of start-ups from Dunedin to Auckland.

"There's definitely a few success stories around [Wellington]," he says, "but when I look at the companies I've invested in, they're kind of spread all over the country. They're not Wellington- focused at all."

He says one of Wellington's strong points - its tight-knit culture - can also be a problem. "It's definitely an advantage, but the counterpoint is that there's always a risk with any small, connected group that it becomes a bit of an echo chamber."

The number of Wellington start-ups is not clear, but Simpson wonders whether the picture is exaggerated. Many web fanatics work for the Government or big corporates, he says.

"It seems like the same names come up a lot. It may not be as deep as people think, especially the start-up scene."

Another who is not sure about trumpeting Wellington is John-Daniel Trask, co-founder of Mindscape, a software development company he describes as "geeks building stuff for geeks".

One local drawback is a lack of skilled workers, he says. "The biggest thing holding us back is raw talent. Even people like Xero can't hire. The place is basically a village. You've got to be really careful about who you leave and go and work for."

One reason for that, he says, is that the education system doesn't push software development. "It's just another language. Why not teach it?"

After speaking to Your Weekend, he went further on his blog: "I've never heard anybody say they moved to Wellington because they considered it the IT hub of New Zealand. It does have a vibrant IT scene, but so do Auckland and Christchurch."

Some of what separates Trask from other commentators is just emphasis - many Wellington supporters also talk about how difficult it is to find talent. But he is also uneasy about the idea of promoting the city's web scene.

By contrast, someone like Silverstripe's Calhoun takes the opposite tack.

"I want to attract the world's best talent to come here because they want to be here - because of the beautiful geography, the climate, the people, the coffee, the bars and the fact that this is the best place on the planet for web innovation. I know that, and a few other people know it, and I'm trying to tell others. There really are no limits to how big we can make this."

Others are happy to celebrate Wellington's web successes without trying to think too big. "I think it's realistic, but it's not going to happen by talking about it. It happens by people genuinely innovating and genuinely doing good work," Pierson says.

The challenges of discussing this go to the heart of debates about how to foster economic development, how cities should position themselves, and whether location even matters when the sector's based on something as placeless as the internet.

It also touches on some classically Kiwi tensions - between parochialism and modesty, and between boosterism and cynicism.

Statistics around the local web industry are scant. What we do know is that between 2000 and 2009, the number of ICT sector businesses in Wellington grew by 27.6 per cent. That outstripped employment growth in the same sector, suggesting, as the Department of Labour put it, "that a number of smaller businesses have started in Wellington".

By 2009, the sector accounted for 4.3 per cent of Wellington's employment and 5.4 per cent of local businesses, compared with a national average of 2.2 per cent for both measures.

ICT (information and communication technologies) is a much broader category than the web and technology sector. Even so, more than half the sector's employment came in "computer system design and related services".

Apart from that, we know that, nationally, as Trask points out, IT exports are not so far behind agricultural exports ($5 billion compared with dairy's $8b). It's a big industry.

We also know that, a couple of weeks ago, Optimal Usability's Trent Mankelow received an email from one of his staff members telling him that "Facebook's just become a customer". One of its products, developed by an offshoot of the company, is selling fantastically overseas."It's just exploded. We've got more than 8000 users and the users are a who's who of tech in the world. It's CNN, Intel, Nokia, Motorola, US Navy, National Geographic, BBC and Amazon."

What we also know is that StarNow, a talent and casting website run by three Trade Me alumni, places more than 1000 casting calls every week, mostly from Britain. The website was founded while the trio were in London on their OE, but they have brought it home, chief executive Cameron Mehlhopt says.

"StarNow has benefited a lot from being based in Wellington. The founders cut our teeth at Trade Me. On returning from London, we were part of [business incubator] Creative HQ, and we have some Trade Me names on our board."

There are more names: Aptimize, a company that found a way to speed up companies' web pages; Resn, a digital agency that has won a swag of international awards; Powershop, an online store for buying electricity; open source specialists Catalyst IT; Sidhe, New Zealand's biggest computer game company; and Core Technology, an innovative ICT services company.

Trade Me's Mike O'Donnell says Wellington companies have been among the first to pounce on the mobile web. Their products are also becoming less bespoke and more commoditised.

Xero's Rod Drury says the web changes everything when it comes to designing software.

"When you can put your software out on the web, that creates really exciting opportunities for Wellington. This is starting to be seen as one of the places good software comes out of."

It's easy to see the reason for the excitement: the key factor that's always been against us, whether in agriculture or travelling sports teams, is that we're far away from the world. The internet erases that. But can we really be the Silicon Valley of the South Pacific?

Absolutely, says Mike Riversdale, who runs Wave Adept, which specialises in "cloud computing", where businesses run everything off the web instead of physical servers.

"Why not? Silicon Valley has a similar feeling to Wellington. It has a similar optimism, a similar we-can-do feeling."

Drury pictures a "global software hotbed", with another five stories like Xero's. For now, though, he still commutes to Wellington, and he still gets a kick out of his first sight of the city.

"It's a very stimulating place to live. I always get excited when I drive down the Ngauranga Gorge and it just opens up in front of you."

- The Dominion Post

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