View Speech by Robyn Denholm, Chief Financial Officer and Head of Strategy of Telstra, Chairman of Tesla
Friday, 29 March 2019

Notes for an address by Robyn Denholm to American Chamber of Commerce in Australia 27th March 2019


The telecommunications sector has long had a significant role in underpinning the connected economy. 

How can this translate to support for up-and-coming entrepreneurialism? What is the case for nurturing the entrepreneurial spirit not only within Australia, but worldwide? How is Telstra stepping up to the challenge, looking at examples like muru-D, a start-up accelerator helping tech founders scale their businesses; and Telstra Ventures, an investment program targeting leading, high growth technology companies.

Why does entrepreneurialism matter? 

Thank you Wyatt and good afternoon everyone,

As business leaders, I’m sure I won’t have a hard time convincing you of the value of entrepreneurialism. This spirit is what drives people to open new business, to innovate and invent new technology, and invest in those willing to try. 

But while we might agree on the incredibly high value of this spirit, we might disagree on the current state of things in Australia and what, if anything, we should do about it. 

One of the measures of the future health of our business environment is the quantity and quality of new businesses started each year. On this front, Australia is performing well . According to the ABS, we have 2.3 million businesses in Australia as of June 2018 and this is growing at a rate of 3.4% p.a. 

Entrepreneurs come in many shapes and sizes. Nothing is more entrepreneurial than starting a new business, and this happens all the time in suburbs and towns throughout Australia that are not seen as epicentres of start-up culture. 
I see this first hand through my role as Ambassador for the Telstra Business Women’s Awards, which shine a spotlight on some of Australia’s most courageous female entrepreneurs. Over the past 24 years, we have helped support thousands of women who have succeeded by doing things their way in small businesses, corporates, charities, the armed forces, education and many other fields. But for me the most important measure of the future of our business environment is the rate of technology innovation, as this is what ultimately fuels productivity and new business.
At the moment, Australia is not performing nearly as well as it could in this area. According to the 2018 Global Innovation Index , we rank 20th in the world. Not a terrible result, but not nearly as successful as we could be. 

What is really interesting is that this report shows we rank 11th in the world when looking at the inputs for innovations (such as the average number of years young people receive formal education, easy access to credit, and a high level of government services being available online), however we rank 31st when looking at outputs (such as the value of our patents, creation of new goods and services, and our Foreign Direct Investment outflow). Clearly something is not working the way it should.

While the number of new businesses being created is strong, and the inputs for innovation are high, we are not seeing this translate to more successful new businesses in the technology arena. 
Why? My view is that our collective “negative” mindset as it relates to technology businesses is to blame and I believe that this fear started in the wake of the bursting of the dot-com bubble….

I totally recall where I was when the dot-com bubble burst. I joined Sun Microsystems in Sydney 1996 and was at a finance conference in southern California in October 2000 when the largest drops on the Nasdaq happened.

Sun designed and manufactured the hardware and software that fuelled the startups that were born online and traditional companies that were going online. The tag line of Sun was it was the dot in .com. Despite being “singed” when the dot-com bubble burst and demand for their products fell significantly, Sun survived this period by making difficult decision on what to stop working on. 

It’s almost 20 years since that rise and fall of many companies and the entrepreneurs behind them. While a very small number of people who invested heavily in tech stocks managed to get through that period with their finances intact, the most common outcome was lots of money burnt. 

From 1995 to 2000, the value of the NASDAQ index rose from 1,000 to just over 5,000. By 2002, the index had fallen all the way back to just over 1,000 – losing nearly 80% of its value. It is difficult to know exactly how many public and private companies were created and destroyed during this volatile period, but some estimates suggest 7,000 to 10,000 new online enterprises were launched in the US in the late 1990s, and by mid-2003, around 4,800 of those had either been sold, written off or gone under . With this came the loss of tens of thousands, perhaps even hundreds of thousands of jobs. 

The bursting of the bubble also had a serious impact in Australia. While we have no equivalent of the NASDAQ there are plenty of people in our business community who could tell personal stories of loss and failure. 

Twenty years later the NASDAQ has climbed to all-time highs and is now at over 7,500. Sure the bubble burst, but many technology firms in the US have grown and many new ones have been established. In fact, many of the most successful entrepreneurs of our time were made better by the experience. 

There are lots of examples of this …… but the two I enjoy are:

1. Jeff Bezos opened an online bookstore in 1994. It was a disruptive move to take on a saturated market. His often-repeated mantra about being obsessed with providing the best possible customer experience, irrespective of what Amazon was selling and where it was selling it, enabled him to ride out the dot-com bust and build a company that, in 2018, had more than US$232 billion in revenue.

2. Google is another great example it was founded in 1998 by two Phd students with the aim of making information on the internet easier to find and access…… it survived the “bust” as a very young company and has prospered. 20 years later in 2018 Googles parent Alphabet  had revenue of  USD$136 billion. 

I was the CFO/COO of Juniper - another dot com bust survivor, founded in 1996 and IPO’d in 1999. And Tesla was also founded in 2003 in the aftermath of the bust. 

In Australia, the dot com boom also gave rise to some serious success stories. REA Group listed on the ASX in December 1999 at $1.11 per share. Today you’d be paying close to $80 per share. was founded in 1997. It listed on the ASX twelve years later and today has a market cap of over $3 billion. And other businesses like Seek, Wotif and, and many others have achieved sustainable, long-term growth. However, their success has had nowhere near the impact on the Australian economy as technology companies have had in the US.

A quick comparison between the highest-value companies in the US and Australia and their dates of founding starkly shows how our conservative culture shapes our economy today. 

America’s four most valuable companies are Apple, Amazon, Google and Microsoft. Their average age? 35 years.

Australia’s four most valuable companies are BHP, CBA, CSL and Westpac. Their average age? 135 years. 

What explains this and why does it matter for our future? As I said earlier, mindset matters. 

The Australian business community, for good and bad, is a conservative one. We have a relatively small market with abundant natural resources, high barriers to entry, and a huge pool of investors through our fantastic superannuation industry looking for steady returns. This incentivises solid, but modest business strategies. Our economy has been very well managed, avoiding the economic recessions other economies have gone through since our last recession in 1990-1991. 

For our future to be as successful as our past, we need to keep creating the next wave of businesses across different industries and we need to develop our own tech companies to help fuel those. 

One of the biggest risks our business community faces is that of technology complacency. If we do not foster an entrepreneurial spirit, and support those who are willing to take on the risks involved, we may miss out on the benefits that only come through innovation.

Large/old companies can innovate and play a role in developing that entrepreneurial mindset too. Telstra is an interesting example. We are one of the largest and one of the oldest companies in Australia. However, constant technological change has forced us to continually act like an entrepreneur in many parts of our business. More than ever before, we know that we need to be bold and take risks to succeed. You can see this in a range of actions we’re taking:
5G is a big bet but we believe it will enable new business models (some we know, some we don't). 
Our Enterprise Network Application and Services (or NAS) business moves us from a traditional telco providing infrastructure to a services company offering high-value products like cybersecurity
Our Telstra health business which is growing rapidly is an entrepreneurial business within a bigger business using core technologies which all have their roots in connecting people/practitioners/data in an important area of health
Through our start-up accelerator, muru-D, and our venture capital fund, Telstra Ventures, we directly invest our capital in great new ideas.

How can we nurture entrepreneurialism? 

Entrepreneurs are an essential part of our economy – creating new products and services, channelling capital into productive use, and taking healthy risks to help balance the more conservative end of the business spectrum. 

Successful companies, big and small, are those that channel an entrepreneurial spirit to innovate over the long term. Those who do innovate successfully create value. Those who don’t innovate risk fading away. 
Fostering an entrepreneurial spirit is a challenge that should be front-of-mind for business leaders, educators, and politicians. We must forge a greater culture of entrepreneurialism in Australia. 

In the United States there is a very long history of innovators and entrepreneurs and they occupy an important place in the national mythology. Edison, Ford, Hearst, Gates, Jobs – these are names even primary school children are familiar with. In this Digital Age, the United States continues to be a beacon of entrepreneurialism thanks to: 
a world-leading combination of high-quality tertiary education
an ecosystem of businesses centred on Silicon Valley that attracts global talent, and 
vast amounts of venture capital to support new ideas. 

In Australia, we have a different history, but we also have many similarities. We have a history of world-leading innovators like Florey, who did Noble prize-winning work developing penicillin; Dr Graeme Clark, inventor of the bionic ear; and the CSIRO’s pioneering work on developing Wi-Fi. We have an excellent tertiary education sector. And we have more than $2.7 trillion of superannuation, some of which is looking for high-returns on investment and is willing to back risks to achieve this.

Australia has the right ingredients for a strong entrepreneurial culture. But frustratingly, we are often better at exporting our entrepreneurs than fostering them here.

So what steps can we take to nurture the culture of entrepreneurialism? 

I definitely don’t have all the answers. No individual, business, educator or government does. We each understand a piece of the puzzle. I do believe we as a nation have made tremendous progress in having this debate and I am hugely optimistic that we can do better in the next decade than we have in the previous one. 

I believe there are five big questions we should be asking to help create the right environment for our entrepreneurs to thrive: 

Firstly - is tertiary education, we have a phenomenal asset in our system of education in Australia, so how can we arm people with a better mix of technical skills and business skills to create entrepreneurs? Our engineers need to learn how to develop ideas into products, and products into businesses, and how to collaborate with others across academic disciplines to create a better business eco-system. Universities must be centres of leaning, but also places where inspiration and creativity across disciplines can yield unanticipated results. The good news is that many that I have spoken to in the education arena in Australia really do understand this and are making huge strides. 

Secondly – do our policy makers understand the risk and reward incentives involved in starting a new business? We need regulators who understand that supporting new businesses can help change the market and benefit consumers. This isn’t just about stock-based compensation or R&D credits. My view is that governments play a fundamental role encouraging and supporting the right environment.

Thirdly - if the policy and regulator settings are in place, are investors open to new ideas and opportunities? Early stage funding is critical for any new business looking to expand, but entrepreneurs need support, mentorship and investment at all stages. How do we define a clear pathway towards sustainable growth, beyond the first couple of years, for the entrepreneurs leading these businesses? We have a small but mighty set of VC and incubators that are helping this key ingredient mature.

Fourth – how can we encourage customers, including very large businesses like ours, to work with new suppliers, try new solutions and support new businesses even if this involves slightly higher risks or slightly higher short-term costs? Can we turn our size into an advantage versus something to get over if you are a new company trying to get in? 

Five - above all these others, the most critical element is mindset. How can we encourage people to dream really, really big about businesses that have technology at their core? I believe the DNA for all of this is truly embodied in the Australian psyche. I grew up with people talking about “having a go” with entrepreneurs who were applauded for taking risks in more traditional industries. 

Perhaps alongside actors, musicians, explorers and sports stars, Australia should have ‘showcase entrepreneurs’ – people who are widely known and respected for their difference and their willingness to try. We definitely have a few that the next generation can look up to like Atlassian founders Mike Cannon-Brooks, and Scott Farquhar who have definitely done things their own way and created a global technology business. 

How about Melaine Perkins, who founded Canva in 2012? Or Nicholas Molnar and Anthony Eisen who founded AfterPay in 2015? Or Anthony Goldbloom, the founder and CEO of Kaggle in 2010?

Sometimes the attempts of our showcase entrepreneurs won’t work out, but failing isn’t a bad outcome. Not trying at all is a bad outcome.

Making progress on all five critical elements I’ve mentioned needs to be joint effort. From our school rooms to board rooms, we need to champion a culture of entrepreneurialism. 

Earlier I mentioned the age of many of Australia’s biggest businesses. I tend to be a “glass half full” type of person and while this might show that not a lot has changed, it can also show that Australia’s economy was founded on companies doing things that others wouldn’t or couldn’t do. Our banks and miners are local and global giants because they needed to take big risks to help create an entirely new economy, largely disconnected from the existing economic centres of Europe. They tried and succeeded because they believed in their abilities and were willing to take big risks on even bigger ideas. 

We need to fuel this spirit. Australia needs a cultural re-set when it comes to entrepreneurialism. We have tremendous assets in our people, in the education system and have the financial wherewithal as a nation - there is no limit to what the future can bring if we focus on fostering and encouraging our entrepreneurial spirit. 

Thank you.



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