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Five Aussie Startups Bringing US Ideas Down Under

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When an American company makes a successful product, Australians are usually busting to get their hands on it.

We look forward to shiny new tech toys as much as the latest episode of Game of Thrones. Unfortunately there are hurdles to accessing cutting edge technology that even a VPN and high-speed broadband can't solve.

Aussies have a strong thirst for innovation and despite a comparatively small population there's a number of entrepreneurs tailoring technology specifically for the hungry Aussie market.

Five of these companies (Sidekicker, Airtasker, WeTeachMe, PetHomeStay and Pocketbook) reflect on the advantages and disadvantages they've encountered as they bring home some of the products that have been successful elsewhere.

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TaskRabbit for Aussies - Airtasker and Sidekicker

There are currently two companies standing out as frontrunners to bring the services offered by TaskRabbit to Australia.

Similar to TaskRabbit, Melbourne-based Sidekicker finds you a pre-screened quality freelancer, (your "sidekick") to complete jobs for you. However Sidekicker differs from TaskRabbit by offering a fixed price (no bidding) and by focusing on business tasks rather than jobs around the home.

Sidekicker director Thomas Amos said he faced a major hurdle simply setting up online payment gateways for Australian customers to actually pay for the service in the first place.

"Payment gateways in Australia are tough - in fact, they are a nightmare," Amos said.

"First you need to get a merchant account, which is difficult for startups. It wasn't until we managed to get in contact with ANZ and a lovely sales rep called Kimberley got it sorted," he said.

"We also had to spend a lot of time working through employment law, which is a very grey area in Australia. It has been a very laborious process, with many hours spent poring over legislation."

"It's hard being a startup and dealing with the legal issues as you're financially so restricted so you rely heavily on off the record advice and your own research."

Airtasker have differentiated themselves from TaskRabbit's manual interview process by creating an open marketplace which allows anyone to create a profile and receive ongoing feedback and verification from the Airtasker community. In a nod to another US company, the Airtasker process feels a lot like the experience of using Airbnb.

Airtasker founder and CEO Tim Fung offered a number of big picture reflections on launching a labour marketplace in Australia versus the US.

Disadvantages

  • Whilst we've got higher smartphone and Facebook penetration than the US, the e-commerce landscape is less mature (higher freight costs, longer shipping times) because we don't have as many local players (like Amazon, Zappos). This means it's a little more challenging to acquire users in e-commerce transactions as there is generally less liquidity.
  • Although we have some excellent engineering talent in Australia, there just aren't enough engineers to support the growing number of startup opportunities. One of the biggest issues here is the 457 Visa regulations which is something that was being massively debated at the Google Startup Action Forum following Gillard's comments on the issue.
  • Venture funding is harder to acquire in Australia, especially post seed round. We were able to raise a decent sized seed round from a really good group of investors, however some other strong teams have struggled to raise capital in Australia past the early stage. That said, we believe that we're on the cusp of some explosive growth.
Advantages
  • Australia's startup ecosystem is currently experiencing amazing growth. Over the last year, we've seen some great companies succeeding (Big Commerce, Freelancer, Brands Exclusive) with more and more startups raising capital (Posse, DesignCrowd, Shoes of Prey) and this is driving massive interest in the space together with more and more entrepreneurs, co-working spaces, accelerators and VC's which are providing the support infrastructure. For a relatively new concept like Airtasker, this movement is helping to drive much greater awareness, acceptance and adoption - a mindset of change.
  • Because wages and the cost of services are comparatively quite high in Australia, it makes strong economical sense for people and businesses to outsource physical tasks. Compared to the US, where there are more economical labour sources, Australia provides a really good opportunity to create a more liquid labour outsourcing marketplace.
  • Unlike social media platforms, for startups based on hyperlocal networks, the size of the city matters but the size of the country isn't so relevant. On this basis, Sydney and Melbourne provide as good opportunities to create strong marketplaces compared to most cities in the US. We've also got proximity to Singapore and a few other cities in Asia which we've identified as exciting new opportunities.

Beating the US to market - WeTeachMe and PetHomeStay

"When the light bulb was "invented", multiple patents were submitted at the same time from different people around the world. The people submitting the patents were both not related nor connected to each other in any way," said Kym Huynh, a founding team member of WeTeachMe.

According to Huynh, the core team started working on WeTeachMe before a seemingly similar product by the name of Skillshare was publicly announced.

"Skillshare launched when we were halfway through development and we were horrified actually," Huynh said.

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"The team was faced with the decision to either abandon ship and lose all the work we had invested in WeTeachMe, or see Skillshare's launch as validation that we were working on an idea that was worthwhile, and keep forging ahead."

WeTeachMe provides an online method to schedule, promote and manage the booking of private courses. Skillshare offers a similar service, but the majority of its courses are also run online.

"Despite holding the world's knowledge in the palm of our hands, we learn best when we're in front of other people, talking to them, looking them in the eye and having the actual experience of learning that is engaged, fun and passionate," Huynh said.

"Through my experience, I find that when you're engaged, the learning is effortless. That's why we offer offline courses."

PetHomeStay

"It is essentially the same but with a local twist," said PetHomeStay founder Tom LeGrice when asked if he minded his company being referred to as the DogVacay or Rover for Australian pet owners.

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A more fitting reference for the business might be the Airbnb for pets, as PetHomeStay helps find temporary homes for animals while their owners go on holidays.

Like Sidekicker, PetHomeStay has encountered a number of legal differences that impact the application of their business idea in Australia.

"Both Rover and DogVacay contract their way out of any public liability around pets in their Hosts care - PetHomeStay can't do that because duty of care is written into Australian common law. It is also written into state law that all providers have to have public liability cover," said LeGrice.

"Our institutional systems such as insurance and banking are highly disadvantageous to Australian companies compared to American ones. Credit and merchant facility rates are higher, and Internet marketplace models are turned down in general due to an almost zero tolerance policy on third party payment aggregation by Australian banks. Insurance companies are far less likely to customise something for you, as there isn't the scale."

"So if you are customising an American idea, you have to ensure that despite all that your business model still stacks up over here," LeGrice warned.

For PetHomeStay some of the advantages of being a fast follower have included certainty around the concept and when they are talking to potential investors. In the US Rover has raised over $10m to date from very well respected investors, as has DogVacay.

"They can see what the vision is before you have even built a prototype," LeGrice said.

"We did register the idea and business in Australia before either company was launched in the US (August 2011), so we were originally a bit more different. We are actually closer to their models now however, as it saves us R&D time and gets us more respect from investors."

"You can also relate to growth trends easier - Collaborative Consumption is huge in the USA but not very established here, so you get a feel for some of the issues before they crop up, like Airbnb having to offer Host guarantees on stays."

LeGrice said he has even connected with the US companies to get their advice.

"I have personally spoken to the CEO of one of the American companies on Skype to get insight as to early challenges and they were incredibly supportive and helpful. You also potentially gain an exit route in the future if the US companies want to expand overseas," he said.

Beyond Expectations

"The disadvantage is that everyone we speak to which knows the Mint.com story thinks its the ultimate end-game for Pocketbook," said Bosco Tan, co-founder of Pocketbook.

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Pocketbook recently launched as an Australian take on the successful American personal finance product, Mint. Tan said the advantage they have is confidence the solution is a valid one.

"We know the problem we're spending our time solving is very real for our customers," said Tan.

"We know there are other things we can do to improve the personal finance management experience, even beyond Mint's offering. And that's our focus, to be even better than Mint - bringing in other useful spending data like rewards programs, invoices in your inbox and physical receipts. A true seamless single view of spending."