Ross Dawson: Hello and welcome. I'm Ross Dawson, a futurist, speaker, and author, hosting the Where the World's Moving Podcast Series, presented by OFX, the global money transfer specialist for where the world is moving. Through this podcast series, we explore our fast-moving, ever-changing world and some of the extraordinary technological and social shifts that are shaping business and society, driving collaboration and globalization, and supporting human progress. To find out more about the exciting ideas in this podcast and the rest of the OFX series, go to wheretheworldsmoving.com.
Ross Dawson: Today, any business anywhere can be global, and an increasing proportion of companies of all sizes, young and old, are in fact multinationals. New financial technologies are enabling international business and allowing money to flow easily across boundaries. Born-global companies are navigating daunting complexity and diversity to seize the opportunities of a boundary-less world. To give us insight into this fascinating space, we are very fortunate to have with us Stuart Richardson, the Founder and Managing Partner of venture capital firm Adventure Capital. Welcome, Stuart.
Stuart R.: Thanks very much, Ross. It's great to join you here today and to be talking about where the world is going.
Ross Dawson: You are the Founder of Adventure Capital. That sounds very exciting. Are the adventures of your capital usually global? Do you look to invest only in startups that have an international scope?
Stuart R.: I think that by its very nature venture capital is looking for the extraordinary, so I guess in terms of when someone looks at their own investment portfolios, if they're going to invest in this sector of the market, they are looking for an extraordinary return. I guess that search then naturally sort of requires us to equally subscribe to that which is extraordinary, and I've always found that the Adventure Capital name has been very apt as to the journey that the entrepreneurs that we have the privilege of working with, as they do really aspire and execute on their ambitious visions and purposes, really move forward and achieve.
Ross Dawson: What makes something extraordinary? Part of it is presumably the scope and scale of vision, and part of that being global. How do you define what it is to be an extraordinary possibility or idea?
Stuart R.: Yeah, look, I think that it starts very much with the fact that you're trying to challenge the status quo, so how big that purpose and vision is, generally is its grounding. Given that Australia is just 2% of global GDP on a good day, if they're going to make an impact, a sizable impact, an extraordinary impact, then it's really necessary for them to look global. Equally, Australia is also just 24 million people, so from a B-to-C point of view, we also don't have a very large market to address. And then as a result, with a not particularly large market to address on a B-to-C basis, I think that we've naturally grown a strength in the business-to-business world.
Ross Dawson: There's this idea of a born-global company. From the outset, it is looking for or engaged in global markets. What do you need to be able to establish that? Are there critical capabilities or relationships that enable you to be a true born-global company?
Stuart R.: Yeah, look, I think that in terms of being born global, you need to be able to actually understand the markets and the customers which you're going to serve. I guess we sort of delineate between old economy businesses, which may be based more around the thesis of the Model T Ford, that you can have it, just as long as you have it in black, versus essentially new economy businesses, which are obviously looking for mass personalization. So that empathy with the customer, the understanding of the customer and their environment and what gives them ease, convenience, amenity, is vitally important.
Stuart R.: In terms of capabilities, people need to be able to, in building their products, actually understand those end users and obviously the use of data. And I guess the evolved versions of that, being machine learning and AI, are extremely relevant to those new economy businesses who are looking to service that global demand.
Ross Dawson: You're talking about this idea of mass personalization. You need to understand your users, both generally but also very specifically. When you've got customers who are all over the world, how is it that you can gather those insights or apply them to make things which are relevant to individual customers in many different places?
Stuart R.: I think you just need to have access, and I guess that access has been accelerated greatly by, I guess, the advent of the internet and the evolution of the internet over the last 20 years, which has made things far more local, in terms of the level of connectivity that we experience today, the fact that we walk around, as they say, with a supercomputer, or relatively a supercomputer in our pockets. The ability and reduction in friction as to how to access people on a global basis is obviously reduced.
Stuart R.: The other key pieces of the puzzle, though, are essentially that localization on a geographic basis and the communications preferences that actually exist as well. A classic example there would be if you were to look at a website which is focused on the United States or North American market, and then you compared that, say, to a website which you would see focused on China or Asian economies and geographies. You see two very, very different user experiences, which have, I guess, exploded within those markets.
Ross Dawson: There's a whole industry around localization, where companies go and help companies to localize their offerings, so is this something which you can outsource, or is this something which needs to be a core capability of the organization, to be able to localize your offerings wherever they may be?
Stuart R.: Yeah, look, I think in terms of your core product, it really does need to be appropriately localized, and I think that that is a core competency of the business in terms of product development, ensuring the product market fits, ensuring that essentially it meets the customer demands and continues to meet those evolving customer demands. In terms of things that I think that maybe can be outsourced, I think there is a lot of infrastructure that can be outsourced. That may be platforms such as social media, in terms of its ability to provide marketing reach. That's somewhat become relatively universal as to how that it's used on a global basis by your Facebooks, your Twitters, your Googles.
Stuart R.: You then look at the other key pieces of business infrastructure, whether that might be payments, whether that might be essentially banking, whether that might be how you navigate localized regulatory environments. I think that those are the pieces, maybe, where more of the outsourcing could occur and actually create efficiency for a company which is moving from a primary or single geography focus to one which is much more globally addressed.
Ross Dawson: We're talking about lots of complexity here, lots of moving internationally, and in startup world, we always hear focus, focus, focus. So if you are a growing startup, and you're trying to be focused, how do you manage customers over many countries and cultures and currencies?
Stuart R.: Yeah, look, I think that as you say, that the focus is so fundamentally important, and everyone's trying to drive for the extraordinary, and that can mean that essentially sometimes focus can be lost and companies can grow too fast. That speed of growth can then create excessive risks within a business, and I think that the natural rate limiter within business is actually not necessarily the technology, which obviously has been sort of following Moore's Law or a little faster, but actually the human side of the equation. And then you add to the human side, obviously, the resourcing side, and obviously here in Australia we're still an emerging market as to the maturity of venture capital and financing startups, but we certainly have made some great inroads in the last couple of years.
Stuart R.: But in terms of managing customers over multiple countries, I think again that's how do you actually create empathy with those customers? Do you localize your support for time zones to provide 24/7, or do you actually have those in the jurisdiction, which provides for those cultural nuances to be serviced through your support desk or customer success functions? And then I guess when you're looking at currencies, obviously there is an emerging, I guess, fintech community or fintech advancement on a global basis. Not only do we have our new economy businesses vying for that, but obviously we have our established financial institutions rapidly trying to evolve.
Ross Dawson: Right. In that, there are some choices around setting up an international office, like say having people on the ground or in the country. That's a pretty important decision, whether you do just have a call center, which is 24 hours, do you have local, regional call centers, or do you actually have people in an office? How do you make that decision around when you set up a new office in a new country?
Stuart R.: I think the key there is the ability to create a, I guess, sufficient density, sufficient density in terms of the customer base that you're servicing and the proximity that you can create to that customer base. If we're talking in particularly business-to-business, then looking through the size of the customer, the size of the markets, and making those strategic decisions as to when to enter the market is vitally important.
Stuart R.: Equally, the ability to appropriately finance these overseas expansions needs to be thought through very, very carefully, as essentially you need to also, as we were talking about before, deal with the complexity of becoming a multi-jurisdictional company, whether that's the HR laws, whether that's the licensing and regulations that you would need to abide by, or just simply the customs of doing business in those particular states and/or territories.
Ross Dawson: How about the leadership of these companies, which you necessarily start in one place, even if you start with a global mindset? And then suddenly you're dealing with all of the complexities of multiple regions and countries and currencies and cultures. Is there a time sometimes when you need a CEO which has the global experience and mindset, where you have to change leadership? Or can leaders grow into that global perspective from sometimes having just lived in one country before?
Stuart R.: The requirement for a CEO to be globally aware, I think, is very important. You've also got just the classic sort of founding team dynamics. If a founding team has been hard at it for five or seven or even more years, they're probably becoming tired, so the energy of the CEO is also important, right alongside their capability to grow. And then there's the obvious role of the board and particularly the chairman in supporting the CEO as to how global growth is actually executed upon and identifying what are the right skills, the right capabilities, the right structures that need to be put in place for growth, particularly on an international basis, to be successful.
Ross Dawson: I suppose one of the basic requirements, then, is you gotta be good at time zones, whether they be getting on airplanes and dealing with jet lag or having to get up in the middle of the night sometimes.
Stuart R.: I think one of the things that Australia is finally starting to get better at is that, whilst we expect the extraordinary from our founders, from our entrepreneurs, we clearly need to understand that it comes at a cost. Just like any performance athlete, the load cycle versus the rest cycle needs to be appropriately managed, and so I'm saying, the fuel that we put into these businesses is fundamentally critical. To expect people to run marathons with nothing but perhaps bread and water or even less is pretty unrealistic if we're looking for something in terms of extraordinary performance.
Ross Dawson: I think it was Walter Wriston, the old chairman of Citigroup in the 1990s, said that money is information, and that means that digital technologies have transformed money and payments and investment. You have some investments in the space yourself, as well as venture capital. If we're looking at this changing world of money and payments and investment, from the big picture, what are some of the big important trends that we need to be paying attention to?
Stuart R.: Yeah, look, I think that fintech has really sort of brought forward the ability for us to look at the store transfer of value in different ways. I think the internet has been fantastic at creating an architecture and a level of connectedness to provide us with alternative both stores of value as well as ways in which that existing stores of value and currencies can be transferred on a global basis, far, far more efficiently than they historically could. That said, the financial services industry is obviously heavily regulated, and for good reason and good measure, and we've also seen the fact that financial systems, on a jurisdiction-by-jurisdiction basis, also create fairly significant, I guess, inertia within the way in which things have always been done versus we should try this, this is a better way to do it, how do we actually get to have the opportunity to do that?
Stuart R.: And again, to come back to one of my earlier comments, the financial services industry, because of its construct, is probably a little more like the old economy Model T Ford. You can have it as long as it's black, vis-a-vis essentially what is it that our customers actually want in terms of the mass personalization, the fact that convenience, utility, amenity are fundamentally important? And the expectations of customers are progressing at an unrelenting rate.
Ross Dawson: If you're enjoying this episode, listen to the rest of the OFX series at wheretheworldsmoving.com.
Ross Dawson: One of the most important things in the world of money is saving, and a lot of people want to save some money, but they aren't necessarily very good at it. In terms of helping individuals save, can technology help us to manage our finances better?
Stuart R.: Absolutely, and in fact, to be open and transparent, I do have a number of investments within the fintech space, two of which actually are, I would say, addressing this very need. The first one is a company by the name of PayActiv, which is a financial wellness solution, and the fundamental premise behind that is to provide employers to give their employees the ability to access their earned but not yet paid salary. The reason for that is that employers are becoming very much aware as to the impact of financial stress.
Stuart R.: So to your point, people probably have a desire to perhaps save money, but I guess the way in which the world has influenced them may have encouraged them to consume to excess or maybe to spend beyond their means. Financial stress is insidious within organizations in the way in which it actually impacts productivity. Similarly, it also causes issues of potential safety alongside that productivity, but has also been pointed towards the impact it can actually have on people's lives, their relationships.
Stuart R.: And so the financial wellness solution that PayActiv provides is specifically to try and take away from those overdrawn fees, those late fees, those low balance fees, which is what we internally call fin taxes, and to actually give that power back and that opportunity back to the individual and for them to be able to create the space to address any, I guess, unforeseen issues. It really just plays to the reality that in life we expect things to be real time to near real time. Why is it that we still get paid on such a batch basis, whether it's monthly or fortnightly?
Ross Dawson: Another thing that's changing is, of course, payments. We have less cash, whether it's plastic or paper, than we do in the past, and we've got contact-less and mobile payments. Where do you see this going, the whole world of payments and how we pay for things?
Stuart R.: Yeah, look, I think that as we forecast into the future, I think the velocity of money will continue to increase. And in order to increase the velocity of money or stored value, what we need to be able to do is to reduce the friction in the system. Effectively, that sort of is coming in the form of moving from, I guess, coins to effectively looking at things like physical bank checks, vis-a-vis essentially banknotes, to ATM-based card systems, to now, obviously, we have the wonderful world of Apple and Google Pay, so your contact-less systems.
Stuart R.: They're also obviously using other technologies in order to do other forms of contact-less payments. They might be effectively attached to your car, and equally, you may actually have applications available in the near future which enable you to maybe not pay in a particular, say, currency like Australian dollars, but also to be able to pay in loyalty dollars like Qantas Frequent Flyer points, which is obviously sort of starting to create a very interesting paradox as to the exchange of value, the exchange of loyalty, and the ability for the individual to actually choose how they actually transact.
Ross Dawson: How fast are the consumer behaviors and attitudes changing when you've got all of these new payment technologies?
Stuart R.: The expectations of the customer are progressing on an accelerating rate. They, I think, pretty much demonstrated by when Apple Pay actually came to the Australian market, that effectively people were willing to change banks or bank cards in order to actually access that technology. There's a particular type of consumer who responds to that type of opportunity, but it's very demonstrative of the appetite for people to be able to utilize technology and particularly where it provides a convenience, amenity, or time or cost saving to the individual. But I think what we're really finding as the new economy businesses evolve is, if the customer wants it, the customer should get it. To be honest, I think the rate-limiting part of it is essentially the infrastructure of the old economy financial services businesses not being able to keep up with the demands of the customer.
Ross Dawson: We all expect more, better, faster all the time, so that's just one example of that.
Stuart R.: And then I guess the other piece of the puzzle is just the way in which the internet is enabling the distributed or Web 3.0 styles of technologies and the role of things like distributed ledger and/or blockchain to enhance or create alternative value chains for new businesses, new economy businesses to provide better services for the customers.
Ross Dawson: You are an investor in extraordinary startups and ventures. So where do you see the compelling opportunities?
Stuart R.: Yeah, look, I think that where I've had the most success has certainly been identifying where mature industries have demonstrated the inability to respond to the speed of a customer's need, and that effectively the infrastructure that they run on is the reason as to why that gap exists. Whether it's in fintech, whether it's in property technology, whether it's in blockchain and distributed ledger-based technologies, things that give the ability in a business-to-business context or business-to-business-to-consumer context to create new and disruptive services that can be architected in such a way that we can obviously not just create something which is just purely disruptive, but actually work with the market incumbents in order to actually create unfair competitive advantage and to grow much faster.
Ross Dawson: Right. I suppose there are incumbents who are trying to stay incumbent, and the new technologies which are enabling them to create new opportunities around that. What is the mindset if you are saying we see a mature industry which needs disrupting?
Stuart R.: Yeah, look, I think that in terms of sourcing opportunities and working with founding teams or forging founding teams from first principles, I think really where it starts is with a purpose. The question as to why is it that this should exist, why isn't it that it doesn't exist, and then why is it that this particular team using this particular approach will be successful in creating something new, different, and in doing so, not creating such a competitive response that stops its ability to be successful? And for me as well, I think that just looking at the ability to make money is very single-dimensional, and I think that it needs to be much broader, to look at through disruption that there is a societal impact, and is that a positive one on a net basis or is it actually a negative one? And certainly across our portfolio, I'm comfortable to say that I believe the portfolio definitely has a net positive.
Ross Dawson: Yeah. Well, I'd say there's plenty of old industries that definitely need to be disrupted. Who it is that can come together to be able to create that, how do you best tap global talent to align around the purpose of the company in which you're investing?
Stuart R.: Yeah, look, I think that what I've had the privilege of doing over the last decade, which has included the foundation and, I guess, scaling of the York Butter Factory, or now YBF, to create a place and a home for numerous communities that understanding the way in which talent works and the changing nature of work and workplace, and that the speed at which that's changing has been fundamentally important as to how the mechanisms of disruption can be, I guess, accessed and also be effective. The reality is, is that the world's smartest people don't work for you nor for I, and to be honest, the world's smartest, possibly I couldn't and shouldn't be able to afford for them to work for me all of the time.
Stuart R.: But through the creation of communities of interest, the reality is, is that we can actually identify who they are, know what they're actually interested in, and then engage and influence them as to the outcome. That really speaks to finding the best people for the job. It speaks to the fact that the geek economy is definitely alive and well and accelerating, and it also speaks to the fact that I think that the friction that exists across borders is actually reducing over time. And to be very specific about this, not only has YBF created somewhere in the vicinity of a hundred different communities, including fintech, prop tech, Internet of Things, and a variety of others.
Ross Dawson: Technology is a force for democratization. It gives people power, the power to do global business, to be able to transact, to be able to connect, to be able to take new opportunities. So what does this mean in terms of the possibilities of poor individuals?
Stuart R.: Look, I think that the possibilities are probably limitless, to be honest, and/or only limited by the individual's imagination. Obviously, in terms of democracies and forms of government and governing, and therefore regulation and the way that that interacts on a global basis, there is obviously significant differentials which exist all around the world. I think technology has that opportunity to actually connect and interconnect and harmonize between all of the various types, and to reduce the friction which may exist.
Stuart R.: Now, be that via transparency, be that via enabling different forms of governing nations and states and the likes, or be that just simply enabling the way in which we can pay for somebody who works for us in Russia, vis-a-vis essentially paying for goods and chattels which you'd like to have made out of a location such as China, as both of those, be it services or goods and chattels, are most efficiently produced from those two jurisdictions. But we need to be able to pay them for exactly what we consume.
Ross Dawson: All of this coming together, all of these forces of change, what kind of future do you see?
Stuart R.: Look, I think it's an exciting future, but it's exciting as a result of the increasing and accelerating pace of change. The ability to embrace that change and for business to change at the necessary speed to support those demands is creating enormous opportunity for new economy businesses to first of all be envisioned and then secondarily that the infrastructure around the world for those companies to not just participate in local economies, but actually participate as global businesses, is becoming more of the norm and becoming actively supported on an increasing basis, which as I said, gives rise to, I guess, a lot of opportunity and excitement from where I sit.
Ross Dawson: Yeah, absolutely. Fantastic to get your insights. Obviously, some deep experience in actually making this happen, in terms of global business, so thank you so much for sharing your time and your insights with our audience, Stuart.
Stuart R.: My absolute pleasure, Ross.
Ross Dawson: To find out more about how OFX is helping their customers move money around the world, go to ofx.com. This podcast is presented by OFX and is a BBC StoryWorks commercial production.