Jodie Fox highlights the contrasts between the Australian and US Ecosystems

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0:59 Speaker B: Thank you.

1:01 Adam Spencer: Hi, I'm Adam Spencer, founder of the Day One Network, which is bringing the history of the Australian startup ecosystem to you. I believe in founders. It's why I do everything I do at Day One and our media company, W2D1 Media. And that's why the Day One Network exists, to create helpful content for founders. We've got some great shows in development, but a large part of what we do couldn't be done without support from our partners and sponsors. And I couldn't be happier than to be working with NTP, who get community better than any other technology recruitment company out there. A Newcastle company like mine, NTP are invested in seeing the growth of the local tech community in Newcastle, Sydney, and more broadly Australia. So thank you NTP for helping us bring helpful content to founders and the startup community in Australia. Back to the interview.

1:53 Speaker B: Thank you.

1:54 Adam Spencer: Hi, I'm Adam Spencer, founder of the Day One Network, which is bringing the history of the Australian startup ecosystem to you. I believe in founders. It's why I do everything I do at Day One and our media company, W2D1 Media. And that's why the Day One Network exists, to create helpful content for founders. We've got some great shows in development, but a large part of what we do couldn't be done without support from our partners and sponsors. And I couldn't be happier than to be working with NTP, who get community better than any other technology recruitment company out there. A Newcastle company like mine, NTP are invested in seeing the growth of the local tech community in Newcastle, Sydney, and more broadly Australia. So thank you NTP for helping us bring helpful content to founders and the startup community in Australia. Back to the interview. Hi, I'm Adam Spencer, and welcome to Day One, the podcast that spotlights Australian startups, founders, and the organizations that empower Australian entrepreneurship. We go back to the beginning to tell the story of Australia's most inspiring founders and how they built their companies. On the episode today, we have—

3:08 Speaker B: I'm Jodie Fox, and I was one of the co-founders of Shoes of Prey. We were the place where you could design your own women's shoes, and we would make them and ship them to you anywhere in the world in under a week. 11 days.

3:23 Adam Spencer: Shoes of Prey began in 2009. Were you involved in the ecosystem, you know, as it were, before that? Did you have any idea of what was going on before 2009?

3:35 Speaker B: So in terms of an ecosystem, it's definitely nothing like it was to— it is today. In 2009, really For Michael and I, the places that we were seeing that real kind of entrepreneurial spirit and startup scale-up were connected to organizations like Google, who, you know, were pretty new to Australia then and, you know, looking to hungrily like to nurture that within the Australian environment. And also within organizations like Entrepreneurs' Organization, which had pulled together this, you know, group of business people. And I, I guess still the word entrepreneur or startup even was not something that was typically in our vernacular.

4:20 Adam Spencer: Who were some of the other big companies that were shooting up and all kind of also had paved the way ahead of you at that time in 2009?

4:27 Speaker B: Look, there were definitely quite a few of them. Two that were really prominent in my experience were Atlassian and Red Balloon. So Naomi was amazing as someone that we could connect with and we did do kind of early business with Red Balloon as well. And Mike Cannon-Brookes was one of the very first people to come on board in our investment round with Shoes of Prey. We also had just down the hallway from us was in our second office, actually our third office if you count my apartment, which I was reminiscing about the other day. It's just crazy. It was this one-bedroom apartment in Surry Hills, and I remember having a team of 8 people in there, hundreds of pairs of shoes. Mm-hmm. Over, you know, a period of time where it was summer and it was 40-degree days and no air conditioning. And anyway, you know, it was kind of amazing. And I remember just when we got into this office building, there was Rebecca Campbell was down the hallway with Posse. And she was probably one of the first people that I knew that was raising capital from these really extraordinary investors. globally. So, and kind of through her, met people like Bill Tai and Rick Baker, who also became part of our first round of funding.

5:46 Adam Spencer: So yeah, 2009 in Sydney, right? Like, that's before a lot of the kind of infrastructure had been set up, even like before Fishburners was a thing.

5:54 Speaker B: Yes.

5:55 Adam Spencer: Yeah, can you help me? I know I've asked this, but I wanna go a bit deeper. Like, who were you leaning on for support before we had all of this infrastructure and, you know, support?

6:04 Speaker B: Well, there wasn't really a lot of infrastructure and support. And to your point, like, I remember when Fishburners opened, I remember when Stone and Chalk and these, you know, coworking spaces were, you know, starting to come together. For us, I think honestly, like, the two organizations, Google and Entrepreneurs' Organization, were the two places where we were kind of able to find our tribe. But in terms of the services and ecosystem, there wasn't a lot. So when we got our first office, you know, we were inviting other entrepreneurs to come and rent a desk from us, kind of own very micro version of being able to, you know, create a co-working environment and of course minimize our costs as we were doing that fine dance between having enough space to grow but not too much space that it was ridiculously expensive. We also used to host like lunch and learn or evening sessions where we would have experts come in who generously donated their time to help teach us and the community of entrepreneurs that engaging with, which is pretty small then, about PR or setting up a company and things like that. And, you know, we would, we would also like kind of throw open our doors on Friday afternoons for other entrepreneurs to bring their teams in because we're all still quite small teams, to have Friday night drinks together and, you know, start to build that connectivity and network. So yeah, there wasn't, there wasn't really a lot. And I do remember as well, even, you know, service offerings were really tough to engage with. So a good example was When we went to set up our first bank accounts and we needed to submit business plans in the format that the bank prescribed, and then because we were global in this online retail world, we needed to be able to, you know, trade in different currencies because it increased our conversion rate and reduced consumer friction in the funnel. And we needed to have separate accounts for each currency, and the fees were becoming phenomenal, and the administration was really challenging. And it was when PayPal wasn't even really fully accepted in Australia because the bank banking regulations didn't contemplate a financial institution that was neither a bank nor a customer. So, you know, there was lots of kind of friction points for us very early on because the system itself didn't contemplate, you know, what it was that we were looking to build or that we were operating in.

8:22 Adam Spencer: How kind of in the startup ecosystem, you know, for lack of a better phrase, how do you still consider yourself part of the community, in the community? I mean, do you still have a finger on the pulse of what's going on?

8:36 Speaker B: I think I could have a better finger on the pulse, but that might speak more to the depth with which I like to get involved in something before I really say I'm there. I feel like I have a reasonable connection into the industry at the moment, whether— and largely it's connecting with VCs and then, you know, participating in things like Startmate mentoring and, you know, vetting and all that kind of stuff and staying connected in with what's going on with different stages of the process, like Galileo Ventures, and seeing what they're doing to bring those university ideas out into the real world. Or this CSIRO fund, which unfortunately the name escapes me at this very moment. I will blame that on baby brain. But, you know, it's just staying connected into all of those different communities to see what's going on. So I'd say that, yes, there's certainly a connection there. Could it be deeper? Absolutely. I think that the complexity that we have in that ecosystem now is totally extraordinary. And having spent 5 years in the US away from it and then having come back and not, you know, really significantly diving back in since being back here on the ground probably means that I'm not, you know, sort of fully immersed. But yeah, I would still say that I'm connected to it.

9:48 Adam Spencer: The reason why I ask that is I, in a second, I do want to ask, you know, what are some of the biggest gaps that you see today in the ecosystem, in the system just generally, but you just mentioned the US, so I just wanna follow up on that. What's the biggest difference you see between, I don't know, I guess maybe our cultures when it comes to startups and scale-ups, or just anything that comes to mind, what's the biggest differences you observe?

10:21 Speaker B: The biggest differences I would say at a broad brush between the US and Australia is probably the appetite and openness to risk, failure, and success as well. So what I mean by that is I find in the US that the result of a single conversation can easily branch out into a huge number of connections and networks that are meaningful, that really just scurry your discussion along so quickly and channel you into the right conversations. Sometimes in Australia I find that those relationships are a little more protected and more difficult to sort of encourage that openness. I think that historically we've also had a little, you know, a bit of kind of shame and concern around testing and failing at something. But, you know, when you're breaking ground on something that is disruptive and new, that's just part of the process. And so I think that attitudes and fears around that in Australia certainly you know, could use a lot more development, discussion, and positivity. And also, I think that the really big challenge in comparing those two markets is scale. And I, I think that we're never going to be able to compete on that, and that's okay because we still have a lot of great opportunities and great foundations here in Australia for building strong businesses that really are global and dominant.

11:51 Adam Spencer: Yeah, um, and I need to follow up on that now too. So we'll eventually get back to the gaps question, but yeah, what are some of those strengths that make Australia, in terms of, again, the startup ecosystem, what are we doing really well? What are we really strong at? What are our, you know, competitive advantages, I suppose?

12:14 Speaker B: In today's ecosystem, my broad sense is that we come from a very strong economy and a sort of, pretty predictable political environment. I know there's some question marks about how predictable that is during a pandemic, but generally speaking, a reasonably predictable environment in that sense. We also, as part of all of that, we now have growing confidence and understanding of what it means to participate in the investment of startups and those, you know, sort of potentially high-growth stories and what the risk looks like as well. And now that sort of extraordinary pot of wealth that sits around superannuation is really getting behind that, which is very exciting. So, you know, what we're seeing is a lot more money in the market, which means that we can open here, test here, you know, really put those startups through their paces on home ground as a test market and then start to experiment with taking them more broadly. So that, that's quite exciting. And I do think that we have good relationships and good track records with a number of startups and businesses that have gone global as well from Australia. So, you know, there are those very, very positive things. Also too, you know, Australia is an interesting market. I would say it's, in my experience, one of the easier markets to kind of do testing in and understanding consumers in, although there are vast differences once you do go offshore. So a good example of that learning is that in Australia, generally speaking, you can market with one message, but in the US, every state is almost like a different country. Requiring different language, different approach, different, you know, colorways, all these sorts of things. So, you know, I think that Australia offers this really kind of rich opportunity for foundation against a backdrop of a healthy economy and, you know, a lot of predictability that is a nice environment for startups to be in.

14:08 Adam Spencer: This next question might circle us back around to the gaps, but what, what made you move your HQ to the US? What was, what was lacking in Australia that made you you know, go offshore?

14:20 Speaker B: It was the next stage of our company that took us offshore. So we had raised the majority of our funding out of the United States at that point in time. We also had brokered a deal with Nordstrom to start testing stores with them. And one of the things that kind of connects to what I was saying before is it's really challenging to get into a consumer mindset of a different market, particularly in a consumer product, without being there on the ground and having people join your team who really natively have that mindset. So a really simple example is the first store that we opened was in Seattle, and it was winter, and we'd been toying with, you know, developing boots for a long time but hadn't prioritized it. And it was the first time that I had been in a type of cold where I really understood. I mean, of course I'd traveled, but I hadn't spent like long periods of time time in very cold weather where I realized that ballet flats were not going to help me through that winter and that my feet might fall off. So, even just a simple insight like that or understanding, you know, the differences in language as simple as something like "it's addictive" to "it's addicting," which is what commonly gets said in the US to make sure that, you know, we're communicating properly. There were so many reasons to do it. But again, if I zoom out into a more macro lens, some of the reasons that, you know, the US was so appealing is actually the reasons that it's still so appealing today for startups in Australia to go to the US, which is traditionally valuations and check sizes of the size of the opportunity of who you can sell to, even in niche, is enormous. And the sophistication of the ecosystems there mean that you don't spend your time fighting a large number of frictions because they already have been solved for you by the multitudes of people who've trodden that path.

16:14 Adam Spencer: What did the VC landscape look like back in 2009? Like, was it just not a choice to raise funds in Australia and that's why you went, you know, why you got the majority of your funding from the US? Like, was it just non-existent in 2008, '09?

16:34 Speaker B: It wasn't non-existent, but there were very few. So, we actually did, in the syndicate, have of some Australian funders and they included MLC and they included Mike Cannon-Brookes. So, you know, there certainly was a scene emerging and there were only a couple of investment funds that we were really aware of in Australia. And it certainly wasn't, you know, a known path. And, but I do wonder, and I must admit that, you know, I mean, there's also a percentage of that, which is I'd never understood or experienced or interfaced with the venture capital world myself. So there was probably a lot newness on my side of things that wasn't just typical of the industry. But yeah, there wasn't a huge amount in Australia, so, which certainly was just such an enormously wild difference when we went to the US and started doing the laps of Sand Hill Road, where it was, you know, absolutely the thing that was done.

17:32 Adam Spencer: Let's get this one done. What are you— what are you— the biggest gaps, like today? I know you, you know, you're still involved. What do you see as some of the biggest gaps or biggest areas that we could improve on?

17:43 Speaker B: The biggest gaps that we could improve on in the Australian ecosystem— I think that it would be wonderful in terms of bridging gaps if we, at a regulatory level, really looked at regulation in a way that contemplated this very exciting new disruptive future that's ahead of us. And I also think that, you know, the attitude shift into which we are already on the journey of, which is very exciting, of how startups operate and what that looks like, you know, as a meaningful career and balancing that risk out into something that we all should be having a crack at at some point or bringing into our careers, even if we are in a more traditional career path. Is there two things that I think gaps that we have the capacity to address in the more near term and the attitude shift, I think, will come sooner rather than later, given that we're now seeing entrepreneurship being taught at universities and STEM being introduced at a much earlier stage.

18:46 Adam Spencer: I want to ask you the advice question. If a brand new founder came to you tomorrow, what would you tell them? Or given everything you've learned along your journey, what would you tell day one Jodie?

18:56 Speaker B: The first one I have said a lot over the years, and frankly, every time I think about it, it still means something to me, which is just do everything before you're ready. There is such a temptation to research a bit more, polish the product a bit more, get it done a bit more, but actually you just learn so much on your first day of doing or showing your product or service to other people or letting them experience that and give you feedback than you ever will in that sort of, you know, preparation process. And, you know, there are multiple examples of that. So I think that's So that's probably the first one. The second one would be, which kind of relates to that, is don't be afraid of making a fool of yourself. Yes, be as best prepared as possible, but there are just things that you are not going to know, and it's better to be out there trying, failing, learning, getting better than it is to be trying to hide behind this veil of perfection. And also too, I think that it builds trust. Especially if you're open with people about, you know, "Oh hey, we're testing this, would you like to try it and let me know what you think?" "Hey, we know that we're not all the way here with X," or, you know, "Hi, I'm new to blah, I'd love to get your advice on..." So approaching it with that learner mindset, I think, gives you forgiveness in the places that you may need it when you don't get an A+ the first time that you try something. So I think I'd tell myself that. And then I think the last thing I would tell myself is to have confidence to ask for what I want or need in that moment of the business. I think there's a real kind of criticism or hesitation. I need this to be a bit better before I can ask for X, or I need, you know, this sort of all of these different criteria we have in our mind. But really, that's just fear-driven, and there's, there's a good reason for everything to happen, and to learn about what other people's motivations and connections are to what you're doing. So don't be afraid to ask for what you actually need.

20:47 Adam Spencer: Casting our kind of minds back to the very beginning, what resources back in 2009, 2010 were available in Australia to help you guys get going and set up? Because we've already mentioned that a lot of the systems and infrastructure wasn't there. But yeah, what was really critical for you then to get off to a really good start?

21:12 Speaker B: So I remember being so glad that we were able to operate with a lot of the Google Enterprise products because we were, you know, I mean, we were setting up manufacturing relationships in China in industrial remote-ish areas. We were in Sydney trying to, you know, build out tech. We were, you know, we were in multiple places just hustling, hustling, hustling to get things done. And the capacity to be working out of the cloud from that very early stage of our business was was, I would say, like critical to us actually being able to work as consistently and in a detailed way that we needed to, was sharing resources and information quickly as we were able to then. And that was all kind of quite new. And I think PayPal as well was pretty excellent because of the fraud protection measures on there. I mean, anyone who's running a small business, like being defrauded is just, you know, so awful and damaging in your business. But the technology they had around that even very early on for us to be able to trade globally was, you know, really important for us too.

22:23 Adam Spencer: When you say Google Enterprise, you're talking about like what it's called these days, Google Workspace.

22:29 Speaker B: Oh yes, it is. I'm so sorry, I was just thinking, you're right, yes, it is Google Workspace. So even just stupid things like Drive was a brand new thing where we could all be in the same document at once, and that's amazing. Or, you know, just, I mean, the, the suite of products that they had, the fact that we weren't paying for long-distance phone calls. iPhones had just been released into the market, I think, in 2000 6 or 7, and I remember Wi-Fi wasn't readily available on plan, you know, everywhere or on plans. And so, you know, I would download— I would build a Google Map of all the places and appointments that I had for press or for fundraising and screenshot them onto my phone. So yeah, they were all— there were a lot of things.

23:09 Adam Spencer: Were you involved in any incubators or accelerators? Was anything like that kind of up and happening back in 2009.

23:18 Speaker B: So when Springboard came to Australia, when Murady was around, when, you know, like actually we met, you know, we did meet Nicky Skivak very early on when he was, when he put together Startmate. And we didn't end up working together, but we met him extremely early on. And just, I mean, the fact that way back then he was working on this and to see what Startmate has, you know, been brought to life within that extraordinary architecture today and within Blackbird is pretty phenomenal. That's awesome.

23:47 Adam Spencer: And this last question isn't really so much a question, it's more of, I just wanna open up the floor to you to, you know, this series is going to be hopefully the most holistic and truly balanced and authentic and honest, you know, telling of the history of the Australian startup ecosystem. Big task, not sure if we're gonna be able to pull it off, but what do you think like needs to go into this series? What do you think people need to hear or know or understand about the ecosystem? Their system.

24:15 Speaker B: I think there can be a lot of glamorous perceptions about, you know, what it is to be an entrepreneur, and I think there's a lot that's not glamorous about the industry or about the profession. And I think getting out as much of what the realness is of it and what it takes and what it's going to take for us to continue to evolve together and rise together as entrepreneurs for the future at that world class. We need to get into those nitty-gritty things of, you know, what that legwork looks like and be specific about it and accountable to it. That for me would be the best thing that could come of this series, is motivating people to realize where those things are and what they can contribute to it in a way that's meaningful and more than the ideation phase of anything is so much fun. The strategizing and mapping out the planning is so much fun. The doing is what separates the wheat from the chaff. And I think I recently read this article about Eliud Kipchoge, the first guy to break the 2-hour marathon, and he has built this very humble training camp and beside his bed he has a quote from Paulo Coelho— probably butchering the pronunciation of his name— and I'll butcher the quote as well, but the essence is, you know, "If you want to be successful, don't lie to yourself." And to me, the heart of that is in consistency. So, you know, every day that you wake up and you've got your task list to do, or you've, you know, it's maybe it's boring data input, maybe it's getting out 50,000 emails, maybe it's chipping away at that discussion that you're having with lobbying the government, but just chipping away meaningfully and consistently every single day. To me, in doing the not glorifying work and really having honest discussions about what that looks like so people feel good about it and know that it's normal and it's worthy of doing is, you know, one of the most important things that we can kind of nurture for attitude change, for motivation, and for making that entrepreneurial journey less lonely.

26:27 Adam Spencer: I hope you enjoyed that interview. More interviews are on the way. Follow the podcast wherever you're listening right now. Stay tuned for more interviews with many, many more amazing people from the Australian startup ecosystem. Thanks for listening and see you next time.