Michael Batko is the CEO of Startmate, an accelerator that has invested in 170+ startups across Australia and New Zealand with a collective portfolio value of two billion dollars. Originally from Austria, Michael had his first exposure to the startup world when he moved to Australia and became the first employee at Mad Paws, a marketplace for pet sitters. In his conversation with guest host Will Tjo, Michael discusses how working in a startup contrasts to a corporate environment, and what he sees as the four prevalent business models of accelerators and where Startmate fits in.
Startmate: https://www.startmate.com/Michael’s profile on the Blackbird website: https://blackbird.vc/team/michael-batkoMad Paws: https://www.madpaws.com.au/
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Michael Batko: Hey everyone, and welcome back to the series. Our guest today is Michael Batko. Welcome to the show, Michael.
Speaker C: Thanks so much for having me.
Michael Batko: Could you tell us a bit about yourself and what you're currently doing?
Speaker C: Yeah, so I'm the CEO of Startmate. Startmate, we define ourselves as the epicenter of startup ambition in Australia and New Zealand. We started off as an accelerator, and now we have many more programs, which we call fellowships for operators as well as investor programs.
Michael Batko: Michael, what made you get into startups? Have you always been interested in it?
Speaker C: No, not at all, actually. I started in finance myself, so I was actually— my first job ever was as a financial analyst in American Express, and then I did a bit of consulting. And my first startup actually was when I first moved to Australia. So you can hear from my accent that it's German. So I'm from Austria, but I moved to Australia 7, 8 years ago. And I actually really wanted to work in a bar and be a backpacker, but it turns out that my first job in Australia would be as the first kind of employee at MadPaws, a marketplace for pet sitters.
Michael Batko: That's quite a big difference, you know, being a bar— working in a bar and working in a startup. Did you fall into it? What drew you to Madpaws?
Speaker C: Yeah, totally. It wasn't planned at all. Honestly, I posted on a Facebook group being like, "Hey, who's got a job for me in Australia?" And a friend of a friend of a friend connected me with the founder, Alexis, who didn't even want to hire me, and I actually played a soccer game with the team, and they liked the way I played. So I actually was then hired as part-time first and then full-time later. And it was complete serendipity. I didn't know anything about startups. I didn't know anything about dogs or cats or marketplaces, and it was completely random.
Michael Batko: Coming from a background obviously not working in startups, how did you adapt then working at Mad Paws?
Speaker C: Yeah, totally, ah, so interesting. I think the biggest one was the one around in a corporate or in bigger companies, there's always somebody who knows the answer or somebody who you can go to to mentor you, to tell you how it's done, and there's already somebody above you who's responsible for it. And it starts— it was just such a different attitude where you actually had to have the drive and the hunger to find the answer for yourself. It was kind of the attitude of like, well, nobody will tell you what to do or how it's done right because often there is no right because you often are doing things which nobody has done before. And that kind of attitude was the biggest shift for me. And how did I change into that sphere? Honestly, it just took time. It was quite natural, but it took time. And I think one of those pivotal stories from my early journey at Madpaws actually was, which kind of illustrates the way of thinking, was that I still remember Alexis gave me, an intern, and himself $100 on Facebook advertising. Each and was just like, whoever gets the most clicks on this ad will get a case of beer. And that was kind of like the, oh wow, this is very different to corporate. I have no idea about Facebook advertising and now I'm just getting $100 to just play around with it. And that kind of attitude, that was kind of what shifted my mindset.
Michael Batko: Yeah, absolutely. I mean, one thing that led to the next, and here you are as the CEO of Startmate, you know, one of the most prominent accelerators in Australia. Throughout your time working in the startup industry, how do you think our ecosystem has changed, to say, over those last 7 or so years?
Speaker C: Mm, oh, so much. So much. I'm just trying to think through a structure which I can tell you, or like, to tell you about the difference. And there's probably two. One of them is on the operator front, and the other one is on the VC front. On the operator front, when I first I started in startups in Australia, that was 7, 8 years ago now. I worked at MadPaws and an expert for 6 years, essentially like an operations manager. And there was just no network to ask anybody questions of. So like you said, like you were kind of there by yourself trying to figure things out. And there was no other way for me to talk to other operations managers or talk to other startups, maybe outside of the coworking space I was in. Yeah. There was just not that much communication, especially as somebody more junior in a startup itself. So the big change from back then to now is just the one of so many more support networks exist. I mean, even as part of Startmate, we've got now fellowships of hundreds of people who all live in one Slack channel, who ask each other questions around marketing and operations and hiring, etc. And that just didn't exist 7, 8 years ago. It would have been so helpful. And the other side of things is maybe the VC front, which I've really noticed in Startmate over the last, 3.5, 4 years, where 3, 4 years ago, getting a VC job was pretty much impossible because there was literally no VC jobs advertised.
Adam Spencer: Hmm.
Speaker C: Just like the number of VCs were actually quite low. There were never any new roles because VCs were like, even the big ones were size of like 5 to 10 people. And especially over the last 3.5 years, they've exploded, like just the number of VCs, but also the size of VCs. And there's never been more roles in venture capital than over the last 2-3 years. Like, now they come out weekly in all different areas, not even just on the investing side.
Michael Batko: Yeah, that's very interesting. So in essence, it's almost the density of our ecosystem, the people, support structures, and just in general, they're all growing since you last worked at Madpaws. What do you think is the catalyst for this? Why is there such an explosion in interest in startups?
Speaker C: Yeah, definitely. So it's probably just a long time in the making. It's those stories which started 10, 15 years ago which are finally kind of coming to fruition where the most prominent startups in Australia are now kind of laying the foundation for like the second and the third wave of startups where people from Atlassian and Canva, et cetera, are leaving the organization, starting their own startups, becoming operators back into the ecosystem. And it's kind of like fueling each other, and it is attracting a lot more money, which therefore is also attracting a lot more talent, which then is kind of growing the entire ecosystem together. And the exciting thing is that the startup ecosystem has always been one of people just paying it forward and helping each other. So couple that together with a massive growth, and suddenly you've got massive network effects of people helping each other. Yeah. And without expecting anything back, which is just incredible.
Michael Batko: Yeah, absolutely. So I'm not sure if you've ever dabbled into startups in Austria or perhaps anywhere else in the world. Do you think that we're on the right direction as an ecosystem in Australia, or what else could we be doing to improve on?
Speaker C: Yeah, no, absolutely. I mean, it's all the right building blocks in Australia. I genuinely think we can be world leaders and are already world leaders in building startups. Here it is exactly the right kind of attitude and we've got all the right ingredients from universities, people taking risks all the way through to building companies. There's definitely a couple of things which we can improve on as a country, such as policies and sophisticated investor kind of restrictions, but no, it's absolutely on the right path.
Michael Batko: Hmm, so you mentioned that just then that we do have all the right building blocks, like people taking risks outside of university and so on. I think I read somewhere that Australia in terms of startup commercialization is not really punching our weight in terms of OECD countries. I think it was like rank 40 or something in the world, which is pretty low, like to be completely honest. Why do you think that's the case?
Speaker C: Yeah, so the one thing which Australia still needs to change a little bit is the mindset of taking risks. Other countries just have that more inherently as part of their culture, whereas in Australia that's just not the norm yet. This is, for example, actually something that we are trying to address at Startmate with an initiative we call the Student Fellowship, where students in Australia I mean, actually, when I compare it back to Austria and Europe, by the time you graduate in Austria or anywhere in Europe when you study, you've probably done 3 different internships in 3 different companies, and by the time you choose your career, you've already had so many different touchpoints. In Australia, that's actually not quite the case yet. Usually what I see people doing is study law, and then the natural thing to do is do a clerkship, and then you actually end up in exactly the same law firm post-studies again, which is like your You haven't even tried that many things yet before deciding on your career. And that kind of change in mindset of actually trying something that's not banking, consulting, being a lawyer, etc., and going outside of that is actually something that just needs to change. So for example, what I mentioned there is at Startup Bay, we do a student fellowship of now 200 students every 6 months in the summer and winter breaks who just get to explore startups for 2 weeks, who get actually— Yeah. Match to internships at startups, and actually just building that kind of more risk appetite in a way, and showing people like this is genuinely a career path. And if you can change that, then it kind of elevates the entire startup ecosystem again.
Michael Batko: Yeah, what you said about seeing startups as a genuine career path kind of piques my interest, because why do we not see it as something that could be a viable career?
Speaker C: Well, exactly, so that's the thing, like people still see it as risky or they don't see themselves building one because they don't have the technology skills or I'm not a developer, et cetera, et cetera. But that perception just needs to change. You don't actually need to be able to code to be in a startup. Startups have so much to give you. So many people see their career as kind of like, "Hey, I want to eventually be in a startup. In order to get there, I need to build I need to build up my skills first, and then they go into banking, consulting, and to learn Excel, and here and there, and so on. And they kind of think about, like, I need to build up my skills first. But actually, the other, flipping the thinking and being like, well, actually in a startup is when you can learn the most. That's actually the, that's the kind of the interesting mindset change here.
Michael Batko: I wanna touch a bit into more of the, owner's side. So you mentioned that at Startmate, for example, you have this 2-week program where you expose people to working in startups and so on. Is that— would you say that's a solution to changing this mindset, or do you think it starts with, I don't know, government or universities to run these programs? Or like, how do we start to make effect to these mindset changes, and who should do it?
Speaker C: Yeah. Honestly, I'm probably not the best person to kind of comment on like the large-scale initiatives, governments, et cetera.
Adam Spencer: Exactly.
Speaker C: Like what I always like to do is kind of play my role of just doing things bottom-up and affecting things that I can affect in a way, and I'm always just the one of staying away from policy changes, 'cause they can take a very long time. So what I love to do is literally like affect 400 students a year, and if those 400 students build 100 companies, that's 100 companies per year which are built, kind of, which is a really good starting point. And that's kind of like the— it's almost like I really am interested in like the atomic little units of individuals changing the world rather than trying to affect entire governments to change them. And absolutely, there needs to be changes as well.
Michael Batko: Yeah, I understand your point. It's when we start to dabble into these large-scale changes, it becomes quite bogging to think about How does in practice that actually works? What you mentioned also is quite interesting because from your sphere of influence, you just want to say help 400 people and then those people create their companies to help more people. Do you think that there's a little bit of instability in relying on hope as a strategy to grow our ecosystem?
Speaker C: Mm-hmm.
Michael Batko: So in essence, we're hoping that people will go back and give to the community. But what if they don't? Does that mean that our startup ecosystem is doomed to fail?
Speaker C: No, I almost don't see it as hope in a way. I almost see it as a given. There's almost no way of somebody not to give back. It's almost like if somebody reaches out a hand to you to help and you change your life, it's almost inevitable for you to want to give back to the community. We're seeing it time and time again. Time out again at Startmate over 10 years now where founders go through the accelerator program, get so much help, come back as mentors, invest their personal money back into Startmate, and we see the same things in fellowships. It's almost like that flywheel which just never stops. You probably still remember that person which helped you get your current job or the job just before that, and you will never forget them. And whenever I ask you for a favor, you will always pay it back, kind of thing. Yeah. It's those kind of moments which change your lives, which people just don't forget, and they will always want to pay it back. Maybe that's a bit of like a romanticized view of the world, but I genuinely believe in the good of people.
Michael Batko: The next question, I guess, is if a new founder or entrepreneur came to you, and given all your experiences, your mistakes, wins, what's one piece of advice you'd give them that would help them increase their chances of success?
Speaker C: I always keep coming back to the same advice here, honestly, and it is always the one around talking to customers. It's like people always see fundraising as the goal, or money as the goal, or persuading people to come on the journey, or mentoring and getting advice, etc. But the only answer which is right is always the one of talk to customers, and that's the best advice I have for any founder, whatever stage they're in, whatever problem they have. The answer always lies with the customer, whether they are at the interview stage, whether they already have hundreds of customers. It's always the one of like coming back to that and talking through the problem and what is the actual burning challenge here. And you will always be able to distill that. Ultimately, founders have kind of two problems here. Like one is a product problem and the other one is a distribution problem. And both those problems can be solved by customer conversations. Yeah. On the product side of things, we'll be able to determine what's actually important to the customer to actually build. And on the distribution side of things, it's the same thing. Like, if you talk to enough customers, you actually distribute your product to the world, and you're essentially doing sales and marketing already inherently.
Michael Batko: Yeah, definitely. It's a kill all birds with one stone, and you're constantly bringing your customer into that journey of building your product rather than building a solution to try to fit it into the problem. The last question, I guess, is not really a question, but more about a space for you to talk about anything that's on your mind regarding our community. So is there anything that is currently on your mind that you'd like to get the word out? We're aiming for this podcast to reach policymakers, entrepreneurs, mentors, investors, and so on. What would you like them to hear?
Speaker C: Yeah, um, I think what is on my mind is kind of the future of Startmate itself. It's probably like the biggest one for me, where what we have, what we are landing on in Australia is lots and lots of spaces and communities and accelerators and coworking spaces, etc. And maybe the message itself would just be what the one of This is what we're trying to build at Startmate, or what we are building at Startmate essentially is kind of the epicenter of startup ambition. We actually want to marry essentially the three key personas of startups in one place, which is founders, operators, and investors. And we're actually building this kind of place of them all to come together. So maybe another way to phrase it is kind of the one of, what we're trying to do at Startmate is reduce the distance between between people and actually just getting them to help each other and bring them closer to each other. And rather than just doing this with founders and mentors, we actually do that now between founders and their investors. And once they have money, with people they can hire as well, with the operators. And if you've got those 3 people in one kind of place, that's when you have a truly thriving ecosystem.
Michael Batko: Yeah, absolutely. Something that just popped to my mind when you mentioned this is the prevalence of accelerators and coworking spaces that has really grown in Australia over the recent 10 years, do you think it can ever be a bad thing to have too many? Because you're in essence competing with one another.
Speaker C: Yeah, I actually don't see it necessarily as a bad thing on the competition side of things. I probably see it as a bad thing for for founders themselves, sometimes having too much support can also be damaging. It's almost like, yeah, just because you can walk on a power line doesn't mean you should be walking on a power line. And with accelerators and too much support and too many accelerators can do is almost like help people be on those power lines for too long. What I mean by that is almost like trying to keep startups alive, which could have realized much sooner and earlier that, you know, it actually isn't and it doesn't have a place to be. So it's almost just a one-off and letting startups die and rise again from whatever next thing is that they're coming up with.
Michael Batko: Hmm.
Speaker C: So too many accelerators in itself can actually proliferate just too many companies which probably just could have gone on to the next journey already.
Michael Batko: Yeah, I understand your point. It's, I guess, throwing money at the problem— money and time at the problem— when you're not actually looking at how to solve. So you're just hoping that the company will succeed, when in reality it really shouldn't, because it's just being sustained by, you know, say, VC money or accelerator money and so on.
Speaker C: Yeah, the real challenge kind of with too many accelerators is just with— I always find it an interesting one of what is the actual incentive for the accelerator program itself. And the incentives usually come from where does the money come from in terms of revenue. And for founders, and that's kind of the Startmate attitude, the mentoring and the advice which founders get should always be from other founders and people who have been there and done that and have the empathy to help you along the journey. And if that advice doesn't come from founders, but like, let's call it corporate executives or— Investors. Government officials and stuff, well, they've actually never been in the shoes of founders and done the real kind of journey which a founder has done. So I always find it ill-placed. And so actually just keeping that really true to giving founders the right ingredients is super important.
Michael Batko: Absolutely. Do you think that Australia has a lot of founder-led accelerators and mentors? Because As we were talking about before, we're only really like the third generation of third wave where alumni from Atlassian or Canva are just starting out their own companies and giving back.
Speaker C: Yeah, I mean, I always see accelerators as essentially four prevalent kind of business models. And the first one is kind of the university-backed accelerator where usually it's alumni of the university coming through and they're great, non-dilutive grant funding usually, and very focused on their own alumni. There's a second one, which is kind of corporate-backed accelerators, which again, when you think about where the money comes from, it is focused on the corporate themselves and creating good outcomes for the corporates rather than the founders. So again, like incentive alignment is very important. The third part is actually probably a dangerous one, which is government-funded accelerators where It is a good gig for like 2 or 3 years whilst you have the government funding, but accelerators are just incredibly difficult cash flow businesses because you don't see the cash coming back until 10, 15 years down the line, and there's actually not much money there operationally. So once you are off the kind of government grant funding, well, then those accelerators just die and you're again left with nothing. And the third model was about to your question as well, is kind of that— is exactly the Startmate model, which is actually a mentor-driven seed fund in a way. So for us, actually, every single mentor is a founder or an ex-founder, and they invest $10,000 all the way up to half a million dollars personally into every single fund that we raise every 6 months for the cohort. And they're literally personally invested in the fund and in the accelerator and in in the success of that cohort themselves. So the beauty of that is that they have real skin in the game. They actually care about those startups. They've been in the shoes of those founders before, and they really have the empathy to give that kind of advice. So yeah, so I'm kind of drumming the Startmate drum here, but it is a very unique business model even in the entire world. I don't know any other accelerator which is actually structured that way.
Michael Batko: Well, thank you so much for your time today, Michael.
Speaker C: Thanks so much for having me.
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.
