Trevor Folsom discusses the challenge of securing talent for Australian startups

0:00 Adam Spencer: Let me tell you about our partner, Teamified. If you need to build a top-notch team quickly, Teamified is your go-to solution. They not only provide fractional CTOs, they can also do contractors and even remote team members tailored exactly to your needs. And whether you're looking for expertise in the Philippines, India, or Sri Lanka, Teamified has you covered. What's amazing is that Teamified uses a blend of AI and human expertise to cut hiring times by 50%, cent. The platform handles everything from automated onboarding to day-to-day management and even performance tracking. You can also handle rewards and recognition, buy equipment, and order training all through their platform. Simplify your hiring process and get the best talent fast with Teamified. Check them out now and transform your team. Go to dayone.fm/teamified. That's dayone.fm/teamified. Thank you, T-E-A-M-I-F-I-E-D, and get started today. 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— Thank you. Helpful content to founders and the startup community in Australia. Back to the interview. 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. You're listening to a special interview series as part of a documentary W2D1 is producing about the history of the Australian startup ecosystem. This episode was conducted by guest host Will Cho.

3:19 Trevor Folsom: Hi everyone, and welcome back to the Australian Startup Series interviews. Our guest today is Trevor Folsom. Trevor, it's so good to have you on the show today, thank you.

3:27 Speaker C: Yeah, thanks Will, thanks for inviting me.

3:28 Trevor Folsom: To start us off, could you introduce yourself and what you're currently working on?

3:32 Speaker C: Yeah, it's Trevor Folsom, I'm a co-founder of Investable, which in essence is a combination of an investor network and also a series of funds in the venture capital and particularly early stage. We love to invest in, in seed-based technology founders that are starting their journey and are looking for capital and support.

3:57 Trevor Folsom: To start us off, I'd love to take us back right to the very beginning. Trevor, would you say that you've always been an entrepreneur? Take us back to even university days.

4:06 Speaker C: Yes, my father was an entrepreneur and had the experience of a lifetime, both to grow and have some success, but also saw the downside of the entrepreneur journey. So I was an unlikely entrepreneur. If you ask my mother, she didn't want me to go anywhere near that. But something inside me always wanted to run my own business. I did do the typical journey of starting lots of little things, even at university days, and had no neglect or concern or fear for starting things, but also obviously had to tie down a job. So I went into the financial services industry and grew from there, but there was something of, you know, real desire to do something my own and different, but I had no idea what that was going to be.

4:49 Trevor Folsom: Do you know now? What was that desire that kind of pulled you in?

4:53 Speaker C: It was really opportunistic. It was, it came by learning from an American finance company. Who were out here in the late '80s and early '90s and they really revolutionized the financial services. Unfortunately, they weren't a big player here in the market competing with the banks. I was fortunate enough to meet my co-founder, Creel Price, at that business and we both lived that journey. As a first-time corp executive, I really thought that's what all businesses were like. So I was gifted into an amazing culture and a business that was very innovative. But it was only when they sold out and I learned from a few other businesses that gave me that desire to do things differently and to leverage it. And so the opportunity to meet Kryll at that business was fortuitous. And we started our first business together in the late '90s.

5:43 Trevor Folsom: Yeah. And I can see from your profile, you've been with some of the most iconic names, both in and outside of the startup industry, you know, such as Car Next Door. And then you were chairman of the Salvation Army. What year would you say that you first launched into the ecosystem?

5:56 Speaker C: Well, really you could say it's when Krill and I started Blueprint Management Group, which was in 1996. And if you recall, that was the period just before the dot-com and not long after the dot-com crash and the bubble that was formed around that. We started a software business. We weren't particularly sexy in that time. And there was certainly nowhere near the infrastructure and support and ecosystem that there is today. But in 1996, We started our first business, we were able to certainly attract lots of really quality staff to help us on that journey, but we did it in a very different way that entrepreneurs have the luxury of doing today.

6:33 Trevor Folsom: Yeah, tell me more about that, how there was in essence a lack of infrastructure. So who did you rely on?

6:39 Speaker C: Oh, I guess it was just friends and family, as they say, and people that were mentors. I didn't really understand that terminology back then, but looking back now, they certainly— I was able to leverage my experience in sport and connections that they gave me, particularly in rugby and water polo. Paulo and a number of people just were available to help. It was really about reaching out, being brave enough to ask some questions and ask for advice from people. And so it was just done in a fluid nature in that sense. Certainly early days, we were fortunate enough to meet a few investors that are still mentors today of ours. They didn't actually invest in our business, but really gave us good insights. And probably in those late '90s, there was certainly a lot of interest from investors, a lot of private equity individuals coming down and looking at the venture space. And those that got into, you know, realestate.com and Carsales and Seek certainly benefited. And that sort of was the rise of what I consider the very, very early days of the ecosystem in Australia.

7:37 Trevor Folsom: Yeah. And as you say, you started just right when the dot-com boom happened and kind of rode that wave. What was it like right after the bust here in Australia?

7:46 Speaker C: Yeah, it was really crazy times. I saw some of my friends and peers and others that were jumping out of their jobs and just investing all over the world in that space. And it was really crazy. And we'd get approached a lot, we'd pitch our business, but it didn't have a dot-com on the other end of the name and it wasn't a global consumer business or brand. So it just didn't get the attention, but I saw lots of people scurry. It was a crazy time and we can look back at it now and learn from it, but it was an amazing— Yeah. Time for, you know, those individuals that were able to ride through that and navigate. And a lot of them are now great investors and supporting the ecosystem in other ways.

8:28 Trevor Folsom: Yeah. What you said before about how back then there wasn't the infrastructure that we see today, can you tell me more about what sort of support structures are available that you use today, as well as when did it start to kick off?

8:41 Speaker C: Yeah, when I think about, you know, The evolution in the Australian ecosystem, as we know, we followed what we could learn in the US and particularly in Silicon Valley and programs and which later became, you know, labeled accelerators and incubators were certainly the early makings in, you know, the sort of early 2000s, but it's really evolved now. And so there's support at every level. There's support for early first-time investors, which are really powerful and a great way to help educate first-time investors and angels. Everybody's looking to get involved in a startup in some form, whether it's mentoring or consulting. We are now seeing, you know, universities really lean in and governments as well to recognize the need to support and to help the ecosystem grow. So, you know, areas all over. I mean, the investor side was always sort of there in the early days, but now it's much more coordinated and considered and there's a real open opportunity for that advice and to whether it's to raise capital or just to— help prepare you to grow your business. And there's, it's not too hard to find an event or a collaboration opportunity. And there's programs of all levels for both first-time entrepreneurs and entrepreneurs that want to, you know, look for a co-founder or just to support others.

9:57 Trevor Folsom: Yeah. A lot of guests point towards that 2012 era is when it started to really kick off, you know, that hockey stick growth from the founding of, you know, Startmate and so on. Would you agree with that time period?

10:08 Speaker C: Yeah, that's probably when it started to really, you know, thicken out a bit and mature. And I think we've got a lot to thank for those guys in Innovation Bay, Faden and Ian, who set the charge and recognized the opportunity to bring people together. And then certainly Phil and Mick from Pollinizer, who in those sort of 2008 to '09, they did a lot of lifting, certainly in Sydney. And then Melbourne not long after started to follow that trend. So by about 2012, there was established programs, ecosystem, and much more awareness. And then from since then, it's really evolved. And like I said, a lot of founders, there's a really great opportunity out there for them to seek information. And we do see that on the investment side where founders are really coming a lot more prepared and certainly knowledgeable about what it is they need to do with their business to attract funding.

10:58 Trevor Folsom: Yeah, I'd love to turn towards improvement opportunities now, and I'd love to get your perspective, do you think we're on the right track as an ecosystem or is there some things that we could still be doing better?

11:09 Speaker C: Yeah, we're certainly on the right track. There's great evidence now of changes in the way that investors are setting up. We've got a lot of good funds now that are specialized in their areas, like Tenacious Ventures in the agtech area and Giant Leap in ESG and even Investable, we've now got a climate tech fund. So that's a good example of funds not just being so broad and really looking to invest in sectors. We've got some great secondary market funds now evolving and Ian Beattie from Second Quarter is a great example of that. We've got some now new development of venture debt products with the Marshall Family Office and what Melissa Widdener is doing. And also there's sounds like there's gonna be others that are coming in, which is a great recognition and, and probably a good desire. In terms of the program side, I'm hearing some really fantastic things going on around universities in particular. I'm involved in New South Wales University. And they've been fantastic in attracting some good people back to add value, but also people outside of the university and programs like that at UTS and ANU in Canberra. There's just some amazing examples that we are evolving and creating opportunities for both founders and investors. Yeah.

12:22 Trevor Folsom: I mean, reflecting over the last two decades, back when you first started that Blueprint Management, how has the ecosystem grown? Has it been what you expected it to be?

12:31 Speaker C: It's hard to say. I mean, really, if I look, it's only 10, 12 years. I'd probably give it a level of achievement. There's certainly more to do and we are challenged by distance and some other areas, but I certainly think the best example is reflected in the founders, the way that they think about their businesses now. It was pretty common in 2000 and 2005 to hear an investor or even a successful entrepreneur highlight that Australian founders need to really think more global and be broader. And more ambitious. Yeah, we definitely see that now. Founders are recognizing that the success that they can really achieve is unlimited. The technology that's available to get your first customer doesn't have to be any longer in Sydney or in Australia for that matter. You can be on the world stage straight away. So, yeah, we've adopted that and yeah, I'd say we're definitely on the right track. Yeah.

13:26 Trevor Folsom: You mentioned there's still more to do though. Tell me more about that. What are some of those things?

13:29 Speaker C: Look, I think we're all challenged by the talent war at the moment, and it's not unique to us as early-stage venture businesses, but it is particularly challenging when a lot of the activity is in capital cities like Sydney and Melbourne, and they're expensive cities to live in. So when you've got a talent war going on and a lot of employees need a cost of living, and so starting the ecosystem or having a focus around the capital cities is really challenging. Startups, you know, they need to be careful of their, their spend and their, their burn rates early. So they just naturally can't compete on salary. So there's a challenge that, you know, we all face across and there's not an industry that doesn't, but particularly relevant to us here in the startup world. And whether it's a case of looking to cheaper locations to start these businesses, moving hubs around the country, certainly governments all around have recognized the opportunity to create a pathway and to build a micro ecosystem in their own areas. And I think that's a really positive thing. But I think there's also, I'm quite surprised that the big recruiters and/or other innovators haven't really caught on to the opportunity that there is to recruit or create a new model of engagement for finding talent and bringing them into early-stage startups. There's some great examples of people that have, you know, spent their time and effort and energy, and they may not invest with capital, but they invest in resource or a service offering in the hope that when that business does mature and grow and can afford to pay fees that are equivalent to what the market demands, things like that is a real opportunity. So I'm expecting our innovators around the country to come up with ways to try and help and particularly help this sector, because if you do get it right, these businesses are going to grow fast. And if you are the recruiter or talent champion of choice, then you've got a great business idea, or certainly as an individual, you're going to have a great career.

15:29 Trevor Folsom: Trevor, do you have any unpopular opinions about our ecosystem? Something that you believe is true, others don't seem to be on the same page as you.

15:40 Speaker C: Yeah, look, it could be unpopular in the negative or positive way. It's probably an opportunity more so, and I predict that it will be. Corporates in Australia haven't really cracked the model. And I'm general— mass generalization here, and not everybody's in this bucket, but compared to the US where probably 12 years ago when I spent a lot of time there, you could see, you know, some of my peers in the US fund managers are backed by 70% of their LPs are corporates. We've got institutional money coming into our funds, but it's particularly prominently super funds. Corporates really haven't lent in. Those that have, maybe they've done some good R&D and and some work to learn about the innovation space or to tick the box. Others are supported in sponsored programs for the same means. Some have built, tried to build venture funds and consider themselves as having the ability to that, but quite complex and not a lot of great examples there. And so really I think the next phase and the opportunity we're going to see is that corporates will start to find out and partner with fund managers and recognize that there's opportunities for them to invest behind a manager and alongside and to to support in other ways and to whether it is a learning exercise or not. But in the US, it certainly has proven the corporates over there 15, 20 years ago learned pretty quickly that they're better off backing the fund managers. And I think that's going to be the next evolution in Australian venture capital particularly.

17:05 Trevor Folsom: Yeah. Why is that? How come corporates haven't leaned in?

17:08 Speaker C: Yeah, it's probably, you know, there's always the biggest competitors in a corporate is inside and the one's own ability or desire to continually create a service offering themselves. So that's one of the elements that's probably held back a little bit. And the others is, I guess, you know, the real big focus in relative terms, investing $10 or $20 million into this sector, it's not going to change the bottom line. And the short-term focus of share price is probably one of those elements. So we need innovative CEOs and boards to look beyond that and to see that there's, especially if they're Their own business is under attack. They need to be really more aware and invest in other models and other companies. You know, it's really been probably a short-term focus on shareholder value and also those that have ventured a little bit maybe didn't get the success that they probably thought and hoped so they retreated. But I think the backing fund managers now, there's a lot of experienced managers in this market, I think is really a great opportunity for them.

18:06 Trevor Folsom: Yeah, that makes a lot of sense. So Trevor, as you know, what we're trying to do on this series is to document as historically and accurately as possible the history of our ecosystem, just so that we can look to the future. And we're aiming to reach all corners, from founders, investors, academics, and entrepreneurs themselves. Is there anything that we haven't talked about today that is always top of mind for you?

18:28 Speaker C: Yeah, look, it's probably, yeah, my— through my own experience and those of founders that have— the first-time founders that are really driven by wanting to to test their business model and so forth. I think there's been a lot of emphasis on the importance of raising money first as the pathway, whereas through my own experience of not being successful in raising capital or choosing not to, I think that's still very relevant. And so those founders that get busy, build their team, build their product out there and can validate that, the capital will come. But, you know, trying to change that mindset of I need to raise the money before I can make this business work is a real challenge for them. And I think we are seeing a lot more support of those founders to get them ready. But yeah, that's really a big desire. And don't think that until you raise capital, you can make a business. In actual fact, turn it inside out and try where you can and hold back from necessarily raising too early or diluting your own equity so quickly. If you can prove it out and get it right, then the capital will flow in.

19:26 Trevor Folsom: Yeah, I think that just is a good segue into our next question because I was just about to ask you, you know, reflecting on your wins, your experience and your mistakes, what's your advice to future entrepreneurs? Is it that not being in a rush to raise capital?

19:39 Speaker C: Yeah, that's one of the ones. Yeah, definitely. It's where we mentioned this talent war. It's really think creatively about how your next hire, where are they going to come from? Can you even bring them in and maybe engage with them in a different way early on before they're ready to take the big leap of faith and leave? So there's different ways to get that talent engaged. We are in a global market now, and so you don't have to look, they don't have to be in your city any longer. You can certainly prove that you can build a team virtually and globally. And then the other standard one is, and we still suffer this at Investable, is being careful of taking on too much too quickly and try not to necessarily think you have to be the best at all the parts. Certainly set a vision for such, but let's— Yeah. Yeah, get really good at what you're best at. And if you can be the best in the world at that component or that part of the industry and own that, then the rest will flow. And really good supportive investors will see that. And so don't think that you have to present the end game from the start. It's, you know, it's really finding that unique space that you can differentiate. And if it's quite, even if it's very narrow early, get that right and the rest will flow.

20:50 Trevor Folsom: I love that. And lastly, Trevor, are there any heroes in the startup ecosystem or your specific and individual story that you would like to shout out? I know we've mentioned quite a few in the episode so far.

21:02 Speaker C: Yeah, yeah, those ones that I've mentioned are heroes and good friends of mine, and I think we owe them a lot. And there's others like, you know, somebody that's been a mentor from day one. When I sold my business, the best bit of advice I got that still holds I learned today is just because your success as an entrepreneur is, you know, current, it doesn't mean that you're going to convert yourself into an investor overnight. And so that was Tony Sirtis, who was on our board when we sold, and it was great advice. So I challenged him to say, okay, who do I go and see? And so he opened up his network in the US. He was one of the first employees in Yahoo. And so that gave me great access there. But I also got to meet Roger Allen, who I I think we owe a lot to. He was in the dot-com. He was investing then as Allan and Buckridge.

21:46 Trevor Folsom: Wow.

21:47 Speaker C: He was obviously a very successful investor and entrepreneur himself, and he's still investing today, and he's still a close mentor and friend of mine. And the fact that he's gone through major changes and challenges in the industry, he's been incredible. And then there's, I guess, the founders, everybody that sort of we invested in and no doubt other venture funds invested in before COVID We really expected a whole lot more carnage and crashes. We invested in companies that are in sport tech and in travel tech. You know, they really relied on events and venues being open, and to see them being closed for so long, it's amazing that they all still survived through that. And so credit to them, all those founders that again showed that resilience and desire and reinvented themselves in some, I think they're a great hero of mine and I can't name them all, but you know, certainly we've got a number in our portfolio that prove that we back the right people in the fact that they could get through that phase and even improve their businesses for ready for growth that we're about to see.

22:51 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.