3 tech trends shaping the future of software – Augmented Reality, Machine Intelligence, Blockchain

I’ve been doing a fair bit of tech strategy work recently and there are three key software tech trends that I’m following closely right now. [And yes, wearables and IoT are up there too, just slightly less interesting. 😉 ]

Augmented Reality


OK, so the tech industry moved forward leaps and bounds in 2014 – one Magic Leap in particular. This Augmented Reality startup raised an astonishing $US542M round of funding led by Google. The vision is spectacular – and the dynamic light-field display technology behind it is still fuzzy – perhaps we’ll see the early hardware hitting the market in 2018 timeframes? There’s a great round up of the company history on Gizmodo: How Magic Leap Is Secretly Creating a New Alternate Reality – well worth a read.


Also Satya Nadella’s regrouping Microsoft recently took the wraps off their latest AR advance – Hololens – apparently the Minecraft demo is amazing. Good to see Microsoft back innovating again after all this time…

The implications of AR finally fulfilling its promise go right to the heart of the traditional user interface – no longer will productivity applications be restricted by (touch)screens,  keyboards and mice – the ability to interact with a full range of information in 3D overlaid real / virtual space has profound implications for how data is organised, presented and manipulated in future. Lots of opportunities, particularly in the Enterprise software market, to meet with the hardware when it arrives.


Machine Intelligence


Another major trend during 2014 was more evidence that Machine Intelligence Will Eat The World. Leading the field is Numenta’s founder Jeff Hawkins who has had a prolific year of presentations during 2014 describing how the Hierarchical Temporal Memory model – based upon reverse-engineering the human neocortex into software – will become the predominant model for Machine Learning and Artificial Intelligence. There’s a fascinating recent GigaOm interview where he likens the current AI research field to the early days of computing – when multiple platforms gave way to a single dominant approach.


He also recently put forward a counterargument The Terminator is Not Coming, The Future Will Thank Us to Nick Bostrom’s more pessimistic outlook in SuperIntelligence: Paths, Dangers, Strategies (Really good read, recommended).

Other notable Machine Intelligence pioneers are a string of AI company acquisitions by Google including Deepmind, a British startup co-led by Kiwi Shane Legg, Vicarious Systems and IBM’s Watson team, now HQ’ed in New York.


US VC Shivon Zilis recently put out a really useful Machine Intelligence industry landscape which is a who’s who of the main players – essential reading for the sector. She is particularly insightful that the time is ripe for MI to provide a whole new class of opportunities for software vendors to add value to their existing product stack:

“If I were looking to build a company right now, I’d use this landscape to help figure out what core and supporting technologies I could package into a novel industry application. Everyone likes solving the sexy problems but there are an incredible amount of ‘unsexy’ industry use cases that have massive market opportunities and powerful enabling technologies that are begging to be used for creative applications ” – Shivon Zilis, Investor, Bloomberg Beta

The applications for MI are only just starting to surface – self-driving autonomous cars is perhaps the earliest example showing how this technology will fundamentally disrupt existing economics, business models and lifestyles.


Not only does Machine Intelligence provide a whole new class of medium-term opportunities for software firms – people are starting to openly discuss its fundamental implications for humanity’s future. Enlitic founder Jeremy Howard absolutely nails it in his talk at TEDxBrussels: The Wonderful And Terrifying Implications of Computers That Can Learn – including an absolutely awesome demo of training up an AI to learn car pictures in 2 minutes.

And once again, I’d highly recommend watching Mark Sagar’s demo of BabyX at 2014’s TEDxChristchurch – mindblowing.



Finally, while 2014 was the year that Bitcoin technology went mainstream, people are starting to think about other applications for the underlying Blockchain technology. Basically the blockchain is a public ledger of all transactions in the Bitcoin network – which critically provides trust based upon mathematics rather than human relationships or institutions. There are already a large number of copycat digital currencies – however an early example of the technology’s wider use is Ethereum, a blockchain-technology-based platform and programming language tightly integrated with a new Ether digital currency. Ethereum raised US$12.7M in the Ether pre-sale back in September.

VCs are betting hard on this space – and although the economics of Bitcoin are still being debated, the underlying insight is that ANY financial or business transaction which previously relied upon centralised human institutions to maintain trust can potentially be transformed using a distributed blockchain-derived technology.

So, three major technology trends which will affect any software business looking to keep their product stack current in the medium term. How is your software business planning to capitalize on these opportunities?


Get in quickly for Startup Weekend Christchurch 2015!

swchch memia-web-logo Memia is proud to be one of the sponsors of this year’s Startup Weekend Christchurch event on May 8-10 this year. Startup Weekend is a 54 hour event that brings together Christchurch designers, developers, entrepreneurs, and experts from all domains to do amazing things. Last year’s event was an amazing success and this year’s event promises to be even better. Registration is $99 and space is limited – only about 30 tickets left – buy your ticket now and we look forward to seeing you on the day!


Memia Zeitgeist 2014 -> 2015 #2: Christchurch Re-imagined and Rebuilt

Following on from last week’s Zeitgeist post about the advances in the New Zealand tech industry, here are some reflections on another major theme affecting us for the last few years: how our home city of Christchurch continues to adapt to the life-changing events of 2011.


2014 was year 3 of living with the [less frequent!] aftershocks and aftereffects of the 2010-2011 earthquakes.

IMG_20140510_144015Having just returned from a trip around to the UK on the other side of the world, it hit home that Christchurch is a globally unique place to be living right now. Nowhere is there a bigger concentration of (nearly finished…?) demolition, construction, digging up roads, new businesses opening up and a plain dogged, determined energy to move forward. It has its ups and downs, and certainly it’s been a year of progress – if frustratingly slow at times.

We now live with a skyline dotted with cranes – a new one goes up every week!


The Hagley Cricket Oval is completed and ready to host the Cricket World Cup in just a few weeks’ time.




Anchor projects including the Justice & Emergency Services Precinctjustice-precinct-01-655 Retail Precincttriangle2 Canterbury Integrated Government Accommodation (CIGA)cashel-st-145-govt-accommodation-artist-impressionBus Exchange, bus-interchange-interior-entrance are all now being built and the White Elephant  Convention Centre  concept drawings are out and construction could be due to start this year. christchurch-convention-centre-precinct-city

Not to be outdone, the private sector has generally kicked into gear with many new buildings being built during 2014. Unfortunately Anthony Gough’s The Terrace project is stalled – when will this get sorted? render-3.2000 Notable private sector buildings are starting to shape the identity of our new city as well:  Stranges Building strangeslane , 151 Cambridge Terrace (lucky Deloitte!) and a few others up around Victoria Street. 151cambridge

If you haven’t already, you can use the CCDU Progress Map  to check out all the new projects as they are announced and progressed.

Gotta say I’m a bit disappointed that the Eastern Frame isn’t going to be so green as originally envisioned – we’re losing an opportunity to provide a future long term asset for the city…

On the home front, after almost total radio silence there were a few developments relating to the Innovation Precinct towards the end of the year. Firstly great news that Memia’s home EPIC has had the lease extended from 5 years to 12 by the land owner Christchurch City Council – this now gives the EPIC board the opportunity to plan long term for embedding EPIC into the local innovation ecosystem. EPIChub.serendipityThumb

Also nice to see building commitments from Vodafone,   voda Kathmandu New-Kathmandu NZ-officeand – just before Christmas – Wynyard Group to set up home inside the Innovation Precinct. wynyardAlso CDC’s new Innovation Hub is being built in the old Twisted Hop building, and will include next year’s Lightning Lab programme (as well as the new Dux De Lux!).

Message to the owners of “heritage” buildings in the neighbourhood: frankly it’s just depressing looking at the wreckage of your derelict bombsites outside our office every day. It’s just bricks and mortar, is it really worth spending millions (of whose money?!) on saving…? Either knock these old buildings down quickly or spend some money to hide them from sight please! We need an end to the moratorium on heritage buildings – a clear deadline date after which they either get funded or get cleared.

Other miscellaneous #Chch happenings that floated my boat last year included:

– the RISE Oi You! Street Art Festival (awesome effort from all involved – including Canterbury Museum – with fantastic murals now positioned all around the city) and to be repeated again in 2015.

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– Great coffee: having just returned from a trip to the UK where the coffee is *truly awful*, it makes you appreciate having the likes of C1C4 and Caffeine Laboratory on your doorstep.c4coffee C4-Tuam-st-Cafe-from-office c1 espresso sticker

– Great beer: Cassels Best Bitter is my regular after-work refreshment but we’ve been spoiled for choice for hoppy New Zealand IPAs over the last year.


– As mentioned in my previous post Mark Sagar’s demonstration of BabyX to TEDxChristchurch  was mind blowing. Bleeding edge AI happening right here in NZ. Kaila Colbin and the team are doing a great job curating TEDxChch for the 5th year running!


– Waltham Pool reopening just a few days ago after 4 years out of commission. Our Spreydon-Heathcote Ward Councillors Phil Clearwater and Tim Scandrett making good on their election manifesto promises. First-term politicians who deliver, nice.


– Speaking of the Council, it’s great to see Mayor Lianne Dalziel and 2IC Raf Manji start to think big about our city’s future. More like this please. Which leads me to…


– The establishment of the Committee for Canterbury – boy do we need a voice to start thinking long term past the earthquake recovery, this is it.

– The continuing [apparent] competence of our present government to keep New Zealand’s economic growth above the line. Whatever your politics and the many naysayers may think, the numbers don’t lie: John Key, Bill English and crew are sure footed business professionals who continue to steer the country towards better prosperity. Another 3 years please, but at the same time do something about the most extreme poverty that’s still there, AND invest some more in the conservation estate please….


– (And finally, hot off the press, just got back from seeing Delaney Davidson at…) LIVE at the Point in Diamond Harbour – amazing views, chilled sounds, great acts. 3 more Sunday afternoon gigs to go, get there on the ferry.

So this is an increasingly good place to live after the earthquakes hit in 2010-2011 – time will tell if this momentum can be maintained…

Next up: Memia Zeitgeist 2014-2015 #3: Three Major Tech Trends to watch



Memia Zeitgeist 2014 -> 2015 #1: New Zealand Tech Industry Growth

Time flies when you’re head down, bum up…

As with many people in Christchurch – and the NZ tech industry particularly – 2014 was a year of relentless workload. The triple dynamics of the post-earthquake rebuild, increased capital available to local tech companies plus a constrained resource pool meant lots of extra hours put in to sustain momentum. Looking back it’s pretty satisfying to see how much was achieved in 2014, but also daunting the amount of work that’s stacking up ahead. A big thank you to all of Memia’s customers, partners and friends for your business, support and company during the  last year!

For the last few years I’ve managed to write an end-of-year round up blog post before heading off on the traditional Kiwi beach holiday – but this year unfortunately I didn’t make deadline before summer [=winter…sigh] holiday travels to the UK. However, better late than never, here’s the first of four linktastic posts on all things zeitgeist 2014->2015 . Something for everyone. Enjoy. 😉

[My good friend @benbodley passed comment that the blog has been “sparse” last year (“…eat your own dogs**t” I think was the exact phrase…) – so best intentions, will try to be more prolific this year…]

New Zealand’s Tech Industry Continues To Grow Strongly

2014 saw continued growth in the revenues and capital base of NZ’s tech sector. According to NZTech ICT alone accounts for 5% of GDP, more than 73,000 jobs and growth of 16.5% pa – with Canterbury’s scene particularly vibrant.


2014 saw a procession of software and tech companies floating on the NZX – SerkoIkeGPS, ERoad, GenTrack, Vista Group and finishing with Orion Health finally floating – raising $120m for a growth round in their oversubscribed IPO.

orionhealthlogo gentrack logo eroadlogoikegps-logo vistalogo Serko_Logo_Horizontal_Colour

Next up in 2014 is likely to be Wherescape (?) and Inventory Technologies Ltd (formerly Clever Medkits – reverse listing imminent).

wherescapelogo  cmklogo

Meanwhile investments in 2013’s tech IPOs Wynyard Group and SLI Systems ended slightly down but steady on a year ago,  wynyardlogo SLI-Systems-new-logo-design-e-commerce-retail-2largely following NZ tech sector bellwether Xero’s rollercoaster ride – lots of banter flying around as to how successful Xero xerologo-opengraphwill  be taking on Intuit in the US – however the company continues to execute on its growth targets hitting 400,000 customers in December and with YoY subscription revenue growth now at 85%. Question is: has the share price now hit the bottom and is it time to get back in?! With a NASDAQ listing still in the pipeline, the company continues to mature. An amazing achievement by @roddrury and all of the management team which leads the way for others to follow. Just the other day there was a solid article looking at Xero’s metrics by SaaS-focused VC @ttunguz, worth a read.


One other notable success was @lancewiggs who hunkered down and just got on with Punakaiki Fund after the aborted IPO attempt last year. The fund managed to raise $1.5M in a private offering and another $1.5M in November from existing investors.

vibelogo influx-hq-flat raygunlogo mindscapeLogo timelylogo

At the end of the year the fund is invested in four companies: Timely, Mindscape (@jdtrask doing an amazing job growing, InfluxHQ and Vibe Communications and added a December round for others to come in at $25K a pop.


Just a couple of other notable mentions of cutting edge tech capability here in NZ – firstly holographic virtual reality platform 8i raised several private rounds of funding and look like they’re hiring like crazy – I was lucky enough to have a try out of their early product on Oculus Rift – mind blowing stuff. Watch this space.


The other is Mark Sagar and his team‘s ongoing development of BabyX and the underlying AI models – watch this video of his presentation to TEDxChristchurch in 2014 and see the future. I can think of 1001 commercial applications already….


Christchurch Tech Scene

2014 was a year of continued growth and development in the Christchurch technology industry scene.


First up in March was Christchurch Startup Weekend – a well organised and attended event held at EPIC which was a major investment into our startup ecosystem. Nearly 100 participants formed teams and developed 6 startup pitches in just 54 hours!

I’m looking forward to this year’s event in May 2015 as well – Memia is a sponsor.

Hi-Tech_Awards_2014 Delta-Strike-Laser-Tag

There was good representation and a full house at the annual New Zealand High Tech Awards, held in Canterbury for the first time since the earthquakes – it was a great night out and congratulations to all the winners – especially Doug Willems of Delta Strike International from Christchurch.


Also back in May Memia and Sourced launched the FLUX report – an in-depth profile of the Canterbury Technology sector in 2014. As part of researching the report we generated an open database of over 500 businesses and organisations working in our region’s technology cluster – we also published a giant poster infographic which you may have seen on walls over the year – what the FLUX database shows is just how broad and mature the technology cluster is here in Christchurch – something to be nurtured and developed further in coming years… We are looking forward to taking FLUX forward in 2015, including placing the database online and adding some more cool infographics into the mix – watch this space…


It was another successful year for the Canterbury Software Cluster – again lots of well-attended regular monthly events, together with the Full Throttle 2014 Software Summit held at Wigram Airbase in October with international speakers and a growing software industry tradeshow – great to see the sector continue to be in good health.


One of the speakers at the Summit was Michael Trengrove, co-founder of CodeClub Aotearoa. This is a volunteer foundation dedicated to teaching young children how to explore software in after-school code clubs – a great effort from all of the founding team in 2014 and establishing the movement nationally: watch out for further success in 2015!


Also established this year is a new early-stage investment network for the region – Canterbury Angels. This group has built great links already with other angel networks throughout New Zealand and all being well will hold the first investment pitch night in the first quarter of 2015, followed by ongoing speaker and investment events throughout the year. Sign up to join the mailing list!


It’s been good to see CDC ramping up its investment in local innovation – the relaunched High Growth Launch Programme (HGLP)


was a success at the end of the year and looking forward to this year’s Christchurch LightningLab programme.


Ones to watch

In terms of fast-growing local tech businesses worth watching, here are just a few that I know have had great years in 2014: Jade Software (really enjoyed being part of the judging panel at December’s Thinkubator event. Great looking website too…), Aranz Geo, Smudge, CleverMedKits (now Inventory Tech Ltd), iViis, goRoster, Debtor DaddyTrineo and Redseed. Apologies if I’ve left you off the list – let me know!

redseed goroster debtordaddy_logo_smalliviis-know-your-business-now trineo-logo smudge ARANZ-Geo-logo jade-software thinkubator


Next post: Memia Zeitgeist 2014-2015 #2: Christchurch Re-imagined and Rebuilt


Launching the 2014 FLUX Report for Canterbury

FluxLogo   reposter


Today Memia and Sourced with support from Canterbury Development Corporation (CDC) are pleased to launch the inaugural 2014 FLUX report for Canterbury – profiling the region’s Technology and Innovation sectors in depth. The report represents many months of effort from the FLUX team who have researched and compiled it, scouring websites, social media and interviewing many of the individuals who make this industry so exciting to work in locally. The result is a substantial deliverable which shines a light on the scale, diversity and quality of commercial technology innovation which is happening right here in Christchurch and Canterbury.

Backstory: during my time over the last few years as part of the team organising the Canterbury Software Cluster I became aware of just how many innovative software, electronics and manufacturing firms were operating from their bases here in Canterbury. However I was consistently aware that many of these companies were not advertising their presence here in the region – often focused on their overseas markets but also having very few media channels covering the exporting technology industry. The value provided by the Cluster to bring firms together, promote knowledge sharing and collaboration has made a significant difference to the growth of the industry.

The technology industry is New Zealand’s fastest growing sector – exports have doubled over the past six years and at more than $7 billion it’s now the country’s third largest export earner behind dairy and tourism. It also provides some of the most well paid and challenging careers in the country. However, even today with the likes of Xero, SLI Systems, Wynyard Group, Diligent and others representing significant steps forward in the national tech ecosystem and GDP, there is still limited mindshare for the industry relative to other sectors like agriculture and property development.

It was while talking these issues over with friend and colleague Jason Bishop, GM of Sourced – one of New Zealand’s leading ICT recruitment firms – that we hit upon the idea for FLUX: let’s go and do the research on the sector and provide engaging content which tells the story of the NZ Tech Industry from the inside out. Furthermore, let’s start right here in Canterbury to show how our resilient and innovative firms have weathered the challenges of the 2010-2011 Earthquakes and are now forging ahead on a growth path.

The FLUX report comes in two deliverables:

1) a 150-page report on the Christchuch Technology and Innovation sectors, including a full listing of all the firms identified during our research.

2) an A0-size poster infographic which shows the logos of all the tech organisations who operate in Canterbury in the sectors covered – an informative and educational resource.

Access the downloads or order a printed copy here:

It’s our first attempt at compiling the FLUX report so if you notice any errors or omissions please contact us – we’re more than happy to make a correction.

From the whole FLUX team, we hope you enjoy the report!


Christchurch – City of Opportunity? (Video)

I finished off the run up to Easter by attending CECC’s annual Prime Minister’s Breakfast event – 700 of Christchurch’s business community attended at Wigram Air Museum to hear John Key deliver an update on rebuild progress and generally preach (drily) to the converted. Good to see so many of the tech community out in force as well.


Not sure if everyone saw this new video below which was shown at the event, but the latest rebuild video put together supported by Ian Taylor’s ARL is included below – includes a nice plug for EPIC!



Christchurch Startup Weekend 2014 – what an event!


Congratulations to everyone involved in this year’s Startup Weekend Christchurch 2014 (#SWCHCH on Twitter) event – held at EPIC from Friday 14th  through to Sunday 16th March. An amazingly enjoyable and positive event which I think bodes well for the future of Christchurch and New Zealand’s business community.


(Photo credit: Mark Tantrum)

For those who don’t know, Startup Weekend is a global movement for nurturing and developing entrepreneurs, helping them to learn new startup business and technical skills by forming teams and competing during an intensive weekend to build a new business in just 54 hours. This year’s event is the first since the first Christchurch Startup Weekend since 2012 – see my blog post from that event (… interesting to have my memory jogged that Pozly founder and now established #chch mover and shaker Tim Hatherley-Greene was on the winning team Tsk way back then…)


This year’s event was amazingly well organised – nearly 100 entrepreneurs from a diverse range of backgrounds, ages and skillsets worked hard for two days, morning till late, developing new business models and honing their startup pitches for the event finale. The event was won by the codemonkeys from House Intel, with second prize going to One Great Gift. In all, nine teams formed and toiled relentlessly to impress the judges. The judges and organisers – veterans of Startup Weekend events around the world – were all agreed that the standard of competition was incredibly high by international standards.

From my privileged perspective on the mentoring team, #SWCHCH’s success is yet another indication that Christchurch has turned a corner after the earthquakes and a clear signal that a new cohort of entrepreneurs is coming through. (In particular it was great to see so many women not only taking part but actively stepping up and leading their teams). As Christchurch Mayor Lianne Dalziel said while opening Sunday’s pitch event: these entreprenurs are the future of our city’s success and we need to continue to provide them with opportunities and support.
One other positive observation from such a successful event is just how suited the EPIC centre is as a venue for these events – in its short lifetime EPIC has become the natural home for Christchurch’s entrepreneurs and innovators and we really can’t remember what life was like before it! Long may we continue to benefit from such a crucial infrastructural asset towards ensuring our city’s future success.

A big shout out to the Startup Weekend organisers, Geoff Brash, Jess Eastmond, Chanelle Scott, Robina Dobbie and also Memia alumni Sam Ragnarsson and Tom Harding. Plus facilitators Rowan Yeoman and Dave Clearwater and the whole mentor team. Amazing job guys, you should be proud of the results.


So farewell, then, 2013…

Well we’ve nearly come to the end of 2013 – a *crazybusyrollercoaster* of a year.

As is customary, here are my highlights of the year just passed…

Christchurch Recovery

It’s been over three years now since the first Canterbury earthquakes and there are clear signs now of a new city emerging from the rubble. Since Memia’s been based inside the CBD over the last year we have been witnessing high rise after high rise being “nibbled” away at and leaving flattened rubble or just a hole in the ground. At the same time, the first new buildings are nearing completion and signs of life are showing as businesses slowly return to the city centre. There’s a sense of optimism that things will get back to a “new normal” over the next few years – and clear signs that the local economy is starting to crank forward a few gears.

IMG_20130618_130407 IMG_20131217_185844

IMG_20131122_140526 IMG_20131122_140033

On a personal level, my family completed our house repairs in the first quarter of this year – we’re some of the lucky ones and my thoughts go out to the many people who are still in the queue to be repaired or even to resolve their insurance issues. The waiting and uncertainty takes such a sustained, heavy psychological toll which the rest of the world just can’t understand. Living through these years of earthquake recovery has been life-defining for me.

But…. I’m still confident that the end result will be a city which attracts the best, brightest entrepreneurial talent from around New Zealand and the globe to work hard and play hard. We can be the Boulder of Asia Pacific if we do things right.

One exciting development was Ian Taylor’s spontaneous unveiling at the CECC AGM of a new concept for Christchurch Cathedral Square – although this debate has since been shut down by the landowners (the Anglican Church, jeez) – we absolutely need non-boring iconic architecture to gain global mindshare. So: If this concept doesn’t make it into the central square, why not put it up over Victoria Square as part of the proposed market place, or central to the new Innovation Precinct.


EPIC Living

EPIC is Christchurch’s new central city Innovation Campus and Memia’s home – it was great last week to see founders Wil McLellan and Colin Andersen celebrate EPIC’s first birthday in style. The building has lived up to many of its aims and in particular has become the collaboration hub for the city’s innovation, technology and entrepreneurial communities. EPIC’s central location has meant that every week there are regular events held by Ministry of Awesome, Canterbury Software Cluster and many others. This EPIC  investment in the city’s young innovators and entrepreneurs will pay off long term.

EPIChub.serendipityThumb IMG_20131213_200100 (1)


Christchurch Startup Scene – Class of 2013

The greatest change I’ve seen this year has been the emergence of a new class of startups based in Christchurch. In hindsight I think the earthquakes just pulled the rug out from under any early stage startup activity – this year a cohort of entrepreneurs has emerged which is plain exciting to watch. Here are just a few of the “Class of 2013” startups to watch out for next year.

goroster DriveSoftwarePortfolio  skilitics3
metrisportlogo pozly shuttlerocklogo
linewize glassjarlogo SiteSortedPortfolio
ironclad iComplylogo billboardme
 Square  LogoBlueWhiteOutline  acornrobotics
  tiktaklogo  SuggestionBox  puteko


Tech Trends

2013 has seen the continuation of three core technology trends which have been driving the direction of the IT and Software industry for the last few years. A few major developments that I’ve been watching:

Big Data

“Big data is like teenage sex: everyone talks about it, nobody really knows how to do it, everyone thinks everyone else is doing it, so everyone claims they are doing it.”  Nuff Said.

Cloud services

Cloud services are now ubiquitous in all areas of consumer and enterprise IT- and has now reached the tipping point that on-premise solution deployment is becoming  a rarity. Even the recently published New Zealand Government ICT Strategy ensures that all ICT should purchase IaaS rather than invest capital. The implications of this on corporate IT are raising their heads now with many IT departments needing to rise to the challenge of operating hybrid on-premise and cloud based solutions, maintaining common authentication, security and service levels across a broad application portfolio spread across the internal datacentre and various SaaS / cloud providers. Expect these challenges to get harder before they get easier!

Meanwhile major industry analysts like Gartner will now only include Enterprise ISVs in the Magic Quadrant if they offer On-Premise and SaaS deployment options. Those ISVs who don’t have a core SaaS multitenant architecture and operational capability need to acquire these rapidly to stay competitive in the markets.

Mobile and BYOD

Likewise for ISVs who are still tied to the Windows Desktop, Silverlight or other technologies which don’t translate to iOS or Android: keep up or be prepared to lose share rapidly. While the market share for PC-devices running Windows seems to be holding up, there is a growing demand to provide responsive web applications and native mobile user experience for BYOD users which is just plain hard to do with a legacy codebase. Rearchitect now, before it’s too late.

Everything as a REST API

SOA is dead. Long live REST. From now on, everything is an API – the RESTful HTTP / JSON stack has proven itself to be sufficiently robust, flexible and secure in many consumer, SME and enterprise use cases and from now on these REST APIs rule. Application Management vendors like Apigee and Apiphany provide great capabilities to wrap your enterprise APIs publicly and/or privately APIs and accelerate integration efforts. Still problems with latency for mission critical high usage apps but these will be ironed out over the next few years…


There was a clear winner in emerging web application development stacks in 2013 – Node.js . Although still niche (only 0.05% of global websites run Node at last count) Node’s growth is impressive. I’ve run a couple of projects on Node myself this year and have been impressed with the clean, relatively rapid results. Currently there’s a growing undercurrent of developers adopting the full top-to-bottom Javascript stack – watch this space grow further in the next year.

 Wearable Tech

2013 was the year when wearable technology took off. All sorts of bio monitoring, productivity enhancing, lifelogging devices hit the market or pre-launched. The key point to appreciate here is that all these wearable devices are actually just sensors attached to your Personal Cloud – how to store and what to do with all this data are the next big questions.

As usual I really enjoyed TEDxChristchurch this year – when I joined the ranks of White Men Wearing Google Glass and try out the latest Oculus Rift prototype. Blows your mind.


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Kickstarter Launches In NZ!

Towards the end of the year Kickstarter launched in New Zealand.


quebee_logo  Really impressed by the team at Quebee from Auckland – their mobile digital camera offering has been getting lots of coverage and they’re nearly there on their Kickstarter campaign.

linewize Also, Scott and the team from Linewize had a brief foray into Kickstarter earlier this month.

I’m looking forward to seeing more Kiwi startups using this funding platform to get off the ground next year. If anyone’s interested in “how” – let us know and let’s see if we can get some of the early pioneers and the Kickstarter team themselves to do a presentation in early 2014.


Understanding the SaaS Industry

Perhaps the biggest advance for me personally this year has been the rapid maturing of a common understanding of the core metrics of the worldwide SaaS industry – and recurring revenue businesses in general. This year I’ve put out a few posts on the online literature in this space, but to repeat myself here are the best resources for your Christmas reading!

David Skok – For Entrepreneurs SaaS Metrics 2.0 – (Rewritten Jan 2013) A Guide to Measuring and Improving What Matters

Bessemer Venture Partners – 10 Laws of Cloud Computing

Kissmetrics – The 5 “Must Have” Metrics for Your SaaS Business.

A Smart Bear – COC: A new metric for thinking about cancellations in SaaS business models

Dave Kellogg – What Drives SaaS Company Valuation? Growth!

Tomasz Tunguz – The 10 Most Important Metrics In A Startup’s Financial Statements

Christoph Janz – A KPI dashboard for early-stage SaaS startups – new and improved!

Canterbury Software Summit

Another highlight (as part of my erstwhile role as Chairman of the Canterbury Software Cluster) was to hold yet another successful Canterbury Software Summit event. This year we had to close down registrations once we’d hit the venue limit of 530(!) – over 20 speakers in four streams and great keynotes from Claudia Batten and Wynyard CEO Craig Richardson, a new trade show and it was just great to see our local tech industry in such fine shape! I’m looking forward to serving on the Cluster committee in 2014 under new chairman Geoff Brash – let’s see what the next year holds.




The New Zealand ICT Industry is Booming

And not just in Canterbury but across the whole of New Zealand the ICT industry is booming. The latest TIN100 report reveals that NZ’s IT Export sector is now worth over $5Bn per year – and growing at >3% per year.


This year’s inaugural New Zealand Tech Innovation Week conference in Auckland was fantastic – look forward to the repeat in 2014.

Check out the superb stock market performances of Xero, SLI Systems, GeoOp, Wynyard Group, Snakk Media  (and even Diligent once they sort out their accounting systems….). Also other privately held high flyers like Vend and Vista.

Who’s next? Plenty of new talent coming through but my pick for next year would include ARANZ Geo, makers of the Leapfrog 3D geological modelling system: stellar growth over the last couple of years has led to revenue growth of 42% to nearly NZ$12M in FY13 – with more to come I expect. Also watch out for Christchurch software development superstars Trineo making it into the top rungs of the Deloitte Technology Fast 500 Asia Pacific.


Best Science Fiction of 2013

OK so that’s enough about work. In between it all this year I managed to get stuck in to some great books – mostly sci fi as usual, here are my recommendations.

Nexus by Ramez Naam – great near-future action novel about what happens when you can hook into a group mind…


Alastair Reynolds – Blue Remembered Earth (Poseidon’s Children #1)


The Owner Series – Neal Asher.  Believe me this is not for the faint hearted – a dark, dark future vision of humanity’s near future, but gripping from start to finish.

owner_1 owner_2 owner_3

2013 also saw the sad departure of literary genius Iain [M.] Banks, a local to my previous hometown Edinburgh. Banks spanned both contemporary fiction and science fiction, and has left a huge legacy with the Culture series. His last Culture book, The Hydrogen Sonata, replays common themes and explores the mysterious concept of “Subliming” (basically when an entire galactic civilisation in the Real decides to migrate en masse into the Sublime (the hidden dimensions of the universe…) . Mind expanding.


Best Science Fact

Some may argue with the “fact” bit, but Ray Kurzweil’s book How to Create A Mind which he released this time last year is pretty thought provoking. Do you think of yourself as a massively redundant hierarchical pattern recognition machine? Maybe you will after reading this…



Best TV Drama

Also managed to enjoy some superb TV Drama this year, including:

Game of Thrones Series 3

game-of-thrones-season-3 (but READ THE BOOKS first!!!) a-game-of-thrones-the-story-continues-the-complete-box-set-of-all-7-books


House of Cards – Kevin Spacey and Robin Wright are just fantastic in this Washington re-imagining of the Original British Political Drama from 1990.



And from my wife’s descendant homeland Denmark comes this high quality political drama (although it takes itself slightly too seriously…)  based on the country’s (fictional) first female Prime Minister. Currently just starting Series 2 – Series 3 to come…


Best Movie of 2013

Hardly got to see any films this year, *too busy*. Gravity wins by default.


Coolest Quadcopter Juggling

OK this is one of the coolest things ever – juggling a fleet of quadcopters using a Microsoft Kinekt.

Coolest Johnny Depp Movie about the Singularity coming in 2014

And I just saw the first trailer for next year’s Transcendence movie come out. Bring it on.


Best wishes to all Memia’s customers, partners, friends – thank you all for your business, support and great conversations over a Macchiato at C1 or a quality pint of Best Bitter at CBD.

Have a totally relaxing holiday break and we look forward to seeing you refreshed and ready in 2014!

I’m off to the beach. 🙂



New Zealand SaaS company valuations – something in the water?

OK so Kiwi investors are finally cottoning on to this SaaS game, right? Xero, SLI Systems, Vend, GeoOps, Diligent… – all subscription-based recurring revenue businesses with strong management teams, happy customers  and consistent growth. But often not profitable, no sign of a dividend for years to come – a concept that until recently was just alien to traditional NZ investment community.

Yet Xero is now up there on the market cap leader board on the NZX – recently just over NZ$5Bn – and still hasn’t made a profit. Their most recent interim report states that the company is “continuing to follow a growth agenda focused on creating longer-term shareholder value rather than short-term profitability”.

In all likelihood with businesses like this, there are only three possible options for shareholders to realise their gains:

A) Trade sale to a bigger international player.

B) IPO (if it hasn’t been done already)

C) Hang around until the company reaches a growth inflection point, stops burning cash on R&D and Marketing, farms their customers for 7+ years and starts paying a regular dividend

You’d have to be a very loyal shareholder to wait for Option C. So what’s going on with the valuation?

I thought I’d just run the numbers and see how the – let’s face it, *exuberant* – valuations of some Kiwi SaaS companies compares against recent international (mainly US) research and commentary.

There are three good jumping off points that I’ve found from the last year which discuss valuation dynamics of recurring-revenue (SaaS) businesses. All three point to Revenue Growth Rate as being the primary – but not only – determinant of  valuation multiple:

Dave Kellogg: What Drives SaaS Company Valuation? Growth!

Dave Kellogg is the CEO of Host Analytics, a cloud-based enterprise performance management (EPM) vendor.

Forward revenue valuation multiple = (Growth rate % / 10) + 1


(Source: David Kellogg)

David Cummings: Quantifying the SaaS Valuation Growth Rate Multiplier

Valuation = (2*ARR) + (ARR*(1+(GRM*GR)))

(ARR = Annual Recurring Revenue, GRM = Growth Rate Multiplier (assume ~ 2.5), GR = Growth Rate)


SaaS Capital: What determines your SaaS Company’s multiple?

saascap valuations

(Source: SaaS Capital)

Again, a clear correlation between revenue growth and valuation multiple. (Check out the whitepaper What’s Your SaaS Company Worth that these guys have published as well – a pretty comprehensive framework which includes other factors including Addressable Market Size, Customer Retention, Gross Margin and Customer Acquisition Costs(CAC).

So, given these recent analyses how do the handful of NZ SaaS vendors with publicly available data stack up?

I’ve given it a quick crack and come up with the following figures. Happy to share my workings if anyone’s interested – several guesses made around Gross Margin (not all companies report consistently)  – that may skew things a bit, but nonetheless the numbers tell a story: when it comes to Kiwi SaaS firms (especially those aligned closely with the Xero ecosystem) there’s something in the water. Question is: what is it and who’s drinking it?

Company ARR (NZ$) ARR Growth % Market Cap (NZ$) – Dec 2013 Kellogg Multiple Cummings Multiple Actual Multiple
Xero  $70.6 million (source)  82% $3,900 $4304* million

9.2 5.05  55 * 61
SLI Systems  $19.3 million (source)  25% (forecast) $115 million 3.45 3.61 6
Diligent  $70.3 million (source)(US$58.3 million)  80% $316 million 9.00 5.00 5
GeoOps  $1 million (? 4500 paying users at $20/user/month with churn and discounts?)  100% (? Charitable guess) $53 million 11.00 (?) 5.50 (?) 53 (?)
* (Doh! use NZ$ not US$)

If you’re running a SaaS firm and want to run your numbers through the spreadsheet and see how you compare, get in touch.


Some useful resources for understanding and benchmarking SaaS metrics

In between watching Team New Zealand miss out on converting  four match points in a row in the Americas’ Cup I’ve recently been working with a few SaaS businesses to analyse their growth strategies and test how realistic growth projection options are. There are a bunch of interesting parameters to the models, in particular the mix of SaaS licensing to professional services and cost of customer acquisition (CAC). In each case, the question comes back to how much capital would be involved to achieve that growth, and just how available is capital with that risk profile in New Zealand. (Answer: Not Very).

As part of this work I’ve done a fair bit of reading about what the business models are and the key metrics which can be tracked and benchmarked against the sector. The pretext here is that if New Zealand is going to gain a few more Xeros and SLI Systems which successfully make the break out of NZ then we need to be able to prove that we are competitive against international competition. I think educated capital is the key ingredient here – Silicon Valley VCs have been walking this talk for some time now, but NZ investors are just waking up to the shape of subscription based business investments. Investing for growth rather than yield seems to have been an odd concept in the South Pacific until very recently…

So, there are a reasonably small number of free internet resources out there which can be used to rapidly upskill on SaaS business metrics, which I’ve collated here. Hopefully this goes towards helping entrepreneurs and investors to arrive into conversations with a common vocabulary which is used across the world.


The most accessible resource is the eminently readable blog of Boston-based VC David Skok of Matrix Partners, For Entrepreneurs.  Skok has a rare writing talent to be able to express the concepts in such a way that you come away thinking “…ah of course…”. All the posts on his blog are worth reading, but the key entry points are:

[He’s also a VC who edits his own CSS stylesheets: Nice. 🙂  ]

Most recently David published a comprehensive list of SaaS business benchmarks as part of the 2013 Pacific Crest SaaS survey. There is a wealth of information in here and – although the sample set isn’t huge and mostly from US – there are some really interesting insights worth exploring. Most importantly, it gives new SaaS businesses a leg up on what to measure and how to design your business for success.  (Another option to get hold of a few more reference points:  it’s really easy to get hold of some “ballpark benchmarks” just by downloading NASDAQ annual filings of similar profile SaaS businesses and comparing their financial ratios of Revenue to Sales/Marketing, Admin and R&D.)


bvp_10 laws

Coming a close second in accessibility is the occasional report from VC firm Bessemer Venture Partners: 10 Laws of Cloud Computing (link to download 2012 version as PDF using BVP portolio company Box).

The whole of this paper is entertaining, candid, informative and clearly illustrates how investors and entrepreneurs can successfully partner to achieve great success in the SaaS business. In particular section 5 – Check the scoreboard with the 5 Cs of Cloud Finance: CMRR, Cashflow, CAC, CLTV and Churn – is highly instructive for new SaaS businesses assessing their growth strategy. Also a funny dig at Oracle boss Larry Ellison at the end. 🙂

(Incidentally, it would be great to see some Kiwi VC and Angel firms publish some content like this, shedding a bit of colour on the VC / entrepreneur relationship here in NZ.)


Next up, SaaS metrics business KissMetrics reinforces the Bessemer position with a (self referential!?) post: The 5 “Must Have” Metrics for Your SaaS Business.


There’s a cautionary SlideShare from entrepreneur-turned-VC Christoph Janz: 9 Worst Practices in SaaS Metrics.   (Incidentally an early investor in NZ SaaS high flyer Vend).

Finally, here’s a really interesting recent post from entrepreneur Jason Cohen of Smart Bear Software:

COC: A new metric for thinking about cancellations in SaaS business models


Would you recommend any other resources out there which help entrepreneurs and investors to understand the ideal shape of a SaaS business? Please leave a comment and I’ll work them into a future post.