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.


1382129205910 1382146279253

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.


OPINION: Tech contributes 6% of Christchurch GDP, and that’s just the beginning

Just had an article published in Computerworld Magazine – see

It is time again for Christchurch’s annual Canterbury Software Summit, the largest technology industry conference in the South Island. The October 3rd event is the perfect opportunity to reflect on the achievements of the local industry since the highly acclaimed 2012 Summit – and there have been many, from new NZX listings to the opening of the Enterprise Precinct and Innovation Campus (EPIC).

Two significant-sized Canterbury software companies launched successful IPOs in 2013: SLI Systems (SLI) and Wynyard Group (WYN). These innovative firms now have a combined capitalisation of over $240 million with revenues measured in the tens of millions and they are growing rapidly. Indeed, software is a significant driver in the local economy, contributing approximately $880 million – 6 per cent of Christchurch’s GDP – every year.

SLI Systems and Wynyard swell the ranks of other successful New Zealand software businesses like Xero, Diligent, Orion Health, Serko, Vista and Vend; Kiwi investors are now aware of software as an attractive investment. With good NZX outreach and increased capital availability (due in part to growing Kiwisaver funds), there are more listings in the pipeline.

The next generation of rapidly growing Christchurch companies are also proving that they have amazing technology, solid marketing strategies and experienced management teams – I can name firms like Telogis, Leapfrog (ARANZ Geo), Redseed, Skilitix, BIMStop, CerebralFix. It’s evidence that the challenges of building a global business from Christchurch are being overcome and there are plenty of examples of those who have made it and are happy to share their knowledge and experiences.

However, there is much more that can be done to accelerate local start-up activity. We need greater investment in seed-stage software entrepreneurs, such as the Hatchery Incubator at the University of Canterbury, to ensure they receive the right support and remain in Canterbury.

Thankfully, the local infrastructure is bouncing back stronger than ever. The opening of the Enterprise Precinct and Innovation Campus (EPIC) building last October was a major rebuild milestone for the region. EPIC has become a world class centre for innovation-based companies in Canterbury and is successfully doing what it set out to achieve: Facilitating commercial collaboration between technology businesses.

EPIC is now home to 19 innovation-led companies including SLI Systems and, with events hosted on site every week, is very much helping to nurture the growth stage sector here.

As the late Sir Paul Callaghan said, in order to have successful businesses we need to make New Zealand “a place where talent wants to live”. Three years on from the first earthquake, the audacious task of dismantling the old city centre and creating a brand new 21st century “city in a garden” is well underway.

Those involved in the Christchurch software industry can feel hugely confident that we live in a world class city which can attract the best and brightest talent from all around New Zealand and the world. With a strong tradition of successful and lasting collaboration and sharing ideas, the Canterbury Software Summit is our way of celebrating that.

Ben Reid is Chairman of the Canterbury Software Cluster, and founder and principal consultant at Memia Ltd, which provides strategic advisory services focused on helping high growth software and technology businesses be successful from New Zealand.


5 years in, growing technology business from New Zealand

Yay, we got the new website up. Kudos @tgpharding. 🙂

So, we’re five years in, four websites down, what have we learnt?











When I (re*)started Memia in 2008 I was fresh out of a global corporate with a software architect skillset and a great idea for a SaaS Service Portfolio management tool for the Cloud IT era. [This was 2008, way before anyone had even heard of Cloud – and, as I now know, pre-chasm …] As is many starry-eyed Kiwi startup tech company’s rite of passage I then went through an infinite bootstrap loop of late night coding, talking to potential partners, looking for investors, and meanwhile consulting / contracting services to keep the cash coming in. ….Cut to now, 5 years […and 3 major earthquakes later, natch…]: the service portfolio management opportunity came and went (Google Apps Marketplace and others have taken that space), we’ve tried our hand at several other startups of our own and for other investors, and although there haven’t been any home runs yet we’ve learned a massive amount about early-stage software business along the way.

Most importantly, Memia has continued to deliver high quality consulting engagements to New Zealand tech companies helping with strategy, software development processes and general ISV operations. Today, our consulting and advisory work with software firms and IT organisations is the mainstay of our core business. We really enjoy helping our customers be successful and look forward to continuing to do so for a long while yet.

Excitingly, we’re now also actively investing in our own startup ventures and gearing up for more investment activity in the future. In particular, I really admire the model of New-York based Betaworks who style themselves:

“We are not a fund and we are not an incubator; we are a company that builds companies. We are makers, scaling germs of ideas…”

We think that the best bits of this “builder” model can be adapted to work well here in NZ, taking the now-mainstream Lean Startup movement as a guiding methodology for rapidly validating, developing and scaling new technology businesses. So that’s what we’re doing at Memia:  Advisor to/ Builder of/ Investor in high-growth New Zealand tech business. Join us.

One thing we’ve noticed in New Zealand, especially post-earthquake Christchurch, is that – despite the recent stellar market success of Orion Health, Xero, SLI Systems, Diligent and the new cohort Wynyard, Vend, Serko – there is a distinct lack of an “on-ramp” for the next generation of software entrepreneurs who are just starting out. (Kudos to the Lightning Lab who managed to funnel a lot of enthusiasm and resulted in some seed investment successes this year). Speaking personally I think we need more structured opportunities  here in New Zealand for software entrepreneurs to learn off each other, find partners and – at the same time be matched with smart, committed investors who understand the software business.

At Memia, we’re all about Growing Technology Business. If you’re a software entrepreneur or a would-be tech investor in our part of the world, we’d love to shout you a coffee at C1 Cafe to hear what success looks like for you and explore how we could work together. Let’s talk.


(* I say *re*-started – there were previous incarnations of Memia in my early web contracting work in the UK in the 90s – you can go back in time at the fabulous WayBack Machine internet archive:


Slicing the Pie – Startup Equity Split

With so many other things to occupy your time in a new startup , agreeing upon an equity split with your co-founders may not rank high on the priority list. However if history teaches us anything, then it probably should.

We only need to look at the Winklevoss-Zuckerberg Facebook situation or the currently unfolding Brown-Spiegel-Murphy Snapchat debacle to realise that a civilised conversation, captured in writing, can solve a lot of problems further down the track (OK possibly not as relevant in NZ, but hey, we can dream big). More importantly though, what it does is let everyone know where they stand in the startup.

So how do we slice this pie? If all things were equal then it would be a straightforward process of dividing the pie into nice equal servings. However things are rarely straightforward in a startup, and there are many factors we must consider about said pie:

Fortunately, there are many great tools available to founders to aid in the pie slicing process. A quick google search will turn up a tonne of results, so instead of talking about all of them I’m going to point you at two tools I’ve found particularly useful for splitting equity in the startup I’m currently working on.

The first is the Co-Founder Equity Calculator.  It is a quick and easy method for getting to a ballpark figure for what each of your co-founders contributions are worth. It’s a purely qualitative method for reaching equity splits. If you find that the result ‘feels’ about right, thats because its based on three years of startup research by Marc Harrison.

The second is a book called Slicing Pie by Mike Moyer. Slicing Pie approaches the equity split from a quantitative perspective and is based on the opportunity cost to each of the co-founders in undertaking the venture. Mike has kindly provided the Grunt Fund Calculator, an excel spreadsheet based on the model in the book, download it and start having a play with the number for yourself.

While no single tool may capture the perfect pie split, they do provide an estimate that will help to shed light on the relative value of what each of your startup founders brings to the table. I’ve barely scratched the surface here so do your research, use some, none or all of the tools available and then have an open and  frank conversation with your co-founders.

Finally one last piece of advice that I recently received and thought was worth sharing – if you and your co-founders find yourselves fighting over 1 or 2% worth of equity then it might pay to stop and ask yourselves, are these really the types of people you want to be tying yourself to for the next few years of your life?


Reflections on a highly successful NZ Technology Innovation Week 2013 #TIW2013

Got my feet back on the ground after a really stimulating and – don’t use this word too often! – inspiring time at last week’s Technology Innovation Week (#TIW2013 on Twitter) conference in Auckland. The theme for the conference was “Lifecycle of a technology company” and my hat is raised in respect to NZICT chief Candace Kinser who led the team which put together such a broad and comprehensive group of speakers and topics. The bar is set high for TIW2014 which is already in planning! Fantastic also to have the event kicked off by Auckland Startup Weekend and finishing on the biggest-ever New Zealand Hi-Tech Awards 2013.

In terms of my personal takeaways from the event, the main message is that the NZ Tech Industry is Right Time, Right Place, Right Now. There is an alignment of various trends all happening at once:

  • Highly successful NZX performers Xero, TradeMe and Diligent finally drawing attention from NZ investors as being credible and attractive propositions
  • NZ investors are slowly waking up to the SaaS / Cloud growth model driven by reliable recurring subscriptions: once your business model is proven then you can predict your next year’s baseline revenue and confidently focus on 100% annual growth
  • A raft of new tech IPOs arriving together:  Snakk Media, SLI Systems, Wynyard Group, Serko and found out about a few more companies now in the pipeline planning to list soon as well. More choice, more diversity.
  • Kiwisaver funds starting to hit critical mass ($12Bn under management now and growing!) which has two effects: firstly there is more money out there seeking investment, and secondly Kiwi fund managers are finally able to think about taking more long term positions rather than needing to retain liquidity year-to-year. All good news.
  • The GFC has treated NZ lightly and we are coming into a cyclic growth period fitter and leaner than before
  • Government support for the technology innovation export sector, and recognition that we are pivotal to NZ’s future economic success, is refreshingly welcome after years of focus on low-yielding primary industry and tourism
  • Most fundamentally, a clearly growing capability in New Zealand – cheerled by the hyperactive, ubiquitous and knighthood-no-doubt-imminent Rod Drury – for understanding what it takes to develop and grow successful technology businesses from here. What struck me most about the conference is how there is now a cohort of NZ entrepeneurs who have successfully taken their first business through to exit and are now re-investing in a second round, bringing international knowledge and experience to the table.
  • Events like TIW2013 are getting us more connected as a community – it was great to see a substantial contingent of the Christchurch tech industry make the trip up north and make great contacts to bring back home
  • With the industry growing in confidence, it seems to me that we are successfully developing a vocabulary of Kiwi tech business success which is being spoken more fluently around the country. Frequent mentions of “lean startup”, “accelerators”, “Angel”, “Series A/B”, “exits”, “liquidity events” and statements like “Venture Capital is called that for a reason” all goes to help us have informed conversations with investors and customers that will help to support and grow a successful industry. [PS Just don’t mention dividends… ROFL  ]

Loving being in the middle of it all, right time, right place, right now.


Christchurch Lean Startup Circle Meetup 20th June

There’s a new group meeting up next month 20th June – Christchurch Lean Startup Circle.

All over the world, Lean Startup Circle communities are getting together to share knowledge, experiences and build networks. It’s about time that Christchurch’s startup entrepreneurs and investors had a place to get together!

What is “Lean Startup”?

“Lean Startup” is a system for developing a business or product in the most efficient way possible to reduce the risk of failure.

It is an approach for launching businesses and products that treats all product and business ideas as assumptions (or hypotheses) that must be validated by rapid experimentation in the marketplace.  The approach relies on scientific experimentation, iterative product releases, and customers feedback to generate validated learning, see here for more info.

If you would like to participate in the very first Lean Startup Circle here in Christchurch then register your interest here.

Ben Reid from startup coaches Memia will be talking about practical experience applying lean startup methodologies and giving a quick overview of lean methodologies and how these can be applied to your startup.


First meetup is June 20th in the EPIC innovation building.


Ben Reid from Memia talking NZ Tech industry and EPIC on Canterbury’s Plains FM


I had a great time last week talking with Rob Lawrence from CECC and Gary McIlroy on Christchurch’s Plains FM last Wednesday morning (3 April)
. A free ranging conversation covering New Zealand’s tech industry, the EPIC centre in Christchurch, Canterbury Software Cluster and the pace of change in tech.

Take a listen:


Training and Coaching: Strategic Planning for High-Growth Technology Businesses

We’re pleased to announce that Memia has been developing a new training and coaching offering for founders of ambitious tech companies. This training is based around the “Get Strategy Right” section of our evolving Growth Framework (shown below). Details of the course are below – if you are a tech startup founder and think that your business would benefit from this training then let’s talk.

Memia Growth Framework for Tech Businesses


– Software and technology businesses need special strategic planning focus to stay on track to high growth
– Introducing strong strategy, planning and measurement practices early on will help to ensure success through constant validation, evaluation and focus
– This course introduces a practical framework for introducing rapid strategic planning focus into your tech company

The course involves one-to-one or small group training for tech business founders spread over a period of 1-2 months with follow up coaching provided if required. The training format is part-course, part-workshop applying the course material to the business in question.

Areas covered:

Strategy and Operations Planning:
– Vision & culture
– Market definition
– Measurement
– Financials and Funding
– Governance & Advisors
– Risk Analysis
– Operations Planning

Technology and Product Planning

– Product conception
– Technology Strategy
– Architecture
– Customer Development
– Market validation
– Design values

Talent and Team Planning:
– Structure
– Roles definition
– Talent attraction
– Team composition
– Team culture

The business will have run through a broad-based strategic planning framework designed specifically for high growth technology businesses and have produced a strategic roadmap with clear metrics and milestones and decision points defined.

Course location:
Courses can be delivered at the customer’s site, or at Memia’s purpose-designed workshop space at the EPIC Innovation Centre, Central Christchurch.

Course duration:

Approximately 4 8-hour training and workshop days with follow up coaching as required

Exact costs of course delivery are unknown until exact requirements for each business is ascertained.