The world's best start-up hubs: Melbourne, Australia

Our first stop off in Australia, as we continue the search for the world’s best start-up hub, sees us touch down in Melbourne, a city regularly touted as a hot-bed of young, creative talent...

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  • Population: 4.1 million
  • Pros: A great standard of living in a city the right size to create some scale, while still being small enough to be able to access all the right people.
  • Cons: Australia offers only a limited market to the rest of the world, Melbourne has been said to have a "deeply conservative business culture" despite the diversity of the business community.
  • Cost: Labour and living costs can make it tricky territory for start-ups, although there are plenty of incubators and networks to help with this.
  • What to expect: A real 'can do' attitude amongst the start-ups based there, a wide range of businesses are located in the city.

Ryan Trainor is co-founder of Republica and Kon Karapanagiotidis OAM is the CEO of Asylum Seeker Resource Centre, both are based in Melbourne and have significant knowledge of the city’s start-up culture. We sat down with them to get a better understanding of what makes the creative hub tick.

How would you describe the business culture in Melbourne?

Ryan Trainor (RT): The business culture in Melbourne supports people who are willing to build their business, but ensures that humility is a key factor and value that remains at the forefront. People within Melbourne would rather come across a secret, rather than be screamed at with a brand. The subtleties of this ensures that brands that have a strong sense of community, are considered with messaging and offer a clear value proposition which can get cut through very quickly, creating strong word of mouth.

Kon Karapanagiotidis (KK): At its best, the business culture is community-minded, accessible, and keen to harness their human social capital to build capacity and opportunities for asylum seekers and other marginalised communities. Businesses who want to be market leaders and see that their brand stands for something more than just commercial outcomes. At their worst, Melbourne businesses engage in ways that are tokenistic, obsessed with protecting brands at all costs, enhance its standing without contributing anything meaningful despite having great resources, networks and wealth.

What are the best aspects of doing business in in Melbourne?

RT: With a population of a little over four Million people, in terms of size Melbourne is big enough to create some scale and small enough to access the right people for your ventures. In Melbourne, networks are important, as business is very relationship driven and there needs to be a high level of authenticity to build trust. As the creative hub and cafe / food capital of Australia, business is usually done over a coffee and once trust within networks are built, Melbourne can provide terrific opportunities for entrepreneurs who wish to not only expand around Australia, but also review opportunities in Asia.

KK: Melbourne is an entrepreneurial city where people are more open than other cities to new ideas and innovation, there is a culture of giving it a go and taking strategic risks. The diversity of the business community, its high desire for engagement, a robust appetite to bring its networks and skills to improve the lives of asylum seekers to enable them to fulfil their potential.

What are the downsides to doing business in Melbourne?

RT: As Australia is still a relatively small market compared to the rest of the world, private equity or access to start-up capital can still be challenging as our risk profile compared to other countries remains conservative. The challenge for Australia & Melbourne is to continue to invest in the next wave of entrepreneurship and ensure that we cultivate IP and truly invest in the future generation of ideas and businesses.

KK: While Melbourne would lead the nation in terms of its entrepreneurship and innovation, the business community still remains deeply conservative and inwardly focused. Most still don’t see the branding and culture-building opportunities for their business by aligning themselves with human rights. 

Too many are driven by fears of consumer perceptions and backlash rather than by owning the space, reshaping the landscape and standing for something. They are too scared to be businesses that have values and support causes that are politically unpopular missing the amazing opportunity to be market leaders. More and more people want to give their money to companies with ethics, values and a mission beyond simply making money. Companies should shape the terrain, disrupt traditional business out dated models rather than wait for the consumer too.

What are the costs of doing business in Melbourne?

RT: As with any state in Australia, Melbourne has its challenges. Labour costs and cost of living often make it hard for start-ups to grow, but as with any city, the harder you work, the luckily you are and this remains true in Melbourne. The city provides opportunity if you are willing to work hard with a number of incubators, start-up educators, shared office space and an active creative community who are willing to support people who engage within the network.

KK: The greatest cost is the time cost of relationship building. It is the huge amount of time spent with businesses building relationships, to keep them engaged and to become meaningful partners. People invest in people before they invest in any business or charity and there is a large sunk cost as a CEO in building those relationships and bringing them to fruition. Time spent building those relationships takes you away from delivering on the rest of your strategy and sometimes for little reward.

What’s your advice for anyone thinking of starting up in Melbourne?

RT: Really seek out support from people who have gone down a similar path that you are planning to go. My experience is that people genuinely want to help others and I think there is a real culture of this within Melbourne. On my journey, I have really sought people and asked for advice and now when I am asked to catch up for a coffee, I always do, as we are all part of the same ecosystem. We are really fortunate in Melbourne to have some terrific success stories, a wonderful city that provides opportunity for those willing to work hard for it.

KK: You need to have a really thick second layer of skin, you need to be resilient, leave your ego at the door, never take no for an answer, have industrial-strength self-determination to succeed, master your narrative, be clear of your vision and the needs of your audience, tailor that vision, don’t compromise on your core idea or dream, diversify your risk and investors, start small, master the business model and its risks before scaling, be adaptive and flexible in recognising your business idea needs to adapt to the market.

Virgin would like to thank Igniting Change for their help with compiling this feature.

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