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New Zealand as a tech destination

Paul Matthews, NZCS CEO. 03 February 2012, 1:48 pm
New Zealand as a tech destination

Many people look to Silicon Valley in the San Francisco Bay Area as the epitome of tech innovation worldwide, and for very good reason. A large chunk of the world's top tech companies are connected in some way to the Valley.

What many don't realise however, is that very few of the people behind these great companies actually originated from San Fran or Silicon Valley. Most moved there because it was "the place to be", surrounded by other tech companies also doing great things; In actuality creating a self-fulfilling reputation as the home of innovative technology.

So what would it take for New Zealand to be the next Silicon Valley? What would it take for our country to get noticed to the extent that great young tech companies wanted to call New Zealand home? What would it take to build a reputation as the place to be for tech innovation?

If the steady stream of emails I've been receiving in recent months from overseas-based software companies looking seriously at relocating to New Zealand is anything to go by we're partly there, and a large part because of our country's position on unsustainable software patents.

Software patents and New Zealand

If the article linked above is any indication, many many tech companies care about the damage software patents have caused. According to Klout.com the above blog post was tweeted, retweeted and shared over a million times within a few days. I remember watching the tweets coming thick and fast, many times a minute and almost all with congratulatory and positive messages about the change.

In short, a big chunk of the world's tech community took notice and were hugely positive about New Zealand taking the lead in dealing with what is perceived to be one of the major impediments to software innovation and growth. New Zealand was being noticed as a country where the Government wasn't for sale to those with vested interests and a country friendly to innovation and technology-based development.

What all this means for New Zealand

New Zealand is a great place to live with a lifestyle unsurpassed anywhere on Earth. Our country is big enough to support decent infrastructure internally (such as ultra-fast broadband) and externally (with direct flights to most travel hubs worldwide) but small enough to avoid many of the problems faced elsewhere due to overpopulation.

And now, New Zealand's finally being noticed as a place where tech innovation thrives.

This is illustrated by two things: investment patterns and prospective relocations.

Investment patterns

It's hard not to notice the increase in New Zealand software and tech companies being purchased offshore in recent times, with 2011 seeing a wide range of kiwi software companies like Aptimize, WaveAdept, Right Hemisphere and heaps of others sold offshore for millions. Even kiwi-run tech blog site Read Write Web was sold in December.

While these acquisitions were a result of bloody hard work by their respective entrepreneurs, the fact is a fairly clear pattern of kiwi tech acquisition is emerging.

This is mirrored in other investment areas as well in the sorts of people getting behind brands like Xero and the level of (for instance) chinese investment flowing into New Zealand's tech sector.

Global acquirers and investors are noticing New Zealand and are ready to invest.

Tech companies relocating to New Zealand? 

Alongside this I've been approached a number of times recently by generally US-based tech companies looking very seriously at relocating to New Zealand, many citing the position on software patents as an indication of our country's willingness to support innovation.

Here's an example I received in the last few days:

Dear Mr. Paul Matthews,

I recently read an article that you have written titled "OPINION: US heavies NZ on software patents" and wanted to weigh in my own opinion, and seek some advice.

I am an American citizen, but went to university in Canada at the University of Toronto.  I recently started a company with some friends from university, and we have a growing business.  Our competitive advantage comes from some clever algorithms that we developed, which we keep as trade secrets.  We are morally opposed to software patents, and have decided from the start that we would not obtain them.

Recently, somebody patented the concept of inventing an algorithm like ours.  They do not have one, they have patented the idea of coming up with one.  Our lawyers inform us that this is enforceable, and we are in a sticky situation.  We have certainly not stolen anything, it has taken 2 years of hard work and dead-ends to build a product and business.

At this stage, our business is preparing to move to New Zealand once it is clear that software patents are invalid there.  We are a company of six highly talented people, including mining engineers, a mathematical physicist, and myself (computer scientist).  Our company is growing, and we are going to have to hire more people this year.

With the Internet, we feel that we are capable of doing business anywhere in the world (in fact, most of our business is already international).

In my opinion as a software developer, New Zealand can easily become the next silicon valley.  The clear absence of software patents would cause a migration of young innovative firms like our own to the country, and as we both know technology companies are generally quite profitable.  We might not be the next Google, but someone will be...

and there is a good chance their office will be in New Zealand if there are no software patents to hinder their growth.  I contacted you, because I wanted to make clear as a foreigner that there isn't just a potential for New Zealand to attract new technology firms... we are on our way.

I will be traveling to New Zealand in April to collect my own impressions of the country, and report back to my partners.  I will be spending a week in Wellington (April 11 - 17 likely) with the intention of meeting with individuals from the government who can provide more information on taxes, business programs, and of course the state of software patents.  

(Reproduced with permission, name and company withheld for commercial sensitivity reasons)

Putting aside the potential sticky situation in that US patents can still be enforced when selling into the US (even if we can patents here), this is a good representative example of the types of contact I've been regularly receiving both from startups like this one and from more established multi-million dollar companies looking to relocate.

What to do now

It's clear that there's real potential for overseas tech companies to relocate to New Zealand, bringing with them employment, experience, reputation, tax revenue and a multitude of other benefits.

I know of at least half a dozen that have, like the example above, sent scouting teams to New Zealand to take a look around. Undoubtedly there have been countless others that have likewise done so, and I really do see even those as the tip of the iceberg.

But what do they do when they get here?

2012 brings a massive opportunity for New Zealand to market itself to the world as a serious tech destination. Maybe we should be planning this, for example putting together a "landing committee" through NZRise or NZICT to welcome these scouting groups and showing them around, introducing them to Government and helping their transition to our shores.

New Zealand really is on the cusp of becoming the next Silicon Valley if we play our cards right. Technology has the potential to reshape our country and our country's fortunes if we grasp these opportunities. But we must grasp them now, and 2012 has to be the year we make this happen or the opportunity will be lost.

Either way, one thing is clear. New Zealand's principled position on software patents and other IP matters is being noticed and is helping put us on the map in global tech circles. This is great for technology and great for New Zealand.

Next week: Roundup of NZCS activities for 2012. Stay tuned - there's a heap happening that you'll love.

Paul Matthews is Chief Executive of NZCS, the professional body of the IT industry.


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