Ask members of the Wellington business community what makes their city special and chances are their answer will feature the same word: collaboration.
Home to the household names such as Trade Me and Xero, and the Oscar-winning film production studio Weta Workshop, Wellington is carving out a name for itself as an innovative and technologically savvy city thanks to the close ties between the businesses that operate there.
“It’s an easy place to do things like this,” says James Findlater, head of product at video software startup Wipster, when reflecting on Wellington’s business community.
“Everything is very compact … you can pretty much go and see the right people very easily.”
By international standards New Zealand’s capital city is small, with just under 500,000 people living in the Wellington region and approximately 200,000 residing in Wellington City. But the size of its market is what makes the collaboration not only possible, but for some, essential.
“We need to be really innovative because our market is so small,” says Tim Pointer, founder and chief executive of digital marketing firm Uprise, which is readying to launch into international markets later this year.
“The method that we’ve almost been forced to create because New Zealand is so small … that’s what is going to be our point of difference moving into these other places, that’s a benefit of coming from New Zealand and working in such a small market.”
An estimated 400 startups call Wellington home and with the local government’s focus on technology, this number will undoubtedly only increase.
According to the Wellington Regional Economic Development Agency (WREDA), 56% of Wellington City’s employment is in knowledge-intensive service industries, compared to 32% nationally in New Zealand.
That’s not by accident, says Wellington Mayor Celia Wade-Brown, who told SmartCompany the digital infrastructure that was first established by the council back in the 1990s made it possible for digital businesses like Trade Me to get off the ground.
“We’re an ambitious city,” she says.
“In the last 15 years, our population went up by 20% and GDP [Gross Domestic Product] went up 35% … we have an open door to the world but a great, convenient lifestyle at the same time.”
This collaborative culture has its grounding in Wellington’s growing startup community.
Creative HQ is the powerhouse behind many of the local startup initiatives and in its 12 years of operation, has supported the likes of well-known New Zealand startups SilverStripe and Wipster.
Chief executive Stefan Korn told SmartCompany one of the key aims of Creative HQ is to increase the density of entrepreneurs in New Zealand.
“What we’re going to see over the next 10 years is actually global competition for entrepreneurial talent because entrepreneurial talent is basically a leading indicator for economic activity in a particular region,” Korn says.
“So if you can increase the density of entrepreneurial talent in the region, in the long term, that region’s likely going to do well.”
Creative HQ’s goal is to produce at least 1000 entrepreneurs a year through its incubation and acceleration programs, including Lightning Lab XX, which has a particular focus on encouraging startups with female founders.
The first Lightning Lab XX program ran in 2013 with nine teams, which collectively closed NZ$2.3 million in investment at the end of the three-month program. The second cohort went through the program in 2014, with a third program now underway.
One of the startups currently in the accelerator is Music Ecademy, an interactive web application designed to provide music teachers with resources to help their students learn.
Founders Jaroslav Novak and Helen Jones told SmartCompany the support they received from the mentors at Lightning Lab is invaluable given this is the pair’s first business venture.
“We want to be the number one music teacher resource” Novak says, adding that being part of Lightning Lab XX has taught them they can “back” themselves.
Creative HQ has developed a pool of some 250 mentors, who Korn says give up their time to helping young founders without payment. The mentors come from all walks of like.
“They all do it for love,” he says.
Also in the latest group of startups to spend time at Lightning Lab XX is GeoAR Games, a developer of mixed reality games that use GPS technology to build digital playgrounds.
The startup recently raised more than NZ$10,000 through a crowdfunding campaign for its “Sharks in the Park” app and secured a trial with Wellington and Porirua Councils to pilot the game in city parks.
For co-founder Melanie Langlotz, being part of an accelerator means being challenged and even uncomfortable.
“You only grow at the edge of your comfort zone,” she told SmartCompany.
Langlotz says the program “keeps you so focused”, while at the same time, opening up doors to new contacts and potential investors, especially at the program’s ‘Demo Day’, where the startups pitch to a room of hundreds of potential investors.
“Where else do you get that sheer opportunity?” she says.
While Creative HQ is wholly owned by WREDA, the organisation receives less than 25% of its funding from government. The remaining of its revenue is sourced from its programs that teach larger businesses adopt the same innovation processes as its startups.
In fact one larger business that recently completed an innovation program with Creative HQ is Trade Me, which has been operating for more than 10 years.
These corporate programs are based on McKinsey’s model of the three horizons of innovation, says Korn.
“Innovation doesn’t just happen, it’s a structured process and there are three buckets of innovation. The first is horizon one, which is about continuous improvement, all large organisations do this well,” Korn says.
“The second one is horizon two, it’s adjacent innovation and that’s about launching new products or services in an existing market or entering a new market with a modified offering. That’s a little bit harder [and] a lot of organisations don’t do that well, certainly in NZ they don’t.”
“And the last one is disruptive or transformative innovation and that’s about all the new technologies that are coming, completely new business models and markets,” he says.
“Everything is new so you can’t base anything on what you’re doing at the moment. So everyone does that really badly.”
While Korn says “conventional wisdom” is for companies to allocate 65% of available resources to horizon one, 25% to horizon two and 10% to horizon three, in reality, companies in New Zealand are only allocating around 1% of resources to horizon three-type innovation.
“One of the key things that everyone forgets is that in the end, innovation is quite structured,” he says.
“When you look at how innovation happens, it’s a really kind of diligent, structured process you go through. So we bring the programming and the process to organisations.”
Nowhere is the power of collaboration more evident then at BizDojo, one of Wellington’s creative business hubs.
While it looks just like a co-working space for business founders, Wellington regional manager Jessica Manins says BizDojo does what all other co-working spaces don’t.
“It’s not just a desk,” Manins told SmartCompany.
Instead, the focus is on what each business can bring to BizDojo and new members are selected after a trial period to see if they are the right cultural fit.
The 60-odd businesses at BizDojo Wellington participate in regular seminars and workshops with experts and the space is designed to offer young businesses the support they often need after going through an accelerator program like Lightening Lab.
“It’s a risk to not be in a space like this,” Manins says.
One of the startups based at BizDojo in Wellington is crowdfunding platform PledgeMe.
Anna Guenther, who founded PledgeMe as part of her Masters in entrepreneurship four years ago, told SmartCompany the exciting thing for her as a Wellington-based business owner is “there are more spaces where we can collaborate and interact”.
“I think there’s more people coming into the space, more awareness, more places to hang out, we’re all using technology better as well,” she says.
“I think that’s also just the nature of Wellington being a compact city,” she says.
“It’s really easy to bump into people and have conversations on the street about how you should do things together. We’re really supportive of each other as well.”
“We all know that we’re on the ass end of the earth and if we want to get anything done, we probably have to work together,” she adds.
SmartCompany travelled to Wellington as a guest of the Wellington Regional Economic Development Agency.
Editor
Eloise is an experienced business journalist and editor, who has held senior editorial roles at SmartCompany since 2014. Prior to joining SmartCompany, Eloise was news editor at Books+Publishing, the trade press for the Australian book industry. Eloise has degrees in media and communications, marketing and business management, and political science. You can follow her on LinkedIn, and Twitter at @ellykeating.
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