Adeo Ressi is an American entrepreneur and after being successful in Silicon Valley has turned his mind to creating greater global tech successes. Ressi is headed to Sydney, Australia on the 28th of May and will speak at an event by Unstoppables. The talk will be a pitch to angel investors and venture capitalists in Australia, suggesting they think differently about entrepreneurs and startups when investing money.
After selling his web development firm, Methodfive, Ressi exited for a cool $88 million. On the back of that success, he created The Founder Institute, an entrepreneur start-up program with a difference. Instead of creating companies like Ycombinator and Techstars, this program creates the people that go on to create great companies. It helps entrepreneurs avoid the common mistakes founders make and aggressively tests them to make sure they’re not just ready to build a project, but ready to build a great company.
With plenty of examples of Australian Entrepreneurs having to leave the country to fund their companies, Ressi wants to see greater investment by Australians into Australian start-ups. This will stimulate the Australian economy as well as create jobs. This week we got to speak to Ressi about his vision for Australian startups, entrepreneurs, the opportunities that superannuation and international investment could bring as well as touching on his friendship with Elon Musk.
At the Founder’s Institute, applicants are given a test to measure their entrepreneurial traits. The test poses a series of questions that ensure that they ask themselves the difficult questions,like how they would address and deal with the challenges experienced in the world of business. How would they react in certainly situations, how do they deal with pressure, how do the cope with stress and timelines or other people in general, all of these things play a part.
This test, weeds out the weak early, while the intensive training, combined with the introduction to a network of relationships, have resulted in 87.5% of business created by people who’ve been through the Founder Institute, are still operating today. Compared to the average small business in Australia that lasts less than 24months, it’s an incredibly high success rate, something that all small business tech or not, should pay attention to.
In an interview with Revision 3 in 2012, Ressi said the accuracy of the test was around 73%, thanks to some revisions and larger sample group, the accuracy in 2015 is now at 84%. While there’s no way to test who will go on to be successful, this may be the closest thing that exists to a recipe.
Another interesting anecdote is that the average age of graduates is 34, 8 years older than the average 26yo in other programs. It’s also interesting that between 70 and 90% of entrants quit their 9-5 job by the end of the program.
The Founder Institute opened in Sydney in November 2011 and since then has expanded to Melbourne and Perth. After talking with Ressi, it’s clear he believes that Australia is uniquely positioned to make a power play in this region of the world. In many ways our lunch has already been eaten by Singapore, with many Asian-startups looking for funding there thanks to some great government incentives, incentives that should be considered in Australia.
To attract the right investment for startups, and to keep entrepreneurs and jobs here in Australia, Ressi says the Government could offer tax breaks for organisations or even people that invest in startups. With capital easy to come by, growth in companies on the start of their hockey stick growth, becomes easy, allowing those founders to focus on building the best company they can, rather than chasing the next funding round.
In terms of establishing new businesses, the process was made incredibly simple in Singapore, just jump online, pay around $50 and in a weekend you could have new business setup. In Australia the process is still far more complex and at some point, that damages people’s ability to reach their potential, when burdened by too many hurdles.
Superannuation — Should it be used to invest it in start-ups? How do we as a nation invest into our future?
Ressi says that Australia is perfectly positioned geographically to leverage our rapidly developing neighbours of Indonesia, India and China. This part of the world are going through a population explosion and if we can make investment in Australia attractive, the benefits are simply massive. A well developed investment community could then see international startups look to Australia as the place to go start their next company.
Another option for the government is to offer schemes which would see co-investment, meaning every dollar an investor contributes, the government would co-contribute. In some parts of the world the Government would actually become a share holder or part-owner in the company, but just ask for the repayment of the initial investment, not the 2-10x return an investor is seeking).
Right now Australia has a unique asset, not available anywhere else in the world. Superannuation. This national fund of billions of dollars are invested in a multitude of risk levels to suit the needs of the individual. What if the current restrictions were removed and at least part of Super could be invested in Startups. The reason venture funds exist is certainly to help grow companies that change the world, but more importantly, make them higher returns than a term deposit.
If we took even a slice of the Super bucket and allowed it to be invested in startups, it could achieve 3 goals in one. Help startups grow, address unemployment with new jobs and if deliver significant returns. There’s no reason Australian developers can’t create the next Facebook or Twitter, or even better a completely new idea that takes the world by storm.
Adeo Ressi and Elon Musk have been friends for more than 20 years, so I could resist asking him about Musk’s recent announcement of PowerWall. Ressi says Musk is one of a kind, something special in the world. His ambition to chase big problems is impressive, but there’s really no reason the next Elon Musk isn’t in Australia.
For more information about Adeo Ressi’s visit, head over to http://unstoppables.com.au/