Given my recent, unplanned surfeit of free time, I decided to explore the Sydney start-up scene. I have merely grazed the surface but it emits an eerily familiar vibe.
When I grew up in the UK in the 80s and 90s, there was a thriving creative scene – musicians, writers, artists. For the working-class members of this scene, it was funded by unemployment benefits of a generosity as dated and extinct as the keytar. For the middle-class members of this scene, it came from a more pre-modern source of social welfare – their parents. In these Bohemias, there would be a lot of debating, shagging and drug-taking and sometimes even art would get created, songs recorded, books written. For most participants, simply being part of the scene was enough until something else came along. It was fun. As the social welfare safety net was surgically sliced away, only those with private incomes could afford to participate. Hence the slow domination of the arts by people with double-barrelled surnames, private educations and polished (or deliberately scuffed) accents.
To a naïve, aged outside such as myself, the Sydney start-up scene is a kind of Code Bohemia. Coworking spaces stand in for community arts centres. Hackathons for all-night jam sessions. Companies for bands. Products for albums. VCs for record labels. Middle-aged corporate types for groupies. Rockstars are, huh, rockstars. Among the Code Bohemians (CoBos?), a few will produce things of genuine worth that other people will pay money for*. Many will not. The double-barrelled names, private educations and accents are a constant.
The CoBos are generally middle-class and if not funded by family members then certainly connected to the middle-class institutions of universities, banking and professional services that can provide them succour and support. Working class entrepreneurs are generally absent from the coworking spaces as they start restaurants, smash repair shops, and tanning salons. Commerce that the CoBos look down on as mere “lifestyle businesses” – concerned as they are with such plebeian notions as revenue and profit.
Another characteristic that CoBos share with their forebears in the incestousness of their scenes. I cannot comment on the shagging and drug-taking (I suspect it may be more Fortnite and Kombucha). But the point that most of these accelerators, incubators, innovation labs and coworking spaces make is that you are surrounded by other start-ups that you can partner with and sell to. It’s not clear to me how much of the purported revenues of tech business come from other tech businesses. There’s nothing wrong in principle with keeping money in a community. It means that VC cash probably circulates multiple times in these environments (I would like to know the velocity of start-up money). Of course, that money will end in Amazon Web Services for hosting, Google & Facebook for advertising, Stripe for payments, Slack for internal collaboration and the coworking space, the consultants, the VC-recommended staff. The way to get reliably rich in a gold rush is by selling picks and shovels.
It also begs the question what happens when the music stops? The oncoming IPO wave of Uber, Lyft, etc has the vibe of people copping off in the disco at 2 am. Find someone before the lights come on or go home alone. The start-up scene appears to be incredibly healthy and yet a couple of days ago, someone said to me: “The accelerators are all ****ed”. Who knows? In some ways this interdependence is reminiscent of the banks in 2007. As John Kay records**, most banking activity was between the banks, clipping a ticket for each transaction between themselves at the customer’s expense. No one had an idea of the system risk. I am not sure anyone has any sense of the systemic risk within the Sydney start-up community.
Lets see what happens.
*That’s you, gentle reader. You obviously have taste and distinction.
**https://www.johnkay.com/product/other-peoples-money-masters-of-the-universe-or-servants-of-the-people-hardback/