Griffiths / Thriving in the world of bright ideas

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FROM time to time Australian politicians will muse about how nice it would be for an Australian tech company to get really big, like Facebook.

John Griffiths.
John Griffiths.
It’s not going to happen. But the reasons bear thinking about.

Last week the local, long-established internet video service Quickflix announced it had raised nearly $800,000 from investors as they look to redesign its technical offerings.

At current prices, its market capitalisation is nearly $6 million.

The poor buggers are trying to take on Netflix, which has a market cap of nearly $US40 billion.

The saddest thing is that, within certain technical limits (can I press the button and have the movie start reliably?), no-one cares much about the technology, what they care about is whether the available content is anything they want to watch (having said that, Netflix has invested in some very clever technology to make their shows play down ropey ADSL).

Little Quickflix can’t beat an international goliath when it comes to signing content deals with big production studios. What it needs is a game-changing idea.

And if it had one of those, though, it would be mad to try and flog it in the Australian market.

A red-hot idea might be able to raise hundreds of thousands locally. Get on a plane and start pitching it to venture capital companies in San Francisco and they’ll write cheques for tens of millions for the same idea.

The movie “The Social Network”, about Facebook’s early days, has a pretty good depiction of how these things work.

Just as one robs banks because that’s where the money is, tech companies come out of the US because that’s where the money is (and the big market to try and make money in once it’s up and running).

This isn’t anything to be too sad about; big “Australian” companies such as News Corp and BHP are just as adroit at minimising their tax as any other multinational doing business here.

And while one can say it’s highly unlikely there will ever be an Australian Google, that’s not to say an Australian won’t start what goes on to be a tech giant one day.

We rightly look at so-called free trade deals and chafe at what’s being offered.

Rather than freedom of movement, or even in trade, they mostly represent the freedom of capital to invest.

The proposed Trans Pacific Partnership, negotiated in secrecy, largely to the agenda of very large companies can look like something not in any individual citizen’s best interest.

But if we want our kids to be able to have brilliant technology concepts turn into an Uber, or a Netflix, deals like it are the only real hope.

For a long time Australians have done well lifting ideas from overseas and implementing a half-arsed local model at twice the price.

Those days are over, the overseas ideas makers can sell direct into our market now.

The bright side is if we do these deals we can at least sell our bright ideas for $40 billion, not $6 million.

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