Life after Lockdown: Malcolm Turnbull on entrepreneurship
Australia has a choice of how it recovers from the COVID-19 recession – try to resume business as usual or shift the national mindset to support a new economy.
Murray Hurps, Director of Entrepreneurship at UTS, in conversation with Malcolm Turnbull
Murray Hurps: Welcome to our 11th Life after Lockdown event, and our finale. This series aims to visualize what life after lockdown will look like. Today, we are looking at the role of entrepreneurship in Australia's recovery, alongside our former PM, the Honorable Malcolm Turnbull. My name is Murray Hurps and I'm the director of entrepreneurship for UTS.
Before we begin, I would like to acknowledge the Gadigal people of the Eora nation upon whose ancestral land our campus now stands. I'd also like to pay respects to elders past and present, acknowledging them as traditional custodians of the knowledge for this land.
So, we've received over 300 questions from people attending this event. We've been working through those questions trying to distil them down to half a dozen or so … if we don't get to your question, my apologies.
Malcolm, I really don't think you need any introduction, especially for our audience. But I would like to highlight your own entrepreneurial background – establishing a law firm, an investment banking firm, investing in and being involved in several entrepreneurial efforts, including Ozemail, and others that we'll cover shortly. You are an incredible example of what entrepreneurship can do to enable a career and true impact in the world. And it's a pleasure to have you here with us today.
Malcolm Turnbull: Thank you very much. Great to be with you.
MH: So, Australia made a choice to prioritize health in the pandemic and was smart enough to ensure that we continue to support important exports so the economy wasn't completely brought to its knees. There are, however, many parts of the economy that have been devastated – airlines and tourism, for example. This gives us a once-in-a-generation opportunity to lay the foundations for a new economy that addresses the inherent weaknesses. I firmly believe, as I'm sure you do too, that entrepreneurship is critical to rebuilding our economy and helping young Australians to navigate the uncertainty they now face. Today I'd like to have your help to explore what Australia can do to support this. So, with that in mind, let's start with your perspective on entrepreneurship. In a few sentences. Could you describe what entrepreneurship is?
MT: Entrepreneurship is the spirit of enterprise, the spirit of innovation, the power to have a go, to try something new. It's a fundamental human quality because, you know, deep in our DNA we all yearn to be free, to be autonomous, to do things in our own unique way or what we think is our unique way. And so the entrepreneur is doing something very timeless, very human, very essential – but it's more essential now than ever.
Because, you know, as I've said for many years – and it's truer now than it's ever been – we are living in a time of change unprecedented in its scale and pace. And what that means is that you need to be as dynamic, as agile – a bit overused that adjective – but nonetheless it's valid: agile, entrepreneurial, able to make volatility your friend, to enable it to work for you, rather than against you. And all of that requires an entrepreneurial approach, and that's true whether you're running a one-person business, a startup, whether you're working in a division of a big company or indeed in a department of the public service. Entrepreneurship is a critical quality and more critical now than ever.
MH: Since last year we've seen a new government, unprecedented bushfires, a global pandemic and a belted economy. How would you say Australia is going about recovering from that?
MT: Well, we're still in the midst of the pandemic. And as we've seen in Victoria, things can go backwards after they've been going well, very rapidly. Look, I think you've got to say we've handled the pandemic, so far, better than many other comparable countries, particularly the United States and the UK. So Australia and New Zealand have done very well, relative to others.
But it is going to be a long haul back. There's a lot of unemployment that is masked by the JobKeeper payments, they obviously can't be maintained forever. I expect they'll have to be extended. But look, it's going to be a rough time and there are big sectors, as you said in your introduction, that look like being devastated for a long time, you know, airlines, travel, tourism, hospitality.
There's been this sort of false paradigm of saying you've got a choice between health and the economy. But the reality is even if you have no restrictions, no lockdowns, once people start leaving aside the horrific health consequences and what it does to your hospital system, people are not going to be rushing out into bars and restaurants, if they think they're going to get seriously ill. The truth is that prioritizing health, public health – which is what government should be doing – is also the right thing to do in terms of the economy. Otherwise you get the worst of both worlds. You get a health catastrophe and all of the attendant loss of life and illness that follows, and you get the same economic disruption because you know people feel they're going to get a very serious disease from going into crowded places and they're not going to go there.
MH: That's the thing that I keep getting stuck on. I ran a company from a bedroom for 14 years with teams around the world. If there was a pandemic I wouldn't have really noticed. And it was a software-driven company. Why is that not a more normal thing? Why, especially at the moment when we are locked at home, do we not start to look at this as an opportunity to do?
MT: I mean I think we do if you look at … say, what is life going to look like post-pandemic. The one thing that is clear is that we'll be doing more communications, more business, more interaction like this. The pandemic has occurred at a time when in many countries you have near ubiquitous high speed broadband, or at least fast enough to do video conferencing. And of course the equipment and the applications that are affordable to enable you to do it – 20 years ago, you simply couldn't have responded in this way. But there is no prospect, in my view – even assuming there's a vaccine tomorrow and the medical challenge goes away – that life will go back to precisely the way it was.
More people will work remotely. I've always been, as has Lucy, a believer in workplace flexibility, and in our own businesses … I was never interested in people showing face-time at the office, I was interested in what they produced. Well now, there truly are no excuses. It’s as though we've had this gigantic global experiment where we said, all right, let's all try working from home for a few months and see how it works. And it has, in many areas.
Obviously, there are frontline workers, whether it's in retail or public transport or, above all, healthcare, where that isn't an option, but you can certainly mitigate the level of risk and increase the amenity. And I believe productivity for millions of people, by having a more flexible approach to workplaces that this kind of technology entails, now that has implications for cities. It has big implications for real estate. I don't know that you'd want to be in office space at the moment, would you?
MH: No, and I think that's the point. If the pandemic is a catalysing moment for Australia, which I think it is, and there is a new generation of people that see this as the way to adapt to this environment and make the most of it, how do we go about normalising that? So, the conditions are there but what can we do to make all Australians realise that entrepreneurship is something they can start doing in the current world?
MT: Well, I think, one thing that’s important is to talk about it. You know, I think the National Innovation and Science Agenda (NISA), which was the big economic policy we launched in 2015, not long after I became prime minister, has had a very beneficial impact … in terms of the whole tech startup innovation ecosystem in Australia. But, and there were lots of measures, I think there are over two dozen measures in fact, ranging from tax to insolvency laws to setting up new funds and so forth, in many ways the most important thing that I did was talking about innovation, a lot. And you've got to talk about it and encourage people, and point to successful role models – really, in many respects, it's a cultural change you're looking for. Because the thing that holds us back in so many areas is culture, particularly culture in workplaces and businesses and government departments, which are hierarchical and blame based.
If you have a culture in your business or your department, which says, if you try something new and it doesn't work out, you'll get jumped on like a ton of bricks. And if by some chance it does work out, it's more likely than not that a superior will appropriate the victory and claim the rewards – in that kind of culture, which probably sounds very familiar to many people on this call, the rational actor does nothing and makes no decisions.
You've got to have a culture which encourages people to take risks … you don’t want to bet the whole farm on every roll of the dice, but equally, unless you're prepared to experiment you'll never advance and that's a critical thing. Blame-based cultures are very antithetical to innovation, and the growth and productivity that we're going to need.
MH: How do we change that?
MT: It requires leadership. It's often just a question of being honest. I remember on one occasion when I was PM, I think it was the first occasion with the NISA, I was asked by some journalists, could I guarantee that all of these measures would work, and I said, no, I'm sure some of them might work. And whatever doesn't work, we’ll dump, and whatever does work, we'll do more. And if we see someone else achieving the same objective, more effectively, we’ll shamelessly plagiarise them. It's easier to do with public policy than it is with software and technology, where you have intellectual property issues, but you get my point. You can't get yourself hung up on the proposition that everything you do, every decision you make, is going to be right because it's not going to be. Governments will hang on to policies that have failed for much longer than they should. You know they don't fail fast, as you should. And the reason for that is because they don't want to admit they've made a mistake. Well, it's not a mistake … the best thing you can say about any new approach is it's the best idea I have at the time. Not that it comes with a guarantee because nothing does.
MH: Looking at the current situation and the responses that are being made … the JobKeeper program supports companies started up until May, but, notably, doesn't support companies started after then. The JobMaker program announced in May is focused on skills development. Would you say these are the right ways of going about generating new entrepreneurship, through a government lens?
MT: Well I think JobKeeper was simply just designed to stem the flow of millions of people onto the unemployment queues and was essentially a holding pattern measure. What the government's got to do now is look at it very carefully – see which bits of it have worked, which haven't, where the anomalies have been, and then come up with a revised model in the light of the real life experience.
You clearly don't want to be using government money to keep people in jobs that have gone or are no longer able to be sustained – what you need, then, is the economic growth in other parts of the economy so that other opportunities will arise. There's always a tendency to want to throw money at a business that is failing to keep people in employment, and that's a natural human reaction. That's why a strong diverse economy is so important because as one business falls over or fails, for whatever reason – you know, it may just be poor management, it may be the pandemic, it may be competition – there is growth elsewhere in the economy to create other opportunities so.
If I could just make this point about startups: there is a tendency with governments – I mean obviously my government was an exception because of my own experience – but there's a tendency with governments to discount the startup economy and discount software, because they see it as not being real, being a bit of ephemeral.
The reality is that in a startup, the only people who can potentially lose out are the investors, and even they will often, you know, learn a lot. But the founders learn a lot. The employees pay tax, I might add, to the government. And they learn a lot, too. The startup economy is one that is – even though most startups will not succeed – hugely beneficial to the economy as a whole … if you look at it from an Australia-wide whole-of-economy basis it's hugely beneficial. You know, some investors will do their dough … and they'll do their dough in the stock market, they'll do their dough in real estate development and there's plenty of ways to raise money.
But what it does do is train people up, give them real-life experience that then enables them to go on and be productive in other areas. They may decide it's all too hair-raising and they'll go and get a job with a larger company or they may go on to another startup, which turns out to be hit. Lucy and I have started over a dozen businesses and some of them have done very well, some of them literally 100% of the money [was] lost … but you know we learned from every one of them.
Companies can fail but no entrepreneur fails to get something valuable from their experience of doing it, and that prepares you for the next success.
MH: Notably, you invested $500,000 into Ozemail and five years later sold your stake for $57 million. Congratulations. We do have some vehicles for encouraging investment into startups but, I would argue, we've got probably stronger incentives for investment into real estate in Australia or at least at some more normal pathway that people take.
MT: Yes, well, real estate's been a bit of a one-way bet, you know, because you've had the combination of very low interest rates and very strong asset appreciation. I've got to say my real estate investing track record is patchy. You know, I've lost money on real estate in markets where most people are making money, so I wouldn't claim any expertise there. And I had a bad experience in the late ’80s – you know, in the recession we had to have – when interest rates were 21 per cent and so forth. And so my own investing has been more focused on taking an unlevered dollar and turning it ideally into $10, you know, $5 or $15. What a real estate investor typically does is, you know, borrows $9, then buys something for $10 and then hopefully sells it for $12 and thereby triples their equity investments. So, it's a different mindset, but that cheap money has been what has really made it a one-way bet.
In the late ’80s we had some commercial property where the tenants went broke and the interest rates are up, as I said, up around 21 per cent I think … well, that's just devastating. That's ruinous, but that's a completely different world. When you talk about that to young people nowadays, they might as well be talking about the Weimar Republic.
MH: We've got about 10 minutes left … over the last two years, UTS has grown the largest community of student launched startups in Australia. We're at about 340 student-launched technology-driven startups currently … we’re also in the process of opening a new high-visibility space to inspire entrepreneurship in the public, but that's just a kind of UTS-driven agenda of trying to create not just graduates but jobs for graduates as well. I am interested, what do you think the role of universities is in driving entrepreneurship?
MT: Well, it's a hugely important because you're not only providing instruction in entrepreneurship, as you are, then obviously also people are learning the necessary technical skills, the quantitative skills, the business skills. But above all, it's a place where entrepreneurial people, particularly the students, most of them young, are getting together. This, by the way, is the sort of the proviso that what we were talking about earlier, when we were discussing video conferencing and remote working and so forth.
Human beings are social animals, you know, we are allegedly better evolved chimps, or apes or whatever, and like our counterparts in the monkey kingdom, we are social animals, We like to hang out together; we are very sociable. And we spark off each other, and that human connection is, of course, what drives cities.
So you know it's interesting, when the internet first got commercial, say in the mid-’90s, a lot of people were foretelling the end of the city because frankly they were forecasting that we'd all be doing the kind of stuff we're being forced to do now. So I could stand here in a nice garden in the countryside and be talking to you and lots of other people, you know, in the city.
But I don't think there's any substitute for physical face-to-face engagement, particularly as people are getting to know and trust each other because so much of business, and collaboration depends on trust. So, you know, universities, and the ability to congregate and collaborate, are vitally important … this is one of the reasons why we've got to hope that we can get a either a therapeutic or a vaccination solution to this pandemic before too long.
MH: UTS engages with a huge number of future students, and I'd love to get a message out to those future students about what they should do to consider entrepreneurship … if you can look down the camera and send a message to a few hundred thousand future students about whether they should consider entrepreneurship or not.
MT: Look, Australia's future prosperity and security depends on Australian entrepreneurship and innovation. So not only does entrepreneurship offer an exciting and interesting prospect both for study and for, you know, your business life, commercial life, it gives you the set of skills and attitudes that will enable you best to navigate a very volatile world and make volatility your friend, not your foe – it’s critically important … particularly if you couple it with the right technical skills to deal with circumstances and opportunities that are not just unpredicted but unforeseeable.
MH: Lastly, when I'm out in high schools, the most common question I get asked by students is ‘What should I tell my parents about this thing that I'm running on the side?’ It makes me sad every time I hear it. Do you have a message for all the parents out there, and all the teachers out there, about encouraging entrepreneurship?
MT: Well, the message obviously Murray is that most parents would welcome this. I mean it is, you know … the reality is a young person starts a business or an enterprise. What is the downside? I mean, they may lose some money - though their investors may lose money, as we've discussed before, the young person learns so much. I mean it is it literally … there is no substitute for actually starting something new and learning on the job. You can read all the books about entrepreneurship and innovation you like, but there's no substitute for actually doing it. And so getting in and having a go is enormously valuable and that will stand that person in good stead.
If you know after their venture doesn't succeed – let's assume it doesn't succeed – you know, like whether they go off and work in a government department or, you know, a big institution or academia or whatever. I mean, look … you've got to be prepared in this world more than ever – to look at what you are doing and saying, you know, the way we did things last week is not necessarily the way we should be doing things this week or next week. You cannot work on the assumption that everything is going to stay the same because it's not.
Our environment, and I don't just mean our physical environment but our economic or social or political environment, is in a constant state of change. And that means that we've got to be prepared to take advantage of that because you know otherwise you'll just get left behind.
MH: Fantastic. In the two minutes we've got left, I'll go to one audience question that I really liked – in the future, Canberra may have a suburb named Turnbull, as per tradition. What do you envisage your suburb to be like?
MT: Well, that is one of those rare questions I've never ever thought about before. I'll tell you the sort of stuff that I like … I like suburbs that are reasonably dense. In terms of cities, there is an identity coupled with amenities, I suppose. Something that is reasonably dense and has got good connectivity, both in terms of telecoms, obviously, but also in terms of mass transit.
Canberra has got a lot a lot of things going for it in terms of design, but it was built around the motorcar which is another great mistake. And the efforts at densification closer to the centre, including around Kingston where we used to have a flat, has certainly improved the amenity of the city. Despite all the problems of the pandemic, I still believe in cities – density is the solution, not the problem. But you've got to couple it with the right community. And that, in particular, means, you know, transport, mass transit in particular, that's why I made public transport such a high priority for our cities agenda.
There is actually quite an entrepreneurial scene in Canberra, in the tech world, and you get very smart people coming out of defence technology … the Australian Signals Directorate, and so forth and, you know, doing their own thing. So there is an ecosystem there, and that's good. And it's only three hours drive from Sydney - it's not exactly a remote location.
But the one thing I do know is they don't name anything after ex-prime ministers until they dead so I hope, whenever such a suburban name arose, if it ever did, I hope it's a very long way off because I'm having a great deal of fun getting on with business and in venture capital today.
MH: Malcolm, you have made a contribution to Australia's future that I think is incredible. And I'm confident that everyone watching appreciates it as well. And thank you for joining us today. Thank you for everything you've done and that you continue to do for Australia.
MT: Thanks, Murray, thank you and good wishes.
In the 1990s, when the internet was in its commercial infancy, there were many predictions about the end of the city. As technology freed employees from bricks-and-mortar workplaces, there’d come a time when people would work from wherever they pleased.
Fast forward to 2020 and here we are, says former Australian prime minister, entrepreneur and venture capitalist Malcolm Turnbull. Enabled by technology, but with a global pandemic as the catalyst, people are indeed working from home – and the workplace may never be the same again.
“The pandemic has occurred at a time when in many countries you have near-ubiquitous high speed broadband, or at least fast enough to do video conferencing. And of course the equipment and the applications that are affordable to enable you to do it,” Turnbull told an audience of more than 400 at the final Life after Lockdown webinar.
“Twenty years ago, you simply couldn't have responded in this way… but there is no prospect, in my view – even assuming there's a vaccine tomorrow and the medical challenge goes away – that life will go back to precisely the way it was.
“It’s as though we've had this gigantic global experiment where we said, all right, let's all try working from home for a few months and see how it works. And it has, in many areas.
You can't get yourself hung up on the proposition that everything you do, every decision you make, is going to be right because it's not going to be.
“Obviously, there are frontline workers, whether it's in retail or public transport or, above all, healthcare, where that isn't an option, but you can certainly mitigate the level of risk and increase the amenity.”
Turnbull was in conversation with UTS Director of Entrepreneurship Murray Hurps, and joined the webinar from the garden of his Hunter Valley farm.
Turnbull, a long-standing advocate for Australian innovation and entrepreneurship, spoke about the opportunities and challenges for Australia as it grapples with post-pandemic life and how we can all help drive this change.
Building the right culture
“You've got to talk about entrepreneurship and innovation – encourage people and point to successful role models – because the thing that holds us back in so many areas is culture, particularly culture in workplaces and businesses and government departments, which are hierarchical and blame based.
“If you have a culture in your business or your department, which says, if you try something new and it doesn't work out, you'll get jumped on like a ton of bricks. And if by some chance it does work out, it's more likely than not that a superior will appropriate the victory and claim the rewards – in that kind of culture, which probably sounds very familiar to many people on this call, the rational actor does nothing and makes no decisions.
“You've got to have a culture which encourages people to take risks … you don’t want to bet the whole farm on every roll of the dice, but equally, unless you're prepared to experiment you'll never advance and that's a critical thing.”
“It's often just a question of being honest. With the NISA (National Innovation and Science Agenda), I was asked by some journalists, could I guarantee that all of these measures would work. I said, I'm sure some of them might work and whatever doesn't work, we’ll dump, and whatever does work, we'll do more … You can't get yourself hung up on the proposition that everything you do, every decision you make, is going to be right because it's not going to be.”
Keeping jobs, making jobs
“I think JobKeeper was simply just designed to stem the flow of millions of people onto the unemployment queues and was essentially a holding pattern measure. What the government's got to do now is look at it very carefully – see which bits of it have worked, which haven't, where the anomalies have been, and then come up with a revised model in the light of the real-life experience.
There's a tendency with governments to discount the startup economy.
“You clearly don't want to be using government money to keep people in jobs that have gone or are no longer able to be sustained – what you need, then, is the economic growth in other parts of the economy so that other opportunities will arise.
“There's a tendency with governments to discount the startup economy … because they see it as not being real, being a bit of ephemeral. The reality is that in a startup, the only people who can potentially lose out are the investors, and even they will learn a lot. If you look at it from an Australia-wide whole-of-economy basis, the startup economy is hugely beneficial.”
Universities’ role in driving entrepreneurship
“You're not only providing instruction in entrepreneurship, but also people are learning the necessary technical skills, the quantitative skills, the business skills. Above all, it's a place where entrepreneurial people, particularly the students, most of them young, are getting together and collaborating.
“Human beings are social animals. We like to hang out together, we spark off each other, and that human connection is, of course, what drives cities.
A message for young Australians
“Australia's future prosperity and security depends on Australian entrepreneurship and innovation. So not only does entrepreneurship offer an exciting and interesting prospect both for study and for your business life, it gives you the set of skills and attitudes that will enable you best to navigate a very volatile world and make volatility your friend, not your foe.”
Innovation and entrepreneurship are not only vital for Australia’s economic recovery, they’re also core to UTS. Stay connected to the UTS Innovation and Entrepreneurship Unit.