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    Tony Surtees: mind games

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    Best-selling author and entrepreneur Seth Godin, describes him as “one of the most brilliant marketers on the scene today.” Most Australians know him as the man who built Yahoo!’s Commerce Group. Today, Surtees faces a new challenge: exposing Australians to the Silicon Valley mindset. And sometimes, the truth ain’t too pretty.

    Australia probably knows you best from your association with Yahoo! What other jobs have kept you busy over the last five years?

    I can probably divide my recent past into three phases. The first was moving from entrepreneurial mode, running my own private business in Australia, to international management mode, at Yahoo!’s head office in Santa Clara.

    During the second period, I was Chief Executive Office for emaimai HK Ltd, managing its re-structure. The task there was to transform a partially developed Chinese language online auction business into a mobile commerce business, at a time when capital markets were closing off to online businesses.

    The third phase has involved my return to Australia to find the best and brightest opportunities to get involved with and migrate them to the US.

    How do you make the leap from Australian entrepreneur to founding vice-president and general manager of the Yahoo! Commerce Group?

    I have spent my working life on both sides of the desk – either developing my own companies or working for big corporations in network service based business, like banks, telcos and transport companies, as well as in the ultimate network business – the internet.

    In 1994, I opened up a telephony business, at a time when telephony was in de-regulation, and in 1999 I sold it. After this, my natural inclination was to do as I had done before, on three previous occasions, and start another company, build it up and then sell it.

    So, I wanted to find a different opportunity.

    The opportunity that I found, involved online auctions. The intention was to replicate what some ex-McKinsey guys had done in Germany with a company called Alando, which was effectively to build an online auction business and position it for a sale to one of the major players. In that case, the intended buyer was eBay.

    I had intended to build this business, but, unfortunately, got pipped at the post by Kerry Packer’s Group, eCorp, which secured the rights to eBay about a month before I could get anywhere near it.

    At the same time, through contacts I had made while at Stanford’s Graduate Business School, Yahoo! heard about what I was aiming to do and decided to get me to apply the business plan, developed for building an Asia Pacific online auction business, and use it to build Yahoo!’s online auction business.

    I did what lots of Australians do. I joined the company, complained loudly and vigorously and made the case that their ecommerce strategy, at the time, was disjointed and that Yahoo! would not be in a position to compete long-term without a more comprehensive approach. To cut the story short, they promoted me to vice president and general manager of the commerce group.

    Which, at the time, constituted approximately 25 per cent of Yahoo’s 625 million page views per day.

    Yes, that’s right. The Commerce group was comprised of Yahoo!’s shopping, store, classifieds, and auction businesses, Yahoo Careers, Yahoo Finance sites, as well as a host of other sites. Over the next year and a half, the task was to rapidly build this group of online business, which we viewed as separate online businesses, but ultimately all one, under the Yahoo banner.

    So, if you ask how I got to my role at Yahoo!, I guess it was the combination of a good idea, extraordinary timing and a reasonable amount of chutzpah.

    Based on your time in the US and your background as an Australian entrepreneur, what do you think differentiates Australian entrepreneurs from those in the US?

    Make no mistake, Australia has a vibrant entrepreneurial culture at an organic level, but it doesn’t have the same levels of experience in entrepreneurial activity, or the levels of support, or entrepreneurial infrastructure that exist in the US. Entrepreneurs here don’t have the same exposure to enterprise-building skills in areas like finance or marketing.

    Australian business, by its very nature, tends to be very conservative and risk averse, whereas there’s a richer and more encompassing risk taking culture in the US. While we’re a country of punters, entrepreneurs need to be trained to become outstanding risk managers. There’s a richer and more sophisticated risk management and risk-taking culture in the US.

    But there are a couple of key things that differentiate us. In particular, if you look at the Silicon Valley entrepreneurs that have been successful, they tend to be very specialised. Their area of expertise is two miles deep, two inches wide. They will know everything they need to know within a narrow focus.

    They are also a lot of serial entrepreneurs that have jumped from one side of the table to another, from entrepreneur to VC and back again, but they will still have deep domain knowledge in a certain specific area.

    Primarily because of the shallowness of the market, Australian entrepreneurs are forced into a position where their knowledge base is two miles wide, but only too inches deep. Australians are great generalists, which can be strength if you are a lawyer, but will weaken you if you are an entrepreneur.

    Expatriates seem to place a lot of emphasis on building networks. But we also hear that Silicon Valley is the ultimate meritocracy. Does who you know really make that big a difference?

    Firstly, it’s important to acknowledge that who knows YOU is more important than who you know.

    Everybody in the market can boast a big rolodex, but I think the key thing to recognise is that most of the deals that are done come about because people like each other. If you get along with people, they will remember you.

    Networking is supported and expected early on in careers in the US and often universities are the most active – promoting their best and brightest and ensuring they stay connected. The best American colleges have highly active alumni activity, whereas in Australia we don’t seem to have anything remotely like that.

    It’s a truism, but the majority of the deals that get done between the really influential people take place after hours, in quasi-social settings, outside of an office environment.

    Above all though, it is who knows you that counts.

    But coming from the antipodes, the other side of the world, how can an entrepreneur get themselves immersed in those social settings?

    They must actively engage in networking, find the right mentor, do their research about whom they want to talk with, and relentlessly follow up. Find things that you like to do that other people are doing and build up your social networks, before you even think about your business networks.

    You have said in the past that the entrepreneurs and inventors that were drawn to Silicon Valley were not setting out to achieve great wealth, or even happiness, but the freedom to exercise their talents. Do you think that this sort of attitude is important to entrepreneurial success and does it exist in Australia?

    Well, I think that an entrepreneur needs to be passionate about the particular product, service or technology that they are pursuing. But they must also have commercial skills, or someone in their team must have commercial skills.

    An entrepreneur needs to be able to build sustainable business models, but not just focus on the money. Success requires a combination of skills that, I’m afraid, you are more likely to find in a place like the US – where people are commercially attuned as well as being technically literate.

    Do you think this sort of mass meeting of minds is achievable in Australia?

    There is nothing that Australia can do, or should want to do to try to recreate Silicon Valley, because Silicon Valley is unique. There have been many attempts to re-build multi-media corridors and technology clusters in the world, but they don’t necessarily replicate that critical mass of thinking and financial and technical resources that you find in Silicon Valley specifically.

    But what I think Australia can do is find a way to be more relevant in a global context by becoming a more intelligent competitor.

    The bottom line is that if Australia wants to go and tackle the 98% of the market that they don’t have, they must be able to meet and be relevant to that market’s needs. And that very often comes down to good marketing, more than anything else.

    We are not lacking in innovation, technical skills or intellect. When it comes down to it, we are probably not lacking in money either. What we are lacking is marketing skills, which are possibly the most important commercialisation skills to have.

    So we have the talent and technology, we just aren’t selling it?

    Yes, exactly. If you put two companies at the exact same stage of development in any particular business side to side, one being American, one being Australian, Australia has to deal with the cross-cultural issues, the market migration issues, which places it twelve miles behind the starting line.

    Australian entrepreneurs need to find a way to break through that barrier so that they are at least competing on equal footing with a US company, and the only real way to do that is through marketing.

    Average technology and good marketing beat good technology and average marketing every day. Australians need to improve their capacity to engage the marketplace in the way that the market needs and expects to be engaged.

    In Australia, if you talk up your successes you risk becoming a victim of the tall-poppy syndrome, but if you announce your failures people don’t want to know you. What approach do you think works best in the US?

    This is a great point and it highlights just how big the cultural divide is.

    You should definitely talk forthrightly and amply about your failures, because from an American point of view, if you aren’t able to articulate your mistakes it means you are either dumb, lying, haven’t taken enough risks or haven’t tried hard enough.

    The view is that anyone who has done anything significant has made mistakes, and right at the moment the entire community in Silicon Valley is made up of people who have run the gauntlet and made it out the other side. Everyone has made mistakes and the survivors have emerged stronger.

    It’s true that in Australia no one ever admits to making mistakes, because here if you make a mistake it is unlikely that you will get a second chance, which is a far less effective way of learning.

    It is a cultural behaviour that simply must change. It is dishonest on a personal level, as well as on a professional level and is a dangerous business practice. How can you attempt to change or hire people to compensate for your deficiencies, when you won’t acknowledge your own weaknesses?

    To finish up, what words of advice would you give the Australian entrepreneur wanting to break into the US market?

    Understand the differences in commercial culture.

    Networking is good, not bad. Don’t be shy – because your American competitors won’t be. Take up opportunities, as many opportunities as possible, to meet with as many people as possible.

    And, most importantly, be very focused on what they want to buy, not just what you want to sell. You might have five or ten concepts to sell to an American VC, but, in all likelihood, you will have one chance to sell one idea, and all they’ll want to see is that you really understand that one area.

    If you display your breadth of knowledge, rather than your depth of knowledge, this will be send up a red flag that you are not focused and the VC or partner will not want to deal with you.

    So, the big challenge in the entrepreneurial environment is how can an Australian compete at an equal level of proficiency when facing competition from large numbers of people across many different vertical domains, who also know how to talk balance sheets, financial statements, talk investment as well as operational strategy. The key is work on your business, not just in it.

    It might sound like a tall order, but I think it’s achievable.

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