When the three founders of Spaceship touched down at Tyro Fintech Hub in 2016 we had no inkling we were witnessing the birth of one of Australia’s most remarkable start-ups. Within three weeks they’d secured seed funding at a good valuation, with Atlassian co-founder Mike Cannon-Brookes not only leading the round but also promising to bank his own superannuation savings with Spaceship.
And all they had at that point was a slide deck.
Eighteen months later they’d grown to thirty staff and a valuation of $100m, with a $50m capital raise at the end of 2017, for a total of $69.5 million that calendar year. Funds under management grew to $150 million.
Tyro Fintech Hub was now home to the biggest tech capital raise in Australia for 2017.
Their seed round was one of the more remarkable ones I’ve seen. The founders met with the GM of Tyro Fintech Hub, Sharon Lu, and me on a Thursday and we quickly nutted out a strategy. Mike Cannon-Brookes committed to the round at lunch on Friday, and by Monday the round was 3x over-subscribed, leaving a wake of good investors disappointed to have missed out.
But even before the back-to-back rounds of investor meetings it was clear to us that this was an exceptional team.
We sat down with Spaceship Co-founder David Kuhn to dig deeper into his journey as a founder.
What was your first start-up?
My Dad was in commercial real estate and construction and he kept reporting that equipment was going missing on the worksites. I costed out a system of wireless solar cameras for security monitoring. Each one cost me $2k but I was renting them out for $250 a week so I was going to get my money back pretty quickly. But then irony or ironies, my cameras got stolen! I was really wet behind the ears, and it was shocking to me, and disheartening.
Did you keep going?
I went out and got a job. It was one of the crossroads of my life. I had two job offers on the table – one was a to work with Atlassian, and the other was as a software engineer with the superannuation team at ING Australia. ING was offering double what Atlassian was offering and, in what could have been seen as a loser move at the time, I took the ING job!
But I would have had a very different outlook on the world if I had gone straight into Atlassian. I knew back then that I didn’t want to get too comfortable. I knew that I would find working at Atlassian really exciting and interesting and I was worried that I would become too absorbed in that and that the dream of starting something would die.
If I was going to take a job it was going to be with the goal of earning as much money as quickly as possible so I could get back out there and have another crack at a start-up.
It sounds like entrepreneurialism is in your blood. So tell me, when you were at school what did you do to earn money?
I used to buy one of those big cubes of soft drink and cart it back to school, and I’d buy a bag of ice from the servo and stick it in an esky that I’d hidden at school. I’d sell those cans for $1, and the canteen was selling them for $1.20, and I was still making 55 cents on every can.
So what was it like in your “boring super job” at ING?
It was interesting because I learnt the ropes there.
But I couldn’t help thinking that everything seemed really old and really dumb. Why wouldn’t we just rebuild things from scratch? It was horrible – the legacy systems, how we talked to customers, the experience they had online. We had servers that used to go offline at 5.30pm and I was like: “What are they doing? Going off to the pub? Seriously!!”
It made no sense to me. It was important though because I got to see why these businesses failed.
You then flirted with another idea which didn’t get far, so how did you end up in the Startmate accelerator?
Despite my introverted nature I can be very outgoing and I know that people are the key to success – the more connections you’ve got the better chance you have of encountering different opportunities. I’d been building up a network of friends who were entrepreneurs as well and I heard about this thing called Startmate. This guy I knew approached me and said: “Mate, I’ve got a bit of a problem. My CTO has disappeared on me. We just got accepted into Startmate, I’ve sold the software to NineMSN and I haven’t got any technology to deploy. Would you consider helping out?”
That was my introduction to accelerators!
And then, to my total surprise and delight, he says “Oh, by the way, what are you doing next month? They’re flying us out to San Francisco for a couple of weeks to go and talk to some VCs.”
Now, I’d been wanting to go to San Francisco to look at the tech scene since I was 13 years old: “You’re kidding me right??!”
That was the point where it started to feel like working in start-ups was the right thing for me.
In San Francisco I suddenly found myself in this massive diaspora of people who had come together for a singular purpose – to build something. And I was stunned by the density of the network there.
At the end of the two weeks I called my wife who was back in Sydney and said: “Hey, I think we need to be here.” And so we flew her out. We chatted it through and if the business was going to succeed anywhere it was going to succeed there, so we packed up all our things and moved to San Francisco.
So how did it turn out?
It was a really unsuccessful venture. We crashed and burned hard on that! We were so green when it came to developing product. We spent too much time developing tech and not enough time talking to customers.
And then you moved on to another start-up – Spaceship…
It almost didn’t happen. My wife said: “Look, are you going to do another start-up? After all that?! We’ve got two young kids. How is that all going to hang together?”
I said: “I can’t change my spots. And I’d have to work just as hard on something that’s trivial as something that’s big, and I’m not willing to go and break myself again for something that doesn’t have a massive impact.”
That was my commitment: it has to be something big. And she was happy with that.
And Spaceship ticked that box?
It instantly qualified as big.
It also hit the ‘meaningful’ button for me. You see I was watching my own parents – it was agonising – but they don’t have enough in super to retire. They’re exhausted. They work a lot. They desperately want to retire but don’t feel that they can.
And I thought, if there was an opportunity to wind back the clock what I’d love to do for them is get in their ear and say: “Right now is the time to do something about it.” I couldn’t do that of course but I felt like this was an opportunity to turn around to my friends, who weren’t living appreciably different lives to my parents, and say to them: “Right now! Now is the time to do something about it.”
And so Spaceship really intersected with something deeply meaningful for me, a potential impact for millions of Australians.
What advice would you give your younger self?
First, you work just as hard on something trivial as you do on something big. So do something big, not trivial.
Second, don’t be afraid of tackling the big stuff because it’s not as hard as everybody thinks.
What did you learn from Spaceship as an entrepreneur?
Spaceship was an incredibly painful birth. It was way harder than any of us expected.
It was pretty incredible to be sitting on the other side of something that was really taking off though. People were reaching out and grabbing it with both hands, and they wanted more from you than you could possibly deliver in any reasonable timeframe.
The biggest lesson for me from Spaceship was about levelling up. A few times I was caught flat-footed because I just didn’t conceive how quickly things were moving. I hadn’t put adequate measures in place to make sure that I when I needed something I could just reach up to the shelf and grab it.
What led you to choose Tyro Fintech Hub as your launchpad?
The first thing was you had other Fintechs there. The NDA arrangement between all of the companies gave us the privacy to handle sensitive information and sensitive issues. And there was a level of security that wasn’t available at other spaces.
I can’t overstate just how valuable Tyro Fintech Hub’s dedication to helping us was. I have really fond memories of being there – it was what we needed when we needed it.
It was bumpy start though…
Getting Mike Cannon-Brookes over the line for funding helped. It became a runaway train! That was a game-changer.
What’s you advice to other founders?
Don’t be afraid to go and test your idea.
Don’t play at being in business. I see founders spending heaps of time working on the business cards, making sure that their website is just so. I just want to shake them and say: “Stop messing around with all of that. Go and see if you can sell something.”
If you’re really solving a problem and you have something that the market is looking for, then you’ll get some signals. And don’t be worried that you’ll miss that signal! It’s unmistakeable and strong when it comes in, when you find the right market.
The length of time some people spend stuffing around with founder issues is such a waste. So many fundamental issues that make businesses un-investable happen in the early days.
For example people go and see their local accountant say “we need a company” and he sets them up in a company that has two shares and no vesting arrangement and they find later that it’s going to cost them an arm and a leg to go change the company structure, reset the constitution, set up a new shareholder agreement.
The more you invest in all of that other stuff the harder it is for you to just pack up and walk away. I think you need that cavalier attitude where you couldn’t care less about the company, it’s not part of your identity, and you can be somewhat objective about its prospects.
Has it all been worth it?
Absolutely it’s been worth it!
You’ll never experience anything quite like the low days you have as a founder. They are the lowest of the low. But then again you’ll never really experience anything like the thrill and the exhilaration that punctuates all of that.
If you can stay anchored to things that really matter, and not get your identity too tied up in the whole founder and start-up circus but remember it’s about your family and your friends – and God, if you’re that way inclined – these are the things that count in the long run.
Being in a start-up will accelerate your life experience like nothing you’ve ever done.