The announcement from US tech payments player Square that it will be launching it presence in Australia with a new headquarters in Melbourne risked ruffling some feathers among some in Sydney’s booming technology startup community, who believe they are working in Australia’s version of Silicon Valley.
Among the usual talk about customer service, the company said it is setting up in Melbourne because it has a “growing reputation as Australia’s technology hub.”
While it was probably intended as a harmless enough platitude at Square HQ, it touches on a live issue of whether Australia needs to focus its tech endeavours on a single city, in the attempt to create a critical mass of activity. Last year Mike Cannon-Brookes, the co-founder of local tech giant Atlassian said Australia needed one very active and well supported start-up community in Sydney rather than several scattered across the country, in order to grow a stronger local industry.
At the time this was disputed by a number of tech industry players, including atmail chief executive Zach Johnson, who said the tech industry needed to grow across the country, rather than bulk up in Sydney.
Following Square’s decision to set up shop in Melbourne, Mr Johnson said there was potential for global companies to consider locations outside of Sydney and Melbourne.
“If they were to partner with a university producing graduates with a particular skill set they need, they’d be able to get out of the Sydney versus Melbourne competition and set up somewhere else like Brisbane, Adelaide or Perth, which are only slightly behind the two larger cities in terms of infrastructure and culture,” he said.
“Volume of entrepreneurs, investors and talent is a huge consideration in selecting a regional hub for these companies. Sydney may have a slight advantage when it comes to the fintech industry and access to some broader resources and facilities but, relative to the size of Australia, there isn’t really a material difference between Sydney and Melbourne at this point.”
Chief executive of Melbourne-based peer-to-peer lender MoneyPlace Stuart Stoyan said it was important to support startups wherever they were based, but felt like the Sydney startup scene was based more around hype than business performance. He said Melbourne was currently more likely to produce well-rounded tech companies.
“Sydney has been very vocal and has been able to get high profile coverage of its fintech hubs and incubators, but if you look beyond the PR campaign to the substance, there’s a very strong fintech and tech community in Melbourne,” Mr Stoyan said.
“Melbourne has more solid foundations to establish itself as a tech hub, but it has not yet been as organised as a collective as the Sydney community has been. Melbourne startups are focussed on creating great businesses and are so far less focussed on industry hype.”
Managing director of Sydney-based WiFi provider SkyFii Wayne Arthur said it shouldn’t matter where a company chose to base itself in, but the confluence of tech players in Sydney meant it had benefits over other Australian cities.
“For startups with limited travel budget, being based in Sydney gives you greater ability to interact with these companies and better work with them to grow your business,” he said.
Kerry Plowright, executive chairman and CEO of Aeeris, which is based in Chinderah northern New South Wales, meanwhile rubbished the notion that location of a business mattered in modern tech companies.
“What the heck; this shouldn’t even be a debate,” Mr Plowright said. “Thanks to the internet, it does not matter where you are based. I thought we were in the digital age?”