Most of the politics of the pandemic have pitted health outcomes against the economy. In health terms, Australia is doing well in avoiding the full brunt of the global pandemic. However, we have not been immune to the economic distress.
Treasury is now forecasting our unemployment rate will hit 10 per cent. This may only be half that projected for the US, but it is clear the aftershocks of the pandemic will be felt in Australia for years to come.
Australia has not faced a downturn in almost a generation, but the United States experienced a ‘Great Recession’ triggered by the global financial crisis in 2008. The recovery was uneven and took time – it was seven years before the employment numbers recovered.
However, in previous US downturns, rates of entrepreneurship have risen alongside rising unemployment rates. And while new ventures typically have a high failure rate, there are some markers of success.
Successful new ventures tend to have radically innovative products serving emerging market sectors. Successful businesses often have high growth potential and a global perspective.
Lessons from Australian companies who have taken the step of entering the US market provide valuable insight as we think about what it will take to get our economy restarted.
My colleague, Don Scott-Kemmis, and I conducted research for the United States Studies Centre in 2019 that captures a snapshot of the situation before COVID-19.
We looked both at perceptions as well as close-up case studies of eight Australian companies who had navigated the US-Australia cross-over. Our findings about how Australians perceive, and approach entrepreneurship are even more important now as we face a real economic crisis.
Australia has a very high proportion of small businesses, but both entrepreneurial activity and attitudes lag the United States.
Prior to the coronavirus era, Australians were about half as likely as Americans to be in the process of starting a business, less likely to know someone who has started a business in the last two years, less likely to see business opportunities and, when a profitable opportunity is spotted, Australians were less likely to act on it than Americans.
Yet the facts show this hesitation is unfounded. The World Bank rates Australia as a very easy place to start a business – one of the top 10 countries globally – and ahead of the United States.
Despite the 28 years of economic growth – Australians were more anxious than Americans about a) losing their job or business, b) failure at work and c) losing everything and having to start from scratch. And while this anxiety decreased for high income Americans, there is very little difference between high and middle-income Australians for these issues.
Given over a million Australians have just lost their jobs or businesses, kick-starting entrepreneurial thinking will be critical to overcoming the reality of COVID-19 impact on the economy.
Successful new ventures build networks and provide positive feedback of experience and capital that raise the quality and scale of entrepreneurship.
The tech entrepreneurial ecosystem in Australia is already rising to this challenge. These companies and those that lead them become both the exemplars and the mentors for the next generation of entrepreneurs.
There is no real substitute for this role of successful pioneers. Such pioneer entrepreneurs who remain active as mentors and angels are the key mechanism for the transformation of the Australian innovation system.
Growing new ventures to a global scale is vitally important for the development of Australia’s entrepreneurial ecosystems. As Australia emerges from the immediacy of the COVID-19 crisis, building a culture that encourages and celebrates entrepreneurship is key.
Around 100,000 Australians are living in the United States – an estimated 20,000 working in the San Francisco area alone. At least 100 Australian startups have built sustainable businesses in the US in the last decade.
The experiences of just some of these turn up themes that will prove useful for other Australian ventures. The importance of being well prepared, proactive in building networks and open to advice and support are key themes.
Being on the ground in the US, although not always in the cities most Australians think about is a key insight.
In times of economic crisis, the resilience of business is tested, often in unprecedented ways. There are always winners and losers. The example of our successful, globally-focused businesses is a good place to look for role models as we seek to shift our entrepreneurial activity and attitudes.