Startups tackle ‘X’ factor challenge

Getting in is easy, but global success is a massive challenge. Three Kiwi companies share how they grew in this type of environment.

Kiwi technology startups and X-Factor contestants both face similar hurdles: Getting in is easy, but success on a global scale is a massive challenge, said Andy Hamilton, CEO of Icehouse.

Icehouse runs business growth programs for small and medium enterprises (SMEs), is a business incubator for startups, and has the largest group of Angel Investors in New Zealand.

New Zealand is a great place to start a business, Hamilton said at a recent Amazon Web Services (AWS) roundtable discussion in Auckland. Internet and technology generally have become democratised and access to talent and specialist skills is much better compared to to ther countries.

Raising international capital for a startup in New Zealand is significantly different from five or 10 years ago, he said, and international capital is looking for places around the world, not just in New Zealand.

There are also more people who have grown a company, got the knowledge, and are now thinking how they can help other companies.

What has not changed is the team has to execute to be successful, said Hamilton.

At the roundtable, three Kiwi startups shared insights on how they hurdled the initial challenges of growing the business: Jarred Clayton, engineering manager, Eroad; Rob Coup, CTO, Koordinates; and Miki Szikszai, chief executive, Snapper

Snapper: Business continuity imperative

Snapper is a contactless payment system, with more than 115 million transactions across 1000 buses, 3000 taxis and hundreds of retailers in New Zealand.

Snapper went live in 2008, but is not a typical startup, said its CEO Miki Szikszai. Snapper is part of Infratil, which owns and operates several businesses including the Wellington Airport and Trustpower. Snapper’s core products are fare collection in buses in Wellington, Auckland and Whangarei, and he sees the future of Snapper in mobile payments.

A review of its disaster recovery and business continuity plans made it clear its infrastructure, based on hardware from IBM and software from Tibco, would be unable to fully recover in the wake of certain events.

While Snapper had two separate datacentre and failover plans, in an event, it will be a “one way trip”, Szikszai said, meaning it will failover to a disaster recovery machine but with a chance it may not be able to go back.

Szikszai said Infratil worked with the AWS technical team which demonstrated a full failover and recovery in the Sydney and American regions. In four weeks, Snapper and AWS designed and architected a system based on AWS message queue, S3 bucket and EC2 capability that replaced this function and replicated them across AWS locations globally.

Szikszai explained to the board that if it builds its own infrastructure, it will not have a much better ability to recover in face of a disaster. “It was the easiest board discussion I ever had.”

The move meant Snapper reduced operational costs, from $200,000 a year to the current $83,000.

He shared his experience at the recent CIO and CEO forum which Infratil holds for its member organisations every six months. He did a live failover and the other companies are now reviewing their strategies on how they can use some of these technologies differently.

EROAD takes different path

EROAD designed, implemented and operates the world’s first network-wide autonomous GNSS/cellular tolling system, which has been operational in New Zealand since 2009. As the company expands it needs to be able to enter new markets without increasing infrastructure capital costs, said Jarred Clayton, engineering manager.

The EROAD GNSS/CN-based toll system comprises a secure on-board unit (OBU), and a bank grade web-based transaction gateway to collect road user charges and provide value-added services such as fleet management, fuel management, service and off-road reports. The OBU sends the required data via a secure cellular link to the enterprise, which calculates taxes and provides value-added services. The EROAD server interfaces with the government transport registry, payment facilities and digital map provider.

He said EROAD started five years ago with eight staff, and now has a hundred employees. EROAD was ranked by Deloitte as Australasia’s fastest growing technology company in the Deloitte Technology Fast500 Asia Pacific 2012.

The organisation did not want to buy servers, and “throw them away after a year”.

“That is a big distraction,” he said, “and you have to justify the procurement”.

EROAD is moving its IT production infrastructure to AWS, he said. Using AWS Building Blocks means EROAD can build new environments in minutes, across multiple regions and availability zones.

For Clayton, the move meant EROAD can take the “fail faster” route, a “move on” approach taken by startups.

“We just need internet connection, and we can nail up a staging environment, he said. “For a couple of days we can do lots of experiments.”

With AWS, “if a whole datacentre goes down doesn’t bother us at all”, he said. This was important as their employees are doing a lot more now and have to support production environments 24x7.

Koordinates: Helping people find and distribute data

Koordinates is New Zealand’s largest online distributor of geospatial data. Its website,, hosts hundreds of data sets for universities, private companies and public agencies. Thse include the NZ Transport Agency and Wellington City Council, many of which have tens of thousands of views and downloads.

Rob Coup, CTO and co-founder, explained Koordinates data platform allows users with no technical expertise to view, crop and download data sets.

“People were angry at dealing with data,” he said, on the business driver for the startup.

Koordinates has been using AWS since 2008, and this year completed a move of the entire infrastructure to the Sydney region.

Coup said the startup’s biggest client is Land Information New Zealand, the national mapping agency, which is transitioning the last of their hard drives and DVD to the online platform. When this is completed, all of its data distribution to the public is going to be through the LINZ data serve based on Koordinates technology, he said.

The earthquakes in Christchurch and Wellington also prompted Koordinates to go through its options of whether to host the data internally or through Amazon. It decided the second was more efficient as it meant “less moving pieces, less people” needed in a time of crisis and cheaper as well.

“We had reasonably sized data sets, we needed to scale our costs,” said Coup. We did not have to “predict the future and throw away the money”, he said on the cloud option.

The “turn on and turn off compute capacity” of the cloud services mean, “dealing with enterprise IT and government IAAS is about 10,000 times more painful than dealing with the likes of Amazon”.

Early adopters

Startups have to raise a significant amount of money, and are forced to make decisions on an “incredibly unknowable future”, said Ed Lenta, managing director, Australia and New Zealand, AWS. They are opting not to invest their hard earned funding on server storage capacity but on “building products, iterating fast”.

Lenta said some of the largest global startups like Spotify and Tumblr were built on top of AWS platform.

“Startups want to bring products to market as quickly as possible, having a platform that supports that is important,” said Lenta, as he concluded the roundtable discussion. “They want to do business as rapidly as possible in a global stage, make use of capacity and resource in the United States, Europe, Asia, South America and Australia.”

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