Creative HQ

By Melinda Collins

Steve O’Connor knows how to run a business fast and hard. For the past 20 years he’s been at the forefront of growing innovative ventures and streamlining corporate behemoths to achieve the same pace. Now he’s the CEO of Creative HQ, Wellington’s start-up incubator, and oversees a portfolio of young companies looking for some of what he has lived through.

“I’ve done the high corporate growth stuff here and overseas, we did corporate spinouts, I’ve run my own businesses and I’ve run them for others. But mostly it has been about generating money. This (Creative HQ) is about generating some wider value for others.”

Business incubators come in all sorts of shapes and sizes. There are seven officially recognised incubators across New Zealand, in a rough geographic spread. They wrap business acumen and intensive coaching and advisory capacity around smart ideas, driven entrepreneurs and young companies. They introduce clever companies into a productive web of entrepreneurial networking, international connections and investor introductions.

The focus at Creative HQ is on businesses that can become leading lights in Wellington’s innovation ecosystem. O’Connor says the mandate for the incubator is to grow economic performance in the region by championing future business leaders.

Creative HQ alumni include stellar Wellington-based companies like Silverstripe, Optimal Usability, Starnow, DeNada; companies that pump millions of dollars back into the region in revenues, investment and salaries.

O’Connor says the intensive support and fast growth path is not right for every young aspirational company, and neither is every company right for Creative HQ.

“There are plenty of businesses, people and ideas that are commercially viable, it’s more about the scale of what they’re trying to achieve. For us, that idea has to be scalable; we’re looking for businesses that can scale to at least $10 million within five years of start-up.”

That means looking beyond Australia, O’Connor says. It means innovation, not renovation, and it means knowing what you are trying to do for a customer and how you are going to deliver it. At the crux of that comes knowing your customer, he says.

Engage to grow

“One thing we reinforce with anyone with an idea, whether it’s high growth or not, is make sure you engage with the market; know the pain or problem your product solves, what it’s worth and the real definition of what they actually need and value, so you can build it into the product. It helps companies build a product that lots of people will value and pay good money for, as opposed to a product based on an assumption.”

The pitfalls for start ups are varied and numerous. It’s a David and Goliath battle repeated over and over for most of them. Whether Goliath is the competitor with deep pockets, a seemingly impenetrable market or the mass information clutter an innovative company has to rise above in a given market, the support Creative HQ pushes in behind its ventures complements the characteristics a business and its founder needs to navigate these pitfalls.

O’Connor says speed, cash and people are key factors in this mix. At the start everything needs money, which means the entrepreneur comes last on the list of who gets paid. Allocating limited resources across a to-do list that grows daily is hard work and calls for tough decisions.

“It’s a real challenge to be sufficiently resourced to work on the businesses foundations for long term success, when you need cash in the door here and now. They have to think how to build a business to be successful and sustainable in five to 10 years time, so they are working the hardest on something they get no payoff for now.”

Team is a critical word, O’Connor says, and what it means looks different at every growth stage. “The classic tenets of entrepreneurship are essential for startups to succeed; founders require dogged determination, they’ve got to be bullish, they’ve got to have those nuggety, sometimes lone-wolf characteristics,” he says.

“These are often different characteristics to those needed to build a sustainable team to run and manage a growing business long term. Often the founder is not the right person for the business long term if it grows successfully, yet they’re naturally attached emotionally.”

Helping with the personal side of business growth is one aspect Creative HQ’s team of business strategists does week-in week-out. O’Connor sees the testing sides of it as he and the incubator team help companies transition from one life stage to another, find strategic partners, manage equity sharing and navigate tension and fallout from the natural ups and downs of fast paced growth.

Changing direction is a given. How often and how hard the startup ‘pivot’ comes is anyone’s guess, but it challenges the conventional aim of planning — having a stable track to follow.

“The plan becomes outdated as you adjust and pivot, as you’re putting up new plans every three months and wondering if there’s any point after a while. On the flip side, planning is essential and shouldn’t be ignored. How to balance that is a big challenge for start-ups.”

The world view that is so critical to New Zealand’s GDP is not as relevant to startups, even when they are playing in global markets. Commodity prices don’t count for much, the value of the Kiwi dollar is what it is, and the odd global financial meltdown is just another kick in the guts. “The financial crisis has changed the dynamics in some financial markets, but probably less so at the start up end. But investors are now looking for businesses that are less capital intensive and will generate cash flow rather than just hype. Some of those businesses previously invested would not pass the test for investment now.”

Riding mountain bike trails in Canada recently, O’Connor found himself at the top of some serious downhill runs next to a few locals. In a standard cycle helmet and a trusty pair of gloves, he felt a touch naked next the full body armour worn by the resident riders. He likened it to what Kiwi start ups contend with as they head international. “Our domestic market is the size of a single city in Europe. We have a lack of capital for small growth companies; we have great talent but not enough of it.

“We are forced to do more with less. And we still get there.”  

Innovative zest

The high standard of entrepreneurs and businesses fronting up to Creative HQ encourages O’Connor that the zest for innovation is strong. The capability and expertise in his team and the networks they work with to create high-flying successes are in more demand now than ever before.

Some sectors in Wellington are looking particularly bright. “We’re strong in the digital and web space, in the weightless economy or knowledge-based industries and in science and technology commercialisation. Much of that stuff has good speed to market, good intellectual property attributes and because it’s weightless, it’s scalable. It’s repeatable and durable and can get to different markets quickly.”

Creative HQ’s portfolio and alumni results were measured by New Zealand Trade and Enterprise as the fastest growing of all the incubators during 2009/10. With a cumulative economic contribution of $156 million, half in export earnings, Creative HQ alumni give back a sight more than they got.

Beyond the dollars and cents, the entrepreneurial spirit is the hardest to measure, but is the most valuable part long term, O’Connor says.

“We’re building a real cohort of talented, successful and experienced entrepreneurs that will become serial. In the early days, success was individual businesses. Now we’re getting a real sense of ground swell with these guys who will become very fundamental not only to the Wellington region and a thriving economy here, but nationally and, ultimately, globally.”

Back to the top.