THE UPCOMING CHANGE WITH NEW ZEALAND & NZX

I recently read an interesting paper on internet trends by Mary Meeker, an investment partner at Kleiner Perkins Caulfield Byers in Silicon Valley, who claims that “the magnitude of upcoming change will be stunning”. Meeker’s paper is well worth a read, and can be viewed at kpcb.com/Insights – Internet trends 2012.

The key focus of Meeker’s paper is the growth of the internet and she conducts an indepth look at internet stats, the influence of mobile and social on business models, mixed economic trends and the financial situation in America. “Unprecedented global technology innovation” is one of a number of forecasts that Meeker details in the paper, a summary of which is listed on page 85.

Upon reading Meeker’s paper, I started to contemplate so what does this mean for New Zealand?

While the global economy is facing headwinds in the wake of continued uncertainlty in overseas markets, when we look around the globe the New Zealand economy is relatively well placed and has been supported by the strength of global commodity markets over the past few years, particularly in the dairy sector.

But, how well placed are we in terms of “the magnitude of upcoming change will be stunning”? How can New Zealand – our government, our businesses and our people – continue to capture the benefits of our unique position, to drive increased growth and productivity? Unfortunately high commodity prices and high interest rates are not a long term sustainable competitive advantage.

Mary Meeker’s paper supports a number of the significant changes that Howard & Company is currently seeing in the New Zealand technology sector, which are influencing investment and growth opportunities:

  • Significant acceleration of global technology innovation driven by consumer demand
  • Broad adoption of high speed wireless access
  • Proliferation of inexpensive devices and competition in operating systems
  • Mobile, social and information transparency driving changes in corporate and consumer behaviour
  • The ability to reach millions of users in record time, building a new generation of entrepreneurs
  • Value in unlocking “big data”, using predictive analytics

Which brings me to the NZX and New Zealand’s appetite for share investment, and in particular for high tech, high growth investments. As a relatively young country, the pioneering ‘can do’ innovative approach to business is alive and well, and it produces some amazing ideas and great companies. Unfortunately however, they seldom see the light of the public markets and tend to get gobbled up in trade sales. These clever kiwi companies are often bought by staid old companies that need to buy in innovation, and they are usually sold by an owner / founder who has finally been ground down to the point of settling for the three B’s (Boat, Batch and BMW). As a country though we need to keep and grow these companies to secure our future.

When we look at the NZX companies, F&P Healthcare, Xero, Trade Me and Diligent, they are meeting head-on many of the ‘upcoming stunning changes’ forecast by Mary Meeker. We as a country just need many more of them, and the investment vehicles in place to help fund them: And New Zealanders need to be able to participate in them and feel passionate about doing this.

John Quirk