Sydney needs to be Australia’s startup capital, says Mike Cannon-Brookes

Australia needs a single city where all its tech startups are concentrated, and that city should be Sydney, according to Atlassian co­founder Mike Cannon-­Brookes.

Speaking at startup conference SydStart on Tuesday, he says while it makes sense for some startups, like those operating in the agriculture industry to stay in regional areas, Australia would benefit if all its startups were gathered in a single startup capital.

“I think a lot of the regional stuff the government tries to do is bunkus,” he says.

“I have a lot of good friends from the country and stuff. The problem is you need critical mass for a lot of these things to work. And I’m not even sure in Sydney we have critical mass yet for certain things.

“So the more we start spreading out, the more difficult and dangerous it becomes that we diffuse ourselves, and all that we’ve got just withers away into nothing.”

Cannon-­Brookes compared the Australian ecosystem to Texas in the United States. The population of Texas is similar to Australia, roughly 26 million, and has a single startup scene focused around the city of Austin.

“They have one critical mass centre, in a population the size of Texas and we’re trying to build, two three, four, and get out to (Wollongong), Newcastle and other places and you’re getting to seven, eight, nine, and I don’t think we can support that.

“I don’t think we have the population size and the density of companies that you need.”

He says if one single individual was making decisions for the Australian tech industry they would “shut down everything other than Sydney in terms of tech”.

“That’s a reason one guy making all the decisions is probably not a good idea,” he says with a smile.

“You can’t tell people to do that, and people are going to make amazing businesses in other places and some of that is good.

“(But) the one thing the tech industry needs is a lot of free atoms, radicals bouncing off each other on a constant basis. That requires somewhat of a co-location.”

Cannon­-Brookes says the exception was agritech startups which made sense to be regionally based, noting it’s important for startups to choose a location that suits their product or service. 

“If you think of someone starting Uber, for example, starting in regional Australia doesn’t make any sense.

“(A) you don’t have many taxis; (B) you don’t have a taxi problem. So you just don’t have the problem set to solve. You’re not going to be able to attract engineers. You’re not going to be able to attract capital and it becomes negative reinforcement that you don’t want.”