Startup businesses generally don’t have the luxury of deep pockets, running on the proverbial smell of an oily rag until success strikes. Google founders Larry Page and Sergey Brin famously founded their global business in a suburban garage, and it’s a familiar story with last year’s BRW Young Rich leaders having started in a bedroom.
According to the 2012 survey, Atlassian founders Mike Cannon-Brookes and Scott Farquhar took top spot with a shared fortune of $480 million, ousting coal baron Nathan Tinkler after three years at the top.
The technology entrepreneurs founded their software development company straight out of university in 2002, growing with the aid of a $10,000 credit card debt into a business with a turnover of $102 million last year.
A massive 24 of the 100 young rich aged under 41 earned their fortunes in technology, including debutant Nick Armstrong of emissions trading company COzero, Matt Barrie of Freelancer.com and Damien Waller of iSelect.
Based on their intellectual business smarts, what are some of the money lessons from the rise of the youthful rich geeks?
Mixing business with pleasure
Atlassian competes with Google for talent, but has established a reputation for “mixing a culture of fun with interesting work and innovative human resources practices,” according to BRW’s Fiona Smith1.
More than 12 per cent of the company is employee-owned, thanks to an employee share option plan, while staff are offered bonuses for new recruits, which help save on headhunter fees.
Importantly, Atlassian’s annual “ShipIt days”, where employees spend 24 hours working on their own project before presenting it to the company, have helped create multimillion-dollar products.
Using online marketing to reach a global audience
Technology business Bigcommerce has grown from zero revenue to tens of millions in just two years, with nearly all of it coming from overseas. Co-founders Mitchell Harper and Eddie Machaalani made their BRW Young Rich debut in 2012 worth $110 million by helping other companies build their own online stores.
The company used Google AdWords and search engine optimisation to target customers in North America, thereby reaching a market of 300 million compared to Australia’s 22 million. Before establishing its first US office, Bigcommerce used a virtual office to gain a US toll-free number and postal address for credibility with customers.
Attracting venture capital
Atlassian’s first big leap came when it raised US$60 million in 2010 from US venture capitalist Accel Partners, known for having helped fund Facebook2.
Similarly, Bigcommerce told BRW that “raising money from venture capitalists is easy if you remember that a business isn’t just a product – it’s a product that solves a problem.”3 By having regular revenue and predictable returns, it can be possible to attract major investors to fund expansion.
Pick the right industry
The slump in coal prices saw Tinkler’s $1.13 billion fortune shrink to $400 million in the 2012 survey, with the rise of technology entrepreneurs showing the ability of this industry to generate wealth.
The property market downturn has also been shown by the fact that only eight of the top 100 made the bulk of their money from real estate, compared to 55 of the Rich List 200.
It also helps to be athletic, with sports stars Harry Kewell, Andrew Bogut, Mark Webber and Lleyton Hewitt among the young rich.
Based on the survey, mining is out and technology in, but an ability to generate wealth regardless of age remains timeless.
This article represents the views of the author only and not those of American Express.
Anthony is a communication consultant at BWH Communication and a freelance writer with 15 years' experience in the stockbroking and media industries of Australia and Asia. He is a regular writer on business and other issues for publications in Australia and Japan. He consults on communication strategy to businesses ranging from private enterprises to professional service firms and publicly listed companies, with a particular interest in entrepreneurship in all its forms.