Australia, Ranked 81st In Innovation, Seeks Lessons From Silicon Valley

People are always swarming in from other countries to set up outposts in Silicon Valley, and that’s what Larry Marshall has been doing on a trip this month. But for Marshall, who flew in from his native Australia, the visit is also a homecoming.

Marshall spent 26 years here watching entrepreneurs transform technology breakthroughs into viable companies backed by Silicon Valley venture firms. He was swept up into the entrepreneurial culture by a mentor at Stanford, and became a serial company founder and executive with several IPOs to his name.

During roughly the same period, scientists back in Australia were also producing a raft of valuable inventions such as Wi-Fi and medical ultrasound technology—but Marshall’s home country didn’t create a matching set of new businesses to reap the full market rewards, he says.

“Australia has struggled for the last quarter of a century to figure out its own innovation ecosystem,” Marshall says.

Globally, the country ranks 81st in innovation efficiency. Now, Marshall says he’s in the key spot to change all that. Leaving his job as managing director of Southern Cross Venture Partners, he became the new CEO of Australia’s sprawling government-owned science agency, the Commonwealth Scientific and Industrial Research Organisation (CSIRO) in January. He says the country’s prosperity has long relied on its natural resources, mining and agriculture. But Marshall says it’s time to build a future on technology.

Marshall is now trying to supply the missing gear in Australia’s economic engine. He plans to enlist his contacts in Silicon Valley to help him show Australia’s existing companies, scientists, and investment funds how they can collaborate to form a national innovation powerhouse. CSIRO will be opening an office near Stanford or in the mid-Peninsula area by March.

CSIRO is kind of like a combination of the U.S. Department of Energy, the Defense Department’s Defense Advanced Research Projects Agency (DARPA) and the private Menlo Park, CA-based research institute SRI, Marshall says. CSIRO’s 5,000 staffers work on pure research and also tackle practical problems that can be solved with technology, from mining safety measures in Australia to agricultural innovations in Africa. That track record positions the agency to bridge the gaps between the scientists who produce potentially transformative breakthroughs and the companies and investors that could take those inventions out into the world, he says.

CSIRO’s long-term partners in the United States—which include Boeing, GE, Monsanto and NASA—have offered to help the agency tap into their California networks to cross-fertilize the Australian business community.

“They said, ‘Come here, set up a presence and let us introduce you,’ ‘’ Marshall says.

CSIRO will still be looking for U.S. partners to commercialize Australia’s scientific discoveries, but Marshall also wants to catalyze the growth of an entrepreneurial class back home.

While the Australian government invests more than $9 billion a year on research and technology, and its investment funds manage about $2 trillion, those two pots of money “don’t talk to each other,” Marshall says.

Australian companies, while they are early adopters of proven technology, are less likely to invest in riskier early-stage research that could lead to groundbreaking products, he says. And it’s hard to coax the country’s scientists out of their labs to talk to customers whose needs might influence their approach to the problems they tackle. Marshall wants CSIRO to take on the role others don’t yet fill—moving scientific discoveries from the lab bench to the workshop where prototypes can be readied for beta testing.

He already has an example in mind—clearing the practical obstacles that could prevent a scientist’s current work on a single atom transistor from turning into a product. Manufacturing could be tricky with the technology, but that’s not necessarily the kind of problem that would fascinate the scientist herself. “CSIRO can step in and help, so she can just work on the invention,” he says.

Silicon Valley VCs have already helped Marshall with one key initiative—they came to Australia to help CSIRO evaluate 240 new product ideas that were generated by the agency’s staff in a recent all-hands brainstorming session that linked researchers in 55 different locations.

The agency chose the ideas proposed by the nine strongest teams, and hopes to spin out companies to develop each of them. Marshall has proposed that the Australian government devote $50 million of the roughly $1 billion the country received from licensing its Wi-Fi technology to create a fund to invest in such homegrown startups. With CSIRO jumping in, Australian investment funds might sign on as well. “I can see my way to getting (the fund) up to $200 million,” Marshall says.

Marshall says his entrepreneur’s intuition tells him the time is right to bring an innovation ecosystem into being in Australia. For one thing, the country’s new prime minister, former lawyer and investment banker Malcolm Turnbull, understands CSIRO’s goals.

“I’m really pushing on an open door,” Marshall says. “The stars are starting to align.”

Bernadette Tansey is Xconomy's San Francisco Editor. You can reach her at btansey@xconomy.com. Follow @Tansey_Xconomy

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