It’s the Silicon Valley Way or the highway: Startup stories from San Fran, part seven


Security Colony was one of six cybersecurity companies selected by Austrade & AustCyber to take part in the Federal Government’s Landing Pad program in San Francisco. In this exclusive series for Dynamic Business, Nick Ellsmore, co-founder of Security Colony shares his journey as he builds his second business (the first sold to BAE Systems) and introduces an Australian-built cybersecurity solution into the global market against the backdrop of the Californian startup and investment scene.

The cybersecurity cohort in the Australian Landing Pad is now into its third month. The premier cybersecurity event – RSA Conference –  is just a week away, and plans are being made for what comes next.  Some will briefly return to Australia ahead of a full-blown, family-life-altering move to San Francisco for the foreseeable future. Others will transition from the Landing Pad into another incubator such as Plug and Play or Alchemist.  Then there are those of us who are counting down the days until we touch down in Australia, to share knowledge gained and re-focus on rapid regional growth. Security Colony fits into that last category.

Although I’ve been fascinated by the market here, I’ve realised that for all the talk about the open-mindedness of San Francisco (e.g. legal weed), there exists a perception that there’s only ONE way to start and build a company. This way involves relocating the team to San Francisco – we’ve been told over and over again that a startup won’t be taken seriously unless it moves here, or somewhere in the US). The San Francisco way also involves eschewing non-scalable business components such as professional services – this means relying completely on external funding, and attracting more and more venture capitalists over a series of funding rounds. It’s sort of a crack-dealer-drug-addict relationship of co-dependence supporting mutual success.

This approach is not us. As much as being disinterested in the venture capital industry makes us pariahs in Silicon Valley, we simply believe that our professional services funded business model is a more sustainable and reliable way to build a business to last. We remember the dot com crash and the incineration that ensued of any company that wasn’t self-sustaining. An enormous number of companies here would be vapourised if the venture capital spigot was turned off, even just briefly. We also genuinely believe that it is through the professional services side of our business that we get the understanding we need about customer problems to be able to make an effective solution to address them. This isn’t to disparage firms taking the venture capital route to success – the reality is that in many areas, including almost every B2C play, there simply isn’t a plausible alternative. Speed is almost everything here.

I’ve learned a lot from being here, and Security Colony has developed in leaps and bounds due to discussions I’ve had with entrepreneurs, advisors and venture capitalists and, of course, my colleagues in the Landing Pad. I’ve had the opportunity to share my views and experiences with school groups, incubators, and business leaders in the last two months. What I’ve told the other entrepreneurs I’ve spoken to in San Francisco is this…

Yes, coming from Australia we have a relatively small market view of the world. So, it is definitely worth listening to the advice this heartland of innovation has to offer… but understand that this advice often comes from an equally narrow, albeit different, perspective of the world. You have to find a way to run and grow your business in a way that works for you and plays to what you want to achieve. Not everyone wants to be a unicorn – or, perhaps more accurately, not everyone is willing to make the trade-offs necessary to become one – and that’s fine.  

While waiting at the lights to cross Kearny St in the Financial District, I found myself reflecting on my time in San Francisco. On the other side, a very large and (I suspected) homeless man crossed the road against the lights, clearly agitated and mumbling. Unprovoked and without warning, he king hit a guy next to me, dropping him to the ground instantly. It really shook me.

Further down Kearny St, I saw another homeless guy in a purple overcoat ‘tending to himself’ in the doorway of an office building. This all happened mid-morning on the weekend in the very heart of the CBD. Tourists, locals, parents with kids, all just walked past him, shrugged, and continued going about their day. I mean, what do you do? Say “Excuse me sir, please don’t masturbate in public“? I’d assume that if you’re at the point in your life where you’re that person, you’re probably past the point of being reasoned with.

Perhaps I am over-sensitive to the homelessness situation here, but it really is shocking. I think in many ways if you don’t (like many locals I’ve spoken to) find it shocking… well, that’s a pretty significant black mark on the society you’re living in.  There are also so many metaphors for the broader economy, but also contradictions, here in the way homelessness operates. We spend our days listening to visionaries and leaders telling us to celebrate failure. I’m not sure the homeless feel like they should be celebrating their lack of success in the race that is life here.

I grew up reading The Road Ahead, by Bill Gates, and Microserfs, by Douglas Coupland, and dreaming about one day being in the buzz of Sand Hill Road and El Camino Real. Now that I’m here, I realise that my priorities have changed a lot from those days. I still find it inspiring, and still get butterflies in my stomach to be in Palo Alto, Redwood City or Mountain View, given the amount of emotional attachment it brings back from my school days, but I also recognise that Silicon Valley in 2018 is very different to Silicon Valley in 1998. Inspiring as it is, it’s hard to beat the quality of life we are blessed with in Sydney, and Australia more broadly.


About the author

Nick Ellsmore is the co-founder of free-to-join cybersecurity resource Security Colony. He is also the co-founder of cybersecurity consulting firm Hivint, the winner of the 2017 Telstra Business Award “Business of the Year” in Victoria.