SA Weekend cover story: David Rohrsheim’s radical ideas to make SA the entrepreneurial state
David Rohrsheim brought Uber to Australia – now he’s got $50m to spend and some radical ideas to make SA the entrepreneurial state. Roy Eccleston gets to know the man and his mission.
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You might feel cautious about taking too many tips from a bloke in a pair of old tennis shoes, ripped jeans and a faded polo shirt. But then again, David Rohrsheim has $50 million to spend and has just transformed Australia’s taxi industry. He probably deserves a hearing.
The 39-year-old is back in Adelaide after two decades of work and study that took him to Sydney, London and California’s Silicon Valley. Now he’s managing the South Australian Government’s Venture Capital Fund, tasked with finding ingenious local products and helping them to be successful – hopefully on a global stage.
Rohrsheim’s outfit speaks volumes. He’s a tech geek who believes in disruption – a rejection of the usual ways of doing things. No point looking like the established order. It seems to work: at Uber, which he introduced to Australia in 2012, he’d turn up shoeless or in a onesie jumpsuit. Some colleagues preferred ball gowns. He didn’t care, because he believed being yourself helped you do your best.
Now, Rohrsheim wants the best from SA’s entrepreneurs – small start-ups with big ideas that can drive South Australia’s economy over coming decades.
But given we’re in a killer pandemic, isn’t this a bad time to be a budding entrepreneur? “No,” he says, pushing back a mop of fair hair. “It’s a good time.”
The world, Rohrsheim points out, has changed lately. That means there are different problems – and opportunities. And with so many people at home, working or not, there has been more time to tinker with ideas that may have been brewing for years.
“There are businesses of all shapes and sizes rethinking how they work,” he says. “When it is business as usual, when everything is going fine, they tend to stick to the way things are. But now I think for many, everything is up for discussion. So that’s again an opportunity for someone who’s got something new to bring.”
Rohrsheim also wants to share lessons he’s drawn from watching how entrepreneurs like Elon Musk operate. One of the most important is that failure is not bad – it’s how we learn.
That’s something he says South Australians need to rethink and embrace, perhaps by changing an education system that only rewards top marks.
And while Rohrsheim says he’s a geek, he adds clever technology alone won’t bring success. Entrepreneurs must keep customers front of mind. They must also be passionate about their project, because that motivation will be vital when the going gets tough.
He should know.
When he introduced the controversial Uber ride-sharing business to Australia eight years ago the opposition was monumental.
It was “disruptive innovation” – a new way of doing business that up-ended the taxi industry. Governments said the app-based operation was illegal and the taxi owners declared him an outlaw. Some are still suing Uber via a class action.
But Rohrsheim was sure Uber would work. His faith came from his own experience struggling to get a cab, especially a clean one, and then paying more than he wanted. He says he knew plenty of others who felt the same.
“I was one of those customers in Kings Cross during the changeover at 3am waving a $20 note on the corner of a street trying to get a cab,” he says. “If you wind the clock back further to my life in Adelaide there was probably too much drink driving happening among my friends because we couldn’t afford cabs as uni students.”
Rohrsheim’s belief helped him persevere, despite needing a personal security guard, until it was up and running. By the time he left as general manager in 2019 Uber had about 60,000 drivers and millions of users.
He has no regrets for those who lost out, and points out that the SA government – the second state to legalise the service – compensated taxi licence holders funded by a $1 levy on rides. But he says passengers were paying too much and couldn’t always find a ride when they wanted, the cars weren’t very good, and drivers were not paid well.
“So these investors had prioritised making money over investing in the experience, in providing good service to their customers,” he says.
“They’d had a really, really good run for a really, really long time. And if you leave your customers unhappy for so long, eventually they’re going to look for an alternative – and we gave them one.”
Rohrsheim has been back in Adelaide since the beginning of the year, keen to have a home and garden big enough for the family of five. He met his wife Ge in Sydney while handing out Uber flyers; she didn’t fancy the app, but she didn’t mind him.
“When kids appeared and you started thinking 20 years ahead to school and lifestyles, that’s what came back into focus … you can have a backyard and great schools, so that’s why we’re here.”
He grew up in Lower Mitcham, where his mother Margaret still lives.
His late father Graham was an engineer and decorated military veteran who loved speed: he once built a dirt bike that won a national title, and went on to fly jets for the RAN and, in the Vietnam War, helicopters.
The youngest of six, David was born in Queensland but grew up in SA. Did he have a vision as a kid what he wanted to be in life? He shakes his head. “Still don’t,” he says. What he did know was that the family’s expectations were high.
“People certainly cared about the report card at the end of every year,” he says.
Being the youngest of four boys also brought its own pressures, especially when they all attended the same private school, St Peter’s College.
“Mr first brother Geoff was a prefect, second brother James was vice-captain, and third brother Andrew was captain – so there were some expectations on the fourth son when he arrived at the school,” he says. “That was both an inspiration because I thought, ‘Look at what they can do’, but also a bit of pressure.”
As it happened, Rohrsheim did become school captain in 1999. Despite winning a scholarship, he didn’t follow his brothers into the military for a university education. But he did embrace eldest brother Geoff’s interest in technology.
“Geoff was an engineer and his early interest in computers rubbed off on me – he bought a computer and I got to see one,” he says. “And when he was at university in the 1990s I’d sneak in after hours with him and they had the internet.”
It was love at first sight. “I did just start off as a geek,” he says. After school, Rohrsheim made a strategic decision, with Geoff’s advice, to combine that love of technology with business smarts. He did a double degree in computer engineering and finance.
At the time e-commerce – now worth trillions of dollars annually – was just becoming a word. The idea was to bridge the gap between those who could talk money and those who could talk technology.
Beyond that he had no clear plan, other than wanting to continue educating himself. “Almost every step of my career I’ve chosen to go where I’ll learn most,” he says.
His first job, while still at university, was with takeaway food business Wok in a Box operated by Steven Marshall – before he entered politics – and brother Geoff (an IT entrepreneur now on Marshall’s Economic Advisory Council).
“If one store ran out of noodles, I’d pick them up and move them to the other store,” Rohrsheim says. “But I got to witness them starting a business, what they had to do, and that was fun for me – and I got to know Steven when he was just in the private sector.”
After university, Rohrsheim’s first move was to Sydney for a summer internship at Macquarie Bank. It was there he met people who’d taken jobs with management consulting firms like Bain and Company – where he also soon found himself working.
That firm was where big companies like Telstra came to get advice on how to solve problems. “So you learn about how big business makes decisions,” he says of his time in the Sydney and London offices.
After about two-and-a-half years, someone at Bain and Co’s San Francisco office triggered Rohrsheim’s next move when they alerted him about a job for an analyst at big venture capital fund Draper Fisher Jurvetson, based in Silicon Valley.
DFJ invested billions in some of the best- known tech start-ups. Normally, he says, that was a job that would have gone to someone in the closed community of the Valley. But the interviews went well, and in 2008 Rohrsheim found himself in San Francisco.
The fund had a dozen partners, all experienced technology entrepreneurs, and a small group of analysts to help them filter the thousands of business plans they would receive. It was an eye-opening experience, he says, to see not just how these people operated, but the scale of their ambitions.
“They would always be global from day one,” he says. “They’re a technology company operating on the internet so they just assumed the whole world is their market.
“During that time I remember Elon Musk came in and he was pitching SpaceX and I didn’t realise at the time how lucky I was to be witnessing that kind of entrepreneur sharing his vision.”
He stayed another two-and-a-half-years. “Very millennial,” he admits of his short-term approach.
But he didn’t jump to another job. Instead he enrolled in an MBA at Stanford University, a two-year course he started in 2010, with a class of 300.
Again, it was an eye-opener, and the lessons were not just about business, but how in future SA’s education system could change for the better.
“They have a unique feature there which is a student-held norm, not a rule … for decades the students have all signed up for this concept where nobody ever discloses their grades to their future employers,” he says.
“So when you come to a job interview they don’t know if you were top of the class or bottom, which is very different to high school where the goal is to get the highest ATAR you can, and the goal is to make as few mistakes as possible in exams.
“Under this scenario at Stanford there are no penalties for trying a class you won’t get a good grade in; no penalties for trying something you’re not good at; and also there’s no reason for someone in the class not to help you out. They’re no better off. Therefore it’s a very friendly environment and also people are encouraged to study what they’re genuinely interested in.”
What Rohrsheim took away from his time in Silicon Valley and Stanford was “getting more comfortable with mistakes and failure as an acceptable thing to do, and in fact, even desirable”.
One example he recalls was during a meeting at DFJ where two entrepreneurs sought financial backing for a similar idea. “I remember scenarios where you’d have one founder with a perfect resume and Harvard Business School, and another one who had started a business, it didn’t quite work out, and then here they are trying again,” he says.
“And one of the partners, it would have been Tim Draper, said we’re going to go with the failed founder because they’ve already learned $5m worth of lessons with someone else’s money.”
The idea of failure as a learning experience is one of two distinctions between the Silicon Valley culture and what he grew up with in Adelaide, he says.
“Firstly, this idea you’ve got to get a perfect score – that’s how you progress,” Rohrsheim says. “And also this idea if you try and fail it’s OK, as opposed to ‘I told you so’, or ‘You should have waited your turn’, or ‘Why didn’t you just join a law firm or become a doctor?’. So that was just a different mindset – in addition to thinking globally from day one, which is a California, internet-driven mindset.”
It was another colleague from his Bain and Co days who helped him return home. Rachel Holt, who set up Uber in Washington DC, told him the company was looking for general managers to spread the business. Rohrsheim started to think about whether it might work in Australia.
He recalled his own cab experiences, and did a lot of other research, which was just as well because the interview process included a maths test, marketing exercise and then a presentation to the controversial and fiery co-founder Travis Kalanick.
“I’d been warned Travis could be an intimidating figure and that he knows his city managers might end up in challenging situations,” Rohrsheim says. “So, in the interview process, he’ll just try to put people off and see how they react – just so he knows he’s got someone who won’t walk out at the first sign of trouble.”
Rohrsheim already had another job lined up at a new company which acted like a Dropbox for business, Box.net, so he wasn’t too stressed. But once the interview was over, he was offered the Uber job on the spot. “I was about to turn 30, had no real responsibilities, wasn’t married – so I thought it was maybe the last time I could roll the dice on a crazy start-up.”
Uber’s foray into Australia was controversial and Rohrsheim had a fight on his hands. He knew another well-funded attempt to break the taxi hold in Sydney had failed before, and that the resistance would be intense. But it had been the same story wherever Uber had tried to set up, and the start-up had prevailed time and again.
His parents were worried, and there were times he felt threatened. “Perhaps I was blissfully naive about what was coming,” he says. “But I wanted to use it and knew my friends did too, and I knew there were lots of them. So that was the motivation.”
The SA Venture Capital Fund started three years ago with $50m of government money to back local entrepreneurs. It doesn’t make grants but invests in the companies – usually between $1-$2.5m – and aims to make money. But it had a rocky start.
The government opted for private sector managers, but the collapse of the initial operator, Blue Sky Alternative Investments, in May 2019, meant there was almost a year hiatus before the contract was won by Sydney-based Artesian.
Rohrsheim had been part of a losing rival bid to manage the fund, but Artesian later chose to employ him along with ex-Blue Sky analyst Alexandra Grigg, and Shane Masters.
So with all this money to invest, what is his philosophy on what works? “Pick a problem you care passionately about, and solve it,” he says. “Be sure you are solving a real pain point for somebody. If you are, the money will take care of itself.”
Motive also matters. “I’m meeting entrepreneurs pitching their ideas on a day-to-day basis,” he says. “And often what I want to get at is: why do you care about this? Because if you’re just in it to make money you will probably give up before someone else who has a more passionate reason to do it.
“So I encourage people to look out for moments in the day when they say ‘This sucks, someone should do something about this’. And there’s a lot of them – and there are a lot of us who sit in our armchairs and complain about it. But look for these moments and see if you could be a part of fixing it.”
So far the fund has spent about $10m on four start-ups. Ideally, he wants companies with a product that has customers but is ready to expand. Each one requires equal backing from another investor, usually one specialising in the area of investment.
The first three were approved by Blue Sky, the fourth, announced a few months ago, was the first made under Rohrsheim’s management.
How have they gone? “Well none have failed, that’s a good start,” he says (see box).
He estimates about 1 per cent of the applications have been successful in winning the fund’s backing, but adds there’s still $40m left to invest.
SA needs to be more entrepreneurial, he says, which requires a shift in mindset. One place to start is school. The focus on great marks to get the best jobs is not good. “There needs to be a safer space to make mistakes,” he says. It’s a disruptive idea, and it will be interesting to see how it is viewed by the other governors, none of whom appear to favour onesies, at least according to the school website.
The other thing is to encourage resilient, alternative thinkers. “If you are going to be a successful entrepreneur you need to be doing something that almost nobody else is,” he points out.
“You need to be swimming against the tide. So you’ve got to be comfortable going somewhere where people are going laugh at you on the way because you’re doing something that is different and, by definition, the rest of the world disagrees with you, otherwise they’d all be doing it.
“So everyone has got to be comfortable going out into that scary place where people are going to say, ‘That’s not going to work’. And, unfortunately in Adelaide, there are plenty of people who will tell you that – starting with friends and family.”
Rohrsheim muses that if the government’s fund is successful, and he finds plenty of great SA start-ups, he’d hope to one day raise another fund with private investors. “One of my motivations is to make sure there are jobs for my kids,” he says. “There’s no question there are great schools, the only doubt I have is whether there’s a good economy in 20 years’ time. So start-ups will hopefully create the big businesses of tomorrow.”