No longer the underdog: Tech has arrived as a serious force in the Australian economy

The last six weeks should be viewed as a watershed period for the Australian economy, with the extraordinary wealth created by the nation’s top technology entrepreneurs representing a significant breakthrough for the sector.

For many years technology has been considered a niche corner of corporate Australia, a scrappy underdog of sorts, dwarfed in wealth and power by sectors more embedded in the national psyche such as mining, banking and even agriculture. But those days are surely now long gone.

Canva co-founders Cameron Adams, Cliff Obrecht and Melanie Perkins have seen their business hit a $55 billion valuation.Credit:

Back in August, buy now, pay later pioneer Afterpay agreed to merge with US payments business Square in a $39 billion deal. It was the biggest takeover in Australian corporate history, and one of the biggest software buyouts in the world to date.

Then this week, Sydney-based design software startup Canva announced a share sale that valued its operations at $55 billion - making it the world’s most valuable private software business and worth more on paper (with all the necessary caveats attached to private market startup valuations) than listed corporate giants such as Telstra and Fortescue Metals.

On Friday morning, Atlassian’s market value on the US sharemarket crossed the $US100 billion mark, meaning the project management software provider is now the nation’s fourth most valuable company behind only the ‘big Australian’ miner BHP, banking behemoth CBA and Anglo-Australian resources Rio Tinto.

Remarkably, Canva and Afterpay were both founded less than a decade ago and Atlassian, the relative veteran of the industry, is yet to turn 20. BHP can trace its origins to 1885, CBA was founded in 1911.

If you have been paying close attention to the growth of the Australian startup community over the past five or six years, none of this will be a surprise. A growing array of talented entrepreneurs, backed by a growing array of venture capitalists, are building world-class businesses that are global from day one and unencumbered by the geographic, financial and regulatory constraints of the past.

It’s undeniably good news for our economy, which has historically relied on commodities exports, even if technology companies tend to employ far fewer people than the old world businesses they are often displacing.

The rise of a new class of ultra-wealthy, socially conscious and politically progressive entrepreneurs represents a major shift for the business community. Canva’s founders this week announced the commendable and unprecedented decision to give the majority of their multibillion-dollar fortunes away to charity. Atlassian’s Mike Cannon-Brookes has emerged as a major proponent for action on climate change. These are very different kinds of billionaires to the media moguls, property barons and mining magnates that have dominated corporate Australia in the past.

Yet with wealth comes power. And invariably the growing financial strength of technology founders, not to mention their employees and financial backers, will change Australia’s power dynamics. It remains to be seen how.

The rise of a new class of ultra-weathly, socially conscious and politically progressive entrepreneurs represents a major shift for the business community.

In Canberra, the tech sector has long struggled to get its voice heard in key debates, suffering a string of bitter policy defeats on encryption legislation, immigration laws and research and development tax breaks. This is in part a product of naivete in the way the sector has approached the grubby world of politics. But it also reflects failures within the political class, which has for too long dismissed the technology industry as unimportant.

The formation of a bona fide industry lobby group - the Tech Council of Australia - to be helmed by Tesla chair Robyn Denholm may finally give the tech sector more clout in the corridors of power. Meanwhile, a new generation of politicians such as Liberal Senator Andrew Bragg and Labor MP Tim Watts mean technology regulation is very much on the political agenda in Canberra.

As the tech sector’s power grows friction between it and traditional industries is inevitable. Scrutiny around the amount of tax revenue these companies generate to fund schools, hospitals and other vital services and infrastructure is certain to intensify.

While Australia’s technology success stories have become extremely valuable companies, none enjoy anything resembling the market power controlled by the platform businesses such as Google, Apple, Facebook and Amazon which now dominate the US business landscape.

However, there are signs that Australia’s tech sector may view the world through similar regulatory and political prisms as America’s ‘Big Tech’.

The recent debate over the government’s media bargaining laws - in which the local tech community sided with US tech giants rather than local media companies in a dispute over payment for news articles - could be instructive on this point.

The world’s largest economy has experienced a technology revolution of its own over the past decade that is much more dramatic than what is emerging in Australia. The tech giants have been compared to the industrial monopolies of the 19th century which were eventually broken apart.

The impact of Big Tech’s dominance on the US economy, and the knock-on effects of that to broader society is only beginning to be understood now.

We are a long way from anything like that in Australia. But at the very least, it is time to stop pretending that the tech sector in Australia is the little guy.

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