Focus on Wellington: Reinventing the world from the coolest little capital

Once dominated by central government and corporate head offices, today Wellington boasts dynamic, diverse economy marked by innovative knowledge-based industries and flourishing creative sector. From high-tech manufacturing to the creative, digital, ICT and health sectors, Wellington’s economy is abuzz with highly connected, innovative, entrepreneurial people. Dominated by finance and insurance, and communications and business services, the private sector now accounts for nearly 80 percent of Wellington’s economy, and just over 70 percent of the jobs.
Government cutbacks and loss of head offices have forced Wellingtonians to think outside the square. In many cases talented and experienced people have chosen to stay in Wellington when their company has moved out, and started up their own business – Xero’s Rod Drury is just one example.
The result is that Wellington is globally recognised for its entrepreneurial successes – Xero, Weta, Trade Me, Icebreaker, Resn, Phil & Teds, Trilogy, Sidhe and more. key factor in Wellington’s success is inventive, high-value businesses excelling in global markets.
Is it working? Well, Wellington is still strongly influenced by public sector performance – GDP for the Wellington region grew 0.8 percent for the year to March 2011 (cf national growth of 1.6 percent). This gap is largely attributed to government sector cutbacks, which in turn saw decline in business services.
However, the region’s priority sectors – food and beverage, screen and digital, manufacturing, education, information technology and clean technology – have all grown above the national average. The food and beverage sector grew at almost double the national rate (4.2 percent compared with national growth of 2.1 percent). Screen and digital output grew by 2.2 percent compared with national growth of 1.2 percent. (Source: Infometrics Annual Economic Profile, year to March 2011.)
“To be successful company in Wellington you pretty much have to export from the get-go,” says Mary-Anne Webber, general manager, business growth for Grow Wellington, the regional economic development agency. “It’s often overlooked that if you’re an ICT company in Wellington you need to move very quickly to establish global market because you don’t have large domestic one.
“Wellington is the coolest little capital in the world but it is little capital. In Wellington you cannot create successful me-too company – it’s not going to work. Phil & Ted’s doesn’t make one of the best designed baby buggies in the world – it makes the best designed baby buggies in the world. Xero didn’t create an accounting software program; it created world-leading software program. That’s the difference. The good thing is the whole culture here is set up to support that.”
Webber is one of many who agree the city’s geography has had special influence on the city’s culture of innovation. Wellington’s CBD is very tightly contained, and the weather is not always that kind. The resulting coffee culture often sees business people, politicians, creatives and start-up entrepreneurs in the same cafe, encouraging the cross-fertilisation of ideas and creating something of melting pot.
“That’s coupled with large number of highly qualified people living in the city,” adds Webber. “You get these very clever, very forward-thinking people living in geographically isolated country, but focused in very small area.”
People power is certainly factor in Wellington’s success, with highly educated workforce, and tertiary education and research resources all contributing to Wellington’s education, skills and research infrastructure – four of the eight national Crown Research Institutes, three universities, three institutes of technology and polytechnics, many private training establishments, national offices of over half of New Zealand’s industry training organisations and over dozen formal, research-oriented organisations.
Around 47 percent of the region’s workforce is employed in knowledge-intensive occupations compared to national average of just over 32 percent. The region also has the highest average household income in the country and more than 40 percent of households earn more than $89,000 year. It’s also young city – 56 percent of Wellingtonians are aged between 18 and 49, compared with 45 percent of the overall population.
“Highly qualified people are key component of innovation,” says Webber. “Because there aren’t lot of big corporates here there aren’t lot of corporate ladders to climb, so if you want to be successful and you’ve got lot of drive, energy and enthusiasm, it’s very welcoming community in terms of start-ups.”
Every success story spurs others to follow, and physical proximity encourages collaboration.
“All over the city there are little clusters of small networks,” says Webber. “They’ve all got day jobs but at night they’re all working together to be the next Sam Morgan – it’s wonderful.
“We’re also beginning to see the merging of technologies in the region, so, for example, we have companies that are using the science from Industrial Research, and blending that with the ICT and creative capability of Wellington City in creating world-leading medical devices. In Otaki, for example, there’s Clean Technology Centre, with about 20 entrepreneurs clustered around it. Kapiti Coast District Council has made the region available as test bed for piloting new technologies so these entrepreneurs are taking the smarts available through the institutions and the universities, and they’re up there piloting world-leading technology, so you can see how the whole region is becoming an innovation network.”
Grow Wellington seed funded the Clean Technology Centre, and has manager helping companies commercialise their products. Grow Wellington also supports biomedical and screen and digital centres of excellence as well as number of the innovation networks that have sprung up around Wellington.
This support can range from helping with events, making space available for meet ups, providing speakers, through to commercialisation advice. Grow Wellington does not make seed funding available to individual businesses but focuses on enabling the private sector.
“A good example is the BizDojo cooperative working space in Vivian Street,” says Webber. “That’s wonderful place for emerging ICT, screen and digital companies to work, so instead of setting up standalone facility we enabled BizDojo to set up their space in Wellington.”
Grow Wellington is also the regional technology partner for the Ministry of Science and Innovation’s business investment programme TechNZ.
Wellington has the highest concentration of web and digital-based companies per capita in New Zealand, with Wellingtonians more than three times as likely to work in ICT.
Dave Moskovitz is chair of WebFund, self-described combination of “angel investor, private incubator, ideas factory, and development shop”, that takes web-based businesses from ideas to the point where they’re ready for world-wide expansion.
“We invest our time, money, expertise and creativity in people with brilliant ideas and the drive to make them happen,” he says.
“Wellington is great place to do business. New Zealand ranks as the third easiest country in the world to do business. We’re the world’s least corrupt country, we have great education system and our computer science grads are really world class – there’s lot of raw talent to work with.
“Starting business in Wellington is fantastic because not only are you able to build on that substrate but there’s only half degree of separation here. Everybody knows everyone and people are generally friendly and supportive – we help each other out because we know it’s for the common good.
“There are lots of good support services here that people can use – more than one incubator, Grow Wellington, TechNZ, and multiple co-working spaces where you can get involved with like-minded people and other companies at the same deve