The most unsexy product from a dour town blows our perceptions of what’s really cool, writes Vincent Heeringa, who looks towards our glorious future.
You couldn’t ask for a less sexy star than CxBladder. Just the name induces guffaws. And the disease it detects, bladder cancer, is a sure-fire conversation stopper.
What’s more, Pacific Edge, the company behind the breakthrough diagnostic product, has come from pretty much nowhere on the global pharmaceutical stage and has been used in polite circles as an example of just what’s wrong with university spin offs. And yet last month there was CEO David Darling being the toast of the media after announcing not one but two major distribution deals in the US that could introduce CxBladder to more than 40 million customers. The news sent Pacific Edge rocketing up the NZX to set the records for largest ever one-day and one-week gains.
The news coincided with us anointing Pacific Edge the Supreme Innovator of the Year at last year’s Innovator awards, so there’s a small part of me that hopes we know how to pick ‘em!
And yet I was surprised at their success. I should know better. I remember being similarly gobsmacked at the sale price of TradeMe to Fairfax all those years ago. I continue to be amazed by the success of Xero and something tells me that other Innovator Award winners like Vend, Trigger Happy and GreenButton are on a similar trajectory (no pressure!).
Perhaps it’s because we see so few high- growth Kiwi companies reach their full potential that we’re justified in being surprised by success. The pain of receiving my six- monthly update from Wellington Drive Technologies is a reminder of just how long it can take, if ever, to hit the high-growth jackpot. My shares in Genesis R&D are barely worth the papers in my filing cabinet and the decade-old biotech industry is disappointing to say the least.
But that’s kind of the point, right? High growth is balanced by high risk and so a healthy high-growth sector should be littered with carcasses and a few black eyes. But when they do hit the jackpot, holy smokes Batman, it’s awesome to witness and provides critical evidence that, at the very least, it’s not impossible to create a high-growth story here.
I remember interviewing a fund manager about why so little institutional investment makes its way into the high-growth sector and he said that there simply aren’t enough examples of success. He’s probably right but in some ways a better question than whether we have enough winners is whether we have enough entrants. The evidence from successful high-growth economies such as Israel and Silicon Valley seems to be that high growth is a numbers game: launch many, fund them aggressively and fail fast. In this regard I believe we’re still miles off the pace.
My feeling is that we certainly don’t lack for ideas or innovations, but there’s a lack of infrastructure or ecosystem that allows them to grow fast and fail fast. Yes, some things take time. But the fact that Xero and Pacific Edge remain exceptions makes me worry that the rich pipeline I see in Idealog is disconnected from the growth machine of capital, networks and professional ambition.
I want Pacific Edge to be so normal it barely makes the news. Not because I think they’re not newsworthy but because there are so many other high-growth companies that could do the same if only they could get the support they deserve. In the glorious future I really want to stop being surprised by the success of companies with unsexy products from rainy, cold places.