In light of Telstra pulling the plug on Muru-D in its current form, Dale Cohen shares how it all began

This week I read an email (full text below) from Julie Trell, announcing the end of Muru-D in its current form.

The email was diplomatic and talked about the evolution of Telstra partnering with startups, but the writing is on the wall for the original vision of Muru-D as a startup accelerator.

Here are my recollections of the beginning.

As a Telstra employee at the time Muru-D was in development, I was alerted to its existence by a call from renowned Telstra ‘fixer’ Freddie Jansen Van Nieuwenhuizen (or Freddie JVN as he’s known in the company) asking for help building a website for it.

As someone who’d been engaged with the startup ecosystem, the idea that Telstra was starting an accelerator piqued my interest, so I started digging. I learnt we’d hired Annie Parker to head up the team, who had done the same thing for Telefonica in Europe.

Then I heard local startup legend Mick Liubinskas was joining the team. I was sceptical, but I checked the email system and there he was, right next to Wayne Liubinskas, his brother who already worked at Telstra. ‘A family chat maybe?’

I learned that a colleague, Ben Reid, had been appointed as the ‘Telstra interface’ for Muru-D, part of his job essentially being to hold back a tsunami of goodwill and interest that would threaten to overwhelm the capacity of any startups who entered the program.

Ben said to me: “Telstra could love these guys to death. I need to make sure they spend their time here focused on what we can do for them without that time being soaked up in well-intentioned but ultimately useless meetings.”

Ben’s concerns didn’t apply to me of course! So before the first cohort of startups were selected, I went over to the Telstra Exchange at Paddington where the final fit-out for the Muru-D space was being done on the upper floor.

The space was very nice, and set in Paddington, where I had worked across the road at a startup called Ninemsn. It was a very cool location. There was just one issue with the choice: Paddington Exchange is one of the primary peering points for the internet in Australia, so building security was deservedly tight.

In the long term, that would prove one of two key issues that caused Muru-D to move to the Liverpool Street office. The other issue was the distance from the CBD was just enough to be a pain for attracting people to evening events.

In those early days though, with expectation building, and the mild terror of not knowing if Telstra could pull it off successfully, the early team of Annie Parker, Mick Liubinskas, Ben Reid, Rachel Bui, Gordon Carr-Gregg set about building up a startup accelerator.

I asked Mick Liubinskas what he hoped would be the outcome from Muru-D. His response was startlingly frank: “To make better second-time entrepreneurs.”

The fact that he considered the return for Telstra much less important than the return for the ecosystem was brilliant… and needed to be protected.

So I set about creating an internal narrative, that the investment in any individual startup was irrelevant and should almost be considered a write-off. It was a portfolio investment, we would own stakes in many businesses over time, and it was the whole that should be viewed as the mark of success.

I also made the point that Telstra’s competitive advantage was the ability to invest very patient capital. Given the value of an individual investment was completely immaterial to Telstra’s balance sheet, we didn’t ‘need’ a return on an investment in a specific timeframe. We could effectively take a permanent stake, while others were buying-in with an exit strategy.

Ben Reid was meanwhile busy building a narrative around the ancillary benefits to Telstra around things such as adding a dash of ‘cool’ to Telstra, learning ways of work that compound in a large organisation, and enhancing our appeal to hiring new graduates.

Ben said to me: “If Telstra got 0.1% more efficient by having something like Muru-D, what would it mean to the bottom line?”

He worked out it could be as much as $17 million per annum of indirect benefit to the company as the result of having an accelerator in the business.

Ben’s warning about Telstra loving the startups to death was only one side of the equation though. There was plenty of opportunities for Telstra to provide benefits to the startup businesses and the ecosystem generally.

The first thing we set out to do was demonstrate goodwill and earn some street cred. A meeting I’d had a year or so earlier with Rory Ford who was at Pollenizer at the time had stuck with me. I’d asked him what his biggest issue was, and he responded: “Red tape, tax rules, government.”

So I called up Dan Mandaru in Telstra’s regulatory team, and explained that to be taken seriously, and show the ecosystem what we could do, we needed to deploy Telstra’s weapons of state, aimed in the right direction. Helping the little guy, I said, would help us. “Leave it with me,” he replied, and before I knew it, Annie and Mick were fronting a committee about tax rules for startups.

Once the startups were in the building, Ben and I set about finding the right connections that would add value. Ben was right onto the legal aspects. His thinking was that if we could get Telstra’s best legal minds working on things such as shareholder agreements that were fair to the startups, they could become a template for the industry.

One of the startups in the first cohort was Zed Technologies. Speaking with co-founder Ross Wright, it became clear the startup needed help with market sizing and pricing. As you can imagine, Telstra has the best talent it can hire for pricing, but their work isn’t always thrilling. When I called up Ben Yi, Fred Olive and Ben Cooper from our pricing team, they virtually sprinted across to Paddington.

The ‘pricing masterclass’ they conducted was one of the most astonishing meetings I have ever sat in. I thought I knew my stuff but I was in awe. I had never sat in a meeting before where the response was about 30 seconds of stunned silence flipping to a sudden clamour of questions. Like paparazzi stalking their prey, the Telstra pricing team had become superstars to the startups.

I had a day job, but for that first year, I was at Paddington as much as I could get away with. Annie and Mick were doing an awesome job, supported by Rachel and Gordon. We’d managed to get Muru-D off the ground in a way that had authenticity and buy-in from the ecosystem.

All good things must come to an end though, and after several years now, Telstra has obviously decided that incarnation of Muru-D no longer fits with their strategy. At least not in its original form.

The announcement in the letter to ‘partner’ with startups is a fundamental change from the original intention. When Muru-D started, if you asked what had to be in it for Telstra when selecting a startup to participate in the program, Annie and Mick would have said “nothing”.

This change means a different approach, and a timeline on when startups will need to show benefit to the relationship. Telstra is fully entitled to adopt that approach, it is a business after all, but it’s not the original vision of Muru-D.

Good luck to the team who takes it from here. I wish you well.

Thank you to Julie and the team who hand over the reins.

It was great while it lasted.