San Francisco

If entrepreneurs were mosquitoes, Silicon Valley would be the malaria capital of the world.

But entrepreneurs are human money-making machines in the knowledge economy, and their propensity to gather in Silicon Valley has made it one of -- if not the – the most astonishing stories of economic revolution since the Industrial Revolution.

Australia, like numerous other nations, has looked with envy at the phenomenon and attempted to capture some of the magic. Policy has concentrated on seeding an early stage financing market for high tech start-up companies and encouraging universities to be more commercial.

The hope is that, together, an appropriate financial infrastructure and a more business-like approach by the institutional sources of some of Australia's undoubted ability to generate ideas will provide the spark to ignite a fire of new economy activity.

But the third ingredient – entrepreneurial spirit – has been somewhat taken for granted. There are few policies initiatives overtly aimed at building or supporting entrepreneurial businesses, as opposed to small business. Small business policies in many cases do nothing for entrepreneurial businesses because there is a fundamental difference between the two. Small businesses are, by and large, happy to stay small. Start-up entrepreneurial businesses want to get big. And in the new economy, they need to get big and global and do it fast.

Where is Australia's Intel? This is a company that was founded in the late 1960s, based on technology developed and refined in a series of earlier companies, some of which founded by those who started Intel, over the previous 20 years. They were engineers. Boffins.

But they were also dreamers and ambitious businessmen.

Where is Australia's Microsoft? There are hundreds of talented Australian software programmers in Silicon Valley. But it is unimaginable that an Australian company could ever grow from nothing to a business now valued at more than $US480 billion in half a generation. Let's put the age of Microsoft in perspective: a person born at the same time as that company was founded would have barely had time to finish training to be a doctor.

It's easy to say that Australia is not big enough to have such companies. Microsoft needed proximity to the manufacturing domination of IBM to set its roots.

But what about the new Internet giants? Cyberspace is the new domain of business, and it has no borders and demands minute capital compared to multinational business in the past. Yahoo! was founded within months of Australia's most successful Internet company Looksmart. Successful as Looksmart has been, it went public only in August, by which time Yahoo was the one of the three most recognised brand names in cyberspace, alongside AOL and Amazon, and one of a handful that was profitable.

Looksmart's founders, Tracey Ellery and Evan Thornley, drove the company past formidable barriers to get where they are today. They represent the best of Australian entrepreneurial spirit, but had no choice but to move to the US to get the company to where it is today. How many Australian entrepreneurs would be willing to do the same? (See related article: Australia: On the Boat or Standing on the Dock?)

Will the example of their success, combined with the improved availability of early stage financing, encourage others to follow their lead?

Is it possible to encourage a more entrepreneurial culture in Australia by importing it, bringing some overseas entrepreneurs here, against the tide? Australia has seen many of its brightest new business people head to the US to be in the centre of the Internet action. But do Australia's immigration laws provide a welcome mat for overseas entrepreneurs who might be looking to enjoy the Australian lifestyle?

Or are there other issues that require creative policy initiatives? Corporate Australia is notoriously conservative when it comes to embracing change. A branch office mentality has long pervaded decision-making and the board level of Australian companies. Has that encouraged a risk-averse attitude among Australian business people when they contemplate their own careers? Numerous Silicon Valley companies are started by middle managers leaving their corporate positions to take the high risk/high rewards route of founding their own businesses. Does Australia have a business environment that encourages them to do that, or are they punished for taking a risk and failing?

These are all open questions. The problem is not that there are no easy answers but that they are not being asked often enough. Australia needs to recognise that entrepreneurs are an essential part of an innovative, knowledge-based economy. Working out how to nurture them should be a public policy priority.