Why Australian startup SafetyCulture closed its office in San Francisco

Luke Anear. Photo: Belinda Pratten/ Supplied.

SafetyCulture has closed its office in San Francisco a year after the startup announced that it would be setting up digs in the epicentre of the tech world: Silicon Valley.

Despite phenomenal growth in its Sydney, Kansas and Manchester centres, founder and CEO Luke Anear made the call to exit San Francisco in May.

Speaking to Business Insider, Anear said the “tough decision” came down to not finding the right person to lead to company’s go-to-market strategy, and also discovering the city was not a good culture fit for his business.

“The San Francisco office was home to our marketing team and we believed it was in the best interest of the company to have this team relocate to Sydney,” he said.

“Part of the decision was the dichotomy between an Australian company managing product in Australia, and then having your marketing lead from the US.

“It’s a SaaS [Software as a service] business, so it’s very much entwined in user experience. Any time you wanted to try and discuss product issues you’re on a Skype call, or you’re waiting eight hours for the other team to wake up.

“Sitting the marketing team alongside them will allow for better collaboration and growth.

236 candidates and no leader

Anear said they ran a search for a president, looked at 236 candidates and interviewed some great people.

“But at the end of the day I just felt that to have someone over there leading the go-to-market strategy and yet have our product teams in Australia, [that it was a] bit early to charge someone with that brief and expect them to have a big impact when we’re still completely overhauling our core product experience,” he said.

“There was just too many moving pieces. The more I spoke the people about leading a team over there – we had a team of about nine people – the more apparent it became to me that we need to double down on Sydney and really just let our product mature a bit more before we lead this global charge.”

He said the last 12 months have been a learning curve for the business as it matures into it’s “toddler” phase where it’s not a baby, and not quite yet a teenager.

“We no longer need a physical presence in San Francisco to find the right marketers with the right experience,” he said.

“We were there for 12 months and in that time I assessed how it would grow and what it would look like.”

Not there to ‘fail fast’

With San Francisco running at “a frenetic pace, and in a bit of a bubble”, Anear said the cultures didn’t align.

In Silicon Valley, “companies can get it wrong from a growth at all cost mindset”, he said, referencing Uber.

“We’re always trying to balance rapid growth while ensuring we don’t comprise our values.

“San Francisco is an interesting place at the moment, there’s always the next best thing to jump on to… with this fail fast mentality. As a company we don’t have an option to fail fast. It’s not like we’re going to raise more money for the next idea and the next thing, we’re here and we’re committed to solving a very big problem.

“There was a bit of a misalignment between then craziness of what’s happening over there… and building a sustainable company that will stand the test of time.”

Anear said the pressure to take on more funding didn’t fit with his vision for the company.

“You’ve also got a lot of investment capital in the system at the moment and you’ve got investors that are pushing companies to take money and you end up with valuations that are very high in order to make the investment numbers work. That then puts pressure on companies. We’ve always tried to measure twice and cut once… just taking money because it’s available hurts companies long-term. It’s got to be for the right reasons,” he said.

“In the Valley, in a general sense, there is a lot of investment that perhaps is off the back of venture capitalists trying to deploy capital because if they don’t they won’t be able to raise any more, and that’s not a great reason to make or accept investment.”

Since then he says it has felt like it was the right thing to do, and bring the bulk of the business under one roof in Sydney will be beneficial.

Anear adds that Sydney has gone through an evolution over the past two years, and is now attracting and retaining talent again.

“The ecosystem is evolving and there is more experience coming into Sydney and living in Sydney, so that has definitely played a part of [the decision to return],” he said.

“Two years ago you didn’t have the depth that we’ve got today, and two years from now it’s going to be that much better again.”

Staff were given the option to relocate to the company’s other offices and the cost to the company “wasn’t that much”, he says.

“Our lease was ended and we didn’t bring any furniture back because there’s another tech company that wants all your furniture… as we took furniture from someone else. It’s actually not that hard at all.”

Plans to double down

Looking ahead, the company plans to double its intake in Sydney, Kansas City and Manchester over the next 12 months.

“In Kansas City the tech ecosystem is an emerging one and we feel very humbled to be a part of an environment with such a bright future,” said Anear. “The office space we have secured is located within an old, retro-fitted high school. Over time we could see as many as 30 other startups of similar size working out of the same building.”

Anear is also in the process of building an office that will be able to hold 400 staff, which it is due to move into in 2019.

It is also heavily investing in re-engineering its core user experience by adding more capabilities and tools for its 11,500 companies that are users.

The brand also now has the backing of global VCs. In 2016, it secured $AU30 million in investment from US firm, Index Ventures.

“We were the first Australian startup to secure investment from this international firm and so we have achieved our strategy of attracting deals with US VCs.”