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BusinessAugust 29, 2018

NZ tech is losing it over the idea of Derek Handley as CTO of New Zealand


Entrepreneur Derek Handley is reportedly on the verge of being appointed the CTO of the whole country of New Zealand. And the tech community is not happy about that at all, reports Duncan Greive.

Much of New Zealand’s tech community has reacted with derision to a report entrepreneur Derek Handley is all-but-certain to soon be announced as New Zealand’s first chief technology officer. The critiques, which erupted on Twitter and have been followed with interviews and emails to The Spinoff, are notable for the diversity of their tech experience. Those who have spoken out include people with engineering, investing and UX/design backgrounds, as well as fellow tech founders.

Handley’s job application has already been controversial, with Clare Curran omitting to mention an evening meeting with him in February and being stripped of her digital services and open government portfolios and losing her place in cabinet as a result.

Yet a piece of analysis yesterday from Stuff’s Tom Pullar-Strecker suggested his appointment was an “open secret”, and likely to be announced this week. Almost immediately, prominent figures within New Zealand’s large tech community began venting their opinions about his suitability for the role.

It “has potential to become a major embarrassment for the government”, said one, while another referred to what they perceived as his “poor industry reputation… [he] was presumably unvetted.” The storm was best captured by Nat Dudley: “Literally everyone I know in tech, an industry known for arguing over the stupidest shit like which almost-identical JavaScript framework they’re going to use, is united in the idea that Handley would be a terrible pick for NZ CTO.”

The role of New Zealand chief technology officer was lobbied for to “help develop a digital strategy for New Zealand, drive our digital agenda and respond to the opportunities and challenges of our changing digital world”. It was first mooted by Xero founder Rod Drury, and soon adopted as Labour policy going into the 2017 election. After Labour’s victory some of the initial shape – such as it being part-funded by industry – has fallen away, with the cabinet paper establishing the role describing it as “to serve as both a challenge to, and advisor for, the New Zealand government as it responds to the challenges and opportunities of our rapidly evolving digital world.”

That nebulousness has been noted, and the basis of the role itself has also been criticised. One CTO who considered applying decided against it after noting that it had “no defined mandate and no defined deliverables”. He added “there’s not a market failure in terms of vague ideas from technologists – we’ve got plenty of those.”

Another senior engineer said “there’s more than enough hype around startups, blockchain, machine learning and AI … If the CTO role is a figurehead who is meant to continue people’s enthusiasm for tech then that’s fine. But to me that’s super low value.”

Low value – but high salary. The role will pay anything up to $400,000 a year, along with a generous $100,000 travel allowance. Yet despite the pay and prominence, there was obvious disappointment at the initial 60 applicants, who were informed in January that none were suitable for the role.

It was at this point that Handley became interested.

He sent Curran a private message on Twitter on February 13, and the pair met at the Beehive two weeks later, on February 27 at 8pm. The meeting evidently went well, with the pair exchanging emails and text messages over the coming weeks. Handley sent Curran a link to a story about the Pinterest CEO starting a company to tackle device addiction, and reminded her to send him the email address to apply to, noting that he was texting “from a jazz bar in New York”.

It’s plain from their communications that he was keen. It makes sense – the job title could have been designed for Handley, who made millions from running startups in the mobile ad space, but has lately cultivated an image as a guru – someone with profound thoughts about the digital world, its potential and its perils. He has collected a pile of awards as both a business and thought leader – Business Leader of the Year; Young Entrepreneur of the Year; Leader of the Blake Trust; Adjunct Executive Professor; World Class New Zealander – though few are specifically in the area of technology.

He appeared on TVNZ1’s John Campbell and Nigel Latta-fronted extravaganza What’s Next? a year ago wearing an asymmetrical shirt, part of a panel of “futurists” to discuss what would happen to New Zealand as technology overtook it. He has spoken at conferences, written thinkpieces (including some for The Spinoff), and started a foundation. The latter provides scholarships to US colleges, and a 2016 Metro profile featured portraits of three of the recipients – all young women from high decile or private schools.

He famously idolises Richard Branson, has holidayed with him, and his Wikipedia says that Handley “donated a year of his life to help Sir Richard Branson found what is now The B Team”, a not-for-profit which aims to help create “a better way of doing business”. Handley has also signed up for one of Branson’s trips to space, citing “the magnitude of it all and, yes, the danger,” though he also told The Listener that they no longer set tentative dates for it after a crash, and says he “doesn’t think about it often”.

(Handley’s assistant said he could not comment for this story due the current status of the NZ CTO appointment process, though did direct The Spinoff to speeches by former cabinet minister Curran in which she outlined her vision for the role.)

His suitability for the role of CTO, then, rests largely on his business CV, which is where a lot of the complaints seem to come from. “I don’t think Derek Handley’s success is at all attributable to a talent in tech,” said Ben Gracewood, head of engineering at Vend.

“Handley would be a surprising, perhaps polarising choice,” said Lance Wiggs, a tech investor and founder of the Punakaiki Fund. “His background does not show the sorts of experiences that would impress the IT industry, as it seems focused on branding and marketing rather than building reliable sustainable enterprise systems … His selection could create controversy from investors in companies he has founded that subsequently floundered or failed.”

A well-credentialed CTO characterises Handley’s career thus: “He’s founded two ad agencies – he’s not a technologist as far as I can tell.”

His assistant tells me he is working as “Chief Innovation Officer with New York-based social impact startup studio, Human Ventures, co-founding industry-changing ventures alongside exceptional entrepreneurs” at present. But Handley’s most relevant professional CV highlights are a pair of mobile companies, Hyperfactory, which he ran for most of his twenties, and Snakk Media. The former was founded in 2001 and acquired by Meredith, the American women’s magazine giant in 2010 for an undisclosed sum (the NBR’s Chris Keall made an educated stab at US$22.5m); the Hyperfactory domain now leads to MXM, a division of consultancy Accenture, while its Facebook is delisted and Twitter account suspended.

Snakk Media is a mobile advertising company which listed on the New Zealand alternative exchange in 2013, transferring to the NXT in 2015, the same year Handley stepped down as chairman (reporting at the time said he retained a 15% stake though he is not listed among the 20 largest current shareholders).

Snakk’s most recent annual report describes a perilous position. “The level of working capital available is very tight limiting opportunities and placing pressure on the business overall,” it reads. “Snakk’s scale of operations is low for a listed company.” Its current market capitalisation says it’s worth just over $800,000, which surely disappoints those who participated in a $6.5m investment round in 2013.

Which is to say that one of his two main businesses achieved a successful exit but now appears to have vanished, while another limps along. His most high profile directorship has been that of Sky TV, which has taken a sharemarket pounding these last few years, in large part due to its failure to adapt to the digital environment. Sky Go in particular is perhaps New Zealand’s most complained-about piece of digital infrastructure.

Speaking to a number of different tech luminaries, most of whom asked that their quotes not be attributed to them due to the tight-knit nature of the community, there was an overwhelming sense of bemusement at his apparently imminent appointment.

“I feel a little bit sorry for Derek,” wrote one. “He has been a tireless self-promoter for so many years, and obviously really wants the job.

“But, I’m pretty confident that he would take much more from the job than he would contribute. And that’s not what we need.”

“None of us really consider him a technologist,” said another. “He didn’t invent new ad formats – Google and Facebook did that. He just sold them.”

The general sentiment among those The Spinoff spoke to was that if the role is worthwhile, then Handley is not right for it – and that if Handley is right for the job then the job has no purpose.

As perplexing for the tech community as Handley’s likely appointment is the nature of the role itself. Vend’s Gracewood said that there was a useful job working with the government at a high level on tech issues – but that it would not be a particularly attractive one. “It’s potentially extremely unglamourous, rallying around a lot of things which already exist and making them work better, or work together.”

There’s also a sense that there is a lot of governmental wish fulfilment wrapped up into the grand-sounding title of CTO of New Zealand. That it will advise ministers, and provide a voice for the entire tech community and help end the longrunning nightmare that is IT procurement for government. The latter is particularly unlikely to mesh well with Handley’s skillset – or even be possible, according to one highly credentialed engineer.

“The taxpayer overpays for everything [IT related],” they said. “There are no capable people working [in government procurement]. It’s staffed by people who wash out of the private sector and get captured by vendors.”

The disquiet is occurring very publicly, on Twitter threads into which various ministers are often tagged in. There is consequently no way that the government can claim not to be aware of the strength of feeling – yet it’s in a bind. As the prime minister was at pains to point out when she announced Curran’s sacking, Handley himself did nothing wrong during the appointment process, or in his communications with Curran. It is not his fault that his application has suddenly entered the public domain. And given the failure of the previous round, the government is hardly in a position to further delay the appointment – especially if it has already been privately confirmed.

Unfortunately the animus is such that his confirmation is likely to provoke an even bigger response from the tech community. All of which will make an already very difficult job that much more difficult for Handley – assuming he has it, and still wants it.

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