The Pull Problem: Why New Zealand’s Innovation Engine Needs a Different Kind of Fuel
When Isaac Newton wrote to his rival Robert Hooke in 1676 — a man of notably diminutive stature, which lends the gesture a certain ambiguity — he offered what has become one of the most quoted lines in the history of science: “If I have seen further, it is by standing on the shoulders of giants.” My own observations about New Zealand’s innovation ecosystem are similarly borrowed. They are assembled from two decades in Silicon Valley, from conversations with founders, investors, and researchers on both sides of the Pacific, and most recently from a reader whose comment on my last post stopped me in my tracks.
Charles Sorensson raised something I have been circling around for years without quite landing on it so cleanly. He asked: what creates pull? Not funding, not talent, not timing — no single piece in isolation. But what if, in New Zealand’s particular case, the missing variable is a specific and nameable thing? What if the system is structurally misconfigured not because of what it lacks in quality, but because of what it lacks in direction?
I think it is. And I think the missing piece is the presence of large, R&D-oriented multinational companies with genuine innovation mandates, embedded deliberately and physically close to our universities.
Universities Are Built to Push
Let me start where Charles did: with universities. They are extraordinary institutions. New Zealanders are genuinely world-class in a number of domains — agritech, marine science, photonics, quantum technologies, materials, aerospace, and biomedical engineering. The researchers are talented, the output is rigorous, and the funding, while never sufficient, is real.
But universities are structurally designed to push. The incentive architecture — grants, citations, tenure, research excellence frameworks — rewards knowledge production. It does not reward commercialisation. Tech transfer offices exist at most institutions, and they work hard, but they are intermediaries operating without a buyer reliably on the other end. They push IP toward a marketplace that, in New Zealand’s case, is thinly populated with companies that know what to do with it.
The result is a well-documented and deeply frustrating pattern: excellent New Zealand research gets published, noticed, and then commercialised — elsewhere. The founder emigrates. The IP gets licensed offshore. The value accrues to economies with the commercial infrastructure in place to receive it.
This is not a failure of ambition or intelligence. It is a failure of system design.
The Missing Ingredient: Context
Throughout my career — and particularly as I have thought about what separates innovation ecosystems that compound from those that stall — I have become increasingly convinced that the most underrated variable is context.
Great researchers cannot be told what to do. Attempt to direct them too narrowly, and you extinguish the very quality of mind that makes them valuable. But there is a profound difference between direction and context. Provided with a rich, real-time understanding of what problems matter most — to their industry, to their community, to the world — researchers naturally gravitate toward work that is both intellectually serious and commercially relevant. They do not need to be managed to create value. They need to be informed about where value is being sought.
This distinction matters because it reframes what we should actually be asking of the commercial sector’s relationship with universities. We are not asking companies to set research agendas or to capture academic output for private benefit. We are asking them to be present — to be in the room, at the seminar, in the corridor conversation — so that the ambient signal of what is commercially urgent reaches researchers as naturally as the ambient signal of what is academically interesting. Context is the mechanism by which pull works. And it is precisely what New Zealand’s research community is, at present, largely denied.
What Pull Actually Looks Like
In the ecosystems we tend to admire — Silicon Valley, Boston’s Route 128 corridor, Eindhoven in the Netherlands, Grenoble, France, and Melbourne, Australia — the defining feature is not the universities themselves. It is the gravitational relationship between the universities and the large commercial entities that orbit them.
IBM and MIT. Genentech and UCSF. Google, Lockheed, and Stanford. These are not coincidences of geography. They are the result of deliberate co-location strategies by large corporations that understood something important: proximity to a university research environment is not just a recruiting advantage. It is an intelligence function. It lets you see what is coming before it arrives. And crucially, it works in both directions — the corporate presence continuously radiates context back into the research environment, shaping what questions feel worth asking without ever issuing a directive.
The best examples of this go further still. IMEC in Leuven, Belgium, became one of the world’s most important semiconductor research centres not because Belgium had an obvious claim to that role, but because it built a model in which large multinationals — Intel, Samsung, TSMC — co-invest in pre-competitive research alongside a public institution. The Fraunhofer Institutes in Germany operate on a similar logic: applied research conducted in close partnership with industry, solving real commercial problems, with a deliberate mandate to transfer knowledge into the economy. Singapore has spent thirty years constructing exactly this kind of architecture, and it has worked.
What these models share is pull — and the mechanism of pull is context. Researchers produce knowledge in conversation with partners who have skin in the game, can articulate which problems are commercially urgent, and can provide a pathway from the laboratory to the marketplace. The horse, as Charles put it, gets a cart with better wheels — because someone who needs the cart to move faster is standing right there, and the horse knows it.
Perhaps the most telling evidence of this dynamic, however, is the behaviour of sophisticated non-American companies toward Silicon Valley itself. Toyota, Volkswagen, Bosch, and Samsung have all established substantial R&D presences in the Bay Area — not to sell cars or semiconductors to Californians, but to be physically close to the crucible of ideas. SAP, the German enterprise software giant, runs a significant innovation lab in Palo Alto. Alibaba and Tencent, despite the political complexities, have maintained research outposts there. Nokia, when it was still a force in mobile, famously built its most forward-looking research unit not in Helsinki but in Silicon Valley, precisely because the ecosystem intelligence available there was worth more than any cost saving from centralisation.
I know this not only from observation, but from direct experience. As a member of the Bay Area Science and Innovation Consortium — a body established by the Bay Area Council to preserve and strengthen the San Francisco Bay Area as a global crucible of innovation — I was involved in meeting the leadership teams of many global companies that were considering establishing a small R&D footprint in the region. We were deliberate and active in making the case, and we were successful. Those relationships helped establish and reinforce the gravitational pull that Silicon Valley exerts on global start-ups to this day. The companies that came were not doing so on a whim. They came because a community made the argument clearly, backed it with relationships, and demonstrated that the ecosystem had something genuinely worth being close to.
These companies were not naive about the expense or the difficulty. They made a deliberate calculation: the optionality and early visibility that comes from proximity to a world-class innovation cluster is worth paying for — and, crucially, that calculation can be influenced by the quality of the welcome they receive. The same logic, applied in reverse, is the argument I am making for New Zealand. If the world’s most sophisticated companies can be persuaded to establish R&D outposts in California, it is not a stretch to imagine that the right framing — the right domain, the right relationships, the right policy environment — could bring a small number of them to Auckland, Wellington, Christchurch, or Dunedin for the same reason. What worked in one direction can work in another. What is required is not a miracle. It is the deliberate, sustained effort to make the case.
New Zealand’s Structural Gap
New Zealand’s commercial sector is dominated, for understandable historical reasons, by domestically-oriented businesses. Retail, property, agriculture, banking, telecommunications. These are not innovation-hungry industries in the research sense. The multinationals that do have a presence here — the major banks, the FMCG companies, the telcos — are largely distribution and service arms. Even the major technology multinationals with a presence in New Zealand make their R&D decisions in California, London, or New York. Their New Zealand operations have neither the mandate nor the budget to engage seriously with university research.
The consequence is a context vacuum. When a researcher at the University of Auckland develops a promising technology, or when a team at Victoria University produces a genuinely novel result in a commercially relevant domain, they look around for a commercial partner and find the room largely empty. There is no ambient signal telling them which of their possible directions leads toward a problem the world will pay to solve. There are New Zealand companies with a genuine appetite for innovation — and I am proud to back a number of them through Quidnet — but the ecosystem of large, well-resourced, technically sophisticated commercial partners that would continuously replenish that signal is simply not here at the scale required.
The consequences are compound. Without a commercial context in the room, researchers cannot calibrate their work to real-world problems — not because they lack the inclination, but because they lack the information. Graduate students see no local career pathway and emigrate, taking with them the embodied knowledge that no publication fully captures. Founders with promising technology cannot find the strategic partnerships that would allow them to scale without immediately leaving. And each departure increases the likelihood of the next departure.
I have been advocating, so far without measurable effect, for a specific intervention: encouraging large multinationals to establish small, R&D-focused satellite teams in New Zealand, located deliberately near our university research clusters. Not full subsidiaries. Not sales offices. Small, technically sophisticated teams with genuine innovation mandates — the kind of presence that restores context to our research environment and changes the gravitational dynamics of the ecosystem around them.
Why a Multinational Would Do This
The reasonable question is: why would they? New Zealand is a long way from anywhere. The market is small. The talent pool, while excellent in quality, is limited in depth.
The answer lies in understanding what these beachhead investments are actually for. They are not market-entry plays. They are intelligence and optionality plays. A small team of senior researchers embedded in Christchurch or Auckland gives a global corporation early visibility into what is emerging from New Zealand’s science base — and New Zealand produces genuinely world-leading work in several domains that matter enormously to the global economy over the next two decades. The exchange, moreover, is not one-directional: the corporate team also radiates context back into the local ecosystem, informing researchers about where the commercial frontier is moving in ways that no grant application or journal submission ever could.
There are other advantages that are underappreciated. New Zealand sits in a time zone that bridges Asia and the Americas, which is operationally useful for global R&D networks. The country has a stable regulatory environment, strong intellectual property protections, and — for the right kinds of research — access to unique natural environments that are simply not replicable elsewhere. The agritech and marine science opportunities, in particular, are tied to physical realities that cannot be reproduced in a California laboratory.
There is also the AIP — the Active Investor Plus visa programme — which has made New Zealand meaningfully more accessible to offshore capital. We have used it as a differentiator for Quidnet’s Fund II, and it has resonated. But the logic applies equally to corporate R&D investment. The policy infrastructure to welcome this kind of presence exists, or can be constructed without enormous difficulty. What is missing is the deliberate effort to make the case.
Patience, Systems, and the Longer Arc
Charles made another point that I do not want to pass over too quickly. He pushed back against the tyranny of speed — the “quick in, quick out” model that dominates much of contemporary startup discourse. He is right that some innovations require a longer arc. Regulatory environments need to mature. Technical dependencies need to resolve. Market timing is real. The venture capital model, with its fund cycles and return horizons, is not always well suited to holding that space.
This is another reason why multinational R&D beachheads matter. A large corporation with a multi-decade time horizon and a substantial balance sheet can sustain a research partnership through the fallow periods that would exhaust a venture fund. They can absorb the cost of waiting for a regulatory environment to catch up, or for a complementary technology to mature, in ways that early-stage investors structurally cannot. And crucially, they can maintain the context signal continuously — even during the fallow periods — so that when the moment of readiness arrives, the research community is already oriented toward it. The patience that Charles identifies as a reality — not a virtue, but a simple requirement of some innovation trajectories — is more available to a corporate partner than to almost any other actor in the system.
This is not an argument against venture capital. It is an argument for a more complete system — one in which different actors play the roles they are actually suited to play, rather than one in which we ask early-stage investors to carry weight that belongs on stronger shoulders.
What Would Actually Change
If New Zealand succeeded in attracting even a handful of serious multinational R&D presences — genuinely technical, genuinely embedded, genuinely engaged with university research — I think the downstream effects would be larger than they appear.
Researchers would design projects in conversation with partners who understand what problems are commercially urgent. The gap between academic output and commercial application would narrow, not because researchers became less rigorous, but because they had better information — better context — about what rigour was needed where. Graduate students would have career pathways that did not require a flight to Sydney or San Francisco. IP would be more likely to be commercialised in, or at least through, New Zealand, building local capability and local revenue. And — this is the compounding effect — multinational presence attracts multinational presence. The first serious R&D beachhead makes the second easier to justify.
None of this happens automatically, and none of it is cheap. It requires deliberate policy design, active government-to-business diplomacy, and a sustained investment of political attention over a period longer than any single electoral cycle. It requires New Zealand to be explicit about what it is offering and to whom, rather than relying on the general warmth of its reputation to do that work.
But the alternative — continuing to produce excellent science and watch it leave — is not a neutral outcome. It is a choice, made by default, with compounding costs.
A Final Word to Charles
You asked what would create momentum in a complex system of competitive players with misaligned incentives and different time horizons. I do not have a complete answer. But I think momentum requires a direction — something that orients the system’s energy rather than just adding more of it. Pull provides that direction in a way that push, on its own, cannot. And the mechanism of pull, at its heart, is context: the continuous, real-time signal of what problems matter, flowing from the commercial world into the research environment and back again.
The horse needs a cart. But first, someone has to want what the cart is carrying badly enough to show up and say so — and to keep saying so, every day, until the horse knows exactly which way to run.
Mark Bregman is Managing General Partner of Quidnet Ventures, an Auckland-based deep tech seed fund. He writes Antipodean Musings on innovation, political economy, and life at the bottom of the world.