Last week I wrote about the rather dodgy methodology adopted by the Northern Ireland Science Park and its advising “consultants” Oxford Economics when attempting to describe the “knowledge economy”.
However, I thought it might be timely to explore the whole tech start-up mentality in Northern Ireland in a little bit more detail.
The NISP and Oxford Economics Knowledge Economy report illustrates a particular malaise that afflicts Northern Ireland – in common with other UK regions that want to be seen as Internet and tech start-up trailblazers.
It’s all about confused causality.
Let me explain. There’s a received wisdom that:
- We need more start-ups
- We need an entrepreneurial culture
- We need more venture capital funds (or, more generally, risk funds)
- We need more innovation
- We need more people working in knowledge industries
If all these things become more abundant, it is argued, we’ll create more wealth and Northern Ireland will create a veritable sea of “major multiple” trade-sales or IPOs. In short, there is a causal relationship between these things and positive outcomes.
Erm…sorry, but no.
As MILO YIANNOPOULOS argues in The Kernel, the quantity of start-ups is no guarantee of the quality of start-ups. More technology start-ups may just dilute the very finite pool of developers that are available to create viable and interesting products. In short more start-ups may make the situation worse – limited capital and talent is simply squandered. In Northern Ireland, our availability of talent is much more finite than in London’s “tech city” (AKA the area around the Old Street roundabout). Therefore, argue for start-ups – but there’s no clear reason why they should all be technology companies.
But what about the entrepreneurial culture? Well, yes, on the face of it if more people were more self-reliant and were less of the view that a job was a right than something to be worked-for – then perhaps our economy may move forward. But it’s not necessarily the case that entrepreneurs have to create mobile apps. Lord Sugar started in business by selling car aerials. He stumbled into technology – but was successful initially because he was good at selling rather than good at electronics. Indeed many of our largest businesses were started by people who were traders rather than entrepreneurs in the Silicon Valley sense.
Trade is good. Trade allows people to build business expertise. If people can build income by selling on eBay or at their local flea market – that’s good business. Because business is only good or bad on the basis that it creates profit and provides sufficient return to its founders. But there is a received wisdom that creating a string of failed Internet businesses is some type of badge of honour. I think a greater badge of honour is creating profitable business – regardless of how sexy or unsexy the business concept is.
There’s also a received wisdom that venture capital is the key to business success. It isn’t. Often it merely sustains awful business ideas and allows business founders to have an inflated sense of achievement when they haven’t raised a single invoice. And, unfortunately, far too many VC firms are sustained – almost completely – by tax-payer money.
As for innovation – well some of the most successful new businesses enter mature markets and just do things better. One of our fastest growing and apparently most successful Internet businesses sells bicycles online. It’s hardly rocket science but they obviously do a great job selling bikes. Similarly Amazon started by selling books online. But Starbucks sell coffee. Most of the Dragons on Dragons’ Den made their money from very mundane and simple businesses.
In short there is no clear reason why Northern Ireland needs more knowledge workers in order to be successful – we simply need more people working for profit rather than for public money.