An article on The Kernel asks some questions about whether the East London startup scene is either a) full of companies that would not exist without government sponsorship or b) hopelessly obsessed with vague social products that have no real prospect of success. Either way, Milo Yiannopoulos suggests the ecosystem would be better with fewer startups.

With regard to this first point about government funding, I may be wrong, but my experience is that the amount of government sponsorship that actually finds its way to supporting startups is tiny (perhaps deliberately). The article mentions subsidised offices, a picture I don’t recognise at all: most of the classic Old Street locations have quite expensive desks for startups. You might almost think they were being taken advantage of, certainly you won’t get more than a free beer at Tech Hub.

The second idea, that all those hipsters ought to knuckle down and make some accountancy software rather than faffing around with ‘the next Twitter’ is well made, or would have been a year ago. But now Old Street is far more focused, and plenty of companies are making serious and non-social offers with obvious sources of revenue streams.

Even so, I have to agree that the fetishisation of startups leads to a shortage of developers. Established small companies find it almost impossible recruit, which is silly when you consider that a company that already has customers, knows its market and turns a profit is so much more likely to have a great web offer than a start-from-standing fledgling company. I recently saw Lucky Voice offering £1000 for successfully introducing a front end developer to them. This is a company that has everything going for them, including Internet eminence Martha Lane Fox.

Within startups the market is warped too: demand is so high that hiring developers is only possible for the well funded, not the shoe-string budgets of the startup entrepreneur. Unless of course you happen to be one of a bunch of developer friends, in which case you can give your time to your startup company for free. So many founders are developers, but it’s not at all clear to me that developers make the best founders. Probably many good ideas go unexplored while capable developers are focused on their own, less viable, schemes.

It’s fair to ask, who caused the fad for doomed social business models? Where did that strange fixation with gamification come from? Milo wants to blame “Soft skills… public relations and even business development enthusiasts angling for a slice of the Old Street pie”. Surely journalists also belong on that list, duty bound as they are to generate hype around every new idea.

And who is responsible for making startup life the thing to which every young developer ought to aspire? Surely that’s the tech press, too? So, thanks for this article, The Kernel. Glad you’ve stepped in to give Old Street some advice on where it’s going wrong.

I recently posted something pointing out that the fever for Open Data in local and national Government is perhaps building unrealistic expectations, not to mention diverting resources from other useful projects. Here are some surprising political arguments being supported by innovation in tech.

Whatever your view on Open Data, conservative strategist Oliver Letwin made his thoughts clear: Open Data is a way to expose how much money government wastes, thus reinforcing the case for a smaller public sector.  That’s why there is the specific diktat about  local councils releasing all contracts over a value of £500. This kind of politicking is not, I don’t think, what Open Data campaigners had in mind.

As an aside, I think the exact reverse might happen. I would guess most people have no idea how often their street is swept, the gutters cleaned, drains maintained etc. If this data was accessible, the public might be quite staggered at what they get for their money. There again, perhaps Mr Letwin is banking on the fact that wasted money is more news worthy than money spent competently.

Did you know that when News International was bidding for Sky, it argued that the plurality of voices provided by blogs and Twitter meant the takeover would not represent a monopoly?  This even though it would own 36% of broadcast media. So all the discussion of the power of social media actually ended up working to help News International bolster its monopoly.

With all the Ted Talk optimism of Clay Shirky’s recent talk about Internet enabled democracy, it’s as well to remember that in reality political opportunism is bound to rear its head – and likely running quite counter to visions of empowered, democratised equality.

Right wing views fit into the tech agenda in variety of ways. Small businesses (startups in tech talk) innovating away poverty is a classic tenet of the tech and Tory mindset – the “doing more with less” mantra.  This alignment of views is a recipe for making a policy of doing “less with less” – less help for the vulnerable – more politically palatable.  All you have to do is wrap your regressive views in optimism about technology.

You can look at universities, where Massive Open Online Courses could be used to make the argument against financial assistance for students. Why should the state pay for expensive university attendance when the same course is available online for free? By this logic people from less wealthy backgrounds would be denied the transformative experience of going away to university – while only a URL away from the virtual lecture theaters of Oxford and Cambridge.

There’s a variety of mechanisms for increased political participation.  These are explicit,  such as Germany’s Liquid Feedback concept, and informal – blogs, twitter etc. At first impression, these seem to prevent the political exclusion of people at the margins of society and to alleviate the danger of media monopolies. As we’ve seen, this isn’t necessarily true.

In short tech can do a lot to increase equality of opportunity, which is enough to satisfy the right’s sense of justice. What it might not do so well change people’s propensity to take advantage of those opportunities. Thus at the same time as opportunity notionally increases society could become less equitable.

All this is to say there is a strange alignment between the optimism of the tech community and the ideology of the political right – even though the two camps probably have quite different moral standpoints and ambitions. Tech’s utopian views of the future, as expressed by Clay Shirky, can become handy cover for less egalitarian purposes.

 

 

 

 

 

The Romney formula, and that of the right in general, is that the poor are best served by unregulated markets with low taxes, because of the growth such policies create.

I wondered who actually produces the most economic output – Republican voters or Democrat? I did the comparison using Gross State Product per capita stats from Wikipedia. States are classified as belonging to a particular party if they have voted in one direction by an average of 10 points or more over the last 5 elections.

It turns out that Democratic states have a GDP per captia of $53,232 and Republican ones $45, 360. The national average is $47,482, so Republican states have about a 5% lower productivity than average, and Democratic ones 11% higher.

Obviously, this is entirely consistent with other things we already know, in particular that rural voters are Republican and metropolitan voters are Democrats – clearly rural areas will also have lower productivity than urban.

But it’s amazing to think that all the rhetoric trumpeting the primacy of economic growth plays so well in the relative economic backwaters,  while in the productivity powerhouses of New York and California they aren’t listening.

Regardless of which party actually has the best “pro-growth” policies, people with low productivity prefer messages about free market capitalism and highly flexible labour markets, while the most productive states are less interested.

Economic arguments aside, some voters will disapprove of “government intervention” on philosophical grounds – another reason to vote Republican.  But from the purely economic perspective, perhaps deregulation and low tax don’t really promote productivity in way rich Republicans would like you think?  It’s hard to escape the feeling that the wool is being pulled over the eyes of poor voters.

Democratic Sates

GDP Per Capita
Massachusetts 58,108
Rhode Island 45,000
New York 57,423
Hawaii 49,214
Vermont 44,000
Maryland 51,724
Illinois 50,328
Connecticut 64,833
California 51,914
Delaware 69,667
Maine 40,923
New Jersey 56,477
Washington 52,403
AVERAGE 53,232

Republican Sates

GDP Per Capita
Utah 41,750
Idaho 34,250
Wyoming 63,667
Nebraska 49,778
Alaska 65,143
Oklahoma 42,237
Kansas 44,310
North Dakota 47,714
Alabama 36,333
Texas 45,940
Mississippi 32,967
South Dakota 49,875
South Carolina 35,717
AVERAGE 45,360

On the World at One today Fraser Nelson (of the Spectator) went head to head with Geoff Mulgan (of Nesta) arguing that quangos, charities, think tanks and unions have been stuffed with the ranks of the former Labour government and civil service, causing a distortion of the processes of democracy.

In the article in the Telegraph that sparked the debate Nelson focuses on the resistance to change inherent in many of the institutions that shape public debate. Clearly, this resistance is only going to be exacerbated by the fact that the kind of people who work at charities and unions are left-leaning, and will no doubt take an intuitive dislike to Tory policy.

This sounds like a reasonable point to me. Certainly Tory policy frequently gets exclusively evaluated on whether it’s an attempt to rob the poor. Even if you hate the right I think you ought to admit that it does have a slightly more nuanced agenda than lining the pockets of the 1%. Whether Gove’s education reforms are good, bad or indifferent for poor families, they will always be cast as a means to oppress the downtrodden – and that reflex reaction is sure to stifle innovative policy in the area.

On the World at One, however, I think we saw a glimpse of the intellectual position that motivated Nelson to write the article – and a silhouette of the ideology that fuels much of the antipathy between left and right. Nelson said, admiringly, that most Tories who left Government did not go work at a charity or a think tank, but instead went into business.

This assumption that business is the fount of all things good is a matter of dogma for the right. What is admirable about the opaquely named occupation of “business”? Is going on to hold multiple non-executive directorships to milk your acquaintances from Westminster really more admirable than working at a charity?

Should we admire Grant Shapps for building a successful business, even if the business in question pointlessly recycles other peoples text in order to game search engines? The point is there are plenty fo fruitless things that one can do to earn money.

If the right could get past the idea that anything done the by “the market” or in the name of “business” is virtuous then  perhaps the former labour Mandarins now apparently dictating the tone of public debate could be a little more sympathetic.

 

 

 

 

Dr Ha-Joon Chang recently gave a talk at the LSE about his book 23 Things They Don’t Tell You About Capitalism. One of his ideas is that the Internet has done less to change the world than the washing machine. It’s a waggish claim, in his lecture he gave it a fond mention.

The claim works like this: the washing machine is short hand for domestic appliances, whose widespread use in the US, Europe and now the world have allowed women leave the home and enter the workplace: surely a huge achievement.

By comparison Wikipedia doesn’t seem so exciting. But what he hasn’t taken into account is that the Internet has a world-changing effect on intellectual property – and for the better.

A societies approach to Intellectual property has to balance two things:

  1. Incentivising companies to invent things by allowing them to earn money from their inventions. Who is going to spend time inventing if someone will immediately copy your idea?
  2. Not allowing companies that have invented something to hold society to random. If someone invents something essential and has a water-tight protection for it they can charge any amount they like for it.

So the optimal situation would be one where every company thought that they were going to make a fortune from their next idea, but as soon as they have the idea they are forced to share it with the world without charging (too much) money for it.

That sounds impossible. You could perhaps fool a company into innovating once, but then after you had forced them to publish the secret of their innovation they wouldn’t bother investing in further R&D.

But what if the innovation was stolen without their knowledge, manufactured in some far off land and then appeared on the market without the original inventor ever quite being sure how the idea got out, or if it had just been developed independently?

If that happened companies would continue to innovate, but without ever earning the huge monopoly profits that come from patent law and industrial secrets – like the disproportionate Tetra Pak fortune, earned by getting a patent on a particular shape of box.

That’s surely just what China’s industrial espionage program represents – a flow of knowledge from West to East, which is allowing China to lift itself out of poverty and making goods cheaper in the West. By all accounts China is hacking into all kinds of companies to steal their secrets.

As Martin Wolf has argued in his book Why Globalisation Works, information is the ultimate non-rivalry good, and it’s flow is a major cause of China’s rise.

And that flow is facilitated by companies in the West keeping their manufacturing secrets on computers connected to the Internet, where people in Shenzen can access them.

And that is why the Internet is more important than the washing machine. Not because of LOLcats, but because it lets information leak into developing countries.

 

 

 

In the beginning was the word, and the word was money. Actually bankers believe in the creation myth of the 1986 “Big Bang” when stock trading was computerised – facilitating high speed speculation – and the UK government deregulated financial markets in London to tempt money from other financial centres. Back in 1982 the London Docklands Development Corporation had declared the Isle of Dogs an enterprise zone, with special tax breaks, so it made sense for the exploding banking industry, whose main competitive advantage was already low taxation, to expand into the tax efficient offices of Canary Wharf.

Skip forward a bit. Yesterday we saw Bob Diamond of Barclays (head office: One Churchill Place, Canary Wharf), explaining why his company had rigged the LIBOR intersest rate. The banking crisis overall has left everyone in the country about £1,300 a year worse off, in terms of GDP per capita, for the last three years.  Pricing the crisis is almost impossible, Andrew Haldane of the Bank Of England believes about 10% of GDP gone forever is about the right mark. It’s not that the finance sector is unproductive – it’s worse. For some time periods its net effect is destructive.

What else could we do with the real estate? I think we should turn the the Docklands back into docks. It’s the most honest kind of shopping experience – go down and buy it off the boat. Don’t we live in a world where we value the shopping experience, and where products have to come with a story that makes them personally valuable to us?  Check out the history tag – telling you where the provenance of your goods on a web page, adding value by adding context.

There’s no romance in a container ship unloading, but that won’t happen because the docklands can’t cope with container ships. Imagine instead the Cutty Sark offloading Italian cheeses, Ethiopian coffee or Indonesian spices. Toiling cockney lightermen humping barrels as Islington mums pick their way through crews of lascivious Filipino sailors smoking clay pipes.  That’s better than the history tag, surely.

Prices would be higher, but perhaps not so much. Firstly, we should copy the Chinese idea of a Special Export Zone, and create a Special Import Zone where no tariffs are imposed.  Third world countries would be allowed into the market thus reducing prices. Secondly, rather than sponsoring banks, we could offer subsidies to traders who use the use sail boats, thus reducing carbon emissions.

And why not make the process into a holiday while we’re at it. If a gourmand coffee shop isn’t enough for you, why not sail to Jamaica, select your beans, sail them back to London and roast them.

We can send jellied eels and ale back.

Here are some pictures of the docks, in 1810, 1847 and 2012. 1847 looks like the most fun to me. I love the way it’s so legible – a dock for loading, another for unloading, and wharfs named after a product or location. Canary Wharf, obviously, once serviced the canary islands (I think the Wharf was owned by a fruit company). The utility of the docks is so obvious, now not even the people who work at Canary Wharf can tell you what they do.

If you could see a little further east you could see the East India dock, neatly mapping global trade into a few acres of East London.

In an interview for the BBC’s Virual Revolution documentary – a programme I worked on tangentially – Charles Leadbeater praises Fred Turner’s book From Counterculture to Cyberculture. The book describes the connection between 60s counterculture and modern silicone valley. It pricked my curiosity so I bought a copy.

I’d like to say it’s a great read, but it didn’t live up to Mr Leadbeater’s promise. It laid the facts out, but they never took on a significance beyond intellectual curiosities. Becky Hogge’s Barefoot into Cyberspace (which also references Turner’s book) transforms the same facts into an epiphany. The book evokes epochal urgency, pessimism and outright fear set against a backdrop of technological utopianism – everything it touches takes on gravitas.

Although Hogge deals with much else in Barefoot into Cyberspace, preoccupation with the link between the hallucinatory 60s and the then nascent digital economy this aspect of the the book fairly gripped me for the first few chapters.

What struck me was this: isn’t it weird that two of the most obvious, and well documented, cultural phenomena ever are profoundly linked and nobody talks about it? San Francisco 60s counterculture must be one of the most intensely chronicled moments in history. The catalytic Merry Prankster bus trip, which was at the centre of the wider hippie movement, was paid for by the celebrity author Ken Kesey. The trip itself was documented by Tom Wolfe and Jack Kerouc, with both texts going on to become pillars of American literature. There is an episode of The Simpsons about the bus trip, the ultimate signifier of cultural significance. When people refer to the 60s – surely the most iconic decade since it’s been possible for decades to be iconic – they frequently have this tiny cultural nexus in their minds.

Of course the cyberculture of Silicon Valley itself has also been much celebrated. I was going cite the film about Mark Zukerberg as evidence,  then I realised the film is a footnote compared with the fact that a kid in his University dorm built a website that is nearly as popular as watching TV. And he’s appeared in The Simpsons.

The link between counterculture and cyberculture is personified by Stewart Brand.  A member of Ken Kesey’s famous bus trip, he organsied the psychedelic TRIPS festival, one of the first Acid Tests. In Hogge’s book’s he quoted as having concluded “[computers are] the kind of revolution that we thought psychedelic drugs [were] going to be”. That’s to say, he made a completely explicit decision to stop taking acid and start experimenting with networked computers instead.
I’m not going to retell the whole story here – there’s too much of it – but Brand went on to set up a magazine evangelising computer technology called the Whole Earth Catalogue. He gave some of the proceeds to Fred Moore – the man who set up chip manufacturer Intel. Fred Moore in turn set up the Home Brew Computer Club, whose members included Apple founders Steve Jobs and Steve Wozniak. Tellingly, the club also got into a bit of a tiff with a young Bill Gates.

Brand was friends with Douglas Engelbart who gave a legendary demo at Stanford University, showing technologies such as hypertext, email and the mouse. He was assisted in the video by none other than a Mr Stewart Brand. Incidentally, Stanford University is also where the Larry Page and Sergy Brin wrote the paper that founded Google.

You get the picture. Many of the major players of the computing industry knew each other long before they were major players in the computing industry, their connection springing from their various counterculture associations. If I didn’t manage to make that sound profound, read the book and it will do.

There’s a lot to the book which isn’t about coutercultural origins. Hogge also reshapes the topography of the news landscape so that Internet activism becomes the single point that knits together some of the most significant stories of recent times. From the influence of the NO2ID campaign on the formation of the coalition government to the meaning of Wikileaks and the recent revolutions across the Middle East, cyberculture is pervasive. The global influence of Wikileaks is a particular focus and, as the author herself points out, a political story that has not had nearly enough attention.

The view is “from other side” as it were, with Hogge focusing mainly on her acquaintance or friendship the protagonists in these news events. This method of relaying the narrative means that we get an intimate feel for Internet activism , and an insight into Hogge’s own unpleasant experience of lobbying Westminster.

Possibly deepest topic that the book broaches is the political influence of architecture, in it’s broadest sense. I’ve thought a lot about what to make of the possibly exclusively titular similarity between the job titles of “Architect” and “Information Architect”. Hogge has an answer, and it’s best summed up by this quote:

“To a hacker, architecture is politics: how you build something will dictate how it will get used. The rest of the world is just getting used to this concept with regard to buildings. Watching the demolition of sixties tower blocks that had dictated community life in my one-time neighbourhood of East London I knew that this was a political act, a confession, that old ways of thinking about welfare provision and social justice had been forced to change by the failure of sixties idealism.”

To me it’s a very profound way of understanding the virtual world, and it makes the analogy alluded to those job titles entirely apposite. The theme is revisited in several places in the book; it’s a topic I’d love to hear more from Hogge about.

I have to admit to finding the Tom Wolfe nonfiction-novel style of the prose a little jarring at first – it’s something that I found difficult Wolfe’s writing too – but don’t let it put you off. As soon you’re sucked into the content you’ll realise it’s a mechanism for bringing you closer to the story in hand.

If you work in tech, this book lends a context to the nuts and bolts of your job. Even if you don’t, I bet you use Google, and this book gives an immediate perspective on what Google means. I found it an utterly compelling. Reading, as I did, the book in every available moment I might have been tempted to reach for the unputdownable cliche. Being virtual, it’s actually unpickupable. Here’s the link:

or get the unputdownable version here:

http://www.amazon.co.uk/gp/product/1906110506/sr=8-2/qid=1311777818/ref=olp_p…

 

This Wednesday I went to a London Web event to hear venture capitalist and ex-Goldman Sachs employee John Frankel talk about “Using VC Funds To Change The World”. I took it to be implicit in the title that it referred to changing the world for the better. I think what it actually referred to was changing the world by making a lot of money for yourself, and, if you are lucky, John Frankel.

Two topics particularly caught my attention. Firstly the way the dialogue between audience and speaker dwelt on why Europe couldn’t produce Startups like “the Valley”, echo ing Eric Schmidts’ comments later in the week to the Edinburgh TV festival. My natural response is to feel that there are few circumstances where aiming to be more like the US is a useful policy.  Calling Old Street Silicone Roundabout is symbolic of a naff, and hopeless, attempt to ape America. Anyway, I think that observation sets the context for what I felt was the most salient point of the evening.

A lot of questions were asked about what qualities Mr Frankel looked for in a startup, questions he was clearly used to fielding. Taking the liberty of summarising him, he wanted to invest in a future monopoly like Google or Facebook. Though expressed in many different ways, the idea was that he would put his money in services that could hold society to ransom by using their scale to ensure that they have no competitors.

In too many places to list, I’ve heard the San Francisco originated cyberculture of the web is one of Doing No Evil and being generally lovely. You might think I’m naive to believe this stuff, but actually I kind of do. Whilst I’m not saying that I think Google and Facebook are run for the good of the world, Google.org exists, Bill Gates is the biggest philanthropist in history and Mark Zuckerberg has signed a pledge to give at least half his wealth away. I’d also point to the fact that Google, Yahoo and Facebook have been prepared to open source all kinds of things, in many instances where they stood little to gain. These firms seem distinct from the gray homogeneity of normal capitalism. Just look at how frivolous their names and logos are: Yahoo! insists on an exclamation mark while Google’s logo was designed by a friend of the founders and is, by any normal standard, terrible. Facebook is not a name that a marketing department would come up with.

I strongly got the impression that this is not the MO of the next wave of startups – they are funded by former Goldman Sachs wonks with a view to earning money by exploiting consumers using their monopoly powers. Startups will not be sparked from an exciting PhD paper or from a dorm in a university – they will be the spawn of business plans and spreadsheets and market research.

For reasons I don’t fully understand the web seems to make monopolies easier to build, which is incredibly bad news for everyone except their owners. And now I realise there is a whole world of funding for anyone who wants to seize that opportunity. Inevitable perhaps, but normally when I go to a talk about the web it will be about (perhaps overblown) claims that the Internet will make everyone’s lives better, especially poor people, especially in developing countries. This talk was exactly the opposite.