From our Swindon Correspondent:
From the Telegraph
The Prime Minister’s chief advisor Dominic Cummings has told civil servants that he is examining ways to help the UK build $1 trillion (£775bn) technology giants.
Mr Cummings emailed employees of the Department of Digital, Culture, Media and Sport (DCMS) this week and told them that he is considering “ways we can build [$1 trillion] tech companies,” according to a report in Business Insider.
Get out the way, lower taxes,
The UK has so far failed to build large, public technology companies at the same scale of American giants such as Apple, Amazon and Google, which have all reached valuations of $1 trillion.
So what? What does it matter if you have some huge giants or a bunch of rich minnows? What’s wrong with 40 companies of the size of ARM holdings ($25bn) instead of one Amazon? I’d wager that the people at ARM earn more per employee than Amazon.
And you can also apply this to 48 other states of the union. It’s only California and Washington State that have trillion dollar companies. Not Nebraska, New Jersey or Texas. And if you want to really drill down, you can’t even say that California produces trillion dollar companies, it’s an area of about 200 square miles near San Jose. Google is about a 15 minute drive from Apple. And this should make people wonder why.
The reason is mostly about network effects and history. People who made a lot of money setting up companies around silicon (like Intel) invested in the companies that made PCs and servers (like Sun Microsystems) and they invested in companies like Google. Either directly or via venture capitalist firms. And the companies form around the investors. And throughout history this clustering has occurred, from car companies in Detroit, to shoe makers in Northamptonshire, to the perfumes industry in Grasse. Maybe the remote work revolution will shift it, but I doubt it’ll shift from San Jose to Wolverhampton. Maybe more work goes to Sacramento or Bakersfield.
A no-deal Brexit could allow the Government to give state aid to British technology businesses, helping them grow through incentives as well as taxpayer funding.
Yes, it would allow that, It’s also a really bad idea, at a whole different level than propping up Rover or developing Concorde. Because, well, it wasn’t that hard back in the late 90s to start a search engine, or build a basic social network or setting up an internet retailer. I know people who worked in companies doing just that. They aren’t now, because software scales very easily. One small change to a website can be applied for almost nothing to millions of people, you get a small number of huge winners. The odds of picking the Brin/Page idea is almost zero. Hell, they offered it to their rivals for a few million and none of them bit. Does anyone think a bunch of lawyers, journalists or civil servants is going to pick the right one?
Mr Cummings is believed to have been a vocal advocate of the Government’s recent $500m investment into struggling satellite business OneWeb.
This is why you don’t get government types investing money. OneWeb is a dog with fleas. It hasn’t even raised all the capital to finish the network, while everyone is watching SpaceX launching 50+ satellites every few weeks and starting beta testing.
Rob Kniaz, a venture capitalist who has backed businesses such as Deliveroo and Darktrace, welcomed Mr Cummings’ proposal.
“If it means breaking EU laws to build these winners then so be it,” he said. “The future of the country will be defined by having some of these world-leading companies start here so I’m pleased to see someone near the top looking at how to remove friction along the way.”
Mr Kniaz is now big enough that he can jump through the hurdles for funding no doubt, but the government throwing billions at picking wins robs entrepreneurs.