Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

Why is there no British Google? A top British politician asks...

Posted by Tom Foremski - June 15, 2006

A reader (www.elleeseymour.blogsite.com) writes:

Belated congratulations from over the pond. Bloggers in the UK do not have sponsors but advertisers, what advice would you give to them about this? I would like to write a post about it tomorrow, so a response would be appreciated.

Also, what are your views about this story in The Times about why the UK cannot develop the Yahoos and Googles cyberspace company. I think you will find this of interest.
http://www.timesonline.co.uk/article/0,,6-2222386,00.html

Osborne.jpgThank you Ellee. Let me address the article in the Times, written by George Osborne, a British [politician and shadow chancellor, which means he is in the Conservative party and part of the "shadow cabinet" of senior Tory politicians.

Here is the intro:

We may have invented the internet but it's the Americans who have colonised it. It's time to stake our claim WHY IS THERE no British Yahoo! or Google? Why are we not home to fast-growing community websites such as MySpace, the fifth most visited site on the world wide web? The internet may have been invented by a Briton, but it is a sad truth that not one of the leading internet companies is British. I am in Silicon Valley to find out why, meeting not just the people who run these internet giants, but also the venture capitalists who turn their bright ideas into great businesses. I want to know what we can do to make sure Britain has a slice of the future.

There was nothing pre-ordained about America dominating the online world. Many of my contemporaries at university packed in traditional jobs in the 1990s to launch start-up companies and claim their stake in the internet boom. Now almost all have gone back to careers they left behind.



To broadly summarize, Mr Osborne asks why are there no British Internet companies on the scale of a Yahoo or Google? He talks about a recent visit to Silicon Valley and the vibrant, supportive infrastructure here. And he says Britain must do something similar otherwise it will fall ever further behind. He identifies it as a key economic/ competitive issue.

SVW's take:
The reason there are no British Googles or Yahoos or EBays is the same reason there are no British Apple Computers, Intels or Seagates. Silicon Valley is not something that can be copied, Israel's Silicon Wadi is the closest copy, and then everything else around the world could be described as being variations on: a business park built next to a university.

What's different is that here is different.

It's different because this is a place that tolerates massive amounts of failure. One in 20 startups make it beyond five years, venture capitalists want that ten-bagger, that massive return on investment. But they are prepared to fund ten or twenty startups that fail.

In Britain, Mr Osborne does not have that culture of tolerance of failure. And the rest of Europe is pretty much the same. If you fail once you are a failure evermore.

Here, in Silicon Valley, they let you back into the game, time and time again. I know plenty of people who "made it" but they failed six or seven times before that. This is the only place in the world that has such high tolerance of failure.

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And as for sponsorships versus advertising? Sponsorship is more akin to being a patron, having the wealth and the interest to promote new things because it creates a mutual, a community benefit. This is in stark contrast to trying to sell advertising.

Sponsorship doesn't come with the same type of controls that an advertiser might be tempted to exert over a media company. My sponsorships are usually for a 12 month term. Advertising contracts are for much shorter periods and thus there are many opportunities for advertisers to influence their media partners. I've seen it many times during my 25 years in the media industry.

That's why a sponsorship is a more ethical model for a new media publisher - and a more efficient model. I can direct the resources of Silicon Valley Watcher to building a team and producing great content instead of having to build a large sales team. I can focus on the journalism rather than advertising.

And my sponsors will learn about the new media, they will work with me and my teams and their teams, on figuring out some of the many questions about the best practices in this emerging, fragmented, two-way media world. And we will be involved in trying out new media formats, and applications of these fascinating media technologies that are bursting out of Silicon Valley. It is an exciting time to be in the media/communications industry.

Sponsorships will work as a business model for Silicon Valley Watcher but I know it is not something that can be applied widely. We still need to develop a type of Google AdSense on steroids that fairly rewards content producers rather than aggregators. And I'm not sure if Google et al, the aggregators are on our (the content producers side).

We need that a content-reward technology to make a success of this emerging Internet 2.0 world. By content-reward technology I mean that organizations producing compelling, truthfull content will be rewarded by lots of money. To enable them to continue to provide great content. Unless we can figure out what is one of the most challenging computer/online problems of our time--we will be toast. And....tens of thousands of startups will fail. We wil not have an Internet 2.0.

Maybe Britain could help? I hope Mr Osborne is reading this post and he can galvanize Britain's elite researchers and its smartest bus/dev teams and create a content-reward technology for content producers that pays back more than the pennies Google's AdSense ad network, (and the other online ad networks...) pay. And the money will be invested back into yet more great content... producing a virtuous cycle.

Something like that would be bigger than Google and Yahoo and WalMart combined, IMHO.

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