Are we only creating start-ups for them to be acqui-hire targets for tech companies that are getting bigger and bigger? John Kennedy investigates.
The good news? Tech is here to stay and is part of the fabric of our lives indefinitely. In fact, we live in an age of wonder, and every business today is, in some way, a tech business. The bad news? The tech industry is defined by boom-and-bust cycles, and a market correction is long overdue.
What shape that correction may take will be anybody’s guess. Will it be like the dramatic dot-com bust of March 2000? Or will it be more subtle this time? My reckoning on the reckoning is that it has already begun, and the main arbiters of change are the big tech companies, rather than solely Wall Street, as a long boom just gets longer.
‘Big companies are getting bigger, and are buying what they cannot crush for talent purposes’
As a long-time supporter of the tech industry – who has, on many an occasion, been accused of drinking the Kool-Aid – I have to admit I’m not a big fan of the shape it has taken.
I see it as a victim of its own success, where the substance of tech – in terms of breakthroughs and innovation – is being skewed by who has the fanciest office spaces and perks for their legions of order-takers and salespeople. Sadly, a pattern of gentrification is strangling the civic spirit of towns and cities worldwide. Instead of breathing life into city spaces, are these ivory towers of homogenisation that bristle with security stealing life from community and small business?
What is tech giving back?
Homogenisation is the watchword. Decades ago, cities were virtual wonderlands of bookshops, coffee houses, bars, hotels and individuality. You could explore for hours. Now, in an age of convenience and breathtaking efficiency, most people buy their books and music online, and even the grocery shopping experience is about to be transformed by AmazonFresh, with discounts of up to 50pc.
Is tech innovation sacrificing inventiveness at the altar of efficiency? Is music in the time of Spotify and Deezer the first victim? Think about it: musicians can barely survive in this new reality. Every era and movement of the past century – from the beat generation to rock’n’roll, hippies, punks, mods and grunge – has had a soundtrack. Is this generation of smartphone-toting hipsters just providing us with beards, craft beer and kale?
In other ways, the tech revolution is empowering. Taxi drivers using Hailo and Uber are no longer cloistered around ranks, and Airbnb has unleashed a whole new economy, with added choice for places to stay. Yes, the consumer wins in terms of efficiency and value, but are we selling ourselves short in terms of spirit and uniqueness?
We are supposedly in the grips of a start-up revolution. I love spending time with entrepreneurs, and spark from their energy. The only entrepreneurs I have time for are the ones that don’t say things like, ‘We plan to be the Uber of … ’, or whatever vertical they are targeting.
Instead, I prize invention. Two recent start-ups that caught my eye came from NDRC in Dublin: Opening.io, which uses AI to make sure that CVs don’t fall through the cracks; and Sonarc, a company that is reinventing speaker technology. Both were given top marks by investors on Investor Day, but every investor I spoke to emphasised the importance of selling. Sales, sales and more sales, they urged.
Every start-up I meet, I question myself on what will ultimately happen to them. I hope that some become global, household brand names. The reality is, though, they often get acquired. And there is a good reason for them being acquired: scale. Sometimes they just can’t do it by themselves and need a bigger parent in order to achieve the grand vision. But still, I dare to hope.
Not since the days of Iona Technologies, Trintech and Baltimore Technologies have Irish tech firms dared to IPO – a situation in harsh contrast with their Israeli counterparts. The one exception in digital terms is Fleetmatics, a company founded above a newsagents in Templeogue that made mobile cloud workforce technology, which floated on the New York Stock Exchange and was acquired by Verizon for $2.4bn just over a year ago. Ultimately, for Fleetmatics to achieve its vision, it required scale and the deep coffers of Verizon.
But if the ultimate fate of start-ups is to be acquired, then what is left?
Jobs growth in the future will only happen in diverse start-up communities
My musings on the subject have been prompted by the grotesque accommodation crisis that has gripped Dublin, Cork, Limerick and big towns around Ireland.
This is not the fault of the tech industry, but if the property landscape continues to be skewed towards big office developments with no planning for the civic health and spirit of towns and cities, then we are digging our own graves.
If workers and students cannot afford quality accommodation, then who will create the next wave of start-ups? If they cannot, then the tech giants will have no reason to invest and create more jobs. I have warned that this should send alarm bells ringing at the highest levels of the Irish establishment.
Dublin likes to compare itself to San Francisco because of the many-mirror headquarters of tech giants such as Google, Facebook, Airbnb and others, but I would urge you all to be careful what you wish for.
In the Bay Area of San Francisco, Google, Apple and Facebook are already brushing up against authorities in communities such as Palo Alto, San Jose, Menlo and Mountain View because the communities can no longer house ordinary people while these tech giants have vast ambitions for their visions of the workplace of the future. (Think eco-friendly utopias with giant canopied roofs designed to catch rainwater.)
As this happens, diverse communities of minorities and people in ordinary jobs such as teaching and healthcare are being forced to move out to live miles away and commute just to give way for white, well-paid tech workers who can afford vast rents and mortgages. In San Francisco, legions of tech workers enter secure buildings where free food and other perks means they don’t interact with the local community or spend money locally, while others board air-conditioned buses with free Wi-Fi to whisk them off to tech wonderlands 30 or 40 miles away to the south in Silicon Valley. And this is killing San Francisco’s spirit. Do we want the same for Dublin, Limerick or Cork?
An insightful article in the Financial Times entitled The great Silicon Valley land grab rightly describes what we are in now as a “long boom”. It points out that the Silicon Valley myth of the next big thing being dreamed up in some garage somewhere is just that now: a myth. I hope that isn’t true, but it’s not far off the mark, either.
If you think back to the dot-com bust of 2000, thousands of start-ups were destroyed in a near instant.
This time, it is different. Big companies are getting bigger, and are buying what they cannot crush for talent purposes.
After 2000, large tech companies such as Microsoft, IBM and Apple actually flourished and grew. Tech developments such as broadband, 3G and Web 2.0, and devices such as the smartphone, only came after the bust of 2000, laying the groundwork for the new kids on the block at the time but also laying out the canvas for today’s start-ups to influence change.
If the next correction is more subtle and involves giants hoovering up minnows for talent and tech, then communities and districts that have forced out young people capable of creating vibrant, diverse companies, will ultimately be all the poorer and more vulnerable.
A new start-up creed is needed.
Don’t be the next anything. Be the first something. Be unique. Create, invent and, above all, be different.
Don’t put a dent in the universe. That’s just destructive old yap. Just try and make the world you know a better place.
Sell for your lives.
Build sustainable businesses that will endure and ultimately will form a part of your community and its identity.
Make that your legacy.
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