Plans for a £50 million redevelopment of the Old Street roundabout are being drawn up. And, yes, that figure is shocking. There are many reasons to be angry at the cost of just 100 new jobs. In response to the news, Willard Foxton at the Telegraph has assembled a fine summary of The Kernel’s objections to the Tech City Investment Organisation’s incompetent meddling thus far in its life.
But this new building represents something more sinister and tragic than just another lungful of smoke blown up Shoreditch’s rear end: when erected, it will be a symbol of a technology industry riven in two, split between the productive, profitable and sustainable companies that eschew government money and attention, and the wannabes at the drinks parties who greedily hoover it up.
That’s a problem because talent is a finite resource, and too much of it is now being spread around pisspoor companies that are going nowhere, starving the more promising ventures – and even high-growth businesses – of the people they need.
As the venture capital industry mutates into a middle-class branch of the welfare state and east London entrepreneurs assume the entitlement culture and hubris of Silicon Valley, having put in none of the work to deserve it, other parts of the country are looking on and laughing. But look hard enough at the language the Government uses about Tech City and you start to see what’s really going on: the nationalisation of the start-up economy.
The Government can’t control and doesn’t know how to communicate with companies that are succeeding. But, for the other 95 per cent, the quangocrats are swooping in and taking ownership. And we know where this story ends: ballooning numbers, mediocrity, failure and colossal expense.
What was previously grumbling from the fringes about the Government wading in and interfering in the sector, claiming credit not due to it and trying to take over what is happening in spite of and not because of TCIO’s presence in east London is now represented in a generational flow of wealth through public sector VC firms and, now, urban regeneration: the latest, most expensive and most manipulative kind of engineering the Government has yet applied to the area.
Trendy architects “oo:/” (don’t ask me how to pronounce that), charged with assembling ideas for the redevelopment, describe it as “civic infrastructure” designed to “nurture a culture across generations”.
“Whilst much of the new ‘commons’ is understood as a physical asset,” says 00:/ founder David Saxby, “the building really isn’t at the heart of things – clearly announcements need eye candy. Building a great institution in the tradition of the Royal Institution, RSA, British Library, but using radically new modes of crowd-centric organisation, is much more significant.”
If anyone can assist me in deciphering this statement, I’ll be in their debt. One thing is clear: this is not language, and these are not goals that the private sector understands. In fact, this is wording we have all seen before, attached to ill-fated and pointless public building works. It’s also the language of futurist pseuds whose only observable skills appear to be an almost preternatural talent for leeching off the taxpayer.
In May, apparently conceding that Tech City would never be able to produce success metrics to justify its existence, chief offender Ben Hammersley said: “Tech City is actually the realisation that there is something very special here.
“We have a community that has become a place that nurtures people into a set of skills that can be a blessing for everyone and everyone in this community from the imams in the mosques to the academics in the universities to the graffiti artists and the market traders and the strippers and everybody else have all come together [sic] to create a place which in its totality seems to be about to create a new renaissance, and not just a local renaissance but a genuine, capital-R renaissance.”
This is what is happening to the poor wallies huddling in co-working spaces in Shoreditch, armed only with terrible ideas and no clue how to realise them. They are being seconded into the language and economics of the welfare state: their start-ups funded by public sector VCs, their offices subsidised, their make-work salaries paid for by someone else.
By the time they actually take a product to market, assuming they get that far, the entitlement engendered by Tech City’s dirigisme has already crippled them. Like the long-term unemployed, existing on hand-outs from the state, the young start-ups in east London have no idea what it takes to succeed in the real world, and they are not developing the skills to find out.
In case anyone points to the emperor’s clothes, glittering distractions are now being built in the area at gargantuan cost to the public purse, in order that David Cameron can point to east London and say: “Well, at least we’re doing something.” But the engorgement of state interference and largesse will, as it always has in the past, produce the opposite effect to the one intended.
The economic illiteracy of a government throwing money at the one bit of the technology industry that doesn’t make money, doesn’t create jobs and doesn’t pay taxes – the internet sector – is breathtaking. But I get less satisfaction from being right about the curse of Tech City than you might imagine, because I see young people clearly not cut out for start-up life desperately trying to prove their mettle as entrepreneurs.
I won’t name names; that would be cruel. But if you work in the area, you doubtless know dozens yourself.
For many months, I have been drawing attention to the calibre of new start-ups in east London. Others are now cottoning on, agreeing that the ideas on show are weak and derivative; those proposing them ill-equipped to build high-growth ventures. Only now are the tech blogs asking whether government interventions might be doing more harm than good, recognising that the one benefit to Old Street – cheap rents – has been stripped away by the cacophony of claptrap spewed forth by Tech City.
“I’m from the Government, and I’m here to help,” goes the old joke. Well, now the technology industry – and the press – is about to see just how terrifying that greeting can be, as a warm bosomy embrace turns to silent suffocation.
Your leaders, by the way – successful people who should be speaking out – have either shut up or sold out, each one likely bribed with a position on an “advisory board” or flattered with invitations to posh drinks parties. Smart founders running successful businesses simply keep a low profile these days, but management consultants, magazine editors and corporate executives are now seen carousing at football matches with No. 10 policy advisors. They have become one and the same.
Failing venture capitalists, too, who look anxiously into a future with no private sector limited partners in it, either keep quiet, hedging their bets, or they pay lavish complements to the Government’s posturing. All the while, dozens of young people pour into Old Street, expecting easy riches. How bitter they will be in just a few short years.
Meanwhile, the language of business – of exits, returns and valuations – is being replaced with vague waffle about innovation and transformation. As Mr Saxby puts it: “For the moment, there will be a lot of superficial debate about whether it is big, centralised, expensive, and so on.
“For us, [that’s] possibly a useful smokescreen to allow some genuine innovation around how we hold (radically) open the opportunity for emergent culture and ideas (which are often transgressive and beyond markets) to be developed under the radar. This is what Old Street is about.”
Saxby’s £50 million white elephant will stand as a physical reminder of what the Government did to the start-up economy in the first decades of the new millennium: how it squandered the talent and promise of an entire generation of clever young people who were persuaded that they, too, could be start-up founders, subsidising dreams that could only ever come to nothing.
It will remind future generations of how a Tory government drove a wedge through the centre of a promising industry, germinating a thousand pointless ventures on the publicly-funded side, denying talent and resources to the other, when all anyone ever wanted was lower taxes, fewer regulations and more easily granted work visas.