Building Silicon Valley in East London?
Back when I was working for Morgan Stanley, I once had a one-to-one with Colin Bryce, the European head of sales and trading. At the time, Morgan Stanley seemed obsessed with replicating Goldman Sachs’ success by taking more risk (this was before the credit crunch, during which Morgan Stanley lost $9.6bn and nearly followed Lehamn Brothers into bankruptcy). I felt that, as a company, we were not as competent in certain areas like risk management as Goldman Sachs was, but that we had other areas where we were potentially stronger.
“I don’t want to beat Goldman Sachs,” I told Bryce. “I want to win.”
My point was two-fold. Firstly, Goldman Sachs are always going to be the best in the world at being Goldman Sachs. They got to be the way they are over decades. That’s not something you can replicate overnight or even over the course of a few years. If you try to copy them, the best you can hope to achieve is second place. Secondly, by trying to copy others’ strengths, you risk overlooking your own. Or, to put it another way, focus on what you’re good at.
Silicon Valley is the result of decades of development, growth and investment, beginning with the defence sector. After WWII, the R&D divisions of companies like Lockheed Martin bred a generation of scientists and engineers. In the ’60s, the Californian government came up with an education strategy to support those companies, which turned Stanford, UCLA, UCB and UCSC into some of the top universities in the United States.
It’ll take a lot more than £200m and a trendy name to replicate that success story. The best example I can think of is Ireland, where (notwithstanding its recent economic difficulties) more than a decade of encouraging FDI by American technology companies and a huge investment in education (including the decision to make studying a European language compulsory for all secondary school students, which led to Microsoft choosing Ireland as the base for its European and South American operations, thereby turning Ireland into the largest exporter of software in the world), combined with an enterprise-friendly tax environment, gave birth to the Celtic Tiger.
Britain’s already tried to replicate Silicon Valley, with limited success (Silicon Fen and Silicon Glen). Instead of targeting a specific geographic area (East London landlords must be salivating at the prospect of a government-funded property boom), Cameron should concentrate on doing his job (improving the educational system) and simply get out of the way of entrepreneurs by reducing taxes, red tape and other costs for all start-ups, not just the ones in East London.
Photo: During the 19th century, Royal Marines based on Ascension Island constructed water catchment areas out of concrete near the summit of Green Mountain.