Friday, March 16, 2012

Tech Cities; Hype Inflation in Amsterdam & London

I know that Tech City in London has come under fire for hyping its success. Those stories last year about 600 companies joining the Silicon Roundabout were definitely over the top. The Register was the first to spill the beans, questioning why 50,000 had been spent on a rather simple Wordpress website and noting that tons of money were being spent on food, drink and events without really quantifying whether this is doing much to help the start-ups it is supposed to help. The PR machine has cost the UK Taxpayer around 1.79 million, with a lot of that going into the coffers of "business specialists". 

The taxpayer-funded quango given the job of rebranding and promoting the nontrepreneurs of Shoreditch has blown through £1m on admin costs alone in 2011. 'Tech City' is the brainchild of No.10 special advisor Rohan Silva. It's also the name of the eponymous unit within UKTI, a taxpayer-funded quango, that's been set up to promote 'Silicon Roundabout' web companies. UKTI has refused requests to reveal the costs of the vanity venture, and the salaries of those involved. Now, thanks to a FOIA request from Milo Yiannopolous we know some budget details....Marketing has cost £150,000 and "events and other promotional activities" £250,000.....And some FOIA requests were refused flat out: PA Consulting and Grant Thornton declined to reveal salaries of their consultants and BIS refused to disclose the salary of Eric Van der Kleij, the "CEO" of Tech City.

Tech City has already come under fire for spending almost £50,000 on a basic Wordpress blog and getting things seriously wrong on its map of the area. Also for claiming that 400 new tech firms have launched in the area - but using a definition of "tech firm" that includes clothes shops, law firms, dance studios and marketing agencies.

I note that Wired UK picked up on the issue today. What struck me was poor way in which the TechCity machine is able to work WITH local entrepreneurs rather than for them. 

Inflated Claims about Innovation Rife in Amsterdam

I'm afraid some of these inflated figures and claims quoted in the Register on the UK pale by comparison with other cities in Europe like Amsterdam. They also seem to be living the fantasy that they are a creative city on par with Silicon Valley or the SxSW Convention in Austin, Texas.

I firmly believe that government and innovation don't mix very well. City councils are busy gathering local votes and financial support. They are rarely looking at the challenge of promoting their place in the creative economy from the outside looking in. So they often don't know or care how foreign investors see them when compared to other European cities. 

When it comes to design, architecture, and some types of fashion there's no doubt that the Netherlands is world class. But the really innovative firms like Northern Light that are busy building incredible things in the great cities of the world have not waited for the City of Amsterdam to organize a entrepreneurs' fair to make it happen. They just do it.

In the last six months, I have attended several events in the Netherlands on behalf of foreign analysts and funds seriously interested in how creative cities are positioning themselves. They are looking for local entrepreneurs operating in media sector. 

In the case of Amsterdam, I've been horrified at the waste of time and effort, all done with an air of self congratulation. The problem is that since the investigative journalism sector in the Netherlands is so small as to be insignificant, the nonsense presented in propaganda videos like this one below are not being challenged.  There are some exceptions, like KRO's The Accounting Room  which does do some investigative reporting. But it's rarely an international issue that can be sold-on at a fair like MIP-TV.

Others have reported on huge ICT failures like Diginotar in the Dutch public sector which have been quietly swept under the carpet. But when it comes to creative industries, the slow collapse of important parts of the media sector is largely ignored. Contrary to the PR video above, there's massive downsizing going on across both public and commercial companies, especially in the area of factual information production. 

I find the analogy of the spinning top to be rather ironic. A top works fine at the start, but it doesn't take long for it to keel over and stop. It's not sustainable. Note that the video doesn't go into much detail about what the 6000 (!) companies in the Amsterdam region has supposedly committed to innovation. It's not clear what percentage is in the creative sector, nor how they can justify their claim of being one of the top "5 creative hotspots in the world".  I am sure that "2500 jobs" must include a lot of volunteer and short-term work-experience positions which are poorly paid and don't encourage people to stay in the respective sector. Compare this to the London TechCity promotions and it makes me cringe!

A massive amount of video is being made and posted to websites all over the place here. But the storytelling is either promotional coverage of an event or undisguised PR for a product. Most of it is design-driven and very thin on substance. Very little is independent and critical. And because people don't trust it, explains why it is being ignored abroad. Can AIM claim to be on any foreign radar screen when the web traffic to what they produce is so low (How much did it cost to produce the useless video above that has managed to score 131 views up until today? Why was it produced with public money? )

I was commissioned to wander around the AIM Event at the Amsterdam Convention Factory yesterday and compare it to events in other cities. I came away very disappointed. It was very similar to the windswept Marketplace at Picnic last year. Out of dozens of stalls, I counted no more than 4 companies there who had international potential, and were even slightly interested in pitching to foreign investors. The majority were Dutch versions of ideas seen elsewhere and the emphasis is clearly on setting up shops of some kind. Very little of it was based on understanding what people need, either in the Amsterdam area or much further afield. My report back to the foreign investors - it's a sea of nontrepreneurs here. You're better off in Berlin or Paris. AIM is not Le Web or SxSW by any stretch of the imagination. The huge "for rent" sign on offices right next door to the Convention factory are stark reminder that things are tanking rather than taking off.

Reality Check Needed Fast

I have far more respect for small organisations who are focussing on understanding the needs of their market and coming up with innovative, clear and sustainable solutions. They exist in the Netherlands. But they have already realized that the Dutch domestic market is far too small for world-changing ideas. As long as the City of Amsterdam remains so inward looking it will always rank as a mediocre also ran, no matter how much public money it throws at "innovation". And quit making these nonsense PR videos which convince no-one. 
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