Fionn Murtagh’s Blog

Themes: information economy, intellectual property, research

Innovation: Let a Thousand Flowers Bloom – and then Wither…?

with 15 comments

Roger Needham, who was a major figure in computer science, said that one should not judge the quality of the flowers in the garden from the quantity of manure used to cultivate them. He was referring to research output and the funding that is used to drive research. It’s clear that the benefits of research are their own reward for society and for the individual. From another vantage point, those who allocate funding, maybe ultimately the taxpayer, have every right to know what is derived from the nitrous deposits.

Let’s look at the flowers. It is not a bad thing to countenance a thousand flowers blooming. It is super important too to cultivate the rare and ever so valuable specimens. This is what the French call the orchidean scholarly disciplines, the orchids among the flowers, which in the long run make us proud to be earthlings.

With these floral thoughts in my mind you can imagine how dismayed I was to see an enormously crass view expressed recently by Chris Horn, whom I generally admire.

“If Ireland is to become a world centre for innovation and one of the best smart economies, then it is important to understand why Irish innovators and entrepreneurs would want to stay here in Ireland, and why overseas innovators and entrepreneurs would want to start their companies here in Ireland: the basic reason is to get rich, by building a company to sell it.”

Ouff, is that all?

“Failure is expected. It is critical to fail early … Failure is common, but so are retries: investors and management learn from mistakes and anxious to use this wisdom to become rich by trying again.”

Let a thousand flowers bloom, let them wither and decay and out of the nitrous substances more flowers will spring up. Maybe, but I am thoroughly dismayed by the short-termism of it all, by the personal and unsociable (maybe even unsocial) aggrandizement, by the crudeness of using whomever is at hand to make a quick buck, – in a word by the striking amorality of all of this.

I have noted before (see next post on “Intellectual Property, Innovation and Globalization”) how we in Europe have a real problem with consolidating and growing companies of scale and stature. It is clear that if not consolidated and growing, if companies have no future, well, yes, they should become manure. But there must be a belief in what we are doing, in our engineering of systems, and in our provision of products and services.

Content and substance must be what counts in the end. Building in order to exit is a bad way to pursue any initiative. We may be – all of us – nitrous stuff in the end, but being spectacular in between times is what makes it all worthwhile.

My hope is that our Irish and our European ambition, in engineering, science and technology, are as high as they can be, and stay that way.

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Written by Fionn Murtagh

2009/10/27 at 23:16

Posted in Innovation

15 Responses

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  1. Morning Finn,

    Interesting perspective.

    Out of curiosity why is “building to exit?” amoral? Are you suggesting that if you are “building to exit” that you lack anymore content, substance and impressiveness than the person building an empire?

    ~Steve

    Steve Gotz

    2009/10/28 at 08:56

  2. I am surprised that you find Chris Horn’s statement to be crass. If it is amoral for foreign entrepreneurs to be purely motivated by the potential for profit, what sort of more moral motivation could you imagine? Personally, I can’t see any reason why a foreign national would choose to get involved in an Irish enterprise unless there was some potential for generating profit for them at some stage.

    It is conceivable to me that Irish based innovators and entrepreneurs might have emotional ties to the country which would cause them to choose to base their enterprise in Ireland even if there was a financial down-side for them. However, even the people with the strongest emotional ties will choose to leave if the economic consequences of staying are negative enough.

    The people who emigrated in huge numbers from Ireland to USA and elsewhere in the 1800s and early 1900s has very strong emotional ties to Ireland. Unfortunately, the economic realities of life in Ireland during that period trumped the lofty notion of “love of Ireland”. Surely you don’t intend to make the current generation of Irish people face a similar tough choice.

    Brian O'Donovan

    2009/10/28 at 10:03

  3. [...] Innovation: Let a Thousand Flowers Bloom – and then Wither…? « Fionn Murtagh’s Blog fionnmurtagh.wordpress.com/2009/10/27/innovation-let-a-thousand-flowers-bloom-and-then-wither – view page – cached Roger Needham, who was a major figure in computer science, said that one should not judge the quality of the flowers in the garden from the quantity of manure used to cultivate them. He was referring… (Read more)Roger Needham, who was a major figure in computer science, said that one should not judge the quality of the flowers in the garden from the quantity of manure used to cultivate them. He was referring to research output and the funding that is used to drive research. It’s clear that the benefits of research are their own reward for society and for the individual. From another vantage point, those who allocate funding, maybe ultimately the taxpayer, have every right to know what is derived from the nitrous (Read less) — From the page [...]

  4. I find myself in agreement with Chris, at least from the perspective that many entrepeneurs do become engaged in an initiative with the object of making money and being successful.

    Very many large companies and successful products were nurtured and developed in the small “manure gardens” but then became ultimately successful when they attracted attention and money as a result of this initial success. It may sound crass but it’s realistic. Many large endeavours start with an intention to attain rapid success and make money… there will be many less large endavours without these small beginnings. Also, just because someone might be in it to make money quickly, doesn’t mean that they will not stick with it as it breeds further success – that does, after all, lead to more money. Entrepeneurs are about making a success of things.

    damienjm

    2009/10/28 at 10:41

  5. Strong language there Fionn. Chris is many things to many people but crass seems such an unfair word to apply to such a nuanced individual.

    Europe is chock full of hand wringing economists bemoaning the lack of scale and the inability of Europe to grow enough large technology businesses.

    Enterprise Ireland distributes a disproportionate amount of its funding (over two thirds) to its scaling and expansion programs. The EU through its Framework 7 program has allocated over 50bn to innovation programs. To what end?

    A natural focus on early stage exits for early stage innovation economies make sense because the rapid cycling of capital leads to all kinds of incidental benefits beyond just returning capital to the investment pool.

    Nobody is saying “please exit early” what Chris is identifying is the reality, that the vast majority of Irish companies that are successful *do* exit very early in their development cycle.

    Instead of ignoring that model and trying to force feed a Nokia out of each crop of startups, we should focus on making our early stage exits as successful as possible. Only then can we use the fruits of those successes to build global players.

    For example, NewBay, HostelWorld.com, ChangingWorlds are all global players that were all founded by entrepreneurs who cut their teeth in smaller successful ventures first.

    As regards amorality and short termism, that is all in the eye of the beholder. I meet entrepreneurs *every day* in Ireland and they all want to change the *and* they would *all* love a quick hight value exit. These are not incompatible goals.

    Joe Drumgoole

    2009/10/28 at 11:19

  6. I don’t think Chris’ view is crass at all, Fionn: it’s realistic.

    Note that he isn’t saying anything about why scientists and academics would move to, or stay in, Ireland: he’s talking specifically about entrepreneurs. In other words, about innovation, not about research. It would be more worrying if such people *weren’t* motivated by money, and it’s well-recognised that the entrepreneurs who start companies are often not the right people to run them once they’ve grown, so planning for the exit is a rational goal for them. The same is true for academics, who typically aren’t profit-oriented and so typically don’t make the best stewards of start-ups. (I place myself firmly in this category.)

    I suspect the real issue is more about having a multi-pronged strategy for research *and* innovation, avoiding an undue focus on one or the other. Let the flowers bloom, and find a way to allow innovators to enjoy the orchids as well as the researchers.

    — Simon

    Simon Dobson

    2009/10/28 at 11:24

  7. Manure . . . or compost? Out of the recycled waste of dead plants comes the material for the next season’s crop.

    Mary M
    http://marymulvihill.net/2009/10/16/ireland-smart-econom/

    marymulv

    2009/10/28 at 11:29

  8. It is a bit crass to mention exit and or empire building before content, quality, design, technology invention, people, sales, purpose, etc.

    anthony hutton

    2009/10/28 at 13:47

  9. I was fortunate to spend some time, several times in fact, in Cambridge talking with Roger Needham :-). I enjoyed a very interesting dinner sitting between him and Hermann Hauser (co-founder of Acorn Computing and VC fund Amadeus amongst other things) discussing the problem of ‘lifestyle’ tech companies that never grow beyond a certain size and why in Europe this seemed to be a problematical norm. I also recall a discussion on the need to pay researchers very well indeed to get them to Cambridge rather than sunnier locations like Palo Alto.

    Needham I think would have been amongst the first to recognise that what drives entrepreneurs and researchers is the creative process coupled with the remunerative process. He made a good amount himself then donated it back to research.

    Anyone who fails to recognise that financial reward (especially spectacular reward!) drives Valley tech innovation does not understand how Silicon Valley works. I grew up in Silicon Valley, next to Stanford, have lived there a few times since, and spend a significant amount of time in Menlo Park every year. It’s an culture I know very well. I know many people who have become major and minor figures in the Valley, who work for and have founded and finance tech companies. I have yet to meet an entrepreneur or really great technologist who wasn’t driven by the goal of financial success (the Valley grail) even if it was merely symbolic of winning the game. People don’t admire/want to be the next Sergei and Larry because they made a cool search engine. They admire them because they are multi-billionaires who turned a cool search engine into a powerful tech empire. For many, money qua money is irrelevant (I know lots of well off geeks with half empty trophy houses!) — it is like Monopoly money after your first few million in the Valley. But making it marks your venture as a success and enables you to roll it over and move on to the next idea. That is why the Valley is driven by the idea of the Next Big Thing — not the Next Modest But Satisfying Thing. If you don’t want to exit, you want to acquire and grow big. If you still are puttering along after a decade you are a nobody in Valley innovation terms. Acquire or be acquired. Roll over your management, your staff, your money.

    Ireland will remain in the backwater of technological innovation unless the goal is enabling entrepreneur-driven, well-rewarded innovation in a risk-taking culture.

    Karlin Lillington

    2009/10/28 at 19:45

  10. Thanks, all. There is a good deal of food for thought there. Maybe some flowers to be chewed on too!

    Human capital is very mobile and the Irish were always dab hands at it, including especially in the first millennium A.D. when developing Europe during the dark times, when the only game in town was setting up monasteries and the proto-urban centres that accompanied them. The Irish have kept on the mobile human capital theme ever since.

    Investment capital too is highly mobile. At a Research Excellence Framework (REF) meeting in London a few months ago, when one of the main speakers stressed the need for researchers to attract FDI (foreign direct investment) into the UK it just struck me how universal this issue really is. I found exactly the same theme in a talk by a political figure at a research conference in Dresden earlier in 2009, extolling nanotech in the region. And at the big Framework Programme ICT congress in Lyon at the end of last year, the same tune
    when the mayor additionally bemoaned the lack of ability to achieve critical scale and mass in Europe in ICT.

    I am fine with movers and shakers getting their kicks from financial reward. But other considerations also apply and these other considerations are super important in the overall mix.

    Firstly, as I wrote under “Intellectual Property, Innovation and Globalization” (see blog entry), free floating human capital and free floating investment capital need to be anchored. Here is where culture and content come into play. They have never been more important than in a globalized world.

    Secondly, Europe has given the world strong telecoms and energy companies, Skype too, and aerospace and other transport systems. But for the most part in software, digital media systems, and knowledge based systems, we have not done sufficiently well in Europe. I am worried about what this means for the future. The engineering and scientific quantum leaps that are needed now to pull us out of the economic quagmire that we are in are hugely dependent on all of these sectors.

    Fionn Murtagh

    2009/10/28 at 23:33

  11. There seems to be many overlapping points being made in this discussion. As far as I can see most people are agreed on two points:

    1 – Chris has accurately identified what motivates entrepreneurs. Whether or not this means most entrepreneurs are crass depends upon a subjective opinion on the definition of crassness.

    2- Chris himself is not crass. Speaking so clearly about what motivates entrepreneurs is something we should value. I would hate if people were discouraged from speaking openly by the possibility of being publicly insulted in this way.

    Brian O'Donovan

    2009/10/29 at 09:19

  12. Thanks, Brian. No insult taken nor given. I appreciated all comments.

    There are very whacky views out there (Finfacts… no, I didn’t say Finfacts… and I never read certain Sunday newspapers, in fact the great thing about only reading newspapers online is that the reader chooses what the reader wants to click on and one’s eye is not led astray) and if our level of debate in the ICT sector – which is all of society and globally – remains at a somewhat silly level then we are all fair game. Let’s raise our game.

    Glorifying failure and exits is silly.

    Fionn

    Fionn Murtagh

    2009/10/30 at 20:53

  13. This is a very interesting thread, and points up some fundamental differences in how we might balance some options for how and what we fund in Ireland, and what we expect from it. I suggest it may make an excellent debate or panel discussion at some future forum.

    Now to take issue with your comment that “Glorifying failure and exits is silly”.

    I think that may be an unfair characterisation of what Chris referred to. Pointing out that, in practise, most successful entrepreneurs have had (on average) 1-2 failures behind them before they hit their stride, isn’t glorifying it. It’s pointing out a oft-accepted fact that this is the case. And this point is crucial, as Valley-culture is “good” at accepting failure and moving on. While no one seeks out failure (duh!), It’s a badge of experience, not shame. Meeting someone who’s had a “failed” venture tells you something: “I tried, it didn’t work, I think I learned something, and I’m at it again!”.

    As for “exits”- they’re are on balance extremely good for the whole native ecosystem. Every entrepreneur who starts a business, especially a software business, typically wants their business to be “the biggest and best in the world” in their chosen area. Along the way they may find that the market structure is changing and consolidating, or that they can’t get distribution organically, or that a competitor with pockets wants to “take them out”, and so on, and so on. Of course, maybe they don’t, and like WRI or Havok or even IONA (up to a certain stage) decide to take on the world and try and be number 1 in their sector. This is to be encouraged :-)

    However, it doesn’t make exits bad. Post-exit you tend to have a) a set of people more experienced that they were before, possibly ready to go again, b) if a good exit, some money to buy yourself time to think up the next big thing c) domain expertise in a specific area (look at how some of the ex Havok folks are thinking about new things in gaming, or Similarity folks in DQ, and so on…). That’s all good “compost” for the next set of growth, and there’s nothing short-term about that at all. Lots of start-ups and a vibrant exit cycle makes for a resilient sector that can weather market shifts well.

    Cheers, Sean

    Sean O Sullivan

    2009/11/02 at 17:07

  14. I also take issue with your comment that “Glorifying failure and exits is silly”, but I was resisting the urge to comment.

    As Sean said, Chris did not suggest that we should glorify failure and exists, he just said that it should not be considered a big deal to be avoided at all costs.

    In any case, if you don’t want to cause offence you should avoid using words like “silly” and “crass”,

    Brian O'Donovan

    2009/11/02 at 23:07

  15. Amazing affair, didn’t thought reading it was going to be so great when I looked at the link!

    DomDRADANKson

    2009/11/25 at 14:03


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