Davos 2014: Copying Silicon Valley no jobs engine solution for Europe
By Michael Hennigan, Finfacts founder and editor
Jan 21, 2014 - 9:24 AM

Printer-friendly page from Finfacts Ireland Business News - Click for the News Main Page - A service of the Finfacts Ireland Business and Finance Portal

Angela Merkel, German chancellor, giving a history lesson at a Berlin school, Aug 13, 2013

Davos 2014: Berlin is vying to become Euro's tech startup hub and according to McKinsey, the consultancy firm, it could add 100,000 new jobs by 2020. However, in a blog post for the World Economic Forum, in advance of Wednesday's opening of the 44th annual meeting of the forum in the Alpine resort, a digital insider who lives in Berlin says: "Many are looking to the technology industry for solutions, hoping to replicate the success of Silicon Valley. However, while there is no doubt about the size and importance of technology as an industry, copying the US model will not solve Europe’s problem."

Igor Schwarzmann, a co-founder of Third Wave, a Berlin-based digital business consultancy, says that  "more and more young Europeans are hoping to make money by founding tech start-ups. Increasingly, they are relying on so-called incubators to guide them to success.

Despite talk of changing the world, incubators are not fundamentally different from military boot camps. Despite their promise to cherish individuality and creativity, they’re really only interested in conformity; they punish startups that stray from proposed business models and predefined processes (processes that, despite incubators’ claims, are built around financial risk assessment models and are not there to help founders. Investors want their money back.)"

Schwarzmann says that the Berlin unemployment rate is significantly higher than the rest of Germany, "yet of that group of job-seekers only a few have the potential to work in a technology startup."

He wants a European approach to the technology industry with a focus on sustainable businesses that pay tax to the community and  "instead of pilgrimages to San Francisco, startup founders should travel to southern Germany. This is the home of the Mittelstand, the small and medium-size enterprises that are the reason for Germany’s success as an export-driven nation."


We at Finfacts said last month that 2013 was the year when Ireland would be recognised as a "world-class knowledge economy," according to a 2006 official target.

The issue was buried by the establishment as patent applications fell to a 30-year low. Putting research at the heart of enterprise policy is delusional but providing no evidence of success, Richard Bruton's Department told Finfacts: "Minister Bruton and the Department of Jobs are unashamedly ambitious for the potential of scientific research in Ireland to support economic growth and job-creation in Ireland" -  - this comes down to faith and we expect that time will be called when the effort to conceal failure with public funds will be unsustainable. A recent €88m project, is a combination of SFI public funding (€58m) and 30 industry partners (€30m). "This does not include other state funding such as academic salaries, buildings, in universities etc which may be used at times by the research centre," the Department said meaning that for industry partners net of grants and tax credits, Joe Taxpayer is funding the lion's share.

There can be a very thin line between a minister being "unashamedly ambitious" and clueless.

Irish Innovation: Evidence of science policy failure mounts - - high growth firms are not typically in high tech and McKinsey Global Institute has said: "While many policy makers see innovative technologies as the answer to the challenge of job creation, our analysis indicates that governments are likely to be disappointed in such hopes.”

US company profits per Irish employee at $970,000; Tax paid in Ireland at $25,000

Irish Medium-Term Economic Strategy 2014-2020: Exports to plunge by €50bn - Parts 1-8

© Copyright 2011 by