It's striking how the tech industry has made the terms 'startup,' 'entrepreneurship' and 'innovation' synonymous with itself in public and policy settings in Ireland and elsewhere, with the help of fawning politicians and technology journalists.
Last week Dublin City Council and Enterprise Ireland in cooperation with the DCU Ryan Academy announced a recruitment drive to fill the soon to be established position of Dublin’s Commissioner for tech and innovative startups who "will contribute to making Dublin the best place in Europe to start and grow a tech business. The goal is to have Dublin recognised as the innovation hub where companies will start up, scale faster, create long term sustainable jobs and value-add to the economy."
Good luck to the successful candidate with this impossible task that evokes memories of the 2010 goal to become a European Silicon Valley with up to 215,000 net tech jobs added in a decade; the 2006 goal that Ireland be recognised as a "world-class knowledge economy" by 2013 and the 2012 goal "in which Ireland in 2020 is the best country in the world for scientific research excellence and impact," ['Ireland's doomed goal to become a world-class knowledge economy' (pdf)]
The Central Statistics Office has reported that at end of 2013, there were 82,000 employed in ICT (information and communications technologies) in Ireland and research done for the Irish Government showed that only about 50% of that number were tech personnel.
The simple reality is that a venture capital-backed young Irish tech firm that gains international attention is inevitably going to be sold before it has the opportunity to scale up.
Startups, entrepreneurship, technology and innovation are very important in a modern economy but in Ireland, should most of the focus of enterprise policy be on a VC-backed sector that employs about 10,000 people?
We reported in February that there has been a big drop in recent decades in the rate of US startup business creation (firms with at least one employee) while the number of young (up to five years old) firms in the high tech sector has fallen from a 60% ratio in 1982 to 38% in 2011.
Irish tech journalists are not alone in being starry-eyed about the tech sector and last January The Economist began a cover story called 'A Cambrian moment - Cheap and ubiquitous building blocks for digital products and services have caused an explosion in startups':
Daniel Isenberg, a former entrepreneur who created the entrepreneurship ecosystem project at Babson Executive Education and previously taught at Harvard Business School, replied in The Economist:
Prof Isenberg said that many startups are not entrepreneurial and much entrepreneurship is not about startups and he cited Icelander Robert Wessman who came home from Germany in 1999 to save a small failing generic drugs company named Actavis and in a decade it was transformed from a firm with a payroll of less than 100 to 11,000 while doing little core scientific innovation.
Isenberg says that while there has been a jump in tech startups, it is not clear that the actual speed on the highway to scaling-up has been impacted at all. "In fact, the entire highway just may move more slowly as a result of the startup glut - - that is, firms that have the wherewithal to scale into socially and economically valuable ventures, may just be slowed down by the on-ramp traffic build up, the hype, and the valuable resources startups tie up."
Prof Isenberg added:
Last year we highlighted that high growth firms are not typically in high tech:
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