Kewney (2): Silicon Fen strewn with smoke, mirrors
It goes beyond hardware. It goes beyond software. It's people, and it's beyond people. Eat in a pub in Cambridge, and inbetween the discussions of post-modernism and pre-liberalism, you might occasionally hear someone mumble something about a workstation. Eat in Palo Alto, and it's like being in the board meetings of Next, Radius, Intel, plus a dozen other names people in the UK haven't heard of, but names which are lunch and supper-time conversational gambits around Stanford or Berkeley.
And, finally, it's finance. There's a "venture capital" outfit in Cambridge, which prides itself on its ability to spot winners. They boast about how many new ventures they've fledged, and how they have, so far, not got a single failure. And (as ex-pat Brit David Rosenthal put it while we helped ourselves to sushi in University Avenue, recently) "this entirely misses the point of venture capital".
In Silicon Valley, Rosenthal remarked, it's the fact that VC people are prepared to blow their money on 12 almost certain turkeys - in the hope that against all the odds, one of them might fly - that created the climate. Of course, the climate created this attitude; there are enough clever people out there that the financiers eventually realised that they couldn't all be wrong, even when everybody said they were. So they get investment capital from people who need tax losses; if it burns, it burns. If it wins, it wins BIG!
Just one example: the founders of Netscape actually got several bank loans from a European financier. They borrowed more; eventually, the man in charge of the account realised that he already owned more shares than were permitted under European banking law; he was obliged to make an official bid for the company. It would have cost him well under $20 million to own a majority of the shares.
His bosses fired him for being "over-exposed" to a high risk investment. Next year, Netscape was capitalised at around $500 million.
And you want us to believe that Bill Gates buying $10 million worth of land in Cambridge is going to make Silicon Fenn a rival to Silicon Valley? In a country where you still can't officially get ISDN installed without paying the full installation costs up front? Where you can get "venture" capital only if you mortgage your house? Where if News International wants to buy you, you're as good as dead, but if it doesn't, you aren't worth buying?
Let's get a grip, shall we?