techno-culture

This is the full transcript of my recent interview with Prof Dan Breznitz of Georgia Tech, which informed both a piece I did for the Review section on Saturday, looking at what Ireland could learn from Israel on the tech front, and my column this Friday.

I first met Dan Breznitz when he was a student working on his MIT PhD. His thesis, later to become an award-winning book (Innovation and the State: Political Choice and Strategies for Growth in Israel, Taiwan, and Ireland), examined the state policies and issues that went into producing highly successful high-tech economies in the past decade in in Israel, Ireland and Taiwan. He extensively interviewed people in Ireland and lived here for a period and perhaps, with an outsider’s perspective coupled with lengthy time spent in Ireland, is better positioned than most to offer a neutral and incisive analysis of this country’s policies.

This is the interview:

(what led to economic success in Israel and Ireland?)

In part, in Israel and Ireland: in both cases you have a lot of very good civil servants. None were prophets, and no one knew what would happen as a result of the decisions they took.

(States make policy choices that end up having unforeseen consequences) Those choices mean you have very specific capabilities. This is where I think some mistakes were made in Ireland in 2000 and 2001 for which the Irish high-tech industry is still paying.

In both cases (Ireland and Israel) it’s basically the same industries–the most storied being ICT. In Israel– they took the perspective that as long as it’s a good idea and you can move it into a product you don’t have to become an IBM to sell it — The silicon and source code approach. Israel has become an outpost of Silicon Valley and directly chose a very specific institutional approach with a dependency on a very particular formula of venture capital and money coming from the US. VCs of course like “the fastest and biggestâ€. But if all the money is coming from abroad most of the gains will concentrate in the few (who could afford to make investments in Israel, or who work in the jobs in the tech sector), or go back to the US investors. This has resulted in a horrific inequality in Israel.

In order to excel in that system you really need to have your private institutions tied into it. You need lots of startups because most fail (statistically it is well established that about 9 in 10 fail). In Israel, you are no longer building great companies, but great companies to sell. There’s unbelievable R&D, and unbelievable innovation. But it’s all in one industrial sector (technology). If you take that industry out of Israel… in the 70s and 80s Israel was in a horrific situation. Inflation rose 100,000% in less than a decade. In Israel now they have the attitude that this is the only thing that works so we have to make sure we have the environment and the people. But academic capabilities are declining. The question is, how do we make sure more fruits go to the general Israeli economy?

As for Ireland: Ireland latched onto the ability of really big companies to outsource and offshore – mostly to offshore. The fragmentation of production globally meant Ireland could move towards manufacturing. But then started a quite interesting opportunity around the mini computer revolution which created quite a number of interesting companies. Those opportunities then failed over time but something else began. I think not enough credit is given to the Irish university system which was very poor, and had extremely limited resources.

People decided to stay in Ireland and built an impressive succession of companies. There was Iona, and direct spinoffs, and many TCD/UCD core companies. But then two things happened. The first was the real estate boom. It’s very hard to be an entrepreneur in a real estate boom. A lot of talent moves to real estate–and why not, it’s much easier to make money then to work hard and build a company. And 2, there was a misunderstanding by the state of what those companies do, what they are coming from and what support they needed.

And I will say that I was critical, and even a little bit fearful, of Irish policy in my book well before we have seen these results. The problem was and is, the state had a stranglehold via the IDA and Enterprise Ireland on every single level. The state was too involved. The VCs in Ireland had 15 to 20 years of attempting to build companies – but I think we can say none were really VCs in the internationally understood sense of the term, and none were very good. Think of the amount of money channeled into VC funds in the years since the dotcom crisis, and the Irish high tech industry has been in stagnation – in decline! – yet those were the years when Irish VCs had the most money of anywhere bar Massachusetts and Silicon Valley. I think this was a failure of policy because by then, (the government) had a proof of concept – that Irish men and women can create very successful companies. There were seven Irish IPOs on the NASDAQ. But the industry was given a blow to the stomach by the very institutions in which it was located.

But one of the good things that was started was the massive investment into the university sector, with some successes. But (the state) expects turn around too fast – in five years. But it takes seven or eight years or so to finish a PhD. If you want to generate change, you have at least a seven year time lag and at least 10 to 15 years before you really start to see something happen. The best universities in the world cannot produce world-renowned researchers in less than seven years and only then do those people start to play. Another mistake is the very strong concentration on the state of only a few sectors (which reduces the ability to have flexibility in innovation).

Also the state basically killed off every attempt by Irish universities to get EU funds. It would have been better if they could have said, we will give one euro for every two coming from the EU. Ireland has yet to see the fruits of this approach. It’s also a ridiculous idea that IP somehow transforms into millions or billions of euro. In the whole ICT sector, how many companies actually make billions out of IP? Very few.

Ireland had a specific idea of multinational companies, of what Irish companies do and can do. (This very fixed view has meant) you have a complete stagnation of the Irish startup scene. In particular you had little money to go through to it; people focused on real estate; and people didn’t understand what Irish companies are and how they go about what they do. Instead there has been a focus on other countries, which have completely different strengths. There’s been an attempt to reconfigure the Irish institutional system, which has been in some ways successful and some ways horrific. But what’s needed really is a thorough analysis of the situation in Ireland – not in Israel – or in Finland.

(If you really want to start generating jobs and value through startups) you need a lot of startups. 20 startups a year is a no go. 40 startups is a no go. You need 400 startups a year. Most will fail without even doing anything. This is where I would urge some different policy directions. In that sense I think the current crisis might be the best thing that ever happened to Ireland. The system that Enterprise Ireland created for startup creation has been dysfunctional since around ‘99 to 2000. The results are there – absolute stagnation.

(One good thing is that the people remain a resource in Ireland). In the current situation there are people out of work but they are people with skills and because the crisis is international and all across Europe everyone won’t be immigrating this time.

One myth is that venture capital is a policy tool. No – it’s a financial industry that aims to make a lot of money. Okay, they might on the way create successful companies – but mainly they want to sell the companies they invest in, to bigger companies. When Israel took the policy decisions it did it already had about 4000 companies in existence. It then unleashed a very small number of VCs and they picked out the very best. And then each year, hundreds more companies are created.

If you create vibrant industries, people are not afraid of creating startups because they know they can go to a new job if the company they are in fails. One way of mitigating risk for Irish people is to create a system where if a startup implodes, you don’t face insolvency. But where Ireland is right now – there are very few big companies left to come in (as a foreign direct investment strategy). What’s much more important is to really create a lot more companies and create policy vehicles which enable companies to be created. I wouldn’t say to re-create Silicon Valley should be the holy Grail. I understand why that’s attractive but Silicon Valley is unique.

It’s a myth that innovation should be defined solely as novel products and gadgets. Innovation should be seen to be for everything from invention and science to selling existing products and services at a higher profit. Innovation can be new ways to produce stuff, new logistics. Ireland gets that. For example, biotechnology has been a focus of the government and is an example of what Ireland does extremely well. You want to be looking at the available strengths and faculties and build on them to create unique products and services.

(If you want to try to excel in a particular sector) you need an unbelievable amount of innovation at certain levels. Taiwan excels at producing chips because they facilitated a system that lets them excel at that. Silicon Valley’s focus now is to create new technologies, but they hardly produce anything anymore. Ireland cannot be only focused on those multinational companies. You need to ask, at which stage of production does Ireland excel, and then the question is how to create a system to make that sustainable.

(Should Ireland focus as Israel has on bringing in foreign VC investment?). Well it’s okay if you’ve got 4000 companies! VC money will come if it can make a process happen and foreign VCs would be good because many Irish VCs just can’t do it. That money will come and stay only if they can become profitable. But they will come to make first stage or second stage investments; not seed investments, not early investments that startups need. And think of the reality of what they are looking for. Imagine seven of the top Silicon Valley VCs came to Ireland and stayed for three months – they would want to see maybe 1000 businesses because they would want to make about 100 investments and only one out of 10 companies they would see would probably be worth an investment if you take a typical ratio. And only 10 of those, will be successes for them because out of those 100, 90% will die. Those are just the usual number is in the venture industry – you will look at 1000 companies and maybe only 10 will bring a return. Will you find that many startups in Ireland? Now there was a time at the end of the 90s when (finding that number of startups in Ireland) might have been the case but now we’ve seen 10 years of stagnation.

If you analyze how startups were being formed and financed at the time and analyze the policy at the time you realize a significant amount of blame went on the state institutions and now, we know, on the financial institutions. The difficulties now are in part the economy and in part past policies and part dotcom crash. (Breznitz pointed out many of these things in his book, written in the first half of this decade and published in 2007). The book was written a good three to four years before the financial crisis, so all of this was apparent if anyone looked and understood how global production really works.

(One of Ireland’s real strengths is) there’s an unbelievably huge goodwill towards the Irish people from all around the world. It’s capital – it’s an unbelievable resource. Compare that to Israel or to Finland!

If you want startups–how are they going to come through, how are they going to be financed, how are you going to convince people who have been burned to go back and start companies again. One puzzle for me is how the Irish state, since the 50s and 60s, has been biased against local companies, and for multinationals. Irish companies are treated as if they are unimportant. When an Irish startup goes bankrupt, it is seen as a betrayal of hope.

If this financial crisis has proven anything, it is that the ownership of companies truly matters. Look what happened in the US – when the big companies failed they went to Uncle Sam for help. The US multinationals love Ireland, but they are not Irish. There is a balance needed between multinationals and local companies. And now because of the financial crisis maybe the whole system of banks that control Ireland can be restructured and maybe there will be a rethinking of institutional structures and policy.

(He is now working on a book that examines many of the same issues in China). My book on China asks some of the same questions — there are many ways to innovate, and those many ways necessitate different institutions and policies, and are sustainable. I think China shows that once prestige is out of the way in policy, you can have economic growth, jobs, and some semblance of equality – of opportunity, and of resources.

(Prof Breznitz’s book on China is due out later this year, published by Yale University Press.)

A very happy Ada Lovelace Day, in celebration of women in technology all over the world! For my post this year, I’d like to honour the many, many women in the early years of computing — the 40s, 50s and 60s in particular — who did so much of the behind the scenes work that made the growth of this extraordinary sector possible, at lower pay and with little recognition. They punched, collated and fed punchcards into readers. They cracked encoded messages. They wrote and entered manual programs into the earliest big iron machines. They prepared the paperwork. They did the troubleshooting. They spotted and sorted the problems. Almost always, they did these things at a lower job and pay grade then the men of the time doing similar work. They were almost always in the background of those early documentary photographs, looking busy or posing before lights, switches and dials. Rarely you get to see them actually doing the meaningful work that actually filled their days.

They made companies work. They lifted them to success. They were central to the war effort in WWII. They enabled and conducted research. They solved key problems. They opened doors over time to the young women who would come after them.

Thank you, tech women, for your hard work. We don’t always know your names, but things happened, economies thrived, innovation blossomed and lives were saved, because of you.

Tags: ada lovelace day

General Larry Platt has been a mostly US phenomenon, but surely deserves worldwide recognition for his magnificent American Idol audition song, “Pants on the Ground”.

Wait, don’t go away just because AI was mentioned…!! I promise you, this will make you laugh out loud: for the song, the rendition of it, the singer’s wonderful sincerity, and the reaction of the judges. The video unfortunately cuts off before a great scene in which everyone in the lobby of the building is in a giant group chanting ‘pants on the ground, pants on the ground…’. Hope this gets recorded and that Larry makes a few million. A true original talent, generally in pretty short supply on those shows…

Of course there are already various versions and plays on the original all over YouTube. So, surely someone out there will want to do an Irish version of “Pants on the Ground”?! Pretty please?

Tags: pants on the ground

Right now: ‘thaw’ — ‘melt’ — ‘rain’.

At the moment, with 95% of the snow and ice gone (and there was considerably more than that pic below by Saturday night!), I think the pavements are actually more dangerous — as overnight the walkway slush turned into flat platters of thin and lumpy ice. Walking the dogs this morning was a ginger business, stepping slowly and carefully into areas where the pavement was clearly ice-free. It is raining again though so am hoping another 2-3 hours will get rid of the remainder. The three week freeze loosens its grip at least for now, and I can get into town on a bicycle again!

Tags: ireland, weather

Tags: Dublin, snow

I am listening to Brendan Balfe’s radio retrospective on the 60s on RTE Radio 1 (his Five Decades historical series) and parts make me blink back tears, pulling up my own young child’s memories of those years. Somehow that decade has assumed a funky and fun, happy-go-lucky-but-with-cool-student-protests kind of aura. But this is just not what it was like (as the Balfe recordings underline); it was always a decade leavened with extreme anxiety, which undoubtedly contributed to the flip-side party atmosphere and shifting social mores. Just as the sheer unmitigated anxiety of the aggressive cold war posturing between the US and USSR in the 80s has for many been trivialised into a great disco anthem — Frankie Goes to Hollywood’s Two Tribes — so the 60s can be so easily boiled down to an extraordinary decade for rock and roll, fashion and parties.

But for many, including and perhaps especially small children, it was also a decade of unending fear and worry and anxiety. It is hard to explain what it was like to be a small child in a decade that witnessed the public assassinations of its leading politicians and social leaders; a war that went on and on until it became normalised (in some bizarre ways: a grade school fad was collecting POW and MIA bracelets honouring individual Viet Nam soldiers… I desperately wanted at least one but my parents would not indulge this strange fashion); nuclear threats; drugs and overdoses; weird, scary hippie street people; high profile serial killers and murders, some, like the Zodiac killer in my home area of the San Francisco bay, that directly threatened small children; starvation in countries in Africa and Asia, and then, the fears about ecological disaster, overpopulation, etc.

My very earliest memories are post-Cuban missile crisis era nuclear drills at school (!!!) where we learned to duck and take cover under a desk — now that would have helped a lot! But as tiny children we just learned, and accepted the idea of sirens and mushroom clouds. And also, the assassination of JFK (I was very small but remember the funeral because no cartoons were on TV; every black-and-white channel was, so drearily to a child, the funeral, with a little John-John Jr, about my age, barely beyond toddler-hood, bravely enduring the horror of saluting his own father’s coffin). Then Bobby Kennedy was shot and Martin Luther King, the latter being the first time I saw an adult cry, my black 3rd grade teacher at a memorial service at my school, when the flag was lowered to half mast (how amazing that this was done; what a progressive school). It seemed that if you tried to do anything to help people, you got shot. Hearing all those events on the radio clips, I cannot help but choke up — the horrible live coverage of the assassinations, the wonderful quavering speech at Bobby’s funeral by the late Ted Kennedy.

There was fear that your friends’ older brothers would be drafted and killed in Viet Nam; that your own younger brothers would grow up to die in such a war. There was acid rain and other forms of pollution, there was the fear of waiting at the busstop, as I had to do every morning, often alone and scared, when the Zodiac had said he would stop a schoolbus and then shoot all the little children as they came off.

No one ever, ever talked to kids about these things. We absorbed them and they affected us and our childhoods, even as we had ‘normal’ childhoods otherwise. We saw the pictures in Time and Newsweek of the Viet Cong soldier holding decapitated heads of enemy soldiers (a photo I am sure gave me a horror of anything to do with decapitation that endures to this day — I have never been able to watch a film with a decapitation and even the thought absolutely terrifies me). We saw the images of the starving Biafran children our age, with their distended stomachs. We watched the nightly news footage of the battles, the napalmings, the protest marches, the riot police. It was such a sad decade in so many ways, even though of course it had its wonders and excitements — the space programme and scientific breakthroughs, some great movies and TV shows, brilliant music (I was a Beatles fan by age 6 or 7, while summer camp bus trips and evening campfires were full of Bob Dylan singalongs); wonderful bright crazy clothes (I had Peter Mac shoes and a psychedelic dress in ‘hot’ pink, green and orange swirls that I wore with white fishnet nights and Mary Jane shoes to my grandmother’s 1967 wedding), baseball (this was the great era of the San Francisco Giants — Willie Mays, Juan Marichal, Willie McCovey, listened to on a Sony transistor radio from ‘Santa’).

But only when the first Gulf War broke out — I was an adult teaching at San Jose State University by then — did I realise the legacy of unease and anxiety. At the first reports of missile attacks and bombings, that childhood terror flooded back. I rang my mother, a bit thrown that I felt so overwhelmed by this distant war as an adult. It turned out that this was a common reaction amongst a whole generation of my coworkers who grew up or came to adulthood in the 60s and early 70s and Viet Nam. Our students were, to our confusion, sanguine — students in an era of no draft, brought up on Sylvester Stallone movies. War was something they could cheer on. They were so disconnected. Meanwhile, this time around, small schoolchildren were seen as vulnerable and exposed. Programmes for addressing the subject of the war were swiftly developed; teachers worked with kids and their fears were discussed. That’s when it struck me that some of my own dis-ease clearly was the legacy of our being left to figure out this disturbing adult world of war, assassination, murder, protest, abductions, drugs and violence by ourselves in the 60s.

Can you ever truly address children’s fears? I don’t know — probably not. But you can give them a gentle supportive forum at school and home to speak about them, rather than leave them to worry and worry quietly and alone, as so many of us did through the 60s. Still, for western children, I think there is little since that has compared to the scariness of the 60s. And that sequence of assassinations, the sheer loss of good people, of Kennedys and King, still endures as a frightening burden all these years later for me. It still makes me feel so, so sad, and those recordings, those speeches, the truncated promise, those voices from a receding childhood, still can elicit tears many decades later, when I am far older than my so-young parents were back then.

Tags: 60s

Two days after Christmas now, and I only finally got around this evening to completing the vinarterte, a traditional Icelandic Christmas cake treat. On my grandmother’s recipe it says to store the cake in a cool place as it needs to sit for three weeks before Christmas. That’s how far behind I am! I debated whether to make it at all, but I’d already done the filling a week ago and then did the dough on Christmas eve. However, it is a laborious process to make (you have to carefully press out 5 large layers on cookie sheets then carefully remove them when done so they don’t fall apart). And I had an idea of using the dough to make flat cookies that I could put together with a layer of the filling. But in the end that sounded just as laborious, and I hated the idea of throwing out the filling, so in about an hour, I cooked the layers, put it together, cut it into two cakes so I can freeze one, eat the other (eventually…) and Bob’s your uncle (in my case, he actually is, and is married to my dad’s sister, who originally taught me how to make this involved Christmas pastry in the first place). In my family, we have pieces of vinarterte sometimes at Thanksgiving but almost always at Christmas when we get together with my dad’s sister’s family, along with lashings of strong coffee. Vinarterte and its special rich blend of flavours, sweet and spicy and aromatic, to me is synonymous with Christmas.

I’ve blogged about vinarterte before. Though it is a proud part of Icelandic immigrant heritage in Canada (I’m of Icelandic descent on my Canadian father’s side of the family) I have had my doubts as to how authentically Icelandic vinarterte is. I have wondered whether it is like the ‘authentically Irish’ corned beef and cabbage or soda bread with caraway seeds familiar to Americans and especially Irish-Americans as true Irish dishes. But I have lived 25 years in Ireland without ever seeing corned beef and cabbage served anywhere. Boiled bacon (more like a ham joint, not like US bacon) and cabbage, yes, all the time, and spiced beef at Christmas, but never, ever corned beef and cabbage. Nor have I ever encountered a caraway seed in soda bread (caraway seems more Scandinavian or Germanic). There’s probably a PhD thesis in how those foods came to be thought of as ‘Irish’. They are the Darby O’Gill version of Irish food, distorted through a foreign lens.

So I have had a mosey around the net to see what’s up with vinarterte (given that I can’t eat the one I just made for a while). I see vinarterte was featured as a typically Icelandic torte in November in Martha Stewart magazine, though typically they have made the recipe even more tortuous (7 circles! How Dantean and how appropriately hellish) and the cardamom — and lots more of it — goes into the dough, not the filling, which should instead have cinnamon; also it isn’t vanilla in the dough but almond essence — cardamom and almond are quintessential Scandinavian flavourings.

Or are they? Here’s a website by an Icelander who posts an Icelandic vinarterte recipe which has cardamom (far less than my family recipes — my great aunt’s is slightly different) but no almond flavouring, and there’s no sugar or cinnamon or vanilla in the prune filling. The author of the website notes that West Icelanders (the term Icelanders use for those who emigrated to Canada and the US — talk about wanting to hang on to your diaspora!) have a different version of vinarterte and she links here to a recipe almost identical to my grandmother’s. My grandmother’s father emigrated directly from Iceland, and she’d have been part of the huge Icelandic immigrant community in Gimli outside Winnipeg.

Just to confuse the origins issue even more, the Icelandic website notes that Vinarterte means Viennese Torte, but its author thinks it was probably a Danish recipe. I like the alternative name she gives for Vinarterte: Randalín, which means ‘the striped lady’. That’s quite a good name for this stripy torte made of layers of dark filling and light cookie/cake.

I clicked through to read the writer’s blog as well and admire her lovely pictures of Iceland (a country I have only visited once but felt oddly at home — older people all looked like my aunts and uncles) and found that sadly she has been one of those caught in the jaws of the financial crisis in Iceland, something we can all understand and empathise with over here in Ireland.

Updated to add: well, whatever about PhDs on corned beef and cabbage, there IS a scholarly paper on vinarterte and Icelandic identity!! Called, believe it or not: The Mystery of Vinarterte: in Search of an Icelandic Ethnic Identity. The author’s observations about vinarterte ring quite true to me.

Tags: Canada, Christmas, Iceland, vinarterte

…great word!

Cunctatory.

It’s a truism that the older you get, the faster time passes. I remember in childhood, it seemed whole geological periods passed in between Thanksgiving and finally, FINALLY, joyfully waking up to toys on Christmas morning (not long afterwards and far too soon came the annual inevitable argument between my mother and oldest brother about how he HAD to wear nice trousers for Christmas day dinner with our relatives… there would be the tantrum, the standoff, and then acquiescence — and the trousers would be worn).

Now, it seems I only was just on the plane back to Ireland from Thanksgiving in California, thinking about cards and decorations, and the holidays are upon us. These days I probably notice the solstice more, however, because I like how it marks the shortest day and the end of the ever more truncated hours of daylight, back towards the promise of long summer evenings in the months ahead. Now we are at the solstice and that shortest day! So where did the last 364 days go…?

By the way, poet Vona Groarke had a lovely piece today on the radio about working at Newgrange two decades ago (back when it had just the little ticket shack on site) and witnessing the liquid flow of light into the inner chambers on the winter solstice. It was the last piece on Sunday Miscellany and very much worth a listen (you’ll want to download the show for the 20th Dec when it goes up) as a reminder of the marvelous for the coming new year.

Five Finnish Intel engineers (or actors?! see comments… ) recreate the Intel chime tune by firing themselves at gigantic chimes from five cannons. As you do. This is just about the best company video I have ever seen, I think! Gotta love the Finns… Great quote from one of the engineers (the D flat): “And the longer I stayed in the bar, the more sense it made.” Yup, been there!!
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Tags: cannonbells, chime tune, Intel, video

No, no connection between the Irish dotcom multimillionaire and the Silicon Valley VC multimillionaire (yet!?) outside the tenuous one of sharing some newsprint space today in the Irish TImes. I interviewed both for this Friday’s Business This Week section. You can read Ray Nolan on the inside story of the $340m sale last week of WRI (Web Reservations International), parent company of Hostelworld.com and reborn Boo.com, and Tim Draper (who speaks at TCD this evening) on growing up the third in a family line of Valley VCs, and what makes for a good investment.

On a more sombre note, my column is on the endemic level of text-driving (driving while texting), an activity that has been shown to be more dangerous than driving drunk.

Tags: hostelworld, ray nolan, tim draper, VCs, WRI

Last month was the 50th anniversary of the launch of one of the most iconic old mainframes, the IBM 1401, in Oct 1959. Not only did one get a cameo role in the film Dr Strangelove, but this was the computer that brought real computing down to the level of small to medium sized businesses. The monthly lease costs were affordable to smaller businesses but also, many used bureau services from IBM or its partners to get processing jobs like invoices or inventory work done by computers rather than by hand.

I love writing about and talking to people who were involved with such aspects of computing history. I had a fantastic time talking for about 90 minutes to former programmer Denis Mullen, a retired Irish IBM career veteran, for my piece in today’s Irish Times.

As a companion story, I also relished finally having a good excuse to ring up the Icelandic composer Jóhann Jóhannsson, whose lovely album, IBM 1401: A User’s Manual has long been one of my favourites. That interview into why this album has this name and on how to get an old mainframe to sing — is here.

Tags: IBM 1401, IBM 1401: A User's Manual, Jóhann Jóhannsson, mainframe