In response to Mark Pesce

May 22, 2009 — 9 Comments

On Nick Hodge’s excellent video podcast last night, noted futurist Mark Pesce said (and I quote) that I should “shut the fuck up.”

He’s entitled to his views, but it’s what he said around it that I take offense at (and the reason I’m writing this post), in particular the idea that I ignore the excellent work done by a range of Australian startups when I don’t. I’ve never met Mark, let alone swapped an email with him, so I find his claims bizarre to say the least given he had never read my views (outside of one post), nor asked me about them. Australia has a vibrant startup community, full of people who are succeeding despite the lack of support (specifically a vibrant VC community that invests in web based startups.) Not only have I had the privilege of meeting many fine people in the community, I’ve also written about them.

I do find it odd though that a futurist who earlier in the interview spoke about reading so extensively doesn’t understand the meaning of context as well.

This post was in the context of the Future Summit, an event that was suppose to be a show case of Australia’s biggest and brightest leaders. If we accept that underlying premise of it representing the best, tech doesn’t have a bright future in this country because they don’t get it. Conversations I had the day after that post horrified me even more and confirmed what I had written. Tech, and particularly web based startups just aren’t on the radar for these people. The idea that millions are employed directly and indirectly in web based industries in the United States is foreign to them. I can’t help that they don’t get it, but stating that they don’t is stating fact.

That is in no way to say that Australian startups don’t exist today, or more will emerge tomorrow: they will because of bright people like Mick Liubinskas at Pollenizer (a company I should note that builds projects for other startups), but likewise given what I heard, the Australian web startup industry will remain at its current low and slow rate (again, we have startups, but we’re not even close to a range of other comparable countries by volume.)

But Pesce wasn’t there. A few smart people in the room (and there was some) doesn’t balance the sheer weight of tech ignorance from the rest.

Pesce also claims incorrectly that I’m some how a big Government interventionist, again having never once spoken to me. Quite the contrary, and this can be confirmed by many others (including Bronwen Clune who heard me speak on this over lunch at the Summit), or in the submission I made yesterday to Elias Bizannes who is compiling submissions for the Government on the question “what do we need to tell Australia’s Government to build our tech industry?”

Indeed Pesce and I agree: Government should get out of the way, and direct Government support isn’t necessarily the answer either.

But here’s the part Pesce either doesn’t understand, or is ignoring: we don’t have a level playing field, and this is holding us back. Here’s part of what I wrote in my submission:

The Government needs to level the playing field when it comes to investment within the various sectors of ICT, and with investment opportunities outside the sector. That can come in two forms: removal of investment incentives in sectors that currently receive it, or the extension of investment incentives to those that currently miss out, specifically web focused companies. For example, there are tax incentives offered currently in areas such as Biotech and Blue Gum trees, but not in web based industries (tax credits, R+D etc). The problem today is simple: those with money to invest favor those investments that offer tax incentives over investments that don’t.

Then there’s the CGT problem vs the United States

The Government should consider reviewing CGT, in particular with consideration to CGT deferment on rollover where the capital gain is reinvested in ICT, and more specifically web based industries. This has been cited in the United States as being one of the big drivers behind the VC industry there (I can provide references later if required.)

Government does have a role here, and that’s in creating a favorable environment for investment in web based startups. Even if you hate Government intervention like Pesce does, you can’t ignore the role of Government in the United Sates in creating a favorable investment environment that has fueled the growth of web startups, particularly in the San Francisco Bay region.

The alternative of course is Government intervention and spending. It’s not my preferred outcome, but it is a point strongly argued by others. If CGT and incentive reforms can’t be undertaken to create a favorable investment environment, only then do I become a supporter of direct Government intervention. Consider that millions, billions have been spent on legacy industries such as clothing and car making. If only a small amount of that money was allocated to supporting local web industries, it has to help.

I’ll guess I’ll shut the fuck up now, because I don’t know what I’m talking about. PS: we were up one spot on the Top 100 Australian Web Startups yesterday.

9 responses to In response to Mark Pesce

  1. Having spent time over the past two years in start-up mode i'd agree that many of the government programs fail to make a distinction between tech and web and that web is frowned upon. The much missed 'commercial ready' program was much more slanted towards tech widget making and couldn't even define us as a service business that used the web.

    In our visit to the US in October (and in build up to our UK visit in 6 weeks) our place as a web business is much better understood and the benefits quantified – we actually have these foreign governments chasing us to relocate (and we are a web based loyalty program aggregator)!

    I'm not complaining – COMET has been a great support for us and has connected us well (due mainly to our COMET advisor who is a gun networker). It's also allowed us to work with great people like Mick @ Pollenizer, but we've definitely felt that the Gov and VC community have a harder time coming to terms with web start-up.

    Don't know what you and Pesce had a fight about but there's our experience.

  2. Well, I don't suppose I'll shut the fuck up now, because you're still reiterating the same lame points you made in your post the other day.

    My point – and feel free to disagree with me on it – is that it doesn't matter at all what the Government does. Full stop. Create a favorable investment environment, or not. (The US does not particularly favor investments in technology startups, contrary to what Duncan seems to believe.) Just so long as the government isn't actively standing in the way of such investments, they will bear fruit.

    The rest is just whinging about why Australians aren't creating more businesses proportionately, than they are today. To this I'd just like to point out that Australia somehow managed to avoid ever having an Industrial Revolution, so many of the processes (both cognitive and legal) which lead to a startup-based culture simply aren't present in Australia in the same numbers. The lack of a viable venture capital culture in Australia is a clear indication of this. Can it be fixed? Probably. But it would require risk, and right now those with capital are risk-adverse.

    Perhaps we need some sort of government intervention. ๐Ÿ˜‰

  3. I disagree with Mark on several points. Duncan is right about CGT deferment – that seems to me to be a no-brainer move that won't cost the government anything, and VCs definitely take notice of tax avoidance as Dunc says. It encourages continued investment in tech, not just fly-by-night lurks.

    I don't think it's true to say that there's not a viable VC culture. The key is that there's not a viable angel culture. And who are the most regular angels? Friends and family, sure, but also previously successful entrepreneurs. It's a virtuous circle that the government could play a role in speeding up.

    It does grate me, however, when people do get a teensy bit whiny about the handouts given to the likes of the pine plantation industry and demand the same thing. Incentives to invest are one thing, government grants at $900 a pop are something else. I'd prefer more of the former.

  4. To clarify one point for me, I was under the impression that tax concessions for research & development happened no matter what sort of R&D was being done, whether it be process improvement in coal mining or flux-generator efficiency improvements for time travel. Is that correct?

    However what's being suggested is that other government programs, such as direct investment or places at NSW Technology Park or profile raisin through Austrade, tend to be more selective of the sectors they support — and that anything web-based is looked down upon. Yeah?

    If so, then I contend that's due to the failure of the web-based industries to lobby effectively i the traditional places where such lobbying is done. While there are certainly a few smart players out there doing their best, the bulk of the web-based industry players are, I reckon, spending to much time talking amongst themselves and whinging that the politicians don't come to them, rather than going to where the politicians are.

    @Duncan Riley and @Mark Pesce: Please stop being such self-righteous stubborn pricks. I know it's in both your natures, but on this occasion it's annoying rather than endearing ๐Ÿ™‚ You're both smart, and you're both largely on the same page. Energy spent on refusing to budge an inch from strongly-held positions on the edge of the issue is energy wasted.

  5. I'm glad I came back here to see Stilgherrian being the voice of reason. ๐Ÿ™‚

  6. I'm glad I came back here to see Stilgherrian being the voice of reason. ๐Ÿ™‚

  7. I'm glad I came back here to see Stilgherrian being the voice of reason. ๐Ÿ™‚

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