Griffiths / Cruel downside to the startup religion

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THE government and opposition seem to have got the religion about startups.

Opposition Leader Bill Shorten wants uni students to be able to draw down on their HECS/HELP to start businesses while they are supposed to be studying.

John Griffiths.
John Griffiths.
Innovation Minister Wyatt Roy is tackling the issue from the other side with a thought bubble about letting people pull on their superannuation to get disruptive businesses up and running.

What the hell is a startup besides a hipster with a business plan and seed funding?

Wikipedia puts it thusly: “The essence of startups has more to do with high ambition, innovativeness, scalability and growth.”

While the politicians, with no skin in the game, will endlessly enthuse about Amazon, Facebook and Uber, it doesn’t take much unpacking to see this is some truly awful public policy in the making from both sides of politics.

The first thing to bear in mind is that most startups fail.

How many young lives are Bill and Wyatt willing to see destroyed in the quest for one or two Australian flag carriers at the South by SouthWest festival?

I’ve made this point before, but it bears repeating that, in startup world, one of the best-case scenarios is early failure.

Selling the business model for a few million is unlikely enough as to make putting the time and money into sports betting seem like a wise option.

Making easy government money available to fuel these fever dreams, either taking it from retirement savings or additional student debt seems positively cruel.

The other question is to what extent we actually want to accelerate the disruption of our economy.

It’s already been noted in the US that, with the low-hanging fruit of positive disruptive ideas having been largely (if not entirely) already seized on, the venture capital money is increasingly flowing into business models bordering on the downright illegal.

And speaking of the US, San Francisco is where our bright young things need to go, as much as that might pain our political leaders.

In fact, if we really want Australian tech entrepreneurs then a scheme to arrange a year’s business visa in the US and some sort of hostel for Australians in Silicon Valley would be a better way to go about it.

In Menlo Park in California is a street called Sand Hill Road and that’s where the money for nearly every tech company you’ve ever heard of was raised.

The Sand Hill Road men (they are mostly men) may be vultures, but they know how to get a company off the ground and how to make founders (and themselves) insanely wealthy.

Finally, while I’m not suggesting we try and stifle innovation or disruption we might, as a democratic society, question to what extent we want to actively encourage this sort of thing.

The model of the startup is a lot like Sauron’s “one ring to rule them all”.

Taking the taxi industry as an example, we go from a world with thousands of companies (mostly local monopolies) for better or worse making one or two owners each a good living, and a basic living for their employees, to a world with one dominant company with obscenely rich owners and a huge vulnerable casual workforce.

Nice work if you can get it, but a strange kind of lottery for a Government to want to run.

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