Wallen's

Can governments create sector hubs?

Taylor Davidson has a good post on "Can governments create entrepreneurial and innovation hubs?". Interesting discussion out there. More broadly the question is can government economic policies help create sector hubs - be it innovative or not. Here was my comment on Taylor's post:

" [...] To broaden your question, a government action to put in place a given industry ecosystem (innovative or not) has been done numerous times in the past decades. Actually it was a standard policy in Europe after WWII (e.g., Airbus in France). It's also the strategy that successful developing countries have put in place (e.g., IT offshoring in India, manufacturing in China, but also smaller countries like Morocco). But there has been a lot of failures too (e.g., Latin America in the 60's and 70's). The success cases have in common to align (lots of) money, political will, education system, infrastructure investments, tax breaks, etc. In other words, there is no silver bullet. Moreover, the "new ecosystem" tends to build on an "adjacent" pre-existing ecosystem and culture. In any case, it's really a long term investment.

For "fixed cost" industries, you also need a critical element: "natural market" with large scale. The latter explains why, for example, the US software industry was more successful than in any European countries. Building on this software industry, the web sector came very naturally as an extension.
Based on this logic and considering that the web industry is slowly becoming a "variable cost" industry, I would argue that it is today less difficult to build web start-up ecosystems in new locations (though it will be difficult to reach Silicon Valley scale)."

The pre-dominant view in the past decades has been that of total "lassez-faire" but recent events has catch-up on this view. Just as entrepreneurs take actions to make "things happen", governments can also to a certain degree. History, culture, economic envrionment vary by country so the levers to use vary by country. My point is not to push for complete government intervention but like in everything there are various shades of grey...

Panic at TechCrunch?

The problem of being a journalist is that you need to find stories. I usually appreciate Michael Arrington's post but here is a story that is totally beside the point.

How can one relate directly a financial crisis to a media usage pattern??? Yes, some start-up will go bankrupt, i.e supply goes down. But it does not mean that the entire media usage pattern of the past 10 years will suddenly change, i.e demand is still here.

If one defines web 2.0 (and I'm not fan of lingo) as harvesting collective intelligence, claiming that it is dead is just absurd. Did train usage stop because of 1929 crisis? No. Did TV stop because of 1973 crisis? No. So why would the demand side of the Web "democratization" stop because of an upcoming recession? "Democratization" of all sort of products have been a common pattern over the past century across all industries. A new one has recently emerged in the media industry via the Web. CDOs and CDSs won't stop the demand for this! User generated content will survive this financial crisis.

While I am not sitting in the Silicon Valley, it seems from reading blogs in the past few days that there is a real state of panic currently in the Web industry because of Wall Street events. As I mentioned in a previous post, yes, we will go through rough times. But demands rarely changes dramatically, it usually waits for supply to come... Web 2.0 is alive and is here to stay!