May 16, 2011
Last week was a great week. I have employed a few people and intend to employ a few more every month if things go according to plan. Ireland is full of good people who just need the proverbial ‘start’.
There is always a great sense of excitement setting up a new venture, rolling up the sleeves, mucking in, negotiating and getting things done, particularly with new people who bring all sorts of interesting ideas and ways of doing things to the table.
In response to demand, my new venture will give independent economic advice to people, investors and companies that want clear, simple explanations about what is going on economically and financially, and how to plan their next moves.
We can all do more and more of this, because despite everything, the recovery will begin with us – each of us.
If you read this column regularly, you’ll probably be asking yourself why we aren’t talking about the ‘bitchfest’ between Irish economists which broke out in various guises last week. It’s rather pathetic really because, with one or two exceptions, last week’s more vocal protagonists didn’t see the bust coming.
They didn’t see the credit bubble or the housing madness.
Equally, when we spoke of default in this column two years ago, the Irish economic establishment (such as it is) was of the view that default couldn’t happen. Well now it’s here. This default or no default ‘debate’ is old news.
Telling people two years ago that there would be a default – because of the botched way the guarantee was deployed – gave you an opportunity to move your money out of here if you were worried; today it’s more or less a foregone conclusion.
But as this debate among academics – and others on the public payroll – rages, life goes on and the rest of us must make a crust.
We know that the macro economy will not be helpful for a few years. If you wait around, no one is going to save you.
There is no cavalry coming over the hill. If you want to make something happen in Ireland, you have to do it for yourself. And there has never been a better time to do this, despite the banks being broken and not operating as sources of credit for the vast majority.
This sounds counterintuitive, but bear with me.
There is lots of creative talent in Ireland and, while we are blessed in the traditional Irish area of writing and books, there are buckets of other talented people, who have the same creativity as our writers, the same yearning for self expression, the same love of risk and the same balls to try something new.
This is the New Ireland. Old Ireland is stuck in the old debate. Old Ireland is still afraid to fail. Old Ireland is caught up an a puerile debate about who is right and even more so, who is wrong.
Old Ireland is still caught up in pointless arguments about our national credibility. Listen lads: we blew our credibility years ago when you were peddlling the soft landing cant. We have none: that’s why the IMF is here.
But just because the IMF is here, it doesn’t mean the game is over. In fact, the reinvention of Ireland is only just beginning.
When this reinvention is over, the old guard will have been swept away and a New Ireland will emerge.
Hopefully, the New Ireland will be an Ireland that is not afraid of failure, not wrapped up with itself and its squabbles. Move on, bring on the default, start afresh and stop keeping old washed-out companies and ideas afloat.
With that in mind, let’s start with the idea of failure and the fact that failing, being wrong and trying again are part of the game.
Recently, venture capitalist Jon Moulton pointed out that the four European countries with the lowest rate of corporate failure were, in this order, Greece, Ireland, Portugal and Spain and guess what,?
They are the countries in the same order who needed to be bailed out. It’s not only that we are reluctant to fail; we don’t fail fast enough.
Companies are kept alive long after they should be.
One of the lessons of working for yourself is that you learn to kill projects that are not working swiftly. If you don’t do this, if you hang on, you’ll probably lose more money. Better to cut, save your resources and start again anew.
The Irish banks are the best example of keeping bust entities open. It’s usually easier to do this with other people’s money. As well as the true cost, the opportunity cost of delay can be huge. The more you occupy yourself in keeping something alive, the more you miss the new trends, the new opportunities.
One of those mega trends right now worldwide is the exploding gaming industry. Look around.
The other night while finishing Paul Murray’s thought-provoking Skippy Dies, it struck me that one of the many reasons that Murray’s suburban character Skippy Juster is so believable is that he plays these games constantly, like any other 14-year-old.This is the market and it is exploding everywhere.
The gaming industry this year passed the $50 billion mark.
This makes the games industry bigger than the movie industry, the DVD market or the music business. The online part of this is exploding rapidly. Companies like Zynga, makers of games like Farmville and Cityville – both played on Facebook – have emerged from nowhere.
Zynga is projected to have revenues of $1 billion this year – that’s revenues and not some notional value.
Three years ago, Zynga didn’t exist. The online gaming business was worth $18 billion last year and is growing at a rate of 16 per cent per annum.
One of the fascinating stories emerging beneath the fog of the macro-economic war is that Ireland is rapidly emerging as Europe’s hub for the online gaming industry. Companies like Zynga have made Ireland their base. The reason they are here is because the other big companies are here.
With Google, Facebook, eBay, Blizzard, Popcap here, a cluster is emerging and it’s crucial we nurture this and the creative people working in this emerging business. For example, the blockbuster game of last year was Call of Duty.
The technology behind its online version linking millions of users together was designed here in Dublin by a company called Demonware.
We should tell the world about this success and get more of them to set up here. Give them free office space.
Now that we own the banks and the banks own the offices, why not? For example, if the Central Bank moves out of Dame Street as suggested, give this glorious space away for free to a start-up.
Imagine a hub right in the centre of the city. In fact, few things might symbolise the reinvention of Ireland better than moving a shell-shocked institution and replacing it with confident vibrancy.
Dylan Collins – a man who has sold two gaming companies in his short, very successful career – noted something instructive about China recently.
He reported that any ‘‘Chinese town with 300,000 residents will often have up to 500 people dedicated to soliciting inward investment. That’s about 0.2 per cent of their population dedicated to inward investment.”
We could do the same thing, deploying agitators, persuaders and champions to get more and more of the gaming business here.
This is the way we will begin the process of recovery. Obviously we have to default to start again. Anyone who knows anything knows that a balance sheet with too much debt can only be solved by less debt, not more debt.
But we can’t wait for that, because the world is moving on. So let’s move with it.