Over the last twelve months, many in the Spanish public and private sector have been questioning the need to create a national plan along the lines of Startup America. Jose Cobian asks why.
Spain is in the midst of its worst social and economical crisis ever. The once-called “New Spanish Golden Age” in which SMEs employed some 79 per cent of the total workforce is over. The creation of new companies has decreased by 40 per cent since 2007, boosting the unemployment rate close to an all-time high of 21 per cent – 45 per cent of recent university graduates.
The situation is critical. Recent studies from organisations like the World Bank have ranked Spain the 133rd on the ease of starting a business, just behind Kenya, and several nationwide studies have pointed out that only 1.6 per cent of university students consider entrepreneurship as their top career choice. 60 per cent of high school students say they want to work for the government.
These metrics point towards an inevitable brain drain of what is Spain’s most prepared generation of highly talented individuals in its history as a country. (Spain’s production of talented graduates is currently ranked 21st in the world.)
How could this have happened in a country that has a low cost of living, highly talented workers, great weather, competitive average salaries and, most importantly, over 2,500 public entities ostensibly dedicated solely to support and foster innovation and entrepreneurship?
The only possible answer is that, unfortunately, entrepreneurship and innovation are not genuinely critical goals for those public and private institutions but something more like marketing tactics.
Unfortunately, the Startup Spain movement, as good as it sounds and as much as it is needed, also appears to be gaining more keynote speakers than actual activists and doers who know what they are talking about and have in-depth industry experience of what entrepreneurs and start-ups really need.
This is not only counterproductive, but dangerous. We cannot afford to continue prioritizing return on ego over return on investment in this area any longer and we cannot continue to let the non-entrepreneurial decide what the entrepreneurial need. As Vivek Wadhwa said when he visited Spain last summer, it appears that Spain needs Startup Chile more than Chile does.
Now let’s stop here for a minute to take it all in. A program like Startup Chile has little to do with Startup America, Startup Britain or creating a Spanish Silicon Valley. The first two are initiatives suited for already well-developed start-up ecosystems and the latter is the only model that has been implemented in Spain (and most of the world) so far in order to promote innovation.
Mainly based on Michael Porter’s cluster theory, this “local Silicon Valley creation” fad is starting to get old. Mr. Wadhwa’s summary of it is extremely accurate: “Pick a hot industry, build a technology park next to a research university, provide incentives for businesses to relocate, add some venture capital and then watch the magic happen”. Unfortunately, as it has been proven, this magic never happens.
In fact, companies that maintain ties only with players within the same cluster are up to four times less likely to innovate than those which are globally connected.
The amount of public and private investment wasted on these fruitless efforts is unacceptable. When are we going to learn that a copy-cat strategy cannot generate disruptive and sustainable innovation? Silicon Valley is there, waiting to be disrupted, but that will not happen if what everyone tries to do is replicate it.
The kind of program that Spain needs will focus on dramatic changes in the way we foster entrepreneurship and the way we spend money without the need for it to be a constant excuse for politicians and executives to make it to the front page of the newspapers.
This battle is not about spending more money on infrastructure, but about using our current money and resources more wisely and efficiently to make the perks of the Spanish entrepreneurial life easier, more convenient and more attractive.
It is imperative that both the government and large private entities assume their roles as background facilitators as quickly as possible, operating quietly in the background to protect the people that should to be in the spotlight: the entrepreneurs.
As with Startup Chile, the cornerstone of this plan should be, of course, attracting foreign entrepreneurial talent while retaining and fostering the local talent at the same time. This means putting into practice measures that will make Spain not only a great place to live but a place where operating a startup is easier, cheaper, faster and better than any other place in Europe.
All in all, there is still a lot of work to be done and we need key public and private actors to quit promising, showcasing, demanding and proposing and start taking commitments, decisions and, most importantly of all, actions.