Sillycon Scrape?

sscrapeI’ts lovely that some of our country’s useless politicians presided over a function to promote the Cape as “Silicon Cape”.

However, innovation and invention also happens here, in Johannesburg — “amazing doll!”.

I think in Joburg it’s just more the accepted norm than “something amazing”. Perhaps that’s why fancy banners aren’t slapped onto web2.0 businesses in an attempt to attract venture capital, because quite honestly every single investor I’ve talked to are looking at business fundamentals and not the badge.

From what I can see the soon-to-be-immolated-in-silicon-cape  has come up with  SynthaSite (ohwaitzors that’s called Yola now) (didn’t geocities try this and fail?) and a Fon-like  scheme trying to monetize Wi-Fi hotspots,  and an even grander scheme to reinvent Youtube in a bandwidth starved country.  I wish the initiative luck, and lots of mountain. Then again,  frogfoot do rock so there must be some brains in Cape Town. In fact, it must be so, because many of my previous colleagues have immigrated there…

Blogs, “Web 2.0” apps and the like was OFN in the year 2000 when the bubble burst. I really don’t see the reason for the excitement now. I had a web-2.0 style framework more complicated than prototype, jquery, mtools and and scriptaculous built for a web-based application delivering real-time data in 2004 already. Oh, and I had paying customers.

Why does every brand new MVC based framework out there still have a “blog” as the primary example of the efficacy of the framework? Is this what computing has driveled down to?  Blogs ?

Honestly — trying to flag a single city in South Africa as “silicon” just because a lot of people living in it tend to blog, and build RSS based aggregators does not mean that it invents stuff. RSS, XML feeds, content aggregation — it’s been done. All the Silicon Cape appears to be doing is refining it, and putting well-designed badges on it.

Call me sour. Call me whatever you want, but please don’t label the Cape as if it’s something new and fancy, or “the mother of invention”.

Try and build something innovative, that requires scaling, and challenge the problems before claiming that a city filled with developers is the new Silicon Valley. Do something really innovative. Like. Let’s say… Something that HASN’T been done before. Repeat it. Make it a success. Monetize it.

Politicians take note — if you want to incentivise innovation, technology and the overly-used term “ICT Development” how about giving technology companies a tax break, stop charging insane provisional taxes on profits not yet realized, and unbundle the local loop already… Perhaps then, successful businesses would want to put people into apprenticeships, and innovation and development could really happen. Perhaps — THEN, we could develop into an information society.

I have nothing against the Cape. Sounds like a marvelous lifestyle, and I certainly wouldn’t mind to live in Cape Town.

In my mind “SiliconSA” sounds a lot better…

Invention and innovation is a mindset —not a fucking geographical location.

Author: roelf on October 8, 2009
Category: Uncategorized
Tags: , , ,
22 responses to “Sillycon Scrape?”
  1. Jonathan says:

    I couldn’t agree more, well said.

    If only there were more people with their head /outside/ of their ass.

  2. Colin Alston says:

    Well they aren’t “refining it” so much as going “Omg South African’s can make this stuff too!”, which duh of course we can when it’s already been done and wasn’t rocket science.

    The main issue here is that people involved in Silly-Conman Cape are not the programmers or the people with brains to do anything – those people seem to live in Joburg, and quietly go about their lives.

    What it rather transparently is, is a bunch of middle men who have “big ideas” and noticed they can’t actually afford to implement them, and don’t have the skills to do so in the first place. So they create a big media hype to try and attract people to Cape Town so they can get venture capital, buy a Ferrari, and pay some coders 10k a month to implement it.

    The problem with this mindset is is that it’s not how good things happen. Microsoft, Apple, Google, Facebook, Twitter, MySpace, etc etc etc were built by genuine programmers working on stuff in their basement. They hit luck, and the investors came running anyway, they then used that money to hire marketing jerks because the technology was what came first.

    Basically, programmers aren’t as stupid as capetonians look. We know we can make the stuff ourselves, and we don’t need some pretentious assholes acting like they are the be-all and end-all of Web2.0. We’ve also been screwed enough times by start-up’s that lack technical knowledge, because the best recipe for a failing product is people in the driving seat who are absent of technical skill.

    That and the fact that Sillicon Cape is entirely white, meaning it won’t get DTI or Government backing, meaning it’s doomed from the start. And also, Yola’s not even a South African company for fucks sakes.

  3. Darb says:

    Hi,

    I work for lol-omgz-its-yola-not-synthasite. I went to Silicon Cape. I am impressed how tastefully and mature you have engaged in the debate around the issue.

    Let me give you an overview of what the event was about:

    * Silicon Cape is a brand and working group, that happens to be in Cape Town, but is aiming for benefits for all of South Africa (since the legislation that is getting in the way of innovation and small business is national)

    * It is a 5-15 year project and is more about getting the right people talking regularly (VC funds, entrepreneurs, government, small business, tech companies)

    * It is about recognising and seeing how we can lift barriers to entry for investors, entrepreneurs, etc. for all of south africa.

    And, the government people that spoke:

    * Helen Zille (Premier of the Western Cape)
    * Dr. Mamphela Ramphele – Former VC of UCT, with a zillion degrees behind her name (not just honorary degrees), and newly appointed head of the government working group ‘Technology Innovation Agency’ which is well placed to inform policy changes and advise government.

    There was also a number of other pretty intriguing discussion around the issues the TECH (not the “omglolweb 2.0”) industry faces in South Africa, what issues Entrepreneurs face, etc.

    There was also discussion about building tax free zones for tech companies (which you pointed out).

    Silicon Cape was not intended to only be about Cape Town, but (and this is my own opinion), take it from someone who has worked and lived in Durban, Grahamstown, and Johannesburg; Cape Town has a lot going for it in terms of attracting innovators, funders, and geeks who like to live in a pretty place with high quality of life and a strong, friendly geek network.

    Just to clarify, Yola is not based in South Africa for the same reason SAB, and many other big companies that started in SA, have moved base. Working with foreign currency is unnecessarily complex and difficult under current Reserve Bank laws (the same reason we don’t get PayPal payments in SA). The exit strategy for investment companies and VC funds is not particularly attractive (South African law doesn’t allow IP to easily leave the country (except in people’s heads when they leave to start businesses in other countries)).

    Building a globally viable company, with good acquisition prospects (a way for founders to make large amounts of cash straight up), is nearly impossible in SA.

    You should probably read more about the event from people who attended it before you criticize, infer, and childishly attempt to undermine a concept.

  4. roelf says:

    I, for one welcome our new “Technology Innovation Agency” overlords.
    I’ll make a prediction : *FAIL*

    Darb :
    criticize, infer, and childishly attempt to undermine a concept

    Free country eh ?

    Of course, I have an apparently long history of doing the things you mention. I’m certainly going to continue to speak my mind.

  5. Darb says:

    I didn’t say you couldn’t criticize a concept, I just said you should probably do a bit of research first so you can at least put forward valid, relevant arguments. Otherwise people who did do their research, attend the event, or thinks the concept is good will read your blog post and go ‘That is just adorable’.

  6. Erin says:

    I hate to burst your bubble but everything that has succeeded in South Africa has been copied in some form or another. Our cellphone networks were launched off models taken from overseas. MNET built itself off international cable/satellite business plans. MXIT just did exactly what MSN chat had been doing for years, and succeeded mostly because their users didn’t have the cellphone handsets required to support free IM applications like Gtalk – once phones catch up in the next 6 months to 1 year, are millions of users still going to want to pay MXIT their Moola for the sensational ability to send messages on their mobiles? Lastly, taking a look at the items on your Projects list, it seems you too are working on existing platforms. Why? By your reasoning in this post, you should be reinventing every single item you work on and sell.

  7. Colin Alston says:

    What research is there to do? You have to admit, it’s pretty difficult to get any kind of signal with so much noise from people going “OMIGAWD IT ARE TEH AWESOME IDEAS”.

    All any of us can see on the website for Silicon Cape is mile long lists of trash about venture capital and people punting their various Web 2.0 clone sites.

    Face it, the real issues are just not out there. As for reading up about the event, I can’t find a single one which gives an unbiased blow-for-blow account.

    That’s just the price you pay for inviting fanboyism to your idea.

  8. Ivo Vegter says:

    Finally, I’ve acquired fanboy status!

    Silicon Cape has nothing to do with its past. It’s a wish for its future. This whine misses the point about as much as the observation that DEC and IBM were east-coast companies.

    If you want an unbiased blow-for-blow account, read my 4500-word live blog of the event. Barring a few clearly marked lines, those 4500 words are pretty much verbatim notes. Also, I wasn’t invited, wasn’t paid, and covered my own petrol and accommodation. But yeah, cynical though I am, and conditional though my conclusions were (in publications that carried my coverage), I’ll admit I’m a fan. And while Silicon Cape may not have solved the ultimate question (how do we attract the right people), I think your post is a pretty good example of how not to.

  9. Andrew Thomas-Woolf says:

    Hi Colin, Roelf & others,

    The primary results/outcomes of the “conference” were:
    1) identifying some of the major hurdles in building a commercial and innovation ecosystem in a similar mould to the Valley, Boston, London or other centres; and
    2) getting buy-in from the major institutional role-players who have the capacity to effect the changes required to enable this ecosystem.

    The “useless politicians” included Ramaphele (an exceptional woman, and I truly hope you view her speech when the video clips are released of the event) and Zille (World Mayor of the Year?) in person and indirectly (via Johann Rupert’s interactions) Trevor Manuel, who were all supportive of this initiative.

    The problems identified as most pressing for building the appropriate ecosystem were legislative and regulatory hurdles, in particular tax issues (not incentives, but provisions that have dramatically punitive effects on “normal” VC-style structuring aimed at incentive alignment, not tax dodging) and exchange control issues (e.g why can’t we sign up to Paypal and receive Paypal payments? Why can’t we charge US$ currency amounts when we accept credit card transactions?), and to a lesser degree e.g. the fact that SA is not a signatory to the most recent Madrid Protocol to the Paris Convention on IP, leaving our IP protection laws behind those of our major trading partners and potential capital providers. Also clearly highlighted was the mobility of so-called “intellectual capital” (i.e. you and I), which can be a double-edged sword: great minds leave South Africa, but it is inordinately difficult to try bring in bright, skilled and determined foreigners to boost our woefully low level of tech skills.

    None of the above problems can be solved without getting government buy-in and involvement, and this is why we exerted so much effort in getting them there. They weren’t piggy-backing on our initiative to score points. We *WANTED* them there so we could actually try and get some of the issues resolved.

    Re: the Cape vs Johannesburg, understand that the Cape has certain things that make it attractive for internationals that is /not/ easy remediable: beautiful scenery and surrounds. If we want to attract internationals, then it makes sense to have a geographic focal point that has relatively unique and difficult to replicate features (sustainable competitive advantage, anyone?). Regardless, if anyone had read the manifesto, it’s not only about the Cape and in particular the idea was put forward that in this more modern environment, geographic concentration was not as important (and, as Darb pointed out, the regulatory issues are national in nature).

  10. Andrew Thomas-Woolf says:

    With regards to making out like the Cape is the “Mother of Innovation”:
    There was no intention to imply that the end game is here. Several speakers made abundantly clear to those who may have thought otherwise that this was likely to be a multi-decade initiative.

    Andrea Bohmert specifically highlighted the issues regarding not only the Cape’s, but South Africa’s dramatic lack of performance in international recognition of innovation. Our patent application rate by locals is abysmal, for example. Universities here have no or relatively immature commercialisation programmes in place for the IP that /is/ developed.

    There is a role to be played with the use of the “Silicon Cape” brand in attracting venture capital, but again (and you would know this if you were there) the major issues that were raised were around the incomplete ecosystem in place. “Venture Capital” isn’t monolithic and isn’t the entire range of funding required to build substantial businesses.

    The major issues around funding identified here included:
    1. There are no substantial “angel” funding networks in SA, or at least none of which the majority of people in attendence were aware. (I am aware of some of the old FNB/RMB crowd that are fairly active and of course some of the Clickatell parties, which leads me to my next point…)
    2. That getting the right kind of people involved in funding requires a first few rounds of exits by competent business developers. It is these previously-successful founders/entrepreneurs who are usually best placed to identify, support and fund (courtesy of having previously made money) businesses to a point where they are ready to be taken to a full venture capital funding round, assuming these businesses then require them.
    3. There are substantial amounts of funding in the marketplace and very few people who appear capable of receiving substantial funding and using it appropriately. There are too many (as you have identified) people trying to do a localised version of some Web2.0 idea, which is utterly irrelevant to someone who is looking for substantial returns from a substantial investment.

    Our economy is just plain and simply too small. A 20% penetration rate on say 4 million Internet subscribers at R200 total lifetime value per customer == R160m or US$20m. For an early-stage funder looking at achieving return multiples of 8x-20x, the maximum amount that could be invested would be US$2.5m assuming the founders would accept ZERO equity, or US$1.25m if the founders would accept 50% equity. This is simply not enough of a return to justify attracting the skills and funding of institutional VC.

    Therefore, another iniative objective is to educate the potential entrepreneurs (coders or otherwise) as to what is involved and required before they would likely achieve some measure of success on an economic level (as opposed to technical level).

    The other parties that need to be educated are in fact the supporting professionals, e.g. accountants and lawyers, as the legal costs involved in setting up VC-style structures are prohibitively expensive. The US-based NVCA has precedent documentation which can be used by all as a starting point for term sheet negotiation and also definitive agreement development, saving everyone time and money and letting people focus on the substantive issues instead of learning about VC or angel structuring. On this note, and as a direct result of the conference, we’ve had Jo Neser, a Cape Town partner of Cliffe Dekker Hofmeyr, commit to looking to US legal service-provider payment arrangements to reduce the cost of obtaining genuine, strong and profficient legal advice for start-ups in South Africa.

    Frankly (and I stand open to correction here), I see the criticisms as coming from a set of prejudices and assumptions, which are as follows:
    1. Cape Town is trying to present itself as “something special” and in undeserving of that (yet?).
    2. The people driving it are self-centred, egotistic and media/attention-seekers, without any real knowledge of what the real problems are, if any.

    Please, if these are your views, then ask yourself what you would have to see to convince you that they were wrong.

    If I am wrong in my assumptions, then let me know. We can continue this discussion. Colin, I know you and your competence, and it would sadden me to see this whole /South African/ initiative denied your potentially valuable input simply because you choose to be dismissive before knowing more about what was being undertaken. Media is media, be they print or blog, and people should know that it frequently in their interests to hype to sell newspapers/generate eyeballs. I cannot see why in this particular circumstance one would choose to take their messages as gospel.

  11. Andrew Thomas-Woolf says:

    Lastly, with regards to the “whiteness” of Silicon Cape, the two guys that were pushing it hard were Justin and Vinny. I know that so-called Indians may not be “black enough”, but I’ve yet to hear them be called “white”!

    Colin, you are factually wrong when you said that this will not get DTI or government backing. We have explicit statements of support made by Helen Zille, Dr Ramaphele and Trevor Manuel. Dr Ramaphele is to head up the TIA and organise the future direction of the various, dispersed innovation-focused initiatives (e.g. the DTI’s SPII) and she is absolutely on board.

    Yesterday in a meeting (which involved my co-workers) the IDC very clearly and specifically stated support for this kind of initiative and made clear that they had funding ready and available for appropriate opportunities.

    Mansoor Mohammed (executive director of economic & social development in the City of Cape Town) has been engaged repeatedly and the interim SC people are in tune with and well aware of other initiatives, ala the Barcelona Activa-style project.

  12. justinspratt says:

    Silicon Cape is merely a branded metaphor for the wider SADC region. I have spoken to Justin and Vinny directly about this.

    I have never herd of you, and probably wouldnt unless Colin Alston hadnt posted your blog link on twitter. because I know he is smart I guessed your post was worth reading. I also read your cv before reading your post, which also excited me – you clearly have credentials that lead to a “he is smart” conclusion.

    But then I read your post. Wow. Unlike most “vitriolics” (SC detractors essentially), at least your prose was readable. Unfortunately it is contentless. I have taken nothing useful away from it except that you (whom I didnt know previous to reading this) doesnt like Cape Town. Who cares about that?

    If you have a good mind (which I am lead to believe in spite of this post) I would really be interested to know how you think we can solve South Africa’s macro-economic woes. Because that is what SC is trying to solve… we need entrepreneurship and we need a rallying point for it. Sc is the best example of providing this to-date.

    I am in Joburg. If you want to come to The Campus in Bryanston to discuss it, that would be great. I will spot you and Colin to a cappuccino and we can

    PS I had the same views on politicians as you prior to this event. Helen Zille is remarkable. I suggest you try and see her give stump speech live – good chance it will give you some hope in them.

  13. Izak Burger says:

    So it seems some people in the Cape organised something to promote the Cape and now some Notherners are unhappy? Perhaps just one or two… 😛

    Re Frogfoot, I know the company well, and while I respect and personally know the people who own it/work there, I don’t think they are the poster-child of greatness as far as the Cape goes.

  14. roelf says:

    justinspratt :

    But then I read your post. Wow. Unlike most “vitriolics” (SC detractors essentially), at least your prose was readable. Unfortunately it is contentless. I have taken nothing useful away from it except that you (whom I didnt know previous to reading this) doesnt like Cape Town. Who cares about that?

    I can understand my views coming across as being unclear, having re-read my post.

    I certainly don’t get how you read that I dislike Cape Town.

    What I do dislike is lip service, and I guess what you need to take away is that I’m tired of hearing the same thing from politicians and “those concerned”.

    In addition, I’m patently tired of Web startups whining about a “difficult venture capital environment” and the problems they encounter when trying to make their supposedly startling businesses cash flow positive, whilst verbally fellating about this in endless Geekdinners and 24-somethings.

    I have personally found that elbow grease tends to lubricate a lot of things. And yes, I do cross border transactions, and projects scoping Africa and have a very good handle on what the issues are in terms of IP, and foreign currency and taxes.

    But honestly, people complaining about the lack of cross-currency Paypal payments because it breaks their business model is simply farsical.

    The Silicon Cape initiative is far too focused on “monetizing online startups” than with the real plumbing that is Information Technology. I would hate to see just another series of SEO optimizers, Blog consultants and microblogging tools and websites be the vanguard of Information Technology in South Africa.

    justinspratt
    I have never herd of you, and probably wouldnt unless Colin Alston hadnt posted your blog link on twitter.

    Ditto. I’d never heard of you either. Are we quits now ?

    I also did some digging, specifically around this post and you. Let’s, for example take your twitter post quoted such:

    http://twitter.com/justinspratt/status/4757278625
    @karnaugh oh, a bring that “rodent” guy too. although he sounds abused as a child, he appears smart, so there could be a chance 🙂

    You, on the other hand appear dumb and vindictive. Take your fucking invite for coffee and shove it up your anus, you pompous, conniving prick.

    I’ll buy you a Jack Daniels if I ever get to see you. I don’t need your Cuppacino.

    Oh, and bring more hate please.

  15. roelf says:

    Erin :

    I hate to burst your bubble but everything that has succeeded in South Africa has been copied in some form or another. Our cellphone networks were launched off models taken from overseas.

    My bubble is quite intact, thank you. And you’re wrong.

    Thanks for your post.

  16. Colin Alston says:

    @Erin

    Quite right. Why then are we perpetuating this?

  17. roelf says:

    Ivo Vegter :

    Finally, I’ve acquired fanboy status!

    Congratulations.

    Ivo Vegter :
    But yeah, cynical though I am, and conditional though my conclusions were (in publications that carried my coverage), I’ll admit I’m a fan. And while Silicon Cape may not have solved the ultimate question (how do we attract the right people), I think your post is a pretty good example of how not to.

    Ah, yes. So sorry if my post upset the entire initiative. I’ll try to do more “we’re not worthy’s” next time.

  18. roelf says:

    Andrew Thomas-Woolf :

    Hi Colin, Roelf & others,

    Andrew, your post is very eloquent and hits the right strings with me. Thanks for engaging, and I have to say that it has left some lingering thoughts.

    I’m posting a full response as a new article…

  19. justinspratt says:

    @roelf
    Rodent – there was no hate or malice in my response at all. It wasnt even sarcastic! I was merely offering an olive branch to try and understand your point-of-view… oh, well. 🙂

  20. Colin Alston says:

    @justinspratt

    For what it’s worth I will take up the offer, I just need to find a time. Will email you.

  21. Darb says:

    Sjoe, you guys are all enthusiastic. I hope everyone has achieved some level of synergistic properties, minimising misunderstandings and leveraging positive relationships.

    It has taken a week, but, Colin/Roelf, please spend the time (if you can) watching the speeches on http://www.zoopy.com/siliconcape (you can avoid all the soundbyte videos), and you can judge for yourself.

  22. Darb says:

    @justinspratt to be fair, you did postulate that he was abused, that is not really a neutral olive branch.

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