Google comes to Wales, but at what cost?
As part of the Get British Business Online programme Google will be setting up in Cardiff to offer free websites to small businesses. That sounds great doesn’t it?
But as usual what it really shows is a lack of understanding by the Welsh government of the consequences of these grand projects. What’s wrong with giving free websites to small businesses? Ask Google how many companies are out there offering web sites for small business. Google returned about 394,000 when the search is narrowed down to “web designers Cardiff”. That may not only tell us something about the accuracy of their searches, but it does tell us that there are lots of companies offering to build websites. And that’s just in Cardiff.
Doesn’t the Minister think that Google competing for free will affect these companies? Supported and promoted by the Government. Are they really doing it for free or are they being subsidised by the Welsh Government?
A further look at the GBBO website reveals that the website builder that Google are offering is from Yola, a South African company.
Wales actually boasts two companies that could have done this. Basekit has moved to Bristol, but they started here. SubHub is still Cardiff based and has been built with Grant funding from the Welsh Government and local investment. It counts Finance Wales as one of its main shareholders.
Does Google really need the governments help to capture a few more customers in Wales or does the Minister just think this makes great headlines?
Further investigation reveals another dark twist to this story. Cardiff’s only digital incubator, @Wales, in Saint Line House is to be closed and the start up companies within it have been given notice to move out by the end of March. Guess where Google will be housed. That’s right the Google Juice Bar will be based in Saint Line House according to the GBBO website.
The Welsh Government is constantly worried about State Aid rules when it is helping local companies, but seems to be falling over themselves to help big name foreign companies at the expense of local business. Seems like State Aid to me.
Why closing @Wales is wrong. There is a better a way to run an Incubator.
In seven weeks Cardiff Digital Incubator will be closed. The startups that are in there will be out to look for a new home. It must be an anxious time to be either working in one or running a start up. They need support.
The @Wales Incubator has been poorly run from the start and the Minister responsible, Edwina Hart, is right to question it. She is wrong to close it.
Back in August last year I wrote to her and proposed a better way to run the Incubator which is now to be the home of Google’s team delivering the Get British Businesses Online project. Now doubt with pressure the Government will announce another six-month extension for the tenants. Why not get it right?
I wrote “I am writing to you to discuss the future of the @Wales Digital Media Initiative in Cardiff Bay. As you will know, this business incubator is to be closed shortly. The tenants had originally been given notice that it was to be closed in September and have now been given notice of a 6 months reprieve. Unfortunately this reprieve has merely introduced more uncertainty into the life of the early-stage businesses that occupy the building.
I have discussed with Cardiff Council how important it is that this vital business incubator remain open and I believe my discussion went someway to the extension of the leases.
I am a Cardiff based business angel. I have invested in excess of £500,000 in a number of early-stage and start-up business over the last three years. These investments have attracted a further ten times that amount of investment. All are based in South Wales.
The current Government initiatives, whilst well intended, do not offer what these businesses of tomorrow really require. I would like to meet to discuss how we could work with the Assembly to offer a full range of meaningful services and infrastructure for start-ups.
A group of like minded business angels are willing to offer their services as Mentors and, later, as Angel Investors to tenants of a properly managed @Wales. We envisage working with Finance Wales on a co-investment fund for tenants and have discussed the principle with them and, separately, with Cardiff Council.
@Wales should not be allowed to close. Media and IT businesses will be forced out of this area, just as the Porth Teigr project begins. The Business Incubator must just be managed properly and it will deliver significant returns to Cardiff and Wales.
If you wish to discuss this please email me soon. Time really is critical as the tenants are all feeling uncertain about their future.”
A well run Start Up eco-system delivers real jobs and real economic benefits. Start up companies are the engines for growth. Fuelled by angels, driven by entrepreneurs.
In the UK some 50 per cent of people dream of becoming an entrepreneur, only 5.8 per cent actually do it. Closing that ambition gap could transform the lives of people and the economy.
Governments role is to build infrastructure to allow that to happen, not shut it down!
The above articles were originally published on the LinkedIn groups: Cardiff Startups, Welsh Entrepreneurs and Xenos. These comments appeared on those sites:
It strikes me as very disappointing that the Welsh Govt will work this closely with Google and not only create the challenges that David outlines, but more sadly: fail to encourage Google to provide a Welsh version of the Google Apps suite of applications.
Having returned to North Wales after many years in south-east England working in IT, there is no doubt that small businesses here would benefit from a greater awareness of the many benefits that a digital approach can offer. However there is widespread confusion that by simply adding a website, it will return great rewards. This is patently not the case. There is a growing awareness that businesses need to "engage" with their customers......this applies in the digital world as much as in the real world. A simple web presence does not deliver this. Wales needs leadership in technology that goes further than superficial and simplistic thinking.
It's shocking to see the Welsh Assembly kicking Welsh start-ups out of Saint Line House, to instead provide State Aid to foreign companies by allowing them to move into the same premises and launch a programme that will suck business away from local web development firms and web services providers. What were they thinking? A classic case of politicians being seduced by big brands to throw overboard the best interests of their constituents. Shameful.
Walter May • Wouldn't Wales get a bigger BANG for the $ if Google worked with our Web Site development and e-commerce companies and help them improve their knowledge and web presence. That way we could give our on-line businesses a boost and service providers could help their customers to a higher level on an ongoing basis. Walter
Evan Rudowski • Yes, you're right Walter. Instead they chose as their website partner a South African company, Yola. No local participation at all.
David Hulston • The issue here is that if this sort of thing is not put out to tender it is normally considered State Aid. This is the position WAG tell all local companies bidding for work from them. It just shows short sighted knowledge of the industries they say they are promoting.
Aled Finniear • This is a monopoly issue yet again from google - google maps got fined in the last few weeks in France for offering free mapping services, which threatened a number of local well establshed mapping companies. This was anticompetitive and an abuse of their monopoly position. Most of the feedback I saw on that one, was anti the French stance and in support of Google (i.e. the French were being seen as protectionist yet again) - everyone wants things for free these days and customers will not look 10 years down the line, when the real price for accepting these tactics becomes apparent.
Evan Rudowski • Aled, you are right -- and people will push these issues because there are many businesses who have a vested interest in being sure that the Welsh Assembly does not enable Google to come in and eat their lunch.
David Hulston • I asked a couple of web design houses before I posted this. One said "They have indeed got it wrong. It bugs the pants off me." Some of these design studios are 1 and 2 man bands and their market is the "plumbers and florist" of the area. Competing against a free offering from Google will be enough to kill them off. I don't think Google will say we will only build you a website if you never contemplated doing so before this juggenaut rolled into town.
Neil Cocker • Maybe we're speaking to different agencies and freelancers. None of the ones I know get any work at all from florists and plumbers. I think Google are targeting those businesses that previously had no interest or awareness of having an online presence.
I totally see how it directly affects your model with SubHub, but I think Google might well be opening up a whole new future market for small web development agencies.
David Hulston • Neil, as I said in my reply, I don't see that google (or you now that have disclosed that you are being paid by them for that matter) are going to restrict who gets the free site. They will inevitably take work from even the web developers and freelancers that you claim to have spoken to, shame hey!
Neil Cocker • Hahah, I don't know exactly what I'll be involved with, but I'm fairly certain I won't be getting paid. :-) I got an email after our discussion had started and thought it only fair I should disclose it before continuing. My involvement will be very, very small. And very, very unpaid.
Steve Dimmick • Good discussion this, stimulated by your initial post David... although I do think the Saint Line House conspiracy will prove unfounded.
Evan Rudowski • Hey all. Neil, thanks for all your comments, and you too Steve.
Neil Cocker • Hi Evan,
Meet the team
Indycube Ventures offers funding and expert advice to entrepreneurs. Entrepreneurs and small-business owners based at coworking space network Indycube are being offered access to a half-million-pound annual funding stream and expert advice.
"We have benefited greatly from David's experience, counsel and contacts on a wide range of issues. His past experience in the IP space is particularly useful to Inngot, but even without that, he is just the sort of investor and non-executive director a high growth business needs. He sees potential, makes connections, and keeps us focused on the things that matter."Martin Brassell, CEO, Inngot Ltd