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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:

Alan Davies

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.
Can it be that the seductive power of the brand overpowers the commitment to Welsh businesses and the Welsh language?

Mark Ellis

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.

Evan Rudowski

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.

Considering the Welsh Assembly have funded many of these local companies via grants and subsidies, you would have thought it would have occurred to them to encourage Google to make this opportunity available to those same companies. Instead they are assisting Google in enabling a foreign competitor to enter the local market.

Evan

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.

This does seem to be a trend with Google and the Welsh Government should be very careful if it chooses to support Google in this - if they're not careful here, they could become embroiled in something very messy.To me this is no different to old fashioned dumping practices that used to go on, to drive out competition and control a market - it is anticompetitive and will stifle the market.

This seems to be the Google model and it's the duty of government agencies and regulators to maintain an arms length position from these practices, so that their positions are not compromised.

This may seem like a small thing, but it's part of a much wider issue and this could well blow up into another big EU vs large corporation issue - similar to the microsoft saga that ran and ran for years. Where is WAG getting it's advise from on this - they are taking an incredibly dumb stance here and need to be very careful - this one could easily blow up in their face.

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.

Evan

Neil Cocker

Hi David,

Interesting thoughts. I don't necessarily agree on the point about it taking business from web companies here. I think that Google aim to get those businesses online that previously would never have considered it in the first place (e.g. plumbers, florists, carpenters...), and then hopefully in a few months or years they will "graduate" to needing a more bespoke site, hopefully built by a local developer. It takes someone with Google's PR clout to get such businesses thinking about going online.

However, I agree that such a campaign could have been run locally along with someone like SubHub, instead of a multinational. But sadly I think they'd argue that it doesn't come with the impact and column inches that Google brings. How much they're being subsidised/incentivised to bring their roadshow into town, I honestly don't know.

As for the "Juice Bar". I don't think there's any great nefarious plot there. Just that the comms & marketing agency that is running all this is based in Saint Line House (and also ran the campaign from Cardiff for the Liverpool leg of Google's GBBO, incidentally) and there's space there for a Juice Bar. Why there is space, and why the building is being shut down, is another issue altogether. I think we both agree that the building could have been managed much better from start to finish.

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. 

Afraid I am more cynical about the @wales story. I asked the Minister in August of last year to consider this matter. Tennants have been told they must leave by the end of the month. If Google can move in then why close it at all.

I'm afraid the big name of Google means more than the future of Cardiff startups.

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.

As for @Wales, I don't think Google's presence has any bearing on the future of the building at all (although I could be completely wrong). It's a half-empty building where all the marketing for the campaign will be run from. It makes sense to have them in there for a few weeks, I would have thought. The fact that it's half empty (as it has been for the vast majority of its time) and is due to close is down to the management and marketing of it. I don't think there's any plans for them to be there long-term at the expense of any other startups. I don't know for certain, but that's certainly the impression I was given. I do take your point that if Google can be in there then why can't other businesses, though. But @Wales as a model failed. There are surely better ways of running incubators/accelerators.

Full disclosure - as of about 30 mins ago, I may be marginally involved with the campaign.

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!
You are right that Google should have no bearing on the future of the @wales incubator, but I am less willing it see it and the startup community sacrificed for the sake of Google. Once it was known that they would occupy the space there, why were the others not told they could stay. Let's see who has to move to satisfy the Goglemonster.

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. 

I know that this could potentially take business from SubHub, but I do think it's good for everyone in the longterm. Lots of people complained about the arrival of the Millennium Stadium in the early days, saying that retail takings were down on match days. But there's no doubt that it's been one of the key elements to the long-term improvement of Cardiff's international standing as a city of note. There's been a 50% increase in tourism visitors to the city since it was built, for example.

While Google's campaign could potentially take some customers away from local agencies (although Google Sites is available for free already, so any of those small business could be using it or any other free site creator now, regardless of this campaign), surely having more businesses aware that they can showcase their business online is a good thing. Those businesses that go on to use the Google Sites platform almost certainly won't have been using SubHub, an agency, or any other free platform anyway. There may be a minute handful who were on the verge of employing an agency, and fewer/none who will migrate away from a Cardiff agency/platform to use Google Sites, but I'll bet my bottom dollar that almost all of them will be businesses who hadn't considered being online before. So it's not business lost, but possibly a market opened up.

I'd see it as an opportunity rather than a threat. For every new business that uses Google's site creation platform, there's bound to be another that would prefer to use SubHub because of its unique offerings. Piggyback Google's massive PR spend.

And while I do agree that maybe the WG missed an opportunity to work closely with local web firms like SubHub instead of Google, I can't complain about the lack of the local tech startup scene and then bemoan the presence of the world's most successful web company in our city. It's things like this that will hopefully build towards a long-term successful web and tech culture in Cardiff.

Steve Dimmick • Good discussion this, stimulated by your initial post David... although I do think the Saint Line House conspiracy will prove unfounded.

As Neil's alluded in his final post I think that in the long term it will bode well for local developers... but perhaps for different reasons than those Neil's proposed. I remember when GBBO was first launched... I signed up and spent innumerable hours trying to create anything approaching a decent site. Google sites back then was an abomination, the least user friendly site I'd used for a long time... oh, the irony. I've just had a look and it seems to have improved somewhat, but not massively.

The upshot of this could be that Google / WAG recruit ... what do we think a hundred? a few hundred? sole traders / craftsmen etc. With a following wind at least half of them will care enough about their brand / perception to ensure that their online presence is strong and easily manageable. Of my mates that are builders and handymen, I can't think of many that will be wanting a load of hassle with a difficult to tweak website of a weekend. As such, the restrictions and complexity of the Google Sites offering could quickly p*ss them off and push them into the hands of the local developers you mention, looking for help when the fluoro tees and whitened teeth of the Juice Bar have left town.

I'm going along to chat in hopefully detail about Google Analytics and Adwords as opposed to the Google Sites section.

Perhaps SubHub / other local platforms / agencies could look at workshop sessions for existing clients and new interested parties?

Evan Rudowski • Hey all. Neil, thanks for all your comments, and you too Steve.

I don't think it's a question of choosing Google or SubHub -- only Google could have the clout and resources to launch a programme like this, which certainly has the potential to be beneficial.

The problem we have is that Google themselves no longer provide the site builder for GBBO -- they have partnered for this with a South African company called Yola.

This is where Google could have chosen a local partner -- SubHub maybe, or someone else, or several -- to provide the website builder component. Why enable a foreign competitor to come into the market riding on Google's bandwagon? Why didn't the Welsh Government insist instead that Google slot in local companies as providers of such services?

This is where both Google and the Welsh Government missed an opportunity to turn it into a benefit rather than a threat -- and that's unfortunate. It's more galling considering that the Welsh Government provides local companies like ours with funding for job creation and business growth -- but apparently they didn't take notice of that when the best opportunity maybe ever was ready to come rolling into Wales to power growth of the web here. Instead the profits will go to a South African company as they get tens of thousands of websites online.

Evan

Neil Cocker • Hi Evan, 

If the way they ran the same scheme in Liverpool is anything to go by, they will be working with local agencies in the immediate future and possibly in the longer term, and they've already contracted the services of at least two Cardiff companies that I know of.

I think the Yola thing is a little more complex than it appears on the face of it. I don't know a great deal about it (and a little knowledge is dangerous thing, right!) but I'd be surprised if they could easily switch that provision according to each region they visit, both technically or contractually.

I know it seems like I'm defending Google & WG's actions here, but with this being a private group neither of them will ever see this thread, and I've not aired these opinions anywhere else. I just believe this to be a positive thing in the long run for Cardiff and its tech/web startup scene.

Neil