Alex Hearn needs to learn some economics

While such a string of acquisitions certainly represents a massive inward flow of cash to Britain, it could have its downsides. If Britain’s most promising startups always pick guaranteed cash now, over the prospect of a much bigger payoff later, then the nation will never have its own tech giants to rival Apple, Google and Facebook.

The companies don’t belong to the nation. Further, the value to the “nation” is in being able to use the technologies, not in who owns them.

Seriously, we Britons are made poorer by Google’s existence?

It’s the same idiocy as the insistence that nations trade with each other. It’s simply not true.

13 comments on “Alex Hearn needs to learn some economics

  1. The other reason Britain won’t have as many tech giants (or any other giants) is because the minute they’re successful SJWs and idiot politicians try to bring them down.

  2. I’d have a lot more sympathy for Guardian journalists crying about poverty if they spent any time getting to know their subject matter.

    Companies like Shazam are designed to be bought or floated. The whole industry is stuffed full of “greater fool” investing. No-one backed YouTube, Snap or Facebook to collect dividends. They did it to sell or float them and cash out.

    And having “giants” is so irrelevant to the economy. The average company size is 10 employees (according to my uncle).

  3. There is nothing like evidence of a sub-optimal outcome for the national economy to spur politicians to meddle/tinker/prohibit.

    Bloke, the giants started out as start-ups with ten employees and no capital other than garage space. They innovated, then big capital let them roll the product out worldwide and cost-reduce it. Eventually, they turn it into a commodity and get bought out as the world turns to the Next Big Thing. Buyers may find they cannot cost-reduce further; the phenomenon is now perfectly understood by everyone and the phones and MP3 players are stamped out in Taiwan.

    I have always come in in the middle, and never bought stock without hopes of turning it right around at a higher price. The founders no more started their brainchilds to walk away with a fortune, than you elect to have a child in contemplation of its magnificent funeral. The tech industry has inventors as well as quick-buck artists. Even the inventor hopes his neat idea will eventually be popular and lucrative.

  4. But try suggesting to the Guardian that the UK emulate Silicon Valley – lower taxes, venture capitalists, lots of Indian immigrants, the government staying out – and see how they react.

  5. Spike,

    No, I think founders are much more interested in the thing, but the investors aren’t generally building for the long-term.

  6. “The founders no more started their brainchilds to walk away with a fortune, than you elect to have a child in contemplation of its magnificent funeral.”

    I rather like that.

  7. Alex Hearn needs to learn some economics

    As does DM’s Alex Brummer who is similarly protectionist of UK based firms.

  8. I think these Grauniad cretins see something like Shazam as Oblast IV People’s Software Engineering Works. They seem to think that the purpose of a company is either to make things/provide services or to employ people whereas pretty much everyone here knows what its real purpose is: to make money for the owners and investors. The fact it makes things is a felicitous side effect of the money making and the employment of people to do it is simply faute de mieux. Socialists have such a cock-eyed view of what’s what that they persist in making this simple category error.

  9. ” If Britain’s most promising startups always pick guaranteed cash now, over the prospect of a much bigger payoff later, then the nation will never have its own tech giants to rival Apple, Google and Facebook.”

    Thats because they’ve worked out that they better grab the money now, before the State can get its greedy mitts on it later. Building a multinational corporation isn’t the work of five minutes, it takes decades. In which time you’ve had multiple different hues of politician in charge, and multiple changes in the taxation of businesses. Who can blame the owners for cashing out early while the going is good, than hang on and potentially lose the lot to some Corbynite?

    It occurs to me that there should be a rule – the day a company is incorporated, the tax rules are set in stone for that company – that would encourage longer term thinking. But of course that would take the power of politicians to meddle away, which would never do………

  10. The start-up mentality is hugely different from the steady-growth one. Why would we saddle our entrepreneurs with the burden of building their good idea into the next giant?

  11. @Jim,

    It occurs to me that there should be a rule – the day a company is incorporated, the tax rules are set in stone for that company – that would encourage longer term thinking.

    I like your idea. Reverse takeovers may be problem which is solvable. Add taxes can go down to current rate, but never exceed original.

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