There was a piece on the Today programme this morning about Conservative shadow chancellor George Osborne's trip to Silicon Valley. He's meeting a few of the big firms like Google and Yahoo and trying to get a feel for what makes California so much better than the UK at turning little ideas into massive wealth generators. As Osborne pointed out in the interview, even though the UK has world class universities and plenty of money available, there is no British equivalent to MySpace which has become the world's fifth most popular website in just a few years, let alone a Google or a Yahoo!.

James Naughtie tried to push him on the tax regime, making out that it must be because they have lower taxes. But Osborne quickly pointed out that California has much higher taxes than other parts of the US so it can't just be that. It also isn't about intellectual property laws because although, yes, it is more expensive to take out a patent in the UK, actually none of the success stories of the past decade have really been about IP.

I reckon it has a lot to do with a deep understanding of networks. Somebody pointed out in the package before the interview that one difference is the role models that students at Stanford have. Larry Page, Pierre Omidyar, Jerry Yang are all treated as heros. But you have to realise how different these guys are to British business role models like John Browne or Richard Branson. They've built business not just through good strategy or PR or relentless personal energy but by incredibly clever hacks that make the most of the underlying network logic of the internet.

If you're a young entrepreneur trying to emulate the current generation of internet success stories, you're going to try and think of business ideas that are like Google or eBay, that tap the value of networks of active participants for the simple reason that those are the most likely business to thrive in a network age. At the moment, we just don't have that culture of understanding network business in the UK.

I reckon if George (or Labour for that matter) wants to know how to build Silicon Valley in the UK, he'll certainly need to read this.

Posted by Paul Miller at June 13, 2006 11:32 AM