Madrid: Wake Up and Smell the Entrepreneurial Spirit

After spending ten years running a variety of technology businesses in Madrid, Spain, I’m occasionally invited to contribute my thoughts as to how to escape the current economic crisis. While I’m not a huge fan of Paul Krugman I do agree that we need to start thinking about growth, and that breaking the vicious cycle of firefighting is needed if we are to plan for the future.

The most worrying aspect of Spanish government planning, or rather lack of it, is that everyone I speak to seems to have a hundred urgent things to do before they can start even thinking about the future. Well if you want the economy to go the way of Hewlett Packard that’s fine, but my overwhelming impression remains that most Spanish government agencies live in mortal dread of actually having to do anything.

I do have skin in this game, I still have family in Madrid, and it annoys the **** out of me to watch the clueless ham fisted dimwits in Madrid running around slashing budgets and killing projects with no thought about what to do beyond their next paycheck while anyone under 30 has long since figured out that there are no safe jobs in government and banks anymore.

You can read my original thoughts in El Pais in the article “El motor de la riqueza es el emprendedor” or a translation below.

I spent much of this year talking to a variety of Spanish government agencies about innovation, and I got a strong impression that with the current economic crisis,supporting entrepreneurs is the last thing they want to hear about.

Let’s face it, when you are under pressure to cut your departmental budget by 40% while being asked to take a pay cut yourself, it’s hard to take time out from applying for safe jobs in international organisations to discuss supporting anyone else, and that is a large part of the problem.

The economy isn’t driven by people making budget cuts on excel spread sheets, it is driven by the people who create wealth, the people we call entrepreneurs, who set up companies, employ people and pay taxes. If Spain is to effect any kind of economic recovery, it will come from the coffee shops of Zaragoza, Leon, and Malaga rather than the National Ministerios of Madrid. At present the World Economic Forum ranks Spain as the world’s 36th most competitive economy, below Chile, Estonia and Oman, while Cientifica’s index of the best places to commercialise emerging technologies has it below Portugal, Indonesia and Puerto Rico. Something needs to change.

In the 21st century innovation doesn’t happen in isolation any more. Scientists,engineers and entrepreneurs are globally networked so that information flows freely, and although capital can still be hard to raise, innovation now has no borders. Butthere are still few models that take advantage of this new world, and for once Madrid’s regional government is showing the way.

The Madrid–MIT M+Visión Consortium created by the Comunidad de Madrid and MIT is an example of how cross border collaboration can stimulate economic activity by connecting one of the US’s leading universities with Madrid’s scientificcommunities. As the Consortium aims to stimulate innovation in medical imaging it also involves big teaching hospitals in Madrid and Boston and the results after just two years are impressive. The project has already fostered a number of innovations in the biomedical field, all of which have the potential for significant impact in health care, and some of which are almost ready for commercialization.

But an international consortium also poses a dilemma: with entrepreneurs being mobile, the resulting companies could end up being located anywhere. As a first step towards economic recovery, Spain needs to find ways to become globally competitive, to attract and retain entrepreneurs. Politicians need to look beyond the short-term pain, and create a fertile environment for innovation and entrepreneurship.


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