What will it take to build a ‘Silicon Valley’ in Dominica?
Crazy thought isn’t it? This question has consumed my mind for the last 5 years, and I still have way more questions than answers
Why would we want a ‘Silicon Valley’ anyway?
It’s now a year and a half I’ve spent working in London’s ‘Silicon Roundabout’ — everyone and their cousin wants a ‘Silicon Valley’ these days. But for good reason: it drives the economy and it creates loads of jobs. According to Tech Nation, London’s tech is ‘expanding 2.6 times faster than the rest of the UK economy’ and is ‘worth nearly £184 billion’ —that’s a lot of high-paid jobs. And if you’re reading this from the Caribbean, you’ll probably agree that we need those.
So again, I ask myself: “what would it take to form the next Silicon Valley smack in the center of Roseau? Or Portsmouth? Wesley? Or Grand Bay?”
How would we make one? What would it look like?
No one knows how you ‘make’ one of these things: it’s a system of different players & forces. You have investors with money and a risk appetite, entrepreneurs that think they can change the world, and passionate, highly productive staff. But like any system, its difficult to tell which one to start with. Then, when you pick one, there’s the chicken-and-egg problem of it needing the others to make sense.
What it looks like:
Let’s take Roseau. It would be overflowing with highly talented/experienced tech/marketing/operations workers. On a bus-ride from Canefield to Roseau you would overhear tech employees talking about the new crypto-currency trading app that they were expanding to Eastern Europe. You would walk off the bus and bump into the local entrepreneur who hired them. He would complain about the Chinese and Trinidadian investors, who want 20% of his company for only a EC $200,000 investment. He would know he was under pressure to generate revenue from that trading app before his employees’ high salaries shut his business down. Those last 2 lines are key by the way: funding would not be debt-based (banks/loan sharks); it would probably be equity (ownership) based. That way if the entrepreneur fails he isn’t saddled with debt, so he can try again.
That sounds complex, can we get the high-paid tech jobs without all of that?
Not really. We might replace parts of the system with alternatives: switch equity investment (traditional investors) with grant investment (EU or DFID funding). But the general blueprint must stay the same, it can’t work without all these pieces.
You might need convincing, so here’s a story:
In 2014 I started Tropicode Software Solutions. Young and bright-eyed, I dreamt of it becoming a massive software provider for the region. It would give every business in Dominica the software tools to be more efficient and grow themselves. It would expand to the rest of the world.
Tropicode had some successes. We ran free workshops to train high school Computer Science students at DGS. We finished one 3-month contract for a local real estate business. But in sum, Tropicode failed. The initial EC$5000 never got to zero, but I shut it down after realizing it would never become more than a side project.
Part of that failure was on me. In retrospect, my tech & business ability, networks and finances were all pretty modest. But besides that, Tropicode was destined for failure due to the system it was born into. It was locked into a market of 70,000 people and 1–10 person businesses. The dream of exporting was constantly in the back of my mind, but I knew of no clear path to do it. Low revenue earning potential and no route to raise money meant leaving my day job to focus on Tropicode would never make sense. It also meant hiring was a pipe dream; I would forever wear all the hats.
Environment matters
Environment matters. The business environment in Dominica has held back countless Mark Zuckerberg’s and Bill Gates’s whose names we will never know. These leaders will never create the multinationals that would have enabled whole families and communities to thrive. One key thing I’ve learnt in London’s ‘Silicon Roundabout’ is that John in London is no different from John in Roseau. The real differences are between Roseau and London.
“Well stay in London nuh”
Roseau certainly shouldn’t become London. If nothing else, our weak private sector has saved us from the twin plagues of massive wealth disparity & corporate capture that tear countries like the US and UK apart. Late bloomers like Dominica are fortunate to be able to build better. We can generate wealth while minimizing inequality and avoid the Brexits and the Trumps down the line. But all things considered, we need to build a stronger business environment if we want to give individuals and families opportunities to prosper at home.
You’re sure it will make a difference?
If we manage to build an enabling business environment, it will be game changing. I don’t have all the answers but I know tech companies will require at least the following:
- Access to regional and international sales channels
- Access to risk-taking financial capital
- Access to a pipeline of highly skilled human resources
Lets look at the effect of each of these, one-by-one
Assuming these things are in place, we can look at how they would change things for Portsoft, a theoretical software contracting firm started by Marie Joseph (fake name), and based in (you guessed it) Portsmouth.
- Access to regional and international sales channels
Portsoft will thrive easily if it wins a market rate contract in London. Market rates for software development contracts in London range from £300 per day to £600 per day. With three day’s revenue Portsoft could pay its engineers a competitive salary of EC $3000 ~ (£900) . Portsoft could then use its profits to hire more staff, train developers, rent an office and buy computers. Portsoft could also use its profits to expand to Castries, St. George’s and Bridgetown. Portsoft’s happy employees would then fly around Caricom and wear jeans & t-shirts.
2. Access to risk-taking financial capital
Portsoft would now be growing fast so it might take 1 or more years to be profitable, even with its nice margins. Portsoft’s fast growth means it would spend more than it makes in the beginning, so Marie would probably take equity investments to get over the valley of death. Eager investors might fund Marie and 9 other businesses with EC$100,000 each. The investors know that most businesses fail, but they expect at least 2 of their investments to turn the EC$100,000 into EC $1 million. This makes their investing strategy profitable in the long run. Marie likely wouldn’t enjoy giving part of her business to someone else. However, she would prefer this to being liable for EC$100,000 plus interest if she lent from FastCash or a bank and then failed[1].
3. Access to a pipeline of highly skilled human resources
Portsoft would now be a profitable business with large cash reserves to invest. Marie’s biggest challenge might become hiring talent as fast as she needs it (did someone say ‘jobs’?). Marie will want more software engineers because they mean she can take on more profitable contracts and they also mean she can step away from coding herself, to focus on growing Portsoft. However to grow fast she will need software engineers with experience working in teams, experience building things that look like Facebook and Whatsapp, and experience with the technology stacks her clients use. Otherwise, she’ll have to train them herself.
Let’s build this
By now, I hope we can agree that Portsoft would have way higher chances of success than Tropicode, regardless of who was running it. We probably also agree that building a business environment like that would be very hard.
Well don’t give up now, what ideas you got?
- Access to regional and international sales channels
Something tells me the diaspora has a large part to play in this. For example: I currently lead a tech startup. If we needed a contractor to build something I could consider Portsoft as a delivery partner. My contribution alone would be tiny, but what if we could tap into all the diaspora across the US, EU and Canada? Another idea might be to set up large contracting firms in these markets and then sub-contract from them to delivery partners like Portsoft. Institutions like Carib Export also have a part to play in preparing companies like Portsoft for regional/international expansion.
2. Access to risk-taking financial capital
This one is trickier. The UK and US can cover this easily, but its because of the wealth disparity we mentioned earlier. One route for Dominica would be grants e.g. EU/DFID funding, but grant finance is often quite opinionated on what you can do with it. Another route would be targeting institutional investors abroad (potentially diaspora again), however, they would need to have a lot of confidence in our court system to enforce property rights.. swiftly. Another avenue is government financing, both in the form of grants and government contracts. Government financing was key in forming San Francisco’s silicon valley, through large government contracts during the Cold War. Government funding is often even superior to venture capital, due to its long-term horizon.
3. Access to a pipeline of highly skilled human resources
I think a big avenue here is technology & business academies. These institutions are usually far less exclusive than degree programmes and they are far more tuned in to what industry is currently demanding. For example: institutions like Founders and Coders play a big part in pumping out talent that’s ready-to-roll in London. The traditional education sector also has a part to play: we could teach programming to 9 year old’s. Or have more industry-focused curricula in our high schools/DSC, but honestly even universities like Oxford fail on this. With curriculum set at the regional/governmental level, their curriculum will always be slower to respond to industry.
Teamwork makes the dream work
If there’s one thing that’s clear from the above, its that this would take massive cooperation. Across Dominicans at home and abroad, across Dominicans & non-Dominicans, across the private and public sector and across political and religious lines. It definitely won’t be the work of any one guy or girl.
Realizing this, I’ve recently become involved in building a network of locally and internationally based Dominicans who can cooperate on projects. The idea is to explore how we much progress we can make on projects for Dominica (or just projects by Dominicans) when we team up.
If you’re excited by this I will probably be excited to talk to you. You can reach me on LinkedIn here and check out the Dominica Innovators group here.
Extra Notes
[1] Marie will only be personally saddled with debt if her business is a Sole Proprietorship. If she started a company, it would simply go bankrupt and she could start again. Unfortunately, incorporating a company costs around EC $3000 in Dominica (lawyer & government fees combined), so many entrepreneurs start Sole Proprietorships. Note: it costs £80 ~ (EC $280) to incorporate a business in London.
