“Seek and ye shall find,” thundered Ed Harris from behind bars in a pitiful 1995 film called Just Cause that was a knock-off of Silence of the Lambs and In the Heat of the Night. Harris’ character, a wanna-be Hannibal Lecter, causing the whole movie theater to burst out laughing in ridicule at the over-the-top ludicrousness of the story.
Seventeen year-old memories of such an uninspiring waste of time of money that Hollywood tricked me into taking my girlfriend to see on date night were strangely unearthed last week when I read about the fate of Quaero.
Quaero, which means I Seek in Latin, was an initiative launched during French President Jacques Chirac’s administration with ambition to become the European ‘anti-Google’. It’s safe to say that France never found what it was looking for with this one.
I’ve already written about the futility of government attempts to carbon-copy Silicon Valley in their home territories. Just as previous attempts to duplicate the Silicon Valley ecosystem have ended in embarrassment and wasted resources, government efforts to duplicate specific companies without regard to market dynamics often meet similar fates. The latest example of this type of embarrassment and wasted resources made headlines last week in France upon the release of Oséo’s post-mortem of the Quaero project.
Even back in 2005, a government initiative to create a search engine counterweight to Google, was as silly as it sounds today. I recall mocking the idea at dinner parties back then, but I had no idea how stubborn and wasteful the government would prove to be in this distraction.
The verdict was rendered last week, paradoxically in the form of a celebratory luncheon: a leviathon of 32 industriel companies led by the French government collectively spent over five years and 198M€, half of which came from French taxpayers.
Oséo is arguing that the project spawned multiple ‘technological ruptures’. Possible. But over-engineered pieces of soon-to-be-obsolete technologies without a market is my bet. Even if some parts are salvageable (and I sincerely hope the full 198M€ was not squandered), the project is an epic fail. It’s not Oséo’s risk-appetite I’m against; on the contrary, France badly needs a culture of calculated risk-taking, and I commend Oséo’s attitude here. The problem is that Quaero is a fail (not failure, which is more respectable, but fail) in terms of efficiency of capital and opportunity cost.
You see, when the private sector invests in innovation, its capital can be patient (also like Oséo is proud to claim), but let’s not confuse patience with exigeance. Private capital demands a financial return on its investment. The higher the investment and the more time goes by, the higher the absolute return must be. When the leaders of an ambitious project request additional funds, private sector investors will carefully scrutinize signs of progress and confirmation of continued ROI potential before opening their wallets.
The opportunity cost of such a monumental misguided effort is that it sucks the air out of other innovative projects in adjacent domains. The talented individuals working on Quaero were off the market for five years. A project of highly-complex technical components can draw some of the brightest engineers away from other things. Former CEO and founder of Autonomy, Mike Lynch expressed it this way:
“Not only did it fail but it had a scorched earth policy — no one would invest in related areas in Europe, thus it killed areas of innovation.”
Oséo remains undaunted, announcing its appetite to sponsor other similar ‘radically innovative’ programs. While I sincerely appreciate the government’s desperately needed financial support to innovation in this country, I submit that there are more effective ways than dispensing large sums on projects that require unwieldy collaboration of multiple enterprises (hint: a week ago I wrote about just one).