German government puts up $165 million to start Google competitor | Hacker News Reader

German government puts up $165 million to start Google competitor

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9 pointsjcwentz44 comments

This and Quaero will serve as valuable lessons for the governments that sponsored them. You can compete with Boeing this way, but not with startups.

I admit I'm kind of surprised they still need this lesson. You'd think they'd have already learned this from the British government's attempt to set up ICL as a competitor to the Google of its era, IBM, in 1968. Never heard of ICL? Exactly.

From my experience having a German wife and visiting Europe yearly (which is limited experience but helpful), many Europeans genuinely believe that the government can do things better than private groups. The evidence for the validity of this belief speaks for itself (not valid). In Europe, security seems to be one of the highest considerations in taking action which leads Europeans to have far more trust in large old corporations than in untested and untried new companies. The exceptions to this view are Eastern European countries like Czech Rep, and Poland and Romania, etc.

To a certain extent, Europe does do socialism better. I'm sure if you could plot the corruption & waste per taxpayer dollar, the US would win.

Former Eastern Block states had a completely incompetent and corrupt government, meaning movement to open markets was the only direction and the results are awesome. Estonia is a perfect example.

Hmm, how do you do socialism better? Germany, as propsperous as it is, has chronically high unemployment (from 10% up to 20% in some areas) and a huge crisis right now with funding their version of social security (which they are unable to do.) What is really impressive about the Germans is that they actually look at the money they have and think about how that money is spent (in the public realm and private realm) instead of the smoke and mirrors we get here about how much something will cost and how it will be funded. Germans like precision, especially with money, even government money which is great to see, but does not solve the underlying impossibility of success with socialism. Germany is successful to the extent that it is capitalist - the socialist side is what prevents Germany from being as impressive as it should be.

The unemployment rate in Germany currently is 8.8%. Bad enough, but far from 10-20%. In the East there are some regions with more than 20% unemployment, but on the other hand in the prosperous southern states (Baden-Wurttemberg, Bavaria) it is about 5-6%.

The news of this thread seems to refute that. Living in Germany, my impression is that the government actually thinks it can generate value by raising taxes.

It is scary, but I think true.

I would define "do socialism better", as programs that come closer to the intent, with successful deployment. A concrete example: Scandinavian heath care might fall apart in the US from corruption -- something that isn't a problem so much there.

I'm not saying socialism is a good idea, even in Europe.

There are degrees of socialism. What if the United States government took 1% of all new companies?

In effect it takes about a third of all companies, because corporate tax rates are about a third of earnings.

Right... you could say that the United States is 33% socialist, based on the tax rates. Is it inherently better for a government to tax corporations instead of owning them? I look at China, which owns 30% of Lenovo and has shares in many Chinese companies and wonder if a combination of taxing and partial state ownership is the way to go.

Germany and other rich EU countries are spending quite a bit of money in helping the poorer members converge (a spectacular success case is Ireland). I think the benefits of that will be seen long term.

The long term is already here - the results: high unemployment, stagnating innovation, financial crisis in the public sector with unfunded liabilities. Germany is now lengthening retirement age, raising taxes, lowering benefits, etc to try not to go under. And the high unemployment is really a big deal - it is giving rise to a growing rightest (ie neo-nazi) movement in Germany, and I think to Islamic extremists in France, etc.

I guess I'm talking about specific program compliance and not macro-economic effects. I agree with you about the latter.

That's the short term.

Good point. I think even in America that most people are uncomfortable when they say the free market will lead to the best/optimal/most efficient solutions. Its just they are even more uncomfortable to say that a big government will.

Then again, it looks like universal healthcare will be at least an interesting side-story in the upcoming US presidential race. Perhaps socialism is finding some roots in US politics.

You'd need only look as far as FEMA to see an example of what a government agency can provide. Do you really want a similar agency running your healthcare? I'd sooner sign up for Google-Health, if there were such a thing.

Personally I was waiting out for Enron-Healthcare. Oh wait. Maybe both systems can fail catastrophically. ;)

Enron's ability to manipulate the system was only possible because the system was not a free market, but a disastrously regulated market. Also, Enron behaved in criminally fraudulent ways, which for a business, is the beginning of the end. So Enron does not provide a free market comparison.

I would only add: The US system is not perfect ... we are not nearly capitalist enough!

And thats a fact!

Um, you can't even compete with Boeing this way.

When will other countries understand that: the best role of government is to ensure the rights of businesses and people. If you get that right, the rest will follow. They shouldn't be using tax dollars as venture seed money. They'd be better off refunding it to the taxpayers!

100% agree - I never saw the rationale for the government making risky investments, just because purportedly nobody else does. Imagine your bank adviser telling you they are going to put your money into high risk investments because nobody else does. Yet if the government spends our money like that, few people seem to realize that it is basically the same thing happening.

I never saw the rationale for the government making risky investments, just because purportedly because nobody else does.

Risk is important because it offers incentives to the marketplace, and prevents economic systems falling into stagnation (local optima), as Aaron Brown describes in this interview: http://marketplacemoney.publicradio.org/display/web/2006/05/...

But I agree with you that it is not the government which should be taking those risks, since (as others have pointed out in this thread), governments really don't know what they're doing in that regard.

Boeing gets billions from the US Military.

Ah yes, but that is to buy Military products which Boeing is very good at, not to finance a competitor to google.

You're right, not to finance competitors. There are maybe 3 or 4 companies that matter in defense, each making many billions while others get an order of magnitude less. So, no...there is no funding competitors in defense. There isn't much competition to speak of.

But this is not to say the machines Boeing makes are not amazing.

My comments are from working on military contracts. They're enough to make a reasonable person run for the hills.

Perhaps if the Military used my product, they would be less wasteful :)

That is a billion dollar question: how do you get the military to buy my awesome product. The answer is usually absorb the culture and lower your productivity.

So the usual answer won't work - but I'm not sure what will.

Some helpful advice: the people that decide to buy your product aren't the same people that will use it.

They don't even need to ensure the rights of businesses. That's included in the rights of people (the shareholders).

Sad really that so much money will go to waste. There are some amazing hacker entrepreneurs in Germany -- many of them move to the US. Giving 165 teams $1m would have resulted in at least one billion dollar company (and probably more like 20) even with incompetent decision-making.

The money will not merely go to waste. It will actually harm German startups. A lot of smart hackers who might otherwise have started or worked for startups will get drawn into this doomed project instead.

That makes a lot of sense. I was just accusing Google of doing the same thing world wide. Do you think there's any difference between them hiring 5k developers they can't really make use of and what Germany is doing here?

Hey, give us some credit! Humour me on the "smart hacker", but this German search founder will steer well clear of the government projects...

This is perhaps the exact opposite of barebones seed funding.

Yes, I was thinking that too. This is as far from traditional VC as Y Combinator is, but in the opposite direction. Which seems a further predictor of doom, because the trend in venture funding lately has been a shift toward the low end.

Indeed. Also, didn't France already try to make a google killer? That I haven't heard much lately implies the fate of this program.

http://www.infoworld.com/article/06/12/21/HNquaero_1.html " The French and German partners involved in a consortium developing future search technologies, Quaero, went their separate ways because of differences over technology, according to senior officials at the French agency funding the research. "

Wow, this could be as successful as Airbus's biggest plane :)

News like that make me hate paying taxes so much :-(

This will give a new meaning to the expression "design by committee".

A $165 million kiss of death

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