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Technology start-ups are all the rage and an entrepreneurial spirit is something that
cities and companies would like to have a little bit more of.
What makes an entrepreneur, and is it the answer to our economic problems?
Here in the heart of London's silicon dreams, I am Linda Yueh, and we are Talking Business.
Welcome to the show. What does it take to be an entrepreneur?
Technology companies are in the spotlight, and they are rather good for the recovery.
It is very apparent in London, where they account for 30% of the jobs growth since 2009.
Tech jobs are up about one-fifth against the backdrop of overall jobs growth in the UK
of just 0.3%. I went to Silicon Roundabout to meet one of
those tech entrepreneurs. Many of us think about starting a company,
but few do it. Everyone here, though, at London's Silicon
Roundabout, has started a tech company. What does it take to start your own firm?
First, you need an idea. Brian Taylor had one.
Hi, Brian, tell me your idea. Hi. My idea is to do away with passwords forever
and use personal pictures to log into websites instead.
This is a simple example. I have used a picture of my daughter and I on a Sunday afternoon
ride-out on our motorbikes. And, I'm clicking on certain places that I
have chosen and that has logged me into the website, as simple as that, no more passwords.
But how do you turn an idea into a business? Shared seminar space, a shared office. Mentorship
and even a boot camp, that is what is offered in this incubator or accelerator.
Brian, tell me, is that why you came here? Yes, we moved specifically to London from
Cheltenham. We have a technology strategy board grant, and
this is where everything is happening, so the business is growing through being here.
We've got mentorship, we'ev got networking events, basically everything we need.
But is that really everything that you need? Well, companies need money to grow, and that
is where angel investors come in. They will give you cash for a stake in your
company. The big question is, how much to give away?
Brian, how challenging is financing for a start-up?
It is very challenging indeed. I invested £50,000 of my own money into the business.
And I have subsequently raised finances through angel investors and have given away 32% of
the business to do that.
Small businesses like these represent 99.9% of all private firms in Britain,
plus, they employ nearly 60% of the work force, and have been creating jobs at a double-digit
pace since the recession ended.
Many start-ups fail, but for now, they are an important part of the British recovery.
Joining me today to talk about the entrepreneurial landscape here in London and in Europe are
Eze Vidra, head of Google for Entrepreneurs Europe,
Dan Crow, chief technology officer for Songkick, a start-up focused on making it easier to
find live music events. He previously founded a start-up in Silicon
Valley. And Jennifer Arcuri, founder of InnoTech Summit,
a start-up that brings together policymakers, the private sector and entrepreneurs.
Welcome to the show, all of you. Dan I'm gonna start with you. What is that
quality that you have, that is different from somebody else who says, I do not know if I
can start a company, what is your entrepreneurial secret?
Well, I do not know that there is really a great secret. I do not see myself as that
different from anyone else. I think the one thing that entrepreneurs tend to have an appetite
for risk, for doing something that is a little bit, .. yah ... that might fail.
They are willing to go out there, try something new, and if it does not go well, get up, start
again and try something else.
It is that feeling of, yes, I want to do something that might change the world, and I will take
a risk to do that. What about you, Eze? You have also founded
companies, what is the entrepreneurial quality that you might have that differentiates you
from somebody else that says, maybe I won't take that leap?
For me personally, it was a need for experimentation and wanting to do something different. So,
I like taking little bets and seeing if they work out. Most recently I founded Tech Bikers,
which is a collaboration of the tech community to help support children's education through
cycling. And, this was just started as an idea. I put it out there on Twitter and I
got a few supporters. And then, by talking to people that were willing to help, suddenly
we managed to create something that is gonna go global in 2014.
Jennifer, you are bringing together basically a whole bunch of policymakers and entrepreneurs
to try and build , I suppose, that willingness for people to take that risk. But one thing
that I always think is: How? what can you do to enable risk taking? Because a lot of
people might say: well, Dan and Eze have done it, but I do not know if I can give up my
paycheque, what if I fail? What if I can't pay for my mortgage?
That is what everybody feels. Even as an entrepreneur, sometimes you wake up and think, wait a minute!
what am I doing? Right? They are both nodding! You really are, you've
got a screw loose somewhere, but that is all right.
I mean, the idea of just getting up and hustling, that's what I think is so inspiring to be
around other like-minded people, because they share that drive and they get it. They get
that half-insaneness. And then when you strive to bring together all these different constituents,
you know, for one day, to really rally the ecosystem, I think you can't help but feel
inspired. You get a high off of it.
What differentiates an idea from one that actually can make money and be a business?
Well, that's ... If I knew the answer to that, I would be a much richer person than I am!
I'm sure. I will not ask you what you are worth!
Not very much. No, look! I mean ... Part of the thing about start-ups is to understand
it is an experiment. I mean this is exactly right. Experiment is the right way to think
about it. Every start-up is a gamble. You have an idea, you think, maybe somebody's
going to like this ; so what you need to do is find out whether the people actually want
it. What actually differentiates a good idea from a money-making one is whether people
want that idea, whether you can find enough people around the world to pay you money for
whatever it is you are doing? It's a sort of... It's as simple as that.
So, what you really need is ... it is not about the idea.This is what's really interesting.
It is not about the idea. It is about the execution. Are you able to go from the seed
of something that has some signs that people like it, and then put in the hard work, persevere,
go through the bad times as well as the good, and drive your way through to something that
is actually a globally-scaled business that lots and lots of people want to use.
Do you agree? Eze? Marc Andreessen, a Silicon valley venture
capitalist, the founder of Netscape and other companies said, the most important thing when
you are starting a start-up is product-market feed. Most companies fail not because they
fail to develop their product, but because they fail to develop their market or their
customers. So, you need to build something that people want, to Dan's point. And that
means talking to customers. It does not mean just cooking the best product in the kitchen.
You're noty gonna know that it's brilliant until people actually get the chance to try
it.
Jennifer, scale is actually quite difficult for an individual entrepreneur to try and
do to test the market. So what are some of the things that you would like to see in an
ecosystem that would help? So, you know, what London's Silicon roundabout and the other
ecosystems have? What are the kind-of key ingredients to make ... help entrepreneurs,
to give them the kind of things they need to make a business out of an idea?
Sure. Well, One of the things I keep finding, and I am sure you will attest to this, we
meet so many entrepreneurs that are like, we are fundraising, and I am like, go get
your customers! Go build your market, I mean, go build the buzz around it.
When I started InnoTech my company, it was not because I was out to build a British business
. It kind of came as a default. You know, I did this event during my MBA school and
suddenly everyone wanted more of it, and more. And that drive, that hunger of that market
is what fed me to -A- build a business and, you know, -B- to be so passionate
about bringing together what it takes to build an ecosystem.
That scalability, product development people are crucial. Building a team with your founders,
the scheme we have that allows our founders to take part, and be a part of that company
for the journey, because you really need that core team. You have located here. Why London,
why London 's Silicon Roundabout? Why not the M4 corridor or Europe? To answer your
previous question, successful start-up hubs need different things to successful start-ups.
They need three components, environment, the physical environment and the community, maybe
even the spiritual environment of learning and collaboration. The other thing that they
need and this is very important, density. They need density of networks. Start-ups are
designed to grow and they need partners, backers, founders, customers, users. They need more,
basically, so that works well where there is enough density. It does not mean that it
cannot work outside of capitals, but a city like London, a metropolis, it is designed
to bring this density. Finally, you need to have this secret element of serendipity, chance.
This is no secret, it happens when you get a bunch of smart people together in one place.
I will make you confess something. Is being an entrepreneur, hoping to develop a business,
is it a 24/7 job? Do you ever switch off? I guess there is a part of my brain that is
always thinking about it. But look, I have young children. I But look, I have young children
I am very lucky to be a father of twins. It is incredibly important to me. Are you very
lucky?! Yes! It is the best thing that I do with my life. It is the best bit of my life.
It is very important to me personally that I find time outside of work for my family,
and that I am a proper father. It is really important to me personally, so yes, it is
not only possible, I think it makes me a better entrepreneur. I see life outside of the bubble
of the company. You can become so obsessed and focused on the company you do not see
the bigger world outside it. I am building a company that I hope my children will grow
up to enjoy using and that gives me a much broader perspective on things. I think that
is valuable. Jennifer, do you agree? I never shut off, I am always working. I have no social
life. We only hang out with other start-up people. What about you Is it a 24/7 job? I
think that you cannot fake passion. If you're really passionate about something, it naturally
comes to you. I shut off, but we are all guilty of looking at the phone way too many times,
even in bed. Very quickly, what is the biggest sacrifice you have made to start your own
company, Jennifer? Moving to England. No. Jennifer? Moving to England. No Being here
and literally stopping everything just to... I mean, my hair fell out the first year I
built the business and that was a huge sacrifice for me, but I loved being in London that much,
that is what kept me here. Probably worklife balance. It's heavier on the work site but
it means the moment you have with family, you enjoy them more. For me, it goes back
to risk-taking. Every time you take a risk, there is something you are not doing. It is
all the things might have done that I did not. I am pretty happy where Ryan. Thank you
all very much indeed. -- pretty happy where Ryan. 22 month analysts. -- thank you to my
analysts. They companies are also trying to instil an entrepreneurial spirit. One of the
oldest and biggest software solutions providers calls itself the worlds biggest start-up.
I spoke to its CEO to ask him how the company set themselves apart. Eiger up on Greenland.
I learned to ski when I was very young. -- I grew up. There is one rule in downhill skiing,
lean forward. Then you are in control. If you lean backwards, you often lose control.
It is a good analogy to what happens in our industry. In 41 years, many of the companies
that were around when we started our not around. If you are not always leaning forward and
challenging yourself, challenging assumptions, and having teams who are willing to do something
unexpected and go with it, then you will be irrelevant suddenly. It is not enough to be
bigger. You need to be fast. That is what we're trying to do. We have come through three
generations, radical shifts of technology. We're now on the fourth generation, with big
data and cloud storage becoming the new skills. Is storage becoming the new skills Is it possible
to retain the best people who may want to go off and take their know-how and start the
next cloud computing company? The one thing about big companies is that it is hard to
show that you are innovative. Absolutely right. If there is one task in our business that
is the most important, it is to attract and retain the best talent. That is our only asset.
It is a very intelligence oriented business. And we produce software that is imagined by
people. So how do you do that? Think there are two things that matter. First of all,
you need to be an attractive company. -- I think. Attractive today often means that you
have a purpose. You have an impact in the world. An impact that is meaningful. People
do not just have a job. I'd think they are part of a company where they feel they have
a meaningful task. In our case, we say that we want to help the world one better -- world
run better. It sounds vague but we have been spending 40 years helping companies manage
their resources more effectively. There are 7 billion people in the world and skiers resources.
So why not be the company that helps the world to manage this new growth with much more efficient
ways of handling resources? That is the first thing. Secondly, I believe that many young
people would like to be an entrepreneur we asked ourselves, how entrepreneur we asked
ourselves how do we create the biggest entrepreneur company in the world? How can we be the biggest
start-up? That means that we foster a culture like start-up, but we get the benefit of scale
which start-ups do not have. I was once told by creative types that the key to being able
to innovate in a company is minimising the risk of failure. Because most innovators strike
a balance between design, creativity and fudge nullity. The result was an element of failure.
-- functionality. How do you minimise the risk of failure in the world's biggest start-up
to make --? The Whitby do that is by not trying to avoid risks. -- the way we do that. You
have to take on crazy projects and listen to crazy ideas. You have to go with it. So
how do we manage risk? We try to fail or succeed fast. Sometimes we get an idea or an employee
has an idea and we go with it, but we evaluated very rapidly. -- evaluate it and very rapidly.
That means that it will succeed or fail fast. We do not believe in huge programmes over
many years in which new hope for success one day. In today's world, you should see success
very rapidly. All companies, big or small, need an environment where people are willing
to invest. But is the slow pace of recovery deterring investment and stifling potential
tumour what is holding back the economic recovery in the UK and Europe? Joining me, the senior
economic adviser to PwC, and external member of the Monetary Policy Committee of the Bank
of England from 2006 until 2011. And John Longworth, Director General of the Chamber
of Commerce, representing thousands of businesses across Britain. Welcome to the show. John,
starting with you, what is holding back business investment? Was no question of business investment
is being held back to some degree. That is partly a rollover of lack of confidence from
the economic situation prior to today. It looks like the economy is picking up. Maybe
it is good but not good enough. That affects sentiment and it will be a self-fulfilling
prophecy that business investment will rise. Access to finance is a problem for British
companies. We do not have a system in the UK of being able to access long-term capital
for banks or do we have access to working capital for fast-growing, new companies or
for companies that have run down capital reserves during the recession and are now ready to
fulfil orders again. I go around the country and find companies who are turning down orders
from overseas because they have not got the working capital to invest in those. It is
a big problem of a long-term structural problem. The only alternative is equity investment
for businesses and if that is involved, you have a sell-out programme. We do not have
the sector developing the way that it should. At this stage of the cycle, I think we should
not expect investment to be too strong. It ticks a while for businesses to take up the
spare capacity. -- it takes a while. That has been compounded by the fact that growth
is slower than it was before the financial crisis and some of the sources of growth that
we had before the crisis, widely buoyant sector and consumer spending which relied on people
being able to borrow heavily, those sources have gone away. And the new sources of growth
are from emerging markets and exports. Benefiting different types of companies from the ones
that have benefited before the crisis. There has been a big shift in the economy. There
has been slow growth and I think there is uncertainty in the business world about making
commitments for the longer term. What do you think is the biggest source of uncertainty
that is affecting confidence? Is a government policy, what is it? -- is it government policy.
What is it that businesses are most concerned about? What is it that is making them deter
from investing? In the UK, we have seen a big change in the consumer environment. Consumers
are a big part of the domestic market. Consumer spending grew by over 3% Consumer spending
grew by over 3% for a quarter of a century, until 2007. Recently, it has been growing
by about 1%. It has been a big change in the consumer environment. Companies that serve
to the UK consumer are now having to adapt to that and reorientate themselves. That is
one source of uncertainty and the other is the amount of volatility that we have had
from all sorts of different sources, since the financial crisis. The crisis was a big
shock. We have also had the Euro crisis and other shifts in the international markets
and sources of volatility. All of those things make businesses nervous. Do you agree? Broadly.
Certainly, businesses like certainty. We have low interest rates in the UK at the moment,
which is a good thing and long may that continue. That has encouraged businesses to think about
investment because the idea that interest rates may remain low for a time gives them
confidence that there will be increased consumer spending and also that any borrowing will
be relatively low -- will have a relatively low rate of return. But there is external
factors that worry businesses. The number one external factor is the Eurozone crisis,
which businesses recognise is still not over. The Eurozone is still a pack of cards which
is being propped up by investment from Germany and it is still not certain how that will
unravel in the end. Do you hear from members that the debate over whether the UK should
stay in the EU is a source of uncertainty? They would certainly prefer to be more certainty
around that debate. A number of our businesses, April Araki businesses want the referendum
to be earlier than the declared date. -- a plurality of businesses. Certainly, that that
majority want a referendum. Actually, they have already accepted the fact that there
is a level of uncertainty and discounted it. We have some very clear views in the businesses
in our network, that they actually believe the Prime Minister's position is correct and
should be really good sea and in order to get reform of the European Union. -- the should
be really negotiate. The Catch-22 is that the slow recovery deters firms from investing.
Perhaps they are reluctant because of tepid growth? For those who want to take the leap,
coming and entrepreneur can be fulfilling. It is all we have time for. I've like to thank
my panellists. Check out our websites. -- I'd like to thank my panellists. Join us sex week
for more Talking Business with Linda Yueh. -- join us next week. Gone is the Arctic air,
and we are looking at Atlantic air. The badgers have risen, and that changes taking place
in Shetland. The wind is picking up, but not stormy. Despite the cloud, a lot of dry weather
around and the temperatures not going down too far. The frost will be hard to come by
on Sunday. Some heat in Adelaide for the cricket but a change here as well. Set to turn cooler
with a chance for showers. On Monday,