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Why is there no British "Google"? Presented to the Cass Entrepreneurs Network, 06/12/11
- 1. Engine Search Why is there no British “Google”? James Clark – Cass Entrepreneurs Network – December 6st, 2011
- 3. British culture is unsuited to entrepreneurs United States – 7.6% United Kingdom – 6.4% Comparative Ave – 5.6% Source: Global Entrepreneurship Monitor Global Report 2010
- 4. We don’t do tech like America…
- 5. Shortage of money for start-ups Regional Venture Capital Funds UK High Technology Fund Early Growth Funds Community Development Venture Funds Enterprise Capital Funds UK Innovation Investment Fund The Aspire Fund £1 billion
- 6. Development of the paper
- 7. Why have a Google? • Google is an exemplar of VC funded businesses – Between 1981 and 2001, 0.1% of start-ups employ 10% of US workforce – By 2008 that became 11% of the private sector – 21% of US GDP – Lower capital costs, higher potential returns, shorter lifecycle
- 8. Review and research • Sponsored by the CTF; academic review by Cass Business School • Researched in 3 phases: – Interviews with industry players – Extensive literature review – Limited survey used as confirmation of certain points
- 9. Learning from the experts
- 10. The Silicon Valley story Wave 6: World Wide Web • WWW is created at Cern by Tim Wave 5: Berners-Lee Software • ARPANET repurposed as • IBM aligns with Internet Microsoft MSDOS • Internet Wave 4: • Compaq releases Hardware commerce arrives IBM clone; • Search engines • Personal hardware market dominate computing takes is flooded • New business Wave 3: shape • Bad for hardware, powerhouses Integrated Circuits • Intel = Memory very good for • Netscape initiates • IBM = Databases Microsoft • Texas Instruments VC boom • Xerox PARC = GUI, • Yahoo created and Integrated Wave 2: Workstations, • Amazon goes Circuits Ethernet from $40k Semiconductors • The Planar • Altair 8800 investment to Method • Shockley and the inspires the $438m IPO in 3 • Intel created by Traitorous 8 creation of years Wave 1: members of • Fairchild Microsoft and • Google created in Valves Fairchild Semiconductor Apple 1998 Semiconductor • Fred Terman • Arthur Rock and a • Moore’s Law • Hewlett Packard new financing • Growth in the • Stanford outreach model Valley • US Military projects
- 11. The “4 Drivers” of Silicon Valley Culture Knowledge and Experience • Determination • Innovation • Pioneering spirit • Continuous Regeneration • Calculated Risk Taking • Clustered knowledge-base • Entrepreneurialism Finance Networks • Creation of the VC model • Rapid distribution of knowledge • Equity structuring • Closely linked community • Reinvestment of wealth • Ready access to resources
- 12. Google’s advantages Culture Knowledge and Experience • Focus on excellence in product • Page and Brin studied at Stanford • Willingness to “Go big” • Investors brought with them • Flexible enough to adapt experience • Experience meant confidence in changing Finance Networks • Access to Angels • Advantage of Stanford network at • Buoyant VC market start-up • Private ownership during Dotcom • Investment through KP and Sequoia Crash enabled cool heads enabled access to the best networks • Model generating revenue • Tradition of talent mobility
- 13. In search of a British Google
- 14. Culture • British “Reserve” – More likely to draw attention to failure than success – Following the “traditional” path • Misperception of risk – Stock options; early sales; poor investments by angels; conservatism of GPs and LPs • Failure – Less of a factor and can be misleading – GEM: UK vs US vs Israel • Ambition – Less desire to go “big” • Dotcom Hangover – Investors are highly averse to risk taking – Financial “Nuclear Winter” • HOWEVER – Things are changing – Risk of losing touch with current generation of start-ups
- 15. Knowledge and Experience • Entrepreneurial teams – Strategy and Operational Experience – Industry Experience – Financing Experience • Investors – Angels – VCs – Institutional investors (LPs)
- 16. Finance • Seed/Start-up finance – Thriving yet inexperienced angel investment – Government programs • Growth Finance – Funding gaps • US vs Europe/UK • “Wrong” institutional investors • Flight from risk • Misdirected incentives = misdirected investment – Consequences • This has nothing to do with debt finance • Collapse of venture market • Need to sell before IPO
- 17. Networks • Networks as they relate to the other factors – Culture – Knowledge and Experience – Finance • Stratification of networks – Poor understanding of the total network – Who knows what?
- 18. Summary Culture Knowledge and Experience • Some aspects of our culture can act as • Not enough of the “right” kind of “inhibitors” knowledge • Behave in a way that makes use of • You can’t do everything, so seek out cultural activators partners who complement your skills Finance Networks • Financing gaps at crucial growth stages • Networks are stratified and • Know your funding options; information is poorly distributed understand your investors • Be an open networker – share information and others will reciprocate
- 20. Culture • Embrace failure – Learn from it rather than fear it – Good investors accept the value of failure • Manage risk – Accept risk, manage it, mitigate it
- 21. Knowledge and Experience • Avoid “Zuckerberg Syndrome” – One person rarely has all the skills and knowledge to succeed – Be willing to use shares to attract staff – Potential investors will look for a team • Learn from failure – Failure is only a waste if you don’t learn lessons • Be where the action is – You may be able to find funding locally, don’t take it
- 22. Finance • Take an interest – Business structure – Keep all financing options on the table • Know your financier – Banks, F&F, Angels, VCs – Investment should be more than just money – What can they offer you? – What do they want from you?
- 23. Networks • Value your network – Get out there and grow it – Maintain it – Bring others along as well • Be open – Share your ideas – Share your network – Rewards as well as risks
- 24. ... and a British “Google”?
- 25. Conclusion • Recommendations are specific to tech – Not all start-ups are the same • Make best use of Britain’s advantages – Industrial, human, financial • Yes, but not yet – Slow process but not 60 years
- 26. Thank You – Q&A
Editor's Notes
- Alan TuringSir Maurice WilkesTim Berners-LeeLulzsec HackersSteve JobsMark ZuckerbergMike LynchRichard Moross
- Saffo from Newsweek in 2002 The valley also recycles its most important resource – people. Observers are quick to lampoon the callow folly of the fallen dot-comers, but they overlook the experience gained by these pioneers. An entire generation of twenty- and thirty-somethings just rocketed through an accelerated business cycle. They got in, shot up, crashed down and now they are out, and 25 | P a g e their careers still lie more before than behind them. Few are rushing to embrace the security of the corporate establishment. Rather, they are busy starting over.
- Risk: Mike Lynch, CEO of Autonomy when interviewed for the Wall St Journal: It is all summed up for me in one simple thing. We had someone write a note last year that accused us of running Autonomy with a start-up culture. It was a sell note on that basis. That would be a buy note on an American company. It is just an absolutely beautiful clear-cut case of the different way of thinking. (Rooney 2011)