Land of Hope and Technology February 2016 - Page 13

ISSUE 1 Why we may mess it up THE GREAT BARRIER GRIEF The UK has many strengths, but it is more than capable of turning those strengths into weaknesses, of snatching defeat from the jaws of victory. Take as an example attitudes towards failure To borrow words from a report published by the European Flash Barometer Index, the UK population has a level of ‘fear of failure’ that was almost double that in the US and Canada. It turned out that no less than 43 per cent of Brits felt a business should not be set up if there was a chance it may fail. The same survey put that number at a mere 19 per cent for the US. In fairness, it should be pointed out that the ratio was typically even higher throughout much of Europe, even so that was a pretty damning finding. The thing about risk is that it carries a downside. It wouldn’t be risk, now would it, if nothing could go wrong? The business that can never fail is a business that has incredibly low expectations, an economy that is allergic to risk is an economy without hope, without any dynamism at all. negative attitudes in the UK towards failure discourage entrepreneurship Take findings from PwC. In a survey carried out earlier this decade, it found that 61 per cent of those questioned thought “that negative attitudes in the UK towards failure discourage entrepreneurship.” It cited an entrepreneur as saying “In the UK, a failure is a failure. In the US, a failure is someone who has tried.” It may be worth correcting a myth at this point. In Silicon Valley, business leaders, investors and entrepreneurs do not love failure. No one loves failure. But there is an acceptance that it is inevitable. Maybe one could say an entrepreneur who has never failed is one who has been lucky. An entrepreneur who has failed was perhaps made wiser and more humble by the experience. It is not that in Silicon Valley people love a failed entrepreneur, but they do have more respect for such an individual, whereas in the UK, such an individual must battle prejudice and a tendency for people to associate failure with loss of credibility. In the UK, many have a problem appreciating that business success is impossible to predict, – if it was possible all investors would make a fortune – that randomness plays a role. Maybe, in the UK, the public love to see the mighty fail, and gain schadenfreude from seeing an entrepreneur’s dreams turn to nightmares. In the UK, there is also an abiding sense of defeatism. It seems to be something in the national characteristic to knock ourselves. You only need to read the comments relating to the articles referred to in the list of references to this chapter to see this. If a journalist dares talk up the prospects of UK plc, suggest that we are become more entrepreneurial, then they are met with a chorus of derision. If more baby boomers are turning to entrepreneurism, we are told it is because the country is in such as poor state that they are desperate. Millennial entrepreneurs are naive, and there is nothing good that comes out of Britain turning to the world of start-ups, or so we are told. Coupled with all that is the UK’s ability to do its level best to lose its advantages. This sometimes beggars belief. Take as an example the UK’s time zone. It may be defined by the position of the sun, but many think it needs changing anyway. For example, take the Daylight Saving Bill 2010/11, a private members bill which wants to see a cross party analysis of the benefits of moving the UK time one hour forward to GMT+1 in winter and GMT+2 in summer. Let’s hope those concerned wake up and see how in making such a move the UK would in a display of abject stupidity rob itself of a key advantage. Then there is the issue of raising money. If you are a budding entrepreneur, with nothing but a good idea, and bundles of enthusiasm, raising money has traditionally been incredibly difficult. This is well known. And even admitted by the banks themselves. Take as an example these words written in May 2015: “Lending [for UK technology businesses] has not been widely available to UK businesses, whereas their US counterparts have been able to grow rapidly though access to debt finance.” So who uttered those words? Were they written by a disgruntled entrepreneur, exasperated by failed attempts to raise money? No, they were written by Barclays Bank. Even banks admit that UK banking has not been providing the services that entrepreneurs need. Although, in fairness to Barclays, it has now joined a growing cohort of institutions that are trying to change that, in the case of Barclays, via a £100 million fund set-up for the purpose of lending to growing UK technology firms. Maybe the change that has seen the likes of Barclays become a signed up member of the entrepreneurs’ fan club, a kind entrepreneurs’r’us, has been led by the internet and social media. All of a sudden we are seeing the emergence of alternative forms of finance, including peer to peer lending and crowd sourced funding. Both have been made possible by new technologies, in particular the internet, and they are revolutionising things. For hardstrapped entrepreneurs trying to get their new projects off the ground, times they are a changing. But our ability to take this wonderful opportunity and consign it to the graveyard has not been quelled. The UK’s financial regulator, the FCA, has said it wants to limit investor’s crowd sourced funding and peer to peer lending. Unless investors can show they are ‘sophisticated’ the FCA wants to limit their investments into crowd sourced funding and peer to peer projects to less than 10 per cent of their portfolio net of property assets. As I wrote in March 2015 “The FCA has just inserted a massive layer of bureaucracy in the process of crowd sourced fundi