Why hasn’t the UK (or for that matter Europe) been able to create a significant number of tech companies? Both the US and China have created tech companies with staggering valuations.
This week, legendary Silicon Valley investor, Michael Moritz, took a sharp jab at the UK’s failure to build unicorn (valuations of $1bn+) tech companies.
In light of recent press and governmental anger over the aggressive – yet legal – tax avoidance schemes employed by the likes of Amazon, Google and Facebook; Moritz suggests that we ought to be more concerned with building our own big businesses, not trying to scrape more tax from Uncle Sam’s successes.
It’s unfair to say that the UK Govt has done nothing. Change is happening in this space with the Government backing entrepreneur’s tax relief, founding catapult funds for incubation of high growth business, and creating great hype surrounding Silicon Roundabout.
Will favourable taxation and pots of growth funding provide the fertile ground for a £1bn+ UK business to emerge? Possibly, but I personally feel that there are two major blockers that sit in our way. The first is our somewhat reserved culture; the second a gap in business and finance education.
“Culture eats strategy for breakfast” – Peter Drucker
Nothing defines British culture better than the Very British Problems Twitter account. We are cripplingly polite, avoid open confrontation, emotional expression and excessive promotion (particularly of one’s self).
Our rebellious cousins on the other side of the Atlantic, share our language but certainly not our culture. To avoid offence to the American reader, allow me to quote from Harvard Business Review:
“Americans aren’t shy talking up their accomplishments and selling themselves. We do it all the time — at job fairs, interviews, sales calls, performance evaluations, and when vying for prized internal assignments and positions. The overall point is that self-promotion is clearly a necessary and useful skill for getting ahead in the U.S. professional world.
“In the U.S., it is culturally acceptable — even admirable — to show enthusiasm. When arguing for a point in a meeting, for example, it is quite appropriate to express your opinions enthusiastically. Or when speaking with a potential employer at a networking event, it is appropriate to express your interest enthusiastically. In fact, in this particular situation, the employer might interpret your interest as real and genuine because of the enthusiasm you express.”
All of these characteristics are vital elements in creating and raising funds for a fledgling business. Not only are they vital for the founders, but they are also required by all of the team who are genuinely excited and not ashamed of evangelising their company.
I’d contend that Brits either need to find a new means of raising funds, one that doesn’t require pitching to VCs or we need to become more comfortable with outward enthusiasm and self-promotion. Either way our reticence to toot our own trumpet may be off-putting to potential investors who want to place their bets on the next big thing.
“Nothing happens until a sale is made” – Thomas Watson Sr (Founder of IBM)
Sales and commercial astuteness are absolutely crucial in business.
More needs to be done in the UK to train and educate business students at an under and post-graduate level on the selling skill set. A quick analysis of the top 10 European MBA programmes reveals that the topic barely features on the curriculum. It may get a mention as an element of supply chain dynamics or as marketing’s poor relation but it isn’t taught outright as an essential part of business life.
Those who have worked in the field know that there are very specific skills that can be taught to improve both education on the topic and academic research on it.
Personally I’m pleased to see the development of business and computing apprenticeships. These I hope will be the grounds from which a UK Zuckerberg, Gates or Jobs can emerge. There are also other new education initiatives (Alacrity based in Newport is the best example that I’m aware of) that could provide the perfect incubation environment for a big UK tech company.
So whilst politicians can huff and puff about tax avoidance, ultimately the result will be determined by our ability to throw off the shackles of Britishness and ensure that we’re training the future generation of business leaders with skills to help them compete on a global level.