Engine SearchWhy is there no British “Google”?James Clark – Cass Entrepreneurs Network – December 6st, 2011
British culture is unsuited to       entrepreneurs                              United States –                7.6%       ...
We don’t do tech like America…
Shortage of money for start-ups       Regional Venture Capital Funds     UK High Technology Fund                          ...
Development of the paper
Why have a Google?• Google is an exemplar of VC funded businesses   – Between 1981 and 2001, 0.1% of start-ups employ 10% ...
Review and research• Sponsored by the CTF; academic review by Cass  Business School• Researched in 3 phases:  – Interviews...
Learning from the experts
The Silicon Valley story                                                                                     Wave 6:      ...
The “4 Drivers” of Silicon ValleyCulture                        Knowledge and Experience•   Determination              •  ...
Google’s advantagesCulture                               Knowledge and Experience•   Focus on excellence in product    •  ...
In search of a British Google
Culture• British “Reserve”    – More likely to draw attention to failure than success    – Following the “traditional” pat...
Knowledge and Experience• Entrepreneurial teams   – Strategy and Operational Experience   – Industry Experience   – Financ...
Finance• Seed/Start-up finance   – Thriving yet inexperienced angel investment   – Government programs• Growth Finance   –...
Networks• Networks as they relate to the other factors   – Culture   – Knowledge and Experience   – Finance• Stratificatio...
SummaryCulture                                       Knowledge and Experience•   Some aspects of our culture can act as   ...
Recommendations forentrepreneurs
Culture• Embrace failure  – Learn from it rather than fear it  – Good investors accept the value of failure• Manage risk  ...
Knowledge and Experience• Avoid “Zuckerberg Syndrome”   – One person rarely has all the skills and knowledge to     succee...
Finance• Take an interest   – Business structure   – Keep all financing options on the table• Know your financier   –   Ba...
Networks• Value your network  – Get out there and grow it  – Maintain it  – Bring others along as well• Be open  – Share y...
... and a British “Google”?
Conclusion• Recommendations are specific to tech   – Not all start-ups are the same• Make best use of Britain’s advantages...
Thank You – Q&A
Why is there no British "Google"? Presented to the Cass Entrepreneurs Network, 06/12/11
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Why is there no British "Google"? Presented to the Cass Entrepreneurs Network, 06/12/11

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This study was produced on behalf of the Conservative Technology Forum, a technology interest group attached to the Conservative Party of the United Kingdom. It is a broad-based study that seeks to understand why Britain, with its continuing history of technical innovation, has yet to produce a technology company that achieves the scale of Google. It then seeks to provide policy options designed to assist Britain in developing its own ‘Google’. A shortened version of this presentation was made to the Cass Entrepreneurs Network on December 6, 2011.

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  • 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)
  • Why is there no British "Google"? Presented to the Cass Entrepreneurs Network, 06/12/11

    1. 1. Engine SearchWhy is there no British “Google”?James Clark – Cass Entrepreneurs Network – December 6st, 2011
    2. 2. 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
    3. 3. We don’t do tech like America…
    4. 4. Shortage of money for start-ups Regional Venture Capital Funds UK High Technology Fund Early Growth Funds Community Development Venture Funds Enterprise Capital FundsUK Innovation Investment Fund The Aspire Fund £1 billion
    5. 5. Development of the paper
    6. 6. 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
    7. 7. 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
    8. 8. Learning from the experts
    9. 9. 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 yearsWave 1: members of • Fairchild Microsoft and • Google created inValves 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
    10. 10. The “4 Drivers” of Silicon ValleyCulture Knowledge and Experience• Determination • Innovation• Pioneering spirit • Continuous Regeneration• Calculated Risk Taking • Clustered knowledge-base• EntrepreneurialismFinance Networks• Creation of the VC model • Rapid distribution of knowledge• Equity structuring • Closely linked community• Reinvestment of wealth • Ready access to resources
    11. 11. Google’s advantagesCulture 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 changingFinance 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
    12. 12. In search of a British Google
    13. 13. 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
    14. 14. Knowledge and Experience• Entrepreneurial teams – Strategy and Operational Experience – Industry Experience – Financing Experience• Investors – Angels – VCs – Institutional investors (LPs)
    15. 15. 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
    16. 16. 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?
    17. 17. SummaryCulture 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 skillsFinance 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
    18. 18. Recommendations forentrepreneurs
    19. 19. 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
    20. 20. 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
    21. 21. 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?
    22. 22. 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
    23. 23. ... and a British “Google”?
    24. 24. 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
    25. 25. Thank You – Q&A

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