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Peter Cochrane's Hard Drive 1999 Stop carping and seize the day I SENSE that the California hi-tech start-up culture has migrated to Britain and is about to have a great impact on our culture and industry. An increasing number of our young people are leaving university and their host companies to initiate or join new start-ups. This is not powered just by the opportunity to make money, but by the frustration with the old ways of doing things. The Net culture is creating a far greater sense of urgency, opportunity and "seize-the-day". In America, money is available to do almost anything, but there is a shortage of good ideas and people. Their solution has been to comb the world. Silicon Valley is full of Europeans and Asians who went to America to make it. This is how Victorian England was - rich, confident and attractive to people willing to risk everything to create the new. The rise of the British economy offers an opportunity to realise new wealth in new electronic markets. What is missing is the vision to create the right environment - and money. A young graduate of the Massachussets Institute of Technology recently raised $25 million (about £15 million) to start a new company. As a result, his chances of success are very high, especially as the Business Angels already have a string of related successes. They also have an attitude of wanting to support and help him, rather than just protecting their money. In Britain he would be very lucky to get £150,000 and his chance of failure would be almost certain - he would simply run out of money and be starved of support. If Britain is to take advantage of talented people and deter them from emigrating, there needs to be a big change in attitude. But I don't think we should simply adopt the American model, because it now comes from an old perspective. The success rate for new start-up electronic businesses is one to two per cent. So to get a success means 100 or more new start-ups, which by American standards would require a fund approaching £1 billion. But the payback could be on the scale of Yahoo!, Amazon or eBay, with valuations of $6 billion in five years. It is unlikely that a single British institution could afford such a risk, or avoid the temptation to meddle with the operation as it developed, and thereby predicate failure. As a general rule, the people who start companies should not run them and vice-versa. A new model focused on success would see 10 to 20 companies and institutions clubbing together to invest five to 10 per cent each in a single start-up. This would create a capital-without-interference environment. Also, the start-up could tap management, financial, technical, marketing and contact support from the host companies. Start-ups could also be directed to trade among each other to form a virtuous circle of dependency. Given the American appetite for people and expansion, we should consider the risks of not doing this. The words "technological imperialism" spring to mind. They no longer have to attract our people and ideas to America; they are all online and available for the picking - just like farming. Peter Cochrane holds the Collier Chair for the Public Understanding of Science & Technology at the University of Bristol. His home page is: |
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