:00:00. > :00:00.flooded and thousands of people had to leave their homes. Now on BBC
:00:07. > :00:11.News, it's time for Talking Business.
:00:12. > :00:13.Technology start`ups are all the rage and entrepreneurial spirit is
:00:14. > :00:17.something that cities and companies would like to have a little bit more
:00:18. > :00:24.of. What makes an entrepreneur, and is it the answer to our economic
:00:25. > :00:26.problems? Here in the heart of London's silicon dreams, I am Linda
:00:27. > :00:54.Yueh, and we are Talking Business. Welcome to the show. What does it
:00:55. > :00:57.take to be an entrepreneur? Technology companies are in the
:00:58. > :01:02.spotlight, and they are rather good for the recovery. It is very
:01:03. > :01:12.apparent in London, where they account for 30% of the jobs growth
:01:13. > :01:15.since 2009. Tech jobs are up about one`fifth against the backdrop of
:01:16. > :01:18.overall jobs growth in the UK of just 0.3%. I went to Silicon
:01:19. > :01:21.Roundabout to meet one of those tech entrepreneurs. Many of us think
:01:22. > :01:25.about starting a company, but few do it. Everyone here, though, at
:01:26. > :01:30.London's Silicon Roundabout, has started a tech company. What does it
:01:31. > :01:35.take to start your own firm? First, you need an idea. Brian Taylor had
:01:36. > :01:40.one. Hi, Brian, tell me your idea. Hi. My idea is to do away with
:01:41. > :01:48.passwords forever and use personal pictures to log into websites. This
:01:49. > :01:52.is a simple example. I have used a picture of my daughter and I on a
:01:53. > :01:55.Sunday afternoon ride on motorbikes. I'm clicking on certain places that
:01:56. > :01:59.I have chosen and that has logged me into the website, as simple as that,
:02:00. > :02:13.no more passwords. But how do you turn an idea into a business? Shared
:02:14. > :02:16.seminar space, a shared office. Mentorship and even a boot camp,
:02:17. > :02:19.that is what is offered in this incubator or accelerator. Brian,
:02:20. > :02:24.tell me, is that why you came here? Yes, we moved specifically to London
:02:25. > :02:27.from Cheltenham. We have a technology board grant, and this is
:02:28. > :02:32.where everything is happening, so the business is growing through
:02:33. > :02:35.being here. We have mentorship, networking events, basically
:02:36. > :02:41.everything we need. But is that really everything that you need?
:02:42. > :02:44.really everything that you need Companies need money to grow, and
:02:45. > :02:54.that is where angel investors come in. They will give you cash for a
:02:55. > :02:57.stake in your company. The big question is, how much to give away?
:02:58. > :03:02.How challenging is financing for a start`up? It is very challenging. I
:03:03. > :03:04.invested ?50,000 of my own money into the business. I have
:03:05. > :03:12.subsequently raised finances through angel investors and have given away
:03:13. > :03:14.32% of the business to do that. Small businesses like these
:03:15. > :03:18.represent 99.9% of all private firms in Britain, plus they employ nearly
:03:19. > :03:27.60% of the workforce and have been creating jobs at a double`digit pace
:03:28. > :03:30.since the recession ended. Many start`ups fail, but for now, they
:03:31. > :03:45.are an important part of the British recovery. Joining me today to talk
:03:46. > :03:48.about the entrepreneurial landscape here in London and in Europe are Eze
:03:49. > :03:50.Vidra, head of Google for Entrepreneurs Europe, Dan Crow,
:03:51. > :03:53.chief technology officer for Songkick, a start`up focused on
:03:54. > :03:56.making it easier to find live music events. He previously founded a
:03:57. > :03:58.start`up in Silicon Valley. And Jennifer Arcuri, founder of InnoTech
:03:59. > :04:00.Summit, a start`up that brings together policymakers, the private
:04:01. > :04:04.sector and entrepreneurs. Welcome to the show, all of you. What is that
:04:05. > :04:08.quality that you have, Dan, that is different from somebody else who
:04:09. > :04:11.says, I do not know if I can start a company, what is your
:04:12. > :04:15.entrepreneurial secret? I do not know that there is a great secret. I
:04:16. > :04:20.do not see myself as different from anyone else. Entrepreneurs tend to
:04:21. > :04:30.have an appetite for risk, for doing something that is a little bit, that
:04:31. > :04:34.might fail. They are willing to go out there, try something new, and if
:04:35. > :04:42.it does not go well, get up, start again and try something else. It is
:04:43. > :04:46.that feeling of, yes, I want to do something that may change the world,
:04:47. > :04:53.and I will take a risk to do that. What about you? You have also
:04:54. > :04:55.founded companies, what is the entrepreneurial quality that you
:04:56. > :04:58.might have that differentiates you from somebody else that says, I will
:04:59. > :05:01.not take that leap? For me personally, it was a need for
:05:02. > :05:04.experimentation and wanting to do something different. I like taking
:05:05. > :05:09.little bets and seeing if they work out. Recently I founded a
:05:10. > :05:12.collaboration of the tech community to help support children's education
:05:13. > :05:17.through cycling. This was just started as an idea. I put it out
:05:18. > :05:21.there on Twitter and I got a few supporters. By talking to people who
:05:22. > :05:30.were willing to help, suddenly we managed to create something that
:05:31. > :05:32.will go global in 2014. You're bringing together a whole bunch of
:05:33. > :05:37.policymakers and entrepreneurs to try and build that willingness for
:05:38. > :05:44.people to take that risk. I always think, what can you do to enable
:05:45. > :05:48.risk taking? Lots of people might say, they have done it, but I do not
:05:49. > :05:51.know if I can give up my paycheque, what if I cannot pay my mortgage?
:05:52. > :06:02.That is what everybody feels. Even as an entrepreneur, sometimes you
:06:03. > :06:06.wake up and think, what am I doing? They are both nodding! You have got
:06:07. > :06:11.a screw loose somewhere, but that is all right. The idea of just getting
:06:12. > :06:13.up and hustling, that is why it is so inspiring to be around other
:06:14. > :06:23.like`minded people, because they share that drive and they get it.
:06:24. > :06:26.They get that insanity. When you bring together all these different
:06:27. > :06:29.constituents for one day, to really rally the ecosystem, you cannot help
:06:30. > :06:34.but feeling inspired. What differentiates an idea from one that
:06:35. > :06:38.actually can make money? If I knew the answer to that, I would be a
:06:39. > :06:45.much richer person than I am! I will not ask you what you are worth! Not
:06:46. > :06:48.very much. Part of the thing about start`ups is that they are an
:06:49. > :06:55.experiment. Every start`up is a gamble. You have an idea, you think,
:06:56. > :07:02.maybe somebody will like this but you have to find out if somebody
:07:03. > :07:06.wants it. Do people want that idea, can you find enough people around
:07:07. > :07:10.the world to pay you money to do whatever you are doing? It is as
:07:11. > :07:20.simple as that. It is not about the idea. It is about the execution.
:07:21. > :07:20.simple as that. It is not about the idea. It is about the execution Are
:07:21. > :07:24.idea. It is about the execution. Are you able to go from the seed of
:07:25. > :07:27.something that has some signs that people like it, and then put in the
:07:28. > :07:31.hard work, persevere, go through the bad times and the good, and drive
:07:32. > :07:33.your way through to something that is actually a globally`scaled
:07:34. > :07:36.business that lots of people want to use. Do you agree? Yes, Marc
:07:37. > :07:39.Andreessen, a Silicon valley venture capitalist, the founder of Netscape
:07:40. > :07:43.said, the most important thing when you are starting a start`up is
:07:44. > :07:46.product`market feed. Most companies fail not because they fail to
:07:47. > :07:50.develop their product, but because they fail to develop their market.
:07:51. > :07:56.They need to build something that people want. That means talking to
:07:57. > :07:59.customers. It does not just mean cooking the best product in the
:08:00. > :08:10.kitchen. You will not know it is brilliant until people get the
:08:11. > :08:12.chance to try it. Jennifer, scale is quite difficult for an individual
:08:13. > :08:16.entrepreneur to test the market What are some of the things that you
:08:17. > :08:23.would like to see in an ecosystem that would help? London's Silicon
:08:24. > :08:26.roundabout, what are the key ingredients to give entrepreneurs
:08:27. > :08:30.the kind of things they need to make a business out of an idea? One of
:08:31. > :08:34.the things I keep finding, and I am sure you will attest to this, we
:08:35. > :08:37.meet so many entrepreneurs that are like, we are fundraising, and I am
:08:38. > :08:40.like, go get your customers and build your market, build the buzz
:08:41. > :08:42.around it. When I started my company, it was not because I was
:08:43. > :08:45.out to build a British business it out to build a British business, it
:08:46. > :08:50.kind of came as a default. I did this event during my MBA school and
:08:51. > :08:53.suddenly everyone wanted more of it. That drive, that hunger of the
:08:54. > :08:56.market is what fed me to build a business and to be so passionate
:08:57. > :09:00.about bringing together what it takes to build an ecosystem. That
:09:01. > :09:10.scalability, product development people are crucial. Building a team
:09:11. > :09:13.with your founders, the scheme we have that allows our founders to
:09:14. > :09:17.take part, and be a part of that company for the journey, because you
:09:18. > :09:20.really need that core team. You have located here. Why London, why London
:09:21. > :09:25.'s Silicon Roundabout? Why not the M4 corridor or Europe? To answer
:09:26. > :09:37.your previous question, successful start`up hubs need different things
:09:38. > :09:39.to successful start`ups. They need three components, environment, the
:09:40. > :09:41.physical environment and the community, maybe even the spiritual
:09:42. > :09:44.environment of learning and collaboration. The other thing that
:09:45. > :09:52.they need and this is very important, density. They need
:09:53. > :09:54.density of networks. Start`ups are designed to grow and they need
:09:55. > :09:59.partners, backers, founders, customers, users. They need more,
:10:00. > :10:05.basically, so that works well where there is enough density. It does not
:10:06. > :10:09.mean that it cannot work outside of capitals, but a city like London, a
:10:10. > :10:11.metropolis, it is designed to bring this density. Finally, you need to
:10:12. > :10:21.have this secret element of serendipity, chance. This is no
:10:22. > :10:24.secret, it happens when you get a bunch of smart people together in
:10:25. > :10:37.one place. I will make you confess something. Is being an entrepreneur,
:10:38. > :10:41.hoping to develop a business, is it a 24/7 job? Do you ever switch off?
:10:42. > :10:43.I guess there is a part of my brain that is always thinking about it.
:10:44. > :10:47.But look, I have young children. I But look, I have young children I
:10:48. > :10:57.am very lucky to be a father of twins. It is incredibly important to
:10:58. > :11:01.me. Are you very lucky?! Yes! It is the best thing that I do with my
:11:02. > :11:04.life. It is the best bit of my life. It is very important to me
:11:05. > :11:08.personally that I find time outside of work for my family, and that I am
:11:09. > :11:11.a proper father. It is really important to me personally, so yes,
:11:12. > :11:14.it is not only possible, I think it makes me a better entrepreneur. I
:11:15. > :11:18.see life outside of the bubble of the company. You can become so
:11:19. > :11:28.obsessed and focused on the company you do not see the bigger world
:11:29. > :11:32.outside it. I am building a company that I hope my children will grow up
:11:33. > :11:34.to enjoy using and that gives me a much broader perspective on things.
:11:35. > :11:38.I think that is valuable. Jennifer, do you agree? I never shut off, I am
:11:39. > :11:49.always working. I have no social life. We only hang out with other
:11:50. > :11:54.start`up people. What about you Is it a 24/7 job? I think that you
:11:55. > :11:58.cannot fake passion. If you're really passionate about something,
:11:59. > :12:01.it naturally comes to you. I shut off, but we are all guilty of
:12:02. > :12:07.looking at the phone way too many times, even in bed. Very quickly,
:12:08. > :12:09.what is the biggest sacrifice you have made to start your own company,
:12:10. > :12:16.Jennifer? Moving to England. No. Jennifer? Moving to England. No
:12:17. > :12:20.Being here and literally stopping everything just to... I mean, my
:12:21. > :12:24.hair fell out the first year I built the business and that was a huge
:12:25. > :12:37.sacrifice for me, but I loved being in London that much, that is what
:12:38. > :12:44.kept me here. Probably worklife balance. It's heavier on the work
:12:45. > :12:53.site but it means the moment you have with family, you enjoy them
:12:54. > :12:56.more. For me, it goes back to risk`taking. Every time you take a
:12:57. > :13:00.risk, there is something you are not doing. It is all the things might
:13:01. > :13:06.have done that I did not. I am pretty happy where Ryan. Thank you
:13:07. > :13:16.all very much indeed. `` pretty happy where Ryan. 22 month
:13:17. > :13:18.analysts. `` thank you to my analysts.
:13:19. > :13:25.They companies are also trying to instil an entrepreneurial spirit.
:13:26. > :13:28.One of the oldest and biggest software solutions providers calls
:13:29. > :13:37.itself the worlds biggest start`up. I spoke to its CEO to ask him how
:13:38. > :13:43.the company set themselves apart. Eiger up on Greenland. I learned to
:13:44. > :13:50.ski when I was very young. `` I grew up. There is one rule in downhill
:13:51. > :13:58.skiing, lean forward. Then you are in control. If you lean backwards,
:13:59. > :14:03.you often lose control. It is a good analogy to what happens in our
:14:04. > :14:07.industry. In 41 years, many of the companies that were around when we
:14:08. > :14:12.started our not around. If you are not always leaning forward and
:14:13. > :14:16.challenging yourself, challenging assumptions, and having teams who
:14:17. > :14:21.are willing to do something unexpected and go with it, then you
:14:22. > :14:24.will be irrelevant suddenly. It is not enough to be bigger. You need to
:14:25. > :14:29.be fast. That is what we're trying to do. We have come through three
:14:30. > :14:34.generations, radical shifts of technology. We're now on the fourth
:14:35. > :14:38.generation, with big data and cloud storage becoming the new skills. Is
:14:39. > :14:41.storage becoming the new skills Is it possible to retain the best
:14:42. > :14:48.people who may want to go off and take their know`how and start the
:14:49. > :14:51.next cloud computing company? The one thing about big companies is
:14:52. > :14:57.that it is hard to show that you are innovative. Absolutely right. If
:14:58. > :15:02.there is one task in our business that is the most important, it is to
:15:03. > :15:10.attract and retain the best talent. That is our only asset. It is a very
:15:11. > :15:14.intelligence oriented business. And we produce software that is imagined
:15:15. > :15:19.by people. So how do you do that? Think there are two things that
:15:20. > :15:25.matter. First of all, you need to be an attractive company. `` I think.
:15:26. > :15:28.Attractive today often means that you have a purpose. You have an
:15:29. > :15:33.impact in the world. An impact that is meaningful. People do not just
:15:34. > :15:39.have a job. I'd think they are part of a company where they feel they
:15:40. > :15:42.have a meaningful task. In our case, we say that we want to help the
:15:43. > :15:47.world one better `` world run better. It sounds vague but we have
:15:48. > :15:50.been spending 40 years helping companies manage their resources
:15:51. > :15:54.more effectively. There are 7 billion people in the world and
:15:55. > :15:57.skiers resources. So why not be the company that helps the world to
:15:58. > :16:04.manage this new growth with much more efficient ways of handling
:16:05. > :16:07.resources? That is the first thing. Secondly, I believe that many young
:16:08. > :16:08.people would like to be an entrepreneur we asked ourselves, how
:16:09. > :16:12.entrepreneur we asked ourselves how do we create the biggest
:16:13. > :16:18.entrepreneur company in the world? How can we be the biggest start`up?
:16:19. > :16:21.That means that we foster a culture like start`up, but we get the
:16:22. > :16:30.benefit of scale which start`ups do not have. I was once told by
:16:31. > :16:36.creative types that the key to being able to innovate in a company is
:16:37. > :16:40.minimising the risk of failure. Because most innovators strike a
:16:41. > :16:43.balance between design, creativity and fudge nullity. The result was an
:16:44. > :16:49.element of failure. `` functionality. How do you minimise
:16:50. > :16:58.the risk of failure in the world's biggest start`up to make ``? The
:16:59. > :17:03.Whitby do that is by not trying to avoid risks. `` the way we do that.
:17:04. > :17:09.You have to take on crazy projects and listen to crazy ideas. You have
:17:10. > :17:16.to go with it. So how do we manage risk? We try to fail or succeed
:17:17. > :17:23.fast. Sometimes we get an idea or an employee has an idea and we go with
:17:24. > :17:27.it, but we evaluated very rapidly. `` evaluate it and very rapidly.
:17:28. > :17:35.That means that it will succeed or fail fast. We do not believe in huge
:17:36. > :17:39.programmes over many years in which new hope for success one day. In
:17:40. > :17:47.today's world, you should see success very rapidly.
:17:48. > :17:51.All companies, big or small, need an environment where people are willing
:17:52. > :17:55.to invest. But is the slow pace of recovery deterring investment and
:17:56. > :18:00.stifling potential tumour what is holding back the economic recovery
:18:01. > :18:04.in the UK and Europe? Joining me, the senior economic adviser to PwC,
:18:05. > :18:12.and external member of the Monetary Policy Committee of the Bank of
:18:13. > :18:14.England from 2006 until 2011. And John Longworth, Director General of
:18:15. > :18:19.the Chamber of Commerce, representing thousands of businesses
:18:20. > :18:23.across Britain. Welcome to the show. John, starting with you, what is
:18:24. > :18:25.holding back business investment? Was no question of business
:18:26. > :18:31.investment is being held back to some degree. That is partly a
:18:32. > :18:39.rollover of lack of confidence from the economic situation prior to
:18:40. > :18:43.today. It looks like the economy is picking up. Maybe it is good but not
:18:44. > :18:48.good enough. That affects sentiment and it will be a self`fulfilling
:18:49. > :18:53.prophecy that business investment will rise. Access to finance is a
:18:54. > :18:57.problem for British companies. We do not have a system in the UK of being
:18:58. > :19:03.able to access long`term capital for banks or do we have access to
:19:04. > :19:06.working capital for fast`growing, new companies or for companies that
:19:07. > :19:10.have run down capital reserves during the recession and are now
:19:11. > :19:13.ready to fulfil orders again. I go around the country and find
:19:14. > :19:17.companies who are turning down orders from overseas because they
:19:18. > :19:25.have not got the working capital to invest in those. It is a big problem
:19:26. > :19:32.of a long`term structural problem. The only alternative is equity
:19:33. > :19:37.investment for businesses and if that is involved, you have a
:19:38. > :19:40.sell`out programme. We do not have the sector developing the way that
:19:41. > :19:46.it should. At this stage of the cycle, I think we should not expect
:19:47. > :19:51.investment to be too strong. It ticks a while for businesses to take
:19:52. > :19:54.up the spare capacity. `` it takes a while. That has been compounded by
:19:55. > :19:58.the fact that growth is slower than it was before the financial crisis
:19:59. > :20:03.and some of the sources of growth that we had before the crisis,
:20:04. > :20:07.widely buoyant sector and consumer spending which relied on people
:20:08. > :20:10.being able to borrow heavily, those sources have gone away. And the new
:20:11. > :20:15.sources of growth are from emerging markets and exports. Benefiting
:20:16. > :20:19.different types of companies from the ones that have benefited before
:20:20. > :20:24.the crisis. There has been a big shift in the economy. There has been
:20:25. > :20:30.slow growth and I think there is uncertainty in the business world
:20:31. > :20:39.about making commitments for the longer term. What do you think is
:20:40. > :20:46.the biggest source of uncertainty that is affecting confidence? Is a
:20:47. > :20:50.government policy, what is it? `` is it government policy. What is it
:20:51. > :20:56.that businesses are most concerned about? What is it that is making
:20:57. > :21:01.them deter from investing? In the UK, we have seen a big change in the
:21:02. > :21:03.consumer environment. Consumers are a big part of the domestic market.
:21:04. > :21:11.Consumer spending grew by over 3% Consumer spending grew by over 3%
:21:12. > :21:20.for a quarter of a century, until 2007. Recently, it has been growing
:21:21. > :21:24.by about 1%. It has been a big change in the consumer environment.
:21:25. > :21:28.Companies that serve to the UK consumer are now having to adapt to
:21:29. > :21:34.that and reorientate themselves. That is one source of uncertainty
:21:35. > :21:39.and the other is the amount of volatility that we have had from all
:21:40. > :21:42.sorts of different sources, since the financial crisis. The crisis was
:21:43. > :21:47.a big shock. We have also had the Euro crisis and other shifts in the
:21:48. > :21:52.international markets and sources of volatility. All of those things make
:21:53. > :22:00.businesses nervous. Do you agree? Broadly. Certainly, businesses like
:22:01. > :22:03.certainty. We have low interest rates in the UK at the moment, which
:22:04. > :22:07.is a good thing and long may that continue. That has encouraged
:22:08. > :22:11.businesses to think about investment because the idea that interest rates
:22:12. > :22:14.may remain low for a time gives them confidence that there will be
:22:15. > :22:23.increased consumer spending and also that any borrowing will be
:22:24. > :22:28.relatively low `` will have a relatively low rate of return. But
:22:29. > :22:31.there is external factors that worry businesses. The number one external
:22:32. > :22:35.factor is the Eurozone crisis, which businesses recognise is still not
:22:36. > :22:42.over. The Eurozone is still a pack of cards which is being propped up
:22:43. > :22:46.by investment from Germany and it is still not certain how that will
:22:47. > :22:52.unravel in the end. Do you hear from members that the debate over whether
:22:53. > :22:56.the UK should stay in the EU is a source of uncertainty? They would
:22:57. > :23:02.certainly prefer to be more certainty around that debate. A
:23:03. > :23:06.number of our businesses, April Araki businesses want the referendum
:23:07. > :23:11.to be earlier than the declared date. `` a plurality of businesses.
:23:12. > :23:16.Certainly, that that majority want a referendum. Actually, they have
:23:17. > :23:21.already accepted the fact that there is a level of uncertainty and
:23:22. > :23:25.discounted it. We have some very clear views in the businesses in our
:23:26. > :23:28.network, that they actually believe the Prime Minister's position is
:23:29. > :23:34.correct and should be really good sea and in order to get reform of
:23:35. > :23:42.the European Union. `` the should be really negotiate. The Catch`22 is
:23:43. > :23:46.that the slow recovery deters firms from investing. Perhaps they are
:23:47. > :23:51.reluctant because of tepid growth? For those who want to take the leap,
:23:52. > :23:54.coming and entrepreneur can be fulfilling. It is all we have time
:23:55. > :23:59.for. I've like to thank my panellists. Check out our websites.
:24:00. > :24:12.`` I'd like to thank my panellists. Join us sex week for more Talking
:24:13. > :24:18.Business with Linda Yueh. `` join us next week.
:24:19. > :24:25.Gone is the Arctic air, and we are looking at Atlantic air. The badgers
:24:26. > :24:38.have risen, and that changes taking place in Shetland. The wind is
:24:39. > :24:41.picking up, but not stormy. Despite the cloud, a lot of dry weather
:24:42. > :24:47.around and the temperatures not going down too far. The frost will
:24:48. > :24:51.be hard to come by on Sunday. Some heat in Adelaide for the cricket but
:24:52. > :24:55.a change here as well. Set to turn cooler with a chance for showers. On
:24:56. > :24:57.Monday,