07/12/2013 Talking Business with Linda Yueh

flooded and thousands of people had to leave their homes. Now on BBC

News, it's time for Talking Business.

Technology start`ups are all the rage and entrepreneurial spirit is

something that cities and companies would like to have a little bit more

of. What makes an entrepreneur, and is it the answer to our economic

problems? Here in the heart of London's silicon dreams, I am Linda

Yueh, and we are Talking Business. Welcome to the show. What does it

take to be an entrepreneur? Technology companies are in the

spotlight, and they are rather good for the recovery. It is very

apparent in London, where they account for 30% of the jobs growth

since 2009. Tech jobs are up about one`fifth against the backdrop of

overall jobs growth in the UK of just 0.3%. I went to Silicon

Roundabout to meet one of those tech entrepreneurs. Many of us think

about starting a company, but few do it. Everyone here, though, at

London's Silicon Roundabout, has started a tech company. What does it

take to start your own firm? First, you need an idea. Brian Taylor had

one. Hi, Brian, tell me your idea. Hi. My idea is to do away with

passwords forever and use personal pictures to log into websites. This

is a simple example. I have used a picture of my daughter and I on a

Sunday afternoon ride on motorbikes. I'm clicking on certain places that

I have chosen and that has logged me into the website, as simple as that,

no more passwords. But how do you turn an idea into a business? Shared

seminar space, a shared office. Mentorship and even a boot camp,

that is what is offered in this incubator or accelerator. Brian,

tell me, is that why you came here? Yes, we moved specifically to London

from Cheltenham. We have a technology board grant, and this is

where everything is happening, so the business is growing through

being here. We have mentorship, networking events, basically

everything we need. But is that really everything that you need?

really everything that you need Companies need money to grow, and

that is where angel investors come in. They will give you cash for a

stake in your company. The big question is, how much to give away?

How challenging is financing for a start`up? It is very challenging. I

invested ?50,000 of my own money into the business. I have

subsequently raised finances through angel investors and have given away

32% of the business to do that. Small businesses like these

represent 99.9% of all private firms in Britain, plus they employ nearly

60% of the workforce and have been creating jobs at a double`digit pace

since the recession ended. Many start`ups fail, but for now, they

are an important part of the British recovery. Joining me today to talk

about the entrepreneurial landscape here in London and in Europe are Eze

Vidra, head of Google for Entrepreneurs Europe, Dan Crow,

chief technology officer for Songkick, a start`up focused on

making it easier to find live music events. He previously founded a

start`up in Silicon Valley. And Jennifer Arcuri, founder of InnoTech

Summit, a start`up that brings together policymakers, the private

sector and entrepreneurs. Welcome to the show, all of you. What is that

quality that you have, Dan, that is different from somebody else who

says, I do not know if I can start a company, what is your

entrepreneurial secret? I do not know that there is a great secret. I

do not see myself as different from anyone else. Entrepreneurs tend to

have an appetite for risk, for doing something that is a little bit, that

might fail. They are willing to go out there, try something new, and if

it does not go well, get up, start again and try something else. It is

that feeling of, yes, I want to do something that may change the world,

and I will take a risk to do that. What about you? You have also

founded companies, what is the entrepreneurial quality that you

might have that differentiates you from somebody else that says, I will

not take that leap? For me personally, it was a need for

experimentation and wanting to do something different. I like taking

little bets and seeing if they work out. Recently I founded a

collaboration of the tech community to help support children's education

through cycling. This was just started as an idea. I put it out

there on Twitter and I got a few supporters. By talking to people who

were willing to help, suddenly we managed to create something that

will go global in 2014. You're bringing together a whole bunch of

policymakers and entrepreneurs to try and build that willingness for

people to take that risk. I always think, what can you do to enable

risk taking? Lots of people might say, they have done it, but I do not

know if I can give up my paycheque, what if I cannot pay my mortgage?

That is what everybody feels. Even as an entrepreneur, sometimes you

wake up and think, what am I doing? They are both nodding! You have got

a screw loose somewhere, but that is all right. The idea of just getting

up and hustling, that is why it is so inspiring to be around other

like`minded people, because they share that drive and they get it.

They get that insanity. When you bring together all these different

constituents for one day, to really rally the ecosystem, you cannot help

but feeling inspired. What differentiates an idea from one that

actually can make money? If I knew the answer to that, I would be a

much richer person than I am! I will not ask you what you are worth! Not

very much. Part of the thing about start`ups is that they are an

experiment. Every start`up is a gamble. You have an idea, you think,

maybe somebody will like this but you have to find out if somebody

wants it. Do people want that idea, can you find enough people around

the world to pay you money to do whatever you are doing? It is as

simple as that. It is not about the idea. It is about the execution.

simple as that. It is not about the idea. It is about the execution Are

idea. It is about the execution. Are you able to go from the seed of

something that has some signs that people like it, and then put in the

hard work, persevere, go through the bad times and the good, and drive

your way through to something that is actually a globally`scaled

business that lots of people want to use. Do you agree? Yes, Marc

Andreessen, a Silicon valley venture capitalist, the founder of Netscape

said, the most important thing when you are starting a start`up is

product`market feed. Most companies fail not because they fail to

develop their product, but because they fail to develop their market.

They need to build something that people want. That means talking to

customers. It does not just mean cooking the best product in the

kitchen. You will not know it is brilliant until people get the

chance to try it. Jennifer, scale is quite difficult for an individual

entrepreneur to test the market What are some of the things that you

would like to see in an ecosystem that would help? London's Silicon

roundabout, what are the key ingredients to give entrepreneurs

the kind of things they need to make a business out of an idea? One of

the things I keep finding, and I am sure you will attest to this, we

meet so many entrepreneurs that are like, we are fundraising, and I am

like, go get your customers and build your market, build the buzz

around it. When I started my company, it was not because I was

out to build a British business it out to build a British business, it

kind of came as a default. I did this event during my MBA school and

suddenly everyone wanted more of it. That drive, that hunger of the

market is what fed me to build a business and to be so passionate

about bringing together what it takes to build an ecosystem. That

scalability, product development people are crucial. Building a team

with your founders, the scheme we have that allows our founders to

take part, and be a part of that company for the journey, because you

really need that core team. You have located here. Why London, why London

's Silicon Roundabout? Why not the M4 corridor or Europe? To answer

your previous question, successful start`up hubs need different things

to successful start`ups. They need three components, environment, the

physical environment and the community, maybe even the spiritual

environment of learning and collaboration. The other thing that

they need and this is very important, density. They need

density of networks. Start`ups are designed to grow and they need

partners, backers, founders, customers, users. They need more,

basically, so that works well where there is enough density. It does not

mean that it cannot work outside of capitals, but a city like London, a

metropolis, it is designed to bring this density. Finally, you need to

have this secret element of serendipity, chance. This is no

secret, it happens when you get a bunch of smart people together in

one place. I will make you confess something. Is being an entrepreneur,

hoping to develop a business, is it a 24/7 job? Do you ever switch off?

I guess there is a part of my brain that is always thinking about it.

But look, I have young children. I But look, I have young children I

am very lucky to be a father of twins. It is incredibly important to

me. Are you very lucky?! Yes! It is the best thing that I do with my

life. It is the best bit of my life. It is very important to me

personally that I find time outside of work for my family, and that I am

a proper father. It is really important to me personally, so yes,

it is not only possible, I think it makes me a better entrepreneur. I

see life outside of the bubble of the company. You can become so

obsessed and focused on the company you do not see the bigger world

outside it. I am building a company that I hope my children will grow up

to enjoy using and that gives me a much broader perspective on things.

I think that is valuable. Jennifer, do you agree? I never shut off, I am

always working. I have no social life. We only hang out with other

start`up people. What about you Is it a 24/7 job? I think that you

cannot fake passion. If you're really passionate about something,

it naturally comes to you. I shut off, but we are all guilty of

looking at the phone way too many times, even in bed. Very quickly,

what is the biggest sacrifice you have made to start your own company,

Jennifer? Moving to England. No. Jennifer? Moving to England. No

Being here and literally stopping everything just to... I mean, my

hair fell out the first year I built the business and that was a huge

sacrifice for me, but I loved being in London that much, that is what

kept me here. Probably worklife balance. It's heavier on the work

site but it means the moment you have with family, you enjoy them

more. For me, it goes back to risk`taking. Every time you take a

risk, there is something you are not doing. It is all the things might

have done that I did not. I am pretty happy where Ryan. Thank you

all very much indeed. `` pretty happy where Ryan. 22 month

analysts. `` thank you to my analysts.

They companies are also trying to instil an entrepreneurial spirit.

One of the oldest and biggest software solutions providers calls

itself the worlds biggest start`up. I spoke to its CEO to ask him how

the company set themselves apart. Eiger up on Greenland. I learned to

ski when I was very young. `` I grew up. There is one rule in downhill

skiing, lean forward. Then you are in control. If you lean backwards,

you often lose control. It is a good analogy to what happens in our

industry. In 41 years, many of the companies that were around when we

started our not around. If you are not always leaning forward and

challenging yourself, challenging assumptions, and having teams who

are willing to do something unexpected and go with it, then you

will be irrelevant suddenly. It is not enough to be bigger. You need to

be fast. That is what we're trying to do. We have come through three

generations, radical shifts of technology. We're now on the fourth

generation, with big data and cloud storage becoming the new skills. Is

storage becoming the new skills Is it possible to retain the best

people who may want to go off and take their know`how and start the

next cloud computing company? The one thing about big companies is

that it is hard to show that you are innovative. Absolutely right. If

there is one task in our business that is the most important, it is to

attract and retain the best talent. That is our only asset. It is a very

intelligence oriented business. And we produce software that is imagined

by people. So how do you do that? Think there are two things that

matter. First of all, you need to be an attractive company. `` I think.

Attractive today often means that you have a purpose. You have an

impact in the world. An impact that is meaningful. People do not just

have a job. I'd think they are part of a company where they feel they

have a meaningful task. In our case, we say that we want to help the

world one better `` world run better. It sounds vague but we have

been spending 40 years helping companies manage their resources

more effectively. There are 7 billion people in the world and

skiers resources. So why not be the company that helps the world to

manage this new growth with much more efficient ways of handling

resources? That is the first thing. Secondly, I believe that many young

people would like to be an entrepreneur we asked ourselves, how

entrepreneur we asked ourselves how do we create the biggest

entrepreneur company in the world? How can we be the biggest start`up?

That means that we foster a culture like start`up, but we get the

benefit of scale which start`ups do not have. I was once told by

creative types that the key to being able to innovate in a company is

minimising the risk of failure. Because most innovators strike a

balance between design, creativity and fudge nullity. The result was an

element of failure. `` functionality. How do you minimise

the risk of failure in the world's biggest start`up to make ``? The

Whitby do that is by not trying to avoid risks. `` the way we do that.

You have to take on crazy projects and listen to crazy ideas. You have

to go with it. So how do we manage risk? We try to fail or succeed

fast. Sometimes we get an idea or an employee has an idea and we go with

it, but we evaluated very rapidly. `` evaluate it and very rapidly.

That means that it will succeed or fail fast. We do not believe in huge

programmes over many years in which new hope for success one day. In

today's world, you should see success very rapidly.

All companies, big or small, need an environment where people are willing

to invest. But is the slow pace of recovery deterring investment and

stifling potential tumour what is holding back the economic recovery

in the UK and Europe? Joining me, the senior economic adviser to PwC,

and external member of the Monetary Policy Committee of the Bank of

England from 2006 until 2011. And John Longworth, Director General of

the Chamber of Commerce, representing thousands of businesses

across Britain. Welcome to the show. John, starting with you, what is

holding back business investment? Was no question of business

investment is being held back to some degree. That is partly a

rollover of lack of confidence from the economic situation prior to

today. It looks like the economy is picking up. Maybe it is good but not

good enough. That affects sentiment and it will be a self`fulfilling

prophecy that business investment will rise. Access to finance is a

problem for British companies. We do not have a system in the UK of being

able to access long`term capital for banks or do we have access to

working capital for fast`growing, new companies or for companies that

have run down capital reserves during the recession and are now

ready to fulfil orders again. I go around the country and find

companies who are turning down orders from overseas because they

have not got the working capital to invest in those. It is a big problem

of a long`term structural problem. The only alternative is equity

investment for businesses and if that is involved, you have a

sell`out programme. We do not have the sector developing the way that

it should. At this stage of the cycle, I think we should not expect

investment to be too strong. It ticks a while for businesses to take

up the spare capacity. `` it takes a while. That has been compounded by

the fact that growth is slower than it was before the financial crisis

and some of the sources of growth that we had before the crisis,

widely buoyant sector and consumer spending which relied on people

being able to borrow heavily, those sources have gone away. And the new

sources of growth are from emerging markets and exports. Benefiting

different types of companies from the ones that have benefited before

the crisis. There has been a big shift in the economy. There has been

slow growth and I think there is uncertainty in the business world

about making commitments for the longer term. What do you think is

the biggest source of uncertainty that is affecting confidence? Is a

government policy, what is it? `` is it government policy. What is it

that businesses are most concerned about? What is it that is making

them deter from investing? In the UK, we have seen a big change in the

consumer environment. Consumers are a big part of the domestic market.

Consumer spending grew by over 3% Consumer spending grew by over 3%

for a quarter of a century, until 2007. Recently, it has been growing

by about 1%. It has been a big change in the consumer environment.

Companies that serve to the UK consumer are now having to adapt to

that and reorientate themselves. That is one source of uncertainty

and the other is the amount of volatility that we have had from all

sorts of different sources, since the financial crisis. The crisis was

a big shock. We have also had the Euro crisis and other shifts in the

international markets and sources of volatility. All of those things make

businesses nervous. Do you agree? Broadly. Certainly, businesses like

certainty. We have low interest rates in the UK at the moment, which

is a good thing and long may that continue. That has encouraged

businesses to think about investment because the idea that interest rates

may remain low for a time gives them confidence that there will be

increased consumer spending and also that any borrowing will be

relatively low `` will have a relatively low rate of return. But

there is external factors that worry businesses. The number one external

factor is the Eurozone crisis, which businesses recognise is still not

over. The Eurozone is still a pack of cards which is being propped up

by investment from Germany and it is still not certain how that will

unravel in the end. Do you hear from members that the debate over whether

the UK should stay in the EU is a source of uncertainty? They would

certainly prefer to be more certainty around that debate. A

number of our businesses, April Araki businesses want the referendum

to be earlier than the declared date. `` a plurality of businesses.

Certainly, that that majority want a referendum. Actually, they have

already accepted the fact that there is a level of uncertainty and

discounted it. We have some very clear views in the businesses in our

network, that they actually believe the Prime Minister's position is

correct and should be really good sea and in order to get reform of

the European Union. `` the should be really negotiate. The Catch`22 is

that the slow recovery deters firms from investing. Perhaps they are

reluctant because of tepid growth? For those who want to take the leap,

coming and entrepreneur can be fulfilling. It is all we have time

for. I've like to thank my panellists. Check out our websites.

`` I'd like to thank my panellists. Join us sex week for more Talking

Business with Linda Yueh. `` join us next week.

Gone is the Arctic air, and we are looking at Atlantic air. The badgers

have risen, and that changes taking place in Shetland. The wind is

picking up, but not stormy. Despite the cloud, a lot of dry weather

around and the temperatures not going down too far. The frost will

be hard to come by on Sunday. Some heat in Adelaide for the cricket but

a change here as well. Set to turn cooler with a chance for showers. On

Monday,