Transcript
Michael Bichard
We’re going to talk in this last session about investment and investing in design for growth.
And I’m not going to say a great deal, other than to introduce the person who’s going to facilitate your panel, and that’s David Rowan, David, editor of the UK edition of Wired Magazine but many of you will know him because he’s a media star, not only in his own right.
I hesitate to mention this in the light of the previous conversation today. Not only does he write a regular column in GQ magazine, which no-one here, certainly, will read – or certainly, probably, admit – but GQ magazine and also you will have seen him on Newsnight, you’ll have heard him on Radio 4 Today breakfast news and all sorts of other places.
So, David, we’re absolutely delighted that you’ve been able to come and facilitate this last session and you will have alongside you Sherry Coutu who you’re going to introduce, and Reshma Sohoni also. So welcome to you and please take the sofa.
David Rowan
Now, the lovely thing about my job is I get to hang out and learn what’s really happening in the world from people in the front line and we are very lucky to have two experts who are dealing with businesses every day in terms of what to invest in, how to mentor, how to connect people.
And we’re going to have an intense conversation about how your experience can influence those in authority to promote growth because that’s going to get us out of a lot of the mess that we’re in.
Reshma Sohoni is behind seed camp which, if you don’t know it, is a fantastic mentoring organisation that sources start-ups from all over the world and they have competitions and the winners get funding and go on to great things.
What are your success stories so far, Reshma?
Reshma Sohoni
We’ve had a few exits. One of the bigger ones is a company called Mobclicks so this is all about digital and I didn’t hear much of digital today so, which really surprised me coming here. And I didn’t know many of the people here today so that surprised me as well. I think there’s a lot of work to be done between this community and the digital community, really tying the groups up.
But anyway, so back to what you were asking, so Mobclicks is a company all around sort of mobile advertising and analytics so when people are developing applications for the iPhone, Android, etc, it allows developers to know how good their applications are doing. So that’s one.
Some of you might have heard of My Builder which is, in the UK, the leading marketplace for connecting homeowners and construction, individual construction workers together. It’s the leading marketplace in the UK so kind of a household name.
And the list kind of goes on but there’s about 40, 45 companies that we’ve invested in over three years.
David Rowan
And some of them British?
Reshma Sohoni
Absolutely. About 25% are UK companies but we do cover on a pan-Europe basis so out of 45 companies, they represent 20 or so countries.
David Rowan
Fantastic. Sherry Coutu has started some hugely successful businesses. She’s now not just investing in a whole bunch of start-ups but also bringing people together, running Silicon Valley, come to the UK every year, hooking up with the talent from the West coast and the East coast and bringing them over here to influence the way we think.
So what are you investing in at the moment, Sherry?
Sherry Coutu
I really like databases and so, and I continue to invest in databases so there’s one recently, actually, came out of seed camp called garms [?] which is a very interesting database of things that designers wish, are thinking, you know, new designs from new designers. They put it on the web.
People then say, I like that one. If they get enough orders, they then go to get it fulfilled. So very interesting, disruptive for the whole process of design from end to end and, you know, some really fantastic entrepreneurs.
There’s other investments that have got, sort of LinkedIn, very interesting, again, design, redesigning the process of finding a job using digital and social. AlertMe, which is empowering customers to have a little device that tells them how much energy they’re consuming in a home so that they can alter their behaviour.
I2O, which is a B2B process, which is a gizmo that you attach to water pipes that creates a database telling you whether or not… what the pressure is doing in the water pipe. If it goes to high, we send alerts to the engineers to tell them to turn down the pressure so they don’t get a burst water pipe. If the pressure gives a sudden decrease that means that we know with a pinpoint where the pressure is immediately.
And that was a redesign of process because there was a, some people who understood the conventional industry, that understood new technology and how it could improve the process.
David Rowan
So you’re looking at not just product design but the design of processes that maybe use data in a new way, use the internet in a creative way?
Sherry Coutu
Yes. Yes, no, I think that that’s a very interesting and disruptive and… thing to do and the reason is that the consumers win. If you design around a consumer need and deeply, being deeply empathetic with something that a customer really needs then you can do all sorts of amazing, magical things, sometimes, that decrease the costs phenomenally to… you know, nine, you can rip 90% of the cost out in some cases if you use this new technology, which is, you know, it’s got to be a good thing to do from a customer’s point of view.
David Rowan
So we’re here to look at how the mindset of the designer, whether it’s the process or the product designer, can create new companies, fast-growth companies, boost the economy. I mean, based on what both of you are learning from being out there in the field, how optimistic are you that design is the solution?
Reshma Sohoni
Actually, when we look at the companies we want to back, and we see sort of 2,000 applications a year. Out of that, we only back, you know, 1% of those businesses. We sort of, it’s not my term but we sort of look at three Ds; design, development and distribution so, you know, can you, what’s the product and who has the vision for the long term of the product? What can you actually develop, who’s the technical people that will actually make it happen? And then, can you really sell it, right? Can you get it into the customer’s hands?
So design is absolutely critical but I know, you know, out of the 45 companies, probably half really, more than half struggle with the design part of it because they’re often the techies so they can do the development bit and they often even have a commercial person on the team. But the design part of it is really, really difficult.
David Rowan
What do you mean by design in this context? These are, a lot of them are web businesses or mobile businesses. Are we talking about the interface, are we talking about the product itself and how you navigate through it?
Reshma Sohoni
So, probably all of that. I mean, the term in the digital marketplace that we use is UX, right, user experience kind of captures all of design, as such. But I think it is all of it, sort of the main, the, you know, the main website that you land onto and then the whole journey through the website, especially with more complex products.
I mean, there’s a story I love which is mint.com. I don’t know if people have heard of it but it’s a personal finance management business based out of the US. And there was a competing, sort of competing company called Wasabi, backed by a really prominent VC.
And they wrote a whole, you know, after Wasabi basically died and Mint really, Mint became the number one player, you know, they wrote a whole article about why and design was the critical part because they used to actually do focus groups when they would put people in front of two monitors, one with Mint and one with Wasabi and they would go to Mint over and over again.
And it’s a complex finance product so you really, you know, design has to be extremely good otherwise the user gets lost and you lose trust in a finance product, which is a horrible thing, so…
David Rowan
So it’s about putting yourself in the mindset of the consumer and going through that journey, whether it’s logging in, choosing your music and simplifying it?
Reshma Sohoni
Yes. A lot of our companies really struggle with it because the founders, the entrepreneurs come from a technical background so they really struggle with the design part.
David Rowan
So if you wanted to share some experiences of the companies you’ve seen winning seed cap and that you’ve been backing, that other companies should be learning from, give us a few specifics, a few case studies and a few lessons.
Reshma Sohoni
So we’ve, you know, kind of a trend, going to Sherry’s point about big data, we’re definitely backing more and more companies that are doing things in big data. So there’s a company called Profitero and they’re enabling retailers to understand sort of pricing across their completion, so really interesting business.
And, you know, they’re applying principles from – everybody here probably knows of Bloomberg, you know, and what Bloomberg did in terms of visualisation and the design around how to make complex data much more digestible so they’re working in that space. We have a company called Server Density that’s making server monitoring sexy so, which is, you know, a strange concept but, so, but… Yes.
David Rowan
In this context, design is taking the mass of data that we’re producing, that’s pretty cheap to generate now, and turning it into information that we can act on.
Reshma Sohoni
Exactly, intelligent information that you can actually act on so, and then, you know, in fashion it’s really disrupting a lot of processes so, you know, garms is one, taking a very offline process, building, bringing it online, putting in a lot of social elements to it.
Edited is another fashion business that hopefully will really impact how designers even design clothes.
David Rowan
So what does Edited do?
Reshma Sohoni
So they take a lot of the chatter that’s going around, so a lot of the data, you know, around sort of the social networks and people talking about fabric, cuts, certain designs and make, again, intelligence out of that. And they’re selling to retailers and to brands but into their buyer group and their product group, to actually influence their decisions on what kind of fabrics they’re going to buy, what kind of cuts are going to be in season, what kind of colours are going to be in season. So revolutionising something that was quite qualitative, quite sort of creative. I think that’s…
David Rowan
So, Sherry, you’ve investing in online and offline businesses.
Sherry Coutu
Yes, and often those that mix, sometimes those that mix the two together.
David Rowan
So based on what you’re seeing work, what are the wider lessons from design?
Sherry Coutu
From design? I think that when you get the design right then the customers will use it and they will love it and if you get the design wrong…
I think one of the things that’s interesting with the technology is it allows you to iterate faster than you were able to historically because you can gather data from the market better. So, you know, if it’s not working then you can iterate [?] again.
There’s a, one of the companies that I’ve got an investment in is called Art Finder and it brings both the offline and the online world together. One of the objectives is to let people know what’s going on in museums and galleries and to make them want to go there and to meet other people there.
And the design there, I mean, we’re doing user testing every single day and the product is being iterated. We’re releasing new product design and flow around the consumer every – well, there’s a release every two weeks, a major release every two weeks.
And we’re monitoring using the modern technology and the metrics and even using, you know, cameras to see when someone hits it for the first time, where are their eyes looking, how, you know, where do they look? You know, if you give them an instruction, how do they fulfil that?
And that is influencing completely how the engineers then go back and reiterate and change the product. And, you know, in the olden days, if you think sort of design 1.0 or 2.0, it would take weeks or months or years to do that. But you can now do it in, you know, days or weeks and that’s really important for start-ups in our world because it’s quite risky making investments or, and indeed making start-ups. There’s a very high failure rate.
Those companies that test hypotheses quickly all the time are those that succeed and I know that you ran a failure, I think you called it a failure conference but I – and I wanted to address it from a point earlier – you’re just testing hypotheses. You’re trying an interface, you’re seeing if consumers like it.
The new technologies allow you to test and therefore probably avoid failure because you’re learning lessons all that much faster. And that, I think, fundamentally changes the process of design because you can get that feedback. The feedback loop is shortened.
You know, I think one of the things about, that Edited did was Zara was quite disruptive to the fashion market because they could iterate and they could get their clothes out really quickly. But that gives the iteration to the rest of the industry a lot faster. That’s what that service does. It allows them to be reactive whereas they had been, because of the industry’s structure, separated from their customers and what their customers thought and wanted. And that brings them together and able to respond to that as if it were a conversation and immediately.
David Rowan
So we did, as you say, run a cover of Wired a couple of months ago on failure – fail fast and I think our remit was to try and bring some of that Silicon Valley thinking that you have to take risks and be prepared to fail, which Europe hasn’t traditionally been so good at.
Sherry Coutu
I think of it as testing hypotheses, I don’t think of it as failure. You know, if you…
David Rowan
But being less risk-averse?
Sherry Coutu
Well, yes, absolutely.
David Rowan
So we’re here, you have the expertise. How can the UK create this more entrepreneurial culture?
Reshma Sohoni
Within…
David Rowan
You’re the Minister of Design.
Reshma Sohoni
Right.
David Rowan
What do you do on day one?
Reshma Sohoni
Well, you know, I mean, actually, what I said at the beginning is I, you know, it shocked me today to walk into this place and really, you know, realise we’re not joined-up, that we as investors and a lot of the… You know, we’re very close to the computer science departments at the universities; at UCL, Imperial, Oxford, Cambridge, so on and so forth, but we really don’t, we’re not close at all to, you know, to the design part of those schools and I wouldn’t even know kind of where they sit.
So we really have to get much more joined-up. I mean, that’s what, that’s the first thing I would do is, if you want to create design-led entrepreneurs, connect them with, you know, with the kind of well-known entrepreneurs already or the ones who are really going out and starting from businesses, which are coming from a very technical background, currently.
Sherry Coutu
Okay. Can I add to that? So I think mixing, again, mixing people together… And I’m reminded of a story of Alexander McQueen and how he was working with Robert Pollok. This is from Gucci and Alex… I mean, I’m sure you all know who that is. And I remember the first… Robert was reporting a story which is now Harvard Business School case, which has just been released.
And he was saying, I remember the first time that I met with Alexander McQueen just after he had taken over and Robert had been this, with Unilever before, which is not exactly known for fashion and people were quite doubtful about his, whether or not that would work.
And the first conversation, he was describing, he had with Alexander McQueen about how his clothes were really, truly beautiful and they were pieces of art and he wondered, in the first conversation, whether or not it might be possible to make them look okay on other sizes than size two people.
And I think the response, again, the first response was, oh, no, that just wouldn’t work. And I think a year later he had another conversation with Alexander and he was showing him the whole line-up with different sizes and how they had been redesigned so that they looked okay as you went up through the different sizes. And he had come to understand sustainable design because he’d been matched with a good leader who was capable of overlaying economic, commercial acumen on top of that.
I, so building on Reshman’s point, there’s a collaboration between London Business School and – I can’t remember which, a design school and I’m sorry, I’m failing to remember which one it is. But I think that’s really smart, bringing people together.
I went to university and when I was at university I was exposed to entrepreneurs continually, from a whole, wide variety of backgrounds and that exposure gave me the confidence to think, oh, I could start up my, I could start up a company, all I need to do is find a problem that I think is worth solving and form a team which is, you know, which is equipped to address that problem.
And the black box went away and it was really simple so if you hold up your design icons who have either got the commercial acumen or created a team with someone who can do that then you’ve got a model which goes all around the world. And you were just asking – sorry, you didn’t ask, but I want you to ask this…
David Rowan
You’re very elegant today, Sherry. Tell us who designed that top.
Sherry Coutu
So it’s a female, British designer called Caroline Charles and she used to spend some time in India, hence you can see the influence on that, on the garment. But I liked it because I saw the earlier tweets about the conference when I was still at home. They were saying there weren’t that many female designers on the stage and I thought, well, I’m a woman but I’m not a female designer but I do know a few. I’ve got a few things that I could probably bring and this also is Matmos [?], run by a woman. The company was invented by a man but it was, they also do lava lamps and I don’t know if you can see it but it’s going green and then red and then orange. It’s lovely. I stole it from my daughter’s bedroom on the way here today.
David Rowan
What do you do with it?
Sherry Coutu
She just likes it in her room, she just loves it. It doesn’t really do anything, it’s a light. It’s like a night light or a sort of fancy night light. But, you know, what does a lava lamp do? But people buy them by the millions and I liked that story because it was a commercial women, Cressida, who used to work in a market selling lava lamps and when she found out that it was possible that the company might, you know, wasn’t doing very well, she went to buy it out.
And she did, and since then the commercial, you know, it’s gone through the roof and the, you know, it’s distributed absolutely everywhere. And again, she made that company sustainable because they paired up with the designers and enabled lots of designers to create amazing things.
If you go into the store, which is in East London, it’s phenomenal, it blows your mind and it’s a great example of the creativity pairing with a team of people around them to go forward.
I think of, you know, I think of Burberry. It’s a beautiful, you know, it’s a beautiful company and, you know, we’ve very strong at that. We’re strong at a lot of things.
David Rowan
If we’re agreeing that innovation, successful innovation often comes from people with different skills meeting each other, should we all be very excited about David Cameron’s plan to create a tech city on the Olympic site when it’s finished, where you bring start-ups, you bring financiers, you bring designers? Is that going to boost the economy?
Reshma Sohoni
I mean, I remember from earlier today, someone said, you know, Old Street doesn’t exist. It does, actually, because I work on top of it so, you know, there’s definitely companies there. We moved from the West End just about a month ago to the East and the momentum’s definitely moving there and actually, having moved out now over to the East side, I’m definitely getting to meet many more kind of from the creative world, so much more from, you know, agencies like Poke, today, that I met and Mother and so forth, that I just didn’t even really interact with when, you know, when I was on the West side.
So it’s definitely, it’s already helping us bring more and more people together and although the transportation still sucks, trying to get to Old Street, you know…
Sherry Coutu
It’s not that bad.
Reshma Sohoni
It’s bad!
Sherry Coutu
Not bad from King’s Cross. I come in from King’s Cross. It’s okay.
Reshma Sohoni
But, you know, more and more meetings are happening there. You run into people all the time on the street, just like you do in the Valley, actually. There’s coffee shops there that, you’ll be having the meeting and you’ll run into, you know, ten more people that you either met during the week or a couple of weeks ago or something.
So I definitely believe in it.
David Rowan
So as Minister for Design, do you think you can create the conditions for a British Silicon Valley in the Olympic site or is it more organic?
Reshma Sohoni
I think, well, it’s going both ways. There were already start-ups that were starting there because of the lower rent and a kind of a different atmosphere to what you were getting in the rest of the city, right?
So it did start organic and I think the Government’s recognised sort of what was there already and is helping from a top-down approach of, you know, adding to that and increasing the momentum towards that so…
Sherry Coutu
I’ll probably declare an interest. I’ve been helping them do that for the last few months and so I must think that it’s a good idea and I do think you can create the conditions. I think bringing people together and creating serendipity and, again, where you mix the cultures together, is a great thing.
And I think, in terms of trying to create a legacy out of all of the bandwidth and the infrastructure that’s going into that area, it’s, you know, it should be amazing.
If you look at – and again, you know, in terms of the jobs created and the economic growth that can come through entrepreneurship, you know, 54% of all jobs that were created in the UK in the last seven year were created by fast-growth start-ups of the nature that, you know, get created when you mash these things together.
And, you know, 40% of all, 40% of companies that exist today weren’t around 15 years ago so it’s the regeneration that you get as you combine and put people together in different areas.
You get the universities there, which is critical. They’ve studied different clusters around the world. You’ve got the universities, which is an important element, so you’ve got the research and young, you know, young people.
If you’re getting… There are 500 start-ups now in East London. That’s a good number and what you need… There’s a fast turnover of staff often in these companies because you’re iterating and you’re testing hypotheses. And so if they’re in the same geographic area then they can move from one to another. You know, they can go to, you know, a hackathon or they can go to a meeting or a conference like this. They can talk about, jeez, you know, I’ve got this really neat idea and I’d love to do that and do you think that’s interesting?
And you can meet other people and then say, well, I don’t know how to do that technically. It’s like, ah, well, I know someone over there that I met at that that can do it.
And you build companies, that’s how you happen [sic].
David Rowan
So what do you want from universities if we’re going to create this design-led growth spurt? I mean, we’ve got the RCA with Design London Helen Hamlin centre commercialising some of the students work but what’s going to be the big push forward?
Reshma Sohoni
Well, I guess, you know, from my, probably for us as an investor community to even get more educated on some of these initiatives that are happening and just the same point I made before, just making sure that, you know, the design students are connecting with the computer science students and multidisciplinary, you know, kind of coming together and working on some of these ideas.
Sherry Coutu
I think, bringing them together and helping them understand what they need to do in order to create a sustainable company that can be successful. Often there’s a translation difficulty between the highly creative individuals and the highly financially literate individuals so, you know, getting across those barriers by putting people in touch with each other so they get to know each other is a, I think, is a good formula for success.
And there’s, you know, it’s a hive of activity. I don’t know if you’ve been there recently but it’s happening and it’s tangible, still not like going to Silicon Valley where you feel when you go to Silicon Valley you plug yourself into the electric grid and it’s just like – grrrrr – because you just, everything is accelerated and the iteration is very, very fast there – still not quite that fast yet here but I think that there’s every reason to think that it could be and I think there’s every reason, economically, to try and encourage that and to make that happen.
Reshma Sohoni
And actually, the earlier you start, you know, you’ll… these founders will know each other for a much longer time and then the chances of being, you know, being successful, working with each other through the ups and downs also increase, right?
Sherry Coutu
There’s a… and I don’t really want to do a plug but there’s a thing called the Silicon Valley comes to the UK, which you alluded to earlier, which I run. It’s a non-profit to try to create an ecosystem that allows students and people to form companies more easily and if you form companies more easily then you can also support them as they go through. Some will not succeed and others could easily grow as big as the Googles, the Arms [?], the Autonomys.
And putting in place mentors who are other entrepreneurs who have made that journey before is really important. I wouldn’t… My company; there’s no way I would have been able to float it on Nasdaq and London if I hadn’t had some entrepreneurs who had done it before hold my hand through that process.
They didn’t know anything about my business, which is very digital, but they knew a lot about business and overcoming obstacles and they just took me through that process and that’s what is the benefit of creating something like Tech City. You can spot a company or a person that may be struggling and you can match them with somebody to help them overcome that, you can help them form a team that can take them all that bit further.
David Rowan
So I just want to open the conversation to the experts in the room but just one last question from me; you’re both actively investing. What would be the dream business plan that comes across your desk? What are you looking for?
Reshma Sohoni
Well, you know, a big idea, you know, a potentially, you know, big market, the right way to address that as an opportunity, and then that perfect team of three or four people, you know, who are an extremely intuitive designer, incredible kind of at the top of all the coding competitions that go on and so on on the development side, and then, you know, a constant salesman, right, who can really deliver that combination of design and development into the hands of a user, whether that’s a consumer website or selling into businesses.
So, I mean, that’s the ideal package, I guess, of…
David Rowan
Which was the last one that had that?
Reshma Sohoni
All growing very, very fast. Which is the last one that had that?
Sherry Coutu
You’re asking her to name her favourite child. That’s tricky.
Reshma Sohoni
Yes, exactly, hard to do that! But no, I mean, you know, I think, I mean, Garms is really, really interesting. Voxio [?], which is a web-based telephony so hopefully it’ll kill Skype – if Skype isn’t already killed, that is. But it’s absolutely going to revolutionise how we call people. It’s all about sort of concepts that we haven’t even thought about; disposable numbers and, you know, just making phone calls off the web so very interesting.
David Rowan
So the scale of the ambition and the talent. It’s not British, is it?
Reshma Sohoni
No. Garms has moved from Austria to the UK so yes, that’s half of two.
David Rowan
Sherry, where would you put your money?
Sherry Coutu
Not… I like to work with great entrepreneurs who want to solve problems that matter, which sounds a bit trite. For me, so I like the idea to be big, which means that you need to, the entrepreneur; I like to work with them to figure out how large is the market, because sometimes you can start out and can be really enthusiastic but it’s too small. So I think working with them is important.
I think having a team where you’ve got some young people, it’s the first time they’ve done it on the team, is important. I also like to have some people who have a few grey hairs and the reason is because, well, if you’ve got a few grey hairs you’ve fallen in a few holes and picked yourself out a few times. And you often do that in start-ups so like to have the match and you’ve got to have a team. The whole thing is a team. You’ve got to… It’s not one person. One person is an idea, doesn’t necessarily work. It’s not backable if it’s just a person.
David Rowan
Great. There is a microphone roving around. Hands for questions, please.
Nick Leon
Nick Leon, Design London at RCA and Imperial where designers and technology people meet. What level of maturity are you looking for in the ideas that are brought to you so that you’re ready to invest? What stage do you need that business at, or the idea at?
Reshma Sohoni
So there’s sort of a value chain of investors and I guess we’re at the very, very early stage because we only invest €50,000 so it is generally, you know, super-early stage. But we also look at not just ideas, you have to have built some kind of a prototype. It can be quite, you know, quite nascent but you have to, we have to be able to see that you can actually, you know, develop on an idea and that it’s not just a concept.
So super early and our entrepreneurs do tend to be people who can live on no money, basically, so, because the 50,000 obviously only lasts for a few months and then they need to raise money further.
Sherry Coutu
And I’m a slightly… so I’m an angel, I’m not a fund. I’ve made 40 investments over the last dozen years and they now, the turnover is just south of a billion and they employ 7,000 people across 22 countries. And I often start working with people – and I’m on the finance committee of Cambridge University and do a lot of stuff to try to help students imagine themselves as businesspeople, as entrepreneurs when they graduate.
So I’m often working with existing students who have an idea and you just sit down with them and have a conversation and say, well, you’re missing a few things so why don’t you go try to rework it and, you know, talk to so-and-so that I know or so-and-so and then come back. And sometimes they never come back and sometimes they come back with something really amazing and, you know, it’s great when that happens.
There was an interesting chat the other day by Kolf Ram [?] from the Kaufman Foundation and he made an interesting point which was, of America’s 500 fastest growing companies, guess what age the average age of the founder was? Okay, I’ll give you a… Do you want to guess? I’m going to cold-call you right here in the room.
Sherry Coutu
40. 40 is the average age of the founders of the fastest 500 growing companies in the US. The other thing that was really fascinating was the extent to which they had been backed by venture capitalists. So guess a number. Again, the 500 fastest growing US companies.
14% so there’s a lot of other ways so often these companies which are growing really fast are not necessarily backed by angels or incubators or VCs or PEs or any of these two or three-letter acronyms. They’re often, you get a customer, you start working it out and you’re self-financing. And there’s something that I’m working on called the innovation launch pad which is trying to help the government buy more from SMEs.
And I think in the last sort of 28 that are being mentored, there might be two or three that are VC-backed. The rest are, they’ve got, they’re profitable and they’re not VC-backed. They’ve just got a great company, they’re growing like a tank and they have deeply disruptive, innovative solutions that are well worth, you know, well worth thinking about.
So there’s some surprising stats that are encouraging as well, I think.
David Rowan
Okay. Other questions? Gentleman over here.
Richard Cass
Richard Cass, architect and landscape architect based up on Merseyside. There’s a real danger in the UK which is also pretty prevalent in the States and parts of continental Europe that economies are moving very fast geographically and certainly in my career, which goes back, you know, 30-odd years, the, broadly speaking, anywhere but the south-east and perhaps the South-West of the UK have seen economic stagnation or decline. And yet if you go to those areas and if you talk to government at national, regional and local level, they’ve all put very intensive efforts into doing the very thing that you’re talking about, i.e. encouraging new business start-ups, creating wealth, encouraging local enterprise.
And this conference obviously is about advice to government and how we can engage with government to achieve growth and I just wondered, as you’ve got Government ministers here, whether you have any advice to give them or observations to make about the very high level of failure that the last 25 years of effort for economic regeneration in the North and the traditional industrial areas has failed to bring about the sort of growth that you’re obviously witnessing in the areas that you’re operating.
David Rowan
Government’s sitting over there.
Reshma Sohoni
That’s a tough one. I mean, the approach that we’ve taken, we’ve taken, again, a pan-European approach of actually going into not just London but cities all around Europe to help build ecosystems and we connect a lot with, you know, Birmingham, Leeds and so forth to actually work with those communities as well within the sector. Again, you know, we’re just a small piece of the overall equation but because we’ve taken a real focus on the, you know, entire continent and really – continent and, you know, and the UK and really connecting those up and, I think, just encouraging more of that.
And it’s hard work. Literally, you know, we go into a new city once a month and we’re only a team of four that do that and two of us always go. So you’re on a, you know, you’re on a plane every single week and so it’s extremely difficult but then you have to do that in order to connect all those regions up.
And because we’ve funded a company from Birmingham, we’ve funded a company from Wales, Scotland, you know, so we’ve done all sort of, all the regions in the UK. And it’s just all about trying to… And you find great talent coming from those regions but we’re always trying to connect them into some of the key hubs; London being a key hub.
David Rowan
Sherry, what do you want the Minister to do?
Sherry Coutu
So I’m also with NESTA, the National Endowment for Science, Technology and the Arts, which has been thinking about this a lot and earlier in the year we put together a panel of the top investors and asked them if they could rate the different thing, the different policy initiatives that government could do and whether or not, what we thought the highest impact would be so that we could create more billion-pond companies. That was the homework assignment, as it were.
And the top three or four things that we thought the Government could do; one was along the lines of employment and immigration; make it easy for us to be able to, if we can’t source the employee in the UK, to be able to get them from elsewhere more easily because there are some terrible skills shortages in the UK, particularly with product marketing and commercial and… those areas are acute and some on engineering.
And sometimes you have to go elsewhere to get them but there are lots of barriers to bringing them in here and there were some companies in the room who had chosen to create their engineering centres in Zurich. They tried to do it here, found the barriers were too high, went to Zurich. They’ve now 900 people there. They’re all highly-paid, they brought their families there and that’s not so good and that means there’s a good ecosystem now going on there.
So I think encouraging things like Tech City where you’ve got the, you know, accumulation is really helpful. The other thing that we came up with which rated really, really highly is procurement. We don’t, you know, there isn’t a great history of governments directly investing in start-ups because it is hard and it’s hands-on and again, the history is not at all excellent of their direct intervention.
But buying from small and medium-sized businesses is critical and there was a statistic that came up in the meeting and, you know, it’s probably a rule of thumb but it is a rule of thumb [sic], which is £1 of investment from a government is worth one tenth of if a government were to buy a product from a small company. So think about it; your multiplier, if you become a customer of a small company is at least tenfold. If you invest, not so much but literally a 10%.
So if I had a big message, it’s buy from small companies. Not only is it great to have customers of small companies, these companies have amazing products that often they have sold in the private sector for a long time, that are phenomenally innovative and help those customers have a great RLI.
And, you know, it’s not right that the Government doesn’t enjoy those, you know, the same innovation as much and there’s some good examples in, you know, in the US of successful intervention. So buy from little companies and probably also get some of your big suppliers to buy from companies. That was the strong message that we came up with and I would love that to happen.
David Rowan
So you love watching power radiate around the room. Policy is about to change.
Thank you very much, Reshma and Sherry.