At first the American side of me read this post title and agreed. It just didn't seem likely. But after reading the post, I don't think it did a very good job of describing why Britain hasn't produced more successful startups.
The primary reason that Britain doesn't accel at more, I think, is both opportunity and size of the population. If Britain were at least the size of the U.S. with otherwise the same ratio of opportunity to excel vs. the U.S. counterparts, they should have produced at least one startup-gone-global-household-name by now.
The article mentions the Victorian times - you don't need to go that far back - Richard Branson, Alan Sugar, Clive Sinclair come to mind, although that was the 1980s. But why haven't there been any huge new successes in the last decade or so ?
I can think of a few (over-generalized) reasons:
- over-emphasis on banking and finance. The City is where the big money was made, and is disproportionately important to the UK economy (even now) so that's where the polymaths -our homegrown Zuckerbergs and Brins and Gates - went to make their fortune.
- class system. Business and government leadership comes from a very narrow circle of ex-public school and/or Oxbridge graduates who share a common disdain for science and technology. Time and again scientists and engineers have left for the US and elsewhere because they couldn't get funding at home - businessmen and politicians simply didn't "get" the potential of research.
- over-centralization. If you think Hacker News is bad with its Silicon Valley-centric worldview, come to the UK. If it's not happening in London, it's not happening. London however is a horribly expensive place to live, pushing up salaries, office costs, etc - not the ideal place for a startup. Start your business in the "provinces" however and nobody will notice you.
- bureaucracy. Both UK and EU legislation have increased the amount of paperwork needed to get started - for example employment legislation. Not sure how this compares to the US (which varies state to state) but it hasn't helped.
Maybe another reason is too many British people think in terms of the government solving the problem, or starting projects funded by quangos: "what we need is a startup scene, therefore we need government funding!"
Getting startups in touch with funding sources and getting the word out that you can fund your ventures without living off baked beans for 18 months might help encourage more people to take the leap of faith.
That's true. With the recent government cutbacks and slashing of quangos that might (hopefully) change. More than money though would be a better startup community - or communities - all over the UK, which is up to us, I suppose.
One assumes however that students and recent graduates are living off baked beans anyway (I suppose that's our equivalent of ramen profitable - Heinz profitable?)
One assumes however that students and recent graduates are living off baked beans anyway
Exactly. Based on observation of people's reaction to me being self-employed, the biggest fears are the bureaucracy and what happens when you fail. Neither of which are anywhere near the biggest challenges, so diminishing those fears seems like an easy target.
It would probably also help to get actual startup entrepreneurs to speak at universities, which by and large are run by people who have never been outside "the system".
Actually it costs a pound to start a company in Britain, and by the time you can afford to hire somebody you should be able to hire a lawyer to work through the issues.
There are plenty of recent tech success stories. European companies pretty much dominate the global telecoms and gambling markets, financial tech companies are fairly evenly split between New York and London. And while we don't dominate, the UK has a disproportionally large market share of the chip design and computer games industry.
Dyson, ARM, Amstrad, Sophos, Betfair, Last.FM immediately spring to mind as Tech Startups that have done well. For a country of our size, resources and population we do extremely well, unnaturally so one might say.
it is taboo to drop out of universities, which remain poor incubators
This is definitely true. I'm currently at a top UK university, and there is very little incentive to start a startup. Whilst a friend a Stanford has access to an entrepreneur group with a budget of half a million dollars just for having a good idea, we have business plan writing competitions.
The very idea of dropping out of universities is met with horror, by other students, staff and relatives. They would rather you just go through uni and get a job at a nice bank or accounting firm somewhere. Starting a startup as a student isn't the norm, there seems to be too much friction.
There also appears to be much less of a can-do atmosphere and much more aversion to risk in the UK for current university students. This isn't to say there isn't a good startup scene here - but it's mostly hardware/biotech; most of the other stuff seems started by mid-30s ex Goldman Sachs bankers.
I doubt it has much to do with the university drop-out rate. In Austria, it's the norm to drop out of university but my gut feeling is that the UK has more startups per capita.
That said, I got my degree in the UK (York, in the top 10 at least at that time) and there was no entrepreneurial angle at all. There was one guy in the careers office who encouraged you to enter business plan competitions and ran one or two seminars (which were vague and focused on coming up with an idea, not practicalities) but you only found out about that if you looked for it. I only ever contemplated opting out of the standard "get a job" career path because I stumbled across PG's essays via his "plan for spam". Up to that point the "get a job" indoctrination was working perfectly. As far as I can tell from friends, it's similar in Austrian universities (except they don't even tend to have careers offices).
Honestly, I think the best way Europe could help the startup situation is to somehow convey the message that the worst that can happen if you fail isn't really too bad. Also, everyone seems to be scared of the "business angle", so that could be addressed by running a module or two on practical small-business bookkeeping, accounting, tax and incorporation basics in sci/eng degree courses. Because, let's face it, those things are not actually that hard, at least not in the UK. Rest of EU needs to get rid of their idiotic capital requirements for setting up limited companies and severe penalties for bankruptcy. Lower social security/tax rates at low self-employed income levels would be appreciated, too. (those could easily be financed by killing all those stupid grants schemes that are so complex no small company could afford the lawyers required to figure them out)
It's definitely true that the UK has lots of startups. But I think the problem is that people at universities, or university staff don't even consider it.
Looking at the two best known (to your average consumer) startups in the UK - Betfair and Ocado, both were started by people in their mid 30s. I can't think of many started by people in their early 20s, which I think is a huge oppurtunity being missed.
There is definitely a stigma of failing. It feels like if your startup fails in the USA it isn't too big a problem, you just pick yourself up and start again. In Europe I get the impression that a failed start up reflects poorly on you - leading to a risk averse culture.
But I think the problem is that people at universities, or university staff don't even consider it.
Universities have historically not been the place for training up professionals or business people, but pure scholars. The vast majority of staff at universities are in the latter category to this day, probably less so in engineering disciplines or medicine. Expecting them to prepare students for the real world in a job, let alone running a business, is unrealistic. (nobody even teaches you how to do basic things like salary negotiations, forget about raising capital)
I'm not sure what the solution is, but making professors run awkward "soft skills" courses is definitely not it.
It's pretty taboo to drop out of university in the US as well. The article also relies the false causality link between dropping out of university and being successful.
University incubators typically focus on research spin-offs (both in the US and the UK) - while US universities in general are better at this than UK universities, it doesn't really have any relevance to Facebook style companies.
There does seem to be a higher amount of risk-aversion though.
This echoes my experience at a UK university. The 'entrepreneurial' society is borderline inactive apart from the token yearly business plan competition.
Nobody really talks about startups. I've not met a single student who's planning to go it alone after graduation day, let alone drop out. Perhaps that's just the limited demographic occupied by my course mates and other friends.
However we do have Dragon's Den and people are clearly inspired by it - at least in principle. I do wonder whether it's had any affect on the number of startups.
Even when they do invest, it seems the valuations tend to be awfully low (and the equity stake of the investors far too high). Plus, you'd think that with TV budgets they could get participants some coaching on how to pitch.
Sorry to get carried away, I find the whole programme extremely disrespectful. :-/
Completely true. In the UK there's a lot of emphasis put on what's seen as the normal progression from school to higher education to employment.
Startups are rarely mentioned in the media, and mentioned even less outside it. The only exception I can think of is Dragon's Den on the BBC, where people with little experience and even worse ideas sell half their business for a pittance in order to entertain the country. I guess that about sums it up.
I think another issue may be the different views on business.
In the UK, businesses are seen as entities that must be restrained, otherwise they will do Bad Things. This is reflected in the immense amount of legislation regulating businesses, employment, consumer rights, etc.
There's much less of this in the US - businesses are an integral part of the culture, and you can't really go anywhere without being reminded of that.
In a way it's comparable to the mild distrust of government in the US: just as Americans look to the constitution to protect them from government, Brits look to the government to protect them from businesses.
I disagree, the UK is one of the flexible places in the world to start/run a business. The World Bank ranks the UK as the 5th easiest place to do business in the world (the US is 4th).
I don't think I've met a single startup in the UK whose main problem with the UK was legislative or regulatory.
Why would a university incite you to drop out of it? What does the university gain from that?
Why would you go to university with the intention of dropping out as soon as your startup gains traction? Why not just start your startup right out of secondary school and save yourself thousands in tuition fees?
Failing that, what's wrong with finishing your degree and then starting your startup?
"Why would a university incite you to drop out of it? What does the university gain from that?"
Well, I'm sure they wouldn't incite you to do it, but look how much Harvard has gotten from Facebook, even with the founders dropping out.
They're mentioned in the media any time Facebook or Zuckerberg are (blog articles, newspaper articles, a movie...), they gain prestige as "the place Facebook was founded," and the founders of Facebook will probably make (or already have made) generous monetary contributions.
Cambridge is probably the top UK university. Every single Cambridge college is (legally) a charity. This means it is illegal to conduct business activities on college premises; in particular, it is illegal to conduct business activities in your college accommodation.
It's true, my college tenancy agreement explicitly says "The student agrees ... not to use the room for any professional trade or business."
Not only businesses, but any jobs are forbidden at Cambridge as well. If you're not allowed to work behind a bar for minimum wage, it's sort of implied that they're hardly going to look kindly upon you running a business are they?
But I bet you are allowed investments, sit on boards, and draw funds from a trust. If so, what a horrible throw back to ancient times. Are you sanctioned to work during vacations?
While creative accountancy can sidestep some of your restrictions -- say, pay yourself a dividend, take a director's loan -- this hardly solves the entrepreneurial issue at hand. Unless, of course, Cambridge students are expected to legitimately subvert the regulations, thereby preparing themselves for a lifetime of sailing close to the wind :)
In the US most startups probably start in residential buildings which aren't zoned for businesses. Techcrunch was running out of Mike Arrington's house a long time after it was a multi-million dollar business before the neighbours complained about the violation.
As long as you're not doing anything stupid or annoy your neighbours, no-one's going to care if you're running your startup out of your accommodation.
I ran a fairly successful social networking app off my university network, and no-one really cared until it started impacting server performance (~300k visitors/month) at which point I moved it off to a commercial server.
I dunno... I'm British and I founded Ryze, a pioneering social network which was a huge influence on Friendster, which in turn led to MySpace and Facebook.
And I never went to high school.
But then again I never lived in Britain, so maybe the article's hypothesis is fine, just not the headline... ;)
Refutation - British Y Combinator startups by university:
Cambridge: Immad Ahkund (Heyzap), Jude Gomila (Heyzap), Rahul Vohra (Rapportive), Martin Kleppman (Rapportive), Sam Stokes (Rapportive), Ian Hogarth (SongKick), Pete Smith (SongKick), Michelle You (SongKick)
1) Is it due to cultural reasons that Britain isn't producing young tech entrepreneurs
2) Are British young tech entrepreneurs going abroad to start companies.
I think my argument refutes the first but supports the second point. While there are young tech entrepreneurs in the UK (Mashable for example was started by a 19 year old, numerous indy gaming studios are led by 20-somethings) a lot of the more talented ones who are aiming at global consumer markets are clearly head abroad.
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[ 4.3 ms ] story [ 102 ms ] threadThe primary reason that Britain doesn't accel at more, I think, is both opportunity and size of the population. If Britain were at least the size of the U.S. with otherwise the same ratio of opportunity to excel vs. the U.S. counterparts, they should have produced at least one startup-gone-global-household-name by now.
I can think of a few (over-generalized) reasons:
- over-emphasis on banking and finance. The City is where the big money was made, and is disproportionately important to the UK economy (even now) so that's where the polymaths -our homegrown Zuckerbergs and Brins and Gates - went to make their fortune.
- class system. Business and government leadership comes from a very narrow circle of ex-public school and/or Oxbridge graduates who share a common disdain for science and technology. Time and again scientists and engineers have left for the US and elsewhere because they couldn't get funding at home - businessmen and politicians simply didn't "get" the potential of research.
- over-centralization. If you think Hacker News is bad with its Silicon Valley-centric worldview, come to the UK. If it's not happening in London, it's not happening. London however is a horribly expensive place to live, pushing up salaries, office costs, etc - not the ideal place for a startup. Start your business in the "provinces" however and nobody will notice you.
- bureaucracy. Both UK and EU legislation have increased the amount of paperwork needed to get started - for example employment legislation. Not sure how this compares to the US (which varies state to state) but it hasn't helped.
Getting startups in touch with funding sources and getting the word out that you can fund your ventures without living off baked beans for 18 months might help encourage more people to take the leap of faith.
One assumes however that students and recent graduates are living off baked beans anyway (I suppose that's our equivalent of ramen profitable - Heinz profitable?)
Exactly. Based on observation of people's reaction to me being self-employed, the biggest fears are the bureaucracy and what happens when you fail. Neither of which are anywhere near the biggest challenges, so diminishing those fears seems like an easy target.
It would probably also help to get actual startup entrepreneurs to speak at universities, which by and large are run by people who have never been outside "the system".
http://blog.awesomezombie.com/2010/06/yes-europe-does-produc...
There are plenty of recent tech success stories. European companies pretty much dominate the global telecoms and gambling markets, financial tech companies are fairly evenly split between New York and London. And while we don't dominate, the UK has a disproportionally large market share of the chip design and computer games industry.
(Tech startups, maybe. Even there our household names – PartyGaming say – are often illegal in America.)
And hedge funds. Lots of hedge funds.
This is definitely true. I'm currently at a top UK university, and there is very little incentive to start a startup. Whilst a friend a Stanford has access to an entrepreneur group with a budget of half a million dollars just for having a good idea, we have business plan writing competitions.
The very idea of dropping out of universities is met with horror, by other students, staff and relatives. They would rather you just go through uni and get a job at a nice bank or accounting firm somewhere. Starting a startup as a student isn't the norm, there seems to be too much friction.
There also appears to be much less of a can-do atmosphere and much more aversion to risk in the UK for current university students. This isn't to say there isn't a good startup scene here - but it's mostly hardware/biotech; most of the other stuff seems started by mid-30s ex Goldman Sachs bankers.
Edit - I've just found this article - http://www.bbc.co.uk/blogs/thereporters/rorycellanjones/2010... from Rory Cellan-Jones of the BBC which is a good read as well
That said, I got my degree in the UK (York, in the top 10 at least at that time) and there was no entrepreneurial angle at all. There was one guy in the careers office who encouraged you to enter business plan competitions and ran one or two seminars (which were vague and focused on coming up with an idea, not practicalities) but you only found out about that if you looked for it. I only ever contemplated opting out of the standard "get a job" career path because I stumbled across PG's essays via his "plan for spam". Up to that point the "get a job" indoctrination was working perfectly. As far as I can tell from friends, it's similar in Austrian universities (except they don't even tend to have careers offices).
Honestly, I think the best way Europe could help the startup situation is to somehow convey the message that the worst that can happen if you fail isn't really too bad. Also, everyone seems to be scared of the "business angle", so that could be addressed by running a module or two on practical small-business bookkeeping, accounting, tax and incorporation basics in sci/eng degree courses. Because, let's face it, those things are not actually that hard, at least not in the UK. Rest of EU needs to get rid of their idiotic capital requirements for setting up limited companies and severe penalties for bankruptcy. Lower social security/tax rates at low self-employed income levels would be appreciated, too. (those could easily be financed by killing all those stupid grants schemes that are so complex no small company could afford the lawyers required to figure them out)
There is definitely a stigma of failing. It feels like if your startup fails in the USA it isn't too big a problem, you just pick yourself up and start again. In Europe I get the impression that a failed start up reflects poorly on you - leading to a risk averse culture.
Universities have historically not been the place for training up professionals or business people, but pure scholars. The vast majority of staff at universities are in the latter category to this day, probably less so in engineering disciplines or medicine. Expecting them to prepare students for the real world in a job, let alone running a business, is unrealistic. (nobody even teaches you how to do basic things like salary negotiations, forget about raising capital)
I'm not sure what the solution is, but making professors run awkward "soft skills" courses is definitely not it.
University incubators typically focus on research spin-offs (both in the US and the UK) - while US universities in general are better at this than UK universities, it doesn't really have any relevance to Facebook style companies.
There does seem to be a higher amount of risk-aversion though.
Nobody really talks about startups. I've not met a single student who's planning to go it alone after graduation day, let alone drop out. Perhaps that's just the limited demographic occupied by my course mates and other friends.
However we do have Dragon's Den and people are clearly inspired by it - at least in principle. I do wonder whether it's had any affect on the number of startups.
Sorry to get carried away, I find the whole programme extremely disrespectful. :-/
http://news.ycombinator.com/item?id=1811882
Startups are rarely mentioned in the media, and mentioned even less outside it. The only exception I can think of is Dragon's Den on the BBC, where people with little experience and even worse ideas sell half their business for a pittance in order to entertain the country. I guess that about sums it up.
I think another issue may be the different views on business.
In the UK, businesses are seen as entities that must be restrained, otherwise they will do Bad Things. This is reflected in the immense amount of legislation regulating businesses, employment, consumer rights, etc.
There's much less of this in the US - businesses are an integral part of the culture, and you can't really go anywhere without being reminded of that.
In a way it's comparable to the mild distrust of government in the US: just as Americans look to the constitution to protect them from government, Brits look to the government to protect them from businesses.
I don't think I've met a single startup in the UK whose main problem with the UK was legislative or regulatory.
Why would you go to university with the intention of dropping out as soon as your startup gains traction? Why not just start your startup right out of secondary school and save yourself thousands in tuition fees?
Failing that, what's wrong with finishing your degree and then starting your startup?
Well, I'm sure they wouldn't incite you to do it, but look how much Harvard has gotten from Facebook, even with the founders dropping out.
They're mentioned in the media any time Facebook or Zuckerberg are (blog articles, newspaper articles, a movie...), they gain prestige as "the place Facebook was founded," and the founders of Facebook will probably make (or already have made) generous monetary contributions.
Cambridge is probably the top UK university. Every single Cambridge college is (legally) a charity. This means it is illegal to conduct business activities on college premises; in particular, it is illegal to conduct business activities in your college accommodation.
Not only businesses, but any jobs are forbidden at Cambridge as well. If you're not allowed to work behind a bar for minimum wage, it's sort of implied that they're hardly going to look kindly upon you running a business are they?
While creative accountancy can sidestep some of your restrictions -- say, pay yourself a dividend, take a director's loan -- this hardly solves the entrepreneurial issue at hand. Unless, of course, Cambridge students are expected to legitimately subvert the regulations, thereby preparing themselves for a lifetime of sailing close to the wind :)
In the US most startups probably start in residential buildings which aren't zoned for businesses. Techcrunch was running out of Mike Arrington's house a long time after it was a multi-million dollar business before the neighbours complained about the violation.
As long as you're not doing anything stupid or annoy your neighbours, no-one's going to care if you're running your startup out of your accommodation.
I ran a fairly successful social networking app off my university network, and no-one really cared until it started impacting server performance (~300k visitors/month) at which point I moved it off to a commercial server.
And I never went to high school.
But then again I never lived in Britain, so maybe the article's hypothesis is fine, just not the headline... ;)
And there is the example of Bebo also...
Cambridge: Immad Ahkund (Heyzap), Jude Gomila (Heyzap), Rahul Vohra (Rapportive), Martin Kleppman (Rapportive), Sam Stokes (Rapportive), Ian Hogarth (SongKick), Pete Smith (SongKick), Michelle You (SongKick)
Imperial: Tim Davey (SnapTalent), Sumon Sadhu (SnapTalent), Niall Smart (Echodio), Nathan Chong (NewsLabs)
Oxford: Peter Nixey (Clickpass), Harjeet Tagger (Auctomatic), Kulveer Taggar (Auctomatic)
Bristol: Tom Riley (Fabricly)
Kent: Mike Laming (Propable)
(Apologies if I've missed anyone/misspelt any names as I'm writing from memory)
They left Britain to pursue their startup. So I think your refutation is the opposite of what you intended it to be.
1) Is it due to cultural reasons that Britain isn't producing young tech entrepreneurs
2) Are British young tech entrepreneurs going abroad to start companies.
I think my argument refutes the first but supports the second point. While there are young tech entrepreneurs in the UK (Mashable for example was started by a 19 year old, numerous indy gaming studios are led by 20-somethings) a lot of the more talented ones who are aiming at global consumer markets are clearly head abroad.