By Douglas Richard
Yesterday in the op-ed column of the NY Times Thomas Friedman wrote,
“If we want to bring down unemployment in a sustainable way, neither rescuing General Motors nor funding more road construction will do it. We need to create a big bushel of new companies — fast. … Good-paying jobs don’t come from bailouts. They come from startups. And where do startups come from? They come from smart, creative, inspired risk-takers. How do we get more of those? There are only two ways: Grow more by improving our schools or import more by recruiting talented immigrants. Surely, we need to do both, and we need to start by breaking the deadlock in Congress over immigration, so we can develop a much more strategic approach to attracting more of the world’s creative risk-takers.”
He goes on to point out that all of the new jobs created in the last twenty five years in the US were created by firms less than five years old. That’s 40 million jobs.
Well, welcome to the UK. In the last ten years new jobs came from four places in the UK: construction driven by the housing boom, the financial sector, the growth of the government and small business. Looking back this year studies have shown that the only jobs that endured were the ones created by small business or by government. But we all know that the government payroll is unsustainable and those jobs are going too. All that’s left are the real jobs; the ones that were created by smart risk-takers creating new prosperity.
We are in the same position as the US. We must grow more entrepreneurs and we must import more by recruiting talented immigrants. In order to recruit talented immigrants we should not forget the advantages we have.
There are very few nations in the world where English is the first language. There are fewer countries that have financial centres. There are even fewer that are major economic powers and global trade giants. And there is only one that is truly multi-cultural, multi-racial and tolerant. And it is not the United States of America.
For the last fifty years the UK has maintained a special relationship with the US. Within the last 10 years that relationship died. What the US has become is what it has always been: a very very attractive place for disaffected, talented people who bring energy and prosperity with them. But the US has made it more and more difficult to cross its borders.
The UK by contrast has poured money into its Universities, its educational system is the most exported in the world. It is the centre of global trade and finance. London is arguably the most central and cosmopolitan capital in the world.
Around the world there are talented young people who come to the US and the UK for their education. In the US they stay if they can or go home. The same is true here. It must change.
The realization we must make is that entrepreneurs are vital, are central, are the only thing that matter if we want to re-grow our economy. We need to stop the madness of our current drift.
- Our schools must be meritocracies.
- Our universities must be funded to stay global class.
- The economic freedoms that start-ups and small businesses need must be restored and protected.
- We must break the oligopoly of the large banks and create a new class of entrepreneurial banks.
- We must liberalize the flow of small capital between family and friends to engender a thousand new start-ups
- We must stop worrying about roads and rail and start worrying about broadband. Digital Britain cannot roll out in a decade: it must begin now.
And finally, we need a visa, an entrepreneur’s visa. If you come and create a business and hire people we want you.
We have a new special relationship with the US: we are its competitor. They are not so large that they cannot fail. They are not so special that we cannot also lure dreamers. The time has come for Britain to raise its flag and acknowledge what it is: the centre of the free world and the home for aspiring entrepreneurs.
patrick andrews
6 April 2010
10:46 am
And who will lead this by spending large sums of money speculatively, experimentally and over the long term, rather than ‘investing’ in short-term, sure-fire, high-growth cherry picking?
See eg http://www.cherubventures.net
davidjwbailey
6 April 2010
11:06 am
I’ve been saying for, oh, 20 years, that the US is our major competitor and has not acted as a friend since 1946. Even in the 1939-1946 war support, the US waited until the Axis powers had broken the British Empire (which was the main reason for the Axis forming) before the US made any substantial move to help. It then ensured that Europe grow only as much as it could control through debt repayments post war.
The US has also waged a strong campaign against European integration, for the obvious and simple reason that it does not want an emergent 300m person super power in Europe. That campaign has often been waged through the UK as the proxy partner, despite the fact that there is a direct and real UK economic interest in creating a powerful European market.
Since 1946 the US has repeatedly acted against the UK and British trade interests: Saudi Arabia v UAE, Burma, Israel, China. You can add BAE v Boeing, the ‘acquisition of Courtaulds’ and dozens of other $1bn+ deals and trade battles. In each case the US displaced legitimate UK business by massive US subsidy (and sometimes by CIA backed intelligence).
So, we are, and always have been, trade rivals. In the C21 knowledge economy we need to recognise that but not complain about it. Fair competition is good. Fair competition drives better businesses. And if we are going to play by competitive rules, we need to recognise our competitive advantages and play to them, as we are doomed to lose any battles based on ‘a special relationship’ or sheer brute financial force…
John W Lewis
6 April 2010
11:16 am
Very well said!
In the UK, with an extremely small number of notable exceptions, we have a history of business success in a few narrow types of ventures, whether in large or small organisations; and they are mostly based on technology.
However, in general, there is something missing. It is probably a cultural thing.
We need to feel that everyone in the country (and, if at all possible, that needs to include “our” government!) is on the same side. Your mention of competition with the US is interesting; perhaps we need a common competitor.
At present, if I describe an opportunity or idea to someone, they usually try to tell me that I am wrong and/or why it will not work! Either they tell me that my approach is no good, or that I do not have the skills or resources in certain areas to implement it. Maybe it is just me, but I don’t think so; I see it everywhere. We have a culture of not wanting anyone else to succeed! We are not a team!
If we are to succeed, then I think that we need to change the culture. If someone has an idea, then we need to encourage them! When did most people in the UK last say things like: “Well, if you can do that part, then I can help you by doing this part, and you are going to need some of this other part and I know someone we could ask about it.” … probably in about 1945!
We have a culture which is too focussed on individual stars, whereas the US has much more of a team culture.
So, could you advise us on how to change that?!
Marc
12 April 2010
2:34 pm
I agree that the issue is culture. American culture is just more entrepreneurially forgiving than Britain’s. Its not about talent or immigrants. I disagree with Friedman on that point. Having been born in Britain and growing up on either side of the Atlantic, this is just my perspective.
I think that in America there is less negative judgment cast down upon those who fail. There are fewer voices telling you that you can’t do something. America is more forgiving toward people who fail compared with Britain. America is also less obsessed with qualifications and more focused on results. In general, I think America is less concerned with expectations and preconceived ideas about what an individual has done or is capable of doing, even with a history of failure.
Now of course I’m speaking in generalizations here. So yes, it definitely comes down to culture and there are just a lot of deep seated societal norms in Britain that make it inherently less socially conducive to start-ups than America. There may well be countries that are more entrepreneurial than America, but America works well because of its ‘forgiving entrepreneurialism’ in confluence with a nice legal framework, bountiful capital and a large market. The market and capital are even a bit superfluous and not as important since many businesses have huge opportunities even in regional markets. Go to some place in the middle of the country like Oklahoma and you will find lots of thriving young businesses. Not so much because of large capital pools or talented immigrants but because of America’s culture when it comes to all this stuff.
Britain has the capital. Britain has the market. Britain has the favorable legal framework. Britain still lacks the culture. I do find it ironic that when it comes to the arts or music that British culture is very supportive, innovative and entrepreneurial. Why is it that when someone wants to go into business its less so? I think its because arts and music are almost looked upon as vocations or even hobbies that have well beaten paths, but once someone is talking about investing large amounts of their time or resources on something that can really set them back if they fail… well everyone talks as if you’ve already failed, and as if you would be foolish to take the risk. The British attitude is to regard anyone who is not already rich and famous as a complete crackpot if they think they have a great idea and really want to invest a significant amount of time and money into it. An attitude that is more than willing to laugh and say I told you so at the first sign of failure. Its a defeatist attitude. People think about all the negative character traits that any given individual might have and judge them as not having it what it takes to create something new, big and powerful. And those who have tried and failed are momentarily consoled for having tried and encouraged to back to their safe jobs with conformist and pedestrian expectations rather than to get back on the horse and learn how to ride the dang thing.
Maybe I’m exaggerating a bit, but there is a definite qualitative difference between the UK and US in this aspect.
Just as an aside. Having lived in various countries on the continent. I found most of Europe to be even more risk averse than the UK. Europe excels at new and creative things with low downside risk like art, music, etc. Big movies and new industries do not come out of Europe because they are expensive, risky and inherently prone to failure. That’s the breaks. The European approach is to take note of innovative areas that have grown into large industries in America and pour money into a full scale state sponsored version. Always following, never leading leads to living your life well behind the curve. Additionally, what I found so ironic is that this is the case even with a fantastic social safety net. In the States there is no safety net. For most who’ve failed you move back home, sleep on your friends couch or in your car and then pick yourself up and dust yourself off until you manage to scrape out a living with your ventures.
I think a real entrepreneur has to be ready to accept a hard life until he makes it. Learn to deal with failure without surrendering. I did. The perennial problem with being an entrepreneur is that there is no reliable prescribed path. No career track. No guarantees. With each new venture, the landscape has slightly shifted. To get the lay of it, you have to be trudging across it continually. What someone did 10 years ago or even 5 years ago won’t work today. Britain needs to learn to allow people to fail over and over without trying to discourage them. Failure is the best teacher I’ve ever had.
Just one man’s opinion.
Marc
12 April 2010
3:11 pm
Wow! Just saw the videos on your front page. Didn’t know you were American. I think I can agree with everything you said. Great site, I just bookmarked you and will be returning. You are just what Britain needs. I was in the UK during the first season of Dragons’ Den and couldn’t watch it for long because I thought the bigwigs were so condescending and demeaning to people who needed to be told to keep on chugging (reinforcing the culture I was talking about). Not to mention I thought they just didn’t understand a lot of the markets they were pontificating upon and gave poor advice. I also like the fact that even though you are American, you’re adept enough to the tiny turns of phrase that are so British. Yes, I heard the word ‘kit’ was peppered thoughout.
John Millar
6 April 2010
12:20 pm
I agree with this, particularly on the visa issue and go even further. If you have a university degree from a recognised university you get to stay. No questions asked.
Its very clear that university graduates are net contributors to any country they live in, in that they get jobs that pay enough that they pay more in taxes than they take out in services. They get this pay because they create enough value to be worth it, thus growing a UK based business that will pay more taxes and create more jobs.
And of course, the crux of the matter, they start or join new businesses and help them grow creating many more jobs.
It is now clear that the UK can not remain rich selling houses back and forth to each other or gambling on financial products and also cannot compete with Asia in any business where labour costs are a major component.
Therefore, we need as much brainpower in the country creating and innovating as we can get. And if that brainpower has had its education paid for by another country so the UK gets the benefit of that investment for free, all the better!
The US may be about to introduce a new class of visa, “A Startup Visa” that requires only a total of $250,000 in equity investment with at least $100,000 of that investment coming from a US investor for the founder to get a work visa. The implications of 1000s of new startups being created in the US because its easy to get the visa, rather than the UK because its hard, is obvious. http://startupvisa.com/
David Whitewood
6 April 2010
6:16 pm
Not only is the US a major competitor its biggest tech companies e.g. Microsoft and Google make huge revenues in the UK (14% for Google in the UK) and take the profits back to the US. Google invests nothing in the UK startup scene (Microsoft do well with Bizspark).
Nancy
7 April 2010
3:46 pm
That is an important insight. It is interesting how many businesses in the UK are reliant on this imported technology . . . What is more, US stock markets and financial institutions operating with (apparently) little regulation. It is not clear to me what makes US companies a great choice either as key suppliers or good targets for investment. Not that I’m protectionist by nature. I live in the US. It just seems apparent that the UK is poised to take a lead role, if not the lead role, in business innovation and entrepreneurship worldwide. The UK government may not be doing enough, but no government on earth seems to be doing more . . .