A few months ago, someone told me about swapitshop.com, the UK’s leading online swapping and trading community for young people.
It was founded by a young British entrepreneur who not only successfully brought an innovative business concept to market, but also raised finance, first from family and friends, then from angel investors and, finally, from some stellar private equity firms.
Attracted by the ambitions of this exciting business, I recently became its chairman. This prompted me to question why are there so few Swapitshops in the UK – exciting early stage companies with innovative and monetisable business models that have global potential. And why the US dominates digital media.
It is certainly nothing to do with Britain’s raw intelligence and ability to innovate. A few hours at London’s Science Museum demonstrates that, from Babbage to Berners Lee, Britons have been instrumental in the development of computer science. We have some of the best universities in the world. One Cambridge college, Trinity, boasts more Nobel prize winners than France.
No one can doubt Britain’s creativity (and I am not talking about MPs’ expenses).
Music, art, drama, film, fashion, advertising are all spheres in which Britain provides world-class talent. Apple’s top designer, Jonathan Ive, hails not from Cupertino, California, but from Chingford, Essex. So why can’t we harness this talent and produce a Google, an eBay or a Facebook?
Some 30 years after Margaret Thatcher brought Britain out of its Albanian-style economic decline, business – especially small business – is still not at the heart of mainstream culture.
Caricature figures like TV’s Dragons do little to promote enterprise as a serious occupation that should be attracting the best and the brightest. Part of it is the sheer scale of the US domestic market (300 million, five times that of the UK). But there are other reasons too.
The constant introduction of yet more company legislation is cancerous to small companies. They have to compete for talent with the bloated salaries, secure employment prospects and comparatively leisurely lifestyles offered in much of the public sector, starting with the taxpayer-funded BBC.
Spiralling taxes, too, play a role in decimating Britain’s chances. Take Darling’s 50% tax rate – his shot in Labour’s new class war. Not only will many high net worth individuals leave, but those who remain behind will have less, meaning fewer angel investors on whom internet start-ups depend.
The odds are increasingly stacked against UK entrepreneurs, especially those in the digital sector, as the internet is ultra high risk.
Soon after I joined Cheapflights, nearly 10 years ago, a former colleague of mine, then at the Department of Trade and Industry, asked me what his department could do to help. I answered: “Nothing, just leave us alone!”
The digital revolution is in its infancy. The UK could be playing a much stronger role in this revolution.
But for this to happen, a dramatic re-think from government about its role as an enabler of success is required. Ministers should be creating a low tax, proportionately regulated environment in which entrepreneurs feel incentivised to try out their ideas.
Today, we have a chancellor who demonstrably is an undertaker to business. Let’s hope that his successor knows how to create an economic and legislative climate for success – one that allows British entrepreneurs to rival their American cousins in the digital wars.