Sebastian Mallaby: prediction

Transcript context

…What are the cultural factors that limit the success of venture capital in South England? It has not developed a comparable network. It’s fantastic for science. It has London, financial center, at least two incredible universities, other academic contributors, yet it hasn’t really taken off. Why not? My theory about this is that the lacking thing has been, historically, venture capital because you’re right, Oxford and Cambridge both have world-class science faculties in addition to strength in human sciences. Europe as a whole, actually — that’s true as well. ETH in Zurich is very strong, and there are more trained computer coders in Europe than there are in the United States. And Europe is a big, rich consumer market. So, there are a lot of strengths in Europe. What it’s lacked traditionally . . . Traditional lines are always cultural. People don’t take risk in Europe. They’re too keen on working for a big, safe institution. My view is that, when you get venture investors added to the mix that are willing to underwrite the risk of small start-ups, all of a sudden people are willing to start them because the risk is paid for. You can take the risk as an entrepreneur with somebody else’s money. And if it fails, you’ll have burnt up your energy and time, and that’s not to be sniffed at, but it will be somebody else’s capital that underwrote it. Furthermore, you will be helped to hire good people to help you because a venture capitalist will be on your cap table and will use its brand to bring in good people. I’m always struck by the story that Eric Schmidt told me about why he joined Google as chief executive, which was a very risky move. Schmidt had been chief executive of another company, Intuit, and he was joining Google that was controlled by these two grad students who were notoriously ordering him, controlling him, might fire him, and didn’t particularly like people who were over the age of 30. Eric Schmidt knew that, going into Google, he might get fired, but he did it because the venture capitalist involved — John Doerr — said to him, “Look, if they bounce you out, I’ll find you another great job somewhere else.” That cultural thing about, why is there this risk appetite in Silicon Valley — it’s not something you drink in the water. It’s not something in the air that you breathe. It’s venture capital that is de-risking entrepreneurship and the business of joining tech start-ups. Venture capital is mobile. You would think it could all spread to South England, which is not a backwater by any stretch of the imagination. Very rarely —…

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