We'll stop Johnny Foreigner gobbling our biznovation - UK gov Westminster has admitted that foreign companies are poaching British start-ups and has promised to make sure cash raised from innovation stays in the country. The problem was first highlighted in a report called Bridging the valley of death: improving the commercialisation of research, which was published in March. The …
Nothing new here. Consider that so many of the innovations we hold dear that have been highly successful in the market, are partially or wholly owned by companies outside the UK. In more than one case this has been thanks to our wonderful Government who have failed to support these businesses over the decades.
And I'm not being partizan here - every government since the 1970s has had a hand in this.
As much as I would, and could, slag off the bankers, this was a group that was, at one time, controlled by the Government. The move to a more hands-off approach by the Government didn't help matters on more than one level.
Having said that, yes, the bankers and financiers can't be absolved of their portion of the blame. I've mentioned the asset stripping of Acorn in the past, and this is hardly the only example of beancounters doing what beancounters do.
" In more than one case this has been thanks to our wonderful Government who have failed to support these businesses over the decades."
Given the failure of enterprise zones, and all the other incentives, grants and boondoggles, I'll be very surprised if government can come up with anything to change the situation. Start ups with one or a handful of good ideas are rarely capable of commercialising those few ideas as a sustainable product within a growing business, and that's true outside the UK as within. If I come up with some new display technology in my garden shed, then it will be one of the global hardware makers who will be capable of making that into a global success, as they have the brand, the design , integration, manufacturing and supply chain. If the government think that Ledswinger Display Technologies Ltd are going to rival Samsung any time soon, then they are living in the usual cloud cuckoo land.
Quite honestly, the best thing government can do is to get out of the way. Reduce planning restrictions, reduce business rates, eliminate employer's national insurance, simplify the Companies Act to less than fifty pages. Abandon all the nonsensical charges like the "Climate Change Levy", legislate to stop property owners forcing unfair lease terms on businesses like upward only rent reviews and excessively long break points "because that's how it has always worked". The only thing I can think of that government might usefully do would be to offer funding to enable startups to get top class leagl, IP and commercial advice, to make sure that they get the best deal from buyers (whether UK or foreign), and to try and ensure that a share of the IP rights remain in the hands of the innovator.
The only place that I can see for government investment, is buying startup assets out of administration. So for example, when Modec Electric Vehicles went bust, the government wrung their hands and did nothing, and a US corporation bought the assets for a song. If the government had wanted to they could have bought the assets them selves, and had a (potentially) viable business, cleaned of its liabilities and any excess debt, with a view to hold and build, or maximise national benefit from a trade sale, rather than let the administrators sell it for a song because (at the moment of sale) few buyers can see the potential. You'd still end up investing in a few losers, and still end up selling some assets to overseas firms, but lets have something like state sponsored Chapter 11, instead of government just walking away and then complaining that they don't like the outcome.
Oh course, naturally the solution to all ills is to remove from businesses any semblance of oversight, social responsibility or liability for their actions. This will naturally benefit the small, struggling businesses and in no way be twisted into a hammer by large enterprises and used to beat everyone else down.
You sir, are naive.
The best thing the UK could do to encourage small businesses would be to provide access to the resources necessary to start producing one's own widget. The costs are extravagant, but there is absolutely no reason that $small_business cannot evolve into $chaebol.
"Hands off" by the government will do nothing but siphon cash out of the UK to established interests which are largely American at this point. Indeed, UK_Display_Tech_Ltd wont' even fetch the same price as Silicon_Valley_Display_tech_Ltd because American businessmen place a high value on having their workers within bullwhip distance. Anything not within a couple of hours driving distance of headquarters will see a penalty on the amount offered for buyout; anything across the pond will see a pretty steep penalty.
What's more, because there aren't any alternatives - going from small to medium in the UK is nearly impossible because of lack of funds, infrastructure, support, etc - UK firms will gladly lap up the table leavings offered them. Holding out will net them nothing and will in all likelihood drive the offer away.
Crapping capitalism for breakfast and burning hippies isn't going to save your pathetic little island and it's byzantine house-of-cards finances-based economy. What will is carefully supporting local businesses interests to develop a stable collection of diverse "big businesses". The UK needs a few 800lb gorillas of its very own spread across enough sectors to be able to deal with downturns in any given handful of sectors.
That takes planning and care, especially in a global economy. The economy of a town favours only a handful of people in a town. The economy of a nation favours roughly the same %. The unified economy of an entire planet doesn't fundamentally alter the maths and the very few, chosen % of people that the global economy favours?
...is isn't you, or your little island, my limey friend. No matter how inflated the British sense of importance is; the UK just doesn't matter enough for market forced to save it.
Stick to commenting on tech stuff that you know something about, Trevor. If you'd ever tried to run a small business in the UK, you'd understand how government departments and regulation, the property system and business rates conspire to throttle any organisation that can't afford the small army of beancounters and HR drones necessary to deal with them. And the problem is getting worse, not better.
I don't deny for a second that there is a lot of getting out of the way that UK.gov needs to do to make small business better in the UK. I do not for a second, however, buy that removing liability or social responsibility from the owners of a business is ever a good idea. Incorporation as a legal shield is important, but corporations cannot be immune to the consequences of their actions nor be allowed to offload externalities onto society at large.
The fact that some change is needed is simply not justification for extremist reforms. Nor is it justification for changes that will hasten the "brain drain" of the UK.
Or is it simply that you have no greater aspiration for your nation than to be a poor "bedroom community" to the USA: feeding it all your best and brightest whilst hoping that they'll give you a discount on sewage treatment and mostly make sure your freshwater is fresh? How far your nation has fallen. Sad, really.
Do not take my comments for a belief that change and removal of red tap is not required in the UK. The UK is one of the most heavily bureaucratized nations int he world to start an SME in. That said, however, you will never convince me that any business - regardless of size - has an innate "right" to see externalities of their operations born by society. Balance in all things.
""Hands off" by the government will do nothing but siphon cash out of the UK to established interests which are largely American at this point."
So my tech city start up making games for Tizen is bought up by Andreessen Horowitz. They pay me, in London, $100 million for this start up.
How does this siphon cash out of the UK? Eh?
They're only going to pay you $100M for your startup if they feel they can make quite a bit more off of it than they pay for it. Were that company developed in the UK the "quite a bit more" would be staying there, instead of heading to the US. So the buy out of your company puts a smallish amount in to the UK economy while the economy ultimately loses out on far greater amounts.
Sure, it's hella nice for the guy who manages to sell his company. Hurrah and cheering; that dude's now set for life! What's better for the UK as a whole, however, is if that company were developed locally and the monies that would have entered the US economy via purchasing that game/software/newfangled microwave/whatever entered the UK economy instead.
What's good for one person (the guy who sells off his company) isn't necessarily good for the nation as a whole.
"You sir, are naive."
Sadly not, although you sir, appear to be a fool. Its a long while since I worked as a techy myself, and now I work in business management for a very large company. I have the joy of reading, trying to understand government's long winded claptrap, and then trying to cope with the inevitable unintended consequences and costs for business. I know far more about this than I wish to, and I've studied enough commercial history to know that government planning of economies always ends in tears.
A few facts might help you: The 2006 Companies Act is over 700 pages long, full of requirements, restrictions, prohibitions, mandations, ALL IN ADDITION to many millions of pages of other statute. Tax law is now so complicated that Tollies guide to UK tax law is over 11,000 pages if you have all volumes. Or if you want the basic starter volume, that's only around 1,900 pages. Now, funnily enough I haven't seen any recent successes of UK tax law of late, have you? Nor many examples of better corporate behaviour. And if you were running a small business, would you be able to find time to read all of the Companies Act, and to understand it?
"The UK needs a few 800lb gorillas" Ahh, National champions, eh? I thought nobody was stupid enough to believe that bilge these days, but evidently I'm wrong. Government have tried that before, and as a direct result, we no longer have De Havilland, Hawker, Bristol, Blackburn, Westland, Handley Page, Avro etc Instead we've got a single fat cat defence lobbying operation, in the form of subsidy and cost-overrun addicted BAES. And they don't now appear to be able to make any aircraft on their own; Even their best commercial offer is the Hawk, designed with slide rules by Hawker Siddeley forty years ago. The British motor industry is a similar case in point, where a range of innovative manufacturers were swept up by a series of idiot socialist politicians, convinced they could do a better job, and by the attractive logic of national champions and 800lb gorillas. As all can now see, they couldn't, and there is no UK owned volume car maker. I could work my way through the whole gamut of failed state consolidation and central planning examples, but that would be a book as long as Tollies tax guide.
Where did I say that UK.gov should not streamline taxes or bureaucracy? I believe 100% that this is the quickest route to driving business innovation and the growth of small business. I said two things:
1) Businesses should not be allowed to dump their externalities on society. So while I believe in streamlining regulation as a general rule, I don't believe in wholesale elimination of anything and everything that businesses find "inconvenient" or "an expense." Businesses have responsibilities as well as "rights." Balance must exist; even if I believe the current balance is out of whack.
2) The UK.gov should make resources (such as capital, manufacturing capability, maybe even startup incubators or dataparks) available to small businesses to help them grow into medium enterprises. The goal being to create a healthy and diverse UK economy that exists to do something other than "risky finance" and "shovel startups at the US."
I also talked about diversity of businesses. Nowhere did I champion regulation complexity or tax code obscurity, nor did I champion BAE or driving out/allowing the merging of all the big businesses. My approach and views are complex and require handling different segments of the market differently as different challenges and opportunities exist at all levels.
I do not, however, believe for a split second that "the market" will solve everything. "The market" will grind down everyone and everything but the most charismatic and powerful few virtually overnight if left completely alone. Businesses would dump every kind of externality onto society and you'd end up with an environment so horrible that the human lifespan would be 40 years in short order.
Maybe you don't care about that; maybe you think that you'll be on top so it's okay to flush away the rest of the human race. I don't. I think there needs be things like minimum wage, social safety nets, environmental regulations and checks and balances to prevent monopolistic exploitation and corruption.
By the same token, the bullshit you have to go through to do basic taxes is absurd. The regulations surrounding meeting the obligations of your social safety net are insane and byzantine.
UK.gov has a lot of cleaning up to do to make the business environment in the UK more conducive to actually doing business. No question. But a free-for-all isn't the answer. Nor is charging along without acknowledging that to compete with the other nations of the world who have economies better geared to sustain medium and large enterprises the UK is going to need to step in and give it's own companies a leg up.
The government is making sense and attempting to keep British businesses British...
And actually realising it takes money to do this, rather than silly 'enterprise zones'
Personally, I would have a 'dragons den' style investment group, funded by the government, where good ideas are invested in, and anyone has a chance of the assistance in getting their idea off the ground..
Right now we need to chuck a ton of money at Skylon, get that off the ground (literally) and the UK becomes leaders satellite launch, something we don't do at all right now, even if we build many of the satellites!
And if this all sounds too much like nationalisation? what is wrong with a bit of national ownership?
IF the government had a nice big share in lots of businesses, they would also be able to reap the rewards of the businesses success and tax avoidance wouldn't be an issue as the money would STILL find its way into the coffers...
Just because national ownership has failed in the past, it does not mean national ownership of some things is not a good idea... national rail IS a good idea, look where we were 40 years ago, and look now... nothing much has changed with our railways... and it has been private for a hefty chunk of that!
I wouldn't celebrate too much, just yet. To quote from the article:
The government has now responded to the warning that British start-ups were being snapped up by foreign companies, promising to hold a round table discussion in the Autumn to discuss how best to support the UK's start-up scene.
"Hold a round table discussion in the Autumn" is about as much as you're going to get, and they will feel they have met their responsibilities by having done so.
No practical application of any outcomes from that discussion will ever be implemented, I guarantee.
REG: Right! This calls for immediate discussion!
COMMANDO #1: Yeah.
JUDITH: What?!
COMMANDO #2: Immediate.
COMMANDO #1: Right.
LORETTA: New motion?
REG: Completely new motion, eh, that, ah-- that there be, ah, immediate action--
FRANCIS: Ah, once the vote has been taken.
REG: Well, obviously once the vote's been taken. You can't act on a resolution till you've voted on it...
This is the just reward for the government's own ideologically-driven policies. Young "entrepreneurs" nowadays go into business with an exit strategy already in mind, as opposed to long term commitment. And the people they sell out to are always foreign because johnny foreigner has all the money and most of the smarts.
it's a terrible shame.
It's even more of a shame that USPTO knowingly and actively facilitated that erosion by granting patents on completely nebulous concepts that actually require little invention or research.
Next they'll do a patent on "politician spouts nonsense".
It's not non-obvious and it's not innovative, it happens all over the world.
:(
If there is one thing us Brits lead the world in, it is completely screwing up great ideas by having incompetent management. Encouraging the mediocre of the mediocre, or shall I say, British business leadership onto a new company can't possibly go wrong.
If nationalised industries had been given the opportunity to flourish, I like to think they would, but politics got well and truly in the way.
As a recent example, I give you Royal Mail, a wonderful organisation that was hamstrung by the government, it couldn't modernise, it couldn't innovate, it even had to do the hard work for its competitors at a loss, no surprise we were presented with a dead fish and told only privatisation would resuscitate it.
If Royal Mail had been allowed to pursue investment, charge the going rate to its competitors for doing the final leg of their delivery and rid itself of the usual politically appointed cohorts. I think.......it would've been privatised years ago, but as a strong, profitable going concern.
Time has passed and the players from across the water have taken full advantage of our politicians dithering/ encouragement to step in and take away Royal Mail's business without a fight.
While I fully support a government initiative to bolster these crumbling shores, I would rather our money was targeted, not at new business, with all the inherent risks, but existing, proven entities, that could take the money and run a lot further and faster and make a difference, and it is they who can help nurture the up and coming, not politicians who exist in the murky world of broken promises, U turns and short term vote netting.
"Crapping capitalism for breakfast and burning hippies isn't going to save your pathetic little island and it's byzantine house-of-cards finances-based economy"
Perhaps enforcing free trade rules - and stopping silly name-calling - would be a start. The EU is supposedly a free-trade zone but we can't do business in France unless we translate documents received from American law firms into English and then onwards into French. Pathetic when the people at the recipient firm in question actually speak very good English (better than some UK-based TV people, certainly). That's not free trade. Let's get that sorted, then a transatlantic free-trade zone; lots of people would benefit. Silly name calling, no-one benefits.
PS
http://www.youtube.com/watch?v=g81eGiLXA1M
Somehow (I don't care how) invest heavily in multiple ideas to long-term reduce our dependence on foreign oil. There is a whole class of foreign investor that is only rich because we buy their oil, and they seem to often not like certain types of people, e.g. women.
So I'm talking electric cars (tech, as well as subsidising fleets etc - batteries, refill, whatever), more trams/electric buses/hydrogen buses, nuclear power stations. How about ways to encourage businesses to do more meetings remotely and by email instead of just insisting on flying/driving, then turning up and only switching brains on once the meeting has started? I know someone in South Africa who flew to Australia to attend a Green PR conference. The mind boggles.
I dunno, I don't have any good ideas, but I'm convinced that in 40 years' time this stuff is going to be a ridiculously big deal and all of these social networking/web or app "innovations" will mean absolutely nothing in comparison to having energy everywhere, and generated locally.
P.s. I'm currently drinking coffee from a nice eco cup, which is recycled paper round the outside and plant-derived plastic on the inside. Nuts to the environment, let's just reduce our dependence on fossil fuels, and along the way we'll invent stuff that's cleaner anyway.
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