London may have billionaires a-plenty, but what about funding for the next generation of businesses?
London is like the UN, even more so than Silicon Valley, but what there is not is that tight community.
On Monday night this week, I was a guest at a ball for Beanstalk, the brilliant, inspiring charity that places volunteers in schools to help disadvantaged children with their reading and writing.
The City was out in force, as was Boris Johnson. The London Mayor gave a typically barnstorming speech, loudly proclaiming the evidence of economic recovery, but also highlighting the dangers in growing inequality between rich and poor, and the fact that too many school-leavers cannot fill in work application forms – hence the need to support Beanstalk.
Listening to his roll-call of facts about London’s economic turnaround, it was hard not to be impressed. More billionaires than any other city in the world! As many French people as the fourth-biggest place in France, putting him ahead of the mayors of Nantes and Lille! Crossrail1 was being built, Crossrail2 will happen! Already, across the capital, there are job vacancies galore!
On he went, telling his audience in no uncertain terms that the good times were back. As if to prove the point, later, in the charity auction, someone bid £100,000 for the last portrait of Baroness Thatcher.
No one was in the mood to disagree with him. Certainly, it would have taken a special kind of curmudgeon to rain on the Boris show. His plea for more children to be taught literacy skills, so they too can reap the benefits of this surge, and in many cases avoid a life of hardship and crime (a shaming 60 per cent of prisoners in UK jails cannot read and write), was well made.
But, without being a party-pooper, I did find myself wondering about the nature of this transformation. Specifically, will it last, or will we be consigned to another episode of boom and bust? What I would like to hear from Boris and our political masters is evidence of permanence, of putting down roots that will grow into something of immovable and wide (not just confined to London) economic value.
As it happened, the morning after, I was talking to Keith Krach. For those of a digital persuasion, Krach needs no introduction.
He’s an American, 57 years old, who enjoys stellar status in Silicon Valley. He is over here to speak at a panel (“Silicon Britain: The Rise of Technology and Entrepreneurship in the UK”) I’m chairing tomorrow night for E2Exchange, the forum for UK entrepreneurs. E2E focuses on high growth and ambition. Joining Krach will be Brent Hoberman, co-founder of lastminute.com and founder of the soon-to-float online furniture retailer MADE.com, and Renaud Visage, co-founder of Eventbrite, the international event-management business.
Krach’s achievements, however, are of a different dimension. It seems like he’s been at the cutting edge forever. After graduating from Purdue with a degree in industrial engineering, and Harvard with an MBA, he became General Motors’ youngest-ever vice –president. He was 26 and running the car giant’s robotics division.
From GM, he co-founded Rasna Corporation, which was sold in 1995 for $500m. Then, a year later, he started Ariba, the online procurement-software company. When he took Ariba public, it had a market capitalisation of $34bn. Krach was named Ernst & Young Entrepreneur of the Year in the US in 2000, and the World Economic Forum has given him its Technology Pioneer Award.
He’s regarded as a founding father of b2b e-commerce, someone who has led the way in making business simpler and automated, and has netted fortunes for himself and his backers. His latest venture is DocuSign, the e-signature company.
What DocuSign aims to do is do away with the paperwork on a transaction – whether it’s a business contract or a property purchase. All the documentation is there, but online, not piled up in an in-tray or thudding through a letterbox.
He’s been on a life-long journey, he says, ever since his days at GM, to rid the world of paper. Ariba saw the creation of an online b2b purchase-supplier network, now DocuSign abolishes the need for piles of bumf. He wasn’t the founder, which was Tom Gonser, who realised so much of the time and effort in a real estate dealcould be saved by putting the documents online.
Now, the company has 40 million users and is adding about 40,000 unique users a day. It’s operating in 188 countries in 43 languages, and counts the majority of the Fortune 500 biggest firms in the US, and Virgin Atlantic, BSkyB and Misys in the UK, among its subscribers.
What Krach builds is scale. Partly, it’s down to the US being so much bigger. But it’s more than that. Too many of our tech ideas either don’t even reach base camp or if they do, they’re soon swallowed up by a larger overseas rival – and the valuable intellectual property is lost.
I’d feel far more optimistic about the lasting nature of the upturn if I heard Boris talk in terms of nurturing businesses, making sure they get the funding they require, as well as the number of billionaires or French folk living here – most of whom, let’s face it, are only in London because they see the UK as a tax haven.
We’ve got Tech City in East London and the Golden Triangle of Oxford, Cambridge and London; they’ve got the Valley. “Silicon Valley is the magical West Point of capitalism,” says Krach. “There’s a premium on youth, it’s like a United Nations with people from all over the world, it’s based on total meritocracy, and it’s about taking risks and failing, and picking yourself up off the ground, brushing the dust off your shoulders, and starting the next one.”
Where Silicon Valley is different, also, is “in the genealogy”. “Ariba spawned eight or 10 CEOs. The mentality is about giving something back, so there’s a lot of mentoring of the younger guys. That’s the secret sauce that makes Silicon Valley so special.”
Adds Krach: “London is like the UN as well, if anything it’s more so than Silicon Valley. But what there is not is that tight community. In Silicon Valley it’s expected that you give back, that you pass on your experience and knowledge.”
So, at Ariba, he was coached by John Chambers, head of Cisco Systems. “John gave up one day a month for four years to help me. I didn’t know shit from shinola but he wanted to mentor me, and then for me to pass on what I learned to the next guy.”
DocuSign has just secured $85m of backing, its second round of finance. “It’s all new money, from large public institutional investors.” A question for Boris: if DocuSign began in the UK, would our banks and institutions rush to fund it? I think, from having quizzed UK would-be entrepreneurs in the past, I know what the answer would be.
The contrast between the bravura performance of Boris at Beanstalk, and Krach was stark. In a sense, the latter filled in the gaps from the night before. Yes, we must raise our educational standards and it’s a scandal that so many of our children leaving school cannot read and write; yes we must make London and the UK appealing to foreign investors; yes we must improve our infrastructure. But if we’re truly going to change things for the better, so that we can really compete on the world stage, we have to go a whole lot further.
We should listen to Keith Krach.