Without a doubt, it’s the hearty appetite for taking risks and not being afraid to fail which so characterises the tech start-up scene in the US.
I feel there’s something innate within US tech entrepreneurs which makes them more amenable to risk-taking – and I just wish that we in the UK could be more like them in this regard.
The US start-up entrepreneur does not see failure as a blot on his copybook, in the way that his UK counterpart might. Not for a minute does he believe that failure somehow implies diminished capability on his part.
This is best exemplified by the oft told tale that a US entrepreneur whose business just failed would go to a dinner party and freely share stories of previous failures, wearing them like a badge of honour, whereas the UK guy would prefer to sit at home rather than face his friends.
You may think ‘so what?’; suggesting that our entrepreneurs are merely cut from a different cloth and that it doesn’t really matter.
I think it does matter though. At the 2013 World Economic Forum, there was much hand-wringing over the inability of ‘old Europe’ to produce an Amazon or a Google. I feel that a big part of this inability is rooted in this fear of failure or willingness to take risks.
It’s near impossible to quantify what this costs the UK tech sector (or our European brethren). Regardless of how you might personally choose to quantify it though, the fact remains that the scale of the challenge is about to get larger.
That’s because that same have-a-go attitude appears prevalent in the emerging markets so soon it won’t be just the US that beats us in the risk-taking stakes.
There is some encouragement to be taken however from the fact that UK youngsters now appear more open to the idea of getting involved with tech start-ups than following the traditional route into a blue-chip corporate.
That’s encouraging because I think that, for too long, the UK has laboured under this misconception that the correct route for someone with first class qualifications from top-notch universities should be employment at a major corporate.
If they do go it alone, the mavericks, the eccentrics and the inventors – while admired for their intelligence – are typically given a short window in which to achieve something before society tells them to get a proper job.
In the US, the opposite may be true; take the corporate shilling too soon and you may stand accused of being a sell-out and throwing away the opportunity you had to strike out alone.
Something else I’ve noticed is that UK tech entrepreneurs do tend to cash in far earlier than their US counterparts. The US entrepreneur is far more likely to stay committed for the long-haul, choosing an equity stake or share options and reduced pay today in the hope of landing the big IPO tomorrow.
It’s difficult to figure out why this is. Perhaps your typical US West Coast entrepreneur has more exemplar companies on his doorstep. It’s all a lot more real for him than for the UK guy for whom the really big rewards appear to be – quite literally – thousands of miles away.
I don’t think we should under-estimate the value of seeing those tech start-up successes at close quarters. I believe it is what encourages US entrepreneurs to stay in the game longer and it is directly responsible for more graduates and scientists being willing to bet their careers on the start-up instead of the established corporate.
The final way in which that more entrepreneurial spirit manifests itself is in the way that US start-ups take risks so much more quickly. The belief in failing faster in order to succeed faster is well ingrained.
In the UK, my sense is that we like to iterate our tech solutions to the nth degree so they are fail-proof before launching. I’m not convinced that such a safety first approach necessarily works when you could instead just launch, test, tweak and then launch again.
Why do these differences exist? At this point, if you wanted to, you could get really philosophical about the differences between New World and Old World cultures. The desire in Europe to build something of great permanence, the remaining traces of a pioneering spirit, the effect that a social security ‘safety net’ can have on individuals’ risk-taking appetite; the list goes on.
Whatever you choose to believe though, you cannot get away from the fact that when it comes to tech start-ups, there will always be more failures than successes (otherwise, we’d all be having a go!).
I think the UK needs to learn to be more tolerant of this fact, especially when you bear in mind the failure rate could be as high as 80-90 percent. It doesn’t appear to deter West Coast investors who seemingly place a high premium on that have-a-go mentality and evidence of having at least tried previously.
It need not be any different in the UK but for as long as we remain as concerned about failure as we are, the US’s risk-taking spirit will be the one thing that I remain most jealous of.
Tudor Aw is Technology Partner at KPMG in the UK