Taking Risk

🌈 Abstract

The article discusses the author's observations on the differences between the startup ecosystems in the UK and the US, particularly in terms of the attitudes and ambitions of top university students. It explores why UK students tend to pursue "safe" jobs at prestigious firms rather than starting their own companies, in contrast with the more entrepreneurial mindset seen in the US.

🙋 Q&A

[01] The UK vs. US Startup Ecosystems

1. What are the key differences the author observed between the UK and US startup ecosystems?

• The author found that top UK university students are more likely to pursue jobs at prestigious firms like McKinsey, Goldman Sachs, or Google, rather than starting their own companies. In contrast, US undergraduates start companies at over 5 times the rate of their UK-educated peers.
• The author believes this is due to a more "risk-averse" and "zero-sum" mindset in the UK, where entrepreneurship and commercial ambition are often seen negatively, compared to the more "positive-sum" and optimistic "American dream" mentality in the US.
• UK investors also tend to be more risk-averse, focusing on mitigating downside risk rather than the potential upside of startups, unlike US venture capitalists.

2. What factors does the author cite as contributing to the differences between the UK and US startup ecosystems?

• The author suggests it is not due to a lack of talent, education, or access to capital in the UK, but rather something more "deep-rooted" in the culture and mindset.
• He believes the UK has a more pessimistic view where people believe they are "destined to fail" before even trying, whereas the US has a more optimistic "American dream" mentality.
• The author also notes the role of government incentives, with the UK government passing supportive measures for startups, while US politicians have not done much to help the ecosystem in recent years.

3. How does the author's own experience as an entrepreneur in the UK and US compare?

• The author describes facing significant skepticism and resistance as an aspiring entrepreneur in the UK, with people telling him it was "inconceivable" he could become the CEO of a new bank.
• In contrast, the reception he received in the US was "dramatically different" - people were "overwhelmingly encouraging, supportive and helpful."
• The author believes the "UK felt like it was pushing against me as an aspiring entrepreneur" like an "immune system fighting against a foreign body."

[02] The Mindset Differences

1. How does the author characterize the different mindsets between UK and US entrepreneurs?

• UK entrepreneurs often take a "more realistic" approach, pitching their business based on the median expected outcome, which for most startups is failure.
• In contrast, US founders "imagine the range of possible scenarios and pitch the top one percent outcome" - they have "limitless ambition" and make "outlandish claims" about their goals.
• The author sees this as matching what venture capitalists are looking for - they are seeking the "outlier returns" where 1% of investments could be worth 1000x the initial capital.

2. What are the author's views on the risk-taking attitudes of young people in the UK vs the US?

• The author believes the downside risk for privileged, smart young people with a good education and supportive family is relatively small, as they can always fall back on a "job at Google or McKinsey."
• However, there is a "pessimism in the UK that often makes people believe they're destined to fail before they start" and that it's "wrong to even think about being different."
• In contrast, the author felt the potential upside of creating a successful startup was worth the relatively small downside risk he faced.

3. How does the author view the role of successful startups in driving economic growth?

• The author believes that as a country, the UK should want its "smartest and hardest working people building very successful companies" as these are the "engines of economic growth."
• Successful startups can "employ thousands of people and generate billions in tax revenues" and create prosperity that "will make the entire country wealthier."
• The author argues the UK should be focused on "making our pie bigger, not fighting over the economic leftovers of the US" and imagines how different the country would feel if tech giants like Google, Microsoft and Facebook were founded there.