The Exchanges

Q Why do you think we have a lack of capital in the UK? I, I disagree with you, so I'm intrigued why you think we have a lack of capital.

A Well, I think you just need to look at the numbers. Um, you know, the, the, the numbers, uh, say that, um, I think in last year, you know, because the model I think to copy is the US. I mean, yeah, so the, the U.S. is, is just so obviously successful in technology, uh, uh, 20 trillion dollars of value created in the last 50 years in building, uh, decacorns in, in the U.S. Uh, the U.K. has created two, um, uh, about a hundred and seventy billion of value in the U.K. So, so it, it, it's like two orders of magnitude off, uh, the U.S. Um, so, um, so the, the U.S. I think is a model to copy, and the, Um, I think if you look at how much venture capital was raised by US VCs last year, it was about seventy six billion raised in the US. Um, pro rata to population, the UK should be 15.4 billion. Um, the UK funds raised 3.7 billion last year, so we're short about twelve billion in venture capital.

AI assessment note: “UK funds raised 3.7 billion last year, so we're short about twelve billion”

Q What do you mean a national goal for wealth?

A Like, like, like if you, if you take the, yeah, firstly, I think tech and innovation is really the engine of economic growth here. There's no other engine that we can rely on, so it's that, um, and, and if you look at the U.S. has created this 20 trillion of value over the last, you know, 2030 years in new tech companies. UK, naught .1 trillion. So, um, so we're, we're, yeah, pro rata, we should be about Four trillion we should have created, and we've created 0.1 trillion. So we're about four trillion short of where we should be. So I think we could set a goal to say, look, what if in 20 years we set a national goal of creating four trillion of wealth in tech? Um, so, yeah, so, um, and, uh, so, yeah, so that obviously that's, that's a sort of escalating growth of value. So, yeah, so let's say at year 10 the goal is half a trillion. Um, and, and, and thereafter, you know, the, you know, we grow from that point. So growing half a trillion is already quite a big goal for us, yeah, given that we've only created a hundred billion right now. Um, and that, uh, but it also sets the mindset for saying, what, what are we going to have to invest to do that? What, what these companies look like? How much capital are they going to need? They're going to need about a hundred billion of capital to do that, really, realistically. Um, and you think, okay, well, that hundred billion, where's it …

AI assessment note: “what if in 20 years we set a national goal of creating four trillion of wealth in tech?”

Q Debbie Downer and just do the problems, but I want to be also pretty granular on the solutions. I think for me, the biggest problem is actually talent supply and not being a magnet for the best developers in the world to have as London or the UK anymore, where I think it maybe once was. Do you agree that we have a fundamental talent problem today in the UK?

A Uh, I think we've got a bit of a talent problem in the UK, so I, I don't think we're the magnet that we were, or that we could be. Um, I think it's quite interesting, actually, if you look at where talent is being born in, like, AI across Europe, and you look at where it lands in terms of where it stays, actually the UK is minting about the same talent it's keeping, uh, but that is a net-net, actually. Um, so we're losing talent to the US, um, and we're actually recovering some of that from other parts of Europe, so net-net we're about the same, actually. But we could be 10 X better, frankly. Uh, so I think that's the key point is that, you know, we ought to be making the UK the magnet, the place to set up a company in Europe, actually. And all that talent that is leaving the UK and leaving other parts of Europe to go to the States, we, we ought to be capturing it and building companies here. Um, so, so we, we, uh, I, I, I'd say we're losing a bit of it. Yeah.

AI assessment note: “I think we've got a bit of a talent problem in the UK”

Q Debbie Downer and just do the problems, but I want to be also pretty granular on the solutions. I think for me, the biggest problem is actually talent supply and not being a magnet for the best developers in the world to have as London or the UK anymore, where I think it maybe once was. Do you agree that we have a fundamental talent problem today in the UK?

A Uh, I think we've got a bit of a talent problem in the UK, so I, I don't think we're the magnet that we were, or that we could be. Um, I think it's quite interesting, actually, if you look at where talent is being born in, like, AI across Europe, and you look at where it lands in terms of where it stays, actually the UK is minting about the same talent it's keeping, uh, but that is a net-net, actually. Um, so we're losing talent to the US, um, and we're actually recovering some of that from other parts of Europe, so net-net we're about the same, actually. But we could be 10 X better, frankly. Uh, so I think that's the key point is that, you know, we ought to be making the UK the magnet, the place to set up a company in Europe, actually. And all that talent that is leaving the UK and leaving other parts of Europe to go to the States, we, we ought to be capturing it and building companies here. Um, so, so we, we, uh, I, I, I'd say we're losing a bit of it. Yeah.

AI assessment note: “I think we've got a bit of a talent problem in the UK”

Q market, because I've been in venture for 10 years now. A lot of the job has been like, oh, well, it's like HR platform X, but in Europe, it's Y for Europe. And actually, you can build billion dollar, two billion or three billion dollar companies on the back of that. Where can the UK and Europe then be a number one market leader and beat the US and China?

A Well, I, I think you, if you think of it as a stack from like, uh, semiconductors and hardware up to sort of applications layer, um, then, uh, I, I think it's easier for Europe to think about building at the bottom of the stack or at the top of the stack, actually. Um, I think it's quite hard for Europe to sort of build in the middle of the stack. Um, so, so, so I think AI application companies that are solving a particular problem, particularly if there's a sort of defensive moat that exists in Europe, obviously, A good place to sort of start, um, um, and, um, and, and then I think at the bottom of the stack, I mean, um, I think something that's attached to the metal, so semiconductors that are solving a particular problem happen to be somewhere where we have the expertise to do that, and it happens to be a B to B sale where we get paid for the value of the architecture that we put down and the utility it delivers. Um, and, and so I think it's, it's easier to think top and bottom of the stack as the places that we can build those companies actually. So it's not necessarily where we're focused on, but it is kind of where we should be focused. Whereas I think if you're building some middleware layer or some tools layer, I think it's a little bit easier to imagine doing that in the States. I think they're doing that here.

AI assessment note: “easier for Europe to think about building at the bottom of the stack or at the top”

Q Why is that? I agree with you, but I don't know why.

A Because, uh, the quality of investment managers is quite low, um, and because they feel they've done a good job if they get anywhere close to just returning capital. Um, so, instead of saying, you know, here's, here's, here's an investment, and, you know, go swing for the fences, is that, you know, for God's sake, don't lose it, you know, so, you know, take the low risk return, and, and, you know, flip the company as quickly as you can, and get, if I get 80 cents on the dollar back, I'm happy. And, and, in fact, all the returns are somewhere between 80 cents and one dollar 20 on the dollar. I mean, it's ridiculous. So, so I think those funds are a frickin' disaster, really.

AI assessment note: “Because, uh, the quality of investment managers is quite low”

Q What's your biggest takeaway from working with Janssen?

A Firstly, he's a good human, um, so, so that's good, I think, that we got, you know, one of the world's richest people is actually, I think, a good person, um, so that's good. Um, and, uh, uh, he is, however, a bit of a control freak. Um, so, you know, many would be the time we're just about to give a sort of presentation to a major customer, and Jensen wants to go through the deck, and we'll change product name, schedule, pricing, uh, uh, uh, and resources and everything on the fly, like, with, like, 10 minutes to spare before the meeting, so, so he's, he's, he's quite hard to work for in terms of his, Desire to have command of detail and to be in control of the most important variables in the company. But in a way, as a sort of founder, I do sort of respect that, actually. It's just, you know, so, so within NVIDIA, we used to have a, Jensen at the top, we had a layer of people whose job was to buffer everybody else in the company, actually. And so this buffer layer would deal with Jensen, which is great.

AI assessment note: “Firstly, he's a good human... he is, however, a bit of a control freak.”

Q You do you. Um, my question to you then is like, when we look at that, and we look at the money that's needed to fund that, where does that money come from? I, I understand your argument around the scale and the scale of cash needing to change. How do we fund the four fifty million that BBB does invest to whatever we want to call it, 2,000,000,003 billion.

A Four billion, yeah. Um, yeah, I, well, firstly, I think, I think the money, Europe has a lot of money, actually. Um, so that's the first thing to say. So Europe's got a lot of money in, obviously, in pensions. We talk a lot about pensions. So it's got a lot of money in family, uh, family offices, um, that are sort of locked up all over the place, actually. So Europe actually is not capital short. It's just not investing in this particular asset class. Um, Um, so the job, I think, of BBB is to create that asset class at speed, and, and to play an enabling role in doing that, essentially. So, so my, yeah, my suggestion would be that we get the government to increase the amount that British Business Bank, and we may need to operate the quality and talent in BBB to be able to do this, but yeah, BBB puts like four billion a year in, um, and would, um, Would require like a fifty-fifty funding ratio. So the GPs have to raise matching money. Um, otherwise, yeah, BBB doesn't participate, but it can be 50%. Um, so, so if I want to create a billion dollar fund, I know I'm going to get half a billion from BBB, and I've got to raise the other half a billion, essentially. Um, so raising the funding ratio to fifty-fifty would be a good start. And, and then I think we've got to be creative, um, which, you know, which I guess is another call to action for BBB about how We, we split the fees and…

AI assessment note: “my suggestion would be that we get the government to increase the amount”

Q What do you mean a national goal for wealth?

A Like, like, like if you, if you take the, yeah, firstly, I think tech and innovation is really the engine of economic growth here. There's no other engine that we can rely on, so it's that, um, and, and if you look at the U.S. has created this 20 trillion of value over the last, you know, 2030 years in new tech companies. UK, naught .1 trillion. So, um, so we're, we're, yeah, pro rata, we should be about Four trillion we should have created, and we've created 0.1 trillion. So we're about four trillion short of where we should be. So I think we could set a goal to say, look, what if in 20 years we set a national goal of creating four trillion of wealth in tech? Um, so, yeah, so, um, and, uh, so, yeah, so that obviously that's, that's a sort of escalating growth of value. So, yeah, so let's say at year 10 the goal is half a trillion. Um, and, and, and thereafter, you know, the, you know, we grow from that point. So growing half a trillion is already quite a big goal for us, yeah, given that we've only created a hundred billion right now. Um, and that, uh, but it also sets the mindset for saying, what, what are we going to have to invest to do that? What, what these companies look like? How much capital are they going to need? They're going to need about a hundred billion of capital to do that, really, realistically. Um, and you think, okay, well, that hundred billion, where's it …

AI assessment note: “set a national goal of creating four trillion of wealth in tech”

Q You do you. Um, my question to you then is like, when we look at that, and we look at the money that's needed to fund that, where does that money come from? I, I understand your argument around the scale and the scale of cash needing to change. How do we fund the four fifty million that BBB does invest to whatever we want to call it, 2,000,000,003 billion.

A Four billion, yeah. Um, yeah, I, well, firstly, I think, I think the money, Europe has a lot of money, actually. Um, so that's the first thing to say. So Europe's got a lot of money in, obviously, in pensions. We talk a lot about pensions. So it's got a lot of money in family, uh, family offices, um, that are sort of locked up all over the place, actually. So Europe actually is not capital short. It's just not investing in this particular asset class. Um, Um, so the job, I think, of BBB is to create that asset class at speed, and, and to play an enabling role in doing that, essentially. So, so my, yeah, my suggestion would be that we get the government to increase the amount that British Business Bank, and we may need to operate the quality and talent in BBB to be able to do this, but yeah, BBB puts like four billion a year in, um, and would, um, Would require like a fifty-fifty funding ratio. So the GPs have to raise matching money. Um, otherwise, yeah, BBB doesn't participate, but it can be 50%. Um, so, so if I want to create a billion dollar fund, I know I'm going to get half a billion from BBB, and I've got to raise the other half a billion, essentially. Um, so raising the funding ratio to fifty-fifty would be a good start. And, and then I think we've got to be creative, um, which, you know, which I guess is another call to action for BBB about how We, we split the fees and…

AI assessment note: “get the government to increase the amount that British Business Bank”

Q market, because I've been in venture for 10 years now. A lot of the job has been like, oh, well, it's like HR platform X, but in Europe, it's Y for Europe. And actually, you can build billion dollar, two billion or three billion dollar companies on the back of that. Where can the UK and Europe then be a number one market leader and beat the US and China?

A Well, I, I think you, if you think of it as a stack from like, uh, semiconductors and hardware up to sort of applications layer, um, then, uh, I, I think it's easier for Europe to think about building at the bottom of the stack or at the top of the stack, actually. Um, I think it's quite hard for Europe to sort of build in the middle of the stack. Um, so, so, so I think AI application companies that are solving a particular problem, particularly if there's a sort of defensive moat that exists in Europe, obviously, A good place to sort of start, um, um, and, um, and, and then I think at the bottom of the stack, I mean, um, I think something that's attached to the metal, so semiconductors that are solving a particular problem happen to be somewhere where we have the expertise to do that, and it happens to be a B to B sale where we get paid for the value of the architecture that we put down and the utility it delivers. Um, and, and so I think it's, it's easier to think top and bottom of the stack as the places that we can build those companies actually. So it's not necessarily where we're focused on, but it is kind of where we should be focused. Whereas I think if you're building some middleware layer or some tools layer, I think it's a little bit easier to imagine doing that in the States. I think they're doing that here.

AI assessment note: “it's easier for Europe to think about building at the bottom of the stack”

Q Why do you think we have a lack of capital in the UK? I, I disagree with you, so I'm intrigued why you think we have a lack of capital.

A Well, I think you just need to look at the numbers. Um, you know, the, the, the numbers, uh, say that, um, I think in last year, you know, because the model I think to copy is the US. I mean, yeah, so the, the U.S. is, is just so obviously successful in technology, uh, uh, 20 trillion dollars of value created in the last 50 years in building, uh, decacorns in, in the U.S. Uh, the U.K. has created two, um, uh, about a hundred and seventy billion of value in the U.K. So, so it, it, it's like two orders of magnitude off, uh, the U.S. Um, so, um, so the, the U.S. I think is a model to copy, and the, Um, I think if you look at how much venture capital was raised by US VCs last year, it was about seventy six billion raised in the US. Um, pro rata to population, the UK should be 15.4 billion. Um, the UK funds raised 3.7 billion last year, so we're short about twelve billion in venture capital.

AI assessment note: “UK funds raised 3.7 billion last year, so we're short about twelve billion”

Q see all of this, but then I see the Daily Mail headline, which is about how your taxpayer dollars are going to fund Tom or Sarah's Venture fund where they have a Porsche and a nice house in Hampstead and the concentration of wealth on your taxpayer dollars. Do you think we're actually being reasonable by thinking we can do that? Can you share my concern around that headline risk?

A Uh, it is definitely a challenge, I think. Uh, so I, I definitely see the, the challenge. Um, but I, I, I actually think we've got to make the case really for why The UK needs to change, really. I mean, yeah, the, I mean, clearly, we're not really fulfilling our potential right now. Clearly, we've got a lot more to achieve, actually, and, yeah, and it's about raising everybody's sights to build this country to be the best it can be, really, is, is, let's build this value that is kind of missing in tech, um, yeah, because it, it, it's not in any way coordinated right now, you know, this, 20, thirty billion a year that we pump in at the front end per annum in tech. So, like, a hundred and fifty billion over a parliament in university funding for science and tech, in SEIS, in EIS, in VCTs, in R&D tax credits, and patent box, and, uh, and so on. All those things, you add them up, um, and what's coming out of the pipeline is, what, nothing, really. Um, so, Yeah, so there's some, people are making some wealth along the way, but that's not what we want. We're not achieving a national goal, really. Um, so I think, I think if we say, let's, let's do this together as a country, let's build this value, and let's, yeah, energize people, then the, yeah, it's clear to me that active money is, is the way to go. Passive money is not the way to go. Um, so an active money means, yeah, when thing…

AI assessment note: “it is definitely a challenge, I think. Uh, so I, I definitely see the, the challenge.”

Q It's terrifying. Um, but it worries me great. Do you believe the multiplier effect? Because I always get the pushback. Whenever I'm on social, I'm like, listen, It is great having non-doms. They spend in restaurants, they hire people, they buy homes, they spend in shops. Do you buy it, or do you think that actually trickle-down economics is a lie that we continuously?

A There's bound to be some trickle-down economics, but there is also this need for fairness as well, and I think it is just a balance that we've got to strike between the two. Um, so yeah, so, you know, people that Um, don't enjoy a privileged tax status and pay full taxes, uh, sitting in the same restaurant as people that do enjoy a privileged status. I mean, that's also not right. Um, so yeah, so we got to find a balance between the two is, is how to, how to sort of, you know, make it feasible for people to stay here and not be penalized. Um, but at the same time, try to be as fair as possible as a country as a whole, because we need to We kind of need to hold hands together on this, actually, as a nation. So, so we need both people that have come from outside the UK and people inside the UK to feel we're on a shared mission together, really, and so that it's got to be somewhat fair at the same time, and I just think the balance right now has probably swung too far in the opposite direction, and that we're, we're actually making it much harder to do that.

AI assessment note: “There's bound to be some trickle-down economics, but there is also this need for fairness”

Q market for them to go public. There is a liquidity market that is much more vibrant. In the UK, we have the London Stock Exchange, where a lot of people throw a lot of criticism, And people choose to not list on the London Stock Exchange. To what extent do we need local domestic liquidity markets, or are we in a global world where you can just go to NASDAQ?

A Um, yeah, I've thought about this a bit, actually. I, I, I think it's a supply problem again. Um, so, so I, I think, um, the lack of, like, tech companies in London, there's only one London listed tech company worth more than ten billion, and that is Sage. And Sage is like a thirty-year-old ERP company. So, so, which is, I mean, it's a, it's a very nice company, but it is a, is an output of the twenty billion a year that we pump into tech in the UK. To have one company worth ten billion dollars on the stock exchange is not a great out turn, really. Um, so, um, so once the US has minted 20.5 trillion of value in its tech companies, we've minted about a hundred Billion over that period of time, so, in tech. So, yeah, so, yeah, firstly, let's accept it's not good, um, but I think the problem is supply, actually, is that companies grow to a certain size, they're stunted for all sorts of reasons. You know, it could be quite early on, the cap table's broken, they hire the wrong people, the wrong product, market focus, but it could also be lack of, uh, swing over the fences, lack of money to swing over the fences, actually, and net result being Companies just have to be sold, uh, to typically US buyers. So they never get to the point where they're into growth and they're capable of being IPO. So there's not a big pipeline of companies coming through that could be IPO. Um, there's a ha…

AI assessment note: “I think it's a supply problem again.”

Q market for them to go public. There is a liquidity market that is much more vibrant. In the UK, we have the London Stock Exchange, where a lot of people throw a lot of criticism, And people choose to not list on the London Stock Exchange. To what extent do we need local domestic liquidity markets, or are we in a global world where you can just go to NASDAQ?

A Um, yeah, I've thought about this a bit, actually. I, I, I think it's a supply problem again. Um, so, so I, I think, um, the lack of, like, tech companies in London, there's only one London listed tech company worth more than ten billion, and that is Sage. And Sage is like a thirty-year-old ERP company. So, so, which is, I mean, it's a, it's a very nice company, but it is a, is an output of the twenty billion a year that we pump into tech in the UK. To have one company worth ten billion dollars on the stock exchange is not a great out turn, really. Um, so, um, so once the US has minted 20.5 trillion of value in its tech companies, we've minted about a hundred Billion over that period of time, so, in tech. So, yeah, so, yeah, firstly, let's accept it's not good, um, but I think the problem is supply, actually, is that companies grow to a certain size, they're stunted for all sorts of reasons. You know, it could be quite early on, the cap table's broken, they hire the wrong people, the wrong product, market focus, but it could also be lack of, uh, swing over the fences, lack of money to swing over the fences, actually, and net result being Companies just have to be sold, uh, to typically US buyers. So they never get to the point where they're into growth and they're capable of being IPO. So there's not a big pipeline of companies coming through that could be IPO. Um, there's a ha…

AI assessment note: “I think it's a supply problem again. Um, so, so I, I think”

Q us, uh, in two ways. One is the US and the other is China. Again, this wonderful politician that I interviewed the other day said, ah, you know what? We were an afterthought, uh, for the US and now we're not even that. And I guess my question is in a wider world perspective, What does not even being an afterthought mean for us, and what we need to do?

A We do actually have, um, as Tom was saying, universities that are global grade universities. I mean, Cambridge is not that different to Stanford. Um, you know, you know, maybe a little bit smaller, maybe a bit less funded, but the quality of research that we're doing here is as good. So we, so there is raw talent here. I do think, I do think London is A really great city, actually. A great place to live and work, actually. I mean, it's probably, probably the best city this side of the, of the Atlantic, and arguably the best city in the world, actually, to do this. So, so, so I think it's a great place to live and work.

AI assessment note: “there is raw talent here”

Q Final one guys. 10 years time. Where is the UK? One. And how many ten billion dollar companies will we have on the LSE then?

A I, I think we will get the UK pointing in the right direction. So, um, so I, I, I, I think it will require some Government embracing of the challenge and a lot more communication by government on what we're going to do and how we're going to do it, um, but I, I, I think, you know, we're approaching a point, we're about a year into this current government, four years to go to the next election you know,, yeah, things that have not gone well, um, I think it's fair to say, and yeah, and I think, you know we're,, we're approaching a point when they've got to Recognize a change and make some changes, and I think we are going to see some changes that will be positive, and assuming that happens, ah, yeah, I think in, in 10 years time, I think we will be on, we will have achieved this five hundred billion dollars valuation in, in tech, and the UK will be seen as the magnet in Europe in which people come to kind of build these companies, um, so that, that's what I think we're going to achieve.

AI assessment note: “in 10 years time, I think we will have achieved this five hundred billion”

Q see all of this, but then I see the Daily Mail headline, which is about how your taxpayer dollars are going to fund Tom or Sarah's Venture fund where they have a Porsche and a nice house in Hampstead and the concentration of wealth on your taxpayer dollars. Do you think we're actually being reasonable by thinking we can do that? Can you share my concern around that headline risk?

A Uh, it is definitely a challenge, I think. Uh, so I, I definitely see the, the challenge. Um, but I, I, I actually think we've got to make the case really for why The UK needs to change, really. I mean, yeah, the, I mean, clearly, we're not really fulfilling our potential right now. Clearly, we've got a lot more to achieve, actually, and, yeah, and it's about raising everybody's sights to build this country to be the best it can be, really, is, is, let's build this value that is kind of missing in tech, um, yeah, because it, it, it's not in any way coordinated right now, you know, this, 20, thirty billion a year that we pump in at the front end per annum in tech. So, like, a hundred and fifty billion over a parliament in university funding for science and tech, in SEIS, in EIS, in VCTs, in R&D tax credits, and patent box, and, uh, and so on. All those things, you add them up, um, and what's coming out of the pipeline is, what, nothing, really. Um, so, Yeah, so there's some, people are making some wealth along the way, but that's not what we want. We're not achieving a national goal, really. Um, so I think, I think if we say, let's, let's do this together as a country, let's build this value, and let's, yeah, energize people, then the, yeah, it's clear to me that active money is, is the way to go. Passive money is not the way to go. Um, so an active money means, yeah, when thing…

AI assessment note: “it is definitely a challenge, I think. Uh, so I, I definitely see the, the challenge.”