Don't panic. We can still do business
It's the destructive British aversion to risk that entrepreneurs should be worried about, not war or
Is it me, or are there people in this country who half wish for an anthrax attack in London so that they can stir themselves up into a frenzy? The world has gone a lot less mad than CNN would have us believe, and there is even much to be reassured about from a business point of view. We must not talk ourselves into a recession, but instead capitalise on the opportunities that exist.
I oppose the current war and wish that the United States and Britain were not bombing Afghanistan. But we must not allow the war hype that pours from certain parts of the media to dent our confidence, both as consumers and as entrepreneurs. Jack Welch, the recently retired chairman and CEO of the General Electric Company, reminded an audience of budding entrepreneurs at Harvard Business School last week that "there have never been as many good opportunities around as now". It would be sad for Britain if people with good ideas were deterred from new enterprise because of the current crisis.
Business is opportunistic, and there is nothing callous or macabre about that. What is important is that businesses are run well and fairly, with a sensitivity to the outside world. It's a fact of life that opportunities arise from all sorts of world events. Each company has to adapt and make the best of opportunities that arise. Think of Charles Revson, who started selling cheap nail polish to cheer women up in the midst of the depression: 80 years later, his Revlon empire is a giant US business. In my industry, too, it is not all bleak. At lastminute.com, business is strong. During the summer, when the foot-and-mouth crisis deterred tourists from coming to London, we were able to form even deeper partnerships with hotels that had never before considered offering discounts, or selling over the internet. Now we are working with a range of five-star hotels, including the Savoy, the Berkeley and the Sanderson, which are offering big discounts and are not afraid to shout about it. They know they must now use different tactics to succeed, and they, too, will benefit from that, perhaps in the long term as well as during their current difficulties. That's one small example of how the dynamics between supplier and distributor have changed.
Last year, we acquired Degriftour, the biggest e-commerce website in France. The company had been early on to the internet, and had been able to build up a good brand name. Recently it celebrated its tenth birthday. Degriftour started when the Gulf war was killing the travel industry. It saw the opportunity to help airlines, hotels and others in difficulty by pushing their products, unbranded to allow deep discounting, through this new medium, the internet. As a result, the business flourished, despite being born in a very difficult time.
The terrible events of 11 September have fast-forwarded something that might have happened over the next year anyway. In industries that were already struggling, the tragedies in the United States hastened decisions that would have been faced sooner or later. The loss of up to 5,000 jobs at some national airlines, announced in the week after the terrorist attacks, was not the result solely of those events. This is also true of media companies and others cutting jobs.
In fact, there is still money available to determined people with a good idea. Venture capital funds and banks that raised cash when the market was more in love with new technologies are still looking for ideas in which to invest those funds. Last week, Telewest raised £125m in venture capital from GE Capital.
There could even be advantages in starting up during a recession: at a time when some sectors are making workers redundant, there is an opportunity to recruit talented people without having to compete with large companies able to pay enormous salaries. There is also the opportunity to do much more aggressive deals, in order, for example, to buy ad space on more realistic terms.
I do not agree with many aspects of how the US conducts itself, particularly with regard to foreign policy. However, one thing the US has got right is that it is a culture in which failure is acceptable, even on a spectacular level. It's important to innovate. I strongly believe that, even if the business you launch ends up going bankrupt, there was some good in giving it a go. It takes 1,000 ideas to find 100 good ones, and so you have to allow for the other 900 to fail.
In Britain, we seem almost to will people to fail. We revel slightly in the way that boo.com went under, that Laker Air ultimately stayed on the ground, or that Ionica, the £500m telecoms start-up, never made it to the market. Apportion blame where it is due, yes, but we should regard business people and employees as more seasoned and rounded if they have experienced failure. If we could only embrace that aspect of US life, Britain might create a more innovative business culture, regardless of the economic climate.
I don't think anything can prepare you for the tenacity, energy and leadership that are needed when you're trying to launch a new enterprise. You can't make people into entrepreneurs. They either want to take the risk, feel they would enjoy that kind of challenge, or they don't. What you can create is a culture that is prepared to allow risk.
There's never been a great wealth of entrepreneurship in this country. We're clever at invention and research, but less good at taking the ideas to market and building businesses. Just this week, I was looking at a list of winners in the latest business awards. The names were striking for their familiarity: Stelios of the easyGroup; James Dyson, who invented the bagless vacuum cleaner; the founders of Carphone Warehouse. These are all great achievers, each one admirable in their field. But where is the new talent, the names you do not recognise who have emerged in the past year?
Martha Lane Fox is co-founder and group managing director of lastminute.com