Competing with China, AI regulation, and declining sound quality

Beating China at its own game

Suggested by Marc Sidwell, deputy editor of a new magazine, launching in the new year

Can unleashing global entrepreneurship reset the strategic balance with China? In a provocative essay, the ever-interesting Francis Pedraza makes the case.

Pedraza is the entrepreneur behind Invisible, an online ops platform that coordinates remote knowledge workers. He points out that China leveraged its manpower advantage in low-cost labour to end up dominating high-tech manufacturing through the Shenzhen cluster, gaining a global strategic advantage. Pedraza argues that the West can now play a similar game of its own by turning to the world outside China to coordinate low cost knowledge work online.

There are 5 billion people outside China earning less than $10 a day. Tapping that workforce, he argues, could open an advantage that China, with its total population of 1 billion, cannot replicate.

Pedraza identifies an opportunity that trades on the ever-expanding dominance of English as a lingua franca, the ever-deeper penetration of the internet around the world and the growing sophistication of online platforms that lower the transaction costs of coordinating and rewarding entrepreneurial individuals everywhere.

With increasing concerns about China’s aggressive tactics at home and abroad, perhaps it’s time for entrepreneurs to think big in response.

AI regulation in the EU: The risks of a human-rights based approach

Suggested by Sam Dumitriu, research director of The Entrepreneurs Network

The new European Commission President Ursula Von der Leyen has promised to release proposals for a new AI law within her first 100 days in office. She’s advancing a human rights-based approach to this regulatory effort – focusing on impacts on individuals, and framing potential harms by reference to human rights concepts such as individual dignity and autonomy. What does this mean in practical terms? Ben Hooper and Ying Wu of regulatory consultancy Fingleton Associates argue “the EU’s hope that trust will drive AI growth looks like a risky bet.”

There’s a danger that the EU will fall behind in AI, as other more permissive regimes attract talent. Not only would this be a bad result for businesses and consumers in Europe, but it’d also mean that the EU would find it increasingly hard for the EU to enforce its more restrictive regime.

As the authors write: “AI looks set to be the most important technology of the next few decades. Given these stakes, losing the global AI race would have immense implications for the EU’s future competitiveness.”

Music as cultural cloud storage

Suggested by Philip Salter, founder of The Entrepreneurs Network

"I would say that music is the only form of entertainment in which the technology has gotten worse during my lifetime." Ted Gioia's provocative idea comes from his excellent Conversation with Tyler.

Gioia isn't a luddite. For example, the music historian isn't concerned that streaming platforms have changed how people sing and perform (ie. needing to hold listeners' attention for a few seconds to get a royalty). But he is really concerned about the technology lessening the whole listening experience due to lower sound quality.

It wasn't always thus. Innovation in sound quality used to be the norm, with RCA the Apple of its day, inventing new sound technologies like microphones and the 45 RPM single. Columbia invented the long-playing album and Sony invented the Walkman.

Gioia thinks it was a mistake for record labels to hand over innovation to Silicon Valley. Personally, I think having the world's music in my pocket is probably a price worth paying for lower quality listening, but Gioia makes a strong case that it's not (he also has a brilliantly eclectic music taste).

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A Little Help From Our Friends

This week we've been busy writing a start-up manifesto with our friends at Coadec. It will cover a lot, including access to talent, regulations and tax reform. The aim is for this to influence whoever comes to power on 12 December. It includes some awesome ideas – many of which were sparked by speaking with our 10,000 strong network of entrepreneurs.

We're also busy planning a hustings with our allies at Enterprise Nation and IPSE, which will be hosted in Morgate by the ICAEW. Speakers and timings will be announced next week.

Regarding the election itself, a friendly entrepreneur got in touch to suggest that business owners "allow staff to arrive late or leave early so that they have time to vote." Polling Stations will be open from 7am to 10pm, but I think his point of offering clarity to employees on whether or not they can turn up a bit late makes a lot of sense (unless you suspect your employees will vote the wrong way!)

Micro management
Our pals – yes, we are a friendly bunch here – at the Small Business Charter have just launched a new programme to help micro businesses use tech to grow.

The Leading to Grow programme is part of a broader £9m package of measures to support small businesses through the Business Basics Programme (run by BEIS and Innovate UK).

Businesses can apply online or directly via one of the 15 business schools across Yorkshire, the Midlands, Manchester, Newcastle and London. Spread the word!

Nudge, nudge
The Behavioural Insights Team – informally called the Nudge Unit – has a report out on applying behavioural insights to business policy. In behavioural economics, Nudge is a theory that proposes positive reinforcement and indirect suggestions as ways to influence behaviour and decision making.

It's a useful report, but I've got reservations about some of the findings of behavioural economics. For example, even something as seemingly uncontroversial as the sunk cost fallacy – e.g. that we too readily throw good money after bad – may have its uses. (If you want to read more about this, check out this article from Jason Collins).

At the extreme, there are no doubt ways that government can help businesses make better decisions. Behavioural economists sometimes call this "choice architecture", framing information and choices to nudge business owners into making the 'right' decisions. However, the primary focus should be simply making any decision easier for business owners. Until entrepreneurs' interactions with government are at least half as slick as Estonia's (read my thoughts on Estonia here), simplification should be our number one priority.

Read the whole thing here, and sign up here.

Tech pondering, Estonia, and people vs. machines

What is a tech company?

Suggested by Dom Hallas, executive director of Coadec.

At Coadec, we help represent tech startups to Government. But what even is a tech company anyway? It’s something we wrestle with a lot. From the young entrepreneur I met ‘selling dreams’ (he was actually selling skiing holidays) to the story that a lot of Europe's AI startups weren’t using any AI, there’s now a vibrant debate about how to define the boundaries of the tech sector (sparked by the recent WeWork IPO debacle).

This is something that our friend Nicolas Colin, co-founder and director of The Family has tried to answer. He suggests:

  • Its business model is marked by increasing returns to scale, sustained thanks to supply-side economies of scale, strategic positioning, built-in network effects, and supply-side platform effects.

  • Its main strategic goal is to provide its users with an exceptional experience, as it’s the only way to inspire trust and retain those users that are so critical for sustaining increasing returns.

  • It collects user-generated data on a regular and systematic basis — which enables it to constantly improve the experience and, again, sustain increasing returns.

Benedict Evans of A16z, Ben Thompson and Christopher Mims in the WSJ are also trying to answer this elusive question.


The inside story of building a digital nation
 
Suggested by Philip Salter, founder of The Entrepreneurs Network
 
Estonia’s innovations in governing have been a big idea for over two decades – one that has undergone multiple iterations. 

Starting with a blank slate in a country with limited internet, just collecting the data was ambitious enough. Upon this they built e-tax, X-Road (the open source distributed data system that Finland, Iceland and the Faroe Islands now also use), their ID card, i-voting, e-health and e-residency, which provides anyone anywhere in the world with the opportunity to establish a business remotely.

Earlier in the year, Taavi Kotka, former CIO of Estonia and Toomas Hendrik Ilves, Estonia’s president from 2006 to 2016, shared their views on what made Estonia so successful. When asked about the incredibly low budget, Kolta quips: “If you don’t use Accenture or McKinsey, you’d be amazed at what you can get done.”

All interactions are logged on X-Road, but the X-Road system is designed to allay privacy concerns by being totally transparent. “We had one famous case where a systems administrator with the police abused her authority. She checked up on her boyfriend. The police are not allowed to do this. She was fired and convicted of a felony,” says Ilves.

Many countries claim that copying Estonia is too hard due to legacy issues. But surely not as hard as successive Estonian governments building these systems from scratch.
 

People versus machines in the UK

Suggested by Sam Dumitriu, research director of The Entrepreneurs Network

Just over a month ago, Chancellor Sajid Javid announced bold plans to raise the UK’s minimum wage to £10.50, the highest in the developed world. It’s part of a dramatic change in the UK labour market. As Tim Harford writes: “When the minimum wage was first introduced in the UK in the late 1990s, only a few hundred thousand workers were paid it. Last year, 2m workers received the minimum wage.”

One under-discussed aspect is the impact of minimum wages on automation. As minimum wages become higher, firms may be tempted to automate jobs typically performed by low-skilled workers. There’s a risk point to moving too fast, as Harford again states: “Once a minimum wage rises too far, and the new machine is installed or the factory is moved offshore, reversing the policy will not easily bring the old jobs back.”

A new study by the LSE’s Grace Lordan looks at the impact of recent minimum wage rises in the UK on automation. She finds that “a 10% increase in the minimum wage leads to a 0.11 percentage point decrease in the share of automatable jobs done by low-skilled workers.” Relatively modest, you might say, but as ever it’s more complicated.

There’s been “a stronger effect over the last decade and a half which is roughly double in size, implying that the importance of the interaction between the minimum wage and automation has been accelerating.” She concludes: “while the effects found in this study are modest, they should not be used to predict the future. Rather, monitoring of these trends, and ensuring that low skilled low wage individuals are not unduly hurt by the advent of the 4th industrial revolution is a key role for government and social science researchers.”

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Not another one?

It’s November 1st and somehow Britain is still in the EU. Boris was unable to keep his “do or die” pledge and Brexit has been delayed, again, until January 31st. With the risk of a No Deal Brexit subsiding, at least in the short term, the Prime Minister was finally able to get the opposition to agree to the General Election he’s wanted since the start of September. Coincidently, Brenda from Bristol has stopped answering the door.

The Brexit Party stand out as an unknown quantity. While they won the European elections, the First Past the Post (FPTP) system tends to close the door on insurgent parties. Counter to popular wisdom, Stephen Bush argues the Brexit party may be an asset to Boris, noting that “the Conservatives actually did slightly better overall in seats where Ukip stood than where they stood down, because disgruntled Labour voters, flirting with Ukip, reverted back to Labour rather than backing the hated Tories.”

The other unknown is whether the Liberal Democrats can maintain their jump in the polls. FPTP has a habit of squeezing out smaller parties.

The polls are hinting at a Conservative majority as Labour struggles to hang on to the Remain votes they won in 2017. But as we learned back then, a lot can change over the course of an election campaign.

So what does this mean for entrepreneurs? Every party will be making a pitch to business and we’ll be interrogating their plans on tax, immigration, and regulation closely.

Why talent matters?

This week I blogged about a new US study on the impact of immigration on startups. It found that startups who won the H-1B visa lottery (and therefore were able to hire skilled migrants) were more likely to receive additional rounds of VC funding, to patent, and to successfully exit through IPO. It’s a stark reminder of the rewards of being open to international talent.

You can read the post here.

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Rock climbing, skilled migrants, and trains

Rock climbing and the economics of innovation

Suggested by Anton Howes, economic historian and author of Age of Invention, a newsletter about the causes of Britain's industrial revolution.

Richard Jones provides a fascinating explanation for how modern rock climbers, often without any ropes or gear to support them, have managed to surpass even the wildest feats of their predecessors.

Contrary to what some might think, the key has been new technology. From cheap air travel, to better rubber soles, to superior ropes and ways to secure them to the cliff face, today's astounding free climbs are made possible by the ability to practice, practice, and practice before doing them without the ropes.

It's time to reverse the Beeching Axe

Suggested by Sam Bowman, principal at Fingleton Associates and author of Reviving Economic Thinking on the Right

The last fatal rail accident took place when Tony Blair was still Prime Minister, with one fatality. Since then, 23,000 people have died on our roads.

Niall Gooch makes the case that the Beeching Cuts, which closed hundreds of miles of suburban and cross-country railways during the 1960s, were the turning point when we gave up on public transit and surrendered to the motorcar. That’s led to huge expenditure on roads, including highways straight through once-booming metropolises like Birmingham.

Today we’re rebuilding some of the most valuable lines killed by Beeching – HS2 recreates the Grand Central Main Line, and the old Varsity Line between Oxford and Cambridge is being brought back too. Many more may be worth reviving if we’re serious about plugging in ‘left behind’ towns to booming cities near them so that they can grow as well.

There may be one thing to add to Gooch’s piece. Apart from a few toll roads and London’s congestion charge, roads are effectively free at the point of use. That creates a lot of traffic congestion, which makes buses unreliable. If we’re serious about moving people onto trains and buses, and out of their cars, we’ll need to get serious about road pricing, too.

Give Me Your Tired, Your Poor, Your High-Skilled Labor: H-1B Lottery Outcomes and Entrepreneurial Success

Suggested by Sam Dumitriu, research director at The Entrepreneurs Network

A new study allows us to quantify the value to startups of being able to hire high-skilled workers. In Give Me Your Tired, Your Poor, Your High-Skilled Labor: H-1B Lottery Outcomes and Entrepreneurial Success, researchers exploited the lotteries used to allocate H-1B skilled worker visas to businesses in the US. While economists typically can’t conduct randomised controlled trials on immigration policy, the H-1B lottery, while arguably a bad way to allocate visas, created a natural experiment that allows us to see just how important access to talent.

They find that a one standard deviation increase in the H-1B visa lottery win rate for a company is associated with a:

  • 1.5pp (23%) increase in the probability of IPO.

  • 4.5pp (10%) increase in the probability of receiving additional external funding.

  • 2.9pp (20%) increase in the probability of a successful exit over the next five years.

  • 4.8% increase in the number of patents filed and a 4% increase in quality adjusted of patent citations.

I blogged about the study here.

The value of talent

It is hard to overstate the importance of international talent for the success of an/our entrepreneurial ecosystem. Our recent report, Job Creators: The immigrant founders of Britain’s fastest growing companies, is strong evidence. We found that 49% of Britain’s fastest growing startups – companies like Deliveroo, Monzo, and Gousto – have at least one immigrant co-founder. Our data fits with past research from AnnaLee Saxenian, which found that over half of all Silicon Valley engineering and technology companies had at least one immigrant founder. 

But that’s not the whole story. Job creators deserve credit, but so do the talented managers, engineers, and product designers who actually do those jobs.  When I speak to founders at fast-growing tech startups, they will typically tell me that the biggest barrier to more growth isn’t access to finance or consumer demand, but a lack of access to talent.

A new US study, Give Me Your Tired, Your Poor, Your High-Skilled Labor: H-1B Lottery Outcomes and Entrepreneurial Success, highlights how access to skilled talent is crucial to a startup’s success. The study exploits the lotteries used to allocate H-1B skilled worker visas to businesses. In economics, we typically can’t conduct randomised controlled trials on immigration policy, but the H-1B lottery, while arguably a bad way to allocate visas, creates a natural experiment that allows us to see just how important access to talent.

The researchers found:

Relative to other firms that also applied for H-1B visas, firms with higher lottery win rates are more likely to receive additional venture capital funding and to have a successful exit via an IPO or acquisition. H-1B visa lottery winners also subsequently receive more patents and patent citations. Overall, our results show that access to high-skill labor is a critical determinant of success for start-up firms.

The results are stark. A 1 standard deviation increase in the H-1B visa lottery win rate for a company is associated with a:

  • 1.5pp (23%) increase in the probability of IPO.

  • 4.5pp (10%) increase in the probability of receiving additional external funding.

  • 2.9pp (20%) increase in the probability of a successful exit over the next five years.

  • 4.8% increase in the number of patents filed and a 4% increase in quality adjusted of patent citations.

If policymakers want British startups to succeed they need to recognise the importance of accessing skilled workers. Recent moves such as the reinstatement of the post-study work visa and adding roles such as software developer to the shortage occupation list will help, but we need to go further. 

Plans to end free movement and impose a £30,000 minimum salary on all new arrivals will damage the UK’s entrepreneurial ecosystem. At the very least, the plans should be amended to take into account the preference of early-stage startups to pay workers in equity. 

If Britain is to be truly ‘open for business’ then we must be open to talent.

If you’re an entrepreneur and want to discuss the impact of Brexit on the immigration system, then why not come to our upcoming breakfast roundtable at Kingsley Napley - “Britain Needs Talent: What Next For Entrepreneurs”. 


Turkeys Don't Vote for Christmas

Philip has departed for warmer climes – all founders need a break from time to time. It has been left to me to make sense of the week's events (thank you, Philip).

Super Saturday began auspiciously and with unexpected victory – for the England rugby team. Politically, however, we witnessed an anticlimax to rival season eight of Game of Thrones. The Letwin Amendment, an "insurance policy" to ensure Britain would not crash out of the EU without a deal, passed by 322 to 306. On Titanic Tuesday the bill seeking to put into law Johnson's deal was passed by MPs, but just 20 minutes later they voted against the government's programme motion. The compressed timetable – essential fo the Prime Minister to stay true to his "do or die" rhetoric – was rejected.

We are now told that Johnson will launch a fresh bid to hold a general election on 12th December to "get Brexit done". His fate is partly in the hands of EU leaders, who today agreed to a delay of unspecified duration. Of course, passing the Withdrawal Agreement will be just the beginning. Some fear that, having taken 40 years of membership to get to this point, it will take another four decades for us to untangle ourselves from the world's largest economy.

Unlike the focus group who were stunned into silence on Monday when informed that the wrangling, double-dealing and persistent threat of crashing out without a deal after the transition period are set to go on and on, entrepreneurs know all too well that we're staring down the barrel of medium to long-term uncertainty.

Looking Up

That's the bad news. But as Jimmy McLoughlin, former special adviser to Theresa May, wrote in The Times this week, it has never been easier to start a business – regardless of demographic or geographical location. Some entrepreneurs thrive in uncertain economic conditions while large companies decrease investment: see Microsoft or Apple, both started during recessions.

Fifteen years ago, McLoughlin explains, entrepreneurs needed relevant experience and the support of a local chamber of commerce to turn an idea into reality. "It was likely you quit your job on the Friday and started your business on the Monday." Today, two-thirds of founders start up while in full-time employment.

Citing our Future Founders research, McLoughlin draws attention to the fact that just 15% of young people say they've never thought about starting a business (and never will). Over half of 14-25 year olds, meanwhile, have thought about starting (or have already started) a business. Call it the end of the job for life. Call it progress. McLoughlin calls it a revolution.

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Boomer Memes, The Backfire Effect, and Anything-as-a-Service

How the Liberals beat Labor at its own game

Suggested by Sam Dumitriu, research director at The Entrepreneurs Network

It’s only a matter of time before Parliament is dissolved and Britain faces another general election. Today, the Conservatives tweeted their slogan “Get Brexit Done” in Comic Sans. Predictably it led to a fair deal of mockery and within 20 minutes “Comic Sans” was the top trend on UK Twitter.

There may be a method to their madness. I found this analysis of how Australia’s Liberal party used social media to pull off a shock election win informative. One part stood out:

“CCHQ deliberately turned out tacky content it dubbed Boomer Memes. These would often riff off a well-known movie or television show but always contain a serious message about Shorten being an economic risk.

"We'd make them really basic and deliberately lame because they'd get shares and lift our reach - that made our reach for the harder political messages higher," one campaign staffer says.”

Coincidentally, two weeks ago the Conservatives hired the Kiwi behind the tacky memes, Sean Topham.

Truth can only take you so far in politics

Suggested by Annabel Denham, associate director of The Entrepreneurs Network

US academics Ethan Porter and Thomas J Wood set out to show that the backfire effect exists. The more you told conservatives in the US that Iraq did not have WMDs, the more they believed it did – or so the theory went. But instead they discovered that Americans are not immune to facts. People will accept correction even when the original view is one they like and is held by people they approve of. Further, though we may prefer being corrected by a “fellow partisan,” we’d take being put right by someone we dislike.

Framed in the context of one of the most contentious claims since 2003, that we “send the EU £350m a week”, Finkelstein exposes an uncomfortable truth. The reason factual correction is possible is that facts simply aren’t that important to people in forming their political views. As the authors put it: “People do not care enough about facts to engage in motivated reasoning against them.” It is unlikely, Finkelstein concludes, that persuading the public that “£130m a week might have been a fairer figure would have altered the referendum result in any way”.

A new deal for big tech

Suggested by Kirsty Innes, Head of Tech And Economy at the Tony Blair Institute for Global Change.

Starting a business has never been easier. Thanks to cloud-based services, your company can store data, manage its accounts, or build an app cheaply and efficiently, without needing to run its own servers, procure accounting software, or design its own web development platform.

“Anything-as-a-Service” utilities have become part of the essential infrastructure of the economy. Just like roads, telecoms or the National Grid, they underpin millions of businesses who depend on them in order to function. Unlike traditional infrastructure, these services are almost entirely unregulated.

Does this matter? What would be the economic fall-out if, say, Amazon Web Services were to go bust, get hacked or suffer a serious technical failure? What would be the benefit if all companies made the best use of these services? If cloud services are infrastructure, do governments need to get involved, or get out of the way? Chris Yiu’s paper A New Deal for Big Tech sets the context for this debate. Over the new few months, TBI’s Tech and Public Policy team will be answering these questions and more – watch this space!

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#bobptd?

Entrepreneurs are used to working weekends, while Members of Parliament haven't had to officially work on a Saturday since the Falklands War. Tomorrow they vote on the Prime Minister's Brexit deal. It's too close to call.

While the Democratic Unionist Party (DUP) will vote against the deal, a few of the Tories in exile, some self-styled ‘Spartans’ from the European Research Group (ERG) and quite a few Labour MPs will vote with the Government.

However, whatever happens tomorrow, Sir Oliver Letwin MP and others could force Boris to ask the EU for an extension. Their stated concern is that a vote in favour on Saturday would cancel the Benn Act, leaving the door open for a no-deal if Boris pulled back from the deal.

But perhaps the biggest shift in recent days is the split among anti-no dealers. While many have their heart set on remaining come what May (or Johnson), there's a growing #bobptd movement – #bobptd stands for 'Bored Of Brexit, Pass The Deal'. (Of course, while passing the deal would eventually take Brexit off our front pages, the new deadline of December 2020 isn't far off. Whatever happens, this is just the beginning – or the end of the beginning.)

The think tank Open Europe has a useful explainer on the new deal. In essence, the backstop has been replaced with a ‘frontstop’ special arrangement for Northern Ireland which will come into force immediately after the end of the transition period. The UK will have to enforce EU Customs procedures at points of entry into Northern Ireland, which will impact exporters into and importers in Northern Ireland. Businesses will continue to enjoy unfettered access to the market in Great Britain, but the region will also follow the EU’s regulatory framework in certain respects.

More Erg
Whatever happens tomorrow, a hard Brexit remains possible. Some RRG types are supporting it precisely because of the possibility of a no deal come December 2020. Giles Wilkes, former adviser to Theresa May and Vince Cable has written a paper for the Institute for Government on the potential for a bailout for business in a no-deal Brexit. Wilkes sensibly calls for the Government to develop clear principles now to reflect the purpose and constraints of business support.

Sham Pain
A think tank's work is never done. As you'll see below, we're putting on a couple of events on immigration and visas. It's not just for the champagne and slap-up breakfast, we're busy scoping out a new paper on fixing the failing Start-Up and Innovator visas. If you're an entrepreneur or expert with experience or knowledge of these visas, drop me an email so I can ensure you're consulted.

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Patent Buyouts, Fed Policy & Scott Kupor

The Nobel Prize in Economic Science

Suggested by Sam Dumitriu, research director at The Entrepreneurs Network

My first port of call when the Nobel Prize in Economics is announced is the Marginal Revolution blog. Within moments of the announcement, Tyler Cowen and Alexander Tabarrok provide an essential summary of the winners’ work. They’re good at picking out papers that might be missed by others.

Banerjee, Duflo, and Kremer won the award for using randomised controlled trials to solve tricky problems in development economics. Duflo and Banerjee have a very readable book called Poor Economics, that summarises the research project and highlights some of the more surprising findings. But in Tabarrok’s post, Kremer gets the attention. In particular, the concept of patent buyouts, a nifty idea to incentivise research without the monopoly costs of patents. The idea had a real world impact. The Advance Market Commitment for Vaccines was used to guarantee a market for the pneumococcal vaccine which has now been given to some 143 million children.

Fixing the Fed’s framework with paychecks, not prices

Suggested by Ant Breach, analyst at Centre for Cities.

A new thinktank in the US, Employ America, is pushing for a reform to how central banks and especially the Federal Reserve work. Their big idea is that the Fed should shift away from targeting 2% consumer price inflation to targeting growth in gross labour income.

They have two good reasons to do so. The first is that it will allow for more responsive monetary policy. It takes time for changes in supply and demand at the macroeconomic level to cascade their way down to consumer prices, especially to the degree which triggers a response by the Fed. But data on gross labour income can be collected much more rapidly, allowing for finer-tuned monetary policy.

The second reason is it would rewire the Fed to pursue policy which supports growing living standards. Targeting consumer prices means that monetary policy is structurally more hawkish than it is designed to be. In practice, a target of 2% average inflation functions as a cap which inflation has rarely risen above. Targeting gross labour income would connect the lever of monetary policy to aggregate demand and the purchasing power of paychecks, more effectively improving the standard of living and growth than consumer price targeting has done.

Scott Kupor on venture capital

Suggested by Philip Salter, founder of The Entrepreneurs Network

This time tomorrow evening I'll be having a fireside chat with Andreessen Horowitz’s Scott Kupor about his book Secrets of Sand Hill Road: Venture Capital and How to Get It. He wrote the book to demystify and democratise venture capital funding: “Eliminating the information asymmetry barriers between entrepreneurs and VCs.”

James Pethokoukis of the AEI interviewed Kupor earlier this year. With the growing regulatory backlash against Silicon Valley companies, Kupor offers a note of caution: “Part of what I try to talk to the regulators about is just how well we’ve done from a policy perspective in enabling entrepreneurship in this country. One of the wisest decisions the US government ever made, in the early 1990s, was to enable the internet to be released into the wild and to not regulate it. Notwithstanding some of the challenges we have today, a lot of the last twenty-plus years of economic growth and development that we’ve seen has been a function of that.”

In an increasingly flat world, Kupor is concerned that regulations could knock the US off the top spot as the best place in the world to start a company.

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Right here, Right Now

Yesterday we launched our latest Female Founders Forum report at the Barclays Entrepreneur Awards. In Here and Now we interrogate follow-on funding data to reveal that women-led businesses are just as bankable an investment as exclusively male-led businesses.

Using Beauhurst data, we reveal that female-founded startups were just as likely to raise additional rounds of funding compared to non-female-founded firms: 52% vs 51% for businesses without a female founder.

As Annabel Denham concludes in her Telegraph column: "There is more to do. A lot more. We must continue to highlight the challenges still faced by female entrepreneurs, but these new figures show we are on the right course. Only by celebrating how far we’ve come can we inspire the next generation."

We've been running the Female Founders Forum for three years in partnership with Barclays. In previous years we revealed the equity funding gap in the Untapped Unicorns report and championed paying it forward in our Mentoring Matters report. In the process we've held loads of events around the UK.

You can read more about our latest report in City AM, where Juliet Rogan of Barclays has written on why "it’s time to shout louder about the success of our entrepreneurs." And Kim Darrah of the FT's Sifted has written on the fact that "female startup bosses who succeed in raising a first round are (ever so slightly) more likely than men to attract funding later in the game".

At yesterday's launch, Annabel interviewed Emma Sinclair MBE and Tugce Bulut – both inspirational entrepreneurs and Members of the Female Founders Forum. Tugce is co-founder and CEO of the innovative market research company Streetbees, and Emma's latest venture is the corporate alumni network EnterpriseAlumni. Check them out.

You can download a two-page summary of the report here, and read the whole thing here. (Incidentally, the report's designer, and a female founder in her own right, Eleanor Hyland-Stanbrook comes highly recommended. Check out Studio Twenty Twenty.)

If you're keen to get more involved in the Female Founders Forum, sign up to Annabel's quarterly newsletter.

SEIS The Opportunity
The Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) are seen by many entrepreneurs and investors as critical to supporting startups and scaleups.

We’re keen to make it easier for startups to access capital and anecdotally we’ve heard that the Advanced Assurance process for EIS and SEIS can cause real headaches for entrepreneurs.

Our Research Director Sam Dumitriu is investigating ways to improve the EIS and SEIS Advanced Assurance process to reduce unnecessary delays. If you’ve gone through the process, he’d love to hear about your experience (good or bad). Your experiences will go into informing our policy work. Drop Sam an email if you want share your experiences.

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Road Tax, Progress & Belarus

A road map for motoring taxation

Suggested by Sam Dumitriu, research director at The Entrepreneurs Network

Ahead of every Budget, the Institute for Fiscal Studies puts out its Green Budget. It sketches out the key policy choices faced by government and pushes important, but neglected issues onto the agenda. In their latest Green Budget, they look at taxes on motoring. It’s an issue important for three reasons, fiscal sustainability (they raise £40bn per year), productivity (congestion is a drag on it), and the environment (motoring is a massive source of carbon emissions).

They point out that the shift to electric vehicles, while a win for the environment will deprive the government of revenue (electric cars don’t pay fuel duty or road tax). As there’s still a need to fund the roads and to discourage congestion, the IFS calls for the lost revenue to be replaced with a system of road pricing where charges vary by time and location.

Though technologically feasible and tried elsewhere, it’ll be a tough political sell. But it’s got two things in its favour. First, it’ll be easier to replace fuel duty before there’s a large interest group of electric car drivers used to lower taxes. Second, while there’d be some ‘losers’ (drivers in congested cities), there’d be far more ‘winners’ (such as those driving long distances in rural areas).

How life sciences actually work

Suggested by Philip Salter, founder of The Entrepreneurs Network

Alexey Guzey thinks scientific progress in biology isn't slowing down. If he's right, this would be a vital corrective to the growing consensus that progress across the sciences is slowing.

Guzey writes: “Yes, funding agencies are risk-averse; yes, academia now selects for things you probably don’t want it to select for, like conformity and high conscientiousness; yes, an average scientist is not in academia for the love of science (and maybe the productivity of an average scientist is decreasing. However, all of this does not mean that science is stagnating or even that it is slowing down.”

In 2018, we had the first bionic hand, a new 3D bioprinting technique, and a method through which the human innate immune system may possibly be trained to more efficiently respond to diseases and infections, for example. And these three breakthroughs are just a snapshot of what happened in January.

Perhaps we can be more optimistic about the prospect for progress in our lifetimes. At the very least, Guzey provides an update to our template for how to think about the process of progress.

Insulating Belarus from external shocks

Suggested by Anthony J. Evans, professor of economics at ESCP Europe Business School

Pavel Kallaur, Chairman of the central bank of Belarus, provides a useful overview of the state of the economy in The Banker. Improving competitiveness has been a stated aim for Belarus over recent years, and my own research suggests that competitiveness has been improving in recent years. 2018 saw their inclusion in the Economic Freedom of the World Index for the first time, and they have since moved out of the "unfree" category.

Belarus Hi-Tech Park, in particular, has received a lot of attention. The lack of privatization in Belarus means that most private companies are start ups, and advanced payments technology has contributed to a blossoming tech sector. Success stories success such as Facebook-acquired MSQRD, and NYSE-listed EPAM are there.

Companies located in the park receive tax and social contribution advantages, but the zone is a virtual one – it isn’t a designated geographical area. This gives policymakers a lot of flexibility and interestingly last month officials touted the idea of Bulgarian companies joining the park.

Anthony has written here on the economic competitiveness of the Belarus.

Sign up for the Three Big Ideas e-bulletin here.

Press Release: Share of Funding to Women-Led Firms Doubles in Less Than a Decade

A report from the Female Founders Forum – with a foreword from Rt Hon Liz Truss MP – reveals that while the percentage of deals to female-led teams slightly dipped in 2018, female-led businesses represent a growing share of investment activity and receive similar rates of follow-on funding.

  • Female-founded startups are receiving a growing share of investment. In 2011, 11% of startups that raised equity investment were female founded. By 2018, this figure had nearly doubled to 21%. 

  • Of the 6,147 investment deals made in 2018, 17.9% went to companies with at least one female founder, down from 18.2% in 2017.

  • Nonetheless the total amount invested in businesses with at least one female founder in 2018, as a percentage, was 11.4%, up from 9.9% in 2017.

  • Using data from Beauhurst, we find that female-founded businesses also have similar rates of follow-on funding. Once they received an initial investment , female-founded startups were just as likely to raise additional rounds of funding  compared to non-female-founded firms (52% vs 51% for startups without a female founder).

  • Of the 19 high-growth companies that have floated on the stock market since 2011, three (or 15 %) were female founded. Of the 665 high-growth companies that have been acquired since 2011, 53 (8%) have at least one female founder.

  • Though we find women-led businesses securing investment in all sectors, they are over-represented in some sectors (industrials), and under-represented in others (tech and IP-based businesses), relative to all equity-funded startups.

  • In a foreword for the report, Rt Hon Liz Truss MP, Minister for Women and Equalities, says: “We have made great strides. I hope and expect that a decade from now, we will look at how far female entrepreneurship has come.”

  • In March HM Treasury found that the gender gap accounts for approximately 1.1m missing businesses, which equates to a £250bn opportunity for the UK economy.

  • Female VC partners are three times more likely to invest in companies with a female CEO, but Diversity VC has revealed that 83% of VC firms have no women on their investment committees.

Here and Now: Making the UK the Best Place in the World for Female Founders, a new report from the Female Founders Forum (a joint Barclays/The Entrepreneurs Network project), finds that while in 2011 just 11% of funding went to firms with at least one female founder, by 2018 this figure had grown to 21%. Further, female-founded businesses have similar rates of follow-on funding – reversing any perceptions that women are a less bankable investment.

Once funded, the percentage of women-founded startups that raised additional rounds of capital was similar to non-women-founded firms (52% vs 51% for startups without a female founder). Among startups five or more years on from their first raise, female founded startups were more likely to have secured a second funding round (66.5% vs 62.8%) and marginally more likely to have secured a third funding round (42.8% vs 41.8%).

This makes sense: at the early stages where venture capital firms make their initial investments, there is limited rigorous, objective information available. It means the founding team comes under great scrutiny, and there is a risk that gender bias can play a decisive role in who receives investment. As investors get more information, however, unconscious bias is less decisive.

The five highest raises with a female founder in 2018 were Orchard Therapeutics (£117.5m), MADE (£40m), Hyperoptic (£38.6m), Darktrace (£38m) and COMPASS Pathways (£35m). 

The Gender Gap

The report draws on other evidence that finds one in five businesses is created by a woman, that funding rates for all-female teams are still abysmal (these firms receive just a penny in every pound of VC investment) and that male-led businesses are five times more likely to achieve £1m+ turnover. Women tend to be less concerned with expanding their businesses and are over-represented in service industries.

Though we find women-led businesses securing investment in all sectors, they are over-represented in some sectors, and under-represented in others, relative to all equity-funded startups. They are less likely to be tech or IP-based businesses (27.9% vs 32.9% for all equity-funded startups) but more likely to be involved in the category of industrials (21% vs 15% for all equity-funded startups). Within the category of industrials, female-founded businesses are twice as likely to be involved in clothing (3.1% vs 1.5% for all equity-funded startups) and significantly more likely to be involved in food and drink based enterprises (10.5% vs 5.7% for all equity-funded startups).

In a Foreword to the Report, Rt Hon Liz Truss MP writes:

“It’s completely wrong that 50% of the population are not being fully utilised, they’re not having their talents used, and they’re not contributing as they could do to our fantastic economic success story. It's important to speak out against inaccurate stereotypes and celebrate the great female-founded businesses like HyperOptic and Darktrace. I commend this report and the ongoing work of The Entrepreneurs Network and Barclays on the Female Founders Forum."

Annabel Denham, Head of the Female Founders Forum, says:

Though there is undeniably work to be done to level the playing field and tackle unconscious bias, by dwelling on the negatives we risk missing how far we have come. We can now reveal that funding rates are similar for male and female-led businesses, dispelling the myth that female founders are a less bankable investment. Ensuring women-led businesses start and scale is vital to our economy and society. We need more investment to pour into these firms, more female networks, and many more role models to inspire the next generation.”

Juliet Rogan, Head of High Growth and Entrepreneurs at Barclays, says:

“The opportunity is clear – if we create an environment where women start and scale businesses at the same rate as men, we could add nearly £250 billion to the UK economy. At Barclays we are committed to helping make this happen. We have the trust of 24 million customers and nearly one million businesses, and inclusive UK economic growth is essential for our success. We are a proud signatory of the Investing in Women code, and we are committed to providing all the support and resources needed for female entrepreneurs to thrive.”

Recommendations

Here and Now raises a number of issues for policymakers, schools, the media and others to consider.

  • Government should open the doors of Number 10 and Parliament to female entrepreneurs and formally validate their efforts. 

  • Government should gather more data on STEM drop-off rates, examine the role of socialisation in the STEM disparity, and ensure careers guidance informs and tackles gender stereotypes.

  • Schools must instil the right skills, financial literacy and self-belief in young girls from school age so that they may become the entrepreneurs of the future.

  • The media must continue its efforts to shine a spotlight on the barriers to female entrepreneurship, profile those women in male-dominated industries, and ensure others get the role models they need to start and scale up.

  • Venture Capitalists could continue to work with organisations like Diversity VC and consider training programmes to tackle unconscious bias.

The report features three case studies: Tania Boler (Founder – Elvie), Alexandra Daly (Founder – AA Advisors), and Tugce Bulut (Founder – Streetbees). All are available for interview.

Tania Boler, Co-Founder, Elvie

Elvie – which is behind the kegel trainer and silent breast pump – was recently listed as one of the UK’s Top 100 fastest-growing businesses. “When raising money, bear in mind that you will need to work with these individuals for a long time. You need to be sure they are right for you – not just the other way around.”

Tugce Bulut, Co-Founder, Streetbees

Turkish-born entrepreneur Tugce Bulut founded AI market research company Streetbees in 2015. It was recently listed as one of the UK’s Top 100 fastest-growing firms. “We must teach children entrepreneurial skills from the start. I cannot stress enough how important it is to learn how to take risks and cope with failure.”

Alexandra Daly, Founder, AA Advisors

AA Advisors was founded in 2007 when Daly decided to apply her skills and knowledge, acquired during a career working for some of the largest global investment banks, to her own “PnL”. 12 years later later Daly is mentor to five women and sits on the board of the APPG for Women and Enterprise. “Never before has there been a better time to be a female founder: we need to be positive about the here and now.”

Stalemate

Unless Boris and Dominic Cummings are playing a game of 4D chess unintelligible to neither man nor beast, the Prime Minister's "do or die" promise to leave the EU is looking increasingly like the bluff most assumed.

Next stop: extension then general election. Which is why the Prime Minister's Conference speech – like that of Labour's and Lib Dems – felt more like a pitch to lead the country.

As such, Chancellor of the Exchequer Sajid Javid revealed the Conservative Party's most concrete policies impacting entrepreneurs, including:

On Post-Brexit Trade: "We’ll be able to pursue a genuinely independent trade policy. We’ll be able to replace inefficient EU programmes with better, home-grown alternatives. And from retail to green tech, we’ll have the opportunity to design smarter, more flexible regulation."

On Red Tape: "To help us do that, I will launch a Brexit Red Tape Challenge to help identify EU regulations that we can improve or remove. Liberating our entrepreneurs, small businesses and consumers from the burden of over-bearing bureaucracy, wherever we see it. Doing what a good pro-business government does."

On the Minimum Wage: "Over the next five years, we will make the UK the first major economy in the world to end low pay altogether. To do that, I am setting a new target for the National Living Wage: Raising it to match two-thirds of median earnings. That means, on current forecasts, this ambitious plan will bring the National Living Wage up to £10.50, giving four million people a well-earned pay rise."

On Broadband: "We have rolled out superfast broadband but we have fallen behind many European countries on the next generation of technology. And as we catch-up I don’t want any part of our country to fall behind others. So I can announce we are committing £5billion to support full-fibre rollout to the hardest to reach 20% of the country."

Top Tier
Hot off the press, we've just released our latest Policy Update on recent changes to the Tier 2 Visa. It's good news for entrepreneurs, with a significant expansion of the shortage occupation list, including for civil and electrical engineers, web design/developers, software developers, biologists and bio-chemical scientists.

This means for these and other jobs there's no need to advertise for 28 days before recruiting outside the UK; no need to meet the minimum income threshold (£30,000); reduced visa fees; and a priority if the visa cap is reached.

You can read Sam Dumitriu's full update here, and sign up to future policy updates here. And if you work at an organisation with expertise and want to partner on these updates, get in touch.

The Other Cameron
Mental health is a challenge for the majority of Britain’s entrepreneurs. Over half of entrepreneurs have suffered anxiety or panic attacks, nearly 7 in 10 report sleep problems, and 53% of founders say that building their business has been one of the toughest times of their lives. That's why the All-Party Parliamentary Group for Entrepreneurship is convening a roundtable later in the month to consider the scope of the challenge and what role government could play in better supporting entrepreneurs and their employees.

We have Dr Lisa Cameron, SNP Spokesperson on Mental Health and Guy Tolhurst, Founder of Intelligent Partnership and Adviser to The Entrepreneurs Network speaking. You can read more about Guy's story here, and watch the stories of Michelle Morgan, Nick Hussey, Kate Lester and Bonnie Chung, as part of Guy's Mindful Investor initiative.

Read the whole e-bulletin here, and sign up for the e-bulletin here.

Policy Update: Tier 2 Visas, Post-Study Work Visa and Freedom of Movement

At last, some good news on immigration!?

Welcome to our latest Policy Update. In these updates, The Entrepreneurs Network focuses on a recent policy development and set out (nearly) everything an entrepreneur needs to know about the topic. If you’re joining us for the first time, you can read our past updates here. We want to make sure this is as relevant as possible for entrepreneurs, so we’re happy to take suggestions for future topics (send them here).

In this edition, we’re looking at some recent changes to the Tier 2 visa system. Perhaps surprisingly, given the chaos in parliament, the changes are broadly welcome and will make life for startups a bit easier. We’ll also touch on a few policy announcements that aren’t in place yet, but are useful to keep an eye on, such as the restoration of the Post-Study Work Visa and the Conservative government’s plan to end free movement after Brexit.

Shortage Occupation List

From October 6th onwards, the shortage occupation list will be expanded significantly. There are a number of key advantages for employers hiring foreign workers in shortage occupations on Tier 2 visas. These include:

  • There is no need to advertise the role for 28 days before recruiting outside the UK.

  • No need to meet the minimum income threshold (£30,000).

  • Reduced visa fees.

  • Priority if the visa cap is reached (it’s less likely to be reached now as NHS Doctors and Nurses don’t count towards the cap).

The announcement is particularly good news for startups in science and tech. Newly added roles include:

  • Civil and electrical engineers

  • Web design/developers

  • Software developers

  • Biologists and bio-chemical scientists.

Other occupations added to the shortage occupation list include:

  • Architects

  • Skilled Chefs

  • Graphic Designers

  • Maths and Science Teachers

The full list is available here.

llda de Sousa, Partner of Immigration at Kingsley Napley told us: “We welcome the most recent statement of changes as these will help employers fill a much needed gap in their workforce. Even though the UKVI fees for short occupation roles are slightly lower than the standard fees, more can be done in terms of reduction of the fees.”

We are undertaking a series of roundtables with Kingsley Napley on understanding and reforming Britain's visa system to support entrepreneurship in the UK. The next one will be on November 7th. Find out more here.

Other helpful tweaks to the Tier 2 Visa include:

  • PhD level roles will be exempt from the monthly Tier 2 visa cap.

  • If a worker in a PhD level role has to leave the UK in order to carry out research, then those absences won’t count against an Indefinite Leave to Remain application.

  • Tier 2 workers who are absent from work due to sickness, statutory parental leave, assisting in a national or international humanitarian or environmental crisis or engaging in legal strike action may still apply for ILR even if those absences cause their salary to fall below the required threshold.

Post-Study Work Visa

We think the reinstatement of the 2-year post-study work visa is really good news for entrepreneurship in the UK. In fact, it was our top policy request in our recent report Job Creators. In the report, we found that 49% of the UK’s fastest growing companies had at least one immigrant-founder. When we dug deeper into the backgrounds of some founders, a pattern emerged. Most came to the UK to study, before transitioning to either the post-study work route or staying under EU free movement.

For employers and startups in particular, this change will help as it will allow them to hire foreign workers without sponsoring them with the Tier 2 process.

It’s worth noting the Post-Study Work Visa’s reinstatement is not guaranteed. The government has merely announced its intention to bring it back in time for graduates who start their degree level courses from next year onwards. However, given the cross-party support for the idea, it should pass into law even in a relatively gridlocked parliament.

The end of Freedom of Movement

While given the passing of the Benn Act, it’s unlikely that the UK will leave the European Union without a deal on October 31st, there is still an outside chance if parliament rejects an extension or the government finds legal means of being forced to seek an extension. You may remember back in August, Home Secretary Priti Patel claimed that free movement would end immediately in the event of a No Deal Brexit. This understandably has caused concern for companies employing EU citizens.

In part due to risk of legal challenges, the Home Office has now updated its guidance. The department accepted it will not be able to distinguish between EU nationals living in the country before and after Brexit until at least the end of 2020. As a result, employers will not be asked to carry out checks until everyone who is eligible has had a chance to apply for indefinite leave to remain through the EU settlement scheme.

Law Professor Steve Peers was quoted in Politico as saying: “It should avoid any serious crisis of large numbers of EU citizens not being able to enter the country again [after a no-deal Brexit]”...“It seems to be a climbdown because the government had threatened a much stricter scheme, without really explaining it.”

The key difference immediately after an Oct 31st No Deal Brexit would be that EU nationals who commit crimes during their stay in Britain would be subject to tougher treatment and would be at risk of deportation.

Propaganda, Heroism & Trade Wars

When truth trumped propaganda in wartime

Suggested by Fred de Fossard, communications manager at Public First

Sean Coughlan’s BBC article about the newly released archives from the Ministry of Information shines an interesting light onto the British public’s attitudes throughout the Second World War. In a time of huge public anxiety, the government wanted to know what the public really thought: How were people responding to the bombing raids? What rumours were circulating? What was really irritating the public? The results are fascinating, and instructive for anyone trying to interact with public opinion today.

‘"People were saying, ‘We want the truth, even if it's bad. We want to be treated as adults."’

Fighting against the dictatorship of Nazi Germany, the Ministry found it important to present as much truth as possible to the public, rather than hide it. “It was a case of, 'We've got truth on our side, we're going to use it as a weapon. And we can't do the same as the Germans or the Russians […] There was a clear feeling that we were fighting the war for freedom, democracy and the truth – and those things were indivisible."

Politicians and entrepreneurs alike should remember the nuances in public opinion, and the value of honesty in communications, even in times of crisis.

The archives are online here, and make excellent reading.

The myth of heroism

Suggested by Annabel Denham, associate director of The Entrepreneurs Network

The idea of heroes is as old as Greek mythology but with superhero movies smashing box office records it has enduring resonance.

As with comic books, heroes in the classical narrative are special, marked from birth with a destiny only they can realise. But Dr Stephen Davies asks whether these heroes are necessarily different from the common herd. They were for Ayn Rand, and are treated as such in economics today – where we can find a focus on heroic inventors or entrepreneurs who are retrospectively seen as fulfilling their destiny.

But “this is not the only way of thinking”. In the domestic or bourgeois concept of heroism it is a person’s actions, not a specific set of characteristics – or, destiny – that defines heroism. What they defend can be fundamentally mundane – “the life and circumstances of ordinary people and the virtues they reflect”.

What do we take from this? First, "human progress is driven by ordinary people doing extraordinary things." Second, "we should avoid stories that suggest we can only be saved by heroic figures in the classical sense." Third, “the performance of simply quotidian tasks as well as private and personal acts of kindness” will preserve and improve everyday life.

Politics is the problem – trade is the answer

Suggested by Philip Salter, founder of The Entrepreneurs Network

“When goods don’t cross borders, soldiers will”. This widely misattributed quote may sound like common sense, yet many so-called foreign policy experts act as though it’s anything but.

Economist Scott Sumner takes this truism to its logical conclusion in hoping that China wins the ongoing trade war with the US. In answer to a reader’s question, “how can you support in any way the most murderous, totalitarian empire in world history?”, he replies: “I strongly oppose that regime, and trade with the Chinese people is my method of opposing the regime. If China wins the trade war, the US will be less likely to launch such foolish actions against other countries.”

For Sumner: “Hundreds of years of human history strongly suggest that trade makes people better, both at the individual level and the national level.”

History seems to be on Sumner’s side. As Marginal Revolution reports, Ju Hyun Pyun and Jong-Wha Lee have investigated the effect of trade integration on interstate military conflict. Based on a large panel data set of 243,225 country-pair observations from 1950 to 2000 it finds that an increase in bilateral trade interdependence significantly promotes peace.

All we are saying is give trade a chance.

Sign up to Three Big Ideas here.

Pro Rogue?

This week it was the turn of Labour to hold their Party Conference.

Jeremy Corbyn had to bring forward his speech following the Supreme Court's judgement that the Prime Minister's suspension of parliament was unlawful. Corbyn led on that and the risks of a no-deal Brexit, but his speech was wide in breadth, including policies that would impact entrepreneurs:

On Workers Rights: "We’ll bring about the biggest extension of rights for workers our country has ever seen. We’ll scrap zero-hours contracts; introduce a £10 living wage – including for young people from the age of 16; give all workers equal rights from their first day in the job; take action on the gender, disability and ethnicity pay gaps; and introduce flexible working time for workers experiencing the menopause."

On Spending: "Labour will get our economy working in every town city and region with a record investment blitz, and we’ll boost the devolved budgets in Wales and Scotland. We’ll upgrade our transport energy and broadband infrastructure with 250 billion pounds of investment. And breathe new life into every community, with a further 250 billion of capital for businesses and co-ops. Investment on a scale our country has never known, bringing good new jobs and fresh growth to where you live."

Rebecca Long Bailey MP, Shadow Business, Energy and Industrial Strategy Secretary, gave more detail in her speech:

On Gig Workers: "Workers under Labour will get full legal rights – such as sick pay, holiday and parental leave and protection from dismissal from day one, even those working in the gig economy."

On High Streets: "Some of that action will be long-term changes, such as addressing the imbalance of tax treatment between traditional retailers and online sellers. That is why my colleague Bill Esterson is convening a cross-departmental taskforce to look into these complex issues."

On Business Rates: "On one of the most pressing issues, business rates we will introduce annual revaluations of rates, exempt new plant and machinery from revaluations, ensure a fair appeals system and fundamentally review the business rates system to bring it into the 21st century."

Next up it's the much reduced Conservative Party Conference. It's been been cut short after opposition MPs voted to punish the Government for proroguing parliament by not allowing the MPs time off to party in Manchester.

However, a lot of MPs still seem to be going, including Gillian Keegan MP and Dr Caroline Johnson MP for our event with Barclays and the Female Founders Forum. Our event is outside the secure zone, so no need to a pesky Conference pass. We also have Lou Cordwell OBE, Lisa Tse MBE and Juliet Rogan from Barclays on the panel. Sign up for free here.

On Your Marks
The Government has produced an 8-page booklet on how leaving the EU could impact your business. Read it here. Also, HMRC has launched an EU Exit Import and Export Trader Helpline for traders and hauliers importing from / exporting to the EU after October 31. The number is 0300 3301 331. Lines will be open from 8am to 6pm Monday to Friday.

The Government is also working with the British Library to produce a series of webinars to help prepare businesses for Brexit. The first webinar will be next Monday 30th September at 2pm covering the regulation of manufactured goods covered by the “New Approach” (i.e. mostly CE marked goods) in the event of no deal. Topics covered will include CE and UKCA Marking, Notified Bodies, conformity assessment, importer duties and declarations of conformity, and there will be the opportunity to ask questions. Find out more here.

As we head towards the cliff edge / Elysian Fields (delete as appropriate), or not, I'll update you on a few specific things you might want to think about / ignore (delete as appropriate). This week: Trade marks.

Trade marks are a form of intellectual property right, commonly taking the form of words, logos, or a mixture of both. Currently, you can apply at the UK's Intellectual Property Office (IPO) for a right that covers the UK, or at the EU Intellectual Property Office (EUIPO) for a EU Trade Mark (EUTM) which covers the whole of the EU. If and when we leave the UK, any existing EUTMs will only cover the remaining EU Member States, and so will not provide protection in the UK. However, to ensure that UK protection is preserved, the government will provide holders of existing EUTMs with a comparable UK trade mark on exit day. Find out more here.

Read the whole thing here, and sign up for the e-bulletin here.

Glaeser, Screen Time & Bright-Line Rules

The entrenched vs. the newcomers

Suggested by Sam Dumitriu, research director at The Entrepreneurs Network

Economist Ed Glaeser is the world’s leading expert on cities: “Everything you see around you today in the glittering, towering, often maddening cities we call home, has at some point or another been quantified and chronicled across his more than 600 written articles, and nearly 100,000 citations.” Since 2015, he has given an annual lecture in New York.

2019's lecture focuses on what he argues is the new divide in US politics: The entrenched vs. the newcomers. It’s a divide that applies equally well to the UK. He argues that we’ve seen a proliferation of rules, such as restrictions on new development, that favour insiders at the expense of the young. He believes that the young understand “that they’re being sold out, shut out, and they want to reshuffle the deck.”

Glaeser makes the case for the need for a new agenda focused on freedom: “Overmighty states are engines for empowering insiders. Markets are not. Markets are about making things open for any entrepreneur.”

In defense of screen time

Suggested by Philip Salter, founder of The Entrepreneurs Network

Björn Jeffery urges parents to move beyond the growing consensus that all screen time should be discouraged or at least tolerated. Like books and other media, he argues that screen time isn't inherently good nor bad. It can be both. The content and context matter.

Jeffery cites the biggest study we have on screen time from ten years of data and involving over 10,000 British preteens. What does it show? "Well, mostly nothing! In more than half of the thousands of statistical models tested, researchers found nothing more than random statistical noise."

For Jeffery, Fortnite and Minecraft point to a potential positive future, "where global collaboration is seamless and enriching". He has concerns about screen time in the extreme, but argues that by withholding screens from our kids we may be reducing a hypothetical risk at the expense a substantial future opportunity.

Using bright-line rules

Suggested by Scott Craig, adviser at The Entrepreneurs Nework

Do you have at least one 'bad' habit you’d like to eliminate? Are you checking emails at 11pm for example, or drinking more often than you would like? Then this big idea is for you. Habit researcher James Clear argues that setting progressively expanding ‘bright-line’ rules can help us overcome even our most deep-rooted habits.

Here's how it works. Pick a habit you'd like to change, then set a clear and unambiguous rule that’s initially very small in scope. For example, 'I don’t drink on Thursday evenings.' Once you can stick to the rule, gradually expand its scope, e.g. ‘I don’t drink on Weekday’s’, until – like an antibiotic spreading across a Petri dish – the bad habit is eventually eliminated.

Each week we send three links on the big ideas in entrepreneurship, innovation, science and technology, handpicked by the team, entrepreneurs, academics and friends of the think tank. Sign up here.

This Lady's For Overturning

It's Party Conference season. The Liberal Democrats went first, and as it may not have escaped your notice, their platform is centred on overturning the Brexit referendum. So far it seems to be paying off – yesterday they overtook Labour in the polls.

But what about their other policies? Jo Swinson's leadership speech focused on social issues and didn't speak about policies impacting entrepreneurs, but Ed Davey's speech did. Davey is the Lib Dem's Spokesperson on the Treasury as well as Business, Energy and Industrial Strategy, and though these aren't manifesto commitments, they will be useful for understanding where things might be heading.

On Funding: "We will back enterprise in communities and towns across our regions by relaunching our Regional Growth Fund that worked so well, and regionalising the British Business Bank, which the Liberal Democrats set up."

On High Streets: "We will restore high streets in our towns and cities, devastated by business rates and unfair competition from the likes of Amazon. Our plans to reform and cut business rates will breathe in new life."

On Productivity: "Britain’s productivity problem hasn’t been tackled properly for decades. So I’m going to let you into a secret. About our confidential economic plan. How Liberal Democrats will make Britain more productive. We will invest. In people. Massive investment. In education. In training."

On Climate Change: "My first Liberal Democrat budget will be a budget for people and a budget for the planet. A Climate Emergency Budget. We will invest in new technologies, to help tackle climate change."

On Monday we will be at the Labour Conference and the following week at the Conservative one with the Female Founders Forum that we run with Barclays. You won't need a Conference pass and can still get tickets for Brighton (here) and Manchester (here). Like every event we do – they are free. Do pop in to say hello!

Tech Nation
Tech Nation – a government-funded organisation for tech entrepreneurs across the country – was born out of Tech City, which was originally created to support the East London tech scene (dubbed Silicon Roundabout). So did Tech City work? Despite some important qualifications, a new paper suggests that the "policy substantively increased cluster size and density, most clearly for the younger, newer group of digital tech plants, and with increasing impact over time." For anyone interested in cluster policy, I would reading the conclusion in full, as the lessons extend to the whole country.

Applications are now open for Tech Nation’s three leading growth programmes – Rising Stars, Upscale and Future Fifty. They cover everything from seed funding to pre-IPO. Find out more here.

Ready Steady
Will we leave the EU at the end of next month? It looks less likely than it once did. Nevertheless, the government is adamant: "The United Kingdom will leave the European Union on the 31 October 2019 and your business will need to take action to get ready." The government is hosting Get Ready For Brexit events across the UK that they've asked me to share with you:

• Birmingham – 27 September
• Hull – 3 October
• Leeds – 4 October
• Derry/Londonderry – 7 October
• Belfast – 8 October
• Cardiff – 14 October
• Leicester – 24 September
• Perth – 24 September
• Glasgow – 25 September
• London – 20 September
• Northampton – 16 September
• Nottingham – 17 September
• Sheffield – 23 September
• Swindon – 19 September

Find out more here.

Read the whole e-bulletin here, and sign up here.