This is an AI Transcription. It’s pretty good, but please forgive any errors.
[00:00:00] Jonathan: Welcome to The Difference Engine, the show for tech founders, investors, and innovators.
[00:00:09] Paul: So then, what have we got for everyone this time? It's events week, and we'll be sharing what we learned from our East End trip to the third Sifted Summit. And The Difference Engine also attended the UK's prime tech meets the government conference, DigiGov. We'll be asking, is selling tech to the government alive and well?
[00:00:29] Jonathan: But first up, the UK budget. Could some short sighted policy decisions put us in the UK's pole position in European tech in danger.
So we want to talk now a little bit about killing the golden goose. Now, why the golden goose? Well, the UK tech economy has been helped, frankly, quite a lot. by previous government's fiscal policy. Um, but are we now in danger of losing our pole position in European tech due to some short sighted decisions by the new administration that's come in?
You know, are we about to throw the golden goose out with the bathwater as a metaphor for how messed up things could be getting in UK for tax investors? We're talking everybody from VCs and PCs. P E's to high net worth individuals from the UK and of course, overseas, single entrepreneurs. And if they're not worthy of our sympathy in this new area, how about the pension funds we all pay into by law?
[00:01:25] Paul: Right. So the pension funds, uh, are big investors in new categories of tech, uh, as, uh, Obviously, our VCs and PEs. And as we know, personally, from, um, our most recent client, uh, on the category side, there was about a six month delay in raising funds, which points to a problem with how we get these companies funded.
[00:01:46] Jonathan: Let's talk about the upcoming UK budget, which will be the first for the new Labour government that's come in and is scheduled for the end of October. Um, for those of you who are not Brits, the budget is the annual financial report and policy reset, which UK governments have to undertake, um, uh, used to be annually.
But increasingly it is now twice a year. So this is where the UK public and businesses heed the most attention to those that they put into power and what they are doing or not doing for them. It's sort of like the US election without the hint of racism, sexism, ageism, and a lot less guns. Uh, but that does not make it boring for us Brits.
[00:02:26] Paul: No, cause the autumn budget really affects everyone in the UK. And some EU citizens, whether we're a chain smoking senior worried about pension payments and tobacco taxes, or a new family hoping for help with their first home or a billionaire investor looking to plan a taxes. So her family does not go from rags to riches to rags in two generations.
This is it. So it's crunch time first one out the gate for the budget. Why does it matter
[00:02:52] Jonathan: to category creators? Well, it matters because the investment environment is crucial for attracting Into the economy that underpins the risk that is involved in creating brand new technologies playing at the bleeding edge.
And there are three particular, um, policies that have been enacted recently, which look to be under threat. And we think this is a problem.
[00:03:18] Paul: We're speculating a little bit here, but let's talk about E I S and S E I S as, uh, enter enterprise investment scheme and seed enterprise investment schemes are going to talk about carried interest.
Uh, which is a specific term for the fees charged by private equity firms and VC firms. Who, as a reminder, are the largest investors in tech and new tech categories. And finally, in terms of exits, we're going to talk about CGT, which stands for capital gains tax. And those are, uh, those affect investors in existing tech investments.
And more crucially, those individuals who take the risk to start tech businesses, the actual entrepreneurs who actually add value and actually create wealth. Pretty important then. One might say so. Some context. The change of government just over three months ago, It usually means change of policies, particularly after election, where the electoral majority gives a massive mandate to go and make, uh, what may be unpalatable changes.
That said, many fear what could happen to the business tax breaks that have helped propel the UK to, frankly, take leadership in Europe. Let's kick it off with the
[00:04:19] Jonathan: EIS. This is the enterprise investment scheme. Um, it's actually a series of UK tax release launched during the last conservative administration back in 1994.
Um, and it was a success succession to a scheme which had operated before, which is called the business expansion. That's a
[00:04:37] Paul: better name for it than EIS business expansion scheme. Now
[00:04:40] Jonathan: it's designed to encourage investments in small. Unquoted companies, um, carrying on a better commerce quality qualifying trade in the United Kingdom.
So EIS and its sister break, the SEIS, which stands for seed enterprise investment scheme, what, what really strikes of genius, essentially, essentially Enabling almost anybody to invest in early stage, high risk tech with a massively reduced risk to themselves. So the money piled in. And
[00:05:08] Paul: it's important to understand this means that access to the potentially high growth new tech categories of tomorrow.
It's available outside of the privileged and the, uh, privileged because they're wealthy and institutional investors, meaning mostly pension funds, which is the case in the U.
[00:05:24] Jonathan: S. Boy, did it work, you know, by the end of the 2014, 2015 tax year, cumulative total of 14. 2%. billion pounds that had been invested under the scheme into about 25, 000 companies in that year and in excess of 1.
8 billion was invested under the AIS.
[00:05:43] Paul: So these, all of these 25, 000 companies, you know, VC records of one in a hundred will, will become a, you know, a category leader, a, um, Decacorn, 25, 000, that's a fair. A bunch of companies, a couple of them could be the new Google.
[00:05:56] Jonathan: You can play this all off against tax. So that reduces your risk.
But in a, to my mind, this just hasn't been about the money. It's about where tech sits in the mind of the average Brit, not in some esoteric corner of the economy or an investment portfolio, but front and center. And what concerns us, if there's going to be changes in this, is that. Tech will increasingly look like a risky bet, you know, without schemes such as EIS, SEIS, and, you know, after all, you know, why risk any of your savings when you can score 4 percent in relatively safe banks?
[00:06:29] Paul: That's a fair question. And then what about if you don't grow your economy so you've got inflation and 4 percent becomes flat? Anyway, I digress into, um, Finance. So that's E. I. S. I think it's clear we like it and don't want to mess with. So let's talk about something. We totally disagree a little bit on
[00:06:43] Jonathan: carried interest to something that is a little bit more esoteric.
Um, and is of concern to a much smaller group of people in the economy. The issue is, um, that smaller group Uh, carry great sway when it comes to tech investment. And we're talking about people in the sometimes mega wealthy VC and, uh, PC firms. Tell listeners how this works, Paul.
[00:07:08] Paul: Sure. So the carry or carried interest is, uh, normally about 20 percent of the funds invested.
And, um, this is the charge that People who manage funds, invest your pensions, et cetera, from VCs and private equity firms charge as interest. And it's a business expense to them, but some see it as arguably money for nothing and just merely financial engineering. Um, because often one tech firm is passed to another, and of course, even the mere circumstance of carrying it.
Hence, the current interest of holding that stock gains the people who carried it from their investors, 20%. So I can see how it's, it swings both ways on this one. It
[00:07:46] Jonathan: could be seen as rather unfair, but you know, we are living in a pragmatic world and the UK does want to retain its crown as the leader in tech in Europe.
Um, the issue with all of this is that VC and private equity firms are the most relocatable economy. Investors in the world, you know, with the exception maybe of taxa XL digital nomad. So if we close down this verticomers loophole, they will simply ply their trade elsewhere. So what's the downside of that?
Pretty obviously lost jobs and sector knowledge immediately. And, um, you know, longer term, less interest in our homegrown scale up tech firms.
[00:08:25] Paul: UK tech IPOs are an increasingly, a vanishingly rare beast. So if we don't nurture these companies and grow them, uh, and they, they don't stop disappearing off to the States, Revolute and other people, um, it just leaves trade sales as the only exit.
option for people building new categories. And let's face it. Um, few of those buyers, those trade sales, as we discussed previously, are going to be, uh, UK companies. People go, I'll go, well, well, well,
[00:08:53] Jonathan: well, well, well, they won't move actually. They're just making a whole lot of noise. Well, if you read the pages of the wealth margin press, many have already gone and others are in the process of rearranging your affairs.
I think recently there was a survey that says many as a fifth.
[00:09:06] Paul: But that said, I think this is rattled. Uh, the child's a little bit, uh, Rachel's been having a look and she said she might compromise.
[00:09:12] Jonathan: Oh, hang on. Let's have a look at what she actually said. Yeah, we are approaching this in a responsible way and we need to make sure we aren't reducing investment in Britain, remember that Rachel?
[00:09:23] Paul: Anyway. Uh, so that is carried interest, bit of a weird one. So we've done EIS, we've done carried interest. Now let's talk about. CGT, Capital Gains Tax, maybe lay it out a little bit.
[00:09:33] Jonathan: Currently, Capital Gains Tax, um, if you, if you make a capital gain, i. e. you sell a company, for instance. Or a portion of the company, as you are growing your category.
It is 20%. Now, that's sort of quite a, Deal when you think that your income tax could be as high as 45 percent which should pay on on earned earnings. Now, the proponents of raising CGT talk in sort of broad terms about those with the bigger shoulders doing more. Um, and make the point that this is somehow, I
[00:10:05] Paul: mean those who bang on about broad shoulders and stuff, they, they point to a generational divide between those lucky enough to benefit from the housing asset bubble.
And there clearly was one and those who are victims of it. But that's not really what this, what we're concerned about. We're not talking about domestic household gains, we're talking about risks in building
[00:10:23] Jonathan: businesses, and we are talking about the basic wealth creating capacity. So let's look at some facts.
Yeah. Since 2016, CGT in the UK was set at 20%, um, however, it's already as high as 28%. And as we said, with a rumored rise to 45. Now we know, we know numbers are boring. 45%
[00:10:44] Paul: is two
[00:10:44] Jonathan: x.
[00:10:45] Paul: More than
[00:10:46] Jonathan: 2X. I think it is indeed doubling. A bit more. That's me under exaggerating. There you go. So what? You know. Well, let's just look across at another land, a small smidgen of sea away, uh, the Celtic Tiger.
Indeed. You know, home of many. Now complaining fine tech companies, very, very effective at, um, giving tax breaks to attract inward investment. CGT now is already 33%. Look at that. Lots of complaining going on in Ireland. So are we going to price ourselves out of the text text? So this is
[00:11:18] Paul: such a serious question.
Are we pricing ourselves out? So with CGT at 45%, almost half of all the blood, sweat and tears it takes to build a business is lost to the wealth creator. What sort of message is that? And that's not even the, um, quite the full story that there are some exemptions. Entrepreneur relief, but they're not meaningful.
If I mean, they're meaningful to the average individual, but, um, when we're talking about the potential value of a category leader, you know, when it's, we're way off,
[00:11:47] Jonathan: then this is important because this is about matching the U S which still does it with alacrity. Um, so, you know, today's tech entrepreneurs who will be most likely be a, an, Be part of the next tranche of really big tech entrepreneurs may lose millions of funds, which they could invest in the next British tech success.
Get that virtuous circle, which you see coming around in the valley.
[00:12:11] Paul: This CGT disincentive or capital gains tax is a big disincentive. Why even bother to work half as hard? as a quote, unquote, wage slave, and earn almost the same amount at the end of your career. It's just a massive shot in the foot.
[00:12:24] Jonathan: And it strikes at some very, very important cultural values.
Do we value entrepreneurship as a key cultural value? It
[00:12:32] Paul: can be argued in the last 30 years, both left and right leaning governments have created a Overall pro tech policy, and that's probably why we have the tech economy leadership that we have today. If these proposed changes to EIS, CGT, and carried interest come through,
[00:12:48] Jonathan: maybe not.
Could really, really affect, you know, a goose that has kept laying golden eggs. In a country, let's face it, in overall economic terms, has been in decline since the 1850s. This is going to be a very big test for the UK's new chancellor, and her vision And I assume she does have a vision for the structure of the UK economy.
We hope she's as wise as many think or thought she was, uh, before she came into power and doesn't apply GAROT to the goose.
I gather you, uh, Paul, this week have been spending some time down the East end of London meeting the new boss.
[00:13:32] Paul: Yeah, I was at DigiGov, it's in London, Stockland, and this was the show for the, uh, Cream of the cream of people who want to sell to the UK government and the buyers. So quite an interesting show in many ways.
I
[00:13:45] Jonathan: bet what you saw was a sort of an army of, um, sort of midway to senior servants in those sort of rather cheap dark suits they tend to wear. That's true. And, uh, an army of consultants, perhaps some, some tech vendors, smattering of training companies.
[00:13:59] Paul: Yeah, no. Uh, so I was down there to see what's changed in government procurement.
Um, and depending which way you look at it. Not much or everything.
[00:14:06] Jonathan: You know, haven't we got a bit of a reputation in a UK public procurement? Um, we sort of rank quite highly, but not in a good way.
[00:14:17] Paul: But we are best at terrible government procurement. Yeah, lots of examples. The Elizabeth line. The Elizabeth line, a little bit late, a little bit overpriced. HS2, uh. Cancelled, didn't even do what it was promised to do. I know, Army radio tank fiasco. Oh yeah, billions spent and now it's happening and just using 60s technology for all lads in the field, crazy.
And of course, then you've got the constant, um, refrain these days of let's nationalise, let's privatise, let's re nationalise again. Um, just seems to go round and round. To say nothing of the post office, uh, top brass and the political masters would say that there are deep seated problems. Um, and there are,
[00:14:55] Jonathan: which, uh, Dan appears to be going away looking at the latest editions of computer weekly.
[00:14:59] Paul: Well, uh, yeah, but of course we've got a new regime now and, uh, they're thinking it's all going to go away. It's going to be returned to spending inflation, corrected wages. And returning gifted items,
[00:15:10] Jonathan: I think for all those people who had tracked down to the very, very lovely Excel, it's let the good times roll,
[00:15:16] Paul: let the good times roll.
So the first thing you notice is just how God damn busy this is. Um, you know, the Excel is a big place, but this was full to the gunnels and there are thousands of attendees, nearly a hundred exhibitors. And personally for a new administration, who You know, presumably be quite busy trying to impress their new overlords, lots and lots of civil servants, not in their offices at Excel presenting their plans to sellers who are hungry to sell them.
Yeah, that's what it is. It's a meeting of the guys that got into the civil service and hold the Cards, so to speak, and the guys who didn't get into the civil service in the non nasty suits, trying to sell them stuff. It was a really interesting, um, mishmash. They could clearly pull in a crowd. The organizers did a great job.
[00:15:58] Jonathan: Yeah, and the theaters were beautifully themed, you know, from a content perspective. Content was strong. And the ones we attended, very well marshaled. We like a good bit of marshaling. Indeed, why not? Difference engine. Um, you know, there were theaters on cyber security at just about Anything else you can
[00:16:15] Paul: possibly imagine?
Yeah. Digital citizens, lots and lots of interesting theaters, plenty of content. The speakers too were really knowledgeable.
[00:16:24] Jonathan: Well, that's pretty handy, isn't it? Because they appear to be talking completely different language composed entirely of acronyms.
[00:16:29] Paul: Oh, yeah. Uh, there was a big difference between, um, you know, people are very comfortable with acronyms.
Yeah. Let's call them CSs, that's an acronym for civil servant.
[00:16:36] Jonathan: Oh, right. Okay. Yeah. See what you did there.
[00:16:39] Paul: Just made that one up. But there was a bunch of those guys and a bunch of people with technology. And there are two different languages, as we said many times, what's techie language and there's government language.
And getting the two together means you're in acronym city. So a quick test for you, sir, on acronyms. Let's start with, um, we'll start with the hard one actually. What is C A F? In, uh, tech terms,
[00:16:58] Jonathan: uh, is it like some dodgy old greasy spoon in the east end where the east drops off the end?
[00:17:04] Paul: No, it's not. What is it then?
It is, of course, the Cybersecurity Assessment Framework. Oh, oh. Nearly brought in. Yeah, yeah, yeah. Try another one. What about And
[00:17:13] Jonathan: I think I know that one. I think that is national cyber security center. I'm not mistaken.
[00:17:19] Paul: A UK invention part of a GCHQ. Very cool. How about a I S a,
[00:17:24] Jonathan: it sounds like a Scottish full name, but other than that, I am clueless.
[00:17:28] Paul: Um, no, a I S a stands for the, uh, artificial intelligence. Safety Institute.
[00:17:33] Jonathan: Apart from this sort of tendency to talk entirely in acronyms, the level of the speakers was actually pretty, uh, impressive.
[00:17:40] Paul: It was, especially maybe more in the, in the, in the optics and the reality. So we had a couple of Lords, um, we had the heads and deputy heads from serious departments, like the MOD, the treasury, plus the NHS and more quangos than you could, um, than you could even believe.
And we also had a bespoke, um, 10 minutes video from the tech minister, Peter Kyle. Now, obviously he was too busy to show up in in person. Yeah. And I wonder if
[00:18:03] Jonathan: that was a little bit, cause he might've got found out. I don't think given a background entirely in the charitable sector and being a spad was exactly going to equip him for the world.
The world of tech and defense.
[00:18:16] Paul: Now, he talked a good game, I've got to say, but I think you're right. Uh, you know, why would you never have a job where you had any P and L responsibility or, um, had to sell anything? How would you be the UK's top tech minister with the full title of the secretary of state for science, innovation, and technology?
I
[00:18:34] Jonathan: think you're misunderstanding the entire government here. Because from, uh, from what I can see so far, nobody. Has any background in anything that involves any form of wealth creation or technological innovation?
[00:18:48] Paul: Grubby stuff, grubby stuff. Well, um, let's talk about some of the highlights. Um, because it sounds like we are, you know, saying something which in fairness was a very good meeting of minds.
So we have the head of the resilience unit at the treasury by resilience, we mean cyber resilience. He noted how Australia has hired 2000 cyber experts. I'd like to see them do that in the UK, especially for wages that they're offering. Um, To their version of GCHQ, optimistically, what he was talking about for the UK in particular is, we can pitch ourselves as a nation which is one of the most resilient to cyber risk.
If and if we can do that, it will be a major benefit to the economy.
[00:19:26] Jonathan: Yeah, it sounds entirely alike. Something which should be the foundations of a modern economy.
[00:19:32] Paul: But let's remember, after all, it was the UK legislators who prevented the multi billion dollar Adobe acquisition of Figma, the only two companies that aren't even based or headquartered in the UK.
On the flip side, we also very sensibly, in my view, adopted the EU GDPR. But then again, we let ourselves down badly with the Online Safety Act, which, which is openly admitted. Cannot work because the tech is not there. Why would you pass legislation when the tech's not there? I struggle.
[00:19:59] Jonathan: Let's face it. The, uh, the, the law and technology have been fabulously disconnected for about 70 years.
So what should they change now?
[00:20:05] Paul: I mean, but it was fascinating to think that people in high office. Departments like the treasury think that the UK has got an edge here. Looking forward, I think the EU is going to drive even more draconian privacy laws. It's coming, it's coming.
[00:20:17] Jonathan: And Mr, Mr Alex Woods. Alex Woods, fake lord,
[00:20:21] Paul: uh, indeed, um, styled himself as a lord.
I can't remember what his lord title was, but this guy is an interesting character. He's a reformed hacker and he shocked everyone in the room by standing up and playing an actual telephone recording of a small businessman being conned out of his Firm's cash and his life savings, uh, in what's called an authorized push payment fraud.
He then appalled us by admitting the perpetrator on the line was none other than the presenter himself attention. Yes. He's done his time at his majesty's. Pleasure and allegedly is now on the straight and narrow quite a lot to gain for the, for the folks in the audience there to see just how easy it is to be hacked and how
[00:20:59] Jonathan: fiendishly clever a lot of these frauds
[00:21:00] Paul: are.
Well, the other thing, perhaps the most shocking bit of all was, uh, he showed us a picture of the device that one of his cell mates at one of these prisons had invented. And even he was gobsmacked at its genius. So yeah, maybe there's a lesson for those people looking people up at the moment. Technical
[00:21:16] Jonathan: innovation is a life and well worth it.
But in prison,
[00:21:19] Paul: many of the speakers also talked about the persistence. And this is an oldie, but a goldie of data silos, um, in departments. And, and some of them of course, now I've got, um, obligations to freedom of information requests, et cetera, et cetera. So there's this trade off between the cost of keeping your data nice and clean and consistent and offering it out.
To people when, if, and when they want it and pleasingly for, for all of us as taxpayers, uh, cost actually came up as an issue. And it turns out that someone's discovered that huge duplicate datasets, just like in the private sector will cost you a fortune with cloud providers. So shopping around though, is not as inexpensive as you think.
It's quite, be quite expensive. If you say to one cloud provider, please take this off my hands. So intake of breath, that's going to cost you, et cetera. But the good news from my point of. point of view is people actually understood these costs and those people are the people with the public purse string so it's quite good.
[00:22:13] Jonathan: But I think, um, I think you were considerably more disappointed with the speech from the UK's ICO, which stands for information commissioner's office.
[00:22:23] Paul: Uh, now these guys literally, you know, this speech, um, sorry to the individual, but sorry, but not sorry. It was literally a self important man talking to us without notes or even slides to distract us from the monotone delivery, uh, just a monologue or platitudes, which could be funny in a normal world.
But these guys are the folks that are going to administer the online safety act that we talked about for, and they'll approve or not approve how safe or private, um, information stays. Yeah. Um, so on and on about the AR in data protection risk and the regulatory sandbox of which the ICO is clearly part of.
Proud of, but couldn't really answer a direct question as to how private all messages are when the online safety act now that the online safety act has been enacted, which was frankly poor
[00:23:10] Jonathan: and didn't say, um, carry on being being rather proud when he was talking about, um, the innovation advice that this particular regulator was offering the department.
I mean,
[00:23:22] Paul: God's right. These guys are offering innovation advice. Massive air, um, quotation marks here, uh, innovation by so the departments, but then these guys allow the online safety act to be passed earlier this year, despite publicly acknowledging publicly acknowledging that his provisions could not technically work, but they would at some future point.
I didn't know that we could pass legislation based on wishy washy. Very feeling, but it seems like we can't
[00:23:51] Jonathan: carefully dodged any mention of, of how they would, what's the
[00:23:55] Paul: classic when you want to dodge a question? That's a good question, but he was clear that he could not reassure his audience, uh, or indeed any of the UK's.
68 million these days citizens about their deeply compromised privacy.
[00:24:09] Jonathan: It was a speech that appeared to be pretty long on, on rhetoric and lots of use of the word frameworks and some, some pretty high levels of self satisfaction, I think.
[00:24:17] Paul: Yeah. For listeners of a certain age, yes, minister came to mind. So yeah, um, it was educational.
Educational, right. What did we learn here? So selling to the UK government is clearly alive and doing very well. For those in the know, as it always has done, I suppose.
[00:24:33] Jonathan: At this point, there's even, I think, a chance that things may open up for the smaller, more nimble tech companies will get away from the usual suspects.
[00:24:44] Paul: Oh, that would be nice. That would be nice. Because with the usual suspects, you seem to get more of the, Horizon post office type scandals, and you may with the smaller guys, but possibly on a smaller scale, to be fair to the government, you know, things like opening up the catalogs, et cetera, have made this the direction of travel.
I just hope it continues. The G cloud was the start of this, this government online catalog for public sector customers to buy cloud computing services. And there was a bunch of new folks there, but the signs are that they are picking up the message if they want innovation. They need to go to new categories and not just buy from the, from the regular dude.
Yeah.
[00:25:20] Jonathan: So hopefully this is beginning to open up the opportunity for smaller, more nimble companies to move in. Wasn't there also something about this fact that increasingly you don't have to go to dual use on a technology?
[00:25:32] Paul: On the military side. Yeah. So on the defense side, yeah. Um, you know, especially with defense, uh, unfortunately we've got a war, but, um, if there is an upside to it, the amount of innovation on that side of the house, the defense side of the house.
It's flying. Yeah. So dual use, um, you used to, you know, just hedge your bets. One would make a product that was usable in non military circumstances and military. That seems to be going away, which is, um, from a category perspective, quite a positive thing. What was good is that the public sector seems to be more confident and they seem to be more confident about tech, which is great.
Um, and genuinely excited about AI.
[00:26:07] Jonathan: Let's hope that positivity continues. Let's hope just for once the frameworks and the acronyms. Don't keep multiplying. The government needs to get smarter at buying tech. And as part of that, it needs to foster new homegrown startups. And it also clearly needs to be selective about the legislation that it enacts.
Being based in London, we're constantly concerned about just how buoyant is VCC. Now, there's really only one way to find out at this time in the year. So we sifted for gold at the sifted summit.
[00:26:50] Paul: Very good. Yeah. Again, another trip out East. Um, so America's the original home of tech. We all know that. Uh, and it has by far the world's largest tech companies over here.
They're slightly less obese. Very much more scrappy and way more international rival tech investors and startups all gather in the shadow of the O2 arena, aptly named because it's called Magazine London.
[00:27:12] Jonathan: That might be quite appropriate because, because unlike its rivals, the Sifted Summit is hosted by an actual digital publication, part of the FT.
[00:27:23] Paul: East London bound again for the third annual Sifted Summer, only the third one, hosted by the excellent John Thornhill, who is in fact the founder of Sifted and his merry band of reporters for two days.
[00:27:40] Jonathan: I think as possibly our, uh, talk about DigiGov, uh, revealed, um, these are times of mixed fortunes, uh, for tech events, where once they looked not very different, they now have some really quite different personas.
[00:27:56] Paul: Yeah, it's funny how hard times will diversify the, the, the offers, uh, again. Categorizing themselves into different categories of events.
So if you want volume, where are you going to go?
[00:28:07] Jonathan: Um, I would say a good example of that tech generic, very buzzy, big data London. Um, but you've just got to watch out for the masses of the unwaged and students looking for jobs.
[00:28:19] Paul: Okay. And if I'm going high end, if I want exclusive head honchos, where am I looking there?
[00:28:24] Jonathan: That's an easy one. You know, work on your favorite CEO. Uh, get introduced and tag along with them to BoardWave Live.
[00:28:30] Paul: If you're looking to sell not quite the latest thing to the UK government, um, and you haven't got spare, um, eyeglasses and suits to, to give them to, to get in there, what do you do there?
Well,
[00:28:42] Jonathan: firstly, you've got to pay your dues, but not give people suits or eyeglasses. Um, probably hold your nose and DigiGov.
[00:28:49] Paul: Obviously, what we're looking at with SIFTED, Summit is to see if it's still trendy, uh, to be a VC.
[00:28:55] Jonathan: You can't be put off by this, uh, this shit is real failure rates for startups or just be a fan boy or girl.
Um, you really need to be world class in your thinking to get to the sifted summit.
[00:29:07] Paul: Yeah, and it was noticeable this year that it was, uh, Perhaps a tad down on the hype, certainly down on the, um, what'd you call these? Uh, holiday makers, tech tourists, someone who's definitely not a tech tourist is an
[00:29:19] Jonathan: absolutely not.
And for those not familiar with, and she, she's the much fated founder of, uh, what I think is fair to say is one of the UK's FinTech success stories, which is darling bank. Um, and there's been, um, I think as we say, uh, in the industry. kicked upstairs in a nice way, I think, and quite happy to be so at this stage because she's been growing that bank from nothing, um, in 2016 to a major player with a half a billion turnover.
Um, and I think most importantly, one of the first near banks to actually operate profitably. But she said next to nothing
[00:29:57] Paul: except. And this was amusing. I'm very cynical about PCs just before she said she would consider VC investments. Mixed messages there.
[00:30:06] Jonathan: Yeah. Yeah. But she, she, she's off to something new, isn't she?
Um, was she, she was sort of hinting clinical trials or publishing. I mean, that's, that's a pretty broad butch, but I think there was a reason why she, um, wasn't as a belly and some talkative as she may
[00:30:19] Paul: be. You're not being cynical. Are you Jonathan?
[00:30:21] Jonathan: Well, you know, perhaps. The fact that Stalling was fined 29 million, Oh, actually 20, 28, 959, 426 British pounds, um, which is about 5 percent of its entire turnover by.
We've been talking a lot about acronyms recently, the FCA, which is the
[00:30:43] Paul: Financial Conduct Authority
[00:30:44] Jonathan: on the day of the show.
[00:30:45] Paul: So on the very day of the show, she was sitting down. They announced that how
[00:30:48] Jonathan: unfair? Yeah, because, um, they really haven't been doing some things properly, which is actually not what we'd expect from Stalin Bank, but
[00:30:56] Paul: no more to come from that.
And clearly, another highlight. It's an old one was just the sifted out really nice to nice looking. Um, and there were five state, five, uh, simultaneous stages. Each one had enough information that you could dip to want it to the other. Great job here. And if you contrast that with like other, other events,
[00:31:15] Jonathan: the Q test, stick big data,
[00:31:16] Paul: the likelihood is you go down to big data, London, and there's something you desperately want to see.
And that's something that's happening 30 minutes later. You ain't, you got to pick. Pick one, because the queue just to get into the theater will stop it. So
[00:31:26] Jonathan: I was really impressed by this online networking facility. So,
[00:31:30] Paul: yeah, so cool. Um, all the attendees, you can reach out to them. Um, they're all names. Uh, so you send them a discreet message.
This is how communities are built. I was very impressed with this because, you know, there was a time when Sifton and others, uh, wrote about, um, Apps for events, didn't they? That crazily valued Hopin, of course. That was a real rags to riches to rags story. This app, the Sifting app, was excellent. Um, delivered a ton of value that sadly Hopin never did or will.
[00:31:57] Jonathan: And of course, um, in the current environment, it would be rude not to, um, mention that Defense Tech, uh, was, was also, um, Pretty super hot.
[00:32:07] Paul: Yeah. You got the Ukraine war, obviously the Middle East and, um, indeed, uh, lots of other little localized wars going on. So there was an excellent panel there that included, um, defense tech vendors, some of whom were ex military themselves, um, and a VC.
Um, and whilst it may not be to everyone's liking to talk about, um, You know, what keeps countries safe, et cetera, it's clear that this market is on the up in, you know, in a way that hasn't been for years, they were talking about how pragmatic, um, purchases, which normally means, um, you know, armed forces are being in this environment.
[00:32:40] Jonathan: I mean, the opinion was generally that there will be an innovation boost because it's being matched by real investments now. We're in the past that that hasn't been particularly
[00:32:50] Paul: where the penny dropped, right? Cause I didn't really get why defense tech wasn't VC investable, but if you think about it, defense tech, which has always been much more profitable and in fact based in the U.
S. Um, because they've got the primes, so to speak, the prime, you know, we're talking about Lockheed Martins, Raytheon's, those sorts of guys, um, you know, some say they run an oligopoly, a cartel and it's probably a bit strong, but that, um, means that the rivals to those primes of just a money pit. Until now for investors, right?
But we're seeing with Andrew and other companies like that, there are new categories, certainly the whole drone categories taking off here. Um, and what's good from an investment point of view is that the lead times to develop products are radically shortened now needs must, right? So, Even though VC funding has cooled in other sectors, defense is, is now able to run faster and has become more VC backable as a result because the VCs can see when they can get their money out.
And even as we discussed previously, this dual use thing is interesting. Defense
[00:33:50] Jonathan: only technology can be delivered quickly enough. And of course, You know, that, that time to delivery is very, very important. If you're, if you're putting VC type money into something.
[00:33:58] Paul: Defense tech is definitely, um, investable.
One that is less investable was green tech.
[00:34:04] Jonathan: That's a sort of strange U turn, isn't it? Given how keen they were on it, not very long ago.
[00:34:08] Paul: But in the opening keynote, one of those involved in. Uh, Greentech, um, who, um, had previously had to unfortunately lay some of the team off, um, was talking about different metrics, they're not correctly valued because they need different metrics.
Right. Well, as far as I can remember, um, you know, funding is very clearly, it's a very clear measure of, uh, how successful the market will decide, but I think what they meant. was that governments should bail them out. You know, just as defense tech is becoming more investable from a private investor point of view, green tech is becoming less investable and they actually just want the government.
That's not really a business to me. If it looks like a duck and it quacks, it's not an eco business, it's a taxpayer
[00:34:46] Jonathan: bill. Which is a pity because we do need to build a green economy. But I think more interesting to the techies that were at the show, there was a Uh, quantum tech panel.
[00:34:55] Paul: Yeah. So here's my question for you.
The quantum apocalypse where all, um, cryptology is broken by quantum, quantum computing. How far away do you think that is? It's almost a decade, isn't it? Yeah, you're right. It's 10 years, 10 years from now, you'll go there and someone asks the question and the answer will be, A decade.
[00:35:10] Jonathan: Yeah, yeah. So that's been that's a sort of a bit of a permanent feature.
Um, and also the permanent feature in tech innovation is interest in quantum appears to be moving from the picks and shovels of the machine to the software layer.
[00:35:25] Paul: Yeah, people are anticipating that Eventually, the ability to do billions of quantum operations, you know, that will be fixed once that's fixed.
Then we're into the usual thing with with all tech, um, innovation waves. The category of infrastructure is sorted out next layer software and people saying there's a lot of, um, possibilities for the application layer on top of quantum. I mean, one of the guys there was talking about error correction as a category of Of, uh, software, which is fascinating.
We heard that head
[00:35:55] Jonathan: first. Um, and there was a sort of rather lovely moment when, um, you know, we, we were thinking, Oh God, this, this, this event is absolutely full of some very, very smart people. And that there was, there was one who particularly stood out, um, for being very, very smart, but also. To passport.
Yeah. Yeah.
[00:36:14] Paul: We've pressed the flesh with Huai. Um, shared a stage with that guy previously. I shared a stage with him. What an extraordinary young man. This is, uh, an Oxford graduate, but
[00:36:22] Jonathan: from a rather fabulous part of South Manchester,
[00:36:26] Paul: uh, school. Um, his school not far from me at Burnage High School. And, uh, him and two mates, one of whom went to St.
Paul's, which is not the same as.
For the, for the three of them to, to launch on Fido, um, a thriving global scale, global quality identity management, management business right here in the UK. Uh, the company was sold, um, to the not entirely without scandal and trust. Oh, was it, was it for the absolutely awful sum of 650 million? 650. Uh, so he was in the FinTech session and he is right back on the horse.
Just down the road here, uh, in White City with, uh, Quench.
[00:37:06] Jonathan: Wanna come on the show, Hussein? We'd love to have you.
[00:37:09] Paul: So, um, what do you think we should take from the third Sifted Summit? Apart from asking the question, will there be another one? Who knows?
[00:37:15] Jonathan: You know, I just think, you know, hats off to, to the third Sifted Summit.
It was an excellent, uh, event. I think We would like to see this content and format to pervade at other shows. I think they've got a lot to learn.
[00:37:30] Paul: Thank you for listening. If you want to learn more, go check our blog posts on becategorical. com.
[00:37:35] Jonathan: If you have a category issue, then we can help get in touch with us.
[00:37:39] Paul: And remember, don't be better, be different.