Scotland’s economic growth will come from entrepreneurial students

This is the talk that I gave at ACCA Scotland’s business debate in June 2012. ACCA is the global body for professional accountants. Let me know what you think, join in the debate using the comments below.

“I know where our economic growth will come from – it will come from our students; the enterprising, socially aware, tech savvy, globally connected, young people that fill our university campuses.

I am by nature an optimistic person. And why wouldn’t I be? I lead an organisation that helps students to become entrepreneurs. Every day, I see bright, enthusiastic young people who are full of ideas. Some are supremely confident, others are more reticent. All, however, are smart, hard working and forward looking. These smart, well-educated young people are not enough, however; they need to be nurtured and supported.

I’ve heard a lot of negativity about Scotland’s low rate of business start-ups but, I wonder, are we too focussed on quantity rather than quality?

What we see at the Scottish Institute for Enterprise are companies started by students and recent graduates that aim high. They are not just looking to develop a lifestyle business or become self employed. Their ambition is to have companies with turnovers in the millions; and then they are going to use that money to help others. These are the companies from which Scotland’s future growth will emerge.

An example, Deer Digital in Aberdeen. The business started in 2010, when Alice, their Managing Director graduated. Its founders are still in their 20’s, but already they are employing 13 highly skilled people. They could have been just another web design agency, but they are far more ambitious. They are successfully raising investment for the technology platform they have developed; their aim is high and their horizons are global.

And then there is Lat56, founded by 2 students from Strathclyde University’s Department of Design, Manufacture and Engineering Management. Keen outdoor sports enthusiasts, their first product was a folding surfboard, before they moved on to the luggage market. Their company was founded in 2007, and in 2010 they secured an exclusive launch with Selfridges to retail their innovative luggage designed specifically for business travellers.

Now the products are available in the US and the rest of the world thanks to an online launch, and the luxury brand has offices and logistics in Glasgow, London, San Francisco and Hong Kong.

Last night, I was at Strathclyde’s annual design show, full of students with great potential and amazing ideas. And that’s just one department in one of Scotland’s 19 higher education institutions, so we have more than enough raw materials to work with.

So what do we need in order to fully exploit Scotland’s emerging talents? In my experience, students need three things:

– Advice

– Routes to market

– Money!!!!!

The first, advice, is where we score very well.
The existing Scottish business community is our ‘secret sauce’. We are a small country, and our experienced business people are incredibly generous when it comes to sharing their experiences and giving advice to our students. They are candid and realistic, and their insights are incredibly valuable to our new, entrepreneurial companies.

And if they can’t help, they will know someone else who can, the networking advantage of a country where everyone seems to be, at most, just two degrees of separation away, cannot be overestimated. At one of our recent student company accelerator bootcamps, participants worked out that they knew people who know Richard Branson and Bill Clinton!

The second, routes to market, although good in part, can be problematic.We have access to global markets though organisations such as SDI, and we have Global Scots. Global Scots have infiltrated every corner of the globe. They have senior roles in companies around the world, but they still feel like part of the Scottish community. They are perfectly positioned to help Scottish companies to develop global clients.

And of course, technology brings the world to us. Every young person has grown up in an environment where information is available at the click of a button, and where contacting people on the other side of the world is easy and quick. Even I can build a website in just a few hours, and can reach a global customer base instantly via tools such as eBay. If I can do that, imagine what people who have grown up using these technologies every day can do.

However, if you need good business contacts, either as customers or as partners, there comes a time when you need to meet them face to face. I don’t need to tell you how hard that can be, when almost any journey requires at least two flights.

On a related note, manufacturing is also an issue. Our fledgling companies happily negotiate production deals with manufacturers in China. Any why not? Costs are lower, which gives them bigger sales margins. However it’s hard to get started on prototyping when relying on remote manufacturers, so many promising product ideas fail early because of the lack of local, smaller scale manufacturing and prototyping.

And finally there is access to money.
Do I need to say any more? Our new entrepreneurs are very adept at bootstrapping in the early stages, but there comes a point where significant investment is needed, and that is very hard to get. In fact, for many new businesses, they struggle even to raise £20k and so can fall at the first hurdle.

I don’t want to end on a low note, however, so I’d like to end by quoting Sir Tom Hunter when he spoke last week at the Business in Parliament event:
He said that “The beauty of Scotland is that we are small, we’re nimble. We’re a speedboat, if you like, against the large supertankers that are America, India and China. We can run rings round about them if we have the ambition, drive and determination to do so.”

And quoting Google founder Sergey Brin, who said the competitor he feared most was probably sitting in a bedsit in China or a garage in America, Sir Tom asked: “Why not a bedsit in Scotland?” He also asked that when he spoke to nearly four hundred students at SIE’s Student Enterprise Summit last year, and you can be sure that the audience took note!

So if you want to see where Scotland’s economic growth will come from, don’t take my word for it, come and meet some of these young people yourselves, I’d be pleased to introduce you.”