This article was taken from the May 2011 issue of Wired magazine. Be the first to read Wired's articles in print before they're posted online, and get your hands on loads of additional content by subscribing online.
In his recent autobiographyWhat You See Is What You Get, Alan Sugar recounts the story of an early venture that didn't work out as planned -- at least initially. A teacher suggested a monthly school magazine, and Sugar sensed an opportunity. He convinced the deputy headmaster to shell out for a secondhand Adana printing machine, but soon found that it was not up to the job.
The paper went ahead, using an old-fashioned duplicator, and Sugar took on the job of selling copies, profiting handsomely after hitting upon the idea of selling directly to students' parents.
Still, the deputy head complained about being saddled with a useless piece of equipment. Sugar hit him up for a further "ten bob" -- and managed to sell the printer for more than it cost.
Sitting across from Wired in a central London TV production house, Baron Sugar of Clapton (his title since entering the House of Lords in 2009) displays an alarmed expression when it's suggested that his actions represent a pivot. "What is a 'pivot'?" he fires back, before being introduced to the idea current among many tech entrepreneurs that businesses should navigate around obstacles as basketball players do, keeping one foot still while moving the other, looking for opportunities in new directions. "It's the learning curve, isn't it?" Sugar responds. "This may be some 21st-century new technology word, but it's no different from changing your strategy midstream. That's what you have to do. You start something off with the greatest intentions at the birth and, as you go along trying to implement it, you start to self-learn that actually it's not possible in some cases. In some cases, not technically possible, in other cases not commercially possible. So you have to rethink on the fly as to what you want to do."
It is not often that a British technology pioneer such as Sugar -- born into modest circumstances, now estimated by the Sunday Times to be worth £730 million -- agrees to discuss his professional failures. But in a long career -- he formed the consumer-electronics company Amstradin 1968, hitting the big time with its 80s home computers; in 1989, Amstrad made the first mass-market satellite-dish/receiver packages for Rupert Murdoch's new satellite network Sky -- not everything has gone to plan.
When the topic is broached, he is neither hostile nor particularly warm. "Failure is part of business. We don't tend to talk about failure, but we learn from it. As you get older it's what not to do, and that's brought about by experiments and doing things, and you kind of adapt to what you shouldn't do the next time."
So what of the prevalent notion that Britain is less inclined than more entrepreneurial societies to embrace failure? "I understand," Sugar interjects. "In American culture, forming a company, starting something up and it completely failing, going bankrupt or whatever, is an accepted thing. They tried, they didn't conquer, they failed and they started again. Some of the billionaires in America will tell you that they failed in their first ventures, right?"
He says that, although there may be a few such examples in the UK, they are the exception. "The English culture is that if you go in to the market with a big fanfare and then it fails, there's a stigma attached. There's a loss of confidence in that individual among investors. I have to say that we are not tuned into failure in this country. You either make it or you don't, I'm afraid to say. I don't agree it should be that way."
Sugar then clarifies that there are forms of failure he cannot abide. "There's failures due to an irresponsible person who doesn't know what he or she is doing. They fail in the sense that some basic business principles go out of the window. The worst examples of this was the dotcom boom that we all experienced in 2000. It became so fashionable [to have a startup] and it was easy to get finance."
And that was the problem. "Instead of deploying that finance properly, some people believed that they had arrived already when it was investors' money, sitting there with their feet up in their very plush offices, hiring jets to fly here, there and everywhere instead of deploying the money in a very miser-like manner and making sure it was used to develop the business."
Sugar did not have the benefit of a safety net when he started out. "No, because I was using my own money, sorry to say," he says in a tone that suggests the bite of this particular hardship has faded. When Wired suggests he must have feared failure, he bristles. "I didn't fear failure because I'm confident in myself," he replies.
Still, he says, he realises that the principles that guided his early ventures would not be applicable today. "I was buying stuff and selling stuff, so as soon as I sold something, you knew what you bought it for and you knew what you'd been paid for it so you knew you'd succeeded. "If you're in a dotcom kind of environment where you have to invest up front with websites, trying to sell your service to try to get consumers to latch on to it, that is where you have to have a high level of concentration, where you have to make sure that you're not wasting money. It's all down to an idea, the concept. Is the concept going to fail or is it going to work?"
What stands out for Sugar as his own most instructive failure? "In technology, the most valuable lesson was [placing] too much concentration on big profit margins, accumulating profit and assets, and not regenerating that money back into research and development. Because the biggest failure we had was a lack of engineering resource when one of our series of computers went wrong. You look back in hindsight, and you kind of kick yourself at the things that are kind of obvious now but were not obvious then."
He also learned to trust his gut. "Some of my early products were so off the wall that if you were a product manager inside Sonyor Philips, you'd have got out your Harvard Business School manual and looked up 'going to bring out new product'. If you tried to look at UK market size for word processors back then [the mid-80s], you would have seen there were 22,000 of them sold. So what bloody lunatic is going to start making 50,000 a month? It's only going to have to be a gambler, right?"
Sugar's current focus is on producing a new series of BBC 1's The Apprentice, which is making a slight break with the familiar formula. "Instead of getting a job, they'll actually be getting 50 per cent of a business in which I'm going to invest £250,000. It's good for the show, and it's good for me -- it gives me another kind of challenge, because there's nothing better than starting a new venture, a new idea, and making it work." What is he looking for? "How fast their brain is at absorbing things. I don't mind people making mistakes, I just don't like them making them twice, yeah?"
So will an Olympic-site "<span class="Apple-converted-space"> Tech City" boost the UK's economy, as David Cameron intends? "Well, Groundhog Day comes to mind," Sugar replies. "It's the typical prime minister and Lord Mayor speech. Every prime minister, every newly elected minister of business, says the same thing -- that we're going to set up some technology centre, a centre of excellence and this, that and the other. We don't. We failed. We continue to fail. We didn't follow the model of Taiwan and Korea.
I've watched Taiwan come from nothing, from making speaker cabinets out of paperboard and chipboard. And [South] Korea, when there was a curfew there. It's become the nation that rules the world in electronics. And this is all because the government gave backing to manufacturing, to investment in technology."
The Apprentice returns to BBC1 in May.
This article was originally published by WIRED UK
