20VC Rishi Sunak, Chancellor of the Exchequer on Turning the UK Into a Talent Magnet, What Can Be Done To Drive Further Investment in UK Venture & A Breakdown of Morning Routines, Peloton Favourites and Managing Nerves

Summary Notes


In this episode of 20 VC, Harry Stebbings interviews the UK's Chancellor of the Exchequer, Rishi Sunak, discussing his journey from waiting tables to politics, his experience at Stanford, and his commitment to fostering entrepreneurship in Britain. Sunak reflects on the importance of early job experiences, the challenges of the hospitality industry during the pandemic, and the government's initiatives to support it. He emphasizes the role of innovation and a "startup treasury" mindset in his political approach, drawing on his business background. Sunak also addresses high-skill migration reforms, the Future Fund, and the need for cultural shifts to attract global talent and investment. Despite the pressures of his role, Sunak shares personal insights, from his morning routine and Peloton favorites to the importance of delegation and setting priorities in government spending.

Summary Notes

Introduction to Rishi Sunak

  • Harry Stebbings expresses pride in featuring Rishi Sunak on the podcast, marking a highlight in his podcasting career.
  • Rishi Sunak was appointed Chancellor of the Exchequer on February 13, 2020.

"And so with that, I'm thrilled to welcome the Right Honorable Rishi Sunak. Rishi was appointed chancellor of the Exchequer on 13 February 2020."

The quote introduces Rishi Sunak and his role as Chancellor of the Exchequer, setting the stage for the conversation.

Career Background

  • Prior to politics, Rishi Sunak worked in business and finance internationally and co-founded an investment firm.
  • He served as Chief Secretary to the Treasury and Parliamentary Under-Secretary of State at the Ministry of Housing, Communities and Local Government.

"He spent his professional career before politics in business and finance, working internationally, where he cofounded an investment firm working with companies in multiple geographies, and used that experience to help small and entrepreneurial businesses in Britain grow."

This quote summarizes Sunak's pre-political career, highlighting his international finance experience and his efforts to support small businesses in Britain.

Sponsors and Advertisements

  • Mercury offers full-stack banking for startups, including FDIC insured accounts and various financial tools.
  • AngelList provides a platform for fund administration, allowing investments into startups.
  • Masterworks allows investment in shares representing iconic artworks, enabling a diversified portfolio in the art market.

"Mercury is building full stack banking for startups... Angel list fund admin platform to manage my investments... Masterworks, the first platform for buying and selling shares representing an investment in iconic artworks."

These quotes outline the services offered by the podcast's sponsors, emphasizing their relevance to startups, investors, and those interested in art investments.

Early Career Experiences

  • Rishi Sunak reflects on his first job waiting tables, emphasizing the importance of any job for young people.
  • He highlights the value of being part of a team and the broader skills learned beyond the job's immediate tasks.
  • Sunak expresses concern for the hospitality industry's struggles and the government's efforts to support it.

"But it was amazing to have a job... understanding what it's like to go and work and be part of a team... It's the hum and the buzz of the high street, the town center and village."

This quote conveys the significance of early work experiences and the role of the hospitality industry in community vibrancy, as well as Sunak's personal connection to the industry.

Influence of Stanford Experience

  • Stanford University's environment of entrepreneurship, creativity, and innovation had a profound impact on Sunak.
  • Sunak describes adopting a "startup treasury mentality" and thinking on a larger scale.
  • He mentions the importance of technology and management training, leading to the creation of the 'Help to Grow' schemes for businesses.

"And it broadened my mindset out considerably... a slightly bigger, more dynamic approach to change... Something called help to grow in the budget."

The quote illustrates how Sunak's time at Stanford shaped his approach to change and influenced policies he implemented to support business growth and technological adoption.

Creating a Safe Environment for Innovation

  • Sunak discusses the challenge of fostering an environment where employees can make innovative decisions without fear of failure.
  • He acknowledges the difficulty of this in government compared to business and the necessity of trying new policies during a crisis.

"It's even more difficult in politics and in government... we had to throw some unprecedented solutions at it."

This quote highlights the unique challenges of promoting innovation within governmental structures, especially during crisis situations.

Evaluating Policy Effectiveness

  • Sunak speaks about the importance of evaluating policy effectiveness through post-mortems.
  • He emphasizes the need for leaders to take responsibility for outcomes and support their teams in suggesting new ideas.

"And ultimately, I think what I try and do inside the treasury is people need to feel confident that I'm willing to go and front them up and ultimately take responsibility for them."

The quote underscores Sunak's leadership approach in encouraging innovation and his commitment to being accountable for policy results.

Policy Review Process

  • Government has a formal process for reviewing policies on a fixed timeframe.
  • Iterative policy development is ongoing, with a willingness to adapt as needed.
  • Continuous improvement is a key aspect of policy evaluation, learning from both successes and mistakes.

Yeah, we do. I mean, government has a very formal.

Fixed time frame, as you might imagine.

We're constantly iterating it as it's going, which, again, is probably a novel approach.

You want to be on a journey of continuous improvement, right?

So actually, we have that mindset generally.

The quotes indicate that there is a structured approach to reviewing policies within a set timeframe, and there is also an openness to continuous, iterative improvement. This approach is highlighted as potentially novel, emphasizing the importance of learning and adapting policies over time.

Talent Attraction and Immigration Reform

  • Talent is crucial to business success, and the quality of people in businesses is a top concern.
  • Recent budget announcements included significant reforms to high skill migration.
  • Introduction of an unsponsored visa not linked to a job, a points-based system, and a scale-up visa.
  • Reforms to the Global Talent Visa and Innovator Visa to broaden their scope.
  • Expansion of the Global Entrepreneur Program to attract talent from top universities like Stanford.
  • These reforms are designed to make the UK a global talent hub and support the growth of businesses.

The success of all your businesses are based on the quality of people you have.

We're going to introduce unsponsored visa, right? So it's not linked to a job.

We're going to reform our global talent visa because it's got quite a narrow.

That will enable them to do it. That has definitely not worked as well.

These statements underscore the importance of attracting high-quality talent to enhance business success. The introduction of various visa reforms aims to make the UK more appealing to skilled individuals globally by offering a more accessible and supportive immigration framework.

Reflection on Policy Implementation

  • Fast policy implementation is prioritized, with industry collaboration to ensure practical design.
  • Government branding and communication are essential to connect with people and ensure accountability.
  • There is an acknowledgment of underestimating demand for programs like the Future Fund and the need for better initial communication.
  • Balancing the protection of taxpayer money with support for businesses is a key consideration in setting policy thresholds and criteria.

We moved quite quickly, start to finish.

We worked with industry, so we didn't just sit here in an ivory tower to try and develop the policy.

What we got wrong is we obviously underestimated the demand for the product.

I've got to balance two things there.

These quotes reflect on the speed and collaborative nature of policy implementation, the importance of clear government communication, and the challenges in estimating demand and setting appropriate criteria for policy programs. The balance between supporting businesses and protecting taxpayer interests is highlighted as a critical factor in policy design.

Entrepreneur's Relief Reform

  • Entrepreneur's Relief was misnamed and misused, leading to calls for its removal or reform.
  • The relief was not effectively serving genuine entrepreneurs, as it was often used to reduce tax bills without impacting entrepreneurial decisions.
  • The reform of Entrepreneur's Relief aimed to address its misuse while still supporting true entrepreneurs.

Well, you know what, we talked about branding, actually, before, that's one of these things which is misnamed.

The relief is not doing what it said on the tip.

I think one of them called it the UK's worst tax relief.

So I think given all of that, we were able to not scrap it as many people wanted us to do, but reform it.

These statements explain the rationale behind the reform of Entrepreneur's Relief. The reform was driven by the need to correct the misuse of the relief and to ensure that it serves its intended purpose of supporting genuine entrepreneurial activity, rather than being a tax loophole.

Tax Policy and Entrepreneurship

  • The UK has favorable tax rates for entrepreneurs compared to France and California.
  • Entrepreneurs in the UK pay lower capital gains tax rates, which incentivizes wealth creation.
  • Tax policy is seen as one aspect of what makes the UK an attractive place for investment.

"If you look at capital gains tax rates, effective capital gains tax rates, if you create your unicorn, good for you. Right. You're going to make a lot of cash, you'll probably pay 20% capital gains tax rates in the UK on all of that."

This quote highlights the UK's competitive capital gains tax rate for entrepreneurs, emphasizing the financial rewards for successful business ventures in the UK.

"In France, when all is said and done, you're probably paying closer to 30. And in California, which we all love and celebrate, you're probably paying closer to 37."

This quote compares the UK's capital gains tax rates with those in France and California, showcasing the UK's lower rates as a competitive advantage.

"So is this a place that rewards entrepreneurship financially, from a tax perspective? 100% it does."

This quote confirms that the UK's tax policy is designed to financially reward entrepreneurs, making it an attractive environment for business creation.

Investment Attractiveness and Skills

  • The UK's attractiveness for foreign direct investment (FDI) is high, with recent surveys showing strong intentions to invest.
  • While tax policy is important, businesses and entrepreneurs often prioritize skills and people over tax considerations.
  • The government's investment in research and development (R&D), innovation, and infrastructure is also crucial for attracting business.

"We actually just had a survey out this morning from Emy. They do a survey of businesses about where they're going to do FDI, for example, and we ranked, I think, top."

This quote shows that the UK is leading in attractiveness for FDI according to a recent survey, indicating a strong investment climate.

"Skills and people are probably the most important thing."

This quote emphasizes the importance of skills and human capital in attracting businesses, more so than tax policy alone.

"We consistently is one of the best places to come and do business anywhere in the world."

This quote reflects the UK's strong reputation as a prime location for business, as recognized by international organizations.

Government Limitations and Trade-offs

  • The public often expects the government to address all issues without considering the financial trade-offs.
  • Most suggestions to the government involve spending money, with few ideas on how to generate funds.
  • The government must balance various priorities and cannot act on every request due to budget constraints.

"People always want you to do everything right, and it's not their job to deal with the trade offs, as you say."

This quote acknowledges the public's high expectations of government actions without considering the necessary trade-offs.

"99 of them are, please can you spend some money on something? And maybe one of them is an idea for you to raise some money to pay for it."

This quote illustrates the imbalance in public suggestions, with the majority asking for government spending and few offering revenue-generating ideas.

Pension Fund Investment and Venture Capital

  • The UK's pension fund industry is large but historically underinvests in venture capital (VC) and private equity (PE).
  • The government is working on new models like the Long-Term Asset Fund to facilitate pension fund investments in less liquid assets.
  • Adjusting the charge cap and introducing more flexibility can help pension funds invest more in VC.

"We have either the second or third largest pension fund industry, I think, in the world."

This quote highlights the size of the UK's pension fund industry, which has potential for greater investment in VC and PE.

"The long term asset fund, which is a new model that we're working on with the bank of England, the FCA and the industry to create a vehicle that hopefully will deal with some of the liquidity issues that pension funds have whilst investing in liquid assets."

This quote describes a government initiative to create a new investment vehicle to encourage pension funds to invest in less liquid assets like VC.

"We're looking at smoothing some of that out."

This quote refers to the government's efforts to adjust regulations to enable pension funds to invest in ventures with lumpy returns, such as VC.

Cultural Change and Government Influence

  • Cultural shifts within industries are challenging for governments to achieve.
  • Governments can provide fiscal incentives and nudges, but changing deep-seated cultural norms is difficult.
  • The focus on culture is essential for long-term changes in investment behavior, such as pension funds investing in startups.

"It's hard for governments to change the culture that we can provide nudges and fiscal incentives to try and get people to do things, but changing the culture is quite a hard thing to do for a government to do."

This quote acknowledges the limitations of government influence on cultural change, despite the ability to offer incentives.

EMI Scheme and Stock Options

  • The government is reviewing the Employee Management Incentive (EMI) scheme to ensure competitiveness.
  • Stock option plans are a key factor in recruiting and incentivizing talent.
  • The UK aims to be as competitive as possible in terms of tax treatment for stock options.

"We were good, but not the best. We were kind of just about in the Champions League spots, I think, of their league table."

This quote suggests that while the UK's tax treatment of stock options is strong, there is room for improvement to reach the top rank.

Rishi Sunak's Personal Routine

  • Rishi Sunak describes his daily routine, including his wake-up time, breakfast habits, and family time.
  • He practices intermittent fasting and enjoys a sugary pastry midmorning.
  • Weekends feature a full cooked breakfast, alternating between pancakes and waffles on Sundays.

"But anywhere from six to seven in that range, depending on what gym I'm doing. So I have two young kids, two girls. So part of that is school and everything, getting them ready for that."

This quote provides insight into Rishi Sunak's morning routine, which balances personal fitness with family responsibilities.

"And then at the weekend we have a cooked breakfast, full cooked breakfast on Saturdays and on Sundays we alternate between pancakes and waffles."

This quote reveals Rishi Sunak's weekend breakfast traditions, highlighting a personal aspect of his life.

Diet and Exercise Routines

  • The speakers discuss their weekly diet, alternating between pancakes and waffles.
  • They express humor over the degradation of diet quality.
  • Rishi Sunak shares his disrupted exercise routine due to job demands, previously incorporating peloton, treadmill, and high-intensity training (HIT) classes.
  • Rishi attends a HIT class at his leisure center in North Yorkshire on Sundays when possible.
  • The conversation shifts to favorite peloton instructors, with Rishi favoring Cody Rigsby and exploring classes by Leanne Hainesby and Hannah Frankson.
  • Other speakers mention their preferred instructors like Robin Arsen, Olivia Amasso, and Ben Aldis.

We interchange pancakes and waffles every week. I'm so glad that the diet gradually got worse. I was feeling terrible about my life. It's bad during the week because I have this problem with you. I need to have this sugary pastry thing most midmornings.

The speakers are sharing a light-hearted conversation about their diet habits, indicating a relaxed approach to eating during the week.

Yeah, it's been destroyed, my exercise routine, by this job.

Rishi Sunak acknowledges that his job has significantly impacted his ability to maintain a regular exercise routine.

So I'm a huge Cody rigsby fan that he has definitely been my long term favourite.

Rishi Sunak expresses his preference for peloton instructor Cody Rigsby, indicating his engagement with the peloton community.

Handling Nerves and Public Speaking

  • Rishi Sunak was very nervous during his first budget presentation, having been in the job for only three weeks.
  • The environment in parliament on budget day is described as stressful, with a full house and high expectations.
  • Rishi found comfort in his wife's presence and the support from his colleagues, emphasizing the team aspect of politics.
  • He advises that it's normal to be nervous, especially during live TV appearances, and suggests imagining speaking to someone familiar to ease nerves.

I was very nervous when I did my first budget.

Rishi Sunak reflects on the anxiety he felt during his first major political event, highlighting the pressure of the situation.

Politics is a team sport, and you've got lots of your colleagues all around you and they're willing you to succeed and cheering you on, and that really helps.

Rishi Sunak discusses the supportive nature of colleagues in politics, which helps to alleviate the stress of public speaking.

Personal Favorites and Challenges

  • Rishi's favorite books include "A Suitable Boy," "The Count of Monte Cristo," "To Kill a Mockingbird," and Roald Dahl's "Going Solo."
  • The hardest part of Rishi's role is allocating resources, as it involves making tough decisions and dealing with people's differing opinions on how the "pie" should be divided.
  • Rishi admits to struggling with delegation and not letting perfectionism hinder progress.
  • He wishes for all Coke to be like Mexican Coke, reflecting a personal preference.
  • Looking five years into the future, Rishi hopes to see job creation, economic recovery, and the UK remaining a hub for innovation and business growth.

Oh, my gosh. I mean, some of my favorites are, like, a suitable boy by Vikram Seth counter, Monte Cristo, killer Mockingbird, Harper Lee. But probably my favorite, if you're going to force me, is Roald Dahl.

Rishi Sunak shares a list of his favorite books, revealing his literary tastes and influences.

The hardest thing is trying to divide up the pie, right?

Rishi Sunak discusses the difficulty of budget allocation in his role, emphasizing the challenges of meeting everyone's expectations and needs.

Probably I'd have all coke, be mexican coke.

A light-hearted comment by Rishi Sunak expressing a personal preference for a specific type of Coca-Cola.

Professional Aspirations and Goals

  • Rishi Sunak aims to focus on employment, particularly in light of job losses over the past year.
  • He emphasizes the importance of job creation, controlling borrowing and debt, and fostering an environment conducive to innovation and business growth.
  • Rishi's vision for the UK includes being a place where new products and services are created, improving people's lives and contributing to the country's wealth.

So five years time, I just want to get everyone into work, get everyone back into work, create as many jobs as possible, fix our borrowing and debt, which has obviously taken an absolute hammering, and get that back under control is an important part of my job and one I take seriously.

Rishi Sunak outlines his professional goals, emphasizing job creation, economic stability, and fostering innovation as key objectives for the future.

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