Rugby, Capital Base, Entrepreneurship & Success

Being a Welshman I have, of course, spent the whole of today trying to figure out how we lost out by a point to the World Champions in the opening game of the 2011 Rugby World Cup. We lost despite by being, by some distance, the best team on the day and having 60% of the territory and ball possession.

The answer, I've concluded, is a rather convoluted one.

The problem Wales has at rugby is that it takes on the big guys and expects to loose. (A bit like UK tech companies who expect to be taken over by American companies. For example, we recently lost the jewel in our crown - Autonomy (a company I was heavily involved with at its inception) - to the US's HP.)

But what underlies this ?

I believe that it's the Capital Base. Fundamentally, the wealthier your underlying structure, the better off you feel and the more confident you are. Now, capital isn't just money: it's people, resources, ability, brand name... Including what accountants call intangibles. It's also things like the size of a market. England has twelve registered rugby players for every one in Wales. The US has nearly six times more customers at its doorstep than the UK (I include Ireland and Canada in that equation).

Wales has absolutely no capital base. Its only sizeable economy totally resolves around the public sector, which is heavily subsidised by English taxpayers. Its education system is on its knees, with no world class universities (I recently found that my young second cousin was doing his graduate coding project using 1990s coding languages at a Welsh University). Worse still, success begets success, and in Silicon Valley you can trip over investors who, amoeba like, multiplied from the previous generation (in Silicon Valley a generation is around eight months), eager to invest ever new ideas and projects. So, no private investors and, no buyout companies.

Of course, public investment can be a great boon to the public sector - the defence spending in California in the seventies and in Texas more recently have resulted in booms, as they have more locally in many other areas around the world.

So, back to rugby. The Southern Hempisphere countries, South Africa, Australia and New Zealand have an excellent capital base, in terms of independence, funding, people and aspiration, which you do not find in the more reticent Old World. However, Ireland, a country around the same size as Wales, has the confidence and has seen success well beyond that of its Celtic brethren, for a sport which until recently counted as fourth in the nation's psyche.

In Wales success is more readily criticised than praised. Being enterprising becomes a target for the public sector establishment, which is enunciated by the all powerful BBC, which has successfully stifled any commercial competition in the principality.

Before Wales succeeds in beating these countries it needs its own stockmarket, its own billionaires and its own obnoxious bankers and needs to break the shackles of a monopolistic media and the tyranny of the public sector. It needs a confidence that it has never had in its existence as, largely, an English colony.

And there's a lesson there for any company. Start with an inadequate capital base and you're dust. The survivors of the Internet TV first wave are theplatform (bought and funded by the US, sorry, Comcast); KIT Digital, funded by Arab oil and then US market investors and now rolling up all the smaller players in the market (much as New Zealand cherry pick the South Seas for their best players).

Today was the worst rugby game Wales ever played in history, not because they played badly - they were brilliant, but because they lost when they should have won. There is no greater failure. No one remembers the loser or the company that was second to YouTube.