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Embracing a Digital Future – Interview with David Cameron

Ahead of the GovTech Summit, Co-founder of PUBLIC, Alexander de Carvalho interviews Former UK Prime Minister, David Cameron about designing innovation policies and digitalising the UK government.

The UK saw many advances in the way the government uses technology during your premiership. What should be the agenda today?

When we came to office in 2010, the government’s approach to technology could best be described as “analogue”. It was the second decade of the 21st Century yet our public sector was still using fax machines, pagers and paper records. We were determined to change that. We merged 1,700 government websites into one: gov.uk. We made services, from car tax to power of attorney, “digital by default”. We created the Government Digital Service and published reams of government data, spawning new businesses such as CityMapper. Critically, we created the Digital Marketplace to help smaller firms sell their products more easily to governments. And by 2016 the UN ranked ours as the most digital government in the world.  

But we cannot stand still. Other countries inspired by our approach – indeed whose governments we even trained in our approach – could overtake us. The first answer is doing more of what works – migrating more services to digital, publishing more data. The second answer is bringing principles that are flourishing in the private sector, for example in FinTech and MediTech, into public services – which form a big part of my focus, post-politics. What will facilitate all of that is making sure the digital mindset permeates all of government. Training is key, particularly for those who procure such services. The better officials understand digital developments, the better services governments are able to provide. 

 

“In 2010, the government’s approach to technology could best be described as “analogue”. We were determined to change that.”

 

How do we strike a balance between allowing innovation to flourish but not allowing large, winner-take-all companies to gain unfair market advantage or play fast and lose with citizen’s data?


The reliance on big companies was a real problem when we took office. I remember Francis Maude coming to me one day, exasperated that of all the people in the Office of Government Commerce, no one could tell him who the top-20 suppliers were. All we knew was that Labour had negotiated enormous five-year IT contracts. Opening up procurement to smaller businesses, removing barriers that hindered them and publishing data that would help them was key to unleashing innovation. It was a big part of what enabled us to embrace a digital future. We need more of that. 

govtechsummit-david-cameron

But at the same time we have to ensure that such innovation happens safely. There can be the unintended consequences of unbridled innovation. I saw that first-hand as Prime Minister – indeed, I wrote about it in my book – when I clashed with tech companies over their insistence that they were merely platforms, who could not prevent people from typing child pornography terms into their search engines.  Eventually Google and Microsoft agreed that 100,000 terms would yield no results except a warning: that child abuse was illegal. From that experience I became convinced that we can achieve tech success while putting the privacy, safety and security of our people first. It doesn’t have to be either/or. But to achieve it, we do need robust, independent regulators who are focused on competition and the consumer. And politicians need to let them get on with the job. 

What kind of technology scares you, and what fills you with hope?

There are lots of areas of technology that fill me with hope, but the main one is in health. This is where I see it all coming together – technological advancement, big data, machine learning, private sector innovation and competition, government backing and the greatest needs of our society today. In fact, one of my proudest endeavours as Prime Minister was in this area. With the US firm Illumina, which pioneered the practice of whole-genome sequencing, we were able to sequence 100,000 genomes, helping us build up a picture of cancer and rare diseases (a project which has since been expanded by the Health Secretary Matt Hancock). Moreover, as President of Alzheimer’s Research UK, I see how key tech is when it comes to confronting our biggest killer. From monitoring people’s smartphone activity to detect early warning signs, to observing global trends across vast datasets, we are relying on tech – in its micro and macro forms – to defeat the diseases that cause dementia.

But, of course, technological advancements can be used for ill as well as good. During my time in office, the use of technology by terrorists, hostile states, criminal gangs and, as I’ve mentioned, paedophiles, rose to the top of the agenda. The balance we’ve got to strike – again, this tech tightrope we’re walking – is ensuring innovation can flourish while heinous practices are prohibited. The internet should not be like the Wild West. But nor should it be a police state.

In your book, you describe how the Leveson Review in 2012 led to the establishment of a new, robust regulatory body for the UK’s press and media, IPSO. You comment how surprised you were at the lack of attention given to online and social media. Do you think that it’s time for a full review of these new forms of media?

Yes, it’s shocking really: just a few paragraphs devoted to what has become one of the biggest challenges of our age. Leveson implied that people take online content with a pinch of salt. That couldn’t be further from the truth. Not only do people listen to fake news; they build whole echo chambers out of it and never leave. And just as technology changes, regulations have to evolve – and that doesn’t just apply to the press and social media. Think about surveillance. Time was when we had to change the law to give permission to spooks so they could steam open envelopes and listen in to telephone calls. But nowadays the people that would do us harm aren’t writing letters or calling on landlines; they’re emailing, texting, sending encrypted messages online. That is why one of our first big moves in government was compelling companies to retain communications data. 

A lot of people worry about how the state will use their data. Is it wise for the state to be so involved in data collection?

Both the WikiLeaks and Snowden scandals happened during my time in office. I am aware of how dangerous hacking can be to our national security. People are also right to be alive to the risks involved with the gathering of their personal data. That is why it is incumbent on all of us who are championing new technologies and the gathering of data to make sure it is done so in a way that is safe. But I am optimistic. I think of all the manpower, creativity, intellect and enthusiasm devoted to technological progress. If we applied those things to these vital issues of safety and security around our data – and we must – then I know we can take people with us, and, above all, keep them and their information safe. 

The GovTech Summit will gather the champions of digital innovation in government from all around the world – make sure you don’t miss this unique opportunity to hear from public leaders & entrepreneurs transforming public services. Get your ticket now.

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GovTech: How to Generate Superior Returns and Change the World

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How to navigate GovTech: an industry obsessed with improving public services and empowering citizens

Last week a PUBLIC portfolio company, Echo, was sold to McKesson.

McKesson is a leading healthcare company for wholesale medical supplies and equipment, pharmaceutical distribution, and healthcare technology solutions, that reported revenues of over $200 billion in 2018. Echo is a free, easy-to-use service that delivers medicines, typically repeat prescriptions, to a patient’s door. Echo’s 2018 revenues – in case you didn’t know – were a little less than $200 billion!

So whilst McKesson is a healthcare giant devoting huge resources to pharmaceutical distribution, supplies and healthcare technology solutions, they still opted to buy Echo instead of developing their own Echo-like solution. Why?

I personally think it was a very smart decision. McKesson now has the opportunity to bring Roger, Stephen and the rest of the Echo team into their ecosystem: if they allow Echo to continue to be obsessed about building elegant, user-focused tech and removing the barriers to prescription adherence, they will make a healthy return on their investment.

An exit like this is great for investors but it is not a new model. Incumbents have been buying innovative technology companies for many years. However, now is the time for government-facing organisations to start looking over their shoulders and turning to tech for growth. We will come to expect more and more of these acquisitions in GovTech. For that reason, it is time for investors to wake up to the massive potential of GovTech. To recap why PUBLIC is particularly obsessed with the GovTech opportunity: 

BUY vs. BUILD

This battle – “Buy vs. Build” – has been playing out amongst corporates and government for centuries. With the advent of new technologies (e.g. cloud computing, machine-learning and APIs), smart, obsessed engineers and entrepreneurs can benefit from very cheap infrastructure to develop step change solutions that can perform at a scale and cost-effectiveness never-before available to the markets in which they look to operate. The caveat is that you need to find this smart, obsessed talent and more often than not it is not sitting inside a large corporation or government entity.

CORPORATE ACQUISITIONS

Corporates, led by the large tech companies (and particularly the Chinese tech companies) have been quick to recognise this, fuelling spectacular returns for early stage technology companies (e.g. Facebook’s acquisition of WhatsApp). It’s extraordinary to think that some of these acquisitions are even highly cannibalistic, such is the pace of change that threatens those corporates. Think of FinTech, think of eCommerce, think of the restaurant, taxi and travel industries: incumbents across these industries have been replaced or forced to acquire new entrants building on better, cheaper technologies and delivering consumer-obsessed products.

GOVERNMENT TECHNOLOGY

As briefly outlined above, product-focused entrants have transformed every major industry – the public sector being almost a sole exception. But this is changing. 

Government and perhaps government suppliers in particular, represent one of the last frontiers for major technological disruption as we know it. Looking at the public sector, we see three key hallmarks of an industry ripe for disruption (excuse the anecdotal examples):

  • An over-reliance on legacy technologies: 70% of the US government’s $82bn IT budget is spent on maintaining legacy system
  • A lack of investment in technology: From 2010 to 2015, government IT expenditure was static vs. 25% growth in the private sector
  • A small number of incumbents dominate: The top ten UK Ministry of Defence suppliers account for 40% of total vendor spend

Governments have traditionally been slow to adapt to new technology and market entrants. Low risk appetite combined with a frequently non-technology fluent buying and policy-making layer have led to public sectors being behind the curve. Added to this, some departments are faced with low managerial bandwidth and financial restraint.

Change is coming, however. As citizens’ expectations rise and public sector challenges become steeper still – mental health, social care and cyber security to name but a few – more and more public buyers are looking to new solutions from new technology. Legacy systems and cumbersome procurement structures can only hold back the GovTech tide so long.

WHY GOVTECH COMPANIES WILL BE SO VALUABLE

When looking at investments like Echo, investors need to understand why these companies will almost always develop better solutions than incumbent players, and hence build attractive businesses that will fuel acquisitive exits:

  • Good value for money for investors (nascent sector)
  • Passionate founders (mission-driven)
  • Unencumbered technology
  • Singular focus
  • Data-first mindset

This last point is critical in understanding why new, well-architected platforms can add such enormous value when implemented across the public sector.

Take Echo. Echo is not just a company when viewed with a GovTech hat on. Echo has the ability to provide Public Health England (PHE) with data that it never had access to before (but desperately wanted). Thanks to Echo, PHE could actually search through data: which patients are taking what medications, when, and in particular where adherence is lowest. Echo could allow drug companies to action product recalls via push notifications. Echo could allow PHE to analyse cohorts of patients by postcode and draw up statistically interesting facts on populations. The examples continue. Whether McKesson knows what a beautiful business they bought is beyond my pay grade, but if they are able to let Echo flourish, we will all as citizens benefit from their great tech, excellently executed.

Here at PUBLIC, we specialise in backing companies with public sector applications, helping them scale across government by reducing the barriers to entry that currently exist. Our platform gives us the insight, power, and capability to take on incumbent providers, therefore doubling or tripling the addressable market for the companies we support. We are passionate about what we are pioneering: creating the environment for any company looking to engage and scale within government. More VCs and investors are joining us in this mission – it’s time for us to recognise the returns, as well as the potential for public sector improvement, that investing in GovTech represents. 

The GovTech Summit 2019 will bring together investors, thought leaders, and world leaders to reimagine the future of public services – sign up now to join us on 14 November in Paris. 

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The UK’s £20 Million GovTech Fund: An Important Step Forward

Public’s co-founder Alexander de Carvalho explains the importance of the recent announcement by the UK government of a £20 million GovTech fund.

In a race to become the most digitally-savvy nation, Theresa May’s government has taken an important step forward for the UK by announcing a package of tech-focused measures to make it easier for more entrepreneurs to come to the UK and backing Tech City UK which has been a mainstay of the UK’s digital scene for many years now.
But to us at Public, the really important step forward has been the announcement of a GovTech fund and the intention to run a number of challenges – which is really exciting.

Public has been arguing for a while that Departments needs an easier way to access, fund and trial new technologies. Everyone is familiar with the line “nobody got fired for hiring Fujitsu” – which speaks to an innate caution in bureaucracies. Our view has therefore always been: make it less risky for officials to take a chance on new technologies. Make them see they don’t risk their large programme budgets and give them a system to help them do what startups do so well – experiment, test, iterate and learn. To go, as Silicon Valley’s Peter Thiel put it, from 0 to 1. That is what Theresa May’s GovTech Fund now allows for.

And it will be accompanied by a setup which can help connect departments with startups. Governments across the globe have experimented with similar arrangements – a GovTech catalyst team. Cities, realising what the rise of UrbanTech can do for them, have had entrepreneurs-in-residence: The Urban Challenge programme that Public is running with the West Midlands Combined Authority is an example. Even the White House, under President Obama, created a fellowship programme for entrepreneurs.

But the UK could be the best system yet. It will hopefully allow the Centre – the Cabinet Office and Treasury – to actively engage and advise departments while speaking a language that technology startups understand.
We are shortly coming to the culmination of our GovStart programme which helps 10 startups over a six month period engage with and transform the public sector with new technology. We’ve learnt a lot in this period and have had many successes – with product development, fundraising and, critically, sales. It is clear that there are many great startups which could not only save the government a lot of money but upgrade services so they are fit for a modern, data-rich, smartphone-enabled age.
But these startups do need help – especially capital, insight, and technical support. We provide that at Public. But there is one element they need which is harder to get than many other sectors like fintech, adtech and so on, and that is access to decision-makers. Government is just a more difficult-to-understand buyer. We help with that too but having a one-stop-shop in government will not just be immensely helpful to us but will help “democratise” access for a range of startups – which is very exciting.

When Daniel and I started the journey to build Public, we always said that programmes such as GovStart would be successful when they have helped make GovTech such a mainstream that they won’t be needed any longer, and can be replaced by more mainstream accelerator programmes; when the UK has the £20 billion GovTech industry we predicted in our first report. We aren’t there yet – and we won’t be there for a long time. But with today’s announcements we are a step closer. And that is very exciting.

Join us at the GovTech Summit in Paris, on 12th November 2018 to bring entrepreneurship to the European public sector & transform democratic practices!
For regular updates on Public, sign up to the Public newsletter. 

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4 Tips for GovTech Startups Looking for Investment

Finding investors is always hard. Here are four tips to help your GovTech Startup find the right investment. 

Seek investment from those who share your sense of “missionism”

When you are looking for capital, make sure that you raise money from investors who share your vision and are prepared to back you to deliver that vision. Breaking into a nascent market like GovTech requires patience, trust and support. Starting your journey with the wrong investors could prove detrimental when you look to raise further capital or ride out the inevitable bumps that all start-ups experience.
Pools of capital are increasingly available (e.g. in the form of grants) that you can access and the mindset of traditional investors and wealthy angels is also starting to change.

Make sure you know your customer inside-out

Knowing the public sector is important when it comes to gaining investment as a GovTech startup. If you haven’t worked in government or for a government agency, you should try and ensure that you either find a co-founder, or prioritise hiring someone early, who has worked in the space (e.g., doctor, fireman, local government official etc.). That person must have:

  • the domain expertise.
  • a foundational understanding of the specific problems your technology can address.
  • a plan for how your solution can fit into existing workflows.
  • perhaps most critically, a commercial sense of why a civil servant will procure your solution.

If you are unconvincing on any of these points, you should expect to receive a hefty amount of skepticism around your business plan when approaching investment.

Economy, Efficiency, Effectiveness

The National Audit Office uses three criteria to assess the way in which spending is allocated in the civil service – and investors will also be looking for you to explain how your business satisfies these requirements.
Economy: Explain why your solution represents the best value for money. How can it help a department to deliver a required service on budget, on time and alongside other resource constraints?
Efficiency: Can you demonstrate how your solution will offer an acceptable return on the money and resources invested?
Effectiveness: Can you convince a public-sector procurement officer that your solution will deliver what it is intended to deliver?
Convince an investor of these three things and you will have taken a large step towards gaining investment.

Develop your sales pipeline

Few things give investors more comfort than the realisation that you have lined up a clear pipeline of potential, paying customers. Starting to work on your sales pipeline early will often help you iterate and shape your solution for the better. You will also develop more confidence in your business plan which will be apparent in subsequent fundraising meetings that you have. Having customers lined up – both public and private – will always go down well.

Join us at the GovTech Summit in Paris, on 12th November 2018 to bring entrepreneurship to the European public sector & transform democratic practices!
For all the latest GovTech news, sign up to the Public Newsletter.