305. The Apprentice Unicorn - Euan Blair on rewiring investment and training

20:33Steph McGovern:So in terms of your business, then, are you kind of pivoting more towards providing that training? because that's what it feels like because you recently acquired a European AI business which does training in this area is that because you're thinking this is where you know is this a commercial decision obviously but also do you think this is where things are going I mean it's both we we up leveled our mission to be equip the workforce to win in the AI era because there is no bigger threat right we exist in a space where we're training workers on the job if we can't get workforces sufficiently AI-pilled, they'll get left behind.

21:07And so this for us was such a natural move. We acquired Germany's largest kind of data and AI upskiller in large part because in Germany, there's such an emphasis on vocational and technical training. And we want to take this across Europe. I think the fascinating thing about Europe versus America is you have a really robust social contract between employer and employee, right? It is quite difficult to fire employees in Europe. And whether you think that's a good thing or a bad thing, it does mean that if you can't simply fire people, you better than well invest in retraining them. Otherwise, you just lose productivity and the economy falls behind.

21:39I mean, I think it is a staggering statistic, but the poorest US state has a higher GDP per capita, Mississippi, than any of Europe's top five economies. And it's about to be on par with Germany now.

21:52Steph McGovern:So when you look at us then, the UK, are you thinking Germany's where we want to be at? I think from a vocational skills perspective and in terms of how it addresses youth unemployment, yes. I think though at the same time and where Germany has really struggled is they haven't been fast adopters of technology. So Karsten Willberger, the German AI minister, has a commitment to train 46 million German workers in AI skills because he knows the country's falling behind. I mean, a stat published last year by the Mittelstand, which is the kind of group representing this long tier of small and medium-sized businesses in Germany, shared that 80 % of them still have a fax machine, right?

22:29Germany was once the pinnacle of innovation. It has really struggled in recent years, especially with competition in manufacturing and the auto industry. So we do have some advantages, by the way. Our workforce in terms of technology skills is ahead of most of Europe, but we can't take that advantage for granted. And by the way, when Germany turns its mind to something, which it has now done with AI training, it tends to do it pretty profoundly.

22:54Steph McGovern:And so can you see that the growth and skills levy in its current form or its new iteration, is that going to be a way to help companies provide this then? Is that going to be something you're a pot you're going to be dipping your hand into? Yeah, I think it ought to be. It ought to be helpful. At the moment, as I say, there's actually a deficit of things that companies can spend their money on that aren't the traditional apprenticeships that we already have. And I think that's a problem. And I think we need in the system a way for employers to create qualifications suitable to their workforces much faster.

23:27Steph McGovern:And when you are talking to employers, what are they saying to you about the skills they need? And are they talking about enhancing employees or replacing them? So it tends to be, you see three areas where if you can show training works, it becomes really valuable. One is revenue generation, right? Make more money. One is cost avoidance. Don't incur costs that you never needed to incur. And the final one is cost reduction, right? Which is sometimes indeed shedding workers. I think most employers we speak to are not falling over themselves to cut their workforces. They know it's unpopular with existing employees and you're going to struggle to get your workforce adopting AI.

24:05You basically say, yeah, by the way, the plan is we use this to replace you. But is there lip service being done to that?

24:11Steph McGovern:Is it, you know, we're not going to do that, but that is the plan. I don't think so, because the reality is where AI struggles most is when it comes to areas that require deep context. And one thing that workers and especially frontline workers have in abundance is context. All these little signals about how your job gets done, what you're allowed to do, how you sort of build relationships, how you negotiate across a company, how you sort of bring people with you on a journey. AI is also not very good at holding people accountable in a way that humans are. So if you can use AI to give people kind of technology superpowers and do their job much better and faster, then you end up unlocking this productivity revolution.

24:51There is a fork in the road. AI either becomes the great jobs destroyer or becomes the great productivity enhancer. And the only way I think we can put our thumb on the scales to make it the productivity enhancer is by training as many workers as possible to use it effectively.

25:04Steph McGovern:There are some companies, though, where their AI has become the new buzzword and it's like, right, we've got to do AI, but they don't really have a strategy around it. They just go, we've got to do AI. Are you dealing with CEOs like that as well? Many companies. So what are you... It's one thing for a CEO to stand on a stage and say, we're going to do AI, right? Everyone is going to be AI enabled. It's another to actually make that happen. And the challenge is how you kind of move from even deployment and purchasing AI tools into actual adoption and usage. And the only way we found to consistently drive adoption usage is to start with frontline workers and enable them to basically deconstruct and reconstruct their jobs around the tools that their company is invested in.

25:51Because in the end, and this is where the worker still has so much power in all of this, they know how the jobs to be done and they know how to do those jobs. They can do them better and faster with AI. That's great. So it's interesting that, just to pick into that a bit more.

26:05Steph McGovern:So you're saying rather than going top down, it's bottom up with AI. It's got to be both. So look, what you need from a top down perspective is you need to purchase AI tools, right? You need to do that. You need a framework for usage of AI. One of the challenges companies have is AI policy gets tied up in knots between infosec, information security, data privacy, compliance. legal everything else so you do need a sort of safe framework for ai usage and you need clear guardrails articulated that kind of has to come from the top but then if you can train workers within those confines to use ai as much as possible you can see real success and that's exciting and you know the estimates around how much ai can add to the economy vary from kind of low hundred billions to high hundred billions.

26:55This could be the thing we're crying out for. We know that government is struggling to make the sums work and we can't simply just keep raising tax because it will destroy growth. So if you are constrained, how do you break through those constraints? AI could be the solution. And in the public sector where, you know, take the NHS as an example, it is the largest single healthcare system in the world. You can use AI to do incredible things, but we have to have the public sector adopt it fast.

27:25Steph McGovern:And as you say, you know, you use that example of doing an AI apprenticeship and it taking four years after, you know, ChatGBT came out. What are you seeing that the government aren't getting about AI? I think basically allowing more flexibility and what kind of qualifications can be delivered and what they can be focused on. I think in particular, and we were talking about young people before, one of the things we've been calling for is a generalised AI qualification that is field and sector agnostic that young people can go and take to enter the workforce. Because employers are often relying on young people coming in to be advocates for AI because they've been using it in their personal lives.

28:04Steph McGovern:Yeah, that though sounds very general. Like as in if you have an AI qualification and as you say, by the time it gets passed through all the, you know, the hoops and everything else, it'll have changed again. it's a bit like you know doing it at school we all know like i mean my six-year-old is still learning how to use a mouse in school and you're like what the hell are we teaching that for yeah but the difference is this again is where apprenticeships are so powerful what what is an apprenticeship for us is basically a series of projects and use cases you're delivering on the job to show you can do your job better and faster so therefore if your company started with microsoft copilot and ends up moving towards claude and ends up in a few years on some completely different ai system so long as you know how to apply that to do your job better right you're staying up to date and actually when you look at the kind of the challenge we have in traditional education at the moment is we are giving people a shot of learning to do a university course for three years that was built often a century ago and expecting that to prepare them for the future i think training on the job in ai is likely to be more inherently valuable so a couple of points on that before we come back to talking a bit more about your business the you know we heard andy burnham talk about obviously the giving the parity of esteem to vocational and academic training but also um this idea that technical education would be a choice at 14 and what do you i think that's too late i think it should be much earlier on because you're in mainstream secondary school by then and you'd suddenly uproot you you know with your mates and everything else yep what age do you think we should be doing this at?

29:39Steph McGovern:Start a secondary school. And there are templates for this. And by the way, I applaud Lucy Powell and Andy Burnham for grasping the nettle. We've been waiting. Don't you think everyone says something about... I just feel like it's genuine verbal enthusiasm every time someone comes in. But they're talking about actually reforming the system. Now, of course, we'll see if they do it. But before it's been, we think apprenticeships are great, we want more people to do them, but we're not actually going to take any of the steps to make that happen. Right? If we can reimagine how education works from cradle to grave and make it a lifelong learning pursuit.

30:10It was Howard Wilson who created the Open University, right? And in theory should have changed the way education happens and education and work being combined, but we never followed through on it. And in fact, we went in the opposite direction.

30:21Steph McGovern:Ewan, sit tight for a couple of minutes. We're just going to a quick break.

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32:04Steph McGovern:I hate to bring your dad up but it was quite a pivotal thing when he came out and said 50 % of people should go to university I was 18, 19 at the time and it was like basically saying to me you're not smart unless you go to uni and I mean, have you had rows with him about that? Well first, I'll give my dad a hard time on your behalf I'm very sorry, Steph Well to be honest, I've done it via Alistair Campbell a few times I've had a pop Well Alistair never holds back so you'll be alright And you know, I'm not going to bang on about your dad because you're here in your own capacity but is that an argument you've had with him?

32:33Steph McGovern:Because I do think that was the wrong thing to say. Yeah, I think it's a pretty open and shut argument because he agrees. Does he? Does he now? He does. I mean, the reality, look, the idea was that the more people who went to university, the more you'd encourage social mobility, the more opportunity would be spread throughout the country. It just hasn't worked out that way. And basically, if you think of the experience of someone from the ages of kind of four to 18, it's massively influenced by your parents and your background and the resources you have access to. From 18 onwards, once you enter the workplace, you have far more agency in the arc of your career and what you can do.

33:08And actually, we should be trying to tilt some of the balance towards that area. It's where I think having arbitrary kind of academic credentials as a sort of, you know, gatekeeper on access to the labour market is a real problem. I used to say to employers all the time when they would focus on degrees for hiring, why are you letting academic admissions officers at universities up and down the country choose who your workers should be how could they possibly know better than you yeah so what do you

33:34Steph McGovern:think about this idea to devolve education um in the sense of you know local authorities or regional mares whatever will be part of deciding what the education should be to fit the needs of the local area so robert and i disagree on this i don't have a problem with it because i think anything that focuses more on work is transferable skills. Robert's argument is this could really narrow the opportunities for people who are in areas like where I grew up in Middlesbrough. And he did a comparison between, you know, if you're a kid in King's Cross with all the tech world around you and everything else and the financial sector and everything, it's going to be very different to a kid in Middlesbrough.

34:15Steph McGovern:And it already is by a million miles anyway. but for me I just think anything which focuses more towards workplace skills is a good thing what do you think so am I allowed to take a third way on this go on yeah you are I mean I so partly depends what you mean by devolution I think devolving power to where people can actually people have the most context and can make better decisions is not a bad thing but I actually think devolving more to employers is pretty fundamental in that rather than having it all sit in central government. So I don't think it's just local mayors because they don't necessarily know all that much about their local area versus the people who are creating the jobs there.

34:53So I think there should be more emphasis on employers. I would devolve the ability to create qualifications to local mayors and regional powers where they actually know what skills are needed in their area. But you don't want a system where you talk about how the apprenticeship system could often be difficult to engage with, where a national employer has to do multiple different types of apprenticeship in every part of the country because they need to retrofit their sort of hiring policy or training policy into a different part of the government ecosystem. That would be a disaster. So I think giving employers more choice and flexibility and devolving to them is great.

35:30I think allowing regional mayors, local authorities to sort of set guideposts for what qualifications are most needed in their area is good. But I think you don't want to make the system more Byzantine than it already is.

35:42Steph McGovern:Yeah and I guess there's a danger as well that you know because some people would say hang on school and education is as much about you know being creative and everything else and that might necessarily you know if there isn't I think I don't believe this what I'm saying but I'm putting an argument that some people say about you know would you lose the number of people going into the arts for example because that wouldn't necessarily be a really obvious job to I don't buy that argument actually as well and the other thing look comes back to this whole idea of why is a career in the arts somehow more prestigious than a blue collar job right like so much of it comes back to the british class system and we have this very skewed way of looking at specific types of jobs that is just deeply unhelpful and also doesn't really stand economic scrutiny yeah so coming back to multiverse you've been going 10 years this year you still haven't made any money have you what's going on There are a lot of great companies in the world out there who took a fair while to make a profit.

36:45Steph McGovern:It's an interesting thing to explain to people, though, because, you know, you're valued as a unicorn, so over a billion pounds, but yet haven't made a profit. Sure. How does that come about then? Why is your value so high? So it's revenue growth. It's a belief that you can be the clear winner in this space. It's the belief that you can do this in multiple markets. And for us, the objective isn't just training workers. It's how do you use that to start to measure performance, who's effective in the workplace, how technology is used and adopted more generally, make that an engine of productivity.

37:18One of the things every employer struggles with is figuring out how do they make their workers more effective, right? We have a solution to that in apprenticeships, and we're taking this to multiple parts of the world, and that's really exciting. It also helps, I mean, we, you know, we deliver more apprenticeships than pretty much anyone else in Europe and we're growing incredibly quickly.

37:37Steph McGovern:So can you see a day and when will it be that you'll be making money? In the not too distant future. Right. You've got a glint in your eye, which suggests it's coming sooner than. It might. But in terms of getting that investment, we talk a lot on this show about how do you, you know, British tech companies in particular, and that's what we're saying you are, the tech education space. How easy has it been to get that funding? And what about selling to America? Because that's the other thing. If someone came in now with one of the Magnificent Seven or whoever came in and said, we want to buy you, how important is it to you to stay British, I guess?

38:15Steph McGovern:And, you know, what's it been like on that journey in terms of where the money's come from and the investment? So there's a lot to unpack there. There is, yeah. I think if I start with, so we're kind of unusual in that our business is pretty much all focused on Europe. And yet we've raised basically all of our funding from the US. That's such a common story. It is. And it's, look, we only have ourselves to blame. And there's a couple of points around this, but I would speak to UK and European investors. And the only thing they'd care about is how do I make three times my money back in the next three to five years?

38:51I went over to Silicon Valley and met some of the great people we raised from. I mean, Mary Meeker is on our board and a brilliant kind of investor. First thing she asked me was, Ewan, how do you make this a$50 billion business? right that there is a level of ambition there yeah that is just far away from from the way a lot of our investment community is thinking now that is changing by the way and we have some brilliant investors over here and also increasing number of american firms have come to the uk and europe because they they see value in it i think there is a raising investment when the company's growing and and things are going well is not particularly hard or challenging versus anything else right actually building a successful enduring business is always more challenging but you don't have the pressure of making money that the best thing about venture capital back businesses is you can swing for the fences as they say in america right go big or go home and not worry about immediately making a profit but that only comes from american investors you you do have some uk and european investors that think like that as well but it just it tends to be more common in America.

40:00And there is just this level of kind of implicit and explicit risk that they're very comfortable with taking. I do think there is also a piece that we have to be quite focused on in Britain that links to how you kind of extol the virtues of wealth creation and tech more generally. And it's interesting that in America, nearly half of retail investors, the general public, have their wealth in equity markets. In Europe, on average, it's about 20%. In the UK, It's high single digits. So basically, when we have companies go public, they make a lot of money for the founders. They make a lot of money for their employees.

40:37They don't really make any money for the general public. And it's kind of crazy. We leave huge amounts of money on the table in pension pots and other things that could be occurring masses of value. But people just aren't invested in tech at the same way here.

40:51Steph McGovern:On that point about pension funds, we again, Robert and I talk about this a lot. how do you incentivize or should you incentivize for that money to be invested in british businesses because obviously you put the money where you're going to make the most money so how do you make it so that it is british businesses that they want to put their money in so i think you've got to use the carrot more than the stick right and i think you've got to just create incentives tax and otherwise to make it really appealing i also think you know for example no longer having a cash isa is very sensible encouraging more people to invest money in equities you don't want to constrain people to just have to back British businesses.

41:27The same time, though, we are seeing an increasing focus on sovereign AI, on sovereign tech capability. And it's not a bad kind of thought for this government to be thinking, how do we make sure that British businesses are getting a strong share of funding?

41:42Steph McGovern:So what would stop you selling to an American? I think probably the idea that I'd love to take this company public and build a big story and not exit that journey too early. Yeah. You know, I'm not thinking about selling to America. I don't want to sell the company. I want to grow it and I want to build the huge British success story. That's always been what I've wanted to do with this in a cause that I really care about. And then when you get, you know, you talked about the meeting with Mary and when she's saying, I want you to grow the business to 50 billion, how are you going to do it? What's the time scale you're then given on that?

42:15Steph McGovern:Because if you're saying the focus more in the UK and Europe is a couple of years or whatever, which is hard for you to achieve. What are they thinking? What's the time frame they're thinking? Well, again, a lot of these funds, and they all have fund cycles, but they're prepared to wait from when they put their money in, five, ten years, sometimes even longer. It really depends on the extent to which they believe in the thesis and the extent to which they believe that you can kind of fulfil that thesis and be a winner in the space. Where does that mindset come from, though, compared to us? Because I often go on about the short-termism here, like politically, but also on the investment point.

42:48Steph McGovern:But what drives that, the longer term view there? I mean, that probably is more deeply rooted in the American psyche and their approach to risk and failure. I mean, how often do you see failures in America celebrated? Everyone loves a comeback kid. Here, one failure, you're kind of hung out to dry and it's very hard to come back from that. I think that is absolutely part. There's just a different approach to risk. I mean, it was a country built by immigrants who were all taking a massive risk to go there in the first place and build their lives. And then from a kind of policy standpoint, the Americans embraced capitalism and the idea that you could make people wealthier by making the economy grow at an uncommon rate.

43:27And they've continued to do that.

43:29Steph McGovern:And this might be a question that annoys you, but I'm going to ask it anyway, because I think we're on good terms. What are you going to say, Steph? How much of you getting your funding and the doors being opened was because your dad was a former British prime minister? Yeah. Well, look, I can't answer that question. But do you put it on the emails? Did you put it on the emails when you were like, oh, did you just put your surname in bold? No, I didn't even do that. No, because I think that would probably hinder, not help. The thing I've had is, you know, you get, I've been super fortunate, obviously, incredibly privileged background.

44:05It's opened lots of doors for me. You do have to go and walk through them.

44:08Steph McGovern:Yeah. But you'd be better off asking the investors who backed me themselves whether that was a factor because they certainly haven't told me it was. and what's more intimidating walking through number 10 the door of number 10 or walking through one of the big doors in silicon valley well i mean i lived there for 10 years so it's not super intimidating walking through the door how old were you also i know i know the secret entrance oh right of course you do but you know all the secrets are and you and it's been an absolute delight to chat to you thank you very much for coming on the show that's it from us on the rest is money bye

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