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Monaco diary: Jonathan Guthrie reports from the Entrepreneur of the Year World Summit
You have to be American, as is web business pioneer Terry Jones, to quote Ronald Reagan without ironic intent. According to Mr Jones, the former president, who was loved at home but ridiculed abroad, once said: “When we come to the edges of the known world, we are standing on the shores of the infinite.”
Mr Jones, founder of Travelocity, an internet travel agency briefly capitalised at $655m in 2000, was outlining the challenges of the web at the Entrepreneur of the Year World Summit, an annual conference and awards event in Monaco organised by Ernst & Young.
But there are cultural barriers here. When I come to the edges of the known world I am plain lost, which is where I suspect Ronnie would have been too. I need a map, not a sense of numinous wonder. As FT.com’s web diarist in Monaco, I am hampered by my inability to do anything more complex with a laptop than type. I have to dictate my story by phone, as if Wi-Fi had not been invented. Never send a man to do a boy’s job, that’s my advice.
The message of Mr Jones, a jolly, professorish type, was that the internet has given businesses huge capacity to collect information and exploit it for direct marketing. For example, Travelocity has built up a database of 40m “members” that it can segment into ever-slimmer income and lifestyle groups. “That allows the company to personalise its website and devise email marketing campaigns,” said Mr Jones, who left Travelocity after it was taken private and now chairs Kayak, a travel price comparison start-up. US laws allow marketers to meld their own data with information from public sources for these purposes, he added.
Mr Jones illustrated his point by describing how Travelocity had used its data to target a customer called Rob. “We put the lure in front of the fish and he immediately bought two [air] tickets for $611,” reported Mr Jones, though Rob might be surprised to find himself likened to a trout. The implication is that such direct marketing will increasingly supplant TV, newspaper and internet advertising.
There are cultural barriers here, too. In Europe, the attitude to full-on sales pitches is far more hostile than in the positive, outgoing US. Inhabitants of countries that have recently escaped totalitarianism, or still suffer from it, may find the idea of big organisations stockpiling personal data particularly unwelcome. Even in an established western democracy, pinpoint marketing could backfire. Who, for example, would want a targeted offer of penis enlargement zapped to their mobile?
Earlier in the morning, Marek Belka, former prime minister of Poland, made a targeted pitch of his own to the assembled magnates – for investment in central and eastern Europe. State institutions were stable, levels of education were high and infrastructure was improving, he said.
Mr Belka said he was “fundamentally optimistic” on growth over the next decade, though “the labour cost differential [with western Europe] will start to dissipate soon and at an accelerating rate.”
He was needled by the appearance of Estonia – which has flat-rate income tax and no corporation tax – towards the top of world competitiveness rankings. Mr Belka described this coup as “crap”, suggesting it reflected flawed methodology. But comparisons are always invidious. The presence of Kumar Birla, head of Indian conglomerate Aditya Birla (turnover: $8bn), has inspired awe among several of the mere multi-millionaires present in Monaco this week.
Radim Jancura, creator of the biggest air travel agency in the Czech Republic, who I ran into at a drinks bash on Thursday night, complains that entrepreneurs in accession states are hampered in efforts to create empires of similar scale by uneven tax policies that favour foreign investors. But Mr Belka dismissed such arguments with characteristic asperity on Friday morning. He concluded: “Neither I nor other economists can tell you where the business opportunities are [in eastern Europe]. If you need to ask, you are not entrepreneurs.”
I would personally be amazed if wealthy foreigners, lacking the necessary hunger and local knowledge, clean up in the accession states. The real candidates are locals, such as Mr Jancura, 34, whose Student Agency started with capital of €170 ten years ago and now turns over €61m.
My hunch is that a healthy proportion of the next wave of UK entrepreneurs will also be eastern Europeans. You should look for them in the poor inner city neighbourhoods that have functioned for centuries as clearing houses for successive waves of economic migrants. Among the Polish plumbers and Czech minicab drivers will be the Jack Cohens and Gulam Noons of the future.