The Notebook: Turo’s Xavier Collins on why the UK needs to regain its risk appetite
Where the City’s movers and shakers get a few things off their chest. Today, Xavier Collins, vice president, UK, at car-sharing marketplace Turo, takes The Notebook pen.
A low appetite for risk is stalling the UK’s entrepreneurial ecosystem
I’ve been lucky to build my career at three unicorns – handing out flyers for Uber, launching markets for Deliveroo as general manager and, with Turo, bringing our marketplace to Europe and now overseeing the UK market as vice president. All businesses shared one defining characteristic – we were told they would never work. The clearest manifestation of this scepticism is in the UK insurance market, but sadly it has roots across the UK startup ecosystem.
I’m not advocating for leaving critical thinking behind – startups today must continue to demonstrate a viable path to profitability far earlier in their journey. However, to not only survive but thrive in the next decade, UK insurers, investors, founders, and media must all widen our aperture.
When we launched Turo (the world’s largest car-sharing marketplace) in the UK, we had raised a $92m series D round and spent six years building a successful US business. I came with high hopes, and despite promises that insurers wanted to supercharge mobility revolutions using data and machine learning, we were bogged down in endless negotiations, 1960s heuristics and debates about matters that didn’t move the needle. Thankfully, we found a great partner to work with us. Since then, we’ve built a marketplace that has generated significant earnings for thousands of UK car owners and created a profitable business for our insurer.
The UK insurance industry serves as a microcosm of and lesson for the UK entrepreneurial ecosystem – one where an ethos of wealth preservation over wealth creation pervades. Our starting point should not be a statement – “that will never work” – but a question – “why wouldn’t that work?”
The science of business
When they work, peer-to-peer marketplaces are an incredible phenomenon. In order to create new behaviour and generate new connections between people you must do more than simply balance supply and demand. In a marketplace, each side of the model is your customer. At Deliveroo for example, the business must work for three distinct groups: restaurants, riders and consumers, fail one and you fail them all. This balancing act is a unique challenge and provides boundaries akin to the laws of physics: push too hard and the model breaks.
Lessons from startup life
The last year has been a cataclysm for many companies in the UK, particularly those that are venture-backed without a clear path to profitability. Even if interest rates fall halfway through 2024, early-stage companies will need to remain focused on building viable unit economics and demonstrating a path to profitability. There’s reason for optimism, IPOs in 2024 could unlock a fresh new wave of capital and entrepreneurs to help reawaken our ecosystem.
One to watch
Henry Ludlam and I met in our early 20s, when I had £2,000 of savings to my name. In an act of madness, I decided to put most of what I had into backing him and an idea that at the time made no sense… His company, Percent, has built the rails for charitable donations, working with Google, Atlassian, and others to build purpose into everything they do. They raised a major series A from General Catalyst and are one to watch!
A podcast recommendation
The All-In podcast is a great alternative source of information and discussion from a group of proven entrepreneurs covering all facets of the political spectrum. The conversation tackles key global topics, focusing on the economy, startups and geopolitics to deepen your understanding of the broad landscape of global affairs.
Quote of the week
You mustn’t confuse a single failure, with a final defeat
F Scott Fitzgerald