Internet and Great Britain

Eric Schmidt of Google talks on the Internet and Great Britain

This country is still one of the world’s leaders in technology, innovation and inventions, writes Eric Schmidt .

I am not sure the inventors of the internet were thinking of camelids when they created a technology that would change the world. Happily, Adrian Holcombe, founder of an alpaca farm in Swindon, had other ideas. Wanting to expand his customer base beyond the area close to his business, he set up a website. Customers can buy scarves, rugs and leg warmers made from alpaca wool and if they really want to splash out they can purchase their very own alpaca for £10,000. Adrian’s business is booming thanks to online advertising, which alerts potential new customers every time someone searches for alpaca goods. Adrian’s alpaca gloves have even made it to the West End, on the hands of the cast of the new musical Shrek.

This is something the UK should be proud of, because it is not just Adrian who is reaping the economic benefits of the web: small businesses up and down the country have seized the online opportunity. When you think of technological leaders, many people point to the US or Japan (NYSE: MCO – news) , but it is the UK that is leading the world in e-commerce a testament to this country’s entrepreneurialism and willingness to embrace new technology.

With the global economy still on shaky ground, much of the talk focuses on collapsed banks and budget turmoil, so it is easy to overlook the internet as a key source of solid growth. Consider these numbers: the UK internet economy was worth £100?billion in 2009, according to the Boston Consulting Group. That is roughly 7.2 per cent of GDP. It is projected to reach 10 per cent by 2015 and that is a conservative estimate. Who knows what new inventions and ideas will emerge from British start-ups in the next few years? There is a growing culture of online entrepreneurship and venture capital investment here that I think will yield great results.

I am frequently asked where the next great advances in technology will come from where the next Google (NasdaqGS: GOOG – news) will emerge. Some people seem to think there is a magic potion that created Silicon Valley and the companies that thrive there. In fact, the recipe is much simpler, particularly in the internet age. The history of innovation from the printing press to the telegraph to the internet itself shows that where there are clusters of people or companies exchanging information and exploring new ideas and new ways of doing things, invention becomes possible.

Google emerged from this kind of creative forge. Its (Paris: FR0010370163 – news) founders figured out a better way to find and organise information on the internet because they were part of an innovative community. They didn’t have that fabled “eureka” moment. Theirs was a process made possible by a network of ideas and opportunities. The good news is that in the age of the internet, every person can be a catalyst for change and every company an engine of innovation. The internet is creating a world that is richer in every way and that prosperity belongs to us all. Globally, hundreds of millions of people are living lives that are served and enriched by technology. Our societies are being transformed with new growth, new jobs and new opportunities.

We don’t have to hope that people will stumble on great new ideas. That is not how innovation happens, and it is rarely how businesses grow. But we do have to encourage people and businesses to get online. I have seen data showing that, of the world’s 90 million small businesses, only 25 per cent have a website. There is untapped potential here, without question. Only the largest and wealthiest companies can afford to advertise on television, but any company can build its brand online. Today, there are more than one million advertisers using Google AdWords, the majority of which are small and medium-sized businesses.

Take a company called Scotweb in Edinburgh, which sells kilts, bagpipes and tartans and is one of Google’s advertisers. Its online store sells 12,195 types of tartan and fabrics, far more than it could stock in a shop. It has become a £1.5?million business, and its internet presence means that 80 per cent of its sales come from more than 100 countries overseas. But online advertising has a positive effect that extends beyond these businesses: users get free, economically beneficial services such as search and email because of it.

Last year, advertising-supported services across the EU were worth roughly 100? billion euros to consumers, according to a study conducted by McKinsey. This value is expected to grow to 190?billion euros by 2015. Still, the internet is not just about selling things online. From this commerce, new ideas and innovations will emerge. Small businesses will form large and dynamic creative communities.

There are increasing numbers of what I like to call micro-multinationals. These are businesses with up to 10 employees who see themselves serving a global clientele. This was not possible before this generation of technology. So, when I look at the weakest parts of the global economy, I have no doubt that these small businesses, many of them here in the UK, will lead us to recovery.

Eric Schmidt is executive chairman of Google

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