Three Big Ideas #60

Money for moonshots, second-city shortfalls and dabblers vs adopters

Welcome to our fortnightly Three Big Ideas roundup, in which we serve up a curated selection of ideas (and our takes on them) in entrepreneurship, innovation, science and technology, handpicked by the team.

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🧠 Mann Virdee, Head of Science and Technology

Google DeepMind is perhaps the most transformative startup Britain has produced. It’s now synonymous in the minds of many, myself included, with its protein structure prediction system, AlphaFold, and the 2024 Nobel Prize in Chemistry.

But did you know that to secure early funding, DeepMind’s CEO and co-founder Demis Hassabis once had to pitch investor David Gammon at his home — during which he was also required to win approval from Gammon’s wife and three teenage sons? It seems strange now that such a successful company could have been set back or derailed if just one of them hadn’t been convinced by his pitch.

It’s one of many stories in Sebastian Mallaby’s new book The Infinity Machine, which follows DeepMind’s rise from a startup in a Russell Square townhouse to the heart of Google’s operations. It’s well worth a read for those who want to understand what it takes to be a successful entrepreneur, as well as to explore broader questions about the future of scientific research, the nature of consciousness and the potential of artificial intelligence.

The family-veto story is important. In 2010, no British venture capitalist was set up to fund a company whose stated mission was to ‘solve intelligence’. That meant that Hassabis had to piece together funding from Peter Thiel, Elon Musk and others. By the start of 2014, the money had run out and the only viable option was to sell to Google.

Some mistakenly draw the conclusion DeepMind should not have sold to Google. But Google’s compute and resources were necessary for DeepMind to thrive. The lesson is a broader one. Britain still struggles to fund moonshots at the scale and time horizon they need.

It’s been said time and time again that our universities are world class. So too are our founders. But the patient, multi-billion-pound bets that turn blue-sky research into world-leading companies remain largely an American endowment. Closing that gap is partly about R&D and tax design, and partly about cultivating high-conviction angels and family offices willing to back unproven founders with audacious ideas.

That makes the recent news from David Silver, Hassabis’s old Cambridge friend and the man behind AlphaGo, feel like a test. Silver’s London startup Ineffable Intelligence has raised $1.1 billion at a $5.1 billion valuation, which is the largest seed round in European history, with the UK’s Sovereign AI Fund investing alongside Sequoia, Lightspeed, Nvidia and Google. The capital is still mostly from the US, but the company is British. It remains to be seen whether we can keep it that way as Ineffable scales — and whether we can grow and support more companies like it.

🐝 Philip Salter, Founder

Britain’s productivity problem is, in part, a problem of its big cities outside London underperforming. Manchester, Birmingham, Leeds, Glasgow — in most comparable countries, second-tier cities punch above the national average. In ours, they don’t. Closing that gap matters not just for the people who live there but for national prosperity.

A new CEP paper from Aadya Bahl and Henry Overman, Hive of Talent, uses Greater Manchester as a case study to ask what it would actually take to close one component of that gap: skills. The numbers are sobering. Manchester’s productivity sits 35% below London’s, against a 20% gap between, for example, Paris and Lyon. Even partly closing it would require — among other things — an additional 180,000 workers with degree or sub-degree qualifications.

The paper considers three pathways through which Manchester adds graduates: people who grow up there, people who move there to study, and people who move there for work. On the local cohort, even matching London on both attainment and retention, the GCSE pathway would generate only an extra 4,285 graduates a year. The local cohort is “just too small relative to the size of the workforce for even quite sizeable improvements in attainment or retention to generate the scale of changes needed.”

Manchester’s universities attract and retain around 11,400 graduates from outside the city region each year, but a meaningful slice of that depends on international students. The Government’s Immigration White Paper may dampen this significantly. And on non-education migration, the picture is similarly fragile. Manchester currently gains around 2,606 graduates a year through net international migration but loses 1,219 to the rest of the UK, for a net gain of about 1,387. Halve net international migration and the net gain shrinks to just 84 a year — a fall of roughly 1,300 graduates through this channel alone.

As the paper acknowledges, keeping more skilled workers in Manchester only helps if there are skilled jobs there for them to do:

“London benefits from a unique concentration of universities, high-skilled employment opportunities, and strong graduate labour markets that attract and retain graduates from across the UK and internationally… replicating these conditions in [Greater Manchester] would require changes that go well beyond skills policy alone, as factors such as labour market opportunities, wages, and supporting infrastructure all shape graduate location choices.”

The wider lesson is that no single lever moves the dial, and the supply-side levers don’t move it at all if the demand-side jobs aren’t there to absorb the workers. For founders and policymakers tempted by simple stories about either just fixing schools or visas — important as both are — this is a useful corrective. Manchester’s skills problem is a coordination problem, and one the rest of Britain’s big cities, with smaller cohorts and weaker universities, will face in even less forgiving forms.

💼 David Bharier, British Chambers of Commerce

By the late 1990s, most businesses had a website. While many firms simply replicated their brochures online, a smaller group — from Amazon to early digital-native retailers — built their operations around the technology entirely. It was that depth of adoption, not the speed of uptake, that ultimately separated the winners from the rest.

We may be seeing a similar pattern emerge with AI. Much of the current debate focuses on how quickly firms are adopting the technology. On that measure, the UK appears to be moving at pace. Analysis conducted with the University of Essex, using British Chambers of Commerce survey data from early 2026, finds that over half of SMEs are now using AI in some form, up sharply from around a third last year.

But this headline figure masks a more important reality: not all AI adoption is equal. For most firms, AI is not yet translating into meaningful workforce change. Around 95% of users report no impact on headcount, while 86% say job roles remain unchanged. This reflects the fact that most businesses are still using relatively light-touch, off-the-shelf tools — such as ChatGPT or Copilot — to support existing tasks rather than fundamentally redesign them.

The picture looks very different among the smaller group of firms embedding AI more deeply into their operations. Among these businesses, around one in five report staffing reductions attributable to AI, and they are more likely to have reorganised job roles. So it is not adoption itself that is driving change in the labour market, but the intensity of it. This distinction matters. Workforce restructuring may be concentrated among a relatively small but potentially growing segment of firms with adoption.

The key question now is whether this group remains niche or begins to grow. If it does, the lesson from the early internet era is clear: it will not be the firms that simply “use AI” that shape the future, but those that reorganise themselves around it.

In a labour market where wage floors have risen sharply and new firms are taking on fewer staff, the challenge for policymakers and businesses alike will be to ensure that this transition delivers productivity gains while bringing the workforce with it.

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