This is a guest post by Tom Allason, founder & CEO of Shutl, a web-service that enables retailers to offer shoppers immediate/convenient delivery of online purchases. In 2003 Tom also founded eCourier.co.uk – the online courier company with the purple vans. In 2009 eCourier.co.uk reached #6 on Deloitte’s list of UK’s fastest growing technology businesses with 5291% growth since ’04. Tom is currently the Shell LiveWIRE Young Entrepreneur for London.
Yesterday I had the curious pleasure of being invited to join a panel at an event put on by No.10 to announce the launch of Tech City and the Government’s commitment to supporting technology based innovation. If I am honest, the highlight of the event was undoubtedly Bookingbug’s Glenn Shoosmith giving a forceful pitch/lecture to David & Boris, seated only a few yards in front of him, encouraging government to open up procurement to start-ups with his proclamation: “There is no tender process for innovation.”
The PM made a slew of announcements – all of which can be found in the government’s blueprint for technology… including a pledge to consider start-ups for government contracts. Job done Glenn! Not to be out-done, Mayor Boris took the podium and made several announcements too. Notably that the new cable car to connect O2 & Royal Victoria dock would be named after the coalition’s treasury secretary (Vince Cable – I think he was joking, just a guess) and that London would be the first European city to have 4G mobile networks (if you were to ignore those cities that already have it, of course).
All spin you might say. Well, perhaps. However the Government’s ambitions certainly seemed both sensible and genuine. Diversifying the UK’s economy away from financial services and toward the industries of tomorrow is not something to sneer at. It should be encouraged, and with the momentum East London is gaining we also have a unique opportunity.
In 2003 when I embarked on my first London start-up, East London was a very different place. For starters our rent in Brick Lane’s Truman Brewery was £6 per sq foot per annum (its now closer to £30). This was all the incentive needed for a startup short on capital. Back then there were not very many others- a far cry from the ‘ecosystem’ that we now hear so much about. Today you can’t swing a cat in Shoreditch without hitting a dozen start-ups. And even with current rents, I would not have considered starting my second startup anywhere else. I really do believe that we have the makings of something very special here and I am not alone. It is palpable. Hyperbolic politicians aside, we have a unique opportunity to create an environment worthy of being mentioned in same sentence as Silicon Valley. Let’s just try to make sure that we don’t cock it up.
My biggest concern is that too much attention is being given to solving the wrong problems. If you have spent any time around the UK’s tech entrepreneurs you would think that the single matter holding back start-ups is lack of access to bank debt and investment.
London is now the world’s financial capital. Banking and insurance aside, we even have the right kind of capital. After Silicon Valley, we have more VCs here than anywhere else on the planet. Financial capital is liquid and it goes in search of wherever it can make the best return. If UK start-ups are short on capital it is not due to lack of proximity to capital but because they are short on the risk/reward dynamic that creates a worthwhile return for financial capital. Making more capital more available to start-ups wither directly or by underwriting risk will not make a difference – if anything it has potential to push risk/reward even further out of kilter and make investing in UK start-ups even less attractive. What we really need to focus on is what makes UK startups more risky and less rewarding than their Californian counterparts.
Of all the announcements made by the PM the one that I believe has the capacity to be the most significant is the new Entrepreneur Visa. If implemented correctly, this could provide a major competitive advantage over our trans-Atlantic cousins. Silicon Valley luminaries have for years, and without success, been lobbying for a founder visa. Technically an entrepreneur visa is nothing new in the UK, however in its current form it is all but useless as evidenced by the low numbers granted. In addition to attracting more entrepreneurs to UK, the new visa may also give UK entrepreneurs access to the single most valuable ingredient to a startup’s success- talent.
For both my start-ups I have had to look overseas to hire the best technical talent – without these key hires these businesses, which have created hundreds of jobs – would not exist. I am not saying we don’t have good technical talent here – we do. There just is not enough of it, which means that that which does exist commands far too high a premium.
Start-ups are competing with banks for the best local talent, and its rarely the start-ups that win – London is, after all, not a cheap city. Since start-ups cannot sponsor overseas candidates his has meant going down the frustrating route of the highly skilled migrant visa. Visas which as of Monday became lot harder to obtain.
A commitment to making it easier for entrepreneurs to attract and retain the world’s top talent, which adding senior talent to the entrepreneur visa would achieve will make a world of difference. A fish without bicycle is nothing compared to an entrepreneur without a team.
In an ideal world we would not have to go abroad for the talent we need – it would be home grown. This is where the government should be focusing maximum effort.
The UK’s best and the brightest need to be attracted to the industries that we need nurtured: engineering, design and computer science. This means luring them away from financial services. They need to be aware of opportunities at primary and secondary schools. There also need to be opportunities- they need to know that if they are making a significant investment in studying these subjects at higher education that there will be the payoff at other end. Right now top computer science graduates must leave UK if they want to perform at the top of their game, unless they want to work in financial services. There has been much celebration of Apple’s British design team however I find it worrying that they do not have opportunities here. And it’s not just the successful talent that leaves, that is where our successful start-ups go too. Our startups do not have the same capacity to grow into home runs like those in California. The ambitious ones either move there or exit early. The real reason you could never start Google in UK has nothing to do with IP laws – where would we find the thousands of engineers required to create it?
If we are serious about creating a competitor to Silicon Valley we need to make it easier and more attractive for the hirers of the talent we need. Lets face it these employers are for the most part these are not going to be start-ups but instead mature and maturing technology businesses. This means we need to ensure that the Apples, Googles, Microsofts, Orcales, Intels, Ciscos and Facebooks of today and tomorrow have reason to hire those employees here. This will require ensuring our technical universities have the funding and incentives necessary to develop the talent these businesses need. It should also mean incentivising businesses that are hiring in fields determined to be of strategic importance to the future of our economy. This would benefit all UK’s tech start-ups.
I am heartened by the signalling of intent, which is undoubtedly what yesterday was all about. It is great that David Cameron and his team have recognised the strategic value of the technology industry to UK. Lets hope they can also recognise exactly what kind of commitment will be needed to fulfil their ambition. As evidenced by Ireland’s treatment of the world’s F.ounders last week – the UK should expect competition. It’s good for innovation after all.