Lessons from London – and a few UK Start-ups that aren't Rubbish

So that was London for another year – my annual trip back to the old town to see what’s what, en route North to spend Christmas with the family.

Interested readers might recall (almost) a couple of weeks ago as I was leaving San Francisco, I reiterated my already year-old proposition that there are no interesting start-ups (which is to say companies less than 5+ years old) in the British capital. By “interesting”, I dunno, I think I meant companies that are making a splash on the world stage, or might one day bring in – say – ten million pounds plus in annual revenues (hell, even ten million dollars would be nice).

My reason for being so mean-spirited in my review of the UK start-up scene was two fold. First off, I was concerned that my reception in London would otherwise be too warm: punching every British entrepreneur on the nose before I’d even landed seemed like a good way to head off that possibility. But secondly, and more importantly, I wanted to be proved wrong. Brits love proving people wrong, and so I figured that by saying there were absolutely no good start-ups in London, scores of brilliant entrepreneurs would contact me to refute my claim.

Guess what? Didn’t happen.

I mean, yes, scores of people came out of the woodwork – via email, or at the half-dozen parties and gatherings I attended in town – to tell me they passionately disagreed with my post (or my follow-up video chat with Sarah). But here’s how the conversation generally went…

Entrepreneur: “So, I read your post (/saw your video) where you said there were no good London start-ups. You’re an idiot.”

Me: “Oh?”

Entrepreneur: “Yeah, just because the Silicon Valley echo chamber hasn’t heard of a company, doesn’t mean it doesn’t exist”

Me: “Fair point. So what are the good start-ups that I haven’t heard of?”

Entrepreneur: “Moshi Monsters is doing brilliantly.”

Me: “I know, I wrote about their success on TechCrunch and – uh – I profiled (founder) Michael Smith in my book. Trouble is, Mind Candy (the company behind Moshi) was founded seven years ago.”

Entrepreneur: “Ok! Moo.com

Me: “Yeah, same.”

Entrepreneur: “Last.fm!”

Me: “You’re kidding, right?”

Another popular line of conversation was the “British start-ups don’t have a chance because there’s no investment here” argument. Or, worse, the “people in Silicon Valley only care about companies founded by their friends” complaint. I heard that latter whine wheeled out not once but twice about Path – Dave Morin’s new social start-up. I had to gently explain to the poor critically-ignored London entrepreneurs that the attention given to Path was probably less down to the fact that Morin has friends in the tech media (which he certainly does), and more because he was previously senior Platform Manager at Facebook. At that they skulked away.

So, all depressing news then? Not quite. While few people here were able to readily identify London’s new crop of potentially world-beating start-ups, a small amount of independent investigation reassured me that those start-ups do exist. (I should probably insert a quick disclosure here and point out that due to the Petri-dish-like size of the London tech scene, a lot of the following companies employ – or were founded by – friends of mine. You simply can’t be a Brit writing about London technology without that being thus conflicted.)

Take, Huddle. The collaborative working start-up founded by Alastair Mitchell and Andy McLoughlin in 2006 continues to expand in both London and San Francisco (perhaps a little too hastily: rumour has it they’ve just laid off about a dozen people from their SF office – although the company says the number isn’t that large). The company raised $10.2m in Series B funding this year and according to their website, clients include HTC, Fujitsu and UNICEF. They also recently moved from Huddle.net to Huddle.com, so you know they mean business.

Or Skimlinks, which hopes to provide a viable revenue stream for online publishers by inserting affiliate ads in editorial content. Founder Alicia Navarro have disagreed in the past about whether automatically mixing editorial and advertising is a good thing or the work of the devil, but numerous publishers including the UK’s Daily Mirror newspaper are using the technology. Also, judging by the number of revellers at the Skimlinks Christmas party on Tuesday night, the company growing fast. Like Huddle, they’ve also just opened up shop in San Francisco.

Or Struq – one of several companies responsible for those creepy banners and buttons that stalk you around the web, from retailer to blog and back again. Unlike Skimlinks, Struq respects the moat between editorial and advertising, but again they’re growing fast as advertisers and media owners desperately leap on the new advertising format.

And not least – but, as far as I can tell, last – there’s Mendeley, a start-up which aims to ‘disrupt’ the cozy, costly, world of academic journals by offering a “research management tool for desktop & web” and also a way to “explore research trends and connect to other academics in your discipline.” I met the company’s Research Director, Jason Hoyt, in Palo Alto last year after he responded to one of my previous claims that the London start-up scene was dead – and he did a pretty decent job of convincing me that Mendeley might be an exception to that truth. Certainly judging by their advisory board – including former Last.fm chairman, Stefan Glänzer and former head of digital at Warner Music Group,  Alejandro Zubillaga – and the rave reviews from Wired, the New York Times and even the US government – the company probably deserves a place near the top of any list of promising UK startups.

So what can we learn from the success of Huddle, Skimlinks and Mendeley (and Moo, Moshi et al before them)?

Firstly, we can learn that there are certain types of companies that do very well in London. Media companies, for one.  The UK is very good at media – be that music, book publishing, magazines, TV formats and even film (writing them, if not actually making them). If your company is a media play, rather than a pure technology one, then London could be a really good place to start  – not least because it’s a city where the leading media, technology, advertising and investment companies sit side by side. In the US there’s an entire containment between the technology and the creatives, a gap that forces entrepreneurs to pick New York (creative, but lacking in tech) or Silicon Valley (tech, but lacking in advertising and media expertise) as a base of operations – which, either way, represents a compromise.

Other companies that do well out of London are those, like Betfair, which involving gambling (the laws here are reasonably pro- online gambling, the laws in the US – not so much) and those involving academia (see Medeley) where, again, the UK is a recognised centre of excellence.

The second thing we can learn is that, if you’re a London-based entrepreneur who hopes to compete with Silicon Valley companies – say in areas like collaborative working or social networking – then you’d better book a flight to SFO, fast. You can whine all you like about Silicon Valley cliques and the bubble-mindedness of the US investment community – but that’s the reality. You can either get on a plane or – to quote Curated.by’s Bastian Lehmann – “stay at home and play with the losers”. Frankly, if your entrepreneurial skills don’t stretch to getting an O Visa then you’re probably not going to ever be the next Mark Zuckerberg. Or even Jonathan Abrams.

So there we are – a few learnings from London, for what they’re worth. Now, just time for some festive cheer before I hop back on a plane to the Valley bubble, where the cliquey US tech press give regular handjobs to their best friends’ startups and money is plucked off trees by colluding investors, and handed to anyone with an American accent and a Stanford hoodie.

I can’t wait. See you at the Crunchies.