In the last few years, London has emerged as one of the top three places for tech entrepreneurs to start a business, as a recent TechCrunch article on the Startup Genome unveiled.
The UK government clearly recognises the importance of encouraging growth in the start-up arena and is doing just that through investment and publicity. Tech City is already grabbing the attention of the international tech world. London-headquartered Telefonica Digital recently sent out its rally cry to entrepreneurs in the region by announcing the launch of its Wayra accelerator for Europe. Google has laid its hand on the table and placed a sizeable footprint in the Old Street area by leasing a seven-storey building which is set to provide office space and assistance to new technology companies. When global giants like these get involved, it can only be a good thing for the start-up scene here.
The rise of London's tech scene brings up an age old question: is Silicon Valley unique, and can its success be repeated elsewhere? At one point, Boston was the next Silicon Valley. And then Seattle.
As someone who participated in the building of one multi-billion dollar tech company, and is trying to do it again, I get this question a lot. What makes Silicon Valley unique?
Is it the proximity of all relevant parties to each other and to the huge North American market? So once you have that subculture of VCs, companies, programmers, lawyers, designers and managers all centralised in one place like there is in The Bay Area, you have the infrastructure to breed success. Maybe, but to me, the infrastructure must have come later, they follow the creation of entrepreneurs.
In answering what makes Silicon Valley unique, I always take it back to one observation.
In the 'real world', entrepreneurs have to chase money. But in Silicon Valley, money chases entrepreneurs.
This is a profound difference! During my last two years at Salesforce, I found myself being approached by various Venture Capitalists who wanted to buy me breakfast. We had just launched the AppExchange, a place where people could build and sell SaaS applications, and I thought they only wanted to see if I could direct them to the next great startup. During these breakfasts, though, it was hinted to me that if I were ever to leave Salesforce to start something on my own, the money would be there.
Just think about that. The classic story of the entrepreneur has him (or her!) maxing out five credit cards, taking out a 2nd mortgage on a house, all to pursue their dream. But in Silicon Valley, there's about $20 billion sloshing around at any given time, looking to be "put to work" through investing in entrepreneurs.
I tell this to entrepreneurs from London or Australia and they look at me with murderous envy. But this is the backwards and bizarre world of the Valley where innovation really flourishes.
I have had conversations where people ask why the money chases entrepreneurs in Silicon Valley and how it came about. Was it the entrepreneurs first or the money first? This is about as much use as the old chicken or the egg debate. Success and investment follow each other very closely.
One big difference I see, however, is there haven't been many successful public companies that have come out of places like London. The reasons are complex, but one common thread is that people in Europe seem to rush to sell-out their companies too early, leading to few blockbusters like Google or Facebook. When there are no big lottery winners, no one wants to play the lottery.
So, here at Zuora, we're really hopeful about London's Tech City. We're big believers that innovation can be a great driver of economic prosperity, and that there is no reason Silicon Valley should have a lock on innovation. But for the UK to create an enduring tech hub in London, they will have to be patient. It can take 10 years to create a big international success. If people nurture and create the first public Tech City company, money will flow there. Such a company will prove to be the true litmus test and put the initiative on the map. A couple of great success stories will start the fly wheel turning.
People will follow, then so will the money.
London needs Tech City. Here are the key ingredients that will make it happen:
- Build trust and relationships
- Effectively demonstrate your potential for growth and profitability and ROI
- Obviously you need an idea but also a plan and management with a track record
- Take a risk but learn to walk before you run
- Strategic partnerships are key
- Encourage companies to IPO