Thanks so much to Tom Evans (@Tomato_Evans) for writing this great post!
Pleasantly bemused perhaps to receive an invitation that came from Bloomberg on Monday, to attend a lunchtime networking and panel discussion on the subject of the Flat White economy yesterday, I graciously accepted. Arriving, it was a pleasant surprise to see some familiar, friendly faces over the buffet, before we were seated to listen to a interesting debate on the history, growth and prospects for London’s Silicon Roundabout, entitled “The Rise of London’s Tech Entrepreneurs”. The buffet was exemplary and the chocolate brownies would have bought out the best in any flat white!
The panel consisted of:
Ben Southworth: Deputy CEo, Tech City
Divinia Knowles: COO of Mindy Candy
Bindi Karia: Silicon Valley Bank
Eze Vidra: Campus London
Jeremy Kahn: Senior Writer, Bloomberg
Guy Johnson, the Bloomberg TV anchor
The flat white economy was I believe a term coined by Jeremy Kahn recently: http://www.bloomberg.com/slideshow/2013–05-15/-flat-white-buzz-in-london.html#slide1 and then reported about in Bloomberg’s press: http://www.bloomberg.com/video/tech-city-and-the-flat-white-economy-9lLd90IkQMuBakF4BWxC3w.html
The phrase Silicon Roundabout has emerged since the current government took over, and was I believe a name generated in part to energise a movement around a phenomenon that had already begun to take shape, in order to encourage start-ups and entrepreneurship in the tech sector, and subsequently to stimulate economic growth through innovation. This was gathering momentum until, just over a year ago, Google set up a campus space in Bonhill St, where young people with the aspiration to start companies could congregate, connect, learn and grow, with the chancellor himself as I recall, declaring it open.
Since that time, there has been an exponential rate of growth among not only those from the sector, graduates, (who as Eze pointed out tend to flock to the open plan working space each September, filling it to near capacity only for it to contract back to an optimum volume in due course), but also existing talent from abroad. There has been a definite change in perception amongst graduates from good universities to consider the advantages of working for start-ups as oppose to the traditional milk round roles, which are fewer and further between than they once were. Only last week, silicon milk roundabout, a grad fair for talent attracted more visitors than ever before. Yet all seemed in agreement that more must continue to be done.
Comparison was drawn to Cambridge, where Tech City’s Deputy CEO Ben, coincidentally hails from, and which, as a bastian of academic excellence, has been home to tech entrepreneurship for some time longer, (with inevitable businesses springing out of academic research and those that have migrated there to support them). Whilst not far away, it was mentioned that whereas Cambridge excels in business to business models, what’s happening in Shoreditch has been and continues to be, principally focused more on creative people, designers, hackers and hustlers, maybe some of whom have either left or had to leave corporate jobs in the financial services sector, inventing their way out of a crisis by joining forces to invent smart and compelling, popular consumer experiences that intend to add value to peoples daily lives and can scale beyond our shores.
Inevitably, a name like Silicon Roundabout throws down the gauntlet to California and other technology centres of excellence such as Israel, in implying that the UK means business, and much of the discussions topic focused on London as being now the optimum climate on the world stage for not only being a financial services epicentre, but also a centre for the new economy as a result of the inevitable symbiosis necessary between the two. In fact, of course, physically the districts are next to one another, but Guy pointed out that most VC money is in West London, around St James’. Whilst in the overall economic picture, I read recently that investor confidence is beginning to return, it was mentioned that investors here as opposed to US, need to be lead a little, as this territory is unfamiliar to them, but nevertheless the financial capital that is locked away in the square mile is starting to be put to use. A problem was identified that there seems to be some difficulty in companies raising finances between certain fiscal milestones here, that is not a factor in the States. Whilst start-ups, with an innovative idea, a team capable of executing on it and a solid business plan can raise a seed round in this climate of up to 250K or thereabouts; be it from friends, family and fools, incubators, crowd-funding or more likely Angels (at the top end of that figure). Also the finance for B rounds in excess of 2 million is there for businesses that have demonstrated the requisite capacity for growth, between those two stages is where the shortage of investment occurs here. Despite this however, Bindi was keen to point out, the Americans have woken up to London’s emerging significance and, she said that her company Silicon Valley Bank, wanted a UK banking licence for a reason.
Saul Klein, a governor of SCA 2.0, gave a notable talk recently at internet week Europe, entitled: we are the 8%, where he was keen to point out the value that this sector now has to the economy and the importance that it must be recognised, as it is predicted to grow yet further.
I think it is the entrenched nature of this trend that’s lead a financial company such a Bloomberg, to give this section of the economy a memorable name. In the talk, London was championed as the best city in the world, to both live and do business, but as now also having the optimum overall ecosystem conducive to starting a tech company. Davina spoke about Moshi Monsters having chosen to move in 2010 from Battersea, to Shoreditch, in the Tea building, where they are happy and plan to remain, despite the fact, she noted that the area is only really conducive to a mid level company’s dwellings at most and once the need to scale is imperative and companies reach a stage of rapid growth, they intentionally intend to accelerate by adding additional employees, at increasingly frequent increments. There are relatively few buildings where it is practical to house this growth, but for the moment they are themselves content. It is hard to believe this company is only 5 years old. The panel noted the increasing rental overheads, as the phenomenon the powers that be intended to breathe life into, has taken on an established shape. I have myself noticed that events, that were once free and about establishing a community in Old St, have begun becoming so popular that fees are now necessary as-well.
So where does the Zenith of Silicon Roundabout’s aspiration lie?
This was made quite clear by the panel; the UK has yet to produce a Billion Dollar exit from a home grown start-up, and this has been cited as the milestone to demonstrate that the growth strategy of creating this hub, has clearly worked, and that the talent, international outlook and inherent British creativity, combined with London’s significance as a centre of trade and commerce has paid off, and that it can be a force to compete with Silicon Valley in the future. All speakers seemed convinced that this was going to happen and that when it does, such a company would create enough millionaires among the stakeholders, who’ve got that start-up bug, that most likely they will proceed to start their own ventures, or indeed become investors themselves, with the finance feeding back into the ecosystem and propelling it even further forward.
The questions at the end of this carefully timetabled event, touched on education policy and the need to educate the tech talent of tomorrow, here at grass roots so that kids finishing school in five years time or more will be equipped to participate in what may then well comprise of more than 8% of our economy. It was pointed out that a lot of the best technical talent gaining places in computer science at our elite Universities apply from India and China respectively, but apparently, whilst the benefit in attracting the very best talent to the UK is appreciated discussions, are taking place in Whitehall regarding pre-empting future skills gaps.
An interesting talk to have been party to yesterday lunchtime indeed, sitting at the Shoreditch Grind some time later and gazing across the Old St Roundabout, I remembered arriving in London in 1997 to study art, and there being a hugely trendy area called Hoxton, where, if you were prepared to brave the potential danger of venturing into a rough neighbourhood, you might catch a glimpse of Tracey Emin, with Sarah Lucas hanging out at the Lux Centre. The area gradually became gentrified and established, and increasingly inert; the Opening of the White Cube Hoxton Square, serving to demonstrate the transformation into an establishment area for trendies. In the intervening years, the artists ran away to Dalston and the Hipsters moved in. In turn the media migrated east, with some ad agencies and most of their digital counterparts setting up shop and fashion businesses likewise; the area grew mainstream to the point where, people travelling into the capital from outside for a night out, were as likely to arrive here as in Soho, whilst the hipsters moved to Dalston. By the time Nathan Barley aired on TV, the artists had most probably grown up and were to be seen pushing prams in Stoke Newington and Hackney. Now the geeks, techies and fresh faced Russel group grads, the co-working spaces where they’re conceiving the digital future, and the flat whites that fuel this energy have taken over Old St (and this will be validated by the building of a new tech site in the middle of the roundabout itself). The White Cube Gallery is shutting up shop (it was still open the last time I looked), and even the hipsters disdain Dalston preferring perhaps Peckham instead. I will say this for London, it is an entertaining city to watch as it evolves.
I believe Tech City’s Deputy CEO’s parting words in the discussion were:
“The geek shall inherit the Earth.”