How Tech City is taking shape for ambitious start-ups
TransferWise's Taavet Hinrikis on parallels with the rise of Estonia’s start-up scene after Skype emerged and London's Tech City
People say that in the 90s a man following his dreams was in a rock band. Today, he has a start-up. While fashion wasn’t the motivation behind TransferWise, the peer-to-peer money transfer business I co-founded in 2010, East London’s tech scene is undeniably trendy at the moment.
Even the prime minister, David Cameron, seems to be joining in, badging the area formerly known as the Silicon Roundabout, ‘Tech City’. Many people say this is the clever manoeuvring of a politician, claiming thanks for a good thing already in place, but even hardened politicos can’t deny that the publicity lures in talent and investment.
Clustering and communication
The red-trousered, government-endorsed image can distract from the real dynamic at work – namely, clustering and its evolution. For those fortunate enough to have avoided this jargon, it describes the fierce competition between interconnected businesses based in the same area – relationships that nurture and feed off one another.
This all sounds terribly abstract, but I first saw this at work on a smaller scale in Estonia when I joined Skype. I started with the firm as Niklas Zennstrom and Janus Friis’s first-ever employee. Back then, there wasn’t much of an Estonian tech scene to speak of – if you went to work in a start-up, your parents wondered why you couldn’t get a job in the bank.
Start-up staffing – success and shortages
Without a ‘tech hub’ or a ‘cluster’, recruitment was tricky. The first tranche of staff we hired at Skype were nearly all from Estonia’s largest bank, Hansapank (now called Swedbank). We literally set up a truck, plastered in advertising, in its car park and tried to persuade its staff to join.
Now the situation is quite different in Estonia. Skype’s success has made working for a start-up a legitimate career path and dozens of start-ups have sprung up around its headquarters, our Tallinn office included. Indeed, many of these businesses were set up and run by ex-Skypers like me.
Today, I find myself in the odd position of attempting to poach Skype’s staff for my own business. We haven’t yet set up a truck in its car park, but I’m not ruling it out.
Meeting of minds in London
While small scale, this experience is a helpful way to understand how tech areas evolve. It’s the super successful businesses that give birth to many others.
London’s tech scene has been criticised for playing host to mainly support industries and businesses that create cosmetic products like mobile phone applications. They say the area has failed to produce the Facebooks and Googles that mark out Silicon Valley.
America’s west coast is still – and may long be – in a league of its own. But admitting that, doesn’t confine London to the scrap heap. Tweetdeck, Mind Candy and Betfair are great beginnings.
Not to mention that London has a lot to offer to entrepreneurs: it’s integrated with the European markets, but sits geographically between the US and Asia. In the years to come, entrepreneurs will need to think globally from day one.
After all, fashions come and go, but timezones stick around forever.
Taavet Hinrikus was Skype’s first ever employee and is now founder of peer-to-peer money transfer business TransferWise. He is also an angel investor, with investments including Tweetdeck, Mendeley, OMGPOP, Betaworks and Farmeron. Hinrikus was named a Young Gun in 2012.