Tech City: Is it working?
Is hype killing tech’s golden goose? Entrepreneurs Tim Jackson, Nick Holzherr and Stefan Siegel pull no punches in delivering their verdict
How many tech start-ups were in the Old Street area in 2008? Incredibly, the answer’s 15. And now there are more than 1,300. But has Tech City hype taken away its edge?
To tackle this question and more, three entrepreneurs with ties to the area assembled at Google Campus for a hard-hitting discussion about the tech start-up and funding landscape.
Fashion entrepreneur and founder of Not Just a Label Stefan Siegel was part of a small group of business owners invited by prime minister David Cameron to devise the plan to establish the Tech City cluster.
Tim Jackson sold the online auction site he founded for $1.9bn and now backs tech start-ups through his seed funding firm Lean Investments. And former Apprentice finalist and founder of online food app Whisk.com Nick Holzherr completed the line-up. Hosted by Marc Cameron, founder of Seven magazine and forthcoming website 2210 Fashion, here’s what they had to say.
So far, is Tech City a success?
Stefan Siegel: “No. I remember it being hugely exciting and we were one of the initial eight companies chosen to be part of it, we sat around a massive table with David Cameron and the like and it was exciting at first.
“But we have a healthy six-figure turnover now and we still can’t get an overdraft at our bank, we can’t move the fibre glass broadband connection across the road to our building as the council says it’s too expensive so we have low internet speed.
“It’s hard for us to hire developers that don’t live in London as they can’t afford it and most of our designers can’t afford to be in East London anymore.
“So the answer to ‘Did Tech City work?’ is no.”
Tim Jackson: “My answer would be a firm ‘don’t know’. What I would say is that tech clusters matter. I know that, from living in Palo Alto, when you’ve got investors, professionals, start-ups and support systems it makes things a whole lot easier.
“That said, I think there’s a big temptation as it gets more cool and fashionable for start-ups to live in a postcode that they forget what they’re trying to do.
“It’s very easy to meet lots of people in bars and tell them about your start-up and say how great it’s going to be and to lose focus that you’re actually trying to build a business. There’s a lot to be said for locking yourself in a room and getting on with it.”
[Directed to Siegel] How would you have grown and developed Shoreditch differently?
Stefan Siegel: “The reason we were originally part of Tech City was because we had the connections to the artists on the ground; the people that made Shoreditch what it is today.
“Therefore our position in Tech City was to connect government policy and translate it into what people on the ground were thinking but it never really mingled.
“I think we’ve [Tech City] failed in terms of interacting with the community here. We had a couple of designers on this street who couldn’t pay their lease anymore because Google moved in here.
“There was a huge opportunity here and East London is one of the most creative hotspots in the world but we haven’t profited from them.”
Is it possible that Britain could have its own Twitter moment?
Stefan Siegel: “The idea of Tech City was exactly that. There are so many businesses that once they get to a certain level, move somewhere else so they can raise finance. The question is really about the eco-system – does London work as an eco-system, as somewhere where businesses can grow?
“I think for us at the moment London is losing traction and excitement. There’s too much money in the City now, too many Bugattis, there’s no ‘cool kids’ anymore. I regret Google Campus being here because this area was really cool before.
“I think it’s ridiculous that in Shoreditch there are now more companies offering services to entrepreneurs and start-ups then there are actually successful entrepreneurs. Co-working spaces seem to be opening up every week but that’s just my cynical view.”
“London is losing traction and excitement.”
Nick Holzherr: “I think we can have our own moment. The early-stage of a business can happen anywhere in the world. Everyone has got access to education and resources now for free, you can hire a team for wherever you are.
“But can you scale a business to be the same size as Twitter and Google in the UK? Probably not. I think you’ll have to move, I think at some point Whisk will probably have to open up an office in London and San Francisco.”
Tim Jackson: “Hell yes! I wouldn’t say the next Twitter but I would say the next Google or Facebook.”
If you had £1m to invest what big ideas would be on your shortlist?
Stefan Siegel: “Things that change the world, not in an ideological way, but a business plan for 24 years not 24 months. I would love to invest in those companies that aren’t able to raise finance.”
Nick Holzherr: “One of the things I’m really interested in is education, especially university education. Often you get university lecturers trying to teach you the subject area and it’s not that inspirational.
“There’s some great content online and there will be changes to the way we stream education online and how education is delivered. There’s about 30 other areas that are also really exciting. The space of technology to invest in is nowhere near capacity, there’s opportunities in almost any vertical.”
Tim Jackson: “A surprisingly high proportion of internet and technology services are for the very rich and very lazy. These services are about increasing convenience and making the already happy, happier, and a nice life even easier.
“I’m really excited by the potential for businesses to improve the lives of people that don’t have those niceties, there’s a lot of people of in Africa, there’s a lot of people in Asia, and emerging countries which that could apply to.”
You can read part 2, ‘When is the best time to start a business?' here.