It’s painful to do a tech startup in London

Dear London, it’s not you, it’s me. I left you for another women. Her first name is Silicon and her last name is Valley. I’m not sure why I believed you for so long, but you lied to me. You told me Tech City is the next Silicon Valley, and it isn’t. You told me you were going to lead the UK out of a slump and you didn’t. I wanted edgy. I wanted mobile. I wanted hip. I wanted cool. You were boring, conservative, and expensive. So what did I do? I left. I left you because my new girlfriend knows how to support me.

Ok, let’s tone down the drama for a second. I started the journey of launching my current venture, Compete Hub, in March of last year in London. I’m American, but had the opportunity to work and live in the UK under it’s fairly lax visa laws (relatively speaking). It was my home for awhile, so it felt natural to do so. When we launched our MVP in march my thoughts were “yes, let’s be part of this tech city revolution”. My thoughts now, “What revolution?”

Without sounding completely derogatory – London’s tech startup scene is very amateurish. That’s ok, all professionals were amateurs at some point, but I don’t see that changing anytime soon. Let me be clear, the developer talent isn’t exactly amateur. For example, take a stroll into a TechHub campus or the Innovation Warehouse and it’s buzzing. I met a number of young and hungry developers, technical and online savvy who struggled to find good companies to work for. Here in SV, that match is almost nearly always met. I even met a women tech founder, yes one of this “pink” unicorns SV is biting it’s hands off to use as a poster child, who lacked a support network. The bottom line is this – the right people aren’t leading the pack. I’m not suggesting a personal nomination, but it was still clear there aren’t enough of the right people in the system. Could have I waited it out and became one of those people? Sure, but one thing you learn in tech is that time is not on your side.

One of the foundations of Silicon Valley is its strong angel investing community and large amounts of high net worths. As far as I am concerned this community doesn’t exist in London. Are there high net worth individuals in tech investing in companies in London? Yes, but as a whole, it is neither the correct group nor right number of people to become critical mass.

For the longest time living London, I couldn’t tell if I was completely crazy or they were. Many, if not all, of these angels and advisors had never actually built, grown or sold a web software company, but they generally gave the impression they had. Actually I continue to fight with myself not to expose two individuals in particular who have been completely toxic to the very infant ecosystem which needs the exact opposite. Do these jokers exist in SV? Sure, but their efforts are usually quickly suppressed.

You see, ecosystems are built on values, and values are built on market dynamics. The market dynamic in London is to recycle money in the banker’s boys club, whereas SV recycles it in tech. In SV, this is all based on the value of a Pay it Forward™ economy. London is based on a forecasting spreadsheet. NYC has caught on, what gives London?

I’ve been in San Francisco for 23 days now. In these 23 days I’ve been here, I’ve met with some of the brightest names in technology angel investing, signed customers, partnered my company with a team of MBAs for an entrepreneurial project, and have had more productive business development meetings than in 10 months in London. I’m not a Stanford MBA but even I can calculate that return on investment. The bottom line is this – people are stupidly smart here and they are extremely helpful. There’s a common saying here and it goes like this: “How can I help?”

I hypothesize that there is one defining characteristic that London needs to adopt in order for Tech City to work: you can’t look at people like they are crazy when they tell you they are going to change the world (or the world your market exists in). You can’t build the next big thing with technology laggards – you need evangelists, lots of them. When someone looks at you with they scrappy, nonsense looking MVP, provide insight on “how this could be the next big thing”.

Let me be clear, not everyone here in SV is walking around with a fit bit, an Oculus Rift headset, Google Glass, iPhone 10, and a hover board. But, if I told someone in SV I was going to build a hover board, people might actually believe me. It’s call optimism and confidence; and it’s contagious. I love you Britain, but your pessimism and generally laggardness isn’t going to get you anywhere soon in tech. There is one thing you are good at – laughing at your own failures. Now take that energy and support it financially and with advice.

Do you sense a little bitterness? Sure. But for as much as it sounds like I wasted my time, I didn’t; I learned a heck of a lot. I learned that building a technology startup in London is painful, and when you’re building a business you can’t be in a place where painkillers are scarce. So London, how can I help?

  • Dev

    I’m a developer in Amsterdam and I feel the same about the atmosphere you described: tons to talented developers, but not that many inspiring companies.

    • http://www.techdisruptive.com Mike Bestvina

      Yup! Some of my team is in Barcelona and it’s no different there as well. You could have very well replaced `London` with `Europe`.

    • Wolf

      I’d blame the socialistic culture in Europe. We tend to value safety nets and little risk taking. Both the engineers and investors in the USA don’t seem as averse to taking risks.

      • Jelly Jim

        I wonder to what extent TCIO engenders this culture.

        That said, some actual creativity and innovation happens outside of London. From the perspective of my Northern pit, TC hogs a lot of the attention.

        • http://www.samelawrence.com/ Sam E. Lawrence

          TCIO? Could you explain / elaborate on this?

          • Jelly Jim

            Sorry – Tech City Investment Organisation.

            http://www.techcityuk.com/

            It’s a quango set up ostensibly to develop London’s East End as a ‘tech cluster’.

          • http://www.samelawrence.com/ Sam E. Lawrence

            Interesting. Is it intended to be an incubator, or just a VC group?

          • http://www.techdisruptive.com Mike Bestvina

            I sent two individuals emails from there – they were less than helpful. Odd considering their material literally says “Start helps entrepreneurs set up in Tech City by providing practical advice and guidance on everything from location to contacts.”

          • http://www.samelawrence.com/ Sam E. Lawrence

            As someone who works on the US team of a UK company, I can confirm that the other side of the pond is often unwilling to hear good ideas that challenge the status quo. It will cost England dearly if she cannot learn to adapt. I also say this as a dual US/UK citizen with family on both sides of the Atlantic.

          • Nicolas Henry

            We’ll written Mikey. I thought I’d spice the discussion up a little. You’re correct when stating Europe is too conservative, however being too “out there” also causes problems. If only we could mix people up to find a balance between being way out there for a while and invest and then stabilise things for a while. Without taking risks, trying new things out without a guaranteed outcome we would not come up with anything new and innovative. We all need to get used to being knocked down, pick ourselves up and try again. Unfortunately, a lot off people don’t like the down part of trying and tend to avoid it. Good luck out there and maybe we’ll catch up in the promised land at some point. Keep the articles up as it seems to start of good conversations. Ps: wet and miserable in London :-)

          • http://www.techdisruptive.com Mike Bestvina

            Wet and miserable?! No way! ;)

          • Jelly Jim

            Neither, really. I think it’s an organisation set up by another government department called UK Trade & Investment, which itself is responsible to two other departments/ ministries, DBIS and the Foreign and Commonwealth Office.

            I’m unclear on what its full purpose is, but I get the impression that it “greases the wheels” for investors in the area: puts on events, arranges meetings, perhaps lets some taxpayer money flow to some startups for a specified purpose – and perhaps tries to collate opinions to represent to Government. Maybe a ‘catalyst’ is what it is attempting to be.

            Some of Tech City looks fun to me – some of the events, Google Campus and just being closer to others who perhaps share similar ideas. But I think what counts as ‘Tech City’ is too broad. Admittedly, it was around a year or so ago, but I looked at a map of the area to see which businesses were part of the cluster. There were an awful lot of law firms and ad agencies – businesses that might be complementary to a tech ecosystem, but not part of it (specialists excepted, perhaps).

            So I feel that Tech City is more of a new media cluster, rather than a tech cluster. Of course, that’s only the perception I can offer from up here in the North, but it’s what I have.

            Actual tech and innovation – original products ready to market – looks to quietly happen around the M4 Corridor and Cambridge. It’s not as sexy, but it is tech and it is innovation.

          • http://www.samelawrence.com/ Sam E. Lawrence

            In general, centers of technological progress (and startups) occur around good technical schools. Stanford in California, Columbia in NYC, Georgia Tech in Atlanta, University of Colorado in Boulder, MIT in Boston. I’m not really aware of the UK educational system, but it seems like the most famous schools (Oxford, Cambridge) aren’t located close enough to London to exert a direct influence.

            This TCIO sounds like some sort of Chamber of Commerce, or catalyst as you say. It’s a nice start, but ultimately to effect real change you have to have young, bright people, with open and free access to each other, to mentors, and to money. Those three components seem to be happening in different places.

          • Jelly Jim

            Cambridge itself exists in its own cluster. Oxford… I don’t know – I can’t see it leading a cluster anywhere, but it is on the fringe of the M4 Corridor.

            That said, London has a plethora of world-class institutions serving it. How that dynamic works, I’ve no idea.

            On the topic of clusters and who leads them, I like what Brad Feld has to say, if nothing because it chimes with the conclusions I’ve reached with my own experiences.

            http://steveblank.com/2012/10/08/startup-communities-regional-clusters/

            If governments want to help, they could be more responsive. As it is, they swoop in, set up a programme and then manufacture some glory for themselves, regardless of the needs of new businesses and startups. They’re too slow to respond to what they learn – if anything. One difficulty for them is political accountability, and this is something that’s been hinted at with TCIO’s wheel-greasing. People see the parties hosted and the hospitality that goes with it, but when it’s taxpayers’ money, they understandably want to see causal linkage with results.

            I would rather government involvement took the line of “there’s no money on the table, but you have the power and knowledge of government at your disposal, if we can help.” – God knows the number of times some informal help and advice was what I needed, rather than being signposted to yet another scheme.

    • Guest

      That’s funny, because I’m in San Francisco and I feel that way about San Francisco.

  • garry t

    Sorry but that is complete nonsense. 23 days in and you are still impressed by a meetup. Talk to me in 1 year, and let me know how many of those ‘new relationships’ have actually been fruitful. Measure your success in actual milestones, not who you just had a beer with, and the blueness of the sky.

    • Dieter Engel

      SV is the perfect place for those who confuse noise and “networking” for progress and work.

  • marath0n

    I love this article – I believe some of it – I think some of it needs the Magic 8 ball but it’s all done with the guiding hand of someone who clearly loves the tech/entrepreneurial world in which we live – the world needs more folk like this and the others to be guided to share more of love

  • rootkey

    Well, Raspberry Pi is built in England. ARM too.

    • rolfen

      Big deal.
      I sure hope there are some success stories, and good for them! I’ve been in London so I know a thing or two. They all seem to be somewhat niche products. I’m not sure why but people seem to believe in whacky niche stuff.

  • adam clifford

    The issue that I have with Britain, and being a native I know, is that failure is seen as a bad thing! We can laugh at our own mistakes, but when it comes to trusting someone we always seem to look for the guy who has had at least one or two successes and no failures!

    The feeling that I get from the US and particularly the SF Bay / Silicone Valley area is one of “Learn from your mistakes, your bound to have a success after you’ve got the failures out of the way!”

  • http://blog.trak.io/ Liam Gooding

    Hi Michael, I’m sure London is sad to lose you!

    For this to feel fair and balanced, I think you need to have a LOT more time building a startup in SV before you jump the gun.

    Anyone who says London doesn’t have business dev opportunities is doing something wrong… the caveat I guess is if your only customer market is tech startups, in which case you’ll find a higher saturation in SV… but you’ll also find way more competition vying for the attention of those tech startups! An orchard in blossom is an orchard full of bugs!

    • Dieter Engel

      These days you can build a company anywhere, global distribution is the way to go anyway, and access to resources you need should be the criteria… rather than “opportunities”. I find opportunity is everywhere.

    • http://www.techdisruptive.com Mike Bestvina

      Totally Liam. I have the fortune to have a team that’s not based in the US. It’s actually become a very strong signal to investors here as they plan to see a funding crunch in the next 18-36 months.

  • Dieter Engel

    If your goal is to build a “company’ whose primary product is it’s own stock, then SV is the perfect place to find dumb money to buy your stock, and when you fail, you can sell even more to some company dumb enough to want to “buy” engineers.

    London may not be a great place, given the UK’s still highly socialist economy.

    But the idea that SV is the place for innovation is a joke to anyone who is genuinely innovative. The bay area is a terrible place to build a company, in every regard, *except* the prevalence of dumb money.

  • alarmclocktothestars

    It’s not London, it’s you. Plenty of tech successes coming out of Tech City (and other places in London). Why do I get the feeling that ten months from now, we’ll be seeing a “It’s painful to do a tech startup in San Francisco” post from you. Starting a startup is SUPPOSED to be hard. Maybe you just don’t have it in you?

  • http://benwerd.com/ Ben Werdmuller

    This isn’t going to make a lot of people very happy, but I think one of the reasons why you see a discrepancy in the experiences of people in the comments is that you’re an American. Britain is wonderful in many ways, but it’s also very insular; there are lots of unwritten rules that you can fall afoul of if you’re not used to them, and which can certainly affect your chances of getting investment etc. I relate to this very well.

    Part of the trick is that we take the negative feedback on face value; British people don’t. There’s a whole other language under the language, which can take a lifetime to master. I lived in the UK for most of my life, and I feel much more relaxed in California; there are other taboos and social norms here for certain, but they’re much easier to navigate.

    I do think San Francisco is becoming toxic to true startups because of the costs involved, but London also succumbs to the same issues. Nonetheless, I find the US a much more rewarding place to do business. (For social issues, I still prefer Europe.)

    • rolfen

      There is no point in socialism. In the end, when the bottom line hurts, people have to be laid off. Misplaced managers, enabled by the system, will fire the wrong persons.
      If they could fire themselves instead, but no. Human nature.

  • joesmo

    “Here in SV, that match is almost nearly always met.”

    LOL. This is just not true unless you measure your success by meetings: “had more productive business development meetings than in 10 months in London”

    “you can’t look at people like they are crazy when they tell you they are going to change the world”

    Actually, that’s the only way to look at people, as the people who claim they will do so, never will. That includes you.

  • http://www.mozart.vc/ Rainer Dechet

    awesome, thx Mike

  • Joe M.

    I think a lot of US try swimming the pond to win the jackpot… However, dear Mike, you ran, you swam and even biked on a fat ass salary that was supposed to cover your… studies? Poor dude.
    Truth is that your yada yada IS very good. Oh yeah. You had the salt, too bad there was no pepper to be found… Good luck and looking forward to seeing your writings in 2 years time kissing ass on Australian soil. It’s just natural to bounce.

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  • rolfen

    Thank you. You can help me, I am in London. I’m coming to the same conclusion. I am not exactly the same case. See I’ve heard things told about Europe and I came here, and it’s been a bit disappointing on the pro level. Too institutionalized. That’s not bad in itself, but it enables the worst breed of clowns (professionally speaking, again). Should I try SF? See, I’m not american.
    London, it’s nothing personal. I thought you were just going to drain me from my money. My soul is off limits, mate.