In theory, you could enter a London roundabout and just keep going and going. If not for the limits of fuel consumption. Likewise, as much as we don’t want our glorious tour of Silicon Roundabout to end, reality intrudes. We have jobs—back in the States.
If you’re just now tuning in to our U.K. expedition, a little background: By “we,” I mean my five fellow travelers (meet them here). They won a contest by Fast Company and Virgin Atlantic at the recent FC/LA Creativity Counter-Conference. At that event, attendees went behind the scenes at hot spots such as Funny or Die, Atom Factory, Hulu, and the Honest Company. The #LetItFly contest offered an all-expenses-paid opportunity (read: adventure), courtesy of Virgin Atlantic, to do the same in London.
Calling it a whirlwind trip doesn’t do it justice. In 48 hours in London, we manage to hang with eight tech leaders, picking their brains and getting an advance peek at coming products, like Made by Many’s Hackaball, which teaches children the fundamental of programming. Our mission is twofold: immerse ourselves in creativity with some of the most inventive entrepreneurs and companies while learning about the local tech scene.
Our previous dispatches focused on the savvy strategies of industry outsiders, such as the Business of Fashion’s Imran Amed and Passion Capital’s Eileen Burbidge, and on how the Foundry, a force behind the scenes in Hollywood and product design, is building digital tools to improve the creative process. Today, we’re looking at how the London tech scene compares to that of Silicon Valley, or New York, Boston, and other U.S. hubs for that matter. What are the opportunities that everyone should know about? What’s behind the growth?
We have answers. Specifically, eight answers that explain why London tech is booming.
London is in a good place right now, JC Oliver, Microsoft’s London-based global head of innovation, tells us over dinner at Soho House. He credits the following chain reaction: “Energy drives creativity, which drives innovation, which drives creativity, which drives energy, and so on, ad infinitum.” The city recovered from 2008’s financial crisis with help from the government, a mix of investment, economic controls, and pro-startup policies that together generated enough energy to set in motion what he calls the “virtuous cycle of innovation.” Once the cycle is moving, it gains a momentum of its own. Progress becomes self-sustaining.
“We’re catching up,” Michael Acton Smith, the founder, chairman, and creative director of the entertainment company Mind Candy, tells us. When he founded his first tech startup in the late 1990s, he was part of a small, scrappy wave of entrepreneurs. Now there’s more support—funding, mentoring, etc.—for first-time founders, increasing their odds of success. “You’re getting second- and third-time entrepreneurs who are becoming angels,” says Acton Smith, who has invested in a dozen startups himself.
Look no further than London’s growing share of unicorns—that is, startups valued at $1 billion or more. Currently, the U.K. has 17, the most in Europe. Thirteen are in London. Valuations used to lag behind U.S. startups, but that’s changing.
The lifeblood of any tech hub is talent. And at some point, the community needs to adopt a strategy toward recognizing, nurturing, and retaining these engineers, designers, and founders. London has done just that. “What has changed in recent years,” says Oliver, “is that we now have talent staying within London itself to create business. I say stay because the global elite have always been educated here, but they used to leave and pursue their business elsewhere.”
New entrepreneur-friendly government policies have helped, such as the U.K.’s popular “startup visa” begun in 2011. It allows foreign nationals to start a business in London and get on the path to citizenship. Now, he says, “you attract and retain the best talent in the world.”
One sector that’s flourishing is financial technology, or fintech, with the likes of Monitise, TransferWise, Funding Circle, and others. London is rare in having each of the components that fuel the industry in close proximity, enabling more collaboration and experimentation. “This is the place to do fintech,” says Burbidge, a partner at Passion Capital and one of London’s top VCs in early-stage tech startups. (Twenty percent of Passion’s investments are now in fintech.)
“In the Valley or New York, you have startups or Wall Street, one or the other,” she says. “Here, you have both. You have 300 of the world’s largest banks. You have a time zone that allows them to do business with the U.S. and Asia. And you have the government, which helps with all the regulatory issues. Imagine having the Valley, Wall Street, and Washington, D.C., in the same place. That’s London.”
The next big opportunity? Perhaps health care, Burbidge says. Because of socialized medicine, the National Health Service has more than 50 million medical histories in its database. “That’s a huge opportunity to innovate,” she says.
This isn’t a one-industry town. “In the Valley, everyone is talking about technology,” says Burbidge. “It’s around you so much you stop eavesdropping. In London, you go to a restaurant and no one is talking about tech. They still call it the IT sector.” That exposes tech to a lot more industries where it might be applied, and vice versa.
And unlike the Valley, with its well-chronicled struggles at inclusion, London “has a great tolerance for multiculturalism, fusing together people, businesses, and ideas,” says Oliver. The proximity to Europe, the Middle East, and Africa ensures that London is one of the most, if not the most, ethnically diverse populations on the planet.
The drawback is when companies want to expand they can’t follow a one-market approach like their U.S. counterparts. They have to compete in diverse markets across Europe and the Middle East. No easy feat.
“The marriage of creativity and technology seems particular to London,” Nicole Vanderbilt, vice president of Etsy’s international team, told the Fast Company/Virgin Atlantic group during our visit. After all, London is an arts, fashion, design, and media capital, which is spurring a new breed of digital startups, such as Amed’s must-read site, the Business of Fashion. “We’re at this interesting intersection of fashion, technology, and media,” Amed says, “and they’re all changing so quickly.”
This concentration of creative companies represents a significant business opportunity. At the Foundry, we saw how the staff is targeting technology to encourage or enable creativity—software to innovate in special effects in TV and film and in product development as well as the sketching app Mischief, that make brainstorming more expansive and collaborative.
At each stop, we got a taste of the imaginative culture that’s pervading London. “One theme that stuck with me throughout our visits was childlike wonder,” says Clint Schaff, one of the #LetItFly tour winners and the U.S. general manager for the integrated marketing and communications agency Camp Playa. “It seems that every product we encountered, from Mischief to Hackaball to any Etsy creation to Pop Jam, seemed to evoke a sense of play. That’s something I want to not only bring into my work, but also into the solutions my agency provides to its clients.”
When Burbidge scouts for early-stage companies to invest in, she not only looks for compelling tech, but also a founder who’s driven, ambitious, and frankly obsessed with bringing his or her solution to the world. In London, though, these entrepreneurs often balance their obsession with their private lives.
“I believe there’s a greater respect for quality of life here than in the Bay Area,” says Burbidge, who moved here from Silicon Valley 11 years ago. “People are happy there, but they’re almost working 24/7 and half the weekend. That just doesn’t happen here. It’s very rare. In the long run, I think it might be better for the tech industry. You don’t hear about burnout as much.”
That’s a fitting note to end on, a reminder that unbridled obsession isn’t productive in the long run. It has its limits, its consequences. In the end, managing your creative ambition, whether you’re in London or elsewhere, requires a certain discipline and creativity.
To read our complete coverage of the Fast Company/Virgin Atlantic #LetItFly creativity tour, go here. And to check out five key lessons for entrepreneurs that Virgin Atlantic gleaned from the London trip, go here.
Chuck Salter for FastCo Works, Fast Company’s content studio.