Business Conference Notes Technology

How American are Startups?

The second day of and the first day of the conference proper (yesterday being tutorials) starts with a keynote from Paul Graham (see his Wikipedia entry) talking about whether or not the success of Silicon Valley might be replicated elsewhere – more specifically How American are Startups?. Suw Charman’s done a pretty solid near-perfect transcript of his talk and Graham’s subsequently written up the piece in two parts (How to be Silicon Valley and Why Start-ups Condense in America) but fundamentally his argument breaks down (to me at least) to these points:

  • Silicon Valley is about an accumulation of people, not geography – get the right 10,000 people and you could recreate it
  • To create an environment which is conducive to start-ups you need two groups of people – rich people who are prepared to invest and lots of nerds
  • Government is not a good replacement for rich people / angel investors as they’re slow, invest inappropriately and don’t have the contacts or experience to support the right activity
  • For rich people and nerds to mix you need a location where lots of rich people who care about technology and lots of nerds want to be – New York has lots of rich people but no nerds, other places lots of nerds but no rich people
  • Places that attract nerds and rich people tend to be cosmopolitan, liberal, happy places like San Francisco where people walk around looking happy and with high levels of students going to high-class universities
  • Other features of good places potentially conducive to this kind of activity are: personality, good transport hubs and connections to the existing Silicon Valley, quietness, good weather, not about excitement

Anyway, it would probably be fair to say that the reaction to the session has been mixed, although it’s more to do with his thoughts about American success and European problems than the points above (I suspect). Here’s one particularly astringent comment from Jeremy Keith:

It’s essentially a Thatcherite screed about why businesses should be able to get away with doing anything they want and treat employees like slaves … He also thinks that it won’t be long before Europe is all speaking one language namely, his … What. A. Wanker.

I think Jeremy’s gone a bit over the top, but I can completely understand why he reacted the way that he did. Paul’s piece felt extraordinarily American, in a semi-utopian libertarian free-market kind of way, and I have to admit it felt alien and strange and fairly abrasive. But there was also some pretty solid insights and a hell of a well-presented argument. By the end of the piece I was wondering, was this a political screed supported by good argument? Or was this a position that had been reached through experience that just happened to coincide with a particular political ideology.

I’ve spent about an hour thinking around this now, and have come to the conclusion that it’s probably the second of the two – an argument borne from experience but still an argument that needs to be heavily contextualised and derives from the particular environment that he operated within. The approach that Californians take to governance clearly works pretty well (for some interpretations of good), but that doesn’t make it a natural fact of the universe. It could be much more contingent than we tend to recognise.

Let me put it this way – one point that Graham made was about the role of government – basically intimating that regulation and government intervention was almost uniformly and universally a bad thing. But no government and no enlightened citizenry will be prepared to mutely accept the facts of their destiny on the basis of their weather (one of the aspects that Graham spells out as making a place attractive to the right kind of people). And all governments will try hard to make their environments more conducive to certain kinds of activity, including the US government. For example, one concern that I note that Paul Graham did not mention at all during his piece were simple start-up costs. He talked about companies started in garages, but probably didn’t realise that even garage space is pretty limited for large groups of people in metropolitan areas in Europe. This is a factor that probably has no effect in California outside the big cities, but is of massive importance across Europe. Property prices and costs are so extreme in parts of Britain that it’s almost immediately impractical for two or three people to try and start a little company. This is not in defiance of Graham’s talk, it’s simply ignored by it. And he ignores cultural differences, food costs and increased risks that mean that people are simply less comfortable making these kinds of decisions. If you want to create a culture where this kind of thing is possible, then these things need to be fixed. And that means work that needs to be funded and that means government one way or another.

And there’s another aspect which I found worrying – clearly it’s good for business to be able to hire and fire as you choose. And it’s also clearly not problematic for technology workers to lose their jobs if they’re working around Silicon Valley – it’s not like there’s a shortage of other places to work for. But the laws don’t only apply to the people with lots of job mobility and freedom – they also apply to people at the bottom of the food chain. Many European countries have decided to try and protect those people at the cost of some of their business flexibility. I’m not saying one option is more right or more wrong – I’m actually quite keen on the free market, and my time at the BBC rammed home to me some of the problems of working in an organisation that’s unionised to the point that it’s unable to fire people or restructure itself effectively in response to changing circumstances. But I think it’s important to at least recognise that the things that may make a Silicon Valley possible might also be partially founded on immigrant labour, crippled unions and a lack of support for people at the bottom of the pile. What’s good for Startups may not be good for all, and occasionally I got the impression that much of Graham’s stuff was describing the environmental factors that make Start-ups work as a uniform and perfect good in the world. I don’t buy that so much.

Having said all that, I have to be honest, I pretty much agree with all of his major points, and his thoughts on the right places for start-up activity got me thinking about places in the UK that would be good seed beds for an ecosystem of small and larger companies to operate together effectively. I’m not convinced that London is a good place for this kind of stuff at all, even though unfortunately all the money and all the business ends up there.

I’ve done some exploring around and found information on the top ten Computer Science departments in the UK and they are: Imperial, York, Oxford, UCL, King’s College London, Edinburgh, St Andrews, Cambridge, Glasgow and Bristol. Applying Graham’s criteria to those places, I’m afraid Scotland is probably mostly out as an ideal transportation hub and a home for rich technologists. I suspect London is simply too expensive and cripplingly scary for anyone other than people wanting to work for big businesses and media companies (it’s the New York of the UK, not the San Francisco). Which leaves Oxford, Cambridge, York and Bristol. I don’t know much about York, but my sense is that it’s a bit too far off the transport grid to be ideal, even though it has a large student population and is a relaxed and outdoorsy place. Oxford and Cambridge are obvious candidates, but I’m actually most interested in Bristol (coincidentally where I went to University) which is an hour and a half from Paddington and the Heathrow Express, is surrounded by beautiful landscape and opportunities to explore and has a 20,000-strong student population across the University of Bristol and the University of the West of England. It’s also not unmanageably expensive.

The other place that interests me a lot is Brighton. I don’t know whether or not it has an enormous technology contingent, but I’m hearing a lot about start-ups based out of there. It’s an hour from Central London, is extremely cosmopolitan and seems to have a lot of the characteristics that a start-up culture would require. I’d be really interested to get people’s thoughts about where and how we could get a more technology-focused start-up scene going in the UK. So feel free to leave a comment.

Addendum: For those interested, he also summarised the advantages and disadvantages of the US in the start-up space, and I’ve cut back the advantages to these helpful headlines which should give you the gist of his argument:

  1. Allows immigration
  2. Isn’t a poor country
  3. Not a police state
  4. High quality universities
  5. You can fire people
  6. Attitudes that don’t associate ‘working’ with being employed
  7. Not anal about business regulations
  8. Huge domestic market
  9. High levels of funding
  10. People comfortable with career switching

54 replies on “How American are Startups?”

Actually, the thing that really got on my goat was Paul Graham’s dismissive stereotyped description of speakers of the Irish language. I felt personally insulted.
That amadán can póg mo thóin.

I second Bristol as a location with great potential as a startup hub.
Bristol Uni are now really pushing entrepreneurship in the CS masters course – the bulk of the final year is essentially about creating a startup idea that you might be able to spin off with the uni or attract VC funding for (and some graduates I know did exactly that).
Aside from the Unis there is a lot of IT talent around (HP Labs is here and GCHQ is down the road in Cheltenham).
I currently work for a startup here (having graduated from Bristol 2 years ago) and we have found Bristol students / graduates to be a fantastic source of talented developers.

Another point is important, the history of Leland Stanford Junior University and how it leased land, didn’t sell it, to technology companies. It’s an interesting story. And one best told by someone who knows it well (not me).
But for me, doing a business in California and having developed the concept in the UK at UCL (based on California’s Doug Engelbart’s work) it comes down to the different kinds of tolerances (and I think tolerance is maybe the most important feature) of the different places:
London is great for philosophical coffee shop pre-startup talks, but not as supportive for getting things off the ground.
The Bay Area however, is very supportive with getting things off the ground and running (you are really allowed to be a geek, with events like SuperHappyDevHouse which is wonderful) but there is not much early philosophical coffee house type chat (that I have been a part of anyway) of what to actually try to get off the ground in the first place.

I wouldn’t dismiss Glasgow and Edinburgh out of hand – Rockstar seem to have done rather well for themselves. Not to mention the fact there are so many nerds knocking about already that ‘4.5% of Scottish GDP is from digital media and creative industries‘.
Also, it strikes me that startups require the same conditions to thrive as a contemporary art scene – low living costs, cheap property for studios, lots and lots of wealthy people to buy the work, good international transport links for visiting foreign wealthy people, a top notch art school, &c.
Since Glasgow has turned itself into a hugely significant city in Europe when it comes to visual art over the last ten years, I don’t see why it couldn’t play host to startups. (Or ‘small businesses’ as I like to call them – ‘startups’ are definitely American in that sense.)

Hi Tom. I’m the Dave that was sitting diagonally opposite from you at dinner last night.
Anyhoo, interesting to read about this talk, since it’s related to a couple of things I’ve been reading this week. One is Will Hutton’s “The State We’re In”. The other is the current unit in my OU course (International Development), which is on Technology and Knowledge.
Hutton’s book is perhaps a little dated, but his criticism is that investment culture in the UK is geared around the City, and the immediate short-term gains demanded by it. This doesn’t encourage the kind of speculative investment needed by startups. He claims that a rentier mentality exists that prefers investment in assets that return interest, rather than investment in production.
The OU unit focuses on the needs of developing countries, but addresses the ways in which a knowledge economy provides a route for development. One point made in the course is that large international companies are still vital to help smaller companies reach wider markets, so the local ecosystem needs to be a lot more varied than just cuddly little startups.
The anti-government aspect of the talk was unfortunately predictable. The Asian tigers are a good example of how well government can foster development. It also forgets the role that government money played in creating Silicon Valley in the first place, first through the US Navy, then through NASA. Whether the piece is driven by politics or experience, it’s missing a lot of history.

Present to me the research, or I’ll tell you it’s complete nonsense. It’s complete nonsense.

Brighton – yes and no. In Lynda La Plante’s Killer Net there’s a Usenet newsgroup called I think that pretty much sums up the pros and cons of Brighton as a potential geek hub.
I’m surprised to see Manchester doesn’t figure in the top 10 – there’s a ton of Semantic Web stuff going on here, I know that (not least because the Semantic Web currently pays my wages).

I went to York 20 years ago. I can confirm what you said about transport. Since I left they’ve got a Science Park (, but at 21 acres, it’s not really a whole valley. I don’t know much about the atmosphere since I’ve only been back a couple of times since.
I think you’ve done well to spot Paul’s blind spots.

‘Even French and German will go the way of Luxembourgish and Irish — spoken
only in kitchens and by eccentric nationalists.’
A little more research before shooting his
mouth off would have been welcome there. n√° bac leis an cac sin!

I wasn’t at the conference, but I can recognise what the speaker was saying. When I was founding my startup, I really wished that I lived in the US.
There’s more capital there, there’s good infra-structure and things generally just work well. (think of late trains, crappy tubes, delays in getting basic utilities wired up…).
Also, I think in the UK, it feels almost as if there is no government. Compare the purpose that the Tiger economies and the US has to the UK. We are just drifting and to me, it seems as if the momentum of the City as a historical financial hub is the only thing keeping us going.

York, aside from being my alma mater, has the distinction of being the pulsing hub of the XTech conference planning itself! Doing a startup here is eminently practical on the talent side — there’s a lot of smart students at York and in Leeds too. What’s more is that accommodation is still affordable.
Transport is good but not top-notch. (Manchester airport 2 hours by train, Leeds-Bradford airport 45 minutes by car. London itself is 2 hours by train.)
It’s far too beautiful a place to live to make me want to leave, but occasionally I miss the buzz that I get from being in London.
I second your analysis that Bristol is probably the top spot for startup activity.

I second Brighton. Two great universities with strong CS departments. 10% student population with a huge number choosing to stay after graduation, and a range of great technology & enterprise hubs:
…and the new media scene continues to grow:
My business will be joining the ranks of start-ups based here in the next few months. I’ve worked for start-ups here and a couple of the multinationals in town and the atmosphere definitely fits the start-ups best.

“But the laws don’t only apply to the people with lots of job mobility and freedom…”
Very good point. In fact, tell the 2000 Peugeot workers or the people at Vauxhall today that it’s too hard to fire people in Europe!
What a load of lazy cultural stereotpyes and simplistic economics.
It was lucky there were no Japanese in the room to walk out.
And – am I being miss-PC to say that the “don’t mention the war” gag was beyond the pale?
You’re probably right that there were some good points in there, but I was too irritated to take them in.
I hope that the next Silicon Valley will be in India, staffed by mean Japanese women with pension plans.

Brighton – yes for me. I’ve been here for 8 years, first for my Masters Degree in Artificial Intelligence at Sussex University and then working in several start-ups on the same campus at the Sussex Innovation Centre.
Recently I’m co-founder of, based in part at the Innovation Centre and mostly in our living rooms. We’re encouraging the peer-production of training videos, made by anyone who knows what they are talking about.
Brighton sometimes markets itself as Silicon Beach, it has a very relaxed atmosphere, two universities, is an hour from London and has a good number of Angel investor types and geeks alike.
A comparison to San Francisco would be hard – Brighton is much smaller and I’ve only been to San Francisco on holidays, though having travelled a bit I’d say that Brighton does indeed share a similar vibe to San Francisco.

Brighton from my recollection in agency life before my temporary life at Yahoo! had a number of start-ups and new media agencies. This seemed to come from quality of life, commuter distance to London, the sea. Also the entreprenial spirit that was there seemed to be driven by a need to get out of london and do something but still be close enough to not become irrelevant.
Boston used to be Silicon Valley before Silicon Valley with people like DEC founded there. What went wrong?
I came up with a number of other factors:
– Regional banking system in the US helped foster Silicon Valley in a way that the NatWest wouldn’t
– The culture of entreprenuership is part of the American dream
– Failure isn’t failure: the way the bankruptcy laws at least had been structured in the US people could learn from failures and move on (like a scientific experiment), whereas in Europe it has much more of a stigma
– Company cultures: Hewlett and Packard and the guys who broke away from Fairchild to found Intel wanted to make better cultures that people wanted to work at
– A counter culture: could modern silicon valley have founded without the counterculture. Personal computing was a way of rebelling against the man, early networks were a way of fulfilling the dream of the Whole Earth Catalog.
– The man: much of Silicon Valley’s innovations were financed by the government or the military industrial complex (SRI, DARPA, Xerox PARC, hell the entire semiconductor industry was built on cold war dollars)

Anyone want to start a workers coop in Brighton? Socialist 2.0! Welsh and Irish speakers particularly welcome.
Seriously, my vote goes to Brighton too. Lots of bright, clever people, really nice atmosphere and lots of open space to go ride a bike or just stare at the sea – either of which is good for the soul. Why do I still live in London, dammit?
I agree with Jeremy Keith and Katie – my first reaction on reading the transcript was “what a load of Thatcherite tosh!” Good point above about NASA and DoD money in the Bay Area. I think Graham’s oversimplifying the economics and politics somewhat in order to make his point.

I work for a startup in Brighton, although I’m based in London. It’s definitely a more suitable city than London for startups, and still close enough to get their investors. Even though there a lot of top CS departments in London I’ve found a lot of the grads end up in the city or at consultancies because startups can’t compete on salaries.
One problem in Brighton is office space. There are lots of little offices, but finding more space when you grow is difficult.
It’d be cool to see a map of the UK with where all the tech companies are starting up. I wonder if that data exists.

The anti-government thing is to be expected, but it is based on a fundamental misunderstanding of the past 40 or 50 years of American social policy.
Short form: How many trillions of dollars did the US spend on military hardware and technology, including a fair proportion on computer-related stuff, since 1950? There’s your welfare state expenditure equivalent in the US, and there’s your startup capital for probably hundreds if not thousands of companies back in the day, and there’s your government intervention in the marketplace at the dawn of the computer age.
It’s still significant because a) lots of money is still spent and lots of rich people got that way via defense contracts and b) California has always been a huge destination for this money.

Hey, Tom — real estate and housing in the Bay Area are astronomically expensive. Anywhere you want to put a startup in San Francisco or San Jose or anywhere in between will cost you a sum comparable to the sums you pay in London, Geneva or Amsterdam (and way, way less than comparable space in Barcelona, Florence, Rome, or many other major cities in Europe). What’s more, landlords in the Bay Area are far more predatory towards startups than their opposite numbers in Europe — for example, it’s commonplace to demand warrants (equity) on companies as part of a leasing deal on even the mingiest office-space. A startup that grows fast and cycles through four or five offices might give up 10-15% of its equity to bastard landlords who charge astronomical sums for places that make London offices seem luxurious by comparison.
It’s just not true that the cheapness of real-estate in the Bay Area contributes to the startup climate.
If anything, I’d say that the Bay Area owes its geographic location to the horseshoe-shaped, easily defended bay. That bay made San Francisco a natural for naval installations, hence shipyards, hence radio-engineering facilities, hence electronics, hence semiconductors, hence PCs, hence software, hence the Internet.
And if there’s one giant difference between the Bay Area and London that accounts for the differing startup climates, I’d say that it was cynicism. People in the Bay Area are optimistic about technology to the point of being starry-eyed and they possess a completely unabashed sense of ambition. In the years since I moved to London, I’ve felt a palpable cynicism about technology and about ambition: anyone who says anything grandiose about technology and what you might do with it is apt to be greeted with eye-rolling and pedantic, picky objections.
The mantra of the well-informed UK geek seems to be, “The world isn’t like me — technology is central to my life, but that’s not so for the rest of the world, and it won’t be any time soon.”
By contrast, the mantra of the San Francisco geek is more like, “Technology kicks so much fucking ass I am about to explode. Soon everyone will realize this.”
I don’t know that San Francisco instills that attitude into the people who live there, but it’s certainly the case that for a lot of people who have that attitude, San Francisco is a great place to go.
One other major contributor to California’s technology success (especially as compared to Route 128) is that noncompete agreements aren’t enforceable in Cali. That has led to a culture of aggressive poaching and promiscuous job-hopping through which the best and the brightest go from company to company, spreading the best ideas from each. That’s kept things growing very fast in California indeed.

Does it actually matter where you’re located? We all work from home now, right? In a high tech business you shouldn’t need to meet F2F more than once a month, and you can do that anywhere in the world.
Big up to those that mentioned Asia.
Oh and as for this one.
“3. Not a police state”
Oh yes. That made me laugh.

Now, putting Mr Cynical back in the box. I’ve been completely unable to find any nerds/geeks in the UK prepared to work evenings, weekends and other 10% time on things just because they’re cool. And when I’ve suggested 10% time to Indian software companies they don’t get it at all. If it’s not chargeable it’s not worth doing. Isn’t this the pre-cursor to startups? Some of the biggest Web 2.0 success stories have started with no VC, no backing and people working in their spare time to create something “because it’s cool”. In at least some of them, they went live (or at least beta) for months before they ever needed to talk to rich people. Bootstrapping is the new burn rate.
So where do you find people who no longer have to spend their entire life trying to survive? Because isn’t it that which always acts as the trigger for civilisation to move forwards?

Some thoughts, totally off the cuff.
1) Real estate might be expensive in the Bay, but there’s a damn sight more of it than in metropolitan Europe. Space is important for growing companies.
2) America’s huge investment in military spending over the past few decades is far more important than regulatory frameworks put in place by European governments (we all realise most technological leaps are military-related)
3) British technology hubs like Silicon Fen (ahem) thrive, but too often swerve between hugely academic or hugely B2B. There are few happy mediums.
4) We spoke briefly, Tom, about Brighton the other day. I agree, there’s a lot going on there – but I think most of its reasons for being “startup friendly” are probably cosmetic. Still it would make life dead easy for me, I’m moving there in a week or so.
5) After all of this, I think it’s time for me to finally get round to writing that big piece on the state of technological innovation in Britain that I’ve been promising for a while.

PS in response to Julian’s comments – I think he’s on the ball. How do Graham’s arguments apply to Asia? Japan is probably closer to Europe in many cultural and regulatory ways than it is to the US, but how do India and China fit?
And what about the elephant in the room, the version of the American Dream that says if you work your balls off, you’ll become a billionaire. That’s good incentive to spend all your days and nights on an idea that has a tiny chance of succeeding, rather than just enjoying work/life balance a little more.

My feelings are also mixed. Lots of interesting thoughts, but I can’t say I agree with all of them, and some will probably need a while to sink in :).
On one hand he was not entirely clueless about Europe, e.g. he knew that in the Netherlands all universities are pretty much equal in quality (although there are some differences, none of them is really standing out, only in specific fields). But on the other hand it was all so much from an American view, and with no regard for e.g. as you mentioned the social aspect of the story, and all the other aspects where America and American culture differs so much from Europe.
For example, I really don’t agree that ‘equal’ universities are bad. It’s actually pretty convenient because you don’t have to go live across the country just to get into a good university, and if you go to one that’s close you can still be fairly sure that the education isn’t bad. By the way, I’m not aware that this evening-out is an official Dutch government policy? Universities just don’t teach what they’re not good at.
I’m also not convinced that to create a good place for startups, things like being less ‘fussy’ about social security and making firing of people easy are a requisite, I do not see why it wouldn’t be possible without.
I’d say most startups start as a very small group of people who have a plan, and are willing to invest free time in the hopes that it will become profitable. When they arrive at a point that they can actually hire people, they apparantly earn sufficient money for that or have good prospects. If they after that suddenly get to a point where they can’t pay their own employees anymore, then clearly the idea is not profitable, and the startup fails.
How many successful startups fired people during their startup-phase? I never hear that in success stories.
Maybe I’m being too simplistic? Anyways, I’ve heard this before from the VVD (Dutch liberal party), and I’m not convinced, especially given the negative implications Tom rightly points out.
Also, I don’t see why governments aren’t trusted with financial decisions. Clever investment decision-makers with good knowledge of the field and experience can’t/don’t work for the government? I don’t buy that.
And English becoming the main language? A fantasy :). Fortunately! Diversity in languages should be treasured, not seen as an inconvenient obstacle. I understand that for an American used to hearing English only (to the point of dubbing everything on TV that’s in a foreign language) (okay, they are not the only ones guilty of this :)) this might be difficult to grasp. Hmz hmz.
A point that I can agree with is that not having freedom of speech also leads to dampening innovation. At the very least it will deter nerds from democratic countries (I know I certainly do not like the thought of working in such an environment).
(The thing with China though is that they have the advantage of sheer numbers, and that by now history has shown that having extensive international contacts does nothing to improve their freedom of speech situation, in the contrary foreign businesses are generally all too willing to forego their principles if they would otherwise miss out on opportunities to earn money.)
Basically I perceived this as being mainly a lauding talk for the ‘liberal’ way things are arranged in America minimal government involvement (except on topics that *really* matter of course, and then involvement of the wrong kind), little protection of the less-able, that kind of stuff.
However, what it totally lacks is the idea that, *gasp*, the way things are in America might not be the only way to create a good climate for startups!
I really really don’t believe there is ‘one right way’ to achieve a goal.
(Unless there is a mathematical proof of course.)
By the way, what I missed in this talk (maybe because I was a little late due to public transport delays, let’s not get into that), why are startups such a good thing? Not that I disagree per se, but I haven’t heard convincing arguments that they are the key to innovation.
Oh, and the thing about ‘taking out the Jews stifling innovation’ I really do not see what that has to do with anything, or why being of a certain religion or race would somehow make people more intelligent. Thinking in terms like that really doesn’t get my appreciation. I suppose it was a joke, but a bad one.
p.s. julian bond makes good points :).

I’ve come out of the Imperial CS degree and start working at on Monday. They are located in London and i’m going to be living round the corner from the office.
I’m pretty devoted to London as a place to study and work. seem to be pulling it off. It’s not impossible to succeed as a startup here – the investment is there. You have to improvise a little to handle the office space situation, but out of constraints comes creativity.
Get the right people in a room and innovation will happen. Trying to systematize innovation (silicon valley) is not a very exciting proposition for me.
I’d rather be presented with a set of unique real-world environments through my career than a campus-style ‘valley’ to work in. I suspect Paul Graham would agree.
I also challenge Graham’s notion that nerds and investors are all that’s required to create great software products. Difference and diversity, a crowd, is critical. The metropolis gives you this. Choosing the metropolis as a site for intellectual productivity is pretty important for me, since i could have sat in leafy campuses all my life and be sitting here with a higher life expectancy, reduced stress and great skin. I chose not to because all the things that are culturally relevant to me happen in the city.
I think trying to instill a little of that West Coast ethic (“Technology kicks so much fucking ass I am about to explode. Soon everyone will realize this.” – Doctorow) is critical to more success stories in London.

Julian: “In a high tech business you shouldn’t need to meet F2F more than once a month, and you can do that anywhere in the world.”
Depends very much on the project, the positions and the people. (Oh, and don’t forget timezone differences.) I’m currently working long-distance for a California startup and I *hate* not being in the office – makes everything at least twice as hard, not to mention the issue of having meetings at midnight. You miss out on far too much of by not being in the office – not just company culture, but essential knowledge sharing. Plus, taking part in meetings where nearly all the participants *apart from you* are in the same room is almost unbearable – you can’t hear half of the chatter and it’s really hard to concentrate. In summary – yes, relative location matters.

I’m spent a few years working for an Australian Cooperative Research Centre called DSTC in Brisbane. The brief of CRCs are to improve the commercialisation of university research by forming partnerships with Industry. One of the ways we tried to do it is with start-ups. A couple of things I wanted to drop in:

  • Silicon Valley seems to me to have an incredibly interesting social environment – I don’t mean pubs and parties, I mean that you’re surrounded by other people “making a go of it”, sometimes succeeding, sometimes failing, but trying. Brisbane is the home of a bunch of large companies and the state government. I went to school with kids whose parents worked in one of these large institutions. About an hour down the road, the Gold Coast is a long beachside metropolis populated mostly by small business people. Kids I met at Uni from the Gold Coast, I swear were much more predisposed to start their own companies or become consultants – much more so than the Brisbane kids who looked for Big Companies or the Government for a job. So, yeah, entrepreneur-friendly social environment.
    In the Valley, when you go to college, a bunch of your professors do or at least have run their own companies. In the British tradition that Australian universities try to follow, that’s a little venal.
  • The financial and general business-helping ecology seems a lot more diverse in California than it is here. More kinds of venture capital, from the risk-friendly to the risk averse, more places to partner with, more ways to set up, more ways to do business.

I feel that a lot of discussion around this stuff focusses too much on what the correct formula is, rather than on how to promote essential financial, social and corporate diversity in both kind and scale.
Or that’s what I reckon.

I think one neglected area with some potential is South Wales.
Cardiff (Bay) and Swansea are pretty IT-oriented places, and the whole of South Wales has a good transport link to Bristol and London (the great western train line).
Cardiff and Swansea universities have good computer science courses, and reasonably cheap property prices compared to other UK cities.
As for government funding, the Welsh Development Agency is very keen to fund even the most optimistic of business ventures.
I’m hoping there’s something to this anyway, as I’m currently a final year computer science student at Cardiff!
If there’s one downside, it’s probably the weather…

I’m amazed no-one’s mentioned Manchester…huge University population, just about affordable housing, London in 2h15, the BBC (soon to be growing?), a large (largest outside London?) growing media/advertising industry and liberal social environment…I think the VC scene is non-existant though 🙂

the entreprenial spirit that was there seemed to be driven by a need to get out of london and do something but still be close enough to not become irrelevant.
IOW, Brighton’s a satellite of London. Which is fine in many ways, but doesn’t give you quite the degree of autonomy that the ‘Silicon Valley’ concept implies.
Difference and diversity, a crowd, is critical.
…and Brighton is so not diverse. There’s more diversity in the suburb of Manchester where I live than in the whole of Brighton. And Hove.
Enough of the slightly unexpected anti-Brighton rant (I like Brighton, but…) I’m not sure I agree with the ‘diversity’ point anyway. Isn’t part of the Silicon Valley model the idea that a few geeks with a dream can come up with something that’s simply, objectively right (like the Mac OS or – and a few geeks with a dream and a VC can make it happen? Or is that part of the Silicon Valley myth?

‘the degree of autonomy that the ‘Silicon Valley’ concept implies’
San Jose was a satellite of San Francisco, once. These things take time!
‘Silicon Valley seems to me to have an incredibly interesting social environment … you’re surrounded by other people “making a go of it”‘
having checked out the Irish blog scene, and the recent EnterpriseIreland get-together, it certainly seems like that social environment is happening here, too, for what that’s worth. Let’s hear it for Dublin 😉
Also: Cory++! excellent comments there, esp w.r.t. the negative outlook of some geeks over here. I’m amazed by the number of people I’ve talked to in the last couple of months who scoff at the notion of non-techies using RSS. They need to meet my mum, who’s happily figured out how to add all sorts of stuff to her GMail. 😉

I set up a Brighton tech company and there’s lots of freelancers and small companies down here. But I’ve heard it described as “the graveyard of ambition” with good reason.
Basically: it’s really nice to live here. Which means IMHO that people (quite healthily) have things they want to do other than work. When I was in my early/mid-20s I, and quite a few of my peers, were quite happy to work every hour that god sent doing work we loved.. but part of the reason for this was that we’d moved to London and didn’t have a stable social scene we were embedded into outside of work.
There’s lots of noise about “creative talent” down here – and some very talented people – but nonetheless London seems to be where it’s at for most of the new media industry. Which is a shame cos with a decent train service, we’re nearer to London than many bits of London are.
(apply usual disclaimers re generalisations obviously)

Conincidentally this weeks In Business discusses lot of the issues above in this thread and Tom’s post.
“Can taxpayer’s money help innovation, or does it actually hinder it?
And does Europe really need a European rival to the current American-run Global Positioning System and its own version of Google?”
Contributors include Loic Le Meur (six apart), and Mike Lynch (autonomy).
Should be available as a podcast by now.
and yep. Brighton is a lovely place to live but its not diverse.

Having just made my first trip to Cambridge, I’m quite taken aback that nobody has flown the flag for the Technology Corridor. One of the big things in the US not just in the tech sectore has been a history of Corporate-Academia cooperation. And Cambridge seems to already have this in addition to those rich VCs and Nerds.
Bangalore in India will also be a massive base for start ups as erstwhile Silicon Valley guys head back in numbers to take a piece of the “India boom” – the VCs are already circling there.

I do get the feeling that the discussion is going around in circles a little, although many of Paul’s remarks are very interesting and there is definitely scope to get a *lot* more people involved in this discussion. But I ask you: why does the UK or anywhere else have to replicate anything?
I worked for a start-up in 2000/01 – they were Swedish and I worked in the UK offshoot. The business model was unfulfillable without broadband and other Web 2.0-ish factors – as we had streaming video, download retail, micropayments / online wallets, blogs, user-created content, you name it (okay, no Ajax). Getting VC money was easy for a while (naturally), and we had an incredibly talented team (one of whom – our Web Manager at aged 25 – is now senior in Overture/Yahoo), and grew a reasonably large audience even without much marketing!
The problem then was the bubble’s unsustainability. But the really interesting thing was the extent to which the burn-out of the first crash affected my team as a microcosm of what happened in UK start-ups generally at the time – in irretrievable terms. Many of the people in that business returned to the traditional media and publishing companies from where they’d sprang – including myself for two years as the tumbleweed blew (apart for the few bunkered down in the BBC and thereabouts) – but most are still there. And I know plenty others other too disenchanted to ever return to digital media as a whole, never mind start-ups!
It’s a microcosm, but the lesson seems to be the levels of cynicism and long-term reaction to perceived failure-by-association here. Also, I think there’s a problem with the style and level of business and entrepreneurial skills taught in schools and higher education here.
If we can begin to try to turn that mindset around – without becoming mindless boosterists (hell, even Bruce Sterling describes himself a semi-serious “thoughful” Web 2.0 booster these days) – then the fruitful patterns, locales and approaches for local (or local-multinational) start-ups will start to be thrown into sharper relief and become something we can aspire to and if needs be celebrate.
In a related aside: it’s a big jump and too much too go into properly in one comment, but the approach and target-market of UK mobile start-ups (and mobile companies generally) seems to be less encumbered by locale. The recent Red Herring European Top 100 had lots of mobile companies on it and it’s definitely a European and Asia-Pacific strength compared to the Valley/US.
Although the platforms are a lot less open, pricing for content controversial, and development complicated by handset-differential issues – never mind the policies of network operators – there is a massive buzz around mobile in the UK and Europe that this discussion seems to have totally neglected so far. Maybe we should look at it, and then perhaps wonder if buzz, dynamic start-up activity, levels of VC funding, and one-upmanship about how great one place is compared to another, is the be all and end all of how we categorise success..?

After 8 years of living in London (I moved there from Bristol, my home town) I’m weeks away from striking out again on my own, this time in Worcestershire.
The Worcester/Malvern area contains stunning countryside but is still only an hour from both Birmingham *and* Bristol plus there’e the cities of Gloucester and Worcester very close plus plenty of smaller towns.
I’ll miss the tube…

You make an interesting point in raising Brighton as a potential tech start-up hotspot. As someone who’s lived in Brighton for six years and recently started up a web company (with no investment other than our own time and money) and can say there is certainly plenty of geek talent around. There are lots of small-medium web companies, contractors and folks choosing to live in Brighton and work in London. Another commenter pointed out the universities have good skills.
As for money, well you certainly have to be increasingly wealthy to actually live here, although the local pay is generally fairly poor compared to London.
It has to be said that Brighton probably has an inflated idea of its own importance and desirability. It’s still a small place (but I like that) and pretty scummy for the most part. That said I love it here – there’s a feel to the city which I’ve never felt anyway else. As I said there’s a prominent geek culture, but also a vibrant arts culture too, and this attracts people with a certain outlook, to add to the Hovian middle class and working class estates towards the outskirts of the city.
And as for the weather. Well it’s raining today, but sitting between the South Downs and the sea, Brighton does have its own micro-climate meaning it can often be sunny when the rest of the South East is in cloud. And who’d want the incessant sunshine of California anyway?

I’ve seen a lot of pro-Brighton comments here, and, although I have to admit Brighton is a nice place and all that, Bristol Rocks!! So I’m with Tom on that one.
I moved to Bristol about 3 years ago now from the Midlands as I was running a ‘Digital Media Startup’. Hey ho, that didnt quite work out, nothing to do with lack of business, we had more than we could handle, more to do with lack of understanding and communication between the partners.
Still its all been very good, there are just so many ‘nerdy’ (although we prefer ‘geeky’) types around here, in fact (perhaps because of the work I do) I don’t actually know anyone who isn’t working in Digital Media (or whatever you choose to call it). I love the pace of life in Bristol, there is lots of culture, great transport links and more recently local government and government funded agencies and project have recognised that digital media is a key sector for the region and have been supportive in backing many initiatives (although inevitably it is a lengthy and not a quick process).
However, I still stand by Bristol as the best place I have ever lived (and I have lived all over Europe) with the most opportunities I have ever had, and also the greatest group of friends 🙂
Through things like Underscore, the Bristol New Media List I have met so many people and recently started up our very own SkillSwap a la SkillSwap in Brighton The support from the community and government bodies has been tremendous and I hope to get more and more people involved and have some more regular social meet-ups too.
Two of my best freinds are from San Francisco and frequently comment that the reason they love Bristol so much is that the culture and city are so similar to SF, even down to the proliferation of steep hills (sadly no trams!)
Many of my friends are Bristol Uni graduates who have very successful ‘start-ups’ all though I prefer the term SME as most have been going for 6-10 years now, and currently the market seems very buoyant and more and more business is coming to the region. We are able to compete with London due to lower overheads, although to buy a flat here is pretty much as expensive as London, there is a ton of office space available at pretty decent rates. Also both Bristol and UWE (University of the West of England) run business incubators for new startups particularly tech start-ups so there is a fair bit of support there too.
If anyone wants to know more about all the great things going on here, don’t hesitate to contact me! Long live Bristol as the new Silcon Valley of Europe 😉
Laura (

I believe that government has an important part to play in stimulating high-tech company start-up and to counter the brain-drain down to the London and the South East. I’m a computer science student and I’ve been involved in the enterprise agenda of Newcastle and the North East of England. Local government involvement, as part of the city’s regeneration plans, has helped build opportunities for start-up.
Initiatives such as ensuring that there is reduced-rate incubator work-space for these new companies. More importantly is having spaces within universities where the entrepreneurial students can come and speak to people about their ideas. Even if it’s just for the encouragement and saying ‘go for it.’ It’s hard work countering student’s assumptions that the large, graduate employers are the only way they can progress after they finish university.
The communities that these spaces create are essential to create a positive buzz and to counter the inherent cynicism of success that permeates British culture.

It’s a microcosm, but the lesson seems to be the levels of cynicism and long-term reaction to perceived failure-by-association here.
This is interesting. That word ‘here’ only really works if you can show that things are different ‘there’. I know that one of the great myths of American entrepeneurialism is that people don’t get knocked back by failure – pick yourself up, dust yourself off etc – but is it any more than a myth? More specifically, did more dot-com newbies stay in new media after the bubble burst in America than over here? (I specifically exclude people who were in technology already – where else were they going to go?)

Here’s an alternate opinion: that being in a hot start-up area during a hot start-up time is actually detrimental to building a great start-up. Perhaps building a start-up scene could be a disincentive to creating a great companies.
Witness San Francisco during the dot-com boom: tons of people pouring into the city, driving up rents for both apartments and offices (Cory’s spot-on about the insane landlord requests w/r/t equity) and creating a near-hysteria. It wasn’t particularly fun because so many of the people were there for the money rather than the technology or the product or the passion. Originality was seriously lacking and many just copied what someone else was doing, and tried to raise more money, spend more money, and do it faster. There were two online pet stores on the same block!
Jump ahead to bust times, around 2001. Most everyone I knew was unemployed, or scraping by on some odd consulting jobs here and there. People had the leisure (albeit an often difficult, scary leisure) to play, to build things because they were driven by passion and interest. What came out of that time? UX consulting firm Adaptive Path, drivers of AJAX (SF). Flickr (Vancouver, BC). Upcoming (LA). Delicious (NYC). Six Apart/Movable Type (SF). Only two of these companies even came from the Bay Area, and neither were started in the Valley in typical VC fashion.
I’m not sure how you encourage people to create a start-up scene, nor if that’s critical to launching a successful business. Most companies start when a couple (rarely more than four or five) passionate people come together with an idea, and, to tweak Cory’s statement, feel that their “idea kicks so much fucking ass I am about to explode. Soon everyone will realize this.” Perhaps a technology scene makes it more likely that these people will meet, but I’m not sure that’s the case. Any city with good mix of diversity and creative types and tech types could foster the right environment. Maybe all you need is booze, I met Evan Williams in a bar. 😉

Continental Europe’s labour laws and culture are a challenge to entrepreneurs. The reality is that when laying off staff you often go through the “Regulacion de Empleo” or “Licenciement Collectif” process, and negotiate with Unions and staff Representatives. The surprise to my american and english peers is that this applies to small technlogy startups also.
From Paul Graham’s speech, essays, and job offers, he seems unaware of how sensitive employees can be on job security. Though I grant this does not apply so much to staff under 20, which he seems to favor.
A big problem with startups on the continent is how cautious CEOs are on growing the staff county. Even with clear double-digit return on investment for projects, the European CEOs I am involved with resist hiring staff. In my experience, the risk of possible layoffs in the future undermines a lot of solid growth.

On the subject of hiring people in Europe:
Continental Europe’s labour laws and culture are a challenge to entrepreneurs. The reality is that when laying off staff you often go through the “Regulacion de Empleo” or “Licenciement Collectif” process, and negotiate with Unions and staff Representatives. The surprise to my american and english peers is that this applies to small technlogy startups also.
From Paul Graham’s speech, essays, and job offers, he seems unaware of how sensitive employees can be on job security. Though I grant this does not apply so much to staff under 20, which he seems to favor.
A big problem with startups on the continent is how cautious CEOs are on growing the staff county. Even with clear double-digit return on investment for projects, the European CEOs I am involved with resist hiring staff. In my experience, the risk of possible layoffs in the future undermines a lot of solid growth.
Paul also has reason to be more cautious on speeches like this. Specially in France.

To answer Laurens’ comment on Government’s role in growth. If you look around Europe, you will find Paul Graham is right about governments:

Government is not a good replacement for rich people / angel investors as they’re slow, invest inappropriately and don’t have the contacts or experience to support the right activity

The best evidence is comparing a commercially run Technology Parks and state funded parks. St John Science Park in Cambridge has one of the best company growth records in Europe. The Park director is an ex-banker, the funding is largely private, and the innovation support is entirely focused on sales.
Governments play an essential role in creating the infrastructure in which these Creative Classes can thrive, but private investors are best at funding growth companies.

When Amazon set up its UK offices, it chose Slough. Microsoft and Oracle are in Reading. Apple is in the outer burbs near Heathrow, surrounded by all sorts of corporate HQs.
What’s the uniting factor? Although these locations are on the London-Oxford corridor (one of the oldest technology corridors in the world, dating back to the 17th century) I can’t think of anything more likely to put you off technology than having to commute or live in those locations. Fine for mature companies where there’s lots of conventional office work; not so good for startups.
Anyway, Oxford is possibly even more expensive to live and work in than London: there’s less in the way of commercial/office space, and house prices within the ring road are extortionate.
Anyway, to pick up on what Meg said: we all know now that the post-bust retrenchment was vital for the tech industry we see today, because it broke up the monoculture of the Valley and forced people back to first principles. Sometimes it’s good either to be in an environment that remembered the ‘days before’ (SF) or wasn’t quite part of the ‘days during’.
So, yeah, Bristol.

I don’t live there, but Leeds is great too. Lots of tech stuff going on there. As with Manchester.
Of course, I much prefer being out here in the middle of Lincolnshire. Cheap, lots of space, and very easy to get on with your work as there’s an excuse not to fly off to all the unproductive conferences 🙂

I’ve not seen much discussion of wider cultural issues so far. My perception (and I may be wrong) is that, in the US, failure in business is not seen as a damning indictment of one’s abilities – you simply dust yourself off, stand up and walk on. In the UK at least, if your CV shows that you worked on your own project for a year or two and it failed, many employers would have a lower opinion of you – there is a focus on your failings and not on the fact that you had the bravery, attitude and willingness to stick yourself on the line and have a go.
Maybe we, as a society, need to be a little more enthusiastic about startups generally.

Coming back to the discussion… obviously this chat has a UK focus, but we shouldn’t immediately make comparisons between Britain and Silicon Valley without thinking about other similar environments, too.
I was speaking to a Swedish entrepreneur the other day about why so many good telco/mobile startups come out of Scandinavia. Obviously there’s the influence of manufacturers like Nokia etc, but there is also little tangible evidence that labour laws and social welfare have prevented Tele2, Be, Skype et al from flourishing.
Are the differences more cultural than procedural (with regards to risk, etc)? Are they about social benefit rather than business models? What’s the influence of the BBC, telecoms industry and other existing players? What if your home market is only a fifth, or a tenth the size of Silicon Valley’s US market – how do you approach internationalisation?
I think these are all far more relevant questions than Paul Graham’s pseudo-political diatribe.
Also consider the ideas which underpin this entire conversation: that the Bay is a great place for startups. Of course, it’s the place where there are lots and lots of startups. But considering Silicon Valley’s had 30+ years to cement itself as a hub for IT startup activity through various means and measures, I’m left wondering whether it really *is* outperforming its own expectations in the first place.

Hi Tom,
You may recollect from the Our Social World conference that I asked your advice about starting a site to support UK new media entrepreneurialism.
The result is a new wiki, JigsawUK:
As you’ll see, entries are by digital media project and they’re categorised by location (regions that match the regional funding agencies).
For instance, see here for the south-west, including Bristol:
Receiving more info about new projects, funding, events etc, particularly from outside London, is welcome!

Full disclosure: I am an American who has lived his entire life in the USA (aside from brief trips to Europe and Asia). Furthermore, I have spent most of my adult life in Silicon Valley, and all of my adult life working for startups.
Given the passion of the discussion, I think it’s worthwhile to try to lay out in a single comment the pros and cons of the American, and more specifically the Silicon Valley model.
As you’ll see, whether or not you believe that this model is superior or inferior to other models is largely dependent on the importance you assign to these pros and cons.
1) Freedom.
By freedom, I mean the availability of many different options, with few (if any) governmental restrictions on your actions. Of course, freedom is a double-edged sword–freedom can be used or abused. That brings us to our next pro…
2) A willingness to accept variance, including bad results.
Here in Silicon Valley, we accept an astonishing amount of variance without blinking an eye. It’s perfectly acceptable to start a venture with a 60% chance of failure, 30% chance of muddling along, 9% chance of mild success, and 1% chance of striking it rich. In fact those figures closely match the success rate of venture-backed firms, which in turn are far more likely to succeed than companies that do not receive funding. This kind of variance would be completely unacceptable to a society which valued equality of outcome (e.g. safety nets and high wages for all).
3) Optimism and openness.
Many have commented on Cory Doctorow’s “kicking ass” comment, but it is very true and telling. The culture is Silicon Valley is neophilic–we love the new, and we’re all searching for the next big thing. The fact is, most of us won’t find it, but our optimism allows us to keep looking no matter what in a triumph of hope over experience.
1) Unhealthy obssession and tunnel vision.
People in Silicon Valley tend to forget about the outside world. We live in a little bubble where we talk about companies like Flickr and, and read TechCrunch daily, and believe that the rest of the world does the same. We tend to ignore things like politics, literature, and the arts, focusing instead on product launches and liquidity events.
2) Minimal compassion.
This is all you need to read:
Bill Gates is giving away his fortune. Larry Ellison is defaulting on a $100 million commitment to Harvard, is only giving his own foundation $100 million because he’s being forced to by an SEC settlement. Meanwhile, he spent $194 million on a new yacht.
3) Dizzying pace of change.
Everything is always changing. You can go from hero to goat in a matter of months. Take a look at guys like Mark Andreesen, who went from the next Bill Gates to, well, some guy. Or more recently, how about how Friendster founder Jonathan Abrams went from lionization to vilification in less than 6 months.
If you need stability, this isn’t the place. Future shock is a way of life.
Ultimately, whether you like Silicon Valley depends on what you consider important. If you believe that life should be fair, and that you like things the way they are, you should steer clear.
On the other hand, despite all its flaws and room for improvement, I don’t believe there’s a better place in the world to start a company. The world would be better off with more Silicon Valleys.

I did the MEng computer science “business” course at bristol and I can safely say that its not a threat to Silicon Valley (I spent a year just south of Moutain View).
The department admits to having attempted to roll out only one MEng project to the real world and results are still pending. The difference with the Valley? Bristol doesn’t have a hacker community; it’s _far_ to right-wing to begin to attract the hackers that make the Valley able to roll over the rest of the world. Bristol thinks too much of itself and is too arrogant to survive in a business that changes hour by hour.
Cambridge on the other hand is 50mins by train from london’s money and has dustbin men with pHD’s. I’m regularly talked off my point by bar staff over here…

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