Gadget Gavin: What we can learn from San Francisco
In the spring I travelled on the first ever direct flight from the North of England to San Francisco.
I was part of a 30-strong delegation from across the region’s growing technology sector to use the first of these flights to travel to a dedicated Silicon Valley trade mission.
Having travelled to and from San Francisco innumerable times over the years this is like manna from heaven. No more layovers in London, Dublin, Amsterdam, Atlanta or the litany of other airports you normally have to go through.
It will undoubtedly improve the economy of the North and for the UK in general. Improved trade links, greater shared knowledge and hopefully more inflow of investment to UK tech companies.
The question is, why does every tech company you speak to dream of raising the big capital from over the pond?
Why, in the oldest economies of the world and with all the great inventions and achievements that have been made in Europe, do we continue to be unable to create a tech giant?
I think there are two main reasons for this: one is culture and the other is network effect. Culturally we are risk averse as a nation and a continent.
The vast majority of European investors still look through the EBITDA lens. Pretty much any of the major US tech businesses wouldn’t have had a sniff of a cent in profit for many of their early years, or ever in some cases.
And yet they still attract eye-watering valuations. Many will fail or not reach their expected potential but if two in 10 do then the returns far outweigh the losses.
And on the note of failure, in the US it’s almost a prerequisite to have had one, to learn the lessons the hard way.
However in the UK it’s something to be whispered about. Better to aim for Yorkshire and catch a bus than aim for the stars and blow up a few rocket ships trying to get there.
Below: What North West entrepreneurs hoped to get from the trip
The bigger reason, and one that I believe can start to change the culture, is the network effect. The US and the Valley and San Francisco in particular is oozing with experience, with people who have had major exits even if they weren’t a founder.
They’re on hand to both invest and to mentor the next generation. So your degrees of separation from both knowledge and capital are much smaller, and that means the chances of a great idea seeing daylight are much higher.
And let’s face it, if you’re sat in the Valley looking to invest and there are a tonne of great ideas floating around, why would you travel thousands of miles to put that money to work? Much better to be able to have two board meetings in a day five miles apart from each other.
This is where the exiteers in the UK have a responsibility to try and create that flywheel of motion in the tech start-up community. This is something you can definitely see happening already and the more critical mass that is created, the better.
The UK does have many advantages over our US cousins though. The biggest is that if you want any scale, then on day one you need to be international.
We’re a small island and that means real growth means export. Given Europe has these pesky language and currency issues, it also means the DNA of the business is ready for global expansion.
Add to that the need to deal with data protection, sovereignty and privacy in such a highly regulated part of the world we have a huge competitive advantage on a global stage.
I saw first-hand the amazing tech talent we have in the UK when I was part of the inaugural flight from Manchester to San Francisco.
With the growing number of exiteers-turned-angels, the rain to keep us all indoors working hard and our innate international DNA, we have a great platform to succeed.
So we might not have created a Google, Facebook or Amazon yet but there is every reason we could and should do – and when we do, that flywheel will gain a lot of speed.
BELOW: Flick through the Q2 2017 edition of BusinessCloud’s interactive digital magazine