I get asked quite a lot about the tech sector in the North.
What’s it all about? Have we got a tech sector? Isn’t disruptive tech all about Silicon Valley? How can we grow our business and exit at some of those valuations we see across the pond?
Lots of questions – and here are a few facts:
- As a sector, it contributes over 10 per cent to our region’s economy – that’s bigger than utilities;
- It’s the fastest growing sector, a third of all new company registrations are tech;
- In the North, the sector is split 35 per cent software, 20 per cent IT services, 12 per cent unified communications, 11 per cent digital and marketing, then Fintech, e-commerce and gaming making up the rest.
What about the macro landscape? People talk a lot about the fact that the international tech scene is going through rapid change. We are all experiencing change and changing the way we behave through social networks and the power of these little devices we carry with us, and the rapidly increasing penetration of the Internet of Things.
But let’s pause again and look at some more facts.
- The average lifespan of a Fortune 500 company in the mid-20th century was about 60 years. It’s less than 20 now source and the expectation is that this will fall below 10 in the not too distant future;
- It took an average of 8.5 years for the early 2000 vintage tech unicorns like Facebook to reach unicorn status. These days, it’s less than three years and indeed there are 14 companies in the world today that reached unicorn status in less than two years.
The current world record? It’s enterprise messaging platform Slack that went to unicorn status only eight months after its birth in 2016.
Think about that for a second. Zero to a billion in eight months!
Anyway, forget unicorns. Decacorns are the new thing – $10bn tech companies – think Uber, Airbnb, Dropbox.
But what does all this mean? Let me bring this back to a local level. People say to me that the ‘sexy’ companies are in America and we don’t have any decent tech companies in the North.
What I say back is that I’m more than happy to leave the next photosharing app, or a new idea for a social network or messaging platform, to the flowery Californians.
Let them have their nice B2C companies with multi-billion dollar marketing budgets.
We have our unicorns, and frankly I’d much rather have the likes of Anaplan, Sage and Skybet – tech businesses with deep expertise who are busy creating disruption locally and fostering creativity and innovation in their own communities.
And let’s not forget the next unicorns – the so-called foals – out there like Performance Horizon Group, UKFast and Myparceldelivery.
So technology is changing. Fast. I imagine a future where everything you buy is made just for you. The death of mass production. Think about this: right now 3D printing is still in its infancy and restricted to building objects with no strength for prototyping.
But hang on, graphene could change all that. Guess where that is being innovated? Manchester. Right here in the North. In the future, almost everything you buy will be 3D printed and custom made just for you.
The other thing that is turbocharging momentum and change is the Power of the Crowd, of disintermediation. Remember the fact about lifespan of companies: it’s change or die.
Who remembers Friends Reunited? I wonder if in a few years we will be saying the same about Twitter?
You have the power to disrupt huge monoliths in the world, who may be slow to precipitate change in their markets.
Using crowdfunding and crowdsourcing each and every one of us can get an idea researched, developed, marketed, launched and operated by the crowd.
There are websites that allow people to bid on design ideas, you can run auctions for people to manufacture for you; entire supply chains can be set up through an iphone.
But all this crowdsourcing is just a stop gap until computing power gives us true artificial intelligence. Look at Moore’s law – it shows little sign of breaking.
Artificial intelligence, machine learning and all that comes with it is going to revolutionise our lives, and this will happen within our lifetimes.
There’s no reason at all why the UK and the Northern Powerhouse shouldn’t take a leading role in the changing nature of commerce and business.
I’m excited by the businesses I meet every day and have no doubt that the next ten years will be a very exciting time to be advising the best tech businesses in the region.