I’m pleased about the news of Google moving into London’s Old Street and Shoreditch area, popularly called Silicon Roundabout.
A big player like this will help dispel the scorn David Cameron’s vision for a Tech City has attracted. And cynicism doesn’t build companies.
Cue mocking from entrepreneurs and VCs
The roundabout’s attraction was always more creative than tech-specific, evolving from the arrival of the art and design community, not the science one. In many ways the Thames Valley, with Cisco, SAP, Oracle and others dotted between Reading and Maidenhead, has traditionally been a more fitting comparison to Silicon Valley.
Nevertheless, David Cameron’s declared vision is for the neighbourhood to be “one of the world's great technology centres”, the Tech City Investment Organisation was launched, and a team of 14 government employees hired.
Cue: mocking and contempt from many UK entrepreneurs and their backers at the prospect of £400 million taxpayer pounds being squandered. Well, yes, if you need government support to get off the ground, there’s probably something wrong with your business plan. Handouts from the government are anti-entrepreneurial. That’s my impulse too.
The news of Google’s London encampment (its second in the capital) came just a day after Twitter announced it would make Dublin its European base because of the tax breaks on offer there. Twitter also benefits from government largess in the US - enjoying payroll exemption on new hires for six years - in a bid to keep it from leaving San Francisco. Also in San Francisco, games maker Zynga has negotiated a six year exemption on the one and half per cent tax on stock options for companies about to go public.
The UK’s government support is restrained
That makes the UK government’s entrepreneurs visa and 30% tax relief for investors look timid. Despite what the UK government may call it, our big tech brands in California would not describe those incentives as “red carpet treatment”.
In fact it’s more in line with US policies like low capital gains taxes and the new Global Traveller programme. In the end, it’s a red herring to suggest that there’s no connection between government policy and where business chooses to locate.
But that’s to lose sight of what the Silicon Roundabout, or Tech City, does have in spades - its own natural creativity and energy. Already we’re seeing stellar global success from local startups like Mind Candy and the cool businesses who’ve moved in from abroad like Buongiorno and Moo.
The Silicon Roundabout is also about folks like TechHub, whose office space for tech startups is welcoming and affordable, and whose networking events are renowned. The indefatigable enthusiasm and loyalty to tech entrepreneurialism from TechHub and their ilk is what makes the Silicon Roundabout so special. It’s about hack-a-thons and seed camps, great bars and cafes, as well as the arts and design scene, all the activity that truly makes a neighbourhood jump.
It’s exciting that Google plans to embrace this vibrant culture when it moves in, using most of the new space to host training days and hack days in its technology community centre. Tech City is not Silicon Valley - and might never be - but creativity will thrive and some great businesses will make a lot of money.
Posted by Gene Hoffman, CEO of Vindicia