The city used to struggle to keep its start-up talent. Not anymore

With New York City’s emergence as a start-up hub, the suburban nerdistan model for high tech start-ups appears to be losing some luster. "Whether Silicon Valley’s hegemony is in jeopardy or not," I wrote Monday, "there can be little doubt that high-tech has taken on much more of an urban cast in the first decade of the 21st century."

The same urban tech dynamic appears to be taking root in London. This map from Tech City charts the rise of London’s "Tech City" or "Silicon Roundabout" in the area around Shoreditch, where some 200 significant high-tech companies and as many as 600 tech-related firms have sprouted, according to a report in Gigacom.

Dan Crow, who authored The Guardian article that the map accompanies, has a long history in high tech. He left the U.K. in 1996 to work as a software developer at Apple in Silicon Valley. England was start-up and tech-unfriendly at the time, he wrote, and offered few opportunities to work in cutting-edge software development. Crow spent ten years in the Valley, "founding or helping to run" four tech start-ups, before heading to Google in New York – the last assignment likely exposing him to the urban turn in tech. He recently returned to England to become the Chief Technology Officer of a small start-up.  

Crow notes Prime Minister David Cameron’s interest in supporting high-tech development as well as that of minister David Willets.  This is something I am somewhat familiar with: I met Willets in his office while traveling to London to give an address to the Royal Geographic Society 18 months or so ago, and I was subsequently invited to and participated in a meeting with members of the Cameron administration and others to discuss the broad issue of urban tech.

London has considerable assets. Like New York, it is a big, diverse, open-minded city with a long history of entrepreneurship and innovation. It is home to exceptional universities, including Imperial College, a standout in science, engineering and technology, as well as the London Business School and London School of Economics. Cambridge and Oxford universities are close by. Pound for pound, London and its environs can compete in university quality with virtually any location in the world – including the Bay Area, Cambridge, Boston, and New York.

London has long been a center of innovation in popular culture—from music, art and fashion to movies and media—an asset which is increasingly important given the importance of content as sources of value and competitive advantage. In the spring of 2003, I was on a panel on high-tech entrepreneurship with members of then Prime Minister Tony Blair’s economic cabinet, who were trying to develop strategies for improving England’s position on software, biotech and other high-tech clusters. I asked them to name the most financially successful people in their country. The names that shot back—Paul McCartney, Mick Jagger, Elton John, David Bowie and the like—made my point for me. England already had a well-developed innovative and entrepreneurial ecosystem in place, I told them. I urged them to study its dynamics and understands its creative ecosystem—the best of its kind in the world—as opposed to aping what was happening in Silicon Valley.

Big dynamic cities like London or New York have a considerable advantage in the creation and propagation of new cultural forms, especially at the nexus of popular culture involving trends in music, fashion, art and media. Shoreditch and Hoxton have long been the "refuge of artists, hipsters and trendy digital media agencies," according to Gigacom. The company Crow returned to London to join, Songkick, the second largest live music website in the world, operates in just this kind of space.

Despite its many assets, London had one great limiting factor until recently. It was unable to hold onto its homegrown tech talent, never mind attract new talent. But this appears to be changing. Not only are expats like Crow returning, Americans are moving to London to join local start-ups, according to Crow. Six members of his 30-person team at Songkick are from the U.S. A survey of Shoreditch area start-ups identified "more than 50 entrepreneurs who have come to London from Silicon Valley." Part of the reason is that tech talent, like creative talent more broadly, actually prefer denser, urban living and all the amenities global cities have to offer.

This is not to say that Silicon Valley is on the verge of extinction—far from it. Across most key high-tech sectors, it remains the world’s most important, successful and vibrant innovative and entrepreneurial ecosystem.  But for a growing cadre of entrepreneurial and high-tech talent, urbanism is a big draw. There is a rapidly growing niche for urban tech, one where big global cities like London and New York have significant advantages and where Silicon Valley and its imitators simply cannot compete.

Photo credit: Michaela Rehle/Reuters

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