How can the Northern Powerhouse become the next Silicon Valley?
This was the million-dollar question posed at the recent Insider Northern Powerhouse Digital & Tech conference in Manchester.
To illuminate what made Silicon Valley successful, Hugh Campbell, founding partner at GP Bullhound, technology investment and advisory firm, described the pioneering, risk-taking culture that typified Silicon Valley when it started 50 years ago and has maintained since.
Helped originally by the availability of cheap land and a group of venture capitalists, the Californian Bay Area community was always prepared to take risks, Campbell said, with a proactive and positive culture happy to fund future success. Conversely the European approach to funding tech businesses, he explained, was akin to “driving a car with the fuel indicator flashing”.
“The Valley is full of entrepreneurs creating innovation – big, global ideas that will change the world – with investment following. The work ethic of people in those businesses is fantastic,” Campbell said.
He highlighted the “ecosystem in which everything is better and reduces risk” and the approach of “aggressive networking” in which “someone knows someone who can help you”, making your venture more likely to succeed. The attitude to innovation of “fail fast and fail often” is also part of the culture and something US entrepreneurs are not afraid of, he added. This overall approach puts Europe, Campbell estimated, 30 years behind the US experience.
However, the Silicon Valley success story carried some caveats: while it might not be “broken”, Campbell said, there are unhealthy elements of today Silicon Valley that the Northern Powerhouse might not want to emulate. The area has become prohibitively expensive to live in, causing a fall in talent moving there, while the infrastructure is creaking under the pressure of population.
Co-incidentally, an article published today by Professor Genevieve Bell – an anthropologist who worked in Silicon Valley – strikes a note of caution about the concept of Silicon Valley thinking. She said: “It is easy to get seduced by all the potential of the new and the wonders it promises. There is a lot of hype and not so much measured discussion. So it is time for a conversation about our possible digital and human futures and about the world we might want to make together.”
She speaks about the importance of “working out how to navigate our humanity in the context of this data-driven digital world”.
A way of thinking
Back at the conference, James Bedford, head of investment strategy at Tech North, reiterated that idea of Silicon Valley as more than a geographic location but a “way of thinking”. He also noted the underdeveloped ecosystem in the north of England, though its tech sector is growing faster than any other.
What he – and Tech North – want to see develop in the Northern Powerhouse is co-ordinated investment between the region’s cities, deals that are easily accessible to investors outside the north, readily-available capital throughout the development of businesses and companies that are primed and ready for investment.
Peter Wade, tech alumnus of eBay in Silicon Valley, Trainline and LADBible Group, noted from his time spent in the US the “deeply-held belief that tech will solve all problems”.
The longer-term thinking he witnessed in the US was defined by his time in investor relations for eBay: the focus was more on understanding the market and company differentiation versus the more British approach of going through the cash flow statement and looking at share price fluctuations.
He said: “The cultural difference [in the US] is the belief that all the value is yet to come, to harvest in the future. Therefore, you want to take investment, even though that means giving up something.”
Paul Gouge, CEO of Wilmslow-based gaming business Playdemic, pointed out the lack of emphasis on being an entrepreneur in Britain: “We’re not encouraging people to make those life choices. We need to try to change that at the start of people’s careers.
“Most people ask me how I take risks: I ask them what’s your notice period? You’re a month away from redundancy. There is a need to shift culturally.”