Spend any time around tech startup circles in the UK and you’ll know just how many people view Silicon Valley as some kind of Shangri-La, where world-changing ideas are ten-a-penny, the VC’s grow on trees and world market domination by your mid-20’s is standard.
Yet whilst listening to this sort of chat can be inspirational (and it’s surely a good thing for a business to have global aspirations), it can have a far more damaging result when such talk of opportunities elsewhere ends up demotivating people who become convinced that they’ve been dealt a poor hand in the location stakes. You’ve no doubt heard it before: investors would love my business if only I’d been born in America/been to MIT/had Mr & Mrs Zuckerberg for my parents [delete as applicable].
So I was a big fan of the talk given by John Peebles, CEO of local business Administrate at the excellent Turing Festival recently. John did a sterling job in dispelling some of the location-envy that at times is all too common both in online discussions and in bars following local startup events throughout the country.
Whilst some businesses have to be close to their customers, for the most part geographic location is becoming increasingly less important. At times, it feels that many people use location as an excuse for a lack of creative thinking. So as someone who’s built businesses in different locations across the globe, John brings a useful perspective to the startup scene in Edinburgh.
Here are some of the reasons why, instead of spending time complaining about just how high the barriers are which are preventing you from building a global venture in Scotland, you should be thankful for the advantages:-
1. High profile
You’re a big fish in a small pond. There may be few other big businesses to compare yourself with but it means that everyone knows you. Good news: this can often give you a recruiting advantage in the constant war for talent as people gravitate towards the success stories.
2. Lower costs
Compare the costs of setting up a business in Silicon Valley – or even London – to Edinburgh. Avoiding the centre of the universe means cheaper wages, lower rental, a lower cost of living… The savings soon start to stack up and each one can be essential in the cash-strapped early days of the life of a business.
3. Cheaper healthcare
Regardless of your views on how it could be improved, one side-effect of having National Insurance on this side of the pond is that there’s one less cost to consider in the recruitment process. In the US, the healthcare plans that employees seek will sometimes come with a price tag that tips the balance from deciding to hire that individual and putting off the decision until a later date.
4. Access to markets
The US often represents a huge (and lucrative) market for a startup. Yet it’s often easier for a European startup to break into other non-US markets. A fast-growing European startup is likely to be multi-lingual from the start and can be better placed to deal with local variations, even when it comes down to simply dealing with different currencies across the various markets.
5. Better employee retention
When you’re building a tech startup, you can’t get away from the fact that the level of talent in the Valley is unsurpassed. Yet it also leads the way in the size of financial packages and competition for the best employees. Factor in the prospect of many exciting startups being based closely together, the risk of employees choosing to hop around between the hottest businesses is very real and you have to start factoring in significant HR costs.
6. Increased investor patience
Not to be relied on perhaps, but there’s a greater chance that the investment community in a smaller pond is likely to be more patient. Sure the local investment scene in Scotland may not be perfect but it’s still easier for an entrepreneur based up here to get in front of any London-based VC’s than a US startup based in Missouri (for example) can get to a VC on Sand Hill Road.
7. Education ecosystem
We have great education over here and a university system that in some notable areas leads the world. That sort of talent is looking for opportunities to work in exciting, growing businesses. Engage and enthuse others with your vision for the business.
8. Tax breaks
EIS, Seed EIS and Entrepreneur’s relief are all good examples of how the UK’s current tax system is designed to help entrepreneurs – and investors who provide the essential support – where possible. A country that has “the world’s most generous scheme for angel investors” is evidence that everyone is working hard to close the gap between the Valley and the UK.
9. Work/life balance
Yeah, I know. Another mythical Shangri-La concept for a founder, perhaps. But at least you have the (theoretical) option of being able to take a weekend off now and again and head into the unspoilt hills of the north for some relaxation if that’s your thing. Even if it’s not, there’s few people that can actively wish they had a longer commute to work in the mornings.
10. The chance to impact others positively
But of course, it’s not all about improving your own life. Do it right, with just the right amount of luck, and you also get to help others by creating jobs, spreading wealth, inspiring your local community – you know the drill. In a smaller location, you can be one the few, rather than one of the many, who achieves this level of success. In the right set of hands, that power to both inspire and to actively support others as they strive to be successful can really help a local community.
No-one’s pretending that it’s in some way easier to succeed simply because you’re based away from the centre of the universe, wherever that might be in your line of work. But there’s only ever likely to be one outcome for any would-be entrepreneur who focuses only on the hurdles that face him or her, rather than on the opportunities.
Thought I’d end with a video. It might be created for a US audience but it’s always important to remember that there’s never been a monopoly on achievement. Wherever you’re based, it’s up to you to do the best with what’s available and use your own creativity to work out how to get the things that you need to succeed – after all, isn’t that what entrepreneurship is supposed to be all about? There’s a reason why Edinburgh is home to businesses such as Skyscanner, FanDuel and others after all.
Any other thoughts about why you think it’s good to base yourself outside the Valley – or even London – or if you disagree, feel free to let me know below.