London’s Silicon Roundabout from a New York state of mind

We may live in a globally connected world, where we’re just an email, Skype call or Follow away from a brilliant introduction. But it’s tricky going to bed at midnight in London when Silicon Valley is still in the office and happy hour in New York is just getting started. I arrived in London one week ago, energetically high from a spring spent celebrating an epic technological movement in New York City, but insatiably curious to discover what our friends across the pond are up to in London.

As you may know, there are about 100 tech startups in East London, particularly in the Shoreditch area peppered along Old Street in a location lovingly referred to as “Silicon Roundabout,” the city’s twee answer to Silicon Valley. With Government investment now planned for the area and exciting plans for The Tech City that will stretch from the area to neighboring Stratford, hub of the 2012 Olympic Games, London’s tech scene is nascent, wondrous and explorative.

Week 1: Who’s here

While New York’s tech scene is comprised of dozens of late stage startups like Foursquare, Tumblr, Meetup, Etsy, Gilt Groupe etc. and a plethora of innovative startups across finance, fashion, real estate and media, London has innovated in industries such as fashion, the arts and games, but is perhaps most proud of its emerging digital music industry includes startups like Last.fm, MixCloud, Reactive Music, WhoSampled, Musicmetric and Songkick (who’s mobile app recently dropped). These new growth companies are standing on the shoulders of the tech platforms that the West Coast’s Silicon Valley has built over the past decade such as easy-to-use infrastructures like Amazon, discovery tools like Google and Facebook’s social graph.

A few of London’s notable startups including entrepreneurs from Mind Candy, Moo, Songkick, Spark, Group Spaces, Unruly and folks from the coworking space Techhub come together every Friday to host “Silicon Drinkabout” a celebration of all things tech, wine and sunshine.

It was here I encountered Moshi Monsters, which are online pets that kids can adopt and then look after within a safe, fun and educational virtual world. The children’s social gaming company is the brainchild of London-based Mind Candy‘s Michael Acton Smith who founded the company in 2004. Moshi Monsters has 50 million registered users so far. Mind Candy has raised $10 million from VCs and is profitable via subscription revenue and licensing revenue from its physical products. This past February, we wrote about Moshi Monsters’s new pop-up shop in London.

When asked about London’s growing tech scene, the CEO said, “It’s in great shape. A lively community and growing ecosystem.” But he says, “Most of London’s games companies are still at quite an early stage.” One such early stage gaming company is We R Interactive, a Clerkenwell based online games publisher that combines “film storytelling” with high-end gaming to deliver a set of relatable characters and engaging plot twists. Wait, no bird-throwing? For the first time in a long time, it sounds like a game worthy of a try. Stay tuned for a full TNW review.

I also met entrepreneur Rich Martell, the founder of Floxx, a website and accompanying app that allows users to anonymously post about people in their vicinity. Floxx shares office space near Silicon Roundabout with a number of other startups, freelancers and developers. “We work hard and play hard, constantly bouncing ideas off each other and concentrating on where the company is heading,” says Martell. Floxx is part of a local cadre of other social networking companies like Badoo, Skout and Grindr. When asked what it’s like to be a part of London’s tech scene right now, Martell says:

“It’s tiring! Early starts and networking sessions that usually run late into the night means that being part of the scene is by no means an easy job. However, if you have the passion and the drive to succeed, it’s difficult to think of many places you could be happier. It’s also great that the atmosphere is one of collaboration and support, rather than a really cut throat environment.”

Watch a recent interview with Floxx here, who has been chosen by The East London Lines as a potential “The next Mark Zuckerberg” in Shoreditch:

In London there is certainly no lack of fashion start-ups, but many come and go as the seasons. However one timeless London-based fashion startup Not Just a Label (NJAL) has been earning serious coverage in publications like Vogue and Elle for its ability to find the hottest new fashion designers. Founder Stefan Siegel set up NJAL in 2008 as a networking platform for future fashion designers and those who are ready to present and sell their collections to the world. The site now receives over 16 million hits per month and currently represents over 6,000 fashion designers from over 90 countries.

I feel the fashion industry relies on antiquated systems and strategies, it is slow, it takes itself too seriously and therefore to stay on top you have to challenge the habits, you have to be willing to break the mold and re-invent yourself again and again. We are convinced that, despite the past financial crises and the implications for the economic climate, brands focusing on “authentic luxury” will continue to grow and prosper, resulting in one of the greatest creative opportunities in decades.

-Founder Stefan Siegel

NJAL grew from a kitchen table in East London and was bootstrapped until it became cash positive in year two. The team monetizes through advertising and commissions earned via the online store (all 6,000 designers are able to sell selected pieces through the platform, and ship them straight from their studios). While Siegel says he’s not so sure if he’s a part of London’s tech scene because “the wiz-kids” at networking events usually do not think fashion is a part of their universe, he believes East London’s enormous advantage is that it is not a collecting pond for clusters or ‘scenes’, it is a mix of artists, designers, developers, architects, musicians and various types of hipsters, who make this place so unique. NJAL was selected by Number 10 to advise the Prime Minister David Cameron’s office about developing the London start-up ecosystem.

With Europe at its doorstep, London is a fertile ground for culture focused new media companies like Crane.TV, which has defined its own niche in a similar space to New York’s Thrillist, Flavorpill and Urban Daddy. After 10 years of experience working in media and video production, entrepreneur Constantin Bjerke left to start Crane.TV, which officially launched in October, 2010 and aims to be “The Economist of Culture,” with stunning video content featuring interviews with the world’s most creative and innovative people whether they be artists, chefs, designers, curators, etc. Crane.TV was recently invited to meet with New York’s tech scene as a part of “World to NYC,” a program run by the NYC Economic Development Council. The new media startup is currently funded by a number of angel investors and is looking into several monetization strategies such as deals, media partnerships and affiliate marketing. For more on Crane.TV, find them on Facebook and stay tuned for a full review of the media company’s sleek new iPad app.

Networking Events

Networking is undoubtedly a huge part of any industry, particularly the technology industry, and participation and attendance at these events are the most measurable factors of a growing scene. It would seem then, that London’s tech scene has quite a way to go. For example, London’s Silicon Roundabout Meetup has nearly 1,000 members, which pales in comparison to the NY Tech Meetup, which has over 18,000 members and a secondary market for tickets.

This week, London’s first Inspire Conference took place at The University of London’s Senate Hall. The ambitious two-day conference drew 350 attendees, which is a normal show for a London tech conference. At this conference, we covered Ogilvy’s Rory Sutherland; Lutebox: a social entertainment hub for premium content; Why innovation is being stifled in France; Rovio’s Mighty Eagle; Alexander Ljung of SoundCloud; and Blippar, an augmented reality app that brings brands to life.

2Pears is a London based events and networking company for creative and startup companies in tech, music and media. 2Pears runs Techpitch 4.5, Music 4.5, a series of events that aim to bridge the gap between the companies such as these and the traditional music industry, as well as the UKTI pitch training workshops.

We are seeing a lot more new startups coming to our events compared to just a year ago, and this is mainly due to the fact that there are more startups out there, and they need events with relevant content and a casual environment in which to talk, drink, connect and share. More people are taking the plunge to set up their own business, and we are seeing an increasing demand from digital and tech startups to participate in our pitch training workshops that we organise on behalf of UK Trade and Investment.

As the number of startups and entrepreneurs are increasing, they are creating their own eco-system of support and fun for the community. Entrepreneurs and startups are getting together through casual meetups, informal drinks, networking and even recruitment events created by themselves such as Silicon Roundabout Social Club, Silicon Drinkabout, Silicon Milkabout etc. This makes for a strong community focused on working together to create more opportunities for everyone, and in which startups thrive, spark ideas off each other and support each other’s entrepreneurial efforts.”

-Petra Johansson, Co-Founder of 2Pears

It seems I’m not the only New Yorker who wants to get in on the action that is London’s tech scene. On Tuesday night of this week, the NYC based web TV company Boxee threw its UK Launch party and unveiled its upcoming iPad app to a crowd of 400 Boxee enthusiasts, partners, developers and members of the press at the Bar Music Hall in East London. The room was packed with English tech enthusiasts and I even saw one Android developer chased across the room for his card.

Aside from celebrating its UK Launch and partnership with the BBC, Boxee unveiled its yet to be released iPad app, which looks like something I can’t wait to get my hands on. The free app will be coming out at the end of the month, stay tuned for a full review. 5 Boxee Boxes were given away as prizes, one going to a portly older guy named Tom who chugged 2 pints of beer in a blink of an eye. The device, which has been out in the US just under a year, will be debuting for £199, or around $330 – $130 more than the US version.

Investment and Development

Events, creativity and enthusiasm aren’t all that a tech scene depends on. Necessarily, London’s developer scene has begun to attract talent and pick up speed. “The London Ruby community is thriving. The monthly meetup LRUG is really popular and a great place to discuss new technologies. Startups in London also tend to be very big into Agile Software Development and the idea of a ‘Lean Startup’. We take an all hands on deck approach, with the full team following agile methodologies in the day to day process and strategy of the business,” says Jenna Anians, the co-founder of the Silicon Roundabout based Tribesports, a brand new social platform that motivates and encourages its users to participate more in sports, allowing users to build a complete catalogue of their sports achievements.

In taking a first look at London’s venture capital scene, a city notably proud of its financial sector, the findings are less exuberant, perhaps less bubbly one might say, than the current funding patterns in California and New York. Lord Green of Hurstpierpoint, The Minister of State for Trade and Investment, and responsible for initiatives such as London’s planned Tech City says, “One of the challenges as we seek to get the Tech City cluster through tipping point into a significant technology force in the context of the European economy is to ensure that venture capital focuses on the area. One of the things we need to do is simply to make them aware of what is going on. There are some surprisingly physical facts that start to come into play. It is a 10 hour flying time from San Francisco to here; as someone said “that is a long way to go for a lunch…At the end of the day venture capital companies have to make their own decisions. The view that we have is that this is a young start up of a technology hub. There is a lot of momentum to it, but actually it needs some promotion, it needs some showcasing, it needs some support. I think it is the government’s job to provide that.”

One English engineer who moved to New York City last year says, “I think London’s tech scene is growing, but is having to fight the general oppression of the UK, and it’s bitter opposition to individual success. Startups are having to fight tooth and nail just to stay afloat, and getting funding is a lot trickier than in the US. There is however, lots and lots of good talent. It’s just locked up in traditional companies paying the rent. There’s very little ability for people who are young, working in and around London to save and build a bootstrapped company, especially given the wages. £40k is often the limit for senior developers.”

Even if the government isn’t able to sway venture capital, the hope is that big corporations like Microsoft, Google, Intel etc., who’ve yet to really tap into the city’s robust talent, will take notice. In fact, Google already has London offices at 123 Buckingham Place and across the street at 76 Buckingham Place in The Belgrave Building. Over the next few months, all UK based Google engineers are moving into the Belgrave offices while sales and marketing will move into Google’s massive new offices in the city’s West End at the colorful Central Saint Giles development. Further to this point, Vodafone, Facebook, Intel and McKinsey are all among the leading companies that have said they will commit to invest in the long-term future of the East London area.

But is there something about the personality of London that will hold it back? At first glance, ladies and gents in this town don’t seem too keen to stay in the office past 6pm. In fact, coworking spaces such as The Cube and Starthub shut at 6pm, giving employees little choice but to join their friends at the pub. Meanwhile, I’ve seen people check-in on Foursquare at New York’s We Work Labs past 10pm nearly every night this week.

“I also think the difference has got a lot to do with the U.S. culture of independence and frontier spirit- the need to reinvent and make themselves better than the last generation. The UK see things from a different perspective, one we’d argue, I’m sure, comes from “years, centuries of experience” but the reality is that it’s a long, tired and entitled view of the world. We’ve given up trying, and are somewhat content to lie fallow into our obsolescence,” says a British engineer who currently lives and works in New York.

Much like NYC’s Mayor Bloomberg declared last month, Lord Green of Hurstpierpoint has said, “What I think we can reasonably expect is that London will be the leading hub for Europe,” he said. But then rowed back, “Not the only one…a leading hub.” The British culture does seem less prone to self-celebration, which is proper and all, but not exactly the best way to get noticed in a crowded world of tech startups.

As a culture, the US celebrates entrepreneurship to a point where even if you fail it’s cool because you’ve figured out what doesn’t work. (On this point our beloved Dutch entrepreneur and TNW co-founder Boris writes, We haven’t failed, but successfully shown it doesn’t work.) Meanwhile, a failed business in the UK is considered a career issue and not a ‘great learning experience’.

I met with an editor at Google UK this week who explained that socially, there’s a lack of collaboration in London because there’s an absence of the desire to do so. It’s ingrained in the culture to be wary of others and to be guarded. I’m more than happy to be proven wrong here, but more to the Googler’s point, I’ve noticed that in comparison to New York, London lacks a flair for combustion and that intellectual intrigue that your next business partner could be right around the corner. Perhaps it’s because every time you walk around a corner, you have to duck into a shop and buy an umbrella. Or perhaps it’s because instead of talking about open APIs, raising funding and collaborating, people can’t stop talking about the rubbish weather.

Despite the rain in June, there’s something wondrous happening in London right now. People are excitable, waiting for the wheels to start turning. I met with the Director of Google UK’s Creative Lab who, alluding to Google CEO Eric Schmidt’s quote: ‘We run this company on questions, not answers,’ said that people in London are asking questions, and if you keep asking questions you can keep finding better answers.

We often discussed if London is the right city for our venture, and while I think in terms of availability of business support, VC’s and legislation there might be better spots, overall, London is one of the 4 trend-generating cities in this world. Especially looking at the development of East London, you won’t find any spot that combines so much artistic and entrepreneurial energy, mixed with a fantastic transport network to access literally every country around this world. I wouldn’t want to live or work anywhere else at the moment, despite the rain!

-Stefan Siegel, Founder of Not Just A Label

If the questions keep coming and the answers keep getting better, in the coming months and years, I expect we’ll see incubators like TechStars opening up camps in London and witness financiers trade their 6-figure salaries for equity stake. We may only be at the beginning of the chronicles of East London’s tech scene, but the pages are being written.