Business Technology

Silicon Valley Comes to the UK: It's not just the entrepreneur, it's about the ecosystem

13 min read

24 November 2014

Former deputy editor

Jack Hidary, senior adviser to Google X Lab – the department responsible for Google Glass and self-driving cars – spoke to Real Business about his involvement with Silicon Valley Comes to the UK (SVC2UK) and explains that a leap of faith into the unknown is often required for success.

Silicon Valley came to the the UK last week, and Real Business has already spoken to startup mentor and managing director of GrowthPoint Technology Partners, Michael Shepherd. He explained that the programme has changed in recent years to guide businesses on scale-up and how they can improve their chances of securing funding.

Now, fellow mentor Jack Hidary, senior adviser to Google X Lab, reveals the UK needs to embrace the culture of startup, and urges companies to be more aggressive and paranoid so that the industry can be changed. 

What excites you about the SVC2UK project?

I mentor six to seven startups at any one time in the States and help run an incubator for startups, so to come here and mentor UK companies is very exciting.

Given that you operate largely in the US, how does the UK scene differ to the way it operates?

I think that for UK companies and European companies, there’s a unique challenge which is facing fragmented markets. You want to grow and scale – you can do that in the UK. But then if you want to go to adjacent markets whether that’s France, Germany or Spain, it requires a very different cultural fit, localisation, different teams and so forth. 

It’s much easier for us in the US because we can scale in a very large market with no borders and a common culture across the entire country.

This morning we were mentoring a travel company that offers unique solutions for leisure travellers. They’re based in Milan, but want to expand n the UK and Germany. However, travellers play differently in those markets, so these are challenges for companies looking to expand across the continent.

How can the UK companies adapt?

One of the ideas I’ve been sharing here with the UK companies, which is probably more of an American trait, is that the window to dominate your market is smaller than you think.

I find that American companies are very aggressive in their effort to go and dominate their sector because they know the number one in the sector tends to monopolise the capital and attention in the space – it sucks up the air in the room. Uber is one example of that that and has quickly left its rivals behind and has dominated the capital markets for the mobility service, and the press as well.

I find that some UK companies may not be as paranoid as I am as a US entrepreneur in terms of wanting to quickly dominate the sector by organic growth or a combination or organic growth and acquisition of competitors or potential competitors. I find that many startups do not think naturally to go to competition and merge in – although that is one way to grow quickly.

Another is to go and say to a large company that we should partner up to dominate that sector. It was traditionally difficult to work with multi-billion dollar companies because they would act very slowly and bring you down as a startup. But now the tables have turned and many large companies recognise that they’re being disrupted by other startups and that their need to partner with startups rather than to be disrupted by them is great. They can partner with them to disrupt their industry and so I think there are now many large companies in the US who are partnering with startups.

Can you provide an example the UK can learn from?

Chobani is a yoghurt brand in the US and it’s come from nowhere. It’s seven years old, sells $1.5bn of yoghurt a year, is responsible for about a third of the yoghurt market in the US, and just announced that it’s opening a food industry incubator in order to find and cultivate new disruptive ideas in the food industry.

Rather than being disrupted itself, it’s going to disrupt more in the food industry by identifying and cultivating entrepreneurs with emerging companies, and it’s going to invest in each one and house them in an incubator with a shared kitchen to further disrupt and dominate the food industry.

That’s an example of what a US company is doing, but large companies in the UK and Europe are beginning to become more paranoid about the disruptive nature of startups – so they’re open to partnering quickly.

What do you think it will take for more UK companies become more aggressive and realise the threat and opportunity?

I think it’s beginning to happen. There are a number of incubators in London and other parts of the UK, and the startup culture is being recognised. Last night [20 November] we were hosted by the speaker of the House of Commons and we got to see his house. The fact that he hosted SVC2UK and students who participated in the appathon, which encouraged entrants to develop apps from children’s ideas to win a trip to Silicon Valley, shows we have reached right into the halls of power. It speaks volumes that the interest in this sector has now happened in the UK – as leadership, government and other large businesses are interested in what’s happening.

What is required to speed up this trend of interest and understanding startups?

There are several banks and law firms interested in serving startups and that’s what you need. To have a startup culture, it’s not just about the entrepreneur, it’s about the ecosystem and that’s one thing we’ve learned from Silicon Valley – it’s about having all of the elements come together.

Yes, you need entrepreneurs who are passionate and excited about their idea, but we also need the supporting actors of law firms; ones that will not charge through the roof for a startup to get their business going and who understand their needs. Having universities participate in the culture is critical – two days ago we were at Cambridge University and had sessions there with students and startups.

These are the elements we now need in the UK to really foster a whole ecosystem of startups, not just to identify a handful of startup entrepreneurs.

What interesting innovations have you seen come out of the UK?

I’ve met a lot of the entrepreneurs here who are very inventive agile thinkers, and they want to succeed. One is called RealEyes, a software technology that can view a face via a camera and tell the emotional state of that person, whether they’re reacting to a video advertisement positively or apathetically, for example.

I was trained in neuroscience and it has a lot of interesting implications, such as the effect video has on us as humans. I believe they have 11 PhDs, and others with deep computational and behavioural psychology experience, so that’s interesting.

In a startup culture, you want to see companies that are going deep in terms of technology and looking for new white space. Too often startups go for a me too approach, so they just copy something else. What I find encouraging here is that I’m seeing new white space startups, ones that are looking for new spaces that haven’t been filled in by others yet. These are spaces that sometimes require a leap of faith to enter, but this is where a lot of the rewards are – entering areas that have not been explored by others.

When Google announced a self-driving car, this was a big surprise for a lot of people that such a thing was even possible. These are examples of new white spaces that amaze and delight the customer and also have massively positive implications – the self-driving car is an example and it will save thousands of lives in the UK, on the continent and in the US through reduction of driver deaths.

Would investors feel like white space is a risky business?

Going into these new spaces is worthwhile even though it does take a leap of faith sometimes. That’s one thing I would like to encourage the UK entrepreneurial community to do – find more white spaces that have not yet been explored and go into those. Leverage the universities, Cambridge, Oxford and so on. 

Imperial yesterday hosted a session focused on women in tech and I think that’s one of the encouraging signs I see here, that many of the entrepreneurs participating at SVC2UK are women and that’s a challenge for the tech sector – it needs to be more inclusive, bring in more diversity and women to lead companies.

The event at the speaker’s house where we had young children getting a book and kit from Cambridge University Press on how to code in Python was very encouraging to start young, and to encourage this entrepreneurial activity is the thing the UK wants and should do more of.

Is there anything else the UK can do to bring Silicon Valley to the country?

What I’m hearing from UK entrepreneurs is that the UK investor base may be a bit conservative. In the US there’s a robust culture of angel investing, which is starting in the UK now, where people who have had success are investing in more startups

That first cheque of £50,000 or £100,000 is one of the hardest cheques for a company to get. In a way, it’s much easier to get a cheque for £5m or £10m at a later stage, but that first cheque before you have the prototype or much of the team is often the leap of faith and I think it’s starting. 

There’s Cambridge Angels in Cambridge and TechHub in Silicon Roundabout, so it’s beginning, but the more we can encourage that early stage of investment, it would be fantastic to see more of in London and the UK in general.