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London, along with many other small communities across the globe are now fast competing with the largest and most influential start-up ecosystem in the world - Silicon Valley. Over the last 30+ years Silicon Valley has produced the biggest tech Goliaths we know today, but the rest of the world is catching up. Figures published in the Tech City Third Anniversary Report show the number of technology companies in London increased 76% from 2009 to 2012. In the same period, the tech sector in the capital grew by nearly 17% and was responsible for 27% of London's job growth. Entrepreneurs have also been flourishing in Berlin, Tel Aviv and Sao Paulo. Whilst it is clear the Valley isn't the only entrepreneurial destination, do entrepreneurs still need to be there in order to guarantee success?
If you are running a B2B business, then your market in the US is going to be about 20 times bigger than that in the UK. B2B companies need to position their sales and marketing teams accordingly i.e. near to where their customers are. For two companies operating in these markets with identical products, the macro economics of the US are arguably more compelling. It might be more expensive there but it is certainly not 20 times more so and once that larger market size starts to take effect the US business will out grow, out market and out develop its UK counterpart. The most likely scenario for the UK company is that it gets bought as the long-term independent outlook isn't good.
For B2C companies, it's a different picture. The internet has become the primary sales and marketing channel, so in that respect it doesn't matter where the company is based. One advantage of not being in the US, and in particular Silicon Valley, is that great developers are paid a lot of money in San Francisco so seed funding doesn't go far. But, and these factors are considerable, access to finance is much easier in the US, there is a very receptive environment to great ideas and start-ups, and the number and network of people doing similar things is huge which adds both energy and serendipity.
On balance, my view is that being in Silicon Valley helps to be successful and is very important in order to become extremely successful.
Silicon Valley was once the only place in the world technology startups could launch, however now Europe is as good a place to start as the valley. London is seeing huge investment, both in the supporting infrastructure from UKTI as well as in startups themselves. VC's such as Forward Partners, Balderton Capital and Index Ventures have all picked Europe as their home.
One particular success story to illustrate Europe's success would be Nutmeg (www.nutmeg.com) a company that launched in SF but actively moved to London to scale. They have just closed a $35 million round.
With the introduction of Bitcoin in 2009 and the various other forms of crypto-currency which followed, it seems we are moving ever increasingly in the direction of operating with alternative currency equally as much as real world currency. Between March and April 2013, the value of a Bitcoin jumped from £21 to an incredible £150, showing that these types of currency could indeed be a force to be reckoned with. We asked the VP of Marketing and Growth at Shopify and a Venture Capital Analyst at Ariadne Capital whether they think crypto-currency will gain the same recognition as real world currency.
Crypto currencies offer several advantages over usual currencies for both customers that buy, and merchants that sell online.
For merchants: there is no per transaction fee so they make more money (credit cards often charge 3 per cent + 30 cents, or more), there is much less risk of fraud (a credit card number can easily be written down and sold on the black market), there is no risk of chargeback (these cost merchants $15 or more) and more.
On the customer side, they get much better anonymity, no expensive currency exchange costs, lower costs (assuming a merchant passes on the savings) and more.
If ecommerce were to be invented today, Bitcoins would be the de facto way of paying online and credit cards would seem as quaint as paying with a check.
Crypto currencies are still a long way before being used and recognised at your next door shop. There are some examples where they could develop, especially for business to business payments, international exchanges or in some emerging countries where the national currency is already highly volatile. Nonetheless, for day to day mass market use, digital currencies such as Bitcoin don’t offer enough incentives for people to change their habits.
Bitcoins have two main characteristics: they are created with an idealistic view that currencies shouldn’t be issued exclusively by states, and they are bypassing credit card networks and their associated fees (1 per cent to 3 per cent commission charged to merchants).
In my view, both those features are not compelling enough for people to start using a new currency they are not familiar with and are sometimes afraid of. Retailers that have and will announce their intention to accept Bitcoins are mainly doing it to create a marketing buzz. It doesn’t mean that we will keep paying in cash and cards; mobile payment is thriving, but these transactions will still be in pounds, dollars and euros for quite some time.
On Wednesday, Jeff Bezos announced that Amazon would be releasing their first smartphone - the Fire Phone - on the 25th of July. The phone is seamlessly integrated in to the Amazon marketplace allowing direct and easy music, kindle and video downloads, straight to the device. The phone boasts impressive new features such as its 3D interface and the 'firefly' which enables the camera to recognise products that can then be added in to the users basket. Amazon is a dominant force in the retail and digital world and launching a phone is the next logical step to widen its customer base. As innovative as its new features may be, we ask two digital experts whether it will it be able to disrupt Apple's reign in the mobile space.
“The Amazon Fire Phone with its dedicated FireFly button is exactly the kind of show rooming tech that supports our view, that this is about bridging real world objects and online. Accompanied by real world product detection application, this gives Amazon the power to operate on the high street. By allowing users to match products using its hand set Amazon hope to undercut those high street stores effectively turning them into little more than showrooms for good, Amazon will then deliver.
At every turn, consumers will be able to find products and check prices. Amazon's efficiency in delivery services will mean it can now actively challenge the immediacy of the high street whilst also amassing swathes of data on consumers shopping behaviour.
That is of course, as long as Amazon can produce record breaking sales figures and polarise Samsung and Apple's market share, with a phone that the media are already calling the Shopping Phone.”
“Amazon’s new phone simply closes a gap in their device offering, extending the ways in which they can influence interactions with the rest of the Amazon ecosystem. There’s no radical disruption to any fundamentals of mobile economics, which means it will simply be another phone competing against Apple, Samsung and others, on the basis of ergonomics, functionality and personal preferences.”
Uber has been rising in popularity ever since it was founded by Garrett Camp in San Francisco five years ago. Over the years its notoriety has grown and has been backed by notable investors such as Goldman Sachs and Google. Uber is a prime example of a disruptive innovation and it has been making waves across the transport industry in 38 different countries . The app allows users to book a car straight away with customers then given an estimated cost, wait time and driver information. It is connected to a debit card which means a smooth, cash free journey and the rates are a lot lower than traditional city cabs. Uber has been hugely popular across the world and has recently been valued at a staggering $18bn. Change is not always welcomed, no matter how innovative it is. Uber has been at the centre of many disputes with traditional city taxis in Paris, Belgium and most recently, London. Thousands of disgruntled drivers blocked central London on Wednesday to protest the app. Whilst tradition is great and should be valued, surely we cannot allow it to halt progress? We asked a black cab driver and a Uber customer whether they thought that the two could co-exist.
We can definitely co-exist with Uber, because they are a minicab company. We’ve co-existed with mini cabs for over 40 years which has been fine. We’ve had competition long before Uber came about, we had dial-a-cab and com cab. We’re definitely not frightened of technology, just look at Hailo and GetTaxi. TfL have to make sure they don’t use a meter and abide by the same laws as other mini cabs. Addison Lee have had an app for four years and we’ve never had a demo. Some people need to hail a cab and others choose to book one, that’s fine, it’s dependent on circumstance. We do the Knowledge so we know where we have to go and so we don’t drive around in circles. That’s why minicabs don’t have a meter because they could go the wrong way and end up charging customers far too much. We wouldn’t study for four years for no money if we had nothing to gain from it. This isn’t an us vs. them approach, if drivers suddenly stopped doing the knowledge and decided to go work for Uber, it wouldn’t work. For example, what would a satnav do today? If someone tried to drive down Charing Cross Road it would be impossible, but cab drivers who’ve done the knowledge would know different routes and to get around that. Technology is great but a satnav can only take you so far.
I think Uber’s offer is far more attractive, they’re cheaper, easier and you can trace the driver. If you leave something in the back seat, you will immediately be able to contact them and get it back. It’s safe for lone travelers, with a photo, contact number and registration plate of the driver. For the younger generation I can’t see why anyone would choose a black cab, through a smartphone an Uber will take you across London for a fraction of the price. It’s survival of the fittest and technology is making life easier and more affordable. Whilst tradition is great, living in London means you really have to take cost in to account. I think they will deplete in numbers hugely as more and more people become aware of Uber’s better offer.