How London became the rest of the world’s startup capital
(economist.com)225 points by ellieh 5 days ago
225 points by ellieh 5 days ago
As a Brit when I started doing deals in North America one of the things I picked up was that I had to be explicit about disagreement OR where a decision was not being made yet. In the UK during a negotiation a 'silence' is not equal to agreement or disagreement, it's a NO-OP. If I didn't do this then prospective customers/suppliers in the USA would believe that I'd agreed to their request when from my perspective I had merely noted that they'd asked for something. Has anyone else run into this?
The other one that's confusing is that "tabling" something means the complete opposite.
I would separate 'politeness' and 'indirectness' a bit. I generally agree about 'politeness', there are plenty social forms that Brits still follow. For example I found the language/manner of New York attorneys pretty 'aggressive' the first few times.
Indirectness, is definitely a thing - Brits speak to each other or signal disagreement in ways that's clear to another Brit, but maybe not others. The use of silence, but also some words that depending on tone can mean different things which I think is difficult for North American's to interpret.
best reasoning I've heard for this is that English is subtext heavy, like Japanese due to the history of the aristocracy. The populace were in thrall to their feudal lords and the aristocracy as serfs and servant classes for so long, that being indirect has been embedded into the language as a defense mechanism to not upset the pay masters. We get the subtext but people new to our culture might not.
I remember a technological mess being present at work and my team lead bringing out the classic:
> it's not ideal is it?
or the classic Jeeves and Wooster valet/aristocrat relationship with Jeeves giving it the:
> as you say sir
> very good sir
with both statements being flexible but often being delivered with the dripping subtext of "yeah that's complete bollocks".[0]
Obviously this doesn't apply to the real working classes but then those types are not the sort to gain a STEM education.
[0] https://www.youtube.com/watch?v=s03Fq1nsbng
(The full scene is around 11:30 in the first episode and I think its captures a conversation of subtext and indirectness quite well).
> it's not ideal is it?
Oh jeez, I've literally just typed out a message on Teams to describe a situation where someone deployed breaking DB changes without the accompanied app changes as "a less-than-ideal scenario". Sometimes I forget I have to translate from British for the benefit of everyone else on the team (half in India, half in US, one German)
10x more insufferable tech bros too? I've never lived there true, but I've spent some time there to know this place isn't for me.
Depends on the company, but typical junior salaries are £35-45k a year, mid level around £50-65k year and senior somewhere between £65-85k a year. Obviously you have FAANG who pay significantly more and finance firms, but they are not the majority, and I've hired or have friends being paid in these ranges who are extremely talented and from top unis.
Upper ranges for all levels accross the very highest paying employees are £100-400k when including bonuses usually. Usually these are quant/quant-dev jobs and FAANG.
I've always found levels.fyi to be a little pessimistic for the UK when compared with commercially-available benchmarking services.
I suspect it's because people on PAYE tend to think of their basic salary + bonus + income tax, but disregard NICS, pension, paid holidays, and other benefits. They end up reporting a total package that's 10-20% lower than it actually is.
I arrive in 2026. Decide to start a startup. By the year 2038, the state mandated reader of legal documents has finished reading out aloud to me and my co-founder. Now we find a VC. His documents need to be read to us both. But the Y2K38 problem strikes. He thinks we are in the year 1970. He needs to read us the "ancient company addendum". While he's reading he chokes and keels over, dead from the emissions from his Volkswagen. Our ARR may be zero, but what about our government grants? Also zero.
My friend. He starts in France in 2026. The government mandates that the retiree earnings to worker earnings ratio must be fixed by law to what it was in 2025: 130%. For every employee I hire, I must also pay a retiree 1.3 times his salary. He visits me via train in 2038. I ask him how his trip was. Turns out he actually got on Deutsche Bahn train back then in 2026. I just didn't know because he spent all his time on Twitter explaining why the US approach to startups won't work. He's lucky. Pretty short delay for DB train.
This was crafted with a subtlety that captures the continental combination of infrastructural petrification and untethered pride perfectly. Wonderful
Reminds me of how often you hear Austrian Railways announcing that they apologize for the late running of a train "which was subject to delays in a neighbouring land". They never name which country but it's always Germany.
Come to Germany, the letters from Rundfunkbeitrag and Waldorf Frommer are already waiting for you!
The big disadvantage is wages, and how everything is so...formal and bureaucratic, for lack of better terms.
For example, I couldn't even hope to get employment in tech in the UK or Europe without a degree. Work hours and wages too, less pay given the tradeoffs makes sense, but getting paid more than others for the same role is a big problem, even if you have more skill/talent/experience. Or simply working long hours on salaried jobs, with the understanding that when the spring or whatever hacking cycle is over, you can take it easier, that's hard because of the formalities, laws,etc...
Perhaps the term I'm looking for is "inflexible"?
On the other hand, the reason all of that is not a problem here in the US is "bottom-line oriented" thinking, and that ultimately leads to everything getting enshittified.
It feels like the UK and EU think they're happy with where their society is at, and they mostly want to keep things afloat? The type of thinking that goes with startups involves risk taking and experimentation outside of zones of comfort, or even outright laws sometimes.
Would all these AI companies get away with scraping the internet if they were based in the UK or EU? I'm not saying they should, I'm saying look at the big picture results vs near-term stability and comforts.
If I were British or European, I would want local and/or regional wages to be high, trade surpluses to make sense, foreign dependency to be minimal, military to be strong, so that social welfare subsidies, and all the nice pro-human laws won't require so much sacrifice. The US had been (no longer) in that position, but our deep political divisions and prevalent sub-cultures of cruelty prevented us from going that extra step and having the best of both worlds for everyone.
Do you have an experience working in Europe or the UK?
> I couldn't even hope to get employment in tech in the UK or Europe without a degree
Maybe this is how it looks from the outside, but it's not how it works in reality.
My evidence is I've been working in 'tech' for 25 years and having hired people across the UK, Europe and North America. Tech is one of the most accessible career paths, particularly for areas that are novel and expanding rapidly - consequently direct experience of an area is the important currency.
Often roles will advertise a 'degree' or equivalent industry experience. The only roles I can think of where this could be an issue is trying to join a large corporate organisation in their 'graduate' programme (e.g. a major bank), but that's the same situation in the USA as well.
I have no experience working in the UK, my impression is entirely based on what people there have told me. I've also looked at job postings there. In the US you'll see "or equivalent experience" tacked on, but not in UK, Canada, EU job posts I've seen so far. But I'm very glad to hear you say it's different.
I've had a similar career, and the only time I've ever been asked about my education was towards the end of the hiring process with a major US-based tech company back in the early 2010s.
No UK employer has ever asked about it, to my knowledge.
Sounds more like a company problem than a London problem. Wages also - the distribution is very wide.
Can a software engineer afford to buy a home on a London salary? Or is it a similar experience to living in the Bay Area?
London is the money laundering capital of Europe [1]. The entire London property market has been propped up by Russian kleptocrats [2]. I'm not saying startup money is (necessarily) illegal or at least dubious in origin. I am saying that London's banking and legal system heavily favors companies and invetors. And that's the point. It's the same reason Delaware is the de facto standard for incorporation for American companies.
Granted, English is widely spoken in London and that's factor for cross-pollination of talent between the US and the UK. It also has an easier visa situation than the US.
On top of that, salaries in tech in London are much lower than the US [3]. The cost of living in London is actually pretty awful.
London's biggest problem is that the UK is no longer in the EU. Long term I see this as a strategic problem because (IMHO) the EU is going to be incentivized and ultimately forced to make their own versions of key US tech companies in much the same way as China has. And the EU won't want that outside of EU jurisdiction. It defeats the point.
[1]: https://www.theguardian.com/world/article/2024/may/14/nearly...
[2]: https://www.theguardian.com/uk-news/2022/mar/06/how-london-b...
well, the split is both ways. lets not forget that depite a lot of talk and wish-casting, the EU is still largely impotent. I know for sure that I am envious of my colleagues in the US. but europe? hmm...
regarding the Russian kleptocrat situation, you can't knock London for having a Profitable Business Arrangement. The biggest enemy of any Russian oligarch are other Russian oligarchs. it makes sense then, to keep your dragon hoard where none of them can touch it (possibly not even you!)
ofcourse it becomes even funnier when all of them get the same idea, converging on the same optimal strategy...
indeed any and all mafiosos are welcome to safeguard their assets in London banks (for a price, and not neccesarily monetary.) whatever happened to the venezuelan gold? if that then serves to subsidize the rest of the UK ordinary citizenry, hey, you could say the UK in the business of karmic repayment.
Smells like marketing stuff.. there are plenty of other places that i think are better.
It's not based on marketing, it appears to be based on metrics like amount of venture capital raised.
Having a London domicile often leads to an overstating in venture capital raised for the UK ecosystem.
For example, I've funded Polish and Indian startups that chose the UK as their legal domicile because we couldn't be bothered to hire a legal team to draft a contract to Polish or Indian specifications.
Builder.ai [0] is a great example of that - it was an Indian startup that was domiciled in London to simplify raising capital from Gulf investors.
[0] - https://www.ft.com/content/926f4969-fda7-4e78-b106-4888c8704...
Startups like Builder AI use London because a.) they want to raise money from filthy rich Arab investors and b.) those guys are not known for doing much due diligence. They go more by vibes and hype and who's on the existing cap table. Also c.) they are very comfortable with London because it was so much easier back in the day to launder or siphon away funds from their home countries. London is an extremely popular destination for Gulf Arabs.
You'll get a lot of shady startups of that kind in London for this reason.
Does this also impact US metrics for capital raised? My understanding is that the Delaware C-Corp is still the startup standard for founders from anywhere in the world to raise global capital, which I imagine skews where the capital actually ends up flowing if they are actually building a company in a foreign location and just using the Delaware entity as a holding co.
Somewhat, but not to the degree as you see in the UK, Singapore, or HK.
Until a couple years ago, it was difficult for someone without a SSN to create a Delaware C-Corp and even despite current political instability, the depth of IP, capital, and R&D available in the US is difficult to replicate outside China, Japan, and maybe India.
Given that London has little else going for it other than a financial industry it's not surprising money is raised and companies are registered there.
That said I don't know anyone doing a startup in London. But I know dozens in Berlin without even thinking about it.
That would be pretty funny to say. Where are America's startups founded? Principally the San Francisco Bay Area. What about the Rest of the World? Oh, principally the San Francisco Bay Area.
It reminds me of the funny fact that for years I worked at a building in Bush St. that was nice but not particularly remarkable only to find out that that's where Saudi Aramco was originally headquartered when some Twitter post counted them for the Bay Area for their "Where are the top market capped public companies from?" segment.
Could you give only a few examples from those PLENTY of other places that are better? Like the first 10 that come to your mind, you made me very curious!
Not the person you asked but I am thinking of France and Germany. France has Station F (https://en.wikipedia.org/wiki/Station_F).
There are also Portugal, Spain and Romania that are rising contenders. I am also very dubious of UK being "world first"
I'm waiting for the yearly "Waterloo is the Silicon Valley of Canada" article that always fails to deliver its promise.
I grew up in Waterloo but it's just not it lol.
Which makes me all the more disappointed that Birmingham (close to me) doesn't have a better startup ecosystem. It is an ideal place to benefit from London (little over an hour away) without the crazy prices. Anyone here based around the midlands, say hello / "alright bab"....
So London feels less like a Silicon Valley replacement and more like the world's best startup nursery
London's basically great for:
1. Startups
2. Scaling/Growth
3. Existing company expanding from USA->Europe or Europe->USA
For start-ups/high-growth you get a pretty good business environment (legal/corporate and day-to-day running a company is reasonably straightforward), employees with skills and the employment law is pretty flexible, there's plenty of finance around.
For Growth and USA companies that are expanding into Europe then London/UK is somewhat easier to understand than other European geo's. There's an aligned language and there's more cultural touchpoints - it's kind of a mid-point culturally/institutionally between Europe/USA.
For funding/driving to late-stage and IPO there just isn't anywhere like the USA. But everyone has to expand to North America eventually, so it can be fixed at that point. Also, PE funding has changed a lot in the last 10 years, so if you're not on the 1-in-1000 rocketships there's a more steady 'good' path which is totally viable.
While startup capital flows in, the growth story is very different, and for those living in the UK, it isn't what it seems.
There aren't any jobs in the UK and most are offshored to other low CoL countries.
Young people, founders are leaving for other places like Dubai, Singapore and even SF for higher paying jobs.
This is generally how it is. For the entry level market you have a realistic choice of 5 companies like Barclays, BT, Amazon, SKY for limited positions while competing against the world for them. A fresh linkedin job post for tech even for no-name companies gets a 100+ applicants in under an hour starting at 30k salaries. I'm not even sure which startups are hiring graduates except maybe from Oxbridge. It is obvious a lot of people commenting particularly in this thread are ultra-privileged expats where "London" is just zone 1 for them and are well connected in the industry. They probably don't even know what Morley's is. Living costs along with the high tax rates alone will eat up your income and I know British people who work in international bank's at senior positions complaining about these things and about mass immigration all the time.
This doesn't seem true, I work in a UK tech company and it's an incredibly international team. My team has three Brits (including me), a Norwegian, a Swede, a Pole, and an American. The CEO is Irish, the CTO is German/American.
Obviously that's just one data point, but every tech company is similar.
This checks out. I live in Silicon Valley but now work for a startup in London. Same vibe, less attitude.
They are not the same. The energy/resources in SF/SV are 5x at a minimum - but London has it going on.