I recently had a conversation with the head of Economic Development of an outer London Council who were bemoaning the fact that their borough was failing to create economic activities, jobs or “excitement” needed if their part of London is going to reverse what increasingly seems like an inevitable economic decline. Why can’t we get the private sector to create another “Shoreditch” in our part of London was the envious cry?- Where is our Tech Hub, Trampery, Book Club or Brick Lane, Spittlefields market they cry?- Where are our exciting new start-ups or future growth hubs?
I replied to the council officer ( perhaps optimistically) that their future high growth businesses and entrepreneurs are likely to found locally ( after all it is still London) but that their London borough obviously does not yet have an entrepreneur ecosystem to attract and nurture todays and tomorrows talent and that it will not have until they do something about it.
Presently places like Shoreditch, Soho, Farringdon, South bank and upcoming areas such as Dalston, and Greenwich Peninsula have all the advantages of being clusters that have a “critical mass of entrepreneurs” that attract other entrepreneurial talent. They work because:
A: The “Buzz” or “Hype” of being the place to be – (The hard facts are that 12-18 months ago the centre of London’s thriving digital economy was not Silicon Roundabout- Tech City ( that title in terms of numbers and scale of digital business belonged to either Soho or perhaps Victoria) but 12 months on from the initial PR story it is becoming true for now everyone( entrepreneurs, talented staff, investors and cool businesses) wants to be in Tech City or at least somewhere near Old street roundabout.
B: The psychological and practical benefit of having other entrepreneurs in close proximity.- It is a great motivation being around other entrepreneurs, the informal learning opportunities are great and just as importantly knowing that others around you are constantly trying to do something new and innovative in face of enormous uncertainty of succes makes the entrepreneur believe what they are doing is a little less crazy.
C: Good Connectivity. -This is a necessary condition but anyone who has been to Shoreditch will attest it is not the easiest or quickest place to get to and get around.
D: Cheap and flexible accommodation- A place where costs are low so you can experiment and most importantly reduce the initial cost of starting and scaling a business.
E: Support services including those provided by Capital Enterprise members (Universities, Enterprise Agencies, Incubators) and the less formal peer-to-peer learning and support groups such as techmeet-up http://techmeetups.com , minibar http://www.meetup.com/minibar etc
In essence entrepreneurs want to start and grow a business in places that are less risky and more fun. This can occur naturally but I contend that local councils and corporate sponsors can give it a little hand. The reason why the private sector is not creating mini Shoreditch’s across London with their own incubators, meet-ups and trendy social clubs is because it is too dam risky. The barriers are too high and the chances of success are too low for everyone but the most imaginative/daring entrepreneurs with the deepest pockets. ( I tend to meet a lot of entrepreneurs with former rather than the latter attributes). I believe that local councils could work with these entrepreneurs and with their local business support infrastructure ( Enterprise Agencies , Universities etc) to create an eco-system that could seed a cluster of high growth, job creating, exciting, PR worthy businesses in their borough. I think that most (if not every) council in London should co-invest with their local private and not-for profit companies in a plan that will create:
A: Touch down or meet-up space for local entrepreneurs (similar to dreamstake http://www.dreamstake.net ) in the best connected part of their borough. ( A great use for underused libraries by the way)
B: A hatchery offering free or heavily subsidised desk/office space to at least 10 potential high growth businesses. I would run a competition with the local media to find these entreprenuers with growth potential and offer them a package of support including space at the hatchery, on-going support micro credit, free publicity in the local press etc)
C: A high quality mentoring service for those in both the hatchery and those further along the growth path
D: Access to a high quality training and development programme provided by a business support agency or university.
E: A permanent pop-up shop space where new and existing real world and on-line retailers can try out their latest offerings. ( This will bring back excitement to Town Centres better than most of the ideas funded through the £10m Outer London Fund http://www.london.gov.uk/priorities/business-economy/investing-future/outer-london-town-centres/successful-bids )
F: A local Entrepreneur dynamo/ champion whose job will be to coordinate activity, organise and facilitate local entrepreneur led meet-ups and to personify the “buzz” around entrepreneurship.
How much will it cost a council to seed is dependent on scale etc but I think most if not all of it could be done for between £50-100K per annum if you could enlist the support of existing players.
Will it work ?- There are no guarantees but I think it is worth a try. The recent McKinsey report on how entrepreneurship and new businesses are driving innovation and job creation http://www.wamda.com/web/uploads/resources/the-power-of-many-mckinsey-report-20110310.pdf – explicitly declares there is a role for government, universities, not for profits and the private sector to work together to create an Entrepreneur Ecosystem.
Capital Enterprise is more than willing to play its role to engage our members and to find and raise corporate support. So we now require London Councils to step up to the plate, embrace new thinking and do something ( rather than nothing) to reverse the otherwise economic decline of their boroughs.
Pick up the phone- send me an e-mail- let’s talk.