Listen to the noises coming out of the local companies, and it’s clear that they feel good about this. Former Facebook executive Joanna Shields, now working for the government’s Tech City organization, said it would help turn a “vibrant community” into a “global leader in tech innovation”. And the head of Google Campus, the internet giant’s local bridge-building effort, said it would “help to establish London as a global center for tech entrepreneurs”.

London’s time, you’d assume, is now.

But here’s the message I took away from it all: it’s time to step things up.

Promised unfulfilled

Britain’s government has been one of the biggest cheerleaders of London’s nascent startup scene over the last few years. While the Old Street area has been a center for the country’s digital economy ever since the birth of interactive media, the decision to create an official “Tech City” movement has seen a concerted effort to court technology companies.

This is for a few reasons. It’s partly an attempt to find some light in the economic gloom. It’s partly an attempt by Prime Minister David Cameron to appear connected, forward-thinking and switched on (look at his relationship with Google to understand the positioning here). And it’s partly an attempt to turn the legacy of the Olympics into something more by enticing big tech firms to the area — even if they don’t contribute much in the way of tax revenue to the British economy.

But Cameron’s commitment to bolstering the startup economy is actually even deeper than that.

Right now, I think the British government — or at least it’s gov.uk team, which is rebuilding government services to be “digital by default” — is actually the most exciting startup in the country.

It’s dealing with big problems in a smart way, tackling and operating in a lean, mean, aggressive manner: a world-leading approach that Tim O’Reilly recently said set the standard for governments. And to do that, it’s hired some of the most impressive coding, design and strategic talent around. Over the last couple of years a sequence of great talent — mainly from London, many of them friends of mine — have been sucked into the gov.uk machine as they try to reinvent the way Britons connect to their public services.

Don’t get me wrong: tackling big problems is great, and the work that Government Digital Service is doing is extremely important. But I think it’s an indictment of the local scene that so many great people are choosing to work for the civil service, and that the apparently thriving scene around Old Street seems to be more and more reliant on government boosters.

So how do you fix that?

The challenge to Britain’s startup community

A few months ago, I wrote that London’s tech community was looking at “golden moment”: a confluence of circumstances that could see the region really push on and make good on its promise.

Now, however, I’m less optimistic. There are lots of great companies and strong ideas floating around the UK startup scene, but right now there are too many poseurs and very few world beaters. The latent potential is not being achieved, and the signal is being crowded out by all the noise of bearded startup hipsters tapping away aimlessly in local coffee shops.

Still, I believe this is a glass-half-full situation. Those who are really taking the bit between their teeth and developing serious businesses are doing very well. Moshi Monsters has turned into a massive children’s brand; online loans company Wonga is doing things that banks can’t; innovative smaller outfits like BERG and Makie and others are making waves in their industries.

But the scene needs an injection of real talent and ambition — in part from the same people who have been subsumed into the government’s digital efforts. While they get down to Important Public Service stuff, the hangers-on have fallen into a self-congratulatory funk, drunk on applause from boosters and ego massages from investors looking to pump up their own interests.

Fortunately, most some of the talented individuals working on gov.uk are contractors, not staff. When their time is up, they’ll be back out. Let’s hope they do something great when they’re free again.

In the meantime, listen up, Silicon Roundabout: don’t buy into the mirage of success. It’s time to stop combing your mustaches and build something important.

Update: Mike Bracken, who heads the GDS project, has been in touch to say “most of our people are civil servants, as we’ve removed loads of contractors as per government policy”.

Glass of wine photo courtesy of Flickr user Davide Restivo

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And it appears tech startups have a very strong role to play, picking up the slack left by London’s declining financial sector.

On Monday, the Centre for Economics and Business Research (CEBR) issued a few pieces of interesting news. I say ‘interesting’, but for the money folks it’s just bad news: London has lost its position as the world’s financial center, and bonuses in the City (the banking district) have fallen dramatically. But all is not lost – caffeinated coders to the rescue!

“The key areas driving the London economy in the years to 2017 are expected to be the MIC [Media, Internet and Creative] sectors of London’s ‘flat white’ economy and the more traditional Business Services such as business consultancy and accountancy,” the think tank said.

Just to drive the point home, the CEBR projects a 31 percent rise in employment in London’s East End by 2031, compared with nine percent for inner West London. The east, of course, is where all the startup action is.

Geography aside, this shift would have some pretty significant social effects, CEBR economist Rob Harbron told me:

“The MIC sector employs a lot more people for any unit of output. It’s expected to help drive employment growth in London over the coming years, and to spread out employment over more people with a lower wage packet.”

In other words, the tech sector may pay less than banking (hardly breaking news, that) but it employs more people.

The irony of this situation, of course, is that London’s tech sector exists largely because of the city’s status in the financial world. If it weren’t for the capital’s capital, chances are the UK’s tech startups would all still be up in the Cambridge hub.

In the end, it comes down to diversification. As the financial crisis has demonstrated quite clearly, London’s extreme reliance on the finance industry is highly risky. That industry isn’t going to go away, of course – not while London stays where it is, geographically speaking – but it does appear that the tech scene is forming an increasingly essential pillar of the city’s economy.

No pressure, then!

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The so-called “TV Triangle” “counter-balances the much-vaunted and invested-in east of the city where the Silicon Roundabout and Tech City reside”, writes Tess Alps of TV advertising lobby umbrella ThinkBox.

The initiative’s backer, a media advisory called Decipher, plots almost 60 outfits in broadcasting and online TV on its TV Triangle map.

But, unlike the compact, emerging technology area around Shoreditch, east London — which is attracting government funding and budding hipster-entrepreneurs like bees to a honey pot —  ”TV Triangle” covers a whole swathe of west London measuring perhaps around 35 square kilometers.

What’s more, the zone doesn’t just include broadcast firms but also liberally claims food etailers like Graze, PR agencies like Bite and furniture firms like Made.com.

In these converging times, it is more typical that technologists and media firms should rub shoulders and mingle. What now appears to be happening is a demarcation of particular locations as thematic business zones.

This may divide two cultures that should really be meeting more often, or it may simply point to increasing maturity around the concerted development initiatives of each.

Sounds to me, at least, like one of those sectors has a touch of the green-eyed monster…

@Malctheviking @guardiantech it is time Guardian got its act together & discovered places doing same as TechCity elsewhere across the UK!—
TV Triangle (@TVTriangle) October 28, 2012

@turnipshire: Joanna Shields…..says #London "is the gateway to the world"
We think she must mean WEST London as we have Heathrow?—
TV Triangle (@TVTriangle) October 22, 2012

“@L_Pbusiness: What’s next? London’s moving east – London Business News #london bit.ly/W6cyXj”

Not if we can help it!!—
TV Triangle (@TVTriangle) October 31, 2012

“It is right for the government to invest time and money in the east and the ‘new media’ companies developing there,” Thinkbox’s Alps writes.

“But there should be equal energy put into other media that are at least as valuable and ripe for growth. The east does not have a monopoly on ‘new’”.

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The docks, once crawling with shipbuilders constructing huge constructing vessels like The Titanic, are now an empty sprawl of wasteland dotted with lonely office buildings. And for anyone who remembers the Troubles, an activity as simple as crossing the road or staying at a hotel can carry chilling reminder of brutality that is not easily forgotten.

It’s no surprise that these difficulties have had an impact on the local startup scene too.

From what I heard, the attempt to build a new entrepreneurial culture is there, but it’s slow going. Northern Ireland’s turbulent existence means that the economy remains massively reliant on the British government (around a third of the population work for the public sector) and it is still working hard to attract investment from outside. Meanwhile, locals are still looking for a real champion, a real victory, beyond bluster and good ole boy networks.

Belfast’s problem is that things don’t get consigned to history: in fact, history stubbornly raises its head at every opportunity, bleeding mercilessly into the present and the future. Northern Ireland’s ambitions are too often scuttled like The Titanic, crushed by the pressure of the past.

But the truth is, Belfast is not alone in this. It may feel like an extreme example, but the whole of Europe suffers the same malaise in some shape or form.

Weighed down by the past

From Finland to Faliraki, from Portugal to St Petersburg, Europe is sitting on a vast and varied history that it struggles to move beyond. We’re stuck like flies in amber, our ideas freeze-framed at the moment our societies were at their most successful or most extreme. Britain can’t shake off the arrogance of empire, France clings to its l’exception culturelle,

In a way, this is especially resonant in technology companies — because, after all, they the ones meant to be inventing the future. And because our societies are failing to shake off the worst parts of their legacy and craft a successful vision of where we’re going, we are all left copying Silicon Valley’s idea of what tomorrow will look like.

Look at Nokia — not long ago the world’s biggest force in the world’s fastest growing technology industry, now apparently an also-ran. Although some of its leaders have a bright vision, too many insiders stubbornly cling to a history of greatness that no longer chimes with the rest of us.

Or look at Germany’s attempts to enforce rigid and steadfast privacy rules. These ideas have a totally understandable historical context, but outside of that unique bubble, it would be polite to call them overzealous. Clinging to that history has left German web companies hamstrung while the buccaneering robber barons of the Wild West clean up everywhere else.

The result is that the conversation about our future has become a one-sided dictation from a group of companies who essentially grew out of the same Valley culture. Our tomorrow is their tomorrow.

I was reminded of this failed future when London’s Tech City announced that it had poached top Facebook executive Joanna Shields to run the organization.

Bringing in Shields, an American, is definitely a win for the group paid to cheer on London as a startup and technology capital: she’s got more experience at the top of 21st century web companies than almost anyone else, which gives her a stratospheric level of credibility with the investors that Tech City is desperate to court. She’s smart, savvy and sharp: a great hire.

Shields’ record is not as spotless as Downing Street would have everyone believe — for example, masterminding the $650 million sale of Bebo to AOL was a genius move for company insiders but disastrous for everyone else. And then there’s the little fact that she has presided over companies that avoid millions of pounds of taxes from the country she now represents. But there is a rightful sense of pride at being able to prize somebody away from Mark Zuckerberg’s clutches.

However, bringing her in is also an admission that Britain — and Europe — has no other visions of the future to offer. It’s a tacit acceptance that technology, that innovation, can only be built the way they see it in Palo Alto.

Follow your own path

Perhaps you don’t mind. That’s fine. But I think if we want to find some alternatives — or at least explore them — we need to move on from our history, and our obsession with creating “the next Silicon Valley”.

Earlier this year I gave a talk in Portugal aimed at helping people there understand that they cannot win by chasing the Bay Area’s dreams. Every startup hub across the continent talks endlessly about being “the new Silicon Valley”, every PR flack has pitched the and every journalist (including me) has worked on those stories. But that’s just playing somebody else’s game. You can’t be the next Silicon Valley by doing what Silicon Valley does. It will win every time, because the game is stacked in its favor.

The same thing happens elsewhere. I talked about the reporting I did a couple of years ago from Shenzhen, China, where most of the world’s electronics are now built. Those skills, that expertise, are all in one place — and in just 30 years. Now their advantage is so huge, why would you try to beat them?

The problem with “the next Silicon Valley”, I argued, was that we took it too literally. Focus on “the next”: What will the next huge technology-led industry be? What will the next center of innovation that touches everyone be? What will change the world? Find that, get there early, build now around a vision of the future that you really believe in, and reinvention could work. Use the strengths you have locally — things like engineering talent, design culture, customer service, research expertise — but don’t let them dominate you. Don’t let history weigh you down.

Now, I don’t know what that thing is — biotech, next generation manufacturing and data are all contenders that Europe could focus on. But whatever “the next” ends up being, every entrepreneur across the continent, whether they’re in Belfast or Berlin — must stop looking over their shoulder, shrug off the past and stop buying into somebody else’s dream of tomorrow.

Photograph of Bobbie Johnson and Belfast mural used under Creative Commons license courtesy of Flickr users Luca Sartoni and Infomatique respectively.

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The setup is similar to that in New York, with the consultancy giant and the banks joining forces with local public bodies – in this case the Technology Strategy Board, the Mayor’s Office and the City of London Corporation – to accelerate financial services startups. Applications will be accepted until the start of November, and six startups will win a place on the 12-week program.

Applicants will already have to have a working beta, and will have to demonstrate that they will really benefit from the access to senior banking executives that comes with the course.

“London is the world’s number one financial centre and a global leader in technology innovation, which is why the FinTech quest for entrepreneurs is such an exciting proposition,” mayor Boris Johnson opined.

If the original iteration is anything to go by, the London FinTech lab should come up with some interesting services. Recent grads from the New York operation range from ‘gamified compliance’ mobile apps (TrueOffice) to big data search tools (EidoSearch) and analytics engines for combating fraud (Centrifuge. Not the sexiest material, but all useful to the big names lined up behind the scheme.

And what a roster that is, with many names – Barclays, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley and UBS – being familiar from the New York version.

“In the UK, the intersection between the technology space and financial services space perhaps didn’t have the sort of accelerator that we’re looking to set up,” program manager Karl Meekings told me. “There’s obviously a whole array of accelerator programs that exist, but nothing focused on the financial services sector in this way. So we thought this was a good way to identify technologies which are relevant to financial services and which could improve upon the efficiency of the industry as a whole.”

From the organizers’ perspective, setting up the London lab makes sense: while anyone is free to apply to these programs, they need to relocate if they’re accepted, so it’s a natural move to have at least one European base. Meekings also noted that initiatives such as Tech City showed there was “something we could already tap into” in the London scene.

Could we see another of these labs elsewhere in Europe? Doubtful: if Accenture and pals are looking for that magic confluence of tech innovation and high finance, there aren’t too many places outside New York and London to look. If anywhere’s next on the list, my guess would be Singapore.

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The project, which is trying to push the British capital as a global startup hub, will now be looking for a new CEO and deputy to share the workload that van der Kleij has been balancing for the past 18 months. But they don’t have to rush too much: the change is not immediate, as he plans to reduce his role over the summer before stepping down entirely in September.

The South African-born entrepreneur has been a highly visible — if sometimes controversial — figurehead for an organization that has generated a mixed reaction among the community it’s meant to be championing.

Many prominent British technologists have told me that they are frustrated the government decided to focus on a narrow slice of East London known colloquially as “Silicon Roundabout”, rather than either looking at the substantial activity taking place in other areas such as nearby Cambridge or Reading. And sometimes its desperate attempts to latch itself onto the existing community in East London even stretched the truth to breaking point.

Meanwhile those who have benefitted from the extra attention Tech City has brought them have no reason to complain: after all, they can only see the good side of the organization’s priorities of bringing investment into local tech companies, and raising the area’s profile to tempt in talent.

When I asked van der Kleij about the criticism he’s faced, he was pretty sanguine and positive about its prospects, even if it has been difficult to bear at times.

The vast majority are very happy with us, 80 or 90 percent. We could just say that’s fine and carry on — but listening to the 20 percent, that falls into two camps: those that are looking for a rational challenge to what we do, and we’re always happy to consider those, and the other, who are actually quite smartly using this initiative to mobilize their own agenda. I understand that, and by the way some of it can be fun. But I listen to all of it, and we do make changes as a result. I’d never say we’ve got it nailed, and one of the things I’ve learned from being an entrepreneur is that you have to iterate.

Some of it is weird, though, and some of it comes from the wrong perspective.

Mike Butcher at Techcrunch gives a good roundup of how the last year or so has gone for Tech City, and says “only a curmudgeon would say it’s done nothing at all”.

That may be true, but the fact is that whatever the impact of Tech City has been, it is a project that has van der Kleij’s fingerprints all over it. Whoever comes next will have to remodel it into something a little different.

This could be to their benefit, of course. In particular, the TCIO’s desire to focus in order to claw back some of the money invested in the Olympic Games has caused it some conflict: trying to push technology companies into unloved parts of East London to help cover the costs of building for the Games has been a thankless task.

The Olympics will be over once van der Kleij has left, which could the make the job of his replacement substantially different. And it will be interesting to see if can bring in somebody who has a very strong reputation in the region (which van der Kleij didn’t, particularly) or if they’ll opt for somebody who can pull in outsiders.

So the question now is who’s in the running to take over? And who would want to be?

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The event, which was started by a group of U.K. entrepreneurs who wanted to woo jobseekers away from corporate gigs in corporate life or finance, will make its next appearance on May 26 and 27 at the Truman Brewery in East London.

That’s right, two days: it’s larger than the one held last October, and now stretches across a whole weekend. It’s also been expanded so that design and product jobs are on offer, as well as engineering.

So far more than 100 startups are confirmed, trying to get what they believe will be around 3,000 attendees into more than 800 positions — not bad when you consider that it started out a year ago as a small event in a local pub, even if it’s only succeeded in filling a little over 150 jobs at the two events so far.

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After all, what does Google have to gain from opening up a place just a few miles from its swish base in West London? Sure, the new space is at the heart of the city’s much-hyped “Silicon Roundabout” area… but is that really enough?

Now more solid details are emerging about what the company plans to do with the 25,000 square foot space, though, I have to admit they’re intriguing.

According to the London Evening Standard, 4-5 Bonhill Street will open next month under the name of “Campus”, and essentially become a co-working space for London startups:

It will feature open plan office spaces where firms can rent desks, along with cafes, meeting rooms and event spaces. Google will also have an office to give advice to firms.
Plans for the building seen by the Evening Standard show space for over 200 desks, along with lockers to leave expensive equipment, table football tables and even tea making stations. Small wooden booths can be hired to work on sensitive projects, while upper floors feature open spaces and even a cinema area for presentations.

Google will keep plenty of desks in the building too, but what’s particularly intriguing is that other companies will be moving in as well. I understand that Seedcamp, the pan-European incubator, will be moving its operations entirely into the Campus building, and it seems that other groups including Springboard and TechHub will also be using the space.

That makes it a smart move for Google in more ways than one.

Most obviously it gives it increased visibility in the developer community: London’s a city where small distances can make a big difference, and while its main Victoria complex is only four miles from the new building, that is in fact a world away for many of the engineers who are clamoring to be near the heart of the British capital’s technology scene.

In the short term this gives it a boost at a time when rivals like Facebook, Twitter and others are starting to increase their British presence. And that means it could be useful in the longer term for hiring and even acquisitions.

In addition, Campus also allows Google to do a little public relations work, acting as a champion of the local technology industry and working alongside the British government: no small thing when the company has been under fire for paying just $1.9 million in U.K. taxes on more than $3 billion in revenues.

But while the deal appears to have been blessed by the authorities — though Google hasn’t yet answered my questions on what incentives it was offered to open Campus — the truth is that the government may be smiling about this deal through gritted teeth.

The authorities have made a concerted effort to woo major technology companies into the area — dubbed the “Tech City” development — in the hopes that big businesses can fill the vast space left behind when the Olympics finishes this summer.

But while the official Tech City group has been bending over backwards to get Google to sign on the dotted line and take over a significant office space in the Olympic Park, it seems that Campus may be the best it can manage. Instead of committing to East London as Downing Street had hoped, over the past few months Google has leased hundreds of thousands of square footage elsewhere in the city and continued negotiations to move its operation to an 8 million square foot space in North London — just outside the Tech City zone.

So while government officials may crow about bringing a major Silicon Valley name into their orbit, the reality is that Google’s only serving one master here: itself.

Update: Shortly after publication a Google spokesman responded to my question of whether there were any incentives given for opening Campus: there were none, he said, and Google is “just looking to help fuel the community and support their ideas and concepts.”

Photographs used under Creative Commons license courtesy of Flickr users mbiddulph and osde-info

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The circus rolled into town yesterday as the country’s Prime Minister, David Cameron, stepped forward and announced a raft of new developments and vaunted the success of the Tech City Investment Organization (TCIO) — a group he launched himself one year ago.

The PM hailed the area’s “successful growth”, echoing a statement put out by the group that:

“the number of tech businesses in the Tech City area is now over 600. In November 2010, there were around 200 – indicating an impressive growth rate in the last year”.

But the claim that the number of technology companies in the area has tripled inside a year is not just audacious — it’s incorrect. In fact, the numbers are based on a self-reporting list that has significantly expanded its scope in the past few months — to such an extent that “tech businesses” now apparently include nightclubs and fashion boutiques.

I took a look through the list used for the Tech City Map and compared against other publicly-available information and discovered that, contrary to the official line, only a tiny proportion of these hundreds of businesses were started in the area in the last year. In fact, most were several years old — and many stretched back to East London’s emergence as dotcom hub back in the 1990s.

Even more concerning was the fact that a significant number were not technology companies at all, including Fabric London, a world-renowned nightclub that opened its doors 12 years ago, and a number of fashion businesses based in and around the Brick Lane area. In addition there were a large number of architects, photo processing firms and film companies — few of which would be qualified as technology firms by any normal measure.

And it is not just my examination of the official numbers that concluded they were incorrect. In a separate study by the business search service Duedil, only 200 “real tech startups” — that is, businesses under 10 years old and working on defined technology products — were identified. So TCIO seems to have reached its numbers simply by widening the net.

So how did this happen?

I asked the TCIO for comment, and they confirmed that Tech City Map list was self-reported — meaning that anyone can add themselves to it. But when I spoke to TCIO chief Eric van der Kleij about the figures, he said the growth numbers were drawn from a slightly different data set: a survey conducted on behalf of the Digital Shoreditch organization.

“From the time I took office last year, I always planned to do a proper empirical survey,” he said. “But in the meantime we asked the community to help. It wasn’t us reporting who the companies were, it was them.”

“We feel very comfortable with the 600 number, but it does not include — should not include — hairdressers and the like.”

However, examination of the Digital Shoreditch list shows that it contains the same non-tech companies, such as Fabric, as the broader data set. Van Der Kleij then said that the earlier figure of 200 companies last year was based on a report by McKinsey, and that he stood by the growth estimates, which he said was proof that the number of businesses had “more than doubled”.

“I think what was done at the beginning of the year was accurate,” he said. “I’d never let 10 Downing Street stick these figures out if I hadn’t done some work on this myself.”

I believe the initial figures of 200 companies in the area were under-reported — leaving TCIO in an awkward position when it comes to measuring growth. But there is a significant difference between saying “we are now listing hundreds more businesses than last year” and implying that those extra companies have arrived in the area and generated 200 percent growth over the past 12 months.

The sad thing is that East London is really buzzing at the moment, and there was no need to inflate the numbers this way. Cameron used yesterday to put the ribbon on a number of existing deals with the likes of Cisco, Intel and Google, and announce some others — including the launch of a new London seed fund run by senior figures at Google and IDEO. It’s all good news for the area, and useful recognition for some great companies.

And the British government is doing its part to help startups, including tax breaks for small businesses and fast-track visas for startup investors. Indeed, it would be mad to want anything else except success for them: after all, it has already closely aligned itself with companies like Google, and is working hard to make London known as Europe’s pre-eminent startup hub, ahead of Berlin and Dublin.

But at best it seems the growth figures are inaccurate and misrepresent what’s actually happening on the ground.

Tech City’s doing well, but the truth is much more complex than the headlines about a sudden explosion. East London’s emergence is no overnight success: in fact, the districts of Shoreditch and Hoxton — traditionally the refuge of artists, hipsters and trendy digital media agencies — have been the center of Britain’s digital media industry for nearly 20 years. Indeed, many of the companies on the Tech City list go back to the 1990s or early 2000s. It’s a culture so well-established that even TV shows mocking the area’s new media cliches went off the air six years ago.

There is a real and well-deserved sense of achievement in East London, and one that is growing all the time. But if Tech City wants to be successful in the long term then it has to be realistic, not bombastic.

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