Starting Up: London Vs. The Valley

These days, my job at Spigit has me spending 50% of my time in London, and the rest in California at our head offices in the East Bay area. This is very interesting, because it really illuminates the difference between startup world in both places.

Firstly, the obvious: London may be a hot place to start something in Europe, but it lacks the scale of the community in the Valley.

But the real differences are all about attitudes to the way things are done.

The UK is a much, much less business friendly environment than the US. The amount of red tape involved in doing anything is absurd, and you don’t realize it till you have seen the two compared.

Let me give you an example. Here at Spigit, we have our employees provide themselves the mobile phone they want to use, and expense the costs back to us. It sounds sensible, right?

In the US, this is all fair and good, but in the UK, we have to report that as a benefit in kind to the tax office. Then, what happens is the employees all get these coding notices from the tax office saying they owe additional tax because they had a personally owned phone paid for by their employer. Most of the time they only use the phone for business calls, but that, apparently, isn’t the important test of taxability.

Our CFO, based here in the US, made a very sensible suggestion: just pay their tax bill. But no, we can’t do that either. The payment of the tax bill, apparently, would be another taxable benefit.

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So, instead, we have to work out a way of taking over all their phones, which are all with different operators, just so our employees won’t be out of pocket when they do our business.

Stuff like that happens all the time. I was on the phone to some unhelpful people in the UK’s tax office the other day and made this point, and discovered, somewhat to my horror, that they hadn’t yet discovered Britain no longer had an Empire.

I’m also not the first person who’ll make this observation: there is a stigma attached to being in a startup that doesn’t work in Europe, whilst trying and failing in the Valley is celebrated.

In London in particular, this is a big issue. The idea that you’d leave a relatively senior job in a big company and go to a startup and not succeed is something of a career limiting move.

It says, if you ever wanted to go back, that you can’t run projects, you can’t manage budgets, you know nothing about marketing, and have poor networking and people skills.

To get that kind of taint in a large European organization, you’d have to screw up repeatedly over the course of years. But Europeans, and the UK in particular, don’t celebrate failure as a learning exercise: it is just failure plain and simple. And as a leader, you get associated with it personally.

Here is the real challenge of the startup scene in London: it is an all-or-nothing bet. You are either completely off the career track in large organizations and doing startups, or don’t go there in the first place.

I think this might be more true for people who are at my stage in their career than those who are coming into this earlier on. It encourages major risk aversion, which, lets face it, is the number one inhibitor of innovation.

I do have this piece of advice though: startups are exciting, and they’re exhausting, but they put zest back into your work life. I used to get really annoyed with people who carried on in large companies about work/life balance, and I have come to realize something: it is only people who don’t like their jobs that rant on about it. Everyone else finds a way to make it work, because they want it to work.

The whole question of work/life balance is one that comes up only when there is a huge disparity between the amount of joy you get in what you do for money and what you do for life.

A startup, in my experience so far, has the chance to bring the two closer together than anything else I’ve tried so far.

I can’t, however, say, that the comparison between the Valley and London is all bad, though.

Europe, and London in particular, has phenomenal talent, and lots of it is available now that being a banker is so much less an attractive career choice.

The thing in the Valley is the best people are all in huge demand, and you have to be either exceptionally hot or exceptionally rich to get them.

In Europe, there aren’t so many great places for the talent to go. It is sad, but true. So, when you want XYZ skill, you can usually get it, and you can usually get it for a substantial discount on the rates you’d have to pay in the Valley. That’s wonderful for companies like ours who have operations in both places, of course. And it will continue to be so, I think, until the rest of the Valley works out what a phenomenal place for talent Europe is.

I suppose the interesting question is whether my experiences are typical or not.  So let me end this post by asking the question: if you work in both places, which is better? Or, like us, do you prefer to have the best of both worlds?

13 Responses to“Starting Up: London Vs. The Valley”

  1. BrianSJ
    February 16, 2012 at 3:33 pm #

    and of course blackberries and smart phones aren’t phones so far as HMRC is concerned. Not sure what they do think they are, but the complications are endless.

    • jawgardner
      February 16, 2012 at 3:40 pm #

      Really? Thankfully, I didn’t actually dare go into that particular difference with them. US Based readers: HMRC is the official name of the UK Govt Tax Office: it stands for Her Majesty’s Revenue and Customs.

      Brian – thanks for your comment.

  2. February 16, 2012 at 4:33 pm #

    Top post James, spot on. The UK hates people who pay people, both tax and employment law make it as difficult as possible, and yes we hate “failure” – I guess because most corporate Brits have never been a success and also envy success. The UK is the land of the greasy pole not the ladder of achievement.

    • jawgardner
      February 16, 2012 at 4:38 pm #

      Steve – hi.

      Your comments, though I hate to admit it, does indeed seem to summarise the situation. But to your points: those of us who have chosen to *stay* in the UK – I am one of them – kind of do have an obligation to try to make things better, which we can do by trying to push uphill anyway. I recognize that this is not always that effective, especially, as you indicate, what’s needed is a massive cultural change, not just some policy change in Government.

      • February 16, 2012 at 7:48 pm #

        It’s an odd thing, but the technophile culture of the US can be traced back to the French, also great technophiles. One of the greatest contrasts in UK vs US culture is their relative respect for technology and technologists, and one can observe the same cultural contrast between the UK and France. If it were not that France makes employing people even more onerous than the UK then the French would be the technology leaders of Europe, language notwithstanding. I think this contrast rather indicates the massive scale of the tectonic shift in UK culture that would be necessary for the UK to truly flourish as a technology leader – and I greatly admire anyone who creates a successful tech startup in the UK in the face of all the apparent obstacles!

  3. luke
    February 16, 2012 at 4:45 pm #

    Exactly the same situation in Austin, Texas. Great people, less competition for spots.

    Love London, been many times. It does seem head and shoulders above other cities in Europe on the tech scene.

  4. Kate
    February 20, 2012 at 12:04 am #

    Towards the end of your post you talk about the best people being in huge demand in the Valley. There’s an interesting discussion here about this topic (in both the original blog post and the comments): http://pandodaily.com/2012/02/04/silicon-valleys-engineering-salaries-are-finally-getting-fair-thank-facebook/.

    • February 20, 2012 at 2:00 pm #

      That is a very interesting post Kate: goes directly to the point i was trying to make too. I wasn’t aware that there were accusations of cartels in the valley though, which suggests things will get worse in the Valley not better.

      A good time to build teams in Europe, it seems to me.

  5. Stephen
    February 26, 2012 at 5:09 pm #

    Simplifying and reengineering massive layers of policy and especially tax law could be a first mover advantage for many of the existing mature western states facing decline and a way to inspire new growth and innovation. I have to say though, that both the UK and US have considered simplifying their highly complex tax legislation over the last few years but have yet to fully address the issue? Perhaps another example of someone being unable to make a decision unless they have too. Greece is an example of what can happen when countries fail to challenge the status quo or leave things too late. I look forward to when we see true engagement in policy formulation, and an extension to democracy that considers the needs of all Stakeholders. We have the technology to enable it and governments need to embrace it. If policy is formulated with just a motivation to increase government cash yields rather than increasing growth, then we will all have to live with the consequences for many years to come. Government policy is a very significant part of a nations competitive advantage and needs to be formulated with due consideration by a wide and diverse base of stakeholders who could perhaps offer up new ideas. I know governments have dabbled with this but it needs to more than just a one off.

    • February 27, 2012 at 7:57 am #

      Stephen,

      I can’t disagree with any of your points. There are presently moves afoot to simplify tax law here as you know in the form of Universal Credit and other initiatives, but these, tragically, do not go nearly far enough to make things simpler.

      But, to your point, it is hard to go past examples of nation-states like Singapore if you want to see the effect of business-friendly policy. That is a tiny country which punches far, far, far above its weight just because of the points you’ve made.

  6. March 1, 2012 at 4:14 pm #

    James,

    Good article but should the paragraph starting “To get that kind of taint..” then read “.. in a large US organisation.. ” to make your point?

  7. Karin Thomassen
    August 23, 2013 at 11:47 am #

    Hi James, so true, just found you again on the internet, so that should explain my late response, in The Netherlands it is like in the UK, although the lack of jobs pushes people to start their own, still like in the UK you really should want it, because in spite of complaints from the entrepeneurs tax rules are very unfriendly, and like you said, also here we see only failure, not all the other good things, and secretely we do not like others to show us it can be done, so we are all too happy to see others fail, and thank god we still getting a paycheck at the end of the month from our save and mostly not too excited jobs…

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