Introduction
Is the rampant startup culture that's insidiously burrowing under the skin of UK PLC the saving grace of our future economy? Yes, most economists and politicians will answer emphatically. But is it that cut and dry? Creative hubs in London, Manchester and Cambridge have grown organically and been very successful, organised locally by some enthusiastic people that have benefitted from Goldilocks conditions.
But does that mean that the success of one creative hub can be replicated elsewhere? Can it be artificially recreated and planted in a town that needs a new economic saviour? Or is the rise of the tech hub the result of a combination of factors that ultimately lead to creative success?
A fresh start?
The story of a creative hub always follows the same narrative. Creatives and entrepreneurs settle in a deprived part of a city looking for cheap rents and likeminded people. This creative overspill attracts music, food and entertainment that caters for the new residents. Which in turn attracts others who want to be part of the 'scene'. When it's officially known as a scene, you officially have a tech cluster with people starting businesses, just to remain part of the scene.
London, Manchester and Bristol, as well as the tech clusters up and down the country exist because the entrepreneurs in the respective areas wanted to create a business or a community of techies. In every cluster you'll find at least one person who's well known for organising meet-ups, hackathons or just being 'that guy' who everyone knows and uses as a conduit for networking.
Take Manchester for example – the digital creative sector accounts for around 50,000 jobs and generates around £2bn in economic output every year. It also has the most significant internet exchange outside of London and houses huge data centres. This is all backed up by Manchester Metropolitan University which produces lots of talented digital and media graduates, as well as trade associations like Manchester Digital which promote the cluster. There's a lot of local support.
But it wasn't always like this. As digital strategy expert and Manchester's 'that guy', Shaun Fensom, explained to me: "At the start of the digital age Manchester was a depressed rust-belt, failing city."
"What were the initial conditions that helped it grow such a thriving digital sector? Some of it was doubtless about the universities and the fact that Manchester was the home in the North for media and advertising.
"But digital infrastructure played a vital role. The cluster of digital businesses that grew up around the Telecity hosting space, which later became an internet exchange point, were an important initial condition. This wasn't about getting access to the internet so much as getting access to the value chain."
Infrastructure issues
Manchester's infrastructure provided a huge boost to local businesses and attracted more. A pre-existing gaming industry, which collapsed before the tech cluster fully formed, was reinvigorated with the advent of mobile gaming. This meant that the skills and talent that formed and worked at the many gaming companies were available when tech companies began to show up.
Infrastructure is a necessity, and it's what largely drove the digital sector in Manchester. However, atmosphere, people and amenities play a big part too, especially for clusters like London's Silicon Roundabout.
Fensom explained: "There are standard economic regeneration and property issues. But if a location isn't appealing it won't work Рit needs the right atmosphere and amenities. The clich̩d view is that you need great caf̩s, restaurants and bars, and there's truth in that. Plus there are straightforward infrastructure issues like housing and transport."
Can it be replicated?
All of these factors combined meant that Manchester was ripe for hosting a centre of creative tech startups, as with London and other hubs around the country. With help from big business, local councils and entrepreneurs, the hubs formed largely without any top-down management.
The need to replace failing or extinct industries around the UK is apparent, and people are looking to tech for answers. But can the success of the organically grown clusters in other areas be replicated elsewhere with some top-down management, or does it have to happen naturally?
Paul Smith, director of startup accelerator Ignite 100 and 'that guy' in the North East, thinks that it has to happen naturally for a tech cluster to truly thrive: "A deprived area would obviously benefit from a tech cluster, but I don't think it can be built in a vacuum. All successful tech clusters originate in the roots of the local community.
"Maybe there's a large company to anchor it, but then others seed the community by organising events and develop the first instances of a support network; meet-ups and social events where different people can meet one another and share experiences. Declaring a town or city as a future tech cluster where there's no naturally occurring activity is a massive challenge, and I can't recall an example where it's occurred artificially."
Argument in favour
Specialising in technology law at DLA Piper, Anthony Day disagrees with Smith and thinks there is an opportunity to replicate successful tech clusters elsewhere: "The key point is that you can artificially create a successful tech cluster if you engineer the situation, as has been the case with the UK Government and Tech City in London. However, to really make a tech hub flourish you need to have access to the finance companies and the bigger corporates that want to play in this space who can help the startups develop and expand, which you are only really going to get in international cities.
"Cambridge tends to get a lot of investment, as you have a lot of great talent coming out of the university and key funders/players see that as a market to invest in. Manchester has also been helped by the BBC move and the regeneration of Media City, Manchester science park, amongst other initiatives."
Startups in the driving seat
Clearly, it takes a collection of efforts from business, local people and government (who provide the infrastructure) to properly succeed in creating a tech cluster. But, as Fensom concluded, it's the startups that are ultimately in the driving seat: "In 2014, the initial conditions that will matter are not so much about great broadband as good raw infrastructure – fibre, hosting space – that digital businesses can adapt and use to innovate. Creating a thriving digital sector is about giving businesses the materials to build with. It's not about supplying it all ready-built."
from http://bit.ly/1wQPSvy
