Delivering almost £4 billion to the economy and growing rapidly, Scotland’s tech sector is in a period of booming growth. It is already challenging other centres for tech sector excellence, particularly London. The quality of universities producing exceptional graduates and cutting edge research; the groundswell of exciting start-ups across all sectors,with a growing number of specialisms, such as fintech; and, of course, our unicorns (companies reaching the $1 billion valuation) demonstrating the unique and balanced capability that exists in Scotland. There is an awful lot for the ecosystem to be proud of.
However, much of the focus, both in the media and wider industry, is directed at the two ends of the spectrum: those big and highly successful, but extremely rare, unicorns and the multitude of start-ups still working to achieve product-market fit. This focus is hiding a significant constraint to our being considered a truly world class internet economy.
A major pinch point for Scotland is that we are missing what are sometimes described as the “small giants” to sustain the ecosystem. These are the companies that focus on being great over being big. They have already found a product-market fit and are looking to create sustainable, profitable, medium-sized enterprises rather than opting to chase the mythical unicorn. They carry less risk than a start-up and it is on this foundation that tech sector economies really grow. The alternative is a start-up bubble that eventually bursts.
A key characteristic of London’s tech sector is that it has a very balanced and broad spectrum of successful companies. It has a start-up ecosystem not unlike Scotland’s, only bigger. The difference is that London also has a large number of small giants that are both sustainable and profitable (or at least close to), creating a huge number of safe and stable tech sector jobs.
When Skyscanner opened its London office in 2016, it was not one of the top internet economy employers of choice, as is the case in Scotland. At the same time, it was the kind of company where any individual could still have a significant impact on the overall business. Coupled with a strong consumer brand, this made it an attractive proposition within London’s industry. Its middle-of-the-market position allowed Skyscanner to attract world class expertise across multiple disciplines.
One of the appeals of London is the significant volume of positions available for candidates in start-ups, scale-ups, SMEs and multinationals. From a candidate perspective, when they look at London (Brexit aside) they see a market where, should things not work out, there is a real probability of being able to move on to their next role without too much of a problem. The risk of relocating not just themselves but their families, too, is lower. The reality is that those same candidates do not see that level of ecosystem maturity in Scotland. Equally, tech centres like London are able to use this position to attract our homegrown talent - both graduates and experienced tech sector professionals. That is a big issue for the Scottish ecosystem.
Scotland hasn’t attracted the same level of investment where a US tech giant creates one thousand plus jobs - compare the approximately 250 Amazon tech jobs in Edinburgh with upwards of five thousand people at Amazon in London - but what we can do better is support the teams who are building strong sustainable tech businesses with global customer reach and enable them to grow to medium-sized, profitable enterprises. By helping those in this position to become the small giants of our ecosystem, we will establish the kind of maturity that is currently missing. Then we can offer medium to low risk, high impact opportunities that appeal to candidates globally. It’s time to focus on the small giants, not chasing unicorns.
- Richard Lennox is a former Skyscanner senior director who now advises Scotland’s start-up and scale-up sector