The Daily Reckoning UK

Why Talented Nerds Are Flocking To London

Sean Keyes

by

Posted 2nd December 2016

Weird stuff is going on in a nondescript warehouse on the Hackney Road, in London.

I turned up after work one evening. Up the stairs and down the corridor, I came into a room full of people, tangled cables, lights, industrial machines, beer. Lots of activity.

Down in the basement, people were fiddling with radios, bending steel and carving wooden tables. Tools everywhere. Laptops on every table.

This place is called the London Hackspace. It’s a voluntary organisation, and a place for hackers and nerds of all stripes to get together and do their stuff. Members pay around £15 a month to keep it running.

It’s a place to solder metal, program a drone, teach a computer how to read, tinker with nerve cells, carve beautiful wooden joints, pick locks, compose glitchy electronic music, and do very hard sums.

This kind of stuff goes on a lot in London, under railway arches and in pubs’ upstairs function rooms. According to Meetup, a social network for organising events among strangers, London had 160,000 technology-related meetups last year. That’s by far the most in Europe – as much as the next four cities combined.

American techies head for the Bay Area, but in Europe, London is the place to be. It’s where the money is (five times as many angel investors as its nearest rival), where the success stories are (more billion dollar startups than anywhere else), and where the talent is (far more developers than anywhere else). That’s why talented nerds end up in London, in clubs like the London Hackspace.

The agglomeration effect

The technology industry is a bit like the finance industry. It wants to be in one place. It makes sense to have lots of experts and lots of ideas close to each other, so they can learn from each other, and poach each other’s talent and spin off new businesses. That’s why every medium sized city doesn’t have a technology industry. Lots of medium sized counties don’t even have one. Economists call this the “agglomeration effect”.

So why did the tech industry settle in London instead of Berlin or Dublin? It’s impossible to say for certain. But it’s probably something to do with the diversity of London’s economy. Where northern British cities were built around one big industry, London’s always done a bit of everything – manufacturing, finance, shipping, tourism, government, media, academia, healthcare, and now technology.

Speaking to the venture capitalist firm Andreessen Horowitz, here’s how London-based software engineer Nick Babaian described it:

“What’s interesting about London is… it’s the regional hub for a bunch of other industries. Especially industries which are being changed by technology – advertising, finance, the list is long. That’s a healthy thing for a [technology] ecosystem to have – a lot of other industries that are also powerful and important.”

That’s good for London because it means there’s a big range of skills and ideas nearby. But it means technology companies have to battle for the best talent. Matt Clifford runs an “incubator” where startup technology companies get their start, and he says the best young workers are starting to choose to work in tech:

“What do the most ambitious people in society want to do with their lives? Historically in London the most ambitious people wanted to be bankers. [But] It is changing very quickly. Four years ago 65% of computer science grads wanted to become bankers. Now it’s 10%. And the delta is very much driven by tech, by startups.”

The vibrant London technology scene is getting attention. You’ll have seen the headlines recently: Google ploughing £1bn into a new London HQ, Apple moving into a giant space in Battersea power station, Facebook increasing its London headcount by 50%. You might not have noticed smaller stories like Google and Twitter acquiring London AI startups for £400m and £150m. Lots is going on behind the scenes.

That’s the thing about agglomeration effects. Once a place gets established as the tech / finance / insurance / media capital, it’s very hard to budge it. The talent attracts more talent, which attracts more investors, which creates more success stories, which recycle their know-how and talent back into the system. That’s happening in London. The fire has been lit.

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