Since Tech City’s Impact Report was published on Friday, entrepreneurs and investors have approached us asking if we can put a few questions to its chief executive, Eric van der Kleij. Mr van der Kleij was kind enough to grant The Kernel an extended interview, so we compiled the questions we were sent, solicited a few others from prominent members of the community and added a few of our own. Here we reprint the exchange in full.
Mr van der Kleij, why are you not publishing a list of the paid advisors to TCIO?
We have published the list of all those people currently engaged by TCIO. There are other people we have engaged previously (for example for specific projects) during the past year and they are not listed because they are not currently engaged, or they have long since been deployed on completely different UKTI projects. However you can be certain that we have fully reported the total costs of everyone ever engaged in the expenditure section. Feel free to check yourself with those you think are currently engaged by TCIO, or even ask me.
Will you agree to publish an anonymised salary structure for TCIO?
We currently do not publish the salary structure for TCIO, because historically UKTI has sought best value for the work it does via a public tendering process for the specialist skills it needs, which do not exist internally, which was won by PA Consulting and Grant Thornton. It also means the government is procuring skills it currently does not have in house in a flexible way, such as entrepreneurs with real world experience of startups.
The government does this because the skills it needs will change over time, or only be needed for a short intervention. If we forced the contracting companies to disclose what they pay for the consultants it would likely impair their commercial competitiveness, and if the competitive part of the tendering process was removed by complete transparency of costs is possible that [the Government] would end-up paying more for this type of work.
However, in line with this Government’s wishes, this will change for all new specialist advisers. We will honour the confidentiality of our existing contracts but have now made the stipulation that all future people engaged for the project must agree in advance to have their compensation made public.
Why has TCIO not focused on policy advocacy, which is obviously the area that could yield most bang for buck? Don’t entrepreneurs simply want access to capital, low taxes and less regulation?
All the policy changes we’ve made, such as the Entrepreneur Visa, EIS/Seed EIS tax breaks, changes to Entrepreneur Relief, open data policies, the Hargreaves Review of Intellectual Property and so on are developed by central Government – that’s No. 10, in conjunction with the relevant Government department. These policies have arisen as a result of the direct conversations that No 10 have had with Tech City companies and the feedback that I and TCIO also gather from Tech City companies.
TCIO is responsible for promoting Tech City globally, and supporting the growth of the ecosystem in east London. Central Government is responsible for developing and designing policy to promote technology, enterprise and innovation in east London and beyond.
In addition, we have been active in publicising the major policy changes that favour entrepreneurs and investors, and have also made sure that it has been a central part of all our mentorship activity. Examples of this range from VAT to R&D tax credits, and our monthly No. 10 Tech City breakfasts have been a terrific place for the community to feed into our thinking and raise issues. You know this yourself to be the case because when you brought [Conversocial chief executive] Joshua March to meet me with a terrific idea for education, I offered to immediately put you both in front of the Minister for Education or Science and Universities.
The final page of your report basically says “more of the same with the same money”, which seems to imply you think TCIO has done a great job and no change in strategy is required. Is that accurate?
The reason for publishing the report is to share what we have been doing in our first year and we are pleased with our progress, but it is also to ask for input into what we should be doing more of, so there is plenty of time to inform our future activities.
Why so thin on detail about these 37 “wins”? People want to hear specifics. Doesn’t this sketchiness make fact-checking impossible?
UKTI reports on the 37 wins through its normal annual process, but we have decided to release initial details of our progress early, so people can see what we have been doing. We have shared case studies where people are happy to allow their details to be made public.
Did you deliberately avoid telling Loic Le Meur about London Web Summit because you thought he might not bring LeWeb to London if he knew about it?
Absolutely not. We started negotiating with LeWeb last year, and, as you know, London Web Summit gave very short notice themselves. Also, we have been clear with LeWeb from the start that we absolutely cannot guarantee that other events might announce before and afterwards, but that we would not be directly encouraging competing events to take place immediately before or afterwards. Also, the events are different and both bring great value to the UK, which benefits from these and other events in the future.
Why omit things like the ‘1,000-1,500 new jobs’ you told the Wall Street Journal had been created in east London from your report? The report in general seems very light on detail. Any particular reason?
The Impact Report is specifically designed to report on the work we did ourselves at TCIO, hence the focus on our targets and the progress to date. Ben [Rooney, WSJ Europe tech blogger] had asked me in the interview about the growth of the cluster and how we estimated whether the growth was translating into jobs. I told him about the various surveys that had been conducted and the number of companies that were being reported, and things like the number of jobs being offered at the Silicon Milkroundabout as indicators of the growth. But because TCIO is not directly doing those activities – they are being done by members of the community – they are not included in the report.
Do you think you’re measuring the right things in the report? The number of businesses created (among many other notable absences the infamous 600 figure does not appear in your report), the fact that 150 people have trudged around Old Street… shouldn’t we be given meaningful figures for jobs created, amount of VC money invested, and so on (with TCIO’s estimation of its contribution to specific deals)?
We do. We have only focused on TCIO’s specific activities and the results of those activities, including the resulting pipeline of companies that we have engaged in discussions about Tech City. TCIO is a part of UK Trade & Investment, a major government department – not a quango – whose principal activity is foreign inward investment (FDI)work and trade (export) work. Thats why, in the case of jobs, we only report on the specific number of jobs that the 37 company “wins” confirm they plan to hire when they establish in the UK. This is an accurate measure of our direct activity, which of course feeds into the overall growth of the cluster, but we do not claim to be responsible for that.
In the case of VC money invested, we have a restricted role under UK regulations of “signposting and raising awareness amongst non-UK potential investors” and we are specifically not allowed to recommend any particular companies to invest in, as that is a regulated activity. On occasion, we are made aware of where our signposting results in an investment, such as into Seedcamp, but we legally cannot do more than signposting.
The feedback from the community is that they are keen to do more, as this seems to be highly valued by the community. Depending on the results of this feedback, and the priorities going forwards, we may change what we measure accordingly.
Roughly how much of the £2.1 million spent in 2011-12 went on food and alcohol?
A very modest amount, and, furthermore, UKTI has a policy that for event activities where we may want to host a reception where alcohol could be served, we secure sponsorship to pay for the hospitality part of the reception. We in fact have a dedicated (part-time) person to ensuring this takes place throughout our 2012 event activities.
Do you think it’s fair to say that Tech City has failed to proactively engage its critics until very recently?
The vast majority of comment has been favourable, and on every occasion where we were asked by a critical commentator for an interview we have responded straight away.
Why do journalists critical of Tech City get bumped off your and Hill & Knowlton’s mailing lists? This has happened twice.
If there is someone we need to add we will. Contact us by Twitter, or email the press office.
Why was Charles Armstrong described as the “founder of Tech City” in one of your H&K press releases?
This was a typo made by Charles Armstrong’s own PR company and they quickly corrected that when it was raised.
Isn’t this report a bit thin on the massive efforts you’ll be making this year to relocate/encourage start-ups in Stratford? It’s a major part of your brief but it’s almost as if you don’t want to talk about it.
Well spotted. This is because the responsibility for managing the bidding process for the press and broadcast centre is with the London Legacy Development Corporation and is in its final stages of the bidding process, and we will know – before the Olympics start – who the winner is going to be, and what their plans are going to be, which will shape the activities that take place there. Also, the park is going to be shut down for around eight months, post Olympics, to conduct the major works that will make the area ready for its legacy activity, so it is a little early to be showcasing the area to start-ups.
We are of course delighted that all the bidders have included an accelerator space of some kind within their plans. What we are doing right now is to continue signposting to major potential investors the opportunities that the area offers. As a country, we have made a huge investment into the Olympic Park and the incredible infrastructure so we are determined to support the LLDC in helping foster a thriving business community there.
Isn’t urban regeneration and social engineering like trying to get companies to set up in E20 entirely contrary to free market economics and contrary to the best interests of start-ups? Isn’t this just about making sure the Olympic village isn’t a desolate embarrassment after the Games?
As in your previous question above, when the winner of the bidding process is known and the proposition for start-ups is clearer, we will support the LLDC in sharing the opportunities with start-ups. As to whether it is right to showcase the area to companies now it is absolutely right, because many companies make very long-term strategic plans and we believe the area could develop a powerful proposition for both established companies as well as start-ups.
The best interests of start-ups are served by us making sure that the best opportunities are made accessible to start-ups. It may be that the area could offer very good value for money for Shoreditch businesses looking to add more employees, but, to reiterate, our main interest will most likely be to promote the area internationally because FDI has one of the biggest positive effects on the economy.
How are you planning to persuade people to move/set up there?
The main way we are currently doing this is via regular inward investment activities of showcasing the area to inward visiting executives. During the Olympics, UKTI will of course be scaling up this activity and TCIO will be supporting this work throughout.
Do you think TCIO bears any of the responsibility for rising rents in Shoreditch that have forced at least four companies that we know of to move to other parts of the city?
This is one of the tensions that regeneration and a degree of prosperity creates: as demand rises, prices do start to increase. That is why we spend quite a lot of our time meeting property owners and developers to ensue they are aware of the demand in order to encourage them to develop ahead of demand. Capacity is the best solution to ensuring prices remain affordable and they are still affordable when compared with the West End and other parts of London. I think though that we all prefer to be in an environment of growth and I am happy that the TCIO is doing its part to contribute to that.
Do you see any potential downsides to a massive government spin operation that opens up a gap between appearance and reality in east London? Entrepreneurs tell us they feel pressured to meet unrealistic expectations about their contributions to the economy and job creation.
There is a delicate balance that needs to be achieved in the promotion of the cluster and our job is to amplify the good things that are happening. One of the things companies tell us is that they hugely value the positive coverage we often achieve for them, as shown by our case studies. We don’t want to put any extra pressure on these start-ups – we know they have enough pressure – but one of the things they tell us we are doing well is shine a light on them. We are however keen to hear from more startups as to whether they value this as it will help shape our promotional activity.
Do you think £530,000 is a reasonable annual events budget? Is it money well spent when only five companies were persuaded to relocate to Shoreditch as a result?
Good spot! I think we could have done a better job at explaining that. The figure includes, for example, the amazing Entrepreneurs Festival, which you were invited to speak at, where we conducted a record 2000 mentor-entrepreneur sessions in just two days. The feedback from this was overwhelmingly positive so the benefits are much more than just the five companies. We will review how we present this in the future.
From the report: “235 companies are in negotiations with TCIO to move to Tech City.”
Is this true? Who are they? And why should they be ‘negotiating’ with you to move at all? That sounds like an awful lot of companies.
UKTI is represented in over 96 countries and the inward investment teams in each country have been briefed over the last year by our specialists on Tech City as a new narrative and magnet for inward investment into the UK. This results in many inward visits which our team delivers, and in turn a pipeline of 235 companies currently registered on our CRM systems, which are being provided information to help land them in the UK.
A year in the life
Do you now accept that the figure of “600 tech businesses” in east London was misleading and wrong?
No, you can now see how that number was arrived at, and we have done a much better job of explaining the breakdown of tech and digital businesses in Tech City, which was clarified by our blog post “The story behind the numbers” on the Tech City website.
How do you feel about this widely derided figure being put in the Prime Minister’s mouth by TCIO?
The clarification post of the story behind the numbers has cleared-up any confusion.
TechHub has admitted that its staff have shredded Korans as part of an “art project” (along with Bibles and Torahs) next to the reception desk in full view of residents. Will you now be distancing yourself from the company and its directors and employees, or do you endorse the desecration of Islamic, Jewish and Christian holy books? What does No. 10 say about this? Are they not struck by the political absurdity of George Osborne opening Campus London/TechHub’s new home while this sort of far-Left radical extremism is going on?
Of course no-one condones any such behaviour, but I hope you will forgive me if I don’t answer these questions as they have nothing to do with the activities of the TCIO. From my personal point of view, TechHub and the amazing start-ups they support are doing great things for the community. It is wrong to negatively characterise their entire activity.
Given some recent missteps that have seen TCIO become an object of ridicule on Twitter and elsewhere, do you plan to adjust your approach to PR to ensure you are making more substantiated and sensible claims?
I think that all of us can always seek to improve how we present things and having you around does help keep us on our toes.
Do you agree with Ben Hammersley’s peculiar recent comments that Tech City should not concern itself with numbers and metrics for success and that its role is instead to help catalyse a “renaissance with a capital R”? Do you see Tech City as primarily a social mission like he does?
One of the attractions of the area is the rich cultural mix of people and opinions, and Ben (who supports us voluntarily, without compensation) has a strong belief that we are facing an exciting change in the area. In addition, Ben has an international view that feeds into policy thinking helping us make sure government does not implement inappropriate policies that might stifle growth. Our active role at TCIO is around FDI and for us and we will continue to focus on our deliverables and measurability.
Do you regret associating yourself so closely with Charles Armstrong?
Charles runs a very interesting incubator with a very different look and feel that is very popular and has some great start-ups doing great work. In addition, he built the Tech City Map, which is a great way for us to showcase the cluster internationally.
Do you think the start-ups in east London are pleased to be represented further afield by people such as Hammersley and Armstrong?
The great thing about Tech City is that it is not owned by anyone, and Ben, Charles and your good self all contribute to the richness and diversity that makes the area so attractive.
Can you give me the traffic figures for the TCIO website?
I’ll come back to you on that.
TCIO seems to engage well with consumer product companies, which are better off trying their luck in the US if they want to achieve profitability, but less well with enterprise/B2B plays, which are the only tech businesses that do consistently well in Europe. Do you have plans to focus on any particular type of start-up in the future?
Great question, and one, if I may, that I would like us to put to the community to help inform where we put our resources.
Kevin Eyres [a TCIO employee] has said: “A lot of VCs are starting up, some of them from the US, coming over and setting up facilities in Tech City.”
Which US VCs now have offices in east London?
Index and Seedcamp plus some angel investors have opened in the area, but facilities to us means investing facilities. We know this will take time.
You said in November 2011: “The Entrepreneurs Festival is the largest event of its kind staged in Europe.” It isn’t, is it?
This is because of the scale of the mentoring we provided, which resulted in over 2000 mentor-entrepreneur meetings in the first two days, run by Jon Bradford and his team with our own team. We have asked around, including Jon, who is a bit if an expert on these matters, and we understand this is some kind of record. Perhaps I might say “one of the biggest” in future though.
Is it a good use of taxpayers’ money to employ people to write to start-ups begging them to use ‘Tech City’ and not ‘Silicon Roundabout’ in their press releases?
We don’t do that. If a quote from us is requested, we do reference Tech City. [Editor’s Note: this claim is disputed by two east London companies.]
Why was [BookingBug chief executive] Glenn Shoosmith offered an expenses paid trip to Finland? Was it a reward for supporting you publicly?
No. UKTI is a big organisation that occasionally uses people from the business community to talk about their experiences of the UK internationally. This often works much better than government people doing this and I understand he was asked by another part of UKTI to do exactly that. It was not something TCIO organised. He would have been great doing it!
Do you understand why people accuse you of appropriating credit for other people’s accomplishments? Do you, for example, see how the wording of this press release might be interpreted that way?
We clearly need to achieve a good balance between amplifying the growth, companies and opportunities in the area, and not over-stating our role. We are keen to do that and will be even more vigilant. Thanks for the feedback.
The Kernel is grateful to Mr van der Kleij for his time in answering this substantial list of questions. Browse The Kernel’s full coverage of Tech City’s first impact report.