Sky-high rents force tech start-ups to leave London’s Silicon Roundabout | Video
World Finance interviews This Is My Jam Co-founder Hannah Donovan on how expensive rent is eroding the start-up culture of London's Silicon Roundabout
Hannah Donovan, Co-founder and Design Director of This Is My Jam, speaks about the changing vibe of London’s Silicon Roundabout. With rents reaching extortionate prices and the government pushing its own agenda, is the Old Street tech hub losing its allure?
World Finance: Hannah, tell me, how did you end up here in Haggerston?
Hannah Donovan: We’re originally incubated by a Boston-based company called The Echo Nest, and we had a studio over on the “Silicon Roundabout” in Old Street, and after we went independent from them towards the end of last summer, we then started to think about our options for our space, and in January we decided to move here.
World Finance: Tell me more about the evolution of the Silicon Roundabout community.
There’s a lot of money being poured into the area, the rents are getting raised, the vibe has really changed
Hannah Donovan: I think if I really had to pinpoint something, there’s many things going on over there, there’s a lot of new builds, there’s a lot of money being poured into the area, the rents are getting raised, the vibe has really changed. It’s gone from being an area that’s been a little bit more diverse, where you had not only tech companies but also artists and musicians and designers, all sorts of different types of people there, to a slightly more tech focused crowd that just tends to be more the same kind of person.
And that was just something that didn’t really appeal to us so much any more, especially being a music start-up, and that being a really, you know, music and all the things that come with it, fashion, street culture, all that stuff, being really important to what we do and what we thrive on.
World Finance: But isn’t gentrification a slow evolution in any city?
Hannah Donovan: Sure, absolutely, and I’m not hating on gentrification here. Change is inevitable, and change is good. I’m just pointing out that the change that has happened in this particular case, I think maybe isn’t necessarily something that is as fertile a place for us to be working anymore. In a more hard cost kind of way, rent was also an issue too, and so by moving to Haggerston we were able to be just far enough away that it’s outside of that zone, and we were able to cut our rent in half, which was really significant to a small company.
World Finance: Tell me more the slow migration of entrepreneurs out of Silicon Roundabout.
Hannah Donovan: The thing is that there’s no one place that everyone is scattering to right now, and I think that’s a really important point to make. That it doesn’t feel like there’s a scene, so to speak, like it really did feel like when I came here in 2006.
World Finance: Why do you think the government is promoting Silicon Roundabout so much?
Hannah Donovan: Oh yes, I think it’s definitely profit-driven, for sure, it’s all about the economy, especially down the road, looking at the longevity of industries in the UK that are going to support the economy in the coming decades, it’s absolutely about that. There’s no doubt that there’s a lot of talent here for that, and we were demonstrating that early on way before this initiative started, and there’s tons of great stuff coming out of the UK, so it makes perfect sense that they would look to it as sort of the next thing for the economy. I think it just makes a lot of sense.
World Finance: If Silicon Roundabout isn’t helping entrepreneurs, who is profiting from this model?
Hannah Donovan: The same people that profit from it in any place, really, the people that put the money in originally. That’s how it works. Sure, starting your own company there’s a small chance that as a founder or something you might be able to make a nice exit, but I want to stress that is not the majority of people, that’s sort of a one in a million chance.
World Finance: Let’s look at one of the prominent features of Silicon Roundabout, which is the Google Campus model or incubators in general, where you rent space to discuss ideas. Do you think entrepreneurs are at any sort of competitive edge by being there, or are they simply commodifying the creative experience?
Hannah Donovan: Yeah, it’s a bit of both really. On the one hand, it’s great to be able to brush shoulders with people that might not otherwise get to do, and it’s also great that they offer space that people can hot desk in because, as I mentioned earlier, leases are kind of a big thing to get locked into early on.
However, I think on the other hand, it does sort of attract a certain type of individual, and being in those space it’s a bit of the same sometimes, I guess is how I would cautiously put it, and there’s maybe a little bit less of the sort of diversity that we were seeing previously.
World Finance: Now in an effort to quantify the successes of start-ups, Number 10 issues a statement that Tech City UK has “grown from 15 tech companies in 2008 to topping the chart for new business generation in the UK in 2013 with more than 15,000 new start-ups.” Do you think these numbers are in any way misleading?
Hannah Donovan: I feel like I’m pretty embedded in the community and I have a good sense of what is going on. It does sound a little bit on the inflated side to me, and I just wonder if they’re counting also all of the companies that don’t still exist since then, or what the quantifier for being a tech start-up is. Is it just a small business that has a website, or is it a company that’s actively making their money from technology? Because those are two pretty different things.
World Finance: Now if you think entrepreneurs don’t need the glittery landscape of Silicon Roundabout, what do they really need in terms of government support?
I would have loved to see some rents that were more affordable, I think that’s incredibly important, I don’t know why that hasn’t been more supported
Hannah Donovan: I would have loved to see more multidisciplinary co-working space, I would have loved to see some rents that were more affordable, I think that’s incredibly important, I don’t know why that hasn’t been more supported. Some of the pubs in the places that we would hang out and talk about our ideas and trade thoughts were, I think, where the innovation really happened. A lot of them have been upscaled or shut down.
I don’t think that anyone would necessarily see this as something really important, but stuff like that, those sort of community infrastructure pieces were actually really important to what we were doing, so it’s more that side of things, for me anyway.
World Finance: Is it even possible to say where or if there will at all be a next great tech hub?
Hannah Donovan: I would say it’s impossible to say so right now. I would love to hope that that will happen and that we’ll see that come out of London eventually, but it’s really hard to say, and if rents keep going in the direction that they do and if we are forced to move out of here in a year’s time or two years’ time, then that continual migration and lack of place where people can congregate to make things could make it really hard for people to do the type of work that we do in London.
World Finance: You’re a few years into building your business here. Is London still the right city for you?
Hannah Donovan: At the moment I would say yes, just because London is a really great city for music, and I do firmly believe that London is a place where music revolutions have always happened and will continue to happen. And so at the moment I’m still rooting for it.