Location is everything: Tech hubs thrive in a supposedly virtual world
- 29 November 2010
- From the section Business
Wasn't the traditional office workplace supposed to be dead by now?
It is de rigeur for anyone starting a business today to use keywords like 'virtualisation' and scoff at the thought of paying for real estate and overheads.
With laptops, tablets, smartphones and teleconferencing, staff can work for their multi-national from practically any location. And cloud computing - storing information on remote servers rather on local PCs - means that projects can be synced effortlessly, no matter where you are.
But even in the early adopting world of tech, place still seems to play an important role. In New York, there is now talk of a 'Silicon Alley' because of all the start-ups. England has its own mini-hub around Cambridge. Germany has Munich.
And Silicon Valley is still going strong and producing corporate behemoths.
One tiny building in Palo Alto, 165 University Avenue, has produced Google, internet payments company Paypal and the mobile phones developer Danger.
And keyboard and webcam specialists Logitech, who moved into the building from Switzerland. One of the firm's founders said: "I don't think we could have done this staying in Europe at the time."
So why does location still matter?
Silicon Valley made a pilgrimage to a picturesque English university town earlier this month.
The University of Oxford's Said Business School hosted its annual meet-up of US and British entrepreneurs. So why didn't they just all stay where they are and gather on Skype?
"We're seeing that a lot of people involved in technology did start in their bedroom and when they really want to take things forward, they seek out like-minded people," says attendee Elizabeth Varley of London-based TechHub, which helps start-ups in the capital by providing desk space and meeting rooms.
Still, Ms Varley insists that innovation can happen anywhere and that is where her company comes in.
"What Silicon Valley has done very successfully is creating a hub where everything is brought together," she says.
Alastair Mitchell did begin his London start-up, Huddle, with three friends in a bedroom four years ago.
The company, which allows companies to collaborate online no matter where they are, now has 65 employees and is used by corporations like Panasonic, charities and the UK government.
They should be proof that it is possible to start a business anywhere. But Huddle has also recently opened an office in San Francisco.
Mr Mitchell says it is important to distinguish between offices and communities.
People can work more easily together, in the same way it is easier to keep in touch with family and friends because of Facebook, he says.
But the connections that come from being in an area where people are thinking along the same lines are important for businesses.
"The concept of the office will always exist," he says. "People are sociable animals. But being around like-minded people is huge.
"Take Silicon Valley. Whenever you go into a bar or a cafe, you hear people talking about tech."
Huddle have started a drinks night in London to try and bring the same level of confluence between venture capitalists, coders, ideas people and so on.
And Mr Mitchell insists that the office was opened because 50% of its customers are in the US and they needed support in their own timezone.
Outsourcing used to be big companies transferring work to much cheaper offshore specialists across the world.
Start-ups today can build global organisations from day one. Kulveer Taggar graduated from Oxford and worked as an investment banker in London before moving to Silicon Valley.
His start-up, auctomatic.com, was sold to Live Current Media and he worked on a fantasy cricket game that was at one point making $30,000 a month.
Chance meetings with Facebook executives are why he came to California in 2007.
"It's true you can start your business anywhere but when you really want to grow it, the Valley is a great place to be," the 27-year-old says.
"It's the density of talent there, both in terms of investors, advisors, employees and even acquirers."
"I ran my start-up in England for about two years before moving to the Valley, and it really was a struggle," he adds.
Another attendee at the conference in Oxford, Joichi Ito of Asian start-up incubator Neoteny Labs, talks about the importance of an "ecosystem" where all the ingredients to make a company work are there already.
"There's huge serendipity in the physical world," he says.
Perhaps location matters, just not as much as it used to. And that may be the limits of the technology of business.
"It's definitely easier to stay connected to people," Mr Taggar says. "However, it can't fully replace the chance meetings that happen. You always want to meet potential employees, investors, and business partners in person."
That said, Mr Taggar has moved from Silicon Valley to Vancouver.
Like many entrepreneurs, a while after his company was acquired, he left his lucrative job at Live Current. Now he travels, dabbles in sketch comedy and has become an angel investor in three companies.