Atlantic Cities

The Secret to London's Tech Boom

The Secret to London's Tech Boom
Reuters

When the 2012 Olympics kick off at the end of this month, the bulk of the action will take place in East London. The area is virtually "unrecognizable from seven years ago when London celebrated its winning bid," according to yesterday’s Boston Globe and is rapidly becoming "a new metropolitan center." While the district’s $10 billion Olympic makeover has attracted all the attention, the bigger story for urbanists and city-builders is the ongoing bottom-up transformation of nearby neighborhoods into a bustling new center for high-tech industry.

A Tale of Tech City: The Future of Inner East London’s Digital Economy, a new report from the Centre for London, an independent think tank, documents the dramatic growth of East London’s tech cluster, known as "Tech City" or "Silicon Roundabout." The study finds that the cluster now houses 3,200 firms and 48,000 jobs, far larger than previous estimates.

The Centre's analysis of the tech cluster’s growth and evolution is a case-study in Jane Jacobs-like bottom-up, organic urban development, driven by proximity, density, amenities and relatively cheap space (this is London, one of the world’s most expensive cities, after all). As the report points out:

Inner East London’s digital firms are closely related to both financial and business services, and to London’s creative industries. Inner East London and other digital hotspots have also emerged organically within London’s neighbourhood fabric, rather than being planned ‘innovation zones’.

The firms are new and young: Almost two-thirds of the firms covered by the report are five years old or less. Most are small enterprises – a third with 11 to 50 employees, while more than half are micro-businesses with 10 employees or less. Still, many are globally oriented: More than a third have satellite offices in other countries.

These are more than merely tech firms. The majority are "digital creative," combining computer technology with music, art, and narrative. This is a great advantage of and indeed a driver of the shift to urban tech. Cities are containers for the wide range of skills that power the creative realm and that can and are being leveraged by the shift to digital technology.

The report details six key assets that underpin the cluster’s emergence in East London, based on research and interviews with the companies themselves:

• Amenities and ‘vibe’

• Similar/complementary firms

• Branding and messaging

• Cheap space

• Proximity to central London

• Connectivity – to the rest of London and UK

For many firms, the location was talent-driven. According to one firm:

You have no problem, ever, persuading someone to work here. Whereas, if we were on a Science Park in Newbury, I’m certain we wouldn’t find good caliber developers when we needed them, or that if we could they wouldn’t want to move to where we were. So that’s the first thing. Apart from that, it’s kind of handy being close to other like-minded companies…. I actually don’t think you get many pearls of wisdom in those conversations, but it just makes you feel less isolated.

Another adds:

We moved here out of pressure from the [software] developers to move somewhere better. And by better, I think they mean somewhere which has lots of bars and lots of places you can eat. Most developers are young, and male, and that means that they don’t cook, they rarely buy fresh food. So you basically want somewhere where there’s lots of takeaway options, and lots of places to hang out in the evenings. That, more than anything, is what compels people to this area.

The density and connective fiber of the neighborhoods helps lead to serendipitous interactions, the combination and recombination upon which innovation and new ideas depend. One firm notes:

There’s a lot of impromptu networking here. We’ve had a lot of exposure that we wouldn’t have had if we hadn’t been here.

And another:

I like the fact that you bump into interesting people or people that you might sort of read something that someone’s written online and then meet them down at the pub. Which is nice. … when I worked in South Kensington that never happened.

The report questions the efficacy of a top-down approach to high-tech development, expressing genuine concern about the Tech City Investment Organization's efforts to steer growth east, towards the new Olympic Park and Stratford. "One of the most striking characteristics of the East London cluster is its organic growth," it notes. "It has been evolving for years under the policy radar, and only now—as it reaches critical mass, and becomes the figurehead of London’s digital economy—is it receiving much public attention." While there is much that government policy can do in the realm of promoting "investment in new thinking, new ideas and smart people," the report cautions, "artificially generating clusters in mature industries – as digital content and ICT now are – is very difficult to do."

"Tech City," the report concludes, "should be about taking what Inner East London already has, and helping it get even better."

Most of all East London's tech transformation  provides further evidence of the ongoing shift to urban tech. For decades, the model eco-system for high tech innovation has been the "nerdistans" (low-rise campuses set amid sprawling suburbs) epitomized by California’s Silicon Valley. Though Silicon Valley’s hegemony as the world’s leading tech center is not in any immediate danger, tech—like so much else—has been taking on a distinctly urban aspect as of late.  Evidence of an emerging shift is growing. Last year, New York City’s Silicon Alley surpassed the Boston area’s fabled Route 128 as a magnet for high-tech venture capital. Twitter and many other companies have chosen San Francisco over Silicon Valley. Seattle’s South Lake Union complex houses Amazon and other tech companies.

Add London to the growing list.

Top image: A barman passes a drink to a customer at The Bow Bells pub in East London. (Eddie Keogh/Reuters)

Richard Florida is Co-Founder and Editor at Large at The Atlantic Cities. He's also a Senior Editor at The Atlantic, Director of the Martin Prosperity Institute at the University of Toronto's Rotman School of Management, and Global Research Professor at New York University. He is a frequent speaker to communities, business and professional organizations, and founder of the Creative Class Group, whose current client list can be found here. All posts »

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