Jan 2, 2019 · 33m · a16z
a16z Podcast | Building Tech Startups in a Place Where Tech Isn’t Everything
Matt Clifford · 11m spoken Nick Babayan · 5m spoken Michelle You · 5m spoken Michael Copeland · 4m spoken Sonal Chokshi · 4m spoken
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
Recorded on location in London, this episode of the a16z podcast explores the growth and unique characteristics of Europe's emerging technology ecosystem. UK tech founders and venture leaders discuss how London leverages technical talent, cultural diversity, and legacy industries to build globally scalable startups outside of Silicon Valley.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. The host holds 13.3% of the talking time here. How this is scored →
The host as informed peer 2.7 Guest teaching 5.1 Guest disagreement 1.9 The host pushing back 1.7
speaking balance: gold is the host, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 14:55 Michelle labels Silicon Valley a cultural wasteland
Michelle candidly criticizes Silicon Valley culture, describing it as a cultural wasteland and an intimidating echo chamber compared to London.
Hardest push from the host ▶ 4:19 Sonal challenges the significance of European startupsSonal deliberately uses an obnoxious framing to challenge the guests, asserting that US investors believe no tech company of significance has come out of Europe.
Biggest teaching moment ▶ 16:00 Matt details engineering cost arbitrage between SV and UKMatt educates the hosts on the financial dynamics of hiring talent, showing how a UK startup can hire a Cambridge PhD with postdoctoral experience for the salary of a fresh Stanford graduate.
The host holds their own ▶ 6:15 Sonal highlights regulatory arbitrage in UK FinTechSonal demonstrates strong industry knowledge by framing London's ecosystem advantages in terms of regulatory arbitrage in financial technology.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The host as informed peer | Guest teaching | Guest disagreement | The host pushing back | Why |
|---|---|---|---|---|---|---|
| Shifting Career Ambitions from Finance to Tech | 2 | 5 | 1 | 1 | The host asks open questions about career shifts in London. Matt Clifford educates the hosts with concrete data showing computer science graduates going into finance dropped from 65% to 10% in four years. | |
| European Success Stories and Emerging Investor Mafias | 4 | 6 | 4 | 5 | Sonal intentionally introduces a provocative US premise that no European tech company of significance exists. Nick Babayan and the guests push back with counterexamples like Spotify and Skype, while Matt explains how EF builds teams from scratch. | |
| Comparing Accelerators and Leveraging Cultural Diversity | 2 | 5 | 1 | 1 | Matt contrasts Entrepreneur First with Y Combinator, explaining how EF pre-selects individuals before ideas or teams exist. Nick Babayan highlights how London's multinational background impacts product decisions like privacy. | |
| Global Problem Solving and Fostering Tech Ambition | 3 | 5 | 2 | 2 | Michael Copeland poses an insightful premise asking if Silicon Valley's insularity gives global advantage to diverse hubs. Matt Clifford illustrates this with a memorable reframe comparing Stanford megalomaniacs to UK computer scientists. | |
| Perspectives on Silicon Valley Strengths and Weaknesses | 3 | 6 | 3 | 1 | Guests offer candid critiques of Silicon Valley, with Michelle You calling it a cultural wasteland and echo chamber. Matt Clifford details an engineering talent arbitrage strategy where startups raise US VCs and hire UK PhDs. | |
| Government Policy, Tax Breaks, and Urban Pressures | 3 | 5 | 2 | 2 | Sonal brings up urban innovation cluster theory regarding top-down versus bottom-up ecosystems. Nick Babayan and Matt Clifford detail how UK tax incentives like SEIS and direct access to government officials aid early startups. | |
| University Talent Pipelines and Academic Engagement | 3 | 5 | 1 | 1 | Sonal asks about university talent integration, drawing parallels to Silicon Valley roots. Matt Clifford explains how the DeepMind acquisition energized UK computer science PhDs to consider startup paths. | |
| Corporate Partnerships and Enterprise Adoption | 2 | 4 | 1 | 1 | Michael Copeland asks how corporate incumbents engage with startups. Nick Babayan explains how London ad agencies buck traditional corporate hesitation by funding and partnering with early-stage companies. | |
| Mentorship Models and Flywheel Acceleration | 2 | 5 | 2 | 1 | Michael asks what is needed to accelerate the ecosystem flywheel. Matt Clifford criticizes standard accelerator speed-mentoring networks, detailing EF's model of hiring dedicated exited entrepreneurs as venture partners. |
Statements from this episode (17)
Babayan: Multi-industry focus creates a healthier tech ecosystem in London
“Technology is, it's probably the technology hub for Europe and for the startup scene, but it's the regional hub for a bunch of other industries, especially industries that are being changed by technology, advertising, finance, the list is long, and I actually …”
Clifford: Top UK tech grads entering finance dropped from 65% to 10%
“Four years ago when we started Entrepreneur First I know this from a recent conversation with a dean of engineering at one of the, you know, top technical institutions in the world that's very close to here, you know, they said 65% of their computer science gr…”
Clifford: Songkick was likely the first UK startup backed by Sequoia
“Songkick's a great example of that. Maybe the first British company to take funding from Sequoia”
Babayan: Europe has major tech successes, but post-exit mafias remain underdeveloped
“Well, I mean, I think the list is pretty long of, you know, Spotify and Skype, and I mean, there's, yeah, there's a whole bunch of success stories. I think what probably hasn't happened yet is you don't have the mafias that have followed those yet necessarily.”
Clifford: The Skype mafia is actively recycling talent and capital in Europe
“The Skype mafia, I think, now is actually pretty active as investors and entrepreneurs, and that recycling of talent and capital is starting to happen.”
Clifford: Entrepreneur First's model would have failed in Silicon Valley
“I actually think we would have never got off the ground in Silicon Valley because the people would have just said, you know, you just can't do this.”
You: London Has More Culture, Fashion, and Music Startups Than Silicon Valley
“And similarly, I think the reason why there's so many culture related startups in London is because that's a very London thing about fashion and, you know, media and music as well. I think there's a lot more startups in London focusing on those problems as opp…”
Clifford: London's local tech market is too small for single-market startups
“You know, there isn't a big enough tech ecosystem that you can that you can serve that community alone.”
You: Silicon Valley is a cultural wasteland lacking non-tech social variety
“I think the flip side of that is it is like I personally find it to be a cultural wasteland. Anytime I go over there after I'm there for two weeks, I'm craving going to a museum or being able to see that film that just came out or having more variety in my soc…”
Clifford: Startups can arbitrage US capital and lower UK engineering salaries
“I think the other thing we're increasingly seeing very strongly with our companies is that the cost of engineering talent in the Valley relative to here means that there is actually, has Ted said, an arbitrage play available of raising US money on US terms and…”
Babayan: UK government tax agencies directly answer startup inquiries by phone
“When you're a very small startup, and you have questions about things like tax, you actually can pick up the phone and talk to somebody and get a real answer.”
Chokshi: Tech ecosystems require both government support and bottom-up entrepreneurship
“There's never been a really successful case of a top down government mandated or government created eco cluster. Nor has there been a completely purely successful bottoms up community where it's just a startup set of entrepreneurs who are very entrepreneurial …”
Clifford: UK angel tax incentives significantly boosted startup investment
“Some of the tax breaks for angel investors, which undoubtedly have had a huge impact on both who and how much is investing in, in, in the UK.”
Babayan: London ad agencies buck trend of poor corporate-startup partnerships
“You know, in general, large companies do not partner well, especially with small companies, but I think big advertising agencies in London have proven that wrong.”
Babayan: London media companies exchange ad reach for startup equity
“I think there's also an emerging trend in, in media for equity deals. Big media companies based here that have huge reach but feel maybe they're not playing a part in innovation and in some of the new ways that information is being spread and using some of the…”
You: Advice from big-company executives is usually irrelevant for early-stage startups
“But I think a lot of the problems you face as a startup are inherent to the nature of starting a company and learning how to grow a business. I think the kind of advice you might get from somebody who comes from a big company might not be relevant to you, so t…”
Michelle You: London founders naturally build for global markets from day one
“I think in America, I can say it because I'm American, it's really easy to just think that American, America's all there is, because it's dominant force. It's where a lot of, you know, dominant force in culture and technology, and it's easy to just think about…”