THE RIGHT MAN FOR THE JOB

Eric van der Kleij positively exudes enthusiasm for his current role, and why wouldn’t he? Tech City – the name given to an area in East London which encompasses Old Street’s Silicon Roundabout, the Shoreditch area and right out to Stratford’s Olympic site – is shining out as beacon of light on to an otherwise gloomy economic backdrop. The area is now home to over 600 companies and its growth seems set to continue for some time yet.

From two-man startups to household names like Google and Facebook, there’s a plethora of companies operating in Tech City. Van der Kleij’s role is to ensure that the investment for the area and the companies wanting to operate within it continues to grow. It is job personally entrusted to him by 10 Downing Street’s leading resident, no less.

Our conversation begins with him offering some background of his experiences and how he ended up at the helm of one of the country’s most exciting and prosperous projects. “I was formerly an entrepreneur that built a technology business here in the UK,” van der Kleij explains. “It’s a company called Adeptra and it automates credit card fraud alerts.” Adeptra, he does not tell me but a quick bit of research does, has been the market leader in fully automated, fully interactive consumer communications since 1996. “I exited that company about six years ago and then started working part time for (the government backed business ambassadorial quango) UK Trade and Investment (UKTI). My main focus was the Global Entrepreneur Program which works with individual entrepreneurs to try and attract them to the UK to set up their businesses.

“At the end of last year the Prime Minister announced the Tech City initiative,” he continues. “I was asked if I had any strategic input and I felt so strongly that I knew exactly what to do that I wrote a strategy for the TCIO (Tech City Investment Organisation) and showed it to the boss of UKTI. He said ‘fantastic, let’s go for it’. We presented it at Number 10 within a couple of days and a week later I was made the chief executive of the TCIO.

“I thought I was busy before...,” he adds. “I wasn’t. This is the most full on role I have ever had in my life but it’s also the most fun.”

ORGANIC GROWTH

We swiftly move on to talk about the Tech City area and how it has risen to such prominence over the past 12 months. It was, after all, an area with a bustling tech community when it went by the moniker of the Silicon Roundabout, long before David Cameron branded the Tech City initiative. It’s roots in creativity extend even further – a decade ago it was the centre of the coolest of the cool chic fashion and art scenes.

“After Damien Hirst and his followers were doing their cool artsy gigs and strange thing with sheep, the creative classes soon followed,” explains van der Kleij.

“I think it was in 2008 when it started to get on peoples’ radars as a technology scene. I think it was largely led by the creative agencies and following the growth of them the digital agencies came along and attracted the really creative types to the area.

“Then this piece of magic happened,” he expresses gleefully. “They started to created product businesses. You began to see the LastFMs, the Dopplers, the Songkicks and more recently the TweetDecks growing up in the area. Product companies are the ones which are so exciting to us because the creative talent that’s working within those businesses can create great things.”

But he is by no means ready to sit back and leave the area to its own devices, even if some would prefer the government to do so. There is more to be done. “One of the things we can do in government is to shine a light on what’s going on,” van der Kleij states. “So we started a press campaign to raise the area’s profile further.

“We were at about six per cent awareness internationally last year, now we’re at about 20 per cent. I need to get that to 75 per cent. A lot of entrepreneurs come here from all over the world now. Why? Because they have heard our message: ‘this is the place where your business is most likely to succeed, and faster, than anywhere else’.”

THE GOVERNMENT’S ROLE

As the media spotlight hovers over the Tech City area, much is made of the government’s role in its development. Some have praised the coalition’s work over the last year to help promote the area and those working within it while others claim they are trying to piggy-back their way to popularity on what was natural, organic growth and as such should remain removed from the area which thrived long before David Cameron made it a party priority. There’s one school of thought that states that government’s intervention could even be harmful – with fears of inflation in rent rates when the big companies set up camp, something that happened before with the fashion and arts scene. 
But Van der Kleij is quick to dissolve any claim the politicians may lay to the success of the area.

“Unlike other clusters elsewhere in the world where governments are writing cheques to try to foster innovation, this growth is based on a natural, organic phenomenon and that means it’s far more stable as a platform,” he says. “We are definitely not taking any credit for starting the cluster but what we are doing is making sure that, number one; we don’t get in the way and number two; we create some policy changes to make the area as attractive as possible for the businesses.”

Sure enough, the conversation promptly turns on to these policy changes and exactly what they are. There are, London’s ‘resident entrepreneur’ tells me, four main policies that have been implemented to help Tech City continue to flourish. The first is the entrepreneurs’ visa. This allows an entrepreneur to enter the UK if they secure £50,000 from a capital investor, something Kleij claims saw a 90 per cent rise in the successful number of visa applications of this sort in the first three months of this year compared to last.

The second is the life time capital gains tax relief for entrepreneurs which means that for the first £10m of capital gain that an entrepreneur makes, they are only charged 10 per cent capital gains tax. Kleij proudly states: “That’s terrific because it sends a great message that we are serious about entrepreneurship in this country.”

The third, increasing investor tax cuts from 20 to 30 per cent (as of early next year) while simultaneously increasing research and developed tax credit from 175 to 225 per cent. “The final thing,” he says “was the corporation tax rate. Corporation tax is tough, that’s a fact a life, but it is being reduced by one per cent a year so by 2014 it will be 23 per cent which will make it the lowest in the G7.”

The issue of office prices soaring in London’s trendy east end is something that the Dutch born, South Africa-raised van der Kleij says he is already taking steps to combat. Here, government is encouraging local developers to continue to build in the area to stay ahead of the curve.

“By encouraging them to build, build, build,” he says, “we can ensure we stay ahead of capacity which means we can make sure that we continue to bring some of the price competitiveness to the area while retaining its character.”

AVOIDING THE TALENT WATERFALL

By introducing financial and legislative initiatives Kleij and his team can facilitate continued growth throughout East London. However, the main area that must be addressed is personnel. Posed with the question about whether the talent pool existed in the UK to allow Tech City to become a centre for technological excellence or would the area be hitting a glass ceiling in the foreseeable future, he retains his confident demeanour but recognises the challenge.

“It’s much easier to hire the talent you want in the UK at the moment compared to the Silicon Valley where there is an incredible shortage,” he says. “The challenge going forward is to get graduates going into startups. That’s why we supported the Milkroundabout, because it was sending a signal to the grads that they could try working for an innovative company and do something really novel somewhere like Shoreditch.” This echoes the message sent out by Songkick’s CTO Dan Crow when The Cloud Circle interviewed him last month.

We met Crow at the Silicon Milkroundabout job fair in October of this year – an initiative which saw 100 companies advertising 500 jobs up. This was a means of filling the new jobs which are being created at a rapid rate by the expansion of Tech City and the companies within it. In times of economic hardship, when unemployment is rife, the availability of over 500 jobs for graduates, budding entrepreneurs and the tech savvy is a testament to the growth and, moreover, the importance of Tech City.

Nevertheless, creating a rich and deep talent pool for the long term remains an absolute priority for Kleij and the TCIO. “We will reach a talent waterfall in three or four years time similar to that Silicon Valley is currently experiencing unless we address the issue right now,” he says. “Of all the things we do at TCIO, this is the most important.

“So what we’re doing,” he moves on to explain, “is to work with the local community to encourage them to enter Tech City.” To do this Kleij and host of influential people from the technology, business and political arenas tour surrounding schools to demonstrate to children how they can be innovative and entrepreneurial. A good example of this is the work he has done with the organisation Apps for Good.

“Apps for Good is a fantastic program which goes to schools and shows children how to design and build an app,” says van der Kleij. “Young people these days in the Hackney area love their phones and they love apps. The program is a way of widening the horizons of some of these kids in a way that could break a generational cycle of unemployment.”

With short term measures – such as job fairs, entrepreneurial visas and attempts raise the profile of the area to attract potential workers over the East London – combined with the long term goals of inspiring the younger generation in the area, van der Kleij and the TCIO are confident they are doing everything in their power to ensure that the river of talented personnel flowing into Tech City does not run dry any time soon.

THE POWER OF THE CLOUD

‘So how’, I inevitably cannot avoid asking, ‘can the cloud help Tech City’s budding startups?’
“When I think about my own experiences,” he reflects, “my co-founder and I took our first £100,000 of angel investment for machines and servers just to build prototypes. It was the biggest cost we faced. And all of that time and effort we spent looking after that stuff could have been spent developing the product. We would have got to market quicker and saved a lot of money.”

It becomes immediately apparent that he has little doubt that the cloud is an invaluable tool available to companies of all shapes and sizes. Put to him that cloud does, then, indeed have some important role to play in Tech City, his response was almost remonstrative: “don’t undersell it, now.”

“Agile development technologies and capabilities, together with the cloud, mean that you can focus on the idea, throw it together quickly, throw it up into the cloud and see if there is any traction,” he says. “And then you can start building a more stable platform on which to scale it. And of course the real advantage now is that you can scale without any huge costs.

“There are so many opportunities of creating a richness of functionality in the cloud. I can think of five businesses I would start right now using the cloud if I wasn’t doing this.”

Though sceptics will always be quick to lambaste the role of the government in what was a natural and organic phenomena, there can be little doubt that van der Kleij and his colleagues are enjoying measurable success in their endeavours to support the area’s continued growth. The former entrepreneur’s experience, passion and vision appear to be integral ingredients in the recipe for success.

He may have been named as one of the country’s most influential individuals but if Tech City can develop in the way intended, and he seems more than confident that it will do just that, his influence will extend along way beyond our national borders.