Tech 100: 'Unless we can create technology firms of scale our entire economy is at risk'

Jamie Coleman, co-founder and chair of CodeBase - Image credit: Murdo Macleod

Looking back over the last few years since we began incubating tech companies in Edinburgh, I see a spectacular number of changes in the ecosystem.

In CodeBase we now have over 80 growing companies with over 650 jobs between them. The growth has been staggering. Overall, Edinburgh has been levelling up.

For context, the UK creates a larger number of unicorns (start-up companies valued at more than $1 billion) than other European countries.

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Of the 17 current unicorns, 13 are in London, and of the four outside of London, two don’t count (one is an older company and the other is based in an offshore tax haven).

The only two real unicorns outside of London are in Edinburgh: Skyscanner and FanDuel.  

There are some larger global trends at play, which offer both opportunity and threat to the Scottish economy.

Software is now at the heart of every industry and traditional companies are at risk from complete disruption. Think of hotels vs Airbnb, local taxi firms vs Uber, Netflix vs traditional media.

What happens when many of the big traditional employers are destroyed seemingly overnight?

Companies are staying private longer and raising more private money to grow internationally.

Facebook waited 10 years to IPO and Alibaba 15 years, in contrast to companies like Microsoft and Amazon who floated on the stock market rapidly.

This means that the growth in share price and the value capture to an economy is not shared within traditionally traded stocks of the type traded by pension firms. What happens to our pensions in this world?

Huge platforms eclipse business size. Facebook, Apple, Amazon and Google are more than 10 times larger than last century's tech giants Windows and Intel.

Their power and dominance allows them to control the environment and opportunity for smaller businesses and at the same time, they are able to finance 'moonshot' side projects that if successful would create brand new markets.

Finally, robots really are eating our jobs. Any job involving productivity is being replaced by technology, even previously “white-collar” jobs such as lawyers and doctors.

What will the future of work look like in this world? What does this mean for Scotland?

Unless we can create technology firms of scale, our entire economy is at risk.

It is heartbreaking to regularly see startups that fail because they do not understand how to grow into significant companies.

Fortunately, we have the beginning of a community of skilled individuals who have been working in incredible companies such as Skyscanner, FanDuel, Craneware, FreeAgent, TVSquared and Administrate.

This experience feeds into the wider startup culture with peer learning and advice. However, too many startups are making the same mistakes.

The good news is that building successful technology companies is teachable, but only by operators who are actually active in company building, not consultants and academics.

This is at the core of the CodeBase mission.

Jamie Coleman is co-founder and chair of CodeBase and co-founder of Accelerated Digital Ventures