Playing to our strengths
According to the Government’s ‘Digital Future: Infrastructure Action Plan’, there is an opportunity to achieve a “truly world class digital economy” by 2020.
One company at the forefront is 4J studios. The name refers to the three traditional Js in Dundee – jute, journalism and jam – now with a fourth added: joysticks. After porting hit creative PC game Minecraft by Swedish developer Mojang onto games consoles last year, 4J has sold over 11 million copies to Xbox 360 and Playstation 3 customers around the world.
The figures are, according to company founder and chairman, Chris Van Der Kuyl, beyond “anybody’s wildest dreams.” The company is now working on versions of the game for the new generation of consoles. “The games industry in Scotland is stronger than it’s ever been, and actually, you’re starting to see signs of real strong sustainability now. We’ve been very fortunate with Minecraft, that’s really put 4J in a position where it’s now sitting back choosing what the next 10 years of growth is going to look like. Goodness me, in 20 years I’ve never had that ability.”
The games industry is not alone. Scotland’s digital sector has seen impressive growth in recent years. Polly Purvis, Executive Director of trade body ScotlandIS, says: “Where we’re sitting in 2014 is with a considerable amount of potential, and a significant amount of optimism and hope around this industry. This is an industry which can be one of the powerhouses of the Scottish economy for the future with or without independence.”
An emerging digital hub in the centre of Edinburgh is evidence of momentum in software development, according to Purvis, incorporating banking solutions company Aveloq and healthcare support firm Craneware in the old Standard Life building in Brandon Terrace, the Amazon development centre and Microsoft at Waverley Gate, and the creators of the controversial video game Grand Theft Auto, Rockstar North in Leith Street. The University of Edinburgh hosts the informatics forum and several companies based at the Appleton Tower. Nearby is the TechCube, a building devoted to technology start-ups.
“It’s a broad range,” says Purvis, “and their markets are out there. I think the whole bit about trying to increase exports and support the development of companies that are going to trade internationally is absolutely where it’s at.”
Flight comparison website Skyscanner is also nearby, and is held as an exemplar of what can be achieved. “They decided Edinburgh was good because of talent from the university, etc, but now that business is of a scale to bring in global recognition to Scotland,” says Van Der Kuyl. Purvis agrees: “It has been held up as being a shining example of a Scottish company really doing a fantastic job, and they have, but we need that to be emulated across a whole range of companies, and the lessons on how to grow a company fast. The difference between Silicone Valley and the rest of the world is that the Americans understand how to scale a company fast.”
Van Der Kuyl, an experienced consultant across the digital sector and chairman of the Entrepreneurial Exchange, sees no reason why Scotland can’t emulate the success of the world renowned Californian breeding ground. “That can happen here, and should happen here. The only way it will is if we believe it can and then start to align ourselves to make it more likely,” he says.
“Scotland’s entrepreneurial ecosystem has matured enormously in the time I’ve been around. You’re now seeing sustainable support mechanisms. A huge amount of kudos to Scottish Enterprise in terms of the role it took in kick-starting so many things,” says Van Der Kuyl.
Entrepreneurial Spark, a not-for-profit business start-up incubator and accelerator programme launched in 2012. Van der Kuyl is part of the Dundee group which looks for people with ideas to then assign mentoring talent, financial backing, structures and support “to help ideas really take off.”
One “chicklet” in the Edinburgh “hatchery” of Entrepreneurial Spark is Brian Baglow, who has set up the Scottish Games Network as a mouthpiece for the games industry after a Creative Scotland report mistakenly listed the sector as having no value to the Scottish economy. “On the commercial side, Scottish Enterprise and Scottish Development International have been fantastic, on the cultural side, the games sector has received no support whatsoever,” says Baglow, who is also a member of BAFTA Scotland. Integration with both creative and technology sectors would benefit everyone, says Baglow: “With external support, with simple recognition of the value of the sector, and the potential as an art form in its own right, but also as this transformative technology, the games sector in Scotland could actually help the rest of the digital and creative worlds to achieve an awful lot more.”
Van Der Kuyl agrees, citing a conversation with an MP who asked if he could use a word other than games: “Why?” asked Van Der Kuyl. “Well, every time I bring it up in the House it gets laughed at a little,” he replied.
“That’s a problem. That’s a problem of ignorance, because games is one of our greatest industries with potential of growth,” he says.
Scotland can learn more from Silicon Valley, adds Van Der Kuyl: “When they spot something the investment community just kind of circle the wagons, dive into it, put management in, put talent, whatever it takes. If you look at anything from Google to Facebook, and onwards, those businesses didn’t just happen because Zuckerberg is a genius, or Larry and Sergei are geniuses. It almost becomes a process of anointing.”
Van der Kuyl welcomes the Scottish Government’s “catalytic role” in helping the process with initiatives like the Edge Fund – a competition to support and encourage entrepreneurial activity among young companies in Scotland. “I think that kind of catalytic role has to be the right place for a government to be, because I think when a government tries to intervene in a direct sense it can be less effective. Where Scottish Enterprise has been most successful was in the catalytic role,” he argues.
“When you look at inward investment, I think Scotland’s got a pretty chequered history. The one commonality is if the talent is linked to the investment, the talent is far less moveable. A [manufacturing] plant eventually needs replaced, and you have to fight like tooth and nail to secure it. You see the Government doing this all the time, trying to throw every incentive in, because they know they could spend their dollars in any number of countries. I think making Scotland a more attractive place for the digital industries in general is pure talent,” says Van Der Kuyl.
There is a problem with perception of an industry still compared with the electronics sector of the 1990s, which disappeared quickly. The IT and software services sector is much less visible because it is often smaller businesses in smaller premises, and this disguises the figures. According to e-skills UK, there are 105,000 people working as IT professionals in Scotland, but the country needs more. ScotlandIS has been working on a skills development plan for the industry with Skills Development Scotland which will be announced soon, but it will not provide all the answers, says Purvis, when the industry needs to treble its intake of talent. As well as informing careers advisers of the new opportunities, and promoting maths and physics in education, the digital industry is looking at ways of expanding apprenticeship schemes. “We need as a country, and I’m talking about Scotland rather than the UK, we need to go and find fresh talent for the sector from other parts of the world,” says Purvis.
Retaining and attracting talent is a key factor in the independence debate, according to Van Der Kuyl: “The most compelling thing I’ve heard from the Yes campaign is the argument about talent. About net migration policies, and if Scotland doesn’t get its policies right for Scotland, and we’re talking specifically about fresh talent around highly skilled jobs in the knowledge economy, then I think on a global basis we’ve got a real problem.”
A recent debate on immigration at Westminster has caught his eye: “I think the Tory view of this is a pretty scary view, when one is trying to build a knowledge-based economy. It revolves around challenges that undoubtedly exist in the south-east of England, but don’t really reflect us. My position is quite clear, and I threw out the challenge to the Better Together campaigners: what’s your counter to that? Because if one looks at everything else round the periphery and tries to take the long view on Scotland, and the UK, to be globally successful in the next 100 years, we’ve got to become quite competitive. I don’t think there is an option for the Better Together campaign to play dirty politics and just say, ‘we know we can win an opinion poll by saying nothing’. They’ll do a generational disservice to the people of Scotland if they don’t get actively involved in saying here is how we’ll lay out a really strong country for the next 50 years, I don’t know how it’s possible to make a decision based on that.”
Silicon Valley, he says, understands the fast pace of a technology-driven economy. “I think Scotland has the potential to be a very similar place,” he says.
Although “no one has yet put a compelling case either way”, Purvis sees two significant risks to business from the referendum. The digital transformation of the public sector must not be distracted by the focus on the referendum agenda, she warns, leaving us trailing behind comparative countries in Scandinavia and beyond. “To me, the opportunity to improve the quality of life for everybody, to improve opportunities for our young people, and to reduce the cost of government is enormous, and it would be tragic for that to be blown off-course,” she says. She also expresses concern about Scotland’s image in an increasingly divisive debate, when many of the smaller digital companies in Scotland look to England to sell their products. “Over the years we’ve had ‘buy British, back British’ strategies. If you ended up with a ‘buy English’ then I think Scottish businesses would lose out.”
For Baglow, the independence debate offers an opportunity to create an identifiable branding: “2014 obviously offers a massive opportunity, because if the country becomes independent we’re going to have to stand on our own two feet and we’re going to have to be able to represent ourselves as a thriving and successful industry on a global basis. We need the relationships, not just with the rest of the UK, but with Europe and the US, and China, Far East and South East Asia,” he says.