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Q&A: Chris Neumann, CEO, Commonwealth Ventures

David Paul

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silicon valley

Chris Neumann, CEO and founder at Commonwealth Ventures, spoke to DIGIT about tech startups, the importance of Silicon Valley, and how Scotland is making a name for itself on the startup scene.

What is it about Silicon Valley that is so important for start-ups?

Silicon Valley is the epicentre of what we view as tech startups. It has been doing tech startups and software and hardware startups for 80 years at this point. And what has happened over those years, by virtue of the incredible companies being started here and the universities of Stanford/Berkeley that are based here, it has created a loop where we have generations and generations of people building great companies, learning from that, going in and building more companies and then teaching the next generation.

So, when it comes to experience and expertise, and going from an idea to a billion-dollar company, there is nowhere in the world that has anywhere close to that density of knowledge and experience.

If that’s the case, what would Scottish startups need to do to succeed in the Silicon Valley market?

Silicon Valley, in and of itself, isn’t really a market, if you think about it. Silicon Valley is only a market if the product or service you are selling is for customers that are tech companies. If your customers are not tech companies but any other type of business, then Silicon Valley is a benefit by virtue of the resources it provides, not the market.

The reason why you would come to Silicon Valley is to get access to those resources; to get access to those people; their experience; the capital that’s available here, but that does not necessarily imply that you are only selling your widget here in the Silicon Valley.

If you think about other markets, such as Hollywood in Los Angeles, that is the market for films. It does not mean that there are not films made elsewhere, and it does not mean that the only people who watch films are in California. Similarly, when we think about finance, we think about London and New York. So, there are key cities that have an incredible influence and density of knowledge in most markets.

If you are a Scottish startup and you are thinking “how do I succeed”, success isn’t necessarily that you got the blessing of Silicon Valley. The question is can you learn from it?

What can a Scottish startup learn from what is available in the Silicon Valley?

Being based in Scotland is an incredible strength for startups. Scotland has an incredible university system and a very good work ethic. It has got a government both at the Scottish level and in the broader UK level that is incredibly supportive in implementing policies and legislation that is beneficial and supportive of startups. And, in comparison to California, the cost of living, the cost of salaries and the cost of operations is significantly lower. There are great reasons to be based in Scotland.

Why might you also leverage Silicon Valley? Scotland is a relatively small country, so if you are creating a large multinational company, or that’s your ambition, you are probably going to have to go elsewhere to get certain expertise and certain types of engineers or managers or go to market leaders. If you are looking for people who have experience in tech companies specifically, there is no better place to go than the Silicon Valley.

Would you say that Scotland’s startup market is better than the rest of the UK?

I’ve seen startups all over the world. I’ve seen startup ecosystems all over the world. I think Scotland is probably the most exciting startup ecosystem for the size of country that it is. It’s punching massively above its weight in terms of the size of the country, and I think if you were to compare it to the broader UK, the biggest startup ecosystem in the UK is London, hands down. It’s a larger city, has more people and more capital and more things going on.

What is it that makes Scotland such a perfect place for startups to thrive?

If you look at what the Scottish Government has done with its innovation centres and the various strategies that have been layered on top of what the broader UK does, we’re seeing impacts and up-levelling of an entire country in ways that we just don’t see anywhere else.

Most countries of that size do not have the same level of education that Scotland has. They do not have the density of world class universities. They don’t have this amazing experience or institutions at an industrial level, whether they be the expertise in finance, or the expertise in oil and gas and other things. So, I think that Scotland is incredibly exciting. It’s doing amazing things. We’re seeing great entrepreneurs and great startups coming out of there. And there’s a reason why you are seeing larger companies get attracted.

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Do you think that Scottish nationalism has something to do with it?

I think one of the things that makes Scotland more primed for success than other similarly sized countries is that it does not shy away from the fact that it is a small country. When I speak to people who are entrepreneurs and in tech and government they don’t have that overly nationalistic idea that we can do it ourselves.

There’s still that good amount of stubbornness, but the people who are trying to do exciting things, they are saying “look, we know this country. We know that if we’re going to build something amazing, we need to hire people from other places. We need to attract people and capital from other places”, and so very early on in the process they are owning that idea and they are looking for solutions. They’re not just sticking their head in the sand and saying “we can do it all ourselves” without taking stock of the reality of the size of the country.

Do you think there’s anything that Silicon Valley could learn from Scottish startups?

I don’t know that there’s a huge amount that the Silicon Valley can learn from Scottish startups. The reason why I say that is Scottish startups, by virtue of the size of the country, and the fact that it’s a little further away from other things, have to employ different strategies than Silicon Valley startups.

Silicon Valley startups have an abundance of wealth. It just has an embarrassment of riches in so far as the number of people there and the amount of capital. In Silicon Valley everything sort of comes to you. Startups that are in places like Scotland must become more resilient out of the gate, they must work harder and try harder. I don’t know that necessarily the strategies employed by a Scottish startup might translate to startups in Silicon Valley.
However, the Scottish startups that do succeed tend to be in a better position because they’ve not had the influence of entitlement – they’ve had to work hard. They’ve had to build better business fundamentals and figure out how to create a company starting in a small market with relatively few resources than starting in a large market with an abundance of resources, and so that tends to build more robust companies.

David Paul

Staff Writer, DIGIT

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