Duncan Logan, the Scottish founder of San Francisco-based technology accelerator RocketSpace, joined BQ Scotland editor Peter Ranscombe live on stage at the We Are The Future Startup Summit in Edinburgh to discuss Uber, other unicorns and the importance of coding.
RocketSpace has been involved in nurturing 17 ‘unicorns’ – digital technology companies valued at more than US $1 billion – including Spotify and Uber. How does RocketSpace help tech companies?
We remove friction and help companies to get funded – but we’re not an incubator, we’re not sitting there and telling people what they should do with their businesses. During our first five years, the companies at RocketSpace have raised US$20bn – a lot of that is down to the introductions we’ve made.
The foundation of RocketSpace came from a comment by Marc Andreessen: ‘Software is eating the world’. Everyone’s heard that comment, but most people get that comment wrong; they think it’s because software is working its way up through every industry but the true meaning is that, in the past software companies produced software and sold their product to the incumbent companies, but now with two billion people on the internet those companies can produce the software and go straight to the customer. They cut out and disrupt the incumbent. In the past Uber would have produced its software and sold it to black cab or yellow taxi companies, or Airbnb would have sold its software to a hotel chain, but now they just go straight to the market.
I wanted to work with entrepreneurs who were passionate about starting businesses and I wanted to do something focused around tech. So, I thought about the core components that tech companies need: the first was access to capital. This isn’t a flippant comment, but raising capital has never been easier, but building a fundable company has never been harder.
A lot of companies fail not because their ideas are bad or they can’t raise capital but because they can’t go as fast as the market is going – so our second component is helping start-ups to find partners. The biggest part of our business is our corporate services innovation business; we’re consulting to 150-plus Fortune 100 corporates through which we’re connecting start-ups to the right people and then driving those projects. It’s brilliant for the start-ups because they get scale and great for the corporates because they’re getting outsourced innovation coming into their organisations. Access to each other is probably the most important element of all – it’s hard to innovate on your own. I’m in awe of the first unicorn in any city because if you’re not surrounded by other people all moving at the same pace then how do you get your performance so high above the curve?
Where did the idea for RocketSpace come from and how did you go about setting it up?
If you’re not a coder then you should avoid setting up a coding-led business. I don’t code and if I was young again then I would go and learn to code in a heartbeat. Because I couldn’t code, I couldn’t inspect what the coders were doing. I had a bad experience running a pure tech start-up, so after that I decided that I still wanted to do something in this area that I was passionate about, but not coding – and that’s where the idea for RocketSpace came from.
You recently raised US$336 million from HNA – what prompted you to pick a Chinese investor and what will that cash enable you to do?
It was a conscious decision. If we want to be a global company then China is going to be a big part of our market. China is fascinating. The size and scale is just staggering. The Chinese tech ecosystem is so competitive compared to the Valley and it’s iterating faster and faster.
We’re rolling out campuses around the world, including London in partnership with Royal Bank of Scotland. We’ll also be making other announcements in the coming months about new projects.
Help us to ‘See ourselves as others see us’ – what are your impressions about the tech ecosystem in Scotland and is there anything that we’re not doing that you’d like to see us doing?
The first four or five steps don’t look that impressive but after that growth becomes exponential. Scotland has a tech scene and there’s been a lot of work going on with little reward, but now we’ve got Skyscanner and FanDuel. What Scotland has going for it is huge
political will, which is awesome, and a huge educated workforce coming out of the universities. In the Valley, we’ve moved from capitalism to ‘talentism’ because the shortage is not capital, the shortage is talent.
Every start-up in the Valley is just focussed on talent, talent, talent. How do we attract, retain and inspire talent?
Out of all the unicorns that have passed through RocketSpace, are there any that hold a special place in your heart?
When I go to China, I’m treated like a film star because they adore Uber and I have to tell them that I’m not the founder and I didn’t invest in Uber. Uber’s desk was right outside my office. Why didn’t I invest?
Another would be Leap Motion, which has become a big company but they started off as just two guys. They were the bane of my life because they were constantly trying to solder stuff and were blowing fuses in the office, which was full of smoke. They were amusing and the nerdiest of guys.
The third one was a British one – Blipper. I wish this happened every time – they came out to California to be introduced to capital, they spoke to me and I introduced them to someone in London. Three weeks later he wrote them a cheque. It’s never usually that simple.
What are your top tips for budding entrepreneurs?
When I left university, I found jobs in banking very easily because I could use Excel spreadsheets. I’m going to age myself because back then not many people could use them.
The same is true of coding – it doesn’t matter if you’re going to end up working in human resources or public relations, front office, back office, wherever, if you know how to code then you’ll have an advantage over people who don’t. It’s not as hard as you think to learn the basics. At RocketSpace, we have this idea about ‘finding the science’. We believe there’s always a deeper level. What’s the science of hiring talent?
Always understand the science of what you’re doing. Scots will hate me for saying this, but if you are deeply passionate about tech then spending a little bit of time in California is invaluable. I’m not saying move there, but go and see how they do it there and then come home and do it in Scotland.