When it comes to IT successes in Scotland, we often hear about SkyScanner and FanDuel, but how is the wider Scottish IT scene is faring?
There’s a lot of positive development: universities and the commercial world are getting better at identifying opportunities and playing a catalystic role to help push those through. These developments, plus initiatives like CodeBase, are collectively making traction. The effect I see is that young entrepreneurs are much more clued-up about what they need to do: they’re identifying what problem they are trying to solve, what the addressable market is and what geography that’s in. They’ve thought about the competition and how they can be successful. That’s real maturity and it isn’t just a matter of the founders’ age: it’s about how far they’ve thought things through and the milestones they need to achieve. Years ago, many technology entrepreneurs took the attitude that “when the market sees it, the technology will sell itself.” They were forgetting the huge marketing effort that’s needed.
Are there other signs that Scotland’s tech market here is maturing?
Yes - young companies are more aware that they need to build a team early on. Groups like Scottish Enterprise, Business Growth Fund, Maven, Par Equity and other angel investors are helping with that: matching technical entrepreneurs with business people who’ve done it before, and who can add credibility to the founders. People are learning that it’s not enough to have a good technical solution: you have to have a good business solution, also. How will your solution be monetised? Two Big Ears is a great example of a company that worked hard from day one to engage with their market.
That’s the Scottish company out of the University of Edinburgh that was sold to Facebook. Tell us bit about their journey.
Through Scottish Enterprise, myself and Neil Heywood were approached by the founders of Two Big Ears: two young men who’d finished their MScs, who had a way to deliver 3D audio for virtual and augmented reality, a niche that very few businesses were addressing. Neil and I didn’t charge for our services, but we did take a stake in the company and help run it as a proper business from day one: we’d have monthly board meetings and address issues as they arose. We used social media to build a following with games developers and within 18 months had thousands of developers using our technology, but the big issue was monetisation, as individual developers like to use freeware. So we looked for other applications and identified professional studios which needed a solution for 3-D sound for 360 videos. That connected Two Big Ears with the people who’d done Titanic and X-Men, which caught the market’s attention and got the founders invited to conferences in the US. They met Facebook at one of those conferences, and the rest is history.
That’s a great example of something that wouldn’t have happened five years ago: companies like Two Big Ears know that their own burning belief in their technology isn’t enough. They need to get out there, sell, and promote what they’re doing.
So Scottish tech entrepreneurs are more market-aware, they’re operating like proper businesses earlier on, and they’re thinking about monetization. What challenges haven’t they cracked yet?
The challenge I see, where small companies are transitioning to medium size and beyond, is selecting the right people to help build out their team. Because tech entrepreneurs are naturally curious people, they like to figure things out, so they tend to do all the sales, marketing, finance and the legal aspects, but what they really need is other people, who bring other perspectives and experience.
But it’s really difficult, because the entrepreneur might not have the management skills and the people skills to select the right individuals to handle these roles, and it’s something they can’t afford to get wrong. That’s the biggest challenge facing Scottish tech companies right now. Ideally they need to be working with people who have been to the next stage and further and are able to take them through that journey.
You’re a big believer, too, in encouraging founders to get out from behind the desk, attend conferences and meet other people.
Yes. It’s so important to get along to conferences, to network, and to talk to other companies – just phone them up. Ask them, how did they build their sales force? How did they start their US operation? In my experience other companies are quite willing to talk about what they have done; it’s doing it that’s difficult. There’s a tendency, perhaps especially with Scottish companies, for them to hunker down and feel they don’t have time to get out there, to network, to talk to other people. But it’s not just the people inside their own community that they can learn from: they can learn from their peers and from other professionals; they just need to get out there and meet them.
George Elliott is non-executive director of a range of companies including Craneware plc, Calnex Solutions Ltd, Cooper Software Ltd, Optoscribe Ltd and the venture capital company Par Equity Holdings Ltd.