MICHAEL HAYMAN MBE: LESSONS FROM NEW YORK, BIGGER IS NO LONGER BETTER IN THE NEW WORLD OF AMBITIOUS SCALEUPS
This article first appeared in City A.M., 17 May 2016
Every business is a hypothesis based on a bet. And if you want to bet big, grow small. That’s the lesson I learned on a recent visit to New York to meet the scaleup businesses aiming to become tomorrow’s titans.
Of course, think New York and you think big. The Big Apple, big business and big ambitions. Skyscrapers and corporations, bold and boundless, it’s perhaps the city, more than any other, that is the benchmark for London.
In the UK we often think about scaleups in three ways: profits, people and premises. But the latter two are waning as measures of success.
The example that came up time and again was the messaging service WhatsApp. Sold for $19bn to Facebook two years ago, it had just 35 engineers. Today that number is only in the low 50s, though the number of users has doubled.
This is the business that is helping change how the world communicates, with a team that you could fit into one roomy open-plan: where every team member, going by the acquisition price, is worth over $350m.
Our idea of the people power needed to fuel rapid growth is changing. So too are our perceptions of space and place.
“The new bravado is how much you can do with less,” was the message from James O’Reilly, co-founder of shared working space Neuehouse. And while co-working spaces in London are often the preserve of sole traders and startups, in New York they are very much the home of tech scaleups. Flexibility of space, creative collisions in thinking, and a focus on environment are some of the reasons cited for the evolution of traditional office space.
“What a small company can do today is dramatically different to even five years ago,” was one founder’s reflection. “Small teams can change the world.”
It’s giving rise to the notion of a federated economy where one space serves many and becomes the focus for disruption rather than a home for process, conformity and hierarchy.
A striking example of this sits at the heart of New York’s commercial district, at 26 Broadway. There stands an immense testament to capitalism, the original headquarters of JD Rockefeller’s Standard Oil Company. Built as a visible symbol of corporate power to those entering New York Harbour, it has today been repurposed as a home to young growth companies, attracted by the dual appeal of cheaper rents and high quality transport links.
It’s the base for one inspiring British entrepreneur, Jules Ehrhardt, whose digital product business ustwo is storming its market and is one of those companies that looks set to be a world beater.
But its growth path is not for the faint-hearted. For those looking for the assurance of planning for the long term, forget it. “We have no idea what we’ll look like in five years and that is the fun of it,” he says.
While the business has headquarters in the States and London, the culture is definitely one that believes that small is beautiful, small is better, and small changes the world. But once you have, don’t rest on your laurels.
Take an arch disruptor like Uber, which has trashed the established taxi market. In the UK it’s still new news. Over the pond, you get a sense that the story is already moving on. Not just because of the competition, but the technology – some observers believe the rise of driverless cars could in time wipe out the Uber business model.
The political debate in the UK often implies that it is London that has the learnable lessons to provide to its Atlantic cousin. But beware hubris. New York’s entrepreneurs are on the move and there is much to learn.
All of the entrepreneurs we met were driven by a belief in their products and crew. Their companies are small and nimble but growing and highly profitable, and they’re people that can and do make a difference.
Emerging from the subway we spot Whole Foods. “Eat like an idealist” the advertising slogan commands from the shop front. It got me thinking. The idealists are on the rise. And they are changing the ideal model of growth.