UK tech industry valued at $1T, becoming third country to hit milestone | Hacker News Reader

UK tech industry valued at $1T, becoming third country to hit milestone

uktech.news

35 pointscsomar61 comments

The article could also have been called

> UK financial industry is huge

Which I guess would not have surprised or interested as much people.

Now before the financial crisis, we were already told that the financial sector was oversized because it was doing so much sophisticated innovation.

When the shit hitted the fan everybody realized that all this crazy innovation extracted much more value than it contributed to the world.

My question is: have we evidence that this has fundamentally changed because you label some financial companies as "Tech"?

"almost five times larger than France and Sweden" - the UK population is almost 7 times that of Sweden, so that's quite flattering. But what are the reasons for France's relatively small tech industry?

Workers rights are a disincentive to SV funding, as well as expansion by existing companies (at least until the company is already huge).

Cost of starting up and taxation (as you have a lot of risks, why increase them by increasing costs so early).

I don't agree with these (if everyone had rights like France it would be a non-issue) but that's what I've seen in discussions about opening offices in France, hiring in France, setting up in France.

Edit: Sigh, downvotes... but perhaps people don't realise that things like unions are essentially mandatory in France when the employer has more than 50 employees: https://en.wikipedia.org/wiki/Works_council#France or that the standard corp tax is one of the highest in Europe https://taxfoundation.org/corporate-tax-rates-europe-2022/ . It's not that high tax rates alone will be a disincentive - it isn't, Germany is higher - but combine high tax rates with a lot of employee rights and now try to imagine the modern SV startup that leverages gaps in legislation thriving in this... it doesn't.

There's also the matter of how funding is made available and the appetite for risk. From what I've seen and been told, the situation in Europe (including the UK) is vastly different to that in the US, where risk-taking is almost seen as a virtue. Meanwhile in Europe, a lot of money comes from family generational wealth and they only want sure bets. For example, friends in the UK have had more luck raising from US VCs than UK ones.

In the UK it's just an ingrained cultural difference.

There's a natural skew in the UK for public businesses to focus on making profits and paying dividends, both of which don't help growth.

Meanwhile, many British entrepreneurs are happy with a "lifestyle business" that let them lead an upper middle class life on their own terms.

When you look at crowdfunding platforms for tech startup you won't see any ambitions to aggressively take over the world like you do in American pitches.

Most people here don't trust or invest in the stock market at all and instead the moderately well off seem to prefer investing in property, which produces income in retirement.

Have seen this a lot too. Almost every business I’ve worked with wouldn’t want to touch France or Germany due to employment rights.

Regarding unions, I believe that there are much more union members in the UK than in France. A "comite d'entreprise" is not the same as an union, either.

An issue (if you see it that way) in France is that the right to strike is written in the constitution and extremely liberal. Basically if you have a work-related problem and you find just one colleague to agree with you then you have a constitutional right to strike.

On the other hand, in the UK a strike is only legal is organised by a trade union after a formal ballot.

Beyond that the UK is much more business-friendly with much less red tape... The French administration is kafkaesque.

Just to clarify, "workers rights" in this context refers to laws that mandate minimum benefits/contractual-protections. Classically, such laws would not be considered to be a bestowment of rights. On the contrary, they would be viewed as limitations on contract liberty: a case of denying workers certain options, ostensibly to protect them.

France is the last country in the West I would hire in. A decent place to conduct business but the worst place to hire labor.

Could you elaborate? I know very little about this aspect of French commerce / work.

Very difficult to fire a FTE. Imagine you take a risk on someone and they don't work out. It's extremely expensive and time consuming to exit that poor performer. This isn't even mentioning the huge bureaucratic state that is tuned towards large enterprises and not small business - be prepared for arbitrary and conflicting regulations and taxes once the proper government agencies learn of your existence.

It's also pretty hard to fire a FTE here in Sweden so not sure how that alone would justify anything given that Swedish tech sector punches well above the country's size.

I don't know as much about Sweden but I've heard their government is more efficient and less contradictory than France.

That would cancel strong labour rights as a main issue. Government bureaucracy I completely understand, even more when I have personal experience with such involving the Brazilian government.

Strong labour rights being considered a culprit is a red herring, a very useful one to fuck workers with.

That's why employment contracts allow for an experience period (typically between 3mo and 6mo)

"Last place you'd hire in the West" I can assure there are plenty worse places.

Where is worse?

South America, as an example

Interesting. I don’t consider South and Central America to have western countries. Normally Western refers to countries with majority European people. Ie North America, West and Central Europe, Australia, NZ.

Less access to capital, engineers still considered glorified blue-collars.

In France "engineers" are considered the top of the pile, they have a higher status than in the UK, not least because they traditionally stem from "Grandes Ecoles".

Edit: interesting that the person I'm replying to wrote "considered glorified blue collar", which I interpret as status, and that those who are replying to me focus on pay. In the UK a plumber (blue collar) or train driver can make more than a software engineer who is university educated and enjoys a higher status, for instance.

Salaries in tech/software are not that different in UK and France. Perhaps London salaries in hot startups are outliers.

I don't think there is a difference in the way devs/programmers are considered on either side of the channel. The key is not that but rather the company/industry. A tech company will consider them a key resource, an old industrial company maybe not...

"engineers" are considered the top of the pile: as long as they're not talking salaries...

I switched to not working for french companies for that very reason. Engineer, loads of experience, low salary compared to the UK or US.

I know you could put a price on the "french social privilege", but I didn't benefit from it the least bit (no kids, working) so I was better off without it.

> In France "engineers" are considered the top of the pile, they have a higher status than in the UK, not least because they traditionally stem from "Grandes Ecoles".

Very few people come from the Grandes Écoles, that's the point of them. There are far more engineering schools than that. And even then they don't necessarily have exceedingly high status and pay. In France status means being management/exec. You're technical ? Well, get fucked, you're from a lower caste.

Hence why I wrote 'traditionally' but even being an engineer from an engineering school is high status in France.

You seem to conflate your experience and generally the pecking order in a company with something specifically French whereas it's not.

> In France status means being management/exec. You're technical ? Well, get fucked, you're from a lower caste.

That was my impression as well, working as an engineer in France. Is it different in the UK or other European countries?

Even talking about mechanical engineers, they're paid poorly. The average is like $40-50k USD atm. There's a reason inequality is lower in these countries than the US, because high-skilled workers are paid much less.

I think he means programmers.

More english speakers than french speakers in the world?

Article also says twice the size of Germany's and than valuation was 'only' 450 billion in 2018.

So my guess is that this is because London is both a major financial centre and a fintech hub.

Does language barrier matter here?

It's not just France but Europe in general doesn't have much foot into high growth businesses that are colloquially called "Tech". UK is a superpower in Europe in that regard, always was and will continue to be.

The reasons are a never ending debate, everyone(including me) likes to explain it from their own world view. If you are libertarian you will probably say because it's the big government, high taxes, workers rights, unions etc. but I personally don't like these explanations because they fail to explain why the distribution is not homogeneous within those legislative regions. So in reality, it's not that US and UK dominate the "tech" but it's SV and London. For whatever reason it is, you cannot do some tricks and have SV in Detroit and London in the Balkans.

But it isn't just London - the UK has substantial tech clusters in Manchester, Leeds, Bristol, Cambridge etc.

I'd posit that the BBC Computer Literacy Project, Acorn and Sinclair were central to seeding the right skills base in enough of the population to build a sustainable industry.

Of course, so does Europe has tech clusters but all the difference comes from the concentrated one and the continental Europe doesn't have one.

Europe does have a lot of tech companies and startups, especially EU is a rich place with a lot of innovation and high tech business happening. What EU lacks is unicorns.

I cannot take seriously the comparison between SV and London. Their tech cultures aren't even remotely the same, and never will be.

What comparison?

Sorry, it was late and I was tired. Also my tone wasn't so constructive and I'd rephrase my original comment if I were to write it now. By "comparison", I meant grouping SV and London together. They're worlds apart in my experience. The UK is much closer to Europe (particularly in VC culture) than the USA, to my mind.

You are probably right. UK must be somewhere in the middle but closer to continental Europe.

I would agree.

After reading the submission title I tried to think of a UK tech company and honestly couldn’t come up with even a single name…

UK tech companies tend to be B2B service companies rather B2C or product companies like the big name US tech companies, with the notable exception of Sage Group who are essentially the UK version of Intuit (but not quite so awful.)

That doesn't really mean anything though. You can't get any useful information from asking "do these companies market themselves in ways that would make me hear about them?"

This certainly explains why I couldn't remember any, thanks a lot!

Arm?

Not strictly a UK company any more.

Can you think of a US technology company?

What a horrendous site to open on mobile.

My impression is that the UK government is in dire need of good news, so I felt sceptical reading this.

I'd expect Ireland to rank higher because all the large US companies have their EU offices there. At least on paper for tax purposes.

Also, a lot of banks moved from the UK to Germany as a result of Brexit. My guess is those weren't counted as tech.

In general, it appears to me that this report is crucially dependent on a very narrow and unexpected definition of what qualifies as a tech company. Looking at market cap rankings, they probably had to include Shell and BP to compensate for the likes of Bayer, Biontech, BMW in Germany. But is big petrol still tech?

Also: "The total market capitalization of German companies listed on the Frankfurt Stock exchange reached 1.67 trillion euros at the end of June 2022." so they had to exclude some companies.. And that's just one stock exchange.

> I'd expect Ireland to rank higher because all the large US companies have their EU offices there. At least on paper for tax purposes.

Aren't US companies incorporated in Ireland and Luxembourg basically paying no taxes?

"Amazon had sales income of €44bn in Europe in 2020 but paid no corporation tax": https://www.theguardian.com/technology/2021/may/04/amazon-sa...

The same is true of London to a degree. London is dominated by private finance and trading firms, and many of those employing techies will be making a paper loss as far as HMRC is concerned, while their overseas arms make all the profit in 0% corporation tax jurisdictions.

Yes. That's why I would expect Ireland to have more valuable tech companies than the UK.

I wouldn't say that a lot of banks left the UK... "they moved the minimum they had to (not necessarily to Germany) in order to meet regulations and be able to continue operating in the EU" seems a more accurate summary.

London is still the European financial centre and a hot hub for fintech.

> My impression is that the UK government is in dire need of good news, so I felt sceptical reading this.

Seems like it - their prime minister was up in a fighter jet during the week doing barrel rolls for the cameras, in a clear photo-op to distract from his usual crass nonsense.

The report referenced by (but not linked from) the article is this one: https://technation.io/a-decade-of-uk-tech/

How much of this is due to the "depth" of the UK financial markets?

I can see in Denmark that a lot of succesful tech startups end up IPOing in the US or UK. For example Just Eat or Unity.

This is also somewhat of an issue in the U.K. with lots of companies being sold to US firms like Google. Being acquired often feels much better than going public.

Is this something to be proud of at the peak of "the everything bubble"?

For most asset classes the peak was late 2021.

This might be my little Irish brain firing off, but why is the picture in the article of Ireland and Britain? To the ignorant it would appear from the picture that Ireland is part of the UK. I can only assume that whoever picked the image didn’t realize that Ireland is not in the UK which is strange for a website called Uktech news.

Interestingly, I’ve seen a map of the UK where Southern Ireland had been completely deleted making the actual geography look different to reality.

My thought at the time was that would be more confusing for my kids as they learn about countries, especially as my mum is Irish.

I agree with everything you say, it needs a better visualisation.

I think it’s likely they just didn’t care. It looks a bit weird to delete the Republic of Ireland from the map. What would the equivalent for France/Germany look like? I would guess not a squarish blob-shaped country outline and a satellite-style image of the country likely would be too ambiguous. Probably a stylised flag image.

It’s surprising how many people outside of the British and Irish isles still think the Republic is constituent to the UK. As if it never moved passed it’s Free State period.

Anecdotally: I’ve met Germans, Canadians, Australians, Americans, etc that were surprised to learn it’s completely sovereign.

Must be all that sweet "hard-earned" money from third-world countries coming into the Oligarchy of the City. Not surprising, since much of blood-sucked out of countries like India in the past went straight here.

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