My conversation with Mark covers a range of topics including Techscaler, government involvement in the startup ecosystem (whether or not that’s a good idea in the first place), founder entitlement, and balancing the need to be inclusive with the challenges of needing to build something for everyone and running the risk of serving no one.
We talk about mediocrity, zombie companies, what other ecosystems are doing well, vanity metrics, and being okay with the idea of failure.
He also previews the priorities of government-funded activity in the near term including answering whether or not there’s likely to be a new ecosystem fund in place.
My thanks to Mark for the fun conversation.
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Transcript
This transcript was produced automatically through an AI transcription service, therefore it might not be completely accurate. For an accurate transcription, please defer to the recording.
Gelb
Recently Mark Logan joined me for a conversation about the startup ecosystem in Scotland. As the government's chief entrepreneurial officer, the author of the STER report, and the person most associated with government initiatives like Techscaler, I wanted to have a chat with Mark about his views and perceptions of the ecosystem, and also to respond to some criticism, feedback, and perceptions that exist from founders in Scotland.
We cover a range of topics including what failure metrics and KPIs there are for techscaler, whether there's too much money in the ecosystem, and whether government involvement makes it more likely to encourage high growth potential startups or just more mediocre zombie companies. We talk about failure, government priorities in this funding landscape, and of course the back and forth he had with Chris Herd on linkedin.
Instead of editing the recording to pull bits out, I've decided to leave the conversation in its entirety. You should also have access to a transcript for easier reading with timestamps.
I hope you find the conversation interesting and relevant. Thanks for listening and for being a campfire subscriber. Enjoy.
Gelb
Your back and forth with Chris Heard is pretty well timed. There've been a lot of conversations and now there's been a bit of a back and forth between you two since the initial rather spirited couple of posts. So I guess maybe what are your main takeaways from that interaction and perhaps why you chose to engage?
Mark Logan
Yeah, sure. So let me say at the outset that I think criticism of the ecosystem and the position of Scotland as a tech sector is actually very welcome. I have sat at all sides of this table. I've been in the Scottish tech sector working since I was a software engineer for well, well over 30 years, I've been involved in a number of startups in different ways. So, you know, I understand the journey, I think, that we're all going on. An observation I would make is that one of the problems Scotland's had when it comes to developing an approach to building out a great support ecosystem is that government and business have tended to keep apart from each other.
And you'll often hear people on either side of the fence, the business side, criticise government for being not sufficiently engaged with business. What I've also noticed though is that business is often willfully not engaged with government. Now, when I wrote the Stair report, at the time my intention was to kind of hand it over and go back to do other things. But I realized that if you really want things to change to be better, you've got to follow
your report or your ideas or your criticisms over the wall and get engaged with the government. And that's not easy, you know, it's not easy in any country. You know, things move at different pace, there's all the complexities and so on. But what we need in Scotland is more industry people genuinely engaging with government. And therefore, what we don't need is just gratuitous criticism that gets, you know, clicks and likes.
Why did I intervene with Chris? Well, firstly, huge respect for Chris. I've known Chris for a number of years since before he was as famous as they say. Really admire what he's done. I would love to have people of Chris's caliber working side by side with people like me and yourself and the work that you do and others to improve the ecosystem. We've got to be very careful because of the mentality in an early stage ecosystem like ours that we don't harm our belief by deciding that everything's just unfixable and everything's poor and the government's full of idiots and all these kinds of things. What I found when I was CEO in Skyscanner was that it's important to maintain the population, if you like, be it the people in your company, yourself, or in this case, us in the ecosystem, between two extremes. One extreme is complacency.
And you'll see quite a lot of that LinekdIn, everything's just rosy and great. The other extreme is paralysis, belief that this country can build a great ecosystem, can't compete with other countries, et cetera. We have to be in the middle of that spectrum, which is a point of restlessness. And we have to be engaged in turning that restlessness into development and progress. So I think my intervention in that thread was to make that point, you know, I don't want just rock throwing or rock throwing for clicks as perhaps I too harshly put it. I do want criticism but I want sleet rolled up and I want people to try and work on these problems constructively. So, and we've got to be very careful as well that we don't create huge collateral damage in the process of throwing those rocks. You've got to be careful that for example, making a comparison between and see the funding levels in the Silicon Valley and you know fifty seed stage companies raising money and those numbers not being the same that might not seem important but in an embryonic initiative like Techscaler where you know money is very tight in the Scottish economy and inside government we've got to be very careful we don't kill promising initiatives as collateral to make some other points and you know, I'm sure I have been criticized for appearing oversensitive in that point or stifling criticism. That's not my goal at all. It's an ask for a mature reasons, you know, restlessness that helps together to improve the ecosystem. And I think the discussion that Chris and I have had, and I think Chris engaged in it very constructively, has been a useful, you know, thread. And Chris and I are meeting very soon to follow-up on some of those points. So that's valuable. But let's be careful not to kill our belief in a way that other countries wouldn't just because frankly it's easier.
Gelb
Yeah, totally. And I think you're known as a bit of a straight shooter, and you don't come from the government side of that spectrum that you talked about. So with your COO hat on, rather than your government advisor hat on, if possible, I'd love to kind of dig into a few questions about how you see the beast that is the kind of Scottish startup ecosystem and the government's engagement with it. I guess if you had to say what the biggest bottlenecks are, whether they are solvable by government or not, what strikes you as the largest ones?
Mark Logan
So as you know Robert, my way of thinking about this is to think about it the same way I think about a company which is essentially we've got a system and the system's inputs are relatively large number of early stage start ups coming into the funnel and the outputs are companies getting to their natural level of scale and notice I don't say unicorn, I say natural level of scale. What I mean by that is a company in Scotland should be Silicon Valley. Not every company can or should become a very large company, but there should be no barriers or lacks of something that caused the company to fail to get to its natural point of scale. So when we look at the situation in Scotland today, I think the first observation is that we should just accept that we are quite an early stage ecosystem in that regard. We have a relatively large number of early stage kick startups and the funnel going from there to larger scale narrows too quickly in Scotland. And the question that I wrestled with and I know others do is, why is that? I formed the view over time that an aspect of that was access to funding, of course, scale up funding, et cetera, but why was that an issue? And I came to the conclusion that what we had was a lack of expertise and belief in the ecosystem. Now, expertise means people who know how to take a company from scale A to scale B to scale C. We didn't have a lot of that experience. But also we were hampered by a lack of belief that we could do those kinds of things. And I think belief comes from vibrancy from having lots of other startups around, from having expertise coming into the ecosystem, from having more experienced practitioners engaging with earlier stage practitioners, all the things you would see in a vibrant tech ecosystem. So I think that the task that I think we've started and the task that's ahead of us is to build great physical places for us to start companies, meet, interact, hold meetups, et cetera, have great social networks around that, of mentorship, of founding teams meeting each other, learning from each other, hiring from each other, and having that in a sufficient density, that it's meaningful, and also having an injection of technique. How do you grow a company from 50 people to 100 people? How do you organize? What changes in your engineering approach and your processes?
And we can let that technique evolve organically, or we can accelerate that by bringing in some really good formal training programs in front of our founders. And I think from that, belief starts to form, and eventually you get to a critical density of startups where these things just kind of take off from there. And in that process, I think it becomes a lot easier to attract investment because you've got more credible companies with better forward-looking visions, et cetera.
So I think if you look at where Scotland is, let's say where Scotland was five, six years ago, we didn't really have those great places, we didn't really have those great training programs. Outside Edinburgh, we lacked any sort of identity to the tech sectors in our cities. And I think, you know, we can come on and talk about this, but I think that's changing, but it's early stage and we've got to be careful to really accept that this is a 10 year journey, 10 year plus journey. You know, you don't get this done in one election cycle or in one or two years. It's a 10 plus year journey where you get benefits all the way along. And it requires us to, as a nation, to be consistent in our strategic approach in terms of building that type of environment.
So that's my kind of overview, very happy to dive into any areas, of course.
Gelb
I'd love to kind of dig into why then the ecosystem wasn't full enough beforehand. I think Scotland has a lot of startup support ecosystems. I think I saw one slide, 45 different ones, this was a couple years ago, of various ecosystem support organizations that were funded by the government.
There's a lot of money that both governments put into the landscape here. Scottish enterprises has existed for, for quite a while. The largest investor, in spin outs in the entirety of the UK is Scottish Enterprise. It just seems like there has been a lot of activity, but I think a lot, a big question, maybe this is something that you feel is just not been fit for purpose? I see numbers like Scottish Enterprise being the largest investor in spin-outs and the largest in terms of deal numbers in Scotland. I see people celebrating that. I certainly don't. I'm not saying that Scottish Enterprise shouldn't invest, but to celebrate that the largest investor is a gap funder of last resort is kind of saying that like, or is it saying that like, government's propping up a lot of this activity that can't actually, isn't good enough to get funded elsewhere?
Mark Logan
Yeah, I think this takes us back to a point made a few moments ago that if you think about an ecosystem resting on three dependencies, so talent, properly equipped, great physical and social infrastructure and investment, you know, a test question for me when I was considering the STER report was if someone gave me 10 million pounds, would I rather invest it in companies directly or would I rather invest it in those other two categories? And I think if you don't have well equipped founders and founding teams with the knowledge and experience to grow a company. If you don't have the sense of identity and belief in the ecosystem that creates a momentum, then the risk is that the money you spend to some extent is wasted. And I think that's probably consistent with your observation on historically SE being the main funder of spin-outs, for example.
Let's think about a spin out. So a founder, academic leaves university, technically very gifted, knowing nothing at all about business, nothing at all about team organization or investment or commercial models. I could go on, you can put money into that environment, but you're not going to get the returns you would get if on the other hand, that spin out founder had studied a year of reforge, product management models, commercial models that founder had around her, people who had taken a company to scale and were sitting on her board and all this kind of stuff. So you've really got to work on the, I might call it the educational or the knowledge aspect of the ecosystem and you've got to give people opportunities to build that knowledge and to interact with others who are building it.
And then I think you're in a very different position. And then I think a pound spent in an environment like that is gonna be much more likely to make a return. But also you're gonna attract investors from outside the ecosystem to come and spend time here. So that's why my focus has always very much been on, if I could stop a founder in the street, preferably, and ask them what they know about retention, about, you know, about driving virality in a consumer environment, about structuring teams to be productive when they get to 100 people. And I could go on. If I got the same answers as I got from asking a founder from the Valley, for example, then I think we're getting somewhere. But if I can't get those answers, then that's the gap. And until I can, then investment is not going to be as effectively deployed. So that was the genesis of a lot of the ideas behind STER.
Gelb
Sure, sure, sure. But in terms of the role of, whether it's government or other, mostly government funded, at least, ecosystem support organizations, I mean, why could you not take the argument that the world is big, it's all online, this information's already out there? And perhaps providing that support is, in and of itself, setting up founders who maybe aren't taking the initiative to figure things out on their own, setting them up for a long drawn out failure. We have a big problem with zombie companies here, and as Chris said, LARPers. That's a real thing. And when I look at folks from or based in Scotland that are building fast growth companies, often they're not a product, frankly, of ecosystem primarily, right? They might not even know that Scottish Enterprise exists or that Techscaler exists. They're just too busy actually working on the problem or hustling for customers or something like that. And if they need a raise, they do their research, they go down to London, they go overseas, or maybe they figure out a way around it anyway. And so, I hear a lot of criticism for start-up organizations all over the place but oftentimes the founders themselves are maybe coming at it from a sense of entitlement of like, no, this stuff should be spoon fed to me. And now I'm frustrated that I'm not being successful. So I guess, how do you invest in in creating inclusive programs to bring especially groups, of the population that, are from disadvantaged backgrounds or have not had the same amount of opportunities or lack the privilege and the cultural expectation that you can do whatever you want? How can you design more inclusive programs like that and expanding the scope of relevant participation without preventing the rise of mediocrity?
Mark Logan
Yeah, absolutely. And you're speaking with someone who, it's been most of my career in an ecosystem where there were no other startups, pretty much, there was certainly no support. I mean, I remember in Atlantic, which we sold to Cisco in 2000. So some time ago now, they're under this, I've entered this six, seven years before that. There was nowhere to go for advice. We're not incubators, no accelerators, little investment, etc. And what we did was we figured our way through that and we built a company that, you know, eventually, excuse me, exited for almost 200 million dollars at the time, which was, you know, could have been a bigger success, but was it was okay. And, you know, Skanscanner, obviously a more recent example, didn't receive any funding from Scottish Enterprise or Scottish take your point that the primary point of focus is finding teams, helping themselves. You know, we had a law of our own rule in Skyscanner that the chance of best practice being found in our company or in Scotland for that matter was statistically zero. Think of many other companies that are on tech, you know, so it's very unlikely that you have created best practice. And we were very, very concerned to avoid just iterating on who we were. We were very focused on turning outwards and learning from the best companies in the world at the time because those companies were our competitors. You know, internet makes everybody a competitor, everyone a customer. So I think that's absolutely true. So I think in any ecosystem you will find a percentage of companies that just get that, and turn themselves outwards and learn from the best and learn from their mistakes and so on and so forth. I'm also conscious though on my journey across those different startups that we made a ton of bad mistakes on the way that I would like to have not made. So for example, in a lot of what made me relatively successful as a COO in Skyscanner was all the terrible mistakes I made in Atlantic, you know, some years before and learning from those, but that's quite an expensive way to learn. And I would love to have been able to access, you know, expertise and guidance and, you know, in an easy to access format, just distilled lessons from the world's best tech companies at that point in time. And so I think that means there's an element of both founders' needs to help themselves, they need to turn themselves outwards, they need to strive for excellence, not mediocrity, and you can accelerate that process. But that's my thesis. Now, there's another group of founders who are all the things I've just discussed, but for various reasons don't get access to the opportunities that frankly, white males tend to get considerable access to.
I used to smile and look at the Silicon Valley, you'll hear people say it's a meritocracy and it is if you're a white male who's been to Harvard or MIT, it's absolutely a meritocracy. Otherwise it isn't. So I think there's another category of founders that we lock out who are very entrepreneurial. For example, immigrant founders are far more entrepreneurial on average than native citizens because they've frankly had to go through a lot more hell to survive and to reach the point of that.
And they meet far more barriers to participation because they are not from the country, they can't even get a bank account, they can't access grants, that they're not taken as seriously by investors because their skin color's wrong, or their gender's wrong to take another category. So I think there's a group of, aggressive in the best terms of the word, founders who we lock out, and I think we can enfranchise them. So I think there's work that...
you know, government and others can do to bring them in. Then I think there's another category of people who could be successful founders, but things just haven't occurred to them. You know, my point about if you want to be a great startup, you've got to learn from the best practiced worldwide is an obvious point to me now, but actually it wasn't once, you know, once I just didn't think that way. So there's another category of founders who I think have the toughness, but...
can be helped to think about this problem the right way. So that's not even about technique. It's about just having the mindset adjusted. And I think by the experiment of making people aware of that mindset, you unlock another group of founders. And yes, there's a final category of people who aren't going to be successful founders who tend to want things done for them, who should probably stay in large corporations but thought they'd dabble in this founder stuff.
You'll find them in every ecosystem. So we've got to be careful in summary that we don't broad brush this. We've got to segment our founder population by something like the categories I've just described and recognize that it is possible to accelerate the outcomes of even the most gifted and neat founders, the folks like Chris, et cetera, who will just go out there and hustle. They can be helped by hustling with technique.
I have worked with so many founders, over a hundred founders, and the number of times I've lamented that if only they would educate themselves on what good management looks like, we could all be doing a lot better here. I could apply that criticism myself in days gone by. So, you know, it's not kind of black or white. I absolutely do agree with you, though, that this risk of mediocrity is something Scotland has to be very careful about.
And that's why I put a lot, we can't be educating ourselves, mediocre people educating mediocre people. We have to strive for excellence, I say mediocre in terms of knowledge and experience and so on. We can't be complacent about our programs, it can't be tick box. It's why I put a lot of emphasis on the fact that, for example, Scotland has two techs, they are essentially the equivalent of a national license to reforge.com because that's a really world-class scale-up program that's really popular in the valley.
They're not saying, oh, we don't do reforged because we just have to hustle them by ourselves, but we need to find the best inputs to our founders to give them the best chance. And I think in days gone past, some of our accelerator programs were mediocre. Some of them were complacent and that wasn't helpful. So in summary, let's bring forward our aggressive self-starting founders, but let's look at how we can accelerate them.
and recognise it on the way will pick up some people who shouldn't really be in the game and they'll eventually leave it anyway. And that's not a precise art so sometimes the balance can look wrong but I think it's a valid approach.
Gelb
When you talk about, you know, mediocrity teaching mediocrity, I think, you know, that also kind of goes into the whole idea, or at least the perception that there's a big strong positive feedback loop, especially when it comes to ecosystem organizations patting themselves on the back. I mean, I was a bit astounded when I went to, I think you announced the ecosystem fund last time. And there were people in the audience that were really angry about how small this free money from the government was to support their ecosystem organizations. And it did strike me as like, you know, is there not a sense of entitlement here? Like why isn't it possible for you to create your own, you know sustainable organization, if that is what you want to do. That's my own personal bias. I stick my foot in it all the time, so forgive me, anybody listening, if that describes you. However, who are you listening to, and who or you or the ecosystem, the government, who are you listening to, and who are you benchmarking yourself against? I think a lot of times founders don't actually know what they want or need sometimes and speaking as a founder, as you know, similar way, making a ton of mistakes, making all these assumptions and being rather good at being quite clear about why I need X, Y, and Z when in reality I was not actually just facing the reality of the, situation that I was in. Right? My question is, does the ecosystem listen to founders too much?
Are ecosystem support orgs actually empowered or knowledgeable to push back? Because like that's one challenge I see is that, I think a lot of people just default to trusting a founder in terms of saying what their problems are and what it is that they need. And personally, I disagree. I mean, someone can go and complain that they've never raised investment because investors just won't listen to them and they don't understand and all this kind of stuff. But it might just be that you have a crap idea. It very well just might be that it's time to move on. I guess what I'm not seeing is that willingness, that maybe inherited, learned experience to be able to push back and say, no, actually this is the direction you need to be on. This is the bar you need to cross and you haven't crossed that bar.
Are you benchmarking the way in which this ecosystem is behaving compared to, let's say, other ones, Finland, Portugal, ways that the government has engaged or taken part in the development of that ecosystem?
Mark Logan
Yes, absolutely. And I think there's two very interesting points you make there. One is about founding founder dependency or a sense of entitlement and related to that. Ecosystem builder sense of entitlement or dependency. And then the question of how do we benchmarks, maybe sort of three things to look at there.
Gelb
Yeah, I just threw 20 things at you. So yeah, appreciate it.
Mark Logan
Yeah, no, they're all great points. I think a slight wrangle for me, if we go back to the famous Chris and Mark thread on LinkedIn, was that to some extent, I think that thread risked reeking of dependency. It's like, you know, startups, we want to have a very equal system, government does not do a good job, you know, shame on government. And I say, I grew up in an environment where there was no ecosystem and we still had to be successful. So I guess it's back to the point that at the most basic level, founders need to own their own problems. They've been creating an environment to help them and steer them, so much the better, but surely there's something, you know it doesn't quite add up if we expect government to be the thing that makes our founders successful. You know, because government is not a start-up and is very poor relatively speaking at the sort of things that start-ups want to be very good at. You know, disruption, you know, fast iteration, etc. So again, we've got to be careful that we don't set a mentality in these conversations that government should come and make us successful because it ain't coming, right? And I think that does extend to ecosystem builders as well. I think you can make a case that investment in ecosystem builders is in principle worthwhile because, you know, for example, if we can support a great conference to bring great speakers to Scotland who, you know, start spending more time here and start to become mentors to some of our startups. If there's a catalyst for that, then great.
And things need bootstrapped and it's sometimes quite hard to bootstrap ecosystem organizations. But absolutely shouldn't fall into a dependency culture either. And because if they do, it's hard for us to tell which ecosystem partners are actually good. Either as market forces, you know, and drawing them into the, into, into demand or which are just long term artifacts of our failed model. Now, if I look at an example, like Accelerate Her receives minimum funding from government, has hundreds of female founders a year going through its accelerator programme, has introduced 300 female founders to Techscaler. I look at that and say, you know, minimally supported, massive outputs, that's the sort of thing that Scotland should encourage and I think that's good ecosystem building and if we can stimulate that a bit, we should because I know the people there are very clear about trying to do it.
They are very careful how they spend their money and they're very clear what good looks like. There are other groups that purport to support female founders that take a bunch of money, don't do anything noticeable at all, and simply complain and lament how bad the situation is. I think that's not a good use of money. So, to take that example and extend it, ecosystem builders should survive where they can maybe bootstrap them a little bit, but they go on to make such an impact that their value's obvious. If it isn't obvious, you know, at some point that they shouldn't be getting funded. Now, what does, you know, where do we take our inspiration from an ecosystem perspective to take your last point? So I personally look at a lot of ecosystems, big and small. I look at what made big ecosystems big, and I look at what makes smaller countries have great ecosystems like Finland, Estonia, Norway, Sweden, to name a few examples. And we can look at that numerically, but also more in terms of what they're doing. And I tend to be more interested on the inputs. You know, if you have good inputs, the outputs will take care of themselves. So if you look at some of these countries, they do a great job of educating engineers at school level. So there's a high level of engineering literacy. And they have great market squares, town squares, where people can learn from each other. They have great incubation options available. And as they do those things, investment starts to arrive. Because how this works is some companies start to get to scale that starts to attract some investment, that starts to attract some senior folks from other ecosystems, that then starts to recycle experience back into earlier companies. These processes together start to strengthen an ecosystem. So what we've done, I think, in Scotland so far, and its early stages, is trying to emulate some of those ideas and even trying to take them further. As I said earlier, Scotland is the only country on Earth at the moment with a national license for reforge, for example. Scotland's, if you take tech scale, or the combination of patient incubation with excellent education with lots of active mentors is actually you know, it builds in what other countries are doing, then takes it a step further. I think about it a little bit like, you know, there was no landline network in many countries in Africa, and they skipped straight to mobile network. And in some ways, we're further ahead of European and North American countries on mobile adoption for a period of time. I think Scotland can look at what we haven't done, we can look at what we started to do and skip a generation, create a better environment for our startups. That's essentially what we're trying to do with TechScaler. And interestingly, I've had inquiries personally and through other channels from countries that we admire for their tech sectors saying they'd like to do a stair, they'd like to do TechScaler, how did they do that? I take some encouragement from that, although it's early days and we shouldn't be presumptive about outcomes. So I think what we should do is learn from what works elsewhere but not be afraid to adapt it to local conditions.
Gelb
When I hear something like, we're the only country that has a subscription to reforge, first thing that comes to my head is, well, does that mean then it's not worth getting? If we're the only one that does it, like why are we spending money in that way, right? So I guess focusing though on TechScaler, I think there's relatively like good agreement that TechScaler itself is a massive experiment. And there's been a lot of pushback from ecosystem organizations, from certain folks that are critical of the government, from certain types of founders. There's been a lot of assumptions about how it's going to fail. And I know that it's still very early, but it does look like TechScaler needs to be all things for all people. And which, which as you well know, you know, if you're trying to build something for everyone, you end up serving no one and probably pissing off everybody in the process. Right. So, like, specifically then thinking about TechScaler itself, what are, what are the KPIs that you might have or that exist for TechScaler that aren’t related to the ecosystem as a whole? What are the failure metrics? How will we know if this experiment has succeeded or more importantly, that it's failed so that we can learn from that information? Especially with your COO hat on, you might be familiar with the concept of a pre-mortem, right? If you had to pre-mortem TechScaler, how would you go about it?
Mark Logan
Again, some great questions. Just taking those in order, you're quite about the fact that Scotland has essentially a unique agreement so far with Reforge saying that it's the wrong thing to do. I don't think so, but it's a fair question. So I think when you do something first, it's either because it's a great thing and you did it first, or it's because it's a bad idea and that's why I have strong reasons to believe that we're doing this first because it's a great idea. And I don't want to spend all of the answer on that point, but we know that Reforge is regarded extremely highly by very many startups worldwide, very, very highly. We know that the things they teach, and I've been on almost all the programs, certainly one EPOC, you know, in my time at Skyscanner are extremely valuable to startups. And therefore I think, through a reasoning process, making that more available to companies that otherwise wouldn't necessarily be able to access that content is valuable. Why wouldn't they be able to access it? Because Reforge focused initially very much on scale ups. And my proposition to Reforge was, a lot of what they were teaching was very valuable for startups as well. And they were prepared to come with us on that experiment. So I think that's currently unique because we're first, not because it's a bad idea, but I've been wrong before, I'm no doubt wrong again. And I would just say that some of the inquiries we're seeing are partly about how can we do that too. So I think they're not gonna be unique for very long on that regard. Moving on to the tech scale and how people feel about it and the size of the experiment. You know, we've all done our, we've all read our lean startup and fail fast and you know, small experiments and grow, et cetera. Something I learned in Skyscanner and I think I've learned again in government, working with government, is that in sometimes it's not possible to run a small experiment for a whole bunch of reasons. You know, you can certainly run the experiment, but it's not going to tell you the things you want to learn because the experiment is trying to address a problem that can only be fixed with universal adoption, for example, or with significant scale for you to actually see if it's working or not. You know, I'm reminded of in Skyscanner when we decided to move the entire company to the squads and tribes model. And it's actually not possible to do that with one team and I've seen companies try and do that and for a whole bunch of reasons it doesn't work. And we had to take a significant risk and a significant hit to forward plans to squadify if we use that verb the entire company. And it worked extremely well for the company at that time. But it taught me that sometimes you've got to go large on something to get the result you want with the risk that that's a bigger failure.
Scotland needs to be willing to take those risks. As to the dissenting voices, et cetera, I spent a lot of time working in this ecosystem. I remember so many people telling me back in the 90s, you can't grow a tech company in Scotland. And then when we grew a tech company in Scotland and sold it, I remember being told that you can't grow a big tech company in Scotland. Sky Scanner, all my time in SkyScanner, I heard people say, well, you can't do that.
And those voices were sometimes from outside Scotland, but they were usually sadly from inside Scotland, because something we're really world class at here is doing ourselves down. I, you know, not to get philosophical, Robert, but I think it comes from two events in our history. One was the collapse of Scotland's world leading industrial base. Your Scotland was the Silicon Valley of steel once. And I think that the second reason is that Scotland tried to import the tech sector in the 1980s and called it the Silicon Glen. Brought in a whole bunch of American, mainly companies, started to talk about we're back and then the economic cycle turned over. We figured out they were actually only here because the salaries were less and they all left and we've got lots of empty artifacts like IBM, Motorola, Hewlett-Packard, Sun, lots of them. I think we lost our confidence as a nation. What we started to believe was that Scotland can't really do these things, it's all in our past. And a lot of the criticisms you hear is just people who've grown up in an environment that says it's easier just to say we can't do things. So, you know, I think while allowing for valid criticism, we just try to check ourselves and make sure we're not just doing that.
I think there's another effect. Yeah, and I think there's another effect that to the extent that government should play a part in funding initiatives like this, there's a mistaken belief among some that we're in a zero sum game. You know, I think it's fair to say that in Scotland, the financial position, as in many countries post-COVID, post-Brexit, is such that there's less government money to go around. And, you know, it was almost an automatic response when the idea of TechScaler was put forward, a lot of ecosystem players said, well, does that mean less money for me? And therefore I've got to try and kill this in the nest, as it were, because it might be bad for me. So some aspect of the ill-considered criticism, just like, let's just decide this is bad before we've looked at it or let it run, is a fear of funding. Now, I can tell you that TechScaler's arrival has not taken money away from other organizations. It has brought in net another £7 million a year to Scotland that wasn't getting spent on the tech sector, just wasn't getting spent. It hasn't resulted in a reduction in funding to other organisations. So that criticism is understandable, but it's actually the opposite is true. Now to the question of, well, is tech scaler actually a good idea? What could go wrong? Let's turn to that substantially.
The truth is I just don't know if TechScaler is the right thing to do. I just don't know if it's in danger of being spread too widely or if it holds itself too tightly. How would we know it was working? The challenge with that is that, and this is where I lose sleep, is that we will not get instant results from techscaler.
I remember the days of Codebase, which was a kind of like, early, I guess, ancestor of TechScaler. I remember it was impossible to get Codebase supported by Scottish Enterprise or Scottish government because they would say, well, let's look at its P&L. How many companies has it produced and what are they earning today? And my point to people who with that view was that code base is a value in terms of the companies would just be expressed outside of code base five to ten years later. You know it takes them ten years to grow a large scale company. Sky scanner was like 15 years something like that you know a long time. So we've got to be careful when we think about an experiment like tech scale or that if we want to actually completely experiment it's a long experiment. It's five to 10 years. Now, the North Star metric I proposed for a rough measure of success is the alumni companies of TechSailor, what is their total valuation over five-year periods, and measuring that over time, and how does that compare to the environment that had in Scotland before TechSailor? And if that number is, you know, is growing non-linearly, I think we can start to see there's some success there. What we can also do though is look at the leading indicators. So things like the number of companies that have achieved early stage investments, we can look at the number of people who have been trained, we can look at the number of people who have attended meaningful meetup events held there. These kind of metrics on the conviction that if we educate our people properly and create great environments for them to learn from each other, if we can create a sense of belief, that will lead to more companies. And that's quite a qualitative metric, I accept, but I think that's probably the best we have at this stage.
Gelb
But that's an ecosystem focused metric for a single program. And when you were at Skyscanner and you were thinking about making the shift to tribes, I imagine that it was then very clear there was a time frame, which certainly may be longer or shorter. But there were probably very core key indicators and leading indicators that you saw or that you were watching very closely to see if you were on track because you knew that would have a knock on effect on productivity or you know and rather than necessarily just seeing an external figure like profit or revenue increase as a justification that the the you know that the productivity shift was working or not, right? So from a, we can call it a failure metric, it doesn't seem like, and maybe this is because it's a government funded program, but it doesn't feel like it's clear what failure actually looks like versus success attributed to this.
And I wonder if, if there are any specific, KPIs, aside from, longer term impact,, that can be applied to something like TechScaler. I know, many people involved with TechScaler and I think they have a very difficult job because they have to be all things to all people. And my question is, is that true? Or are there decisions that have been made strategically, whether it's by the government or not, to say we are prioritizing this as a strategy, we are deprioritizing this? Don't know if it's gonna work, but that's what we're focused on, because that doesn't seem to be very, very clear.
Mark Logan
Yeah, so taking the first point about metrics, it might surprise you to know that the metrics I operated by in Skyscanner, the ones I paid most attention to, and obviously, as a responsible CEO, the metrics I had to report were revenue and user growth and so on and so forth, but in order of importance, this is how I looked at it, my leading indicators were frustration levels amongst the team.
levels of belief amongst the team and the pursuit of international excellence amongst the team. And those are quite hard things to measure. There's no kind of meter you can point at people to see what their belief level is, but you can feel it. And I knew that if we focused on those three human metrics, if you like, then the next set of metrics would tumble over.
how many features are we releasing, how quickly are we releasing software, how many releases do we make a month, how many experiments are we running, what's our uptake of new partners in Korea, these kind of things become your next set of metrics, but they only move because of the first sets. And I experienced Skyscanner when it didn't believe in itself and when it didn't believe in itself. So I could see the difference that had on the next set of them.
metrics and then in turn that eventually causes the very visible above the waterline metrics that everyone looks at to fall over as well, the revenue and user numbers, etc. So if I apply a similar model to Techscaler, this is not how the government measures the contract and you can be sure with the government contract there are a lot of KPIs and I'll come on to that in a moment.
a sense of companies striving for excellence in their pursuit of technique. How do we organize? How do we exploit markets? I'm looking for a sense that people are inculcating that and are driving for that. I'm looking for a sense of belief emerging from what people say about textile and about being a member that they can build a world-class company, not necessarily a scaled company but at least a world class company and we can take it from there. I'm looking for these kinds of indicators. I'm looking for an absence of complacency and satisfaction mediocrity. And you can feel those things when you walk around in an environment, you can feel those things when you talk to people. And now what the government is measuring is a very wide range of KPIs, some of them obvious, like is the government getting what it paid for in terms of training sessions delivered and customer satisfaction on the experience? What are the investment rates being experienced by those start-ups? How many of those start-ups are failing, etc. So there's a whole bunch of KPIs like that, but those aren't the ones that will tell us if TechScale is working. It will be that rising sense of belief, confidence and restlessness.
And I think you can apply that to ecosystem, but you can certainly apply it to what you experience when you spend time in tech scale. Now, a really interesting point you raised, Robert, is tech scale in danger of failure because it's trying to be all things to everybody. And it's the danger that people like me or government folks drive it to being over diluted. And yes, I think there is a risk of that. Here's how I think about that.
I think that over the right period of time, which I think is quite a long period of time, TechScaler could be a lot more than it is today. So for example, think about this. TechScaler started as essentially an internet economy, software incubation and learning environment, for a certain type of narrow focus company. How that can expand is you can start to say, well,
What about biotech? What about medtech? What about fintech? So these are all companies that have a very large overlap technique-wise with internet economy, software, consumer, and sort of B2B businesses. So you ask yourself, is it a safe step to widen the scope to those? And you can make an argument that actually, it's actually better to do so because you get a more diverse environment, et cetera, et cetera. Then you cannot make the argument, do we take this further so that we try and equip companies that don't think themselves as native digital product companies to nevertheless benefit from being high speed iteration companies? And it's tempting to go there. Then you have an argument that says, could you take TechScale into the community with the pre-scaler idea or the pre-starts idea so that we've got access to some of these training courses, some of the mentorship for smaller companies aren't necessarily planning to become big tech companies. Could social enterprise benefit? Scotland spends a lot of money on social security bills and so on. What if our social enterprise founders acted like real business founders with the same incentives and with being exposed to the same technique so that we could grow the social impact of these companies? You start to open up those conversations.
And that's just some examples. Now, I think that in time, we should take this movement in that direction. We might call it different things at different times, we might segment it different ways. I think we do have to be careful we don't go there too quickly, because then we risk overloading the organization that we've asked to run with this challenge. And I think there's a risk of that, and I need to be aware of that risk, and others need to be aware of that risk as well. So yeah, I think that is a risk.
Gelb
Is that risk happening now? You said that looking at valuations and the valuation changes and the valuations of the companies that are going through it, that then puts a lens over the types of companies then that TechScalers should probably be prioritizing, right? There's a conversation, that is always ongoing, what is a startup?
My wife is a leadership coach. She's a sole trader. She's working on her business. She's building her business. She does not identify as a startup. She does not identify as a founder. And I agree. Right. But you'll have other people that disagree with that. VC, if we're talking about highest valuations and if that's the goal, then surely TechScaler should just be going after power venture capable companies. A lot of VCs in Scotland are not power venture VCs.
They're regional VCs, they're interested in a couple rounds, exit for 50 million, we're happy, you know, that they're not looking for the types of companies that are more moonshot higher risk, but potentially much higher kind of reward. So is there an is there an argument that, that is already being stretched quite deeply in the in the name of having to tick as many boxes as possible in order to justify their own existence so that the government lets them actually get on with what it is that they're doing pretty well, which is developing pretty good resources and trainings.
Mark Logan
I think it's certainly a risk and I might generalise that risk to say that there's probably an execution terms there's always going to be a tension between quite a narrow focus and doing that super well, for example stimulating more potential high growth tech companies and the other available mission which is to stimulate entrepreneurship in Scotland, you have to make Scotland a start-up nation. We could talk about what that means, but just basically normalizing entrepreneurship and using that investment as widely as possible. I think both are valid ideas, but there eventually becomes a tension between the two of them. If you try and do them too quickly together, that you'd risk breaking both of those things. And you could also, I mean, if I may introduce another dimension, you could say it's a risk for TechScaler or to be a multisite organization or to be trying to do these things in Edinburgh, Glasgow, you know, Aberdeen, Dundee, Stirling and Inverness and the borders. Now, you know, that creates a risk. I think there was also a risk though in Scotland for many decades having the view, which I don't know if it was ever written down, but it was certainly the view that Edinburgh is your startup sector.
Glasgow is where you put your big banks and good luck everybody else. I think there's a risk there. So it's a case of, how do you balance these risks? And I think there's a lot of awareness around the people involved in tech scale or both governmental and actual operators of the code base that we could screw up by diluting. And there was a lot of discussion about that. And we could also, by being too narrowly focused. And we've got to also recognize that at the end of the day, there's a government investment involved. So how do we maximize that investment? So that is a very active conversation. And I think it's a very valid point you bring up. And at the moment, it's so nascent that we just don't really know the answer to that. I think what you're gonna see happen is we're gonna try some things, we are trying some things, and we're gonna take stock as we regularly do and say, you know what, that's an overstretch. That's a you know, that's a dilution of focus, we're gonna have to tighten that focus. We've already seen the model evolve in interesting ways, and for example, the initial approach in the south of Scotland was to have a Edinburgh-style site in Dumfries, but that didn't work because it's a more distributed community. So now, Sozi and PECSG are working in partnership to support a more distributed model, with Sozi taking a much more active role in that.
So the model will evolve, but I think everything you call out is a risk. You're absolutely right. And we just got to be careful we don't run too far ahead of ourselves. That's a very valid point.
Gelb
I think hearing more people just saying, yeah, this is a risk, we're trying it out, this is what we're thinking works, this is what we don't know, and this is what we wanna change – more of that would be welcome. I think there's either this positive feedback loop that we've talked about, there's a sense that, well, TechScaler needs to work, so we only wanna highlight, you know, all the good things, and you risk then going into metrics and highlighting and celebrating metrics that are frankly very vanity metrics, right? You know, the whole 50 million in investment of companies that, and it was worded very carefully, companies that are members of TechScaler. I've spoken to founders who are a bit miffed that they know that they're probably included in that figure, yet they, it wasn't because of TechScaler that they necessarily raised, or at least they don't see it that way.
So I feel like the less vanity metrics and the more we really don't know if this is gonna work, this is what we're worried about the most. This is what we're unsure about. The more of that, the better.
Mark Logan
I think that's a really important point. I think that's fair enough. I absolutely agree. You'll not be surprised to know that I'm very averse to vanity metrics. I think this takes us back to where we came into this discussion. Scotland has to decide what it wants because in our opening discussion we talked about how when TechScaler appeared we had a huge number of critics who decided that this is a terrible thing. If we are incapable of as a country of having this sort of debate you just described, you know the let's look at what works, let's look what doesn't work, let's change it, let's stop some things, start some things. If you know an attempt to have that type of discourse results in I told you so this is all a terrible idea, let's kill it, then we kind of get what we deserve and I hate vanity metrics as much as you do. And I hate just the, let's pull it down because we're good at that. I don't think we're at the level of maturity as a country when it comes to the score sheet to get that right. So I absolutely second what you're saying there. It does require us collectively to be willing to engage in the positive as well as negative aspects of that sort of discussion. Because otherwise what we'll do is we'll take it, and we'll take in the nuance, because we'll take a, you know, I think a promising and exciting initiative. It's not the only initiative that's running in Scotland just now. And we will kill it in the shell and we'll then criticise the lack of such initiatives. So it's a difficult thing, and especially when government's involved, because I've found my own role, for example. I have never stated anywhere in my politics. But the very fact that as an industry guy I decided to sort of, you know, climb over the wall and try and help implement these things. The very first thing I got from our good, you know, parliamentarians was personal attacks because I was a proxy for the SNP apparently. You know, that discourages people like you, for example, or Chris or others coming and doing what I'm doing.
And that's a shame. So at some point we'll realize that we've got to try and constructively help ourselves bootstrap the country rather than celebrate our ability to pull ourselves down. And from that environment, you'll see less vanity metrics and more learning metrics, let's say.
Gelb
A universally bad thing that has been a complete failure is a gift because it is so clear, but it's also a unicorn in that it doesn't exist. And I think it's very easy for people to oversimplify that, both something as a failure, as you say, but also saying it's successful, it's the bee's knees. And I do think the lack of relatively specific KPIs... It's challenging, but the lack of that then also inhibits that embracing of the nuance. Last little bit, the STER and the Pathways report made a bunch of recommendations. I think there were 34 ones from yours specifically
And others including several funds as the journey fund, the investment seeker's fund, student internship grants, things like that. Obviously TechScaler is happening. There are things like the ecosystem fund. But, objectively, it doesn't look like the government has the cash to implement much else. So how does that affect your view as the author and as the CEO and as an advisor? How does that affect your view about what's needed and what's possible to do, especially in this environment?
Mark Logan
Yeah, it is a frustration that we're in a financial situation where all the things we'd like to do, we can't do them all, we can't do them all when we want to do them. I get frustrated about that as the author of one of those reports and the co-author of the other, because I know that we could move Scotland towards being a far more enfranchised, far more start-up-oriented nation.
faster if we could do more of those things at once. And I think that's important because we've got to create the jobs of tomorrow, in fact, the jobs of today. So we need starters, we need starters to be starting, and we can help people do that. And I think that the fact that we are constrained isn't necessarily a bad thing by itself because I think having a lack of constraint can cause bad results to, you know, people, you know, throw money in and consider weight things and don't really stay close to them to make sure they're successful, don't iterate them to make them successful. I think that's always a risk of having an abundance of things. So we have the other problem, which is we have a constraint. So I think that needs to make us very thoughtful about what, to the extent, and you know, part of our theme today has been to what extent should government intervene in these things, but to the extent that it should.
What interventions can we make that are going to be the most effective? And the approach I've personally taken to this point is to try to build on past work. So for example, if you take the Pathways review, which is, of course, mainly about trying to create an environment where we can enfranchise more women into entrepreneurship to address the appalling gender imbalances that for some reason, for so long we've decided are normal and should be okay. To try and address that, we try to create the pathways review with a view to also building on some of the things that have gone before. So an example of that is, if we can establish an effective start up incubation and learning environment in the shape of tech scaler, can we extend that assets? To extend a network of incubation across the country, not all focused on tech, but building on that initial investment because that has to be more effective than always building from scratch. So that mentality is what's driving how I'm thinking about it and how folks in government are thinking about it. And therefore we will look to identify those other interventions and STER recommendations and pathways that can build on what we've already invested in. And so you'll see that as a direction of travel. Clearly, it'd be nice to go faster, but you know, in some ways I've always thought, or always I think I've learned this, I should say that if I have to choose between having too much of something too little, I'd rather have too little because it makes me very thoughtful about where I spend my time. I'd like us to have a little more of what we've got right now. We are working on that. But I think you'll see us be thoughtful about how we build out on that basis. So that's the philosophy underpinning what we're doing.
Gelb
Any hints about what specifically that's in the pipeline that you're trying to move forward with?
Mark Logan
Yeah, so to take a few, a couple of areas, let's say, going back to Techscaler and Ostera, I guess, two areas there that I think are interesting. One is you have seen us experiment with the Silicon Valley Techscaler. Now, the point of that is, goes very much to the heart of what we were talking about earlier, which is...
We need to learn from outside the ecosystem as well as inside the ecosystem to make it a world class ecosystem. So being able to send founders out to the valley for several weeks at a time with all the relationship building and exposure to investors that can come from that, I think is an interesting experiment. It's still an experiment of course, but I think that's interesting. Not the first country to have tried that, but I think it's interesting. I'd like to see us set up a similar facility in Singapore because I think that can be a gateway to Southeast Asia and to APAC. I'm conscious that when SkyScanner started out, we put an office in Singapore. We could hire folks from different countries across that region into Singapore, and let us talk with an authentic voice in those markets, and let us understand those markets. And SkyScanner still is Southeast Asia's most popular flight search engine. So, you know, these are powerful gateways. So I'm interested in taking that network out a little bit further. Another area which I think is very important is the entrepreneurial campus initiative. Now what that basically does is say let's look at the very best spin out universities in the world, look at what they do and look at our universities and say are we doing those things and if we're not can we do those things. Now we're not starting from zero in Scotland, we do pretty well on spin outs. We've had done it in 232 in the last 15 years.
You know, Edinburgh University has quite an impact on that number. Strathclyde University last year was awarded by the triple E the most, the New York's Entrepreneurial University of the Year and so on. So there's some real good activity, but we know in all cases that our campuses could be a better environment for stimulation of entrepreneurship and we could better support our spin-out founders to not fall flat on our faces when they exit.
So, you know, there's a lot of active discussions in universities as a result of that initiative. I'd like us to get a bit more money behind it to make it a more embedded initiative, but that's interesting. On pathways, I think what you'll see emerge next is, you know, we ran the pathways fund last year, which, you know, was good, but I'd like to be more strategic this year and what I'm hoping we can do is start to pilot this idea of these pre-start centers and the pop-up version that allows us to create incubation in the community, you can connect it into the wider training network that's available in the mentorship network to some extent, but that starts to create a place people can go to work with other proto-founders to bring their ideas forward and take their first steps in entrepreneurship. And I think that we can do that cost effectively by embracing those organisations that do it really well today and asking them how they can scale their efforts both in terms of what they offer and in terms of the number of companies that they support. So this is very far from tech but for example if I look at what Weevolution does it takes or accesses, it knows how to access female founders who are also immigrants who are locked out of the job market to start their own companies to help themselves and to help their families and enrich their communities. Now, I believe that sort of entrepreneurial activity is extremely important to the welfare of people in this country. And I'd like to see us supporting that as well. And I think it's the other side of the coin from what we've been talking about all day, because if you want to have more scale-up founders, you have to normalise entrepreneurship in this country and have more founders of that mentality in the country. So I'm excited about that initiative and I'm hoping this year we can pilot that scheme. When I say pilot, at a reasonable scale. So these are some of the things that are in mind. I think we'll run an ecosystem fund again. We'll do a lot of the things we've done before. We'll continue to experiment with it and wrestle with the questions that you've raised today around some of the initiatives.
But this is kind of, I think, where I see us spending time. When I say us, I mean, it's not just me, obviously. It's a lot of people in a lot of different organizations trying to come together to build an environment that's just basically more fertile for startup creation.
Gelb
Cool. Well, thank you very much. That was great. And thanks so much for spending so much time, you know, speaking with me today. And enjoy the rest of your day.
Mark Logan
Thank you and I look forward to us checking back on the things we've talked about and see where we get to next time round. But thanks for your time as well, Robert.
A conversation with Mark Logan