Tech startups scene in the UK - and Tom Blomfield
Tom Blomfield is a bit of a legend here in the UK. In 2016 he founded Monzo bank - digital-first bank with iOS app and no website. Their very first offices were right around the corner from ours at Old Street in Shoreditch, and this is probably why I got my very first Monzo (back then called “Mondo”) bank card back in December 2016.
Last week Tom tweeted the above - he has since successfully exited Monzo, and are apparently part of Y-Combinator now. Good for you, Tom! But I do have some thoughts on the UK tech startup scene, so might as well make this into email instead of a meeting.
Dear Tom, I hope this email finds you well.
I saw you were complaining on X that UK doesn’t have enough tech startups. That the “majority of smart technical young people in the UK aspire to… work in finance”.
I’ve been working for UK tech startups for the past 10 years, and there are a thing or two I can say about that. I also work in finance today - although still as a software engineer. We should probably have a talk.
Fundamentally today the balance of risk and reward when working for a startup has tilted towards a lot of risk and very little reward. In fact, working for some of the startups today will cost you a good deal of health. And fair enought - we have free healthcare on paper here in the UK, but as every startup founder knows, there’s a cost of money, and a cost of time. NHS time will cost you a lot of time.
Ambitious startups are also aiming to hire seniors only - which is fair, since that is exactly who you want to hire for the founding team. But the balance there has shifted even more.
Let me explain.
What’s the hours are like in a London based tech startup?
You work 5 days a week from an office in central London. The hours are 8:30-19:00. That’s not counting the commute to your tiny flat somewhere in zone 3 if you’re lucky.
Since you are in a tech startup, you have to hustle. We are a big family. We want to grow. We’ve got a stand on Silicon Milk Roundabout both days this weekend - come along, it’ll be fun! Also we’re running a London React meetup after work - the hottest meetup of the town. And maybe a drink after work with your team.
Oh, you’re also on 24/7 pager duty, with SLAs. You have to pick up the call within 10 min around the clock, and be ready to start debugging production and be on a conference call. Doesn’t matter it’s 3am and you just came back from that drink after work. In fact, you don’t really get to drink, since you’re on pager duty.
Working on weekends is also very much normalised, and rarely compensated, since you’ve signed a waver as part of your work contract.
But at least the money is good?
No idea how this works in the US, but here in the UK tech startups are generally trying to hire senior engineers for a price of a junior. This rarely works, so the hiring budgets are getting gradual bumps until someone desperate enough is hired - or the runway stops.
This approach worked better while the UK was part of EU. I’ve relocated here from Finland thanks to the company offering to pay for the first month of Airbnbs in London. Back then you could just buy yourself a one-way plane ticket, arrive to Gatwick, and start working in Shoreditch basement office the next day. No visa, no paperwork.
For startups that was brilliant. You could hire engineers from all around the EU, pluck the best talent, offer them below market rates, and skip on visa sponsorships.
Not anymore. Today most startups in the UK have to pick from within the UK. Which means competing for the talent with - as you put it - consultancies and finance industry.
Today, when I’m approached on Linkedin by UK startups, I get consistently offered below market rates.
But surely it’s not just about the money?
Ah yes, the share options. Let me tell you about those.
Since tech startups are unable to offer market rates, traditionally they’d offer you a piece of a company as a compensation for your troubles - and a motivation to work harder.
I worked directly for a number of UK tech startups - including the the fastest growing tech company in the UK - Bulb Energy. At Bulb I was the second ever engineer they hired. Very early days, tiny team, lots to do.
If you are joining a tech startup in the UK today, you will likely be teased a “generous share options package”. The earlier you join, the better the package usually is. Eventually, you could cash out all your shares and live care free on a farm, raising geese.
There are two problems with this.
- When joining as the very first founding engineer, you will be offered the best possible slice of a pie - which would be around 0.5% at best, and even that you might have to negotiate.
- The likelihood of cashing out is not very high, to put it mildly.
And Tom, I know you did say “found your own company and get 100% of the shares”. We’ll get to that. I have some ideas of what a sustainable remote friendly tech startup with great funding could look like.
But at least you get a massive career growth?
Yes, this is another angle why it could be good to join a startup. As an engineer, you get to try all the hats. I mean, when else you’d get a chance to annoy millions of customers with a single untested deploy on Friday night?
Best learnings do come from massive failures.
Your expectation as an engineer might be to join a company early and quickly progress through titles to staff / principal level. And the reality is - you will be the one building tech stack from scratch, while scaling up the engineering team and debugging production issues. You will be working side-by-side with CTO and CEO. You will learn everything about what it’s like to successfully scale up a tech company.
Assuming the company survives the first year, let me throw a few spoilers here.
Instead of promoting founding engineers, companies tend to get new hires for more senior roles. Startups here do exactly what every other corporation would.
There are exceptions, of course. And in fact, joining startup as a junior could get you progressed to mid and even senior titles. The problem is - startups don’t hire juniors today.
Sustainable tech startups
Enough doom and gloom. What can we do? We need tech startups in the UK after all.
I agree that this is a cultural issue. But the issue is not about people not ready to take risks. It is about bringing the risk vs rewards balance back to what it used to be.
And Tom, since you’ve mentioned that money is not the issue - we can easily get some of that Silicon Valley VC funds flowing to our misty island. So let’s build our perfect UK tech startup, so that everyone would want to join it.
We’ll make billions.
Remote friendly
I don’t really buy into the idea that you can only build a great product while being all together in a shitty office in Shoreditch. I worked in so many London offices, and all of them suck in a variety of ways. Some slightly less, most - a lot.
No more shitty offices! Remote first.
This will help a lot with diversity across all aspects, create trusted environment and enable our engineers to work from Shetland via a Starlink dish while also herding geese and enjoying life without London Tube.
A number of WeWork passes is available to anyone, who’d like an office for a day or a week.
Paid overtime
This one might actually solve most of the hiring issues. Let’s just pay people for working overtime.
This is not a novel idea. Some countries have this mandated by law, while here in the UK overtime compensation is very much at a discretion of an employer. Which is great news - this means we can disrupt the traditions in our brand new sustainable tech startup.
All overtime is paid - 2x hourly rate on work days and 3x on weekends and between hours of 20:00-06:00. Normal working hours are 9-5. Hosting a meetup or speaking at one is considered overtime work and is paid accordingly.
Should go without saying, but here we are - employees can refuse doing any overtime, and have no consequences for their career at our startup.
Perks and pension
I’ve seen UK startups employing all kinds of tactics to minimise the mandatory payments to the private pension fund. The minimum mandated payment is 3% - but even that can be worked around once your salary goes beyond a certain threshold. I’ve seen the real number being much lower that that.
Our sustainable startup will contribute 5% of the actual salary, without requiring employees to match that.
We will also get Vitality perks - they used to offer a great middleground for early startups in terms of cost and effect.
Learning budget
Everyone gets £3000 per year for learning purposes. Meetups, conferences, books, courses, anything you need. When you need to buy a book, you don’t look at its price.
Share options
Everyone gets share options with no clawbacks. Linear vesting across 3 years, starts from the moment you’ve passed 2 months of probation. Actually, in our fast pacing startup probation period will be just 1 month. After that you are permanently hired.
We will also be very transparent on the risks and the likelihood of caching out the options.
Founding engineers get at least 1%.
Final thoughts
We need more companies like what Monzo used to be. Making small amazing apps, solving real world problems that are ignored by large corporations. But ideally not at the expense of income and wellbeing of talented individuals. I’ve worked at startups where they deliberately pushed everyone and assumed there’s limitless credit of skilled talent just waiting outside to be hired.
We can be better than that.