Too good for your own good

Too good for your own good

Different cities send different messages.

After living in Buenos Aires, Cincinnati, Milano, Paris and now Barcelona, I realized that each message resonates with different people.

Paul Graham writes:

"Great cities attract ambitious people. You can sense it when you walk around one. In a hundred subtle ways, the city sends you a message: you could do more; you should try harder."

Everyone claims their city is a thriving startup hub that attracts ambitious people. Google “thriving startup hub” and see it for yourself.

But the reality is if all cities are thriving startup hubs, none are. Most cities aren’t, and Barcelona isn’t one of the few exceptions that is.

Barcelona is a fantastic city, don’t get me wrong. It just doesn’t attract ambitious people.

In spite of what people are saying (or want to believe), Barcelona will never break the top 3 as a European tech hub.

Here’s why.

Barcelona is too easy  

Barcelona excels at one thing: being average. It's the best "average" city I know.

Weather, cost of living, public transportation, food, nightlife, access to nature, connectivity, work opportunities – Barcelona is pretty good at most stuff.

On top of that, Barcelona is fairly affordable. Since it’s not a “work” city (Frankfurt, Milan, NYC, Paris), you get a phenomenal bang for your buck.

I believe there isn’t a single city in the world that trumps Barcelona in quality of life relative to the cost of living.

Because most people aren’t idiots, thousands flock to Barcelona every year.

But that is not the kind of city that drives ambitious, talented people to do their best work.

The problem with Barcelona is that it’s not the best at anything. It’s good, but not great. For those people, “good” isn’t enough.

Surfers don’t go to Barcelona, they go to Maui. Foodies move to Copenhagen. Skiers go to Jackson Hole. Fashion designers move to Paris or Milano.

The best tech people in the US flock to the Valley and in Europe, to London and now, increasingly to Paris.

Being a fantastic, affordable city without ambition attracts a very particular kind of person to the tech scene – someone who likes working (who is very good at his or her job, even), but also kind of likes doing other stuff.

When these people move en masse somewhere and connect, stuff happens. It’s great for your social life, but hard if you want to focus on growth.

It takes a very specific kind of personality to say no to beer and tapas to submit that pull request at 9 pm.

The best people don’t look for average, or even above average things. They look for the best.

Do they move to Paris because it’s expensive? No. They do it in spite of that. Ambitious cities are arduous, hostile and expensive. As a result, they filter out the ones who just want to coast along.

The best don't move to Barcelona. Barcelona is too easy.

London and Paris are way ahead

A couple of years ago, London was the undisputed tech king. Now Paris is cutting the distance, and growing at impressive lengths.

In 2018, Paris and London-based tech companies raised over €7 billion euros. During the first quarter of 2019, Paris raised over €1 billion and created a new Unicorn.

As a comparison, Spain ranks 5th in capital investment for the region during the 2013-2018 period, with €3.3 billion.

France raised that much in 2018 alone.

In 2018, Spanish startups raised €1.8 billion. Barcelona accounting for more than 50% of that, with €1.05 billion across 71 deals. That’s good, very good, even. Not great though.

In contrast, London raised €4.4 billion over 489 deals. On a cumulative basis since 2013, London has produced more than 1,800 companies that have been venture-backed, more than double the number of the next-largest city. Barcelona sits at 6th place, with 242.

Barcelona is growing at an impressive rate, sure, but it’s light years away from London, Paris or Berlin. In Barcelona, people seem more concerned with independence and tapas than leveraging a fantastic city. And that’s okay.

Salaries aren’t great

Europe is home to at least 30 different hubs with 50,000 or more professional developers. Its three largest hubs for developers are London, Paris, and Amsterdam, which together are home to about 15% of the region's total developers.

Barcelona sits at 22, barely making the cut with 72,000.

A reason might be that there aren’t a dozen technical universities. Another one may be that people just aren’t moving to Spain to work in tech.

The UK is the number one destination for all international movers into the European tech ecosystem, closely followed now by Germany and then France. Spain, on the other hand, attracts only 6% of the talent movement.

"The biggest challenge is finding high-quality talent. There is talent in Europe but it’s in demand, especially when it comes to people who have been there and done it already.” - Tugce Bulut, Streetbees

Why is that? Other than the fact that Barcelona is too easy, I believe that top talent wants top salaries. It only makes sense.

Here’s the Barcelona salary for developers and marketers compared to Paris, London and San Francisco.

Source: Glassdoor

The average software engineer in Barcelona makes €27,000.00. The city’s cost of living index sits at 46.66.

As a comparison, Berlin is only 7% more expensive, but the average software engineer’s salary is €48,600.00. That’s an 80% jump.

Most people stop and think for a minute before taking a 40% pay cut just to live in a more ‘comfortable’ city.

A lack of late-stage capital

A great indicator of access to late-stage capital is the number of unicorns per city.

$1 billion+ European tech companies have now emerged from 14 unique countries in the region, led by the UK with 19, and Germany with 11. Spain sits in 10th place, with 2 – eDreams and Cabify.

Source: State of European Tech Report

The lack of late-stage capital in Spain (and as a consequence, Barcelona) is a real issue. Young startups often need to go abroad to raise funding.

The Tech ScaleUp Spain report explains it better than I ever could:

“In Spain the first source of financing comes from the US-based investors accounting for 35% of total rounds (about $1B with an average round of $14.6M), mostly later stage. Only 31% have been domestic ($800M, average rounds value of $2.7M) and they have been mostly focused on early phase. UK-based investors led only 8% but they poured into each round over than $10M. Other European funds count for 6-7%.”

I’m usually wary of quoting anything that refers to startups as “scaleups”, but the data is solid. And it gets even worse when you realize that 4% of the startups take 55% of the capital invested

Should you move to Barcelona and join the tech scene?

Let me say something in case you missed it. I live in Barcelona. I made the conscious choice to move here.

Also, I believe that you can build a business from LITERALLY anywhere with decent internet access. London, your mom’s basement in Utah, or Nairobi.

But here’s the catch.

Barcelona seems to be a victim of Gresham’s Law – the bad drives out the good. The same way talent attracts talent, an insufficient ecosystem drives out the great startups.

If you are an employee looking to get some experience and live in a fantastic city, move here. If you run a bootstrapped or remote company, and you are looking for a great city to live in, move here.

But if you are an ambitious, career-oriented person looking to change the world, or the founder of a high-growth startup looking to go big, stay away from Barcelona.

Go to Google Flights and search for a one-way ticket to LHR or CDG.