Hundreds turn out to celebrate the IT sector at Dynamo 14

Newcastle Civic Centre conference attracts strong speaker line-up including the BBC's Rory Cellan-Jones

The Dynamo14 conference at Newcastle Civic Centre. Speaker Rory Cellan-Jones and Mark Little of Red Hat
The Dynamo14 conference at Newcastle Civic Centre. Speaker Rory Cellan-Jones and Mark Little of Red Hat

Around 300 people turned out at Newcastle’s Civic Centre for the inaugural Dynamo 14 conference, aimed at celebrating the vibrancy of the North East’s IT community.

BBC business and technology correspondent Rory Cellan-Jones was among the varied speaker line-up, along with Newcastle University professor and TED Prize winner Sugata Mitra, the Guardian’s technology correspondent Phillip Inman, Newcastle Central MP Chi Onwurah and Dr Mark Little, vice president of engineering at Red Hat.

Workshops and presentations were also held on everything from energy to inward investment to so-called ‘big data’, led by more than 40 leading figures in the North East’s IT scene.

The event was organised by Dynamo, an initiative aimed at expanding the North East’s economy by acting as a focal point for the region’s IT growth.

Founded through a collaboration between a wide range of big players with the sector - including Accenture, Sage, Orchard Information, Opencast Software and Newcastle University’s Digital Institute - it brings together IT organisations, employers, technology hubs, education, local government and employer support scheme, who can then promote the North East’s skills nationally and internationally.

Dynamo chairman, IT investor and entrepreneur Charlie Hoult said lots of initiatives had already been aimed at promoting innovative start-ups.

However, there had been a widespread feeling that much of the region’s growth in the IT sector would come from bigger corporations, including the likes of Hewlett Packard and Sage.

Despite their size, he suggested, these businesses were lacking a collective voice.

“So we decided: why not hold a conference and start by defining what the IT economy here is,” said Hoult, who runs Hoults Yard in Newcastle.

“I thought we’d maybe get about 250 here, but in the end we got 300.”

Among those leading the day’s events were Herb Kim of Thinking Digital, Dr Vincent Thornley of Siemens, Fiona Cruickshank of SCM Pharma and Edward Twiddy of the North East Local Enterprise Partnership.

A wide range of IT businesses from Newcastle software giants Sage to Zerolight, the innovative new 3D showroom business launched by Gateshead games pioneer Eutechnyx - also held displays.

The popularity of the event, said Hoult, was a “big indicator of the growth in the economy”.

“The recession has been seven years long and, now recovery has begun, people are recognising the need to update their IT,” he added.

The regions, including the North East, were growing, communication was less of an issue and the technological landscape was undergoing interesting changes, with HMRC, for example, changing from a “bureaucracy and paperwork hub” to an IT hub.

“There’s a heck of a lot going on,” Hoult said.

One conference participant, Bobby Bowstead, a business analyst at Tees Valley business development organisation, Digital City Business, who also works for the 23 Mile fund, said the event was of great relevance to North East firms, given the recent expansion of the IT sector.

“In the three and half years I’ve been with Digital City Business, it has grown massively,” he said.

“We decided to come along to meet people and get the word out about what we do,

“There are also a lot of interesting speakers discussing areas we operate in.”

Case study 1 - Palringo

Sometimes North East innovation not only sparks a successful business, but initiates a shift in the tech landscape - Palringo being the perfect example.

At the time the instant messaging app was first conceived - around a decade ago - its rivals were stuck in a largely user-unfriendly mindset, with service operators keener to benefit from SMS use than to open new channels of communication.

Since then, 28m people have chatted through the mobile tool, which also offers a diverse range of games and more than 350,000 ‘communities’, some with up to 2,000 members.

The business, which recently acquired Swedish game development outfit Free Lunch Design (FLD), now boasts revenues of $15-20m. By Q1 of next year, that looks set to hit $35-40m.

“Over the last two years, we’ve seen consistent month-on-month growth,” said Palringo chief executive Tim Rea, who was involved in a digital workshop at Dynamo 14.

“The focus now is growing our audience and broadening our offering.

“This is a pivotal time for us - what we’re doing now works so well that, probably for the first time, we can look forward to the future as far as we want; we’ve built the machine.”

That machine stemmed from fairly modest beginnings, when then-21-year-old Martin Rosinski developed a communications tool to help with his father Jarek’s work.

Jarek, an engineering consultant also working at Newcastle University’s engineering department, was working at the time with testing strain, thus predicting future failure of equipment.

Once such problems were detected, however, it made little sense to issue a mass notification. Much better to allow affected parties to communicate with each other to find a way forward.

Rea, who’s originally from the US and has a wealth of experience with mobile and tech start-ups, got involved when venture capital company Northstar Ventures contacted him, suggesting the technology had potential.

Rea agreed.

So did plenty of investors, a few of whom, in Rea’s words, were “fighting to get in”.

By August 2006, a seed fund of £650,000 had been raised and the firm - which now employs over 50 people across sites in the North East and Ipswich - was ready to start building a user base.

As the Palringo community developed, then, the business noticed a pattern that would prove to crucial its growth and would distinguish it from rivals.

“Over time, we noticed consumers wanted to interact by setting up groups,” Rea told the Journal.

“And these weren’t groups of friends and family. These were groups of people interested in the same things.”

Insight number two came Palringo noticed many were gamers, prompting it to branch out and provide a number of games, which have been well received.

“You cannot be tied to the initial proposition,” Rea said.

“People talk about ‘pivots’, whereas I would describe this more as evolution.”

And has the North East’s tech scene evolved alongside it?

“I can see a big difference now compared to when I first came here,” Rea said.

“Then there were some tech-savvy people but few who wanted to work for a start-up.

“Now, we have bright young students coming out of university who realise they don’t have to go to London to get a great job - and that’s helped by the likes of Northstar, Ignite 100 and other initiatives.

“It is, though, a journey - and there’s still quite a while to go.”

Keynote speaker - Dr Mark Little

Venture capitalists must up their game if North East start-ups are to reach their potential.

That was the message from Dr Mark Little, one of Dynamo 14’s keynote speakers.

As vice president of engineering at Red Hat, a multinational opensource software firm, Little is now at the pinnacle of the growing global tech sector.

Getting there, however, has not been without its struggles - the most striking being a lack of capital for his early projects, due to the “shortsightedness” of UK VCs.

Originally from Northumberland, Little studied at Newcastle University and stayed on there to do a PhD in computing science.

“I got offers from Cambridge and Imperial College London, but chose Newcastle,” he told the conference.

“It’s always been very focussed on industry and it was easier for students and postgraduates to get jobs and feel relevant.”

After his PhD, Little became a research associate before setting up a spin-off company.

As time went on, however, he found that, while scraps of angel investment where coming forward, it was “really, really hard” to attract any real capital.

“It was easier to fly across to America than to find anybody in the region who would invest in us,” he said.

The company Little worked for was eventually acquired by Hewlett-Packard, but was later axed as it didn’t fit with the information technology giant was focussing on.

HP offered some investment funds, but the financial problems continued.

“We were fortunate in that we managed to bring people with us, so we didn’t have to find skilled people,” Little said..

“The challenge was finding money to keep 20-odd people gainfully employed and that became harder and harder.”

Little’s company, which became Arjuna Technologies, shrank because of this for a few years, before Little left in 2005 for JBoss, later acquired by Red Hat.

The business is based on an opensource model, the technology being free to use without a licence.

However, if users want support, they need to pay a subscription.

Clearly, the model works.

“Last year, we made $1.3bn revenue from selling free software,” Little quipped.

When asked about Newcastle’s tech strengths, he said cloud technology, security and software engineering were all thriving here.

As to the downsides: “One of the biggest differences I’ve seen between VCs in the UK and the US is that in the UK they are much more shortsighted.

“In the US, they could be thinking up to a decade into the future.

“If we’re going to compete with the US and the likes of Israel, then we need to be looking to get a return in 10 years time.

“We need more forward-looking, risk-taking VCs to give some people a chance.”

Speaking to the Journal afterwards, another keynote speaker, BBC business and technology correspondent Rory Cellan-Jones, agreed finding capital was a problem that was “very difficult to get on top of”.

“I travel quite a bit internationally and I do find it difficult to measure how places across the UK are doing,” he added.

“I strikes me, though, that the North East has got some but not all of what’s needed to be a tech cluster.

“There’s a fantastic flow of talented young people coming out of the universities and a great attitude among the universities when it comes to encouraging start-ups.”

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