Where have all the salesmen gone ♬ ♬

I've been doing some interesting work on entrepreneurial ecosystems lately. I just published a paper in Entrepreneurship Theory and Practice on ecosystems (hint hint) but that was just the start. One of the points I made in that paper is that entrepreneurial ecosystems depend on more than just entrepreneurs. Look, entrepreneurs are the most important thing, but there are a bunch of other people that matter. Now, we know that angel investors are important and Kenney and Patton said that we should pay attention to folks like patent lawyers and accountants. Obviously you'll want experienced, successful entrepreneurs who can serve as mentors for future generations of firm founders. But I've been talking to a lot of entrepreneurs, policy makers, and other people in Edinburgh for the past month and from those conversations I think we need to think about a broader group of people that you need to make an effective ecosystem.

First of all is sales people. I think sales is the toughest nut for entrepreneurs to crack, especially entrepreneurs who see themselves as 'technologists' or 'innovators' rather than businesspeople. Heck, even businesspeople don't think of themselves as sales people: how many business schools or MBA programs actually teach sales techniques? The answer is Not Many. How many books on entrepreneurship actually talk about sales beyond a very simple 'it would be nice if you sold some stuff'?

But salespeople are very important for startups! Salespeople are typically the first employee at a startup that actually gets a real, competitive salary. They are instrumental in building connections with customers and landing the deals that actually pay for product development. But new entrepreneurs often have a lot of trouble working with sales people, they really don't know how to pay them, how to measure their effectiveness, or how to help them do their job. And if I'd have to guess, I doubt there are a lot of salespeople who like working in the structureless environment of a startup.

And this is where the trouble starts: there's been a 20 year debate in the academic research over if entrepreneurs are born or taught. The debate is still going on but there seems to be a consensus that we can at least try to instil an entrepreneurial mindset in people if we catch them early enough. There's be no discussion about this for sales. There is the basic assumption that salespeople are born; they are born with an extroverted personality, slicked back hair, and the ability to give a sales pitch so meaningful people run from the room crying and you never look at a slide projector the same way. This may or may not be true: I hate talking to people yet during my PhD I learned how to make cold calls to entrepreneurs in order to sell them something they truly didn't need — an hour of their time spent with me.

So we're left in a situation where we assume that since we can't teach sales entrepreneurs will just draw on what ever local talent exists and hope for the best. The problem is that there doesn't appear to be an even distribution of sales talent. We're lucky that the ONS's Labour Force Survey provides detailed occupational data so we can actually see where specific types of salespeople are in the UK. The map below displays the location quotient (LQ) of sales professions: not telemarketers or retail salesclerks but Marketing and sales directors, Business sales executives, and Sales accounts and business development managers. These are high level salespeople and managers. LQs are a nice metric for this sort of thing since they show the ratio of a certain profession to all other professions while controlling for population and other factors: an LQ above 1 means that the concentration is higher than the national average and below 1 means it's lower.

They've gone to London is where they've gone

Not unexpectedly, London has a huge cluster of sales professionals: London is a global city filled with sales based companies, this is exactly where you'd expect them to be. But the map shows big problems for Northern England, Scotland, Wales, and Northern Ireland. These places have almost half the national average of sales professionals. This means that when startups go looking for salespeople, they have a smaller pool to draw from. They'll either have to pay more or get a lower quality worker. It means there's a smaller support infrastructure for salespeople to build up their skills and learn how to manage other salespeople.

What does this tell us? Typical region policy to support entrepreneurship focuses on training entrepreneurs first, then trying to educate potential angel investors, and maybe they have a workforce development program to help train people in computer programming or whatever else it hot right now (is Internet of Things a job yet?) But no one is really thinking about (1) how can we train more and better salespeople and (2) how can we train entrepreneurs to be better at working with salespeople. Having a broader conception of who matters in entrepreneurial ecosystems makes it clear that this should be a priority.

Mapping UK Startups

Since I first washed up on the chalky (more peaty, I guess) British shores, I've been doing my best to get an overview of the geography of UK startup activities. That's my job after all: to figure out where the entrepreneurship hots spots are and why those places are great areas for startups. I forgot about this for a while after being buried in other work and teaching, but I was reminded about this by a recent report by Startup Britain about the the UK's entrepreneurial hotspots. They were kind enough to release the underlying dataset, which was produced by Companies House. The data is a report of how many new firms were registered in every postal code area in the UK.

This data set helped me rediscover the joy and the pain of making maps while watching re-runs of Law and Order.

Plugging the data from Startup Britain into QGIS (a nice, open source GIS platform that actually runs on OS X!) produces a nice visualization of where the UK's entrepreneurs are. UK Startups

This is a pretty diverse geography of startups, but it's about what we'd expect. High levels of entrepreneurship in the Southwest and up into the Midlands, lower levels of entrepreneurship in the Northeast and in the Highlands.

We can make this a bit simpler to get an even broader overview of the UK's entrepreneurial geography. This is an equal area map of the average number of startups in the postal code areas contained within 25 KM hexes I think this is the prettiest map I've ever made.

With this, you can see a very clear pattern of high rates of startup activity in the area between London and Manchester, with fewer activity elsewhere.

But XKCD teaches us that most maps just map population.... XKCD teaches us every lesson.

So, we've got to control for population. This is where I ran into the wall of horrible data collection. It's pretty dang easy to get population for postal code areas England and Wales from NOMIS. But, because of Events over the past 700 years, Scotland gets it's own census and it's not very good at showing what data they have and letting you have it. After several hours of yelling at the computer, I finally found what I needed and could make a map of the number of startups per 1000 people in every area code in the UK (except for northern Ireland, Gibraltar, and the Channel Islands, because I just couldn't bring myself to care.) Startups per 1000 people

This is..... ummm.....less interesting. London is really the only place where we see huge deviations from the mean of 20.66 new firms per 1000 people. Indeed, if we look at a histogram of the log of startups per capita, we see it's really concentrated around the mean. Has anyone writen a history of histograms?

This is because there is a very clear relationship between the population of a postal code area and the number of startups. The correlation coefficient is 78%! This is very apparent when you graph population against startups. The colors! From the graph, it's clear that there are very few regions that have an exceptionally high rates of startups per capita, but there are plenty of regions in the North and the North West which have very low rates.

This is even more apparent when we make a box plot of startups per capita by region. I guess it's more of a violin plot than a boxplot. London does have a lot of areas with exceptionally high levels of entrepreneurship per capita. Of the 6 area codes that have more than 1 reported startup per person, 5 are in London (EC1V, SW1Y, EC4A, W1B, W1S) and one is in Birmingham (B2). I imagine these codes are some weird corporate or historical zones where no one actually lives (maybe just the Queen and her Dogs), which totally throws off the per capita calculation. But even with that, the average startups per capita in London is still significantly higher than the national mean.

So, where do we go from here. The first thing I want to do is try to break this down by industry. In terms of economic development, all new firms aren't created equally. A consulting LLC will likely never employ more than a few people, but a new manufacturing firm can employ many people and export products abroad. We also need to look at firm births as well as death. What regions are gaining startups and which are losing them? We also need more data to figure out what's driving entrepreneurship. High populations do mean more economic activity, but this doesn't help policy makers figure out how to encourage entrepreneurship. We need to look at things like education, levels of immigration and migration, and that fun stuff.

So, I've got a lot of librarians and statisticians to yell at. I want to thank everyone on the twitter-sphere who encouraged me to make these maps, it was a great excuse to learn some new tools and data sources.