Duncan Logan: The man searching for Silicon Valley's 'rarest creatures'

By Douglas Fraser
Business/economy editor, Scotland

Image source, Chris Schmauch
Image caption,
Duncan Logan brings early stage technology firms into one space

Duncan Logan is a rancher of unicorns - providing the space on which these very-hard-to-spot creatures can grow to maturity.

Yet the job looks like the more prosaic business of renting out office space, which he doesn't even own.

By doing that the smart way, he's getting rather rich, through his company he founded five years ago, Rocket Space. The value is in creating a network - or what the Scottish entrepreneur likes to call "the ultimate tech eco-system".

This brings early stage technology firms into one space, where they can spark off each other.

Once there, he provides a service more than a space, intended "to remove friction - just keeping everything out of the way which isn't core to their business.

"A lot of that would be introductions to lawyers or accountants or real estate people, or capital or corporations."

Think of it as an office water-cooler, with something special in the water. That would help explain how this company has been the stable from which 16 unicorns have emerged. That's companies worth more than $1bn (£765m).

A further 33 are worth more than $100 million (£76.5m).

That has earned Rocket Space a reputation that brings the big corporates calling.

Who is Duncan Logan?

  • Age: 44
  • Occupation: Founder and chief executive, Rocket Space, since 2011
  • Born: St Andrews
  • Education: Strathallan School, Aberdeen University
  • 1994-97: London derivatives trader
  • 1997-2000: Managing director, CityPro International
  • 2002-07: MessageLabs
  • 2008-10: NationalBLS, the Buyer Listing Service
  • Interests: triathlon, skiing, golf

To ease their search for innovative ideas, big companies are willing to pay a lot of money to Rocket Space for access to the tenants in its San Francisco office. Half the income comes from the access fees they're charged.

From the perspective of the young technology company, Duncan Logan explains that an Initial Public Offering - or a stock market float - has become more difficult, or at least less attractive.

To scale up the company and to give it reach, 40% of new funding comes from big corporates. And being sold to a big investor is the path taken by around 90% of graduates from Rocket Space.

So while renting out office space sounds like the less lucrative or glamorous end of Silicon Valley, this company's reputation has this month secured a $336m (£257m) investment from Chinese firm HNA Group.

That still leaves the 44-year old founder with most of the equity in Rocket Space, while providing him with the capital he needs to build a similar centre in London and another in China.

"It is all about quality, and as soon as we drop that quality bar, the whole concept sort of falls away," says Logan.

"The very best entrepreneurs and the very best start-ups want to hang out with the other top quality people. So we get 25 to 30 applications a week and we will cherry pick the best companies out of those applications."

What's the secret to spotting a unicorn at birth? If he knew the answer, he says, that's what he'd be doing. But he observes that the successful ones tend to have ideas that look ridiculous at the start.

That way, others are not attracted in to that market space and they have the time and space to grow to unicorn maturity.

The downside, as Logan found with a previous tech venture that failed, is that no-one in Silicon Valley wanted to tell him that his idea was not going to work. No-one wanted to be the one who rubbished a subsequent success.

The successful companies are very focussed on culture, he adds.

"They have an incredible focus from day one on the quality of the talent that they bring in. They are probably the most ruthless at people putting applicants through interviews.

"Then, there's operational excellence. It is all very well having a fantastic product or service, but a lot of start-ups die because they can't keep up with the growth that they see in the marketplace."

The new finance and the Chinese investors will help open up opportunities for Rocket Space in China, where Logan wants to open a tech centre, and where he wants to draw on the investing eco-system to benefit his US clients.

Leaving Scotland

He also plans to open a London office in 2017. And while he has no plans, yet, to extend that to his native Scotland, he is impressed by the growth of unicorns such as Skyscanner.

In any case, Edinburgh now has a privately-run business, CodeBase, which aspires to provide a similar platform for its tech business tenants.

The experience of growing a big tech success spins out people to build new companies. The key is to find people who aren't content to sit back and enjoy the enormous wealth they have created, but who want to dive back in and re-invest in new companies.

With an agriculture degree from Aberdeen University, Duncan Logan had to leave Scotland in his 20s to achieve his ambitions.

But he reckons that might not be necessary for a tech entrepreneur now. What he sees happening in Scotland now is "super-exciting".

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