Cronofy is a truly global company. Whilst we’re headquartered in the UK, our revenue is split 55% US, 25% EU, 9% UK. EU GDPR legislation has not harmed our US business and in many cases has been an advantage. Having to confront data privacy requirements from the founding of the business puts us at a distinct advantage as US companies wake up to having to protect people’s information.
The UK government has announced plans to weaken the UK version of GDPR which will certainly damage our EU business and may well weaken our US business.
While the UK has now left the EU, Cronofy is about to re-join.
Let me explain why.
Data privacy is, rightly so, one of the key concerns of the modern age. Our lives are increasingly on-line leaving a data trail of activity and information about us. It is beholden on the providers of services that we use to run our lives that they respect and protect that data.
The GDPR legislation enacted by the EU is that obligation made law for hundreds of millions of people. Its goal is to enshrine the principle that innovation and the use of personal data should be centred on human rights and designed to serve mankind. Where they have led, others have followed. Data privacy laws from California to Australia lean heavily on the principles that the EU encoded.
The UK’s continued compliance with GDPR was not part of the agreement to leave the EU. Instead the UK government quickly drafted the UK GDPR legislation, that was essentially a copy, and thus the EU ratified the UK as an ‘adequate’ regime for processing EU citizens data.
On the lead up to the UK leaving the EU, we had a significant number of EU customers concerned about what it meant for their data and our relationship. Software companies use the Cronofy API to access calendar data and for scheduling meetings on behalf of their customers. The information in calendars can be very sensitive so their customers need absolute reassurance that their data is safe.
Cronofy will always do the right thing. We will always do our utmost to protect people’s private data. However we were making these assertions against the backdrop of the UK government grandstanding in the name of ‘strong negotiation’, even to the extent that they voted to break international law.
As you can imagine, this didn’t give our customers confidence that if we weren’t to stand by our word, we were under the control of a strong and stable regime that would enforce that compliance. Even more importantly, they couldn’t give that reassurance to their end users.
With the recent announcement by the government of the changes they want to make to the UK’s data privacy legislation, it seems that those fears were well founded. It wants to move to a ‘do and ask for permission’ model driven not by benefit to mankind but instead by commercial interests. Whatever we say to our customers about how Cronofy approaches data privacy and controls, corresponding enforcement will not follow.
For context, 91% of our revenue is from exports. We’re a global company, in many ways we are the epitome of what global Britain could mean. The EU represents a massive opportunity for us. Other providers of similar services to ours are predominantly US based and are thus playing a long game of catch-up on privacy matters. What the UK government is proposing is going to put us on the same footing as US companies when it comes to dealing with EU customers, ie under the auspice of a regime that can’t be trusted.
We can make our protestations about ISO certifications, data management controls, segmented data hosting. However, prospective customers won’t necessarily get that far because we’ll be discounted based on our location. I don’t blame them. Data protection is fraught and complicated. Why even entertain the risk of going with a provider from outside the EU.
So do we accept our fate and forgo this market on our doorstep or do we change the game? I refuse to be kowtowed by the actions of the cynically self-serving cabal currently in power in the UK. I didn’t vote for any of it and I refuse to be held back because of it.
The answer is pretty simple. It’s time that Cronofy became a European company again.
We are establishing a new company in the Netherlands and will offer our customers the option to contract with Cronofy BV under Dutch law. That will become the new HQ for all of our data processing so we can be under the oversight of the Dutch data regulator and thus the EU. Our new General Counsel overseeing all of this is Dutch.
How does Britain fare out of this? Not very well I’m afraid. Apart from perhaps a temporary fillip for the lawyers who are advising us on the corporate restructure.
Loss of GDP. We are moving existing revenue into The Netherlands and, of course, there won’t be any new revenue from the EU. Our go-to-market focus will inevitably drift away from the UK so UK companies will be less likely to benefit from the productivity improvements from using a service like ours. Likely others will come to fill any space that we leave but we are (forgive the hyperbole but it’s true) the best in the world at what we do.
Loss of international stature. From talking to customers around the world, the UK’s reputation is increasingly a pitiful shade of the vibrant, outward looking persona that we had when I was building my second international business in the 2000s. A successful, entrepreneurial country that cared about its citizens and about what other people thought. It feels to me that we couldn’t be further from that now. But then, every week seems to reveal a new low. The more companies like ours that either move or get started elsewhere (Amsterdam, Berlin, Paris) as result, the worse the reputation becomes. Britain becomes an international irrelevance.
Loss of highly skilled, high wage jobs. We need to build a team in The Netherlands. With customers data sovereignty concerns, they want to know that there are sufficient EU resident team members operating the service. Whilst it’s great for us that we can legitimately expand our talent pool, it follows that far fewer of the new jobs we create will be in the UK.
The last point is probably the one that pains me the most. Being able to develop talent and offer opportunities is one of the tangible societal benefits of building a tech company, this is my third. We’re already supporting one of the team with a degree apprenticeship so that they can become a software engineer. Having to start a new team in a new country means that there will be a while before we can support junior team members again. As well as the question as to whether those junior team members that we’ll invest in will even be in the UK.
Of course this also means that my focus as company leader has to be on the Netherlands. I will be spending an increasing amount of time there and I’ll have to consider whether moving there on a more permanent basis is necessary. I’m sure the Dutch government will be happy to take my taxes. Can I look our customers in the eye and say we’re serious about this if I don’t?
Building a business is all about pragmatically navigating what life throws at you. With tech companies especially, you’re generally doing something that hasn’t been done before so it’s not going to be easy. You have to roll with the punches and be constantly open to learning and course corrections. Unfortunately this obstacle requires a little more than rolling round. We have to make a substantial change to the way we do business.
This national act of self-harm will have ramifications for decades to come. It turns out that Project Fear, was actually Project Fact. Instead of taking it as a warning of something to avoid, the UK government seem to have taken it as an outcome to exceed. Whilst in isolation, Cronofy being collateral damage is unimportant. What we are facing is a worrying portent for the UK and its relationship with the rest of the world.
I expected and wanted to be building Cronofy into a world-beating, UK company. Membership of the EU gave us an enviable platform to do that and, in turn, invest that success back into the UK. Unless we act now, we’ll lose that platform and everything we’ve worked for and that we represent will be forever constrained as a result.
Wacht EU, we komen terug.