Author Archives: Hervé Lebret

A remarkable analysis of European weaknesses: the acquisition of Withings according to François Nemo

Sometimes I make a copy/paste of articles that I have particularly appreciated, with the objective of then translating them to English from the French part of this blog. (Sorry for the bad English, this is pretty quick and dirty). Here I will add my own comments in brackets and italics. You can find the original article and the comments on Frenchweb.fr.

Withings or the story of a French naivety
François Nemo expert in disruptive strategies.

The spectacular acquisition of Withings by Nokia does not illustrate as it is always argued the weakness of our financing system but the lack of vision and commitment of our entrepreneurial scene. It shows our failure in creating an ecosystem with the right scale to position ourselves in the digital war against China and the United States. It is time to mobilize our energies to “beat the GAFA” and defend our sovereignty.

[For years, I have been saying that we do not have so much a funding problem, but a problem of culture, a complete misunderstanding of the importance of start-ups and their growth.]

After Captain Train bought by the British for €200M, it is now an emblem of the French technology, Withings – which made the buzz at CES in Las Vegas by playing the “made in France” card, – to be bought by Nokia to €170M. And I am ready to bet that Blalacar would not withstand a proposal from Facebook if it decided to introduce carpooling in its range of services to connect the planet. The adventure of the so-called French jewels has unfortunately only one outcome: a big check!

[I will let you browse my documents on Slideshare and especially the one that compares Europe and Silicon Valley and its slide 37]

Intelligence First

As technology develops, the more it disappears behind the ideas. The “purpose” or the “raison d’être”. The big digital players have understood this by turning to “intelligence first.” The product is a feature that is integrated in a platform whose role is to solve the world’s problems, health, travel, leisure … manage a community, organize a circular, iterative, open and inclusive ecosystem that connects direct users and producers to shorten and optimize the interaction. This is the announced death of sites and applications. The role of the entrepreneur is then to defend a “vision” and then to design the system to match it. He is a conductor more than a resource creator who will defend the key assets of the company; ideas and data. In this new context, mono-products like Withings companies have no chance to grow if not to integrate an ecosystem. One can also wonder about the real benefits for Whitings of being acquired by Nokia? Dropbox or Evernote had bitter experiences in yielding to the striking power of large platforms. And what about the relevance of that phrase of Steve Job: “You are a feature, not a product” by refusing to buy Dropbox ten years ago?

The new war of ecosystems

This is on the field of ecosystems that now compete the two giants of the digital world, the United States with GAFA, underpinned by an ideology, and China with more pragmatic companies like Alibaba, WeChat who developed new ecosystems in booming sectors by creating new business models and which after reaching an impressive number of users on their domestic market are beginning to position themselves internationally by triggering a fierce fight with the Americans. It is in this context that the GAFA (mostly) do their “market” in the four corners of the planet to feed and enrich their ecosystem. And France with the quality of its research and its dynamic start-ups is a particularly attractive hunting ground.

Why Europe is not able to create worldwide ecosystems?

The acquisition Withings is not as it is claimed a financing problem, an inadequate investment European ecosystem that would prevent a rapid scale-up of our jewels. The scope of Withings whatever the funds injected made impossible anyway a development outside of any platform. The question is why Europe is not able to create worldwide ecosystems in which promisng start-ups like Withings find their place?

[The failure of the European Union is not political only. There is also economic failure. So much fragmentation and so much national selfishness …].

We do not think digital at the right scale!

Our speech about the “Made in France”, staged around our digital champions and their presence at CES supported by the Minister of Economy himself is something naive and pathetic. All the institutional and private infrastructure, accelerators, think tanks, French tech, CNNum, Ecole 42, The Family, accelerator or NUMA, to name only the most prominent are not programmed to develop platforms with visions but products and features or laws and reports. This is our economic and entrepreneurial culture that is in question. A world still very marked by the culture of the engineer and the specialist. A world that is unfamiliar with and remains wary of notions of vision and commitment and more generally to the world of ideas. Rather conservative entrepreneurs who do not perceive the deeply subversive nature of the digital revolution and the need to change the “scale of thinking.”

Large groups who all have a start-up potential

We could also rely on large established groups who all have a start-up potential just like the American Goldman Sachs saying: “We are no longer a bank, but a technology company, we are the Google of finance” by having three thousand five hundred people working on the subject and by announcing a series of measures such as giving access to market and risk management data as open source. One can easily imagine corporations like La Poste and Groupama which business will be radically challenged in the next five years preparing for the future by organizing an ecosystem around wellness and healthcare (for example) that would integrate their know-how with Withings. But listening to the representatives of the major groups, Pierre Gattaz or Carlos Ghosn, for example, one quickly perceives their shortsightedness and lack of interest (they have nothing to gain) for disruptive strategies.

[Which role models or mentors could have our young generations in Europe, not only in France, at the end of their studies? How could they build GAFAs when the model is today the CAC40 and a very engineering culture, indeed].

Are we ready to live in an ” Fisher Price Internet”

Are we doomed to become satellites, and lose our economic sovereignty and security by staying under the influence of GAFA. Or as proposed François Candelon, Senior Manager at the Boston Consulting Group in a very good article “look at what China can teach and bring” and “create a Digital Silk Road”. Are we doomed to choose between Scylla and Charybdis? No! Because even if the web giants with their vision paved the way to new relationships by building the most disruptive companies in history, they leave us facing a huge gap. The “technical transformation of the individual.” Are we ready to live in an ” Fisher Price Internet” as Viuz claimed “in closed houses” run by machines “with chubby groves, manicured lawns and paved roads” where exclusivity, premium and scarcity matter leaving out of the door a part of the population. A kind of ultra-secure retirement homes for the wealthy?

Breaking the GAFA

We must unhesitatingly rush into a third track: “Breaking the GAFA”. If the formula is somewhat provocative, it encourages mobilization. The gap will be difficult to catch up, but it is time for Europe to build on its historical and fundamental values to build new ecosystems and enter fully into the economic war between the two major blocs. Propose alternatives to GAFA. “Use algorithms and artificial intelligence to create an augmented intelligence and solve the complex problems that the ecological and social emergency create” as said Yann Moulier Boutang. Integrate new technologies to rebalance the power relationships, find the keys to a true economy of sharing and knowledge to tackle the question of the future of work, compensation, health, freedom, education …

To scale

A rupture that requires a change of scale by challenging our economic culture and our understanding of the world. A rupture which, even if it still faces a “diabolical” inertia, has become a necessity for many of us.

If you are part of this new “generation” of “intelligence first”, if you have ideas and solutions to change our scale of reflection, I invite you to join us on Twitter or email @ifbranding f.nemo@ifbranding.fr together, we have solutions to propose and build projects.

The author
François Nemo expert in disruptive strategies.
Website: ifbranding.fr
Twitter: @ifbranding
Medium: @ifbranding

Myths and Realities of Serial Entrepreneurs

Leave a reply

This is my latest contribution to Entreprise Romande. This is a topic I have covered from time to time and though that it would be interesting to share it with a wider audience thanks to the FER newsletter.

I have always been suspicious of the concept of serial entrepreneur, this creator who, according to Wikipedia, “continuously comes up with new ideas and starts new businesses, as opposed to a typical entrepreneur, who will often come up with an idea, start the company, and then see it through and play an important role in the day to day functioning of the new company.” Why such a bias if one considers exceptional serial entrepreneur like Steve Jobs (Apple, Next, Pixar), Elon Musk (PayPal, Tesla, SpaceX) or English “rock star” Richard Branson who declined Virgin in music, retail, air transportation and mobile communications? Because from experience, the idea of going from one idea to another seems far from sufficient if the entrepreneur does not invest an enormous and sustained activity to market and commercialize her project? Not really, since the three examples show that it can be not superficial hyper-activity, but the success of products or services consecutive to a total commitment of their creators.

My suspicion was built over time, because with the exception of some mythical characters always cited as examples for good reasons, I had the belief of recurring “patterns” and the example of Steve Jobs is a good illustration: he has never done as well as with Apple, his first creation. A few years ago, I dedicated some time to a statistical study about the “performance” of these serial entrepreneurs in comparison with their more conventional counterparts. [1] The study of some 450 serial entrepreneurs out of a group of more than 2700 founders gave some interesting results: if on average, serial entrepreneurs do better than others with their first business (the value created is larger, and with less investment), the trend is reversed with the following ventures, and beginning with the third, they do less well, while raising more money from their investors. QED! This study was perhaps the result of a particular situation in Silicon Valley and Stanford? A 2011 study of some 600 British entrepreneurs [2] shows that 60% of the founders having experienced failure were serial entrepreneurs while they accounted for half of the sample. The authors are known as experts on the subject and their many studies do not show that experience is a real advantage.

If the facts seem somewhat scuttle the myth, it is also interesting to analyze a little further. A serial entrepreneur, and more if she had a successful career, will have an enormous self-confidence and probably a seduction power to attract investors and talent for her future projects. She will be ready to take risks, even greater as she has already succeeded, so that failure may have a lower financial impact. The authors of the British study add that those who have failed have experienced such trauma that they repress this failure to the point not to learn anything from the experience …

What lessons for those – investors and employees – who are willing to blindly follow such a hero? Probably the need to show a little caution and analyze with some rationality if the project makes sense and if the creator seems a minimum rational in his vision of the development of this new project. In reality, success will always remain the domain of the exception, an unlikely alignment of the planets. An entrepreneur must always be optimistic, but if he loses too much sight of these realities, blindness can be fatal. And I would add a message to the entrepreneur without experience: by listening too much to the advice of those who “know”, the entrepreneur may forget his inner voice, the intuition so fundamental for all creative people. This myth of the serial entrepreneur perhaps shows that talent is more important than experience …

[1] Serial Entrepreneurs: Are They Better? – A View from Stanford University Alumni – Babson Conference “Frontiers of Entrepreneurship Research” 2012. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2133127
[2] Why Serial Entrepreneurs Don’t Learn from Failure. Par Deniz Ucbasaran, Paul Westhead et Mike Wright . https://hbr.org/2011/04/why-serial-entrepreneurs-dont-learn-from-failure

Cisco’s A&D

1 Reply

In 2009, I had analyzed Cisco’s strategy of Acquisitions and Development (A&D) which was claimed to be a substitute to R&D. You can have a look at my previous article also entitled Cisco’s A&D. I decided to redo the same analysis, i.e. the size of Cisco per year (sales and employees) as well as the number and values of its acquisitions. I also analyzed the geographical location of these acquisitions. The results follow. I just add that Silicon Valley remains the main source of acquisitions. The total value of the M&As were about $75B ($48B until 2006 and $27B in the last 10 years).

Finally the exhaustive list (from Cisco’s web site and Wikipedia).

The crazy ones. The misfits. The rebels. The troublemakers.

Leave a reply

How is possible I never used this great quote when I talk about what is needed in innovation and entrepreneurship. What a moron, I am (sometimes…)

Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They’re not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them. About the only thing you can’t do is ignore them. Because they change things. They push the human race forward. While some may see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do.

Of course it’s very likely that you know what this is. And if not, no worry either. Here is the video:

And if you want to know more, check Think_different on Wikipedia.

Listen to the other versions too:

Is the Venture Capital model broken?

1 Reply

There is (sometimes) a love-hate relationship between entrepreneurs and investors. In fact there is a recurring message that Venture Capital (VC) does not provide an answer to the needs of many young start-ups. I will not enter that debate here as I do not have the answer. But as I recently read four different articles / reports where the current situation of venture capital is analyzed, I hope this post will be helpful to understand why VC is debated so much. These reports are:
– Lessons from Twenty Years of the Kauffman Foundation’s Investments in Venture Capital Funds (published in May 2012)
– Emergent models of financial intermediation for innovative companies : from venture capital to crowdinvesting platforms (publised in 2014)
– Venture Capital Disrupts Itself: Breaking the Concentration Curse (published in November 2015)
– Why the Unicorn Financing Market Just Became Dangerous…For All Involved, published in April 2016.

The Kauffman report

The Kauffman foundation explained in 2012 that the returns of venture capital have not been as good in the last 10 years as they were in the 80s and 90s. The reports also shows something which is quite well-known I think: the VC “industry” is much bigger than in the 90s, but with fewer funds. The explanation is simple: individual funds have grown from $100M to $1B+… The conclusion of the Kauffman foundation is that funds of funds, pension funds, limited partners (LPs) should be careful about where and how they invest in venture capital. Here are some graphs provided in the study.

The VC industry according to the Kauffman foundation

The VC performance according to the Kauffman foundation

In particular, you may see that IRR is a tricky measure as it changes over time (from peak value to final value) during the fund life. The Kauffamn suggests the following:
– Invest in VC funds of less than $400 million with a history of consistently high public market equivalent (PME) performance, and in which GPs commit at least 5 percent of capital;
– Invest directly in a small portfolio of new companies, without being saddled by high fees and carry;
– Co-invest in later-round deals side-by-side with seasoned investors;
– Move a portion of capital invested in VC into the public markets. There are not enough strong VC investors with above-market returns to absorb even our limited investment capital.

The Cambridge Associates report

Cambridge Associates (CA) does not show a very different situation, i.e. there are indeed more bigger funds and a slightly global degraded performance. But CA also claims that the VC performance is not concentrated in a small number of high profile winners. Some elements of information first:

The VC gains according to Cambridge Associates

The VC gains vs. fund size according to Cambridge Associates

Cambridge Associates is not saying the VC world is doing OK, but that the increase in fund size has an impact on the investment dynamics. On the performance, the next figure (from another report) illustrates again the fact that performance may indeed be an issue…

The VC performance according to Cambridge Associates

Bill Curley about unicorns

Bill Gurley is one of the top Silicon Valley VCs. So if he has something to say about the VC crisis, we should listen! No graph in his analysis, but a scary conclusion:

The reason we are all in this mess is because of the excessive amounts of capital that have poured into the VC-backed startup market. This glut of capital has led to (1) record high burn rates, likely 5-10x those of the 1999 timeframe, (2) most companies operating far, far away from profitability, (3) excessively intense competition driven by access to said capital, (4) delayed or non-existent liquidity for employees and investors, and (5) the aforementioned solicitous fundraising practices. More money will not solve any of these problems — it will only contribute to them. The healthiest thing that could possibly happen is a dramatic increase in the real cost of capital and a return to an appreciation for sound business execution.

The crowdinvesting report

So when I read Victoriya Salomon’s report about new financing platforms, I was intrigued. What does she say? “The global venture capital market suffers from unfavourable exit conditions reflected in a drop in the number of VC-backed IPOs and M&As. This trend affects all markets across all regions. In Europe, VC funds have shown less risk appetite by realigning their investment choices on later-stage companies and those already generating revenue. Furthermore, because of the poor performance of many VC funds during the six last years, they struggle to raise new funds, as institutional investors, disappointed by low returns, show a preference for the most successful large funds with a perfect track record. This slowdown particularly affects traditional venture capital investments, while, at the same time, the share of corporate venture capital has significantly increased, exceeding 15% of all venture capital investments by the end of 2012. In Switzerland, the venture capital market has also entered into a phase of decline and is losing ground in the financing of innovation. In fact, Swiss VC companies are suffering from a lack of investment capital and struggle to raise new funds. According to the Swiss Commission for Technology and Innovation, the amount of venture capital invested in Switzerland has shown a disturbing decline of about 40% during the last five years. [Also] venture capital investments in early stage start-ups fell by more than 50% from €161 billion in 2011 to €73 billion in 2012. In contrast, “later stage” participations grew by more than 50% in 2012 reaching €77 billion compared with €34 billion in 2011. While the number of early stage transactions is falling, investment periods are tending to become longer (7 years instead of 4-5) and the capital gain smaller.”

So the analysis is very similar. The VC world has experienced major transformations. The author believes that one solution might be the emergence of new platforms, such as crowdinvesting, which can be described as equity crowdfunding for start-ups. This is indeed an interesting argument. It is a way to scale and extend geographically the business angel activity. Now it could be also that we just need to go back to basics, i.e. less money with smaller funds, investing again like in the 80s and early 90s in less cash spending companies… Whatever the answer, the analysis seems consistent: the VC world has moved in a direction (fewer but bigger funds, in the USA mostly) which may not be good for a world where many more start-ups appear all over the world, not only in Silicon Valley, with relatively modest needs…

So what?

First if all this looked elliptic, not to say cryptic, you should read the reports and articles. They are excellent. Then, in a recent interview; I explained that money is needed, but (too much) money can be dangerous. That is I think the main message… you may read below if you want to have my views…

“A Good but Potentially Dangerous Idea”
Former venture capitalist, Hervé Lebret is now responsible for Innogrants (seed money) at EPFL.
What do you think of the proposal to create a future Swiss Fund?
This may be a good idea, but only under certain conditions. It must be able to hire talented managers because it is an extremely complex business. This is what Israel did when it established its venture capital funds, it brought in experienced American managers. Without the right people, it’s a recipe for disaster. And the fund must have the freedom to invest anywhere, not only in Switzerland. If you want a fund that only invests in Swiss start-ups, we may only create mediocrity.
Why?
Because no European fund can prosper by investing only in its own country. It’s a matter of scale. Only Silicon Valley has sufficient critical mass. The Californian model of venture capital is to lose money in most investments and make a few homeruns such as Google or Airbnb. So you need to have ten thousand ideas to create a thousand companies, then one hundred will grow, ten will be successful and one become Google or Airbnb. You must be able to create such a success every five years, and Switzerland just does not have the critical mass. And it is dangerous to focus too much on money.
Really?
Yes. Money is a necessary, but not sufficient for success. It requires funds, but also talent, a market, a product and ambition. It is not because we make money available to start-ups that success will come – the other ingredients should also be present. It is true that Switzerland lacks venture capital, but this is not what explains that Google, Apple and Amazon were not born here. This is in my opinion rather a cultural question. We lack ambition and rebellion. And this is the only factor that cannot be decreed by the authorities. Entrepreneurs are satisfied to aim at the creation of a viable firm of modest size, in which they retain control. In Switzerland, the start-ups create fewer jobs than McDonalds. Neil Rimer (note: co-founder of venture capital firm Index Ventures) wrote two years ago: “We and other European investors constantly are looking for world-class projects from Switzerland. I think there are too many projects lacking in ambition and supported artificially by organs – which also lack ambition – that give the feeling that there is sufficient entrepreneurial activity in Switzerland.” I have to agree with him.

CRISPR Start-ups

Leave a reply

There are not many weeks, not to say days when you cannot read something new about CRISPR. I have to admit I do not know much about it given my total incompetence in health related matters. But when I heard there was a battle around intellectual property between universities (see Bitter fight over CRISPR patent heats up for example) and that start-ups were already entering the field, to the point that one was already public and another one filing to be, my interest was aroused… So I had a look at 3 of the more visible companies, and you know what… I could build their cap. tables… here they are:

– Editas Medicine

– Intellia Therapeutics

– Crispr Therapeutics

What is worth noticing, at least for me? They are young companies (less than 3 years old. they have raised a lot of money, at least $50M. They have very reputable investors: Polaris, Third Rock & Flagship for Editas; Atlas & Orbimed for Intellia; and Versant, NEA, Abingworth & SROne for Crispr Therapeutics. the founders are alreday quite diluted as they all less own than 15% as a group in each. Additional comments welcome!

How to become a hub for startups?

Leave a reply

This is the subject that “génialissime” Paul Graham addresses in the speech How to Make Pittsburgh a Startup Hub, a speech he has just published on his blog. I say “génialissime” because every time I read him, I am excited by the simplicity of his messages even if often counter-intuitive. Thus in How to be Silicon Valley?, he said “Few startups happen in Miami, for example, because although it’s full of rich people, it has few nerds. It’s not the kind of place nerds like. Whereas Pittsburgh has the opposite problem: plenty of nerds, but no rich people.” Yet he returned to Pittsburgh to give his recipe, at least paths to become a hub for start-ups.

Image borrowed from Zak Slayback

Here are some excerpts that show that everything is cultural so that a city or a university should have above all a friendly and liberal, not to say laissez-faire attitude. “And it’s not as if you have to make painful sacrifices in the meantime. Think about what I’ve suggested you should do. Encourage local restaurants, save old buildings, take advantage of density, make CMU the best, promote tolerance. These are the things that make Pittsburgh good to live in now. All I’m saying is that you should do even more of them.”

And about universities, he adds: “What can CMU do to help Pittsburgh become a startup hub? Be an even better research university. […] Being that kind of talent magnet is the most important contribution universities can make toward making their city a startup hub. In fact it is practically the only contribution they can make. But wait, shouldn’t universities be setting up programs with words like “innovation” and “entrepreneurship” in their names? No, they should not. These kind of things almost always turn out to be disappointments. They’re pursuing the wrong targets. […] And the way to learn about entrepreneurship is to do it, which you can’t in school. I know it may disappoint some administrators to hear that the best thing a university can do to encourage startups is to be a great university. It’s like telling people who want to lose weight that the way to do it is to eat less. […] Universities are great at bringing together founders, but beyond that the best thing they can do is get out of the way. For example, by not claiming ownership of “intellectual property” that students and faculty develop, and by having liberal rules about deferred admission and leaves of absence. […] But if a university really wanted to help its students start startups, the empirical evidence […] suggests the best thing they can do is literally nothing.”

And now a diggression. This article reminded me of the text of another genius of Silicon Valley, Steve Jobs. “[There are] two or three reasons. You have to go back a little in history. I mean this is where the beatnik happened in San Francisco. It is a pretty interesting thing. This is where the hippy movement happened. This is the only place in America where Rock‘n’roll really happened. Right? Most of the bands in this country, Bob Dylan in the 60’s, I mean they all came out of here. I think of Joan Baez to Jefferson Airplane to the Grateful Dead. Everything came out of here, Janis Joplin, Jimmy Hendrix, everybody. Why is that? You’ve also had Stanford and Berkeley, two awesome universities drawing smart people from all over the world and depositing them in this clean, sunny, nice place where there’s a whole bunch of other smart people and pretty good food. And at times a lot of drugs and all of that. So they stayed. There’s a lot of human capital pouring in. Really smart people. People seem pretty bright here relative to the rest of the country. People seem pretty open-minded here relative to the rest of the country. I think it’s just a very unique place and it’s got a track record to prove it and that tends to attract more people. I give a lot of credit to the universities, probably the most credit of anything to Stanford and Berkeley.”

Paul Graham’s latest contribution is a must read. As usual, it is long, provocative, disturbing and totally convincing…

Alexander Grothendieck, 1928 – 2014

Leave a reply

What link is there between Andrew Grove (the previous article) and Alexandre Grothendieck? Beyond their common initials, a similar youth – both were born in the communist Eastern Europe they left for a career in the West) and the fact they have become icons of their world, they just represent my two professional passions: startups and mathematics. The comparison stops there, no doubt, but I’ll get back to it.

Two books (both in French) were published in January 2016 about the life of this genius: Alexander Grothendieck – in the footsteps of the last mathematical genius by Philippe Douroux and Algebra – elements of the life of Alexander Grothendieck by Yan Pradeau. If you like mathematics (I should say the mathematical science) or even if you do not like it, read these biographies.

I knew as many others about the atypical route of this stateless citizen who became a great figure of mathematics – he received the Fields Medal in 1966 – and then decided to live in seclusion from the world for over 25 years in a small village close to the Pyrenees until his death in 2014. I also have to confess that I knew nothing of his work. Reading these two books shows me that I was not the only one, as Grothendieck had explored lands that few mathematicians could follow. I also found the following stories:
– At age 11, he calculated the circumference of the circle and deduced that π is equal to 3.
– Later, he reconstructed the theory of Lebesgue measure. He was not 20 years old.
– A prime number has his name, 57, who nevertheless is 3 x 19.
Yes, it is worth discovering the life of this illustrious mathematician.

The reason for the connection I made between Grove and Grothendieck is actually quite tenuous. It comes from this quote: “There are only two true visionaries in the history of Silicon Valley. Jobs and Noyce. Their vision was to build great companies … Steve was twenty, un-degreed, some people said unwashed, and he looked like Ho Chi Minh. But he was a bright person then, and is a brighter man now … Phenomenal achievement done by somebody in his very early twenties … Bob was one of those people who could maintain perspective because he was inordinately bright. Steve could not. He was very, very passionate, highly competitive.” Grove was close Noyce in more ways than one, and extremely rational and according to Grove, Noyce was too lax! Grothendieck would be closer to Jobs. A hippie, a passionate individual and also somehow self-taught. Success can come from so diverse personalities.

Last point in common or perhaps a difference. The migration. Grove became a pure American. Grothendieck was an eternal stateless, despite his French passport. But both show its importance. Silicon Valley is full of migrants. I often talk about this here. We know less that what is called “the French school of mathematics” also has its migrants. If you go to the French wikipedia page of the Fields Medal, you can read:

Ten “Fields medalists’ are former students of the Ecole Normale Superieure: Laurent Schwartz (1950), Jean-Pierre Serre (1954), René Thom (1958), Alain Connes (1982), Pierre-Louis Lions (1994) Jean-Christophe Yoccoz (1994), Laurent Lafforgue (2002), Wendelin Werner (2006), Cédric Villani (2010) and Ngo Bao Chau (2010). This would make “Ulm” the second institution after the ‘Princeton’ winners, if the ranking was the university of origin of the medal and not the place of production. Regarding the country of origin, we arrive at a total of fifteen Fields medalists from French laboratories, which could put France ahead as the formative nations of these eminent mathematicians.

But in addition to Grothendieck, the stateless, Pierre Deligne, Belgian, had his thesis with him, Wendelin Werner was naturalized at the age of 9 years, Ngo Bao Châu the year he received the Fields Medal, after doing all his graduate studies in France, and Artur Avila is Brazilian and French … One could speak of the International of Mathematics, which might not have displeased Alexander Grothendieck.

Andrew S. Grove 1936 – 2016

1 Reply

Andrew Grove died a few days ago. I remember reading is “Only The Paranoid Survive”. I remember that he had an amazing life, at least his first years from his native Hungary until he reached New York.

Andrew S. Grove was chairman of the board of Intel Corporation from May 1997 to May 2005. He was the company’s chief executive officer from 1987 to 1998 and its president from 1979 to 1997. Ref: Andrew S. Grove 1936 – 2016 (Intel web site)

I also remember he wrote in 1010 an analysis about start-ups which is very profound. So I will quote him again.

It’s our own misplaced faith in the power of startups to create U.S. jobs. Americans love the idea of the guys in the garage inventing something that changes the world. New York Times columnist Thomas L. Friedman recently encapsulated this view in a piece called Start-Ups, Not Bailouts. His argument: Let tired old companies that do commodity manufacturing die if they have to. If Washington really wants to create jobs, he wrote, it should back startups.

Mythical Moment.

Friedman is wrong. Startups are a wonderful thing, but they cannot by themselves increase tech employment. Equally important is what comes after that mythical moment of creation in the garage, as technology goes from prototype to mass production. This is the phase where companies scale up. They work out design details, figure out how to make things affordably, build factories, and hire people by the thousands. Scaling is hard work but necessary to make innovation matter. The scaling process is no longer happening in the U.S. And as long as that’s the case, plowing capital into young companies that build their factories elsewhere will continue to yield a bad return in terms of American jobs. Scaling used to work well in Silicon Valley. Entrepreneurs came up with an invention. Investors gave them money to build their business. If the founders and their investors were lucky, the company grew and had an initial public offering, which brought in money that financed further growth.

Intel Startup

I am fortunate to have lived through one such example. In 1968, two well-known technologists and their investor friends anted up $3 million to start Intel Corp., making memory chips for the computer industry. From the beginning, we had to figure out how to make our chips in volume. We had to build factories; hire, train and retain employees; establish relationships with suppliers; and sort out a million other things before Intel could become a billion-dollar company. Three years later, it went public and grew to be one of the biggest technology companies in the world. By 1980, which was 10 years after our IPO, about 13,000 people worked for Intel in the U.S. Not far from Intel’s headquarters in Santa Clara, California, other companies developed. Tandem Computers Inc. went through a similar process, then Sun Microsystems Inc., Cisco Systems Inc., Netscape Communications Corp., and on and on. Some companies died along the way or were absorbed by others, but each survivor added to the complex technological ecosystem that came to be called Silicon Valley. As time passed, wages and health-care costs rose in the U.S., and China opened up. American companies discovered they could have their manufacturing and even their engineering done cheaper overseas. When they did so, margins improved. Management was happy, and so were stockholders. Growth continued, even more profitably. But the job machine began sputtering.

U.S. Versus China

Today, manufacturing employment in the U.S. computer industry is about 166,000 — lower than it was before the first personal computer, the MITS Altair 2800, was assembled in 1975. Meanwhile, a very effective computer-manufacturing industry has emerged in Asia, employing about 1.5 million workers — factory employees, engineers and managers. The largest of these companies is Hon Hai Precision Industry Co., also known as Foxconn. The company has grown at an astounding rate, first in Taiwan and later in China. Its revenue last year was $62 billion, larger than Apple Inc., Microsoft Corp., Dell Inc. or Intel. Foxconn employs more than 800,000 people, more than the combined worldwide head count of Apple, Dell, Microsoft, Hewlett-Packard Co., Intel and Sony Corp.

10-to-1 Ratio

Until a recent spate of suicides at Foxconn’s giant factory complex in Shenzhen, China, few Americans had heard of the company. But most know the products it makes: computers for Dell and HP, Nokia Oyj cell phones, Microsoft Xbox 360 consoles, Intel motherboards, and countless other familiar gadgets. Some 250,000 Foxconn employees in southern China produce Apple’s products. Apple, meanwhile, has about 25,000 employees in the U.S. — that means for every Apple worker in the U.S. there are 10 people in China working on iMacs, iPods and iPhones. The same roughly 10-to-1 relationship holds for Dell, disk-drive maker Seagate Technology, and other U.S. tech companies… (more on the Bloomberg article)

A great man has just disappeared.

Start-Up, a culture of innovation

Leave a reply

I just published a very short essay. A summary of my activity in the start-up world: “Almost 10 years ago, I wrote a book entitled Start-up, what we may still learn from Silicon Valley. If I had to do a second edition, I don’t think I’d change much despite all the flaws and blunders of the exercise. Yet one morning in February 2016, I had a look at ten years of supporting start-up entrepreneurs and decided to send again old and also new messages to those that the world of innovation and high-tech entrepreneurship puzzles or interests.”

It is also available in French. If you wish to obtain a pdf copy of the books, just send me an email!