Category Archives: Silicon Valley and Europe

The Startup Kids – a film that any wannabe founder should watch!

Leave a reply

Movies may become a better way to communicate about start-ups & entrepreneurship than books or blogs. It’s something Neil Rimer had told me when I published my book. It is true there has been a number of new features in fiction (The Social Network, Jobs) and non-fiction (SomethingVentured) recently without a need to mention old stuff such as Triumph of the Nerds Silicon Valley Pirates and special events on television such as PBS.

Startup Kids belong to this new trend and it is an interesting (and fun) document. You may watch the trailer here and I will quote a few entrepreneurs thereafter. The document had been mentioned to me by colleagues (merci Corine ) who showed it to me, including the very good blog article of Sébastien Flury: The Startup Kids – a film that any wannabe founder should watch! (whom title I used, nice Sébastien 🙂 )

What’s entrepreneurship?

StartupKids-Houston
Drew Houston, Dropbox: “It’s like jumping out of a cliff and having to build your own parachute”

StartupKids-Segerstrale
Kristian Segerstrale, Playfish: “An entrepreneur is a person who dares to have a dream that not many people have and even more important dares to chase it, put their money where their mouth is and their time and their career and dares to take the risk to going out there to realize that vision.”

StartupKids-Ljung
Alexandre Ljung, SoundCloud (from Sweden and based in Berlin and San Francisco): “I did not have the typical entrepreneur background, […] but in hindsight I was very focused on projects so I was very entrepreneurial but not in a business sense.”

In European Founders at Work, his co-founder Eric Wahlforss states “I think we could have easily done this in one year faster if we would have been a little bit more bold and thinking a little bit more in terms of scale early on. We started out very small, had almost no money at all, and a very small team. I think we could have been bolder. […] and running with a bigger vision from the start.” And then “Do it.” It’s the best decision I’ve ever done in my whole life. […] And I was studying engineering as well, and I had one hundred classmates. And I know that almost zero of them actually went on to start a company, which is kind of crazy because I know a lot of them have good ideas. But none of them quite felt that they were able to pull it off.

Luck is an important topic in the movie

Segerstrale again: “Successful start-ups need a lot of things, they need a great idea, they need a great team, they need to be there at the right time, they need the right level of funding, and they need a lot of luck.”

StartupKids-Draper
Tim Draper, founder and investor, DFJ: “There is a lot of luck in the success of all the companies which have succeeded. You need a lot of luck, there were 25 search engines funded before Google was funded. There was Friendster and LinkedIn and MySpace and about 50 others before facebook became the big winner in that area.” [And it was the same with computer companies in the 80s!]

StartupKids-Klein
Finally do not miss Zach Klein (founder of Vimeo) in his beautiful wood cabin which reminds me of Thoreau’s Walden.

Stanford will invest in companies founded by students

Leave a reply

“The prestigious American university Stanford will now invest in start-ups.” Thus begins an article in the newspaper Le Monde. The author, Jerome Marin, is rather negative about this decision, as the following quote shows: “The confusion is fueled even at the top of the university: the president has close ties with several giants of Silicon Valley, including Google as it is a member of the Board.” Without trying to argue, I think the reporter is misled.

Stanford va investir

But before I give you my point of view , I’d like to mention that I looked for other articles related to the topic, I found at least two :
– That of TechCrunch, close in spirit to Le Monde’s one, Stanford University Is Going To Invest In Student Startups Like A VC Firm. The article is also critical but I think better informed… and it also deals with the tension between the academic and business worlds. “That tension between academia and industry was highlighted this past spring when a number of students dropped out of school to start Clinkle”.
with references to another New Yorker article.
– The press release by Stanford University, StartX, Stanford University and Stanford Hospital & Clinics announce $3.6M grant and venture fund. If you read the statement carefully, it is about a gift from Stanford to StartX and a joint Stanford-StartX fund. StartX is an accelerator created by Stanford students and I understand that the University therefore supports this initiative. There is no mention, however, of a fund managed by Stanford as a VC fund.

The reason I think the reporter is mistaken is when he says that “Stanford will invest in companies created by its students”. As if it was new. Even if I agree that the stakes taken in start-ups in exchange for licensing of intellectual property is not an investment per se, Stanford still has acquired stakes in more than 170 of its spin-offs in the past . In addition the Stanford endowment has invested on an individual basis in many start-ups in the past (not to mention in many VC funds). For example, I found in a database I am building on Stanford-related companies, that Stanford invested in Aion (1984), Convergent (1980), Gemfire (1995), Metreo (2000), Tensilica (1998). Website LinkSv mentions Stanford invested in 143 companies. [I am aware there might be some confusion between investor and shareholder, so the topic remains somehow confusing].

Finally, in the 2000s, the Office of Technology Transfer at Stanford managed two funds, the Birdseed Fund (for amounts of $5k to $25k) and the Gap Fund ($25k to $250k) as shown the 2002 OTL annual report.

It is not at all new that Stanford invests in its start-ups. There has also always been tension, let’s do not deny it either. A little-known example of Cisco-Stanford early relationship. So nothing new under the sun. But you will not be surprised if I add that the overall result seems (is) extremely positive for all stakeholders, the university (including in its academic dimension), individuals, start-ups and the economy in general.

The Capital Sins of Silicon Valley

1 Reply

People who are close to me are sometimes (often?) tired of my enthusiasm for Silicon Valley. It is well known that the creative energy in innovation is quite unique and the resulting value creation pretty huge. This energy is contagious and as Steve Jobs said: “[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 openminded 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.” A paradise? That’s a nice question! I will try to address the maybe lesser-known dark sides of the region.

google-offices
All those office perks come with strings attached. Reuters/Erin Siegal
from Those cool Silicon Valley offices? More like secretly evil empires

Single-minded devotion to self-interest

The topic is not new. In 1984, the authors of Silicon Valley Fever devoted two chapters to the difficulties of the region, one is entitled “Lifestyles” and the other “Troubles in paradise”. On page 184, they say: “In the 1980s, cracks began to appear” and concluded (page 202) that “perhaps the greatest threat of all is the single-minded devotion to self-interest at the expense of the common good. ”

I think this is the most serious problem in Silicon Valley. In a recent article in the Nouvel Observateur, The hidden face of the oligarchs of the net, Natacha Tatu is critical of the wealthy entrepreneurs who “sometimes become rich against the American interests.” In fact, the large technology companies (Intel, Oracle, Google, Apple, etc.) have made real war chests outside the U.S. and prefer not to repatriate them to avoid paying the taxes they consider excessive. “The effective tax rate of the high-tech giants was only 16% in 2011. At this game, the champion is Amazon, which taxes amounted to only 3.5% of its earnings in 2011, followed by Xerox (7.3%) and Apple (9.8%)”, according to BFM TV in How Google, Apple & Co use tax havens. Furthermore, “in 2004, George W. Bush, magnanimous, had given such a “tax holliday” – the repatriated profits were taxed at only 5% instead of 35% -, that HP took the opportunity to repatriate $16 billion, IBM 12 billion, Intel 7.6 billion, Oracle 3.3 billion, and Microsoft 1 billion.” This tax selfishness may partly explain the poor infrastructure (public transportation, low quality highways, schools, health services); this is a typical American vice that is not unique to Silicon Valley. The fact remains that the gap between the wealth of the region and poverty in the public system is more extreme.

A very expensive area with large inequalities

I quote now Chris Schrader in What’s The Dark Side Of Silicon Valley? “The amount of wealth in the area has driven up home prices near the places where the jobs are to astronomical levels.” If we add the cost of health and education, living in Silicon Valley is a nightmare if you do not have comfortable income. I do not even talk about the “working poors” whose situation is more difficult admitting that their situation is legal. Not to mention either that much of the production is outsourced to emerging countries where working conditions are even more difficult. Needless to return to the example of Foxconn in China that provides the bulk of Apple products.

Workaholics

This is known. In Silicon Valley, people work a lot. Not just for the money, no doubt, but the material considerations seem to be the only common concern to everybody. This is probably the consequence of this devotion to self-interest as much as of the cost of living. In order to pay for home, health care and education, you have to work a lot. But it goes further, and this is probably linked to the Protestant ethics and culture as well as to the pursuit of wealth that startups give hope to. Social life is sacrificed and I remember that many students at Stanford thought only of their education, which is a little sad…

This geek culture does not help in making Silicon Valley a balanced society. Discrimination and inequality remain strong. Noyce, the founder of Intel, was afraid of the unions and thought their arrival in a company were killing business. Undeclared work exists and working conditions are not nearly as idyllic as is sometimes described. More simply, the behaviors are often arrogant, hypocritical and superficial.

A deteriorated quality of life

The authors of Silicon Valley Fever mention some negative consequences of the points above: the lack of free time has obviously negative impact on family life, which is sacrificed at the altar of hard work. Little vacation, little curiosity too. In addition to degraded life conditions related to stress and a high divorce rate, these financial constraints induce a struggling transportation system since people generally work far away from home. Traffic jams are so unreasonable that Chris Schrader said, “I have to establish my schedule based on commute traffic which typically has me out of the house well before 7 am and many times back home by about 8pm. Leaving work at 5pm simply doesn’t make sense, because I would get home at the exact same time if I left at 7pm.” I’m not even talking about public transportation which is almost non-existent compared to European cities or even the metropolitan areas on the East Coast of the United States.

Security is not such an important topic in the Bay Area, but there are significant pockets of insecurity in East Palo Alto and Oakland. I’ll let you see the picture I took a few years ago. Again this is a more general American issue.

DSC00860

A poor socio-cultural life

Contrary to the statements by Steve Jobs I quoted earlier, Silicon Valley does not shine by its cultural life. Few major artists (compared to the wealth of the region). Athens, Rome, Florence in the distant past or Paris, London, Vienna and New York today did much better at their peak. No major museum in the region. No major figure in the political or social life despite two major universities. If you go to New York, Washington, Chicago or Los Angeles, I’m pretty sure that you’ll find a richer cultural life.

A herd mentality

I am far from having a complete list of negative elements in the region, but I will finish with a point that certainly creates a lot of frustration for innovators and creators. The fashions and trends are so strong that it is difficult to express oneself or worse succeed if one swims against the current. This “herd mentality” implies that one rarely listens to those who come up with ideas seemingly farfetched. Even the Google founders had struggled several months to convince anyone. More recently Elon Musk dit not use for Tesla Motors the usual Silicon Valley investors to finance his dream of electric vehicles; however, he has become the latest darling of the region. In the late 90s, it was the dotcom bubble, today, you need to be in social media. Innovation is much broader, but the money is flowing though in dozens of similar and often less innovative projects… Employees in start-ups follow the same trends and have no attachment or loyalty to their employers. This has probably some good sides (employees can negotiate for example, companies need to do their best to retain talent), but the superficiality of social relations in general can be problematic.

I do not in any way deny my enthusiasm for Silicon Valley which remains in my mind one of the most dynamic and creative regions in the world. I found inspiration and enthusiasm at critical moments of my life and the beauty of the surrounding nature, the enthusiasm (even if artificial) of the population and the sweetness of life (if you can afford it) make the region much enjoyable and exciting. It does not mean it is a paradise and there is clearly room for improvement.

In Innovation Quest, Regions Seek Critical Mass

Leave a reply

Very good article by the MIT technology review about technology clusters: In Innovation Quest, Regions Seek Critical Mass. Nothing really new, but it shows again and again how difficult it is to build such clusters and to promote an innovation culture. I just extract a few quotes:

“Clusters exist—it’s empirically proven,” Yasuyuki Motoyama, a senior scholar at the Kauffman Foundation, told me. “But that doesn’t mean governments can create one.”

The problem for governments is that they often try to define where and when innovation will occur. Some attempt to pick and fund winning companies. Such efforts have rarely worked well, says Josh Lerner, a professor at Harvard Business School. Governments can play a role, he says, but they should limit themselves mostly to “setting the table”: create laws that don’t penalize failed entrepreneurs, reduce taxes, and spend heavily on R&D. Then get out of the way.

But can entrepreneurs succeed in creating clusters where governments have had so much difficulty? “The conflict now is between two logics on how to create an ecosystem,” says Fiona Murray, a professor at MIT’s Sloan School, who consults as a kind of therapist to clusters, including London’s TechCity. One is “a government logic that says it’s too important to leave to entrepreneurs, and that you that need specialized inputs, like a technology park.” The other is “purely focused on people and their networks.” Murray believes the answer lies somewhere in the middle. Governments are good at organizing but poor at leading.

I will finsih by reminding you the power of SV in the cluster leadership…

WinnerTakesAll

AnnaLee Saxenian, Migration, Silicon Valley, and Entrepreneurship.

Leave a reply

Shame on me! How is it possible I mention so little AnnaLee Saxenian in this blog, as well as the importance of migrants in entrepreneurship? I had shortly mentioned Regional Advantage in Silicon Valley – more of the same?, but this was more about the openness of Silicon Valley culture and why it did a better job than the Boston area.

It might be because migration was a big feature of my book and nothing new came out thereafter even if the topic is of utmost importance. So let me address the topic of Immigrants again now. In her second book, published in 2006, The New Argonauts: Regional Advantage in a Global Economy Saxenian analyzed the importance of migrants in high-tech entrepreneurship, both for the USA and for the countries of origin of these migrants.

Saxeninan-TheNewArgonauts

In a related paper, she had written: “In the United States, discussions of the immigration of scientists and engineers have focused primarily on the extent to which foreign-born professionals displace native workers. The view from sending countries, by contrast, has been that the emigration of highly skilled personnel to the United States represents a big economic loss, a brain drain. Neither view is adequate in today’s global economy. Far from simply replacing native workers, foreign-born engineers are starting new businesses and generating jobs and wealth at least as fast as their U.S. counterparts. And the dynamism of emerging regions in Asia and elsewhere now draws skilled immigrants homeward. Even when they choose not to return home, they are serving as middlemen linking businesses in the United States with those in distant regions.” [Brain Circulation: How High-Skill Immigration Makes Everyone Better Off – 2002 – http://www.brookings.edu/research/articles/2002/12/winter-immigration-saxenian] In the end, she added: “Essentially, the new argonauts are people who have learned the Silicon Valley model, usually by doing graduate work in the U.S. and getting absorbed into the Silicon Valley boom. They marinated in the Silicon Valley culture and learned it. This really began in the late ‘80s for the Israelis and Taiwanese, and not until the late ‘90s or even the beginning of the ‘00s for the Indians and Chinese. They began to realize that they could take advantage of their own personal networks in their home countries to provide skill that was scarce in the Valley, and that they could even go home and start businesses there that would tap their old networks. Usually, they were going home and tapping their undergraduate colleagues or their friends from the military, in the case of Israel. They knew and they understood how to work the institutions and the culture of those places, often the language too, better than anyone else in the world.”

From the New Argonauts, I will take only two small paragraphs: “Graduating classes from the elite engineering program at National Taiwan University, for example, came to the United States in the 1980s, as did a majority of engineering and computer science graduates from the prestigious Indian Institutes of Technology. Technical universities from smaller countries like Ireland and Israel also report large proportions of graduates leaving to study in the United States, although their numbers are too small to show up in the aggregate data. [Page 50]

Now the depressing argument! “The technical elite in countries like France and Japan move automatically into high-status positions at the top of the large corporations or the civil service. They have little incentive to study or work abroad, and often face significant opportunity costs if they do. As a result, relatively few pursue graduate education in the United States, and those who do often return home directly after graduation. Those who end up in Silicon Valley for a period are not likely to gain access to capital, professional opportunities, or respect when they return home.” [Page 333]

Saxenian has a long history on the topic. She began in 1999 when she published Silicon Valley’s New Immigrant Entrepreneurs. In two related studies, Saxenian and colleagues had a much deeper quantitative analysis. These were America’s New Immigrant Entrepreneurs in 2007 by Vivek Wadhwa, AnnaLee Saxenian, Ben Rissing, and Gary Gereffi; it was updated in 2012 in America’s New Immigrant Entrepreneurs: – Then and Now written by Vivek Wadhwa, AnnaLee Saxenian and F. Daniel Siciliano.

America-New-Immigrants

There is one table I had used in my book which I found striking: Europe has many Silicon Valley migrants as shown below. But we have not been capable (yet) of using them fruitfully as Asia did. We only begin…
Europe sees the value of migration (still only one way, attracting talent) and hopefully we will benefit from accepting the lessons…

Venture Capital in Europe and in the USA

Leave a reply

A very short note on an excellent presentation by Jean-David Chamboredon, partner with ISAI fund, entitled Funding Innovation in Europe. I particularly liked two slides that show the success rate of investment in a start-up, and the other one addressing a subject that is dear to me, the comparison of VC in Europe and the USA. Thank you to my colleague Marie-Laure for mentioning this study have me 🙂

ISAI-VCreturns

ISAI-USvsEU

The Swiss innovation model: is it the best?

3 Replies

Very interesting presentation by the newspaper Le Temps and Xavier Comtesse about innovation in Switzerland (compared to the USA). (Thanks to Pascal for giving me the link :-)). The article is entitled The Swiss innovation model is it the best? (Same document on Prezi)

Prezi-SwissInnovation

Before you view or read the content of the contribution by Comtesse, here is my reaction: it is indeed an excellent analysis, but the conclusion can be misleading! One could get the impression that the U.S. does not have large innovative companies like Switzerland has with Novartis, Roche or Nestlé. But I fear that it is a misleading view. The U.S. does not have that start-ups only and our are not growing. Not to forget, the topic of job creation, see Job creation: who’s right? Grove or Kauffman

Now here is a summary translated from Prezi: For several years, Switzerland has been at the top of the world rankings for innovation, this was not always the case especially during the 90s. So … Are we better than Silicon Valley?

Silicon Valley has developed a model in 8 strengths
– Excellent local university system
– Transfer of knowledge to the economy – technoloy parks, coaching, awards, etc..
– Powerful venture capital
– Start-ups that grow quickly and innovate in disruptive fields
– An effective IPO or M&A market (Exit Strategy)
– Large expenditures in R&D
– A high rate of patents per capita
– A strong entrepreneurial spirit per inhabitant

The 7 strong points of the Swiss model: Switzerland has a very different system of innovation from Silicon Valley but ultimately just as effective, especially for large companies.
– No federal masterplan for Innovation
– A concentration in life sciences
– A innovation driven by large companies
– Incremental innovation more than disruptive
– A quality education at all levels
– Framework conditions very favorable to the economy
– A high performance system of transfer of knowledge / technology

What are the strengths and weaknesses of Switzerland?
– Yes, our universities are excellent:
More than half of young Swiss university follow the one hundred best universities in the world, no country has such a result
– No, the Venture Capital industry is very low in Switzerland:
Switzerland underperformed largely in the area of ​​venture capital (investment in Switzerland in 2011: 737 Million for USA 29,500 million).
– No, our start-ups do not grow fast enough:
The excellent survival rate is suspect, this means that start-ups are protected by the academic system or federal funding
– No, there is little IPO in Switzerland:
A small number of IPO (Initial Public Offering) shows weak growth start-ups or SMEs in Switzerland
– Yes, private R&D is very important but for large firms rather than in SMEs:
The share of the private sector is very important in Switzerland, particularly in the life sciences (pharma, biotech and medtech, etc.).
– Yes, we file a lot of patents:
but again it is primarily large enterprises, the proportion of patents is very important in Switzerland, this is partly due to the strong presence of very large firms
– No, the Swiss create firms twice less than the US:
the ntrepreneurial culture is very strong in the U.S., more than double that in Europe,
– Yes, the general conditions of business creation are very favorable:
Switzerland does better than innovative small countries such as Finland, Sweden and Israel
– Yes, technology transfer takes place in Switzerland:
Switzerland has fifty incubators, TechnoParks or other transfer centers Switzerland Silicon Valley

These two models as we have seen are very different. They work well both but the objective differences do not make possible to compare them as is done ll too often, especially in the field of start-ups …

Safe choices aren’t always good choices

1 Reply

I am reading I’M Feeling Lucky – Falling On My Feet in Silicon Valley by Douglas Edwards. I thought it might be just another book about Google. It is not. The lessons are amazing. And I will come back with many things I liked. One deserves a full article, and it is about “Safe choices aren’t always good choices”. The story is covered on pages 256-258.

When Google finally recognized its failure in implementing a CRM software to manage customer emails, “composing a list of CRM vendors didn’t take long. Fewer than half a dozen major players offered stable, well-tested systems. […] Larry has a college friend, David, who would advise us on desirable features and then added, by the way, he and a buddy were building a CRM product called Trakken. […] Interested? Interested in an untested CRM product still in development with one tiny client? Sure that’s just what I was looking for – another risky technology with no support and no track record behind it. I thanked David for his help and, because he was a friend of Larry, assured him we’d be happy to send him our request for proposal. [Meanwhile they analyzed established players.] I felt confident I could convince Larry and Sergey to loosen the purse strings and do it right this time: spend money for a high-quality, stable system from a respected vendor. I hoped Larry’s friend had taken the hint and forgotten about us. [He had not] I didn’t want him to complain to Larry when his hopes were dashed. I decided to head him off at the pass by talking to Larry myself. “Actually,” Larry recommended “you should hire these guys. They’re really smart. They’ll work hard to build the product and we can invest in their company. […] They’ll be very responsive.” I could say I was stunned, outraged, incredulous, but that would be an understatement. I couldn’t believe Larry was going cheap again instead of buying reliability. When I informed the other vendors, they thought I was either corrupt or an idiot. […] “If you can believe you can build an email tool like resembling ours in thirty days, you are mistaken. It has taken us four years and twelve hundred customers.” […] I’d still be cursing Larry’s decision today if not for one small thing: Larry was absolutely right. […] Within a couple of months we had the CRM system we wanted built to our specs, fully stable and intuitive to use. […] So what did I learn from all this? I learned that obvious solutions are not the only ones and “safe” choices aren’t always good choices. I had thought that due diligence meant finding the product most people relied on, then putting pressure on the vendor to cut the price. It never occurred to me to talk to Larry not to do that. We had different tolerances for risk and different ideas about what two smart people working alone could accomplish in a complex technical area – and that is why I spent seven years working in mainstream media while Larry found a partner and founded his own company. Two smart guys working on complex technical problems, it turns out, can accomplish a hell of a lot.

Failure is a learning experience

Leave a reply

This is my third article in the journal Entreprise Romande (and thank you to them for editing my work and for the opportunity given to talk about topics that are dear to me.)

Every entrepreneur knows that failure is an integral part of business: a contract breach, a lost customer, a unsatisfactory hire… So why is failure so stigmatized in the European culture, and especially in Switzerland? Freeman Dyson, ths famous physicist explains it more clearly: “You can’t possibly get a good technology going without an enormous number of failures. It’s a universal rule. If you look at bicycles, there were thousands of weird models built and tried before they found the one that really worked. You could never design a bicycle theoretically. Even now, after we’ve been building them for 100 years, it’s very difficult to understand just why a bicycle works – it’s even difficult to formulate it as a mathematical problem. But just by trial and error, we found out how to do it, and the error was essential.” The example of the bicycle is just perfect: who would blame a young child for his multiple drops wjile learning who to ride it?

FAILURE AND CREATIVITY

Silicon Valley is known for its tolerance for failure, which, far from being a stigma, is even valued. “In Silicon Valley, if we had not tolerated failure, we would not be able to take risks and we would have many fewer entrepreneurs than we have today. If you fail for good reasons, that is to say almost all, except to be corrupt, stupid or lazy, then you have learned something that will make you more useful,” says Randy Komisar, based in Silicon Valley, as are the other people mentioned in this article. “You’d be amazed at how many investors prefer to back someone who has tasted the bitter fruits of failure. In failing you learn what not to do. Get your skin in the game and there is no failure—you have opened your mind to growth and yourself to reinvention,” adds Larry Marshall.

The fear of failure has deep roots. The school system encourages the child not to try or say anything if she does not know the answer rather than testing hypotheses, for fear of reprimand. Experimentation, creativity, the “process of trial and error”, are never quite encouraged in favor of more rational disciplines. “Indeed, we have psychological and intellectual difficulties with trial and error and with accepting that series of small failures are necessary in life. “You need to love to lose”. In fact the reason I felt immediately at home in America is precisely because the American culture encourages the process of failure, unlike the cultures of Europe and Asia where failure is met with stigma and embarrassment”, says Nicolas Taleb, essayist of Lebanese origin and writer of The Black Swan.

The European start-ups do not fail! Their survival rate is 90% after 5 years of existence. But is it good news? In the first months of Google,co- its founder Larry Page considered a success rate of 70% of individual projects was ideal. Asking for more, “we would take too few risks.” And failure is so digested that Americans have created the FailCon (a conference on failure) in 2009. By sharing their experience of failure in public (because failure is still a taboo even in the United States), participants learn from their peers and leave strengthened. The famous entrepreneur and investor Vinod Khosla admitted to have failed more often than he was successful. “Failure is not desirable, it is just part of the system, and it is high time to accept it.” Would this explain why we do not create any Google Switzerland and Europe?

PREPARING FOR SUCCESS

Nevertheless, the failure will always be unpredictable. “Of course, business, just as life, is never a smooth curve. Failure can come as quickly, and more unexpectedly, as success. But true success is management of failure. Every time you hit a bad patch you must be able turn your fortunes around. That’s why it’s important to be always prepared for failure and build strong teams. To be a successful entrepreneur, venture capitalist or philanthropist, you must bring together people who know there will be problems, love to solve problems, and can work well as a team.” … “It reminds me not to be too proud. I celebrate failure — it can temper your character and pave the way for great achievement.” notices Kamran Elahian.

So, should we be not afraid to fail? A short and most moving answer comes from Steve Jobs, who – we must not forget – failed to grow Apple in the 1980s: “I didn’t see it then, but it turned out that getting fired from Apple was the best thing that could have ever happened to me. The heaviness of being successful was replaced by the lightness of being a beginner again, less sure about everything. It freed me to enter one of the most creative periods of my life.” And even better: “Remembering that I’ll be dead soon is the most important tool I’ve ever encountered to help me make the big choices in life. Because almost everything — all external expectations, all pride, all fear of embarrassment or failure – these things just fall away in the face of death, leaving only what is truly important. Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart.”

When will a FailCon be organized in Switzerland?

A Chinese student introduced me to a few years ago the following proverb: “Shi Nai Bai Zhi Gong Cheng Mu”, which means “failure is the mother of success.” Asia might learn perhaps faster than Europe this important concept.

New rankings of the best technology clusters: the USA still leads.

1 Reply

There are so many articles, studies about technology clusters or ecosystems that I am not sure exactly why I write this. The only explanation is that I have read a couple of simultaneous studies, all mostly going in the same direction. Whereas there’s been a trend claiming the decline of the USA in favor of Asia or predicting the decline of Silicon Valle (SV), these ones show the opposite: the USA still leads, and among the American clusters, Silicon Valley is by far #1.

The first study is the Startup Ecosystem Report 2012 by the StartupGenome. You can read for example what techCrunhc says about it: Startup Genome Ranks The World’s Top Startup Ecosystems: Silicon Valley, Tel Aviv & L.A. Lead The Way.
The following table was kind of a surprise to me, not because SV is leading (this has been obvious for me for many years), but because Boston is #6 only.

I read the report and changed the ranking method with their own data and got the following new graph. I basically weighted all parameters (Output, Funding, Performance, Mindset, Support, Talent, Trendsetter, Differentiation to SV) on the horizontal axis, but deleted the last two ones on the vertical axis as I was not convinced about their role. It obviously shows there is a lot of subjectivity in rankings! The only thing which does not seem to be debatable is that SV is number 1.

There’s been another interest study: Ecosystem 101: The Six Necessary Categories To Build The Next Silicon Valley. It’s a good complement to the Startup Genome work, which is weak on Asia. The criteria here are Market, Capital, People, Culture, Infrastructure and Regulations. Again the USA leads, but weakness here is that we do not have a more detailed description of local clusters.

Finally, there’s been a strange analysis comparing US universities, whowing that Stanford leads and MIT is not even number 2. This is about VC money. The University Entrepreneurship Report – Alumni of Top Universities Rake in $12.6 Billion Across 559 Deals

Well, Silicon Valley might be declining, btu my feeling is it will be a long time before it loses its #1 position…