What to expect from an investor?

Leave a reply

I am again taking advantage of the questions asked to me to write a post (after the one on the impact of the personality of founders on the success of startups). I could have titled this post “what do investors expect?”, I look here at both subjects.This time, I even copy a part of the message I received:

Context: Just to share with you the dynamics of investors (very early stage) who look at my project. I have received 10+ requests, sometimes from investors who want to make an initial contact call (to follow developments in typically 6 months). Some display their investment thesis upfront (sometimes stratospheric expectations). I try not to waste too much time with such requests, to focus on my product (and Product-Market-Fit – PMF, *the priority*!), but what do you think of this typology of investors? Very early, who favor the blank page vs. PMF but with enormous expectations (100x potential ROI).
(I know that several entrepreneurs are experiencing a bit of the same thing at the moment). I can’t imagine how a founder can calmly seek his or her PMF having onboarded this type of VC and under their pressure (100x and not 10 or 20x!)…
Questions :
1) Are they intrinsically better or worse than more “common” funders (5x-7x under ~5 years, or 10x under 7-10 years)? (I’m exaggerating on purpose, of course).
2) The less-pressing alternative would be a collection exclusively made up of BAs and/or BA-Networks, but does the absence of institutional SEED investors send a bad signal to VCs? A sign of too little ambition? A potential lack of initial attractiveness?
3) There is a strong trend towards “leaner startups” which give less and less equity in pre-seed / seed (including to YC). However, institutional investors often want a double-digit equity share. What is your vision/experience in European VCs? Is leaner (equity shared) better or less attractive? Many startups (even at YC) do not give more than 10% of total equity across the SEED round (+ the initial 7% from YC, or other more or less equivalent SAFEs).

I answered a little quickly like this and I’m going to add a little more, notably a new update: an update of my pdf of cap tables, which includes more than 900 companies now…

This is a true wrong question! But I’m not an entrepreneur, I’m a mentor!
The main thing is the added value of your investor in two dimensions:
– the amount invested,
– the quality of advice.
We could almost say that if one of the two dimensions is zero then the other must be very high, and we can therefore accept that one is weak.
You dream of having a renowned VC or BA (her name and her credibility), this undoubtedly has a price!
Then the lower the amount, the greater the expected multiple. If you put 10k you hope to make x1000, if you put 100K you hope to make x100 if you put 1M you hope to make x10.
In reality it’s more a question of stage, in series D, E, F, it’s probably 2x-3x, in A, B it’s 10x, in seed, it’s 100x, in pre-seed it’s 1000x
– Google had David Cheriton and Andy Bechtolsheim as BAs, they put in 100k, I think they made 400M…
– Sequoia and KP put in $12M and made $2B
(see page 47 of the pdf, $85/$0.06 and $85/$0.52 for the multiples at the IPO but they sold at least six months later and I think it was worth at least 3x or 4x more)
On the last point, it’s not easy either, but Stanford had around 2% of Google at the time of creation, which is unusually low and it is paradoxically their biggest grain, we can see the diversity of criteria.

So let me add a couple of points. I thought Paul Graham (YCombinator) would have provided answers on his blog paulgraham.com but did not find an answer. Howver he keeps on writing great things like:
– How to start Google (March 2024) https://paulgraham.com/google.html
– Superlinear returns (October 2023) https://paulgraham.com/superlinear.html

The two figures that follow illustrate the explanations above. The pdf therefore gives more than 900 cap tables which can illustrate the diversity of multiples (theoretical at the IPO).
Finally, it is still quite rare for an investor to contact an entrepreneur directly (even if it can also happen). The contact is rather established by a third party who knows both the entrepreneur and the institutional investor, for example the Business Angel or the mentor…

Finally, the percentage given in return for an investment is not linear either. It depends on the stage of development of the company of course but on the amount itself!
– for 100k, we typically give 5-15%,
– for 1M it’s more like 40%,
– for 10M and more we fall back to amounts of around 10%.
This may seem counterintuitive and it shows that the percentages are not the result of accounting but of negotiations.
I add two recent French startup cap tables, Mistral AI and H.ai which show that exceptional fundraising leads to exceptional valuations and therefore unusual percentages. These were built with assumptions given my media or data from company documents.

The BA, business angel, is a wealthy individual who invests his own money (generally at least 100k per startup). Below we are talking more about F&F – Friends & Family.
VC (venture capital) invests third party money (pension funds, companies, banks, insurance companies, very wealthy individuals) generally with a minimum of 1 million per startup.
PE, private equity, is an institutional investment firm which takes less risk (even if the companies are not listed but generally profitable or with stable turnover). They invest large amounts but do not expect returns on investment as high as the VC.

Equity_List-Herve_Lebret-June_2024

The Science of Startups: The Impact of Founder Personalities on Company Success

Leave a reply

When a young colleague of mine (thanks Amine!) mentioned a paper entitled The Science of Startups: The Impact of Founder Personalities on Company Success, I was intrigued not to say interested. You can find the version published on Nature here and the one on arXiv there.

When I look back on the 741 articles of this blog, 118 are tagged with founders, coming only second after Silicon Valley. Most of them deal with facts and figures but 38 mention the term personality. For example:
– Knowledge, skills and personality of entrepreneurs (dated March 2021) https://www.startup-book.com/2021/03/19/knowledge-skills-and-personality-of-entrepreneurs/ where it is claimed “There’s an entrepreneurial character.”
– The Founder’s Dilemmas – The Answer is “It depends!” (dated December 2013) https://www.startup-book.com/2013/12/12/the-founders-dilemmas-the-answer-is-it-depends/ where the claim is “There are no real pattern in becoming a founder (age, experience, childhood influences, personality, family status, economic status), however early influences and natural motivations seem to be important.”
– Larry Page and Peter Thiel – 2 (different?) Icons of Silicon Valley (date October 2021) https://www.startup-book.com/2021/10/30/larry-page-and-peter-thiel-2 -différentes-icônes-de-la-silicon-valley/
and I would advise anyone interested in the topic to read the book Founders at Work. I put my long notes about this great book at the end of this post.

This new article is long and a little complex. So I just took notes directly in the text and paste them here. But the article is worth reading if you have the time and interested.

Attention has increasingly considered internal factors relating to the firm’s founding team, including their previous experiences and failures, their centrality in a global network of other founders and investors as well as the team’s size. […] The effects of founders’ personalities on the success of new ventures are mainly unknown. […] Here we show that founder personality traits are a significant feature of a firm’s ultimate success.

[…]

Key personality facets that distinguish successful entrepreneurs include a preference for variety, novelty and starting new things (openness to adventure), like being the centre of attention (lower levels of modesty) and being exuberant (higher activity levels). However, we do not find one Founder-type personality; instead, six different personality types appear, with startups founded by a “Hipster, Hacker and Hustler” being twice as likely to succeed. Our results also demonstrate the benefits of larger, personality-diverse teams in startups.

[…]

In this article, we analyse a variety of firm-level, founder-level and founder-team-level determinants of the success of startups, which are by their very nature experimental, high risk and likely to fail.
Firstly, we examine a range of firm-level determinants of startup success, including location, industry and age of startup to explore to what extent these factors are associated with success. Then building on our previous occupation-personality fit research, we use a large collection of public data on startup companies from Crunchbase to examine the detailed personality profiles of founders.

[…]

Firm-Level Factors of Startup Success. On a country level, chances for success are highest in the US, Japan, West Europe, and Scandinavian countries. Firms from the payment and software industries have high chances of success. Chances of success are positively related to a firm’s maturity, with firms that are seven years or older having higher chances of success.

[…]

Does the combination of founders and their personalities play a role in startup success, and is there any evidence to support the commonly held view in the venture capital investment community that startups require three types of founders: a Hacker, a Hustler and a Hipster?

[…]

In technology, the categorical roles of Hackers (skillful computer programmers and developers) and Hustlers (entrepreneurial leaders able to win over customers and investors to new
products and ideas) have been around for decades, with […] oppositional tension. For example, when Steve Jobs announced he would take medical leave from Apple in January 2009, Mat “Wilto” Marquis described him as a hacker and a hustler in a well-wishing tweet. However, the first use of Hacker and Hustler in conjunction with Hipster in the context of the putative startup founder dream was coined by influential venture capitalist Elias Bizannes in 2011. It was then popularised in 2012 by an address at the influential technology conference South by Southwest by Rei Inamoto and in a subsequent Forbes article “The Dream Team: Hipster, Hacker, and Hustler”. Hipster is a broad term used to describe members of an urban subculture in many cities in the US and other countries who are design conscious and favour non-mainstream fashions, trendy foods and alternative music. Bizannes co-opted the term to reflect what he perceived was the increasing need for successful startups to have a founder with design-savvy, aesthetic imagination and insider knowledge (Hipster) in addition to the traditional roles of someone good at selling things (Hustler) and creating technology products (Hacker).

[…]

While recent research has demonstrated that many employees in the same occupations share similar personality traits, being a startup founder is not a conventional job. we inferred the personality traits across 30 dimensions (Big 5 facets) of a large global sample (n=4.4k) of successful startup founders.

[…]

Using two samples together: Successful Entrepreneurs and Successful Employees (unlikely to be founders), we trained and tested a machine learning random forest classifier to distinguish and classify entrepreneurs from employees and vice-versa using inferred personality vectors alone. As a result, we found we could correctly predict Entrepreneurs with 77% accuracy and Employees with 88% accuracy. Thus, based on personality information alone, we correctly predict all unseen new samples with 82.5% accuracy.

[…]

Adventurousness— the key feature

We explored in greater detail which personality features are the most important in distinguishing successful entrepreneurs from successful employees and found that the subdomain or facet of
Adventurousness within the Big 5 Domain of Openness was both significant and had the largest effect size. The facet of Modesty within the Big 5 Domain of Agreeableness and Activity Level within the Big 5 Domain of Extraversion was the subsequent most considerable effect. All thirty dimensions of the Big 5 facet were found to be significantly different in their distribution, with ten features having large effect sizes. […] Adventurousness in the Big 5 framework is defined as the preference for variety, novelty and starting new things

[…]

Six types of startup founders

Once we understood that startup founders have distinctive personality features that are different from regular employees, we explored whether there are distinct types of personalities among startup founders.

[…]

We discovered clear clustering tendencies in the data. Then, once we established the founder data clusters, we used agglomerative hierarchical clustering; a “bottom-up” clustering technique that initially treats each observation as an individual cluster and then merges them to create a hierarchy of possible cluster schemes with differing numbers of groups. And lastly, we identified the optimum number of clusters based on the outcome of four different clustering performance measurements. We found that the optimum number of clusters of startup founders based on their personality features is six (labelled #0 through to #5).

[…]

Together, these six different types of startup founders represent a framework we call the FOALED model of founder types—an acronym of Fighters, Operators, Accomplishers, Leaders, Engineers and Developers. Each founder Personality-Type has its distinct facet footprint. Also, we observe a central core of correlated features that are high for all types of entrepreneurs, including intellect, adventurousness and activity level.

[…]

By analysis of the six types of startup founders in our FOALED model within the broader Occupation-Personality landscape, we identify three types to be characterised as types of Hackers (Fighters, Operators and Developers) and two as Hustlers (Accomplishers and Leaders). The remaining type is different in personality to both Hackers and Hustlers. It is more of a subject matter expert whose insider field knowledge and problem-solving design strengths can be seen as a type of Hipster (Engineer). When we subsequently explored the combinations of personality types among founders and their relationship to the probability of the firm’s success, adjusted for a range of other factors in a multi-factorial analysis, we found significantly increased chances of startup success for Hipster, Hacker and Hustler foundation teams.

[…]

Our modelling shows firms with multiple founders are more likely to succeed, as illustrated in Fig. 3a), which shows firms with three or more founders are more than twice as likely to succeed as solo-founded. The benefits of larger and more personality-diverse foundation teams can be seen in the apparent differences between successful and unsuccessful firms based on their combined Big 5 personality team footprints, illustrated in Figure 3b). Here maximum values within each startup for each Big 5 trait for any of its cofounders are mapped, and the spread of these between sucessful firms — those who have IPOed, been acquired or acquired another firm and the other firms are shown. […] We found that ten combinations of founders with different personality types were significantly correlated with greater chances of startup success when accounting for other variables in the model. The coefficient of each of these factors is illustrated concerning other features that were also found to be significantly associated with success in Figure 3c.

[…]

We have learnt through this research that there is not one type of ideal “entrepreneurial” personality but six different types. Many successful startups have multiple co-founders with a combination of these different personality types. Startups are, to a large extent, a team sport; as such, diversity and complementarity of personalities matter in the foundation team. It has an outsized impact on the company’s likelihood of success. While all startups are high risk, the risk becomes lower with more founders, particularly if they have distinct personality traits. Our work demonstrates the benefits of diversity among the founding team of startups. Greater awareness of these benefits may help create more resilient startups capable of more significant innovation and impact.

More figures

Is there anything to conclude? Are the authors right or wrong? Can this be used for prediction? I do not know. The authors admit themselves there are biases in their research (it is based on the Twitter accounts of the founders…). I missed the element of the relationships between founders and I am a little skeptikal that more founders is better beginning with 3 or 4. My experience is that a team of 2 founders is ideal (you could chekc my long series of studies on startup data here. But who am I say this today ? What is certain is that the article is interesting and its ambtion to be praised !

Founders at Work - May08

The Chaos of the Internet : SBF, JKS and more

Leave a reply

Sometimes I see striking coincidences in things which have apparently no link. It helps me in writing (useless?) posts… here the chaos of the Internet became apparent again in a trial against a startup founder, in literature and in street art, three topics which are dear to me.

The trial against a startup founder is that of Sam Bankman-Fried (SBF). Of course there has been tons of papers about it including one of my favorite references, The New Yorker:
– Sept. 2023 : The Parent Trap. Inside Sam Bankman-Fried’s family bubble.
– Nov. 2023 : Will Sam Bankman-Fried’s Guilty Verdict Change Anything?
as well as CNN in March 2024 : Sam Bankman-Fried sentenced to 25 years in federal prison

And of course this follows the scandals of Elisabeth Holmes or of Adam Neumann. There were other stories, even if less famous, like Cadence vs. Avant! or Stanford vs. Cisco (more here). Technology including the Internet has brought debatable things including crooks and I believe it is just an enlarged illustration of human nature, but it does not excuse anything…

Literature brings me back to my current fascination Jón Kalman Stefánsson (JKS). In my latest reading I found the following (that I translated thanks to the usual tools):

Sex is the most popular content on the Internet, yet very few people admit to watching pornography.
Ah, damn the Internet! If I remember correctly, you are a poet – have people like you managed to describe the phenomenon, are there poems that succeed in capturing this monstrosity, this divinity? I think I could benefit from this kind of poetry. My little Gunna says that only poems allow us to identify what constitutes the human essence.
[…]
In any case, you put your finger on the problem just now. The Internet. Do You Know What It Is Gunna asked me a long time ago, back when the world was just beginning to get a glimpse of what this web was. No, I said, I have no idea. The Internet is chaos, she said. Ah, ah, disorder, you are probably right. No, it’s not disorder, she corrected before quoting an old Greek book she was reading at the time. She spends her time reading and she always tries to make me benefit from it, as if it serves any purpose. In any case, this book explains that it was at the dawn of time that Chaos was born, and this Chaos was a kind of god or character. I forgot the details.
[…]
What Gunna wanted to emphasize about the Internet was that there was something mythological about it, it was both emptiness and the beginning of everything. Which was later verified. Is not it ? The Net is a bit like a new sky above our heads – and there are new underground worlds there too.
[…]
I was talking about the Net, this new sky, these new underground worlds. This is a radical change. So radical that, for the first time, man does not need to die to know what hell is since hell has reached us and is invading digital reality. The devil knows how to exploit technology. It seems that his domain has excellent connectivity.
Dante wouldn’t have minded that.

By accident, I discovered that one of the street artist I like, Infinipi has another name, Kaotica and he chose that name when, as a computer scientist, he entered the world of the Internet. For French readers, you can listen (soon) to his podcast here. Street art is not very far from Technology. Invader got inspiration from video games and then created one of most innovative Internet applications I have seen in the last ten years

Chaos, it is…

Read Jón Kalman Stefánsson without any hesitation

Leave a reply

I have already written in a recent post all the happiness that the discovery of Jón Kalman Stefánsson and in particular his Romanesque Trilogy had brought me.

  • Himnaríki og helvíti (2007) / Heaven and Hell (MacLehose Press, 2010)
  • Harmur englanna (2009) / The Sorrow of Angels (MacLehose Press, 2013)
  • Hjarta mannsins (2011) / The Heart of Man (MacLehose Press, 2015)

I am lucky to have enjoyed the same happiness with the equally magnificent Family Chronicle:

It’s difficult for me to talk about literature. A friend recently asked me what “explaining” meant, and after some exchanges, we arrived at “giving to see”, “making luminous”, “giving a particular perspective”, and obviously there can be an infinity of perspectives. We were talking about science and mathematics. Literature, novels, poetry explain often and much better than the human or even exact sciences… Stefánsson does.

So here are two short extracts:

Why do you call me Pluto? And what will happen next?
I will win this game of small horses, then disappear into the moonlight, you will continue to live, you will be a planet surrounded by the darkness of the universe. Later, it will appear that it does not deserve the name of planet; and that we should rather say of you that you are a dwarf planet. You are devoid of orbit, you do not dare to dive deep enough within yourself, perhaps for fear of not being able to get up and lift the weight of your discoveries. You will eventually convince yourself that life is a horse that can be trained, then you will kiss someone and destiny will send a comet in your direction, the horse will get scared, you will no longer be able to control it, you will get lost in the middle of the journey that is your life.
And then, will I find my way back?

This reminds me of a beautiful and terrible quote by Wilhelm Reich in Listen Little Man. Then there is this feminine side of the author. Not only in his themes, but also in his way of writing. There is no better argument, no better response to this hatred against the woke movement or of the loss of the masculinist power. It is by loving what is not like us that we love better and that we can lose or abandon our part of darkness, by developing or seeing better what is luminous.

By the way, Þorkell announces, I am writing an article about a remarkable woman, Marie Curie, one of the greatest scientists of our time, if not all time. Oh good, Margrét replies in a neutral tone, as if out of simple politeness, then she turns slightly to look at him again. He nods, she has just died, he adds, she received the Nobel Prize twice, first in physics, then in chemistry. She is an immense scientist, a figure, and I would like to broaden the horizon of our lives a little; here in the East, talking about her. Is it a woman, Margrét is surprised. Yes, he confirms.
And maybe a mother?
She has two daughters.

And as I finished my other post with Cynthia Fleury, I will end this one with another discovery, that of the filmmaker Terence Davies, author among others Of Time and the City, Benediction and the very beautiful short film Passing Time.

Entrepreneur in residence, serial entrepreneur and what else?

Leave a reply

This morning I was at a big meeting of the French innovation ecosystem and after a presentation about support to entrepreneurship, I took the liberty of asking a question about the importance given to entrepreneurs in residence, to serial entrepreneurs, but also to the idea of bringing together researchers and students in science and technology on the one hand and business school students on the other, the latter having a sensitivity to and perhaps more experience of business. I added that from my point of view, in entrepreneurship, at the international level, these concepts have had little or no impact on value creation…

I felt a lack of understanding about my question, which in itself is not surprising since these ideas have precisely been chosen to develop or encourage entrepreneurship. It wasn’t just a feeling as three people told me they didn’t really understand my question (although a few people in the audience seemed to nod and others came up to me later to thank me for asking the question).

So let me try to develop my point of view and clarify the reason for the question. I have the strong belief, developed and confirmed year after year I think, that innovation is made by fairly raw talents. I’ll just recall one of my favorite quotes: “A few years ago, a major consulting firm published a report advising all companies to appoint a Chief Innovation Officer. Why? Allegedly to establish a “uniformity of command” over all the innovation programs. We’re not sure what that means, but we’re pretty sure that “uniformity of command“ and “innovation” don’t belong in the same sentence (unless it’s the one you’re reading now). […] Innovation stubbornly resists traditional, MBA-style management tactics. Unlike most other things in business, it cannot be owned, mandated, or scheduled. Innovative people do not need to be told to do it, they need to be allowed to do it”. If you are intrigued, you will find the context here.

The idea that people without experience need to be helped and supported (I’m not saying encouraged or stimulated) has puzzled me since I discovered the world of startups. Of course, it is difficult to enter a world that you do not know. You have to learn about it, to even confront it. But why a need to “manage” these (future) raw talents by offering them entrepreneurs in residence, serial entrepreneurs or even business school students?

The truth is that we just need role models for these raw talents. Tom Perkins put it this way: The difference is in psychology: everybody in Silicon Valley knows somebody that is doing very well in high-tech small companies, start-ups; so they say to themselves “I am smarter than Joe. If he could make millions, I can make a billion”. So they do and they think they will succeed and by thinking they can succeed, they have a good shot at succeeding. That psychology does not exist so much elsewhere.

The Serial entrepreneurs, I have already analyzed their performance in posts that the interested reader can find here or there. As a short summary, their performance statistically deteriorates over time! I mention entrepreneurs in residence in an article that I translated here. Finally, the myth of the association between technical and commercial students is just as tough as the idea that we must combine technical and business profiles among startup founders. I remember anecdotally a seminar at MIT in 2004 where the same idea, then quite widespread in the Boston region of combining an MBA from Harvard and a PhD from MIT was dispelled as illusory. Which large startups bring together such profiles? I’ll let you think about it. Founders are above all people who understand each other and can work together. Later, they will look for the skills they lack.

Here is a very nice quote to drive the point home: Performance tools are great for augmenting operational performance. There is nothing wrong with that aspiration or the tools themselves; all companies can perpetually need to improve, and using best practice is indisputably efficient. But apart from connecting measurements with actual improvements, the platoon of executives graduating from business schools came to believe that the tools were the answer to everything, including how a company should strategize for something new to make money in the future. While the recipe for corporate success cannot be found in a text-book, and not everyone is an entrepreneur just because they have read a book on entrepreneurship, the dominating notion was that strategizing for something new was almost equal to finessing costs by a few percent every year, gradually improving sales tactics, analyzing a key performance ratio here and adding another staffer there, and generally being opportunistic. This comes from the very good The Innovation Illusion. Even more funny : Executive recruiters have not been scouting for entrepreneurial people like Elon Musk or Mark Zuckerberg to take up key positions in multinationals. They wanted executives with specialisms in optimization, management, logistics, capital markets, and other key operative functions of a firm. […] And these partners were planners, not entrepreneurs. And what about this: Can Business Schools Teach Entrepreneurship?

I will stop for now with my worriness about all this but quote with my recent favorite writer (without forgetting either the beautiful quote from Churchill, success is going from failure to failure without losing your enthusiasm). I am not talking about Churchill here but about Stefansson. He suddenly understands something, as if someone had suddenly lifted the veil of illusions that covers the world – which now appears to him as it really is. He understands that his conception of reality is there, before his eyes, printed in the words and images of this daily life that he has flown over every morning for years, unknowingly ingesting the vision developed in these pages. A conception of the world which is an assembly of stale opinions, stale ideas, all these things which have taken over and which we call dominant thought, what we call tangible realities. […] Besides, what is our deep nature, what is the adequate point of view, is this deep nature an illusion, perhaps we are nothing more than a container filled to the brim with dominant thoughts, consensual points of view, perhaps we almost never glimpse what free, independant thought is throughout our lives, except through a few flashes that are quickly snufled out, immediately extinguished by the standardized, stale and rancid ideas that distils the news, advertising, films, popular songs; songs of variety and truth? [Translated from the French version of Fish have no feet, p.274-76]

Dare to read Jón Kalman Stefánsson

Leave a reply

I rarely write about literature, about subjects that have nothing to do with the world of startups. But sometimes, necessity and happiness prevail. In 2023, I discovered an admirable novelist: Jón Kalman Stefánsson.

His novel trilogy requires slow and attentive reading as the language is deep and poetic. Here are some examples through the chapter titles:

Heaven and Hell

We are nearly darkness
The Boy, the Sea, and the Loss of Paradise
Hell is not knowing if we are alive or dead
The Boy, The Village and the Profane trinity

The Sorrow of Angels

Our eyes are like raindrops
Some Words Are Shells in Time, And Within Them Are Perhaps Memories of You
Death brings no contentment

The Heart of Man


These are the stories we ought to tell
An old Arabic medical text says that the human heart is divided into two chambers, one called happiness, the other despair. What are we to believe?
Man’s heavenly string?
Life, that great musical, is neither sonorous nor fine-tuned by the Lord
That open wound in existence
This godforsaken world is habitable so long as you love me
What we miss most in existence
Where does death stop but in a kiss?

And here is a longer extract

There is nothing to add except that you have to dare to delve into a magnificent writing style. In fact Yes ! Stefansson is Iceland. And my last crush of this magnitude dates from around ten years ago, I had similarly immersed myself in three works by the philosopher Cynthia Fleury.
MesLivres-Cynthia-Fleury
(with here a long interview translated in English)

The Best Videos about Startups

Leave a reply

Of course the title is misleading, there is no such thing as “the best”, but there is certainly a list of the videos about startups which struck me. Here it is:

Feature films and TV series

I begin with the top of the top, Something Ventured, a documentary I have watched so many times, at least once a year since I showed it to the EPFL students interested in the topic. The trailer is available below and I am not sure which part is best, the one about Sandy Lerner maybe, the co-founder of Cisco. Here is the trailer, you can buy or watch the movie quite easily online.

There are additional feature films or TV series about startups, but not that many. The best film might be The Social Network. The best series is probably The Playlist even if HBO’s Silicon Valley has become kind of the standard.

Short videos

Now when I thought about this short post, I was thinking of miraculous Stanford Ecorner: I could not find when it was launched and I had the feeling I knew about it since I began to be interested in technology entrepreneurship.

The first I remember of is Larry Pages’s tips for entrepreneurs, among them: Tip 2: There is a benefit from being real experts. Experience pays off. Tip 3: Have a healthy disregard for the impossible. Stretch your goals. Tip 4: It is OK to solve a hard problem. Solving hard problems is where you will get the biggest leverage. And I think all Page’s videos are great.

The definition of a startup by Steve Blank is a definitive reference and must watch. More of his videos on his blog or here

I thought Randy Komisar was also on eCorner but apparently not. Here are his great advice on “how to about entrepreneurship”:

Venture Capital is a time bomb by David Heinemeier Hansson is funny and nuances my bias in favor of venture capital. Worth remember when you take venture capital (if you need it and if you can!)

I think it is good to finish with another of my favorite ones, so tipycally Silicon Valley: Making Meaning by Guy Kawasaki:

But now you understood: visit Stanford ecorner (Wikipedia) and watch them, randomly, once a day!

Marie Curie in Morbihan according to Xavier Jaravel

Leave a reply

Here is a short, dense and convincing essay that anyone interested in innovation should read. The subject is nevertheless complex, but the author gives a clear and argued vision of it. So here is my summary or rather selected extracts, because you have to go directly to the text which only takes an hour or two to read!

A diagnosis

Taxation?

In the top 1% of the income distribution, around 70% of taxpayers receive income from entrepreneurship, a figure which increases further for the richest, reaching 85% for the top 0.1%. [Page 21]

A list of individuals with the highest wealth is drawn up each year by Forbes magazine: less than 10% of the individuals appearing on the list in 1983 are still there in 2023. [Page 23]

The author is not convinced that taxing the rich is a solution to the inequalities created. Provided that the incentives and dynamics do not ultimately favor a tiny minority [but taxation in general remains a subject of fairness (see Piketty]. The tech giants, however, seem to have become dangerous monopolies because they are unregulated [page 24]

On the “Darwinian” dynamics of innovation, see also an older post, Silicon Valley will soon be 65 years old. Should she be retired?

Globalization ?

Companies that automate increase their employee workforce. [Page 28] Of course, this result only reflects average trends and does not mean that there are not negative effects on employment for certain technologies. For example, organizational innovations in logistics tend to reduce labor requirements. But it is very difficult to identify such cases with certainty; and, on average, the effect on employment is very positive. [Page 30]

Innovation for whom?

Due to the increase in inequality in the United States since the 1970s, the size of the market for products consumed by wealthy households is growing more quickly, and it is therefore on these markets that innovators are focusing their efforts. […] In an economy where the purchasing power of the most modest stagnates, which has been the case in the American economy for decades, the most modest never see the color of these innovations [Page 35]

The flow of innovations that generate purchasing power throughout society is not automatic: it depends on economic incentives. […] In the absence of a solvent market, there will be no innovation, so what can we do? [Page 37]

Some directions

Market size

It is estimated that a 10% increase in market size leads to a 3% drop in prices for consumers. [Page 42]

The sociology of innovators

The innovative or entrepreneurial idea is often born by directly experiencing a need or a problem to be solved. If those who innovate are not representative of society as a whole, innovations are biased in favor of a minority, those of the privileged who innovate. [Page 43] And the author mentions the examples of Louis Braille and Joséphine Cochrane.

In the United States, individuals whose parents are in the top 1% of the income distribution are ten times more likely to become innovators. […] There is no self-made innovator: the social environment plays a major role. […] Same thing in France for individuals who become doctor-engineers or doctor-researchers. [Page 44]

Innovators are turning to consumers who are like them. [Page 46]

When it comes to innovation, the scope for public action is immense. [Page 48] Innovation policy has given an emphasis to financing innovation, with tax credits and direct subsidies […] Conversely, investment in education and public research has had a tendency to decline. […] States spend relatively little on innovation. The innovation policy consists of around ten billion euros. Of these 10 billion annually, the most important system is by far the research tax credit (CIR), amounting to 7 billion. [Page 51] Despite numerous analyzes attesting of its low effectiveness, the CIR remains the main instrument today. [Page 52]

Note by the way that this process is not accompanied by a public debate. […] It is a process in small committees bringing together senior civil servants, a few politicians and a few captains of industry, whose sociology is just as selective as that of the innovators, that is to say not very representative of the population in its entirety. [Page 52]

Education

X. Jaravel devotes a long chapter to the importance of education in all its dimensions for the least privileged as well as for the highest potential, in the sciences as well as behavioral skills, to combat all the biases of the sociology of innovators who are basically middle-aged white men [page 47]

For example, those who excel in the International Mathematics Olympiads will not always have the opportunity to do a doctorate, due to lack of opportunities in their country. That’s so many researchers and innovators lost. [Page 53] With the reference “Invisible geniuses: could the knowledge frontier advance faster?”

Education produces its effects in the long term, which does not attract the attention of those in a hurry, obsessed with other, more short-term priorities. [Page 56]

In his chapter 4, the author explains his skepticism about the taxation of the rich, the establishment of a universal income, the taxation of robots, protectionism or planning, while qualifying his remarks, as he knows that acting on a complex system can have effects that are difficult to measure. Once again he expresses the blind spots of such decisions, due to very technocratic processes on the one hand, not very effective on the other hand, especially if they are not evaluated a posteriori and finally because too much of a role is given to innovative projects rather than education and training. [Pages 68-70]

In search of the lost Marie Curies

There are innovation clusters, not only from the point of view of the production of innovations, but also with regard to the origins of the new generation of innovators. [Page 74] Those who are most likely to become innovators in tech are those who have spent the most time in Silicon Valley, as if they were embedded in the environment and planned for these careers. [Page 76] Which makes me think of how many Robert Noyce, from a small town in the American Midwest, compared to Steve Jobs and Larry Page.

Achieving perfect parity between women and men to access innovation would increase the growth rate of labor productivity from 1% to 1.80%. [Page 78] We obtain equally important effects when we analyze a hypothetical situation in which individuals from disadvantaged backgrounds (rather than women) would no longer face any barriers in accessing professions in innovation and science. [Page 79]

It is also instructive to appreciate the effects of a very targeted policy which, by hypothesis, would achieve parity among the top 1% of individuals classified according to their aptitude for innovation. In the macroeconomic model, the most important innovations come from a small number of innovators (which is consistent with the data on the extreme concentration […] of start-up fundraising.) [Page 79]

The next pages are devoted to the impact of awareness raising in schools, an equally fascinating subject. Women are largely under-represented in scientific fields in France, which explains a third of the salary gap between women and men, which amounts to around 15% (for identical working hours). [Page 83]

X. Jaravel therefore insists on the importance of investment in education by emphasizing parity and territorial equality [Pages 85-6]. The author is concerned about the deterioration of education. Both in the basic “read, write and count” as well as on the best: In 2017, only 1% of students reached the level of the top 10% in 1987. [Page 91]

Three principles of action

– We know well that there is no single mechanism with a magical power, but that it is rather the conjunction of tools that makes it possible to change the situation.
– Under no circumstances should technical training be left aside.
– Several reforms could be specifically considered in their link with innovation and entrepreneurship. For example, introductory courses in entrepreneurship and innovation in high school, and strengthening teaching on the use of new technologies.

Democratizing innovation

At the end of his essay, X. Jaravel recalls two blind spots: a technocratic bias (leaving little room for citizens) and a limited use of evaluation. It is important to determine whether a scheme creates windfall effects or is truly effective. Thus an American study showed that certain subsidies constituted a pure and simple windfall effect when the subsidized technologies were already mature [while] conversely subsidies for start-ups at the very beginning of their life, in particular to realize prototypes had a strong ripple effect. [Page 110]

The author ends with three priorities:
– An educational policy that inspires vocations
– Do not give in to protectionist temptation
– Promote active participation of citizens

With the observation that innovation flows neither from the most brilliant entrepreneurs nor from the top of the State. Innovation is always collective, it infuses slowly, in the “rhizome” of innovation [Page 115]

I doubt that the reader in a hurry will understand much of these notes, and the author also indicates that this same reader could jump directly to the conclusion of his essay. You should read the full essay even if I doubt that the decision-makers often mentioned in Marie Curie habite dans le Morbihan – Démocratiser l’innovation will take the time to implement the recommendations, assuming they read them. But we must remain optimistic!

From Counterculture to Cyberculture by Fred Turner (second & final part)

Leave a reply

I must admit having mixed feelings after finishing my reading of Fred Turner’s book. In my previous post, I tried to show why it is an important book and how the counterculture influnced the early days of Silicon Valley (together with different influences illustrated by Christophe Lécuyer in Making Silicon Valley (another post here).

Steward Brand with his Whole Earth Catalog had a major influence and many people did not know it. Even Steve Jobs in his famous speech at Stanford celebrated Steward Brand and probably many people discovered him then.

But what has been the influence of the counterculture and its impact after Steward Brand? This is where I am intrigued: Fred Turner does not seem to admit it, but the impact is disappointing…

Politically, the influencers moved towards a kind of techno-anarchist not to say libertarian philosophy and even to the far right of the political spectrum (Newt Gingrich). Let us not forget the proximity of Peter Thiel or Elon Musk to Donald Trump (despite the diner of titans). I am not sure what to believe of other people or institutions such as the MIT Media Lab of Nicholas Negroponte, the Santa Fe Institute or Esther Dyson.

All this was apparently and symbolically represented by magazine Wired and its founder Louis Rossetto. As a prime symbol, the cover below seems to claim that Wired was the successor to the Whole Earth Catalog.

All these people and institutions seemed to have of the future not to say an ability in predicting it… but in the end what is the final output. If it is just Burning Man which Olivier Alexandre has perfectly described in his book La Tech, it is, yes, disappointing… how Burning Man ended up is in 2023 (see wikipedia) when I was finishing my book seems to be a strange coincidence…

From Counterculture to Cyberculture by Fred Turner

Leave a reply

From Counterculture to Cyberculture is another recent reading of mine after Making Silicon Valley of a not so recent book. It is subtitled Stewart Brand, the Whole Earth Network, and the Rise of Digital Utopianism.

Here is a short extract of why the book is important: By the end of the 1960s, some elements of the counterculture, and particularly that segment of it that headed back to the land, had begun to explicitly embrace the systems visions circulating in the research world of the cold war. But how did those two worlds together? How did a social movement devoting to critiquing the technological bureaucracy of the cold war come to celebrate the socio-technical visions that animated that bureaucracy? And how is it that the communitarian ideals of the counterculture should have become melded to computers and computer networks in such a way that thirty years later, the Internet could appear to so many as an emblem of a youthful revolution reborn? [Page 39]

The Whole Earth Catalog

One explanation of this strange phenomenon is Stewart Brand and the Whole Earth Catalog:

Here are some more extracts: “In late 1967 [Stewart Brand and Lois Jennings] moved to Menlo Park where Brand began working at his friend Dick Raymond’s nonprofit educational foundation, the Portola Institute. Founded a year earlier, the Portola Institute housed and helped a variety influential Bay area organizations, including the Briarpatch Society, the Ortega Park Teachers Laboratory, the Farallones Institute, the Urban House, the Simple Living Project, and Big Rock Candy Mountain publishers, as well as its most visible production, the Whole Earth Catalog. As Theodore Roszak has suggested, Portola’s efforts were all designed “to scale down, democratize and humanize our hypertrophic technological society.” When Stewart Brand joined, much of Portola’s energy was directed towards providing computer education in the schools and developing simulation games for the classroom.

[…]

The Portola Institute served as a meeting ground for counterculturalists, academics, and technologists in large part because of its location. Within four blocks of its offices, one could find the office of the Free University – a polyglot self-education project that offered all sorts of courses, ranging from mathematics to encounter groups, usually taught in neighboring homes – and two off-center bookstores (Kepler’s and East-West). A little farther away was the Stanford Research Institute, where Dirk Raymond had worked for a number of years, and not far beyond that, Stanford University. In addition, many of Portola’s members represented multiple communities. Albrecht had worked at Control Data Corporation and brought with him advanced programming skills and links to the corporate world of computing, along with a commitment to empowering schoolchildren. Brand and Raymond both had extensive experience in the Bay area psychedelic scene. And Portola’s various projects kept its members in circulation: teachers, communards, computer programmers – all came through the offices at one time or another.” [Page 70]

An additional note states: “For a fascinating account of the intermingling of countercultural and technological communities in this area see What the Dormouse Said. How the 60s Counterculture shaped the Personal Computer by John Markoff, Viking Penguin 2005.” Turner is convincing in the description of the society turbulence, with the New Left focusing on civil rights whereas the New Communalists in a less organized, more anarchist vision of the world, neither being opposed to technology, but trying to scale down the impact of capitalism and cold war, Norbert Wiener, Marshall McLuhan and Buckminster Fuller being influential thinkers.

Turner concludes his chapters with these quotes : “Once while working with him on the catalog, I asked Mr. Brand if he would not carry out any of a various number of politically oriented underground newspapers. Upon reply, he told me that three of the first restrictions he made for the catalog were no art, no religion, no politics.” … then pointed out that Catalog offered all three : the art was fined art or craft; the religion, Eastern; the politics; libertarian: “From all the 128 pages of the Whole Earth catalog there emerges an unmentioned political viewpoint, the whole feeling of escapism which the catalog conveys is to me unfortunate.”

Brand responded with a defense of local action and of his personal experience : The capitalism question is interesting: I’ve yet to figure out what capitalism is, but if it’s what we’re doing, I dig it. Oppressed peoples: all I know is that I’ve been radicalized by working on the Catalog into far more personal involvement with politics than I had as an artist. My background is pure WASP, wife is American Indian. Work I did a few years ago with Indians convinced me that any guilt-based action toward anyone (personal or institutional) can only make a situation worse. Furthermore the arrogance of Mr. Advantage telling Mr. Disadvantage what to do with his life is sufficient case for rage. I ain’t black, nor poor nor very native to anyplace, not eager any longer to pretend that I am – such identification is good education, but not particularly a good position for being useful to others. I am interested in the Catalog format being used for all manners of markets – a black catalog, a Third World one, whatever, but to succeed I believe it must be done vy people who live there, not well-meaning outsiders. I’m for power to the people and responsibility to the people: responsibility is individual stuff. [Page 99]

And a little further a tough comment by Turner : Like P. T. Barnum, he had gathered the performers of his day – the commune dwellers, the artists, the researchers, the dome builders – into a single circus. And he himself had become both master and emblem of its many linked rings. [Page 101]

Taking the Whole Earth Digital

The next chapters covers the influence of the Whole Earth Catalog, outside the more or less closed circles of the famous Augmented Research Center (ARC) of Douglas Engelbart at the Stanford Research Institute (SRI) and the Palo Also Reserach Center (PARC) of Xerox, undoubtedly materialized in the no less famous Homebrew Computer Club. The cross-influences are multiple and described in detail by Fred Turner, in his chapter Taking the Whole Earth Digital.

There is in particular the reference to an article that I did not know from Rolling Stone magazine written by Steward Brand with photographs by Annie Lebowitz: Spacewar: Fanatic Life and Symbolic Death among the Computer Bums.

1972-12-07 Rolling Stone (Excerpt) Spacewar Article V02 - lowres

Turner concludes his pages on the Rolling Stone article with this: In the pages of Rolling Stone, the local work of individual programmers and engineers became part of a global struggle for the transformation of the individual and the community. Here, as in the Whole Earth Catalog, small-scale information technologies promised to undermine bureaucracies and bring about both a more whole individual and a more flexible, playful social world. Even before minicomputers had become widely available, Steward brand had helped both their designers and their future users imagine them as “personal technologies”. [Page 118]

In the article, there is a mention of Hackers which ethics are described by Steven Levy, in his book Hackers, Heroes of the Computer Revolution (my next read ?). They include:
– All information should be free.
– Mistrust authority—promote decentralization.

Brand, not surprisingly, celebrates them : I think hackers… are the most interesting and body of intellectuals since the framers of the US constitution. No other group that I know of has set out to liberate a technology and succeeded. They nt only did so against the active disinterest of corporate America, their success forced corporate America to adopt their style in te end. In reorganizing the Information Age around the individual, via personal computers, the hackers may well have saved the Amerian economy. High tech is now something that mass consumers fo, rather than just have done to them… The quietest of the ’60s subcultures has emerged as the most innovative and most powerful – and most suspicious of power. [Page 138]

Turner does not hesitate to nuance Brand’s enthusiasm in the following lines, because once again the arrival of technology in everyday life has been a complex phenomenon in Silicon Valley. I am not even half way through Turner’s book. Maybe another post. Already a very intersting reading.