This blog contains original articles as well as articles from the book "Start-Up", by Hervé Lebret, which exists both in English & French. It is available on Amazon as well as in electronic versions. To buy it, click here.
Follow hlebret on Twitter rss_logo-st-book amazon-sq-logo-gb

Equity split in 305 high-tech start-ups with founders, employees and investors shares

September 10th, 2014 Comment »

I regularly compile data on start-ups with shares of founders, employees, board members investors, as well as the size of the round of financings. These are companies who went public or at least filed to go public or were acquired. Enjoy!

Was Christensen wrong and is Disruptive Innovation a shaky theory?

September 6th, 2014 Comment »

Clayton Christensen has been one of my heroes. Will I have to kill this father figure? The often excellent New Yorker magazine published recently The Disruption Machine with subtitle What the gospel of innovation gets wrong. Author Jill Lepore knows a lot about the Innovation gurus from Schumpeter to Porter and Christensen and what she has to say is at least very disturbing.

NY-Disrupt
“Disruption is a theory of change
founded on panic, anxiety,
and shaky evidence.”

You have to read the article: Lepore seems to have strong arguments about the weaknesses of Christensen’s. In the Disk Drive industry, she claims, Seagate Technology was not felled by disruption. Same with Bucyrus and Caterpillar for the mechanical-excavator industry or “Today, the largest U.S. producer of steel is — U.S. Steel”. Difficult for me to assess the claims. I have to admit I had read more recent books of Christensen which were really disappointing but I thought his first breakthrough remained strong.

Funnier: “The theory of disruption is meant to be predictive. On March 10, 2000, Christensen launched a $3.8-million Disruptive Growth Fund. Less than a year later, the fund was quietly liquidated. In 2007, Christensen told Business Week that “the prediction of the theory would be that Apple won’t succeed with the iPhone,” adding, “History speaks pretty loudly on that.” In its first five years, the iPhone generated a hundred and fifty billion dollars of revenue.”

There has been a debate following Lepore’s claims which I will let you discover:

– Business Week: Clayton Christensen Responds to New Yorker Takedown of ‘Disruptive Innovation’: here.

– Forbes: What Jill Lepore Gets Wrong About Clayton Christensen and Disruptive Innovation: here.

– Slate: Even the Father of Disruption Thinks “Disruption” Has Become a Cliche: here.

PS: thanks to Martin for pointing that amazing article to me!

Brussels, Street Art and Space Invader

September 6th, 2014 Comment »

Two articles tonight on my blog. A serious one coming, a huge criticism of Christensen’s disruptive innovation and an equally important one on Street Art. Yesterday there wwa a magnificent athletics meeting in Brussels where two high jumpers soared ever higher, and tried in vain for the world record at … 2.46m. It was beautiful to see. It was the perfect opportunity to show the work of Invader in Brussels in March 2012.

01-Gallery3

Here is the pdf file: Space Invader in Brussels. He obviously did not fail to invade the symbol of the city!

05

Finally the Google corresponding map.

Street art again: Space Invader in Grenoble

August 31st, 2014 1 Comment »

Street Art is a strange combination of references to art of course, but also to sociology, politics and economy. It might be why I became interested in the phenomenon and mention it here, in a blog related to start-ups which are also a strange combination of creation, social policy and economy. Both reconsider the established world, the institutions. Street Art interferes with private property and invades places it is not allowed to touch in theory. Street Art revisits consumerism and capitalism in a very interesting manner. And in the end, it became a part of consumerism, capitalism and the established art world. In a way, it’s exactly the same thing with start-ups. The successful ones become a part of the established economy. Also, both appeared without a clear objective. The computer, the Internet were nearly as useless as art in its first years. In the next picture, what does belong to advertising and what to art?

banksy-ad

Whatever I continue my virtual and real visits to street artists with Space Invader in Grenoble in 1999. As you may imagine, there is not much left, but still a lot online! Attached is my pdf compilation of Space Invader Grenoble invasion.

SI-Grenoble-Map

PS: You can find my compilations of Banksy in New York, the beautiful mosaic-mirrors of Pully and the invasions of Lausanne, Geneva, Bern, Basel, and Toyko under the tag Street Art.

The First Trillion-Dollar Start-up

August 18th, 2014 Comment »

Thanks to my friend Jean-Jacques for pointing to a nice historical article about the beginnings of Silicon Valley. According to The First Trillion-Dollar Startup,
“measured in today’s dollars, we believe the firm [Fairchild] would qualify as the first trillion dollar startup in the world.” I will let you read the other findings and will not relate again a story I mentioned in The fathers of Silicon Valley: the Traitorous Eight.

The authors show that Silicon Valley did not exist in 1957. No company active in semiconductor was based there as the East Coast was still the center of high-tech. But the founders of Fairchild are directly or indirectly responsible for 92 companies in Silicon Valley, today listed on Nasdaq or NYSE, worth over $2’000 billion and employing more than 800,000 people.

Here is a nice illustration of their study,
endeavor-insight-sv-2-retina
but I still love this one, a famous poster created by the author of the term Silicon Valley; I scanned it a few years ago,

the image below is taken from the previous (left and halfway up – corresponding to 1957)

HDSVBSV
The full report can be downloaded in pdf format and I find interesting their 3 lessons:
1. Great companies can develop in unlikely and challenging places.
2. A few entrepreneurs can make a large impact.
3. There is a framework for success that leaders can accelerate: ambition, growth, commitment, reinvestment.
HDSVBSV-acceleration

Space Invader in Tokyo

August 9th, 2014 Comment »

Summer is not the season for start-ups, news is rather thin, with the exception perhaps of the GoPro IPO. I also use this blog to talk from time to time about street art and in particular of Space Invader. I also found an indirect way to discover a city, physically or virtually, is to start looking for these ephemeral works.

SpaceInvaderTokyo

Japan has always been an attracting place for me, so I became interested in what the artist has done there. There are dozens of photographs online, some maps, so I made ​​my own synthetic work in pdf format as well as my own Google map of SI in Tokyo (largely through the work of Toruteam). [Other examples of SI fans in Tokyo include Nalice_Malice or True2death.]

I still have to make the actual discovery … Latest topic, Invader has launched its application for smart phone, Flash Invaders. It is perhaps this slight argument that will change my device!

flashinvaders

The (sad) state of high-tech IPOs on the Paris Stock Exchange

July 23rd, 2014 1 Comment »

I just read an excellent article in the newspaper Le Monde: Investors get tired of IPOs.
LeMonde-July14

The first reading could suggest positive news, as shown in the following charts:
LeMonde-FrenchIPOs-2
Click to enlarge

LeMonde-FrenchIPOs-3
Click to enlarge

LeMonde-FrenchIPOs-1
Click to enlarge

I looked in more detail at the IPO prospectus of 11 of these strat-ups. For reference, the 11 companies studied are:
Ask http://www.ask-rfid.com
Awox http://www.awox.com
Crossject http://www.crossject.com
Fermentalg http://www.fermentalg.com
Genomic Vision http://www.genomicvision.com
Genticel http://www.genticel.com
Mcphy energy http://www.mcphy.com
Supersonic Imagine http://www.supersonicimagine.fr
Txcell http://www.txcell.com
Viadeo http://fr.viadeo.com/fr/
Visiativ http://www.visiativ.com
and here I let you discover the 11 capitalization tables.

I show you here the two most successful and Supersonic Viadeo:

Supersonic-captable
Click to enlarge

Viadeo-captable
Click to enlarge

Why did I feel the need to use the term “sad” situation? Because:
– Valuations do not exceed €200M
– Amounts raised do not exceed €50M
With such numbers, neither entrepreneurs nor investors can not be compared with their U.S. counterparts. (I refer you to my summary of U.S. IPOs, if you are not convinced).

And if you’re still not convinced, I refer you to an excellent debate on France Culture including Osamma Ammar, founder of The Family: Is France heaven or hell for start-ups? Osamma Ammar describes the historical weaknesses of the French system, too much government intervention, IPOs (like those Viadeo rightly) that are so low that they would not take place in the USA (whereas a French start-up such as Criteo could be quoted on the Nasdaq). There is much to say from the 11 IPOS, but I leave you to think about what they mean …

Is this what Google Glasses might be about?

July 21st, 2014 Comment »

Just back from my summer break and thanks to the one who gave me the link of this brilliant (and scary) video. I doubt the future will be like this but who knows.

A Futuristic Short Film HD: by Sight Systems

Innovation and Society: are the Returns and Benefits Sufficient?

June 30th, 2014 Comment »

Here is my latest contribution to Entreprise Romande. I return to a subject that is dear to me, Innovation and Society. (If you read French, the original version is certainly better…)

ER-Lebret-June2014

The Enterprise is more than ever at the core of the political debates through its role in the creation of jobs and wealth – both individual and collective. It is indirectly the source of populism and of protectionist temptations. Inside and outside of its walls, innovation is the subject of similar tensions: are the returns and benefits of innovation sufficient for society?

Mariana Mazzucato and the Entrepreneurial State

A recent book tackles the topic of the respective roles of business and government in innovation: Mariana Mazzucato, a professor at the University of Sussex, develops in The Entrepreneurial State [1] – a fascinating and quasi-militant book – the argument that the States have not collected the fruits not only of direct investments in their universities, and even indirectly from the help and support provided to businesses, investments and supports that are at the origin of the major innovations of the last fifty years.

Mazzucato brilliantly illustrates this through the example of the iPhone and the iPad, which integrate components initially financed by the public bodies: from electronics developed for the space and military programs to the touch screen or GPS, or even Siri, the voice recognition tool (which has sources at EPFL), the author shows that Apple has masterfully integrated technologies initiated by public money. Google is also the result of research done at StanfordUniversity. Mazzucato adds that clinical trials for new drugs are mainly made ​​in hospitals funded by public money, from molecules equally discovered in university laboratories.

Mazzucato therefore advocates major reforms both on the governance of the initial support and on taxation. She fights for a new tax system that would compensate the absence or insufficiency of direct returns to universities or from businesses, all the more that it is indeed undeniable that multinational companies easily optimize their taxation. She shows how Apple has taken advantage of international rules to create subsidiaries in Nevada or Ireland to minimize its taxes.

The English researcher is convincingly claiming that Apple has to pay more. But how to pay? Paying a license for the GPS, but to whom? I’m not even sure that the GPS is patented. And if the Internet had been patented, it would probably not have had the same development – I do not ned to go over the limitations of the French Minitel. By seeking more direct financial returns (which are not as insignificant as one might think – Stanford has received more than $300M for its equity shares in Google and over $200M of the first patents in biotechnology), the risk would be very high to discourage creators and stifle innovation. I doubt that the solution lies in more rigorous national rules.

Peter Thiel and the Individual Entrepreneur

Peter Thiel, an libertarian entrepreneur and investor, is so opposed to such views that he encourages youung people motivated in entrepreneurship to abandon their studies by providing them with $ 100,000 grants and he even imagines moving businesses to offshore vessels off California so they totally escape tax. He is afraid of any form of public support which, he considers, quickly becomes bureaucratic. It is worth adding that Thiel’s motto also shows his skepticism about the social benefits of innovation: “We wanted flying cars; instead we got 140 characters.” [2]

Upstream, there is therefore the question of direct returns and the actual role of the state. But without the incredible creativity of Steve Jobs at Apple, without the extraordinary ambition of Larry Page and Sergei Brin at Google, without the vision of Bob Swanson, a co-founder of Genentech, the world would probably not have experienced the same technological revolutions. Downstream, the question arises of how to create international rules on innovation. Let me make a wide digression. The Internet, another innovation initiated by public authorities, has become a major topic in the political, economic and fiscal fields. But “neutrality and self-organization are part of the libertarian options [...] and are inconsistent with politics. Humanity must seize this opportunity to revisit what is considered important. [...] The Internet enables the emergence of a global political space, but it is still to be invented. At the time of this invention, the Internet will probably be gone!” [3]

If from experience I lean more toward Thiel’s view on innovation as an individual act of exception, actually quite far from the public investment, even if it is its seed, yet, I cannot agree with abandoning the public good. It is the soil that allows the emergence of exceptional talent. Companies also have their share of responsibility in discounting the importance of the collectivity. Just like in any complex human activity, innovation is a delicate balance between private and public actors. But especially today, issues have become global. The question is not so much as Mazzucato says that the role of the state has been largely underestimated in this process, but rather that the tax return has largely been decreased by globalization and the lack of economic governance.

Tax as a single global solution?

Does society receive any return from the public money spent on schools, roads, security? No, because it’s not an investment in the true sense of an objective of financial gain. These are infrastructure provisions that allow citizens and businesses to exist and develop properly. And they 8should) pay taxes in return. When Darpa funds Stanford, it is not sure that a student from Korea will not benefit from it and later work for Samsung. The concept of ​​supporting national champions seems of another age.

We are left with Tax, in a renewed vision of its global governance. Whether innovation is in the public or private domain, the world globalization will soon prevent from hiding behind the argument of whom is basically at its origin. Not only individuals but states also must agree upom a greater share of its profits, at the risk of serious crises. At a time when Switzerland reviews its tax policy and its citizens think they can create barriers from its neighbors as its borders, it is important to be aware that the current tensions are an opportunity to revisit the status of innovation in society before new major crises emerge. Wishful thinking?

[1] The Entrepreneurial State – Debunking Public vs. Private Sector Myths. 2013, Anthem Press, http://marianamazzucato.com
[2] Peter Thiel. Zero to One – Notes on Startups or How to Build the Future. Sept. 2014, Crown Business press, http://zerotoonebook.com
[3] Boris Beaude. Les fins d’Internet. 2014, FYP Editions, http://www.beaude.net/ie

A few lessons from disruptive innovators

June 25th, 2014 Comment »

My friend Jean-Jacques (thanks :-)) sent me a link about the CNBC Disruptor 50, a list of 50 “private companies in 27 industries — from aerospace to enterprise software to retail — whose innovations are revolutionizing the business landscape”. One could criticize the method, the fields, what is disruptive and what is not, but the list is by itself interesting. And I have done a few quick and dirty analyses. (I mean by Q&D a very fast analysis on the age of founders based on available data – their age or the year of their bachelor – my full analysis is available at the end of the post)

cnbc-disruptors

I found the following:
– Disruptive innovators are young (33 years-old)
– They raise a lot of money: more than $200M!!!
– and yes, they are mostly based in Silicon Valley.

Disruptor50-stats

Disruptive innovators are young

The average age of founder is 33 (whereas the age of founders of start-ups is closer to 39 – see my recent post Age and Experience of High-tech Entrepreneurs). As it was the case with that general analysis, founders in biotech and energy are much older than in software or internet. This was something I had already addressed in that paper: disruption might be the field of young creators.

They raise a lot of money

A really striking point is the amount of money raised by these disruptive companies. With an average age of 6 years, these companies have raised on average $200M… In energy, it is more than $400M and even more than $250M for the internet.

Silicon Valley leads

Not surprisingly though, Silicon Valley seems to be the place where to be. 27 companies are based there (a little more than 50%). It is also where they have access to the most capital ($280M on average). Then comes the East Coast (25%). Surprisingly they are based in NYC, not in Boston anymore when East Coast is concerned. Only 3 are Europeans… (Spotify, Transferwise and Fon) even if a few Europeans have also moved to SV…

Here is my full analysis which as I said before might contain mistakes (particularly on the founders’ age…). You might also disagree with my field classification…

Disruptor50
click on picture to enlarge