How do you measure your entrepreneurial ecosystem?

The title of this post is the first sentence of the report published by the Kauffman foundation entitled Measuring an Entrepreneurial Ecosystem. And it is a critical question. For years, universities, cities, regions, countries try to assess if they are innovative and entrepreneurial enough. And unfortunately, this is often measured through inputs and not outputs. Sometimes for good reasons, because stakeholders can offer favorable conditions but in the end entrepreneurs perform and stakeholders help but do not act…

measuring_an_entrepreneurial_ecosystem

The Kauffman foundation is proposing a set of metrics to help in assessing your ecosystem. It is an ambitious proposal as these are not easy to obtain, but they look very interesting and I thought it would be worth describing them here. They are classified in 4 topics:

DENSITY

1- Number of new and young companies per 1,000 people,
where “young” can mean less than five or ten years old. This will tell you, in the most basic way, how the level of entrepreneurship changes over time relative to population.

2- Share of employment accounted for by new and young companies.
Entrepreneurial vibrancy should not just be measured by the number of companies — it also should include all the people involved in those companies. This will capture founders and employees.

3- Density of new and young companies in terms of specific sectors.
Some places already may have a particular economic sector that has been identified as the centerpiece of an ecosystem, such as “creative” industries or manufacturing. Again using population as a denominator.

FLUIDITY

4- Population flux, or individuals moving between cities or regions.
Entrepreneurial vibrancy means people both coming and going. From an ecosystem perspective, this means that the entrepreneurial environment must be fluid to enable entrepreneurs to engage. The obverse, of course, is that limits on fluidity will suppress entrepreneurial vibrancy.

5- Population flux within a given region.
Individuals also need to be able to find the right match with different jobs within a region. The pace at which they are able to move from job to job and between organizations should be an important indicator of vibrancy.

6- The number (and density) of high-growth firms,
which are responsible for a disproportionate share of job creation and innovation. A concentration of high-growth firms will indicate whether or not entrepreneurs are able to allocate resources to more productive uses. Importantly, high growth is not necessarily synonymous with high tech.

CONNECTIVITY

7- Connectivity with respect to programs, or resources, for entrepreneurs.
A vibrant entrepreneurial ecosystem is not simply a collection of isolated elements — the connections between the elements matter just as much as the elements themselves. The diversity of your entrepreneurial population is likely to be high, and a one-stop shop for serving entrepreneurs is unlikely to do much good in serving all of them. Entrepreneurs move through an ecosystem, piecing together knowledge and assistance from different sources, and the connectivity of supporting organizations should help underpin the development of a strong entrepreneurial network.

8- Spinoff rate.
The entrepreneurial “genealogy” of a given region, as measured by links between entrepreneurs and existing companies, is an important indicator of sustained vibrancy.

9- “Dealmaker” network
Individuals with valuable social capital, who have deep fiduciary ties within regional economies and act in the role of mediating relationships, making connections and facilitating new firm formation play a critical role in a vibrant entrepreneurial ecosystem.

DIVERSITY

10-Economic diversification,
an important concept because no city or region should be overly reliant on one particular industry. At a country level, research has shown that economic complexity is correlated with growth and innovation.

11- Attraction and assimilation of immigrants.
Historically, immigrants have a very high entrepreneurial propensity.

12- Economic mobility,
i.e. the probability of moving up or down the economic ladder between different income quintiles. The purpose is to improve the quality of life for your citizens, to expand opportunity, and to create a virtuous circle of opportunity, growth, and prosperity.

Jacques Lewiner about Innovation

I had the chance to meet this afternoon Jacques Lewiner, the renowned French professor and entrepreneur, who has contributed a lot in making ESPCI a completely atypical engineering school in the French landscape. This is probably the school that “innovates” the most, especially through its spin-offs.

Lewiner-at-ESPCI

No need to tell you much about the meeting because all his messages can be found in an excellent interview he gave to the newspaper Le Monde last November entitled “In France, there is a huge potential for innovation.” The article is online (and for a fee – it seems) but there is also a pdf document available, both in French. Allow me then to provide my translation below. His philosophy is simple: encourage and encourage again, with a lot of flexibility; in particular, we must strongly encourage entrepreneurship with Silicon Valley, Boston and Israel as models.

An anecdote before I let you read the interview: he enjoyed reminded me several times that his vision did not make him only friends, as he thought the proximity to the industry and flexibility are essential. But he told me he was the successor of a famous lineage with a similar philosophy: Paul Langevin was a renowned scientist, inventor and author of patents on sonar and… a communist. ESPCI was founded by engineers concerned about the weakness of France and its universities in chemistry after the loss of Alsace and Lorraine in 1870. The Protestant culture of its founders facilitated perhaps closer links between academia and industry. (See History of the Graduate School of Industrial Physics and Chemistry of the City of Paris in French again.)

“In France, there is a huge innovation potential”

For the researcher and entrepreneur Jacques Lewiner, we must fight the idea that research does not support the creation of wealth. Jacques Lewiner is Honorary Scientific Director of ESPCI ParisTech engineering school. This former researcher with “a thousand patents” (taking into account the many countries where patents have been filed) is also the head of the Georges Charpak ESPCI endowment intended to help researchers to put their ideas into practice. He is also the Dean of the valorization at Paris Sciences and Letters (PSL), a new entity bringing together several academic institutions. In addition to his research career, he created or co-founded many companies, including Inventel (Internet box manufacturer) Finsecur (fire safety) Cytoo (cell analysis) and Fluigent (fluid management).

What do you mean by innovation? This is what transforms the knowledge acquired – through study, imagination, research … – into a product, a process, a new service. Among this knowledge, those from the research have a very strong leverage. But innovation does not necessarily give a Nobel Prize. And conversely, intellectually beautiful ideas can be of no industrial interest! For example, I was convinced of the value of the piezoelectric plastic materials for which a voltage appears when distorted. I have filed patents and thought that these devices would be used everywhere. It was more than twenty years ago and it is still not the case. Only a few car seats have been able to detect thanks to them the presence of a passenger … In fact, often, the ingredients of an innovation are already around, but it lacks someone to put them together. When we designed the first Internet box with Eric Carreel, creating Inventel, there was no rocket science. We just had the idea of putting in one device a modem, a router, a firewall, a radio interface… It was also very difficult to convince operators of the interest of such a device but, fortunately for us, Free arrived and opened the market.

You did not always meet with success, as shown in the adventure of the first e-book, available from Cytale who filed for bankruptcy in 2002. What lessons did you learn from these failures? By definition, innovation means taking risks. Nothing is taken for granted. In case of failure, we must analyze the reasons and win an experience that others do not. It is enriching. I also remember very well my first failure. I was convinced to have found new properties of “electrets”, the electricity equivalent of what the magnets are in magnetism. I finally realized that they were already known for over a century. However, they could enable the design of new sensors, especially microphones. I tried to convince large corporations by contacting their research center, and not their business units. It was a mistake. These laboratories had obviously no interest in defending an invention that they had not made! I then had the chance to meet a remarkable entrepreneur, Paul Bouyer, with whom I could create my own business. The future was opened to us, but I did in record time all possible errors. I wanted to do everything myself, without understanding the importance of team work. The adventure lasted a year …

Where is France in terms of innovation? It has a huge potential. People are well trained and research is of quality. The basic culture is in place. But there are too many barriers between scientific discovery and the application that will appeal to the market. Our system blocks initiatives. We must simplify French law and do away with some nonsense.

Which ones? Before the 1999 Allegre law, a researcher could not even get into a board! That changed but nonsense persists. Today, it is very difficult for a researcher to become a consultant, the authorization may be received at the end of a very long time, sometimes a year, and, in addition, it has to be out of its filed of competence! Fortunately, some resourceful people manage to get by, but it is an obstacle for most. A ESPCI ParisTech, to help our researchers, we have created an endowment fund. We make strong efforts to answer within two weeks to a researcher who claims an invention. In some institutions, this response may take from six months to eighteen months! Such a delay is likely to delay the scientific publication of the researcher. One could imagine a rule that states that beyond two months no response means agreement.

Are patents necessary? Yes, they are useful in two ways. On the one hand, they avoid if successful innovation is copied and, secondly, they secure investors at a fundraiser. But patents can sometimes be like mirages. CNRS has long received many patent royalties from Pierre Potier’s antitumor drugs Taxotere and Vinorelbine. But when the public domain, these patents do not bring any revenue. [In 2008, they accounted for 90% of CNRS royalties]. To create wealth from research, we must also encourage the creation of innovative companies. At ESPCI ParisTech, we help in patenting but also in the creation of start-ups, by granting them very favorable terms in exchange for 5% of their capital. It is a model of operation similar to that of Stanford University [in California], which portfolio of ownership in start-ups (like Google) represents more income than from patents. Some universities charge a 10% to 25% ownership in start-ups, and further require the repayment of loans. It is far too greedy and discouraging for researchers. A few years ago, the Ecole Centrale estimated that its start-ups had generated a ten-year cumulative revenue of € 96 million. For ESPCI ParisTech, over the same period, it was 1.4 billion. And for the Technion Institute in Israel, it was 13 billion in 2013. Do not tell me you cannot do the same in France!

Maybe is it a question of culture. Can we change it? One should not oppose research and creation of economic activity. But it is true that in France sometimes persists the idea that researchers should not benefit financially from their work. However, it is not shocking that good research also creates economic wealth. We must create a favorable ground leaving the most possible freedom for researchers. We can also improve the training of researchers and engineers. Stanford University and the Technion are also models here. The former, with its Biodesign Center, promotes the mixing of cultures between physicists, chemists, medical doctors, biologists, computer scientists… As part of their curriculum, students are required to file a patent, or even start a business! At PSL, we have created with this in mind a new curriculum, the Institute of Technology and Innovation, in which research and innovation are mixed.

Many economists are pinning their hopes on the digital world to boost growth. What about you? Of course, the digital world will have its place in the future as it will be used in all activities. Sometimes we assimilate the digital technologies and the Internet start-ups. The latter sometimes have phenomenal success, sometimes ephemeral. Many fail. The area that can benefit directly from the research is the industrial sector, creating jobs and activities. Have we reached the peak of development and innovations? Certainly not. On the contrary, a new world is opening for the next generations at the confluence of chemistry, physics, biology, electronics and information technology. All this will continue to result in improved quality of life. Let’s not put artificial obstacles on this path and therefore be optimistic about the results that will follow.

Interview by David Larousserie
Le Monde, November 23, 2014.

Invention is the Mother of Necessity!

I am reading the remarkable Guns, Germs, and Steel: The Fates of Human Societies by Jared Diamond.

Ggas_human_soc

I did not think initially that I would have anything to extract from it related to entrepreneurship and innovation. And I was wrong. I just read a section about human inventions and innovations, which I liked very much. Here it is.

THF STARTING POINT for our discussion is the common view expressed in the saying “Necessity is the mother of invention.” That is, inventions supposedly arise when a society has an unfulfilled need: some technology is widely recognized to be unsatisfactory or limiting. Would-be inventors, motivated by the prospect of money or fame, perceive the need and try to meet it. Some inventor finally comes up with a solution superior to the existing, unsatisfactory technology. Society adopts the solution if it is compatible with the society’s values and other technologies.
Quite a few inventions do conform to this commonsense view of necessity as invention’s mother. In 1942, in the middle of World War II, the U.S. government set up the Manhattan Project with the explicit goal of inventing the technology required to build an atomic bomb before Nazi Germany could do so. That project succeeded in three years, at a cost of $2 billion (equivalent to over $20 billion today). Other instances are Eli Whitney’s 1794 invention of his cotton gin to replace laborious hand cleaning of cotton grown in the U.S. South, and James Watt’s 1769 invention of his steam engine to solve the problem of pumping water out of British coal mines.
These familiar examples deceive us into assuming that other major inventions were also responses to perceived needs. In fact, many or most inventions were developed by people driven by curiosity or by a love of tinkering, in the absence of any initial demand for the product they had in mind. Once a device had been invented, the inventor then had to find an application for it. Only after it had been in use for a considerable time did consumers come to feel that they “needed” it. Still other devices, invented to serve one purpose, eventually found most of their use for other, unanticipated purposes. It may come as a surprise to learn that these inventions in search of a use include most of the major technological breakthroughs of modern times, ranging from the airplane and automobile, through the internal combustion engine and electric light bulb, to the phonograph and transistor. Thus, invention is often the mother of necessity, rather than vice versa.
A good example is the history of Thomas Edison’s phonograph, the most original invention of the greatest inventor of modern times. When Edison built his first phonograph in 1877, he published an article proposing ten uses to which his invention might be put. They included preserving the last words of dying people, recording books for blind people to hear, announcing clock time, and teaching spelling. Reproduction of music was not high on Edison’s list of priorities. A few years later Edison told his assistant that his invention had no commercial value. Within another few years he changed his mind and did enter business to sell phonographs but for use as office dictating machines. When other entrepreneurs created jukeboxes by arranging for a phonograph to play popular music at the drop of a coin, Edison objected to this debasement, which apparently detracted from serious office use of his invention. Only after about 20 years did Edison reluctantly concede that the main use of his phonograph was to record and play music.
The motor vehicle is another invention whose uses seem obvious today. However, it was not invented in response to any demand. When Nikolaus Otto built his first gas engine, in 1866, horses had been supplying people’s land transportation needs for nearly 6,000 years, supplemented increasingly by steam-powered railroads for several decades. There was no crisis in the availability of horses, no dissatisfaction with railroads.
Because Otto’s engine was weak, heavy, and seven feet tall, it did not recommend itself over horses. Not until 1885 did engines improve to the point that Gottfried Daimler got around to installing one on a bicycle to create the first motorcycle; he waited until 1896 to build the first truck.
In 1905, motor vehicles were still expensive, unreliable toys for the rich. Public contentment with horses and railroads remained high until World War I, when the military concluded that it really did need trucks. Intensive postwar lobbying by truck manufacturers and armies finally convinced the public of its own needs and enabled trucks to begin to supplant horse-drawn wagons in industrialized countries. Even in the largest American cities, the changeover took 50 years.
Inventors often have to persist at their tinkering for a long time in the absence of public demand, because early models perform too poorly to be useful. The first cameras, typewriters, and television sets were as awful as Otto’s seven-foot-tall gas engine. That makes it difficult for an inventor to foresee whether his or her awful prototype might eventually find a use and thus warrant more time and expense to develop it. Each year, the United States issues about 70,000 patents, only a few of which ultimately reach the stage of commercial production. For each great invention that ultimately found a use, there are countless others that did not. Even inventions that meet the need for which they were initially designed may later prove more valuable at meeting unforeseen needs. While James Watt designed his steam engine to pump water from mines, it soon was supplying power to cotton mills, then (with much greater profit) propelling locomotives and boats.

THUS, THE COMMONSENSE view of invention that served as our starting point reverses the usual roles of invention and need. It also overstates the importance of rare geniuses, such as Watt and Edison. That “heroic theory of invention,” as it is termed, is encouraged by patent law, because an applicant for a patent must prove the novelty of the invention submitted. Inventors thereby have a financial incentive to denigrate or ignore previous work. From a patent lawyer’s perspective, the ideal invention is one that arises without any precursors, Like Athene springing fully formed from the forehead of Zeus.
ln reality, even for the most famous and apparently decisive modern inventions, neglected precursors lurked behind the bald claim “X invented Y.” For instance, we are regularly told, “James Watt invented the steam engine in 1769,” supposedly inspired by watching steam rise from a teakettle’s spout. Unfortunately for this splendid fiction, Watt actually got the idea for his particular steam engine while repairing a model of Thomas Newcomen’s steam engine, which Newcomen had invented 57 years earlier and of which over a hundred had been manufactured in England by the time of Watt’s repair work. Newcomen’s engine, in turn, followed the steam engine that the Englishman Thomas Savery patented in 1698, which followed the steam engine that the Frenchman Denis Papin designed (but did not build) around 1680, which in turn had precursors in the ideas of the Dutch scientist Christiaan Huygens and others. All this is not to deny that Watt greatly improved Newcomen’s engine (by incorporating a separate steam condenser and a double-acting cylinder), just as Newcomen had greatly improved Savery’s.
Similar histories can be related for all modern inventions that are adequately documented. The hero customarily credited with the invention followed previous inventors who had had similar aims and had already produced designs, working models, or (as in the case of the Newcomen steam engine) commercially successful models. Edison’s famous “invention” of the incandescent light bulb on the night of October 21, 1879, improved on many other incandescent light bulbs patented by other inventors between 1841 and 1878. Similarly, the Wright brothers’ manned powered airplane was preceded by the manned unpowered gliders of Otto Lilienthal and the unmanned powered airplane of Samuel Langley; Samuel Morse’s telegraph was preceded by those of Joseph Henry, William Cooke, and Charles Wheatstone; and Eli Whitney’s gin for cleaning short-staple (inland) cotton extended gins that had been cleaning long-staple (Sea Island) cotton for thousands of years.
All this is not to deny that Watt, Edison, the Wright brothers, Morse, and Whitney made big improvements and thereby increased or inaugurated commercial success. The form of the invention eventually adopted might have been somewhat different without the recognized inventor’s contribution. But the question for our purposes is whether the broad pattern of world history would have been altered significantly if some genius inventor had not been born at a particular place and time. The answer is clear: there has never been any such person. All recognized famous inventors had capable predecessors and successors and made their improvements at a time when society was capable of using their product. As we shall see, the tragedy of the hero who perfected the stamps used for the Phaistos disk was that he or she devised something that the society of the time could not exploit on a large scale.
[Pages 242-245]

A brilliant conversation about science between Gérard Berry and Etienne Klein

Indeed a brilliant and “crazy” conversation between Etienne Klein, the physicist, and Gerard Berry, Gold Medal of the CNRS for his work in computer science on France Culture’s Conversation Scientifique. They speak about so many beautiful “provocative” things.

Berry

On the serious side Berry talks about the difficulty of predicting and the danger of impossible promises, also about the courage in science. Physics talks about energy, computer science about information and so do the new generations, Berry claims. Berry also speaks of the machine and the human. The digital machine, the computer goes very fast, but not with much more intelligence than a steam engine. Except the computer is everywhere. But we, humans, are intuitive, there is no insight in a computer. We are very complementary. Again, I do not agree with transhumanists who believe that the machine will overtake us – in the short term at least. Berry is very annoyed by the notion of intelligence in computers. The performance is not intelligence, but there are many interesting things in AI such as learning, find people in a photo database fascinates Berry.

On the politics of science, Berry expresses great caution and wisdom. “Claiming that a research topic will happen right away is the best way to kill it.” He was answering a question about the quantum computer. “This was the case of artificial intelligence”. There are people willing to promise the moon and more people willing to believe them. They promise sensational things in interesting topics. One must look into these areas, but one should make no promise. Among the possible benefits, but unpredictable, there will be some interesting things.

He also talks about neuroscience. He is fascinated by the way children learn, which is difficult to understand; why the brain freezes after a while. His fascination is that the brain processes information, but we do not understand creativity, the brain is a huge machine which we do not understand. But again, it will be difficult, no doubt very difficult to understand how the brain works. Berry believes “no more than that” in our ability to build artificial neurons to simulate the brain mechanisms. We also discover that pleasure and boredom, motivation are essential to learning. Finally Berry started a short analysis on the current state of research. “Do not do anything new when you want to be successful. Or rather you have to fight.” (just as in any art).

I let you discover the last quarter of an hour which talks about the college of Pataphysique… but you need to understand French…

Space Invader in Paris

A very short post about Space Invaders in Paris. Up to now, more than 1100 ceramics have been created, most of them destroyed by the way.

In September 2014, I began to compile data about Paris. From time to time I add more info about them. Here are pdfs files about specific arrondissements:
the 1st,
the 2nd,
the 3rd,
the 4th,
the 5th,
the 6th,
the 7th,
the 12th,
the 13th,
the 14th,
the 15th,
the 16th,
the 17th
the 20th
and also the 1000+ Paris Invaders. All of them are also available on Slideshare.

Below is my Paris map.

Another billion dollar start-up founded by young people? Except they are out of Etsy

Etsy is the most recent IPO filing to date. It’s a well-known ecommerce start-up, based in New-York, seed funded by Caterina Fake, Stewart Butterfield, Joshua Schachter & Union Square Ventures (Albert Wenger and Fred Wilson), further funded by Accel Partners, Index Ventures and Tiger Global, with a total of at least $100M raised before the IPO.

The three founders (Robert Kalin, Chris Maguire, Haim Schoppik) graduated from NYU around 2005 just before founding their start-up, then in their early to mid-twenties. But there is no info on them in the S-1 document. Kalin was CEO until July 2008 (came back between Dec. 2009 and July 2011). many employees and co-founders Maguire (Software development) & Schoppikleft in August 2008.

Etsy-founders
Founders: Robert Kalin, Chris Maguire, Haim Schoppik

and here is the usual cap. table. Interesting to check what the value at IPO will be…
Etsy-captable
Click on image to enlarge

Recent exits in Swiss biotech show interesting features

In the last 12 months, 3 biotech start-ups from the Zurich area have experienced an exit. Molecular Partners went public on the Swiss stock exchange (see my post from Nov. 21) and two other start-ups have been acquired, Covagen by Janssen (see news release dated August 2014) and GlycoVaxyn by GSK (news release from Feb. 2015), both for about CHF200M. I had already written a post entitled Swiss Founder’s Dilemma in Decembre 2013. But I had not at the time published precise individual capitalization tables. Here they are.

EquityTable-Covagen
Covagen cap. table – click on image to enlarge

EquityTable-GlycoVaxyn
GlycoVaxyn cap. table – click on image to enlarge

The next table compares some interesting features such as levels of investments and dilution:
SwissBiotechDataFeatures
click on image to enlarge
I could have added the university equity which was in the 5-8% range at incorporation to be reach 0.2-1.8% range at exit. An interesting additional point is that the IPO seems to induce less dilution and more value creation than the M&A.

The liquidation preference is another interesting feature. The Glycovaxyn case was interesting with a complex mechanism. Despite its complexity and because the acquisition price was much higher than the amount invested by the VCs, the resulting stakes were similar to a plain vanilla prorata shareholding.

I just added these companies with a couple of others to my series of cap. tables and updated my file soon!

In the French speaking part, EPFL has enjoyed some exits too in the last two years: Jilion, Sensima, Aimago, Composyt. Interestingly the exit values were lower and VCs non-existent. But VCs have been active too in the last 5 years. Hopefully some nice outcome will happen in the near future…

“You have money, but you have little capital”

Here’s my most recent contribution to Entreprise Romande. Thanks to Pierre Cormon for giving me the opportunity of this opinion column.

YouHaveMoneyButLittleCapital

“You have money goal you-have little capital.” This is essentially the phrase that the US ambassador in Switzerland, Ms. Suzie Levine, delivered at a ceremony in honor of the ventureleaders alumni – a group of young Swiss entrepreneurs – last November 15 in Bern. She said she remembered it after hearing it from one of her recent contacts. I also quote her from memory and since then, I thought about it many times, trying to understand it.

“You”, of course, is Switzerland. We have money, for sure. Switzerland is rich. It is doing well socially, economically and financially. And Swiss companies invest wisely. It would not be fair to take “little capital” at face value, if one defines the capital by what is invested. I feel compelled to repeat “You have money, but you have little capital. »

The first explanation, the most obvious probably is due to the factual finding of the weakness of the Swiss venture capital. The figures vary from 200 million to 400 million per year, depending on whether one defines venture capital as the money invested in Swiss companies (regardless of the origin of the capital) or capital invested by Swiss financial institutions (regardless of the geography of the companies). For comparison, venture capital in Europe is of the order of 5 billion and in the US of 30 billion, or 75 times less in Switzerland than in the US, while the population is 40 times smaller.

A second explanation, perhaps less known, is related to the relative lack of “business angels” (BAs). While Switzerland has the highest density of “super-rich” and one of the highest living standards in the world [1], investments by individuals in Swiss start-ups are limited. Swiss startups unfortunately do not benefit from this potential windfall: the amounts invested by BAs are around 50 million per year and 30 billion in the US. And the situation is even worse: most of the US investment is made in two regions (Silicon Valley and Boston), which does not allow anymore to poner the figures in relation to the population size.

Some players such as SECA, the Swiss association of private investors, or the Réseau through its “manifesto for Swiss start-up” [2] are conscious of the deficit. They lobby to create new venture capital funds of funds and favor private investment in start-ups with lower taxation.

Finally, but this in itself would be the subject of another article, the transition from business angels who provide the first funds (up to a million in general) and venture capitalists who are involved from 5 to 10 million is much less natural than in the US because of a lack of trust and mutual understanding.

However, I fear that the citation / title of this article can not be explained solely by the finding of simple numbers. The third explanation, I should say interpretation of the word capital is that of human or cultural capital. The strength of the US investment in innovation was not financial only. It requires individual attitudes more than economic reasonings.

One note: it may be useful to recall that institutional venture capital – funds from pension funds and corporations – was born out of the vision of a few individuals who believed in the potential of innovation in entrepreneurship; it is the business angels who created the venture capital (not the reverse). This vision comes from a typical American optimism and also more prosaically from the fact that these first business angels had made money by betting on innovation.

The Swiss money is less adventurous and above all – this is often said to me – from a capital creation of more traditional and maybe less innovative economic value. It is also transmitted by inheritance. As it is more hard-won, the fear is stronger of losing it and the confidence lower to make it grow again. Risk taking and lack of stigma associated with failure are typical features of American entrepreneurship, this is well known. We can better understand the (good) reasons for this larger Swiss (and European) conservatism.

Worse: because the financial capital travels easily and many Swiss start-up entrepreneurs look for their investors in London, Boston and San Francisco, this cultural capital is lacking in Switzerland. I do not speak of the quality of the executives in the large companies and SMEs, who perfectly manage their businesses and rarely leave them (rightfully maybe!) to create their businesses. I speak of the non-existence of men and women who have succeeded in the world of startups. One could become tired of always refering to Daniel Borel as the “role model” of Swiss high-tech entrepreneur. Silicon Valley has created in the same period thousands of millionaires in technology, wealthy individuals who systematically reinvest their money, and their time most importantly, in new adventures.

I had found the quote a little unfair, when I first heard it, because I had misunderstood it and at worst easy to fix if it referred to a lack of financial capital. I realize it refers to an even more serious situation as it takes time if we want to change a culture.

[1] Le Matin (May 2012): http://www.lematin.ch/economie/suisse-affiche-forte-densite-superriches/story/25762272
[2] Bilan (June 2014) http://www.bilan.ch/node/1015095

PS: the following table was not in the article but I had included in my book to explain the “cultural” differences between American and European venture capital.

Cruttenden VC US  Europe 2006

My top 10 (must-read) (business) books

After reading a couple of top 10 and must-read list of books, here is an exercise I had never done. I went through my past readings and quickly built my own top 10 / must-read – business books. If you want an exhaustive list you could have a look at all the Must Watch or Read articles on this blog. here is my ranking:

#1: The Four Steps to the Epiphany by Steve Blank,
(subtitled Successful Strategies for Products that Win)

Four-Steps-to-the-Epiphany-5th-edition

Although it is rather painful to read because of the density of advice and check-list, it is the must read book for any entrepreneur who must understand the complex relations between building a product and service and selling to customers. Here is my post, dated November 2013.

#2: The Hard Thing about Hard Things by Ben Horowitz.
(Building a Business When There Are No Easy Answers)

thehardthing

A honest and toughest account about what entrepreneurship means. As the great Bill DAvidow was saying, “Being an entrepreneur is not for the faint of heart”. More about my account dated May 2014.

#3: Regional Advantage by AnnaLee Saxenian.
(Culture and Competition in Silicon Valley and Route 128)

Not a book about entrepreneurship but about high-tech clusters. Saxenian explained (already) in 1994 why Silicon Valley had won. It is the book to read to understand what start-ups really are and why they are important. A short indirect account dated October 2011.

#4: The Black Swan by Nassem Nicholas Taleb.
(The Impact of the Highly Improbable)

It is not directly related to innovation and entrepreneurship, but successful start-ups are highly improbable events with huge impact. A fascinating book I first talked about in July 2012 but I mention the concept and author so many times you could also check the tags Black Swan and Taleb.

#5: The Man Behind the Microchip by Leslie Berlin.
(Robert Noyce and the Invention of Silicon Valley)

The Man Behind the Microchip

The best (in fact nearly the only!) biography of an entrepreneur I read so far. It’s great, moving and full of information. You can read my short account dated February 2008 but you could also read more in The Tinkerings of Robert Noyce dated August 2012.

#6: Founders at Work by Jessica Livingston
(Stories of Startups’ Early Days)

FoundersAtWork-2015

Great interviews of start-up founders with an account dated June 2008. I had read before and I read since many other books built with such interviews. No doubt this is the best one.

#7: I’M Feeling Lucky by Douglas Edwards
(Falling On My Feet in Silicon Valley)

I could not have a top 10 list without a book about Google! This is my favorite one (but close to #8). When a marketing expert is hired by two crazy founders and learns he does not kwow so much about marketing and many other things. And in addition, it is the funniest business book I have ever read. My account is dated December 2012.

#8: How Google Works by Eric Schmidt & Jonathan Rosenberg, with Alan Eagle.
(The rules for success in the Internet Century)

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I initially thought a book written by the chairman and former CEO of Google would not be very enlightening. I was totally wrong. great lessons. great advice. A recent account dated November 2014.

#9: The Art of Start by Guy Kawasaki.
(The Time-Tested, Battle-Hardened Guide for Anyone Starting Anything)

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The best book about what you need to say with a powerpoint pitch or write in a business plan. A simple, direct to the point about launching any venture. One of my oldest (and shortest) posts, dated March 2008

#10: Against Intellectual Monopoly by Michele Boldrin and David K. Levine.

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An important analysis of the crisis of intellectual property: “It is common to argue that intellectual property in the form of copyright and patent is necessary for the innovation and creation of ideas and inventions such as machines, drugs, computer software, books, music, literature and movies. In fact intellectual property is a government grant of a costly and dangerous private monopoly over ideas. We show through theory and example that intellectual monopoly is not necessary for innovation and as a practical matter is damaging to growth, prosperity and liberty.” I wrote many posts about it, the latest being dated May 2013.

#11: Something Ventured

It is so difficult to build such lists, I cheat twice! First with the greatest ever video document about Silicon Valley. You must watch and listen to Sandy Lerner, the co-founder of Cisco. And it is freely available on youtube, so no excuse not to watch this fascinating movie. My account is dated February 2012.

#12: The Unfinished Debate about the Individual and the State between Peter Thiel and Mariano Mazzucato

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My second extension to the top 10 is made of two books! Peter Thiel is the author of Zero to One (notes on start-ups or how to to build the future). Mariana Mazzucato wrote The Entrepreneurial State (debunking public vs. private sector myths). But again, I produced so many posts on the topics they address you can also check the tags Mazzucato and Thiel. After the terrible events “Je Suis Charlie” which happened in Paris in early January 2015, these two books remind us about the complexity of analyzing how individuals and groups (societies, institutions, states) interact (with some tension) to create and innovate.

The Dark Net by Jamie Bartlett

I did not think when I bought this intriguing book about the hidden faces of the Internet that I would relate it to my three previous posts. The world is dangerous, the physical world is dangerous as we all know and as it was confirmed in Paris last week (A tribute on Jan. 8, We are all sad on Jan. 7). It is also known that the online world may be dangerous as illustrated by Jamie Bartlett in The Dark Net. I am not sure that the authors of How The Web Was Born (Dec. 2) had envisioned such possibilities.

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Bartlett is not really pessimistic about the web. In his conclusion, he states: Technology is often described as “neutral”. But it could be more accurately described as power and freedom. […] The dark net is a world of power and freedom: of expression, of creativity, of information, of ideas. Power and freedom endow our creative and our destructive faculties. The dark net magnifies both, making it easier to explore every desire, to act on every dark impulse, to indulge every neurosis.[…] Each individual responds differently to the power and freedom that technology creates. It might make it easier to do bad things but it’s still a choice.

In his book Bartlett talks about the trolls (you may also want to read the recent MIT Tech Review article – The Troll Hunters), the lone wolves (such as Berwick), about Tor Hidden Services, about Bitcoin, about illegal sites selling drugs such as Silk Road, about online pornography and paedophilia, about self-harm and finally about transhumanists against anarcho-primitivists. Written this way, I am not sure I am doing a good marketing for the book, but the truth is that with the exception of terrorism, the author addresses many dark sides of the internet. It is a fair and good description of what the Internet hides (“close to its surface” [Page 238]).

These are important topics about freedom, about the evolution of our world, and I can only quote a famous French thinker: on France Culture, earlier this week, coming back about the Paris terrorist attacks, Regis Debray explained that the Western world is the primacy of the individual over the group. The Eastern world it is the reverse.” And I am not sure I understood if there was a value judgment or not, he added: “And the West today represents modernity.” I strongly believe in these values and I understand the risks linked to them, but I do not think we have much choice. You may want to read The Dark Net if these topics are of interest for you…