Monthly Archives: March 2015

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,Preview Changes
the 6th,
the 7th,
the 8th,
the 9th,
the 10th,
the 11th,
the 12th,
the 13th,
the 14th,
the 15th,
the 16th,
the 17th,
the 18th,
the 19th,
the 20th
the Surburbs
and also the 1000+ Paris Invaders. All of them are also available on Slideshare.

If you are interested with my excel file with 1000+ entries, just ask me! Below is / was my Paris map. However, I got a message from the Invader team in June 2015. They complain about the high rate of destruction of their works and asked me to hide as much information as possible about the location the Invaders. My maps are therefore now private and my pdfs much less informative. Sorry for this and good luck to those who look for them just to shoot pictures…

Following this message and after my full compilation, I did a few stats, which I will let you discover if you are interested:

SI-PA-stats

SI-PA-stats1

SI-PA-stats2

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