Monthly Archives: May 2016

HBO’s Silicon Valley is back – Season 3

What a pleasure to meet again the heroes of HBO’s Silicon Valley. Yet the first two episodes are quite caricatural. First all the hot technologies from the region are mentioned: robotics, virtual reality and artificial intelligence.

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Failure is an important component, and does not have exactly the same consequences for everyone.

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Of course, the episodes describe the extreme social situations: the problems of the wealthy (money) and the problems of the poor (money). Finally we also see the equally caricatureal opposition between engineers and sales people.

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But all in all, the pleasure is there, and that’s what matters!… Even if the last sentence of Episode 2 is “Every day things are getting worse…”

When was the word “start-up” first used?

It’s a question I was asked yesterday (May 21) and thought it would have between the 60’s and 80s, but had honestly no clue. So I did a little search, first through old books I had read and found this on Google books:

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Silicon Valley Fever: Growth of High-Technology Culture, by Everett M. Rogers, Judith K. Larsen Basic Books, 1984.

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but apparently I was quite far. It seems to be 1976 as I found the question answered on Quora: What is the origin of the term “startup”, and when did this word start to appear?

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As cited in the OED (1989 edn) start-up, in the business sense, is first recorded in 1976:
1976 Forbes 15 Aug. 6/2 The?unfashionable business of investing in startups in the electronic data processing field.
Start-up company arrived a year later:
1977 Business Week (Industr. edn) 5 Sept. : An incubator for startup companies, especially in the fast-growth, high-technology fields.[…]
The term “start-up” meaning upstart dates back to 1550. Now, in the sense of “budding company”, it was first used by Forbes magazine in 1976:“The OED traces the origins of the term, used in its modern sense, back to a 1976 Forbes article, which uses the word as follows: “The … unfashionable business of investing in startups in the electronic data processing field.” A 1977 Business Week article includes the line, “An incubator for startup companies, especially in the fast-growth, high-technology fields.”

A remarkable analysis of European weaknesses: the acquisition of Withings according to François Nemo

Sometimes I make a copy/paste of articles that I have particularly appreciated, with the objective of then translating them to English from the French part of this blog. (Sorry for the bad English, this is pretty quick and dirty). Here I will add my own comments in brackets and italics. You can find the original article and the comments on Frenchweb.fr.

Withings or the story of a French naivety
François Nemo expert in disruptive strategies.

The spectacular acquisition of Withings by Nokia does not illustrate as it is always argued the weakness of our financing system but the lack of vision and commitment of our entrepreneurial scene. It shows our failure in creating an ecosystem with the right scale to position ourselves in the digital war against China and the United States. It is time to mobilize our energies to “beat the GAFA” and defend our sovereignty.

[For years, I have been saying that we do not have so much a funding problem, but a problem of culture, a complete misunderstanding of the importance of start-ups and their growth.]

After Captain Train bought by the British for €200M, it is now an emblem of the French technology, Withings – which made the buzz at CES in Las Vegas by playing the “made in France” card, – to be bought by Nokia to €170M. And I am ready to bet that Blalacar would not withstand a proposal from Facebook if it decided to introduce carpooling in its range of services to connect the planet. The adventure of the so-called French jewels has unfortunately only one outcome: a big check!

[I will let you browse my documents on Slideshare and especially the one that compares Europe and Silicon Valley and its slide 37]

Intelligence First

As technology develops, the more it disappears behind the ideas. The “purpose” or the “raison d’être”. The big digital players have understood this by turning to “intelligence first.” The product is a feature that is integrated in a platform whose role is to solve the world’s problems, health, travel, leisure … manage a community, organize a circular, iterative, open and inclusive ecosystem that connects direct users and producers to shorten and optimize the interaction. This is the announced death of sites and applications. The role of the entrepreneur is then to defend a “vision” and then to design the system to match it. He is a conductor more than a resource creator who will defend the key assets of the company; ideas and data. In this new context, mono-products like Withings companies have no chance to grow if not to integrate an ecosystem. One can also wonder about the real benefits for Whitings of being acquired by Nokia? Dropbox or Evernote had bitter experiences in yielding to the striking power of large platforms. And what about the relevance of that phrase of Steve Job: “You are a feature, not a product” by refusing to buy Dropbox ten years ago?

The new war of ecosystems

This is on the field of ecosystems that now compete the two giants of the digital world, the United States with GAFA, underpinned by an ideology, and China with more pragmatic companies like Alibaba, WeChat who developed new ecosystems in booming sectors by creating new business models and which after reaching an impressive number of users on their domestic market are beginning to position themselves internationally by triggering a fierce fight with the Americans. It is in this context that the GAFA (mostly) do their “market” in the four corners of the planet to feed and enrich their ecosystem. And France with the quality of its research and its dynamic start-ups is a particularly attractive hunting ground.

Why Europe is not able to create worldwide ecosystems?

The acquisition Withings is not as it is claimed a financing problem, an inadequate investment European ecosystem that would prevent a rapid scale-up of our jewels. The scope of Withings whatever the funds injected made impossible anyway a development outside of any platform. The question is why Europe is not able to create worldwide ecosystems in which promisng start-ups like Withings find their place?

[The failure of the European Union is not political only. There is also economic failure. So much fragmentation and so much national selfishness …].

We do not think digital at the right scale!

Our speech about the “Made in France”, staged around our digital champions and their presence at CES supported by the Minister of Economy himself is something naive and pathetic. All the institutional and private infrastructure, accelerators, think tanks, French tech, CNNum, Ecole 42, The Family, accelerator or NUMA, to name only the most prominent are not programmed to develop platforms with visions but products and features or laws and reports. This is our economic and entrepreneurial culture that is in question. A world still very marked by the culture of the engineer and the specialist. A world that is unfamiliar with and remains wary of notions of vision and commitment and more generally to the world of ideas. Rather conservative entrepreneurs who do not perceive the deeply subversive nature of the digital revolution and the need to change the “scale of thinking.”

Large groups who all have a start-up potential

We could also rely on large established groups who all have a start-up potential just like the American Goldman Sachs saying: “We are no longer a bank, but a technology company, we are the Google of finance” by having three thousand five hundred people working on the subject and by announcing a series of measures such as giving access to market and risk management data as open source. One can easily imagine corporations like La Poste and Groupama which business will be radically challenged in the next five years preparing for the future by organizing an ecosystem around wellness and healthcare (for example) that would integrate their know-how with Withings. But listening to the representatives of the major groups, Pierre Gattaz or Carlos Ghosn, for example, one quickly perceives their shortsightedness and lack of interest (they have nothing to gain) for disruptive strategies.

[Which role models or mentors could have our young generations in Europe, not only in France, at the end of their studies? How could they build GAFAs when the model is today the CAC40 and a very engineering culture, indeed].

Are we ready to live in an ” Fisher Price Internet”

Are we doomed to become satellites, and lose our economic sovereignty and security by staying under the influence of GAFA. Or as proposed François Candelon, Senior Manager at the Boston Consulting Group in a very good article “look at what China can teach and bring” and “create a Digital Silk Road”. Are we doomed to choose between Scylla and Charybdis? No! Because even if the web giants with their vision paved the way to new relationships by building the most disruptive companies in history, they leave us facing a huge gap. The “technical transformation of the individual.” Are we ready to live in an ” Fisher Price Internet” as Viuz claimed “in closed houses” run by machines “with chubby groves, manicured lawns and paved roads” where exclusivity, premium and scarcity matter leaving out of the door a part of the population. A kind of ultra-secure retirement homes for the wealthy?

Breaking the GAFA

We must unhesitatingly rush into a third track: “Breaking the GAFA”. If the formula is somewhat provocative, it encourages mobilization. The gap will be difficult to catch up, but it is time for Europe to build on its historical and fundamental values to build new ecosystems and enter fully into the economic war between the two major blocs. Propose alternatives to GAFA. “Use algorithms and artificial intelligence to create an augmented intelligence and solve the complex problems that the ecological and social emergency create” as said Yann Moulier Boutang. Integrate new technologies to rebalance the power relationships, find the keys to a true economy of sharing and knowledge to tackle the question of the future of work, compensation, health, freedom, education …

To scale

A rupture that requires a change of scale by challenging our economic culture and our understanding of the world. A rupture which, even if it still faces a “diabolical” inertia, has become a necessity for many of us.

If you are part of this new “generation” of “intelligence first”, if you have ideas and solutions to change our scale of reflection, I invite you to join us on Twitter or email @ifbranding f.nemo@ifbranding.fr together, we have solutions to propose and build projects.

The author
François Nemo expert in disruptive strategies.
Website: ifbranding.fr
Twitter: @ifbranding
Medium: @ifbranding

Myths and Realities of Serial Entrepreneurs

This is my latest contribution to Entreprise Romande. This is a topic I have covered from time to time and though that it would be interesting to share it with a wider audience thanks to the FER newsletter.

ER-Mai2016-SerialEntrepreneur

I have always been suspicious of the concept of serial entrepreneur, this creator who, according to Wikipedia, “continuously comes up with new ideas and starts new businesses, as opposed to a typical entrepreneur, who will often come up with an idea, start the company, and then see it through and play an important role in the day to day functioning of the new company.” Why such a bias if one considers exceptional serial entrepreneur like Steve Jobs (Apple, Next, Pixar), Elon Musk (PayPal, Tesla, SpaceX) or English “rock star” Richard Branson who declined Virgin in music, retail, air transportation and mobile communications? Because from experience, the idea of going from one idea to another seems far from sufficient if the entrepreneur does not invest an enormous and sustained activity to market and commercialize her project? Not really, since the three examples show that it can be not superficial hyper-activity, but the success of products or services consecutive to a total commitment of their creators.

My suspicion was built over time, because with the exception of some mythical characters always cited as examples for good reasons, I had the belief of recurring “patterns” and the example of Steve Jobs is a good illustration: he has never done as well as with Apple, his first creation. A few years ago, I dedicated some time to a statistical study about the “performance” of these serial entrepreneurs in comparison with their more conventional counterparts. [1] The study of some 450 serial entrepreneurs out of a group of more than 2700 founders gave some interesting results: if on average, serial entrepreneurs do better than others with their first business (the value created is larger, and with less investment), the trend is reversed with the following ventures, and beginning with the third, they do less well, while raising more money from their investors. QED! This study was perhaps the result of a particular situation in Silicon Valley and Stanford? A 2011 study of some 600 British entrepreneurs [2] shows that 60% of the founders having experienced failure were serial entrepreneurs while they accounted for half of the sample. The authors are known as experts on the subject and their many studies do not show that experience is a real advantage.

If the facts seem somewhat scuttle the myth, it is also interesting to analyze a little further. A serial entrepreneur, and more if she had a successful career, will have an enormous self-confidence and probably a seduction power to attract investors and talent for her future projects. She will be ready to take risks, even greater as she has already succeeded, so that failure may have a lower financial impact. The authors of the British study add that those who have failed have experienced such trauma that they repress this failure to the point not to learn anything from the experience …

What lessons for those – investors and employees – who are willing to blindly follow such a hero? Probably the need to show a little caution and analyze with some rationality if the project makes sense and if the creator seems a minimum rational in his vision of the development of this new project. In reality, success will always remain the domain of the exception, an unlikely alignment of the planets. An entrepreneur must always be optimistic, but if he loses too much sight of these realities, blindness can be fatal. And I would add a message to the entrepreneur without experience: by listening too much to the advice of those who “know”, the entrepreneur may forget his inner voice, the intuition so fundamental for all creative people. This myth of the serial entrepreneur perhaps shows that talent is more important than experience …

[1] Serial Entrepreneurs: Are They Better? – A View from Stanford University Alumni – Babson Conference “Frontiers of Entrepreneurship Research” 2012. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2133127
[2] Why Serial Entrepreneurs Don’t Learn from Failure. Par Deniz Ucbasaran, Paul Westhead et Mike Wright . https://hbr.org/2011/04/why-serial-entrepreneurs-dont-learn-from-failure

Cisco’s A&D

In 2009, I had analyzed Cisco’s strategy of Acquisitions and Development (A&D) which was claimed to be a substitute to R&D. You can have a look at my previous article also entitled Cisco’s A&D. I decided to redo the same analysis, i.e. the size of Cisco per year (sales and employees) as well as the number and values of its acquisitions. I also analyzed the geographical location of these acquisitions. The results follow. I just add that Silicon Valley remains the main source of acquisitions. The total value of the M&As were about $75B ($48B until 2006 and $27B in the last 10 years).

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Finally the exhaustive list (from Cisco’s web site and Wikipedia).

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The crazy ones. The misfits. The rebels. The troublemakers.

How is possible I never used this great quote when I talk about what is needed in innovation and entrepreneurship. What a moron, I am (sometimes…)

Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They’re not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them. About the only thing you can’t do is ignore them. Because they change things. They push the human race forward. While some may see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do.

Of course it’s very likely that you know what this is. And if not, no worry either. Here is the video:

And if you want to know more, check Think_different on Wikipedia.

Listen to the other voice too: