Author Archives: Hervé Lebret

Business Lessons by Kleiner Perkins (Part III): Straight Talk for Startups – Randy Komisar

With subtitle 100 Insider Rules for Beating the Odds–From Mastering the Fundamentals to Selecting Investors, Fundraising, Managing Boards, and Achieving Liquidity, Randy Komisar has an ambitious goal in writing his new book Straight Talk for Startups and he executes!

Komisar is a Silicon Valley veteran (and brilliant) investor. I have already mentioned here his previous books The Monk and The Riddle and Getting to Plan B, as well as many of his advice. In his new book, he is trying to give precious advice because “entrepreneurs today don’t have the luxury of learning by trail and error.” [page xix of the introduction]. The Times They Are A-Changin’ and the stakes are just too high…So Komisar gives “the crucial things, like creating two financial plans, not one; hiring part-time epxerts rather than full-time trainees; knowing what to measure and the pitfalls of doing it too early: and the criticality of unit economics and working capital.” [Page 1]. I have to admit I was a little surprised with reading the previous sentence, but after discovering the next first rules, Komisar convinced me again.

If you do not have any time for reading the book, which would be a real pity, at least have a look at his 100 rules. Here are the first 28 form his Part 1 – Mastering the fundamentals:
#1: starting a venture has never been easier, succeeding has never been harder
#2: try to act normal
#3: aim for an order-of-magnitude improvement
#4: start small, but be ambitious
#5: most failures result from poor execution, not unsuccessful innovation
#6: the best ideas originate with founders who are users
#7: don’t scale your technology until it works
#8: manage with maniacal focus
#9: target fast-growing, dynamic markets
#10: never hire the second best
#11: conduct your hiring as if you were an airline pilot
#12: a part-time expert is preferable to a full-time seat filler
#13: maage your team like a jazz band
#14: instead of a free lunch, provide meaningful work
#15: teams of professionals with a common mission make the most attractive investments
#16: use your financials to tell your story
#17: create two business plans: an execution élan and an aspirational plan
#18: know your financial numbers and their interdependencies by heart
#19: net income is an opinion,, but cash flow is a fact
#20: unit economics tell you whether you have a business
#21: manage working capital as if it were your only source of funds
#22: exercise the strictest financial discipline
#23: always be frugal!
#24: to get where you are going, you need to know where you are going
#25: measurements comes with pitfalls
#26: operational setbacks require swift and deep cutbacks
#27: save surprises for birthdays, not for you stakeholders
#28: strategic pivots offer silver linings

It is a great complement to Measure What Matters and the proof (if what was needed) of how great great venture capitalists are…!

More to come.

Business Lessons by Kleiner Perkins (Part II): Bill Campbell by John Doerr

My Part II should have been about Komisar’s Straight Talk for Startups, but it will be my Part III. I just finished Measure what Matters, the topic of my Part I, and I must admit I was impressed to the point I needed to have a Part II dedicated to it again.

I was impressed by the last chapter dedicated to “Coach” Bill Campbell. It is a very moving portrait of one of the least known celebrities of Silicon Valley. The Coach, the coach of Steve Jobs and the Google triumvirate, Page, Brin and Schmidt and of so many others.

I was also impressed by the subtlety of the message about OKRs. So difficult to explain as it may take a life to digest them. But the book is really enlightening. OKRs have four ingredients, focus, transparency, accountability and ambition (the BHAG – Big Hairy Audacious Goal). It is scary and at the same time generous. I think any leader should read that book…

Business Lessons by Kleiner Perkins (Part I): Measure What Matters – John Doerr

Kleiner Perkins is a, not to say the VC brand name – but there is also Sequoia. When their partners write something, it is often worth reading. And this month two of them publish a book! I begin here with John Doerr and his Measure What Matters (though this is the paperback publication – the hardcover was published in 2017). In my next post I will write about Komisar’s Straight Talk for Startups

Ideas are Easy. Implementation is Everything.

Doerr is a Silicon Valley legend. He owes a lot to the pioneers of Silicon Valley, such as Noyce and Moore and particularly to Andy Grove, whom he mentions a lot: he calls him one of the father of OKRs. Chapter 2 is about Grove who said “there are so many people working so hard and achieving so little”. It reminds me of The Innovation Illusion: How So Little is Created by So Many Working So Hard. And many owe to him, beginning with the Google founders. Indeed Larry Page is the author of a short, 2-page and powerful foreword about OKRs: “OKRs are a simple process that helps drive varied organizations forward… OKRs have helped lead us to 10x growth, many times over.”

And Doerr begins with a tribute to Google and its two founders (page 4):
Sergey was exuberant, mercurial, strongly opinionated, and able to leap intellectual chasms in a single bound. A Soviet-born immigrant, he was a canny, creative negotiator and a principled leader. Sergey was restless, always pushing for more; he might drop to the floor in the middle of a meeting for a set of push-ups.
Larry was an engineer’s engineer, the son of a computer science pioneer. He was a soft-spoken nonconformist, a rebel with a 10x cause: to make the internet exponentially relevant. While Sergey crafted the commerce of technology, Larry toiled on the product and imagined the impossible. He was a blue-sky thinker with his feet on the ground.

So what are these OKRs? It’s an acronym for Objective and Key Results. “An objective is simply WHAT is to be achieved. Key Results benchmark and monitor HOW to get to the objective.” (Page 7) But there is no recipe. Each company or organization should have its own. “By definition, start-ups wrestle with ambiguity… You’re not going to get the system just right the first time around. It’s not going to be perfect the second or third time, either. But don’t get discouraged. Persevere. You need to adapt it and make it your own.” (Page 75)

Now if you need that kind of advice, read Doerr’s book…

Some thoughts about European Tech. IPOs

As some of you may know, I love to crunch data. Among my hobbies are cap. tables of startups which went or at least filed to go public. I have now more than 450 such companies and you can have a look at a recent summary of 400+ such companies in Equity in Startups. In the recent days, I had a look at startups going public on European stock exchanges (Paris, Amsterdam) through their IPO prospectus. What a difference to Nasdaq based S-1 filings! So much less information that it was frustrating to me. Here are the examples of Cellectis, Kalray and Adyen.

I am not sure you will take the time to have a look, but knowing how much founders, employees, investors own in these startups is more complex than Nasdaq-based ones. Just have a look at the difference between Cellectis going public in PAris in 2007 and then in 2015 on Nasdaq.

How can you read who are the people behind all these stuctures in Adyen shareholding?
And why are the past rounds not available more systematically…?

Should you want to have a look at more data, here are the 450+ cap. tables!!

Equity Structure in 450+ Start-ups by Herve Lebret on Scribd

Why was I offered that book? Humor and bureaucracy

While reading Hammer And Tickle: A History Of Communism Told Through Communist Jokes by Ben Lewis, I began to wonder why a colleague would offer me such a book. Because I would be a stalinist? Because on the contrary, I should be careful about being too critical? Or more simply because big institutions would always have a tendency to become bureaucracies. Well i do not know and it does not matter as much as the fact I enjoyed reading these jokes despite the terrible background which explains their existence…

In a similar style, I would also encourage you to watch Une exécution ordinaire (in French) [see the IMDB link here], a beautiful and terrible movie. Here is the trailer.


The jokes mentioned below from the book might push you to read more.

What is colder in Romania than the cold water? The hot water. [Page 3]

‘There was another joke that was almost true – true to life. Ceaușescu is very angry because he is not hearing any jokes about him. So he orders a huge mass meeting, and announces, ‘from now on you are going to work without pay.’ And nobody says anything. ‘Okay,’ he continues, ‘and from now on you are all going to work for me.’ Nobody says anything. ‘Tomorrow everybody is condemned to death by hanging,’ he adds. Nobody says anything. ‘hey,’ he says ‘are you crazy? Don’t people have anything to say? Aren’t you going to protest?’ there’s is only one tiny guy who says, ‘Mr President, I have a question: do we bring our own rope or is the trade union going to give it to us?’ [Page 3 again]

After the October Revolution, God send three observers to Russia: St Marc, St Peter and St Matthew. They send him three telegrams.
‘I’ve fallen into the hands of the Cheka – St Marc.’
‘I’ve fallen into the hands of the Cheka – St Peter.’
‘All’s well. Doing fine. Cheka Superintendant Matthias.’

[Page 25]

Anti-Semitism is unfortunately never very far, but as the Jews themselves are often the authors … I allow myself to quote two:

A Jew talking to his friend: ‘My son Moses and I are doing very fine. Moisha works in the Comintern as a black African Communist, while I sit in the Kremlin, at the top of Ivan the Great Bell Tower, waiting to ring the bell for the World Revolution.
‘Well it must be a rather dull job to wait for the World Revolution,’ his friend says.
‘Oh yes, but it is a job for life.’

[Page 27]

A stagecoach full of passengers is travelling from Zhitomir to Kiev when a band of robbers attacks. Their leader commands, ‘Halt. Nobody move. Hands up!’ All the passengers obediently climb out of the stagecoach and put their hands up. One of them turns to the bandits’ leader and says, ‘Mr Chief, you’re gonna take everything from us in a couple of minutes. Let me go into my pocket with one hand for a moment. I have to give something to the guy standing next to me.’
‘Hurry it up!’ he points the barrel of his revolver at the traveller.
The passenger goes into his back pocket, takes out one hundred roubles and, turning to his neighbour, says, ‘Solomon! Didn’t I owe you a hundred roubles? Here, take it. And keep in mind that we’re even now.’

[Page 29]

A classic: What were Mayakovsky’ last words before he committed suicide? ‘Comrades, don’t shoot!’ [Page 50]

Humour in Absurdistan: A flock of sheep are stopped by frontier guards at the Russo-Finnish border. ‘Why do you wish to leave Russia?’ the guards ask them.
‘It’s the NKVD,’ reply the terrified sheep. ‘Beria’s ordered them to arrest all elephants.’
‘But you aren’t elephants!’ the guards point out.
‘Try telling that to the NKVD!’

[page 58]

About progess and innovation [Page 66]
– Who discovered the electric razor?
It was discovered by Ivan Petrovich Sidorov … in the dustbin behind the American Embassy.
– There were two portraits on the museum wall, one of the scientist Ivanov who invented the locomotive, the steamship and the aeroplane, and the other of scientist Petrov, who invented the scientist Ivanov.

A teacher asks his class ‘Who is your mother and who is your father?’
A pupil replies: ‘My mother is Russia and my father is Stalin.’
‘Very good,’ says the teacher. ‘And what would you like to be when you grow up?’
‘An orphan’
[Page 89]

More to come… and here it is (on June 15)

One housewife to another: ‘I hear there’ll be snow tomorrow!’
‘Well I’m not queuing for that.’
[Page 132]

A man dies and goes to Hell. THere he discovers that he has a choice: he can go to Capitalist Hell or Communist Hell. Naturally, he wants to compare the two, so he goes over to Capitalist Hell. There outside the door is the devil, who looks a but like Ronald Reagan. ‘What’s it like in there?’ asks the visitor.
‘Well,’ the devil replies, ‘in Capitalist Hell they flay you alive, then they boil you in oil and then they cut you up into small pieces with sharp knives.’
‘That’s terrible!’ he gasps. ‘I’m going to check out Communist Hell!’
He goes over to Communist Hell, where he discovers a huge queue of people waiting to get in. He waits in line. Eventually he gets to the front and there at the door to Communist Hell is a little old man who looks a bit like Karl Marx.
‘I’m still in the free world, Karl,’ he says, ‘and before I come in, I want to know what’s it like in there.’
‘In Communist Hell,’ says Marx impatiently, ‘they flay you alive, then they boil you in oil and then they cut you up into small pieces with sharp knives.’
‘But…but that’s the same as Capitalist Hell!’ protest the visitor. ‘Why such a long queue?’
‘Well,’ sighs Marx, ‘sometimes we’re out of oil, sometimes we don’t have knives, sometimes no hot water…’
[Page 133]

Why is it not possible to control the birth rate in Soviet Bloc countries?
Because the means of production remain in private hands.
[Page 145]

Is Marxism-Leninism a science?
No. If it was, they would have tested it on animals first.
[Page 145]

Khrutshchev is walking through the Kremlin, getting worked up about the Soviet Union’s problems, and spits on the carpet in a gesture of disgust.
‘Behave yourself, Nikita Sergeyevich,’ admonishes his aide. ‘remember that the great Lenin walked through these halls!’
‘Shut up’, responds Khrushchev. ‘I can spit all I like here; the Queen of England gave me permission!’
‘The Queen of England?’
‘Yes! I spat on her carpet in Buckingham Palace too, and hes said, “Mr Khrushchev, you can do that in the Kremlin if you wish, but you can’t behave like this here…”‘
[Page 154]

Why do Vopos always travel in three?
One who can read, one who can write, and one to keep his eye on these two intellectuals.
[Page 158]

‘Hmm’, he says opening the letter, ‘he told me if things were going badly out there, he’d write to me in red ink.’ The letter is in blue ink. He reads it: ‘Dear Ivan, I am having a wonderful time in Kazakhstan. The weather is warm, I have a big apartment and plenty to eat…’
He interrupts the letter, turns to his son and says ‘you see, we are progressing along the road to Socialism…’ The he reads the last line of the letter: ‘There is only on e problem – I can’t find any red ink.’
[Page 164]

XXIst Century Utopias according to Libero Zuppiroli

In his latest book, Les utopies du XXIe siècle (The Utopias of the 21st Century) Libero Zuppiroli makes an original presentation of what I call the excessive promises of innovation. I wrote recently a short chronicle about it in Enterprise Romande and Bernard Stiegler makes a much more pessimistic analysis in In the disruption – How not to go crazy? A third very interesting reference is the collective work Emerging Science and Technologies, why so many promises?

Libero Zuppiroli tackles the issue from the perspective of utopias and dystopias, using in the beginning of his book ancient authors of the eighteenth and nineteenth centuries, that show that excessive optimism has always existed and that its realistic, even pessimistic, counterpart has also always accompanied it. Flora Tristan in 1840 mirrors Sadi Carnot’s benefits of the machine in 1824, Marat in 1774 is paralleled to Adam Smith’s economic liberalism in 1776, and Francis Bacon, in 1627, dreamed of never ending scientific and technological progress. The utopian promises are not new!

It is a book that must be read and I will let you discover the analyses of the promises in the fields of information technology, robotics, defense, 3D printers and nanotechnologies, the city and energy, health, and big data. A simple illustration: around 2005, nanotechnologies were seen as an extremely promising market, which would reach 3’000 billion dollars in 10 years. More than 10 years later, the market is around $100 millions…

I fear, however, that Libero Zuppiroli does not have much illusions about the impact of his analyzes. In a note on critical authors (note 119, page 293), he writes, “He is one of these famous intellectual critics whom American society not only tolerates, but also encouraged the birth of. Their critic of the American system is harsh and based on remarkable analyzes, but those who possess the power know that, despite their international reputation, the audience of these intellectuals is limited to a small fraction of people already convinced. Whatever their talent, their influence on the masses of electors will always be much lower than that of teleevangelists.”

But I knew Libero Zuppiroli was playful and his conclusion confirms this to me: this Empire will collapse as previously collapsed the Roman, Napoleonic and Soviet Empires. When? Nobody knows … but it will collapse victim of its Hubris

The Gene by Siddhartha Mukherjee – a Symphony of Research

Progress in science depends on new techniques, new discoveries and new ideas, probably in that order – Sydney Brenner
All science is either physics or stamp collecting – Ernest Rutherford

I did not know much about genetics, except my data here and there about biotechnology startups. But thanks to his book The Gene, Siddhartha Mukherjee makes me feel I know much more. His brilliant storytelling is like a symphony, describing the early days of genetics, with Darwin and Mendel and the latest developments of this fascinating science. There are brilliant quotes like the two above, respectively page 202 and 221. And there are marvelous portraits.

I will only give a few of them, the pictures I mean, as a quiz…

But before letting you discover the names below, here is a short extract from The Gene, a famous anecdote about how Genentech was born…

And a great analysis of what science, technology and biology are:
“Do not be lulled by that description. Do not, gentle reader, be tempted to think – “My goodness, what a complicated recipe!” – and then rest assured that someone will not learn to understand or hack or manipulate that recipe in some deliberate manner.

“When scientists underestimate complexity, they fall prey to the perils of unintended consequences. The parables of such scientific overreach are well-known: foreign animals, introduced to control pests, become pests in their own right; the raising of smokestacks, meant to alleviate urban pollution, releases particulate effluents higher in the air and exacerbates pollution; stimulating blood formation, meant to prevent heart attacks, thickens the blood and results in an increased risk of blood clots to the heart.

“But when non-scientists overestimate complexity – “No one can possibly crack this code” – they fall into the trap of unanticipated consequences. In the early 1950s, a common trope among some biologists was that the genetic code would be so context dependent – so utterly determined by a particular cell in a particular organism and so horribly convoluted – that deciphering it would prove impossible. The truth turned out to be quite the opposite: just one molecule carries the code, and just one code pervades the biological world. If we know the code, we can intentionally alter it in organisms, and ultimately in humans. Similarly, in the 1960s, many doubted that gene-cloning technologies could so easily shuttle genes between species. By 1980, making a mammalian protein in a bacterial cell, or a bacterial protein in a mammalian cell, was not just feasible; it was, in berg’s words, rather “ridiculously simple”. Species were specious. “Being natural” was “often just a pose”. [Page 408] […]

“Technology, I said before, is most powerful when it enables transitions – between linear and circular motion (the wheel), or between real and virtual space (the Internet). Science, in contrast, is most powerful when it elucidates rules of organization – laws – that act as lenses through which to view and organize the world. Technologies seek to liberate us from the constraints of our current realities through those transitions. Science defines those constraints, drawing the outer limits of the boundaries of possibility. Our greatest technological innovations thus carry names that claim our prowess over the world: the engine (from ingenium, or “ingenuity”) or the computer (from computare, or “reckoning together”). Our deepest scientific laws, in contrast, are often named after the limits of human knowledge: uncertainty, relativity, incompleteness, impossibility.

“Of all the sciences, biology is the most lawless; there are few rules to begin with, and even fewer rules that are universal. Living beings must, of course, obey the fundamental rules of physics and chemistry, but life often exists on the margins and interstices of these laws, bending them to their near-breaking limits. The universe seeks equilibriums; it prefers to disperse energy, disrupt organization, and maximize chaos. Life is designed to combat these forces. We slow down reactions, concentrate matter, and organize chemicals into compartments, “It sometimes seems as if curbing entropy is our quixotic purpose in the universe,” James Gleick wrote.” [Page 409]

And now the answer the the picture quiz:

Charles Darwin Gregor Mendel William Bateson Thomas Morgan Alfred Sturtevant
Calvin Bridges Hermann Muller Hugo de Vries Ronald Fisher Theodosius Dobjansky
Frederick Griffith Oswald Avery Max Perutz George Beadle Edward Tatum
Linus Pauling James Watson Francis Crick Rosalind Franklin Maurice Wilkins
Arthur Pardee François Jacob Jacques Monod Edward Lewis Christiane Nüsslein-Volhard
Eric Wieschaus Sydney Brenner Robert Horvitz John Sulston Paul Berg
Arthur Kornberg Janet Merz Herbert Boyer Stanley Cohen Frederick Sanger
Walter Gilbert Craig Venter Allan Wilson Luigi Luca Cavalli-Sforza Shinya Yamanaka
Jennifer Doudna Emmanuelle Charpentier

Virtual Innovations?

I had not contributed to Entreprise Romande for a while, which might be the reason of my somehow tiredness about the never ending flow of (virtual?) innovations. Here is my translation of my latest contribution…

When the editor of your favorite magazine asked me for a new contribution about innovation, offering me to write about bitcoin, artificial intelligence, data protection, GAFAs or China, I was the victim if not of a slight dizziness, at least of a certain weariness. I just had to add to this list Fake news, Trips to Mars or Replacement of Humans by Machines and my ongoing passion for startups and technological innovation turned into a light nightmare. It seems to me that the more we talk about innovation and the less we really innovate.

When I explain my slight skepticism to anybody, they usually start with the mention of replacing the cashier of the Migros (a “famous” chain of Swiss supermarkets) with a machine. I reply that it seems to me that we, buyers, have replaced the cashier. If the media relayed in 2011 Foxconn’s announcement that it wanted to install a million robots in 3 years, threatening the 1.2 million employees, an online search indicates today that it has a ability to install 10,000 robots a year, and still the same number of employees.

Silicon Valley, having been at the origin of the major innovations of the last fifty years, is scrutinized more attentively. Of course the GAFAs represent a real threat: the two A become the supermarket of the world while the G and F support them by advertisements based on data that we have kindly given them, putting them in a quasi-monopoly situation. But you read well, supermarket, advertising. And that is what is called major innovations?

And what about globalized venture capital? Softbank has announced the launch of a 100 billion fund, by far the largest ever. In the last two months, 10 internet startups (including Dropbox and Spotify) have announced their intention to go public. The figures are dizzying: they generated 10 billion in revenues and 2 billion losses in 2017, thanks to 4 billion of funds raised since their creation. Venture capital has become an infernal machine that, like China and the GAFAs, seems unstoppable. But the venture capital that financed in 1976 Genentech and Apple with a few millions today massively funds the “uberisation” of the world, new global supermarket, and less and less the “deeptech”. I see in these trends an accelerated globalization but few major innovations.

When I think of the innovations of tomorrow, I think of nuclear fusion that will solve our energy problems, research on AIDS or cancer that will rid us of these disasters as we have been able to get rid of previous diseases, I think of disruptive solutions for water, food, mobility. Tom Perkins, Silicon Valley’s big venture capitalist, thought that the innovations of our time were based on three major inventions, the steam engine, the electricity and especially the transistor that made possible all the technologies that seem to threaten us today. But where is the next invention? I recognize myself in Peter Thiel’s phrase: “We wanted flying cars; instead, we had 140 characters. ”

Do not get me wrong, the innovation flow was exceptional in the 20th century and developments continue. In biotechnology, the Crispr-CAS9 technology [1] is as promising as the genetic revolution of the 1970s. Three startups, Crispr Therapeutics, Intellia Therapeutics and Editas Medicine went public in 2016 and promise to cure 10,000 diseases. But today these three companies represent less than $70 million in revenue and more than 200 million in losses in 2017. We do not yet have gene therapy or personalized medicine. Google’s Alphago beat the best go player, but nasty voices ​​say that it’s only the largest computing power and the largest data storage of computers that has allowed such performance, and no particular invention or intelligence . In more complex contexts, the machine is not able to compete with humans. And what will really bring us the multiplication of Big Data? But the promises of some to politicians and others to their shareholders, amplified by the media, are sometimes an insult to intelligence: why parasitize the human spirit with promises of (virtual) innovations sometimes more “abracadabrantesque” one than the others and ultimately disappointing when the real world is sufficiently complex and exciting?

[1] https://www.investors.com/news/technology/crispr-gene-editing-biotech-companies/

What we cannot know

It’s the 3rd book I read by Marcus du Sautoy. After the Music of Primes and Finding Moonshine: A Mathematician’s Journey Through Symmetry, here is What we cannot know.

Seven frontiers of knowledge according to du Sautoy: Randomness and Chaos, Particle Physics and the Infinitely Small, Space and Quantum Physics, The Universe and the Infinitely Big, Time and Gravity, Consciousness, Mathematics.

To illustrate some of this, here are tww short extracts:

Du Sautoy asks, what is the B. in Benoit B. Mandelbrot and the answer is Benoit B. Mandelbrot. Nice!

And quite nice too about the “purity of fields” by xkcd.com

If you love science(s) or mathematic(s), a clear must-read!

Are Biotechnology Startups Different?

This is a research work I did recently and after trying very shortly to publish it in academic papers, I stopped trying. Maybe it is not good enough. Maybe the research world and I do not fit! It is the result of two series of research I have done for years, one about Stanford-related spin-offs and another about equity in start-ups.

I encourage you to read it if the field is of interest for you or just have a look at the tables below which I extracted from this 5-page short document.