Tag Archives: Ecosystems

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

How to become a hub for startups?

This is the subject that “génialissime” Paul Graham addresses in the speech How to Make Pittsburgh a Startup Hub, a speech he has just published on his blog. I say “génialissime” because every time I read him, I am excited by the simplicity of his messages even if often counter-intuitive. Thus in How to be Silicon Valley?, he said “Few startups happen in Miami, for example, because although it’s full of rich people, it has few nerds. It’s not the kind of place nerds like. Whereas Pittsburgh has the opposite problem: plenty of nerds, but no rich people.” Yet he returned to Pittsburgh to give his recipe, at least paths to become a hub for start-ups.

0*STindQ5-Serw7lGW.
Image borrowed from Zak Slayback

Here are some excerpts that show that everything is cultural so that a city or a university should have above all a friendly and liberal, not to say laissez-faire attitude. “And it’s not as if you have to make painful sacrifices in the meantime. Think about what I’ve suggested you should do. Encourage local restaurants, save old buildings, take advantage of density, make CMU the best, promote tolerance. These are the things that make Pittsburgh good to live in now. All I’m saying is that you should do even more of them.”

And about universities, he adds: “What can CMU do to help Pittsburgh become a startup hub? Be an even better research university. […] Being that kind of talent magnet is the most important contribution universities can make toward making their city a startup hub. In fact it is practically the only contribution they can make. But wait, shouldn’t universities be setting up programs with words like “innovation” and “entrepreneurship” in their names? No, they should not. These kind of things almost always turn out to be disappointments. They’re pursuing the wrong targets. […] And the way to learn about entrepreneurship is to do it, which you can’t in school. I know it may disappoint some administrators to hear that the best thing a university can do to encourage startups is to be a great university. It’s like telling people who want to lose weight that the way to do it is to eat less. […] Universities are great at bringing together founders, but beyond that the best thing they can do is get out of the way. For example, by not claiming ownership of “intellectual property” that students and faculty develop, and by having liberal rules about deferred admission and leaves of absence. […] But if a university really wanted to help its students start startups, the empirical evidence […] suggests the best thing they can do is literally nothing.”

And now a diggression. This article reminded me of the text of another genius of Silicon Valley, Steve Jobs. “[There are] two or three reasons. You have to go back a little in history. I mean this is where the beatnik happened in San Francisco. It is a pretty interesting thing. This is where the hippy movement happened. This is the only place in America where Rock‘n’roll really happened. Right? Most of the bands in this country, Bob Dylan in the 60’s, I mean they all came out of here. I think of Joan Baez to Jefferson Airplane to the Grateful Dead. Everything came out of here, Janis Joplin, Jimmy Hendrix, everybody. Why is that? You’ve also had Stanford and Berkeley, two awesome universities drawing smart people from all over the world and depositing them in this clean, sunny, nice place where there’s a whole bunch of other smart people and pretty good food. And at times a lot of drugs and all of that. So they stayed. There’s a lot of human capital pouring in. Really smart people. People seem pretty bright here relative to the rest of the country. People seem pretty open-minded here relative to the rest of the country. I think it’s just a very unique place and it’s got a track record to prove it and that tends to attract more people. I give a lot of credit to the universities, probably the most credit of anything to Stanford and Berkeley.”

Paul Graham’s latest contribution is a must read. As usual, it is long, provocative, disturbing and totally convincing…

What makes an entrepreneurial ecosystem by Nicolas Colin

Great analysis by Nicolas Colin (The Family) in his article What makes an entrepreneurial ecosystem? If the topic interests you, it is a must-read.

Colin-Ecosystems

in a nutshell, the entrepreneurial ecosystems need 3 ingredients – I quote:
– capital: by definition, no new business can be launched without money and relevant infrastructures (which consist of capital tied up in tangible assets);
– know-how: you need engineers, developers, designers, salespeople: all those whose skills are necessary for launching and growing innovative businesses;
– rebellion: an entrepreneur always challenges the status quo. If they wanted to play by the book, they would innovate within big, established companies, where they would be better paid and would have access to more resources.

This reminds me of two “recipes” I often mention. First the “5 needed ingredients of tech. clusters”
1. Universities and research centers of a very high caliber;
2. An industry of venture capital (i.e. financial institutions and private investors);
3. Experienced professionals in high tech;
4. Service providers such as lawyers, head hunters, public relations and marketing specialists, auditors, etc.
5. Last but not least, an intangible yet critical component: a pioneering spirit which encourages an entrepreneurial culture.
in “Understanding Silicon Valley, the Anatomy of an Entrepreneurial Region”, by M. Kenney, more precisely in chapter: “A Flexible Recycling” by S. Evans and H. Bahrami

Second, Paul Graham in How to be Silicon Valley? “Few startups happen in Miami, for example, because although it’s full of rich people, it has few nerds. It’s not the kind of place nerds like. Whereas Pittsburgh has the opposite problem: plenty of nerds, but no rich people.” He also added about failed ecosystems: “I read occasionally about attempts to set up “technology parks” in other places, as if the active ingredient of Silicon Valley were the office space. An article about Sophia Antipolis bragged that companies there included Cisco, Compaq, IBM, NCR, and Nortel. Don’t the French realize these aren’t startups?”

Many toxic friends of entrepreneurial ecosystems have not understood this. But for those who have understood, building lively ecosystems remains a real challenge: bringing the rebellion, the culture, diminishing the fear of risk taking without stigmatizing (not rewarding– here I disagree with Colin) failure remains highly challenging whereas finding know-how and capital is not easy but feasible with some hard work…

Finally, I copy his diagrams which show ideal and less ideal combinations of capital, know-how and rebellion, adding my exercise for Switzerland.

NicolasColin-NationalEcoCompar

Switzerland is probably 80% Germany and 20% France…

SwissNationalEcoCompar

(A short addition on Oct 29, 2015) – The best description of Switzerland was given by Orson Welles. It explains a lot of things…

“In Italy, for thirty years under the Borgias, they had warfare, terror, murder and bloodshed, but they produced Michelangelo, Leonardo da Vinci and the Renaissance. In Switzerland, they had brotherly love, they had five hundred years of democracy and peace – and what did that produce? The cuckoo clock.” in The Third Man, said by Holly Martins to Harry Lime.

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.

My coming out – in the world of start-ups

No it is not a true coming out à la Tim Cook, but a much less spectacular message… I woke up early this morning very disturbed. As you can see below, the ecosystem to support entrepreneurs at EPFL (finance, coaching, exposure and office space) is rich and complex. Yet our results are average not to say mediocre… all this is in fact useless without the ambition and risk-taking of enthusiastic and passionate individuals.

I’m not talking about people, but the system. A few days ago, I said to colleagues I was a matchmaker. I encourage meetings and I put the oil in the wheels. Then I smiled, thinking – I’m usually not too vulgar – that I offered vaseline for introducing investors. Fifteen years ago, an entrepreneur who had enjoyed a chat told me that I made him think of a prostitute but hidden behind me, there were nasty pimps…

Two days ago, I was lucky to listen at EPFL to a Nobel Prize in economics who explained that the Western world is in decline, that the crisis can be explained in part by a weak innovation. Corporatism and financiarization are some reasons of this. Then there was a shocking message from another speaker. Switzerland would be fine because it is hard-working while its neighbor would go wrong because its workers start their weekend on Wednesday at noon. Who can believe that unemployment and bankruptcy in Detroit would come from the laziness of the automobile workers and the success of Silicon Valley because of workaholic nerds. Things are much more complex! Just see in particular the recent analysis of Thomas Picketty or the related MIT Technology Review Technology and Inequality.

Four days ago, I listened to the US ambassador to Switzerland and Liechtenstein. Suzi Levine knows the world of start-ups. She is therefore interested in the situation in Switzerland. I noticed two of her messages:
– First “you have a lot of money but little capital”, I leave you to think about the message that was given to her at EPFL I think, “you have a lot of money but little capital”.
– Second, the weakness of the female presence in this entrepreneurial world. She therefore particularly appreciated that the Prix Musy be created this year. But our efforts will be useless, if we do not encourage and allow the emergence of passionate and adventurous entrepreneurs that create wealth and value… it’s not just about women, but diversity in general which should not be hindered by corporatism and financiarization.

EPFL-VoD-funding

More on the EPFL support to entrepreneurs

EPFL-VoD-support

New rankings of the best technology clusters: the USA still leads.

There are so many articles, studies about technology clusters or ecosystems that I am not sure exactly why I write this. The only explanation is that I have read a couple of simultaneous studies, all mostly going in the same direction. Whereas there’s been a trend claiming the decline of the USA in favor of Asia or predicting the decline of Silicon Valle (SV), these ones show the opposite: the USA still leads, and among the American clusters, Silicon Valley is by far #1.

The first study is the Startup Ecosystem Report 2012 by the StartupGenome. You can read for example what techCrunhc says about it: Startup Genome Ranks The World’s Top Startup Ecosystems: Silicon Valley, Tel Aviv & L.A. Lead The Way.
The following table was kind of a surprise to me, not because SV is leading (this has been obvious for me for many years), but because Boston is #6 only.

I read the report and changed the ranking method with their own data and got the following new graph. I basically weighted all parameters (Output, Funding, Performance, Mindset, Support, Talent, Trendsetter, Differentiation to SV) on the horizontal axis, but deleted the last two ones on the vertical axis as I was not convinced about their role. It obviously shows there is a lot of subjectivity in rankings! The only thing which does not seem to be debatable is that SV is number 1.

There’s been another interest study: Ecosystem 101: The Six Necessary Categories To Build The Next Silicon Valley. It’s a good complement to the Startup Genome work, which is weak on Asia. The criteria here are Market, Capital, People, Culture, Infrastructure and Regulations. Again the USA leads, but weakness here is that we do not have a more detailed description of local clusters.

Finally, there’s been a strange analysis comparing US universities, whowing that Stanford leads and MIT is not even number 2. This is about VC money. The University Entrepreneurship Report – Alumni of Top Universities Rake in $12.6 Billion Across 559 Deals

Well, Silicon Valley might be declining, btu my feeling is it will be a long time before it loses its #1 position…