Tag Archives: Immigrant

Alexander Grothendieck, 1928 – 2014

What link is there between Andrew Grove (the previous article) and Alexandre Grothendieck? Beyond their common initials, a similar youth – both were born in the communist Eastern Europe they left for a career in the West) and the fact they have become icons of their world, they just represent my two professional passions: startups and mathematics. The comparison stops there, no doubt, but I’ll get back to it.

Two books (both in French) were published in January 2016 about the life of this genius: Alexander Grothendieck – in the footsteps of the last mathematical genius by Philippe Douroux and Algebra – elements of the life of Alexander Grothendieck by Yan Pradeau. If you like mathematics (I should say the mathematical science) or even if you do not like it, read these biographies.

livres_alexandre_grothendieck

I knew as many others about the atypical route of this stateless citizen who became a great figure of mathematics – he received the Fields Medal in 1966 – and then decided to live in seclusion from the world for over 25 years in a small village close to the Pyrenees until his death in 2014. I also have to confess that I knew nothing of his work. Reading these two books shows me that I was not the only one, as Grothendieck had explored lands that few mathematicians could follow. I also found the following stories:
– At age 11, he calculated the circumference of the circle and deduced that π is equal to 3.
– Later, he reconstructed the theory of Lebesgue measure. He was not 20 years old.
– A prime number has his name, 57, who nevertheless is 3 x 19.
Yes, it is worth discovering the life of this illustrious mathematician.

tableau_alexandre_grothendieck

The reason for the connection I made between Grove and Grothendieck is actually quite tenuous. It comes from this quote: “There are only two true visionaries in the history of Silicon Valley. Jobs and Noyce. Their vision was to build great companies … Steve was twenty, un-degreed, some people said unwashed, and he looked like Ho Chi Minh. But he was a bright person then, and is a brighter man now … Phenomenal achievement done by somebody in his very early twenties … Bob was one of those people who could maintain perspective because he was inordinately bright. Steve could not. He was very, very passionate, highly competitive.” Grove was close Noyce in more ways than one, and extremely rational and according to Grove, Noyce was too lax! Grothendieck would be closer to Jobs. A hippie, a passionate individual and also somehow self-taught. Success can come from so diverse personalities.

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Last point in common or perhaps a difference. The migration. Grove became a pure American. Grothendieck was an eternal stateless, despite his French passport. But both show its importance. Silicon Valley is full of migrants. I often talk about this here. We know less that what is called “the French school of mathematics” also has its migrants. If you go to the French wikipedia page of the Fields Medal, you can read:

Ten “Fields medalists’ are former students of the Ecole Normale Superieure: Laurent Schwartz (1950), Jean-Pierre Serre (1954), René Thom (1958), Alain Connes (1982), Pierre-Louis Lions (1994) Jean-Christophe Yoccoz (1994), Laurent Lafforgue (2002), Wendelin Werner (2006), Cédric Villani (2010) and Ngo Bao Chau (2010). This would make “Ulm” the second institution after the ‘Princeton’ winners, if the ranking was the university of origin of the medal and not the place of production. Regarding the country of origin, we arrive at a total of fifteen Fields medalists from French laboratories, which could put France ahead as the formative nations of these eminent mathematicians.

But in addition to Grothendieck, the stateless, Pierre Deligne, Belgian, had his thesis with him, Wendelin Werner was naturalized at the age of 9 years, Ngo Bao Châu the year he received the Fields Medal, after doing all his graduate studies in France, and Artur Avila is Brazilian and French … One could speak of the International of Mathematics, which might not have displeased Alexander Grothendieck.

Immigrants and Unicorns

Thanks to the a16z weekly newsletter, I just discovered another interesting study about the importance of migrants in the US innovation landscape: Immigrants and the Billion Dollar Startups (in pdf). Here are some key findings:
– 51 percent, or 44 out of 87, of the country’s $1 billion startup companies had at least one immigrant founder.
– 62 of the 87 companies, or 71 percent, had at least one immigrant helping the company grow and innovate.
– immigrant founders have created an average of approximately 760 jobs per company in the United States.
Of course this is limited to the Unicorns, private companies with a rather young history, but these are impressive data.

Immigrants and Billion Dollar Startups

If you have never read anything about the importance of migrants in Silicon Valley, you might also be interested in the work of AnnaLee Saxenian. Now, I copied the data from the study, to add my own comments:

Unicorns_and_migrants

In terms of geography, out of the 44 start-ups, 14 are based in Silicon Valley and 12 in close-by San Francisco.
In terms of education, out of the 60 immigrant founders, 23 have studied in the US universities, including 5 at Stanford and 1 at Berkeley vs. 4 at Harvard and 2 at MIT.
In terms of origin, the study gives the individual countries and I was interested at Europe: 15 come from the European Union vs. 14 from India and 7 from Israel.
Interesting, right?

When Entrepreneurship Meets Street Art

From time to time, I post articles not related to start-ups and entrepreneurship, but to other topics such as Street Art for example. Now comes the opportunity to join both thanks to Banksy. Indeed I can even relate both to migrants (who are a critical component of entrepreneurship). Banksy recently created the following Street Art work:

jobs_02-932x525

648x415_uvre-banksy-pres-jungle-calais

Banksy explained: “We’re often led to believe migration is a drain on the country’s resources, but Steve Jobs was the son of a Syrian migrant. Apple is the world’s most profitable company, it pays over $7 billion a year in taxes—and it only exists because they allowed in a young man from Homs.” Do I need to add about the importance of migrants in high-tech entrepreneurship? If yes, just read again AnnaLee Saxenian, Migration, Silicon Valley, and Entrepreneurship.

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.

A Look Back at the Swiss February 9 Votation

Here is my regular column in Entreprise Romade. This time, the impact of the vote on February 9…

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So much has has been said and written about the impact of the vote on Feb. 9 on academic research and education, that I have hesitated before writing this column. Freezing of the exchange of students through the Erasmus + program and the access to ERC grants for top researchers; degradation to the rank of third country in the Horizon 2020 research programs. All this was well explained and should be known to those who are or feel concerned. Foretold disaster or major constraint to which Switzerland will adapt through its own genius, the future only will tell. Finally, the people are sovereign and the concerns expressed trhough the vote are fairly shared, in Europe and even in the USA. Europe suffers probably more than Switzerland and our neighbors have shown their misunderstanding rather than frustration.

So I will just try to illustrate here the reasons for my sadness. A simple anecdote to start: I arrived at EPFL in 2004. The first file on which I worked was the project of a young Spanish student, Pedro Bados. He had just finished his master’s thesis as part of an exchange program and his work had produced some nice results. These results were patented, and the student turned into an entrepreneur when he founded NEXThink which today has about one hundred employees. The start-up, which is headquartered on the EPFL campus, is supported in part by foreign capital due to the weakness of the Swiss venture capital scene.

Mr. Blocher had told Radio Suisse Romande he did not believe in big European projects that do not work. It is true that innovation can not be planned and very clever is the one who can predict the future. But Pedro’s innovation is real however and simply would not have existed without Erasmus. NEXThink is not the only Swiss company founded by a migrant. Biocartis has raised over CHF 250 million and its founder Rudi Pauwels, is Belgian. He is a “serial entrepreneur” who had come to seek inspiration at EPFL after a first success. More than three quarters of the spin-off EPFL have foreign founders, and half are European.

Another anecdote: Switzerland is a model for its neighbors in academic matters and for its innovation performance. Many universities and representatives from European regions visit the EPFL campus. For six months, I have been working on a project with three other European technological universities on high-tech entrepreneurship. Without accepting the intiative on mass immigration, we would have been the project leader of an exchange program for entrepreneurs. We will not be better than a third country and I can not work with my Swiss colleagues from the private sector who have a good knowledge in the internationalization of entrepreneurship. We will adapt…

The problem is not so much economic as Switzerland contributed largely to the funding of these programs. It is human. In a recent debate in Neuchatel, Peter Brabeck, chairman of Nestlé, said: “75% of people working in Switzerland in our research and development teams are foreigners; this vote is creating a lot of uncertainty for them. But I can assure you of one thing: Nestlé will not lose a single one of its scientists. But Switzerland perhaps. Because if I do not have the right to employ them in Switzerland, so I will have them work elsewhere on their projects” [1]. Novartis had already made long ago the choice to open a research center in Boston. On a smaller scale, HouseTrip, a recent success story from the Lausanne Hospitality School, moved to London, because of the lack of local talents.

Last anecdote: I arrived in Switzerland in 1998 and the process of obtaining my work permit took more than six months…; it was not an easy arrival. The entry into force of the bilateral agreements, in 2002, certainly simplified the decision of Pedro Bados to create his start-up in Switzerland; no doubt. I have no idea how future young foreign entrepreneurs will experience our new situation. Switzerland will probably adapt here too! But I do not see who wins anything at complicating the arrival of talents whereas they leave very easily.

I finish on a more symbolic dimension by quoting a participant in another debate on the subject [2]: “And to return to the question of research, EPFL has not only research capacity, it has a serious mission in training. I’m an engineer and I am amazed to see that the very notion of engineer is disappearing when the EPFL is now staking everything on biotechnology. I’d like to see EPFL still train people how to build bridges.” If the academic world has been so little audible despite its attempts, it is perhaps because it is not as well liked as you might think. Switzerland does not like elitism. One prefers established SMEs to start-ups, which do not make people dream as in Silicon Valley and pension funds do not support the venture capital. When I attended a selection committee of promising young people, I heard the jury member smile while indicating that only 2-3% of Swiss students benefited from Erasmus and if it was for them to live what describes the movie “L’Auberge Espagnole” (The Spanish Inn), this may not be so bad. Yet high-tech entrepreneurship also concerns only 2-3% of our students. Scarcity and elitism, I think, are more important than you think.

EPFL did not stop training specialists of concrete or mechanical structures. Academic research has even improved the quality and cost of bridges. But the world is changing too. Bioengineering, computer science are promising and future innovations in these disciplines will be much larger than those that improve our bridges and tunnels. One does not need to be a genius to understand this. Except if we have lost faith in science and technology? I can tell you that Asia and America have not lost that confidence. Would Switzerland be like Europe?

I understand that the initiators of the referendum are sticking to their positions and consider that the country’s problems were more important than the consequences thereof. Expressing a frustration in front of a Europe in crisis or a concern for the future is one thing. Minimizing the impact this will have on Switzerland seems to be a risky bet. I respect the decision, but I regret it… badly.

[1] http://www.arcinfo.ch/fr/regions/canton-de-neuchatel/a-neuchatel-le-president-de-nestle-peter-brabeck-s-inquiete-des-consequences-du-vote-du-9-fevrier-556-1271025

[2] Florence Despot on the RTS: http://www.rts.ch/info/dossiers/2014/les-consequences-du-vote-anti-immigration/5619927-playlist-immigration-suites.html?id=5598709

The Immigrant, Factor of Creation

Here was my last column in 2013 for Entreprise Romande, with a subject that is dear to me, the importance of migrants.

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The paths of innovation and entrepreneurship are paved with a myriad of dilemmas. Clayton Christensen a few years ago had explored the first topic in his Innovator’s Dilemma and last year Noam Wasserman has published the interesting Founder’s Dillemmas. The uncertainty of the market, youth vs. experience, disruptive vs. incremental innovation, the new vs. the established are just a few examples of these difficult choices. A more controversial and politically sensitive subject is the contribution of migrants and foreigners in the field of creation.

Just when he debate is growing in Europe as well as in Switzerland about the threat that would represent those who are different and come from elsewhere, it is perhaps worth remembering more positive elements about the importance of openness to outsiders. The Swiss history [1] reminds us that the watch industry is linked to the arrival of the Huguenots in the sixteenth century; a part of the textile industry in St. Gallen has its origin in England. There is also a French origin in the Basel chemical industry. Perhaps it interesting to recall that Christoph Blocher has distant German roots. But what about Nicolas Hayek, the savior of the watch industry, rocked by his Lebanese and French cultures.

Much further, Silicon Valley, the world champion of innovation and entrepreneurship, owes much to its migrants. Of course America is a land of pioneers, but the San Francisco area pushed the logic to an extreme. More than half of the entrepreneurs in this region are of foreign origin and for example Google, Yahoo, Intel had founders with foreign roots.

While Europe has a temptation of closing its doors due to its economic difficulties, in the United States, the Start-up Act 2.0 intends to streamline visas for foreigners and to regularize children of migrants to enable them to enter higher education. Japan was another major country for innovation a few decades ago nut it may have suffered from its low level of migration; the country is aging and has not really reinvented itself.

Switzerland is a land of migration, let us not forget it. This is one of its strengths. Today, the campus of EPFL and ETHZ have a great deal of students but also of researchers and teachers with foreign origin. The proportion increases much more if you focus on those who create businesses. For those who have received an entrepreneurial scholarship to EPFL, the proportion rises to 75% including 25 % of non-Europeans.

Would foreigners be more talented and creative? The answer is rather a larger experience of what is unknown and uncertain. Migrants have agreed to leave their homeland, sometimes leaving everything behind. And they know by experience that we can recover from this loss. They know well that it is always possible to start again and the fear of failure is reduced. He also learned to domesticate novelty. It should be added that a migrant has less access to established circles and is stuck by “glass ceilings”. They must often build they destiny. From this point of view, they do not take the jobs of anyone, they create new opportunities, that will become beneficial to others!

[1] http://histoire-suisse.geschichte-schweiz.ch/industrialisation-suisse.html

AnnaLee Saxenian, Migration, Silicon Valley, and Entrepreneurship.

Shame on me! How is it possible I mention so little AnnaLee Saxenian in this blog, as well as the importance of migrants in entrepreneurship? I had shortly mentioned Regional Advantage in Silicon Valley – more of the same?, but this was more about the openness of Silicon Valley culture and why it did a better job than the Boston area.

It might be because migration was a big feature of my book and nothing new came out thereafter even if the topic is of utmost importance. So let me address the topic of Immigrants again now. In her second book, published in 2006, The New Argonauts: Regional Advantage in a Global Economy Saxenian analyzed the importance of migrants in high-tech entrepreneurship, both for the USA and for the countries of origin of these migrants.

Saxeninan-TheNewArgonauts

In a related paper, she had written: “In the United States, discussions of the immigration of scientists and engineers have focused primarily on the extent to which foreign-born professionals displace native workers. The view from sending countries, by contrast, has been that the emigration of highly skilled personnel to the United States represents a big economic loss, a brain drain. Neither view is adequate in today’s global economy. Far from simply replacing native workers, foreign-born engineers are starting new businesses and generating jobs and wealth at least as fast as their U.S. counterparts. And the dynamism of emerging regions in Asia and elsewhere now draws skilled immigrants homeward. Even when they choose not to return home, they are serving as middlemen linking businesses in the United States with those in distant regions.” [Brain Circulation: How High-Skill Immigration Makes Everyone Better Off – 2002 – http://www.brookings.edu/research/articles/2002/12/winter-immigration-saxenian] In the end, she added: “Essentially, the new argonauts are people who have learned the Silicon Valley model, usually by doing graduate work in the U.S. and getting absorbed into the Silicon Valley boom. They marinated in the Silicon Valley culture and learned it. This really began in the late ‘80s for the Israelis and Taiwanese, and not until the late ‘90s or even the beginning of the ‘00s for the Indians and Chinese. They began to realize that they could take advantage of their own personal networks in their home countries to provide skill that was scarce in the Valley, and that they could even go home and start businesses there that would tap their old networks. Usually, they were going home and tapping their undergraduate colleagues or their friends from the military, in the case of Israel. They knew and they understood how to work the institutions and the culture of those places, often the language too, better than anyone else in the world.”

From the New Argonauts, I will take only two small paragraphs: “Graduating classes from the elite engineering program at National Taiwan University, for example, came to the United States in the 1980s, as did a majority of engineering and computer science graduates from the prestigious Indian Institutes of Technology. Technical universities from smaller countries like Ireland and Israel also report large proportions of graduates leaving to study in the United States, although their numbers are too small to show up in the aggregate data. [Page 50]

Now the depressing argument! “The technical elite in countries like France and Japan move automatically into high-status positions at the top of the large corporations or the civil service. They have little incentive to study or work abroad, and often face significant opportunity costs if they do. As a result, relatively few pursue graduate education in the United States, and those who do often return home directly after graduation. Those who end up in Silicon Valley for a period are not likely to gain access to capital, professional opportunities, or respect when they return home.” [Page 333]

Saxenian has a long history on the topic. She began in 1999 when she published Silicon Valley’s New Immigrant Entrepreneurs. In two related studies, Saxenian and colleagues had a much deeper quantitative analysis. These were America’s New Immigrant Entrepreneurs in 2007 by Vivek Wadhwa, AnnaLee Saxenian, Ben Rissing, and Gary Gereffi; it was updated in 2012 in America’s New Immigrant Entrepreneurs: – Then and Now written by Vivek Wadhwa, AnnaLee Saxenian and F. Daniel Siciliano.

America-New-Immigrants

There is one table I had used in my book which I found striking: Europe has many Silicon Valley migrants as shown below. But we have not been capable (yet) of using them fruitfully as Asia did. We only begin…
Europe sees the value of migration (still only one way, attracting talent) and hopefully we will benefit from accepting the lessons…

The New Silicon Valley(s)

Nice series on French-speaking Swiss Radio broadcast les Temps Modernes, this week about five stimulating experiments of high-tech clusters. Probably to fight the depressing mood around WEF and the economic crisis. (And not only because I was given the opportunity this morning to comment the last case! I was only invited on Wednesday… 🙂 )

Monday it was about Russia’s Skolkovo, which I had mentioned in a post a few months ago.

I did not know at all Kenya’s Konza, and this was really refreshing.

You cannot avoid China, but here also surprise, surprise, it was not Shanghai neither Shenzhen, but Zhongguancun.


I had heard of Startup Chile, because Stanford supports the experiment in South America.

Finally, I could comment the stimulating British case, the Silicon Roundabout, in East London. You can listen to or download the mp3 file (in French).

A spontaneous emerging cluster, a name given by a local entrepreneur, no real support by decision makers, at least in the beginning and a nice and enthusiastic atmosphere. And all this attracts people from abroad. Is this finally the cluster Europe has been waiting for? We shall see… The experiment is really interesting and if you want to know more, you may wish to read (French) Le Monde, Le “Silicon Roundabout”, un succès britannique, or The Economist, Silicon Roundabout.

Smasher, another Silicon Valley mystery

Smasher is the second Silicon Valley thriller from Keith Raffel that I read. After reading dot.dead, I found this one more complex, and certainly as interesting. A mixture of a traditional thriller where the hero’s wife is smashed by a car, together with a good start-up story where the leader in the field is trying to smash the hero’s company and an academic story of intense competition between researchers in the physics field of [smashed] particles. Hence the title Smasher.

I already mentioned novels about start-ups or Silicon Valley (dot.dead, but also The Ultimate Cure). I have never mentioned though Po Bronson (I loved The First 20 Million Is Always the Hardest) or Michael Wolff (Burn Rate). I have not read (yet) Kaplan’s Start-up. On the academic side, there is Small World by the great David Lodge which I have not read (either…) There are of course many essays on the start-up or academic worlds (I mentioned many in my past posts in the must read category) but there are clearly not so many novels based on these worlds,

Raffel loves to take inspiration from real individuals in Silicon Valley. I had played at recognizing a few in dot.dead. Here it is less obvious; the academic smasher is a mixture of Feynman and Gell-Man. The start-up smasher looks more like Larry Ellison with his dark suits and love for Japanese architecture. But there is a little from Steve Jobs as well. The other characters existed in the first novel. I will not talk about the story and only shortly about the particle physics. I will say more about the start-up and broader Silicon Valley context. Smasher talks of Quarks and quirks, of Murray Gell-Man who got the Nobel prize for their discovery and of SLAC, the Stanford Linear Accelerator (a small CERN). You may identify SLAC both on the map and picture below.

There is indeed a link between particle physics and the start-up world. Raffel reminds us that the World Wide Web was invented at Cern thanks to Tim Berners-Lee. Slac had other spin-offs, but this is another story. Slac was also a home for the Homebrew Computer Club (see [1] and extract from page 214 below)

Smasher is also about women and science. “Stanford was on a campaign to recruit female undergraduates, Ph.D. candidates, and faculty to the natural sciences. My mother’s late aunt had been the first woman in the physics department back in the 1960s. In an effort to honor her and to appeal to what was still the second sex in the realm of natural sciences, the university was naming its particle physics lab after her. I’d lived in Palo Alto all my life and couldn’t recall a building, library, school or academic chair at Stanford labeled with a name except in return for a donation of dollars, euros, yens, dinars, or other convertible currency. So maybe Stanford was really serious about recruiting women.” And the invited professor for the ceremony adds: “We all follow in the footsteps of our predecessors. When I was a girl in France, I wanted to be Marie Curie. After two years as a graduate student at Stanford, after two years of hearing about her legacy, I wanted to be your great aunt.” (Page 12)

What may not be realistic is that this French professor smokes Gauloises (page 213). I know I left France a long time ago but I doubt professors still smoke them! It is pure work of fiction of course but Raffel adds in his acknowledgments that he found inspiration in Rosalind Franklin‘s life. A sad story which shows the complexity of being a woman in science or high-tech

A funny (sorry for the jump for sadness to humor) quote and apparently true [2] on the academic world is Clark Kerr once said his job as president of the University of California was to provide football for the alumni, sex for the students, and offices for the faculty. [The physics and Nobel prize professor] sanctum was twice the size of the [professor of English literature]’s but only a third the size of the business school professor [who is on the board of the hero’s start-up].” (Page 34)

It is also about VCs and term sheets. “VCs, bah. When you had no need for their money, investment offers would cascade over you like a tropical waterfall. When you could use a capital infusion – like now – the money flowed like water in a wadi, a riverbed in Sahara. In other words, it did not.” (Page 20)

“I drove west of Sand Hill Road. This was familiar territory, the Vatican of venture capitalism. In the bubble days of the late 1990s, office space on Sand Hill was the most expensive in the world. Here’s where the founders of Google, eBay, Amazon and Cisco had come, hat in hand, seeking the dollars required to turn the base metal of their dreams into stock market gold.” (Page 41)

Raffel has a few notes on Silicon Valley culture:
“The value of Silicon Valley company wasn’t in inventory or patents. It was in the brain of its employees.” (page 33)
“I had learned in the Valley that no more than two people could keep a business secret and that only worked if one of them was dead.” (Page 45 )
“Under an NDA? I asked. Non-disclosure agreements didn’t usually do much good in the Valley, which was built on loosey-goosey dissemination of intellectual capital, but having one couldn’t hurt. We had a raft of patent applications pending on the technology, but if they stole what we had, we would be defunct by the time we won any lawsuit.” (Page 94)
“Ron Qi, the inventor [of the technology incorporated in our product] and now head of engineering looked down as if examining the polish on his shoes. The other three around the table, Samantha Maxwell, our Korean-born MIT-educated marketing genius; Ori Mohr, the ex-Israeli paratrooper and kick-ass head of operations, and Bharat Gupta, the CFO, all moved their eyes back to me.” … “I saw Ron, who’d been brought up in the more deferential milieu of Taiwan…” (Page 44) [Immigrants again]
“I asked the engineers how the tweaking of the product was going, the sales rep what I could do to help them close their big deals, and the bean counters how much work was left to close the books for the latest quarter. What I heard from them was unfiltered by the vice presidents who reported to me. (The business professor) had told me that I could ask any employee anything but I could only tell my direct reports what to do. Managing the others was – who’d’ve thunk of it? – the jobs of their managers. As I popped into offices or cubicles, I was following the footsteps of the Founding Fathers of Silicon Valley, Bill Hewlett and Dave Packard, who advocated MWBA – management by walking around.” (Page 102)
“Thirty minutes later, I walked into a building named after Robert Noyce, one of the “traitorous eight” whose departure from Shockley Semiconductor loomed as large in Valley history as the exodus from Egypt did in the Bible. One of the founders of both Fairchild Semiconductor and Intel, Noyce was the co-inventor of the microprocessor, the electronic brain that ran everything from cell phones to server farms.” (Page 194)

A few more things on the academic world:

“It seems that the only way for a Stanford professor to win prestige is to start a successful company.
– Americans may not be interested in how the universe is made. I can tell you though, in Silicon Valley, they definitely want to know how money is made.
A researcher at CERN wanted to share information with others physicists. He invented a language to send it around and we ended up with the World Wide Web.
– Of course you would know our wonderful Sir Tim. […] The computer nerds at SLAC in the early 1970s hosted meetings of what they called the Homebrew Computer Club [1]. Steve Jobs and Steve Wozniak came.” … “And from that came Apple Computer and the whole PC industry. So you’re saying Silicon Valley wouldn’t be much without the physicists?”
(Page 214)

as well as

“I caught sight of a new photo over the desk. His head flanked by two earnest student types. He followed my eyes. “Another sign of my vanity.” Sergey Brin and Larry page developed their search algorithm as Stanford grad students and, of course, started their company to exploit it. Stanford got shares in the venture in return for their ownership of intellectual property.
– And how many millions did that piece of Google add to the university coffers?
– Three hundred and thirty six”
(Page 218)

Smasher is certainly not about literature, but it is (really) entertaining; nor does it belong to the category of the mystery masterpieces. Raffel does not have the genius (or experience) of James Ellroy, or even George Pelecanos and Henning Mankell but he is a real pleasure to read, I appreciate his talent, imagination and his interesting description of SV culture, history and dynamics.

[1] Homebrew Computer Club: “One influential event was the publication of Bill Gates’s Open Letter to Hobbyists, which lambasted the early hackers of the time for pirating commercial software programs.” http://en.wikipedia.org/wiki/Homebrew_Computer_Club. Another site is Memoir of a Homebrew Computer Club Member

[2] Another legacy was his wit—after writing a serious book “The Uses of the University”, Kerr surprised an audience with this riposte–“The three purposes of the University?–To provide sex for the students, sports for the alumni, and parking for the faculty.” From http://content.cdlib.org/view?docId=kt687004sg&chunk.id=d0e21648&brand=calisphere&doc.view=entire_text

America and entrepreneurship

Nearly 3 years after my unusual post about Obama, here is a post slightly related. Before digging into the topic, I have to admit I have a huge respect for the American president. Even after watching George Clooney’s The Ides of March and the disappointment expressed by many people, I am intrigued and fascinated by his track record. I should add for the anecdote that I was in Washington in October 2009 when he was award the Nobel Peace Prize and in Silicon Valley in September 2011 when he pronounced his recent speech to the Congress. I also quite liked the Titan Dinner.

The White House recently published TAKING ACTION, BUILDING CONFIDENCE and the second initiative is about entrepreneurship. It is worth reading these dense 6 pages and among other things, it is striking to notice that the USA, “the most entrepreneurial nation on earth” [page 17] is extremely worried about an “increasingly unfavorable environment” and a “fallen optimism”. For these reasons, the report suggests 12 initiatives to “help spur renewed entrepreneurship”. (They are listed at the bottow on this post)

Here is my simplistic vision of the proposals:
– a few are about lowering the barriers, i.e. “changing the Rules”, what I tagged with an “R” below.
– a few more are about enabling more money and investment towards start-ups, tagged with an “M”.
These are classical measures, important and necessary.

What I found very interesting are the other ones:
– three are about Intellectual Property and Technology Transfer, a sign that the patent system might be in trouble
– even more interesting, the last three are about the People, the Talent. They mention the Immigrants and the Mentors.

These are great advice, that we should also look at very seriously in Europe!


Click on the picture to enlarge

Win the Global Battle for Talent
Some of the most iconic American companies were started by immigrant entrepreneurs or the children of immigrant entrepreneurs. Today, however, many of the foreign students completing a STEM degree at a U.S. graduate school return to their home countries and begin competing against American workers. A significant majority of the Jobs Council calls upon Congress to pass reforms aimed directly at allowing the most promising foreign-born entrepreneurs to remain in or relocate to the U.S.

Reduce Regulatory Barriers and Provide Financial Incentives for Firms to Go Public
Lowering the barriers to and cost of IPOs is critical to accessing financing at the later stages of a high growth firms’ expansion. A significant majority of the Jobs Council recommends amending Sarbanes-Oxley and “rightsizing” the effects of the Spitzer Decree and the Fair Disclosure Act to lessen the burdens on high growth entrepreneurial companies.

Enhance Access to Capital for Early Stage Startups as well as Later Stage Growth Companies
The challenging economic environment and skittish investment climate has resulted in investors generally becoming more risk-adverse, and this in turn has deprived many high-growth entrepreneurial companies of the capital they need to expand. The Jobs Council recommends enhancing the economic incentives for investors, so they are more willing to risk their capital in entrepreneurial companies.

Make it Easier for Entrepreneurs to Get Patent-Related Answers Faster
There are concerns among many entrepreneurs that, as written, the recently passed Patent Reform Act advantages large companies, and disadvantages young entrepreneurial companies. The Jobs Council recommends taking specific steps to ensure the ideas from young companies are handled appropriately.

Streamline SBA Financing Access, so More High -Growth Companies Get the Capital they Need to Grow
The SBA has provided early funding for a range of iconic American companies. The Jobs Council recommends that the Administration streamline and shorten application processing with published turnaround times, increase the number of full time employees who perform a training or compliance function, expand the overall list of lending partners, and push Congress to fully authorize SBIR and STTR funding for the long term, rather than for short term re-authorizations.

Expand Seed/Angel Capital
The Jobs Council recommends that the Administration clarify that experienced and active seed and angel investors should not be subject to the regulations that were designed to protect inexperienced investors. We also propose that smaller investors be allowed to use “crowd funding” platforms to invest small amounts in early stage companies.

Make Small Business Administration Funding Easier to Access
The SBA has provided early funding for a range of iconic American companies, including Apple, Costco, and Staples. The Jobs Council recommends that the Administration streamline and shorten application processing with published turnaround times, increase the number of full time employees who perform a training or compliance function, expand the overall list of lending partners, and push Congress to fully authorize SBIR and STTR funding for the long term, rather than for short term re-authorizations.

Enhance Commercialization of Federally Funded Research
The government continues to play a crucial role in investing in the basic research that enables America to be the launchpad for new industries. The Jobs Council recommends that the Administration do more to build bridges between researchers and entrepreneurs, so more breakthrough ideas can move out of the labs and into the commercialization phase.

Address Talent Needs by Reducing Student Loan Burden and Accelerating Immigration Reforms
A large number of recent graduates who aspire to work for a start-up or form a new company decide against it because of the pressing burden to repay their student loans. The Jobs Council recommends that the Administration promote Income-Based Repayment Student Loan Programs for the owners or employees of new, entrepreneurial companies. Additionally, we recommend that the Administration speed up the process for making visa decisions so that talented, foreign-born entrepreneurs can form or join startups in the United States.

Foster Regional Ecosystems of Innovation and Support Growth of Startup Accelerators
There is a significant opportunity to build stronger entrepreneurial ecosystems in regions across the country – and customize each to capitalize on their unique advantages. To that end, the Jobs Council recommends that the private sector support the growth of startup accelerators in at least 30 cities. Private entities should also invest in at least 50 new incubators nationwide, and big corporations should link with startups to advise entrepreneurial companies during their nascent stages.

Expand Programs to Mentor Entrepreneurs
Research consistently shows that a key element of successful enterprises is active mentorship relationships. Yet, if young companies do not have the benefit of being part of an accelerator, they often struggle to find effective mentors to coach them through the challenging, early stages of starting a company. Therefore, the Jobs Council recommends leveraging existing private sector networks to create, expand and strengthen mentorship programs at all levels.

Allow University Faculty to Shop Discoveries to Any Technology Transfer Office
America’s universities have produced many of the great breakthroughs that have led to new industries and jobs. But too often, research that could find market success lingers in university labs. The Jobs Council recommends allowing research that is funded with federal dollars to be presented to any university technology transfer office (not just the one where the research has taken place).