Start-Up: the book

Carol Bartz is an exceptional woman. The new Yahoo CEO had given an interview in 2002 that you can read in the book Betting It All. Author Michael Malone described her two passions: Fight Cancer and Girls and Math: “Girls in general have no interest for math. I think that in fact they are dissuaded.” On the more general topic of women and technology/business, she added: “I left 3M because I could not evolve just because I was a woman. [...] You are a woman, what are you doing here?” and she also said: “But being a woman in Silicon Valley is to be part of a minority”. The topic of woman in technology is seldom and clearly not enough developed.

Carol Bartz is also amazingly energetic : “I was still running my company while I was having my chemotherapy”.

Finally among the ingredients required for entrepreneurs, she quotes uncertainty that you have to be ready to accept. “Facing the many jobs I took, I was not comfortable because I was wondeing if I was the best for it.” But she also added: “if you cannot make it, you just have to go across the street and try with someone else… which is always possible in Silicon Valley.”

I had read In the Company of Giants in 1997 just before becoming a venture capitalist. Then when I began to read again about entrepreneurs, I just could not find it anymore and had to buy it through the reseller network of Amazon. It is as interesting as my previous posts (Once You’re Lucky, Betting it All, Founders at Work).

I will let you link the names and quotes with the pictures if you have time!

Steve Jobs: “In the early days, we were just trying to hire people that knew more than we did about anything and that wasn’t hard because we didn’t know a lot. Then your perspectives are changing monthly as you learn more. People have to be able to change.”

T. J. Rodgers (Cypress Semiconductor): “the standard entrepreneurial answer is frustration. You see a company running poorly, you see that it could be a whole better. Intel and AMD were arrogant. If you think about it, any billion dollar company, that has so much money to spend on R&D should be unassailable. But the large companies routinely cannot crunch little companies so something’s got to be wrong.”

Gordon Eubanks (Symantec): “What makes a company successful is people, process, product, and passion. You must have great people and product and passion balanced by process.”

Steve Case (AOL): “Do something you really love, you are passionate about. Take a long-term view, be really patient. There are going to be bumps on the road.”

Scott Cook (Intuit): “People [customers] won’t tell you what they want. Often they can’t verbalize it because they don’t understand things they’ve not seen. You must understand fundamental motivations and attitudes.”

Sandy Kurtzig (ASK): “I did not see it as incredible risk. Many entrepreneurs would tell you why it was obvious to do what they did. When you have nothing, you have nothing to lose. That’s why so few entrepreneurs can do it a second time. Even Jim Clark did not really start Netscape or Jobs did not really start Pixar. They funded it. You need other people to be hungry… Believe in yourself, surround yourself with good people, be willing to make mistakes, don’t get wrapped up in your success. You are still the same person you were when you started.”

John Warnock and Charles Geschke (Adobe): “Actually there was the very first business plan, then there was the second business plan, and then the third business plan; we never actually wrote the third business plan.”

Michael Dell: “It did not seem risky to leave school because I was already earning obscene amounts. The worst thing that could happen is I would return to school. The greater risk was to stay at school.”

Charles Wang (Computer Associates): “Managing is not just telling people what to do, but it is leading by doing. Know your strengths and weaknesses and complement yourself. Be realistic and objective. Surround yourself with great people.”

Bill Gates: “It’s mostly about hiring great people. We are [in 1997] 18,000 people and still the key constraint is bringing in great people. We naively thought there were guys who could tell us we weren’t doing things the best way.”

Andy Grove: “I can’t look at a startup as an end result. A startup to me is a means to achieve an end.”

Trip Hawkins (Electronic Arts): “You don’t have an objective, rational process. You need a certain amount of confidence. There are many things that you don’t know will go wrong. If you knew in advance all the things that could go wrong, as a rational person, you wouldn’t go into business in the first place.”

Ed McCracken (Silicon Graphics): “My venture capital friends tell me that many of the ideas they’re seeing for new businesses are coming from people under 26 years old.”

Ken Olsen: “Business school’s goal today is to teach people to become entrepreneurs. I think it’s a serious mistake. You learn first how to be a team member, then a leader.”

Bill Hewlett: “It was 1939 and it was no time to start a company. It was probably the supreme optimism of youth.” and “It’s not all due to luck, but certainly a large percentage of success is. We were in the right place at the right time. We were lucky and we had wonderful teachers and mentors. HP didn’t start in a vacuum.”

Too much organization harms Innovation

These are the title and subtitle of a brilliant paper (inFrench only) by Julien Tarby in the Nouvel Economiste dated June 5, 2008. His article echoes my worries about innovation in Europe. His analysis is really interesting. Among other examples, he quotes:

- Samuel Kortum et Josh Lerner: 1 euro invested in venture capital has a 10x return over 1 euro spent in the traditional R&D of companies

- Pascal Picq, a paleo-anthropologue, who develops the evolution theory applied to the enterprise: start-ups which adapt to survive are Darwinian. “Unfortunately the French education system remains Lamarckian, and considers that organizations improve in a development scheme (administration, big companies). It is the country of the planned projects (planes, trains) and not of disuptions. This culture of the norm does not tolerate variability, trial and error and it induces the development of the [existing] fields of excellence and not the creation of new fields.”

If you read French, and because it is free, you shoud run and download it!

Far from my previous post about Perkins, Peter Drucker’s book Innovation and Entrepreneurship was a paradoxical reading. The first chapters were painful even if brilliant. I understood there that innovation is a process which will be successful if carefully planned and managed. Fortunately, chapter 9 completely changed my perception when the author dealt with knowledge-based innovation, which includes innovations based on science and technology. So let me summarize the main points of this chapter:

1- the characteristics of knowledge-based innovation:

a. the time span between the emergence of the technology and its application is long, 20 to 30 years,

b. it is a convergence of several knowledge and until all the needed ones are available, this innovation can not succeed,

2- the requirements:

a. a careful analysis of the required factors, i.e. the available knowledge and the missing ones,

b. a clear focus on the strategic position, i.e. you have to be right the first time or others will take your place,

c. learn and practice entrepreneurial management, because most tech. innovators lack management skills ,

3- the risks:

a. first, even after a careful analysis, knowledge-based innovation remain unpredictable and turbulent (see also Moore’s books about the chasm and the tornado), and this is linked to its characteristics above; this has two important implication:

i. time plays against innovators,

ii. survival rate is low,

b. there is a limited window where new ventures start, and when it closes, there is a general shakeout, where few survive; who survives is also unpredictable. The only chance of surviving is to have a strong management and resources,… and luck;

c. there is also a receptivity gamble. Even market research does not work with these innovations and the reason why an innovation is accepted or not is also unpredictable.

I have to admit this confirms an intuition I had since my VC years: you have to make a bet and then work hard. But there is no way, you can really plan the success of knowledge-based innovations.

The end of the book is quite good, in particular its conclusion: “The first priority in talking about public policies is to define what will not work: Planning is actually incompatible with an entrepreneurial society and economy. Innovation has to be decentralized, ad hoc, autonomous, specific. It had better start small, tentative, flexible. […] It is popular today [1983!], especially in Europe, to believe that a country can have “high-tech entrepreneurship” by itself. But it is a delusion. In fact a policy which promotes high-tech and high-tech alone will not even produce high tech. All it can come with is another expensive flop, another Concorde. […] The French are right, economic and political strength requires high tech but there must be an economy full of innovators with vision and entrepreneurial values, with access to venture capital, and full of economic vigour.”