Author Archives: Hervé Lebret

Google Innovation: Culture and Practices

When I heard about a talk on innovation at Google, I was obiously interested all the more that the brief summary looked great. here is the video on youtube, and below the summary:

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It was given by Dan Russell, Research Scientist and Search Anthropologist, Google and was part of the Series of the CITRIS Research Exchange from UC Berkeley on March 16, 2011.

12:00 p.m.
Wednesday, March 16
Banatao Aud., 3rd floor, Sutardja Dai Hall, UC Berkeley
http://events.berkeley.edu/?event_ID=39124

About the talk:

As a company, Google clearly relies on innovation to keep our business alive and growing. Translating that desire into a continual innovation practice is central to the outlook and world-view that Google has as a corporate culture. Innovation isn’t just for the futurists, but a part of what everyone in the company is expected to do on a day-to-day basis.
People who work on internal processes, for example, are expected to be as innovative as engineers and product managers who drive externally visible products. Innovation isn’t something that the company can just leave to a few bright minds, but is deeply embedded in the culture of the company.

Beyond culture, though, there are a few pragmatic behaviors that help Google be innovative. A commonplace belief is that innovation originates with an identified market or user need. While we design for the user, we recognize that innovative ideas originate in many places—sometimes with user needs, but also occasionally from technology opportunities that suddenly become available. In these cases, the user need might not be clearly identified at the outset of research, but become evident only over time. Ultimately, of course, an innovation has to be user-relevant, but we understand that not everything starts that way.

One of the key drivers of Google innovation is our focus on data-driven analytics of our products. We instrument just about everything we can think of, log the data (anonymizing along the way to preserve privacy), then analyze it extensively. We recognize that innovation often proceeds in an evolutionary fashion, and that apparently large leaps in design and novel concepts are often hidden beneath a great deal of under-the-covers work the precedes the public announcement.

In user-interface design, for example, we don’t just do A/B testing, but often A/B/C/D/E/F/… testing. And one of the deep lessons of such an extensive testing program is that we recognize that our intuitions are often incorrect. Large changes in the design may very well lead to poor performance shifts, while tiny, sometimes imperceptible changes can have profound consequences. In many of our products, the UI changes significantly over time, particularly as we learn from our experiments, but also as new technology and data becomes available.

Innovation is thus often smoothly evolutionary, albeit looking like punctuated evolution from the outside, but driven by continual rapid iteration and redesign, always driven by an objective function that includes goodness-of-fit to the environment and exaptation of opportunities as they arise.

Finally, we find that innovative products really are the product of many minds. A very small team might drive the initial design and creation of the concept, but having multiple people look at, evaluate, comment-upon and lend supporting insights is valuable. The trick is to allow these additional insights to be supportive, and not weigh the original ideas down with extraneous freight. Keeping an innovation clear, clean and useful to the consumer is an important practice to avoid losing the key insight and value in the innovation.

Start-Up in French on iPad and Kindle.

Following the digital edition of the English version of Start-Up (Kindle, iPad) last summer, I just did the same for the French version. More details on the page which lists all published versions in paper (English, French, Russian and maybe Italian soon) as well as digital ones.

I was wrong about the difficulty in producing an iBook for Apple. Thanks to an EPFL colleague, I learnt I did not have to use complex editors such as Calibre (and then do a lot of manual corrections). I just imported my Word file into Pages eand then converted it in the ePub format. It then took Apple 8 days to validate the content.

Biotech data – part 2/3: Genzyme

Genzyme is the second topic of my biotech series. Same approach as with Chiron. Genzyme was founded in 1981, went public in 1986, in less than 5 years. It had two founders, Sheridan Snyder and Henry Blair. It should be added that Henri Termeer was instrumental in the company success. Snyder was 45 and an entrepreneur who after Genzyme will create again new companies. Blair was a researcher at Tufts and was 37. He would become an entrepreneur again.

Genzyme had some revenues but no profit when it went public. Oak was the main investor and both Advent and Rothschild had about 5-6% of the company. Interestingly enough, just like Genentech (with Roche) and Chiron (with Novartis), Genzyme has been recently acquired by a European pharma: Genzyme has been acquired by Sanofi-Aventis for $20B.

Next: a few features about Biotech founders and start-ups.

Biotech data – part 1/3: Chiron

Biotech is a strange world for me. I am an IT guy and I have never really understood much about biology. The biotech start-ups are also very different from IT companies. It is well-known that it takes them years to reach revenues with products (not R&D revenue), not to say profitability (just like the semiconductor industry). It does not prevent them from going public early (just as Internet start-ups did in the late 90s!). So it is a strange mix of features of hardware and software companies.

In a series of documents on the biotech history, I could find the following quote related to Genentech: “Late in 1979, Tom Perkins pushed the idea of a public offering. Although the technology was young, and we were early on in the development of products, there was enough interest in the public to get a public offering done. This was a foreign concept at the time. While we had a couple million dollars in revenue–! think it was $3.5 million in revenues in 1979-there were no product revenues or profits generated from products. Whether or not you could take a company public that didn t have product revenue, didn t have commercialized products, and didn t have significant profits, was an unknown. In the mid to late seventies, if companies went public, they had revenues and earnings. You d have at least $10 million in revenues and at least a million dollars in profit, then maybe you could have one of the small high-tech underwriters take you public.”

Secondly, the founders are seldom the typical nerds with some great business vision (Gates, Jobs, Brin/Page, Zuckerberg) but often university professors/researchers. They do not have to quit their academic position and often take the title of chief scientist. (This also happens in the hardware academic spin-offs, with Atheros as an example I mentioned in a recent post).

As a first illustration of all this, I will just show some data about Chiron. My next post will be about Genzyme and I will conclude with general elements in the 3rd and final post.

Chiron was one of the early start-ups in biotech. It was founded in August 1981 and went public in May 1983… 2.2 years! It had three founders Edward Penhoet, William Rutter and Pablo Valenzuela who were respectively 41, 54 and 40 years old when Chiron was founded. Not kids in their early twenties! Their activity at time of foundation was professor at Berkeley, professor at UCSF, researcher at UCSF.

Here is my usual cap. table followed by the equity pie. Chiron at $1.5M and $0.8M in revenue in 1983 and 1982, there was no profit but a loss of $2.2M in 83 and $0.8M in 1982…

Chiron was bought in 2006 by Novartis and it is not the only biotech start-up acquired by an European corporation as we will see soon.

Next post: Genzyme.

The fathers of Silicon Valley: the Traitorous Eight.

Thanks to a conversation with an EPFL colleague, I was recently reminded the early history of Silicon Valley. I knew about Shockley, Fairchild and the Traitorous Eight. I did not know Shockley had been funded by Beckman (thanks Andrea :-)), that was the point of the recent conversation.

What is interesting is to have a look at the Traitorous 8 also. Their history (cf Wikipédia) is well-known, what may be less known is their background.

The next table gives the origin, education and age of the 8 traitors, the 8 engineers who left Shockley labs to found Fairchild Semiconductor in 1957 (click on it to enlarge).

They can be considered as the real fathers of Silicon Valley. The famous poster entitled Silicon Valley Genealogy is certainly a convincing illustration of it as well as their Post-Fairchild activities.

The next image is extracted from the one above (left, mid-height level, corresponding to 1957).

A few comments:
– 5 were educated on the East Coast, 2 on the West Coast and 1 in Europe.
– Indeed, three were from Europe.
– 6 had a PhD (3 from MIT), all had a bachelor.
– They were between 28 and 34-year old in 1957.

If Twitter was going public, some far-fetched assumptions

Twitter is with Facebook, Groupon and LinkedIn, one of the divas if the web 2.0. This morning, I read about a new rumor that the start-up received a new investment valuing Twitter at $4.5B. Twitter has already raised more than $250M and the latest valuation was $3.7B for only $45M in revenues in 2010 with 300 employees. If this is true, Evan Williams, Jack Dorsey et Biz Stone, the 3 founders, are already wealthy, all the more that it seems that some of the investors did not buy new shares from the company, but existing shares from management and employees.

I tried to read the crystal ball and guess how the shareholding is structured. Given the number of unknown parameters, I am probably quite far from the current status, but, thanks to a simple analysis of the financing rounds, a standard stock option plan and a quora article on the founders, here is the result:

Google, Silicon Valley and the spin-off virtuous cycle

It’s one of Silicon Valley strongest assets: entrepreneurs do not stay for long in established companies and create new ones. And it is accepted as a fact. Let us just me quote again Richard Newton: “The Bay Area is the Corporation. […When people change jobs here in the Bay Area], they’re actually just moving among the various divisions of the Bay Area Corporation.”

And what about the famous Wagon Wheel bar: “During the 1970s and 1980s, many of the top engineers from Fairchild, National and other companies would meet there to drink and talk about the problems they faced in manufacturing and selling semiconductors. It was an important meeting place where even the fiercest competitors gathered and exchanged ideas.”

The story goes on. I read today (thanks to Burton Lee) 15 Interesting Startups From Ex-Googlers from Jay Yarow. He found that since 2004, 49 spin-offs were created by former “Googlers”. Because it was a work in progress, apparently the number has increased to more than 70. See slide 2 of the pdf.

As a conclusion, let me add a study by Junfu Zhang who compared Silicon Valley to the Boston Cluster, in terms of how many entrepreneurs left their big company. He showed the big difference there was between the two regions that both Newton and the Wagon Wheel bar explain in terms of culture.


Source: High-Tech Start-Ups and Industry Dynamics in Silicon Valley – Junfu Zhang – Public Policy Institute of California – 2003

Check Point, the Israel success story

After my recent posts about Israel and high-tech innovation, I discovered I did know not very well the Check Point story. Start-up Nation did not provide much info and though you can find a lot on Wikipedia or on the Facts@Glance of the company. for example, I became a little frustrated when I discovered I could not find much about the company early days and IPO. I even had to buy the IPO filing through the SEC as the document is not public on the web and Check Point could not help me with such info.

There are a couple of very interesting points:
– the three founders had equal shareholding at foundation (and afer Check Point went public).
– Gil Shwed, one of the co-founders, is still the chairman and CEO. Another unexperienced and young entrepreneur who grew his baby through adulthood.
– Many women in the management of the company, Deborah Triant at the time of IPO, but even today Dorit Dor, Tal Payne and Juliette Sultan as the executive team page shows. (This may have to be linked to Israel culture again).


Gil Schwed, Shlomo Kramer ,Marius Nacht, the 3 co-founders and
Deborah Triant (from the early web sites of Check Point)

Now the usual cap. table that I could build from the IPO filing and the shareholding pies at the end of the post.

– What is interesting is that Check Point did not raise a lot of money, mostly $600k from BRM in 1993. There were also some loans ($400k) and R&D ($160k) from BRM also which do not appear in the shareholding.
– The American VCs (Venrock and USVP) bought shares from BRM in a secondary financing, so there was no new money for Check Point.
– Check Point issued 3M new shares at IPO and existing shareholders (BRM and the 3 co-founders) sold 1.2M shares.
– Not the least impressive, it took the company 3 years only to go public and its 1995 and 1996 numbers are already impressive.

As usual, I hope this does not include too many inaccuracies or mistakes…

What’s wrong with European venture capital?

It’s the title of a contribution in the Telegraph by Richard Titus. You can read the full article in Start-Up 100: What’s wrong with European venture capital?

I do not agree with 100% of the arguments, but probably 90%, which is good enough. Feel free to react by commenting! (And by the way, there is a French translation in the other side of the blog).

60 Great Books to Spur Your Entrepreneurial Spirit

Julia Watson works with Oedb.org, where was just published the article “60 Great Books to Spur Your Entrepreneurial Spirit

I love to read books as you all know and I read some of the 60s (like Founders at Work or Startup Nation). they probably forgot a few (mine!, just kidding) but this looks very good. Thanks Julia 🙂