Google in the Plex – Part 1 : a technology…

In the Plex is an(other) amazing book about my favorite company. Google is the reason why I wrote a book about start-ups: When I did a PowerPoint presentation in 2006 gathering what I knew about the Mountain View start-up, some friends told me to write a more general book about start-ups. Which I did in 2007. Hence this blog !

I have read already three books about Google and this one is as good as the previous ones. Maybe better. So I should thank here Michele Catasta, who advised me to read it when I did last June my updated presentation of the 2006 one. And I should certainly have read before this book published in 2011… I have also posted many articles about the company, just check with the tag Google. But I learnt many things In the Plex, and it is what I want to focus with this post(s). And first with Chapter 1 which is about its technology.

in-the-plex-home

Google was not the only one with the technology

Larry Page was not the only person in 1996 who realized that exploiting the link structure of the web would lead to a dramatically more powerful way to find information. In the summer of that year, a young computer scientist named Jon Kleinberg arrived in California to spend a yearlong postdoctoral fellowship at IBM’s research center in Almaden, on the southern edge of San Jose. With a new PhD from MIT, he had already accepted a tenure-track job in the CS department at Cornell University. […] Kleinberg began to play around with ways to analyze links. Since he didn’t have the assistance, the resources, the time, or the inclination, he didn’t attempt to index the entire web for his link analysis. […] all sorts of IBM vice presidents were trooping through Almaden to look at demos of this thing and trying to think about what they could do with it. ”Ultimately, the answer was … not much”. […] Kleinberg kept up with Google. He turned down job feelers in 1999 and again in 2000. He was happy at Cornell. He’d win teaching awards and a MacArthur fellowship. He led the life in academia he’d set out to lead, and not becoming a billionaire didn’t seem to bother him. [Pages 24-26]

There was yet a third person with the idea, a Chinese engineer named Yanhong (Robin) Li. […] Li came to the United States in 1991 to get a master’s degree at SUNY Buffalo, and in 1994 took a job at IDD Information Services in Scotch Plains, New Jersey, a division of Dow Jones. […] He realized that the Science Citation Index phenomenon could be applied to the Internet. The hypertext link could be regarded as a citation! “When I returned home, I started to write this down and realized it was revolutionary,” he says. He devised a search approach that calculated relevance from both the frequency of links and the content of anchor text. He called his system RankDev. […]Robin Li quit and joined the West Coast search company called Info-seek. In 1999, Disney bought the company and soon thereafter Li returned to China. It was there in Beijing that he would later meet—and compete with—Larry Page and Sergey Brin. [Pages 26-27] (Robin Li is the founder of Baidu.)

The technology was ultimately the best but initially nobody saw the value

Excite would buy BackRub, and then Larry alone would go to work there. Excite’s adoption of BackRub technology, he claimed, would boost its traffic by 10 percent. Extrapolating that in terms of increased ad revenue, Excite would take in $130,000 more every day, for a total of $47 million in a year. Page envisioned his tenure at Excite lasting for seven months, long enough to help the company implement the search engine. Then he would leave, in time for the fall 1997 Stanford semester, resuming his progress toward a doctorate. Excite’s total outlay would be $1.6 million, including $300,000 to Stanford for the license, a $200,000 salary, a $400,000 bonus for implementing it within three months, and $700,000 in Excite stock […] “With my help,” wrote the not-quite-twenty-four-year-old student, “this technology will give Excite a substantial advantage and will propel it to a market leadership position.” Khosla made a tentative counteroffer of $750,000 total. But the deal never happened. [Page 29]

In barely a year since Brin and Page had formed their company, they had gathered a group of top scientists totally committed to the vision of their young founders. These early employees would be part of team efforts that led to innovation after innovation that would broaden Google’s lead over its competitors and establish it as synonymous with search. […] It was at least a ten-day process with one of Google’s first crawl engineers, Harry Cheung (everyone called him Spider-Man), at his machines, monitoring progress of spiders as they spread out through the net and then, after the crawl, breaking down the web pages for the index and calculating the page rank, using Sergey’s complicated system of variables with a mathematical process using something called eigenvectors, while everybody waited for the two processes to converge. (“Math professors love us because Google has made eigenvectors relevant to every matrix algebra student in America,” says Marissa Mayer.) [Page 41]

A technology but not a science… and maybe a dangerous one

In its first few years, Google had developed a number of specialized forms of search, known as verticals, for various corpuses—such as video, images, shopping catalogs, and locations (maps). Krishna Bharat had created one of those verticals called Google News, a virtual wire service with a front page determined not by editors but algorithms. Another vertical product, called Google Scholar, accessed academic journals. But to access those verticals, users had to choose the vertical. Page and Brin were pushing for a system where one search would find Everything. [Something called Universal Search]. [Page 58]

When the Universal Search team showed a prototype to Google’s top executives, everyone realized that taking on the project […] had been worth it. The results in that early attempt were all in the wrong order, but the reaction was visceral—you typed in a word, and all this stuff came out. It had just never happened before. “It definitely was one of the riskier things,” says Bailey. “It was hard, because it’s not just science—there are some judgment calls involved here. We are to some degree using our gut. I still get up in the morning and am astonished that this whole thing even works.” Google’s search now wasn’t just searching the web. It was searching everything. In his 1991 book, Mirror Worlds, Yale computer scientist David Gelernter sketched out a future where humans would interact, and transact, with modeled digital representations of the real world. […] But though Gelernter looked on the overall prospect of mirror worlds with enthusiasm, he worried as well. “I definitely feel ambivalent about mirror worlds. There are obvious risks of surveillance, but I think it poses deeper risks,” he said. His main concern was that mirror worlds would be steered by the geeky corporations who built them, as opposed to the public. “These risks should be confronted by society at large, not by techno-nerds,” he said. “I don’t trust them. They are not broad-minded and don’t know enough. They don’t know enough history, they don’t have enough. [Page 59-60]

Google’s researchers would acknowledge that working with a learning system of this size put them into uncharted territory. The steady improvement of its learning system flirted with the consequences postulated by scientist and philosopher Raymond Kurzweil, who speculated about an impending “singularity” that would come when a massive computer system evolves its way to intelligence. Larry Page was an enthusiastic follower of Kurzweil and a key supporter of Kurzweil-inspired Singularity University, an educational enterprise that anticipates a day when humans will pass the consciousness baton to our inorganic progeny. [Page would hire Kurzweil in 2012 ]What does it mean to say that Google “knows” something? […] “That’s a very deep question,” says Spector. “Humans, really, are big bags of mostly water walking around with a lot of tubes and some neurons and all. But we’re knowledgeable. So now look at the Google cluster computing system. It’s a set of many heuristics, so it knows ‘vehicle’ is a synonym for ‘automobile,’ and it knows that in French it’s voiture, and it knows it in German and every language. It knows these things. And it knows many more things that it’s learned from what people type.” […] Spector promised that Google would learn much, much more in coming years. “Do these things rise to the level of knowledge?” he asks rhetorically. “My ten-year-olds believe it. They think Google knows a lot. If you asked anyone in their grade school class, I think the kids would say yes.” What did Spector, a scientist, think? “I’m afraid that it’s not a question that is amenable to a scientific answer,” he says. “I do think, however, loosely speaking, Google is knowledgeable. The question is, will we build a general-purpose intelligence which just sits there, looks around, then develops all those skills unto itself, no matter what they are, whether it’s medical diagnosis or …” Spector pauses. “That’s a long way off,” he says. “That will probably not be done within my career at Google.” (Spector was fifty-five at the time of the conversation in early 2010.) “I think Larry would very much like to see that happen,” he adds. [Page 66-67]

As a final comment read the book. You may also have a look at my slideshare presentation.

Elon Musk – the new Steve Jobs – insane or genius? (part 3)

I just finished reading Elon Musk and following my two previous posts (part 1 and part 2), here are additional notes.

elonmusk-vance

How does innovation work

It’s really a fascinating book and obviously Elon Musk is too. A really unique and tough character. And obviosuly, very much criticized and hated too. One such harsh critics comes from the MIT Technology Review with Tech’s Enduring Great-Man Myth by Amanda Schaffer. You should read it. I just extract two sentences:
“To put it another way, do we really think that if Jobs and Musk had never come along, there would have been no smartphone revolution, no surge of interest in electric vehicles?” Well, this is a critical question about the source of innovation. Society or individuals. The question is relevant for science too.
– “It’s precisely because we admire Musk and think his contributions are important that we need to get real about where his success actually comes from.” This is a quote from Mariana Mazzucato whom I have often quoted here. her book The Entrepreneurial State is a Must Read. It deals with the role of government in innovation. my stronger and stronger belief with years is that the governement makes things possible (science, technology and invention, innovation) but without exceptional individuals – often geniuses, sometimes to the border of insanity – I am not sure so much happens.

Now let me quote more Ashley Vance because the final chapters are as great as the first ones. These quotes show that despite the high role of the governement, it’s not sufficient to explain how innovation works.

As Tesla turned into a star in modern American industry, its closest rivals were obliterated. Fisker Automotive filed for bankruptcy and was bought by a Chinese auto parts company in 2014. One of its main investors was Ray Lane, a venture capitalist at Kleiner Perkins Caufield & Byers. Lane had cost Kleiner Perkins a chance to invest in Tesla and then backed Fisker – a disastrous move that tarnished the firm’s brand and Lane’s reputation. Better Place was another start-up that enjoyed more hype than Fisker and Tesla put together and raised close to $1 billion to build electric cars and battery-swapping stations. The company never produced much of anything and declared bankruptcy in 2013.
The guys like Straubel who had been at Tesla since the beginning are quick to remind people that the chance to build an awesome electric car had been there all along. “It’s not really like there was a rush to this idea, and we got there first,” Straubel said. “It’s frequently forgotten in hindsight that people thought this was the shittiest business opportunity on the planet. The venture capitalists were all running for the hills.” What separated Tesla from the competition was the willingness to charge after its vision without compromise, a complete commitment to execute to Musks’s standards.

[Pages 315-16]

During the entire period of SolarCity’s growth, Silicon Valley had dumped huge amounts of money into green technology companies with mostly disastrous results. There was the automotive flubs like Fisker and Better Place, and Solyndra, the solar cell maker that conservatives loved to hold up as a cautionary tale of government spending and cronyism run amok. Some of the most famous venture capitalists in history, like John Doerr and Vinod Khosla, were ripped apart by the local and national press for their failed green investments. The story was almost always the same. People had thrown money at green technology because it seemed like the right thing to do, not because it made business sense. From new kinds of energy storage systems to electric cars and solar panels, the technology never quite lived up to its billing and required too much government funding and too many incentives to create a viable market. Much of this criticism was fair. It’s just that there was this Elon Musk guy hanging around who seemed to have figured something out that everyone else had missed. “We had a blanket rule against investing in clean-tech companies for about a decade,” said Peter Thiel, the PayPal cofounder and venture capitalist and Founders Fund. “On the macro level, we were right because clean tech as a sector was quite bad. But on the micro level, it looks like Elon has the two most successful clean-tech companies in the US. We would rather explain his success as being a fluke. There’s the whole Iron Man thing in which he’s presented as a cartoonish businessman – this very unusual animal at the zoo. But there is now a degree to which you have to ask whether his success is an indictment on the rest of us who have been working on much more incremental things. To the extent that the world still doubts Elon, I think it’s a reflection on the insanity of the world and not on the supposed insanity of Elon.” [Pages 320-21]

Tony Fadell about Musk

Tony Fadell, the former Apple executive, credited with bringing the iPod ad iPhone to market, has characterized the smartphone as representative of a type of super-cycle in which hardware and software have reached a critical point of maturity. Electronics are good and cheap, while software is more reliable and sophisticated. […] Google has its self-driving cars and has acquired dozens of robotics companies as it looks to merge code and machine. […] And a host of start-ups have begun infusing medical devices with powerful software to help people monitor and analyze their bodies and diagnose conditions. […] Zee Aero, a start-up in Mountain View, has a couple of former SpaceX staffers on hand and is working on a secretive new type of transport. A flying car at last? Perhaps. […] For Fadell, Musk’s work sits at the highest of this trend. “Whether it’s Tesla or SpaceX, you are talking about combining the old-world science of manufacturing with low-cost, consumer-grade technology. You put these things together, and they morph into something we have never seen before. All of a sudden there is a wholesale change. It’s a step function.” [Pages 351-52] Doesn’t this remind you of Zero to One by peter thiel.

Larry Page about Musk

Google has invested more than just about any other technology company into’s Musk’s sort of moon-shot projects: self-driving cars, robots, and even a cash prize to get a machine onto the moon cheaply. The company, however, operates under a set of constraints and expectations that come with employing tens of thousands of people and being analyzed constantly by investors. It’s with this in mind that Page sometimes feels a bit envious of Musk, who has managed to make radical ideas the basis of his companies. “If you think about Silicon Valley or corporate leaders in general, they’re not usually lacking in money,” Page said. “If you have all this money, which presumably you’re going to give away and couldn’t even spend it all if you wanted to, why then are you devoting your time to a company that’s not really doing anything good? That’s why I find Elon to be an inspiring example. He said, ‘Well, what should I really do in this world? Solve cars, global warming, and make humans multiplanetary.’ I mean those are pretty compelling goals, and now he has businesses to do that.” [Page 353]

Larry Page about education

This is a very interesting piece [pages 355-56] not linked to Musk: “I don’t think we’re doing a good job as a society deciding what things are really important to do.” Page said. “I think like we’re just not educating people in this kind of general way. You should have a pretty broad engineering and scientific background. You have some leadership training and a bit of MBA training or knowledge of how to run things, organize stuff, and raise money. I don’t think most people are doing that, and it’s a big problem. Engineers are usually trained in a very fixed area. When you’re able to think about all of these disciplines together, you kind of think differently and can dream of much crazier things and how they might work. I think that’s really an important thing for the world. That’s how we make progress.” [Pages 355-56]

Some final words about Musk

It’s funny in a way that Musk spends so much time talking about man’s survival but isn’t willing to address the consequences of what his lifestyle does to his body. “Elon came to the conclusion early in his career that life is short,” Straubel said. “If you really embrace this, it leaves you with the obvious conclusion that you should be working as hard as you can”. Suffering though has always been Musk’s thing. The kids at school tortured him. His father played brutal mind games. Musk then abused himself by working inhumane hours and forever pushing his businesses to the edge. The idea of work-life balance seems meaningless in this context. […] He feels that the suffering helped to make him who he is and gave him extra reserves of strength and will. [Page 356]

However….

As Thiel said, Musk may well have gone so far as to give people hope and to have renewed their faith in what technology can do for mankind. [Page 356]

Space Invaders in Paris and Tokyo: an update

Not directly linked to my main blog activity, I publish from time to time about Street Art. The summer is a good time for summarize findings and I did some work about my Paris and Tokyo’s quest of Space Invaders. Paris has now 1167 invasions. Tokyo is still at 138 but I could find old ones online.

3-SI

Here are also two other nice works. First my favorite artist, “Mirror Man” from Pully (Switzerland) who created this in Paris.
IMG_6528

– Breaking Bad
1-breakingbad-s

– Cost
2-cost-s

More “seriously” here are some stats about Paris (updated as of October 2015 with 1182 invasions)
SI-PA-stats-oct2015

So my synthesis, which you also find on SlideShare gives this:

Paris: from PA_1000 to …

Toyko

Elon Musk – the new Steve Jobs (part 2)

After reading chapters 8 & 9 of Elon Musk and after my recent post about the Tesla and SpaceX leader, I am now fully convinced Elon Musk is much more than Steve Jobs. He has brought back optimism to Silicon Valley, to the USA and maybe to the world. He has also brought back hardware and engineering in a world that was thinking everything was virtual and online. Mea culpa, I felt the same; I felt that software and intelligence was what was driving the world. Elon Musk has shown that tinkering, experimenting coupled with an ambitious vision could change the world.

elonmusk-vance

“When the launch was successful [SpaceX 4th launch but the 1st to be successful], everyone burst into tears”, Kimbal said. “It was one of the most emotional experiences I’ve had.” Musk left the control room and walked out of the factory floor, where he received a rock’s star welcome. “Well, that was freaking awesome,“ he said. “There are a lot of people who thought we couldn’t do it – a lot actually – but as the saying goes, ‘the fourth time is the charm’, right? There are only a handful of countries on Earth that have done this. It’s normally a country thing, not a company thing…. [Page 203]

But the reader should not forget the tough reality: For Gracias, the Tesla and SpaceX investor and Musk’s friend, the 2008 period told him everything he would ever need to know about Musk’s character. He saw a man who arrived in the United States with nothing, who had lost a child, who was being pilloried in the press by reporters and his ex-wife and who verged on having his life’s work destroyed. “He has the ability to work harder and endure more stress than anyone I’ve met”, Gracias said. “What he went through in 2008 would have broken anyone else. He didn’t just survive. He kept working and stayed focused.” That ability to stay focused in the midst of a crisis stands as one of Musk’s main advantages over other executives and competitors. “Most people who are under that sort of pressure fray,” Gracias said. “their decisions go bad. Elon gets hyperrational. He’s still able to make very clear, long-term decisions. The harder it gets, the better he gets. Anyone who saw what he went through firsthand came away with more respect for the guy. I’ve just never seen anything like his ability to take pain”. [Page 211]

Again, Musk is not afraid of risk-taking. As 2008 came to an end, Musk had run out of money […] The couple had to start borrowing hundreds of thousands of dollars from Musk’s friend Skoll and Riley’s parents offered to remortgage their house. Musk no longer flew his jet back and forth between Los Angeles and Silicon Valley. He took Southwest. [Pages 206-207] He manage to save Tesla, The deal ended up closing on Christmas Eve, hours before Tesla would have gone bankrupt. Musk had just a few hundred thousand dollars left and could not have made payroll the next day. […] On December 23, 2008, however, SpaceX received a shock. People inside NASA had backed SpaceX to become a supplier for the ISS. The company received $1.6 billion as payment for twelve flights to the Space Station. [Page 210]

It is also interesting to mention Musk’s hiring methods! The SpaceX hiring model places some emphasis on getting top marks at top schools. But most of the attention goes toward spotting engineers who have exhibited type A personality traits over the course of their lives. The company’s recruiters look for people who might excel at robot-building competitions or who are car-racing hobbyists who have built unusual vehicles. The object is to find individuals who ooze passion, can work well as part of a team, and have real-world experience bending metal. “Even if you’re someone who writes code for your job you need to understand how mechanical things work. We were looking for people that had been building things since they were little.” [Page 220] Interviews are tough with puzzles, code writing and Musk interviewed the first 1’000 employees de SpaceX.

I am far from finished but needs to end up for now with my usual cap. tables for Musk’s ventures: 1-Paypal, 2-Tesla Motors, 3-SolarCity which he did not found but backed from the early days and the two founders are his cousins, 4-finally a tentative cap. table based on what SpaceX announced.

1-Paypal
Musk-PayPal-Captable

2-Tesla Motors
Musk-Tesla-Captable

Musk-Tesla-Rounds

3-SolarCity
Musk-SolarCity-Captable

4-SpaceX
Musk-SpaceX-Captable

Elon Musk – the new Steve Jobs

Elon Musk is probably the new Steve Jobs. He might be much more even. His early life, his private life has not been simple and easy. He is probably as tough with a similar distorted perception of reality as the Apple hero. But as an entrepreneur, he may have a broader vision and ambition. He began small and simple with Zip2, an early Internet yellow pages start-up, which he still sold for $307M, followed by X.com which had the ambition to change the banking system before it merged with Confinity to become Paypal. Both were just experiments! He learnt and developed his “grandes oeuvres”: Tesla and SpaceX.

Ashlee Vance has just written a remarkable and fascinating book Elon Musk, Tesla, SpaceX, and the Quest for A Fantastic Future about his life and achievements.

elonmusk-vance

Zip2 – 1995 – 3 co-founders (Elon and Kimbal Musk, Greg Kouri) $3M with MDV – sold to Compaq / AltaVista for $307M on April 1, 1999 after more than $50M additional funding. Elon made $22M, Kimbal $15M, MDV 22x its money.

X.com – 1999 – 4 co-founders (Ed Ho, Harris Fricker, Christopher Payne, Elon Musk) and early employee, Scott Anderson. Bill Harris, CEO in Dec. 99. Merges with Confinity in March 2000. Musk netted $250M from the sale to eBay or $180M after taxes.

All told, Musk invested $12M into X.com, leaving him, after taxes, with $4M or so for personal use. “That’s part of what separates Elon from mere mortals,” said Ed Ho, the former Zip2 executive, who went to cofound X.com. “He’s willing to take an insane amount of personal risk. When you do a deal like that, it either pays off or you end up in a bus shelter somewhere.” [Page 80]

Musk was replaced as CEO while on honeymoon. But when it became clear that the company had already moved on, Musk relented. “I talked to Moritz [from Sequoia] and a few others,” Musk said. “It wasn’t so much that I wanted to be CEO but more like ‘Hey, I think there are some pretty important things that need to happen, and if I’m not CEO, I’m not sure they are going to happen.’ But then I talked to Max [Levchin] and Peter [Thiel], and it seemed they would make these things happen. So then, I mean, it’s not the end of the world. […] Throughout this ordeal, however, he showed incredible restraint. He embraced the role of being an advisor to the company and kept investing in it, increasing his take as PayPal’s largest shareholder. “You would expect someone in Elon’s position to be bitter and vindictive, but he wasn’t”, said Botha [from Sequoia], “He supported Peter. He was a prince.” [Pages 88-89]

Musk is direct and tough but “He comes from the school of thought in the public relations world that you let no inaccuracy go uncorrected” [page 91]. An example of toughness in his private life: “He was constantly remarking on the ways he found me lacking. ‘I am your wife,’ I told him repeatedly, ‘not your employee’. ‘If you were my employee,’ he said just as often, ‘I would fire you.’” [Page 94]. He married and divorced 3 times, first with Justine Wilson, with whom Musk had 1 baby who died after 10 weeks, then 2 twins, then 3 triplets, then twice with Talulah Riley.

Chapters 6 and 7 are a MUST READ. They show the drive, craziness, vision, obsession that Musk put into building rockets and electric cars, combining the chaos of start-ups and the structure needed for manufacturing.

SpaceX – Space Exploration Technologies Corp. – 2002 – https://en.wikipedia.org/wiki/SpaceX. The [PayPal] deal gave Musk some liquidity and supplied him with more than $100M to throw at SpaceX.

Tesla Motors – founded on July 1st 2003 by Martin Eberhard and Marc Tarpenning who had sold a previous start-ups for $187M in 2000. In parallel Musk helped J. B. Straubel, a passionate Stanford student, who had seen batteries had reached efficiency possibly useful to electric cars. Musk invested $6.5M in Tesla and Straubel joined in May 2004. On January 27, 2005, the 18 Tesla employees had built the first prototype. Musk invested another $9M in a $13M round. In May 2006 Tesla had 100 employees. Musk invested another $12M together with DFJ, Larry Page, Sergey Brin and others for a new $40M round. In the middle of 2007, tesla had grown to 260 employees. [page 165]

There is an interesting section about Detroit and how different its culture is from Silicon Valley [Page 164¡: Every time Tesla interacted with Detroit it received a reminder of how the once-great city had been separated from its own can-do culture. Tesla tried to lease a small office in Detroit. The costs were incredibly low compared with Space in Silicon Valley, but the city’s bureaucracy made getting just a basic office an ordeal. The building’s owner wanted to see seven years of audited financial from Tesla, which was still a private company. Then the building owner wanted two years’ worth of advanced rent. Tesla had about $50 million in the bank and could have bought the building outright. “In Silicon Valley, you say you’re backed by a venture capitalist, and that’s the end of the negotiation.” Tarpenning said. “But everything was like that in Detroit. We’d get FedEx boxes, and they couldn’t even decide who should sign for the packages”.

Then fights began between Musk and Eberhard: The engineers credited Eberhard with making quick, crisp decisions. […] Musk wanted changes that started to delay the Roadster, Musk kept pushing the car to be more comfortable. […] Eberhard groused that these features were slowing the company down. […] The company as a whole was sympathetic to Martin [Page 165]. Many issues began to appear, technical problems such as the transmission, overall costs issues and finally delays in delivering the Roadster to customers who had prepaid for it.

In August 2007, Tesla’s board demoted Eberhard to president of technology. Most of the employees were tired; Tesla was running out of money after $140M spent. In the meantime, SpaceX failed with its first two rocked launches. And musk filed for divorce. When the 2008 crisis burst out, Musk was in personal and business troubles with his two companies.

More to come if I love as chapters 8-11.

PS – a short reminder about previous posts about Elon Musk:
– June 3, 2010: What makes a good technology company? A mastery of fear and envy.
– March 8, 2010: Tesla Motors and Paypal, a tale of two founders

Startup Land : the Zendesk adventure from Denmark to Silicon Valley to IPO

Many of my friends and colleagues tell me that video and movies are nowadays better than books for documenting real life. I still feel there is in books a depth I do not find anywhere else. A question of generations, probably. HBO’s Silicon Valley may be a funny and close-to-reality account of what high-tech entrepreneurship is but Startup Land is a great example of why I still prefer books. I did not find everything I was looking for – and I will give one example below – but I could feel the authenticity and even the emotion from Mikkel Svane’s account of what building a start-up and a product means. So let me share with you a few lessons from Startup Land.

Startup-Land-the-book

The motivation to start

“We felt that we needed to make a change before it was too late. We all know that people grow more risk-averse over time. As we start to have houses and mortgages, and kids and cars, and schools and institutions, we start to settle. We invest a lot of time in relationships with friends and neighbors, and making big moves becomes harder. We become less and less willing to just flush everything down the drain and start all over.” [Page 1]

No recipe

“Along the way, I’ll share the unconventional advice you learn only in the trenches. I am allergic to pat business advice that aims to give some formula for success. I’ve learned there is no formula for success; the world moves too fast for any formula to last, and people are far too creative—always iterating and finding a better way.” [Page 6]

About failure

In Silicon Valley there’s a lot of talk about failure—there’s almost a celebration of failure. People recite mantras about “failing fast,” and successful people are always ready to tell you what they learned from their failures, claiming they wouldn’t be where they are today without their previous spectacular mess-ups. To me, having experienced the disappointment that comes with failure, all this cheer is a little odd. The truth is, in my experience, failure is a terrible thing. Not being able to pay your bills is a terrible thing. Letting people go and disappointing them and their families is a terrible thing. Not delivering on your promises to customers who believed in you is a terrible thing. Sure, you learn from these ordeals, but there is nothing positive about the failure that led you there. I learned there is an important distinction between promoting a culture that doesn’t make people afraid of making and admitting mistakes, and having a culture that says failure is great. Failure is not something to be proud of. But failure is something you can recover from. [Pages 15-16]

There are other nice thoughts about “boring is beautiful” [page 23], “working from home” [page 34], “money isn’t only in your bank account, it’s also in your head” [page 35], and an “unconventional (possibly illegal) hiring checklist” [page 127]

I will quote Svane about investors [page 61]: “I learned an important lesson in this experience – one that influenced all of the investor decision we’ve made since then. There is a vast spectrum of investors. Professional investors are extremely aware of the fact that they will be successful only if everyone else is successful. Great investors have unique relationships with founders, and they are dedicated to growing the company the right way. Mediocre and bad investors work around founders, and the company end in disaster. The problem is, early on many startups have few options, and they have to deal with amateur investors who are shortsighted and concerned with optimizing their own position.” [and page 93]: “Good investors understand that the founding team often is what carries the spirit of a company and makes it what it is.”

And about growth [page 74]: “Even after the seed round with Christoph Janz, we were still looking for investors. If you’ve never been in a startup this may seem odd, but when you’re a startup founder you’re basically always fund-raising. Building a company costs money, and the faster you grow, the more cash it requires. Of course, that’s not the case for all startups – there are definitely examples of companies that have come a long way on their own positive cash flow – but the general rule is that if you optimize for profitability, you sacrifice growth. And for a startup, it’s all about growth.”

In May 2014, Zendesk went public and the team was so extatic, many pictures were tweeted! The company raised $100M at $8 per share. They had a secondary offering at $22.75 raising more than $160M for the company. In 2014, Zendesk revenue was $127M!… and its loss $67M.

Zendesk-IPO

There was one piece of information I never found neither in Startup Land nor in the IPO filings: Zendesk has three founders, Mikkel Svane, CEO and author of the book. Alexander Aghassipour, Chief Product Officer and Morten Primdahl, CTO. I am a fan of cap. tables (as you may know or can see here in Equity split in 305 high-tech start-ups with founders, employees and investors shares) and in particular studying how founders share equity at company foundation. But there is no information about Primdahl ‘s stock. I only have one explanation: On page 37, Svane writes: “the thing about money is, it’s happening in your head. Everyone processes it differently. Aghassipour adnSvane could live with no salary in the early days of Zendesk, but Primdahl could not. It’s possibly he had a salary against less stock. I would love to learn from Savne if I am right or wrong!

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Click on picture to enlarge

FT’s Top European Tech. Entrepreneurs

Following my article posted on June 25, entitled Europe and Start-ups : should we worry? Or is there hope? Here is a more detailed analysis of the FT’s Top 50 tech. entrepreneurs. First, you may want to do a quiz: do you know them from their pictures?

FT Top 50 Europe

Before I give you the full list (ranking is from left to right and top to bottom), here are some interesting statistics (I think).

FT Top 50 Europe Stats

The countries are not really surprising whereas the huge presence of Index Ventures, compared to Atomico or even Accel was. American funds, including the best ones, are all around. Interesting too. So how many entrepreneurs did you know…

FT Top 50 Europe List
(click on picture to enlarge – additional sources : Crunchbase and SEC)

Europe and Start-ups : should we worry? Or is there hope?

I just read two articles (thanks Kevin and Deborah 🙂 !) about high-tech entrepreneurship in Europe. One is optimistic, the other one less so… The Financial Times just published a special report about Europe’s top 50 tech entrepreneurs and it includes Watch out Silicon Valley by Skype’s co-founder Niklas Zennström. The new York Times published A Fearless Culture Fuels U.S. Tech Giants. You might not be surprised but I mostly agreed with the American point of view. So let me begin with the pessimistic analysis…

Here’s a stark comparison: In the United States, three of the top 10 companies by market capitalization are technology companies founded in the last half-century: Apple, Microsoft and Google. In Europe, there are none among the top 10 and when it comes to remedies: “They all want a Silicon Valley,” [said] Jacob Kirkegaard, a Danish economist […] “But none of them can match the scale and focus on the new and truly innovative technologies you have in the United States. Europe and the rest of the world are playing catch-up, to the great frustration of policy makers there. The article adds: “while there are always individual exceptions to sweeping generalities about Europeans and Americans, the major barriers were cultural.” […] “Fail fast, fail often” is a Silicon Valley mantra, and the freedom to innovate is inextricably linked to the freedom to fail. In Europe, failure carries a much greater stigma than it does in the United States. […] None of this will be easy to change, even assuming Europeans want change.

Zennström is much more optimistic and I would love to agree with him… “Just as a nimble start-up can defeat a large incumbent, turning its focus and speed to its advantage, so too are we seeing that in some respects European entrepreneurs actually have an edge. The first of these advantages is highly visible: the extraordinary development of Europe’s tech hubs.” He mentions here Helsinki for mobile gaming and London for finance. He sees a second reason why Silicon Valley might be less needed. “When we founded Skype, our aim was never to build the best peer-to-peer communication service in Sweden. Likewise, Daniel Ek and Martin Lorentzon did not set out to build Sweden’s best music service with Spotify, nor did Riccardo Zacconi and his co-founders at King aim to build amazing games for Swedes to play with. Without the luxury of a huge domestic market, we were forced to think internationally from day one — to solve global problems, to work across borders, and to move fast in doing so.” […] “In short, we are seeing the emergence of a remarkable cohort of new businesses: start-ups that begin in some of the world’s smallest domestic markets but are able, thanks to their highly international approach, to reach global scale in record time. In time, I believe, this will be as significant a trend as the historic concentration of innovation in Silicon Valley, and will play a major role in the European economy for decades to come.”

I feel like I read the same analysis from fifteen or twenty years…Just have a look, even if more recent, at Europe vs. USA: growth in IT and Biotech Only time will tell us who best analyzed the situation.

HBO’s Silicon Valley – end of Season 2 : dead or alive?

You may prefer the nerds to the lawyers in the last episodes of Silicon Valley’s Season 2. One of the nice wise quotes of our nerd is “we are going to fail by succeeding”, whereas lawyers just try to use the confusion about our hero’s girlfriend status.

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And what about our brilliant MBA explaining that taking care of cables in a garage start-up is “intoxicating”, is “magical”… whereas making money in a big company would have just been boring, and that in any case, he can find a job the next day if necessary. Isn’t this what real life is about?

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Of course we still have these strange apps…

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Of course, there will be the final great Hollywood-like scene…

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And of course a conclusion preparing us for Season 3!

HBO’s Silicon Valley – Episode 16: billionarizing and 3 commas

There are expressions I did not know from Silicon Valley, like billionarizing and 3 commas…

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But Silicon Valley is still the same politically-correct place where smoking is not a good idea, at least in front of colleagues, and where the s… and f*** words are forbidden are least in front of kids.

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Silicon Valley remains Nerdland, with its unique vocabulary. “Since a negative of a negative is a positive, stealing from a thief is OK, it’s the additive inverse property.”