Tag Archives: Start-up

Biotech data – part 3/3: A short synthesis

After Genentech, Chiron and Genzyme, let just me do a simple analysis of biotech start-ups. The table which follows summarizes it all and I added Amegn but it is obviously a little tough to read. You can enlarge it however. So you can see data about the companies themselves, foundation year, IPO year, revenues and profit/loss at IPO, current status and then data on founders, their age at foundation, what they were doing before the creation and what they did after the start-up adventure. Then I provide a link on them.

So what is interesting about the companies themselves?

– On average, it takes them 3 years to go public. So the myth that biotech start-ups develop slowly is linked to the revenue/profit status, not the exit status.
– Indeed, when they go public, they have very small revenues and lose money. Compare to Apple for example, on the first picture.
– They are very similar to Internet companies of the late 90s: they go public very soon without revenues and still losing money.
– Finally, they are acquired by European players. This is in total opposition to IT companies where the only buyers are American (check for example slide 36 of the pdf I published in the past).

Now the founders.
– First, they are not young people. Compare again to the same document, slide 27 now. American founders in the slide are on average of 27 year-old, and Europeans, 33 year-old.
– Many had an academic career they did not have to leave. They may have taken sabbaticals but many went back to their academic life. It is obviously related to the previous point.

These 3 posts have shown my small knowledge of biotech but also the fact that they are interesting not to say major differences between Biotech and Information Technology.

Start-Up Guides

I have recurrent questions about how to practically setup your start-up in Switzerland. Here is a guide recently published by the Swiss Innovation Agency (CTI/KTI): Gründen 2.0 – start-up guide – From an idea to an enterprise: information and tips for setting up a company in Switzerland (pdf file).

I’d like to add also the very good guide Olivier Ezratty manages for the French start-ups: l’accompagnement des startups high-tech en France (pdf file).

A Swiss (European) way for entrepreneurship?

With my seventh contribution to the Créateurs newsletter, I stay in Switzerland again with two succesful SMEs. Enjoy!


There is a recurrent debate in the world of high-tech start-ups: and if the American model of fast growth supported by aggressive venture capital was not adapted for European or Swiss entrepreneurs? Two examples may contribute to the discussion: Sensirion and Mimotec.

In my contribution to Créateurs last time, I had focused on Swissquote, which has become a magnificent success story, without that venture capital, which is so much criticized these days. Mimotec is an EPFL spin-off with 24 employees and about CHF10M in revenues. The company provides micro technologies for the watch industry. Mimotec was founded in 1998 by Hubert Lorenz who told his start-up’s story during a recent venture ideas conference at EPFL. It is a clear example of organic growth, a steady growth even if not exponential.

Sensirion is probably more impressive. Founded also in 2008, it is an ETHZ spin-off and it sells pressure sensors, another field of expertise in Switzerland. In an article published for the MEMS 2008 conference, Felix Mayer, Sensirion’s co-founder and CEO, described the growth model of his company. Here is an extract: “The Europeans – especially the Swiss – do not go for the big thing! They rather start small and put one foot in front of the other. A characteristic of the European and Swiss mentality is not to promise high returns for a business idea based on an immature new technology. The European way is rather to start with the own money, to try to find customers, and to grow with the earnings. The Americans, as far as I can tell, follow the motto: “Shoot for the moon. Even if you miss, you will land among the stars”. This means: to go for the new big thing, write down a promising business plan, and raise money to realize it. Hunting for potentially high gains means, on the other hand, to take a higher risk. The United States have more of a high risk culture. However, if you fail, you also get a second chance. Europe is different in this respect”.

Mayer adds that because the financial means are lacking, the European entrepreneur will be more challenged to target the very big markets. Therefore he believes in an intermediate path which will not generate Google-like companies, but leaders in their niche. Thanks to the patient support from a business angel and then from its customers, Sensirion can be proud in 2010 of its 180 employees (the revenue numbers are not public as the start-ups is still privately held). I should however add that it took Sensirion six years before ti could fund its growth through its profits; its business angel was apparently critical to its success.

Is there a model that Europe may follow without just copying the Silicon Valley way? Yes, if we notice that very few companies could reach the size of Logitech or Actelion for example. Whatever the success of an Hubert Lorenz or a Felix Mayer, I cannot help expressing again the same thing I did in my book Start-Up. Why should not Europe ambition the same large success the USA experience in addition to our mid-size stories. Don’t you think the Americans do not have companies similar to Mimotec and Sensirion, in addition to Google or Apple? Criticizing venture capital might be an easy way and I prefer quoting an American entrepreneur on investors: “You can’t live with them, you can’t live without them” And let us not forget that Google has today about 20’000 employees and it was founded in… 1998. There is no doubt that our culture and financial support is not made to produce our own Google but I seriously believe that we should not be afraid of having large ambitions instead of criticizing an American model which also has great assets.

A start-up is a baby

I’ve been using this analogy a lot in my talks or courses. Fred Wilson has been using it to in his latest post, The Expanding Birthrate Of Web Startups.

In my talks, the slide is the following (you can check slide 61 in the pdf I posted in Start-Up, the book: a visual summary):

In full text, it is again
– Do parents know about educating a baby? so why do we say to founders to gain experience first?
– Do parents control everything it does, forever? so why founders are so paranoid about losing control?
– Would they give/abandon responsibility to teachers, doctors, “professionals”? so should not founders just hire the best people to increase chance of success?
A start-up is a baby which needs to grow and its founders should help it succeed (and yes your start-up baby is the most beautiful on earth… )

Finally, I usually add, maybe because I am a bit traditional, that I strongly believe single-parent families/companies are tougher for the kid so find a partner, never found a start-up alone.

What’s interesting with Wilson, is that he helps me enrich the analogy with parenting, so he sees the investor, not the founder as a parent. For me, the investor is a mentor, a godfather… so here are a few comments related to the analogy in his post:

– “I am committing to the care and feeding of the company until cash flow breakeven (the startup equivalent of adulthood)” (Wilson himself)
– “I worry like a parent with too many kids. Who is going to take care of all of these kids?” (Wilson again)
– “Parenting is a good way to put it. Unsure about the “pulling the plug” comparison though, doesn’t go very well with parenting!” (Loic Lemeur)
– “The super-angels and the angels, don’t try to play “parent”. They play friend. It’s a mutual benefit relationship, but the ultimate control is to the entrepreneur. Usually the friends and family who are excited about your seed round (when you leave their company), are not thinking about follow-on.” (Prasanna Sankaranarayanan)
-“do you think the “orphaned startups” will suffer because their “parent investors” remove themselves” (Adam Wexler)
-“an environment not unlike pre- or emerging-industrial third world nations. High infant mortality, the necessity of conserving scarce resources for those infants with provable indications that they CAN survive the initial impediments. It doesn’t mean that the parents love or value the survivors more, but rather that as a practical matter there are few options. […] if a ‘gifted child’ is to be sustained through the vagaries of infancy, then it’s important for both the company and the investor(s) to consider this up front. […] When, at the outset, it becomes clear that substantial investment in capital equipment, research and development, or extended operation at a loss is required if a ‘gifted child’ is to be sustained through the vagaries of infancy, then it’s important for both the company and the investor(s) to consider this up front. ” (Rich Miller)
– “We make fun of parents today who enroll their kids in the right kindegarden so they can get into Princeton, Yale, Harvard, but perhaps they aren’t so wrong if we applied that logic to startups….what do you need to do as an early stage company to ‘get into the right school’ when you come of age?” (Dave Hendricks)
– “But that’s not good parenting… if you want your child/portfolio company to succeed long term, you’ve got to consider where the road will take you, because the easy road/early exit isn’t a lock and is usually a lot harder than you think” (Reece Pacheco)
– “History: birthrate without control produces malnourished kids.” (Agilandam)
– “Short answer: A lower % of these “kids” will make it to their 3rd birthday.” (Andy Swan)
– “I thought you were going to make a separate point, that there aren’t enough acquirers — Google is active, Microsoft, Yahoo and others much less so — to adopt all the kids who don’t go public.” (Glen Kelman)
– “If programs like Y Combinator are getting our smartest kids to start companies instead of going to law school, McKinsey etc then that’s going to lead to good things for our industry and our economy.” (Chris Dixon)
– “Also… you say that entrepreneurs should find a one or 2 VCs and have a long term relationship with them. Isn’t this true for VCs too? Doesn’t it make sense to have the same investors lead the company from birth to adulthood and not one VC for the “toddler” period, one of the “child”, one of for the teen? If we take that analogy a little bit further, we know that foster kids who are taken from foster family to foster family usually don’t end up as “well” as the ones who get the same frame all along?” (Julien)

So the analogy has some value. You can react…

Job creation: who’s right? Grove or Kauffman

Two recent articles seem to draw different conclusions on the critical role of start-ups. The Kauffman foundation just published a report entitled The Importance of Startups in Job Creation and Job Destruction

Andy Grove, the former CEO of Intel, is someone who knows so much about Silicon Valley that his recent article How to Make an American Job Before It’s Too Late is much more disturbing. Let me just quote him:

It’s our own misplaced faith in the power of startups to create U.S. jobs. Americans love the idea of the guys in the garage inventing something that changes the world. New York Times columnist Thomas L. Friedman recently encapsulated this view in a piece called “Start-Ups, Not Bailouts.” His argument: Let tired old companies that do commodity manufacturing die if they have to. If Washington really wants to create jobs, he wrote, it should back startups.

Mythical Moment.

Friedman is wrong. Startups are a wonderful thing, but they cannot by themselves increase tech employment. Equally important is what comes after that mythical moment of creation in the garage, as technology goes from prototype to mass production. This is the phase where companies scale up. They work out design details, figure out how to make things affordably, build factories, and hire people by the thousands. Scaling is hard work but necessary to make innovation matter. The scaling process is no longer happening in the U.S. And as long as that’s the case, plowing capital into young companies that build their factories elsewhere will continue to yield a bad return in terms of American jobs. Scaling used to work well in Silicon Valley. Entrepreneurs came up with an invention. Investors gave them money to build their business. If the founders and their investors were lucky, the company grew and had an initial public offering, which brought in money that financed further growth.

Intel Startup

I am fortunate to have lived through one such example. In 1968, two well-known technologists and their investor friends anted up $3 million to start Intel Corp., making memory chips for the computer industry. From the beginning, we had to figure out how to make our chips in volume. We had to build factories; hire, train and retain employees; establish relationships with suppliers; and sort out a million other things before Intel could become a billion-dollar company. Three years later, it went public and grew to be one of the biggest technology companies in the world. By 1980, which was 10 years after our IPO, about 13,000 people worked for Intel in the U.S. Not far from Intel’s headquarters in Santa Clara, California, other companies developed. Tandem Computers Inc. went through a similar process, then Sun Microsystems Inc., Cisco Systems Inc., Netscape Communications Corp., and on and on. Some companies died along the way or were absorbed by others, but each survivor added to the complex technological ecosystem that came to be called Silicon Valley. As time passed, wages and health-care costs rose in the U.S., and China opened up. American companies discovered they could have their manufacturing and even their engineering done cheaper overseas. When they did so, margins improved. Management was happy, and so were stockholders. Growth continued, even more profitably. But the job machine began sputtering.

U.S. Versus China

Today, manufacturing employment in the U.S. computer industry is about 166,000 — lower than it was before the first personal computer, the MITS Altair 2800, was assembled in 1975. Meanwhile, a very effective computer-manufacturing industry has emerged in Asia, employing about 1.5 million workers — factory employees, engineers and managers. The largest of these companies is Hon Hai Precision Industry Co., also known as Foxconn. The company has grown at an astounding rate, first in Taiwan and later in China. Its revenue last year was $62 billion, larger than Apple Inc., Microsoft Corp., Dell Inc. or Intel. Foxconn employs more than 800,000 people, more than the combined worldwide head count of Apple, Dell, Microsoft, Hewlett-Packard Co., Intel and Sony Corp.

10-to-1 Ratio

Until a recent spate of suicides at Foxconn’s giant factory complex in Shenzhen, China, few Americans had heard of the company. But most know the products it makes: computers for Dell and HP, Nokia Oyj cell phones, Microsoft Xbox 360 consoles, Intel motherboards, and countless other familiar gadgets. Some 250,000 Foxconn employees in southern China produce Apple’s products. Apple, meanwhile, has about 25,000 employees in the U.S. — that means for every Apple worker in the U.S. there are 10 people in China working on iMacs, iPods and iPhones. The same roughly 10-to-1 relationship holds for Dell, disk-drive maker Seagate Technology, and other U.S. tech companies.

If you download the Kauffman paper, you will read that newly-established companies create jobs whereas established companies destroy jobs (they create fewer jobs than they destroy others). There is no contradiction between the two papers, they both show the critical role of innovation, but Grove is adding it is far from sufficient in the long term: you also need to make this initial wealth creation sustainable through job creation in manufacturing. It is all the more interesting that Mr. Grove has a very, very long experience in the field…

Give back to the community

My sixth article in the newsletter Créateurs about high-tech success stories: Swissquote. I am leaving Silicon Valley after purely American stories with Adobe & Genentech, then followed by Europeans in SV (Synopsys, VMware) to talk about a pure Swiss success!

Mark Bürki and Paulo Buzzi are the two founders of one of the nicest Swiss (not to say European) success stories: Swissquote. No link to Silicon Valley, no venture capital, an exception to what I am used to promote. “Just a” local online bank launched in 1997 as a spin-off of a software service company, Marvel, which was founded in 1990. Bürki and Buzzi did not launch their start-up in a Garage like HP, Apple or Google; worse, it was in a cellar! The beginnings were not easy, salaries were not always guaranteed…

The USA played a role however. At a conference in Boston, the two founders discovered a new promising platform: the Internet. Sitting at a tiny booth, the founder of an unknown start-up, Amazon. Later, a contract with the IOC, the International Olympic Commitee, for the design of their web site, gave the much needed cash to Marvel. Marvel had also specialized in financial applications and Bürki could see the potential of the Internet for the consumer of stock and financial news.

With a Zurich-based bank as a financial partner, Marvel launched Swissquote in 1997. The beginnings were very encouraging and at that time, most investment banks were competing for the fast-growing start-ups to be quoted on stock exchanges. Swissquote went public in 2001 with less than CHF20M in sales and a huge loss. The future would not be as nice as the pre-IPO boom and the burst of the Internet bubble threatened the mere existence of the company. But Bürki and Buzzi were not part of the mass of entrepreneurs who disappeared as fast as shooting stars. Decisions were tough, many employees were fired but Swissquote survived. In 2009, its sales were about CHF100M with a net profit of CHF35M, and its market capitalization was nearly CHF600M.

In August, and then in November 2006, I had invited the two founders to share their entrepreneurial experience on the EPFL campus. They had explained the importance of a vibrating ecosystem, as they had enjoyed it in Lausanne during their studies, years before. “When we were students in computer science”, Bürki noticed, “the sixty or so students in the department belonged to about twenty different nationalities”, a diversity that can be found in the best technology clusters. Without any business training, they learnt how to manage a company with two hundred people. The two founders are convinced that you learn these things by doing. Two founders. Another important topic. Your co-founder can challenge you with the right questions that a lonely founder may not solve easily.

Bürki also mentioned the vital role of the dream by quoting, in a rather surprising manner, Che Guevara: “Be Realistic, Ask for the Impossible.” As a reminder of their beautiful years at EPFL and also as a sign of their success, Marc Bürki and Paolo Buzzi took in 2008 a typically American decision by creating an endowed chair in quantitative finance.

A Swiss in Silicon Valley

Here is my fifth contribution to Créateurs, the Geneva newsletter, where I have been asked to write short articles about famous success stories. After Synopsys, women and high-tech entrepreneurship, Adobe and Genentech, here is an short article about a Swiss founder in Silicon Valley.

Do you know Edouard Bugnion? I am not sure that Switzerland knows about its child, who grew up in Geneva and Neuchâtel before graduating from ETHZ (Zürich) in 1994 and moving to California where he obtained his MS from the University of Stanford in 1996. Yet he is the co-founder of VMware and Nuova Systems, two recent success stories from Silicon Valley.


Edouard Bugnion with the author in the middle of « cubicles » at Nuova in May 2006 (Picture: Mehdi Aminian).

As I was preparing a short trip to San Francisco, I had been advised to meet this Swiss citizen that I had never heard of. The meeting was planned in his office which we found thanks to a quickly printed logo posted on his door: Nuova Systems. The place was gigantic for a start-up which was less than one-year old. But Nuova was hiring fast. I should add that Cisco would soon invest $50M in the start-up. Why so much money? Because the founders of Nuova were exceptional: Mario Mazzola had just left Cisco and had also been the founder of Crescendo, the first start-up acquired by Cisco (in 1991). Edouard was one of the five co-founders of VMware in 1998, which was bought in 2004 by BMC for $625M. VMware was so successful with its virtualization tools that BMC gave back its independence to the company which is today quoted on Nasdaq (its market capitalization was above $10B at the end of 2009) and has more than 6’000 employees and $1.8B in sales. Nuova has been acquired by Cisco in 2008 for $600M.

When I told my surprise in front such a big office space, Edouard told me the story that when VMware had grown to a workforce which forced the company to move, the company proposed to lease its old offices to a small new start-up. Its founders looked at the place and declined: “Too small!” The start-up was unknown and its founders were very young people. Edouard was as surprised then as I was when we met. Was it ambition? Was it arrogance? The start-up was Google and its two founders, Page and Brin, were, without any doubt, visionaries


Nuova’s front door logo in May 2006.

Edouard might be qualified as a school dropout. Even with his diplomas from ETHZ and Stanford, he quit the Stanford PhD program in 1998 to launch VMware with his professor. With $20M of venture-capital, they could grow the company until its acquisition six years later. In 2000, he gave an interview to SwissInfo. With 120 employees, VMware was only two years old. “In Switzerland, young entrepreneurs do not dare dreaming about such a scenario. If you have a good idea, you can find a few million and your product can reach the market for better or worse.” Such is the quote from the author of the interview, Pierre Godet, who, then, says his concern about this brain drain. Bugnion is more optimistic: “Swiss people in Silicon Valley develop a very unique experience, as well as a network. Then, most of them come back to Switzerland at some point in their professional life.” It is one of the theses in my book. It may be a good idea to go and work in the Bay Area, a region where anything is fast, very fast, where ambition can be expressed and where failure is tolerated. I hope that someday, Edouard will come back to Switzerland to tell his story himself and share his experience and know-how…

A123, Boston and Atlas

I just met this morning Fred Destin in the beautiful Rolex Learning Center at EPFL. We both have a passion for entrepreneurs and architecture!

Fred told me he liked my equity tables and pies (check skype, mysql, Kelkoo, Synopsys, Genentech, Adobe, or the general one.

So as a small gift to Fred who is moving to the Atlas office in Boston this summer, here is the equity case of A123 Systems, an MIT spin-off which went public last September.

I am aware the pictures are not very nice but you can enlarge them and ask me for the excel file…

Start-Up, the book: a visual summary

Start-Up, what we may still learn from Silicon Valley is two years old. I still make presentations of it and I hope to share my passion about this world.

By clicking on the picture below, you can download an extensive presentation inspired from others made in places such as Paris, Barcelona, Stockholm, Marseille, Antwerpen, Geneva… It’s never easy to follow slides without any comment, but I hope you will enjoy some of them… have fun and contact me if they are not clear!

Women and High-Tech Entrepreneurship.

Here is my third contribution to Créateurs, the Geneva newsletter, where I have been asked to write short articles about famous success stories. After Adobe and Genentech, here are some thoughts about women and high-tech entrepreneurship.

Women Entrepreneurs? Carol Bartz, Sandy Kurtzig…

… but also Ann Winblad, Catarina Fake, Kim Polese, Candice Carpenter, Mena Trott.
The list may go on but would not be much longer. Why so few women in high-tech entrepreneurship? And even worse, why are they so little known? The answer is simple: the situation is just an illustration of their position in science, in high-level positions in companies or in society more generally. A few anecdotes will show however that they have nothing to prove their male counterparts.

Sandy Kurtzig is a school dropout. She stopped the PhD program she was following at Stanford University and joined General Electric. She discovered there that computer science must help in improving manufacturing (such as in inventory management or logistics) and left again to found Ask Computer in 1972 with $2’000 from her own savings. “No venture capitalist would have given me money in the beginning. First software was seen of no value and then I was a woman.” She declined an acquisition offer from Hewlett-Packard in 1976 and in 1981 Ask Computer went public on Nasdaq. (The reader should remember that Apple had gone public in December 1980 and Logitech was founded in January 1981.) When she left Ask in 1989, the company had $189M in sales. Her advice to entrepreneurs? Believe in yourself, hire the right people and share success. Do not be afraid of making mistakes.

Carol Bartz also began her career in a big company: 3M is the inventor of the famous post-it. She heard there: “you are a woman, what are you doing here?” She left the company when he understood she would not be promoted because she was a woman. A few years later, she moved to Silicon Valley. “Even in this region, being a woman is belonging to a minority.” Her comment will not prevent her from becoming CEO of Autodesk in 1992. (Autodesk is the world leader for 3D software for architecture and mechanical design with $2B in sales in 2008.) That same year, in 1992, she was diagnosed with cancer. She will have chemotherapy while managing her company. She succeeded twice. “With private life and work, you do not have time to wonder if you are all right or not.” Work was a distraction and the leadership she showed was a strong motivation for her colleagues.

She is also fighting for the position of women in science: “I sincerely believe that women are dissuaded [from doing science]. They are told it is not important. Another female entrepreneur, Ann Winblad adds: “The daughter of a friend of mine is worried about appearing too nerdy if she invests in science. However some of the successful women – myself, Carol Bartz – all of us were math whizzes and we really had fun teenage lives as well as adult lives and have been very successful. The problem is that we need role models like Steve Jobs with this inspirational product, the iPod. Something is getting lost in the message because not many say I want to be like them.”

In January 2009, Carol Bartz became Yahoo’s CEO. The task may not be easy. Should we listen to Caratina Fake, founder of Flickr: « There is a lot of institutionalized sexism working against women in business and I think that people aren’t even aware that it’s there. » This post is unfortunately too short to celebrate women as entrepreneurs- Those who succeeded had to be exceptional and those who try also, without any doubt. The barriers entrepreneurs face are amplified for women. I will just conclude by copying the poet in saying that, in the start-up world maybe “Women are the Future of Men”.

To know more:
Carol Bartz in “Betting It All” by Michael Malone (Wiley, 2002).
Sandy Kurtzig in “In the Company of Giants” by R. Dev Jager and R. Ortiz (McGraw Hill, 1997)

Next article: A European in Silicon Valley, Aart de Geus.