Burton Lee Presentation at YES Execom Athens, 14-16 April 2011

Lessons from Silicon ValleyPromoting High-growth and Innovative Entrepreneurship in Europe

Dr. Burton H. Lee PhD MBAManaging Director, Innovarium Ventures | Lecturer, Stanford School of Engineering

[email protected]

Prepared for:

European Confederation of Young Entrepreneurs (YES)

YES EXECOM Meeting

Athens, Greece

April 15 2011

Topics

• European Entrepreneurship & Innovation @ Stanford Engineering

• Silicon Valley 2011– What We Do in Silicon Valley

– How Silicon Valley Works

– Lessons Learned

– European Companies and Countries in Silicon Valley

• Entrepreneurship in Europe

• European Innovation Policy

April 15 2011 2Copyright 2011 Burton H. Lee and Innovarium Ventures

Serial Entrepreneurship

is The Key !!

Not Just “Entrepreneurship”


April 15 2011

http://www.europeanentrepreneursatstanford.comhttp://me421.stanford.edu 4Copyright 2011 Burton H. Lee and

Innovarium Ventures

http://www.europeanentrepreneursatstanford.com/

http://me421.stanford.edu/

http://me421.stanford.edu/

European Innovation EcosystemTalent Creation

Entrepreneurship EducationImmigration Policies

Primary Focus of2010 ME421 Program

Simplified Schematic

New CompanyFormation

Angel Investors

Venture Capital

ExitM&A or IPO

Recycling of EntrepreneurialTalent & Angel/VC Investment Capital

Legal & Political Context

Idea GenerationResearch & Development

Universities, Corporations, Natl labs

Technology Transfer/Commercialization

University / Lab TTOs

Enterprise InnovationProduct & Services Design, Development & Management


Program ScopeComparative Entrepreneurship & Innovation Systems

Angel Investors

VC Funds

Entrepreneurs& Startups

R&D Labs

Universities

Corporations

Incubators/Accelerators

Silicon ValleyInnovation Ecosystem

+ Government:Pan-EU

NationalRegions

Municipal

Foundations

Institutions& Markets

April 15 2011

EuropeanInnovation Ecosystem 6Copyright 2011 Burton H. Lee and Innovarium Ventures

European Partner Countries, Regions & CompaniesSpeakers in Stanford Engineering ME421 Graduate Course

2009 - 2010 - 2011

Year Three Highlights

University Reform in GermanyProf Gerhard Casper, President Emeritus

European Incubators in Silicon ValleyNL, IT, CH, D, SE, FR

European SuperAngels in Silicon Valley


Year Two Highlights

Europe in the Global Entrepreneurship SceneInstituto de la Empresa, Madrid

Spanish Kings, Monks, Nuns and Explorers as Early Entrepreneurs

Madrid Region, Spain

Intelligent Buildings StartupYoga Systems, Estonia

New Venture Funds in EuropeGermany, Ireland and Spain


Year Two Highlights

Enterprise Software w University IPYseop - Lyon Region, France

Clean Tech – Wave PowerWavebob, Ireland

Spinning Out Successful Startups from Non-profit Research Institutes

VTT FinlandSemiconductor Startup/Incubator

INCIDE - Basque Region, Spain


Year One Highlights

Sten TamkiviHead, Skype Estonia

Corporate Venturing & Incubator ExecutivesRoche, SAP, Siemens, DSM, Virgin

Prof. Alberto Sangiovanni VincentelliUC Berkeley EECS

Co-Founder, Cadence

Uli FrickeTriangle Ventures, Germany

Board Member, EVCA

Dr. Sven SchadeEuropean Commission

DG Enterprise & IndustryApril 15 2011 11Copyright 2011 Burton H. Lee and Innovarium Ventures

Working with European Governments at the Center of the EU Innovation System

FP7 Expert EvaluatorEuropean Commission

Brussels, BelgiumFebruary 2010/2011

Appointed Member, Irish National Innovation TaskforceOffice of the Prime Minister, July 2009 – March 2010

One American’s experiences in the heart of European innovation policy- and

decision-making …

Expert Testimony @ European Parliament

“EU Innovation Policy”Feb 10 2011


Silicon Valley 2011


Silicon ValleyGlobal Center for Innovation

April 15 2011

Silicon Valley

ChinaIndia

Europe

LatinAmerica

The world – countries, regions, cities, universities and companies – all come to Silicon Valley to learn new innovation models, new technologies and new ideas.

We lead the world in innovation finance, new innovation models, disruptive ideas, and rapid scaling of technologies and companies to a global level.

And they all come to Stanford to see how we do it

14Copyright 2011 Burton H. Lee and

Innovarium Ventures

What is Silicon Valley, Precisely ??

• 2.9 Mn inhabitants

• 4 Counties, 40 municipalities

• 1.3 Mn jobs

• Growth areas:– Software

– Industrial/Energy

– Media & Entertainment

– Biotechnology

– Medical Devices

April 15 2011 15Copyright 2011 Burton H. Lee and Innovarium

Ventures

Silicon Valley in Pictures

• 40% of US Venture Capital investment in 2010

April 15 2011 16Copyright 2011 Burton H. Lee and Innovarium

Ventures

What We Do in Silicon Valley

• We build and grow companies to a global level faster –and more efficiently – than anywhere else in the world

• We create more new jobs and industries – faster – than anywhere globally

• We look for disruptive ideas, technologies and intellectual property that can be scaled globally

• We do world class research and technology development

• Silicon Valley is where the World Learns First new approaches to innovation– And where China, Japan, Korea, Singapore and India come to learn


April 15 2011

Source (modified): S. Blank and M. Hancock, Stanford Program on Region Innovation Economies, 2009

+ Mobile Systems

18Copyright 2011 Burton H. Lee and Innovarium Ventures

How Silicon Valley Works“Structured Chaos”

• Institutions– Strong research universities and laboratories– Numerous technology multinationals that are industry leaders– Low barriers to spawning new entities and/or models– Many established institutions are early adopters

• Markets– Relatively low barriers to market entry by new institutions– Low transaction costs– High liquidity + Critical mass– Flexible, efficient– Strong capital and labor markets that facilitate growth and recycling of

serial talent and serial investment

• Processes– Rapid and efficient pipeline processes:

• From innovation/idea => product/service => company => market• Goals: global scale, fast-to-market, high investor returns• Disruptive ideas are rewarded and encouraged the most


How Silicon Valley Works• High concentration of knowledge, skills, talent in

diverse technical and business disciplines

• Specialized business services infrastructure: – VCs, legal firms, accountants, etc

• Open business and information sharing environment – Collaboration + competition

– Open source + Confidentiality co-exist

• Results-oriented meritocracy

• Climate that rewards risk-taking and tolerates failure

• High quality of life + Great Weather !

• Favorable government policies– Federal, state and local


How Silicon Valley Works

• Strong linkages to global innovation clusters– Outsourcing Centers:

• India, China, Ukraine + other CEE

– Talent In/Outflows: • India, Israel, China

– Immigrant Entrepreneurs: 30% of startups

– Law Firms

– Multinational corporations: • Siemens, Panasonic, Canon, Daimler, BMW, SAP, Orange,

Fujitsu, Sony– Business units + research groups


What is “Hot” in Silicon Valley Today?• Mobile and personal computing technologies

– “Apps” – Applie + iPhone, Google + Android, Facebook

– eBooks – Apple + iPad, Kindle

• Gaming

• Technology convergence

– Kurzweil’s “Singularity” – genomics + artificial intelligence/robotics + nanotech

– “BioInfoNano”

• New VC models and firms– SuperAngels

• Empowering entrepreneurs vs investors

– The Founders Institute, co-founders network

• Networks and social computing (Web 2.0)

– Social, business

• Social media – for enterprise social computing (E 2.0)

• Talk about missing out on federal grant funding

• Customer web analytics

• Great entrepreneurs

• Stanford’s d.School

• Looking for new incubator and accelerator models

• Asia ( India, China )

• Google, Apple, TeslaApril 15 2011

• “Open Innovation”• Cloud Computing• Personalized Medicine


What is “Not Hot” in Silicon Valley

• Manufacturing– Unless its related to clean tech

• Logistics and supply chain management• Enterprise software• Nanotechnology• Europe

– Small, fragmented national markets that are slow to grow– Occasional new and interesting ideas and products– Few new startups that are scalable to a global level– Good scientists and engineers

• Japan• Cisco• HP


Silicon Valley & European Innovation EcosystemsKey Differences

• Culture– Attitudes towards risk and failure– Attitudes towards work vs play vs private life– Attitudes towards sharing of information– Asking permission before acting vs looking to government for thought leadership– Optimism vs skepticism– Openness vs Closed

• Speed– Processes and decisions much faster in Silicon Valley

• Government role– Minimal intervention from federal, state and local governments

• Institutions– Broader diversity of institutional models and sizes in US; more flexibility of action

• Markets– Lower transaction costs, greater liquidity, larger, more markets

• Scale, Size and Critical Mass• Networks

– Strong hubs, dense and efficient messaging, global, rapid formation


April 15 2011 25Copyright 2011 Burton H. Lee and

Innovarium Ventures

LinkedIn Network of Burton H. Lee, April 15 2011

In Silicon Valley We Are Not Good At:

• Taking directions from government bureaucrats– Reluctance to get involved in policy– This is changing slowly, with re-emergence of US federal

government as a major new investor in innovation and basic research

• Working with regional government laboratories– NASA, LLNL, LBNL, SLAC, etc

• Representing ourselves in Washington DC– First Valley lobbyist engaged in recent months

• Understanding and explaining how the Valley really works– Replicating the Valley outside of the Valley

• Regional infrastructure– Transportation, environment, etc


Why Silicon Valley Is Important for European Companies

• Technology startup companies– We scale up hitech startups faster than can be

achieved in Greece or anywhere else in the EU• Greater availability of risk capital (angel and VC funds)

• Close to early adopter markets and customers

• Management and technical talent

• Service providers infrastructure

• Higher valuations

• Stronger exits market

• Global vision


Why Silicon Valley Is Important for European Companies

• Established enterprises

– Close to mature markets and customers that are often “early adopters”

– Access to global supply chains

– Early adoption of latest enterprise software systems and models

– Management and technical talent

– Global vision and networks


Entrepreneurship in Europe


Entrepreneurship “Hotspots” in Europe - 2011

Impediments to Entrepreneurship in Europe

• Cultural attitudes towards failure• Punitive bankruptcy laws and regulations• Rigid university systems• High cost of starting new companies

– Patenting, legal fees, etc– Outdated incorporation laws and regulations

• Strong preferences for employment security– Government and big company jobs

• Weak (but improving) angel & venture finance markets• Weak intellectual property base and markets

– Much research in Europe is not converted into IP, and is not commercialized


The Entrepreneurship Scene in Finland

• Long history of independent initiatives and entrepreneurship– Linux and Open Source– MySQL– Mobile

• Strong ICT startups scene– Aalto University

• Aalto Entrepreneurship Society• Aalto Venture Garage

– Other universities

• Strong ties to Silicon Valley, excellent network• Strongest country in non-enterprise software today• Growing recognition in Finnish government and large

companies that entrepreneurship is Finland’s future


The Entrepreneurship Scene in Finland

April 15 2011 33Copyright 2011 Burton H. Lee and

Innovarium Ventures

European Innovation Policy


What *Is* on the European Innovation Agenda

• Strong R&D programs and funding base– Target of 3% of GDP - Government + industry

• Risk Capital formation and investment– Increase volume and quality of angel and venture capital investment into

startup companies

• Entrepreneur formation– University entrepreneurship programs– EU entrepreneurship programs

• “Knowledge networks” and “broker” models– Supports goal of European integration

• Tech transfer, IP & commercialization @ universities + research orgs– At national level

• University reform – but in very few countries – national level only– Jurisdiction of national governments (and not the European Commission)– Regional governments too

• Limited legal reform• Infrastructure

– Broadband buildout, incubator/S&T park facilities, wet labs


What is *Not* on the Innovation Agenda

• Enterprise Innovation– European firms lag US companies in adoption of ICT, use of ICT

as a strategic technology• Chronic underperformance in productivity • High cost structures• Sometimes addressed in part under “enterprise policy”, but not

integrated with broader innovation strategy

• Commercialization of research from EU research programs– Almost no generation of new companies from FP7

• Development of innovation competencies– Product design, ICT management

• Monitoring of outcomes of EU and national innovation and regional development programs– Incubators, S&T parks, “brokers” and “knowledge networks”


Commercialization of FP Research• Major disconnects between research and commercialization exist today

– A broad framework for coupling research and commercialization of related IPR is needed if Europe is to achieve its job creation goals for 2020

– Without explicit connection between research & commercialization, European Union will lose the opportunity to create thousands of new jobs on a sustained basis

– Commercialization is not possible in many FP7 projects (due to nature of basic research), but is possible in projects that are closer to industrial application

– Absence of formal linkages demonstrates lack of understanding of research, and the low value given to research programs and outcomes

– Apparent ideological opposition to linking research and commercialization in academic and policy-making communities seems rooted in attitudes that “public monies should not generate private returns”, & “universities must remain pure”

– Little or no coupling of research program performance assessment with program outcomes

• EU research programs (FP7, etc) must have clearly defined connections, routes and steps to commercialization paths, where appropriate– Coaching and mentoring– Investors: angels, VCs– Incubators


An FP Commercialization Framework is NeededPaths from Research to Marketplace Introduction

April 15 2011

Research

“Basic” & Pre-Competitive

FP8/FP7

Productization

From LaboratoryConcept toPrototype

Demonstration

[ Not always possible withFP8/FP7 Projects ]

Market Introduction

Startup Companies

Established Firms

These Stages Currently Not In Placewithin EU FP Research Framework


University Reform in EuropeProblem Statement

• Many European universities are under-performing vs their US equivalents– Exceptions: Germany, Switzerland, UK and some

Nordic countries

• Mis-aligned and disconnected from national innovation systems

• Generally under-funded• Generally poor representation in global rankings• Jurisdiction over universities resides at

national/regional level, not at EU level


University Reform in EuropeProblem Statement

• Most European universities are geared to teaching as primary mission, not research– Important exceptions in Germany, Switzerland, and UK

• Generate relatively little intellectual property• Do not work well with industry• Generally poor at commercialization of research• Professors have little industry experience, and

see little value in acquiring same• Little encouragement of entrepreneurship by

students


European Partner Countries, Regions & CompaniesSpeakers in Stanford Engineering ME421 Graduate Course

2009 - 2010 - 2011

Thank You !!

Working in Silicon Valley, Europe, Latin America and Washington DC

• Senior financial, technical and strategy advisory services for global technology innovation organizations• Professional Services

– Technology startup and growth companies• Interim CXO and Advisory Board roles• Expert guidance & decision-making at the interface between market/customers, technology and finance• Business development – industrial and government• Business plan preparation/research/review; Government Grant proposal preparation/review• Coaching and mentoring of CEOs and other CXO-level managers• Assistance with government regulatory and policy agencies

– Angel, venture capital and private equity Investors• Fund strategy, team selection and market positioning• Due diligence: technical, financial, strategy and business models

– Public and non-profit R&D laboratories• Technology transfer & partnerships; venturing and spin-out of companies; strategy and business development; grant applications

– Research universities• Innovation-related models, policies and practices• Technology transfer and licensing; industry partnerships and relations; development and strategy; grant applications

– National and regional government agencies• Innovation policy formulation, analysis and review; cluster development strategy; economic impact studies• Science & technology policy formulation, analysis & review: space, aviation, nanotechnology, software/AI/robotics, manufacturing

• Selected recent clients– US/European technology startup companies – alternative energy, robotics/AI, software, Internet, nanotech– Venture and private equity funds – aerospace, nanotechnology, ICT, computing, advanced materials, clean tech– Office of the Prime Minister, Ireland; European Commission; National Science Foundation; NASA, National Academies

• Dr. Burton Lee PhD MBA, Managing Director– Contact: [email protected] Based in Palo Alto, CA near Stanford University– Bio/References: LinkedIn Profile– Lecturer, European Entrepreneurship & Innovation, Stanford School of Engineering


mailto:[email protected]

http://www.linkedin.com/in/burtonlee