European Innovation

Beautiful view of San Francisco, a global hub for innovation

I love that feeling when you get to do and experience something that you have only ever heard about. The myth of “Silicon Valley”, its innovative prowess, its ingenuity, its ability to remake the world with its ideas, its entrepreneurship, its savvy technology and slick new products. It’s been clear to me for some time that this trip to Silicon Valley was for me a matter of professional survival. I just couldn’t bear the inward-looking, crisis-ridden, short-term debates in Europe any more, where the centre of policy focus seems to have become how to convince the markets in the coming week that Europe is not on the fiscal and economic abyss, only to see its efforts fail again, then try a new grand strategy, call for another summit, and so on. I think you get the point.

I was desperate to go somewhere where people think big because I so often appear to be surrounded by people who think small. So I set out to experience for a few days first-hand what all the buzz on Silicon Valley is about, including now, during a time when the United States is also undergoing profound economic challenges.

The first thing that struck me is how unfazed the Valley appears to be by the upheavals in the economy on both sides of the Atlantic. Despite the visibly crumbling infrastructure – signs of the almost bankrupt state of California – there was a vibrancy, a contest for new ideas, a competition for talent, a feeling of optimism and a ‘can-do’ attitude that I have not experienced for a long, long time. It was refreshing, in fact, to be surrounded by people who inspire, who have ambitious plans and who believe they can make a difference. No crisis feeling here, to be sure.

The second thing that was interesting is that while these people collectively reshape the world of politics and business with the technology and the products they produce (think of the importance of social networking on the Arab Spring for instance), they seem largely either uninterested or unaware of it. The thrill of creating new ventures and products which enjoy popularity and user pick-up seemed to be in the forefront, as well as the money that comes with it. This is of course not surprising and is in no way objectionable, as not everyone can be expected to be a policy geek, but I nonetheless was struck by it. For its global significance and universal admiration, the people we met appeared very focused on what it takes for them to be successful and profitable, without necessarily pondering the wider implications.

Here are a couple of the issues that I thought were particularly interesting:

The importance of a big, unified market to succeed globally. Of course we met with many European entrepreneurs and asked them why they chose to take their venture to the United States. Among the key issues raised is the United States’ big, unified market and the feeling that if you make it there, you can make it anywhere. Says Peter Arvai, the brilliant Swedish

Founder and CEO of prezi, the Swede Peter Arvai

founder and CEO of prezi, the hottest new presentation software on offer: “We originated in Budapest and for us, a market like for example the United Kingdom seemed huge. It would be a formidable effort to conquer it and even if we had succeeded, a US rival could have emerged and we would have been in what is a –comparatively – small market [the UK] now faced with a huge competitor. I knew that I did not want to make the same mistake I made in my first two ventures when I did not take my companies to the United States, so it was clear that we needed a base here.” And how right he was: from its office in San Francisco, prezi has seen incredible success. From an investment by TED conference (the first time TED invested in a venture) to the highest echelons of the US government (Vice President Biden) now using its products, it seems that the move across the Atlantic was a brilliant decision and we here in Europe can bask in the glory of knowing that this fabulous new software at least originated here, and continues to have a base in Budapest.

Show me the money: getting the investment that young companies need. There appears to be a very

storify co-founder and CTO, the Belgian Xavier Damman

well-functioning and effective link between investors who are searching – and are able to fund – the next big thing and young, entrepreneurial companies who produce genuinely promising business ideas and concepts. Xavier Damman, an exceptionally talented Belgian entrepreneur and great friend of the Lisbon Council (he serves on our advisory board) co-founded one of the hottest new start-ups in the Valley, storify. We had already heard a lot about it in the days leading up to our meeting and were excited and happy for Xavier, whom we have known for a long time, including when he was trying to get ventures off the ground in his native country. What a great moment when Xavier welcomed us in his slick new, loft-style office in the up-and-coming South of Market district (twitter will open up its new office across the street soon) and told us the exciting tale of storify. The venture received a $2 million investment from legendary investor Kinod Khosla of Khosla Ventures. When asked if he could have received this kind of money in Europe, Xavier said it would have been impossible because potential investors were hard to come by and would have asked for a business plan. When I asked Xavier if Kinod Khosla didn’t request the same, Xavier responded: “He (Kinod Khosla) said forget about a business plan, worry about adoption.” And in this area, storify cannot complain. Every day more and more people, news outlets and organisations are signing on, including on last count, The New York Times, the White House and the United Nations. While this may only be an anecdote, to me it holds certain lessons. This intricate interplay between money (investors) and ideas (entrepreneurs) is unique and is in my opinion nothing that can be replicated by policy makers in their signature top-down, bureaucratic ways. No matter how hard you try, you can neither artificially produce skilled investors nor savvy entrepreneurs.

The war for talent is alive and well. Maybe I have gotten so used to soft labour markets with high unemployment, particularly among the young, that I have forgotten what it’s like to be in a place where everyone is scouting talent, values ingenuity and takes the ideas of 23 year olds seriously. I know that we have pockets of labour shortages in Europe as well, particularly among engineers, but what I am talking about here is something different. It is the appreciation of all high-end professional skills, and an understanding that technology companies need different skill sets in order to be successful, that impressed me. I often speak about how innovation takes place at the intersection of different disciplines but here it was really on display as programmers teamed up with business majors and designers to create something new. Says Hal Varian, chief economist of Google: “Interdisciplinary teams of 5-10 people work best, particularly if everyone is a stakeholder in the company.” Or take our visit to the incredibly impressive IBM Almaden Research Lab, where we expected to meet mostly with IT

The first hard drive, on display at the IBM Almaden Research Lab

experts and instead had thoughtful discussions with an anthropologist and social scientist. Breaking out of the professional silos was on display everywhere we went and this enriching interplay between different disciplines is in my opinion a key to the success of Silicon Valley. The flipside of all this is of course that talented professionals are in great demand, meaning that they are pursued by many players. This can, understandably, make it difficult for start-ups that must compete with big, established firms like Google and Apple. Says Soeren Stamer, a successful German entrepreneur and member of the Lisbon Council board, who is starting a new

Soeren Stamer (on right) in San Francisco co-working space

venture in San Francisco: “One of the things I appreciated about my German employees was their steadiness and their loyalty. It’s quite different over here.” One of the ways that small companies are trying to convince talent to come onboard is on the one hand the excitement of building up something new but also to offer equity in the venture, giving staff a sense of ownership, an incentive to make it a success and the prospect to become rich if you joined the right outfit.

An experimental touch, always trying to be ahead of the curve. While so much of our thinking in Europe is dominated by conformity and not wanting to fall out of line, it was amazing to witness how individuals and companies try, in an almost systematic manner, to think of what they can do to distinguish themselves. This genuine wish to be ahead of the curve, to not follow but pioneer, is contagious and is perhaps not sufficiently understood as an underlying driver of innovation. It makes a hell of a difference if you voice a new idea and everyone around you says “go for it” or if there is apathy, universal doubt, or a wait and see attitude, with the establishment generally only embracing an entrepreneur once he or she already has a proven track record of success. But to come back to experimental ideas, here are a few that I came across: Peter Arvai of prezi said of his business model that with information so easy and cheap to come by, people will in the future pay for privacy, i.e. for not making their information public. As a result, prezi has a more than unusual pricing structure. It is free as long as you make the presentation publicly available, but if you don’t want to see your prezi on the Internet, you have to pay for the software. It’s a brilliant insight which made me a paying customer. Or take Google, where a reflection on how to lower the

Not quite a driverless car but still pretty cool: the Google bike

number of accidents resulted in the conclusion that the weakest link by far in road safety is the driver. The result: the development of a driverless car.

Workplace innovation and collaborative spaces are key. I already knew that the visit to Google would be amazing before I ever set foot on their breathtaking campus. It’s well known that Google in many ways epitomizes workplace innovation, with its 20% rule (senior staff is allowed to spend 20% of their time on projects that are not necessarily part of their job description), the open collaborative spaces and the free food on offer. Suffice it to say that what I saw literally blew my mind. The tour of the campus, compliments of a brilliant Swede by the name of Nicklas Lundblad, who heads up Google’s global public affairs, was eye-opening. From the free “Google bikes” which anyone can use to ride from building to building and the parking

Delicious lunch at one of the many Google cafeterias

spaces with solar panels that allow staff to charge their hybrid cars while at work, to the popular beach volleyball court and the free, delicious and healthy food at every corner, one could literally feel that this was an environment that is supposed to electrify minds, generate new ideas and encourage people to work together to make them happen. It’s fun, for sure, but it’s also sound business because this type of workplace innovation is certainly part and parcel of Google’s success. Another display of workplace innovation was a co-working space that our Board Member Soeren Stamer uses. From the street, it looked like a cool café, with lots of benches where busy youngsters were typing away on their Macs, consuming delicious drinks they could purchase there. But in the back was a door which led to a private co-working space where aspiring entrepreneurs could rent tables. Up the stairs were closed off private offices where investors could meet and interview promising start-ups. People who occupy the co-working space are linked through Facebook or Google+,

Aspiring entrepreneurs at a co-working space in San Francisco

allowing the owner to make announcements or invite people to office parties. This aspect of how people work, how they organize themselves, how they use space to collaborate and synthesize is genuinely not understood in Europe and is thus undervalued in its importance. But anyone visiting the Google campus would immediately understand what a crucial aspect that is to the company’s success.

Joel Mahoney and Erik Michaels-Ober of Code for America

Philanthropy reflects the entrepreneurial vigor and tech-focus. We had two fabulous and most interesting encounters with local philanthropies. The first one was the Skoll Foundation, an organization founded by Jeff Skoll, one of the first employees of eBay. Dedicated to social entrepreneurship and environmental sustainability, the Skoll Foundation is very entrepreneurial in its ways of working and results-oriented almost in a way that a company would be. They want to have impact … and impact they have had. They single-handedly established what is without a doubt one of the most important meeting places where social entrepreneurs and potential investors can meet. Dubbed the Skoll World Forum and taking place every year at the Said Business School at Oxford University, this gathering has become a must-be place for the “who is who” of social entrepreneurship. Says Sally Osberg, the charismatic CEO: “The next step is to become more data-driven, making the business and economic case for social entrepreneurship and going from isolated best practices to systemic change.” Located in a buzzing street in Palo Alto, not far from Stanford University, it is the kind of organization that exudes professionalism, entrepreneurship, innovation with a refreshing dose of down-to-earth friendliness and kindness. It was for me an inspiring experience and an example of a clever, successful entrepreneur putting his money to good use. The second encounter with philanthropy came during a visit with Code for America, a young, tremendously successful operation that sends teams of programmers into cities to help them make local government more transparent, cost efficient and collaborative. We met with two of the fellows, programmers who essentially agreed to work for a modest fee in exchange for the potential to contribute and give back to society. Here again, I came across these inspiring, talented and committed youngsters (at least we seemed to be the oldest people there) who manage to get together to shake up the establishment, question the status quo and provide actionable and future-oriented solutions to public challenges. It was interesting beyond belief and once again I walked away full of awe for the energy, the enthusiasm and the determination to get things done.

I of course know that this is a microcosm of the United States which is not representative of the country at large. However, I was simply struck by how energized and inspired these meetings left me (which I cannot say for the vast majority of my meetings on this side of the Atlantic these days), how time and time again there was a feeling of meeting kindred spirits, and how fun it was to plot the future instead of bemoaning it.

The other take-away for me was that policy appeared to be very much an afterthought. I heard no one talk about the importance of R&D, researchers or patents, I heard no one who looked to Washington for the solutions to problems, and I heard no one who thought there could be some master plan or magic bullet for kick-starting more innovation. Instead, I saw a lot of people who felt that the power to innovative comes from within, comes from being driven, connected and committed. Furthermore, there is incredible faith in the power of transparency and openness – enabled by technology – as an agent of change. Some call it coding, others call it hacking, but the overriding belief is that more data and information should be publicly accessible, thereby helping to drive transformation, raising standards and giving greater knowledge to citizens across the world.

As Bill Lewis, the gifted founding director of the McKinsey Global Institute and member of the Lisbon Council advisory board, reminded me at our meeting in Carmel: the problem with innovation is not innovation per se, it’s the diffusion. We have the innovative solutions to many of the world’s challenges but we don’t apply them – be it for fear to upset the status quo, be it for fear that the costs would be too high, be it for fear of the unknown. It is always easier to talk about innovation than to do innovation. And at the end of the day, innovation is really a euphemism because as every innovator knows, bringing about change is hard, swimming against the tide is always more difficult than going with the flow.

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Comments

  1. Very inspiring article!

    Im a young belgian web entrepeneur who also wants to make it but Im fearing as you said that Europe isnt the right place … unfortunately!

  2. Interesting article Ann,

    For Europe to become entrepreneurial society, we need to learn a lesson or two from the US. They have done a wonderful job in attracting the talent of the world to come to the US for work or study. Take the example of the families of Yahoo and Google bosses.

    40 percent of the Fortune 500 firms were started by immigrants or children of immigrants, including seven of the 10 most valuable brands in the world, according to a study by The Partnership for a New American Economy.

    Unfortunately in Europe we have tax policies that don’t help innovation, I think because of such tax policies European Entrepreneurs would move to places like Bahrain and The Bahamas.

    Matt

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