Turning Start-ups into scale-ups so everyone prospers
Summer holidays are over. Time to get busy building the next stage of the booming start-up ecosystem in the South-Eastern corner of StartupDelta. Jonathan Marks talks with Bert-Jan Woertman, one of the champions of the start-up movement in the Netherlands. To get more insights into what's cooking, we tour his home turf, the High Tech Campus Eindhoven. We start at the Strip, home to high-tech accelerator Startupbootcamp HighTechXL. The slogan on Bert-Jan's new t-shirt reflects exactly what he does best.
“Have a look at this report, ” says Bert-Jan with a wry smile. “Just over a year ago, the High Tech Campus was one of two European research centres described as an “Innovation District”. It was in a ground breaking study by Bruce Katz and Julie Wagner of the Brookings Institution in Washington DC. In short, the US researchers detected a trend – large corporations were moving research facilities from the countryside back to the cities. They cited three reasons:
- “Rather than submitting to long commutes and daily congestion, a growing share of metropolitan residents are choosing to work and live in places that are walkable, bike-able, and connected by transit and technology.”
- “Rather than building on green-field sites, leading companies in knowledge-intensive sectors are locating key facilities close to other firms, research labs, and universities so that they can share ideas and practice “open innovation.”
- These districts are geographic areas where leading-edge anchor institutions and companies cluster and connect with start-ups, business incubators and accelerators.
That’s a concise description of exactly what’s going on in this corner of Eindhoven. But seeing is believing. So we start our campus tour of what Techcrunch recently called the "centre of deep-tech entrepreneurship".
Turning talk to action
Innovation is not something you can order from a menu or invent with a factory mindset.
“Our full support of initiatives like Startupbootcamp HighTechXL is a deliberate part of our growth strategy. Startups are realizing they cannot scale if they stay in the garage and tweak something. They need to mingle with other entrepreneurs and have efficient access to everything from legal advice to sophisticated lab equipment.” say Bert-Jan “But if they grow, we grow, so it’s win-win for everyone.”
Parallel with Pixar – It's all about smart people
“This past summer I re-discovered an article in the Harvard Business Review. It was written in 2008 by the co-founder of Pixar animation studios, Edwin Catmull.” continues Bert-Jan. “Three passages stuck out for me because of their similarity to what we have already implemented on the High Tech Campus Eindhoven.”
- A few years ago, writes Catmull, I had lunch with the head of a major motion picture studio, who declared that his central problem was not finding good people—it was finding good ideas. Actually, I couldn’t disagree more with that studio executive. His belief is rooted in a misguided view of creativity that exaggerates the importance of the initial idea in creating an original product. And it reflects a profound misunderstanding of how to manage the large risks inherent in producing breakthroughs.
- Pixar is a community in the true sense of the word. We think that lasting relationships matter, and we share some basic beliefs: Talent is rare. Management’s job is not to prevent risk but to build the capability to recover when failures occur. We must constantly challenge all of our assumptions and search for the flaws that could destroy our culture.
- Our building, which is Steve Jobs’s brainchild, is another way we try to get people from different departments to interact. Most buildings are designed for some functional purpose, but ours is structured to maximize inadvertent encounters. At its center is a large atrium, which contains the cafeteria, meeting rooms, bathrooms, and mailboxes. As a result, everyone has strong reasons to go there repeatedly during the course of the workday. It’s hard to describe just how valuable the resulting chance encounters are.
“Especially that last point rings true. Pixar calls them “inadvertent encounters”. We (lightheartedly) call the same thing “managed serendipity”. By building the Strip with all the restaurants, banking services and the gym together, we give people a reason to leave their respective research lab and interact with others on the Campus.
“Of course, the magic is amplified because of the more than 10,000 very bright people who are busy here. Many are developing technologies that are already impacting our world. They form part of a unique and vibrant ecosystem of established global brands, leading research institutes, fast-growth enterprises, high-tech startups and service companies. And if each of those people knows just 100 people, just think of the power that international network of expertise brings to the Eindhoven region.”
Advantages for Pioneers of Open Collaboration
“Things are in constant flux at the High Tech Campus. We did some matchmaking experiments a few years back to see whether any of the more than 135 corporates here on site could make a difference to hardware startups from all over the world. Now, as we head towards programs for 2016, we can see our role is rather like a flywheel, engaging when needed to turn startups into scale-ups. But we should never underestimate the power of peer-to-peer contacts between startups and corporates that grow once the trust is established.”
“Of course, we need to show that this open approach works. Luckily, independent evidence is beginning to emerge. I think more people should read the recent report on collaborative innovation from the World Economic Forum in Switzerland. The report draws on more than 80 interviews and includes findings from several CEOs of large multinationals, politicians and start-ups. The author, Lilia Planiyan states that corporate and startups need to cooperate much more for Europe to improve its competitiveness. We have clearly made a start. But so much more needs to be done.
An empty building is not a sign of innovation
“And in their new report in June 2015, the Brookings Institute also give examples where cities and local stakeholders had used the "innovation district" term in the wrong way. They put the label “innovation” to describe empty buildings or areas that only have potential but no regular activities. Clearly owners want to drive up demand and real estate prices, but often there’s lack of understanding of what an innovation district actually is.”
“In fact, there is a tipping point number of innovation-oriented firms, start-ups, institutions, or clusters in order to create an innovation ecosystem. The motivation for real estate developers to adopt the moniker seems clear: to achieve a price premium for their commercial, residential, and retail properties. Yet these sites turn out to be a collection of service-sector activities and shops with little focus on the innovation economy. The lesson: just labeling something innovative does not make it so.”
Building a campus-wide turbo accelerator
“On the High Tech Campus Eindhoven, good cooperation between multinationals and high-tech startups has become part of our DNA. It comes because Philips Research decided in 2003 that it could not invent in splendid isolation, tore down the park gates and attracted dozens of technology companies like NXP and Intel, to build a unique trusted ecosystem.”
This informal culture of trust takes decades to build.
“Several of today’s successful new companies, like Medtronic, NXP, Civolution, Intrinsic-ID or Genkey were founded by former Philips employees. They took the entrepreneurial route and spun out their technology from the mother corporation. And even though many of these spin-outs make most of their revenue in the Americas, Asia or Africa, they maintain a base on our campus. Because in order to profit from the benefits of an eco-system, you need to be in it!”
Clever corporates can make excellent partners for start-ups
“It’s true there’s a difference between passive and active corporate VC’s” says Bert-Jan. “Investor Fred Wilson famously mixed the two types up in an interview a few years back. He suggested that the only role for (passive) corporates in the startup world was as an exit an acquisition strategy.”
“If you look at the people working in corporates here on Campus, you find most are actively working internationally. Being part of the trusted community means they are often willing to open up their network to others because creating value together and sharing resources makes sound business sense for everyone. The more specific the request from a startup, the more likely a corporate will connect you to a contact which, for instance, could help act as a springboard to the Korean market. In that respect, the whole Campus has become one big turbo accelerator."
Assistance well beyond Demo Day
"There is increasing demand from young high-tech companies to be part of our ecosystem beyond the early startup-phase. On the journey to becoming a scale-up, the founders need access to different skillsets. That could mean research and testing facilities while building the prototype. Later, supply chain expertise is needed when it's time to scale up to full production. There are often changes in the teams, as founders hand-over to operational leaders as marketing and sales personnel join the company. And later-stage scale-ups like Smart Robotics have discovered that moving from a research environment to a business creation cluster has been key for their acceleration to market."
Expanding this centre of excellence.
"Yet, while we claim leadership in specific niches internationally, we strongly believe in collaborating closely with other centres of excellence in the Netherlands. StartupDelta is an important initiative to stimulate open collaboration and put our successes into the spotlight they deserve."
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