The Critical Need to Integrate The Humanities With Deep Technology

Human Oversight of Deep Technology Development Is Playing Catch-up

Systems Similar To Those In Place for Medical Science Are Urgently Required

 

After watching “The Great Hack” on Netflix I am appalled by the absence of any moral compass at Cambridge Analytica, which transformed Big Data into a political weapon. Other disturbing examples are Uber’s former corporate culture and Facebook’s collusion with CA in abusing our privacy. These cases are prima facie evidence of the crucial need and the opportunity to integrate the Humanities and ethics with deep technology development. I began my career as a Humanities graduate at Intel Corporation working closely with Ivy League MBA’s and senior engineers. We shared our knowledge and learned together to enable the company to excel. The best companies are those grounded in an appreciation of human values, companies that seek out Humanities graduates with a passion for technology to balance out their teams.

After watching “The Great Hack” on Netflix I am appalled by the absence of any moral compass at Cambridge Analytica, which transformed Big Data into a political weapon. Other disturbing examples are Uber’s former corporate culture and Facebook’s collusion with CA in abusing our privacy. These cases are prima facie evidence of the crucial need and the opportunity to integrate the Humanities and ethics with deep technology development. I began my career as a Humanities graduate at Intel Corporation working closely with Ivy League MBA’s and senior engineers. We shared our knowledge and learned together to enable the company to excel. The best companies are those grounded in an appreciation of human values, companies that seek out Humanities graduates with a passion for technology to balance out their teams.

 

Is Facebook Simply Replicating Kenya’s Successful M-Pesa Mobile Payment System?

Facebook’s Libra and Safaricom’s M-Pesa

Are the similarities mere coincidence and competition, or is a global mega-corporation exploiting a successful Kenyan enterprise without collaboration or compensation?

Since Facebook announced its new Libra currency and mobile payments scheme, the global reaction has been very mixed. Libra is not truly a cryptocurrency though it will use blockchain. It will be pegged to a reserve currency, which cryptocurrencies are not.  Libra will “potentially” be governed by an association independent of Facebook, though that association remains non-binding and sketchy at this point. Potential regulatory issues abound around the World, and Facebook is currently not viewed very favorably by many governments.  But most interesting to me, Libra appears to be modeled after Kenya’s M-Pesa mobile payments system, the world’s leading mobile payments system, invented by mobile carrier Safaricom. Then I asked myself if Facebook, knowing that it needs to move away from selling personal data, has seized on Safaricom’s M-Pesa as its new revenue model. 

More disturbing to me, I asked myself if this might possibly be an example of Western mega-corporate exploitation of a smaller enterprise in the developing world. I have heard no reference whatsoever to M-Pesa from Facebook. In similar situations in high tech, the mega-enterprise would typically acquire the intellectual property of the smaller company, hire its founders and employees to gain market advantage. This is often called an “acqui-hire.” Even without IP, it can be done to simply ensure a positive brand image transaction.

Four years ago, in 2015, Facebook With apparent good intentions, and also a good dose of Facebook business strategy, struck out to promote Free Basics, a free limited Internet for the poor in less developed countries sponsored by Facebook and its local telecommunications partners. India was a prime market focus. While on the face of it Free Basics seemed to have merit, Zuckerberg ran into a wall of opposition. On close inspection of the details, Facebook’s problem, despite all of its global corporate sophistication, appeared to have been naïveté about the foreign markets it was trying to enter. International business is strewn with case studies of corporate arrogance and ignorance that led to failure. Zuckerberg could have looked no further back than 2013 for clues from Google and Eric Schmidt, who also failed in India, as to why Facebook failed. The Indian government viewed both Facebook and Google with the same suspicion that they had for the Raj in 1947.

I do not have all the answers yet about Libra and M-PESA, and other mobile carriers have also entered the mobile payment market, but at this point, I have deep reservations about Facebook’s failure to acknowledge its role and its responsibility to Safaricom and M-PESA. IMHO, questions need to be raised directly to Facebook.

Read more: Facebook’s International Business Blunder: following in the footsteps of Google

A bit of history from The Economist:

Why Does Kenya Lead The World In Mobile Money?

A convergence of factors, some of them accidental, explain Kenya’s lead

Source: Why does Kenya lead the world in mobile money? – The Economist explains

The Economist explains

From March 2nd, 2015:

PAYING for a taxi ride using your mobile phone is easier in Nairobi than it is in New York, thanks to Kenya’s world-leading mobile-money system, M-PESA. Launched in 2007 by Safaricom, the country’s largest mobile network operator, it is now used by over 17m Kenyans, equivalent to more than two-thirds of the adult population; around 25% of the country’s gross national product flows through it. M-PESA lets people transfer cash using their phones, and is by far the most successful scheme of its type on earth. Why does Kenya lead the world in mobile money?

M-PESA was originally designed as a system to allow microfinance-loan repayments to be made by phone, reducing the costs associated with handling cash and thus making possible lower interest rates. But after pilot testing, it was broadened to become a general money-transfer scheme. Once you have signed up, you pay money into the system by handing cash to one of Safaricom’s 40,000 agents (typically in a corner shop selling airtime), who credits the money to your M-PESA account. You withdraw money by visiting another agent, who checks that you have sufficient funds before debiting your account and handing over the cash. You can also transfer money to others using a menu on your phone. Cash can thus be sent one place to another more quickly, safely and easily than taking bundles of money in person or asking others to carry it for you. This is particularly useful in a country where many workers in cities send money back home to their families in rural villages. Electronic transfers save people time, freeing them to do other, more productive things instead.

Dozens of mobile-money systems have been launched, so why has Kenya’s been the most successful? It had several factors in its favour, including the exceptionally high cost of sending money by other methods; the dominant market position of Safaricom; the regulator’s initial decision to allow the scheme to proceed on an experimental basis, without formal approval; a clear and effective marketing campaign (“Send money home”); an efficient system to move cash around behind the scenes; and, most intriguingly, the post-election violence in the country in early 2008. M-PESA was used to transfer money to people trapped in Nairobi’s slums at the time, and some Kenyans regarded M-PESA as a safer place to store their money than the banks, which were entangled in ethnic disputes. Having established a base of initial users, M-PESA then benefitted from network effects: the more people who used it, the more it made sense for others to sign up for it.

M-PESA has since been extended to offer loans and savings products, and can also be used to disburse salaries or pay bills, which saves users further time and money (because they do not need to waste hours queuing up at the bank). One study found that in rural Kenyan households that adopted M-PESA, incomes increased by 5-30%. In addition, the availability of a reliable mobile-payments platform has spawned a host of start-ups in Nairobi, whose business models build on M-PESA’s foundations. Mobile-money schemes in other countries, meanwhile, have been held up by opposition from banks and regulators and concerns over money-laundering. But M-PESA is starting to do well in other countries, including Tanzania and Afghanistan, and last month it was launched in India. At the same time, operators in some other countries are doing an increasingly good job of imitating it. Some of the factors behind Kenya’s lead cannot be copied; but many of them can, which means it should eventually be possible for other countries to follow Kenya’s pioneering example.

Huawei Telecom Gear Much More Vulnerable to Hackers Than Rivals’ Equipment – WSJ

“Reminds me of  the 1990’s Microsoft Windows/Internet Explorer Security Issues, Not Stuxnet”

-Mayo615

Source: Huawei Telecom Gear Much More Vulnerable to Hackers Than Rivals’ Equipment, Report Says – WSJ

A detailed report, prepared by Finite State, a Columbus, Ohio-based cybersecurity firm, concludes that Huawei telecom switching gear is far more vulnerable to hacking than other vendors’ hardware due to firmware flaws and inadvertent “back doors” that were discovered. The report has been circulated widely among cybersecurity experts in the U.S. and UK, and it is considered credible. The report stops short of concluding that Huawei deliberately inserted the flaws to enable espionage, as it appears more likely that these are flaws that are due to undetected software development errors. The Trump Administration has nevertheless seized on the report to claim evidence of Chinese espionage intent. The report’s conclusions do offer sound evidence that Huawei gear should not be inserted into telecom systems until these errors are removed.  This reminds me of the time when Microsoft Internet Explorer and Windows were suspected of being serious security risks for having so many security holes.

Huawei Enterprise Network Switch

From the Wall Street Journal:

WASHINGTON—Telecommunications gear made by China’s Huawei Technologies Co. is far more likely to contain flaws that could be leveraged by hackers for malicious use than equipment from rival companies, according to new research by cybersecurity experts that top U.S. officials said appeared credible.

Over half of the nearly 10,000 firmware images encoded into more than 500 variations of enterprise network-equipment devices tested by the researchers contained at least one such exploitable vulnerability, the researchers found. Firmware is the software that powers the hardware components of a computer.

The tests were compiled in a new report that has been submitted in recent weeks to senior officials in multiple government agencies in the U.S. and the U.K., as well as to lawmakers. The report is notable both for its findings and because it is circulating widely among Trump administration officials who said it further validated their policy decisions toward Huawei.

“This report supports our assessment that since 2009, Huawei has maintained covert access to some of the systems it has installed for international customers,” said a White House official who reviewed the findings. “Huawei does not disclose this covert access to customers nor local governments. This covert access enables Huawei to record information and modify databases on those local systems.”

The report, reviewed by The Wall Street Journal, was prepared by Finite State, a Columbus, Ohio-based cybersecurity firm.

While the report documents what it calls extensive cybersecurity flaws found in Huawei gear and a pattern of poor security decisions purportedly made by the firm’s engineers, it stops short of accusing the company of deliberately building weaknesses into its products. It also didn’t directly address U.S. claims that Huawei likely conducts electronic espionage for the Chinese government, which Huawei has long denied.

A Huawei official said the company welcomed independent research that could help improve the security of its products but added he couldn’t comment on specifics in the Finite State report because it wasn’t shared in full with the company.

“Without any details, we cannot comment on the professionalism and robustness of the analysis,” the Huawei official said.

Based in Shenzhen, Huawei is the world’s largest telecommunications equipment provider and a leader in next-generation 5G wireless technology.

Huawei has emerged as a central fixture in the growing rift between the U.S. and China over technology, especially with the approach of 5G cellular technology.

The Commerce Department in May cited national-security concerns when it added the telecommunications giant to its “entity list,” which prevents companies from supplying U.S.-origin technology to Huawei without U.S. government approval.

Finite State Chief Executive Matt Wyckhouse co-founded the firm in 2017, after spending nearly 13 years at nearby Battelle, a private, nonprofit applied-science and technology firm that does work in the private and public sectors.

Mr. Wyckhouse, a computer scientist who worked in Battelle’s national security division handling defense and intelligence-community contracts, said Finite State did the work pro-bono and not on behalf of any government. He also said he felt the best way to make policy makers aware of the issues was to make his firm’s research available to the public. He plans to publish it this week.

“We want 5G to be secure,” Mr. Wyckhouse said.

Finite State said it used proprietary, automated systems to analyze more than 1.5 million unique files embedded within nearly 10,000 firmware images supporting 558 products within Huawei’s enterprise-networking product lines.

The company said the rate of vulnerabilities found in Huawei equipment was far higher than the average found in devices manufactured by its rivals, and that 55% of firmware images tested contained at least one vulnerability—which the authors described as a “potential backdoor”— that could allow an attacker with knowledge of the firmware and a corresponding cryptographic key to log into the device.

The report includes a case study comparing one of Huawei’s high-end network switches against similar devices from Arista Networks andJuniper Networks Inc. It found that Huawei’s device had higher risk factors in six of nine categories, generally by a substantial margin.

“In our experience, across the board, these are the highest numbers we have ever seen,” Mr. Wyckhouse said.

In one instance in the case study, Huawei’s network switch registered a 91% risk percentile for the number of credentials with hard-coded default passwords compared against all of Finite State’s entire firmware data set.

By comparison, the risk level for Arista and Juniper was rated at 0%.

Chris Krebs, the top cybersecurity official at the Department of Homeland Security, said Finite State’s research added to existing concerns about Huawei equipment and the conclusion that the company hasn’t shown the intent or capability to improve its security practices.

“With Huawei having not demonstrated the technical proficiency or the commitment to build, deploy, and maintain trustworthy and secure equipment, magnified by the Chinese government’s potential to influence or compel a company like Huawei to do its bidding, we find it an unacceptable risk to use Huawei equipment today and in the future,” Mr. Krebs said.

White House officials who reviewed the Finite State report said the findings revealed flagrant violations of standard protocols. They said the report’s findings also suggested Huawei may be purposely designing its products to include weaknesses.

For example, some of the vulnerabilities found are well-known cybersecurity problems that aren’t difficult to avoid. Of the devices tested, 29% had at least one default username and password encoded into the firmware which could allow malicious actors easy access to those devices if the credentials were left unchanged, according to the report.

A particularly unusual finding was that security problems became quantifiably worse in at least one instance for users who patched a network switch with an updated version of firmware compared with the two-year-old version being replaced. Patches are intended to reduce cybersecurity weaknesses, but a comparison of the two versions found the newer one performed worse across seven of nine categories measured.

“For years, Huawei has essentially dared the international community to identify the security vulnerabilities that have so often been alleged regarding the use of the company’s products,” said Michael Wessel, a member of the U.S.-China Economic and Security Review Commission, a bipartisan panel that makes recommendations to Congress. “It’s hard to see the range and depth of the vulnerabilities identified by Finite State to be anything other than intentional.”

The U.K.’s National Cyber Security Centre also reviewed the Finite State research, people familiar with the matter said, and found it broadly aligned with the technical analysis in the agency’s own report, published in March. The U.K. report accused Huawei of repeatedly failing to address known security flaws in its products and admonished the firm for failing to demonstrate a commitment to fixing them.

A 2012 U.S. government review of security risks associated with Huawei didn’t find clear evidence that the company was being used by China as a tool for espionage, but concluded its gear presented cybersecurity risks due to the presence of many vulnerabilities that could be leveraged by hackers.

Rep. Mike Gallagher, (R., Wis.), said the report highlights the urgency for members of Congress and others to stop Huawei from taking over the global telecommunications supply chain.

“I’ve long thought we should treat Huawei as an appendage of the Chinese Communist Party,” said Mr. Gallagher, who earlier this year introduced legislation targeting Chinese telecommunications firms. “But even I was taken aback by the scale of the security flaws within Huawei’s network architecture as revealed by the report.”

Strategic Inflection Points

I want to more fully explain the concept of Strategic Inflection Points. I have referred to this topic in my Week 5 and Week 11 update videos. Former Intel CEO Andy Grove first described a strategic inflection point as a time in the life of a business when its fundamentals are about to change. That change can mean an opportunity to rise to new heights. But it may just as likely signal the beginning of the end. An inflection point can be the result of an action taken by a company or an action taken by another entity. An excellent recent example may be Facebook’s announced intention to enter the cryptocurrency market. The markets have already reacted sharply to Facebook’s move. Analysts have suggested that it may significantly alter the forecasts for cryptocurrencies. Change is inevitable and change is happening more rapidly than ever. Adaptation to change is imperative for corporate survival.

Strategic Focus versus Nimbleness

This week I want to discuss the importance of strategic focus, while still being open to possible opportunities, sometimes called corporate “nimbleness,” which may seem like a contradiction. I am a strong believer in strategic focus, however, I have also personally experienced a case where an “openness” to opportunity transformed the enterprise from a pedestrian company into a Silicon Valley legend. Ascend Communications was “focused” on ISDN based video conferencing with a modest and profitable OEM agreement with AT&T. However, AT&T came to Ascend and asked if it could solve a much bigger problem…

Paris, the Rising Hope for a European Silicon Valley | OZY 🇫🇷

Aix/Marseilles, Bourdeaux, Lyon, Paris, and Toulouse Are All Thriving French Tech Innovation Hubs

This article and others have focused on the recent meteoric rise of Paris as an emerging high technology innovation hub. However, there is much more to it than just Paris. There are thriving La French Tech Hubs all over France and in international locations around the World.  Both KPMG’s annual global Technology Industry Innovation Survey and the 2019 Startup Genome Global Startup Ecosystem Report have validated the significant advance of France and Paris as a leading innovation center.

 

Source: Paris, the Rising Hope for a European Silicon Valley | Fast Forward | OZY

Nick Fouriezos, Reporter

WHY YOU SHOULD CARE ABOUT THE RISE OF FRENCH TECH

The French, with their 35-hour workweek and café culture, might be poised to attract the next great tech talent.

Rand Hindi has the quintessential tech guru genesis story. He started coding at age 10 and built a social network by 14. After getting a Ph.D. in artificial intelligence, the entrepreneur set his sights on Silicon Valley. But that’s where the narrative began to fray. Despite all the hype, the Bay Area, known for innovation, felt like a bust. “When you [speak] to people, everybody says they want to do something great,” Hindi says. “But what people really want is to work at Google or sell their company to Google.” So Hindi returned to his native France, started Snips, a company specializing in AI voice technology, and watched his company flourish from three employees in 2013 to 80 today.

As a growing souring on Silicon Valley sinks in, young tech workers aren’t just leaving hot spots like San Francisco and New York, as OZY has previously reported. They are also leaving the country altogether. And while Asia’s — and in particular China’s — tech advances are drawing the world’s attention, it turns out that a growing number of startups are swooning for the City of Love.

For the first time, more than half of respondents to KPMG’s annual global Technology Industry Innovation Survey in 2019 believed that Silicon Valley will no longer be the technology innovation center of the world in four years — due to questions around its escalating cost of living, lack of diversity and troublesome corporate cultures. Cities like Beijing, Tokyo, Shanghai and Taipei are best placed to replace it, the survey suggests. But it’s Paris that is gaining the most steam. After not being ranked in last year’s KPMG survey, it moved up to No. 14 — behind only London among European cities. Other analysts are even more bullish: Paris ranked fourth in the A.T. Kearney Global Cities Report and third in the IESE Business School Cities in Motion Index.

IT MAKES PERFECT SENSE THAT PEOPLE WHO ARE THINKING ENTREPRENEURIALLY WOULD WANT TO BLAZE A DIFFERENT PATH.

ANDREW RUSSELL, SUNY POLYTECHNIC INSTITUTE

Driving this shift is a growing contrast in France’s approach toward global tech innovations to the U.K. and the U.S., experts say. On the one hand, London’s status as a financial and innovation hub stands challenged by Brexit’s enduring uncertainties. And America and Britain are tightening up on immigration. On the other hand, the French government is aggressively courting tech entrepreneurs and investments — a strategy that’s showing results. Paris rents are also 61 percent cheaper than San Francisco’s, according to Numbeo, the crowd-sourced global database of statistics such as consumer prices, perceived crime rates and quality of health care.

In 2017, the Emmanuel Macron government introduced a program that fast-tracks four-year residence visas for tech entrepreneurs and their families. Since then, French tech startups are witnessing a dramatic increase in funding: There were 743 French startups raising money in 2017, a 45 percent increase from 2016, according to CB Insights. Global giants are taking notice, with both Facebook and Google opening new AI research centers in Paris. Google has even announced plans to create local “hubs” to teach digital skills in other French cities, such as Rennes, with the goal of getting more people online (and using Google products).

The private and nonprofit sectors are pitching in too. Since June 2017, Paris has hosted the 366,000-square-foot Station F, the world’s largest startup incubator, backed by French billionaire Xavier Niel and Iranian-American executive Roxanne Varza. In October 2018, nonprofit StartHer hosted Europe’s biggest startup competition in Paris explicitly catering to female founders, with a record 363 applications from 30 countries. And this March, the French government further expanded access to its tech visa, from around 100 qualifying startups to more than 10,000.

“It makes perfect sense that people who are thinking entrepreneurially would want to blaze a different path” given the high rent, cost of living and income disparities emerging in the Bay Area, says Andrew Russell, dean of the College of Arts & Sciences at SUNY Polytechnic Institute. Cities like Paris see “an opportunity to capture some of the energy” of Silicon Valley “without falling into some of the excesses and toxicity,” Russell adds.

Admittedly, the European market does not hold the same kind of stratospheric (and, to this point, largely unrealized) potential of Asia. But the new buzz around France’s startup scene simply didn’t exist just a few years ago. Hindi remembers the policies of François Hollande being “anti-startup” when the former French president first took over in 2012. But a rising backlash driven by business leaders led to significant change, says Hindi, a former member of the French Digital Council advising on AI and privacy issues.

Before, if your company went bankrupt, you were banned from starting another one for nine years, making students from French business and tech schools risk-averse. That policy has since been scrapped. Tax credits for hiring people were created, and up to 30 percent of a startup’s technology and salary expenses are reimbursed by the French government, allowing French companies to operate at a fraction of the cost of their foreign competitors. Then there’s the tech visa and its expansion.

Those incentives are sorely needed, considering the obstacles France does have. While the country has enough angel investors — and a de facto investor with the government — there isn’t much of an exit market. Unlike American companies, European companies have a tradition of more of a revenue-profit mindset and less of a willingness to take on the (substantial) risk of acquiring a mid-tier player and turning it into a massive, industry-defining giant, Hindi says. They also prefer to invest in goods and services over potentially groundbreaking technology that needs a few years to develop before producing, he adds. The even bigger challenge? The language, which is why London has typically reigned supreme in the European market.

Some of those issues are more perception than reality, say entrepreneurs and tech workers in France. Snips engineer Allen Welkie — who moved to Paris after working at startups along the East Coast of the United States — says many French-based companies are bilingual and that the visa process was simple. A better work-life balance than in the U.S. helps boost retention too, Hindi says. “In Silicon Valley, everybody is fighting for the same few talented people. … If you’re lucky, they’re going to stay a couple of years. How can you build a company if people are constantly leaving?” As San Francisco becomes more and more untenable for everyone but the highest earners, it’s worth asking whether you can build a city that way either.

Mayo615’s French Odyssey: A Complete Product

The concept of a Total Product or Complete Product is essential to product success, particularly in an emerging new company. This concept was pioneered by Harvard Business School professor Ted Levitt and later updated and adapted to the high technology industry by a group of us at Intel. Engineers commonly believe that when their product development is finished, the product is ready for market. Nothing could be further from the truth. The engineering “deliverable” is not a product. It must be surrounded by a number of other intangible value items before it is a Complete Product. In Levitt’s model, these items are the augmented product, the expected product, and the potential product. The Intel variant, shown here, is more detailed but essentially very similar.

Internet of Things At A Strategic Inflection Point

IoT Technology And Market Requirements Convergence

Current Long-Term Market Projections Are Based On The Emergence Of Technology Solutions

This Mayo615 YouTube Channel video focuses on a particularly important technology market, the Internet of Things. IoT is at a strategic inflection point, due to explosive projected market growth and unresolved problems of wireless data throughput and energy-efficiency needs. The IoT market is projected to grow to 75 Billion devices by 2025. This growth is predicated on very high throughput wireless networks combined with high energy-efficiency which are not yet available.  Existing wireless technologies, including 5G, will not meet this market need. Also, the extreme diversity of IoT applications will require both small sensors that operate using minimal energy and bandwidth and virtual reality applications with very high Gigabit per second data rates and substantial power requirements. For example, Intel estimates that one autonomous vehicle will generate 4 Terabytes of data daily.

The good news is that through my work evaluating advanced research proposals in IoT, I can report that a solution may already be at the laboratory “proof of concept” stage.

The proposed solution that is emerging is the development of innovative software-hardware architectures in which all network layers are jointly designed, combining a millimeter wave high-throughput wireless network and a battery-free wireless network into a single integrated wireless solution.

This is no small feat of engineering but it does appear to be feasible. There are many challenges to successfully demonstrating a millimeter wave wireless network integrated with the Tesla-like concept of radio-wave backscatter energy harvesting. However, collaboration among universities and large Internet companies’ research units are nearing the demonstration of such a network. The likely horizon for this becoming an industry standard is probably three to five years, with prototype products appearing sooner.

You can also read my earlier website posts on the Internet of Things here on mayo615.com.  Links to related posts on IoT are also shown below on this post.

Canadian Tech Out of Touch With Global Entrepreneur Ecosystem

Canadian Tech Industry Still Not Confronting Its Infrastructure Issues

This is yet another excellent article questioning the Canadian tech industry’s appreciation of its significant deficiencies and challenges. It reflects my own view after much research and many interviews. It is also the view of UoT Professor Richard Florida who published a similar article in the Globe & Mail recently. Venture capital is anemic, but many also believe that there is a lack of scale-up management talent. Another factor is deeply-embedded Canadian conservatism, as evidenced by the bizarre entry of high street commercial banks’ debt offerings to entrepreneurs.

Source: Canadian tech needs to redefine its sense of scale

CANADIAN TECH NEEDS TO REDEFINE ITS SENSE OF SCALE/BetaKit

If like me, you spend a lot of time poring over the latest in Canadian tech, chances are good that you see both the huge potential of our technology companies and the simultaneous challenge: too often, they’re being held back by Canada’s scale-up deficit.

This, of course, isn’t news. In all the years I’ve participated in this sector, it’s been an ongoing challenge—one that has been the topic of countless discussions, panels, and debates. It’s an issue that has long challenged our innovation and technology sectors, and though it’s been talked about at length, it’s a conversation that deserves our full attention until we get it right.

Canada has become a launch-pad for early-stage companies, but, with a few notable exceptions, we are largely still lacking later-stage success stories.

PwC Canada’s recent MoneyTree report shows that our technology sector has seen a significant increase in funding deal volume in the last year—up 30 percent from 2017. But when one reads between the lines, it’s also clear that our homegrown tech companies are still largely stuck in a middle ground. In fact, of all the companies raising seed or early-stage funding during 2015-2017, only roughly 10 percent of them raised expansion or later-stage funding during 2016-2018.

Even if we leave room for successful shops that don’t need to raise further VC, that still doesn’t account for all of it. Many stall, naturally. They don’t continue to climb the curve and thereby miss the opportunity to hit scale. Of course, some companies shouldn’t scale and falter for good reasons. But many should and, for one reason or another, don’t. As a result, it seems that Canada has become a launch-pad for early-stage companies, but, with a few notable exceptions, we are largely still lacking the later-stage success stories we see in many other ecosystems.

Addressing this begins with challenging our very definition of scale. When we talk about Canada’s scale-up dilemma, we tend to focus on the obvious: raising capital, multiplying sales, and increasing market share in large, global, addressable markets. All of this is important but, in my experience, it’s only a part of the equation. Whether founders are on their first venture or their fifth, early-stage companies face many challenges to growth, and mature technology ecosystems support them by ensuring they see the bigger picture, beyond raising capital and increasing sales. It’s time to redefine our collective understanding of what scale means, and arrive at a new recipe that touches on all the moving parts companies need to master if they’re going to level-up.

To redefine scale, we need to take a closer look at the state of our ecosystems, which can become global hubs for highly skilled digital, creative, and leadership talent, and at the roadblocks that are currently preventing companies from scaling up. Let’s start by looking to the key stakeholders who will inevitably play an important role in shaping the future of the tech sector, including our government, VCs, and the public and private sector buyers of technology.

Government, of course, has several levers to pull when it comes to helping companies scale, like shaping policies and regulations that work to benefit our technology sector, while ensuring tax dollars are well spent through targeted incentive programs matched with data and IP policies that achieve the right balance.

Government(s) of all levels need to re-commit to working with Canadian technology companies at all stages of their evolution. They need to commit to procurement policies and practices that produce a real and predictable market for our tech companies to address and sell into. Federal and provincial governments of all stripes have made promises in this regard, but the velocity of, and commitment to, local sourcing hasn’t yet translated for our entrepreneurs.

Our government can also work to modernize our federal and provincial processes that foster the development and retention of IP, and continue to evolve tax incentives that support later-stage companies. These improvements would also encourage greater global investment in the Canadian ecosystem. According to the World Economic Forum Executive Opinion Survey, two of the most problematic factors of doing business in Canada are inefficient government bureaucracy and tax rates.

Data regulations and privacy policies, too, are of particular focus for governments worldwide. Ours can help us ensure that Canadian technology shops want to stay here, to do their important work, while being intentional about our data protection policies. After all, scaling does not mean scaling by any means, and protecting our data sovereignty is important.

Beyond government support, we should also look to VCs and other sources of private capital to enable companies to scale. Here, we often turn to Silicon Valley for inspiration, as investors there tend to be more willing to place big bets and write big cheques. Canada can learn from this. Any investor is going to have more misses than hits and, without higher risk tolerance, we won’t be able to finance the technological sophistication that will propel us to the next level.

According to the 2019 Canadian Startup Outlook Report, 56 percent of companies state that their long-term goal is to be acquired.

There is good news for Canada: CPPIB recently announced investments of $1 billion in venture funds, much of which will focus on technology companies. I’d love to see our wider investment community follow their lead. Funds like Novacap, Georgian Partners, OMERS Ventures, and more occupy the unique position of helping shape the future of Canada’s innovation economy. They’re already investing in some great home-grown companies, and their continued willingness to take bigger risks on innovative, growth-stage companies will help create the culture we need.

There’s even more good news when it comes to talent in Canada: we’re well positioned to become a hub for top tech and innovation talent. Our immigration policies, like BC’s Provincial Nominee Program and the federal Global Skills Strategy, are helping to draw the global talent stream north; our colleges, universities, and research hubs are world-renowned. Still, as I’ve seen with the corporate boards and senior leadership teams I’ve been involved with, companies need seasoned global talent if they want to become truly global players. It’s time we cast a wider net, finding ways to incentivize governance and executive talent from technology hubs like Boston, New York, Shenzhen, Dublin, Tel Aviv, and beyond to help Canadian companies reach their next stage and deliver on the promise of scale.

Established Canadian corporates have a big role to play here too. While our market is small by comparison to our neighbour, there is big buying power in our financial services, energy, retail, healthcare, automotive, and other major industries. Without a hint of protectionism, we can look to the Canadian innovation and technology markets each and every time we are procuring a solution, looking for new technologies or even looking for a problem to solve. In fact, according to the 2019 PwC annual CEO survey, 52 percent of Canadian CEOs surveyed see collaboration with start-up entrepreneurs as a key growth strategy.

Another way for companies to level-up and scale quickly is to reconsider some elements of the growth strategy playbook. Not surprisingly, according to the 2019 Canadian Startup Outlook Report by Silicon Valley Bank, 56 percent of companies state that their long-term goal is to be acquired. However, we should consider a shift in mindset that focuses on growth by acquisition rather than looking primarily at exit strategies or organic growth. This approach works well in dynamic sectors like fintech and healthcare. I’ve seen companies enjoy success by expanding into international markets or adjacent spaces, growing horizontally through acquisitions. Our tech leaders need to be thinking long-term so that, whether they’re building to grow, to expand, or to sell, they have the right structures and systems in place.

I am hopeful that these thoughts are provocative and assist some in considering strategies and actions that will lead to the scale Canada needs. True scale is critical if we want our technology companies to drive our GDP, provide high-paying jobs, and spur the innovations that will elevate us on the world stage.

This article was originally published on LinkedIn. Photo courtesy @dingle.

Could Macron and Brexit make France Europe’s tech capital? 🇫🇷

Source: Could Macron and Brexit make Paris Europe’s tech capital?

FRANCE 24

Date created : 13/04/2019 – 18:14Latest update : 15/04/2019 – 08:23

Ludovic Marin/AFP | French President Emmanuel Macron speaks as he visits the start-up campus Station F on October 9, 2018.

This article’s original headline and content focused only on a very large, high profile startup incubator in Paris, but frankly, there is a lot more going on in other parts of France as well.

Text by:Charlotte WILKINS

Shortly after his election in May 2017, President Macron said he wanted France itself “to think and move like a start-up” – a vision of the country’s digital future that is gaining traction as Britain wrestles with Brexit.

French President Emmanuel Macron’s vow to make France a ‘start-up nation’ amid the uncertainty over Brexitis raising the question of whether Paris could supplant London as the capital of European tech.

Since his election, Macron has wooed tech entrepreneurs with a string of initiatives in the form of lavish tax breaks, subsidies, and credits for research. In March 2018, he promised to invest €1.5 billion into artificial intelligence research through 2022.

Some of these initiatives, in addition to Macron’s dynamism, have lured British tech companies who are looking to gain a foothold in Europe.

“It made sense to have a European base,” said Cedric Jones*, a Briton who recently launched a start-up at Station F, the cavernous old train station that is now home to the world’s largest start-up campus. “If I’m going to make waves in continental Europe… I wanted to get here before Brexit happened.”

Jones is among dozens of foreign entrepreneurs who have recently launched their start-up at Station F, whose 3,000 desk hub has seen spiraling applications from English-speaking nationals in the last two years.

Some cite political woes back home, the burgeoning French tech sector, or are inspired by Macron’s bid to make Paris the innovation heart of Europe.

“There’s an air of optimism and a can-do spirit in France that I feel we’ve lost somewhat in the US,” said Mark Heath, a New Yorker, who stayed on in France to launch a start-up after studying at INSEAD in 2017.

The Macron effect

Much of the investment in French tech predates Macron’s reforms. The state investment bank Bpifrance, launched by former French president François Hollande in 2013, has been widely credited with developing the sector. Hollande also set up new foreign visas for start-up entrepreneurs.

But Zahir Bouchaary, a Briton who works out of Station F, credits Macron with injecting dynamism into the sector.

“Macron has installed a [start-up] mentality within the French ecosystem itself,” said Bouchaary, adding that it has become much easier to do business in France in the last few years.

“French customers are a lot more willing to work with start-ups than they were before,” said Bouchaary. “France was a very conservative country and our clients were used to working with big old-fashioned companies that have been around for a while. For the past few years, they’ve opened up a lot more to working with younger companies and seem to take more risks than they did before.”

Jones agreed that Macron was “the single variable”. “When he [Macron] goes, the dynamism will go too. I absolutely would not expect that to remain the case if he’s not the president.”

However, although Macron has moved to ease labour laws, Jones said that navigating the country’s labyrinthine bureaucracy in French remained “very burdensome”, and that it was far easier to build a business in the UK. “Whether it’s from a tax perspective or from a legal perspective it’s just so much more complicated.”

UK tech ‘resilient’

The tech scene in London appears to be just as vibrant as ever, explained Albin Serviant, president of Frenchtech in London, who said many UK-based tech entrepreneurs are adopting a “wait and see” approach to Brexit.

“The UK ecosystem is quite resilient,” said Serviant.

“In the first quarter of 2019, there were about €2 billion invested in tech in London. That’s compared to 1.5 billion last year, which is plus 30 percent. And that’s twice as much as France – which invested 1 billion. France is catching up very fast but the investment money is still flowing in the UK,” he added.

Serviant cited London’s business-friendly ecosystem and international talent pool as reasons for why London remains the capital of the European tech sector. Barcelona and Berlin are also contenders for the UK’s tech start-up crown.

Nonetheless, Serviant cautioned against the effects that a hard Brexit would have on the tech sector in the UK.

“‘If Brexit happens in a bad way and if people like me and other entrepreneurs have to leave, obviously that’s very bad for the UK because what makes it very different is the international DNA of London.”

Hard Brexit would not just damage the UK tech sector but would also pose challenges for British developers, who post-Brexit may need a carte de séjour to work in the country, looking to find work in France.

Sarah Pedroza, co-managing director of Hello Tomorrow technologies, a Paris-based startup NGO, said that if she had to choose between hiring a British national and an EU citizen with the same skillset, she would opt for an EU citizen because there would be less paperwork involved.

Brexit aside, others suggest that France is snapping at the UK’s technological heels.

“I do think France has the potential under Macron to close the gap with the UK,” said Jones.

“The single biggest factor in what’s going on for France is that France is developing a sense of confidence in itself, in its start-up scene, as a tech hub, that’s being helped by France and that’s also being helped by Brexit.”