This post 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.
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.
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 banks’ debt offerings to entrepreneurs.
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.
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.
French President Emmanuel Macron’s vow to make France a ‘start-up nation’ amid the uncertainty over Brexit is 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.
Could Macron and Brexit make France Europe’s tech capital? 🇫🇷
Date created : Latest update :
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.
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.”
Welcome to Mayo615’s Odyssey to France and the first of our Tuesday weekly updates. We invite you to subscribe to our YouTube Channel and follow our weekly updates. In this Week One update we will focus on my first Big Idea, and how I achieved it. I will also discuss my three most important key takeaways from that experience. We hope that you find this video helpful in achieving your own Big Ideas and goals. So here we go.
Welcome to Mayo615’s Odyssey to France and the first of our Tuesday weekly updates
We invite you to subscribe to our YouTube Channel and to follow our weekly updates
In this Week One update we will focus on my first Big Idea, and how I achieved it. I will also discuss my three most important key takeaways from that experience. We hope that you find this video helpful in achieving your own Big Ideas and goals. So here we go.
I want to return to France to give back my experience, skills, and technical knowledge to the country of my heritage. France’s industrial economy is in the doldrums, but new policies are stimulating innovation, the key to economic growth and productivity, and technology industry leaders in France with strong technology industry backgrounds are looking to contribute to this new economy in France. I want to join them and give back.
In less than 24 hours since our campaign launch, we are nearing 10% of our goal
I am a native-born Californian with French family heritage and a French wife. We are both French citizens preparing to return to France. My university background is in the Humanities and Social Sciences, with a year of graduate study at Oxford University, researching in the Bodleian Library. When I returned to northern California, I eventually landed an entry-level job at Intel Corporation, which proved to be the crucible for my entire career. I eventually rose to be a senior executive in international business development with Intel. I have continued in international business for all of my career, working for a number of tech startups and venture capital investment firms over the years. I have led two tech industry consortia to develop global industry standards. I have been the director of a tech entrepreneurial incubator in Silicon Valley for the government of New Zealand and collaborated on mentoring promising entrepreneurs in locations here and around the world. I was an Adjunct Professor of Management at the University of British Columbia for four years.
I want to return to France to give back my experience, skills, and technical knowledge to the country of my heritage. France’s industrial economy is in the doldrums, but new policies are stimulating innovation, the key to economic growth and productivity, and technology industry leaders in France with strong technology industry backgrounds are looking to contribute to this new economy in France. I want to join them and give back.
I am now semi-retired, but very eager to return permanently to France to donate my technology industry experience and knowledge to assist French entrepreneurs to transform France into an innovation-based economy.
FundRazr Campaign Story:
We are David Mayes and Isabelle Roux-Mayes, a married couple, who are also French citizens. I am also a native Californian who has spent my career working for a number of Silicon Valley companies and investment firms, beginning with Intel Corporation. I am now semi-retired, but very eager to return permanently to France to donate my technology industry experience and knowledge to assist French entrepreneurs to transform France into an innovation-based economy. I am focusing specifically on building working relationships with three major new initiatives that could benefit from my background and achievements: The Camp in Aix-en-Provence, launched last year, Startup Garage, Paris, and 1kubator in Bourdeaux.
I am more than happy to share my achievements and references to validate my credentials and verify my ability to make a serious contribution. You can start here with my LinkedIn profile and references David Mayes on LinkedIn. You may also contact me here or on FundRazr where we can discuss my crowdfunding project.
Years ago now Google quietly announced its “Loon Balloon Project” in New Zealand. The objective was to launch high altitude balloons that could potentially float over areas of the globe that did not yet have Internet access. The tech press predicted that the idea was “loony” indeed, though some called it “crazy cool.” Google has since also dabbled with the idea of low earth orbit satellites to achieve the same goal. With the rise of SpaceX, this seems an even more interesting technological approach, though other firms in the 1990s lost large amounts of money and failed. A modest aerospace company and a subsidiary of Airbus in Toulouse France is manufacturing low-orbit internet access satellites, hoping to launch as many as 650 such satellites. The idea that is captivating me is the potential for space-based Internet access to potentially provide an alternative to growing political and corporate control and Balkanization of the Internet.
Net Neutrality May Yet Be Achievable…Maybe
Years ago now Google quietly announced its “Loon Balloon Project” in New Zealand. The objective was to launch high altitude balloons that could potentially float over areas of the globe that did not yet have Internet access. The tech press predicted that the idea was “loony” indeed, though some called it “crazy cool.” Google has since also dabbled with the idea of low earth orbit satellites to achieve the same goal. With the rise of SpaceX, this seems an even more interesting technological approach, though other firms in the 1990s lost large amounts of money and failed. A modest aerospace company and a subsidiary of Airbus in Toulouse France is manufacturing low-orbit internet access satellites, hoping to launch as many as 650 such satellites in a “global constellation”. The idea that is captivating me is the potential for space-based Internet access to potentially provide an alternative to growing political and corporate control and Balkanization of the Internet.
OneWeb Launches First Six Internet Access Satellites
Ariane Soyuz rocket launch with six OneWeb satellites on board. February 27, 2019
Political Internet Censorship And Access In Developing World Potentially Solvable
But business challenges and technical problems remain
Aclear plastic box the size of a sofa sits in an underground factory in the suburbs of Toulouse in southern France. Inside it, a nozzle fixed to a robot arm carefully drips translucent gloop onto bits of circuitry. This is to help get rid of excess heat when the electronics start to operate. The slab that is created is then loaded onto a trolley and taken away as the next piece of electronics arrives for the same treatment.
This is what the mass production of satellites looks like. Making them in quantity is a necessity for OneWeb. The company was founded in 2012, and it has yet to launch a single satellite. Yet it plans to have 900 in orbit by 2027. That seems a tall order. Intelsat, the firm which currently operates more communications satellites than any other, has been around for 54 years and has launched just 94.
OneWeb, which is part-owned by Airbus, a European aerospace giant, and SoftBank, a Japanese tech investor, needs such a large quantity of satellites because it wants to provide cheap and easy internet connectivity everywhere in the world. Bringing access to the internet to places where it is scarce or non-existent could be a huge business. Around 470m households and 3.5bn people lack such access, reckons Northern Sky Research, a consultancy. OneWeb is one of a handful of firms that want to do so. They think the best way to widen connectivity is to break with the model of using big satellites in distant orbits and instead deploy lots of small ones that sit closer to the ground.
The rate at which an object orbits depends on how far away it is. At a distance of 380,000km, the Moon takes a month to travel around the Earth. The International Space Station, around 400km up, buzzes round in an hour and a half. In between, at an altitude of about 36,000km, there is a sweet spot where satellites make an orbit once a day. A satellite in this orbit is thus “geostationary”—it seems to sit still over a specific spot. Almost all today’s satellite communications traffic, both data and broadcasts, goes through such satellites.
The advantage of a geostationary orbit is that the antennae that send data to the satellite and those that receive data coming down from it do not need to move. The disadvantage is that sending a signal that far requires a hefty antenna and a lot of power. And even at the speed of light, the trip to geostationary orbit and back adds a half-second delay to signals. That does not matter for broadcasts, but it does a little for voice, where the delay can prove tiresome, and a lot for some sorts of data. Many online services work poorly or not at all over such a connection. And it always requires a dish that looks up at the sky.
Head in the clouds
Ships, planes and remote businesses rely for internet connections on signals sent from geostationary orbit, but this method is too pricey for widespread adoption. Beaming the internet via satellites orbiting closer to the planet has been tried before. The idea was popular at the height of the tech boom of the late 1990s. Three companies—Teledesic, Iridium and Globalstar—poured tens of billions of dollars into the low-Earth orbit (leo) satellite internet. It culminated in the collapse of Teledesic. Although the technology of the time worked, it was very costly and so the services on offer had to be hugely expensive, too. Iridium survived, but as a niche provider of satellite telephony, not a purveyor of cheap and fast internet access.
OneWeb is among several firms that are trying leo satellites again. SpaceX, a rocket company founded by Elon Musk, a tech entrepreneur, is guarded about its proposed system, Starlink, but on November 15th American regulators approved an application for 7,518 satellites at an altitude of 340km (bringing the total for which the firm has approval to nearly 12,000). Telesat, a Canadian firm, has plans for a 512-satellite constellation. LeoSat, a startup with Japanese and Latin American backers, aims to build a 108-satellite network aimed at providing super-fast connections to businesses. Iridium, still in the game, will launch the final ten satellites in its new constellation of 66 by the end of the year. Not to be outdone, a Chinese state-owned firm recently announced the construction of a 300-satellite constellation. In ten years’ time, if all goes to plan, these new firms will have put more satellites into orbit by themselves than the total launched to date (see chart).
These companies want to avoid the technical issues of geostationary satellites by putting theirs into a low orbit, where the data will take only a few milliseconds to travel to space and back. And because signals need not be sent so far the satellites can be smaller and cheaper. OneWeb claims they might weigh 150kg and cost a few hundred thousand dollars, compared with a tonne or more, and tens or even hundreds of millions of dollars, for the geostationary sort.
Floating in a most peculiar way
At 1,200km up, where OneWeb intends its first satellites to operate, they do not sit still in the sky. A satellite overhead will sink below the horizon seven minutes later. That has two consequences. First, to ensure that a satellite is always available to any user, a great many are required. Second, to talk to such a satellite you need an antenna that can track it across the sky.
One way to understand this is as a cellular-phone network turned inside out. On Earth, cell-phone towers are fixed; a user’s phone talks to the closest or least busy one, which may change as the user moves or traffic alters. In OneWeb’s system each satellite is a moving cell tower, circling the Earth from pole to pole in one of 18 orbital planes that look like lines of longitude (see diagram). The 900 cells, each one covering an area of a bit more than 1m kilometres, skim across the Earth at 26,000km an hour. Clever software hands transmission from one satellite to the next as they move into and out of range.
There are three ways to connect to such a network. One is to place an antenna on a terrestrial cell tower, which can use the satellites to get data to and from a mobile-phone network, in place of the fibre optic, microwave or cable links that are normally used. The second is for homes and businesses to have their own ground terminals, smaller and cheaper antenna that can talk to the satellite. The third is for vehicles to have ground terminals. This might be important for driverless cars, which will need to transmit and receive large volumes of data over an area which may be broader than that covered by appropriate terrestrial cellular networks.
In all cases data will make their way to the wider internet through large ground-based dishes, called gateways. An email sent from a house connected to one of the new satellite network, for example, would travel up to a passing satellite, down to a gateway then onward to its destination.
The firms involved today hope to overcome the obstacles confronting the previous generation of leo satellite firms because building and launching hundreds of satellites is now much cheaper. The cost of launch in particular has tumbled in the past decade with the arrival of better rockets and more competition. OneWeb has a contract, reportedly valued at over €1bn ($1.1bn), for 21 launches with Arianespace, a European consortium. Russian-built Soyuz craft will also take 34 to 36 satellites up at a time from either French Guiana or Kazakhstan. OneWeb may later use Blue Origin, a rocket firm owned by Amazon’s founder, Jeff Bezos; it also has a contract for launching single satellites to replace ones that break down with Virgin Orbit. Virgin Group, like Airbus and SoftBank, is an investor in the company. SpaceX intends to launch its satellites on its own rockets.
Space to grow
The bigger challenge is making satellites quickly and cheaply enough to fill up these rockets. It typically takes existing satellite-makers two years to build one after contracts are signed. They are not up to the challenge, says Jonny Dyer, who worked on a Google project that first brought the OneWeb team together (but stayed with Google when the two parted ways). “The supply chain does not scale,” he says. “They’re not used to working at those volumes, and they’re not used to the unit cost.”
OneWeb and SpaceX thus not only have to make new satellites, they have to build a system for building satellites. OneWeb has been doing so in Toulouse for the past two years. Its first satellite was completed in April and ten more will be ready in time for the company’s first launch, some time before February 2019. To step up manufacture, OneWeb is building two copies of its production line in a new factory in Florida. It hopes to have the first satellite from this facility ready before March 2019 and to raise output to ten a week not long after.
The factory floor in Toulouse has separate workstations for propulsion systems, communications payload, solar panels and so on. Satellites in the making move on robot carts from one station to the next. Cameras track the components and look out for errors—misalignments and the like. The finished cube is about the size of a beach ball bedecked with antennae and solar panels. After testing, it is shipped out. The system has had teething problems. The first launch will be more than a year behind schedule. But Greg Wyler, OneWeb’s boss, says he still hopes to offer connectivity in places in higher northern latitudes, such as Alaska and Britain, by the end of 2019.
Putting satellites in place is only part of the problem. How useful they will prove to be depends on designing and building antennae to get data to homes or vehicles that are not close to terrestrial cell towers. “The elephant in the room…has always been the ground terminal,” says Nathan Kundtz, the former boss of Kymeta, which makes antennae. Mr Kundtz says that tracking satellites across the sky mechanically is untenable if the antennae are to be affordable and widely used. His firm does tracking electronically. No moving parts, he says. Teledesic failed in part because no such ground terminal existed in the late 1990s. Fortunately, the necessary electronics have shrunk in size and cost.
Aerial combat
Firms such as Kymeta, along with at least two other companies, Phasor and Isotropic Systems, are producing flat, electronically “steerable” antennae with no moving parts that can send and receive signals from leo satellites. Kymeta’s antenna is the least orthodox. It relies upon the same kind of lcddisplay found in laptops and flat-screen televisions. Instead of using the 30,000 pixels in its screen to display images, it uses them to filter and interpret the satellite signal by allowing it to pass through at some pixels and blocking it at others. Different patterns of pixels act like a lens, focusing the signal onto a receiver beneath them; the pattern shifts up to 240 times a second, changing the shape of the “lens” and thus keeping track of the satellites overhead. Phasor’s system works similarly, but uses an electronically controlled array of microchips to perform the same task. Isotropic Systems, which has said that it is developing an antenna that will be able to receive signal from OneWeb’s satellites, uses an optical system more like Kymeta’s.
Kymeta and Phasor have both said that they do not want to sell antennae directly to consumers, but will focus on businesses, cellular networks, maritime and aviation customers instead. Isotropic Systems has announced that it will use its technology to produce a “consumer broadband terminal” in time for OneWeb’s launch. Once available, consumers are most likely to get the new pizza-size antennae through their internet service providers. But if it is too expensive for people to receive signals on the ground—most of the world’s unconnected are poor—those ventures selling direct to consumers will struggle. Mr Wyler says his firm needs antennae that cost $200 at most for the consumer business to thrive.
Telesat, the next biggest firm in terms of constellation size, is taking a different approach. It does not plan to offer services to consumers directly, but instead is focusing on filling in gaps for cellular networks, as well as businesses, ships and planes. Specialised telecoms companies would buy bandwidth and resell it. In contrast to Messrs Wyler and Musk, and their aspirations for global coverage, Telesat has divided the surface of the planet into thousands of polygons, and modelled exactly in which ones it makes financial sense to offer strong connectivity. This means its constellation needs fewer expensive gateways.
Mr Wyler, in contrast, is known as something of a connectivity evangelist. His first satellite internet firm, o3b (Other 3 Billion), placed large satellites in a higher orbit, providing a connection only slightly slower than a leosatellite. Now owned by ses, a larger satellite company, o3b specialises in providing connectivity to islands that are otherwise cut off. OneWeb’s goal of connecting consumers is largely in the hands of SoftBank, its main investor, which owns the exclusive rights to sell the new bandwidth.
Even if the new satellites bring the internet to people and parts of the planet that have been ill-served up until now, putting ever more objects in space brings another set of difficulties. Satellites in densely packed constellations may crash into each other or other spacecraft. “If there are thousands [of satellites] then they’ll have much higher probability of colliding,” says Mr Dyer. “If there is a collision in these orbits it will be a monumental disaster. At 1,000km, if there’s an incident it will be up there for hundreds of years.” Geostationary satellites, because they do not move relative to each other, are unlikely to collide.
Managing constellations is particularly difficult, says Mr Wyler, because each satellite has only a tiny amount of power to work with (equipping small ones with bigger thrusters would be hugely expensive). So even if a crash were imminent, there would be little that could be done about it other than watch. “What are you gonna do? Nothing. Get popcorn. There’s nothing to do,” says Mr Wyler. OneWeb has designed its constellation so that faulty satellites fall out of orbit immediately to avoid this risk.
Access all areas
The new constellations will also raise tricky questions of national jurisdiction. Countries generally have control of the routers which connect them to the wider terrestrial internet. Satellites threaten that control. The national regulators that OneWeb has talked to are uneasy, says Mr Wyler, because it would create a route to the internet that countries could not monitor. OneWeb’s intention is to build 39 “gateways” on the ground around the world that will beam up and receive traffic from its satellites.
The first is under construction in Svalbard, a remote Norwegian island chain. These access points, and those planned by other firms, present another difficulty. Some countries are willing to share gateways with other countries. Others want their own because they are concerned that third parties will be able to monitor internet traffic, potentially using it to hack data flows of national importance.
Questions remain about whether the businesses involved can do all they promise cheaply enough. But if these companies succeed, their impact will go beyond helping to bring 3.5bn people online. Mr Musk has hazy plans to use Starlink as the foundation for a deep-space network that will keep spacecraft connected en route to Mars and the Moon.
With a network of satellites encircling the planet, humans will soon never be offline. High-quality internet connections will become more widespread than basic sanitation and running water. The leo broadband firms are trying to reinvent the satellite industry. But the infrastructure they are planning will provide a platform for other industries to reinvent themselves, too.
Correction (December 11th, 2018): This piece originally stated that Intelsat has launched 59 satellites in its 54-year history. That is the number of active satellites the firm has in orbit. The firm has successfully launched 94. Sorry.
I was very interested yesterday to read the article in the Globe & Mail by University of Toronto Professor Richard Florida, and Ian Hathaway, Research Director for the Center for American Entrepreneurship, and Senior Fellow at the Brookings Institute. The article by Florida and Hathaway draws the same conclusions as my research, providing even more precise data to support their disturbing conclusions. It is not hard to find many additional articles on these issues. Ironically, also yesterday, a LinkedIn connection shared a post by Sciences, Innovation, and Economic Development Canada with a very upbeat, positive assessment of venture capital for startups in Canada. This is the essence of the problem. Since I came to Canada years ago now, I have seen a pollyannaish state of denial about the true situation for entrepreneurship, immigration policy, and the lack of “smart” venture capital for Canadian startups. No amount of counter-evidence has changed this mistaken rosy outlook. Without a recognition of these problems, nothing will change.
Canadian Venture Investment Is In Decline
Canada’s investment in R & D Has Been Anemic For Decades Compared to OECD Nations
U.S. Tech Giants Are Exploiting Canada’s Talent Base At The Expense of Canadian Startups
My long-time business partner and I, one of us in Canada and the other in Silicon Valley, last year launched a business targeted at bringing immigrant entrepreneurs to Canada, Vendange Partners. http://www.vendangepartners.com. We spent months analyzing and investigating the Canadian entrepreneurial ecosystem, particularly Vancouver and Toronto, Canadian immigration policy, and the Canadian venture capital industry. What we found was very concerning. Last December, I wrote a blog post here detailing our findings (read more below) that Canada was nowhere close to being the next Silicon Valley. With regard to venture capital, we found that there was a lack of adequate risk capital, which could be traced to deeply rooted conservative values in the Canadian financial industry. Immigration policy was a mixed bag, with a “startup” visa program that had become a magnet for immigration scams. Despite these disadvantages, we decided to press ahead, and are making progress.
That said, I was very interested yesterday to read the article in the Globe & Mail by University of Toronto Professor Richard Florida, and Ian Hathaway, Research Director for the Center for American Entrepreneurship, and Senior Fellow at the Brookings Institute. The article by Florida and Hathaway draws the same conclusions as my research, providing even more precise data to support their disturbing conclusions. It is not hard to find many additional articles on these issues. Ironically, also yesterday, a LinkedIn connection shared a post by Sciences, Innovation, and Economic Development Canada with a very upbeat, positive assessment of venture capital for startups in Canada. This is the essence of the problem. Since I came to Canada years ago now, I have seen a pollyannaish state of denial about the true situation for entrepreneurship, immigration policy, and the lack of “smart” venture capital for Canadian startups. No amount of counter-evidence has changed this mistaken rosy outlook. Without a recognition of these problems, nothing will change.
Canada, we increasingly hear, is becoming a global leader in high-tech innovation and entrepreneurship. Report after report has ranked Toronto, Waterloo, and Vancouver among the world’s most up-and-coming tech hubs. Toronto placed fourth in a ranking of North American tech talent this past summer, behind only the San Francisco Bay Area, Seattle, and Washington, and in 2017 its metro area added more tech jobs than those other three city-regions combined.
All of that is true, but the broader trends provide little reason for complacency. Indeed, our detailed analysis of more than 100,000 startup investments around the world paints a more sobering picture. Canada and its leading cities have seen a substantial rise in their venture capital investments. But both the country and its urban centres have lost ground to global competitors, even as the United States’ position in global start-ups has faltered.
Overall, Canada ranks fifth among countries in the number of venture capital deals and sixth in venture capital investment, trailing only the United States, India, China, Britain, and Germany. That said, Canada’s share of the world’s venture capital investment is tiny, just 1.5 percent. And it has actually declined over the past decade and a half.
But start-ups and entrepreneurship are a local phenomenon: They happen in urban areas. The good news is that a dozen or so of Canada’s cities make the list of the world’s 300-plus startup hubs. And the three largest of them – Toronto, Montreal, and Vancouver – rank among the world’s 62 leading global startup hubs.
Toronto, Canada’s top-ranked startup hub, is the only Canadian city to crack the list of the world’s top 25 startup cities. Vancouver and Montreal are in the top 50. Kitchener-Waterloo leads all Canadian cities in venture capital investment per capita, ranking 26th globally on that measure. It and Ottawa also rank among the world’s top 100 startup hubs in terms of capital invested, and Calgary is among the top 150.
The not-so-good news is that Canada and its startup cities are losing ground to startup hubs such as New York and London; Beijing and Shanghai; Bangalore and Mumbai; Berlin, Amsterdam, Stockholm, and Tel Aviv.
More worrying, Canada is failing to take advantage of the United States’ weakening position, which is attributable in part to its tighter immigration policies. While the U.S. continues to generate the largest amount of startup and venture capital activity, its share of the global total has been falling steadily, from more than 95 percent in the mid-1990s to about two-thirds in 2012, and a little more than half today. But the country that has gained the most ground is China, which now attracts nearly a quarter of global venture capital investment.
Exactly why Canada is lagging is unclear. A growing number of Canadian commentators suggest that the influx of large U.S. and Asian tech firms into Canada is sucking up tech talent that would have otherwise gone to local start-ups. But companies like Microsoft and Google are such powerful talent magnets that they are more likely to increase the overall supply. After all, San Francisco, New York, and London are homes to some of the biggest tech companies in the world, and they are also leading startup hubs.
Perhaps the brunt of Donald Trump’s anti-immigration policies has yet to be fully felt. Maybe it is because New York and the San Francisco Bay Area are close enough to lure Canadian entrepreneurs away, or maybe we are just not as entrepreneurial as we like to think.
Whatever the cause, Canada and its leading tech hubs must do more to grow their ecosystems, which already enjoy such clear advantages in talent, especially in the field of artificial intelligence, and their openness to immigration. Given the role that innovation and start-ups play in propelling economic growth and raising living standards, our economic future depends on it.
Richard Florida is University Professor at the University of Toronto’s School of Cities and the Rotman School of Management. Ian Hathaway is Research Director of the Center for American Entrepreneurship and a Senior Fellow at the Brookings Institution. They are authors of the Rise of the Global Startup City, released earlier this month.
Wikipedia defines Specsmanship as the inappropriate use of specifications or measurement results to establish the putative superiority of one entity over another, generally when no such superiority exists. It is commonly found in high fidelity audio equipment, automobiles and other apparatus where uneducated users identify some numerical value upon which to base their pride or derision, whether or not it is relevant to the actual use of the device. Smartphones and the early microprocessor market are also examples.
Two Specsmanship Case Studies
Most recently, we are seeing specsmanship in the smartphone market. As the smartphone market has matured into 7th, 8th, 9th generations of smartphones, the differentiation among products has been reduced to smaller and smaller differences in the products : resolution of the camera, display size or alleged brightness, etc.. In earlier generations, Apple, and the Android phone manufacturers created a highly effective intangible market need to possess their latest generation phone in which features were less important. I called this market need the smartphone “Star Wars” phenomenon causing people to line up around the block as if to see the latest Star Wars film. Most market analysts now agree that the smartphone market frenzy has run its course. Apple’s strategy to reinvigorate the market by creating a higher price point product has predictably fallen flat. Apple’s move surprised me because the marketers at Apple seemed to miss the consumer market sentiment. Water resistance in my view was the last major device feature with a market need to protect phones from the dreaded “toilet drop.” Samsung introduced water resistance in the 5th generation Galaxy, and permanently in the Galaxy 7. I have not been motivated to buy a new phone since the Galaxy 7.
In another, more dramatic and pivotal example, my first personal experience of the specsmanship phenomenon was at Intel, during the original first generation microprocessor war: the Intel 8086 versus the Motorola 68000. Without diving too deeply into the technical specifications, the Intel 8086 on its face was technically inferior to the Motorola 68000 at a critical time when microprocessors were very new, customers had doubts, and the market was just beginning to establish a foothold in electronics design. Facing this marketing challenge, Intel’s Vice President of Marketing at that time, Bill Davidow, made a momentous decision to “differentiate” Intel and the 8086 not its specifications, but on Intel’s long-term vision for its microprocessor family of products and to focus its marketing efforts on senior management executives of its customers, not the engineers. Davidow famously delivered a presentation to the Intel sales force, “How To Sell A Dog.” The message was to ignore the spec and concentrate on the customers higher level needs, and the security of an investment in Intel with its long-term vision to provide them with greater value and competitive advantage.
Motorola fatefully decided to concentrate its marketing strategy entirely on the superior technical specifications of the 68000, poignantly winning a small skirmish but losing the war. Intel dominates the general purpose microprocessor market to this day. The Intel versus Motorola story is definitively detailed in Bill Davidow’s now famous book, Marketing High Technology: An Insider’s View. Davidow’s book also includes numerous gems of insight into marketing. Bill’s thoughts on the barriers to a new entrant into an existing market have stuck with me over the years.
If the smartphone market is ever to revive, it needs to learn from Davidow’s lesson, ignore the specs, and concentrate on creating a higher level marketing message that meets deep customer needs.
Bill Davidow, former Intel Marketing Vice President
HBS Professor Ted Levitt’s Total Product Concept And Its Influence On Davidow
Though I have met with Bill Davidow many times, spent time with him, and invited him to speak with executives of an emerging technology company, I have never directly asked him about the degree to which Harvard Professor Ted Levitt’s concept of a Total Product influenced him. It does seem highly likely that it is the case. By way of example, marketers often refer to “product differentiation.” Specsmanship is the lowest possible form of product differentiation. Creating a higher level of product value is the true essence of product differentiation. This is also the essence of Levitt’s now legendary Total Product. What is different in the Intel case is my memory of how Levitt’s Total Product model, was adapted at Intel. I will explain.
Levitt’s classic Total Product model is graphically displayed here:
In my personal view and recollection which I show here, I believe Davidow focused on the “Augmented Product,” “Expected Product” and the “Potential Product,” and avoided the “Generic Product” to win the specsmanship war with Motorola. I also distinctly remember a slightly different Intel model which is shown below.
The Intel Variation On The Ted Levitt Total Product Model
It is my recollection that we at Intel, and most likely Bill Davidow in particular, adapted the Ted Levitt model to Intel’s particular new market realities, and focused on the outer circle, “Corporate Vision” and “Product Roadmap” to win the microprocessor war. The “Engineering Deliverable” is not a product. It is only a naked engineering project deliverable. Specsmanship does not make it a product. The “Corporate Vision” and “Product Roadmap” offer greater long-term value to customers, and ultimately create a powerful brand image.
There Is More To High-Tech Immigration to Canada Than Meets The Eye
My long-time business partner and I, one of us in Canada and the other in Silicon Valley, earlier this year launched a business targeted at bringing immigrant entrepreneurs to Canada, Vendange Partners. http://www.vendangepartners.com
From our years’of experience in Silicon Valley and with technology entrepreneurship around the World, we knew that many of the best and brightest young entrepreneurs abroad dreamed of bringing their ideas to the United States to forge their skills and their new companies. But from our discussions both in California and overseas it is clear that Trumpism is having a profoundly negative effect on this flow of talent into the American economy, both individual technical talent and entrepreneurial teams looking to start companies and raise capital.
The Canadian government and some of the provinces, particularly British Columbia, Ontario, Quebec, and to some degree the Maritimes, have done a commendable job of promoting high-tech immigration and entrepreneurship. The Global Talent Stream visa is an excellent vehicle as described in The New York Times article included in this post. Global Talent Stream attempts to address the need for technical talent for companies already operating in Canada. The competition for such talent and the salaries offered in the United States are a major problem for Canadian companies, particularly in AI and robotics. Theoretically at least, a Global Talent Stream applicant with an employer lined up can be working in Canada within about two weeks.
The so-called “startup visa” program for founders and already established teams wishing to set up in Canada is more complicated. The program requires a committed investment from a “designated” Canadian investor and a letter of endorsement among other requirements before the visa is granted. The difficulties of doing this are something of a Catch-22. In practice in the past, endorsement letters were written by government listed “designated” investors without actual investment, but this still did not result in a wave of high-tech startups coming to Canada. The only other option is for entrepreneurs to bring a significant amount of their own capital with them to Canada. This option has led to abuse. At its original launch under the Harper government, the startup visa program, unfortunately, became a magnet for immigration scams. Hence, the startup visa program remains over-subscribed with applicants bringing their own capital to qualify for the “startup” visa for up to five founders.
Finally, There is also simply too little smart Canadian venture capital and too many startups competing for the limited funds. It is also commonly acknowledged that Canada’s investment institutions and the Canadian financial mentality are not well-aligned with the Silicon Valley investment culture. Major U.S. pension funds like the California Public Employees Retirement System (better-known as CalPERS) annually invests 10% of its entire portfolio in venture capital funds. The same cannot be said generally about Canadian pensions funds and investment banks, as one example of the differences. Much lower risk debt capital and convertible debt seem to be more popular products in Canada. In defense, it is often pointed out that the Canadian economy is roughly one-tenth the size of the United States. Yet, on a relative scale, the Canadian venture capital industry still does not compare well. Add to this the fact that the Canadian government has historically been far behind other OECD industrialized nations in R&D investment in innovation and you have major problems. Anecdotally, the sheer amount of money and number of available investors in Silicon Valley alone is well-over 5oo compared with a mere handful in Vancouver. When the more than one thousand local indigenous BC startups actively seeking capital are layered onto the available sources of risk capital in Vancouver, there is major local competition before the immigrant entrepreneurs even arrive in Canada. Looking for risk venture capital in Canada, a la Silicon Valley is problematic.
With that candid and sobering analysis of high-tech immigration to Canada, for individuals who have taken the time to do an in-depth analysis of themselves, and the pro’s and con’s of such a major move, Canada may still offer many advantages to entrepreneurs, and those advantages are only likely to improve over time.
Heidi Roizen is a very well-known Silicon Valley venture capitalist and entrepreneur. I first met Heidi years ago at a European COMDEX event in Nice when she was still in her entrepreneurial phase. Since that time she has gone on to fund numerous startups, and is now a Partner at Draper Fischer Jurvetson. In this blog, Heidi is sounding the alarm to entrepreneurs that, as she says, the market has already turned for the worse. She has been there before and offers her sage advice to this generation of entrepreneurs on how to survive. IMHO, she is spot on.
Dear Startups: Here’s How to Stay Alive
By Heidi Roizen
Reblogged from Tumblr
February 15, 2016
There are storm clouds gathering over Silicon Valley – and it’s more than just El Nino.
As a venture capitalist, I see a lot of data points within the private company marketplace. Every Monday, I sit in a room with my partners and we discuss dozens of companies, both portfolio companies as well as those we are considering for investment. When a market turns, we tend to see the signs earlier than the entrepreneurs working on the front lines.
This market? I’d say it has turned.
It is going to be hard (or impossible) for many of today’s startups to raise funds. And I think it will get worse before it gets better. But, hey, my entrepreneurial friend, whoever said it was going to be easy? One of my favorite expressions is: “that which does not kill us makes us stronger.”
So which is it going to be for you? Tougher? Or dead.
Fortunately, (unfortunately?) I’ve been to this movie before, during the dot-com “nuclear winter” – anyone remember that? I’d like to think I’ve learned some things from that painful experience.
I’ve seen companies live, and I’ve seen them die. And I’ve concluded that certain behaviors separate the two.
Which behaviors, you ask? Here are a few from my downturn playbook for how to stay alive.
Stop clinging to your (or anyone else’s) valuation: You know what somebody else’s fundraise metrics are to you? Irrelevant. You know what your own last round post was? Irrelevant. Yes, I know, not legally, because of those pesky rights and preferences. But emotionally, trust me, it is irrelevant now. We even have a name for this – valuation nostalgia. Yes, it was great when companies could raise those amounts, at those prices, blah, blah, blah, but the cheap-money-for-no-dilution thing is largely over now. The sooner you get on with dealing with that, and not clinging to the past, the better off you will be. As my DFJ partner Josh Stein says, “flat is the new up.”
Redefine what success looks like: I had lunch last week with a friend of mine who broke her leg in three places four months ago. “I used to think a successful weekend was 10+ miles of running,” she said. “For now, success is going to have to mean making it to the mailbox and back without my crutches.” When a market like this turns, in order to survive, it is critical to redefine what success is going to look like for you – and your employees, and your investors, and your other stakeholders. Holding on to ‘old’ ideas about IPO dates, large exits and massive new up rounds can ultimately be demotivating to your team. If you can make it through the downturn, you will have those opportunities again. But for now, reset your goals.
Get to cash-flow positive on the capital you already have (AKA, survive):My DFJ partner Emily Melton said this in our last partner meeting: “Must be present to win.” I used to say it at T/Maker (the company for which I was CEO) in a slightly different way: “In order to have a bright long-term future, we need to have a series of survivable short term futures.” You need to survive in order to ultimately win.
You know what kind of companies generally survive? Companies that make more money than they spend. I know, duh, right? If you make more than you spend, you get to stay alive for a long time. If you don’t, you have to get money from someone else to keep going. And, as I just said, that’s going to be way harder now. I’m embarrassed writing this because it is so flipping simple, yet it is amazing to me how many entrepreneurs are still talking about their plans to the next round. What if there is no next round? Don’t you still want to survive?
Yes, some companies are ‘moon shots’ (DFJ has a fair number of those in our portfolio) where this is simply not possible. But for the vast majority of startups, this should be possible.
So, for those of you in the latter group, I want you to sharpen your spreadsheet, right now, and see if, by any hugely painful series of actions, you could actually be a company that makes money. ASAP. Or at least before you run out of money. Because that’s the only way I know to control your own destiny. You don’t have to act on it (although I would), but at least you will know if you have a choice.
And if you absolutely, positively, cannot get there without more capital? Then you need to…
Understand whether your current investors are going to get you there: Guess who else cares about whether you live or die? Yep, your current investors. Another duh. That’s why they are your best source of ‘get me to cash flow positive’ financing. And yet, even though we all know this, why is it we don’t actually (1) create the plan that gets us to cash flow positive ASAP, and then (2) go to our backers and get their commitment that they will see us through (or know that they won’t, because if they won’t, the sooner we know that, the sooner we can go out and do something about this.) I know many VCs hate to be put on the spot about this, but I think entrepreneurs have the right to ask, and to know.
Stop worrying about morale: Yes, you heard me right. I can’t tell you how many board meetings I’ve been in where the CEO is anguished over the impacts on morale that cost cutting or layoffs will bring about.
You know what hurts morale even more than cost- cutting and layoffs? Going out of business.
I was at a conference once where someone asked Billy Beane how he created great morale at the A’s. His answer? “I win. When we win, morale is good. When we lose, morale is bad.”
Your employees are smart. They know we are in uncertain times. They see the stress on your face. They worry about their jobs. What do they want to see most? A decisive plan for survival, that’s what – even if some of them have to go. Trust me, a clear plan is a real morale turn-on.
Cut more than you think is needed: Yes, this is simple, but not easy. It is so easy to justify why you want to lay off fewer people. However, when you do, by and large, you’ll be laying even more off later. Why we humans seem to prefer death by a thousand cuts is a mystery to me. Don’t. It’s easier on everyone if you cut deeper and then give people clarity about the stability of the remaining bunch.
Scrub your revenues: Last week an entrepreneur pitched us, and his ‘current customers’ slide was alight with bright, trendy logos of bright, trendy venture-backed companies. You know what I saw? A slide full of bright, trendy, money-losing, may-not-survive companies. (Luckily, in this case, the entrepreneur referenced these customers because he thought VCs would like to see that their smart startups use his stuff, but he actually had a lot of mainstream customers too. He has a new slide now.) This, I think, was one of the biggest surprises from the last dot-com bust – we all knew we had to cut our expenses, but no one thought about what our customers might be doing. And guess what? They were all cutting costs too – including those costs which comprised our revenues. Or worse, they were going out of business. If you are in Silicon Valley and your customers are mostly well-paid consumers with no free time, or other venture-backed startups, well, I’d be worried. And yes, it sucks, but it is better to be worried than surprised.
Focus maniacally on your metrics: I know a few CEOs who delegate the understanding of their financials and their business metrics to the CFO, and then stop worrying about all that ‘numbers stuff’. Don’t do that. You have to know your numbers inside and out – they are your life blood. You also have to know which metrics drive the business, and focus on them like your survival depends on it – because it does. Figure out your canary (or canaries) in the coal mine (by that I mean the leading indicators that tell where your business is headed and whether it is healthy) and watch them weekly, or daily, or in real time, whatever is possible. And, have a plan in advance about what you will do if/when the metrics go south. Many of the best companies to have survived the last downturn became super data-driven, and were constantly course-correcting to make small but continuous improvements in their operations with what they learned.
Hunker down: These markets generally take a long time to recover. Longer than you think. And, it might get worse. So don’t plan for the sun to start shining tomorrow. Or next month. Or next quarter. Or maybe even next year. Sorry.
Having just thoroughly depressed you, let me say that I’ve seen amazing transformations by companies who adapt early to the new reality. Severe budgets give clarity. Smaller teams often find greater purpose in their work. Gaining control (by becoming profitable) feels really, really good. Watching your competition (who didn’t read this) die, feels – can I say it? – well let’s just say that when your competition goes out of business, you often gain their customers…and that’s a very, very good thing.
Some of the greatest companies were forged in the worst of times. May you be one of them.
mayo615 