[a p e r t u r e Podcast #4] Startup Success Recipes
Together with James Miners, serial-entrepreneur and now Senior Advisor at Fongit — Switzerland’s premier startup incubator — we explore what it takes to make the journey from scientist to startup founder, transforming ideas into successful mass-market products and what is the key to startup success.
Welcome to a p e r t u r e | Podcast, where we highlight the people who are thinking and doing things differently. Our goal is to expose new ideas to challenge received wisdom and to open up debate. We cover strategy, technology, business models and much more.
Episode #4 —Startup Success Recipes
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Resources referenced in this podcast discussion:
- Fongit startup support, news & events — https://fongit.ch
- Follow Fongit news — https://www.facebook.com/fongit.ch/
- Overview of the Swiss startup scene — https://www.startupticker.ch/en/swiss-startup-radar
- Swiss startup workshops, coaching, and grants — Innosuisse.ch
- Startup Genome Report — Metrics for startup success — https://startupgenome.com/reports
- Swiss startup investments — https://www.sictic.ch/report2019/
- Swiss startup investments — https://www.startupticker.ch/en/swiss-venture-capital-report
- Noam Wasserman — The Founder’s Dilemma
You can follow James on Twitter @JamesHMiners
Full podcast transcript:
Ben Robinson (BR): For episode four, we’re in conversation with James Miners. James is an international innovator who has made the journey from science to startup, and now supports fellow innovators, helping them to achieve success. If you’ve wondered what it takes to turn an idea into an successful product, or the keys to startup success, this podcast is for you!
James has founded and grown several companies, transforming scientific inventions into mass produced products. For the last five years, he has focused on building the Swiss startup scene and has supported hundreds of innovators and entrepreneurs. He has also used his innovation techniques to support large companies in generating innovative ideas.
James, welcome to a p e r t u r e! Let’s start at the beginning. Your career has gone from science, to technology, to product, to people. Please can you tell us about it.
James Miners (JM): Yes. So as a kid I was always excited about discovering new things and making good new things happen. And so strangely enough, I really wanted to push the boundary of what was known in science. So I ended up doing a PhD with someone who went on to win the Nobel Prize for chemistry. And that was fascinating. The problem that we had at the Max Planck Institute, was people saying, well, what’s the application? It was so far out and you have a lot of ideas, but then the question is which of those are useful in the real world?
So that pushed me to industry and to startups and working with taxis that were powered by hydrogen and stuff like that. And in that role, I was ultimately chief scientist. So working on the technology, going from prototype to mass production, multi-generational roadmaps, and then ultimately in the last one, more on the people side and the COO role.
Ben Robinson: So what was the first startup you did after your PhD?
James Miners: So that was in fuel cells for cars and boats. And my job was to set up the research center for new materials. And with that we were able to go from an idea all the way to scaling it up and seeing it in a fully integrated system. And it was a joy because I was working with people on the Russian space program, the European space program and some of the Americans. So…
Ben Robinson: What happened to that technology?
James Miners: So it’s funny, technology has hype phases and for a while the best investment you can make in the world was in hydrogen fuel cells. And then all of a sudden it’s out of fashion. Luckily… batteries became really hip and it’s very similar technology. So I was able to move from doing these fuel cells for those applications and to small fuel cells for the military in Israel and then ultimately to nano technologies for large batteries that you can see in hybrid and electric vehicles.
Ben Robinson: Okay. And so that was that. So the first startup was where? It was in..?
James Miners: So that was in France. And then we ended up having I think, nine sites and we were on our way to raising a hundred million pounds and 93 million signed up and 9-11 happened. So you can just imagine bankruptcies just rolling across. And there I am… in France, 26 years old… first job in the industry, first job in France, and with a team of brilliant people that come from all over the world to join me and we’re in bankruptcy. And that was my first big crisis of leadership. Everyone can sail a ship when it’s happy days. But I was very proud that I could keep my team together in France and teaming up with the Belgian team. We could actually get refinancing and bring that into the second startup.
Ben Robinson: So there is — I suppose as long as these things turn out at the end, these are good lessons learned, right? If they don’t.
James Miners: I learnt a lot. And the second startup really was great because we could take those ideas that we had in the first one and really ramp them up to mass production and I learned a lot in that process as well.
Ben Robinson: So you went from fuel cells to batteries. You went from France to Israel and what came after that?
James Miners: So I went to visit my parents one day, live in new Lusanne and I’m talking to the neighbor and they said, “hey, you do batteries. Well you should speak to this professor at the EPFL”. So I did. And that’s how the fourth startup got going.
Ben Robinson: So what — I missing one. I think. So you did a startup in France, a startup in Israel. [We had two in France]. Two in France. Okay, Both in fuel cells? [Yes] Okay.
James Miners: So the first one got bought by the second and then…
Ben Robinson: Got it. Okay. Okay. And so that brought you back to Switzerland or the first time you moved to Switzerland?
James Miners: No, that brought me back to Switzerland.
Ben Robinson: Because you grew up here or you grew up in the UK.
James Miners: I was born in France, raised in Holland, educated in the UK and Berlin. And then had two startups in France, one in Israel, the last one back here.
Ben Robinson: Okay. That was again in batteries was it? [Yes] Okay. And what happened to that company?
James Miners: We were bought by Dow Chemical and that was at the time where Obama was giving — was stimulating the car industry and also the renewables. So once I joined Dow I could help launch their energy material business. And that’s amazing when you’re helping a large company innovate and bring new technologies to the market as well.
Ben Robinson: A couple of questions I wanted to ask you. One was why not do another startup… because it seems like you had very much had the bug to keep starting new things and… why not do a fifth?
James Miners: Well, if the right opportunity comes along, but at the moment — there’s always this question, if my why is to help make good new things happen, I can either go deep in one or I can work on a lot of different facets of different startups. And because I was really helped by a lot of mentors throughout my journey, it’s incredibly rewarding to do what I do now and I think I can actually have four times the impact just [Interesting] doing that…
…than just working on one and it’s also suits my personality as well. I think. Yes my grandfather always talking about cricket. I wanted to be a good all-rounder and… on one front you’ve got to show to yourself that you can do the depth. And I think I did that with my PhD and my postdocs and being a COO. But on the whole I’m happier in a more creative role.
I think a lot of people idealize how it is to work in a startup.
Ben Robinson: Yes So when you did startups, you found it got very operational very quickly and less about ideation and…
James Miners: You’ve got to manage that process. I really did go from invention to technology to product and then…
Ben Robinson: Which I guess makes you a much, much better mentor. But what you’re saying is what you like about your existing job is you can — you can have an outsize impact by mentoring people, but also you get to concentrate on these of early stage of startups. Is that right?
James Miners: So I like the early bit, but actually what I enjoy is the diversity of questions you get asked. So today it was the employee share purchase plan for a company. It was managing the coaches at Fongit talking about the dangers of making a video of your product because it can really damage your ability to patent them. You imagine that in my morning today, so your brain is being exercised at all of these different dimensions. I think the real questions get more interesting later.
Ben Robinson: And you don’t miss some of the rush, the adrenaline of running your own company or, and I guess also a lot of reason why people get into doing startups is because of the out sized potential rewards that can come later. You don’t miss that aspect. The adrenaline, the potential to become rich or really rich or…
James Miners: What most people don’t know about my job is Fongit is a business and it’s a fascinating one. We’ve got 60 startups that we’re helping who’ve got 350 are employees. And over the last five years we’ve transformed, this incubator being world-class in the way it operates and the way we coach in our process for going from IDF to a fully funded business plan. We’re seeing more Swiss startups going a lot further.
So there’s this whole business side and I’m part of a pretty amazing team at Fongit which has also grown up a lot in the last five years. So I get the whole running a business side or working within a business at Fongit and then the ability to affect the startups without the huge portfolio focusing of running a startup. I think a lot of people idealize how it is to work in a startup. I got married at the age of 45 or 46 for the first time. I think there’s a reason why it took so long.
Ben Robinson: We’re going to come back to that. So there’s loads of things I want to come back to because I think one of the — one of the things we should discuss is there is a false narrative sometimes around what it takes to be successful and run a startup? [Absolutely] I want to come back to that. I want to talk about Switzerland because through Fongit, I think we can start to see some of the impacts of Fongit and other incubators manifesting themselves in way better scores for Switzerland; way more way more vibrant ecosystem.
So I want to come back to that. I want to talk about Switzerland in Europe. I want to talk about Fongit, but I just want to ask one more question about you before we move on to Fongit, which is… all the companies that you did were focused on energy, batteries, fuel cells. I guess you were motivated by stopping climate change or the circular economy or whatever we might call it. Do you not — is that not a burning sort of passion or mission and do you not miss that aspect of what you were doing?
Fongit was set up by innovators for innovators and that was 28 years ago and that’s what we’re doing today. It’s trying to find the best way to transform ideas and research into products and services that deliver social and economic value.
James Miners: So, yes I do think that if you get a gift, you should use it for good. And I have to say when Copenhagen summit collapsed, that was a really big blow to me personally. So now I genuinely believe that new technology tends to improve the quality of life and particularly if it’s in life science, but in a replacement economy, better products tend to also be cleaner. And so I find what I’m doing now is contributing and as if we now look at the movement from clean-tech to SDGs, there are a lot more different ways that you can contribute.
Ben Robinson: What are SDGs?
James Miners: Sustainable development goals. [Okay, thank you] All 17 of them.
Ben Robinson: And so, well, I think what you’re saying is you, you are very motivated by helping the planet. What you’re saying is you’re still having a contribution. It’s just a bit more indirect than it was.
James Miners: Developing technologies for industry is probably a space that is best played by industry itself. Clean Tech is not an obvious place for startups. If you’ve got to prove that you’ve got a lifetime of 15 years and then you’ve got to finance all of that… that’s a tough path of the market as well.
Ben Robinson: We’re going to move on now. So tell us how you started working at Fongit and what Fongit is?
James Miners: So Fongit is Geneva Foundation for Technology Innovation and the story of startups in Switzerland really started 50 years ago with a tech innovator who tried to set up as a company and it failed. And then two years later tried again with his brother… failed. And the third time it was a charm. It became LEM which is now quoted on the Stock Exchange. It’s in multiple companies. A Real Swiss success story.
Mr. Eta when the company IPO, he decided when to take some of that money and use it to help other tech innovators so that they could avoid some of the silly mistakes that he made at the beginning and they could boost their success. So Fongit was set up by innovators for innovators and that was 28 years ago and that’s what we’re doing today. It’s trying to find the best way to transform ideas and research into products and services that deliver social and economic value.
For us, success is having a company of 15 to 30 employees doing something interesting for 20 years, that’s a contribution. It’s not necessarily interesting if you’re a venture capitalist however. In fact, you might end up pulling the plug on this company that could really be viable.
Ben Robinson: And how long has it been going?
James Miners: 28 and half years. [Wow. Okay] Yes, so it was the first one in Switzerland and the guy was really visionary to set this up.
Ben Robinson: Yes I mean it was way ahead of its time, right? [Yes] Because it seems, at least to me that incubators are really, while they thought they were relatively recent phenomenon. [Yes] And in those 28 years, 28 and a half years, I guess you can point to quite a lot of successful graduates from the program.
James Miners: Yes. So we’ve had sort of 11 exits in the last 10 years or so and they tend to be acquisitions by larger companies. Normally the distributor of the product. That long time frame has allowed us to develop Swiss model of startup success and also enables us to play to our strengths rather than trying to imitate other behaviors. So one of the first things I did when I joined Fongit, was try and look at the Swiss strengths and develop this model for the Swiss startup success as opposed to pretending that you’re in Silicon Valley in America.
So Switzerland tends to do high deep tech innovation that can be patent-protected, B2B, in a niche. And very often you are going to have a much higher success rate, more successes, but fewer unicorns. And a lot of the narrative around the startups is driven by creating products for venture capitalists. But on the whole VCs aren’t actually tremendously present in the Swiss scene.
Ben Robinson: It’s interesting because a lot of people focus on that. A lot of people sort of say that Switzerland, relative to Israel, or the UK or US, whatever per capita doesn’t have that much VC money. And I suppose one way to interpret that is it’s an underdeveloped ecosystem. But the other way might be that it just doesn’t need it because if most of these companies can kind of bootstrap themselves and they had become SMEs and they’re not pursuing moon shots, then maybe it’s just an economy in an ecosystem that doesn’t require as much VC money.
James Miners: Well I think there’s that. And I think there’s also a question in maturity of the ecosystem. So what you feed a teenager is not what you’re going to feel as a school kid. And so the Swiss ecosystem now is in growth phase. And what’s funny is we’re seeing higher average quality and more of them and they’re going further. So now we are starting to see Swiss unicorns popping up. But our approach is to say we want rabbits. So real actual businesses developing interesting technologies. So the idea is you have lots of these baby rabbits, you feed them rabbit food and at some point in puberty they start growing a horn. At which point you can start giving them Unicorn feed and you’re seeing those metrics going.
However, if you treat every startup like a unicorn, you’re going to kill most of them. [Yes] That’s kind of toxic. And our job at Fongit is to help develop successful startups. Now what does success mean? In fact, that’s the first question I want to ask an entrepreneur. Do you want to get rich or are you wanting to remain in control? and you even believe you’re the best person to grow this? Success will be different in both cases. And for us, success is having a company of 15 to 30 employees doing something interesting for 20 years, that’s a contribution is not necessarily interesting if you’re a venture capitalist however. In fact, you might end up pulling the plug on this company that could really be viable.
Ben Robinson: And you have some quite good statistics on this. I think in terms of the average age of a Swiss founder that the rates of growth and — because its — like I think when you look at those statistics, it’s obvious that trying to turn Switzerland in Silicon Valley or even trying to compare Switzerland with Silicon Valley is just the wrong lens through which to look at this ecosystem.
James Miners: Yes! Just play to your strengths, I think. And it may be it took a few foreigners to come to Fongit and say, look, this is what you do. Well, let’s come up with this Swiss culture of startup success and let’s work on that. So, yes…
Ben Robinson: But do you think — coming back to this story of this narrative around startups, right? So the first one — I’m not saying these are necessarily false narratives, right? But one of the first things that people say is if you want to change the world, you need to work for startup. Do you subscribe to that view? Yes or no. Secondly, the way to get rich is to join a startup. Do you subscribe to that view? Yes or no? And then the third thing is, you’ve got a blitz scale run as fast as you can. Do you sort of subscribe to that view. Yes or no? And I think you would — you probably, I guess you can even turn this on its head and say like they start with the objectives of the founder, But if you can even remember what those three questions were, how do you[Crosstalk]
James Miners: So the third one was, it turns out that premature scaling is the biggest harm to start ups. And there’s a lovely report called the Startup Genome Report and they reviewed 20,000 startups a few years ago and they came up with the term premature scaling is the most common reason for startups to perform worse. And I understand the dynamics. At some point, you’re on generation three, your investors are all “launch it” — — but all your costs come into marketing there and production there.
So you need to be damn sure before you’re going there. On getting rich. There’s a great book called The Founder’s Dilemma and the fundamental question is; do you want to get rich , bigger pie, smaller slice or do you want to keep control? I asked people that if they don’t want to say I really want to get rich and that’s why it’s clear they want to maintain control.
If you’re in your 20s or 30s, you probably get more money working for a large company or in banking than working in the startups statistically. The average age of a founder in the US is 38 years old; in Switzerland it’s 38 years old. VCs tend to prefer funding younger startups and we love the idea of people just finishing university. But the fact is that, every Swiss startup entrepreneur has finished their university. They don’t drop out.
And a really great way to go about doing a startup is working a large company, really understand the industry and then at some point, whether or not autonomy becomes a bigger driver for you, you’ve got the seed capital, you’ve got enough with a few co-founders to go for one and a half years, then your valuation is much higher. Now you’re going to be less manipulatable by VCs and extra money. And there…
People say startups are taking a leap into the void. No, it isn’t. You go, you get a good coach. It’s an airplane… they ask you where you want to fly, they give you some tips, you take off and you work out all the risks and you manage the hell out of them. And you get a great team and a good advisory board. And yes, sometimes you’re lucky.
Ben Robinson: It feels very much the Swiss way, right, to work in industry for a long time, become a master of the profession and then use that knowledge to kind of make the profession better for a different narrative than, ,you know you leave college and he wants to massively disrupt existing industries.
James Miners: It turns out that in the US the 0.1% fastest growing companies, the average age of their CEOs is 40 and the 0.01% of them, the average age is 45. So it depends which story you want. And when we talk about this question of do you want to get rich or keep control, people say, well… let’s look at Apple, right? He was kicked out and there were three founders and you know two of them. Microsoft, also three founders, you know two of them. So even the examples where someone had it all, they’re not particularly helpful. [Yes] So one of the tough things about my job is you have these outliers, which are very, very interesting, but they don’t necessarily help you dealing with the majority of the people you are coaching.
Ben Robinson: True. And the story of successful companies is told by the people who’ve enjoyed their success and they never place or they never attribute any of the success to luck, right?
James Miners: Yes. Or they say it’s timing, which is luck. So one of the worst moments I had and I promised myself when I was going to be successful, I would not do this, is… you’re there… and there’s a successful entrepreneur. And if it’s a guy, he’s going to say… everyone thought I was crazy. And he said, Yeah out there, there are dragons but I went there alone. Well there were three co-founders, but I killed two and I climbed to the top of the mountain… and there was another mountain ahead of me. But now here I stand before you… and I’d be sitting there in the audience thinking you have to be a super hero to succeed.
This was tremendously demotivating. Now I understand why I’d say that, but no, most of your life as a startup, you’re not a butterfly. You’re actually a caterpillar. And I think the helpful start up and that narrative is, hey look, these are the stupid things I did but didn’t kill me. And nonetheless, I’ve had a really great time. I’ve learned a lot.
Ben Robinson: What proportion do you think of the stories and how companies were founded and how they initially felt success are either fabricated or kind of retrofitted because it sounds great?
James Miners: So I work with the professor of innovation at IMD called Stewart Reed. And he said, the problem with his area of research is if you’re a good entrepreneur, you’re good at telling stories then you will tell the best stories. So it’s a story. And when I’m coaching people that is finding the most compelling narrative. There are many stories, but which is the best one? And the question is, which is the most helpful to the goal of building a thriving Innovation Nation?
People working together and also more women entrepreneurs. Because also this mantra narrative, it isn’t the truth and it’s not helpful. And so much of this is people say startup is taking a leap into the void. No, it isn’t. You go, you get a good coach. It’s an airplane… they ask you where you want to fly, they give you some tips, you take off and you work out all the risks and you manage the hell of them, out of them. And you get a great team and a good advisory board. And yet, and sometimes you’re lucky. So your third question, I forget what — oh your second…
The best way a large company can get the most value out of a startup and also help that startup is to be their customer. Because the value of a dollar from a customer is 10 times that of an investor.
Ben Robinson: I think we covered everything. Do you need to do a startup to change the world?
James Miners: Yes, in terms of innovation types, you’ve got incremental innovation. 70% of innovation is incremental. That’s fine. Then we’d like to think about the breakthrough, which is an IP, you know… new science. And then of course you’ve got the disruptive, which tends to be not much technical breakthrough, but it’s really market driven. So that might be more entrepreneurial innovation. And of course the ideal is when you get all of those together. So the Swiss model tends to be — it’s existing needs solved better. And then the question is do you want to build that yourself into a sustaining company? Some point you want — why would a large company want to buy that?
Ben Robinson: Good. So I’m pleased you brought us on to the subject of large companies coexisting with small companies because, so you’ve obviously lived this in your experience with your startup and Dow Chemical. And, I guess you also live this through Fongit because I would imagine one of the things you’re doing is trying to find both customers and also innovation partners for the startups that you incubate. How easy is that to do?
James Miners: So that’s the weakest points in Switzerland’s innovation score cards, the collaboration between large companies and small companies and startups. And there’s always this debate, should we invest in a startup? Should we do contract research for a startup? The best way a large company can get the most value out of a startup and also help that startup is to be their customer. Because the value of a dollar from a customer is 10 times that of an investor.
And that means the large company is not only getting something that’s super fresh, they’re really testing it before everyone else and tailoring it to their needs. It’s phenomenal. On the other hand, if they want to invest well, there are people like me that know how to make an awfully good slide deck and the proof is in the pudding. So my recommendation is if you’re a large company and you want to innovate, we know that startups are three times more Capex efficient in developing something than a large company.
Also, startups don’t have any brand risk. If they go test something and it doesn’t work. In fact, it’s remarkable. When I was acquired by Dow Chemical, we had three times the number of people. But if we were sampling in the existing customer, there’d be a debate. What happens if it’s not perfect? Well, it’s still going to be better than what we shipped six months ago. Right? But we’re selling this other stuff and this might hurt our brand. And as a manager, that’s the last thing you want to do. So startups can get customer intimate and iterate so much quicker than a large company.
So it does make a lot of sense for a large company to, particularly if you want to explore different positions in the value chain, can even do it on a different brand powered by this, or acquire a startup at the right stage. And then it’s basically rebranded and you scale.
Ben Robinson: It always seems like it’s a very healthy coexistence because as you said, one has — one company has a brand, a lot of customers, a route to market and the other one has innovation. And so does it always seems like it’s a very, very good symbiotic match when you can match a big company with a small company. But what you’re saying is just become their customer and you steer people away from some of the other things that they do. Like investing in startups like innovation centers and all these things that are less effective, you would argue.
James Miners: So the investing it’s very complex. [It’s not really in the DNA of the company, I mean they’re not specialists…] so the point with the investing is it works well if it’s completely separate. But if it isn’t, then you set it up to do those risks that you wouldn’t normally look at. But then you’re getting analyzed using the normal part of your brain, which says it can never work. So you’re not really de-risking it in that case. And then we haven’t really seen the success that was anticipated from these corporate centers where they would integrate startups.
Ben Robinson: Yes well there’s a big movement isn’t there? To try to learn from startups and where do you stand on sort of intrepreneurs and that movement, maybe I’m putting words in your mouth, but it seems to me that you’re saying one company is good at exploitation, one company’s good at exploration and they should work symbiotically, not try to copy each other or…
It’s one of the funny things that if you’re a consultant or you’re an external person, people listen to you. The moment you’re inside the organization, you’re one of 50,000.
James Miners: Well I do think if a large company is going to know how to value an innovation and not shoot down every new idea… they do need to nurture it internally. And you just asked an interesting question. What can large companies learn from startups? And there was a very smart guy from Nissan who approached us two and a half years ago and he said, we’re having problems. Our innovation presentations are 40 minutes. And at the end the CEO says, well, have you asked this person if they need it? Can you, and they’ve already been working on it for nine months.
So we worked with them to get an elevator pitch and an executive summary slide where they could pitch the idea to the committee of VPs in three minutes. We train them in Question and Answer. And then it was do we kill it? Do we adopt it immediately or do we ask for a full slide deck, full slide deck, 12 slides. Also trained them to pitch Q and A, took them three months to do. Again, half of them were adopted; one third maybe killed and another 20% just wanting some extra detail. But it turned out the tools that we’re using in startups are highly effective to help those large companies innovate.
And because, you know, you got to be aware, if you see all of your ideas that you’ve gone in house in the next few days and you kick all of them down, well you’re not going to be around in the next five, 10 years. And what was fascinating from the vision of the CEO… said people are managing really well to a certain level, but if they want to become a VP, they need to know how to invent the future. So they need to run an innovation group or on a project or two for 18 months before getting that promotion because someone in the organization has to build the future.
Ben Robinson: I don’t know — you probably have statistics on this too, but it seems that most innovation that takes place within a corporate comes when that corporate is prepared to do things outside of the body corporate. So set up a new entity or give the power to a group of people to go off and think differently and take risks. And so in the same way it works more when they worked with startups because that’s inherent to the culture of a startup. It seems that you’ve got to try to create that culture and maybe you use a separate vehicle if you want to get that kind of innovation in a corporate. Like does applying the business model canvas or whatever work if you just tried to apply it to the body, like divisions within a large corporate.
James Miners: Yes. You always going to have the innovation wars between building the future and the value delivery engine and all credit to the value delivery engine, they’re paying the bills and incremental innovation works fabulously. Now, if you want to do something very different, particularly changing your position in the value chain, so imagine all of a sudden, let’s say you’re Nissan and you want to explore selling cars to Uber drivers. Just want to have a think about it. Now, you upset all of your fleet vehicle manufacturer, you attack all of your existing… so with this idea, just changing a little bit in the value chain, you can damage 90% of your existing business. So that would be silly.
And on the other hand, if you could spin it off or if there was another startup that was doing it and you could help them a bit where you can explore that without that huge risk. So the other problem is if you make this external innovation center within the large company where these people end up being freaks and when they go and talk to the silver back gorilla is that we’re not in running the production and the core thing, they’re like, you’re a freak. So they lose the ability to convince people inside. And it’s one of the funny things is if you’re a consultant or you’re an external person, people listen to you. The moment you’re inside the organization, you’re one of 50,000.
Ben Robinson: So how many years have you worked for Fongit?
James Miners: It is been five and a half now.
Ben Robinson: Five and a half of the 28 and a half. And in that time I would imagine you’ve had exposure to hundreds, probably thousands of Swiss fintech companies because you probably looked through their applications, you were involved in the selection process, then you’re incubating. So you said there’s 60 startups. Is there an annual intake?
James Miners: Yes. So each year we had about 300 people applying and then we’ll screen those down. We’ll pre incubate about 15 so, they spend three months with us and a coach just seeing… what do they really need? Is there a fit? are we the best people to help them? And then we can move on to the incubation, which — typically you’d say, well we want it to be three years. But sometimes, the really great companies you want to keep sticking around because they’re inspiring the other ones. And particularly for me, coaching becomes scalable where you can say, hey, you got this question, go and speak to her, because she really sorted that out and now she becomes an expert because she’s explaining it. So…
Ben Robinson: and those successful companies are also happy to stick around in the program or at least in the building or…?
James Miners: Yes. So some of them get too big and at some point when there were about 30 people, they’ve got enough internal dynamics and unfortunately for us, and we’ve got a rent revenue, but we do feel it’s the moment for them to graduate. But some of them ask us, at pivotal moments, for example, during an M&A can we come back on the board of directors to help them for that? so we’re there and our mission is to help startups maximize their value really.
if it takes a village to bring up a single child, it takes a country to bring up a successful start up
Ben Robinson: Is there a Swiss part to your mission or not?
James Miners: Yes, so we have a few guiding principles. One of them is proximity. And what we noticed is if there’s someone in our building on the way to the photocopy machine that asked me a question, I say, well, that sounds actually like an IP question. Here are three people you could contact. And that’s basically saved them a week. And it’s as good as coaching as you could go and meet for half an hour. So we found that the value of proximity of entrepreneurs talking to entrepreneurs and their teams as well. When you are in R&D and you realize that the head of sales is really annoying. You think it’s your head of sales that’s particularly annoying.
When you see other startups, you’ll realize that jogging with another guy from R&D, it’s just the natural tension that you’re going to have. Those are the kinds of things that are useful from proximity. And then we have two other guiding principles. One is excellence. We’re trying to improve the whole time. And the other one is exceptions because anyone that’s going to be successful has to have a sustainable differentiated value proposition. And we can have our rules… but on the whole, if the evidence is some of our best successful companies will be different and will not be in the natural sweet spot.
Ben Robinson: Are there any downsides of incubating starts? I mean it’s difficult to see them. But one thing sometimes people say is that if you put, if you put sometimes introverted people in an open plan office, then they maybe become less inclined to share ideas and collaborate as kind of the only downside that I’ve heard. But are there any thought of others or if you’re mindful of these things then you take them into account?
James Miners: Yes. So… I’m smiling because when I joined Fongit every year we’d have an event with wine and these little nibbles and ties and the politicians will come and entrepreneurs hate that. So the first thing is…what kind of environment do introverted science geeks like myself like? And what kind of events do they like and how do we create an environment where they can thrive and be celebrated? So it turns out you need a kicker table, turns out that they do like coffee and croissant… that’s sort of our town hall meeting. And you can get the information across and getting the right kind of event and the right mix. That’s a lot of how you get the magic to happen.
But you’re going to need to have some noise canceling headphones. You need to ideally have some quiet zones. You need a variety of different spaces. And so we actually had to change our staffing. So all of a sudden you realize, well if we want to build a community where people interact, well, I’m a physicist, I’m not great at building parties. So we started working with people that had been trained in hotel schools, or business schools. And the moment the person that’s running our space has a background in events and facility management and brings a whole range of different competencies to the ones that we have. But again, not tailoring it to extroverted sales people, but trying to create that environment for Swiss entrepreneurs.
Ben Robinson: Is it competitive? So you said you’re getting 300 applications. It sounds like you’re oversubscribed, but does that — is it becoming harder to attract the best companies and what is the competition? Is it other incubators? Is it WeWork — do you think in those terms or is that…?
James Miners: Someone once said, in Geneva, the problem is not the 100 startups that are supported by the incubators. It’s actually the 20,000 companies that we can’t support. And literally if a company applies to Fongit and they’re based in or around our region or in Switzerland, I will try and find a way in my reply to help them. And most of them won’t come to Fongit. People apply, there may be in social entrepreneurship, well there are other good places for them. There’s the Swiss training. There are other colleagues in different fields.
If they’re in Zurich and they want to do something that is where they can equally well do that. And in Zurich as Geneva. Why move? Why not go to F-10? So it’s strange. We’re a foundation… not for profits. So our job is to try and help these people. And sometimes the best thing to say is, well, go and do this InooSuisse workshop and come back to us.
Ben Robinson: I should have asked this at the very top, but it’s only Swiss companies you incubate, is it?
James Miners: Yes, so you asked that was what I was saying about proximity. You’ve got to be here and be in Geneva.
Ben Robinson: What I was saying in effect is; would ask you to move here at least for the duration of their program. But the, the applicants don’t have to be Swiss. And what — you filtering only for Swiss applicants?
James Miners: No, no, no. So most of our our founders are international and but they have to be based here and live here. That’s the idea because simply we have so much more impact if they are here and you’ve got limited resources and time and you want to have the maximum impact, really.
Ben Robinson: Got It. So they might not be Swiss, it might not be a Swiss company initially, but in order to really take part, you ask them to become Swiss and settle here and base the company here?
James Miners: Yeah, So 90% of Swiss startups or startups in Switzerland are set up within 20 kilometers of where the people live. And in fact, that’s your great advantage as a founder is that — where do I want to live? And giving, you’re taking a big risk on your job. It’s kind of important to be there where you have your friends and families so that when that evening is available and you can go for beers… you can. And I think that was one of the mistakes I made with my first startup going from Berlin where I had my life and all the way to the middle of rural France where I got really good tax break. I wouldn’t recommend that.
Ben Robinson: This question occurred to me based on what you said, which is there is there a problem with a) Swiss geographical mobility. Like is it difficult to get Swiss people to move around? If you’ve got successful startup, how easy is it to attract Swiss people to move from, say, Zurich to Lausanne? And then the other thing is b) how difficult is it to get people from abroad to move to Switzerland because of costs, visas? what one of the reasons might be?
James Miners: So the main aim of an incubator is actually to, to grow what you have and help it to thrive. That turns out that, there are some people that are coming from abroad and have very good reasons for wanting to set up their start up here. But we’ve got an agreement with for example, Vaud, the canton next door, which is before the company set up. It’s fair game. Wherever if we can give them an offer that they really want, or they should come and set up the company here.
Once it’s established, you’re going to pay money to relocate someone, they’re going to lose their network because proximity is important. I know when I moved from having my center, the EPFL where my last startup was and Dow was… to Geneva, I had to rebuild half of my startup network. So I don’t see it there’s much… There’s going to be extremely good reason for moving an existing company.
Ben Robinson: But it’s more question about attracting talent?
James Miners: Switzerland and Geneva is one of the most desirable places to live in the world. And compared to San Francisco, it’s pretty good value for money. But the Swiss, actually the European German model of company growth tends to be… it’s a country of small to mid-sized enterprises, you can have little centers. And then you’ll grow, you might find some talent and grow another center of 30 people there and other talents of 30 people there. But on the whole you’re always keep your headquarters in Switzerland because it makes tax sense and it’s good for IP.
Ben Robinson: Okay, I’m going to get back to the question I was going to ask you earlier, which is, so you were working at Fongit for five and a half years, you see at least 300 startups a year because that’s roughly how many applications you get. So you, more than perhaps anybody else in this country, has a finger on the pulse. And so the question I want to ask you is what’s hot in the Swiss startup scene? What are the early indicators that you see of success? What are the — you think of the best characteristics of successful startups of founders, maybe? Just just share with us some of your insights based on all the startups that you see?
James Miners: Okay. So the first thing is…
Ben Robinson: And do they mainly come out of universities?
James Miners: Yes, so that’s an easy question, right? the first thing is, Yes. Solo founders versus teams. Solo founders take three and a half times longer time — more time to reach scale and two and a half times less likely to pivot. So we know the narrative of the lonely leader on their own. It ain’t true. So the next one is [debunking part of the established narrative right?] Yes. And then it’s always about diverse teams because you want people with (a) if they can get along and work together, but you’ve got different mental models going on as well. So that’s very valent. So balance team tends to have about three times or more user growth.
Ben Robinson: Is there an optimal number?
James Miners: Actually we got a really great start up and I think they had seven co-founders that was — average age was around 40 when they founded … called OB Wise. And they were a spin out of — it was ST Microelectronics and Ericsson, really good team. So we tend to find also early on if it comes to pitching competitions. So teams with a female member will tend to win that… just on the whole we’re seeing women are better in Q and A which is a big part of — [What do you think that is?] On the whole, guys can see questions as a challenge and women on the whole just — thanks for the question and going for it!
And also it’s aspect of differentiation. When you’ve seen five pitches of just one guy and talking about the team and how diverse they are, and then you actually see two people and they’re sharing the, the voice and the Q and A and one of them represents 50% of the purchasing public.It’s kind of more credible.
In terms of trends, our idea at Fongit is very much bottom up. We believe it’s the entrepreneur, the market and the investor that decide. And we enable. So when I heard the word Fintech via London five years ago, I looked around and we had five Fintech, seven fintech companies already at Fongit and no one in Geneva knew that word yet.
So if you know the word, it’s probably too late. So you’ve got to do it bottom up in that approach. But the biggest advantage I have is I get to see teams every day. Do they have lunch together? How are they when they’re not on show? What progress do they make? Because sometimes, and we’ve had to standardize this at Fongit. If you coach a company, put in a hundred hours and another one you got 10 what you’re going to expect? you know 10x improvement in the first case might not be the case.
So that’s my unfair advantage if I’m angel investing… because I get to see it and I do believe or choose to believe that those companies where you have someone that has the positive energy but also the endurance and is part of a team, that’s a really powerful mix.
Ben Robinson: So you think it’s less — so I do want to suggest that it was about technologies. There’s obviously no direct causation between a great technology and a great success. So I wasn’t — the question wasn’t what’s hot and leading to success because I think you’re right. I think it’s many other factors that explain much better than causation. But the question was more what’s hot in Switzerland right now? Is it in the Medtech space? Is there anything in particular that you would highlight as being world beating and quite specific to Switzerland?
James Miners: So in a word it’s Deep tech. So patent protected technologies, that’s our sweet spot. And then of course, yes, Switzerland has a huge life science heritage. A lot of the financing money is going towards that. Of course you combine that with watch making, with med tech and then ICT is growing a lot in terms of the amount invested there and a lot can be said for the fact that now the ecosystem has matured and you’re seeing B2B software or even B2C. And another bit is that now you have some serial entrepreneurs who are working inside angel groups, like SICTIC, to support the next generation. And that’s really powerful when you’ve got people that have done it giving back, investing, and giving appropriate and actionable advice.
Ben Robinson: How does these groups, because there’s this — I agree with you, those groups has seem anecdotally at least to be having a much bigger impact on the ecosystem. So these, the angel investing groups and there are at least three that I can think of right now that have quite big membership and deployed quite a lot of capital. How do you coexist with these types of organizations?
James Miners: So actually we collaborate a lot. And what I love about Switzerland is you’ve got just enough competition to stay world-class. But on the other hand, you’re exchanging best practices. With us, we want to make sure that anyone that we’re allowing to work with our startups is doing this in a benign and positive way. And then how can we collaborate with them? Because we were the first, at the beginning there was nothing. So if someone can do something even as good as us or better, hey, let them do it. And then we could — we can focus in on the other gaps. So we’ve hosted events with the Business Angels Switzerland who we were the first Swiss angel group, then with SICTIC, then with Investiere. And these would be good.
What we normally do is they bring some of their startups, we bring some of our startups, they bring some of their angels, we bring some of the angels in our ecosystem together. And you’ll find that each of these have their own culture. And maybe that will be the place where an angel would think, okay, here’s a group of like-minded people that I can work with. And on the other hand, these are my angels that prefer to do their own thing.
Ben Robinson: So one of the questions I want to ask you again, from the time you’ve been working at Fongit and other companies you’ve seen, which is — are you able to see demonstrable impact of the work you doing?
James Miners: So what we’ve noticed is, if it takes a village to bring up a single child, it takes a country to bring up a successful start up. So really our best startups, you’ll find that they were — the idea was initiated at a pre incubator called Genius. Then they got the venture kick. Then they may have hopped out to Mass Challenge for three months. They’re founded at Fongit. They’re winning the venture.ch prize, you’ve got the Business Angels Switzerland and SICTIC coming in as angels. They’re InnoSuisse coached and that’s classic.
You’re getting the best of all of these components and whether you wanted or not as an incubator, your job as a coach is not being the one source of objective truth, but it’s actually connecting them with the best. The funny thing for me is I think I’m a better coach in fields where I’m not an expert. So I’ve been a better coach in med tech because I connect with more experts in those fields and I’m doing the just plugging the entrepreneur.
And the other important thing is to remember… it’s called entrepreneur. It means she does it, and never try and become a consultant, never make them dependent on you. The three rules of coaching for me is number one, do no harm. And that’s very difficult if you’re coming from a large company because it’s so much of your, what you’re going to advise is actually toxic to start up strategy.
And the second one is do just, just enough so that they still own it, they’re independent. You want to do an upgrade in one specific area, the most vital one that creates the most value in a very short time and then they can carry on running.
And the third rule of coaching, I’m trying to find out…
Ben Robinson: Okay, there’s so much I wanted to follow up on that because, so first of all, do you coach the coaches and do you have professional coaches or are they volunteers? The second question I wanted to ask you was, it’s interesting you said that you think you’re a better coach in fields where you’re not an expert because I’ll give you a short anecdote, which is, I was briefly a mentor at an incubator.
I remember going to a session where startup asked for help on pricing. And it was a B2B Enterprise Support Company asking for help in pricing. And 14 mentors turned up to this meeting, giving — dispensing advice on B2B software pricing. And it was absurd. And at one point I asked, how many people are actually ever done any B2B stuff? None of them had. So what other sort of minimum — like if you could be a better mentor and feels you don’t know much about, what are the minimum criteria you have to meet to be a decent coach. So do you coach the coaches, are they professional and what are the minimums sort of characteristics you think of a coach?
James Miners: Okay. So we have developed a process going from from an idea all the way to a funded business plan. So idea — you have to be able to express that idea, getting the value proposition, minimum viable pitch, written elevator pitch, then the testing it, getting to your 12 slides. We’ve got examples of all of those 12 slides financial templates that are accepted by the market, executive summary and so on.
So we’ve got that process and all of our coaches at Fongit follow that process. They’re all InnoSuisse or Platinum certified coaches. So tech startup coaches and but they get each, everyone gets to use their own tools as long as they deliver this in a certain amount of calendar time and a certain number of billable hours. And because as a coach, if you want to stay fresh and inspired, you’ve got to use new stuff constantly, but within that framework.
My director is Antonio, so he come, did quite a lot in classical music and I’m always thinking about this balance between structure and freedom. And I think that’s important with managing coaches. They’re good musicians. You’ve got to give them… there’s got to be enough structure so that we can all work together in driving that startup forward to success, but enough freedom for each person to add their own flavor and also adapt it to the startup.
And then there’s this other aspect between — difference between a mentor and a coach. So a coach is paid to deliver something in a given time. So, ideally 10 weeks. A mentor on the whole, it’s pro bono. You are lucky because mentoring really should be done with at least two or three mentors in the room so that they keep themselves honest. [Probably not 14]
But the danger is if you have a single mentor who is; oh, you should come work on that and this and let me help you. And Oh actually I’ve got my business calland off they hop and you’ve got your whole slide deck in pieces and you can’t get it back together again. So in Switzerland, because we have this history of the coaches from CTI and Swiss and Platinum, there is less appetite for coaching for mentoring from our high tech startups.
Ben Robinson: So maybe it was a question on mentoring then, which is what do you think? So if you — maybe express it in a different way, which is if you’re a startup and your eager to get a mentor, what would you advise a startup to look for in a mentor?
James Miners: The first thing would be real startup competence. I would ask or same with any new board member, investor, ask them for reference and then phone those people up. And startups are not smaller versions of large companies.
The other thing is understanding what kind of time they can commit. If it’s a little, everyone wants to give you advice, but what you ultimately want is connections to business and then coaching where you can really go deep.
You know how it is with brainstorming anything. There’ll be a few quick wins but, in an hour and a half meeting, how deep can you go? You can’t really start sculpting and changing a bit of your business out of that meeting, particularly a start up that’s been going for more than six months, which is most of our startups and that depth of work and appropriate actionable advice you can — you need to invest the hours there. And that’s when coaching really can pay off because that is their job.
Ben Robinson: Yes. So in short you’re saying go for coaches over mentors and if you go for a mentor, make sure that person, knows something about startups, not necessarily deep domain expertise and they can actually commit time consistently.
James Miners: Yes. So I will always have one lead coach and then get some mentors and try and use them for connections.
Ben Robinson: Yes, okay. And where do you stand on the whole debate about Europe? Because there’s a viewpoint that Europe’s massively lagging United States and China in terms of building next generation tech companies. Where do you sit on that, do you think — I know your viewpoint is very much Swiss centric, but do you have a view since you’ve worked all over Europe on whether Europe’s doing enough to create next generation digital age businesses?
James Miners: So I’m kind of a bottom up guy, so I’m always thinking what can I do to improve things and what are the gaps and can we do something to change them? Because a while back that was the narrative in Switzerland; we are not good enough and — okay, maybe that belief keeps you surging forward, but it doesn’t necessarily tell you what you need to be doing and more of and how to be doing it.
So I do think if there’s a miss message for Europe, then play to your strengths. Stop complaining that you’re not the United States or something like that because you’re not and you’d only be a pale imitation. So Europe and digital, well as David Galbraith said, we have a strength in design and then we also have a strength in privacy. So how can we bring those round to a more modern view of what the Internet is going to be?
And is there space for an internet that is not funded purely on advertising and your data, but rather maybe having privacy at the core and payments and then you see Swiss becoming a good place for privacy and also crypto, potentially micro-payments. So I don’t have the answer. But what I’ve seen in Switzerland where we’ve really gone from, my exit was the only exit in two years at the EPFL in 2009.
Now it’s every three months. Why? Because people kept on doing good stuff and we stopped trying to do B2C platforms that required huge networks to win and focused on deep tech, niched, B2B, export orientated stuff and then all of a sudden we start winning. And by the way, every now and then a unicorn starts popping up. So I think we’re moving in the right direction.
Ben Robinson: Are you excited that Facebook has started Libra here in Geneva?
James Miners: Well, it was funny because, we were having our team meeting a while ago and I say, look, they’re having privacy problems. So what’s the gold standard in privacy? Well, it’s crypto. So if you want to prove that you’re repositioning yourself. Well, that’s a good one. And if you want to do privacy and Crypto, then Switzerland is a good answer and Geneva. So I think that’s a result.
But the other interesting thing is it’s a Geneva entrepreneur coming back and this was one of the strategies of — [explain that? So is that not an angle that I picked up on]. So it turns out David Marcus comes from Geneva. [I didn’t know that]. Yes. So he co-founded Paypal, Facebook Messenger, and then the question is where do you want to live? And actually EPFL, that’s their strategy, to find Swiss émigrés in the US, and say, well, Hey, look, you made it big if you want to come back and do something interesting somewhere where there’s a great quality of life and rebuild. And I think that’s a very smart approach it is…
Ben Robinson: Not many people have picked up on the angle, I don’t think. Just wanted to finish up by asking you — So first of all, I wanted to say that the Fongit events are excellent and we’ll be tweeting out a link to the Fongit event page. We will tweet out links to all of the publications that you’ve mentioned, all of the reports that contain all the great statistics you’ve been mentioning. I wanted to finish by asking you what your proudest achievement is in the time that you’ve been at Fongit. And it doesn’t have to be a single company that you’ve coached, although if you want to mention any great companies, that’s cool.
James Miners: So can I give you two? So first one was five years ago, I was speaking to our neighbours at the incubator, and we were talking about their strategy for the next five years. And together we had this dream we like, could our region be one of the top 30 startup ecosystems in the world? If we’ve done that… that would be amazing. And maybe one day, they will do it.
And literally six weeks ago, the global startup ecosystem report came out and there we are… number 22 in the world. And interestingly, it’s Geneva-Lausanne-Bern as a region. And in Life Scienses we are seventh. Yes, there was a startup genome report, which I mentioned that had studied 20,000 startups and came up with the first success criteria and some real metrics on startup success.
So they’ve always been a reference. So then coming in that was pretty, pretty powerful. And it shows that, it’s not about one start up. It’s about a whole region and other things I like is one great entrepreneur who was working for one company left that worked in another company that bankrupted, started out his own venture, which is doing quite well because our ecosystem is big enough and there’s a need for talent. It’s actually de-risked… your venture or if you’re working a startup that may not work, but we will want you for another one. And I think that’s a sign of the dynamic.
But privately, and this sounds really geeky, but one of the things I’m most proud about is when we developed a new incubation process and new incubation agreements, which were above and beyond what we’ve seen from the US National Business Incubator Association, or theEuropean one; say it’s just taking this profession of supporting startups to the next level and seeing Fongit go from 20 companies to 60 and this great dynamic atmosphere around that. And that’s really rewarding.
Ben Robinson: Fantastic. Well, I would like to thank you very much for your time, and I hope that our listeners feel the way I do, which is I think you’re having a profound impact on the ecosystem and if there was a medal that we could give you for contribution to the startup ecosystem, that would be great. So thank you both for being on the podcast and for everything you’re doing for fostering the ecosystem here.
James Miners: Thanks a lot.
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