Guus Frericks is working in the most unique circumstances in Europe.
Frericks is founder and CEO of HighTechXL, a global high-tech hardware accelerator based in Eindhoven, Netherlands.
He has built his company into one of the most successful accelerators in Europe, attracting promising high-tech hardware startups from all over the world to HighTechXL’s buildings on Eindhoven’s sprawling High Tech Campus. Frericks is one of several Dutch entrepreneurs here focused on elevating Eindhoven’s profile as High Tech Capital of the World. Which is tough when no one has ever heard of it.
Yet, Eindhoven is one of the few European innovation centers that doesn’t aspire to be the next Silicon Valley. Eindhoven already has an ecosystem comparable to Silicon Valley, bolstered by semiconductor suppliers ASML and NXP, the Dutch equivalents of Hewlett-Packard and Intel.
Intel actually owns a minority interest in ASML, which produces the photolithography technology that etches nanocircuitry onto chips. Qualcomm just acquired NXP for $48 billion. Yes … billion, with a “b.”
And like Silicon Valley, Eindhoven has a stand-out university, Technical University Eindhoven, that’s not so dissimilar to Stanford in that it constantly creates new high-tech startups.
Yet this dominant European high-tech hardware hub, with an outsized base of the high-tech businesses in Europe including ASML and NXP, remains inexplicably unknown.
That is about to change.
Frericks’ task is to first attract the most promising startups in the world, then use their success at his accelerator to build Eindhoven’s brand.
Suddenly, little Eindhoven is competing with other European tech hubs such as Copenhagen and even Silicon Valley for the best and brightest. Eindhoven doesn’t always win, but HighTechXL is attracting startups from Poland, Italy, Lithuania, Estonia, Slovakia, Romania, Serbia, Germany, Russia, Azerbaijan and Brazil.
“If you ask … the foreign alumni of our program, ‘Why did you come to Eindhoven?’ the real decision was made while they were here” for interview visits, Frericks said. “They were super-impressed by the campus.”
The idea is to identify today the startups that are great fits with Eindhoven’s foundational companies … and have the potential to grow into the Next-Gen innovators that will keep Eindhoven among the elite tech centers in the world.
Yet it’s not success that’s driving Frericks, who was a VP at several high-tech multinationals including Philips and NXP before becoming an entrepreneur. It’s Eindhoven’s brush with disaster in the 1980s after it became too dependent on Philips Electronics, founded here in 1891.
Frericks remembers being in high school, working on the weekends cleaning the DAF factory, which builds over-the-road trucks. “My buddy was delivering post,” he said. “We met one day and he says, ‘I’ve had a horrible day.’ I said, ‘Why?’ He says, ‘I was delivering the mail and at some addresses I had to deliver three letters ….”
Letters notifying Philips employees they were now ex-Philips employees in a town where the electronics giant was by far the largest employer.
That experience still motivates Frericks to keep Eindhoven moving forward. That and the fact tech is littered with companies such as Nokia that disrupted, then were disrupted themselves. “Take Nokia …. Nokia had 30 percent, 40 percent market share in mobile. Gone.
“If one of these big guys here – and we’re less vulnerable now – but if for instance something happens with ASML, it would be a catastrophe for the region, if not the world.”
The following is from a Q&A conducted Friday, 17 Feb. 2017 at HighTechXL’s main offices on the High Tech Campus. It was edited for length and continuity.
Dispatches Europe: So, what was the original HighTechXL vision and strategy?
Guus Frericks: The original vision was to be far more for young tech companies as a region. When we started, there were a few fast-growing high-tech companies, but not a lot. If you look at the region, you’ll discover that most of these fast-growing tech companies are in the supply chain to the big guys.
But not many truly new companies … they were almost all spinoffs from Philips. You had Silicon Hive acquired (in 2011) by Intel.
When I looked at this, I said, “Well, this is a bit silly because if you look at all the networks, the knowledge and competencies available here, we could and should do much more for young tech companies.”
DE: So you wanted to go beyond companies being spun out of Philips? Start with a fresh sheet of paper …
GF: I saw what was happening here after having lived abroad for more than 10 years. I saw the impact of what happens when you embrace the concept of open innovation. Sharing knowledge is power ….
The campus has grown to 150 high tech companies in a square kilometer. I asked myself, “Why is it with all this knowledge and smart people and big companies making global impacts, why is it there aren’t a lot of young companies flourishing? “
One of my initiatives was, I created a new semi-conductor company with offices in France and the Netherlands. I discovered every time it’s the same story … the technology is there. The brilliant scientists are there. But these guys are struggling to develop their business model and scale it up.
DE: What do they say? “Hardware is hard”?
GF: If you are in high-tech hardware, this is difficult. Unlike the fast-moving web & app business, here you have a different set of challenges. You need to think about your supply chain. You need to think about your scale up. You need to think about (intellectual property rights).
As the web & app business was so successful, and we all know examples, a lot of VC capital went into web & app and hardware became very, very difficult to get financing.
I saw the incubators and accelerator programs in the U.S., Asia and Europe and they were all geared to support the web & app startups. That’s great. But I asked myself, “Why isn’t there anything really meaningful for these science-driven high-tech hardware companies.”
That’s why I created this program, and the vision was indeed, “Let’s become relevant on a global basis. Let’s not just support local initiatives, but let’s look for talent across the globe.”
DISPATCHES: So you started with startups. But now HighTechXL is adding intrapraneurs ….
GF: Two years ago, all the corporates realized this way of working, with three-month acceleration … that really goes fast. Would this also be a methodology and approach for internal innovations?
It started with Philips where we did an internal experiment back in 2015 where we took two research projects and within three months, the (Respironics headquarters) in Pittsburgh decided to pick these up and turn them into service and product lines. These were propositions related to their respiratory and sleep-related business.
You have to realize these projects inside Philips research take on average 18 to 24 months before being embraced … and coming to market.
DE: How do you choose startups for HighTechXL’s cohorts?
GF: First of all, they have to be in one of eight application areas. They have to be active in IoT, smart sensor networks, advanced robotics, MedTech, CleanTech, energy storage or anything related to autonomous or near-autonomous vehicles. That includes drones.
We picked these eight application areas because these are what we are good at (in Eindhoven). Underneath these applications, if you want to be No. 1 in the world, you have to be super-good at medtronica, (health imaging), high-precision engineering, embedded software … these are the glue here in the regions including photonics.
Candidates have to be active in this area … because this is where (HighTechXL) can add a lot of value not just in competencies, but in network.
They need to have a functional prototype they can demonstrate because we are not so much a technology accelerator. We are a business accelerator.
We always look at team composition. We have learned there is a 100-percent correlation between having a balanced team which is coachable and passionate. They need to be willing to scratch the wallpaper off the walls to make a success. If you don’t see that fire … if there’s not that hungry eagerness in a balanced team, it doesn’t make sense.
We have seen brilliant technology, but we had doubts about the team. Our program is so intense, it doesn’t only accelerate the business, it accelerates the team development. If it’s not good, it will blow up.
DE: Can you say specifically what team elements make you uncomfortable? Too heavily reliant on one person … or bad chemistry?
GF: There is a mix of all these elements. First of all, they need to be balanced.
We use a team of 10 organizational psychologists to really do a screening on team composition. We have tooling where we look at the individual profiles. But what’s more important is if you aggregate the individual profiles, you get a view of the team composition and their balance.
There’s always something with young companies. The point is, are they coachable? Do they acknowledge their strengths? Do they acknowledge their weak spots and are they willing to work on them?
We had a team that looked great, but the CEO was really a terrible dictator. (Laughter) Research has shown that if you have a truly diverse team in gender as well as background, there’s a 70-percent higher chance of succeeding in the market regardless of which industry.
We look at these things really in-depth before we do the selection. If there is a red flag on the team …
In the beginning, if the experts raised the red flag, we said, “Ah, we can fix that.” We were really in love with the product and the product proposition. But it would turn out every time, again and again, the team either did not succeed, or blew up.
The other element is, they must have true breadth through potential. They have to have the ability to disrupt an industry or a niche market. On top of that, if there is an element of sustainability … doing something good for future generations and the planet, then we love it.
DE: I really saw that in (HighTechXL alum) USONO. They were smart in that they didn’t try to reinvent sonogram technology. They just wanted to make it in clinical terms more efficient and less intrusive. More practical in more applications like sports.
GF: They completely nailed it that Philips is big in ultrasound. They have great products. By teaming up with USONO, they open up new application areas that haven’t been considered before.
That’s why I always say this program is only going to succeed – and is succeeding – because we’re standing on the shoulders of giants.