{"id":112377,"date":"2022-10-25T06:49:51","date_gmt":"2022-10-25T06:49:51","guid":{"rendered":"https:\/\/dispatcheseurope.com\/?p=112377"},"modified":"2022-10-26T06:07:58","modified_gmt":"2022-10-26T06:07:58","slug":"eindhoven-biz-briefing-pop-quiz-whats-the-best-innovation-model","status":"publish","type":"post","link":"https:\/\/dispatcheseurope.com\/eindhoven-biz-briefing-pop-quiz-whats-the-best-innovation-model\/","title":{"rendered":"Eindhoven Biz Briefing (updated): Pop quiz … what’s the best innovation model?"},"content":{"rendered":"\n

(Editor\u2019s note:<\/strong> This installment of the Eindhoven Business Briefing is part of our Tech Tuesday series<\/a>. Dispatches Europe tracks the tech scene \u2013 startups, scale-ups and mature companies \u2013 in our headquarters city of Eindhoven because so many of our highly skilled internationals are engineers, physicists or developers<\/em>.)<\/p>\n\n\n\n

Okay, kids, pop quiz … what’s the best innovation model?<\/p>\n\n\n\n

You could be forgiven if you think there’s only one, the American-style startup: Two guys in a Los Gatos garage<\/a> or a Harvard dorm<\/a> inventing the future. American startup hagiography is replete with teams who started with two founders. Page and Brin. Hewlett and Packard. Jobs and Wozniak. But it’s also a model designed to fail fast, and more than 90 percent of American startups do fail, with founders moving on to new projects.<\/p>\n\n\n\n

There’s another model that happens to be incredibly successful and the reason why Eindhoven is the most important deep-tech center in Europe. In fact, let’s call it the Eindhoven Model.<\/p><\/blockquote>\n\n\n\n

For decades, Philips has spun out some of the world’s most successful companies, including ASML and NXP. Yet, even our HQ city of Eindhoven increasingly is buying into the startup model. The problem is, the tendency in this startup ecosystem is to confuse declaring victory for actual success. <\/p>\n\n\n\n

Hence, the new campaign by Brainport<\/a>, the economic development org, to celebrate the survival rate of startups. Brainport execs claim more than 75 percent of the startups<\/a> given Brainport’s Gerard & Anton Awards since the award started back in 2016 are still going. So Innovation Origins<\/a> and Strategy Unit B.V.<\/a> researched factors scale-ups in Brainport. <\/p>\n\n\n\n

That research involved asking the 70 Gerard and Anton winners why they’re so successful compared to Dutch startups as a whole. The responses are grouped into pretty esoteric categories, including “cluster dimension” and “agglomeration dimension.” (Please don’t ask us to explain this bureaucrat-speak.)<\/p>\n\n\n\n

Our first thought was, “Define ‘successful.’ ” We helpfully pointed out on LinkedIn<\/a> that a.) Eindhoven, unlike Amsterdam, hasn’t produced a Unicorn in decades, and b.) VCs who invest don’t care about cluster dimension or agglomeration dimension. They care about whether the startup has a product everyone on earth will pay for and whether the team has the talent and grit to take that product to market.<\/p>\n\n\n\n

Innovation Origins<\/a> co-founder Bart Brouwers and I got into a bit of a back-and-forth after I pointed out how the total number of Eindhoven Unicorns during the past 20 years is easy to calculate. Zero. Maybe one near-Unicorn: Sendcloud. By comparison, startups in The Valley have a 90-percent failure rate the first year, but the market capitalization of the survivors coming out of there during the past 20 years is about $10 trillion.<\/p>\n\n\n\n

Bart countered that Gerard & Anton award winners Sapiens, Liquavista and Civolution “would surely be in that (Unicorn) league, if not acquired before reaching that status. I’m not sure about Studyportals, but that might be another one.”<\/p>\n\n\n\n

This is where our positions intersected. I agreed, noting that Sapiens, Liquavista and Civolution would surely be in that league \u2013 but they were never startups. They were spinoffs from Philips. “I think that’s far the better innovation model for Eindhoven.”<\/p>\n\n\n\n

That model is teams of serious engineers form inside Philips, Royal Dutch Shell or one of the big tech companies around a new deep-tech technology. The parent organization funds their work until executives decide it doesn’t match the core competency, at which time the teams leave the nest and fly on their own. <\/p>\n\n\n\n

That’s how ASML, NXP, Sustonable and a dozen other deep-tech companies got their starts.<\/p>\n\n\n\n

The advantages of the Eindhoven Model include teams of men and women who’ve proven they can work together. They’ve got technology developed and perfected inside a tech giant. And they have initial funding, with, say, Philips shareholders retaining an equity stake in the spinoff’s success. And of course, there are other companies and research centers such as imec and TNO and Dutch universities that produce tech and teams.<\/p>\n\n\n\n

I’ve seen this work in the United States in various industries, including tech and telecom. And little-known fact … Sergey Brin and Larry Page get all the pub, but when Google went public, Stanford University actually owned the PageRank IP and got a check for $336 million.<\/p>\n\n\n\n

The spinoff model works even better in Eindhoven. If you invested $50,000 in ASML circa 2011, you’d have more than $1 million now, according to the Motley Fool investment website.<\/a><\/p>\n\n\n\n

In my mind, the Eindhoven Model minimizes risk while maximizing returns for investors, not an easy feat. Should it replace the American model? Of course not. But in advanced, yet risk-adverse, societies such as the Netherlands, spinoffs are a deep-tech innovation model that can produce more success faster and with far less risk.<\/p>\n\n\n\n

\u2013 Terry Boyd<\/strong><\/p>\n\n\n\n

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