This is just the first part of the speech, the full speech can be seen at youtube.

Popularity: 74% [?]

This is the first part, the full speech (click here) can be seen at Youtube.

Popularity: 73% [?]

by Gabor Cselle, San Francisco, California, November 22, 2007

Most revolutionary new technology products and Internet services come from a handful of large companies and small startups. What’s the secret sauce?

Successful and profitable large companies such as Apple and Google invent and produce such products as the iPod, the iPhone, Google Maps, and Gmail. In contrast, startups have developed products and services such as Google Search (back when Google was a startup), Hotmail, PayPal, YouTube, Blogger, Facebook, and Twitter.

Users and the press rave about these products, and they have generated large valuations and profits. How does this kind of product innovation happen?

In this article, I’ll contrast product development at large and small companies. I’ve experienced product development at Google (where I worked on Gmail and some unmentionable projects) and Yahoo (where I interned at the end of the last bubble). I’m currently working on my startup, Xobni, where my role involves development as well as setting engineering and product priorities. We’re a small team of 10 people and are building new ways to search and navigate your email. Thus, I’ve seen both ends of the spectrum.

Between the two extremes of small and large companies, there are a few common denominators:

• Both types of companies start with good people who are smart, well-educated, and passionate.
• They provide good tools: High-end workstations, great infrastructure, and good benefits.
  For example, Google will pay employees for health insurance, serve free food and drinks, coupons towards buying hybrids, gym memberships, and the like.
• They set a culture that is centered on engineers.
  Engineering is the scarce resource, as it hard to find excellent engineers who can create great products. Openly or covertly, PR, Marketing, Sales, and HR are seen as second-rate citizens. This is most clear at Google, where engineering is kept on the main campus, but HR and PR are located in “Siberia“: office buildings so far away that employees have to use bikes and scooters to commute to meetings.

Most people think of “innovation” as “ideas”. But there’s no lack of good ideas. At Xobni, we have an internal Wiki page with hundreds of product ideas. At Google, there’s the ideas mailing list on which you can find thousands of employee-submitted proposals for new features and new products. I’m sure that Microsoft has an equivalent tool. But anyone who has added to that Wiki, or written to the ideas list knows that they are the place that ideas go to die.

What really counts is execution: At large companies, the ideas that survive have a strong proponent who will get support for the idea, find colleagues to work on it with, defend it in meetings, and launch it to a public. This is what happened at Gmail: Paul Buchheit started working on a webmail client, found others to work with, defended it against VPs who said that an ad-supported model would never work, and managers who said that it is prone to extinction because of Microsoft’s control of JavaScript. At startups you’ll find the same process (but less meetings): Xobni’s most popular feature is search. It was two of us who took it from a feature added as an afterthought to one of the core pieces of our functionality.

Yet, there are many differences. Large companies and startups both have their own set of advantages that play in their favor when executing ideas:

Large technology companies

• Resources: As the name says, large companies have tons of people. Once management is convinced of the viability of a project, they can put people, infrastructure, and money to work to make the idea become reality. Giants move slowly, but once they do, the earth starts shaking.
• Experienced management: In Silicon Valley, senior managers at large companies typically have startup experience. They started or joined small companies that got bought or went public. They know how to manage innovation and push interesting projects forward.
• Instant credibility: When Apple, Google, Microsoft, or Yahoo launches a new product, the world listens. If a startup had released Google’s phone SDK, there would not have been so much Google phone speculation in the press, weeks before the launch. Consumers will feel safe buying new Apple products when they’re launched, because they would know where to buy and what level of quality to expect. Startups have to build a really good product and build it from the start, build press relationships, and resort to guerilla marketing as needed.

Startups

• Focus, clear priorities: You’ll never see a company as focused on progress as a startup. At Xobni, the number one priority is to get high-quality software out the door. There’s only this one project: There are no distractions, no talks to attend, no other projects for engineers to switch to. We’re all sprinting towards a clear goal.
• Aligned incentives: At startups, employees have a significant amount of stock in the company, and their financial future is highly correlated with the success of the company. Thus, there is only one controlling variable: Their contribution to the product. If they can add or improve features, they will. On the other hand, large corporations attract resume stampers who are sometimes guided by self-interest: Their priority is to rise in the ranks, not contribute to overall success.
• No lockstep development: Startups have small numbers of people working on small products. Large companies work on large products with lots of people. These people require coordination and planning. For example, I’ve heard that the feature sets of Microsoft’s Office suite are planned out two releases in advance, with two years between each release. This means that a product manager on Word knows what features the product will have in 2011. If you’re an engineer at Microsoft and have an idea, it may not get executed upon until four years from now! In addition, there’s the burden of reverse compatibility: Every new feature must be compatible with versions of the software that are decades old.

In summary, we explored differences in how startups and large companies run innovation and product development. There are some commonalities – great people, focus on engineering, and good tools – but startups have large advantages because they are more focused and have no existing customers, products, and profit lines to look after.

Gabor Cselle is the VP Engineering at Xobni, an email software startup in San Francisco. Gabor received a Master’s degree in computer science from the Swiss Federal Institute of Technology in Zurich (ETHZ) for his thesis on “Organizing Email”. Prior to joining Xobni in March 2007, Gabor was a software engineer at Google Switzerland.

Popularity: 73% [?]

by Christian Emigholz, November 16th, Leipzig

Spreadshirt is often considered to be a reference for building up a company. Its history provides an example for many uprising (potential) entrepreneurs. Its company culture is said to reflect the spirit of an inspiring start-up (a reason for me to come here). The entrepreneurial spirit seems to belong to Spreadshirt like the ‘Amen’ to the church.

Regarding its five years of existence, the market entries of several competitors and a total number of 250 employees (150 in the HQ in Leipzig), one might wonder whether Spreadshirt could maintain an “entrepreneur’s spark” in their employees – a willingness to undertake a venture and to achieve through taking risk, improvising by following a vision.

The answer? - Well, they try to.

The theory: Core values of Spreadshirt’s company culture

The entrepreneurial Spirit is fostered (if not ‘spread’) among the employees through one of Spreadshirt’s core values. Such a value (there are six in total) reflects the “typical” Spreadshirt culture and shall be internalised by each employee. Each new employee has to attend a so-called “cultural onboarding” where Lukasz (founder of Spreadshirt) introduces these values.

At the last general assembly (a monthly held employee meeting) the relevant core value of this article was addressed: “think smart, move fast”. This value is about lighting the entrepreneurial fire in every employee. The following statements specify what thinking smart and moving fast should mean to the Spreadshirt employee

• behave as if you were the owner
• apply common sense, not rules
• structure is the servant not the master

Spreadshirt wants its employees to think out of the box. They shall not simply follow procedures and given tasks. They shall question, dare to do differently and improve the given. The employees are not only responsible for the output, they provide input to the organisation.
The rationale behind is the learning organisation. Spreadshirt operates in a fast-changing (web-) environment, where the ability to adapt to new circumstances is the crucial factor that decides about success and failure: “Be quick or dead” was the concluding phrase in the general assembly.

The practice: Entrepreneurship among employees at Spreadshirt

The employees can be regarded as the working hands of their department manager. Employees are quite self-dependant in working-style, work location and the way tasks are carried out. Nonetheless, if problems and questions occur, the informal culture allows it to let the employees give feedback (and proposals) to their managers. Employees thereby avoid a risk of failure and let their managers know where change and innovation is needed. Possible solutions are then discussed (complicated process) and eventually taken into practice (a long list of proposals still wait for implementation at Spreadshirt’s IT). Nowadays it’s more of an innovation process, than it is entrepreneurial spirit that changes Spreadshirt or that determines its future actions.

The above-mentioned explaining statements for think smart, move fast show the natural trade-off: More structure means less entrepreneurial spirit. The more employees an organisation has to coordinate, the more necessary structures become. If employees change the structures of their working environment by “being entrepreneurial” they endanger the proper functioning of the whole organisation.

Thinking smart and moving fast shall in fact encourage employees to generate ideas on how to do things better. The big difference between a young start-up and an adolescent company is how these ideas are taken into practice. The individuals of a start-up necessarily implement their ideas more or less straight away. Often no best practice exists and nobody can be asked. As structures, processes and hierarchies are set up, employees (can) rely on their managers and profit from the organisation’s past experiences.

In my opinion the adolescent Spreadshirt can’t be called “entrepreneurial” anymore. I consider “controlled innovation” a much more appropriate description.

An additional note: As more employees enter a growing company, the likeliness to employ only individuals with an entrepreneurial attitude diminishes. Creating (!) an entrepreneurial spirit can’t be achieved through something that will often only remain a phrase: think smart, move fast.

After studying general business administration at the University of St. Gallen (HSG), Christian is currently taking an internship at Spreadshirt in Leipzig. Before eventually running his own business in the future, he wants to learn from others who have overcome the peaks and problems an own venture faces.

Popularity: 66% [?]

At the occasion of the 5th Synetgies Event in Zurich, Susan Mueller from the University of St. Gallen (HSG) will present us some extracts of her experience in idea finding and evaluation. During a two hours workshop, she will introduce the participants to the basics of finding good ideas and critically evaluating them.

Susan has held many such presentations before and has received positive feedback for offering an unique and interesting approach to idea finding. Further information on her acitivities can be found at www.ideas-feedback.de and www.business-idea-jam.de.

… further information and registration at the corresponding Synetgies events page.

Popularity: 46% [?]

Inspired by Andreas’ (German) and Flavio’s posts about Facebook’s valuation, I want to take a closer (approximated) look at today’s values of Alibaba and PetroChina in Shanghai and Hong Kong. Where possible, I tried to use projected future values.

Please note that the following numbers are rough estimates with lots of potential rounding errors. Just interpret them as a rough indication that might point in the right direction - not more and not less.

Facebook
Andreas stated, that Facebook is worth:
- $50 Mio. per employee
- $217 per unique visitor
- a hundred times it’s revenue
- five hundred times it’s income (Google 52 times, Microsoft 22.5 times)

Alibaba.com
(approximate market cap of $25.7 bio.)
- $66 mio. per employee
(careful: based on figure from 2006)
- $141 per unique visitor
- 20 times it’s 2006 sales (2006 sales growth was 68%)
- 306 times it’s 2007 projected profit (Source: FT asia)
- 55 times it’s 2008 projected profit

Alibaba.com, part of the Alibaba group that also includes auction website Taobao and e-payment system Alipay, raised US$1.5bn in the world’s biggest internet offering since Google’s flotation in 2004.
(Source: FT asia)

PetroChina
Note that the PetroChina stocks are partly listed at the Hong Kong stock exchange and therefore (Mainlanders are not allowed to buy stock in Hong Kong and vice versa) the valuation here is far below the one in Shanghai. I use 1 trillion USD as the approximate cumulative value of PetroChina.
- $2.3 Mio. per employee
(1 trillion divided by the number of employees as of december 31st, 2006)
- $944 per barrel of oil equivalent produced (total crude oil and gas)
- 11.2 times it’s revenue
- 51.5 times it’s 2006 profit

Even though the numbers might not look as odd as Facebook’s, note that it’s worth almost as many times it’s profit as the often “bubbleized” Google and that it’s worth $944 per barrel of oil equivalent produced, which, in my opinion, is quite a lot. Furthermore Facebook still didn’t go public and therefore the valuation is just a rough estimation whereas PetroChina has gone public and these numbers are facts!

Popularity: 72% [?]

By Flavio Rump, October 29th, 2007, Zurich

With the rising hype of Web 2.0 and it’s exponents like Facebook, Youtube et alia, the rumored valuation of those companies has also risen sharply. It is currently rumored that Facebook has reached a valuation of 10 - 15 bio USD with only 150 mio $ yearly revenues - not profit.

Facebook has only 300 employee’s and is not making a lot of revenue. If you compare to the also very hyped Google, making about 17 bio $ revenues a year and worth 200 bio USD, you find that with 100 times it’s revenue it’s worth just 15-20 times as much as Facebook. How can this huge valuation of 15 bio USD of Facebook be explained?

It is obvious that Facebook has gained a huge amount of traction, reaching almost everyone who is on the web. In a recent evaluation it was found that 22% of Canada’s population is currently on Facebook. These are more people for example than any Canadian political party has members.

A part of the valuation is certainly justified by the huge leverage you can create by having a fifth of a population in the same network. Think about polls, advertising, recruiting, government communication etc. You can now reach more people through facebook than through a newspaper or Television. Imagine Government sending out official documents to everyone that is in its country’s network.

All those opportunities create great revenue sources - and if combined with a potential of 200 to 300 mio users worldwide - can make one understand how much value could lie in this company.

A comparison with other US internet companies shows that facebook is already the 5th largest considering market cap, only surpassed by Google, Yahoo, Amazon and Ebay, all of them making 100 of millions if not billions in profit every year. Facebook’s 2007 net income is said to be around 30 mio USD, amounting to a P/E Ratio of 500 (Google’s P/E ratio is 50).

Facebook has been able to reach this valuation because of two main factors:

1. The idea that there is the need for only one social operating system and that facebook is the one

2. The bidding war between Google and Microsoft

The first factor, if true, allows to draw many conclusions on the potential of facebook. If it is going to be the Microsoft of the internet, the start page of every user and where every other company is going to build their application on top of facebook instead of creating their on website then yes, a valuation of this size does make sense.

Now I would suggest that the second factor has an almost greater importance. Google has made the right move against Microsoft many times: Search Engine, Gmail, Google Docs. Myspace ad deal, Youtube and others. The people in Redmond wanted to make sure that times they were the ones getting the right deal. And even if it would turn out to have been the wrong decision, 240 mio USD is likely to hurt Microsoft when they’re also getting the advertising deal with facebook that should generate substantial revenue over the next few years. It is also smart in terms of recruiter marketing, proving that Microsoft is serious about Web 2.0.

Certainly Microsoft has been willing to pay more for a stake in facebook than a traditional investor - that was not getting any extra deal with his investment - would have been. There have been rumors that two hedge funds have invested in facebook at the same valuation, though.

It will be interesting to see what happens when facebook goes public. Will the public enter the hype and drive the stock price into valuations even more exorbitant than the current?

Flavio Rump is currently an entrepreneur at bluepixel and a student of mechanical engineering at the Swiss Federal Institute of Technology in Zurich (ETHZ). In his personal blog he writes about social networks, politics and business issues mostly focussing on Switzerland. Flavio has also been a candidate in the election for the national council of Switzerland.

Popularity: 81% [?]

Synetgies 1 - Nanotech

At the occasion of our very first try to connect students from different backgrounds, Gustav Schiefler of ETH Zurich and Camille Therre of the University of St. Gallen prepared a presentation and a case study on the latest development in nanotech, both from a technological as well as from a business perspective.

Synetgies 2 - Formula Student

Having been a participant at the Formula Student competition, Daniel Landmann of ETH Zurich introduced us to the first complete version of their self-constructed race car.

Synetgies 3 - Presentation of Wua.la

Dominik Grolimund of ETH Zurich first held the world-wide first public presentation of his new peer-to-peer storage system Wua.la in order to join the Synetgies community later for a networking dinner and to answer specific questions. All Synetgies members received an invitation to test Wua.la.
To find out more about Wuala, see the recording of Dominik’s Speech at Google Techtalks.

Synetgies 4 - Presentation of SUN_D

Founded as an art project, Jonas Burki of the University of applied Sciences of Nothwestern Switzerland (FHNW) soon realised the economic potential of his simple yet ingenious invention, a display which uses sunlight as the only source of light - a possible new approach towards sustainable advertising.

Popularity: 54% [?]

Dear Synetgizers,

It is our greatest pleasure to re-launch the Synetgies blog today. After the success of our first four Synetgies “alpha” events, to which we only invited a selected group of students from the University of St. Gallen (HSG) and the Swiss Federal Institute of Technology in Zurich (EHTZ), we have entered the “beta phase” and decided to enlarge the Synetgies community by re-launching our blog, opening it up to the public and widening the range of participants. The vision of Synetgies had therefore to be re-thought and now reads as follows:

“Synetgies is a network of young entrepreneurs and students from Swiss universities, universities of applied sciences and the two Swiss federal institutes of technology (ETH) who are interested in technology and entrepreneurship. Our goal is to foster entrepreneurial initiatives among students and link skills into new endeavours. Therefore, we organize periodical get-togethers in order to get to know one another, keep in touch and exchange ideas and information on cutting-edge developments from the relevant sectors.“

Respecting the fact that we don’t believe in the “Röstigraben”, want to cover the entrepreneurial community of all three main four language parts of Switzerland and would be happy to reach readers from outside the borders, this blog will be written in English. We want to provide our readers with quality insights on national and international topics in the areas of entrepreneurship and technology. We will regularly welcome contributions from distinguished guest authors and strongly encourage the community members to become active as authors themselves.

Looking forward into an energizing future, we remain,

sincerely yours,
Tiziano, Camille and Andi

Popularity: 38% [?]