Interview with JF Gauthier, Founder & CEO of Startup Genome

We started a series of interviews with global tech professionals who drive the tech ecosystems of countries and cities, develop startup communities, and push cutting-edge innovations forward across the globe.

We are happy to present our interview with a well-known international changemaker, Silicon Valley serial entrepreneur JF Gauthier – Founder & CEO of Startup Genome, the world’s leading voice in innovation ecosystem development, having advised more than 100 governments and private-public partnerships across 35 countries.

TechUkraine: When and how was the idea of the project created?

JF: The Startup Genome project was created in 2011 by Bjoern Lasse Herrmann, Max Marmer and Steve Blank to start quantifying the success factors of startups, understand what made them successful and do that enough in a data-driven approach for the first time. 

Bjorn was leading the accelerator called “Blackbox,” which was trying to help foreign entrepreneurs come to Silicon Valley, to connect and learn, to be more successful. He thought: “we’re helping 10-20 startups at a time. How could we scale this up to help thousands?”

So that’s how it startedwith this idea of helping foreign entrepreneurs. And then, it became a tech startup, which I joined as the first exec. I took leadership of the global research and as we started selling—we ended up selling to Sage in April 2017—Bjoern and I sat down and thought: “We need to make the research useful to the governments. We need to help governments create a better policy so that they can help us, entrepreneurs, all over the world.” We had done the first ecosystem report in 2012, the second one in 2015, and we thought we need to continue and go deeper. We need to start advising the governments, researching what startup policies actually work, which one doesn’t. It was really about helping other ecosystems grow. 

In Silicon Valley, we’re hurting because we’re too successful. There’s too much happening here: the rents are going up, the disparity between the rich and the poor has been increasing. The reason why I moved to San Francisco was the eclectic community colliding with the business leaders: the crazy community of artists, musicians, Burning Man people, hippies, etc. But they have been kicked out of SF by rent increases and almost all of them have moved to Oakland by now. San Francisco is much less eclectic than it used to be. It’s happening in Berlin also, and it’s happening all over the world in the most successful Tech ecosystems. 

So, for all of us, the more cities globally are successful at building thriving startup ecosystems, the better it is. We need everybody to be able to participate in this new economy. As we succeed in having that kind of impact the migration of value geographically goes down. That’s really what we have seen happening—big migration of value from traditional industries to the new economy. And the problem is, traditional industries were dispersed while the new economy has been extremely concentrated in the top 10 ecosystems. So that migration of value is hurting most cities and “benefiting” only a few. The top 10 used to capture 85% of the exits and now it’s about 68% and it’s going down. 

We work with like-minded individuals and organizations to change that concentration—to spread the wealth, to teach, and learn the methodology of how to build a community that is productive economically. Startup communities are really economic communities, so we are sharing knowledge about how to build those productive economic communities all over the world.

TechUkraine: What are the actions for world leaders in policymaking and strategy to drive innovation and economic growth with technology? How has it changed after the COVID crisis?

JF: What we’ve learned is that the actions in policymaking strategy are very different based on your economic context, the political context, your strengths, and the stage of your startup ecosystem. And that’s been the problem in enacting policies: Governments all over the world pay attention to what London did, what Singapore did, what Tel Aviv did. They look at what they did three years ago, five years ago, when they were already top-10 startup ecosystems. Nobody is able to go back to 1994, 1995 in Tel Aviv, in Singapore, and ask: “What did you do then, when you were like us when you had only 200 startups? What failed, what succeeded?” 

That’s what we did to kickstart this in 2015: I picked up the phone, and I called a top leader of Enterprise Singapore, and I said: “What did you guys do in 1994?” They said: “We copied the Yozma program [Israeli national funding program].” “How did it go?” He said—I paraphrase: “It failed to have the impact it had in Israel because we first needed to change the culture focused on young people getting a good and stable paying job, of aversion to risk. We needed to build an entrepreneurial culture and community.” 

But nobody had heard about that. Everybody thinks, “You copy Yozma, build a fund of funds and VC firms, and it’s going to work because it worked in Israel.” Well, it has been failing in many places ever since.

So what they can do is to learn from each other, and learn from us. We really built a community of knowledge, a knowledge network.  We brought in a lot of key insights based on a decade of research, looking at public and private policy action and initiatives to understand which ones work and in what context, and which ones don’t. Then we created a network where ecosystem leaders talk to each other so we can foster peer-learning between actors who are taking action. Behind closed doors, we can tell each other: “We did this; that was very popular. We announced with big trumpets…and it failed. And this is why it failed.” 

So that’s what world leaders can do: Come with us, come to the knowledge network and learn from each other. You learn from us, from the knowledge that we have accumulated—but we don’t know everything yet—so we foster continuous knowledge through talking openly and candidly to each other.

That was very powerful during COVID. At the beginning of March, our advisory board met.  Everybody just wanted to talk about COVID and quickly said: “Let’s share about what each of us is doing right now. Let’s capture it, and let’s share it with everybody in the world.” That week we launched an initiative to capture policy actions across 60 to 70 countries, published it, opened it, and updated it every week. So we could help people learn from each other and take new actions during COVID. 

So it has really changed a lot during COVID as everyone needed to act a lot faster, obviously. We’re still writing that playbook together. There are a lot of new opportunities when there is chaos. We talked a while about the new reality. There’s a lot of things that we used to do that we cannot do right now. That means a lot of changes for startups but also a lot of opportunities. Take EdTech, a sub-sector that was not very hot before COVID. Now it’s very hot because education online is the best solution. A lot of Edtech startups were struggling, and now they actually can do extremely well. 

It has changed for investors, mentors, for everybody. Now the physical barrier—the necessity to meet in person, to be co-located—is broken. Suddenly we can do global accelerators all over the world. It doesn’t matter where the mentor is—so it offers great opportunities to improve mentorship programs. Now people are not resistant to the idea of virtual mentorship. 

TechUkraine: StartupGenome reports cover global startup ecosystems and map the continents and countries. You have more than 100 clients across five continents in 38 countries. How did your service impact and enhance the startup landscape, and why is it so important?

JF: There are a lot of opinions about what to do to grow startup ecosystems—and they are opinions. When the opinion comes from a large VC or the CEO of a global accelerator, it’s easy to think they know what they are talking about. But the problem is none of them have actually built an ecosystem successfully, let alone stopped and listened to learn from actual ecosystem builders. It’s a complex system so the only way to demystify opinions from reality and find what actually works is to measure the hell out of it, just like we did with the human body or the environment. You chip at the problem and then find objective patterns and can measure the objective impact of policy to separate what works from what “seemed” to work.

Over the last 10 years we’ve done the first in-depth, data-driven assessment of about 80 cities across about 35 countries, reaching out to 400 partners to develop processes to create the data that didn’t exist, and developing techniques to quantify how entrepreneurs “live” their startup ecosystems—not each other’s opinion—across 9 Success Factors, and 100 metrics, all validated against Startup Performance, and Ecosystem Performance. So by bringing a lot of data-driven research, we did the first global multi-factors, multi-metric assessment by surveying almost 100,000 entrepreneurs to date. 

That allowed us to identify what matters and separate it from what doesn’t really matter, to prioritize what matters at each phase of ecosystem development, from Activation to Globalization, Attraction, and Integration, and be able to bring focus to the governments that want to take action.

Because one of the biggest failure factor is governments trying to do everything and spreading a little bit of money across everything. So we clarify what policymakers and ecosystem builders should focus on at every stage. That is important because it didn’t exist before. Nobody knew. We didn’t have data to be able to forcefully say: “This is what we need to do. And this is NOT what we need to do.” The “not” is more important. My professor Michael Porter said: “Strategy is what you say ‘no’ to.” Otherwise, it takes you 20 years to build a startup ecosystem. Our economies, our societies don’t have time. The transition is fast and if we don’t accelerate, the top ecosystem and the neighbor in front of you will attract your resources and top talent.

With COVID there’s an acceleration of the digitization of our economy. That means we need to learn. You cannot try a policy for three, four years, and then change—you’ve lost three years and this is terrible. At this point, the big WE, not we Startup Genome, but WE, everybody together, we know “what” to do. It’s already been done somewhere. Everybody has been experimenting with policies, programs, initiatives for 25 years. We know what works, what doesn’t work. So, let’s focus on what works. Let’s learn from each other. We can accelerate and stop doing things that are a waste of money and time.

TechUkraine: Which ecosystems should we care about? Where to invest next, which spot will be the most attractive, and why?

JF: I think we need to care about every ecosystem, to learn from each other, and not favor anyone. So, as an investor, of course, you want care about where the opportunities are, where it’s growing faster. As ecosystem leaders, we should see that everybody can succeed. [Some] people have said, “Everything has been invented.” No, there are more and more inventions every year. So you’re not competing against Estonia and Serbia. You’re not even really competing against Silicon Valley, London, New York that have 40 to 60% of the startup innovation market share because there is almost more to invent.  In a way, we’re competing against the old economy.

We can all work together to learn from each other so that we can grow, create jobs and economic growth for our economies. 

That’s why I say we should not care about any place in particular. We should care about everybody. And we should all help each other and accelerate because we can all do better by learning from each other. Because it’s not a zero-sum game.

[On where to invest next, which hotspot is the most attractive.]

Investors see those accelerating ecosystems, and these are very attractive obviously. That’s usually what we call the Late Activation, Early Globalization which start accelerating through the Attraction phase and start creating a rhythm of global category leaders. These are the fastest-growing startup ecosystems and you can see them in our report. For investors, they are very attractive places. But in reality, also the Early Activation phase ecosystem grow very fast from a small base, and for ecosystem builders, that’s where I’d like to be. That’s where we want to be. It’s where we’ve been moving our attention over the last few years. Because there are a lot more opportunities to have an impact and there are a lot more low-hanging fruits. 

Large corporations and Big Tech are covering a lot of the US and Europe. But in Africa, South America, part of Asia, and Eastern Europe, there are a lot of low-hanging fruits because they’re less mature, they need different types of innovation. Therefore as an ecosystem builder and even as an entrepreneur, these are very interesting places. In emerging economies, there are a lot more opportunities. There’s less support, though. And that’s why we need those ecosystem builders and we’re excited to help them.

TechUkraine: Where is the Ukrainian startup ecosystem placed on the global map? What are the insights you unveil? 

JF: I think that the Ukrainian startup ecosystem is really talent-rich. It’s a sizable local economy for the startups. This is what we’ve seen generally also across Eastern Europe. That region has been a source of talent for outsourcing, IT services, development services to Silicon Valley, the US, Europe, at a reasonable cost. But from a Ukrainian developer’s point of view, you make a lot of money selling your hours with the highest offer and in the US and Europe. 

Therefore, that captured a lot of your talent. It’s hard to get them out once they make three, four times the average salary of the rest of the population. They’re doing extremely well. Do they want to risk being an entrepreneur? Not really. 

We’ve been to Kazakhstan, we looked at Ukraine, and we’ve looked at Serbia and other countries. This is the challenge: How do you create a new culture of people who say: “I’m gonna forgo a big salary. I’m going to start to work for a startup, and then I’m going to do my own startup.”? This is a challengecreating a new culture, a new path for those very smart technical graduates. … In Serbia, one of the key questions we had is: “How can we bring all of the IT services companies to become entrepreneurs and create products, instead of selling hours?” I went into a room with 12 CEOs of IT services companies, and we talked about that for hours. And my conclusion is [that] it would be very difficult to do. I thought “I’m gonna crack the case. I’m gonna figure it out with these CEOs”. [One of them said]: “JF, you know I can either continue to sell my best employees on high-profit projects, or I can take my best technical talent and put them on a risky project that might or might not make me money.” 

I lived that in consulting in the ’90s. We had what we called “internal projects”. But every time an external client like IBM would say: “I’ll pay you a million dollar a year for JF to work for us for a while,” then I was out of that internal project. That’s basically what happens with IT services companies, and they’re not stopping. They can’t stop. That’s their business model; they’re not killing their cash cow. 

Startups are created by building a community of entrepreneurs and entrepreneurial-minded people. We grow it by having them taste of entrepreneurship and offering support to jump in. Once you’ve tasted it, you like it. I’m a Harvard Business School grad where we form executives for large corporations. But as soon as I became CEO of a small software company and turned it around into a new startup, I never went back. It was much more fun; I love it. I never left entrepreneurship. 

That is really my insight for Ukraine. What you’re doing with the [TechUkraine] team is building the foundation of a thriving ecosystem. You’re supporting a community where people help each other, building an exciting place to work and thrive. You’re getting more and more people to think: “No, I’m not going to take the safe job, I’m going to go work in an exciting, fast-moving environment and flat organization where we’re innovating, where we work on changing the world together.”

When I think about changing the world, I encourage you to think about changing a place right next to you. If I’m from Ukraine, I’m not going to try to change America. To change the world is also to change Kyiv, to change Ukraine first, while others in our global community are changing their local communities, and together changing the world. We’re all changing the world by working locally. It’s not just about changing the rest of the world but about starting locally first. That’s what Ruben [Nieuwenhuis] has been doing, and he’s been changing the world by changing Amsterdam then the Netherlands, and how he’s inspiring the rest of the world, and so, therefore, he has a big impact.

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