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Finland in the US

Finland in the US
Approximately 650,000 people in the Unites States are of Finnish descent. In addition, there are thousands of professionals and students who spend at least some time in America. Finland also has its share of “snowbirds,” some 30,000 retirees who spend the winter in Florida.

There are many Finnish-American activities relating to Finland and Finnish culture. Some of them take place in formalized settings through one of the national networks, Finlandia Foundation or Kipinä-kerho, but of course many are merely unofficial gatherings.

Throughout history, Finnish-American newspapers have been a source of entertainment and information for many Finnish-Americans. Although the number of these publications has decreased from a peak of several hundred to six, they continue to serve the community in Finnish and English and spread news from Finland and the Finnish-American community.

Michigan is home to a Finnish college, the Finland University. Upper Michigan is also proud to be the seat of the only regular Finnish language television broadcast in the United States.

The links in this section were chosen to offer you help and provide more information. There are links to Finnish-American organizations, Finnish-American newspapers and information on where you can learn Finnish online and in the USA.

Sunlight to Fuel

Technology: Joule’s Helioculture process mixes sunlight and CO2 with highly engineered photo synthetic organisms, which are designed to secrete ethanol, diesel or other products.

However, unlike algae and other current biomass-derived fuels, the Helioculture process does not produce biomass, requires no agricultural feedstock and minimizes land and water use. It is also direct-to-product, so there is no lengthy extraction and/or refinement process.

The breakthrough was made possible by the discovery of unique genes coding for enzymatic mechanisms that enable the direct synthesis of both alkane and olefin molecules – the chemical composition of diesel. Production was achieved at lab scale, with pilot development slated for early 2011.

Because its organisms are being engineered to directly secrete hydrocarbon molecules, Joule will avoid costly steps such as large-scale biomass collection, energy-intensive degradation, or other downstream refinement. In addition, Joule’s process requires just marginal, non-arable land, no crops and no fresh water.

Business: Joule is pioneering a transformative technology that we believe supersedes existing and emergent cellulosic or algal biomass-derived fuel approaches by employing genetically engineered photosynthetic organisms that directly convert sunlight and waste CO2 to fuel and chemical molecules. Our proprietary Helioculture™ technology is being designed to produce liquid energy in the form of ethanol and diesel that will target the worldwide need for renewable, clean transportation fuels at a price expected to meet or beat market pricing. We also may create a whole range of petroleum-derived chemical products to be commercialized via partnerships with industry leaders.

Model: Options for Joule will range from direct sale of liquid energy and chemical products, to partnerships and joint ventures with existing market leaders and CO2 producers, to OEM and licensing arrangements enabled by the company’s intellectual property platform and know-how. As a result, the strategy over the short-term will be to continue to drive the technology towards commercialization and let partnership discussions and access to capital dictate the best way to create shareholder value. Joule has the advantage of a team of seasoned professionals with proven experience creating significant shareholder value in multi-business unit models.

Past milestones:
1. Achieved significant progress in the development of Helioculture™ technology and a proprietary, genome engineering toolkit, and important progress addressing the technical challenges of scalable reactor and large-scale process design.
2. Achieved first long-term ethanol production in SolarConverter™ system, and first outdoor production.
3. Achieved cellular production of diesel in the lab.

Future milestones:
1. Continue gains in productivity and yield for Joule ethanol and Joule diesel liquid energy.
2. Continue optimization of our SolarConverter systems.
3. Commence pilot plant operations for Joule ethanol and diesel liquid energy.

Metrics: Fuel cost (per gallon) is Estimated at the energy equivalent of less than $50 per barrel for diesel and less than $81 per barrel for ethanol. To date, Joule has demonstrated in the lab proof of principle on greater than 10 fuels and chemicals.

Joule Biotechnology quotable quotes:
“Joule’s Helioculture™ technology has a number of distinct advantages. Relative to fossil fuels or to biomass-derived methods, it has a Direct-to-Product™ process, thus eliminating costly middle steps such as fermentation, large-scale biomass removal or other down-stream refinement. In addition, Joule’s process has the capability of achieving up to 10X more efficient land use versus biomass-derived methods without the need for agricultural land or clean water. By eliminating raw material feedstock requirements, the technology also removes a costly component that can be subject to significant fluctuations in price and availability. The Helioculture™ technology is being designed to offer a high net energy yield, to be highly modular and scalable and to provide a technology platform capable of making multiple products.”

The taste of tiny: Putting nanofoods on the menu

The taste of tiny: Putting nanofoods on the menu
27 May 2010 by Emma Davies
Nanotechnology Topic Guides
Editorial: How to persuade us to swallow nanofood

NOTHING says summer holidays quite like ice cream. On a hot afternoon by the sea, there’s little to beat the simple pleasure of a cooling scoop of your favourite flavour. Can food get much more satisfying than this?

Vic Morris thinks it can, with the help of nanotechnology. He is part of a team tweaking foods to trick the body into feeling pleasantly full long after the final mouthful – and without overeating.

Ice cream that makes you feel full could be just the beginning. Nanotechnology promises even saltier-tasting salt, less fattening fat, and to boost the nutritional value of everyday products. Nanofood supplements could even tackle global malnutrition.

So what is a nanofood? It isn’t just about nanoparticles. Many foods have a natural nanostructure – the proteins in milk form nanoscale clusters, for example – that can be altered on the nanoscale to enhance their properties.

In fact, researchers have been changing the nanostructure of food for years, for example by adding emulsifiers to improve the texture of ice cream. It’s the emergence of technologies such as atomic force microscopy that has changed the game by finally opening a window on the nanoworld. Rather than working blind, Morris can now take a close look at the tiny structures he works on, understand their behaviour and then make changes in a more rational and deliberate way.

These imaging techniques are behind the high-satisfaction foods Morris is helping to develop at the Institute of Food Research (IFR) in Norwich, UK, which promise to help fight obesity by making people feel full before they overeat. Many foods, from ice cream to hollandaise sauce, contain emulsions, in which the fat is whipped into tiny droplets coated with a stabilising layer of proteins. Emulsions were always assumed to collapse in the stomach, but Morris has seen otherwise: some don’t break down until their protein coat is disrupted by the bile salts they meet in the small intestine.

By cross-linking the proteins, the IFR team can strengthen the protein coat and delay the emulsion’s breakdown until the final part of the small intestine, called the ileum. The sudden burst of fats so far down the small intestine triggers the “ileal brake” – the mechanism that makes us feel full. “The body thinks it has a high-fat diet,” says Morris. The team is now looking to apply this approach to real foods.

Hitting the ileal brake isn’t the only way emulsions could be co-opted into helping cut our fat intake. In “diet” versions of many emulsion-based foods, such as mayonnaise, about half of the fat content is replaced with water, making them less satisfyingly creamy. One alternative is to hide that extra water as nano-droplets within each drop of oil so that the mouth experiences less water and more creamy fat. If the idea works as well on the production line as it does in the lab, low-fat mayonnaise might taste and feel exactly like the regular version.

The encapsulation idea has caught the eye of the food industry. “It’s about improving the nutritional value and shelf life of food products without affecting anything else, such as taste or texture,” says Charles-François Gaudefroy, an R&D director at Unilever, which owns numerous food brands.

The food industry is notoriously tight-lipped about products in development (see “Ready for nanofoods?”), and Gaudefroy won’t say what nanofoods Unilever is looking into. Two other food multinationals, Kraft and Nestlé, declined to talk about their research in the area at all. One area they are likely to be working on, however, is finding ways to add extra nutrients to their products by packaging them inside fat or polymer particles.

“We know that the food industry is looking at encapsulating certain ingredients like omega-3 fatty acids, vitamins or minerals,” says Frans Kampers, who researches bionanotechnologies at Wageningen University and Research Centre in the Netherlands. The idea is an attractive one. Oil-soluble nutrients can be poorly absorbed in the watery environment of the gut, with a proportion passing right through the body. Nano-encapsulation converts them to a dispersed form that is more easily taken up (Current Opinion in Colloid & Interface Science, vol 14, p 3). Wrapping them in nano packages also extends their shelf life, masks any unpleasant tastes and, in the case of nano-emulsions, makes them invisible to the naked eye so that they don’t affect a food’s appearance

The Finnish miracle

The Finnish miracle
No shoes but plenty of service: The surprising features of the world’s top-performing schools.
________________________________________
By Hank Pellissier

Can you name a famous person in Finland? Historical episode? Imposing landmark? Foodstuff? It’s not that Finland doesn’t have its share of Olympic athletes, brilliant architects, and technology moguls, but “Nokia” is all most people can mutter when asked about this small northern nation.
Unless you’re a teacher. Then the word “Finland” fills you with awe. Because everyone in the schooling profession knows that Finland is the international all-star of education.
“No sweat,” except in the saunas
At first glance, the Finnish educational system looks like it would only produce hippie slackers. Check out the casual amenities: Schools often have lounges with fireplaces but no tardy bells. Finnish students don’t wear uniforms, nor do they often wear shoes. (Since Finns go barefoot inside the home, and schools aspire to offer students a nurturing, homey environment, the no-shoe rule has some pedagogical logic.) And although academic standards are high, there’s not the grind one associates with high-performance schooling. Never burdened with more than half an hour of homework per night, Finnish kids attend school fewer days than 85% of other developed nations (though still more than Americans), and those school days are typically short by international standards.
Finnish teachers enjoy an equally laid-back arrangement. They work an average of 570 hours a year, nearly half the U.S. total of 1,100 hours. They also dress casually and are usually called by their first names (Aino, Helmi, Viivi, Eetu, etc.).
Is the secret massive financial investment? No. Finland spends only $7,500 per student, considerably less than the United States’ average $8,700.
So how does Finland produce the world’s best young scholars via minimal hours and cash? Since PISA began ranking nations and revealing Finland’s special sauce, plane-loads of inquisitive teachers from every corner of the globe have been making pilgrimages to this educational mecca. Here’s a taste of what
More cred than doctors
The level of respect accorded to Finnish teachers tends to grab attention, especially in America where teaching is viewed as a “fallback” profession occupied primarily by the lower third of college graduates. That equation is flipped in Finland, where teachers boast the highest vocational status (followed by physicians.) A full 25% of Finnish youngsters select teaching as their career goal, but only a fraction succeed. Only 10% to 13% of applicants gain acceptance into the masters’ degree in education program.
After all this hard work, the rewards are generous, but not necessarily financially so. Teachers earn a generous $45 to $50 per hour for elementary school, $75 to $80 for secondary school. Yet some far lower-performing nations such as Spain and Germany pay teachers more. Instead, Finnish teachers enjoy immense independence. Allowed to design their own lesson plans and choose their own textbooks (following loose national guidelines), Finnish teachers regard their work as creative and self-expressive.
Free preschool, free college
Finnish toddlers have access to free preschools supervised by certified college graduates. Ah, you wonder — are the little innocents getting a jump-start there, reading and writing all day? Wrong! Truth is, Finland’s preschools offer no academics but plenty of focus on social skills, emotional awareness, and learning to play. Remarkably, Finnish children don’t approach reading until age seven (Waldorf nation?). They learn other concepts first, primarily self-reliance. One American observer noted that first-graders were expected to walk unescorted through the woods to school and lace up their own ice skates.
Twenty colleges exist in Finland, and they’re all free. Imagine the financial relaxation this provides for both parents and children. Universities are not widely stratified either; the disparity between the “best” and “worst” is not terribly large.
Curbing the dog-eat-dog competition
Americans give lip service to the notion that “all men are created equal,” but our appetite for competition creates an intense focus on ranking low and high performers — whether they’re schools or students.
Finland downplays educational competition in a number of ways. Schools aren’t ranked against each other, and teachers aren’t threatened with formal reviews. At many schools, teachers don’t grade students until the fifth grade, and they aren’t forced to organize curriculum around standardized testing. Gifted students aren’t tracked into special programs, invited into honor societies, or chosen to be valedictorians. Instead, struggling students receive free extra tutoring. After ninth grade, students attend either an academic program (53%) or vocational one (47%) — this flexibility results in a 96% graduation rate, dwarfing the United States’ measly 75%. Finally, since there are no private schools to speak of, there’s no sense that the best students are being skimmed off the top.
Overall, such attitudes go hand in hand with Finland’s socialist-style egalitarian society, which focuses on meting out fees and services according to need rather than merit. Even parking ticket penalties are determined according to income: A wealthy sausage factory heir was fined $204,000 for going 50 miles per hour in a 25-mph zone!
Additional differences
Finnish schools lack some of the extracurriculars — such as sports teams or musical bands — considered so essential to U.S. high schools. But free lunches are available to all students. “School choice” doesn’t exist; everyone goes to the neighborhood school. Students learn at least three languages: Finnish, Swedish, and English. Finally, Finland is a culture of readers, with a great library system and book mobiles reaching even remote locations.
Although the Finnish system seems antithetical to South Korea’s (the Asian nation placed second in the 2007 PISA surveys), the two small countries share much in common. Both cultures hold teachers in the highest esteem. Both achieved independence relatively recently — Finland in 1917, South Korea 1946 — and both are resource-poor nations that decided education was the path out of poverty. Finnish and Korean languages are easy to read and spell; they don’t have the illogical phonetics of English.
Comparing lingonberries to hamburgers
Is it fair to compare the small, homogenous northern nation to our roiling melting pot of diversity? Many experts say no. After all, given our higher immigration rate and wider socioeconomic stratification, our schools tend to become social experiments not simply for learning but also for many other social functions schools aren’t designed to handle.
Still, should these challenges prevent us from learning what we can from Finland’s schools? If nothing else, it’s worth noting the central importance of inspired, highly educated teachers and what keeps the United States from doing the same.

Top 10 Reasons Why European Companies Fail to enter the US Successfully

Top 10 Reasons Why European Companies Fail to
Enter the US Successfully
We have seen many companies set out to conquer the US, brimming with confidence and
convinced that they will be the next big THING in their industry, riding the US expansion to
world domination…Unfortunately, in high tech (as opposed to Bio-Tech), there are very few
real success stories to tell. The ten reasons below give some insights as to the reasons.
1. Insufficient Marketing & Sales Budget
If there is one fatal mistake that Europeans make over and over again when planning
to enter the US, it is this one: failing to adequately fund Marketing & Sales activities.
This can be traced to at least 3 root causes:
 Company founders are usually technologists and they still view Marketing & Sales
with suspicion, distrust and as a necessary evil – even in this day and age. While
that approach might work (poorly) in Europe, it completely falls apart in the US,
with its pervasive M&S environment.
 European sales channels and even the direct sales force are used to spend at
least some of their time on lead generation, given that the marketing function in
many companies is so poor. This is not the case in the US, where channel
partners and sales people expect leads to come from marketing. No leads = no
sales!
 Underfunding M&S will make it impossible to hire the right talent in the US and
only marginal performers will want to work for the company under those
conditions.
2. Hiring the wrong talent
Very often, companies will decide on local hires on an ad hoc basis. They might employ
the sales person that visited their booth at the last European Trade Show, or they
follow some links that are given by current employees or former co-students etc.
In fact, hiring the first person in the US is a KEY STRATEGIC decision, which is also
strongly related to the geographic location of the first office.
Usually, that first person will be responsible for Business Development (finding and
closing the first reference accounts) or for sales in general. For these functions, it is
almost NEVER the right choice to send someone from the European Headquarters,
even if he/she has all the experience in the world with the product.
If the company wants to have a European in the US to “mind the business”, they
should be President of the local corporation, or General Manager, but not responsible
directly for either sales or marketing.
This being said, US sales executives are VERY good at selling themselves. Even the
duds have been to countless seminars and training sessions to hone their resume
writing and interviewing skills. The chances are high that the European company will
end up with a third rate person, working at a first rate salary.
The next question is: Why would a first rate US sales or marketing executive join a
completely unknown European outfit? If they do have appetite for risk, there are
countless US startups that are clamoring for their talents…why compound that start-up
risk by working with a company that is 3500 miles away and that clearly has no clue
on how to sell successfully in the US?
By working through recruiters, by having US based investors, or Board members or
other advisors, the company can start to mitigate these additional perceived risks and
bring on board the right talent.
3. Spending money needlessly on activities that can be outsourced
We are always astonished at what we find in the launch budgets. Typically, there are
full time positions for accountants, HR people and other support staff.
In fact, in the US everything can be outsourced or brought in on a part-time or
temporary basis. This will not necessarily result in lower spending, but at least the
dollars go toward the talent that is critical for success: the Marketing consultants,
sales channel developers and technical writers that will make the company appear to
be local to the American customers.
The key here is to have a network of battle-tested service suppliers who will provide
real value to the company. Here again, there are many duds crowding the field and the
unsuspecting newcomer will pay a price in time and money to weed them out and find
the ones that stand out.
4. No re-examination of Marketing formula that was successful in Europe
The product marketing strategy that worked in Europe most likely will not work in the
US. It is imperative to test your European strategy against what can be expected in the
US.
To frame the strategy questions, important demographic differences between the EU and
the US must be considered. These differences relate to territorial size and to population
density. With approximately 9.1 million square miles, the geographic area of the US is
approximately twice the size of the EU with approximately 4.3 million square miles. The
population of the US is about 304 million compared with approximately 490 million in
the EU. The population density in the EU is approximately 68 persons per square mile.
The density of the US population, taken as a whole, is approximately 76 persons per
square mile.
However, nine states in the New England/mid-Atlantic region are all among the ten
states with the highest population density in the US. These states contain
approximately 170,000 square miles of the US land mass but the average population
density in these nine states is about 560 persons per square mile. These demographics
will have a very significant effect on the choice of location and marketing strategy, not
to mention travel time required, of a European company first entering the US market.
Who are the users and buyers? The end user and the buyer of your product may or
not be the same. In the case of software or peripherals used both by individuals and
enterprises the end user and the buyer may be the same. They will not be the same if
the product is a pharmaceutical. A pharmaceutical manufacturer may not legally sell its
product to the end user, that is, the patient who uses the drug. The seller to the end
user in the case of a pharmaceutical is a licensed pharmacy.
What is the targeted geographic market? If you are Infineon or Novartis the
answer is just simply the US. However, emerging companies with new products entering
the US market for the first time must consider the demographics to decide what
geographic market they can efficiently cover and make themselves known and
economically successful. How much geography can you reasonably expect to cover?
Where can you find resources to help secure your US beachhead? These resources may
be governmental, academic or human.
What is the channel of distribution? The producers of software and the
manufacturers of pharmaceuticals have a common problem. What is the right channel of
distribution to reach the buyer? Information technology products may be sold in
specialty stores, department stores, through independent manufacturer’s
representatives or directly by the manufacturer through its own representatives.
Although pharmaceutical products may be sold to the end user only through licensed
pharmacies those pharmacies may exist as stand alone shops, in grocery stores in
medical clinics as well as department stores. The manufacturer can channel its
pharmaceuticals through distributors who may sell only to licensed dispensaries or,
theoretically, direct to the dispensaries. In fact, in the case of nationally marketed and
branded pharmaceuticals the manufacturer normally sells through distributors because
of the geographic size of the US and the dispersal of its population. It is critical for the
European producer to select the channel of distribution that will maximize the availability
of its products and the efficiency of delivery.
The importance of the internet in the US in product sale and distribution cannot be
overemphasized. With the exception of pharmaceutical products and large medical
equipment, such as MRI machines, there is virtually no product that is not and cannot be
sold through the internet whether directly to individual end-users or in the business to
business model. In fact, there are some products which are virtually never sold any
other way than over the internet. No European company considering entry into the US
market can do a complete analysis of its distribution and selling options without
understanding the overriding role the internet plays in the distribution pattern.
What the principal methods of market communication for your product? The
decision about how to direct market communication should be made by determining who
most decisively influences the sale of your product. If your product is pharmaceutical,
the market communication must primarily be directed to physicians who do not buy the
drug but who have the decisive say about who can buy it. If your product competes in
the information technology market choice of the channels of market communication are
broader and the decision about which to use can be more creative. The options include
1) demonstration at industry trade events, 2) print media channels including newsprint,
industry specific and business magazines and journals, 3) television and 4) the internet.
In general, products introduced for the first time in the US will get no mileage from
general advertising whether in newspapers or television. That leaves, not necessarily in
order of utility, trade events, industry specific journals and the internet… In the case of
to business to business communications for products such as corporate networks,
virtualization or cyber security technologies industry trade events and technology
publications are likely to be productive. For products, such as software that facilitates
record storage and topical organization or interpersonal transfer and communication the
internet is probably the indispensable channel.
Finally, the effects and requirements of local, state and federal regulations and laws
must always be taken into account. These laws and regulations may relate not only to
what you may do and sell but to issues such as physical location and business hours of
operation.
5. Continued use of European-originated sales collateral & website
In more than 90 per cent of the cases, the existing Marketing collateral is not adapted to
the needs of the US market. Even if the English is more or less correct (and British
English is NOT equivalent to American English), the content needs to be more benefit
driven, with ROI studies etc.
Just accept this as a fact and budget for some major rewrites.
6. Endless tinkering to make the product “perfect”
Innovative or disruptive technologies have a limited period of time in which to establish
a market before competitive technologies arrive. The US product market fully
understands and exploits this lead time. Lead time, whether based on confidential
know-how or patent protection, is critical because it represents the difference between
introducing a de facto product market leader and a product launch among a field of
entries already vying for market share.
The greatest threat to the maximization of market lead-time is delay of product
introduction caused by over-engineering or design in search of perfection or elegance.
It is critical to know when to stop and put the product on the market. The product has
to be good enough to “do the job” better than any products already in the market. It
does not have to be perfect. It does not need to have all the “bells and whistles” at time
of product launch. Product launch should be decided by marketing people not engineers.
Once the product has been launched and demonstrated that it fills un unmet need
refinements can follow. There will be time to make the product more efficient and
versatile in its performance and aesthetically pleasing in appearance.
7. Location of the first US office
Again, this decision is of a strategic nature and should not be underestimated, as it will
affect many subsequent choices in terms of travel, recruitment, availability of service
providers etc.
In our opinion, a European company should not locate on the West Coast unless it
clearly has to be there, as is the case for companies related to the movie industry or
semiconductors. In all other cases, the East Coast or possibly some central states should
be considered. Even in today’s environment, a 9 hour time difference is much more
difficult to bridge than a 6 hour one, especially as the company grows and people will
tend to work along normal business hours.
Once a general region is chosen, one should stick to various established high tech
clusters, because they will offer a better choice of outsourced or full time talent. This
would mean Boston for High-Tech in general and especially Bio Tech, Washington, DC
for government related businesses (incl. Telecom and Green Tech), Texas for energy
etc.
To keep costs and time delays low, a major multi-airline airport should be close by.
Airports dominated by one airline have surprisingly high ticket prices.
8. Expecting significant cash flow too soon
The worst nightmare of the CEO is to run out of money. This happens to CEOs of
companies coming to the US for the first time if they underestimate the funding required
to reach cash flow break even. EBITDA, EBIT and net earnings all follow from the
achievement of cash flow break even. When this objective is secure investors breathe
easier because they know they will no longer be required to provide funds simply to
sustain operations. Financial projections of companies entering the US market for the
first time are inclined to understate the cash flow level required to become funded
through revenues generated… Start-up operations in the US usually take more time
and are more expensive than new market entrants expect. Although this
underestimation of funds required is common even among domestic market entrants,
the mistake in judgment is particularly hazardous for European companies coming to the
US for the first time. The geographic expanse and distribution complexity of the US
market are frequently the source of enhanced hazards. For this reason it is critical for
European companies planning for a US market entry to secure experienced market
advice about what the US costs are likely to be and, therefore, the funding required to
reach cash flow break even.
9. Naïve and unsophisticated pricing policies
There is only one way to successfully price a product to be sold in the US market. That
way is to determine by market analysis what US buyers will pay to get what is offered
for sale in the US market including any volume or other discounts the US market
expects. Successful pricing is not based on what the seller believes the product is
worth or what it costs the seller to make it and make what the seller thinks is an
acceptable profit.
The product price commanded in Europe will not uniquely determine the US price
although the US market may in some circumstances, mainly in the market for “luxury”
goods, support a premium for non-domestic products. However, the US buyer will not
pay more for aspirin made in Europe than that buyer would pay for aspirin made in the
US. If the product is aspirin plus the appropriate pricing might be justified but only if
the plus is seen as value added and a comparable value added product is not available in
the US at a lower price. The lesson here is that product pricing is market determined
and not dictated by the seller’s costs and desired profit level. Successful US pricing
must be based on analysis of what the US buyer will pay quality, availability and
deliverability considered.
10. Knowing what you don’t know
No company in their right mind would embark on a China strategy without some serious
advice. Why is it different when entering the US. Few decisions will be more important in
the life of a company. The right strategy could lead to dramatically higher sales and a
lucrative acquisition offer from a major US corporation. A poorly executed market entry
will set back the company, possibly even crippling it.
Get some advice, surround yourself with people that have actually sold in the US, not
worked in R&D for IBM or HP or Sun or only studied here. Find out what you don’t know
and then put together a strategy adapted to the terrain that you want to conquer.
Lucian Wagner is chairman and co-founder of the Alliance. He has a truly global outlook with an
extensive set of contacts in North America, Europe, and Asia. Wagner is General Partner at venture
capital firm EuroUS Ventures and an entrepreneur with several successful start-ups to his credit. He has
20 years of technology industry experience. Wagner was born in Germany, educated in the French
school system, and went on to earn a B.Sc. in International Economics from the School of Foreign
Service at Georgetown University (with a minor in Russian) and an MBA from INSEAD.
John Bagalay is Executive Director of Launch in US Alliance. He is Executive-in-Residence of EuroUS
Ventures LLC, venture capital firm that finances expansion to the US of European based technology
companies. He is also Chairman of Wave Systems Corp., a company engaged in the development and
sale of software to enable full disc encryption security for computers. He has over 20 years’ experience in
venture investing in technology based companies.
© EuroUS Ventures 2009

Why great teachers matter to low-income students

By Joel I. Klein, Michael Lomax and Janet Murguía
Friday, April 9, 2010

In the debate over how to fix American public education, many believe that schools alone cannot overcome the impact that economic disadvantage has on a child, that life outcomes are fixed by poverty and family circumstances, and that education doesn’t work until other problems are solved.

This theory is, in some ways, comforting for educators. After all, if schools make only a marginal difference, we can stop faulting ourselves for failing to make them work well for millions of children. It follows that we can stop working to reauthorize the Elementary and Secondary Education Act (currently known as No Child Left Behind) and stop competing in the Obama administration’s Race to the Top initiative, which promises controversial changes.

Problem is, the theory is wrong. It’s hard to know how wrong — because we haven’t yet tried to make the changes that would tell us — but plenty of evidence demonstrates that schools can make an enormous difference despite the challenges presented by poverty and family background.

Consider the latest national math scores of fourth- and eighth-graders, which show startling differences among results for low-income African American students in different cities. In Boston, Charlotte, New York and Houston, these fourth-graders scored 20 to 30 points higher than students in the same socioeconomic group in Detroit, Milwaukee, Los Angeles and the District of Columbia. Boston fourth-graders outscored those in Detroit by 33 points. Ten points approximates one year’s worth of learning on these national tests, which means that by fourth grade, poor African American children in Detroit are already three grades behind their peers in Boston.

Not surprisingly, these differences persist (or grow) by the eighth grade, at which point low-income African American students in Detroit are scoring 36 points behind their peers in Austin.

Acai Berry EXPOSED: San FranciscoSan Francisco Warning: Health Reporter Discovers The Shocking Truth! Get details… Acai Berry EXPOSED: San FranciscoAcai Berry Diet Warning. Health Reporter Discovers The Shocking Truth! See the results… The scores tell a similarly painful story for low-income Hispanic students in different cities. In fourth grade, there is a 29-point difference between test scores in Miami-Dade and Detroit. By eighth grade, the gap has closed slightly, with low-income Hispanic students in Houston outscoring their peers in Cleveland and Fresno, Calif., by 23 points.

These numbers represent vast differences in millions of lives. Low-income African American and Hispanic students in different cities are sufficiently similar in terms of their academic needs, but their outcomes are so dramatically different.

The main difference between these children is that they are enrolled in different school districts. And research indicates that if the data were broken out for the same students in different schools, the differences would be more dramatic — and more dramatic still if broken out for the same children in different classes.

What explains these differences? Schools and teachers. “Teacher quality is the single most important school factor in student success,” the Aspen Institute’s Commission on No Child Left Behind recently noted. Given how much research supports this view, it is especially troubling, the commission found, that “teacher quality is inequitably distributed in schools, and the students with the greatest needs tend to have access to the least qualified and least effective teachers.”

Different teachers get very different results with similar students. So as reauthorization of the Elementary and Secondary Education Act is considered, we should look closely at those whom we attract and retain to teach, with regard to their quality and to ensuring that they are distributed equally across our school districts. If we can do those things, we could at least make Detroit students perform like those in Boston, and make Boston students do a lot better.

A few things need to happen:

First, we must attract teachers who performed well in college. Countries that do best on international tests draw teachers from the top third of college graduates. In the United States, however, most teachers come from the bottom third. Moreover, the bottom of that group is vastly overrepresented in our highest-needs communities.

Second, we must create systems that reward excellence rather than seniority by creating sophisticated evaluation systems that include student performance and merit-based tenure and compensation. We must make it easier to remove teachers who are shown to be ineffective.

Third, we must do more to attract teachers to high-needs students, schools and subject areas, such as English language learners, special education and other areas to which it is difficult to draw talent because of opportunities in other fields.

These are common-sense and ambitious reforms. Such efforts are rewarded in the Race to the Top initiative and ought to be fully integrated into a new Elementary and Secondary Education Act. Yes, they call for a reevaluation of seniority — the staple of most collective bargaining agreements — in the context of what actually serves children. But right now, one bad teacher with seniority earns as much as two great young teachers. Who really thinks this is best for our kids?

Apologists for our educational failure say that we will never fix education in America until we eradicate poverty. They have it exactly backward: We will never eradicate poverty until we fix education. The question is whether we have the political courage to take on those who defend a status quo that serves many adults but fails many children.

Joel I. Klein is chancellor of New York City schools. Michael L. Lomax is president and chief executive of the United Negro College Fund. Janet Murguía is president and chief executive of the National Council of La Raza. They are co-chairs of the Board of the Education Equality Project.

A grand unified theory of AI

A grand unified theory of AI
A new approach unites two prevailing but often opposed strains in the history of artificial-intelligence research.
In the 1950s and ’60s, artificial-intelligence researchers saw themselves as trying to uncover the rules of thought. But those rules turned out to be way more complicated than anyone had imagined. Since then, artificial-intelligence (AI) research has come to rely, instead, on probabilities — statistical patterns that computers can learn from large sets of training data.

The probabilistic approach has been responsible for most of the recent progress in artificial intelligence, such as voice recognition systems, or the system that recommends movies to Netflix subscribers. But Noah Goodman, an MIT research scientist whose department is Brain and Cognitive Sciences but whose lab is Computer Science and Artificial Intelligence, thinks that AI gave up too much when it gave up rules. By combining the old rule-based systems with insights from the new probabilistic systems, Goodman has found a way to model thought that could have broad implications for both AI and cognitive science.

Early AI researchers saw thinking as logical inference: if you know that birds can fly and are told that the waxwing is a bird, you can infer that waxwings can fly. One of AI’s first projects was the development of a mathematical language — much like a computer language — in which researchers could encode assertions like “birds can fly” and “waxwings are birds.” If the language was rigorous enough, computer algorithms would be able to comb through assertions written in it and calculate all the logically valid inferences. Once they’d developed such languages, AI researchers started using them to encode lots of commonsense assertions, which they stored in huge databases.

The problem with this approach is, roughly speaking, that not all birds can fly. And among birds that can’t fly, there’s a distinction between a robin in a cage and a robin with a broken wing, and another distinction between any kind of robin and a penguin. The mathematical languages that the early AI researchers developed were flexible enough to represent such conceptual distinctions, but writing down all the distinctions necessary for even the most rudimentary cognitive tasks proved much harder than anticipated.

Embracing uncertainty

In probabilistic AI, by contrast, a computer is fed lots of examples of something — like pictures of birds — and is left to infer, on its own, what those examples have in common. This approach works fairly well with concrete concepts like “bird,” but it has trouble with more abstract concepts — for example, flight, a capacity shared by birds, helicopters, kites and superheroes. You could show a probabilistic system lots of pictures of things in flight, but even if it figured out what they all had in common, it would be very likely to misidentify clouds, or the sun, or the antennas on top of buildings as instances of flight. And even flight is a concrete concept compared to, say, “grammar,” or “motherhood.”

As a research tool, Goodman has developed a computer programming language called Church — after the great American logician Alonzo Church — that, like the early AI languages, includes rules of inference. But those rules are probabilistic. Told that the cassowary is a bird, a program written in Church might conclude that cassowaries can probably fly. But if the program was then told that cassowaries can weigh almost 200 pounds, it might revise its initial probability estimate, concluding that, actually, cassowaries probably can’t fly.

“With probabilistic reasoning, you get all that structure for free,” Goodman says. A Church program that has never encountered a flightless bird might, initially, set the probability that any bird can fly at 99.99 percent. But as it learns more about cassowaries — and penguins, and caged and broken-winged robins — it revises its probabilities accordingly. Ultimately, the probabilities represent all the conceptual distinctions that early AI researchers would have had to code by hand. But the system learns those distinctions itself, over time — much the way humans learn new concepts and revise old ones.

“What’s brilliant about this is that it allows you to build a cognitive model in a fantastically much more straightforward and transparent way than you could do before,” says Nick Chater, a professor of cognitive and decision sciences at University College London. “You can imagine all the things that a human knows, and trying to list those would just be an endless task, and it might even be an infinite task. But the magic trick is saying, ‘No, no, just tell me a few things,’ and then the brain — or in this case the Church system, hopefully somewhat analogous to the way the mind does it — can churn out, using its probabilistic calculation, all the consequences and inferences. And also, when you give the system new information, it can figure out the consequences of that.”

Modeling minds

Programs that use probabilistic inference seem to be able to model a wider range of human cognitive capacities than traditional cognitive models can. At the 2008 conference of the Cognitive Science Society, for instance, Goodman and Charles Kemp, who was a PhD student in BCS at the time, presented work in which they’d given human subjects a list of seven or eight employees at a fictitious company and told them which employees sent e-mail to which others. Then they gave the subjects a short list of employees at another fictitious company. Without any additional data, the subjects were asked to create a chart depicting who sent e-mail to whom at the second company.

If the e-mail patterns in the sample case formed a chain — Alice sent mail to Bob who sent mail to Carol, all the way to, say, Henry — the human subjects were very likely to predict that the e-mail patterns in the test case would also form a chain. If the e-mail patterns in the sample case formed a loop — Alice sent mail to Bob who sent mail to Carol, and so on, but Henry sent mail to Alice — the subjects predicted a loop in the test case, too.

A program that used probabilistic inference, asked to perform the same task, behaved almost exactly like a human subject, inferring chains from chains and loops from loops. But conventional cognitive models predicted totally random e-mail patterns in the test case: they were unable to extract the higher-level concepts of loops and chains. With a range of collaborators in the Department of Brain and Cognitive Sciences, Goodman has conducted similar experiments in which subjects were asked to sort stylized drawings of bugs or trees into different categories, or to make inferences that required guessing what another person was thinking. In all these cases — several of which were also presented at the Cognitive Science Society’s conference — Church programs did a significantly better job of modeling human thought than traditional artificial-intelligence algorithms did.

Chater cautions that, while Church programs perform well on such targeted tasks, they’re currently too computationally intensive to serve as general-purpose mind simulators. “It’s a serious issue if you’re going to wheel it out to solve every problem under the sun,” Chater says. “But it’s just been built, and these things are always very poorly optimized when they’ve just been built.” And Chater emphasizes that getting the system to work at all is an achievement in itself: “It’s the kind of thing that somebody might produce as a theoretical suggestion, and you’d think, ‘Wow, that’s fantastically clever, but I’m sure you’ll never make it run, really.’ And the miracle is that it does run, and it works.”

Larry Hardesty, MIT News Office

Will Bloom box replace power grid?

February 23, 2010 by Lisa Zyga Enlarge

(PhysOrg.com) — The hot energy news for this week comes in the form of a small box called the Bloom box, whose inventor hopes that it will be in almost every US home in the next five to 10 years. K.R. Sridhar, founder of the Silicon Valley start-up called Bloom Energy, unveiled the device on “60 Minutes” to CBS reporter Leslie Stahl on Sunday evening. Although Sridhar made some impressive claims on the show, he left many of the details a secret. This Wednesday, the company will hold a “special event” in eBay’s town hall, with a countdown clock on its website suggesting it will be a momentous occasion – or at least generating hype.

As Sridhar explained to Stahl, the Bloom box is a new kind of fuel cell that produces electricity by combining oxygen in the air with any fuel source, such as natural gas, bio-gas, and solar energy. Sridhar said the chemical reaction is efficient and clean, creating energy without burning or combustion. He said that two Bloom boxes – each the size of a grapefruit – could wirelessly power a US home, fully replacing the power grid; one box could power a European home, and two or three Asian homes could share a single box. Although currently a commercial unit costs $700,000-$800,000 each, Sridhar hopes to manufacture home units that cost less than $3,000 in five to 10 years. He said he got the idea after designing a device for NASA that would generate oxygen on Mars, for a mission that was later canceled. The Bloom box works in the opposite way as the Mars box: instead of generating oxygen, it uses oxygen as one of the inputs.

Video: The Bloom box on “60 Minutes.”

Although Sunday was the first time Bloom Energy came public with the Bloom box (there’s not even a sign on the company’s building), several devices are already being used by about 20 well-known companies. Google, FedEx, Walmart, eBay, Staples, and others have taken advantage of tax credits to purchase the Bloom boxes, and they’re seeing cost savings in their energy bills. For example, four refrigerator-sized units have been powering a Google datacenter for the past 18 months, using about half as much natural gas as would be required to generate the same amount of energy at a traditional power plant. And at eBay, five units running on bio-gas made from landfill waste that were installed nine months ago have saved the company more than $100,000 in electricity costs, said eBay CEO John Donahoe on “60 Minutes.” Donahoe added that, on a weekly basis, the Bloom boxes generate five times as much power than the 3,000 solar cells that are installed on the roofs of the company’s buildings.

Sridhar explained that the fuel cells inside the Bloom boxes are made from sand turned into thin ceramic squares, each side coated with a green or black “ink.” A single cell can power about one light bulb, but a stack of 64 of the cells could be “big enough to power a Starbucks,” Sridhar said. In between each disk there’s a metal plate, but the Bloom box supposedly uses a cheap metal alloy instead of expensive platinum.

One of Bloom Energy’s early critics, Michael Kanellos of Green Tech Media, noted that researchers have been working with fuel cells since the 1830s. On “60 Minutes,” he told Stahl that, if Sridhar succeeds in making the technology affordable and efficient, there will likely be others that can, too.

“The problem is then G.E. and Siemens and other conglomerates probably can do the same thing,” he said. “They have fuel cell patents; they have research teams that have looked at this,” Kanellos said.

“What do you think the chances are that in ten-plus years you and I will each have a Bloom box in our basements?” Stahl asked Kanellos.

“Twenty percent,” he said. “But it’s going to say ‘G.E.’”

Further details on the Bloom box – its efficiency; the materials it’s made of; how much carbon dioxide, water, heat, and other emissions it produces – are still secret. In a blog post Monday afternoon, Kanellos said that he had found a US patent filed by Bloom in 2006 and granted in 2009 that mentions the material “yttria stabilized zirconia” as well as electrodes made of metals in the platinum family – although this doesn’t necessarily mean anything. More information may be revealed at Wednesday’s event, which will feature John Doerr, partner in the venture capital firm Kleiner Perkins, which has provided financial assistance to the company. (Sridhar told Stahl that an estimate of $400 million raised by Bloom so far is “in the ballpark.”) Former Secretary of State Colin Powell, a member of Bloom Energy’s board, is also scheduled to be in attendance.

More information: CBS

Cell phone exposure may protect against and reverse Alzheimer’s disease

Cell phone exposure may protect against and reverse Alzheimer’s disease
January 6, 2010
The millions of people who spend hours every day on a cell phone may have a new excuse for yakking. A surprising new study in mice provides the first evidence that long-term exposure to electromagnetic waves associated with cell phone use may actually protect against, and even reverse, Alzheimer’s disease. The study, led by University of South Florida researchers at the Florida Alzheimer’s Disease Research Center (ADRC), was published today in the Journal of Alzheimer’s Disease.

“It surprised us to find that cell phone exposure, begun in early adulthood, protects the memory of mice otherwise destined to develop Alzheimer’s symptoms,” said lead author Gary Arendash, PhD, USF Research Professor at the Florida ADRC. “It was even more astonishing that the electromagnetic waves generated by cell phones actually reversed memory impairment in old Alzheimer’s mice.”

The researchers showed that exposing old Alzheimer’s mice to electromagnetic waves generated by cell phones erased brain deposits of the harmful protein beta-amyloid, in addition to preventing the protein’s build-up in younger Alzheimer’s mice. The sticky brain plaques formed by the abnormal accumulation of beta amyloid are a hallmark of Alzheimer’s disease. Most treatments against Alzheimer’s try to target beta-amyloid.

The highly-controlled study allowed researchers to isolate the effects of cell phone exposure on memory from other lifestyle factors such as diet and exercise. It involved 96 mice, most of which were genetically altered to develop beta-amyloid plaques and memory problems mimicking Alzheimer’s disease as they aged. Some mice were non-demented, without any genetic predisposition for Alzheimer’s, so researchers could test the effects of electromagnetic waves on normal memory as well.

Both the Alzheimer’s and normal mice were exposed to the electromagnetic field generated by standard cell phone use for two 1-hour periods each day for seven to nine months. The mice didn’t wear tiny headsets or have scientists holding cell phones up to their ears; instead, their cages were arranged around a centrally-located antenna generating the cell phone signal. Each animal was housed the same distance from the antenna and exposed to electromagnetic waves typically emitted by a cell phone pressed up against a human head.

If cell phone exposure was started when the genetically-programmed mice were young adults — before signs of memory impairment were apparent — their cognitive ability was protected. In fact, the Alzheimer’s mice performed as well on tests measuring memory and thinking skills as aged mice without dementia. If older Alzheimer’s mice already exhibiting memory problems were exposed to the electromagnetic waves, their memory impairment disappeared. Months of cell phone exposure even boosted the memories of normal mice to above-normal levels. The memory benefits of cell phone exposure took months to show up, suggesting that a similar effect in humans would take years if cell phone-level electromagnetic exposure was provided.

Based on their promising and unexpected findings in mice, the researchers concluded that electromagnetic field exposure could be an effective, non-invasive and drug-free way to prevent and treat Alzheimer’s disease in humans. They are currently evaluating whether different sets of electromagnetic frequencies and strengths will produce more rapid and even greater cognitive benefits than those found in their current study.

“If we can determine the best set of electromagnetic parameters to effectively prevent beta-amyloid aggregation and remove pre-existing beta amyloid deposits from the brain, this technology could be quickly translated to human benefit against AD” said USF’s Chuanhai Cao, PhD, the other major study author. “Since production and aggregation of β-amyloid occurs in traumatic brain injury, particularly in soldiers during war, the therapeutic impact of our findings may extend beyond Alzheimer’s disease.”

The memory test used to evaluate the effects of cell phone exposure in mice was closely designed from a sensitive test used to determine if Alzheimer’s disease, or its very early signs (mild cognitive impairment), are present in humans. “Since we selected electromagnetic parameters that were identical to human cell phone use and tested mice in a task closely analogous to a human memory test, we believe our findings could have considerable relevance to humans,” Arendash said.

The researchers found a slight increase in brain temperature during the two one-hour periods when mice were exposed to electromagnetic waves each day. This increase in brain temperature was seen only in the Alzheimer’s mice, and only after months of exposure. The researchers suggest the increase in brain temperature helped the Alzheimer’s brain to remove newly-formed beta-amyloid by causing brain cells to release it.

The researchers were particularly surprised to discover that months of cell phone exposure actually boosted the memory of non-demented (normal mice) to above-normal levels. They suspect that the main reason for this improvement involves the ability of electromagnetic exposure to increase brain activity, promoting greater blood flow and increased energy metabolism in the brain. “Our study provides evidence that long-term cell phone use is not harmful to brain,” Dr. Cao said. “To the contrary, the electromagnetic waves emitted by cell phones could actually improve normal memory and be an effective therapy against memory impairment”

“It will take some time to determine the exact mechanisms involved in these beneficial memory effects,” Arendash said. “One thing is clear, however – the cognitive benefits of long-term electromagnetic exposure are real, because we saw them in both protection- and treatment-based experiments involving Alzheimer’s mice, as well as in normal mice.”

Previous human studies of electromagnetic waves from cell phones involved only brief exposures given to normal humans. While some studies reported small improvements in attention or memory (not enough to impact daily life), others reported no memory effects from short-term exposure. The new study by Arendash, Cao, and their colleagues is the first to investigate the effects of long-term electromagnetic exposure over many months on memory function in either humans or animals. The findings indicate that “long-term” exposure to cell phone level electromagnetic waves is needed to observe enhanced memory in normal or memory-impaired mice.

The USF researchers began investigating the effects of cell phone use on Alzheimer’s disease several years ago, after several observational studies in humans linked a possible increased risk of Alzheimer’s with “low-frequency” electromagnetic exposure — like the energy waves generated by power and telephone lines. However, cell phones emit “high-frequency” electromagnetic waves, which are very different because they can have beneficial effects on brain cell function, such as increasing brain cell activity, Arendash said.

There has been recent controversy about whether electromagnetic waves from cell phones cause brain cancer. Some researchers argue that the risk of glioma (40 percent of all brain tumors) doubles after 10 or more years of cell phone use. However, others argue that since the overall lifetime risk of developing a brain tumor of any type is less than 1 percent, any doubling of this risk would still be very low. Groups such as the World Health Organization, the American Cancer Society, and the National Institutes of Health, have all concluded that scientific evidence to date does not support any adverse health effects associated with the use of cell phones. Consistent with the view of these organizations, the researchers found no autopsy evidence of abnormal growth in brains of the Alzheimer’s mice following many months of exposure to cell phone-level electromagnetic waves. They also found all major peripheral organs, such as the liver and lungs, to be normal.

More information: Electromagnetic Field Treatment Protects Against and Reverses Cognitive Impairment in Alzheimer’s Disease Mice. Gary W. Arendash, Juan Sanchez-Ramos, Takashi Mori, Malgorzata Mamcarz, Xiaoyang Lin, Melissa Runfeldt, Li Want, Guixin Zhang, Vasyl Sava, Juan Tan and Chuanhai Cao. Journal of Alzheimer’s Disease, Volume 19:1 (January 2010).

Provided by University of South Florida

Guide to Startups

The Pmarca Guide to Startups, part 4: The only thing that matters
This post is all about the only thing that matters for a new startup.
But first, some theory:
If you look at a broad cross-section of startups — say, 30 or 40 or more; enough to screen out the pure flukes and look for patterns — two obvious facts will jump out at you.
First obvious fact: there is an incredibly wide divergence of success — some of those startups are insanely successful, some highly successful, many somewhat successful, and quite a few of course outright fail.
Second obvious fact: there is an incredibly wide divergence of caliber and quality for the three core elements of each startup — team, product, and market.
At any given startup, the team will range from outstanding to remarkably flawed; the product will range from a masterpiece of engineering to barely functional; and the market will range from booming to comatose.
And so you start to wonder — what correlates the most to success — team,product, or market? Or, more bluntly, what causes success? And, for those of us who are students of startup failure — what’s most dangerous: a bad team, a weak product, or a poor market?
Let’s start by defining terms.
The caliber of a startup team can be defined as the suitability of the CEO, senior staff, engineers, and other key staff relative to the opportunity in front of them.
You look at a startup and ask, will this team be able to optimally execute against their opportunity? I focus on effectiveness as opposed to experience, since the history of the tech industry is full of highly successful startups that were staffed primarily by people who had never “done it before”.
The quality of a startup’s product can be defined as how impressive the product is to one customer or user who actually uses it: How easy is the product to use? How feature rich is it? How fast is it? How extensible is it? How polished is it? How many (or rather, how few) bugs does it have?
The size of a startup’s market is the the number, and growth rate, of those customers or users for that product.
(Let’s assume for this discussion that you can make money at scale — that the cost of acquiring a customer isn’t higher than the revenue that customer will generate.)
Some people have been objecting to my classification as follows: “How great can a product be if nobody wants it?” In other words, isn’t the quality of a product defined by how appealing it is to lots of customers?
No. Product quality and market size are completely different.
Here’s the classic scenario: the world’s best software application for an operating system nobody runs. Just ask any software developer targeting the market for BeOS, Amiga, OS/2, or NeXT applications what the difference is between great product and big market.

So:
If you ask entrepreneurs or VCs which of team, product, or market is most important, many will say team. This is the obvious answer, in part because in the beginning of a startup, you know a lot more about the team than you do the product, which hasn’t been built yet, or the market, which hasn’t been explored yet.
Plus, we’ve all been raised on slogans like “people are our most important asset” — at least in the US, pro-people sentiments permeate our culture, ranging from high school self-esteem programs to the Declaration of Independence’s inalienable rights to life, liberty, and the pursuit of happiness — so the answer that team is the most important feels right.
And who wants to take the position that people don’t matter?
On the other hand, if you ask engineers, many will say product. This is a product business, startups invent products, customers buy and use the products. Apple and Google are the best companies in the industry today because they build the best products. Without the product there is no company. Just try having a great team and no product, or a great market and no product. What’s wrong with you? Now let me get back to work on the product.
Personally, I’ll take the third position — I’ll assert that market is the most important factor in a startup’s success or failure.
Why?
In a great market — a market with lots of real potential customers — the market pulls product out of the startup.
The market needs to be fulfilled and the market will be fulfilled, by the first viable product that comes along.
The product doesn’t need to be great; it just has to basically work. And, the market doesn’t care how good the team is, as long as the team can produce that viable product.
In short, customers are knocking down your door to get the product; the main goal is to actually answer the phone and respond to all the emails from people who want to buy.
And when you have a great market, the team is remarkably easy to upgrade on the fly.
This is the story of search keyword advertising, and Internet auctions, and TCP/IP routers.
Conversely, in a terrible market, you can have the best product in the world and an absolutely killer team, and it doesn’t matter — you’re going to fail.
You’ll break your pick for years trying to find customers who don’t exist for your marvelous product, and your wonderful team will eventually get demoralized and quit, and your startup will die.
This is the story of videoconferencing, and workflow software, and micropayments.
In honor of Andy Rachleff, formerly of Benchmark Capital, who crystallized this formulation for me, let me present Rachleff’s Law of Startup Success:
The #1 company-killer is lack of market.
Andy puts it this way:
• When a great team meets a lousy market, market wins.
• When a lousy team meets a great market, market wins.
• When a great team meets a great market, something special happens.
You can obviously screw up a great market — and that has been done, and not infrequently — but assuming the team is baseline competent and the product is fundamentally acceptable, a great market will tend to equal success and a poor market will tend to equal failure. Market matters most.
And neither a stellar team nor a fantastic product will redeem a bad market.
OK, so what?
Well, first question: Since team is the thing you have the most control over at the start, and everyone wants to have a great team, what does a great team actually get you?
Hopefully a great team gets you at least an OK product, and ideally a great product.
However, I can name you a bunch of examples of great teams that totally screwed up their products. Great products are really, really hard to build.
Hopefully a great team also gets you a great market — but I can also name you lots of examples of great teams that executed brilliantly against terrible markets and failed. Markets that don’t exist don’t care how smart you are.
In my experience, the most frequent case of great team paired with bad product and/or terrible market is the second- or third-time entrepreneur whose first company was a huge success. People get cocky, and slip up. There is one high-profile, highly successful software entrepreneur right now who is burning through something like $80 million in venture funding in his latest startup and has practically nothing to show for it except for some great press clippings and a couple of beta customers — because there is virtually no market for what he is building.
Conversely, I can name you any number of weak teams whose startups were highly successful due to explosively large markets for what they were doing.
Finally, to quote Tim Shephard: “A great team is a team that will always beat a mediocre team, given the same market and product.”
Second question: Can’t great products sometimes create huge new markets?
Absolutely.
This is a best case scenario, though.
VMWare is the most recent company to have done it — VMWare’s product was so profoundly transformative out of the gate that it catalyzed a whole new movement toward operating system virtualization, which turns out to be a monster market.
And of course, in this scenario, it also doesn’t really matter how good your team is, as long as the team is good enough to develop the product to the baseline level of quality the market requires and get it fundamentally to market.
Understand I’m not saying that you should shoot low in terms of quality of team, or that VMWare’s team was not incredibly strong — it was, and is. I’m saying,bring a product as transformative as VMWare’s to market and you’re going to succeed, full stop.
Short of that, I wouldn’t count on your product creating a new market from scratch.
Third question: as a startup founder, what should I do about all this?
Let’s introduce Rachleff’s Corollary of Startup Success:
The only thing that matters is getting to product/market fit.
Product/market fit means being in a good market with a product that can satisfy that market.
You can always feel when product/market fit isn’t happening. The customers aren’t quite getting value out of the product, word of mouth isn’t spreading, usage isn’t growing that fast, press reviews are kind of “blah”, the sales cycle takes too long, and lots of deals never close.
And you can always feel product/market fit when it’s happening. The customers are buying the product just as fast as you can make it — or usage is growing just as fast as you can add more servers. Money from customers is piling up in your company checking account. You’re hiring sales and customer support staff as fast as you can. Reporters are calling because they’ve heard about your hot new thing and they want to talk to you about it. You start getting entrepreneur of the year awards from Harvard Business School. Investment bankers are staking out your house. You could eat free for a year at Buck’s.
Lots of startups fail before product/market fit ever happens.
My contention, in fact, is that they fail because they never get to product/market fit.
Carried a step further, I believe that the life of any startup can be divided into two parts: before product/market fit (call this “BPMF”) and after product/market fit(”APMF”).
When you are BPMF, focus obsessively on getting to product/market fit.
Do whatever is required to get to product/market fit. Including changing out people, rewriting your product, moving into a different market, telling customers no when you don’t want to, telling customers yes when you don’t want to, raising that fourth round of highly dilutive venture capital — whatever is required.
When you get right down to it, you can ignore almost everything else.
I’m not suggesting that you do ignore everything else — just that judging from what I’ve seen in successful startups, you can.
Whenever you see a successful startup, you see one that has reached product/market fit — and usually along the way screwed up all kinds of other things, from channel model to pipeline development strategy to marketing plan to press relations to compensation policies to the CEO sleeping with the venture capitalist. And the startup is still successful.
Conversely, you see a surprising number of really well-run startups that have all aspects of operations completely buttoned down, HR policies in place, great sales model, thoroughly thought-through marketing plan, great interview processes, outstanding catered food, 30″ monitors for all the programmers, top tier VCs on the board — heading straight off a cliff due to not ever finding product/market fit.
Ironically, once a startup is successful, and you ask the founders what made it successful, they will usually cite all kinds of things that had nothing to do with it. People are terrible at understanding causation. But in almost every case, the cause was actually product/market fit.
Because, really, what else could it possibly be?
[Editorial note: this post obviously raises way more questions than it answers. How exactly do you go about getting to product/market fit if you don't hit it right out of the gate? How do you evaluate markets for size and quality, especially before they're fully formed? What actually makes a product "fit" a market? What role does timing play? How do you know when to change strategy and go after a different market or build a different product? When do you need to change out some or all of your team? And why can't you count on on a great team to build the right product and find the right market? All these topics will be discussed in future posts in this series.]