What connects these four, very well known, very successful businesses….apart from them all being from the US?
Europe as a region, has not produced a Microsoft, Google, Apple or Facebook and over the last few years has not been the hotbed of the so called ‘unicorn’ business, even with the many €billions spent on R&D and SME development.
However, it is true that the European region has produced, in the past, companies that today would most certainly be considered a unicorn. Indeed Europe has been the lead in many common technologies, from the steam engine to the automobile, with European car companies being some of the >$1bn entities that would easily qualify as a unicorn today…just don’t mention Tesla!
Value or worth is not the common factor which connects the four US giants above though, what you may be surprised to learn is that all of their founders were university drop outs!
Bill Gates dropped out of Harvard, as did Mark Zuckerberg in their sophomore years, Larry Page and Sergei Brin both dropped out of Stanford and Jobs and Wozniack dropped out of Berkeley!
All of them had worked on their technology during their degrees and, in some cases their masters or equivalent, but all dropped out of pursuing their PhD to achieve their personal business goals.
So what does this say about the role of the university in the development of unicorn businesses in the USA or generally, or the failure of the European region to really produce these outcomes?
Given that universities across Europe historically (and continue to) have access to really significant & eye watering (in the tens of billions € & £ of) EU or Government monies to drive R&D, and post-Covid ‘Build Back Better’ opportunities, where does this leave European innovators, students and academics? How are these institutions going to develop and evolve the much needed unicorns of the future and become a truly global powerhouse for innovation and value?
Increasing the flow of capital to universities will not, necessarily, produce more in the way of commercially viable innovation, although it will broaden the scope of discovery and increase project disclosure. This is undoubtedly a good thing for the university and academic, but is it the best thing for European regional economies and their tax payers!
One solution that may evolve, will be to focus R&D and innovation in specific areas or silos as has happened with the Covid-19 vaccine development effort. However, if money is targeted to specific areas, this will stifle research in other, equally as important areas. In addition, universities and academics are not historically money orientated and whilst more money will allow more R&D and thus more project disclosure, this will not necessarily produce more commercial opportunity for regional economies.
Having said all of that, Bill Gates, Mark Zuckerberg, Steve Jobs, Steve Wozniak, Larry Page and Sergey Brin did not build what they built because there was money for the research, they built what they built as a side effect of their research.
The outcome they realised was because they were given the space, equipment and time to carry out what would have seemed like crazy academic exercises! Parsing and indexing the entire world-wide web for example was simply an academic challenge for Page and Brin. It was only after they had done this they realised the floor in their indexing and created ‘Page Rank’ the algorithm that prioritises content based on its perceived value to users, something which is still true of Google today.
Their respective universities almost certainly opened their eyes to the possibilities of technology, but the academic pathway did not facilitate the opportunity for these projects to be anything more than an academic exercise, a paper, a dissertation or a citation in an academic journal. Of course, this kind of publicity is great for universities and academics who wish to follow the pathway from undergraduate to professor, but what if?
What if, in the examples above, Harvard, Stamford and Berkeley had realised what was going on under their roof? What if the university had an additional ‘Pathway Process’ to move research projects out of the lab and onto an IPO? What if the global technology superpowers of Microsoft, Google, Apple and Facebook had evolved with some of the additional governance afforded to them by a considerate university and with input from a experienced and respected public facing institutions?
There is no reason to suggest that these companies would not have been as successful or potentially even more so if they had continued university support. It is a fact that university based projects perform 400% better in their first 4-5 years, than non-university counterparts…so that’s one statistic that could be applied.
In addition, the drive for early profit when backed by a VC may have forced the whole advertising model for free to use software, the preferred business model of Google and Facebook. This in turn has lead to the growth of algorithmic modelling and the Cambridge Analytica issues and global push back on the use and value of content. The need for companies like Microsoft to own the entire value chain, created issues with anti-trust, again, driven by the need to meet investor goals. Sadly his is also true for Apple, who this year face anti-trust legislation in the EU.
Of course these companies make billions, produce returns for shareholders (mainly) and are global superpowers…and maybe that’s all they need to be. BUT..what if they were more than this, what if, when they were at their most vulnerable in the first 2-3 years, they were supported, encouraged, given the space to develop, refine and evolve without fear of underperforming in any one quarter. Something we glibly call ‘patient capital’ today.
What if they had developed and defined a more open, honest and fair commercial model, would they be better today, more respected, more profitable, more inclusive?
Nobody can say for sure.
The truth is universities in Europe are full of students and academics working on ideas, concepts and possibly the unicorns of the future. What is needed is a mechanism or pathway to help those with the best ideas get the support they need to understand how their research is applied in the real world, how it is realised and how the value can benefit society, industry, commerce and the environment.
Universities are places that educate and teach, so we need to help them to understand the value of their impact outside of education. The university cannot be expected to deliver world class teaching and deliver world class commercialisation of new ideas.
This is where the university and PIPE meet, where they teach and educate, we validate and commercialise. The world needs universities to produce the people who will develop the potential solutions for the future, but the world also needs to realise the value of those solutions and how best they can be realised for the benefit of all. This is what PIPE does.