COLLABORAZIONE, INNOVAZIONE, RICERCA E IMPRENDITORIALITA' Alberto Sangiovanni-Vincentelli The Edgar L. and Harold H. Buttner Chair of EECS University of California at Berkeley Co-Founder, CTA and Member of the Board Cadence Design Systems Comitato Esecutivo, Istituto Italiano di Tecnologia Comitato Scientifico, CNR Advisory Board (Walden International, Sofinnova, Innogest, Xseed (MDV)) Investment Committee (Fondo Atlante, Fondo Next) Copyright: Alberto Sangiovanni Vincentelli 2011 OUTLINE • Collaboration, Research, Innovation and Venture Capital • Technological Opportunities driven by Collaboration and Research: The New Innovator! Copyright: Alberto Sangiovanni Vincentelli 2011 Collaborate to Innovate: the Quest for the Virtual Corporation Manager • Firms will focus more sharply on what they do best, and they will enlist a growing diversity of suppliers for the rest. Organizations will increasingly look outside their walls not just to reduce costs but for innovation – in processes, product and service differentiation – to free up resources, transform their businesses, and facilitate sustainable competitive advantage. As supply networks become more global and complex, winning will depend on transparency, trustworthiness, and reciprocity. In a word: collaboration. (Alan McCormack et al. (HBS)) • The ideal collaboration model is the Virtual Corporation where the different firms involved in collaboration act as if they were division of the same corporation (or even better!!). Copyright: Alberto Sangiovanni Vincentelli 2011 Silicon Valley: The Land of Innovation Copyright: Alberto Sangiovanni Vincentelli 2011 Silicon Valley: Role of Universities Copyright: Alberto Sangiovanni Vincentelli 2011 Factors in Success Infrastructure – Legal and financial services – Excellent Universities – The simultaneous presence of large, medium and small companies – The “network”: both inside and outside company boundaries 6 Copyright: Alberto Sangiovanni Vincentelli 2011 The role of VCs in the Industrial Innovation Landscape • As a complementary lens on technological and market change – VCs see the world differently • As a window on global technology development – Technology is global and driven by local/regional needs • As a supplement to or portfolio hedge against internal R&D programs – Not even the best and biggest corporate R&D can cover all possibilities • To drive new/expanded market development or other strategic (non-R&D) objectives (Intel; Microsoft) • Explicitly to develop risky new ideas that will initially flourish better outside the corporation (Cisco) – A form of outsourcing of innovation • The best VCs adhere to "simple" fundamentals: – world-class leadership and team; – large, growing market; – defensible big idea; – rigorous application of best innovation practices Copyright: Alberto Sangiovanni Vincentelli 2011 Risk Factors in Evaluating Startup Opportunities • • • • Execution Risk Market Risk Technology Risk Variable Factors (dependent on sector or specific opportunity): – Future Financing Risk – Regulatory Risk Copyright: Alberto Sangiovanni Vincentelli 2011 Liquidity and Returns • Exit options – IPO vs. M&A (see chart, next slide) – Bankruptcy vs Shut-down • Typical venture portfolio performance: – Historical data: – Out of every 10 investments • Half do not return capital • 1 returns >10X • Rest return 1-10X Source: M. Borrus, Xseed Copyright: Alberto Sangiovanni Vincentelli 2011 U.S. Venture Capital Investment 1995–2008 $120,000 105,140 $ Million Invested $100,000 $80,000 54,102 $60,000 40,609 $40,000 14,894 $20,000 8,031 21,100 21,941 19,730 22,422 22,968 26,449 29,406 28,298 11,271 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 $0 Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report; Data: Thomson Financial Copyright: Alberto Sangiovanni Vincentelli 2011 Venture Exits—IPOs and M&A by Year, 1991–2008 600 M&A Number of Issues 500 IPO 400 300 200 100 0 M&A IPO 91 17 156 92 76 181 93 74 220 94 100 166 95 97 202 96 116 270 97 164 136 98 209 77 99 240 260 '00 317 264 '01 353 41 '02 318 22 '03 290 29 '04 339 93 '05 350 57 '06 368 57 '07 355 86 '08 260 6 Year Source: NVCA, Thomson Reuters Copyright: Alberto Sangiovanni Vincentelli 2011 2008-2010 Exits: Heating up Again (LinkedIn Story) Copyright: Alberto Sangiovanni Vincentelli 2011 Portfolio Progress 8 companies past seed stage 1,700+ ideas/ researchers canvassed ~950 resulting start-up ideas analyzed in detail 18 Companies funded 16 Live 2 Shut Down DigitAB StemCor [ 13 ] What Drives Venture Returns? • Market growth not absolute size • Efficiency of capital deployment • Irrational exuberance in exit markets • A handful of big winners And most of all • Fundamental Innovation—The (Tech) world isn’t “flat” (next slide). Great Universities play a role!!! Source: M. Borrus, Xseed Copyright: Alberto Sangiovanni Vincentelli 2011 The (Tech) World Isn’t Flat: Boston (Medical, HiTech Harvard, MIT) Distribution of most referenced patents Oregon, Washington (Microsoft, Intel U. Wash, Toronto) Illinois Michigan (GM, Ford, Chrysler, (Motorola, U. Illinois) U. Michigan) Silicon Valley Source: ATP and George Mason University LA, S. Diego (Qualcomm, Defense UCLA, UCSD) Texas (Houston, TI, Freescale U. Texas) Copyright: Alberto Sangiovanni Vincentelli 2011 Consequence: VC Investment by US Region (2008 vs. 2007) California (Especially Silicon Valley) Rules! $ in Millions—All Results Rounded # of Deeds 0 California 3,000 New York 295 199 Texas 146 172 Washington 164 175 Colorado 100 97 $1,203 $1,130 $1,299 $1,469 $955 $1,382 $813 $610 90 92 $708 $632 171 159 $603 $819 47 57 $491 $489 Virginia 81 94 $499 $557 0 2,091 3,110 15,000 $2,974 $3,714 Minnesota Top 10 Total 12,000 1,552 1,624 405 Pennsylvania 9,000 $14,264 $14,735 Massachusetts 446 New Jersey 6,000 2008 2007 5,000 10,000 15,000 20,000 30,000 $23,069 $25,595 Copyright: Alberto Sangiovanni Vincentelli 2011 Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report; 2008 Human Resources in Highly Innovative Ecosystems: Meritocracy to the Hilt! • Biggest challenge is to acquire and retain highly-skilled workforce • Play on compensation based on bonuses, restricted stock and options as well as special claused for acquired talent via acquisitions such as earnouts and no compete agreements • Hiring and compensation is mostly decided by technical leaders and agreed upon by HR, HR guidelines may be violated if a good case is mounted • HR mostly focussed on internal issues: administration of the process, say on exec compensation, participate on the compensation plan set up at the Board level Copyright: Alberto Sangiovanni Vincentelli 2011 Factors in Success 1 People and Technology: • Scientific and Technology education • Centers of excellence in research • Talent pools (people form Universities and companies interested in highrisk high-reward activities) • Ability to attract the “best” to the region (infrastructure for families and continuous learning) but attention to moving social and financial costs 18 Copyright: Alberto Sangiovanni Vincentelli 2011 Pasteur’s Quadrant Considerations of Use? NO YES Pure Basic Research (Bohr) YES Use-Inspired Basic Research (Pasteur) Quest for Fundamental Understanding? NO D. Stokes Pure Applied Research (Edison) Copyright: Alberto Sangiovanni Vincentelli 2011 University-Industry Relationships • Professors are promoted on the basis of their contributions in all areas, including professional activities • Reciprocal respect and attention to respective roles • Unrestricted grants: “speed not patents” • Transfer of technology through visiting professionals and summer students • Formation of new companies favored • Companies compete fiercely on talents out of University • Educational agenda left in the hands of University 20 Copyright: Alberto Sangiovanni Vincentelli 2011 Factors in Success 3: The Valley “Culture” • • • • • • • Move fast Leverage all you can Do not be afraid of making mistakes Learn from your errors If you fail, try again Re-invent yourself and your company constantly Grow grow grow …… 21 Copyright: Alberto Sangiovanni Vincentelli 2011 Israele Sistema scolastico e universitario di eccellenza • Più start-ups dopo USA (più seed investments di USA in valore assoluto) • Quasi 100 VC, ~10 miliardi di dollari under management • Governo imprenditore (Yozma, incubatori, Life Science VC) Imprenditorialità • Più alto numero di Nobel pro capite (più che tutta l’area euro) • 4 università nelle top 100 in scienze - N° 3 in pubblicazioni scientifiche pro capite - N° 1 in laureati pro capite • Più di 1.700 laureati all’anno in Life Sciences Cultura orientata all’innovazione e alla crescita globale • Più alto numero di aziende quotate al Nasdaq dopo USA • Più alta spesa di R&D sul PIL • PIL 1948-2008: x50 (come Cina, >Giappone, Corea) • Global view Copyright: Alberto Sangiovanni Vincentelli 2011 22 Haifa Herzliyya Tel Aviv Gerusalemme 90 KM: Stesso Range as in Silicon Valley Copyright: Alberto Sangiovanni Vincentelli 2011 23 Italy Innovation 40-60% below comparable nations EU 27 “European Innovation Scoreboard” 0,50 0,55 0,35 Source: European Community:“European Innovation Scoreboard 2008” Copyright: Alberto Sangiovanni Vincentelli 2011 24 R&D Gap is in the Private Sector R&D as% of GNL State and P.A. Private Companies Svezia Giappone Stati Uniti ) Germania Francia Canada UK Italia 0 1 2 3 4 Fonte: Intesa Sanpaolo, Servizio Innovazione della Divisione Corporate su dati OECD 2005 - The Economist - August 2007 Copyright: Alberto Sangiovanni Vincentelli 2011 25 Why should we worry about High Tech? SUNRISE INDUSTRIES? SUNSET INDUSTRIES? Innovation and high tech can be as high in New economy as in old economy! Process vs Produc! Copyright: Alberto Sangiovanni Vincentelli 2011 OUTLINE • Research, Innovation and Venture Capital • Technological Opportunities driven by Collaboration and Research: The New Innovator! Copyright: Alberto Sangiovanni Vincentelli 2011 The Enabling Technology: The Emerging IT Scene Infrastructural core Sensory swarm Mobile access Copyright: Alberto Sangiovanni Vincentelli 2011 Predictions EE Times, January 07, 2008 • 5 Billion people to be connected by 2015 (Source: NSN) • Web2.0 – The “always connected” community network • 7 trillion wireless devices serving 7 billion people in 2017 (Source: WirelessWorldResearchForum (WWRF) – 1000 wireless devices per person? [Courtesy: Niko Kiukkonen, Nokia] Copyright: Alberto Sangiovanni Vincentelli 2011 The Birth of Societal IT Systems: Complex collections of sensors, controllers, compute and storage nodes, and actuators that work together to improve our daily lives Copyright: Alberto Sangiovanni Vincentelli 2011 The Cloud • A multi-year tectonic and disruptive shift • Proprietary Bottoms up analysis leads to $100bn opportunity • Themes driving the shift: 1. 2. 3. 4. 5. 6. 7. Cloud and Mobile…made for each other Cloud interoperability Security as a Service Mega-bandwidth and Intelligent Networks Collaboration & Social Networking Platform as a Service Private Clouds: Old wine in new bottle Copyright: Alberto Sangiovanni Vincentelli 2011 The Cloud! • Going back to centralized computing from distributed computing…like utilities • Delivering personal (e.g., email, word processing, presentations) and business apps (e.g., sales force automation, customer service, accounting) over the internet via a subscription model. • Cloud computing has been made possible by the shift to Internet built on Web-based standards and improvements in hard drives, processors, and Internet speed • Transfer of capital, implementation and maintenance risk Copyright: Alberto Sangiovanni Vincentelli 2011 Massive Resources are Virtualized 33 Copyright: Alberto Sangiovanni Vincentelli 2011 Challenge of Integrating Intermittent Sources T. Boone Pickens Wind Farm Sun and wind aren’t where the people – and the current grid – are located! 34 Copyright: Alberto Sangiovanni Vincentelli 2011 www.technologyreview.com The Big Switch: Clouds + Smart Grids Computing as a Utility Energy Efficient Computing Embedded Intelligence in Civilian Infrastructures Large-scale industrialization of computing Computing in the Utility Copyright: Alberto Sangiovanni Vincentelli 2011 Energy + Information = Third Industrial Revolution Jeremy Rifkin “The coming together of distributed communication technologies and distributed renewable energies via an open access, intelligent power grid, represents “power to the people”. For a younger generation that’s growing up in a less hierarchical and more networked world, the ability to produce and share their own energy, like they produce and share their own information, in an open access intergrid, will seem both natural and commonplace.” Copyright: Alberto Sangiovanni Vincentelli 2011 Towards Integrated Wireless Implanted Interfaces Moving the state-of-the-art in wireless sensing clock regulator Tx LNA memory DSP ADC electrodes [Illustration art: Subbu Venkatraman] Power budget: mWs to 1 mW Copyright: Alberto Sangiovanni Vincentelli 2011 Engineering Tomorrow’s Designs Synthetic Biology The creation of novel biological functions and tools by modifying or integrating well-characterized biological components into higher-order systems using mathematical modeling to direct the construction towards the desired end product. “Building life from the ground up” (Jay Keasling, UCB) Keynote presentation, World Congress on Industrial Biotechnology and Bioprocessing, March 2007. Development of foundational technologies: Tools for hiding information and managing complexity Core components that can be used in combination reliably 38 Copyright: Alberto Sangiovanni Vincentelli 2011 Microbial Synthesis of Artemisinin Off-the-shelf parts? HMGS tHMGR atoB AcCoA HMG-CoA BioShack idi PMK MPD MK ispA ADS AcAcCoA Mev Mev-PP Mev-P DMAPP IPP AMO FPP CPR Artemisinin Copyright: Alberto Sangiovanni Vincentelli 2011 39 A Roadmap for Synthetic Biology • An educational program (Berkeley (lead), Harvard, MIT and Stanford) – To train the next generation of bioengineers • A research program – To determine how to set standards – To learn how to develop standard components • A BioFAB – To construct biological components and offer them open source • Applications Copyright: Alberto Sangiovanni Vincentelli 2011 40 Applications of Synthetic Biology Energy Crop • • • Water saving No fertilizer Doubled photosynthetic efficiency Biodiesel and biojet fuel • No compromise • Fully compatible with existing infrastructure Natural product drugs • Capture all of the chemistry in nature • Construct a microbe that can produce any natural product Copyright: Alberto Sangiovanni Vincentelli 2011 41 Amyris • Amyris had its technological foundation in 2001 in the Keasling lab at Berkeley, when Jay Keasling and his team of post-docs pioneered a methodology to produce isopentenyl pyrophosphate, at rates with commercial potential, from yeast-fermented sugars. • Keasling’s magic bug, genetically enhanced from a soup of DNA obtained from bacteria and the plant world, is a five-carbon base chemical and a high-value target in the world of what is now known as the field of renewable chemicals — its a path to isoprenoids, which are themselves a family of some 50,000 molecules that have applications or pathways for pharmaceuticals, fragrances, cosmetics and fuels. • Keasling filed the patent in 2001, and Amyris itself was eventually formed and funded by 2006 with $14.1 million in Series A investments from Kleiner Perkins and Khosla Ventures among other early backers. Copyright: Alberto Sangiovanni Vincentelli 2011 • IPO in 4° Quarter 2010 • From 680Mil cap to 1.265Bil today Copyright: Alberto Sangiovanni Vincentelli 2011 The SCIENCE-Application Dilemma Raffaello Sanzio, The Athens School Copyright: Alberto Sangiovanni Vincentelli 2011 Teamwork!!! Copyright: Alberto Sangiovanni Vincentelli 2011 Educational Challenge Copyright: Alberto Sangiovanni Vincentelli 2011 46