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Entrepreneurship and Innovation between the Continents

Joshua Cohen is an entrepreneur, start-up adviser, and innovation consultant from JSC InnovationUSA who has founded and built Startups in both Europe and the US. Now he talks to us about the Start-up phenomenon in Europe as compared to the scene in the U.S. whilst offering insights on how established companies can be innovative and push ahead of the competition. Speaking at the annual Global Innovation Leaders 2016 summit in March 2016, Joshua is hosting a Think Tank on: “Bringing Start-up Speed, Agility, and Creativity to any Organization: An American Tech Entrepreneur’s Guide”

Being an entrepreneur, investor, as well as a mentor in multiple start-up accelerators on both sides of the Atlantic, you have a good viewpoint to observe what it takes to make innovative ideas a reality. In your opinion, what are some of the key characteristics that enable success in entrepreneurship, and do you think they are transferable to larger established companies?

There’s no magic formula to determine who succeeds as an entrepreneur and who doesn’t. I’ve seen people who I think are great entrepreneurs who haven’t yet “hit a homerun” and people who I’d say are less competent entrepreneurs having had great success by virtue of having been in the right place at the right time. That said, over the long haul, if I had to give the top 3 characteristics, I’d say some combination of vision, ability to execute, and perseverance. Perseverance is especially crucial as any entrepreneur will be plagued by setbacks on a day-to-day basis, and the ability to not only recover from these but to learn and take advantage of them proves absolutely critical to success.

On the subject of how well these skills transfer to larger companies, these days most larger organizations have a good sense that if they want to move quickly and be innovative they’ll need to attract new kinds of people, innovative thinkers and doers who thrive in fast-moving environments and in general enjoy building new and exciting things. In this sense, there’s a strong desire for companies to court individuals with precisely those characteristics that translate into entrepreneurial success. The caveat here is that there are some entrepreneurs who need the control and speed that being part of a self-driven organization brings – I’m sure we’ve all seen the type – and there’s only one possible environment where these people will thrive – their own start-ups.

Being an American who splits his time between Germany and the US, you’ve had the opportunity to see how things work on both sides of the Atlantic. What are some of the major differences between the start-up ecosystems in both countries, and what do you think they could learn from each other?

First of all – and this is something I always stress about any discussions on the subject of culture and business ecosystems – we have to be really clear about our point of reference. When we talk about a start-up ecosystem in the US, we’re generally referring to Silicon Valley, Boston, and New York where we’ve seen an enormous amount of success; other US cities have made tremendous efforts in building their own start-up ecosystems but lag behind German cities like Berlin and Munich!
So if we’re going to make the Silicon Valley, New York, Boston vs Berlin, Munich, etc. comparison we could point to a few things. Maturity of the ecosystem is certainly one factor. You could argue that the first generation of Silicon Valley start-ups goes back to the late 1950s when the so-called “Traitorous Eight” left Shockley Semiconductor to directly (and indirectly) start a series of companies that created vast amounts of wealth and talent. The first wave of successful NY start-ups go back to the late 1990s. Maturity of an ecosystem is absolutely crucial as talent and wealth from any generation of start-ups gives rise to the next. The German start-up scene is simply less mature and hasn’t yet seen the creation of as much wealth and talent when compared to the US.

Availability of capital is certainly an enormous difference. Not only is there far less capital available in Germany but there’s a particular shortfall when it comes to later stage investments, i.e. in companies that have already had small investments to get established but need further capital to support their growth and expansion. That said, the good news here is that many of the big US VCs are talking about increasing their allocations in Europe, and in particular in Berlin. Related to this, the American tax and business regulation environment is much friendlier for start-ups, although I see a real push on the European side to change this. Also on the subject of institutional differences, the German government and the EU take a much more active role in funding and promoting start-ups than I’ve seen in the US.

One area where I’ve seen less of a difference between the US and German start-up ecosystems than others I have observed is when it comes to culture of the start-up ecosystem, especially in Berlin. While I’ve certainly seen that the broader business world in Germany tends to be more conservative than its counterpart on the other side of the Atlantic, my observation has been that the start-up scene in Germany selects for people who are open and risk takers, drawing them not just from Germany but all over the globe (including the US). This type of openness and diversity of people and ideas is a good foundation for a successful ecosystem.

As far as what the respective ecosystems can learn from each other, we have to keep in mind what I mentioned before, that the US start-up ecosystem is simply much older and more mature. There are simply more entrepreneurs in the US who’ve had tremendous success building and scaling products and organizations and so the Germans tend to look toward the US. It’s no surprise that so many German entrepreneurs want to make Silicon Valley or NY trips to get exposure to this. On the governmental level, it’s not really clear that governments can simply build startup ecosystems from scratch; their best bet would be to make sure that the conditions are optimal for founding and growing start-ups which is something the US has historically been much better at.

As far as what the American start-up ecosystem can learn from Germany, valuations in the US seems to be pretty high and it seems clear to me that we have some sort of a bubble. Germans tend to be much more sober in terms of their valuations; perhaps a little of this could rub off!

At the upcoming Global Innovation Leaders 2016, you will be leading a discussion titled “Bringing Start-up Speed, Agility, and Creativity to any Organization: An American Tech Entrepreneur’s Guide.” Can you give us a short preview of what participants can expect to take away from the discussion, and what you hope they bring to the table? The overall goal is to give leaders in any organization — regardless of organizational size or industry — the tools they need to integrate fast-moving innovative practices into their workflows.

Specifically, we’ll start by giving the participants an understanding of what a start-up is and how it functions. Most people in today’s business world have some idea of what a start-up is, but they’ve never really zoomed in why the approach is so novel, has the potential to be so disruptive, and is so different from the “traditional” corporate approach. We’ll explore start-up bedrock principles like customer-centric thinking, building an MVP, lean-thinking, etc. and then we’ll take a look at how corporations can begin integrating these approaches into their businesses to respond quicker and more effectively to changing market conditions. Someday we’ll see many of these approaches to business as routine aspects of the corporate world; it just so happens that they
originated within the start-up ecosystem.

I’d love for the participants in the discussion to tell of their success and failures in trying to bring more innovative practices to their organizations. Another of the most important skills any entrepreneur can have is the ability to self-reflect and learn from mistakes (which, by the way, I am quite certain can be an acquired skill). We’ll have a great opportunity to speak honestly and soberly about our experiences, learn from one another, and get new ideas we can bring back to our organizations.

About Joshua Cohen:

Joshua Cohen is an entrepreneur, start-up adviser, and innovation consultant. He works with companies on both sides of the Atlantic, helping them to understand the impact of digitalization on their products, services, and business models, and giving them the tools they need to take advantage of those changes.

Over the last ten years, Josh has founded and built Startups in both Europe and the US. He served as Co-Head of US Investments for SevenVentures, the VC division of one Germany’s largest media companies, ProSiebenSat1, where he was jointly responsible for establishing and building out SevenVentures’ US presence. Prior to this, he held positions at Merrill Lynch, Random House and MTV. He’s a graduate of Princeton University and the NYU Stern School of Business with additional studies in the University of Cologne. He splits his time between Germany and New York City.

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Any facts, figures or references stated here are made by the author & don't reflect the endorsement of iU at all times unless otherwise drafted by official staff at iU. This article was first published here on 17th December 2015.

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