At 59, Martin Varsavsky continues to speak with the same enthusiasm about starting businesses like when he created Jazztel, Ya.com, Fon, Viatel or Eolia. And it is that this renowned Argentine entrepreneur and investor, who lives on horseback between the US and Spain, is still on the crest of the wave with three projects: Prelude, which after three years in operation has become the largest network of fertility centers in USA; Overture, the startup who has ridden in Madrid to create embryos with robots, Y Goggo Networks, with which it wants to stand up to Google and be a European autonomous car fleet operator. “I want to help Europe create companies that can compete with the giants of Silicon Valley, and that’s what I do with Goggo,” he says.
Last week his startup of autonomous driving Goggo captured 44 million euros, and that is just today little more than an Excel, and five months before he achieved 20 million dollars for Overture, his startup to create embryos with robots. How do you do it? You are a genius raising money.
Raising money is based on the confidence one inspires investors and the better you do in life, the more trust you inspire. That doesn’t mean you can’t make mistakes, but if you have a track record With more successes than mistakes, you tend to be able to raise money more easily. When I am going to raise funds, people think about my career and see that over 25 years I have created companies, where one went wrong but six good, and that makes some investors believe. In my case, especially those in Silicon Valley, because I rarely raise money in Spain; I usually get money in the US to do projects in Spain, although this year was the first time I raised money in Spain: 156 million in the MVB fund.
In the entrepreneurial environment they say that their strengths are their great smell to see market opportunities and that ability to raise funds, but they point out that their weakness is their managerial capacity. Do you agree?
Regarding smell in new technologies, yes, totally agree. The only company that really went wrong was EinsteiNet, in which I lost 50 million euros of mine. But in that case I would not say that it was a management failure but of timing. It was the first European company of cloud computing and, in the end, the cloud It has become huge, but without us. I was too pioneer. In the US there is a phrase that says “the pioneers are the ones who end up with the arrows on the back” and sometimes I have had arrows on my back for having started projects very early. Regarding the managerial capacity, I need to rely on people who know how to execute my ideas, because I am not the day-to-day management person. Although, lately, the largest company I have made, I directed the Prelude the first year. But yes, when you do business you have to know what you do well and what you do wrong, and associate with people who do that part well. So I agree with the critics, that’s why I surround myself with very good managers, but that does not mean that one cannot carry out the projects. I am now President of Prelude and the CEO is TJ Farnsworth, I speak frequently. I of the strategy and the management. In the case of Goggo is Yasmine Fage, who worked at McKinsey, and in Overture, which is the company that makes the machine to make embryos, there are three key executives: Santiago Munne, who is co-founder and is the Spanish who built in The largest embryo testing company, Ana García Poyo and Lionel Matthys.
How do you detect the opportunities? How do you choose in which sectors you invest, because it gives the impression that you are always one step ahead?
Yes, that is my forte. Believe in technologies that are starting and that, in general, are surrounded by skeptics, as happened at the time with solar energy. Everyone said it would never work, that the photovoltaic panels were very expensive, that everything was ridiculous. On the other hand, I thought that there was going to be a kind of Moore’s Law on photovoltaic panels, which actually existed and, now, the plates are worth 95% less than when we started in 2005. I think I owe all that much to My father, who was an astrophysicist and I spent my childhood listening to things different from that of all children. From an early age I was exposed to technology and science, also because we are Ashkenazi Jews.
The Spanish entrepreneur has plenty of humility and lacks courage, but I am optimistic. Very interesting companies are emerging
You have great visibility on the Spanish entrepreneurial ecosystem. How do you see it at this time compared to when you started?
When I arrived in 1995, Spain was a country that was taking off, it was solidifying as a democracy, and the biggest activity was the big company. Today the weight of the big company is still there, but young people have the option of entering the world of startups, make your own company. That was very difficult in the 90s when we did Jazztel and Ya.com, or in the early 2000s when we did Eolia. Today there are more possibilities to raise money, there is more venture capital, and there are great events for entrepreneurs, such as the South Summit. In Spain there had been a generation of entrepreneurs before, with Amancio Ortega or the founder of Pronovias, but later he fell into a valley of death, which lasted until the last crisis. And it is as I said: when the alternative is unemployment, entrepreneurship is cheap. Unemployment, especially youth unemployment, made people have more imagination. That was a good aspect of the crisis: suddenly, there was a generation of young people who could not find work or find jobs where they were paid very little and the opportunity cost of entrepreneurship fell. The paradox of the crisis was the birth of the entrepreneurial ecosystem. And diversification. Because Spain was “brick, brick, brick, and banks and tourism, and now it is much more. Companies like Glovo or Cabify are emerging, and other projects in which I am investing as Mox or Claimant are coming to me.
Do you see, then, that the profile of startups And entrepreneurs in Spain are going in the right direction?
Very good. I am optimistic about the Spanish entrepreneurial ecosystem, because something else has also happened: many Spaniards with the crisis went to other countries and are now returning with everything they learned outside.
And something that is missing and urgent to do?
Can you say balls? (laughs) Well, that. It takes much more courage. Courage is essential to be an entrepreneur and, sometimes, self-criticism is lacking and courage is lacking. Say: I don’t know how I’m going to solve this, but I’m going to do it! This is what I have done with Overture: I decided that the process of making embryos had to be robotized to make it safer (without the mistakes made by human distractions), but when I raised the money I did not know yet how we were going to do the machine to achieve it, and we still find things that we still don’t know how we are going to solve. Of course, we have full confidence that we will do it. In Spain people are educated to be humble, but in the world of entrepreneurship humility is almost useless. What serves is courage (which, sometimes, is even arrogance), conviction and faith in oneself. There are few people here with the level of confidence that Silicon Valley entrepreneurs have in themselves.
But there are other differences in draft between the US and Europe in entrepreneurship.
Yes. We Europeans are very good at collaborating. If you think things that came out of Europe and dominate the world or have been very successful think of Linux or Airbus (which is now winning over Boeing), total examples of collaboration. It is as if on one side you have an American weighing 200 kilos and pulling a rope and on the other side five people weighing 70 kilos and pulling the other side. The US makes companies such as Boeing, Microsoft, Apple, Amazon, Google, run by a type of people that rarely grows in Europe. If I tell you Amazon, you say Jeff Bezos, but if I tell you Airbus, you surely don’t know who is behind.
And which model is more successful, because they have managed to dominate strategic business with theirs?
I think they make better companies and we a better society. We lack our Google, Apple, Amazon, but they lack medical insurance, free university, that people have a home … The Americans are brilliant, I said it in a tweet, to solve problems that nobody knows how to solve and they are a disaster to solve what we have all solved. No system is perfect, but I prefer to live in Europe, where we have a fairer society. And I want to help in Europe to create companies that can compete with the giants of Silicon Valley and that is just what we are doing with Goggo.
Waymo (Google) is in autonomous driving as if Huawei came to Europe and, in addition to selling its technology, offered an operator service like Movistar
How are they going to do it?
The idea behind Goggo is how collaboration can beat individualism and go out and compete with Google, which undoubtedly has the most advanced autonomous car project. For this we propose to the European governments to establish a licensing system; that each country grant by competition licenses for three fleets of autonomous cars for the transport of passengers and goods. This will ensure that Google can play a role, but not the only role. We want Google to not be able to transport what Amazon has done to e-commerce or what Google itself has done to advertising and the media. We are already working in that direction with the governments of Germany and France, and we will do so with that of Spain when it is no longer operational.
Is Europe in time to compete with Google and other giants not only from the US but from China (such as Baidu) in autonomous driving or other strategic fields?
That’s why I said you have to be brave. You have to go out to fight even if you think they can beat you. I think we are in time to create an autonomous mobility system that is European.
And why do they ask for only three licenses?
Because the inspiration of this system is that of telecommunications. Why were three or four mobile operators created per country and not 100? It is not true that there were only three on the spectrum. It was because it was very expensive to make a telecommunications operator, just as it is very expensive to create a fleet of autonomous cars. If it is not fixed that there are three and that they start at the same time, what will tend to happen is that there is only one, as is happening in e-commerce and Amazon. The advantages are so great for the one who is bigger, that he eats everything else. If we had left Telefónica, Vodafone, Orange and Deutsche Telekom, the four great Europeans, to buy who would have wanted to, they would have bought all the others. To establish that there are three and that none of them can buy from the other seems a fair balance between helping the consumer and helping companies.
It seems to me that there are ways to deal with the giants of Silicon Valley without destroying them. Dividing them would be as if the United States is shot in the foot
But do European companies have money for it?
Thats the big problem. In Europe we have no money to develop these autonomous cars as Google does, which spends 100 million dollars a month. No one, not even Volkswagen, has that money. That is why the three or four fleet system is reasonable because you create a great deal of value the day you win the licenses. That day, the companies that award them are already worth 20,000 or 30,000 million and can sell their shares and thereby finance the research.
Are European car companies and governments doing their homework on this issue?
Europe is doing very badly on this issue and that is a leader in the car. The autonomous driving dilemma is quite similar to that of aviation before Airbus. There were a lot of small businesses that made planes, but nobody succeeded. There was a huge atomization, just like in this sector. There is almost no company that does not have its effort in autonomous car, but all are tiny with respect to Waymo (Google’s company) and other American firms such as Uber, Aurora, Tesla … If one put companies in a world ranking, the Americans would occupy all the top positions. Daimler and Bosch, who have the best European effort in autonomous driving and have just started testing in San José, California, would probably be the 15th in the world. And that would be European number 1.
But being so, unless protectionist measures are applied, it is most likely that the companies that win the licenses in Europe are from the US.
In the case of telecommunications, Americans were allowed to own minority interests in European telecos, because they were considered important for European sovereignty. And, in my opinion, transport understood as going to work every day is equally important for national sovereignty, so we should leave American companies and Chinese companies to participate, but not with majority interests. Also, here is an additional problem. Waymo does all the autonomous driving technology, but also offers the service, it is a fleet operator (with Waymo One). It is as if Huawei came to Europe and, in addition to selling phones, different equipment and network technology, it offered an operator service as if it were Movistar. That’s what Waymo does in autonomous driving.
And the issue of safety in autonomous driving?
In the US there is a problem with security. Uber, for example, took out its autonomous car system and forgot to program those who cross the street outside the zebra crossings and killed one person. In Europe, however, it is inconceivable that someone will bring software to the market and forget to program that. In the US they paid some money to the family and moved on. I believe that in Europe we are going to ask everyone to share security data. Like airlines, which compete for comfort, for food, fare, point plans, but not for how many people they kill. If Vueling, Easyjet or Ryanair find out about something that has to do with security, they have to tell the authorities and everyone, and we believe in such a world for autonomous cars. That security issues cannot serve to compete.
Speaking of giants of Silicon Valley, do you agree with what the Democrats in the United States are asking to divide some of the American giants like Facebook, Google or Amazon, to curb their power and avoid supposed anti-competitive practices?
I think that in the US there is a lot of confusion right now, because there is a totally atypical president, who is good enough to divide the Democrats. I don’t think there is a single democratic thought in this regard. I am sympathetic to the Democratic party, but with the more central aspect. It seems to me that there are ways to deal with the giants of Silicon Valley without destroying them, because it would be like the US shoots itself in the foot. Why kill the golden egg hen. The question is to regulate them and not destroy society. I don’t think anyone in Europe wants to be charged tomorrow for Google maps, for example. My attitude is not to go against the giants of Silicon Valley, but I want to have a better alternative. It is like piracy: they were not right or those who hacked and said that everything was everyone’s or those who asked to combat this phenomenon with the police and jail. Piracy is over creating good music and video services. We should not be complaining all day about what the great techs in the US do, we have to find alternatives that are better. Although that does not mean that we have to denounce them when they do illegal or unethical things, such as the issue of taxes, although I believe that Europe is also to blame for this because it allowed the Irish solution.
Changing the subject. How is your other big project going: Overture, based in Spain?
We hope to get the first product in 2020. Two years ago Overture was a dream, but we already have prototypes that work, and we are developing them in Madrid. People do not know but Spain is a global leader in fertility. There are very good embryologists, among other things because here people want to have children very late, and many would not have them if it was not with the help of technology.
Prelude billed more than 200 million in its second year and has great profits; Spain is a global leader in fertility
Do you need a common European regulation in the fertility industry so that companies like yours can grow big?
Yes, because each country regulates it in a way and everything becomes very complex. The one behind everyone is Germany, for its Nazi past. The people there confuse embryo testing with the design of a superior race, and the result is that most of the things that can be done in Spain cannot be done there. But the rest of Europe is becoming more and more like Spain and the US, the country where more treatments can be done (like couples gays or women with uterine problems may have children with surrogate mothers, which I think should be legal here). That’s why I rode Prelude in the US. In its second year (it was created in 2016) it invoiced more than 200 million dollars and already has significant profits.
I have read that Overture would lower costs and improve embryo creation security. How does this project fit with the precarious generation in Spain that is precisely the one that has the age to have children and cannot because of working conditions? Would a national plan related to aging be needed in Spain?
I believe that in Spain fertility would have to be financed more, because in fact one cannot have a society in which only the rich can have children. But it seems to me that in Spain another topic would have to be financed, which are nurseries. Why is the university in Spain almost free and daycare centers are not? Because children do not vote. If they gave each parent who has small children one more vote in custody for their children, tomorrow all daycare centers would be free. That is one thing that they have not thought well with democracy. The only ones in Europe who realized this were the French and the Swedes and they are the only ones who more or less do not have a fertility problem. The rest of the European countries have a serious problem. People have economic progress throughout their lives and when they have children they are not at the peak of their economic gains, so they need more help. Egg freezing is a solution to having children later, but there are very few people who do or realize it when they are 25 years old. At that age one thinks about going out and getting his first job.
In Spain, fertility would have to be financed more and that daycare centers were free because you cannot have a society in which only the rich can have children
I see that in almost all the sectors in which it has been put they are very regulated: telecos, energy, fertility, now electric cars.
Totally. I did a master, which few people know, in diplomacy. And many will wonder what if I studied so much science, but indeed many of the things I do have to do with diplomacy. By going to governments and explaining why such a thing or another is good and I have developed a specialty in having a good dialogue with governments. In Spain, I speak with politicians of the PSOE and the PP. Both have consulted me for a plan for the future for Spain, on how to create quality works, because the topics I get into are very apolitical. So yes, I do many things that have to do with regulatory issues because I am not interested in politics but in politics. I’m interested in what is called in English policy, which is different from politics.