December 10, 2018

Google’s Vision and Logic Behind Supporting Serbia’s Emerging Startup Ecosystem

What’s Google Launchpad and why were Serbian startups their first choice for support in Europe?

Serbia recently became the first country in Europe with a startup accelerator supported by Google.

Kevin O’Toole, head of International Growth and Research at Google, talks about their program of support for emerging startup ecosystems and their decision to come to Serbia and help local startups. Also, what’s in it for Google?

So, Kevin, it’s really great to have you here in Serbia, welcome! As I heard, it’s your first time here, and we surely hope it’s not your last time. So, just to start this off, tell me a little about your background. As I’ve heard, you’re a  history major and ended up working at Google, which is not a simple path, at least it doesn’t sound so.

If anyone is a basketball fan in Serbia, they probably heard of the Gonzaga University college team. That’s the university where I got my history degree. After that I went to a firm called Spencer & Stewart, a professional services firm that does consulting for boards of directors and CEOs, headhunting for Fortune500 CEOs, and consulting services for boards of directors. And then I was recruited for Google, where I worked on special projects that focused on the future products and technologies. I worked on a number of products, from messaging services to the driverless car business that was eventually called Waymo, and all were done in Area120, which is Google’s product incubator. I also worked on a number of other initiatives, before going over to Launchpad.

What does it mean special projects in Google? What does it refer to?

It’s a catch for just about anything. I led a small research team that focused on thinking about new products and technologies, primarily consumer products in areas that were make it or break it for Google.

In December of 2012 and then in  2013, we were primarily focused on AI, as it was becoming increasingly important to Google as a company. We knew at the time that we needed to acquire a company that would make a great deal of difference. Google ended up acquiring London-based DeepMind which has become a kind of flagship operation for us.

Simultaneously, Facebook was growing in popularity and product scope, and Google+ wasn’t, so we were tasked with thinking about both of those things, the AI and the future of social and making a lot of bets around what mattered to each of us. So essence of my job was to do reading and thinking about the future of these product areas. Also, I was doing a lot of research on how consumers would interact with these products and technologies that were moving forward and then thinking who the players were in both spaces respectively. I was also researching what Google could do from the strategic perspective on the global scope in both of those areas.

So you are working for Google Developers Launchpad now? How does that differ from the job you had before at Google? It sounds quite different because it’s not profit-oriented, at least not in the obvious kind of way.

It’s definitely a long-term investment. Google Launchpad focuses specifically on startup ecosystems and primarily operates in developing markets where we see a tremendous amount of upside. We have two core problems to the business. One is network of Google owned accelerators that operate in key markets for Google where we can get significant presence. These are Sao Paulo, Tel Aviv, Lagos, Bangalore, and Tokyo. And the other is a programme called Powered by Launchpad. It is focused on picking one partner per country, one partner accelerator, and then investing and giving them resources, credit access to mentors, Google’s brand and other services. The goal is to help the accelerators increase the support for the portfolio companies and to grow the best companies in these countries.

We also focus on ecosystem development so we work with universities, policy makers, and with individuals that create tangible changes to help impact and advance the startups in those markets. As far as working with individuals is concerned, we help by educating them to become the first generation of angel investors and syndicate venture capitalists. With policy we work on how to create tax incentives, exemptions, protections for starting and growing, scaling companies in the region Finally, when it comes to academia, we are helping by backing up talent pipelines and ensuring that there is a strong core in computer science programming in order to ensure that there is a great talent that will become the next generation of entrepreneurs for the country.

What’s in it for Google? You said it’s a long-term investment but I guess it’s not just your goodwill to help out developing countries to further develop their startup ecosystem.

It’s a great question. Here’s the logic behind it. First of all, a lot of great stuff happens in the short term and we get to focus on the number of companies that were founded, number of people that are employed by them, their contribution to the GDP, and as a consequence we get to be a part of, or help support the people who will be defining the future of products and technology around the world. Because, if Launchpad does its job well, we will be contributing to the development of startup ecosystems or brightest minds all around the world in many different areas. That’s fundamentally important. It strikes me as funny that so many great entrepreneurs have to move, or feel that they have to move, to Silicon Valley or London, or Berlin, or Singapore to get access to capital and great talent pools. Our job is to build up a distributed network in these ecosystems, so startups can thrive globally.

And what does Google get out of it? If we’re able to work with the fastest growing companies around the world, eventually they are gonna end up needing AdWords, access to cloud services, etc. Google’s launching relationships with startups as they grow, and their relationship to add and spend in cloud will more than make up for the investment that we make upfront to make their ecosystems thrive. We don’t require it, but the relationships tend to lean to those company founders using our products and services.

Do you plan on making some direct investments in startups that are from your portfolio?

Google has a number of vehicles that we use to make investments in startups, and Launchpad and Google ventures are just a few of them. All of which are in different operating business within Alphabet. Launchpad doesn’t make investments directly to companies because we don’t want to send indicators to the market, but Google venture, Google Proper, and Grady Adventures are all different arms with specific niche focuses and different aspects and they do make investments. The biggest investment that has come up from our portfolio is for GoJack, which has about 9 billion dollars.

You mentioned that you have Google Launchpad accelerators in Sao Paulo and Tel Aviv, but you also have this Powered by Launchpad programme which is what we, as a Startup Academy, are part of. I wanted to know what’s your strategy in choosing countries in which you are gonna be expanding your influence, expand your presence?

We think about a number of macro factors, such as total population, percent of people online, the strength of tech universities there, changes in consumption over time, and we have prioritization amongst Google product areas as well. We got products focused on fintech and next billion users that will come around the world. We got Google Cloud, we got a number of AI tools. Those all contribute to a really messy Venn diagram that helps us prioritize countries.

So, some objective macro factors and Google product expansion factors give us countries that tend to be interesting. The triangulations of those priorities give us countries that tend to be almost evenly distributed between the Middle East, Latin America, sub-Saharan Africa, Eastern Europe, and Southeast Asia. Those regions are expanding over time and we will have twice as much coverage in those regions by the end of 2019.

Taking all of that into consideration, why did you chose Serbia?

Serbia only has about 7-8 million people in terms of the total population It also has a really strong university system and very high per capita of developers.  If we can galvanize those developers, many of whom are working for other countries remotely,, to become entrepreneurs, first time entrepreneurs, and they end up employing a minimal number of people for their new businesses, then that will bring a massive yield in terms of impact for the Serbian startup ecosystem.

We have a long relationship with Startit and a lot of respect for what Vukašin and the team are building here. We are thrilled to be working here, we have a great deal of confidence that Startit is well equipped to galvanize and bring together leaders from academia, policy, finance, and investment sector, and really be the force that pushes all these disparate factions together. All of them are needed to make success.

That’s really good to hear and it’s great recognition for the entire ecosystem, not just for us at Startit. And, what do startups have to gain from joining Startup Academy and Powered by Launchpad programs?

When we partner, we are looking for best in class accelerators from the markets we are looking to operate in. We don’t go in and tell the accelerator partners how to run their accelerator, how to set up programmes. We do offer a menu, if you will, of products and services and tools that those startup accelerators can use. For example, we give product credits, we give access to a partner portal with a hundred playbooks and resources that Google has custom built from people operations, sales marketing strategy, deep tech to product and UX and design. They have access to all of that and they also have access to a global network of accelerators like them — the best in their countries. That exposure helps them improve operations at individual accelerators, increases geo flow opportunities and the potential to introduce startups to global markets.

In addition to that, we also offer Leaders Lab training, which is a people operations training that Google has created to help founders be more successful with Google data and personal data that we use to help founders make better decisions.

One of the other things we have are interested in is that no matter how complex a product or technology is, people tend to be the most important. People issues are the most important make it or break it issues that impact startup success. Hiring your first non-technical founder, hiring help at scale, trying to make decisions around personal issues that form around, unconscious biases that might inhibit people—those things can crystalize around founders who are being aware of the power in their company. They also have to be able to recognize that being a founder is a lonely job. You report to your board and people look at you to make decisions. We built a curriculum called Leaders to address those issues. These are some of the tools and services that we bring in to accelerator partners.

You also have a widespread network of mentors, some of whom have been in Serbia a couple of times. What is your approach in building that network because not all of those people work at Google, but as your associates? How do you find them and what is your relationship with them?

We have a really strong network of mentors who cover everything from product and design to people operations and sales marketing and deep tech. Those mentors come from startups as startup alumni, they come from people who worked with startups as investors or advisors, and we have Google employees who are a part of that network as well. We look for people with deep expertise, in functions as well in regions. Those are the people who want to donate their time in exchange for access to some of the best companies in the world. They can learn from each other in a lot of ways, and they are willing to meet Launchpad startups and help them with specific custom exercises or sprints that can make the companies become more successful.

So actually, people who get involved in Google Launchpad here in Serbia have a chance to one day become mentors to startups from all over the world?

Yes.

That’s great. I also wanted to explore one subject that is not strictly limited to Google or Launchpad, but it is something that’s been surrounded by a lot of talk and controversy in the past couple of years. It is equality in the tech industry, especially when it comes to women and gender equality. There’s been a lot of problems in terms of tech giants not being inclusive enough for minorities and women, so I was interested in hearing what’s your take on the subject? Do you see that there has been some progress in this area, or is it just a lot of talk and not much action to improve the situation?

This is a huge issue for the industry, the world, and Google, and we have a great way to go to do it right and to do better. This is not even worth debating, we have data that shows that companies with boards of directors that have gender parity make more money and outperform companies that do not. Similarly, when you have executive teams that have gender purity they perform better. When you have companies whose work forces have gender purity they outperform companies that don’t.

One of the most expensive things for companies is recruiting, so when you can retain employees for a long time, your costs are driven down. When you employ a woman at most senior levels at a company, you are more likely to retain a great individual contributor and lower level managers within a company who are also women, who can look at the company’s leadership and they can see themselves in the positions with authority. So it’s just a smart thing to do to hire an equal number of men and women.

Most companies make products that serve global audiences and global audiences have 50% women and 50% men. Lots of companies have men and women equally in specific functions, but if you are not building your teams with female product managers, with female engineers, you are probably missing something and you are probably building implicit bias into your tech algorithms and into your products themselves.

So I think probably everyone can do a better job at this and it’s an important thing to get right for the health of your company and it’s a fundamentally great thing to do for your employees and the cultures that you build.

Do you do something specifically with Google Launchpad to help women get more into tech industry?

Yeah, Powered by Launchpad holds many of our partners around policy issues, investing issues, and around academias, to bring the most senior leaders from the countries that we work in, to help create a better environment for startups. Back In the summer of 2018, we initiated something called the Table commitment and it’s saying that Google will not show up to these round tables unless the partners bring 50% women to the table. That sets the standard, so if you want to talk about policies in tech, funding in tech, academia in tech, this is a conversation that must have 50% women because it’s gonna impact 50% of the population. It’s fundamentally the right thing to do and it’s in our best interest to have a holistic well rounded conversation when we are talking about these things.

We also work with the Google Developers team called Women Techmakers that serves to help women in tech connect better with one another, find opportunities, and share resources in the industry.

And we are looking for new ways to build more services to target women in tech. Out of many accelerators that are in Launchpad programmes, especially those that operate in markets where we have an existing accelerator, we work only with accelerators that are focused on investing in female entrepreneurs, which is a direct way that Google says: ‘’Yes, we need to do something about this gender gap’’. Our accelerators in Pakistan snf in Nigeria are both focused exclusively on investing in women entrepreneurs and helping those companies thrive.

Do those countries you mentioned have a lot of startups with women as founders?

No, but having funding options for women founders creates women founders. It’s a chicken and the egg situation. When people are actively looking, when investors have capital to spend, they are not just going to invest in female founders, but they are looking for the smartest, most ambitious women in the countries they operate in. They encourage them to become entrepreneurs and that does an awful lot to encourage the proliferation of women in tech.

It’s tough. The last I saw, there are only 2% venture capitalists with check writing privileges and responsibilities, and there are only 2% of those leaders who are women. And we all have unconscious biases, we all like versions of ourselves. That means when you have a bunch of white guys, and I’m one, who write checks, and I don’t, they are predisposed to write checks to other white guys.

So the first thing you got to do in changing VC ecosystems is to get women in power at venture capital firms writing checks because they are gonna look for people like themselves and that’s going to start solving the problem.

I remember that there was a survey last year that covered female founders getting asked really different questions by investors than male founders, and it’s mostly because most of the VCs don’t have any women operating in those kinds of operations.

That’s got to change.

You’ve been in Serbia for two days, and I know that you had the chance to talk to some of the important people in the industry and startups, and just feel the scene. So what are your key take outs from this visit and when are you going to visit us again?

There’s so much intelligence and ambition in Serbia and I’m really thrilled that there are organizations like Startit that are committed to taking the most ambitious and intelligent people out there and saying things like “Come here and we’ll help you learn how to build successful teams, products and technologies”. And I’m thrilled to be able to support that ongoing effort of ten years.

Also, it’s been great to talk to investors, academic leaders, and founders who are committed to building up a Serbian ecosystem and policy makers who are committed to building ecosystems where startups can thrive, where more people get to be employed by startups and work on challenging problems for Serbian population, for greater southeastern Europe, and for the world. That’s really heartening.

We are in this for the long term and excited to build this out in years forward.

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