Starting a tech company: Crazy or WISe?

WISekey's Carlos Moreira

You don’t have to be crazy to start a technology company from scratch, but it certainly helps.

Seven years ago Carlos Moreira left what he calls his “cosy job” at the United Nations in Geneva to start a private Swiss data-security company, WISekey. The company founders started with 3 million Swiss francs of their own money. Several financing rounds later they are now waging a global fight to become a pillar of the market for so-called public-key encryption technology, the most common form of high-security data protection online. And they just got a boost, with an agreement in May to collaborate with software giant Microsoft.

But starting WISekey was a tough decision for the then 40-year-old, Spanish-born Moreira:  “For me to go to my wife and say, from now on I am going to fight for my salary every month – that is something that entrepreneurs only do if they are crazy, or if there is some structure that permits them to do that. I hope in the future that you don’t have to be that crazy – that you can make a decision without risking your (financial) life or the life of your family.”

Better support for entrepreneurs, Moreira argues, is what Europe needs if it is foster innovation and a peppier economy. In an edited interview with Science|Business Editor Richard L. Hudson, Moreira describes the problem and some potential remedies.

SB: Why is entrepreneurship difficult in Europe?  

One of the big problems is the nation outlook of Europe. VCs in England would rather invest in a UK company, and VCs in Spain, a Spanish company. Culturally, you don’t have a pan-European VC structure. It’s easier (for a European) to go to the US and get a Silicon Valley VC to invest in them than to get a European to invest. There are some  – Index Ventures, which was behind Skype, is now investing in FON.com, a Spanish company – which is a beginning. Some VCs are moving toward creating a European play, but it’s not yet in their culture. We still think as English, Spanish and French.

SB: What must policymakers do?

The first one would be to create a European Institute of Technology. There are discussions going on with the governments (in Brussels) to create one. It’s a great idea. In the same way VCs are fragmented, there’s a lot of redundancy in how universities are handling research – which at the end of the day is a factor in the lack of innovation. You have to have a major institutional, educational player in Europe, like MIT and Stanford.

Cambridge is fine, but it is a closed ecosystem. The VCs in Cambridge invest in Cambridge; you don’t have a truly European ecosystem. The institute will foster innovation by bringing in VCs. Which then provides a focus for the entrepreneurs – who will take the decision to move away from cosy jobs and take the risk of creating start-ups.

You need to create a fund which is fostered by European money, EU money, and complemented by national VCs and national research funds. The Airbus model was good – everybody wanted a piece of the plan, so they put in a lot of money. The same decomposition needs to be done in research and development. And they should have the VCs; these are the guys who can put an entrepreneur on track. A VC brings not only money but a process, the methods that are needed for you to succeed in business.

The third thing is to encourage entrepreneurs to take the risk of a start-up. We need to change the culture in Europe, on how we reward entrepreneurs. Americans view failure as a learning curve: "You failed. Fine. You will do better next time." In Europe we are more: "Oooo, your company went belly up. We don’t want to touch that." We are still treating failure as a punishment rather than a reward.

SB: What was the toughest part of starting your company?

This (data security) space had been monopolized by the big guys – Accenture, IBM.  I was positioning WISekey as a global cryptographic root key, while being a start-up. People said it’s a great idea, but this is something that should be done by the big guys.  

So how do you fulfil that ambition as a tiny company? By handling very complex projects that nobody wanted to touch. (These included electronic security for a Swiss banking system, work with the International Telecommunications Union, and the world’s first secure on-line election, in Geneva.) Then try to get an international company like Microsoft to say you guys are good. If I go now to France or Spain or Germany, I can say I am a very good Swiss company and Microsoft that wants to deploy my technology in your territory. We are still in Europe influenced by somebody doing a global deal.