Press Releases 2017

What Wales can do to become a hub for business start-ups

24.05.2017

South Wales Business Review (SWBR) Editor Lucy Griffiths met up with entrepreneur, investor and new UWTSD Professor of Practice Peter Polydor to find out what he thinks Wales can do to become a hub for start-ups.

SWBR: Tell us a bit about your background and career history?

PP: I got involved in entrepreneurship at a very, very young age. I started my first company when I was a teenager, and from there always had something going on. That’s the life of a serial entrepreneur, you’re constantly building something else new. From there I went to school in the

States, in LA, Occidental College, and from there went on to work for a venture capital firm in California. I was there for about four years and then I left that firm to start my own. So, Ergo Capital is a venture fund that I put together back in 2013. We invest in a number of different industries - IT,

E-commerce, we’ve done FinTech, we’ve done CleanTech we’ve done medical and bioinformatics, so pretty broad, and we’re headquartered in California. Also at the same time in 2013 I launched the Eureka Building, which is a three-acre tech campus in Southern California targeted towards entrepreneurs and creatives. The entire place is designed with 41,000 square feet of cool space that only houses tech and creative companies, ranging from the start-ups of one or two people, all the way up to subsidiaries of billion dollar companies.

We’ve hosted, since launching, over 300 events I believe, so it’s a very busy community there. At Eureka we also produce our own events, including EurekaFEST, which is Orange County’s biggest start-up festival, targeted towards building the community, building that entrepreneurial spirit, and in a way just supporting entrepreneurs and making it a better ecosystem.

SWBR: What would a typical week for you look like?

PP: Ha, a typical week when I’m in London? When I’m in Toronto? When I’m in New York? California?

SWBR: Is there such a thing as a typical week?

PP: That’s the beautiful thing about working with start-ups and venture, there is no such thing as a typical week! The only thing that’s typical is that you’re always dealing with a range of problems within companies. You’re always dealing with the challenges facing start-ups that are always under-staffed, under resourced, they’re under pressure, just under, under, under, under! So, that’s the one thing that doesn’t really change. But, typically if I’m not talking to one of our companies, every day, then that’s a very odd day. And, when you look at our portfolio, we have companies that are in different places; there are companies in California, there are companies in Arizona, there are companies in New Jersey, we’ve got companies in Europe, so the time-zone change also makes it very interesting because I feel like just when I’m solving one problem somebody else is calling me because they’re just waking up!

Which is interesting, and it’s also the reason why I do what I do, I just love being that problem solver and helping companies progress and grow. We’re also launching our own accelerator too. Ergo itself is more of a growth stage funder now, so we’re creating a startup accelerator to really focus on those early stage start-ups that are at that seed stage. We’re structuring it in a way that’s not going to be like your typical accelerator, you know, join a cohort, be there for three months and then get out.

Instead it’s going to be picking up ten companies a year to work with for up to a year, and really just help them hit milestones. That’s going to be called Ergo Accel.

SWBR: It’s sounds as though you’re quite hands-on with the companies you invest in?

PP: Yes, we’re not passive investors. Well we can be, don’t get me wrong, we’ve had companies who we’ve helped get to a milestone, and we don’t want to be a weight, a hindrance, anything like that. We just want to help them get to where they’re going as fast as possible. So, we get out of their way as much as we try to help them on their way. "That’s the life of a serial entrepreneur, you’re constantly building something else new."

SWBR: Is there something in particular that you look for in companies that you invest in?

PP: I coined this term that I like to use, whenever I’m examining a company I like to find the ‘MEAT’. MEAT stands for the Market, Executives, Acceptance and Technology. So, is it a big market, a controlled market, is it an easy one to get into? If it’s a huge market, fifty billion dollars, a hundred billion dollars, is it one that has high barriers to entry? If it doesn’t, anyone can get in and therefore you can be displaced at any time, and if it’s a small market, a niche market, that’s five hundred million dollars, or even a hundred million dollars, great, well can you own it? Because if you can’t own the whole market or a least a huge chunk of it then there’s no real value in going after it because what’s the point of being five percent of a hundred million dollar market?

You’re a five million dollar company. The next one is Executives, which to me is the biggest thing. Who are the people whoare actually running this company? Who are the people who are going to be having those sleepless nights because they’re really worried about how you’re going to get to the next stage. They’re the people who, day-in day-out, are developing this. Acceptance refers to customers – in other words, the product that you’re making, whatever problem you’re solving, has someone already said that yes, there is a problem and I want to use your product as my solution. Having a customer is the single best tool you can have in terms of due diligence.

And the last one’s technology, is this something that is actually a leap forward, meaning are you improving what’s out there by 10%, well that’s not really of value, or are you improving it tenfold? Then the next step behind that is, is it protectable? Do you have any intellectual property behind it? So, those are the four things, but for me, after all the deals we’ve done, after all the companies I’ve seen, the executives, those people that are running the company,they’re the most important.

SWBR: You’ve visited Wales a few times I believe, and Swansea in particular, what was your impression of Swansea as a City and as an environment for business?

PP: I was surprised, because it reminded me a lot of California. The way it looked and felt. Although, I’ve only ever seen it rain once there, so it might be a slightlyskewed vision! I was really impressed when I saw the SA1 Swansea Waterfront development and listened to the people from UWTSD talking about what they’re trying to do, it just showed that there’s a big commitment and a drive to try and make Swansea and South Wales a real innovation cluster, a real innovation hub, which when you look at the European landscape, there’s no clear winner. In the States you know it’s Silicon Valley, and I can go to Canada and tell you it’s the Toronto/Waterloo Corridor. However in Europe, if, for instance, I’m looking for hardware technology, if I’m looking for education technology, insurance technology I don’t know where I would go to find that necessarily.

SWBR: You’ve taken on a new role as Professor Practice at UWTSD, how do you see that developing?

PP: For the SA1 Swansea Waterfront project, I’m part of the working group to help and advise on it, with my experience from Eureka, developing the start-up community in Orange County, and prior to that all the different start-up communities I’ve been to in the world, ranging from Munich to Halifax, Toronto to Vancouver. Seeing how other communities in this ‘rise of the rest’ as it’s been called, are really taking over.

SWBR: Are there specific things places like Swansea need to do to foster that entrepreneurial spirit, either from within, or to attract it in from elsewhere?

PP: Whenever a company is trying to decide where they’re going to build, where they’re going to grow, whether you’re a big company or a small company, talent is a huge thing, so the University being focused on providing educational opportunities for our students to be better prepared is very important. That is, being upskilled, being ready for this world of technology, AI, automation, that has really shifted the opportunities. I think that’s a key point – having the right talent and having access to it.

Outside of that, just being in an environment that is supportive of start-ups. Having different Government programmes, having different resources, both physical and in the sense of policy, all those things come together and what happens is, if you can get one success that doesn’t leave, you build on that. If you look at why Waterloo in Canada is one of the biggest tech clusters in the world, and why the third most prevalent engineering degree in Silicon Valley is the University of Waterloo, it is because of a company call Blackberry.

Blackberry started there, built there, and is still there. They may not be the tech giant that they once were, but they’re still a huge company. Out of that spun so many different technologies, because they became a magnet. So, as a magnet they not only kept talent there, they developed with the University to make the talent even better, but they also brought talent there, and then people were spinning out and starting all these other companies that are now a huge innovation cluster where there are at least three or four start-ups that I can think of that are over $1billion in value – they all started from Waterloo and still have their headquarters there.

SWBR: So you need one high growth company and the rest will follow?

PP: Yes, but the reason why Blackberry stayed was they had a direct plugin to great talent. They had the University producing the great engineers that they needed to grow. So, all of a sudden, one of their biggest challenges of finding people, was solved, so all they had to do was keep getting a bigger office, keep focusing on revenues, keep focusing on the future, and they knew that the people would come.

SWBR: I’ve heard people say that part of it is having a place that’s actually a pleasant place to live in, because that’s what attracts the talent in and keeps it there? Do you subscribe to that?

PP: California is a beautiful place to live, and we pay for that, meaning that we joke that California is the weather tax, because California has the highest taxes, I believe, in the United States. So it’s not necessarily conducive to business, for it to actually be in California. But you’re right, if you are a top programmer, or a top engineer or a top business development person, and almost any company would want to hire you, you have choices, of where you want to live. You can go work for Google in London, you can go work for Google in Dublin, you can go work for Google in New York, you can go work for Google in all these different cities...actually one of my classmates from Oxford is going to work for Amazon in Swansea.

It’s a matter of lifestyle, in other words making it cool, and enjoyable, making it a place that people actually want to travel to. I’ve been to Swansea and it’s one of those hidden gems that people just don’t know about. The plans that the City has, the plans that Welsh Government has, the plans that UWTSD has for Swansea - it’s going to go through this major gentrification, this major uplift, everything from a sports arena, to the huge Tidal Lagoon Project, that’s being pushed forward, it’s going to be just a perfect example of innovation at work.

And it’s one of the benefits that the infrastructure isn’t already there. So now they’re going in, they’re creating infrastructure with the newest and best uses, so you’re not trying to look at it from the perspective of asking how do we take this old space and change it to be this, it’s building new spaces. I sat with the Leader of the Council and he walked us through the plan they were working on and the funding they were bringing in and it’s great planning and great programming, because they’re not just focused on wanting to make this a great place to live, they’re also focused on making it affordable and making sure they have enough homes.

Because another strategic advantage of why you’d want to have a company based in Swansea is the cost of living is lower, which means the salaries are lower, which means the efficiency of your people in terms of the amount of revenue you get out of them per pound you pay them is great. Take London, start-ups don’t come to London because it’s going to be an efficient use of capital, they come because people want to live here, because it’s where the talent is. So, if you make an alternative place that’s got that, what’s going to happen is you’re going to attract the bigger companies, so all of a sudden, Google is going to have an office in Swansea, all of a sudden Microsoft is going to have development teams there.

SWBR: If you were starting out again now as a young entrepreneur, what would you do?

PP: For anyone who’s interested in going down the route of starting their own company, owning their own company, they may not have that idea yet, or they may have the idea, but they need to test a lot about it, the only thing that I’d want to do is either go work for a big company like a Google or a Microsoft, (and I keep throwing in Microsoft, because everyone says ‘go work for Facebook’, but Microsoft is going through a renaissance right now that’s very exciting, so I throw them in the mix too). I say go work for them and make sure you’re part of a team where you can learn.

In other words, don’t be just a salesperson or a software salesperson, go in there and get into projects that are of interest to you, or get in there and make sure you have the ability to find projects that you can jump on the teams for, because you’re going to get incredible experience and knowledge and also networks that will help you once you launch that company.

The other thing that I would do, if I had that idea, and I had an idea of how to actually implement it, I would go and start it. But I would only go and start it if I had a clear path to surrounding myself with the right people. I created Eureka because it was something I wished I’d had when I was an entrepreneur.

This is the thing about entrepreneurs – they’re ever the optimists, right? Because they’re about to take a leap. I’ve heard it described as an entrepreneur is someone who has all the parts for building a plane, jumps off a cliff and has to build a plane as they’re falling down and take off before they hit the ground. The reason why you want to have accelerators and what people refer to as smart money (which I don’t really like because we’re not smarter), but people who have done it before, experienced capital we’ll call it, is that at least it improves your chances of success, and that’s what you want.

 

 

 

Note to Editor

Professor Polydor has built successful companies in ecommerce and web services, and has spent the last several years working in venture capital as Vice President of SAIL Capital Partners and most recently as CEO and Co-Founder of ERGO Capital. In 2014, he founded the Eureka Building, a three-acre start up and tech community based in Irvine, California, designed to foster innovation and entrepreneurs. The site is home to 30 companies ranging from start-ups to large public companies.

He sits on the Board of Directors of ecoPHYSI and SugarsGone. He also sits on the Board of Governors of Occidental College, is a Charter Member of the C100, and a member of the OCTANe Leadership Council.

Professor Polydor was an Edmonson Fellow at the University of Southern California and earned his BA from Occidental College and his MBA from University of Oxford Saïd Business School.

The title of ‘Professor of Practice’ is bestowed upon an individual to honour and recognise that person for having attained academic and/or professional distinction in those disciplines which are aligned with the strategic intentions of the university.

 

Further Information

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