Hermann Hauser, cofounder of chip design company and one of European tech’s biggest success stories Arm Holdings, says that he’s the reason Apple is still standing.
That’s because in the early 90s, Apple’s CEO at the time John Sculley joined up with Hauser to develop the Arm processor — a computer chip design which today powers electronic devices all over the world — and create a company of the same name, investing $1.5m to purchase 43% of the new business.
Apple sold those shares over time, making $800m in the process. In a 2015 interview with PC Mag, Sculley said this is what “kept the doors open at Apple” before Steve Jobs returned.
“We’re responsible for the survival of Apple,” Hauser tells Sifted.
Arm’s market cap is now $136bn. The company listed on NASDAQ last year but is HQ-ed in the UK; it’s the biggest tech company in the country and one of the largest in Europe, ranking behind Dutch semiconductor company ASML ($328bn) and German software provider SAP ($241bn).
Hauser isn’t part of Arm anymore; 25 years ago, he founded Amadeus Capital Partners, A VC firm that focuses on European deeptech startups. And, although Europe has come a long way since he started investing, he says, there is still some work to do to enable more billion-dollar companies like Arm to grow — and stay — in the region.
The biggest obstacles? Money and culture, according to Hauser: “It’s a combination of needing to gather hundreds of millions of dollars in a single round to turn a promising tech company into a global winner — and then of finding management talent.”
Finding management talent
The funding gap for startups in Europe, particularly at growth stage, is well-documented. According to data recently released by the European Investment Bank (EIB), the average total amount raised by a 10-year-old scaleup headquartered in Europe is under $300m — compared to nearly $500m for the same company profile, but headquartered in San Francisco.
But funding isn’t the only challenge. According to Hauser, it’s also about finding the right talent to manage the company’s growth.
“In Silicon Valley, you can go to someone who runs a $500m-$1bn division of Apple, HP, Google or Facebook and say: ‘Would you like to run this company we’ve started?’” he says.
“[In Europe], there is no culture of experienced managers at billion-dollar businesses joining startups or scaleups,” says Hauser.
That’s partly because there are no Big Tech companies in Europe; the region’s largest businesses include more traditional players like retailers LVMH and Hermès, or healthcare giant Novo Nordisk.
Hauser says that senior employees at these companies are less likely to consider jumping ship to join the startup world.
“If you look at the really successful businesses in Europe, the car or drug companies, there is not the entrepreneurial spirit that you’d find at Google, Facebook or Apple, where a really senior manager would consider joining a startup,” he says.
European exits
For Hauser, fostering a culture of innovation will come as a side effect of keeping European tech companies in the region — all the way to IPO.
“If you have large European tech companies, you also create the management talent within these companies, which you can then use to grow other startups,” he says.
This means convincing promising European tech companies to list on stock exchanges in the region.
Despite strong lobbying from the UK government to encourage Arm to IPO on the London Stock Exchange, the company listed on NASDAQ in the US last year. At a $55bn price tag, this should not have been a surprise, says Hauser.
“Neither the London Stock Exchange nor Euronext are liquid enough to do a $55bn offering,” he says. “There was no alternative to NASDAQ.”
“But Arm was an outlier. A typical tech company in Europe would go public at a few billion dollars — that’s still perfectly within the reach of European stock exchanges.”
Seeing more tech companies listed in Europe is desirable, according to Hauser, to create an ecosystem “that can afford all the different stages in the lifecycle of a company”; it is key, therefore, to improve the attractiveness of stock exchanges in the region.
But although Europe hasn’t yet started the virtuous cycle that will come once it can support startups from seed to IPO, it is not stuck either, says Hauser.
“One of our problems in Europe is that we always compare ourselves to Silicon Valley,” he says. “Of course, we always lose.”
“We’re behind, it’s true, but we’ve had a very impressive growth path compared to 10 years ago. That’s why I object to saying we are stuck.”
Hauser is even hoping that some of the most promising companies born in Europe in the past few years will be able to list one day in the region. He points to French AI company Mistral, which has been making waves since it launched one year ago.
“Once Mistral, as I hope it will, does a multi-billion-dollar exit, I hope that [European stock exchanges] will be able to make this one of the first examples of a European tech IPO,” says Hauser, “and that it sets a trend.”
Read the orginal article: https://sifted.eu/articles/hermann-hauser-arm-cofounder-interview/
