"We wouldn't let the internet slip through our fingers today"

An interview with Doris Leuthard

Former Federal Councillor Doris Leuthard is a new member of the >>venture>> foundation board. A conversation about what makes a successful entrepreneur, Switzerland’s shortcomings as a startup nation, >>venture>>’s achievements, and the challenges it faces looking forwards.

Former Federal Councilor and >>venture>> Advisory Board member, Doris Leuthard

Ms. Leuthard, you have met countless entrepreneurs in the course of your career. What character traits offer the key to success?

Unwavering dedication to your service or product. You have to be its biggest fan and be utterly committed to getting it out to people. It’s also critical to think three steps ahead: What’s going on with the competition? How’s your own pipeline looking?

Where do you need to invest? And increasingly, you need to have empathic skills, because with low unemployment it’s important to have something to offer young people. I have seen plenty of executives fail because they are too arrogant to take care of their employees. You just can’t get away with that today.

Is entrepreneurship the ultimate business discipline?

Absolutely! Startups are a good indicator of how dynamic an economy is, and the extent to which citizens can put ideas into action.

And they create jobs.

Yes, although Switzerland is an expensive place to do business and the majority of jobs are often created elsewhere. Particularly in industry. It’s different with tech startups.

They are actually able to keep jobs here and ensure graduates from the top universities stay in Switzerland

A record number of companies were founded last year, and there was more venture capital than ever before. Add to this the countless numbers of incubators, co-working spaces, transfer agents, startup conferences, and competitions. Is anything still missing from Switzer- land’s startup scene?

When I became a Federal Councillor in 2006, politicians and members of the business community would make regular pilgrimages to California to marvel at Silicon Valley.

We all came back saying: we need something like this in Switzerland. When I look around today, I’m incredibly proud of what we have achieved in such a short time—in our own, Swiss way. Startups get a lot more support here, we train them, we coach them, we take care of them. In Silicon Valley they come and go a lot faster.

Nothing needs improving, then?

Well yes: there’s not enough money. Capital- intensive startups quickly reach their limits and head off for Berlin, London, or New York, or are forced to sell up too soon.

It’s an absurd situation. The money is out there but it isn’t being invested in startups.

Last year in Israel around 26 billion dollars of venture capital was invested compared to just over CHF 2 billion in Switzerland. What lies behind this discrepancy?

One major difference is that in Israel, pension funds invest in young companies. This does not happen much here, although it was legalized some years back and high returns are possible. But Swiss investment managers are still very conservative, which is why policyholders need to put pressure on the foundation boards. But it’s also worth mentioning that both in the US and in Israel, a lot of the funding money comes from the military budget.

We could also invest in startups instead of buying more fighter jets.

Now I have to be careful what I say (laughs).

What other improvements does Switzerland need to make?

If a startup fails, the founders get no state support, even though they have paid unemployment insurance. The only people who get unemployment benefits are those who, in the official wording, “cannot determine or influence the loss of their job.” I have never really understood this logic.

We want startups to take risks and expect them to fail every now and then, and

then we punish them for doing so?

Is our culture of failure still under- developed compared to other countries?

Failing is certainly less acceptable in Switzerland than it is in California, but I think a certain amount of caution is a very good thing. And you have to remember that life is very expensive here, meaning you have to be able to afford to fail. But it’s also true that sometimes we are just too modest. A few of our best scale-ups really need to make a big splash on the market and do their best to conquer the world.

But perhaps we just don’t have enough of the excessive self-confidence that this requires. ON has done it, they were quick to think globally, and they really scored a coup with Federer. I hope the younger generation is less plagued by doubt than mine is!

With just 8,500 work permits per year, the quota for employees from non-EU/ EFTA countries is relatively small. Is this another problem?

Yes and no. The ironic thing is that these quotas are not even being fully used!

But there are major differences between the cantons: Zurich makes the most of the quota, but more rural cantons don’t. It would be good if the cantons could coordinate with one another.

Why are there so few women in the startup world?

On the one hand they are still underrepresented in STEM fields. Only one in three students at ETH are women, and their numbers are only growing very slowly. And the situation is even worse among engineers, mechanical engineers, physicists, and computer scientists. On the other hand, female software programmers, chemists, and physicists also want to work part-time if they have children and they want a steady income—two things that are not easy in the startup world. The upshot of all this is that the few women who do found startups often don’t have children.

What needs to change here?

We are a very conservative society. Wives staying at home and looking after the children is the deeply rooted norm. Mothers are stigmatized if they put their kids in a crèche five days a week. What we need is a shift in mindset. And although our childcare infrastructure is reasonably good, it’s incredibly expensive.

The Internet was invented in 1989 at the CERN research center in Geneva, but the big digital companies started elsewhere. Does the transfer between research and business function better today?

We lost the Internet because no one had a clue what researchers at CERN were actually doing—unlike in the US where even then industry was fostering a lively exchange with researchers. But times have changed and at ETH, for example, we invest heavily in commercializing in-house inventions We wouldn’t let an invention-of-the-century like the Internet slip through our fingers today.

[editor’s note: Doris Leuthard is on the board of trustees at the ETH Foundation].

Is the age of European startups upon us?

I was a member of the UN Panel on Digital Cooperation, where I witnessed firsthand how the Americans subordinate everything to technology and how the Chinese primarily see technology as tool for the surveillance state. Neither of these is our approach and neither of them should be our objective. So with our more moderate values and standards, Europeans have a great opportunity now. But we have to invest. There are a few interesting EU programs and efforts are being made, but more needs to happen. It’s a catastrophe for Switzerland that we are currently excluded from the Horizon Europe research program.

How can we change this?

I think we need to de-politicize the issue and focus on the common goal. European research has a strong interest in working with our top universities and in benefiting from our funding.

What’s more important for a country: the number of Nobel laureates or the number of unicorn startups?

(laughs) When it comes to scientific prestige, Nobel laureates are more important, but in economic terms, they don’t directly generate either money or jobs. So I would opt for the unicorns.

>>venture>> founder, Thomas Knecht and Doris Leuthard

You recently stated in an interview that Switzerland could not afford

fall behind in the digital race. How did you arrive at this assessment?

When you look at digitalization rankings we frequently score no better than average. The Covid app and E-ID voting show you just how anti-technology Switzerland is.

Even in the Swiss corporate world, so much is still analog, with fully digitized B2B solutions very much the exception. Of course people are allowed to have their misgivings, but it can also put the breaks on our country’s development.

What needs to change?

The federal government needs to lead by example. Once all services for citizens are digitized, people’s fears will subside. I recently went for a coffee with a Finnish colleague and paid in cash—she nearly dropped her cup in astonishment. We are behind with digital money and we are behind with online commerce. This leaves the door wide open for a foreign player, as happened with Uber, Amazon, or Airbnb back in the day. Right now I am concerned about the financial sector.

I can only hope that our banking world stays innovative and does not withdraw completely into asset management. And the pharmaceutical industry doesn’t have it easy either, because our data protection laws are blocking so much promising research.

And yet you argue that data protection laws should be stronger.

Yes. We need strict data protection laws, but in the right place. I have no problem with anonymized data being used in research. The University of Lausanne wanted to find out whether there are genetic predispositions that influence the course of a Covid infection. The topic is highly relevant but the project couldn’t be carried out for data protection reasons.

What do more contemporary data protection laws look like?

They would allow users to exercise control over their data. Today we get asked if we agree to cookies, but we give our consent without really knowing what’s happening with our data. At the Swiss Digital Initiative that I preside over, we have developed a trust label for apps where professionals check what happens to the data. The label allows users to make choices in how hey use the app, much as they would when buying organic food, for example.

Last year you joined the foundation board of >>venture>>. What motivated you to take this step?

Starting a company based on nothing more than an idea is the most grueling work imaginable. When I see young people taking on this herculean task, investing everything they have, it makes me incredibly proud. So I’m happy to contribute.

And as we discussed earlier, of course startups are essential for Switzerland as a business location.

The competition is celebrating its twenty-fifth anniversary this year. What sets it apart for you?

>>venture>> connects universities with the private sector and federal government; experienced executives sit at a table with young startup founders and ETH presidents. It’s unique in Switzerland, and it really helps young entrepreneurs.

Doris Leuthard hands over the Grand Prize to Margaux Peltier, CEO of Enerdrape.

How can >>venture>> stay relevant for the next twenty-five years?

The competition has to focus on fields that are future-oriented—the financial sector, biotech, robotics—and make sure it is present in the startup scene during the rest of the year as well. I could imagine it hosting a podcast or holding boot camps for young companies.

>>venture>> founder Thomas Knecht is stepping down this year. What is his greatest achievement?

Thomas has always been committed to Switzerland as a business location.

He is a true patriot who believes in promoting entrepreneurship. And he has done an outstanding job. His second concern is breaking up monopolistic structures in regional transport, where you need to be very persistent to get a foot in the door as a private individual. But he keeps at it, which I find very impressive.

What startup would you found today?

I had a very entrepreneurial job when I was a partner in a law firm, does that count? (laughs) These days I have lots of ideas and I like sharing them with others—that’s enough for me.

What recommendation would you give young people starting out: head straight for a young startup or earn your colors at a more established firm first?

It is helpful to learn the ropes and make contacts at a traditional company. If you go straight into a startup, someone else has to bring in that knowledge and that network of relationships. But, again, maybe these are just the things my generation worries about. A better answer would be: choose something you are really passionate about. (laughs)

INTERVIEW by Simon Brunner

Doris Leuthard was a National Councilor, Federal Councilor, and President of the Christian Democratic People’s Party/ The Centre.

After stepping down in 2018, she is now active on various boards of directors (Bell Food Group, Coop Gruppe, Stadler Rail AG, Transgourmet international) and foundations (ETH Foundation, Kofi Annan-Foundation, Swiss Digital Initiative, Ulrico Hoepli-Stiftung, >>venture>> foundation). Doris Leuthard is married and lives in Merenschwand (AG).