Here we find ourselves at the beginning of a new year, and I can’t resist looking ahead.
As I observed in last month’s column, I’m an advocate for cyber security fundamentals. And, like any “fundamentalist,” I would like to assert that these security fundamentals won’t change. As for the Internet of Things as a whole, however, I believe that we are on the cusp of tremendous change. In the next year, I predict that many of the assumptions that have guided us in areas like networking, application development, data analysis and – yes – security will undergo major, and necessary, change. But to what? And from whom? That’s what I’d like to explore.
This past December, I attended the inaugural weekend of CyberCamp, a three-day event in Madrid hosted by INCIBE and the Spanish government. In addition to having the honor of being one of the keynote speakers, I had the opportunity to speak with a number of stakeholders in the Spanish technology business world — from hackers, to entrepreneurs, to venture capitalists. I came away with the sense that Spain has all of the right ingredients to be an IoT innovation leader. Spain, more than many other countries, felt the pain of the global economic recession.A mere two years ago this month, the financial news about Spain was full of headlines related to a sharp drop in gross domestic product (GDP), austerity measures, and more bad news on the horizon.
Many workers who thought they had a career for life found themselves out of work. With such uncertainty, individuals took their futures into their own hands, and Spain saw a rise in entrepreneurship, but not necessarily from whom you would think. According to Verónica Trapa Díaz-Obregón, Managing Director at Swanlaab Venture Factory, there were two main demographics: Young, recently-graduated engineers facing a high unemployment rate, and middle-aged professionals who found themselves unemployed.
This combination of fresh engineering skills and experienced business professionals in the entrepreneurial ranks worked well. Swanlaab sees better quality and stronger technology in projects today compared to those they saw before the economic downturn, according to Juan Revuelta Colomo, Investment Director at Swanlaab.
The Spanish government is also playing an important role with economic programs for technology startups, including a recent emphasis on cybersecurity-related startups. ENISA (not to be confused with the European Union’s cyber security agency) and CDTI are public businesses under Spain’s Ministry of Industry, Energy, and Tourism that are focused on investing in Spanish small- and medium-sized businesses and technology research and development.
According to ENISA’s web site, the organization was responsible for €90M in investments in 2011. The efforts of these two organizations and private equity investments, like those from Swanlaab, are evidence that there is a growing market in Spain (and that the Spanish government “gets it.”)
To be sure, there are regulatory barriers for companies to overcome for the growing entrepreneur space to flourish. Iker Hernandez is a US-based entrepreneur from Spain, who is co-founder and Chief Operations Officer of Enigmedia, a privacy solution start-up. He and I recently discussed some of the challenges that entrepreneurs in Spain face. While frustrations with bureaucracy and overlapping and conflicting government regulations are a universal challenge, it was interesting to learn that one of the challenges Mr. Hernandez faced during the initial phases of Enigmedia was getting local acceptance for pure technology developed in-country.
Mr. Hernandez observed, ironically, that it often takes a U.S. company’s acceptance of Spanish technology (such as through an acquisition) to provide validation at home. The result has been a trend in which Spanish entrepreneurs create their businesses in the U.S. with research and development back home in Spain. However, that may very well change with the fertile ground for innovation that the IoT offers.
When I asked them what advice they give to new entrepreneurs in Spain, Ms. Trapa, Mr. Hernandez, and Mr. Revuelta were unanimous in recommending that entrepreneurs stay in Spain, despite the legal complications in creating a business there or skepticism about home-grown technology. Their reason: personal networks.
While the promise of Silicon Valley still beckons, the smart money is on founding a business where relationships are strong and a solid base can be established before expanding. With the types of investment available from the Spanish government through ENISA and CDTI, along with private equity, there is a strong case for staying put and leveraging an entrepreneur’s local network.
What is the technical environment like for tomorrow’s IoT entrepreneurs in Spain? Judging by what I saw at CyberCamp, which drew approximately 5,000 attendees over three days in December, I think the environment is a healthy one. Activities there included virtual reality demos, maker activities, career counseling, a hackathon, war gaming, exhibits, and more.
I believe the kind of dynamic technology scene that I witnessed in Spain will become common in other countries, as well, as the IoT helps to democratize technology creation and innovation. Rather than one Silicon Valley, there will be many “Silicon Valleys” as we see a shift in focus away from today’s tech centers to a more distributed geographic model that mirrors the distributed nature of the IoT, itself.
As has happened in Spain, work will begin to go where the talent is, rather than the talent going to where the work is. The ease of product design, development, and prototyping brought about by open-source technology, the hacker and maker movements, will facilitate this shift.
But, as Spain shows, it takes much more than someone with a good idea to get from concept to thriving startup. It takes an ecosystem with the proper support from government, business climate, and a deep, broad talent pool. Those regions of the world that can foster and coalesce these factors, as Spain is doing, will be at the forefront of IoT development over the coming years.