CEO Warrick Cramer breaks down the effectiveness of his center’s innovative model.
(Featured Image: Warrick Cramer during Tomorrow Street’s grand opening / Image Credit © Anna Katina)
Why is Tomorrow Street unique?
A lot of the incubators and accelerators, they compete against each other. The main thing is collaboration. So we’re working with a lot of venture capitalists, incubators and accelerators around the world.
We’ve come in and we are at the next phase, which doesn’t exist, because up to series A funding there’s tons of support, but past series A that all drops away and this what Tomorrow Street’s unique value proposition is all about. We take these companies at that point where they might be working well within their own countries and they might be very good in their local markets, but they just don’t know how to go to the next step to go international. It’s really difficult, so this is where we try to help them.
We designed this model based on my own experiences, because when I had one of my own companies and I had to go international it was really difficult. So I thought, wow I’m sitting on a fantastic machine here within Vodafone. Why don’t we use these skills we’ve got within our business and really help these companies to go to the next level.
What is Tomorrow Street’s specialty?
Innovation is one of those bubbles that once you get into you can get lost very very quickly. What happens in a lot of programs is you actually don’t deliver anything. Because you have a team of people that are so enthusiastic…there’s such a buzz, such an energy that you walk out of there wanting to change the world immediately.
We have to stay focused. Eighty percent of our time will be on IoT, Security and AI, and they’re pretty broad categories. For the other 20 percent, I told my team to go and have some fun. To be innovating you still have to have a level of freedom. You can’t be very rigid, and that’s where a lot of corporate programs fail. They put in so many boundaries that the team can’t move. We didn’t want to make that mistake.
Why did you choose those three categories to focus on?
With the internet of things, everybody’s doing it. It’s all around us. Companies are popping up everywhere, but nobody really knows how to commercialize it. Then how do we actually take it to the next stage. I think there are a lot of opportunities there for us.
Security is another big one. As things get connected and as information flows how are we going to secure everything… once again, a very big topic and something we can never ever take our eye off of.
In artificial intelligence, and under that comes big data and all the different streams, there is also very huge growth. It’s early and no one has really got it right. How do we actually contain it?
How will you know if you’re successful?
The center is designed to host startups for a maximum of three years. Ideally, and ambitiously, if my team has not helped them grow within a year and a half we’ve done something wrong, or it’s a very complex problem. Three years is the maximum, but I thinking generally speaking after around a year and a half we would be pushing these companies out into the ecosystem and growing them.
Would you have done this even without government involvement?
Vodafone could have done it without the government, but I think it’s really important to have the government involved. When you think about it, by us coming together we are completing an entire ecosystem. No other country in the world has done that. I’ve spent a lot of time in Silicon Valley speaking to the biggest VCs in the world. They love Tomorrow Street because it’s something no one else can offer.
As we create new competences here, there’s a flow-on effect with education as well. We’re speaking with universities and explaining the sort of skills we need to be training here in Luxembourg so that we have a pool of resources for the future. We’re aligning all these different partners.
What is Tomorrow Street’s revenue model?
We’re not charging any of these companies money to be here. Our model is simple. If they succeed, we succeed and we get paid. If they don’t succeed, we don’t get paid. So my team’s motivation is to make sure that the companies come in, that we select very carefully and we help them to grow. We don’t have any equity in the companies. It’s basically a revenue share model, which is we think really fair. It’s an innovative part of Tomorrow Street.
Most VCs and programs take 40, 50, 60 percent of their companies. We didn’t really want that to happen because we have a social responsibility to do the right thing here in the community. By us helping them, we help our company grow. It’s great for Vodafone’s business, and from a Luxembourg point of view we’re creating new jobs.