Startups scoop expertise from struggling telecom giants

Some of the best brains are defecting to startups. ABB

The economic downturn is forcing many of the world's once high flying telecommunications and networking equipment makers to cut costs by laying off staff, making it easier for Swiss startups to snap up qualified staff, which has a positive impact on the innovation economy here.

Nimble and growing Swiss startups are snapping experienced managers and workers who have been let go from the telecommunications’ industry giants or who simply have realised that startups are no less secure than telecommunications industry giants.

Avalon Photonics Ltd., a fledgling opto-electronic components maker, has just announced it has recruited the former Sales and Marketing Director of Nortel Networks Switzerland, Dr Heinz Meier to its Board of Directors.

He is not the only jewel in this two-year old company’s crown. Last autumn the company hired Dr Uwe Thiemann, the former technical manager at ABB Semiconductors to take over its production line.

Avalon is able to hire some highly skilled people from leading optics manufacturers in the region who have hit a speed bump, according to Torsten Krumm, an investment manager at Intel Capital, told this reporter at a recent event.

The benefit of hiring people like Dr Meier or Dr Thiemann is that they not only bring their technical knowledge, they bring a network of colleagues, customers, business contacts and partners built up over many years in the industry.

Shedding personnel

Established companies like ABB and Nortel are not the only ones shedding personnel. diAx, a young, Swiss, alternative telecommunications operator, was merged out of existence a few months ago as the European mobile phone industry consolidated shortly after major telecommunications operators across the continent and in the UK agreed to pay fantastically steep licence fees for next generation mobile network licences.

It turned out to be good news for a fast growing Web content management firm, Basel’s Obtree Technologies, which was able to hire diAx’s former CEO, Frank Boller, a seasoned executive who was HP Switzerland director previous to his stint at diAx.

Callino, an alternative voice and data operator, owned by a large, but also fairly young and highly leveraged international telecommunications firm, went into liquidation last year. Its manager of operations, Mathias Koch, was able to move immediately into a new position at two-year old Monzoon Networks, a company that builds and manages high-speed wireless LANs to access the Internet in public places.

“The market was very tight for specialists, and still is for some types, but as more established players struggle and shed employees, it enables young companies to have an easier time finding qualified staff,” says Marc Rudolf of Zurich Network, an economic development agency.

Mergers

A similar shift occurred in the pharmaceutical industry in Switzerland in the latter part of the 20th century. It began during the last two recessions in the 1970s and 80s and is expedited every few years whenever industry giants decide to merge or acquire each other, such as when Ciba Geigy and Sandoz merged into Novartis.

Several rounds of redundancies and layoffs, combined with spinoffs of non-core activities drove a new sense of risk-friendliness. Entrepreneurialism was fostered in the region by the industry and government to encourage laid off scientists or researchers with ideas for products outside the core markets to form startups.

Still others joined smaller, growing companies, keeping the know-how in the region and benefiting the emerging med-tech or bio-tech firms.

The result is that Switzerland has a number of small but thriving medical technology, pharma, and biotech clusters. Companies in the medical device sector, for example, employ over 30,000 people.

Many small and medium-sized firms are thriving, exporting some $2 billion worth of specialised high-tech and high value-added products and services each year and spending close to $400 million annually for R&D, according to Location: Switzerland’s latest report entitled, Medical Product Manufacturing Industry In Switzerland: Switzerland is the Gateway to the European Markets.

Valerie Thompson