Trolling for Technologies (and a good beer)

I was inspired to write this post by Sunday’s New York Times article entitled “The Idea Incubator Goes to Campus” which discusses how academic institutions are increasingly active in supporting commercialization of early technologies, and in some cases, funding them. It was rather humbling to see the story of Brontes Technologies featured in the article.  It led me to think about how the entrepreneur should view academia.

University research as a catalyst

From my experience spinning out a technology from a lab, I’ve found that university projects are great catalysts for start-ups.  They often bring highly competent people together who share a common interest and years of research in a particular area. There are typically one or more star innovators that are eager to give their invention “wings” but have yet to find the right collaborators. That said, the distance from lab bench to commercial product is generally underestimated. A marriage between commercial folks and a couple of key academics is ideal.

One particularly satisfying ingredient that most universities bring is a college town with an inspirational watering hole. Whether it’s Shay’s in Harvard Sq, the Muddy near MIT, the Royal Palms in Ithaca, don’t underestimate the value of cheap beer as entrepreneurial fuel (and good team building).

Patent Portfolios, Professors and Projects

The university spin-out often comes with some amount of IP which can be licensed from the university.  Given that the entrepreneurial path is rarely linear, the patents often end up moot in the long term. In the short term, however, they provide a perceived stake in the ground to would-be competitors and the early claim of “patent pending technology.”

Professors also play a key role in spin-outs.  Aside from being idea generators, they help provide validation to would-be investors and to the scientific community.  Instant credibility goes to the tenured faculty member vs. a student with only a bachelor’s or master’s.

One thing I’ve found extremely valuable is to leverage the “entrepreneurial free pass” that comes along with working on a university spin-out. When approaching industry experts, one of the best ways to get time with someone is to preface the conversation with “I’m working on a university project…” This is far less threatening to company execs.

Troll the university for the next big one?

My conclusion is that it’s a poor use of time to troll universities (even MIT and Harvard) blindly looking for innovations. University technologies are often solutions looking for problems to solve, and this is a hard way to start a business.

I have found most researchers accessible and great sounding boards. I now first identify interesting markets and problems and then seek out experts in academia to assess the viability of solutions. As I meet really impressive academics, I file their names in my brain as potential future hires (and drinking pals). 

Everything I needed to know about start-ups I learned in high school

First off, I want to thank Cari Sommer, founder of Urban Interns (a very cool company in NYC), for giving me the spark and title idea for this blog post.

I’ve come to realize that I learned a lot about start-ups in high school (and a few episodes of Saved By the Bell)…

Everyone wants to join the club that won’t have them

I have found this maxim to be true in so many different situations (friends, dating, sports). In fundraising, the smartest thing to say to a prospective investor is that the round is fully committed, or that you’re not sure they’re a good fit for the company (the fund is too big, not the right domain expertise, etc). As soon as an investor hears that, the email response time from VCs goes from days to seconds.

This lesson is a relatively simple one – scarcity creates desire – it’s just human nature. The technique works well when recruiting candidates (e.g. “we received a lot of resumes for this job”) or selling a new product. We’d often sell doctors on the fact that by buying our product they’d be among the first in their area to have what would become the standard of care in the future. 

Pay it forward

Given my belief about the power of serendipity, I think the idea of paying it forward is crucial in that you never know from where the next opportunity will come.  As much as possible, I try to hear out an entrepreneur with an interesting idea and given them as open and honest feedback as possible. In a sense, this should be the “entrepreneur’s code.” Since we’re all underdogs, I believe we have an unwritten obligation to help each other out. I often quip that “you get what you pay for,” implying that my advice while genuine is free and only one data point, and that I expect nothing in return. Ultimately, we all need to get paid for our efforts, but I believe in the short run one should expect no compensation for basic advice or introductions.

Deal or No Deal

The gist of this one is that most of business, and life’s decisions come down to knowing when to take a deal offered (I learned this when I failed to trade my Jose Canseco rookie card). At my first venture, Handshake.com, we mis-played the “Deal or No Deal” game. We raised over $20M and had a $100M post, yet we had overcapitalized the business and should have opted to sell at a much lower price. Additionally, we should have taken less money and kept the valuation within reason to make more modest exits viable. Instead, we were caught up with the heady times and got overly greedy. At Brontes, we were much more careful and did our best to maximize our fundraising and exit, even if there was some potential of an even better outcome. You really do need to know when to hold them …

It’s fascinating to me how life’s (and TV’s) most basic lessons apply so well to building businesses.

“That Dental Guy”

(Early days at Brontes … me as Patient 0 in $10 Target Dental/Beach chair being scanned by VP Engineering Ed Tekeian and why I’ll forever be “That Dental Guy”)

Whether CEO or recent college grad, at a big company or small, it’s easy to get typecast based on your previous experiences. It’s human nature to put things into buckets because it helps us simplify complex situations. This is why VCs (and sometimes entrepreneurs) pitch things as “kind of like Twitter, but for taxidermists!” (As an aside, I noticed a similar phenomenon when I worked in Hollywood … movies were often pitched by making the most ridiculous analogies … such as Titanic meets Ishtar. More on the parallels between Hollywood and VC/start-up world in a future post.)

This can be problematic if you, like me, have spent a good number of years in a particular industry that’s considered “nichey” and you want to pivot professionally. I may forever be known as “that dental guy” for starting a dental product company despite having started a web company, worked in Hollywood and online education. I think investors often underestimate the parallels between businesses and how building a certain type of business in one industry can often be transferred to another industry. Perhaps this is because entrepreneurs overestimate how easy this is to do.

I’ve found that the best defense to being typecast is to put themes together about your own experience and couple them with distinct theses on industries, technologies, etc. I’ve seen entrepreneurs who have literally bounced from tech to pharma to getting fired who tell their entrepreneurial tale with a theme that makes every chapter seem like part of a divine plan, even the lay-off! For me, one theme I talk about is how I like to find markets for raw technologies and productize them for use by less sophisticated small businesses and individuals.

The other reason it’s important to have themes ready at the go is that it’s a much better thing to say at cocktail parties then “I’m looking” or “I’m between projects.” Perception is important and there’s a big difference between sitting on the beach and being actively engaged in the start-up germination process. If someone asks me what I do, I’ll often talk about an idea I’m working on or a company I’m helping out.  It’s important to stay in the entrepreneurial “flow” and to do so you have to stay current by always having some interesting company or idea to talk about.

It’s amazing how quickly (and perhaps unfairly) one can become stale in the VC/start-up ecosystem. However, if one can go from Austrian bodybuilder to Terminator to Kindergarden Cop to Governor of the eight largest economy in the world, I can certainly be more than that dental guy!