As a scientist or engineer, you may have daydreams about starting your own company. Better yet, you have already made plans for a technology-based enterprise. If so, you will find yourself in good company. A study conducted in 1997 found that MIT graduates alone had at the time founded 4,000 companies, which employed 1.1 million people and had generated $232 billion worth of sales. If we were to include companies founded by scientists and engineers generally and on an updated basis the numbers would be even more profound.
Having represented scores of start-up companies, I can personally attest to this prolific nature. Many of the founders of these companies began with little or no business background and then go on to become “serial entrepreneurs.” My oldest client (age-wise) – a former engineering professor – began his third start-up in his mid-70s, and I have now worked with him for over another decade. I am also in the process of helping another client with an engineering background with what is at least his fourth telecommunications start-up.
If you embark on this kind of adventure, one of the many concerns that you should address is your own aptitude for leading or working within an entrepreneurial enterprise. No matter the position, it helps to have a special mindset and personality when working in an entrepreneurial environment. In many start-ups the debate seems to emerge sooner or later and in one form or the other as to whether the founder is up to the challenge. A recent Wall Street Journal article states the problem: “Is running the company you founded and then, after five years, being fired by your investors a sign of failure? Or is it a sign that for half a decade you succeeded?” The article goes on to discuss whether venture capitalists are too quick or too slow to fire CEOs of their portfolio companies, many of whom, of course, created the enterprise. Sometimes this conflict seems to come down to the Ph.D. versus the MBA.
There are obviously numerous examples of successful scientist-led companies. But what are those critical characteristics that enabled these entrepreneurs to lead successfully? And what are those traits or failures that resulted in serious mistakes or worse?
Clearly there are a number of characteristics about a scientifically trained person that should help you to become a full-fledged entrepreneur. These characteristics include: an inquisitive and flexible mind able to learn and digest entirely new concepts in order to make critical decisions about intellectual property, finance and legal matters; mathematical abilities to enable you to develop and comprehend budgets and projections; and perhaps most importantly, a problem-solving orientation.
While scientists and engineers are by definition problem solvers, a new enterprise seeking to develop a new technology is required to carve a path of substantial uncertainty and risks. Where, I think, entrepreneurs often trip up relates to the ability to “connect the dots” when many of those dots do not yet exist, such as coming up with applications and markets for new and untested technologies. The latter is clearly much more art than science, and I think requires a mind and personality that may be more Picasso than Thomas Edison.
Just in the product development area alone the process is obviously much more complex than a laboratory experiment. For example, we represent a medical device company founded by an MIT alumnus. She has developed a revolutionary device based on truly disruptive technology. However, at this moment she is far removed from the relative safety and security of the laboratory – where parameters such as the human factor can be fixed, controlled, or even eliminated. There are budgets, deadlines, manufacturability and cost of goods issues, intellectual property concerns, personnel matters, marketing and competitive aspects to be analyzed and coordinated – just to name a few.
The good manager is able to keep his or her finger on the critical path at all times, foresee obstacles, and develop alternatives before they become problematic. Solving this particular Rubik’s Cube requires the ability to bring to bear the energies and abilities of a team of diverse personalities and skill sets and to lead the less courageous and less visionary – including sometimes your own board of directors and shareholders.
Another positive example relates to a biotechnology company that our firm represented during its start-up phase. One of the co-founders, a Ph.D. and M.D., left academia to run the company. In the beginning, we slogged together through multiple drafts of what started out as a grant proposal but became a credible business plan. The company successfully raised several rounds of investment, built an experienced board of directors and recruited a senior management team. But probably the most impressive achievement was the way in which this client managed to keep focusing on its target markets. To its great credit, the company has been decisive about changing and even terminating development efforts based on its ongoing assessment of the technology, its resources and potential markets. While this company is by no means out of the woods, the founder remains as CEO and the company has brought its initial product to market.
While the entrepreneurial challenge is great, it can be met. On at least two occasions the board and venture capital investors of a semiconductor client sought unsuccessfully to groom a possible successor to the founder and CEO (an MIT Ph.D.) over concerns about the founder’s ability to lead. Each potential successor was formerly a senior business executive at a global computer company. This company is currently listed as one of the Boston Globe’s “High Tech 50” companies and continues to thrive and prosper. Its CEO founder was recently named one of the Mass High Tech “All Stars” and his position remains quite secure.
Footnotes:As published in the Women Entrepreneurs in Science and Technology (WEST) newsletter, Issue No. 23, July 24, 2004.