How can you be a successful entrepreneur? It is the question of the decade. We live with a wave of proposals designed to take advantage of the constant need for rapid innovation in different industries, and discovering factors of success or failure is a kind of new Holy Grail. Indeed, the question itself is a business opportunity, as we can see by looking at related content on Amazon or Linkedin, and as shown by the apogee of coaches and experts flourishing in the field of entrepreneurship.
When I was persuaded to write this article, I thought that I could identify some ideas that could be used as guidance, drawn from the experiences of the eleven technology-based companies (TBC) that we have created at the Center for Sensors, Instruments and Systems Development (CD6), a centre for innovation in optical engineering and photonics at the UPC. The article also serves to highlight the role of universities in Spain as key stakeholders in technology transfer, a function that is not always easy to assimilate within and outside the institutions.
It is not easy to extract common ideas and summarise them in an article, because the common part gets diluted in the execution in each case. However, I think I can identify at least four key factors. Due to the nature of the CD6, the following points refer to technology-based companies that develop physical equipment; those that develop software differ considerably in many aspects.
The first point is that, fortunately, the knowledge that there is a certain theoretical basis for tackling this kind of project has become widespread among entrepreneurs. Many basic concepts are well-known and enable a much less suicidal approach than that taken around 15 years ago. The legal framework is clearer, the stakeholders know what they are talking about and the concepts are fairly common to all projects, although they should be adapted to each one. There are some wonderful books on this, notably, in my opinion, ‘Technology Ventures’, by Thomas H. Byers and other authors. So if entrepreneurs want to put their savings on the line, it is a good idea to read a bit first.
Secondly, the entrepreneurial team is key. A team with clear personal objectives regarding the company; complementary technical, commercial and management skills; and full-time dedication are all bonuses. Here I would add that there is a clear advantage in all members of the team having already worked in a technology-based company or experienced one close hand. If you are planning to create a TBC, working in one first and learning from others seems like an intelligent option. Then, you should build a balanced team of professional, reliable people who are committed to the company.
Assesssment of the business opportunity and how to protect it is another key. It is essential to evaluate whether you can do something that is both profitable and difficult to copy, due to control over some vulnerable point in the industry’s value chain, the existence of intellectual property rights for the technology, or specific know–how that is difficult to replicate. The business opportunity should resolve a problem of a real user who is willing to pay for the solution. There are several ways to assess the opportunity, many have nice names in English, but in many cases they boil down to “the earlier you ask the potential client, the better”.
Another important point to consider is that you have to pay for the party. The aim is to have enough resources to get by until enough repeat sales are obtained to break even. The balance between financial resources and commitments is critical and one of the main problems that awaits entrepreneurs; it often takes them by surprise. It is important to identify all the available channels of support (shareholder’s loans, own capital and presales) to adapt the project to funding needs. The idea is to obtain enough money for the general project to be profitable, no more and, of course, no less. This is where most technology-based companies fail. It almost always takes longer to sell than expected during the planning phase.
Despite so much advice, the main certainty is that there is no certainty in the world of technology-based companies. Physics cannot predict, more than statistically, where a leaf will fall from a tree, even though all the laws that are involved are known individually. Likewise, when we talk about TBCs, we may know the general laws, but each case is different (in terms of the market, internationalisation, the sales channel, the team, and other factors). We can only obey the general laws, quantify the likelihood of being successful, and let the leaf fall within the expected circle. We should enjoy the leaf dropping and all the adrenaline this involves, and learn as much as possible to better overcome the next hurdle.
Dr. SANTIAGO ROYO, DIRECTOR OF THE CENTER FOR SENSORS, INSTRUMENTS AND SYSTEMS DEVELOPMENT (CD6 UPC)