What you are about to read is a true story, unfolding in real time. I have obscured some specifics to preserve anonymity and confidentiality. The scientists and engineers involved have graciously allowed me to chronicle their story as they embark on the exciting and challenging process of exploring the commercial viability of a technological breakthrough.
The phone rings. It is Paul, a friend and colleague from my days as an experimental physicist.
"Peter," he asked, "do you remember the work I was doing measuring state properties in dynamic systems?"
I most certainly did. Paul was a gifted scientist who, over the course of his career, had conceived and carried out a number of clever and groundbreaking experiments to measure thermodynamic conditions in dynamic physical and biological systems. We had collaborated on a few projects years back, and I had enjoyed our work together very much. I was the only person Paul knew who had left a research position to start a company.
"Well," he continued, "it looks like it works--a lot better than I had expected at first. I think there are some pretty significant industrial applications for this thing, and I am thinking about starting a company."
A significant improvement in manufacturing processes
Over lunch the next week, Paul provided more details. The device and process he had developed over the previous 7 years solved an important problem with measuring conditions inside dynamic systems. Measurements of relative conditions can be straightforward. But measuring absolute conditions usually required a host of assumptions about the physical state of the system. Paul had devised a way of eliminating all the assumptions and deriving an accurate and precise measurement, and doing it quickly. This could significantly improve a wide range of manufacturing processes, in which exact conditions are hard to measure.
At first, Paul had not appreciated the commercial possibilities of his work. He had disclosed his invention to his institution, which had filed for a patent. Paul had published an early version of his invention and presented his device and technique, and their spectacular results, at several scientific conferences. The system really worked, and a number of Paul's colleagues recognized that he had made a big breakthrough. But only later did Paul begin thinking about several important enhancements that would make it applicable to industrial process control.
Paul did not initially consider the idea of building a company around his invention. In his mid-50s, retired from his research position, Paul was enjoying a great life with his wife and family. He was not eager to embark on 120-hour weeks, financial uncertainty, and the host of challenges that commonly beset entrepreneurs at the beginning of their ventures.
When he first started considering commercialization, Paul had hoped to interest a company that made process control monitoring equipment. He contacted several over a few years, but all either failed to respond or failed to follow up. Paul began to realize that even though his invention was an extraordinary breakthrough, it could be ignored by the existing players in the industry. Great ideas, he realized, don't always sell themselves.
Paul was concerned that starting a company would be a huge sink of time and energy, but he couldn't get the idea out of his head. It wasn't the dream of riches that obsessed him. It was, rather, the desire to shepherd his idea through to the point at which it would yield more than just a few journal articles. He knew his invention would not have the impact it could have unless he led its introduction into the commercial market.
Paul began to do some market research in the field of process measurement and control. The field itself was huge, with applications across the spectrum of manufacturing. Paul knew that in order to get financial support to build a business based on his invention, he would have to identify a subset of problems and applications for which his invention made a profound difference. He needed to focus his idea on a particular opportunity.
Paul took a short course on instrument applications, sponsored by one of the leading equipment manufacturers in the industry. Most of the attendees were there to learn how the systems worked and how to apply them to process-control problems. Paul was there for a different reason: to learn about the industry itself. Where are these tools applied? Where does existing technology work well? Most importantly, where does existing technology fail to meet the needs of industry?
Recognition of the value
Every entrepreneurial experience, it seems, involves a few apparently chance events. After the short course, a representative of the company that sponsored the course contacted Paul, hoping to sell him a set of instruments. Paul wasn't interested of course, but he explained his invention. The industry rep saw the value in Paul's invention right away. He urged him to consider starting a company to build a line of tools based on the invention. He even offered to join the company as a co-founder.
Paul was thrilled with the validation--but he was also concerned about embarking on such a venture with no private-sector experience.
Over lunch, Paul and I discussed his next steps. On the technology side, Paul had conceived several enhancements that would build on the patent his institution had filed. He also planned to contact several companies in various industries to find out how important his solution could be to their measurement problems. Another engineer--a colleague who helped Paul with the electronics side of his technology--was interested in working on a prototype. Whether he intended to or not, Paul had assembled the core team that would be the foundation of the new business.
But how could they move forward? Questions filled Paul's head. Should he start the company now? How do you start a company, anyway? How should the equity be split among the partners? Where would they get money?
Paul looked up at me from his bento lunch and grinned sheepishly. "This isn't what I had planned on at this stage in my life!"