Oct. 21, 2004 – Serial entrepreneurs, they’re called. The phrase refers to those who by choice or force leave one venture to start or lead another. Then another. And maybe a few more. It isn’t always pretty, but neither is the business world.
Here, a few of small tech’s survivors provide answers to questions posed by Small Times’ Karoub on the happiness and hazards of their chosen career paths.
How do you determine whether lessons from past work experiences are valuable?
BRYZEK: From my perspective, previous experience gives me two key advantages.
Higher probability of success: My first startups were technology driven, while the last ones were market driven.
Increased speed of bringing the new technology to market: At LV Sensors, I plan to have design validation samples of complex, single-chip, very large-scale MEMS integrated wireless devices in six months from company funding, and volume production validation devices fabricated on automotive qualified production line in just 15 months. This speed is not achievable by first-time entrepreneurs.
Over the last year I reviewed about 40 startup business plans by mainly first-time entrepreneurs (performing a due diligence for Silicon Valley top-tier venture capital firms) and the average time to build design validation prototypes ranged from two to six years with very vague plans for production.
JANAC: A new startup company is like a new marriage. Experience is helpful but each new startup has different dynamics. As an entrepreneur, you have to make so many decisions every day that while mostly right, will necessarily include some mistakes.
Experience allows you to predict what will happen and not have to go through the experience of quickly correcting mistakes. It comes down to pattern matching: Does the current situational pattern fit into the current situation so that a better decision is made this time? I pay particular attention to experiences in building and pruning leadership teams, technology development risk and customer deal-making and post-sale satisfaction.
PAK: As an entrepreneur and manager, my key assignments are to close funding, build business relationships with major global enterprises, build a world-class technical and management team, and of course, all aspects of corporate governance.
The key lessons I have learned from my past are to plan and implement aggressive product development, business development and funding strategies, and to create and monitor detailed implementation plans, while monitoring the human energies of my team. That is, product development, business development and funding are all processes that can be planned and managed to a successful conclusion.
However, there is a fine line between getting the most out of myself and my team without exhausting either.
SCHMERGEL: There’s always a danger of applying the wrong lessons from past experience to the current situation, which may be different in important ways. So you have to be able to isolate the key environmental factors that made that past decision a success or failure and figure out if they really apply this time or not.
Otherwise, the same decision that was brilliant last time around might lead you into a crisis this time.
Is there one mistake that has changed the way you make decisions now?
BRYZEK: Three mistakes changed my decision-making process: selection of the startup partners, not filtering customer dreams and underestimating the difficulty of MEMS-based product manufacturing.
JANAC: In one the four entrepreneurial companies I have helped build in my career, I went in as a hired CEO instead of building the company from scratch. The company already had a culture and a problematic strategy. I changed the strategy almost immediately but failed to change the personnel quickly enough to change the culture to match a more business-oriented direction.
You just have to have a team that fits with the CEO and the strategic direction of the company. It was a painful lesson for everyone involved.
PAK: Every successful entrepreneur makes mistakes. We missed the opportunity for a very large-scale payout from a previous enterprise because we had not set our exit goals ahead of time. With Nanostellar, we discuss our goals at the board level every month and we are planning possible liquidity and exit strategies even though we are in the first year of operations.
SCHMERGEL: There isn’t one specific mistake — rather, it’s necessary to learn from every past mistake, major and minor, collectively, to improve current decisions. There are always a hundred paths that lead the wrong way for every one or two that go the right way. That means the hardest part is not as much avoiding the wrong paths but correctly identifying the right one.
Have you found anything unusual or unique about developing small tech?
BRYZEK: To develop a MEMS or nano chip, the team needs to be fluent in multiple disciplines. Most of the MEMS designers come from the electrical engineering field and have no depth in other fields. This dramatically delays the path to commercialization.
To make MEMS-based commercial products, there are a few other stumbling blocks not supported by the existing infrastructure: device packaging, testing and assembly. Each of these tasks requires a significant effort and money, and most of the startups don’t have resources and skills to address these issues correctly.
During the “optical bubble,” about $1 billion was invested by VC firms into MEMS-based startups, and probably another billion or so by the infrastructure vendors. This helps tremendously in the areas of production packaging, testing and assembly, but only in selected MEMS areas. Most of the micro and nano startups will still have to focus internally on these areas.
JANAC: There are a number of differences. Nanotech companies have to do science as well as engineering and manufacturing. Managing the science adds complexity and risk to the whole process of creating a nanotech company. There are management issues in balancing a science culture focused on research, engineering culture focused on creating products and manufacturing culture focused on delivering those products in volume.
Another issue is that the development timeframes are longer then traditional investors feel comfortable with, forcing more complex financial strategies. A nanotech company would have a mix of venture, industrial partnership and government funding, which would be uncommon in a traditional startup. As a result, nanotech companies require more experienced management than other types of startups rather than less.
PAK: Yes, successful small tech today requires a large number of Ph.D.s to work as a team to achieve business goals. It is definitely a challenge to manage our four technical teams — modeling, synthesis, characterization, and test — to work a structured development process to meet business goals against a fixed time schedule.
I am fortunate to have a chief technology officer who is capable of this management task. This allows me to focus on business development, funding and corporate governance.
SCHMERGEL: Developing nanotech is unique in many ways. It requires a very multidisciplinary team: We have 25 people with very little duplication of skills, including chemists, physicists, chemical engineers, materials scientists, semiconductor industry veterans of many kinds. It requires substantial creativity, since it involves doing things no one has done before. You can’t copy or imitate; you really have to innovate.
So that makes it high-risk, but also high-reward, because in exploring new realms at the nanoscale, you can discover many brand new ways to add value.
How would you rate your appetite for risk and how does that influence the career choices you’ve made?
BRYZEK: I have a very high tolerance for risk. In comparison to the escape with my family from communist Poland in 1979, the startup risk pales. Furthermore, I escaped to be free, which for me also meant having no boss.
I would say that these factors very strongly affected my career choices. They enabled me not to fear the uncertainty of startups, but enjoy it.
JANAC: I personally have a high tolerance for risk. When I was 11 years old, my family came to the United States from what is now the Czech Republic with about $300 in our pockets. Switching countries was a risk that worked out great for the young generation, which had its roots firmly planted in the U.S. culture and education system, while being fully aware of the alternatives.
For me, there is nothing better then taking a risk and having it work out. It has led me into three different fields: electronic design automation, semiconductor capital equipment and nanotechnology. At the same time, any fool can take a risk.
The trick is making the risk produce a great result, so one of the key skills of an entrepreneur is risk management. Am I taking the right level of risk? Too little and I will be passed by larger, stronger competitors; too much risk and the objective will not be reached.
PAK: Actually I feel I am in a similar situation to our VCs. I accept a relatively high degree of risk in order to be able to build a world-class and world-scale business.
However, my entrepreneurial/ executive focus is constantly on risk reduction, developing our knowledge base, developing a rational business model and strategies and plans, and implementing our plans at the least cost and in the least time possible and without exhausting myself and my team.
SCHMERGEL: I must have a pretty healthy appetite for risk, otherwise I would have made just about all of my career choices differently. Certainly getting into nanotechnology almost four years ago was not an obvious move. That was well before nanotech had become a buzzword.
Is there a job you could imagine doing for the rest of your life?
BRYZEK: Advising the new startup companies how to start a new business with increased probability of success. I did this last year for about 40 companies and enjoyed it tremendously.
JANAC: I have the greatest admiration for people who can take an idea from startup or early stage and grow it into a large public company over 10 years or more. CEOs I have worked for, such as Joe Costello of Cadence Design Systems and Bob Therrien of Brooks Automation, have done exactly this. However, there are a number of factors working against such a career.
First of all, it is rare to create a lasting public company from scratch. Second, companies change dramatically as they evolve through their various development stages, requiring major changes in skills and even personality of their management teams. At the beginning you are an individual contributor, in the middle you are a decision maker and in later stages you are a resource manager.
These are different skills that explain why so many large company managers fail as startup CEOs and why entrepreneurs have trouble working for large companies. If I could create a company that would be at the forefront of a historical market trend, have a team I love to work with and a set of visionary customers, I would not mind staying with it as long as the company does not outlive my ability to contribute.
PAK: I can imagine growing new emerging technology businesses as an entrepreneur and CEO for the next five to 15 years, and beyond that working as a VC and mentor to entrepreneurs.
Right now, we are at the early adopter phase in the nanotechnology adoption life cycle. As we move into the mature phase and I have a couple of successful nanotechnology companies to my credit, I imagine I will be ready to move more into a funding and advisory role.
SCHMERGEL: I certainly do plan to be an entrepreneur for the rest of my life. That’s the one job I can imagine doing. It must be genetic, since in my family we’ve been entrepreneurs for many generations now!