Download The Entrepreneurship Path

The Entrepreneurship Path:
The Road Less Traveled
Justin Mansell, Ph.D.
VP and CTO of MZA Associates Corporation
President of Active Optical Systems, LLC
[email protected]
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Outline
• My Path to Entrepreneurship
• Beginning Your Entrepreneurship Journey
– Introduction
– Creating a Business Plan
– Beyond the Plan
• Conclusions
• Example Pitch
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My Entrepreneurship Path
(so far)
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Brief Resume
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1991-1996: Computer Consultant
1993-1996: Internships
1995-1996: Research Consulting
1996-1999: Wavefront Sciences
1996-2001: RA at Stanford University
1999-2001: Optics Consultant
2000: Stanford e-challenge
2000-2002: Founder/CTO at Intellite, Inc. (AgilOptics)
2002-present: Mansell & Associates, LLC
2002-2003: Chief Engineer at Qynergy Corporation
2003-present: VP and CTO at MZA Associates Corp
2005-present: President of Active Optical Systems, LLC
[email protected]
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1991-1996: Computer Consultant
• During my undergraduate, I worked parttime as a consultant, mostly on computer
database development.
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ATM Accounting
Medical Doctor Professional Society Database
Security System for Cleveland Museum of Art
Probate Court Case Tracking Database
• Lessons Learned:
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Project Management
Billing & Invoicing
Tracking Time
Importance of Customer Relationships
• New Biz through Customer Recommendations
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1993-1996: Internships
• NASA Glenn
– Developed the control system for the ISS Plasma
Contactor
• Sandia National Labs
– Data reduction from Tri-Axial Compression
Experiments
– Shack-Hartmann Wavefront Sensing and Micro-Optics
• Lessons Learned
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How to solve problems independently
Being part of a research team
Value of experience
Large amount of fertile ground at the intersection
between almost any two fields
– Value of Intellectual Property (IP) and how to protect it
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1995-1996: Independent Researcher
• After my SNL internship, I got back to CWRU
and found the research path outlined by my
research advisor unappealing.
• I pitched doing an independent research project
for my MS Thesis that involved
– Developing software for automation of mask pattern
generation.
– Demonstrating a technique for improving micro-optics
performance.
• Pitched this to SNL and got it funded.
• Lessons Learned
– Think creatively about education (you don’t
necessarily have to do things traditionally)
– How to write a proposal.
– How to develop a credible project plan and budget.
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1996-1999: Wavefront Sciences
• As I was leaving SNL to go to Stanford for my
Ph.D., my SNL boss was leaving to try a start-up
called Wavefront Sciences (WFSI).
• I agreed to work part-time on IR&D, software
development, and micro-optics development.
• Lessons Learned
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How to start a business (peripherally)
How to productize (peripherally)
How to manage research (remotely)
Really being part of a research team
Be creative in working deals:
• We traded a wavefront sensor we could not afford for a
CRaDA with WFSI.
– Small businesses can be a lot of fun!
[email protected]
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1996-2002: RA at Stanford
• Worked on numerous projects including
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MEMS Spectrometer
MEMS Deformable Mirrors
Wavefront Sensors
Low-Cost AO for Lasers
• Lessons Learned
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How to Write & Present
Engineering Ethics
Safety Policies and Procedures
Working Collaboratively
Managing Expectations (“Upwards”)
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2000-2002: Intellite / AgilOptics
• Founded Intellite to commercialize the MEMS
deformable mirrors we developed at Stanford.
• Pitched Intellite at a Venture Capital Symposium
• Lessons Learned
– Productization (manuals, packaging, etc.)
– Writing a business plan
• What do VCs care about
• How to sell to them
– How to roll with the unexpected
• Intellite had to change its name due to legal pressure
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2002-Present:
Mansell and Associates
• Founded to do engineering and IP
consulting
• Lessons Learned
– You really can do it all yourself
– You may not really want to
• Having a team really does help!
[email protected]
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2002-2003: Qynergy
• Business founded to commercialize technology invented
at SNL for radioisotope energy generation
• Strategy was to “top-load” the team
– Lots of Grade A Management, but light on the technical team
• Lessons Learned
– Research
• How to work limited resources
• Managing research outside of my expertise
• “A 90% solution now is better than a 100% solution later”
– Business
• The costs and benefits of a high-quality team
• IP Development & Protection
• Business Plan Development
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2003-Present: MZA Associates
• Primarily DoD consulting firm
specializing in detailed physicslevel modeling of defense optical
systems.
• MZA has grown from 1 office of
~15 people to 3 offices of ~35
people in the last 4 years
• Lessons Learned (and Learning)
– Managing Growth
– How to Transition from a Small to a
Medium-Sized Company
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2005-Present: Active Optical Systems
• Spin-off of MZA founded to
commercialize a new low-cost
AO technology
• Lessons Learned (& Learning)
– Unusual Funding Sources
– Leverage Existing Technology
– Luck Matters
Polymer Membrane Under
12 kW CW 1-μm Light
www.aos-llc.com
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Getting Started as an
Entrepreneur
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Limitations & Caveats
• People spend their life studying this topic.
– I will only have time to present some of the basics.
• I have no formal business school training.
• There are many books and much literature on
this topic, including:
– The Start-up Entrepreneur, J.R. Cook
– Entrepreneurship For Dummies, Kathleen Allen
– Outline for a Business Plan
(http://www.techventures.org/resources/docs/Outline_
for_a_Business_Plan.pdf)
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Entrepreneurs…
• Identify business opportunities
(spark)
• Create a plan to capitalize on
the opportunity (diligence)
• Find the resources (marketing)
• And (sometimes) execute the
plan (leadership)
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New Business Idea Quick Test:
Should I be an Entrepreneur?
• Am I excited about this idea or opportunity?
– E-ink ideas
• Do others also think it’s a great idea?
• Are there people willing to pay for what I’m
offering?
• Why am I the right person for this?
• Why should I go forward with this idea or
opportunity now?
– Diode Laser vs. HeNe for Barcode Scanners
Entrepreneurship for Dummies, Kathleen Allen
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The Business Plan
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Business Plan Basics
• A business plan is like a job application to
becoming an entrepreneur.
• A well-written business plan forces the
author to evaluate the idea in sufficient
detail to sell it and/or guide the
development of the resulting business.
• Reasons for Writing a Business Plan:
– Organizes and Structures the Business to
Capitalize on the Opportunity
– Sells the Opportunity to Investors
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Comments on Investors
• Investors should be thought of as members of your
team.
– What assets (other than financial) do they bring to the table?
• Investors are not stupid, …
– Would you want them on your team if they were?
• …especially about business
– How do you think they got that money to invest?
• Investors are looking for a substantial increase in the
value of your venture (5-10x) in a fairly short period (5
years)
– Success Stats are Dismal, but ask, “What is success?”
• Investors generally won’t sign NDAs
• Investors might be considering other deals in your
space. Its generally OK to ask them this question.
• Investors often care more about team than opportunity.
– Experience more than education
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Components of a Business Plan
• The Opportunity
– Product / Service
– Industry & Market Analysis
– Competitive & SWOT Analysis
Flip in the
Final Version
• The Team
– Management
– Company Description
• The Plans & Projections
– Financial (including projections), Marketing,
and Operating
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Product / Service
• Coming from a technical background, I like to
write this first and then write the industry part
second, but switch the order for the investors.
• Describe the product or service in detail.
• Focus on the distinguishing features.
• Compare to the existing solutions.
– There are always existing solutions.
• Give as much detail as you feel comfortable
releasing publicly
– Investors often won’t sign NDAs
• Include a description of existing or applied for IP
– Investors generally discount provisional patents
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Industry & Market Analysis
• There can be multiple industries or applications, but often targeting
more than one at a time may not be possible given resources, so
choose one & prioritize the others.
• Find as much data as possible on the industry and market segment
including
– Size (dollars and units)
– Recent and Projected Growth Rate (especially in your segment)
– Location (where is the money spent?)
• This data can be hard to come by, but look
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On the internet
In relevant trade journals
In the local business school library
At Technology Venture Corporation (TVC)
Customer Surveys (keep good records)
• This part can be the hardest part for technologists, so don’t be afraid
to ask for help.
– Investors will most likely be better than you at this, so spend the time to
get it right.
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Competitive Analysis
• Who else out there is doing something that
competes in any way?
– Important because it could be a hidden
opportunity
• Why would their customers become your
customers?
• A comparison table is often useful here.
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SWOT Analysis
• Strengths, Weaknesses, Opportunities,
and Threats
• Try to be as realistic and objective as
possible
• Include global considerations.
• You may have done this throughout the
other portions, but investors are
sometimes looking for this as a summary.
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The Team
• Investors generally weigh this more
heavily than the opportunity
– “I’d rather have an A team with a B idea than
a B team with an A idea”
• Experience is key
• They will be looking for a core
management team with all the key areas
covered and ideally with experience.
– Address any key weaknesses (What you don’t
have you might hire.)
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Plans and Projections
• Tie these back to the industry data as
much as possible.
• Investors generally won’t believe ridiculous
market share predictions, so be realistic.
• Create a budget of how you think money
will be spent.
– include a detailed budget if you’re asking for
investment.
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Beyond the Business Plan
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The 5-Minute (Elevator) Pitch
• Once the business plan is complete, it is
important to write down and rehearse a 5minute pitch of your business
• Touch on:
– Product/Service
– Industry & Market
– Potential for Growth
– Management Team
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Types of Investors
• Government (Grants / SBIRs)
– No equity cost
– Not just the USA either…
• Other Corporations
– Small and Large
• Angel Investors
– Small and early round investors
• Venture Capitalists
– Typically $1M+ investment
– Significant equity cost
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Entrepreneur’s Skills
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Management
Legal
Intellectual Property
Marketing
Accounting
Human Relations
Insurance
Workman’s
Compensation &
Unemployment
• Tax
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You don’t have to
be an expert in all
of these areas, but
if you’re going to
lead the team, you
need to know a bit
about all of them.
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Conclusions
• Entrepreneurs capitalize on business
opportunities.
• Getting started means writing a plan
covering the:
– Opportunity, Team, & Plan & Projections.
• The plan will guide your company and help
you hook investors.
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Example Pitch:
Active Optical Systems, LLC
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Problem: Optical Distortions
Application /
Market Segment
1. Lasers
Effect of Distortions
2. Photolithography
Reduced Feature Sizes
and Resolution
3. Ophthalmology
Missed Diagnoses
4. Free-Space
Communications
Large Bit Error Rate and
Lost Data
5. Optical Data
Storage
Lower Data Density
Larger Spot Size
Reduced Intensity
6. Telecommunications Signal Degradation
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Human Retinal
Image
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With Distortions
Distortions Gone
Laser AO Market Opportunity
• Laser Market (~$2B)
– Large High-Growth Market
• ~$2B in 2000 with ~10% growth
– High Product Cost (~$100k)
– Industry Contacts & Contracts
• Laser Adaptive Optics
– OEM Segment for AO
• $240 Million (2001)
• $500 Million in 7 years
– End-User Segment for AO
• $140 Million (2001)
– Estimated $380M AO System
Revenue Potential by 2012
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NOTE: Numbers here are
not necessarily traceable to
research.
Example: Photolithography Masks
• Electron Beam Written Masks
E-beam Mask Writer
– Higher Resolution
– Mask Cost: $3,000 to >$20,000
• Laser Beam Written Masks
– Higher Productivity
– Mask Cost: $300 to $1,500
• Benefits of Laser AO
– Mask Maker
• Electron Beam quality
• Laser beam cost
– Laser Manufacturers
• New Sales Possibilities
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Laser Mask Writer
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AOS’s Adaptive Optics Product
Before
AOS’s Control
Computer
Laser
After
AOS’s
Polymer
Deformable
Mirror
Sensor
Benefits to OEM and End-User AOS’s Competitive Edge
• Reduces Laser Cost
• Polymer DM
• Increases Intensity
• Significantly Reduced Cost
• Opens New Application Doors
with Higher Volume
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AOS Component Technologies
Drive Electronics
Webcam Hartmann
Sensor
Polymer Deformable
Mirror
(patents pending)
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DM Before Packaging
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Competitive Analysis
Competitor
Analysis
Company A
MEMS-based (costly ~$50k)
High Power Laser Capable
Slow Growth Strategy (CEO is a Professor)
Products Need Engineering (not turn-key)
Company B
Limited in size
Limited Laser Power Handling
High Cost (~$100k for DM + Electronics)
Company C
Focusing on the Ophthalmology Market
High Cost ($75k for DM + Electronics)
Cannot handle high power lasers
AOS
Low Cost ($6.5k DM + Electronics, $7.5k Systems)
Turn-key Systems
[email protected]
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Management Team
• Justin Mansell-President
– Ph. D. from Stanford Univ. in adaptive optics for
high power laser wavefront control
– 10 years of Technical and Business Start-up
Experience
• Robert Praus & Steve Coy – VPs
– Each has 20 years of experience in developing
and modeling high power laser systems for DoD
applications
• Defining Marketing and COO Positions
[email protected]
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Experience
(2005)
MEMS FT
Spectrometer (2000)
US Patent
6,707,020 (2004)
Delay Line M2
Meter (2001)
Gaussian to Top-Hat
Beam Shaping
(2000)
Boeing Relay Mirror
AO Testbed (2004)
MOPA AO
(2000)
Knife Edge SHWFS
US Patent
6,376,819 (1999)
Binary Optics
Smoothing (1996)
US Patent
5,864,381 (1999)
(1998)
Mini-Cass (2001)
US Patent 6,108,121 (2000)
Apodized
Microlens Arrays
(1999)
(1996)
(1991)
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70
$ Millon
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Financial Projections
•Seeking $1M in Start-up Capital
•Break-Even in Year 3
•$60 M Revenue by Year 5
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Profit
Sales
20
10
0
-10
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4
Investment Year
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5
Questions?
Justin Mansell, Ph.D.
[email protected]
(505) 245-9970 x122
[email protected]
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