Category Archives: Entrepreneurism

Keeping the Patent Wolves at Bay: Three Tips for Protecting the Heart of Your Startup

Grey Wolf

Don’t venture into the ‘wilds’ of commercialization without the protection of rock-solid patent protection. The tips here will insure that the time, effort and cost of doing this will be well worth it.

By:  Andy Golden, Ph.D.

I know several inventors and patent attorneys who have breathed a sigh of relief after realizing that a patent has missed an opportunity to impede their commercialization path.  For example, the patent claims of a prior art patent may contain unnecessary limitations on design or implementation; despite the absence of a preceding prior art landscape.

Although some patents are obtained merely to check a box or promote technology, most are intended to exclude competition from an invention space.  So why spend $10,000 to $100,000 for a patent that does not exclude competition?  Here are three tips for keeping the wolves at bay:

1.  Choose carefully 
Patent attorneys are not commodities so find a good one.  I usually find patent attorneys through the good recommendations of their peers.  Similarly, I have seen several companies benefit from auditing their current patent firm with a second firm.

Select a patent attorney who has the technical background to quickly understand your invention in detail, as well as its role in your business plan.  Understanding the invention is critical for drafting effective claims, enabling the invention and minimizing ‘design-arounds’.  Moreover, time is money and the quicker the patent attorney grasps your invention, the less you spend on patent drafting.

  • Years ago, a research group wanted to patent two inventions earmarked for two academic manuscripts.  The process in the first paper was used in the second to form a material for tissue engineering.  However, the second paper did not require the first, and the first was broader and more valuable than its application in the second.  De-conflating the inventions in the patent application, among other things, wasted many hours and thousands of dollars.  A weak patent application was submitted just before the deadline and then abandoned five years later.

2.  Tear down that wall
Don’t throw the invention over a wall – a good patent requires collaboration with the patent attorney.  Transforming technical details and business objectives into a legal document is an interdisciplinary process.  In particular, the inventor/scientist/engineer must actively participate in identifying novel elements and technical ‘design-arounds’ for protection, so that technically savvy competitors cannot pursue them.  It’s impractical (and costly) to expect the patent lawyer to understand your invention space as well as a specialist who has lived and breathed in the space for years.  A kickoff meeting can be an effective venue for brainstorming potential claims and ‘design-arounds’ with the patent attorney before documentation and billable hours accrue.  Here are a few questions that might lead to anticipation of technical ‘design-arounds’:

  • What are the ways in which you might practice the invention?
  • How might a competitor or potential licensee practice or design around the invention?
  • How might your invention evolve during the R&D process, production scale-up, or post-market surveillance?  In other words, what risks remain and how might they change the course of the product?
  • How might the patent benefit future product lines or adapt to a changing market?
  • What entities are the focus for infringement?  What entities are not the focus (e.g. a medical practitioner or a customer)?

In truth, it is often unlikely that the innovator can anticipate and prevent every creative design-around, but she/he can anticipate much of the low hanging fruit.  The lawyer should capture these technical and legal ‘design-arounds’ in the patent application.

3.  Keep your eyes on the bottleneck
Align your patent application with business objectives.  Focus on identifying the commercially valuable bottlenecks.  These bottlenecks are your invention – not the product that embodies merely an example of the bottlenecks.  Then, instead of describing each component of the product with equal weight and consideration, focus the patent application on protecting the valuable bottlenecks and associated ‘design-around’ risks.  Taking a stab at this in a detailed patent disclosure for the lawyer can improve the final patent application and sometimes reduce the billable hours required for drafting.

  • Theoretical example: An academic group develops a new label-free biosensor for potential use in drug discovery.  The main commercial advantage is that the label-free biosensor is not a destructive test, so, for the first time, the cells can be monitored for days, providing higher quality data.  At the kickoff meeting, the team decides the key bottleneck is long-term monitoring of cells for this particular cell assay.  In contrast, the label-free biosensor is a minor bottleneck; it is treated as one of several possible ways to achieve long-term monitoring, as other companies could conceivably develop labeled tests that are similarly nondestructive.  Although the patent does include claims on the biosensor, it focuses and expands on enablement and valuable embodiments of long-term monitoring, such as previously undetectable cellular events, data analysis, and methods to exclude dedifferentiated cells.

In brief, some people say that a good patent lawyer “gets into the head” of the inventor to extract the invention.  A counterargument is that with good collaboration and alignment of the patent application with business objectives, this may not be necessary.

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Developing Opportunities in the Life Sciences: A Birds-Eye Review

Bald Eagle Soaring

Keeping a Birds-Eye view of the opportunities shaping the life sciences will allow you to develop effective strategies while keeping your head out of the clouds.

By:  Michael Kaiser

A brief preface: although the developing opportunities listed below refer to the life sciences, they can be adapted to the specific needs of other industrial sectors as well.

1. New Frontier: Stem Cells, Bioinformatics, Genomics, and Proteomics

a)  Stem Cells
bBioinformatics
c)  Genomics
d)  Proteomics

(See descriptions of a), b), c) and d) under “General References and Additional Reading”)

The high R&D cost of these “New Frontier” opportunities demands exposure and experience in dealing with academia, scientific personnel and the highest levels of corporate savvy and investment sources; their ultimate value more than merits the effort.

2. Biomaterials
Biomaterials include implant prosthesis, biochips, nanotechnology, fiber optics for minimally invasive implant or corrective surgery and biochemical suturing. They represent a valuable business opportunity for improving human health and a significant contribution in reducing healthcare costs.

3. Intellectual Property
This is a critical solution in protecting nascent opportunities in high-technology sectors. When the topic of intellectual property is discussed, one cannot but bring to mind the title that Kevin Rivette and David Kline came up for their book on the subject: “The Rembrandts in the Attic. Unlocking the Hidden Value of Patents”.

The potential legal implications of violating a patent requires the assistance of expert counsel in areas such as innovation, field of use, royalties, head-of-agreement terms, etc. Although being an expensive process that can negatively impact the financial resources of a biotechnology start-up, legal IP expertise also serves the purpose of prosecuting copy-cats.

4. Competitive Advantage
Competitive advantage: the key challenge and opportunity in commercial transactions and outcomes; its success lies in the axiom “Understand your competition as well, if not better than thyself”.

No company, be that a startup or established corporation, can afford the absence of competitive strategies. Skills in knowledge management and data mining are useful in the planning of corporate strategies in addition to the regular update of marketing e-commerce and social media tools used in the competitive analysis that precedes a successful commercialization. A clear understanding of information transfer technologies, e-commerce and sales and marketing tools is now an essential requirement in competitive analysis.

5. Entrepreneurship and Structure
Ideally, the entrepreneur enjoys and thrives while working in an innovative, fast-paced environment. However, the reality of the economic marketplace suggests that equal attention should be given to the role of ‘intrapreneurs‘, those executives who implement a formal corporate-like structure to reflect the vision of the entrepreneur’s initiative in a manner that conveys a more established and organized company image to investment sources.

6. Globalization
This one is the quintessential opportunity for any business sector and not just for a selected few because it implies an in-depth knowledge and understanding of the socioeconomic and political factors affecting the conduct of business in different regions. Just like we refer to startup companies, we can also refer to growing national economies, e.g., the BRIC countries.

The liberalization of world trade and the integration of regional markets such as the EU, NAFTA and ASEAN dovetail with organizations such as the WTO and GATT. Paradoxically, in the process of lowering trade barriers the pendulum has swung too far and we see an increase in protectionism by both industrial countries and newly industrialized ones. Furthermore, the fact that the Internet became an effective communications facilitator in no way replaces the unique value of face-to-face personal contact in all endeavors of business, sciences and humanities.

7. Mergers and Acquisition; Strategy and Technology Evaluation
The impact of IT has accelerated the process of consolidation and integration in the life sciences, particularly in those cases where a large pharmaceutical concern and a biotechnology company with a valuable technology platform are concerned. Shareholders, institutional investors and venture capital companies have much higher expectations, with a short time horizon, for a return of their investments.

Therefore, the cost of M & A’s requires a thorough analysis of corporate synergies, innovative financial instruments and fundamentals, experienced investment bankers and financial institutions, assessment of net present valuation and internal rate of revenue, evaluation of technology and future corporate strategy, top management succession, and ability to transfer technologies across corporate and international boundaries.

GENERAL REFERENCES AND ADDITIONAL READING (Links)

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Women as Corporate and Entrepreneurial Leaders

Lions

The business world can be an unforgiving jungle, but women handle it as well as men, and then some.

By:  Michael Kaiser

If you watch nature programs on TV, you have come across at least one dedicated to those Big Cats, the lions and you quickly realize that it is the lioness that looks after and commands the pride. At best, the male serves as a mix of bodyguard, concierge and gigolo. It is the lioness who does all the hunting and caring of her cubs. It is a constant challenge that forces the lioness to erect a fortress of rigorous discipline, alertness and battle preparation. This zoological example serves as an analogy for the vicissitudes and triumphs experienced by women in the business world.

In this second decade of the 21st century no longer can the male gender come up with comments bordering on blatant business misogyny such as “They are emotional”, temperamental”, “They are watching over their family, how can they run the business”, “They will get pregnant”, “They have their period and are impossible to deal with”, “They are capricious”, etc. As if those descriptions were not enough, along came the 2006 movie “The Devil Wears Prada” starring Meryl Streep as the epitome of a ruthless and cynical fashion entrepreneur.

That is definitely not the scenario that we should equate with female entrepreneurs and corporate executives in Western, and more recently, Eastern societies. Time to wake up and get the record straight: women are as strong as men; they are standards of initiative and dedication, intuitive, tactical and strategic leaders, progressive, highly motivated, creative, the list of positive characteristics goes on. And with a good sense of humor, they even bestow positive remarks about their opponents:

“We have ‘arrived.  it means we’re not expending a huge amount of energy battling each other for power, instead we’re having challenging conversations about what we do well and what we need to work on. It’s a fact (I have the research somewhere) that men outperform women in 4 key areas of business. They are better at asking for what they need, for standing out in a crowd, for singing their own praises and speaking up.” Suzy Jacobs in “Can we please change the conversation”.

In a reference quoted for the description of “Female Entrepreneur” we read that:

Studies on women entrepreneurs show that women have to cope with stereotypic attitudes towards women on a daily basis. Business relations as customers, suppliers, banks, etc. constantly remind the entrepreneur that she is different, sometimes in a positive way such as by praising her for being a successful entrepreneur even though being a woman. Employees tend to mix the perceptions of the manager with their images of female role models leading to mixed expectations on the woman manager to be a manager as well as a “mother”. The workload associated with being a small business manager is also not easily combined with taking care of children and a
family. However, even if the revenues are somewhat smaller, women entrepreneurs feel more in control and happier with their situation than if they worked as an employee.

Although many positive changes took place in the 20 years since its authors published their findings, there is still the classical “room-for-improvement” ahead. As an example: early this year the CEO of Yahoo, Marissa Mayer, issued a memo banning the practice of telecommuting for the company’s employees which led to a negative uproar, promptly smothered by a positive retort in her defense from, yes, a male reporter of the Washington Post.

Recent statistics show that women’s level of higher education is on its way of surpassing that of men, which explains the large number of female executives in some of the most complex and demanding scientific sectors. Alas, this has not minimized the obstacles they face due to social mores that still operate under antiquated gender roles; even today, the number of male entrepreneurs exceeds that of women, and that is based more on conventional stereotypes than reality, because women are equally as good as men in starting a company with very few financial resources at hand.

In closing I invite the reader to watch the TEDx video by Gayle Tzemach Lemmon, listed below. It is an uplifting paean to the resilience of women in the face of business entry barriers, and how they have become an integral and much needed part of entrepreneurship and corporate leadership, without gender barriers.

References and Additional Reading

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Startups: Strategy or Innovation? Three Views

By:  Michael Kaiser

eyeglasses on an eyechart

Having a clear vision and mission for your startup is not enough. Entrepreneurs with an actionable strategy have the best chance of leading their company to success!

Rather than “reinventing the wheel” I chose the
following three options to the question.

VIEW # 1

In a recent article by Ken Favaro, a Senior Partner at Booz and Company, (How Leaders Mistake Execution for Strategy (and Why That Damages Both)) explains that:

“When discussing strategy, executives often invoke some version of a vision, a mission, a purpose, a plan, or a set of goals. I call these “the corporate five” (see exhibit, below). Each is important in driving execution, no doubt, but none should be mistaken for a strategy. The corporate five may help bring your strategy to life, but they do not give you a strategy to begin with.

Before they get to the corporate five, companies need to address five much more fundamental, and difficult, questions. Let’s call them the “the strategic five:

1. What business or businesses should you be in?
2. How do you add value to your businesses?
3. Who are the target customers for your businesses?
4. What are your value propositions to those target customers?
5. What capabilities are essential to adding value to your businesses and differentiating their value propositions?”

Corporate5

Favaro reaches the following conclusion to the above:

“They can’t answer those questions because often they haven’t asked them in a very long time, if at all. Instead, the corporate five have become a mask for strategy. When that happens, the real substance of strategy—making deliberate and decisive choices about where to play and the way to play—is lost. There is no foundation for decision making and resource allocation. Everything becomes important. Indiscriminate cost-cutting and growth become the order of the day and, sooner or later, with no strategy as a guide, a business drifts”

VIEW # 2

By contrast,here is a recent article by Tania Prive in the Forbes Magazine issue of March 29, 2013 with the title “Top 11 reasons startups succeed”. Here are her titles for those 11 reasons

“1) Vision- 2) Speed -3) Budget Masters – 4) Social Skills – 5) Discipline – 6) Determination -7) Ability to adapt to Change – 8) Fundraising Skills – 9) Unwavering belief – 10) Master of time management -11) Execution”

At the end of the article we read that “…successful startups are always looking for opportunities to do something better by thinking outside the box and constantly questioning the status quo”

Both authors make a good case: Favaro, with a more analytical emphasis on established companies and Prive from fundraising and personal abilities needed in order to lead to a successful outcome. This is not a contest between two authors, but rather a choice that is left to the reader to determine if a startup is purely based on innovation, and thus, why and when should it dovetail with strategic concepts that fit more established companies.

VIEW #3

The answer and/or solution to such a conundrum may be found in an article authored by Uzi Shmilovici in Techcrunch (‘Strategy For Startups: The Innovator’s Dilemma’). Here are some excerpts:

“Strategy. Unfortunately, it suffers from a bad reputation among startups. It is associated with consultants who are paid millions of dollars only to come back with a two-by-two matrix of animals. Not that there is anything wrong with it. Some of my best friends are consultants.

However, strategy is crucial for startup success. Startups usually operate in an environment of constrained resources while competing with strong incumbents. Hence, the right strategy can be a matter of life and death…

The first concept we’ll look at is the “Innovator’s dilemma”, a term coined by Clayton Christensen from the HarvardBusinessSchool. The innovator’s dilemma discusses a situation in which there are established incumbents in a specific market who are investing in sustainable innovations — these are incremental improvements to an existing product. Usually, they are doing that to support the incremental needs of their customers

They are then faced with a new entrant to the market that introduces a disruptive innovation. The new entrant attacks only a small part of the incumbents’ business, usually the one in which the margins are very low. At this point, the incumbent decides not to compete in this business anymore because they don’t want to invest in defending their least profitable business and/or are afraid of cannibalizing their main business. As a result, the new entrant is then able to capture a significant market share in that specific segment… it is important to understand the types of disruptive innovation that exist. There are four: a new product, a new technology to produce a product, a new way to distribute a product and a new way to provide services. The entrant can introduce a disruptive innovation along one or more of these dimensions.”

And last but not least:
What do you, the reader/analyst of the above views, believe to be the one that more closely reflects your opinion?

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Entrepreneurs: Their Inspiration, Challenges and Opportunities

By: Michael Kaiser

Entrepreneurs face an arduous climb as they build their business but the view from the top is worth it!

Entrepreneurs face an arduous climb as they build their business but the view from the top is worth it!

From the point of view of our economy’s present and future direction, we can predict that management and executive jobs that lasted or last for more than five years will experience a sea-change in the financial history of our country, to be replaced by interim executives and entrepreneurs. For the purpose of this blog I will cite The Random House Dictionary of the English Language Definition of who is an entrepreneur: “A person who organizes and manages any enterprise, esp. a business, usually with considerable initiative and risk.”

I will propose another definition of what an entrepreneur is: He/She are the creative parents of a startup company. In the case of high-technology products and services, those parents have become the innovation and R&D sources of the New Economy.

By the aforementioned dictionary definition, entrepreneurs are driven by deep personal convictions, the main one being the vision of a unique opportunity to be successful in their career choice, as well as financially so. They are also driven by the challenge of their essential need to work after the collapse of job opportunities stemming from an economic recession.

In the search for a better understanding of the entrepreneurial ethos, I came across many useful and diverse points of view, some of which are listed for further reading in the Other References section. Kelly Spors, a staff writer for the Wall Street, in a 2009 edition of the WSJ (notice the start of the Great Recession), asks prospective entrepreneurs ten interrogative and advisory key questions in “So, You Want to Be an Entrepreneur”:

1. Are you willing and able to bear great financial risk?

2. Are you willing to sacrifice your life style for potentially many years?

3. Is your significant other on board?

4. Do you like all aspects of running a business?

5. Are you comfortable making decisions on the fly with no playbook?

6. What’s your track record of executing your ideas?

7. How persuasive and well-spoken are you?

8. Do you have a concept you are passionate about?

9. Are you a self-starter?

10. Do you have a business partner?

For her full article and the content of those questions, click on:  So, You Want to Be an Entrepreneur

For those who took or are ready to take the entrepreneurial plunge, Mike Michalowicz in his American Express’ Open Forum article “The 7 Most Common Money Mistakes That Entrepreneurs Make”, warns them in this order:

1. Overhead investments

2. Underestimating miscellaneous expenses

3. Not testing before investing

4. Purchasing extravagance

5. Tax avoidance

6. Spending on do-it-yourself projects

7. Hiring before you can afford it 

To read the full article, click on: The 7 Most Common Money Mistakes That Entrepreneurs Make

Finally, the following is an abridged version of a recent article by Bill J. Bonnstetter, which addresses the skills and performance of entrepreneurs from a useful statistical point of view:

“After assessing the subjects on their personal skills and comparing their performance against a control group, we found a certain set of skills were the most predictive of an entrepreneurial mindset. In fact, by examining these five distinct personal skills alone, we were able to predict with over 90 percent accuracy people who would become serial entrepreneurs.  HBR ChartThe quality serial entrepreneurs displayed above others were persuasion, or the ability to convince others to change the way they think, believe or behave. Persuasion for this study was defined as the ability to persuade others to join the mission. In the study, this was uncovered by ranking on a scale of 1 to 6 prompts such as: “I have been recognized for my ability to get others to say yes,” or “I have a reputation for delivering powerful presentations.” Unquestionably entrepreneurs need to excel at persuasion, whether to recruit a team or get buy-in from investors and stakeholders.”

To read the full article, click on:  New Research: The Skills That Make an Entrepreneur

Further Reading:

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The 10 Essential Elements of Every Successful Life Science Startup

By:  Andrew Johnson, Ph.D.

keys with a success key fob

Paying attention to these 10 essential elements for a successful startup will greatly increase the prospect that you will get your hands on these keys!

Transforming breakthroughs from the lab into successful companies is a daunting but ultimately rewarding task.  For some, there is no better validation of the quality and value of their scientific discoveries than the kind you get when it generates demand from paying customers.  However, according to Shikhar Ghosh, senior lecturer at the Entrepreneurial Management Unit at Harvard University, 75% of startups fail largely because they have neglected one or more of the 10 essential elements of successful startups.1

 

The 10 Essential Elements of a Successful Startup Are:

  1. Compelling Value Proposition: Having a great idea or discovery does not always mean that you have a product or service that will generate the customer demand required to sustain a business.  Having an experienced Board of Advisors can help you figure this puzzle out and will also provide you with the introductions to the industry experts and Key Opinion Leaders you need to feel confident that you have a viable business hypothesis.
  2. Capital:  How much money will you need to keep your operation running until you start to generate revues?  How will you fund the company?  Grants, Foundation money, investments and bootstrapping are just some of the ways that entrepreneurs get the funding they need to get their product or service to market.
  3. Key Resources:  You need key people on your founding team with the technical know-how and business sophistication to shepherd you company from the early days to a real going concern.  In addition to the people, you need to make sure they have access to the resources they require to succeed like adequate lab space, access to equipment, reagents, regulatory guidance etc.
  4. Key Activities:  Seems like an obvious one.  It is critical to develop a detailed roadmap that describes all of the strategies, tactics and activities that need to be successfully completed to reach your ultimate goal for the company.  This plan will include critical milestones along the way so that the team can monitor progress and make course corrections as needed.  Also, this plan will allow you to develop a realistic budget which will help you to mitigate the risk of running out of capital before you have achieved a successful launch.  The best roadmaps break this down to enough detail to guide not only month to month activity but day to day efforts as well.
  5. Cost Structure:  After you have launched your product or service, your focus now shifts towards expanding profitability.  Your Operations team will be looking to reducing the costs of providing your product while your Sales & Marketing team will be executing on tactics that will bring in significantly more leads, and more sales.
  6. Key Partners:  You don’t need to go it alone.  Establishing strategic partnerships can help you expand your market reach when you set up co-marketing agreements and save capital when you share the cost of space, equipment and other resources that you can both profitably share.  Your team will also benefit from the experience and perspective of your partner as your relationship grows stronger.
  7. Customer Segmentation:  This is something that needs to be started way before you are even ready to sell.  It is important to know both who will want to buy your product as well as who will not.  This will not only help you with your marketing efforts but will also insure that you build the right offering.
  8. Demand Creation:  Once you have a good idea who your customers will be, figuring out how to reach them and what message they will find most compelling becomes a lot easier.  Running an effective beta-evaluation with perspective customers will provide you with key insights that will go a long way to insuring that you have a strong product launch and have a Sales & Marketing plan that will quickly scale up to meet the business growth goals you have set for the company.
  9. Sales Channels:  Having a well thought out Channel Management plan will greatly increase the chances that you will have a strong launch.  It is important to know how you will sell to your customers and then develop the resources and team that will allow you to execute this well.  Different channels have different demands and processes.  Be sure to consider whether you will be using a direct sales force, distributors, a combination of the two and how that would work etc.  Don’t’ forget to consider e-commerce!
  10. Revenue Streams:  Another seemingly obvious ‘element’.  Don’t’ forget that you can get revenue for intellectual property that you can monetize through licensing fees if you don’t commercialize it.  Be sure to consider other ‘products’ like extended warranties, service agreements and advanced training offerings for example.   There are many ways to generate revenue besides what you get from sales of your core product or service.
Chart from UpStart presentation

Making sure your Founding Team has the expertise to manage the “10 Essential Elements” is the best way to improve the odds of success for your startup.2

The Secret to Getting this Right
The secret to keeping on top of all these ‘elements of success’ is having a founding team with the depth and breadth of experience and know-how to cover all of these areas.  Each ‘element’ can require very specific skills and tactics.  Furthermore, it is critical that these are customized to fit the particular needs of your company.  The other thing to keep in mind here is that these ‘elements’ are not static in their timing and demands for resources.  Having at least a few team members that have done this before will insure that you get all of this right.  Founders should look to establish a Board of Advisors very early on to help manage all of this and or help you to find these key people for your founding team.

Notes: 

  1. Venture Capital Secret: 3 of 4 Start-Ups Fail
  2. The Life Science Startup: Bringing Innovative Science to Market with the Right Team 

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