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where technology and entrepreneurship meet

The student/entrepreneur cheat sheet: Balancing school and entrepreneurship

Leave a Comment Posted by on June 6, 2013

Balance

I’ve written in the past about the challenges of being an academic and an entrepreneur (here, here, here and here), and it’s one of the more common topics I get asked about. Many students come to me with questions on balance – how do they get their entrepreneur career started while still in school?

Here are three key insights my mentor gave me early on that really helped me as a student-entrepreneur:

1.    Synergy is king

Try to find work/study activities that “count twice”. For example, my research also happened to be the core technology work for my startup. Many of the marketing white papers for my startup were later turned into publications. And so forth. This requires a bit of forethought, but the impact can be tremendous. This usually also means that you need to cut activities that are not synergistic (e.g. I was the CTI of my first startup because fundraising and other business activities had no synergy effect with my academic work).

2.    Find a supervisor that embraces synergy

When working with a supervisor, you need to find one who gets that your principal goal is *your* career development, not cranking out papers for them. This is important because the synergy aspect above needs to work both ways, and a “needy” supervisor can mess everything up. Ironically, the most successful supervisors are often the ones who get this idea. They’ve had successful careers themselves and know that you will generate a lot more value for them doing “your thing” at 10x efficiency than slaving away at “their thing” at 0.5x efficiency.

3.    Focus on goals to optimize your schedule

The big risk with doing two things at the same time is that you get scattered. 50% of two goals is usually worth nothing. So you need to be very disciplined with schedules and goals. I used to write down quarterly and annual goals for myself – sort of a self-enforced performance review. To make this “stick” a bit more, I went out of my way to publicly declare these goals to create social pressure that would keep me focused (e.g. declare them to supervisor, co-workers, co-founders, put things on a whiteboard in a public space, etc.).

In terms of “hacking” the system, there are really only two parts to a graduate degree:

Papers: You want to generate lots of these, at high quality journals if possible. The best way to do this is to force yourself to write at least one paper per quarter. Even if only half get accepted, that’s still a lot more than most grad students achieve (typically one or two during a 4 year degree). Focus on tactical objectives rather than trying to create one giant master piece at the end.

Courses: Look for courses that are light on regular homework (weekly small stuff) and heavy on end-of-year papers, then use those for your startup objectives (synergy!). The other thing is to find courses that are compact (e.g. 3 hours in one session once per week) as this greatly reduces the “overhead” of course work (travel to campus, etc.). If you are doing a business on the side, you’ll really appreciate the blocks of uninterrupted time this will afford you.

If you do the above right, you also get one of the most valuable insurance policies available to technology entrepreneurs: academic credentials. We all read about the drop-outs who go on to create giant companies but that’s just survivor bias. Most startups fail. A good foundation of education, publications and credentials ensures that you get significant value out of your student-entrepreneur years even if your venture doesn’t become the next Facebook.

Balancing two full-time endeavours is never easy, but by optimizing your time and aligning your goals & interests, you’ll have a much greater chance of succeeding as both a student AND an entrepreneur.

Entrepreneurship , , , ,

When Co-Founder Asymmetry Works

2 Comments Posted by on October 30, 2012

A university student professor team

I recently listed co-founder asymmetry as one of the key failure conditions for startups. While definitely a major cause of startup collapse, there is one scenario where co-founder asymmetry can work well enough: university spin-outs where you have student-professor partnership.  Students don’t have the expertise and seniority of their professors, but typically have far more hours to put into a venture.  For this kind of relationship to work it is important that the expertise provided by the faculty member truly offsets the higher workload of the student. Just being a professor of high status isn’t enough (even if many professors would like to think so). Execution is king, so the high workload student has an intrinsic advantage in the value creation “competition”.

Professors likely have higher technical skill and prestige than their students but just having those isn’t enough. They need to find a way to inject these values into the start-up. Technology-wise, the professor has to be an innovation engine for the startup to offset the often relatively modest workload impact. Similarly, the prestige of the professor needs to translate into tangible opening of doors and recruitment of advisors. Both of these contributions also need to be maintained over time. Once a startup leaves campus it takes a certain kind of professor to remain deeply involved in an innovation function. Even rarer are professors that are able to continue to have a profound impact on the business side of the startup, through strategic guidance and door-opening.  If this sounds demanding, consider the fact that the student co-founder is probably working 80-100 hours per week for her co-founding stake.

I had the privilege of founding a company with a professor who truly made all these contributions and more. Himself a serial entrepreneur and inventor of over 100 patents, he brought deep expertise to the game and had a profound impact on the company. At the same time, I have seen many student-professor founding teams that don’t balance at all. Often, those are primarily on the institutionally determined hierarchical relationship.  Even if that relationship works during the first few months of the startup, as the startup gears up the professor will ultimately become an over-compensated co-founder which is almost guaranteed to lead to trouble down the road.  University startups in particular need to be prepared in advance to for these shifts in co-founder dynamics. A good choice is to reverse-vest founding shares at specific levels of impact (e.g. full involvement, advisory services, no contribution). Alternatively, the startup can issue fixed founder shares to all but then create a large additional incentive grant to operational co-founders.

Entrepreneurship, Spin-Off vs Start-Up , , , ,

5 Reasons “Dumb Money” is OK

1 Comment Posted by on August 15, 2012

There is a common view in the start-up investment world that “smart money” is worth a lot more to a company than “dumb money”: the latter being worth just its monetary value, while the former might warrant additional considerations (e.g. board seats, etc.).

The use of a pejorative word like “dumb” has an unfortunate effect. Easily 90% of the Angel investors I know would describe themselves as “smart money” for the simple reason that no one wants to be dumb. Yet, I would argue that there is nothing wrong with “dumb money” as long as you know what you are getting into and keep the privileges narrow. I have raised financing from, or co-invested with, almost 100 Angels over the years. I would peg at least 90% of them as “dumb money” (including myself on some occasions).

That doesn’t mean that these individuals are dumb themselves. Most Angel investors, at least the true sort that made their own money, are highly accomplished professionals. But their money can still be dumb. There are 5 common reasons for this:

1. Expertise

The most obvious reason for an investor to be “dumb money” is a lack of relevant expertise. You can be a genius entrepreneur in real estate and make no contribution of value in a biotech investment.

2. Time (and Interest)

While expertise is the most obvious criteria, time is usually the biggest failure point. All the relevant expertise doesn’t help if the investor isn’t reachable (often in the tight time frame that a start-up needs). And good intentions don’t count. We all want to help, the question is whether or not we have the time to really do so.

3. Connections

In the days of the internet, one of the most common and less time-hungry, ways to help your start-up is to make introductions to other important people. In my experience, this only really works for people who are truly stars in a major hub (e.g. Silicon Valley). Anybody else will be of limited value. Just knowing others isn’t very helpful as any half-decent entrepreneur will be able to get those connections herself via tools like LinkedIn. What really matters is whether those important third parties actually care enough about your investor to do something for you. There are probably 1,000+ Angels who have Ron Conway or Dave McClure in their address book, but how many can make them actually invest in your venture? Similarly, corporate connections are also common but very difficult to convert into real value unless the connection has real interpersonal or professional depth (and the investor is willing to leverage this on your behalf)

4. Company Leverage

Even if the investor has plenty of relevant expertise, time and deep connections, it’s all for nothing if the company doesn’t leverage it. In my experience, a fair number of companies simply don’t reach out to their Angels beyond the legal requirements. Game over – everybody is dumb money at this point.

5. Relationship

Finally, “smart money” needs a strong relationship with the founders. If the investors don’t feel comfortable offering honest advice or the founders don’t listen then all the expertise in the world isn’t going to help.

Any one of these issues is enough to pull your investment into the “dumb money” bucket, regardless of how smart or successful your investor might be as a person. The key is to know what you are getting yourself into, what you expect out of your investors and how to match up privileges to those expectations.

Entrepreneurship , ,

Three Core Tech Trends

Leave a Comment Posted by on August 2, 2012

There are, in my mind, three major technology trends in this decade’s consumer electronics world: narcissism, visual realism, and naturalism in interaction.

1) Narcissism

Narcissism is less interesting to TandemLaunch, but has become a major driver of our economy.  We all want to be famous, we all want to be the greatest person on earth, and it is in many ways a biological and psychologically ingrained desire.  For the first time in human history, the internet has made that possible to the masses, or at least in the somewhat narrow view of ‘fame’ which society has defined.  Guys like Mark Zuckerberg understand this, and realize that if you provide people with perceived fame, they will freely give up all kinds of higher order desires like ‘privacy’.  It is clear that narcissism drives a major part of the economy, including social network systems, photo sharing, and anything where you can share some part of your life.  These are basically all technologies that allow you to have hundreds or even thousands of friends, be liked by tens of thousands, contribute to revolutions in far off countries, and, to put it frankly, become famous without the actual effort of having to leave your couch.  How much better can it get???

2) Realism

We are entering a world where there is a strong push in consumer electronics not just for functionality, as is the case with computing power, but actual visual, auditory, and otherwise sensory realism.  We have displays that are approaching the human eye’s perceptual limits (Apple’s Retina display for example) and we have audio systems that are approaching the limits of the human auditory system.  This is all a push towards creating technology that looks, feels, and sounds no different than the real world, and there are still opportunities left in this field worthy of technical development.

3) Natural Interaction

Naturalness of interaction for computing devices (touch or gesture recognition), as well as interaction with other human beings, is becoming more and more necessary as many of our human to human interactions are currently done through some sort of computing device.  The emergence of video conferencing, online gaming, and technologies of the like are really about a chain of interactions: interactions between a human being and a computer, that computer and another computer, and interactions between the end computer and another human being.   The goal is to make that chain as natural as a face to face interaction between one human being and another.  This is where I believe there is a lot of opportunity.  In fact, the last trend is possibly the biggest because it is by far the least tapped into.  If you do the same analysis that I just did for realism (take the set of things that human beings would like to have and subtract our current capabilities), you’re left with a laundry list of technical challenges.  This is precisely why TandemLaunch’s first investment was in Mirametrix’s eye gaze technology: an affordable, non-contact, gaze tracking solution that integrates with gesture and speech recognition for your living-room environment.

Technology Transfer , ,

How Incentive Models Skew Behaviour

4 Comments Posted by on July 19, 2012

I have been on a bit of a kick about employee incentive plans lately, and observed an interesting trend earlier this year while we were looking to hire a CFO here at TandemLaunch Technologies. Based on the limited sample of a few dozen finance executives who I interviewed, it appeared that such people in Montreal receive fairly large base salaries, but very little equity (in many cases none). Now, the bulk of the candidates had all worked in start-ups from 10 to at most 200 people so this surprised me a lot. I started my entrepreneurial career on the west coast and the model that I’m familiar with is a blend of low compensation and high equity stakes. A start-up might pay their junior level people at market because, well, they have to eat, but at the mid and senior levels salaries are usually substantially lower than market rate in big companies. Offsetting this are meaningful equity stakes. Out west, I would expect a CFO or comparable executive in a tech start-up to own 2% to 5% equity after having raised meaningful initial financing. And yet (from the sample of people that I talked to) that seems to be very different in Montreal where very few of the candidates had any material equity and almost all had substantially higher salaries than I was paying myself at TandemLaunch!

So why do I find this interesting? It’s interesting in that if this is truly a local phenomenon (and it seems to be) then it might just be an explanation for the results or behaviour of Quebec tech start-ups. When you look at the statistics, Quebec has somewhere around a third of the Canadian population but only 5% of the listings on the Toronto stock exchange (a fairly good measure of the IPO volume of Quebec compared to other provinces). Other indicators, such as the lower rate of exits by population indicate a similar trend: For example, Montreal and Vancouver tend to go head-to-head in the number of early exists except that Vancouver is almost a third of the size of Montreal. While the entrepreneurial ecosystem in Montreal is as strong as it ever was, the city is clearly not seeing as much entrepreneurial action as other parts of Canada.

There are lots of possible explanations for this but I suspect that executive incentives have much to do with it. If the senior executives of your company have no meaningful equity stake but a very high salary then why would they push the company to an exit or IPO? A CFO is probably one of the first positions to be eliminated in most acquisition anyhow, so there is even personal downside to such a move. Much more so than on the west coast, I have observed that status and security are paramount in the Quebecois psyche. So why risk all that when there is no upside?

Thinking about this more broadly, what role do incentives play in an organization? I firmly believe that at the end of the day, even the nicest people will act mostly out of self-interest. At least within the boundaries of legal, ethical and credible actions, people will attempt to maximize personal benefit. So the goal of any incentive model should be to ensure that the natural outcome of individual behaviour leads to the strategic goal of the company. If that’s not the case then you might still achieve the strategic result, but only if you constantly badger people to pursue avenues that are not in their own self-interest. It might work if you have strong enough leadership skills, but you’re really stacking the deck of cards against yourself.

 

People Management

Linearity and Employee Incentives Plans

2 Comments Posted by on July 3, 2012

In my last blog post I talked about the fundamentals of effective employee incentive plans:  Proportionality, Transparency, Appropriateness, and Certainty. To my mind of thinking, creating linearity in your employee incentive plans is essential to achieve Transparency and Proportionality, and I’d like to elaborate on that a bit using the TandemLaunch incentive plan as an example. My upfront disclaimer though is that TandemLaunch enjoys a few luxuries that make it a bit easier to come up with these solutions than it is for many companies. We are privately held, have no outside investors, and have a large enough scope with 30+ employees for it to be worthwhile to do some of the legal work that underlies this type of incentive plan.   As a result, all of this might not map onto your startup or company.

Transparency and Proportionality really go hand in hand.  Proportionality ensures that effort is fairly recognized, and transparency means you can see and, therefore, act on the incentive mechanism.  We achieve this with the TandemLaunch incentive plan by eliminating a lot of traditional nonlinear aspects of incentive plans. There are two different areas linearity or non-linearity can exist: in allocation, or in vesting.

Allocation Linearity.  Those who receive equity, usually founders and investors, have several inherit advantages over employees who usually receive stock options. Stock options, apart from the legal rights and tax disadvantages associated with them, have a strike price and that immediately introduces non-linearity.

Let me give an example.  Two employees join a startup. The first joins a day before a small investment round (share price of the last round at $2/share becomes his strike price), the other starts the day after (share price of the seed round at $4/share becomes her strike price). Afterwards they both work the same, they have the same title, they hold the same role, and they perform at the same level all for 4 long years. Even though the single day difference of their employment is virtually trivial after 4 years, the later employee will get significantly less money during a liquidity event. A hugely successful exit will wipe out this difference but most deals don’t achieve that. More commonly, the exit will be a modest multiple of the last round which can result in the second employee getting completely screwed (a $6/share liquidity event will yield $4/share vs. $2/share – doubling the stake for the person who joined a day earlier).

At TandemLaunch we avoid that non-linearity by issuing reverse vesting shares to all employees. This is a relatively easy way to overcome the tax and strike price non-linearity. Reverse vesting restricted stock is becoming quite popular for this purpose and I would encourage everybody to consider them as an option for incentive compensation.

Vesting Linearity. The next non-linearity that you get in non-traditional incentive plans lies in the vesting period.  Regardless of whether you vest stock options or you reverse vest shares, you have the problem of long cycle vesting periods. Things like vesting on an annual basis, vesting over a fixed time period, or having a one year cliff that your vesting only starts after (e.g. after the first year of service). There are some rational reasons for all these things, but they all introduce non-linearity.  That’s a problem because the guy who holds un-accelerated stock and whose one year cliff period ends three days after the acquisition of the company gets nothing, while the guy signing up three days earlier gets a payout, which intuitively just does not seem fair.

Accelerated and non-accelerated stock can introduce further non-linearity. I was recently interviewing a candidate for an executive role who, in her past company, had only received non-accelerated stock options with a 4 year vesting period. After a year she was tasked with negotiating the sale of the company. Her colleague at the negotiating table had a similar amount of stock but with acceleration. Talk about a recipe for disaster. Half of the negotiating team wants to close as fast as possible, the other gains personal wealth for every month that the negotiations are stalled (at a 4:1 gap if you are in the first year of a four year vesting period). This just screams misalignment of interests, and misalignment is what kills companies.

The TandemLaunch incentive plan overcomes some of these vesting issues by using a very straight forward, linear vesting mechanism (in our case a reverse vesting mechanism).   We base it on the assumption that all the shares belong to employees anyway, and the buyback of these shares occurs just before the liquidity event, regardless of when that event may be. The number of shares employees keep after the buyback are proportional to the time in weeks that they spent employed at the company, at whatever full time equivalent rate, divided by the total period from founding to liquidity event for the company. This creates a perfectly linear system. While there are some issues here around share buybacks, like forced drag along and the like, you can paper over these with the appropriate documentation [*].

Introducing linearity this way does not imply the risk profile of the company necessarily needs to be the same.  It just means that you are adjusting the risk profiles in the magnitude of the grant rather than the mechanism of vesting. So somebody who joins a startup later might very well receive a smaller equity grant than somebody who joins early, but their vesting mechanism is same. That means their reward for their service should be linear to their service, relative to the duration of the project or the company.

[*] This model works because TandemLaunch incubates new companies on a frequent basis and our employees receive equity in those ventures rather than TandemLaunch (thus allowing us to frequently issue equity at nominal value and to new hires). Your mileage may vary in a traditional “going for decades” venture with monotonically raising share price.

People Management ,

How to Create Meaningful Employee Incentives

1 Comment Posted by on June 26, 2012

The purpose of incentive plans is to do exactly what the name implies – incentivise the people in your company (both executives and employees) to contribute more than they normally would. In other words, you want them to work harder, move faster, take on more ownership, and generally make as great a contribution to the overall success of the company as possible.

Usually the incentive is to share in the company’s upside in some way.  A common mechanic for that is a stock option plan that coordinates payout directly. There are a variety of options though, including bonus schemes, commissions on sales, and so forth. More recently, there has also been an emphasis (rightly so) on non-financial incentives, such as work conditions, opportunity for professional advancement, and so forth. But, in general, a major component of the incentive model for startups remains dollars. This is especially the case for mid to senior level employees where upside is a significant portion of their overall compensation.

How you structure your incentive plan depends a little bit on your corporate culture but the fundamental challenge is always the same: How to translate the reward of real dollars into better performance of your team.  For that to happen, your incentive plan needs to achieve Proportionality, Transparency, Appropriateness, and Certainty.

Proportionality.  There should be a pretty tight correlation between the company’s success and personal payout for the employees. You want to have a system that can’t be gamed easily, and that really rewards meaningful advancements with meaningful payout. So if somebody does more, they should get more. If the company is more successful, employees should get more, and so on.

Transparency. Employees need to understand and see the dynamics of the incentive plan. While nobody can predict the final payout in advance, employees should see that they get more if they do a bit more work on something. Incentive plans should not only be transparent enough that the employees can see the impact on their own behavior, but also be able to see the impact on other employees.  They don’t necessarily need to know who owns how much of the company, but they should have some general sense of what it will translate into if they get promoted, and, based on their peers, what their reward will be if they do some certain extra. If employees don’t understand these dynamics, the incentive plan is less likely to influence their behaviour in the desired way.

Appropriateness. Appropriateness is a bit more of a judgement call. On one hand, you want employees to have a large enough stake in the company that the payout has a meaningful impact on their life, and, therefore, creates a true incentive. On the other hand, you clearly don’t want to create a social collective with employees who own the entire company, because (presumably) you have to leave some room for investors and other major stakeholders. In North America, that usually means you end up with an incentive pool for employees somewhere in the range of 10-30%, usually hovering at about 15%-20% unless you have significant elements for founders in the pool.

Certainty. More recently, certainty has become increasingly important. When you make an incentive plan, you are making a promise. You are telling people that when they work for less pay, or work harder for normal pay, they will be considered when it comes time to divvy up the company’s benefits. Employees’ certainty that you will keep that promise is critical, because their belief in the outcome has to be very high in order for an incentive to exist. Everyone will understand that the company might fail, but everything fails if there are scenarios when the company succeeds and employee payout evaporates despite the promised incentive.

In my opinion this is the hardest problem to solve in an organization because certainty is the only factor that does not depend entirely on the company itself. If you are in a market or demographic where employees have been routinely screwed in incentive plans (read my post on ethics and employee equity for example), it lowers employees certainty in that entire industry or region. The best way to counteract this industry effect is a mixture of ensuring the personal integrity of the leadership team, and, most importantly, going to the effort of putting in place a solid legal structure for your incentive plan to ensure that arbitrary last minute changes are less likely, or unable, to claw back employees promised reward.

Ultimately, Transparency is the foundation for any employee incentive plan: if your employees don’t understand how the benefit mechanism works, they won’t have the motivation or understanding to make that extra contribution you are looking for.  Proportionality and Appropriateness need to be taken into account to ensure that you are incentivizing the right people, for the right reasons, in a way that won’t compromise the company’s health.  But no incentive plan will give you the desired results if employees’ trust and certainty that they will actually receive their benefit is compromised.

People Management , , , , ,

Regionally-Focused VS. Domain-Focused University Tech Transfer

1 Comment Posted by on May 30, 2012

Some Technology Transfer Offices (TTO) have been exploring the idea of domain-focused rather than regionally-focused technology transfer recently. This shift is an extremely powerful idea in my mind. In fact, the advantages of domain-focus are the reason TandemLaunch has the specialization it does in consumer electronics market.  Yet the predominant model for technology transfer continues to be based on geographic regions (i.e. one TTO per university covering all domains on the university).

The key benefits of a domain-focused TTO are:

1)      Deeper opportunity assessment capabilities: On average, US TTOs file a patent application for a little more than every second disclosure that they receive (12k patent applications based on 20k disclosures for 2009 according to the AUTM report for that year). That ratio is in all likelihood far too high, especially considering that less than 200 of those patents achieved licensing deals over $1M. The challenge for TTOs is to increase disclosure count, not patent filing rate. But doing so requires more sophisticated technical and business expertise which most TTOs simply cannot maintain for each of their many domains. But a domain-specific TTO could do just that. If it’s a biotech TTO then there would be biotechnology technologists and market experts who would provide technical assessment of the research that comes inbound. In the current regional-model, most TTOs rely on the inventor to decide if their invention is worthwhile or not, which is not always good as the inventor often thinks their investment is the best thing since sliced bread. So it is important to get a second opinion from someone who understands technology and the associate commercial aspects. These TTO technologists could collaborate with the inventor and build a demonstration or prototype based on the early-stage research that would validate the commercial potential of the invention. You can only have that if the TTOs are domain focused as you cannot afford to hire a dozen different technologists per TTO. But if TTOs focused on a single domain, such as chemistry or life sciences, they could have a couple in-house experts within their team of 10 to provide feedback, evaluation, guidance, and support to the inventor.

2)      Deeper relationships with key industry players: Within the specific domain model the TTO’s only has to maintain connections with companies relevant to their domain. They have to maintain constant relationships with the top 10 or top 20 companies in their space, as opposed to having corporate connections that vary across several industries. A domain focus gives the TTO a more definite role, making sure they build and maintain relationships with specific companies. Such a relationship could be that they meet every quarter and discuss new inventions and projects. For example, here at TandemLaunch we maintain mutually beneficial relationships with quite a number of consumer electronics companies. For us, the relationship provides a steady connection to industry.  For them, the relationship provides a very convenient way to learn about new inventions. This regular interaction is just not something you can do if you are a general TTO, as you do not have the headcount and travel budget to maintain connections across all industries, for all prospects.

3)      More appropriate business structures: The next thing a domain-specific TTO can do is deeply understand the business practices of their domain. One problem for regional TTOs is that they are very often forced to apply the business practice of their biggest domain, often biotech or pharmaceutical, to all their prospective research. I’ve had many personal experiences where I’ve approached a TTO as an IT investor and encountered constraining or irrelevant actions that have nothing to do with my investment. These are often things that the TTO must ‘always-do,’ because of some aspect of the biotech/pharma template, instead of IT (e.g. Pharma is an environment where successes are infrequent but gigantic when they occur. Many TTOs have responded to this by developing convoluted “Blockbuster” mechanisms in their license agreements to capture those home run scenarios. The world of software commercialization is radically different and all this Blockbuster stuff is at best a waste of time and at worst actually sabotages the opportunity by creating future liability for potential licensees when the software technique diffuses as a minor element into their entire product chain which then suddenly gets held hostile by vague Blockbuster rules). The misapplication of business practices happens all the time, and can be solved naturally by domain-specific TTOs. TTO templates will be adjusted to their specific space, and there will be common practices relevant to the space. Additionally, domain-specific TTOs will have, in-house, domain-specific experts with domain specific credibility. This credibility would mean that members of the TTO would be seen more so as value-added contributors, and be more readily invited onto the boards of the portfolio companies.

4)      The ability to bundle IP: The last thing domain-specific TTOs could do, is foster the development of holistic IP strategies. From personal experience, I’m not sure to what extent TTOs attempt to integrate IP into the portfolio with the exception of domain-specific entities like some Israeli commercialization entities. I’ve never come across a single TTO offering that has been bundled. In other words, you only encounter one invention. No one at the TTO office approaches you saying, “Here’s a bundle of 6 patents, from 6 different inventors that are relevant to problem X.” Why don’t TTOs do this? I suspect that when you are regionally focused on a single university, most universities have one group working each topic. Who wants to be the electrical engineer who works on data-based sorting solutions when there already is an expert within the university who is working on the same thing? Domain-focus would allow TTOs to break out of this individualistic university culture and integrate meaningful IP portfolio from different groups. Of course licensees could also do the integration directly, as TandemLaunch does, but as assembling bits and pieces from 10 different TTOs with 10 different contracts and 10 different structures is not for the faint of heart.

Given all of these benefits, why aren’t domain-specific TTOs popping up everywhere? I suspect that the biggest barrier is just organisational politics. That doesn’t seem like a good enough reason though. Beyond politics, I can only think of a two challenges for domain-specific TTOs:

1)      A less obvious funding source. The lack of connection to a single host university makes the budget source, and resulting accountability, less clear. Personally, I don’t see this as a major problem as TTOs should be managed on the basic of economic performance anyhow rather than feeding of the education budget of the university (and receive their budget from local economic development funds). Even without that major shift, it should be fairly straightforward to group budgets in a city with multiple universities (as well as sharing rewards in the same way).

2)      More travel. There can be a greater travel burden for domain focused TTOs to meet inventors. That said, to travel to the inventor who is in the same province or state is much more preferable than having to travel to customers who are around the world and within a variety of domains. Domain-specification also doesn’t have to go completely global to be efficient. For example, Montreal has 7 universities and thus 7 TTOs in the same city. The Travel impact would be trivial if those TTOs where to switch to a domain-focused business model.

On the whole, domain specific TTOs have the potential for better technology assessment capabilities, deeper relationships with key industry players, more appropriate business structures, and the ability to bundle IP with few negative side effects. Also TandemLaunch is not a TTO, our ability to focus on a specific type of research coming from a large number of organizations rather than all research from a single entity has allowed us to penetrate much deeper into development and commercialization activities for our projects. At a different level the same would be true for domain-focused TTOs.

General

The CTO Role Broken Down

Leave a Comment Posted by on May 22, 2012

The CTO fills a critical role in a technology startup. The title is really broad, and people tend to cling to different aspects of it, but what do you really need your CTO to do in a startup? Here’s a quick breakdown for aspiring Chief Technology (or Technical) Officers.

 ‘Chief’ communicates hierarchy and seniority. A chief, by definition, is a management role. There is a big misconception about who should be a CTO. A CTO shouldn’t necessarily be the smartest code developer because, as a CTO, they must by definition be an integrator and a manager of people. CTO’s have to understand the entire organization.  Specifically, they need to understand what all of the technical parts of the team are up to, what all the players in the organization are up to, and what the programs are that are underway. Moreover, this must be done in a way that allows one to zoom into the individual details while keeping the overall technology strategy in mind. As a CTO, you must know the vision for the company’s IP. You must avoid being pulled down into the weeds and stay at a high enough level to maintain the strategic level vision.

‘Technology’ or ‘Technical’ is the obvious part of the job description. The CTO needs to understand the technology. But there’s actually more to it than that; The CTO has to have the ability to share his opinion while engaged in any major business activity.  The CTO is someone you do not want to have hidden in the basement, but rather someone to have front and center applying the technical vision of the company. It’s important for the CTO to be able to project that technical vision on the spot, by going into a meeting or strategic discussion either internally or externally, be hit with a new set a parameters “Would this work with x?” or “Would this work with application y?” and, at the drop of a hat, have a sufficiently broad understanding of the technology and operating details to not only answer the questions but extrapolate: “Yes, and this is how we’d do it.”  That kind of knowledge is unique, and as your company reaches any kind of scale it becomes more difficult. The ability of a CTO to do that will give you the ability to advance the development agenda by leaps and bounds, not just by setting a direction, but responding well to shifts in the landscape. Nothing restores more confidences in a strategic partner or investor than a technical leader who can, not only articulate what has been done, but seems to have a clear command about what needs to be done in the future given the variability and uncertainty of that future.

“Officer” means liability and responsibility across the organization. Like a board member there is a certain amount of governance required. The ideal CTO should know the business strategy and operational strategy to an extent where he can be a functional participant and contribute outside the technical domain to the executive. CTOs use knowledge of the technical domain to inform strategic decisions while understanding and being comfortable with the other core areas of the company. Ideally the CTO should be able to take over core preparations, engage, and possibly close a commercial relationship while stepping in for the CEO. Having these skills makes one a much more effective CTO.

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It’s all because of Maria!

4 Comments Posted by on April 10, 2012

The New York Times has an article out about encouraging women to enter the field of computer science. The fellow on the left has probably done some useful stuff in computer science, but I know for a fact that the lady on the right has changed my life. And it sounds like I was neither the first nor the last.

Elaine Thompson/Associated Press

 

Publicly, I was privileged to have Maria Klawe as a Board member at Sunnybrook and BrightSide. Her wisdom during those times rescued the company from disaster on more than one occasion and I am professionally very grateful for her guidance. But that doesn’t even come close to my gratefulness for an even simpler, but much more impactful, act of Maria’s.

Maria was the Dean of Science when I came to UBC for my undergraduate studies. My first few days at UBC were utter hell. Housing had put me into a female dorm thanks to my first name (and then refused to let me into that dorm); and I had suffered in my English admission test, and, as a direct consequence of my linguistic inability, had massively failed the “Physics Aptitude” test to the point that the responsible professor encouraged me to “consider a non-university career.” I grew up in a village in Germany in an environment where few people, including my parents, went to high school much less university. I was in Vancouver for the first time in my life and about ready to go home in defeat after the first week. Then I met Maria.

Actually, I didn’t so much meet her as see her on stage during her welcoming speech to new first year science students. She was juggling on stage, and she sucked at it. That’s when she said the words that would profoundly change my life: “I just started to learn juggling. I am not very good at it yet. But that doesn’t mean that I will never be good at juggling or that I should give up.” So I didn’t give up either. Through her, I met her Associate Dean Lorne Whitehead, who offered me a spot in his lab and would go on to co-found Sunnybrook with me. The rest is history.

That makes Maria responsible for much of my professional evolution. It also makes her the reason why I rarely refuse a meeting request from a person who seeks guidance (including from those who want to develop wooden ‘scaffolding’ to elevate fat cows because that somehow makes them feel better…); why TandemLaunch runs an open internship program where the only qualification is the will to succeed (which in turn, completely organically, led to a gender balanced tech company even at the top leadership – no matter how much the broader tech community decries that as impossible); and why I “waste” countless hours coaching students, children, inventors and aspiring entrepreneurs. What Maria taught me is that often all it takes to enable dreams is to provide a tiny nudge at the right time. I suspect that she doesn’t even realise what she did that day on the stage. But that doesn’t change the fact that I will be forever grateful for it and work hard to do the same for others.

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