Have you had an idea that’s been banging around in the back of your head with annoying frequency? One prospective entrepreneur described his to me after a social gathering: “I have this great idea but I just don’t know where to take it from here. I don’t have money or experience in running a business, but I can’t help but feel that this concept would really make a cool startup company. There’s a need for these types of ingredients and I think my process could make them cheaper.” 

Some people launch a new business simply because they need a job…My son graduated a few years ago and it was only out of desperation that he and a couple of college friends formed a startup in the motion picture industry. They got tired of unpaid internships! But in the technical marketplace, it takes a lot more than hard work and a couple of good friends. No matter whether your idea involves a new functional ingredient or a biotech product/service, maybe—just maybe—it might be the right time in your life to consider such action.

Startups require an original concept along with a plan that leads very quickly to something that can generate revenue for investors. Ideas are easy to come by when you are young and full of energy, which is why this career track appeals to the early bench-level technical employee as much as the experienced executive.

It’s not easy to dig up the required chutzpah—and the backing necessary from other risk-takers who will support you. In this month’s column, I’ll lay out the five rules of the road for the person considering moving out of a regular job and into the thrill ride we all refer to as “the startup company.”

Rule #1: It must be a new idea and meet an unmet market need

“This is the first thing that any investor will want to know,” says my friend and colleague, Dr. Dick Woodward. “Even a smaller angel investor would pass on a business that doesn’t address a need in some unique way. A promising technology is only as good as the benefits others derive from it…cool technology on its own is a business plan destined to fail.”

Woodward has been involved in many startup businesses, some of which were later sold to larger concerns; others just faded into the woodwork after a great deal of effort. In the world of the startup, you must give it your “all” despite the fact that the results could be on either side of that divide. There’s no middle ground.

The common mistake that Woodward is referring to is sometimes called a “technology push” instead of the preferred “market pull.” Because many ideas from scientists or engineers fall into the former category, where the concepts are “cool”—they move forward without adequately addressing the actual need for that product or service in the marketplace. Slick new technology doesn’t solve any problem on its own.

Dr. Spencer Silver, the chemist who invented the adhesive for 3M’s Post-It notepads, actually discovered that unique sticky substance long before it was a success for 3M. When even the 3M marketing people couldn’t think of a way to use it, Silver personally worked out an idea for it. As we all know, it was quite a success once he had shown some kind of “market pull” with his little notes that you could literally stick and re-stick all day long.

Prove that your idea fills a need…if you become very good at quantifying that need, you will show investors how the market will pull the business into profitability. Paint that picture repeatedly as you get out in front of people and keep improving your communication style, slides and marketing materials.

Rule #2: Don’t be wedded to the original idea—be flexible.

Despite feeling great after putting your first angel investments into the bank, never feel like your ideas are completely set in stone.

That’s because when a bump in the road comes along, the entrepreneur must sometimes think his way out of the problem. He or she might have all the ingredients needed to be successful, but she might need to shuffle the deck a bit and rearrange the plan to suit the circumstances. You can’t do this if you are rock solid and immobile on the original plan.

“After we started building our startup a lot of evolution went on,” Woodward told me. “Our original idea used the technology the founder had developed for a different space entirely. But as we got out there and began talking to others, we had feedback that said no one cares about that area we were carving out…this was a real concern. Our advisors were suggesting this space or that space…when we began simultaneously experiencing some regulatory pathway issues with the idea, it seemed like a good time to listen and move into a different space entirely.

“Had we been wedded to the original concept, we’d have been fighting a battle we didn’t have to deal with. The founder came in one day and said that ‘there’s a better way.’ I was happy to hear that. It’s so important to be adaptable,” said Woodward.

Rule #3: Get as much good advice as you can – and then listen to it.

Good advice, from top consultants or well-known names in your field of interest, can be expensive. In the formative stage many entrepreneurs wouldn’t even make the approach. But successful people will tell you that these kinds of recommendations would be worth going after, even early on.

“You need to have significant people giving you advice. They may work with you under the promise that you’ll get them some stock options further down the line,” Dick Woodward told me when I asked about the timing of this approach. “My guess is that they’ll come on board because of the respect they have for you or your idea, and the fact that they know your reputation for getting things done.”

When you are looking for advice in the early days, consider going back to your acquaintances at the university, or even an old boss who may be retired. A professor or an experienced businessperson’s take on your idea and the connections that he or she can suggest…these are worth their weight in gold as you gear up.

Rule #4: Check your ego at the door.

When I ask my entrepreneur friends about the kind of advice that they might pass out to those considering leaving the day job for a dream, they have often commented that getting some age and experience into the budding business is important.

“Find someone to bring into your confidence who might bring a different set of skills, perhaps even someone from a different generation. This is one of those ‘1+1 = 3’ scenarios,” one experienced exec told me who’d just retired after a decade launching a concept into a business. “The big issue for most, however, is that they need to watch their ego when they do this. They need to share the wealth—find a way to celebrate the new ideas that come forward, and not feel like they’ve given away the store.”

I understand that technical founders need to find a way to “pair up” with someone more seasoned, someone who complements the founder’s strengths in his or her field of expertise.

“Most people who built a successful business, or who developed a world-class reputation in their scientific or engineering expertise are over 45 years old.” Woodward cautions, “You’ve got to check your ego at the door and work with others of a different generation. Good seasoned business advice is critical. There are enormous numbers of mistakes you can fall into, and any one of them could trash your company.”

Rule #5: Avoid all fantasies about getting rich quick.

Finally, the last “rule” that has come up time and again in my interviews of executives who have built a startup involves the tendency that entrepreneurs have to think that their businesses will become cash machines shortly down the road.

The young founders of high-tech or social media companies like Google or Facebook may have found incredible riches shortly after their businesses blossomed, but this isn’t the norm.

“It takes years to build a successful startup company, one that will transition through a number of stages before anything ever reaches the market,” they say.

As a recruiter who has worked with startup companies for many years, I can validate that comment.

So, what’s the best indicator of at least the possibility for success, and perhaps even later riches? I like this idea, from Woodward. He suggests that anyone considering becoming an entrepreneur take his or her idea and put it through this simple filter:

“You can put any business idea to task with two simple questions,” says Woodward. “Ask yourself—So what? And who cares?” 

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David G. Jensen
Founder and Managing Director of CTI Executive Search
[email protected]
928-274-2266
www.careertrax.com
 
David Jensen is the founder and managing director of CTI Executive Search, a unit of CareerTrax Inc, a leading search firm working in the life sciences. Previously, he had been a managing director at Kincannon & Reed, a 30-year retained executive search firm where his company, CareerTrax, had been a contractor. In 1985, Jensen founded and was CEO at Search Masters International (SMI), a top executive search practice working with biotechnology companies, which was sold in 2001 to a $4.4B human resources service firm. Prior to 1985, Jensen had established a life sciences practice for Govig and Associates (Phoenix, AZ).