Post-PhD Careers: Entrepreneur
Scientist Entrepreneurs
In general, research is only capable of actually making people’s lives better if it is incorporated into a commercial product or service. Several of the scientists I most look up to have taken their work commercial. I’ll give two examples: Craig Venter and Rodney Brooks.
Craig Venter was a professor and later a researcher at NIH, but he became convinced that academia was moving too slowly on genomics. So, he founded Celera Genomics, which sequenced the human genome far faster and cheaper than the public effort. The company patented genes as it discovered them. Even though Venter was now at a for-profit company, he continued to publish high impact papers. Later, Venter was fired from Celera due to a conflict with an investor, but he used the fortune he earned to start the non-profit J. Craig Venter Institute (JCVI), where researchers can do high impact work unfettered by many of the demands imposed at universities (e.g., teaching). JCVI continues to do cutting-edge research and even employs a Nobel laureate.
Rodney Brooks was a distinguished robotics professor at MIT for many years. He became convinced that the best way to get robots into the real world was to start a company, so he left academia to found iRobot, the company that makes Roombas as well as military and police robots. More recently, he started Rethink Robotics. While Craig Venter never stopped publishing, Brooks has, for the most part, left the research community.
For the past year, I’ve thought a lot about creating a start-up in order to commercialize some of my object recognition technologies. But, it is hard to commercialize a technology without incorporating it into an actual product.
In general, scientists receive no training in entrepreneurship. I’ll give an overview of some resources for those interested in considering this option further.
The Challenge
Often, the big challenge with commercializing your research is turning it into something practical. If your research enables an entirely new product, then you have to find a market for your product, which can be a difficult undertaking. The primary way to find your market is to talk to potential customers about their problems and how you might be able to help solve them. If your research develops a new way of doing something others have already done, e.g., developing a superior object recognition algorithm, then you may have a difficult time entering into an established market. Often, the best way to do so is to find customers that use your competitors product, and show them how your new product is superior and will make their lives better.
Working With Your University
In the United States, most universities force all graduate students, postdocs, and faculty to sign a contract that gives the university ownership of any inventions that you create using university resources. This isn’t a terrible deal — the University of California gives inventors 35% of the net royalties and fees it earns per invention. Another benefit is that the university will pay to file the patents related to your invention. While it isn’t terribly hard to file a patent in a single country, filing patents throughout the world, which is what the university would do, is very expensive. This also means that the university will only file patents on a small percentage of the inventions disclosed to them. The University of California will file a provisional patent application, which is relatively cheap in the US ($130 as of today), and this will give it a year to decide if it wants to file an actual patent on your invention. Typically it will only file an actual patent if it can find a company interested in licensing the technology. Many universities will help an inventor create a start-up to commercialize their product, but the university will then charge your start-up fees or royalties to use your invention.
Outcomes
Once your company is past the start-up phase, you have three primary outcomes:
- Small-scale life style business – There are an enormous number of successful small businesses in the United States. Pursuing a life-style business means gradually growing your company from a few people to perhaps 50-500 people. Assuming you are successful, this route would lead to a very comfortable life as a millionaire. American small businesses have about a 40% chance of being successful ventures, whereas 10% or fewer start-ups succeed (e.g., the next two options). As a PhD, one’s chances of success are probably improved compared to these numbers.
- Get acquired – Sometimes people create companies that aren’t actual businesses. They have technology and a demonstration of that technology, but they don’t actually have an income. In this case, often the founder’s wish for a large company to acquire their start-up. The main two reasons a company will purchase a start-up is that they want their product, e.g., Facebook purchasing Instagram, or their people, which is known as a talent acquisition. Both are fairly common in the technology sector. Typically this can lead to instantly making the founders multi-millionaires and will give them a employment for the next few years, since they are often contractually obligated to stay a certain number of years.
- IPO – This is what most people think of when they think of entrepreneurs. You start a company, you take it public, you become the next Mark Zuckerberg. This is a road to enormous wealth and power, but most companies don’t make it to the IPO stage. I suspect many founders refuse buy-out offers, because they think their company will be the next Facebook. This can be a dangerous gamble. Digg was in talks to be acquired by Google for a reported $200 million in 2008, but they refused and ultimately ended up being sold for less than $20 million. However, being successful with your IPO will allow you to impact science in big ways due to the media attention you will garner and your vast wealth. Prior to getting that far, you will likely have to fight to stay in control of your company, since you will need venture capital and many investors will push you from CEO into the position of Chief Science/Technology Officer.
Resources for Learning to Become an Entrepreneur
As a scientist, I strongly recommend that anybody interested in creating a company get educated in the area before getting too far along. One of the first books I suggest reading is “Mechanics of Innovation” by Richard McMurtrey. It describes how to translate your research into a company, and covers topics such as SBIR and STTR grants, which are often specifically for scientific and engineering projects, that other books overlook.
McMurtrey’s book won’t tell you how to assess if your idea is sound or how to turn your research into a product. For that, I suggest turning to Steve Blank. Blank walks you through the process of creating a start-up, with an emphasis on finding a viable and scalable business model. I’ve read his earlier book, but from what I’ve heard his latest book, “The Startup Owner’s Manual,” is a bit superior. Steve Blank also has a free course on Udacity entitled How to Build a Startup. I’m hoping to work through the course this summer. Blank also started NSF’s innovation corps program (i-Corps), which offers a small grant and training in entrepreneurship to PhD students and postdocs. I know of two teams that won i-Corps grants, and it seems like it was a very beneficial to both of them.
References & Resources
Fletcher, A., Bourne, P. (2012) Ten Simple Rules to Commercialize Scientific Research.
Udacity’s “How to Build a Startup” course taught by Steve Blank
“The Startup Owner’s Manual” by Steve Blank and Bob Dorf