How To Create and Launch Breakthrough Technology Ventures from Research Laboratories, Part II
The Strategy, The Structure, and The Teams
This is Part II of a series of three posts on how research laboratories and universities might create and launch breakthrough technology ventures. (Of course, many parts of these posts are also relevant to anyone founding a venture).
Part I of this series described the elements necessary to build a breakthrough technology venture. In this post, Part II, I delve into the five key groups that were the driving force behind SRI Ventures' success:
The Ventures Group
The Vanguard Teams
The Venture Advisory Group
The Venture Capital Forum
The Commercialization Board
The Ventures Group: The Ventures Group was composed of exceptional individuals I had recruited to SRI Ventures. Their expertise was in the combination of all three areas: markets, technology, and venture creation. Importantly, they possessed the vision and boldness to identify seemingly "crazy" opportunities that challenged conventional wisdom. They also had the skills and patience to guide founders through the venture creation process, acting as their "sherpas" on their climb to "Mount Everest." We recruited specialists across various focus areas like software & AI, biotech & health, and engineering & robotics.
Of course, the primary task of the Ventures Group was to identify breakthrough technology venture concepts and assist in their creation. These concepts could come from almost anywhere: from our divisions, from the Ventures Group itself, from entrepreneurs who came to us with a venture concept, or from entrepreneurs we reached out to when we had a venture concept we wanted to work together on. Once we agreed on a potential set of concepts, we would form a Vanguard Team. The purpose of this team was to help conceive of and advance the opportunities and bring the best ones to life.
The Vanguard Teams: I described the Vanguard Teams in Part I, and to briefly restate, they were composed of enthusiastic and passionate entrepreneurs, scientists, and strategic advisors who worked together to conceive of and develop an initial breakthrough technology venture concept that might solve the eleven elements from Post I. Every Vanguard team was supported by at least one member of the Ventures Group. However, Ventures Group team members were not our only resource for helping a Vanguard Team. It was essential to have a diversity of points of view, and we sought to have individuals who had previous successes in these market and technology areas. To achieve this diversity of opinion, we formed the Venture Advisory Group.
The Venture Advisory Group: The Venture Advisory Group was composed of highly accomplished individuals who came to us from outside of SRI. Several of these individuals were retired venture capitalists with strong technology backgrounds.
One stellar example of a team member of our Venture Advisory Group was David Liddle—who shared his deep and broad experience as a researcher, entrepreneur, CEO, and venture capitalist.
David had that background that made him immensely valuable to our venture groups. He was an Emeritus Partner at USVP. He was co-founder of Interval Research Corporation and a consulting professor of computer science at Stanford University. He was at Xerox PARC and headed the development of the Xerox Star computer system. In 1982, he co-founded Metaphor Computer Systems. He holds a Ph.D. in EECS from the University of Toledo in Ohio.
The Venture Capital Forum: As our Vanguard Teams made progress, it was important to get advice and support for our emerging ventures from VCs who were outside our own circle, as mentioned in my post “A lesson for founders of breakthrough ventures.” Many of our team worried about the wisdom of showing VCs the ventures at this developmental stage. Some people thought it was a bad idea because you’re basically showing them the “sausage making” rather than presenting them with a “neatly wrapped package with a bow on top.” They felt that the VCs might be turned off by the incomplete nature and not consider the venture again.
However, we decided to proceed with our approach, believing that the potential benefit of the VC input was far greater than the risk of losing their interest. In hindsight, the strategy worked beautifully. The VC feedback proved to be instrumental in refining ventures. In addition, many of these VCs later became investors in our ventures.
The Commercialization Board (CB): To accomplish all these tasks, we needed both a fund as well as a decision-making process for allocating our resources. So, we formed the Commercialization Board. The members of the Commercialization Board were senior members of SRI who had deep experience in creating and launching ventures. They included myself as Chair, as well as the CEO, the General Counsel, and several of the Presidents of the technology divisions.
It is important to emphasize that the Commercialization Board did not allocate funds in the same way as a VC or Angel might allocate them to an existing venture. Our ventures did not yet exist. They were just concepts until the time at which we decided to incorporate the venture. We chose not to do that until we had identified the founding team, built the value proposition and venture deck, determined the intellectual property to be invested, established the cap table, and gained external VC funding.
If a team had what we felt was a great concept and needed resources to perform some of the tasks we outlined in Post I, they could apply to the Commercialization Board (CB) for funding to accomplish those tasks. Until then, any concept development was not funded by the CB. They were dedicating their own time to it.
The CB would review the request, ask questions, and provide what was often much-needed input. They would then agree (or not) to provide funding for those tasks. Sometimes, it would be clear that the idea needed to be altered to a new market, or different technology, or more. If the team was motivated to make those changes, they were encouraged.
Then, after a few weeks or so, the team would come back to the CB to show what they accomplished with the previous funding, and to ask for additional funds to perform the next tasks. In this way, teams would not only gain good advice from a diversity of leading individuals in the CB but also, the regular meetings would provide a “heartbeat” for measuring their performance. If the team did not make sufficient progress, the CB would not continue funding.
In general, the Commercialization Board allocated funds for these purposes:
For retainer agreements with Entrepreneurs-in-Residence (Entrepreneurs that we recruited from outside SRI to help us conceive and develop our ventures) as well as roles such as a potential CEO, CTO, or other founding roles
For the “unsold time” for SRI researchers to work on the venture concept
For materials and supplies to build a demo
For reports and research materials
For travel and conferences
My next post, Post III, will be the final post in this series and will give a few examples of how all these teams worked together to create breakthrough technology ventures.
Your Venture Coach,
Norman
That seems like schooling