Author: ronn.kliger@gmail.com

One of the reasons I left my previous job was out of frustration with the slow pace of decision-making and action. At my previous company, a Fortune 500 semiconductor manufacturer, everything took a long time to both decide and impliment. I knew that at a startup, the pace would be faster and things would get done faster. What I didn’t quite appreciate to its fullest is what it would be like dealing with large companies from the outside.

My startup’s ability to make fast decisions and put them into action promptly has been refreshing and satisfying. But what I have also come to learn are the downsides of being a startup—getting other (larger) companies to pay attention to you and to act at anywhere near the pace of a startup!

At my previous company I had no trouble getting meetings with potential customers, technology partners, or suppliers.  Between the company’s global sales network and its strong brand, when I wanted to reach the right person I almost always could.

That is not the case with my startup (and virtually all startups I would say). I’ve found that making contact with the right people at the right companies is a major challenge in and of itself. To start, just identifying the right individual at a company I am targeting can be difficult. I lack the pre-existing relationships that a Fortune 500 company’s sales force has. I also lack the credibility and brand name of a large company.  As a result, I have a much higher barrier in getting people’s attention and stimulating their interest as a startup.

By the way, these comments do not just apply to potential customers. They also equally apply to potential suppliers and partners. Even when we are looking to purchase something, we often encounter difficulties getting attention. The near-term business we bring a supplier is minimal and the promise of future high volume is often viewed skeptically. If we are seeking something non-standard, as is sometimes the case, the resistance can be quite high.

Even after succeeding in gaining interest and attention there still remains the dynamic of slow decision-making and action from large companies. They simply have more complex organizations and a broader set of priorities than startups. They also lack the urgency that a startup’s ongoing cash-burn creates in terms of attaining accomplishments within fixed time windows.

This problem is prevalent at the moment for Uniqarta.  We have received strong interest over the past few months from multiple large potential customers. But the pace of follow-through has been slow. Open questions remain at each of these companies as to exactly if/how/where/when they should engage with us let alone putting such decision into action.  This, in turn, creates uncertainty for us as we are not getting customer feedback fast enough to support our strategic decision-making and market validation efforts.

So, what can we do about this?  In many respects, these issues are interrelated and are centered around my startup’s credibility.  If I can solve a big company’s problem and communicate this credibly I’ll get attention. With a big company “in the fold” I become more credible to suppliers. Yes, steps such as developing and harvesting my network or executing an effective PR campaign can help get me connected with the right people. But at the end of the day, it truly is a question as to how compelling my company’s solution is and how credible I can be in communicating it. 

We therefore need to continue charging ahead with our technology development—even if we don’t yet know precisely where we’re going to focus with it initially. The more fully developed the technology is, and the closer I am to being able to put a solution in a customers hand (even a prototype), the more credible our story is.  This is true even if our solution is not a precise match with a given customer’s needs.

That still leaves me with the dilemma of big companies’ slow action—even after I’ve caught their attention. I don’t know that this can ever be fully mitigated but I don’t want to paint all big companies with the same brush. Some are faster than others and this needs to be a factor in my customer selection process. I also believe that the more compelling our solution is the higher a priority a big company will put on it and consequently move more quickly.  And finally, it is essential that I reach higher up in target companies’ hierarchy where I can more effectively influence prioritization and resource allocation.

None of this is easy.  But finding ways to work with large companies and mitigate their slow pace is essential. Any notion, when I left my previous job, that I was abandoning big-company frustrations were false.  It’s just that I am now experiencing them from the outside rather than from the inside!

In my last post I wrote about how Uniqarta’s technology development was ahead of our market development. By this I meant that we have demonstrated our technology with functional prototypes, established a vision of where we want to take our technology, and defined the required steps to get there. This could not be said, to the same extent, on the market development side relative to market focus, customer validation, and product definition. 

In the past month that gap has narrowed.  We have focused our market exploration on the logistics/inventory management segment I wrote about last time.  We have engaged with three well-establish companies in this segment who see value in our technology and are working to define, validate, and select specific application areas in which to focus.  A key question ahead of us is the extent to which the targeted application areas (and the required solutions) across these three companies align. We may end up having to focus on a subset of these companies if their needs and interests are dissimilar. 

It remains to be seen where, exactly, within the logistics/inventory management area we decide to focus.  This is a broad area encompassing diverse applications such as retail items, healthcare, factory automation, and others.  These have similar technology needs but the specific product we provide and how we position it could likely vary.

Changing topics, I spent a lot of time in October on our fundraising efforts. I’ve received sufficient investor feedback to determine that I’ll end up somewhere in the middle of my targeted $0.5 to $1.0 million range.  This should be sufficient for Uniqarta to meet its 2015 goals although having a bit of a larger buffer would certainly be nice!  I’’ll be closing most of this round in November and December and then look to complete it with a few remaining investors in January.

This past month saw the one year anniversary of when my co-founder Val Marinov sent me an email seeking a business partner. I thought it appropriate, therefore, to provide an update and some reflection on how things are going.

Fundraising

I am about six weeks into my fundraising activities and have a better sense of how our story is being received. In general, investors feel comfortable with the strength of our team and our technology. They also are pleased that we have a paper manufacturing partner who shares our vision and is collaborating on technical and market development. A few investors have noted that our technical development is ahead of our market development pointing out our current lack of market focus and customer development. Some investors are comfortable with this at a seed round and focus more on our description of available markets, their problems, and our solution. Other investors are not and have noted that it is too early for them to invest but are interested to talk in the future once we have progressed further. Overall, I think I have generated enough interest to raise the $0.5-$1.0 million I am seeking.

Technology Development

Several months ago we changed our strategy in terms of what technology we are going to bring to market initially. The company was founded on the foundation of the laser-enabled chip assembly process that my co-founder had invented. This technology remains at the core of our vision but we have developed an alternate approach that will allow us to get to market more quickly and with less investment. We have therefore focused on this alternate approach and have established the laser-based process as our second generation solution. Over the past four months we have demonstrated proof-of-concept of the alternate approach, fabricated prototypes, and filed a patent application on it. We are now in the process of setting up a fully-outsourced manufacturing flow that will allow us to use this process to manufacture ultra-thin RFID inlays in moderate volume.

We also have made good progress on the paper embedding process in collaborating with our paper manufacturing partner. While we have previously shown that we’ve been able to embed inlays in paper one at a time by hand, we need to establish an automated, high volume capability to do so.  Our paper partner has allocated engineering resources and time on their paper machine to run trials evaluating various embedding methods and materials.

Market Development

We have been exploring three market segment categories. The first, logistics/inventory management, is a large, existing RFID segment that is experiencing rapid growth driven by retailers’ adoption in apparel and shoes. These product categories present tremendous inventory complexity for retailers with their various sizes, colors, and seasonal changes. RFID technology allows retailers to improve their inventory accuracy, reduce stock-outs, and consequently increase sales. Uniqarta’s technology can drive adoption of RFID into a broader range of logistics/inventory management applications by embedding the RFID electronics directly within a product’s packaging rather than requiring a tag to be added on.

The second segment we are exploring consists of security and safety applications. These are applications where there is a need to prevent fraud or improve product safety. Existing examples of RFID adoption in this space include passports and certain types of driver’s licenses. Future examples include pharmaceuticals or even certain food products. Uniqarta’s technology can make RFID available in such applications at a lower cost, more adoptable form factor, and higher degree of security than other RFID implementations.

The third segment consists of interactive print applications. These are applications in which printed materials such as business cards, advertisement posters, etc. are embedded with an NFC (Near Field Communication) chip that can be read by a smart phone. This adds an interactive digital dimension to printed items to enhance customer experiences, increase advertising effectiveness, etc. Uniqarta’s technology is well-suited for this as the NFC capability can be embedded within printed materials with no impact on thickness, flexibility, or print quality.

Each of the above market segments have positive and negative attributes in terms of being Uniqarta’s first market.  We have been engaged with potential customers in all three segments to learn more about their needs, their existing solutions, and the value that our technology can deliver.  This process will continue for the next 3-6 months as we establish a capability to deliver evaluation products to potential customers and narrow down our market focus.

Bottom Line

As I look back over the past year I have mixed thoughts. On one hand, I can’t help but wonder where the year has gone and how at the start of the year I had expected to be much further along than we actually are! But on the other hand, I have this year’s experience under my belt and now realize how naive my initial expectations were. In actuality, while there certainly were things we could have done better (and faster), we have accomplished a tremendous amount. We have demonstrated proofs-of-concept on both a new chip assembly technology and a paper-embedding technology, filed patent applications addressing each, secured a valuable paper manufacturing partner, established a small engineering team and facility, and stimulated interest from a number of potential customers and investors.

Our second year will be critical as we raise our seed round. We’ll need to select and develop our initial market, start shipping product, and demonstrate market traction to justify further investment. I can’t wait to see how this next year unfolds!

Do you know certain people who seem to consistently have “good luck”? Or others than seem to be consistently plagued with misfortune?  I think we all have people in our lives that fit one or both of these categories.

I’ve often reflected on the role that luck has had on my career. For example, my present position as Uniqarta CEO was the result of stumbling across a website where my present co-founder was seeking a partner.  It also was the result of a previous (less attractive) startup position not working out. (See my Founder/CEO Conflict post of June 2013).

I could cite many other examples from my career (and personal life)
of positive outcomes being the apparent result of good luck/happenstance/coincidence—pick your term.  So what’s going on here? Have I been somehow blessed with better fortune than others? Or, is there some other dynamic at play?  I’ve never been able to settle this question to my satisfaction until coming across this article by Richard Wiseman, a professor of psychology who has studied and written about “the principles of good and bad luck”. 

The key paragraph from the article is as follows:

My research revealed that lucky people generate good fortune via four basic principles. They are skilled at creating and noticing chance opportunities, make lucky decisions by listening to their intuition, create self-fulfilling prophesies via positive expectations, and adopt a resilient attitude that transforms bad luck into good.

This makes a lot of sense to me as I believe that over the course of one’s life we generally have the same level of good and bad “luck”.  The difference is what each of us does with the presented opportunities and how each of us deals with positive or negative outcomes.

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Fundraising update:
It took most of the past three weeks to identify interested investors and schedule meetings with them.  The first of these meetings will take place this coming Monday and extend through mid-September.  At that point I should have a good set of feedback to help me assess our story, make adjustments, and continue on.  I am still sorting through various options in terms of the type of investor to seek, the amount of funds to raise, and the timing of this next round.  I’m hopeful that after these initial discussions I’ll be able to focus in on one particular type of investor.

Things have been moving along pretty well. We’ve opened a Fargo office where our development team is based. We’ve got a paper partner with whom we are developing IC/paper integration processes. We’ve identified our initial market and have a lead customer in place. And we’ve established a timeline that gets our first product on the market by mid-2015. All that’s missing is the money to make this happen!

I’ve spent the good part of the last few months preparing to talk to investors. This has involved the creation of a two-page executive summary and a 15-20 slide presentation. Each of these documents went through about ten iterations with my team and advisers before I had something that I felt was ready to share.

I’m not yet certain what types of investors I am seeking. I’ve encountered two schools of thought. One is that I should raise as much money as I can as early as I can and the other is that I should only raise as much as I need for the particular stage my company is at. The first approach would imply I talk to venture capitalists while the second would imply wealthy individuals and angel investors.

To start, I’ve selected just a few investors of each type to see how my story is received and learn more what these different funding strategies might look like. By September things should hopefully be more clear and I can then focus in on a particular strategy and investor type.

Here’s an appropriate link for this weekend and for this blog:
Declaration of Independence: 8 Entrepreneurs Who Left Big Corporate Jobs for Startups

A few quotes that resonated with me:

“Don’t just base the decision on financial [impact]. As I have discovered, the flexibility, learning opportunities, and value of building your own [business] can have a far bigger impact on your life.”
— Jasper Vallance (ex-Google)

“The hard-earned comforts of a good job can taste like sweet fruit found at the summit of a long career climb. Then one day you look around and realize you’ve grown fat and you’re stuck on a plateau, not a peak. You miss feeling hungry.”
 — Dan Yoo (ex-LinkedIn)

“And now I feel like you’re on your own in this big, bad world and you have a lot less appeal because [you] don’t have the power of Google. And yet, I’ve never felt more accomplished because the mistakes you make are yours and the victories you have are yours, too.”
— Anastasia Leng (ex-Google)

Happy Independence Day!
Ronn

I have just entered Uniqarta in Cisco’s competition focused on the Internet of things. In Cisco’s words: “This global open competition aims to recognize, promote and reward innovators, entrepreneurs and early-stage startup businesses that can help us transform the industry by connecting the unconnected.”

The competition involves three rounds with the last taking place in September/October involving six finalists. Making the finals would bring Uniqarta some good publicity, access to Cisco expertise, and a crack at the $250K prize money.

You can view our entry here. It also provides a preview of how I intend to position the company to investors. If you are extra motivated go ahead and vote for our entry by clicking the thumbs-up “like it” button at the top right. (You’ll need to register first.)  Entries receiving large numbers of votes will get more attention and the entry with the most votes gets an automatic entry into the semi-finals.  Spread the word!

A lot has happened in the month since I last updated this blog. Some has been good and some has not. Some has been expected and some has not. But that is normal for a startup, actually normal for most any business now that I think about it. But what I’d like to focus on here is the fact that this is starting to feel a like a real company—yes, an extremely small company, but a company nonetheless. This is no longer just a couple guys working out of their basements.

We now have two full-time employees and are opening a Fargo office June 1st. That means we now have an ongoing monthly burn in terms of payroll, rent, etc. and a point down the road when we’ll run out of cash. That ratchets up the pressure to raise more money which in turn places hard deadlines on achieving certain milestones. I knew this would be the case going in but to actually now be in this situation feels quite different.

Not that I’m overly stressed about this—at least not yet. We have a comfortable cushion and our milestones are reasonable. What I don’t yet know is how investors will react to our story.  I think we have a compelling one but until I actually start engaging with investors, I don’t know precisely how they’ll respond.

There is also the matter of determining what kind of investor to seek. We’ve had early, informal interest from a range of investor types—VCs, wealthy individuals, and strategics.  A lot of my time in the second half of this year will be spent talking to potential investors, figuring out what type we want, and (hopefully) raising our next round.

I love what I’m doing! Sure, it remains to be seen whether my startup is successful. We have no products, no customers, no revenue and I’m working out of my basement with no income. But I love what I’m doing.

What prompted this sudden proclamation? Well, I happen to have recently met several colleagues from my former company. Listening to them brought back the feelings as to why I left and increased my appreciation for what I am doing now. The challenges, personal growth, and gratification this new experience is bringing me are things that had been long lacking in my big-company job.

As far as Uniqarta goes here is a quick summary of what’s happening:

• We’ve hired our first employee who starts at the end of April.  In conjunction with that we will be renting space at the incubator that is on the North Dakota State University for our first office.
• Doug Crane has continued to build the relationship with our paper manufacturing partner.  At the end of this month we are meeting with them and one of their end customers to learn more about their end application and confirm it as our initial focus.  We also will start the process of defining our business model with the paper company. There are many options how to configure our relationship and it is not clear at the moment which would be best.
• Val Marinov and I attended a major RFID conference two weeks ago in Orlando.  I gave an invited presentation about our technology which received good interest.  We now have a number of interested parties across different application areas.
• I’m starting to put together materials with which to brief investors. While I won’t formally start raising money until the fall I do plan to meet informally with certain investors in the May-August time frame to establish some relationships and get some early feedback.

Well, I had expected things to accelerate this month and they certainly have. I’ve been on the road the last two weeks investigating potential markets, exploring potential partnerships, and laying the groundwork for opening our first office. The range of stuff I’ve been dealing with extends from determining who our first customer and market will be to figuring out how to get our initial employees health insurance.

On the partnership side, we have met with a paper company that is interested in exploring the technical and business aspects of embedding our RFID inlays in their product. They have an end customer who is interested as well and who will participate in this activity. The purpose of the initial work will be to determine the cost and manufacturing implications of integrating our inlays into their papermaking process, to identify any technical challenges that will require attention, and to assess the benefits that will accrue to the end customer.

We’ve also encountered an opportunity to embed our inlays in synthetic paper. This is a material that has the appearance of paper yet is made from a petroleum or silica-based resin. It tends to be more durable and water-resistant than paper and is used in many applications such as various types of cards, product packaging, and labels. Going in this direction would present a different set of technical challenges and markets relative to embedding our inlays in paper. It may be that both the paper and synthetic paper integration options present attractive paths forward but we will likely need to choose just one on which to focus initially.

With Doug Crane now on board we have accelerated our engagement with parties in various end markets.  This is helping us better understand users’ needs and expectations, the attributes of existing solutions, the alternatives customers are exploring, and the benefits our technology can bring.  As a result, we’ve been able to cross off a few markets from our list of candidates as we seek to determine our initial focus area.

Lastly, I spent last week in Fargo catching up with my co-founder, interviewing an engineer that will likely be our first hire, starting the work of finding office space and health insurance, and working on the various other details associated with bringing on our initial employees. This type of stuff is new for me, but there is nothing overly complex about it.  It’s just a matter of allocating time to learn about these things and doing them. Many a first-time founder-CEO has gone through this before.

Our first hire will begin at the start of May and we will bring on a second engineer at the start of June. Once these people are in place, Uniqarta will start to feel like a real company!  Now we just need to complete the work of determining our product/market focus so that we can properly tailor these engineers’ work on that target.