Author: ronn.kliger@gmail.com

While the search (for a business model) that I wrote about last time continues, we have made progress on some other fronts. First, and most significant, is the addition of a new team member. I had written back in December and January about our need for greater expertise in the areas of paper manufacturing and paper markets.  I am pleased to have found the ideal person to help in these areas and that he is joining our team as our VP, Business Development. Doug Crane is a former executive of Crane & Co.—the prestigious manufacturer of currency and security paper.  In his thirty years at Crane, Doug held a variety of technical and business roles which makes him a perfect fit for our needs. Looking ahead, Doug will help us greatly in exploring potential markets, developing paper manufacturer partnerships, and scaling the process by which we’ll embed our inlays within paper.

On a related note, we have also begun to search for the first addition to our technical team. This is for a process development engineer to work with our founder Val Marinov in Fargo.  Val and this first hire will form the start of our core development team.  On my next trip to Fargo later this month I’ll starting looking for office space and hopefully start screening a few candidates.

Also, I have been in negotiations over the past few months with North Dakota State University’s technology licensing office for rights to the ultra-thin chip assembly process that Val had developed.  I’m pleased to note that we have agreed on a term sheet and will be closing on a license this month.

To address the costs associated with the above activities, we have just closed on a Friends and Family financing round. This has brought in a modest amount of money that will help defray our initial licensing and employee expenses.  We will need to supplement this with a Seed round by the end of 2014.

Lastly, for those of you who may have visited our web site and found not much there, we have recently expanded it to include a bit more information about what we do, our technology, our team, and the position we are seeking to fill.

That’s a quick rundown for now.  With Doug on board I expect our efforts to explore potential markets and further our paper integration process to accelerate.  We have a series of engagements on both fronts planned for the balance of this month.

“A startup is a temporary organization designed to search for a repeatable and scalable business model.”
— Steve Blank

I came across the above definition last week and found it timely. “Searching” is exactly what I am consumed with right now.  At its core, my startup Uniqarta, is based on an innovation that assembles flexible, ultra-thin ICs onto a substrate at low cost. There is an infinite variety of product definitions, market channels, partnerships, end markets, etc. available to us. So what we are doing is searching for the combination that lets us repeat and scale.

The difficulty is that these elements are inter-related and there are many unknowns. The right choice of market is dependent on what benefits our products deliver (among other factors) which in turn is dependent on our technology choices which in turn is dependent on, well, our choice of market. Underlying all this is a long list of questions such as:  what problems are customers looking to solve and how would our product do that, how much will it cost to manufacture our product, how much will customers pay, what alternative solutions will customers have and how will our solution compare, how will we access our market, what partners will we need, what technologies and resources will we need, what will they cost, and on, and on, and on…

This, I have come to realize, is the biggest thing that makes launching a startup so difficult.  Sure, there are other challenges certainly and my guess is that 2-3 years from now I will be identifying something else that is making things tough.  But right now it is painting in this vast canvas of open, interlocking questions that I put at the top of the list.

At Analog Devices I had started up a new business and naively thought doing so outside the company would have a fair amount of similarity. I did recognize that my previous experience lacked any fundraising activity and that I had the huge benefit of accessing the company’s existing infrastructure. However I had thought that the tasks associated with developing a strategy would be similar whether the business resides within an existing company or is being launched independently.

I’m finding this to be less true than I thought.  Sure, a good number of fundamentals are the same:  picking a focus market, defining a value proposition and positioning, recruiting and building a team, etc. But the big difference is that at Analog Devices I had an existing business model as my starting point.  This model involved hiring engineers to develop products, using an established infrastructure to manufacture them, and using an established infrastructure to sell them.  I had no need to develop a new business model.  My team could simply focus on developing and marketing new technologies and products and pump them into the company’s existing business model. However, in a true startup that’s not the case.  We have no pre-established ways of developing products, of manufacturing products, of selling products, or of doing anything whatsoever for that matter!  On all these fronts we have to both decide how we’ll do these things and then actually do them.

Right now we are mostly in the “decide” phase but I don’t want to imply that “decide” and “do” are distinct, sequential steps.  Since the search for business model clarity involves a complex, multi-variable set of questions an iterative assume-try-revise methodology is required. This is the essence of the Lean Startup concept that Steve Blank and others advocate.  The key is to iterate and converge to a solution faster than your competitors and before you run out of cash.

So—we are indeed searching.  More on that later.

Up to now, this blog has focused almost entirely on my personal experiences and reflections as I transitioned from a large company to a startup.  Now that I have completed this transition I am uncertain how much of my writing will be about myself as opposed to my startup.  I suppose to an extent the two are intertwined.  In any event, I thought I’d take this post to write a bit about what is going on with Uniqarta.

First, a quick summary about Uniqarta for those who are not familiar with it. The company was founded in the fall of 2013 by Professor Val Marinov of North Dakota State University and me.  It is based on a manufacturing technology that starts with a standard semiconductor wafer, makes it extremely thin (~25 microns), and transfers individual ICs from the wafer onto a substrate at very low cost.  When this process is used to mount RFID chips onto a substrate having a printed antenna the result is an ultra-thin, flexible RFID inlay that can be embedded within paper.

Our near-term objective is to develop our strategy and technology to a point where we can raise a seed round to accelerate our R&D.  On the technology side, this means having proof-of-concept on the two technologies which our business requires—assembling ultra-thin ICs onto a substrate to create RFID inlays and embedding the inlays within paper stock.  We have proof-of-concept  on the former but not yet the latter.  To achieve this we require access to paper-making expertise and equipment.  We are addressing this through a combination of independent paper manufacturing experts, a university paper-making research facility, and an established paper company.

On the business strategy side, we need to select our initial focus market and then establish the various business plan elements that emanate from that selection:  product definition, value proposition, marketing strategy, required R&D, manufacturing strategy, required funding, etc. In the past few months I have compiled a fairly long list of potential markets withing varying characteristics: some value one benefit our technology delivers while others value another; some will adopt new technology faster than others; some will be easier for us to penetrate than others; and some are huge billion dollar markets while others are niche $10M markets. The key for our first market selection will be to pick one that has a compelling need for our technology, will adopt it quickly at an acceptable price, and provide us with leverage from which we can enter other markets.  Determining all of this requires a lot of learning and validation that can only be done by talking with potential customers. That is where the advisor I’d been seeking and have now identified becomes important.  (More on that in an upcoming post.)

The bottom line is that there two key activities for us right now: achieving paper embedding proof-of-concept and selecting our initial focus market.  I have to admit all this is going more slowly than I had expected and would have liked.  However, the deeper my co-founder and I get into this the more we realize we don’t know.  They key is to maintain a clear focus on what we are trying to achieve and what we need to do to get there.  This is easier said than done!

I wrote last time about the difficulties of establishing contacts to get my end market questions answered.  That is the bottleneck I currently have. Without answers to questions such as in what market will we focus, what value will we deliver, how will our product be differentiated, and how will we access this market I don’t feel I’m ready to talk to investors. These questions are often challenging but particularly so when involving a new technology with new capabilities that is not presently in the market.  To properly address such questions one needs to develop a deep understanding of how the technology might be used, what advantages, disadvantages, and adoption costs a user would perceive, and how all these compare to existing solutions.  This all requires detailed conversations with potential users which brings me back to the challenge of finding and accessing such users.

I have been seeking advisors in our candidate markets to help with this. One method I used was to join relevant LinkedIn Groups and post a description of what Uniqarta is doing and what I am looking for.  I got a lot of responses (>30) that I am now vetting. Some of these will likely be valuable advisors. But what I also found was a lot of other useful contacts responding with various levels of interest and offers of help. These include potential users — precisely the type of people I am looking to reach — as well as others currently servicing my markets of interest.  Yes, there is some filtering required as I’ve received some unwanted responses from paid consultants, people looking for employment, people looking to represent Uniqarta, etc. But mixed in within these is what is becoming a valuable pool of new contacts that can help me answer the questions I noted above.

I must say that I have grown to appreciate the value and power of LinkedIn tremendously.  I had used it earlier in my career at times when I was considering a job change.  My use stepped up markedly this past year once I left my big-company job and was seeking to expand my network to help me find a startup.  And now, in the course of developing my startup I use it extensively to identify and contact people who can help me understand and evaluate candidate end markets.  It really has become an indispensable tool and I struggle to imagine how I could have managed without it if I were attempting to do what I am doing, say, ten years ago.  

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This is likely my last post of the year.  It has been quite a year and one that flew by quickly!  Twelve months ago to the day I wrote my first post. Re-reading it brings back the excitement, jubilation, and freedom I felt and also reminds me of the lack of apprehension I had. Things feel differently now that I’ve found my startup.  Sure, I am excited about it and happy with my choice. But some of that sense of freedom has diminished and a small level of apprehension has materialized.  That is to be expected as I commit myself to my new endeavor and I’m sure that as things progress my sense of freedom will diminish further and my level of apprehension will increase further.  That goes with the territory.

I don’t really know who is reading this blog let alone any individual post. But I nonetheless would like to thank you all for your interest and wish you all a happy holiday season.

Ronn

I’m now deep into my new role at Uniqarta. There have been, and continue to be, a bunch of “mechanical” things that needed to be put in place (getting incorporated, establishing various founder/company agreements, opening a bank account, finding an IP lawyer, etc.). While most of this was new to me, it is established ground that many have traveled so was not that big a deal to get through.

The more challenging stuff has revolved around figuring out exactly where this company is going to focus and how we are going to get there. In my previous positions at Analog Devices I’d become well-versed in strategic planning — especially with businesses commercializing new technologies. So I do feel that I know what questions need to get asked, how to formulate and assess options, and how to select from the ones that emerge. What I’m finding more difficult at a startup is getting many of these questions answered so I can map out an appropriate strategy.

I’m cognizant that I will never have all the answers and that we’ll need to make many decisions with incomplete information. But nevertheless I need to be better armed than I am right now to effectively define our path — both for our own benefit of course as well as for potential investors.

My particular difficulties relate to questions about end markets, customer needs and cost structures, alternative solutions, ecosystems, etc. Part of the issue is that I am seeking to learn about industries (paper making or printing, for example) that are far afield from the electronics industry from which I came. But the bigger issue is simply access to key players in these industries. At Analog Devices my efforts were supported by a global sales force that could almost always get me a meeting with whatever customer I wanted and with a strong brand that brought instant credibility. I don’t have this luxury now so if I want to talk to somebody at Paper Company X, Printing Company Y, or Security Document Company Z, I have to work hard to find a way in. I knew this would be the case at a startup but until I actually started experiencing this firsthand I didn’t realize how big an issue this would be.

One thing I’m doing to address this is to find one or more advisors that are knowledgeable about these markets. The right person would be able to both answer many of my basic questions as well as introduce me to contacts in the industry. My co-founder and I have just recently found highly capable individuals who will advise us on manufacturing issues and general startup business advice. Finding the right end-market expert will fill out our initial advisory board nicely.

I don’t want this post to come across as overly negative. From what I have learned elsewhere, what I am experiencing in this early going is typical. In general, I am enjoying the challenge. I am also enjoying the independence I now have to focus entirely on activities that directly help my business move forward. I no longer am distracted by quarterly reports, management reviews, staff meetings, process improvement teams, etc. Yes, many of these activities are important and unavoidable at a large company — but that doesn’t mean I have to miss them!

That’s it!  My search is officially over!  I’m happy to report that I am a co-founder and the CEO of Uniqarta, Inc.  We are a startup based on new manufacturing processes that embed ultra-thin semiconductor ICs within thin materials such as paper.  This enables a wide variety of applications but has the most immediate applicability to RFID (and NFC) applications.  One of the major impediments to broad RFID adoption is the cost associated with the tags.  Excessive thickness and inadequate flexibility are also frequently problematic.  Uniqarta will address this by both reducing the cost and thickness of RFID inlays as well as eliminating the need for multi-layer laminated configurations.

I consider myself very lucky to have found this opportunity.  I had been doing a LOT of networking, mentoring, and other activities in seeking my next position.  However, this thing came out of the blue from an unexpected source—cofounderslab.com.   This is a entrepreneurship match-making site that I stumbled across last August.  On a whim, I posted a bio and a description of what I was seeking with low expectations of any outcome.  I was surprised when a few weeks later I got an email from Professor Val Marinov of North Dakota State University.  Val had published a paper about his “Smart Paper” research earlier this year which attracted a LOT of media attention (e.g., BBC and IEEE Spectrum).  Of all the opportunities I had come across over these past ten months this was the first that really hit me at a gut emotional level.  I think this is due to the combination of the technology’s great potential, broad applicability, and also the company’s extreme early stage.  The combination of these characteristics made it clear that I could have a huge impact on the future of this technology.  The fact that Val and his university research team are in Fargo, North Dakota while I am in Boston became secondary.

After a number of phone calls with Val I flew out to Fargo and spent several days with him.   By the time I left we both knew we wanted to work together and all that remained was to work the details relative to our roles, equity split, expectations, etc.  Fortunately, this went fairly easily.  We spent another month or so working this stuff out while proceeding in parallel to engage with potential customers, licensees, investors, and other parties.  We are fortunate in that Val’s published paper drew so much media attention that we had large number of parties that were interested to speak with us.

I think there are two key lessons here for anyone at an existing job contemplated a startup job search.  First, cast as wide a net as possible in your networking and don’t neglect any avenue—however unlikely it may seem that something useful may come of it.  This applies to networking events, personal introductions, web sites, meetups, etc.  You just can’t predict where that ideal next position will come from.  Second, prepare yourself and your family appropriately before leaving your existing position.  I mean this from both a financial and emotional perspective.  Financially, build up a bit of a nest egg so that you are not pressured to take the first job that comes your way.  This also opens up a wider range of options as it allows you to be able to consider positions that have little or no salary at the start.  (This is exactly my situation at Uniqarta in that there is no salary until at least I get some seed funding for the company.)  On the emotional front you need to prepare your family for the possibility that it could easily be six months, a year, or even longer before you find the right situation.  Setting this expectation up front will avoid stressful moments later.  I feel very fortunate that I had strong support at home before leaving Analog Devices.  This allowed me to really focus on figuring out what exactly I wanted and on finding it.  Without this financial and emotional preparation you will likely feel immense pressure to find something quickly and settle for a situation that may not be good.

Ok, off my soap box now.  As I dive full blast into Uniqarta I realize that the easy part is behind me.  Now I’ve got to make this thing successful!  I wrote about a lot of the early stuff I was doing in my previous post.  Things are now accelerating as we move ahead with our business planning, market research, etc.  I’ll be continuing this blog and writing about my experiences in getting this company off the ground.  I feel truly satisfied in the way my search turned out and am eager to move ahead with this new endeavor.

Looks like this new gig is a go!  I’ve been working full-time on it for a month now and am enjoying myself.  My co-founder and I are setting up a new company and are still several weeks away from having it official.  But I’ll provide an overview of the range of activities I find myself doing as CEO of this new company.

As has always been the case with this blog, much of what I write is “old-hat” to experienced entrepreneurs.  But they were never my intended audience. The original purpose of this blog was to provide insight for others working at established companies what it is like to leave and search for a new position at a startup.  Now that I have done that I am going to extend its purpose by writing about what it is like founding and working at an early-stage startup.

With my new company, the first two orders of business have been to establish the company (from a legal perspective) and to develop a business plan. Below is what I’ve been up to on these fronts over the past month:

Setting up the Company

• Finding an attorney:  I tapped the network I had established over the past nine months and received about a half-dozen recommendations/introductions for Boston-area attorneys.  I met with them all to better understand each’s experience level, capabilities, and how comfortable I would feel working with each.  In general, they all had deep experience with startups and were highly capable.  In the end, my selected came down to intangible factors related to my comfort level with the selected attorney.  Now that we have one he is moving ahead with registering our company and establishing a variety of agreements involving the three co-founders involving equity terms, confidentiality, invention assignment, etc.  (One note of interest – all the attorneys I spoke with operated on a deferred-payment basis for pre-funded startups.  What this means is that the startup is billed for services but is not asked to make any payments (except for the third-party expenses) until it receives funding.  This is in recognition that early-stage startups don’t have any money and is the attorneys’ way of populating their “client funnels” with startups that will eventually yield some number of paying clients.)
• Picking our company name:  This was easier said than done!  The professor with whom I am partnering had already selected a name some time in the past.  However, once we started using it in practice we realized it was awkward and didn’t work very well.  We embarked on a 2-3 week brainstorming session seeking to develop a new name.  It wasn’t easy to find one we liked let alone one all three of us agreed on! In the end, we did agree on one that I will disclose once our company is legally established.
• IT stuff:  Now that we had our name we needed to set up email accounts, a web site, and a file sharing system.  Fortunately, I had been through much of this when setting up this blog and it turned to be pretty easy to do using this blog’s hosting company.
• Equity split:  A key item that can impact a startups’ success is the equity split among the founders.  If not done in a thoughtful manner that treats all founders fairly it can lead to troubles down the road.  I highly recommend The Founder’s Dilemmas by Noam Wasserman.  This book deals with the many decisions founders face including partner choice, investor selection, and equity splits.  In our case, we needed to deal with the fact that the professor had been working on this technology for about four years and is the inventor while I was coming in fresh out of the blue. On the other hand, I will have a higher level of responsibility and will have to be the primary person getting funding and leading our execution.  Fortunately, the professor recognized the value of what I was bringing to the table and over the course of 2-3 weeks we arrived at an arrangement that we are both happy with.
• Seed money:  We are fortunate that both the professor and I have a moderate amount of disposable funds we are willing to contribute to the company to cover early expenses (travel, legal 3rd-party items, etc.).  Between the two of us, this amounts to several tens of thousands of dollars and will be structured as loans to the company to be repaid some time in the future.

Developing the Business Plan

• Understanding the technology:  I’ve spent a fair amount of time reading about the professor’s research, visiting him at his lab, and getting up to speed on what he has done. This will be an ongoing process.  It is crucial that I have a deep understanding of the technology in terms of its potential benefits, constraints, maturity level, economics, possible extensions, key risks, etc.
• Understanding the market:  We are fortunate that our technology has broad applicability to a wide range of uses.  The flip side is that I need to explore them all to figure out where we should focus first.  This job has been made a bit easier in that when the professor published his research last spring it received broad media coverage and triggered many inquiries.  This provides a great starting point for me as I now have a collection of interested parties from a range of applications that will talk to me.  I’ve started having phone calls and meetings with these parties and have learned enough to make some preliminary decisions regarding attractive and unattractive markets.  Having said that, there is MUCH more work to be done.
• Selecting our business model:  In a nutshell, this deals with how we will operate and our business will make money.  Will we manufacture and sell something or will we license technology to other parties?  Will we sell directly to end users or through and intermediary?  Will we outsource certain activities or do them ourselves?  Defining a business model means answering these questions and many others.  It is obviously intertwined with the above points related to technology and market and forms the basis of the business plan.  Based on my understanding so far I do have an early view of what our model should be but it needs to be validated and refined by further discussion with potential customers, partners, and our team.

That’s it for now.  I hope I’ve conveyed a sense as to what has been occurring in the very early days of our startup.  I’m eager to write about what our technology actually is and hope to be able to do that in about a month.

Things have progressed very quickly with my new position (see previous post for background).  After a series of Skype and face-to-face meetings the professor has invited me to partner with him in the formation of a new company with himself as CTO and myself as CEO. After further discussion clarifying our roles, personal objectives, priorities, and an approximate equity split I’ve accepted the position.

There are many things that need to quickly get done but at the highest level I am focused on the following:

• Finding a corporate attorney to set up the company, formalize founder agreements, etc.
• Engaging with potential customers and partners to better understand their needs, their markets, potential business models, and to start developing relationships
• Defining our business model and developing a business plan
• Securing an option from the university for exclusive negotiation rights for the relevant IP

(Securing financing is certainly also important but right now I am not ready to talk to investors until I tackle the above items.)

All this is very exciting and exactly what I was looking for.  Once the company and my role is formally established I’ll post details as to what we are up to. What I’ll say for now is this:  it involves a technology that can transform a wide variety of applications and markets as it enables new capabilities and reduces cost.  Yes, this sounds like a lot of the hype we all hear about various new technologies.  But the reactions I’ve received from the customers, advisors, and lawyers I’ve talked to so far make me feel comfortable writing this.  Once I post further about it here you can all judge for yourselves.

As an aside, I came across this excellent note by Hunter Walk advising how to choose your next job if you’ve decided to quit your existing one.  The article focuses on the concept of clarifying what you are optimizing for (near-term compensation, long-term compensation, commute time, fun, whatever…) and then choosing a position that delivers on your selected priority.  It resonated so strongly with my experience that I though it appropriate to highlight it here.  

I think I may have found my next job!  One of the possibilities I wrote about  last time was with a university professor who has developed a very interesting semiconductor-related technology that I think has huge potential. We have spent several hours on the phone and I just returned from a 3-day trip visiting him at his university.  I don’t want to provide any specifics until this is more certain but the situation is exactly what I’ve been looking for – except for the out-of-state location!

This technology has been under development for about four years and has recently been demonstrated with prototypes.  Upon publishing his results, the professor received a lot of media attention including main-stream outlets such as the BBC.  This in turn has caught the attention of many potential customers and partners and the professor quickly realized he needed to bring in a business partner to help get a company started and its strategy established.  He found me online and was attracted by my semiconductor technical and business experience, my open interest in working at an early-stage startup, and my willingness to take on a large degree of risk.  Over the course of several phone calls and the recent visit we have found our chemistry compatible and our talents complimentary. As a result we have expressed our mutual interest in working together.

My role would be as CEO of this new company while the professor’s would be as CTO.  Most of the early team members would come from the university and its associated research institution.  The company would be located at the professor’s location which is a little problematic for me. I am not interested to relocate to this location so will need to figure out how to make it work.  Over the next 4-8 weeks the professor and I need to continue to test our compatibility, nail down a first cut of a business plan, and work out the various details of my involvement.

I am very excited about this as it strongly aligns with what I have been seeking.  It gives me the opportunity to get in on something new right at the beginning of its commercial life and have a huge role in developing a new business, a new organization, and a new enabling product category.

Having said that, until this is finalized I’ll continue my exploration of other pending possibilities just in case.  However, I am putting my Bay Area trip on hold for now as that investment of time and money doesn’t make sense right now.

I’ll provide more details as this opportunity gets further developed and gets finalized.

Well, summer’s over and things have heated up quickly:

• Bay Area trip:  I’ve established contact with three VCs and two recruiters out there and am working my way through various introductory emails/calls.
• An entrepreneur I met last spring in the Cleantech Open competition introduced me to the CEO of his parent company in Israel.  This person was visiting Boston and was seeking to hire a general manager for the U.S. subsidiary of his measurement systems company.  I spent a couple hours with him learning about his company and the role he was looking to fill.  I ultimately decided not to pursue this opportunity due to the lack of a strong technology/product development component and also the relative maturity of the company and its commercial offerings.
• The founder of a startup I had several dealings with last spring contacted me with an intro to a friend seeking executive help for his wireless technology startup.  It’s not yet clear what sort of help this person is looking for but hopefully we’ll connect this coming week and see if there is any fit.
• I received a contact out of the blue from a professor at a U.S. university with a novel semiconductor technology.  He is seeking a business partner and found my profile on line.  The technology looks very interesting and promising and I’m looking to speak with this gentleman this coming week.
• I got together with the former colleagues I had written about previously for more brainstorming.  We focused in on three concepts.  One relates closely to what one of the guys is currently working on and may lend itself to a spinout.  The two other concepts are just at the “idea” stage and require further technical and market exploration.  We established actions for the group and will meet again in two weeks.
• I met again with the service business entrepreneur I had written about previously.  The purpose of this meeting was to share my feedback about his concept, to identify the primary challenges I saw, and to determine next steps.  Our key next step is to seek out meetings with a few organizations that are involved in similar services to gain insight as to how they deal with the challenges we’ve identified.

As can be seen I’ve shifted a great deal of attention to exploring new startup possibilities as opposed to finding existing ones.  That’s it for now, I’ll update things as they progress.