"Twenty years from now, you will be more disappointed by the things you didn't do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover." -- Mark Twain
If it was easy, everyone would do it. The odds for a start-up business's success are not particularly good. In general, according to a 2012 report from the University of Tennessee, nearly half of small business start-ups fail within the first three years. To lay bare the realities (sometimes harsh) that need to be considered, the Small Business Playbook website offers "24 Things to Think about Before Starting a Business" to guide prospective entrepreneurs through a careful evaluation of their motivations, aptitudes and business plans.
SLAS members Neil Benn, Burkhard Schaefer and Rob Nail made the leap from employees to employers and they agree the challenges are many. There are important facts to consider -- above all else is a personal commitment to the cause…and customers.
Neil Benn was bored. After working as automation manager for four different companies, he started to feel like he was starring in the movie "Groundhog Day." But he knew his stuff and liked the work, so together with co-worker Tim Dilks, he decided to take his show on the road and ZIATH was born.
Benn and Dilks developed innovative technology to monitor the functionality of laboratory equipment, drafted a business plan and began knocking on the doors of venture capitalists. They soon found themselves starring in a different version of the "Groundhog Day" movie, trying over and over again to explain scientific and technical ideas and benefits to people who didn't understand them. In the words of one potential investor, "If you're selling something to make my beer taste nicer, I'll understand it, but I don't understand anything else you're telling me."
Eventually, Benn and Dilks abandoned the idea of finding venture capital and went back to work. With Benn in Germany and Dilks in the U.K., they used their salaries and every minute of their free time to improve their sample tracking technology. They literally built their prototype on Benn's kitchen table. Then they started selling with the goal of eventually quitting their salaried jobs.
They Skyped and phoned and e-mailed and rarely got more than four hours sleep a night. Soon they came to realize that as scientific and technical experts, they knew little about the art of sales and marketing. "We were phoning potential customers, telling them about our product, and then sending them demo equipment with the assumption they'd know what to do with it," says Benn. "They didn't."
With help from an experienced sales consultant and resources like Sales Closing for Dummies and Marketing for Dummies, Benn and Dilks bought a car and began meeting face-to-face with potential customers. "We shifted our focus from telling customers about how great our scanners and its features were to really talking with customers to understand their needs first," says Benn. "Once we could see what their challenges and opportunities were, it was easy to explain how we could help them – and showing them how we could make a difference to them made all the difference to us."
Actively tapping into the experience and know-how of others was especially valuable as ZIATH honed its products and business plans. "Don't be afraid to ask questions and say I don't know," says Benn. "We asked everyone we knew for advice. We spoke with other scientists, suppliers, people who had businesses in other areas. If we asked 10 people the same question, we got 15 different answers. Everyone has different perspectives and priorities, and by understanding those differences and why they matter, you build a very useful frame of reference. You learn what to do and what not to do. You also allow people to get to know you and you establish your credibility."
Benn says his involvement in SLAS and other business and professional organizations enabled him to build important working relationships as well as friendships. Through the years, Benn has served SLAS as a volunteer member of the Journal of Laboratory Automation (JALA) Editorial Board, JALA guest editor, JALA author and reviewer, and chair of a conference track on Informatics. ZIATH also earned exhibit space on Innovation AveNEW, the special section of the conference exhibit hall dedicated to promising start-up companies.
"Credibility is extremely important, especially in the beginning," says Benn. "Before you have an established brand to sell, you're essentially selling yourself and your partners – the people behind the company and product. Participating in organizations like SLAS helps you earn that credibility."
As ZIATH grew, other challenges began to take shape. Benn and Dilks flipped a coin and decided Benn would shift 80 percent of his focus to business management, especially sales and marketing; Dilks would keep 80 percent of his focus on the science and technology, especially new product development. In addition, they added a third partner to their enterprise – an experienced business professional; "a retired workaholic, really," says Benn with a smile. "We wish we'd found him five years earlier." ZIATH's new partner provides guidance with issues such as financial management, insurance, taxes, currency exchange, banking relationships, distribution and exporting.
ZIATH quickly identified informed customer service as a mission-critical component for success. Benn and partners adopted a unique philosophy, requiring all associates to have backgrounds in science and engineering. "Everyone – including administrative and assembly staff people and certainly our sales people – must have a scientific degree or experience working in a lab," says Benn. "They must be able to understand the technical points, the science and the reasons why our customers use our products. They must be able to really communicate with our customers and answer questions."
"Maintaining quality customer service standards becomes more and more challenging as a company grows from a dozen customers to hundreds of customers," says Benn. "Finding well-qualified staff can be really hard, but it is non-negotiable at ZIATH."
To those thinking about setting off on their own, Benn says "prepare to work hard, but never forget to enjoy it. There are times when I'm dragging a heavy suitcase through a train station in some godforsaken city, thinking I just want to be home with my family. Other times, I appreciate the flexibility and the fact that I don't have a boss shouting at me. If it's a nice day in the afternoon, I can enjoy it. I can set my own company culture. Take yesterday as an example – I was up at 4:30 a.m. (which I hated) to catch a train to Paris. Later, at the end of the day, I found myself walking along the Seine, drinking a coffee and enjoying the beautiful spring weather (which I loved)."
As Benn and Dilks were learning the ropes, Burkhard Schaefer was coming to many of the same conclusions. After earning a degree in computer science in Germany in the 1990s, Schaefer's first job introduced him to the research laboratory environment. ALA Founder Tony Beugelsdijk took him under his wing at Los Alamos National Laboratory in New Mexico where Schaefer says he "had no idea what was going on at first, but quickly discovered it was a very interesting domain for a computer scientist."
Schaefer saw how scientific research teams struggled to advance their work by writing their own software applications, and the results often "were not pretty. Scientists are really good at science and that's what they should do," says Schaefer, who recognized that he could step in and make a meaningful difference by doing what he loved most. By 2003, Schaefer was working as a guest researcher at the National Institute of Standards and Technology (NIST) on Analytical Information Markup Language (AnIML) standards. AnIML is an XML-based, universal file format for documenting laboratory experiments and results, and Schaefer still serves as lead developer and technical consultant for the American Society for Testing and Materials (ASTM) AnIML Standards Development Committee.
When Schaefer's tenure at NIST ended, his interest in laboratory automation was stronger than ever, yet appealing employment opportunities were limited. Schaefer saw an unfilled need, a gap in the market, and he decided to fill the niche by starting his own company, BSSN Software. Schaefer began developing software "tools that enable working with scientific data in a vendor neutral environment. Tools that can be shared, integrated into systems and generate as much knowledge as possible from the data. After all, the reason why experimentation is being done is because scientists care about results. That data must be as accessible as possible. And that's what BSSN Software does."
Like Benn, Schaefer partnered with a trusted friend, a former classmate. While Schaefer focused on science, technology and product development, his partner focused on managing the many details of the business itself. They discovered early on that "your day has only 24 hours; you've got to do your homework on marketing; and learning how to manage and motivate people is very important."
BSSN Software "began in stealth mode," says Schaefer, a decision he would not repeat if he had the chance to do it over. "We should have been more open and made ourselves more visible. We learned the hard way." As the company became more proactive in sales and marketing, a three-angled strategy evolved for business operations. "We learned to approach all projects from three angles," says Schaefer. "From the business side (for sales, contracts, etc.); from the science side (to understand client problems); and from the software side (to use cutting-edge technology to solve scientific problems)."
"Achieving growth requires maintaining the balance of these three angles without creating bottlenecks or gaps," says Schaefer. Like ZIATH, BSSN Software is committed to keeping informed professionals close to its customers. "There is a help desk, but the real support is provided by the three-angle team."
Also like Benn, Schaefer benefits greatly by actively connecting with others in local and international science, technology and business groups. "SLAS conferences are terribly useful," says Schaefer. "They allow you to meet and talk with members of the community to learn and get ideas. Their successes and failures can guide you."
Schaefer advises those interested in starting their own businesses to "truly become a part of your customer's community and don't always think about selling. These communities are not there to be sold to. They are there to help you develop relationships – some business, others personal. Cultivating these relationships helps not only with sales, but with product development and justification." Schaefer also advises aspiring entrepreneurs to "look beyond potential competition, and instead, look for synergies. Everybody can be a friend or a partner, and together you can all be part of a value chain."
Schaefer's involvement in SLAS began very early on in his career. Shortly after he joined Los Alamos National Laboratory, he earned passage to the annual conference through the precursor of today's SLAS Tony B. Academic Travel Awards program. Eventually, he became a conference short course instructor (which he continues to be 15 years later!), authored and reviewed original scientific articles for JALA, earned exhibit space on Innovation AveNEW and now serves as an editor of SLAS LabAutopedia. Schaefer credits his active involvement with not only keeping him up-to-date with scientific and technical trends, but with expanding his professional network and establishing his personal credibility.
Like Benn, Schaefer insists that "customers don't just buy your product because of its features and price. They invest in a trusting relationship with the people behind the company – you. They must know you, and they must trust you."
Songwriter Bruce Springsteen sings "it takes a leap of faith to get things going; it takes a leap of faith, you gotta show some guts… in your heart you must trust." Rob Nail and friends launched Velocity11 in 1999. Eight years later, they sold their successful company to Agilent Technologies. According to Nail, "being dedicated to get through anything is clearly the single most important thing when starting your own business. There were many times when we felt like throwing in the towel, but with sheer willpower, we'd say ‘No! This is our baby and we're gonna make it!"
While he was working on dual master's degrees in engineering and business at Stanford University, Nail started helping out his friend, JoeBen Bevirt, in a bio lab at Incyte Pharmaceuticals. It was there that he acquired an appetite for sequencing operations, laboratory automation process improvement and equipment integration. Eventually, he became a full-time member of the Incyte Corporate Technology Development Group, working side-by-side with Bevirt, Noah Brinton and Eric Rollins.
"We learned a ton," says Nail. "We met lots of customers, interacted with other major pharma companies, and learned about what those companies needed." With leadership from Incyte's Randy Scott, Nail et al. embraced a bigger vision for what was possible in the future of biotech automation.
After a year and a half, Incyte shifted its corporate direction and gave Rob's team a clear signal that they could leave as a group and continue the work they had started at the company. With that, Velocity11 was born. "We spun out and patented technologies we had developed at Incyte," says Nail. "We worked with Incyte to negotiate licensing arrangements in exchange for a small percentage of our new company. This gave us enough initial capital to get us going."
As former employees of Incyte, the four founders also had some chips to cash in. When Nail started at Incyte, its stock was valued at $16 a share. On the day he left the company, it was valued at $99 a share. "We cashed in everything we had," says Nail. "We were not major stockholders, but it gave us enough to make things work. We hired a bunch of friends and were off to the races."
Nail notes that three months later, the stock price soared to $298 a share. "If we hadn't sold at $99, we wouldn't have started the company. At $298 a share, we would have went to the beach instead!"
Even with some money in their pockets, the team "had to bootstrap it," says Nail. "JoeBen and I literally lived in our office and slept under our desks for a while. It was two years before we collected pay checks – we hired other people instead." At one point, Nail's personal credit card debts topped $100,000. "When things started to get really tense and break down, we had a hard conversation with ourselves about sustainability. Then we focused on getting a big deal, a robotics sale to Pfizer, and agreed that if we got it, we would pay ourselves $35,000 a year to cover our credit card minimums and rent. We got it."
Nail credits the SLAS laboratory science and technology community for helping Velocity11 get its start. "We launched at the LabAutomation conference in 2000, just a few months after leaving Incyte. We scrambled to get a booth together, but we learned a lot, had a great time and found our first customers. We made connections with key people who wanted to help us out."
Like Benn and Schaefer, Nail and his partners actively sought "mentors and advisors through different industries, through the university, wherever we could find someone to talk openly and honestly about our problems, what we were up against, what we were doing well, what we were doing poorly," says Nail. "We'd just ask for help and advice, and we were honest about it. Being honest with yourself is an important skill. If you're honest with yourself, others will trust you. They'll see that you're living in reality and not making up a storyline. Even customers will be willing to help you. We always had a constant flow of people willing to help."
Also like Benn and Schaefer, Nail learned to listen. "If you listen, customers will tell you everything you need to know. And guess what? The customer is not always right. But the customer is always the customer. The customer will always tell you what they think they want, but if you really listen to them, dig into what they're saying, ask the right questions, understand what is real, you'll figure out what they really need and how you can help them. Customers don't always understand your capabilities.
"We did well bringing customers in as partners," says Nail. "We always maintained an open dialog, an open channel year-round. When we made mistakes, we talked about it. We welcomed the feedback and we learned from it. Being honest gave us a lot of leeway with customers, because they knew we were working hard to help them. Velocity11 became a credible source of information and problem-solving. If a competitor had a better option for a customer, we'd tell them about it. We were more about serving as consultants whose mission in life was to solve customer problems, not just try to sell products.
"We felt integrity and pride in this approach," says Nail. "In the long term, if you make a partner out of your customer and show them you'll do what's right for them, they will trust you. Those trusted partnerships paid off in a big way, because people were willing to take risks on us."
Over the course of 10 years, "the hardest thing was keeping up with growth," says Nail. "When we started, we were four engineers who were great at designing and building products, but things like accounting, human resources, manufacturing at scale hit us really quickly. Everybody played multiple roles, but eventually my primary focus turned to the management side of the business and JoeBen focused on sales. It was ironic, because accounting was the one class I hated most in college – and there I was doing accounting. But it finally made sense! When you're reconciling your own books and figuring things out, it actually ends up being fun.
"We had to figure a lot of things out as we went along," says Nail. "We were constantly facing new challenges that could have killed the company. We had to re-invent the company and our roles every couple of years. When we hit 30 people, we had to change. When we hit 50 people, change. When we hit 100 people, change again. Being adaptable is a very hard thing to do.
"But it was fun and we felt like a family. Everyone became part of that family. We had good kids, we had bad kids." On the subject of human resources, Nail says "Everyone wants to be challenged and feel like they're building something bigger than themselves. We had to find a way to bring that spirit to everything we did, because we knew it was critical for success.
"Entrepreneurial companies cannot be innovative unless employees know it's okay to make mistakes. Great new ideas can come from anywhere and anyone in a company. Complaints that come with new ideas and suggestions for improvement are productive and have to be encouraged. When people made mistakes, ourselves included, we admitted them, we overcame them, and we didn't repeat them. We had a very forgiving organization and we empowered – actually, we required – people to make mistakes. If they didn't make mistakes, they weren't pushing the limit.
"But there are good mistakes and there are bad mistakes," adds Nail. "If somebody does their homework, tries something new and fails, that's a fantastic mistake. Everyone learns a lesson and moves forward. Mistakes that happen because someone doesn't do their homework or is careless are bad mistakes, especially when they're repeated."
Another thing Nail, Bevirt, Brinton and Rollins learned about employees was "you can never fire somebody too quickly. Maintaining your company culture is critical to the happiness and dedication of your entire workforce," says Nail. "Allowing somebody to continue on the team when they're not a good fit can be very destructive to your culture. Hiring the wrong person is probably the best way to test and upset your culture. It can have a very negative impact." Velocity11 learned this lesson the hard way.
At one point in their struggle to manage their rapid growth, they accepted an investor who required that they strengthen their senior management leadership team by adding five new business executives. "At the time, we understood," says Nail. "We were engineers surviving on dedication and sheer willpower and advice from others, but in hindsight it was a terrible mistake. We ended up with this whole new team of outsiders who didn't really understand the business like the founders and employees did. They were a different caliber of people. They had experience and ideas, but adding so many new people at such a high level in such a short time created a gap between the executive team and the people who were actually doing all the work. The soul of the original company died."
But they recovered. "It took us two years to come back together as a team," says Nail. "We ended up firing and rehiring and eventually we ended up back in balance, but it was painful for a while."
In 2007, Velocity11 was acquired by Agilent Technologies. After a two-year transition, Rob Nail left the company to break more new ground. Now, as associate founder and CEO of Singularity University, he works with a new team of partners to have a positive impact on humanity by assembling, supporting, educating and inspiring future leaders across the globe who can harness the power of exponential technologies to improve the lives of a billion people within a decade.
ZIATH specializes in instrumentation control and information management in both the academic and the pharmaceutical/biotech industry sectors with a focus on the application of laboratory automation. In particular, ZIATH focuses on managing large sample libraries (compound management, biobanking and sample management) using 2D datamatrix tubes.
BSSN Software is an informatics services company with a special focus on vendor-independent laboratory data management and standards. As the architects of AnIML, BSSN Software is considered the leading provider of AnIML technology and services.
Singularity University utilizes accelerating technologies to address humanity's hardest problems. It is an agent of change that goes beyond the classroom to drive real-world solutions with an international network of exceptional faculty, alumni, corporate partners, mentors, investors and start-ups.
August 5, 2013