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Hackney commercialization-of-redacted
1. 3/24/2011
The Commercialization of
*REDACTED*
Or, How I Stopped Worrying and Learned to Love the
*REDACTED*
Douglas Hackney @dhackney
dhackney@egltd.com www.egltd.com
Douglas Hackney
Serial Entrepreneur
Founded six companies
Part of dozens via consulting / advising / board
Consultant
Management
Technology
Startups
VC / angel / seed
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2. 3/24/2011
Relevant Non-*REDACTED* Projects
DARPA
TASC
GE
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Commercialization of *REDACTED*
Technology / Capability
Mix of open and declassified
Goal is commercialization to open market
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3. 3/24/2011
SMB Government Tech Channels
Government Department / Agency Grants
SBIR
STTR
Funding by agency to SMB/RI for development of technology /
capability
Direct commercialization
*REDACTED* source to market
Typically subcontracted
Funding or opportunity by source for commercialization of
existing technology / capability
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Small Business Innovation Research (SBIR)
Department of Agriculture
Department of Commerce
National Institute of Standards and Technology (NIST)
National Oceanic and Atmospheric Administration (NOAA)
Department of Defense (DOD)
Department of Education
Department of Energy (DOE)
Department of Health & Human Services (NIH, CDC, FDA, AHRQ)
Department of Homeland Security (DHS)
Department of Transportation (DOT)
Environmental Protection Agency (EPA)
National Aeronautics & Space Administration (NASA)
National Science Foundation (NSF)
U.S. Small Business Administration (SBA)
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4. 3/24/2011
Small Business Technology Transfer (STTR)
Department of Defense (DOD)
Department of Energy (DOE)
Department of Health & Human Services (NIH)
Department of Homeland Security (DHS)
National Aeronautics & Space Administration (NASA)
National Science Foundation (NSF)
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SBIR / STTR Primary Differences
SBIR > funding sources
Primary Investigator (PI) requirements
SBIR – employed by SB at award and for duration
STTR – not stipulated
Research Institution (RI) requirements
STTR - Formal collaborative relationship required with SB
STTR - Minimum 30% of work done by RI
Intellectual Property (IP) requirements
STTR - Requires contract for distribution / ownership of IP
between SB and RI
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SBIR / STTR Similarities
Small Business (SB) <500 employees
Very competitive, ~10% applications awarded
Multi-phase process
Phase I – feasibility
Phase II – major R&D
Phase III – commercialization (private sector funding)
Daunting application process
Contract process can be lengthy, average 180 days
DARPA testing Other Transactions for Prototype (OT) fast-
track application process (beta test yielded 37 days to close)
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Direct Commercialization
Contract (payment) to commercialize existing technology
/ capability
Payment by *REDACTED* source or 3rd party
Can require licensing / royalty stream to source
Good work if you can find it
Opportunity to commercialize existing technology /
capability
No payment by source
Can require licensing / royalty stream to source
Typically via 3rd party
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6. 3/24/2011
Primary Direct *REDACTED* Source
Channels
Government agencies / departments / acronyms
DARPA
3rd Party Players
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Government Agencies & Acronyms
Typically political initiative / policy
Short half-life common
Default mode is obfuscation and slow-motion passive
aggressive behavior until the initiative goes away
Very challenging to overcome obstacles within available
time window
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DARPA
Upsides
Long tradition of commercialization
Innovative commercialization programs and initiatives
Existing and embedded processes and culture of
commercialization
Downsides
What are their metrics?
You are very unlikely to see the good stuff
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3rd Party Players
Typically politically or revenue driven
Beware delusions of kazillions of dollars
Often more dream than reality
New executive - typically from outside
Mid-level manager / director - path to glory
Contractual limitations often preclude commercialization
Requires extensive due diligence
Fail fast
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The Conundrum
Lots of very interesting technologies and capabilities
An equal number of challenges to commercialization
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Popular Perception
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9. 3/24/2011
Popular Perception
007 / Spy vs. Spy
22 stories below ground
CSI/NCIS labs and personnel
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Reality
Cubeville
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A Lot Like the Commercial World
Same core challenges
Idea vs. problem
Market
Technology
Business model
Sales model
Capital
Execution
Tech Market $
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Subtleties: Suitability / Viability
Technology
Market
People
Scale
Politics
Tech Subtleties Market $
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Additional Challenges
Rivalries
Inter- & intra-agency
Inter- & intra- department
Tribal
Budget cycles
Changing priorities
Uncertain and ever-shifting political winds
Additional
Tech Subtleties Market $
Challenges
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Added Layers
Security
Internationalization restrictions
Compartmentalization
Often walled off from inventors / developers
Additional Added
Tech Subtleties Market $
Challenges Layers
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Adds Time to Market
More time = more risk = more failure
Additional Added
Tech Subtleties Market $
Challenges Layers
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Managing Expectations
Source side
Classified since when?
Commercial side
“This won’t take long”
Both sides
“This will be worth a billion”
Expectation Management
Additional Added
Tech Subtleties Market $
Challenges Layers
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13. 3/24/2011
Created 1943, Declassified 2000
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Not My Last *REDACTED* Paperwork
But Close
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14. 3/24/2011
The Billion is Where?
Fisher Space Pen
• Patented 1965 • Idea 1941, company 1952
• > $1m private development cost • $261m sales 2003
• 400 units sold to NASA, 100 to • Swiss
Russia @$2.95 ea. = $1,475
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Top Challenges
Specialization
Scalability
Suitability
Security
Speed
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Specialization
Too Much
Created to solve a narrowly defined challenge
Can result in a too narrowly limited market
Very easy to fall prey to solution vs. pain trap
Too Little
Broad, general-science discoveries
No specific, viable market
Requires too much time to make market-ready
≠
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Scaleability
Materials or components too expensive
Required processes at bench scale
Required re-engineering for market scale reduces critical
capability
Too costly to manufacture or re-design for general
market
≠
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Suitability
Disruptive = Startup
Incremental = BigCo
+ = #fail
+ = #win
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Security
Can be restricted to components or sub-systems
Multiple layers of review
Each review layer can kill critical functionality / capability /
component
Each review layer = time
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Speed
As always, time is the most valuable resource
*REDACTED* commercialization includes many unknown
time variables
Most *REDACTED* commercialization initiatives simply
run out of time
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Top Failure Drivers
We find that the biggest cause of an [NSF SBIR] project’s
commercialization failure is:
Market too small
Market disappeared
F.C. Thomas Allnut
Program Director and Biotechnology
Cluster Leader
SBIR/STTR Program
National Science Foundation
Source: http://www.montanabio.org/PDF/taylor%20pdf.pdf
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Speed To Market
Market Fit Uncertainty
Time
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Zone of Market Uncertainty (ZMU)
Market Fit Uncertainty
Time
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Zone of Market Uncertainty (ZMU)
Most effort spent on shrinking the circle
*REDACTED* commercialization almost always takes
longer than you think
ZMU is almost certain to grow
ZMU management is a critical skill
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ZMU Management
Start with existential customer pain, not solutions looking
for a problem
Manage expectations
Require accomplishable scope
Assume 3x time for everything
Avoid politically driven scenarios / initiatives
Build and sustain relationships
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20. 3/24/2011
Case Study: Relate-o-Matic
Client: *REDACTED*
Technology candidate
Real time analysis
Language stream
Establish, build and maintain entity relationships
Developed for: *REDACTED*
Project driver: Starry Eyed New Executive
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Case Study: Relate-o-Matic
Target Pain
Identify and surface product issues from customer service data
stream
Challenges
Non-English languages
Fastest route to cash = multi-nationals / overseas markets ≠
internationalization restrictions
Time required to integrate English language
Source organization sensitivity / resistance
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Case Study: Relate-o-Matic
Process
Preliminary agreement
Segment and isolate available technology
Pitch concept
Build demo
Pitch beta customers
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Case Study: Relate-o-Matic
Outcome
Unclear benefits for target market
Insufficient delta from existing, known and trusted solutions
Required culture and process change
Competed with “enough”
Not commercialized
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Prerequisites For Success
Domain expertise or equivalent
Process
$
Patience
Persistence Respect
Humility Humility
Respect Persistence
Patience
You Are Here Process
Expertise
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Confidentiality Implications
Client NSA
Penalty
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*REDACTED* Summary
All the challenges of a startup
But wait, there’s more
Expectation management is key
Time is even more valuable than normal
If it was easy, everyone would be doing it
Pain is King
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With all the Challenges, Why Do It?
Success is Possible
Adapx, Inc. - Multimodal Command Interaction
BCL Technologies, Inc. - Integration of Information from
Heterogeneous Sources
Design Interactive, Inc. - Advanced Neurophysiology for
Intelligence Text Analysis (ANITA) System
Geosemble Technologies, Inc. - Open Source Information
Geospatial Overlay (OSIGO)
Healthsense, Inc. - Non-Intrusive Health and Wellness
Monitoring
J.A. Woollam Company, Inc. - In-Situ Process Sensors for Real-
Time Microcircuit Manufacturing Control
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24. 3/24/2011
With all the Challenges, Why Do It?
Success is Possible
Kinetic Art & Technology - Lightweight, Intelligent Speed
Reducers and Controllers
Multiplex, Inc. - High Performance Lasers for Radio Frequency
Photonics Applications
PhiloMetron, Inc. - Non-Invasive Hydration Monitoring
Radant Technologies, Inc. - Lightweight Electronically Steerable
Antenna
Secure Decisions Division, Applied Visions, Inc. -
MeerCAT®:Visual Analysis of Wireless Risks to Critical Cyber
Assets
SenTech, Inc. - Compact Acoustic-Seismic Unattended Ground
Sensor
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With all the Challenges, Why Do It?
Many potential billion dollar markets are on shelves
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Or, Perhaps, In Boxes…
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The New New Thing is Out There
It’s One Box Over From the
*REDACTED*
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26. 3/24/2011
Resources
These slides on slideshare
Small Business Innovation Research (SBIR)
http://www.sbir.gov/
Research Commercialization and SBIR Center
http://center.ncet2.org/
Defense Advanced Research Projects Agency (DARPA)
http://www.darpa.mil/
SBIR & Small Business Technology Transfer (STTR) links:
http://www.darpa.mil/Opportunities/SBIR_STTR/SBIR_ST
TR_Links.aspx
LARTA Institute http://www.larta.org/
51 The Commercialization of *REDACTED* www.egltd.com
The Commercialization of
*REDACTED*
Or, How I Stopped Worrying and Learned to Love the
*REDACTED*
Douglas Hackney @dhackney
dhackney@egltd.com www.egltd.com
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