Hackney commercialization-of-redacted


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Presentation on the realities and challenges of commercializing technology from government agencies and departments.

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Hackney commercialization-of-redacted

  1. 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.comDouglas Hackney Serial Entrepreneur  Founded six companies  Part of dozens via consulting / advising / board Consultant  Management  Technology  Startups  VC / angel / seed 2 The Commercialization of *REDACTED* www.egltd.com 1
  2. 2. 3/24/2011Relevant Non-*REDACTED* Projects DARPA TASC GE 3 The Commercialization of *REDACTED* www.egltd.comCommercialization of *REDACTED* Technology / Capability Mix of open and declassified Goal is commercialization to open market 4 The Commercialization of *REDACTED* www.egltd.com 2
  3. 3. 3/24/2011SMB 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 5 The Commercialization of *REDACTED* www.egltd.comSmall 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) 6 The Commercialization of *REDACTED* www.egltd.com 3
  4. 4. 3/24/2011Small 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) 7 The Commercialization of *REDACTED* www.egltd.comSBIR / 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 8 The Commercialization of *REDACTED* www.egltd.com 4
  5. 5. 3/24/2011SBIR / 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) 9 The Commercialization of *REDACTED* www.egltd.comDirect 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 10 The Commercialization of *REDACTED* www.egltd.com 5
  6. 6. 3/24/2011Primary Direct *REDACTED* SourceChannels Government agencies / departments / acronyms DARPA 3rd Party Players 11 The Commercialization of *REDACTED* www.egltd.comGovernment 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 12 The Commercialization of *REDACTED* www.egltd.com 6
  7. 7. 3/24/2011DARPA 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 13 The Commercialization of *REDACTED* www.egltd.com3rd 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 14 The Commercialization of *REDACTED* www.egltd.com 7
  8. 8. 3/24/2011The Conundrum Lots of very interesting technologies and capabilities An equal number of challenges to commercialization 15 The Commercialization of *REDACTED* www.egltd.comPopular Perception 16 The Commercialization of *REDACTED* www.egltd.com 8
  9. 9. 3/24/2011Popular Perception 007 / Spy vs. Spy 22 stories below ground CSI/NCIS labs and personnel 17 The Commercialization of *REDACTED* www.egltd.comReality Cubeville 18 The Commercialization of *REDACTED* www.egltd.com 9
  10. 10. 3/24/2011A Lot Like the Commercial World Same core challenges  Idea vs. problem  Market  Technology  Business model  Sales model  Capital  Execution Tech Market $ 19 The Commercialization of *REDACTED* www.egltd.comSubtleties: Suitability / Viability Technology Market People Scale Politics Tech Subtleties Market $ 20 The Commercialization of *REDACTED* www.egltd.com 10
  11. 11. 3/24/2011Additional Challenges Rivalries  Inter- & intra-agency  Inter- & intra- department  Tribal Budget cycles Changing priorities Uncertain and ever-shifting political winds Additional Tech Subtleties Market $ Challenges 21 The Commercialization of *REDACTED* www.egltd.comAdded Layers Security Internationalization restrictions Compartmentalization Often walled off from inventors / developers Additional Added Tech Subtleties Market $ Challenges Layers 22 The Commercialization of *REDACTED* www.egltd.com 11
  12. 12. 3/24/2011Adds Time to Market More time = more risk = more failure Additional Added Tech Subtleties Market $ Challenges Layers 23 The Commercialization of *REDACTED* www.egltd.comManaging 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 24 The Commercialization of *REDACTED* www.egltd.com 12
  13. 13. 3/24/2011Created 1943, Declassified 200025 The Commercialization of *REDACTED* www.egltd.comNot My Last *REDACTED* Paperwork But Close26 The Commercialization of *REDACTED* www.egltd.com 13
  14. 14. 3/24/2011The 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 27 The Commercialization of *REDACTED* www.egltd.comTop Challenges Specialization Scalability Suitability Security Speed 28 The Commercialization of *REDACTED* www.egltd.com 14
  15. 15. 3/24/2011Specialization 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 ≠ 29 The Commercialization of *REDACTED* www.egltd.comScaleability 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 ≠ 30 The Commercialization of *REDACTED* www.egltd.com 15
  16. 16. 3/24/2011Suitability Disruptive = Startup Incremental = BigCo + = #fail + = #win 31 The Commercialization of *REDACTED* www.egltd.comSecurity 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 32 The Commercialization of *REDACTED* www.egltd.com 16
  17. 17. 3/24/2011Speed As always, time is the most valuable resource *REDACTED* commercialization includes many unknown time variables Most *REDACTED* commercialization initiatives simply run out of time 33 The Commercialization of *REDACTED* www.egltd.comTop 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 34 The Commercialization of *REDACTED* www.egltd.com 17
  18. 18. 3/24/2011Speed To Market Market Fit Uncertainty Time35 The Commercialization of *REDACTED* www.egltd.comZone of Market Uncertainty (ZMU) Market Fit Uncertainty Time36 The Commercialization of *REDACTED* www.egltd.com 18
  19. 19. 3/24/2011Zone 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 37 The Commercialization of *REDACTED* www.egltd.comZMU 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 38 The Commercialization of *REDACTED* www.egltd.com 19
  20. 20. 3/24/2011Case 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 39 The Commercialization of *REDACTED* www.egltd.comCase 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 40 The Commercialization of *REDACTED* www.egltd.com 20
  21. 21. 3/24/2011Case Study: Relate-o-Matic Process  Preliminary agreement  Segment and isolate available technology  Pitch concept  Build demo  Pitch beta customers 41 The Commercialization of *REDACTED* www.egltd.comCase 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 42 The Commercialization of *REDACTED* www.egltd.com 21
  22. 22. 3/24/2011Prerequisites For Success Domain expertise or equivalent Process $ Patience Persistence Respect Humility Humility Respect Persistence Patience You Are Here Process Expertise 43 The Commercialization of *REDACTED* www.egltd.comConfidentiality ImplicationsClient NSA Penalty 44 The Commercialization of *REDACTED* www.egltd.com 22
  23. 23. 3/24/2011*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 45 The Commercialization of *REDACTED* www.egltd.comWith 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 46 The Commercialization of *REDACTED* www.egltd.com 23
  24. 24. 3/24/2011With 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 47 The Commercialization of *REDACTED* www.egltd.comWith all the Challenges, Why Do It? Many potential billion dollar markets are on shelves 48 The Commercialization of *REDACTED* www.egltd.com 24
  25. 25. 3/24/2011Or, Perhaps, In Boxes…49 The Commercialization of *REDACTED* www.egltd.comThe New New Thing is Out There It’s One Box Over From the *REDACTED*50 The Commercialization of *REDACTED* www.egltd.com 25
  26. 26. 3/24/2011Resources 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 26