Marina Hatsopoulos. Entrepreneur, Director at Cynosure and Levitronix Technologies; Advisor, MIT Enterprise Forum Greece, The EGG accelerator, OK!Thess

1. Key Elements of a
Successful Startup
Marina Hatsopoulos
Entrepreneur
Director at Cynosure and Levitronix Technologies
Advisor, MIT Enterprise Forum Greece, The EGG accelerator, OK!Thess

2. Agenda
 My Story
 Entrepreneurship
 Intellectual Property
 Market
 Competition
 Team
 Culture
 Board of Directors
 Financing

3. My Story
Background
 Chase Manhattan Bank - Wall Street - finance
 Thermo Electron - technology conglomerate
 MIT – Masters, Mechanical Engineering
 Pivot: search for job>turnaround>technology
 MIT technology licensing office > Inventors
 Z Corporation (early 3D printing leader) - Founder, CEO
 Cynosure ($340M public company) & Levitronix Technologies – Director
 Director on other boards
 Investor in startups based in US and Greece, as well as startup funds

4. My Story
Z Corporation
 MIT Technology
 Early leader in 3D printing
 No venture capital (hardware)
 Focus on Profits and Cash Flow
 Fastest-growing business in New England in 2001
 Raised $11M from angels and strategic corporates
 $9M in bank when we sold
 $30M in revenues
 125 employees

5. My Story
My involvement with Greece/Cyprus
 Invited to MIT Enterprise Forum Greece
 Inspired by Israel: “Startup Nation”
 Why can’t we do what they’ve done?
 Israeli-founded businesses generate $9B in Massachusetts
 Israeli model: CEO & Sales in Boston, Development in Israel

6. Entrepreneurship
What’s the point?
 Jobs
 Upward social mobility & economic opportunity
 Independence
 In today’s environment, startups require very little capital to get off the ground & go global

7. MIT
Culture of Entrepreneurship
 30K Active Companies from MIT Alumni
 5 million jobs, $2 Trillion Annual Revenues
 10th Economy in the World
 100K Competition has created >60 companies valued at $10.5B

8. MIT
Technology Commercialization Model
 Sandbox grants $1K for students to explore their startup idea
 Grants of $25K-$250K at Deshpande Center, to get research out of the lab &
connect to professional investors
 $100K Startup Competition
 Venture Mentoring Service
 Technology Licensing Office patents inventions & licenses it
 Patent Fees paid by startup
 Royalty (about 5%) on Revenues paid by startup
 Equity (about 5%) of startup granted to MIT

9. MIT Enterprise Forum Greece (mitefgreece.org)
 MITEF is a global organization
 Focus on early-stage technology entrepreneurship
 Turn ideas in to world-changing companies
 Events for inspiration and networking
 Diaspora Group to connect Greeks to thriving tech ecosystem in Boston
 StartSmart Conference-Sat. Nov. 5 in Athens (Attend!)
 Startup Competition and Accelerator (Enter now!)
 International partners, mentors, judges
 Global visibility through MIT Technology Review
 One-week Bootcamp at MIT
 Sponsorships available

10. Idea
 Cocktail Napkin Spreadsheet
 # Units
 Revenues
 Time and investment to get to revenues and profitability
 Development, Manufacturing, Sales & Marketing higher than you expect
 Pricing is critical! We would have gone out of business
 Talk with 20 prospective customers
 Does anyone care?
 How much would they pay for this?
 How big is their pain today?
 Who would be better positioned to do this?
 A great idea is necessary but not sufficient
 You have much more to lose by not talking than you have to gain

11. Intellectual Property
 Patents
 Difficult to invent, Easy to copy
 Trade Secrets
 Easy to invent, Difficult to copy
 Know-how
 Processes, Ingredients, etc.
 Use all for competitive advantage

12. Market
 Market is big enough
 Try to sell product, before it even exists
 Early prospects help guide development
 Customers may fund research and development
 Don’t worry about people stealing your ideas!
 Get prepayments from customers-20% up front
 Clear Value Proposition
My Company
Product A
Competitor
#1
Product X
Competitor
#2
Product Y
Price $45K $30K $55K
Speed Fast Slow Medium
Resolution 2 mm 3 mm 5 mm
Quality High Medium Low

13. Competition
 Competition is good: they pay to educate the market
 Easier to have a benchmark to sell against than nothing
 100-pound Gorilla competition (or potential competition) is bad
 Who is perfectly positioned in terms of customers or technology
 Why haven’t they done it already?
 What will keep them from entering the market?
 Will they have an unfair advantage or will you?
 The important thing is product differentiation over the competition
 What is the one thing that makes your product significantly better than anything else?
 What do you have as a company that makes you uniquely positioned to do this?

14. Team
 Most important factor for investors
 Companies with Salesperson on Founding Team have 3x chance of success
 Capitalize on your stars, even if they have holes
 Set up founders equity-consider stock options
 Leverage network but don’t hire someone you can’t fire
 Hiring philosophy
 Some employees are OK, not great: opportunity cost
 We all make mistakes. Deal with them & move on
 Articulate your direction and stay focused

15. Culture
 Focus; can’t do everything
 All that matters is results, not face time or experience
 Time to market is critical and urgent; this is not time for a cafedaki
 80/20 Rule: Perfection is your enemy
 Make concrete milestones-and deliver!

16. Monthly Dashboard
 Average Sale Price
 Revenues
 Gross Margin
 Net Income
 Cash
 Service Calls
 Repeat Sales

17. Board of Directors
 Selected passionate board members who invested in us through several rounds
 Find a mentor with relevant success who is willing to tell you what you don’t
want to hear
 Find investors who understand your business, believe in it and have deep
pockets to invest
 Find missing areas of expertise and fill those roles
 Start with a small board-hard to remove them
 Use your board; don’t just report to them. LISTEN! Half the answer is the
question.

18. Financing
Seed Capital and Series A
 Angels
 Venture Capital
 Equity
 Debt
 Strategic investors
 Equity
 R&D Contracts
 Customer Deposits

19. Financing
Angels
 Individuals or groups which meet monthly to hear pitches & share diligence efforts
 Small investments: $25K to $500K
 Less control provisions
 Seed investments made as convertible debt
 Converts to equity in Series A at a 20% discount
 Postpones valuation until there’s more information
 Advantage:
 Better terms: control, valuation
 Disadvantage:
 May not have capital or appetite to invest through multiple rounds

20. Financing
Venture Capital
 Lots of capital to put to work; same work to invest a little or a lot, so they invest
a lot: $1M-$25M
 VC’s expect dead, living dead, but they’re in it for the very few “unicorns” with
30x-100x returns
 Board seat
 Control
 Have access to larger pool of capital, so can invest through multiple rounds
 Advantage:
 Can carry credibility to be funded by a top VC
 Disadvantage:
 Pressure to grow fast, which can be good or risky
 Give up control

21. Financing
Strategic Investors
 Corporate investors with interest in your success:
 Customers
 Distributors
 Suppliers
 Advantages:
 Give up very little control
 Access to large partner who can help grow business
 Validates business for outside investors
 Credibility
 Disadvantages :
 May limit ability to form partnerships with their competitors
 May reduce chance of selling business to their competitors
 May give them information you’d rather keep secret (eg, gross margins)

22. Financing
Pitching to Investors
 Website & Pitch should be clear and simple: WHAT DO YOU SELL?
 Practice elevator pitch
 Forget about the quick flip
 Forget about the billion-dollar sale in a related area
 Find investors who have invested (with success) in related businesses

23. Financing
Considerations for the Entrepreneur
 Capital vs. Control
 Low capital investment means higher ownership & control
 Lower growth can be lower risk or higher risk, depending on the business and who
the competition is
 Growth vs. Profitability
 Some businesses need to reach critical mass before anyone else, in which case
growth is paramount
 Other businesses take time to educate the market, so there’s no way to accelerate
it in a way that can generate a return to the investors
 Some businesses require lots of capital. If you’ll need over $3M, might as well
go to VC’s early. Otherwise, could retain more control and higher ownership
 Most businesses are not unicorns. You can make good money as an entrepreneur
without building a unicorn, as long as you don’t raise too much money

24. Financing
Acquisition
 Don’t mess up a business to “look pretty”
 Don’t plan on acquisition-many issues out of your control
 Don’t sell into a buyer’s market
 Don’t put your startup in a situation where you have to sell
 Build a strong business and acquirors will come
 If they don’t, you won’t care

25. Financing
Moments of Crisis
 Competition came out with similar product before our product launch
 Zero sales month
 We tripled our burn rate just before sales plummeted
 Failure is information. Use it to move forward.

26. Doing Business with Americans
 Respond immediately—a few hours, or at the latest within the day
 Plan ahead-hard to get meetings at the last minute
 Follow through on anything you say you’re going to do
 Network using Linkedin, not Facebook & use a professional photo
 Mr. or Ms. (not Mrs.) for introductions, but shift to first name immediately

27. Entrepreneurship in Cyprus
 Political, economic and legislative stability, free of bureaucracy, and
business-friendly
 Must go global early
 Bootstrap to early profitability
 Access to strong, well-educated technical talent
 Think bigger: commercialize university research
 What are problems you see that could be solved by innovation?

28. Parting Words
 Controlling your own destiny is enriching and fulfilling
 Persevere. It’s hard. No “life balance.” This isn’t a Disney movie.
 Celebrate milestones and have fun!

29. Thank you
Marina Hatsopoulos
Angel investor and
Director at Cynosure and Levitronix Technologies
Marina Hatsopoulos Marina Hatsopoulos