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Boom & Bust…. Doing a start-up company from ground zero. SciTech 2003 John Innes Conference Centre Norwich Research Park Norwich, UK 29 January 2003. Peter Cochrane. The Big Issues!. Population - Migration Ageing - Health - Care
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Boom & Bust…. Doing a start-up company from ground zero SciTech 2003 John Innes Conference Centre Norwich Research Park Norwich, UK 29 January 2003 Peter Cochrane
The Big Issues! • Population - Migration • Ageing - Health - Care • Energy - Pollution - Ecosytem - Climate • Raw Materials Availability - Limits • Logistics - Transport - Constraints • Education - Complexity - Understanding • Wealth Distribution • Globalisation - Deregulation • Political Stability
New ventures are not optional… Thriving in business depends on new visions for making the transition from “atoms to bits” Small entrepreneurs will restructure industry Large organizations have to restructure themselves Mastering the entrepreneurial process is a must
he basis of my observations…. CompanyFounder Director NEDAdvisor Investor ConceptLabs USA 1998 xx xeBookers UK 1998 xx xNomadix USA 1998 x xPSPL USA 2000 xxRTC USA 2000 x xShazam UK 2000 xiSolon UK 2000 xxEtenna USA 2001 xKVector USA 2001 xx x EZD UK 2002 xxVenture Capital FundsPortview Israel 1999 x x CreateVentures UK 2000 xx xFailures = 5
Example - eBookers 180 160 140 120 £M 100 80 60 40 20 0 1999 2000 2001 2002
Energy and time expended… 90 80 70 Finance Management Marketing Sales Delivery Support 60 50 40 30 20 10 0 Idea Science Technology Engineering
The in… • Identify an opportunity • Identify a customer and market • Search for the competition • Understand every aspect • Locate a suitable technology • Engineer a solution/prototype • Formulate a plan • Raise money & create the company • Spend every $ as if it were your last!
The out… • Create a corporation • Create something a corporation will buy
Customer Driven Exponentiation • Hotmail • - No cost to user • - Easy to sign up • Every message sent advertises the product
My basic rules… • Don’t enter a sector with competition • Get to market in < 9months • Only start things that have huge potential • Only work with friends
In my experience we should… Make sure every single facet of any business start is in place and fit for purpose: technology, design, product, plant, production, market, marketing, sales, delivery, support, aftercare, people, finance etc All have to be 100% at the same time If one element fails then so does the whole
In my experience we should… 1. Never assume people understand 100% anything you say 2. Never assume people do anything 100% you ask of them 3. Never believe or trust a customer 100% 4. Never believe or trust a banker 100%. 5. Identify all competitors - and their state of play 6. Look out for oblique threats from outside the sector 7. Not be blinded by enthusiasm for a technology or idea - especially if it is yours Not let pride get in the way Identify the out - as well as the in! 10. Realize it is never too late to shout stop!
Business = Wealth Generation Science Technology Knowledge Engineering Products Services Education Employment ChangeMarkets Sustainability $
ROI nvestment nnovation ideas Return On $ T Technology People Employment ProductMarket Sustainability
Identifying the customer… The have a problem they need solving They have money to spend They have desperation in their eyes
I happen to like… The Bell-Mason Model
New Ventures Developing new technologies, products, and businesses imply: -a basic vision -a sound business model -a mature technology -an eager market -the right resources at the right times -a good team -good leadership & management -sufficient money
Bell-Mason Model & Diagnostics A system for ...• Measuring risk• Predicting course• Tracking progress• Improving the odds of success
Evolution of the “Ideal State” Stage IV. Market Development Business Plan Stage III. Manufacturing Marketing Product Development Product Stage II. Development Seed Sales Stage I. Concept Technology/ CEO Engineering Team Control Fundability Board of Directors Cash
Business Planning Strategy Organisation Operations Relationships Sales etc
People Family Friends Home Health Hobbies etc
Technology Science Engineering Prototypes Production Supply Installation etc
Society Business Hot Spot People Technology
So innocent looking… y= ex …it is compound interest on steroids!
The ‘S’ Curve Continuum Technology $ DVD CD Cassette Tape Tape Time
Moore’s Wall 3D ICs Molecular Quantum Genetic Biological Optical Computing New Sensors Networks Software Lifeforms Intelligences ICn Log Scale IC5 IC4 IC3 IC2 IC1 Transistor Thermionic Tube 1915 46 59 2010 2025
Lifecycle of Emerging Technologies 10 Smartcards E-Cash VRML/ Avatars Java - the Platform Biometrics Imaging Agents Visibility PDAs Wearable Computers Java- the Language Interactive / Web TV Database Mining WWW Inflated Expectations Application Sharing Speech Recognition Cable Modems Desktop Videoconferencing Technology Trigger Disillusionment Enlightenment Productivity Time 0 0 9 Source: Gartner Group, Monthly Research Review, April 1997
Ever-Increasing Availability Profit $ Abundance Scarcity Ever-Decreasing Cost
Industrial Revolution Availability Availability Availability Power Bandwidth Transistor Apps Consumer Goods Awareness Profit Profit Profit Cost Cost Cost Personal Computer Age Age of Personal Bandwidth
Consumer Recycle The Eco-model… Raw Materials Manufacture Distribution RETAIL Ecosystem Consumer Trash Trash
Consumer Recycle Mobile B-B B-B B-B Raw Materials Manufacture Distribution RETAIL Ecosystem C-B C-C B-C Consumer Trash Trash
Research 99.9% Development 5% Conferences Legal Finance Admin Patents Sales 99.9 0.1 10.0 90.0 99.0 1.0 95.0 5.0 99.0 1.0 100.0 0.0 80.0 20.0 0.0 100.0 Business Value… %Value Add -ve+ve
Key parameters… • Investment • Burn rate • Time to market • Time to break even/profit • Market share • RoI • Efficiency • Profitability
Company/Organis/zation Size What determines the size of any company or organis/zation? Size = CAPEX + OPEX Transaction costs tend to dominate GDP of Planet Earth = 47% Telco ~ 60 - 80% Healthcare ≥ 95%
Interval between an innovation & competitive entry Competition - years
Key Leadership Actions& Qualities Relationships LeadershipActionsQualitiesOutcomes
Thinking Outside The Box
Society Changes slowly!
The dotcom bust! • Greed • Stupidity • Naivety • The old economy torpedoed the new • No bandwidth in the local loop! But this is just a glitch - the internet is very young - so are mobile phones, PDAs, PCs, wearables, things & people on line etc
120 100 80 60 40 20 0 2000 2001 2002 2003 2004 EU ON LINE SALES $Bn Projection
1 1 2 2 5 3 3 4 4 n Network Laws-Internet Broadcast Telephone 1 2 3 4 5 N 1 2 …n < n(n-1)/2 ~n2 < n/2 Nn Always - customer control Availability >95%
Nothing much has changed…. "Nothing is more difficult than to introduce a new order. Because the innovator has for enemies all those who have done well under the old conditions and lukewarm defenders in those who may do well under the new" Nicolai Machiavelli, 1513 A.D.
A world of opportunity & risk…. Thank you cochrane.org.uk conceptlabs.net what you do best….outsource the rest…