Peter Cochrane

1
Boom Bust. Doing a start-up company from
ground zero

• Peter Cochrane

SciTech 2003 John Innes Conference Centre Norwich
Research Park Norwich, UK 29 January 2003
2
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 ?

3
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

4
Company Founder Director NED Advisor
Investor ConceptLabs USA 1998 x x
x eBookers UK 1998 x
x
x Nomadix USA 1998
x x PSPL USA 2000
x
x RTC USA 2000
x x Shazam UK 2000
x
iSolon UK 2000
x x Etenna USA 2001

x KVector USA 2001 x x
x EZD UK 2002
x x   Venture
Capital FundsPortview Israel 1999
x
x CreateVentures UK 2000
x x x Failures 5
?he basis of my observations.
5
Example - eBookers
180
160
140
120
M
100
80
60
40
20
0
1999
2000
2001 2002
6
Energy and time expended
90
80
70
Finance Management Marketing Sales Delivery Suppor
t
?
60
50
40
30
20
10
0
Idea Science Technology
Engineering
7
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!

8
The out

• Create a corporation
• Create something a corporation will buy

9
Customer Driven Exponentiation

• Hotmail
• - No cost to user
• - Easy to sign up
• Every message sent advertises the product

10
My basic rules

• Dont enter a sector with competition
• Get to market in lt 9months
• Only start things that have huge potential
• Only work with friends

11
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
12
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!

13
Business Wealth Generation
?
Science Technology Knowledge Engineering Products
Services Education Employment ChangeMarkets Susta
inability

14
ROI
?
nvestment nnovation ideas

• Return On

T??? Technology People Employment ProductMarket S
ustainability
15
Identifying the customer

• The have a problem they need solving
• They have money to spend
• They have desperation in their eyes

16
I happen to like

• The Bell-Mason Model

17
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

18
Bell-Mason Model Diagnostics

• A system for ... Measuring risk Predicting
  course Tracking progress Improving the odds
  of success

19
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
20
Where is all the action?
21
Business Planning Strategy Organisation Operations
Relationships Sales etc
22
People Family Friends Home Health Hobbies etc
23
Technology Science Engineering Prototypes Producti
on Supply Installation etc
24
Society
Business
Hot Spot
People
Technology
25
So innocent looking
y ex
it is compound interest on steroids!
26
The S Curve Continuum
Technology
DVD
CD
Cassette Tape
Tape
Time
27
Moores Wall
3D ICs Molecular Quantum Genetic Biological Optica
l Computing New Sensors Networks Software Lifefo
rms Intelligences
ICn
Log Scale
IC5
IC4
IC3
IC2
IC1
Transistor
Thermionic Tube
1915 46 59
2010 2025
28
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
29
Ever-Increasing Availability
Profit
Abundance
Scarcity
Ever-Decreasing Cost
30
(No Transcript)
31
The Eco-model
Distribution
Manufacture
Raw Materials
RETAIL
Ecosystem
Consumer
Trash
Trash
32
Mobile
B-B
B-B
B-B
Distribution
Manufacture
Raw Materials
RETAIL
Ecosystem
B-C
C-C
C-B
Consumer
Trash
Trash
33
Business Value
Value Add -ve ve

• 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

34
Key parameters

• Investment
• Burn rate
• Time to market
• Time to break even/profit
• Market share
• RoI
• Efficiency
• Profitability

35
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
36
Interval between an innovation
competitive entry
Competition - years
37
Key Leadership Actions Qualities
Relationships
Leadership Actions Qualities Outcomes
38
Thinking
Outside The Box
39
Society
Changes slowly!
40
(No Transcript)
41
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

42
EU ON LINE SALES
Bn
Projection
43
Network Laws - Internet
Broadcast Telephone
1
2
3
4
5
N
1 2 n
lt n(n-1)/2 n2
lt n/2
Nn Always - customer control Availability gt95
44
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.
45
A world of opportunity risk.
Thank you cochrane.org.uk conceptlabs.net
?? what you do best.outsource the rest