Lions, Tigers, and Bears: What is the Role of an Entrepreneur?


Human and technological progress is both the cause and the effect of a rich and complex set of interlocking relationships and cycles that is similar to many aspects of natural ecosystems. Natural ecosystems consist of small and large thermodynamic, chemical, and biological loops that are necessary to sustain, proliferate, and advance life. By the time an ecosystem matures, either on a local, regional, or even global scale, there are diverse species, stable populations, and complex interdependencies among the members of the ecosystem's communities.

The technology ecosystem is very similar. The loops necessary to sustain an ecosystem consist of people, information, technology, and capital. Capital (that is, money), although very real, is also an abstract method for transferring energy (in the form of work and labor) within and between communities. The food chain (also known as the food web because of a potentially large number of interconnections) describes the various populations and their relationships to each other. In nanotechnology the food chain consists of users, businesses (vendors of technology, products, and information), investors, government, academia, industry forums, and standards organizations.

Each population is trying to sustain itself and proliferate in the context of the development stage and available resources of its community and ecosystem. Ecosystems develop and become populated over time by different populations. Some ecosystem populations reach maturity, but others never fully develop or fail. Occasionally populations fail because of natural disasters or severe disruptions (a meteorite, a forest fire, a stock market crash).

Businesses' and industries' development progress along the population curve is also typically affected by their movement along the hype curve. The vertical axis of the hype curve is visibility, and the horizontal axis is time, divided into periods including the start, the peak of inflated expectations, the trough of disillusionment, the slope of enlightenment, and the plateau of productivity. To some extent, how well businesses and industries negotiate the hype curve will determine whether the population of the ecosystem follows an S-curve to maturity or a J-curve to failure and removal from the gene pool. The early stages of a developing ecosystem are sparsely populated and typically have low species diversity, low inertia (resistance to change), and high resilience (the ability to restore itself after a disturbance). As an ecosystem develops, species diversity and inertia increase and resilience decreases.

Interestingly, some people don't consider nanotechnology an industry per se but rather a series of technologies and products that are applied to solve a wide and possibly unrelated range of problems. In many cases it is unclear whether business synergies can be developed between the disparate uses of the technologies and products. Some of these technologies and products include materials, medical devices, other devices, and processes and tools.

Materials take a long time to get to the market and replace or supplement existing industrial process flows. Planning, procurement, and testing cycles can be very long and are usually tied to capital budgets. Medical devices are expensive and take a long time to get to market because of scientific peer review, government testing, and the need to resolve potential reimbursement issues. Other devices may be less expensive or quicker to get to market, but the value proposition may be more difficult to define.

In all cases, success will depend on having a clear value proposition (in the form of lives saved, quality of life improved, costs or expenses saved, or markets opened) and having sufficient capital available to ensure survival until product sales can scale up. In the early stages of the ecosystem, the development of infrastructure and tools to support the rest of the ecosystem may offer the best possibilities for success.

Nanotechnology resides primarily in academic institutions, federal laboratories, large corporations, and to a lesser extent in small entrepreneurial businesses. There is significant research and some development going on. Nanotechnology is people- and capital-intensive. The tools, processes, and techniques to monitor and control the structural, electronic, optical, and magnetic properties on the atomic scale are expensive. Capital to fund these activities is coming from taxpayers in the form of federal research grants and to a lesser extent from large corporation research and development budgets.

There is some private equity available. The private equity market, in the form of angel investors or venture capitalists, has fairly high expectations that must be met to engage its interest:

  • A strong, transparent, predictable, and ethical management team

  • A large, identifiable, addressable market

  • Good product or service value and a strong, defensible market position

  • Strong, growing, and consistent revenue and earnings performance

  • An understandable story and strategy, leading to a future liquidity event (in the form of acquisition, buyout, or public financing)

There is still disagreement about whether the prodigious sums of capital that were available for the Internet, telecommunications, and pharmaceutical industries will become available for the nanotechnology industry. Many investors feel that public equity funding will become available as privately or self-funded companies mature and show the predictability and financial performance the public markets expect.

Private equity is not the only way to fund a start-up. Self-funding is possible, but very difficult, because of the capital-intensive requirements of nanotechnology. It can take millions of dollars to perform nanotechnology research and development, although it may not be as capital-intensive as the semiconductor industry on the back end. Licensing or using open source technology or products, rather than creating them from scratch, and using shared labs, facilities, and tools can make self-funding more viable.

The nanotechnology ecosystem has analogous models in the information technology, pharmaceutical, and energy industry ecosystems. These industries can be looked to as examples of how nanotechnology might evolve over time in terms of the landscape, the food chain, the ways they operate in regulated or unregulated environments, capital requirements, infrastructure requirements, innovation and development models, and paths to liquidity. Survival and proliferation through all the stages of nanotechnology ecosystem development will depend on the entrepreneur's ability to create or fill a niche that provides a unique value and becomes an integral part of the relationships and loops of the ecosystem.

As the ecosystem develops, as it has in analogous industries, adaptability and flexibility will be essential for proliferation and advancement. Interestingly, there is a fundamental difference in the ways adaptability and flexibility are realized in nature and in industry. In nature, members of the food chain "float" around, but in industry, entrepreneurs can make deliberate choices of how to adapt, stay flexible, and innovate. The ability to make choices and innovate is important because in the early days of most ecosystem (industry) development, the fast rate of change disfavors large, slow-moving organisms (organizations) and favors organisms (organizations) that are smaller, more adaptable, and responsive. Large organizations in general don't innovate as well as small ones donot necessarily because they lack the vision, but because risk taking is judged and supported differently than in small organizations.




Nanotechnology. Science, Innovation, and Opportunity
Nanotechnology: Science, Innovation, and Opportunity
ISBN: 0131927566
EAN: 2147483647
Year: 2003
Pages: 204

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