6 TRUTHS AN ENTREPRENEUR NEEDS TO UNDERSTAND TO TURN A SHINY MARBLE
INTO A BASKETBALL (VIEWED AT BIZPLANIT.COM’S BLOG)
In this series of articles, we tackle 6 truths in a series of blogs that all entrepreneurial-minded scientists and/or
inventors should understand in their quest to turn their technology-based IP ideas into home-run multi-million
dollar businesses:
UNDERSTAND THE VALUE OF YOUR IDEA
1) Truth #1-- An Idea Is Similar To The Size Of A Marble, Not A Basketball
2) Truth #2-- A Patented (or Pending) Idea Is Similar To The Size Of A Marble
UNDERSTAND WHAT IT TAKES TO TURN YOUR MARBLE INTO A BASKETBALL
3) Truth #3—Correctly Packaging Your Marble To Get Funding Is Key To Becoming A Basketball
4) Truth #4—Share The Pie As If You Are Giving Up A Piece Of A Basketball, Not The Marble.
UNDERSTAND THE ENTREPRENEURIAL MINDSET YOU SHOULD HAVE TO BE SUCCESSFUL
5) Truth #5—Think Like A Basketball, Act Like A Marble - Understand Your Gaps And Fill Them With Talented
People
Truth #6-- The Formula For Success: Have The Mindset To Share In The Upside To Become A Basketball. The
Best Ways To Grow Your Business Into A Basketball Is Through The Right Investors And The Right Team!
About the Author, Rob Steir
Rob Steir is the Managing Director and Co-Founder of MindForce Consulting, a firm that
partners with clients to commercialize technology, usually by building new ventures or
finding licensees. MindForce works with Fortune 2000 companies with IP on their "shelves,"
major universities, companies seeking SBIR funding, and passionate individual patent
holders. Since 1997 Rob has also been the CEO of MBA GlobalNet, a marketplace connecting
nearly 20,000 experienced MBAs with entrepreneurial opportunities and high-quality jobs.
www.mindforceconsulting.com
1
6 Truths An Entrepreneur Needs To Understand To Turn A Shiny Marble Into A Basketball
by Rob Steir, MindForce Consulting rsteir@mindforceconsulting.com; 1-646-202-9599
Truth #1-- An Idea Is Similar To The Size Of A Marble, Not A Basketball
DO YOU HAVE A BUSINESS PLAN FOR COMMERCIALIZING YOUR TECHNOLOGY IP OR INVENTION?
Do you own or manage Technology Intellectual Property? If you are a Fortune 2000 company,
university, a company seeking SBIR funding, or an individual patent holder with technology IP that is
simply sitting on the “shelf”, then this six part article series is for you.
In this series we will take a close look at the six most important truths that all entrepreneurial-minded
scientists and/or inventors should understand in their quest to turn their idea or invention into a
home-run multi-million dollar businesses. Today, we will start with the importance of having a solid
business plan for commercializing your technology IP or invention.
Make no mistake about it entrepreneurs who want to commercialize their technology intellectual property
wholeheartedly believe their ideas are all similar to the David statue. Michelangelo used one giant
rectangular piece of stone and sculpted the David statue from it. One could argue that he already
knew the figure of David was there, he just had to chip away at the superfluous marble and voila!
Similarly, an entrepreneur believes his or her idea is already a $10M/year business – the vision just
needs a dose of capital or the right licensee who will pay them a fortune for it, and voila!
Unfortunately, that’s just not the way it works.
An idea is an idea. Nothing more. Certainly some ideas are much better than others based on the
underlying intellectual property and problem being solved. The best analogy for entrepreneurs to use
is to think of your idea as the size of a marble, and not the size of the basketball. A basketball is
hundreds if not thousands of times larger than a marble. Basketballs just do not appear out of thin air.
They start, metaphorically, as a marble and grow over time with much care, luck, passion and effort.
Ideas definitely do eventually grow into the size of a basketball – transformed into a company with
strong sales, abundant new hires, and with products and services in much demand.
Entrepreneurs have to step back and look very carefully at their ideas and visions. The healthy view is
to look at their new business opportunity as the size of a marble. It certainly can grow into the size of
a basketball, but like a plant, it needs watering. The business plan is the perfect initial document that
details the required effort to “become a basketball” and it includes not only the capital that needs to
be raised, but also the number of management team members and employees that will be required,
and the effort required to build sales.
Therefore Truth #1: When entrepreneurs with technology IP look at their business plan, they not only
can’t assume there is a David statue waiting to be uncovered, but also need to understand the fact that
their piece of marble is not of the massive size of the David statue, but truly the size of a marble.
2
6 Truths An Entrepreneur Needs To Understand To Turn A Shiny Marble Into A Basketball
by Rob Steir, MindForce Consulting rsteir@mindforceconsulting.com; 1-646-202-9599
Truth #2-- A Patented (or Pending) Idea Is Similar To The Size Of A Marble
LEVERAGE YOUR TECHNOLOGY IP TO RAISE CAPITAL
This is the second, in a six part series in which we will take a detailed look at the 6 most important
truths that all entrepreneurial-minded scientists and/or inventors should understand in their quest to
turn an idea or invention into a home-run multi-million dollar business. In our first article, we took a
look at the importance of having a business plan for commercializing technology IP or innovations.
Now, imagine the following scenario: You submit your provisional patent. A year goes by. You submit
your patent application. Now, it’s Patent Pending. Your patent lawyer has told you he or she found the
cracks in the patent sidewalk (the claims) that enable your idea to have IP merit and value. You feel as
though you are now home free and it’s just a matter of time before the money will be rolling in after
the patent office grants your patent. Investors will be lining up to invest because you have a patent.
Right? Unfortunately, if it only were that simple!
A future patent holder needs to ask themselves the following questions before he or she even files the
patent application:









Is my patent truly a “disruptive” market game-changing invention or an “incremental” feature/benefit substitute in
the marketplace?
Does the future product or service, based on my patent, compete with well-funded, entrenched competitors?
How fast will the end customer switch to my product over status quo?
How much money will it take to market to these end customers to get them to switch?
How long will my product or service be in the market before it gets the attention of major competitors?
If my product sales grow quickly, can competitors create their own similar product or service by ignoring the
patent or changing one or two features to contest any patent infringement?
How much money do I have to litigate against these infringers?
How many other patents are in the field of use of my product or service, i.e. how crowded is the IP landscape?
Who owns these patents and will they think you are in any way infringing on their patents with other aspects of
your product or service?
You’ll notice the main thrust to these questions is centered not on the technology features (what is
patented) but on the market, competitive products and services offered, and competitors themselves.
Therefore Truth #2 – A Patented (or Pending) idea is similar to the size of a marble. A patent does
afford considerable protection, in theory, and is great to have in your side pocket. It, however, needs
to be properly applied to a product or service that not only can hold up legally against competitors, but
most importantly, will cause the end customer to want to switch to it.
Until these end customers bite and sales result, most investors will acknowledge the potential of the
patent, but will not attribute the same value you place on it. Thus, your patent is really a nice, shiny
marble – one that you wouldn’t trade in a game amongst friends or competitors, but it is no guarantee
that you will successfully raise capital.
3
6 Truths An Entrepreneur Needs To Understand To Turn A Shiny Marble Into A Basketball
by Rob Steir, MindForce Consulting rsteir@mindforceconsulting.com; 1-646-202-9599
Truth #3—Correctly Packaging Your Marble To Get Funding Is Key To
Becoming A Basketball
PACKAGING YOUR TECHNOLOGY IP OR INVENTION TO RAISE CAPITAL
This is the third article, in a six part series in which we are reviewing the 6 most important truths that
all entrepreneurial-minded scientists and/or inventors should understand in their quest to turn an idea
or invention into a home-run multi-million dollar business. In our previous two articles, we took a look
at the importance of a business plan to commercializing your technology, IP or innovations, as well as
discussed the value of your patent to raising capital.
So what does it really take to raise capital? First, you need to project your idea into the future.
Establish a clear vision (think size of a Basketball) and then back track to what you need to do to get
there (remember, your idea is currently the size of a marble).
Next, you need to take an objective look at the gaps in your business? It is critically important to stress
the word “objective”. Most entrepreneurs struggle with this as they find themselves looking through
the rose-colored glasses they purchased at the nearest Overly Optimistic Shop. Friends and family can
be great resources for feedback, but be sure to ask them to be candid even if they think it’s not what
you want to hear.
Ask yourself the following:
•
•
•
•
Do I have the right strategy and tactics to create a sustainable business year after year?
Do I know my “real” capital requirements to execute on this strategy?
Do I have the right management team in place to compliment my own skills and expertise?
Will investors be convinced I can execute with this team?
Bottom line, it’s not so much about the idea or the IP as it is about the execution. Can you convince
investors that you can execute? If the answer is “no”, you need to seek out 3rd-Party assistance
(consultants, advisors, new management team members, etc.) to ensure you have the business
expertise to answer yes.
If you have all of your gaps filled, you now need to create the “Best Package” possible to present to the
investment community. By package, I mean, you need to present your company in the best light
possible. Here are three easy steps toward accomplishing this:
• First you must look the part: Spend money and time to create a logo and an impressive “look and
feel” to your PowerPoint presentation to match.
• Second, build an advisory board to show investors that experts think you’re fundable.
4
6 Truths An Entrepreneur Needs To Understand To Turn A Shiny Marble Into A Basketball
by Rob Steir, MindForce Consulting rsteir@mindforceconsulting.com; 1-646-202-9599
• Third, create the absolute “best” business plan, executive summary, and PowerPoint presentation
that you and your team can develop. Once finished, show them to your advisors and ask them for their
objective opinion. Be sure to tell them not to hold back. If they say “perfect” then you’re set.
However, if they say “it’s OK or needs work” then you know you need to either take another run at it
yourself, or hire a consultant to help you become “investor ready.”
At the end of these three steps, you will be well on your way to having your “Best Package.”
Truth #3 – you must honestly assess if you have put your best foot forward with the resources you
currently have available. You have one shot with an investor. Creating your “Best Package” the first
time will not only help open doors but should also provide you a better shot at successfully raising
capital. Putting your best effort out there the first time will also help keep investors focused on the
investment, your team, your strategy and your ability to execute. If these are all strong, your chance of
cashing a check in the near future goes way up. Good Luck!
5
6 Truths An Entrepreneur Needs To Understand To Turn A Shiny Marble Into A Basketball
by Rob Steir, MindForce Consulting rsteir@mindforceconsulting.com; 1-646-202-9599
Truth #4—Share The Pie As If You Are Giving Up A Piece Of A Basketball, Not
The Marble.
IS YOUR PATENT WORTH $1 OR $10 MILLION
At a recent SBIR conference, I sat down to talk to an inventor. As we talked, I learned that he had
recently received his patent. He went on to tell me that he believed he owned a $10 million Basketball
(see prior my prior blog posts for further explanation). What I saw was that he owned a shiny marble
worth much, much less.
I was intrigued with his patent and its commercial potential. I explained to him how MindForce could
get involved to help him locate a licensee in exchange for a percentage of his future revenue. He
looked at me and point blank said “why should I give you part of the revenues – why do you deserve
such a large sum of money.” In his mind he was holding a bronzed Basketball as a fait accompli (see
Blog Post #1).
He has it all wrong. The inventor was looking at the world at what he is giving up (a huge slice of his
pie) rather than what he is receiving. The reality is that there presently is no pie for him to give up. The
pie he is “giving up” is a slice of a pie that will exist in the future.
Let’s do the math. Today, an inventor has a Marble worth, say, $1 (his patent), and what he needs to
do is license it in order for it to turn into a Basketball (the proverbial $10 million business). The
Inventor is approached by a 3rd party (who may offer hard work and/or capital) who says, “I can turn
your Marble into a Basketball and, for our example purposes, if it reaches $100 (milestone-based
reward), I want a reasonable stake – say 25%”. The 3rd party is not asking for a piece of the Marble (it’s
small, shiny and frankly not worth much). The 3rd party is instead offering to help the Inventor grow
his $1 marble into a $100 Basketball and when it achieves that level they will split the $100 pie ($75 to
the inventor and $25 to the 3rd party). Yes, the Inventor does not have as big a Basketball to himself
(the $100 Basketball), but in reality, the IP, today, only has the potential to be worth $100 or more.
Today, it is still just a $1 marble. Can he get their on his own – maybe or maybe not. But, with this third
party’s help he certainly has a better chance of making it a reality.
Inventors and patent holders need to fundamentally understand that turning ideas and patents into
valuable businesses is difficult and early stage product development very risky. When a 3rd party
(whether it’s a venture capitalist with money, a firm like MindForce, or an individual who wants to join
the management team) asks for a slice of the Basketball in the future and wants to be rewarded upon
hitting milestones – say at tennis ball size, softball size, bowling ball size and finally basketball size – he
is not asking for a piece of the Marble, today. It is earned by sweat, by action, by doing, and a great
deal of time.
As I walked away from my conversation with the inventor at the SBIR conference, I wished him a great
deal of luck. Perhaps he really does have a Basketball and will ultimately succeed in owning 100% of an
actual Basketball (the $10M he claimed it was worth). To me, I saw a shiny Marble, a lot of work yet to
be done, and an inventor with unrealistic expectations who more than likely will own 100% of nothing.
Although, he will always have a Marble to fiddle around with in his spare time.
6
6 Truths An Entrepreneur Needs To Understand To Turn A Shiny Marble Into A Basketball
by Rob Steir, MindForce Consulting rsteir@mindforceconsulting.com; 1-646-202-9599
Truth #5—Think Like A Basketball, Act Like A Marble -- Understand Your Gaps
And Fill Them With Talented People
THINK BIG, YET BE VERY REALISTIC IN ASSESSING YOUR NEEDS TO GROW TO BECOME A BASKETBALL
This is the fifth article, in a six part series in which we are reviewing the six most important truths that all
entrepreneurial-minded scientists and/or inventors should understand in their quest to turn an idea or invention
into a home-run multi-million dollar business.
By definition, an entrepreneur thinks up big, audacious ideas and believes, with a high degree of certainty, that
he or she WILL create a highly successful and substantial company (think “Basketball”). This aspiration is
essential. An entrepreneur needs to wear “rose-colored” glasses and to dream big. They must believe strongly
that there is a Basketball within their grasp. Otherwise, for example, Fred Smith would have never started
Federal Express after receiving a C grade on his business plan.
I am certain there are millions of other examples of entrepreneurs who succeeded when almost everyone told
them their idea was no good. Bottom line: An entrepreneur absolutely needs to have strong convictions and the
passion to turn their dream into reality.
The most valuable advice I can give to an entrepreneur is that they must match this intensity of vision with a
deep, internal assessment of reality, i.e. have a clear understanding of what it will take to turn this shiny Marble
(an idea really) into a company that can grow, sustain itself, and reach its potential. Put another way, the
entrepreneur must clearly understand, without illusion or hockey-stick projections, the time commitment and
effort required, the capital investment needed, and the real number of paying customers they will need over
time to success.
This “internally and honest” gap assessment is critical as it forces the entrepreneur to shed their “rose-color”
glasses. Importantly, it allows them to accurately assess whether they can reach their goals alone or if they
need to build a deep and talented team of professionals to support their efforts. To reiterate from the 4th article
in this series, successful entrepreneur must understand that giving up a piece of a Marble is a great thing to do to the right investors and/or the right team (or person) - in order to have the highest probability of success.
There should be no fear in giving up an appropriate percentage of a company - in its current Marble state - to
secure the proper talent, and go for it.
Truth #5 can be summed up as follows: An entrepreneur must think like he or she has a Basketball, clearly
understand and execute as a Marble, and find the right talented people to help them achieve their vision. If this
occurs, then an entrepreneur has a higher probability for success – and will, over time, achieve sustainable
growth.
7
6 Truths An Entrepreneur Needs To Understand To Turn A Shiny Marble Into A Basketball
by Rob Steir, MindForce Consulting rsteir@mindforceconsulting.com; 1-646-202-9599
Truth #6-- The Formula For Success: Have The Mindset To Share In The Upside
To Become A Basketball. The Best Ways To Grow Your Business Into A
Basketball Are Through The Right Investors And The Right Team!
THE RIGHT MINDSET FOR AN ENTREPRENEUR: ONE WHO IS WILLING TO SHARE THE PIE, GIVE UP
EQUITY AND TURN THE MARBLE OF AN IDEA INTO A BIG BASKETBALL OF A BUSINESS
This is the last article in our series of six articles where we discuss six very important truths that all
entrepreneurial-minded scientists and/or inventors should understand in their quest to turn an idea or
invention into a home-run multi-million dollar business.
AN ENTREPRENEUR HAS TO SELECT HIS OR HER MINDSET TO GROW THE BUSINESS
When push comes to shove, it boils down to the following mindset: Who do you want to be? The
entrepreneur who grows his or her business into the size of a Basketball, but may not own 100% or
even 15% of the eventual company after investors, consultants and management assistance; or an
entrepreneur who hordes his or her equity, owns a vast majority of equity in the company, yet the
business is nowhere near the vision of the Basketball.
WHEN WORIKING WITH AN ENTREPRENEUR AND HIS OR HER MINDSET – YOU CAN CHOOSE
It may not always be as black and white as the following two examples, but you should be able to tell
an entrepreneur’s mindset by the actions and words employed
For an entrepreneur who chooses to horde his or her equity, this person can be very guilty of seeing his
or her future business as a basketball from the very start. This is an entrepreneur who frankly you
should stay away from, as you will never get your appropriate share of the pie, i.e. equity, if you are an
employee or new partner. It is not a “win-win” scenario but rather an “I win, You lose” mindset.
For an entrepreneur who has the mindset to share the pie, this person (1) realistically understands that
ideas are the size of marbles, (2) has big aspirations and visions, (3) understands the gaps in turning his
or her ideas into revenue; and (4) makes a conscious decision to bring in talented people and investors
to help grow the business.
There is no guarantee, but the road to success seems far less bumpy when working with an
entrepreneur who has the mindset of sharing the pie with the right people and investors, rather than
possibly owning 100% of nothing. Of course, it also comes down to the business and the business
problem being solved; however in most cases, an entrepreneur does not change his or her mindset.
8
6 Truths An Entrepreneur Needs To Understand To Turn A Shiny Marble Into A Basketball
by Rob Steir, MindForce Consulting rsteir@mindforceconsulting.com; 1-646-202-9599