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get frustrated by slow progress by the scientists, and scientists can become frustrated finding their CEO’s attention divided. Gordana Vunjak-Novakovic, a serial VC-backed scientist and entrepreneur (Tara Biosystems; Epibone; East River Bio; Immplacate) and Professor of Biomedical Engineering at Columbia, says:
“In each of my four startups, one or more graduate student and postdoc inventors have taken leadership positions in the company (CEO, CSO). I really like this model—invention and patent application, followed by a high-impact paper, and intellectual ownership of technology by trainees that they continue to develop by transitioning into the company. I am also very happy being available as a scientific advisor whenever needed, while leaving freedom to the CEO to build the business.”
On the investor side, Jim Demetriades, founder and managing partner of Kairos Ventures, says:
“We love scientific founders to remain actively involved as the invention evolves from the scientific bench to a full commercial offering. However, scientific founders need to appreciate that their startup’s success critically depends on having an experienced CEO who allocates 100 percent of their time and efforts to achieving such success. While keen technical insight and passion about the technology are excellent attributes, it is rare (but not impossible) for a newly-minted PhD student to make up for the company’s lack of business acumen and years of startup experience.”
4. Letting go: As mentioned above, scientific founders have a clear sense of the best roadmap to develop their products, but also want to be free to pursue their own unrelated academic interests. They also may want to put their time into basic research that may end up in prominent publications (one of the core functions of the modern research university), rather than using those hours to further develop their existing innovations. Meanwhile, the new CEO will likely be getting direct feedback from potential customers, industry partners, and venture investors about critical product features that must be developed. Tensions can arise in either direction: CEOs can become frustrated when the scientists won’t adjust their university research to meet the company needs (and they shouldn’t); and scientists can be offended when the CEO insists on pivoting away from the scientist’s original vision. According to Kathy Ku, the former longtime director of Stanford University’s Office of Technology Licensing:
“Faculty should focus on pushing the boundaries of knowledge, authoring important publications, and teaching the next generation. That means CEOs shouldn’t expect them to divert their research, but also means that faculty need to allow their CEOs (whether a former postdoc or external entrepreneur) to set the direction of the company’s commercial efforts.”
5. Launch velocity: One founder may prefer to raise small amounts of capital from friends, family, or angel investors (or even rely on non-dilutive funding like SBIR grants) to avoid having their shares diluted or ceding ownership. Another founder may want to raise as much money from venture capitalists as quickly as possible, or even partner with industry to benefit from their experience with manufacturing, marketing, and sales. While there is no one right answer, according to Jon Soderstrom, Managing Director of the Office of Cooperative Research at Yale University:
“Wise founders recognize the difference between smart (e.g., professional venture capital) money that brings credibility, contacts and value to a new venture and ‘friends and family’ money that may not dilute the scientific founders as much but does not help create value in the venture beyond the dollars themselves. Founders have to choose between controlling a large stake in a venture that may not be able to later raise additional capital for growth or a smaller slice of a venture that has the possibility growing dramatically if the technology is successful.”
6. Public face: Different people may have varying comfort levels and expectations around who will become the spokesperson for the company, in terms of press interviews, meetings with potential backers, and discussions with local government officials. These issues can lead to difficult conversations among the founding team, given the need for frank feedback about sensitive topics (charm, relatability) and interest in sharing the publicity. The same debate can occur around titles, which, especially in the early years, can be amorphous.
7. Changing of the Guard: While it can be uncomfortable, it is also worth being explicit upfront that even the new CEO may not stay at the reins forever. Steve Blank, senior fellow at Columbia, and creator of the Lean Launchpad entrepreneurship methodology, makes the point that:
“At each phase of the company you need to grow the team’s skill set. If you want to build a traditional startup powered by venture capital, the team would initially start with the Innovator – the person with the insight/invention. For science-based startups, this is typically a professor in a research lab. Think Steve Wozniak at Apple, Paul Allen at Microsoft. The entrepreneur is the person who can create the reality distortion field around the product and company. Think Steve Jobs at Apple, Bill Gates at Microsoft. The entrepreneur’s job is to raise money on just a demo and/or sparse data set, convince others to quit their good jobs to join a small team with nothing more than an idea, convince early customers to pay for and love an early, buggy, unfinished product, and most importantly hit the growth milestones that investors want. Ultimately, though, the entrepreneur is usually replaced by the executor, the person charged with scaling the company.
Each of the transitions implies a change in company culture, process, and trajectory. Each requires a different skill set. Bottom line: there is usually no single ‘right’ person to lead the company; the answer depends on the company’s needs at that moment.”
Launching a successful startup is incredibly difficult, requiring singular focus, years of hard work, and comfort with all of the challenges these scrappy companies need to overcome. Doing so without the right combination of technical and business founders lowers the odds of success, and also makes the journey even harder than necessary. We hope that by following the guidelines above, more startup teams will find themselves with the best chance of a great outcome and a team of which they can be proud!