July 2011 Dr. H. Lee Martin

The July meeting of the TIA featured Dr. H. Lee Martin. Lee holds 16 US Patents and has numerous publications in robotics, image processing, and electric vehicles. He started the company TeleRobotics International, Inc. in 1986, which went public on the NASDAQ exchange as iPIX in 1999. He is the author of the book Techonomics. Currently, he teaches engineering entrepreneurship at the University of Tennessee.

Lee shared with us the lessons he learned over the past 25 years as a technology entrepreneur.

Lee said: It only takes one thing to succeed ---- In order to succeed it takes Good Judgment --- It takes one thing to get good judgment ---- Experience.

He defined Techonomics: it is a portmanteau of Technology (every 2 years we are doubling the knowledge of all the history of mankind) and Economics (competition forces the utilization of best practices with any new technological advance).

More importantly, he reminded everyone that we must realize that we cannot be an expert on everything. We need to know when to hire experts.

The lessons he learned through his 25 years as an entrepreneur are as follows:

a) Never start a 50-50 partnership – every ship needs a captain. You will not know when you need that captain. In the beginning you may think your partnership is equal and is the best until a decision is to be made and both of you have different view points on the issue.

b) Copyright protection protects nothing in software. Software is of no value to venture capitalists or in court of law.  It is worthless.

c) Friend and family financing has hidden costs. There are times to bring in outside financing.  An external board is needed when you need serious money. You must know when to obtain it.

d) Government really wants to help entrepreneurs, but the government does not have the long term outlook to be successful at it. SBIR money allows inventors to operate and the patent is yours to keep. Even the products developed under SBIR money belongs to the inventor. Phase 2 and Phase 3 SBIR applications are very possible. It is highly likely you will get the money.  About 1 in 8 wins.  Once you do the first time, the following applications come easier.  TECH2020 does a good job encouraging those.  You can find these funds at SBA.gov

e) Patents exist to align the interest of the inventor with the investor. A patent is like an incubator for an egg and a chick…it’s there as long as you need it for development and marketing.  This gives a period of time for investors to recover their investment. The simpler the description for the patent is, the better it is.  Otherwise, someone can remove a few parts and achieve the same thing. A patent has a limited life.  Congress is in the process of changing the US Patent Law – from first to conceive to first to file (rest of world).  Now you will have to file.  Provisional patents are critical!!!!  Simply 1 claim.  You have 1 year after that.  (Utility patents provide deeper protection.)

f) Getting a small investment and getting a large investment requires the same amount of work; so dream big.  You’ll still go through a due diligence process either way.  The process is long and arduous both ways…and you do give stuff away.  Besides, you’ll be ‘back at the well’ before you know it if you asked for too little.  “It always takes twice as long and twice as much!” It is all about how big you dream and how well you justify it.

g) Nobody wants a loser on their resume.

h) Emerging technologies may be bringing unimaginable opportunities to what you have been working on. What you have been working on for years you might want to take a look and see if new technology opens other doors for you.

i) A good patent gets investment; a great patent is a ticket to court! (Everyone wants to copy it).  Only a few are ever court-tested, and then you have that 20 year term.

j) Delayed gratification can be very gratifying. Everyone has to put everything into it.  “Lots of sacrifice.”

k) What one Governor starts, the next may not support, especially if the next governor is from the opposing party.

l) The individual that is both technically skilled and an entrepreneur is a rare commodity in the high tech entrepreneurial economy.

m) Never before in the history of the world could you reach more people with less staff. The cost to attract a customer relative to thin margins (competitive) didn’t work.  Analytics are timely, but the product must have some uniqueness other than lower cost. Use Google ad-words.  Google Analytics monitors advertising activity.  Only 1 day to place an ad, and the next day to see the true results.  Amazing with today’s marketing.  It is a different world out there with the help of the internet.

n) The critical cost in a virtual company still remains cost of sales! No labor, no warehouse, no fabrication but slim margins, hyper competitive, must make more margin than the cost of eyeballs.

o) It is financially safer to teach entrepreneurship at UT than for him to practice it.

p) Entrepreneurs and bureaucrats are like oil and water – you can shake them up, but they still separate.

q) Capitalism is fragile and precious; do all you can to protect it.  Too many regulations are restricting the ability to do business as usual…from hiring to firing.

Conclusion: The greatest entrepreneurial lesson: The journey is the reward.

Other Business:

Tom Kulaga gave an update on the Patent Reform Bill working its way through Congress. The House passed a bill that is different than the one the Senate passed. The House watered down the fee diversion provisions and made other changes. The debt ceiling fiasco is currently taking center stage in Washington. The Patent Reform Bill is on hold. The TIA website has information on the Patent Reform Bill. Everyone is encouraged to contact your elected politicians and give them your thoughts.

Tom announced some new resources:

• New Program Got Invention Radio. The Podcasts are available on their website.
• Moms in Business United (MIBU)

Tom also announced a possible new program in which inventors practice their pitch before the group. Every inventor needs an elevator pitch and a 5 to 10 minute sales pitch for investors and/or potential licensees. Tom wanted everyone to think about such a program. He mentioned the possibility of bringing in someone to grade the pitches.

Carl Papa announced MissionImpossiBALL, a charity drive that seeks to hit one million golf balls in 72 hours. The $10 entry fee benefits the American Cancer Society. Pin High Pro is teaming with ESPN Radio Knoxville and Fairways and Greens Golf Center to present the Pin High Pro 2011 Million Ball Challenge from midnight on Friday, September 2, to September 4, 2011.