The SBIR program was designed with the startup community in mind and, in the right circumstances, can be part of a launch. Starting up a business means different things to different people, and the SBIR is NOT a fit for many strategies.
What an SBIR fits?
An SBIR requires a technical innovation and a business plan, not a job plan. Many people are skilled enough to create their job, and they confuse that with building a business. Building a business takes a team, and it is not an individual endeavor. The concept of a Solopreneur creates a job, not a business.
Keys to Startup Success
I have been through the startup process seven times, and those experiences have taught me that the keys to success are, in order, Timing, Team, and Technology. Get these properly aligned, and the odds of success are vastly improved. While presented separately, all of these are tightly woven together. The team has to form at the right time with the right skills to solve the grand technology challenge.
Timing
Timing is the most important item in the chain of success, and it is the one that teams have the least control over. Another word for getting the timing right is lucky, and we would rather be lucky than talented. When considering an SBIR, the team is looking into the future several years, which is one of many reasons this is so difficult. Being too early is just as bad as being too late, and first to market is rarely the difference between success and a learning experience. While there are always outlier data where a first to market won, there are many others where the dominant player comes later. Timing is a startup risk that teams just have to accept, but they need to monitor. After all, they may need to pivot if they guessed wrong.
Team
The leadership team of a startup requires a Technician, Manager, Rainmaker, and Scholar. No one person is exclusively one of these, but everyone is primarily one. Each of these has a specific perspective and role in the formation. Let’s start by defining each of these:
- Technician
Technicians are the creators of the product of the business. Their focus is on the quality of the work, and they are one of three sub-classes: Scientists, Engineers, and Artists. Scientists experiment with new ideas, create tools for Engineers, and are driven by the quest of “What’s Next?” Engineers use tools to create scalable, reliable systems and are driven by the quest for scalability and reliability. Engineers and Scientists are separated with a simple belief question. Do they believe there is a right answer? Engineers believe in the right answer, and Scientists do not. Artists are tortured souls driven to bring their visions to life, and honestly, I have never understood their process, but I appreciate their value and skill. Roles are not titles, and people who are titled Engineers are often Scientists in an R&D project.
- Manager
Managers are the organizers of the business and focus on policy and procedure. They seek consistent measured results and have a spreadsheet for everything. Managers bring cost control and discipline to the business putting them in conflict with the other team members.
- Rainmaker
Rainmakers are the business deal makers and are evangelists for the product of the business. They are customer-facing and bring marketing demands back to the business and then advocate for the customer. Rainmakers conflict with Managers because they bring items outside of current policy and procedure. Rainmakers conflict with technicians because they bring more work back to already overworked people.
- Scholar
Scholars are academic-minded people that bring a high level of specialized expertise to the business. They tend to be purists seeking the truth, which brings them into conflict with everyone. Scholars are deeply respected because of the depth of specific niche knowledge. Scholars are commonly topic mentors of Scientists and Engineers.
Conflict is not a Bad Thing
Conflict creates value in teams and is not a bad thing. It gets a bad name because it can get out of control. The reality is that great businesses come from diverse teams with professional conflict because they represent different perspectives. When solving a tough problem, diversity is an asset, not a liability.
Team Balance
Teams need to be balanced based on the current stage of the business. The SBIR Phase I for a startup is the launch pad phase. Every project is different, but in general, the Technicians will be the bulk of the budget. The SBIR rules require that the Principal Investigator be full-time. The Principal Investigator is a Scientist and teamed with another Scientist or Engineer. Ideally, the second technician will be full-time, although it could be split between two people. The Scholar is a technical advisor to the Technicians in Phase I and budgeted at 8 hours a week. Next in the team is the Rainmaker, who will help bring market demand into the planning and serve as the outside voice of the company, budgeted at 8 hours a week. Next is the Manager, who brings order and accountability to the project, budgeted at 8 hours a month.
Technology
If you get the timing and team right, the technology is normally the lowest risk of the critical path items. Technology represents significant risk depending on how many “Magic Occurs Here” boxes are on the system flow chart. An SBIR is a research project, not an engineering project. If all the questions have answers and there is nothing to discover, it is unlikely that the proposal will represent enough innovation to qualify as an SBIR candidate.
Parallel Tasks
Winning an SBIR award is only part of a business startup. There are parallel tasks that have to be planned and completed. SBIR funds can only be used for R&D activities. There are specific rules against using SBIR funds for business development, marketing and sales, production, patent costs, or any activity unrelated to the underlying research and development effort. These are critical items to launching a Startup resulting in a parallel task of creating and funding the balance of the business plan. The balance of the business plan efforts falls largely to the team’s Manager and Rainmaker. If they have to be paid, there must be separate funds for that. Our advice is to start this business planning once the SBIR Phase I proposal is submitted. Finding business investors is not easy, and it takes time and effort.
Talk to us
For an innovative business, the SBIR program is a wonderful opportunity to launch a world-changing startup. If you are looking for a Rainmaker partner for your team, we invite you to talk to us.