Does Technology alone make a Company?


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While conversing with a VC analyst, she claimed that she had a team of 21 Ph.D.s to evaluate the merits of a technology. She seemed impressed but critical of their evaluations since they were extremely conservative.  I thought that a heavy reliance on their opinion should not be the right strategy to evaluate a startup’s business plan.  For starters, there are so many technologies within many industries that even 21 doctorates could not possibly cover every underlying technology.  That would be my first concern.

I did remark that technology is one component in evaluating a startup’s business plan. In my simplified format, I describe 5 “T”s, with technology being one T of the evaluation or 20% of the total picture.  The other Ts –Ten-fold, Team, Traction, and Terms – should be incorporated with equal weight. (Note that I discuss these terms in earlier blogs.)  One can allocate points to each criterium and then used a minimum scale to establish a screening process.  In other words, those startups that score over 75 points would be screened further.

I, of course, apply a more rigorous analysis that includes the multiple bullet points in defining “strategy” when closer introspection is demanded. When one views the details, then one can finally make some intelligent decision.  The “technology” is a factor but not the final determining factor in assessing the value of the startup.

Going back to my introduction, one can then realize that a heavy reliance on 21 Ph.D.s might sound impressive at first. But when compared to the other factors, it plays a smaller role. Let’s play some scenarios.

In Silicon Valley, I once interviewed a Ph.D. holding over 50 patents.  His problem?  As an academic, he had never managed a business.   The words, marketing, and finance have not been part of his lexicon.  His technology might be interesting, but to market, technology is another skill set. I remind many people that the best Silicon Valley company, Apple, had been run by a college dropout, Steve Jobs, who had a keen sense of marketing. Wozniak offered the technology but, without marketing and Jobs, there never would have been “Apple”.  In fact, I observed the terrible obsession with patents throughout Silicon Valley.  One such SV company, Theranos, raised over $800 mill. on such IP claims.  What that fiasco – the founders were indicted for fraud — proves is that patents do not mean that the actual patents do work.  Patents alone do no create companies.  Other factors do.

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About Juan Ramón Zarco, SVVGP 胡安•雷蒙•扎尔科

Juan Ramon Zarco, 胡安•雷蒙•扎尔科, Silicon Valley Ventures Growth Partners llp, Hygieia Healthcare Technologies Company, AllRest Technologies LLC, Crimson Growth Partners LLP, jrzarco2001@yahoo.com, is an experienced as CxO, General Counsel and Secretary to public and private companies with global operations. Established track record of producing practical, revenue-focused solutions. As Counselor and Secretary, demonstrating vision, integrity, and sound business judgment, to CxOs. Managed complex, strategic transactions, M&A, contracts support, PE Financing, IPO, SEC compliance, Corporate/HR governance, IP licensing, Budgeting, Staff, outside counsel management, International market access strategies, Domestic & foreign government relations and advocacy. Creative in designing and implementing market access strategies. Practices law beyond conventional model with low-overhead and project-based fees. Effective at managing departments, formulating marketing strategies, balancing budgets, and implementing cost-saving measures. Extensive in-house and private practice experience, advising clients on commercial, corporate, international business, and technology law and policy. http://www.docstoc.com/video/89135472/make-your-business-an-international-presence; http://www.youtube.com/watch?v=fx5gijf3yoc For Sprint, he managed iDen international development in Southeast Asia, Middle East, and Africa, and contractual issues with Verizon. In Private Equity, he worked with Pegasus in vetting international investment deals and interim President for portfolio companies, such as Data Foundation, a data storage company, handling marketing, strategy, fund raising, and accounting. Before Pegasus, Mr. Zarco, as CLO and V.P. of Corporate Development, played a principal role in the structuring, international expansions for 2 telecom companies, U.S. Cable Group and Viatel, Inc. in financing and M&A deals exceeding $200 million. Mr. Zarco earned a J.D. from NYU Law School, M.B.A. from Cornell, and B.A. from Williams College; is fluent in Spanish, Portuguese, French, and German, with working knowledge of Russian, Arabic and Japanese.
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