HoPE is Alive and Well

By Orville Butler and Joe Anderson

Our three-year, NSF-funded study of physics entrepreneurs got off to a fast start in May 2009, and we’ve now completed more than 50 interviews with founders and other physicists at over 30 startups in a wide range of specialties. The interviews average about two hours each and are based on a set of questions that were developed by staff and consultants with input from working scientists. The History of Physics Entrepreneurship (HoPE) Study is a groundbreaking investigation of the role of entrepreneurial physicists in developing new technologies. While we are including a small sample of companies founded before 1990, most of the enterprises were started in the last two decades, all by physicists. (For more information on selection criteria, see “AIP Launches New Study of Physics Entrepreneurs” in the Fall 2009 History Newsletter.)

During the first year we’ve focused on both coasts, conducting site visits and interviews at startups in Boston, the San Francisco Bay Area/Silicon Valley, the Research Triangle, and the Pacific Northwest, along with Tucson and Phoenix in the Southwest. We plan to focus our next series of site visits on the middle of the country, starting in the Chicago area. Before then, however, project staff will concentrate on having the completed interviews transcribed and then coded in Nvivo, the qualitative software that we’re using to analyze the responses. This will give us an opportunity to assess our initial results, fine tune the question sets, and adjust strategies for the remainder of the study. Some tentative findings include:

The importance of lab notebooks

Most of the companies require the use of hard copy lab notebooks in their research, which is in sharp contrast with the large companies in our earlier study of the History of Physics in Industry (HoPI), where less than 50% of scientists use lab notebooks. For some of the companies, failure to use a lab notebook is an offense that can result in termination.

Entrepreneurial background varies

While a few interviewees talked about being raised in an entrepreneurial family environment, most did not, and even those that did varied significantly on what they considered “entrepreneurial.” Most saw entrepreneurship defined in some way to suggest openness to taking risks, but entrepreneurial backgrounds do not appear to be a factor encouraging most to go into business.

Patents vs. trade secrets

While each company had its own measure of determining when to patent, most discussed patent costs as an impediment. Costs of a patent ranged from $10,000 to $60,000. Many interviewees who hold academic appointments were happy to have the university patent the results of their research and then license the intellectual property from the university.

Startups are low risk for academics

Several professors who were founders suggested that starting a company was low risk for them. They were not dependent upon the company for their job and the company, once they were tenured, did not put their academic career at risk. However, some said they had to weave their way through ethics issues relating to their fiduciary relationship with a company that conflicted with their interests as an employee of the university.

R&D cycle

One of the issues we will want to track carefully in future interviews is the appearance of an apparent R&D cycle. Most interviewees suggested that when they began, they initially did 100% research, slowly shifting to development with research almost or completely disappearing as they brought a product to market.

Absence of siloing/importance of networking

Another intriguing contrast with our HoPI study was the clear absence of intellectual siloing in the startups. While physicists in large corporations were hard put to name important scientists outside their own company, this came easily to the R&D staff and founders of startups. Part of this undoubtedly reflects the importance of networking for startups.

Funding

Startup funding appears to take a variety of modalities. Some began with venture capital ranging from a few million dollars to over one hundred million. Other startups saw venture capital as a danger to be avoided and relied heavily on SBIR (Small Business Innovation Research) contracts to start, and in some cases continue, their business. A third mode involves contracts with larger companies or federal science agencies. Debt financing appears to be less common but also occurs occasionally.

We welcome questions and comments, including suggestions of companies to include in the study. Please contact us at or .

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