The Tough Get Growing: How to Succeed in a Down Economy

Moderator: Bo Fishback
Eugene Fitzgerald '85
Daphne Zohar
Helen Greiner '89, SM '90
November 16, 2009
Running Time: 1:32:54

About the Lecture
Stay calm, stick with your vision and business fundamentals, and you’ll survive and perhaps even thrive in rough economic times, counsel these entrepreneurial aces. In a conversation with the Kauffman Foundation’s Bo Fishback, panelists reflect on their experiences bringing novel tech products to market and new companies to fruition, in good times and bad.

Daphne Zohar attributes much of her company’s success to its unusual approach: PureTech Ventures is an institutional entrepreneur that “starts companies from scratch, backwards, looking for an unmet need.” Her team investigates thousands of technologies brewing in academic labs, then, says Zohar, “we brainstorm and come up with ideas ourselves, forming a company in a proactive way.” Zohar’s group seeks out the very best researchers from the start -- the first step in building what she calls an “entrepreneurial trinity: people, money, technology.” Zohar has been starting companies since she was a teenager, and is relatively unfazed by the current crisis. PureTech is bullish enough to have started a hair follicle company for such disorders as baldness and acne. It’s “an area where there are no solutions, but it’s clear that if there were something, a lot of people would be happy.”

As a veteran of a half dozen startups, Eugene Fitzgerald has developed a healthy respect for macroeconomic cycles. The contraction of funding opportunities in the current climate may not be such a bad thing. “When you’re in a phase with cheap capital around, you could form an idea incomplete on the technological level, and run with it…Cheap capital biases people toward selling their vision alone.” With investors hard to come by, entrepreneurs will have to ratchet down their expectations, and “build companies the old fashioned way, over a longer period of time.” A recession focuses people on researching and developing an idea so it “will sell tomorrow.” Fitzgerald also sees “lots of opportunity during a time of gigantic changes,” if entrepreneurs can remain fixed on an idea, settle for growing slowly, and reach that “magic point” when the economy starts to leap back.

As an 11-year-old Star Wars fan, Helen Greiner was “enthralled by robots.” When she started her first company right out of MIT in 1990, she had high ambitions but little commercial know-how -- Greiner lacked even a business plan -- and she saw almost a decade of hard knocks before securing venture capital for iRobot. During this period, which taught Greiner “the value of cash,” she partnered with Fortune 500 companies, and found work with DARPA and military contractors as well. All of these proved invaluable opportunities to learn about manufacturing and customers. When Greiner finally introduced her mainstream product, the Roomba vacuum, in the midst of recession, she encountered widespread skepticism. Says Greiner, “If you look at the market opportunity for robots when we started, you would have said zero.” But she notes that with disruptive technologies, you “have to use a little bit more imagination” and “do a lot of evangelizing rather than just selling.”

Source: MIT

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Topic: Innovation