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Focus on the Customer

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Marie Freebody, Contributing Editor, [email protected]

In this new regular column, Photonics Spectra brings pragmatic advice to startups on writing business plans, attracting investors and choosing partners from some of the top entrepreneurs in photonics.

They’ve seen it all and weathered all kinds of storms, from economic ups and downs to takeovers, mergers and acquisitions, and now the giants of photonics will pass on their wisdom to our readers.

Our first advice giver is Jan Melles, who boasts 43 years in the optics and laser industries. Melles began his career in 1965 as a young and inexperienced sales engineer, and his name has since become synonymous with some of the most formidable firms in photonics history.

Jan Melles has seen it all during his 43 years in the photonics business and now shares his top tips for startup success. Photo courtesy of Jan Melles

During his career, he has been the founder or co-founder of 12 companies, including Melles Griot Inc., NanoPhotonics AG and Photonics Investments BV. He has served on more than 20 boards of directors, including Gooch & Housego, Excel Technology, Ocean Optics and Synrad, and brokered the sale and acquisition of more than 30 companies – collectively valued at more than $200 million.

Today, Melles is president and CEO of Photonics Investments, and serves on the board of directors of many companies, such as Access Laser Co., Avantes and m-u-t AG.

Q: How difficult is it to transfer a good idea or technology into a business these days?

A: It is not more difficult today than some years ago. The answer is quite simple: If there is a market need for whatever the new company provides, this will be successful – provided the management of the startup does the things necessary to put themselves into position to be able to fill that need.

The only thing more difficult today is to get funding, but even that depends on how effective the management is in making their case to investors, and this applies to any kind of market condition. Even in this tough economy, new companies are being launched and getting funding.

Q: What is the most important thing that entrepreneurs should keep in mind at the technology design stage?

A: Focus on customer needs is paramount. Tech entrepreneurs often focus too much on the technical aspects of their business and forget the most essential part of any business: identifying the needs of the intended customers and being able to satisfy that need better than the competition.

Q: How necessary is it to have business partners, and how should you go about choosing them?

A: Doing it on your own gives you complete freedom on how to build your business, but having a partner can be – and often is – the preferred way to go, assuming the two are complementary in capabilities and character, and firmly agree on how to grow the business. I am a firm believer in the concept of partnership when you start a business, assuming the people are complementary in character and experience, and are fully committed to jointly achieve the company’s objectives. My most successful ventures have been with partners.

Q: How can engineers/scientists best write a business plan if they have had no business training?

A: Writing a business plan is essential for any business. It forces management to think through how to grow the business and to establish what milestones to achieve in specific time frames. The basic concept of a business plan is well established, and examples can be found on the Internet – which can then be modified to meet the needs of the business in question.

Q: Is it a particularly difficult time to gain investment? Do you have any key tips for attracting investors?

A: First and foremost is a well-defined business plan with believable objectives and expected results. There is no doubt that investment funds are far more difficult to obtain today than some years back when the economy was booming. Investors come in all “forms and shapes,” so it is essential to focus on those investors that share a common background with the company, either technology- or market-wise.

Q: Do products ever fail at the launch stage? How can startups guarantee success?

A: They certainly do. There are no guarantees. Most startups fail because they do lose sight of [a focus on customer needs], and running out of cash.

Jan Melles’ top five tips for startup success

1. Any startup’s chance of success starts with the entrepreneurs themselves. Nothing is more important than the character of the future entrepreneurs – having a strong desire to be independent with a strong focus on the customer, regardless of how technically strong the founder/founders may be. Without these ingredients, no venture can be successful.

2. Hiring the best team of people to help grow the business is another essential element in achieving success. Nothing defines the founders more than how they build and manage their team. If sufficient funding is not available, compensate for this by offering some stock in the business.

3. Have an attitude that “no matter what, we will succeed,” and a character that allows you to overcome inevitable setbacks. It helps, of course, when [the founders] have some experience in business management. Any tech entrepreneur coming straight from college would find things more difficult. Taking business classes will help them better understand the business aspects of building and running a business.

4. Stay focused on the business plan. If that cannot be defined with believable objectives, the venture is dead-born.

5. Without adequate funding, no startup can succeed. While it makes no difference where the funds come from, do everything possible to retain a controlling interest during the startup phase.

Photonics Spectra
Sep 2013
Americasbusiness partnershipsbusiness plansJan Melleslaser industryMarie Freebodyopticsoptics customersoptics industryphotonics businessphotonics customersphotonics entrepreneursphotonics fundingPhotonics Investmentsphotonics investorsphotonics startupsStartup Insightstechnology transferlasers

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