Getting into Business

A little remembered episode of my past is that I started a company called Netek in 1984.  The “plan”, which was formally written down, was essentially the same as that of Finisar.

Except.  That the plan called for us to invent, design, develop, manufacture and sell products for fiber optic network that we were certain that were needed by the market.  But our own vision was not tempered by the key point of view – that of those who would be our customers.  Well I was subsequently fired from that company … under circumstances that were not exactly right, but I have always maintained that I should have been fired for not being a very competent CEO.

When I started Finisar, we had sales our first month and every subsequent month of our now 20 year existence.  Our first year we had sales of $350K, next year was $600K and so on.  There were some downs but generally we doubled our sales each year for the next 10 years.  Key point was that we had sales and by inference, we had customers from the very beginning.  We started out doing contract engineering for other companies with ideas.  We built a scuba diving computer for Tekna, a pool controller for FAFCO, a linear CATV laser transmitter for Wavelength’s lasers and a video on demand demonstration system for Explore Technology.

Another telling of these contracts is that we learned about micro-controllers that became the heart of our digital diagnostics patents from the Tekna and FAFCO projects, we learned about laser modulation and had an early patent on that for CD lasers from Wavelengths collaboration, and we developed our first “transceiver modules” which is the main product family today for Finisar sales to this day.  So customer interaction led to much of what Finisar still produces today.

Sometimes it seems not possible to have customers involved in your business so early.  One of the key principles of the Small World Group Incubator – the efforts of what we are doing here in Singapore – is that we want each of the companies where we engage to have sales early and to have customers that help define and finance their future.  There will have to be different ways for the companies to achieve this goal.

Some may find that they can find customers that want to have their specific requirements be a part of the first products they make.  In this case we will work with them to get commitment to fund those specific developments.  There may be specific c0-branding that can be done as well so that the customer gains some additional benefits.  One of the first companies that we may help has this well underway.

Another way to find a customer early is to agree to use many elements of the final product that you purchase from existing sources.  This may limit in some ways the proprietary-ness of the initial product offering but this allows very rapid product development that hopefully can finish early in the startup company’s life and then the product can be delivered to the customer for actual field use.  Finisar did this extensively in the early years.  We purchased lasers from Rohm, photodiodes from Hamamatsu, high speed integrated circuits from Avantek (purchased by HP) and so forth.  Our main value was weaving these existing technologies from different fields of use into a single product for our customers.

In this same way, clean tech companies started inside the Small World Group Incubator we hope can purchase some system elements from the USA, China, Japan and Europe can contribute some system elements and our companies can weave new thoughtful solutions by for markets and customers.  And as they engage with these rapid developed platforms they can substitute new IP and elements for existing ones.  Key here is that a system purchased by a customer sets known price points, establishes product gross margins and even the company operating model.  By doing this early, the start up company starts out life as a business with customers, revenue and all of the things that those elements require.

We want our startups to get into business early and to stay that way.  We have not seen a technology or idea that is not amenable to this approach.

Contact us so that we can talk to you or your group about this.

Posted in Essays, Investing, Personal Stories, Singapore Incubator, StartUp Ideas

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