The phase after the start up will test the mettle of the entrepreneur, writes the owner of a technology-based company that endured setbacks of many years’ duration on its path to becoming a mature organization. The author’s advice is to persevere and learn to appreciate the struggle.
Only recently do I feel as if my company, ElectroChem, Inc., might be emerging from its second phase. We just landed a $1 million U.S. government contract from NASA to fund a prototype of a new fuel cell to be used in the next generation of the space shuttle program. A venture group has made overtures, recognizing the importance of this technology for permitting cleaner and more energy efficient power, and is talking to us about developing the product they will market.
However, all of this has taken time. Between the point at which I took over as owner of the company upon the untimely death of my husband in February 1992 from a heart attack, and 2002, when we landed the NASA contract, it has been a long winter’s night for ElectroChem – a phase during which we struggled and didn’t entirely succeed in taking our technology to the commercial market. This second stage, after the flurry of excitement that characterizes starting up, is one during which the entrepreneur needs to persist in the face of adversity. It is what I had to do, and the lessons I have learned will, I suspect, be helpful to others.
Starting Up, Staring Over
Mine wasn’t exactly a start up, but it might as well have been. The company my husband, who was an engineer, had founded in 1986, focused on research and development of several technologies and was supported by U.S. government grants. By the time he died, it employed a staff of four scientists. However, it wasn’t profitable and annual revenue was only $335,300.
It would have been easy for me to let it fold. As an immigrant to the United States from India in 1968, and as a holder of degrees in literature and a doctorate in education, I had never worked outside of the home. I had preferred instead to rear my two daughters, now ages 30 and 26. In fact, at the time of my husband’s death, I was offered a job in education that I could have accepted. However, I chose to take over the company, not only because I needed to support myself, but also because I knew that it would be an opportunity that wouldn’t come my way again.
In taking over, I was essentially starting over, because one of the first decisions I made was to trim the number of technologies upon which ElectroChem would focus to just one promising technology – fuel cells. At the same time, I decided that the company would pursue commercial as well as research opportunities.
For the first two years, what I would consider phase one, or my staring over phase, my focus was on determining whether ElectroChem could stay alive. A major issue was whether it could command grant money without my husband’s name attached to the applications. Another was making the strategic decision to go after the commercial market while still pursuing grant opportunities. Money from the grants would have to fund the research necessary for developing marketable products.
Enter Phase Two
How does an entrepreneur know that the starting up, or starting over, phase has passed? In my case, that occurred toward the end of 1993 when we secured a major $500,000 grant from NASA, meaning that we would have sufficient funding to achieve the first step of transition, that of staying alive. The other step occurred when the last of the four scientists from my husband’s era left, meaning that I would be entirely responsible for building the successor staff. This, in turn, would allow me to create a new company that would put into motion my own decisions, without my being hostage to past legacies.
Enter phase two – a stage lasting many years in which the struggles were at times unbearable and the goal became keeping the business sustainable. My own personal goal became staying the course in order to persevere.
One of the first objectives in phase two was to develop the product for sale to commercial markets: to be able to explain the concept, get orders from customers and build it. That required me to take some bold steps, such as hosting open houses to introduce and explain the offering – no small undertaking for a non-technical person in an engineering environment.
Additional funding was also necessary for marketing the product that we developed. It was at this point that we faced our biggest disappointment: the money was not forthcoming, despite many efforts to make our case to investors. For a period of six months, a chief operating officer whom I recruited, with credibility in investing circles, also tried and failed to win financing.
At this point, our company’s second stage was at its most dire. Without the funding, we could not market our product. We had moved forward, then back again, and at times I wondered if this phase would ever end.
Staying the Course
If there is a lesson to be learned for entrepreneurs embroiled deep in the second stage of company building, it is to not give up. In our case, knowing that we couldn’t proceed as we had hoped into commercial markets, we redesigned the product so that we could proceed solely with internal resources. In other words, we decided to take small steps. We also made alliances to make the best of what we had. Today, we are selling our redesigned fuel cells to buyers that use them for building components. Another market has been for test equipment for the fuel cells. Step by step, we’ve managed to stay the course.
Something, in fact, happened during the course of our company’s long phase two, something that perhaps led to the company’s now being on the cusp of the next phase: I learned to like the struggle. I learned to enjoy working through the issues and sustaining both the company and myself.
It’s this lesson that, I believe, could be valuable for other entrepreneurs wondering if they will ever make it through to the other side of this difficult phase. As we at ElectroChem feel ourselves approaching phase three, with the NASA contract and private investment queries, we can see the day in which we will be able to take advantage of opportunities, I have a lot to be grateful for from the phase two experience. The job of hanging in there is, in fact, what entrepreneurship is all about.