Start Me Up

With all apologies to The Rolling Stones, some of the biggest rock stars to ever step foot on campus are the students, faculty members and independent entrepreneurs who’ve partnered with Tech to turn their innovative ideas into new companies. Find out all the ways the Institute helps these upstarts get out of the proverbial garage and onto the big stage.

Long before the word “startup” entered the business vernacular, Georgia Tech was in the business of helping inventors inside and outside Tech get a leg up creating their own companies, particularly those centered on Tech research. A dozen years ago this was called “new venture formation.”

Whatever the label, these days Georgia Tech’s impact on entrepreneurship is chronicled in what are frequently jaw-dropping headlines. The most recent tally: Tech-based programs supported 505 technology startup companies that generated capital investments totaling more than $270 million last fiscal year.

Startups can enter the Institute’s mammoth support system through dozens of pathways, including those dreamed up by Yellow Jacket undergraduates. And more points of entry are on the way—in an ongoing expansion that is both synergistic and deliberate—says Georgia Tech President G.P. “Bud” Peterson.

The godfather of Tech’s startup endeavors is the Advanced Technology Development Center (ATDC), founded in 1980 and still building momentum. Last fiscal year, the ATDC was credited with helping its incubator companies and program graduates achieve more than $1.6 billion in revenue.

Moreover, the Institute’s 25-year strategic plan called for increased support for innovation and entrepreneurship. And many of the scenarios envisioned five years ago have already become reality, Peterson says. Startups are now happening virtually everywhere across campus.

In engineering and computer science labs, through corporate innovation centers springing up in Technology Square and even via loose supper clubs, brilliant ideas are being turned into viable companies. Gaps are quickly being closed between prototype creation and commercialization in a startup environment where boundaries between the old and new fall away. Name drop that your entrepreneurial effort is based at Tech, and top execs at Fortune 500 companies will take your cold calls and potential customers will make time to answer your surveys.

“Georgia Tech’s focus on research and commercialization, as well its statewide support of industry, is drawing major corporations to campus,” says Executive Vice President for Research Steve Cross. “They’re coming to co-innovate, explore technical trends and access our outstanding students and entrepreneurs.”

For students at Tech—many of whom are more interested in creating their own jobs than seeking employment in the corporate workforce—the startup bug is easy to catch and hard to shake.

Aaron Finkel is a mechanical engineering student who also works as a prototyping instructor at the Invention Studio, an innovation workspace geared for undergraduates but open to everyone at Tech. Think of this studio as a traditional workshop on steroids, where students have access to an incredible array of materials and tools, including 3-D printers. The startup and “create” movements at the Institute have become so popular, the studio has spilled over from a singular space to multiple locations across campus.

Indeed, the second-floor location in the Manufacturing Research Center where Finkel helps fellow students is often packed with those eager to build prototypes. Asked who else sitting nearby might be thinking of inventing their own products or building their own company, Finkel’s answer was quick: “Pretty near damned well everybody.”

Finkel, of course, couldn’t help but get caught up in the activity himself. He’s already applied for patents on two designs of his own: One is a specialized folding knife, the other a laser-cut business card that breaks into its own stand. He expects to start his own company someday, but hopes to explore the Seattle job market first.

Nowhere is the startup vibe higher than in and around the startup neighborhood of Technology Square, a nexus of innovation centered at the intersection of Spring and Fifth streets. Tech Square is a bustling cafeteria where there’s something for everybody. For the student scientist: help with funding, licensing and more. For the outsider entrepreneur who doesn’t have a background in technology: partnerships with Georgia Tech faculty and access to labs. For both: experienced mentors to help find the answers to “Will it work?” and “Will it sell?”

Read on to find out more about Tech’s strategic vision for building a culture that fosters innovation and entrepreneurship, and meet some of the startup founders—including alumni and students—who are thriving thanks to the Institute’s support.

BORN TO BE WILD
Tech’s Innovation Incubators Aimed to Disrupt

Wrapping your brain around how Georgia Tech’s startup system works—on one level—is fairly elementary, says Stephen Fleming, Phys 83, vice president of Tech’s Enterprise Innovation Institute (EI2). “There’s teaching students for the advancement of their skillsets and there’s creating companies for economic development,” he says. However, once you head past this fork in the road at Tech, he says, things get more complicated. “First off, our startup system is not a conveyor belt,” he says. “There are lots of different moving pieces and not everybody goes through the same way.”

EI2 is one of the nation’s largest and most comprehensive university-based programs of business and industry assistance, technology commercialization and economic development. A couple dozen programs fall under the EI2 umbrella, but the primary doors through which most would-be startups arrive are:

• The Advanced Technology Development Center (ATDC), an incubator that helps develop new companies—even those that don’t originate at Tech.
• VentureLab, which specifically helps Georgia Tech students, faculty and staff commercialize their innovations and research.
• Flashpoint, a rigorous management education program that demands a four-month, full-time commitment from company founders to use “startup engineering” to find unmet demands in the marketplace and build companies to fulfill them.

ATDC, created in 1980, is geared for high-potential, Georgia-based tech companies looking for education opportunities to accelerate growth and commercialization. It not only provides connections to angel investors and technology-hungry Fortune 1000 companies, but also startup mentors—including “entrepreneurs-in-residence”—who’ve successfully launched their own firms. Typically, ATDC offers a three-year incubation program where companies can lease suite space in the 42,000 square feet available in Tech Square, as well as in 15,000 square feet of wet lab space on Tech campus.

Companies that have graduated from ATDC have attracted nearly $2.8 billion in investment capital to date since the program was founded more than 35 years ago. “At the ATDC, the metric is not necessarily learning,” Fleming says. “The metric there is jobs in Georgia, the metric there is dollars invested, the metric is dollars in revenue.”

Wayne Hodges, vice provost emeritus of EI2 and chairman of the Tech-affiliated Global Center for Medical Innovation—a non-profit formed to commercialize and develop medical devices—came to Tech in 1970 and has seen an evolution of Tech’s entrepreneurship infrastructure.

He remembers a period some years after the creation of ATDC when economic developers began to look into why more companies had not sprung from Georgia Tech research. “We found there were barriers to faculty developing companies,” Hodges says. “Most importantly, there wasn’t any support system for these faculty members. They were kind of out there on their own, trying to develop and run their companies by themselves with little help from the Institute.”

Consequently, many never made the trek to success. But things have changed.VentureLab was born in 2001 specifically to address this need, and quickly became the model the National Science Foundation uses to help faculty at other universities, Hodges says. (Today, NSF-funded companies participate in VentureLab through the I-Corps program.)

Now when students or faculty who have an idea they think might have promise in the real world, they can approach VentureLab for help in figuring out how to commercialize a product, service or technology. They then may move onto ATDC as their ideas take off and they move closer to going to market. Meanwhile, outside entrepreneurs are still very welcome at Tech, and they can apply directly for help with ATDC or one of the other EI2 programs geared to spur Georgia-based startups.

“We’re not only accelerating the rate of startup company formation atGeorgia Tech,” says Executive Vice President of Research Steve Cross, “we are enhancing their chances of success and willingness to stay in the state by brokering relationships with major corporations in key markets that are of strategic importance to the state of Georgia.”

Both ATDC and VentureLab boast clients who come back for repeat partnerships. Fleming explains the phenomenon of the serial entrepreneur this way: “Some who come though the ATDC process will understand the value of the incubator. The way it typically works, the founder takes the company out, grows it, scales it and hopefully is very successful with it. Then the founder typically sells it. Or merges it with some other entity that doesn’t need the entrepreneur anymore. So the founder will come back and do it again with another idea or innovation.”

Fleming has observed—and knows first hand—that creating your own companies can be addictive. “After succeeding, it’s hard for them to go to work for a big corporation,” he says. “They want to create their own jobs, they want to be their own boss.”

That’s how it worked for Jim Stratigos, EE 74, MS EE 80, a serial entrepreneur who in January launched his fifth company, Cognosos. It’s the third he’s run through ATDC, and his company has leased workspace in Technology Square’s Centergy building on Fifth Street. “I think it’s a disease,” he says about his compulsion to create new companies. “I like to tinker, but I’m not a tinkerer for tinkering’s sake, but rather to solve problems.”

The Cognosos tag line is “sensing as a service.” In a nutshell, it couples hardware—low-cost sensors—with wireless data collection to give you a reading on, well, almost anything via a smart device. For example, imagine a sensor to detect the volume of trash in a garbage container to tell a sanitation truck driver whether to stop; sensors in the pavement of a parking lot to indicate the number of spaces vacant; sensors all over a farm that report everything from the moisture in soil to the activity level of a single cow.

The 62-year-old Stratigos tried retirement once but came back. Companies of 50 or fewer employees are his sweet spot, and he likes the vibe at Tech Square. He’s been through VentureLab programs and also mentored others going through them. Stratigos has also served as a judge for the Capstone Design Expo, a showcase for graduating students’ innovations.

He got involved in creating startups in 1983 and has not worked for a large corporation since. His first company was sold to AT&T, the second to Dish Network.
Stratigos is drawn to the ATDC experience for its proximity to campus, the Georgia Resource Alliance seed grants and loans it can connect him with, and the intangible benefits of the environment. He likes taking technology developed here or furthered here and commercializing it. Of the ATDC route, “it’s not a course, it’s an experience,” Stratigos says.

He hopes to have his current company’s services in beta testing in four to six months. After this, will there be another? “Ask me again in two or three years,” he says.

While outsiders generally perceive ATDC as a single incubator, Fleming clarifies that’s not the case. “There are lots,” he says. While ATDC’s main headquarters is in Tech Square, there is a satellite on campus in the Ford Environmental Sciences and Technology Building for life sciences startups. There’s also a satellite facility in Savannah. Two other small facilities will open soon on campus. The planned work in those facilities will complement what’s going on in the Ford Building—one focused on medical devices and one focused on microelectronic systems.

All three of these EI2 programs—ATDC, VentureLab and Flashpoint—boast remarkable outcomes and impacts. Funding for these programs comes from a variety of sources. “We don’t want anyone to fail for lack of capital,” Fleming says.

ATDC itself is funded by a line item in the state budget and its appropriation has been stable for the last several years. VentureLab companies—again, the ones started by Tech students and faculty that involve Georgia Tech intellectual property—can receive assistance in the form of grants, loans or equity investments. I-Corps projects get their funding through NSF grants before being accepted into VentureLab. Of course, entrepreneurs sometimes sustain themselves in the early days of startup formation by bootstrapping via personal savings, help from family or crowdsourcing on the Internet, Fleming says.

He hopes for more investments along the lines of the one recently announced by entrepreneur Chris Klaus, whose CREATE-X gift and investment of $2 million will provide $20,000 in seed money to every undergraduate inventor team enrolled in the Startup Summer program this year and next. “There needs to be a consistent series of donations and investments from alumni to make this real,” Fleming says.

Stratigos agrees: “At my 40th reunion last year, our class targeted our gift to awards for entrepreneurship prizes.”

A DAY IN THE LIFE
A Look at Entrepreneurs Hard at Work

It is late morning and eight startup founders await a 10-minute grilling by a team of veteran entrepreneurs during an ATDC customer discovery session. In a multi-week assignment, they’ve been told to speak to 100 would-be users of the product or service they want to launch.

This morning, they stand up in turn to enumerate the number of interviews achieved this week. Did the feedback cause them to “pivot,” or change their plans?

“10,” “19,” “8” … come the answers to the question: “How many interviews this week?”

“27,” “89,” “36,” … come the responses on total interviews. The guy with 89 is told relatives and friends don’t count.

As they report out, time after time the mentors steer them away from frequent lapses into descriptions of their product, their service, their baby.

Instead, the ATDC mentors leading the session want to know what the customers said.
“Where’s the pain point?” Jennifer Bonnett, ATDC assistant director of education and community outreach, asks a female entrepreneur. In other words, what urgent need did a customer express that only her product can fulfill?

“There’s one reason they’ll act and 5 million reasons they won’t,” says another mentor.
Likewise, there will be no discussion today of social marketing strategy or how hard it is to get FDA clearance for a medical device. Bonnett and Entrepreneur-in-Residence Jane McCracken sympathize briefly but steer conversation back to the topic.

A man who wants to launch a service related to the entertainment industry says he’s picking up in his interviews that men might not be willing to buy it. Finally, the kind of data the experts want to hear. “Will you proceed?”

The inventor of a device related to oxygen use at home is told he can’t avoid finding some doctors who’ll agree to hear out his plans and say whether they would be likely to prescribe his invention. He says he’s happy there’s no class next week because he needs the extra time.

Meanwhile, in an adjacent office, Jeff Leaders, the startup founder of Soneter, has a prototype running and linked to his smartphone, ready to demonstrate how something called SMARTFlow technology works. Soneter is one of the companies that just days ago “graduated” from ATDC’s rigorous and intensive Select program, and was featured in a showcase event. His product is a water meter that tracks flow ultrasonically and can be installed without the need for cutting pipe. It deploys cloud technology to compute usage and alert homeowners and businesses of their data via phone or other smart device.

Leaders’ route to becoming an ATDC partner was atypical in that he brought a technology concept “from the outside in,” looking for help to make it real. He’s a graduate of the University of Kansas and Iowa State University with a background in urban planning.

Leaders says he was he working in the multifamily housing industry and frequently heard apartment dwellers complain of unfairness in their water bills. Because the complex was on a single meter, someone who traveled for work and left her home vacant a large part of the month paid the same as a family with several kids who consistently consumed large quantities for showers and laundry. He went to a plumber and learned converting to multiple meters would be costly.

At the same time, droughts were raising awareness of the need for green solutions to protect water resources overall. “Even the trickle from a bad commode tank flap wastes nearly 60 gallons of water an hour,” he says.

“Until now, tracking water usage was largely something you did in the rear-view mirror, if you think about it,” Leaders says. Short of a catastrophic problem, the leak usually goes undetected for a while. Additionally, the tools for finding problem spots could be pretty elementary, such as putting water pucks into the ground to find areas of unusually high moisture.

So about five years ago he set to work on a simple add-on meter that would work in real time. He knew measuring flow quantity by ultrasonic means wasn’t new, having been widely used in medicine to monitor the health of developing babies as well as blood flow in heart patients.

VentureLab put him in contact with two faculty members in the School of Electrical and Computer Engineering, Tom and Jennifer Michaels, who have extensive experience in methods for ultrasonic measurement. The result of the collaboration is a new type of meter that can sit atop a pipe. It learns flow patterns and can come to discern if usage is via shower, sink or toilet. It can also tell if flow is occurring at a time when the owner is out and send an alert. Lowes and Home Depot like it for smarthome do-it-yourselfers, and it should be in those stores later this year.

In addition to VentureLab’s help in locating the right scientists on Tech’s campus, the exposure to other entrepreneurs has been a key benefit of his ATDC experience, Leaders says. It also helped him qualify for a Georgia Research Alliance research grant. In its first seed-funding round, Soneter recently obtained $6 million from GRA Ventures—the commercialization arm of the Georgia Research Alliance—and Flextronics.

Leaders envisions keeping the company in Atlanta. He has eight full-time engineers on staff, all Georgia Tech graduates, and says he’s looking for three more.
Another ATDC startup making headlines for its success is Rigor.

“They say it’s rare to learn in college what you actually do in the real world, but I’m pretty much doing exactly what I set out to do at Georgia Tech,” says Craig Hyde, CmpE 05, founder of Rigor, another member of the recently graduated class of ATDC Select companies. “I was a computer engineering major, went to the Scheller College of Business and got an entrepreneur’s certificate, and here I am at working at a software company that I started.”

Rigor deploys software as a service (SaaS) technology to monitor and troubleshoot their websites and related applications. Clients include MTV, Belk, Home Depot and The Weather Channel.

After graduating from Tech, Hyde was a business consultant for a couple of companies that were focused on network and infrastructure testing and management. With the advent of cloud computing, companies no longer own the infrastructure their technology is run on. Hyde didn’t like what he saw coming forth as the new options for monitoring traffic flow, discerning when trouble occurs and then fixing it.

“I saw this big pain point in the market and nobody was addressing it,” Hyde says. He was introduced, by Jordan Rackie, a friend and GT classmate, to David Cummings who invested in the idea and helped co-found the company. Once off the ground, Hyde and Hubert Liu, CS 10, a fellow Tech grad who is now Rigor’s chief technology officer, put their heads down for about 18 months, writing code to build a software solution.

“They have a plaque on the wall of all the companies that graduate,” Hyde says. “You’ll see just about every major software company in the city of Atlanta has its roots in ATDC.”
And some of those founders come back as entrepreneurs-in-residence. “That’s one of the most important things, the level of people that come back to be mentors,” he says.

“They’ve ‘been there, done that’ multiple times.” Hyde remembers—with affection—ATDC Entrepreneur-in-Residence Dan Ciprari, CEO and co-founder of Pointivo, challenging him to “quit going slow and invest more into what’s working.”

Another major benefit was connecting with other startups at the weekly roundtables, Hyde says. “Not only was it the first time I’ve ever done something like this, but you’re out on an island as an entrepreneur,” he says. “So it’s good to have a network of people who are showing signs of success you can bounce things off of.”

Hyde ticks off a heaping handful of other advantages culled from the ATDC experience, including the muscle of it being state-supported, the Tech Square location and help with recruiting. “Some of the smartest kids in the world are walking past this place every day,” he says.

In the last few months, the Atlanta Business Chronicle picked Rigor to top its small employer category for its best place to work, the Technology Association of Georgia (TAG) labeled it the most innovative startup in the state, and the MAX awards named it the top startup in Georgia.For the entrepreneur, competitions and awards like these “provide some social proof that we’re the real deal,” Hyde says.

LEARNING TO FLY
VentureLab Helps Make Georgia Tech Ideas Take Off

Walk into VentureLab and you’ll see a wall covered with 140 multicolored sticky notes. They’re arranged in columns labeled Thesis, Discovery, Validation, Creation and Growth. A smaller box at the far right has an additional 25 notes labeled Trophy Case.

The 140 sticky notes represent the companies under active tutelage at VentureLab, headquartered on the fourth floor of the Centergy One Building at Tech Square, as well as at which stage they reside, says

Director Keith McGreggor, CS 82, MS CS 87, PhD CS 13. “This makes us a really big group in terms of volume and we’re growing every day,” McGreggor says. “Not all of these are formed companies at all. Maybe 30 are legal entities, but remember we get them early and we shepherd them through deciding whether they should even be a company or not.”

The 25 in the Trophy Case are those that have graduated. “They’re who we brag on,” says Colin Ake, Mgt 09, an entrepreneur and VentureLab principal.

Founded in 2001, VentureLab helps Tech students, faculty and researchers bridge the gap from the lab to commercialization. It also collaborates with the College of Engineering to provide undergraduates with hands-on educational programs such as Startup Lab and Startup Summer (which now are being rolled under the new CREATE-X initiative).

McGreggor says his organization is scaling rapidly to meet the demands of faculty and students interested in creating startups.

VentureLab is not only big, but also effective. It was ranked No. 2 among U.S. university business incubators by UBI Index, a Stockholm-based consulting group, and placed No. 17 globally. Since its inception, VentureLab has launched approximately 150 companies and helped them attract more than $1 billion in outside funding.

“Sometimes we work with people who walk in the door with the barest sketch of an idea,” McGreggor says. He has been known to uncover a great business idea by digging into the invention disclosures Georgia Tech researchers file when they lay credit for something new. More often these days, these researchers know to come to him and his team for help in commercializing their ideas.

Because VentureLab doesn’t take any equity or royalties from the entities it helps, it can give unvarnished advice. Last year the Enterprise Innovation Institute, VentureLab’s parent organization, reports having assisted Georgia Tech faculty members in evaluating 235 research innovations and helping form more than 30 new companies based on this intellectual property. In all, Georgia Tech research innovations drew $33 million in direct investment and created 737 jobs.

“We usually see two new opportunities every single day based on the work of Georgia Tech students, faculty and staff,” McGreggor says. That’s a lot of innovation, perhaps an overwhelming amount that would scare away those with limited capacity.

“But that’s not the way we do things,” he says “The challenge for growing VentureLab was to create a group of people and a process that could scale with Georgia Tech and manage that infall.”

When an idea comes in the door, “we really don’t know if it’s fantastic or horrible,” McGreggor says. “So how do we figure out whether it’s worth pursuing? The answer turns out to be you have to go back to business basics. Every successful company has a customer with a specific need.”

VentureLab asks its clients to learn “who those customers might be and why they might be motivated to buy,” McGreggor says. “Just that. But that turns out to be the hardest thing ever.”

Often, he finds the inventor has been focused on other considerations. “It’s not that you want to find the right executive team, you don’t need to write a business plan or have investors in mind,” he says. “But if you don’t have a customer, you don’t have a company—you have a hobby.”

McGreggor says that entrepreneurs who come from a science background tend to fixate on getting the science or the technology perfect. “So we tell them: ‘Let’s pretend, just for a little while, that everything you wanted to do technologically has been done. It has worked out beyond your wildest dreams’,” he says.

This forces them to focus on the customer, which almost always proves startling for the science-minded entrepreneur. “Guess what happens? Almost every time what a team realizes is that it should not build what they thought they were going to build and they discover what they ought to build instead,” McGreggor says. By doing this, entrepreneurs save precious time—as well as a lot of money—trying to perfect a technology that might not have a customer.

Another hallmark of VentureLab’s skillset is matchmaking. McGreggor says inventors can come as an individual or a team, but sometimes co-founders surface through the work. “For example, if somebody comes in with a great sensor, we can connect them with alumni who work on batteries and capacitors, too,” he says.

Lessons learned through VentureLab, ATDC and those surfacing via the more recent Flashpoint initiative give Tech’s startup programs long legs, says McGreggor. VentureLab has partnered with seven universities throughout the South, and has taught a session in Puerto Rico and will soon teach its second in France.

“Many Tech alumni will recall the rigorous drownproofing class that was required for decades,” McGreggor says. “We see entrepreneurship as a new kind of life-saving drill. We teach students how to build startups without sinking or drowning.”

GOOD VIBRATIONS
Flashpoint Emphasizes Making Positive Societal Impact

Flashpoint is one of the newest players in the startup system at Georgia Tech—arriving on the scene in 2012—and it’s also one of the most demanding and unusual. It’s a management and educational program geared to help early-stage startups find authentic demand and minimize risk through a process called “startup engineering.” Flashpoint requires an intense, full-time engagement for at least four months from company founders who apply for a seat in the program.

Founder and director Merrick Furst—who calls Flashpoint a first-of-its-kind program nationally—hopes its techniques will be broadly shared to help unleash the inclinations of the millennial generation to better the world, not just make money. (However, making money is fine, too.)

The process accentuates finding authentic demand, while at the same time tamping down founder bias. Flashpoint began by working with startups exclusively, but now helps corporate clients as well, and a team from Coca-Cola Enterprises participated in Flashpoint’s last session.

Moving the venture from a gamble to something closer to a sure thing is what drives Flashpoint, explains Furst. “We’re trying to turn something from being artisanal to being industrializable,” Furst says. “If you’re just rolling the dice, looking for a big upside, we think you can make it happen versus just hoping that it happens.”

If that sounds positive, know that Furst is known as a particularly tough startup mentor. He once recalled to an audience of Atlanta business leaders an instance when he’d made an entrepreneur weep. And in a recent Forbes magazine interview, he emphasized unbridled candor as a key attribute for founder teams.

Furst also is a master of the double negative, explaining the goal is to deliver a product or service the customer “cannot not buy.”

A true experiment, elements of Flashpoint’s operational model remain in flux—on purpose. Furst continues to hone the duration of the startup partnership, as well as the resources the startup must commit and what it receives as a participant in the program. While stressing the model has changed and will likely change again, Flashpoint typically invests a small amount in the startups it accepts—around $20,000 each or about an 8 percent stake—though it can vary, he says. Furst says Flashpoint aspires to eventually be a net generator of revenue.

“The situation with startups is they need cash and they can’t pay for things,” he says. “So if you want to work with them, you have to allow that your upside might come through appreciation of shares. You have to find a structure that works that’s affordable for them and actually gives you a chance of ever seeing a return.”

The competition for seats at Flashpoint is fierce. The acceptance rate of applicants hovers around 6 percent. But those who get in frequently flourish. Though Furst takes care to not overpromise, but the numbers are impressive. The 45 startups that have completed the engagement so far have attracted more than $150 million in venture funds from first-tier investors, and their combined portfolio value is more than a half-billion dollars, he says.

Furst has kept a foot in the worlds of both academics and business throughout his career, which includes faculty positions at the University of California at Berkeley and Carnegie Mellon before coming to Georgia Tech a dozen years ago. Flashpoint itself is his eighth startup.

It was envisioned as a one-year experiment, and from the start Furst and his colleagues did their best to avoid the common traps that prevent success. “The agreement was it would take a small amount of funding and it wouldn’t come from an existing organization,” Furst says. “What we know about innovation is if you ask an existing organization to fund another that might disrupt it, that always fails.”

The truth is, Furst says, most startups don’t succeed. And their failure is often rooted in old, antiquated approaches that no longer work.

“That’s just the way it is,” Furst says. “So we wondered, ‘Might there be a single root cause of most of the failure that we could find a way to manage around?’”

Furst says he believes it is nothing less than the built-in bias inherent in every human being.

“There is a replica of the world we carry around in our heads, a mindset we have, that we don’t even notice we have,” he says. “We think we know how the world works. But that replica is just not that accurate or realistic.”

So when Furst and others at Flashpoint mentor entrepreneurs in the program, they often have to contend with idealistic or otherwise biased preconceptions that don’t match reality. Founders are biased in ways they can’t see, says Furst, especially as they envision getting people to buy their new products. These biases come out and “rub up against the real world in a bad way,” he says.

Beyond the internal bias of the investor, there is a second problem, Furst says. To get customers to buy something from you, you have to get them to change their behavior, too. “Founders have to accept that they have to help them manage this change,” Furst says.
Change is also something that often needs to happen within the startup itself. “Change is incredibly hard,” Furst says.

So dispelling myths on all three levels is required, as Furst puts it: “You have to see the world, see how the world has a problem changing, and then you have to see how you have a problem changing in order to make it possible for the world to change. You have to tend to all three because if you don’t, your startup will have an extraordinarily high chance of failure.”

The Enterprise Innnovation Institute’s Stephen Fleming believe that the unconvential Flashpoint approach is working. “A lot of companies have raised a lot of money, been successful, shipped a lot of products,” Fleming says. “Some of the things learned out of Flashpoint have been filtered back through other programs on campus and it has also extended far beyond.”

Furst—in his goal to make a positive societal impact—wants to share the Flashpoint model with others. Flashpoint sometimes sponsors free workshops, such as recent sessions where a couple of hundred inventors were invited to hear about startup basics and angel investors got advice on making better decisions, Furst says.

“From our position, it’s important that we help startups and their processes in any way we can,” he says. “We’re quite interested in making it accessible. We think it’s new and we believe it runs counter to a lot of approaches out there.”

WE WILL ROCK YOU
Students Pivotal to Tech’s Startup Success

Yellow Jacket undergraduates have always been invited to develop their ideas and build their own companies using Tech’s startup resources. And Institute leaders, faculty and alumni continue to work hard to ensure students play an integral role in the system. “We kept having undergraduates come knock on the door at Tech Square and say ‘Can you help?’” says EI2’s Stephen Fleming. “We’d always say ‘Sure, come on in.’ And then another one came, and another one.” And while students were never turned away, Fleming and others knew there needed to be a more systematic way to funnel their enthusiasm and entrepreneurial spirit.

Earlier this spring, former student and technology entrepreneur Chris Klaus upped the ante by supporting CREATE-X, a new initiative from the Institute and the College of Engineering that formally unifies several startup programs geared for Tech undergraduates. Klaus has dedicated $2 million to the effort, including a $1 million “founding gift” for CREATE-X operations that should fund it for at least three years. The other $1 million serves as seed investment money for Startup Summer teams—$20,000 each—for which a student startup fund will receive about a 7 percent stake, regardless if the teams succeed or not. “There’s no expectation on them, except that they’ll explore the startup process and try to commercialize their ideas,” Klaus says.

As an undergraduate computer science student at Tech in the early 1990s, Klaus came up with an idea for a software company to help protect corporate networks from online attacks. “I didn’t have many startup resources available to me at Tech, so I took a break from school to focus on my company,” Klaus says. “I want today’s undergraduates to be able to stay in school while they’re pursuing their startup ideas. CREATE-X will be a revolutionary program for Georgia Tech, and I’m thrilled to help the Institute’s efforts in getting students excited about innovation and entrepreneurship.”

Klaus turned his idea into a company called Internet Security Systems, a very successful venture that eventually sold to IBM in 2006 for a whopping $1.6 billion. He’s currently the CEO of Kaneva, a social gaming company, and is a huge supporter of Tech innovation. As most on campus know, Klaus is the namesake for the Klaus Advanced Computing Building.

Several of the programs that now roll up to CREATE-X have already been running—and proven successful. Startup Summer finished its pilot run last year, helping to launch eight companies during an intensive 12-week session where student teams worked together to build businesses based on their inventions. Startup House—a dormitory floor that is currently the penthouse of the John Patrick Crecine Apartments that opened in the fall and is overseen by VentureLab—was well-received, as was Startup Lab, a semester-long course that went from 30 student enrollees in its first run to 120 in its second.

Even earlier, students have been encouraged to invent and create their own companies via two high-profile competitions—the Capstone Design Expo and the InVenture Prize—as well as by take advantage of a high-tech campus workshop, the Invention Studio. Craig Forest is an associate professor of bioengineering who has been a driving force behind all three, co-founding the InVenture Prize and Invention Studio, and leading a major overhaul of the Capstone Design Expo, a showcase for seniors in their final semester.

The 2014-15 Capstone Design Expos—one last fall and one this spring—attracted 172 teams, composed of about 900 students with 5,000 attendees in the audience, Forest says. “In many ways, it is now a larger celebration of our graduating seniors than commencement,” he says. “I mean imagine it: the students standing there with a working prototype of their invention to show off to fellow students, faculty, potential investors and employers. This is the proudest moment of their college career.”

The InVenture Prize student innovation contest started in 2009, and the final round each year is televised on Georgia Public Broadcasting for all of Atlanta to see. “When you have the InVenture Prize—with 500 students competing to go on stage for the six finalist positions—you know what that does?” Forest says. “That changes the conversation. That student on stage is a rock star, that student is a celebrity on campus.”

Keller Tomassi, BME 14, benefitted from a number of the startup programs after he and three co-founders—formed SonoFAST for their Capstone project. Tomassi serves as president. SonoFAST aims to produce a single-use pad to replace the gel currently used as a coupling medium in capturing ultrasound images and the transmittance of shockwaves. It is a Class II medical device, which requires FDA clearance through a 510(k) filing.

Upon graduation, the founders saw the company accepted for the inaugural run of Startup Summer, during which VentureLab faculty put the company through its paces and it gained a $15,000 seed grant. SonoFAST also took part in an I-Corps South Life Science Accelerator specifically designed for health care ventures.

Tomassi says the company is finishing up its non-provisional patent application and running some pilot testing at Atlanta hospitals. “We’re actively seeking investors for an equity stake that would provide us the funds to complete the process,” he says. And obtaining 510(k) clearance can take a year.

The pad idea was originally pitched as a means of increasing patient comfort and saving time by cutting out the cleanup process required by gel use. “We had a lot of positive feedback from the start,” Tomassi says. “We got accepted into several accelerators but opted to stay at Georgia Tech because we’d heard great success stories from VentureLab’s Startup Gauntlet. The resources here at Tech are invaluable. We have access to state-of-the-art wet lab space, renowned chemical and material science faculty and active entrepreneurs, as well as an extensive research network and hospital affiliations.”

An early pitch positioned the pad as allowing an OB-GYN office to distinguish itself for increased customer satisfaction. “We have pivoted and found new entry market applications,” Tomassi says. Namely, SonoFAST might have even greater potential for use in lithotripsy, the treatment of kidney stones through targeted shockwaves.

“Some complications arise through the use of liquid gel. The procedure lasts 30 to 40 minutes and air bubbles form,” Tomassi says. This makes the gel less effective for transmitting shockwaves and dissolving the kidney stone. “The SonoFAST pad replaces the gel and creates a more consistent and effective coupling medium.”

Tomassi says the entrepreneurial movement among students grew during his time at Tech and, for him, the seed took root as he spent time building working prototypes for his ideas at the Invention Studio. “I didn’t plan my sophomore year to go this route,” he says. “But if you have skills to make a product to better people’s lives, it’s worth it to take a chance.”

Leading CREATE-X will be Raghupathy Sivakumar, a professor of electrical and computer engineering, who as a serial entrepreneur has taken all three of his startups through VentureLab. The message he wants to get across about CREATE-X—loud and clear—is that any student pursuing a degree in any discipline can have a way to explore entrepreneurship at even the earliest stage of his or her college career.

Sivakumar envisions a day when 300 undergraduate startups could be formed every year at Tech. Along with teaching and research, he says he sees exposure to entrepreneurial thinking as “the third leg of what universities must do.” It’s an ambitious goal, but he believes in five or six years, it could be the norm, given the growth in interest from students and financial support from companies, investors and friends like Klaus.

He learned three powerful lessons—all of which will be applied to CREATE-X moving forward—from the student pilots he co-facilitated with Keith McGreggor and others from VentureLab. The first was that every student who participated in these programs said they changed their lives and their worldviews. The second is that interdisciplinary teams work better than teams whose members come from just one background.And the third lesson is that Tech can’t wait until just before graduation to introduce students to the startup process. It has to be introduced early and often.

“Entrepreneurship has to be a mindset we cultivate in students and give them nourishment throughout their undergraduate careers,” he says. Then, by the time they “get out” of Tech, he adds, students will have a great deal of startup experience in their arsenal, and the quality of their work will be that much greater.

Even if undergraduates don’t go on to become lifelong entrepreneurs, they’ll gain “entrepreneurial confidence” for more traditional careers, Sivakumar says. Georgia Tech leaders stress that the majority of Tech tudents will still look to land corporate positions with established companies in their fields, and that’s a perfectly fine option. But with the experience and skillset that they can learn through startup programs, Yellow Jackets will be well equipped to foster innovation wherever they land and be highly sought-after employees.

MY GENERATION
Why Startups Resonate with Today’s Students and Alumni

With the who, what, where and how of the Georgia Tech startup tour covered, the only thing left to ponder is the why. Institute leaders are eager to explain this by citing both the successes as well as the constant need for innovating their processes and programs.
“Fifteen to 20 years ago, I heard engineering students say they wanted to be a manager,” Tech President G.P. “Bud” Peterson says. “Today, if you ask that question, they want to start their own companies.”

VentureLab’s Keith McGreggor thinks all graduates should know how to create their own jobs, whether they use that knowledge immediately or never at all. Entrepreneurship should be a “fundamental life skill,” McGreggor says, like balancing a checkbook or driving a car.

He suspects the increased demand being seen for that skillset might be, in his words, “a serendipitous collision of influences.”

“We have a generation arriving that seems to be less risk-averse than ever,” McGreggor says. “We also have a time in technology when it’s very easy to build things,” he adds, noting the 3D printers and other complex tools available to the Tech community in the Invention Studio.

“And, at the same time, we have a definite change of perspective on the part of the faculty and staff that we want to encourage this commercialization and this entrepreneurship. So these forces are coming together to create a nice nexus of things.”

Flashpoint’s Merrick Furst agrees, but takes it a step further. “I think the notion that there are large corporations and stable societal structures and organizational jobs that people can move into and keep their whole life may not be true anymore,” Furst says. “And I think young people are at least worried about it.”

However, Furst finds another factor more interesting. “There are a lot of young people who aspire to make the world a better place,” he says. “Young people are really interested in purpose and meaning and to be able to have the tools to solve problems through technologies they can create.”

It is bigger than finding a career, says CREATE-X’s Raghupathy Sivakumar. “Georgia Tech students are coming in with the need to change the world,” he says.

Peterson emphasizes that Tech’s focus on innovation, startups and expansion also are intended to capitalize on a track record of success that’s been coming out of ATDC programs for more than 35 years. “With the recession that occurred starting in 2008, there became a tremendously increased interest in terms of ‘How do we create jobs?’” he says.

“People very quickly realized the best way to create jobs is not by trying to expand major corporations. It‘s by trying to be innovative and creative and trying to create new startup companies. The percentage of new jobs created by small startups is quite staggering. Our numbers speak for themselves.”

Likewise, the move toward projects that include a hardware element was a natural one. Peterson cites the work of the Global Center for Medical Innovation and the medical devices it has brought to market in the last few years.

“Starting companies that are based on software and apps is not nearly as costly,” Peterson says. Meanwhile, Georgia Tech has the resources to help with making the hardware, finding a manufacturer, developing the processes—all of which can be especially complicated in the biomedical industry, including the approval process, Peterson notes.

The Enterprise Innovation Institute’s Stephen Fleming and others admit that while there have been great outcomes, Tech’s startup ecosystem isn’t perfect nor would they expect it to be with its rapid growth in recent years. Higher education is generally considered about as nimble as the Queen Mary, and he acknowledges that, while working to get past the last vestiges of change, resistance continues.

“I came thinking I’d fix this in two years and that was 10 years ago last month,” Fleming says. “We’re not expecting things to change overnight. But we do expect change, so things have to be moving in the right direction. The executive leadership team gets that this is part of what a public research university should be doing. That’s not always the case everywhere in the country.

“We also have some advantages that some other schools like us don’t have, which is where we’re sitting,” Fleming continues. “We created Tech Square here in Midtown Atlanta and now we’re taking advantage of Tech Square. There are plenty of great college towns, but unfortunately for those communities, that’s it—they’re just college towns. From where we’re sitting, you could throw a rock and hit the local headquarters of AT&T, and you’re going to be able to stumble out of our parking deck and into NCR’s headquarters. You’ve got these companies right in the middle of where Georgia Tech has been sitting for a hundred years, and having that sort of interaction is really becoming valuable to us.”

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