Professor co-founders or advisors can be great assets early in a venture’s life; at the same time they can undermine the management team if not managed properly.
I co-founded one company with professors at Princeton (Aegis Lightwave, which has grown into the leader in optical communications monitoring). We had a very good experience there. However, I have watched many ventures struggle with professors as founders and members of the Board.
First, the potential advantages of academic co-founders:
- Access to IP. Certainly helps to have the originating professor cooperating when licensing from a university. Usually important for funding… though rarely is the IP developed in the university sufficient to build a product or company (sometimes it turns out to be completely irrelevant!).
- Cachet with Investors. Having a “world-leading expert” on the founding team gives a venture a lot of credibility (sometimes unwarranted) with investors. VCs always want exclusive access to something valuable, and when you’ve got the world’s leading expert in nanoelectronics on your team, it feels like you cornered the market.
- Customer Access. With a new technology in lab prototype stage, it’s much easier to get a meeting with Panasonic if your team includes an MIT professor… again cachet and “credibility.” Sometimes new opportunities even come in through professors who are approached by industry as consultants.
- Government Dollars. Often professors are already funded by agencies that can offer grants for start-ups, including BAAs, SBIRs and STTRs (where the university can be a partner). Remember academics spend a lot of their time raising money and have a network of relationships.
- Recruiting. A prof who has been running a group for a decade or two has churned out a great network of PhDs and MSs who have gotten industry experience and can be attracted back to a venture co-founded by the professor.
- Technical Radar. While prof’s are not generally good as part of the core technical team (see below), they are heavily networked and at the edges, making them a good radar for technology threats and opportunities.
Now, some of the things to watch out for:
- Cachet with Investors. Yes, I just listed that as an advantage. If VCs invested in the professor, and not the company, it can undermine the venture CEO and management team. Professors are used to lecturing, and being the “smartest guy in the room.” If they don’t understand that a venture boardroom isn’t a lecture hall, get them out of the room.
- Influence over Tech Team. Often many of the early team members are a co-founding professor’s former PhD students. They have great admiration and respect for the professor, and may have just spent 4 years with him or her as their boss. When the prof drops in for lunch and says “you should try this,” it can lead to confusion. It’s not unlike a CTO messing with the engineering team while the VP Engineering is traveling.
- Overhyping the Idea. Professors are about ideas. They like to sell them. And sometimes oversell them- as the solution to everything. Unfortunately you (the CEO) are the one who has to deliver on those promises. Good professor/founders understand that an idea/lab demo is 10% (at most) of the mix in a successful venture.
- Science Smarts != Business Smarts. I have seen situations where founder/professors get very involved in architecting the business, and come up with cute business structures to keep control of IP, voting, etc. Beware in particular of attempts to divvy up IP (and attention) between a “portfolio” of companies!
Some suggestions when working with a founder/professor:
- Technical Board. Even if they sit on the Board of Directors, maintain a separate, regular meeting to discuss technology and product development with the team at a “CTO” level. The VP Engineering and CEO should be present. Address questions and concerns in this session, and make it clear the BoD meeting is not the right forum for this.
- Strong VP Engineering. A strong VP Engineering focused on process and execution helps quickly separate the CTO-like role of the professor (long-term technology vision, radar) from product development. The team should have no question about the weekly plan, even after the prof drops in for a visit.
- Regular One-on-Ones. Just as one should do with other Board members, spend time over drinks with the professor/founder to talk through differences. Feelings are even more important here because you are managing their “creation,” not just their money.
- CEO Negotiates Licenses. The prof should not be involved in negotiating any licenses from the university. This negotiation should be done by someone with only the company’s objectives in mind. Universities have various ways of parceling out royalties to professors and you don’t want someone with a conflict negotiating the deal.
A well-managed relationship with a professor/founder can be an incredibly productive one!