Read to Succeed

20. May 2013

Milton Chang

I began reading several business publications when I was in graduate school in the 1960s. I had a hard time understanding them at first, but it became progressively easier, and over time, they gave me valuable insight into that world.

Whether you plan to start a company or not, I believe that every engineer can benefit from knowing something about business and management. You’ll have a better sense of how technology fits into real-world enterprises; become more effective on the job; learn how to interact with management; and lead people and projects, even when you make engineering decisions.

Moreover, as a practical matter, it is almost impossible to maintain an edge in a 40-year career as a pure technologist. Learning about business and management enables engineers to move into managerial positions and to remain vital and productive. It gives a technical person the opportunity to oversee projects that follow a product’s development from the idea stage to market application. Moreover, anyone who does want to start a business will embark on the process with less fear of the unknown and avoid fatal mistakes from the start.

Reading business magazines and newspapers is a good way to begin learning about the business world. There are four publications on my can’t-miss reading list: Bloomberg Businessweek, Forbes, Fortune and The Wall Street Journal. While some of these periodicals overlap in content, each one offers a different emphasis and perspective.

Bloomberg Businessweek (formerly Business Week)
If you only subscribe to one business magazine, this should be it. I like the section on “Global Economics,” which offers useful background information that helps drive decision-making in industry. I also like the “Technology” department, which keeps me abreast of what’s new with a wide range of products and businesses beyond optics and photonics.

Forbes
This magazine zooms in on the business strategies of specific companies. The “Technology” section highlights interesting new products and innovative ideas. “Entrepreneurs” covers the process that entrepreneurs go through to start companies and explores how they deal with the challenges they encounter along the way. “Investing” provides valuable information that guides how to make wise investment choices.

Fortune
Fortune gets into more specifics about successful, high-profile individuals. What do these people do and how do they live? I always find an interesting scoop in the “Scandals” section. It describes ill-gotten wealth and serves as a good reminder that we cannot always believe what we encounter.

The Wall Street Journal
Published six days a week, this is a great day-to-day resource that provides up-to-date information about what’s going on in business. It is a must-read for anyone who wants to optimize their investment in anything—whether it is in the stock market or real estate.

Other gems
Through reading, you can open yourself up to a vast array of career options—and simply broaden your perspective on life. With that in mind, I also recommend reading a local newspaper every day and following the Economist to learn more about the rest of the world.

And, of course, I wish more people would read my book, Toward Entrepreneurship, Establishing a Successful Technology Business. It is an easy read, and it covers much of what you’ll learn in an MBA program, but it is customized for the individuals in our industry.

Yes, you are successful because you were focused enough to become an expert in your field. Broadening a bit to strike a balance can help you to accomplish even more. Reading these publications is a painless way to start!

Milton Chang (miltonchang@incubic.com) is the managing director of Incubic Management and an OSA Fellow. He was president of Newport and New Focus, and he took both companies public. He is the director of mBio Diagnostics and Aurrion. He is a trustee of Caltech and a member of the SEC Advisory Committee on Small and Emerging Companies.

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ONE Event, Three Perspectives on Optics Startups

24. October 2011

By Christina Folz

At last week’s Frontiers in Optics meeting, I attended the first meeting of OSA’s Network of Entrepreneurs (ONE), a new group intended to connect optics students and young professionals with mentors who are scientist-entrepreneurs.

This post shares advice that was given at the event on how to jump into the startup world. The speakers included Greg Quarles, president and chief operating officer of B.E. Meyers; Michelle Holoubek, director in the electronics group at the intellectual property law firm Sterne, Kessler, Goldstein & Fox; and Tom Baer, executive director of the Stanford Photonics Research Center at Stanford University, cofounder of Arcturus Bioscience Inc. and 2009 OSA President.

Like a startup, ONE is still in development. Its organizers, including Bright Futures bloggers Brooke Hester and Danny Rogers along with Armand Niederberger of Stanford, are seeking volunteers to grow the program. Please contact Brooke, Danny or Armand if you are interested in joining this new community.

Greg Quarles: How to Act Like an Entrepreneur

Have clarity. Know why you do what you do. Successful entrepreneurs have a purpose, cause or belief that exists above and beyond the products or services they sell.

Have discipline. You must understand not only what product or service you plan to offer but how you intend to do it. Business owners cannot simply demand that their team “make it so,” in the fashion of Captain Jean Luc Picard on Star Trek. They must hold themselves and their teams accountable to a defined set of guiding principles or values.

Be consistent. Everything you do and say must prove what you believe. In this sense, YOU are the product—a critical part of your own brand. The product should reflect your core values, and you should adopt a winning attitude in all areas of developing your business. If you don’t believe in what you’re doing, how can others?

Michelle Holoubeck: Why Intellectual Property Matters
Intellectual property (IP) includes trade secrets, patents, copyrights and trademarks. Every fledgling entrepreneur should learn the fundamentals of IP to protect their growing business because it enables you to:

Guard your ideas and establish a competitive edge. IP is the only way that small companies can contend with larger ones on an otherwise skewed playing field. For example, when Microsoft was shown to have used XML technology that was patented by the small company i4i in one of its product releases, the software giant was ordered to pay i4i to the tune of several hundred million dollars.

Promote investments. Because funders want to protect their investments, they are unlikely to finance startups that have not developed IP safeguards.

Encourage disclosure of new ideas. Sharing exactly how a company’s products or processes work in a patent helps to drive further innovation in the marketplace, and it enables businesses and consumers to easily distinguish among different products and services.

Also keep in mind:
• Publically disclosing your invention—by describing it at a conference, for example—before filing a patent application may limit your ability to protect your invention.

• If you disclose some of your invention, you must disclose it all. You can’t keep the best components a secret.

• You don’t have to actually make an invention to patent it; you just have to describe how you would make it.

• Not everyone who works on a product is an inventor. Incorrectly attributing inventorship to someone who did not play a real role can damage your patent.

Tom Baer: Know your Market First
Contrary to popular belief, a product idea is not required to start a successful company. Here’s the process that worked for Tom:

Identify a market. A couple years ago, Tom worked with a team to develop the Stanford spinoff Auxogyn—without a specific product idea in mind. Instead, the team started by targeting the area of assisted reproduction, a market that is growing by about 20 percent per year, with about 1 in 6 couples facing infertility.

Look for people who can build your company. For Auxogyn, this included a diverse group of medical doctors, developmental biologists, engineers, imaging experts and others. Look for those with the skills you lack.

Study the market. Talk with customers and assess other businesses in your niche. How do they work? What will give your company a differentiable edge?

Find and develop your idea. As you do your homework, your idea will emerge. Once it does, create product models to show your customers and incorporate their feedback into the next version. For its product, Auxogyn ultimately decided on imaging platforms that monitor the developmental process of embryos in an incubator—allowing for the selection of the healthiest ones for in vitro fertilization.

Delay financing as long as possible. Once you have the right ideas and the right market, you can find investors. If you fail, it’s better to fail early—before you’ve invested significant time and funding into product development and pilot production.

Christina Folz (cfolz@osa.org) is OPN’s editor and content director.

 

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A Guide to Structures for your Small Business

4. November 2010

By Bill Greener 

Thinking about a start-up? More and more enterprising scientists are applying their knowledge of technology and industry to their own new businesses. What does it take to shape one’s vision into a sustainable business? A solid business plan is obviously important. However, even before that, you must figure out which type of business entity will best suit your needs. This decision will affect everything from the amount of taxes and paperwork you’ll face to your personal liability to the bottom line. Here are the major options you have, along with their advantages and drawbacks.

Sole proprietorship: Someone who owns an unincorporated business by himself or herself. The main advantage is ease of formation. To get started, you need only perform a simple filing with a County Clerk’s office.  The tax implications and reporting requirements are straightforward, involving taxation at individual tax rates and standard IRS Schedule C filing. There is no separate entity tax. 

However, as your own boss, you are the sole risk manager and the profit/loss center—for better or worse. Your liability is unlimited, but you may have restricted sources of capital and funding.

General partnership: An association of two or more people who co-own a business for profit. These partnerships are generally easy to form at the state and county levels. Partners agree how to share profits and losses, which flow through the partnership to each partner’s individual tax return via a form K-1. General partnerships are typically not subject to federal or state business entity taxes. The general partners, however, are jointly liable for the obligations of the entity.

Limited partnership: One or more limited partners and at least one general one. Limited partners cannot be active in the business management; if they are, they risk losing their “limited” status.

Limited and general partnerships are similar in areas of taxation and what is referred to as “special allocation of income and loss.” Government fees for partnership formation may be higher for a limited partnership than for a general one, however. State regulations may require notices about the partnership formation to be published.

C-Corporations are your large business “Inc’s.” Corporate business entities provide greater segregation between their owners and the entity itself than is provided for in partnership arrangements.

Taxation issues are comprehensively addressed by the IRS, under subchapter “C” of the Internal Revenue Code. C Corporations require corporate officers and directors whose identities must periodically be reported to the state.

On the plus side, a C Corporation is taxed for income purposes as a separate corporate entity at both the federal and state levels. In addition, the number and types of shareholders are unrestricted. Shareholders have limited financial liability even if they participate in corporate management; rather, the corporate entity becomes the liable party. In a C Corporation, the retained corporate earnings can be kept in the business.

On the other hand, C Corporations are subject to double taxation; corporate income is taxed at the corporate level, while dividends are taxed at the individual (shareholder) level. The formal requirements of a C Corporation include government formation fees, significant record- and book-keeping, shareholder meetings and corporate elections, the issuance of stock certificates, and the sale of stock for raising capital.  Financial losses are only deductible at the corporate level.

S Corporation: A small business entity that makes a valid election with the IRS to be taxed differently than a C Corporation. S Corporations generally pay no corporate income taxes on their profits. Instead, shareholders pay income taxes on their proportionate shares of the corporate profits. Thus, an S Corporation is considered a pass-through entity similar to a partnership, but shareholders enjoy the limited liability of a corporate structure.

Among the limitations: These entities must be domestic corporations organized under state law, and shareholders are limited to fewer than 100 and to certain entities such as individuals, estates and trusts. All individual shareholders must be citizens or residents of the United States. Unlike a C Corporation, an S Corporation cannot have retained earnings.

Limited liability companies, or LLCs, are formed by filing Articles of Organization with a state’s secretary of state. The IRS taxes LLCs as if they were partnership entities.  There are no restrictions on the number or types of owners or the extent of owner participation in management. An LLC will be dissolved when certain events occur; for example, bankruptcy, the death of a member, or the incapacity or withdrawal of any member unless otherwise voted upon. Annual filing fees are required.

Bill Greener is a U.S. registered patent attorney who practices in Ithaca, N.Y. and is a partner in the firm of Bond, Schoeneck & King, PLLC. This blog post is based on an article that appeared in the May 2007 issue of Optics & Photonics News.

 

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