7
Cases of Successful High-Tech Entrepreneurship
The fourth panel included lessons from two successful female entrepreneurs working in the defense space and a description of a program to provide entrepreneurship training to women. ML Mackey of Beacon Interactive Systems and Alison Brown of NAVSYS described the challenges they have faced as female entrepreneurs, and both described the Small Business Innovation Research (SBIR) program as critical to the development of their companies. Ms. Mackey argued for anonymous review of SBIR applications’ technical merit and for greater diversity on evaluation panels. Dr. Brown noted the importance of partnering with larger companies in the defense space and urged greater incentives for prime contractors to outsource to small companies and to protect small companies’ intellectual property. Jane Muir described how the program she founded, Empowering Women in Technology Startups (ewits®), helps women overcome barriers to entering the tech startup world.
In her role as panel moderator, Kevin Wheeler of the Senate Committee on Small Business and Entrepreneurship underscored the importance of diversity to that Senate Committee, which worked to provide agencies 3 percent of SBIR budgets for program management and authorized the National Academies’ studies of the SBIR program every 4 years to measure results. She suggested that these funds could be used to improve outreach and reduce barriers to completing applications.
The content of the discussion and issues and recommendations raised by speakers is summarized below.
ML Mackey
Beacon Interactive Systems
The first panel speaker, ML Mackey, CEO of Boston-based Beacon Interactive Systems, an SBIR company, told her personal story to illustrate the challenges of women in STEM careers. Having grown up poor, she pursued engineering largely for financial reasons. “I was poor and did not want to live that way as an adult,” she said. My choice to get an engineering degree was based on wanting to make money, and the highest available scholarship was for electrical engineering.” To encourage young women to enter the field, she recommended more female role models and showcasing to prospective students the creative, problem-solving aspects of science and engineering to counter the often dry academic curricula.
After Ms. Mackey met her husband, then getting a Harvard MBA, they started a company in 1994. The company developed software for commercial clients, including MetLife, Olympus, and IBM. After the e-business crash in 2001, the company survived by successfully gaining a Navy SBIR award, whose solicitation they happened to see. “We would not have found the program if we were not in dire straits,” she said. “Nothing reached out to me as a small business owner to participate in SBIR.” The company now provides products and services to the Navy.
As the only woman in meetings with Navy clients, Ms. Mackey said she often felt excluded from the male-dominated banter until her husband gave her a book of insults and comebacks. At a meeting, Ms. Mackey threw down the book in a mock challenge to her male colleagues. Afterwards, she succeeded in breaking the ice and found greater acceptance among them. “All we had to do was to acknowledge I was different and incorporate the difference,” she said. People “tend to see the ‘not like us’ before they see the technical merit,” she said.
Ms. Mackey recommended that the SBIR program be maintained as a competitive award program with clear evaluation criteria based on technical merit. Review of an application’s technical merit section should be conducted anonymously to remove bias, and evaluation panels should be more diverse, she said. If not immediately, then over time, diverse evaluation panels should lead to more diverse awardees, she argued.
Alison Brown
NAVSYS
The next speaker, Alison Brown, CEO of NAVSYS, said the SBIR program was pivotal to incubating her company, which she co-founded in 1986 after leaving a job in California to join her husband in a move to Colorado for his job teaching at the Air Force Academy. After receiving her PhD, Dr. Brown worked on global positioning systems (GPS), then a new satellite technology. The company’s first SBIR award in 1988 enabled it to build the GPS Translator. NAVSYS
won subsequent SBIR awards by acknowledging the need to partner with larger companies to commercialize innovations in transition to Phase III. Such partnerships are a necessity for startups, she said, because only large companies can bid for defense contracts.
Dr. Brown said that NAVSYS technology has provided new capabilities and lower costs for the Department of Defense (DoD). The NAVSYS Jamming Detection and Location Phase III SBIR project, for example, helps solve the problem of GPS jamming by the enemy. The DoD program officer wanted new anti-jamming technology, and NAVSYS offered a cheaper, more effective crowdsourcing solution than the DoD had originally contemplated, said Dr. Brown. The NAVSYS system receives information from GPS receivers in the field and sensors already carried by soldiers to identify jamming incidents. By downloading client software on their computers, any government agency can access this information royalty-free via a government computer network. Dr. Brown described that the system acquired hundreds of users within 2 years and is now a program of record because of the high number of users.
To solve another urgent military need, said Dr. Brown, NAVSYS provided the Air Force with a solution called the Talon NAMATH. To contain collateral damage, the Air Force needed technology to aim small bombs developed for the Iraq War. Using knowledge from technology that it developed for the Federal Aviation Administration, NAVSYS created a GPS precision solution that did not require expensive equipment on the ground. Likewise, NAVSYS’s precision targeting technology, developed mostly with SBIR funds, transitioned into FLIR Systems’ Star SAFIRE® product providing the U.S. military with stable, GPS-enabled, high-accuracy pointing for surveillance using high-precision electronic sensors.
Dr. Brown highlighted a major challenge for defense technology startups: the SBIR program supports the development of technology to the DoD’s Technology Readiness Level (TRL) 6, but DoD is not interested in funding companies until they reach TRL8. Specifically, Dr. Brown identified the following issues:
- DoD prefers to deal with its own prime contractors and does not fund SBIR awardees to a stage where they can enter DoD programs.
- Prime contractors lack incentives to outsource to would-be competitors, such as SBIR awardees.
- DoD recognizes neither the return on investment it gets from small business innovation nor the missed opportunity when small businesses cannot transition to Phase III.
- Lack of enforcement of SBIR policies rewards “bad practices” discouraging SBIR involvement.
Dr. Brown suggested legislative incentives to encourage large companies to outsource to small companies and to protect small companies’ intellectual
property. “If you just encourage small businesses to get Phase I and II [awards], the program is broken,” she said. “That’s not what the SBIR is about; there’s no commercialization.” If the government cannot commercialize the product, then agencies miss an opportunity to reap a return on investment, she said.
Jane Muir
University of Florida and AUTM
Jane Muir, director of the University of Florida’s Florida Innovation Hub, a 50,000-foot incubator with 25 startups, offered her perspective as part of the panel. Ms. Muir said that she started the Empowering Women in Technology Startups (ewits®) program in 2011 to overcome what she termed as “the distressing lack of women among the leadership of startup companies in the incubator.” The dismal statistics, she said, reflected a larger national and global need for more women in tech startups. By providing women with entrepreneurial training in a nurturing environment, ewits® helps participants overcome barriers to entering the tech startup world, including the lack of role models, self-confidence, support systems, mentors, and work-life balance, and their own tendency to wait for an invitation.
The University of Florida is one of the nation’s largest 15 research universities, she said, funding $700 million in research in 2013. Typically for every $2 million to $2.5 million in research, a new discovery is disclosed to its Office of Technology Licensing. That office assesses the technology’s patentability and commercial potential and typically licenses one-third of those discoveries to major corporations, one-third to small businesses, and one-third to startups. Last year, she said, the University of Florida started 17 companies based on university research discoveries.
In Florida, 99.7 percent of companies have fewer than 100 employees, according to Ms. Muir. These companies provide 82.4 percent of the jobs in the state, and less than 63 percent have fewer than 10 people.1 Startups play a key role in job creation in the state, she said, yet while technology is an abundant resource in Florida, experienced entrepreneurs are among the least available resources.
The ewits® program introduces women to the possibilities of entrepreneurship and nurtures budding female entrepreneurs, Ms. Muir said. Women still represent less than 15 percent of Fortune 500 CEOs. Gender bias is ingrained, and even women are biased against women, said Ms. Muir. According to a recent Yale University study2 she cited, science professors (both men and women) at U.S. universities were less inclined to hire female undergraduates than their male counterparts and when hiring were inclined to pay women a lower salary.
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1Florida Trend, January 2011.
2Corinne A. Moss-Racusin, John F. Dovidio, Victoria L. Brescoll, Mark J. Graham, and Jo Handelsman, “Science faculty’s subtle gender biases favor male students,” Proceedings of the National Academy of Sciences, 109(41): 16474-16479, October 9, 2012.
More encouraging, said Ms. Muir, are statistics showing that women are getting academic degrees at a rate faster than men. Women represent two-thirds of U.S. purchasing power. Employees prefer to work for women, and woman-led startups generate significantly higher returns for venture capitalists, she said. Moreover, woman-led startups have much higher rates of initial public offerings.
Yet female participation in tech startups remains low. ewits® envisions a world in which gender is no longer an issue, Ms. Muir said. The first session of ewits® in 2012 identified nine patented technologies from the University of Florida and accepted 57 women for more than 9 weeks of training. Paired with an experienced female mentor, each participant worked within a virtual, cross-disciplinary management team to prepare a business plan and investor presentation. ewits® is still compiling the outcomes of the program. Already, plans for two startups are under negotiation.
The program has been offered several times since the pilot, and thus far 150 women have participated. Evaluations consistently use the words “life changing.” Ms. Muir is gearing up to provide for the fourth cohort of women in ewits® in early 20153 and is currently working to identify pilot locations interested in offering the ewits® program. With a goal of one location in all 50 states, her hope is to see 2,500 women in the United States benefit from this program.
DISCUSSION
Ms. Wheeler suggested that each agency institute three changes for 4 years. For example, an agency could conduct outreach at the same conferences to see whether interest grows. “There’s effectiveness in repetition,” she said. Getting more applications is also important, she said, because awards are proportional to applications, according to the U.S. Government Accountability Office. Reducing application costs and providing funds for applicants to work with proposal-writing experts are possible steps.
An audience members suggested that data be collected from first-time applicants to understand how they learned about the SBIR program, whether through a solicitation or other avenue.
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3December 2014 update.
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