Feb 22, 2011
Ric Fulop is a general partner at North Bridge Venture Partners and a serial entrepreneur who has started six companies during his career. He is most known for the creation of A123 – a developer and manufacturer of lithium-ion batteries. Ric is a MIT Sloan graduate who founded A123 at the age of 26. The company’s nanoscale electrode technology was born out of MIT laboratories.
There’s this idea that there’s a disconnect between business students and engineers. How did you pitch yourself to Professor Yet-Ming Chiang, who was developing the technology at MIT that A123 utilized?
When you present yourself to someone new you have to give a good pitch on what you’re interested in, the market you’re interested in, and why you’re a good person to go after that space.
And specifically you highlighted your expertise that you’d taught yourself?
I laid a case for why a company should be started in energy storage. I told him what I had done beforehand with other companies I started. I told him I thought I could attract the capital since I had raised over $100MM in capital before I started A123. Energy storage is capital intensive and I believed I had the capacity and experience on how to do that, understood the market and focused on building trust and credibility with the other party to get them to do something with you. It’s also mutual since you’re sizing up the person at the same time.
When you were working with the scientists you’d met at MIT , did you feel like they were maybe questioning your ability to understand the technology and the market?
You can’t just be some random guy and think you’re going to go start a company with no domain expertise. You have to get up to speed quickly and get smart about it. If you don’t know what you’re talking about you’re not going to get credibility from the guys at the lab whose door you’re knocking on and they’re not going to pay any attention to you. You have to know what you’re talking about. Read the papers, understand how one thing differentiates from the other, learn the market and be able to speak the language.
You’ve started six companies during your career. What market characteristics do you look for when launching a new business?
Starting companies is fun, but there’s different types of companies you can start. You can start a cottage business, a small business, or you design a start up to become an industry leader. To start an industry leader you need to have a couple different things: you need to be in the right place at the right time; you need to have a very large market opportunity; and, you need to have differentiated market technology that can give you very high barriers to entry. That’s what I’ve always tried to focus on.
What did you do differently with A123 that made is such a big success?
Some of my companies were more successful than others, but I think A123 clearly had escape velocity. We turned it into a public company and today it has over 2,000 employees.
You learn different things at different companies, such as the importance of teams and hiring the right folks, the importance of scaling and how to scale appropriately. I also learned about quality systems, processes, and all sorts of things that are necessary to build a large business. I think I didn’t know a lot when I started my first company and clearly it showed, but as you evolve and get more experiences and you become better at it.
For example, when I started A123 I was a lot less concerned with issues like control and management and what’s going to be my role in the long term than I was about adding value and getting the best people involved to make it into a large successful story. The focus was all about making it successful and zero focus on the things that didn’t matter. And, understanding the difference between what matters and what doesn’t matter is everything. Deciding what not to do is just as important as knowing what to do. You have limited resources and you only have so many people in the company, so you have to focus exactly on what has an impact and matters.
What are some of the things that you’ve learned that really matter when building a business?
If you abstract yourself to a 50,000 foot view, I think what matters is picking the right markets and having the right market strategy, technical team, investors and management team at the super macro level. As you start getting more granular, what becomes more important, for example, are the day to day decisions that trickle down from those things.
Were there any close calls during the early days of A123?
Sure. Early on every business has close calls. You just don’t know if your technology is going to work, you don’t know if your systems are going to scale. You have technology risk, market risk, people risk – all the usual risks since you’re probably in a new market with the technology being applied in a new way. You just have to see if the dogs are going to eat the dog food. The customers are buying the product and once that gets rolling it’s different because it’s a big proof point for the business.