Sep 14, 2010
Everyday, technically minded PhD students around the world toil in their labs and meticulously document their findings. Whether they are spinning their wheels or are on the brink of revolutionary discoveries, they work with the hope that one-day the pages of their lab notebook will tell the story of a new breakthrough technology. Dr. Ory Zik knows this feeling all too well. He has taken his ideas from the lab and crafted them into revolutionary products in bio-technology and clean energy. But it was no simple task. This article chronicles Ory’s experiences in starting five companies and how they have helped him to navigate the uncertainty and challenges that he has faced as an entrepreneur.
His entrepreneurial journey began in 1993 when he founded GreenPeace Israel while pursuing his PhD in physics at the Weizmann Institute of Science. He led the organization for three years as a PhD student and campaigned against chemical companies dumping heavy metals into the Mediterranean Sea. His efforts attracted the attention of the Israeli Environment Minister, who lobbied to the international community on GreenPeace’s behalf.
Ory used this leadership experience and coupled it with his technical training to become a leader of a spin-off of El Mul Technologies. He developed and licensed the IP to an aligned carbon nanotube electron emitter for miniature electron microscopes, which are intended to allow unparalleled throughput and resolution when performing defect inspection in integrated circuit manufacturing. It is part of an industry effort to overcome the traditional tradeoff between quickly scanning over large areas and visualizing tiny features. Due to the immense technical complexity, it has taken 11 years to turn this technology into a product– which will launch next year.
Next, Ory went on to found QuantomiX. He created a one-time-use capsule that allows imaging of biological samples in a natural wet environment, using traditional electron microscopy. These capsules protect the samples from damage, so that cells and tissues can be imaged in a natural state. In trying to figure out how to market his product, he believed that the razorblade model would work best for his technology. His company could charge more for consumables if the product could be used in a traditional electron microscope, which can be found in many labs.
How was Ory, a Physicist, able to successfully create a product for the life sciences? Simple. He enlisted the help of his biologist colleagues. They helped him to understand the issues and importance surrounding the imaging of tissues. Armed with this information, Ory returned to the Weizmann Institute of Science, his alma mater, to develop his idea into a product. He negotiated a tech transfer agreement (royalties and small equity) with the university who granted him lab-space and after a year the concept was proven.
Initially, Ory’s product faced challenges. His aim was to have this product used for diagnostic procedures in inter-operative pathology; however, the product was successful in the research market (somewhere between the academic setting and pharmaceuticals research). This was different than what had been anticipated. The product yielded a relatively smaller return on investment than initially hoped, because they failed to accurately gauge the market. Ory believed that “the market was slow. You have to anticipate the pack.” Generally speaking, the market for electron microscopy moved very slowly. QuntaomiX’s product was too new for their target customer—while the credibility of the product was established in some scientific publications, it was yet to be evidenced by multiple medical publications that demonstrated clinical applications for a reimbursed diagnostic, in order to get into the mainstream clinical market. QuantomiX had taken their technology and pushed it towards a market. According to Ory, they should have done the opposite— first understanding the needs for a large target market and then tailoring the products to address those needs.
Ory’s next role has been as the co-founder CEO of an Israeli solar thermal company, HelioFocus. Their technology uses a parabolic dish that reflects and concentrates solar radiation onto a volumetric receiver, to create and deliver high temperature air for a variety of applications. In general, Ory believes that solar thermal offers unique opportunities. Traditional utility scale solar technologies create a host of reliability and cost concerns. For example, the cost for MW level installation is not encouraging. A quick estimate for a 50 MW installation at $3/Watt is about $150M, which is a tremendous capital expenditure for an unproven technology. At this scale one cannot afford to experiment with configurations and system modifications (Brightsource Energy and e-solar mentioned as examples).
HelioFocus was different. They wanted to bypass the cost and reliability constraints by introducing a low-capital modular technology, where the technology could be proven gradually. Their first product was a power plant booster. The company offers unique advantages that they do not require expensive permits, project finance, or plant turbines. The optical concentrator: parabolic dish, provides an additional barrier to entry for competitors. While there were many nay-sayers along the way, their products are now in their first installations. This has allowed HelioFocus to position themselves for success. According to Ory:
“Flexibility is key. Sometimes you can’t change your technology, but you can change your position. HelioFocus started as a power generating company and shifted to a solar ‘booster’. We will be able to generate energy at a competitive price because by boosting existing plants, many of the fixed costs (such as grid connections and turbines) are eliminated.”
Where does Ory get the money to start all of these companies? While QuantomiX was VC funded, a company like HelioFocus is not a “VC-play” – “in general, infrastructure companies are not VC-friendly because too much money goes to infrastructure and relatively less towards innovation.”In an infrastructure company, expensive equity is traded for concrete and steel. There is disproportionally small value that can be delivered on a $30M investment if only $5M goes into the technology and IP. Infrastructure intensive startups should consider raising enough VC money to remove the technical risk. The bulk investments should be strategic investments, where one can negotiate manufacturing rights, sales rights and a potential buyout early on. HelioFocus raised a second round of roughly $11M through strategic partnership with a Chinese clean tech company Zhejiang Sanhua, after a first $10M strategic round with Israel Corp. In these situations, Ory strongly cautions that one predefine terms with strategic investors so that the exit horizons are not limited (i.e. whether to liquidate or remain with strategic investors after achieving the agreed milestone).
Ory has recently co-founded NobleGen, a DNA sequencing company that commercializes a technology that was developed at Harvard and BU. He serves as the Chairman of this company. In general, he believes being an entrepreneur becomes easier the more times you do it. Ory recommends that every entrepreneur (especially the technically minded ones) begin to think commercially as soon as possible: “ask yourself questions about money versus time, competition, sales channels, margins, where will you have manufacturing, and most importantly, who are the right partners?”
Other bit-sized words of wisdom from Ory:
–“The entrepreneur has a difficult sales job, in that they not only need to sell a product, they need to sell a company.”
– “Promise the most you can deliver (even a little less), and meet each technical milestone on schedule. This is very important in building your credibility.”
–“Typically you have a ‘flexibility tradeoff’ between resourcefulness and resources. Startups just don’t have the resources but they can be more resourceful and flexible.”
–“Founders that are fit for technology are rarely the same type of people who will drive sales.”
–“Your first hires are the most critical ones. It is best that you get people you already trust and know. The reason is that correction times can be too long, and if you make the wrong choices, it might be too hard to correct your course.”
Ory describes himself as a CDO (Chief Duct-tape Officer). Once milestones are met, and operations are in order, he will move on to his next company. His most recent company kWhal, which he is just starting, deals with the enabling quantitative intuition in energy. The idea is that we have an accurate quantitative intuition when it comes to the calories that enter our bodies. However, we don’t have a good ‘metric’ to describe electricity, car miles, airplane miles, food, shopping etc. kWhal is focusing on enabling quantitative intuition with its unique business model and a number of enabling technologies.
Ory Zik is a serial entrepreneur in the truest sense. His unrelenting drive and fascinating experiences should serve as motivation for scientists and engineers to bring ideas from the lab bench, to the marketplace. Having spanned projects in non-profits, materials science, energy and biology, we can only wonder what adventures lie on his horizon.