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Dr. Burton Lee, Monday, 9-17-12 September 17, 2012

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Dr. Burton Lee, Monday, 9-17-12

http://archived.thespaceshow.com/shows/1855-BWB-2012-09-17.mp3

Guest:  Dr. Burton Lee.  Topics: Space entrepreneurship and venture capital investment.  You are invited to comment, ask questions, and discuss the Space Show program/guest(s) on the Space Show blog, https://thespaceshow.wordpress.com. Comments, questions, and any discussion must be relevant and applicable to Space Show programming. Transcripts of Space Show programs are not permitted without prior written consent from The Space Show (even if for personal use) & are a violation of the Space Show copyright. We welcomed Dr. Burton Lee back to the program to discuss venture capital and space entrepreneurship.  Dr. Lee made a presentation about this subject at the NewSpace Conference Boot Camp and is sharing this information with us at this time.  His Power Point presentation, “Space Entrepreneurship & Silicon Valley Venture Finance Trends in 2012,” has been uploaded to The Space Show blog.  During our 90 minute discussion without a break, Dr. Lee took us through the Power Point slides as we discussed important issues, trends, and suggestions pertaining to space entrepreneurship and getting it financed in the VC community.  I suggest you go through the slides with us during our discussion.  Some important take aways to consider include the need to stress business characteristics, not space related characteristics.  In fact, he advised against being a space advocate in pitches, presentations, and business meetings. Also, Dr. Lee suggested getting real business experience with a non-space organization or start-up as it is the real business experience that matters, not space science, space engineering, or anything like that.  He advised to really do your homework as to your markets, business planning, financing, etc.  Later, he talked about “hot” books in the Valley which are a must read for the space entrepreneur.  These are detailed in some of his later slides. Both Dr. Lee and I suggest you read these books.  We talked about new funding methods including Kickstarter and the possibility of equity crowd source funding down the road.  We also went over important trends that adversely impact the potential opportunities for the space ventures.  For example, software is far better and more lucrative than hardware.  The apps and related business are Valley favorites.  We spent lots of time discussing and understanding these trends and seeing where space could possibly fit in but another take away was that space projects face fierce overall competition for funding from ventures with lower risk, larger markets, rapid exit strategies, and the potential for virality.  This is an important discussion and I hope all of you listening to it will do so with an open mind. Dr. Lee has the experience, the position, and the knowledge on these subjects and what he had to say is something we have to know, even if we are simply space advocates and enthusiasts and not an actual space entrepreneur.  For those of us that are space entrepreneurs, Dr. Lee’s discussion is crucial to success – IMHO!
Please post your comments/questions on The Space Show blog to benefit us all.  If you want to email Dr. Lee, note that his email address is provided on the title page of his Power Point.  If you do email him with a question, please copy me as I would like to continue learning and sharing in the knowledge Dr. Lee offers to us all.  Thank you.

Burton Lee – The Space Show – Sept 17 2012 – Final

Comments»

1. Rick Kwan - September 22, 2012

I’m going to take a shot at Patrick’s follow-up question. I don’t have anywhere near the qualifications of Dr. Lee. I work in Silicon Valley as a software developer, and have been involved in failed ventures. And I get exposed to a lot of “the next big thing” ventures, and see a lot of the best talent. (It sorta puts your personal ego in perspective.)

For the hardware entrepreneur, I would ask: what kind of hardware, how big is the existing market for it, and do your potential customers have deep pockets? Listening to Dr. Lee, it seems that an existing product can have further reach by building an interface to the Internet, particularly if it is by way of an on-line app on an Android or iOS device.

For the most part, app developers should not have to go to a venture capitalist (VC) or angel investor to raise money… at least, not early on. What you need to do is get a clear idea of what the app does, how the naive end-user uses it, and get the appropriate development kit for your target device (i.e., Apple iOS dev kit and a Mac OS X computer, or Google Android dev kit and a Windows or Linux computer). From there, it is sweat equity to develop a prototype. If it is a complex application which needs a back-end database “in the cloud”, you might then need an VC or angel; the prototype will help them visualize your target application and market. If the app is not so complex, then you get into the appropriate app store, and get a visible market presence.

Now, all this is of course a lot easier said than done; otherwise, I’d be rich by now and building my own rockets.🙂 I would also caution that the low-hanging fruit of the app market has probably already been conquered; the bar has already been raised. As a result, what’s unique about the app and how you get visibility are even more important than before.

pritchie - September 26, 2012

Thanks Rick.

I’m also a software engineer and have worked for several startups, some in the Valley. I’m a big fan of the Lean Startup movement and the work of Eric Ries and Steve Blank.

I know the IT startup scene quite well but I have had almost no exposure to the hardware side.

On the software side my experience is that team and passion trumps most other factors when trying to estimate the success of a new venture. Ideas are easy. Starting is easy. Having the drive and talent to push through the difficult times and *finish* is hard.

My question to Dr. Burton Lee was an attempt to gauge if he recommends that an entrepreneur passionate about hardware switch to software. Are the advantages discussed on the show so great that they trump the passion he/she has for hardware?

2. Patrick Ritchie - September 20, 2012

Great show.

Big thanks to David for getting my questions in.

It’s very difficult to know how to phrase these without the context of the ongoing discussion. But i think enough of what I was trying to ask made it across to allow Dr. Burton Lee to provide a valuable answer.

A follow on question:

Would you recommend that a hardware entrepreneur re-focus on software / IT in hopes of raising more money?


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