Thursday, 28 February 2008

Taking deep science to market – Plastic Logic

Plastic Logic has grown out of the Cavendish Labs in Cambridge from the work of Professors Friend and Sirringhaus. The firm is at the cutting edge of technology, built on fundamental scientific inquiry (with papers in the top journals and high citation indexes). It presently employs 150 people and as a firm it has absorbed $50m for research and development (after the time in the academic labs of Cambridge) and now a further $100m to develop the factory (not counting any subsidies from the German Government for the factory in Dresden). All in all not a garage start-up by sexy ponytailed fast talking entrepreneurs, but a deep science based company.

For more information about the products and processes please look up the website for Plastic Logic.

From a talk on Enterprise Tuesday at Cambridge Unievrsity

First a few remarks from Prof Richard Friend:

“The proposition is that if we can use plastics like ink – but replace things that are useful like silicon, to provide silicon like functionality, then we can make a great revolution. We can get rid of icons like the huge factories and move to a manufacturing method where objects can be made cheaply…..”

This thinking got the first company underway – called Cambridge Display Technologies now owned by Sumitomo. The fundamental proposition is based on what are known as Polymer organic light emitting diodes (P-OLEDs). Even before CDT, the academic work was published in 1988 and there has been a stream of publications in leading journals in parallel with company development

The progress from scientific inquiry to commercialisation is a long journey and the challenges at the technical level included a search for stability of the product, scalable manufacturing processes, and finding enough performance from transistors so that the end product can do more jobs

“From when basic science was being done – to how to translate this into a product that can be scaled up – when this happens you know that the most interesting things happen in an industrial setting….”

However the virtue of a University setting for research is that we can’t keep knowledge secret, but we can patent and get value, especially if you can get a portfolio of a wide enough interest. We filed a number of patents before we published. And have filed even more patents as a company. So – in 2000 we raised £1.75m (Amadeus, Dow Ventures, CRIL) and appointed a CEO – Stuart Evans – when it felt right to form a company

There are probably three major constructs that scientists need to understand; the differences between doing science; doing technology and doing business. Each is very different and this has an impact on the nature of people that get hired into the business.

As academics we should not be ashamed of moving things into business, but we should be candid, because the interaction between academia and industry can be very valuable. If we look at plastic electronics as an example most of the research and engineering run in parallel, where the interactions, inquiries and work run backwards and forwards. Hence the University environment also gets strengthened by such interaction.

When firms are being kind to us they recognise and say that we lead them into the future. And because managing is not always straightforward we need to recognise the ultimate limitations of the Universities ability in commercialisation. Hence we need to be nice to companies. There is a very positive benefit for both parties.

A few highlighted remarks from Stuart Evans – the founding CEO

If you are going to “make it happen” by taking a deep science project to market there are a number of decision points and critical success factors. Here is what we have learnt so far:

One of the most critical decisions is to decide when to go commercial, when it is no longer a project in the lab. This requires a sense of critical mass of events, evidence and belief in the product’s future. Of course from here the next decision is whether or not to start a company. In the case of plastic electronics, there was only one choice – a company had to be started.

From this key decision the next stages include finding a top name ambassador who also believes in you and your project. This person provides a strong signal to the investor and business community that there is something in the opportunity that draws others to it.

The founders need to then raise some money to get the very early stages of the business concept underway, file patents, get basic communication “out there”.

Then you do need a CEO – who will make things happen at a very practical level, like help to raise money, hire the right people, get facilities organised and start to get to customers and build commercial evidence for further investments and commercialisation.

From here on the CEO needs to find a way to attract a top team and the very early team at Plastic Logic were absolutely at the top of their game, not least Henning Sirringhaus who made it to a Professorship at Cambridge before he turned 40.

There were a number of decisive moments, when investors put in money, including some of the top Fortune 500 companies. One of the major lessons we learnt from that experience is that try and get more than one of them to invest because you can get a better balance in the relationships. In other words you will not become dependent on one set of relationships – which can leave you in a vulnerable position. The trick is to find a lead investor, whose reputation in the market place is gold plated. This lead investor will attract others to follow.

The questions and decisions about where and how to make money – in other words building the business model is perhaps one of the most complex, once you have got underway.

There is a kind of Moore’s Law to the way cash is used up in high and disruptive technology. We had to take the technology itself from say 5 working transistors from a pool of 8 to getting 2 million to work reliably – if we were to make anything useful. This is a huge leap from the lab to the market place and requires a lot of clever engineering, money and smart people. It also requires a huge level of faith.

This level of faith comes from knowing that if you get it right you can lead to new iconic products for the future. So for example with the invention of transistors came great products of the past – the Sony walkman is an example and with further miniaturisation has come mobile phones, the blackberry and other products. So although some of our sceptics say that Plastic Logic is on a hopeless journey our belief is that we are positioning ourselves to be an iconic company. Remember that Apple has transformed itself from being a PC company to a major player in music – through the creation of an iconic product – the ipod.

From our perspective you need great science to make great market opportunities. And this in turn means if you have a great product you can be transformational in your vision.

All this requires cash:

So we have raised cash in a number of rounds starting with the very early $1.75m; then a further $3m to hire research staff, then $17m to scale up operations; $30m for a prototype line and most recently $100m for a factory in Dresden.

Take home lessons so far:

Find customers very early on.
Proof of Concept is not a prototype
Watch out for the big prize
Keep innovating and inventing
Build teams within teams
Focus on industry structure
Search for low cost capital

FT has been generous – reports that we have the best chance of being a $1bn company from a University spinout

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