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Business and innovation

Business and innovation

Physics goes commercial

01 Apr 2001 Matin Durrani

There has never been a better time for physicists to set up their own firms. We profile some of those who have gone into business and seek their advice for would-be entrepreneurs.

Photo of a roll of banknotes

Three-quarters of the people who call the Automobile Association don’t know where they are. It might sound amusing, but being lost isn’t much fun if your car has broken down in the middle of nowhere. Help, however, could be at hand thanks to a high-tech business set up in 1995 by Cambridge University physicist Peter Duffett-Smith. Drivers will soon be able to buy mobile phones containing software developed by his company that can pinpoint their position to within metres. Bingo! Your breakdown recovery service will be speeding its way to you in minutes.

What’s amazing is that the principle behind this “location-positioning” technology was developed by Duffett-Smith for entirely fundamental research – to study the radioemissions from distant galaxies. It’s an example of how even the most esoteric of research can have commercial potential. For the full story of how he moved into business, see page 32 (print version only).

Business is booming

Now is the ideal time for physicists who want to go into business. The economy is thriving. The Internet is growing at a frenzied rate. And the optoelectronics firms that supply the “picks and shovels” of the Internet gold rush are booming. Indeed, the global market for lasers, displays and fibre optics – all physics-based inventions – is worth over £140bn and expanding at some 25% a year.

Scotland, for example, has over 60 optoelectronics businesses, and new companies are being spun off from Scottish university departments every month. The opportunities in lasers and optics are enormous and so-called “photonic band-gap materials” – which might satisfy the demand for ever-faster optical communication – could be the next big thing. At least three new companies have already been set up recently to develop these materials (p39 and p40, print version only).

This special issue also contains advice for would-be entrepreneurs and guidance from experienced physicists who’ve been in business for years. Rule number one: recruit experienced managers who can help you to grow the business. There’s no point burning yourself out when others can do the legal, marketing or financial work better than you. Founding entrepreneurs often become chief technical officers, leaving the day-to-day running of the firm to the specialists – even if it means sharing the business. “It’s better to own a 10% share in a large company than a 100% share in a small one,” as one adviser to entrepreneurs puts it.

Communications skills are also fundamental. You can’t expect to raise finance from venture capitalists if you can’t explain your technology in a nutshell. As physicist Henry Yaffe, who founded Yafo Networks in 1999, points out, some venture capitalists don’t know “the difference between a photon and a futon” (p31, print version only).

You don’t even need to have years of experience to establish a business. The E Ink Corporation (p30, print version only), which makes erasable electronic displays, was set up by two 22-year-old American students just before they graduated. They raised $1 million within four months and are already selling their products.

If you’re after home-spun practical advice on how to succeed in business, then Bob Claridge – who has spent over 15 years working in physics-based companies – has the answers. His top tip: make sure your passport is up to date because you’ll need to sell your products abroad to survive.

And if the prospect of going in to business frightens you, relax – you don’t have to do it all alone. Most research universities worth their salt now have innovation companies that can guide you through the commercialization process and provide access to lawyers, patent agents and venture capitalists (p37, print version only).

From particles to profits

Without doubt the biggest spin off from physics has been the World Wide Web, which was developed at CERN. It has transformed our lives, and “e-business” is expected to soar ten-fold to $6800bn by 2004. But particle accelerators themselves are full of technological opportunities for business, including photomultiplier tubes and superconducting magnets. Indeed, business opportunities for physicists are everywhere – including space science (p43, print version only), imaging and sensors (p46, print version only). Even nanotechnology – which has promised much, but delivered little so far – is getting in on the act (p42, print version only).

The time is ripe for going into business. Of course, it’s tough and a good portfolio of intellectual property rights is vital – if only to impress potential investors. But the financial rewards are high and there’s the thrill of seeing your idea becoming reality.

We conclude by looking at some physics-based companies that have thrived despite all the odds – including Psion, the computing firm set up by the physicist David Potter in 1980. He certainly thinks physicists have what it takes. “Physics teaches hard, abstract, logical thinking, which is exactly what one needs in industry,” says Potter. “I would encourage any physicist who is thinking of going into business to do so.”

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