Ways to be an entrepreneur
I had a discussion with some professor friends recently about the subject of entrepreneurialism among chemists. I made my usual points about how people become captains of industry. Be more like an engineer. Preferably one with an MBA. Naturally, my professorly friends were unmoved. Having spent their entire careers in academia, they just didn’t know about this. I didn’t expect them to.
After I made a gross generalization about the lack of entrepreneurialism among chemists, one prof pointed out that in her field of research, there were indeed people who were starting ventures. I do not doubt this. But it made me think. People, perhaps especially those in higher education or just advanced technology, naturally conclude that an entrepreneurial venture has to be based on new technology. Yes, we need people to start businesses in nanotechnology or what ever you call the latest iteration of biochemistry. We need to have a constant churn of people trying to put new products and capabilities on the table.
But we also need businesses who are able to make polysubstituted phenols, anilines, pyridines, alcohols, ketones, aldehydes, halides, and all of the other “ordinary” raw materials and intermediates that are now largely made in Asia. We need companies who will make 100 kg or 1 MT of some obscure organic material. Entrepreneurialism isn’t just about the bleeding edge. It is about having a dream and seizing opportunity. It can be cookies or chemicals.
For the most part, intermediates have moved to Asia because of the economics of batch processing fine chemicals. And a moribund approach to chemical manufacturing in the USA. Chemical manufacturing in the USA is complicated. There are environmental permits, TSCA, high waste disposal costs, high labor costs, expensive processing equipment, and layers of business structure to manufacture safely and with high quality. A chemist faced with navigating the maze of regulations, engineering details, and business operations is a busy person indeed. Few people can do all of it alone.
There are two fundamental approaches to starting a technology company- Market pull and technology push. Market pull is an activity where one builds manufacturing capacity with the intent of filling it by making exsting items of commerce. Technology push is where one intends to construct a new kind of technology in the form of a service or widget. Market pull is an approach wherein customers buy known technology. Technology push is the activity where the customer is asked to buy into a new product or service. In this case, you’re necessarily asking customers to be first adopters or to find new forms of value.
I’ve seen startups fail because their one-act pony didn’t work. Instead of trying to make a go of it with a one-act pony, a whole circus of acts should be going at once. A batch reactor is capable of making many things. A plant built around one product is entirely dependent on that one product. Batch reactors occupied with products from many market segments are batch reactors that will remain busy over a variety of market conditions.
Pharmaceutical intermediate manufacturing is a business weighed down with substantial overhead and structural immobility. It is not automatically a great place to start. The GMP world is very complex and peppered with many operational land mines. Many early intermediates are not covered under GMP. That is a good place to start.
ISO certification is another area where I take issue. While ISO certification brings good business practices, it also brings layers of administrative structure. It is possible to mimic this structure without formally adopting it. The ISO label on you advertising will impress some buyers, but a surprising niumber will be indifferent. If you want to be in pharma intermediates, this will be necessary. What an ISO certification says is that you will do what you say you are going to do. That is a good idea regardless.
What has to change is the economics of manufacturing in the USA. One way to do this is automated synthesis. A good example of a problem: How would one automate the synthesis of an OLED chemical like 1 MT of 8-hydroxyquinoline? This is an existing item of commerce, so entry into the market means taking share from someone else. You’ll probably have to best the market price by 10 % at minimum to induce someone to switch vendors.
The chemistry isn’t cutting edge, but the processing economics may be. This is an example of how entrepreneurialism can and should tackle manufacturing problems and gain a competitive edge. Since labor cost is a huge driver, find a way to shave off labor. An entrepreneur’s competitive edge may be process cost savings alone. You don’t have to wait for a scientific paradigm shift.
Part of success is just showing up. Just having capacity and a knack for a particular transformation can attract buyers. If you are handy with borylation and are flexible, somebody will call and want a quote. And maybe a sample. Pretty soon you have a PO and a deadline.
It is good to consider that an advance may be in the form of processing economics, not just the science.