Tech Focus
City Manager Sheryl Sculley

How the InCube business incubator came to San Antonio is a story of leadership, strategic pursuit, aggressive action, collaboration, and a little bit of serendipity.
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From the Tech Startup Desk
Startech Successfully Renamed

SATAI is now called Startech Effective Monday, May 17 SATAI has changed its name to Startech. With the name change we have changed our logo, website URL to www.startech1.org and our email extensions to @startech1.org. The physical address, telephone numbers, etc. remain the same. We will continue to operate as before with the same brand, services and staff to serve our clients and meet our organization's mission and objectives.
Thank you for updating your records and spreading news of our announcement!
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Tech Focus
Strategic Pursuit and an Innovative Partnership, Sheryl Sculley describes how the city of San Antonio Recruited InCube
By Analisa Nazareno

How the InCube business incubator came to San Antonio is a story of leadership, strategic pursuit, aggressive action, collaboration, and a smidge of serendipity.

When San Antonio City Manager Sheryl Sculley met Mir Imran – the leader behind the San Jose-based InCube Laboratories – she saw opportunity. She saw an experienced entrepreneur, who could capitalize on the city’s existing medical innovation and commercialization infrastructure, build upon it, and create more higher-paying jobs for the community.

Imran has founded more than 20 life sciences companies, 15 of which he has sold. He holds more than 200 issued medical device patents and more than 350 patents, and is perhaps most well-known for his pioneering contributions to the first FDA-approved Automatic Implantable Cardioverter Defibrillator. Bringing the InCube incubator to the city, Sculley learned, would be a sound investment.

The opportunity presented itself in November, when Imran began exploring the idea of bringing two of his five latest startups to San Antonio. Originally, Imran applied for a Texas Emerging Technology Fund (ETF) investment to bring five of his new businesses to the Dallas-Fort Worth Metroplex. “Presenting five companies simultaneously to the ETF was certainly breaking new ground,” said Startech President and CEO Jim Poage, who was in Austin when Imran made his first presentations to the state.

One of Imran’s advisors from TI – Matt Harrison, whose wife happens to be second cousin to former Mayor Phil Hardberger – suggested Imran consider moving some of the startups to San Antonio. With that open door, the recruitment all of Imran’s new companies began in earnest, with Sculley and other key city players moving together to vet and pursue the opportunity. The city sent a delegation to San Jose in February to visit Imran’s business incubator to report on Imran’s track record and offer recommendations.

“We’re hungry, we’re nimble and we’re creative,” Sculley said, about the process and the people that convinced Imran to settle in San Antonio instead of Dallas.

Additionally, Sculley introduced Imran to a team of analysts at USAA, who did a separate vetting and ultimately invested $10 million into the San Antonio-based venture capital fund that Imran created, called InCube Ventures II. “I accompanied him when he went to USAA and they had 10 people around the table, firing questions at him for two or three hours,” Sculley said. “They are outstanding at vetting. When they completed their due diligence analysis and concluded that they wanted to be an investor in the venture fund, that gave us even greater credibility.”

With Sculley, former Mayor Hardberger, Mayor Julián Castro, and USAA behind Imran’s move to San Antonio, other public institutions and private investors started coming to the table. Sculley said she was pleasantly surprised by the number of positive responses Imran has received from local investors. “Because I hadn’t worked in this area since I have been here, I didn’t know what the potential was,” Sculley said. “I knew that there was a lot of wealth, but I didn’t know what the likelihood was of investing in this area.” The unity of the business community was one factor that moved Imran to come to San Antonio.

The city will invest $6 million over a five-year period toward the San Antonio Innovation Center, and convinced other public entities, including Bexar County, the Texas Research & Technology Foundation, the University of Texas at San Antonio and the UT Health Science Center at San Antonio, to contribute $4 million total over the five-year period. Imran himself is investing another $15 million toward the incubator.

“I sat down with Mir in one of our early meetings and said, ‘What would make it work for you?’” Sculley said. The two discussed the idea of the city forming a nonprofit economic development corporation that would utilize public dollars to invest in Imran’s business incubator in exchange for founders’ stock. Through the development corporation, the City created one streamlined agreement from the public sector. This agreement also offers the public sector an opportunity to get a return on their investment.

“In one of my first meetings with him I asked him, ‘How do we get a return on this?’” Sculley said. “Sure, there is an indirect and direct economic impact that this will have on the community. But financially, since we helped start this, shouldn’t we get some type of return?”

Sculley said she and supporters discussed the opportunity with city council members, understanding that they needed to balance the immediate day-to-day exigencies of municipal management, with the idea of future returns on the city’s investments. Imran gave a presentation to the governing body, as well. “We couldn’t just come in and say, ‘Here’s the final package,’” Sculley said. “So it was: Here’s the concept. This is the direction we’re heading. It was a progression with the council.” But, it was a quick progression, since many members were eager to enhance San Antonio’s high-tech, medical innovations sector.

“It was a huge team effort to make this happen,” she added. “It needed the mayor and council’s support. It needed the county judge’s support, plus that of the commissioners’ court. It needed UTSA, the Health Science Center, the state, and many others. And most importantly, it needed the private investment from the community.”

Sculley offers her own advice to local entrepreneurs, seeking to develop and grow their businesses “No. 1: Everything is possible. No. 2: Ask for lots of advice from those who have been successful, as well as those who have not been successful,” she said. “And collaborate with those you trust.”

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From the Tech Startup Desk
Startech Successfully Renamed
By Jim Poage, President & CEO, Startech & STRCIC

Effective Monday, May 17 SATAI changed its name to Startech Foundation and its website URL to www.startech1.org. The name was changed to align with the core focus of the organization and eliminate common issues associated with the past name. The company brand, services, operations, and mission to Inspire, Create and Grow technology companies remain the same.

“The organization has brand recognition throughout South Texas and Texas and increasingly nationally and internationally. Our Board of Directors that represents a broad cross section of viewpoints felt it was time for a change. We are excited about the new name and logo,” said Jim Poage, President & CEO, Startech. “Our brand remains the same” added Poage. “We have been considering this change for over a year. A recent in depth study we commissioned found a very strong identification and recognition of our major brand attributes of who we are, what we do, and our mission, but a low correlation with the actual name.”

The acronym SATAI stood for San Antonio Technology Accelerator Initiative and was originally used when the organization formed in 1999. The organization was incorporated as a non profit in 2002 with initial funding by the City of San Antonio and named SATAI Network Foundation. In 2005, SATAI became the host organization for the South Texas Regional Center for Innovation and Commercialization and its service area expanded to include San Antonio and a 32-county region. Funding also expanded to include the City of San Antonio, Bexar County, the State of Texas, UTSA, AT&T and many other corporate and private donors.

The organization has a history and successful track record of helping technology commercialization throughout South Texas. Today, Startech advises clients on more than 20 sources of startup funding. The new name creates clear alignment with the core mission and services.

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Entrepreneur’s Corner
Frost & Sullivan and Startech Announce New Program
By David Clark, Director of Investment Services, Startech & STRCIC

Startech is pleased to announce that it has partnered with global research andgrowth consulting firm Frost & Sullivan to create a program that offers substantial savings and benefits to select technology startups. The program is designed to accelerate the success of early stage startups by providing access to Frost and Sullivan Growth Partnership Services (GPS), including market, technology, customer, and best practices research; and access to industry analysts.

Jim Poage, President and CEO of Startech said, “We are pleased to partner with Frost & Sullivan to offer world-class services to our clients. Through this relationship, our clients will have access to the research and consulting necessary to help them generate, evaluate, and implement their startup strategies. We are confident that providing startups with this mission-critical assistance will in turn increase the success of companies who obtain funding.”

“We are pleased to help support Startech’s non-profit mission,” said Bill Archer, Vice President, Global Marketing, Frost & Sullivan. “Frost & Sullivan is in the business of building and growing companies, and we are excited about our joint program that will benefit companies that are in the growth stage. Our partnership makes sense for all.”

To take advantage of the considerable benefits provided by the Startech and Frost & Sullivan program, technology startups should contact Startech at (210) 458-2523 or marketing@startech1.org and ask about the Frost & Sullivan GPS program. Once accepted by Startech, approved startups will be referred directly to Frost & Sullivan to enroll in the discounted program.

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Sales Tips
Sales Compensation Plans – One Size Doesn’t Fit All
By David Clark, Director of Investment Services, Startech & STRCIC

One of the most common mistakes in small (or for that matter large) technology firms is the design of the Sales Compensation Plan. Oftentimes the Comp Plan consists of a salary base, together with a simple commission structure or rate, and sometimes an accelerator (or cap) in case the sales rep hits the big deal.

A properly designed and written Comp Plan will inform the sales rep (without other inputs) exactly what his or her company wants from sales activities. Every firm has their own, but the following is one recommended approach:

1. Examine the company’s business plan and determine what the overall goals and objectives are for the Sales organization. Consider:

a. What are the overall revenue goals of the organization?
b. What are the goals relative to market segmentation?
c. What are the goals relative to new customers vs. existing customers?
d. Are there new product/service launches planned and what their goals are.

2. Consider the skills and motivations of the sales people themselves. This is obviously much easier for smaller organizations; however, think about your ‘hunters’ and your ‘farmers’. Think about relationships that your sales people have built with existing customers and new prospects.

3. Start designing the Comp Plan. This is not a trivial exercise and should be done prior to the beginning of the fiscal year. It is recommended that your design phase be done in confidence. Employees can be distracted by such discussion and you want them focused on closing the fiscal year. Here are a few design elements to consider:

a. Begin with the concept of Targeted Income. Determine the total compensation you want to pay your sales rep if they hit exactly 100% of their goal. Now start working to back into this number based on your company’s goals as discussed above.
b. Consider the mix of base vs. compensation at risk. Good ‘Hunters’ typically expect that the majority of their compensation will come from commissions and bonuses. ‘Farmers’ are the opposite. This mix will drive the commission rate you will pay.
c. Consider accelerators. Accelerators typically are a multiple of commission rates and are paid after the achievement of the sales goal. They can be flat or incremental, e.g. 1.5X after 100% of goal and 2X after 125% of goal. Accelerators are used to make sure the sales rep is motivated to turn in all business and not ‘sand bag’ for the next year.
d. Consider caps. While compensation caps are typically de-motivators for sales people, they can be appropriate when large teams of people are needed to close the deal, e.g. multi-million dollar Federal procurements.
e. Consider kickers. You may want to assign an increased commission rate to a new product or service you plan to launch.
f. You can mix commission rates, e.g. 6% for existing products - 10% for new products.

4. Write, then read your Comp Plan. Is it clear to the sales reps what you want them to do? Have someone figure out how to ‘game’ the plan then fix the holes.

5. Finally, make sure your plan is competitive. Sales reps by nature are capitalists. They are easily seduced by the promise of more money from someone else; and, your good ones will be recruited by the competition. These are only a few things to think about. There are also other techniques such as MBOs (Management by Objective), perks, achievement clubs, and other elements. If you get it right, the whole company wins.

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No Kidding?
Is it True that “Everything that can be invented has been invented?”
By Bruce Hughes, Project Manager, Technology Commercialization Startech

"Everything that can be invented has been invented." Charles H. Duell, U.S. Commissioner of Patents, in 1899.

Rumor has it...
that a Patent Office official resigned and recommended that the Patent Office be closed because he thought that everything that could possibly be invented had already been invented!

While that statement makes good fun of predictions that do not come to pass, it is none the less just a myth. Researchers have found no evidence that any official or employee of the U.S. Patent Office had ever resigned because there was nothing left to invent. A clue to the origin of the myth may be found in Patent Office Commissioner Henry Ellsworth’s 1843 report to Congress. In it he states, "The advancement of the arts, from year to year, taxes our credulity and seems to presage the arrival of that period when human improvement must end." But Commissioner Ellsworth was simply using a bit of rhetorical flourish to emphasize the growing number of patents as presented in the rest of the report. He even outlined specific areas in which he expected patent activity to increase in the future.

Taken out of context, such remarks take on a life of their own and are perpetuated in publication after publication whose authors, rather than check facts, copy and quote each other. For example, recent publications have attributed the "everything that has been invented..." quote to a later commissioner, Charles H. Duell, who held that office in 1899. Unlike Ellsworth, who may have been merely misquoted, there is absolutely no basis to support Duell’s alleged statement. Just the opposite is true.

Duell’s 1899 report documents an increase of about 3,000 patents over the previous year, and nearly 60 times the number granted in 1837. Further, Duell quotes President McKinley’s annual message saying, "Our future progress and prosperity depend upon our ability to equal, if not surpass, other nations in the enlargement and advance of science, industry and commerce. To invention we must turn as one of the most powerful aids to the accomplishment of such a result." Duell adds, "May not our inventors hopefully look to the Fifty-sixth Congress for aid and effectual encouragement in improving the American patent system?" These are unlikely words of someone who thinks that everything has been invented.

References:
Jeffery, Dr. Eber. Journal of the Patent Office Society. July 1940
Sass, Samuel. "A Patently False Patent Myth." Skeptical Inquirer 13 (1989): 310-312.

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