Entrepreneur’s Diary

I was getting pretty close to starting my fish business; I was concluding some final negotiations to secure the capital I needed to implement the business plan strategy (I needed $500,000). As you get involved in this entrepreneurship arena, you’ll quickly discover that there is a lot of parallel processing going on. You will need to juggle several activities concurrently in order to pull this business launch off successfully. My situation was that I knew I was going to need a general manager (GM) about the same day I broke ground on the fish production building. So, about three months before I thought I needed my GM, I initiated a concerted effort to find a competent GM, who would be my first paid employee. I spread the word through my contact list and a national online site for aquaculture. I also received a call from Dr. Tom Fields, a colleague at a private fish farm near Saratoga Springs, New York, with whom we (Cornell University) had done business with over the years.

Entrepreneur’s Diary

When I was trying to start my fish business, I had a very difficult time trying to raise the capital to launch the business; I needed about $500,000. The central idea of the business was to raise tilapia (no one even knew what a tilapia was back then) using indoor recirculating aquaculture system (RAS) technology, which was far removed from a tried-and-tested technology at that time. The problem was that just about every investment that had been made into starting fish farms had failed miserably. Investors often just laughed at you when you tried to initiate a conversation about investing in aquaculture. It even created a new term, “aqua-shyster.” It really helps to convince a potential investor of your business’s viability if you can take him or her to a working prototype of what you are trying to implement full scale. I could take investors to my research operation at Cornell University and show them a single tank setup, but I could not show them a working farm or even refer them to any existing farms in the United States that you could consider economically successful. My somewhat standard response became “If it were easy, everyone would be doing it already! “ Being a first mover has the often-dreaded result of being a failure, but the excitement of a huge upside! Eventually, I found the necessary investors, but it was not easy. I guess I did convince some of them.

Entrepreneur’s Diary

I remain grateful for some good early advice. I had several inventions that had been taken to financial success by others. The benefactors sometimes said thank you. This made me all the more eager to take one of my own ideas to the real world. I had convinced myself that financial success and glory eagerly awaited me.

About fifteen years ago, I launched my first major entrepreneurial effort that revolved around proprietary technology used to produce seafood indoors in an environmentally responsible manner at a competitive price. The market for such a technology had to be huge I kept reminding myself, because seafood was (and still is) a significant contributor to the U.S. trade deficit.

Entrepreneur’s Diary

Planning for my new fish farm start-up was going pretty well. After all, I had twenty years of experience at doing this. I thought I had everything under control. One of the major rules with starting a fish farm was that the backup generator be in place before you stock fish on the farm. This is because in the event of a complete power loss, you have about fifteen minutes to get the pumps working again or you’ll lose all your fish. I knew this. We were having one of our preconstruction meetings the week before we were breaking ground. Someone asked me about the backup generator. I said, “Don’t worry, these are pretty much stock items and we can get them on short notice.” Wrong! When I called our intended supplier, he informed me that these units were all custom built and the lead time was ten weeks. Fortunately for me, we wouldn’t be stocking fish for at least twelve weeks. I immediately ordered the generator. What’s the point? I should have constructed a network showing the interdependencies of all activities and events that would lead up to a successful conclusion of the project. If I had done this, I wouldn’t have had the shock I encountered. In my case, I was fortunately able to recover. Don’t rely on blind luck. Learn the basics of the two types of networks: the Critical Path Method (CPM) and PERT (Performance Evaluation Review Technique) charts. You won’t be sorry or be left up the proverbial creek without a paddle.

Project Scheduling

In project implementation the major concerns are: time, cost, and scope. In the project implementation phase, time is money. Longer completion times generally lead to higher costs. Mistakes and oversights are unnecessary costs; plus, it takes more time to correct them, compounding the situation. Not properly identifying the scope, or end objectives of the project will also impact cost and your ability to schedule events accurately in a sequential manner. Proper contingency planning can help avoid these unnecessary cost and schedule impacts. Of course, the costs avoided by careful and detailed planning cannot be quantified. Cost avoidance is a nebulous concept. Did you really save $5,000 in medical expenses by getting a flu shot? You’ll never know. You do know that the flu shot cost $20, however.

Entrepreneur’s Diary

I think that I have developed a disruptive technology for producing fish in an indoor water-recirculation system. My design dramatically reduces the costs and complexity associated with the water-reconditioning equipment used in indoor fish systems. My design uses less space, is more environmentally compatible, is more reliable, and uses much less energy than other systems that most people are using for this purpose. As far as I can tell, there is nothing that our system doesn’t do better than any other system anybody is already using. What I don’t have is a practical means of demonstrating this technology. It is tough to be the groundbreaker. How then can I proceed? The producers that are using the technology that I plan to replace aren’t willing to convert their system to my system, because it takes them out of production for a considerable time, and to them, my system is unproven and therefore introduces a risk that they don’t have now.

So how do I demonstrate my technology? I have to become my own customer. I am going to have to build a fish farm that features my technology and its benefits. Where do I begin? I have to design a large-scale facility capable of making a profit, then build it, and then operate it. Now, I have to ask myself, “What business am I in? The system technology business or the fish business?” Sometimes it is hard to tell the difference. The truth is that I was about to be in both businesses. My immediate focus, however, was on the fish business. That is where the long-term, continual profits lie and where I pitched my investment proposal to investors. Apparently, I had just recognized my opportunity. Recognizing opportunity, preferably centered around some type of disruptive technology, is what Chapter 2 is all about. But what’s a disruptive technology? I’ll try to answer that question for you in this chapter and how it applies to a start-up.