Is a new technology a “Business”?
Often I am approached by an entrepreneur with a great new technology who wants to get funding to build a great business and take the company public or sell for billions of dollars or…well you get the idea. Each time this happens I ask, “Is this a business or a technology?” Most of the times, it is just a technology, albeit a great one. In one case a would be entrepreneur sent me a completed patent application and wanted to sell this wonderful business for millions of dollars. So what is the difference?A great technology is a business enabler or enhancer. When a plan comes to you with a great technology that you can use to build a great business two things still are missing. First the management team to take the technology and turn it into a great business. The second thing missing is the funds needed to launch the business. Let me tell you it is a long way from technology to business.
Personally I like investing in and building businesses not building technologies. I like the idea of having a breakthrough technology that enables a business. I like businesses that use proven technologies in game changing ways even better. I find that most investors like to bet on teams and businesses more than technologies.
The net is this: A great technology is just that a technology. It does not mean it isn’t a good investment but it is not a business. Great technologies get values lower than great businesses. Entrepreneurs need to recognize this and determine what they want to do and how they want to do it. Usually someone that invents a great technology does not have the skills necessary to build a great technology into a great business. They should either sell their technology or work hard to attract the people necessary to take it and build a business out of it. I used to think that there were plenty of business people and a shortage of technologists. Today I am not too sure. What do you think?