TIFFANY HAUGEN : Jump-Starting New Ventures : UCI Program Aims to Help High-Tech Entrepreneurs
In September, the Graduate School of Management at UC Irvine launched an unusual program designed to help the county’s budding entrepreneurs. The idea of the program is to bring together entrepreneurs, investors and academicians who are familiar with new developments in science, technology and commerce.
The Program in Innovation and New Ventures so far has attracted 25 members, who pay $500 to $1,000 to look into starting a business or jump-starting one that is floundering. Ten sponsors, generally professionals who offer services to businesses, paid $10,000 each to help start the program, and 10 others have paid $2,500 each.
Tiffany Haugen, program director, had hoped for 30 members during the first year. She believes some people are watching and waiting to see whether the program is working.
Haugen hopes to make the path to starting a business easier to follow. Her opinions are informed by experience: She started her first business, a photography service, while she was in college, and paid her way through law school. She has helped run a software development company, a financial consulting firm and an international money management business.
A native of Wisconsin who now lives in Orange, Haugen teaches courses in new business development at UCI. She has also taught business law and development at the University of Wisconsin, the University of Illinois and Arizona State University.
She said the UC Irvine project is among the more interesting things she has done. “I’m always learning about new technologies and what’s going on in the world,” she said. “Secondly, I’m helping people succeed.”
The Times first spoke with Haugen almost two years ago, when she was unpacking books for the shelves of her office at the university. Since then, she has researched university programs across the country that are designed to encourage innovation and borrowed from them to create the center at UC Irvine.
She spoke recently about her program with free-lance writer Anne Michaud.
Q. What is a popular venture in Orange County now?
AThere are certain areas that are hotter than others. Two of them are in the medical device industry and in computer-oriented ventures. Less so in biotechnology. We would like to help synergize biotechnology here in the county.
Q. Why biotechnology?
A. It’s going to be a very important area for the future, and we need a base of it here. If we have a good enough base, we will be able to attract other people in that area. It’s been shown that when you have a threshold number of a type of firm and a type of researcher in a geographic location, you attract more because they’re learning from one another.
Q. When you say “we” would like to encourage biotechnology, who do you mean?
A. It’s myself, the program’s sponsors and other departments in the university. It’s a vision shared by a number of people.
Q. What types of businesses are you working with?
A. We’re designed to work with companies from the very start-up stages to those that are already in business and growing. For those who are just starting, we have a “Square One” seminar series. We’ve already offered some and will complete the development of those courses this spring. Then we have seminars, called the Developing Companies series, that are directed at the companies in business. Those seminars are directed at very particular industries or a particular topic. We had one on creative financing, on getting into global markets, on developing a medical device company.
Q. Is there more interest from people who want to start new businesses or from people who are already running a business?
A. It runs the gamut. We have a couple of businesses that have been in business 10 years or more, and they’re looking for new markets. Some have just come in with inventions and ideas. The program is designed to be an array of services depending on what stage you’re in. For example, some companies that have been in business a while really have to go back to square one and determine what their market is and who their competitors are. It’s a very common flaw we find.
Q. You have a newspaper article pinned up outside your office that says, “Venture capital drought hits Orange County firms.” Is that affecting your program?
A. It’s not affecting the program per se. The program is designed to help develop businesses, and there are a significant number of businesses that don’t need venture capital financing or can be grown from within. There are a lot of different ways of doing financing for new companies right now, including growing from within, joint ventures, corporate partnering, grants and things like that.
Q. Has the downturn in the economy hurt your program?
A. I really don’t think so. In fact, in some ways the economic downturn helps. A lot of people felt they were very secure in their jobs. Now, they have found that their jobs weren’t so secure, and they’d just as soon create their own jobs (by starting a company).
Q. So they’re turning to you more?
A. Yes, in two ways. Some people have thought about starting their own venture, maybe making a product that their company doesn’t want to make. When they feel insecure, they feel it’s time to jump and start the business. The others are managers who end up losing their jobs and are looking for consulting in the interim or for jobs within start-up businesses.
Q. Your program is designed to be self-supporting, isn’t it?
A. Yes. At this point, it’s still getting some resources from the university. We have a timetable of three years to be totally self-supporting. In a way, this is a start-up like any other business. As a result, there are the organizational costs, structural costs, equipment, people, training, brochures. But I don’t think we’ll need three years. We’re hoping it will be within the next year that the program will be self-supporting.
Q. Have you run into any obstacles?
A. We’re still taking out the chinks and the bugs and doing the refinement. But we pretty much have met our goals for the first year.
One of the more difficult tasks has been finding the people we want to come in as members. So far, we have been finding them, but it’s tricky. How do you find people who are about to start a business? That person who’s maybe in middle management who is, let’s say, between 35 and 45 years old and who’s figured out enough about a technology and has enough experience to start a business. How do you wave your arms and say, “We’re here to give it a test drive if nothing else?” Sometimes it’s very difficult ferreting them out.
It’s been no problem to target people who might service them, such as accountants or attorneys or venture capitalists.
Q. What methods have you used to find entrepreneurs?
A. We’ve done selected mailings, sent out brochures to public service agencies and groups that might be interested. We’ve gone to conferences. The other thing is that the program is not just for any entrepreneur. It’s designed for people who are looking at high-growth businesses, which is a little different from a person who does not want to work for an organization and simply wants to substitute their income (from an employer) by doing something out of their home. We call that a lifestyle venture. It’s a very different vision. We’re looking at growing a $1-million or multimillion-dollar venture within five years.
Q. Why that focus?
A. There are a couple of reasons. One, there really are a lot of services for people doing lifestyle ventures already in existence in the county. There are a lot of courses on how to start your own business, and there are small-business assistance centers to help out with that.
A second reason is that, from an academic point of view, the dynamics of a high-growth venture are significantly different from a lifestyle venture. When you’re growing a venture, you have a lot to handle, including a lot more people. There’s an evolutionary process coming about now, studies are showing that 90% of all new jobs and all new innovation is coming out of groups of less than 20. That is different from creating a gift basket in your basement.
And, thirdly, we’re interested in the development of the technologies that are being discovered in basic research; in other words, the various things that are going on at the university. We have selected the market niche that most properly reflects what the university is doing.
Q. Is Orange County a particularly good place to do this?
A. It is one of the best places in the United States to do it. I did research on business incubators about three years ago, and in the process, I evaluated the demographics and businesses across the United States. Ten areas were selected where you could grow businesses. This area of the country was one of the fastest for growing small-sized entrepreneurial businesses.
A second element you would need to make something work is access to capital, and we obviously have a very wealthy community here. In terms of the geographic location, we are on the Pacific Rim, which makes it very good. And we have a young university with a lot of land around it and a can-do type of attitude.
Q. Will Orange County be globally competitive?
A. If we’re not, we’re down the tubes. People have to think global. We really have to focus on our strengths. And our strengths are in developing technologies and being innovative. Other countries can compete on the basis of labor costs. And we all know that Japan competes by producing quality products more efficiently. But no one can compete with us yet in terms of inventing new things and starting new technologies. And that’s where we need to focus to be globally competitive. Even if it’s made somewhere else, let’s invent it here. We’ll keep the ideas here; we’ll keep the machinery elsewhere.
Orange County is particularly well-suited to be globally competitive because of its cultural diversity.
Q. What makes someone successful starting a business?
A. There are two elements that I think are almost critical. One of them is persistence. You run into a lot of obstacles, and the person who is likely to be successful keeps working at it and trying to figure out how to overcome those obstacles.
A second quality is that the person can listen, learn and take in a lot of information. The person doesn’t have a mind-set that says, “This is the way I want the product; this is the way I want the organization; this is how it’s going to be done.” They will more likely say, “This is what I think the product should be, but what do you think? What does my market think?” You don’t have to be the brightest person in the world. You don’t have to have a proprietary technology. You don’t have to have lots of degrees. Those things are secondary.
