Why Internal Efforts to Spin-Out Often Fall Short
Skills & People - Spin-out/Licensing Team
- People re-assigned from defense business may lack requisite skills, market knowledge and contacts; people from commercial context may lack fluency and fit in defense
- Hard to create Venture Capital (VC) model of compensation within a public company in order to attract/retain the talent needed
- Ventures led by technologists rather than experienced entrepreneurs with needed marketing, selling, financial and other skills
Orientation & Focus - “Technology Push” rather than “Market Pull”
- Limited understanding of market “pain points” and unmet needs fueling “killer apps”
- Insufficient validation by customers
- Inadequate channel/marketing/distribution
- Emphasis on designing products, rather than building sustainable businesses
Investor Discipline - Inability and/or unwillingness to do objective triage early to avoid wasted investment
Cultural Issues - Frustrating interface with external partners, and lack of commercial relationships
- Difficulty embracing speed/agility and adapting to commercial negotiations and terms
Investment Horizon and Alignment - VC investment cycle (7-10 years) is longer than the attention span of most corporations
- Reward structure gives insufficient motivation to core businesses
