Entrepreneurship

Bio

Joseph G. Hadzima, Jr. is the current Chairman of the Board of Directors of the Global MIT Enterprise Forum. Joe practiced law for 17 years. He is a Managing Director of Main Street Partners LLC, a venture development and technology commercialization firm, and is President of IPVision, Inc., a Main Street portfolio company that provides intellectual property systems and services. He has been involved in various capacities in the founding of over 100 companies and has advised entrepreneurs, high-growth businesses and venture capitalists. He is also a past Director of the New England chapter of the National Association of Corporate Directors.

Joe teaches at MIT Sloan School of Management. He was a founding judge of the MIT $100K Entrepreneurship Competition. With the support of the MIT Entrepreneurship Center, he organizes and coordinates the Nuts and Bolts of Business Plans course and is a frequent speaker for the MIT Enterprise Forum’s Global Broadcast Series. He is the author of the popular Boston Business Journal column, “Starting Up”.

Interview

Forum Link: As the Chairman of the Board of Directors of the Global MIT Enterprise Forum, can you tell me about the role and function of MIT EF and the vision behind it?

Joe Hadzima: First, there is the historical perspective of development of the Enterprise Forum and then there is the issue of where we are trying to take it in the future. Historically, it evolved because of the need among the MIT Alums to get advice and help in starting and growing companies. They turned to MIT for some assistance in that. It became a sort of  self help organization at the beginning and then developed into a number of chapters, where like minded people got together to figure out how to run entrepreneurial companies. This is the historic base. It has now been about 30 years. The chapters have been involved in creating and building of the local entrepreneurial ecosystems. As a Forum they brought people together to discuss these things and to learn and to educate and to make things happen. We have come to call that the entrepreneurial ecosystem. So over the last 30 years we have developed 24 local area networks, local ecosystems and at the global level we are looking to see if we can create a wide area network. The challenge now is to bring the resources and capabilities of one ecosystem to bear on other ecosystems and to see whether we can help create new ecosystems, in the U.S. and around the world. In the next 25 years the vision is to create a globally connected ecosystem. Many people involved in the Enterprise Forum really passionately believe that entrepreneurship is an enabling and freedom creating aspiration. We see that with Muhammad Yunus and micro finance. When people were given an opportunity to build their own businesses, small as they might have been, that created real personal and political freedom.

Forum Link: How do you see MIT EF grow and stay relevant to the entrepreneurial community in the future?

Joe Hadzima: If the organizations are not delivering value, is there a reason for them to exist? This is one of the things we continue to look into with the Enterprise Forum. Are we continuing to create value? If so, then we need to consider how to do it better. There are some basic ingredients that you need to create an entrepreneurial ecosystem. You need role models. You need to know that people are doing entrepreneurial things. You need to have information on how to do it. And you need an environment in which people can come together in order to make it happen. I think that the Enterprise Forum does all of those things. When I started off in my business career, I went to the Cambridge chapter of the Enterprise Forum religiously, every month and I sat and I learned and I just soaked it up. And I began to realize that there were similar patterns. I saw people succeed and fail, and fail and get back up, so they were role models for me. And I had a forum in which I could interact with people that were doing things. And that really was how my entrepreneurial, on- the-ground education happened before I actually went out and started companies.

Forum Link: Is it important for entrepreneurs to learn from each other?

Joe Hadzima: Knowing it can be done. Knowing how to do it and being with people that have done it, is invaluable. You have to try to avoid the mistakes that are avoidable. Entrepreneurs have such a give back mentality. Almost without exception, every entrepreneur, if you can get them to be honest, will tell you that there were people that helped them. It doesn’t really happen in a vacuum.

Forum Link: Is risk absolutely necessary to accomplishing things?

Joe Hadzima: Entrepreneurs are not risk takers in a sense of foolhardy risks. You don’t learn from success nearly as much as you learn from failure. If you are afraid to fail, you will never reach your true potential.

Forum Link: Do you believe that being an entrepreneur is a pursuit of life-long learning?

Joe Hadzima: Absolutely. An entrepreneur tries to use resources over which he has no control to do something nobody has done before. So it has to be a life-long learning, but I should caveat all this when I speak. I speak more of the technological entrepreneurship. I don’t know what it takes to create a fast food franchise. The people that I deal with are doing things that have never been done technically or the business models that have never been tried before. Entrepreneurs I deal with are problem solvers. Many of the companies coming out of MIT are based on the solutions that were not available in the market and someone would say, “Well I’ll build one.” It goes to the MIT mind and hands approach.

Forum Link: You were a founding judge of the MIT Entrepreneurship $100k Competition. Can you tell me more about this initiative?

Joe Hadzima: There was a club on campus called the Entrepreneurship Club, primarily at the engineering school. There was a bunch of people hacking, as they called it, solutions to different problems. And they had this idea that you could start a company. They had no business training or skill. They managed to team up with a group at Sloan School, which was another student club, The Sloan New Ventures Association. They started to invite each other to talk about things, and someone came up with an idea that maybe a good way to do this was to have some sort of competition. It was totally student initiated. Students came in and said that they wanted to do a competition for a business plan. Someone suggested having a prize. One of the people said well, it costs about $10,000 to get a patent. We’ll call it a $10K competition. The early submissions read more like grant proposals. They didn’t look like business plans. I think it was the second year when someone used the term customer anywhere in the plan. So it came from very humble beginnings, but it began to build over time. Then David Morgenthaler of Morgenthaler Ventures was talking to some students and he really thought that it was an incredible idea. He and his wife put up a $30,000 gift to fund the prize money. It kept going from there. Then it became the $50K. What this is about is building tomorrow’s leading companies. So we really want to make this about how to make a company really successful. It is not a beauty contest. It is about how do we educate these people. How do we give them feedback, connect them with the right people. How do we make it happen.

Forum Link: Who is the MIT $100K Entrepreneurship Competition open to?

Joe Hadzima: There has to be at least one full time MIT student, just to make sure that it has an MIT base.

Forum Link: You teach the popular Nuts and Bolts of Business Plans course at the MIT Entrepreneurship Center. What, in your opinion, are the Nuts and Bolts of Business Plans that entrepreneurs should know about?

Joe Hadzima: This again came from students about 19 years ago. They came to me and asked, “Could you teach a course on how to start a company?” I never quite said yes, but one of them came and said, “We signed you up and it’s going to be on such and such a date and we basically dare you not to show up”. That was the beginning of what was called “The Nuts and Bolts of Business”, but as the $100K got going, the students realized that it would help them if they had a little more education on writing the business plan, so we morphed the course a bit into the business plan. Then we got a credit for it, but it is open to anybody. The basic thing that we drive home, maybe it’s because it’s a lot of technological entrepreneurs, is the importance of customers. Who is the customer? Why would they buy? You have just invented the telephone. Who’s your first customer? Why do they buy? How much would they pay? Behind that there is a lot of stuff. Can you identify them? Can you reach them? Can you give them a product that meets their needs, in a time frame and with the financing that all fit together? What you first build might not be what you ultimately build. What we continually come back to is who the customer is and what is the business model. And then you build everything else off of that.

Forum Link: You have spent many years advising venture capitalists and entrepreneurs on intellectual property issues. How critical is the understanding of IP to someone involved in starting a new venture, particularly in the technology sector?

Joe Hadzima: Having an appreciation that the Intellectual Property is important to a business is the key thing here. Certainly in biotech and the like. We know that the value of Pfizer stock goes down as the patents run out. We had a venture capital investment group and we were looking at early stage technologies at MIT and trying to figure out who would we want to invest in, both in time and money. Intellectual property was an important part of that, because at the end of the day you need something that is protectable. We found very little to help you get your hands around understanding these issues. You could go to a law firm and spend a lot of money and get an idea that it was OK to do what you were proposing, but it did not provide the business context. That’s where we began to develop the analytics and mapping that has since become the IPVision. What you find is that there is a lot of information in the Intellectual Property space that can help inform your business decisions. The problem is that it has not been accessible in any reasonable way. What a patent is, it’s a right to exclude others from using your invention. In order to get that you have to tell people what your invention is and how to actually do it. The idea is that in the process you increase the knowledge pool of mankind and in exchange for that contribution you get a right to keep the trespassers off your bit of it for a limited period of time. So in order to show that your idea is new, you have to show how is it different from what was there before. If you look at a patent it will cite prior patents and other prior art. In essence what you are saying is: “It is well known that so-and-so did this and one of the problems is this, and I have come up with this great idea on how to solve that problem”. Those citations are important, because if you don’t cite the prior art of which you are aware it’s grounds for invalidating the patent. It’s not random. There is a real meaning behind it. So when you start to plot all of those and visualize them on a map, it enables you to see who’s in the space. What are they doing. Which companies are involved. Which inventors. Where are people heading. And that can be very strategic. Now when you start to look at those aggregate decisions over hundreds of patents, you begin to see something like wow why is everyone citing this particular patent? That must be an important patent. When you do the research you begin to see who are your potential partners, competitors. Who might be the people that will acquire you. If you have an early stage technology there might be five or six things you can do with it. Wouldn’t it be better to do something in an area that was not heavily patented, that was going to intersect with a solution that a larger company was going to need in three years out. You might as well build something that will be of value to people who will want to buy it. So the IP due diligence works on many levels.

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