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From Startup to Scale-UpHow connecting startups with local manufacturers can help move new technologies from prototype to production468630012319000Katherine W. NazemiMIT Washington OfficeJuly 2016Contents TOC \o "1-3" Introduction PAGEREF _Toc332368949 \h 3Greentown – MassMEP Partnership PAGEREF _Toc332368950 \h 4Barriers to Collaboration PAGEREF _Toc332368951 \h 4The Program PAGEREF _Toc332368952 \h 6Survey PAGEREF _Toc332368953 \h 6“Office Hours” PAGEREF _Toc332368954 \h 6Workshops PAGEREF _Toc332368955 \h 7Outcomes PAGEREF _Toc332368956 \h 7Integration with Innovation Orchards PAGEREF _Toc332368957 \h 8Conclusion PAGEREF _Toc332368958 \h 9IntroductionIn an op-ed published last spring, President L. Rafael Reif identified a need for a systematic approach to help innovators “deliver their ideas to the world.” He called for accelerating a two-stage process: from idea to investment, and from investment to impact in a new model he called “Innovation Orchards.” Two models described in a prior MIT Washington Office paper — TechBridge and Cyclotron Road — illustrate possible ways to support the first stage: beginning with an idea and providing support for the development of a technology that has been sufficiently de-risked for further investment. Innovation orchards would occupy a similar niche, providing physical space, mentorship, technology and equipment, and bridge-funding for entrepreneurs to turn new science into workable products. However, as Reif’s op-ed noted, taking an idea to impact doesn’t end once a startup has received initial support. In fact, the process of moving from a working prototype to a developed product — one that’s ready for commercialization and production at scale — entails a whole new set of innovations. As startups proceed to the advanced prototype, demonstration, testing, and pilot production phases of their technology, they must solve engineering and production design problems, create an efficient production system, develop and apply new production models, and scale up production “to fit evolving market conditions.” There are “highly creative elements needed at the outset of production at scale,” requiring science and engineering at nearly every point; thus, moving from prototype to product can take years.For a number of sectors, including energy equipment and complex pharmaceuticals, a “close connection” between research, design, and production is also needed throughout this process.For many startups, this will entail working closely with small manufacturers, since in these sectors the production infrastructure “provides constant feedback” between the R&D and design phases. Given that, how can we ensure that new innovation orchards assist startups in successfully transforming their technologies into products, advancing to commercialization at scale, and truly delivering impact to the world? A deeper intersection with practical manufacturing capability appears important to this approach.Greentown – MassMEP PartnershipGreentown Labs is a cleantech startup incubator located in Somerville, adjacent to Cambridge, Massachusetts; MassMEP is the Massachusetts branch of the NIST-sponsored Manufacturing Extension Partnership program that operates in every state to bring optimal production processes and technologies to small U.S. manufacturers. In November 2014, these two groups partnered to launch a one-year pilot program called the Greentown Labs-MassMEP Manufacturing Initiative, aimed at linking startups with local manufacturing capabilities. The program has been developed and managed by Micaelah Morrill, a program director at Greentown Labs, and Peter Russo, the growth and innovation program director at MassMEP. Greentown Labs recognized that startups that have successfully received initial funding and produced a working prototype might still have difficulty becoming a commercial company if they are unable to move to production at scale. During their one-year pilot, members of Greentown Labs and MassMEP identified the existing barriers that prevent startups and manufacturers from working together and developed a program to systematically address those challenges. The Greentown Labs-MassMEP Manufacturing Initiative offers a framework for startups in the later stages of incubation or early stages of series-A funding to connect to a manufacturer and take their prototype to a production-ready design. Barriers to CollaborationA survey conducted by Greentown Labs revealed that startups and manufacturers seeking to connect faced communication and cultural barriers, as well as difficulties finding each other.Startups often are not familiar with local manufacturing capabilities, and may assume they will have to manufacture overseas. CEO of Blackburn Energy, Andrew Amigo, said that while he was trying to find people who could help prototype Blackburn’s renewable power generation system, he was told that he would not be able to manufacture in Massachusetts. “I started to think that Massachusetts manufacturing was in fact dead,” he said. Later, an event at Greentown Labs helped him realize this perception was a false one: he discovered “the breadth and depth of the manufacturing and prototyping capabilities” in Massachusetts.Even once they make contact, the two groups often approach each other from very different perspectives and cultures. If the startup is developing a new technology, it has typically been founded by university researchers (including scientists, grad students, or postdocs), who come from research benches but have little or no experience with actual manufacturing and are often not aware of manufacturers in their region. In contrast, small manufacturers often have deep experience with production processes and technologies but do not conduct R&D. Yet the two different groups are often able to help each other. For startups, access to practical manufacturing experience is crucial as they move toward production. For manufacturers, who often serve as suppliers in various industry sectors, working with startups could give them access to innovations that could scale their production. While small manufacturers seeking to work with startups tend to prefer making connections via word of mouth and face-to-face relationships, startups typically begin their searches online. These internet searches frequently direct startups to contract manufacturers based outside the U.S.; venture capital sources may also refer them to such contract manufacturers abroad. This often means they can’t work in close proximity to collaboratively resolve ongoing design problems, and they may also lose control of important aspects of their innovations.But even once in contact with manufacturers, startups need more than just the fulfillment of a contract. Unfamiliar with designs for manufacturing, startups are out of their depth: they may not know what their needs are, or what questions to ask. “Startups are in over our heads when it comes to interfacing with traditional manufacturers,” said a member of Silverside Detectors, a company that participated in the Initiative. Sarah Haig, CTO of Silverside Detectors, explained that the communication styles, timelines, and incentives often differ between startups and manufacturers. As a simple example highlighting cultural differences, she said, while many startups communicate using Slack or email, manufacturers expect to do business over the phone. Finally, many startups do not understand the needs of the manufacturer they might be trying to partner with. Startups do not recognize the level of overhead and cost that goes into development and communication to complete a prototype, and how this translates into a need for most established manufacturers to secure a longer production run in order for the manufacturer to make a profit. If a startup cannot help a manufacturer make a profit, they need to find other ways in which they can be a benefit to the manufacturer. According to Greentown Labs’ survey, many manufacturers begin working with startups because they are looking to gain exposure to new markets, or because many want to give back to their communities. The ProgramTo bridge these gaps, Greentown Labs and MassMEP developed a three-part program that educates startups and facilitates connections with local Massachusetts-based manufacturers. Broadly, the program comprised 1) a survey, 2) a series of “office hours” meetings, and 3) a set of workshops and face-to-face sessions in which startups received one-on-one advice and guidance for effective communication with manufacturers along with general design for manufacturing information.SurveyTwo initial surveys, one sent to startups and one sent to manufacturers helped Greentown determine each group’s understanding of and expectations for the other. Startups and manufacturers had to take the survey to gain entry into the Initiative. “Office Hours”Office hours were opened to Greentown Labs startups, along with other hardware startups across Boston and eastern Massachusetts and hosted by Peter Russo from MassMEP, along with other manufacturing experts and Greentown Labs staff. Startups would often come in with the goal of finding a manufacturer, but Russo would quickly determine that many were not actually ready to meet with anyone. They might not know what type of manufacturing capabilities they needed, or be unfamiliar with important processes, or their design would be flawed. In one example that Morrill described, a startup asked about remolding their design using an inexpensive material. “[The manufacturing expert] asked, ‘what’s the warranty on your product?’” Morrill recalled. “[The startup] said seven years, and he said, ‘these materials will corrode in five.’” The consultation, which took place through the program, potentially saved the startup from moving forward with a flawed design.In cases where startups were not yet ready to begin manufacturing, Russo would conduct an initial walkover of their plan, help alter or simplify the design, and provide feedback in a 30 to 40 minute session. Startups might ask for feedback on their bill of materials, subassembly, or more generally, for background on manufacturing processes. After incorporating the feedback, the startups would come back for a second, shorter meeting. Once they knew what their needs were and their design was ready, Russo and Morrill would help connect them to a manufacturer. WorkshopsTo educate startups about manufacturing processes, Greentown Labs hosted workshops and “lunch and learns,” which they opened to both Greentown startups and the broader Boston-area hardware startup community. These workshops brought manufacturers to Greentown for half-day informational panels, after which startups were able to speak one-on-one with the manufacturing representatives and start to build relationships. Some workshops focused on manufacturing processes, such as extrusion and injection molding, or on types of materials. Andrew Whitehead, a mechanical engineer at NBD Nano, learned about elastomers at one such workshop. “I definitely appreciate knowledge like this coming in from experts. Most of an engineer’s education… details building with steel and concrete.”Greentown’s involvement formally ended after the first connection was made; the process of negotiating and signing a contract was left entirely to the manufacturer and the startup themselves. Yet Morrill and Russo continued to provide mentorship and advice to both startups and manufacturers as they progressed in their relationships. OutcomesIn all, 32 startups were interested in receiving assistance from the program and 83 manufacturers were interested in working with startups. The program facilitated at least 140 connections between startups and manufacturers and resulted in 19 signed contracts.Working with local manufacturers meant that the many innovations necessary during the process of design for production happened in close consultation with the startups. Nick Mashburn, CTO of Tank Utility, said that the biggest benefit of working with local manufacturer Lightspeed was its proximity, which allowed the two companies to “work through product challenges together.”Greentown received a large amount of interest from both startups and manufacturers: of the manufacturers surveyed, about 75 percent had an interest in working with startups. Manufacturers saw the potential to generate long-term revenue but had a desire to gain exposure to new markets and technologies. Others saw working with startups as an opportunity to enhance their internal processes and capabilities, as well as to bring an exciting and entrepreneurial spirit to their employees. Beyond the number of contracts signed, Russo said the program laid extensive groundwork for future collaboration between Greentown’s startups and local manufacturers. Both entities, following the completion of the pilot project, continue to help in making these connections. Integration with Innovation OrchardsThe companies working at the Innovation Orchard – either the primary node in Kendall Square or one of the secondary nodes – will be relatively far along in the process of developing their technologies, and could benefit from a similar framework for facilitating connections with manufacturers. A startup refining a prototype would benefit from the practical design knowledge of a local manufacturer; a company undertaking initial pilot production would be spared from setting up in-house manufacturing capabilities, bypassing risk and cost. Thus, integration of the Greentown/MassMEP model with the Innovation Orchards model could help startups advance their technologies to production.To get companies out of Innovation Orchards and into the world to deliver impact, Orchards should serve as a clearinghouse for connecting companies to federal and state resources. Additionally, they should offer support to make startups aware of what they need to learn as they scale up – from how to package and ship products, to hiring and labor laws, to writing warranties and performance guarantees. Rather than presenting information in a website or a database, Innovation Orchards should learn from the people-centric approach that was successful for Greentown Labs and MassMEP and connect startups to people who can help them. ConclusionIn summary, startups that attempt to scale-up face a number of hurdles when moving from prototype to production, including a series of new design challenges that entail a host of innovations. In addition, when looking for a manufacturer, startups may be redirected overseas, or face significant communication and cultural barriers. To bridge these gaps, Greentown Labs and MassMEP take a highly people-centered approach, building relationships and assisting in knowledge-transfer, to help startups make connections and learn what they need to know to successfully advance their prototypes to production. The initial success of this model indicates that a similar approach to building connections between small manufacturers and startups in MIT’s Innovation Orchards presents a promising way to help startups scale up their technologies and deliver impact. ................
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