Member Bill Newell Speaks: Establish a Core Technology, Not Just a Single Offering

The Challenge:

In the situation at hand, a CEO was seeking insight into pursuing a partnership in order to bring a product to market. He was torn how -- or if -- to partner with a larger company that would complete development and handle commercialization, as well as whether to retain their own rights to participate jointly in the commercialization effort.

If you were in this situation, what would you do?

If I were in a similar position, I would focus on developing a technology platform – a core capability in order to create multiple different products, with each one benefitting from the inherent advantages of the proprietary technology. Think of it this way: if my company was a band, I could be a one-hit-wonder and put a great product out there. I could sell it for lots of money and retire early. But what about long-term value creation? What if my company was a band that releases entire albums, year after year? By investing in developing a core technology that is mine and mine alone, I can streamline the efficient creation of multiple types of products, avoid reinventing the wheel each time and create value at the center of my company’s efforts, not only in the product portfolio.

Perhaps my company has one product, but doesn’t have the capital to take it to market. If I establish a core technology to build upon, I can strategize on a product-by-product basis. For example, maybe going public is my company's ideal next step. I could strike a lucrative deal on the first product, which would bring in some capital, but I might lose the opportunity to excite public market investors about the core value of my company. If the first product is already effectively monetized, and there is no underlying technology platform, what upside value is there for investors in the IPO? With the right engine under the hood, I can even think about licensing the platform itself into other markets that don’t threaten my core business. A company can’t build everything in the world, but it may build a technology that could!