By guest authors Irina Patterson and Candice Arnold
Irina: How long can entrepreneurs stay?
Mark: Entrepreneurs can stay in our incubator no more than four years. We will look at extenuating circumstances and possibly extend that for another year at most. Most of our better clients graduate sooner than that.
Irina: You said you use a lot of volunteer experts. What else do you use to help your clients?
Mark: Well, again, it’s about a system of referrals. We don’t provide legal assistance. We don’t provide CPA assistance. It is really about the entrepreneurs learning to garner resources and make arrangements for themselves.
We make arrangements for them to get great advisors. Essentially, our mentors are an in-house advisory board. It’s up to the entrepreneurs to pay for the other professional resources that they need.
Irina: What are your metrics of success?
Mark: Number one is job creation. Again, our model is economic development. As a government-owned institution, we have job creation as the number one metric.
We also look at investment dollars that our graduates receive, although that is very difficult to track for our alums. We have been tracking the monies received while they are in the incubator.
We look at revenues. We want to see that they are growing. Those are our major ones. But ultimately, you are known by your graduates and when our graduates are referring clients, that is a good enough metric for me.
Irina: Can you talk about some of your successful graduates?
Mark: Sure. Some are known in the Los Angeles area. Most of our clients, because they do business-to-business, are not well known throughout the United States.
We have a company, for example – one of our alums – is a company called Arecont Vision. They create and manufacture high-definition surveillance cameras.
They started as two gentlemen, both had PhDs and started in a very small office, squeezed in, real cozy and then grew from that very small office to –this is five years ago now – to they now have 130 people and revenues are over $50 million a year.
We have another company called Spectra Sensors, which makes an airplane sensors, something we’d never heard of. Their revenues are probably around $70 million.
Some of my favorite companies have not taken any outside capital. In fact, Arecont has not taken outside capital.
Another one of our more retail companies that people in Los Angeles would know, although they are moving across United States, is a company called Goldstar.com. They are now the largest seller of discounted tickets to live events in the United States.
Three men in an office started here and now employ well over 50 people and are known throughout Los Angeles for great deals on tickets to live events.
We’ve had other interesting medical device companies, some recent companies that are just spinning out as well. Another one of my favorites is a company called CRAIC Technologies and they make a micro photospectrometer.
Basically, it is a microscope with a computer attached, and it’s used in forensic sciences. [By using it], you don’t have to destroy a sample in order to test what it is. They have great traction in selling to the FBI, the Secret Service and selling internationally as well. And they also grew organically.
Irina: Would you give more details on how these companies were able to grow without outside funding?
Mark: There are great lessons in a lot of that. Each one has a slightly different story. To put it together, Arecont Vision was one [where they] just focused on where they were going. They knew exactly what they wanted to do, exactly what they were doing and just went out and started selling.
It was just through hard work, perseverance and experience in the industry, just really knowing the industry.
CRAIC Technologies had a beautiful business model. It is not just about selling the micro photospectrometer, it is also about the other revenue streams that you can extract from that. So, you could sell the machine; you could sell the warranty to calibrate the machine. Every three years, the machine needs to be recalibrated.
You sell the training on the machine and [people] have to be retrained every two years. You sell the samples for the machine plus the new samples that come out. It’s a wonderful business model to have multiple revenue streams.