AUGUST 23, 2002

FACTORY DAYS
By Lisa Bergson

Of Business Plans and Paper Prophets
Bootstrapping Tiger Optics was tough but doable. Producing far-sighted projections to satisfy investors and ourselves is much trickier


By Lisa Bergson
Lisa Bergson

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"Wait until after we've got the money," says Tom Mallon, our executive vice-president for sales and marketing, when I tell him I'm writing about writing our business plan.


Not so very long ago, any MBA worth his or her diploma graduated with a bankable business plan in hand. With but a modicum of venture capital, they were poised for a quick IPO and triple-digit growth in a billion-dollar market. That, and a convincing elevator pitch was all it took to garner millions of dollars -- and high-level management support to boot.

I attended business school well before the art of the business plan was part of the core curriculum and went on to spend the bulk of my years running an old industrial-technology company. Today, other than trying to finish my novel, I can think of no more challenging task.

FROM THE GROUND UP.  On Jan. 3, 2000, I began to draft a business plan for Tiger Optics, a spin-off from my core business that relied on a powerful and proprietary new laser-based technology. Sporadically, my tiny team and I have been working on the business plan ever since, kludging together an unwieldy, obstreperous 73 page opus that I'm too embarrassed to show anyone of means. Indeed, I've stopped returning phone calls from interested venture capitalists. I know what they want. They want to see the plan.

Trouble is, I've been too busy running the business to concoct a credible case for Tiger. No wonder the timeliest, most successful plans are written for startups: Those people have nothing better to do.

By contrast, we had to bootstrap ourselves, forging the first CRDS-based products on the market, generating a revenue stream, with a global pipeline of new business. Now, having proven the viability of our technology, as well as our ability to develop it, we're primed for investment. But, simply defining our prospective market has complex implications.

"A HARD SELL."  I want to parlay our first-to-market advantage into an array of applications, from medical diagnostics to environmental monitoring, big markets with great potential. In the short term, though, the markets we know best just happen to be MEECO-related.

"It's going to be a hard sell," I tell Tom after reviewing his projections. "It's almost a pure play in semiconductors." The semiconductor industry is in its longest, worst-ever decline. Still, it offers value-added applications that support our early-stage technology. And, through MEECO, we have ready access to end users, which accelerates our time to market.

Tom's face falls. He has developed a detailed, well-defined set of sales assumptions for Tiger's first few years. "But everyone says we need to stay focused and not head off in a lot of different directions," he reasons, filling the doorway to my cluttered office. "First, we'll go into semiconductors. Then, we'll branch into other applications."

FIVE-YEAR PLAN.  Tom is convinced investors out there are looking for companies with a relatively sure thing. Yet, even he succumbs to smoke and mirrors. In desperation, we've hired a consultant to help us with the business model, a savvy guy who insists we must project five years into a realm we can't possibly anticipate. "He said he's just going to extrapolate, and I said, 'Go ahead,'" Tom recounts.

"But, we'll be in a lot of new markets by then," I fret. "We need to do a lot more research to project that far."

"I know, but they have to put in something."

PRIDE AND PENURY.  It's here that the art starts to seem like so much artifice. I realize it's not simply inexperience, lack of time, or even lack of extensive market research that's bogging me down. Over the kitchen table, I read this column to my husband, who comments, "You seem offended, like it's a little distasteful. But you want the money. I hear two messages."

I know I sound peevish. Look, I like my independence. I'm proud that my team has been able to triumph over well-funded foes despite -- or maybe because of -- severely limited resources. And I find the whole notion of the "killer app" as absurd as the dot-com bubble, the telecom bubble, and now, the biotech bubble.

I also know that Tiger can't fulfill its true potential without adequate capital. As Don Epperson, a board member and dot-com survivor, advises: "Ask for less money initially to prove out the semiconductor market, but show them the overall market is huge." If you want to deal with other people's money, I guess you better play by their rules. Oops, time to get ready for my quick IPO!


Lisa Bergson is President and CEO of both MEECO and Tiger Optics. Before joining MEECO in 1983, Lisa Bergson worked as a business journalist at BusinessWeek and freelanced for many business publications. You can visit her companies' Web sites at www.meeco.com and www.tigeroptics.com, or contact her at lbergson@meeco.com
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