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This week we got the chance to go visit Joe Matteo at his home in Walland, TN. He and his wife live in an amazing log cabin style home that sits on top of a hill. The glass wall in their living room frames out miles and miles of beautiful east Tennessee mountains. Joe spent his early career working on Defense Robotics but decided soon that he wanted to learn more about being an entrepreneur. While living in San Fransisco he was recruited by a Knoxville company called CTI to work on cyclotrons. To jump ahead in time, CTI is one of Knoxville's great success stories. They advanced medical imaging technology using PET scanners substantially and eventually ended up selling half the company for $1 Billion. Back to the story: Joe decided to take the opportunity because CTI was founded and run by a group of entrepreneurial thinking men. In the early days CTI primarily made products for researchers in radioactive drugs and medical imaging fields. The company was dedicated to interaction with customers and trying to understand their needs. They also relied on outside collaboration with larger companies or national laboratories to utilize facilities and resources without high fixed costs. Joe decided to step out on his own in 1994, that year he founded Matteo Automation & Robotics. He won two SBIR grants and was awarded two patents for the work he did in rapid prototyping with his first company. A short time later one of the founders of CTI decided to retire and asked Joe to come take over his position in the company. After some thought Joe agreed and put his company on the back burner. During his time as Division Director at CTI he gained a lot of skills which included rapid manufacturing, building facilities, executing contracts, sales and marketing, & business development. Joe was asked to head up the LA TechCenter, a research lab started by CTI to develop new technologies. Two new microfluidics technologies came out of that venture one of which CTI decided to pursue and the other of which Joe asked to take out and pursue on his own. The company that Joe started around this microfluidics technology was called NanoTek and they focused on glass based microchemistry. Over a period of 4 years Joe and his team at NanoTek were on track to launch their technology into the drug delivery market in the clinical world, for this they needed a distribution partner. The plan was to continue to develop the technology however a window of opportunity came when Advion a mass spec company offered to buy NanoTek. Joe and his partners decided to sell in Aug 2008. Joe moved to Ithica NY where Advion is headquartered to help transition the company. His main observation during this time was that innovation slowed substantially because they no longer had small business speed. The company also lost eligibility to receive more SBIR grants which reduced funding to R&D. Joe has since moved back home and started another business called MicroTypes.
This past Monday night my classmates and I visited Chuck Witkowski at his company Protein Discovery on Gay St. Chuck is a young guy, 33, who started his company fresh out of graduate school in 2004. His initial funding and projects were based on government SBIR grants (Small Business Innovation Research). If you have never heard of SBIR grants you should look into it! Its an amazing program that just hands out free money to small businesses!!! Anyway, Protein Discovery is a life science tools company that makes instruments for scientific research, specifically Chuck's company makes tools to prepare samples for protein analysis. Protein analysis can be used to test for cancer, drugs, drug targets, things like that. Their main customers are academic researchers at universities and national labs as well as some industry researchers at bio tech and pharmaceutical companies.
Chuck's story seemed to really be all about determination and perseverance. During his last 6 months of graduate school he wrote 24 SBIR proposals to try and get funding to start his company. He was granted 2 of them and began work with another recent graduate and a researcher from ORNL to develop the technology he had licensed from the lab. After a while it became apparent that the technology just was not going to work like they had hoped so Chuck returned it to the lab and started from scratch trying to develop something new that would meet the market need they had identified. He was able to get a few more SBIR grants during that time. The company was struggling financially when they finally landed a venture capital deal out of Memphis. The same week that protein discovery finalized a deal with the venture capitalist firm Chucks partner decided to take a more stable job. Chuck thought for sure that the VC firm would back out of the deal but they didnt and he was able to continue work to develop his product. Chuck said the key to Protein Discoveries success was his ability to find and involve people who were smarter and experienced than he was. His management team consists of seasoned entrepreneurs who have grown similar companies. Protein Discoveries first product was called the passport system it was a machine that prepared samples for protein analysis using disposable cartridges. The price point of the product was high at around $50,000. The product did not take hold in the market place like Protein Discoveries Management had hoped and again the company was in trouble financially. Luckily the scientists at Protein Discovery had been working in the back room to develop a smaller and more affordable system. This machine is called the Gelfree. The new system costs around $15,000 and also has disposable cartridges. The business model for this product is similar to the famous HP printer model. The company makes very little on the initial purchase of the machine but receives recurring revenue from the continuous purchase of the sample cartridges. The new product was only recently released but seems to be having much more success in the marketplace. Protein Discovery has also recently been in conversations with a large company about potential partnership or acquisition.
