Evolutions have been good for Nanomechanics, Inc.
Many start-up companies go through a variety of evolutions in their lives, either surviving or not. In the case of Oak Ridge-based Nanomechanics, Inc., the changes have proven to be “just what the doctor ordered” as it is operating today on all cylinders.
Founded as Nano Instruments in 1983 by Warren Oliver and John Pethica, the company was acquired in 1998 by MTS Systems Corporation and again in 2008 by Agilent Technologies of Santa Clara, CA.
Yet, through all of these changes including a painful reset in 2009, the individuals who were part of Nano Instruments and now are a part of the smaller Nanomechanics have remained true to their passion of developing technologies focused on nano-scale mechanical testing.
Three years after the restart, all indications are that Nanomechanics is in a much stronger position. The workforce has almost doubled, and four of the five added were previous employees of Nano Instruments. Innovation and short cycle times are key areas of emphasis which are much easier to unleash in a smaller company.
In a recent interview with teknovation.biz, John Swindeman, the company’s Chief Executive Officer (CEO), described the positive developments that have occurred since the 2008 acquisition when things did not go as initially planned.
He said that an expected infusion of new capital did not occur, necessitating a “big reset” with total employment dropping from 45 employees to five that remained with Agilent and seven who helped form Nanomechanics.
“Companies like us are stuck in a nether world between VCs and angels and other investors,” Swindeman said. “Scientific test instrument companies with a $50 million potential are not exciting to VCs.”
Nanomechanics pursuit of investment dollars was also adversely impacted by the recession, so the founders and management team decided to finance the newly created company with their own capital. That reality was not necessarily all bad.
“We were able to reset but from an advantageous position,” Swindeman said. “Our corporate overhead got wiped away” while many of the customers remained.
Swindeman said that the last few years provided “a huge incentive for people to have incredible ideas and chase them.” He adds that “it’s about products, product development and turning innovations into revenue streams.”
Now, the Nanomechanics executive team is having to manage many, many opportunities.
“Everyone is screaming for resources” to productize their ideas, Swindeman said. “We have more ideas than we can handle,” adding that the company needs to avoid stifling innovation while making wise choices about those to pursue.
In trying to make the right decisions, Swindeman says that he is guided by a statement that he heard from Knoxville businessman Randy Boyd. “It’s ok to fail, but fail fast and cheap,” he recalls Boyd saying.
In its latest incarnation, Nanomechanics has grown organically. To keep the innovation and product development pipelines robust, Swindeman is considering a strategy that would deviate from this traditional approach. Up to now, founder Warren Oliver and Vice President Kermit Parks have been integral to the innovation-to-product team.
You can’t just add another person to an existing team,” he says. “You have to create a new functional team.” Yet, Swindeman worries that such a move would “be a slap in the face of our culture,” an admonition that he recalls from the Jim Collins book Good to Great.
Swindeman has been with Nanomechanics and its earlier iterations for 20 years. When he became CEO, he thought it was a two- to three-year role to build value in the company and sell it. Those ideas have been modified, and Swindeman now paraphrases the title of another Collins book to describe his role. For Nanomechanics, it’s to “build it to last.”
For those who are similarly passionate about their company, Swindeman offers a few lessons learned.
“Pay strict and careful attention to any legal engagement you enter,” he says. “Be aware of the impact (of agreements today) on future activities and have an exit strategy (from the agreement).”
He reminds those going into business with friends and colleagues to be mindful of the organizational structure and equity arrangements. “It’s business, not just friendship,” Swindeman says.
“You need to have a commonality of vision among key decision makers,” he adds while also saying that “differences of opinion are good.”
Finally, he says that any start-up needs to be especially careful about those whom it selects for support services.