Starting from scratch

Mehdi Yazdanpanah describes how he turned his PhD research into a successful small business, despite starting off with just $500 in his bank account.

Mehdi Yazdanpanah

Some people decide to do a PhD because they think it will help them get a job. I thought so too, and in a way, I was right. My PhD did indeed lead me to my current job but, more importantly, it gave me the opportunity to become an entrepreneur and create jobs for other people.

I am originally from Iran and I earned my undergraduate degree in applied physics at Tehran's Sharif University of Technology, followed by a Master's degree from Shahid Beheshti University in the same city. Then I decided to come to the US to get my PhD, and I chose the University of Louisville (UofL) in Kentucky thanks to Robert W Cohn, who offered me a research assistantship and became my thesis adviser in the electrical engineering department.

At the start of my PhD, I often asked myself whether I wanted to become a professor or a researcher in a large established company such as IBM or Intel. I was particularly unsure whether switching between physics and electrical engineering would help or hurt my chances of finding a job in academia. I still do not know how my career would have worked out if I had not decided to found my own firm, NaugaNeedles.

An accidental discovery
My research project at UofL involved working on direct patterning of liquid metals, such as gallium, using atomic force microscopy (AFM). One day in 2004 I found by accident that gallium interacts with metal films, such as gold and silver, at room temperature in a way that produces interesting self-assembled nanostructures. For example, when a molten gallium droplet was placed on a silver film, I observed very long needle-like structures form immediately inside the gallium droplet in ambient conditions.

After talking to my adviser, we decided it might be possible to grow these nanoneedles selectively at the end of AFM probes. Our idea was to coat AFM probes with silver film, move them deep into a small gallium droplet, and then pull away from the droplet to grow freestanding nanoneedles. I prepared 15 probes coated with silver film and tried to grow needles on them. After investigating the finished samples using a scanning-electron microscope, I found that only one of them had worked. Still, the fact that I had reproduced the effect was promising, so when I showed the result to Cohn, he gave me two thumbs up.

At the same time, I began thinking about the commercial potential of the technology, especially for fabrication of specialized AFM probes. Currently, most AFM probes have a conical silicon tip, but although these probes are cheap (just $10–20 each), they do not last very long – after a few scans they become dull and useless. Another problem with commercial silicon probes is that they are made from pure intrinsic silicon and therefore do not conduct unless coated by the user. In addition, their conical tips cannot image deep micro- and nano-structures. A conical AFM probe with a conductive nanoneedle grown at its tip would, in contrast, be electrically conductive, capable of imaging deep trenches and longer-lasting than conventional probes. Finally, the simple geometry of these probes would make them useful for quantitative force microscopy measurements.

Considering all these advantages, I thought that my devices could make a successful business. But a few hours later, reality began to set in. How could I manufacture such a product? I was living in a foreign country on a student visa. I had $500 in my bank account. I knew that starting a business costs a lot of money, and I did not have much knowledge or experience of the business world. All of these things kept me from taking immediate action on my idea. Nonetheless, between 2004 and 2006, I continued working on the technology and its applications, and they ended up forming the main part of my PhD dissertation.

When I graduated in July 2006, my wife was still a PhD student at UofL, so I started working as a postdoc there in order to stay in the area until she finished her degree. I looked for opportunities outside academia, too, but I soon realized that my chances of finding a job in the Louisville region as a PhD graduate in nanotechnology were close to zero. On the positive side, the lack of job opportunities at someone else's company encouraged me to start my own. I told myself, I got a PhD not to get a job, but to create jobs, and I signed up for a day-long business boot camp at UofL to help me get started.

Learning the ropes
At the boot camp, I learned about several funding opportunities, including one programme called Small Business Innovation Research (SBIR) that gives US government grants to small firms, and another matching fund initiative sponsored by the state of Kentucky. I also realized that there are angel investors who invest money in start-ups and various sources of venture-capital funding.

All of this made me realize that having $500 in savings was not going to be a problem, as long as I had a promising technology. That is when I took my first step towards establishing a company: I paid a $45 fee to register NaugaNeedles LLC with Kentucky's secretary of state. So far, so good, I thought; I had a company now, and it only cost me 45 bucks! My next step was to ask my PhD adviser if he would be interested in joining NaugaNeedles as the first member of its board of advisers. He accepted, and so did a few others, including the president of Zyvex Labs, an established nanotechnology firm based in Texas.

Now I had a company and a board of advisers. What next? The immediate answer, I realized, was nothing – I couldn't do anything if I had no cash. So my next step was to apply for a $25,000 grant from the state of Kentucky via a concept pool fund aimed at early-stage start-up firms. I obtained this funding in November 2007, and it allowed me to make a website for NaugaNeedles, prepare evaluation samples for potential customers using facilities at UofL, and develop a business plan. This small fund was instrumental to NaugaNeedles' success, because it helped me find a few customers who were ready to pay for my company's product.

During this early phase, I began collaborating with a physicist, Ron Reifenberger, and a mechanical engineer, Arvind Raman, at Purdue University in the neighbouring state of Indiana. As a result of this collaboration, in 2009 NaugaNeedles received funding via the US National Institutes of Health. This NIH grant allowed us to demonstrate that nanoneedles could be used as nanocantilevers for mass sensing, as well as measuring interaction forces at the piconewton (10–12 N) level.

Things really started to take off after my business plan won a prestigious $120,000 cash award from the Louisville-based Vogt Invention and Innovation Fund. I used this funding to get an additional loan of $120,000, and the combination of the two allowed me to rent manufacturing space, and build or buy the equipment that I needed to establish NaugaNeedles' current facility. By June 2009 the facility was ready and in-house production began.

At about the same time, I applied for an entrepreneurship fellowship with a philanthropic organization, the Kauffman Foundation. I was selected along with 12 other top scientific researchers for a year-long programme that aimed to teach us how to take promising research forward to commercialization. Each of us had a business mentor and attended intensive workshops where we had the opportunity to network and learn from each other and from entrepreneurship experts. This fellowship allowed me to leave my job at UofL and become the first full-time employee of NaugaNeedles in October 2009.

Reaching maturity
One key question that start-up founders have to address is when to bring in new people and employees. For NaugaNeedles, this point came in mid-2008 – almost a year after the company was officially established, but also a year before we got our own manufacturing facility. By this time, I had realized that a lot of investors, both private and governmental, view the team as one of the most important aspects of a company; if you are a one-man show, no-one is going to take you seriously. After talking with several colleagues from UofL and old friends from other institutions, I expanded the company to include two additional employees: my partners and co-founders, Amir Birjandi and David Mudd, who are NaugaNeedles' chief financial officer and director of operations, respectively.

Today, in addition to the three co-founders and the members of the advisory board, NaugaNeedles has six full-time and four part-time employees. We have launched several categories of products including high-aspect-ratio NeedleProbes (used for both conductive AFM scanning and imaging deep trenches) and exposed-end NeedleProbes, which are specialized for conductive AFM scanning under liquid media. Since its founding, the company has raised more than $2.5m in funds from various sources, and our production facility is capable of making more than 100 Needle-Probes per day – the equivalent of about $3m worth of products per year.

The lesson I take from this is that entrepreneurship is not as scary as it sounds. My main advice is that if you believe there is a business opportunity in your research, go after it! It is not as hard as you might think to start a business, even if all you have is $500 and one great idea.

Mehdi Yazdanpanah is the co-founder and chief executive officer of NaugaNeedles, e-mail

This article appeared in the November 2012 issue of Physics World.

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