A local entrepreneur who sold his last startup to Google for $85 million — and then joined the tech giant for two years — is launching a new startup studio in San Diego.
The company, called Launch Factory, will operate as a hybrid between a business incubator and an investment firm, sinking $300,000 into startup ideas and helping the fledgling companies grow.
Founder Brad Chisum is best known as the former CEO of Lumedyne Technologies, a local sensor company snatched up by Google in 2015. The acquisition is the reason Google has a presence in San Diego today.
Chisum brought along another ex-Googler to lead the new startup studio: James Hereford, Google’s former chief of staff for the technology engineering division over hardware. Hereford is Launch Factory’s current chief operations officer.
Calculating the odds of startup success
The incubator plans to house and teach tech startups that could have multi-billion valuation potential, Chisum said, but will stay far away from “buzzword” areas of tech.
“You won’t see the next artificial intelligence blockchain company using machine learning come out of here,” Chisum said. “Any time something becomes a buzzword, you have a lot of people looking at it. We have no reason to think we’ll have an advantage there.”
And unlike many startup investors, Chisum said they’re also not interested in boundary-pushing novelty or feats of technical engineering (for now). That largely comes from his experience leading Lumedyne, a company that was doing exactly that.
“At Lumedyne, we were really inventing,” Chisum said. “My personality gravitates towards that. I was an engineer before I was a founder. Emotionally, that’s what I want to do. But logically … when an invention is required, the odds of success are lower. It’s a longer path and the payout isn’t necessarily better.”
Instead, Launch Factory is interested in startups that are refining tech ideas rather than creating them from scratch. These are companies for which strategy and execution on the business side will give the startup a definite advantage.
“More often than not, it’s not the engineers and it’s not the idea that makes a company successful,” Chisum said. “It’s how the team executes.”
Could you be their next founder?
The Mission Valley startup studio will launch one startup in 2019, two in 2020, and two to three in 2021.
For now, Launch Factory will be coming up with their startup ideas in-house and then searching for prime candidates to lead the new companies as founders and top executives. This model is similar to “venture studios,” in which venture capitalists fund and incubate startups in-house, later matching skilled executives to their ideas.
The big difference for Launch Factory is their unusual method of finding founders to lead their startups. The company has developed a referral program to hunt down talent, doling out equity to anyone who helps them find founders. Refer a founder that they hire and you’ll get 100,000 shares in the new company. The referral program is tiered, allowing people to get a smaller slice of equity just for spreading the word. Details can be found on Launch Factory’s website.
The ideal candidate? Someone with five years or so of professional working experience, but who’s still open to mentorship — someone in “learning mode.” Chisum said they’re willing to taking candidates who have not proven ability as an entrepreneur yet.
Interested candidates can apply to lead companies in pairs (research suggests co-founders are more effective than solo founders, Chisum said). The pairs will compete in a rigorous interview process, during which candidates will be asked to brainstorm answers to business questions.
“We get to see how your brain works, how you look at problems and what you prioritize,” Chisum said.
Founders are encouraged to take a $50,000 annual salary out of the $300,000 investment provided by Launch Factory, opening the opportunity up to applicants who can’t take a year off from paychecks to dabble in entrepreneurship.
The deadline to register for the first startup — Vestra Solutions — is June 5. Vestra, still in concept-stage, will operate as a “general contractor for business operations,” helping startups and other small businesses navigate the continually changing technology landscape. Find out more about the business idea on Launch Factory’s website.