The following is a chapter from the book “Dynamic Entrepreneurs of the 21st Century” that has chosen PreScouter CEO, Dino Gane-Palmer as one of the most dynamic entrepreneurs of the century. The book is available here.
English statesman and philosopher Sir Francis Bacon once observed that knowledge is power. What was true in the Age of Reason is exponentially more relevant in the Information Age. Today knowledge provides us with the power to help and interact with others in a more productive way. Knowledge includes education as well as practical skills and experience and education. Knowledge can be theoretical or practically implemented. It can be highly personal or socially relevant. And in industry, knowledge can especially help us solve problems, change perspective, forge a path forward, implement a system, persuade the skeptical, establish policy, improve quality, and even build a brand.
For PreScouter founder and CEO Dino Gane-Palmer, knowledge is also the basis for a highly successful business model that landed the Chicago- based company on the 2018 Inc. 5000 list, with a three-year growth rate of 176 percent and more than $4 million in annual revenue.
What does PreScouter do?
In academia-speak, PreScouter provides corporate research and development (R&D) leaders with technology intelligence for industry. In layman’s terms, think of it as a deep-dive virtual consulting service—or the human equivalent of a Google search on steroids—uncovering everything you need to know on a topic and presenting it to you in an easy-to-digest format through a series of reports and meetings. However you term it, PreScouter helps corporations find new knowledge by bridging the gap between industry and the possibilities that exist in adjacent industries, the start-up world, academia, or any other place that is outside the company’s own walls. For example, when a fast food giant challenged its supplier of sauces and condiments to identify a way to remove artificial preservatives from its mayonnaise, the supplier hired a PreScouter team to find a natural preservative that could be used as a substitute.
For each new research request, a distributed team of PhD researchers are dynamically staffed to each client’s project. The team meets virtually with the client over several two-week cycles, producing and presenting a series of reports called intelligence briefs to address the client’s questions. The team searching for that elusive natural preservative substitute for fast food mayo focused each intelligence brief on a different category of natural preservatives, such as citric and ascorbic acids. The number of two-week cycles that clients subscribe to can range from two to an ongoing re-up that spans a year or more.
PreScouter’s service model, called the research support service (RSS), makes life easier for clients by saving them the time and money it would otherwise take them to do informational research work themselves. When exploring a topic like seeking natural preservatives for mayonnaise, a company’s R&D team may assign an internal scientist to dig for information in trade journals, make phone calls to start-ups working in the area, and conduct patent searches. Worse, that scientist may need to learn new fields they do not have an expertise in. With the RSS service, the R&D team can pop into a virtual meeting with PreScouter every two weeks and have what they need to know presented to them, and take away an intelligence brief that captures the findings.
“Clients often tell us that we get done in a month what may have taken six months to do themselves,” Dino notes. “They say PreScouter is more cost effective than the expense of an internal team member doing this kind of work.”
To fulfill client projects, PreScouter hires as needed from a network of more than 3,000 researchers who are mostly PhD candidates and postdocs at top-tier universities around the world such as Stanford in California and Oxford in the UK. Each team is selected based on the particular skills required to complete the intelligence brief for the client’s specific project.
The researchers typically work with PreScouter as a side hustle to their full-time academic obligations although the company retains the top performing members of its network as employees called project architects that provide a concierge service for clients. Based on the client’s need, project architects build a team from the network, manage the project, oversee quality control, and present the intelligence briefs produced to clients.
Intelligence briefs largely take the form of detailed slides, numbering about fifty pages, but can take any form the client desires, from narrative reports to spreadsheets and complex models.
According to Dino, PreScouter has no direct competition other than clients doing the work themselves. While in retrospect such a service may now seem like a no-brainer, it took a perfect storm of entrepreneurial restlessness, willing advisors, an accommodating college department, and a tragedy in China to turn a business idea into an Information Age juggernaut.
How did it all begin?
When Dino came to the United States from the UK in 2009 to attend Northwestern University’s Kellogg School of Management, he was looking for more than just a degree.
“I was essentially looking for a business to start,” he says. “I’d been working in industry for about seven and a half years and I’d always had an itch to start my own company but hadn’t been able to identify what. I thought if I went to business school, I might learn some skills that would help me along that path. So during the two years I spent at business school, I was actively looking for ideas that could be turned into a business.”
Two separate realizations informed Dino’s perspective about what need industry had and the kind of company that could fill it. The first was that every year billions of dollars are spent on research at Northwestern, which is considered one of the most successful universities for commercializing its research.
“But even then only a fraction of what was developed was getting commercialized,” Dino says. “And that was—and is—true for not just academia. Trillions of dollars are spent globally each year by venture-funded start-ups, private research institutions and even corporate R&D labs in developing inventions that never see the light of day.”
His theory as to why more research wasn’t finding commercial applications was simple: nobody knew about most of it.
“Company A or University B may develop a low-cost, self-driving vehicle that only works at night and with limited steering capability but then shelve it, thinking this solution is too limited to be useful,” Dino explains. “Meanwhile a mining company may be seeking a self-driving mining cart but think general, all-purpose self-driving vehicles are too expensive to use in their operation. This is a missed connection and a missed opportunity.”
That observation was driven home by an incident known as the 2008 Chinese milk scandal. In 2007 there were scattered reports of babies falling sick from kidney failure. By mid-2008 three hundred thousand people had fallen ill, an estimated fifty-four thousand babies were hospitalized, and six babies had died from kidney stones and other kidney damage. Doctors determined the culprit; babies and others were getting sick because the milk they were drinking had been contaminated with melamine, which gives the appearance of a higher than accurate protein content. Eventually the powdered milk traced back to one of China’s largest dairy producers, the state-owned Sanlu Group. Test samples showed the milk powder carried up to 500X the maximum allowed level, and it hadn’t been an accident. The chemical had been intentionally added to hide that milk was being watered down to increase profits. In essence, the babies were slowly starved and dying from malnutrition.
At the peak of the crisis, the World Health Organization was seeking a way to identify what dairy products in China had this chemical and which didn’t, and it turned out that the test for that had already been developed at a university, but no one realized it. Such a missed opportunity to help an awful situation and perhaps save children from hospitalization or death stuck with Dino. There had to be a better way of utilizing such valuable resources.
The second piece clicked after Dino’s conversation with a Northwestern alumnus, Brian Skelton, who had gone on to be an R&D director at a company in the Chicago area.
“He said to me that his company used to have an in-house team that would scour what was going on at universities, start-ups, and adjacent industries to figure out if there was anything being developed that could be commercialized as a new product or added to an existing product. But they didn’t have that team anymore, and he told me: If you were to provide that as a service, that would be something we’d be very interested in. That motivated me to then think there was an opportunity there; a possibility of creating a service around the idea of helping companies gain access to ideas, innovations, and insights from outside their company. That was the original starting point.”
Building the business:
Dino is quick to acknowledge that while he is familiar with R&D, at heart he’s not a research guy. While in the UK he had worked as a software developer and operations manager for an online gambling company before moving on to be a portfolio manager at the BBC. Enrolling at Kellogg gave him the skill-set to put his practical experience to work building his own business.
“I have always been fascinated by R&D and did a six-month internship at Hewlett-Packard Research Labs while I was doing my undergraduate education. But I would say it was just more of a foot in the door that provided some interest in the area. I am definitely more versed in the business side.”
Enter Ashish Basuray (PhD in chemistry) and Alok Tayi (PhD in materials science), who Dino says he “pulled into the business because they were much more the research scientists who understood that world a lot better than I did.” Dino also recruited Douglas Pollina (MBA in finance), who had worked with Dino to help draft an initial business plan for the company. Dino founded PreScouter in 2010 with a $25,000 grant from the McCormick Scholars Program at Kellogg. Now all they had to do was actually build the business. And Dino did that by using the resources a world-class institution like Northwestern offers.
“A university is almost like an airport where there are lots of people going through,” he says. “Students are coming and going, there’s faculty, and there are guest speakers.”
Dino attended a talk given by Chicago-area venture capitalist Matt McCall who authors a popular venture blog, VCConfidential.com, and is a founder of the McCall Family Foundation, which encourages social entrepreneurship and global human and women’s rights. After the talk, Dino approached McCall and told him about the PreScouter idea, mostly to gauge his interest.
McCall was intrigued enough to connect Dino to Zach Kaplan who runs a 3-D carve company called Inventables. “His company has changed over time,” Dino says. “But in 2010-2011 it provided a service where every three months they would send a box of random research materials to R&D labs for them to see if there was something they could use to create a new product.”
In other words it was a subscription box service like Hello Fresh (for would-be home chefs) or Barkbox (for your pet pooch) except for R&D Labs.
“Talking to Zach, I learned a lot about how this kind of business would need to work. He had spent ten years making mistakes and figuring it out. Within two hours of conversation, I was able to figure out what would and wouldn’t work for PreScouter based on his ten years of experience. That was the moment I truly understood why people would always talk about the importance of having advisors and mentors because there are things that aren’t really taught in school or a book or anywhere else but which are in people’s heads. So for any entrepreneur regardless of what industry you’re in, if you’re able to get access to a person who’s done something, they can practically give you the secret formula for how they did it.”
Among the many nuggets Dino learned that day was that Inventables had acquired clients essentially through cold-calling.
“Zach also referenced a company called Corporate Executive Board (now part of Gartner) that had the best sales model for getting into R&D labs. Based on the advice he provided, I looked through the résumé database of my classmates and found two people who used to work at Corporate Executive Board, and they ultimately helped train my co-founders and me on how to do sales. So initially we were doing a lot of cold calling, like one hundred a day, to people who worked at these big companies.”
The pitch?
“Two things resonated with potential clients and piqued their interest. The first was that about $500 billion was spent each year on research by start-ups, academia, research institutes, and corporations; research that most companies were doing a poor job of gaining visibility into, because their internal scientists when looking into these sources, did not have the skills and resources to effectively tap into them. As PreScouter completed projects and gained successes, this first point of the pitch evolved into better painting the story of how much more cost- effectively and efficiently PreScouter’s teams could provide this visibility than a company’s own internal scientists attempting to do this.”
The second element of the pitch was outside-the-box thinking. “Beyond uncovering innovations outside of a company’s walls, the smart PhD researchers on PreScouter’s teams could apply their brain-power to thinking about a company’s bottlenecks and challenges in new and different ways they had not considered,” Dino says.
Sometimes those challenges moved beyond technology to identifying new markets for a company’s existing technology, benchmarking best practices or gaining competitive insight. PreScouter’s teams often consist of researchers in specializations a company had no one in-house for. That allowed PreScouter’s teams to suggest new, breakthrough approaches to a company’s challenges.
“Essentially it was talking around those two points and providing a way for clients to get access to this on a very reasonable basis that got us going,” Dino says.
Even though PreScouter’s entire business model depended on specialized researchers, Dino says in his business perspective it was always better to line up clients first to seed the business and then start hiring suppliers. Through the cold-calling blitz, he was able to put $200,000 on the books then put together research teams to handle the projects.
Building an on-demand network of advanced degree scholars:
As often happens with start-ups, PreScouter’s original game plans were adjusted based on client feedback and becoming more familiar with the current marketplace. So after completing pilot projects with Kraft Foods, Honeywell, and the Dutch company Royal DSM, Dino and his partners realized that corporate leaders were more interested in a broader scope of services, one that included interviews of thought leaders and ongoing monthly tracking of new innovations, such as those from new start-ups and emerging technologies.
“Most importantly though,” Dino says, “clients were interested in fresh perspectives and unbiased critical analysis to help them break out of stale, rigid thinking that prevents them from finding solutions. All of this could be provided by PreScouter’s network of scholars.”
The researchers for the first projects were Northwestern PhD candidate friends of Ashish and Alok.
“Then after time a network effect was established. We created a website where people who had heard about the program could sign up and find out more about PreScouter. Then those students would tell their friends because we offered three valuable opportunities for PhD candidates and postdocs.”
The first was an extra source of income; grad students normally don’t have access to side jobs that are flexible around their schedule and utilize their skills. Second, it was a way for them to keep their fingers on the pulse of industry so that if or when they sought a job, they’d be better prepared for the type of work employers are interested in. And lastly, working on a prestige project is valuable for résumés, showing initiative to learn about industry.
Securing a cadre of specialists with the proper skill-sets is one thing, but amassing thousands required some trial and error.
“Initially it started off as friends and then friends of friends,” Dino says. “Then over time a natural network effect occurred. People would include us on their résumé. Then others would see it on applicants’ LinkedIn profiles and other places. That’s how it’s grown.”
PreScouter has also developed targeted outreach campaigns to expand their network. “If a client needs a particular skill-set, and we don’t have a lot of people with that expertise, we will go search for them and ask them to join us,” Dino says.
While résumés may be the calling card of academia, it’s not unheard of for people to fudge on their CVs when applying for a job. But for PreScouter, their reputation and future success depend on the quality and integrity of their researchers, so how to vet a virtual network? Dino says the answer to that question has evolved over time.
“Usually when someone applies, we have a team that goes through the application. Postdocs and PhD candidates usually have a public presence through their published work or any conferences they’ve participated in, so we expect them to have that kind of referenceable presence to help us establish who they are. And then they’ll also usually have a university email address, which also validates they are who they are. After that basic level of vetting, we have them go through some training to ensure they’ll be successful.”
While Dino does acknowledge, “Yes, we do get a very small percentage of those trying to pass off fake credentials, but they are identified and discarded,” for the most part PreScouter accepts any postdoc or PhD candidate that signs up because, Dino says, “The vast majority of people have expertise or specialization that is valuable to us. It’s essentially like having a directory of people we can call on. We also have an online job board that is available to those in our network, through which they apply to work on projects.”
As might be expected, some areas of specialty are more competitive than others. Dino says there is a glut of researchers for life sciences projects, so there aren’t enough projects to go around for everyone to get immediately involved. But as long as they have the expertise, they are welcome, even if it may take them a while to get selected for a project. And as a rule, once a member of PreScouter, always a member.
“Once you’re on the list, you get a weekly email listing the new projects that have become available and then based on that email people go online and apply to work on those projects that interest them. There is a high open rate for the email—50 to 60 percent. So we know that the people who open those emails are engaged. What we also found is that some of our researchers have moved on from academia, taken jobs in industry, and are now clients. That’s another reason we think it’s valuable to keep researchers on the list. There is an element of circularity to these folks, so we don’t really prune the list, and in that way they can remain engaged in other ways going forward.”
With growth came new challenges and responsibilities:
Even when Dino was spending his days cold-calling and lining up the initial set of clients, he says his goal was always to grow the company as quickly as possible and worry about the challenges of fast-growth as they came up. He felt trying to modulate growth was far riskier to long-term viability, a view validated from observation.
“As our sales each month were growing, and our customer base was growing, at the same time other start-up companies of friends that did not grow fast enough went out of business.”
Dino says some of the first growing pains related to “the robustness of the infrastructure. Initially our office was basically a meeting room at Northwestern, which the school had kindly lent us for three months. Then we moved to a start-up incubator in Evanston for about two years. Then we moved into a bigger suite with more dedicated space, and then eventually we moved down to Chicago.”
Along with the increased office space came an increased number of employees. And as the company does better—as reflected by its surroundings—employees also expect more, such as health insurance and benefits.
“Limited infrastructure and benefits limit the number of people you can hire,” Dino says. “You have to figure out how to set up payroll, how to get benefits programs in place, and things like that. Then on the service side, over time it got to a point where it was mostly people we didn’t know, so we had to figure out how to vet them. In the beginning we had someone interviewing everyone who signed up, but that wasn’t the most effective use of time. So we decided to only interview them when we were going to put them on a project. Then we realized we didn’t even need to do that. We could just develop some online tests and peer-review system to complement our basic vetting.”
Dino says regardless the business, bottlenecks or breaking points will happen because of current systems. “The key to success is figuring out a better way to do it or a much more robust way to do it.”
There are also more subtle, unexpected challenges when scaling.
“I would always hear people talk about company culture, but when we were first starting the company, we didn’t really think much of it. Then one day you realize: We have a lot of people here, and they don’t necessarily all work well together. So we needed to figure out ways to manage and develop a culture.”
Challenges, new solutions, future plans?
For all the effort that has gone into developing more cohesiveness in company culture to improve productivity and maintain quality control, Dino admits the company has not spent much time, if any, following up on what becomes of the projects that PreScouter’s teams have created reports for.
“We haven’t done a good job of tracking what happens after the clients work with us, but some clients have told us about certain successes. For example, we have a client who works in the adhesives business. And there is a new type of adhesive technology based on the feet of geckos emerging as a better alternative. Our client’s company was a bit late to the game in terms of figuring this out. So we provided a series of intelligence briefs to help them understand the new approach and also identified the companies developing the technology. Based on the information we provided, our client acquired one of those companies, so they could have that expertise in-house.”
While the majority of researchers and clients are based in the United States, Dino says the company also has a presence in Europe, Australia, and Canada, and he expects the number of international clients will increase incoming years, just one of several opportunities he sees for PreScouter in the near future.
“In the last five years, China has become one of the biggest spenders of R&D in the world,” he says. “It has surpassed Europe and Japan and only trails the United States. In terms of our company’s growth, we have some initiatives we’re working on, and one of them is coming up with a strategy to enter that Chinese market. The challenge there is the difference in language and culture as well as time zone, so we would probably need new personnel. We need to figure that out because that’s an opportunity that will drive growth for years to come.”
The PreScouter brain trust is also looking to expand vertically by helping clients create prototypes. “One of the things we’ve noticed is some clients work with us because they have limited internal bandwidth to research and figure-out particular early stage ideas. They need some outside expertise. But then after they work with us on the project, we noticed that they still had the same problem—they had an idea, got some tangible technologies from us for how to turn that idea into a product, but lacked the internal resources to take the next step: creating a prototype.”
To that end PreScouter is partnering with firms such as BB7, a product development company, to help clients essentially take the next step in commercializing a product by turning the work the research team provided into tangible prototypes that can be tested with customers.
“We’re starting to see some success with that,” Dino says. “So we think that’s another strong avenue of growth for the company as well along with more organic growth by continuing to reach out to more clients and winning more business.”
As far as his own future, Dino says his focus is still currently on PreScouter, but he can envision a time when he might want to flex his entrepreneurial muscles again and create something new.
“The job of CEO is different at each scale of the company. I enjoy working in small teams, moving fast, and building something new. At the largest scale, it may be more about promoting the right company culture, aligning organization units around a strategy, and being a public face for the company; I’m not sure that is as interesting to me. PreScouter is still a long way from there, and there’s still plenty to do before we reach that point. But I will always be a serial entrepreneur.”
