Category Archives: Entrepreneurism

The Startup Founder Effect: The Genetics of Success

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By:  Andrew Johnson, Ph.D.

Black Antique Car

Founder Henry Ford’s leadership style affected his company both for good (ushering in the age of the automobile and for bad (decisions that put it into second place behind General Motors.

The ‘Founder Effect’ was discovered by Ernst Mayr in 1942 (Wikipedia) as part of his seminal work on population genetics.  It basically states that many of the traits that you might see in a given sub-population of individuals can be attributed to the genetics of the first individuals that inhabited the space (especially when the niche is isolated).  This can help explain the sometimes quirky existence of traits that may appear to have no real value for the survival of the species (e.g. higher rate of polydactyly (extra toes and fingers) in Amish communities than that observed in the general American population).

What has this got to do with my startup?
Well just like the isolated communities mentioned above, the ‘genetic imprint’ of the founder of any company has especially strong effects in the early days of the company which may persist far into the future even when the founder(s) are long gone.  The culture of the company, the personalities and formal structure of how things are accomplished come from the founder.  Some of these factors are beneficial and in fact can be traced to the very reason behind a company’s success while most others disappear into oblivion.  However, sometimes these quirks of the founder can largely lead to the eventual failure of the endeavor.

OK then, So What
There are both positive and negative stories told about companies that continue to be run by their founders as well as those that have replaced this team.  Henry Ford and Ford Motor Company, Steve Jobs and Apple, Thomas Edison at what eventually became General Electric are just a few examples of founders that continued to lead their companies beyond what we would call an ‘exit event’.  Each person left their ‘genetic’ imprint (good and bad) on the culture and how that the company thrived.

We would general say that each of these men was extremely successful but what can be lost in the admiration of the companies that they each established is what were the lost opportunities, the alternatives not tried, the products that never saw the light of day.  Steve Jobs was famously known to have a tyrannical management style that equally pushed a slew of incredible technologies into the world and killed others, seemingly at a whim when they appeared to diverge from his own opinion of what was good or bad.  We will never know how many terrific and life changing things will never see the light of day when they were killed based on his opinion.  Edison was known to be equally intolerant to ideas that did not fit his vision for what he wanted (most famously he waged a marketing and commercial war to promote Direct Current (DC) over alternating current (AC) based on his own, it turns out flawed, view that DC was superior).  In fact this, in spite of all of the success with which Edison and his company is associated, character attribute or ‘Founder Effect’ drove one of his most brilliant scientists, Nicola Tesla, straight into the arms of his greatest competitor, Westinghouse.

As we can see, there are benefits and limitations to companies that are run by founders.

Some of the benefits are:

  • Passion and Vision :  This can be the very force that keeps the company both focused and on track in the face of outside forces that threaten to derail the company from its mission.  Raising money, building teams, facing skeptical customers etc. are a just a few of the things that put off lesser mortals.
  • ‘My Way or the Highway’:  Companies run by founders can introduce new innovations and develop whole new markets at a staggering pace.  A lot of this can be traced back to the single-minded drive of the founder.  He /she is not slowed down by gathering consensus at committee meetings as the company reaches important inflection points in its trajectory to success.  Having one ‘top-dog’ founder calling the shots can cut through a lot of the indecision and delay that can come from direction by committee.

Some limitations are:

  • ‘My Way or the Highway’:  The down-side of this style of leadership is that when the founder is wrong, there may be no recourse to alternatives.  Henry Ford was famous for stating “Our customers can have a car any color they like, as long as it is black”.  This shortsighted view of the relationship between a company and its customers (the ultimate bosses) soon left Ford trailing General Motors for virtually most of the early history of the automobile industry.
  • Making It Personal:  Edison had a personal feud with Westinghouse and this led him to the ‘take no prisoners’ focus on winning the electricity wars.  It can be argued that Edison and his company would have been far better off working together with Westinghouse than the time, money and effort that were wasted in trying to defeat the enemy.  It can be hard for some founders to separate their own egos from what might be best for the company as a whole.

What’s a Founder to do?
Should a founder fight to stay on with his company as it succeeds or make an exit and allow the company to grow under new management?  There is no right or wrong answer to this.  Obviously you want to maximize the positives and minimize the negatives of the founder’s influence.  If you are a founder, finding the time to take stock of your relationship to your company on a regular basis will allow you to achieve this.  The following tips are provided to help you with this critical assessment.

  • Has anyone told you ‘no’?  You may think that you have created a culture of openness but if you have not been told ‘no’ by your team, then you may have an issue here.  Remember, you can’t possibly be right about everything all the time and a good team should help you avoid mistakes.  If you are not hearing ‘no’ occasionally, then you need to work on helping your team feel comfortable doing so.
  • How are decisions made?  As you flesh out your team, make sure that you keep ‘delegation’ in mind.  This can be very difficult to do but you need to be thinking about brining on people that will take things ‘off your plate’ so that you can stay focused.   By keeping this concept in mind as you hire, you will make sure that the people who join you will be those that you can trust with the very life of the company.   If you already have your team, make sure that you are empowering them and that they are regularly making important decisions on their own for the company.
  • How are good ideas, not central to the company’s mission, disposed of?  One of the key attributes of a good Founder is to remain very focused on getting into the marketplace.  Good teams will have lots of good ideas (new product ideas, new markets to enter, new applications for R&D to develop etc.)  The key here is to be firm and respectful, but open-minded as well.  If you do this right you can keep the company focused while still encouraging new thinking.  Not an easy task.  If you do take the time to master this, these once rejected good ideas could one dayrepresent your next great product in the market.

Suggested Reading:

Picture Credit:  Gemma Grace via photopin cc

The Successful Startup: Transforming Your Vision into Reality

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Night sky with dish

The successful launch and growth of your startup depends on the skillful integration of great vision and ideas with execution and commercial know-how. Finding your business or technical complement on day one will help to insure that this becomes reality.

By:  Andrew Johnson, Ph.D.

Gazing at the night sky can be an inspirational experience.  For some, there is more to this than just naming and tracking the celestial objects in the sky.  Some of the most interesting and bizarre objects in space are invisible to the naked eye (even to the naked eye aided with the most powerful telescope).  The discovery in the 1960’s of the existence of Neutron stars and Black Holes (not visible to the eye) were not only important discoveries in and of themselves but they allowed for some of the most powerful confirmation of Einstein’s General Theory of Relativity by allowing the actual measurement of things like the bending of light by gravity among other bizarre predictions from the theory.

What has this got to do with my startup?
The stories that are told about these discoveries take on an almost mythical narrative.  Think Einstein in his patent office in Berne, independently and brilliantly coming up with his radical new ideas about physics by himself in a sudden flash of insight (not entirely true).  The key here is that these ideas would remain obscure theoretical conjectures without the hard work and ingenuity of the experimental scientists that built the instruments and conducted the experiments that not only confirmed the validity of Einstein’s work but have even allowed them to be applied in ways that make our modern technologies work (GPS would not function properly without accounting for the dilation of time due to the stronger gravitational field at the earth’s surface relative to the global positioning satellites, as predicted by the General Theory of Relativity.  If this was not compensated for in your GPS, you would be off course by 10 meters in 1 minute).

Why the ‘Odd Couple’ has a better chance of launching your next product
So as we can see from this example, the successful transformation of a great idea into a practical and valuable product (your GPS) requires the expertise of complimentary but different professionals.  Theorists and Experimentalists are as different from one another as scientific founders are from their business counterparts.  However, it takes the ingenuity, passion and drive of each to make the alchemy work of transmuting a great discovery and idea from the lab bench into a successful product on store shelves (or e-commerce sites).

Getting theory and practice together
It is the rare individual that has all of the qualities that are essential to making a technology based startup a success by themselves (I would posit that this person really does not exist).  It may seem very early to think about the commercial side of your business when you are still working on its technical feasibility.  However, if your vision and dream is to someday create a company to commercialize your discovery, you need to find your business or technical counterpart as soon as possible.

Most Life Science companies are founded by scientists with exciting discoveries from their lab.  These companies often languish for lack of adequate capital to take them to the next step.   A quick look at the companies that are successful in getting the money they need to make this work reveals that, more often than not, they have a strong ‘Odd Couple’ founding team.  Speak with any investor and they will tell you up front that they would much rather invest in an ‘A-Team’ with a ‘B-idea’ than the other way around.  What is an A-Team?  This is a powerful team composed of both technical and business excellence.  This type of founding team insures that the science is backed by a compelling business model (and plan).   Potential investors find these companies especially attractive since the science and business hypothesis are equally strong.  This also insures that the requisite expertise is in place to actually achieve the milestones that have been presented (thereby de-risking the investment some).

Take Home Points:

  • Look for your counterpart on Day 1:  The day you decide that you would like to start a company to commercialize some great new technology, start looking for your business or technical counterpart.  They should share your passion, be innovative and also compliment your own talents.  For example, if you are an introvert, consider finding an extrovert.  If you are a visionary thinker, team up with a detail oriented achiever.
  • Remember it’s the A-Team that gets the cash:  A well balanced technical and business team with great connections has the best chance of beating the odds in the rat-race to win the funding you need to get things off the ground.
  • Keep your eye on the prize:  The many challenges that startups face along with the issues that can arise when working with team members that differ from you can seem overwhelming.  Remembering that everyone on the team (make sure that they do) wants this to be a huge success can help you make the compromises, delegate authority and responsibility and cultivate the flexibility that are essential elements of a powerful A-Team member.

Further Reading:

Picture Credit:  “Satellite Dish Under Starry Night” by twobee, FreeDigitalPhotos.net

What You Can Learn from an Orchard about Growing your Business

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Apples

Approach building your company like planting an orchard. Be sure that you know what your customers want today but also a few years down the road as well.

By:  Andrew Johnson, Ph.D.

What does growing apples have to do with building a life science company?  It turns out that there are a lot of similarities if you look closely.  A successful orchard requires a huge investment in planning (what variety of trees, how much of each, etc.), effort (a lot of work before the first harvest), finances (cost of land, labor, farm equipment etc.) and time (trees need a number of years to mature before your first harvest) to become successful.  The successful orchard keeper needs to have a good assessment of what types of fruit his customers will want in a few years and also how he can differentiate his own business from other orchards in the area to compete successfully.  The leadership of a strong life science business needs to think in the same terms.  What need will your offering(s) fulfill in the future and why will customers come to you rather than to your competitors?  With an orchard, once you plant the trees, you are now committed to your view of the future market for your products and now everything is about nurturing your trees until you have your first harvest.  With a startup, once you have selected a product and/or service, all of your efforts will be to get it successfully to market.  The orchard keeper cannot rip up trees next year if he thinks that the market for his fruit has changed.  Likewise, most startups do not have the funds (or time) to scrap a product offering once they are working to get it to market.  The lesson here is, make sure to spend enough time to understand your market, your customers and how you will successfully sell and then commit to a laser-like focus for getting that offering to market as soon as possible.

Tips for Building a Strong Startup:

  • Plant Trees:  Build your company for strong and steady future business.  Whether you are offering a platform, service or a one-time sale of a large instrument, referrals are the key to efficiently growing profitably.  Winning new customers is costly so getting referrals from happy customers is like harvesting apples in the fall.  The time, effort and investment you put into winning strong early customers will pay off as they share their experience with your future customers.  Building a scalable infrastructure that consistently and efficiently delivers the goods that delight your customers will insure success in the long run.
  • Build a Barrier to Entry:  It takes a while to plant and nurture an orchard.  However, once your trees have matured, you will have happy customers coming on a regular basis.  Building strong relationships with key opinion leaders, establishing preferred vendor status with organizations and establishing your company as a market leader in the technology is a lot like planting new trees.  There is a lot of prep work up front and the rewards are not immediate but once you have done this, this makes it very difficult for competitors to come into the market later.
  • Plant some Pumpkins Too:  As a startup, you need to start generating revenues as soon as possible to prove out your business.  Your team will need to put a lot of focus on getting your first sales and creating happy customers.  Many startups make the mistake of neglecting to build in some time for creating a scalable and profitable business.  You will be planting and harvesting an annual crop like pumpkins to do this. Developing a product road map that contains both near term (pumpkins) and long term (apples) offerings will allow you to get to market faster and get the insights you need to insure a better outcome with your later prospects. However, the key here is using what you have learned about your customers, their wants and needs and enthusiasm for your offering to build an infrastructure that will allow you to maintain the high level of customer satisfaction that will lead to referrals from your customers (See first point – Plant Trees).

Take Home Points:

  • Start building relationships with key opinion leaders and strategic partners early (even before the launch of your first product or service).
  • Use the insights you gain of your customers’ wants and needs from early sales to guide your efforts as you scale the business.  (e.g. if you will start selling using distributors, make sure that you build in an infrastructure (tech support, technical inside sales, social media outreach, etc.) to maintain the level of support and service that your customers valued in the early days).
  • Everything you do and every interaction you have with the public will shape your brand.  A strong positive brand can be a powerful barrier to block your competitors.  Clearly identify the brand identity you would like to have and make sure that you and everyone in the company reinforce this in everything they do and with every interaction with the public.

Picture Credit:  © Sofiaworld | Dreamstime Stock Photos & Stock Free Images

Don’t Miss the ‘Good to Great’ Way to Startup Success

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By Andrew Johnson, Ph.D.

Rocket blast off

Achieving breakout success for your startup is all dependent on what you do before anyone has even heard of you. Do this right and there is no stopping the heights you will attain and the success you will enjoy.

There are no shortages of stories of great ideas and entrepreneurs that, for one reason or another, failed to achieve commercial success.  Is there some secret to getting this right that is being tightly held by the winners in this Darwinian race to startup glory?

Jim Collins investigated this phenomenon in his book, ‘Good to Great:  Why Some Companies Make the Leap and Other’s Don’t’ more than a decade ago.  He selected 11 publicly traded US companies from the ‘Fortune 500’ that consistently out-performed the market by 30% for at least 15 years after an initially lackluster performance of 15 years.  He compared these ‘breakout’ companies to their industry matched (same size, market, revenues in the previous 15 year period) counterparts to see what was behind these company’s’ incredible success.   Mr. Collins and his team used publically traded US companies since there was a wealth of publically available data for him and his team to use to figure this puzzle out.

A look at the stock market valuations of the ‘breakout’ companies compared to their market average counterparts shows that any two comparison companies tracked one another for at least 15 years and then the graph of the returns for the breakout company would just skyrocket up consistently for at least 15 years (some showed even more dramatic growth both in size and duration).  This is the type of financial performance and success that every startup team dreams of achieving as well.  However, this study was originally done with well-established companies whose revenues were high enough to rank them as the top earners in the US.  What, if any, of the findings here could be relevant to a startup?

The Secret Sauce
The answer:  Many of the ‘Good to Great’ findings are a perfect fit for startups as well.  Many of the principles that drove the success of the ‘breakout’ companies in Jim Collins’ study are applicable to startups today.  The following insights are inspired by the findings of the ‘Good to Great’ team but have been adapted for startup stage companies.

  • Selecting your leadership:  The ‘breakout companies’ were all lead by top performing CEO’s that many had not heard of before.  This is because they were not celebrity CEO’s that were interested in driving their own ego’s and compensation, but passionate ‘get-it-done’ leaders.  Startup CEO’s rarely have this issue.  The reason is that entrepreneurial leaders are passionate for transforming their startup into a successful company.  The only ‘watch-out’ here is that sometimes investors will insist on the placement of an experienced executive (well-known outsider) at the helm based on the misconception that this will boost the chances for success.  When this occurs, it is important to make sure that this leader shares the passion for driving the company’s success (rather than their own) first.  In other words, a leader that has an enviable track record of creating long-lasting successful companies rather than just a big name in the industry.
  • Building your team:  The ‘Good to Great’ findings showed that all breakout companies spent some time making sure that they had the right team in place before they worried about their strategy for transformation.  The startup is spared the need of ridding the team of ‘dead wood’ if it focuses on only hiring the very best from day one.  The reason that this effort precedes developing your strategy is that you need the input of a top performing team to come up with the best strategy here.  Another benefit of hiring the very best even before you fully know exactly what all of your needs are is that they will require much less care and handling and help to create a culture of excellence from day one.
  • Facing the music:  All great ‘breakout companies’ had some moments of truth were they discovered that they were in the wrong business or that the market had changed in such a way that they could no longer count on being number 1 or even 2.  Once the truth has been faced, the team can then rally to develop a strategy to redirect the company into a more successful and profitable direction.  Startups with a good leader and a solid team can face the realization that they might have a great technology that has no compelling market early on.  This team , working from these facts, is now in the best position to make the necessary pivots in the early days (before too much cash and time) is wasted to direct the company in a new and more promising direction.
  • Refining and sticking to your focus:  Jim Collins called this the ‘Hedgehog Concept’ (The Fox knows many things but it is the Hedgehog that knows the one most important thing).  This is all about focus and not being distracted by outside interests that do not serve your central strategy to succeed.  The ‘Good to Great’ team found that this central guiding concept (The Hedgehog Concept) was composed of 3 things that are roughly 1) identifying what you are best in the world at, 2) what you are most passionate about and 3)what business model will best transform this passion and world-class talent into financial success.  The startup concern will need to do the same reckoning and this is not always an easy thing to do.  Insight will come from both an honest assessment of the capabilities and talents of the team as well as a reasonably good estimate of how you can successfully commercialize this.  Focus is usually not an issue in the early days for the startup.  This becomes more of an issue after the company has enjoyed some commercial success.  The key here is to stick to this central focus of the company (The strategy for taking you to number 1 in the market) when exploring opportunities for growth from everything from product line expansions to strategic partnerships and acquisitions.  Anything that does not contribute to your core strategy should be ignored.
  • Nurturing a culture of discipline:  Remember that we recommended hiring only the best people for your team.  If you have done this well, you will already have built a culture of discipline.  Many of us have seen the gimmicks and marketing efforts that companies use to ‘motivate’ their employees to do more for the company.  If you have the right people in the company in the first place you won’t waste one minute or one dollar on this since everyone is already aligned with your goals for the company.  Essentially with a culture of discipline, you will not need to find ways to get your employees to get the job done as they will likely already be well on their way to completing this.  Make sure that you continue to follow the high standards you used in the early days as you continue to grow the team.  ‘Quality People’ over finding the cheapest person to do the job will always be more valuable in the end.
  • Turning the ‘Flywheel of Success’:  Success does not come overnight.  The ‘Good to Great’ team found that there was never one event or decision that lead to the company’s success.  It turns out that it was the accumulation of a thousand little things being done right that lead to breakout.  For a startup, this is about meeting challenges every day and working together to achieve that one central goal of first getting the company to market and then building its fortunes after a successful launch.  This last point is kind of a recap of all the others in that with the right leadership, the right team will be hired and with the right team and leadership the right path to success will be found and then the team will work hard together to achieve this goal step by step every day.  Judicious and frequent use of refining and following your central strategy will easily allow the team to determine if a given action or decision will be a push that increases the momentum of the ‘flywheel’ or not.

Putting it all together
It can often look like ‘breakout companies’ just popped up out of nowhere.  Whether they are the next Apple Computer or Genzyme, startup or well-established, this comes about more from the way that the popular press covers these companies than reality.  Jim Collins and his team found this to be true in his study and it is true for the budding startup as well.  The ultimate factors that best predicted for success turn out to be with those companies that are fortunate to have a passionate and capable leader, strong ‘results focused’ team and a single minded discipline and focus to do what is most important for the growth of the company.  The road to success may be long but following these great insights will insure that you stay on track.

Suggested Reading:

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The Startup Business Plan: Charting Your Path to Success without Wasting Time

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Treasure Map

Your startup business plan will be like a treasure map to show you and the team the shortest path to the gold while avoiding dangerous traps.

By:  Andrew Johnson, Ph.D.

It might seem trendy to ‘just do it’ but it is pretty difficult to make sure that you are ‘doing’ the right things if little forethought has gone into what is critical for your company’s success.   There are those who propose skipping this step, calling it a waste of time.  The reasons given are that as soon as the plan is ready it is already out of date or “we know what we need to do already”.  Many of these views come about from a misconception of what a business plan really is and what it can do.

A business plan is…
A good business plan gives founders the opportunity to clearly state and communicate their vision of the company with the rest of the team,  investors, key opinion leaders and other VIP’s that are critical to the success of the company.  The founder, his senior team and trusted advisors will be able to use the exercise of preparing a solid business plan to simulate how the proposed company will ultimately achieve success.  Think of it as a dry-run.  Gaps in the business model, feasibility issues with the underlying technology, manufacturing scale-up issues and other key elements that are critical for success will easily be uncovered during this effort.  Since this is essentially a simulation of how you envision things to go, any gaps and pitfalls can be identified early before any time, effort or money is wasted.  In addition to this, the business plan will allow the senior team to get valuable feedback from outside industry experts that will have a direct bearing on the company.

A business plan is not…
Having a clear understanding of what does not constitute a good business plan will not only help you in the preparation of the right plan for your organization but allow you to avoid wasting time.

  • Needed only to attract investors:  Yes, it is true that most investors will insist on reviewing your business plan (often they only read the executive summary) before deciding whether they have any interest in a further relationship (never mind making an investment).  However, the real value here is that you will have a detailed strategy mapped out to guide your progress and even a detailed task list for the team.
  • A long, boring document for ‘business types’:  Nobody wants to read or review anything that is boring or valueless.  If you can cover all of the essentials of your business in 5 pages then that is how long your plan will be.  In fact, it is better to start with a shorter plan in the beginning and then amend it as you make progress and learn more about the things that are most important for your success.
  • A static document:  The preparation of a business plan it not something that you complete and then file away for posterity.  It should be a living document that changes as your company grows and as market conditions that impact it are uncovered.  The key here is that with a good plan in place, you and the team will make conscious decisions to make a change rather than just changing course every time something new comes along.  A business without an ‘Evolving Business Plan’ is doomed to run out of time and money by constantly chasing issues that really should be ignored.
  • Something that can be outsourced:  Some of the hard work here can be defrayed by hiring an experienced consultant.  The founder and the senior leadership team will need to work closely with this ‘hired gun’ to make sure that the final product is a business plan that will drive the success of the company rather than a generic business plan (a true waste of time and money) that has little to do with the particulars of your company.

Spending your time creating the world’s best business plan is a waste of time and money
You don’t need the world’s best business plan.  You need the business plan that will provide you with the details and guidance to chart your company’s path to growth and success.  It should be no longer than that and it need not be fancy looking or printed on heavy bond, acid-free paper.  Spend the quality time you need with your leadership team (and consultant if needed) to draft up the best plan you can in a week or less.  You will need to keep updating it and filling gaps but get at least a reasonable one in place early.  The leadership team will frequently make changes to it as progress is made and new findings are uncovered.  Someone with expertise in creating effective business plans can be a great asset to your team in terms of creating a version of it that will be most appealing to potential investors in your market.

Take Home Points:
You need a right-sized plan to help you avoid wasting time and money and…

  • Avoid creating a great product that does not have a ready market
  • Discover that a huge need in the marketplace does not have a viable business model for growing a profitable company
  • Identify what  the next most important tasks are
  • Reveal underlying risks and opportunities that may not be obvious at first

Resources:

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The Mind of the Startup CEO: Why a Little Crazy is Good

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Person thinking

The successful startup CEO has a particular mindset that tends to favor the chaos and excitement that are typical in the early days.

By:  Andrew Johnson, Ph.D.

We have all heard stories about the ousting of the Founder and his team once their business has proven itself to be a winner.  Steve Jobs was kicked out of Apple (though famously brought back for a second act), Ben Cohen and Jerry Greenfield (The Ben & Jerry of premium ice cream fame) were ultimately replaced when the company was sold to Unilever.  This phenomenon can be scary to many new entrepreneurs.  However, a closer look at the differences between what makes a successful entrepreneur different from a successful manager not only shows why this is a logical progression but also something that should not be feared.

It is extremely rare to find a person that has the mental makeup and desire to be both an entrepreneur and a manager.  The following points show why this is.

The Mind of a Startup CEO

  • Deals with chaos with calmness:  The startup CEO not only has the resilience to withstand the unpredictability and risk associated with a new company but actually thrives in this environment.  Here are a few examples of the things that can keep you up at night with a startup; making payroll, cash flow, technical setbacks, opportunity costs, launching into an unknown market, threats from competitors, dysfunctional boards etc.  The startup CEO actually thrives with these challenges by finding creative ways to resolve these issues while sleeping soundly at night.
  • Doesn’t shy from risk:  The stakes are often very high.  You only have so much time to prove that you have a viable business before either you lose the support of your investors and/or miss your moment to enter the market.  Being comfortable with taking prudent risks allows the startup CEO to move faster towards success or failure.
  • Is creative, resilient and realistic: The startup CEO can maintain a certain amount of detachment from the pressures that are part of launching a successful startup (resilience).  They will look for non-traditional ways of solving problems (creativity). However, they are also realistic.  This crucial balance between Cassandra and Pollyanna (too pessimistic or optimistic) can be the key leadership difference between a commercial success and failure.

The Mind of an Established Company CEO

  • Skilled at maintaining and growing existing business with the least amount of risk:  The market and business of an established company are well known.  Success here is about strong and steady growth that is scalable.  The successful CEO of an established company knows how to execute on the business plan and provides the calm and methodical leadership it takes to keep everyone on track.  There is much less unpredictability here and this type of leader will look to avoid risks when possible and maintain a strong and steady growth trajectory.
  • Generally most effective when things are good – fails terribly when things go bad:  The CEO’s of established companies are excellent managers.  When things are good, they shine at steadily improving the performance of the company using tried and true procedures and policies that can be easily scaled to grow the company.  When things start to go wrong, (e.g. technical problems, labor issues, and/or entry of a powerful competitor into the market) executing on existing plans only makes things worse.  This is a time for innovation and risk-taking, this is a situation where the startup CEO thrives (turn-around experts are often former startup CEO’s).
  • More risk averse, steady hand on the tiller:  Decisions are made after careful and thorough analysis.  If there is not enough data to guide a decision, these CEO’s will defer making a decision and look to gather more information.  This is often the right thing to do in a successful established company where there are fewer unknowns.

Why you want to be replaced
Once a company has seen some success it needs to focus on execution and getting every last drop of profit from its established products.  This is where the mentality of an Established Company CEO is needed.  The startup CEO can find this environment to be stifling and may feel constrained.  The ‘seat-of-the –pants’ style of leadership that worked in the early days must give way to new processes and procedures.  This allows the business to scale up quickly and efficiently with a much larger team.  At this stage, even new product launches will feel different than your earlier efforts.  Phased gate reviews, shareholder communications management etc. will need to be part of the process now.

Know thyself and gun for your exit
The chaotic realm of the life science startup is a fast moving, passionate ride with thrilling highs (achieved profitability) and crushing lows (great tech but no market for it).  This is where the ‘Fail Fast” moniker is celebrated.  If you thrive in the worlds of chaos and speed, you will find the life of a manager to be slow and plodding.  You will no longer be as free to innovate as you were before.  If you know this about yourself, you can start to build in how and when you will exit the company.  Keeping this in mind can even be helpful with investors as they look for entrepreneurs with the foresight to put the well-being of the company above their own ambitions.  Stay as long as it is a fit and plan to leave when it is your time.  With a little planning, you can still participate in the success of the company with good exit terms (seat on the board, profit sharing, valuable equity holdings).  By planning for your exit you will now have even more resources to ease the burdens of starting your next company.

Suggested Reading:

A First-Rate Madness: Uncovering the Links between Leadership and Mental Illness by Nassir Ghaemi, Penguin Books Ltd, 2012. | A New York Times Bestseller.

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No Lab? No Problem! Leveraging the Power of the Biotech Incubator for Startup Success

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Get more bang for your buck! Biotech incubators not only free you from the expense, time and effort of establishing a lab but also can provide access to technical expertise and fellow entrepreneurs that can give you a powerful competitive edge.

By:  Roger Frechette, Ph.D.

Business incubators are loosely defined as supportive environments helping entrepreneurs to launch and grow successful businesses. Whether for-profit or non-profit, spawned by commercial real estate firms, state/local governments, academic officials or entrepreneurs, business incubation on the rise with an increasing variety of offerings to suit virtually any aspiring entrepreneur.  The National Business Incubator Association, and numerous state and local affiliates, offer loads of information for incubators and entrepreneurs alike.

Why this works
A critical advantage that business incubators offer is the availability of fully functional infrastructure – enabling entrepreneurs to focus on their fledgling businesses without having to worry about time-consuming operational bits like setting up permits, licenses, internet access, waste disposal, meeting space, security, vendor negotiations etc.

Successful companies paying it forward
As an active member of the Massachusetts biotech community, I’m delighted that biotech incubation is experiencing a significant growth spurt within the already prodigious life sciences ecosystem.  I wish this had been the case when we started MaxThera in the last decade.  Beginning with an idea in 2003, we landed at Inotek Pharmaceuticals, along with other startups, including Smart Cells. Inotek happened to have a bit of extra lab space and equipment available, and was willing to lend a hand to startups.  Other companies have offered shared space to startups as well, but such arrangements can be difficult to find are not always well-suited to the incubator role.

Massachusetts biotech incubators: A model for success
The Massachusetts Biomedical Initiatives (MBI) is sort of a granddaddy of biotech incubation – launched in the 1980’s, MBI provides office and laboratory space, including some basic lab equipment.  Centrally located in Worcester, MBI has grown considerably over the years, is housed in several buildings and has tenants ranging from innovative biotechs to research service providers. The Cambridge innovation Center (CIC) is another mature entity that offers amazing office facilities and resources to startups of every kind, and is located in Kendall Square (for any readers from another planet, that’s in Cambridge, Massachusetts).  Until now, CIC has not had direct access to laboratory space, but that is going to change soon with the launch of Lab Central expected later this year.

The future of biotech incubators is now
A few new breeds of biotech incubator are on the rise though.  A leader of one such new breed is North Shore InnoVentures, with thoroughly equipped biological laboratory facilities and a host of added value services (Note: NEPA is actively involved with NSIV as a sponsor and advisor).  As is the case with MBI, NSIV tenants include service providers, such as Hepatochem and Cell Assay Innovations, but here, both share the space with other startups, creating a unique environment for collaboration.  Joel Berniac, Founder and CEO of Akrivis Technologies, a recent NSIV graduate, described his experience in this incubator as follows:

“Being part of North Shore InnoVentures during our critical start-up phase proved to be a key success factor in our transition to commercial operations. The collaboration opportunities we received, along with access to world-class facilities, mentoring and a network of business and investor contacts, gave us an enormous advantage.” – Joel Berniac, Ph.D., MBA

Contract Research Organizations (CRO’s): Mixing business with startups to help entrepreneurs
Another new approach is incubator space offered by a contract research organization (CRO).  TGA Sciences and Cambridge BioLabs are two examples of companies that provide varied biological and/or pharmacological research services as well as offering shared space for startups.  For entrepreneurs, this is a great deal because their teams work in close contact with experienced scientists from the CRO, and they can readily expand their staff capabilities by engaging the CRO for services.

With my background in chemistry, I’m particularly interested in the launch of the CreaGen Chemistry Incubator (C2I) (Note: NEPA is also an advisor to CreaGen).  For entrepreneurs starting a chemistry centric business, C2I offers a unique office and laboratory space that includes access to experienced chemists as well as a full array of chemistry equipment instrumentation and automation equipment.  Biology driven companies might also like this space, especially if they are planning to develop small molecule products or to use chemistry based tools for their work.

Accelerating great science, entrepreneurship and financial outcomes…
Biotech business incubators, both new and established (I have mentioned just a few here), offer amazing facilities and resources with cost structures that cannot be matched by any stand-alone company.  In a world where financing great ideas is increasingly difficult, these facilities give entrepreneurs funding their dream with savings accounts, grants or friends/family a chance to get up and running fast.  Professional investors occasionally find gold in incubators, but anecdotal evidence suggests that incubator residents still represent an emerging opportunity for investors to find the next breakout success for their portfolio.  Some investors might also benefit from exploring incubators as low cost options for developing assets they have already funded. Word is getting around:  MassBio recently launched their Incubators in MA page to make it easier for anybody with an internet connection to find them.

This post was originally published by New England PharmAssociates (NEPA).  Click Here to read other posts from the NEPAblog.

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