Author Archive for Graham Randall

Nov11th2008

Pitching to investors: less science, more business

Published
by
Graham Randall
on November 11, 2008
in BioTech/Life Science, General and VC and Angel Funding
. 0 Comments

Over the last couple of weeks, I’ve had the chance to see and critique a lot of early-stage company presentations. One criticism that comes up again and again is that scientist-entrepreneurs waste too much time talking about the details of their discovery and not enough time on the business opportunity.

When you’re pitching to investors, don’t spend more than a quarter of the time describing the science.

In one presentation I saw, the title slide was something like, “Inhibition of Protein X by blah blah blah.” I groaned. I knew what was coming. In a ten minute talk, the presenter spent 13 minutes discussing the details of his technology and 2 minutes on the market potential. The scientist felt that it was important for his audience to understand his technology and to convince them that it works.

Scientists, pay attention. Raising money from investors isn’t like raising grant money. When raising grant money, the quality of the science is the whole game. You have to convince the reviewers that your methods are sound and your findings are correct. Reviewers care about the details of your protocols and your publication history. But the reason things work this way is because the only return granting organizations are looking for is more high quality science.

Investors are interested in a different kind of return. They’re interested in economic returns. Thus, in your initial conversations with investors, you’ll find that they’re willing to assume that the science works, in order to dive in on questions of market size, IP protection, and management. As one of the VCs at last week’s Texas Life Science Conference put it, “I’ll spot you the science, now how am I going to make money?”

That’s not to say that investors don’t care at all if the science works or not. They’re just filtering out opportunities in a different order. Due diligence on the technology comes after considering the market potential and the talent of team.

Look, I know that the science is the interesting part. I understand that it’s your life’s work and the most important thing in the world to you. But nobody is going to invest in your idea if you don’t tell them how it’s valuable to them.

Sep4th2008

Is a Ph.D. Required to be a Biotech Entrepreneur?

Published
by
Graham Randall
on September 4, 2008
in BioTech/Life Science
. 1 Comment

Graham Randall is a regular contributor to Startup Houston on the topics of biotech, life sciences and entrepreneurship.

Do you need a Ph.D. to be a Biotech Entrepreneur? This seems to be a popular question these days, even though I think the answer is pretty obvious: No.

There are lots of biotech entrepreneurs out there without Ph.Ds. What really matters is what role you want to play in your startup company. If you want to found a company and be its lead scientist, then obviously a Ph.D. will be required. Not just for the credential, but because it’ll take you several years to acquire the knowledge necessary to do the kind of research that yields results with commercial potential.

But if your intent is to be the founder and general manager of a biotech company, then the value of a Ph.D. is diminished.

Why would you need a Ph.D.?

The knowledge you gain from earning a Ph.D. will help you evaluate technologies. Even when you’re evaluating technologies that aren’t directly in your field of expertise, the critical and analytical skills you learn in acquiring a Ph.D. will help you quickly get up to speed and start asking the right questions.

You’ll also learn some leadership skills while doing your Ph.D. You’ll gain experience giving lectures and communicating your ideas. You’ll learn how to think on your feet and handle tough questions. And from these experiences, you’ll gain some confidence.

The Ph.D. is also a credential that will allow you to apply for grants on your own. Even so, if you’re not the inventor of your technology, then your partner, the inventor, will probably have a Ph.D.

Why don’t you need a Ph.D.?

If your goal isn’t to be the Chief Scientist of a biotech company, then the 4-7 years you spend in a lab trying to get a Ph.D. would be better spent working at a biotech company gaining practical business experience. Working in a company will not only teach you a lot of technical business skills like finance and accounting, you’ll also be exposed to a variety of management styles, team work, project management, quality assurance, manufacturing, regulatory approval, and sales and marketing. This is the experience you’re probably not going to get in the lab, but it’s crucial to starting a company.

Conclusion

No, I don’t think a Ph.D. is required. Getting a Ph.D. is a personal decision. If you feel passionately about science, or if you have a strong personal compulsion to “phinish”, then go get your Ph.D. But if you think it’s only a means to an end, I think your time is better spent getting real world experience. Maybe even get an MBA (which will be the subject of a future post).

Aug15th2008

Why Aren’t There More Prizes in Science?

Published
by
Graham Randall
on August 15, 2008
in BioTech/Life Science and General
. 2 Comments

Graham Randall is a regular contributor to Startup Houston on the topics of biotech, life sciences and entrepreneurship.

Newt Gingrich recently wrote an editorial in the WSJ [subscription required] calling for greater use of prizes to solve the world’s problems. Regardless of what you think about Newt’s politics, it’s difficult to deny that the current grants-based process of funding science isn’t meeting our needs. Grants are too risk-averse and too time-consuming. As a result, the visionary, but risky, experiments that lead to major breakthroughs have difficulty getting funded, and many future scientists are turned off by the prospect of spending a career writing grant applications. The success of the first X-Prize shows that prizes can work and can be much more cost-effective than the grants system.

Gates Dissatisfied With the Conduct of Science

Derek Lowe commented a while back on the dissatisfaction of the Bill & Melinda Gates foundation with the results of their Grand Challenges. These were grants awarded in 2005 to researchers to try to solve the biggest public health problems. Unfortunately, these grants produced no major scientific breakthroughs. So, the Gates Foundation is reissuing the grants, but this time ignoring the so-called “experts” and looking to other fields for ideas.

Derek isn’t surprised that the grants produced no results since the practice of science is so unpredictable. You can’t do science the same way you would build an operating system–set some deadlines, allocate resources, and draw up a Gantt chart.

Still, I’m not certain that the conduct of science wouldn’t benefit from somebody like Bill Gates throwing some money around and imposing some discipline. Science, and in particular academic science, is woefully inefficient. Part of this is because in academia, the worker bees (graduate students) are still learning their craft. But it’s also because, having accepted that science is unpredictable, hardly anyone puts any thought into managing the project. Few scientists even have training in project management. Experiments get done when they get done, and then the scientists move on to the next experiment. Science, today, is too much like a drunk man’s stagger.

What is generally missing is a project manager–someone to drive the schedule and hold the team accountable for meeting deadlines. By deadlines, I’m not suggesting “cure cancer by the end of the semester.” I’m thinking of shorter-term, measurable goals. What can be accomplished this week, this month, and this semester, and how do the results contribute to the ultimate goal? Nobody’s keeping an eye on these little details in an academic lab. Days turn into months which turn into semesters. Graduate students bang their heads against walls pursuing deadends because nobody set a deadline for pulling the plug.

All of this is allowed to go on in academic science because the focus is on the proposals and the subsequent publications, not the actual, real-world-affecting results. Come review time, anybody can say “Look at how productive we were, we published all these articles!” What Gates is realizing is that publications don’t cure diseases.

Prizes would bring the focus back to results–real-world-affecting results.

Gingrich’s Prizes

In Newt’s article, he suggest seven prizes with $2 billion awards for accomplishing the first three and $1 billion for the rest:

1) A low-cost vaccine or preventive intervention for malaria — possibly the single biggest potential improvement in the quality of life in poor tropical countries.

2) A modestly priced, mass-manufacturable hydrogen engine for cars, which would be the biggest single contribution to reducing carbon loading of the atmosphere and reducing subsidies through high oil prices to dictatorships.

3) A cheap method for turning large quantities of seawater into fresh water.

4) A reusable system that could get people into space at 10% of the current cost, thus enabling genuine space tourism and launching an age of exploration.

5) The first privately financed permanent lunar base.

6) A method for reusing nuclear waste to make Yucca Mountain, Nevada unnecessary as a repository.

7) A method of learning math and science that kids like, and that enables us to leapfrog India and China by breaking out of our unionized, bureaucratic curriculum. This would enable us to replace “No Child Left Behind” with a more effective education model that could be called “Every American Gets Ahead.”

This is a good starting point for further discussion, and I’m sure everybody has their own pet cause they believe is worthy of the list. I’d rather see more prizes for addressing disease. I also think Newt’s prizes are too big. There’s no doubt that the person who invents a mass-manufacturable hydrogen engine will make a lot of money just by licensing the technology to automobile manufacturers. So does that challenge also merit a $2 billion award? For $10 million, the X-Prize found a solution to fly us into space, so why should we spend $1 billion to reduce the cost of that trip by 10%?

We should differentiate between the two uses for prizes:

  1. Spur innovation in a potential commercial market. Compel innovators and entrepreneurs to take the next step to commercialize the technology.
  2. Incentivize innovators to develop solutions to problems for which there is no significant ROI. The mainly applies to orphan diseases, like malaria.

and then adjust the size of the prizes accordingly. Curing orphan diseases is going to require big prizes, but prizes designed to spur innovation in a potential commercial market should be just large enough to motivate people to get started–like the $10 million offered for the X-Prize.

So what do you all think? What causes do you think merit prizes? How big should those prizes be? Please leave your ideas in the comments.

Aug8th2008

Houston’s Dearth of Biotech Entrepreneurship

Published
by
Graham Randall
on August 8, 2008
in BioTech/Life Science and Conversations
. 0 Comments

This post comes to us courtesy of Graham Randall, Ph.D., MBA, who has agreed to become a regular contributor to Startup Houston and will write on the topic of biotech, life sciences and entrepreneurship. Graham is a Ph.D. candidate in molecular biophysics at Baylor College of Medicine where he was a fellow of the W.M. Keck Center for Computational Biology and a recipient of the prestigious John J. Trentin Scholarship Award. His research focuses on the effects of DNA topology on protein-DNA interactions. Prior to graduate school, Graham spent eight years in Silicon Valley as a software architect working for several startup companies, including Tellme Networks. He has an MBA from Rice University and a B.A. in applied mathematics from the University of California at Berkeley. Graham also writes two other blogs: Driving While Texan and Two Randalls.

Houston lags the major biotech clusters

A lot of energy has been spent in the last 10 years trying to figure out why Houston, with all the research conducted in its world-class medical center, hadn’t spawned more biotech startups. Houston lagged behind the major biotech clusters-San Francisco, San Diego, and Boston-in the number of biotech employees (~10,000 vs. 30,000-40,000), the number of VC deals (<10 vs. ~100), and the proportion of corporate-sponsored R&D (25% vs. 70-90%). The density of technology companies in Houston was far lower than the leading regions, so we had an underdeveloped infrastructure to support startups and a small pool of startup leaders.

Still, the city’s leaders wanted to see biotechnology become a major driver for growth in Houston’s economy over the next 15-20 years by creating 65,000 to 95,000 jobs and allowing Houston to remain competitive. Two organizations in town, the Houston Technology Center and BioHouston, lead the city’s efforts to encourage growth in the biotechnology sector. These organizations deserve credit for more than doubling the number of life sciences companies in Houston, as well as tripling life sciences employment.

But Houston still lags far behind the major biotech clusters. What is missing? For a while, the prevailing reason was that there just wasn’t enough biotech-savvy venture capital in town. Startups were forced to seek funding on the West or East coasts, and those deals invariably required the startup to move away from Houston.

This is only one piece of the puzzle, however.

Results of a competitive analysis

Last spring, I led a team of Rice EMBA students in an analysis of Houston’s biotech cluster. Our analysis included a look at the best practices of Houston’s competitors with the goal of identifying opportunities. The 20 competitors we considered were a selection of universities, economic development organizations (EDOs), non-profits, startup incubators, and state programs.

For each of the competitors, we examined their organizational philosophy and vision, primary target audience, scale, activities, and fundraising model. For the universities, we found extensive cross-campus programs with strong ties to the local business community. The schools actively promote technology transfer to students, postdocs, and faculty through a variety of cross disciplinary events designed to encourage attendees to think about how research can be commercialized. The integration of technology transfer with research stood out at UCSF, in particular, where the Center for BioEntrepreneurship is officially housed in the Office of Research. Similar initiatives to link academic research and local industry were found at the EDOs, non-profits, and state programs, with the additional focus on developing biotechnology-friendly public policy. Continue reading ‘Houston’s Dearth of Biotech Entrepreneurship’