Saturday, June 18, 2011

Settle Down, Beavis


My friends at Xconomy hosted another great event on Thursday – XSITE 2011. They did a really clever thing at the event – they invited several people to rant for one minute about what makes them angry about Boston’s entrepreneurship ecosystem. I was pleased to share my rant with the audience, and it got me thinking about a bunch of other things that get under my skin. With graduation season in full swing (two of my own and about a million friends and family), and a string of networking events with appealing titles, it’s been busy, personally and professionally. I’ll try to keep it civil, but I have a few things to get off my chest.

Let’s start with my son’s college graduation. I attended the baccalaureate service, replete with an address by an alumnus who was to receive an honorary PhD the following day. Now with all due respect (the speaker was an accomplished diplomat and theologian), I was irritated when he completed his speech for two unrelated reasons. First, the speech itself was preachy and condescending. Why must graduation speakers use the occasion to speak to the audience and not to the graduates? Indeed, I think it’s safe to say that all the speakers at all the graduations I’ve attended in the last few weeks (they all kinda blend together, frankly) took the same approach. One was introduced as “the most humble person I’ve ever met,” and went on for about 15 minutes about herself. I thought the point of being invited to speak at commencement was to provide some pearl(s) of wisdom to the graduates based on the speaker’s experiences and accomplishments. Second, the audience rose to give the speaker a standing ovation. I did not. I’ve reached my limit. Standing ovations recognize something truly exceptional. Two years ago, my other son’s lacrosse team did not win a single game. At the awards ceremony, the coach gave the most inspirational speech the audience had ever heard, and it was for a losing team. It brought many to tears. That deserved, and got, a standing ovation. You would think the baccalaureate speaker had delivered the first workable plan for Mideast peace. It was an ordinary speech, and I’ve finally dug in my heels.

On Monday I was invited to an event where the speaker was Joseph Ternullo, JD, MPH, Director of International Corporate Relations for Partners HealthCare and Associate Director of Partners’ Center for Connected Health. Instead of thoughtful comments on connected health (using technology to monitor and provide healthcare remotely), I was disappointed that he simply read the draft of an article he was preparing for publication. His halting speaking style made it difficult to listen to (by his own admission he “could talk a dog off a meat wagon”), and I felt as though his statement that he intentionally had no slides was an attempt to distract the audience from the fact that he was just going to read the draft. In addition, there were several content issues I took issue with. First, he said that the “market” was estimated between $17 and $35B. Market for what? The cost of the tools? The cost of implementation? Second, assuming there is some kind of market, who’s going to pay for it? Third, Connected healthcare and EMR (Electronic Medical Records) are similar in the sense that they’re limited by “politics.” Hospital systems and payors want to “own lives.” It is not in their interest to implement technology that makes it easier to transfer information about a person to a competing system or payor. Fourth, this is the Beta/VHS problem to the 8th power. Every hospital system has its own IT system, making “standardization” for EMR or connected healthcare virtually impossible. The only solution I’ve seen with a chance is one that “sits on top” of all the systems and allows them to talk to each other. Finally, Mr. Ternullo raised the point that nobody wants to carry around a health monitoring device because it singles one out. While I take the point, I also believe that it would work over time; my own children grew up wearing bicycle and ski helmets, and now wear them instinctively. Things like that do take time, but eventually, society absorbs them.

Rant over.

Tuesday was a T3 capital markets update hosted by Foley Hoag, which was quite nicely done. The most important comment was made by Ben Nye, Managing Director, Bain Capital Ventures, who, in closing, made a cogent argument for why the overall economy is in a very fragile state. I wouldn’t do it justice if I tried to summarize it, but it was a bit of an eye opener.

Interestingly, in my Breakfast Club meeting on Wednesday, I did my best McLaughlin Report imitation and asked everyone at the end: “Business up or down?” To a person, business is up. When I asked: “Double dip – yes or no?” about half the group said “no,” but the other half didn’t say “yes,” they said “flat.” I think we’re all beginning to grasp the reality that flat is the new up, but maybe it’s not such a bad thing. Slow growth is way better than a bubble, and I wish that message could sink in.

Thursday was a panel hosted by my friends at Goodwin Procter, and hosted by NECEC President, Peter Rothstein. Panelists included ├╝ber-blogger, Rob Day, Goodwin’s own, RJ Lyman, and Kim Stevenson, Manager, New Technologies, Connecticut Clean Energy Fund. Very lively debate about a wide range of financing issues. What struck me was the point that I’ve been making for some time – in terms of financing, cleantech bears a lot of similarities to biotech. Look at biofuels. Biofuels and biotech both have long commercial development timelines, require boatloads of cash (clinical trials vs. pilot plants), and both will get started by VCs and require some kind of major infusion. The panelists all provided some interesting perspectives, but at the end of the day, my belief is that cleantech investors can learn a lot from all the mistakes that have been made by their life sciences colleagues.

Oh, and my Xconomy rant? Let’s get the Venture back in Venture Capital. For 30 years I’ve been listening to entrepreneurs say they can’t get any funding and VCs say there’s no deal flow. Private equity looks like i-banking these days, VC looks like PE, and angels look like VCs. Angels are a bunch of orthodontists with checkbooks, not organizations with a receptionist and an investment committee. What the hell is the difference between a superangel and a VC?! My theory was recently corroborated when Ampersand Ventures changed their name in April to Ampersand Capital Partners, recognizing their focus on middle market PE. Back in the day, biotech companies went public on pre-clinical data; today, VCs want PhII data for an A round. What we need is someone to take some risk again.

And I still managed to get some work done over the last two weeks…