The Professional Tooch

Lamarck’s Legacy

2011-12-19T09:57:00.007-05:00

A few years ago, I wrote an article that was published in Mass High Tech (yeah, yeah, I know. It’s a lousy picture…), the working title of which was “Cleantech Recapitulates Biotech.” Not surprisingly, that’s not the title it ended up with. I was making a reference to embryological parallelism, a disproven evolutionary hypothesis typically stated as "ontogeny recapitulates phylogeny," which suggested that embryological development (ontogeny) is a microcosm of the phylogenetic tree – different species' embryos pass through stages of “lower” organisms their evolutionary history as they develop into offspring (e.g., a human passes through the stages of chimp, ape, etc. on its way to becoming a human baby).

The MHT article highlights one of the key similarities between biotech and cleantech – the need to look to other industries for key executive management as the nascent industries are taking shape. It was originally written with another theme which was removed to shorten it for the magazine. The other point of similarity between the industries is the financing structure – the need for an early slug of venture cash, then long development timelines and hence the need for a much more substantial slug somewhere down the line, with no guarantee of success for many years. For those of us with some grey hair, it’s an old song. When the biotech industry was getting started, and every VC wanted to be in on the next Genentech, they were chasing biotech entrepreneurs with their checkbooks, with an eye on an IPO in a few years and a quick 5X ROI. As biotech has matured, and much of the low hanging fruit has been picked, similarly-motivated investors’ attention has turned to the sexier cleantech space.

Last week I attended a packed NECEC event at Choate on doing cleantech financing deals with large strategic partners. A great discussion with a number of industry luminaries like Bill Brady, Dennis Costello and Eric Emmons, and expertly moderated by Peter Rothstein. As I listened to the discussion, I was struck how this same discussion could have taken place (and probably did) 20 years ago in the context of biotech investment. The titles of the participants would have been the same; just the company names would have been different.

Well, there’s nothing like a good straight man. Just as I was about to make the observation (What? You thought I would attend a panel without asking a question?), Doug Zingale saved me the effort. Andrew Lackner, with GE Capital, made the comment that the difference is that cleantech is much more diverse. It includes everything from biofuels to smart grid to wind to solar, and all things in between. I would argue that the comparison is flawed. The correct one is between cleantech and life sciences (which I consider to include everything from biotech to diagnostics to med device to health care IT). If we compare just biotech against biofuels, for example, the comparison is effectively the same. However, there are two key differences.

First, a lot has changed in the last 20 years. In those days, pre-clinical companies went public; now you need Ph IIb data to do an A round. When those early biotech investors realized that Mother Nature would be the final arbiter of success, not market size and penetration and reimbursement, and that it would be 10 – 15 years before the answer was known, many became disillusioned and started looking for investments with shorter horizons. It didn’t help the life sciences industries that all the Internet opportunities came along. Some of that corporate memory has been carried into cleantech investing, and is why many more businesses look like project finance than company formation.

Second, at the end of the road with a biotech investment, you end up with a product that someone will pay you thousands of dollars a year to inject in their veins. At the end of the road with a cleantech investment you end up with a commodity. If you miss your numbers by $0.02 a gallon or KW, you’re screwed.

After the panel I spoke with Doug for a minute, who made the interesting observation that yes, it’s a commodity, but it’s worth trillions of dollars. We didn’t have time to finish the conversation (but we plan to), but I would counter that prior to the patent running out, Lipitor® was good for almost $11B of revenue for Pfizer. That’s one company with billions in revenue from one product. Trillions, yes, but it will be spread over hundreds of companies, since it’s clear that no single company will own the market for production and distribution of all cleantech products.

Still, the problem is that regardless of the similarities and differences between the industries, it’s mighty tough to get investors’ attention on a multi-year, hundreds of millions of dollars investment when they can fund the next Angry Birds, which will be profitable in about 15 minutes and will cost a lot less to get to market. What we need is to get some of the “venture” back into venture investing.

"Where’s the Beef?" You Mean: “Where’s the Fat?”

2011-11-23T10:11:00.001-05:00

First, an apology. I know it’s been a long time, but to borrow a line from the Talking Heads: When I have nothing to say, my lips are sealed. And now, on with the show.

Yesterday I was chatting with some friends and one of them mentioned something that I jumped on making the point that it was yet another example of the negative impact of our constant quest to cut fat out of society and the economy. But, you say, “Cutting fat is a good thing, right?” Well yes, but only up to a point.

Some of you may know that I’m an amateur chef. As any chef will tell you, the flavor is in the fat. While the texture of a fillet mignon is unmatched in any other cut, there’s way more flavor in a New York strip. Why? There’s more fat in the strip steak. Nobody’s asking you to eat it, but let’s not forget what it adds to the meal. (As an aside, I’m both excited and nervous about being featured as “guest chef” next month alongside my good friend, fellow snowboard instructor and Executive Chef at The Hunt Club, Chris Fratkin!)

My home is in a neighborhood association that was started around the turn of the century (…the century, not the current one). There are several common areas, and between many of the houses, pathways linking them. When it was being built, they added a small stone house on association property where a full time caretaker kept tools to maintain the common areas. I can easily imagine the “old days” when that person was on the grounds all day, knew every neighbor and their cars, and perhaps most importantly, knew when something was wrong in the neighborhood. That person made a decent living and put his kids through school. To have someone in that role today, with OSHA, SSS, disability insurance… it would be over $100k all in, and no neighborhood could afford it (which is a whole other story, and don’t get me going…). Now, the common areas are badly overgrown and houses are being broken into. In the effort to be “capital efficient,” we keep taking fat out, but we’re losing flavor, too.

Last week I attended Acceleration 2011 at Nutter, and co-sponsored by Halloran. The event was quite well done. Well organized, good facility and excellent panelists. The first panel was “How Lean is Too Lean?” Great discussion, and Bruce Booth of Atlas made some great points. One was the distinction between lean and virtual, and the ensuing distinction in the discussion of what is too lean versus too virtual. I agree that there’s a difference, but as I’ve previously noted, there is a point where companies lose the flavor if they’re too lean or too virtualized.

In a tech company, and certainly in any life sciences company, popping into someone’s office and saying, “Did you see the article in Nature last week on chromosomal rearrangements?” is invaluable. I agree that it’s easier to conduct business remotely these days, and young people are far more accustomed to it than the old guard, but let’s not minimize the value (and flavor) of human interaction. There may indeed be a cost associated with it, but it pays dividends.

On a related note, one of the panelists relayed the story of how he filled a key C-level position in the company using LinkedIn, and was happy with the result. Don’t get me wrong, we use LinkedIn, and unlike many of my colleagues who see it as a threat, we embrace social media, but as a tool. I would argue that he got very lucky. Again, I’m a big fan of efficiency, but don’t overlook the value of having a pro do the research, vet candidates and benchmark them against a known database. I know it sounds self serving, but again, it’s about the flavor.

Wish me luck in Vermont!

Settle Down, Beavis

2011-06-18T21:03:00.003-04:00

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 8^th 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 über-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…

A Billion Here, A Billion There, Pretty Soon You’re Talking Real Money

2011-05-29T15:02:00.002-04:00

Last week I attended a Finance Committee Meeting at MassBio: “’The Billion Dollar Molecule’ Revisited.” Not surprisingly, it was a sellout, given the panel of Josh Boger, Rich Aldrich and Roger Tung. The purpose was to take a look back at where Vertex has come over the 17 years since the book first came out. Timing is everything. The panel followed closely on the heels of the approval of INCIVEK™ (telaprevir) for Hepatitis C two days prior.

It was a modified “fireside chat” format, which I normally don’t like, but worked extremely well. My good friend, John Hallinan, moderated with aplomb, and in this very informal setting, the conversation flowed effortlessly. There were some very interesting insights and stories, and, since the place was crawling with Vertex employees and alumni, some inside jokes. Before the event, as I thanked John for inviting me, he exhorted me to participate. Me? Not ask a question? Guess he doesn’t know me as well as I thought.

Well, there’s nothing like a good straight man. Rich made the point early in the discussion that of all the elements contributing to Vertex’s success, the team was the most important. (Music to my ears.) Later, when the discussion had turned to innovation, Roger proposed that part of the Vertex success story was due to the small team in the early days, and that big organizations don’t innovate well. Josh later pushed back on that statement, citing Google and Apple as two of the most innovative companies in the world, with clearly big teams. The answer, as with most things, probably lies somewhere in the middle. I am occasionally asked to join boards of directors of various organizations. While flattering, my standard response is to find out how big the board is. More than about 6 or 7 is, in my mind, a recipe for inaction and interminable meetings. On the other hand, I agree with Roger that a lot can be accomplished in a small sub-committee. My guess is that Apple and Google are not innovating by soliciting the opinions of the entirety of their respective employee bases, and that innovation is taking place in small, matrixed, cross functional teams.

When it was finally my turn, I asked the group what their advice would be to the current incarnation of Vertex at about 1,700 employees, particularly with respect to innovation. They did not offer any particular instructions, but Josh offered an observation on what I thought was a brilliant policy at Vertex. Of the many creative and innovative aspects of the culture at Vertex, Josh said that every one, every one, of the 250-person sales force were interviewed by someone in the research organization before they were hired, and once hired, were assigned a “research buddy.”

As I’ve blogged before, all roles in a technology company are technology roles. OK, there may be a few exceptions, but think about it. If you’re in HR and don’t recognize the unique nature of the research staff and work to create a culture that supports it, or if you’re a finance person who’s never heard the term “third party payor,” or a marketing person who doesn’t understand how to say nice things about the product within the regulatory limits imposed on the industry, you’re going to have a problem.

Recognizing and acting on the importance of everyone in a technology organization being on board is ingenious. It is imperative that your sales people know enough about the technology to be able to sell it to sophisticated medical professionals. They don’t need to be experts, but do need to know enough to speak intelligently. Equally importantly, they need to know when they are out of their depth, and have a resource they can count on to get them back to safe waters.

As perhaps the most sports illiterate person on the planet, I’ve never been good at sports analogies. I understand that a baseball team in Boston beat one from New York in the World Series a few years ago, and apparently it was quite the big deal. OK, it’s not quite that bad… One sports writer at the time made the observation that after practice or a game, each of the players on the Yankees got into their cars and left the stadium. At Fenway, many team members went together, in the same car, to go have a beer or otherwise spend time together. That’s what is meant by a team, and was attributed, in no small measure, to the Red Sox’ win that year. So don’t underestimate the value of putting the right team together, and, particularly for technology companies, filling the ranks with team members who understand the underpinnings of the product.

Oh, and as for the one sport that I do follow, go Bruins!

Thank God for the Government

2011-05-16T19:40:00.001-04:00

Those of you who know me well, or if you’ve read some of the posts here, know that I’m fairly conservative politically. I’ve also tried to keep this column apolitical, although I don’t suppose that such a thing is ever really possible. So you may be surprised by the title of this entry. While I’m not a fan of big government, or of government intervention, I do support a fair balance between individual liberty and reasonable oversight. Big Brother has given us some essential protections that, while one may argue around the edges, we are all far better off having than being without.

Government agencies are not in the most enviable of positions. When things are going well, everyone wants to make cuts, because clearly, they have done their job and why should we continue paying for bloated infrastructure? When problems happen, someone gets dragged in front of Congress, and heads typically roll. Knowing that the tenure of many leadership positions in government agencies are subject to the election cycle, why would anyone in their right mind want to work there? Nonetheless, and again, taken with a grain of salt, I’m far happier that we have a USDA and an FAA and an FCC and an FDA than I would be if we didn’t. The problem, in my mind, occurs when government agencies start to wade into paternalism, where the commercial marketplace is a far better arbiter of value.

Where is all this going? Last Tuesday I was once again privileged to be included in a reception hosted by Health Advances. An excellent panel on Reg Affairs: The Regulatory Minefield: Implications for Global Go-to-Market Strategies. Moderated by Marie Schiller, panelists were:

Richard Francis, Vice President, Global Commercial Strategy, Biogen Idec
Ross A. Jaffe, MD, Managing Director, Versant Ventures
William Pignato, Global Head, Regulatory Affairs, Novartis Molecular Diagnostics
Patricia B. Shrader, Vice President, Corporate Regulatory Affairs, Medtronic

While a panel on regulatory affairs may seem like a bit of life sciences industry arcana, it was a timely, lively and valuable discussion at a time when FDA is still on the hot seat (think Vioxx), and has made significant changes to an important aspect of medical device regulation (the 510(k) approval process) and is proposing more, and is also proposing to exercise the authority it has heretofore chosen not to in the regulation of “home brew” or laboratory developed tests (LDTs). (It didn’t hurt that the discussion was facilitated by the excellent appetizers and drinks provided by our gracious hosts!) Home brews or LDTs are diagnostic tests that are developed and validated by a particular lab and performed only in that lab. LDTs are regulated by CLIA, a division of CMS, and the current regulatory hurdle for CLIA approval is to demonstrate that the test is testing the analytes you say it is – it has nothing to do with whether or not the test is of any clinical relevance. In contrast, the FDA regulates tests that are developed to be sold in kit form or for use at the point of care, and can prohibit you from marketing it if they feel it is not a clinically valid test.

I asked the group if they thought that when FDA finally regulates home brew (I’m not holding my breath – they’ve been talking about it for as long as I’ve been in the industry, and I’m not about to tell you how long that is…), they would use CLIA as the model, or the paternalistic FDA approach. In fairness, part of FDA’s mandate is to assess risk; however, there are numerous cases, for example within the AIDS and cancer communities, where affected persons are willing to take the risks associated with a new drug, particularly when it represents the only alternative to death.

There are some industry groups, notably the American Clinical Laboratory Association (ACLA) that (predictably) oppose the new level of regulation. Are you sitting down? I’m in favor of it. When I was a motorhead kid, Congress mandated pollution controls on cars, and increases in fuel efficiency. At the time, I had a 1973 Chevy Nova with a 350 engine that got 8 mpg when it was new – worse than my father’s Cadillac with a 472! Classic. Engines with the government-imposed controls did, in fact, produce cleaner emissions, but ended up using so much more fuel getting from A to B, that they created more pollution (after some serious wrench turning and installation of new components, my car averaged 21 mpg and got rubber in three gears). Car makers vehemently opposed the new regulations, saying that the mileage mandates were impossible to achieve. Where are we now? Car companies routinely compete based on mileage, and my diesel averages over 40 mpg.

I’m not surprised that the ACLA opposes the proposed changes. Will it result in delay and ultimately cost the consumer (which, as we continue to move toward a single payor health insurance system, is you and me) more money? Yes. Ultimately, though, it will also keep the “riff raff” out of the business (the mom and pop labs where the lunch is stored next to patient samples in the fridge), and will provide some uniformity by which clinicians can help determine clinical utility. I just hope that it will be done with prudence and follow the European or CLIA model which does not evaluate clinical utility – up to a point. As I said in my earlier post, the commercial marketplace does not always screen out all the products that it should, so some level of government oversight is a really good thing.

Don’t worry – there’s still quite a long way to go before I turn into a complete socialist.

Apologies to Galileo

2011-04-11T13:19:00.004-04:00

Luke Timmerman just posted another great Xconomy article about Sage Bionetworks and Open Source Biology. Last year, I blogged about the topic as it relates to intellectual property protections in an age known for open source endeavors such as Napster, Firefox and Linux. I dubbed the generation “Gen-O” (O for “Open”) and ruminated about the implications of that mindset. Luke relays Sage president and co-founder, Steve Friend’s, vision that since the sea of genomic data is effectively impossible to comprehend in any case, and made even more intractable given the maze of intellectual property rights to be navigated, the greater access of a non-profit, open source model will allow a globally diverse pool of great thinkers to parallel process the data, which will result in development of novel therapeutics.

Hold on, because this pendulum is swinging. For a long time, I made my living negotiating rights to intellectual property, and even testified on the importance of protecting those rights. But I’m not one to tilt at windmills. I think a lot of good things really do result from open sharing of information. My concern is that in order to be effective, everyone has to play by the same rules, and that seldom happens. Remember all the rhetoric when the economic markets were about to reopen following the September 11 attacks? Everyone preened about how they were going to do the right thing and exhibit forbearance. What happened when they did finally reopen six days later? The Dow lost a record-setting 7% in one day. Worldwide markets saw billions of dollars evaporate. It’s human nature. Everyone wants everyone else to play nice in the sandbox, but only when it’s not their own dump truck that’s getting smashed by a rock.

And from my experience on both sides of the academia/industry continuum, who are the worst at this game? The academics. While they rail on about crass commercialism and how patents are the bane of their existence, they go to great lengths to obfuscate or be coy about the latest new discovery in their lab because they don’t want to be scooped on the publication by an academic competitor (Remember: to get a publication in the leading journals, the report has to be novel and significant. No top journal wants to publish the confirmatory report. Publications in leading journals lead to tenure and an increased likelihood of grant funding. A well-funded, tenured professorship is the most stable job known to man.) The vast majority of genome data are being generated and disseminated in an open fashion by academic consortia like the Human Genome and HapMap Projects. I can pretty much guarantee you that not all the most recent data are represented there.

There’s an adjunct. Government regulation, which is impossible to implement when the “regulees” are not a handful of companies, but hundreds of thousands of individuals. The age of regulation has been slowly coming to an end – the transportation and communications industries were two of the first – and the movement is working its way towards everything else, including healthcare. My observation is that the whole idea of “Open Source” goes hand in hand with deregulation and personalization – they’re all different species of the same genus. The mindset is that “we’re smart enough to figure this stuff out on our own, thank you very much big government, and we don’t need you interfering and slowing things down.” In general, I agree. I’ve often cited the example of pumping gas. It wasn’t that long ago that if you needed your tank filled, a skilled, specially trained technician had to do it for you. Now, God help you if you want someone to pump your gas. Why? Because we, as a society (especially in the US), are incredibly good at absorbing new technologies. We don’t need paternalistic government agencies telling us what we are or aren’t capable of understanding (now if we could just get the tort lawyers on board…). It’s why I generally oppose government meddling in direct-to-consumer genetic testing. I fully acknowledge that genetic tests to predict balding are likely based on shaky science and are of little value. Some level of government regulation is necessary, but 1) there will always be snake oil salesman, 2) market forces will drive out worthless products and services, and 3) many government agencies, with all due respect, don’t have the most stellar performance records.

Just as I believe that personalized medicine will drive us back to individualized drug compounding at the local pharmacy and that the concern du jour in 100 years will be global cooling, this pendulum will reach its apogee and swing back as well. There will be some thalidomide disaster that will shock everyone into realizing that (at least in the case of healthcare where peoples' lives are at stake) open source without some level of oversight is not such a great thing. Two things need to happen here. First, someone has to develop a viable business model for investing in the development of new therapeutics that rewards innovators and prevents copycats from undermining the effort before the risk-taker has recouped its investment, and second, government oversight needs to get out of the business of being a hindrance to the development of new products and respond to a new climate of groups of motivated individuals with novel approaches taking matters somewhat in their own hands to develop the next generation of new drug products.

Readin' and Writin'

2011-04-07T14:49:00.008-04:00

April 7, 2011

Editor

Worcester Telegram and Gazette

20 Franklin Street

PO Box 15012

Worcester, MA 01615-0012

To the Editor:

In response to today’s column by Jackie Reis “Public schools adjusting to enrollment shift” in which my daughter and I were both quoted, I would like to provide some additional comments that could not be made within the confines of the article.

There has been, and always will be in this country, an emotional debate on the relative benefits of independent versus public education. Part of the debate centers around the level of academic rigor in the two types of educational environments. While measuring “academic rigor” is an exceedingly difficult proposition, I do believe that, generally speaking, independent schools provide more academic opportunities than the public system. However, and very importantly, public schools provide many benefits that are not well represented in independent schools. For example, this past year we organized a cooperative program where two Bancroft Seniors benefited from the expertise of the faculty at the Worcester “Voke” to learn about internal combustion engines in a very hands-on fashion, while working with a Senior at WPI to understand the mechanical engineering theory underlying these practical applications. Practical skills, such as Shop and Home Economics have largely been eliminated from many independent (and public) school curricula, and this is an area where we need to reinvest.

The concern I expressed in the article was that society continues to foist upon the public school system many responsibilities that have no business in the schools. Schools are primarily about education, and all school programs should address that goal (even athletic programs should focus more on teaching young people about teamwork and leadership and less on winning). I recognize that some of our young people face difficult social issues, but the proposed solutions for them should not be administered by the schools; doing so invariably results in distractions from their educational mission, which is unfair to the vast majority of students.

Virtually all industrialized countries on the planet are examining their educational systems (which is way overdue in this country: in an increasingly worldwide community we continue to de-emphasize foreign language instruction; in an increasingly technical world, we are falling behind in math and science education; doctors haven’t compounded drugs in 50 years, yet we continue to require organic chemistry for medical students). Our county’s historic success is, in great measure, due to a culture of an educated public that fosters innovation and creativity. The public educational system (itself an innovation when first conceived) is a key pillar of that success, but needs to be more responsive to the changing demands of society.

We are a society, and successful societies depend on the varied contributions of all of its individuals. We should recognize the strengths of all the educational opportunities available to us, and equally, recognize (and celebrate!) that individual students will excel in different environments. We were very fortunate to have found that Bancroft provided the right solution for all of our children, but we are equally happy that our tax dollars support a system that provides the right one for many students.

Thank goodness there’s chocolate and vanilla ice cream.

Chris Palatucci

Worcester, MA

Decisions, decisions

2011-03-17T13:54:00.000-04:00

Coming to you live from a lounge chair in Jamaica. I just finished “How We Decide,” a great read by Jonah Lehrer. I have a few criticisms, (we’ll get to that later) but what I loved about it was Lehrer’s comprehensive assessment of a wide range of scholarly work straddling neuroscience and psychology and his ability to present it in a very approachable style. (Go figure. My PhD is in Neuroscience, but was done in a Psychology department.) Lehrer makes a compelling argument, based on numerous citations of scientific experiments, for why we need to reexamine our preoccupation with the view set forth by early philosophers that the “rational mind” should guide our decisions, and that our emotions just get in the way of an otherwise detached, data-based, dispassionate process. In fact, it’s quite the opposite.

Lehrer details how the data show that the “rational centers” of the brain are easily overwhelmed in making decisions based on complex datasets because they can only process a limited set of distinct datapoints at a time, whereas the “emotional centers” are massively parallel and can process lots of competing data simultaneously. Consequently, the argument is that when making complex decisions, our emotions guide better choices than our rationality, but we typically try to overrule emotional decisions with logic. I won't restate the entire argument here, but if you don't believe me, read the book.

It got me thinking about executive search. Choosing a new team member is like choosing a spouse. There are simply too many variables to process at once. If you agree with Lehrer’s assessment of the current research on decision making (and it’s kinda hard not to), these are decisions that shouldn’t be made purely rationally. Sure, all the candidates have to check off all the boxes of the core requirements for the position, but after that, it gets down to deciding who will be the best fit with the existing team, or who will bring to the team the missing elements that one seeks. These are largely “gut” decisions. Too often, though, I see clients almost embarrassed to admit that one candidate “just feels right” – they think that the decision should be made logically, rationally, dispassionately. This is where I want all my clients to read the book, and be convinced that sometimes they just need to trust their instincts. It’s also (in a completely self-serving comment) why you should always use a professional to help you work through these tough decisions and point out where you may be literally overthinking the decision.

As for my complaints about the book? One big one and one tiny one. Lehrer talks about the different “centers” or nuclei of the brain as if they are independently functioning units. It borders on a homunculus argument (“This is just what the prefrontal cortex does when faced with a decision.” p. 111). Back in Donald Stein’s lab at Clark University some 20 years ago, we were leading the charge against a reductionistic approach to brain science. The prevailing wisdom was that these anatomical structures defined discrete functional brain systems. There are, in fact, some brain areas that, for all intents and purposes, are “centers” of one or another function. (The occipital cortex is virtually exclusively devoted to vision.) However, in experimentally induced or naturally occurring damage to these “centers,” we can see the remarkable plasticity and adaptability of this infinitely complex organ. The brain is an incomprehensible network of networks, feedback and feed-forward loops, parallel processes and pathways that is in a constant state of flux. I completely understand that for a lay audience it’s much easier to attribute to these structures a certain amount of autonomy, but I wish Lehrer had made some kind of disclaimer that he was doing so only for convenience. I fear that the book will contribute to the popularity of a conceptual framework that, at this point, seems (and is) outdated.

The second is a pet peeve. Sorry for being such a grammar Nazi, but it’s “data are,” not “data is.”

IBM, AMS and CCC

2011-02-10T12:35:00.002-05:00

Tuesday morning I attended “Connecting Companies with Capital,” one of a series of events at IBM’s Innovation Center in Waltham designed to, well… connect companies with capital. This one was co-hosted with AMS and was focused on life sciences. The morning session consisted of networking (to which I was an hour late, thanks to the inability of New England drivers to remember from one week to the next how to drive in a little snow, and that a Statie giving out a ticket on the Pike is not cause to stop and rubberneck) and two great panels. The stage was set by IBMer Karen Parrish who provided an overview of their interest and commitment to life sciences, and provided some staggering statistics about waste and inefficiency in the “system,” which of course, represents tremendous opportunity. (They also gave a plug to their centennial celebration which you can get a flavor of from this YouTube video.)

The first panel on funding for all stages was moderated by my good friend and colleague, Dan Davis at AMS:

Michael Greeley – General Partner, Flybridge Capital Partners
Peter Fair – Principal, Velocity Financial Group
Bernadette Michaud – Team Leader, Northeast Life Sciences Team, Silicon Valley Bank
Peter Handrinos – Partner, WilmerHale;

and the second, on how to build your company, was moderated by my other good friend and colleague (yes, I have more than one), Lauren Celano, CEO of Propel Careers:

Stuart Haber – CEO, Infoscitex Corporation
Mike Webb – Executive Chairman, Virtify
Lauri Halloran – Founder and CEO, Halloran Consulting Group
Larry Wittenberg – Goodwin Procter, LLP, and the always entertaining
Rob Jevon – Managing General Partner, Boston Millennia Partners.

So here are some of my takeaways.

Karen spoke about the importance of standards for a collaborative community. I immediately thought of the VHS/Beta battle, the CDMA/GSM debate and many others. I agree with her entirely – they’re necessary for collaborative interactions. But when there’s a profit motive involved, all bets are off. The biggest impediment to a true EMR system in my mind? the reluctance of hospital systems to relinquish patient data to another hospital system. What’s in it for them?

Michael spoke about the increase of Pharma deals as an exit for startup biotechs. A million years ago at Feinstein Partners, we used to sit around and speculate that Pharma would swoop in and pick up struggling biotechs every time the IPO window closed, which, in those days, was measured in months, not years. It never happened, but I agree with Michael and believe that as Pharma continues to shed their bloated and underperforming R&D, they will increasingly (finally) look to biotech for pipeline.

Bernadette talked about the increase in tranched deals. My thought was “why wouldn’t you?!” Every time we have an economic downturn, the screws get turned a little tighter, and become the new standard. We’re running a much tighter ship than we used to, and we’ll continue to get better. It’s the silver lining of a recession. Rob made a similar point about a prospect he went to visit but never did after discovering on arrival that they had valet parking. Although, having said that, if I hear one more person talk about capital efficiency, I’m going to hurl.

She also spoke about the need for a short path to a strategic deal, and speculated that Venture is returning to truly “venture” investing. I certainly hope so, because God knows we need someone to take some risk around here…

I asked the second panel about building teams after their endorsement of virtualized companies. Mike took me to task a bit, and I guess we’ll just have to disagree on this one. I’m all for unbloating companies, but in a startup particularly, I believe there’s immeasurable value in having a team that can have hallway conversations and work together in the same space and share an occasional beer after work. I agree that it’s different if the team has worked well together before, and may not need to be in the same physical location, but it can be very risky. Rob, at least, agreed, and shared his story of an investment that failed because it took a year to discover that, despite the overseas R&D team’s insistence that the prototype worked as intended, it was, in fact, trash.

Finally, we heard from Ron Newbower, CTO and Strategic Director of CIMIT after lunch. In a very approachable and entertaining style, he made some great comments about the overall state of healthcare, but I won’t elaborate except to point out my main takeaway. The reason the word “system” is in quotes at the end of the first paragraph above is that as Ron correctly points out, the healthcare system is not a system. He gave Air Traffic Control as an example of a system. It’s a great point. If left to individuals, there would be a lot more plane crashes. Maybe what we need is a similar approach in healthcare – a patient advocate role? Or primary care physician? Oh, wait. We tried that. Didn’t work because of profit and turf battles. Silly me.

Enough about me. What do you think about me?

2011-01-28T13:40:00.003-05:00

This installment is a summary of a number of recent events, many of which, for the purposes of full disclosure, I had something to do with. Sorry for the self-serving plug, but I just had to – the events were really good! In chronological order:

Biotech Breakfast Club Annual Holiday Party

As many of you know, I run a small breakfast club of professionals in the life sciences industry. We meet every other month to discuss emerging trends or current hot topics in the industry. Every year, instead of our December breakfast meeting, we host a holiday party for leading executives in the Boston area. The event is “free” to the extent that we don’t charge anything to get in, but we do suggest a donation to a local charity. This year we raised over $1,500 for the Worcester County Food Bank. Interestingly, it was a bit lighter than last year’s raise, but part of that may have been because we were frankly not as well organized about collecting donations this year.

What was most interesting to me was that this year fell on the same night as another important seminar right down the road – one that I wish I could have attended. Just as the speaker would have been taking the stage, I noticed a swarm of people coming into our party. I asked someone about it and they admitted that a group of them left the seminar early to come to the party. I like to think it was because of the rarefied atmosphere at our soiree, but maybe it was just for the free beer…

Totally self serving, but it was really a great event.

Our “Grand” Genome

The next night (no, I wasn’t drinking when this scheduling was decided) The Bioscience Network, where I serve as a founding member of the Board of Directors, hosted a panel discussion with George Church, Phil Reilly and Kevin Davies centered on the topic of Kevin’s latest book, The $1,000 Genome. As I said to the audience when I introduced the panel, if you don’t know who these folks are, you’re probably in the wrong room (or reading the wrong blog). This one was really a winner. Kevin set the stage brilliantly (and the book is a great read, btw), and he, George and Phil followed with a very interesting and, at times, provocative, discussion. I confess that I had some difficulty getting one audience member off a particular topic, but other than that it was a lively discussion with lots of audience participation.

I took the moderator’s privilege and asked the panel if they agreed with my notion that since all the action will ultimately end up with proteomics, is whole genome sequencing the fax machine of molecular medicine (I made the analogous argument in my blog on biofuels). They didn’t necessarily disagree, but didn’t really agree either. Leave it to a bunch of PhDs to waffle on a question…

Pre- JP Morgan

Prior to The JP Morgan Healthcare Conference in San Francisco, the Super Bowl of life sciences conferences, there’s a skiing boondoggle at Squaw that I managed to get invited to this year. It was great fun to see so many young professionals out of context. For you snow fans, one of the days was the best snowboarding I’ve had in two years, which includes trips to Banff and Kitzbuhel. The background of my Blackberry is now a visual reminder of this epic morning with the clouds hanging gingerly over Lake Tahoe, perfectly groomed slopes and the sun rising above the mountaintops. Sorry to rub it in.

Not that I didn’t suspect so prior to the trip, but it was nonetheless noteworthy how a relaxed atmosphere can completely change the tenor of a meeting. Without going into too much detail, I had a particularly great interaction with a person who had been particularly prickly prior to the trip. Riding with a bunch of Type As is a trip in itself, but when you have the opportunity to laugh and relax, the business end of the networking just kinda falls off the bone.

JP Morgan

There are certainly lots of ways to measure how JP Morgan stacks up on any given year, but I tend to prefer a back-of-the-envelope method. Since 2009, which was a funeral, the mood has grown successively more upbeat. This year’s events were energized, with lines (!) to get into some of them. The Cooley event appeared to be the hottest ticket in town, but plenty of other events were buzzing, and the volume level at “the clock” was as high as it’s ever been. Despite the worst travel experience I’ve ever had trying to get back to the east coast during the blizzard of ’11 (which included a charming experience at a sketchy hotel near the Philadelphia airport), it was a fantastic trip with lots of new leads.

For a more concrete measure, my good friend and colleague, Doug MacDougall of MacDougall Biomedical Communications, reported very encouraging news. As a courtesy to their clients, they rent a couple of floors at a hotel near the St. Francis for the clients to meet with investors, bankers or other financial types. The same number of clients availed themselves of the service this year as last, but they experienced a 30% increase in the number of meetings. Perhaps the money is starting to flow after all.

Startup Downhill

Last one.

On January 26, the first annual Startup Downhill took place at Wachusett Mountain. This one was knocked out of the park if I do say so myself. At the risk of totally blowing the lid off what is an exclusive event, my fellow organizers (Doug Macdougall and Jon Eddy of Silicon Valley Bank) and I worked tirelessly to get this off the ground. (Thanks also to our other sponsors: Chris Denn at Goodwin Procter, Michael Barron at DLA Piper and the Crowleys at Wachusett.) I wish I could take full credit for the idea, but I shamelessly borrowed from others, and had the expert counsel of Doug and Jon, and we managed to pull off a great day of networking, and more importantly, deal making. As with the trip to Squaw, the relaxed atmosphere greatly facilitated interactions and constructive outcomes.

The weather cooperated well, but the coming storm scared off a few folks (they should have listened to me and not the weatherman). Still, we ended up with about 40 entrepreneurs and investors sharing ideas and making connections on the slopes at Wachusett. We’ve received nothing but positive feedback from participants, and are already planning next year’s event. If you need your life sciences company funded in New England, this was the place to be. Leading VCs, good food, a perfect venue, and some fun on the slopes. The non-skiers even had a productive and fun day.

Sorry to ramble on about how great I am. Maybe you can comment how great I am…

Health Advances Advances

2010-11-10T01:52:00.008-05:00

I was privileged to be invited to the Health Advances panel last night on “Patient-Driven Healthcare: New Commercialization Strategies” at the Mandarin in Boston. As always, Mark, Skip and the crew put on a great event in a spectacular venue. The networking over wine and aps was so engaging that it was difficult to get people in the ballroom to hear

Alfred W. Sandrock MD, PhD, SVP, Neurology Research and Development, Biogen Idec,
Jamie Heywood, Chairman, PatientsLikeMe, and
Marie Schiller, Partner, Health Advances

discuss this timely and important topic. They finally managed to herd us into our seats, and Skip Irving led a lively panel discussion.

There has been a lot of gum flapping about personalization for many years, but not a lot of solid progress. Yes, I’m aware of Herceptin et al., but Dx/Tx combos are still quite uncommon. I was initially a bit skeptical that this would be more of the same gum flapping, but was most intrigued by the part of the title after the colon: “New Commercialization Strategies.” The discussion thankfully turned out to have less to do with personalization, as the topic is commonly beaten to death, and more about the role of the patient in future healthcare.

In his opening comments, Jamie noted that Skip’s choice of words (“…patients at the table for these discussions”) reflected a misplaced focus, and should be turned around (“…patients allowing others at the table for these discussions”). I could hardly bite my tongue and wait for the Q & A.

I never did get the chance – the discussion ran significantly over, but everyone was enjoying it. Here’s my problem: with all due respect, I think Jamie is wrong.

I am reminded about a talk at an American Neurological Association meeting many years ago. In 1997, Allen Roses (who, by the way, completely disagrees with my prior snide comment about personalization) left Duke after leading the team that discovered the ApoE alterations associated with Alzheimer’s Disease to become SVP of Genetics Research and Pharmacogenetics at GlaxoSmithKline (where he remained until 2008 when he returned to Duke). Shortly after the announcement, he was giving a keynote lecture at the ANA meeting and started off by, well, not exactly ‘warming up’ the audience. Through a bit of a snarl and with a wagging finger, his opening lines went something like this: “I was stopped in the hall on the way here and a former ‘colleague’ asked me how it feels to be a whore, apparently referring to my recent move from an academic position to the crass, commercial GSK. Well let me tell you something. I am not a whore. Drug companies make drugs. Doctors don’t make drugs.”

I think Allen hit the nail on the head (although I may have said it a bit more politely). No party to this effort can take another for granted, but frankly, patients don’t make drugs, either. Yes, they have sometimes been seen as a tool to serve the purposes of a drug company in their commercial efforts, but there are also plenty of examples of true collaborations between a patient group and a drug company that served the needs of both parties. And yes, the patient groups are, will continue to be, and rightly should be an important part of the equation, but let’s not underestimate the need for a commercial partner in bringing a product to market.

Having said that, a system that delivers a product to the market only after investing $1B and 15 years of effort cannot sustain itself much longer. And what I was a bit disappointed about last night was that nobody cared to opine on that part after the colon. What are the new commercialization strategies? I have my own ideas, and have blogged about them before, but I would have really liked to have heard from the panel about their vision for the future of the drug development paradigm. Particularly on the heels of Fred Frank’s comment yesterday proclaiming the end of big biotech (I think he’s wrong, too).

The best comment of the evening? I’m not sure if everyone caught it, but Al made the provocative suggestion that we may soon see an outcomes-based reimbursement system. Could you imagine going to your healthcare providers and telling them that you’re only going to pay them if you get better?

Patient-driven healthcare is a good thing …to a point. Years ago when I was at Athena Diagnostics, I led the team that launched the first test for neutralizing antibodies to β-IFN. At the time, the interferon therapies (Betaseron® and Avonex®) were the only options for patients with MS, and both were very expensive. Our assay identified patients in whom the neutralizing antibody titer was high enough that they were no longer deriving the benefit of the therapy (arguably the first personalized medicine test).

It was like selling ice cubes to Eskimos.

Athena Sales Rep: “Doc – use this test to see if your MS patients are responding to the drug.”

Neurologist: “Lemme get this straight. You think a patient with MS will allow me to stop the only hope they have for relief of their symptoms? Don’t let the door hit you on your way out.”

Now once the interferon alternative, Copaxone®, came on the market, it was a different story. But prior to that, no doctor would have stopped the therapy, no matter what the antibody titer. That would have been the correct decision, but it would never have been tolerated by patients.

All in all, a great event. It’s always better when there’s something to talk about. And that’s coming from someone who really knows how to flap gums.

Nice Guys Finish Better

2010-11-04T09:00:00.001-04:00

This morning’s peHUB Wire has a great article on Reid Hoffman at Greylock. (ok, so I paraphrased this blog’s title from the cover story in VCJ. Sorry.) I don’t know this guy, but I like him already. Look, I get it. We’re all busy. But does that mean we can’t take the time to be civil and to help others out? It sounds like Reid and I share a fault: we may err on the side of being completely unable to say “no” (I once got called into Peter Feinstein’s office back at Feinstein Partners where he told me that I was the “biggest sap” in the office because I couldn’t say “no”). It’s funny – as a recruiter, lots of people don’t have any time for you …until they’re looking for a job. Then they’re all too eager to “meet to explore my next steps.” So here are some of my gripes and suggestions. In no particular order.

If you tell someone you’ll get back to them “early next week,” get back to them early next week. And here’s how that works: “Early next week” is from 8:00 Monday morning until noon on Tuesday. “The middle of next week” is from noon on Tuesday until noon on Thursday. “The end of next week” is from noon Thursday until 6:00 on Friday. Even if all you can do is drop a line that says “I got tied up and now won’t be able to get to this until Thursday,” take the 6 seconds to do it. You’ll be happy you did.
How long does it take to hit the reply button on an email? And yes, I get it. We all get ten thousand emails a day. But have the common courtesy to respond, even if it’s to say no. You can still do so politely, and we’re all adults and can be told no, but it’s annoying and unprofessional to be left hanging. As a recruiter, I take the time to call back candidates who were in the final running but were not selected. I can’t tell you how many times people thank me for taking the time to do so, since most in this business don’t. More importantly, it’s a reflection on my client. At the senior level, my client is likely to run into these same people again in a business transaction, and it wouldn’t be good to leave them with a bad taste in their mouths about the client.
Is it really going to kill you to spend half an hour with someone who is willing to come to your office? Of course, there are cases when you are particularly happy with a service provider or other vendor, but are you really saying that it is not possible that another service could be better or provide something that you’re not currently getting? Frankly, I have to turn down lots of requests from candidates who want to meet to discuss their career plans, because I simply don’t have the time to meet everyone, and the meeting is only relevant when we are on an appropriate assignment. When one does come along, I’d do the interview all over again anyway, so it’s generally not a fruitful use of time. However, if I have the bandwidth, I’m usually willing to grab a quick coffee with someone.
Say “thank you” every now and then. I am constantly amazed when you do a big favor for someone or a company and it’s not even acknowledged. It’s not that I’m fishing for compliments, it’s just 1) nice to hear it and 2) what I would do were the tables turned. Take that extra 30 seconds to pop off a quick email to say thanks to someone. They’ll remember it.
Respect others’ time. I, like Reid, would be happy to meet you on a weekend or evening. But remember that you’re taking time away from my family and down time, so don’t overstay your welcome.

It is possible to have balance, get things done, and be a “nice guy.” Reid has obviously done it, and I bet he and I are not the only ones (that is, assuming you think I'm a nice guy...).

Shameless plug: Come join us for a great panel discussion with George Church, Kevin Davies and Phil Reilly on the revolution in whole genome sequencing on 12/9. Register here.

Hire the Nerd

2010-10-05T17:31:00.002-04:00

I recently completed a search for a finance role and had an interesting discussion with the client about a candidate (let’s call him John). He said, “You won’t appreciate this, Chris, because you’re not a finance person, but I really liked John. We had a long discussion about expense reports, and we were really on the same page.” My client figured that I wouldn’t appreciate the arcane details of expense reporting. (Little did he know, but that’s a separate story.) His point was that only finance people could spend an enjoyable half hour discussing accounting for employee expenses, and that non-finance people would rather have their teeth cleaned.

There is some truth to his statement. However, as a recruiter, I look for enthusiasm as one of the differentiators among candidates. And one of the best ways to assess enthusiasm is to see how jazzed the candidates get about their area of expertise. That is, are they nerdy enough?

As a technology nerd myself (with academic training in math, computer science, biology, psychology and neuroscience), it would be very easy for me to drift into technical discussions with candidates. I have trained myself to focus on the management skills of the candidates, but I do allow and enjoy the technical discussions, and purposely cover that in the process.

Why? For two key reasons. First, I have long argued that all roles in a technology company are technology roles. Everyone in a technology company needs to have some level of grounding in the technology. As an example, I’ve often heard CFO candidates argue that numbers are numbers, and they should be considered for life sciences opportunities. Well if you’ve never heard the term “third party payer,” or don’t understand the long development timelines and capital requirements, or don’t know what a “burn rate” is, you’re going to have a tough time in a life sciences company. It’s the same reason you wouldn’t hire a CFO for your public company who didn’t have post-SOX public company experience. There’s even a recent example. Jolene Varney was hired from The Dr. Pepper Snapple Group to take the reins at Mylan Pharmaceuticals last year. Hunh? What were they thinking? It’s true she did the heavy lifting on the $4B demerger from Cadbury Schweppes, and I’m certain she’s very talented, but she had no experience in the life sciences! Not surprisingly (to me, anyway), she lasted three months. Now of course it’s possible that she took a look under the sheets and didn’t like what she saw, but at least one analyst wrote that “…Varney's departure was driven primarily by fit issues, as compared to something more serious. As a reminder, Varney had been with MYL since May 28 and had no prior CFO or generic industry experience."

Second, I want to hear the candidate’s level of enthusiasm about the technical requirements of the role. In John’s case, I was glad to hear that he got jazzed talking about expense reports. For a CTO or VP, R&D role, I want to hear excitement in the way they want to drill into the technology. In a Marketing role, I need to feel the excitement about their last campaign. You get the picture.

Having said all this, too nerdy isn’t good either. I once walked into a lunch interview and knew in about 7 milliseconds it wasn’t a fit. The candidate was way too nerdy for the culture at the client company. (Of course, I gave the candidate the benefit of the doubt and diligently conducted the interview, but it was only further confirmed by the time the check arrived.)

So hire the nerd. And in a shameless plug, it’s why you’re always better off with a recruiter who understands the client’s business. The life sciences industry is just different. Trust me.

Gen-O

2010-06-18T18:16:00.008-04:00

We’ve had Gen-X and Gen-Y, but now we are about to have the onslaught of a generation of people who grew up with Linux and Napster and Firefox and so many other open source technologies that I wouldn’t be surprised if this generation comes to be knows as Gen-O (for "Open").

Myriad Genetics filed a Notice of Appeal on Wednesday in the suit brought against them by the ACLU challenging the validity of the BRCA1 and 2 patents. The ACLU claimed a first round victory on March 29 when a New York district court held that genes are products of nature and therefore not patentable. My friends at Choate, Hall and Stewart have a great summary of the case in last week’s GEN.

In October of 2007, Radiohead released their album, In Rainbows using a unique pricing policy: pay what you want. Fans were able to download a complete digital version of the album and only had to pay what they thought was fair.

How exactly do these things relate? And more importantly, relate to life sciences and cleantech? We are about to experience a sea change in the way technology businesses are conducted, and it will be driven by an open souce mindset. We have, for decades, operated under the model of patent protection for technological innovations, and so far it has worked quite well. Why is the US arguably the world’s foremost center of innovation? Because there has long been a clear, consistent plan for encouraging entrepreneurship through the patent system. In the case of Radiohead, it’s copyright law that applies, but it has the same net effect. That clear path is about to get a little murky.

The music industry was caught unawares when technological innovations made violation of copyright law as simple as a click of a mouse. Radiohead’s response was unique and innovative. The life sciences industry has been seeing this coming for some time. Years ago, I served on the rare disease sub-committee of the (HHS) Secretary’s Advisory Committee on Genetic Testing. Nucleic acid patents were (and still are) under attack from the likes of Mildred Cho, Deborah Leonard and John Merz who were making the case that there was no inventive step in developing a diagnostic test based on alterations of a gene. (Wanna know the truth? 1. It’s about the money. Academicians who had a side business of testing patient samples were mad that a commercial organization could block them from performing the test in their lab, despite the fact that the commercial organization had paid to license the rights to the patents from an academic center and was incurring the cost of developing, marketing and distributing the test, not to mention those of prosecuting the patents. 2. Their stated goal was to increase “access,” but that is precisely what will not happen. Patients and physicians would somehow just know that a particular test was available in someone’s lab? Quality Control and Quality Assurance is enhanced by having numerous academic labs across the country performing the assay using different standards? 3. They went after diagnostics first because the argument is reduced to triviality if you apply the same logic to therapeutics, but I’m sure it won’t be long before they start down that path. But I digress.) Now, the successor to the SACGT, the SAC on Genomics Health and Society, is arguing for exemption from infringement for certain categories of people and is taking on genomic data sharing. Heaven help us.

The Myriad case will be overturned on appeal, but it’s a shot across the bow. The nucleic acid patent hand-wringers have an accidental ally in Gen-Oers. We will continue to see attacks on nucleic acid patents, and concurrently, will see approaches similar to that taken by Radiohead in new settings, but most commonly in industries where intellectual property rights are important to de-risk investment and to foster innovation. Do I believe we will move to abolish patents or move to a system like India or China where there is a patent system but effectively no enforcement? Clearly not. The early results from Radiohead and other similar experiments (like video games offered on a pay-what-you-want basis) were not great. Most people paid something, but it was far less on average than it would have been had they sold through traditional channels. (The analyses I’ve seen don’t account for the reduced production cost when offering the product as a download, so the net to the artists may actually be better.) However, a generation of people who grew up with an open source mindset will certainly continue to challenge the existing model, and technology industries will feel the pressure the most.

Is this a bad or a good thing? It’s a little of both. In fairness, I fully agree that there are quite a number of nucleic acid patents that have no business being around. Remember all those EST patents in the late 90s? When a point mutation in a gene is found to cause a disease, it seems to me it’s a novel and perfectly patentable discovery. After the fifth or seventh or tenth point mutation in the gene is found to cause the same disease, is it truly novel and patentable? I’d argue no. However, invalidating patents based on completely novel disease gene discoveries will result in less, not more, access to commercial products, including, and very importantly, diagnostic testing.

Oh, and one last thing. Did you know that Francis Collins, who has been behind this jihad against nucleic acid patents from the beginning, is an inventor on the original patent protecting the discovery of the gene for cystic fibrosis and about 20 other patents?

I'm just sayin'

The New Talent Pool

2010-06-07T11:02:00.005-04:00

A couple of weeks ago I was invited by a group of bioscience graduate students at The University of Washington in Seattle to give a talk on making the transition from academia to industry. It's an interesting organization - a group of UW grad students across a number of bioscience disciplines who are exploring careers outside of traditional academic roles. They receive funding from a number of academic departments and bring in folks like me who have made the transition to talk about their learnings and (hopefully) provide some insights. If you have an hour to kill, you can watch the video, although the audio is pretty bad, especially at the beginning, and until the end, it's just video of my slides. Very exciting.

Prior to the talk I was meeting with Anson Fatland of the Allen Family Foundation who asked me why I agreed to schlep across the country for a 45 minute talk. I responded that I believe the children are our future. Seriously, though, these folks are the VP R&Ds, CSOs, CTOs and for some, CEOs of the next wave of bioscience companies. I'm happy to make the investment. I only hope they took away some pearls of wisdom...

At one point, it was evident that the whole investment world was largely unknown to most of the young people in the room. I wish I had this link the week before; Rob Day at Black Coral Capital, an alternative energy / cleantech investment firm, just posted a nice article on his Cleantech Investing blog that would have been helpful. It wasn't the main focus, but it gives the uninitiated a few good handles with which to figure out a little bit about how venture capital works. By the way, If you're into green/clean, it's a great blog and you can sign up for the feed (although I must say I find the GreentechMedia site impossible to navigate - at least in IE8).

Another group focused on cultivating talent is PropelCareers, whose goal is to connect employers with academic talent. They've already had some great success connecting companies and interns, some of whom have turned into FTEs at the companies where they interned.

I guess I've always tended to see the long term picture better than the here and now. Most retained recruiters wouldn't bother spending time cultivating such early stage talent, but I see it as an investment. And I fully recognize that I'm helping current and future competitors of mine, but I believe there's enough work out there for everyone, and we'll get our share.

When I was a lot younger (when emails were produced using line editors), I belonged to “The Young Scientists’ Network,” which was an Internet-based group that in effect, was a group whine about how tough it was to find meaningful employment with a PhD. There were huge debates about which side of the fence had greener grass, but for the most part, we thought rather poorly of industry. Years later, as Director of BD at Athena Diagnostics, I was galled every year at the Academy of Neurology annual meetings when a particular immunologist used to make disparaging public comments about our technical acumen. These comments came from an academic who likely had his lunch in the same fridge he kept research samples in. We consistently had the highest possible ratings from organizations like the American College of Medical Genetics, the College of American Pathologists, CLIAC, NYSDOH and more. What happens when he made a mistake in an assay? He ran the experiment again. What happens if we made a mistake? We give a doctor and patient an incorrect diagnosis; we couldn't allow it. The stakes were much higher on our side of the fence, and there’s a big difference between running an assay in an academic lab and making a commercially viable, bulletproof diagnostic assay. Most PhD candidates and post-docs simply don’t recognize that critical difference until they get a peek behind the curtain. There are data to support this. At this year’s MassBio annual meeting, a young post-doc presented a poster showing significant changes in perception about industry employment after spending a day at a biotech company. The work was supported by MassBio, and won top honors at the annual meeting of the National Postdoctoral Association. The abstract is available as a .pdf here (link to the annual meeting program book and search for "MGH"). It is important to continue to show these bright young minds that there is true purpose in taking discoveries that would otherwise sit on a shelf in a dusty corner of an academic lab and transforming them into commercial products that can help patients.

Aaahhh, it’s so touching watching them grow up.

Virtually Everything

2010-05-14T00:53:00.002-04:00

I just got back from a conference on “Optimizing Early-Stage Drug Development” sponsored by Cooley and Talaris Advisors. John Hession was his customary jocular, professional self as emcee. Well organized, well attended. The only issue was that the landlord at 500 Boylston seems to think that it’s OK to shut off the AC at 6:00. What? Do they think lawyers don’t work past 6? Well, I guess that wasn’t the only problem. The presenters all went over their alloted time, and combined with the rising temperature in the room, it put pressure on everyone to get out and get back to the wine and cheese. Thus, nobody was in the mood for asking any questions. Which was good, since everyone went so far over that they completely consumed the Q&A time, not to mention half of the networking time. I did have one burning question, though.

In any case, it was an interesting group and presentation:

VC Perspective: Doug Onsi, Venture Partner, (HCV), Derek Lee, Chief Financial and Corporate Development Officer, Talaris Advisors
Big Pharma Incubator: Wing Delatorre, MD, Head of Business Development, Biogen Idec Innovation Incubator
Pre-clinical: Steven Richter, PhD, President and Scientific Director, Microtest World Class Life Sciences Services (streamlined non-clinical models)
Pre-IND to Phase 2: Mark Hurtt, MD, Chief Medical Officer, Talaris Advisors (drug development efficiency)
CMO Perspective: Patti Seymour, Senior Consultant, BioProcess Technology Consultants (innovations in contract manufacturing out-sourcing)
IP Risks: Erich Veitenheimer, Partner, Patent Intellectual Property, Cooley, LLP

Doug told us that the VC model is broken (despite yesterday’s Xconomy article to the contrary), and that the HCV investment thesis (as virtual as possible, ≤$15M to get to POC in 2 – 5 years, strong IP and products that Pharma wants) is the way to go. Wing told us that you want to be in her incubator because it reduces costs. Steve, Mark and Patti all made cases why an entrepreneur with a molecule should use their services to develop it into a product and manufacture it, and Erich told us to hire Cooley to do your IP work. Virtually everything is virtualized. (Doug even told us about an HCV investment with only one FTE!)

So what was my burning question? Well let’s assume that Doug is right and I can get some money put together for my drug. Then I go out and hire all these service providers and contract out all the work. What’s left for me to do? My job becomes the General Contractor on a construction project managing all the subs. We even heard from Patti that it can take as many company FTEs to manage the contractors as it does to do it yourself. So if we completely virtualize a development project, I wonder if it would end up costing more than just putting a reasonably sized company together. And wasn’t that the point of putting these companies together in the first place? That you could tap into the multiple expertises of the team? The old VC mantra – I’d rather fund an A team with a B idea than a B team with an A idea – seems to be turned on its head. The “team” is the list of contractors. As an investor, I’d be very concerned that they didn’t share my passion for success.

John promised more events this summer. If they’re as thought provoking as this one, I’m looking forward to them.

Keep Your Money

2010-04-02T01:49:00.009-04:00

The MassBio Annual Meeting was held Wednesday and Thursday of this week in its new venue. For the second year, the meeting took place at The World Trade Center – a welcome change from the Sheraton, where it seems as if it has been since I was a green Senior Associate at Feinstein Partners (about 100 years ago). The format was pretty much the same as it has always been – plenary sessions and some breakouts.

Some of the panels were better than others. Deborah Dunsire moderated a fireside chat with Henri Tremeer and Jim Mullen. If you believe what they said, no entrepreneur and no investor would set foot near any biotech company. You’d be better off keeping your money.

The article in the Globe about the panel, which has been widely picked up by other outlets, latched onto the apparent major difference in their opinions about the effects of healthcare reform on the drug business. Maybe it depended on where you sat, but while I agree that they said different things, I didn’t see the great chasm that was described in the article. Here’s what I did hear:

Henri, who is an expert in this regard, managed to not answer a single question that was asked of him. His preference is to wax on about how great Genzyme is, and to actually take pride in the fact that he has been at the helm for 35 years.
He proclaimed that there is now an international marketplace for talent. That might be true if you’re Genzyme or Biogen, but try recruiting someone from overseas for a venture-backed startup in Cambridge.
He told us that it's important to be sensitive to cultural differences while maintaining the organizational culture. In other words, get Asians to work in Asia, Germans to work in Germany. Thanks. Didn't we learn that lesson when Nissan (back when it was Datsun) sent Japanese managers to market their cars here in the US? In a culture where people take their shoes off before getting in their cars, they couldn't understand why the US cars' seat belt retractors were failing until they got them back to the lab in Japan and found a month's worth of french fries mangled inside them.
It’s better to be lucky than smart. Henri’s sage advice? “Don’t work on things that don’t work.”

(ok, enough Henri bashing; there were some takeaways)

Jim made the somewhat provocative statement that everyone is abandoning cardiovascular drug development because the agency has made it impossible.
The old saw about “US = 60% and ex-US = 40% of sales” is no longer valid. Emerging markets (think India and China) will soon totally eclipse the US market in numbers of patients. However, I can’t believe they’ll all have the same diseases as us (think genetics, environment), which is good and bad. Bad for currently marketed drugs, good for R&D and discovery of new therapies (read: good for the industry).
One of the best points was one made by Jim – don’t forget that no matter how big your company is, there is always more R&D happening outside your company than inside. Collaborations and partnerships are the lifeblood of this industry.

We may finally be at a point, as is said to be at hand during every economic downturn, where Big Pharma will finally see Biotech as providing its near term pipeline. Pfieth has cut nearly 20,000 jobs – 6 of 20 R&D sites worldwide. When Big Pharma starts cutting R&D, I start getting nervous. However, coupled with the constipation in the investment community, there may well finally be some early stage Biotech assets that will end up in Pharma and be carried through to market. On Michael Lytton’s panel, he aptly characterized the current Biotech venture capital community as project finance, and the current state of R&D as S&D (Search & Development). Good call.

There’s an old saying that if aspirin were discovered today, it wouldn’t be approved. I wanted to ask them if Cerezyme or Avonex were discovered today, would anyone invest? Oh, but silly me, there were no audience questions. I can only guess. First question: “So, what do you guys think of Carl Icahn?” Second question: “This is to Henri. Henri: what the hell is going on in Allston?” I guess the organizers didn’t want any bloodbaths in the meeting hall.

To add insult to injury, the morning after the meeting, Richard Pops writes a piece in Xconomy about PDUFA 5 – another disaster in the making.

On a different panel, Tim Coetzee, PhD, President of FastForward, part of the National MS Society that funds drug development projects (as opposed to never-ending academic research morasses), made a chilling observation. There are 200 compounds in development for MS. There are 2.5 million people with MS worldwide. Do the math. There aren’t enough patients to do the trials.

What’s an entrepreneur to do? There’s no money, no blockbusters left, the FDA won’t approve any drugs and there aren’t enough patients to do a trial.

The hopeful thing that I got out of all this is that all the assets that are not being funded now will be highly sought after in a few years. Arguments that the venture model for Biotech is broken appear to have more validity now than they used to. But that, to me, represents opportunity. I have confidence that Yankee ingenuity will drive the development of novel funding mechanisms. Look at the PXE story. An incredibly rare disease, the parents and other patient advocates took the bull by the horns and funded an investigator to identify the gene that causes the disease. What was so clever was that they pre-negotiated rights to the intellectual property coming out of the research. This and other novel funding mechanisms are what are going to have to be developed to get us out of this mess. The good news is that you can’t stop innovation, no matter what the economy.

Just the Fax, Maam

2010-03-15T13:41:00.003-04:00

Remember fax machines? They are those things we used to use before scanning and sending an email attachment. For the younger set, you put a document into your fax (short for "facsimile") machine, then dialed a number and the document was transmitted over phone lines to a receiving fax machine on the other end. In the early days, they required thermal paper, so receiving a fax was more akin to receiving something from The Holy Land. I have heard that some are still in use to this day.

There was, of course, a time when fax machines were ubiquitous. If you were important enough an executive, you even had one right in your office! These days, they're a bit less common, and have been reduced in size and importance to be on a tiny card in your computer. But at one time, they provided a critical function, and one would be foolish not to have embraced the technology. Looking back, we have the luxury of seeing them as quaint, but it's easy to forget that they were once the bleeding technological edge.

To me, this is a lot like ethanol. "What?!" you say. Yes, ethanol. In virtually any issue of the Biofuels Digest, articles discuss variously how ethanol will be a key fuel source, or why it won't work. (If you're in this space and not subscribing to the Biofuels Digest daily email digest, do it now.) Ethanol will certainly play a role in the world's fuel supply, but I believe it is the fax machine of the alternative energy space - it is not a long range solution. I won't debate the entire industry here, but let's just agree that there are good reasons why it makes sense to add it as a component of our supply, as well as excellent reasons why the infrastructure and other changes necessary provide significant barriers. In any event, and in case you haven't noticed, the industry is upon us. My view is that we should certainly keep working and researching and investing, but let's not lose sight of the long range view. Will we ever be a global society that runs on totally ethanol vehicles? I seriously doubt it. That doesn't mean we should stop developing the technology.

Entire companies were built on fax machine technology. The products improved, got faster, went to color -- all kinds of technological advances. Despite the fact that far fewer are in regular use today than even five years ago, I would not support an argument that we shouldn't have made the investment, or exploited the technology. Similarly, people who point out all the warts on ethanol are missing the point. No, I don't think it will be with us for the long haul, but that doesn't mean we won't learn anything by developing the technology.

More Tea Leaves

2010-03-09T13:54:00.000-05:00

Just a quick one with no particular insight.

I mentioned a while ago how the question of whether or not we're coming out of the economic Dark Ages depends on whose tea leaves you choose to read. I just received a new datapoint and thought I would share it with you.

John Hession at Cooley just sent me a copy of their latest report on the state of early stage deal making. Some ups, some downs, some flats, but it's good reading. It's based on Cooley's impressive portfolio of 376 transactions in 2009 where they served as counsel to one of the two sides of the table. Despite an abysmal start to the year, Q4 ended up strong in many areas including deal flow, pre-money valuations and overall deal size.

It's only 6 pages. Take a look. I choose to see this as additional good news.

What a Difference a (non-alcoholic) Beer Makes

2010-03-03T15:26:00.003-05:00

Sorry - Late again. It's snowboarding season. What can I say?

I attended a great event a few weeks ago put on by the Boston Irish Business Association and hosted at Caturano, called “Biotech 2010 and Beyond,” and featuring MassBio President and CEO, Bob Coughlin. As an amateur chef, I was particularly pleased to have Caturano as the venue. A key employee benefit there is the full-service kitchen on premises. The evening of the event, Richie Caturano’s daughter was hard at work in the kitchen serving up delicious appetizers, and I was fortunate to get a tour of the kitchen (every now and then, they even get local celebrity chefs to come in and run the kitchen). But enough about food (not that I ever really get enough about food, but this isn’t a food blog).

The event was well attended and well organized. While there were plenty of beverages at the bar, Bob was completely abstinent. You never would have known it. It was a great pleasure to see Bob loosen up and speak very frankly about MassBio and the state of the industry on the heels of JP Morgan the prior month. Without re-hashing the entire preso, Bob was upbeat about what’s coming down the pike. Certainly, some of his enthusiasm comes from the passion associated with having a child with a medical condition that will only be addressed by the efforts of the biotech industry. Some is just Bob – an energetic, passionate leader.

What I was most impressed with, and frankly a bit surprised by, was his candor when I asked him what he saw as the biggest threat to the growth of the industry. The question wasn’t even out of my mouth and Bob dove on it. “Healthcare reform” was his immediate response.

Now, I promised to keep this blog apolitical, but I have to say that I agree with Bob. In my mind, the issue is to develop a system that provides access to reasonable basic healthcare. In this country, there will always be people who have the means to, and who are willing to pay a premium for, the top of the line. That’s why we have Toyota and Mercedes. We have somehow moved to a society where free, best-in-class healthcare has become an unalienable right. I’m not uncompassionate. Everyone should have access to reasonable care. But we seem to keep forgetting that it comes with a price, both in terms of dollars and in terms of expectations. In countries with universal healthcare, a 70 year old in end stage renal failure is told to make preparations. In this country, that person is sustained, and assuming there is a donor, given a transplant. All at outrageous cost.

Once again, I don’t claim to have the answer, but I do know this: The United States leads the world in biotech and pharma R&D. There’s a reason that Novartis chose to locate their global pharmaceutical R&D headquarters in Cambridge, MA. A proposal for universal healthcare that impedes the world’s best engine for drug innovation will seriously undermine not only our global competitiveness, but will also result in poorer healthcare overall.

Marriages Made in Heaven

2010-01-04T13:00:00.001-05:00

Maybe it’s because we recently celebrated 23 years of marital bliss, but I’ve been thinking about all the recent discussion about M&A in the Biotech/Pharma space.

I had lunch a few weeks ago with a C-level executive at a major biotech in town. We were talking about the recent Pfizer-Wyeth deal, Biogen and Idec, Genzyme and GI, etc. He said something that I loved: “there are no mergers.” This seems particularly relevant as we are witnessing a “blizzard of new pacts” according to a recent FierceBiotech article. It seems that big Pharma once again has its collective eye on the biotech pipeline, and cash-strapped biotech is all too willing to acquiesce given the constipation in the VC community.

When I was starting out as a consultant with Kendall Strategies, we did a project for BBC (BASF Bioresearch Corp.), just after they had acquired Knoll. We pulled into the Knoll site in New Jersey and they were literally changing the sign at the entrance. Knoll had inherited a product from their prior Boots acquisition and we were doing a go/no-go analysis on the PhIII. We walked in and saw big banners proclaiming unity or announcing company-wide integration seminars, or the new logo being displayed on giant TV monitors (no flat screens in those days). I remember turning to my boss and saying, “they must be spending a million dollars on this BS! Why don’t they just tell everyone to get back to their desks and get back to work?”

Many years later I was at Elan headquarters in South San Francisco in my BD capacity for Athena Diagnostics (a subsidiary of Elan at the time). Elan in those days was on a buying spree and they had just acquired Neurex and made Paul Goddard, the Neurex CEO, President of Elan North America (the new name for the old Athena Neurosciences). I had been there many times, but this time, something was different. Walking through the halls, I saw people, but there wasn’t the customary “Hi, Chris!” or nods of acknowledgement. It was dead silent. In fact, you could cut the tension with a knife. Finally, I asked the Medical Director what was going on. I got a terse response: “we bought them and they’re running us?!” It instantly became clear to me why BASF had been spending so much money convincing people that the merger was a good idea.

My comment to my boss as a young associate at Kendall displayed my naïveté, but in the fullness of time I have learned that integration is no easy task. My lunch guest crystallized it, albeit somewhat harshly. I think mergers do happen, but they take waaaay more time and effort to accomplish than anyone anticipates. The efforts I saw at Knoll were not even the beginning of what needs to happen. Even sophisticated organizations have deep trouble integrating. Here’s what a Tuck School review of the failed Daimler-Chrysler merger had to say about the importance of aligning the views and sentiments of the people involved:

“Although DaimlerChrysler’s Post-Merger Integration Team spent several million dollars on cultural sensitivity workshops… the larger rifts in business practice and management sentiment remain unchanged.”

Last week the In Vivo blog announced their winner for the DOTY (Deal Of The Year). Of the three they discussed, Pfieth (Pfizer/Wyeth), Merck/Schering and Roche/Genentech, the prize went to Roche/Genentech not because of the size of the deal, but because “…the Roche/Genentech deal seems most likely--of the big three mergers at least--to actually work as advertised.” I would argue that the likelihood of its working is in no small measure a result of the close relationship the companies have had for the last 15 years. It was clearly not the result of a few banners in the hallways.

It’s the people, stupid. Mergers that are concocted because of a lust after another’s assets, without regard for cultural differences and true integration, are doomed. Even in the case of Roche/Genentech, there are ‘old-timers’ at Genentech who still resent the relationship and long for the days of the “DNA” ticker symbol. Only time will tell how the latest Pharma mergers will pan out, but I have a new appreciation for ‘post-merger integration teams,’ and suspect that they are actually understaffed and underappreciated by senior managers who are probably in their corner offices wondering why people aren’t just going back to their desks and getting back to work.

I'll take "potpourri" for $200, Alex

2009-12-22T22:59:00.003-05:00

This one is just a bunch of observations I’ve made over the last few weeks. No priority; no order.

I hate to say “I told you so,” but everyone is now setting to print what I said when this all started – we’re going to have an OK year in 2010. “Flat” seems to be the order of the day. Accounting Management Solutions just conducted a survey on the 2010 outlook. I’ll be very interested to see the results. They do have a Life Sciences practice headed up by Dan Davis, but the survey was more broadly based, so we’ll have to take that into account in interpreting what it means for Life Sciences.
On a related note, Jack Derby in his monthly newsletter for December (worth subscribing to) talks about the changes taking shape in sales. He says:

“My personal belief is that a couple of years from now, the most successful sales organizations will look back at 2010 as that time when they made the transition from the old, traditional, relationship sale to and demonstrated to their customers that they were no longer the approved vendors, but they had become their trusted partners.”
Jack grew up as a sales guy, so views the world through that lens, and his focus is not exclusively Life Sciences. However, an interesting article from FiercePharma paints a similar picture from the Life Sciences perspective, suggesting that the old Pharma sales organizational model is in for massive change. Docs and regulators continue to raise barriers to Pharma reps detailing in their offices, and it turns out the formularies are the more important decision makers anyway. Since there are far fewer of them than there are docs, it doesn’t require the same field force.
This week’s Mass High Tech (12/16/09) was the Life Sciences Issue and included the list of the region’s largest biotech employers. (I wish I could provide a link here, but they don’t appear to put “The List” on line – only in the print edition.) Genzyme tops the group at 11K total employees generating $4.6B. In second is BiogenIdec with a total of 4,700 employees, but generating $4.1B. That’s $418K/employee for Genzyme, $872K/employee for BiogenIdec. Seems to indicate that BiogenIdec is about twice as productive as Genzyme. Maybe that’s why Adam Feuerstein is calling for Henry Termeer’s resignation at TheStreet.com.
I had breakfast with an unnamed VC last week and the discussion turned to the popular topic of the state of the VC industry. I have posted about that before, so won’t rehash it now, but as many who are far more literate on the topic than I have said, there’s trouble in River City (with a capital “T” and that rhymes with “C” and that stands for Capital). We were comparing notes on our respective forays into alternative occupations peri-college. We agreed: there are lots of really smart folks out there who, through a cosmic alignment of the stars, are not executives at biotechs. These are smart folks; solid business people; they understand costs and revenues and drivers just like any other executive. They just happened to choose their parents rather poorly. My experience in executive recruiting is similar. There are lots of rock stars out there who, for myriad reasons, are slogging it out at some small cubicle instead of the shiny offices of Kendall Square. Of course, one needs to be careful what one wishes for…

One Lump or Two?

2009-11-19T22:54:00.004-05:00

Everyone now seems to be commenting on how everyone is commenting on the state of the economy. The latest craze is asking or being asked, “When do you think we’ll get out of this for good?” or, “Do you think the recession is over?” or, “Are the recent positive signs going to last?” For a while now, I’ve been fond of responding, “It depends on whose tea leaves you choose to read.”

About a month ago (ok, sorry - I’ve been busy), New York research firm, ChubbyBrain, produced a lengthy report, summarized in an Xconomy article, indicating that venture investing was turning a corner. They noted a 16% decrease in investment in Q3 from 08 to 09, but a 14% increase from 2Q09 to 3Q09. Sounds like a recovery in the making, right? Not so fast.

The next day, Dow Jones VentureSource reported a 6% decline from Q2 to Q3. So who to believe?

I find this quite amusing, particularly on the heels of a weekly newsletter from noted consultant, Alan Weiss. Ten days prior to these conflicting reports, Alan’s weekly “Monday Morning Memo” presciently anticipates it. Not the content, but the concept. I loved what he said there. To paraphrase, he notes that there are those who will profit from downturns in the economy, so it’s in their interest to propagate bad news. Most of us would rather see the pendulum swinging in the other direction.

Think it. Feel it. See it. Act it. So much of the ‘crisis’ is in our heads. I’ve said it here before – those of us with some grey hair have been through this and know we will not only come out of it, but we’ll be stronger! Don’t listen to those 28 year old CNN reporters who think the sky is falling. Think, feel, see and act on positive information. Find opportunities and capitalize on them. I’m having a pretty good year.

The View from Winter St.

2009-10-25T14:48:00.003-04:00

On Wednesday night I attended another Xconomy event at Willmer Hale. As I’ve posted before, the folks at Xconomy do a great job, and the events are worth the entry fee. We were treated to a fireside chat with two leaders of the local investment community – Terry McGuire and Peter Brooke (although Terry was self deprecating in correcting Bob Buderi’s introduction of the two legends: “there’s only one legend on this stage, and it’s Peter Brooke!”). I’m normally not a big fan of the “fireside chat” format, but this was the exception. Terry did a fabulous job of keeping the discussion moving on many topics of great interest to the audience. Peter was affable, relaxed, candid and engaging. He shared some stories and insights in just the right balance.

A few key takeaways for me –

I share Peter’s dismay that so much investment money is going into consumer product projects like video games and other forms of entertainment. On one hand, it’s comforting to know that we have the privilege and wherewithal to devote time and effort to fun, but it’s more evidence of what I’m always complaining about – we focus too much on potential returns than on solving the world’s problems. I know, I know. As an investor, that’s precisely what one should be focusing on. But again, I wonder if we have our priorities in order.

I was intrigued by Peter’s comments about protectionism. He seemed very willing to share our ‘secret sauce’ with others in terms of investing, but I’ll bet he would not be in favor of diminishing the strength of our intellectual property system. The SACGHS (Secretary’s Advisory Committee on Genomics, Health and Society) recently released a draft recommendation exempting healthcare providers from infringement claims on DNA-based patents, and that no such patents be awarded in the future. Having served on the rare disease sub-committee of the predecessor organization (SACGT), I was incredulous that such a recommendation could be made, and it has in fact, stirred considerable debate. (By the way, how they could single out DNA patents as distinct from other diagnostic methodologies is beyond me, and will perhaps be the topic of another blog posting.) Strong IP protection is at the core of the innovation economy (which Terry proclaimed is alive, well, and working just fine, thank you). Thus, Peter’s comments against protectionism were intriguing.

I had a chat with Terry about the related issue of no-compete agreements. Massachusetts has been criticized for its enforcement of these agreements, in sharp contrast to California, where it is virtually impossible to enforce a no-compete. The approach in California has often been cited as one of the key success factors of Silicon Valley. Without naming names, Terry indicated that there is not universal agreement among his VC industry colleagues. This will be an interesting debate.

Terry cited a few key factors on the horizon that have the potential to have a severe impact on the VC industry, including the popular debate about capital gains vs. ordinary income treatment of management fees. Peter mentioned the need for banking reform (intermingling of commercial banking and investment banking in the same organization, for example). Well, if you’re looking for me to take sides on the treatment of management fees, forget it. On the other hand, I’ve posted here my thoughts on banking, and I agree wholeheartedly with Peter, who has forgotten more about investing than I will ever hope to know. Still, it’s nice to know that he agrees with me ;-)

The next Xconomy event is November 4 on Pharma’s Bet on Boston Innovation. I’m looking forward to it!

Sustainable Sustainability

2009-09-09T05:22:00.000-04:00

Last night at the WPI Venture Forum, Jim Matheson of Flagship Ventures gave a fantastic overview of the opportunities and challenges in the “greentech” or “cleantech” space. This emerging area is of tremendous importance to the future of our planet. Although I don’t believe that climate change is quite the doomsday that many believe it is, I do agree that it human activity has had a significant impact on the global environment, and it ain’t gonna get any better on its own. Many of these new technologies provide real promise for solving some of our short-term energy problems.

I long for those carefree days before seatbelts when gas was cheap, engines were big, and nuclear power was being promoted as a safe energy source that would produce electricity in such abundance, it wouldn’t pay to meter it. But those days are gone forever, so we better start looking for solutions to the problem of increased demand on diminishing resources.

As a VC, Jim’s mission is to look for venture returns on capital invested in technological solutions to societal problems. However, the concern for me is that we are all missing the point. I grew up as a biologist, so I tend to view the world through that lens. If you put some cells in a Petri dish with a nutrient, assuming they’re not cancerous cells, they will continue to grow and multiply until the nutrient becomes scarce, and then the real competition begins. We can observe plenty of these behaviors in our own back yards. Literally. Just watch what happens in a stand of trees over time.

But isn’t this the situation we humans are in? No matter how efficient we make our transportation and minimize our energy demands, our exponentially increasing numbers are all still making demands on resources with a natural limit. Jim predicted 10 billion people in our lifetimes. Ten billion! So isn’t the real issue how we limit our own growth? I’m not sure there’s a opportunity there with VC returns, but it seems to me that we’re not going to really solve any long-term sustainability problem with a more efficient automobile or air conditioner. The real focus should be on how we manage the population explosion that has been rising like a mushroom cloud since we first figured out mechanical advantage.

As usual, I don’t have the answers; only the questions. My mother told me they’d get me in trouble…

You Don't Get What You Pay For

2009-08-20T16:44:00.003-04:00

Michael Luo had a very interesting and timely article in Monday's issue of The New York Times on the 'value' of career coaches.

I feel for the folks who get swindled by charlatans like those described in the article. Nobody can get you a job. Yes, of course there are better and worse ways to go about it, and many folks could use some advice. But paying thousands of dollars to have someone blindly fax your resume to a million companies is one sure pathway to failure. I can guarantee that most HR folks on the receiving end of those faxes put the fax machine over the trash can so they don't have to get up out of their seat.

My advice to job seekers who are on the market is to read Hellman's Law. Follow the instructions carefully.

The Needle in the Haystack, v. 2K9

2009-08-17T17:12:00.002-04:00

Recently, I’ve been hearing a lot of people saying “Oh, your job must be a lot easier these days with so many people out of work,” or “Gee, business must be slow – your clients must have lines out the door of prospective candidates.”

Not really.

Why do clients call upon the services of executive recruiters? It’s only when there’s a tough position to fill; otherwise, they’d just do it themselves through their own network. We work together with the client to develop a summary of the position that we will send out to prospective candidates – the “spec.” These are typically very narrowly defined descriptions of the perfect candidate. Again – if it were easy, they wouldn’t be calling us.

These days, there are a lot of people who think that it’s a lot easier to find the right people because so many people are out of work, many through no fault of their own. That last bit is important, and it’s true. There are a LOT of folks who are ‘on the beach’ because the company couldn’t raise its next round, or the division was shut down, or their major customer folded, or, or, or… The point is, these are very skilled, capable managers who happened to be in the wrong place. It’s the first bit that’s the issue. In fact, the situation is quite the opposite.

The reality is that we’re busy, and working harder than ever to service our clients. The problem is that the needle got smaller and the haystack got a lot bigger. There are two forces at work here, coming from opposite ends of the recruiting spectrum. On one hand, clients believe that now that there are so many good folks on the market, they can be extremely picky. The specs are tighter, and the barriers to entry are higher. “If this person isn’t the right candidate,” they believe, “we’ll just move on to the next one in the pipeline.” On the other hand, there really are a lot of folks on the market. That makes sorting through all the noise is a lot more difficult. Again, there are a lot of very highly qualified resumes to sort through. Thus, the ever-important characteristic of “fit” becomes even more central.

At the risk of sounding self-serving, I would say that now, more than ever, the services of a skilled executive search professional are required when seeking to fill critical roles in an organization – and one could easily argue that they’re all critical roles. This is particularly true in emerging industries such as cleantech, where it takes a skilled eye to discern the technical and personal characteristics in candidates that will make them compatible with a new industry.

State of NE VC Industry

2009-08-06T08:34:00.007-04:00

Once again, Xconomy editor Bob Buderi has provided us with some useful fodder for discussion. Yesterday, he posted a poll seeking reader opinion on the overall state of venture investing (or the lack thereof) in New England (don't bother voting, the results have already been tallied).

I was happy that my answers were mostly correct (readers had an average 29% correct rate), but not overly happy about the story the results told. Bob solicited commentary from Michael Greeley of Flybridge (and chairman of the NEVCA), who provided some valuable insights. The stated objective of the poll was to address the long-running debate about the purported difference between venture investing on the west and east coasts. While the questions addressed the state of NE VC investing, they provided less insight into the east/west debate. I’d like to see the data on the same questions directed to west coast VCs. I know it’s an informal survey, but I must confess that I share the popular opinion that Boston VCs are too risk averse, not willing to bet on CEOs who have had a failure (which is a virtual requirement if you’re looking for money from a west coast VC), don’t like early stage investing, etc. My guess is that for every anecdote about this debate, you could find an equally true countervailing story. Thus, I’d really like to see the data (guess I’ll just never get away from my data-driven scientific training).

At the end of the day, though, one really needs to ask if the traditional venture model is still viable, and could it just be that Boston VCs got that a lot sooner than their west coast colleagues. Personally, I don’t get it, in the case of biotech, anyway. (So lemme get this straight – you want me to invest a boatload of money, wait 5 years, invest another boatload of money, wait 5 years, invest another boatload of money, and then wait another 5 years to find out if the science holds up?) On the other hand, that’s why it’s called “venture” investing and not “fully collateralized” investing. Not every investment is going to pan out, and not every pitch opportunity is recognized (take a look at Bessemer’s “Anti-Portfolio” page). Is it time for a different model in biotech? I really like the innovation taking place at firms like Puretech. They take the approach of trying to grow the companies internally, and were the brains behind the unique industry partnership, Enlight Biosciences. I’m just not sure that the traditional model of making early stage investments in a bunch of companies, some of which you know are going to fail, and hoping that one makes it big, is the best way to commercialize promising new technologies. The battlefield is littered with plenty of corpses of companies that simply ran out of money. Nothing wrong with the team or the technology, they just couldn’t raise another round for one of a variety of reasons. Does that make sense? Wouldn’t it be better if we could find a way to mitigate risk a bit more and have a sustainable investment paradigm? I’ve got some ideas, but that will have to wait for another blog entry…

GM Total "Protection"

2009-05-13T09:53:00.000-04:00

In the throes of (as we are constantly reminded by the media) "the worst economic crisis since the Great Depression," GM, a company itself teetering on the edge of a very steep precipice, announces its “Total Protection” program, designed to get you into a car and have you keep it if you lose your job.

Let me get this straight.

I don’t think it takes any Milton Friedman to acknowledge that the way we got into this mess in the first place is by providing financing vehicles to (sometimes unsuspecting) consumers which should have never been created in the first place. Negative amortization mortgages, effectively unsecured “NINJA” loans, pre-approved credit cards (with usurious rates) – all the effect of financial engineering run amok.

Now, a dangerously unstable organization, one that recently announced it will drop an entire brand (Pontiac which, by the way, gave us classics like the GTO and the Firebird), is proposing to instill confidence in them by offering a plan to sell you something you can’t afford. And just what will happen to GM’s balance sheet when people start defaulting on their car loans under the “Total Protection” program? They should call it the “Total Destruction” program

I strive to keep this column apolitical – easy for me, one of the least political people on the planet. However, it boggles my mind to think that the solution to our economic crisis is to encourage more spending of money we don’t have. How about we reconcile our accounts first? The new administration’s plan is to rescue ourselves by spending more? Don’t get me wrong, I know this is a big problem, and that people who know a lot more than me about macroeconomics and finance, and who know how to use words like “debenture” correctly are working on it. But isn’t there a fairly simple approach? What if we stop spending what we don’t have? Let’s get the government out of the business of business. I have no issue with taxes supporting legitimate expenses that we, as a society, agree should be covered. I do, however, have a major issue with emergency or temporary programs that become institutionalized, and with government handouts that reward stupidity.

Let me get personal

2009-04-30T10:24:00.000-04:00

Yesterday afternoon I attended another great Xconomy Forum on the future of biotech. (These guys do a great job, both in the newsletters, which I recommend highly, and in the forums they put on. They have unparalleled access to key thought leaders and industry executives, and their editorial commentary is always insightful and spot-on.) In the fireside discussion with Wally Gilbert and George Church, which was moderated by Jim Collins, the discussion migrated quickly to a focus on personalized medicine – a buzzword that, like pharmacogenomics, has been around for a while, stimulates much discussion, but has yet to be proven out as a commercial success. The notion that we can analyze a cheek swab and determine which therapeutic and at which dose is the appropriate one for your condition has an alluring appeal, but in my mind, it remains to be seen how to commercialize the concept.

Wally pointed out one of the problems with the concept that has been circling for some time – the presumed lack of interest of big pharma. The notion here is that a system to identify which patients will respond best to a particular drug would be anathema to an organization seeking to promote its product to the widest population possible.

When I was doing business development at Athena Diagnostics, we thought, back in the 90s before this dialogue had become as common as it now is, that we were very clever in thinking that big pharma might help us further monetize our enormous patent estate by recognizing the value we had in exclusive rights to disease markers. I am fond of saying that we were kicked out of every decent drug company in America. The problem is that when you go in to explain that you have rights to patents that can identify patients with disease, the clever drug company product managers lean over the table and say: “Let me get this straight. You have a way for me to reduce my market share?” We were quickly shown the door.

For some time, I’ve been saying that this creates an opportunity for enterprising biotech entrepreneurs. Let’s consider diseases with a clear hereditary component, but complex (non-Mendelian) inheritance, like diabetes or MS. I predict that we will find sub-populations, based on haplotypes or other genetic markers that are stratified into responder/non-responder and dosage classes. I further predict that each individual class will not be of interest to big pharma as a therapeutic development program since they need comparatively enormous revenue estimates to even get their attention. However, a $100M drug is a perfectly respectable target for a small biotech startup. Fast forward, and now there are ten small biotechs, each with a $100M product for a small subset of an enormous patient population, and together they cover 75% of the pie. Now you have the attention of big pharma. A single company that could acquire all of those technologies would own the market, and would be able to detail all ten products to their call points with a single sales force.

Personalization is one of those things like pornography. The Supreme Court effectively ruled that they couldn’t define what pornography was, but they knew it when they saw it. Similarly, everyone likes the idea that we will go to the doctor and he/she will (painlessly) analyze some aspect of our biology and prescribe a “cure” with no side effects. I like the idea too, but it’s going to be a while before ten startups figure out how to stratify the diabetes market and capitalize on their effort.

The Blues Brothers and Executive Management

2009-04-03T22:44:00.001-04:00

In a couple of weeks it will be the 31st anniversary of the debut of the Blues Brothers Band on Saturday Night Live. How do I know this? Thank God for Wikipedia. In case you don’t remember, the band was started by Dan Aykroyd and John Belushi as a comedy skit. I’m not sure if they ever anticipated that it would take on a life of its own, but it did, and the band cut an album, was the subject of two movies, and was nominated for a Grammy. While I didn’t know the anniversary date before I looked it up, I frequently use the band to illustrate a point.

Perhaps the thing I most remember about the band is how bad the lead vocals were. Aykroyd and Belushi couldn’t carry a tune if their lives depended on it. However, look at the band. Over its life, many talented musicians did stints with the band. Notably, it included jazz luminaries like Steve Cropper and Donald Dunn, both formerly of Booker T. and the MGs, Willie Hall of the Bar-Kays and the Isaac Hayes band, and remarkably, the legendary Matt "Guitar" Murphy.

My point here is: know your strengths. And weaknesses. Aykroyd and Belushi were comedic geniuses. They just couldn’t sing. But they were smart enough to know that they could never have pulled off the concept for the band with a weak backup. They surrounded themselves with the best talent available, and nobody paid much attention to the “singing.”

As a senior executive, you didn’t get to where you are by being a lousy singer. You got there because of a certain set of skills; that doesn’t mean you are great at everything. If you came up on the finance side, maybe you’re not a marketing genius. You get the picture. Be honest with yourself and do a deep dive into your strengths and weaknesses, and get the best back-up band money can buy, with a particular focus on your area(s) of weakness. See it as an opportunity to improve your own skills in that area. One of your key responsibilities is to be an effective delegator. But you need to be able to count on your lieutenants, and that means that in addition to being trustworthy, they better be able to shore up the areas where you need support.

Back...

2009-03-19T22:38:00.000-04:00

OK, I know it's been a loooong while. It has been an interesting few months. To make a long story short, I've been preoccupied with my latest project – the launch of Palatucci Executive Search, LLC. I was in discussions with a (surprisingly large, given the economy) number of search firms, from small boutiques to the majors. It was all very flattering, but at the end of the day, I couldn’t get past the math of handing over 30 – 50 percent of what I earn to someone else for the privilege of putting their name on my business card.

So, with the encouragement of current clients, past clients and almost clients, I decided to go it alone. The early results are good – I’m working on two searches. That’s the good news. The bad news is that if you go to my company website, you’ll see a picture of a car (no joke). I’ve got my head down in execution on the searches, so the details like the website and announcement have taken a back seat.

I may be kinda scarce around here for the time being, but I should be able to say something comparatively meaningful in the relatively near term.

Wish me luck!

Three Days, Four Events

2008-12-02T14:24:00.000-05:00

Well, so much for making this a weekly posting. I'll try and catch up.

The week of November 10 saw four great events that I was able to attend. There were, of course, many more great events this week, but my clients are only willing to pay so much to ensure that I'm staying connected with the industry – my 'day job' is finding candidates.

Wednesday evening was another great MIT Enterprise Forum event in their Innovation Series: Neuroscience Drug Discovery and Development: The Route to Disease-Modifying Therapies. Having been trained as a neuroscientist, registering for this one was more or less a Pavlovian response, but it was a great event in its own right. The Kirsch Auditorium in the Stata Center was packed. It was well organized, and a great panel representing industry and the investment community. Skip Irving of Health Advances did a great job as moderator. We heard about Merck's plans in the broad spectrum of neuroscience therapeutics from Darryle Schoepp, PhD, Merck's SVP and Franchise Head, Neuroscience; a novel approach to attacking neurological diseases associated with protein misfolding from Chris Adams, PhD, CBO at FoldRx; the perspectives of investors from Doug Fambrough, PhD, GP at Oxford; and those of patients from Todd Sherer, PhD, VP, Research Programs for The Michael J. Fox Foundation for Parkinson’s Research. What a great panel!

(Leave Cambridge late Wednesday after the reception from the Enterprise Forum, drive to Worcester, sleep for a few hours, be at the Boston Harbor Hotel at 7:00 the next morning for another ACG event.)

Thursday morning, bright and early, Howard Berke, CEO at Konarka, gave an enlightening overview of investing in the cleantech space at another one of ACG's excellent Dealmakers Breakfasts. Did you know that there are currently more than 400 solar companies on the planet? Think we'll have 400 in 5 years? The most interesting part of Howard's presentation was that I saw something that I don't normally see in cleantech presentations – data. Armed with tools from NVCA and other sources, Howard's presentation is what you can count on from ACG – a well organized event, an articulate, industry-leading speaker, Jack Derby's lively emceeing, and two strips of bacon.

(Back to the office to try to squeeze in some actual work, then back to State Street that evening.)

Thursday night was the PEHub Across America event at Clarke's in Boston. As the registration page says: no content, just networking. While well attended, lively audience and great food (best sliders I've ever had), I would lobby for a different venue next time. Too difficult to get around in the room. (Full disclosure: we sponsored the event, so I get to make snippy comments.)

(Leave downtown Boston late Thursday night, drive to Worcester, sleep for a few hours, back to UMass Boston at 8:00.)

Friday was the all-day MassMEDIC Investors Conference at UMass Boston (What a great facility! If you haven't been to the Kennedy Library, go.). Another great event. Lots of interesting early-stage companies with some really cool technologies. Some, frankly, look cool, but I wonder about the likelihood of their commercial success. We also heard from Susan Windham-Bannister, PhD, President & CEO of the Massachusetts Life Sciences Center, which recently released the draft certification application. I've heard her presentation many times, and the good news is that it has always been the same message. She is providing an open atmosphere for stakeholders to provide comments and participate in the implementation of this important legislation. The lunch speaker was a pleasant break from the constant med device diet - John Della Volpe, Director of Polling, Institute of Politics at Harvard. He provided some very interesting data showing how much better executed the Obama campaign was in attracting younger voters, and the analysis leads one to the unmistakable conclusion that the Democrats simply had better tools and understood their market better than the Republicans. It's all about the marketing, isn't it? Well, the proof will be in the pudding, and we'll have to see if the "change" is for the better.

(stop in the office, drive home, have a scotch, crawl into bed.)

Humor - not so funny

2008-10-25T07:18:00.000-04:00

As an early adopter of the Internet (I remember using line editors on a mainframe to send an “electronic mail” message), I was also the beneficiary of some of the first Internet humor – those sometimes funny, mostly annoying forwards of forwards of forwards that can clutter our already stuffed inboxes.

As a public service, I started a highly selective distribution list of like-minded individuals who appreciate the occasional off-color joke (and if you’re nice to me, I’ll add you to the list). I distribute only the very finest of Internet humor.

In the last month or so, in addition to all the political humor, which I generally don’t forward since that will only generate more unsolicited email to my inbox, I’ve noticed a dramatic increase in the amount of email humor I’m receiving. I attribute it to the economic meltdown being so bad that people have no recourse but to laugh.

I’ve been using the analogy that we’re sitting at a red light. Those of us who have been around the block a few times have seen this before. We’ve also been at red lights and wondered if they will be a long one or a short one. We know they will eventually change, it just a matter of when. And when they change, we always get where we’re going.

Having said that, I have to admit that as Fred Sanford would say, “this is the big one, Elizabeth.” To make matters worse, we have comments like those from Sequoia on the ‘future’ for entrepreneurs. Still, I don’t think it’s quite the end of the world that some would have us believe.

Bad economic times don’t stop innovation or good ideas. They may raise the bar on funding of those ideas, but it’s not the end of the world. Additionally, as Warren Buffett clearly understands, this is a time to buy, not to panic. It’s just like in It’s a Wonderful Life when George Bailey reminds his customers that “Potter isn’t selling, Potter’s buying! And why? Because we’re panicky and he’s not.” I don’t exactly have my head in the sand, but we’ll get through this and come out stronger. We always do.

And how did we end up here? There are lots of experts much smarter about the economy than me, but in my opinion, it all started with the NOW account. Remember them? Negotiable Orders of Withdrawal. When I was a kid, checking banks were for checking, savings banks were for savings, never the twain did they meet, and God knows they didn’t cross state lines. Once we started to relax, it was the beginning of the end.

There are some industries that need to be regulated. Pharmaceuticals. Food. Liquor. Finance! While SOX has put an undue strain on small companies and has had the unintended consequence of preventing many entrepreneurial companies access to the public markets, we need some kind of oversight here; it’s completely out of control. One hundred percent mortgages?! NINJA loans?! How does any of that make sense?!

Yes, we will get through this, but it ain’t gonna be easy. And we’ll need to gird for the inevitable second wave of the tsunami – new government commissions, agencies, and regulations. Yuck.

From today's Daily Biofuels News Digest

2008-10-16T14:42:00.000-04:00

Despite the financial crisis, clean energy attracted $2 billion in new capital investment in the first half of 2008, compared to $3 billion for all of 2007, according to Ernst & Young.The sector has attracted $7.29 billion in US investment, covering 301 companies. Globally, 11 percent of venture investment in 2008 has gone to clean energy, up from 1.6 percent in 2003. Greentech has also released updated investment numbers and the Renewable Energy and Finance Directory has updated its database.

The Voyage of the San Antiago

2008-10-14T17:12:00.001-04:00

OK, here goes.

My colleagues have been encouraging me to start blogging. I'm surprised, since they are normally telling me to shut up. So, for better or worse, here it is. My plan is to make this a weekly event, so put it on your calendars now. I'll try to provide some kind of meaningful commentary, but I reserve the right to wax on about some completely random observation.

For my first entry, I'm taking a gimme. I'll simply point you to my most recent missive in Mass High Tech. It was (of course) originally too long for them, so I had to do some major reconstructive surgery. But I hope the point still holds. Cleantech smells a lot like biotech did back in the day. Complex, protectable technologies, long runways to success, huge capital requirements, and a drastic need for talented senior leadership in a nascent field.

I promise something more original for the next posting. I also plan to keep these short. I hope you derive some pleasure/information out of this blog.

Oh, and the name? Well it turns out that there's a fair bit of controversy surrounding the voyages of Amerigo Vespucci, but one thing is clear – he sailed the San Antiago after Columbus had already discovered the New World. So I thought this was kinda the same thing. I'm certainly not the first to discover the blogosphere, but it's new as far as I'm concerned.

Happy reading.