Settle Down, Beavis

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

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

On Monday I was invited to an event where the speaker was Joseph Ternullo, JD, MPH, Director of International Corporate Relations for Partners HealthCare and Associate Director of Partners’ Center for Connected Health. Instead of thoughtful comments on connected health (using technology to monitor and provide healthcare remotely), I was disappointed that he simply read the draft of an article he was preparing for publication. His halting speaking style made it difficult to listen to (by his own admission he “could talk a dog off a meat wagon”), and I felt as though his statement that he intentionally had no slides was an attempt to distract the audience from the fact that he was just going to read the draft. In addition, there were several content issues I took issue with. First, he said that the “market” was estimated between $17 and $35B. Market for what? The cost of the tools? The cost of implementation? Second, assuming there is some kind of market, who’s going to pay for it? Third, Connected healthcare and EMR (Electronic Medical Records) are similar in the sense that they’re limited by “politics.” Hospital systems and payors want to “own lives.” It is not in their interest to implement technology that makes it easier to transfer information about a person to a competing system or payor. Fourth, this is the Beta/VHS problem to the 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

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

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

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'

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

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

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.