- 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…
Tuesday, December 22, 2009
I'll take "potpourri" for $200, Alex
This one is just a bunch of observations I’ve made over the last few weeks. No priority; no order.
Thursday, November 19, 2009
One Lump or Two?
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.
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.
Sunday, October 25, 2009
The View from Winter St.
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!
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!
Wednesday, September 9, 2009
Sustainable Sustainability
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…
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…
Thursday, August 20, 2009
You Don't Get What You Pay For
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.
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.
Monday, August 17, 2009
The Needle in the Haystack, v. 2K9
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.
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.
Thursday, August 6, 2009
State of NE VC Industry
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…
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…
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