Many people unknowingly hold a simplistic mental model of entrepreneurship, often reduced to a linear sequence:

1. Develop an idea
2. Raise capital
3. Commercialize a product.

In the tech industry, there is a familiar rhythm: build → ship → learn → iterate. Development time is rapid, and customer feedback arrives fast. Product changes are deployed quickly to respond to the market. There are many challenges in building a technology company; however, it is important to recognize the fundamental differences between biotech entrepreneurship and entrepreneurship in other industries.

Biotechnology entrepreneurship is not simply “entrepreneurship with a lab attached.” Unlike entrepreneurship in other industries, in biotechnology:

• You cannot “fail fast” when experiments take months and cost hundreds of thousands of dollars.
• You cannot “pivot” away from a core biological hypothesis without destroying prior investment and market opportunity.
• You cannot iterate on a clinical program the way you can iterate on a user interface.

Biotechnology involves a unique combination of disciplines, influenced by biology, intense capital requirements, stringent regulation, long development timelines, and the obligation that comes with developing products that impact human health. These factors change how entrepreneurs must think, decide, and act.

Although understanding this doesn’t make it easier, it does make it more navigable.  Below, I’ve highlighted three of the many elements that make building biotechnology companies vastly different from entrepreneurial companies in other industries:

1) When You Combine Biology and Business, You Create a Business of Uncertainty

One of the most important—and least appreciated—realities of biotechnology entrepreneurship is that when you combine biology and business, you do not simply create a technology company. You create a business of uncertainty.

Biotechnology companies are built on biological systems that are complex and variable. Even when experiments are well designed, outcomes are not always predictable. Promising results may not replicate. Unexpected findings may appear late. These experiences are not signs of failure; they are normal when working with biology.

For leadership teams, this means uncertainty is constant. Biological uncertainty cannot be eliminated; it can be reduced, managed, and better understood over time, yet it never fully disappears. Therefore, the role of the biotechnology leader is to learn to operate effectively within this level of uncertainty. Essentially the entrepreneur becomes the Chief Uncertainty Officer. They are responsible for identifying the biological and business risks facing the organization, designing strategies to reduce them, communicating tradeoffs, and maintaining team unity as knowledge evolves.

This may include:

•             Making decisions with incomplete information, while remaining open to change.

•             Choosing experiments that reduce the most critical risks.

•             Communicating uncertainty to boards, investors, and teams.

•             Avoiding the temptation to oversimplify complex scientific realities.

Biotechnology companies are being built and operate in the midst of many unanswered biological questions. This is one critical factor in why biotechnology entrepreneurship fundamentally differs from entrepreneurship in other industries.

2) The Entrepreneur Owns Both Scientific and Business Risk

In a traditional business enterprise, the entrepreneur is primarily responsible for the business risk, that includes the market risk, financial risk, and execution risk. In a biotechnology company, scientific uncertainty is not separate from the business; it is embedded within it.

The entrepreneur is responsible for both the business risk and the scientific risk.

This dual responsibility is one reason why many biotech companies are founded by scientists and physicians.  This dual responsibility often surprises first‑time biotechnology entrepreneurs. Decisions about experimental design, data interpretation, and biological feasibility directly affect capital allocation, partnerships, hiring, and timelines.

In biotechnology, leaders must make decisions before all the answers are known, because biological outcomes shape business strategy.

Scientific results may:

• Delay or accelerate development timelines
• Change the addressable market
• Alter regulatory pathways
• Force reconsideration of partnerships or business models

In biotechnology, business considerations often shape scientific direction

For example:

• Market needs define which scientific questions are worth pursuing.
• Regulatory requirements influence experimental design and data collection.
• Manufacturing feasibility shapes the early research conducted.
• Capital constraints force prioritization among competing scientific paths.

This dynamic—the business driving the science and the science driving the business—is the core distinction between basic research and translational research, a topic I will explore in future articles.

3) Biotechnology Entrepreneurship Requires Long Timeframes and Lots of Money

Biotechnology companies are built over long periods of time, spanning many, many years.

• Diagnostic companies may require 3 to 7 years or more
• Medical device companies often require 4 to 10 years or more
• Therapeutic and biologic companies can span 10 to 15 years or longer 

Development timelines are extended because biological data must be generated, repeated, interpreted, and validated before it can reliably support decision-making. In addition, biotechnology is one of the most highly regulated industries in the world. Regulatory expectations affect what data must be generated, how it must be generated, and how results can be communicated.

Timelines affect financing strategy, hiring plans, and partnership decisions. These realities influence nearly every strategic decision a leadership team makes.

Building biotechnology companies is capital intensive, and requires multiple, successive, timely, and large investments of capital. 

• Diagnostic companies may require $20 to $100 million or more
• Medical device companies may require from $25 to $120 million or more
• Therapeutic and biologic companies may require hundreds of millions to over $2.6 billion before reaching market

Many early failures in biotechnology stem not from bad science, but often from a misunderstanding of the time and capital required to build, sustain, and grow a biotechnology company.  

Takeaway Thoughts

For scientists, physicians, and executives who are biotechnology entrepreneurs, a few observations are worth keeping in mind:

• Biotech entrepreneurship is fundamentally different from other industries, defined by biological uncertainty, regulation, long timelines, and capital intensity. Set your expectations realistically. Design your company, financing strategy, runway and risk reducing milestones around these.

• Biotech leaders operate in persistent uncertainty, making high‑stakes decisions before all scientific answers are known. It is impossible to have all the information you need to make every decision. However, create a decision framework for yourself based upon outcome risk coupled to your requirement for different levels and types of information you want before making different decisions.

• Science and business are inseparable for a biotech entrepreneur, with time and capital as core strategic variables and constraints. Treat capital and time like experimental inputs. Every scientific decision should have a clear business rationale, and every business decision should respect the biological limits and reality.

For those who wish to explore this topic further, Elsevier has authorized a free download of my Chapter 1, “What Is Biotechnology Entrepreneurship?” I wish you the best of success in your entrepreneurial journey.

Recognizing these facets of biotech entrepreneurship is where strong leadership begins.

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Flawed Capital Management: Fundraising is not Strategically Timed to a value-enhancing milestone

An unintentional but common mistake of an entrepreneur is that their capital raises are not timed to occur after reaching a value-enhancing milestone. Less experienced entrepreneurs raise capital when they need it. If a company attempts to raise capital because they are close to running out of money, but they have not reached a value-enhancing milestone, this negatively impacts investor interest and the company valuation. A value-enhancing milestone is an accomplishment that increases the valuation of the company because by accomplishing this, the risk of product development failure has been reduced.

Many entrepreneurs instinctively focus on raising money only when they need it or just prior to running out of cash. An important strategy for success is determining the amount of capital to raise, and the timing in which to raise it. You should always plan that the amount of capital you raise will allow you to reach certain milestones, however, it is not just the amount of money raised that is important, but also the timing of raising money.

When a company sets out to raise money but has not reached the next value-enhancing milestone, it becomes more difficult to raise money for three reasons, 1) It is not clear to investors what you will accomplish with their new money, as the company has not increased its value since the last round 2) There is a perception that the company is desperate because you are raising money out of need rather than in strength 3) There is a perception that the entrepreneur leader is not capable of properly managing funds for the company.

How to Avoid this Mistake

Identify your value-enhancing product development milestones, then time your funding closings to occur after completing a key milestone. This means that you must identify and estimate the amount of capital needed to reach each value-enhancing milestone. Begin raising capital 9 months, to as long as 18 months prior to needing the capital, depending on the size of the round it can take this long to close on a large financing. For capital raises that are $0.5MM or less, the timeframe usually is shorter, as the investors for seed funding are typically angels rather than institutional investors.

Ample time is required to make connections, give pitches, allow investors to complete due diligence, negotiation of terms, legal documents and then the final funding. One way to help shorten this timeframe is to always be “selling” even between financing. Practically speaking, you should always be in a mode of “raising money” whether you need it or not, as you can always say “no” but you cannot say “yes” without an offer. In a sense, you should always be raising money. By timing your closing to occur after completing key milestones, you will improve your ability to raise the needed funds.

To preserve capital and direct the majority of it towards product development, remember to stay as virtual as possible and focus on your core activities and outsource the things that others can do better than you, such as non-core activities. One cash preserving option during your early stages is to consider negotiating a lease agreement with the university for lab space and equipment (if you licensed their IP), and even lease some of their key personnel who worked on the licensed technology. Also consider compensating critical individuals and consultants with some equity for reduced fees.

The key is to efficiently utilize the limited capital you have, and to raise new money on strength to improve your likelihood of success. Remember that without a continuous source of capital, regardless of how great your technology, you will never be able to reach your goal.

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Entrepreneurs possess a unique perspective on how they view the world around them.  When others see problems, entrepreneurs visualize a myriad of solutions.  When others spot roadblocks, entrepreneurs picture untapped opportunity. When others encounter challenges and are overcome by cynicism and despondency, entrepreneurs sense motivation rising within them to overcome.  Sometimes entrepreneurs may be accused of seeing the world inaccurately through rose-colored glasses. However, those who have a vision of “what could be,” achieve far more than those who believe “they cannot.” All good entrepreneurs should work to gain a balanced view of the real challenges yet not lose sight of their aspiring goals.

I believe that many individuals possess some underlying capabilities for entrepreneurial success. However, for most individuals, certain life events and outcomes, coupled with their belief about the future, have altered their sight. As if wearing a green-tinted, grease-smudged pair of glasses, their eyesight is tainted by a misleading and hazy view of circumstances and a belief about their inability to change them.

There are many characteristics successful entrepreneurs possess, and these are only a few.  However, I believe everyone can improve on these skills with focused practice, but it is important to know the target, as a goal without a target is impossible to reach.

6 Characteristics of Successful Entrepreneurs*

1. A driving passion for your work: Be sure to check your internal enthusiasm gauge and determine if you have a passion for what you are doing. When you have passion for your work, it does not feel like work.  Be sure that you would do what you do, even if you did not get paid to do it (most entrepreneurs don’t pay themselves in the beginning anyway). If you don’t have passion for what you are doing, none of the other characteristics will make up for the lack of it.  Investors will see it, your team member will notice it, and you will not have sufficient motivation to do what needs to be done to be successful.  If this is the case, you should re-evaluate the focus of your endeavors, the market you are targeting, the application you are focused on, the people you are partnering with or working with, or the industry you are working in. Once you recover your passion, and get your purpose back on track, it will not be “work” to you.

2. The ability to communicate your vision and inspire others to follow: Good leaders inspire other to follow because they communicate a vision and paint a mental picture of where they want to go. Entrepreneurs have little innate authority over others to get them to do want them to do. However, through inspiration they possess massive influence on others such that they will work harder and longer than if they were simply told to do something. Often the words and manner in which we communicate do not inspire others to follow.  Good communication is simply the faithful and accurate transmission of thoughts from one person to another. If you recognize this as a weakness, ask those around you to give you some feedback and what to improve upon or do differently.  This may seem difficult, but it is fruitful and leads to characteristic #3.

3. Humility and the desire to learn: The best entrepreneurs are those that have a sense of humility. They don’t think of themselves better than others, rather they think of others as teammates with different responsibilities. Arrogance is the opposite of humility, and arrogant entrepreneurs repel most people because the thought is they don’t need anyone’s help, and they know everything. Humility is difficult to define, but you can sure recognize it when you see it. One characteristic that signifies humility is the ability to learn from anyone and everyone.  Make it a habit to practice. For instance, learn from the investor presentation that did not go well rather than being argumentative. Ask them questions about what was missing, what do they see as the weakness of your company, what feedback and advice can they give you? Don’t be afraid to ask clarifying questions and get honest feedback.  You are the one that will benefit with the knowledge and wisdom you gain from this exercise.

4. Accepting responsibility and ownership for problems: A good entrepreneurial leader does not blame others, but is introspective, accepts responsibility for the outcome of situation. The entrepreneur looks to see what they can do differently to avoid this in the future and prevent it from happening again.  This does not mean there should not be shared responsibly for problems. Just remember that ultimately, success and failure are in the hands of the entrepreneur who accepts ownership for a problem because it is very difficult to fix something you do not own.

5. Perseverance and creativity in the face of adversity: With the certainty of setbacks that the average entrepreneur will experience, it is tempting to want to give up and quit. However, the successful entrepreneur realizes that perseverance, coupled to creative problem-solving are keys to making the outcome better than it would have been without adversity. When you face adversity and you don’t know what to do, seek other people who occupy similar positions and talk to about the problem. Ask lots of questions and learn (see #3) until you can formulate a strategy to overcome the adversity. There is safety in having many mentors.

6. An ability to raise money and manage it well: Without capital, like a car with a near empty gasoline tank, your business will not go far. You should have a well thought-out plan for raising capital and in increments that allow you to achieve your next value-enhancing milestone, so you can raise the next round of capital at an increased valuation.  Be sure to allow at least 6-9 months to raise early stage capital, and 9-12 months for latter-stage capital, and include a contingency amount because everything does not always go as planned.  Equally important is to carefully manage the capital you do have.  It is wise to outsource the activities that are not core to you and your team, but be sure to pick partners, consultants, vendors, suppliers that share the same core values you do, and treat them as your team members.

The term entrepreneur as defined by Merriam-Webster’s Dictionary is “one who organizes, manages, and assumes the risk of the business or enterprise.” In other words, the entrepreneur is the owner and manager of the business risks of the company. One of the most important risks an entrepreneur can manage is to ensure they, themselves, have the skills and abilities to help overcome obstacles they will face during their journey.

Best wishes to you for your continued entrepreneurial success!

*Adapted from Chapter 4: What is Biotechnology Entrepreneurship in Shimasaki, C (2014). Biotechnology Entrepreneurship: Starting, Managing and Leading Biotech Companies. Waltham, MA, Academic Press.

© 2018 Craig Shimasaki

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Although the context will be biotech entrepreneurs, these principles apply to all entrepreneurs.

A fourth common mistake of entrepreneurs is that they have untapped and unrecognized human resources that are not fully leveraged to help them accomplish their goals.

The challenge for early-stage companies is that cash is sparse and they are unable to hire a full team of individuals having all the requisite skills to accomplish everything they need. Early-stage companies generally have goals larger than the human resources they possess to achieve them. The irony is that these companies may possess the most innovative product concepts, but they don’t possess the necessary resources that established companies possess. Because of this dilemma, it is critical to recognize and utilize untapped human resources.

How to Avoid this Mistake?

Without question, one critical success factor for all entrepreneurial organizations is the quality and breadth of the team, all working together seamlessly toward the same goal. Your collective team is referred to as your “Human Capital.” Unfortunately, human capital is usually thought of as your full-time employees. However, I encourage you to realize that your human capital is much broader, and really includes the following three components:

1. Full-time Company Employees
2. Consultants, Advisors and Contract Individuals
3. Partnerships with Companies and Organizations

The individuals that comprise each category should be selected based upon their expertise, ability to meet your needs, and more importantly, that they all share the same core values of your organization.

Capitalizing on Your Expanded Human Capital

We will omit discussion of the first category “Full-time Company Employees,” as this is self-explanatory, however, how to select these individuals are worth reviewing in the following blog “What Early-Stage Companies should look for in Employees.”

Human Capital: Consultants, Advisors and Contract Individuals

This second human capital component includes all external individuals with specialized knowledge and expertise your full-time employees do not possess. These include more people than you may initially realize: your corporate attorney, patent attorney, board members, scientific and clinical advisory members, business and technical advisors, mentors, technical and regulatory consultants, angel investors, supportive civic leaders, your legislators and others who are supportive of your organization and its mission.

Although you will likely interact with these individuals less frequently than your full-time employees, you should treat them, and communicate with them, as important members of your integrated team. These relationships should be established on a common set of goals, mutual benefit and especially, common core values. You should keep these individuals updated on the progress and milestones of your company, as they can better assist you if they know your company’s issues, or alternatively they can detract from your progress. Building these types of relationships can provide valuable learning and informal mentorship opportunities. Be willing to ask difficult questions and do not be afraid of candid feedback.

As another example, angel investors are typically viewed as a source of money but never forget they also have achieved success in business and can be called upon for help and advice with issues that you may not have faced before. Leverage the knowledge of these advisors knowing they have a vested interest in your company’s success.

Board members also fall into the category. The appointment of board members typically falls to individuals who have financed your company. Therefore, always choose financial partners who share your company’s vision and your core values. All cash from investors spends the same but recognize that when you accept equity capital, you are entering into a formal agreement with the investor’s values or the institutional philosophy from which the cash comes. Board members are a key component of your human capital and, when properly selected, provide a valuable resource of expertise, contacts and advice to help you reach your company goals.

As an entrepreneur, I have had the privilege of working with many great investors. They have provided valuable advice in sales and marketing, financial matters, regulatory and business counsel, and even moral support. Be sure to include them in your business decisions and you will find a willing group of individuals who can help advise you, as well as introduce you to others in their network who can provide valuable resources.

Human Capital: Partnerships with Companies and Organizations

This third component of human capital includes all the “outsourcing” organizations of activities you do not perform internally, or cannot perform as well as them. For instance, most development-stage companies do not have an HR department and do not keep up with employment law requirements.  Partnering with a good PEO (Professional Employer Organization) leverages expertise for all the HR and payroll functions without having this burden on the entrepreneurial organization. CROs (Contract Research Organizations) are utilized by development-stage biotechnology companies, and early-stage companies should outsource all activities that are not core to their expertise. This allows them to extend their time horizon to reach critical product development milestones. The key factor is to view these organizations as an integral part of your team. If you select these organizations as you would any employee, and work with them as such, you establish a trust relationship with them. As a result, when unexpected things happen (and they do), these organizations will respond and assist in ways to result in your company’s benefit.

This human capital component also includes all organizations you work with that has overlapping interests. These are usually collaborations where each receives a different benefit by working together. In fact, these types of mutual relationships can provide external validation of your company’s value, or they even may result in future investments in your organization, or possibly a future acquisition partner.

Summary
Entrepreneurs and development-stage companies must perform many activities in which they are not experts. These activities include everything from building a website or putting out press releases, to managing your financing and ensuring scientific progress of your product. However, the number of activities consuming an entrepreneur’s attention increases exponentially as the company grows, making it harder for them to wear many hats successfully. Seek talented individuals and partnerships outside your organization who can perform functions beyond your realm of expertise.

I’m often reminded of a saying: “At some point in your career, your success will no longer depend solely on what you accomplish alone but by what you accomplish with and through the help of others.” I can safely say that I have never encountered a development-stage company that claimed to have all the human resources they needed. Therefore, it is critical to identify and leverage the right human capital resources that no company can do without. These external individuals are people whom you have chosen to rely upon for certain functional aspects of your business – or for business advice and help – who are an addition to your full-time employees.

Successful entrepreneurs strategically leverage all their human resources as integrated components of their human capital and overall company strategy. Carefully select these individuals and they will provide valuable advice, assistance, network contacts and mentorship to ensure you can overcome the challenges you will face as a growing company. More examples of board, scientific advisors, consultants and mentors are discussed in the book Biotechnology Entrepreneurship: Starting, Managing and Leading Biotech Companies.

© 2016 Craig Shimasaki

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Although the context will be biotech entrepreneurs, these principles apply to all entrepreneurs.

A third common mistake of entrepreneurs is that as they grow their business, they haphazardly, although unintentionally, put together a disorderly array of foundational documents that impedes their ability to raise capital from more sophisticated investors in the future. These documents are usually piecemealed together after they were needed and often by various attorneys, and some were do-it-yourself. The result is loosely assembled or completely omitted founder agreements, an inadequate technology license agreement, missing key employee agreements failing to ascribe value to the organization from its founders and stakeholders.

Requisite documents may have simply been omitted, or more often if they exist, they contain conflicting language with other documents.  As a result, there may be ownership issues in poorly written foundational documents. There may also be ownership uncertainty because of verbal agreements made to individuals who could come back and claim rights. If multiple founders started the company, one may no longer be working to advance the business, yet they walked away with a large chunk of equity with no agreement for reacquiring those shares. All this creates unnecessary obstacles to raising capital in the future.

Other problems can include:

• A license agreement that does not allow the rights to sell the technology (business) without prior approval from the licensee
• Missing employment agreements that ensure investors that key employees will not be leaving to start a competing business after their investment
• Inappropriately structured funding agreements with angel investors
• Missing invention assignment agreements from key employees that are inventors of the technology

In many cases, institutional investors may simply walk away from deals that require too much renegotiation because of these uncertainties and the potential pitfalls.

Why This Frequently Occurs

This mistake happens more frequently than not, simply because early-stage entrepreneurs are solely focused on what they think are the most urgent things. Most early stage entrepreneurs become fixed on seed fundraising and incrementally advancing their product concept but neglect consideration of other critical aspects of the business. Progress is made, but nevertheless this is like plugging a hole in your boat to prevent it from sinking, not realizing it is headed toward a waterfall.

This piecemeal, deal-with-it-when-you-need-it, and do-it-yourself approach may suffice for a short period of time. Unfortunately, as your business gains momentum and interest from sophisticated institutional investors, there will be grave concern over this legal quagmire and the lack of clear ownership of the assets and legal structure of the organization. Entrepreneurs need to recognize that these corporate hindrances impact your ability to raise future capital and grow your business. Think of this as watching a building grow atop a foundation that later needs to be torn up and re-laid in order for the structure to be finished.

How to Avoid this Mistake?

Entrepreneurs must realize at the outset that there are four Essential Components of a business that each must be simultaneously advanced in order for optimal chances of success.  These include:

1. Product Development
2. Market Development
3. Financing Development
4. Corporate Development

All entrepreneurs understand the need for the Product Development component and they are usually deeply entrenched in this.  However, the other three components are equally essential in order to build a successful business. In this piece we are focusing on the less recognized “Corporate Development” component of the business.

In order to have the best chance of success, entrepreneurs need to identify key milestones within each of these four development categories and manage and monitor reaching each of them. Be sure to select milestones that demonstrate to investors a reduction in risk for each of these components.

In order to create an overall strategic business strategy, you will need the help of an experienced and seasoned start-up corporate attorney. You need to find one that is experienced with development-stage companies in your sector, someone who is supportive of entrepreneurs, and one whom you can establish a good working relationship. Realize you will be paying for experienced business and legal advice, not for someone who fills in blanks in boiler plate documents. As a general rule, look for senior partners in small to midsized firms rather than someone in a mammoth law firm that may relegate your work to junior or novice individuals. There are other attorneys you will likely need help from during your business venture such as a Patent Attorney, and possibly a Securities Attorney. For more information on finding and hiring an attorney, review the article I wrote for Nature Biotechnology’s Bioentrepreneur titled: “Why You Need a Lawyer”

A good corporate attorney is someone who will assist you with the overall impact and alignment of each of the following (and more) to your overall business strategy:

• Choosing the right legal corporate structure and at appropriate stages
• Properly securing the rights to your company name, trademarks and product names
• Negotiating technology license agreements with rights that are needed to sell the company in the future
• Creating founder’s agreements and founders’ stock or options with buy back rights
• Creating key employee agreement with non-disclosures and assignment of inventions to company
• Establishment of stock option plans
• Properly constructing financing and shareholder agreements

Documents outlining the above are foundational because they define your corporate entity, its ties to licensed entities, founders and employees, describing various restrictions and rights posed on your organization.

If You are in a Problem Situation Now

If you realize that you have created a legal document mess, in order to repair it there must be a process of creating new documents, obtaining required signatures from past shareholders and other potential stakeholders who could possibly claim rights to some part of the business. All the more important to find a good corporate attorney as described above and work out some arrangements with them if you do not have a large budget. Some attorneys will help and move part of their fees tied to the next funding, or possibly even exchange for participation with stock options. If you find yourself in this situation, recognize that in order to secure subsequent financings, some of your agreements may need to be renegotiated or canceled which takes time and effort in order to move forward. Remember, it is not too late to begin.

Summary

In order to be successful, entrepreneurs should ensure they advance each of the four Essential Components of a business simultaneously. Stephen Covey speaks about the “Urgent/Not Important” quadrant displacing the “Important/Not Urgent” quadrant of activities in his book “7 Habits of Highly Effective People.[1]” Be sure that you do not simply focus on the urgent, but also the important. Allocate time and focus to the Corporate Development component of your business. Set value enhancing milestones in each of these four development areas and check monthly to be sure you are engaged in activities that move each of these forward simultaneously. By consistently and progressively reaching incremental milestones in each of these areas, you will find that your business will be viewed with interest by investors.  Be sure to find a good attorney who has experience in your sector and at your stage of business, whom you get along with and gives you good advice. They are extremely valuable for their strategic business advice and as a trusted advisor rather than someone who provides you with just legal templates. Focus your attention on all four areas of business for your best opportunity for success!

© 2016 Craig Shimasaki

[1] Simon & Schuster; 25th anniversary edition (November 19, 2013)

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The context will be biotech entrepreneurs, however these principles can apply to entrepreneurs in any industry.
Most successful products today are enabled by some novel technology that provides the features and benefits of that product. Entrepreneurs utilize this underlying technology and direct it towards a particular market application. A common mistake of entrepreneurs is, although they have identified a great technology, their choice of market application is not ideal. This problem usually occurs when a product application was chosen because of the entrepreneur’s familiarity with one particular problem—or shall we say—their lack of familiarity with a more acute problem. As a consequence, there is lackluster investor interest and limited interest in their product. Entrepreneurs should recognize two important principles at the outset:

Principle 1: Technology is Agnostic to any Single Market Application

Technology itself is not beholden to any specific market application. For example, in the biotechnology industry, a scientific discovery that interrupts cell cycle control can be directed toward the development of a therapeutic for breast cancer, prostate cancer, or brain cancer.  Often the choice of application is a result of the entrepreneur’s familiarity with a market problem, or more often—convenience. For instance, if down the hall from the entrepreneur is a researcher who has tumor tissue available from breast or prostate cancer patients, the market application can easily be directed toward breast or prostate cancer therapy. However, glioblastoma, a type of brain cancer with a more acute market need has a lower barrier for adoption in terms of effectiveness. The National Cancer Institute’s website lists over 55 drugs used to treat breast cancer. Whereas, the FDA approved just 5 drugs for glioblastoma—none are curative.

This same technology applied to breast cancer or prostate cancer would have higher hurdles of efficacy than for glioblastoma due to the greater number of effective alternatives. The market application for a technology may have been selected because of convenience when it may not have been the best application for business success. Certainly, there are technical, biological and regulatory issues that factor into the selection of a market application, but at the outset entrepreneurs must first seek to align their technology with an acute market need in order to be successful.

Principle 2: Most Products Today Possess an Underlying Technology Platform

Technology-based products arise because of an underlying “technology platform” that enables the product features, but the technology is capable of being directed toward many other products for different market applications. Often, the underlying technology platform is not realized because the focus has been on the product application.  Also, the platform technology of any particular product is sometimes difficult to characterize at first, but with practice it becomes easier to identify and redirect.

Technology Transfer Offices at universities and research institutions possess shelves full of unlicensed patents, not because the technology is ineffective, but because the market application chosen is not appealing to potential licensees. Almost all products have an underlying technology platform that would allow it to be redirected toward another, possibly better, market application.

How to Avoid this Entrepreneur Mistake?

Realize that the market application of a technology is usually a choice, and is often selected based upon the entrepreneur’s personal awareness of a particular market need. Practice getting out of your comfort zone and force yourself to be exposed to problems in other industries. Learn from experts who have different backgrounds and experiences than yours. When you become familiar with the nuances of diverse problems you can apply many technology solutions to solve that particular need.  Successful entrepreneurs make themselves aware of problems confronted in different industries and markets. Unfortunately, if you are unaware of market problems, your abilities are self-limited. It is as if you are repairman with only one tool—if you are a hammer, everything just looks like a nail!

The most successful products arise from an entrepreneur’s awareness of an acute unmet market need AND a great technology solution. In other words, successful products combine great technology with a market application that has an acute unmet need with few alternative or substitute products.

Summary

There are two critical elements that underlie successful products 1) the novelty and useful capabilities of the technology 2) the acuteness of the market need and the lack of adequate substitutes for the product that the technology supports.

If you recognize these principles at the outset of your entrepreneurial career, you can better align technology with a critical market need, and you will have greater investor interest and market receptivity.

Remember, technology is agnostic to the market application—the same technology utilized in cell phones for wireless communication can be applied to medical devices for heart rate monitoring, or leveraged in the petroleum industry for real-time assessment of oil rig production.

Never forget that the bigger or more critical the problem, the bigger the market need and the more important the solution. Find critical problems, even if they are in a niche market. There will be lower hurdles for acceptance in markets where few effective products exist. The height of the hurdle for product acceptance is directly proportional to the number of competitive products and good substitutes available for that particular need. A market void of effective products or good substitutes has increased interest from investors, and lowered hurdles for adoption. Remember to align your technology to solve the most critical need, and you will never be stuck with a great technology solution in search of an important problem to solve.

© 2016 Craig Shimasaki

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This is the first in a series of seven common entrepreneurial mistakes, and how to fix them.

One of the most critical mistakes entrepreneurs make, is not clearly defining their goals at the outset, in terms of their business model and product development goals.  Investors instinctively know whether an entrepreneur really understands where they are going, or if they are just on a “fishing expedition,” hoping to figure out things—after they get their money. Your business model and product development goal impacts many things.

For example:

• Is your business goal to incrementally advance your technology and increase its value while at staying employed at your academic institution, then to consult for the company that licenses, develops and commercializes your future product?
• Is your business goal to advance your technology all the way through to product commercialization?
• Is your business goal to develop a prototype or reach preclinical stage, then license the project to a Med Device, Pharmaceutical Company or Diagnostic Company?

• Is your business goal to develop an In-Vitro Diagnostic test kit, or are you wanting to reach to the market faster as a Laboratory Developed Test (LDT) as a clinical service model?

Recognize that the choice of a business goal effects the optimal enterprise structure, the amount of capital you need, and the time required to reach an investor exit. Each of which have differing amounts of risk and differing valuations.

Here is an analogy why it is critical to define your goal at the outset.  Suppose ten people living in Oklahoma City have a common goal of arriving at New York City by automobile. Each one can choose from dozens of different routes to reach this destination. Some choices will allow an individual to arrive sooner, other choices will cause an individual to arrive later, but all ten individuals will eventually reach the same destination—as long as they constantly head northeast.  The moment someone heads south, west, or northwest…they will not arrive at their goal!

This may seem remedial, but it is an important analogy. If your business goal is defined at the outset, you and your team can use their creative ability to overcome obstacles to arrive at your desired destination. However, if your business goal is not clearly defined, often weary entrepreneurs will take the path of least resistance, only to later discover that their past decisions are directing them away from their desired goal.

Recognize the Difference between the Goal and a Method

Starting and building a biotech company or entrepreneurial organization is not prescriptive!  Although there are defined concepts and principals to follow, many paths can lead to success. For instance, when raising capital, one entrepreneur will be successful by building their company with non-dilutive capital in the form of grants, donations and crowdfunding. However, if this funding “method” becomes the “goal” for another entrepreneur who cannot raise non-dilutive capital, they waste precious time trying to achieve a “goal” that was simply one of many methods for raising capital. Recognize that there are many methods to reach the same goal.

How to Avoid this Mistake?

Every entrepreneur begins with a product idea from technology they developed or plan to license. During this time, before the company is incorporated or launched, there usually is no overhead cost structures or payroll to maintain. It is during this time that a variety of goals should be examined, tested and defined—prior to starting the organization.  This is a time when literally no one is looking at your organization and you can make as many mistakes as you want—and no one even notices. During this time, practice sharing your vision and goal with other seasoned entrepreneurs, then listen to their feedback. Share your goal with others in the industry and see if they get excited about your vision. If you already launched your company and you are struggling, re-examine your business model and product development goals to see if they are truly aligned with an acute market need. Always be sure to reduce your product concept and business goals into understandable terminology so that even your grandmother can understand. If you successfully do this, and people get excited about your goal, you may be on to something.

Can your Goal Change?

Absolutely! In fact, a good number of successful businesses and products are the result of a strategic business change that occurred because of an insurmountable roadblock in the original product idea or market. However, you first need to have a goal defined before you can change it! I’ll share more about this principle in Mistake #6 “Not Knowing When or How to Pivot or Reinvent Your Business Model or Product—missing critical external queues and failing to take advantage of “serendipity.”

Summary

For entrepreneurial success, you must clearly define your business model and product development goals. Well-defined goals provide a destination that team members can get behind and help to overcome obstacles and roadblocks that are encountered along the way. Entrepreneurs must clearly identify their goals at the outset because those who join your team are motivated by your vision, and your goal is the description of your ultimate destination. If you fail to define your goal, like the reply from the Cheshire cat to Alice when she asked him “which road do I take?” he said, “If you don’t know where you are going, any road will take you there!” Be an entrepreneur with clearly defined goals, so others can creatively help you reach your destination.

© 2015 Craig Shimasaki

The post 1 of 7 Common Entrepreneur Mistakes: Unclear Goals appeared first on Biosource Consulting.

I am a firm believer of the quote by Eleanor Roosevelt (or Groucho Marx–whomever really quoted) “Learn from the mistakes of others because you will never live long enough to make them all yourself.”  I believe the title “Seasoned Entrepreneur” is really a subtle reference to individuals who have accumulated the most battle scars during their entrepreneurial journey–and survived to tell about it! I would like to share some of these lessons because there are many pitfalls for entrepreneurs, but most of them are avoidable with careful planning and advanced knowledge. I have narrowed these mistakes down to seven of the most common categories.

1. Unclear Goals: Not knowing where you are going and not recognizing the difference between a Method and a Goal.
2. Misaligned Technology with a True Market Need: You find yourself possessing a technology solution that is in search of a problem to solve.
3. Poorly Planned Corporate Entity and Agreements: These foundational legal problems impact your future ability to raise capital and grow.
4. Failing to Fully Leverage your “Human Capital”: There are unrecognized and untapped resources available that you need, but you are not utilizing.
5. Poor Capital Management and Fundraising Strategy: Your capital raises are not timed to occur after reaching a value-enhancing milestone, thus impacting investor interest and valuation.
6. Not Knowing When or How to Pivot or Reinvent Your Business Model or Product: Missing critical external queues and failing to take advantage of “serendipity.”
7. Short-term Perseverance and Limited Vision: Misaligned internal motivation which ultimately leads to a self-limiting enterprise.

I’ll post more about each of these topics in the upcoming weeks.

Updated:

As i promise I have started posting step by step about the Mistakes of Entrepreneurs:

1. 1 of 7 Common Entrepreneur Mistakes: Unclear Goals
2. 2 of 7 Common Entrepreneur Mistakes: Misaligned Technology with Market Need
3. 3 of 7 Common Entrepreneur Mistakes: Poorly Planned and Conflicting Agreements
4. Entrepreneurial Mistakes 4 of 7: Failing to Leverage Untapped Human Capital Resources

© 2015 Craig Shimasaki

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Everyone can see a woman in this picture.  If asked about the relative age of the woman, some will reply, an old woman, others will say, a young woman.  At the outset, we all see one woman (old or young) and not both. However, with a little help and effort, everyone can eventually see both the old and the young woman facing different directions.

From this interesting exercise, we can glean two things.  1) Each of us spontaneously interpret new information without our conscious awareness. 2) However, the most critical point to recognize is that we are all examining the same information, but arriving at different conclusions.

Each of us interpret new information based upon a set of criteria.  These include our personal experiences, our unconscious biases, our beliefs about the world around us, and our views about life. Thorough these “lenses” we spontaneously interpret everything new we encounter.  For instance, if we believe all people harbor an ulterior motive, we will interpret whatever others do with caution, and be suspicious of everyone’s intentions. If we believe that we are prone to failure, we will abandon things prematurely when we encounter trials and adversity.

Thomas Edison viewed the world differently. He held the belief that he could discover a way to create an efficient incandescent light bulb by passing electricity through the right filament and thus converting electrical energy to light. Later, when asked the question about his numerous attempts and failures to find the right filament he replied “I never failed once, it just happened to be a 2,000-step process”. Edison saw the world differently because of what he believed.

What are you believing?

Everything that is man-made, such as massive skyscrapers, majestic dams, fine works of art and successful commercial products, were all envisioned in the mind of a “problem-solver” or entrepreneur many years before their existence.

Do you see the world differently from everyone else?

Let me encourage you with a quote from Henry Ford “Whether you think you can, or you think you can’t…you’re right.”  Set your sights on a vision, believe in yourself, and work towards a solution.  You will then be walking the same path successful entrepreneurs have traveled.

Best wishes for your success!

Copyright 2015 © BioSource Consulting. All Rights Reserved

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It is a great product…but after all, it’s still just a chicken sandwich!

The secret is in the rest of the story and the philosophy of its founder, Truett Cathy.  The Chick-fil-A founder, S. Truett Cathy died at the age of 93. In the September 14, 2014 Wall Street Journal article, Mr. Muhtar Kent, Chairman and CEO of Coca-Cola Co, shares a story titled “Truett Cathy’s Lessons on Life and Business”.  This list is adapted from the article:

1.  Despite having only a high-school education, Mr. Truett believed in himself.  He was an irrepressible optimist and he was convinced that he could make something of himself.  As entrepreneurs, so many times, our biggest obstacle is our own disbelief in what we can truly accomplish given the opportunity. The quote by Henry Ford “Whether you think you can, or you think you can’t – you’re right” is a fitting reminder that we must first overcome the biggest obstacle – our own belief system.

2.   He was a hard worker.  In an age where there are real, but unlikely, expectations of winning the lottery or finding get-rich-quick formulas, the tenet of perseverance and hard work may be foreign to some.  Good old hard work, with a purpose and a strategy, will eventually pay off.  Remember Aesop’s Fable of the Tortoise and the Hare?

3.  He was the motivator of a culture that he wanted to build and insisted on the highest quality products and service.  He was devoted to serving his customers, his employees and young people in the community.  All companies have a corporate culture. It is the sum total of the core values of its employees and leaders. For example, a company culture can be one of excitement and creativity, or one of minimalism and only doing what is required. Your corporate culture is either built on purpose, or by default; nevertheless, all companies will have one.

4.  He was and innovator in his field. All companies must have a culture of innovation if they hope to grow and be viable force long-term. Innovation should be incorporated into the company’s service to its customers, the products the company creates, and in the way the company conducts business.

5.  He was generous. All individuals appreciate generosity because it lets them know they are valued and appreciated.  This is true of employees, customers and managers in any business. Generosity can be given in time, attention, money and assistance. Being generous always has a habit of returning in some way to the giver.

6.  He stayed humble and never took himself too seriously. Pride is the opposite of humility and has a way of creeping up on individuals that have some measure of success. However, pride is simply the erroneous belief that every success you have is the result of your efforts and no one else’s. At its worst, pride makes an individual believe he or she needs no one, which cannot be further from the truth. I recall a quote that goes something like this, “At some point in your career, your success will no longer depend on what you do with you own hands, but rather, what you can do, with, and through the help of others”.   Taking yourself too seriously means you do not allow yourself the latitude to make mistakes and you become too hard on yourself. It is like living life in the rear-view mirror, being preoccupied with what you didn’t do or should have done, rather than looking forward and giving yourself some space to learn and grow.

Although making a chicken breast sandwich is not the same as making a therapeutic or medical device, the underlying principles that help make entrepreneurs successful are common to both. Let’s learn a few lessons from the Chicken Sandwich Entrepreneur!

 Copyright 2015 © BioSource Consulting. All Rights Reserved

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