Apologies for the low volume of posts recently. I have some more stuff to post but I have been ridiculously busy. Tomorrow though, I will be on holiday and will be travelling about so it may be a little quiet until I get back home. But, enough about me. I just met a friend for coffee & it got me thinking about my time here and the people I have met.

I just want to say this, thank you to everyone who has touched my life in some way while I have been here. Whether you just came up and chatted to me, whether you invited me to meet your friends and spend an evening with you. Whether you indulged me by coming to an American Football game with me or some other random thing I wanted to do. You made more of an impact on my life than I probably did on yours. Most likely none of you know quite how much it means to me to have had people reach out, almost strangers, and offer that arm of friendship and companionship. Having offers to join people on different occasions, even just for coffee makes what can essentially be a lonely existence, so much brighter. Thank you & if you are ever my side of the world, wherever that is, I would love to return the favour!

I know I promised a post about David Schonthal’s Kellogg lectures, but that will have to wait. I was leafing through my notebook trying to find my notes from Keith Murnighan’s lectures on Leadership.. I’ve been reading his book and wanted to write a small post. Instead I came across notes I had from a guest lecture at INVO on due diligence. Which is rather pertinent considering some of the stuff I have been up to recently. Due diligence is something you perform to understand the world in which your invention resides. There are many tools which can help you perform due diligence. Instead I will list some of the questions you need to ask to understand whether your product is viable.

Due diligence is understanding several things including: market opportunity, the technology & the intellectual property (IP) that surrounds it, your management team and the finances. One of the things we learnt was that you need to figure out the things that could be a big problem for you early on. The longer you leave it, the more you bury your head in the sand, the more money you will burn for potentially nothing. This first post is about the questions you need to ask and answer about the market you will be entering.

Market Opportunity

• Use a bottom-up approach, not top-down. It’s all very well the fact that the potential market globally is worth €1 trillion. The likelihood of you capturing that entire market is low. Instead you need to figure out who would buy your product by asking potential customers (actually this relates really well to what I’ll write about David Schonthal’s stuff..)
• Does the product address the problem better than the alternatives?
• Is the market ready for the product? Check out these technologies that were way ahead of their time
• Validate the existence and the severity of the market problem you are trying to solve
• Who are your competition? Market leaders? Newcomers? Who are their investors?
• What about your customer? Do they have authority over what they purchase? If not who does and what does that mean for your pricing model? A good example is the pharma industry. Some makers of amazing wound healing products are struggling because Medicare has capped reimbursement levels for certain product types.
• What about external factors influencing the market? Regulatory, environmental, legal, political factors?

There are ways and means of doing this. You can buy expensive market reports which may or may not save you some time. You can hire consultants. You can use the internet. When it comes to your customers, in the words of Steve Blank you need to “Get out of the building” go and talk to your customers, find out what they really need, not what you think they need,

Now Kellogg has finished, and the I2C Fellows have left I am putting my spare time and energies after work into organising the Business Essentials for Scientists (BES) 2014 course held by Åbo Akademi University in Finland. This course started in 2011 with the first “pioneers” of this Kellogg & Northwestern Program, my former colleague Emilia Peuhu and another PhD student, Anders Björkbom. It was them and their experience here that made me decide that I was going to do whatever it took to get to be a part of this. Fast forward a few more years than I would like and I am on this side of things.

I took the first BES course in 2011. It was great, We had speakers from start-ups, some fresh out of the Boost Startup Farm, including WalkBase who have done very well since. We had seasoned speakers who had spent many years in industry and some academic entrepreneurs. We had some academic teaching, not as much as I would have liked then, But I recognise that I am probably slightly unusual for wanting more lectures and courses. However, the course was inspiring and we had a great opportunity to interact with people that we would never ever come across in our day to day lives as PhD students. We also got a fresh, non-academic view on how life works outside of university. Some of the guest speakers were not afraid to speak openly about their opinions and the reasons for why they made their choices. It meant we got some conflicting advice, but when you think about it that’s the reality of life. We make our choices with respect to the circumstances at the time.

As I have been trying to find speakers for this year’s course, look up some of those who have been with us for the last few BES courses and find some new faces and stories, I have been forced to reflect on what I have done over the last few years and what inspired me to seek out additional business-orientated education.

I think maybe the turning point for me was reading articles on NatureJobs site which described a poor job market for PhD graduates. This was back in 2009 when a career outside academia was an “alternative career”. Where students worried that they couldn’t tell their supervisor that they didn’t want to stay in academia for fear of repercussions. Nowadays, academia is the alternative. I realised any “real world” experience that I had work-wise was fast losing value with each year that my PhD took. Working since I was 16 in various customer service jobs, from selling outdoor clothing, bar work, telesales of various kinds, would cease to mean anything. If you graduate in your late 20’s or early 30’s, no one is going to care about what you did when you were 18. Even if it means you didn’t just stay solely in education, and can talk to normal people.

I figured I needed to find another way to make myself stand out from what was evidently going to be an increasing number of bright PhD’s looking for work in industry. Given the non-existent internship opportunities. I decided to take advantage of the freedom of taking university courses for free while I could. So, I browsed through the courses in English at Åbo Akademi and took a variety of classes, and even did a couple of MOOCs (massive open online courses). Always aiming to find something that sounded interesting that would also help me broaden my knowledge, I’m lucky my supervisor was supportive, although I tried not to let it get in the way of my research. I raised money to go on the BioBusiness Summer School in Amsterdam, where we had a very similar but more developed experience to the BES course. We had many speakers from different aspects of the Pharma, Biotech and Medical Devices sectors come and talk to us frankly about their careers, how their company has evolved, and different aspects of BioBusiness.

So what does this mean for the next BES participants? Well, classroom learning is all well and good. But for me the most rewarding learning experiences have been getting hands experience in MOOCs, such as the Technology Entrepreneurship course run by Stanford University. As well as getting the chance to interact with people who have had wealth of life and business experience. It’s all very well to be taught something, but to see how it has been applied is more valuable. I hope to find a balance between academic learning and interactive sessions with entrepreneurs and business people. I’m not promising miracles but I am hoping that some part of this year’s course will inspire each of the participants in some way.

The lectures with Thomas Lys, were incredibly enlightening as well as entertaining. Accounting can be a boring subject, understanding the differences between cash flow statements, income statements and balance sheets is not at all easy. Thomas Lys really strived to show us how to understand how the numbers between the different reporting types are connected, what they mean in reality, and more interestingly how they can be fudged. Obviously, not so we can fudge them, but so that can tell when the wool is being pulled over our eyes. I would have loved to have had the opportunity to have an assignment to explore this aspect further (wow, I never thought I would say that about accounting). Although, if I tried I could probably find a few current examples…

Thomas Lys was involved in the prosecution for the Enron case and he showed us how they managed to “cook the books”. As one of the most famous and arguably sophisticated accounting scandals, it was a great example and a good finale to the 10 odd hours we spent with him. In Enron’s case, cooking the books came down to a series of energy swaps within and outside of Enron which he showed us in some detail.

Generally Thomas gave us a few quick ways to see whether a company could be guilty of fraud. One of the ways you can check if the books are being cooked is by how discretionary accruals (an expense that hasn’t yet been realised) are recorded and how they behave over time. A drop in the ratio of discretionary accruals/total assets at the end of the fiscal year is an indicator of the company’s accounting methods (soft or hard) and a possible sign that the accounting is not being done properly.  Another good indicator generally is if a company uses a little known auditor. It helps to know the industry, if say in manufacturing the % value of your accounts receivable is high, it might suggest that you are financing your customers’ purchases (not good since it can lead to default). One other easy one is disparity between trends between income and cash flow, if income is increasing but cash flow isn’t, something could be going on. These are all things that many of us can look out for when reading the news and just checking publicly available information. Most of all he showed us how we should think of and treat different types of income and expenditure, and how we can find them in balance sheets, income statements and cash flow statements.

I really enjoyed this class. I’ll probably need the notes by my side if I need to go through accounts information in detail. But, it took the confusion out of these seemingly similar spreadsheets of financial information. I would definitely be tempted to take an MBA level class in this, just to have the chance to understand this subject better and get some practice.

I’m in half a mind as to whether to publish this or not. But what the heck. This blog is about things I am learning here in Chicago, and working in a professional environment is part of the parcel.

In my seven week journey I have had the opportunity to meet many people, of many backgrounds both professionally and culturally. I have learnt many things from the people who I work with about how to look professional, some great tips and tricks from the girls. Not so easy coming from a lab environment, where jeans and sneakers are the norm. I’ve watched and observed how different people act in different situations and I am trying to apply it. I do have some prior office experience, but that was a small town office many years ago. Most of what I have seen so far is positive, people are generally very respectful, polite and also kind. I have seen how this had helped benefit interactions and exchanges between people. I have to say when I went to Kellogg I wasn’t expecting the down to earth experience I got, I was expecting something more brutal, akin to what you would see in a movie (more of a Gordon Gekko style of treating people). Let’s just say I am glad it wasn’t like that.

However, I have come across a few instances in my seven weeks, which have probably taught me more about how to behave appropriately because of their negative example than the positive examples. In the few cases I have seen, I have met people who feel that just because they think (or are) above someone else that it is ok to be rude, shout at others for no good reason, demand things from them without having fulfilled their side of the bargain (and with no intention to). I have seen some pretty outrageous brown-nosing and one-upmanship – some of which I can’t believe didn’t send the recipient’s BS-meter into overdrive (or maybe it did and they were too professional to show it). Most of all I have seen how upsetting bad attitude can be to those who are in the vicinity, and how it disrupts a team dynamic. The question is, when is it appropriate to say something? Is it only when you are on the receiving end? Is there any benefit to calling someone out on their attitude? I don’t know. What I do know is that once someone called me out on my attitude when I was a teen. I thought I was above the work that I had been given. I remember that lesson to this day, and while painful to learn it, it obviously stuck with me.

There is a saying “manners maketh man”. I think the thing that I have learnt from observing all this is that although you may not like everyone you work with, you should strive to treat people honestly and with respect. It’s ok to disagree, but not belittle. I know in the future I am going to strive to be more like this. It only takes a couple of instances of bad attitude to ruin someone’s perception of you, and much longer to earn their respect back.

The other day we met Samir, CEO of SiNode a Northwestern University Startup company dedicated to improving battery performance through the use of graphene. Their product aims to be the solution to the problem of mobile device batteries that need to be recharged several times a day. Samir walked us through the pitch of SiNode, something he said took them about a year to perfect to the point where instead of being placed in pitch competitions, they were winning them. The pitch was clean and simple, and very effective through the use of well chosen graphics, simple language and judicious use of animations to keep the audience’s attention. Although Samir was not actually “pitching” for real it was easy to see how he and the company could be very persuasive.

Samir has a pretty impressive background in management consulting and politics, even working on the Obama campaign before finishing an MBA at Northwestern and starting SiNode. While I imagine he has quite a number of contacts, they would probably not all be in the energy and mobile devices sector. One of the things about building a company is that you need to contact other people to partner with to help you manufacture and sell. The question is, is how do you find these people? Here’s a few tips we gleaned about founding a start-up and networking:

• Utilise your university’s alumni database and finds who works for the target company. Contact them and ask for an introduction to someone at the relevant dept.
• Making contacts and maintaining them takes lots of hours on the phone.
• You need to hustle & get out of your comfort zone. If you aren’t willing to hustle, get someone who is.
• Pitch your business idea ASAP by entering competitions. You won’t win the first time but it will help refine your message and understand your weaknesses. You’ll also see whether people are actually getting excited about your product.
• Understand the value of having a good team. You need both a business-oriented person and a tech-oriented person. You also will need the inventor or someone with kudos on board – it will improve your credibility.
• The MBA needs to understand the technology to some extent, and the engineer/PhDs need to understand the business side of the company in order for them to be able to understand what investors want and customers want.
• The whole team needs to be involved when setting milestones, PhDs MBAs and Engineers. Otherwise you will run into problems of not delivering on time. Which can eventually lead to investors pulling funding.
• Understand the industry value chain, who supplies to who and where you can fit in. It might be that you can’t supply direct to a big company. But you might be able to make yourself indispensable to one of their suppliers and get in that way.

We’ve had a few interesting discussions during the classes at Kellogg. A couple of interesting and provocative discussions from last week included the following:

Generating return on academic investments and scientific research. What we were taught was one way of valuing commercial projects by finding what their NPV (net present value) is. The problem with applying this approach to scientific research projects, is that on the face of it, the majority of basic research is financially a one way street. You get grants, you spend the grant on materials and paying students/post-docs to do the work and then you publish. Publishing doesn’t generate income. It might help you get future grants but you can’t put that easily into an NPV calculation. If you do more applied science, you can probably patent some of your inventions and try to license them out to recoup costs (which is basically what Tech Transfer Offices do). However, for a lot of scientific research this isn’t possible. So if you can’t put a value on your project’s worth, should you still do it? Absolutely, yes – if, it is well thought out. While I do believe that scientists could do more to apply risk management and project management principles to the process of conducting scientific research. Applying numerical valuation principles is clearly in conflict with the nature of academic research.

Fundamental scientific research which may not have a NPV value and whose worth cannot be foreseen is necessary, since this research can drive innovation. The beauty of the university system is that scientists and engineers have the freedom to follow far-out ideas (although some may argue that this is becoming increasingly impossible with the squeeze on funding and tenure opportunities). Companies, on the other hand, are driven by profit generation, which means that they won’t take on projects with a negative NPV (i.e. basic science research). What they can do is build on the ideas generated at universities and turn them into tangible and financially viable projects. Some great examples of this co-dependency and its effect on innovation are described in Nathan Rosenberg’s book (check out the recommended reading tab).

Another interesting point made the other day was: “Today, there is no shortage of capital in the world, merely a shortage of good ideas that deserve that capital” – Prof. Effi Benmelech (paraphrased). To some extent I would agree with that comment. Much of the technological advances in the world in the last few decades have been incremental. From the point of view of scientific research funding, I think I would actually disagree and suggest instead that perhaps the distribution of capital and the metrics for assessing good ideas is skewed, rather than there being a lack of good ideas.