Savvy's Resolute Adventures

US-China Science & Technology Forum (cont'd): Hiring 'A' Players

Question:  As an entrepreneur, how do you approach hiring?

 

Ms. Ueng: If you are truly passionate about your business, it will come across when you interview prospective employees.  It has to be a good fit.  Not all people will do well in entrepreneurial companies.  I once hired an individual who only had worked at large companies, and it was not successful. It takes a certain type of person who will enjoy and thrive in an entrepreneurial setting. The first transition to smaller company is usually very hard for a big company person.

When I looked at entrepreneurial opportunities to join, I would look at 4 Ps:  (1) People - does the CEO attract top notch 'A' players who will take the venture to the next level? (2) Product - is it strong enough to be well positioned?  (3) Potential - does the category offer a strong growth rate?  (4) Passion - do I have passion for the venture and do the people already there exude passion as well?

As a leader, I would empower my people in order to maximize their potential. I would hire people who are self starters as that is critical in start ups.

Dr. Wang: This can be a struggle. To keep employees loyal, you have to treat them very well. Companies usually give stock options or try to pay a little more as financial incentives.  As a startup, you have little money and limited resources. How do you get your employees to be loyal to you?  My idol is Steve Jobs - he knows how to motivate people to make them feel good which is very important. He praises them and tells them they are doing the best. I like to have data to back it up - that is the difficult part for me. You have to serve as a role model by working hard and to be someone that they will look up to. 

Dr. Fernandes: When we start a company (this is my 4th startup) and start hiring people, you are restricted to the area. You don't have much money, and you are just starting to raise money and you really don't have much security. No one is going to leave a good job to join a high risk situation unless they already have financial stability.  So you are not necessarily able to attract the right people at the start. Some will be able to see the potential based on your past track record and take the risk.  As we've become more stable and successful, we are able to have the best.  We usually try to hire locally, but that is not always possible. 

The people you hire at the start are not necessarily the people that you need later when you reach the product stage.  You need different areas of expertise. That is one of the hardest areas for me. Venture capitalists will get after you to reduce headcount and get the people fit for the job later.  That is very hard for me, because I get close to my staff. When you have someone who has worked very, very hard for you, as is true for many entrepreneurs, you work many hours together, so it is hard to let these people go.  You've got to have enough equity to offer your team so that the people who have worked hard with you will be rewarded when the company goes public or is acquired and be fully vested at the time  you may have to change the people.

US-China Science & Technology Forum (cont'd) : On Being Asian | Female

Q: We hear many stories of being disadvantaged as a woman or Asian. Is there a situation where this  can be an advantage?

 

Dr. Fernandes: That is an interesting question. I can tell you in major companies before I founded my own company, it can be used as an advantage. I was the only female out of one dozen EVPs at Bristol Myers Squibb. They could call each other pretty bad names, but they wouldn't call me the bad names.  That was certainly an advantage. Someone who is petite or a foreigner or a minority; they don't view you as a threat. Men, on the other hand, are very competitive with each other. They didn't view me as competition to them.  In some ways, it is an advantage.  It can also be disadvantage because they don't recognize you as one of them. So it can be both sides of the coin. 

Dr. Wang: You ask an interesting and important question. We (Chinese) are a minority and in some situations are not treated fairly.  I have experiences as such. On the other hand, you have to be confident that you are a very important person. Right now, China is a big story.  In fact, more people are interested in China than ever. In terms of business, we have an advantage being Chinese now. Though people do have many stereotypes.   Right now China is growing very fast and offers so many financial and market opportunities of huge potential, so indeed of interest to America right now. This is the best time to be Chinese.

Ms. Ueng: It's interesting to look at this over time. Earlier in my life, I was very much of a "banana". I wanted to be white and mainstream.  In my executive roles, I was the only female, and only nonwhite on my executive teams. I tried very much to be male and white...I was a banana! I thought "how can I get ahead if I'm not manly because all these other people are men."

Fast forward, now that I'm in my later 40s, things have changed. It is "in" to be Chinese.  It can be an advantage to be female.  It's interesting how big companies at the board level are trying to add women and non white women. Data shows that companies that have diversity on their boards perform better. While the correlation is not causal, the data definitely bears out a connection.  There is pressure for diversity. These companies have more innovation in their HR practices and are usually more successful.

The good news is now that I'm older and hopefully wiser, I am no longer a banana. In fact, our company is now helping companies with their China initiatives, as that is an area that larger companies as well as smaller companies are trying to figure out.

You have to accept that you are who you are.  People will be interested in differences and people now are more open to understanding and embracing the differences.

 

US-China Science & Technology Forum (cont'd): Customer Acquisition

Dr. Zhiyong Li: Getting new customers - how do you recruit and then keep new customers?

 
Ms. Ueng: In the beginning, you will want to focus on gaining initial users - beta customers or early adopters. As far as how you price, I would never give away your service for free since that is an indicator of value. Your first customers are those that are ideally very articulate and very passionate about their experience with your product or service so they in turn can serve as your evangelists and the news can trickle from there. These days, there are so many channels of communications that if your early users become evangelists, they can spread the word rapidly, especially if they are very happy.

And while you always want to over serve your customers, serving initial customers is critically important. You want to spend time with them, find out how they use your product, what might go wrong and how you can improve.  If you have a close relationship with them, they can provide articulate feedback. You could perhaps offer them a discount off of the initial pricing in exchange for their time.

Dr. Wang:  Grace really hit on good points. For us, when you try to get a client, when you start off, your best customers are your friends, people you already know. In the beginning, you don't have credibility yet.  So in our case, we go to professors that we already know, so they trust us. Otherwise, it is very difficult because the company's name recognition is not yet there. For us, we approach prospects based on our existing relationships. It is very important to engage in building relationships on an ongoing basis, so that when you start a business, you will have customers who can also offer helpful feedback.

Dr. Fernandes: We discover and develop new drugs, a process that takes  7 or 8 years.  In the start up stages, we don't need to be talking to the people who will be buying -  customers/pharmacies. But what we do find out, and is a required part of the presentations we make to investors, is what will these people will pay for.  That is a fundamental part of the market research.

It's hard to predict due to changing medical care and insurance changing right before us every day. What could we possibly charge here in the U.S., in Europe, and in Japan? You cannot have much difference in pricing.  There is a lot of thought that goes into this many years in advance. It is so hard to predict due to change in government, change of laws. We have to have credibility to predict this and tell investors with an honest face based on having done a lot of research.

US-China Science & Technology Forum (cont'd): Approach to Product Development

Dr. Zhiyong Li:  Let's move on to Product Development. There are so many things you can think about especially with internet advancement. We have Google, Facebook, Twitter, and now, Groupon.  With so many options, how do you know if you have the right idea?

 

Dr. Wang:  When you start a company, you have an idea of something you want to develop. I then go to the end customer.  My current company is BioMedomics, a medical diagnostics provider. We spend a lot of time talking to doctors. We are very fortunate here in Research Triangle Park that we have Duke and UNC.  One of our company advisors is a senior administrator and leading cardiologist at UNC. We go to him and ask his needs and probe on what is missing. He gives insightful answers on what the market needs. We listen carefully, since we must develop something that we can really sell. 

Also, I suggest going to strategic partners such as Johnson & Johnson and other big companies that could become your customers or one day buy you. Go to them and ask their needs, what their problem is, and what is missing.  Get into a conversation, and they will identify areas where they have no solution.  Go in there as soon as possible to help define your product early on.

Ms. Ueng: You have to really understand your market.  You can't develop your technology in a vacuum and think because it is "such cool" technology that all these people will want it.  While that could happen, if you are in market of only 2 people who will want it, certainly that is not commercially viable! 

I can't emphasize how much you have to listen to your market and understand their needs and make sure that your product has the features that meets those needs, assuming you want to have a product that has a sizeable market potential in order to grow your business.

Do your market research, whether it be qualitative research or quantitative research, and ideally, a combination of both.  Then make sure you are uniquely positioned so that you have a chance to stand out and be the leader in your market space.

Dr. Fernandez: We have a renewable business because bacteria become resistant. You have to find out who else is doing what, and how to differentiate your product. Research on competition is very important:  we have to find out what's available, what's coming along, what's ahead of us, what's side by side us, and what's behind us.  We do a lot of this research so that when we get the FDA process done, there is still a place to sell this product. 

Some of the knowledge is common sense having been in the industry for a long time. You should, however, get key opinion leaders to tell you there is a need, as investors will ask the key opinion leaders. It is important that you have a core set of people who believe in the same thing you do.

 

 

US-China Science & Technology Forum (cont'd): Controversy - When to Write a Business Plan?

Dr. Li:  A lot of people talk about writing a formal business plan to start a company - do you really need one and when?

 
Dr. Fernandez: Having a business plan is almost old fashioned now. It might have been more important back in the 90s. I only did one for my first company.   After each investor presentation, you realize you want to make a modification, so you have to keep changing it. It's sort of like an idea that rapidly blossoms. So, I recommend making a powerpoint presentation which is flexible and easily changeable. 

What does a business plan do?  It should clearly tell how to take your idea to a product & how much money it will take to get from here to there. You should be able to say this within 12 slides, not a 45 slide deck.

Dr. Wang: For any start up or existing company, you constantly need to be doing a 'business plan'.  In fact, right now I am doing a business plan. The reasons for writing a business plan are very important. If you want to raise money, you for sure have to have a business plan or no one will give you money.  Even if you aren't raising outside money, there are reasons to have a plan. As Grace talked about, you have to have a clear understanding of your market.  You have to understand who your competitors are. What is your market and your niche?

Human beings talk about a lot of things.  But when you write it down on paper, it takes on a different purpose. It's much more serious thinking. When most people talk, they don't give as deep thinking as when they write it down.  In engineering terms, writing down the important steps on how to run a business would be described as a simulation.  As a former engineer, this is not a challenge for me. 

For investors and for entrepreneurs, the financials are key. You need to take detailed steps to simulate the financial outcome: if I hire this many people, what revenue can I expect? You can then really get a clear idea if your business will make sense and how long it will take to get a return.  Otherwise you will not really find out if the business is good or not. One of the key things you will ask is "What is my business model?"  "How will I make money?"  Testing assumptions to make sure they make sense in a detailed financial model will tell you how you can make money. 

Ms. Ueng: I've worked in house as an executive for several venture backed companies and also as a consultant for entrepreneurs seeking to raise capital. In most cases, you have to have a business plan to raise outside money.  The traditional lengthy business plan may not be as relevant today, but you should plan to have an executive summary.  Usually to get there, you have to do a detailed bottoms up plan which you then summarize into a tight 1-3 page document. 

Often times when I work with entrepreneurs, I say "if you fail to plan, you plan to fail."  In the planning process, it can be in your mind, but ideally, it should be put on paper.  If you are going to invest your own money as well as a lot of your sweat equity, you want to invest time to fine tune your business model to ensure your business idea makes sense.

The whole exercise  is good for you from an internal perspective - it forces you to think through your business.  It's mandatory to gain external investors.  Venture capitalists and private investors will require some kind of presentation - at least a pitch that summarizes your thinking. This requires putting a lot, a lot of time to boil down concise content that drives a discussion from which they will feel confident in putting in money to take a share of your company. First impressions developed in the first 30 minutes count. 

This initial business planning process serves as a foundation internally and externally. Keep in mind that you will always be pitching your company throughout the life of your venture.

Dr. Fernandez: We have raised  $80MM from venture capitalists, and we have never written a business plan for my company.  The thought process for the business plan is reflected in the slides: competition, financial model, and the market.  We have not created pages and pages of texts. In my experience in the pharma industry, VCs do not read business plans.  They get so many a week and throw them in the trash. They want to meet the people and what you have to say. 

Dr. Wang:  I think what you experienced is totally different versus someone who is starting from scratch.  The reputation and success you have has allowed people to know you. The risk is removed. That is very different from starting from scratch when no one knows you. That is when you need to provide detail. Because people know you, that is why you didn't have to have a detailed plan.

Dr. Fernandez: Yes - you are right.  My first time around, I did have to have a plan!

Ms. Ueng: If someone has been successful at 1 or 2 companies, it is very different - you just make one call and people will take meetings and have interest in investing.

US-China Science & Technology Forum: Key Steps to Start a Busines

At the 19th  annual national Chinese Association for Science and Technology, Dr. Zhiyong Li of SAS moderated an Entrepreneurship panel including executives (l - r):

Ms. Grace Ueng, Founder and CEO, Savvy Marketing Group
Dr. Frank Wang, President, CEO, and Founder of BioMedomics
Dr. Prabha Fernandez, CEO and President of Cempra Pharmaceuticals

Dr. Li: What are the key steps to start a business? 

Dr. Fernandez : First key step is to get both the IP and the team.  Two things you absolutely must have. Cannot raise money without that.  IP has to be very strong when it will be approved, not necessarily at that instant.  Team must be strong, loyal to you, and one you can trust. As you will be multi tasking and there will not be time to do everything.

Dr. Wang:  When you start a business, the key step is you must have an idea that can make money. That is the starting point.  After that, you must have passion that you can go along with the idea and do it. Then you can come up with the funding and team and the IP.  Then comes down to execution by the people. I learned a lot in this area in my startups - really comes down to who can work with you, who is good with you and loyal with you.

Ms. Ueng:  In addition to having an innovative technology/solution,  there needs to be a market need for the product you are going to deliver.  You should assess the market for what your technology solves.  Understand what other competitors there are that offer a similar solution. 

    So often entrepreneurs tell  me they are definitively the best and dismiss other players or believe that they simply don't have competitors. Then is there really a market need for your solution? There usually are others that do something similar things to what you are doing, as that validates the market opportunity.

    Once you properly conduct a market assessment, then you must ask 'what is my unique selling proposition (USP)'? And how do I communicate it & package it up?  There are so many brilliant technologists, but only a small percentage of them can clearly and concisely articulate what their product does for their end user.