Tuesday, November 10, 2015

Non-scalable businesses are non-financeable

I recently had the pleasure of hearing what Chris Wagner, CEO of Contextual Genomics, had to say about life sciences and biotech entrepreneurship at the Canadian Cancer Research Conference in Montreal.

His talk began with his very definition of commercialization: The act of actually making and selling stuff.  He warned the advice (mostly academics) that commercialization was not forming a company around intellectual property; it was something more than that. There were several points where he emphasized that the point of building a company was to do something big, very big, and not run a company like a science project.  The message was that academic spin-offs run like vanity projects (my words, not his) were missing the whole point entirely.

This isn't news to anyone keen on doing business, but the importance of people and teams in early stage companies was touched on several times. Hire good people, he said, and make sure they bring value to the company: "If you know more than your employees [in their field of expertise], there is a problem". As a CEO, you also need mentors above and beyond your Board, and those mentors must be ex-CEO types.

Surprisingly, Wagner also addressed the issue of credibility in science-based startups.  It's not that there is a question that a company will be a fraud, it's just that the perception of credibility is lower from a for-profit organization.  Being in that conflict of interest needs a third party to lend their support to you, be it through having advisors vouching for you or having others in your network to let people know that they believe in you.

I'll leave off with an excellent quote Wagner shared with everyone.  Too often, he said, businesses try to sell custom solutions to each customer/client.  Custom solutions require lots of work, and they just don't scale, which leads to a huge problem:
If your business is non-scalable, it's non-financeable
 And without that life-blood of capital, the growth of your business is stunted.