Business Encounters: Life Scientist

To Succeed You Need to Risk Everything and Be Stubborn – NOT! (Part 1 of 5)

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Chapter 2 of It’s a Jungle in There demonstrates the humor value of the book  and explains the book’s title. It also provides evidence of why the book offers poor and simplistic advice for the entrepreneur.

The author presents a story in which he intends to demonstrate to venture capitalists the idea of a restaurant with a jungle theme. His tactic is to convert his house into a jungle.  He proposes this as an example of why the entrepreneur must have sufficient passion and take necessary risks to succeed.

His strategy is a classic “throw in all the chips” type of gambling-based risk-taking. One puts all one’s effort into one potential solution and risks everything. Further, it demonstrates little planning regarding the overall business with the only emphasis focused on highlighting the desire to create something new based om an inspiration. Overall, it is not surprising that the potential funder was dubious despite the fact that his family and friends thought the house was impressive. A house lit up for the holidays is similarly impressive, yet no sound investor would see such a home as evidence of a potential investment in a holiday-themed enterprise (or hasn’t yet).

In the process, the author mortgaged his house and spent $400,000 on alterations to switch it into a jungle.He spent several years trying to convince others that a restaurant was a good idea using his house as a demonstration. It appears that only one fish caught this bait and it took two years to reel it in.

He did not pay his gas bill and engaged in illegal activities associated with stealing access to the resources of the gas company to keep his house warm (and his jungle viable). It’s unclear how many other code violations he could be accused of in the alterations of his home. But it’s likely that his use of electricity violated the electrical code. He angered others around him by turning a residential neighborhood into a demonstration of a concept. The jungle alterations probably placed other houses near him at risk of fire and likely decreased their value. Most communities would have shut him down, causing him to lose the entire investment.

The money he used to alter his home was most certainly wasted and would not add value in the long-term. Also, all the alterations would need to be reversed yielding additional expense.

Further, many advisors do not recommend mortgaging one’s house to obtain capital in order to engage in an entrepreneurial pursuit. There are several good reasons. In addition to the reality that if one loses, then one has lost a place to live, there is the more logical question if this is a good strategy. In fact, the additional stress of knowing that failure means losing a roof over one’s head may cause someone to take less risk because the repercussions are so grave. In his case, such reckless behavior was not an issue as he apparently was going to accept any risk to achieve the goal of obtaining the venture capitalist’s interest and achieve his passion. However, such reckless abandon is not typical behavior even for entrepreneurs.

The author presents his approach as the only solution in which he could have launched his entrepreneurial pursuit. He does not describe getting input from any other person before embarking on this extreme strategy. Had he asked for input (say a potential customer) a more efficient way to spend to $400,000 would be to set up a coffee shop with a jungle theme. Although the coffee shop might not have been quite as extensive as he proposed, it may have been sufficient to demonstrate the value of his concept. The coffee shop could have provided a potential revenue-generating example of his jungle themed restaurant. Customers could guide steady growth by asking about interest in decor changes, menu additions, meal preferences, and pricing. If successful, he might not have needed to seek venture capital funding to grow the coffee shop to a more extensive restaurant. Bootstrapping this process may have been a far more efficient and effective way of achieving his results without engaging in illegal and reckless behavior.

Further Reading

Photo Credits: Max Pixel (CC0 Public Domain) and Bengal tiger in jungle-1920×1080.jpg. Author Hineshvalayil. 7 June 2016. This file is licensed under the Creative Commons Attribution-Share Alike 4.0 International license.

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Funding Your Life Science Startup with SBIR Phase I Funds from the NIH

During psychiatry residency a friend said, “You should consider pursuing SBIR funding.” You may be wondering what SBIR is. This blog hopes to succinctly answer that question and, more importantly, to explain why Small Business Innovation Research (SBIR) is an excellent way for someone interested in the life sciences to fund an entrepreneurial interest. Once a life scientist establishes a small for-profit business, SBIR funds can support the creation of a technological solution to an unmet need in the life sciences.

What is SBIR?
SBIR is a component of all the primary funding initiatives of the US federal government. The SBIR funding solution is not the same as a loan from the Small Business Administration. You do not owe the government anything for its granting of money to you. There is no obligation to pay it back. Still, keep in mind that this is a government-run grant program. You must spend the funds wisely and carefully, follow government standards, and in some cases complete an audit following government standards.

NIH and other branches of government are obligated to dedicate a percentage of their R&D funds to SBIR efforts. SBIR funds are only available to a commercial enterprise, in other words, a for-profit company. This funding mechanism is not designed to complete basic science research or produce a product with no apparent applicability. Funds must yield a viable commercial product sold in the marketplace.

SBIR at NIH
This blog focuses exclusively on the NIH’s SBIR program and specifically Phase I of SBIR funding, which is the most rudimentary and simplest way to achieve funding. There are similar mechanisms such as STTR, as well as more complicated means of obtaining additional SBIR/STTR funds. However, those are less likely to be the optimal choice and are not the focus of this post.

The NIH SBIR program is particularly well-suited to the life scientist-entrepreneur. NIH provides investigator-driven research through its more academic grants, as well as SBIR. That means that the NIH program is unique in that it will consider your idea versus telling investigators what ideas they will fund. SBIR programs in other branches of the government will often specify a need and goal of the research. Your project must fit within that specified need. To sum, the NIH SBIR program can be an excellent solution for an entrepreneur interested in creating a product that will add value in the life sciences. But you must assess if the limitations and conditions are acceptable to your goals.

SBIR Limitations and Focus
Phase I focuses only on demonstrating feasibility. You are not expected to complete the entire product, nor fully assess it in all logical ways. Your goal is to use Phase I to demonstrate that the idea is sound, the team is capable, and with further funding it is likely that you will produce something of value. Some ideas cannot be easily demonstrated in a short time frame and with a limited budget. To fit within SBIR Phase I, you must then roll back your plan and goal to a feasible project. Reviewers will reject a project that over promises as quickly as one that under delivers.

Budget and timeframe for an SBIR Phase I are constrained. SBIR recommends completion of Phase I in six months. With justification, you can request a one-year period for funding. A Phase I SBIR budget is typically limited to $150,000, including any overhead or indirect costs, as well as a fee that the government allows, which is maximum of 7% of the other expenses. This budget request can be raised to $225,000 if the author can justify the higher amount due to the complexity of the project. If your needs fit within time and dollar SBIR limitations, it can be an excellent source of capital to start your company while retaining full ownership of the enterprise and limiting debt.

More funds are available to support your project. If you obtain Phase I funds and complete the project successfully, you can apply for Phase II, which is two years in length and up to $1 million in funding. Phase II has a greater chance of success if you have had a productive Phase I that demonstrated the feasibility of the project to create a valuable product.

Preparing a Phase I SBIR Application to the NIH
Obtaining SBIR funding is complicated and challenging. As with any funding request, you must have a novel idea with potential and definite value. Alongside that idea, you need a team and an organization with the skills to convert that idea into a product that provides health-related value to a potential customer. You must carefully outline the strategy to create the product and describe the underlying theoretical basis that will guide the development.

It’s helpful to consider an SBIR application as a standard pitch to a business audience, except you are pitching using paper to an academic audience that demands that the process and assertions are backed up with quality references.

The decision-makers regarding funding are not business investors looking for a return on investment over time. In fact, those decision-makers are a collection of individuals ranging from university-based academics to practicing clinicians to small business personnel who likely have submitted SBIR applications and/or received awards in the past. Due to the likely academic orientation of reviewers, the emphasis will be more on the scientific basis of concept and rigor of the theoretical underpinnings. It is not just a question of “Is this idea good?”, but “Is this idea based on sound theory?”

All SBIR efforts include research and development to determine the effectiveness of the product. Rigor also applies to the assessment strategy and process as well. The application must provide detail regarding how value will be measured by various metrics and using established methods. For an individual with experience in research, this is relatively straightforward. For an SBIR applicant with no science or research background, the academic component will require guidance from someone with assessment research expertise.

As mentioned earlier, a Phase I application only focuses on demonstrating the feasibility of the concept. In Phase I, you are expected to show that it is feasible to produce the product and that it potentially has value. The typical commercial emphasis on commercial viability is not an essential component of this phase of the application although the potential business value should be relatively clear. In other words, there’s no need for complicated calculations of cash flow, anticipated pricing, or ongoing production costs. The author of an SBIR application focuses more on the customer need, the basis for that need, as well as a discussion of why the intended product will successfully address that need.

NIH provides complete information online, through conferences, and by other means to assist the individual interested in preparing an SBIR application. Contacts in the government can answer questions about the NIH SBIR program in general or the SBIR program for a particular Institute of the NIH can answer questions as well. A local Small Business Technology Center likely has the expertise to assist with a pre-review of the application as well as general guidance. The NIH will not help you write your application or tell you if it’s good or not. That feedback will come from the review committee after you apply.

Applications are submitted approximately every four months on the following deadlines: January 5, April 5, and September 5. Feedback from the review committee comes roughly three months after you submit and will include the overall committee’s consensus about the application as well as individual observations from three reviewers. These comments are an excellent guide to the problems which may have interfered with obtaining a score worthy of funding by the government. You can respond to the comments and resubmit the application at the next available deadline.

Is SBIR For You?
If you are new to SBIR, consider the first few applications to be attempts to understand the process and opportunities to learn how to sculpt a quality application that fits the structure and limitations of the SBIR program and reviewers’ expectations. That is, achieving success the first few submissions is unlikely. As with most other pursuits, success requires diligence as well as perseverance. If you intend to submit one application for SBIR funding and not to resubmit, then in all likelihood you are wasting your time.

Hopefully this blog overview helped get you started in your investigation of the potential of the SBIR program to fund your life science company. Good luck!

Photo Credits: MaxPixel and: US Dept of Homeland Security

Multitasking Is Really Task Switching and Doesn’t Work (Part 2 of 5)

Chapter 5 of It’s a Jungle in There recommends that an entrepreneur be a multi-tasker. Some activities can be completed simultaneously, such as listening to a podcast and exercising. However, for cognitive tasks, divided attention is merely task-switching. That is, the person is not actually accomplishing two things at once, but one is rapidly switching between two different activities. The high rate of accidents seen with individuals who are attempting to drive and text demonstrates the difficulty of accomplishing two cognitive tasks at the same time.

The human brain cannot “multi-task” just as most computers cannot. [Multi-threaded computers do process things at the same time, which is both wonderful and kind of scary]. Computers can task-switch really fast and pay no penalty as they switch, but people do.

The penalty for biologically-based intelligence is attentional inertia. When we switch, some of the attention is still focused on the older task. The time spent between task-switching can be relatively rapid and yield little loss of productivity if the cognitive load is small. Chess masters can play multiple games at the same time because, for them, each game is actually a relatively simple task.

As an example, for short-term task switching the delay can be up to 27 seconds for simple verbal actions when driving. Typical interruptions have long-term consequences. The exact figure is probably not obtainable, but the data is clear that we are not computers – we pay the price for distractions and task switching.

How about even more complicated cognitive tasks? Activities, especially those requiring high cognitive activity, take some significant time to return back to their previous level of efficiency. Since it takes time for human brains to recover from task switching/distraction, with each interruption, we lose time and focus, and it takes us time to recover. For more complicated tasks, some estimate 23 minutes and 15 seconds to recover from a distraction. Others identify 10-minute effort to get “back on track.” Assume that with each one it takes 5 to 15 minutes to get back to where you were (full speed ahead, making progress). The more interruptions, the worse it gets. Eventually, we don’t do either task very well. In reality, if they come more often than 10 minutes, most likely one is actually never hitting full speed concerning focus.

In other words, if one is pondering the future of the company and designing a mission statement, it is best to stay on that task and not multi-task when phone rings, or someone else asks for your attention, or a new email shows up. The author attributes his desire and interest in multi-tasking to undiagnosed or undiscovered attention deficit disorder. Whether that diagnosis is accurate or not, the point is that his approach to problems uniquely works for him. One might also argue that it not only works for him, but it works with the enterprise that he is trying to start. In contrast, the typical recommendation based on the above reality is to focus and pay careful attention to the task at hand. One must attempt to reach a conclusion before moving on to another action. As an aside, most treatment of ADHD stresses the need to have a thoughtful plan to guide activities and to decrease distractions to increase the ability to focus and improve productivity.

So, stay focused, but don’t get stuck on a single task. Switching a function to another one is the proper choice when one is not making progress or realizes that the task is far more difficult than initially anticipated. And, emergencies do arise where one has to stop one task and pick up another one. But, again, one is not multi-tasking, one is redirecting attention based on priority. In this case, when the fire is put out, go back and address the more minor concern.

Further Reading

Photo Credit: Wikipedia user Takamorry under the Creative Commons Attribution-Share Alike 2.0 Generic license and Airman Sadie Colbert Released 150802-F-MZ237-054.JPG. On official US Air Force Government Website

Building a Successful Working Environment

Creating a working environment seems simple. As in It’s a Jungle in There, you can distill that down to:

  • Care about your staff or co-workers.  (ch. 21)
  • Recognize and praise their accomplishments. (ch 22)
  • Help others out (ch 23).

But creating a successful organization takes much more effort and a mini-degree in psychology.

The challenge starts with how you hire people. 

What are your current criteria? Are you seeking intelligence, flexibility, compassion, perseverance, energy, enthusiasm, mental toughness, physical fitness, leadership, or adherence?

Then decide what makes a person a good fit for your organization by describing:

1) Characteristics that help someone succeed in your enterprise

  • If your Friday dress code means that staff can ditch the suit, but should still be “professional,” that tells you a lot about what you value.
  • If your industry is rapidly changing and challenged with new technology, then flexibility and innovativeness may be your top priority.

2) Criteria that helped others in the past, assuming the environment hasn’t changed.

3) Personal values that predict success in the position

  • Options include money, autonomy, work-life balance, travel, quiet, minimal interaction, constant action, desire for a big success, fear that effort will be discarded, etc.

Once the staff member is on board, it’s time to get them up to speed. Don’t just dump them onto the organization and assume they will “figure it out.” Have a plan for training and inspiration that conveys the organization’s core vision, mission, philosophy, and values. If someone doesn’t seem to buy the core organizational direction, you have a problem you need to fix promptly.

Then use qualitative and quantitative to assess the accuracy of the fit. Perhaps you thought that the person having “energy” was paramount. Then you realized that the person you hired based on that criterion was always pushing for a change in a direction that conflicted with your obligations or timeline. Perhaps the proper criterion you are looking for is “passion” for your mission and goals. That passion will translate to “energy” for staying the course to achieve success.

The fit might be great, but the organization isn’t consistent or is providing conflicting messages. The solution is organizational, not personal.

Or, despite your best efforts, the fit for this position isn’t right. Before you give up, maybe another area would demonstrate an improved fit. For example, you assumed that the person was more extroverted, but it seems that they like quiet and working one to one with people. Migrating to a position that involves coaching vs. one with the leadership of a large team may be the right solution.

Finally, there are the red flags. Occasionally some folks have a toxic side. They breed resentment, crave control, manipulate and intimidate. You need a system to identify such people. It is unlikely they are going to tell you that harming your organization is their goal. And other staff are likely to be intimidated and unwilling to come forward. Folks who are bullied look to supervisors to take action – that’s your (unpleasant) job. You need a system in place to ensure you collect information from other staff so you can identify the problem and take action.

To summarize, It’s a Jungle in There recommends to be kind and helpful to folks and give out praise liberally for work well done. That is a tiny piece of ensuring that you are creating a working environment where everyone is working together, doing their best, and helping the organization meet its mission.

References:

Photo Credit: Competency-circle.jpg. Components of competency-based management. 1 October 2010 (UTC).  Paduch. Creative Commons Attribution-ShareAlike 3.0 License.

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