Try Biotech for Blockbuster Startup Opportunities

In addition to the “green” sector, which I outlined a few weeks ago, I see biotech as one of the places where startups can always go for real opportunities. Recession-proof products with innovation continue to come from the biotechnology industry. Plus, it was the top industry attracting VC money in the most recent quarter of 2010, with a total of $944 million.

In its most general sense, biotech is used to refer to any sort of technology that uses biology or other medical technology to accomplish its end. It includes the use of microbes, or life processes, to produce materials and products that are useful to mankind.

Two top-notch analysts in this area, Eric Schmidt and Ross Muken say in Forbes “True innovation and products with a more durable revenue stream are coming from the biotechnology side of the industry,” They argue that biotech drugs treat life-threatening diseases - so recessions barely dent sales growth.

The hot areas of research today are cancer, AIDS, diabetes, heart disease, neurological diseases, immunological diseases, viral infections and tissue regeneration, where there is a high degree of incidence in the population.

Success in these areas will ensure a faster return on investment in R&D and licensing efforts. An alternative is to start a niche company with an orphan drug that, if successful, is protected from competition for several years. There is always money around for the right team and the right plan, and I believe biotech is a good area to start from.

If you are looking for the ideas on top of the list, I recommend you start with one of the following hot areas of biotech. Each one has the potential of annual sales more than $1 billion, which puts it in the new “blockbuster" drugs category:

• Metabolic disorders. "Metabolic syndrome" is the politically correct term for patients who are obese, diabetic, and face increased risk of heart disease. Now that half of the U.S. population is technically obese or overweight, an effective diet pill has become the Holy Grail of drugs.

• Vaccines. With new products to prevent cervical cancer, avian flu, and the common cold, vaccines are back in vogue. There are many other novel vaccines now on the table for development, ready for entrepreneurs who can license and commercialize them.

• Infectious diseases. Now that HIV has been transformed from a death sentence to a chronic disease has turned the infectious-disease-drug market into a multibillion-dollar industry. The next frontier is an effective treatment for Hepatitis C. Current drugs have terrible side effects and only "cure" 50% of patients.

• Lowering blood cholesterol. Drugs in this category are commonly called “statins.” They not only control blood cholesterol, but also stabilize plaque and prevent strokes through anti-inflammatory and other mechanisms. This is a huge need as the population ages.

Another biotech subcategory with opportunity is new medical devices. A friend of mine, a distinguished physician and surgeon, happens to manage a small private investment fund seeking early stage companies with new medical devices that have an established market. If you know a hot new startup in this area, I’m interested.

There’s never been a more exciting time to be a biotech startup. People tell me that “Big Pharma” companies have nearly $100 billion in cash that will keep buyout offers large. There are plenty of Holy Grail areas to focus on. How can you argue with this logic? Now is the time to jump in.

Marty Zwilling

Which Social Networks are for Entrepreneurs?

Social networking is indeed the new business networking. But you need to understand the different cultures to make it work. For example, my personal interest is entrepreneurs, and MySpace is for tweens. Me going to MySpace is sort of like your parents crashing your high school prom – everyone is uncomfortable and neither side has any fun.

Since I’ve been lurking around the various social networks for the last year or so, I’ve learned a few things, so I thought it would be helpful to clue you in on current networking cultures, and how they map into the business networking scene.

Every social network, including MySpace, claims to be a mecca for business people to network and sell products. That’s a necessary part of their hype to build followings and compete in the numbers game. But the reality is that each has a different style and some unwritten rules.

Here is my characterization of the social networking scene, as it relates to business networking for entrepreneurs and startups:

• Twitter. Believe it or not, this is my favorite for entrepreneurs. It is the melting pot of 75 million young and old members, business, personal, and celebrities. It’s the Internet version of the old daily newspaper, with serious news links, celebrity gossip threads, and business people of all sorts looking for information and leads. Entrepreneurs can find like-minded people here.

• Facebook. Here is the big gorilla of social networks, now exceeding 500 million members worldwide. It was built by Gen-Y, but it has now grown far beyond that. Facebook has groups like “Facebook for Business,” and millions of Fan/Business Pages, so be there or be square. Just don’t expect anything too technical.

• LinkedIn. This is the “old guard” of 60 million professionals, mostly populated by experienced executives and serious marketers. There are groups like “Applied Entrepreneurship”, where discussions get animated about the value of patents, and the legality of MLMs. Gen-Y will not feel comfortable here, but it’s an important business information source for entrepreneurs.

• MySpace. As I mentioned earlier, this network is dominated by musicians and tweens. Yet they have groups for “Entrepreneurs” and “Business Networking”. I tried business discussions here, with no response. This does seem to be the forum for “get rich quick working from home,” but it’s not the place for most real entrepreneurs.

• All the rest. (Ryze, Plaxo, Orkut, Ecademy, Bebo, Friendster, etc.) There are dozens of other social/business networking sites out there, some regionalized, and some are special interest boutiques. For example, Orkut is most popular in India and Asia, while Ryze is popular in Europe.

Before you decide to build your own perfect match, combining the best of all of these, consider these sobering statistics. The four major sites above all worked for several years before they saw any revenue, and have required investments of $50 million or more to build their brand. Viral marketing costs real money, to pass that magic million member mark, before your advertising revenue will even pay the rent.

My advice is to join one or two to check for value, rather than trying to do them all. It’s just like joining only one or two business groups in a new town, rather than trying to be active in all of them. You will be surprised at the number of valuable people connections, and the real leads you will get for your business. You have to give as well as take, listen as well as talk. Observe the social graces, and have fun!

Marty Zwilling

Five Steps To Social Media Success for Startups

Everyone is talking about how social media can help you jumpstart your business at no cost, and experts are springing up on all sides to help you do it at a high cost. So who do you believe, and what are the keys to success for your startup?

I’ll put my money on one of the originals in the social media marketing game, my friend Lon Safko, who just published his Second Edition of the bestselling book, “The Social Media Bible.” In the book, and in his popular lecture series, he says you can do it yourself, and  outlines five steps to success, which I have adapted a bit for startups as follows:

1. Analyze existing media, social media, and your demographics. Before you start, analyze existing media, demographics, and new social media alternatives for a fit to your rollout campaign requirements. Factor in the fundamental shift to ‘pull’ marketing taking place across the world in media and advertising. Then set your goals.

2. Understand the basic tools – the social media trinity. Blogging (Wordpress), micro-blogging (Twitter), and social networks are the trinity. Key social networks are Facebook (500 million consumers) and LinkedIn (60 million professionals). Get to know the five W’s of these and others – who, what, where, when, and why. Pick your fit.

3. Integrate your strategy into the trinity. Social media does not stand alone; it must be integrated into a balanced marketing strategy. Content is still king, so do the proper homework on what you blog, and the quality of the messages you deliver via social media. Put your social network links on your stationery, business cards, and email.

4. Assess and commit the resources required. At this point you need executive buy-in, decide what you do personally, assess your staffing and out-sourcing requirements, and commit the budget. This is the time to get creative, run pilot projects to look at ROI, and educate the whole team on objectives and activities.

5. Implement metrics and analytics. You can’t manage what you don’t measure. Determine the proper measurement tools and set up the measurement process. Only then can you determine your ROI. Manage your expectations, and analyze every marketing channel. Lather, rinse, repeat.

The best attribute of social media tools is that most of them are free. The down side is that many of them are limited, or have poor quality, and they come and go each day. You need to allocate a few minutes a day, or every week, to researching via blogs and websites like Tech News World the latest recommendations and reviews. This is not something you can learn once and forget about.

With social media, a key element of success is focus on the message. Never “sell” or push out your message like conventional advertising. The trick is to listen first, add something of value to the conversation, and pull the customers to you because they trust you and want more. According to Lon, the keywords to remember are to be “sincere, authentic, and transparent.”

Now is the time to capitalize on this fundamental shift in power to the customer, who now has real control over your brand message. Companies now have to communicate, rather than just pontificate. Customers see what their peers are saying about you in blogs and product reviews, and how you respond to these, and this impacts their decision more than any advertisement.

But above all, don’t forget to observe your competition and their social media activity. Luckily, you can see and measure online most of the things they can, and see which things work, and which ones don’t.

Finally, remember that it takes time to establish and optimize your presence on social media sites. Use the five steps listed here to leverage your time effectively, stay one step ahead of your competitors, and enjoy the success that social media can bring your startup.

Marty Zwilling

Avoid Hiring Pitfalls When Staffing a New Venture

By Ernst Gemassmer

Hiring the right people into the right positions of a new company is critical to getting funded, and the right people are as critical to success as the funding. Yet the hiring process in most small companies is usually haphazard, and low priority compared to all the other work that needs to get done.

The solution is to make this function one of your highest priority tasks, and formalize the process to avoid the following common hiring mistakes:

• Desperation hiring without a plan. Too often, you need a person “yesterday,” so you hire the nearest warm body, without proper consideration of strategic skills required, or how this hire fits into your overall staffing requirements. My recommendation is to hire the core executive team first, and charge them will building their own team.

• Poor position definition. The responsibilities of every position need to be clearly defined, realistic, and appealing. Make sure you are not looking for a set of skills and competencies that can’t usually be found in a single person. If the expectations or the salary range are unreasonable, you won’t get good results or a happy employee.

• Inadequate candidate sourcing. Going to Craig’s list may be adequate for some roles, but your rolodex and networking are the best source for C-level executives. Save the executive search firm for later, but make sure your search process can yield a robust list of candidates with the qualifications you need. Saving costs at hiring time can cost you a fortune through years of poor and unhappy performance.

• Hiring process that starts and stops. Without the proper priority and a formal timetable, your hiring process loses momentum and the results are unpredictable. Good candidates quickly recognize and avoid potential employers who never respond, cancel interviews, and can’t make a decision. Poor prospects have fewer choices so they wait.

• Skip the background and reference checks. It’s easy to be so impressed by a mirror-image candidate, or so pushed for time, that you skip the reference checks. Unfortunately, your gut-feeling may be a setup for pain later, when you find out the candidate talks a great story, but never delivers, or is highly skilled but unable to work with customers.

• Slow to correct staffing mistakes. In the heat of battle, to complete your initial staffing, every executive makes some staffing mistakes. For example, you may have overlooked a person’s professional shortcomings because of a close friendship. When you realize that you have made a mistake, address the issue in a polite, confidential but firm manner, and then encourage everyone to move on.

• Hire without consideration of team culture. You should focus on developing a ‘team spirit’ around the fundamental beliefs and objectives of your emerging company. If your team spirit and culture are developed through Friday afternoon beer bashes and open work hours, people from other work cultures will have a hard time fitting in and performing. A good practice for startups is to have every senior manager interview all significant new hires to ensure that they fit the culture of the new company.

As a startup, your future is all about the people you have on your team, and the people you hire. You need the very best to maintain that competitive edge. It’s normal to make some mistakes, but you need to minimize these by at least avoiding the common pitfalls, and realizing the importance of the staffing process. Then proceed with cautious urgency and make quick changes when warranted.

Today’s article is presented by one of the founders of our Startup Professionals team, Ernst H. Gemassmer. He resides on the West Coast, and has long helped entrepreneurs there, as well as providing turn-around assistance as interim CEO, and International coaching. You can contact him directly at ernst@startupprofessionals.com.

Building a Startup is Like Prospecting for Gold

Startups are tough. For every entrepreneur and every gold prospector, there are more opportunities to fail than to succeed. Yet experts say that quitting too soon is a prime cause of failure in both endeavors. No one knows how many business founders quit digging when they are only three feet from the gold.

Way back in 1937, an author name Napoleon Hill first released a classic book called “Think and Grow Rich,” which started with a real story of a man named Darby prospecting for gold, who gave up on his dreams of becoming rich, a mere three feet from a major gold vein.

A more recent Napoleon Hill Foundation follow-on book, “Three Feet From Gold – Turn Your Obstacles into Opportunities!” by Sharon L. Lechter and Greg S. Reid,  highlights the similarities of those economic times with the ones we have today. It also demonstrates that the driving principles for entrepreneurial success haven’t changed all that much either.

While this book is not specifically about entrepreneurs, the motivational and leadership concepts discussed certainly apply. Here is a sampling of quotes from the book which don’t need any commentary from me for you to understand their business applicability:

• A dream is just a dream until it is written down. Only then does it become a goal.
• Before great success comes, you will surely meet with temporary defeat.
• There is a big difference between believing in something and knowing it.
• Focus on your people more than your profits.
• Work your strengths, hire your weaknesses.
• Capture the leaders, corner the market.
• Whether the glass is half full or half empty depends on where it began.
• Success simply comes from going from failure to failure without loss of enthusiasm.
• Find and use your advantage, or someone will take it away.
• To succeed you must have “stickability.”
• Stay on your toes. Focus on the job at hand.
• Run from people with negative attitudes.
• Success is the reward for setbacks.
• Sometimes the worst situations turn out to be the best opportunities.
• There is a difference between being interested and being committed.
• Goals are aspirations until they become real. Then they become responsibilities.
• Every wealth creator is crystal clear about two things: a vision and a mission.
• Success simply comes from going from failure to failure without loss of enthusiasm.
• Many receive good advice, yet few profit from it. Will you?
• Sometimes you have to step back and look at your situation from a different angle to find a different solution.
• The most successful people are the most accessible people. The most successful people want to teach others how to become successful.
• You need two types of courage – First, the courage to get started. Second, the courage to not quit!

In fact, these quotes are all from successful business leaders of the current generation who are sharing how they have been able to persevere and keep their fire of passion burning, despite adversity – how by not giving up, they were able to allow their miracles to happen.

The message for you, if you are ready to receive it, is that there is a roadmap to success for everyone. If you are willing to work with mentors, peers, and your team, it only takes a few weeks to cultivate a good habit. After that "we first make our habits and then our habits make us."

In my experience, the real measure of an entrepreneur is his determination to “never give up.” I suggest that all of you can discover your own special gifts and keep moving forward, never giving up or quitting. A real entrepreneur would never stop digging three feet from the gold. Would you?

Marty Zwilling

Track the Ten Elements of Value for Your Venture

By Akira Hirai

We can measure success in many ways. In business, one important measure is the value of the company. That’s because a company’s value is a composite of all of the quantitative and qualitative factors that comprise a company: revenues, expenses, risks, growth prospects, quality of the management team, competitive advantages, strength of the intellectual property, and so forth.

In general, we want to do the things that increase the value of the business, and we want to avoid doing the things that reduce it. The problem is that we often lose sight of the big picture, and get mired in everyday distractions.

One useful technique for keeping your eyes focused on what really matters is Cayenne Consulting’s Venture Value Scorecard™. It’s human nature to prioritize the metrics that get measured, so the simple act of keeping track is often enough to have a significant positive impact.

The Venture Value Scorecard is a one-page summary of your company’s achievements and assets: the factors that contribute to the value of your organization. It should be updated monthly so that you have a regular reminder of where you’re making progress, and where you may have become complacent.

You can structure your Venture Value Scorecard any way you like (you can download our free Venture Value Scorecard Template here), but I suggest organizing it around the following key elements of value:

1. People: A strong team is obviously central to value creation. Your Venture Value Scorecard should highlight your recent successes in recruiting highly qualified team members to fill the most important gaps in your organizational structure. You can also use this space to keep track of innovators (R&D personnel) and rainmakers (sales & marketing personnel).

2. Products: You obviously can’t create value without a viable product (or service) to sell. This section of your Venture Value Scorecard should summarize the important advances you have made recently in research and product development.

3. Customers: A company’s only sustainable source of cash is sales, so you need to keep track of your business development efforts. You should inventory your best accounts and prospects, as well as the status of any pending major sales.

4. Partnerships: Relationships with larger firms not only confer legitimacy to your business; they can be an important source of intellectual property, distribution channels, and marketing clout. You should document the status of your partnership negotiations so that you can easily gauge progress.

5. Competitive Advantages: Your ability to create value depends on your ability to grow and protect your market share. This requires the continuous development of competitive advantages, whether through intellectual property, new innovation, exclusive distribution partnerships, key endorsements, brand building, corporate culture, or other factors. Keep track of what you’re doing to develop and enhance your sustainable competitive advantages.

6. Net Income: The five factors listed above all contribute to something that is directly measurable: net income. Part of your Venture Value Scorecard should be devoted to summarizing your income statement. Detail isn’t important; tracking your progress is. Items that paint a big picture include revenue by major product area, cost of goods, and operating expenses by category. If you have a lot of non-cash items such as amortization or depreciation, or if you have unusually long receivables cycles, you should also include adjustments to reconcile net income to cash flow.

7. Assets: Your assets add to your venture’s value, so any recent or pending changes in your assets should be recorded in your Venture Value Scorecard. These assets include things like cash (say, from a pending investment), facilities, inventory, and other property.

8. Liabilities: Your liabilities detract from your venture’s value. Any recent or expected reductions in your liabilities should also be recorded in your Venture Value Scorecard.

9. Risks: Unexpected events can kill a firm (of any size), and can therefore detract from its value. This is an opportunity to demonstrate that you recognize the greatest sources of risk facing your company, and that you’re taking prudent steps to mitigate the greatest hazards. Use your Venture Value Scorecard to summarize your major risk management initiatives.

10. Other: Every company is different, so you’ll need to customize the Venture Value Scorecard for your own circumstances. I suggest you try to figure out the 3-5 key metrics that are used to judge the health of companies in your industry, and keep track of these somewhere in your scorecard.

As noted earlier, your Venture Value Scorecard should be updated monthly. Keep an archive of your old scorecards. That way, you can go back and review the progress you’ve made. I think you’ll be pleased by the momentum you maintain by keeping score.

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Today's guest blog is by Akira Hirai, founder of Cayenne Consulting, a firm that helps entrepreneurs prepare for the fund raising process by developing strategies, business plans, financial forecasts, and presentation materials. His website is http://www.caycon.com.

Go Green With Ten Startup Triple Bottom Line Ideas

For those of you looking for startup ideas that are hot today and recession proof, consider anything to do with saving energy, sustaining the environment, or solutions to the global warming problem. These are especially good for Gen-Y (millennials) who have the passion, or every Gen-Y “wanna-be” (over 25 but not yet fulfilled).

Especially during a recovering economy, these will get you extra attention with investors, as long as basic business principles are not forgotten. Doing the right thing has to be profitable and competitive if it is to be sustainable.

Here are ten themes to get your mind rolling:

1. Reduce, reuse, recycle. Figure out how to recycle profitably your old cell phones. Come up with a responsible way to dispose of old medicines. Generate energy from the stuff you recycle.

2. Sustainable agriculture. Eliminate poisons from insecticides, weed killers, and other common products as well as the use of sprays in agriculture, and reduce dangerous chemicals in the food source.

3. Wildlife and resource conservation. Replant deforested areas to improve air quality, and restore indigenous forests. Protect wildlife to restore natural selection and the natural environment.

4. Renewable energy. Harvest renewable energy sources to power your home; sell that renewable energy back to your utility company site and build your dream eco-home; minimize your fossil fuel use; and more.

5. Alternative transportation. The alternatives here range from wind-powered battery-electric vehicles, to concentrated solar powered, geothermal-powered, tidal powered, wave-powered, to nuclear powered vehicles for different roles across the world.

6. Hyper-efficient appliances. Residential technologies – heat pump water heaters, new air conditioners, programmable thermostats, lighting, electronic appliances.

7. Organic food. This can be done both as big business and on a relatively small farm; and the third, help in hunting and gathering food for oneself.

8. Healthy fast food. Make visits to fast-food restaurants healthy rather than the culinary equivalent of "impulse buys."

9. Save the global environment. Global warming, air and water pollution, and reducing energy usage are just the beginning.

10. Green construction. I’ve heard many ideas for greening your house and your business, from minor improvements - such as what paint to use - to major ones, such as how to choose and install solar electric panels.

There are programs out there to help businesses green their practices in a way that works with, and often enhances, the bottom line. There's a phrase in green-talk, "the triple bottom line" which encapsulates what it takes for a business to be truly sustainable - economy (profits), ecology (resource management), and equality.

The last refers more to the social issues of green businesses today. It's all about how a thriving business can enhance the community it is located in. Go green, and make it a triple bottom line – for your business, the economy, and the environment.

Marty Zwilling

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Culture Counts in Every Business, Large or Small

By Roger S. Robinson, Ph.D.

Can an intangible like a company’s culture make a difference in your business? That is a tough question. After all what is culture? And can it impact your bottom line?

The concept of culture really entered the world of business through Peters and Waterman’s “In Search of Excellence.” They defined it in terms of successful organizations permeated with strong and sustaining systems of beliefs. Later authors have refined this definition to include a company’s character, its deeply entrenched perspective that influences the way that organization develops new ideas, weighs options, and responds to changes in its environment.

Perhaps a simpler way to think about culture is to think of it in terms of how an organization makes choices, how it develops its values, its ethics, how it trains, recognizes and rewards its associates, its spirit, and not to be overlooked, how it treats its customers - both internal and external. In other words culture can be thought of as the ideology of the organization (Mintzberg).

Clearly this concept sounds good, but does it really matter. Given the nature of various industries, both large and small, data on this issue is hard to come by. But are there lessons that can be learned?

The airline industry is one example that comes to mind. Its attractiveness from the point of view of Wall Street is low. Costs for entry and for modernization are high. Competition is high, profitability is low, especially low when compared with some of the new, hot industries such as those burgeoning in the high-tech arenas. In terms of analysts such as Michael Porter of Harvard, the bargaining power of buyers, the customer, is high. The customer has many alternatives, there is low buyer loyalty, decisions by customers are easy to make.

In other words it is hard to be different in this, the airline industry, Yet one company has been able to differentiate itself from all the other airline carriers - Southwest Airlines. And they are so successful they may soon become the largest airline in the US.

Yes Southwest does feature low costs to the consumer and none of the standard frills like meals, travel agents for reservations and baggage connections transfers, but they are also the most efficient with the lowest operating costs in this industry. Their service performance is perceived as extraordinary. Their on time ratings are excellent. They have the fewer complaints filed against them with the FAA then other airlines.

But the thing that most clearly differentiates Southwest from all of their competitors is culture -Southwest is a fun place to work and for many a fun airline to fly. Employee turnover is extraordinary low. Productivity is high - even pilots have helped with luggage and turnaround if needed. There has never been a layoff nor a labor shutdown in their history. Once you have a job with Southwest, it is yours for as long as you want. Lifetime employment is implicit. Employees are involved and empowered and rewarded for their performance and for innovation.

Southwest’s success is based on many things, not the least of which is that it is a place where there are a lot of people who take pride in what they are doing. As noted above this is a fun place to work and that spirit, that culture has made this airline over the past 35 years the most consistent profit performer in this mature and difficult industry.

Are there lessons here? If nothing else, focus on the attitude of your associates, your employees and how they interact not just with your customers but also with each other. What really matters is how you train, trust, treat them - how you recognize them, reward them - how you value them. Not to be ignored is how you lead them. Consider the model your behavior factors into this equation. As Herb Kelleher, former Southwest CEO, noted in a past Wall Street Journal article, “You have to recognize that people are still most important. How you treat them determines how they treat people on the outside.”

My conclusion is, not just for the airlines, but for virtually all businesses, culture counts. After all when you spend your money, don’t you want to do it where you are well treated, where you enjoy yourself, where your expectations are exceeded? And especially where you have fun.

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Today’s article is presented by my friend Roger S. Robinson, Ph.D., President of KnowHow, Inc, counselor to small businesses through SCORE, and author of Basic Business Planning for Entrepreneurs. You can contact him directly at roger_knowhow@yahoo.com .