The grass roots biotech movement is in full swing in the New York area. And in just a week, Xconomy will bring together some of the region’s most influential names to talk about it.
On March 6, we’ll be hosting our latest biotech event, “New York’s Life Science Disruptors,” at the Apella event space at the Alexandria Center for Life Science on East 29th Street in Manhattan.
It’ll be a series of interactive discussions with local life science experts spanning three key perspectives of the biotech ecosystem: industry, academia, and the investment community. We’ll be getting to the bottom of the progress that has been made—and the big challenges that lie ahead—in fashioning a successful life sciences cluster right here in the New York metropolitan area.
Today, we’ve posted the agenda for the event, which you can see here. We’ll be hearing from biotech luminaries such as Celgene’s George Golumbeski, Rockefeller University’s Marc Tessier-Lavigne, and the Icahn Institute for Genomics and Multiscale Biology’s Eric Schadt, among others. So be sure to grab your ticket—you can still take advantage of our student and startup discounts. Looking forward to meeting a lot of readers in person next week at the Apella.Comments | Reprints | Share:
OK, I want you to take a quick test and answer the question with the first thing that comes to mind: What does a “start-up entrepreneur” look like? OK, do you have a picture in your mind?
If you are like most people, I bet your first thought was someone who looks suspiciously like a white male 20-something in a blue hoodie, torn jeans and ironically unhip tennis shoes. And if you stroll through the “typical” tech or health IT startup in Silicon Valley, that is exactly what you see, although there may be a few females sprinkled in. The young entrepreneur’s natural habitat is often portrayed as a landscape of garages and loft-like spaces with exposed pipe architecture. Decorations run to also-ironic old band posters (Rolling Stones or Elvis Costello especially popular), abandoned pizza cartons and discarded Red Bull cans aimed poorly at garbage can baskets. People tend to equate entrepreneurship with youth who have a wanton willingness to show the world how they are all doing it wrong while yelling “Cowabunga” and launching into the high risk abyss unencumbered. A couple of years ago PayPal founder and now venture investor Peter Thiel even started an organization to encourage kids under 20 to drop out of school and build start-ups.
OK, now let’s move past conventional wisdom and to reality. Here’s a fact for you that are obsessed with the idea that innovation is the purview of youth: over the last decade, the highest rate of entrepreneurship in the U.S. has shifted to those who are currently eligible for senior discounts at the local movie theater and dine on the early bird special.
“Contrary to popularly held assumptions, it turns out that over the past decade or so, the highest rate of entrepreneurial activity belongs to the 55-64 age group. The 20-34 age bracket, meanwhile, which we usually identify with swashbuckling and risk-taking youth (think Facebook and Google), has the lowest rate. Perhaps most surprising, this disparity occurred during the eleven years surrounding the dot-com boom—when the young entrepreneurial upstart became a cultural icon.” This comes from a report called The Coming Entrepreneurship Boom published by the Marion Ewing Kauffman Foundation, a leader in thinking about entrepreneurship in the U.S.
And if that’s not good enough for you who think that grandparents should be seen at the holidays, not followed at the office, the same Kauffman research has revealed that the average age of the founders of technology companies in the United States is a surprisingly high 39—with twice as many over age 50 as under age 25.
This whole issue came to my attention earlier this week when I was sitting next to a friend and colleague, Jody Holtzman, who is senior vice president of thought leadership at AARP (hey Jody: are there people with the title of Thought Follower at AARP? Just checking…). We were at a conference together and he showed me his cell phone where there was an announcement about a February 12, 2014 hearing being held by the U.S. Senate Special Committee on Aging with a title of “In Search of a Second Act: The Challenges & Advantages of Senior Entrepreneurship.”
The purpose of the hearing was to highlight the incredible entrepreneurial contributions of people over 50, but especially to make a call for senior-focused training and mentoring programs, funding incentives and tax incentives for senior entrepreneurs, and especially, to call for an end to age and lending discrimination, which is rife among our start-up culture.
The young may think they have a special right to represent entrepreneurship, but it turns out that, according to 2013 Global Entrepreneurship Monitor data, 50 percent of new businesses launched by individuals aged 50+ are still in business after five years. I would be shocked if that statistic held up for 20-something-founded start-ups. What seniors have that young people don’t is a wealth of experience to bring to bear when things go inevitably side-ways, as they always do in start-ups. They also have highly evolved (many decades long) business networks to draw upon for resources that include more people than the members of their college fraternity. No wonder actual grown-ups do so well. Plus, they have actually seen the Rolling Stones and Elvis Costello live and don’t need a poster to be cool.
This whole debate reminded me of that awesome scene in the 1991 movie Fried Green Tomatoes where Kathy Bates is sitting in her car ready to take a long-awaited parking spot and two young girls steal it from her, saying “Face it lady, we’re younger and faster.” She responds by smashing their car and saying, “Face it girls, I’m older and I have more insurance.”
And another thing: in healthcare we most often think of seniors as those who will be using the healthcare system, but if you listen to the testimony from this hearing, one would come away thinking those are the people who will build the businesses to fix it. An interesting thought raised that hadn’t occurred to me was this: The Affordable Care Act will increase the potential for seniors to start companies since they will no longer feel attached to other jobs for the sake of maintaining their health insurance coverage, a point made by Senator Bill Nelson, Chair of the U.S. Senate Special Committee on Aging. I found this to be such an interesting idea; we may have a whole bunch of pent-up senior entrepreneurship to unleash by allowing those who actually need their healthcare coverage to be free not to worry about where to get it anymore.
As Elizabeth Isele, Co-founder and CEO, of SeniorEntrepreneurshipWorks.org, pointed out at the Senate hearing, “Boomer entrepreneurs live healthier (physically, mentally, emotionally), vital, relevant, productive, and more meaningful lives longer than their retired counterparts and thus create less demand on social service/entitlement programs; in fact they continue to contribute to Social Security and Medicare through their taxes.” So there. I love this quote of hers:
“We need to stop the gloom and doom we are generating by referring to this huge and rapidly expanding demographic as an impending crisis or ‘Silver Tsunami.’ We, as a society, need to recognize seniors are one of our greatest natural resources. They are not a ‘silver tsunami,’ they are a silver lining, yielding golden dividends.”
The MetLife Foundation has done research showing that there are 34 million seniors who wish to start their own businesses in the US. During the Senate hearing it was pointed out that it is a particularly good thing when seniors start businesses because:
To help address some of the challenges faced by senior entrepreneurs, the Small Business Administration (SBA) and AARP entered into a strategic alliance to provide Americans over the age of 50 with the tools and information they need to launch new companies in March 2012. As a result of this effort, SBA, AARP, and its partners have helped nearly 120,000 new and existing small business owners over the age of 50 between April 2012 and May 2013. That is, as they say, a good start.
I have spent a lot of time with the people at AARP working with them on encouraging healthcare start-ups targeted at the 50+ marketplace, but it occurs to me that we have not had a lot of participants who are actually over 50 present at the event. Maybe none. I hope that this year is different, as I have to believe that the best people to solve problems are the ones with intimate familiarity with them. Plus they have more insurance.
And with that I will make a pitch for you to attend the wonderful AARP Health Innovation@50+ Live Pitch event May 9, 2014 in Boston. I will very happily be emceeing for my third year and I am confident it will be a great event featuring entrepreneurs of all ages. The best part is always the live audience of AARP members grilling start-up CEOs on their products and services targeted to seniors. It is a super event infused with an entrepreneurial spirit that transcends age and brings a broad array of people together for a collective good. I hope to see you there.
This essay was originally posted at Lisa Suennen’s Venture Valkyrie blog and is republished by permission.Comments (3) | Reprints | Share:
It’s been about a year since NuoDB released its first product, a new kind of database software designed for the era of cloud computing.
The Cambridge, MA-based company had all of the frills you might expect for the occasion, including testimonials from early customers who said they’d put the new technology through its paces.
That roster included a technical expert from Dassault Systemes, the 3D design and manufacturing specialist that is one of Europe’s biggest software companies—not a bad friend to have if you’re trying to make a splash.
“Every Boeing you’ve ever flown on, every Airbus you’ve ever flown on … the cars you’ve driven in that get designed using 3D modeling systems, most of those are designed using the Dassault stuff,” NuoDB CEO Barry Morris says.
Today, Dassault is ratcheting up its relationship with the startup by leading a $14.2 million investment in NuoDB. It joins previous investors Morgenthaler Ventures, Hummer Winblad Venture Partners, and Longworth Venture Partners. Altogether, they have staked NuoDB with $26.2 million since its founding in 2008.
The investment is a strong endorsement of NuoDB’s mission to reinvent older-style relational databases for the cloud computing era. We dove into the details of NuoDB’s approach in this profile, but the short version is that it’s an “emergent” database that has substituted the old hierarchical model for a series of smart objects called “atoms” that work together.
“It goes away from the idea that the system is centralized and turns it into a system of collaborating peers,” Morris says. “It means you can lose machines, you can add machines, you can take machines away.”
So why is a big enterprise software company like Dassault interested in this small startup? Like a lot of the other behemoths, Dassault is moving its business to cloud computing, and needs services that will help its products work in that environment.
Dassault apparently likes the results, having now gone from a NuoDB customer to become an investor as well.
NuoDB plans to use the new investment to ramp up its sales and marketing workforce, adding to the roughly 40 employees in its office near Kendall Square. The company says it now has “thousands of developers” using its product around the world, with other customers including auto parts retailer AutoZone and shipping logistics provider DropShip Commerce.
“This story is not about a product that’s kind of marginally better and we’ve got to hire the biggest sales team and see if we can take a niche. It’s technology that’s solved this really fundamental problem of scaling out a transactional database,” Morris says. “We’re out there with a fairly aspirational idea of what we can do with that.”Comments | Reprints | Share:
Everyone loves partnerships. These fancy sounding deals are also often called “strategic alliances,” “co-marketing agreements,” “channel sales,” or in Continental Europe, “a coöperation” (sounds quite nice and German, doesn’t it?). Partnerships are prestigious, and they whisper to you the sweet possibilities of easy revenue. In Silicon Valley, they are generally run with lots of fanfare by a gal or guy with shiny white teeth and a winning personality.
Here’s the problem, though: most of the time, these deals don’t do jack to advance the company’s interests. Often they’re net drain on the company’s resources and, in the worst cases, they nearly kill the company outright (just look at Ask.com and other search companies that have tried to “partner” with Google).
So how can executives approach the “real” partnerships, as opposed to the ones that serve as an excuse for a press release or two but otherwise get consigned to the void of failed company projects? Here are a few guiding principles to keep in mind:
Find the partners who share your values. Companies have values, and those values mean something. If you try to align yourself with a partner who views the world through an entirely different lens, it’ll fail miserably. One good (though not perfect) proxy for understanding this is to look at the pricing strategy of the partner (i.e., are they a low-cost leader or do they want to have the premium pricing in the category?). Ideally, the two companies share the same approach.
Partner infrequently, but commit deeply. Make the products and services really sing together. In order to afford the requisite integration time of a deep partnership, limit the number of deals you evaluate and the deals you agree to do. My own company, Grand Rounds, expects our immediate number of partnerships to be so low that you can count them on the fingers of one hand. But the ones we choose to pursue, we will pursue with 100 percent commitment and dedication.
Trust and respect your partner. Make sure the leaders of the brand are ones that speak to you in some way; you should be excited about about sharing a set of goals with them. Consider the early ‘90s partnership between Apple Computer and IBM: they were attempting to release a new operating system together, but ended up squandering $150 million. Why? Because while they were collaborating, they were also filing lawsuits against each other for patent and technology infringement. Let’s just say that the foundation of a strong relationship was never successfully built.
Figure out the right timeframe. Recognize that the relationship is likely to age, and that corresponding interests will converge (or diverge). Cisco used to have alliances with Motorola and Ericsson—but those relationships eventually imploded once the smaller companies had finished enough acquisitions to enter into the market as a competitor to Cisco.
The partnership is actually not about you. Or the other guy. It’s about the customer. What does the customer get out of this joining of mighty forces? How will the end user ultimately benefit from what’s happening? Think that over carefully; if there’s no tangible benefit for the customer, it will be hard for either side of the deal to achieve huge financial success.
License to partner. Consider licensing technologies from trusted, stable and non-competitive partners and then make heroes of each other in the marketplace.
Something to gain and something to lose. Partner only when there are clear revenue goals and there’s skin in the game for both sides. This is the one that I think most startups miss. Startup life is busy with priorities constantly shifting; if there’s no sting to missing the deal, then it’s not likely to get attention during strategy and prioritization sessions.
Patch up your weaknesses. Partner to make yourself strong where you are not already strong or for the things you don’t know how to do. For example, I love how SONOS has embraced the music services and digital download world while they master hardware and software. (I don’t have nearly as much admiration for how T-Mobile and AT&T did their network sharing… you can see how that’s working out for them).
If your proposed strategic partnership gets a passing grade in all of these areas, great—time to send out your white-teethed alliance guru to get the deal done. But if any of these areas makes you think twice—or worse, break out in a sweat—well, then I’m sure you can think of business priorities that are truly more pressing.Comments (1) | Reprints | Share:
Less than a year ago, Elliott Sigal, Bristol-Myers Squibb’s R&D chief for nearly a decade, stunned the industry. After a lengthy run that saw Bristol morph from a slogging, multifaceted healthcare conglomerate with its fingers in everything from AIDS drugs to baby formula, to a sleeker, pure play biopharmaceutical company, Sigal abruptly walked away in April 2013.
“I envision an active retirement,” he said on a conference call with investors at the time.
Nearly a year later, Sigal is starting to show what he had in mind. Sigal is now dabbling in several areas of the life sciences world, from venture firms, to startups, to Big Biotechs. In January, Sigal joined investment firm New Enterprise Associates as a venture partner and senior advisor. It’s essentially a part-time gig that’ll enable him to advise NEA’s healthcare team on its investments, and in some cases help the executive teams of the firm’s portfolio companies. At the same time, he also began doing some consulting work for the research division of Thousand Oaks, CA-based Amgen (NASDAQ: AMGN), the biotech powerhouse best known for its anemia drugs. He’s since joined the board of a recently-formed gene therapy startup, Philadelphia-based Spark Therapeutics, adding to similar board roles he already holds at Bristol spinout Mead Johnson Nutrition and the Melanoma Research Alliance, a non-profit group. More appointments may be on the way. And Sigal says he’s taking a long look at a different type of advisory role, one where he could help scientists bridge the gap between basic research and potential drug candidates—a translational gap that’s commonly called the “valley of death,” when academic projects can’t get the funding needed to become true partnership or investment opportunities for VC’s and drugmakers.
“I’m in my early 60s,” Sigal says. “I’m not done, except with a big operational role. And I love the biomedical ecosystem.”
It’s a return to the old days, in a way, for Sigal. He served on the faculty of the UCSF Department of Medicine before leaping to industry in 1992. Sigal rose through the ranks at smaller companies—Syntex (acquired by Roche in 1994) and later the genomics company Mercator Genetics before joining Bristol in 1997. He became Bristol’s chief scientific officer and R&D head in 2004, and is perhaps best known there for helping champion a plan to align the company with a number of biotechs through licensing deals and small to mid-size buyouts, an initiative dubbed the “string of pearls” plan. In late 2012, The Wall Street Journal called him the best R&D chief in pharma.
Still, as is the case for every R&D chief, it wasn’t all rosy for Sigal at Bristol. Some deals were successes, like Bristol’s $2.4 billion buyout of Princeton, NJ-based Medarex in 2009, which it can now largely thank for a leading position in the white-hot field of immuno-oncology. Others fizzled, like the $2.5 billion deal for Atlanta-based Inhibitex in 2012. Bristol was hoping for a gem of a hepatitis C treatment, like the one Gilead Sciences got when it paid $11 billion for Pharmasset in 2011. Instead, Bristol-Myers soon found out the Inhibitex drug had safety problems and bombed in clinical trials, leading to a big write-off.
Now that he no longer has to answer to investors for his every move, Sigal’s feeling a lot looser these days. He does a lot of work from his home in Princeton, is building a house on the West Coast, and says he can now spend more time with his family (“I’m very accessible, even when I’m physically there, I’m more accessible I’m told,” he jokes). But Sigal’s also adamant about staying close to biotech innovation, and helping other scientific entrepreneurs succeed. I spoke with Sigal about life after Big Pharma, the new science he’s homing in on, and the lessons he’s learned about biotech entrepreneurship along the way. Here are some excerpts of our conversation:
Xconomy: When you left Bristol, how did you plan your next move?
Elliott Sigal: I spent six months of reflection thinking about where a good place was to put some time. But from the beginning, I wanted to be an advisor to the next generation of leaders and companies, and to have a portfolio of advisory relationships that span R&D from the beginning through the large company. The best advice I got in those months was, to be successful, you have to have a certain amount of tunnel vision. This was my opportunity to bring the peripheral vision into focus. What is out there that maybe is … Next Page »Comments | Reprints | Share:
Financial data can be downright awkward and wonky to deal with.
The challenge is not just that there is a lot of information to work with, says Quovo CEO Lowell Putnam. Data taken from different sources might not even look similar. For example, he says, market data and transaction data are not always put together the same way.
To clear up the confusion for financial advisors, Quovo in New York has developed software that cleans up financial data and produces financial analytics.
After operating under private beta, Quovo is opening up about its plans. The startup recently announced it closed on $1.4 million in a Series A funding round led by Long Light Capital.
And earlier this month, the startup said it opened an office in Amesbury, MA. While New York is an obvious hub for the financial world, Putnam says Quovo is especially interested in finding customers in Massachusetts.
He and co-founder Niko Karvounis are Harvard University grads and hope to expand the business in their old stomping grounds.
Quovo’s online portfolio management software is designed to assist wealth management advisors and foundations that do not have the IT resources of bigger institutions. Large firms typically hire lots of staffers, Putnam says, and they buy different pieces of software to do similar work. “If you’re willing to spend $500,000 per year in manpower and software, you can probably get something that approximates aggregated data,” he says, referring to financial information gathered from different sources and put into a more digestible form. “There’s a very small group that can afford to do that.”
Karvounis says Quovo gives wealth managers a holistic way to see their clients’ portfolios, including assets they don’t directly work with. That way managers can point out possible ways to improve the performance of investments, he says.
Originally the Quovo team planned to just offer insights on investment data from different sources, Putnam says. The trouble was that no single place had all the information they needed. “We realized no one was making that kind of technology even possible,” he says. “No one was doing data aggregation properly or data normalization.”
That led to Quovo’s development. Putnam says the startup has been around for about three-and-a-half years. He says the needs of advisors at smaller shops usually go ignored by the large software providers, who focus on much larger enterprises. “Most advisors are small or medium size and trying to grow,” Putnam says. “Most endowments are small and can’t afford a big solution.”
Quovo is not just for the little guys though. Putnam says his company has been approached by larger institutions, such as private banks and high-net-worth advisory shops, about its software. “They didn’t have a way to pull everything together into one place, and make it client or advisor-friendly,” he says.
If Quovo catches on, Putnam believes it can alleviate the hassle many wealth advisors face cobbling together statements and spreadsheets by hand to track investment activity. “They really need a platform that pulls all the pieces together,” he says, “without creating more work.”Comments | Reprints | Share:
In the wake of aggressive press coverage of recent major breaches at companies from Target to Neiman Marcus, cybersecurity has finally move out of the shadows to become a top-of-mind issue at major enterprises. The new focus is dramatically changing the landscape for security leaders and business executives, who no longer struggle to convince their boards of the seriousness of the threat.
The sea change was one of the big takeaways from a session I moderated at the recent SINET Showcase 2013 in Washington, D.C. The panel of leading Chief Information Security Officers from top companies made it clear that they no longer have to shout cybersecurity warnings from the ramparts. Their boards are now aware of the looming threats…and they are scared.
“Thanks to the New York Times and Wall Street Journal, now I don’t have to go and educate the board or the senior leadership team. They’re asking me questions,” agreed panelist Jay Leek, CISO of Blackstone, a diversified financial management company.
Security Is More Than Just IT
Just as important, the high-profile coverage means that cybersecurity is no longer seen just as an IT problem requiring an IT solution. The threat vector may be IT, but now there’s board-level awareness that actually this is a risk that affects the entire enterprise.
“It’s very, very sensitive data, and if that were to get lost, stolen, breached in some form or fashion, there’s a loss of trust that those patients may not come back and we’re out of business,” noted panelist Bill Dieringer, CISO for Ardent Health Services. “So it is very much a business problem, not just an IT problem.”
Education and Culture
The greater board-level awareness of cybersecurity is leading to a new emphasis on education and corporate culture, explaining the threats as a business-level issue and not a complex technical problem.
The challenge now is to stop sweeping security issues under the rug and change the business culture to get employees, contractors, and partners to take them seriously. At Blackstone, for example, “We make a big scene of it around the office,” Leek told the session audience. “If somebody’s machine gets compromised, we go and we yank it… People watch the help desk push it out on a trolley, and I think they really think twice.”
Visibility, Intelligence, and Analytics
Enterprise security leaders are also looking to better understand what’s happening on their networks and systems at all times, both internally and externally. That means visibility into how things are working, and using analytics to detect threats and develop effective protection. There’s still work to be done on that front, though. “Too many of us are…hiring statisticians that don’t know anything about security, pumping years and years of data into this big-ass database, not knowing what we’re going to get,” lamented Leek.
Progressive companies are also moving away from building taller walls for protection, instead investing in planned responses to minimize the impact of the most likely threats. “We can’t build a sarcophagus,” said panelist Jim Nelms, CISO for the Mayo Clinic, the world’s largest integrated medical practice, “so we’re actually tearing down the walls, because the data has to be where the patient is.”
The Decision Makers
So, what does that mean in the real world? Enterprises choose their security solutions according to a number of key principles:
If there’s any upside to the continuing barrage of high-profile hacks, they’ve moved cybersecurity out of IT’s back room and forced the executive team to invest in everything from better security technology to improved education.
Specifically, enterprises want real-time, 24/7 visibility into the state of their systems—as well as swift, effective responses to attacks and breaches. The security solutions they choose have to be open and scalable, but can’t slow down the speed of business.Comments | Reprints | Share:
IBM is taking another bite out of the cloud software world as it tries to keep up with much younger technology companies.
Today, IBM announced it was buying Boston-based Cloudant, an online database software provider. The price wasn’t revealed. Cloudant had raised about $15 million in private investment since it was founded in 2008.
Cloudant’s service handles large, complex sets of data for mobile and Web software developers, essentially outsourcing some of the behind-the-scenes processing work and freeing customers to work on their applications.
The purchase comes just as IBM is once again touting its investments in cloud computing, which represents a huge shift for the traditional software market as software applications—and the digital infrastructure to keep them running—move to the Internet.
Also this morning, the company said it was planning to shift $1 billion in spending toward cloud projects, including an effort to move its business-focused software online. Last summer, IBM spent a reported $2 billion on SoftLayer, a Dallas-based cloud software infrastructure company.
After that purchase, it may have only been a matter of time before IBM gobbled up a provider like Cloudant, which built its online database software on top of SoftLayer’s technology.
“Our joint customers benefit from a tight coupling of our respective services,” Cloudant CEO Derek Schoettle wrote this fall. “As such, some of Cloudant’s biggest and most important accounts are on SoftLayer infrastructure. Now, they’ll be on IBM Cloud Services.”
Cloudant’s three founders are former MIT particle physicists, and the startup was part of the Y Combinator accelerator program, back when it still had a branch in Boston. It also has offices in Seattle, San Francisco, and in the U.K.
Cloudant recently said it had topped 20,000 customers, and reported that its annual revenue grew 175 percent in 2013, although no actual figures were provided. The company’s most recent $12 million Series B investment was led by new investors Devonshire Investors, Rackspace Hosting, and Toba Capital. Previous investors Avalon Ventures, In-Q-Tel, and Samsung’s venture arm also participated.
The acquisition adds to IBM’s longstanding penchant for software acquisitions in the Bay State: since 2003, it’s now snapped up at least 22 companies with headquarters or major operations in Massachusetts. The last was Trusteer, a security firm that sold in August for a reported $800 million.Comments | Reprints | Share:
Last summer, we were the first to report on a stealthy MIT startup that’s trying to become a big player in personal health and wellness. Well, that company is now one of the better-funded efforts in this emerging sector.
Quanttus, a 25-person startup based in Cambridge, MA, announced today that it has raised a $19 million Series A round from Khosla Ventures and Matrix Partners. The deal, which closed in December, comes on the heels of a $3 million seed investment from Khosla early last year. Khosla Ventures is also an investor in San Francisco-based wearables company Jawbone and Boston-born mobile health startup Ginger.io.
This is a rare case in which a startup’s financing and investors are more of a news story than what it’s actually doing. Mostly because it’s still too early for the company to say much about the latter—or about where it will play in the competitive market of health tracking and wearables.
Not that I didn’t try to draw that out of Shahid Azim (pictured), the CEO and co-founder of Quanttus. Previously he was the CEO and co-founder of Lantos Technologies, another MIT spinout that makes 3D-imaging equipment to help hearing aids and audio headsets fit better.
In early 2012, Azim says, he was intrigued by Qualcomm’s announcement of its Tricorder XPrize—a competition to design a personal-health device that can scan a patient and diagnose problems, like its “Star Trek” namesake. That was the original inspiration for Quanttus, though the company’s approach has since diverged.
Azim put together a small team of mostly MIT alums (he’s a Sloan School grad), including co-founders David He and Richard Bijjani, to see how far they could get quickly. They built on He’s PhD work at MIT on monitoring cardiovascular disease using wearable sensors. The core technology is about “passive, noninvasive, continuous monitoring,” Azim says. That’s techno-speak for something you can wear comfortably while you work, play, or sleep, and doesn’t require you to do anything special, like draw blood.
After some experiments, Quanttus developed a prototype device worn on the wrist. The hardware uses a variety of sensors—optical, accelerometer, and so forth—to measure vital signs such as heart rate, blood pressure, and respiration.
That’s no easy feat. If it were, doctors would just scan your wrist instead of putting your arm in a blood-pressure cuff and listening to your chest. A big part of Quanttus’s innovation, Azim says, is around its methods for resolving the human body’s vital signals in the presence of noise, including wrist motion when a person walks or moves around.
The other big challenge has to do with processing the data. As Azim puts it, once the hardware isolates the right signals, the company’s software needs to “add context around that” in order to generate “the right insights to induce behavior change.” In doing that, he says, “you have a shot at the Holy Grail of healthcare, which is outcomes.”
That’s pretty abstract, but it sounds like what Quanttus is doing is using machine learning and artificial-intelligence tools to get a fuller picture of a person’s health, once it has a baseline of vital signs. You could imagine, for instance, that the software can account for things like sleep quality, hydration, and exercise, and even pull in environmental factors like location, weather, and air conditions, to try to figure out why a person doesn’t feel good on a given day.
Quanttus hopes eventually to tackle serious health areas like cardiac disease, hypertension, and stress. If successful, the company will “create powerful new tools for consumers and healthcare providers that will change how we understand our health,” says lead investor Vinod Khosla, in a statement.
Azim first met Khosla, the famed VC and founding CEO of Sun Microsystems, at a mobile health conference in December 2012. … Next Page »Comments | Reprints | Share:
People who appreciate baseball stats agree: Jonny Gomes of the Boston Red Sox is a below-average player. Yet, if you pay attention to his intangibles, he looks better. Even with lousy performance data, he was credited with playing a key role last fall in helping his team win the World Series.
The Gomes example reminds me—no matter how hard people try—that you can’t reduce everything in the world to data-driven decision-making. Especially when you’re talking about evaluating people, and how they might perform for a company.
Biotech and pharma hiring managers, are you listening?
For a couple years now, I’ve been hearing biotech and pharma companies complain they can’t find enough good job candidates. At the same time, job seekers with excellent qualifications say they can’t get hired because they only check, say, 12 of the 15 or so qualification boxes on the application. One recent story in The New York Times noted that companies across multiple industries are becoming increasingly slow and picky in their hiring practices, and resorting to various gimmicks like spelling quizzes and math tests to filter the good candidates from the not-so-good. Biotech and pharma companies are the most cautious, with an average interview process that takes 29 days, the longest for any industry, according to a recent survey by the website Glassdoor.
What’s ironic here is that in the Internet age, it should be easier to match up job seekers with appropriate job openings, like with online dating. Instead, we are seeing companies craft job descriptions that no mere mortal can fulfill. Where does that leave the ambitious postdoc from academia with a great faculty advisor, a few publications, valuable expertise in something like oncology or neurology, and a positive attitude? Company X down the street may have a job that looks ideal, but oh, the candidate lacks 3-5 years of industry experience? Sorry, you just got filtered out in the online screening process.
The thing about algorithms is they can’t imagine how a talented person who lacks a few qualifications might be resourceful, and able to adapt and grow into a top performer if given a chance in the right environment.
Ellen Clark, a recruiter of senior scientists for biotech and pharma companies, said she’s noticed companies getting pickier about candidates in recent years. When they complain they can’t find talented people it’s “baloney,” she says. Often, there are talented people in academia looking for science-based jobs in industry, but companies are unwilling to consider anything but the “perfect” candidate.
“Sometimes they really want everything,” Clark says. “They want the person to walk on the moon. They really want the person who checks every single box. They want it all. I had one search, where the company wanted an MD/PhD with an oncology background AND genetics experience to bridge the gap between the research people and the clinical people. This is the kind of thing they are looking for. They are trying to find everything in one person.”
No doubt, companies have always felt like good help is hard to find. Big companies like Genentech, Genzyme, or Novartis get thousands of applications every month. Genentech alone says it gets 20,000 to 25,000 job applications a month, while it currently lists 532 job openings on its website. I don’t envy the people tasked with trying to filter through them all in a fair and efficient way. Certainly, I get why they fear making hiring mistakes, because it can be a long, painful, and toxic process to surgically remove a tumor, shall we say.
None of that excuses the kind of dysfunction that passes for business as usual in biotech and pharma hiring. Nick Corcodilos, a headhunter and job market columnist, summed up the cracks in the system when he commented on a related article I wrote last year:
We used to talk about people: chemists, biologists, scientists. Then HR started talking about “human resources,” and more recently about “assets.” A worker (at any level) is “talent.” But this game has now pushed even top executives into an incredibly reductionist view of recruiting and hiring: It’s all about database records. Renting them, buying them, searching them, filtering them, subjecting them to algorithms.
And the databases promise perfect hires, if HR will just search the records long enough and if managers will just wait patiently. Meanwhile, important work goes undone, and fantasies of “perfect candidates” yield complaints of talent shortages.
So what are job candidates supposed to do to navigate this algorithm-driven minefield? To find out, I followed up with Marie Beltran. I spoke with her almost a year ago, when she was unemployed after being laid off from a job in quality-control at Seattle-based Dendreon (NASDAQ: DNDN).
It took Beltran almost a year to find a job, but she ended up … Next Page »Comments (9) | Reprints | Share:
Had a remarkable day Friday in Houston crawling around the Texas Medical Center. I was in town to speak at the Xconomy Healthcare Summit—an incredible roster of speakers and attendees, I must say. As Ron DePinho, president of MD Anderson Cancer Center, characterized, this part of Houston is as if someone put the Kendall Square and Longwood regions around greater Boston into a giant centrifuge and spun it down. What an extraordinary concentration of healthcare expertise/technology/discovery—54 healthcare institutions and 21 hospitals in only 1.6 square miles! If you have not been there before, make a point of hanging out at the Texas Medical Center.
The Texas Medical Center has 8-9 million patient visits per year, and as the CEO Bobby Robbins [jokingly] lamented, until recently the most important part of his job has been dealing with parking. More specifically, MD Anderson sees 1.4 million of those patients and has a $4 billion annual budget; more impressive, of that amount, $700 million is spent on research. There are 11,000 patients enrolled in clinical trials being run at MD Anderson and the productivity of their development pipeline is exceptional.
Much of the discussion was centered on how best to build an end-to-end healthcare innovation economy. John Mendlein, serially successful biotech entrepreneur and current CEO of aTyr Pharma, portrayed numerous possible roadmaps (he called them recipes) on how one might go about building great start-up companies, but the common refrain was that it was all about the aggregation of talent—scientific, clinical, commercial, financial, managerial talent—and they all need to be present for the ecosystem to survive. With this important awareness, it certainly feels like it is only a matter of time, and not much time at that, before we see a Genzyme or Genentech launched in Houston.
Other interesting observations I gleaned over the course of the day…and some are meant to be more thought provoking.
• Academic centers of excellence seem to be increasingly prepared to embrace that innovation must co-exist with commercialization. DePinho stressed the need for “informed” clinical trials and the powerful role of integrated diagnostics (which was music to my ears)
• Houston, like many other emerging healthcare hubs, has numerous grass roots efforts to raise awareness, build community, create dialogue—these activities are important precursors to successful ecosystems (see Bloomberg in NYC)
• Surprised how many leading academic hospital systems are “exporting” their expertise in the care service delivery models that they have built (see Hopkins in Saudi Arabia, Cleveland Clinic in Abu Dhabi, MD Anderson with its numerous international partnerships, etc). There is something profound here and I am not sure all of us fully understand the implications of this phenomenon—they are probably all good, though. At Foundation Medical Partners, we have seen the increased focus placed on Asia, specifically China, and the ravenous appetite for new healthcare delivery service models.
• We need to better “democratize” expertise from academic centers, which plays directly into the “consumerization and retailization” investment themes our firm is exploring. How can we best deliver to the consumer/patient very complex clinical information? How can we ensure the superior standards of care we are accustomed to receiving from leading providers are made available to people who cannot access those providers? Innovative healthcare technology platforms will provide that consistency of care.
• What is a human life worth now? The old therapeutic pricing models were predicated on inadequate therapies which showed poor efficacy for many (only great outcomes for few), and many of these drugs merely extended life by a few months, and in many of those cases, it was very low quality of life. Soon we will see therapies that will profoundly extend life for many: should those drugs be more expensive or less expensive? If across a population we extend life expectancies, are we not raising overall healthcare costs to society because we all know most of healthcare care costs are incurred by those over 75 years of age? Complicated issues are going to be raised by extending life expectancy.
But none of that mattered earlier today as I toured my brother’s pediatric ward; he is an extraordinary pediatrician at the University of Texas Health Sciences Center. At one point we stood at a large window looking down Main Street across the entire complex at Texas Medical Center and I remarked, “this is the Las Vegas Strip of Healthcare.”
Fortunately for all of us, what happens at the Texas Medical Center does not stay at the Texas Medical Center…
[Editor’s Note: This article is cross-posted on Michael Greeley’s blog On the Flying Bridge. It has been edited slightly to fit Xconomy’s style.]
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Isis Pharmaceuticals could earn a big check if a drug it’s developing for a rare spinal disorder is up to snuff with Biogen Idec. Though that decision hasn’t been made by the Cambridge, MA-based biotech giant just yet, Isis took a step forward with some early results from a mid-stage study.
Carlsbad, CA-based Isis (NASDAQ: ISIS) today reported interim, top-line data from an ongoing Phase I/Phase II clinical trial of ISIS-SMNrx, an experimental treatment for spinal muscular atrophy, a rare genetic disease that causes severe muscle atrophy and weakness in newborns and children.
The early results were positive: Isis said the drug is increasing the muscle function of the children in the study, is working better at higher doses, and is boosting the levels of the key protein—-survival of motor neuron, or SMN—that spinal muscular atrophy patients are lacking. Patients taking the highest (9 mg) dose, for instance, saw their muscle function increase by an average of 3.7 points nine months after their first injection. That score was measured by the Hammersmith Functional Motor Scale-Expanded, a standardized test to gauge changes in muscle function for patients with spinal muscular atrophy.
Isis also said SMN levels of patients on the highest dose of ISIS-SMNrx increased by an average of 115 percent three months after the first injection. Isis didn’t provide much detail on the drug’s safety, but said it’s been well tolerated so far, and that the only two serious adverse events experienced by patients—one of which was pneumonia—weren’t related to the Isis treatment.
“In our view, the data indicates the drug is having the desired effect (increasing SMN protein, improving muscle function) and justifies advancement of the program,” J.P. Morgan analyst Cory Kasimov wrote in a note to investors Friday.
Shares of Isis climbed about 16 percent in early trading.
The data are impressing Isis shareholders, but are the numbers good enough for Biogen (NASDAQ: BIIB)? Isis struck a deal with Biogen two years ago to co-develop ISIS-SMNrx, and has since received more than $45 million in various payments. But the deal also gave Biogen an option to license the drug if it wants to, which would entitle Isis to potentially receive $225 million in a license fee and milestone payments. Biogen has yet to decide whether to opt in on the program, however.
Additionally, Isis will have to show that these protein and muscle function increases translate to a clinically meaningful benefit for patients. Isis is still awaiting data from a second mid-stage study testing its drug in infants with spinal muscular atrophy, as opposed to those who develop the disease in childhood. Chief operating officer B. Lynne Parshall said today’s numbers give Isis “further confidence” to test ISIS-SMNrx in a Phase III trial in children with spinal muscular atrophy later this year.
Spinal muscular atrophy is caused by a faulty version of the SMN1 gene, which doesn’t end up producing enough of the SMN protein to keep muscles strong. The disease affects about one out of every 10,000 newborns. There is no approved cure for it.Comments | Reprints | Share:
Facebook announced Wednesday that it will acquire mobile messaging provider WhatsApp, a five-year-old startup in Santa Clara, CA, for $4 billion in cash, $12 billion in stock, and another $3 billion in restricted stock units. So, $19 billion when all’s said and done.
The deal is eyebrow-raising on any number of levels. What made WhatsApp attractive to Facebook, clearly, was one very big number, its 450 million users, and one very small number, its 35 employees. It would be hard to think of any other company that has achieved a higher valuation relative to its size ($543 million per employee). But perhaps—just perhaps—such a price tag is justified by WhatsApp’s unheard-of ratio of users to employees, which is about 12.9 million to one.
On the subject of big numbers, how much is $19 billion, really? A few comparisons may be helpful. $19 billion is more than the gross domestic product of Honduras, Jamaica, Iceland, Nicaragua, and 80 other nations. It’s more than the annual revenue of 355 of the Fortune 500 companies. It’s equivalent to the net worth of hedge fund multibillionaire George Soros—and only 29 people in the world are worth more than Soros, according to Forbes.
It’s enough to fund NASA’s Mars Curiosity rover mission six times over. It’s roughly the amount Google has spent on its last 15 big acquisitions combined (that’s only counting the deals where the sale price was disclosed; in another 29 Google acquisitions over the same period, it wasn’t). It’s more than anyone has ever paid for a venture-backed startup. It’s very likely more than the sum total of all exits by technology companies in Boston, Xconomy’s original hometown, over the last five years (though again, deal amounts aren’t always published). It’s roughly the same amount that the bankrupt city of Detroit owes to all its creditors combined.
Which is to say, we aren’t talking about the real economy here. Only in today’s Silicon Valley could a company this insubstantial bring a price this fanciful.
There’s no point in asking, as so many have this week, whether WhatsApp is really “worth” $19 billion. An Uber ride across midtown Manhattan may be worth $200 to you if it’s New Year’s Eve and you dislike the subway. Mark Zuckerberg was willing to pay $19 billion to own WhatsApp, so that’s how much it’s worth.
A better question set of questions would be:
1. What does it mean for the rest of us when such a small company can create such a fantastic amount of value in such a short amount of time?
2. Is this kind of exit a sign that venture-backed innovation is working even better than we thought?
3. Can other startup founders, buoyed by WhatsApp’s success, hope to attain similar riches?
4. Should consumers now expect Silicon Valley to come up with even more time- and money-saving products and services?
My answers are not much, not really, definitely not, and maybe.
Let’s start by asking what kind of value WhatsApp really created. As with Instagram back in 2012, this is mainly the story of a tiny group of engineers taking advantage of open programming languages, operating systems, and mobile platforms (Erlang, FreeBSD, iOS, and Android, in WhatsApp’s case) to build a service that filled a niche and was effortlessly scalable. So scalable, in fact, that it scared Facebook into handing over 10 percent of its market value.
On its own, WhatsApp was a nice business, though not huge by Silicon Valley standards. After the free first year, users of the messaging app are asked to pay 99 cents per year. Let’s assume half of them do this. (The company hasn’t publicized its actual conversion rates, but most companies offering freemium services would kill to be able to convert even 10 percent of their free users to paying users, let alone 50 percent, so I think it’s a generous estimate.) Half of 450 million is $225 million per year. Not shabby for a 35-employee company.
But WhatsApp’s real superpower was not its revenue stream. It’s that the startup had entered a sector of supreme interest to Facebook. As Zuckerberg explained during a call with analysts on Wednesday, Facebook knows that it must become a mobile-first company to stay on top in social media. Millions of mobile subscribers around the globe want an alternative to pay-by-the-message SMS services (the all-you-can eat plans many Americans enjoy are uncommon in the rest of the world). WhatsApp was the largest and fastest-growing of these services.
And crucially, it was “the only app we’ve ever seen with higher engagement than Facebook itself,” Zuckerberg noted. (About 70 percent of WhatsApp users open the app once a day or more.) Facebook wants to make sure that all the time people spend texting isn’t time spent away from Facebook, but its own real-time messaging service, Messenger, has never really caught on.
Add up all those factors, and it made sense for Facebook to buy WhatsApp.
Here’s the thing: Facebook is just about the only company in the world with this particular set of goals and fears. And it has a lot of Monopoly money to play with. After a rocky post-IPO period in 2012, Wall Street decided sometime last summer that it loves Facebook after all. Now that it’s trading at almost $70 per share, it can put together all-stock or mostly-stock deals large enough to turn the heads of even the most idealistic startup founders.
(WhatsApp’s creators, Brian Acton and Jan Koum, complained on their company blog in late 2012 that “These days companies know literally everything about you, your friends, your interests, and they use it all to sell ads.” They even quoted that line in Fight Club that goes “advertising has us chasing cars and clothes, working jobs we hate so we can buy shit we don’t need.” They’re now part of a company that uses personal information to sell targeted ads for shit you don’t need, to the tune of $5 billion per year.)
There was one other company with the resources and the mobile ambitions to put together a multibillion-dollar exit package for WhatsApp: Google. And in fact, Fortune has reported, based on unnamed sources, that Google offered to buy WhatsApp for $10 billion. (According to the report, that offer didn’t come with a board seat for Koum, as Facebook’s larger offer did.)
My point is that WhatsApp’s “value” was only “valuable” to a tiny number of suitors, since they were the only ones in a position to act on it. So, yes, Ben Evans of venture firm Andreessen Horowitz is correct when he writes that “the widely discussed collapse in the cost of creating a startup in the last decade combines with both the much larger scale of mobile and the routes to market and virality offered by mobile platforms to mean that if you’re very good (and lucky) you can get to astonishing scale in a short time.” But then what? You better hope that … Next Page »Comments (6) | Reprints | Share:
[Updated, 3:20 pm ET] Local universities, investment firms, and non-profit groups have been increasingly teaming up of late to get basic research off the ground. A couple more such deals were struck this week. Those stories and much more below:
—David Green spent almost two decades leading Holliston, MA-based Harvard Bioscience (NASDAQ: HBIO) before taking on a more ambitious project—the head role at Harvard Apparatus Regenerative Technology (NASDAQ: HART), a Harvard Bio spin-off trying to make replacement organs that incorporate a patient’s own cells. HART’s vision is to make a whole line of engineered organs, like whole hearts or lungs, but before it can get there, it’s got to convince regulators to approve its first stab at regenerative medicine—engineered tracheas. I spoke with Green about his decision to take on the project, and the challenges it’ll take to make it work.
—If any further evidence was needed to prove how hot cancer immunotherapy is these days, Cambridge, MA-based CoStim Pharmaceuticals provided it. Novartis acquired the nascent startup less than a year after CoStim grabbed $10 million in a Series A equity financing led by MPM Capital and Atlas Venture. Novartis didn’t disclose how much it’s paying for CoStim, though Atlas partner Bruce Booth wrote on his blog that the deal gives the startup’s venture backers an “above-top-decile return.” CoStim is developing cancer immunotherapies known as “checkpoint inhibitors,” antibodies that remove a cloaking mechanism that tumors use to hide from immune system attacks.
—Carl Icahn finally got his wish for New York-based Forest Laboratories (NYSE: FRX). Actavis, the acquisitive generics giant formerly known as Watson Pharmaceuticals, agreed to buy up Forest for $25 billion, or $89.48 per share, a 25 percent premium to Forest’s $71.39 closing price on Feb. 14 in a cash and equity deal. Actavis will give Forest shareholders $26.04 in cash and 0.3306 of an Actavis share for each Forest share of common stock. Icahn, of course, had been agitating for change at Forest for several years. The activist investor—who held more than 11 percent of Forest’s stock—had engaged in a couple messy proxy fights with previous CEO Howard Solomon before finally cutting a deal with Forest last year. Shortly thereafter, former Bausch + Lomb CEO Brent Saunders became Forest’s new CEO, and steered the company towards a big buyout. He did the same for Bausch + Lomb less than a year ago.
—Cambridge, MA, and Cincinnati, OH-based Akebia Therapeutics revealed plans to raise as much as $75 million through an IPO. Akebia would use the cash to support a Phase III clinical trial for an oral anemia drug it’s been developing called ALB-6548. Akebia aims to trade on the Nasdaq under the ticker symbol “AKBA.” With a 25.1 percent stake, Novartis Bioventures is, by far, Akebia’s largest shareholder.
—Fresh off its IPO, Cambridge-based Eleven Biotherapeutics (NASDAQ: EBIO) kicked off a big Phase III trial for its dry eye disease drug candidate, EBI-005. Eleven plans to enroll 650 patients in the study, and report top-line results in early 2015.
—Former Icahn lieutenant Alex Denner has joined the board of Cambridge-based Ariad Pharmaceuticals (NASDAQ: ARIA). Denner, the chief investment officer and founding partner of Sarissa Capital Mangement, will get a two-year term on Ariad’s board.
—[Updated with new item] Cambridge-based Vertex Pharmaceuticals (NASDAQ: VRTX) was cleared by the FDA to begin selling its cystic fibrosis treatment ivacaftor (Kalydeco) to patients aged six and older who have one of eight additional mutations in the cystic fibrosis conductance regulator, or CTFR gene. The FDA nod opens up a market to Vertex of another 150 cystic fibrosis patients in the U.S. The drug is already approved in the U.S. and European Union for use in cystic fibrosis patients that have the G551D gating mutation. About 2,000 patients worldwide have that abnormality, so Friday’s FDA approval bumps up the market for Vertex’s drug by 7.5 percent.
—Bloomberg’s Meg Tirrell reported that former J.P. Morgan banker Ilan Ganot has raised $17 million to finance his Boston-based startup biotech, Solid Ventures. Ganot wants to use the cash to acquire a nascent drug candidate for Duchenne Muscular Dystrophy. The goal is to help find a cure for his two-year-old son, Eytani, who has been diagnosed with the crippling disorder, according to the Bloomberg report.
—Bedminster, NJ-based NPS Pharmaceuticals (NASDAQ: NPSP) began selling its first product, teduglutide (Gattex), in February 2013, and the drug wound up generating $31.8 million in net sales over the rest of the year, $15.8 million of which came during the fourth quarter. The numbers come in at the high end of NPS’ $28 million to $32 million projected range for teduglutide. NPS’ drug is for a rare disease called short bowel syndrome.
—New York’s Weill Cornell Medical College has established the Daedalus Fund for Innovation, an initiative designed to help shepherd basic university research discoveries in life sciences forward, so they don’t run out of money. Weill Cornell didn’t say how much cash is in the fund, but its goal is to boost the number of collaborations the institution has with industry. The Daedalus Fund is open to Weill Cornell scientists, who must submit proposals to an independent advisory committee of biopharmaceutical and venture capitalists. (Weill Cornell hasn’t named who is on the committee aside from pharmacology professor Hazel Szeto.)
—New York-based Pfizer (NYSE: PFE) cut a three-year collaboration deal with MIT’s Synthetic Biology Center to help translate synthetic biology research into potential drug candidates, diagnostics, and other potential products.Comments | Reprints | Share:
[Updated 8:40 a.m.] Layoffs, IPO filings, investment, and an acquisition in this trip through a few of the week’s storylines around the greater Boston technology sector:
—Irrational Games, developers of the big console franchise BioShock, has abruptly shut down. In a post on the company’s website, co-founder Ken Levine says he wants to build a new studio that will have ”a smaller team with a flatter structure and a more direct relationship with gamers.” He’s taking about 15 members of the Irrational team, which will reportedly cause about 100 layoffs. Irrational was owned by Take-Two Interactive, which will also be the parent of Levine’s new studio.
—Boston-based home goods seller Wayfair is inching closer to a public-market debut. The company, which recently said its sales were more than $900 million in 2013, has reportedly selected the bankers who will run an upcoming IPO of its stock, according to The Wall Street Journal. You’ll also recall that recently, Wayfair was reported to have raised a round of private funding that valued it around $2 billion. Whenever Wayfair files its IPO paperwork, it’ll be able to do so secretly, taking advantage of the JOBS Act provision for companies with less than $1 billion in yearly sales. [Added this item.]
—Nabeel Hyatt, the former Zynga Boston general manager who is now a San Francisco-based investor at Spark Capital, has led a new investment round in San Francisco delivery startup Postmates. It’s a $16 million Series B round for Postmates, which enlists people to deliver groceries, meals, and other items from local businesses via a smartphone app. Spark’s marquee investments in recent years have included Twitter, Tumblr, and Foursquare.
—ClickSoftware Technologies, a Burlington, MA-based maker of mobile software for managing workforces, has acquired a competitor. ClickSoftware (NASDAQ: CKSW) says it is paying $14.7 million in cash to merge with Mountain View, CA-based Xora, adding about 130,000 users to its previous user base of 500,000. ClickSoftware says the combination also will help it move further into the small and medium-sized business market, and give it new distribution channels with wireless carriers.Comments | Reprints | Share:
When Facebook acquired WhatsApp last night, most of the initial headlines focused on the value of the deal and overall shock at how big the number actually was.
Examples ranged from “Facebook to buy WhatsApp for $19 billion in deal shocker” (Reuters) to “Stunner: Facebook to buy WhatsApp for $19 billion in cash, stock” (Forbes). But looking beyond the price, the Facebook acquisition of WhatsApp proves that mobile messaging is truly the “new black” for mobile innovation in 2014 and beyond.
As the market seeks to assess the meaning of the price tag in the $19B acquisition, analysts will have conflicting views of the valuation. Initially, most are saying it is not justified by historical norms. Others will say it was a smart move designed to pre-empt an emerging powerhouse, as seen in the explosive growth of WhatsApp. And even others will say it is a means for Facebook to broaden its presence on mobile devices and draw in a younger audience—where it has been plateauing the past few years.
Evolution to mobile communications
However, this initial analysis may gloss over the more fundamental shift that is signaled by this deal. In looking at how consumers are engaging with one another and media, Facebook is making an assessment that our electronic communications are continuing to evolve—now, from voice, e-mail, IM, and yes, even social media like Facebook, to text messaging. And before betting against Facebook (which thus far has never been a good idea), skeptics may want to note that Facebook and Mark Zuckerberg have placed big bets before.
It was only a year ago, in Q2 of 2013, that Zuckerberg redefined his company from a “social media” company to a “mobile company.” And let’s not forget that many thought he paid crazy money for Instagram (compared to yesterday’s deal, it was a bargain-basement $1 billion). But in the year since, the power of mobile has worked, as Facebook stock has moved from sub-$20 a share to over $60. Only time will tell, but it may be that the WhatsApp deal will be seen as a prescient assessment of the power of next-gen text messaging, with features that go beyond what the carriers have offered for over two decades.
Mobile consumer behavior precedes business behavior
At HeyWire, we are seeing compelling evidence of not only the power of texting in consumer communications, but the reality that it’s also driving business today. Text messaging, through its immediacy and responsiveness, is redefining how consumers and now business people engage with each other and with brands. Consumers and professionals alike are choosing text as the preferred means of communication with family, friends, and colleagues. Texting has moved from a demographic trend of the teen set to a completely mainstream activity.
A recent HeyWire Business survey shows that 67 percent of business people ages 21-59 are texting for work today—not just with colleagues, but for conducting sales and services with customers. The opportunity this creates, in terms of a powerful forum for people to communicate more easily—and for companies to conduct business with their customers, not just for mobile marketing—cannot be underestimated.
Text messaging in the business world is growing daily, as users come to realize that text improves efficiency—enabling users to avoid the delay that comes with e-mail and voicemail. Companies like HeyWire are helping customer support centers text-enable their landlines—letting customers text to the same numbers they have called for info and support. Employees are using business texting to reach colleagues and close time-sensitive business from computers and tablets, not just mobile phones. It’s a lever for productivity that lets more business get done in less time.
So while honest debates will rage about the valuation of the WhatsApp deal, the fact remains it is indicative of the broader long-term migration by people of all ages to text messaging.
Let’s credit Mr. Zuckerberg for recognizing a trend early on. It’s unlikely we’ll look back at this acquisition in five years as more “post-bubble folly”—it’s not a fad or fashion. Text has emerged as a fundamental medium of communication powering both consumers and business users.Comments (3) | Reprints | Share:
There is a certain mystique to playing the radical in an old, traditional industry. However, stirring things up almost guarantees the incumbents will push back—and push back hard.
If that tension leads to a legal spat, most startups do not have a war chest ready for a lengthy battle. Nor do they have the time. So, following in the footsteps of a company like Aereo, which has been defending itself all the way to the U.S. Supreme Court, is far from an ideal scenario. Just this Wednesday, Aereo got hit with an injunction in a federal court in Utah, blocking the service in that state as well as Colorado, Kansas, New Mexico, Oklahoma, Wyoming, and other locales.
New York-based Aereo debuted two years ago, offering access to miniature antennas that stream broadcast TV shows to mobile devices—all for a monthly fee of $8 plus tax for basic service. Part of Aereo’s legal argument is that the viewer already has the right to watch the programs at home. But one of the big questions raised at Aereo’s first press conference was whether broadcasters would cry foul since the startup was not paying for the content.
Eventually they did.
The major TV networks—including ABC, CBS, NBC, and Fox—struck back claiming Aereo’s service infringed on copyright and rebroadcasting regulations. The cases coiled their way through the lower courts, with Aereo claiming victory on some fronts. But last September, Brian Roberts, CEO of NBC’s parent Comcast, said in a PBS interview that he believes what Aereo does is flat out illegal.
Before taking on powerful incumbents, startups should think about the clout they are up against, says Michael Phillips, an associate with law firm Fensterstock & Partners in New York. He says startups need to know what existing rules are in play before those rules get used against them. “You don’t want your technology to look too much like regulatory arbitrage,” he says. “That’s the problem Aereo has run into.”
There is a fine line, Phillips says, between innovation and cleverness that has gone too far. On one hand, he says, Aereo looks like a savvy advance over old TV antennas. “But when you look at [their] satellite dish array and how every [user] is assigned an itty-bitty antenna,” he says, “it begins to look like this is just a strategy to work around the Copyright Act.”
For all their ingenuity, sometimes startups must bend to the rules, Phillips says. That makes playing the rebel dicey, he says, if startups cannot adjust their technology to both satisfy regulators and be profitable. “For some, it’s the core of the enterprise or nothing,” Phillips says. “That’s Aereo’s circumstance. If the system they’ve set up violates the Copyright Act, then that’s it for Aereo.”
Aereo’s case is due to be heard this April by the U.S. Supreme Court. The company stated it welcomes the chance to resolve the matter once and for all. Its CEO, Chet Kanojia, seems to be looking forward to some finality to the fight.
But Phillips believes Aereo might be a bit wary that the highest court in the land took on its case rather than defer to the lower court rulings. If Aereo loses before the Supreme Court, he says, the brand might still have some market appeal—but it would not be the same service anymore. “That’s a scary risk for any startup or its investors to take on,” Phillips says.
The allure of being the rebel, he says, can be a persuasive way to quickly build a client base. Apple is a classic example. But Phillips says startups should think about being more subtle and careful about what they want to revolt against. “With the Aereo case, some of the judges look at it as rebelling against the law,” he says. “That’s not where you want to be.”
So far Aereo has come out ahead in some of its legal quarrels, but a rival startup called FilmOn X has not, says Andrew Goldstein, a partner with law firm Freeborn & Peters in Chicago. Britain-based FilmOn X, which previously went by the name Aereokiller, also offers streaming content from TV broadcasters. Goldstein says FilmOn X lost some of its courtroom fights, stalling its plans. (Incidentally, FilmOn X recently requested to have a voice in Aereo’s case—a request Aereo is fighting.)
Indeed, the consequences of building a business around supposed loopholes in the law can be harsh. Goldstein wonders if other startups taking this approach understand what they are getting into. “It could be a house of cards,” he says. “If you’re in this scenario, someone is likely going to test your loophole; your whole business could come tumbling down.”
Goldstein says Aereo’s fight differs from other startups battling within an industry because Aereo has Internet mogul Barry Diller as a backer. However, the outcome of the case could be a lesson for all. “If the Supreme Court rules in favor of Aereo, … Next Page »Comments | Reprints | Share:
Bruce Booth, the biotech venture capitalist known for his social media savvy, sent a Tweet last month that caught my eye. He tweeted in reference to the number of academic spinoffs reported in the 2012 AUTM Licensing Survey Report, “What % biotech? My bet, ~ half.”
Extrapolating from Top U.S. universities, institutes for life sciences in 2012 and AUTM data, perhaps 63 percent of academic startups formed in 2012 were biotech or in “life sciences.” Working from a set of 639 startups, that would equate to 402 biotech startups formed in 2012.
A recent paper from The Brookings Institution noted “the top 80 universities by research funds control 89% of research expenditures and 92% of gross licensing revenue.” This top-heavy distribution, the paper suggests, has led many of the smaller universities to try to compete with the big boys by nurturing more startup companies.
That may sound like a great idea, but in practice, it isn’t. In How many startups can university research support?, Jerry Paytas of Fourth Economy Consulting suggested that universities need at least $100 million in research expenditures to be anything but lucky in creating academic spinoffs. Data from the AUTM 2012 survey suggests that, on average, it takes $90,863,347 in research expenditures at U.S. universities to create one startup. I think these numbers work best in the negative. For example, if an institution’s research expenditures are $150 million and they are creating 20 companies a year, it raises an eyebrow.
Are universities creating too many life science startups?
I tried to answer this question by doing some simple math based on data from the AUTM 2012 survey of U.S. universities and research centers. If you take the total research expenditures per university and divide by the average research expenditures per startup ($90,863,347) you can see the university’s projected number of startups per average research expenditures. Next, I looked at the actual startups created per university, minus the projected number of startups per average research expenditures, and gave an over/under score for each university. Taken together, I found there were 37 “too many” startups. If 63 percent are life sciences companies, then U.S. universities created 23 “too many” life science startups in 2012.
Success in biotech is said to hinge on “Three basic factors: science, demand and people.” How many of the startups are based on proven reproducible science? How many of the technologies have been “shopped” for industry interest? Importantly, how many will be able to attract the talent to drive them forward?
According to AUTM, 79 percent of the startup companies formed had their primary place of business in the licensing institution’s home state. Avoiding a specific biotech hub ranking, geographically, 333 of the startups were not formed in California or Massachusetts. And of those, 263 did not move; meaning many of those startups are not formed in a biotech hub and don’t move to one.
In The spill-over theory reversed: The impact of regional economies on the commercialization of university science, Steven Casper of the Keck Graduate Institute of Applied Life Sciences essentially says that universities in regions that lack a signiﬁcant industry presence—for example, a biotech anchor tenant— “will not develop extensive networks of ties linking academics with industry, and as a result will have lower commercialization output.” Nevertheless, AUTM data indicates a significant number of startups are being formed in regions without a significant life science industry presence.
You can form and grow a successful life science startup outside of the hubs. But, like it or not, … Next Page »Comments (4) | Reprints | Share:
The Affordable Care Act has certainly made headlines over the past year—and the ACA, along with several other developments in the current venture funding environment, is beginning to radically reshape value creation in the life sciences and for biotechnology firms.
Below, I provide some updates on trends, challenges, and opportunities for life sciences companies in 2014—and advice for best navigating the current climate.
Challenges and opportunities for investment
2013 was a mixed year. As Silicon Valley Bank managing director Jonathan Norris stated at the Nutter Acceleration 2013 Conference, there remain several challenges for early-stage companies seeking venture capital: decreases in fund sizes and total dollars raised, the consolidation of the raw number of venture investors looking for life science deals, the reduction in overall venture investing into new companies (particularly in medical devices), and the “exit bottleneck” of still-private companies representing $38 billion in venture funds invested from 2000-2011. More encouraging was the eight-year high in the number of big exits and the increase in total deal exit values in 2011 to 2012, as well as the increasing presence of corporate investors in biotech investment (although they continue to shy away from investment in medical devices).
One other trend that Norris’s data supports is the dramatic increase in structured and milestone-driven deals—nearly three-quarters of all such deals during the eight-year high. This brings us to my next point…
Drill down on specifics in milestone deals
In the current biotech IPO market, there is generally an agreement that this eight-year high and volume of transactions has been an aberration. Many IPOs tend to be financing events rather than liquidity transactions for founders and early investors. While IPOs may provide some leverage and optionality for biotechs, acquisitions will continue to be the likely exit mechanism for all sectors of life science companies. In 2014, I expect structured exits rather than cash deals will be the norm. I cannot stress enough the importance of specificity around what constitutes milestone achievement as absolutely critical to driving founder and investor returns. These deals stretch out founder and investor returns, and shift substantial portions of the technical risk back to the sellers.
Some of the data can be attributed to a broader shift in life sciences and healthcare to a population-based approach to medicine and a shift away from volume-based fee-for-service models. The impact of the ACA has been to initiate and accelerate a massive shift to a value-based analysis—but the challenge is that payers, providers, investors, and acquirers have differing definitions of value. There is also an emerging trend towards a patient-centered approach to care, which is opening up a whole new spectrum of opportunities.
As government and private payers continue to drive down healthcare costs, biotech companies will need to pay increasing attention to their pricing and reimbursement strategies. The days of “if you build it, they will pay” are over. In this new environment, as Laurel Sweeney, senior director of health economics and reimbursement at Philips Healthcare, has suggested, “Companies should start with the question: ‘What is the clinical problem we are trying to solve and how large is the problem?’”
The continued shift towards evidence-based medicine means that demonstrating efficacy and safety will no longer suffice as a reimbursement strategy; payers and regulators will increasingly demand hard data and evidence-based metrics on patient outcomes. This is going to create opportunities for health IT and health services companies to drive value in different areas—real time mobile/device monitoring, telemedicine, big data analytics, and post-op treatment care plans designed to reduce unnecessary readmissions.
Best words of wisdom for cutting-edge biotechs in 2014
Given the tough investment climate and the challenges involved in conceptualizing, funding, and growing an early-stage biotech, creating good networks and having strong advocates on your side has never been more important. Avaxia Biologics’ founder Barbara Fox has emphasized how important it is to “know someone in the room” when seeking funding from potential angel and venture investors. In this rapidly changing and complex environment, where the margins for error are growing smaller and smaller, the need for early-stage life sciences companies to attract A+ human capital has never been more important—and it has never been more important to investors looking at where to bet their capital.
Awhile back I blogged about Ashwin, one of my ex-students wanted to raise a seed round to build Unmanned Aerial Vehicles (drones) with a hyper-spectral camera and fly it over farm fields collecting hyper-spectral images. These images, when processed with his company’s proprietary algorithms, would be able to tell farmers how healthy their plants were, whether there were diseases or bugs, whether there was enough fertilizer, and enough water.
(When computers, GPS and measurement meet farming, the category is called “precision agriculture.” I see at least one or two startup teams a year in this space.)
At the time I pointed out to Ashwin that his minimum viable product was actionable data to farmers and not the drone. I suggested that to validate their minimum viable product it would be much cheaper to rent a camera and plane or helicopter, and fly over the farmers field, hand process the data and see if that’s the information farmers would pay for. And that they could do that in a day or two, for a tenth of the money they were looking for.
(Take a quick read of the original post here.)
Fast forward a few months and Ashwin and I had coffee to go over what his company Ceres Imaging had learned. I wondered if he was still in the drone business, and if not, what had become the current Minimum Viable Product.
It was one of those great meetings where all I could do was smile: 1) Ashwin and the Ceres team had learned something that was impossible to know from inside their building, 2) they got much smarter than me.
Even though the Ceres Imaging founders initially wanted to build drones, talking to potential customers convinced them that as I predicted, the farmers couldn’t care less how the company acquired the data. But the farmers told them something that they (nor I) had never even considered—crop dusters (fancy word for them are “aerial applicators”) fly over farm fields all the time to spray pesticides.
They found that there are ~1,400 of these aerial applicator businesses in the U.S. with ~2,800 planes covering farms in 44 states. Ashwin said their big “aha moment” was when they realized that they could use these crop dusting planes to mount their hyperspectral cameras on. This is a big idea. They didn’t need drones at all.
Local crop dusters meant they could hire existing planes and simply attach their hyper-spectral camera to any crop dusting plane. This meant that Ceres didn’t need to build an aerial infrastructure—it already existed. All of sudden what was an additional engineering and development effort now became a small, variable cost. As a bonus it meant the 1,400 aerial applicator companies could be a potential distribution channel partner.
The Ceres Imaging Minimum Viable Product was now an imaging system on a cropdusting plane generating data for high value Tree Crops. Their proprietary value proposition wasn’t the plane or camera, but the specialized algorithms to accurately monitor water and fertilizer. Brilliant.
I asked Ashwin how they figured all this out. His reply, “You taught us that there were no facts inside our building. So we’ve learned to live with our customers. We’re now piloting our application with Tree Farmers in California and working with crop specialists at U.C. Davis. We think we have a real business.”
It was a fun coffee.