Zell Lurie Presents Entrepalooza 2008: From Theory to Practice
Janish Shah
Issue date: 9/22/08 Section: News
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Roger Newton delivered the opening speech. Like many entrepreneurs, Newton reached a pivotal decision point in his career where he faced the choice between staying in a stable, low-risk, but compromised setting at a large pharmaceutical corporation or venturing into a high-risk biopharmaceutical start-up where the future was anything but secure. As a research scientist at Warner-Lambert/Parke-Davis (now Pfizer) from 1981-1998, he had built an enviable reputation as the co-discoverer and champion of what is now the most prescribed cholesterol-reducing drug in the world, atorvastatin (Lipitor®). However, the onset of industry consolidation and a "blockbuster" mentality compromised innovation. Newton wanted more.
In 1997, he opted for the unknown and left Pfizer Inc., where he was Senior Vice President of Pfizer Global Research and Development, to co-found and lead Esperion Therapeutics Inc. in July 1998. "We married business and science," Newton said. Esperion's success in developing a promising portfolio of products, including an HDL (high-density lipoprotein) therapy for treating patients at risk for heart attacks, attracted the attention of Pfizer, which acquired Esperion in 2003 for $1.3 billion.
Looking back on his trajectory from scientist to entrepreneur, Newton shared some insights with his audience. "Do the best science you can do, and be fiscally responsible," he advised. "Don't eliminate options, develop competing alternatives and constantly reassess your prospects." He emphasized the importance of cultivating close relationships with experienced entrepreneurs and knowledgeable advisors, and he expressed special gratitude to Ross School of Business Professor Robert E. Quinn for his guidance. Finally, said Newton, "Never lose your passion."
Newton's speech was followed by four different panel discussions: Launching & Growing Your Business, Financing Your Business from Angel Funding to Raising Venture Capital, Legal Considerations for Start-ups, and Growing Emerging Companies in the Tech, Life Sciences and Energy Market Sectors. Each panel featured four accomplished entrepreneurs and allowed students and other attendees to soak in some of their insights and ask questions.
In Launching & Growing Your Business, panelists with start-up experience in a variety of industries, including life sciences, technology, media communications, health care and retailing, weighed in on what it takes to launch and grow a successful business. Identifying and evaluating opportunities for a technology-based company requires "having people on your team with a good understanding of the base technology and the capability to do world-class evaluation," said Jeff Williams, president and CEO of HandyLab, Inc., a molecular diagnostics company.
When asked about the importance of having experience in the field an entrepreneur ventures into, Williams said, "If you are going to be a successful entrepreneur, you really have to stick to what you know. You should work in the industry for a while before you found a start-up." He continued to advise that before you decide to found a start-up, "make sure you're doing it for the right reasons. Make sure you know you have the right idea, talent, and capital to be successful. A good idea is not enough. You entrepreneurs I have met often have great ideas, but little thought about the talent and capital side of the equation."
Robert Wolfe, the founder of bricks-and-mortar outdoor apparel retailer MooseJaw, said his three-part business strategy revolves around retail stores, Internet sales, and manufacturing branded merchandise. "We have to differentiate ourselves from our suppliers who are selling direct to customers online," said Wolfe. "So, we are focusing on building our own brand and launching a new Web site. We are also filing for trademarks in any country where we market our merchandise."
Williams recommended striking a balance between lofty aspirations and down-to-earth reality. "People think they will be the next great entrepreneur," he said, "but it can be very hard and scary. As CEO, you are responsible for people and raising money. You have to be willing to deal with the bad and good times." When asked about the most important thing before launching a business, all three panelists agreed that passion about the business is essential. "If you're not doing something you love, you are probably going to fail," Wolfe explained. "Either like it, and make some money, or love it and make a ton of money!"
The Financing Your Business panel discussed how a start-up can raise the initial cash to actually bring the idea to market. Panelists, who were drawn from commercial lending and angel, venture, and private equity investment firms, agreed that now is the time and Michigan is the place to launch a new business. "We need the spirit of entrepreneurs to turn the tide in Michigan," said Douglas H. Adams, Vice President of Small Business Administration (SBA) lending at Comerica Bank.
Adams advised entrepreneurs that when approaching a lender for a loan, "know your credit score before your banker does." He also suggested cobbling together a patchwork of financing to tap various government and private pools of money.
Robert Savage, Founder and Managing Partner of the Ohio-based angel fund CoreNetwork, observed, "It's a lot easier to get investors' attention out here in the Midwest." He noted that as companies go through different stages of development, they often require different kinds of investors-beginning with friends and family, then progressing to angel and finally venture capital. Savage recommended that before attempting to raise capital, entrepreneurs work in an industry first to gain experience.
Valuation is often a sticking point between founders striving to preserve their equity and investors seeking to make a good return on their risk. "It's tricky," conceded Savage. "You have to strike a balance between giving investors a reasonable risk-adjusted return while giving the founder the ability to grow the company and protect against dilution."
"Keep the capital structure simple," advised Michael Singer, Founder and CEO of LeapFrog Holdings LLC. "Say what you'll do, and do what you say. Create alignment and win-wins for your investors. They are your partners, and what's good for them is good for you."
The main events of Entrepalooza concluded with a speech from this year's Ross School of Business Alumni Entrepreneur of the Year: Sam Wyly. Wyly, a self-made billionaire, has been part of several successful entrepreneurial ventures through his career. The list includes University Computing, Sterling Software, Sterling Commerce, Earth Resources, Bonanza Steakhouses, Michaels Stores, Maverick Capital, Ranger Capital, and Green Mountain Energy.
Wyly discussed his career in a chronological format, starting with how he ended up coming to Ross. He received his undergraduate degree from Louisiana Tech before being granted a scholarship to attain his MBA from the University of Michigan. Through his speech, Wyly continually stressed the importance of surrounding yourself with talent in business. "There is always a better manager than I am. You have to surround yourself with talented and confident people," Wyly explained.
When asked about Maverick Capital, Wyly explained how the strategy remained the same despite the shift into the financial industry. "We were worth about $10 billion before this past week, probably a lot lower now!" he joked. "The strategy is the same: good managers and owning good companies and shorting the opposite."
When asked the most important element of his success, Wyly explained that it was "being stubborn, or persistent as some people call it. There are always smart people who will tell you it won't work and several reasons why," he said. "You just have to know who you are and be confident. You can never be sure about your goal, but you can know yourself."
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