High-Tech Entrepreneurs Learn to Start on Right Foot

Howard Birndorf, a veteran of nearly half a dozen biotechnology company start-ups in San Diego, learned early that creating a company “isn’t the job for everyone.”

“There are a lot of (executives) who don’t like emptying their own trash cans or answering the telephones,” said Birndorf, who played an integral role in the creation of Hybritech, Gen-Probe, Idec, Gensia and, most recently, Progenx.

But Birndorf and other founders of high-tech and biotech companies often find themselves pressed into service as a jack-of-all-trades.

Consider Jon Bennett, controller of San Diego-based Apex Medical Technologies.

For most of his working hours, Bennett handles the controller’s duties for Apex, which has developed a polymer and membrane technology that it hopes to use to produce a new generation of extremely thin but exceptionally durable condoms and surgical gloves.

But Bennett recently has been pressed into service as photographer, negotiator and public relations officer.

Market for Condoms

While Apex was completing a slide presentation for the San Diego Technology Financial Forum on Feb. 17-18, an observer suggested that the show needed a slide that graphically portrayed the growing market for condoms.

The observer suggested that Apex include a picture of a public service advertisement being carried on buses in San Francisco. Within days, Bennett was “in San Francisco with camera in hand, shooting at the back of buses.”

Bennett got the slide but almost missed the mid-morning presentation because he and Apex President Mark McGlothlin were rushing to complete negotiations with a large company that wanted an option to market Apex’s proposed product lines.

The two executives eventually signed a letter of agreement. But just minutes before their presentation, they realized that they’d inadvertently reversed the order of the slides while loading them into a borrowed projector.

Richard Tullis, another of the 33 executives who made presentations at last month’s financial forum in San Diego, agreed that a start-up’s success is linked to the founder’s ability to handle some decidedly non-executive chores.

A co-founder of Molecular Biosystems, Tullis contributed $250,000 of his own money to fund Synthetic Genetics. But he stretched that seed money by finding laboratory equipment that was being sold “at 10 cents to a penny on the dollar.”

He also spent weekends painting the walls in Synthetic Genetics’ 4,000-square-foot laboratory and enlisted a friend’s help to build laboratory benches and bookshelves.

Founders of many start-up companies balk at performing those relatively mundane tasks, according to William W. Otterson, director of “Connect,” a UC San Diego program that helps entrepreneurs who are starting new businesses.

The Dangerous Maze

Consequently, many start-ups wither and die because their founders “get completely wrapped up in their scientific idea and, consequently, it never moves beyond a concept,” Otterson said.

To reduce the fatality rate in San Diego County, the UCSD Connect program is trying to guide selected companies through the perilous maze that leads to sources of venture capital.

Otterson said that process includes offering some fairly basic advice.

Connect helped Gloria Ma, whose TEST Inc. start-up is developing a line of non-destructive testing equipment, learn that she is more effective as a speaker when she tosses aside her carefully written notes and relies on her memory.

Ma, the only female to make a presentation during the two-day forum, credited Connect’s coaches for helping her to become a more effective speaker.

“I realized that I really didn’t need to read my speech,” Ma said.

Otterson also helped Tullis--whose business card identifies Synthetic Genetics as a manufacturer of “fine custom normal and phosphorus modified synthetic DNA”--to present his story in a less-complex manner.

Tullis acknowledged that despite his company’s exciting potential, its decidedly technical nature “could put people away if I’m not careful.”

Consequently, Tullis used speaking techniques that he honed while teaching an introductory biology class that was mandatory for many student-athletes at the University of Southern California.

“I enjoyed the hell out of that class,” Tullis said. “And, I learned a lot about how to tell people things they really don’t want to hear about.”

But too often, founders of start-ups fail to get the right message across to potential investors, according to Connie Baher, a local businesswoman who helped coach several company founders who spoke at the the San Diego forum.

Lost in Research

Scientists who tend to get lost in their research unwittingly tell potential investors that they’ve “got a technology in search of a market,” Baher said. “I advise them to describe the problem first and then come along with how their technology is going to provide the much-needed solution.”

Founders of most start-up companies are hungry for direction, Otterson said. But there are some who “don’t follow instructions very well.”

Before the February forum that was sponsored in part by UCSD’s Connect program, Otterson advised participants to “not let any (venture capitalist) leave the room without your knowing their names.”

Otterson deflated the ego of one exceptionally proud entrepreneur who had handed out business plans to 20 venture capitalists--but promptly forgot several of their names.

Preparation can’t eliminate all the rough spots, but it can help presenters overcome unexpected problems, Otterson said.

One presenter was “mortified” when a slide projector failed to work. But venture capitalists in the audience were favorably impressed by the speaker’s graceful response, which was no response at all until someone in the back of the room fixed the glitch.

“The technology is obviously important, but (venture capitalists) also want to know something about the person, about how they react to a tough situation,” according to Irving Katz, director of research for Thomas Green/San Diego Securities.

For the 33 executives at the forum, first impressions were important because the 100 venture capitalists in attendance have invested about $5.5 billion in various start-ups around the country.

Otterson’s coaching continued after the forum was over, especially for several speakers who were “euphoric because of all the attention that they received.”

“I told them that a deal isn’t a deal until it’s a deal,” Otterson said. “I’ve got to preach that over and over again.

“I tell them to act aggressively until they’ve got the money in the bank. Then, I tell them to write a thank-you letter because they’re going to need more money (from that source) next year.”