On Thursday Evan and I spent the afternoon at the first session of the Harvard Medical School Dean’s Symposium. The topic was “Challenges to Successful Innovation and Translation” of medical research, and the highlight was a talk by Professor George Whitesides.  Dr. Whitesides is one of those very interesting products of Cambridge, MA – he’s written over 950 papers, and co-founded twelve companies, including Geltex (which was sold a few years ago for $1.3 billion) and a little biotech named Genzyme. So when he talks, it’s worth listening.

After his talk I asked him if it would be all right if I shared “Whitesides’ Rules” on this blog. He agreed, provided that I referred to them as “Uncle George’s Homey Rules for Entrepreneurs.”  So here’s Uncle George’s homespun advice for entrepreneurs. I’ve refrained from adding my own commentary, other than to type up my notes from the talk (and thus take no credit for various homey aphorisms):

1. There are three strategies for entrepreneurship. You can solve a problem, you can develop a technology, or you can imitate or improve on something that already exists. Solving a problem is best, and keep in mind the difference between wants and needs in mind when you select that problem. A cure for Alzheimer’s is a need. A new car, less so.
2. Radically new ideas are much harder than a “me too.” And they may or may not be more profitable and important. Genetic engineering was going to change drug development thirty years ago. It’s only now beginning to have a real impact.
3. Finish the science before you start the company. Ideally, prototype the product and try selling it.  It’s easy to do engineering on a budget and on a schedule. Science is a little trickier.
4. A customer is someone who will pay you money, and product is what s/he will pay you for. The most intimate, shared human experience is writing a check.
5. Spend time as an apprentice. Learn from people who know – and have already made many expensive mistakes.
6. Use Venture Capital as little as possible. Venture advice can sometimes be very helpful, but remember the overvaluation of capital. VCs get most of the money.
7. Make simplicity an explicit strategy. But don’t go overboard. Start as simple as possible, then make it simpler.
8. Remember the Money. If research is $1, development is $10-$100 and manufacturing is $100-1000.
9. Technical development and market development are inseparable. Most scientists aren’t socially acceptable. Take them to the meeting, but use duct tape.
10. Regulatory agencies are motivated to avoid risk. Nobody ever lost their job for not approving a product.
11. Cash may rule, but time and risk discounted cash flow decides. Slow and uncertain are both bad.
12. Cost of capital differentiates. Small companies are creative and have a high cost of capital. Large companies aren’t creative, but have a lot of cheap money. Synergy would be ideal.
13. Learn elementary accounting. DCF, RONA, ROI, EBIT(DA) and CAPEX. Otherwise the business people will see you as shark food.
14. Right now, and for 3-5 years or more, IPOs will be difficult or impossible. Plausible exit strategies are eveloping a company that sells stuff, or selling the company.

And that is what Dr. Whitesides thinks bioentrepreneurs should know.  Not all of these apply to Health IT, regular IT, and entrepreneurial activities that don’t have a science component. But most of them do.