M. D. Anderson Cancer Center
Date: March 25, 2008
Duration: 0 / 20:32
Uhmm...Yeah, where to start? So last time I gave you guys some
advice on what your whole goal is which is to try to get a meeting and
we're trying to raise money and we need to get a meeting and the whole
idea here is to be memorable. And that's kind of true for the
executive summary, the business plan, elevator pitches and that goes
back why only ask which one of you remembers what the other teams
talked about this...let's see not this week, next week is the Rice
Business Plan Competition. Yeah, I think it's next week.
One of the first things they have is an elevator pitch competition and
you sit down and you'll see every elevator pitch from every team in a
very short period of time and the Rice Alliance as a whole has started
doing this at every event. It's really interesting because if you
sit down and watch 30 elevator pitches in an afternoon and then go to
the cocktail party afterwards and listen to people talk about the
deals. Usually they're only talking about a couple of them and it
does not necessarily hold true that they are the best most viable
business opportunities. They're just the deals they stick in
people's heads because the people don't know how to communicate and
that's what I am trying to encourage you guys to do. Skip the
rules like all they said if you've got a list of okay, I've gotta talk
about the market size and how much my product is going to cost and how
many years it's gonna take me to get it on the market. If you
limit yourself to that list, you're gonna feel really cramped. So
fit with the style that works for you and this is true for business
plan as much as anything else. So hopefully, this information
will work. Like I said it works for grants and defense of thesis
and what I'm gonna point out is one of my favorite tricks. Write
a good document, answer detail, answer questions well. But
sometimes lead them questions to ask and the reason being is if you've
written a document and people get engaged and they'll say, "Hhmm, yeah
but what about this." May be they'll pick up the phone and call
you and ask. I used to do that in my thesis defense. I
wanted them to ask the easy questions so I made obvious questions for
them to ask and it worked. I got out. [Laughters] All
right. So one of the things I was gonna tell you was since I just
read 6 business plans back to back, all of them. Some key things
I've learned. One is people always talk about having conservative
values in their business plan. They'll say these are conservative
market estimates. Well, yeah right. Forget that. Tell
me what you think is reasonable. I wanna actually know what you
can do not what you think some conservative number is. Don't
worry if you tell me that market is so big I'll probably cut it in half
or if you tell me your cost is at one number I'll probably double
it. Let me take those things into account. The other thing
is provide credible data. Sometimes the numbers just don't ring
true. Make sure they all hang together. I was looking at a
spreadsheet of projected financials and like all they noticed in one of
the summaries that there was a math error. I realized there was a
complete error in the spreadsheet carried over year to year and you
couldn't look at it and figure out what the companies revenues would be
at the end of that time. And finally, explain what it is you're
selling and try to do it pretty soon. I noticed it was on the
bottom of page 8 of the business plan. We actually figured out
what it was they were going to do and it was to sell a device and I
thought, you know, actually it sounds like an interesting idea.
There's some people I'm gonna have to ask about this but I shouldn't
have to wait 'til payday and normally, I wouldn't do that. It
just happened to be that because I'm sitting down to review 8
business...6 business plans for competition. I actually read them
cover to cover and the frequency with which I do that is like 2%...2% of the business plans I read. Oh, and one more
thing about providing credible data, be credible when you're writing as
well. Someone wrote about a drug-eluding stent.
E-L-U-D-I-N-G. So the stent was trying to run away from the
drugs in your body. If that's your major competitor as a drug
eluting stent, I suggest you spell it right otherwise you're gonna lose
credibility. So reread your documents, at least you spell
check. Well, spell check wouldn't have caught that one. I
did promise you a couple of good resources on how to write business
plans. In general, what I recommend is find an outline. In
some of these books and you can even find them on the web, you'll find
an outline that has 12 or 15 types of topics to cover. That's
very similar to what I've presented last time. I think that's a
really about as much structure as you need to follow in writing a
business plan. Let the rest come out of your own brain rather
than just feeling like you have to check up a box here or there and
that's why at the bottom, I list software packages but I really don't
like software packages for writing business plans. Word works
great, just sit down and write. Do want you think is appropriate
and don't get stuck. And then the Houston Technology Center, HTC,
is a good resource and actually, you might notice a lot of similarity
between the documents on their website and the documents on the DFJ
Mercury website. Another thing, I thought I'd talk about is do
you really need a business plan. And this is a pretty good
question because you don't always need one and sometimes your business
is changing so quickly that it really doesn't make sense to spend a
month writing a business plan and then you have to rewrite it two months
later. You need to have an operational plan definitely, but the
only time I really recommend you sitting down and writing out a
business plan directly for business is when you think it will really
help you reach a particular goal. For example, if you're investor
requires it, that's a great time for you to sit down and you write it
and you give it to them. You might have parts of it sitting
around and you're basically pulling it together at the last moment with
all the freshest data you can give them from your research and
persuading with that. But just for an example, one of our
portfolio companies, Glycos Biotechnologies we don't have a business
plan right now and we've just finished our Series A Funding of a pretty
considerable size. It was basically based on the technology and
the presentation of the technology and conversations over the
phone. So it is possible to raise money without one. The
executive summary, you really do need to have that shipped out to
people. Okay, elevator pitches. I think Olive [phonetic]
was particularly hard with 60 seconds you know. I realized most
elevators are pretty quick these days but, you know, I'm used to
hearing one going for about two minutes so it was a little short, but
that was still good because I think you can deliver a really effective
executive summary in one or two sentences and the best time it happens
is when you craft your message really specifically to the target you're
talking to. I don't think Al Napier will mind me telling the
story. Al Napier is a faculty member over at the Jones School at
Rice and he teaches entrepreneurship in classes about business plan
writing. And he was working with a small company several years
ago that was providing a new way of basically delivering food to
different people, a new food distribution service. And he knew
the local entrepreneur who's a pretty big guy runs a really big company
and owns a sports team and walked up to him and said, "Hey, I've got a
really neat new food distribution idea for you. Would you like to
hear about it?" and the guys response was here's my card call my
secretary and arrange a meeting. So sometimes you can deliver a
very short message and get the money or get the meeting. I don't
know if he invested or not. Good question. So what's on
your tombstone? How do you wanna be remembered and I think that's
really the question here. Oh yeah, he's the guy with
the...what? Sometimes I'll remember he's the guy with the tic in
his eye because he was very nervous speaking. Hopefully, that's
not the case. But this goes back to prioritizing what you're
saying in a conversation. When you get up to give an executive
summary or elevator pitch or business plan, what do you want them to
walk away remembering? Well, that should probably be the very
first thing you tell them and it should probably be the very last thing
you tell them because the chances are they're gonna forget everything
in between. I have seen people list every single advisory board
member in an executive summary and I didn't understand the point of
it. I also use the rule KISS for "Keep It Simple Stupid". I
know it sounds kinda trite but it really does work. One of the
things you guys know about is a lot of very detailed scientific
knowledge. And it really is very impressive to the point of being
overwhelming for a lot of the recipients out there. One of the
things that I've had a good...well, recently I've had a good fortune
with one of the companies that I work with. We have a business
man who is very capable of learning at least the very important salient
facts about the science. And the reason that's good is because he
gets rid of all the technical jargon and the garbage that we tend to
load it up with all those little three-letter acronyms that we try to stick
into everything. He started talking about DNA and people...their
eyes roll. He can summarize the business in a way that other
people who don't have any idea about science can understand and in this
case, it happens to be for the industrial chemicals market. But
he can explain the concepts behind our biotechnology to other people in
this industry that have no clue about the biotechnology. He can
explain why we're important, why we're unique without resorting to a
lot of jargon and that's what I mean by "Keep It Simple Stupid."
Try to think of well, in my case, I always say when I'm talking to my
parents, my parents are not from the science background and I remember
in graduate school just trying to talk to them and have a conversation
they say...they would ask, "Well, what did you do today?" "Well,
I did 48 minipreps and six gels whatever." They have no concept of
what that is and the other thing is really you should and that's why I
put it in big letters here. You really should ask for a
followup. What's the purpose of your elevator pitch? A lot
of times if you're lucky it really is a one-on-one situation at a
cocktail party, at a reception at one of these events at
BioHouston. Ask for a business card. Usually the best way
to get a business card out of somebody of course is to hand them one of
yours, so as a scientist one of the other things you might think about
doing is getting business cards. Trust me, it took me six years to
learn how to carry one and in fact, I only have one on me right now
which shows how successful I am but [audience laugh] following my own
rules. But ask for a business card. That's a good place to
start and that could be, you know, business card, "I'll send you an
e-mail." or, "Can I give you a call next week when you're back in
town?" Whatever is appropriate for the situation that's what you
need to do and sometimes it's painful to ask but you should ask 'cause
you're gonna have to ask a lot of people a lot of times to do fund
raising or to get a job or to get a grant. Okay. So, I've been
hammering this point over and over and there's a reason why and that's
because I want people to walk away remembering what it is you did, put
the really important stuff up front. I know, I mentioned that the
burying the product on page 8 in a business plan is a bad idea and the
problem is that that wasn't the first time I've seen an issue like
that. I read. I don't know I guess through our office, we
probably get a thousand business plans a year. So I read way too
many of them and this is a pretty common problem. You gotta
remember that you are so enamored or so knowledgeable about your own
technology that you sometimes don't see the...I guess the best way to
put it is the inconsistencies on how you set up a document or how you
can make it easier for somebody to read what it is you're presenting to
them. And so I recommend that you talk to people, talk to your
peers, talk to other people who may not be closely related to you in
the scientific field, but still understand what you're talking about
from the scientific basis and have them look over what it is that
you're doing and have them give you feedback on how to work with that
information and put it into a form that's much easier to read. I
think this is one of the things that I've really benefited from in the
long run is I did my Ph.D. at Rice. And I was in the Biochemistry
Department and Gordon came...and sponsored the Cain Project at Rice
which is a project to help scientists learn how to communicate. I
was forced to give a presentation every year and was given a training
in that program that followed up on...was...or I followed up on that
with the training in communications at the Jones School as part of the
business program working at the HTC and other places as well. You
know, it's just repeatedly getting out there in front of people and
practicing and so drag your friends off. Talk to them for a while
and see if they can help you. Most people really do want to help
you and they'll try to tell you things that will help you succeed and
the other thing to remember is that when you're in a presentation like
this, the people in the audience actually want you to succeed as
well. I mean this is not some reality TV show where they're
looking at you to screw up. The audience will be supportive of
you. If you make a mistake, don't worry about it. Chances
are they're not gonna remember that anyway unless, okay there is
exceptions to that, but you know unless it's something really odd that
you do. Most people are never gonna remember. You're gonna
focus on this one tiny little thing you did and you're gonna say to
yourself, "Oh my god, I can't believe I did that", but the audience
know. Hopefully, they'll remember the first thing you said.
If you're lucky, the rest of the stuff, they probably won't remember so
remember that. That's why you put the important stuff at first
and hope to have the nice to have stuff below. Hey, I jumped
ahead. I already talked about this so don't worry about it.
Ahh..but yeah. Point number 2 here, think about the
message. You don't have to hit every word in that prepared speech
that your wrote down when you're talking to people. You just have
to get the point across and that's one of the crutches that people use
quite often and I've seen this at business plan competitions.
People will have the set of index cards and they'll sit there.
They'll read from the card and then look at the audience and if the
card's out of place, they're in deep trouble. [Audience
laugh] If you're trying to get your message across and you just
feel comfortable talking to people you're gonna be a lot better
off. And yeah, your pitch involves. Every time I give...I
tend to give a presentation on business plan writing or executive
summarizing every couple months, six months at least. I've never
given the same pitch twice. I keep on learning new things like
people would much rather hear stories than long, winded, point by point
bullet point descriptions, so I tend to forget about my slides and I
try to tell stories. I thought...I think this may be my last
slide. I thought I would tell you...and in all the things we've
talked about elevator pitch, executive summary and business plan, the
rank that I give you here and importance is the one I think that you
need to start with. When you're developing a business or an idea,
you need to communicate your ideas to other people. You gotta
say, "Okay, which one of these three things should I come up with
first?" And I really say the elevator pitch because you're gonna
have to go out and start talking to people immediately and shortly
after you start talking to people you're gonna get someone saying,
"Well, can you send me over an executive summary or can you send me
over something brief about your technology or your company so I can
learn a little bit more about it." And usually you shoot them a
quick e-mail and it's got an executive summary attached and then if
everything goes well they ask you the business plan. So that's
why I put the rank in this order. Each one opens the door to the
next one so you really need to make sure you got the first one nailed
before you move on to the second and then on to the third. Hey, I
was right. It is my last slide. I didn't wanna labor you
too hard with the elevator pitch because I know you guys only have 60
seconds and I think I took longer than 60 seconds but that's the story
so far. Any questions?
[ Pause ]
[ Background Noise ]
Okay. I would like to share this experience of mine. I was
successful in attracting attention from an investor, an angel or may be
not an angel, a member of HTC who did not ask me for an executive
summary but introduced me to a lawyer from HTC. I didn't know
what to tell that lawyer. I met him. It was nice to meet
him but I expected something more of somebody who was interested in the
business plan and the plan as a whole rather than the legal part of...
I think that's a pretty common problem. It is knowing why
people want meetings with you. And as a young company, you gotta
remember that you are the breeding ground for a lot of service
providers I think and I don't mean that in a bad way because the
service providers can really help young companies succeed but a service
provider would be someone like an attorney or an accountant who helps
you get your business off on the right footing and those people will
want to meet with you and they are very helpful. They can help
you set up your business appropriately but one of the things they can
do for you later on is if they like you and they like your business and
they think you're a trustworthy person, they make introductions
[audience coughs] for you. A lot of our business plans, the deals
that we do, do come from very close contacts that come out of the
accounting world or out of the legal world. There are some
consultants that work in very specific areas that bring us deals but
they're usually trusted professionals rather than somebody inside the
company 'cause more often than not we don't know someone in the
company. When I mean...when you see a thousand companies a year,
only a handful of them do you know the people inside and to put it in
perspective we've...I get a thousand companies a year, four years on
our first fund, I think 15 investments, 4,000 deals, 15
investments. We look at a lot of deals so you need to do
something and having a good introduction from an attorney can be
good. You just have to make sure you know what the meeting is for.
[ Pause ]
Thanks guys!
[ Applause ]
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