Musings of a Neophyte Entrepreneur
As a newbie in the business world, the length of my experience is limited to the past year. As a new biotech/medical business founder, I’ve had to learn a great deal of information about running a business. It’s not just about the basics of running a business, such as how to manage personnel, keep records, fill out paperwork, etc. These are things I learned how to do as an academic scientist at two different universities, right? Nope! I’m learning it all as I go. And one of the biggest lessons is that running a biotechnology startup means predicting revenue streams that you might tap in the future—several years into the future. As you might imagine, that can be problematic.
When your job is to develop new medicine, you have to face the reality that you will not have a single product ready to go on the market for years to come. If you don’t have a nice, shiny new product to show to potential customers, it’s impossible to get customers’ reactions, but you are still expected to make predictions about revenue to potential investors. And I don’t mean qualitative predictions, such as “We’re gonna make a boatload of cash because people are gonna love a new treatment that works better and faster than antidepressants!” Oh, no, no! Predictions have to be quantitative, such as “In year 1, we will collect $X million in sales from Y thousands of customers. Our assumptions include forecasts from Authority X (published in a slightly outdated but still hopefully reliable report) and trends in the prices of fairly (or really, minimally) similar products…” and so on.
Here’s another example: valuation. As an entrepreneur, you are expected to estimate the value of your fledgling company, again without even coming close to selling a product. This process of valuation involves intricate mathematical manipulations, based on assumptions, intuition, past performances of marginally similar companies (who almost never reveal their pre-investment valuations), divine inspiration, etc. And guess what? After you spend weeks working on a business plan, including an entire section devoted to financial statements that describe your valuation, investors can take the privilege of coming along and slashing your numbers in a seemingly arbitrary manner. That’s when the negotiations begin.
Now, I’m no stranger to math or making predictions. As a scientist, math has been a close friend for most of my life, and I’ve made plenty of predictions about scientific phenomena. That is what got me here, in the realm of medical entrepreneurship, in the first place. The main problem is that some of the predictions about the future of a startup business might as well come out of thin air.
So there’s got to be somewhere else I can look for these answers—or at least to figure out how to make better predictions, run a better business, etc. Here’s an idea I had. In my high school pre-engineering curriculum, we produced “source books,” which amounted to the sum of all our knowledge, gained from lecture notes, about a particular subject.
So, in the past year, I’ve been starting to create source books about entrepreneurship, running a startup business, predicting success, etc. I’ve read dozens of books on those topics, watched hours of YouTube videos, and taken more pages of notes than I currently have a count for. It’s easy to think that instead of making progress, I’ve regressed to the level of a source-bookwriting high schooler, but I fully expect that all of this work and learning will pay off in the not-too-distant future. In the meantime, I’m in it for the long haul. I love science, I love a challenge, and I love entrepreneurship. If you want to start a medical or biotech business, I suggest you love those three things as well—and if you’re not in the sciences, sub in the thing you do love to do and start learning more about it.
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