About Dr. Olivier Wenker Since 2001, Dr. Wenker is M. D. Anderson Cancer Center's Director of Technology Discovery. In this function, he has created a novel support mechanism for clinical and research faculty. The fund he manages created within a few years a multiple of 4 on value creation for the institution. Dr. Wenker also teaches entrepreneurship classes in collaboration with The University of Texas System. Dr. Wenker started his career as an anesthesiologist in 1985. He is triple European board certified in anesthesiology, critical care medicine and emergency/disaster medicine and holds the title Professor of Anesthesiology. Dr. Wenker served many years as emergency/trauma physician on board rescue helicopters, ICU airplanes, ambulances, and emergency physician vehicles. He worked as a trauma field physician, rescue diver, disaster medicine triage and lead physician, and served many years as chief of a medical team for special police forces. He was involved in over 700 rescue missions. In 2004, Dr. Wenker earned a Master of Business Administration degree from the Jones Graduate School for Management at Rice University in Houston, Texas, receiving the prestigious Jones Award for Academic Excellence. Dr. Wenker's special interests involve electronic publishing and the use of digital information for education. In 1996, he founded "Internet Scientific Publications, LLC." This online platform became the world's largest electronic medical publishing house. Approximately 15,000 daily readers enjoy the free medical content offered by the site. Dr. Wenker created and launched 64 online journals in the past nine years. He assembled over 1,000 international editors and reviewers and closely collaborates with over 60 editors-in-chief. For two consecutive years he won the esteemed ASA (American Society of Anesthesiologists) "Exceptional Merit for Outstanding Education in Anesthesia Award." In addition, he won over 20 awards for his online journals. Most recently he received the Golden Web Award presented by the International Association of Webmasters and Designers.

1. Landmines For
Entrepreneurs
Olivier Wenker, MD, MBA, DEAA
Director of Technology Discovery
Professor of Anesthesiology
MD Anderson Cancer Center

2. So, You Want To Start A Company

3. And That Will Be You, Right?

4. But This Is Your Near Future

5. Founders/CEOs
• Think hard before you jump into the
“cold water”
• Agree with your spouse/partner
• Talk to experienced entrepreneurs
• Find mentors: entrepreneurs,
accountants, lawyers,…
• When you jump…jump all the way!

6. Jump Baby Jump

7. How do Founders Stumble?
1
• Believing they can do everything
• Not sharing ownership in an equitable way
• Naïveté or lack of market knowledge
• Hiring mediocre people
• Stubbornness; not a good team player
• Domineering personality or style

8. Most Important Things Techies
Should Do:
1
• Hire strong, experienced people
• Operate to schedules and milestones
• Control expenses and cash burn
• Establish lean, mean, hungry, focused,
team-oriented company culture
• Bring in best possible CEO with sales and
marketing track record

9. Do “Academic” Founders Have It?
2
o Mostly R/D techies
Founders o Science, engineering background
o Often lack business skills,
management experience
o Most never exposed to sales
Founders’ or marketing
limitations o Don’t have MBAs
o Undeveloped right brain skills

10. Skill Set
Left: Right:
• exact calculation • estimation
• scientific • creative
understanding
• flexible/chaotic
• spreadsheets
• CMO
• CFO, CSO
Both but maybe R > L: CEO

11. What is a CEO?
5
• Chief Executive Officer
• The Boss (buck stops here!)
• Sets and cultivates the company culture
• Selected by and reports to the board of
directors
• Responsible and accountable for all
management and operations
• Leader and motivator

12. How to Find a CEO
5 • Contacts of founders, VCs, Angels, etc.
• Executive search firms
• Critical skills
– Matching chemistry to founders
– Take-charge leadership skills
– Wearing multiple hats
– Relevant sales, marketing, industry background
– Leader, motivator, team-builder
– Must be able to attract investors

13. Burning Through CEOs
• Startup CEO (#1)
– Raising money, starting company
• CEO # 2
– Growing company, raising more money
• CEO # 3
– Stabilizing company, running company
• CEO # 4
– Running large company (public or private)
– Exit (IPO, M&A, closing company,…)

14. Ownership
Be the owner of
2% of
100 % $ 1 Billion
Of Nothing

15. Some Observations
8 • Most deals are undercapitalized
• Management and founders will spend far more
time than they think to get financing
• VCs rarely say no! But they think…no way!
• You should learn the decision dynamics of
each VC firm
• Never run out of cash
• Don’t over-value the startup

16. How To Value?

17. Valuation
• Valuation depends on:
– Revenues (typically 2 to 4 times revenue)
– Other recent deals in the market
– Stage of development (important in drug
development)
– Potential future revenues
– Previous $$ investments and your time
invested is typically not valued much…but it
will get you equity

18. Valuation
• Over-valuing your company will do the
following:
– Make you look stupid
– Scare away savvy investors
– Result in a future down-round (devaluation)
– Prevent professional VCs from coming on
board with major money later on
– It might kill the company before it even had a
chance to survive

19. Asking $ And Financial Projections
• A frequent mistake:
– Asking for lets say $ 6 million
– Preparing financial projections for 5 years
– In the very best case scenario the revenues in “Year
5” is $ 6 million
– Why would anyone give you $ 6 million?
• You will never see the best case happening
• You have to calculate profit (not just revenue)
• A professional investor would not make a profit unless your
market is very large and it is accepted that development
takes more than 5 years (i.e. drugs)

20. Startup Financing
3 • Founder team usually focused solely on
current round needs
• Need clear milestones and schedules
• If met, constitutes a step-down in risk and a
perceivable step-up in value
• Important to plan ahead, design a
capitalization scheme, i.e. next round

21. But Be Prepared For This

22. …. And This

23. Over-estimating Markets
• Market might be large but very segmented
– Difficult to capture multiple segments
• Market windows might be very short-lived
– Fast moving technology
• Economic forces such as down-markets can
significantly interfere with buyer behavior
• You might not have enough money or staying
power to win against inferior product adapted by
many users

24. Over-estimating Markets
• Market might be large but buying cycles
might be very long
– For example hospital information system
• Great product … no buyers
– No paying customers
– No letters of intent (LOI)
– Building it does not mean that they will come
automatically

25. Under-estimating Competition
• At any given time there are at least half a dozen
working on the same great idea
• “Google” at least your idea to see if something
very similar already exists
• Investors have typically heard the same story
from different inventors
• If your successful idea is easy to copy (lack of IP
protection or low barrier of entry) your
competition will quickly follow

26. Focus
• Too many opportunities
– For example startup biotech with 10 new
drugs but no money to develop even 1 of
them
– Prioritize on 1 new drug and show others in
potential pipeline
• Too many features
– Get a first functional prototype and add
“whistles and bells” later

27. Timing

28. Marketing Materials
• Have them ready
• Update them regularly
• Synchronize them
• Use different messages for different
audiences
• Keep them clean and short

29. Marketing Materials
6 • From restaurant napkin to bound book
• Best plan is 15-20 pages, succinct, complete
• 2-3 page executive summary
• 12-15 page PowerPoint presentation
– Mission, milestones, product, market,
financing, human resources, value proposition
• Need crisp elevator pitch
• Trifold brochure… “always selling”

30. Intellectual Property Issues
7 • Patents, disclosures
• Licenses, terms
• IP ownership:
– Prior employer issue?
– Co-inventors?
– Overlapping claims with other IP
– Similar technology, same claims
• Trade secrets, know-how

31. Conflict Of Interest

32. Conflict Of Interest
• If you work for an employer at the time you
are starting or are working with an outside
company you will have to disclose financial,
ownership, and other interests
• Most academic institutions have a Conflict-
Of-Interest (COI) policy
• Entrepreneurs who are still employed will
have to play by the sometimes crippling rules

33. Conflict Of Interest
• Every faculty member at MDACC has to
submit a yearly Conflict-Of-Interest disclosure
• Full financial disclosure required to COIC;
includes family (spouse, dependent children,
family trusts or corporation and other known
relationships)
• Full financial disclosure in publications or oral
presentations

34. Conflict Of Interest
• You cannot serve as member of Board of
Directors or officer (such as CEO) of for-profit
company or competitor of UTMDACC
• You can obtain temporary permission to
serve as CEO
• No sponsored research is permitted at
MDACC in which payment depends on a
specific outcome

35. Conflict Of Interest
• State resources such as MDACC property
cannot be used for consultancy or
employment with an entity other than
MDACC
• The same is true of the MDACC name
• Consultant fee limits:
– 50% of base salary in 12 months from all sources
– 25% of base salary in 12 months from one source

36. Conflict Of Interest
• Company ownership rules: you cannot own
more than:
– 50% interest in privately-held company (that
includes ownership by your family!)
– 5% interest in publicly-traded company
– 20% in private company at time of IPO
• Faculty cannot be principal investigator of or
primary physician for a patient on a trial if
he/she has equity in sponsor company or
receives cash > $10,000 per year

37. Common Board Problems
9 • CEO loads board with cronies
• Divided camps of interest
• Big names are good…but they need to
contribute
• Inadequate agenda for board meetings
• “Once-over lightly” financial scrutiny
• Board member or CEO micromanagement
• Clash of egomanias

38. Common Pitching Mistakes
10 • Being caught short… no elevator pitch
• Poor competitive assessments
• Inadequate IP
– Minimal proprietary uniqueness
– Overlapping competitive patents
– Stating “we have patents” when patients were filed
but not yet issued

39. Common Pitching Mistakes
10 • Sloppy bios
• Poor references
• Inconsistent format of presentation materials
• Serial pursuit of prospective investors
• Egomania, naïveté, stubbornness
• Failure to show entrepreneurial zeal

40. Common Pitching Mistakes
10 • Unprepared, half-baked presentations
• Presentation too long and too technical
• No passion, no story that sticks
• Reading the slides with too much stuff on it
• You are not applying for a NIH grant and you
are not defending a thesis … you are trying to
capture the interest of a potential investor

41. Common Pitching Mistakes
10 • Don’t become too “sticky” with potential
investor
• Remember, first contact is not intended for a
2 hours presentation
• Give him/her some privacy in the rest room
• If investors calls the police and has
restraining order issued .. You probably
over-did it

42. Top Ten Mistakes Made by
Entrepreneurs (and Investors)
• Mistake No. 10: Failing to form an entity early
enough
• Mistake No. 9: Issuing founder shares without
vesting
• Mistake No. 8: Failing to:
– Understand the tax effect of issuing stock or options
– Make a timely Section 83 (b) election
by Paul Pryzant, Burleson LLP

43. Top Ten Mistakes Made by
Entrepreneurs (and Investors)
• Mistake No. 7: Negotiating venture capital or
angel financing based solely on valuation
• Mistake No. 6:
– Failing to do due diligence on your investors
– Taking money from the “toxic” shareholder
• Mistake No. 5:
– Promising more in the business plan than can be
delivered
– Failing to comply with state and federal
securities laws
by Paul Pryzant, Burleson LLP

44. Top Ten Mistakes Made by
Entrepreneurs (and Investors)
• Mistake No. 4: Failing to:
– Have an intellectual property strategy to understand
what IP the Company has and how you need to
protect it
– Waiting too long to implement your IP strategy
• Mistake No. 3: Disclosing inventions without a
nondisclosure agreement, or before the patent
application is filed.
by Paul Pryzant, Burleson LLP

45. Top Ten Mistakes Made by
Entrepreneurs (and Investors)
• Mistake No. 2:
– Starting a business while employed by a potential
competitor
– Hiring employees without first checking their
agreements with the current employer and their
knowledge of trade secrets
• Mistake No. 1:
– Thinking any legal problems can be solved later
– Hiring a lawyer not experienced in dealing with
entrepreneurs and venture capitalists
by Paul Pryzant, Burleson LLP

46. Think Twice Before You Say This

47. Think Twice Before You Say This
• We have first-mover advantage:
– Is this advantage or disadvantage?
• Our projections are conservative:
– Be realistic
– Startups should not be conservative; they are
usually aggressive (but stay within the truth)

48. Think Twice Before You Say This
• We have no competition
– Yeah, right; are you kidding me?
– At least do a Google search
• We are truly disruptive
– Investors look for disruptive technology
– But can take long time to develop

49. Think Twice Before You Say This
• We only need 1% of the market:
– Well, that first 1% is the most difficult to get;
why stop when you finally got it?
– What investor wants only 1% of the market?
– Overall, market sizes and sales projections
are usually over-estimated (might be OK for
an aggressive startup if not grossly over-
stated)

50. Think Twice Before You Say This
• We have a great CEO lined up and he will
join as soon we raise the money:
– What do you need this guy for? His job is to
raise money!
– Why does he not join you now? Does he not
believe in you and your business?

51. Think Twice Before You Say This
• We have strong interest from major
customers:
– Wishful thinking???
– Show me the money (LOI, order,…)
– Get a letter of intent
– Have paying customers is usually much better
than having “strong interest”

52. Think Twice Before You Say This
• Several VC’s are very interested and will
get back to me:
– Why did they not get back to you if they are so
hot on your idea?
– Were they just friendly?
– Were you invited to present to them directly?
– Wishful thinking?

53. Do This
• Know your pitch
• Know your target audience
• Know your market
• Know your projections
• Know your competition
• Be prepared to support your statements
• Know what you are asking for (value proposition)

54. Watch And Learn
• Learn from others
Watch some episodes on www.abc.go.com/shows/shark-tank/

55. The Problem
• You have an idea and need $$$$
• How do you go about raising money
• What things do you need to have
ready to go
• Remember: Success comes when
opportunity meets preparedness

56. What is your primary goal?
To raise positive awareness and
money

57. What is your goal?
To get a meeting
To be remembered
To raise interest

58. What is NOT your goal?
To summarize your entire business
plan
To look like you don’t know what
you are doing
To be remembered for the wrong
reasons

59. Stories are interesting.
Scientific facts are mostly boring.
Unless you are applying for a
scientific grant.

60. Stories That Stick
• Friday the 13th is an unlucky day! This is a
story that sticks!

61. Friday The 13 th
• Movies have been created around
this topic
• Many, many, many people around
the world believe in this
• Is it just an Urban Legends that sticks
or is there more to it?

62. Friday The 13 th
• It is the most widespread superstition in
the United States today.
• Some people refuse to go to work on
Friday the 13th
• Some won't eat in restaurants
• Many wouldn't think of setting a
wedding on the date
• Many will not travel that day

63. Friday The 13 th
• A medical study published in one of the most
prestigious medical journals (British Journal of
Medicine) investigated the relation between
health, behavior, and superstition surrounding
Friday 13th in the UK
• The investigators collected data on:
– Numbers of drivers on the streets
– Number of shoppers in malls
– Number of admissions in hospitals

64. Friday The 13 th
• The results of the study:
– Significantly and consistently less vehicles on
the street
– No difference in shoppers
– Significant increase in hospital admissions
(risk of admission increased by 52%)
• Recommendation: Staying home on
Friday 13th is recommended

65. Friday The 13 th
The real reason behind it:
The Knights Templar
Friday, October 13, 1307

66. Friday The 13 th
• Self-fulfilling prophecy
• At least 21 million Americans believe this bad-
luck fact and change their lives around to
avoid certain activities around that day
• Almost no one knows really where the story
came from but it certainly “sticks”
• A “sticky idea” is understood, its remembered,
and it changes something

67. Suggested Reading
• Hardcover: 291 pages
• Publisher: Random House;
1 edition (January 2, 2007)
• Language: English
• ISBN-10: 1400064287
• ISBN-13: 978-1400064281
• Price: US $ 15.26
http://heathbrothers.com/madetostick/

68. Messages To Your Audience
• Investors like to hear:
– You have a great story to tell
– You have something novel (disruptive)
– You can deliver the technology/product
– You have a large market
– There is a great need for your technology

69. Messages To Your Audience
• Investors like to hear:
– There are barrier to entry for competitors
– Customers are willing to pay for your
technology/product
– You are credible and believable
– You can also listen
– You have thought about reasonable
financials

70. Messages To Your Audience
• Investors do NOT like to hear:
– There is no product yet but you think the
company is worth tens of millions
– You are willing to give away 10% of your
company for $ 5 million (remember all
those unreal business propositions on TV
“Shark Tank”)
– There is no competition (there is usually is)
– You know it all (the investors and others
may also know some things)

71. What’s on your tombstone?
• How do you want to be remembered?
– “Oh, yeah. He’s that guy with the…?”
A. Delaware C-Corp…
B. 62 really impressive scientific advisory board
members that I’ve never heard of…
C. A cool way of making sure that lung cancer
patients survive.. (the story that sticks)
Paul Campbell: Ideas On Fire Series by O. Wenker

72. Real Showstoppers
10
• Incompetent CEO
• Excess product development risks
• Troubling intellectual property issues
• Inattention to cash management
• Inadequate capitalization plans
• Unrealistic valuations
• Poor market understanding

73. Real Showstoppers
10 • Lack of focus
• Overly optimistic sales forecasts
• Underestimation of competition
• Don’t know what you don’t know (how
do you know that they will buy it …I just
know)
• Unable to describe business or
opportunity in 30 seconds

74. Conclusions
• Success comes when preparedness
meets opportunity
Be prepared: Wait for the opportunity:
• Elevator pitch • Business plan competition
• Executive summary • Venture meeting
• Business plan • Introduction to investor
• Slide presentation • Any other opportunity
Success

75. From This …..

76. ….To This

77. Good Luck

78. What Now?
• If you want to learn more about
entrepreneurship and about how to
start your company
• Take for free 17 online modules at the
Entrepreneur’s Academy
• Go to: http://loyacenter.utep.edu/ut-
transform/entrepreneurs_academy.ph
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