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Letter from the Editor-In-Chief
                     Welcome to the second issue of JayStreet. This journal is

Do You Have What it Takes?
      By Stephen Sihelnik, page 6
Business School: Who Needs It

      By Ilya Subk...
A World Without
The Untold Story of Conquest Software
By Andrew Pevsner

   It is difficult to believe that in just...
commercial power was just begin- ously consider: a very lucrative offer Addison was solely a business deci-
ning to be rea...
                                           Who needs it?

Law One: Network, Network, Network.
       Mike Huerta, Johns Hopkins ’06, Applied Math & Statistics, is co-founder of the...
dustry, and work your way along the career path towards that start-up you want to create.” Students often
forget that they...
How Much I$ That MBA?
By Stephen Sihelnik

   Even though getting a Business are now five schools where the           $1...
Anatomy of a

 By Ilya Subkhankulov

  Peter Boneparth, former CEO of to Jones Apparel, allowing the lat- shar...
try, dominated by big names such       small as Jones rarely stands up to York, a luxury retailer. Jones’ back-
as Polo Ra...
On Your Mark, Get Set,

      Running A Business of Running
By Brett Schwartz

  Running a marathon is one ...
Mile 3-4: “The thing is, everybody wants to be a winner. And when you’re
             psyched up, you’re willing to make a...
Mile 26: “It was the simple keeping of a promise to oneself, to finish, to try.
Endurance athletes are created by that dec...
The Idea Behind Entrepreneurial Thinking
By Dory Giannos and Brett Schwartz

 Not all entrepreneurial ideas stem from an a...
Staying On Top: Innovating To Remain Profitable
                 An Interview With A Successful Entrepreneur
points were, where we could help. The introduction       customers’ desires, like this new “line of sight” fea-
of the 64-...
pete and award this fairly. In the private industry        fired for this. When government agencies that are
it is more li...
Planting the Seed for
By Dory Giannos and Jose Deschamps

  Although biotechnology dates           lated agencie...
facilities and funding. Technolo- understanding with the County was fostering biotech through in-
gy transfer is the proce...
and the most recent one was built     Germantown headquarters of-         politan area and 16% in Frederick
in 2008. The l...
is formulating its own biotech
                                                                          hub in quest of c...
Biotech              Davids
    Struggling Pharmaceutical
ent rights, and convince physi-      and more research-focused bio-         als, the industries that do manu-
cians to pre...
It’s much easier for these multi
billion dollar pharmaceutical cor-
porations to buy innovation than
to innovate. As Rosen...
Social Networks:
 Are they becoming a                         Nuisance?
 By Elizabeth Lenrow

  How many notifications hav...
version of the relationships we      ple to create a fictitious persona.          my daughters were using the site.
have i...
The Johns Hopkins Journal of Science and Entrepreneurship 2009
The Johns Hopkins Journal of Science and Entrepreneurship 2009
The Johns Hopkins Journal of Science and Entrepreneurship 2009
The Johns Hopkins Journal of Science and Entrepreneurship 2009
The Johns Hopkins Journal of Science and Entrepreneurship 2009
The Johns Hopkins Journal of Science and Entrepreneurship 2009
The Johns Hopkins Journal of Science and Entrepreneurship 2009
The Johns Hopkins Journal of Science and Entrepreneurship 2009
The Johns Hopkins Journal of Science and Entrepreneurship 2009
The Johns Hopkins Journal of Science and Entrepreneurship 2009
The Johns Hopkins Journal of Science and Entrepreneurship 2009
The Johns Hopkins Journal of Science and Entrepreneurship 2009
The Johns Hopkins Journal of Science and Entrepreneurship 2009
The Johns Hopkins Journal of Science and Entrepreneurship 2009
The Johns Hopkins Journal of Science and Entrepreneurship 2009
The Johns Hopkins Journal of Science and Entrepreneurship 2009
The Johns Hopkins Journal of Science and Entrepreneurship 2009
The Johns Hopkins Journal of Science and Entrepreneurship 2009
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The Johns Hopkins Journal of Science and Entrepreneurship 2009

  1. 1. Letter from the Editor-In-Chief Welcome to the second issue of JayStreet. This journal is entirely the product of an advanced entrepreneurship and communications class offered by the Center for Leadership Education (CLE), part of the Whiting School of Engineering. In September 2009, thirteen students from a variety of majors on the Homewood campus enrolled in the workshop, some flirting with the notion of starting a business someday, others drawn to the opportunity to write, design and produce a magazine and still others who wanted to meet people who had turned ideas into successful enterprises. Over the course of the semester, these students formed teams, interviewed and worked with en- trepreneurs, absorbed business principles, created covers and layouts, wrote draft after draft, and edited each other’s work. Very simply, they fully engaged in the process. The articles, in- terviews and graphics in this Journal represent their take on the bustling intersection of science and entrepreneurship. This journal would not have been possible without the sup- port of the Center for Leadership Education and the Develop- ment and Alumni Relations Office of the Whiting School. In particular, I want to thank Robert Spiller, Associate Dean for Development, and Development Coordinator Mike Blow for identifying several of the entrepreneurs who worked with us all semester. We owe special thanks, as well, to Montserrat Capdevila, former President of the Hopkins Biotech Network, who generously volunteered her time, expertise and talents to us, recruiting speakers, creating our website (www.hopkinsjay- street.com) and providing expert advice in too many areas to enumerate. Niki Buchholz, our tireless Course Assistant, de- serves special thanks, too, for being there for all of us, keeping the classroom technology – and the copier – always going. Fi- nally, I would like to thank the entrepreneurs themselves, who generously gave their time, energy, insight and guidance to me and to all the students enrolled in Creating JayStreet. Read, think and engage with us. Pamela H. Sheff, Ph.D. Lecturer, Professional Communications Program Center for Leadership Education 2 Fall 2009
  2. 2. CONTENTS Do You Have What it Takes? By Stephen Sihelnik, page 6 Business School: Who Needs It By Ilya Subkhankulov, page 10 Anatomy of a Dealmaker By Brett Schwartz, page 12 Running a Business of Running By Dory Giannos & Brett Schwartz, page 15 The Idea Behind Entrepreneurial Thinking By Kyle Halleran, page 16 Staying on Top: Innovating to Remain Profitable Doing Business in the 21st Century By Andrew Pevsner, page 4 A World Without Google By Elizabeth Lenrow, page 26 Social Networks: Are they Becoming a Nuisance? By Chelsea Gonzalez, page 29 Academia: Cultivating More than Intellectuals By Alex Qian, page 39 Guanxi & Entrepreneurship in China Biotech- Beyond Biology and Technology By Dory Giannos & Jose Deschamps, page 19 Planting the Seed for Biotech By Jose Deschamps, page 23 Maturing Biotech Davids & Struggling Pharmaceutical Goliaths By Sean Hennessey & James Teta, page 32 What is Biotechnology & Why Does it Matter? By Michael Brooks, page 34 BME Design Team: Cultivating the Next Generation of Biotech Entrepreneurs JayStreet Journal 3
  3. 3. A World Without Google The Untold Story of Conquest Software By Andrew Pevsner It is difficult to believe that in just a keyword search, while ConQuest’s source of Google’s competitive ad- ten years, Google has grown from a engine was concept-based. vantage over other keyword-based Palo Alto basement to an irreplace- As the name implies, keyword engines. But even Google cannot able destination for millions of Inter- searches simply attempt to match a beat concept-based engines when it net users every day. Google has come given word to either the content or comes to searching ability. to dominate nearly every sector of title of a website. Engines then in- Concept-based search engines use web usage and has become such a dex the results; how well they do so algorithms built around artificial in- strong influence on everyday life that determines their success level. The telligence theory to mimic human it was added to the Oxford English relatively simplistic nature of this thought processes, searching for Dictionary in 2006. Its unprec- underlying meaning in keywords edented growth, hip image, and rather than simply identify- unparalleled success have given ing similarities. The software is Google an iconic, rock-star status so complex that it works in es- among companies in all indus- sentially the same way that any tries. It is one of the coolest and translator does. There is just one most influential corporations small difference—its translation in the world, and arguably the most matching process forces users, rath- enables communication between hu- highly sought after employer in the er than the search engine, to find the man language and computer code. United States. But what if it had nev- precise words that will deliver the For users who want to search through er existed? most relevant results. anything electronic, whether it’s a Before Google Founders Larry Page Page and Brinn turned a small in- local collection of files or the entire and Sergey Brinn had even met, Ed- novation into multi-billion dollar Internet, an effective concept-based win Addison was running ConQuest, fortunes by providing Internet us- search yields much more highly tar- a search engine company based on ers with the best available keyword- geted results than even the best key- artificial intelligence that earned based search engine on the web. word searches. Addison “Entrepreneur of the Year” Their brilliance was not in creating a But if concept-driven searching is honors in 1994 from the Information new way to match words to sites, but so much better, why do we tell our Industry Association. Like Google, in developing an innovative and su- friends to google something when ConQuest’s success was predicated perior method of indexing and rank- we want information, instead asking on search innovation. However, the ing the results returned during the them to “ConQuest it?” two search engines worked in com- matching process. This complex and Ed Addison founded ConQuest in pletely different ways: Google uses mostly secret ranking system is the the late 1980’s, when the Internet’s 4 Fall 2009
  4. 4. commercial power was just begin- ously consider: a very lucrative offer Addison was solely a business deci- ning to be realized. By the mid-90’s to sell the company to Excalibur, a sion. An Internet search engine was the economy was beginning to grow firm specializing in multimedia re- an exciting and tempting new fron- at an increasing rate but the Inter- trieval software. tier with the potential to net billions net was still in its infancy. In 1995, While many thought the Internet of dollars. But it was also the costli- Addison was running est and riskiest option, and a successful software carried an equal potential to company in a healthy destroy the company. How Do We Search? economy. His concept- After thoughtful delibera- driven searching soft- tion, Addison and his man- Keyword Based ware, designed using agement team decided that Matches search words to websites complex algorithms and putting ConQuest online was Returns hits based on exact word matching artificial intelligence, too risky; the time it would Ranks sites based on levels of similarities boasted capabilities take to net the additional never before seen. He Match what search words are ‘‘about’’ with websites capital required would have Concept Based had created large barri- Returns hits based on theme or subject of your search given keyword based search ers to entry for potential engine companies too big competitors and was of a head start in acquiring Ranks based on relevance to underlying meaning facing a market on the market share and establish- verge of exploding. On the surface, was the next frontier, taking Con- ing brand name. He decided to sell the future appeared to hold nothing Quest online was a risky proposition ConQuest and was rewarded hand- but smooth sailing. In reality, Addi- that would require millions of dollars somely for his work. The battle be- son faced a difficult crossroads that in additional capital. Concept-based tween keyword and concept search- had the potential to drastically alter searches do yield better results. But es, Google and ConQuest, was not to the path of the entire technology in- better results require better algo- be. In all likelihood Addison made dustry. rithms, which are more difficult and the right business decision. But his If ConQuest was going to become a expensive to create and maintain. story does leave room for the ques- dominating force in the industry, the More importantly, concept-based tion: what if? natural next step was to take its tech- searching requires the use of expo- nology online and reach the millions nentially more data. of potential users that the Internet Storing and analyzing this data provided. But this is easier said than requires larger and more powerful done, and Addison had several fac- servers. More servers mean more tors to consider. His company was money. To paint a picture, some es- Thoughts For the doing very well with several large timate that Google’s 450,000 servers Concept-based search- Future: clients, and would likely continue to run up monthly bills of over $2 mil- ing is currently dormant flourish selling software directly to lion in electricity charges alone. Add but may not be dead. As customers. Launching an Internet initial hardware and other mainte- computing costs con- search engine would require an en- nance costs, and Google’s costs range tinue to come down, tirely new and foreign business mod- in the tens to hundreds of millions concept-based engines el, the likes of which did not exist at of dollars annually. And remember, may be able to compete the time. Google’s model, which was keyword software like Google’s de- created by first attracting as many us- mands far less computing power than ers as possible and then figuring out ConQuest’s software would have. with keyword search- how to make money, violates nearly It is easy to forget that corpora- is currently in the midst es. Ironically, Google every historically standard rule of tions are built and run by human be- of internal research business and has succeeded only be- ings who have to make decisions just revolving around solar cause of incredible innovation and like everyone else. While technology technology that could pioneering. There was also a final might have dictated that ConQuest go bring down computing option that Addison also had to seri- online, the decision that confronted costs by as much as 60%. JayStreet Journal 5
  5. 5. Business school Who needs it? I’ll tell you who. By Stephen Sihelnik What next? As a budding entrepreneur, you should (hopefully) be finishing up university and looking towards the future. As you think about what you’ll be doing next, you keep hearing those magic two words ring out in your head. You know, the two words that make everything better: business school. Sure, you need a little work experience before you head off to business school, but after that, you’re set, right? Right? “Wait a minute.” That’s the response I’d get from some of the entrepreneurs I’ve met with. In their eyes, the business school route is only one of the many paths you could take to get your business education. Heck, even some professors at MIT might not think that business school is the way to go. Andrew Lo, of MIT’s Sloan School of Management, is fond of pointing out that in the physical sciences, three laws can explain 99% of behavior, whereas in finance 99 laws can explain at best 3% of behavior1. Is all that education—and money—really only worth 3% of your time? Professor Lo commented on finance—what would he have to say about the laws of Entrepreneurship? If Entrepreneurship had 100 laws, could these laws explain any of its behavior? Would learning those laws even be a benefit? The fact is that many, if not all entrepreneurs consider education to be a great thing; however, being in the correct mindset while you are at business school makes the difference between a scrap of paper and a true pedigree that you can be proud of. I talked with several entrepreneurs about what it takes to start your own business. Using Professor Lo’s idea, I molded their advice to explain some of the laws of entrepreneurship. 6 Fall 2009
  6. 6. Law One: Network, Network, Network. Mike Huerta, Johns Hopkins ’06, Applied Math & Statistics, is co-founder of the solar enterprise start-up BrightPath Energy. BrightPath Energy integrates the renewable energy of solar power into struc- tures that are in their construction phase. Huerta noted that the level of rigor and discipline required at university prepared him for his job at Lehman Brothers right out of school, “After a certain level of intelli- NETWORK gence, networking becomes pretty important. Constantly meeting people and making new relationships is key, no matter if they are with a professor, an associate at a private equity firm, or a fellow undergraduate.” Huerta began looking at the renewable energy space when Lehman Brothers started to go under. Utilizing his contacts through family and work, he was able to found BrightPath Energy. In fact, one of the colleagues that sat next to him at Lehman became the other co-founder of BrightPath Energy. Do yourself a favor and ask for a rolodex for Christmas. Law Two: Don’t be one-sided. Do what you love. Of course, networking isn’t everything that university or business school is about. Who could forget the classes? Edwin Addison, who received his Masters in Biomedical Engineering and his Ph.D in Computer Science from Johns Hopkins, is the founder of TeraDisc, a high performance modeling and simulation ap- plication. After earning his Ph.D, Addison started teaching at Johns Hopkins as a doctoral fellow. Addison met a bright grad student in one the programming classes he was teaching. He found out just how bright he PASSION was when he “took a 100 line coding assignment and turned it into a 5,000 line project—and finished it in the time it was assigned.” Addison realized the potential this student held, and reached out to the student to work on a project that Addison had in the back of his mind. This project turned into ConQuest, a concept- based search engine (opposed to Google’s keyword based one). Addison successfully exited from ConQuest and proceeded to found Powerize.com, another search engine. Again, he exited successfully, this time just before the bursting of the dot-com bubble. After this exit, Addison decided to help launch TeraDisc, a high performance modeler and simulator venture. Addison stated, “For budding entrepreneurs, find and study something that you are passionate about, not something that you think will make you money. Do things so you can become a better person-not for the resume, but for yourself. You want to be a well-rounded person coming out of school.” Law Three: Tweak the degree, and yourself. During finals week, it’s easy to forget that there’s another world out there. Unfortunately, sometimes what we are studying may not totally translate to your first job or venture after you graduate. Raul Me- drano is currently taking classes part-time in the Johns Hopkins University Carey School of Business MBA Program as well as working as a business development specialist for the Montgomery County Department of Economic Development (DED). He has over 15 years of experience in the business development, project management, and sales and marketing fields. Medrano has much to say on the translation of your degree to your future job or business. TWEAK “In professional life, there is always tweaking. You have to in order to succeed. The college degree is not an automatic recipe for success; it helps prepare you, but ultimately it’s what you, the individual with your personal life, academic, and work experiences, bring to the table.” Law Four: Experience before Entrepreneurship. Addison also noted that entrepreneurs shouldn’t rush to start a venture right after school: “don’t just jump in [a venture] without having experience in the industry you have a passion for. Find a job in that in- JayStreet Journal 7
  7. 7. dustry, and work your way along the career path towards that start-up you want to create.” Students often forget that they have been living in a sheltered environment for the past 4 years, which sometimes leads to a false sense of security. Chris Parker is the founder of Applied Imagery, which uses technology created at the Johns Hopkins Applied Physics Laboratory to produce 3-D visualization and exploitation software. Parker’s electrical engineering degree was a strong attractor for those hiring him straight out of school. He landed a position in sales, and has progressed phenomenally since. “Usually, positions that are offered to those coming out of undergraduate require knowledge from university classes, but from then on, your skill EXPERIENCE sets progress with your job experiences.” He stressed, “part of my success with Applied Imagery stems from past jobs that taught me lessons and new skill sets that are applicable to my current position.” Parker also noted: “Entrepreneurial aspects, the ‘soft skills’, cannot be learned in the classroom-you’d be fooling yourself if you thought they could.” This would also apply to business school—however, in most cases, people have had work experience before going back to school for their MBA. Medrano urges those in school to “apply for internships [paid or unpaid], shadowing the CEO, VP of Marketing/Business Development, and so on for various companies.” Law Five: Surround yourself with advisors. Mike Ionescu, Johns Hopkins ‘06, Writing Seminars, took a path towards a venture that few decide to take. Ionescu originally was turned on to business by talking classes with Professor Aronhime, who teaches In- troduction to Business in the Center for Leadership Education. After entering business plan competitions every year from his sophomore year on, he realized that one of his business plans could actually become the basis for Ionescu Technologies. Instead of going to work for someone straight out of university after graduation, Mike took the path less traveled and founded Ionescu Technologies. Ionescu Technologies is ADVICE an interactive marketing company that puts information in front of users through touch screen kiosks. “Constantly surround yourself with advisors”, said Mike. “They are a great sounding board that you can bounce ideas off of, at any time.” Advisors are there to help you through critical evaluation, and the more you have, the better. By finding advisors from different fields, you can have different experts from all areas of the world of business (or other fields, such as academics) expose the strengths and weakness of your own ideas. I wasn’t kidding about asking for a rolodex. Law Six: Read. I know, I know—what an anticlimactic law. But as anticlimactic as it is, reading is even more important to determining the success of an entrepreneur. Medrano advises, “Start reading books in self-improvement and entrepreneurship, as well as biographies of success people in life in general. There are common char- acteristic traits among successful business people and that is what each person needs to discover on their personal journey.” Biographies may just seem like a colorful way to pass the time, but the more you read about the Andrew Carnegies and the John D. Rockefellers of the world, the more you will see what traits it really takes to become a successful entrepreneur. READ So there we have it. Those still in university now have a couple of laws to live by—as do those who are gearing up for Business school. Let’s try and answer our original question. Is Business school worth it? Most people agree that a university creates a doorway to vast opportunities in the real world, and to step through that doorway, nine times out of ten you need to receive that degree. But what about Business school? Your MBA can be useful, but it depends on your own perseverance and ability to do more than just “go through the motions.” Use some of the laws of entrepreneurship to enhance your education on all lev- els. All that leaves is this: Are you up to the challenge? 8 Fall 2009
  8. 8. How Much I$ That MBA? By Stephen Sihelnik Even though getting a Business are now five schools where the $100,000 may justify this short- school education does not neces- total cost of an MBA is well over term cost (a mighty one, at that) sarily mean “Pass go, as a long-term benefit1. collect a large signing While many salivate over bonus, proceed di- the long-term compensa- rectly to financial ser- tion benefits that come vices,” 30% of Harvard with procuring a top-tier Business school gradu- MBA, a certain class of ates did just that after bold, brazen warriors graduation in 20061. scoff at the idea of a base So what are Business salary or job security. I’m school Graduates get- talking about the entre- ting out of their educa- preneurs of the world. If tion? those who attend business We certainly know school plan on forming what they are putting their own business—the in. Pricing has become If you want to join these Harvard Business School 2% “other” category for a very controversial HBS’s graduating class grads, you might need a few loans. issue—we’ve entered of 20062—can they really the era of the $100,000 justify going to business degree. There are places where $100,000—three times over, school? getting an MBA—nothing more in fact. Wharton ($320,000), than tuition and required fees— Harvard ($308,300), Chicago is hitting the six-figure area. Har- ($305,965), Stanford ($302,664), 1: http://www.nytimes. vard Business school ($101,660) and Columbia ($301,178) can pat ness/yourmoney/11harvard. com/2006/06/11/busi- and Wharton ($100,860) are two each other on their respective html?pagewanted=3&_r=2 of the characters on that exclu- backs for making that list2,3. If 2:http://www.businessweek.com/ sive list, with Duke ($99,906) money was the only factor in- bschools/blogs/mba_admissions/ dying to get in2. But it’s fool- volved in deciding whether or archives/2008/10/business_school_2. ish to think that just tuition and not you should pursue an MBA, html 3:Estimates based on 2 year MBA with required fees make up the pric- short-term costs might put many forgone salary of $100,000/year. ing for an MBA. You still have to people off from attending. But 4: picture courtesy of add in the cost of living, as well those who follow that reasoning http://images.google.com/ as the opportunity cost of hav- fail to see the bigger picture—in imgres?imgurl=http:// ing to forgo your salary to attend compensation, at least. For HBS cache.daylife.com/ Business school. With these graduates, a median base salary significant factors added in, there in a first job after graduation of JayStreet Journal 9
  9. 9. Anatomy of a Dealmaker By Ilya Subkhankulov Peter Boneparth, former CEO of to Jones Apparel, allowing the lat- sharply with the typical Seventh Jones Apparel Group, an American ter company to diversify to the Avenue fashion experts. His expe- designer, marketer and wholesal- middle market and thus a larger rience centered on bringing fash- er of branded apparel, is a deal- customer base. Appointed as CEO ion companies public, not catering maker. After spend- to consum- ing years as a prime ers. After time lawyer at a ma- meeting jor Manhattan firm Boneparth, and an investment it is easy to banker at mid-size see why: Mabon Nugent, he his manner- took the reins at Mc- isms and Naughton Apparel speech are Group (then called gracious yet Norton McNaugh- blunt and ton). By his own unadorned. measure, this was a As a leader, risky move at best, Boneparth but nonetheless a made dif- risk he was willing ficult deci- to take. He explained sions un- to me that under- waveringly. standing your own He hired Barney’s New York was Boneparth’s big time acquisition for risk profile is key to and fired Jones Apparel Group planning your career. Jones’ retail In his case, leaving division chief a successful management posi- of Jones one year later, Boneparth Heather Pech because she failed tion in investment banking was a saw himself as part of a plan to to hit revenue targets. During change he felt comfortable with. further expand Jones’ brand port- conference calls, sales figures and After two years as president of folio and adapt to changing mar- forecasts were delivered frankly McNaughton, Boneparth orches- ket conditions. A professional and straightforwardly. trated a deal to sell the company manager, Boneparth contrasted At the time, the fashion indus- 10 Fall 2009
  10. 10. try, dominated by big names such small as Jones rarely stands up to York, a luxury retailer. Jones’ back- as Polo Ralph Lauren, had begun a celebrity designer powerhouses end logistics and excess capital paradigm shift in the way clothes like Ralph Lauren. This experi- would help Barney’s expand and are designed, marketed and pur- bring products to market faster. chased. Department stores, key Barneys seemed out of place in to Jones’ business model, suf- Jones’ mid-price brand portfolio, fered as consumer culture moved but Boneparth held firm; he be- away from brand names towards lieved in the brand, the manage- consumer-centric stores such as ment and its growth potential. Target and the Gap. Thus, rela- While the Barney’s deal met criti- tively small firms such as Jones cism from industry players and and Liz Claiborne began acquiring the press, it turned out to be an brands to expand their customer. excellent investment for Jones, A licensing partnership with Polo returning $937 MM on an invest- Ralph Lauren enabled Jones to ment of just $400 MM. sell clothes under the Polo brand. Despite this success, Boneparth The eight year partnership was and Jones parted ways abruptly in very lucrative for both firms, but 2007 after six years at the post. in 2003 sales fell, reflecting a de- With department stores selling cline in department store sales. their own apparel lines, thereby Through a clause in the contract, decreasing supplier’s customer Polo played hardball with Jones: base, Jones’ Board of Directors double our royalty fees or we take disagreed with Boneparth and or- back our brand. After negotiations chestrated his exit after he failed and concessions on both sides, the to sell Jones at a good price to pri- parties agreed to close operations vate equity firms. in 2004 and Polo would buy back Peter Boneparth spent his time Polo Jeans. at Jones developing its brand A major snag arose when value, making deals and cutting Boneparth learned that the sale costs. His performance was affect- would yield unsustainable tax ed by many externalities; judg- consequences for Jones. Meet- ment was very harsh and very ing with Polo executives in their public. But his experience helped conference room, he wanted new solidify his retail expertise and he terms for the agreement. Polo is now a Senior Advisor at Irving executives refused. After a short Place Capital Partners, a private recess, Mr. Boneparth announced equity firm, and specializes in the that “We just sued you.” Polo retail sector. He now concentrates Peter Boneparth countersued two hours later. ence helped shift Boneparth’s solely on private equity deals that Jones immediately cut production game plan out of licensing deals call upon knowledge acquired on the Lauren line and began a and towards acquisitions. Many throughout his diverse career in competing Jones Signature. Com- designers can benefit from sup- the apparel industry. petition quickly ensued. pliers’ superior logistical backend The sleepy apparel industry is that support hundreds of stores. Barney’s Picture courtesy of rarely subjected to this side of Soon after, Boneparth devised Designscene.net corporate drama. A supplier as a deal to acquire Barney’s New JayStreet Journal 11
  11. 11. On Your Mark, Get Set, Running A Business of Running Go! By Brett Schwartz Running a marathon is one of the most grueling and challenging experiences a person can put him or herself through. Starting a business is roughly akin to running a marathon. Kevin Callahan, an avid mara- thoner and a 1999 graduate from Johns Hopkins, is the creator of the product system, Map My Run. John L. Parker, author of several running books, describes the sport of running with great detail. Parker’s insights provide a prism on the intricacies of entrepreneurship as an endurance run. Pre-Race Training: “In Distance running, courage isn’t merely a helpful trait or a har- binger for success; IT IS THE PRICE OF ADMISSION.” Kevin Callahan graduated from Johns Hopkins with a degree in Mechanical engineering. With aspirations to be a rocket scientist, Callahan hoped he could work for an aerospace startup. He always wanted to be an inventor as a kid, which led him down the path of entrepreneurship. After several startup ventures in sev- eral different areas of business, Callahan used his passion for running to start his own business, a website designed to help runners map and train their runs called, MapMyRun. Start: The only true way is to marshal the ferocity of your ambition over the course of many days, weeks, months, and (if you could finally come to ac- cept it) years. The Trial of Miles; Miles of Trials? The gun goes off and there is no turning back. Callahan decided to take his idea and run with it. He gave up a steady income and a normal routine with his former 9-5 job as a management consultant. Callahan knew how important stability was and how quickly he could be without income for several months at the least. He understood that he would have to live his job, so he wanted to love it, and jumped at the new opportunity. “The idea is to find something that you’re so passionate about that you’re able to incorporate it into your and your family’s lives. It’s hard I’m not going to lie,” he said. 12 Fall 2009
  12. 12. Mile 3-4: “The thing is, everybody wants to be a winner. And when you’re psyched up, you’re willing to make any sacrifice.” After reaching early success, Callahan decided it was time to get a partner to expand the company. He did not actually meet with Jeff Kalikstein, his partner, for almost a year. Kalik- stein was a user of Callahan’s site and developed a way to visualize GPS data using Google Maps. Kalikstein reached out to Callahan and suggested the two work together. Although they did not meet for almost a year, the two spoke almost daily in starting up their company. Jeff was much less of a risk taker than Kevin, as Kevin describes him as “the ying to my yang.” Jeff kept Kevin and the company on an even keel. Mile 10: “A runner is a miser, spending the pennies of his energy with great stinginess, constantly wanting to know how much he has spent and how much longer he will be expected to pay. He wants to be broke at precisely the moment he no longer needs his coin?” Before Callahan’s business caught fire, he had to face very rough beginnings as an entrepre- neur. While in San Diego, Callahan ate 25-cent burritos for every meal, while he pondered his future as an entrepreneur. Callahan had to pass on fun social events and many trips with friends to work constantly on his product. “Not every day was tough like that, just usually around the end of the month when the rent was due. I can imagine that a lot more people have it worse than me -- having to put up their house or max out their credit cards. I think I was lucky...” Mile 20: “Endurance athletes build it slowly, painfully, along with their con- ditioning, day by day, over the course of months and years. It’s the one thing they all have in common.” At this point, Callahan was not sure if he could go on much longer. This mark is the most crucial part in any marathon, as a runner starts questioning his motives and ideas. He knew how easy it would be to give up, and knew the challenges ahead. “It’s hard. You think that you have a great idea and money will start raining in, but you have to work hard at develop- ing it, at marketing it, at selling it,” he said. Callahan decided to keep pushing forward toward the goal of a completed product. Two and half years ago, he was approached by a company who wanted to buy his business as well as by an angel group who wanted him to develop a site for cycling. Unwilling to relinquish his dream of a business, Callahan chose to accept the investment from the angel group. JayStreet Journal 13
  13. 13. Mile 26: “It was the simple keeping of a promise to oneself, to finish, to try. Endurance athletes are created by that decision, to keep on.” The finish line was in sight! After working countless 16-hr workdays, it seemed like all Cal- lahan’s work would finally pay off. “Sixteen hour days can get old but sometimes it’s needed to get it done right,” Callahan says. He believed he had to stay positive throughout and find the perfect work-life balance. All his training and experience was finally helping him as he neared the finish line. Finish: “And there it is. The true courage of the endurance athlete, it doesn’t show on the surface, and it isn’t the product of a single day’s pride in “just finishing.” It doesn’t have to be summoned; it’s already there.” All the training has culminated in a great finish. Although Kevin has reached financial success, he is not completely satisfied with finishing just one race. Callahan’s company is now believed to be worth 10 mil- lion dollars and he believes the company can be worth over 100 million someday. He has expanded MapMyRun and MapMyRide to MapMyWalk and now, MapMyMountain. Both an entrepreneur and a runner are defined by their courage to keep on fighting. Through financial hardships or actual physical pain, both understand that there always is a goal in sight. Callahan showed how difficult the entrepreneurial process is to live, but that the rewards at the finish line are plentiful. Pictures Courtesy of: www.runfresno.com/Race_Information.htm sultanofsnow.wordpress.com/ Screen Shot of MapMyRide.com’s user interface 14 Fall 2009
  14. 14. The Idea Behind Entrepreneurial Thinking By Dory Giannos and Brett Schwartz Not all entrepreneurial ideas stem from an analysis of the market and the desire to find a source of com- petitive advantages. Many ideas stem from pure need and a desire to make one’s own life easier. Here is what turned on the light bulb in these entrepreneurs’ minds and made them passionate to start their busi- nesses. Below are their answers to the following question: How did you come up with the initial idea? Kevin Callahan Patti Chan Michael Ionescu Chris Parker Founder of Co-Founder of 600Block Founder of Founder of MapMyRun.com Ionescu Technologies Applied Imagery “Hopkins had a bunch outdoors [outdoor ki- “It was a problem I dis- “It was Tom’s idea [her osks]. I through if they covered when I was run- co-founder]. Tom had can do that, we can do ning -- how to measure just moved in to the city. that. I was just looking / map your run without He couldn’t find anything for something to do to “If it is a desirable busi- buying a $300 GPS de- online that told him best enter the business plan ness for you, it is going to vice. I knew there was places to go in Balti- [Johns Hopkins Business be a desirable business technology around to more. There were only Competition]. Then out for many other people solve it cheaply so I went the weekly newspaper of school, I didn’t know and other organizations. for it. My experience reviews. This was before what I wanted to do. The I picked my best idea off with web development sites like Yelp became only think I knew is that of the shelf, but it was re- enabled me to build the popular. Immediately I didn’t want to work for ally my background with site. My experience with after we [Tom and me] anyone, but I had no real technology and expo- internet marketing al- met in 2004, we started specific goal. I tried by sure to the business side lowed me to build it in to brainstorm what we starting out small and of science that made me a way that can be easily thought was lacking on- surrounded myself with so versatile in the busi- shared with others that line and how we could advisors. I realized that ness at Applied Imagery. have the same problem.” make the website expe- just because a product is Luck also plays a role rience fun to use.” something you like does in any entrepreneurial not mean it is something venture.” everyone else will.” JayStreet Journal 15
  15. 15. Staying On Top: Innovating To Remain Profitable An Interview With A Successful Entrepreneur By Kyle Halleran How does a successful business remain successful? Creating a profitable product or service is the easy part, but how does an entrepreneur constantly update and innovate to remain on top? Chris Parker of Ap- plied Imagery took a disregarded invention at the Johns Hopkins Applied Physics Laboratory and turned it into a business. Parker attributes his company’s success to two core elements: a customer focused busi- ness strategy and the security of government contracts. Founded in 2004, Applied Imagery consists of three full-time and two part-time employees and uses LiDAR (Light Detection And Ranging) technology to gather information for its software product, Quick Terrain Modeler. LiDAR relies on optical remote sensing to measure the physical properties of scattered light in order to gather data from a distant object or target. This data is used to analyze size, shape, distance, and other char- acteristics of the target object. LiDAR collects data through pulses of laser emitted at the rate of 100,000 per second. The distance from the transmitter of these laser pulses and the target object is determined by the time variations between the pulse and the received reflected laser signal off the target. LiDAR collects a vast amount of information, accurate within five cen- timeters. An airplane equipped with LiDAR technology surveys a landscape, collecting all of this data, which A LiDAR Model of Mt.. Saint Helens from Applied Imagery is then transmitted with one-meter resolution to Applied Imagery’s product, the Quick Terrain Modeler. I sat down with Chris Parker in his office at Applied Imagery in Silver Spring to discuss his strategy of constantly innovating to remain profitable and satisfy his government clients. Kyle Halleran: Why is your product better than the from 32-bit to 64-bit. A 32-bit system means that competition? it can hold 232 bits of data, while a 64-bit system Chris Parker: One of the things that we’ve done can hold 264 bits of data. What this means to the better than the competition right from the get-go is user is instead of looking at millions of points you produce these point clouds. A lot of other software can look at billions of points, and this is important will give you a static view, and maybe you can move because the resolution of this stuff is getting denser to another static position, but you won’t be able to and denser. We introduced 64-bit because we knew interact with millions and millions of points. that there is always competition. If it is a desirable business for you, it is going to be a desirable busi- KH: How do you use customer feedback to improve ness for many other people and other organizations. your product? We were hearing from our customers, constantly on CP: A year ago one thing that we did was switch the phone with them, understanding what their pain 16 Fall 2009
  16. 16. points were, where we could help. The introduction customers’ desires, like this new “line of sight” fea- of the 64-bit was a quantum leap in our capability. ture we just added. We had a sense of the marketplace and our custom- KH: How do you recruit employees who share ers were very, very happy about this.” your ambition of customer satisfaction? CP: There’s no magic formula, I like to think we KH: How important is it to know your competi- (Applied Imagery) have a great work ethic and very tion? high ethical standards, and I think it starts there. I CP: Part of what you need to know about your look for relevant experience either in the larger field product is what it does better than the competition. of geospatial or smaller field of LiDAR or software. That way you can excel in the marketplace. When Certain things you can teach and certain things you most people see our software for the first time, they can’t teach. You can’t teach a good attitude or good are just shocked at how fast it is. That’s a key prod- work ethic. You want to make sure you get it right, uct differentiator for us. We are constantly assess- because mistakes on personnel can be very costly, ing the marketplace and understanding where the painful, and cause you some sleepless nights. competition is.” KH: Who are your biggest KH: How often do you “You hear horror stories of late payments customers and how do they update your software? from the government and having to wait use Quick Terrain Model- CP: We are constantly up to six months, but in our experience er? working on it and come they’ve been in line and on time with CP: A big part of our suc- out with an official re- everybody else.” cess is selling to the De- lease four times a year, so partment of Defense. This every three months. kind of representation of LiDAR data, called point clouds, is very useful if KH: Do customers pay for these updates? you are planning to land a helicopter in a situation. CP: Our business model is selling licenses of soft- You would want to know the heights of buildings, ware and maintenance. When you purchase our smokestacks, power lines, and other deadly haz- software you get one year of maintenance included. ards. When we come out with a new version we just send out notices to our customers and they download it KH: What is the fundamental difference between for free. After a year they renew their license. doing business with the private sector and govern- ment agencies? KH: How often do you include new features? CP: For a company like us that sells a solution it’s CP: There will be something new every time. We very similar in terms of the sale cycle. Once a per- just released version 7 in September. When we re- son in private industry or a person from govern- lease something new we’ll compile a list of bug re- ment becomes interested in your product you have ports from the customers who notify us what doesn’t to convince that person that this is useful to them work. We fix these quickly so our customers remain and solves a problem, then they need to decide to satisfied. purchase it. There’s this unfortunate common be- lief that the government puts out solicitations and KH: So you just always get feedback from your cus- you just respond to them. tomers, see what they want, see what they like or dislike and update your product every three months KH: How does the government sale cycle com- accordingly? pare with the private sector? CP: Right. We have an ongoing list of big things, CP: The government will have very rigid, procure- medium things, and tweaks to fix or improve to our ment guidelines and rules that they have to com- JayStreet Journal 17
  17. 17. pete and award this fairly. In the private industry fired for this. When government agencies that are it is more likely that you will find someone who customers call up and say they had to reboot their will say okay, I have the budget, I’m going to buy computer or their hard drive got wiped out, we just this now, and its over. Part of what we do during issue them a new key - we totally trust them. With the sales cycle for government is the Department of all of the stereotypes of doing business with the gov- Defense, civilian government, states, and counties ernment, we find it wonderful doing business with will have to issue a sole source letter, stating that we the government on so many levels. (Applied Imagery) are the only company that can provide Quick Terrain Modeler in America, and they KH: In your experience, is there any truth to the put that on file. This may cause a government sale to popular perception of the government being late take a little bit longer. with payments? CP: When we sell to a government customer I feel like it’s guaranteed that we get paid. We are focused on ARs (Accounts Receivable), once we in- voice a customer. There have been instances when we’ve sold to little companies where I was wondering if we were go- ing to get paid, so it can be a little psychologically tolling. Selling to Lock- heed Martin or SAIC is very much like the gov- ernment. Chris Parker is at the end of his fifth year as founder and CEO of Ap- plied Imagery. He is one of the few and fortunate entrepreneurs who has achieved success and main- A LiDAR Model of a Power Plant from Applied Imagery KH: Why do you think there is a general perception tained his position as a leader in the field, with no of that dealing with the government is vastly differ- plans of slowing down. ent than dealing with commercial customers? CP: Other than the rigid rules in funding, it’s the same. You have to develop the relationships, con- vince somebody of something, and ship the product. It’s pretty much the same thing. Looking for a Unique Holiday KH: What is a benefit of selling to the govern- Gift this year? ment? CP: We have a fear of software piracy. Any of our “A creative customers may call us and say they lost their key or and colorful idea!” they had to reformat their hard drive, and ask for an- -Kevin Callahan JHU’99 other key or license. In the government you will get www.BlueBirdCandyDish.com 18 Fall 2009
  18. 18. Planting the Seed for Biotech By Dory Giannos and Jose Deschamps Although biotechnology dates lated agencies in the surrounding The first MC biotech hub was back to 500 BC when the ancient area. Without leading academic born in the early 1980s when the Chinese used moldy soybean institutions, Montgomery County county developed the Shady Grove curds as an antibiotic to treat boils, used the proximity of the Food and Life Sciences Center (SGLSC), a most academics and practitioners Drug Administration (FDA) and 288-acre park owned and oper- date the beginning of the biotech- the National Institutes of Health ated by the County and specifi- nology industry in the United (NIH). The FDA headquarters are cally zoned for research and de- States to the early 1970s. Then, located in Silver Spring, Maryland, velopment. Subdivisions were investment in research projects approximately 20 miles away, subsequently created and all land and biotech centers flourished in while NIH is located in Bethesda, has been sold or leased to biotech San Francisco and Boston in the MD, approximately 15 miles away. entities. When selecting land to fertile grounds of academic insti- One biotech industry observer develop, county officials decided tutions such as Caltech, Stanford, said that the federal labs are “not to position the complex next to Harvard and the Massachusetts so much a magnet as a fountain.” the Shady Grove Aventis Hospital, Institute of Technology. A decade They served as a source of labor, opened in 1979, because they saw later, however, the next biotech founders and contracts for new plenty of nearby farmland in the center bloomed out of an agricul- companies and initiated the emer- proximity that could be used to tural hub. gence of biotech in the area. establish the anticipated biotech ecosystem. What Brought Biotech to Forming the Montgomery Montgomery County Ecosystem Creating a Wealth of Knowledge Maryland? Montgomery County (MC) has Knowing that academia was The initial seeds for biotech were created an extensive plan to at- needed to sustain and develop planted in the 1980s, shortly after tract and encourage biotech by biotech in the area, Montgomery the emergence of biotech hubs in creating research villages where County donated 35 acres of the other parts of the US. Raul Medra- people can live, work and play. SGLSC to Johns Hopkins Univer- no, a Business Development Spe- Mini developments have emerged sity and 50 acres to the University cialist for Montgomery County, next to science centers to create of Maryland. Universities help explains the birth of biotech in the a biotechnology ecosystem that with technology transfer because County as a decision to leverage house researchers, scientists and they posses close links to the pri- the many health and resource re- their families. vate sector that offers incubator JayStreet Journal 19
  19. 19. facilities and funding. Technolo- understanding with the County was fostering biotech through in- gy transfer is the process of shar- to outline Hopkins’ commitment cubators, a physical space where ing of skills, knowledge, technolo- to the area. For example, JHU companies can rent lab or busi- gies, methods or samples from purchased the 107 acre Belward ness space at low rates and share academic institutions to business. farm in 1989. This land is the expenses for access to resources. Linking these two entities allows only undeveloped large plot in These incubation spaces aid entre- a wider range of users to further the Gaithersburg West subset of preneurial companies by provid- develop and exploit newfound the biotech ecosystem and Hop- ing an array of support resources technologies into new products, kins intends on creating a“21st and services on site, for example processes, or applications. century research community that advisory boards and mentors. Johns Hopkins University and will advance health, science, and Additionally, incubators typically University of Maryland have sub- education.” The Belward cam- have networks of contacts such as sequently become key to the infra- pus is projected to be completed lawyers to help with filing patents structure of the area as they have by 2030. This new campus will or financial advisors to help with established a technology transfer be just 3/10 of a mile from the business plan projections. network and brought funding to present JHU Montgomery County The National Business Incuba- the area. For example, the Univer- Campus, created from the origi- tion Association (NBIA) projects sity of Maryland developed its that overall only 10% of biotech Center for Applied Research companies will succeed; in Biotechnology with the therefore incubators help County land and funds in col- safeguard success by provid- laboration with the National ing crucial resources that help Institute for Standards and alleviate the financial burden Technology. This 120,000 and uncertainties of starting square foot facility has state a company. Medrano notes: of the art laboratories for col- “There is a lot of hand hold- laborative research among ing, but when these entrepre- academic, government and neurs leave the program they industry scientists. It also are business savvy.” The aver- houses the University of age length of stay in the Maryland System Shady incubator program is five Grove Campus, which is a years and allows scientist collaboration of nine, pub- entrepreneurs to be in a Jose Deschamps and Raul Medrano in an incubator lic degree-granting institu- better position with their at the Germantown Innovation Center tions that bring some of the top nal 35 acres of land donated to product by affordably having ac- programs from across the state Hopkins. The plot has been trans- cess to an array of resources to to one facility in MC. The campus formed into a campus that accom- execute their business plan. The offers four-year undergraduate modates 4,000 graduate students NBIA calculated that historically degrees in over 60 programs, one and 13 life science companies. 87% of incubator graduates stay being a B.T.P.S. in Biotechnology. in business. The establishment of this campus Incubators as Helping Hands for As of October 2006, there were has brought a wealth of intelligent Fostering Biotech 1,115 incubators in North Amer- scientists and researchers to the ica, up from only 12 in 1980 ac- area. These initial steps created the cording to the NBIA. The first Currently Hopkins is in the pro- blueprint for the development of Montgomery County business in- cess of inking a memorandum of biotech in the area. The next step cubator was established in 1999 20 Fall 2009
  20. 20. and the most recent one was built Germantown headquarters of- politan area and 16% in Frederick in 2008. The latest addition is the fice. NBIA estimates that in 2005 County. Germantown Innovation Center, alone, North American incubators In size, MC with its 15,000 bio- which provides 11 wet labs aver- assisted more than 27,000 start- tech workers, is third to the San aging 500 square feet, 2 modular up companies that provided full- Francisco and Boston area for the clean rooms and 45 offices. It is time employment for more than largest number of firms. Approxi- strategically located adjacent to 100,000 workers and generated mately 220 companies related to the Germantown Campus of Mont- annual revenue of more than $17 the life sciences have their head- gomery College, a public, open ac- billion. Business incubators not quarters in the County. Notably cess community college offering only help advance biotechnology Medimmune, Takeda, Quiagen, two-year associates degrees and and industry overall, they assist and Human Genome Sciences have a variety of professional certifi- with employment and revenue emerged since the late 1980s. cates and letters of recognition. across the United States. With the County’s boom of suc- The Germantown center is poised cess in its first few decades, Me- to benefit from the drano explains, “Our technology programs vision is to continue offered at the college fostering and nur- and the growing “Tech- turing growth of the nology Corridor,” High- industry. We want way 270, which runs to continue to be in- through the area has volved with it as it earned this nickname evolves.” Medimmune due to the continual was recently bought by technological develop- a larger international ments in the area. company and foretells MC’s five incubators the future for other form a “network of bio-incuba- locally grown companies. MC is tors that provide mentorship, gravely concerned with the work- Map of Maryland’s Biotechnology coaching, and ‘affordable’ space force and talent leaving the area. Yellow= Education to start-up companies,” explains Medrano highlights the fact that Red= Industry Montserrat Capdevila, President Sustaining Montgomery County with the development of new ed- Blue= MD Biotech Org. of Johns Hopkins’ Biotech Net- Now The Epicenter of Biotech in ucational efforts, development of work, a professional, student-run Maryland transportation and residential ar- organization whose main mission eas, Montgomery County wants to is to create a stronger biotech Currently, MC has become the preserve the strong talented work community. heart of Maryland’s biotech com- pool that has developed through Qiagen, a provider of sample munity as biotech has predomi- the onset of biotech. Maryland and assay technologies for mo- nantly clustered around the Coun- Governor Martin O’Malley con- lecular diagnostics, applied test- ty and the Washington DC area. curs, “Together, we will create the ing, academic and pharmaceu- As of 2008, about 60% of the most fertile environment for bio- tical research, is an example of state’s 370 bioscience companies science in the country with the the County’s incubator success. call Montgomery County home, ability to compete and win on the According to its website, Qiagen according to Maryland’s Depart- world stage.” This can only occur started with 5 employees at a MC ment of Business and Economic by cultivating talent. incubator. Now they employ over Development which compares MC is placing high prior- 200 trained professionals at their with 24% in the Baltimore metro- ity in developing the talent pool JayStreet Journal 21
  21. 21. is formulating its own biotech hub in quest of capturing biotech funding. A recent article in the Washington Business Journal sug- gests that Prince George has the potential to compete with Mont- gomery due it its close proximity to the University of Maryland and the College Park Metro station. As Montgomery County becomes more crowded and developed, will new biotech innovation flow to Prince George’s County or oth- er counties in Maryland due to the available open space and at- tractive transportation offerings? through education. Educational tion as a leader in the industry Time will only tell if a new biotech programs have been installed in and the future of MC remains very hub is about to emerge. the middle schools, high schools promising. The County has begun and colleges focusing on the busi- to address problems including ness side of biotech: “We are try- limited public transportation and History of the Biotech Industry was ing to create a pipeline of tran- competition from other areas. In provided by Raul Medrano and Mont- gomery Planning reports which can be sitions into biotech starting as order to tackle the transportation found online at: www.montgomeryplan- early as middle school,” explains problem, MC is establishing a new ning.org Medrano. The County is work- light rail system, which is esti- ing to have younger generations mated to be up and running in the 1 “Koo, Jun & Bae, Jonghoon & Kim, interested in biotech and able to next five to ten years. It will con- Dohyeong. What Does it Take to Be A Biotech Hot Spot.” Environment and understand and be enthusiastic nect the Shady Grove Life Science Planning Journal. 27th Volume, 2009. p. about the concepts of incubators Center to the new JHU Belward 665. and venture capitalists. campus as well as the other incu- 2 Sinha, Vandana. “Prince George’s bators in the County. Identifies Sites for Biotech Cluster.” Wash- Future of Biotech in the US and The increasing competition and ington Business Journal. 13 November 2009. <http://washington.bizjournals. Montgomery County development of biotech in other com/washington/stories/2009/11/16/ states is welcomed by Montgom- story1.html> Biotech is considered to be the ery County and Maryland accord- next growth engine by many poli- ing to Capdevila: “MC will be able cy makers and economic develop- to maintain its position as a strong ment scholars. A 2009 survey that county and will also be able to polled 36 economic development stimulate other ‘neighboring’ agencies in the US exemplifies counties to enhance their growth. this sentiment; over 80% of re- The more the counties grow and spondents identified the biotech prosper, the better Maryland is; industry as one of their major in- more jobs and enterprise creation dustrial development targets. leads to higher tax income and Montgomery County is concen- happy voters!” trating on maintaining its posi- Nearby, Prince George’s County 22 Fall 2009
  22. 22. Biotech Davids Struggling Pharmaceutical and Maturing Goliaths By Jose M. Deschamps For years, pharmaceutical buster drugs like Lipitor or Pla- panies. Unlike pharmaceuti- companies have been known for vix which generate over a billion cal companies who work with two things: finding innovative dollars of revenue each. Now, chemically based compounds, drugs and reaping huge profits. many pharmaceutical compa- biotechs manipulate the function The industry has spent billions of nies are primarily marketing ma- of living cells so that they work dollars on research and reaped chines that sell drugs of dubious in more predictable and control- billions in return. In 2006 alone, benefit.3 lable ways. 4 The great majority the pharmaceu- of “new” pharma- tical industry ceutical drugs are introduced 31 not new at all, but drugs and sold merely variations $643 billion in of older drugs products world- already on the wide.2 Howev- market. These are er, over the past called “me-too” two decades the drugs. The idea is pharmaceuti- to produce some- cal industry has thing very similar moved very far to a top-selling from its original drug and reap the high purpose of benefits.3 discovering and producing use- A New Contender in Drug Dis- As Dr. Sharon Levine, associate ful new drugs. In the late 1990s, covery executive director of the Kaiser pharmaceutical companies be- As hard as it is to believe, only a Permanente Medical Group, put gan to divert resources from re- handful of truly important drugs it, search and development toward have been brought to market in “If I’m a manufacturer and I attempts to increase revenues recent years, and many of them can change one molecule and from the sale of existing block- came from biotechnology com- get another twenty years of pat- JayStreet Journal 23
  23. 23. ent rights, and convince physi- and more research-focused bio- als, the industries that do manu- cians to prescribe and consum- technology companies. Recently, facturing, and the industries that ers to demand the next form of Medimmune, one of the more do preclinical research all in one Prilosec, or weekly Prozac in- well known biotech companies, area. After working for pharma- stead of daily Prozac, just as my made headlines by creating a ceutical companies like Pfizer patent expires, then why would I vaccine for the infamous swine and Bristol-Myers Squibb, Mi- be spending money on a lot less flu. Unfortunately, most biotech chael Rosen has switched over to certain endeavor, which is look- companies are still unprofitable, biotechnology, which he consid- ing for brand-new drugs?”4 strapped for cash and find get- ers to be the future of drug de- This is the problem with phar- ting their products out to market velopment. “If the pharmaceuti- maceutical companies. They are very difficult. Their drugs have to cal companies do not change the focused more on marketing than go through several stages of test- way they do their business, they actually finding new drugs. Typi- ing which takes over ten years. will find themselves out of busi- cally the pharmaceutical indus- Without revenue coming in, it is ness,” he says. try spends 15% of sales on R&D hard for these companies to even What are pharmaceutical com- while biotech companies spend stay in business. panies doing to generate new 25-45% of sales on R&D. Even Michael Rosen, the Senior Vice drugs? though this dis- They are buying crepancy has biotech compa- not changed the nies. fact that phar- Marcia Angel, au- maceutical com- thor of The Truth panies rake in About the Drug nearly 600 bil- Companies puts it lion a year - ten best, “Pharmaceu- times more than tical companies biotech compa- are not particu- nies – innova- larly innovative in tion is neces- discovering new sary for success. drugs, and they When the pat- are highly innova- ents on some of tive— and aggres- the most prof- sive— in dreaming itable pharma- up ways to extend ceuticals expire, their monopoly other drug com- rights.”4 panies are free to sell generic President of Forest City Enter- Many pharmaceu- versions, chemically identical prises, a real estate company tical companies are buying out copies that typically cost much that develops and builds biosci- biotech companies. These merg- less than the trademarked ver- ence parks in the U.S., believes ers are sweeping the life sciences sion. This leads to a huge drop in that biotech business model will sector – a trend that shows no revenue for the pharmaceutical predominate in the future. Most signs of slowing down. In 2006, companies that originally pro- biotech companies are located Big Pharma spent roughly $17 duced those drugs. in bioscience parks. At the heart billion for more than 250 biotech When the pharmaceutical is a university like Hopkins that deals, up from 150 in 2003, ac- industry cut back on R&D, it generates the research. You have cording to venture capital firm opened the door for smaller the industries that do clinical tri- Burrill & Company.2 24 Fall 2009
  24. 24. It’s much easier for these multi billion dollar pharmaceutical cor- porations to buy innovation than to innovate. As Rosen puts is, “A large pharmaceutical company has many layers of organization so the communication process is very slow. Assistant scientists have to report to a main scientist who reports to a senior scientist who reports to a manager who reports to a director who reports to a senior director who reports to a vice president who reports to a senior vice president who then would report to a R&D pres- ident. It is a very long process for making decisions.” With an in- dustry as over managed as phar- maceutical companies, it is time consuming even to get drugs into the clinical stages. proval by the U.S Food and Drug drugs. Will the pharmaceutical Administration (FDA ) which has Goliaths change the way they do become more conservative in re- business or will they simply buy sponse to patient demands. up the biotech Davids? That re- However, the FDA knows that mains to be seen, but the future new therapies for certain dis- of drug discovery is firmly in Da- eases like cancer or HIV are so vid’s hands. important that they have created a fast track policy for approval. This fast track policy will shorten the time to market by about two 1. h t t p : / / g l o b a l t e c h f o r u m . e i u . c o m / i n d ex . a s p ? l ayo u t = r i c h _ years. Add in the resources of story&doc_id=8009&title=How+big+p Drug Development bioscience parks, and you have a harma+is+picking+the+best+of+biotec real advantage emerging for bio- h&categoryid=7&channelid=3 tech. 2. http://www.wetfeet.com/Ca- While biotechs may get drugs At the end of the day without reers-and-Industries/Industries/Phar- maceuticals-and-Biotech.aspx into trials faster, it is here where innovation, drug discovery is im- 3. h t t p : / / s c i e n c e c a re e r s . s c i - they stumble. Only a fraction of possible. Unfortunately, innova- encemag.org/career_magazine/pre- the 1,466 biotech companies tion is not happening in Pharma. vious_issues/articles/2009_04_10/ in current existence sell prod- It is happening in universities caredit.a0900048 ucts.2 Most lack the resources and because biotech compa- 4. http://www.nybooks.com/ar- ticles/17244 and expertise to fund the lengthy nies spin out of the universities, 5. picture courtesy of clinical trials necessary for ap- they are developing many more simeonstewartwordpress.com JayStreet Journal 25
  25. 25. Social Networks: Are they becoming a Nuisance? By Elizabeth Lenrow How many notifications have you received on Fa- Just as we read the tabloids and gossip columns, it is cebook in just the last few hours? Have you received our voyeuristic interest in the lives of others that keeps so many emails for events on Facebook that you de- people hooked. People flip through their friends’ pho- lete them because they have become an annoyance? tos and “walls” just like reading celebrity magazines, In a candid moment, wouldn’t you say that you because they think that their friends’ lives are more don’t really care to know what all of your friends interesting than their own. It is not just the SNS us- are doing ers’ mundane every sec- view of their ond of the lives that keeps day. Twit- them addicted, ter, a popu- but also the lar social design of the networking websites that site, is cre- keeps us “net- ated solely working.” Ev- to provide eryone knows the “status that many peo- updates” of ple are con- w h o m e ve r stantly updat- you are try- ing Facebook. ing to follow. Hence, even if Why are you only spend people more five minutes inclined to on the site, you sit online are drawn to and follow sign back on a the lives of few hours later their friends to see who put rather than living their own? up new photos, wrote on your wall or created a new event –and, you can easily flip from one person’s page The Intrigue of Social Networking Websites to the next. Facebook’s addictive features make it “a huge time It is interesting to consider what motivations suck” says Lily Seidel, a senior economics major at drive people to these social networking sites (SNS) the Johns Hopkins University. Fortune Magazine’s, and leave them spending countless hours glued to Jessi Hempel (Feb. 2009) points out that Facebook is their computer, iPhone, or Blackberry. The flip side intentionally taking over our lives. She writes, “the of this question is whether social networking sites ‘stickiness’ of the site is a key part of 24-year-old CEO will eventually drive their users away? Mark Zuckerberg’s original plan to build an online 26 Fall 2009
  26. 26. version of the relationships we ple to create a fictitious persona. my daughters were using the site. have in real life. Offline we bump For example, you can “friend” peo- Now, I find it a great way to net- into friends and end up talking ple you wouldn’t normally talk to work with people. I have found for hours -- we flip through old or know, because you believe that three or four old college friends photos with our family -- we join “friending” them in “cyberspace” and have now been able to con- clubs. Facebook lets us do all of is somehow okay. This theory is nect with them and see photos of those things in digital form.” But illusory. The lack of real contact their families and talk about our does it really? on these sites encourages some lives.” While it is great that Ms. A Screen Shot of Patti Chan’s 600block.com The connection one makes on people to act out of character in Weir is able to connect with her Facebook or Twitter is by no the mistaken assumption that old friends from her school days, means comparable to the con- only their mere profile is at stake. they may not keep her on the site nection formed by actual human Similarly, as more middle-aged forever. She will find out that most contact. Twitter is predominantly users join Facebook, they are of her college friends will not be a one sided site where there is “friending” their kids, and wit- on Facebook. And as Ms. Weir’s little to no interaction between nessing sides of their children daughters grow older, they too users besides looking at the sta- that they normally would not see. will stop posting so many photos, tus updates of the users you are Hence, parents are trying to be leaving their mother to wonder following. On Facebook, there is “friends” with their kids—when what she’s doing on Facebook. an instant messaging/email com- that is really not their relation- The thrill of “Facebooking” may ponent, but the only connection ship at all. Duffy Weir, a market- already be losing its hold on the made from that is a “cyber” one. ing consultant and now a regular early adapting younger genera- This wall between users on so- user of Facebook adds, “I started tion. Seidel, who used to enjoy cial networking sites allows peo- using Facebook to observe how Facebook, now bemoans that JayStreet Journal 27