Don’t Be Naïve: 7 Things to Know Before Taking a Biotech Startup Job

9/16/13Follow @xconomy

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have to have a pretty healthy ego to do what they do, but he often seeks to understand if the person is self-aware enough to know his or her weak spots, and humble enough to work on improving in those areas. A smart job candidate would be wise to probe, tactfully, to get those same answers.

Get to know as many people in the company as you can, other than the CEO. Get to know the team you’ll be part of, with whom you’ll be spending many hours, including some nights and weekends. While the person attempting to hire you is putting on the organization’s best possible face, others inside may provide a more candid view of the day-to-day reality. These people can give you some straight dope on how fairly people are treated, the morale of the shop, how much sacrifice is involved. The chemistry among these folks, how they work together, is important to witness at close range.

“The thing that’s going to make a company succeed or fail is a combinatorial thing,” Gilman said. “Every relationship is really significant.” Often in academia, Gilman says, you’ll encounter people you dislike working with, but they tend not to stay long, or they can be avoided. “If there’s an asshole in the midst you can usually outlast them,” Gilman said. “That’s not necessarily true in a company.” As More put it, “know your company cold. Not just your role. Know backgrounds and stories of your colleagues. This stuff matters.”

Bob More of the Bill & Melinda Gates Foundation

Bob More

How far along is this company in development? Does it have a shot? Everybody knows biotech is a high-risk business. There are no sure things. Startups by their nature are testing out unproven concepts for new drugs, devices, or diagnostics. Anything can fail, at any time, for any reason—even after a product is on the market. But what startup employees should ask is whether the opportunity in front of them is a pipe dream, or something with a real shot. Who are the scientific founders, and who is on the scientific advisory board? Are they credible? Is the management team (not just the CEO) capable of taking the concept to the next level? This is also where you dig into the scientific literature that’s related to the company’s core concept—not just the stuff the company presents to you—and try to understand just how validated its concept is (or isn’t). Many supposedly groundbreaking studies in academia, that get published in top journals, are nothing but bunk that can’t be reproduced anywhere else. You need to find out how validated the scientific concept is.

This is also where you dig into the finances. How much money has the company raised since its founding? How much cash does it have in the bank? How long is the company’s operating runway at its existing cash spending rate, if it were never to raise another dime? Who invested—top-tier investors with good track records, or friends and family? Do the investors have a track record of seeking quick flips, or do they tend to be long-term company builders? How much progress has the company made in further validating its concept since the founding? Where does this company stand vis-à-vis its competitors? If the company hits its stated milestones, will it be a steady-as-she-goes story of staying in business, or will it likely take off like a rocket ship?

Nothing is guaranteed about the outcome, but answering these questions could give you a sense of the worst-case scenario, the best-case scenario, and things in between. If you’re comfortable with a worst-case scenario of something like 18 months of work in an exciting or challenging new position, alongside talented colleagues, before everything goes kaput, then that’s a good sign.

If that sounds like a terrifying lack … Next Page »

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  • Denise Clarke

    “Many supposedly groundbreaking studies in academia, that get published in top journals, are nothing but bunk that can’t be reproduced anywhere else”…a tad harsh, no?

    • Roger Ramjet

      Absolutely true.

    • Fabian

      I believe there is proof somewhere that a good percent of papers published in top journals can not be reproduced by industry scientists. Doesn’t mean they are fake, maybe you need skills or details not outlined in the publications. But anyways makes the studies non reproducible and non translatable into something else. I’m a scientist in Academia.

  • Truth Williams

    Publishing in top academic journals consists more of navigating another political process than exercising in good science.

    All the points in the article are valid (especially understanding senior management and what your stock options really mean in terms of fully diluted shares). The main problem is that it is basically impossible to acquire all this information unless you are being hired for a senior executive position and you have a lot of time to conduct this diligence. Even then, it is difficult to deduce misinformation and you can easily end up more confused than before. Most people do not want to give out their capitalization table or shed any light on the equity compensation. Of course, this is due to avoid the realization that if you are not a co-founder or senior executive, you are not going to get much in a liquidation event. In the end, the base salary is the most important.

  • Argo

    Another thought is to find out how the existing team was formed. Are they accepting of outsiders? Or are they a small click of a former company? This will really effect how you fit into the culture and the politics.

  • Tom Klopack

    I’ve done 5 startups and this is a good primer for anyone joining particularly from a large company. Would also suggest using social media like LinkedIn for contacts and background on teams. Another key dimension is understanding the financials. Many privates won’t reveal financial detail but it is easy to construct:
    How many people in the company? Multiply by $225K to get total expense $ per year. This works very well for wide range of companies.
    Are they break even? If no sales then burn is expenses. If break even in a timeframe how much sales must be made at 60% margin to cover expenses?
    Figure out the burn rate and you know how much money they need over time. Ask if they are raising money.
    By putting together some simple info like above you can triangulate on financial position. If there is 12 months or less of cash and they are not focused on money raise there is an issue.