Who is an entrepreneur, founder or incentivised manager?

Just as in medicine, we need to use latin terms to identify the different entrepreneurs.  My latin is a little rusty so I will leave the terms to others.

There is the entrepreneur like me who started a business on a kitchen table – no plan, no product and no customers.  The first step was to find a customer, and then a second customer and then another.  Slowly the business evolved to meet the market need.  Jonathan Milner created Abcam from similar humble beginnings and is a great story.  How he used trade credit to fund the initial losses instead of raising angel/VC funds accounts for his major shareholding explains why he retained such a good shareholding plus, of course, the explosive growth, very high margins and positive cash flow when the business took off

There are the entrepreneurs who started ARM and call themselves founders as if they started something new.  Development of the RISC computer started in Acorn Computers in t.

The early 80s and it was not until ten years later that a market for a RISC computer was slowly found.  RISC computers use little power and only came into their own when mobiles took off in the 90s.

ARM is a amazing story and the vision to sell a design and the execution of the plan was brilliant.  I remember Sir Robin Saxby saying “I found twelve guys in a shed in the Fens and “only” two million pounds in the bank”.  There were two corporate shareholders, Olivetti and LSI(?).  That is a very different start-up than a kitchen table.

Then there are the start-ups funded by VCs with multimillion pound investments with the founders having tiny shareholdings and receive their rewards by options.  In terms of an Equity Fingerprint, the founding team’s shareholding goes up from near 0% usually at the time of a trade sale.

Then there are the academics spinning out of universities funded by the enterprise department at their universities.  When the university starts with 60%, the team are left to share the balance but probably also retain research positions so they are not taking the full entrepreneurial risk.

There are many different types of entrepreneurs based on their equity holding at the start.  We need better terms to define each category and I have not even mentioned the important class of social entrepreneur and company entrepreneurs.

Ignite 2014 at Judge Business School

Fun talking to the delegates at Ignite 2014. Entrepreneurs from many nations coming together to dream.
A professor from Stanford made a comment at an event I attended in Oxford a few years ago along the lines of: we must remember that teaching entrepreneurship is more than about helping people to start businesses, it is about education – making sure more and more people were aware of the process of starting a business so that in whatever career they followed, they would have some idea about the business process.
This applies to these delegates. I guess that few will start but they all had a fantastic education and the buzz at the final dinner was “awesome”!

Astex Pharma: Will the Japanese profit from the USA/UK small molecules?

Astex will make a great case study.

Who are the equity winners in the Astex story?  It is quite fascinating.  It is very different from the entrepreneurs who start a company  on a kitchen table with low overheads and low salaries trying to build value  in the business and keeping as much equity as possible.  This is just not possible in the bio world.  Big money is required to develop drugs and it leaves the founders struggling to keep much equity in the company.  They only come good through options which “vest” on sale.  Well that is what I learn from a quick look through of the public data.  It is quite a story.

It goes like this, starting in 1999:

– take two Cambridge professors, Prof Abell and Prof Sir Tom Blundell

– add commercial skills gained at GSK, Dr Harren Jhoti

– raise nearly £100million of VC funds (perhaps the VCs put the team together) leaving the founders with tiny shareholdings but some with high salaries

– use small molecules and high throughput robots to identify potential drugs

– partner with pharma companies to develop five potential drugs

– in 2011, “merge” with a quoted drug company listed in New York which has strong commercial skills and plenty of cash

– close down the USA laboratory

– in 2013, sell to a Japanese pharma company and cash in the options.

The Japanese company, Otsuka Pharmaceuticals,  bought Astex Pharmaceuticals for $800million in October 2013.  Who will be the winner?  Is this another story of academic research in the UK being sold before a great company has been built?  Can you build a great pharma company from scratch?  Is it really for entrepreneurs?


According to the University of Cambridge website, the story goes back to 1999 when Prof Abell and Prof Sir Tom Blundell combined with Dr Harren Jhoti from GlaxoSmithKline (with partial seed funding from the University of Cambridge) to form Astex. The two professors had developed fragment based drug discovery.  It is easier to use small fragments and fast processing techniques to work out which is active and then you can design your drug (I think).  I guess that this sounds easy but needs great brains to realise and then make happen.

In 2011, Astex merged with Supergen Inc of Dublin, California.  Supergen was a quoted Delaware company – it is always Delaware!  By the time of the merger, both companies has raised some $100million of funds.  It was more a merger of equals.  From a quick read through all the papers, the research labs near Dublin were closed and the new company concentrated on the work in Cambridge where some 80 people were employed.  The companies ran up some $350 million of losses but revenue from partnership with the major drug companies were covering running costs.  It appears that the owners, (VCs?) of Astex flipped the company into a Delaware quoted company bringing along the science with Supergen providing the quote and the commercial strength with their James Manuso becoming Chair and CEO.  It is a great model and has happened to many University of Cambridge spin-outs.

Of course, running a fast moving company in such a competitive and fast moving world as pharma needs top talent.  The directors were well paid, with top people earning hundreds of thousands of pounds per year.  The details are available on line as for all quoted companies for those with time to search.

The holdings of the directors are available on line and make interesting reading.

What happened to the staff?  Did they have an option scheme?

What happened to the two founding professors? To CE?

Has the UK lost out on building a great UK company?


Astex annula reports: http://investor.astx.com/annuals.cfm

Astex board: http://investor.astx.com/committees.cfm

Astex SEC filings         Pharma Television

Astex pipeline             Astex Scientific Advisory Board      University of Cambridge press release on sale

Compensation form              Options and shares               Astex 2012 Annual Report





Prof Bill Fitzgerald

imageRIP A very special person much missed by family and friends.

Thanks for all your help and inspiration.

The Magic of Quad

Quad designed wonderful hi-fi and it still works so well and even allows me to play my iPad using the BBC iRadio App. I bought the Quad 606 amplifier, pre-amp amp and tuner from a hi-fi shop in Cambridge, UK. They had been traded in and were in good working order, or where they? I took them up to Quad in Huntingdon and Peter and Ken Bunting serviced them. That is right – they serviced hi-fi equipment that was made thirty years ago. Sadly I had been slightly misled but a few weeks later I collected (and paid for the service and replacement parts) and they are as good as new. Some people want to update some of the parts, but why? They are designed to be reliable and so they are.

The 63 ESL speakers are delicate beasts and large. I made the mistake of buying the first pair I found from a dubious “dealer’ in Cornwall. Then I found a specialist near Leicester and they have been re-built to the highest standard. The specialist re-builds the 63s or you can take them to Quad in Huntingdon who will replace the panels with new ones made in China. I wonder if anyone thinks that they can tell the difference. One speaker settled in and has never made a non-musical sound. The other has made a few burps and hisses but I am instructed to keep them switched on – to keep the electrostatic charge on – and to use them. The sound is glorious and so different from little speakers however clever their wi-fi or bluetooth.

I have yet to have the aerial set up so the FM tuner is untried. Quad did fit a new battery and replaced the part that had got slightly corroded after thirty years of service.

So here I am typing away on the Internet and using the World Wide Web invented by a British man and listening to hi-fi designed and built in Britain. The CD is by Roksan another British product but this time designed British people who came from Persia and named their products accordingly.

Anyone knows what Quad stands for? Quality and Dam the costs!

Founders of Twitter

There were four founders. The initial split has not been disclosed but should be available in the prospectus. At the time of the IPO the founders’ shares were:
– Evan Williams 10%: (left 2010)
– Jack Dorsey 4%; (left 2008)
– Biz Stone 10 millions shares; (left 2011)
– Noak Glass no shares; (left 2006).

Biz Stone sold shares recently.

The pictures in the papers featured the first three but Noak Glass was not seen. It must have been amazing to watch your wealth double in minutes and know that many of your team who had worked so hard to build Twitter would also have enjoyed the same satisfaction.

To sell or not to sell is not easy. There are a number of people in Cambridge who floated companies and thought they should not sell any shares and then watched as  their gains disappeared.  It is quite amazing how few companies are sold in Cambridge, UK, when the Stock Market is booming. As my co-founder said in 1987 – “It is the best time ever to sell and business” and “We could work (and our team) for another ten years and not be as well off”.

How did she know? Guess that is what marks out the great entrepreneurs – timing, their ability to bring everyone together and to close a deal. Happy days but such intense work. It is not the hours or hard work – lots of people do that all their life; it is the intensity of continually striving to be better each and every day. I did it once. Ever again? I wish but doubt it.

Armistice Day at Clare College

Made very welcome at Clare College where a short service was held in the ante-chapel. I arrived late – must be getting older and need to speed up the old cycle. Finished the day with a wonderful concert in the OCR at Trinity College. Learnt that barristers work very hard and earn millions and can work past the usual retirement dat. As always it will only be the ones on the top of the pile!

Remembrance Sunday

Time to think how lucky I am that my parents did so much for me. In Cambridge, there are many people with the same special parents but not everyone is so lucky.  There is a memorial at Sedbergh School to the three VCs.  My Father used to read the names on the war memorial seemingly searching for a name but, as so many like him, he never told us who or why.

The service War Memorial at the junction of Hills Road and Station road was very special although some were so keen to get too and fro from the station that they could not stop. Silence at Cambridge Rugby Club with all the youngster learning the special bonds of playing rugby and then to Clare College for the last service of the day for me; another wonderful service and an amazing sermon. As I left the College, the disco was warming up in the vaults under the chapel so life for the young never changes! All on a bike and no need for a car, bus or tube!

Twitter by Bloomberg

Logo_post_bPrint Back to story
Twitter’s Debut Mints Fresh Crop of Millionaires
By Sarah Frier – Nov 7, 2013
Twitter Inc. (TWTR) co-founder Evan Williams is now a multibillionaire on paper, after shares of the short-messaging website rose 73 percent on the first day of trading.

The stock surged to $44.90 at the close in New York from the initial public offering price of $26. Williams, the largest individual shareholder with a 10.4 percent holding, owns a stake valued at $2.56 billion.

Williams, who co-founded San Francisco-based Twitter in 2006 out of his failed podcasting startup Odeo, is among the biggest beneficiaries of the IPO. Others include early backers such as Rizvi Traverse Management LLC, which holds almost 16 percent valued at $3.82 billion. Insiders held onto their shares, anticipating that Twitter will deliver on promises to Continue Reading »

How much did Fred Wilson and www.avc.com make from Twitter?

Fred Wilson on his great blog www.avc.com – a must read for all entrepreneurs – gives frank insights into the geek world but is always shy about his carry percent. I have not looked at the figures but I guess that as one of the first VC investors in Twitter, his firm, USV, probably invested some $10million and turned that into $1bn. With a carry percent of the usual 20% he will have given a great return to his investors and walked away with a substantial profit some of which he will have cashed in at the float.

How does he and his partner pick these great winners? He wrote on one of his recent blogs that USV has a hit rate for big winners of 1 in 3. That is amazing. In my little portfolio of 12 companies, I am seeking to find one that returns my cash let alone goes mega.

The biggest problem I have faces is trusting people – assuming that everyone really wants to be a successful entrepreneur and will devote five years of their life to build a company and hopefully a great company. Fred Wilson writes that he always takes up references and talks to many people before investing. I have just relied on people in Cambridge being honest.

One company has just outsourced support to India and two execs are working part-time to keep the website active. The first founder left after going through £14million. We backed his co-founder to learn too late that he had little regard for the money of the investors or the jobs of his team. It took a couple of years to rumble him as I guess we just did not believe that we had been so stupid. Another £6m down the tube.

One of the many lessons is to back a geek(s) who wants to learn how to manage. If the key person is not a geek then he cannot build the business and does not carry the charisma of an Envangelist. It was a sad day when the office closed and I was offered an umbrella for my troubles. I guess the umbrella cost hundreds of thousands. Better put it up in a gale and let the wind take it away.

When we bought the assets from the receiver for £1 we thought that they original team could not have p*****d £14m against the wall – there must be something there. It took another £6m to find out that we should have invested in one of the early USV funds and let Fred Wilson and friends work their magic!