Inaki Berenguer, MBA '09

Web 2.0 by Philip Evans, Managing Director of BCG

This week Philip Evans, Managing Director of BCG and author of "Blown to Bits" gave us a talk about the Web 2.0. The talk was organized by the Innovation Club.

Besides the normal characteristics about the Web 2.0, he gave some interesting hints about Web 2.0:

1. Web 2.0 companies have preference for colors and round fonts
2. Using mashups, Web 2.0 companies can go live after one week of work (i.e., interoperability drives down the cost of innovation, e.g., Google maps). He used the term "democratizing innovation", as the book written by MIT professor Eric von Hippel.
3. Web 2.0 companies are in perpetual beta
4. In the past, sellers were motivated by financial results and buyers motivated by psychological gratification. In Web 2.0, the motivation overlaps. People participate for skill building, hobby, moral, consumption, reputation and advertisement.
5. BCG is recommending some clients to use Web 2.0 concepts to share knowledge, e.g., research in pharmaceutical companies
6. The main idea behind Web 2.0 is trust

He used Threadless and Trulia as examples to explain his arguments.

Since the talk was organized by the Innovation Club, he closed his talk stating that innovation comes in 82% of the cases from new functional capabilities and only 18% from "dimensions of merit improvements", e.g., improve financial margins, improvements in size or weight of a product, etc. (i.e., it is difficult to innovate here).

Breakfast with partners at General Catalyst Ventures

Last Friday I had breakfast with Hemant Taneja and Bill Kung both Managing Directors at General Catalyst Ventures. The breakfast was held at their offices in Cambridge, next to Harvard square. Bill told me that he had a similar background to mine (McKinsey alumni, career in wireless communications and graduate school in the UK and US). Hopefully I will be as succesful as he is.

We were discussing options for people interested in VC career paths. In their opinion, it is better to start a company after the MBA and then join a VC as a partner (i.e., after the exit) instead of joining a VC firm right away as an associate. The real money and the interesting work as a VC comes when you become a partner and it may probably be easier (and faster) to join a VC after the exit of your startup with $2M in the pocket. Moreover, it will be easier to empathize with entrepreneurs.

For people that really want to join a VC after MBA graduation, they think that the recruiting process is very different to the standard management consulting or i-banking one. They only recruit people that they know very well and trust, since this is a big investment and people do not rotate as much as in i-banking or consulting. So before you hire one person, you want to make sure that you may want to work with him for the next 4 or 5 years. For instance, now they are hiring one associate that has been helping them partime during the last year and a half. Not only that, there are usually very few open positions in a VC and more than enough MBA's interested in these positions. In the Boston area, there are about 12 VCs investing in early stage and probably less than 10 open positions per year. They also think that in the West Coast it is slightly different and a normal career path is undergrad in CompSci/EE at Berkeley/Stanford, some years at Google/eBay/etc and then join a VC and use all the contacts you have in the Bay Area to source deals.

On the other hand, they talked about their daily activities: Deal sourcing, due dilligence and helping entrepreneurs.

Carl Yankowski (CEO of Ambient, Palm, and Reebok)

Last week I had lunch with Carl Yankowski (CEO of Ambient Devices, former CEO of Palm, Reebok Brand, Cadbury Schweppes, COO of Sony, and MIT Sloanie). The lunch was organized by the MediaTech Club.

He went through his professional life, telling various anecdotes. Some interesting ones:

• He took Palm public. One of his toughest moments was when he had to hire 1000 people in 6 months and fire 1000 in the next 6 months. To attract people in California, he had a Rock Band and free food in the parking lot.
• He helped designing the VAIO logo while he was COO of Sony Electronics. VA is written as a sinusoid for the analog world and IO is for the digital content (1s and Os).
• He gets 2 hours of sleep, works for 4 hours and then he sleeps another 2 hours. There is this research study that humans get 80% of their rest during the first 2 hours of sleep. I knew the study (with different figures) but he is the first person I know doing it. More info here.
• He gets bored being in a margin focus business (commodities) without innovation or design.

Howard Anderson (founder of The Yankee Group)

Howard Anderson was the invited lecturer of yesterday's "Introduction to Technological Entrepreneurship" class.

Howard is a teacher at MIT and the founder of the Yankee Group (founded just after graduation from HBS) and VC firms Battery Ventures and YankeeTek Ventures.

The title of his talk was "Troubles Ahead" and he gave us recommendations about what to do in our startup when:

1) Sales do not hit target

2) The product does not work, is late or is wrong

3) Key employees leave: E.g., do not get angry and finish with a good relation, offering him help whenever he needs it in the future. And in the end, ask him not to steal any employee of the team he has helped to create. Moreover, Howard thinks that the odds to change people's mind is about 25% so when an employee says that he wants to leave, even if you convince him to stay, you should start looking for a replacement.

4) We run out of money: E.g., reduce sales people before engineering

I liked his comment about the main reason to start a company. It is not about making money, having success, satisfaction, etc. He said that the main reason is that "You will never use your talent as much as when you start a company", and what you do contributes to the real success. If you work at Google, Goldman, etc., nobody is going to miss you when you leave.

He also gave an example about how to find who is committed in a startup. Sometimes he would throw a paper on the floor of his startup: if employees pass and take it from the floor, they are in his team: if not, employees probably think that the company is not their problem but the founder's.

Another useful comment was that he thinks that the happiest moment of an entrepreneur is not the IPO but when he breakevens, because then, he has options to do a lot of things (new products, focus on margins, etc.).

Innosight talk

I went to the talk of Scott Anthony, President of Innosight and co-author of Clayton Christensen's third book, "Seeing What's Next: Using The Theories of Innovation To Predict Industry Change"

Scott talked about what Innosight is watching today as innovation (the talk was organized by the Innovation Club). He gave some examples for different industries:

MEDIA

• Joost
• Spotrunner
• Blinkx

SOFTWARE

• Salesforce
• VmWare
• Intuit
• Quickbase

FINANCIAL SERVICES

• Prosper
• Celpay

INSURANCE

• The Admiral Group
• Tonik

AUTOMOTIVE

• Zipcar
• Tata

AVIATION

• Dayjet

ENERGY

• EnerNOC
• FirstSolar
• Gridpoint

HEALTHCARE

• ChoiceMed

TELECOMMUNICATIONS

• Vanu
• Blip
• Clearwire

Surprisingly, he did not mention any company doing RFID and Nanotechnology, very hot and popular in the last 5 years.

He reminded a quote from Meg Whitman (eBay CEO) which I had already heard in various ocassions: "It is better to put something out there and see the reaction and fix it on the the fly... "Perfect" is the enemy of "good enough""

And he stressed that when dealing with innovation, "markets that do not exist, cannot measure in the same way."

Research papers

My two latest research papers have been recently published. I wrote them back in 2005. It is amazing how long it takes to publish in journals.

• K.-C. Liang, X. Wang, and I. Berenguer ,"Minimum error-rate linear dispersion codes for cooperative relays" IEEE Transactions on Vehicular Technology, 56(4), pp.2143-2157, July 2007.
• I. Berenguer, A. Host Madsen, and X. Wang, "Multiuser TH-precoding for TDD-CDMA over multipath channels", Communications IET, Volume 1, 4,  August 2007 Page(s):739 - 750

Professor Langer and successful biotech companies

Last week I attended a talk by Professor Langer about entrepreneurship and successful startups in the biotech sector. I had read about Professor Langer multiple times and I was looking forward to attending one of his talks.

Professor Langer has over 560 patents (either granted or pending), multiple honorary doctorates, and has started over 20 startups (e.g., Microchips, Mimeon, etc.). Only in this talk, he gave at least the name of 5 startups he co-founded and he sold (or went IPO) for over $100M each.

The principles  he gave for successful startups are:

• Have a platform technology
• Ideally, product company, as opposed to information company
• Seminal paper in top journal, e.g., Science or Nature
• Seminal (ideally blocking) patent
• In vivo proof of principle, so you do not have to wait for a long time to test it with mammals and get diluted during the process

He went over 5 of his successful startups and explained how these principles applied to all of them. What this tells me is that in order to start a successful biotech company, you more likely need to commercialize an idea that has been developed at a research center.

However, somebody in the audience asked him what really makes a company stand out of others and be a real success and he replied: the CEO.

On the other hand, I have to admit that he is an excellent speaker and probably a very good PR. What surprised me is that he mentioned that until he turned ~30, he used to be a very bad presenter and used to prepare each of his talks for about one week. It seems that practicing has worked for him.

ps.- The day before I had attended a different talk about InVivo Therapeutics a very promising startup he has recently founded focusing on spinal cord injuries.

ps2.- One of his postdoctoral students said about Prof. Langer "He will pick the problem that is not necessarily scientifically the most challenging, but that has the most impact value. In that sense he's a real visionary. He bets on the right things."

Welcome

Welcome to my blog!

I plan to post frequentely about entrepreneurial experiences and stories at MIT.

Regards,
Inaki

www.inakiberenguer.com