How to grow your start-up

Adam Levy 0:08

Hello, I’m Adam Levy. And this is Working Scientist, a Nature Careers podcast.

In this six part series, Business of Science, we’re exploring how to commercialize your research.

In the first half of the series we looked at the crucial steps of setting up your business, pitching your idea, getting it patented, and working with your tech transfer office.

But what happens after you’ve set up? Well, then you really need to get things established and hopefully, begin to grow.

And it’s that process of growth that we’re focused on in today’s episode.

Barbara Domayne-Hayman is entrepreneur-in-residence at the Francis Crick Institute in London.

By supporting businesses in early stages, she can see very well what the crucial elements are. And a clear leadership can make all the difference,

Barbara Domayne-Hayman 1:06

Creating a vision and making sure that everybody really understands what you’re trying to achieve, and kind of agrees with it, and really throws themselves into it wholeheartedly.

I mean, I think that’s something that you, you really have to have.

I mean, you have to have it in academia as well.

But certainly in an early stage company, you know, people can’t be half hearted about things. They really have to commit.

And it’s hard work, and it’s very long hours, and it’s uncertain.

So you have to have that degree of, kind of really wanting to do this and really having a conviction about it.

And you need to look for that in the team of people that you build as well.

If they’re just interested in having a kind of 9-5 job, they are probably not the right person to help you build a startup.

Adam Levy 1:57

Throughout this series we’re speaking with entrepreneurs like Barbara about their experiences, as well as experts on all the topics we’re discussing.

One of the entrepreneurs we spoke with is Javier Garcia Martinez, a chemist based at the University of Alicante in Spain and founder of Rive Rechnology.

Rive Technology uses nanotechnology to improve catalysts. This has given them some stiff competition while establishing their business.

Javier Garcia Martinez 2:24

Competing with the biggest companies probably in the world, that are also producing similar catalysts has been an amazing challenge.

So it has been a little bit like David and Goliath. I mean, we were a small fish in a pond with a lot of big fishes.

Adam Levy: 2.42

And while you’re still growing, it can be normal to have this feeling of fighting against the odds.

So what can you do to shift the odds in your favour and avoid your startup prematurely shutting down?

Here’s Daniel Batten, an investor with Exponential Founders Fund, and a coach with Beyond the Ceiling.

Daniel Batten 3:02

Out of all the reasons, of course failure, if you put together all the business and technical factors that stuff like you know, your quality control, your product, the science itself, and then the business side, the product market fit, the reaction from customers, competitive pressures, regulatory stuff.

All that stuff together, counts for 35%, of why companies fail.

So the other 65%, this is according to 49, different Silicon Valley based venture capital companies, was the people, was actually the human-centric reasons, or the human factors.

Adam Levy 3:35

So Daniel’s message is clear.

While you’re growing, don’t forget the human factors.

This means having a clear vision from the leadership as Barbara explained, but it also means ensuring that the leadership is taking the time to transfer the skills among the staff,

Daniel Batten 3:51

I see plenty of companies that might be growing 20% every month, or 200%, 300% of the year, but then what happens they get to a certain size, and then the leader has been trying to do it all themselves, and they haven’t reproduced that leadership DNA in their company.

And then comes to some point maybe they’re opening up a new office or and they’re doing a capital raise at the same time.

And, and you’re also trying to sell stuff. And suddenly, you can’t do everything at once and no one else can do it as effectively because you haven’t grown the next generation of leaders.

Adam Levy: 4.22

Before you can grow this next generation of leaders, you actually have to hire them.

Wei Wu, who is COO of Helio Heat, working on a solar power technology. She explains that growing a team is much more complex than just filling vacancies,

Wei Wu 4:39

To find the right people, actually, I think that’s the most challenge actually.

Since we are located in the southern Germany, in a really small city, so it’s not really big and it doesn’t have so much to offer, the city by itself.

And so to get people there is quite hard. I think that that’s the most challenge,to really find or to reach the right audience and the right people to work for you.

Adam Levy 5:06

Growing your team and your business can present an almost paradoxical challenge.

Patrick Anquetil is founder and CEO of Portal Instruments with a technology to replace needle based syringes with needle free devices.

He explains the tension between needing to grow in order to expand your business, but at the same time needing resources in order to grow.

Patrick Anquetil 5:31

That alone is actually difficult. It’s actually it takes time. It takes resources to do that added. On top of things, you also have to look on the cost side of thing that you have enough finances as well to be able to scale.

So it’s almost like a dance where you always have to say that. You’re always in pain. You’re always playing catch up.

So I think I think that’s the other thing that happens during scaling that’s so interesting is that you start to see a few, you basically start to see where things are breaking down, right, you start to see not only at the organizational level, as we just talked, but you also start to see it in your processes.

So you may remember that a few years ago when Tesla was increasing production capacity, all the problem starts to happen is that it happened was it was model three, basically.

And they almost went under because of that. So things are more complicated, but you also have less room of manoeuvering at the same time.

Adam Levy 6:28

So to find out a little better how you can walk this tightrope. I spoke with an expert on scaling up,.

Charles Christy is head of commercial solutions of Ibex Dedicate, at Lonza, which works as a partner to pharmaceutical and biotech companies.

Charles Christy 6:44

So I try to translate customers’ needs into what we call commercial solutions.

So, for example, the donor which the vaccine which is, I guess, hot news at the moment. That’s one of the projects that I helped bring to commercialization.

Basically, I try and translate the customer’s process, what their risks are, some of the uncertainties, and try and come up with a creative solution, to take that through the development pathway all the way through to commercial and hopefully supplying patients with the drugs that they need most.

Adam Levy 7:14

So Charles has a lot of experience thinking about scale, and what can help and hinder a company from growing.

So I started out by asking him at what point in the process a company should start thinking about its scaling up strategy.

Charles Christy 7:29

To be honest, it should come up from the outset.

Although there’s plenty of uncertainties right at the beginning, when you’re starting, you know, you need to look, particularlyone of the lessons is to try to look at what it would be when it grows up, or when it goes industrial.

Because what the product needs to be is a very important consideration from the get go.

And by that I mean cost of goods, availability of raw materials, scale, stability.

All of these things are things that you need to plan for success from the beginning.

So it’s never too early. Sure, there’ll be uncertainties, and you’ll need a plan A, a plan B, from that point of view.

But, you know, we’ve got the saying that you plan for success. And if you don’t plan your fails,

Adam Levy 8:13

Once an organization is ready to start scaling up, or at least to start planning to scale up, what are the technical challenges they need to be mindful of in that process?

Charles Christy 8:25

The first thing really is to start from a solid base. It sounds almost obvious, but to start from somewhere where, you know, from an IP, from a freedom to operate, that you’re able to do that.

And then secondly, if any materials are biological in origin, that you have the freedom to use those and that those have a documented and safe background. You know the purity, you know, the biological safety.

And that’s a lesson if you don’t obviously that comes back with with tremendous problems in the developing even having to start again, then I think if you go forward, looking at scaling up, the key thing, particularly if you’re small, or you know, a university or others is to avoid using materials and avoid using processes that cannot be scaled.

And by that, I mean quite often, in a university laboratory, one might use quite exotic chemistry, quite exotic resins or affinity resins, things that work extremely well in the laboratory environment, but just are too expensive or unavailable and scale for commercializing a product.

So I think really that plan to succeed is really looking and going you know, almost a risk based approach saying this is the final scale is 1000 litres or 10,000 literess and I need 500 kilograms of this material. I need 50 grams of this. Is it available? Is it going to cost me hundreds of millions of dollars, particularly here in the time of pandemic when materials are under short supply or being used by by many, many pharma companies.

Having that security of supply and knowing that you can take it through from, you know, laboratory scale to medium scale, right to full commercial scale is very, very important.

And that will prevent tremendous problems later on.

There are examples of companies that have had affinity resins that cost tens of millions of dollars for a batch.

And obviously, that that will make the cost of goods and the availability for patients almost impossible.

Adam Levy: 10:23

Now, when a company is looking to produce a product en masse, what are the advantages of doing that relatively locally versus perhaps having those processes carried out overseas?

Charles Christy 10:36

Commercial processes is really almost independent of location.

For sure, there are locations that are easier in terms of language. in terms of communication.

You know, if you’re going to work in time zones, which is a 12 or 15 hours. Timezone differences can be extremely different, difficult for a small company.

So I think more it’s about convenience. At the commercial scale, it’s really much better to have a scale of operations which gives gives you a cost of goods and security of supply.

So going to the largest facility possible always reduces the cost of goods, always makes that supply more reliable.

And that may not be available locally.

So from my point of view, commercial, I don’t think it matters as much. And I think it’s actually in that process of taking it to scale where you need a very close partner, because there’s much more interaction.

Adam Levy: 11:27

We’ve been talking about scaling up the production.

But on the other side of that, how do you begin to scale up demand and try and reach overseas markets, whether it’s with a new piece of engineering, or medicine?

Charles Christy 11:40

The key to do that is to do scenario planning. And scenario planning is really to look at the competitive landscape and then see where you are vis a vis the competitors, are you likely to get to market first, what is the likely dosage of the product?

And of course, most of these will will be wrong. The patient populations will change, the dosing may change, depending on the potency or the strength of the product.

But it gives you an ability to estimate. And from those estimates, you can really then start to say, “Yes, we need to scale up to a 5000 litre process, or 20,000 litre process, or let’s say those estimates, those planning processes can then be refined and adapted as you go along the path to commercialization.

So you’ve really got to be planning for success from the outset. Now, what

Adam Levy 12:28

About the human side of scale? As a business grows?

Of course, that means growing the number of people working for the business? How do you handle that? And what new considerations does that raise?

Charles Christy: 12:40

I think it’s a very important point out and I really think that there’s two choices there.

One is the, as you say, the choice to grow the company.

And if you take the companies, typically, at a startup stage, they’re very entrepreneurial, typically a founder this, there’s a core scientific, very close knit team, they really live and breathe the product.

And as you bring on, as you as you would increase the scale of that company, you’re actually diluting that core resource.

You’ve got to onboard people, you’ve got to train them, you’ve got to really work hard a) to keep that culture of science, and b) not to dilute those key resources as you grow.

So it’s one of the biggest challenges.

And I think really the second challenge is that core team is really used to science and used to maybe fundraising from from early seed funding, and really then has to change to being a commercialization team.

How do you commercialize it? What are the elements of that? And that culture, from science to commercialization is a completely different skill set.

Some companies do that by growing internally, and some companies, for example, will use partners to outsource.

And I guess that’s a choice. And it’s a very fundamental choice at the beginning of a company is as the as the human considerations.

Do you build up an internal team for a single product, which may or may progress or may not progress?

Or do you use partners? Sponsors, for example? A contract development and manufacturing organization?

And we would do manufacturing and all the various elements of the chemistry, the manufacturing controls, the quality

Do you want to grow? And how do you change your culture from this early entrepreneurial ship into a more commercial organization?

Do you partner do you bring on lots of people at the same time?

Adam Levy 14:32

How do you see this, this process of scale both on the human side and the technical side, going wrongfor some companies?

Charles Christy 14:41

I think the lessons are learned quite often is that that is about planning and it’s about communication, that you’ve really got to not have one plan, you need to have multiple plans.

You need to be able to adapt as you go through the lifecycle of the product, or biotherapeutic and have a Plan B, and aPlan C, and really adapt

The second thing that I think one of the elements that we’ve seen is that quite often these companies go far too fast at the beginning, and they make compromises.

And I think the compromises can be, you know, in terms of quality, in terms of robustness of the process, or some of the analsyst that may be needed.

And that will come back and bite. So it’s going fast enough to be competitive and to get the product through to the market.

But without those compromises, which will either cause a regulatory hold on the product, or the need to go back and repeat an element of that product, whether that’s repeat a study or repeat a manufacturing step, that can really cause a six month or a year delay.

So I think that that element of really, how do you take enough risk to be fast and to be flexible and agile, but without compromising the quality of the product, because that’s really where you want to be?

All of these elements need to be built in from the beginning of the process.

Adam Levy 16:00

I wonder if you have any stories or anecdotes of times, you’ve seen this really not go right for company or for folr agroup?

Charles Christy 16:11

Actually, unfortunately, it’s one of the major ones. If you look at, if you look in Food and Drug Administration in the US, is one of the organizations which which qualifies and authorizes biological medicines.

And most of their rejections are really around product quality or around product robustness.

And those delays can be six months to 12 months, and can actually mean the company either doesn’t make it first to market and then loses tremendous market share, or runs out of money or has to refinance because the cash burn.

If you have to go back and repeat six months or a year or even another clinical study, that delay, and that cash burn can can really jeopardize the future of the company.

We see it far, far too often. I think that’s why, certainly in biotherapeutics, you see now with monoclonal antibodies with vaccines, people coming to companies like like Lonza, and like big pharma, where they have platform processes, which are proven and that have really stood the test of time.

So it’s a race to be first. But the risk is to avoid these sort of catastrophic errors which derail you and then you’ve got to repeat a development project.

Adam Levy: 17:23

So what should companies that are still at a fairly early stage be doing to prepare for these questions of scale that are going to come up further down the line?

Charles Christy: 17:36

Quite often, companies now coming back to these lessons learned actually do a lot of these de risking activities now earlier on in the develop.

So people look in particularly biotherapeutics, at these little studies called manufacturability, stability formulation, ease of use.

These types of studies that can be done early on really then pay off later on in development, because you know, then the process is able to be manufactured. Money invested early on in these types of critical questions almost always pays off.

Adam Levy: 18:10

If a company does choose to partner up to help make these questions of scale and growth more manageable. What do they have to be mindful of to make this relationship as fruitful as possible?

Charles Christy: 18.21

When you do have a partner and you work with a company or an outsourcing partner for, for these activities, two or three lessons there.

I think a very critical one is you’re going to partner with somebody, it takes a long time to set that partnership up, you have to invest a lot of time and resource into that.

I think that’s critical. And I think lessons are about trust and about communication, identify risks, be very transparent and open with each other.

That partnership, if you’re going to start with a company, that’s going to be a partnership that can last for five or 10 years, or even longer.

And it’s critical to the success of a small company.

So don’t just see it as a throw-it-over-the-fence and you’re paying money to get a service. I think definitely invest more time in that.

Look at that as a partnership where it’s going to grow together, over-communicate at the beginning, even though those meetings every week or two weeks and only last five or 10 minutes.

That effort at the beginning will pay dividends as you go through that product development cycle.

Adam Levy 19:24

That was Charles Christy.

As things grow from what may have been a research project and into a fully fledged business, you’re going to be increasingly relying on other people.

Wei, who we heard from earlier explains that this can easily present challenges

Wei Wu 19:40

Since there are also many people involved like manufacturers and subcontractors and something and then they have somebody is sick or something then everything is also delayed.

So that’s something we always have to deal with.

Adam Levy 19:54

And in our next episode, the fifth in the series, we’ll be talking about exactly, this how to deal with setbacks, whether that’s a deal falling through, or a global pandemic.

Because if there’s one thing you can expect in business, it is, of course, the unexpected.

Stay tuned for that episode. This has been Working Scientist, a Nature Careers podcast.

Thanks for listening. I’m Adam levy