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

Xconomy National — 

You’ve spent years working hard to hone your skills in science, medicine, or business. You’ve accomplished things, and you have the talent and desire to do more. You may be bored, or stuck at a dead end job in academia, Big Biotech, or Big Pharma. You are intrigued by a job posting you just saw at a biotech startup, and the company appears to be showing some interest in you.

It’s a great position to be in, but you may quickly discover you’re out of your depth. What are the things you ought to know about the company before you make that life-altering decision to take a job at a startup? What questions should you ask? Where can you get the straight scoop about whether this opportunity is a fair deal?

These are relevant questions for many people, as biotech companies are starting to hire more after years of recession-related belt-tightening. From 2011 to 2012, there was a 13 percent increase in employee headcount at companies listed in the Nasdaq Biotechnology Index, according to the accounting firm BDO. Many people being drawn to those jobs are smart people with specific expertise, but are naïve about how to evaluate a startup. I know, because many people in this camp have been asking me for advice lately, and I haven’t felt very well equipped to offer detailed answers.

So, I spent some time last week interviewing a few savvy insiders about what biotech job candidates can and should do to study a startup before they sign up. I spoke to Bob More, a senior advisor for venture investing with the Bill & Melinda Gates Foundation; Craig Greaves, recruiting partner at Third Rock Ventures; Thong Le, a managing director at WRF Capital; and Michael Gilman, a scientific entrepreneur formerly with Biogen Idec (NASDAQ: BIIB) and a startup called Stromedix.

I’ve tried to distill the various thoughts into a set of guidelines below. If you have other suggestions, please leave a comment at the end of the story or send me a note at [email protected]

Get to really know the senior management team, and I mean really! This is a science-based industry, so put your scientific hat on, observe the people who run the company, and try to ask the key questions. Dig deep. Look at this person’s work history on LinkedIn, and track down people who have worked with this person in the past. Does this person treat people fairly? How does he or she perform under pressure? Does the CEO, or other members of the senior team, have previous experience at a startup? Does this person have a track record of success? Credibility in the industry? Do they have the trust of investors? How did this person react to their first failure? Does this manager seem to really believe in the mission of the company, care about the company, care about you? “If those answers are yes, you’re in position to consider the job,” Le said.

Thong Le, managing director of WRF Capital

Thong Le

If you’re the person who thinks you’re being hired to do a specific thing, and you don’t really work that closely with the boss at a startup, think again. Many companies, particularly those with 30 employees or fewer, are small enough that the boss is closely involved and aware of detailed, day-to-day matters. As Gilman put it, “it’s important to understand that there’s a much sort of stronger food chain in a company than generally there is in an academic environment. There’s an egalitarianism in an academic lab. But if you work at a company, you have a boss. That boss is second only to your spouse, and maybe not second, in terms of people who can make your life wonderful or miserable. It’s important to pay close attention to who that person is.”

Greaves, the recruiting partner at Third Rock, said all CEOs … Next Page »

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

  1. Denise Clarke says:

    “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?

  2. Truth Williams says:

    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.

  3. Argo says:

    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.

  4. Tom Klopack says:

    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.