Keys to Launching a Successful Startup with Lorraine Marchand

Keys to Launching a Successful Startup with Lorraine Marchand

Mark Bayer: [00:00:39] Hey, everyone. This is Mark Bayer. And thanks so much for tuning in to this week’s episode of When Science Speaks. Today’s episode is brought to you by Bayer Strategic Consulting in Washington, D.C., which helps scientists and engineers get funding, gain influence and build relationships with the stakeholders who matter most.

Lorraine Marchand: [00:00:58] It is such a great pleasure to have Lorraine Marchand on the show today. Lorraine is a life sciences consultant, speaker and educator. She’s held executive roles at Bristol-Myers Squibb, Covance, Ocular Proteomics, and Cognizant Technology Solutions and currently leads global R&D at IQVIA.

Mark Bayer: [00:01:15] She knows the world of startups firsthand, having founded four companies, and is an expert at showing scientists how to communicate the value of their innovations. Lorraine has helped numerous entrepreneurs successfully commercialize their technologies. I’ve invited her to be my guest today because of her proven method for successful innovation. It’s based on data driven problem solving, followed by solution prototyping. And then, and this is what people very often neglect, it’s punctuated by specialization and contingency planning and what she has termed the art of the pivot. “You never fail. You always learn” is one of Lorraine’s mantras. And today she’s gonna share her insights and best practices. And we’re really so fortunate to have her with us to do that. Lorraine holds an MBA from Columbia Business School and the London Business School, Master’s from the American University and a Bachelor of Science in Science and Journalism from the University of Maryland. Lorraine, welcome to the show! Thank you so much for setting aside the time in your busy schedule to be with us.

Lorraine Marchand: [00:02:22] Oh, Mark, thank you. It’s my pleasure because we’re going to be talking about my very favorite topic. So this is an easy one for me to get excited about.

Mark Bayer: [00:02:32] Great. Great. And, you know, you are an expert in storytelling and effective communication in the startup environment. And many of our listeners are very interested in both of those aspects. You know how to put together a strong narrative, tell the story and in results oriented, jargon-free language of their research. And then also interested in startups, potentially entrepreneurship. And you combine both of those things. And so I’m wondering if to start off, you could provide an example of strategic, well crafted communication of scientific information or technical information. One that sort of is well done and one that’s maybe not so successful.

Lorraine Marchand: [00:03:14] Mark, I get this question a lot. So thank you for the question. And let’s look at a couple examples. First, let me use a simple one everyone can relate to and I’d like to turn things around for just a couple of minutes and ask you a question. OK. Good. Yeah. Mark, what do you like about your smart phone?

Mark Bayer: [00:03:40] Well, I think one of the things is that it actually makes me smarter because I can carry in a small package so much information that, you know, I need at my fingertips and then just things that, you know, come up that I want to know a quick answer to. So it’s I know people sort of think of it sometimes as some sort of like peripheral like a peripheral brain. And I kind of see it that way, too, like in a small package. I can just, like, have so much information. And that’s not even the phone part, which most people don’t even you know, it’s a kind of almost an afterthought. It’s just I just love the fact that I’m able to get so much information and keep in touch with people, too. I guess mostly, you know, by text now. But it’s just a great compact way to carry with you the biggest libraries in history.

Lorraine Marchand: [00:04:36] Mark, with that answer, you told us a little bit about who you are. What do you care about? And the features and benefits of your phone that matter most. Now, let’s examine what you didn’t say.

Lorraine Marchand: [00:04:52] You didn’t open up by saying that you have an iPhone A11 that weighs six point eight four ounces and is six five three inches in size with a six point one inch screen powered by Apple’s new A13 bio I.C chip with one hundred and twenty eight gigabytes of storage and dual ultra wide cameras.

Lorraine Marchand: [00:05:17] Did you know none of that? No, not at all.

Lorraine Marchand: [00:05:20] Why not?

Mark Bayer: [00:05:23] It’s just that to me sounds like so kind of like just dry and like it’s not maybe, you know, like it’s not really results oriented. So then the question is so what can you do with that stuff. And that’s what I care about.

Lorraine Marchand: [00:05:37] Exactly. The technology description fails to communicate what you love about your phone. What kind of experience it gives you and why you chose it over competing products and how you use it. Let’s look at a Lifesciences example. I want you to listen to these two pitches and tell me which one communicates the value and attributes of the technology. Here’s number one. My lab has been studying the vitreous proteome for 15 years. We have filed patents on our discovery of 10 biomarkers in the vitreous that we believe are associated with wet macular degeneration known as wet HMD. This eye disease causes bleeding in the retina and can eventually lead to blindness. We’ve developed an assay that demonstrates changes in the levels of these biomarkers before and after the injection into the retina of drugs used to treat this disease. We plan to develop a diagnostic test to predict response and non response to therapies used to treat this eye disease. OK, Mark. Did you get all that?

Mark Bayer: [00:07:00] I heard it. I heard some words that I recognized and some that I didn’t. I know macular degeneration is very, very bad. And then I heard a lot of other things like assays that I don’t usually use or completely understand.

Lorraine Marchand: [00:07:15] OK, now let’s try this version of the pitch. Eleven million people over age 65, including my mom, have an eye disease called what HMD, which can eventually cause blindness. Doctors have five different drugs to treat that HMD. But the problem is 70 percent of patients don’t respond to their treatment. And doctors go through a process of trial and error over many years, trying different drugs to see which one works better. Our solution? We’ve developed a test used in the doctor’s office to help determine whether a patient is responding to their therapy so they can get on the drug that works. I’d like to tell you more about how our technology works and how you can help us get it to the market. Mark, what was different about the two message tracks?

Mark Bayer: [00:08:16] You know, it really told the story, and I think it’s so important. I love it, Lorraine, that, you know, a lot of times scientists should say, because we’re talking about this and obviously our audience, they’re told to tell a story or a narrative. It’s not necessarily like a story from beginning to end, but it follows like what you were describing, first of all, very accessible language and and using, you know, vivid types of descriptions that everyone can understand, starting with mom but also on top of that talking about the doctor’s office. And I just I was able to follow you step by step the entire way rather than getting diverted by words I didn’t understand drifting off when you started talking in the first example of some vitreous something or other that really was way over my head. And so I just enjoyed your description – I wanted to get to the end because I was following you every step of the way. I wanted to hear how the story was going to end.

Lorraine Marchand: [00:09:21] And that is the point. The first example describes the research and the technology. But it wasn’t until the last sentence that we learned something about the application of the technology.

Lorraine Marchand: [00:09:34] It is what we call burying our lede. Keep in mind that because of the digital communication world in which we live, the time we now have to capture someone’s interest is seven seconds, seven seconds for that investor or strategic partner to decide if they want to tune into our message in the first example. We used our seven seconds to communicate that we’ve been researching the vitreous proteome for 15 years and have filed patents, 10 biomarkers.

Lorraine Marchand: [00:10:15] Is that enough to keep someone’s attention? No. Maybe not. Yeah, right. Right, right. Right. Now, in the second example, we learned that 11 million baby boomers have a potentially blinding eye disease, including Mom. So read skin in the game and most don’t respond to drugs on the market. We described a problem. We gave it a name, a number, a face and explained our solution in lay terms. So to sum it up, the way we communicate our scientific advances in a way that’s compelling and impactful is to start by describing the problem, the unmet need in human terms, using numbers and details for impact. Number two, we explain the solutions in simple terms, people can understand the new iPhone lets me take amazing photos creating memories every day or what the HMD Test may help doctors determine who will respond to treatment and who won’t. So they can get patients on the drug that will work for them. And third, the investor. Now that you understand the problem and I’ve defined our solution. Let me tell you how and why you should invest in helping us bring this differentiated technology to market.

Mark Bayer: [00:11:47] What am I supposed to do? Like, what do you want me to do? And it was it’s so interesting to have to say, Lorraine, because when I was on Capitol Hill, you know, for during a big part of my career, you know, we always needed to know, OK. You’ve described the problem. Then what? What do you want us to do? You know, it’s that call to action that is just so vital. And it was really interesting and crisp the way that you got to that.

Mark Bayer: [00:12:14] Exactly. The call to action? I couldn’t have put it better.

Mark Bayer: [00:12:18] Now, let me ask you this question that follows sort of from your example. And this is a question that I get a lot. And I’m really interested. I know it would inform our audience to get your perspective on this, which is, you know, the idea that I want to communicate the real world results of my innovation. But I need to be accurate. And I don’t want to overhype it. You know, in working in this community of these these amazing, talented, inspiring researchers who are looking to really push the bounds of what’s possible and uncovering these discoveries. And it’s so exciting at the same time, this training that at the same time this cohort of folks received, to follow the data. Don’t overhype, you know, maybe use the passive voice, you know, and always leave open the possibility that what they’re working on is not going to turn out the way that they hope. And it’s sort of leading down that trail. How do you balance that tension?

Lorraine Marchand: [00:13:30] Well, Mark, we all appreciate that every opportunity has a challenge. Every pro, a con, and it’s no different in the business of science. Well, we need to clearly state the benefits of our technology and communicate a reason to believe. We also need to address risks proactively and provide fair balance. But we don’t stop there because there’s always risk. We need to present a mitigation, a contingency plan B. So drawing on our example about the wet HMD diagnostic after our opening pitch, we acknowledge that our program has some risks.

Lorraine Marchand: [00:14:18] For example, the samples used to date have been from a sample bank of frozen vitreous. Yet for FDA approval for our test, we need to run a prospective clinical trial to demonstrate that the biomarker changers are consistent and the changes are statistically significant in a large sample size. But we’re going to manage this risk, right? So we’ve got the risk. But now we’re going to talk about how we’re going to mitigate the risk. We’re going to manage this risk in the trial by developing a profile of responders and non responders and then targeting patients subtypes, who we believe will clearly benefit from the test.

Mark Bayer: [00:15:03] Yep – you’re demonstrating how thoroughly you’ve got your mind and your arms around this issue and looking at it from all these different angles. So interesting. And so, so specific and helpful and actionable for listeners. I want to shift a little bit to the next question, which is, you know, we know this term alternative facts. You know, it was born in twenty seventeen. Kellyanne Conway first said those words on Meet the Press, but the virus – it’s the latest variant of a mutation of a virus that’s been with us for centuries and centuries. But when I talk about that sort of meaning, I’ll turn to facts or pre-existing biases, they could be based on incomplete or incorrect data, you know, kind of maybe drawing conclusions from a small data set and kind of applying them more broadly when that’s not called for. Do you feel like maybe given your extensive experience, expertise in being in these rooms on both sides and teaching about this? You know, when you first of all, when you’re thinking about an alternative fact as a kind of a pre-existing bias that your listener may have, is that, you know, how do you see that as an impediment to innovation? And then how do you recognize that you’re in that kind of dynamic, kind of facing that sort of belief system, if you will? And how do you recognize it? And then how do you address it? How do you try to overcome it?

Lorraine Marchand: [00:16:48] Well, Mark, whenever I’m communicating science or technical content to an audience, especially a lay audience, because as you pointed out, even in my teaching, I often have students who are what I might call tourists of health care, medicine, science. I first do what I call a perception audit. And in a perception audit, I identify with the attitudes, knowledge, biases, perceptions of the audience might be. And then I get them into the open. At the beginning, I worked them into the talk.

Lorraine Marchand: [00:17:27] Why? Well, first, by dealing with the perceptions upfront, I reduced distractions during the talk or in the Q&A. Sometimes the perceptions and biases sound unfounded. When you say them out loud, they lose their sting. And secondly, I create through this method empathy with the audience. They feel understood and much more tuned in to my explanation or the facts that I’ll present. And I’ll give you you an example of a recent example. I was giving a talk a day after the  coronavirus story broke. There was a lot of confusion, misinformation and hype at the time. Some of the misinformation was around the origin of the virus. And I knew members of the audience had heard rumors that the virus was manufactured in a lab and might be a terrorist tactic. I opened the talk by pointing to the rumors and speculation given we knew so little about the virus.

Lorraine Marchand: [00:18:39] I said it was completely understandable, but I then went on to reference the data that the Centers for Disease Control had gathered at that point, isolating the virus to the bats sold in the food markets in Wuhan. I explained animal to human transmission of viruses. I reminded everyone of the Saar’s outbreak, which is also a coronavirus. I explained how vaccines were developed, why it takes so long, and I could almost see people in the room breathe, relax, nod their heads.

Lorraine Marchand: [00:19:16] And afterwards, many came forward to thank me for that simple lesson in virus transmission because I had actually reduced some of their anxiety around this misinformation and these misperceptions that had been in the rumor mill.

Mark Bayer: [00:19:34] I have to say, Lorraine, that she’s I mean, it’s so skilled, sophisticated.

Mark Bayer: [00:19:41] I mean, it’s what I would expect from a person of your caliber. It’s so beautiful to hear and elegant to hear you doing that.

Mark Bayer: [00:19:50] And underlying what you said and even the way you described it is you did all these things with genuineness and authenticity, taking these at face value and suspending any sort of judgment about them. And, you know, getting them out in the open, as you point out, you’re taking some of the sting out of these things. So well done! And and brilliant, I have to say. And then, of course, you got this response. And I think, you know, just underlying it, the sort of empathy that you were showing as far as taking these concerns seriously must have gone a long way.

Lorraine Marchand: [00:20:44] Well, I do believe, Mark, that when you display empathy and people feel understood, you have a much better opportunity of having a dialogue of having influence over them and having a more positive outcome.

Mark Bayer: [00:21:02] People need to feel heard. And that can be, you know, that’s really a prerequisite that often is ignored. I’m just going to dictate to you or maybe even imply how stupid these things are, how crazy. And perhaps they may be, but you can’t, you have to take them seriously to open up that channel, as you pointed out.

Lorraine Marchand: [00:21:32] Exactly. Exactly. Otherwise, you have people sort of challenging you throughout the talk and you just don’t have their attention because you haven’t been able to settle their mind and recognize and honor the view that they have. Whether it’s misguided or not, they still need to be recognized.

Mark Bayer: [00:21:55] Thank you for that example. So, so important. Now, you’re a veteran of launching companies. And so what are the essentials that you feel every entrepreneur should know and should be doing and if possible, things that she should be avoiding in starting a company?

Lorraine Marchand: [00:22:17] Sure. So, Mark, the essentials that every entrepreneur needs to know in starting a company. You know, first and foremost, you need to start with feasibility. And the feasibility is an assessment of the risks, the risks of your technology, the financial risks and the market risk. Those are the main large categories.

Lorraine Marchand: [00:22:45] And after an honest assessment of those risks, the entrepreneur needs to make a go or no go decision. And so I think that’s sort of the first inflection point is to really understand those risks and determine whether it makes sense to continue with a pursuit of this technology and trying to transition it into a company.

Lorraine Marchand: [00:23:11] That’s essential. Secondly.

Lorraine Marchand: [00:23:18] And entrepreneurs, especially scientists, entrepreneurs, oftentimes make this mistake.

Lorraine Marchand: [00:23:25] You have to have a strong management team and that management team has to have a track record of success. So I think the scientist has to keep that principle of staffing to your weaknesses in mind and knowing that while you have the scientific acumen, you likely don’t have market investing experience or

Lorraine Marchand: [00:23:51] financial regulatory acumen. And you have to find the best talent to bring into your entity or into your project so that you are getting as much benefit as you can from having a very talented, well-rounded team, and preferably one that has been down this road before and has been successful. That’s number two. Number three. And again, I see physician entrepreneurs make this mistake, too. But having experienced this myself, my guidance is to raise as much money as you can. Early on, too many entrepreneurs are afraid of giving away too much equity early on, and they therefore undercapitalize their enterprise and then find they can’t raise the money later. And we have so many examples of that happening around the 2008 recession, depression that we had when the markets were very much opened up. You know, going into twenty nine, 09, 2010, a lot of entrepreneurs held back on maximizing that. And then we went into the Valley of Death for several years and we really saw a spike in the number of ventures that just were not able to get the capital to move forward. So you always have to evaluate the pros and the cons. But my guidance is get the capital while you can.

Mark Bayer: [00:25:27] One question about this and really such valuable advice, Lorraine, in the early stages when you are looking, as you point out, you really should be raising as much capital as possible. On the other side, you explain why people can sometimes be hesitant to do that. Are there ways of you know.

Mark Bayer: [00:25:49] So would an idea sort of be to try to raise the capital without sort of the dilution, maybe going after grants or other programs, funding from other federal programs, for example, or other things that don’t require equity in exchange?

Lorraine Marchand: [00:26:04] Yes, absolutely. You want to go from the the mildest form of capital or the non dilutive forms of capital up the ladder, if you will. So to the extent that you can apply for a small business innovation grants from the NIH or the SBA or the other federal agencies, that you have high net worth individuals in your circles or if not high net worth individuals, family and friends who are willing to be early angel investors. Those are obviously the first two forms of capital raise that you want to try to achieve because they are non dilutive or at least with the angel investing, mildly dilutive impact on, you know, once you get up and running, if you’re successful, then you’re going to need to transition to venture capital and the various levels of venture capital. And yes, you can progress on this ladder in a way that is phased and tranched and appropriate for the growth of your enterprise and also feels comfortable to you.

Mark Bayer: [00:27:17] Sure. So I really love how you added that at the end, because that is so important. You know, you’ve given us so much actionable information and specific information. I’m wondering in the next question if is there anything just thinking about communicating your message to investors now taking that sort of tranche of the communications pie, the audience, you know, segment, that audience segment, let’s put it that way. Is there anything that you think either bears re-emphasis from what you talked about previously or maybe something that’s a little bit different in degree or kind when you’re talking about messaging to investors in particular?

Lorraine Marchand: [00:28:04] Yes. And some of it’s going to reinforce some of the messages that we’ve already discussed. But in terms of talking to investors. Number one, remember that investors are looking for a commercially viable product that the market wants that a buyer will pay for, and they want to see a business plan that minimizes exposure to financial, technical and market risk. Number two, they want to see a solid technology that is solving a real problem based on research with the key stakeholders. I always tell my students we don’t do innovation in a vacuum. Sitting in the office, we need to get out and talk to at least one hundred customers or other stakeholders that are going to be impacted by our technology in order to prove its merit and to prove that we have somebody who wants our solution. And importantly, that decision maker or that buyer needs to be willing to spend money to fix the problem. And they need to want to spend money on your solution, at least potentially really, really important. If you ask somebody if you’d like this feature or this app on the iPhone, they’ll say, sure, if you ask them the question, are you willing to spend fifty dollars a month for this feature, for this app on your cell phone, you might get a different response. Number three, we talked about securing a management team that has succeeded before. And one of the reasons that I emphasize this is because after the solidness of the technology and the de risking, the second thing that investors look for that’s the most important to them is investors like management teams who’ve had a series of successes. So they’re going to look at the talent and the track record of the team for be objective and pragmatic decision. Entrepreneurs need to demonstrate that they’re not in love with their technology

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