This is the story of Kahn, and I can’t tell it without telling…
THE
STORY OF THE CARD
It was June 12th, 2000, and I was working for a large
corporation. I got a call from my boss, who said, “David, why don’t you come
over? You’re going to be able to hire another person for your department, and I
want to discuss the details of his inclusion into your department.”
So I went over to my boss’s office in the executive wing. And when I
walked in, it was like the scene in Goodfellas
where Joe Pesci thinks he’s about to become a “made” man—then walks into the empty
room or whatever it was, and knows immediately that his minutes on earth are
numbered. I had a similar feeling.
My boss was seated next to the vice president of Human Resources, and he
proceeded to recite from a script that he had probably read more than once.
Then I was handed a packet of papers, which I was told contained the terms of
my departure if I chose to sign it, and was escorted into the next room, where
there was a social worker. He gave me his card and asked me if I was OK to
drive home, and if I wanted to talk about what I was feeling. I assured him
that I was OK to drive, and asked if I could be excused. Then I was escorted
back to my office by a handsome young man who worked for the security division
of the company, I frantically grabbed a few personal items, and I was escorted
to my car and off the premises.
Driving home, I felt a strange sense of relief, because I had always
wanted to build and create something I believed in and I finally felt I had something
to offer in terms of service, at least to the business community. I knew that
because I had made $50 million the previous year for the company that had just
fired me.
Sometime the following week, I got together with a good friend of mine who
is nicknamed Frogman. He had worked in the advertising business in its heyday
in the 1980s and still freelances as an art director. Although his work was
always visually compelling, I considered him much more balanced: He was a great
writer, he had a great visual aesthetic, and, as he described ad men and women,
they were “frogmen and women of the mind.” He certainly was that: He’s one of
the smartest and most intuitive guys I’ve ever met.
So we got together. And, as always, I had a hard time defining who I
was and what I had to offer and what my new company would offer clients—what
made us special. I knew I didn’t want to have a menu of services like every
other consulting firm on the planet, where you could order the egg roll or the shrimp-fried
rice. But what I had to offer was bit nebulous. So I spent some time with
Frogman and his wife, talking and trying to micro-manage things. I thought I knew what I had to offer, and I
was spewing forth. Frogman was great: He sat there and listened to about an
hour of my bullshit, and then he said, “I’ve got it. Here’s what we’re going to
do. The headline is, ‘This guy made $50 million in one year.’”
And within a day, I had a printer-ready version of a card—a
duofold—which looked like a business card. It was like a birthday card, except
that it was on its side, and its headline was, “This guy made $50 million in
one year,” in white impact typeface
in relief against a purple background. That was on the front, and when you
opened the card, it was a business card, with my name and phone number and new
consulting firm.
Then I went to the Dunn & Bradstreet database at Lehigh University,
which I could sneak into and use at no expense. And I picked a couple of SIC
codes, which are industry codes: If you’re targeting a certain type of industry,
you can punch in the SIC code and get the names of the companies in that
industry.
I was interested in the pharmaceutical and biotech industries, so I
punched in that code and pulled up about a thousand firms. I picked the CEO of
every firm and made a mailing list and proceeded to get special white envelopes
that looked like they contained wedding invitations. We didn’t want our
audience to think they were being solicited by a consulting firm—we wanted them
to think they were getting a wedding invitation or an invitation to a summer
party in the Hamptons.
A lot of big-shot firms were listed in the database and all of them
were in the northeast corridor, within a 250-mile radius of where I lived. I
think one of the SIC codes was actually for research-and-development-based (R&D)
firms, which were predominantly in the biotech industry, but there were others,
as well.
We stuffed our envelopes and scattered the cards to the wind. So they
went to the wind and I got a couple of calls. One guy, who I think was in his
sixties and had been in business for twenty years, called up just to say, “I
have never, ever responded to direct mail in my life, but I just had to call to
see who sent out this card!” That was a very nice call to receive, but no
business. There was another guy who called and said a similar thing, and
basically tried to pick my brain about a legal dispute he was involved in, but
wasn’t looking to hire me—the first of many who didn’t.
HOW I MET
KAHN
Then, several days hence, I picked up a voicemail. I was in my first
office in Allentown, which you might have read about in the story of W-LAND.
And this voicemail says, “Hi, my name is so-and-so, and I’ve got this combinatorial
chemistry technology, and I thought you might be able to help me out.”
I didn’t even know what combinatorial chemistry was. The only thing I knew about chemistry was that it was my
Waterloo in high school. I think it was one of the few classes that I got a “C”
in, though I think I actually got a “D” in physics the spring semester of my
senior year. By then, though, I was already safely ensconced in the college of
my choice. But in tenth grade, I just could not get the concept of the mole. It
was my Waterloo, and it was the last time I had tried to deal with chemistry.
Now, this is the greatest story, and it’s great for a couple of
reasons. One is that it’s why I believe we are entering a new age of self-determinism
and tremendous opportunity for creators. Ultimately, what I had to offer clients
was the ability to think and provide a fresh perspective for them, and an
independent view on matters that were important to them. And I always say that
if I had tried to open my firm twenty years earlier, in the 80s, I would never
have gotten my first client. You’ll understand why, momentarily.
I got the voicemail—thank God I didn’t answer the call live. I actually
didn’t even understand his last name at first, because he said it quickly and
it was unusual. But I Googled the name of his company, and he was on that page.
Then I Googled combinatorial chemistry and I think I stayed up all night on the
Internet in that tiny office in Allentown. By the morning, I knew about Kahn, I
knew about his company, and I was fairly conversant in combinatorial chemistry,
which had hit the pharmaceutical industry in 1998, so it was approximately two
years old at that point.
There were all sorts of things on the Internet. There had been
conferences on combinatorial chemistry, and I could find scientists involved in
it; there were chemistry publications online about how it was being used in the
pharmaceutical industry, etc. In short, there was a wealth of information about
Kahn, his company, and at least the functional area that his technology was
being targeted for. I also found information on some companies that were
producing combinatorial chemistry machines and were selling them to the pharmaceutical
industry. By the next day, when I called Kahn back and we spoke, I guess I
could bullshit well enough and was conversant enough in combinatorial chemistry
that I piqued his interest.
I MEET
KAHN
One thing led to another. Kahn was working with an eminent scientist
from GlaxoSmithKline (GSK) who is considered the grandfather of combinatorial
chemistry, and he invited me to a meeting with this scientist to talk about the
project. None of this was paid—we didn’t have a contract or anything—but I was
tremendously excited. Coincidentally, my cousin-in-law was an expert in
combinatorial chemistry and had worked in the pharmaceutical industry for
fifteen years. So I called him up and spoke to him at length, and he told me
the good, the bad, and the ugly. I was also able to track down some of the scientists
who had been at the conferences and I contacted them, and did a lot of other
research. By the time our meeting rolled around a couple of weeks later, I was
very conversant in combinatorial chemistry.
Had it been 1980, I wouldn’t have had access to any of that
information. The best I could probably have done was to go to the Library of
Congress, which would have probably have had the most comprehensive and
publicly accessible information about combinatorial chemistry. But it would
have taken time, and the materials would have been out of date. Who knows if I
could have been as responsive, and could have come up to speed as quickly—in time
to capture the interest of Kahn.
I probably did half the project before I was even hired to do it. It
was just that sort of thing—a desire to help Kahn. I had a tremendous interest
in the subject matter because it was something I had never done before, and I
was really excited about being able to help him out.
Lest you think this is a story about me, it’s really just the first
indicator about Kahn—the fact that he would get this card I sent out and would
think to give me a shot. To me, that speaks volumes about him. He’s a very
driven, smart, accomplished man, but he was open to a purple card that came in
a wedding-invitation envelope, and was willing to give it a crack.
Kahn embodied my ideal client. The entire time I had my consulting
firm, from 2000 to 2008, I kept trying to repeat my experience with Kahn—helping
him out and getting clients like him. So I find it strange that he was my first
client, and an ideal client in every sense of the word.
Anyway, I met Kahn when I went up to where his company was. I met him
and the folks that worked with him at his company, and his collaborators. And
the thing that struck me most about him was that he was sort of what I aspired
to be, and he had done it in a very accomplished way.
He is the youngest tenured faculty professor in the history of the Ivy
League school he was affiliated with—he got tenure at some insane age like
twenty eight. He had also gotten a PhD in chemistry and physics from another pre-eminent university by the time he was
in his early twenties. So he was an intense guy, but he also seemed very
down-to-earth and cool. He had a great sense of humor, liked joking around, and
was very welcoming. In my experience with people at institutions of higher
learning who were similarly accomplished, there were not many folks of Kahn’s
ilk.
OUR
SHARED PURPOSE
Kahn really wanted to apply his science to challenges faced by
businesses and industries, which was exactly my desire. I considered myself a scientist—not
a physical scientist, but a scientist, nevertheless—because at the University
of Chicago, where I was trained as an economist, they viewed economics as a
hard science and held to all of the tenets and practices of hard science. We
formed hypotheses that we tested and refuted, etc. And I really wanted to apply
that science and technology to problems in the real world—in particular to commercial
and business problems, which fascinated me.
I think Kahn was very similar in that regard and he’d already constructed
a company that had become a success by creating technology based on his
world-class science. He had several clients that were paying his company good
money, and he was looking for other things to invent and other business
problems to solve. The particular one that he initially hired me to evaluate
was the invention he was collaborating on with the scientist at GSK, which was
to build a technology that would speed drug discovery through creating chemical
compounds that might turn into new drugs. This would make the discovery process
exponentially more productive, both in terms of the number of compounds
produced and in reducing the time it took to produce those molecules.
It fascinated me! I flew down to North Carolina to the lab of the scientist
who was going to collaborate with Kahn—the place where this scientist took his
knowledge of chemistry and physics and built things. If I were doing it, I’d
worry about something exploding or going awry. But they were just using their
knowledge of the basic principles of chemistry and physics, along with some
clever thinking, to construct contraptions that did incredible things. And,
although I ever visited Kahn’s lab, my sense was that he was doing exactly the
same thing. That was fascinating! This guy was taking an industry and looking
at its main challenge—and the main challenge for the pharmaceutical industry at
that time is still the main challenge today, in 2008—which is for their labs to
discover drugs. Kahn had assessed that need and had come up with a clever way
to help them do it.
HOW
KAHN GOT HIS NAME
The reason we developed the name “Kahn” was that there was already a
machine on the market that did something similar—not as well as Kahn’s proposed
machine—but the company had a pretty well-established position and had sold a
number of their machines to the big pharmaceutical companies. And they were like the Three Little
Bears—with a big machine for the massive companies with massive budgets, and a
smaller one for companies with more limited budgets.
Kahn and I joked around, as scientists are wont to do, because coming
up with ideas is a tough business. A lot of your ideas don’t work out, and it’s
a lonely existence because you often wonder if they ever will and what will happen
even if they do. You really need to have an almost unhealthy belief in yourself
and your powers.
Kahn and I shared that disposition, and it manifested itself by our
making fun of the closest competitor. We developed this big joke, and called
each other “Kahn.” In the same way, when I was creating my consulting firm—and throughout
its existence—I always viewed other consulting firms that did strategy-work,
which I considered our domain, as never doing anything right or worthwhile or
useful. So this is how we got the nickname of Kahn, and why we used to call each
other that—sad, but true!
Anyway, a series of events happened that drew me in and really made me
passionate about Kahn, and a big believer in him. What touched that off was
what happened when I concluded that if Kahn built this machine, he would probably
not make any money, and actually stood to lose a tremendous amount.
There was a time when the pharmaceutical industry was open and
welcoming to the technology, and was willing to spend money on that type of
combinatorial chemistry.
But that day was gone. The main reason was that the technology that got
into the market was fraught with problems and created a lot of false leads that
burned up the scientists’ time—particularly the biologists’ time—and biologists
got mad and basically wanted to throw out the technology. It didn’t seem worth
it, because you had to spend a lot of time chasing down stuff, and when you
figured out what had happened and tried to recreate it, you couldn’t do it.
So there was a big negative stereotype in the pharmaceutical industry
against that class of technology. And even though Kahn had built a much better
mousetrap, that negative perception was going to be hard to change. Another
challenge was that there was a lot of consolidation in the pharmaceutical
industry. There were only about ten companies you could sell to, and once you
had sold to them, you were done. Furthermore, there was no guarantee that you
could sell to all of them.
KAHN’S
CHARACTER AND SAVVY
For a number of reasons, therefore, we gave that idea the thumbs-down,
which was not without risk. To his
credit, however, Kahn read my report, stress-tested it, asked the tough
questions, and then followed my advice. And as it turned out, he seemed pretty
happy about his decision not to invest several million dollars in trying to
bring it to market, and ended up being able to spend that money on the
development of other technology.
That was a great testament to Kahn and his thoughtfulness and business
savvy. He obviously wasn’t a scientist who just wanted to pursue ideas for
their own sake. He wanted to build a viable engine for his creativity that
would reward the people who had invested their money in his company. That’s the
hallmark not only of a creative scientist, but of someone who understands that
it isn’t all about the science—that, at the end of the day, it’s about getting
stuff into the hands of the people who need it and getting some sort of
exchange for it.
Over the next several years, I really became amazed by Kahn, whom I
visited regularly. He was astoundingly inventive and developed a number of
products with a wide range of applications for a wide variety of industries.
KAHN’S
EXCITING NEW INVENTIONS
There are other ideas that Kahn is working on and will work on in the
future. And I’m thoroughly convinced—I know it in my bone marrow—that this is a
guy who has the potential to come up with ideas that would create new worlds in
ways that I can’t even imagine. I’ve seen him do it five or six different times
in completely different applications and industries—in medicine, in media, in energy,
and in drug discovery. The possibilities are endless, so I’m very bullish on
Kahn and I really believe in him.
THERE
MUST BE A BETTER WAY
The other aspect of my experience with Kahn over almost a decade of
following him and being involved with him is the complete inadequacy of current
methods of financing to make the fullest and best use of his efforts. Over the
decade, my perspective of his company is that he has had to spend a significant
amount of his time trying to raise money, and dealing with the people he raises
it from. And it seems to have come at tremendous cost. He spends an inordinate
amount of time refereeing disputes, involved in legal proceedings, talking with
venture capitalists that are looking for the latest and greatest thing, and
involved with people who think they know how to manage his company and his
technology better than he does.
From my view, there has to be a better way. There have been times in
his tenure when he spends very little time discovering and creating and selling
into the market, and it’s because of the Faustian bargain he must make to
secure funds and keep the company alive. So it’s a real testament to his
resolve and persistence that he has managed to keep the company alive over the
last ten years. He’s built a credible business and is very optimistic about the
future.
What’s really been great about knowing Kahn and having the privilege to
work with him and try to help him out is it’s always a two-way deal—actually, more
than a two-way, because I’ve brought in some people to help Kahn who had influenced
me. So I don’t want to make it seem like just a two-way, but it certainly is at
least that.
And four or five years ago, when I was thinking heavily with another
colleague, we came up with a new way to organize R&D to make it more a lot
more productive. It was a fairly comprehensive and thoughtful scheme, and was
actually based on underpinnings from science and natural laws. It was
completely novel—so much so, that—as I remember, I took it to Cambridge,
Massachusetts, and tried to sell it to two gentlemen who oversaw what was
probably the second- or third-biggest pharmaceutical R&D budget in the
world.
For reasons I won’t go into, they were not buying it. But that night, I
hung out with Kahn and we brainstormed about it. And he had a great insight,
which was that one of the challenges in the pharmaceutical industry that
contributes to problem of R&D productivity is the fact that there’s a very
long time between building a better mousetrap for doing R&D, and knowing if
it actually works. In the pharmaceutical industry, you don’t know for ten to
twelve years if it’s producing better results, because that’s how long it takes
for a discovery to get to the market. So there’s a long period of time when
you’re trying to evaluate whether the fact that you built a better mousetrap
ten years ago is now producing more than the old mousetrap would have. It’s a
very difficult question and it takes a long time for people to figure out.
So Kahn made a very simple suggestion—which now seems obvious—to take the
new way we had developed to organize R&D and sell it to companies that had
shorter product-development times. That way, we could demonstrate a big
increase in productivity, and, with that success, we’d perhaps have a better
chance of convincing other folks that we really had something novel and useful.
That’s just one example of the many areas in which Kahn has improved my
thinking by several orders of magnitude. As is the case with all of the people
identified on this site, not only do I help myself through helping them, but I
always seem to get back more from them than I feel I give. And that’s something
I want to continue to do and celebrate and foster.
