the adventures of hippleberry lou: May 2012

This is the story of Kahn, and I can’t tell it without telling…

THE STORY OF THE CARD

It was June 12^th, 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 in high school. 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 Rhode Island, 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 Brown University—he got tenure at some insane age like twenty-four or twenty-five. He had also gotten a PhD in chemistry and physics from Johns Hopkins by age twenty three (he completed all the requirements by age twenty two). 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.

THE “PRINCE OF OPTICS”

He was known as the Prince of Optics. At Brown, he had done a lot of work with lasers, and as I understand one of his seminal contributions, he had figured out that you don’t have to bounce light off a series of mirrors in a deterministic way in order to create a laser beam. Instead, you could let the random nature of light work in its own way to create a similar effect. As long as you had random scattering in an appropriate medium, you could create the same beam that was created by bouncing it off mirrors.

Kahn really wanted to apply that technique 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 anti-counterfeit technology for currencies of the world. 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 on building what was called the laser chip—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 never 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. The device in their machine was a little capsule that they called a kan. 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. The big machines could handle an enormous number of these small capsules, so they called that machine the NANOKAN.

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. The scientist from GSK who was planning to spend a significant amount of his time over the next several years working with Khan on this was certainly not happy with the recommendation. 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. And I’m very excited about trying to bring two of them to people’s attention now, and seeing if we can’t set the world on fire with those products.

KAHN’S EXCITING NEW INVENTIONS

One of them is a new solar-energy technology that doesn’t use silicon. It uses dyes and has the benefit of having rechargeable panels that can be serviced by someone who services an air conditioner. This makes them sustainable over decades, and they’re in a format that can be upgraded with increasingly efficient dyes as those technologies are developed, so they can covert higher and higher rates of sunlight into solar energy. The dyes are colored, too, so there’s a visual, artistic aesthetic to the technology that silicon-based panels do not have, as well as a very clever, scientific angle. This is very exciting stuff! If a technology like this could be developed and become widespread, it would make a big difference in the world.

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—for the medical field, for a technology that allows people to put print and pictures on the play-side of CDs and DVDs, the solar example, and the drug-discovery example. 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 emblematic of all the people in my life. 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 drove down to Providence and 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.

late spring, 2008.

story produced in collaboration with Corinna Fales.

the adventures of hippleberry lou

Tuesday, May 29, 2012

Saturday, May 26, 2012

the bonnies orphanage

hippie lou meets kahn, unabridged

Friday, May 25, 2012

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