Professor Ellen Rudnick spoke with pharmaceutical entrepreneur Michael Pape about the challenges of starting and growing a business.
Rudnick: You are a partner at Orchard and CEO of Nymirum. You teach classes, serve on several boards, and are active in church work. Do you think that diverse activity is important to how you do what you do?
Pape: It's incredibly stimulating. I have a favorite quote that characterizes entrepreneurship that permeates all the connectivity: "Entrepreneurship is the pursuit of opportunity without regard to resources currently controlled." It so captures the essence of the whole mosaic that is my life. I have four children and a grandchild; even raising a family is entrepreneurial. You may not have the money, the house, or even the needed virtues; the resources may not be under your control. You just do it.
Rudnick: Despite our best efforts, we can never totally prepare students for the extreme challenges and total commitment necessary to being an entrepreneur. What do you wish you had learned that would have helped you in the early days?
Pape: What I learned actually did come out of Booth. I was surprised by the absolute pervasiveness of incentive thinking in each class. It was ubiquitous. I've seen it on boards, in companies. What is their incentive? Booth massaged it from a lot of different angles: the structure of a deal, the number of shares you own in a company. When we're talking to potential partners about buying one of our companies, we try to get on the other side of the table and figure out what would make them want to buy it. Do they want something that's closer to launch? Do they want to structure a deal in a particular way for tax purposes?
Rudnick: What drew you to entrepreneurship?
Pape: The key was when I was offered a position as a professor but I also had an offer from Parke-Davis in drug discovery. I decided to go the latter route. The business captured my imagination. That's where the resources were. This was the late 1980s, early 1990s, and there weren't that many biotech companies. Later on, the idea of starting my own business became enticing.
Rudnick: Which comes first for you: the entrepreneurial challenge or the scientific challenge?
Pape: They're both filled with uncertainty. You have to learn to deal with shades of gray. You always have incomplete information. The modern scientific enterprise is about prediction and control: If high blood cholesterol increases your risk of heart attack, then how can we control that? On the business side, there's the market: What is the current standard of care, what is the FDA currently prioritizing, what are other companies working on?
Rudnick: The Forbes list of 20 most promising companies has no companies in health care. Why do you think that is?
Pape: We're in a cycle where information technology is the hot area. IT has higher highs and lower lows. Health care kept many VC portfolios alive during the early 2000s when IT crashed. Over time, health care outperforms, but we'll never have the attention that consumer technology companies like Twitter or Facebook receive. Science can be difficult for the media to explain, or for investors to understand, but that asymmetric information is exactly what generates superior returns.
Rudnick: As busy as you are, you've managed to keep a good work-life balance.
Pape: There was a guy who came up to me one day early in my career. I was working really hard in the lab, trying to succeed. He said, "I lost my family to science. It was like I was married to it." He said it with real sadness in his voice. "Don't throw things away in order to be a big shot." It was a great lesson to keep your eye on balance. ■
Photo by Beth Rooney