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John Hebert, MIT Sloan MBA '03
Vertex Pharmaceuticals
Winner 2003 MIT $50K Competition, SmartCells
Letter written to Howard Anderson,
Instructor 15.390A New Enterprises

Hello Howard,

I hope to find you well. I'm sorry I did not get a chance to see you last Thursday at the E-Center evening.

I don't think I ever expressed my thanks for your class and teaching in the Spring of 2002. When I took 15.390 and tried to pitch the Sante Trainer exercise system to you and the class we pretty much got destroyed. However, I took the many lessons from your class and we won the $50K the next year with SmartCells.

Even here with my job at Vertex Pharmaceuticals I still use the metal checklist from 15.390.

So I guess what I'm saying is the kick-in-the-pants sometimes works in mysterious ways.

I hope to see you around Cambridge or the Back Bay in the months and years to come.

Warm Regards
John Hebert

Paige Arnof-Fenn, HBS MBA '91
Founder & CEO, Mavens & Moguls
E-Lab Company
Favorite inspirational quotes:

Christiana Thoda Burgess
Founder & CEO, Quaeris
How have I learned to get things done the hard way? By starting an Internet services company in FRANCE! If you make it there, you can make it anywhere!

Any advice to offer entrepreneurs?

What golden piece of advice have you been offered?

Inspirational Quote or Person: Who has inspired you and why? What words do you live by?

Rob Carney, MBA '99
Co-founder, Adero, Inc.
E-Lab TA 1998-99
1997 $50K Finalist "Perfect Underwear"
My favorite quote of all time: "Cash flow is more important than your mother." - Ken Morse. I started one company where we failed to live by this mantra, and ran another where we followed it to the letter. Guess which story had the happier ending?

My advice to the would-be entrepreneur is "just do it." There is no substitute for jumping into the fray. This runs counter to Ken's prescription for learning on someone else's dollar, but in my opinion every entrepreneur has to make every mistake for his/herself anyway. You might as well accelerate the learning curve and get it out of the way as quickly as possible.

Bob Dalias
President & CEO , WaveSmith Networks, Inc.
E-Lab Company
After my E-Lab team completed the assignment, one of them said to me that they had a new appreciation for what "customer-focused" meant. It wasn't just a marketing term like they had thought, it was a business mantra and call to action.

What's that one golden piece of advice you would offer every entrepreneur?
Always consider the possibility that what you expect to happen won't and what you don't expect to happen will. That way you'll be ready with ideas for change to adapt, not react, to whatever is thrown at your company. Summarized as "always have a B plan" just in case.

John Dukellis, BS '99, MNG '00
Article: "Getting the Most Out of an Advisor Rolodex"

Ziad A. Ferzly, MBA '97
Founder, DeepMail
I was told that the early stage of a company is a time of war, not peace. The people you pick have to be fighters, not people who will do well when all is calm. The team is critical. I would rather work with a group of fighters with no resumes than with non-fighters with great resumes.

Andy Freire
Being an entrepreneur is not a decision. It is in our blood, or it isn’t. All successful entrepreneurs I met in may life had it in their blood and all unsuccessful ones were those who decided to become entrepreneurs because they thought they could make a lot of money during the internet craze! My advice to every entrepreneur:

1. Be careful with Venture Capitalists. Make sure you bring someone that will add REAL value!
2. Be careful with preferred shares and liquidation preferences. They can kill your company!
3. Only bring people on board that are unique. Do not fill your company with average people.
4. Spend time with your people.
5. Find ways to stay very close to your blue collar employees. They know the business better than anyone else!
6. Cash is king!
7. Be careful with international expansion! It isn?t that easy!
8. You can always get a better premoney than the one you think you can get!

Who has inspired you and why?
I have several "spiritual mentors". They all have one thing in common: They all found a great balance between professional life, sports, family, doing things for others and spending time with friends. They taught me about "not counting the days but making the days count", "enjoying the path more than achieving the goals" and "understanding that you are helping others when you do something that will benefit someone you've never seen". Beto Sicupira, Fernando Oris de Roa, Guillermo Schettini, etc: they all are continuous sources of life-learning.

Jim Hannoosh, Ph.D. ‘75
Owner, Hannoosh Industries
"Perseverance is a Powerful Asset." (anonymous)

Bill Hilliard, MS '84
CEO, E-Color, Inc.
We called on well over 50 VC's before getting a terms sheet from the first one. From there, two others, quickly decided we were worthy and gave us terms sheets as well. One of them had said they were going to be a follower and didn't want to lead the deal (i.e., a nice way of taking a pass without saying no). When called to see if they wanted to follow, they decided that they really wanted to lead the deal by offering us a competing terms sheet. Don't give up. Investors have a herd mentality. Once one falls, others will follow--even in hard times.

Also, do whatever is possible to avoid signing a "no-shop" agreement saying you won't talk to other investors while the first investor is doing diligence on your company. After all, if the offer is not binding on them, why should it be so on you? Aside from the positive story above resulting from "shopping" a deal; in a previous situation, we had an experience where a VC backed out of a terms sheet for no good reason. They had just offered the terms sheet to freeze us out from competition while they did their evaluation. Our decision to agree to their "lock-up" cost us significant dollars in valuation/extra dilution, and we almost went under while looking for alternative deals.

My advice:
When money is offered. Take it. Take as much as possible from every investor who wants in. The dilution is small compared to the risk of running short. Really. Today, in a recession, having money has a multiplicative effect on our valuation.

Kevin Kendrick
Advisor, Darby Technology Ventures
One of my very favorite guiding principles came from my grandfather who continually said "Even if you work in a gold mine, you have to 'dig' every day."

Here are "Eight Credos of Great PR" that hold true for start-ups as well as Fortune 500 companies. (Courtesy of Maura Kendrick, Code8 Communications).

Evan Lee, MBA ‘03
Co-Founder, Crosslink Medical
$50K Finalist
Make sure that you have your relationship(s) with the inventors or holders of IP straightened out before you end up doing lots of work for little return. There is some value to doing the 50K "for the experience", but it is important to know when to "cut your losses" if it looks like you're not getting a good ROI.

In particular, I have been dealing with the Mass. General Hospital, which has a many-layered organization, little experience with doing startups, and an over-riding need for control. The IP that I worked with was controlled by their Corporate Sponsored Research and Licensing Office, who seem to feel that Sloan students should be glad to do business plans "just for the experience"... and while it has been a valuable learning experience, it is frustrating to see that at the end of it, the team is not being allowed to take it further.

Lucinda Linde, MS '83
Managing Director, First Light Capital LLC
From an Enterprise Forum a long time ago: "No amount of Hocus Pocus can take the place of Focus Focus!"

One from Ken: "CFIMITYM - Cashflow is more important than your mother."

Another on from the Enterprise Forum: "One way for entrepreneurs to think about their needs. Which side of the graph do you fall on?"

If Greed > Control - get outside capital, board members etc. If Control > Greed - run your business on its own cashflow; keep your control.

Recruiting Management: "Think of the best possible person, the one you have no hope of recruiting and go after him or her." - From an MA Software Council panel.

Chris Maeda, BS '89
CTO, Broadbase Software
My best advice is to not be afraid to fire people the second they are not working out. A loser will do a lot more damage than no one at all.

Jack McCullough, MBA '97
VP of Finance, Top Layer Networks, Inc.
My best advice to entrepreneurs is to remember that starting a business is a marathon, not a sprint. I know that's a cliche, but that does not make the advice less valuable. Mentally, the entrepreneur needs to prepare herself or himself for several YEARS, not a few months of hard work. Make sure you have the buy-in of the people in your non-work life...you won't be seeing as much of them as you would like to.

Favorite Inspirational Quotes:

Gary S. Miliefsky
Chief Technology Officer, Excelcion, Inc.
My piece of advice is simple. Be honest, ethical and passionate. Be creative but stay organized. Communicate often. Find advisors and mentors who are smarter than you and more successful. Now is the time to build upon your dreams because this moment will pass you buy if you do not seize it. Finally, and always, remember to "measure twice - cut once."

Kenneth P. Morse
Managing Director, Senior Lecturer
MIT Entrepreneurship Center
"Any awesome innovation had better have a way of rolling out that is cash-flow-positive for many steps along the way. The challenge the invention faces is to make the first few customers very happy and to have them become missionary salespeople." - Published in the Boston Globe, 12/4/2001.

George G. Mueller
Chairman & CEO, Color Kinetics, Inc.
Our first team of 4 MIT Sloan interns showed up in Fall of 1997 when we were 2 cofounders working out of an apartment in the North End of Boston. Overnight we went from 2 to 6 people (2 cofounders + 4 interns) and felt like a real company. Jim Murphy, Andy Swiecki, Dale Galvan and Maas were extremely valuable in a time when we were short of resources.

Here are some of my lessons learned:

I'm inspired by other great entrepreneurs. Quote: "Success is getting what you want, but happiness is wanting what you get."

Andres Nannetti, BS ‘99
Co-Founder & Chief Strategy Officer, Rovia, Inc.
When I was starting Rovia, a successful entrepreneur told me, "Remember, you're running a marathon, not a sprint". Great words of advice that made no sense to me at the time but now ring true. When an entrepreneur gets excited early in a venture (as I was), it's easy to get carried away and pour everything into making the company a success as quickly as possible, as if "sprinting" for the finish line. We forget to pace ourselves and can get burnt out quickly, working insane hours and neglecting the other aspects of our lives. The solution? Show up every day to work hard, but leave some for tomorrow and the day after, as if running a marathon. You feel better and actually get more done because you tend to focus on the important things, leaving the less important things for another day (because there will always be another day...)

Philippe Netter
Directeur, Societe D'Economie Mixte Locale, Technopole Metz
Some advice received from MIT professors that have changed the way I deal with problems:

“Just try, nothing is possible or impossible until you try it.” (Ken Morse, August 97). Ken told me this during a research project led by the MIT Entrepreneurship Center. I revolted against Ken requesting to seek an appointment from a major French banker in August (during the French full holiday season), with an imposed date 3 days later. With real outrage, I called the banker assistant anyway, and....immediately got the appointment for Ken.

“The source of all sales is pain.” (Leslie Gray, Jan 98) This remark has been true for all my successful sales and negotiations ever since I heard it (and the selling course that went with it).

“As a boss you are responsible of everything including the unexpected.” (Jay Forrester, June 1996). I met Jay at a seminar a year after I took a course about system dynamics organized by Pr John Sterman at MIT. He asked me what essential conclusion I had made after the seminar. I said as a manager I now concentrate much more on internal structures to fix the problems rather than blame the environment. I’II never forgot his quote.

The Mount Washington Cograilway
I would very much like to explain to young entrepreneurs the story of Mount Washington Cograilway to illustrate the entrepreneurial way of thinking as opposed to the classical way of thinking.

The engineer developed his system in 1870 at a time when no cograilway existed in the world (the first European system was built in Switzerland around 1876). He got a concession from New Hampshire, only after the legislator made sure he was expecting no money from them. He had just raised sufficient money to build a locomotive and 100 yards of steep track. Once he built that track and locomotive he called the large railways that were seeking to create traffic in the Northeast and showed them the tourist attraction that would attract hundreds and thousands of travelers. They financed his track to the top.

So the big difference between an entrepreneur and an classical manager is that a manager starts his project only once he has secured all resources needed whereas an entrepreneur immediately starts the project fully knowing its objective and finding subsequent financing off the credit from the first steps made.

Patty Rivera, MBA '97
Principal, Acuity Market Intelligence
Sadly, I walked away from my business partner last month. One of my lessons learned from our venture was:

I got involved in a completely new area within high-tech. Though our company folded, the knowledge gained from the experience landed me an incredible position with my dream job (so far so good) at a startup within the same field. The point is, even if you don't make lots of money, the knowledge gained is still worth the investment. You just have to set milestones and know when to walk away.

The other story would have been regardless of how much you trust your business partner, don't go into a partnership without an Operational Agreement to include a Buyout Agreement. It is NEVER TOO SOON to create these!

Daniel J. Roach
Chief Financial Officer , Konarka Technologies
One quote I've carried with me that I heard a couple years ago at the $50K, Duncan McCallum's question to a team was, "Who's going to get a bonus next quarter if they buy your product?" This is a dictum I carry with me always.

Amy Salzhauer, MBA '96
President, Ignition Ventures, Inc.
Here are two lessons learned/pieces of advice:

Peter H. Schmidt, BS '88, MBA '92
Co-Founder, Lifting Mind
Entrepreneurship is a game of risks versus rewards. It's you against the world, with the odds in the world's favor. It's exciting, frightening, frustrating and fulfilling -- sometimes all in the same day. In an increasingly paternalistic civilization, it is one of the few remaining endeavors where a small group, banding together in common cause, can apply their skill, savvy, guts and determination to changing the world, and see it happen. For those who are up to it, it's the only game there is.

Favorite Inspirational Quotes:
"Things take place, there is a confluence of events and circumstances, and we can't always know their purpose, or even if there is one. But we can take responsibility for ourselves and be brave." -- Lance Armstrong, U.S. bicycle racer who overcame a nearly fatal battle with cancer to win the Tour de France

"I arise in the morning torn between a desire to improve (or save) the world and a desire to enjoy (or savor) the world. This makes it hard to plan the day."-- E.B. White

Axel Schmiegelow
CEO, Denkwerk Neue Medien Holding Gmbh
Two most important rules, courtesy of Ken Morse and MIT:

1. CFIMITYM (Cash Flow Is More Important Than Your Mother)
2. Sales people are not lower life forms.

Seriously, fellow entrepreneurs in high tech: yes, get patents, build the product, have cool technology. But NEVER count on VC money to save you in a crisis. Cash comes from the customer, and from nowhere else.

Peter Schnorr, MBA '97
Former CEO of Fitplay.com
DPS Associates, LLC
Funny story (kind of sad) - when we failed to close on our "bridge round" I as CEO raised around $200k from angels to keep us going - but was hesitant to continue without a matching commitment from the Chairman/Founder - who owned 85% of the stock. Actual quote from my chairman when pressed for matching funds - "Take the money - and don't pay your bills. That should buy you another 5 months." (I shut the doors and returned the angel money; which has allowed me to keep those angels.) Never forget, a reputation is something you only get once.

Lessons learned - Number one with a bullet; revenue. Stay in the garage until you can't stand it anymore; get customers and then show them to your angels or strategic partners. Kind of simple; but quickly forgotten.

Inspirational quote - "Winners never quit, and quitters never win." - John B. Kelly

Bruce J. Shook, Sloan Fellow '98
President and CEO, Neuron Therapeutics, Inc.
An entrepreneur is in many ways defined by the investor company he keeps. Never underestimate the importance and utility of having high quality investors behind your company. While virtually all venture capitalists will parrot the phrase "we bring added value," it is not always true. A venture investor with a sterling reputation in your space, tight connections with other funds of similar quality, deep pockets and a portfolio of like companies is invaluable. Moral: the best financing deal is not necessarily the deal with the highest valuation; it is usually the deal with the best investors.

Tanaz Sowdagar, MBA '02
I have been inspired by Ben Zander when he said: "explore the world of possibilities" vs. "follow the defined social ladder." In my opinion being an entrepreneur is all about exploring the possibilities and allowing them to happen.

In his visit to MIT Sloan, Warren Buffett said: "If you want to know who among your peers will be most successful, find people that are the most generous and who will give credit to people around them." Ken Morse believes in being 'high-touch' and runs the e-center exactly that way. When I TAed for him, I had to follow up with students one by one and when I achieved academic excellence or got my desired job, he made the point to follow up with me and congratulate me, although he was out of the country.

Bart Stuck, BS '68
Managing Director, Signal Lake Venture Fund, L.P.
Make sure the wire transfer happened; anything less than that is non-binding.

Ed VanDyne
President & CEO, Adrenaline Research, Inc.
After 12 years of selling my technology, that I discovered at MIT, to the Automotive Industry; I have finally arrived at the starting line of the first development program for production in three years. There is no substitute for blind optimism in going after you dreams. Of course it may help you to pick an easier industry to start with.

Lessons learned:
Business is not about technology, it is not about products, it is not about marketing, it is not about finance, it is not about manufacturing; yes, you need all that but business in all about PEOPLE. You have to motivate people, sell people, work with people, leverage people, satisfy people......and when you are done, you might have a little time left over for those other things.

Inspiration
Go for it! You learn more from your failures than your successes! So, set your goals and get started now! You will be way ahead of everyone else, by the time you take time to look around and see who kept up.