Penn State Startup Week 2018 – Keynote Panel: “The Entrepreneur’s Journey”

– So thank you for coming tonight, I appreciate you taking
the time out of your day, I know it’s been a busy week, my name is Liz Kisenwether, I’m going to be the moderator
for tonight’s panel, and the title of the panel is
The Entrepreneur’s Journey, Learning From Successes And Setbacks. And a little bit of background, I was involved in Penn
State entrepreneurship for over 17 years, I started in the College
of Engineering and then at the School of Engineering and Design, and retired about a
little over a year ago, and was involved in helping Penn State lunch entrepreneurship education here, so it’s been a great journey, and start-up week is
one of the crown jewels of entrepreneurship here, so it’s great to be part of this panel, and I hope you enjoy the session. So the plan is going to do a really quick introduction of all four of the panelists, and then I’m gonna see if
we have questions right away from the audience, if there are no questions I
have some questions to kind of get things rolling, but we want to maximize time for audience to ask questions of our panelists, so we’ll get started, first of all Nayeem Hussain is here, he’s the founder and CEO
of Keen Home and is based in New York City, he is a Penn State grad from 2005, and Keen Home’s first product
is Keen Zoning System, which provides individual room temperature controls including smart
vents and smart phone apps so that you can control
the temperature in every room in your home 24 seven. And before he started Keen Home, Nayeem was a real estate
investment doing real estate investment in New York City as well as working in finance. Next up is Nina Jenkins, she is listed on the program as a senior research associate in entomology, in the college of EXI, but she is much more than that, she is a founder of a company
called Condio Tec which is developing an EPA registered bedbug bio pesticide called Apprehend, if any of you have ever
experienced bedbugs you will know that this is a
product we want to see on the market as soon as we can. So it’s a great story, so, next is Maureen Mulvihill, and she’s the president
and CEO of Actuated Medical here in Bellefonte, Pennsylvania, over the past 11 years Maureen has helped transition Actuated Medical
from a prototype company to a fully integrated medical device company that develops, manufactures
and sells its own devices, and some of those products include systems for supportive surgeries, blood and bone sampling, and transdermal drug delivery. And last is Matt Rose, he’s a Penn State graduate 1994, he’s the managing director
of 1855 Capital here at Penn State, and he is also the
co-founder of that group, and 1855 Capital is a seed and early stage venture capital fund, investing in companies that
have close ties to Penn State, and Matt also has extensive experience in the semiconductor industry, both in start-ups and venture capital, both here in the United
States and internationally, so we have a panel that’s
about as broad as I think we could ever provide
during start-up week, which is great for you, so it’s good news. So do we have any
questions from the audience to get started, I know it’s early, don’t be afraid. – There’s got to be one.
– One, just one, yeah. – Come on, there you go. – [Man] I have one but I’m
being a little bit facetious, what is the best question
you were ever asked, and what is your response
to that question, In terms of panel questions, because I’ve seen many of you on panels, and I’m sure you’ve got
some good questions. – The depth of experience
you have here is tremendous. – So anybody want to jump in? (audience laughs) You stumped the panel. – That’s a hard one, I’ll get back to you
I’ll think of something. – I’ll go the opposite way, so Priya just asked me
to talk about something, not bad that happened, but something that happened and you had to compensate for a type thing, so it wasn’t on a panel, but it was kind of an
interesting conversation, because instead of the happiness and joy of being an entrepreneur,
and the rollercoaster, you’re always on the
top of the help instead of that bottom one, so she’s asking about what
is that bottom one like, I would say that in, 2014, I had been courting, or they had been courting me, a distributor to sell my first product, and the gentleman I was interfacing with and negotiating with about
a week before I was supposed to sign the contract called me up and said I’m leaving and going somewhere else, and I’m like, “Mike should I still sign?” “Oh yeah Maureen go ahead it will be okay, “go ahead, go ahead.” And so I signed, and then months go, sales aren’t happening, months go, sales aren’t happening, about 15 months into the contract, as a two-year contract, I ran into the CEO at a conference, so I grabbed him and I took him outside, and I’m like, “What the hell is going on?” And he goes, “Oh you have a great product “but it didn’t incentivize
the sales guys.” I don’t know if you guys know
anything about salespeople, but you’ve got to incentivize them or they won’t do anything, so I said alright you got three
months to turn this around, and he didn’t and I had
to cancel the contract, turns out that they were advertising, they were trying to get acquired and they were advertising 21 new products, and they kept two in the
new product category which means there is no
incentivizing the sales guys, but turning that around when
the company got acquired, then they laid off seven senior sales guys that I then hired, (laughs) so I’m on the rollercoaster, anyway so those guys
in 2017 got Tube Clear, if you look at the sales funnel, they got 75 hospitals on the
top of that sales funnel, and now we’re moving them down, so I don’t know what’s gonna happen down here because our sales cycle is long, but the fact that now
Tube Clear is being talked about at 75 facilities is pretty awesome. – I was thinking that
maybe you could be good, for us to hear about maybe
a successful challenge, from each of the panelists
so we can all learn from, okay they’ve gone through
successes as well as challenges, because you learn not just from successes but also from failures, so I think that would be great
if each of them could spend– – That one is actually my question, so Maureen took the lead, here was a learning failure, so if each of you would like to do that, talk about especially the failure side, we are famous for talking about all of the successes that we
see in entrepreneurship, and we don’t always hear
the very interesting stories of troubles and failure, so if each of you would like to tell some of those that would be great. – Yeah I’ll jump in, I think scaling your team, it’s always a challenge, because I just spoke
about this an hour ago, there’s a huge volume of work to get done, and you need to hire people quickly to do the work otherwise you’ll
never make it to market, and you’re constantly looking for, if you’re a tech start-up, you’re constantly looking
for good engineers and good talent, and it’s easy early on when you’ve raised a couple of million bucks, you need to spend it by hiring
people to build your product, to be sort of be lured
away from the core culture that you’re trying to build
to chase the MIT resume, or the machine learning PhD, and we certainly did that, made the mistake of bringing on a neuroscientist, Cybernetics,
machine learning expert, amazing on paper, very well spoken, nice guy but ultimately
ended up paying the guy well into the six figures to write
a lot of math for us that then our engineers
couldn’t really translate to meaningful production quality code, and it takes time to figure that out, it’s not like after a
month you’re realizing that this guy is great at
writing maths equations, but that’s not really marketable, you can take that to market, so it took about six months
and a good chunk of money down the drain before we figured out that a, he wasn’t really a culture fit, and b, we sort of got lured into the buzzwords, and it wasn’t really
going to be tangible what he was producing for years to come, so that was certainly a
tough lesson to really, and I said this again so
I apologize for repeating, and this is not necessarily
relating to him, but Brad Feld as a mentor of mine, and he told me earlier on
that it’s better to have a hole in your team than an asshole, and it’s something that’s
tough to come to terms with that at the comes to grips with that when you just have so much pressure, and you need to do so much
in such a short timeframe, but a couple of years in now
it’s something that I take to heart every day when
I look to hire people. – Okay well to describe
my challenges or failures I’d probably have to talk a
little bit about my product, which is a bio pesticide
for controlling bedbugs, so it’s based on a fungal
disease of insects, and if insects or if bedbugs crawl over a surface that’s been sprayed
with this bio pesticide they pick up the spores on their legs they spread it on their bodies, and then the spores just
like seeds germinate and they penetrate into
the body of the bed bug they grow inside its
blood system and it dies. It’s a technology that I’ve
been working on a number of different pests before
we came across bedbugs, but for bedbugs it was really important, the chemicals are currently
used don’t work very well, this is why we have this
massive bedbug epidemic in Europe at the moment, so we kind of almost had
the technology there, we just had to adjust it a little bit, and develop the strategy
for attacking bedbugs, but we had been using
in the lab this little artists airbrush to spray
our formulation of spores and barriers on various
surfaces and run them over, and when it came to the point where we had to actually register the bio pesticide, they said well what are the users of this bio pesticide going
to use to spray it? They can’t use this tiny
little artists airbrush, so we’ll have to find a sprayer that’s commercially available that
we can recommend is used, and we had to test every
single commercial sprayer out there that’s used by any pest control, whether it’s in agriculture
or whether it’s in the home, and we didn’t find a
single thing that could spray our spores, which have to be sprayed
at a very low volume, we call it Ultra low volume rates, almost all pesticides have water added and there are sprayed at high volume, so all of the sprayers that deal with high volumes were already, we can’t use those, so we had to as microbiologists
become engineers, and develop a spray system that would be sold alongside our product, all of a sudden we’ve
got to develop a product to sell a product, and that process took us two
microbiologists over two years, and we came up with all kinds of monsters, that looked like they
were promising at first and then they failed because they blocked, because our spores are particulate, and most things don’t have little particles floating in them, so the tiny nozzles we
had to use got blocked, and well we can’t sell that, and actually it was only
two weeks before our launch, because we decided to
launch anyway just hoping it would be alright, we found a system that would work, and we get all of the
items imported from China and we put it together, and the success is remarkably, we haven’t had a single complaint from that application system
from our users since we started selling in November, so it’s a huge relief, because honestly anything
could have gone wrong, but it actually didn’t, so that was a close call, and it was a low two years thinking will never be able to solve this, because we can never
spray it in the field. – I have very few morbid fears in my life and one of them is bedbugs, so I am already itching a little bit. – Be satisfied, because as she explained
her product they die a horrible death. (audience laughs) – Just imagine them dying horribly. – The story that comes to mind for me, so we had a company I was a co-founder of, and still is a company, and at one point we had an interest from a company to buy the company, So we enter negotiation, it took a little time, they were a foreign company, it was an international deal, we spent weeks and months negotiating it, and we were being very careful
in terms of how do we do this in such a way that we
get what we need out of it, they get what they need out of it, and we get the deal done, and by the way our company
is running out of money, so now at some point halfway
through the negotiation, you’re sort of committed
to get the deal done, and are starting to weaken your position and all that sort of stuff, anyway get it all done, Sign the term paper, sign it, shake hands, go
out drinking because it’s a foreign company where you go out and you drink to celebrate these things, everything is happy, we go home, the next thing they have
to do is send money, no money. Call up, money on the way? Yeah, money’s is on the way. Week or two later, still no money, call back yet we don’t want
to do the deal no more. What do you mean you don’t
want to do the deal anymore, we had a deal. We don’t have a deal anymore. Now what do you do, and yeah you can probably sue them, and yeah making you can get something, but it’s an international deal, you’re gonna sue in their backyard, and by the way the last
act of a desperate man, you’re not gonna get anything out of it at the end of the day, so the lesson learned is, no matter how much you
think you’re being diligent, it goes wrong, by the way that was four years ago, we looked at each other my partner and I, what do we do now, we were out of money, all the sorts of things, but a little bit of web searching, found a grant program, one week later we prepared
a 50 page application for a grant, it was two and a half to
three million dollars grant, we got it, waited for it, made every dollar count, that was four years ago, and the company is probably
I think we’re going to sell the company for a better result
in three or four years now, the lesson learned is lessons you always find when you’re in the start-up world, is you’re gonna be at the bottom, there is an abyss you’re
going to be staring at, and is what you figure out
you’re going to do while you staring at that at this that makes or breaks whether the start-up
is gonna be successful, I know very few success
stories that didn’t stare into the abyss at one point or the other. And having the deal done, and having the guy you
did to deal with saying, yet we don’t have a deal anymore, that feels like an abyss
I’ve got to tell you. – So how about for each of you, what is a success that
you just kind of relish, that you always remember as something that was surprisingly
positive or serendipitous, or you just hold in
esteem for each of you? – Go ahead you start Maureen. – So here you have a small medical device company in
Bellefonte, Pennsylvania, and most VCs I talked to told
me I need to move to Boston, or have got to move to San
Francisco or something like that, but you know my asset is my people, and they are not moving
because they love living here, so the first patient, and Wendy knows the story most people do, anyway the first patient
Tube Clear was used on was a 27-year-old
soldier at Walter Reed, not only did this small
little rural company in central PA help a human being, but we helped a soldier who
was wounded for this country, it was an emotional day, high-fives and all that kind of stuff, the second case is
something I can’t market, the product was used off label, so we are indicated for adults, so that meant that it was
used in a pediatric case, it was successful and
we helped that child, so another very emotional day, because the child was in a
very difficult situation. The third big one just happened recently, so those were in 2012, 2013, the most recent one was a
person was 80 percent burnt, and think about it if
you’re 80 percent burned that means your whole throat is burned, and so our device, I don’t know if we can talk about it, so when you’re critically
ill they put a feeding tube through your sinus
passage than your esophagus and into your stomach, and they feed you through that and they give you
medication through the tube, they clog at about 25 percent rate, our device goes in there and clears that clog mechanically
so you can restore food and medication to that patient, well if you’re 80 percent burned that means your esophagus is burned, and that tube clogged on that patient, and they were able to use
Tube Clear to clear that, so that’s what drives us, and that’s the thing, when you hear these cases of you helping these people that are in dire situations, and that’s your persistence, because it’s all about
persistence and resilience, you called it the abyss, I like that by the way, so many times you’re in the abyss, and those things when you hear about it working and you really
help somebody keeps you going. – Not quite so meaningful
as those stories, but it is the case that
I was lucky enough to run a very large semiconductor business that was communication technology, and how many of you people
remember dial-up modems, so I worked for Connexon, and that was formally Rockwell
Semiconductor Systems, and our business sold 60 percent of the dial-up modems by unit into the world, and our business also had
about 80 percent margin share, in other words I sold the
higher-priced products out there in the market, so 80 percent of the margin that was available in the
market came to my division, and a 150 percent of the industry’s profit came to my division, so think about that, and by the way I spent
on more on R&D developing the roadmap than everybody else combined, everybody else combined, so we were selling at
the peak something like 140 million dial-up modems a year, and this was in the late 90s early 2000’s and that’s how people
connected to the Internet, so I used to be able to stand
up in front of my division and say you team of people have connected more people to the Internet than everybody else in the world combined. And that was impactful, and that was really meaningful, and then I remember sitting down with, anybody remember the Sega Dreamcast, the first online gaming system, the guy who invented the Dreamcast came to me and said I want to put this online, and by the way the only place
I can get a modem is from you, and I need to buy the
modem for a certain price, and I want to buy 20 million of them in the next three months, and I really don’t have a
good negotiating position, what’s the price? And of course now you’re
sitting in a situation, you are absolutely on the
top of the world right, and again, you Wanna say at that time you give them a good price it was a great deal, we give them a pretty good price, the margin was only 65 percent, by the way that was a cut, we cut the price, he got a decent deal, and we got better at the whole thing, and it really helped the business, but it is the case that
when you find yourself in the right place at the right time, because you persisted to get
their it’s very rewarding, and you better be doing something that is actually meaningful
like saving lives, connecting people to the Internet, doing something that’s
really meaningful because that’s what’s going to get you through the really tough times, because they’re going to be there as well. – I fully agree with that, on somewhat of a tangent, some of the daily boost we get, we have a Slack channel that we used to communicate with our team, and we have a happy channel
when customers tweet or write in or post something positive about using the product, we quickly post it to
that and we immediately get that gratification, but here’s a real user out there and you’re doing a small bit
to just improve their day, my story will certainly be
on the more micro level, when my co-founder and
I met doing our MBAs, we were still on the fence whether to do Keen Home full-time, he was working as a management consultant, he was going to school part-time, I was going to school full-time, and I had an offer from
an investment bank, so I was really figuring out, both of us, how we were going to potentially split our time or were we going
to jump in with both feet, we got a call from John
Biggs who was editor at TechCrunch that we
were invited to pitch our idea there’s an event
called TechCrunch Disrupt, they have a Startup Battlefield in New York and San Francisco, so twice a year, so he said hey would you like to pitch your Idea on the Startup Battlefield, we looked at we each other
and said immediately sure, and then we realized that all we had was a two-page not even a business plan, a two-page document, because we had just conceived of this idea to enter an NYU business plan competition, but we said hey look, if we can pull this off
it’s five weeks away, we can validate, you’re going to be in
front of live streaming to millions of people all over the world, you can validate does
this idea have any legs, so we essentially created a
company in five or six weeks, everything from the website, to creating a prototype, a physical prototype to business
cards to all collateral, and we pitched on working
hundred hour weeks, we got there on the battlefield, we were one of 18
companies in the country, and we pitched our idea, we launched a crowdfunding campaign we raised 50,000 dollars
on Indiegogo for again a company that was literally
a two-page document just over a month before that, and then we sort of, and then I get an email the next day from a guy I went to elementary school with, and he said hey I saw you live stream I haven’t spoken to you in 15 years, I work at Lowe’s now would you like to meet with the VP of
Smarthome who is my boss? I said hell no, because we basically
put this thing together just to pitch it, just to see if we were going to do it, so long story short I
ended up contacting him six months later when we had
a little bit more traction, and it was still a team of three of us, hadn’t raised any meaningful
VC money at the time, had a better more expensive
3D printed and laser cut prototype in a Pelican
case and we flew down to Moorsville, North Carolina and met with their entire smart home team, it was a team of six people at the time, and it was supposed to
be a one hour meeting, and we were in that room
for three or four hours, didn’t open up the Pelican case once, just really convinced
them that we were the team that was going to bring
this type of product to market and they were
a good partner for us, and fast forward another six
to eight months after that and we got the million
dollar PO from them, and that really helped
us validate demand as we sought to raise more and more money, so I’ll always look back
on that kind of early time and sort of whirlwind
couple of months early on where we made it to that
Startup battlefield was really just the turning point
for whether Keen Home would even come to be. – That’s great, okay so I know there’s hands
up in the audience now, I saw a couple around the room, how about over here, wait for the microphone to get to you. – [Sofia] Hi I’m Sofia, I’m a freshmen computer science major, so I know from personal experience, and you guys probably do too, that most start-ups fail, like one of yours is bound to, how do you know when to quit? – That’s a great question, I come across so many founders who should have probably quit years
ago and are just grinding it out because you’re told
on one hand fail fast, on the other hand you’re told to be a hustler and to never give up, so there’s sort of two things
at odds with each other, and to an entrepreneur
or a founder’s psyche it can play a lot of havoc, so I think especially at the early stages, at the pre-seed seed stages, your raising seed
financing really to figure out if you’re gonna be able
to have a viable product, you’re not iterating to product
market fitness necessarily, maybe you are, but generally you’re just
validating demand with that money, and if you can validate
demand then you can quickly start iterating to product
market fit and start raising more capital and growing at
the rate you need to grow up, but the VC game at the
start-up game is such that, in order for investors to get that ROI, you need to be growing at a certain rate, and if you don’t fit that profile, there’s nothing wrong with that but you’re not necessarily a start-up
profile at that point, you are a different type of business, and you have to understand that, and you have to be honest with yourself, is this business going to meet
this type of growth profile, and if it’s not let me find investors that have returned expectation more in line with my business, and when those are mismatched often times it can lead to disaster, so you have to be really
brutally honest early on, is there a market for this, am I gonna be able to grow it fast enough, and don’t ignore the data. – Yeah I would say from
personal experience I haven’t learned it well enough, and I think it’s got a lot
to do with personality, but a lot of start-ups and founders you’ll see they never quit, but they change direction
so dramatically that it’s a different deal, and it’s really the
dichotomy of what’s quitting and what’s changing, it’s hard to know, there’s an interesting statistic, you’re right, most start-ups fail, something like a 99 percent failure rate, but here’s an interesting
statistic for you, start-ups created 40 million jobs in the last 20 years I think, the economy created 40 million jobs, the net job creation in the economy was the number of jobs created in Start-ups, now there are not the same jobs, but the point is that making that effort, creating those ideas, putting them into the marketplace, testing, failing, all that stuff, it’s hard to know what’s the right answer as to when to quit, and when to change and do
all those sorts of things, but over the broad picture of it, it’s a hugely healthy and necessary part of our innovation economy. – I call it pivoting. – There’s a soft pivot, a
medium pivot and a hard pivot. – But there’s never go home. – How about right here? – [Tom] Hey guys how are you doing my name is Tom O’Neill I am a
senior at IST College, actually going into finance because I did not like my IST internship last semester, but anyway Mr Hussain this might be a question more applicable to you, what do you value the
most when you’re fielding offers from venture capitalists, if you’re desperate to get
your initial round of funding, do you value the relationship
with the investors more, the kind of evaluation giving
you and how that works? – Yeah that’s a good question, I think it’s dangerous when
you’re raising capital, and I’m sure you get the
investors take as well, to be solely focused on any one thing, it’s easy to fall into the
evaluation sort of trap, in that you have to realize that if you’re really aggressive with valuation, and you really negotiate hard on that, the next round of capital you raise, it better be on a good
multiple on that valuation, and you better be growing astronomically, otherwise it’s going to look really bad, so it can end up shooting you in the foot, if you’re not growing, if you’re raising on six pre money that next round better be
on three or four X of that, otherwise you’re going to
have to answer questions, so there’s a fine line
between delusion and getting a good price, I personally think if you’re a hot deal and you’re going to have
to seed professional investors knocking on your door, they’re all going to have
their pitch and how they can provide strategic benefit to you, there’s the smart money versus dumb money, ultimately the best investor is the one who’s going to tell you upfront, look I am not going to
meddle in your operations, but I am always here, you pick up the phone you
call me if you need anything and I will do my best to help you, but it’s your company
here’s the money you run it, and those are the types of individuals that you want on board, that are well connected, you can pick up the phone and call them, but they’re not calling you every week for the check-in and trying to
meddle in the operations, if you can be lucky
enough to have a stable of those investors in
your first few rounds, not only will they be able
to help you operationally, but more importantly you
look for brand-name investors to help you raise more and
more rounds of capital, and then the dirty secret
in Silicon Valley is, the tier one VCs if
you’re failing they’ll try to find a buyer for you, try to find a soft landing for you and get you an exit because it helps everybody, it helps the whole ecosystem. – Again it’s interesting because I guess I’m the investor perspective, but actually most of my life was really on the other side of the table, I was an operating guy and
raising money on the VC, but the thing I would say is you have to remember your VC relationship, there’s two relationships
that you can break up, one is your marriage and
the other is your VC, you can’t walk away from them, so you better make sure
that you are about to enter a relationship that
you’re gonna live with, and by the way you can actually
get divorced in a marriage, you can’t walk away from
somebody who’s given you money, that person you’re making a very long commitment to a relationship there, so it ought to work, and then you can figure
out on what dimensions, in terms of is it passive money, is it active money, if it’s active money how’s
the value going to be added, those sort of things, and I think the other point that was made there is a really, really important one, be real careful of getting yourself over your seasonal valuation, because you’re going to live with that, and you create an opportunity for a down round before you need one, that’s a real problem. – I think that’s an excellent point, especially if you’re looking
for your lead investor, generally they are going
to get a board seat, and that’s a marriage, that board of directors dynamic, especially if it’s an early round when it was just you as a board of one, or you and your co-founder
as a board of two, you’re introducing a third party into your board of directors, and the VC relationship
is very interesting, because you’re negotiating hard, it can be bitter, maybe it can get a little aggressive, and then the next day you’re partners, so it’s a really funny flip, and the good VCs will know that, and they know that they
have to properly incentivize the founder at the outset
because of that dynamic, so you always want to
make sure this is someone who you’re comfortable
being on a board with, and having regular meetings, really talking about the
future strategy of the company, and building the company with
that person’s opinion in mind. – I was add to this, it’s possible that you don’t need VC or angel investment at all, with the support of Penn State actually we did the lean start-up model, we had no dilution from
those kinds of investors, we got loans, which we pay back on good terms, Ben Franklin have been really
good with the loan money, and we actually have one
single private investor, who was one of the people I contacted when we were building our business model, and this is through the
Tecelerator program, up at Innovation Park, and we were told that you really have to do customer discovery, so we were sent out
during this course where we just had this bright idea, and told to phone up the people we thought would be our customers, and see if they were
interested in our product, and I did this, I was on the phone to various people, and I spoke to this guy
who was an independent pest controller down in
the DC, Baltimore area, and he got really enthused, and he said I want to support you on this, let me know if I can give you any money, just let me know, and I said sure Stewart, and he kept phoning me up
and he was really interested, and he wanted to collaborate, and he said so what size
bottle are you going to sell the stuff in, and I said I’m thinking we might need to get 25 gallon drums, he said no we use tiny bottles, we need to be able to
carry them into our jobs, into houses, so we spoke on a regular basis as we did our product developments, and then the end Stewart
kept saying I’ve got 150,000, just ask for it when you need it, and it went on and on and on
until eventually we got to the point where we really
were going to start, and I said okay Stewart you’re on, and we did that deal, but he proved himself to be so valuable, and he is the only dilution
of investment that we had, everything else is loans, so depending on how much technology and development you really need, you might be able to
do it without actually going to these guys sorry. (audience laughs) – I think that’s right on the head, if you can avoid taking VC money avoid it. – So I’ll go from that, so Actuated has done a lot
of our early innovation using small business
innovation research grants from the National Institutes of Health, National Science Foundation, DOD, and USDA, so that’s another avenue
where these SBIR’s or STTR’s are non-diluted, so with those funds I’m not giving away equity in the company, and with the numbers that we brought in, or the different grants
that we brought in, we have 10 products in development, and we have right now
17 issued US patents, three more coming and then
we have some other ones, so the company has built the intellectual property portfolios, but we own the intellectual property, and we have some early angels
which are more strategic, more friends, but there’s not that much
money with those guys, however now I am looking
for the VC type funding, but our early stuff was with the SBIR, so we could get going and
understand where you’re going before you have to
worry about the valuation. – [Nayeem] And you take
less dilution then. – Other questions, yes? Go-ahead. – [Woman] Sorry. – You go ahead first and
then will shift it over here. – [Woman] You guys were
previously talking about trust, relationships and developing
relationships with the VCs and the dynamic
that was involved in that, and we’re talking about
successes and setbacks here, so was there ever a time
when you instilled trust in someone or brought
someone into your circle of trust who turned out
to be wrong about them, and if so was it
incremental where you were one day like, okay,
this isn’t working out, or was it one big boom where
you’re like, this is a failure, this is not the right fit? – Great personnel question. – I can start, you can start, you start. – Well yes you always
have those experiences, the expectations that we
have here are not being met one side or the other, and you know at the
end of the day you have to decide how to handle it, sooner rather than later, and usually it means okay we’ve
got to go to different ways, it is very, well you mentioned it before, if you get bad dynamics on your team, letting that hang around for too long is the most damaging thing you can do, and you’ve got to do yourself
and your team a favor, and say hey we’ve got to move on, and trying to face that
sooner rather than later even though it’s very difficult, but at the end of the day you try to avoid saying it’s your fault or it’s my fault, it’s just not working out, and move on, because if you ruin the team dynamics then it has a lot of
long-term implications. – Two points on that, when you let that person go, the team will thank you, because they saw it and they saw that person bringing everybody down, the other thing I would say
is we had with the founder, and he kept saying the
docs will get signed, the docs will get signed, the docs will get signed, so any time and in a group what I’m trying to mentor young entrepreneurs
or entrepreneurs, I always say that whatever
your docs are your agreements, they need to be signed almost on the first day established in the company, because as the company starts people start seeing dollar signs, and if they don’t have
the best interests of the company at heart you’re in trouble, so get the documents signed early so that everybody is in agreement, even if you’re the best of friends, it doesn’t always stay that way, but I always say that I take a long time to hire and I fire fast, and I let go fast, and the team always thanks me, because they saw it too, and I did too. – I’ll make two quick points, you know the higher slow fire
fast is a popular saying, I think in my opinion I agree with that, but I think it’s a little bit more nuanced in that as a CEO, as a manager, you need to give your people feedback, whether it’s monthly quarterly whatever you can handle administratively, I think too often start-ups
have this fire fast mentality, and you lose your humanity a little bit, because the person may not know everything bad that they’re doing, they may not be intentionally screwing up, and I think something that you can bring, an acumen you can bring
from large companies, is they’re very good generally
about 360 degree feedback, my wife works for a big corporation, and she has to take hours every few months dong this 360 degree feedback, but that’s both feedback
up and feedback down, and I think if more start-ups
could incorporate that, it would certainly be beneficial to those people who aren’t working out, and my second quick point is, a lot of start-ups skimp on lawyers early on because it can be expensive, but if you can find a good law firm, you essentially pitch
them like an investor, and get them brought into your vision, a lot of them will defer fees, we deferred maybe 50,000
dollars in fees for over a year, just because the firm was
willing to take a chance on us, and if you can bring a
good law firm on board, they can help you avoid a
lot of those trust issues, by getting docs in place, getting a legal framework
into place to make sure that you don’t get into
some seriously hot water with just administrative issues. – Nina did you have a comment? – Well we’re really young, so so far we have made no hiring mistakes, but I have to say I was
told I needed a CEO, I was the CEO of our company initially, but that’s clearly not my strength, I’m more in the technical area, so we were going to need a CEO, and it did fill me with some horror, because I really didn’t know
who we were going to get, and this person was gonna have
no idea about our product, I was going to have to
teach them everything right from the word back, Because it’s really
unique and the likelihood of getting somebody he knew anything about bedbugs and bio
pesticide was so slim, but we were incredibly
fortunate because our trainer at the Tecelerator, Don McCandless decided he wanted a change in direction, and actually offered himself
to take this position, and we had worked with him
for two or three years, he had trained us, he had always given us good advice, so when he said that it was
one of those high moments, it was one of the best days of my life, because I thought, oh my goodness,
I’ve got a CEO and I know I can work with him, so so far so good, (laughs) but there’s only three of us so far, three and a half. – [Liz] Alright we had
a question over here. – Hi I was just interested in some of the logistics of having talent, I’m sorry the logistics
of talent acquisition internationally, which I think I’m not sure if Matt Rhodes, I’m sorry Mr Rhodes might be
one who can speak on this, but also just your early hires, what you were looking for
in terms of matching it with your available funds that you had. – I’ll again take that, I have had some experience
in international hiring, it was a big company
in terms of things that we had to staff there, we had those, a bunch of people working on it, I think probably more
meaningfully to answer your question is, if you’re gonna bring people
into your organization make sure you bring them
into an organization that you know how they work as people, because you’re hiring people, whether it’s internationally or locally, and I had a lot of
experience working across at one point I had 20
design centers around the world reporting to me, and it was the case
that when I told people they were gonna work
with the design center, said the first thing you
have to go do is go there and be there for at
least seven to 10 days, and work with them and
be with and the like, and then after that you can
manage them on the phone, you can manage them more effectively, but if you don’t know, if you’re just talking to a voice, it just doesn’t work, so it really is, the international experience, there’s lots of reasons
things are diverse these days, you’ve got to go to where
the talent is available, you’ve got to do all
those sorts of things, but never forget that they’re people, and they are gonna have
their own environment, their own pressures, and ins and outs, and as long as you can identify those ins and outs when you’re
actually working with them, you can become much more effective, I’m not sure if that
answers your question, I’m not sure what you’re
really looking for, but the international piece of
it I think is less meaningful just remember the people. – We have a full stack app
developer in the Ukraine, he is a full-time team member, but there is a third
party and there’s many, many of these third parties now, that are cropping up that
essentially act as the HR, so they pay his payroll, but he is technically a Keen Home, for better or for worse
he’s a Keen Home employee, so when we first signed his contract, we flew him to New York from Ukraine, it was his first time
in the United States, we had a test home in New Jersey, so we put him up in the test home, he was here for a month, and really to that point, really became forged bonds with our New York-based employees, and then we have a daily
stand-up every day, every day the entire
team gets on the phone and everybody talks for 30 seconds and what they did yesterday, what they’re doing today, and if they have any challenges, and he’s on every stand up call, so once they’re back remote
it’s all about communication, and making sure they
are into the fold with what’s going on on a daily basis, and there’s so many tools
today to about you to do that more effectively than
five or six years ago. – Okay I guess I’ll hand over here. – So many students right
now may not be ready to jump in and start their own business, but they also may not want to
go work for corporate America, so they may want to come work for you, so what are you looking for, what is that intangible, what are those characteristics, not specifically the discipline, but what do you look
for people for your team that they should be thinking about? – So we are actually
in a wonderful position where we’re six miles down the road, and people here owe there is a medical device company and Bellefonte, so we get lots of resumes
from Penn State right, so the resumes come in, and we are like oh that
person might be neat for that, but when we bring a
person in we go through a very rigorous interview process, at least five people have
to interview that person, because the cultural corporate
fit is much more important to us than what their background is, so in the case we hire a lot
of interns from Penn State, we hire a lot from
Southfields Business School, and then those that work
out well we bring them on, so we’ve test driven then I say for about three months and things like that, we had somebody from Drexel come in, we test drove him for a couple of months, then we hired him. But it’s that interview process, because what happens is those five people that interview that person, if they say yes we
should hire that person, they are now engaged to make
sure that person is successful, because they said that person
would be good in the team, so it’s a really good dynamic in the pit, where people support each other, because hey I said you were a good person I want to make sure you are successful. – You’re not gonna Love
my answer too much, we don’t really hire undergrads right out, just because we’re too small a company and we need the experience, there have been a few
occasions where we have had undergrads extend internships, and miss a semester, miss two semesters, we had one intern, he was a Stanford guy, and he basically left school for a year, because he was so effective, he was a mechanical
engineer and we just needed his skill set at that time, but generally the younger folks on my team are going to be, computer
programmer software engineers, and the volume and quality of
work that needs to get done, we just need that at least four or five years of high quality experience, in order just to get
the ROI of the salary, because the spread of
salary is not that much, because if you think about
it the engineer who’s been working at Google for
five years made good money and now they’re looking
to go to a start-up, because they’re looking
for a better lifestyle or more meaningful work, so for us first and foremost
it’s tech jobs that we look to, so in the rare event that a more younger employee is applying to Keen Home, it’s how much time are they going to take away from our senior team members, for training, for even just general handholding, and are we going to be able to stomach that is a small company, generally the answer is no, sometimes it could be yes. – Well for me, yes I will take fresh graduates
from Penn State absolutely, but what I would be
looking for is somebody who is pragmatic and flexible, so I’ll be looking for a
specific degree skill set, like my partner microbiologists, maybe there is an engineering problem that I want them to tackle, because we don’t have an
engineering department, so somebody who can
demonstrate on their CV, or at least in their interview, but they’ve performed different roles, and can adapt and do this, and maybe they need to go
stand at our sales booth and become the salesperson, even though they were the microbiologist in charge of quality control or something, I think for us it’s got
to be that flexibility, somebody who is enthusiastic
and capable of doing many different things and
would love to do that, rather than this isn’t my job. – Just one quick question, when you say small company
what are you talking about, what number of employees right now? – 15.
– 15, and Maureen? – Give or take, 15 full-time. – Okay and Maureen how
many employees do you have? – 25, 24 here and one in Ohio. – So when they say small
that’s what they mean. – That’s fair. – And Rita, three? – Three and a half. – We’re counting halves,
is that a part timer? – Yes part-time web developer and answerer of customer inquiries. – Many hats. Okay, yeah, question? – Nayeem, sorry to pick on you here, another question, so you said you started financing, had an IB offer out of business school, so it goes without being
said that you pretty much could have lived the rest of your life pretty comfortably
working in finance, so can you explain the
mindset that you were able to kind of throw away that career and just jump into a start-up? – Light it on fire. I hope I can maybe return to
the career one day if need be, but I get your point, no that’s a great question, I think you hear in
culture and society today with start-ups being so hot, the starving entrepreneur
type of sob story, I think that’s a lot of bullshit, if you look at the numbers, most start-up founders, most start-up CEOs, at least grads, a lot of them are grad school educated, a lot of them have worked
in corporate America or Wall Street what have you and have made a reasonable
amount of money, a lot of them have spouses that work and have good healthcare, and I checked all of those boxes man, so for me it was a lot
easier to make that leap, like sure there was the year that we couldn’t raise any
money right at the outset, and my wife is like, you’re coming out of an MBA program I thought you were
supposed to get a good job, and you just paid 100 K and
now you’re putting equity into the company out of their own pocket, so yet you do have to deal with that, but she had a good job, I was on her healthcare, I had saved up money, I had an MBA to fall back on, a Penn State agree of
course to fall back on, so for me it was certainly
easier to kind of weigh that risk reward, and looking back even if Keen Home fails and it could very well fail, it’s certainly more likely to fail that it is to have a huge exit to be honest, I try to be brutally honest, the network that I gain, the connections of people that you meet, the brilliant, brilliant investors, technologists, other executives, you hope that can lead you somewhere good. – Any more questions? I think we have three
minutes or so and then we can head out to a reception in the lobby, I think I have one last question, for everybody, so when you were in college, you know the way back
machine for some of you guys, at the time did you think you’d
be an entrepreneur some day, was that even on your radar screen, because I think a lot of people in this audience are undergrads, and it’s like they’re not
even thinking about it. – I’ll go first, you introduced me as a 1994 graduate, not even close, 1979 graduate, and so that was a long time ago, I was a physics major
playing on the soccer team, and then I didn’t have a clue, so I was just going to go play
soccer and go to grad school, and so I would say that the journey is based on life happens, and so I do actually worry
when I talk to some of the undergrads, I’m gonna do this and then this and then
this and then there is, okay maybe, but life happens and you
take your opportunities, and so I guess I never saw, and it wasn’t even on the
radar screen at that time, but as things come at you, if you’re curious, flexible, and persistent something
good is gonna come out of it. – [Liz] What about you Maureen? – So when I was an
undergrad and grad school, no I don’t think I ever
thought that I would start a company and been here for 11 years and still do what I do and love what I do, but you know once you’re in
the mix and you’re doing it, and then you start
thinking back in your life and your like what did I do, and so when I was 10 I had a paper route, you earn a lot for a
paper route if you’re 11, I had to sign something, my mum had to sign something to get me a paper route, and initially I did it with my brother, and he hated collecting money, and I just loved collecting
money from people, and that one time when a
guy didn’t want to pay me, he’s like, “I’m not paying you.” And I’m like, “Oh yes you are paying me.” So then I withheld his
paper until he paid me, and then he told my dad, “She has quite the attitude.” And my dad like, “You owed her money of course she “is going to have attitude.” So you think back, I did have the entrepreneurial
spirit back then, but I don’t think I knew what the word entrepreneurship was
when I started the company, I mean this work has really come around and the last eight years maybe, it really wasn’t the word I
used when I started the company, it’s just what you do, makes you happy. – I thought it was an American word, I’ve been here 10 years, and entrepreneurship
emerged in my vocabulary, and I was thinking, I’ve
never come across that before. – When I saw it at first, I’m like, how do you spell that word? – So Nina it was never
on your radar screen? – No but I was also of
entrepreneurial spirit as a kid, I was always looking
for ways to make money, and I did, I was pretty good at it, and I’ve never been broke, because I’m always on the lookout, but no my passion was biology, and I went through biology as my degree, and microbiology specifically, and I loved it, but this part of my career
has been just the best, because I’ve combined the two of them, so it’s worked out fantastically, but no I didn’t head that way. – And if I could comment
on Nina specifically, because I’ve known Nina now
from a distance for two years or three years something like that, this is a researcher, this is a scientist, and she fell in love with
I can make a difference, and I can see it, so it happened, it wasn’t a goal, it happened, is that fair Nina? – Yes it is. – And now you’re slaughtering
bedbugs by the million. – Indeed, it’s millions.
– I’m loving it, I’m loving it. – I think everyone made excellent points, I would add apart from
persistence flexibility, put yourself in a position to win, so coming out of undergrad I
picked a pretty vanilla route, I was a finance major, I was in finance, then I got my MBA, but when I was at Penn State, I sort of fell victim to
what many, many students here do is get caught up
in the whole experience, and you don’t necessarily
take leadership roles and get really super involved, and there are so many
opportunities at this school with all the
clubs, all the speakers, but when you’re young you
don’t necessarily see all that, and you’re too busy doing other things, so I told myself if I was
going to go to grad school I was going to try to be more involved, so I was class president at Stern, I made a point to really get
to know all my peers of course, and get to know all the faculty, so my co-founder came to me, he was in my cohort, and he came to me with this early concept, and said hey I want us to do this business plan competition together, maybe if I wasn’t class president he wouldn’t have come to me, I have no idea, but you put yourself out there, you be a little uncomfortable, and sometimes the universe
will conspire to align for you, and you have to embrace it when it does. – Alright so watch for opportunity, you never know when it
might pop up on you. So can you please join
me in thanking our panel, they did a great job. (audience applauds)

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