Asthma: The First Aperon Biosystems Article

Unfortunately, this article is not available anymore, so I've put it here. We did this interview a long time ago while still in the early days of the company. As you can tell, I enjoy history, especially my own :). I hope the folks at the Merc don't mind:

PERSONAL CRISES BROUGHT 3 BAY AREA FIRMS TO LIFE
When illness leads to innovation
By Michele Chandler

San Jose Mercury News
9/21/2003

Entrepreneur Paul Lovoi of Saratoga was pushing ahead with his latest company, which is developing a device to treat people with a condition that causes blindness. Then, in March, tragedy hit.

His wife of 26 years, Janice, died suddenly after a weakened artery in her brain burst. At his wife's wake, Lovoi vowed to their friends that he would find an easy way for others to detect life-threatening hemorrhagic strokes before it's too late.

[ . . .]

Few inventors create medical devices because an up-close calamity pushes them. They face the same hurdles as other entrepreneurs: needing experience, documenting a void in the market and getting cash.

``Most people who have a personal tragedy aren't adept enough to start a medical device company. They don't have the right background or training. It's a special situation to end up there,'' said Casey McGlynn, a San Jose attorney and prolific fixer of medical device
deals in the Valley.

On average, it takes five years and tens of millions of dollars to get a would-be device from the drawing board to everyday use -- if the Food and Drug Administration gives its approval. And these days, venture capital firms are skittish about putting their money on ingenue developers. They favor business plans, market analysis and sales projections above emotion and personal drive to make a difference.

Perhaps they should consider those other factors, said Patrick Lynn, co-founder of Palo Alto's Rinat Neuroscience.

``Often times, people can make up for that with the passion derived from their personal experience. You don't count them out,'' said Lynn, who has both founded and invested in young health care companies.

Here's a look at three Bay Area firms started by entrepreneurs whose personal crises served as a springboard to invention:

[diabetes content omitted]

MONITORING ASTHMA

Asthma dictated life for Rajiv Parikh as a boy. He vividly recalls the wheezing, the inhalers and an ill-fated vacation to India at age 10 spent riding on his father's shoulders because he couldn't catch his breath in the pollution and heat.

Parikh eventually outgrew the condition. Today, along with his wife, Bhairavi, he's developing a breath analysis device to enable asthmatics to monitor their airway inflammation so they can take the appropriate medicine and ward off a full-blown asthma attack.

It's the first start-up company for Parikh and Bhairavi, who founded Aperon Biosystems two years ago. While they lack prior experience bringing a business online, they both have credentials -- Rajiv earned an MBA from Harvard University, while Bhairavi received a doctorate in biomedical engineering from Worcester Polytechnic Institute in
Massachusetts.

In early 2001, Rajiv had his sights set on founding a wireless company. Bhairavi had a job doing research and development for Natus Medical, a San Carlos maker of products to detect common disorders in newborns. One device under development there screened babies for
jaundice by analyzing the infant's breath.

Bhairavi had done related research involving gas analysis while working on her doctoral thesis. She saw potential for using that technology to detect lung inflammation experienced by asthmatics. So, in 2001, the couple licensed the gas analysis technology from its
inventors -- two UCLA physicians -- and founded Aperon.

``She had worked on this back in her days as a Ph.D., and I had the personal experience'' with asthma, Rajiv said. ``I don't know if it was fate or faith, but it worked very well together.''

The couple set up a small shop in Santa Clara and began lab experiments, bankrolled with $100,000 from the couple's savings, plus $200,000 loaned by family and friends.

One venture capital firm turned down Aperon's funding request. But representatives there put the Parikhs in touch with John Kaiser, a retired executive who had also headed a Sunnyvale start-up. Kaiser became Aperon's CEO late last year.

In May, the company received $4.6 million from two venture funds. So far, the money has been used for a larger office in Palo Alto, to hire staff and to develop a prototype device.

``The intent today is to build a great company that helps lots of people,'' Rajiv Parikh said.

Unbeknowst to me, there was some discussion about this article on a medical info site. Check this out with my response many years later. It's cool because it's a way to catch history online and then reach a current state quickly.

Personal Finance: Managing Money and Getting Out of Debt

I consider myself lucky to have been raised by parents who were obsessed about saving money and keeping spending low. That allowed me to save a lot early in my career - we used to live on base pay and bank our bonuses. That saved us when I went to HBS and started companies in the Bay Area. I must say that we did rack up a lot of debt. A lot of folks have asked me about strategies we used. So instead of reinventing the wheel, I'll let you read some articles by my friend Brad Stroh, co-founder of Bills.com - a site that gives practical advice & tools on personal finance (listen to his podcast). If you need a particular service like debt consolidation or refinance, they hook you up with a host of trusted independent firms. They even have this Ask Bill feature where you can ask questions and get personal responses. Brad's passionate about this stuff.

Check these out:

Hone Your Debt Consolidation Savvy -Top 10 situations when debt consolidation is a smart move-

When Second Mortgages Make Sense
- Making the most of home ownership – without betting the farm

6 Steps to Getting Out of Credit Card Debt

Level the Playing Field With Collections Agencies for Fair Debt Payment
- What to do when a debt collector calls -

Home Loan Tips: Avoid Mortgage Troubles, Other Pangs of Rising Interest Rates
- Bills.com outlines 9 tips to prevent problems, avoid foreclosure -

Before ‘Medical Bankruptcy’: Consumer Options Can Salvage Credit

Position2: greendimes - end junk mail & plant trees

I have to talk about this new client... Today we signed up greendimes, a business with a significant social benefit. For a dime a day, they will eliminate your junk mail and plant a tree for you every month. That's is, $36 a year - a ridiculous value.

I was one of the 1st customers, not because they were a potential client, but because it was a slam dunk. Get rid of the junk mail nightmare, lower the number of trees chopped, energy consumption and the bonus is to plant a tree. It drives me crazy to have so much junk mail. A lot of times, it overflows out of our mail box. We've actually thrown away real mail - checks and bills.

Pankaj Shah, the founder and super successful entrepreneur, has gotten the attention of the socially conscious Hollywood. Lot's of well known names will become members.

We are running the SEO, PPC and Blog Outreach campaigns. It's fun for us because the value proposition is so strong. There's so much excellent content in this area. I can imagine tons of people signing up with the company. Check out their blog as they are putting together great articles.

I really hope that we can sign up more like this - great businesses with strong societal benefits.

Sign up and give a dime!

Position2: How People See Us

Want to know a little more about Position2? Here are photos of the Position2 management team.


Rajesh Sule is sitting to the left. He heads Business Development and Marketing. Vinod Nambiar (standing) heads our Global Delivery or Operations group. Super guys - highly experienced execs. They build very loyal teams and are creatively brilliant.


Here is Andreas Ramos who is our Search Engine Marketing expert on PPC and SEO. He comes up with a lot of new ideas for us to build technologies and processes. He and Stephanie wrote the seminal book on Search Engine Marketing: Insider SEO and PPC. He's written a ton of other books as well. Andreas' website and newsletter has a huge following. He writes about anything in an engaging way and is a true Renaissance Man. By the way, he rarely dresses up as he's still a Valley engineer at heart.


Here is Stephanie Cota who is our Analytics and E-Commerce expert. She's an out-of-box thinker who is great with clients. If you buy her book from here, she might even sign it.

Unfortunately, I do not have Soumya Ravi and Rakesh Varma's pictures. They are so busy with Clients (Soumya) and Technology (Rakesh) that neither have time for pictures. Both are stars in their own right and minds :) .

I also do not have a picture for Manju yet. She keeps the trains running on time around the world for the company. Manju is invaluable to us.

Here's me in a suit. This is an unusual thing since now I'm a Silicon Valley guy. It reminds me of my old days in sales at NCR. I'm sure they would have objected to the fact that I didn't have a white shirt :)

I had these shot when I was in India. The price was the same in currency units at a Bangalore professional studio as it was in the US. The only difference was the rupee was 45 to 1. That's right, the cost was about 98% off. Too bad you can't build a startup off of that.

Blogging and Content Management

Blogging has been the latest craze on the web. There has been an explosion of information available through all kinds of people blogging about a wide variety of subjects. Of course, businesses see opportunity as well as risk. By influencing expert bloggers, there's the ability to engage in viral or buzz marketing. There's also the risk that your customers can kill you on the web. Do a search for "Dell Hell" and you'll see what I mean.

I totally enjoy blogging as I can post something as it comes to me and improve it as I go along. There's not that pain of, "Oh, I need to make sure it's perfect before I publish."

This post will focus on some of the cool technology platforms we are looking at for implementing a blogging type of architecture for our site and client sites. In many ways, blogging is a form of content management. You don't have to worry about knowing html, style sheets, web architecture. Blogging platforms allow you to organize your articles and have a consistent yet somewhat customized format.

The term content management used to scare me way back in 1999. These were expensive enterprise systems that large publishers used to implement complex systems. Nowadays, just sign up for Blogger or Typepad and off you go.

You can implement blogging on your website. Check out how Sandeep did it. He took his site and added some code to connect Blogger to his site. He's thrown in some YouTube videos that he likes and now people can see content filtered by him. On top of that, he's thrown up some Google AdSense code and he's even making a few bucks.

What do I do for my website? Well Blogger may not be enough. There are 2 open source (meaning free) platforms that my folks have checked out. One is WordPress, an open source blogging platform. Another is Drupal, an open source blogging/content management system. Rakesh, my tech chief, has tested both. He prefers Drupal for a website because it is more flexible and has some more features. We plan on using it to do the initial build of EffinFunny because it will allow the team to quickly add content without needing a technical team. It also has some cool features like voting, discussiong, video downloads, and categorization. I understand that both make it easy to drop in Google AdSense.

This is a new era where new tools are making it far easier to set up and run a content business. Stay tuned...

Patriots: Articles about my Favorite Team

I did promise Patriots stuff in my byline. Well let this page be my listing of cool articles.

This Boston Globle article about the Denver's 11 man blitz has a really cool flash graphic of how it works. I'd be really interested in finding out more of these things on the web. Football strategy makes the game more exciting to watch, though nothing beats screaming and yelling at the TV with a loyal group of family and friends.

SEM: Justify your Search Engine Marketing Investment

Why spend money on marketing? To achieve a positive return on investment. If I put $1 in, how much do I get out? Does the return justify the risk? This is why Google Advertising or PPC is so powerful. You can estimate your return or ROI before you get involved in a campaign. And you can track and tweak as you go.

Even though search engine marketing is results oriented and completely measurable, many sites and tools given an inaccurate analysis of profit and ROI. I have seen tools that consider new revenue to be profit, many of which do not even consider the cost of the cost of goods. If you are not going to offer an appropriate measurement mechanism, then you should not have one at all. It is deceptive.

Let me walk you through how I run the numbers step by step...

Know your revenue per customer (Rev). This is easy if you are a mortgage broker, a consumer software firm or anyone that has a product or service with a 1 time fee. This is a bit more work if you bring in a certain stream of revenues per customer. Then you need to know churn, average time of a customer, what typically a customer buys. The best is if you understand the notion of Lifetime Value of a Customer (LTV).

Know your average gross margins (GM%). GM% = Rev - COGS.

• Average Gross Margins are expressed as a percentage and is Revenue minus Cost of Goods Sold (COGS). For a services company, COGs is the cost of producing or providing a service. This is the key missing item in most analyses. Not listing this is the difference between investing in your business and putting your money into slots. For example if someone tells you that for an average $12 cost of acquisition (CPL), you get $8 in "profit." This is fool's gold if the cost of producing the product (COGS) is $10 or a gross margin of 50%. You lose $2 for every product sold through this medium. That can add up to the thousands or millions fo dollars in losses.

Estimate your cost per click (CPC). CPC = Average bid price over all clicks.

• There are many tools to estimate this number - some are on the search engines themselves. Generally a less competitive arena is less than $0.50. More competitive is around $1. Highly competitive areas like mortgages can be over $2.

Estimate your conversion rate (CR%). CR% = Lead/Clicks

• This is your conversion rate to a lead. That is, what percentage of people who click, do something that you want them to do? This is typically filling out a form to be contacted, downloading software or a white paper, or purchasing something directly. This number varies substantially from 1% all the way up to 25%. I would be conservative in this number. The output this number will cost per lead or CPL.

Estimate your quality lead rate (QLR%). QLR% = Quality Leads/Leads

• Not every lead is quality. Many filled forms are garbage info, duplicates, tests, etc. Some forms are not filled out at all. Numbers vary widely here as well. We've seen as high as 90% and as low as 30%. Having a quality keywords, ad copy, and landing pages make all the difference in the world here. Now if someone is purchasing something directly, neither conversion rate nor quality leads count.

Estimate your close rate (CloseR%). Close R% = Sales/Quality Leads

• Every company with a different business has a number here. Some are 3-5%, others are 30-50%. As they would say in The Holy Grail, "100% is right out."

Estimate your search engine budget (Ad Spend) and your campaign management fees (Fee).

• If you are doing this yourself, then only your monthly search engine ad budget matters. If you are paying a firm to manage this, enter this data in - typically its a percentage of ad spend or a lead based fee.

Now it is time to make some calculations:

Clicks per Month (ClickMonth) = Ad Spend/CPC
Leads per Month (LPM) = ClickMonth * Conversion Rate (CR%)
Quality Leads per Month (QLM) = LPM * Quality Lead Rate (QLR%)
Closed Sales per Month (CSM) = QLM * Close Rate (CloseR%)

Gross Margin per Customer (GMC) = Revenue per Customer (Rev) * Gross Margin (GM%)
Monthly Lead Cost (MLC) = Ad Spend + Fees
Cost per Lead (CPL) = MLC/LPM
Cost per Quality Lead (CPQL) = MLC/QLM

Now for what really matters:

New Sales per Month (RevM) = Rev * CSM
Cost per Sale or Action (CPA) = MLC/CSM

New Profit per Sale (PS) = GMC - CPA
New Profit per Month (PM) = PS * RevM

ROI% = PS/CPA * 100

Now this is something a businessperson can work with because it includes real cost per sale including your cost of good and your cost of sales. With search engine marketing these types of metrics are completely understandable and trackable. It's why I got into this business.

Having this data in detail is very helpful to you and your search engine marketing agency, because they can control for certain steps in the process to help you arrive at your projections. Soumya (from our firm) has done a nice job defining the terms you should know about PPC or Search Advertising.

Different businesses will have to make some adjustments to fit their situation. If you need some help, please let me know.

And yes, I do plan on releasing a spreadsheet tool to help you do the analysis yourself. Just contact me and I'll send you a beta version.

This is a work in progress, so comments are appreciated.

Environment: Global Warming and Alternative Energy Articles

Beyond Fossil Fuels by Robert Semple is A Talking Points feature in the NY Times. It is an excellent essay that discusses the multiple alternative and renewable energies along with the cost, environmental, carbon emission impact. Semple then delves into subjects like energy efficiency, ethanol, hydrogen, solar and wind. It is well linked. The only issue you may run into is that it is for subscribers only. I have printed it out and will put it online after I move this blog to another spot.

Low-Sulfur Diesel Fuel Is Reaching Market: It's a good NY Times article on the new low sulfur diesel fuel that finally comes to gas stations this Sunday 10/15. It's an exciting development as it reduces particulate emissions in new engines by 95% and in older engines 10%. While the Bush administration is taking credit, it was actually delayed by 2 years. While smog creating sulfur content is down 97%, it is still not to European levels. For some reason, the technology exists to get super low in Europe, but it has not made its way here. Nevertheless, any progress on this front is good progress. Another article in this area, A Love Hate Relationship Bears a 50 State Diesel, is on Honda's new diesel engine that is coming in 2008 that meets emissions requirements in all 50 states and gets a combined 42 mpg. This is based on a diesel Accord that is already on sale in Europe. That 2 mpg less than what people say they realistically get in a Prius.

Cool beans, a NY Times article on plug-in hybrid vans that are going to deployed over the next year. Daimler-Benz plans to offer them under the Chrysler nameplate. This vehicle is mostly designed to be of value in short distances with a lot of stop and go.

An interesting NY Times article on wind power. It's an article how an Indian company, Suzlon has experience fantastic growth by starting in an emerging market like Indian and then expanded rapidly throughout the world. Because the power grid is disconnected and dysfunction, wind power has value because it can be place closer to the user. India has benefited by wind power - generation is up 49% over the year earlier. Stories like these are great because they demonstrate environmental benefit while offering greater value to people than conventional sources.

GM released info on its Sequel hydogen fuel cell vehicle in this NY Times article. It sounds impressive as they have promised a commercial vehicle by 2009. The vehicle is based on their Chevy Equinox platform and claims to get 300 miles on a single tank (hydrogen tank). GM says that the product does not become competitive until 1 million vehicles are produced. The big issue is how do you produce hydrogen and how does it get distributed? In any case, at least GM is not playing the old game of resisting every innovation and then getting beaten when the trend favors fuel efficiency or new technology.

Richard Branson made a huge $3 billion commitment to finance projects to reduce global warming. Most of these are investments in companies related to cellulosic ethanol. It's over a 10 year period and represents all projected profits from his transportation groups. I bet this investment will end up making him a lot of money. Check out the article.

Saw this article on CNET about cellulosic ethanol technology that Honda has developed in conjunction with the Research Institute of Innovative Technology for the Earth (RITE). It's pretty cool as it is carbon neutral and can eventually offer greater benefits in terms of production and efficiency than corn derived ethanol. Best of all, they are talking about a pilot plant in 2008.

This article on Brazil's sugar ethanol breakthough eloquently describes how oil will be displaced. - again in a carbon neutral way.

Here's another reason why someone should live in California. Check out the first well written and detailed NY times article on how California is taking the lead on carbon emissions and global warming. This should not be a partisan issue. It is probusiness, proconsumer and pro-National Security.

In the NY Times, check out the Energy Series of articles. It's fascinating.

Business: Get to Breakeven - Help! My Business is On Fire!

I was sitting with a Marketing Partner CEO yesterday. Joe's services business is losing money. He's in a panic trying to figure out how to turn it around. "Everytime I sell more, I still don't catch up, " Joe says.

Joe can't afford to hire people, but tries to sell more through his own services and partner services. Then he hits a wall. To service the business, he needs to hire more people. Then he needs to sell more. He thought he was only a short distance away, but he has a long way to go. It never seems to get close, but there's no time for sit back. "Just keep pounding away," he says.

I ask, "Well how much do you need to sell to breakeven?"

"Well, I'm losing $20,000 a month, so, uh, $20k," Joe replies.

"Are you sure?" I respond.

Hmmmm....

Remember algebra, remember y=mx+b. Well that's how business functions. In a product business, it's pretty easy. It cost me a certain amount to buy raw material. Add that to the cost of production and then tack on a profit margin.

It's no different in a services business. There's the cost of providing a service - COGS or cost of goods sold (you can even call it cost of service or COS). This is a variable cost: it includes employee costs directly involved in providing your services and if you have to pay a vendor for a service that becomes part of your offering. In a web development firm, it's the designers and developers. In a technology services firm, its compensation for those that deliver on projects. It goes up as you sell more.

Then there's gross margin or GM. This is what you care about. This matters more than anything else. This is what you get after you take away the cost of offering the service. I t's how you pay for all your other expenses.

So...

Gross Margin = Revenue - COGS

Expressed as a percentage it is:

GM% = (Revenue - COGS)/Revenue

In my friends case, if Revenue is $100,000 and COGS is $60,000, then the Gross Margin is $40,000 or 40%.

Now everything else is a fixed cost, then you know your breakeven. Since this is a stylized example, we will not include variable costs of sales like sales people or advertising in Search Engine Marketing. We are going to pretend the main salesperson is the CEO and he can't hire any more. Nothing new there :)

From Gross Margins or Gross Profits we subtract operating costs like:

• Sales & Marketing (S&M)
• Research & Development (R&D)
• General and Administrative (G&A)

From here we get Net Profits which are also called Net Margins, Profits Before Tax (PBT) or EBIT (Earning Before Interests and Taxes).

PBT = GM - S&M - R&D - G&A

Or expressed as a percentage:

Net Margin% = PBT/Revenues

Now let's get back to my friend, how far should he go before he breaks even?

Revenues: $100k
COGS: 60k
Gross Margins: 40k or 40%
S&M: 30k
R&D: 5k
G&A: 25k
PBT: - 20k or -20% Net Margins

Again, how much does it take to get profitable?

Well, if your fixed costs are $60k, then you need to receive enough gross margin to get to $0 PBT or:

Operating Expenses => Revenues - COGS => Gross Margins = $60k

He must overcome $60k in fixed expenses. Solving for this can be made easy by using the Gross Margin equation above

Breakeven Revenues = (Operating Expenses)/GM% = $60,000/.40 = $150,000

Given that current sales of $100,000, our CEO friend needs to sell $50,000 more! That's to get to breakeven.

Remember: We are not including cash flow issues or the fact that our CEO probably needs to do a variety of things that probably include going after high value deals, closing more profitable deals, hiring sales help or cutting expenses.

Cool Anti Spyware Tool

Nothing is more annoying than after you buy a really fast laptop that it starts to slow down and show an annoying set of popups. Worse, many spyware and adware makers were watching your every move and could steal your credit card info. Years ago I downloaded the freeware of Spyware S&D. Just yesterday I bought MaxSecure's Spyware Detector. After the initial scan, it seemed like my freeware didn't do the job. Moreover S&D had a clunky interface. Many times, I would have to download multiple times and run the scan many times, because it would freeze or have errors. It was painfully slow.

I looked at some other packages, but picked Spyware Detector. It had a lot of awards and good references. Plus, the scan and quarantine was superfast. So I took the plunge and dropped the $30 and removed the 80 or so spyware infections on my PC. I was happy to see my computer's performance pick up again. On top of that, it moved lightning quick through the scan and removal. Now every other day I'm still pickup spyware, but it automatically cleans my machine. It updates itself too. The GUI is real easy as well.

This stuff is worth the money - peace of mind and better performance.

Successful Red Sox Prospects Traded Away

A lot of folks have been fretting aloud about Theo's trades of Anibal Sanchez and Hanley Ramirez for Mike Lowell and Josh Beckett. Both have done incredibly well over in Florida. Sanchez with the no hitter and Ramirez with 44+ steals (see this search result and this Providence Journal article). There are two reasons why those folks should cool down. Beckett has had a hard time in Boston this season, but Lowell has been a real winner. Beckett is a young known winner who will find a way to adjust. Lowell has had an excellent season offensively and defensively.

You have to remember, Boston is a hothouse. There's tremendous pressure to perform. You can't avoid the scrutiny over every move. Plus, the NL is like AAAA ball. The top teams just can't match up against the AL. Players who leave Boston tend to do well because fans are more forgiving. There's less attention. In baseball you need to focus on the moment and forget the world around you. Boston media and fans do not allow that to happen. Neither does New York. Look at how Renteria has done in Atlanta, Lowe in LA, and Payton in Oakland. Whether you like it or not, pitchers will not do as well in the AL East and only big game hitters do well.

So folks, calm down. Yes, we got hit with a rash of injuries, but Theo's doing well by allowing the system develop a great crop of young players.