General Comments / Chat, page-60

Management is critical to the success of any company, but it is particularly critical in the biotech sector. It is really difficult to find people with both a strong scientific and commercial skillset. This is why most biotechs are run by people who are either scientists with zero business clue, or more commonly, sprukiers with no idea about the science.

You need to be careful with management skin in the game as it can cause problems. In biotech it is very easy to blind the market with science. If you have management who can’t get another job it is all too easy for them to convince themselves that painting an overly rosy picture (or worse) is for the best. These managers can very easily end up creating a lifestyle business. You can trade these companies, but you really don’t want to invest in them.

The ideal is management with skin in the game, but with good alternatives outside of the company. You want people who are not there because they can’t get a better job, but because they see the potential. You also want management who are able to tell you the truth without it causing their family hardship. Too much skin in the game without sufficient external wealth can make people reluctant to say what should be said or do what should be done. I am only in RAC because I think it is a great opportunity and I believe it has a real chance of success, not because I don’t have other interesting things to do.