Soccer is a fantastic sport – eleven players on a side, a hundred yards of pitch, one ball, and lots of emotion. Watching the World Cup this year has been fun; our children are just now old enough where they can passionately scream along side us, especially our son, who knows far too many statistics about the scores, Groups, and Round of 16 standings. Plenty of great teaching moments for life – being a good sportsman, the way teams work together, giving it 110% for the entire game, and most importantly, why you shouldn’t bite people.
In addition to great life parallels, there are a bunch of parallels to the biotech sector and its trials and tribulations. I’ve tossed down eight of them here:
Long periods of patience are required, punctuated by crazy moments of excitement. Watching soccer is often a test of patience: 85 minutes of rather boring passing play (i.e., tactical execution) with five minutes of incredible excitement, usually spread out into a couple minute intervals. Biotech can be a bit like this. Start your 18-month clinical trial and other than the excitement of an interim analysis, you’re just going to watch the clinical execution statistics (screened, enrolled, FPFV, LPLV) like passes in the midfield. Frankly, if it’s too exciting in the middle of the game, it’s usually a bad thing, like getting red cards. As a biotech, you really don’t want a DSMB handing out red cards. Patience is clearly a virtue for the soccer fan, as it is for the biotech investor. Hold steady, watch the execution deliver, and hope that in that 90th minute the goals on the scoreboard line up in your favor.
Teamwork, teamwork, teamwork. While superstars like Messi, Rodriguez, or Mueller can change the dynamics of the game, it takes a team of 11 players working together to win. Sloppy moves or below par play from one player (like Spain’s goalie Casillas in the opening gain against Holland, here) can bring down an entire team. The cliché that a chain is only as strong as its weakest link holds for many of team’s in the World Cup. Lots of messages about teamwork in the World Cup (here). It’s also true that great teams know how to celebrate the achievements of their colleagues – jumping in piles, chest thumps, head butts, hugs and high fives. Clear parallels to drug R&D teams – when our biotech entrepreneurs start chest-thumping, you know good stuff is happening. But importantly, while brilliant team members and “drug hunters” are critical, there’s a broad and diverse team around them – whether physically or virtually – that makes a biotech a true success. Teamwork comes in as many flavors as flags at FIFA, and there are many team-building paths to get there. But laughter and fun, as well as challenge and sacrifice, are always part of it on the field and in the lab.
Faking it disingenuously, with enthusiasm, might help in the short run, but hurts the game (and the sector). Take Arjen Robben’s dive against Mexico, leading to the Dutch win (here). While it helped them win, it leaves everyone with a bad taste in their mouth. I know a lot of people who hate soccer because of the diving and the Oscar-nominating cries on the field. The same goes for other fakers: the over-promotion and over-hyping of biotech stories – put up a good façade of an innovative biotech, spin-up a big story, sell the hype to some sucker investors down the road, and exit with a win. Like diving in soccer, that quick flip might be a win in the short run. All of us who love soccer cringe when a dive is rewarded, just as we cringe when a smoke-and-mirrors bogus biotech gins up an exit worthy of a con-artist. Sadly it happens nearly as frequently as the dives in the penalty box.
Global teams, assembled virtually, are commonplace. The national teams in the World Cup don’t often play together; in fact, nearly 75% of all World Cup players play on professional teams in Europe as their “day job”. They aren’t a team until they get assembled and train together in the run-up to the tournament. See this great post on the “mixed up geographic allegiances” of World Cup soccer players (here). Overwhelmingly, professional soccer clubs have fed the ranks of the national teams. Biotech, especially virtual biotech, is similarly mixed up – where a company is based (HQ) is often very different than where its drug discovery is done (offshore CROs all over the place), which is different from its legal jurisdiction (Delaware, or maybe think tax inversion geography), etc… Further, the core teams of many firms, especially here in Boston, are full of international players – immigrant scientist-entrepreneurs are a big part of the ecosystem. So its clear biotech and soccer put real value on international backgrounds and source the best talent around the globe. The big question, then, is whom these biotech folks cheer for in the World Cup!
Big-time Coach-CEOs often make big bucks on and off the field, and many of them don’t earn it. The top three most highly paid coach-CEOs in the World Cup all underperformed this year – as all were knocked out in the Group stage (list of salaries for all 32 here). Russia’s coach, Fabio Capello, gets paid a whopping $11.2M per year – and they placed third in Group H. Capello makes about 1.5-3x as much as a Head Coaches of R&D in Pharma (here) and sadly has just as little to show for it, on average. That’s the trouble with being the Head Coach – very hard to predict how the players on the field (or the drugs in the clinic) will deliver, especially since they were all largely trained (discovered and developed) by other coaches. Although they, as coaches, are held accountable, it’s often tough to turn around a soccer program overnight (just as an R&D portfolio). On the flipside, some very inexpensive coaches have managed to deliver value: Costa Rica’s Jorge Luis Pinto only makes $440K and has advanced his team to the quarterfinals. Pharmacyclics CEO Robert Duggan takes no salary (he is, however, a rather big equity holder), and has delivered a 10x return in four years. I’m hopeful that the 10th most well-compensated World Cup coach, a German named Juergen Klinsmann, earns his $2.6M in salary in the coming days…
Soccer, like drug R&D, can be really expensive. In a classic example of building excess infrastructure just to support a one-product entity (the FIFA World Cup 2014 being the product), Brazil will have spent $15-20B by some estimates (here) to build the eight large stadiums required to support the tournament. That’s like a dozen blockbuster drug NDAs, and all just for soccer. Interestingly, it is this expensive in large part because Brazil didn’t have the infrastructure and as a physical asset couldn’t rent it elsewhere; in order to put on the event, they had to build them all. In past World Cups in other countries, where FIFA could leverage someone else’s stadiums – someone else’s infrastructure – they were far, far less expensive. Sadly, Brazil’s FIFA legacy will be a bunch of empty events and excess capacity: in Manaus, Brazil, the average stadium attendance for their mid-division local professional team is 1500 per game. As Time magazine notes: “Manaus now has a new stadium with a capacity of 42,374, at a cost of $325 million. It will be used for a grand total of four games during the World Cup.” Wow. A mid-tier team now has 30x more seating capacity in its stadium than it needs. On a vastly smaller scale, this happens all the time inside Pharma and Biotech. Building infrastructure has been part of the model of the Pharma R&D mega-site for decades, and is only now being unwound. Accessing existing infrastructure – often renting it rather than buying it – can often be a far more economical way to develop drugs and host World Cups.
In investing and in soccer, there really aren’t any do-overs. Once a play has happened on the field, whether or not the referee has called a foul or not, or whether a goal was scored, it’s instantly history. The word of the referee is the law on the field, and he typically doesn’t allow “do-overs”, as my son would call them. Instant replay would be helpful to prevent bad calls, but unfortunately its not used in the World Cup or biotech. Imagine being able to have an instant replay “do-over” instead of doing an ad hoc clinical trial analysis. Or to make a better investment decisions. I certainly would like a do-over regarding our seed/Series A term sheet into Cancer Metabolism Therapeutics Inc back in 2007; we should have been more flexible, as CMT went on to become Agios, and we missed it. Oh well, the game plays on.
Lastly, the whole world benefits from both. It’s inspirational to watch the World Cup. It captures the attention of the entire world – I love the real-time web camera videos of the various plazas and parks all over the globe watching the game on the big screen, erupting with passion with each exciting play. Biotech, in its quest for improving the lives of patients through new therapeutics, has a similar way to touching people all over globe. The global demand for further improvements in healthcare make for powerful demographic forces in favor of our industry – and for the future of soccer.
Gotta love the game. And, tomorrow at 4pm, I’ll be taking a break from the world of biotech to watch Team USA. My short-term productivity might suffer, but screaming at the top of your lungs together is good team-building…