Entrepreneur vs. Professional Manager

(Excerpts from a speech given at CEIBS by Paul Contomichalos. Content rights reserved by the speaker and CEIBS. Use of the content must be with the prior approval from CEIBS.)

Paul Contomichalos (Biography)
Former Chairman & President of Bristol-Myers Squibb(BMS) China, Co-Founder and Chairman of Profex Inc.
Sept. 24, 2003

As we all know, when we're in business, it's not only successes but there're lots of experiences including some failure that we can learn from. But I would talk about and elaborate about my experience on the subject of Entrepreneur vs. Professional Manager. I've thought a lot about this topic. Let me start by saying, first of all, I'm very thrilled to be here, because I've known CEIBS started in the year when I came to China in 1994, right? So it was an early mover as a university. That's why you have a kind of good faculty experience, professionals, great reputation which leads to great careers and great jobs. So you're a special audience because first of all you're smart, because you chose CEIBS. And those of you who didn't go to CEIBS and are here, you are also smart, because you chose to come this afternoon or this evening. I want to warn you something that I like to ask questions. Even though I have these slides, I still want to ask some questions. Some of you I know, so I may pick on you if no one wants to answer my question. Let me start with this question - who from the audience knows me? And by "knows" let me define - I mean, "Have we worked together? Or had a coffee together, or had a drink together? Let me see. Put your hands up. No one knows me? How many are you? Let me count. Ok, so quite a few of you. So, as Pro. Zhang kindly mentioned, my name is Paul Contomichalos; I'm originally from Greece; Born and grew up in Athens and then went to the United States for an MBA degree. And then came to China - I'll talk a little bit about my experience and career.

The topic I'm going to be addressing is one I've spent a lot of time thinking about. And it's a big decision to make - to make the transition from a corporate kind environment to a more entrepreneurial environment. So what I would like to do is share some of my experiences over time, what I have learned in ¡­ and also hopefully we can both- yourselves and me - learn from the process because I like to constantly learn and gain new experience. So let's start by a kind of definition so we'll have a little bit of a common language, because people can use different definitions. What is a professional manager and what is an entrepreneur? The way I'd like to look at it is that the professional manager is someone within an existing, in many cases, it could be a public company. It doesn't matter what your position is. It could be a manager, a director, general manager, a president, CEO ¡­ It doesn't matter. But it's someone working within this environment. For the balance of my presentation, I would call this company manager, this person. So when I talk about company manager I will talk about people within an existing company and in most cases public. Now, entrepreneur is not only someone who starts a business in my opinion, or a member of a start-up team. For example, if in a new company, you are the first holding a position, you're very entrepreneurial. So it could be a member of a start-up team, either within a big company or possibly within a smaller organisation. So that's how I will refer to this and obviously that would be an entrepreneur. Let's look now at the role and responsibility of a company manager. A company manager can be the plant manager for IBM, or can be the marketing head for L'Oréal or Bristol Meyer. Entrepreneur is anyone who works in an environment of their own. So the role I see as a company manager is to do everything within your control to maximise value to shareholders, right? That is within the area of your responsibility. So you work in a team with other members. And you have a defined area that you are responsible for. Now when you are an entrepreneur, it's quite different. Because entrepreneurs build business to fulfill personal goals. That is the reason they create businesses. That's quite different. It's not good or bad, only different. Let's look at the scope of a company manager vs. an entrepreneur. For example, let's take, which company, let's take Dell, Dell Computers, today. The way they define their business ¡­ if you are working for them you'll see what business is Dell in - computers. So they are in the computer business. And what is the core competence of Dell? Supply chain? Anything else? Service? OK So if you are working in China for Dell, you work within this environment, this pre-defined framework or parameters. If you are working for Dell in China, you have an idea of creating an Internet coffee using Dell computers, do you think headquarters would buy this idea? I'm not picking on Dell. But it's very, very difficult because you work within a defined framework which has been set by the corporation you're working with. And that's your own. When Michael Dell started Dell, he was an entrepreneur. In fact, he was quintessential entrepreneur. And at that time he defined what the company would look like, what capabilities the company will have and so on. I don't know Michael Dell, But he probably thought at that time, what business do we want to be in? Because these was an unlimited opportunity of businesses for them to be in -- and subsequently, what capabilities do we like to develop? Those are the questions the entrepreneur asks which are quite different form the questions a company manager will ask. And again for the entrepreneur the options, think about it, are vast. Because you are creating something from scratch. So the options as to where we want to play, what are the key competencies we want to develop are unlimited. And that's why it is overwhelming sometimes, because the most difficult thing to do is to decide what not to do, not what to do, because the opportunities are vast, so sometimes deciding what not to do is most difficult to do. In a new company being focusing and insuring the success of the things we do is the most important.

Let's look a little bit more in depth at each of these two areas. Let's start with the company manager. And I have spent 15 years with Bristol Meyer Squibb, had different positions with them, but with one company working in different countries with different jobs. I have seen a lot of types of people within one company. I've seen bureaucrats. What is a bureaucrat? Bureaucrat is someone who whatever you tell them, they say it can't be done, right? Or, can not find the way to do it. So we have a lot of bureaucrats. We have people who say it's not my job. You try to do something and they only look at their job description very, very strictly and they do not want to go even a step beyond that. Because maybe it's risky, maybe they do not want to take that risk, or maybe they are lazy. So we have those types of people. What are the other people we have? We have those who want to keep the boss happy. So they anticipate what the boss want, so I give them what they want. So we have those people too. It gets better I guess. We have efficient managers. What are the efficient managers? They are people that do things in the right way. When they have a task, they will do it well, and they will do it in the right way. And those are absolutely crucial to any organisation. We also have seen that we have business builders - people that find new ways that create businesses within big companies and obviously if you're working in China and you're the first one in China starting a business is easier, but again we have people we have the mindset of building or creating businesses. And we also have pioneers and people who are very entrepreneurial within big companies or small companies but anyway corporation. We have people with an entrepreneurial mind and a pioneering kind of spirit. So we can see all kinds of people. And I guess if you are sitting in the audience you think you are towards the left of this, never think about becoming an entrepreneur ¡­ stay with a big company, because at least ¡­ maybe there is a way to survive. But if you're on the right, you like to build things, you like to create, you like to innovate, maybe at some point of your career, it's a right thing to look at an entrepreneurial kind of job -- starting a company or being part of the start-up team. Obviously, we all know - a lot of you have put up your hands and you're working with big companies - the benefit that we have can be quite lucrative and also rewarding. So, we have generally package salary compensation. If we're doing good, our career development is usually quite good. We can get promotion, because corporations or big companies have a lot of businesses that we can get promoted in. And there is relative job security. I put the word "relative" because there is no such thing as job security. But at least if you are working with a 20-billion dollar company, chances are they will be around. You never know. So there is lower risk. There is generally very good training, exposure to new areas, its prestige, image working for a good company no doubt. And then very, very important, we have access to a lot of resources of the corporation. That is probably for those of you who have ventured out to become entrepreneurs, or those of you who will one day, you'll find that is something sometime we underestimate the corporate resources and the systems, structures the company may have. So in summary, generally speaking, if we're performing well, if we're doing well, we have relatively good package we're offered as a member, a performing member -- I'm not saying people that don't do their jobs -- but if you are performing and performing adequately in a big company. Not too bad.

Now, question - being a company manager, whom is it for? Everyone? Some people? What do you think? Shareholders? OK Why isn't it for everyone? I think it is. Those are all correct points. It depends on when you are in your career stage. But I firmly believe it's for everyone. Because everyone should gain experience ¡­ and you know you can argue, "Why do you say that?" Bill Gates, I think he dropped out of school or whatever and started Microsoft and he is now the richest person in the world. So why should people go through or have a corporate experience? Yes, but how many Bill Gates are there and how many people who did that you don't know about because they ended up probably not doing too well. There are a lot of those examples. The statistics show that people who start companies with the relevant experience and track record generally do much, much better. So you are here because you have thought about, maybe you have in mind deliberated entrepreneur, you said how does company life compare with entrepreneurial life or big company life. So I guess a key question is for how long, or is it for life? I've talked with a lot of people that say I've been thinking about starting a business, but they haven't taken the action. And it's a difficult decision. So that's a key question I think for every one at some point in your career. It's probably the bigger decision you'll have to make in a way. Because the goal from IBM to Dell, from L'Oréal to a competitor or so on, or from Bristol Meyer Squibb to Johnson and Johnson is a relatively easier decision, because if you are working within an environment. But starting a company is a bigger decision, and usually you make it once, because either you succeed you continue; you fail, then you do something else. So it's a very, very big decision in all our careers.

Let's turn focus to the entrepreneur and look at entrepreneur¡­ Let me remind you, an entrepreneur is someone who builds, if you build your own business. Again, he thinks about at what area, what type of business and what capabilities. But the key is you do it to fulfill needs and goals. The options are unlimited. So the scope of this kind of venture is really vast. It can be at times overwhelming. Now, I firmly believe that the most important thing that people started businesses or are part of team, they don't know why they are doing it. Let me explain what I mean. This is not my opinion. This is from some reading I've done. People quote the following reasons of starting a business. One is to control my own destiny. And the second is make money. Now, again this is from some reading I've done, these reasons are extremely general and vague, because what does it mean to control my destiny or make money? You have to go deeper - peel the onion, as I like to look at it. So control my destiny. What do you want? The satisfaction of a long-term creation? You want to write history, do something new, novel, pioneering? Become a case study at CEIBS because you created some new business? You want to be the boss? Because some people say, "I want to be the boss, my own boss." Do you do it because you want a flexible schedule so you don't want to have to go work 9-5? And then what sacrifice do you have to make now that you are prepared to make them. These are very important points. I will discuss them a little bit more. Make money. People say, "Oh, I want to get rich." What does it mean - make money? You want to make quick money? Money immediately? You want to make enough money to be able to maintain your life style? Having your car and servant at home or whatever? Or you want to make big money, huge money later. Those questions are very, very, very important. You may find if you talk to people or maybe if you think of yourself you need to understand why. Because that will drive what type of business you want to start and so on. And let me explain what I mean by that. These are very, very different reasons for people to start their company. So, when and only when you have decided the "why" and you have clarified and crystallised in your mind, then you look at what type of business do you need to build or be part of to fulfill the goals you have. And there are 3 types of entrepreneurial ventures I'd like to call them. There is quick profit. And I'll talk about it. So there is a quick profit entrepreneur. There is a life style entrepreneur. And there is a sustainable value entrepreneur. Very, very different, and I'll discuss why. You may start to get the idea. OK, let's look at type, size and so on. Let's start with quick profit. What could a quick profit type of company? Anyone? Restaurant. OK. Let's see. Trading is an example, right? Import, export. The size is a small-scale type business. That relies squarely on the founder or the founders of the company. And you have immediate money. For example, if you have a friend in Singapore and they're looking for refrigerator in China - I just make it up - and you know someone in China you find the source; you buy it in one RMB; you sell it in one and a half. You make quick money, right? Immediate money. You don't invest. That's an example of a business. Obviously, that's a very small scale business. But they could be restaurant, they could be other businesses. Business is basically that you don't need to invest a lot behind. Now, life style could be services, could be an advertising company, could be a consulting company. Again, relatively small scaled. By the way, a lot of these businesses can become big businesses. Don't misunderstand me. But statistics show that most of these businesses remain small type businesses. Yes, there are big companies. But the majority of the start-ups remain small companies. Why? Because they rely on the founders. And they don't build the scale as is necessary. In this case, the payoff is enough money to maintain the life style I want to have. Now let's look at the sustainable value, which is a quite different type of company. Now, here it could be in any area. And it could be a trading, an import, export or service company. But it is any business that has proprietary assets. Some value that could be protected over time. What could be proprietary assets? Patents? Exactly. Trademarks, new technology that you can protect. A brand. If you build a brand in consumer, it could take a little longer, but if you build a very strong brand name, you have that proprietary asset. Or it could be a network of customers that you have some relationship that you have built over time, and so on. But you need to have a proprietary asset. Again, here companies tend to go from medium-sized - they don't start as medium-sized, but they have the potential to be large companies. Again, here you don't rely on the founder or the founders of the company, but you rely on the start-up team and the infrastructure. It's a different type of animal. I guess the payoff ¡­ I like to think about it as the immortality of creation, the fact that you build, you create something that lasts for a long, long time. And something that is very, very important is, there is big payoff as far as money later through selling the company, or through having shares of the company that becomes very big, in most cases public company. So, you can see that these are very, very different. And again, let me reiterate it doesn't mean that every business that is service or import falls in this category. But again, generally speaking, it's those type of companies that fall in the Quick Profit and Life Style area. So, think about the previous point that I was making about the "why".

Why do you want to start the company? You need to be very clear. Because these are very different. And let me show you something which is very important, and also it's the toughest part, which is the question we have to ask and be very honest with ourselves when we ask it then give an honest answer. I will prepare for the risks and the sacrifices. So in the quick profit, clearly, to start a company you have a job now, so you have to forego the current job, the package you have. And you have to be devoted to your business. Risks, personal capital, right? Because you need to invest some of your personal equity in capital. Very long commitment and hours of work. And sometimes maybe leading to the question of growth potential. Because you may build a business but then "how do you scale it? How do you grow it?" maybe an issue in this type of company. Also a very big risk is that the value of the company is the founder or the founders. For example, you have created a small trading company that is making money. And then all of a sudden, God forbid, you get sick, or you burn out, or something happens. It's very, very difficult for that company to continue. It's very difficult for the company to be sold. So you can be locked in. You hear a lot of stories of people that get locked in the company they build, because everything revolves around them so the company can not be sold, the value is yourself. So there is really no difficult exit. You're in this area, you remain small-scaled. Let's look at Life Style. Again, here, it's pretty much the same as the first category as far as the sacrifices and the risks - the same issues have to go through your mind. The third area, which is in a way bigger scale in a way sustainable value company ¡­ Again, in the sacrifices, same. You have to sacrifice your current job, the package you have, the comfort you have and so on, devote yourself to the business. But where it's quite different is in the risks area. Because here, you have to think long-term. There is no immediate payoff. You have to think longer term, because you're creating and building an asset overtime. So you make a long-term bet. You need to be fully aware that it's a long-term bet. And it may take a few years. Second, there is significant capital that has to be devoted and tied up behind the business. And then the continued investment. You read and hear about entrepreneurs that have started their companies that are building an asset, a proprietary asset that has sustainable long-term value. There is continued investment. People have to have staying power. They have to be patient and not lose confidence and also a high tolerance of risk, because there is not one time risk, but there is continued risk in the business. So you need to be that type of person. Otherwise, if you start a company like this, or if you're part of a team, you may not be happy, or you maybe miserable. So if you start the company that takes time to build. And you are thinking money day one; or you're thinking of having the payoff ¡­ or the payoff to you being immediate, you are wrong. So you may be disappointed and give up. So, that's why it's very important to know exactly the "why" before you venture out. If you look at most new companies, the reason they don't succeed is because they lose patience; they lose confidence; they run out of money. So those are some of the reasons that probably have not been thought through well at the beginning of why people are venturing in starting a company. And again, here, one point I want to mention is the difference between proprietary assets that I talked about before and hustle - entrepreneurial hustle so you can hustle to do a lot. But those companies stay in small scale when you're doing everything yourself. And you're not building sustainable value overtime.

Then I'll now focus a little bit on the right side and talk about a company - entrepreneurial start-up company that falls in the right-hand side of a sustainable value and talk a little bit also about my personal experience in it. So we'll go a bit more in depth. So building a proprietary asset that has durability. We've talked about what're some of those proprietary assets - pharmaceuticals, could be patents, brand name, the famous brands that come up your mind when you think about any area - clothing or shoes ¡­ Nike or Coca-Cola those brands that come to mind and have built equity over time are huge, huge assets that those companies have. And you don't need to become a Coca-Cola. You can create a niche that people are loyal to you and think your brand has the value and is the best. And thirdly, specialisation is very, very important. You can specialise in one area and be the best in that area and create barriers for other companies to enter. So that's a another way ¡­ or a customer group. So first you need to have a very clear mind of proprietary assets. Second, the company needs to be big enough to attract a team, because we said in this area if you want to build a sustainable company you can not do it yourself. You need a team, you need partners and you need investor that are willing to support. Unless you're a billionaire yourself, you need some investment if you're to build a company that will last over time. And secondly the infrastructure is very important. You need to be big enough to have the infrastructure. Because if you are a one-man operator you can not have the infrastructure and then you always rely on yourself. So, proprietary assets, big enough area. But you can not be too big. Because if you try to go against the gorillas of the industry as I say, chances are they will crush you. So it's important to find areas that are big enough, that you can do this. But not too big to get into the nose of the bigger guys, because you are vulnerable at this stage.

So it's important maybe not to be too big, or to plan to be too big, at least initially. I guess, to illustrate this, I will use the example of Profex, which is our company, and talk about how to become an entrepreneur and start our company Profex. And I don't want to use this to talk too much about Profex. But the company is the first international dermatology company based in China. So it's international focus in the dermatology area based in China. So that was the idea behind the company that we found it. And it is now in its third year. Let me talk a little bit about ¡­ look at myself ¡­ becoming an entrepreneur and also starting the company Profex and I will use some examples of the company. First, why I start my own business? The question that we asked before, why? For me, it's very clear. I want to be a pioneer, start a very unique company, long-term value is very critical. Build long-term value and be proud of what we do with my colleagues. What type of company? Very clear, a sustainable value company because that's the only way to achieve the personal objectives that I have. And third, sacrifices, risks. I had a career with Bristol Meyer Squibb. Some of you are from Bristol Meyer Squibb and know me? I had a good, comfortable package. So those things are things that had to be sacrificed. And I had to use personal fund. So not only you need to keep money going in, you have to use your personal fund - what you have accumulated to invest behind the business and make a long-term bet. Because we set out to create a company that can have this capability and infrastructure to be strong in the area. So clearly for me the decision was it has to be a company with long-term proprietary asset. And I also had to make clear in my mind if I was prepared. This is something I urge everyone before you venture out to think very, very carefully and make sure you're prepared. So only after your mind is very clear on the above areas you start looking at the process of starting a company. And I believe there is a 5-step approach. You know it's not the ¡­ people can debate. But from my experience I believe there are 5 very, very important steps to looking at starting a company that has sustainable value overtime. The first is ¡­ has to start from you.

I have worked in the pharmaceutical industry, over the counter, personal care and fast-moving consumer goods. I have worked very briefly in my home country in Greece. I've worked in the US for about 7 years then in Canada for almost 2 years. I've been in China since 1994. So China is the area I have the most experience at the senior level. Business type: I worked in an established, mature business; start up with corporate resources, which was my first job in China, which was to start up the over-the-counter division of Bristol Meyer Squibb. The products we introduced include Bufferin line, Therogram line. The turnaround situation I've been involved a couple of times in my career and recently start up my own business, Profex. And then my functions and roles have been in marketing, in business development, general manager, president and then the founder now of the company. And I put there entrepreneur because in a way I consider myself entrepreneurial even with the big company I was working in. The last 4 jobs I had with Bristol Meyer Squibb were new jobs, now one had before me. One was a start-up; the other was a new position combining different positions. They were new jobs. So they were entrepreneurial in some ways. So that's kind of a snap shot of myself. With that, going back to the earlier chart of annualising the experience for me, the decision was quite obvious, health care was the area that I had accumulated the experience. And I had personal experience in China. It's the market where I had my recent experience. And I also like and enjoy the fast pace, the growth, the ability to create a pioneering thing. And also I was at a point in my career where I could believe be a founder with good partners and team obviously of a new company that could become strong in its area. So that's the first step, analyse, look at your experiences throughout. Because those will determine something for you. Obviously if you're thinking of starting a business, if you're not, maybe no need; if you are, very important, first, analyse Second, I believe very, very strongly that for every business to succeed you need to have a different idea. It doesn't need to be a revolutionary idea, but it needs to be creative and have some point of differentiation. I put the word "crystallise" because it's not enough to have the idea, you need to make it crystal clear in your mind what it is - define it very, very clearly. In our case with Profex, we picked an area, as I said before, large enough to attract top team of people to join us - partners, investors, but not too big to antagonise maybe some of the bigger companies that can be our partners. So we decided with Profex to specialise on one area, on dermatology and skin. So within the total health care - pharmaceutical, over-the-counter, cosmetics ¡­ the whole area, we chose one area -- the skin care and dermatology. And thirdly, build a comprehensive portfolio of top products in this area. I don't want to get into details on this, but just to illustrate how you have a different idea, because it's an area no company has comprehensively, systematically focused on. So we build a business around this idea. So that's the second area. The third is you need to develop a very clear strategy and roadmap because you need to know very, very clearly where you want to go before you start putting plans in action.

And here we use a tool that we had used in BMS(Bristol Meyer Squibb) also, which is our strategic pyramid, which is a tool that guides us. It's like a compass. On top you have the vision of the company. Vision, you develop one time, is where you want to go. What's out there? Not where you are today but where you want to be in the outer years. Then you determine what areas you need to be superior to anyone else. They don't need to be too many areas. You may say I'm going to be the best in getting products fast into the market, or having a network covering pharmacies in Guang Dong. It doesn't matter. But the best in some area that you're going to be superior to others. And then break that down to who is responsible for what, what they must do for the year and for the quarter. So this is not the only way. There're many ways to do it. What's important is to have a very clear roadmap. Start up your vision as the founder of the company where do you want the company to be, and work downwards. Fourth, after you have the first 3 "yes", you get into the point of building the team, the infrastructure that will guarantee you superior execution. And I think this is probably most challenging because it entails the capability to attract top people and usually you're looking at professionals that have very good jobs and careers. So to attract top people as part of your team may not be easy. And in our case with Profex, we are quite fortunate to be able to attract top people as part of our startup team. With stellar experiences, proven frank records, we quickly manage to have some top partners, such as Black Smith. Some companies have basically entrusted our dermatology company for their dermatology products because we have a bigger focus in this area. Having a global network is very, very important. In our case, the United States, in Japan, Europe, Latin America ¡­ having a global network, value-added investors and lastly, very important, aligning strategy with people with rewards. And what I mean here is ¡­ to give you an example. Most big companies, again if you think it as a pyramid, most of people's compensation is salary. Then you have some incentives, which is lower usually, some bonus. And then you may have some equity in the company, some stock options, and so on. Most of your pay is fixed and then goes up. In our case, we like to think of this the reverse, up-side-down. The fixed salary is the smaller part. The variable, such as the bonus and incentive, which depend on performance, is bigger. And then the biggest payoff, which we have to be patient, is the stock options or ownership in the company. This is very, very important for any company if you have one strategy and you don't align people with the strategy. Then the reward system, you can have a significant problem. So, this is the fourth step, which I believe is the most complex and challenging in a way, because it entails much more than the founders of the company to pull together the building the team and network and the infrastructure, which will guarantee or will get you close to superior execution. Excellent execution is the most difficult thing to do. Plans and strategies are generally easy, but executing consistently better is what makes different and that generally is not easy.

You can do all of these. But if you do not build barriers for other people to enter you may be doing it for someone else. So there are examples of first movers or pioneers in some technology are not the ones that commercialise successfully those technology. So it's very important to move very fast, but have some way to protect the venture you create and erect very, very clear and strong barrier of entry. In our case, first we create the brand in skin, so trust our company that has anything to do with skin, so building a brand that is trusted more than any overtime for any skin issue. Second is speed of new product entry. We can produce products faster than anyone else. Because we don't have our research and development to wait for. For example, a big company has its own R&D so they wait for R&D come up with drugs, go through all the processes and then introduce. We're in a unique situation to look all over the world and China to find the best products for skin in every area, pick those products and bring them to our customers. It's a very unique kind of situation and therefore we can be fastest.

And lastly building a long-term sustainable partnership with our key customers, which are dermatologists, because they are the ones that will recommend or prescribe the products we have to the end users and consumers. Those are the three areas we have determined that will give us the protection, if you will, and the barriers from other company try to follow. Sometimes it's easier to copy or to duplicate a product. If you have a whole business system and process. It is usually more difficult to do so, especially if you're constantly moving, and moving fast. So far, we've looked at company managers, remember company manager? We've looked at entrepreneur a little bit ¡­ what types of entrepreneurs, from starting, from why you want to start the company. Then we've looked a little bit more in depth at the sustainable value company, and use our company Profex, a dermatology company as an example. So you can see there is a very stark contrast, I think, if you compare with an entrepreneur, I think, there are quite many differences. And again, there are times when the company manager is the right thing for someone's career and at times when an entrepreneurial position is right. So it's only for us to judge. But there is something that are quite different. Let's take research analysis. Big companies depend on extensive and long analysis, research, proposals to justify action in order to reduce the risk. There are a lot of decision makers. There is a lot of justification. Usually you'll prepare a proposal. It will be a report. You may wait for answer, the answer may not come. Then you make questions, and so on. So there is a lot of that which is part of the system; part of big companies doesn't do too many things. They are protected. On the other hand, maybe they move slower than more entrepreneurial type of venture. Entrepreneurial environment, research, you do as much as needed, or analysis. Judgment or judgment core is very, very important because you act on judgment. And you have to quickly weed out the bad ideas because there are just so many things you can do that you have to quickly decide, I believe, what not to do and just park it or kill it, because otherwise it gets overwhelming.

Now let's look at how companies, big companies, public companies take action. Usually, as I said, it's a risk verse. So, you may be fully convinced but you need to convince other people, your colleagues, your boss, people in headquarters, and so on. It's usually slow. There is a lot of convincing. The process is sequential. You cannot take action unless you've done some research and analysis, right? Can you just one day launch a new product and then tell people to do some research on it? No, you have to do it in sequence. First, you do the research. You have findings; you convince the people, then you launch the product. So it's very sequential. Whereas in an entrepreneurial environment, I like to look at as integrated. Analysis and action are integrated. You do a little bit analysis, you take some action; maybe right; you make adjustments; and you analyse a little bit more; you take some action. So it's an integrated process, cannot be sequential. And because you may not have too many people to justify, you can do that and move faster. So you're just along the way. You also sometimes combine annualising with selling. So in a traditional big company you may do focus groups to understand something. In an entrepreneurial environment you may have a focus group which is also a selling session, understand a little bit, convince a little bit your target audience. So there are many, many differences in the way of operation. Also something else an entrepreneurial company is doing is what I call guerrilla marketing which is finding ways to do things in a much cost-effective fashion and manner. And then there is big difference in the behaviour, in the support, and in the role you play. Your behaviour in the company has to be in accordance with the corporate value. And most of the time the corporate value is, I would say most of the time, they are very sound values that give you a guidance. There is no doubt. You have something which is very, very important, you have ample, lots of resources to draw on from the corporation. And you have to work within a system that has been somehow pre-determined. Even if the company is new in China, the company has its own systems that you need to follow, which is good usually, because you don't have to worrying about creating those. In an entrepreneurial environment though, there are a few things that are critical. First, passion, you need to have passion for the business and venture you do. And without that, the venture will die. You need to have an unrelenting commitment and devotion to what you do. So the business has to be your top priority. You also need to be very adaptive. This is a very important point I believe, because things are quite different from when you work in a big company. And do it yourself in some cases. A bigger adjustment for people that move from a corporate environment, and let's say, to a more entrepreneurial is a lot of things you have to do it yourself. You don't have the infrastructure or the system copies, before someone made for you, you may have to do it yourself ¡­ telephone calls ¡­ a lot more things you have to be hands on and do, because the infrastructure and the system are not there. And then something which I believe is very important. If you are not willing to learn, and you've reached the point in your life or your career, where you think you've learned enough, then you're not the right person, because as an entrepreneur you learn constantly. So you need to learn, create, learn more, evolve. And that's very, very important. So, I think a willingness to constantly learn and evolve is important.

And lastly, something I want to say is never say die. Because there are so many issues that will happen and problems that will come your way and hurdles, that is very easy to give up. That' not, again, only for entrepreneurial kind of situation. But it's more evident when you're starting something. There is no doubt about that. So, this is kind of difference between the two categories on an day-to-day operating basis. So if you want to be part of a team. If you want to operate this way if you think you have these characteristics, you should go for it, either be part of a start-up team, or start the company yourself even. But it's very important to do the analysis and understand that. It's easy to talk about the benefits of an entrepreneurial kind of job, but it's very, very important to understand the difficulties, the sacrifices and the risks. So I think that's very critical. I would urge everyone who is thinking about it, and most of you in the audience have had some thought, to think about that before you venture out.

Next, when and how should I consider becoming an entrepreneur when and how? Let me kind of summarise what are the key steps. First, you start from yourself, because that's where you need to understand. If you build a company, you need to understand the 3 questions from yourself - why? Is it for quick profit? Do I want to have a life style ¡­ enough to support my life style or do I want to build a sustainable value type company? What type of company? Small scale or one that can be scaled to greater size? And most important - Am I prepared for the risks and sacrifices that I talked quite a bit in detail? Devote yourself to the business. Make it your first priority. Lose some or forego some of the benefits you've had, and have the staying power that is absolutely necessary. So only after you've answered these 3 questions, you should think about what is the approach. And there, analyse your personal experiences that have to be relevant to the venture. Develop, combine, create something ¡­ an idea or a business model that is different and have something unique about it. Third, have a roadmap - a way knowing exactly where you want to go. You'll definitely do things not do things according to your initial plan, but you need to have a plan of where you want to be. It may take you differently, but if you don't know where you want to go, it's like a boat - the wind takes it here and there. You need to know where you're sailing. So a roadmap is absolutely critical. And build a team. That will guarantee good execution. And then try to find a way to create barriers for other competitors to follow you and copy you and enter your business, because that is what you've sweated a lot to create, so try to protect that from others that will copy. You know working here and living here and studying, it's an environment when something is successful, people will follow very, very fast. So you need to be able to protect them, because what happens is one good idea, then a lot of people follow, and then it becomes bad business for everyone, because there are just too many players. So that's an important thing you must keep in mind. And lastly, I urge you to think of your role as an entrepreneur, because, again, your role and the way you behave and act will be quite different from your role if you're in a big company environment. You need to have total commitment to the business, the people and venture. Adapt quickly; be adaptive; be prepared to do things yourself; be willing to constantly learn. I can talk another one hour about all the new things I have learned in the last 2 years. I will not. But I guarantee you I have learned so many new things, that before someone else maybe was doing for me but they are very useful that I managed to learn these and create and evolve, constantly evolve your role because as the organisation. grows, your role as founder needs to also evolve. And then have perseverance and tenacity and never say die. So that's a summary of the entrepreneur, if you have in mind of an entrepreneur, some of my experience and over the years, what things you need to consider, think about before you venture out.

Now, do you recognise them? Do you recognise these people? Anyone recognises it? Oh, you recognise yourself? Some of you recognise these - two gentlemen and a lady, right? What do they have in common? Anyone knows? CEIBS. They all were smart enough to go to CEIBS. What else? Profex. Who said Profex? Successful careers. They all have successful careers. They all made the transition from a company manager - in fact they were directors in a company - to a Profex entrepreneur and they all create parts of the Profex start-up team. So we are happy to have them and there are also someone in the audience here. Now do you recognise yourself here? Probably not. Of course you don't, because this is a big picture, and you're not there anyway -- maybe some of you are. The thing I want to say is, if you do decide you want to be an entrepreneur in a company of sustainable value like Profex. It's a long-term company that builds sustainable value. Hopefully you will consider Profex as one option. Because as Profex grows, there are going to be a lot of entrepreneurial type positions, because in my opinion, every new area that the company develops is very very entrepreneurial. So before closing I wanted to thank you all very much for coming, for your attention. And sincerely I want to wish everyone best of luck with your life, which is most important, and your career, which is also extremely important. So thank you for taking the time and appreciate you being good audience

Q&A

Q: What are the biggest problems in founding a company in China?

A: I think it's obviously a very good question. I'll try to relate my personal experience. First, I think one of the biggest problems is figuring out "what is the area you want to compete in. China being such a fast-growing area, the opportunities are just so many. There are just so many people that have the same possible idea. So figuring out what is the best area to compete in and then how do you protect that area to me is the biggest challenge, because it is maybe easy to start a small-scale company that can make some money. But if you want to start a company that will have value over time, it is, in my opinion, very difficult to find that area that you can support overtime and also get the right people. So to me the first hurdle is figuring out an area and having a plan that you can support and build the barriers of entry. And in our case, to give you a specific example, my partner and I did a lot of analysis on the market, trying to figure out which area we have the best chance to compete in the long term. The second I think is people. I worked in several markets. By far China is the most people-dependent market I have had the experience. China is a complex and not that sophisticated market yet. So you have the difficulty of the complexity and the lack of systems and sophistication compared to some other markets. So the people will make more the difference. You know people like to say people are important, make a difference. In my experience, China is the most people-dependent market I have been involved with. So, being able to, as a start-up company, to attract the top quality people you wanted is very difficult. Because you don't have a name, you don't have a infrastructure and some of the big resources some big companies have. So to me that is the biggest challenge. But I think the opportunity is once you decide to do it, I think it kind of absorbs you and it becomes a very, very exciting kind of a trip.

Q: I know that you're looking for making big money later. My question is that, are you making money now?

A: Good question. We're on plan. We have put the plan together as to when our company wants to break even. We're now in our second year of operation. And we're very, very close to that point. You know you see companies that have invested for 3 to 5 years and have not made any money. And you see other companies that do it faster. But I think if you want to grow because you are launching new products and are investing behind new areas, it becomes quite difficult to make money in the first year or second year if you are building the company. The other thing to keep in mind is if you try to make money, you may hinder your growth. One way to look at your business is to look at "Am I making money on my initial business or my initial portfolio. And then as I add new ones maybe you need to invest more behind you.

Q: You've mentioned in your slides you've got relationships with some of the large organisations in pharmaceuticals. A lot of people entered this type of pharmaceutical institute, but how do you actually make it work? And also how do you build a global distribution network from being a start-up here in China?

A: I think one thing you have to do and we have certainly done is have as long-term kind of agreement with companies as possible and make sure you deliver on the commitment. For example, I've seen companies that, let's say service companies or promotion marketing companies that in order to get a contract or a name will get a one-year agreement or terms that may not be great, just to get that. I think you have to be relentless and very tough to make sure the agreements you have are long-term. Because otherwise you can not invest behind those businesses. I think that is the most important one. And obviously, you know ¡­ you have 10 businesses, maybe not everyone will work. But the law of probability says if you make most of them work, that's success. The second part of your question regarding the global network. we have a quite unique opportunity there, because we are a new company; we cannot pay employees to have people in the United States or Japan. So the people I talked about in the network. For example, the person who is our chief representative in the United States used to be my boss before. He retired from BMS a few years ago. And now on a part-time basis, he is our representative for the United States, and his job is to source new technologies because he has the contacts and the relationships. He has an equity in the company because he believes in it and has invested. And he also gets an invested interests or a percent of any business he brings to us. So that's one example it's very similar in the other markets. In Japan it's the boss of my partner. In Latin America, it's a similar kind of relationship. So what we have tried to do is build a network of partners that at the early stage will not be compensated with cash, but believe in the company, believe in the future, are willing to invest. And then again it's money later concept. It may not be for everyone, but we've been quite fortunate to get good people to work with us so far.

Q: Is there any way that someone can be both a company manager and an entrepreneur at the same time? And how to leverage this position at the same time? I mean ¡­ some one who can be a company manager and at the same time he can be an entrepreneur, and then how to leverage these tow positions?

A: A lot of things can be done, I guess. My personal opinion is, if your question is, "Can you within one job do both, I think it's very difficult to do, even though a lot of people do that, but maybe difficult to do it successfully in long term. I think you have to make a decision. But within a company environment, there are many entrepreneurial people that have an entrepreneurial spirit and act as entrepreneurs. Especially in China it's quite common because you have market creation, so you can be very entrepreneurial in a market-creation type of environment. And frankly, you know I tried to separate the two, but depends on where you are and what you are doing you may have a different hat in the way you are wearing. I don't know if that answers your question, but you try to have your company job and start a business at the same time, even though people do that, it may become difficult.

Q: Can you describe your biz model and talk about what is the competitive advantage you previously achieved is helpful for your entrepreneurship? I mean your previous experience is working in a pharmaceutical company. It focused on sales and marketing. You now build a new biz model. This model is focused on just branding or just focused on sales and marketing?

A: Our business model, our experience, our whole team is marketing and sales. That's our experience and expertise. So leveraging that, our company is a marketing and sales company. And we focus in one area we have chosen which is the skin area - anything that has to do with skin. We do not have R&D; we do not have our production at this point. So we work with principal companies. Basically what we do is try to find the best products. So our goal is to have a comprehensive range of products for skin from different partner companies in order to give our customers the best choice. So it's a specialty pharmaceutical company basically specialising in dermatology. We focus mostly on prescription drugs, but we also have some over-the-counter and also in the cosmetics area ¡­ some products, but mostly prescription drugs.

Q: Can you say something about the process of becoming profitable of a small-sized? Is there a clear year plan?

A: One thing I can say is every company has its own way of looking at it. In our case, we first decide what we want to achieve, which is we want to build a trusted company name in the area ¡­ in the dermatology area. We did not start up saying we want to be profitable in the first year or second year. We make sure we have enough fund to achieve this goal. And we constantly evaluate and assess, because I think that's the only way to be true to your goal and objective. Some companies say I want to become dominant in this area and I also w ant to make profit in year one. Those two may fight each other or year two. So I think you have to decide what is the goal ¡­ the main goal you have, then have some idea, clearly financially. And then very important is the investors' interests to be aligned with yours. Because if you have any investor who wants to cash out or make money very quickly, then you may have a conflict of interests. But generally, I believe if you want to have a rule of thumb for any sustainable value company, you need to invest 3 years, generally. It's a kind of average rule of thumb ¡­ less than that makes it very, very difficult to make profit. I think it just depends on so many factors. The key thing is know what you want to accomplish and then see if you can have enough fund to make sure you can get it.

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