The Case Study Guide updated: 05/25/2005 | go to the homepage
	Focus, focus, focus This episode first aired in September 1996. Key Idea #1:An excellent technology does not a business make. In fact, Peter Drucker has always said, "The purpose of a business is to create and maintain customers." Therefore, if you don't have a customer, you don't have a business. When Bill Hagstrom joined UROCOR, it was a startup based upon technology developed at the University of Oklahoma. The professor who invented and secured a patent for the diagnostic process which UROCOR sells today was not the person who could build a successful business. Topic for discussion: Why was the professor failing? WATCH TELEVISION THAT TEACHES Key Ideas of this episode 1. An excellent technology does not a business make. 2. A key motivation of people who provide venture capital is to find personnel to take a business to the next level. 3. Success attracts success. 4. Research creates timing. 5. Core competencies are a requisite for success. 6. IPOs are carefully regulated by the federal government. 7. No leader can move forward with old experience and old information. more... Possible answers: Just because something is the best doesn't mean the customers will choose it over what they are using now. UROCOR's product is new and physicians must be convinced to try it. Bill Hagstrom doesn't clearly say that the founder didn't understand marketing but that is the logical assumption. Bill was hired to make a business out of selling a diagnostic test. Bill had a great deal of experience in healthcare and has taken the company from 12 to 250 employees. Key Idea #2: A key motivation of people who provide venture capital is to find personnel to take a business to the next level. Bill Hagstrom was hired by the group of venture capitalists who had provided funding from the beginning. This group had already invested thousands of dollars and knew they were not going to get their money back unless they changed everything about the business. A venture capitalist is a person who invests funds he/she is managing for others, into a new enterprise. The venture capitalist becomes part owner hoping to cash out with a nice profit in the not to distant future. Topic for discussion: How did they find Bill? Possible answers: They hired an executive search firm. This is basically an upscale personnel placement business and they do not work for the employee, they work for the employer. Bill was happy in his work as the head of a multi-million dollar division in a multi-billion dollar healthcare related business. Key Idea #3: Success attracts success. Bill's first goal was to recruit from the cream of the crop. Topic for discussion: Why would a person with a good job in a huge company leave it to work in a startup? Possible answers: A good idea, ownership, and vision. Bill moved from Chicago to Oklahoma City to take the position of CEO at UROCOR. He knew that most of the people in the multi-national healthcare companies worked on the east coast and for him to build UROCOR, his first task was to convince others to join him in Oklahoma City. Many people want ownership, but, don't have a good idea for their own business, or, they want to work on a powerful team. Bill offered key people an equity position in the company which could make them wealthy faster than most jobs. An equity position means an ownership position. So, if the value of the company goes up, so does the net worth of the owners. Key Idea #4: Research creates timing. Bill knows that as baby boomers age, prostate cancer detection will be more and more prevalent. And, 1 out of every 6 dollars in the U.S. is spent on what Bill calls, disease management. This includes every aspect of healthcare from prevention to dying with dignity. Topic for discussion: How does an entrepreneur know if the timing is right for a product? Possible answers: Research, testing, focus groups, and intuition are all techniques used to ascertain the viability of an idea. Many small business owner confess that they did no research, they just started working on what they thought was a good idea. Many of these businesses don't make it, but, many do! Key Idea #5: Core competencies are a requisite for success. Bill came from big business and there he learned the importance of strategic and analytical thinking. Big companies will not allow leaders to jump into projects without being able to explain the why and the how. The discipline of working in a large organization prepared Bill to be the leader of a startup. Topic for discussion: Can and should everything you learn from a big business apply to a small business? Possible answers: No. Bill says that many people who work in big business are successful because the company as a whole is successful. In a startup you must be able to function without a staff of employees and you must have a bias for action. You can't sit around thinking about doing something, you have to do it. In a startup, creativity, drive and motivation are essential. Also, Bill was trained to run his division from financial and profit and loss statements. This information does not give you a clear picture of cash flow, and cash flow is essential to small business. Topic for discussion: Why, in the beginning, did Bill have to spend 30-40% of his time raising money? Possible answers: In a startup there is always more expense than can be supported by sales. Leasing space, buying equipment and hiring people is very costly and convincing customers to try a new product is the hardest part. Bill was raising money by selling shares in the company. Key Idea #6: IPOs are carefully regulated by the Federal Government. A few months before this program was taped, UROCOR went through an IPO, an initial public offering. The Securities Exchange Commission regulates this process and it is laden with rules. You must have attorneys, CPAs and investment bankers involved and you must keep excellent records throughout the development of the business. Topic for discussion: Why is selling shares of stock to the public so appealing to entrepreneurs and how does it change the business? Possible answers: Raising money through the stock exchange is appealing because it can make the initial owners of the company very wealthy over night. The infusion of dollars gives the leadership cash to grow--they can hire more people, buy more equipment, and do more advertising to win new customers. It is all a gamble. When a company is publicly traded, it must have a board of directors, file many reports and keep stockholders informed. Small business owners have historically been not interested in others owning part of their business, however, the stock market can be the road to enormous wealth. Note: In the last class of this curriculum you will study how to execute a Small Corporate Offering Registration. Key Idea #7: No leader can move forward with old experience and old information. Topic for discussion: How does Bill keep current? Possible answers: First, he has a "seeking" attitude. He wants to learn. He reads 5-6 newspapers a day, subscribes to two fax services and visits news sites on the Internet twice a day. You can't run a dynamic, viable enterprise without the newest information. Bill says, "I have always thought about my life divided into three parts. The first third is for learning, the second third is for earning and the last third is for returning." COMMENTS OR QUESTIONS. We invite your comments and questions.