Phillips Kuhl, "The Timeless & The Now"

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Timeless values of loyalty and integrity have helped Phillips Kuhl build a thriving company at the heart of one of the economy’s most innovative sectors: biotechnology. Holding more than 250 conferences per year, Cambridge Healthtech Institute or CHI, helps participants discover new perspectives on the problems they are addressing. This impressive feat requires the concerted effort of 150 talented employees whose encouragement and guidance are Phillips Kuhl’s constant concern. I really enjoyed discovering how my friend of long standing built his remarkable company.

Click here to read the episode transcript

Here are some highlights:

  • Sal Introduces Phillips Kuhl
  • “…consorting with biotech royalty…”
  • Russian Studies & Economics at Haverford
  • Reading Russian Novels to Stay Awake on the Night Shift
  • “I always knew that I wanted to work for myself. I didn't work particularly well for someone else. I'm not great at following someone else's direction…”
  • Grandmother Provided Phillips with a Model for Entrepreneurship
  • Why Phillips Went to Harvard Business School
  • Fast Growth Got the Attention of Vidar Jorgensen Who Was Already in the Conference Business
  • The Easiest Decision: Become an Entrepreneur
  • “…one of the key lessons was figuring out who were the people that represent the buy side of that topic, who are the people that represent the sell side…”
  • “…critically valuable to have several different perspectives that are brought together…”
  • “You're going to hear perspectives that you otherwise might not be aware of…”
  • Listener BPaul2 says: "Great content. Very informative podcast for entrepreneurs to get inspired and start working in their ideas."
  • Company Crisis Number One
  • Company Crisis Number Two
  • Company Crisis Number Three
  • The Heartbreak of Having to Fire Good Employees
  • A Culture of Openness Sets CHI Apart
  • Angel Investing: SQZ Biotech
  • Savran Tech
  • Angel Investing: Glycosyn
  • What Phillips Most Appreciates About Boston

Transcript of "The Timeless & The Now" 

Guest: Phillips Kuhl 

SAL DAHER: Welcome to Angel Invest Boston, conversations with Boston's most interesting angel investors and founders. I'm Sal Daher and my goal for this podcast is to learn more about building successful new companies. The best way I can think of doing this is by talking to people who have done it. People such as founder and angel, Phillips Kuhl. Phillips, I'm really grateful for your hospitality in hosting us at the offices of Cambridge Healthtech Institute.

PHILLIPS KUHL: Delighted to have you here.

Sal Introduces Phillips Kuhl

SAL DAHER: Also, I should say, Phillips is a friend of many years and we have daughters who went to the same school.

PHILLIPS KUHL: Both named Laura.

SAL DAHER: And both named Laura. The Laura Club.

SAL DAHER: Phillips Kuhl co-founded and built Cambridge Healthtech Institute, also called CHI, the prime organizer of biotech conferences. His business recently celebrated its 25th anniversary which has allowed Phillips and colleagues to look back on how much progress they have made. The company now employs 145 people and runs 250 conferences per year. Jonas Salk of polio vaccine fame, Francis Collins of the Human Genome Project and NIH, Lee Hood of the Automated DNA Sequencer and other inventions, George Church, who co-published the first method for genomic sequencing in 1994 and has countless discoveries since, and Tim Berners-Lee who … never mind. Let me put it this way. If Tim Berners-Lee had not existed, you would not be able to look him up on the internet or look up anything else.

“…consorting with biotech royalty…”

SAL DAHER: This is a partial list of the luminaries who have keynoted the conferences run by CHI. Before consorting with biotech royalty, Phillips Kuhl grew up in a modest family which greatly valued learning and curiosity. He majored in economics and Russian studies at Haverford College, worked for a while, then went to Harvard Business School, while working at a consulting firm post HBS. He became aware of the value of biotechnology.

SAL DAHER: Now, a word to our listeners. Biotechnology now is part of the landscape. In the early 1980s, biology was still a little bit like botany, a sort of a fossilized science. There was nothing happening, and this is when biotech was just beginning to take off, so the fact that Phillips discovered biotechnology back then is highly significant. This discovery of biotechnology would set Phillips on a path on which he's still traveling. The unfolding of the massive impact of biotechnology that's had in the past decades and will continue to have going forward.

SAL DAHER: Eventually Phillips became an independent consultant and organized conferences occasionally. In 1992, he was approached by Vidar Jorgensen who ran conferences in healthcare and other spaces but not in biotech. Vidar proposed that Phillips set up CHI with him. Vidar provided some financial backing and probably some consulting on how to do conferences. Soon CHI was holding conferences at a pace remarkable for a recent entrant into the field.

Russian Studies & Economics at Haverford

SAL DAHER: The company has gone through ups and downs but has emerged as the sponsor of the premier biotech conferences. More about this later, but first, Phillips it's normal for us in this interview to ask our really successful guests how they found their path. We're gonna do a little bit of this here. You majored in economics, as well as in Russian Studies at Haverford College. What prompted you to go to Harvard Business School after that?

Reading Russian Novels to Stay Awake on the Night Shift

PHILLIPS KUHL: From the time that I went to college I knew I was interested in economics. It just seemed natural to me. It was a subject I studied at the end of high school and I was fascinated by it. The Russian part of it really didn't happen until halfway through college. I spent a summer working an awful night security job, and I ended up reading Russian novels to stay awake overnight.

SAL DAHER: Some would say Russian novels to go to sleep.

PHILLIPS KUHL: No. I had to stay up.

SAL DAHER: In the original Russian, you were reading?

PHILLIPS KUHL: No. This was in English.

SAL DAHER: In English.

PHILLIPS KUHL: When I went back to school for my junior year, I added a Russian history course, a Russian literature course and a Soviet economics course which I thought was fascinating because it made no sense. Just the Russian system, the Soviet system was crazy and so to understand how it worked at all, much less well was something I found quite interesting. I spent several years working on commercial opportunities in the Soviet Union and China, so now I'm dating myself because this is Soviet Union, not Russia because this was before the breakup.

“I always knew that I wanted to work for myself. I didn't work particularly well for someone else. I'm not great at following someone else's direction…”

PHILLIPS KUHL: I always knew that I wanted to work for myself. I didn't work particularly well for someone else. I'm not great at following someone else's direction and I figured if I'm gonna do it, if I'm gonna work for myself, I should get the kind of training to do it well and so after a couple of years, that's when I applied to go back to school, to go to business school and that's how I ended up back in Boston at HBS.

Grandmother Provided Phillips with a Model for Entrepreneurship

SAL DAHER: Now, you said, that you always knew you wanted to work for yourself. Did you have any models of that in your family or was that just like your own expression?

PHILLIPS KUHL: No. My dad worked for the phone company, for years and years, was not very political, passed up several promotions because he didn't want the politics and the additional senior responsibilities.  He was not a great model of taking on higher level job responsibilities or being in charge of a business. I did see that model with my grandmother, my mother's mother.  Her father had run a shipping company in Northwest Florida and she took it over. She was an incredible role model not just as a leader but also as a woman.

PHILLIPS KUHL: At that age, to see someone as a woman in the south, who took charge of a business and ran it very successfully that was quite empowering. Eventually after her death, one of my uncles took over the business and so I saw him as well in that role but that is more the example that I saw of an entrepreneurial leadership position.

SAL DAHER: Your father's generation was the generation about whom The Man in the Gray Flannel Suit was written. It was a time, post-World War II. When there had been a huge mobilization. It was very much a sense of large entities because also the economies of scale from industrialization.

PHILLIPS KUHL: And entities didn't get much bigger than AT&T.

SAL DAHER: AT&T, exactly. Really, it was a time of really large, relative to the size of the economy, corporations and people felt that that's the best place to be and this was way before the era of small is beautiful and all that stuff that technology has made possible. It was definitely a very different time, very different environment in those days. Now, what did you get out of HBS?

PHILLIPS KUHL: I knew that there were a lot of things about business that I didn't understand, like the details of accounting, of finance, of marketing, of production, so as much as anything, I felt that the time at HBS gave me confidence in areas that I didn't fully understand. I had the capability of quickly going in, getting enough of an understanding to do what I needed to do, to work with other experts that I could learn from but I could speak their language, I could understand the concepts.  I'd like to say that it provided all kinds of connections or things like that, but not really. It was more the experience and the confidence.

SAL DAHER: The confidence that you could work up to solving any problem that confronted you. That's why all these young kids come out of Harvard Business School and want to run the company right away.

PHILLIPS KUHL: Oh, yes.

SAL DAHER: That was a commonplace when I was … In the '80s.

PHILLIPS KUHL: I actually go out of my way when I'm talking about business school to say more I came to Boston and went to business school. I tend not to say HBS because there a lot of connotations associated with it and I'd rather be judged on what I do not the kind of reputation or connotations that people will have about HBS.

SAL DAHER: Let me put it this way. You're not a country club type, you're more like a yurt summer house type?

PHILLIPS KUHL: Yurt and Frisbee.

SAL DAHER: Yurt and Frisbee type?

PHILLIPS KUHL: Yes.

SAL DAHER: Okay. Very good.

PHILLIPS KUHL: Not much in for golf.

SAL DAHER: Not much in for golf. This really, really crucial experience that you had at SIAR, the consulting firm, I understand they had a very particular culture and there you made a really remarkable discovery of biotech so give us a little bit of a scenario what the world was like before biotech?

PHILLIPS KUHL: I'd like to be able to say I made a strategic decision to move into that area and yet the reality is that basically I was the consultant in the office with fewer projects on my plate when the first biotech project came into the office.

SAL DAHER: Then what?

PHILLIPS KUHL: They gave it to me.

SAL DAHER: So dumb luck.? The luck of the draw.

PHILLIPS KUHL: Once I had some experience with that, the next project that came in that was also biotech related I got that as well and so it went from a period where I was just getting started with biotech projects to where literally two-thirds of my consulting work was biotech project related. I then ended up going to work for one of those clients, a small company out in the Chicago area, headquartered out of Helsinki, Finland but where their business was all biotech related and so I stayed involved in looking at what was happening across biotech and what could be useful to that subsidiary or any of the other divisions of the company.

SAL DAHER: You were by luck, you happened to build an expertise in this area that would become an enormously powerful trend over the next several decades. I compare it to my stumbling into the whole business of emerging market debt and I had no idea then that it would be this incredibly consequential trend, far less consequential than the biotech trend and yet the one that allowed me to build a career out of it.

PHILLIPS KUHL: Sometimes it's better to be lucky than smart but that being said, I think I also … Because of the background, because of the schooling, I had the capabilities to recognize the value and then to focus on it, and to say that's what I want to really focus my efforts around.

SAL DAHER: Basically, you had skills which allowed you to learn to the point that you could start solving problems with your knowledge. This is the experience you had in the consulting world, the confidence that you have from the Harvard Business School that you could do this, the curiosity and so forth that you picked up from your sister Mary. So, that served you well. You didn't know biotech was gonna be so valuable?

PHILLIPS KUHL: No.

SAL DAHER: Going back to this again, when I was an undergrad at MIT, I graduated in the class of '76. You were required to take two semesters of calculus, two semesters of physics, one semester of chemistry, one semester of material science. Do you notice any missing there?

PHILLIPS KUHL: There's no biology.

SAL DAHER: I never took biology as an undergraduate. Nowadays, I think it's two semesters of biology. 30% of what goes on at MIT is biotech related, completely different. It's a revolution in that time and it is a revolution that is gaining momentum, as you well know because now you get a really privileged seat inside biotech and we'll talk more about that a little bit.

PHILLIPS KUHL: I like to refer to it as a ring side seat without having to get in the ring. Just to talk a little bit about science courses, from my undergrad, I was required to take one math, and one science course and the science course I took was affectionately known as physics for poets. It was the application of physics in the real world.

SAL DAHER: Without calculus?

PHILLIPS KUHL: Without calculus and certainly without a lab. Any of the training that I've had on biology, on molecular biology, on genetics, molecular biology, all of that has come from reading, talking, and experiencing the things going on in the field, not from any type of academic training.

SAL DAHER: Which is a tribute. I think it's very important because it's a kind of learning that we have to be doing going forward. We're always learning all the time. How did you make the leap from consulting to organizing conferences? You were an independent consultant and …

How Phillips Started Organizing Conferences

PHILLIPS KUHL: Yeah. Basically, I was busy enough with certain projects that it occupied about two-thirds of my time and I was looking for what else am I gonna do with another third of my time. I came across a local company, IBC, that organized conferences and I had never thought of that before. No one ever thinks about organizing conferences. No one says to themselves: "when I grow up, I'm gonna be a conference organizer."

SAL DAHER: It's a daunting thing.

PHILLIPS KUHL: I can't imagine anyone thinking that even conceiving that that's even a job that's possible.

SAL DAHER: It's a complete chicken and egg problem, right?

PHILLIPS KUHL: Right. No one looks at it that way. I had the background. IBC at that time was doing two to three biomedical meetings a year in the US. Another part of the business in Europe was doing more of them but they really didn't have anyone in the US that could take those concepts and apply it to a US market, primarily US speakers, and so I started doing that and they gave me enormous latitude in choosing the topics, deciding how I would go after it, working with them to help promote it but I could decide most of the key decisions and so from that point of view, it was great training for going from that to being able to run a company, making those decisions on my own.

SAL DAHER: If that's how you got your MBA in conference running?

PHILLIPS KUHL: Yeah. In the course of three years, I went from that company running two to three biomedical meetings a year to a point where three years later, we were doing two to three per month.

SAL DAHER: At CHI?

PHILLIPS KUHL: No. This was at IBC.

SAL DAHER: At IBC.

Fast Growth Got the Attention of Vidar Jorgensen Who Was Already in the Conference Business

PHILLIPS KUHL: An order of magnitude increase in the number of conferences over three years and I think that's a major point that caught Vidar's attention as someone who was capable of doing that type of growth over a short period of time because obviously, you can't grow that number successfully if the individual conferences themselves aren't producing good results. He saw that growth and that's when he reached out to me to say, "If he puts the money up, would I be willing to start over?" What I've joked since then is what I first should have asked was put up how much. Because he didn't put up much because if you do the conferences well, it's not capital intensive.

SAL DAHER: Well, but it's a contingent guarantee and those have to be counted. If you need it perhaps you might have put up more money but they'll discount the value of contingent guarantees and giving you the confidence to start the business.

PHILLIPS KUHL: I think it's a testament to him and to myself that now more than 25 years later, we're still working together as partners, getting along well. To a large extent, he allows me complete freedom to operate the organization as I choose. He steps in with comments and suggestions from time to time but essentially, it's my operation to run.

SAL DAHER: Right. It's been such a beautifully performing asset for him that I'm sure he doesn't want to mess with success.

PHILLIPS KUHL: It is the best investment he ever made.

SAL DAHER: I can't imagine. You' were curious. You' were a quick study. You were early to biotech. When is it that it actually clicked that running conferences is what you were put on this earth to do?

The Easiest Decision: Become an Entrepreneur

PHILLIPS KUHL: I think when I was doing this at IBC, as I said, they gave me quite a bit of latitude but they were also ways in which they operated the business that were in complete contrast to how I would choose to do it so even there, in the back of my mind was a strong feeling that if I had the chance, I would rather do it independently rather than for them. When Vidar came along and made that offer, it was about the easiest decision I ever had to make.

SAL DAHER: Oh, wow.

PHILLIPS KUHL: It was a no brainer to me. I had to do that because it was the opportunity to take what I'd found I was good at, what I enjoyed doing, what I was passionate about and being able to do it the way I chose.

SAL DAHER: Yes. In the startup world, they talk about product/market fit. When you have that first product market fit, it's like inventory you have just disappears. It's like immediately things click. I imagine you hit product/market fit with setting up conferences.

PHILLIPS KUHL: I will say that the immediate fit was not obvious because the very first conference that I ever organized was canceled. It was very painful; contacting a series of speakers to let them know no one wanted to listen or at least not enough that we could justify running the conference.

SAL DAHER: Oh my.

PHILLIPS KUHL: For at least 15 years after that, I never covered the topic of drug delivery because of that allergic reaction to the topic I tried as my very first. Fortunately, the conferences after that ran very well.

SAL DAHER: Now, knowing you, I can just imagine what was going through head when that conference got canceled. You were saying, "I'm not going to have another canceled conference."

PHILLIPS KUHL: No.

SAL DAHER: You weren't saying that?

PHILLIPS KUHL: I absolutely said that, that I learned some lessons, I learned to talk more with the experts in the field to see what the issues were, how to position a topic and to make sure that it was focused in the right way that the audience was there.

SAL DAHER: Take a moment and explain to us the dynamics of the technology conference business?

“…one of the key lessons was figuring out who were the people that represent the buy side of that topic, who are the people that represent the sell side…”

PHILLIPS KUHL: Conferences are an interesting event in a sense that you're bringing together people, people to talk about it but you're also bringing together an audience, one of the key lessons was figuring out who were the people that represent the buy side of that topic, who are the people that represent the sell side, who's selling technology, services, products, concepts to make sure that both sides of that equation have good reason to be there because if you have only one and not the other, neither one is gonna get much value out of it so that balance of the buy and sell side being represented.

“…critically valuable to have several different perspectives that are brought together…”

PHILLIPS KUHL: We've also found that critically valuable to have several different perspectives that are brought together, it's one of the reasons that we tend not to focus much on conferences that cover, for example, a given disease indication because that's gonna be people that all have a similar perspective.

SAL DAHER: Right.

PHILLIPS KUHL: It's also going to be a perspective that's likely already well-covered by an association focused around the disease so that perspective may already be well-covered but instead we might take a focus on a given technology or something like for example biomarkers which might be made up or based on proteins. It might be based on gene signatures. It might be based on metabolites, various different groups can use it and so you get a variety of perspectives that are coming together who maybe don't sit down and talk with each other and realize that some of them may have problems that the others aren't aware of, some of them may have solutions that the others aren't aware of and by bringing them together, you create more value for the whole.

SAL DAHER: Okay. Get people out of their silos.

PHILLIPS KUHL: Yeah.

SAL DAHER: Is this like the primary value that you're selling in the conferences is that you come here and you're gonna get outside your silo?

“You're going to hear perspectives that you otherwise might not be aware of…”

PHILLIPS KUHL: You're going to hear perspectives that you otherwise might not be aware of. It's one of the reasons that I've been interested in identifying early-stage startups. Some of the most innovative groups in the field who are able to bring perspectives that in many cases even people that are focused on that area, aren't aware of or haven't recognized the value of, and by including a number of those as well as more experienced speakers on the program, it provides that richness of diversity in perspective and coverage.

SAL DAHER: Very, very interesting. Coming up next, I will ask Phillips Kuhl how we confronted Company Crisis Number One in 1995. Now, these company crises being neatly numbered, the reason for that is that I have the benefit of a document, 32-page document which was the basis of a retrospective that Phillips and the whole company went through the last 25 years. I've been very fortunate in having my research helped by this so I normally would not even be able to ask this kind of question but first what I want to do is I'd like to thank BPaul2 for this review titled "Very Insightful."

Listener BPaul2 says: "Great content. Very informative podcast for entrepreneurs to get inspired and start working on their ideas."

SAL DAHER: BPaul2 says: "Great content. Very informative podcast for entrepreneurs to get inspired and start working on their ideas." Thanks, BPaul2. The Angel Invest Boston podcast has outstanding guests such as Phillips Kuhl, is professional produced, has no schlocky commercials for mattresses or anything else and comes to you free. The only thing we ask in return is that you get out the word. Please tell a potential angel or founder about us. Take a minute to review our podcast in iTunes. In faithful emulation of BPaul2. Sign up at angelinvestboston.com to be notified of new episodes and of upcoming in-person events we'll be holding. So, Phillips, what was Company Crisis Number One and how did you confront it?

Company Crisis Number One

PHILLIPS KUHL: The time that you're referring to?

SAL DAHER: 1995.

PHILLIPS KUHL: We had gotten started; our initial year was basically scaling up. It took us about a year from the time we got started to where we ran our first conferences. By the next year, we started ramping up the number of those conferences. At that point, we didn't have a lot of systems in place but we did figure out that by the end of the year, we were essentially at break even and that's when perhaps the irrational exuberance came to play and we thought this is easy.

SAL DAHER: This is the era of irrational exuberance by the way?

PHILLIPS KUHL: Yes. Hence my reference.

SAL DAHER: The first internet bubble. We're in the second internet bubble.

PHILLIPS KUHL: We have figured we were successful, we made very good progress. All we need to do is scale and so in 1995, what we did was double the number of conferences. We successfully doubled the amount of revenue unfortunately we were also successful in more than doubling our expenses and so by the end of the year, somewhat as a shock, I was informed that we had just lost a quarter of a million dollars on very little equity.

SAL DAHER: Oh my gosh.

PHILLIPS KUHL: It was a bit of a panic. My administrative assistant spent most of her time over the next six months focusing on prioritizing who we were gonna pay, who we could put off, who we could delay.

SAL DAHER: Our listeners should know, this is before the days when you had easy-to-use accounting software that a small business could run, that could give you real time numbers.

PHILLIPS KUHL: Yes, that would have helped. Having budgets would have helped.

SAL DAHER: Even then in spreadsheets. There were spreadsheets then but they were not easy accounting software and this is in one of your business schools professors would call a cash crunch that comes from lack of working capital from growing too fast?

PHILLIPS KUHL: Yes.

SAL DAHER: A classic problem, yes?

PHILLIPS KUHL: Yes. It was an awful year.

SAL DAHER: Yeah, I can imagine.

PHILLIPS KUHL: Fortunately, that fall we had a good season and particularly the next winter was very good and that allowed us to get out of that cash crunch and to move on.

SAL DAHER: Basically, you strung your suppliers along and set up conferences in different hotels that you did owe money to, still then.

PHILLIPS KUHL: We ended up having to say all of the hotels we had used in the spring. You're going to get paid but we can't pay you yet and the expectation was that as revenues came in for the fall conferences we would send that money to the spring hotels and they would get paid except hotels talk to each other. As soon as they knew that we were not paying for the spring hotels, the fall hotels wanted their money upfront.

SAL DAHER: Right.

PHILLIPS KUHL: The fall revenue had to go to pay for the fall hotels that we hadn't even used yet and the spring hotels had to wait until we had even more money available, but fortunately that happened.

SAL DAHER: You fixed that by basically increasing margins, controlling cost and also raising price.

PHILLIPS KUHL: One of the key recommendations that Vidar made fairly early was to say you cannot make money unless you're charging much more than you are now. It's also one of the areas where I pushed back and I said, "No, we can. We need more volume and by keeping those prices lower, we'll be able to get that additional volume but until we did, it was problematic." Certainly, one of the keys to success was a growing reputation for quality and being on target for the topics and that is what helped us grow the size of the attendance and so even without increasing prices, we were able to deliver better margins and therefore a healthier bottom line.

SAL DAHER: '96, you got out of that crisis number one.

PHILLIPS KUHL: Yeah.

SAL DAHER: By the end of the decade, you were heading into Company Crisis Number Two. Please tell us about that.

Company Crisis Number Two

PHILLIPS KUHL: Yes. That was the so-called Y2K problem.

SAL DAHER: Explain to, again, our listeners, Y2K.

PHILLIPS KUHL: Yes.

SAL DAHER: This just seems so unbelievably kludgy and crazy.

PHILLIPS KUHL: Yes, that up through 1999, if you're using two digits for the dates, everything should work fine but all of a sudden when you move to the year 2000 and that shows up as 00, the software, at least the theory went, would be confused and wouldn't know whether it was talking about 99 years ago or this year. There was the sense that all software would potentially blow up on January 1st, 2000. We had a database that was not Y2K compliant and so that had to be revised. It turned out to be a nonissue.

SAL DAHER: Y2K turned out would be a nothingburger because everybody took steps ahead of it and when … I remember the day, we shut down our servers at Turan so that nothing crazy could go on because we thought there might be crazy things going on in the internet and so forth. On Monday, everything was normal. Nothing happened. It was a big nothingburger except in your case because of your migration you lost some data or you didn't have the detail you thought you had in your new database [crosstalk 00:28:40].

PHILLIPS KUHL: It created some problems but it was really pretty minor compared to any expectations we had as to how disastrous it could have been.

SAL DAHER: What did that teach you, after that?

PHILLIPS KUHL: As it turned out, it actually was quite fortunate and that we had brought in some canned software for our prospect database that was Y2K compliant but that was about the only good thing I could say about it. It took us using it for about two weeks to decide that needed to be replaced and we ended up bringing in a database designer, a developer that could replace that and that has become what I would consider one of the real competitive advantages we have over some of the other companies in this area of a much more integrated database that allows us to track, to pull names, to pull companies and help us do our promotions in a more effective way.

SAL DAHER: You had to roll your own database which you built after the Y2K problem. It reminds me of a time when I was at Bank of Boston. This is back in the late '80s and the group that I was in tried to roll its own software and it never really worked. It's very dangerous.

PHILLIPS KUHL: It can be very risky but if done well, it means that you get what you want. It's still being updated and revised on a regular basis but it means it provides us with tremendous flexibility.

SAL DAHER: Let's fast forward to Company Crisis Number Three which was the 9/11 debacle in 2001 shortly after-

Company Crisis Number Three

PHILLIPS KUHL: Not that many after the second one. That was the time that I can still remember, I think most people can who experienced it, what they were doing, were they watching a TV? I remember someone bringing a TV into the office and watching in horror the events of that day unfold. It took a while to realize just what the impact would be. All air travel in the United States was shut down and here we are a business that depends on the vast majority of our participants getting on a plane to go to a conference, to get together and all of a sudden, that was an impossibility. We ended up postponing a series of conferences, rescheduling them for a new time. That helped some.

SAL DAHER: You have fixed costs. You have staff and you don't have revenue because all of a sudden, those conferences get postponed and you have to pay for people's salary so that is a big problem.

PHILLIPS KUHL: In the first case, there were some programs that we rescheduled for six or eight weeks later in retrospect that was too soon that didn't provide enough time for people [crosstalk 00:31:43].

SAL DAHER: People were too afraid.

PHILLIPS KUHL: They didn't want to travel and so those programs ran but ran at a fraction of the size that they would have been had they been able to run originally without the disruption. Interestingly later in the year, what we saw was actually a bit of an uptick in the participation on the exhibit side because everyone on the business side, everyone who's looking for leads, looking for business was falling short. Things were down. They had to get more involved and so we actually saw growth on the exhibit side but conversely, we saw a dramatic drop on the attendee side which meant that exhibitors weren't as happy. They weren't getting as many good leads and so …

SAL DAHER: Explain exhibitors, attendees.

PHILLIPS KUHL: Sure. The companies that are offering products, technology, service, relevant to the topic being covered by the conference they pay to have an exhibit presence, a booth in the exhibit hall or to sponsor for additional presence of one type or another. They're looking to get a return on that spend by getting leads and generating business from the attendees who are there at the event.

SAL DAHER: Right. These three crises, what is it that you did to make CHI more resilient after that? What course correction did you make?

PHILLIPS KUHL: The first step was a lousy one which was that at the end of 2001 the end of that fiscal year which ended June of 2002, our revenues were down about 15%. Now, on a business like ours, we have very low marginal cost but as you say, very high fixed cost which means that a drop of 15% pretty well wipes out what you would expect for bottom line for that year.

SAL DAHER: Marginal cost means incremental. To add a conference doesn't cost much.

PHILLIPS KUHL: To add additional attendees to a program is very inexpensive. We basically have to feed them but the fixed cost, the cost of salary, the cost of rent …

SAL DAHER: Is there.

PHILLIPS KUHL: The cost of paying speaker travel for an event for example. Those are pretty well fixed. I had assumed that in that year, we were down 15% but I had decided not to cut cost by trimming staff because I said, "Why do that? These are valuable people. Why would I let them go if in the next year, I had expected we might get half of that business back." Not all the way back to where it was the year prior to 9/11 but half of that 15% drop would return and I was wrong. Instead what we saw in fiscal 2003 was another 15% drop in top line revenue and at that point, we had no choice but to cut cost in the easiest way, the only way we really had was to cut cost by cutting staff. We ended up having to let go 25% of the company.

SAL DAHER: Wow. That's painful.

The Heartbreak of Having to Fire Good Employees

PHILLIPS KUHL: That was the most uncomfortable, heartbreaking time I've ever been through. It's one thing to tell someone who has been performing poorly. We have standards, you haven't measured up, you have to leave. It is something else entirely to say to someone you have not done anything wrong, you've performed well but the business is now in a position to be-

SAL DAHER: Part of the business you're working in is gone.

PHILLIPS KUHL: For example, in marketing we have more marketers than we have capacity to afford and so we need two less marketers and someone has to go and you're one of the one that has to leave. It's very different. Those two conversations. I don't enjoy the first conversation when you're letting go of a poor performer but it is much more difficult to let go of someone who has performed well and through no fault of their own, the business has shifted. We did. We cut back, we eliminated any of the conferences that we thought were marginal, that we weren't sure were going to perform well. We'd looked at all kinds of things to trim cost and by the following year, in this case, FY 2004, we had the best year we'd ever have.

SAL DAHER: Oh, wow.

PHILLIPS KUHL: It did bounce back but it took two years, not one.

SAL DAHER: Tremendous. You have a really unusual culture at CHI. Tell us a little bit about that. How was that created? Did you explicitly foster it or did it develop organically because of the people who were involved and so forth? Describe the culture also.

A Culture of Openness Sets CHI Apart

PHILLIPS KUHL: Certainly. Some of the decisions that I've made about how to run this company were in effect in response to some of the things that I didn't like about past organizations I've been a part of. It seemed to me that there was not the level of trust that I would have like as an employee to be treated. Sharing of information, sharing of strategic plans, sharing of financial results in our particular case one of the key assets is access to the prospect database. I'd been in situations before where that access was restricted and it meant that productivity took an enormous hit because of that.

SAL DAHER: Terrible.

PHILLIPS KUHL: My approach was I hire professionals, let's treat them as professionals, give them trust and respect and as a result what we get back will be much more positive.

SAL DAHER: This is very interesting. If you have that trust, someone could misuse the prospect database for their own purposes who try to go off and set up their own thing.

PHILLIPS KUHL: Someone could download it on a thumb drive and walk out of here and we would never know.

SAL DAHER: The problem is that they can't run a conference the way you run a conference.

PHILLIPS KUHL: No.

SAL DAHER: They don't have the reputation … Consulting businesses and conference businesses. I use to work for Wendy Abt and her husband was Clark Abt of Abt Associations and every time we ran into Clark, he was saying, "Saleh, who do you know in this field or in that field? I'm looking for someone in this field and that field." He had a consulting gig that needed somebody. The same thing with conferences. You're always running around and we run to people saying, "Who do you know in this particular area and so forth?" That kind of capital that you have, creates a moat for the business. It's not easy for someone to replicate that knowledge and the whole synergy that creates something which is the whole is more than just some other parts from the operation that you have here that is extremely hard to replicate as a scale factor that happens.

SAL DAHER: It's really hard for someone to walk off with the sacred fire so to speak. Part of it is also the culture that you've created which is very open and people can have a very productive work and very satisfying work at CHI. Tremendous. Let's mosey on to angel investment. How was your experience with SQZ Biotech?

Angel Investing: SQZ Biotech

PHILLIPS KUHL: SQZ is a company that presented at Walnut Angels Group that I was a part of for a period of time. It was in the biotech area and I saw it as a technology that I thought had very good promise. Basically, the ability by putting cells under pressure to allow molecules of various sorts to get into the cell without disrupting the cell membrane and because of my experience, I recognize some of the ways in which that could be quite valuable. I and several other people from Walnut put some money in and as part of that investment from Walnut as a group, we were allowed to designate a person as a board observer and so I spent six or eight months sitting in on board meetings of SQZ and it was fascinating to see the involvement of some of the academic leaders that were part of that. Bob Langer was one of the key founders. It was a grad student in his lab.

SAL DAHER: Armon Sharei.

PHILLIPS KUHL: Sharei who is continuing as the CEO of the company, to see his involvement, his understanding of what was going on in the company, things he added but also some of the other academic advisers that were part of it as well as some of the VCs that were brought in to help with the process as the company matured.

SAL DAHER: Jonathan Fleming.

PHILLIPS KUHL: Jonathan Fleming certainly one of them.

SAL DAHER: Then later on Amy Schulman.

PHILLIPS KUHL: Amy came in as well and both of them some very practical, very helpful advice and consulting that they provided. I've been very pleased to see the progress that they've been making; agreements, partnerships with Novartis and several other large pharma across a range of different applications.

SAL DAHER: And Roche, yes.

PHILLIPS KUHL: Yes. I've been pleased with that. I can't tell you what that original investment is worth now but I at least think it's worth more than it was at the time.

SAL DAHER: It's gonna date the podcast but yesterday it just got the news that a company that I'm invested in, Akili Interactive, they've just revealed they hit their primary end point in a study and it gets me thinking so now how much is my position worth in that company is because it's been $73 million raised since I put in my initial investment.

PHILLIPS KUHL: You know you've been diluted but the overall value [crosstalk 00:41:44].

SAL DAHER: The evaluation has been way up and so forth and so I'm just wondering. It's also because it' now owned by a public company. By design, you cannot get information out of the company except through public announcements. I know nothing about what's going out there other than what I read.

PHILLIPS KUHL: A much different level of detail that you have access to.

SAL DAHER: From a private company where you gave a lot of conversations and news about the company is disseminated in a very spotty way. There isn't the requirement that exist in public markets.

PHILLIPS KUHL: Just one example where I have been able to get some interesting insight into some of the developments happening at SQZ is that I get a quarterly investor announcement that tells you some things but necessarily a whole lot. One other advantage I've had is that for very good reasons because it's innovative new technology, we've had someone from SQZ speak at several of the CHI conferences and so I listened to those talks with two different ears, one as a conference organizer as to what attendees are hearing and what they're learning, what might be useful to them and with another ear from an investor perspective as to how that investment is doing.

SAL DAHER: Right. It's bears mentioning that Armon Sharei was interviewed in this podcast and also touching on SQZ, Patrick Rivelli who was also an investor at the time and so this is really a remarkable company and I think that they are going to be having a big impact in some areas that are very productive. Would you like-

Savran Tech

PHILLIPS KUHL: I will just mention that as it happened Patrick was at one of our conferences last week so I had a chance to catch up with him.

SAL DAHER: There's an interesting story there and it's because I was sitting with my brother-in-law in a restaurant not too far from here, a Chinese restaurant that we go on Sundays and he said, "You got to see the technology of this company," because he filed the patents for this company and I said, "Let's take a look." My brother-in-law knows a lot about the science so I looked at the company and I was very impressed. I said is it commercial, is it possible. Then it turned out that when I showed it to Patrick, all this biotech stuff, I show it to him because he has a lot of sense about what can sell and what doesn't sell and so on. He really liked it.

SAL DAHER: That's when the light went off and he said, "Well, there's some of the applications at Phillips' conferences. That's where I'm gonna go to learn because he wants to license some of the technology to some people and they want to develop another aspect of the technology." He wanted to go to your conference to scout out potential licensees for this technology of a company that doesn't even have a funding yet.

PHILLIPS KUHL: In their particular case, it involved a micro-fabricated device that can be used for separating rare cells and so there are two obvious applications for that. One is in the area of cancer, of looking at circulating tumor cells and that's an area that quite a few companies have jumped on and the other is in prenatal molecular diagnostics, in this case, non-invasively isolating fetal cells from maternal serum and being able from that to be able to do diagnostic tests on the genetics of the fetus.

SAL DAHER: Savran Tech the name of the company and the previous episode to this is an interview with Cagri Savran.

PHILLIPS KUHL: Okay.

SAL DAHER: I think my audience will have a lot of knowledge about Savran Tech by the time they listen to this conversation. So, you'd left Walnut because Walnut doesn't do a lot of life science...

PHILLIPS KUHL: It doesn't do enough of the biotech oriented. There were lot of interesting companies that presented but I really didn't feel that I was in a position to make any kind of informed judgment about whether they were worthy of investment or not. I did feel I could make that on companies in the life science area and I enjoyed my time there. It also happened that it was a period of time where for four or five months in a row the Tuesday that Walnut met I was traveling for a conference and I figured if I'm gonna miss, three, four, five months in a row, something telling me that's not quite right.

SAL DAHER: Tell me about your post-Walnut life in angel investing?

Angel Investing: Glycosyn

PHILLIPS KUHL: There's one other company in particular that I've put some money into called Glycosyn. This is a company that manipulates organisms and metabolic pathways in order to synthesize human milk oligosaccharides. These are complex sugars found in human breast milk that have a variety of properties, anti-infectives as well as helping with adjustment of the microbiome, a field that five years ago, no one even considered.

SAL DAHER: Did not exist, yeah.

PHILLIPS KUHL: I imagine that some years from now, we will look back on these as the dark ages as where how do we think we could understand health if we didn't understand the population of microbes in a human body and the fact that has on, not just digestion but immunology, on all kinds of things. I've certainly seen reports for example that the effectiveness of certain cancer treatments are influenced by the balance of different microbial populations and so I think that area is another one that we've had an interesting chance to learn about from the conferences that we've done and I think that will be an area that as much as some of the other topic areas like genomics or sequencing will be ones that will be vastly different in a relatively short period of time.

SAL DAHER: This is Glycocen with a C-E-N?

PHILLIPS KUHL: S-Y-N.

SAL DAHER: S-Y-N. Oh, Glycosyn.

PHILLIPS KUHL: G-L-Y-C-O-S-Y-N.

SAL DAHER: Interesting.

PHILLIPS KUHL: They've developed microbial strains that will produce individually and combinations of these human milk oligosaccharides and then are testing them for a variety of indications.

SAL DAHER: I'm an investor in Vedanta which also in that space. They're working on regulating the immune system through the microbiome. They have two different technologies that can increase immune response and suppress immune response. Anyway.

PHILLIPS KUHL: A topic like this is much more relevant for both you and I since our daughters went to school together and have recently both become mothers at about the same time and so I'm paying that much more attention to some of the healthful benefits of human breast milk.

SAL DAHER: We're both living in a little population boom. Being able to synthesize, basically these sugars that have these antibacterial effects or whatever is important because my daughter, Laura she had some health problems. She had to stop breastfeeding in order to have treatment and it would have been nice to have that alternative so eventually it will be there in the market to benefit mothers in the future. My Laura is a physician, your Laura is a professor. It's a lot of fun to see this next generation growing. Phillips, we're basically wrapping up. Is there anything else that you'd like to say to our audience?

What Phillips Most Appreciates About Boston

PHILLIPS KUHL: The one thing I would say is how much I enjoy the kind of ecosystem that there is here in the Boston area, in terms of not just biotech but technology in general of companies that are startups developing fascinating new technology in many cases coming out of the research universities that are so prominent here in the Boston area but also the VC's, the angel community that there is to help support those startups as well as then the biggest change that I've seen over the last 10 years, the influx of large pharmaceutical companies that are bringing in R&D organizations because they're attracted to the tremendous resources of educated talent here in the Boston area. It makes for such a rich environment and really helps facilitate rapid progress in the biotech field.

SAL DAHER: Yes. Very well said.

PHILLIPS KUHL: It also makes for much interesting dinner conversation or cocktail conversation because there's so many interesting things being developed.

SAL DAHER: At dinner, you stay away from microbiome.

PHILLIPS KUHL: Yes.

SAL DAHER: Great. Phillips Kuhl, I'm tremendously grateful to you for hosting us at your office and making us feel welcome here and for being generous with your time with this really great interview.

PHILLIPS KUHL: And Saleh, it's great to see you again. I enjoyed getting together and thank you very much for this experience.

SAL DAHER: It's so much fun. I'd like to invite our listeners who enjoyed this podcast to review it on iTunes. This is Angel Invest Boston, conversations with Boston's most interesting angels and founders. I'm Sal Daher.

SAL DAHER: I'm glad you were able to join us. Our engineer is Raul Rosa. Our theme was composed by John McKusick. Our graphic design is by Katharine Woodman-Maynard. Our host is coached by Grace Daher.