ECONOMY: CEOs tell their war stories about failed companies

By BRADLEY J. FIKES - Staff Writer | Thursday, November 20, 2008 2:11 PM PST ∞

While inspirational books like to say that success if inevitable if you keep at it, four veteran local CEOs said this week that sometimes the only rational response is to give up.

That sobering message was delivered to more than 300 people at the Salk Institute on Wednesday night. The event, "Failure IS An Option," was held by the MIT Enterprise Forum technology networking group.

Their most important message: Don't confuse business failure with personal failure. Those who do may destroy their personal relationships and general happiness.

"Keep your emotional self separate from your business self," said Kenneth Kalb, chairman and chief executive of software maker Analog Analytics.

Tina Nova, chief executive of Carlsbad-based Genoptix, hadn't learned that lesson when she arrived at San Diego's Ligand Pharmaceuticals. The San Diego-based biotech company had a great staff and business plan, she said. There was just one little problem: Its technology didn't work.

Nova said she had to break the news to the board of directors.

"I walked them through all these scientific experiments and told them that they had bought oceanfront property in Arizona," Nova said. "Their technology didn't work. They had wasted their money and had to start over."

As a result, Nova said she had to lay off scientists who, through no fault of their own, were suddenly not needed. And without a product to develop, the company itself had no reason to exist.

"I cried in my car on the way home several times," Nova said.

But instead of shutting down the company, Nova found another promising source of technology from the lab of Ron Evans of the Salk Institute. Ligand licensed that technology, and hired a new team of scientists.

"Was that failure?" Nova asked. "It was change. We took something that didn't work, and we turned it into something that did work."

The executives also dispensed hard-learned lessons from their mistakes in hiring (not doing your own due diligence); and firing (waiting too long to get rid of an underperforming employee); how to deal with board of directors (make sure they know you run the company); and venture capitalists (take their money, but watch out for egos).

The others executives on the panel were Joe Markee, a founding partner for Express Ventures, and Peter Shaw, principal of Shaw Management Advisors Int'l LL.

Moderating was Neil Senturia, chief executive of Blackbird Ventures, who told his own failure stories.

"Sheer dumb luck" is one of the most underappreciated elements in success, Senturia said.

"Do not ever underestimate the power of good fortune," he said.

Contact staff writer Bradley J. Fikes at (760) 739-6641 or bfikes@nctimes.com. Fikes blogs at http://bizblogs.nctimes.com.