Imagine receiving a thousand venture capital (VC) proposals a year—all of them promising the moon—and having to discover the single shining star. “In any given year, we probably see between ten to twenty plans a week. So that’s a thousand plans a year. We do serious work, read the plan, and schedule a management meeting on maybe fifty,” says Eugene Hill. He is a managing partner at SV Life Sciences in Boston, whose team includes 31 professional portfolio advisors1 managing $1.6 billion in capital.2
Hill compares the constant onslaught of financing proposals of recent years to “trying to drink from a fire hose.” Since the early 1980s, Hill has examined tens of thousands of entrepreneurial proposals in the healthcare venture capital world, but the number of investments he has made from those mountains of applications is in the low double-digits.
His due diligence process for investigating these pitches may seem conservative to the point of being merciless, but it also has made his return on investment enviably consistent and notably successful. “There have been years when I’ve seen 1,500 business plans, issued a dozen term sheets and invested in one deal. There’s a huge ‘no’ factor, for a whole host of reasons,” Hill says.
Hill has been a speaker at a number of Kauffman Fellows modules, and he spoke with me several times over the summer.3 In this article, I present what he shared about his 5 Ms of the due diligence process and the keys to being one of the lucky few to get his funding go-ahead.
Origins of a Life Science Investor
It was “pure serendipity” that led Eugene Hill to his profession as a healthcare venture capitalist. Hired as an administrator for the Chief of Surgery at Denver General Hospital in 1975, Hill discovered his passion for healthcare methodologies and developing technologies. “I’m not a trained scientist,” says Hill. “Healthcare services are pure business execution.” To pursue his interest, he went to business school at night to earn his MBA. (Figure 1 includes some off-topic points of interest.)
Much has changed since Hill, now 61, entered healthcare venture capital. There were fewer funds, says Hill, and the funds themselves were much smaller. “VCs were very engaged, active investors, and there were few industry-specific funds,” says Hill, himself a life sciences investor. “Fund sizes today are larger and there is increased specialization.”
|Last book read for pleasure:||The Battle of Bretton Woods, by Benn Steil|
|Last music downloaded:||Mark Knopfler|
|Last concert attended:||Bach Festival, Carmel, CA|
|Where were you raised:||Denver, Colorado|
|Family:||Married, three children, two younger sisters|
|Hobbies:||Golf, tennis, skiing, collecting antique oriental rugs|
|Last vacation destination:||Aspen, Colorado|
|Professional philosophy:||“Do not go where the path may lead, go instead where there is no path, and leave a trail.” – Ralph Waldo Emerson4|
|Personal quote:||“Invest in haste. You can repent in your leisure.”|
|Alternate career:||None. I’m a serial healthcare services entrepreneur.|
Figure 1. Off Topic with Eugene Hill.
Figure by Kauffman Fellows Press.
The 5 Ms: Separating Wheat from Chaff
Hill’s painstaking proposal-refinement process4 delves deeper than the potential return on investment, and is dependent upon whether the opportunity is an initial investment, continuing investment, or acquisition. The crux of his philosophy involves what he calls the 5 Ms: Market, Management, Method, Money, and Metrics.
As to which M is the most important, Hill admits there is a lot of debate in Silicon Valley and among investors about whether management or market is the chief ingredient in any venture.
I believe market characteristics are the primary goal that you need to use as a screen. You can have high-quality people and a really high-quality strategy, but if the market characteristics don’t exhibit the right order of magnitude, or the right order dynamic to permit the right amount of profitability or monetization of the assets, it’s probably not going to make for a successful venture return.
Over the years, Hill has developed a structured list of questions asked of every entrepreneur who comes through his door. The answers can mean the difference between Hill’s likely “no” and the all-too-rare “yes.” Sometimes, even a correct answer, when preceded with waffling or uncertainty, is sufficient to crater the proposal. Hill’s questions are the starting point in his dissection—what he calls the Hierarchy of Triage—of a candidate for venture capital injection.
M1: The Market
Hill’s examination of the market involves quantifying the business case relative to a number of factors. He investigates the market size, growth rate, degree of competitive penetration, concentration of participants, pricing and profitability dynamics, and barriers to entry.
Hill prefers to invest in disruptive “tsunami opportunities.” Because today’s markets are “winner take all,” he says, with the top three entrants having the dominant share in an established market, a new entrant must be able to dislodge the existing competition.
As a specialist in life sciences investment, Hill first looks into the technology behind the company. The first question may seem almost absurd in its simplicity: Can the company actually make the item? In other words, Hill asks whether the company will use off-the-shelf parts, or bleeding-edge technology and the knowledge of a few intellectual heroes.
Even if the company can produce its intended product or service, regulation can present obstacles. Government interference can range from mundane, bureaucratic blocking and tackling, to halting the business altogether.
For example, a managed-care startup might need an insurance license, which is a straightforward mechanical exercise: applying with state regulators and confirming that the company has sufficient capital and experienced personnel. Compare that path to a company developing an Alzheimers’ medication—potential treatment for a disease that is largely still a mystery to science, with physicians having only a modest understanding of how the disease progresses. Not only is it going to take years of trials to know if the drug works, but those tests are also going to be the basis for FDA approval. The second company’s path is both costly and challenging.
The company also must prove it understands the viability of entering the market. “It’s important to get an idea around pricing and gross margin, and how much R&D and marketing expense it will take to get to the market,” Hill says.
Part of Hill’s work at this stage is to quantify how many customers there are—the key distinction between the addressable market and the accessible market. The addressable market is how many people could potentially buy the product, as opposed to the accessible market, which is the number of people who realistically will buy the product.
A new entrant into the mobile phone scene, for example, has 200 million potential buyers in the United States (addressable market). However, the product’s accessible market concerns how many people have already bought phones and how often they replace them—a number that gets quickly reduced when factoring brand loyalty and whatever penetration rates a new entrant might have. Finally, while 200 million U.S. residents can buy a cell phone and the average replacement cycle is three years, a few vendors such as Apple and Samsung control a large percent of the market share and spend hundreds of millions of dollars a year in advertising each.
Unless a company has a product that is highly differentiated, it is unlikely to achieve any kind of market position. Even in a virgin market, a company must be concerned about price, performance, and features; but in this case, at least, one can anticipate and manage adoption rate.
The concept of financial risk is associated with the amount of money required to run the enterprise. Usually, $10 million to $20 million is a very important VC milestone, whether for FDA approval and achieving a revenue rate, or for opening a swath of stores that will sell a product or service in volume. But what if it will take $300 million to reach this milestone? In that circumstance, the only real exit for the VC is if the company has a legitimate shot at an IPO or a buyout. If the company is going to cost $2 billion, then there are maybe a half-dozen firms in the world that can finance that kind of reach.
As a result, it is imperative to set boundaries on the amount and type of financing that can be brought in over a given timeline. Raising $2 million can be done in 90 days; that is easier than raising $20 million, which is exponentially easier than $200 million.
I’m asking myself whether this is going to happen with debt or equity, whether the government will assist or provide subsidies. You have to look at all those things, and you have to look at what the return on investment is.
Determining whether the product or service is financeable on reasonable terms is vital.
It is not always wise to be first to invest, especially with companies that require huge up-front expenditures for infrastructure. For instance, the first three rounds of VC investors in FedEx lost money—only investors in the fourth round came out ahead. “Something is always going to go wrong,” Hill says. “You always provide a cushion, because something will always cost more and take longer.”
Hill calls this “oasis preparation.” It may result in the operation being slightly overfunded, but that’s a better scenario than the VC equivalent of crossing the Sahara and running out of food, water, and gasoline.
M2: The Management
Nearly as important as market opportunity is determining whether the people in charge have the requisite experience and expertise to execute.
Depending on the stage, circumstance, and the size of the business, you require different skill sets and different personal characteristics. Businesses at different stages of development need different things.
Management pedigree is key.
Missionary and Mercenary
For example, a startup needs an almost missionary focus: a leader who gets up in the morning with a visionary mindset and who sees the big market opportunity and is not deterred by noise or negativism. However, a missionary cannot be driven solely by a psychic reward; a mercenary attitude is also required. A missionary executive will not necessarily succeed with a business in its late stage of development, or in a firm that is in need of a turnaround and facing declining margins, mature products, or intense competition.
In the course of his career, Hill has seen this situation many times: People who are skilled at running one stage of company development may not be appropriate leaders in another stage. “The key,” says Hill, “is to find people whose skill sets match the business opportunity, in terms of content knowledge as well as the experiential characteristics, and to anticipate those transitions,” Hill says.
CEOs get replaced approximately half the time. “To use a sports analogy, a startup usually doesn’t have a strong bench. They usually are not deep.” Replacing the CEO and other top executives may seem like a cruel blow to the team who successfully chartered the company to a critical development point, but it is often necessary for the company to grow to maturation.
These investments can take a long time. As you transition a business from a startup to a growth phase, you address the different challenges businesses face. It’s important to anticipate those challenges and prepare everybody for those transitions. It’s rare that you see a CEO take a business from startup all the way through maturation.
Succession planning is obviously lower on the priority list than getting the product to market, but ultimately, businesses that succeed do so because of the people involved.
We see a lot of businesses that meet market characteristics that are attractive. Then you look at the team, and your immediate conclusion is that this is a team that isn’t going to succeed. They don’t have the relevant experience, expertise, or personality characteristics that enable them to exploit the opportunity
Hill always conducts background checks for things like criminal activities or other “icky stuff”; sometimes, however, the check turns out to be unnecessary. Merely suggesting a background check can open the confessional floodgates. “When we ask, ‘Is there anything else we need to know?’ the amount of stuff we get is amazing, and horrifying,” Hill says. The most frequent falsification involves education credentials. More seriously, in regulated industries people have not disclosed past criminal activities in their applications while building the business, but in falsifying an application to a regulator, that person has already committed a crime.
Hill also has lawyers look over the paperwork the company has amassed to date, looking for fatal flaws. Many cash-poor startups have to scrimp on legal advice, and things do not get buttoned up—the IP may not be under control, the company’s books may not be audited, or stock may have been sold and not accounted for in ownership documents. Decimal points may be misplaced in contracts; verbal agreements are not notated.
I’ve seen major gaps between what companies thought their financials were and what we saw when we came in with pros. None of this is a problem until it’s a problem, [and] then it’s a huge problem.
Even management all-stars can have skeletons in the closet. Hill likes to meet executives in both business and social settings, to see how they interact in unscripted situations. He often brings his wife to a group dinner, because she finds out things that he would never learn in a business environment.
With companies that survive Hill’s rigorous screening, he conducts a site visit to meet with the management team and other principals, and to check out the work environment. Hill always takes a partner to avoid the inherent biases of solo judgement.
At this stage of due diligence, credentials mean less than the company’s message and how it is presented. For a tech company with a scientist presenting the product or data who is a neophyte to presentations, Hill cuts some slack. If the sales and marketing guys stumble, that’s a red flag.
Glib, overconfident answers also are a bad tactic for management, especially when Hill asks a hypothetical, “speed of light” question that he knows is baloney.
If they answer, “Oh, yeah,” then I know they are bluffing. If they say, “No, of course not,” then I know they are listening and have engaged their brain before they engaged their mouth.
Hill also tries to gauge the pitch based on how many previous VC presentations the company has given. First-time efforts get some forgiveness, but veterans need to nail it.
I want them to be efficient and preemptively answer the majority of my questions. I’m still going to validate the answers they give me, but I want them to at least put a stake in the ground. And it’s absolutely okay for them to say, “I don’t know the answer and I’ll get back to you.”
Once the pitch is complete, Hill takes a thorough walk-around of the facility. He requests that his tour be given by junior managers, not executives, and during off hours if possible. “I want to mingle with the worker bees. I want a tour on the graveyard shift, because they’re always weird, and no one has told them what they can’t tell you,” Hill says. “You learn a ton of stuff when the executives aren’t around.”
This is his favorite part of the process, because this sort of tour allows him to engage in human capital valuation using the dissertation theories of management guru Geoffrey Smart.5 Hill admits that initially he was a by-the-numbers investor: “I thought social science stuff was malarkey.” He is a convert because of Smart’s work.
Getting to know a company’s culture speaks volumes. A tech company does not have to have a coat-and-tie dress code but it does need good gear: A clean lab with high-quality, modern, well-maintained equipment, even if the building itself is old. “If the office is a train wreck, with bad discipline and garbage everywhere, how can you trust their data when they can’t even throw their trash away?” Hill says. Or it may go the other way, with an early-stage startup choosing palatial digs in the upscale part of town. Limited resources should be spent on real technology, not real estate—it’s a matter of priorities.
If an entrepreneurial company can make it past Hill’s first two rounds of questions, it is off to a good start. However, the business methodology can be a tricky path to navigate.
Drilling Down on the Value Proposition
Hill examines the company’s value proposition. In other words, what is the business model? Is it a product, is it a service, or is it a mix of both? Does the product save time, money, or both? Will it succeed by increasing revenues or by slashing costs? Will it beat competitors through higher quality, by being quicker to market, or by being a product revolution?
“You need to know if it’s better-faster-cheaper or a ‘Brave New World’6 equation. Better-faster-cheaper is good. You have a reference point that you can verify because you know a ton about the market. Brave New World is tough because the market doesn’t exist yet,” Hill says.
With Brave New World, even with the best engineering teams, companies often are at the limits of material science. For example, as a startup Intel had huge waste rates before they figured out how to do integrated circuits properly, Hill says. They had to invent clean rooms and large-scale integration. It meant building something for scale, and meeting certain specifications; it also meant investing a lot of money, well beyond the resources of most venture capitalists.
Compare Intel with Cypress Semiconductor, a company that came in later but was building highly specialized chips sold mainly into the defense sector. Cypress was able to carve out a very nice niche building high-performance chips that did not need to be produced in high quantity, because they could sell them at a premium for their superior performance. Their plan did not require a Brave New World solution.
Hill believes the problem with better-faster-cheaper is a low barrier to entry. “If your firm was able to find a price-slashing way to get ahead of the competition, someone else can do it to you,” says Hill. Margin erosion ensues along with a race to the bottom in a chase for customers and investors, an unhealthy pursuit. That’s the “greater fool” theory in action: unloading the hot potato before everyone else realizes the idea is a loser.
All of these methodologies add up to a firm identifying its “special sauce”—be it a less expensive way to address a problem, a better distribution angle, a niche created through more attractive product characteristics, or a patent that will provide a high barrier to entry against competitors. However, Hill finds that while many believe in their value, few companies actually have the secret sauce.
If somebody suggests that their economics are fundamentally different from everybody else’s, then either they really have identified some special sauce—and that does happen, because they’ve cracked the code—or else they’re clueless. And the percentage of those with the secret sauce is infinitesimally small. It’s a teeny minority.
Almost by definition of being a startup, there are many places where things can go wrong. Hill believes the most frequent problem is a lack of focus, with companies trying to overreach and do too many things.
In his book, Crossing the Chasm,7 Geoffrey Moore talks about the difficulty of a company progressing from the audience of early adopters to the early majority consumers. It takes a very different set of skills to cross that chasm and get a product or service into the adoption cycle where there is extremely high growth; it also requires a lot of discipline to get there.
Many entrepreneurs get seduced by the idea that there is a huge opportunity they can crack overnight, and they lose focus and discipline. They dilute their landing force across 98 beaches, rather than putting all their weight behind establishing one beachhead.
Hill cites VC veteran John Doerr, who says companies frequently overestimate the opportunity in the near term, and underestimate the opportunity in the long term. “It’s more important to establish a series of realistic milestones in terms of time and resource, providing a sufficient cushion, and achieving them,” says Hill. “If you pick them correctly, you can increase value along the way.”
Personally, Hill says he is more intrigued by the companies that do not purport to have the special sauce.
They may not have a patent-protected product; they just have a great management team. It is pure execution. Anybody else who can assemble the right team could copy what some of these businesses do, but they will succeed simply because they execute better.
M4: The Money
Next, Hill turns his attention to how the business is going to operate on a daily basis. He looks closely at the cash-flow statement, because it tells him how the business is actually operating—“even though most income statements are completely illusory.”
It boils down to a simple equation: How much money is it going to take, and how long is it going to take? Capital is more than cash, obviously. An early question is whether the entrepreneur anticipates using equity, debt financing, government loans or grants, customer down payments, or a combination of sources. The last thing an entrepreneur wants to do is dilute his share, so equity financing is often a last resort.
Talking about money may be one of the most time-consuming aspects of due diligence, because this is why entrepreneurs are talking to venture capital in the first place. The financiers also want to make sure their money is spent well, not wasted on lavish game rooms and Christmas parties.
Hill makes a point of searching for entrepreneurs who have less-capital-intensive business plans. Needing a lot of start-up capital is a red flag. He asks, “Is the money going to pay for people, office space, or industrial equipment? What is the best way to finance that?”
In looking at employees, one factor is whether there are only five people in the world who can do a critical job, or fifty thousand who can do it.
You would be surprised at how many businesses’ financials just don’t make any sense. They’ve grossly underestimated the real amount of money they are going to need to hire to get the best and brightest, if that’s what they need.
If the company is based in a remote location, getting the best and brightest could be a challenge; if the company is in San Francisco or La Jolla, however, it had better be ready to open its purse strings to attract and keep talent.
Then there’s the almost-clichéd, inflated return on investment calculation by the entrepreneur—“eye candy” for potential investors, but often not grounded in reality. Hill recalls meeting a group of eager Harvard sophomores looking for funding whose healthcare idea was intriguing, but unfocused. “They were trying to do five things, when any one of the five would have been challenging enough by itself, but they had all five mixed up together,” Hill says. Their equation detailed two years, $30 million in revenue, and $7 million in profit.
I’ve been doing this for 35 years, and that would have been unprecedented. I’ve never seen it happen. So they discredited themselves by putting forth a proposition that on its surface was so incredible no one would believe it. That’s an example we see every day, where something put forth is so impossibly incredible, where if they are crazy enough to think that’s realistic, you have to start asking whether every other assumption is wrong.
Relating back to the Market equation, Hill delves into what is causing the opportunity, and what is driving it. Is it sustainable, an aberration, or a time-limited condition?
Hill also warns against “point valuation” by VC investors, who often use today’s numbers to gauge their expected return down the line. “Look at long-term trends, over five to seven years. Markets are cyclical. There are times when things are depressed, and times when they are inflated. Assuming your exit valuation is based on today’s inflated market, you are going to be in for a surprise,” Hill says.
The answers to these questions inform the VC’s hoped-for return on investment over time. From that point, Hill can project what he might realistically try to extract from the venture, should it be successful.
M5: The Metrics
“The notion of metrics is to quantify as much of the business opportunity as you can,” Hill says. A key question is how many potential customers the company is chasing. If there are 10 customers, you can go visit them yourself; if there are a million customers, you’re not going to see them personally.
Next, Hill investigates the sales cycles. Who are the customers and how do they buy these things? Do they buy them at Wal-Mart, over the internet, or only on a request-for-proposal basis? How many do they buy? Is it a $10, $100, or a $2 million product? Is the company selling at a price dictated by the market, or can it set the price? Is production scalable or sensitive to rapid volume changes? The sales cycle “dictates how much you can afford to spend on promotion, which then dictates your operating margin and things like that,” Hill says.
How a company forecasts its sales is a key metric. Hill refers to “the pipeline fallacy,” where a company might be overconfident in its success rate in penetrating a market. Are its forecasts based on actual customers, cash-in-hand qualified prospects, prospects who have been pitched but have not responded, or just pie-in-the-sky suspects? “I’m trying to figure out how credible all these numbers are,” Hill says. “People will use terminology like ‘pipeline,’ and you have to peel the onion back to really see what they are talking about.”
Another stumbling block is if there is a sole-source supplier somewhere in the mix. “If there is, now I’m nervous. What happens if that supplier goes out of business? What happens if they raise the price? I’m trying to see whether the assumptions made are realistic,” Hill says.
Knowing precisely where the product is in development is a crucial element for a venture investor. With a tech company, a product may be in the alpha stage, just a big idea in someone’s head and still in early development. It could be in beta testing, where the product is functioning and being debugged in a controlled environment. Or, people may have actually paid for the product and are giving feedback.
Then, of course, there is the product itself, and the numerous ways even a savvy venture investor can slip up—Hill calls it being “deluded by the demo.” He admits to being “blindsided” by nanocrystal developments at a leading research university. This exciting medical technology had been licensed, and a company wanted to commercialize it for a specific medical application. Hill’s group joined a few others to fund it, but when the time came for the actual technology transfer (moving outside the university laboratory environment and into a commercial environment), it took three times as long and cost four times as much as anticipated. The nanocrystals simply were not ready for prime time.
Hill takes his share of the blame in this case, speaking with a touch of chagrin.
We should have realized that these guys didn’t really have it fine tuned. A laboratory, in a super-controlled environment, not even producing consistently, can’t produce at scale. There was a huge amount of variability in quality control. There were just a lot of things that hadn’t been worked out. We didn’t do enough work figuring out where they were at, and the people that we charged with doing the technology transfer didn’t understand how much work remained to be done. Because they talked past each other, no one really nailed exactly where things are were.
Hill sees this mistake happen all the time with software company investors.
We will see a mockup. Somebody has developed a series of screens, and the screens look pretty. You can do some stuff with them—but there’s nothing behind them. The integration coding work is huge.
After seeing a lush, elegant presentation, Hill’s first response is, “I want to see it in the field, not where there is 24-7 support, but where I can tell if it’s doing what it’s supposed to do.”
Hill is the first admit it: Even with all the background checks, psychological profiling, interviews, and market assessment, choosing the right venture to back is still a judgment call.
A Prince among Frogs
What can an entrepreneur do to get to the head of the line with Eugene Hill? Having an established network of trusted connections helps. Unsolicited proposals go the bottom of the pile, if not the circular file.
We kiss a ton of frogs to find the prince, and there may be more frogs than there used to be. In the old world, pre-Web, pre-digital, where people had to produce a hard-copy business plan and use the U.S. mail, there was some sort of cost. Whereas today, they go on the web, push a button, and business plans fly through the ether.
Figure 2 includes some of the questions Hill has formulated around the 5 Ms; he uses the answers to weed out the vast majority of applicants. Both entrepreneurs and VCs may find them useful.
Hill acknowledges that his methods are gained from his own personal perspective, and modestly refrains from categorizing it as “some comprehensive genius solution to due diligence.” Instead, he concludes, “This is just a series of lessons that I’ve learned, sometimes with a lot of blood, sweat, and tears. These are the takeaways that I’ve had over thirty years. This is a journey, not a destination.”
- What is the product and how many are people going to buy?
- Is the market large and growing fast?
- Are the intellectual property barriers low?
- Is the company in a declining market, with intense competition, where a potential turnaround situation exists because of changed circumstances?
- Is it a visionary startup, in its growth phase, or approaching the buyout phase?
- Is it a product or service business?
- How does distribution happen?
- What are the pricing dynamics?
- Can a fast follower easily come in and erode margins?
- Do the team leaders have sufficient experience and talent to make the venture succeed?
- Can they handle the transition period from startup to successful operation?
- Do any of the top executives have skeletons in their closet?
- Does the management presentation ring true, or are they glib and full of bluster?
- Did lawyers ensure their documents line up, or are filings filled with potentially costly errors and omissions?
- Will the company’s value proposition succeed through increased revenue, or cost savings, or by working better-faster-cheaper?
- Is it a “Brave New World” proposition?
- Is the company B2B or B2C?
- What is the company’s “special sauce”?
- Is the business planning to grow organically or through acquisition?
- How does the company plan to build and sell the product?
- What is their competitive advantage, and how long will it take for them to achieve it?
- How much money is it going to take to get to market, and where are the funds coming from?
- Does the company need to spend extra to lure the best and brightest minds to create the product, or can it make do with a cheaper rank-and-file?
- Is the company selling to thousands of customers or to a limited audience?
- How will the customers actually buy the product?
- How much will the product cost, and what is the operating margin?
- How much will the company spend on promotion?
- Is the company a price setter or price taker?
- Is their model consistent with other competitors?
- Is there a single-source component supplier that could raise the price or simply disappear?
Figure 2. Due diligence questions from Eugene Hill’s 5 Ms.
Image by Kauffman Fellows Press.
A professional journalist and syndicated columnist for the early part of her career, Lisa has been a writer and content strategist for San Francisco and Silicon Valley corporations and startups for the last fifteen years. Her clients have included Twitter, Adobe, Shutterfly, Genentech, Zynga, Time Warner Cable, and the Department of Defense.
1 SV Life Sciences, “SVLS Team,” para. 1.
2 SV Life Sciences, “Welcome to SV Life Sciences,” para. 2.
3 All Eugene Hill quotes are from my three telephone interviews in July and August 2013, from our follow-up emails in September 2013, or from Hill’s PowerPoint presentation on the 5 Ms.
4 Editor’s note: This quote is widely attributed to Emerson (e.g., BrainyQuote.com, ThinkExist.com), but more reputable sites such as RWE.org and EmersonCentral.com do not include it.
5 See, e.g., Geoffrey H. Smart, The Art and Science of Human Capital Valuation: Smart Assessment, Smarter Performance (Big Speak Consulting white paper, 1998); Geoffrey H. Smart, Management Assessment Methods in Venture Capital: Toward a Theory of Human Capital Valuation (dissertation, Claremont Graduate University, 1998).
6 Hill uses this term frequently to refer to a certain type of groundbreaking business entity. The phrase originates with the 1932 speculative fiction classic Brave New World by Aldous Huxley (New York: Harper Perennial Modern Classics, 2006).
7 Geoffrey A. Moore, Crossing the Chasm: Marketing and Selling Disruptive Products to Mainstream Customers (New York: HarperCollins, 2002).