Peter Pacult: I know you started at Toyota, founded a medical device company, and then moved into other C suite and director roles in life sciences. I’d love to learn how you made those transition and what motivated you to do so.

Peter Falzon: As an undergrad at the University of Michigan, I got a double major in Economics and Japanese Studies. My passion was Japan. I had been a high school exchange student to Japan, and junior year of university. When I graduated, I went right back because I wanted to be fluent in speaking, reading and writing. I ended up getting a contract to teach English at a school there, which allowed me to reconnect with my network at the university in the Nagoya area. And of course, Toyota is headquartered about 30 minutes outside of Nagoya. Within a few months I had a former professor who said, hey, Toyota is looking for bilingual Americans and Europeans for an internationalization program. This was back in the 80s when Toyota was primarily a Japanese-based manufacturing exporter. So I think 70 to 80% of their business was export.

Toyota needed to diversify and start manufacturing overseas. In 1986, I was hired to work in their finance group at their headquarters and I was embedded within manufacturing. I was basically doing accounting for planning and building factories. It was an exciting time. I learned a lot about business. I sort of considered it military training. If you can learn business processes and how to write reports and manage your time in a big organization like that, it’s just really, really good basic training.

But what was missing was, I could see that it would be decades before I would have any real responsibility in an organization that size. And even though I had such a privilege, because I was the bilingual guy who was following the president around and interpreting for all the bigwigs, it still wasn’t like I had responsibility.

How did you respond to that realization?

The opportunity to move to my next company, which was a Silicon Valley-based tech company called Coherent, came as a result of an airplane ride from Tokyo to San Francisco. Next to me was the President of the medical division of Coherent, which was the market leader in medical lasers primarily for treating age-related diseases and glaucoma. So it was very serious medical stuff and he was just a really interesting guy. We had a nine-hour flight, and he shared with me his frustration about understanding his business in Japan. His company was the market leader everywhere in the world, but a copy-cat had started in Japan five years earlier and they were starting to impact his business and especially in Japan, their home market first. So I just thought, wow, that could be really interesting and I could be spending my time saving eyesight, instead of polluting the planet, that could be kind of cool.

So it sparked your interest. How did you leverage your interest into opportunity?

I offered basically to do a U-M EMBA EXECmap. I spent my own time visiting his customers, distributor and other partners, reading up about the technology and the product in the market. Then I just made a proposal to them. And I said, well, you know, Japan is the second largest market in the world. And your opportunity in Japan is larger than it is in the US because you treat primarily age-related diseases, and the Japanese population is much more skewed towards older people. Oh, and by the way, the insurance reimbursement for the things that your products treat is double in Japan than in the US. So it’s all very well-funded. Your business in Japan should be booming and the only reason it’s not is because you don’t have anybody who can speak the language to get in and help manage or put a strategy together.

Just leaving it to a distributor means they’re going to sell what comes their way. They’re not waking up every morning thinking, oh my god, how do I create number one market share for your company. I recommended they set up a marketing office in Tokyo that worked closely with their distributor.

And this led you to found Coherent Japan?  What did you focus on?

Yes.  I focused on understanding every barrier they have and removing those barriers, doing education for the marketing and salespeople, helping the service technicians, making sure that they have the latest information to service the lasers in the field. But most importantly, understanding how to marry together the strategy to drive that distributor to get top market share. 

That’s a big jump from manufacturing to a device health care company. What motivated you to make that leap?

The need to control my own destiny.

At Toyota, someone was telling me what to do. And I was doing it. With Coherent, there was a problem that I was able to dig into, understand it, and come out of it with a solution.

What I really like to do is solve puzzles where I get all the information, put the pieces together and synthesize it into a strategy. I also really like to decide what’s noise and what’s important.

For Coherent Japan, once I got it down to what’s important to pay attention to and put the strategy together, then it was actually something that I created and I felt, okay, I understand it and I can drive it.

That’s certainly common among many entrepreneurs, the desire to control one’s destiny and drive forward a strategic plan. That leap is also a bold move. How old were you at the time?

28. Yeah, but you know at the time when you’re 28 you think you know everything.

What was a key takeaway from this experience?

You have to be both strategic and opportunistic. I saw the opportunity and I put the strategy together.

If there is no risk, there is no reward. And in this case, I understood it well enough. And I was probably just young and risk taking enough.

What led you to Ross’ Executive MBA program?

I went to Ross because I felt like I was repeating the same thing too many times. And there was a bigger universe out there.

Coherent, the whole company the Coherent Medical Group, got acquired and I moved on. I was with a startup that was venture funded. I was not the CEO, but I worked on the CEO’s team. We did an IPO and that was successful. I then went on to become the CEO of a laser company based in Australia. And that was basically taking a family company and building out the distribution around the world and we grew that. Then I had done a couple of startups, where I was basically partnering with the technology founder. These were very early stage and, in many cases, I was helping them with the business plan and raising money. In some cases, I was putting operations in place.

Part of me said okay, you’ve got all this experience and you’re not 28 anymore. You should move up the food chain and work for a bigger organization where you don’t have to worry about “how I raise money to keep going next year?”. That would be fun.

Or, I need to break it up and consult. And be involved in three or four things that are still fairly risky but break up the risk. Or I was also at that time consulting for Wayne State University, helping on their technology transfer and entrepreneurship ecosystem, or I could do something like Ripple Science.

I thought, I don’t need to rush anything. I want to actually have a process and the best process recommended to me was to get the book called Designing Your Life, which was written by the guys who started the Stanford design school, which is not art or creative design. It’s a process that allows you to really dig in deep and understand where your motivations are and passions are and what you’re good at, and at the end of the day, decide through that investigation to come up with a better understanding of what you’re going to succeed at.

I took a month, and I went through that whole process and it was pretty obvious at the end that I was a CEO at 28. I was not going to fit in well with a big bureaucracy.

Based on your recommendation, I read Designing Your Life. What were the biggest insights and surprises you had going through that process of reviewing Designing Your Life and some of the step by step processes they recommend?

Discovering what’s important. I thought the process is really good because it goes down layer by layer. Starting with what gets you out of bed in the morning? When you have a Sunday free, what do you do? What are you doing in your unstructured time? Then it starts asking, where were your successes? And why was that successful? Where did a situation become really intolerable and what led to that? Where did you fail and why?

For me that led to a couple of realizations.

First was I love the puzzle. You know, I’m not afraid of ambiguity and lots of information. I love diving in and like exploring, synthesizing, and then saying, oh now I know it. So that’s really my super skill I think.

Second is, I have very, very low tolerance for incompetence. I get frustrated very quickly if someone’s stonewalling or just can’t come along, and I can’t do anything about it.

And then integrity.

I remember very quickly. There was this one really great opportunity. I was running a company and we had funding. But my heart just wasn’t in it because I live by partnering with the scientist. I commercialize things with inventors. And this scientist to me had a bit too much fake-it-till-you-make-it. I never totally admired his science or his approach to science. And I was continually suspicious that, for him, it’s really about the company side. Like I want to fake it, as far as I can to raise this money and spin this company up and then sell it.

You’re in a bit of a unique situation. You’ve worked in startups, you’ve worked with other founders, you’ve worked with scientists. Sometimes pulling that chord and leaving a job is hard for people. Someone may have a gut feel that not everything lines up, but the job checks a number of “good” boxes. With your unique background of seeing those different angles, how did you know it was time to leave the company in California?

I think that’s a great analogy. You’re like, okay, this is checking three or four of the boxes but two or three not quite. In those cases, I find myself doing my best, but also looking for the opportunity that actually does check all the boxes. I’m not all in and I know I’m not all in.

The opportunity to come to Ross was partially driven by the fact that the opportunity just before wasn’t checking a couple of those boxes. The fact that I’ve been far enough in my career and had a couple of exits, I figured I can do this so why I shouldn’t I.

Since you went through your life process also, did any light bulbs go off for you going through that process?

Peter Pacult: Yeah, what was interesting to me, early on in the book, the authors have you work on your work plan and life plan. In other words, what do you want out of work, and what do you want out of life? Where are they compatible and where aren’t they. I actually think I do that pretty regularly, but I hadn’t examined where are they incompatible. And how do I move beyond those incompatibilities.

In the book, they have you build multiple five-year Odysseys of what your life would look like if you pursued different career paths. The authors also emphasize not to put pressure on yourself and think that you have one best life to live. There are many different things you could do. So why don’t you write out three of them? What do you want the next five years to look like going down different avenues and then prototyping with mini life experiments? And so when I started doing those two things, it took a lot of perfectionist pressure off of me to say, oh, yeah, I do have many dynamic interests and here’s what these look like. Then, prototyping to see if any of those different avenues work well. I think that’s a great thing.

We’ve discussed what’s really meaningful to you. Solving puzzles, low tolerance for incompetency, integrity and partnering with scientists. Is that what drew you to Ripple Science?

While getting my EMBA, I worked with Wayne State University to reorganize their entrepreneurial ecosystem. Through connections at Ross, I ended up doing something similar for University of Michigan’s Office of Technology Transfer (“OTT”).

I became at Mentor in Residence at the OTT’s Venture Center and helped their portfolio of early-stage life science companies’ founders. I would vet their business plans, advise them, and raise money. That’s what the Venture Center told me my job was. What they were actually doing is sending me on job interviews. There’s a talent gap in the Midwest, compared to the Coasts, for experienced executives to run startups. The University of Michigan’s tech transfer office spins out 25 companies a year. The Venture Center was desperate for more people to run U-M startups.

Ripple Science was one of the companies that I was helping. The founder, Nestor, was a Professor of Psychology at the University of Michigan. He really wants to fix the biggest bottleneck in the clinical trial industry, which is recruiting and retaining patients for clinical trials. He is brilliant, and he’s in it for absolutely the right reasons.

After graduating from Ross, I took a sabbatical, went to Europe and read Designing Your Life. After applying that process, I called Nestor and told him I’ve come to the conclusion that Ripple is what I want to do. And he said, oh, terrific, because we’ve come to the conclusion that you’re the person we want.

Have you found that by going through the Designing Your Life process, your level of engagement and commitment is higher?

 The process was critical to getting it right. And I will tell you, since the day I landed there, I am grateful that I spent that five weeks going through the process because it informed me to make the best decision. Every day that I’m doing it, reinforces that decision.

That’s great. What additional advice would you give to fellow EMBAs?

The cost of living is much higher in San Francisco. It was much easier to make it by moving back to Michigan. I could take a calculated risk and make a change professionally. Being a CEO in Michigan won’t pay as much as it would on the West Coast, so I had to set my expectations differently.

Do I regret it? No, because honestly, I don’t gain as much satisfaction about looking at what’s in my bank account as I do about building a team and working with that team every single day. So I’m getting all of the joy and satisfaction that is important to me to get out of bed and keep going.

Has that always been your life philosophy or has it evolved over time?

I don’t come from a wealthy family. When I was younger, it was very important for me to become economically secure, which is very different from independently wealthy. Economically secure means you’re not worried about the next paycheck. Or, you know, the next six months, let’s put it that way. When I was younger, I would say I might have made a different decision because I was still building my foundation that allowed me to feel the freedom to pick and choose and do other things that weren’t so motivated by the salary.

Interesting. Sounds like you’re very comfortable with the decision?

Right. There’s actually great freedom in it.

You worked on the West Coast and moved to Ann Arbor. What are your observations about the University of Michigan, and Michigan as a state, regarding its ecosystem for startups and business opportunities?

Venture capital started on the coasts. In the last ten year, there have been a plethora of new fund set up that are focused on not-the-coasts because the value is better.

I will tell you I’ve brought a couple of other folks I’ve worked with out in California to Michigan. One of them has actually taken the helm of a University of Michigan startup company, even though he still lives in San Francisco. The reason is there are a lot of great assets and projects coming out of the universities, all of them.

Right now, there is a really good early funding ecosystem: angels, seeds, seed funds, economic development-minded funds that might or might not be working with the state and VC. There’s been a lot of effort made over the last ten years to improve access to capital for early-stage companies. I have to say I was a pleasantly surprised.

Thank you, Peter. We appreciate you sharing your insights and it’s been a real pleasure speaking with you.