The Strategy Behind the Scientist

Acuity with Marrone Bio Innovations' Pam Marrone

Back Q&A Mar 1, 2014 By Douglas Curley

She took her company public last summer with an IPO that netted $56.4 million. In 1995, she founded AgraQuest Inc., also based in Davis.

 

Pam Marrone, 57, is the founder and CEO of Marrone Bio Innovations. Launched in 2006, the Davis-based company develops and sells biologically derived products to kill pests and fertilize plants. She took her company public last summer with an IPO that netted $56.4 million. In 1995, she founded AgraQuest Inc., also based in Davis.

My first boss at Monsanto recognized my talent for management of science versus doing science. One day he told me I was destined not to be a scientist but instead to be a manager and a leader. He kept me out of the lab. He told me to take whatever business courses I could. That’s the most important lesson I ever learned.”

“One of the highs of my career was launching AgraQuest. I had the privilege of being able to develop a product from scratch, discover something new and then have it become a biological standard for the industry. It was really heartwarming.”

“Of course, getting basically kicked out of AgraQuest is probably the low of my career. The timing of the [initial public offering] and the 9/11 terrorist attacks, picking the wrong investors who then changed the strategy of the company; I got cast out of my own company. I had to start all over again. Although, I’m happy now that I did.”

“At this stage of my career, I don’t have to spend much time proving myself. Certainly, in the beginning I did. Not only was I a woman, but also I had a Ph.D. rather than an MBA. Even though I was business savvy, not having an MBA, everyone assumed I was a chief technology officer.”

“There’s no doubt that women have a narrower window of acceptable behavior. CEOs are strong people. Most CEOs are male, and they are a hell of a lot stronger than I am because, as a woman, I have to dial it back. To this day I get criticized for being strong. I’m very conscious of this perception. I have to be very careful because I’m very animated, very passionate. People get scared by that.”

“I would describe my management style as highly communicative. With me there’s lots of bouncing ideas off of individuals and teams. I want to create a value-based organization. We have our core values posted in our lunchroom and on our website. They include being adaptable, agile, creative, having candor, accountability, being performance-oriented, respectful and fun. Every six months we ask the employees which ones we are doing well on and which ones still need improvement.”

“I like people that are strong and confident and can argue their points with data, facts and logic. I want them to be able to argue without getting bent out of shape when we get into it. I require an honest, candid relationship with my team. It goes both ways. I want them to be able to tell me when I’m screwing up.”

“I’ve made a lot of mistakes in hiring people and bringing in certain investors. I’ve learned that it is really important to pick people that share my vision for the company. I need to feel confident that they’re going to back me all the way. Nobody will ever be as motivated as much as the founder. But you want people who come close and will value the stock options when they become real cash. I need people working for something bigger than them. I need to have investors and employees that realize things do not go perfectly all the time and don’t panic when things go wrong, because that is going to happen. Hell, we’re now faced with a 150-year drought.”

“It’s not easy finding talent. We have a huge advantage because we have institutional bio-pesticide knowledge within our company that other companies don’t have. We can take raw talent out of UC Davis and turn them into employees that can efficiently develop bio-pesticides. Finding talent will always be an area of my focus.”

“I’m talking with UC Davis about creating some new curricula that address the needs of our industry. Right now, I have to do a lot of training to get recent grads — even Ph.D.s — up to a point where they are functional. They know how to problem solve, but they have not been exposed to working in an industrial environment where they have goals and deadlines. There’s a huge learning gap right now. There’s just not enough talent out there with industry experience.”

“And I must select investors that have a chemistry with me. That’s one lesson I learned from the AgraQuest iteration. It’s not easy managing a board of venture capitalists. It takes a lot of skill, and I’m still learning on that front.”

“When you start a company, investors don’t want to have to change paradigms. You want to go into a market that is easy to change, easy to penetrate. Taking the company to the public market was much more difficult than we could have ever imagined.”

“You’ve got to give investors an exit. There’s two ways to provide an exit. You can sell or go public. I thought we would have more value taking the company public and creating a new category of high growth for new bio. I thought we could have more of an impact and grow faster being a public company rather than being sold to a big agrichemical company.”

“It’s really fun to have small public shareholders. I recently went to an estate sale in Davis. I walked in, and someone looks at me and says, ‘Hi Pam, I’m a shareholder.’ And then later in the day, I’m riding my bike in downtown Davis and someone yells, ‘Hi Pam, I just bought your stock!’ I think, ‘Oh my god.  Everywhere I go, there are people who have bought MBI stock.’ It’s fabulous. On the other hand, it has an immense sense of responsibility. What if the stock price goes down?”

“We’re building the company for the long term. We have stated that we plan to more than double revenues every year. We’re going to launch at least two new products every year. We’re going to be profitable by the end of 2015. We’re sticking to that.”

“When you’re a public company, it’s all about growth. Right now, a majority of the world’s farmers use chemical pesticides and genetically modified plants to ensure a good crop. Biological pesticides, or natural products, are the third major leg of this paradigm. Over time, we actually think that biological pesticides will become dominant.”

“Biological products (not all organic) are about $2 billion of the $50 billion pesticide business. Organic farming is a very small niche. But the reason why the sales of biological pesticides are growing 6 percent a year, compared to conventional pesticides, which are growing at 5 percent, is that our product is being adopted by 90 percent of conventional farmers.”

“The rationale for biological pesticides is scientific. Although not everything that is natural is safe, you can find things that are natural that are biodegradable and much safer than some chemicals.”


 

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