In 1999, with the Agilent licensing deal generating the startup's first few million dollars of revenue, Rosetta could pursue an even more exciting market: perfection of software that would help giant drug companies analyze a flood of data from the gene arrays. "We always felt that analytical software would be the best part of the value chain," recalls Chad Waite, an OVP partner and Rosetta director. But Rosetta's ambitions would go nowhere unless it could sign up pharmaceutical customers who would share what ordinarily would be top-secret data.

That's where Friend opened doors faster. "Steve had the stature to talk to top pharma researchers as a peer," Waite recalls. "He was incredibly enthusiastic about what Rosetta's technology could do for them." By last year, more than a dozen top-tier life-sciences companies and universities were Rosetta licensees. In all of those negotiations, insiders recall, Friend was the "good guy," focusing on shared opportunities. Rosetta's senior VP and COO, John King, played the role of the "tough guy," making sure that Rosetta got the best terms possible from each deal. In early 2000, Rosetta made a successful public stock offering -- and to almost everyone's surprise, Friend handled the role of CEO as though he had been training for it all his life.

Big Ambitions, Big Backers

As Friend pushed for closer collaboration with big drug companies, Rosetta agreed to meet with executives from Merck. But when a nine-person Merck delegation arrived in Kirkland, Rosetta managers began whispering to each other: That team is way too big to send to talk about a research partnership.

Sure enough, partway through those talks, Merck executive Peter Kim took Friend aside and asked him, "What would you think if we talked about acquiring Rosetta?" Friend was suitably coy at first. But inside the Rosetta boardroom, he argued hard for the deal. From the moment he helped found Rosetta, he argued, his ultimate goal was to hasten the development of life-saving medicines. As he saw things, the Merck deal would give Rosetta unparalleled access to compounds, libraries, and facilities -- enabling the little company to maximize its impact.

Meanwhile, Merck agreed to pay a 70% premium over Rosetta's predeal share price. It promised to keep the Rosetta team in Kirkland, as a separate subsidiary that could still seek non-Merck clients for its software products and services. Friend would remain president of the Rosetta business -- and take on powerful responsibilities at Merck as well.

Already, Friend's new position has encouraged him to think even bigger. "For much of Rosetta's existence, we've avoided cancer-related research," he says. There are many factors at work in the course of any cancer, and the interactions can be maddeningly complex. But for the past few years, Friend says, two researchers in Amsterdam have been urging him to apply Rosetta's tools to cancer anyway.

"They persuaded us," he says. "So we are now working on developing genetic markers that could help us determine the prognosis for someone with cancer -- whether or not they would be responsive to therapy. It's exciting to see what could be an entirely new diagnostic tool."

And now -- 16 years after his early, disheartening encounters with cancer during his pediatric residency training -- Friend can again dream of lifesaving breakthroughs. "This will play out over many years," he warns. "But if we're lucky, there may be new ways to start identifying the targets that really matter for fighting the disease."

George Anders (ganders@fastcompany.com) is a Fast Company senior editor based in Silicon Valley. Contact Stephen Friend by email (stephenfriend@rii.com).

Sidebar: What's Fast

Over the past two decades, Stephen Friend has published more than 60 scientific articles and commentaries on topics ranging from breast-cancer screening to DNA analysis. But some of his best new insights apply to business leadership -- and the special challenge of guiding a fast-growing startup to stay on track in turbulent times.

Dare to enter a "zone of chaos." Exciting young fields like genomics seldom have clear rules. There's no way for the pioneers to be experts when they start. But the people who jump in first are likely to find the best opportunities.

Don't get distracted. Startups can be seduced by a multitude of opportunities -- and companies that try to do too much may end up accomplishing nothing. When Rosetta developed its own gene-array technology, it could have decided to build such arrays by the hundreds of thousands. But it didn't, because Friend wisely believed that the young company needed to pour all of its energy into software development and research breakthroughs.

Cultivate a few great customers. In its first three years, Rosetta didn't hire a single sales representative. Instead, top executives led by Friend hit the road themselves and courted research chiefs at the likes of Amgen, DuPont, Merck, and Monsanto. After winning just a few of these accounts, Rosetta was in a much better position than it would have been if it had decided to chase dozens of smaller contracts with less-renowned partners.