Reference Checking Your Prospective New Boss

Medical device employment and compensation have been frequent topics of mine over the past couple of years (see list below). It’s an important theme.

Today I’d like to talk about reference checking your prospective new boss. As a senior executive in the industry, I’ve hired many people for my companies – some more than once. As part of the hiring process, I always try to find colleagues in my network to provide references on the prospective hire. My goal is to build an outstanding team, and mistakes are costly. While I always ask candidates to provide references, I also like to check with colleagues not on that list.

Turnabout is fair play. Yet I’ve never had a prospective employee ask me for references. Why not? I’m happy to provide them.

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Getting the deal done

Cameron Health’s March acquisition by Boston Scientific for $1.3B was the subject of some Monday morning quarterbacking by stock analysts.

Leerink Swan Analyst Rick Wise was quoted in Mass High Tech saying “the purchase of Cameron is a major positive for Boston Scientific, ‘with the potential to transform the longer-term outlook for BSX’s lagging CRM business.'”

The Wall Street Journal quoted Citigroup as saying “the dated deal structure … looks too rich and risky” for Boston Scientific.

Whatever the analyst opinions, the striking aspect of the Boston Sci/Cameron deal is the imbalance between the $150M upfront price and the $1.2B in milestone-based payments.

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New England Medical Device Series A Syndication

It’s been about a year since I published a list of newly venture-funded New England medical device companies, so it’s time for an update (see below). The Series A rate continues to trend at two-per-quarter, despite the purported decrease in the number of active VC’s.

Last year I noted the surprising proportion of diagnostic technologies in the startup list. Over the last four quarters, only one of eight newly-funded startups is developing a diagnostic. That’s more in line with expectations.

This year I’m taking the opportunity to respond to a question from a colleague: Should I syndicate my Series A round or raise funds from a single venture investor?

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Healthcare Venture Capital Fundraising List 2011 Q4

My list of ‘healthcare VC’s with money to invest’ has become increasingly popular, and today I’m very happy to say that I’ve reached an important milestone: three years of data.

In total, my list now includes about 250 VC fund raising announcements from January 2009 to February 2012. Considering that VC’s typically make their new investments within three years of the fund’s raise, I suspect that the list includes the vast majority of healthcare VC’s that are actively making new investments in startups today.

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Lean Medical Device Startup: Independent Directors

Great independent board members add tremendous value to a startup. I want to share two recent blog posts on the subject that I found really helpful. Enjoy.

First Mike Travis answers the question Why Startups Need Outside Directors.

Second, Elad Gil explains How To Choose A Board Member.

Update 4 Mar 2012: Bruce Booth of Atlas Venture just wrote a great post on “High-Performing Boards in Early Stage Biotech.” Well worth reading.

Update 28 May 2012: local entrepreneur and angel Ty Danco posted “Everything You Wanted to Know About Boards: Touring the Blogoverse” an awesome compilation of the best advice on startup boards. Definitely check it out.

What Makes An Awesome Board Member? (feld.com)

Lean Medical Device Startup: Test Driven Development

Lean manufacturing, now common in the medical device industry, originated in the automotive industry. Companies that truly embrace lean practices dramatically reduce costs and inventory levels while improving product product quality.

Stage-gate and requirements-driven product development, pervasive due to FDA’s QSR, has roots in PRTM’s PACE process and Robert Cooper’s Winning at New Products. A well-designed product development process shortens new product development timelines and improves the likelihood of product success.

Medical device companies reap tremendous benefits from borrowing the best practices of other industries. Unfortunately, most of us spend our whole careers in medical devices with limited knowledge of other industry practices. Meanwhile, as Marc Andreesen wrote last summer, “Software is eating the world.”

It’s not just the dramatic decline in the costs of memory, processing and communications that is fueling the software revolution. Key to software success is a radically new approach to product development best summarized in Eric Ries’ fantastic book, The Lean Startup and Kent Beck’s classic Extreme Programming Explained.

While I don’t expect scalpels to be replaced with software anytime soon, we in medical devices can learn a lot from Lean Startup software practices. Today’s topic: test-driven development (TDD).

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Healthcare Venture Capital Fundraising List 2011 Q3

For medical device startups, raising venture capital is a challenge that seems to keep getting harder. For healthcare VC’s, raising money from limited partners is just as challenging. Despite the reality that some VC’s are exiting the healthcare investment business, the good news for entrepreneurs is that there are still many healthcare VC’s raising new funds, even in today’s less-than-stellar economic environment.

Who are these VC’s? For almost 3 years I’ve been tracking the fundraising activity of venture funds that focus on healthcare, and generalist firms that make some healthcare investments. My goal is to create a reasonably comprehensive and current resource for life science entrepreneurs, and make it available here.

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Manufacturing Matters

Personalefabriksmall — Image via Wikipedia

Look around the parking lots of medical device companies, and you’ll find that most engineers drive Japanese cars. Even those who drive something else acknowledge the manufacturing prowess of Toyota, Honda, Nissan, Subaru and Mazda. When it comes to cars, we all know that manufacturing matters. Look inside the buildings of medical device companies though, and it’s often a different story. Most product development engineers have little understanding of the discipline of medical device manufacturing, other than a required familiarity with good manufacturing practices. It’s the rare medical device product developer who understands single-piece flow, 7 wastes, line-balancing, cell-based manufacturing, theory of constraints, poka-yoke, kanban design, kaizen events, six sigma, zero defects and the many other buzzwords/elements of lean manufacturing. It’s a real problem.

The best development engineers know that manufacturing matters, and engineers who “get” manufacturing create significantly better product designs and significantly more value. No great medical device designs make it to the end customer without being manufactured. I could even argue that medical device product development is all about manufacturing. Here’s what I mean.

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WSGR View on Medical Device Corporate Strategic Investments

Wilson Sonsini Goodrich & Rosati is one of the top life science law firms on the left coast, with a strong focus on start-ups. Their “Life Sciences Report” is required reading for start-up medical device execs. This quarter’s report includes a great article on Negotiating Corporate Strategic Investments. Well worth reading. Check it out here.

How to Avoid a Bad Strategic Partnership for Your Startup (readwriteweb.com)

Bringing your medical device to the U.S.? Start in Massachusetts

I’m fortunate to live in one of world’s great medical device hubs, so I hope you’ll forgive this unabashed promotion. Massachusetts is home to hundreds of innovative medical device companies, and we are well known as a source of med-tech start-ups. What’s less known is that Massachusetts is the best place for European and Israeli companies to set up their US operations.

Andover Massachusetts (population 33,201) is practically the United Nations of medical devices, hosting Switzerland-based Straumann, Netherlands-based Philips, Germany’s Draeger Medical, and UK’s Smith & Nephew.

Last year, Syneron merged with Candela in Wayland MA, becoming the largest Israeli medical device company in New England. Israeli start-up Odin Medical located its US HQ in MA prior to its acquisition by Medtronic, and Israeli start-up rcadia has their HQ in Newton, MA. EarlySense is the most recent Israeli company to locate here.

Ireland-based Creganna, a leading provider of medical device contract R&D, set up its first US location in Massachusetts and later expanded to locations in California and Cleveland. Ireland’s Shimmer Research, designer of new devices for wearable health sensing, set up their US operations in Boston.

I’d love to see more European and Israeli companies set up shop here. If you are developing a great new medical device outside the US, and thinking about entering the US market, you should be thinking about Massachusetts. Here’s why.

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