Customer-Facing Metrics for Product Launch Assessment

Adoption Curves — Image by Nathan Laurell via Flickr

Medical device product development is justifiably hard. Innovative devices push technical and clinical boundaries. Before being used for patient care, new devices must undergo rigorous analysis and testing. It takes months or years to bring new medical devices from concept to reality. So it’s a big milestone when the last signatures finally authorize product release, and the first units ship to the first customers. Time to celebrate? Not so fast.

Your first customers decide if you should celebrate. Initial shipments are just steps towards the ultimate objective – satisfying unmet customer needs and building a great business. How well have you really done? A couple of weeks ago I wrote about the need for metrics to be customer-facing. Here are a few suggestions for quick-and-dirty customer-facing metrics to help you assess your product launch.

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Medical Device VC Funding: Slide Deck – Part 2 – Platforms

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Platform technologies have a certain allure. Look at MicroCHIPS, poised to revolutionize glucose monitoring and drug delivery (starting with osteoporosis, diabetes and cardiology drugs). Look at Seventh Sense Biosystems, hard at work developing rapid, simple-to-use diagnostics that measure “several classes of analytes including small molecules, peptides, proteins, and nucleic acids.” Medical device geeks like me can’t help being impressed.

Broadly defined, platform technologies are families of IP that enable multiple distinct clinical applications for distinct patient populations. MicroCHIPS and Seventh Sense are great examples.

Because platforms address multiple market opportunities, the revenue potential of a company with a platform technology can be several times that of a single application company. Does that mean platform technologies are easier to fund?

Pitching platform technologies to VC’s can be challenging. First, cool new technologies need lots of explanation. Second, presenting multiple market opportunities takes lots of time. One of my most popular posts has been “Medical Device VC Funding: Slide Deck – Part 1,” which covers a company developing a single medical device product to address a single unmet need. How should companies with platform technologies present to VC’s?

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Ardian – A Case Study in Value Creation

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I’m surprised that there hasn’t been more written about Ardian since their sale to Medtronic last month. It may be the largest venture-backed medical device exit to-date. Ardian’s $800M-plus-milestone-payments may end up being larger than Medtronic’s purchase of CoreValve for $700M-plus-milestone-payments in 2009. Even more unusual was Ardian’s relatively early-stage. At the time of sale, CoreValve had implanted devices in 2,600 patients at 125 centers in 25 countries. Ardian exited much earlier, with about 150 patients treated.

Overnight sensations don’t happen overnight. While Ardian seemed to come out of nowhere in 2009 and exited large in 2010, the truth is that the company had been hard at work for almost 10 years. Ardian achieved more than 10X return on $66M invested – at least $732M of value created, before milestones. While the end of the story is still unwritten, Ardian’s first few chapters form a great case study for medical device entrepreneurs and investors.

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Lean Medical Device Startup: Tales of Pivots

To pivot is to change one element of your business model to improve product/market fit. Iterating the business model via a series of pivots is easy to imagine in a software startup, where code is relatively mutable, but aren’t hardware timelines just different? Is the idea of a Lean Startup really applicable to medical device companies?

Last month, Eric Ries posted a real-life story of the iterations of a lean hardware startup in a “Case Study: Rapid iteration with hardware.” It’s compelling. Hardware startups can pivot.

Medical device companies can pivot too. Here are a couple of examples.

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Lean Medical Device Startup: Test Your Problem Hypothesis

Original test pilots for the Mercury Project — Image by State Library and Archives of Florida via Flickr

Having trouble getting your medical device startup funded? Most likely, you have picked the wrong problem to solve. Think about it this way: When you launch a new medical device, you are asking physicians, hospitals, nurses and patients to change medical practice. That’s a big deal. A really big deal. So get it through your head that medical practice will only change if your new device solves an important problem. That’s why the lean medical device startup defines its problem hypotheses first. That’s also why the lean medical medical device startup tests its problem hypotheses early and often. You need to make sure you are solving the right problem.

What does ‘testing your problem hypothesis’ mean? How do you go about testing your problem hypothesis?

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Lean Medical Device Startup: Finding Early Adopters

To test your business plan at its earliest stages, you have to find early adopters. Early adopters are the potential customers who have the problem you intend to solve, have tried to solve it on their own, and are willing and able to purchase a solution if one can be built. For medical device startups, true early adopters also have experience shepherding new products through the provider process (e.g. hospital purchasing and CFO) and payor process (e.g specialty coding committee and Medicare). Consequently, only early adopters are able to provide value-added feedback to the lean medical device startup. How do you find them?

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Lean Medical Device Startup: Getting to Product/Market Fit via Customer Discovery

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The confluence of cheap computing power, cheap memory, and cheap bandwidth has fueled the emergence of web 2.0 companies like Twitter, Flickr, Tumblr, and foursquare. Because software-based-products are inherently extensible and mutable, these web 2.0 startups have rethought the concept of the product lifecycle, enabling their web-based products to evolve new capabilities monthly, weekly or even daily. (Contrast that to the less-than-annual releases of Microsoft Office.)

In turn, this rethinking of the product lifecycle has spurred dramatic changes to the way these companies and products are formed, financed, and managed. The term Lean Startup captures the philosophy and practices of this new way of thinking. Despite the relative immutability and non-extensibility of most medical devices, we can find ways to apply Lean Startup concepts to medical device startups. In a previous post, I discussed the Lean Startup concept of Product/Market fit in the context of medical devices. Now that we have defined Product/Market fit, the question is “how do we get there?”

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Lean Medical Device Startup: Product/Market Fit

How did we survive for so long before web applications like Gmail, Facebook, YouTube, and SalesForce.com? These web 2.0 applications have dramatically changed the way we live and work.

These web 2.0 companies are also dramatically changing the way startups are managed and products are developed. Eric Ries coined the term Lean Startup, to describe a new way of thinking about startup companies, their markets and their products. These Lean Startup concepts can be applied to medical device companies too. Let’s start with one of the most critical concepts: Product/Market Fit.

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