One of my most popular posts concerns employee stock options (see Stock options – everybody in the pool). Last week, Fred Wilson of Union Square Ventures described his formula for granting employee options, on his blog AVC. Everyone gets options, according to his transparent formula. Makes a lot of sense to me, and I’m sure it will for you. Read his post here.
Over the past several months, I’ve had the privilege of meeting many entrepreneurs who are raising funds for new medical device startups. One common VC refrain they hear: “Come back when you have more data.” Many times this can be a VC’s way of saying no without saying no. Sometimes though, the VC really means what s/he says: the current proof-of-concept data hasn’t proved the concept. It’s not just startups that face this challenge. I’ve seen weak proof-of-concept data in bigger companies too. How can you make sure your proof-of-concept data is solid?
Wow – two big medical device exits were announced in the past week: Boston Scientific bought Sadra, and Medtronic bought Ardian. Most successful medical device startups are ultimately acquired, enabling their investors to achieve a financial return and reputational enhancement. (With sufficient return and reputation, the investors will be able to raise another fund and keep their jobs.) Relatively few medical device startups remain standalone businesses, earning a return for their investors by going public or throwing off profits. Still, it’s usually better to build your company to be successful standalone, as it puts you in the best negotiating position vis-à-vis acquirers if and when they come.
There are likely to be four to six potential acquirers for your company, although there are occasionally less and sometimes a few more. Who are they? Continue reading “Begin With The End In Mind”
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.
Continue reading “Lean Medical Device Startup: Tales of Pivots”
On his blog Both Sides of the Table, Mark Suster of GRP Partners provides some of the best advice for startups, including his series on sales and marketing. Although written for high-tech startups, Suster’s advice is readily applied to medical device companies. His recent post on managing your sales pipeline is truly insightful. Enjoy it here!
Is there a medical device company anywhere that doesn’t use Microsoft Project to manage product development projects? After all, it’s a time-tested, incredibly powerful Gantt-charting tool, and it plays nicely with Microsoft Office. What’s not to like?
Okay, maybe I have a few pet peeves:
I could go on. So I’ve been looking for a better solution for years, and I’m starting to see signs of life beyond MS project.
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?
Continue reading “Lean Medical Device Startup: Test Your Problem Hypothesis”
Kaiser Health News and NPR yesterday reported on an important US healthcare trend: Hospitals Lure Doctors Away From Private Practice. A dramatic shift from practice-owning physicians to salaried, hospital-employed physicians, could create an equally dramatic shift in medical device market opportunities.
Continue reading “Hospital Hiring Trends Impact Medical Device Opportunities”
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?
Continue reading “Lean Medical Device Startup: Finding Early Adopters”
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.
Continue reading “Lean Medical Device Startup: Product/Market Fit”
Jay Caplan on Medical Devices 