Is Launching A “Me Too” Medical Device Within A Year Realistic?

If you ask an engineer whether or not something can be done, I’ve found that most will provide you with an optimistic response. You usually get an unequivocal “yes, that seems feasible”. And what the engineer fails to provide and you fail to hear is that there is not an infinite amount of money and resources at your disposal to make it happen. But you trek on anyway, believing, or probably better stated wanting to believe what you want to have happen (and likely what your boss expects).

When I was approached by a startup medical device client last winter, I was asked if it would be possible to launch a “me too” medical device within a year. Before answering the question (yes, I’ve been that optimistic engineer), I did give the suggestion a great deal of thought. I also chimed in with quite a few follow-up questions. Satisfied with the answers, I too had mine. Yes, it seemed very probable that we could bring a “me too” medical device to market within a year. And I was sincere.

Now we are about 6 months in. That year target is still within reach, despite all kinds of twists, turns, bumps, obstacles, roadblocks, etc. But the next few weeks will be the telling factor. We have to hit a CRITICAL July milestone to have any hope.

So I’ll push like crazy to make it happen.

8 Lessons Learned from Current Medical Device Product Development Project

The current medical device startup product development project is still in process. However, there have been several lessons learned already with this project. Here are 8:

  1. Finalizing Design Control documentation may lag a little (and it’s okay).
  2. A good project manager maybe should be a control freak.
  3. Trust project team members. Don’t trust project team members.
  4. Go to my network. Expand my network.
  5. A task is not completed until there is clear objective evidence to support it.
  6. Delivering bad news never gets easier but should not be avoided.
  7. When I’m comfortable, I’m being too complacent.
  8. Communicate, communicate, communicate.

 

On Budget. On Task. On Time.

The other night, I was watching a home improvement show Rehab Addict, when the host, Nicole Curtis, stated: “. . . On budget. On task. On time. . .” I realize home improvements and do it yourself projects have zero to do with medical device product development. However, project management is remarkably similar across industries, genres, project types, etc. As Nicole made the statement, my attention drifted away from her latest remodel to thoughts about current and past medical device projects.

I remember once very early in my career touting that my projects were always on time. And at that time, my employer didn’t really track budgets, so I guess that metric doesn’t really count. But I remember being very proud of being on time with projects. I remember hitting deadlines. Many projects and years later, I’m not sure that those early projects are a good measure of my project management capabilities. Yes, we did bring some good medical devices to market. However, the on time claim was probably a little skewed. That, and the reality is that if you hit your deadlines, you probably aren’t being aggressive enough. And the reality was then the due date was often prescribed to me by my boss ahead of time. Fortunately, my boss either was naive enough or had enough foresight to set a fairly doable date for project completion.

Fast forward to my current project. Like nearly every project I’ve ever had, the due date for this one was also given to me by my “boss”–the entrepreneur behind the idea. The issue in this case is that this is the first time the entrepreneur has ever gone through medical device product development. From the beginning, I have been very critical of the timeline and the budget. I was able to reset the thinking about the budget to a more realistic value. Timeline, while aggressively established by the entrepreneur, continues to be technically possible. Of course nearly every thing has to go the right way the first time.

I think the entrepreneur really knows that launching when he stated will be a difficult and tough assignment to complete. However, he is also the type to push and push to get the most out of a team. And I’m on board. I know the next few weeks are critical to us meeting the overall launch date. But we are on track and the team is for the most part on board making great strides.

Medical Device Product Development Is Like Going to the Eye Doctor

Have you ever been to the optometrist for an eye exam and been posed with the question which is better? Then the optometrist flips a lens or two while you stare at an eye chart. Sometimes the letters get clearer, other times blurrier.

My latest medical device product development adventure feels sort of like an eye exam. For a few weeks, we have been back and forth and up and down on the design of a medical device. Do you like this one? How about this one?

Some days, it feels like we are getting a step or two closer to ironing out the design. Other days, further away.

While I so wish we would be able to narrow in and define the industrial design of the device, we are making progress on the electronics design and other components. Soon, it will all come together.

Medical Device Startups – Keeping the Balance

Medical device startups need balance. Specifically, keeping quality, regulatory, manufacturing, product development, and business in order and harmony with one another is a challenge and a must.

Which one rules the medical device startup?

Trick question. None of the functional areas rule. The trick is to keep quality, regulatory, manufacturing, product development, and business in balance. And yes, it’s always a trick. And always shifting and requires adjustment. One day quality might have the ball. Another might be regulatory. And yet another, all functions might share it.

As a startup, keeping the balance is a frequent, often daily, challenge. I don’t possess the magic formula. I don’t have all the answers. Helping startups with this balance is a large part of what CQ does.

Don’t Shoot! I’m Just the Messenger.

A current product development project has me in a situation that is not very comfortable. A few weeks ago, the project needed to make a “pivot“. I was given the task of finding options. Meaning, I was tasked with finding product development resources who could assist with industrial design, mechanical engineering, electronics design, firmware, tooling, and manufacturing. As project manager for the startup medical device, this task was definitely within my scope. I tapped into my terrific network to try and figure out a path forward. The startup wanted a pretty quick turnaround for quotes. The startup was okay with having ballpark estimates to make a decision. But they wanted to make a decision as soon as possible; the project had already been delaued a few weeks.

I talked with probably a dozen resources. Some options were full turnkey. Others only addressed a particular functional area. I organized all into a matrix to ensure all areas of concern had been identified and to determine rough overall product development costs. I presented the options to the startup, who in turn asked me to provide and support my recommendations. Fine.

After making a decision, I then had the dubious responsibility of informing all the resource providers of the decisions. For most, this was a difficult message. I had to tell them that the startup chose to work with someone else.

And of course when these sources were told “no”, they wanted to know why. Was it cost? Was it schedule? Was it something else? Most took the decision pretty well–this is how the medical device product development business works. We have all been told that our firm was not selected. Others, though, got defensive and wanted detailed explanations. They wanted to schedule a meeting to better understand and have a chance to revise and so on.

I’ve been managing medical device product development projects for 15 years. I admit that delivering “bad news” is still tough for me. But it comes with the territory, like it or not. My job is to inform and communicate. Sometimes, I am just the messenger.

Medical Device Startups Get to Revenue

It’s refreshing to work with a medical device startup with a focus on getting products into the market as quickly as possible to help patients. This same approach will allow this startup to begin generating revenue from the sale of its own products. I say fresh because it is surprising how novel this concept seems to be.

Okay, of course every medical device startup I’ve worked with definitely wanted to get their devices cleared and sold as soon as possible. But this startup seems different.

  • Initial capital equipment will not have lots of bells & whistles and will be similar to other products in this space.
  • Realization that there are quite a few accessories, kits, etc. which could likely enter the market first and serve as a source of revenue to help offset product development expenses.
  • Makes decisions with enough “facts” and without getting too bogged down with minutia.
  • Trusts the resources hired to do the job. When it’s clear there is a mismatch in needs versus capabilities, makes tough decisions about next steps.
  • Focused on the end-goal: get products cleared and ready for sale.

It’s still early. However, I think we are on the cusp of some exciting things with this startup, especially when it comes to the approach and their business model.

New Product Development – Why Start with a Clean Slate?

I’m currently providing project management services for a medical device startup. We recently encountered a “roadblock” requiring we find additional resources to move forward. I was able to reconnect with several capable options within my network for possible solutions. Nearly each resource I spoke with wanted to start at the beginning, basically with a clean slate and blank sheet of paper.

The thing is, this medical device project doesn’t need to start with a clean slate. In fact it should NOT for a couple reasons:

  • We’re developing a “me too” device. Yes, there are likely to be a few features and benefits which are unique to this product. But there is a ton of existing products in this space, including a couple identified as benchmarks.
  • The project actually started a few months ago. While we haven’t gotten too far, we have made progress. Let’s leverage and use as much as this progress as possible.
  • We have an aggressive yet realistic timeline to launch this device in 2013.

Thankfully, there were a couple potential resources who get it and want to minimize the research phase and get right into development. They realized and listened to what we were trying to say. We should make a final decision about the next resource(s) later this week. I assure you it will be those who we feel can pick up where we left off and help us get back on schedule as quickly as possible.

There are very few product development scenarios where you start with a clean slate and blank sheet of paper. Beg, borrow, and steal from other products and technologies. It’s very cliche, but don’t reinvent the wheel.

By The Time I’m 40

Yes, I shared in an earlier post that I currently invest time with inventors and entrepreneurs. But by the time I’m 40, I want to be in a position to where I can invest meaningful capital in startups. I have about 2.5 years to achieve this big hairy audacious goal. How am I going to make this happen? My plan is multi-faceted:

  • Continue to invest time in early-stage ventures. Why? The assumption is that a few of these ventures will one day receive funding to pursue product development. Once this happens, CQ should be in a position to continue providing consulting support and be compensated, maybe even with equity opportunities. And maybe, just maybe, one of these funded ventures will have an exit and the resulting equity will have substantial value.
  • Bring UniDoc to market. This is a proprietary CQ software product geared towards helping medical device companies better manage design control and product development documentation and records. We’ve had a couple starts and stops and are at a point where we need to aggressively work towards launching this into the market.
  • Continue to provide consulting services, helping medical device companies with business development, operational efficiency, and project management.
  • Identify and launch other product ideas.
Yes, time is ticking but this is my BHAG. Why? Since starting CQ, I’ve come across several medical device inventors and entrepreneurs whom I think have decent ideas. However, funding, especially locally and during the last few years, has been basically non-existent. I think there are a few very good ideas that are dying due to lack of investment. I’d like to be in a financial position to help make a difference.

 

How?

Invest in them now, providing advice and consulting. Find opportunity or two with equity, resulting in exit.

Also, develop own products, starting with UniDoc.

Playing Investor

For years, I have been an investor for inventors, entrepreneurs, and startups. No, I don’t write checks or provide capital. My investment comes in the form of pro bono time. I knew when I started my business in March 2007 that I wanted to work closely with early-stage ventures. And I learned just as quickly that many early-stage ventures are hungry for assistance yet often lack funding to compensate for it. This presented a bit of a dilemma. I had just started my business and needed income to take care of my family. Somehow, I had to find a balance.

Fortunately, I did. Through networking and connections, I was able to find a couple of well-funded medical device startups in need of project management and quality system services. Plus, I established a partnership with Anson Group to be a consultant on their bench, if and when needed. These engagements took care of my financial needs and allowed me some flexibility. I could now “invest” in a few early-stage ventures where capital was lacking.

Many asked me why I would do this. To me, the answer was simple. Not all good ideas have funding. Not all good resources are funded either. But the lack of funding did not mean these early stagers didn’t need a little help and guidance. I never claimed to have all the answers. But I was willing to review business plans, have a discussion over coffee, and help make a connection or two. I just wanted to give back–to pay it forward so to speak. Plus, I have been very fortunate to have willing and patient mentors throughout my career who invested their time in helping me every step along the way.

After doing this for a couple years, I began to notice a trend. I put the word out that I wanted to work with medical device inventors and entrepreneurs. And quite a few of these folks found me one way or another. However, I learned that many of these contacts were not as prepared as they should be, in my humble opinion. Many wanted me to do quite a bit of the heavy lifting. Many times, the scenario would repeat itself. Inventor contacted me asking for help, usually identifying market opportunities, regulatory pathway, estimate on time to market, and estimate of budget. I would spend a couple hours researching and provided feedback to inventor. Inventor took the information and never called again, I suspect because he/she wasn’t ready to do anything with the information and/or didn’t like my answers.

So one day, after having done this dozens of times, a light bulb went off for me. The questions and issues each of these inventors is many times the same. Yet, I often times got frustated because the inventor did not seem to be passionate enough to take the idea to the next step. I decided to develop a process for these requests and created a questionnaire called “Building the Business Case“. The process developed was this:

  • Inventor contacts me, seeking assistance
  • I send non-disclosure agreement and Building the Business Case questionnaire
  • Inventor returns NDA and questionnaire, completed as much as possible
  • I review the responses and set a time to follow-up with inventor to discuss next steps
We also wrote a whole blog series about the questions on Building the Business Case. After putting this in place, I was amazed by how many inventors and entrepreneurs were NOT willing to fill out the questionnaire. Keep in mind that these questions are pretty basic and pertain to the business opportunity. A completed questionnaire would be very helpful in writing a business plan. So implementing the process with the questionnaire became a filter, allowing me to more easily identify the inventors and entrepreneurs who are passionate about their ideas and willing to do some of the heavy lifting and homework required.
The process has been in place for a couple years. Yes, I still invest my time in early stage ventures. Yes, I’m still optimistic that one of these will take off and be the next big thing. Product development takes time. And not every idea will go through every phase and launch.

Medical Device Entrepreneurs Need to Start at the Beginning

But where is this? I guess because of the years of experience I have with medical device product development, I often times take the process too much for granted. This became a little evident to me the other day while talking with a medical device inventor / entrepreneur.

The inventor is an ER doctor who developed an idea for a novel solution to a problem he has had to treat a few times. I had the opportunity to hear the doctor speak at an event a couple weeks ago. He was very humble and apologized several times for being out of his element. But the doctor spoke very well, almost eloquently, about the issue. The audience was on the edge of their seats, listening intently. When it was time for Q&A, nearly half the audience threw their hand up to ask a question. I think the question and answer session lasted as long, maybe even longer than the presentation.

A few days afterward, I had a chance to connect with the inventor via email. He humbly admitted again that he was out of his element and wanted to know if I would be interested in talking to him. Of course. We had that first, semi in-depth conversation a couple days ago. I provided a high-level overview of medical device product development. And the doctor was very hungry for knowledge on this topic. He understood that we needed to start at the beginning and asked question after question to understand what this means and where the beginning actually begins.

It was actually very refreshing for me. Not always, but many times when working with inventors / entrepreneurs, they are more concerned about the end rather than starting at the beginning. Within the next couple weeks, I expect to have a face to face meeting with the doctor. He asked if we could use this time to review medical device product development process and discuss FDA Design Control regulations.

Some Thoughts About Startup Valuation

I’ve written about how entrepreneurs / inventors often over-value their product ideas in the past. For me, this continues to be an interesting topic. If you follow this blog, you know that I’m a huge fan of Shark Tank.

While watching the most recent episode of the tank, I witnessed yet another example of an entrepreneur coming in with an unrealistic valuation. The entrepreneur asked for $200K for a 10% equity stake, valuing his idea at $2M. The sharks had a flurry of questions, including whether the entrepreneur has generated any sales. The response: no.

So how did the entrepreneur derive at a $2M value for his product idea? The sharks asked. The answer given was something along the lines of “. . . we’ve had people tell us our company has a value between $1.5M and $2.5M . . .” Sounds plausible, right? Follow-up question from the sharks was: Why didn’t any of these people write you a check?

Entrepreneur stumped. Entrepreneur with deer in the headlights look on his face.

I can somewhat appreciate this dilemma because of current efforts with UniDoc. We’re considering raising some funds to accelerate our efforts. However, how do we value this? We have no revenue. We can only speculate on the size of the market opportunity. I can only give you a best guess on the value of UniDoc. And my guess is, well uh, WRONG.

And that’s the beautiful thing about valuation. It’s only write if the person writing you a check believes it to be.

How to Get a Federal Grant for Your Medical Device Startup

What is the best way to get a federal grant for your medical device startup?  Considering that the success rate for companies seeking federal loans hovers only between 11 and 15 percent according to Bhramara Tirupati, of BBCetc, an Ann Arbor, Michigan-based business consulting group, it is best to do everything you can in order to get one of these loans.  She shared these four tips with Brandon Glenn from MedCity News for startups looking to acquire the elusive federal funding:

Determine if you’re eligible.  SBIR and STTR grants are open to for-profit companies with fewer than 500 employees that have a U.S. location.

Follow the money.  Eleven different government agencies issue SBIR and STTR grants. Think of each one of those 11 as a separate program, as each has different interests, deadlines and requirements.

Exert some influence.  Agency scientists and engineers typically author “topics” that indicate the types of projects the agency is looking to fund. Find a topic that mentions technology similar to what you’re developing and contact the author.

Get a letter of support.  Some agencies, such as the National Science Foundation, accept letters of support from third parties that help make the case for an applicant’s technology.

Even though it may seem the odds are not in your favor, it is definitely worth it to check out this funding which could be a lifeline for your business.

 

 

June 7, 2012 – Venture Club of Indiana: Venture Capital Update

VCOI_medium      Event Notice
On June 7, the Venture Club of Indiana will be presenting a Venture Capital Update featuring: 

Don Aquilano, Allos Ventures, Indianapolis and Cincinnati
John Diekman, 5AM Capital, Menlo Park, CA
Rob Smith, Petra Capital, Nashville, TN

If you have questions that you would like to submit to the panel, please emailinfo@ventureclub.org.

Sponsored by:

 T2 Systems Logo

Hosted by:

B&T Stacked

June 15, 2012 – INpact: Navigating & Mitigating Risk for Emerging Technologies

Join us at our June meeting when Insurance Management Group will lead a panel of experts on the
topic of “Navigating & Mitigating Risk for Emerging Technologies”.
DATE: June 15, 2012
TIME: 11:30 a.m. – 1:00 p.m.
LOCATION: Bingham Greenebaum Doll LLP
                 10 W. Market St.
                 Suite 2700
                 Downtown Indianapolis MAP
COST: Non-members $20