Mike Carusi: The Healthcare VC is Not Extinct
Mike Carusi had a good year. As a general partner at Advanced Technology Ventures (ATV) he saw his investments in Ardian and Plexxikon payoff with acquisitions of $800 million and $805 million respectively (not to mention potential milestone payments). He saw another investment, GI Dynamics, IPO on the Australian stock market, and to top it off he was named on the Forbes 2011 Midas List as a top investor.
Keep in mind that this occurred in a year where VC investment for life sciences dried up. This was a year where medical device entrepreneurs were squeezing phrases like “android-compatible” into their pitch decks just to get a foot in the door.
This set the stage for an incredible tableside chat with Mike where Biodesign Alumni had the opportunity to see the venture industry through his eyes. He walked us through his path to becoming a VC and his thoughts on what lies ahead for the industry. Below are a few key takeaways:
- Don’t underestimate sales and marketing experience. Mike’s first job out of college was sales engineering position, and later on as a consultant he had a heavy focus on marketing. It taught him the discipline of building a story and listening to the customer. As a venture capitalist, access to the best deals only comes after you have some success and build an extensive network. So, early on in their careers, VCs have to squeeze themselves into deals by selling themselves. Mike attributes his part of his success to his ability to gain access to some good deals soon after becoming a VC.
- Life science is challenging, and that’s why it’s appealing. Looking back at his first job selling ball bearings, Mike recalls that there was really just one challenge – sell the product. In healthcare it is much more complex, and he likes the hurdles that it offers. It takes strategy and planning and hard work. And it separates people who are really good and not so good. As Mike laid out his own career path, it was clear that he had a natural affinity for challenging, entrepreneurial environments. Even at large companies he sought out the small teams and strategically developed the experience necessary to succeed in the healthcare space.
- Life science is a good investment. Despite the doom and gloom that we hear about the life science sector, it has actually provided the best return of any sector in VC investing over the past decade. However, they often get no respect (see this article “Life Sciences: The Rodney Dangerfield of Venture Capital”) because 1) there are no huge outliers like Facebook or Groupon to point at, and 2) life science companies are often difficult to understand. To Mike, the fact that there is less investment in healthcare can actually be a good thing, especially to the companies who do get funded. Major companies like Medtronic have the same appetite for growth through acquisitions as before, yet with fewer companies receiving venture funding it means there could be higher valuations for those companies who do receive funding. These cycles are not unusual in the venture industry, and so far life science investments have always reemerged as an integral part of many funds. Mike is bullish on the future of the industry.
- Swing for the fences. Without a doubt, Mike prefers the big game changers to the base hits. He reminded us not to pass up on an idea just because it is a PMA.
- Team risk is a killer. When asked what risk he is generally not willing to take on in a new investment, Mike quickly answered: team risk. Scientific risk is usually definable and surmountable, but even one member of a founding team can easily break an investment. Mike recounted some significant lessens learned where a single founder was the reason for the failure of a company. Learning the character of the people you’re going to spend the next 5 years with is important to do early on and Mike makes it a priority before an investment.
- Discipline. In Mike’s own words, “The (VC) industry needs discipline. I believe we are repeating the mistakes of 2000 in 2011… There is clearly a shakeout underway in the industry. It is a story of the haves and have-nots, with the ‘haves’ representing those firms or partners who have generated performance. Ultimately, a healthier industry will reemerge with fewer firms chasing fewer deals.” (WSJ)
The Biodesign Alumni were extremely grateful to spend the evening with Mike Carusi and appreciate his time to support the group. We wish him the best of luck at Lightstone Ventures.
Erik van der Burg and the Lean Medtech Startup
If There’s a New Model, What Is It? How Lean Can Be Rewarding
Last month several Biodesign alums had the opportunity for an in-depth personal conversation with serial medical device entrepreneur Erik van der Burg. Many of us were eager for the chance to hear directly from Erik about his approach to medical device startups.
We’ve been exposed to many of the headlining success stories of the past few years, which are always inspiring. However, the current funding environment has made the classic model of a big game-changing idea backed by bold venture capitalists as difficult as ever. Tolerance for risk among funding sources has diminished. This environment has led many in the space to ask: “What is the new funding model?”
A successful year of Biodesign Alumni Women’s Group Tableside chats culminates with Kyphon co-founder and inspirational Medtech leader / innovator Karen Talmadge.
On a recent plane ride, I was pleasantly surprised to find that the offerings on the personal entertainment system (conveniently located only 18 inches away from my face) included TED talks. I had been meaning to watch “Why we have too few women leaders”, given by Sheryl Sandberg, former VP at Google and current COO of Facebook. I had just read a Businessweek article featuring Sandberg a few days prior that piqued my interest in the Silicon Valley powerhouse. In her TED talk, she spews a number of disheartening facts showing that women are still struggling to make it to the top of any profession, anywhere in the world: there are 190 heads of state and only 9 are women, women hold only 16% (at best) of top-level corporate jobs, two-thirds of married senior-management-level males have children while only one-third of married senior-management-level females have children, and, perhaps most discouraging of all, the numbers have not changed since 2002 and are, in fact, moving in the wrong direction. Read more…
Three Biodesign Founders Reflect on their Journeys
 Photo courtesy of Iris Tan |
Three of the Biodesign founders, (L to R) Ginger Graham, John Abele, and Bob Croce, graciously took the time to visit and speak with the Biodesign fellows a few weeks ago. From the depth of their combined wisdom and experience came many pearls about career, medical device innovation, and life. |
Starting Out
It was slightly disconcerting to me, and possibly other aspiring medtech entrepreneurs, that Bob, Ginger and John had not nailed down medtech entrepreneurship as a career choice early in life. The sort of certainty that seems to be a requirement, or at least is greatly encouraged on university applications (think about all those essays starting with “My first-ever toy was Legos. I’ve wanted to be an engineer since before I could crawl.”) seemed suspiciously absent when they set off on their journeys. John sold light bulbs. Ginger wanted to be a veterinarian. And Bob had no idea what he wanted to do. Read more…
Ardian shares with Alumni
“Overnight sensations don’t happen overnight.”
In 2006, Foundry company Ardian was well positioned with a disruptive technology to address a large unmet clinical need: a neuromodulation device to treat heart failure. Fast forward to November 2010 and Ardian has just been acquired by Medtronic for $800M upfront and an expected $500M in milestone payments. However their technology is now an RF ablation catheter for treating hypertension, a major risk factor for stroke, heart attack, and heart failure.
While it seemed like Ardian appeared out of nowhere, in truth they had been working diligently for years at building their business from the ground up. So what were the key steps which led to such success? Read more…
Exploring Asian Medical Device Markets: An International Conversation with Anurag Mairal and Karl Im
Anurag Mairal and Karl Im, two contributors to the international medical device community, recently joined our Biodesign Alumni Group for its first International Tableside Chat in which over 40 participants from the US, India, and Singapore were connected by a video link to provide a truly interactive forum for discussion of the opportunities and challenges with device development in Asia. Read more…
Learning Between the Lines at Stanford Biodesign
The Stanford India Biodesign Group was asked about their key non academic learnings at Stanford during their first half of the program and this is what they had to say..
In 1Q2011, the Singapore Fellows hit several major targets, including
- The Cheesecake Factory on University Avenue
- The Texas Roadhouse in Union City
- The Dr. Perkins Breakfast at Buck’s Restaurant in Woodside
Our journey of discovery was not without its challenges, however. In a few words, the Singapore Fellows weigh in on the following mid-year topic.
In one paragraph: what was the most challenging aspect of transitioning from your previous life (engineer, physician, or researcher) to jumping into the Biodesign innovation process?
Vibrant Beverly
Beverly Huss, President and CEO of Vibrynt, joined our Biodesign Women Alumni group for dinner a few weeks ago.Vibrynt is dedicated to creating minimally invasive therapies for patients suffering from morbid obesity. We had a wonderful time learning about Beverly’s experiences, both as a CEO and as someone who has spanned the gamut of leadership roles in a big company, namely Guidant: research and development, manufacturing, sales, marketing, finance, regulatory affairs, quality assurance, clinical affairs, and human resources. Beverly concluded her career at Guidant as President of Endovascular Solutions and Vice President of Guidant Corporation before transitioning to Vibrynt.
People First – Mentorship, Team, & Network
Beverly was enjoying a well-deserved half-retirement when she was asked to be the CEO of Vibrynt.
Reza Zadno’s Secrets to Success
What’s the secret to success? Believe in yourself, work hard and build relationships…
At least that is what Reza Zadno thinks. A few weeks ago, eight Biodesign Alumni had the privilege and opportunity to sit down and have an intimate conversation with Reza, a successful medical device entrepreneur whose credentials include the founding of two successful medical device startups, PercuSurge (purchased by Medtronic) and Visiogen, which was acquired by Abbott for $400 million last year. Over dinner, Reza shared his story with us and recounted the lessons he learned along the way. Needless to say, we paid close attention. Read more…
A Day in the Life
Mid-Year Reflections from 10th Class of Biodesign Fellows
Knowing is not enough; we must apply. Being willing is not enough; we must do.
- Leonardo da Vinci
The fellows are now over 4 months into the Biodesign Innovation Fellowship, and we have been striving to put Leo’s words into practice. Reading or just talking about how to innovate new medical technologies is not enough. We must do.
Each of us came into the program with a unique set of experiences and expectations. Reflecting on our progress thus far at about the midpoint through the year, the fellows were tasked with answering the following question:
In one paragraph: what was the most challenging aspect of transitioning from your previous life (engineer, physician, or researcher) to jumping into the Biodesign innovation process?
How does the FDA affect you? Here’s why you should be concerned…
Recently, Josh Makower MD, Aabed Meer, an MD-MBA Candidate at Stanford, and Lyn Denend, a Research Associate also at Stanford published results of a survey that sought out to (1) investigate problems with medical device company interactions with the FDA and compare these interactions with those necessary for clearance in Europe, (2) assess perception of FDA versus European regulatory pathways from these companies, and (3) provide a quantitative measure of the time and cost to navigate the current FDA system.
The survey gathered data from 203 companies with 213 unique product submissions. The participating companies represent approximately 20% of medical device companies in the US. Read more…
J. Johnson & K. Wu
Earlier this year, J&J announced its intention to acquire Acclarent, Inc. for $785 million, making it perhaps the biggest exit of the year in med devices and definitely creating a buzz among fellow entrepreneurs. Perhaps you, like many others, are thinking to yourself, “How can I do that?” and “What are they doing that I should be doing?”
So, how did Acclarent become a success? How did they avoid pitfalls that might have led them to becoming one of the often-quoted 9-out-of-10 startups that fail?
At this year’s Biodesign Alumni Annual Event, we had the opportunity to explore these questions and get insights from those in the trenches at Acclarent since its inception 6 years earlier in 2004. Read more…
The Real World: Biodesign
Teamwork, Conflict, and the Expectations of a Future Fellow
“This is the true story… of eight strangers… picked to live and work at the Biodesign office at Clark E100… and have their lives taped… to find out what happens… when people stop being polite… and start getting real.”
-Adapted from MTV’s The Real World Opening Lines
Ok, so our lives won’t be taped (that we know of), and the new fellows are not really strangers at this point. In fact, I’ve already met the other seven 2010-2011 Biodesign Fellows, and I am very excited to work with them next year. They are all incredibly intelligent, enthusiastic, good-humored, and professional. In other words, you would not expect the kind of antics from this group that you might see on The Real World.
However, after speaking with a handful of Biodesign alumni about what to expect next year, I am a bit apprehensive, as I’ve noticed a common thread among their pearls of wisdom—a thread which may put us closer to our reality show counterparts than we would like. Read more…
David Thrower – Insound Medical
According to InMedica, the consumer medical device market continues to enjoy exceptional growth. With cumulative annual growth rate (CAGR) of 10%, it is well on track to reach $10 billion by the end of 2013. Despite this growth trajectory, however, many believe that consumer medical devices lag far beyond many other consumer products in terms of design and usability. In a recent and thought provoking comparison of insulin pumps and ipods, Amy Tenderich explores the question: Wouldn’t it be nice if medical devices were designed like consumer electronics? Read more…
Fearless Ferolyn: Lessons Learned
Recently, good friend and fellow alum Dorothea Koh (’07-’08) shared an interesting New York Times article titled “Out of the Loop in Silicon Valley”. The piece described the hurdles that still exist for women in (and striving for) successful positions in the tech sector. According to the article, women own 40 percent of the private businesses in the United States, but they make up only 6 percent of the chief executives of the top 100 tech companies. The disparity seems huge when it comes to technology-based entrepreneurship: women create only 8 percent of the venture-backed tech start-ups and make up only 14 percent of venture capitalists. Similarly, a separate Harvard Business School study has shown that only 5 percent of venture-backed biotech companies have a female CEO. Interestingly, research cited in the New York Times article has found that venture-backed start-ups run by women achieve comparable early-year revenues using an average of 40 percent less capital than those run by their male counterparts, are more likely to survive the transition from raw start-up to established company, and are increasingly involved in successful IPOs.
So what gives? Read more…
Pediatric Medical Device Innovation
“A paradox exists in pediatric healthcare: while tremendous philanthropy supports individual care, few new therapeutic devices/tools are ever developed specifically for pediatric patients. The impediments are profound- pediatric markets are small and poorly funded, and regulatory hurdles are high. These impediments notwithstanding, such new products would improve the lives of many children. Thus, there is compelling need to discover and develop new ways to build businesses that mitigate these risks. The Pediatric Idea Campaign, nurtured by The Kauffman Foundation and Lucile Packard Foundation for Childrens Health, may provide a model to do just that” – Thomas Krummel MD
Kevin Chao MD and I have recently launched an idea campaign is intended to bring physicians, care providers, parents, patients and innovators together in a collaborative environment. Read more…
The Merits of Pessimism
“Both optimists and pessimists contribute to our society. The optimist invents the airplane and the pessimist the parachute.” — G.B. Stern
I’ve heard it said that one of the most valuable skills an entrepreneur can have is an abnormal capacity for optimism. This makes sense: in an environment fraught with incredible risk, large-scale uncertainty, and emotional distress, there may be nothing more valuable than optimism and perseverance. Founding or leading a start-up consumes your life, in essence it is your life, and you absolutely need to believe that your immense effort will someday translate into something tangible. But though profound optimism is a priceless asset, a team composed entirely of optimists may be one that is incomplete or flawed. Read more…
Lessons Learned from Acumen Medical
Recently 8 Biodesign Alums had the unique opportunity to share a meal with Chris Eversull and Nick Mourlas, founders of Acumen Medical. Chris and Nick were also fellows the first year of the Biodesign Program at Stanford. Over the course of the evening, they shared their journey in developing a technology to revolutionize the delivery of therapy to the heart. Several interesting and insightful points emerged Read more…
Just when you thought you had heard the last of Stimulus Plans in the US, think again. The United States Patent Office (USPTO) has initiated its own version of a Stimulus Plan. Secretary of Commerce for Intellectual Property and Director of the USPTO, David Kappos, announced the pilot program at the Annual Independent Inventors Conference in early November. “The program will accelerate protection for important innovation from independent inventors while reducing our unacceptable backlog,” Kappos said. “Getting these inventions to the marketplace quickly will also help stimulate the economy and create jobs”.
The program is called the Patent Application Backlog Reduction Stimulus Plan and it went into effect on November 27th, 2009 (http://www.uspto.gov/patents/law/notices/74fr62285.pdf). Although the pilot program is only running until the end of February (unless extended by subsequent notice), it may provide an important strategic tool for small companies, particularly medical device start-up companies. In short, the plan provides small entities (solo inventors, companies having less than 500 employees, and nonprofit organizations) with the opportunity to have one of their patent applications accorded special status for examination in exchange for the abandonment one of their other co-pending applications. Read more…
Links edition: Lessons for the founder
For me, the hardest part of contributing to a blog is the idea-generation phase, or more precisely, the ‘what can I write about that anybody else is going to want to read?’ phase. Perhaps I’m overly hard on myself, but I struggle with this quite a bit (suggestions, anyone?). In other words, the smart money was on me copping-out and producing a ‘links’ post early in my blogging career. As a placeholder while I think of a new topic to write about, I will cleverly buy time by linking to other authors who have some interesting thoughts worthy of mass-appeal. I’m confident that these articles/blogs are so good, that in the end nobody will notice that I only generated about three sentences of original content for this post. These folks can all write better than me, anyway. These are my favorite pieces that I’ve come across recently (most were originally linked to by the Venture Capital Dispatch page, associated with the Wall Street Journal). Read more…
Dr. Fred St. Goar shares lessons as co-founder of Evalve
Recently 9 biodesign alums had the unique opportunity to share a meal with Fred St. Goar, co-founder of Evalve, Inc. Over the course of the evening, Fred shared candidly about his 10 year journey developing a percutaneous approach to treat mitral valve disease, from the early days at The Foundry® to the recent acquisition by Abbott (NYSE: ABT; Press Release, PDF).
Several interesting and insightful points emerged from the dialogue: Read more…
The Tricky Side of Tackling Latent Clinical Needs
There ma
y be nothing more exciting for a medical device entrepreneur than the discovery of a latent clinical need. But not long after the throbbing from the over-zealous celebratory high-fives has subsided, an uphill battle generally awaits the clever innovators. For whatever reason, the tough part about working on latent needs doesn’t get a lot of attention. To that end, I thought that it might be an interesting topic for discussion, and I could begin my tossing in my own $0.02.
To take a step back, it might be useful to define what (at least in my mind) a latent clinical need is: a compelling clinical problem that is generally overlooked or undetected by the medical device community. Like many things in life, a great latent need is often obvious in retrospect — the true genius lies in the insight or viewpoint that drives the discovery process. Read more…
As a current Biodesign fellow, now one-third of the way through the program, I am confident in saying that the most useful lesson learned so far happens to be the simplest of them all…
Now three weeks removed from the program’s flagship clinical immersion and needs finding phase, my team has just finalized a list of 16 clinically observed needs—filtered down from a less manageable 260—which we will use as a medium for learning the rest of the Biodesign process. Around here, this method for systematically identifying, validating, and putting forth a strategy for solving some of today’s unmet clinical needs is simply referred to as “The Process.” The two fellowship teams of four are composed of engineers, physicians, PhD’s and business people. We have all spent the beginnings of our young careers attempting to solve some very difficult problems. Now as fellows, we are given the privilege of trying to do something much tougher, something completely foreign…we are asked to find them. Read more…
Thoughts on the Healthcare Reform Debate
This morning, the US House of Representatives is debating the current version of the healthcare bill. As it stands US healthcare seems to be unsustainable, with increasing costs and decreasing access. According to the 2007 census 45.7 million Americans were without health insurance during that year, with an even more categorized as under insured. In the June issue of the New Yorker, Dr. Atul Gawande described a mismatch between dollars spent on healthcare and the level of care received in his article The Cost Conundrum: What a Texas town can teach us about health care. Furthermore it seems that Americans are already paying a form of public option, in the form of “ER healthcare”. BUT these are not the issues being addressed in this posting; rather the question to be raised is the impact reform is currently having on medical device innovation in the US?
