Lessons Learned from Tom Goff, founder of Kerberos

7 Biodesign Alumni Fellows recently got the rare opportunity to hear the inside story of the founding and eventual exit of Kerberos directly from one of the founders, Tom Goff.   Over a dinner in Palo Alto, Tom graciously answered every question that the group had including topics such as financing, strategic path, clinical missteps, and lessons learned.

Here are some of the lessons learned:

• Stay connected to the clinical need…even/especially when you change clinical needs!  Kerberos initially was focused on embolic protection in carotids, then in coronaries.  Driven to simplify the device, they developed a new product for thrombectomy in coronary arteries, and then finally expanded that device into the peripheral vascular market to increase sales.

• If you receive money from investors new to medical devices, anticipate some adjustments as board members figure out what they should be influencing and what they should be leaving alone.
• Keep critical processes in-house. If you must outsource, develop a relationship with a contract developer/manufacturer that welcomes your presence at the facility 24/7 until the device processes are on rails.  Kerberos experienced issues trying to get consistent results from manufacturing vendors.
• Other companies’ public failures can greatly affect the perceived value of your solution.  This is especially true with clinical trial results, so it is important to closely monitor the studies that are active and relevant to your space.  Specific to Kerberos, rival companies enrolled too wide a spectrum of patients, hoping they could have very broad indications for their device.  The trial endpoints were not met and thus they failed to receive approval for even a subset of patients.  These flawed trials significantly reduced the market size for all competing devices in the space.
• Beware of earn-outs.  An earn-out based on the acquirer’s diligence in selling product is high risk and should be valued appropriately.  Once you’re out of control, you are out of control and have very limited influence on sales outcomes.