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Each startup comes to life with specific strengths and weaknesses. No orthopedic startup is perfect. The strengths are great assets in the early years. However, if weaknesses are not addressed early, they can become a “weak link” that can stymy growth.
Think about it. Why do some startups:
– reach profitability quickly, while others burn cash indefinitely?
– run operations like a Swiss watch, while others live in chaos?
– have a great product, but cannot seem to gain sales traction?
The Founder Effect
The Founder is the person who starts the business and typically leads the business in the beginning. The Founders strengths are the Founders weaknesses.
The thesis of this article is… The training and background of the Founder determines both the strengths and “weak links” of the company in the early years.
This opinion is derived from decades of pattern recognition following hundreds of orthopedic startups. The Founder only knows what the Founder knows.
Below, I’m going to share the patterns that I see for each type of Founder. Please don’t take the examples literally. I’m talking about general tendencies, not specific companies.
Let’s jump in.
7 Founder Backgrounds
#1 – Founder has a SALES/MARKETING background, usually either an Independent Distributor or a Marketing executive from an organized orthopedic company.
Strengths: Closeness to the customer. Know how to build the distribution model. Practical understanding of what the customer needs. Strong messaging.
Weak Link: Unrealistic expectations for cash burn rate and timelines for Product Development, Regulatory, Operations. Poor understanding of manufacturing and timelines to make the product. Sales/Marketing Founders tend to build operational systems late in the game.
My Advice: Hire strong operational leaders early.
Examples: Choice Spine, Degen Medical, Osseus, 4WEB, OsteoRemedies, ExtraOrtho, In2Bones, Soteira, Danek Medical, and Met 1 Technologies.
#2 – Founder has a CLINICAL background, usually as an orthopedic surgeon working in a full-time practice.
Strengths: Closeness to the customer. Solving real clinical problems.
Weak Link: Unrealistic expectations of funding and timelines for Product Development, Regulatory, Operations and Sales. Also surgeon founders derive early sales from colleagues, and don’t know how to gain new sales through proven sales/marketing execution. Additionally, surgeon founders are sometime driven first by trying to impress their MD colleagues. Most want to continue their full-time practice.
My Advice: Hire a CEO early with operational expertise to lead the company.
Examples: Exactech, Hand Innovations, Intellirod Spine, Titan Spine, MiRus, OXOS Medical, Aptis Medical, NuOrtho Surgical.
#3 – Founder has a TECHNICAL background, usually as an Engineer within a startup or an organized orthopedic company.
Strengths: Product development, product detail and systems.
Weak Link: Sales & distribution. “What does the customer want and what is he willing to pay for?” Sometimes ego of founder.
My Advice: Hire a Marketing pro early, then hire a Sales pro 9-12 months before commercialization.
Examples: Theken Spine, NextStep, Regeneration Technologies (RTI), NovApproach Spine, Mission Surgical, and Amedica.
#4 – Founder is an INVENTOR on a Class III device pathway.
Strengths: Cahones. Thinking big to carve out a huge regulatory barrier to entry against potential competitors. Not afraid of risk.
Weak Link: Long haul fund-raising. Time to market can be 10 years. “Are investors willing to wait that long?”
My Advice: Hire strong Clinical and Regulatory leaders with street smarts.
Examples: Intrinsic Therapeutics, Active Implants, Surgical Dynamics.
#5 – Founder is an INVENTOR on a Class II device pathway.
Strengths: IP protection of product.
Weak Link: Unrealistic expectations of product and market acceptance. “Everyone will love my idea once it’s a product”.
My Advice: Hire proven Engineering Management and a Marketing pro early.
Examples: Spine Wave, Ellipse Technologies, TranS1.
#6 – Founder has a FINANCE background.
Strengths: Cost control, maintaining profitability, and avoiding the need for outside funding.
Weak Link: Lack of closeness to the customer, taking risks with new technologies, low R&D investment.
My Advice: Hire strong Sales and Marketing pros early.
Example: Wenzel Spine
#7 – Founders are a TEAM, usually a collection of 2-5 individuals with diverse orthopedic backgrounds.
Strengths: Ability to listen to the customer, validate the market need and deliver what the customer needs in a timely way.
Weak Link: Alignment. Pushing and pulling in different directions. Founders, investors and key personnel can lose sight of shared goals.
My Advice: CEO must over-communicate and continually review the company’s collective objectives.
What is your experience with Orthopedic startup founders?