#424: The MedTech Startup Survival Guide with Steve Bell

Episode Transcript
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(00:00):
Welcome to the Global MedicalDevice Podcast.
Where today's brightest mindsin the medical device industry go
to get their most useful andactionable insider knowledge direct
from.
Some of the world's leadingmedical device experts and companies.

(00:31):
Everyone, welcome back to theGlobal Medical Device Podcast.
My name is Etienne Nichols.
I'm the host for today'sepisode and today I want to talk
about how to start up in medtech.
And with me today to talkabout this is Steve Bell, who's a
veteran medtech entrepreneurwith over 30 years of global experience
scaling startups,commercializing breakthrough technologies
and advising early stage ventures.

(00:52):
He's helped build Europe'slargest medtech unicorn, led the
global launch of the Versiussurgical robot at CMR Surgical, and
he now serves as a strategicadvisor and co founder across multiple
cutting edge initiatives fromAI powered business models to next
gen diagnostics.
Steve brings deep expertise ingo to market strategy, funding and
leadership innovation with thefocus on helping medtech teams avoid

(01:15):
the pitfalls that sink over75% of startups.
And so I'm really excited tohave this conversation with you today.
Steve, how are you doing today?
Yeah, great.
Etienne, thanks very much forinviting me on.
Always glad to be here.
And for those that don't know,Etienne, by the way, is the French
pronunciation of Stephen.
So yeah, we're linked.
Absolutely nailed it.
And you know, it's funny, mymom tells me I don't even say it

(01:37):
correctly.
So I always love hearingpeople who, who speak the French
language.
I want to say.
So I've joined the coursebecause I wanted to get a little
bit of prep and foundation inyour course because you've built
out something, what is it like?
Over a hundred differentvideos and it's very extensive and
as it should be becausebuilding a medical device company

(01:59):
is extensive.
But I'm curious if you couldtalk to some of the, some of the
depth that you have to go intoin order maybe this is even getting
back into your background.
Can you, can you give us alittle bit of background on what
you've built?
Yeah.
So you know, I've spent a longtime either building startups in
major corporations likeJohnson Johnson did many of the startups

(02:22):
in their cardiovascians beingone of them.
Gyneco was one of the otherones that we did in there and then
I did multiple Californiastartups and I worked with some of
the best startup people in theworld who'd already done before me
multiple startups, many thatcrashed and failed because as you
rightly said, over 75% crashand fail.

(02:42):
So I've been surrounded forthe last 20 years with people who
just do this on a regular basis.
And I started seeing some patterns.
There was those clear patternsof those who have a much higher hit
rate and those that don't.
And I been through it myself.
Multiple startups crashed, afew done well on a few.

(03:03):
And there's some patterns thatstart to emerge.
And I just thought to myself,most of this is just not repeating
the mistakes that everybodyknows are the basic mistakes.
And if you take the life of astartup from concept on the back
of a napkin all the waythrough to either exit or death of
a company, or you should killa company, quite often there's kind

(03:25):
of like about a hundred stepsthat you go through, and in each
of those steps there's just areally simple what you should do
and what you shouldn't do.
And I found that those peoplewho generally follow the what you
should do and avoid the whatyou shouldn't do don't get in as
much trouble in their startup.

(03:45):
So I spent a lot of time onphone calls at night with startup
entrepreneurs who were askingme these questions.
And every night I would repeatthe same stuff.
And my wife just walked intothe room one night when I put the
phone down and she said, Ican't hear you say this one more
time.
I just can't hear you do it.
You need to just record thisand put it online for somebody because

(04:06):
I can't have you do this onemore time.
You've been doing this for twoyears, every night and you say the
same things.
So that was when the.
So the impetus came that Ithought, well, okay, there are these
life lessons.
There is a very basic sort ofrecipe book for success.
You can definitely take itfrom the 80% failure to the 50% with
some very simple things.
And why don't I just stickthis online so that people can just

(04:29):
get access to it and I don'thave to spend every evening repeating
it.
So that was the genesis of it.
And I.
It broke into a handy 100 pieces.
It wasn't by choice, actually.
It's actually that's how itactually worked out.
But it's just right that onthat journey, there's about a hundred
segments of the life of astartup that you need to follow.
I'm curious what your wifekept hearing.

(04:51):
Are there any.
I mean, because over thehundred, there have to be certain
spikes that this one, youknow, the top five or something like
that.
Yeah, yeah, there are.
So she kept hearing me say,often that's just a dumb idea.
Why you, why you think you'regoing to spend your next 10 years
of your life and all thatmoney on something that you know
everybody knows is going tofail just because it's a pet project?

(05:13):
So my number one thing that Italk about to a lot of people is,
you know, every idea is good,but not every idea is a good business.
And some of them are reallydumb businesses.
You know, they're just really,really interesting tech that's trying
to look for a home.
And even if it finds a home ora clinical need that it's filling,
that doesn't mean it's a good business.
And I always talk aboutsomething called the water speculum,

(05:35):
which is speculums.
Like I've been out for yearsand years and there's at least once
or twice a year I get sent anew idea for a speculum, which is
just not a business.
There's no business in that.
And people are willing tospend time and money.
So my number one thing is ifyou're going to have an idea, make
the idea worthwhile.
You're about to spend a decadeof your life on it.
The second piece of that is ifit's not a good business idea, why

(05:57):
is anyone going to put moneyinto it?
And this is not about R and D,this is not about med tech tech.
It's about med tech business.
And if you can't have a, youknow, a really interesting business
that's going to be successful,no one's going to put money into
it.
They'll see through it in two seconds.
You know, there are smartinvestors out there.

(06:18):
So the next thing is, youknow, make sure that you've got a
good idea, it's a goodbusiness idea, and it's going to
make money in this.
You know, if I put $10 in, Iget a hundred dollars out, how does
that work?
And you've got to be able toarticulate that.
The other thing then aboutthat is have a big idea.
There are lots of great smallorphan diseases or small orphan needs
that need to be done.

(06:39):
But that for me is not goingto be a business.
Investors are looking for thebig shots.
They're looking for the, forthe, the big needs that affect a
lot of people.
And the reason for that isjust simple math, right?
If you've only got a hundredpatients worldwide that can ever
use your device and you've gotto make a hundred million investment

(07:01):
to do it, you got to sell thatat such a phenomenal high cost, you're
never going to make money.
So I exaggerate on the size ofit there, but that's the lens that
you need to look through.
You got to look through thatfilter and say, okay, is this big
enough to affect enough peopleto be a sustainable growth business
with profit?
Because that's what theinvestors will ask.
So if you kind of take thosefirst three things together, it's,

(07:24):
it's a lot around the idea.
And I, I tell people, killyour ideas very, very early.
And the reason for that isthat you only have maybe four or
five genuine startups in youin a lifetime because they take so
long.
Now it's average exit at theminute in MedTech is 12 years.

(07:45):
That's the average exit.
Average, yeah.
And you're going to raise, youneed a lot of money, you know, maybe
a hundred million dollars fora decent product.
10 years.
A lot of people will losetheir houses, a lot of people will
lose their college funds.
You better make sure thatwhatever you're doing is absolutely
worth it, bankable.
And if it hits, it's going tohit big so that you get the reward.

(08:08):
And that's why I generally atthe beginning try and say, and I
know people love their, lovetheir children, they love their babies,
and their ideas are justabsolutely the best thing they've
ever had.
If it isn't a good businessthat's investable, you gotta kill
it and kill it fast becausethe idea is important, the team is
important, but the twotogether is the critical piece.

(08:30):
It has to be a good idea witha good team.
And that's why she makes agood business.
I can hear someone sayingthat, maybe listening to you and
saying, totally agreeing with you.
But here's the problem.
They're so close to thisproblem that they're trying to solve
that they maybe they haven'tzoomed out and actually been able
to see that, you know, maybethis isn't actually a business viable

(08:50):
product.
So how do you, how do you fixthat, that ocular problem?
That, that's, that's great.
So part of the problem iswe're all human beings, right?
And we, we all have emotionalattachments to stuff.
And what I've done in the pastis I, I basically, I removed project
names, I removed, and I sortof tabulated it and I did that when
I was at J and J.
What I've done recently isI've built a score system and you

(09:11):
go in and you just answer 20 questions.
And I have a model that putsall those in it.
It looks like it's an easy model.
It's actually, it's about 330years of information in there.
It goes through a massiveweighted algorithm and it will tell
you, it will give you a score,what I call the greenhouse score,
which is how much chance thatbusiness has got of surviving or

(09:32):
not.
And it'll tell you the weak points.
And I've just built a MedTechadvisor AI that we're about to launch
very soon that if you fill thescore in, the AI will analyze your
score and it will tell youwhere your weaknesses are, it'll
tell you where your strengths are.
So it's not me telling youyou're getting an objective score
based.
And what it does is it putsyou against all the other scores
that we've done in the world.

(09:53):
So it ranks you.
And the reason why you need todo that is you can't look at your
own idea in isolation.
You're competing for the samedollars as everybody else's ideas.
So somebody else has got abetter greenhouse score, which looks
at all kinds of things.
There's all kinds of factorsin there.
It's a very complex weightedscore, but that's basically how investors
will also look at you.

(10:14):
So if you've got a really lowscore down in the sort of the 50s
and everybody else is up inthe 120s, it's not me telling you
you've got a bite at it.
It's not me being emotionalwith you.
I'm giving you a fact driven algorithm.
That should give you an indication.
It doesn't mean that you can'tfix the idea.
You may have got it in thewrong market, you may have had the

(10:35):
scope wrong with it, you mayhave got the regulatory pathway wrong.
There could be several thingsin there.
So it might not be a bad idea,but it's not for another human to
tell you you need to have anindependent partial algorithmic based
score that just ranks you andtherefore you can then make a decision
based on that and hopefully beless emotionally attached.

(10:57):
Most people still stayattached even when they see they've
got a score of 30 versuseveryone 150 and they can see where
they sit on the graph, theystill say, yeah, but my idea is different.
So that that's one of the things.
Well, first of all, I thinkthat's awesome that you built this
and that's going to be reallyhelpful to the industry because one
of the things that I reallybelieve that makes entrepreneurship

(11:20):
difficult from just havingtalked to different people and interviewed
over 200 medical deviceprofessionals, most of them founders,
it seems that it's it's justnot an easy path.
People can go down PhD at MITbecause it's a clearly defined path
you go through.
You take these courses, you dothese things, do this research.
Whereas entrepreneurship is awide open field and it's not clearly

(11:42):
defined.
It's not, it's not.
But there are, there are basicrules of thumb that you need to follow.
So I'll give you one of, oneof the examples.
One of the mod.
One of the modules in thecourse is location, location, location.
You'd be amazed how manyentrepreneurs, they happen to sit
in some weird little town likeBadfiessen somewhere in Germany,
out near Stuttgart somewhere, okay.

(12:03):
But was far away from theepicenter of MedTech funding in the
world and a small universitythere gives them a grant of €50,000
and they got a European grant.
So they found their company inthis weird little location.
I don't need to tell anybodythat's going to be a failure who's
going to come and invest inyou there, right?
So the basic thing is ifyou're going to, if you're going

(12:25):
to start a business, okay, theimmediate time that you first really
put your company into anoffice, put it in somewhere where
it's near a major airport, putit in somewhere where an investor
from London or from the US orfrom, from Singapore or whatever
can fly in with one flightbecause they're not going to take
five flights, two trains, twobuses and a taxi to come to your

(12:49):
little company somewhere.
It's not happening.
So these are basic rules of thumb.
Okay.
The again, it's not like it'sa hard and super fast rule, but I
can tell you those who arebased in the Cambridge triangle and
those who are based in someweird little town in a small forgotten
place in Poland, I know who'sgetting the investment dollars more

(13:13):
likely doesn't mean 100%because the idea might be great.
But I guarantee you most ofthe investors are not coming all
the way out to Poland in thatsmall place.
Simple things like that, lotsof lessons like that throughout the
whole MedTech thing.
So I think it is an algorithm.
I think it is like a big lot,big, big complex algorithm and the
more things that stack thedeck in your favor, still a lot of

(13:35):
luck involved but, but atleast stack the deck in your favor.
Absolutely.
I think and it's interestingbecause I, I, I look at positive
and negative levers and whenyou talk about, because you actually
mentioned bring that 80%failure rate down to 50 maybe and
it doesn't mean that doingthese things is Going to guarantee
you failure.
But by not doing them, it doesguarantee you failure, I think is

(13:57):
kind of what you're saying.
Yeah, and there's, and there'sjust lots and lots of things, things
in there that their lifelessons learned.
And again, I've actually got abook that's going to come out called
the Medtech Survival Guide.
I forgot.
I think I've called it aMedtech survival guide.
And it's literally, it's goingto be a hundred things that you should
and should not do, you know,in a very digestible format.

(14:17):
And this is just things thatI've, you know, in 30 years I've
just seen what works and whatdoesn't work firsthand.
You know, how to raise money,how not to raise money, how to raise
good money, how to raise bad money.
What does your board look likeat the beginning of your company
and what does your board looklike at the end of your company?
Two very different things.
Yet I see so many startupswhere they have the same people on

(14:39):
the board, which is somefriends who put some money in at
the beginning who know nothingabout the business, who live till
the end of it.
There's all kinds of justsmall sort of like when you go through
it and hopefully when you'vegone through the course you'll sit
there and say, but most ofthat was like really obvious because
after the fact it's very obvious.
But you'd be amazed how manypeople go in and they try and reinvent

(15:01):
the wheel.
Why that's madness to me andthis is why I'm so passionate about
this.
Medtech is one of the hardestbusinesses in the world.
It's super regulated.
It's really difficult.
Oh, got a thumbs up.
It's really difficult.
It's regulated.
It's got so many minefieldsthat can strip you up.

(15:23):
Just as Medtech, J and Jstruggles, Medtronic Struggles, Boston
Scientific Struggles.
Second one, startups.
Startups are hard, right?
Startups are really, really hard.
And now what you're trying todo is you're trying to put the two
things together.
And quite often a first timeentrepreneur, first time founder,
never done a startup.

(15:44):
Oh, it's frozen.
Am I frozen or is it still working?
Well, the video's frozen, butI still hear you.
Oh, let me turn my video offand turn it back on again.
For some reason it didn't like my.
Hang on.
Oh, hang on, let me turn itoff and turn it on.
Well.
Oh, there we come.
There we go.
We're back.
Yeah, we're back.

(16:04):
I Didn't.
I'm not going to do themaneuver again because whenever I
put my fingers together itseems to have stopped.
So maybe there's some hiddenthing in Apple's, Apple's algorithm.
There's.
So, so, so basically you weresaying yeah, yeah, yeah.
And, and you know, first timefounders, some of them have got medtech
experience but some haven't.
And some of them are like, youknow, university grads or PhDs or

(16:28):
engineers and, and they'relike I'll have a go, you know making,
making a startup in medtech,great, love the enthusiasm.
But have somebody else in thedriver's seat.
Have somebody who's done astartup or, and done MedTech because
it's a really, really hard oneto, to, to, to do a startup in.
It's, it's really quite, it'squite amazing to me how many people

(16:54):
think I'll just have a gobecause I'm a surgeon.
That's the thing that amazesme the most.
I know surgery.
So therefore how hard can astartup in medtech be?
And I actually want to talkabout that.
That was my next on my list.
Should a first time founder bethe CEO?
And maybe if I tweak thatquestion because I'm sure there are
first time founders who arelistening to this podcast and think
well I already am one, what doI do now?

(17:15):
You know, and, and, and whatdo you do if you find yourself in
that situation?
Are there ways to overcome it?
Just all your thoughts aboutfirst time founders as CEOs.
So my, my, my rule of thumbwould be never ever first time founder
or CEO put a CEO in who's donethis before or been a COO another
company or a CFO anothercompany, it doesn't really matter.
But they've been on the Csuite of, and they've kind of got

(17:38):
some scar tissue that they'regoing to bring along.
You'll save months andmillions by doing this.
Right.
I want to ask a question about that.
So yeah, just because I have aspecific few people who have come
to me and said hey, I'veinvested so much money getting IP
patents, etc.
I have this idea and I reallythink it could work.
I know other people who are,I'm a surgeon, several other surgeons,

(17:58):
but they actually have theself awareness to say I don't want
to CEO a company.
How do I find a CEO and whatdo I pay a CEO?
And I'm sure those are loadedquestions, but any thoughts?
Yeah, so I mean there areprofessionals out there who find
CEOs for startups, you know,there's several great people and
depends whether you're inEurope or the U.S. but there's great

(18:21):
talent management firms outthere and they have on their books
CEOs who are looking for, asthey say, the next gig.
Yeah, right.
And it's not going to becheap, but they'll take equity.
It was a great idea.
You don't pay them top dollarCEO, you know, Jane J.
Money.
But again, it's really funny.
So a lot of people, as thefounders say, I want to do it on

(18:42):
the cheap, don't do medtech.
Then we're looking at hundredsof millions of dollars.
Right.
You've got to be thinking fromday one, this is an expensive venture
and trying to do it on thecheap by bootstrapping it all together
and you can sort of get there,but your chance of success is the
lower than 50% just because of that.
So go to a professional, findthe right kind of CEO.

(19:04):
And the reason for that isyou'll pay the money, but they'll
bring their own money to paytheir own salary.
They'll go out and be able tobring in with their millions.
Because people say they'vedone it before.
Yeah, yeah.
And you know, their win win isyour winners, you get millions invested
into your company.
Their winners, they get a nicesalary and to get the options and
everything.
But trying to bootstrap and doit yourself and do it as a part time

(19:26):
gig and stuff, that's just arecipe for failure.
It just can work.
And I've seen the odd onework, but generally it's a recipe
for failure.
That's a really good pointbecause a lot of times, like you
said, they are surgeons whomaybe are doing this.
And, and I think if you justdrew the illustration the other direction,
who would want a pancreaticsurgery on the cheek?
You're like, well, let me findthe cheapest surgeon to do this.

(19:47):
Not what we're after.
Or even worse, someone who'snever done a pancreatic surgery.
Oh my goodness.
But, but they've developed aharmonic scalpel.
Surely.
How hard, how hard can it beto do a pancreatic surgery?
Can't be that hard.
Right.
Because I've designed ascalpel, one of the most complex
things in the world, you know,the electronic scalpel.
And that's the, the, that'sthe flip side, opposite.

(20:07):
For some reason surgeons andclinicians thinks it works okay that
way because they're supersmart people.
Yeah.
But they don't understand it'sa profession.
It's an actual, you know,there's method to the madness.
It's not just have a go.
And that is why 85 fail,because we have this have a go hero
kind of mentality of going in.
The idea is good enough on its own.

(20:28):
It's not.
Most likely thing for mostcompanies is the idea you go in with
is not the idea you come out with.
It very often morphs orchanges or you get through the first
labs and say, oh, well, that'snot going to work.
But the need is the same.
The need is the same doesn'tmean that the solution is the same.
And I've used that as anillustration before.
So I want to pressure testthis with you for a minute because

(20:49):
I've, I've used theillustration that let's say you think
you're a band aid company andthen suddenly band aids go out and
now it's surgical glue.
If you are a wound carecompany, then nothing's changed for
you as a company.
Maybe the products change.
Is that how you look at it?
100%.
You need to be needs based,not product based.
The product is just a resultof the need.

(21:10):
And there might be 15 ways toresolve the problem.
The first idea you happen tohave when you were in the shower
that day and banged your headagainst the wall and said, oh, I've
had a really great idea thatisn't necessarily the best idea that
wins in the end.
And people have to getattached to the need that they're
trying to solve and they haveto get passionate and they have to

(21:31):
get really deeply passionate about.
We're trying to fix thisproblem, but not the solution.
Okay?
They have, they have tounderstand that the desperate need.
The broken water pipe, okay,is the focus, not the wrench, not
the screwdriver, not, youknow, what, whatever is the, the,

(21:52):
the duct tape, right?
You've got, you got to get thebest solution that's going to win
out for it.
And honestly, how many timesI've seen where startups where they
go in saying, this is theidea, and three months into it they're
like, that idea sucked.
That was the worst thing wecould have thought of.
And we've got a much better idea.
So, yeah, I, I think thatthey've got to go in with this attitude

(22:16):
of what's the need that I'mtrying to solve?
Not what's the problem I'mtrying to ram down people's throat.
Oh, excuse me, the product I'mtrying to ram down people's throats.
There's another thing that youmentioned earlier that made me think,
because I have a question thatI wanted to ask about the difference
between a business and an orphan.
And you mentioned somethingabout this.
Well, there's these nicheplaces that problems that need to

(22:39):
be solved, but it's really nota business idea.
I can hear, you know, thephilanthropists and a lot of people
saying, well, those problemsneed to be solved too.
Would you, how do you look at that?
And yeah, yeah, they do.
And there are funds andfoundations that will help with orphan
ideas.
There was a Kaisha Bank,Kaisha Fund in Spain was one example
that had day just dedicated toorphan projects.

(22:59):
That would be for me, I thinkit's great and I think for philanthropists
and stuff it's brilliant.
Sure.
But not, not if you want tomake a for profit business.
They are not going to be theplaces to do it.
You, you know, some do now andagain, but it's rare.
I mean hyper rare.
You know, you're going tospend the next 10 years, make sure
it's something that's likelyto succeed and likely to turn a profit

(23:23):
and likely to get bought orbecome an IPO or be a sustainable
business.
What you don't want to do isgo in there and say we're going to
have this, you know, charitybusiness forever.
Fine, if you want to do that.
But that's not what I talk about.
I, I don't believe that.
That's my strength there.
My strength is for profitbusinesses and how to get someone

(23:44):
to hand over $50 million toyou so that they can make $500 million
back.
That's, that's what medtechbusiness is mainly about.
Yeah.
You mentioned something whenwe first started talking about this,
about how many people destroytheir business before they even get
started.
Whether that's the IP or themoat through academic research and

(24:06):
just, just publishing papers.
What are, what are yourthoughts about that and what do you
mean by that?
Yeah.
So you know, at the end of theday, if you can't defend your idea
legally or from secrets orwhatever because people mistake IP
intellectual property withpatents, they mist.
It's patents are part of theintellectual property.

(24:28):
You know, Coca Cola doesn'thave a patent on the recipe.
It's a secret recipe.
You know, KFC doesn't have apatent on spices, but the blend is
important.
So there's a lot of secretsources that go into medtech or businesses,
especially in software and AI algorithms.
There's tons of secret saucethat go in there and what often happens

(24:48):
is to be either patents orsecret sauce.
Or whatever.
You, you have a lot ofacademics who get very excited about
their idea.
They just come up with thisbrilliant idea that they're going
to fix this big problem.
And they decide one of thebest things that they can do is to
go and present it as anabstract at the next big congress.
And they stand there and theygive away all the secret sourcing
at public space.

(25:08):
Once you've done that, youcan't patent it anymore.
You've now you, you now you'vegiven away your rights to patent
it.
If it's got a secret sourceand you put up there, you know, we
do these things in this order.
There are tons of people satthere with their iPhone in the camera,
just either recording you ortaking screenshots of your screen
and saying, well, that's easy enough.

(25:28):
That was the thing that washolding us back.
Thank you.
That happens all the time.
And yeah, you'd be amazed athow many times, you know, somebody
says to me, you had thisamazing idea, and amazingly, they
saw the big company came outwith it two years later while I was
still working on it, and Isaid, you didn't present it, did
you?
And he said, yeah, I did,yeah, presented it.
And I'm like, well, then youjust basically gave it to them.

(25:50):
So, yeah, definitely.
Secrets of secrets.
There's a whole video on mycourse just about, you know, keep
it as a secret because youwould be amazed how many people just
give this stuff away.
And I liken it to this, and Ithink I say it in the video, which
is, if your idea is a billiondollar idea, okay, would you go to

(26:10):
a congress with a map of yourhouse and show where the billion
dollars is sitting and tellpeople how they can get over your
alarm, how they can disableyour security features and just walk
in and grab the billion dollars?
Would you do that in a public forum?
And if not, then why would youdo it?
If you.
Billion dollar idea?
Yeah, absolutely not.

(26:31):
That's.
And that was actually thething that I think that's a good
illustration because usingthat illustration, you can kind of
apply it to your company andunderstand how you.
What should be secret.
But that was, I guess thequestion in my mind is how do you
determine what should besecret and what should be fed out
there as kind of teaser or whatever?
Or is there ever a situationwhere that makes sense?

(26:53):
I, I think so when you'retrying to get a little bit of buzz
going.
Well, first of all, make surewhat you can patent is patented,
even if it's just aprovisional patent in the us.
I mean, it costs you likenothing to throw down some provisionals
and it gives you a stick inthe sand and the clock starts ticking.
You've got 12 months into fileyour formals.
I think what you've got todecide is, why am I telling people

(27:15):
this?
So if it's just to havebragging rights to my friends, you
know, in the next hospitaldown, that's just stupidity.
Yeah, right.
That's just.
That's just pure vanity.
And you shouldn't be doingstartups in the first place, because
if it's about your own vanity,you're doing it for the wrong reasons.
So the question would be, whyam I telling people something?

(27:35):
Well, I certainly don't wantthe competitors to know.
Right.
Or people who potentiallycould make a competing product if
they see it's a great idea.
If I'm going to investors, I'mtrying to tease the investors.
Well, there's methods and waysto do that.
Right.
Very few investors actuallysign an NDA.
Believe it or not, VCs, veryfew sign an NDA.
But your early investors will.
Your friends, family and foolswill Definitely sign an NDA.

(27:57):
Get them under an NDA.
Still, in 35 years, not seenanyone sued for an NDA that's been
breached, by the way.
I've never personally seen it.
Not for a startup.
Big companies.
Yeah.
But I think what you've got todo is you've got to look at every
piece of information you'reputting out there, asking, why am
I saying this?
Do I need to say this?

(28:18):
And that's the filter that Iwould use.
And again, you show more andmore as people go deeper and deeper
into agreeing to put moneyinto you or to be in a partner with
you.
But you, you definitely don'twant to give away anything in public.
You want to be very judiciousof who you tell.
You want to do your homeworkon investors.
So, for example, let's sayyou're building an ophthalmology

(28:42):
robot and an investor says,oh, I'd love to come and see your
deck and I'd love to see this.
And if you don't even go totheir website and see that they have
a competing ophthalmologyrobot in their portfolio already
today, that's just blatant stupidity.
You've not done your diligenceas much.
They're doing diligence.
You do your diligence.
Is this an investor?

(29:03):
Do they have contacts?
Look on their LinkedIn page.
Well, they've got loads ofophthalmic companies.
They got look, okay, you know,should we be showing them everything
on our ophthalmic robot today?
Is that the right thing for usto do today or is this just information
gathering?
Yeah, that's a good point.
And, and maybe that's a goodsegue into how to get money at different

(29:25):
stages.
I'd like to talk because Iknow you have in your course different,
different talks about series Aversus Series B versus series C and
D. I assume those are all, youknow, having not taken those sections
yet, I assume those are allvery different.
And can we talk about thedifferences and, and the pros and
cons and what you should bedoing for each.
Yeah, so, so early, early on,I mean, it's very hard to get a VC

(29:49):
interested when you've got anapkin sketch.
You know that that's not whenthey're investing.
Let me talk, let me talk verybrief, just very briefly, about the,
the way that the world ofinvestment has changed since the
early 2000 or the 1990s.
So back in sort of like the1990s, you could walk up and down
Sandhill Road in California toall the different VCs and go in with

(30:09):
a napkin and some of themwould actually think, oh, that's
great, I'll put some money down.
Very early on then there was acrash in 2007, 2008.
There was a lot of drawback ofpeople putting money in.
There was a lot of bubbleshave been burst.
So a lot of the venture inventure capital actually retracted
a little bit.
And what I found now is thatif you're looking in 2025, a lot
of the VC, a lot of VCs, notall of them, but a lot of the VCs

(30:31):
are much wanting later stage.
And there's many reasons for that.
One is to do with the lengthof cycle of funds.
So in the 1990s, you couldliterally sell a napkin sketch sometimes
and actually exit.
You could get some basicpatents and exit.
You could, you know, your IPcould be exited.
And the average back in 1990for a startup was less than five

(30:54):
years from when you did amedtech startup to when it went out.
The average was actually quite fast.
Roll Forward today is 12 years.
Well, that's almost threecycles of a lot of VC funds.
So of course they're going tobe much more cautious of when they
put the money in, how manyrounds will they have to go through,
how much follow on cash willthey have to have, how much dilution
will they get.

(31:14):
So everyone immediately thinksstartup vc, that's not the only way
there are angel investors forthe early seeds.
So these are people, high networth individuals, family offices,
they've got lots of money andthey're looking for fairly high risk.
They're not super, super technical.
They won't do as muchdiligence or due diligence as most

(31:34):
of the more seasoned largefirm investors.
They're more likely to have apunt and you've got your three Fs.
They got friends, family andfools, you know, and yourself.
You should be putting your ownmoney in.
I do say strongly, if you'renot willing to put your own money
into your own idea, why shouldsomebody else put money in?
Means you don't believe in it.

(31:54):
So I think early on, in theearly seed, pre seed stages, there's
grants, there's governmentgrants, there's non dilutive grants,
there's all kinds of money youdon't have to pay back.
Go and dig as many of them asyou can.
If you're in an institutionlike a university, I'm sure they've
got some funds and grants.
There's little incubators andthere's all kinds of money around

(32:15):
and that can get you going,that can give you that seed capital
to see whether your idea isgoing to go anywhere.
And then as you're going toget towards more of what would be
defined something like aSeries A.
Okay, so this is where yousend to get the first professional
investors coming in who arelooking at doing this.
You're going to go out toagain some high net worth family
offices.
And some of these familyoffices will put 10, 20 million in.

(32:37):
So they're not like they'regoing to put in 100,000 like a friend
next door.
But some of these offices willput good checks in.
The strategics sometimes willput money in at that point.
So the big companies will havea fund like a J&J DC Fund Fund, development
Corporation fund or IntuitiveVentures fund or several of the companies
have investor funds and theylike to get in nice and early and

(33:00):
make sure they are checkingwhat's coming down the pipe.
And then you go to the VCs andthere'll be different small VCs,
large VCs, different funds.
And then as you go through thedifferent funding you go to bigger
VCs and then you go out todifferent money markets.
So there'll be privateequities, there'll be large cap funds
that will be putting money in.
You know, things likeSoftbank, they, they'll put a lot

(33:22):
of money in things like AlleyBridge China, some so so some big
funds will start putting moneyin so, and start small, start on
the seed, close and family.
More professional investorsgoing to the big investors as you
go forwards.
And one of the things that Ido say is that in the very, very
early rounds, you don't reallyneed a broker or a bank.

(33:42):
Once you start raisingprofessional money, my biggest advice
to people is get a bank or geta, get a proper investment advisor.
Who's going to do that?
They're going to cost you 6 to8% of the raise, worth every single
penny.
It's an interesting thing, youknow, and it's a thing that I do
want to say at this point.
The startup is trying to be astartup and build product.

(34:04):
You're not an investment firmtrying to raise money.
Sounds weird, I know that, buthow much effort do you want your
C suite raising money and howmuch of the CEO's time do you want?
Literally just raising money,which is the majority of their job,
by the way.
But how much of the rest ofyour team do you want raising money?
Or do you want your CEO tohave a professional investment advisor

(34:27):
next to them who has all thecontacts, can pick up the phone to
a lot of people, knows exactlywhat your investment would suit for
that fund?
I advise people very stronglythat once you start getting to professional
rounds, have a professionalraise the money with you.
A or A for you.
Okay, interesting.
And so before we get to thatpoint, before the CEOs raising additional

(34:50):
rounds and so on early on withthat angel investor round, are there
suggestions you have when itcomes to the cap table and how to
manage that, that that aremore beneficial later on?
Yeah, yeah.
So one thing that really turnsoff sort of later stage investors
is horrible messy cap tablesthat need to be cleaned up.

(35:11):
There's two or three thingsthat can happen in a cap table.
One is that you've got a veryfragmented cap table that's just
all over the place and atdifferent rates and rounds and you've
raised money at different waysand different costs and it's not
been done in a veryprofessional way.
That becomes a very messy cap table.
Try and avoid that early on.
You know, get some advice fromsomebody in the finance world, even
if it's just on how tostructure your cap table, how to

(35:34):
make your share allocation.
And then the other thing thatyou see often is that if you've got
one or two founders, they havethis weird thing of trying to cling
onto all the equity, like toomuch equity, and they cling on to
too much of it too early onand that'll work with friends and
family, but that'll bite youlater on.
That will bite you later on.
It doesn't look professional,it becomes a bit of a problem.

(35:56):
And a founder who wants toretain 80% of the share of the company
and only wants to give a VC2%, they're dreaming, right?
So get your cap table,especially in the first early rounds,
the, the pre.
Seed, the seed money.
Try and have a financialexpert help you to structure those
cap tables in the right wayand take the right investments.

(36:16):
You know, anybody with a checkisn't necessarily a good investor.
You, you really want to have acouple of things in those early investment
checks.
One is you want some industry knowledge.
If you can, if you can find,you know, if it's a surgical product,
other surgeons at least willunderstand it a bit better.
So that when you have thosediscussions with them a bit later
on, when it gets a bit feistylater on, they can understand at

(36:40):
least the space that they're in.
If it's some auntie who youknow has a cake shop in, in New York
or whatever, they're not oftenthe best.
Even though they'll give you30,000, $50,000 in investment seed
money, they're not always the best.
Saying that though at CMRSurgical, one of the best investors
we had was an author.

(37:00):
She actually kept the companyalive in the very early days, was
a local author.
So it can work.
I'm not saying absolutely no.
But if you get to pick andchoose your fight, make sure that
you try and take somefinancial investors, people who've
got financial links to biggerfunds, so they're high net worth
individuals who do they have aRolodex and a network out to do they

(37:21):
have it onto follow on seedcapital or more capital to do bridging
rounds.
Try and find someprofessionals who've been medtech.
Try and find someprofessionals who are in this space.
So if you're for example adental company, have a couple of
dentists who are putting somemoney in because they'll be able
to get you free.
Good advice.
Yeah.
You know, these are all thesmall tricks that you do early on.

(37:42):
But don't let the cap tablebecome 100 people giving you $10
checks.
You know, that's not the wayto do it.
You want, you want to setyourself a minimum amount that people
come in on and structure thatearly rounds.
You know, let's say you wanthalf a million, you probably want
5, 6 investors coming in on ahalf million round max, because otherwise
it becomes A mess.

(38:02):
Yeah.
That makes sense when it comes.
So if we were to kind of moveon a little bit from the funding,
because there are a coupleother things I wanted to ask you
about.
So one of the things that yousay is stay startup as long as possible.
I'm curious what.
Yeah.
What that means.
And I will.
Maybe we'll start there.
Yeah.
So there's several things thatcan happen and I've been part of

(38:23):
this when it's happened as well.
So the reason that startupscan actually win in spaces is because
they're startups and they'reagile and they can pivot very, very
fast.
And pivoting happens all the time.
Right.
So you've got to be able to beable to pivot fast.
You've got to be able to dostuff on a shoestring fast, nimble.

(38:48):
What tends to happen is someof the investors say you need, you
need someone from one of thebig companies to come in.
Your C suite needs a seasonedpro and that's fine as long as they're
a startup season pro.
You take somebody out of oneof the big companies who's never
been in a startup, the firstthing they do is let's write some

(39:09):
new SOPs.
Let's make sure that we get anexpense system in and let's make
sure we get this system in andlet's hire some assistance for me
because I'm obviously notgoing to book my own travel and let's
get on the AMEX travel programand let's.
And what happens is, I thinkit was one of my colleagues at one
of the last companies thatsaid you get this thing where you

(39:31):
just end up in sludge and youslow the startup down.
You don't have brand, youdon't have size, you don't have the
money, you don't have this.
What you have is agility,smallness, nimbleness, and ability
to flex and pitch.
Very flex and pivot very, very fast.
If you throw that oneadvantage away, you're not going
to survive.
And the way you do that is totry and stay as a startup as long

(39:53):
as possible with the way thatyou hire the people that you hire.
You know, does it need an sopor does it just need a bit of common
sense and two lines in an email?
Stop having meetings formeetings sake.
Once you start getting to 10people in a room four times a week,
that's no longer a startup.
That's, I want to be a big company.

(40:13):
So I really say to people, thelonger that you can stay as A startup,
the longer you can avoidhaving an HR person, the longer that
you can just keep that agilitysmall where everyone's saying I'm
working 130% of my time, butthe CEO can literally in the morning
have talked to everybody individually.

(40:35):
I think the longer you canstay at that, the higher the chances
of success, the less chanceyou start getting into the spending
like drunken sailors andburning through your money.
And I, and you know, we cantalk a little bit about burn in a
minute.
But all these things, time,resources, people, energy, these,
the resources that you've gotto keep in the startup frame because

(40:55):
that's your differentiator asa startup.
That's the thing that makesyou be able to do this faster, better,
quicker, more.
Okay, we're back.
So.
Well, you mentioned two things there.
You mentioned the hiringpeople, you know, maybe from the
larger company and you alsomentioned as long as you can keep
an hr, as long as you canavoid hr.

(41:17):
Talk to me a little bit abouthiring and just your, your, your
thought process about that.
How do you find the right people?
Yeah, hire people that youknow, respect and can work with.
So, so one of the things Italk a lot about in startups is you're
going to spend more time withthem than your family.
Right.
So you better like them, theybetter have the same mindset.
And I talk a lot aboutcreating a cult.

(41:40):
I think a startup is a cult,not in a negative sense, but it's,
it's got that cult like thingis a devotion to an ideal where you're
all like minded and you alljust doing what you do for the cause.
Okay, So a startup really is,should be like a cult.
So you want like minded peoplewith you, especially in the early
stage of a startup.
And the best way you can hireis either to go to people you've

(42:02):
done a startup with before.
If you've not done a startup before.
Personal recommendations donot go out and go through, you know,
putting adverts out there thateverybody can answer to.
It has to be hire people thatyou trust and you get the trust either
through knowing them alreadyand seeing what they've done.
You know, but reading people'sCVS and stuff, I mean CVS should

(42:24):
just be binned into thefantasy world.
It's just, especially with AI now.
Yeah, of course, you know,everyone can have a great resume,
right?
That reads brilliant and thehiring of it needs to be done by
one person who, you know, youcan't have these massive committees
in the early days if you'vegot a Team of five people, you know,
very quick, nimble.

(42:45):
If three of you need to sit inthe room, you bring them in one interview
and you decide there, and thenwe're taking you.
Or not.
Okay.
If you've got to debate anddeliberate, you're already no longer
a startup.
You're done.
You're already getting intothe big company mindset and mentality,
which is, let's do this by committee.
Let's do some psychologicaltesting, let's do the psychometric
testing.
Let's set them through a red,green, blue test.

(43:07):
You know, all that kind of.
Kind of stuff that just.
That's not what startups are about.
So really what you're talkingto, I mean, we're talking about hiring,
but really what I'm hearing ismore decision making in general has
to be agile and nipple.
Oh, absolutely.
You know, you have to be ableto make the decision without going
through committee.
Because if you're a startupthat's burning, let's say you're

(43:29):
burning $10,000 a day and yousay, I want to make a decision, and
somebody says, well, can youdo me a favor?
Put something on my schedulefor three days from now and we'll
have a talk about it saysthree days.
There's your $30,000.
Just $30,000 are burned whileyou're making a decision.
You have to get into this burnbaby, burn mentality.

(43:50):
Everything is burned.
Every second of every day counts.
Every decision that you delaykills you because it eats your money.
It doesn't mean you alwaysmake the right decisions, but make
a decision and don't have itby committee.
Make it with the best personin the room with the best knowledge,
makes the call, and you'll getit wrong.

(44:10):
But that's okay because you'vetaken action and you're wiser because
you'll have learned from it.
So again, I can't stressenough, be it hiring or deciding
what coffee machine you'regoing to have in there or whatever
it is, right?
Your office space, you decide.
You're the ones that's chargedwith doing it.
Do it, come back.
We all live with it.

(44:31):
Yeah.
Sometimes I think peopleprobably use too much of their leadership
capital on, like you said, the coffee.
The coffee.
You want to weigh in on that?
Who cares?
Yeah, that makes sense.
Yeah, yeah, yeah.
And you'll get it wrong, right?
You know, most decisions aredone wrong, but then you'll adapt
it and make it work becauseyou're smart people, so don't get
hung up on that.
And definitely what you don'twant to do is be outsourcing to an

(44:51):
HR person.
Now there's agencies out therethat can help you, right?
So if you've got somebody whoyou, you got a position, you just
don't know anybody.
You don't have a cto.
Right.
Go and find an agency that isabsolutely known for finding the
best startup people.
You know, I, I work a lot withpeople like Joe Mullings, you know,
Joe Mullings's group.

(45:11):
They'll find you a CTO andthey'll find you the best CTO and
they won't throw you a set of garbage.
It's as good as having afriend recommend it because their
reputation lives and dies on it.
So, you know, use one of them.
But don't have an internal HRperson who's going to do the hiring
for you and then schedules youto have the interview after they've
seen them.

(45:32):
What is going on with thatwith startups?
You know, you should, youshould not have an HR person until
the last, last minute.
You can take HR advice oncontracts, on hiring, on legal things,
setting up, you know, shareschemes and all this kind of stuff.
Get advice, but don't hire anHR person.
Yeah.
And they don't do it.

(45:52):
You take the decision, you do it.
But you take some advice froman external HR consultant or, or
agency.
Yeah, makes sense.
So we talked a lot about someof the, the top five things that,
or whatever, the, the topthings that stood out.
I use that illustration whenyour wife walked in the room, said,
I'm tired of hearing all this.
What are some things that arereally subtle that maybe they don't

(46:14):
come up until you really get deep?
Is there anything that's justreally, you have to dig deep to really
get to this.
But really something probablyeverybody needs to hear.
Yeah.
So it comes up and it shows upas something deep.
But it's actually there fromday one.
But you just didn't look at itbecause it wasn't the time.
So it's friction between, it'sthe wrong kind of friction between

(46:34):
the leadership team.
So if there's four or five ofyou and you're all excited and the
idea is great and everything'sgood, you're all looking through
rose tinted glasses.
So you can ignore the factthat this person does that, you know,
he's a bit, okay, you know,Johnny's a bit demanding sometimes
when you know that's okay,fine, it's all working out.

(46:57):
When you're digging deep,you're getting deep into it and there's
a crisis because there'salways crisis and stuff.
It's literally lurching fromcrisis to crisis in a startup.
Those small niggles that youkind of rode over at the beginning,
if you don't either addressthem, nail them or say that person
can't work with us early on,when you come to the crunch time,

(47:19):
that's when your leadership isgoing to just get into absolute,
you know, head smashing together.
You're not going to makedecisions, people are going to be
back biting, fighting, political.
They will be amplifiedmassively in the moment of crisis.
If they're there at the momentof joy and, you know, champagne at
the beginning and the, the,you know, everyone's in the love

(47:41):
fest at the beginning and youstill see it.
I guarantee you when that getsamplified through the we're in a
crisis and we're running outof money and you didn't do this and
we didn't, those things willbe amplified so big.
So you've got to watch forthose early on and as a group, you've
got to address them and yougot to say, if we're going to work
together, that has to end now.

(48:02):
And don't be scared.
It was said by, I forget whosaid it, but they said cut the cancer
out of the culture very early on.
So if you see somebody who isa narcissist, okay.
And a lot of people who foundcompanies, they're narcissists.
It doesn't matter if they'rethe founder.

(48:22):
The company is what counts,not the founder.
This is not the founder's project.
This is a company that is astandalone entity and people forget
that.
And you have to remove thosetoxic elements very early on.
And that's why you need a verystrong board from day one.
And you need people on theboard who'll say, we will not tolerate

(48:42):
this early on because it'sfine, you can live with the beginning,
but three years down the road,it will destroy your company.
Yeah.
So that's one of the bigthings that I, I see that when you
get into the weeds, really,really comes up and destroys companies.
Yeah.
This has been a really funconversation and I might want to,

(49:03):
I don't know if you'd be opento it, extending it at some point.
But if there was one takeawaythat you could, if you were sitting
in front of a founder and youhad to give them one piece of advice,
what would that be?
I think be honest about theneed and the idea and if it's the
wrong need or idea, kill it immediately.

(49:25):
Don't hang onto it because 10years from today you'll wish you'd
killed it on that day.
And doesn't matter how goodyou think you are, because everyone's
good, right?
Everyone's brilliant,everyone's amazing.
And of course it'll bedifferent for me.
I understand it's not quiteright, but I'll make it right.
I understand it's not quitethere, but I'll make it the great

(49:45):
business because I'm sopowerful, great and amazing that
it'll happen.
Not true.
Not true.
The truth is that if the ideais bad at the beginning, it will
be bad 10 years from now.
And it won't be you that kills it.
It will be your customers andit will be the market that will kill
it.
But don't have spent five, 10years of your life to wait to get

(50:06):
told by the market and the customer.
That was a bad idea.
Why did you even think of that?
Be honest, rigorous, early andgo to people who are not sycophants
and say what do you think ofthat idea?
And if they say that's areally bad idea, listen.
Yeah, I think that's good advice.
Well, Steve, really appreciatethis and I'll just direct people

(50:26):
to your website.
How to startup in MedTech.comif there's.
Do you have any other waysthat people can get a hold of you
or preferences?
Yeah, so they can get me on LinkedIn.
So Steve G. Bell.
Steve G. Bell on LinkedIn.
Just join me on LinkedIn,follow me, send me a message on there
and I can either be in touchor send you to the website or help
you with funding through,through putting you in touch with

(50:48):
people that are very, verygood at finding with funding.
I have a lot of resources onmy website as well for people who
can help you with funding.
Experts, licensed funding professionals.
Because funding is one of thehardest things at the beginning that
people have and yeah, justcontact me, reach out and I'll try
and help all I can.
Fantastic.
Well, we'll put all thoselinks in the show notes so people
can find them and I'm lookingforward to your book coming out as

(51:09):
well.
I'd love to revisit that when that.
Happens, but yeah, yeah, 50%through of the final, the final edit
and I keep getting sidetrackedso I will get out.
It'll be, it'll be out beforethe end of the year, I promise.
That's kind of like a startupin and of itself.
I'm sure that's awesome.
Really excited about that.
Well, thanks so much, Steve.
I'll let you get back to it.
And those who've beenlistening, thank you so much.

(51:30):
We look forward to seeing younext time.
Everybody.
Everybody take care.
Thanks for tuning in to theGlobal Medical Device Podcast.
If you found value in today'sconversation, please take a moment
to rate, review and subscribeon your favorite podcast platform.
If you've got thoughts orquestions, we'd love to hear from
you.
Email us@podcastreenlight.guru.
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(51:52):
innovation.
And if you're ready to takeyour product development to the next
level, Visit us at www.greenlight.guru.
until next time, keepinnovating and improving the quality
of life.

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