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5 Tips Startups Need to Know for Success

Nimble startups remain critical to driving market innovation in orthopedics. As in many industries, the current health and economic environment demands change, creating a ripe opportunity for startups to usher orthopedics into the “new normal.”

In seeking advice for startups that are generating their first product ideas, we turned to Tiger Buford, an orthopedic executive, thought leader and recruiter who works with small companies, for perspective. Buford wrote a post on his OrthoStreams website, “30 Lessons Learned in 30 Years of Orthopedics.” The first five lessons target startups. We cite them here.

5 Lessons for Startups

Time the Market

Buford pointed out that most game-changing ideas in orthopedics were too early for market acceptance. Spinal cages were conceived around the late 1970s, robotic orthopedic surgery in the 1980s, telemedicine in the 1990s, and many early artificial discs were designed that never reached the market.

“You must be in the right place at the right time to impact orthopedics in a big way,” he said. “Each unique opportunity in orthopedics happens only once in time. As the Greek philosopher Heraclitus said, ‘You can never step into the same river twice.’ In other words, the next Maurice Ferré, M.D., will not build another MAKO (first real robot company). The next George Bagby, M.D., will not build another Spine-Tech (the first spinal cage). The next Mark Reiley, M.D., will not build another Kyphon. These guys had the right technology at exactly the right time.”

Solve a Big Problem in a Smallish Market

Buford recommended that companies begin in a small niche market, preferably one with gaps that other players don’t recognize, then expand from there.

“Kyphon didn’t try to take over spine; they focused on a new treatment for a single frustrating problem, loss of VB (vertebral height), using existing materials,” he said. “MAKO didn’t try to take over total joints; they focused on better bone cuts for unicompartmental knees. Spine-Tech didn’t try to take over all of spine; they focused on a mechanical MIS fusion for one-level only…

“Once you’ve successfully dominated your smaller clinical problem, you can expand your reach. Startups that try to boil the ocean…die.”

Create Your Own Monopoly

This is still possible, in Buford’s eyes, even more so in orthopedics today.

“You can create a monopoly by creating a new category or new procedure. You will be the only solution in your new category. Customers will seek out and find you. Sales and marketing will have a tailwind. Distribution partners will beg to carry your product. You will dictate pricing (there are no comparables). You will have leverage in all negotiations. Life will be good.”

Kyphon, MAKO and Spine-Tech are examples of companies that didn’t have competition at the onset. Others include:

  • Ellipse Technologies (remote control spinal rod; company acquired by NuVasive)
  • Active Implants (artificial meniscus)
  • Trice Medical (dynamic joint diagnosis)
  • OrthoSpace (biodegradable balloon protects rotator cuff tears; acquired by Stryker)

Buford’s message is to avoid commodity products and commodity markets because they have many built-in challenges—pricing competition, thin margins, high cost of sales, ten sales reps calling on the same surgeon with roughly the same products. There is too much noise to get attention in the marketplace.

“You don’t want to play in a competitive market; it’s like running one of 250 restaurants in your neighborhood,” he said.

Product First, Everything Else Later

In a company’s early years, Buford said that companies should dedicate most of their effort to getting the product right.

“At least 80% of your company should be working directly on the product,” he said. “There will be time later for regulatory, IP, quality, sales and distribution, marketing, surgeon training, reimbursement, etc.

If you really nail the product, it will be easier to market, sell, distribute, price and teach.”

Don’t Try to Survive with a Single Product

Buford warns against starting a company around a single product unless it is a groundbreaking new category, as mentioned in tip three.

“You can launch a single product first, but you MUST have a second and third in the pipeline within the next 12 to 18 months,” he said. “If you have to, swallow your pride and partner with another small company and combine your products. We all remember the ortho companies that started with a single promising product and then did not follow up soon enough with new products.”

Future Opportunities

Buford is optimistic about today’s startup environment. Actually, he said, it’s the best time in history to start a new orthopedic company. Certainly, there are barriers. He noted a lack of funding and an abundance of groupthink in orthopedics as two primary concerns for startups. But companies with an innovative idea, surgeon support and a willingness to take risks, have a good formula.

As he told BONEZONE earlier this year, during these uncertain times, “Losing companies will ask, ‘How do we get back to normal?’ Winning companies will ask, ‘How can we change our company to adapt to the new environment?’


 
Kathie Zipp is an ORTHOWORLD Contributor.