The CEOs of emerging med tech companies are among the hardest working people I know. There are a multitude of things to worry about, with several on the edge of cataclysm at any given point – keeping money in the bank, getting the damn technology to work, the FDA, building out the human and capital infrastructure, managing the burn rate, filing IP, gearing up clinical trials, manufacturing, commercialization, engaging KOLs, generating “buzz”, meeting with strategic partners, managing the BOD, and so on. Just writing that sentence exhausted me. For a new CEO of a small med tech company, all this can be quite overwhelming, so I turned to my road-tested CEO clients and friends and asked them a simple question:
What's the single most important piece of advice you would give to someone about to start their first emerging med tech CEO job?
At press time I had 17 responses from current or very recent CEOs of small med tech companies, ranging from development stage (6) to early commercial (11) and publicly traded (2). All but one of their companies are in the greater Boston area, not that I would expect much geographic bias – the wisdom they shared seems quite universal. The vast majority of respondents were not the founding CEO, so they inherited existing teams and operations (and problems). Most have had only one CEO role, so are close to the experience of being a first-time CEO. I was happy to get replies from so many of these busy people, who seemed eager to share insights from their hard-won experiences that might benefit others on the same path.
In rough order of number of mentions, here is what the CEOs had to say:
1. Get the right team in place, and fast
While it seems obvious that a good team is crucial to success – a platitude, really - the “need for speed” in building a solid senior team came through loud and clear.
The sum total of one CEO’s advice was, “Make your people decisions quickly,” echoed by “make sure you have a solid management team in place, and if not act quickly in creating one.”
Rapid action needs to follow rapid intel, but not judgment; “Gather as much information as you can in a short period of time – don’t assign blame to the people there who are there and have been working hard, but make sure they are capable and you can trust them.”
Great people aren’t enough, though - you also need everyone on the same page in terms of objectives and roles. “If you have great people, all aligned behind the goals and how to operate together, you can accomplish anything,” offered the most upbeat CEO of the bunch.
Another CEO emphasized this point; “Pay attention to how the team works together - individual genius can save a company but dysfunctional teams can disable progress.”
If key people aren’t working out, “don’t delay addressing personnel issues” and “be willing and prepared to make changes to the team as the business develops.”
The CEO’s role is captain of company culture, and according to one CEO a good culture “…allows people to give their best, removes obstacles, and facilitates the great results the team can achieve.”
Singing Kumbaya with your team isn’t the only means to success, though, as one CEO observed. “You cannot gauge progress by measuring satisfaction. Teams are often closest to a breakthrough at the height of their frustration. Revolutionary change is inertial and nearly everyone who is threatened will resist until the facts are undeniable or they have incentive to change.”
2. Investors / Board of Directors (BOD) – pick and manage carefully
One CEO described his relationship with the Board in marital terms, which pretty much says it all. “The board determines the fate of your company and the CEO, and they will require you to alter your vision and compromise, as in any good marriage.“
Boards, like spouses, just want to be heard. “Listen to what’s important to your board members. Understand what the Board considers to be the most important things for the CEO to get done,” offered one CEO.
Consider carefully with whom you climb into that figurative marital bed, assuming that decision is in your control. “Find a team of financiers who believe in your vision and especially in you.”
Another CEO described what they look for in their funders; “The best investors want us to create value, and want to be there to back us, and grow their investment with the firm as long as their capacity to do so permits.”
The right investors for an early stage company might not be the best fit as commercialization nears, and managing that transition thoughtfully is important. “It is natural that the appropriate mix of investors change as a firm grows and matures, and it is important to help facilitate fair rewards to your early backers.”
Misalignment between management and the BOD is a big concern - “If the Board members don’t share your values or don’t have the resources to continue investing until you reach an exit favorable to them, your interests will diverge.”
Managing investors’ (and others’) expectations of the team and company progress is clearly challenging, especially when a new CEO is brought in to “fix” things; “Typically people’s expectations are out whack, especially when it involves turnarounds.”
Several CEOs advised a strong, proactive approach to managing these expectations. “Be firm with your Board as to what their expectations should be, and then communicate like crazy to keep them aligned with you,” advised one CEO.
Getting on top of expectations quickly and for all stakeholders is key; "Set and communicate the correct expectations early to the investors, the company, and customers.”
How you communicate with the BOD is critical – honesty is important, within limits that is. “Be as transparent as practical with your board - lead when possible by offering solutions but don’t hide problems,” suggested one CEO.
Fundamental to a good BOD-CEO relationship is gaining a clear picture of investors’ assumptions and motivations. One CEO with a big company background shared his surprise at learning “…the different meanings of value creation to different investors in a startup” and advised new CEOs to “...know your investors and Board - understand what matters to them, what a good return looks like to them, what their timing expectations are, and try to be sure that they know you have their interests in mind in all you do.”
3. You don’t know everything – have strong outside advisors
Perhaps because many of the responding CEOs are fairly new to CEO-hood, several mentioned the need for experienced external business advisors, specifically who are not members of the Board of Directors.
“Find someone, a mentor or trusted former colleague, who you can level with – you can’t always be completely frank with your BOD. It is crucial to have independent perspective and find someone who can challenge you.”
Another CEO was even more to the point. “As a first time CEO you don't know what you are doing. You can’t admit to your team how much you don’t know, but if you pretend you know everything you will be ‘royally buggered’. Surround yourself with people who have done it before and listen to them. Don't put them on your Board.”
Commiseration with other CEOs in a similar boat seems to be helpful, too (and was the inspiration for this blog, by the way). “Seek out advisors who have experience as a first-time CEOs and know what you are about to go through, and learn from them,” suggested one CEO.
Another offered, “Stay humble, don’t think you know it all, surround yourself with advisors/mentors who were in your shoes before and who know the land mines.”
4. Market - pursue good opportunities, and get out there
I was a little disappointed but not shocked that only 3 of the 17 CEOs mentioned anything about their market opportunities (a.k.a. their reason for existing) in their top-of-mind advice to new CEOs. Not complaining, though – their preoccupation with so many other priorities, like staying solvent, keeps S2N busy!
One CEO emphasized the need to personally immerse yourself in the market; “Listen to your customers - get out into the trenches, early and often, and hear what patients are saying about the technology if it is already commercialized, or what the customers need for technology in development.”
The other market-related advice centered on pursuing the right market opportunities. “Be as certain as possible the problem is really worth solving: that there is a real need that someone will pay to address,” offered one CEO.
Another CEO suggested, “Ensure you have picked a relatively large market with a very real unmet need to give yourself the best chance that what you build will be embraced by the market.”
5. Stay funded
Two of the CEOs felt it most important to remind new CEOs that their primary responsibility is to keep the money tap flowing. My guess is that all of the CEOs would agree with this point, and maybe thought it too obvious to mention – no funds, no company, no CEO job.
“Remember your #1 reason for existence is to ensure the company has the money it needs to execute its strategy,” advised one CEO.
Another CEO made his point in all caps, for emphasis; “KEEP THE COMPANY FUNDED. That is the single most important role of a CEO. You need to look at all funding options. When you have few options, you lose your negotiating leverage.”
Many thanks to these CEOs for contributing their time and insights to this blog:
Manny Avila, Bill Floyd, Chris Hutchinson, Edward Kerslake, Doug Lawrence, John McDonough, Jon McGrath, Maria Palasis, Amar Sawhney, Martha Shadan, Ellen Sheets, Jan Skvarka, Samuel Straface, Howard Weisman, Amy Winslow, Chris von Jako, and Marc Zemel