Paul Chipperton is co-founder and CEO of Toronto-based Profound Medical Inc. He is responsible for the corporate and operational development of Profound's medical device for treating prostate cancer. Mr. Chipperton has 15 years of international biotech startup experience in the areas of new product development, business development and marketing. He has led the successful commercial launch and penetration of three new technologies into highly competitive markets.
He is a guest lecturer at both McGill University and University of Toronto on managing innovation and entrepreneurship in the life science sector. Here, he talks about Sentinelle Medical's distribution deal with GE Healthcare.
How would you characterize the life sciences industry for startups in terms of competitiveness? Is this a crowded industry? What are the chances of success?
Paul Chipperton: This is a very crowded, very competitive industry. The likelihood of success is slim.
If we're talking specifically about startups, then you know as well as I do that a typical venture capital investment portfolio will contain, at the end of a 10-year run, seven failures, one or two get-their-money-backs, one impressive return and one shooting star that has really performed above and beyond any other. This applies to life sciences just as much if not more than other industries.
As for competitiveness, many companies don't have what it takes to be competitive from an operational and revenue perspective. The other aspect is whether the technology is any good and is answering a vital question.
You also have to consider that medical devices have to go through very rigorous regulatory demands where you can fail at any point. The regulatory path affects the ultimate success of a company. And this will affect the competitive nature.
Because of the nature of Sentinelle's technology, they initially developed their equipment to work with GE's MRI platform. This was a necessary starting point for the company. But would you say it made for a risky enterprise? In order to sell their equipment to another MRI manufacturer, they'd have to customize their technology to that specific platform. How do you think this affected the overall viability of the company in its early days?
Paul Chipperton : There's no doubt it's risky, but let's take a step back and look at the context. MRI manufacturers to which Sentinelle's technology must be married number, globally, maybe nine companies, and of those nine, there are only three that really have any market power that would make sense for Sentinelle to base development on: Philips, GE and Siemens. So Sentinelle president and co-founder Cameron Piron had to decide at the beginning which one of these platforms he would develop upon with the strategic aim and a bit of strategic hope that his work would be attractive to one of those parties.
In fact, I think Cameron's development was predicated on circumstance somewhat. It just so happens that the GE platform is what is used at Sunnybrook Health Sciences Centre; he comes from Sunnybrook and he had GE instruments to work with. From a strategic perspective, the actual development costs were in favour of starting with GE.
In that situation, I would look for other alternatives and I'm sure he was. The fact that he started on a GE doesn't mean he wasn't simultaneously researching and trying to get same the information on the other manufacturers. It just means this was the lowest hanging fruit.
Mr. Piron and his partners tried dozens of pathways to get to GE. What's your advice for entrepreneurs in the life sciences industry - or any industry - who are trying to get the attention of a giant like GE? What techniques should they consider?
Paul Chipperton: The trickiest thing is getting to the right person who has a decision-making capability and is interested in the area in which you're working. I think there are two golden rules: First, find out who the person is you need to get to, and second, get the assistance of as many other people who know that person to say good things about you. Tap your industry contacts - ex-employees of the company, consultants who may have had historical relationships. Try to manage the communication so that your target person is hearing about you or your technology and its potential in a positive way over two, three, four weeks.
Then make sure this person gets both a phone call and a follow-up e-mail around that period. At this point, the target person has heard from you directly. When your target audience has heard about you a few times over a space of a month, it is very difficult for them to ignore you.
One other thing I like to do is make an excuse to be in the area. For a company like GE, you will know which conferences they're going to, where their headquarters is located. When you send that voicemail or e-mail, let them know that you'll be in their area on X date and would be happy to give a brief presentation. That often works to get a face-to-face meeting.
What tactics should start-ups avoid in this situation?
Paul Chipperton: If you are going at it and you've had a firm no, look at other avenues into the same company with a different person. But if you've done the job properly and researched the target person in the first place and they've said no, then you're just going to upset them if you keep harassing them. Don't harass. Politely and enthusiastically engage but don't harass.
When you get a no, take no as a no. But you should go back again every quarter. Don't close the door. Don't be immature and angry and cut off all communication, because it will hurt you in the future. Be sure not to leave this process to the last minute, when it is absolutely desperate for you to execute something. By nature you will then harass someone.
Start early and give yourself a lot of time and negotiation room. If they are interested, then you have plenty of time. If they're not, you have a few months to work on your numbers, your slides, and go back again. If you leave it until the end when you only have three months of cash or your company will die, you will harass someone and that is not an attractive way to negotiate.
Mr. Piron says that an oversight on Sentinelle's part was to focus on the furthering of its technology following launch and somewhat ignoring marketing. In hindsight, he would have dedicated more dollars and energy to establishing name recognition. Would you say this is a common occurrence in the life sciences field? What's your advice on addressing it?
Paul Chipperton: I think it is common. Cameron is going at this from the perspective of a scientist who has become CEO of a company and you typically focus on what you're good at and think other things will take care of themselves.
The scientist typically hasn't had any training in branding and thinks technology will speak for itself. And it will up to a point but people aren't really investing in the technology. They're investing in the company, especially in the early stages.
Typically, people who start companies imagine that you need a lot of money to get brand awareness and build a marketing communications campaign and that's not true. Scientist shouldn't be afraid to use their own judgment on some of those things. Common sense prevails. A lot of people are discouraged when they go to a formal marketer and hear they have to spend $15,000 to $20,000 to get a corporate brand. You can do it in a much more economical manner. And no one knows how to represent your technology better than you.
When they finally did get a meeting with GE, Mr. Piron says there was a level of intimidation. What's your advice to companies that find themselves in this situation?
Paul Chipperton: I think it's typical the first time you do it because you don't know what to expect. While you're confident in your own technology, you know that these guys make $400-million in profit a quarter. It's a David and Goliath thing.
But you need to realize that they wouldn't be meeting you if there weren't something in it for them. They're not going to waste their time.
So you must be absolutely confident in your technology. If you do not convey with emotion, energy and enthusiasm that it is the best thing since sliced bread, they won't believe it either.
And when you're challenged on it, if you don't know the answer, say you don't know the answer. If you are asked a question and you do know the answer, give it, and if challenged, don't back down because someone from GE is on other side of table. You know your technology better than they do and you know the applied science area just as well as they do. As long as you've done your research and can support your argument, stand your ground and believe in what you've got.