Everyone needs to have the persistence that we discussed before. Persistence is an attribute that everyone in the company — not just its founders — needs to have in the company’s early stages. There will be times in every startup where the mountain of work in front of the team seems to be insurmountable. It is during these times where the team’s persistence in pursuit of the company’s goals can make or break it.
Startups have such a glamorous reputation. Companies like Facebook, Instagram, Youtube, Uber, and Airbnb once started as scrappy startups with huge dreams and huge obstacles.
Yet we of course know that most startups don’t end up as success stories. What does a founder or a founding team need to know to create a highly successful startup?
In this series, called “Five Things You Need To Create A Highly Successful Startup” we are talking to experienced and successful founders and business leaders who can share stories from their experience about what it takes to create a highly successful startup.
I had the pleasure of interviewing Kevin Derr. Chief Executive Officer at HMD Labs, a company he founded with Brian Greene, to help medtech companies’ R&D teams reach important breakthroughs. They help medtechs harness artificial intelligence (AI) and machine learning (ML) to empower innovators to get to market more quickly with better clinical solutions. Kevin has more than 10 years of experience in medtech management roles.
Thank you so much for joining us in this interview series! Before we dive in, our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
My backstory has not been what most would consider to be the “normal” path. In the late 90s I switched my major at Montclair State University from anthropology to marketing, not because I was interested in business, but rather because I was building websites for small businesses and I wanted to pursue a career in web development. At that time, many web departments at large companies were in marketing, not IT. My theory panned out and I landed my first job at The Hertz Corporation, where I led world wide web development. I learned about HIPPA through Hertz’s insurance business, which provided me a foundation for moving into medical device manufacturing. That said, it was luck that my recruiter found me an interview at Stryker, and it was there that my primary drive for work changed. At Stryker Orthopedics, I got to see how our work on software systems directly impacted patients’ lives, and I had a new mission. I was fortunate at Stryker to experience roles in numerous divisions, my favorite being in a research and development leadership role. From there, I followed my passion to a role where I led data analytics at Auris Health, and now leading HMD Labs.
What was the “Aha Moment” that led to the idea for your current company? Can you share that story with us?
My partner, Brian Greene, and I had been speaking about how it seemed unfair that data was a primary driver for medical devices, yet small and mid-sized businesses struggle to afford the data engineering efforts required to run robust and compliant data systems. Brian deserves the credit for our “aha moment” when he invented our way of building a data ecosystem, which can be as close to a turn-key solution as you can get in a data platform, while preserving the intellectual property of our customers’ devices.
Was there somebody in your life who inspired or helped you to start your journey with your business? Can you share a story with us?
I think the person who both inspired me and helped Brian and me start our HMD Labs journey was Josh DeFonzo, CEO at Lux Health Tech Acquisition Corp. I had the good fortune to work with Josh for more than four years when I was at Auris. There, he served in numerous roles, from leading product development to ultimately running the division of Auris for Johnson & Johnson after our acquisition. His drive, positive attitude and focused attention on employee success were extremely inspiring. I had been working for organizations — from multi-billion multi-nationals to startups like Auris — for more than 15 years when I started working with Josh. His humble way of managing and encouraging teams to greatness is truly awe-inspiring. If it were not for the example he set during our mutual time at Auris, I may not have had the courage to “take the plunge” and strike out on my own (well, with Brian, but you know what I mean).
What do you think makes your company stand out? Can you share a story?
I think the thing that makes HMD Labs really stand ahead of the pack is our team. While we are small, (we have ten team members currently), our combined experience totals more than 150 years of working on data systems. Further, well over a century of that time is specific to medical device manufacturing data systems. This depth of experience enables us to accommodate our primary customer needs at a level they just are not used to experiencing. Many other cloud platform vendors do not understand the nuances of getting medical devices cleared by the FDA and other regulatory agencies, which always cause churn in data platform projects.
How have you used your success to bring goodness to the world?
This is an interesting question, as there is a “now” answer and a “future” answer. I would be hard pressed to say our success to date with HMD Labs has brought goodness to the world yet. However, what we are building will allow medical device manufacturers to improve their intelligent medical devices both in compliance with regulation and at a speed heretofore unheard of. As such, we believe our product, NeuronSphere™ has the power to not only speed up time to market for new medical devices (or improvements to existing devices) but also prove their safety with regulatory bodies globally. When we see our first medical device manufacturing customers shorten their development cycles and launch new, innovative devices to improve the health and well-being of humans, we will see a direct impact from our success bringing goodness to the world.
You are a successful business leader. Which three character traits do you think were most instrumental to your success? Can you please share a story or example for each?
Persistence — There are so many hurdles in front of new businesses, from maintaining compliance with laws to landing customers, and there is an endless supply of things to do and stress about. There is no giving up if you want to succeed. You have to be able to “take a no” and still believe in the mission and drive forward. Brian and I are both extremely persistent when we believe in something. For example, we started HMD Labs during a global pandemic, and yet we have been able to build an amazing team and platform, as well as nearly reach our customer base projections ahead of schedule.
Humility — Brian and I have a saying we often lean on — “We have strong opinions loosely held.” What we mean by this is that we may argue at length about the merits of an idea, or a way of doing something. However, when someone makes a strong counter, born from logic and exhibiting reliable evidence for the counter, we will change our minds. Our team does a daily stand-up meeting, and there is almost always at least one strong debate (some might say heated). While we want and encourage our teams to argue their points, we also want our teams to be humble enough to change their mind when someone else brings a counterpoint that “wins.”
Inquisitiveness — To me, everything in the early stages of a company is about learning. You try to learn your product and how it fits in the world. You might learn new “business activities” such as accounting or marketing, because in a startup there may not be named people for every type of business role that a large organization has (yet those functions still must happen). You must learn about your competitors and how they fit into (and possibly dominate) the market. In the end, it seems like in the startup world every time you turn your attention to the next task there is something new to learn. If you are not inquisitive and eager to gain such new knowledge, you will grow bored or frustrated and either of those attributes can quickly lead to ruin.
Often leaders are asked to share the best advice they received. But let’s reverse the question. Can you share a story about advice you’ve received that you now wish you never followed?
The decision about when you’ve done all you can to enable positive forward momentum and when it’s time to pivot directions is very personal. ‘Stay put and wait’ or ‘find greener pastures’ is an answer that has to come from within — even with the best intent of the advice giver.
Can you tell us a story about the hard times that you faced when you first started your journey?
For me, the hardest time of our journey so far was the first three months. We had a great idea. We had a tiny team of four people who all worked well together. We had no customers, little money and a pandemic was raging around the world. There were numerous stressful nights wondering if we had made the wrong decision in leaving Johnson & Johnson. That said, we persisted and closed our first funding in our third month of business, which gave us hope. By month five, we had closed our seed round fully booked and we knew we had succeeded in STARTING the journey. We then moved into customer acquisition and platform development, and away we went!
Where did you get the drive to continue even though things were so hard? What strategies or techniques did you use to help overcome those challenges?
My main strategy for maintaining my drive during tough times was to continually remind myself of the goal. Anyone can get lost in the details of what needs to be done, or what is not getting done, and sometimes those thoughts can be overwhelming. When I start to feel this way, I remind myself of how much we will help the world with NeuronSphere™ as medical device manufacturers use our system to bring new and improved medical devices to market.
The journey of an entrepreneur is never easy, and is filled with challenges, failures, setbacks, as well as joys, thrills and celebrations. Can you share a few ideas or stories from your experience about how to successfully ride the emotional highs & lows of being a founder”?
I think the major strategy I recommend for managing the roller coaster ride of being a founder is: don’t just get advisors — USE them. Lean on their expertise, ask them questions and LISTEN to their advice. Remember why you brought them in as advisors and don’t get too absorbed in your own opinions. A couple of good advisors and your own ability to listen to and take their advice can help tremendously in smoothing out the peaks and valleys of the inevitable roller coaster ride you will be on. It will not remove all of it, but it will make what remains more palatable.
Let’s imagine that a young founder comes to you and asks your advice about whether venture capital or bootstrapping is best for them? What would you advise them? Can you kindly share a few things a founder should look at to determine if fundraising or bootstrapping is the right choice?
One of the biggest lessons we learned was how many kinds of capital funding are available, and the implications of each. “Pure” venture funding, family offices, private qualified investors, Angel Consortiums, Incubators — it was overwhelming in ways. Understanding the goals of each kind of investor is key. I’d say you have to analyze your business proposal, total available market, growth model/unit economics and where you are in the product market/sales fit cycle. You can then make informed decisions about the investor profile that’s the best fit. There’s enough capital in the market right now that investors are advertising their criteria, segment and deal parameters in a lot of more public ways. In many ways, it’s a lot easier to self-select for the best chance at investment.
Ok super. Here is the main question of our interview. Many startups are not successful, and some are very successful. From your experience or perspective, what are the main factors that distinguish successful startups from unsuccessful ones? What are your “Five Things You Need To Create A Highly Successful Startup”? If you can, please share a story or an example for each.
- I think it all starts with your team. To me, you could have an amazing product or service that everyone wants, but if your team does not work well together, the company will eventually fail. But it goes beyond just working well together: First, everyone on the team needs to understand how each team member fits into the puzzle that makes the company.
- Second, they need to trust that their team members will deliver on their part of the puzzle.
- Third, each team member needs to understand the business and product you’re selling. Many years ago, I read “The Toyota Way” by Jeffrey Liker and it really made an impression on me. That book describes how one of the transformative actions Toyota took to reinvigorate its business was to have its leadership work the manufacturing line and re-discover its products. Since then, I’ve Found that many failed projects I have experience with share a root cause in that the leaders of those projects did not understand the technology needed to see the project succeed. As such, everyone in a startup needs to have a solid understanding of the product and the business in order to succeed.
- Fourth, everyone needs to have the persistence that we discussed before. Persistence is an attribute that everyone in the company — not just its founders — needs to have in the company’s early stages. There will be times in every startup where the mountain of work in front of the team seems to be insurmountable. It is during these times where the team’s persistence in pursuit of the company’s goals can make or break it.
- Fifth, I cannot express enough how much good advisors will help a startup succeed, if the founders are humble enough to listen. We cannot individually know everything there needs to be known to run a successful, game-changing, new product category startup, and anyone who tells you they know it all is also likely “selling you the Brooklyn Bridge.” We all need help from others, so startup founders should identify and lean on a solid group of advisors. I know with certainty that Brian and I would not be seeing the success we have to date if it weren’t for our group of advisors.
- Finally, you have to be decisive. This looks like a propensity for action and a willingness to fail forward, knowing that some of the decisions will be wrong. If you’re listening to your team, steeping yourself in the problem domain, being persistent and having humility, it is easier to make seemingly big decisions as they’re “best informed” and the organization will course correct together as a matter of habit.
What are the most common mistakes you have seen CEOs & founders make when they start a business? What can be done to avoid those errors?
One mistake would be thinking that your idea is unique and that it’s your greatest value. We think we have some “secret sauce” technology that’s pretty spiffy, but without a team and solid execution, it’s just an idea. It’s hard as a founder to hear that, but the sooner you start delivering on your dream, the closer it is to being a growing concern.
Not getting advice from multiple specialized lawyers is another big piece you can miss. Your cousin’s friend is a lawyer? Cool. Are they a lawyer that specializes in setting up C-Corps and advising on term sheets? If not, you have to keep looking. There are just too many mistakes that are easy to make and will cost you forever — all of which can be avoided. Good securities, employment, intellectual property, and contract lawyers are involved up front. And then you still want a good general business counsel to help coordinate. This has an added dividend if you’re seeking funding, as professional investors have a low tolerance for sloppy or missing legal matters.
Startup founders often work extremely long hours and it’s easy to burn the candle at both ends. What would you recommend to founders about how to best take care of their physical and mental wellness when starting a company?
Brian and I take time off and we make sure to demonstrate and champion self-care, hobbies and mental health in our discussions routinely. There’s a big difference between “I’m working productive, longer hours and delivering to plan, while adapting to the situation” and “We’ve set up a situation where the only way to succeed is for everyone to work themselves to the bone, and we’ll figure out balance later.” Before we started, we had some really heartfelt discussions. You can work hard without neglecting your family and health. You can build great companies by building a culture around long-distance endurance-style performance rather than death marches that leave us all hoping for better days.
You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
Sustainable, distributed food production at a far more granular and pervasive societal level. Farm to table, CSAs, and farmer’s markets are all on the right track, but encouraging more people to have small gardens and redistribute that food even more pervasively is my ideal. Is this “less efficient” in some ways? Maybe. But the positive impact to community, resilience to disaster, and a reduction in carbon used to produce and distribute food is one of my bigger dreams.
We are blessed that some very prominent names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US with whom you would love to have a private breakfast or lunch, and why? He or she might just see this if we tag them.
A breakfast or lunch with Neil eGrasse Tyson would be a dream come true. It’s tough for me to express all my thoughts on this, but it comes down to what I perceive is his character. To me, Neil exemplifies everything I hold dear in science: to always ask questions — even to question the established “laws” — yet do not forget about our fellow humans on this spaceship we call Earth. I have a quote from him on my desk, which I try to live by, and it stays on my desk as a reminder:
“For me, I am driven by two main philosophies: know more today about the world than I knew yesterday and lessen the suffering of others. You’d be surprised how far that gets you.”
I think living this way has gotten me pretty far to date, and I can’t wait to see how the next stage of my life unfolds!
How can our readers further follow your work online?
This was very inspiring. Thank you so much for the time you spent with this. We wish you continued success and good health!