This is an excellent blog post from Sophia Kirova of Startupbootcamp HighTechXL. She had the change to interview Sjaak Deckers, co-founder of Sapiens, which was recently acquired for 200M.
I had the chance to meet Sjaak during the Setting the Deal event that was organized in January 2013 in Eindhoven. Sjaak was participating with the role of the entrepreneur and I was moderating the event.
You can originaly find the blog of Sophia here.
————-Copied from Startupbootcamp HighTechXL website———————————————-
I sat down with Sjaak Deckers, COO and Co-founder of Sapiens Steering Brain Stimulation — the startup which was recently acquired by Medtronic
for 200M dollars — to talk about life and entrepreneurship. After 21 years at Philips, Sjaak left only to spin out a technology intended to alleviate symptoms of patients with Parkinson’s disease. This is his journey and the lessons learned which he wants to share with you.
Prepare your favourite drink, take your time, and let’s dive together into the story.
‘You only get one chance, so you have to be damn sure that you’ll be successful with your first milestone.’
‘When I moved from Philips Healthcare to Philips Research seven years ago, I was asked to take responsibility for those healthcare research projects for which Philips had no immediate future plans. It would have been a waste of talent to just stop and end the activities. So, out of a portfolio of about 20-30 projects, we were able to keep, spin out or sell around 10 of them. The last and most exciting one was brain stimulation. This one I wanted to continue myself!’
An Unexpected Shift in Technology
‘My co-founders, Michel Decré and Hubert Martens, had discovered that there was not much ongoing innovation in the field of Deep Brain Stimulation (DBS). Medtronic had been a market leader, a monopolist, for 20 years.’
Philips had developed a technology that originated from flexible displays. Michel and Hubert came up with the idea to apply this to DBS leads. This lead technology was something companies working in the field of DBS did not know yet, simply because it was developed in a completely different branch of industry. That’s the strength of a company like Philips, where such unusual combinations sometimes arise.
I thought this innovative lead technology was very cool and embraced it for a number of reasons.
I took a serious risk leaving Philips after 21 years, but you only live once, right? I thought I could spend another ten years in Philips, which I have enjoyed a lot during all these years, or… Sapiens was an opportunity you only get once in a lifetime.
I told most of the employees: “This is a startup, it can fail tomorrow. If it’s successful, you will rejoice its success. However, you need to have enough confidence in yourself, your capabilities and your strengths, since there is a chance that we fail next year. You should not be afraid of losing your jobs and finding new ones.”
These are the kind of people that you hire; the ones who are confident and want to participate in the fun of a startup.’
‘The first investment is always the most important and the most difficult one. If I look back on the first pitch now, the very first pitch we held… It contained 95 slides and it was really terrible. In 2010, Hubert, Michel, and I pitched to LSP (Life Science Partners) in Amsterdam. They watched all 95 slides with a grin, but at the end, they concluded: “Well, it’s very interesting, but perhaps a bit early for us.’
You have to convince people to believe in three things: the team, the market and the technology. I’ve interacted with 30 or 40 investors, and this is what they are continuously looking for.
The team: do they have enough confidence in the three of us behind the table; do they trust us enough to spend their money wisely? The technology: will it impact the industry, does it create a sustainable advantage? By sustainable advantage, I mean that it is protected by IP, or by know-how, so that it cannot be copied very easily. The market: is the targeted market large enough to create enough business value?
Finally, based on these three basic features, the question is: ‘Do the financials match?’ The correlation between how long it would take and how much money it would require, has to be reasonable and attractive for investors. Initially, some very credible investors reacted: ‘We’re very sorry, but the financials do not match. They simply don’t.’
What turned the tides? We were fortunate enough to raise over 10M euros through subsidies and loans, so-called soft money. We were promised a 5M euros innovation loan from the Dutch Ministry of Economic Affairs, provided we raised sufficient venture capital money. We also won a subsidy project in the Netherlands from Point One, and we were selected for a large grant from The Wellcome Trust in London. Now we could approach new investors and this time they liked us. Even LSP joined the initial syndicate.’
‘This was probably the greatest lesson that we learned from that early period.’
‘Take a fast decision and focus, focus, focus’
‘We managed to accomplish important milestones with the money that we had. 18 months after the Sapiens kick-off, we were able to include the first patient in our clinical study. It did not consist of a full DBS procedure, but only the lead implant; and we only temporarily inserted it into the head of an actual Parkinson patient.
However, it was sufficient to demonstrate that our lead showed a superior performance in comparison with existing ones. Later, we included seven additional patients during a very short period. So, within two years after starting Sapiens, we had finished our first clinical study.
There are a couple of important aspects which I’d like to emphasize. One is: you have to focus on the first steps. Researchers tend to diverge and see opportunities everywhere. In actual business, one needs to draw the line: “Ok, guys, there’s a lot beyond the horizon, but let’s get our first product out and focus, focus, focus on the most important aspects.”
Second is: your business case. I found out that investors are not so interested and a very detailed 10-year out business plan. What they are most interested in, however, is: do you have a credible understanding of your costs during the first years.
You will have to continuously scrutinize whether you are doing as much as possible with the least resources possible and achieve short-term successes, one step at a time. You only get one chance, so you have to be damn sure that you’ll be successful with your first milestone and then you can go on to the next. Make sure you walk small steps that can prove your credibility.
Building credibility and community
‘For a startup like us, it makes no sense to invest in advertising. What we did instead, was gradually build up confidence and a relationship with clinicians. They are the people that will grow your reputation among their colleagues and the entire community.
Hubert and Michel started discussions with neurosurgeons already back in 2006.
Dr Schuurman in the Amsterdam Medical Center (AMC) was our first clinical connection. He and his team gave us feedback and guidance on the prototype, and in return he performed the first study with patients, which was recently published in the Neurology journal.
Also, we visited a number of physicians in the US very early on. Prof Okun, a Neurology professor in Florida, proposed to set up a medical advisory board for us. He invited his colleagues to discuss the future of DBS and provide feedback to us.
They are a very important part of our business chain. We gained credibility – we showed doctors that we’ve listened to them, because we actually implemented their feedback in the development of the prototype. We created a relationship with all these physicians, a good recommendation for all medical startups.
‘MedTech is Where my Heart is’
There is nothing more rewarding than the consciousness that what you are doing improves the lives of people. I have a couple of friends with Parkinson’s disease, so my personal motivation underlies the path of my choice that I’ve been walking.
Here at Sapiens, we have regular meetings at which doctors or patients share their stories with our team. One of the patients was a former colleague of mine. He kept a diary of how he had deteriorated over the past seven years. He came to us a week before he would undergo his DBS operation, and two weeks after the procedure, he came back to show us how well it worked for him. A year later, they unfortunately discovered that it had some side effects, and that’s exactly what we are working on at Sapiens – to reduce the side effects.
A number of engineers who had never seen a Parkinson’s disease person before, got emotionally involved in the patient’s struggle. They were deeply touched by his story, and it was a very motivating event for them.
Three years and three months
‘It’s a success story in several ways: we picked the right people, we chose the right market, and developed the right technology and this was recognized by the DBS market leader.
I am very happy to have been acquired by Medtronic, for two reasons:
1. For patients: they will have access to the best possible solution for their condition.
2. For the team: with the acquisition, Medtronic not only acknowledges the technology but also the strength of our team.
‘I am very proud of what I pulled off together with my co-founders, and that it worked. For the time being, Sapiens certainly is the cherry on my career cake. It also whets my appetite for more. Perhaps in a couple of years, I might take on another opportunity like this.’