Entrepreneur Office Hours - Issue #88
Can you see the world from someone else's perspective?
The more I work with entrepreneurs, the more I find myself thinking the most important skill in entrepreneurship is empathy. Can you figure out how to see the world from someone else’s perspective?
So many entrepreneurs — myself included — focus on themselves, their own goals, and their own interests. But success in entrepreneurship doesn’t come from helping yourself. It comes from helping other people. And successfully helping other people means learning to understand their problems from their perspectives.
As you’ll read in this issue’s first article, that’s not always easy to do. In fact, it’s what caused my first startup to be a major failure.
While I’m on the subject of major failures, when you get to the Q&A section of this issue, you’ll see that I majorly failed to answer the question. But there’s a good and, I hope, illustrative reason for doing so. I’m trying to set a good example about how to give useful startup advice. I’ll leave you to decide whether or not it’s valuable.
-Aaron
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Office Hours Q&A
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QUESTION:
Hello Aaron,
I love your startup advice and have read all your blogs.
I wanted to know your specific opinion with regards to the MedTech space. We're thinking of forming a startup in that space. We're creating software that will improve the treatment outcomes of IVF (InVitro Fertilisation) using Artificial Intelligence. I'm a medical doctor with a fair amount of experience in IVF, so I have a good idea about the product development and clinical research aspect of things. However, this will be my first foray into the commercial aspect of things, which is selling software to hospitals. I wanted to know about the possible risks and what traction looks like specifically in this space, since the technology will take a while to develop and especially go through the regulatory processes before one can actually start selling. So, what is the best substitute for revenue basically? Or, do we need a significant amount of presales/waitlisted hospitals before we can raise the pre-seed round?
I also love your article about the magic traction slide - the one slide to convince the investor. What can be that one slide in the medtech space? Is it the effectivity as far as the treatment goes, or the demand, in terms of waitlist or industry connections or research papers? What is the one northstar metric to focus on and showcase in this case?
Thank you so much for your help!
Regards,
Trishala
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I have no idea.
Seriously… not a clue.
I have no experience building or operating companies in the medical tech space, I’ve never tried fundraising for a medical tech company, and I haven’t seen enough quality medtech pitches to be able to understand what distinguishes a good one from a bad one beyond superficial structural and delivery issues. Just about the only thing I know about medtech is that heavy regulation leads to longer development timelines than I’ve dealt with in other industries, and that means medtech companies are more likely to need significant funding pre-revenue.
Of course, everything I’ve written above is the reason for the question being asked here. In other words, the question is basically saying: “Hey Aaron… since you’re always writing that companies need to show traction in order to raise capital, and since medtech companies aren’t likely to have revenue traction, what kinds of traction should medtech companies focus on?”
Unfortunately, as I’ve already written, I don’t know. To be clear, I know everyone definitely needs traction in order to raise VC. But, for medtech companies, I don’t know what traction looks like. Sorry!
The next question you might be wondering is: “Why is Aaron bothering to include this question in his Q&A if he doesn’t know the answer?”
I’m including the question and my non-answer because I’m trying to set a good example. Specifically, I’m trying to do what I wish more startup advisors/mentors/gurus did for me back when I was looking for advice and the person I was speaking with didn’t have the right kind of expertise to answer my questions. Instead of saying “I don’t know,” people always told me what they thought. It didn’t matter if their thoughts weren’t based on any sort of relevant experience. People were so uncomfortable saying “I don’t know” (or so inexperienced saying it) that they’d rather invent answers with no basis in reality rather than admit to not knowing something.
The problem, of course, was that, as the person soliciting advice, I didn’t realize the answers I was getting weren’t backed by any sort of relevant experience. As a result, I followed people’s advice I should never have followed, and I’m sure doing so caused unnecessary problems.
To avoid being guilty of the same thing, when someone asks a question and I don’t have a good sense of the answer, I try to use the opportunity to practice saying the three hardest words in startups: “I don’t know.”
So, Trishala… in answer to your question, I’ll again write those three tricky words: I don’t know. I do know you need traction. And I do know the medtech industry has expectations for what would be and wouldn’t be considered good traction. But I don’t know what those expectations are. I’m sorry, and I wish I could help more. My best advice is to encourage you to find a dozen or so people who have successfully built companies around technologies similar to what you’re developing and ask them. I guarantee any advice they give is going to be significantly better than mine.
Got startup questions of your own? Reply to this email with whatever you want to know, and I’ll do my best to answer!