An MD&DI October 1999 Column
Tom Steinke disagrees with the business cliché that says entrepreneurs should "listen to their customers" for ideas on creating the next great product. "When customers give you a product idea, they're recognizing an opportunity themselves, which usually means your competitors have also," Steinke says. "If you develop a product based solely on that, by the time it reaches the marketplace it will be too late."
Steinkefounder and CEO of MD3 Inc. (San Diego), a firm developing a new stentbelieves that it's more important to watch what customers do rather than listen to what they say. "What you're looking for are unrecognized product opportunities," he explains, "and you find those by watching how a customer adjusts to or deals with problems." The best product opportunities, Steinke says, lie in creating novel solutions to such problems. "A lot of the time it's human nature to just deal with difficulties when you can't see an obvious solution," he adds, "and that's precisely where the product opportunities are."
Steinke followed his own advice in developing a new stent, the lead project at MD3. The stent's design allows it to be used in a number of different body areas. "No one said, 'We need a stent to do this and this,'" Steinke says. "They were saying, 'Stents need improvement,' or 'These parts of the process are frustrating.' We looked at how they did the procedures, what issues they were facing, and came up with the specific guidelines for this new design."
Of course, having a clear idea of what products will work also requires thorough industry knowledge. Steinke drew on 15 years of industry experience to launch his own company. During those years he kept his eyes open for the chance to set out on his own. "Everywhere I've worked in industry, I've always been a sort of in-house entrepreneur," he says. "I was thinking about forming my own company 10 years before it actually happened."
Tom Steinke believes that product versatility is vital when starting a company.
Steinke spent those years gaining valuable experience and waiting for the right opportunity. His resume tracks the progression from his start as a biomedical engineer at Daily Medical in San Diego to director of business development at Navius Corp. (San Diego). In between, Steinke served stints at Advanced Cardiovascular Systems (Santa Clara, CA), Sonotek Corp. (San Diego), and Medtronic Interventional (San Diego).
It wasn't until he headed up the Navius stent program that Steinke sensed the time was right to break out on his own. "That's when things really started clicking," he says. A year later he started MD3, in December 1997.
"There is an incredible amount of risk involved in starting your own company, and actually, I'm a very risk-averse guy, so I didn't want to move too quickly." One way he minimized the risk was to concentrate on his objectives. "I took a very conservative road, made sure I was clear of any previous agreements, and developed a product with multiple application possibilities."
Steinke believes the importance of developing a versatile product cannot be overemphasized. "When you start a company, you're putting all your eggs in one basket," he says, "so you want to stay focused on a low number of products." But in doing so, Steinke says, the developer must create multiple applications for those products in order to open alternate paths to the marketplace. "If you go in with just one product that has only one application, then you only have one egg, and that could get you into trouble."
Another essential component to building a successful company of any size, says Steinke, is the staff. "That's something you really can't cut corners on," he says. "Do whatever it takes to get the best people possible, because that makes all the difference."
In the product development business, says Steinke, one of those people must be an excellent patent attorney. "When the game is played out, my single most important asset is my patent. To that end, I'm going to do whatever it takes to make sure I get the best patents I can, and that requires the best patent lawyer." According to Steinke, most good patent attorneys are tied in with competitors, making it hard to find someone without a conflict of interest. But finding one is paramount. "Everything but the original idea can be duplicated by a large company," he says, "so you need someone who can protect that cornerstone of your business."
In doing all this, Steinke says, the successful entrepreneur can't lose sight of his or her passion for the process. "My mother always told me growing up, 'Do what you love and the money will come.'" Steinke offers a slight amendment: "Do what you love, but manage your risk so you can get the market rate for it," he says, laughing.
"When starting your own company," Steinke maintains, "you have to focus on the end solution, the end goal. You have all these questions: 'Do we produce the product ourselves?' 'Do we partner?'" Ultimately the particular answers aren't what's critical. "You have to know what is finally important, and for me, that's the commercialization of my product," Steinke says. "It doesn't matter how I get there."
Robert Drummond is associate editor of MD&DI.