How To take your Healthtech Innovation From Launch to $20m of Sales

By Samuel Levy, Founding Partner at Lauxera Capital Partners

Selling novel medical devices, diagnostics, digital therapeutics, and tech-enabled healthcare services is hard.

Really hard.

Before founding Lauxera Capital Partners, I experienced this challenge first-hand as I spent more than a decade building an innovative medical device company. With my co-founder and a dedicated team, we took Allurion Technologies from an idea on a napkin through sales in 34 countries. Taking our weight loss innovation through prototype development, clinical evaluation, and European regulatory approval took 6 years. There were many sleepless nights. It took abundant creativity and grit.

Then we had to start selling it.

That new chapter suddenly required creating value through revenue growth rather than regulatory or product design milestones. Nor was it just about the topline number. Investors wanted us to demonstrate real commercial traction at the individual physician level by showing utilization growth and low customer churn.

To get there, we had to make a radical cultural change inside our organization necessitating new hires, new capabilities, and new core strengths. To date, the organization has delivered more than 4 years of 100%+ year over year growth, but there were no dull moments, little room for error and inexorably increasing complexity.

How do you do it? How do you build a high performance, commercially-focused organization? Is there a reproducible playbook?

It is tempting to say that every company is different. It is certainly true that the nuances needed to drive a reproducible sales model vary by country, product category, call point and payment model.

Some would say that a highly functioning commercial organization feels like a big family and this resonates with me. As Tolstoy put it, “all happy families resemble one another, but each unhappy family is unhappy in its own way.”

What follows isn’t exactly a happy-family playbook or a panacea, but it is a set of practices that I’ve seen work over-and-over in my experience as an operator, investor, and board member.

Let me humbly set the scene:

You’ve made it! (Have you?)

At last, the regulatory approvals are in place and your warehouse is full of shiny boxes waiting to be shipped to your future customers. You can picture them champing at the bit to send in their first purchase order.

Your phone rings.

It’s your favorite investment banker who has called you to congratulate you on your recent epic regulatory milestone. She says your space is white hot and she can take your company public once you’re doing $20m of run rate sales.

You’re elated.

For ten seconds.

Then your phone rings again and as usual, the next call punches you in the gut.

It’s your sales guy

Lesson One: Get the right commercial talent on the bus.

You’ve hired your sales leader. It’s his first start up gig after 17 years at at a mega-cap Medtech where he held regional marketing roles with increasing responsibility. He’s never worked directly in your therapeutic area, but one of your mentors swears by him. You’re waiting for your first purchase order and the New Technology Evaluation Committee of a key academic medical center just voted. This is the reference client you’ve been name dropping for weeks, since of course it’s a sure thing. Everyone there is so excited.

“How are you doing?”

“I’m OK.”

Your sales leader’s voice lacks the usual pizzazz. You’re suddenly worried.

“Did the committee vote?”

Painful pause.

“Yes. It’s a no. The head of medicine torpedoed us.”

— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —

When you launch a medtech innovation and you’re sitting at $0 of sales, your job is to develop a reproducible sales model.

Period.

You need to figure out how to qualify potential accounts, how to close them, and how to drive utilization of your widget. There’s got to be a payment model. The clinicians must be trained and comfortable using the product. There must be a certain level of trust.

The good news is you don’t need every customer to hit it out of the park at the beginning to be wildly successful in the end. And they won’t. At the beginning, you need a handful of success stories. Understanding what ingredients made the success stories successes is your key responsibility.

So how do you open those first accounts and open them quickly?

One of the best ways to find and launch your first wave of successful reference customers is by on-boarding an experienced, A+ individual contributor. Not a “basketball coach” sales leader, but a shark.

Your shark knows the customers in your category. She has known them for years. She knows who to work with and why. She knows who to avoid and why. She’s helped make your future customers in her region successful before. She quickly navigates your widget through the local bureaucracy and onto the shelves because she knows all the stakeholders. She knows who actually matters and who only thinks they matter. She doesn’t send artful reports. Sometimes she doesn’t return your calls. She doesn’t fill in your CRM, but… you don’t care.

Because she’s killing it.

You wonder why you invested in a CRM so early in the first place before you knew what you really need the CRM to measure.

The temptation is to hire a senior manager with a vision and great macro skills right away. But at $0 of sales, what you really need is someone with granular experience who is a master of the micro. It’s hard to predict the phenotype of your best early customers. You need a sales-focused shark able to open a significant number of diverse accounts, so you can learn what works and what doesn’t. Identifying the characteristics of successful accounts will enable you to qualify your customer funnel and stop wasting time on low value prospects.

At around 5–7 individual contributor sharks on-board (call it $3–7 million of sales), the organization needs to make another transition. You’ll need a more marketing-oriented commercial leader who can drive deep business reviews, but also be the proverbial basketball coach. Hire someone who has real sales and sales management experience (not only marketing experience). Marketing people who have done sales conceive tactics and collaterals that are practical, useful and actually drive results.

Lesson Two: Great sales teams like competition, money and feeling successful

Great salespeople are like great athletes playing team sports. They like it when their team wins. They like it even more when they score the winning goal. Ideally, each and every salesperson gets out of bed in the morning fired up to sell your widget because they believe your product is, first, the best horse out there and, second, the horse that will earn them a huge amount of incentive compensation. Your incentive compensation plan is uncapped and your reps realistically think they can hit the cover off the ball each quarter and make a small fortune. Since you have a great gross margin and your valuation is driven off a revenue multiple, you don’t mind that above-quota sales aren’t making a bottom-line impact. Where the business is today, driving topline silences the doubters and takes you to the major leagues. Better to be “near-breakeven” than start thinking about EBITDA.

Your incentive comp plan is designed to drive the most appropriate sales rep behavior. If your goal is opening new accounts, your reps are drooling to land that first PO because of the new account bonus that will hit their bank account. Your goal is account productivity? You add a multiplier tied to year over year average utilization. If your reps open unproductive accounts, their incentive comp suffers. If they open fewer, high-productive accounts, they’re leasing a Porsche. Don’t make the plan too complex. Focus on one or two behavioral priorities. Convince your Board that it’s OK to pay the rock star reps like rock stars over quota. Their success is your success.

Focus on sales training. Do real sales meetings early on in your launch to teach your sales team how to leverage the marketing collaterals. Role play. Use adult education techniques. Brainwash the sales team with 2–3 key messages with simple, supporting facts and figures drawn from market research and clinical trials.

Motivate your sales team to feel and act like they’re winning together. They should be calling each other during the day on their cell phones sharing tips and tricks and strategizing how to convert prospects and drive growth. Sales teams need to bond. They need to solve hard problems together and party together. Use sales meetings to work hard and have genuine fun as a team.

Implement creative team incentives that are earned together through the achievement of ambitious sales goals. Make them feel like they are part of an incredible success story, and they’re making it happen with their energy and dedication. This is the business success they’ll be telling their grandkids about. This is the moment to give it their all and do their life’s work. Now is when the big money is going to be made. Now is when their efforts will transform medicine, patient outcomes, and their real estate rental portfolio.

Lesson Three: Spend marketing dollars strategically, measure ROI, and back up the truck when tactics work

You’ve won over the earliest adopters and your sharks’ hottest prospects. Now you need more marketing horsepower. Your marketing lead needs to start with a short list of key objectives that will drive sales now. Do you need more leads at the top of the sales funnel? Are you focused on switching users of a competitive product? All prioritized and funded marketing tactics must directly serve one of these objectives. Save everything else for later. Favor tactics with ROIs that can be measured, and measure the ROIs using consistent methodologies that aren’t overly complex. Kill what’s not working, and double down when tactics drive sales. Give things time to work, but shutter initiatives that are going sideways without pity or politics. Blame no one for trying, but don’t accept more spend when a tactic is beating a dead horse.

The marketing team needs to be driving to see customers with the sales team. Finger pointing should lead to layoffs. Marketing and sales need to be one team.

Lesson Four: If Production, Quality, Regulatory, and Operations are not humming, your reps will sit on their hands.

Selling drives topline, but sales growth is totally dependent on the rest of the organization’s ability to deliver. The list of challenges and errors to avoid across functions is long and daunting. Your production capabilities, regulatory function, operations bandwidth, and quality system must be very robust as aggressive sales growth will stress and strain your people and your systems.

It’s your head of operations

“Hello, can you hear me?”

“Yes.”

“Uh….hi there. I’m calling because for the past three weeks, something strange has happened to our production process.”

“What do you mean by something strange?”

“Well, our scrap rate has gone from 3% to 97% and we don’t know why.”

It’s your head of medical affairs

“Hello, can you hear me?”

“Yes.”

“Are you sitting down?”

“I am now, what’s wrong?”

“One of our patients in the UK had a complication we’ve never seen before.”

“WHAT?”

“The patient is in the intensive care unit. That’s all I know at this time.”

It’s your head of people

“Hello, can you hear me?”

“Yes.”

“Are you sitting down?”

“I am now, what happened?”

“Marc’s leaving for a tech company and…

“…And what?”

“A customer just emailed complaining that our Hungarian distributor’s rep falsified her signature on a purchase order.”

— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —

There’s never a dull moment keeping your “salesforce family” happy while taking a healthtech innovation from $0 to $20m of sales.

When the tough call comes in and punches you in the gut, remember why you’re doing this. Your innovation is transforming medicine, improving patients’ lives, and making the healthcare system sustainable.

Start by taking a deep breath.

Don’t panic.

Force yourself to be calm and smile in front of your team. Lean on your lieutenants. Take the time you need to thoroughly think through your options, structure your next moves, and execute.

Doing something is almost always better than delaying.

Call your Board members to get ahead of the problem. Brutally prioritize how you are spending your time. Don’t neglect your real family, and don’t drop the things you love and make you happy.

Selling novel medical devices, diagnostics, digital therapeutics, and tech-enabled healthcare services is hard.

Really hard. But when customers become believers, our high-margin products become sticky. Very sticky.

That’s why it’s fun. And that’s why enormous value gets created when it’s done right.

I invest in commercial-stage health technology businesses at Lauxera Capital Partners. I am an American physician entrepreneur based in Paris, France