In February 2017, a leading investor with an active interest in people and healthcare was appointed CEO of a medtech company. David Fischel took a step into a role which he had never done before, because he believed in its mission.
As CEO of Stereotaxis, his leadership has seen a company which was stagnant and struggling despite having leading technology in robotics, revive and see growth in its stock.
In our latest episode of Career diaries by Elemed, David talks with Elena about changing the culture of a company, common mistakes startups make and how to avoid them, the importance of hiring “doers” as part of your team and his vision for the future of Stereotaxis.
With David Fischel at the helm, Stereotaxis has significantly increased its capacity to benefit the MedTech industry with its innovative robotic technology in performing endovascular cardiology and treating arrhythmias. Among its many advantages, Stereotaxis equipment makes surgery safer for patients and more precise for physicians.
Why medical devices?
The beauty of working in medicine and medical devices specifically is that you combine multiple challenges and specialties all in one. On the one hand, you have human biology and medicine which is fascinating, and trying to work to improve that is motivating.
On top of that, when you look at robotics in medical devices, you have a mix of mechanical engineering and electrical engineering and software and the combination of all of those together is fun, exciting and challenging.
And then you have the whole business dynamic. Working in the business of medical devices, combining human biology and medicine with technology with the challenge of running a business is a beautiful combination.
When did you first get exposure to the industry?
My parents are physician scientists. In the ‘90s, both of them gradually transitioned to learning that there was this world where medicine and finance interacted. In 1999 they founded a hedge fund, DAFNA Capital Management, focused on earlier stage publicly traded biotechnology and then also medical device companies.
I worked with them throughout my schooling. At University, I studied math and finance. After graduating, I went to Israel to work in an Israeli medical device venture capital firm called SCP Vitalife, before returning to LA. I joined our firm, with medical devices being my primary focus and I was a portfolio manager for those investments.
How do you go from passive investor to CEO of a company?
“When you’re an investor, you’re looking for situations where the current reality of a company does not reflect its potential. As a passive investor, you want that gap to be bridged through actions not on your own. When I came across Stereotaxis, I was intrigued by this gap and discrepancy that I had seen so far.”
He investigated to find out why the company had such disparities and realized that there had been issues with corporate governance and leadership. He knew that to bridge the gap, a more concerted effort was required than what the company was used to. As a big believer in the companies’ technology and potential, David was elected as CEO and chairman of the board.
During your time as an investor in startup companies, what common mistakes did you see companies make?
Some of the reasons why startups fail:
- Developing a product that doesn’t have a market need
- Developing a product where the market need is not substantial enough
- Not considering in enough detail how the users will actually use it
- Not thinking about all the potential stakeholders in the adoption of the product
- Pricing: not designing it at a cost that would be feasible for the market to bear and for the company to make a return.
- Regulatory issues, manufacturing issues, IP issues
- Not managing the human element and interaction in the right way
Some of the reasons startups succeed:
- Sometimes it’s like winning the lottery – luck
- Most of the time, it’s repeatedly making the right micro decisions every day in the right direction.
- Make good & smart decisions.
- Being persistent as you make those decisions.
- Be directional even in the big decisions.
- Be patient. Companies are not built overnight.
- Hiring do-ers
- Designing a product which solves a market need
How will the Medical Device Regulation change the landscape of the industry?
I Don’t think MDR vs MDD is a complete phase change. Regulators globally, are caught between a rock and a hard place. On the one hand, they have a mandate to protect the public from products that could cause harm or that aren’t proven and on the other hand, they have a mandate to bring to market those therapies that could provide a benefit. Those two goals in some way, counter each other. Regulators have to find the balance between them.
What we’ve seen in the medical device field is generally Europe being more accommodating to devices. A more accommodating regulatory environment is positive in that it gives patients and physicians more choices. It’s negative in that, you can have therapies that aren’t that well proven causing harm until that harm is noticed.
MDR will be more protective of patients, but every time you increase the level of regulation and you increase that burden, it makes it more difficult for smaller companies – there is a societal cost making it more difficult for smaller companies to operate.
Will startups survive?
It makes it harder and it makes it more costly. Again, there’s a benefit to it and I guess that the European regulators probably were looking at the benefit in terms of reducing risk to patients that an unproven device comes to market. The cost is that innovation will of course suffer.
The biggest things to watch out for in Medtech
There are two major trending topics that we see across the industry, especially in Stereotaxis’ area:
1. A preference for reduced invasiveness of procedures which is beneficial both in that it reduces the risk of a procedure and improves outcomes, and secondly it’s beneficial because it improves access to therapy.
2. The transition to a more digital, connected, robotic environment. It’s being used to overcome limitations with better precision, stability, reach, safety and more data is available to the physician through digitization.
Most defining moment of success at Steretoaxis
Taking a company that was static for almost a decade and reenergizing it; the people, the way the customers and the market look at it is the most heartwarming aspect of the job.
Another defining moment happened last year when Stereotaxis came out with the first new meaningful robot in the company’s history which was the Stereotaxis Genesis RMN platform. It’s a smaller device, less costly and is an improvement in robotic magnetic manipulation.
How do you build a strong company culture?
It starts from the top. The culture of a company should be made up of two important factors:
1. Doers.
2. People who have aligned interests and share the view of what the mission of the company is over the long term.
“Those are the two biggest things I’ve tried to make sure happened across the team.” To incorporate this culture, David went so far as changing the system of board members in their company of getting paid in cash to getting paid in stock so that they would be motivated to see the company succeed. Leading as an example, David has never received a salary from Stereotaxis and is paid only in stock.
So, how do you identify if somebody is truly a doer or just claiming it?
“It’s very, very hard,” David laughs. Even CEOs of medical devices companies that have hired thousands of people over their long term careers, say that hiring is a 50/50.
“When you start working closely with somebody, it becomes very obvious who is a doer, and who is more of a talker.”
Doers contribute rather than just talking. They don’t just manage people and tell them what to do. They lead by example by functionally contributing and they have a specialty that is valuable to the company. And this should take place in every part of the organisation.
They are more efficient and have the right mindset; they’re willing to roll up their sleeves and get the work done. They’re not removed from reality. When you behave as if you’re in an ivory tower, it can create resentment from those that are actually doing the work.
What do you do as a leader when you identify that someone on your team is not a doer?
Each case is different. “It depends on the individual environment — the company situation. In some situations you need to make rapid, tough decisions. There are other cases where you need to coach and guide the employee…”
GOAL SETTING
There tend to be two schools of thought concerning goals. One group is set against it and believes that people should go with the flow. Another group firmly opposes that view and has the utmost confidence in planning, knowing what you want to achieve and striving for it. Both schools of thought are correct and that neither is better than the other.
“Either you proactively go out and try to grab something, make something happen or things come to you which is not entirely passive because you need to have the mind and eye to be able to notice when opportunities present themselves to you. Success and growth can happen through both mechanisms which is okay.”
The future of Stereotaxis?
Cardiac ablation is a big opportunity. 99% of surgeries are still being done manually using hand held catheters. There is a lot still that needs to be done in terms of advancing robotics interventional medicine which we are working on such as, making the technology accessible and the therapy better for the physician and the patient.
What does success look like for you?
Success is us transforming endovascular surgery in the same way that Intuitive Surgical transformed laparoscopic surgery. I hope we will see that 85% to 90% of cardiac ablation procedures are being done robotically and then additional endovascular procedures should probably follow.
What’s the legacy you want to leave on the world?
You have a limited amount of time in this world, a limited amount of bandwidth, you want to have as good of a positive impact on the trajectory of the world as possible. So, it’s important to try to use your skills, energy, influence, intellect and time to do as much as good as you can.
Right now I try to do it by pushing forward medical innovation so that we transform the way medicine is performed into a smarter, more effective, better way.’
