Three Startup Lessons From my Days at Early Auris

Eleven years ago, on June 11th, was my official start as the first employee of Auris Health. Eight years later, Auris was bought by Johnson & Johnson for a total deal package of $6.2Bn including earnouts; the largest med-tech acquisition of a private company in history.

While I wasn’t there for the acquisition, but I did lead the early efforts of evaluating opportunities, defining the possibilities, and proving the potential in the field of flexible robotic endoscopy. My time at Auris was through its first 4.5 years of life where I was part of a small team, led by Fred Moll, MD, that took robotic endoscopy from conception through initial human trials. After I left, the flexible robotic development team led by the brilliant Richard Leparmentier did a fantastic job refining and commercializing the Monarch.

Over the years I have been asked on countless occasions “What was it like? What did you learn? Why was it so successful?” Here are the three biggest lessons I learned during my time there.

1.?????Focus vs. Exploration

In a startup, time is the most important resource to manage. You might think it is money but hear me out. Understanding over what timeframe you must achieve your next value inflection points drives the staffing, what your development plan will cover, outsourcing strategies, and ultimately the amount you raise with each round. What is ahead of you is a constant crisis of prioritization; you cannot do it all. You must tightly navigate the present, anticipate the constraints, and ensure you reach your goals without running out of money. Time is the one thing you have no control over.

Some might argue that if you had more money, you could go faster.?They’re right, but there is always a point of diminishing returns, and it’s not easy to identify. Pull in too many people and your speed and results are drastically reduced.

Take ideation for instance. Too many cooks in the kitchen for ideation, prototyping, and iteration, means that getting to your deliverables will be like swimming in honey, with excessive meetings, and misalignment of goals. You might even end up with designs that have been compromised to accommodate group consensus. There is also an optimal dwell time effect that is imperative with ideation. It can’t be rushed, and it can’t be procrastinated. Engineering teams need an amount of time that gives them the freedom to break down problems, contemplate solutions, build them, and have these solutions fail early so the right solution is designed. Too little time and the fear of failure digs in, resulting in lower-risk solutions. Too much time and watchful waiting take hold leading to solutions that cost much more than they should because it’s taken so long to get there.

The solution is architecting a development plan that allows you to de-risk the critical parts of your business as fast as possible while consuming as little capital as possible.

Sounds simple right?

Well, it’s not, there is work to be done around every corner, and your resources, including your mind share, your team's zeal, and capital, are limited. You must adjust priorities daily to ensure the work is efficient, unblocked, and creates value with each step —you have to be agile in deploying those resources and work to achieve your goals.?

“What is ahead of you is a constant crisis of prioritization; (…) you must adjust priorities daily to ensure the work is efficient, unblocked, and creates value with each step”

I learned how essential this is during Auris Health’s seed. In June of 2011, we closed on $500,000 of seed funding. Our goal was to build a demonstrable robotic system for cataract surgery in under one year. At first glance, there is no way to design and build a surgical robot with such a small budget, and in that short time frame; we had to get creative.

We decided to spend $200k, a significant portion of our seed financing (40% of our financing!), on two obsolete surgical robotics from a company in an adjacent field. We disassembled them and developed a plan to reconfigure them to perform the procedure. ?We maintained our focus realizing there were many challenges we’d have to design around.

?What we wanted: a new instrument control mechanism, custom optics, and to build new computing boards.??

What we could have: none of those.??

We cleverly engineered instruments to fit in the existing mechanisms, adjusted their pneumatics to meet our safety needs, and even tweaked the computer vision algorithms to track the movement of a pupil. I’ll never forget the day when Jian Zhang?- the second employee of Auris, and lead controls engineer -, came running in from the lab, screaming with excitement that we now had eye tracking!

Within a year, our small team of three (plus some brilliant contractors) had a working device and could do cataract surgery on bench models and bovine eyes. The focus on our goal and holding time as our most precious resource forced us to think outside the box on our path to de-risk the technology and business.

But here’s the catch; the focus must be complemented with some freedom for invention.

It is equally important that you take some time to explore the unknown. To tinker with new technology and generally experiment with outlandish ideas. Without this, you might miss the opportunity to learn something that would change how you think about your business.

Here is an example.?

On Christmas Eve in 2011, we wired $10,000 to purchase a 1mm micro camera system. We had no idea what we would do with it; we just figured it might open unique possibilities. After a year of tinkering, exploring, and raising our Series A, in December 2012, we kicked off a program, robotic flexible endoscopy. Our goal was ambitious; a leading medical device company who had a strong interest in flexible robotic endoscopy would be visiting us in three weeks, and we had to build and demonstrate this capability.

We assembled a small fire team: Enrique Romo, Travis Schuh, Jian Zhang, and myself. ?We had the instruments attached to our system and a breath-taking demo three short weeks later. It was a huge success. By April of that year, for several reasons, we decided to put the cataract program on the shelf, and the company pivoted to robotic endoscopy.?

Focus is important. Exploration is important. In a startup, you must manage to prioritize these two conflicting activities. Prioritizing the path to the goal (focus) is essential; find the quickest way to reach it and get answers to validate or invalidate your assumptions. There will be surprises, and things that you get wrong; you need to find out early.?Exploration, on the other hand, is also essential because you never know when you might hit an impasse and need to adjust the pathway for your business. The road to the finish line may seem straightforward, but it is anything but. It is always full of surprises, and you need to be ready for it. There is no better way of describing it than this cartoon.

The lesson I learned; drive focus on the interim flags. Work with your team to figure out the fastest way to navigate the hurdles and reach them. Once there, take the time to explore and assess that you are still on the right path.?

2.?????Pivoting

In early 2013 we were hitting a wall in cataract surgery. Success in cataracts meant transforming the typical 10 procedure per day surgeon and transforming them into the David Changs of the world who crush 30+ procedures. Robotics in cataract surgery is about increasing surgical volume and efficiency.

There are over 4 million cataract procedures performed in the US every year. To support that procedure volume, ophthalmologists mostly operated in high-efficiency ambulatory surgery centers that facilitate 15-minute procedures with equally fast room turnovers. But the spread between the speed of surgeons was quite significant. Some average 25-minute procedures, others average 10-minute procedures. The robotic technologies we were building at the time were just not well suited to support this kind of turnover. We had also identified the incredible capability.

Auris CEO, Fred Moll MD, recognized this uphill path, the new endoscopy opportunity, and made the bold and brilliant decision to pivot.

I quickly learned that as a startup leader, you should never be afraid of a pivot; it is an integral part of the entrepreneurial process. Whether you’re pivoting in the early days because you haven’t yet found product-market fit, or you’re pivoting by reinventing yourself, at some point, most if not all companies that want to stay successful are going to have to pivot.?Here are a few excellent examples:

• Slack: Stewart Butterfield founded his company, Tiny Speck, to begin developing a game called Glitch. After a brief launch in 2011, Glitch was returned to beta, and by 2012, Butterfield declared the concept wasn’t viable. However, the internal communications platform Tiny Speck had created to communicate between US and Canadian offices turned out to be the real opportunity. The messaging app Slack officially launched and became a unicorn ($1+ billion valuation) in 2014. Four years later, Slack had 8 million active daily users and was valued at more than $7 billion.
• Intuitive Surgical: The path of Intuitive Surgical’s da Vinci took a few significant turns in its early years. The technology basis for the da Vinci robot was licensed out of Stanford Research Institute (SRI), as the foundation of Intuitive Surgical Devices, Inc. After years of struggling to get traction in their initial focus of cardiac surgery, a surgeon suggested they explore laparoscopic prostatectomy. A new procedure that took incredible skill required fine suturing, working in a deep pocket, and that a limited number of surgeons could perform. Intuitive went all in and it stuck.?Twenty years later, over 85% of the 90,000+ radical prostatectomies in the US are done with da Vinci.
• Microsoft: The renowned software company from Redmond, Washington, has pivoted its core focus on countless occasions. In 1980 when IBM had found itself late to the personal computer revolution, it paid Bill Gates and Paul Allen a few hundred thousand dollars for what would become the Microsoft Disk Operating System (MS-DOS).?By 1985, Microsoft launched Windows 1, an easier-to-use graphical user interface for a PC that hoped to ease the user experience. It was a significant change in the industry and democratized access to computers.?By 2003, Microsoft's annual revenue had surpassed $32 billion and had over 90% market share. Since 2003, Microsoft has continued to pivot on occasion, and today it focuses on cloud-based service subscriptions.
• Netflix: If you are as old as me, you probably remember the hands-on version of Netflix. In the early 2000s, Netflix operated a mail-order service where its customers rented DVDs and received them directly to their homes. There was always a lot of excitement in my apartment when those little red packages showed up. But as connectivity and residential bandwidth increased, Netflix not only began offering access to movies and TV shows online.

To have the ability to pivot, you must be sure that you’re taking those opportunities to explore what is around you. Get out of your echo chamber. Talk to the customers, and dive deep to understand the reasons behind their needs and how they’re changing.?

3.?????User Experience Should Not Be Ignored

Guidant Corporation was founded in 1994 and, by 2006, was bought by Boston Scientific for $27 billion. During that time, it launched dozens of successful products. A way Guidant differentiated itself from competitors was by focusing on the user experience through industrial design.

Consider vein harvesting, for instance. This was an incredibly awkward procedure that required the surgeon to work deep in a 15-20cm long tunnel while dissecting, visualizing, clipping, cutting, and safely removing the saphenous vein. The Guidant’s VaseoView system combined these necessary elements into one intelligent, streamlined package. All these tasks, which initially required several different tools, could now be completed with one handle by the surgeon. The added benefit was a minimally invasive procedure for the patient and more efficiency and comfort for the surgeon.

The user experience should not be overlooked. The networking effects of a positive Net Promoter Score pull the revenue curve toward you, accelerating your adoption. Ecstatic doctors and surgeons will happily use social media to share their experiences using your device, and nothing is better than peer-to-peer marketing in the medical community.

Conversely, surgical teams will be reluctant to use it if your device is “high friction” or frustrating to use in the operating room.

At Auris we knew that focusing on user experience is even more critical for robotics. ?From day one, we focused on clinical workflow, user interface, and design language to ensure that our product delivered a pleasant and intuitive experience. That user-centric focus continued throughout the product design by the teams after I left.

We strove to minimize the noise and distraction of things not essential to a user while amplifying the “signal” of crucial things.?The best example of this is the primary user input for the Monarch System: the gamepad controller.

The first prototype was our Atari-like controller (pictured below); it did not work well! It was confusing and awkward. It was so big; that you couldn’t hold it with one hand. You had to sit down and put it in your lap like you were getting ready for a game of pong. It also inconveniently required the surgeon to look down from the endoscopic view as they searched for the right button to press. The joystick also did not feel precise. Its height required a significant throw to steer the endoscope. The result was that your whole arm was used to drive the system like you were shifting gears in a semi-truck; not the precision we wanted.

Our second controller (pictured below) was an improvement, but it was still far from the ideal design.?We made it more ergonomic, so you could now hold it with one hand and drive it with the other while standing to observe both the patient and robot. We added illuminated buttons to engage the surgeon's peripheral vision with the hope that it would assist with interacting with them.?However, the controls still lacked ergonomic positioning and tactile elements, leaving you searching for the proper button (and sometimes pressing the wrong one!) The surgeons never openly stated their frustrations. Still, you could see their lack of confidence while interacting with the robot, which told us we needed to do better.?

At this point, it felt like we were spinning our wheels. We did not have the money or additional resources to dial in the suitable input device, but we had to keep going.

Three of my four boys had been born by this time, and we loved playing Xbox together. Minecraft was usually the game of choice. ?It’s a game where you play a pixelated character who must survive in a dangerous world filled with zombies, spiders, and diamonds! To survive, you harvest resources by mining resources and crafting gear. Running through blocky tunnels away from an obnoxious zombie to reach a diamond is eerily similar to driving in the lung’s airways to a suspicious lesion (sans zombie, of course).?

“Running through blocky tunnels away from an obnoxious zombie to reach a diamond is eerily similar to driving in the lung’s airways to a suspicious lesion (sans zombie, of course)”

This was when the epiphany came.

The next day, Ben Fredrickson and I mapped out all the controls on a whiteboard. He went to work and dug into the code. We sat down to try it by the end of the day; it was game-changing. It delivered the speed needed in the large airways and the precision desired in the periphery, where the airways were much smaller. All the controls were at your fingertips, and you rarely had to take your eyes off the screen.?

Watching the next cohort of interventional pulmonologists use the system was immediate validation. Smiles and exclamations of joy replaced the frustration on their faces with past iterations.

The new controller, a leap forward, was the primary interface between the surgeon and the robot. This user experience influenced all the feelings about and perceptions of the system and the company. Such a vital component that carries so much weight for the user has to be done right.

The user experience will have a significant impact on the success or failure of your device. Your customers need to willingly pull your device off the shelf into the operating room to use it. To understand what’s needed, you can’t just passively do usability studies and ask questions. You must religiously observe how the surgeons interact with your device to the point where you can step into their shoes and understand how they feel when using it.

To the Moon

There are many more lessons from my time at Auris and other great companies I was honored to be a part of. At Moon Surgical, we’ve taken these lessons to heart. We’ve organized our culture and team to be user-centric; we hold user experience as a pinnacle filter in design decisions. We also enjoy rigorous focus as we accelerate towards our goals while taking the time to stop and look around for course corrections on occasion.

By sharing our collective experiences in start-ups, we can learn from each other’s missteps and also each other’s triumphs. And I hope sharing these lessons helps you and your teams refine your path while balancing the need for focus and the human desire to explore.

?About Jeffery Alvarez

Expertise is in identifying, defining, and creating significant clinical value through a holistic design thinking approach that delivers high-impact products.

Over the past?17 years, Jeff has helped define, design, manufacture, or launch over 22 different medical devices.?Including early product development on Auris Monarch Robotic System and Hansen Vascular System. He has led teams through need-finding, definition, development, and human clinical trials.

Jeff has a BS in Mechanical Engineering from Rensselaer Polytechnic Institute & and MBA from Haas School of Business, UC Berkeley.