Tech startups are predicted to disrupt US healthcare in 2024. Scott Nelson, co-founder, and CEO of venture backed FastWave Medical, offers his strategies for success in innovation with Jim Cagliostro. Episode Introduction Scott reveals the two signs that an idea has potential, why market trumps everything in innovation, and why leaders should focus on eliminating pain points for their end users. He also advises innovators to connect with potential strategic acquirers at an early stage and explains why leaders of startups shouldn’t put all their eggs in the venture capital basket. Show Topics Two signs of a good idea Market ultimately trumps everything in innovation Engage with potential strategic acquirers at an early stage Finding investment in your community Flipping the script: eliminating pain points Effective ways to raise capital Leaders of startups don’t have to be the CEO 05:49 Two signs of a good idea Scott said there are two things for leaders to consider in innovation. ‘’I guess to answer your question in a little bit more long-winded way, I would say if you've got an idea that you can't seem to shake a little bit… It's sticky and you find yourself maybe waking up at night thinking about it or you thought about it and then two weeks ago you're still thinking about it, maybe a month goes on, you're still thinking about it, that's usually a good signal. Maybe there's something there, but the most important point from my perspective is before you go too far, before you get too latched onto this idea, you really need to think about two things primarily. One, does it solve a real glaring problem? Is it a painkiller? I remember interviewing Dan Hawkins way back in the day. He was actually the founder of Shockwave, the company I mentioned previously, was very early at Intuitive Surgical, was the founder of Avail Medsystems, et cetera, serial entrepreneur. And he phrased, this was back in, I think 2016 or 17, but he mentioned finding a painkiller, not aspirin, not Tylenol, but a real painkiller, something that really causes a lot of pain, whether that's from a cost perspective, whether that's from a workflow perspective, but something that's like, there's a lot of friction there. That's what your idea hopefully solves for, a real painkiller. And then secondarily, if you think you're onto something that solves that real pain point, secondarily, you need to think about this as early in the process as possible. Who's going to pay for it?’’ 09:03 Market ultimately trumps everything in innovation Scott explained why market is the #1 factor for potential entrepreneurs. ‘’I sort of fundamentally believe that market ultimately trumps everything else, right? Now, don't get me wrong, you could have a great product and a great team, but if it doesn't serve a huge market, you're going to have to think about other ways to fund that, right? Maybe it's a product that you can invest your own money in. Maybe it's a product that you can get to market quite quickly and use revenue and profits to support the company's growth, etc. But the reality is you need a big market to serve in order to give you optionality to capitalize and fund your idea or fund the company moving forward. So I do kind of think market trumps everything, because again, you could be working on a great product, have an awesome team, but if the market just doesn't support it, it's likely not going to have a lot of substance there. On the flip side, you could have an awesome market and maybe a decent product and a decent team, but it's probably going to do fairly well because the market supports that need. So, long story short, there's a couple of different ways to think about it. They're all important. ‘’ 12:38 Engage with potential strategic acquirers at an early stage ‘’Obviously you need to be careful and cognizant about not disclosing too much, but the imperative is really to start engaging early on with those, what you perceive as potential strategic acquirers, really under the guise of just an introduction. You're not trying to sell them anything. It's a dating process. You're trying to get to know them, inform them of what you're building, what you're working on, so at least have a high-level idea. And as you continue to make progress against your idea and against your milestones, keep them informed. Not just them, but hopefully potential investors, people that... stakeholders within your community. You want to be communicating the progress that you're making against the idea or the product that you're building. So I can come full circle on your question. I just think it's really sometimes underappreciated, and it's actually a tip that I picked up on from Duke Rohlen, he's the founder of Ajax Health, serial entrepreneurs, had multiple exits under his belt, but he mentioned this, in an interview maybe close to 10 years ago now that I had with him. That was one of the things ...
