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April 6 Covid-19 Newsletter
Knowing when to hire executive level leadership is a daunting challenge for medtech and life science innovators. How long should founders go it alone? What skill sets should they develop versus hire into the organization? Do you hire a technologist, generalist, someone with founding experience? The answer is yes. But it depends on precisely who you are, what you know, what you need and where you are in your pathway to commercialization.
We hope you find this Q&A with Evan McClure MD, a Partner in the Healthcare and Life Sciences practice with global executive search firm Odgers Berndtson, useful. Evan describes his work as senior level executive and board search for healthcare and life sciences companies of all shapes and sizes, from preclinical biotech and medtech startups to global multibillion-dollar organizations. He can be reached at firstname.lastname@example.org.
How does an engineer, clinician or researcher innovating know when it’s time to hire executive leadership?
“Executive hires for growing companies tend to happen around periods of transition, so begin with the end in mind. What are your goals in the immediate, near and mid-term? Do you need to take a new Class I device into the clinic? Do you need to raise a series B or prepare for an IPO? Do you need to open up a new geography or client segment? Identify the capability gaps relative to your milestones, then work backward to identify the actions you’ll take to shore up your management team. Try to be brutally honest with yourself.
“Bringing on new leaders without a clearly articulated need can lead founders and young companies to get “out over their skis.’ You might find a great commercial leader, but if an upcoming trial doesn’t go as expected, you may still be years away from having something you can market. Of course, you also don’t want to wait until your FDA approval letter to think about commercial or market access strategy, so there’s a balance here.
“Founders and young life science organizations need to ensure they are accurately identify their needs to get to the next milestone. They should articulate these in a concrete way and translate them into discrete sets of responsibilities that complement one another. Make these plans and specifications as concrete and specific as possible, and you’ll find this makes things much easier when you start to compare real people against your rubric.
“A common scenario is a scientific founder growing the enterprise to the point where a broader skill set is needed at the top, such as needing to hire a CEO who has experience raising capital or building an executive team. Does the existing team have the capabilities and bandwidth to navigate the transition and come out of the other side successfully? Is the scientist-founder able, and have the time, to learn an essentially new kind of CEO job each time a company encounters a new phase? Can the gal with a finance background run BD? Can the guy with a sales background run HR? Perhaps – but it’s a risk.”
From a hiring and recruiting standpoint, what are the most common mistakes young medtech & life science entrepreneurs make?
“There are two common scenarios found at ends of a spectrum. The first: hiring without a clearly defined need (e.g., I need to hire a CFO because that’s what companies do at our stage). Learn from others’ playbooks but don’t copy blindly. Every company has its own nuances and context. Make your talent strategy bespoke to your circumstances. Don’t get ahead of yourself.
“On the other side of that coin, some wait too long to hire executive leadership or expect the team to naturally adapt to meet a need. They think, ‘I’m smart. Why wouldn’t I [the founder] also be the CEO and Chairperson? I know the space and the technology. Certainly I can figure out how to organize and fund a clinical trial.’ Expect a de novo executive search to take several months. Look ahead and understand what your own network looks like in an area and the projected degree of difficulty in finding what you need. Consider that you’ll be in a better position to recruit a CMO, for example, if you can map out that need and start conversations several months before you need to hire.
“I’ll also comment on humility and the transferability of knowledge. I know doctors who are also pilots, but just because you are a top-tier physician key opinion leader doesn’t mean you can fly a plane. Or raise equity capital. Or design a market access strategy. Founders, especially engineers, scientists and clinicians – accomplished individuals in their fields – need to acknowledge their susceptibility to hubris as they venture to the edges of their spheres of expertise. Be realistic about your abilities, interests, and network. Plan ahead, talk to the right people and get out in front of the situation because the search, selection and hiring process takes time to execute and your windows of competitive opportunity may close quickly.
Having done the “homework” you described above, how does a young company get started in the search for the executive level talent they need? What about cost?
“Good executive search consultants are thought partners first and foremost. Those you’d want to work with are generally open to a discussion about your needs and willing to give advice. Many larger firms have minimum fees that are prohibitive to startups; some can make creative arrangements. Typically my own team has a $100,000 floor for a project, but I have certainly made exceptions and even (rarely) taken equity. I’m almost always open to a discussion with someone who is pragmatic and collaborative.
“Founders and young medtech or life science companies don’t need to presume they can’t talk to me because of a fee. We are information brokers, strategic partners, problem solvers. I’m happy to have an exploratory conversation that allows me to introduce the firm and get to know a young company, even and especially if they aren’t sure they need an executive search yet. We all make investments of time to establish and build relationships that don’t involve an invoice. If a search consultant won’t take the time to get to know you (or, alternatively, tries to sell you a search without understanding your business situation), that person is not likely very well-equipped to support your company and represent you to the talent market.”
What’s the smartest decision – of any kind – you’ve seen a young medtech or life science company make?
“I recently worked with a very exciting young biotech whose name can stay private, though I suspect it will be very well-known in the coming years. It’s a classic story of a scientific founder CEO who discovers a great technology but needs capital to scale.
The uncommon piece is that this founder readily acknowledged that a $50mm venture raise would be new to him, and that his skills were better suited to a Chief Technical/Scientific Officer type role than a growth-stage CEO position. He had the humility to say ‘I’m happy to try this, but my top priority is to ensure the success of the company and its ability to save lives, and I think a professional CEO would be better-equipped.’ He put aside his need for the CEO title in the interest of meeting the company’s goals. That’s not always the case, and I have also recruited CEOs to replace scientific founders against their wishes and at the request of their Boards, which is much harder for everyone.
“It takes humility and foresight to transition out of the CEO role, or any senior role, in the interest of the company. In this case, there are others available in the market who have done this before, earned their scars, and are more likely to anticipate the normal potholes of company-building and emerge with the funding required to initiate human trials. We’re at the offer stage with a tremendous candidate who complements the founder-CEO and has all our boxes checked (with a slate of additional candidates at the ready if required). It’s our expectation that this scientific founder will find himself and the company in a much better spot in 12 months than if he had tried to take that on himself.
“A more concise answer to your question: Know when someone else is a better fit for your needs. Your ego may object initially, but it will thank you later when that leader takes your company in a direction, or at a pace, that you might not have been able to. Dig the well before you’re thirsty, and look to establish relationships with talent partners who can be your advocates for the long term.”
Thank you, Evan for sharing your insights with us! Connect with Evan on LinkedIn.