The NHS, UK PLC, and the wider world will all benefit if we have more doctor entrepreneurs willing to take risks and start up companies. Starting up a company can be exhilarating, but it’s also complex and exhausting. Healthbox has been founded to help health start ups, and last week it’s managing director, Nick Rosa, offered extremely useful advice to those bold enough to start a company.
Rosa was a “corporate guy” who was among other things the chief executive officer of NutraSweet and a senior manager at Monsanto. When he retired young (presumably having made a fortune) he didn’t know what to do and so started Sandbox, “a place where business creation and exploration could thrive.” Sandbox flourished, and Rosa and colleagues started Healthbox, “a health accelerator company” that offers mentorship and support to those starting companies. Now Healthbox has come to Britain. (I’m one of its unpaid mentors but missed the launch and haven’t yet mentored anybody.)
Wearing a roll neck black sweater, which is almost the uniform of entrepreneurs, Rosa illustrated how he has moved on from his corporate days by telling the story of being at a meeting of the senior managers of Monsanto discussing diversity—all white, middle aged men in country club that didn’t admit women or blacks. Pointing out the irony didn’t make him popular.
Rosa started by describing the “endemic flaws” of entrepreneurs: a bias against recognising serious difficulties; unrealistic optimism; limited management capabilities; and an inclination to incremental growth rather than big leaps. The first two, I couldn’t help thinking, are what allow entrepreneurs to keep going when failure is the most likely outcome.
To overcome these flaws entrepreneurs should ask the killer questions early. The killer question is “Why will this business fail?” By anticipating the likely causes of failure, you hope to avoid them—but there are many ways to fail. The challenge to entrepreneurs seems to have the conviction that you can succeed while simultaneously thinking why you might fail.
You need, said Rosa, 500 ideas to get a successful business. Keep a book of ideas, and think of your start up as a hypothesis. The hypothesis will keep evolving, and a failed hypothesis will lead to a new hypothesis. “Your business,” he said, “will fail, and you’ll need to move on.”
Perhaps the best—but hardest—advice that Rosa offered was “to celebrate failure.” Risk implies failure, and in Silicon Valley failure is a badge of honour. If you haven’t failed you haven’t taken a risk, and you can’t start a company without taking a risk and being willing to fail. American business culture celebrates failure in a way that British public life doesn’t—and that’s a big problem for entrepreneurs in Britain. It’s easier to climb the familiar hierarchy of British medicine than take the risk of starting a company.
As in any enterprise you should chose your partners carefully—be they staff, directors, or investors. One of the big questions for investors is “whether to bet on the horse or the jockey.” A study of a thousand start ups suggests the jockey: “a good team with a mediocre idea will beat a mediocre team with a good idea.” Rosa urged the entrepreneurs at the meeting to take time with boring things like job specifications, interview skills, and checking references. Many start ups (and I can think of one) have gone bust because they “fell in love” with a candidate for a job and didn’t check references.
An investor himself, Rosa talked about what he looks for in a team. First comes commitment and desire. Starting a company and working for a start up can’t be “just a job”: passion is essential. Next Rosa looks at how well the team functions: Is there lots of talk? Is everybody contributing? The team must have “deep knowledge of the space in which they work.” Flexibility is essential because things will not go as planned. Rosa also looks for things that might be surprising: a capacity to say “I don’t know”; and a willingness to ask blunt questions of him like “How do you manage your company?”
Every team needs a hacker and a hustler. The hacker is a problem solver, and the hustler is the leader of the charge, the holder of the passion. (When I heard this I thought of Tim Kelsey, National Director of Patients and Information for the NHS Commissioning Board, whom I listened to earlier this week. He is the Chief Hustler for the new NHS.)
Do you ask about education, asked somebody in the audience. “I couldn’t care less which school they went to” was Rosa’s straight answer.
But culture is important–even if there are only two of you, insisted Rosa. Each organisation has its own culture, and a good cultural fit within an organisation makes for success. It doesn’t mean everybody has to be and think the same—indeed, that’s bad—but people must enjoy working together. In the best cultures people take pleasure in the success of others. And it’s important to articulate the culture, which might be done, suggested somebody in the audience, through icons. Putting a sandbox in the middle of your office shows that you have a creative culture and becomes embarrassing if you cease to be creative.
Funding is a never ending debate within a start up, and, said Rosa “You should take funding if offered it [by investors] and not worry about dilution [of equity]. Go get it.” Others, he acknowledged, might take a different line, and he did say that founders are always ahead of investors in understanding business opportunities. Indeed, he described investors as “clueless.” It’s very hard to grow your business from customer payments, and classically a start up will take a long time, perhaps years, to generate sales “and then it will go crazy.” When it goes crazy may be the time to take money from investors—to realise your full growth potential.
With start ups, Rosa concluded, you are “swimming upstream most of the time” and “most deals don’t work out.” You need “determination and flexibility” to succeed, but when you succeed—and if you can live with enough failures you will—you can create huge value for your customers (perhaps NHS patients), your country, and yourself.
Competing interest: RS is an unpaid mentor for Healthbox but hasn’t mentored anybody yet. He is also the chair of a start up, Patients Know Best, in which he has equity and invested but receives no salary.