Startups: One Entrepreneur’s View of Balancing Passion with Practicality
Wednesday, January 24, 2018 • J. Richard Hughen
UM Baltimore Entrepreneur in Residence (Diagnostics/Medical Devices) Ric Hughen urges focus on facts and data, rather than emotions, when running a business
Richard Hughen’s first entrepreneurial experience was as Managing Director at e-learning startup LearnWare, where he says his “addiction” to startups began in earnest. The former manager at Abbott Diagnostics, Cordis and Johnson & Johnson enjoyed LearnWare for the very reason that entrepreneurs usually get hooked: building something from scratch is exhilarating.
Mr. Hughen was also motivated by a desire to make more impact faster. “At a startup, you see the effect of your work every day; large companies move slower than that.” An example was when LearnWare secured a large project with AstraZeneca, an important first win after the company pivoted to specialize in life sciences. “This was a critical turning point as we moved LearnWare from a general e-learning provider to one that would focus exclusively on pharmaceutical, biotech and medical device companies.”
Mr. Hughen, who earned an MBA and a B.S. from The Pennsylvania State University, brings diverse experience in the medical device industry to his Entrepreneur-in-Residence role at UM Ventures. He’s worked at three start-ups, a mid-cap, and with three Fortune 500 companies. As a VP at Maryland-based CSA Medical, he helped the spray cryotherapy device maker move through various stages of development – from technology licensing through product development, clinical trials, multiple FDA clearances, CE marking, and raising money in Series A, B and C rounds to the tune of $50 million. When he left CSA Medical in 2015 after nine years, the startup had evolved into a profitable commercial business.
Central to his experiences at CSA Medical was the ongoing chase of investors. “You realize that the company is running out of money, the clock is ticking and it can be quite stressful, but at the same time you need to run the business and move forward,” he says. “Fundraising is the most difficult thing to do in a startup.” Ultimately, he says, raising money in med tech depends upon on having sound evidence that the technology works, patients benefit and the health care system saves money. “We could always give a pending financier a list of physicians using our device who had patients with dramatic clinical response and data to back it up.”
Lessons to grow: talk to customers
Entrepreneurism is about passion and ambition: finding an idea with market potential and sticking with your convictions. Mr. Hughen advises that running a business on emotions does not work; what’s needed when making decisions is facts and data. “I would hear executives and engineers at previous jobs discussing big changes they were going to make to a product, based on a single conversation with a thought leader the previous day,” he says. “But that’s just one opinion, and it’s not based on enough facts. As commercial lead I had to head off emotional tangents and keep the project and team on track.” That often meant stepping back and getting quantifiable feedback from dozens of potential customers.
This last point can get lost with entrepreneurs in any industry. The best validation for a product or service is to talk with potential customers. Mr. Hughen recommends that founders do at least 50 such interviews. “I guarantee that these discussions will be enlightening, as you often find out that their needs are much different than what you had imagined,” he says.
It is also critical to interview several successful entrepreneurs who can share what it’s really like to undertake a startup. “It’s brutally hard work and it can take a toll on everyone in the startup executive’s family,” he says. “It’s extremely important to know what you are getting yourself into before you go down the road.”
Working with UMV
Mr. Hughen has been working two or three days a month for UM Ventures since 2016, counseling faculty members on next steps for their inventions. That entails determining a pathway for the next few years regarding the business model, funding, and operations. His advice is frequently imbued with a reality check. He encourages inventors to carefully consider whether to pursue commercialization at all. Mr. Hughen advises in-depth technical and market analysis to determine “whether the dog can hunt.” And, he muses: “Most dogs are pets. Very few can actually hunt.” It’s tough when researchers have been working on an idea for many years, he says, only to learn that it has limited or no commercial future.
He enjoys spending time at the University of Maryland, Baltimore (UMB), inspired by the many “extremely brilliant” people doing research and development and delivering clinical care. “I see it as an opportunity to get an early view of technologies that could help patients and be the basis for a new company,” he says. His latest venture as CEO of UMB startup Cellth Systems was born out of technology licensed from the University by InnovateTech Ventures and Gerard Eldering.
Cellth Systems is working on a personalized medicine technology initially targeting breast cancer patients. The cell-tethering technology is a nanoscale, engineered surface that can lasso and immobilize a cell without altering or affecting the cell’s native state and behavior. “We are focused on circulating tumor cells and building a chip to identify the optimal drug for each patient,” he explains.
Mr. Hughen is bullish about getting the facts right, if you want to bring a product to market. “A lot of the literature talks about following your gut,” he says. “There’s some merit to that, but when you get beneath the superficial layer, you’ve got really smart people with strong educational backgrounds who probably didn’t follow their gut as much as they say. There are a lot of facts and data behind the motivation and path forward.”