Tiger Buford, former VP of R&D at Ellipse Technologies, explains how the startup went from two products to a $400 million NuVasive acquisition in eight years by embracing risk. Weekly implant redesigns, creative regulatory shortcuts, and rapid restructuring let Ellipse outpace giants like Medtronic in remote-control spinal rods and limb-lengthening systems.
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Brought to you by Tiger Buford. Hello, orthopedic peers. Welcome to Inside Orthopedics. My name is Tiger. I'm an orthopedic industry insider and a retained recruiter for early-stage orthopedic companies. Thank you for listening. This is episode number 11. The title is The Secret Weapon for Orthopedic Startups. So let's get into it. I talk about Ellipse Technologies a lot. Ellipse wasn't perfect, but we did do a lot of things extremely well, and the record speaks for itself. Ellipse went from an idea for 2 orthopedic and spine products and a zero start to a $400 million valuation in 8 short years and a buyout by NuVasive. So we had a secret weapon at Ellipse that any startup can use, actually. Ellipse was a VC-funded startup with zero bench strength in orthopedics, I joined in 2012 as the Vice President of R&D. On paper, we had nothing. We had meager sales, finite funding, very few employees, 2 products, few customers, few regulatory clearances. However, we had a secret weapon. Our CEO coached us regularly that we had a weapon that we could use against the orthopedic competition every day, and that is a high tolerance for risk. We had the ability to take on extreme risk, and we knew that our competitors did not. We could try anything to see if it worked. We embraced a high-risk culture to really blow past the competition. So how did Ellipse use risk? Here's a few real examples. We redesigned our implant systems weekly. We said, can we make it better for our customers? We experimented with creative regulatory strategies. How do we find a way to receive a 510 clearance for remote control implants in kids? We redesigned the complex product assembly testing processes weekly. Can we build the products faster and with less waste? We experimented with borderless sales strategies that quickly put us into 20 countries. The question was, where are our evangelist customers and how do we best serve them? We reorganized the company every few months for speed. What is the best organizational structure and physical layout to go faster in the next 6 months? So with these questions and more, we simply outran the big orthos such as Smith Wesson, Synthes, and Medtronic with rapid iterative product development of new technologies that solved unique clinical problems. 2 years later, we literally had zero competition in our 2 market niches, which are remote control Spinal growing rods and remote control limb lengthening. In a span of 6 months, we had accomplished what Smith Nephew had struggled to do in 8 years and counting in limb lengthening. The competition was just in the rearview mirror, and we never looked back. We booked annual sales of $1 million $6 million, $12 million, $24 million, $42 million before being acquired by NuVasive. During this exponential doubling of sales, the employee count grew from 12 to about 120. So let's now look at the big ortho mindset to figure out why they can't do this. The big orthos avoid risk at all costs. They play not to lose. As a recruiter today, I talk to good people who are stuck in these big ortho companies each week. Even though they have massive resources to work with, they spend their time doing groupthink exercises and endless meetings. Nobody seems to be able to make a decision. Nobody's willing to stand up and take a chance because— and I think there's 3 reasons. Management has to protect earnings and shareholders first, every 3 months. The second reason is management has to protect the zillions of dollars of legacy products that are out in the field all over the world. And the third thing is management has to protect their own jobs by not taking chances or screwing up. So the big orthos have completely forgotten how to innovate. All new products are slow incremental improvements. It's just no longer in their DNA to innovate. Their innovation strategy has defaulted down to one single tactic: acquiring innovative startups. So let's look at the contrast between the big ortho mindset and the startup mindset. Today, the big and the small orthos have completely inverted cultures. In a small ortho, you are applauded for promoting creative ideas that challenge the way things are done. The result is that you will be given the latitude to test your crazy idea out. You may go down a rat hole, you may learn something new for your company, and you may be a hero. In the big ortho, you are slowly pushed out or fired for promoting creative ideas that challenge the way things are done. The result is you will undermine your career there. In small ortho, plans are fluid. What can we do this week to create value? In big ortho, you develop annual plans and 5-year plans. In small ortho, success comes from identifying a worthy risk and having the courage to embrace it. In big ortho, success comes from growing the top line with existing products. In small ortho, employees are evaluated based on what they are doing for the company today, tomorrow, this week. This is forward-looking. In big ortho, employees are evaluated based on what they did for the company last year. This is backward-looking. I could go on and on here, but you can feel the, the cultural differences. So in closing, I have a take-home message for any small orthopedic company. If you're leading a small orthopedic company or in management, You must never forget the unique leverage that you have over the competition is the ability to take on risk. So go out and win by embracing a culture of risk-taking and rapid iterations. That's all. Thanks. Follow me at tigerbuford.com or on Twitter @TigerBuford. Don't forget to subscribe. Be safe out there.
