Tiger Buford, an orthopedic recruiter, argues that execution matters far more than the initial idea for orthopedic startups. Ideas multiply value by only 1-20x, while execution can multiply it by $1,000-$10 million. Amedica had a strong ceramic-implant idea but weak execution and stayed at $5 million; Ellipse Technologies paired a remote-adjustable implant with great execution and exited for $400 million in eight years.
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Brought to you by Tiger Buford. Hello, ortho comrades! Welcome to Inside Orthopedics. My name is Tiger. I am an orthopedic insider, retained recruiter for Great little orthopedic companies. You may be driving, traveling, working out, or sitting at home. Thank you for listening. This is episode number 3, a short one. The topic is why the startup idea doesn't really matter. I'll get right into it. I live in the orthopedic startup world. I worked in startups and now I recruit for startups. I have come to the conclusion that startups place way too much emphasis on their idea and far too little emphasis on the execution of the idea. Startup entrepreneurs call me. These leaders often fall in love with their idea, their concept. They ask me to sign an NDA before they can even share the idea with me. I signed the NDA, but it doesn't really matter. The idea doesn't really matter. In fact, they could email their idea patents to the big orthos and nothing would actually happen. Just like Tesla recently gave away all of its patents to the other car manufacturers. It doesn't matter. Tesla will outrun GM with their execution. It's the execution that matters, not the idea. Every day there's thousands of great ideas floating around for orthopedic startups. However, there's only a few orthopedic startups that are executing and killing it each week. The potential acquirers of startups really only take notice when a startup is executing well. Acquirers give strong valuations for execution, not great ideas. The best way to illustrate this is to use Derek Sivers' multiplier example. So the value of an orthopedic startup is a multiplier of the idea times the execution. You have to have both. But here's the secret. The idea contains a small number multiplier and the execution contains a big number multiplier. For instance, weak idea, 1. Good idea, 10. Brilliant idea, 20. So we're in the, we're in the tens here. On the execution side, weak execution, $1,000. Good execution, $100,000. Brilliant execution, $10 million. So, to make a valuable business, you need to multiply the 2. The most brilliant idea with no execution is worth 20 times $1 or $20. The most brilliant idea with great execution can be worth 20 times $10 million or $200 million? Here's a couple examples. At Amedica, I believe they had a great idea. I got to see it early. The, the founder presented to us at Wright Medical about 13 years ago. He had an implantable ceramic that was simply better and stronger in every way. Okay, so I give them big points for the idea, but few points for the execution over the last 13 years. So today, Amedica is just an OEM ceramic supplier with a market cap of about $5 million as a public company under the ticker SINT. So they had a great idea and they didn't execute. Now let's look at Ellipse Technologies. They also had a great idea— remote control adjustable implants using magnets. By contrast to Amedica, Ellipse multiplied a brilliant idea with brilliant execution. This enabled us to go from zero to a $400 million buyout in 8 years. So the bottom line is, I don't want to hear about your idea. I really want to hear about your execution. That's the message. Thank you. You can follow me on orthostreams.com or at Twitter @TigerBuford. Don't forget to subscribe. Be safe out there.
