The 20th century saw amazing advancements in the treatment of nearly every class of disease. Conditions that were once considered death sentences, such as breast cancer and late-stage coronary artery disease, were successfully fought through medical science, in many cases allowing patients to be completely cured. These advancements were largely the product of better procedures, medicines, protocols and knowledge.
The 21st century is shaping up to be a continuation of this rapidly improving healthcare picture. But whereas the advancements of the 20th century primarily took place in the physical realm, the advancement of the 21st century are mostly centered around the increased collection, use and understanding of information. This revolution of medical information not only entails a mind-boggling wealth of medical data but also nature’s very own ancient storehouse of biologic information: genetics.
In this new and exciting frontier of medical science, few stand as tall as Marc Beer. Since the mid-1990s, Marc Beer has been at the forefront of some of the most forward-looking medical science companies in the world. Beer worked for nearly a decade at pharmaceutical giant Abbot Labs, one of the largest generic drug and medical device manufacturers in the world. From there, he embarked on an executive career that would become a one-man tour de force in the biotech space.
Beer was a key early figure in the success of biotech giant Genzyme, which become one of the largest biotechnology companies in the world under his leadership. Today, the company boasts more than 11,000 employees and has billions in yearly revenue. Beer quickly found his executive talents in high demand, being approached for a large number of potential employment opportunities.
In 2000, he co-founded ViaCell, a stem-cell company whose proprietary technology allowed for the long-term preservation of babies’ stem cells through a patented means of preserving umbilical tissue. Beer helped build ViaCell from scratch into a $300 million company. In 2007, ViaCell was sold to Perkins Elmer, netting Beer a small fortune but also leaving him pondering his next big move.
That would come in 2010 when Beer got involved on the ground floor with a new startup called Good Start Genetics. The company pioneered a genetic testing system that helped dramatically raise pregnancy rates for couples seeking in-vitro fertilization. Good Start was eventually acquired by Invitae, adding yet another major success story to Beer’s already impressive track record of successfully guiding startups to viability.
Today, Beer has taken on a new and ambitious startup project. As the CEO and co-founder of Renovia, he is helping to change the lives of millions of women who are experiencing pelvic floor health challenges. Renovia promises to completely revolutionize an area of treatment that is of increasing concern to millions of American women, without subjecting them to the dire risks of surgery.
With such a fascinating and inspiring career, Marc Beer sat down with us to answer a few questions and hopefully pass on some of the rich knowledge that he has gleaned over 25 years as the embodiment of the modern-medicine vanguard.
How did you get started in this business? What inspired you to start Renovia?
From an early age, I was always fascinated by the fact that modern medicine could not just heal the sick, but, like a dam averting the flow of a great river, completely change the very course of nature. That people with conditions like diabetes or cancer — who almost certainly would have died in a matter of months or years over the near entirety of our species’ mostly benighted existence — could be completely cured was to me a really miraculous thing. I always wanted to be part of that, to be able to contribute to this great and magical thing that we call modern medicine.
As far as Renovia goes, Dr. Sam Pulliam came to me with an idea about how to potentially solve a very serious problem that afflicts more than 13 million women in the United States. Together with Dr. Jose Bohorquez, she had developed an evidence-based approach to treating this problem, pelvic floor muscular dysfunction, without the need for the often-grueling surgery that has defined the gold-standard treatment for severe forms of this condition over the last few decades. Sam and Jose needed someone with both the technical background and the executive chops to help secure the Series-A funding and to run things once the operation came together.
It didn’t take much for them to convince me that this was a concept with both real market potential and the chance to become a huge quality-of-life driver for millions. After a couple of brief meetings, I agreed to come on board as the CEO. The rest is history.
How do you make money?
Renovia is still very, very early in the business cycle. We’re really still in the early to middle part of the startup phase, the earliest phase of company formation. This means that we are not currently a profitable company. In fact, we just closed a $42 million Series-B funding deal, which included $32 million in equity and $10 million in venture debt. So, we are still very much dependent on venture funding and are not looking to actually start turning a profit in the near term.
I’ve been involved in a number of highly successful biotech and medical startups throughout my career. One thing that you have to understand about the biotech and medical research space is that it is an extremely capex-intensive business. There’s a quip that if you don’t want a startup to waste $30 million, then you shouldn’t hand it $30 million to waste. In many industries, this sort of thinking is much more right than wrong. But in the medical startup space, it can be absolutely disastrous.
So, you have guys like Sam Walton who became famous for pinching every last penny and cutting out any possible costs that were perceived as unnecessary. When you’re talking about commodity businesses where core tasks, like stocking shelves, logistics, packaging and customer checkout are highly repetitive and can be either automated or competently carried out by workers at the bottom of the education spectrum, that sort of philosophy tends to work very well. Now, when you start talking about industries that are dealing in advanced sciences and where tiny mistakes can be literally fatal, that save-costs-at-all-costs model not only doesn’t work, it becomes extremely dangerous.
The kind of research that we are doing at Renovia, developing advanced medical devices, KDD algorithms and treatment protocols, requires top-flight talent, top-end equipment and state-of-the-art facilities. We don’t skimp on anything. Unfortunately, one result of that is that medical startups like ours remain capital-intensive for their first five years to a decade. But as my own track record shows, once these businesses reach the point where they’ve developed a robust product lineup and have patented technologies or fully FDA-approved devices and drugs, the profits can become truly compelling.
I’ll just add that companies in which I’ve been a principal and co-founder, which have been mostly started from absolute scratch, have gone on to be acquired for a total of more than $1 billion. So, from my personal perspective, the perspective of our founding principals and the early-round financiers, these ventures all turned out to be wildly profitable. Yet, only one of those companies was actually making a profit at the time it was sold.
So, why would major industry players pay such huge sums for companies that weren’t currently profitable? Because they understand that medical research and biotech represent the long game of long games. A biotech company that is break even today but that has a robust product pipeline and a good shot at FDA approval on one or more future devices or drugs with large total available markets could become a literal gold mine. A lot of investors don’t want to make overly risky or perceived risky bets like that. But the companies that last in this business understand that a biotech startup is just like a kid; you may have to continue helping that company along 10, 15 or even 20 years after its birth. But if everything goes right, all your high-investment parenting will pay off when that entity finds its legs and becomes something of real value in the world.
So, the ultimate answer to the question of how I make money as a biotech founder and executive, is that I take great care to do whatever is necessary, unconditionally, to incubate and guide my startups until they become productive and value-creating entities in the world.
How long did it take you to become profitable?
Like I mentioned, Renovia is still in the early startup phase. But a good rule of thumb is that firms in the biotech sector should shoot for profitability about a decade after formation.
When you were starting out, was there ever a time you doubted it would work? How did you handle that?
Well, first I should emphasize that I’ve had the great fortune to work in a huge variety of capacities over the course of my career. So, obviously, when I was working for major firms like Abbott Labs and Genzyme, I wasn’t worried about waking up the next day to find out that the company had gone belly up. That said, there have been some moments across my career that were seriously trying, especially when I began getting into startups.
There were a few stretches in the early days of ViaCell where we had a high burn rate and didn’t know if we would be able to continue to secure the capital that we needed in order to continue building the company. Times like that can be scary, particularly when you realize that everything that you’ve worked for on that project, years of not just my own sweat and tears but that of hundreds of others, is at risk of being completely erased. But we got through those challenges, not least because we were working with some of the most talented and driven people that I’ve ever had the pleasure to know.
And this is a point that I really would like to drive home, if I may. Ultimately, you can have the best idea or product in the world. But if you don’t have talented, hardworking and honest people on your team, you will almost certainly fail. I like to say that I have been very fortunate to work with some of the best, hardest-working and most-honest people in biotech. But by fortunate, I don’t mean lucky. On the contrary, I have always made a point of carefully selecting the people I work with. As Steve Jobs said, if you can assemble the right team, you won’t ever have to manage them because they’ll tend strongly to manage themselves. No truer or wiser words regarding business have ever been spoken. The final reason for my business success has been the chance, or better stated, the deliberate choice, to work with great people.
How did you get your first customer?
In retail biotech, getting customers is primarily a function of reaching out to medical professionals and demonstrating that you have a superior solution to a given problem. We have invested heavily in doctor outreach programs, seminars and educational materials for healthcare professionals.
What is one marketing strategy (other than referrals) that you’re using that works really well to generate new business?
Well, that’s a tough wording for a question. I say that because at Renovia, we sell an FDA-approved, prescription-based product called “leva.” Because this is a prescription-only technology, it is literally only possible to acquire it by referral: a physician’s referral. Now, taken from a broader view, we have invested in a number of other marketing channels, including online, some limited television and radio, which have produced encouraging results.
That said, we have a great marketing team that has created a highly flexible strategy. We constantly monitor our marketing campaigns and are ready to change our marketing spend on a dime when new information becomes available.
What is the toughest decision you’ve had to make in the last few months?
For me, a company is nothing more and nothing less than the people who make it up. Sure, some companies have extensive real estate, capital equipment and intellectual property. But it is the people who create new products, manage operations and interact with the general public who are the heart and soul of any corporation.
So, for me, the toughest decisions I’ve had to make over the past few months are the toughest decisions that I’ve had to make my entire career as an executive: decisions like demotions, firings, and downsizings, which deeply affect people’s personal lives and, potentially, the overall morale of the company’s employees. Unless you’re some kind of sadist, and, make no mistake, they exist all over the corporate world, the decision to let someone go has to be the hardest that any executive will be faced with. For me, nothing else really even comes close.
There’s a scene in the movie Moneyball where Brad Pitt’s character is teaching his underling how to let people go. The bottom line is just to be straight and curt, without prancing around the issue or emoting. That’s generally good advice. But having to cut people from the staff still takes a toll on you. If I didn’t know that cutting out the dead wood, so to speak, was an absolute necessity, perhaps the most pressing necessity in being an effective CEO, I don’t think that I could do the job if it entailed having to tell people that their time with our company is up.
But understanding, as I do, that having the right people on the team is vital to the health of the enterprise, I’m able to find the strength to go through with letting people who aren’t the right fit go. Still, those are, far and away, the hardest decisions for me.
What do you think it is that makes you successful?
As I alluded to earlier, it may not be a great way to stroke one’s ego, but the inevitable truth is that just about all really successful individuals owe that success to working with really great people who are talented, driven and experts in their field. That is especially true of those of us in upper management. I like to think that we’re worth what we’re paid. But the fact is that whether you’re talking about myself, Warren Buffet or John Rockefeller, executives don’t actually create anything. Most of us don’t actually invent products, create positive experiences for customers or personally do anything else of direct operational import to the firms we run. Our roles are vital, to be sure, but well-removed from the front lines.
The only thing we create is the conditions that are conducive to a profitable enterprise. That’s a very important function, of course. But the plain fact is that a CEO, like a general, is necessarily only as good as his troops. Now, a CEO with great employees can still be a lousy CEO. But a CEO with lazy, incompetent or dishonest employees will, without fail, be dragged down by his underlings’ shortcomings. In fact, it could be rightly said that any CEO overseeing such a motley group had failed straight out of the gates.
But there’s a corollary there. Good people, right down to the employee with the perceived lowest position in the company, know that they’re good and they know that they’re valuable. That may seem like a stretch to say for something like a Walmart greeter. After all, you could argue, anyone can do that job. But believe me when I tell you, that’s not actually true. You may not notice the good Walmart greeters, but the bad ones will certainly catch your attention. And those are people that may be great in some other area, but they are absolutely toxic as the face of your store.
The point is that even people who are good at the lowliest of jobs, I mean really good at them, know that they are good at them; they know that they’re better at that job than others because they can see it with their own eyes. As a CEO, you never want to try to hoodwink or gaslight those people into thinking that they are somehow disposable, unimportant or fungible. They are not. And trying to work on that assumption will fail because it’s false. Talent must be recognized and rewarded. This is one of the most important functions of any leader, to maintain high levels of morale among the troops by recognizing the standouts and creating a culture of competence, effectiveness and pride.
This is important in any business. But in the biotech space, where your average employee is likely to have a PhD from MIT or Caltech, recognition of talent, great work and a winning spirit are of great importance. To create a strong and cohesive team, you need to let every team member really feel that they are an integral and deeply valued part of the whole. And you don’t do that by being aloof and dismissive. You do it by giving praise and recognition where it’s due, maximizing autonomy of your best people to let them manage themselves and meting out the occasional dose of tough love.
Unfortunately, as I mentioned earlier, an important part of that process is also culling the herd. In uber-competitive environments like biotech, the superlative never want to be weighed down by the mediocre. That’s a guaranteed morale killer. Just as a rotten apple can spoil the bunch, the wrong stuff can run out the right stuff. Running a tight ship is far more about finding people with internal discipline than administering external discipline. If you find yourself constantly doing the latter, something is fundamentally amiss.
What business books have inspired you?
I try to read as widely as possible. But the business books that have really stuck with me have been those written by and about Warren Buffet and other value investors. The reason is pretty simple: Value investing, at least as far as I’ve been able to discern, is the only investment philosophy that is really deeply consistent, complete and coherent.
I’ve been deeply influenced by the notion of both creating strong value in every product with which I’m involved as well as creating strong competitive advantages or what Warren Buffett refers to as moats. The best possible business, as he says, is a toll bridge. And that’s what we strive to create. Except, we do it through creating excellent products that are the result of processes that only we have the expertise and infrastructure to perfect.