Intuitive Surgical makes giant surgical robots (surgeon assistance devices), and is publicly listed, delivering $1.76b of revenue last year. The have 2341 of their systems installed globally, mostly in the US and with 5 in NZ. Their revenue model is clever, with $700m of the total revenue from instruments and accessories, between $1000-2000 per surgery and $272m in service agreements. The disposable parts last for 10 operations, and are fully autoclavable, expiring due to stretch and wear on the wires controlling the pincers and other tools.
Using the robots does not save money on surgeons, as they are present, but does reduce length of stay, increase throughput per surgeon and reduces errors. There is a bit of literature out recently on making hospital procedures more consistent and I wonder whether the survival rates reflect not just the less invasive approach (the arms go in through small incisions) but also through an imposed procedure.
Clearly they are very good at selling in to hospitals, but Intuitive sees itself first as a product-led company, focussing on making the machines intuitive. Evidence for this is that surgeons require just two days of training and the first few procedures supervised to be proficient. I struggle to reconcile this with the massive display wall of patents inside the building, which points to them being technology led. I also struggled with the giant cube farm and overall blandness of the office – which feels straight out of Dilbert and creativity free.
Intuitive seems like a classic start with technology and flip to product or sales led company. The IP to make the first product came out of DARPA, MIT AI lab and Bell labs, and was pulled together by the early team. A president was hired later on who flipped the company to be product (or as I believe, sales) led. The transformation was led by the second generation of product, which was aimed at prostate cancer surgery first. This is an important flip which many MSI funded companies need to go through, one example of which is Christchurch’s Syft, led by sales guy and fellow Yalie Doug Hastie.
Most of the presentation touted the benefits of the robots (which are driven by surgeons operating locally, rather than telemedicine or true robotic. This reiterated the feel that Intuitive has a sales DNA rather than a technology one.
The sales team was built originally by people who already had experience in health care marketing. The large sales force goes to ‘university’ twice each year, and they all go through a 6 week boot camp when they start, which has a very high drop out rate. This is clearly a core competency in the business – and something that many NZ companies fail to build.
We spent the rest of the time playing with the robots, which are more like waldos to me – they help surgeons do what they do. Simply amazing products.
1: Flip your technology driven company to a product (or solution/sales) based company as soon as you have a viable product. The best way to do this is through a new CEO, who should build a management team with a different style. Allocate a good amount of money to do this.
2: Hire people who are already selling into your market, and build a large high talent team. Train them rigorously in your product, as well as basic sales techniques and how to sell to your market.
3: Sell the benefits, not the product. The presentation we received was strong on the health care benefits, creating a compelling case for buyers. Everyone in the company should know the benefits the product delivers, playing from a single song-sheet.