MedTalk

TMCx leader is ready for Houston's health care innovation ecosystem to fully bloom

Natalie Harms
Dec 5, 2018, 3:35 pm
Erik Halvorsen is sparking a medical innovation revolution with TMCx. Courtesy of TMC

Editor's note: Halvorsen reportedly left his position at TMC on December 13, 2018. The original article as it first published is below.

Erik Halvorsen describes himself as an impatient guy, which is why, rather than wait for Houston's medical startup culture to evolve to meet Boston's or Silicon Valley's, he's taking steps to change it now.

"The reality is Houston is not Boston or Silicon Valley, and it comes down to a couple things: access to capital and the pool of entrepreneurs running around," says Halvorsen, director of the TMC Innovation Institute.

But the Texas Medical Center is looking to change that in the health care sector with TMCx, its accelerator.

TMCx was recently given silver recognition from the Seed Accelerator Rankings Project. While it's an impressive feat, Halvorsen envisions TMCx rise through the ranks of that award over the next few years.

"For us, we're kind of competing with ourselves to be as good as we possibly can be."

TMCx graduates around 20 companies per cohort, and there's two cohorts each year — one focused on medical devices, which just concluded with the Nov. 15 Demo Day, and the other, which is about to launch, focused on digital health.

InnovationMap: How did you get your start in your industry?

Erik Halvorsen: From as young as I can remember, I wanted to be a medical doctor. Fast forward, all through undergraduate, I was pre-med. Took the MCAT, scored in the 99 percentile, but when it came time to apply to medical school, I chose not to. I ended up applying to a "tweener program" at the Medical College of Virginia in Richmond, and they had these master's programs where you would take all the first year's classes of medical school and do research in a particular discipline. I was doing research in biochemistry. I go through that whole program, and then I still wasn't sure I wanted to be a doctor or go to medical school, but I liked research. I got offered a full scholarship to do a Ph.D. program at the University of Virginia, but I didn't love being in the lab. I found an ad somewhere about an internship at the UVA Patent Foundation. It was basically taking early stage innovation, discoveries, and IP out of universities and medical centers and turning them into products, and what that's look like — whether it was startup companies or corporate partners, and that's when the lightbulb went off for me. I was really good at speaking the science to the business side, and then speaking the business and finance side to the scientists and doctors. The rest of my career became some version of playing in that in between space in helping translate ideas to ultimately get to the big companies and ultimately in the market to help patients.

IM: In your role at TMCx, you oversee the accelerator and what companies make it in. What does TMCx look for in its cohort?

EH: What we're looking for is what we think is cutting edge, and truly innovative addressing an unmet need. We consult with a lot of the hospitals here. I ask them what's keeping them up at night. That list helps me select the companies. If I see companies that are making cool products that meet one of these unmet needs in TMC, then I know that company will get traction if they were in town, and that's important.

IM: What's the process of picking the companies?

EH: We'll get 200 to 300 applications and interview about 75 companies for the 20 to 25 spots. When we interview, we get at what is their understanding of the current practice, competitive landscape, etc. It's also a good chance for us to glean a little bit of the personality of the teams we're bringing in. We learned a long time ago that we don't want to work with assholes. We go a long way to find the people who are in it for the right reasons. You have to be really smart and confident — you've got to be pretty self confident if you're think you're bringing a solution to a problem that no one has success doing before. But it has to be self confidence without arrogance.

IM: What's the economic impact of the accelerator?

EH: I think we're clearly a major piece of the Houston ecosystem. JLabs has 50 companies under their roof, and when you add TMCx and the coworking space, we have about 100 health care companies under our roof. When you think about the companies that came through our program, that's a total of 250 companies. Those companies are important to the ecosystem because they are out there telling the world about Texas, the medical center, and Houston. Their word of mouth is the reason we see the volume and the quality of the applications going up each year. A lot of our companies choose to stay in Houston.

IM: What sets TMCx apart from its competition?

EH: We don't take equity. That sets us apart. I think this is a major reason we've been able to attract companies that are more advanced — still startups, just far down the path. Those of the kinds of companies who would never consider an accelerator program that asks them to give up equity.

IM: Where does Houston's innovation sector have room for improvement?

EH: One of the things that I knew moving to Houston from Boston was that the investment environment for life sciences wasn't as robust as Boston. I knew coming in that was going to be a bit of an issue. I also felt like we had the raw materials, that if we ran our program the right way and attracted those companies we needed, the dollars would flow. And that's really been the case.

Another area we have to grow is international collaborations. We already have a high percentage of international applicants, but now we're trying to build these biobridges to other ecosystems where we can collaborate on two areas: research and innovation commercialization.

IM: What all are you excited about seeing from TMC3?

EH: I think it's really unique to Houston to bring all of these elements together in what I think is a well-designed manner. It will really transform the city. You're going to have big industry down there — a lot of those conversations are still ongoing. I mean, 116,000 medical employees and 10 million patients a year, these big health care companies want to be close to that.

This will be another way we can accelerate what we learn in the lab to treatment for patients. I'm really excited about it, and I think the startup companies we continue to bring to Houston and nurture in the TMC Innovation Institute will be a major part of bridging that gap between research and discovery to the big companies that will bring that product to market.

IM: What advice do you have for health-related startup companies?

EH: There are plenty of studies that have been done that have shown that the main reason companies fail is that there's no market for their product — and that's industry agnostic, but it's definitely true in health care. What we spend a lot of time in our program is helping the companies evaluate that and understand what their product market is — and really validating that people are going to use it and, more importantly, people are going to pay for it.

My advice would be not to just assume there's a need. Go figure out how to validate that it's a better technology and that people will use it and buy it.

------

Portions of this interview have been edited.

erik halvorsentexas medical centerhoustonhealth caretmctmcx

Trending News

what's trending

5 most popular innovation stories in Houston this week

Building Houston

 
 

taking notes

7 lessons from a Houston-based unicorn startup founder

Gaurab Chakrabarti, the CEO and co-founder of Solugen, shared his entrepreneurial journey on the SXSW stage this year. Photo courtesy of the Greater Houston Partnership

At a fireside chat at SXSW, a Houston founder pulled back the curtain on his entrepreneurial journey that's taken him from an idea of how to make the chemicals industry more sustainable to a company valued at over $2 billion.

Gaurab Chakrabarti, the CEO and co-founder of Solugen, joined the Greater Houston Partnership's Houston House at SXSW on Monday, March 13, for a discussion entitled, "Building a Tech Unicorn." In the conversation with Payal Patel, principal of Softeq Ventures, he share the trials and tribulations from the early days of founding Solugen. The company, which has raised over $600 million since its founding in 2016, has an innovative and carbon negative process of creating plant-derived substitutes for petroleum-based products.

The event, which quickly reached capacity with eager SXSW attendees, allowed Chakrabarti to instill advice on several topics — from early customer acquisition and navigating VC investing to finding the right city to grow in and setting up a strong company culture.

Here are seven pieces of startup advice from Chakrabarti's talk.

1. Don’t be near a black hole.

Chakrabarti began his discussion addressing the good luck he's had standing up Solugen. He's the first to admit that luck is an important element to his success, but he says, as a founder, you can set yourself up for luck in a handful of ways.

“You do make your own luck, but you have to be putting in the work to do it," Chakrabarti says, adding that it's not an easy thing to accomplish. “There are things you can be doing to increase your luck surface area."

One of the principals he notes on is not surrounding yourself with black holes. These are people who don't believe in your idea, or your ability to succeed, Chakrabarti explains, referencing a former dean who said he was wasting his talent on his idea for Solugen.

2. The co-founder dynamic is the most important thing.

Early on, Chakrabarti emphasizes how important having a strong co-founder relationship is, crediting Solugen's co-founder and CTO Sean Hunt for being his "intellectual ping-pong partner."

“If you have a co-founder, that is the thing that’s going to make or break your company,” he says. “It’s not your idea, and it’s not your execution — it’s your relationship with your co-founder.”

Hunt and Chakrabarti have been friends for 12 years, Chakrabarti says, and, that foundation and the fact that they've been passionate about their product since day one, has been integral for Solugen's success.

"We had a conviction that we were building something that could be impactful to the rest of the world," he says.

3. Confirm a market of customers early on.

Chakrabarti says that in the early days of starting his company, he didn't have a concept of startup accelerators or other ways to access funding — he just knew he had to get customers to create revenue as soon as possible.

He learned about the growing float spa industry, and how a huge cost for these businesses was peroxide that was used to sanitize the water in the floating pods. Chakrabarti and Hunt had created a small amount of what they were calling bioperoxide that they could sell at a cheaper cost to these spas and still pocket a profit.

“We ended up owning 80 percent of the float spa market,” Chakrabarti says. “That taught us that, ‘wow, there’s something here.”

While it was unglamourous work to call down Texas float spas, his efforts secured Solugen's first 100 or so customers and identified a path to profitability early on.

“Find your niche market that allows you to justify that your technology or product that has a customer basis,” Chakrabarti says on the lesson he learned through this process.

4. Find city-company fit.

While Chakrabarti has lived in Houston most of his life, the reason Solugen is headquartered in Houston is not due to loyalty of his hometown.

In fact, Chakrabarti shared a story of how a potential seed investor asked Chakrabarti and Hunt to move their company to the Bay Area, and the co-founders refused the offer and the investment.

“There’s no way our business could succeed in the Bay Area," Chakrabarti says. He and Hunt firmly believed this at the time — and still do.

“For our business, if you look at the density of chemical engineers, the density of our potential customers, and the density of people who know how to do enzyme engineering, Houston happened to be that perfect trifecta for us," he explains.

He argues that every company — software, hardware, etc. — has an opportunity to find their ideal city-company fit, something that's important to its success.

5. Prove your ability to execute.

When asked about pivots, Chakrabarti told a little-known story of how Solugen started a commercial cleaning brand. The product line was called Ode to Clean, and it was marketed as eco-friendly peroxide wipes. At the time, Solugen was just three employees, and the scrappy team was fulfilling orders and figuring out consumer marketing for the first time.

He says his network was laughing at the idea of Chakrabarti creating this direct-to-consumer cleaning product, and it was funny to him too, but the sales told another story.

At launch, they sold out $1 million of inventory in one week. But that wasn't it.

“Within three months, we got three acquisition offers," Chakrabarti says.

The move led to a brand acquisition of the product line, with the acquirer being the nation's largest cleaning wipe provider. It meant three years of predictable revenue that de-risked the business for new investors — which were now knocking on Solugen's door with their own investment term sheets.

“It told the market more about us as a company,” he says. “It taught the market that Solugen is a company that is going to survive no matter what. … And we’re a team that can execute.”

What started as a silly idea led to Solugen being one step closer to accomplishing its long-term goals.

“That pivot was one of the most important pivots in the company’s history that accelerated our company’s trajectory by four or five years," Chakrabarti says.

6. Adopt and maintain a miso-management style.

There's one lesson Chakrabarti says he learned the hard way, and that was how to manage his company's growing team. He shares that he "let go of the reins a bit" at the company's $400-$500 million point. He says that, while there's this idea that successful business leaders can hire the best talent that allows them to step back from the day-to-day responsibilities, that was not the right move for him.

“Only founders really understand the pain points of the business," Chakrabarti says. "Because it’s emotionally tied to you, you actually feel it."

Rather than a micro or macro-management style, Chakrabarti's describes his leadership as meso-management — something in between.

The only difference, Chakrabarti says, is how he manages his board. For that group, he micromanages to ensure that they are doing what's best for his vision for Solugen.

7. Your culture should be polarizing.

Chakrabarti wrapped up his story on talking about hiring and setting up a company culture for Solugen. The company's atmosphere is not for everyone, he explains.

“If you’re not polarizing some people, it’s not a culture,” Chakrabarti says, encouraging founders to create a culture that's not one size fits all.

He says he was attracted to early employees who got mad at the same things he did — that passion is what makes his team different from others.

gaurab chakrabartisxswhouston housesxsw 2023unicornsolugen

Trending News

what's trending

5 most popular innovation stories in Houston this week