Copy of an interview done by Frank Boermeester for HealthStartup Europe. Original is here.
#1 Begin with a concrete market need
Telemis was founded in 1999 as a spin-off company from the telecommunications lab at the University Louvain-la-Neuve where a lot of smart people do research in the fields of image compression and security. Our university has strong links with the hospitals of Saint-Luc in Brussels and the University Hospital in Namur. In 1996 the lab set up a project to tackle a practical question that some of the clinicians had. The problem was that there were lot of road accidents in the region of Chimay and the local hospital could do CAT scans but had no neuroradiologist available to analyse the images. As a result they would conduct the scan, print out the images and send the patient with his or her images in an ambulance to Namur. The question was whether it would be possible to send the images digitally to Namur for an initial consult to see whether the patient in question really did need to be transferred to Namur. That focused our initial efforts.
#2 Build a strong, multidisciplinary team
I was involved in this project via the professor who initiated the project, as were my co-founders Bruno Piscaglia and Damien De Greef. Bruno was qualifying as an engineer and Damien as a commercial engineer. Our professor asked the three of us if we wanted to continue the project after our studies, build a first version of the product and explore the potential of creating a spin-off company. We agreed and at that point a fourth person, Stephane Ketelaer, joined us who is currently CEO of the company. Stephane had a lot more business experience than us and he was instrumental in helping us secure additional funding, next to the funding we had from the university to build a prototype. Within a year we had collected €2 million in funding and thus launched the company formally in April 1999. This allowed us to strengthen our team further with a finance person, several developers and administrative support. We were really lucky to have a good team in place from the start. That is so important, and also so challenging for new entrepreneurs. You need to find people with the right fit.
#3 Be careful with a “lean” approach in the medical sector
Looking back it is interesting that we did the exact opposite to what has currently become the mantra among startups–that one should launch ‘lean’ with very little capital, because development costs have declined radically, to reduce risk, to prevent dilution, and so on. We knew that we would have to survive and keep on investing in development for at least a year before generating any significant revenue. In the medical industry the sales cycle is long since multiple decision makers and influencers are involved. And the technology cycle too is much longer than in other industries since you need to meet stringent regulatory criteria. When we launched we had none of that. That’s why we needed €2 million in startup capital.
#4 Build on strong technological foundations
Our core technologies initially were in the areas of image compression and security. At the university lab, which is a world leader in these fields, we had developed specific algorithms to compress medical images so that they could be sent over an ordinary telephone line, but without altering the diagnostic utility of the images. And from a security perspective the images needed to be encrypted, we had to make sure that the file sent at point A was the same file received at point B, and we needed to ensure that the right people were sending and accessing the files. Authentication was a real challenge in those days. Fortunately we could rely on world-class talent to solve those issues.
#5 Be prepared to pivot in response to market need
Almost from the start we switched our positioning. When we started selling our first product we quickly realised that hospitals weren’t interested or ready for the product. They would tell us that while it was interesting to be able to send an image from Chimay to Namur their most pressing problem was being able to send an image from one department to another within the hospital building. Could our technology help in that regard? So we piloted a first project in Namur and soon after two more in Charleroi and Brussels. In Brussels, for example, they had an advanced PACS system from Kodak but it only had a few terminals for the radiology people. We connected our technology to it which opened up the PACS to several hundred people in the hospital. So we thought we’d position ourselves as a partner to the established PACS vendors such as Agfa, Siemens and GE. We’d tell them; “we’re not a PACS company; we’re an image distribution company.” That worked out for a while until a new client encouraged us to switch again. The Chief Radiologist at this hospital basically told us that we were a PACS company. He said; “you have a great image viewer and you have great software; all we need to add is storage and a few workstations and we have PACS in place.” Sounded like a good idea so we went ahead and sold our first PACS in 2003.
#6 Where there is disruption there is opportunity
So now we have three types of competitors. Firstly, we compete against the traditional film vendors such Fuji , Agfa and earlier Kodak too. These companies are undergoing a difficult transition, initially from analogue film printing to digital film printing and later from printing to digital distribution and visualisation. This was really challenging for them, not only because they were forced to cannibalize their existing revenue streams but also because they had to build entirely new service models. Selling film is an entirely business to software. The second major group of competitors are the modality vendors, the suppliers of the actual scanning machines, such as GE, Siemens and Philips. These are large industrial companies whose core business in this area is to sell big expensive machines. They have software installed on these machines but it is a peripheral aspect of the business; it’s mainly about the hardware. The third group of competitors are companies like Telemis, companies that have roots in software development and integration. They’re emerging in every country that we’re active in today.
#7 Always be selling
In the years that followed we steadily grew, first in Belgium and subsequently in France, Italy and Switzerland. I would say that we are pretty conservative in our growth strategy. Initially we focused on Belgium; we have over 60% market share in Wallonia at present. Then we added a partner in France, we got some good customer references, and then acquired the partner. We have about 15% market share in France at present, which makes us major player in the country since no single vendor has more than about 15% market share. We’re now following the same approach in Italy and Switzerland. Today we have a team of about 55 people, generate nearly 7 million in revenues, and we’ve been profitable for 8-9 years. Crucial in this success story has been our ability to sell. I tell the startups I mentor ; “If you don’t know who the sales guy is in your team then you don’t have one.” Selling in the medical sector isn’t a sprint, it is a marathon, you need stamina.
#8 Keep the bigger (big data) vision in mind
For me it is a nice success story and what is great about it is that it is not over yet. There are still so many things we can do. Firstly, there are many additional countries we can go to and in many of these countries the PACS market is still in its infancy. Secondly, medical imaging technology is evolving rapidly. New types of scanning technologies and machines are constantly being developed and it is our job to manage those images and help facilitate diagnosis. Thirdly, the medical sector lags other industries when it comes to fully exploiting the potential of digital technologies. Sure, we’ve made progress if you consider that we used to print out images and send them along with patients. Now we can store them digitally and make them available in digital format to any clinician who needs them. But essentially we’re just storing them for use in a clinical context, when we could be using all that data in the background too, for research purposes, similar to the way Google is using its data in the background.
#9 Innovation means listening to customers
Innovation isn’t simply lab-based R&D. Listening to customers and coming up with simple clever solutions is equally important. For example, one of our customers – who had made the step towards a filmless PACS – told us that they’re now burning a huge number of CDs and mailing them to GPs. As a more efficient alternative they wanted to publish images on the web. We advised that this is possible but “were they prepared to impose an authentication solution on the GPs in their network?” “Not necessary”, the client argued. “All we want to do is publish anonymous but numbered images on a publically available website and send the relevant number or code to the GP so that he or she can view the right image.” Here’s a c clever and simple solution that works. That’s the type of innovation we pursue: listen to customers, develop a solution, and then create a product out of that solution that we can sell to all our customers.
#10 Invest in integration capabilities
Integration is pivotal to our business model. Most of our competitors are highly specialised; they focus on specific scanning technologies or specific medical specialties. We don’t want to compete with them at that level. Instead, we want to be the backbone of the hospital’s imaging, the document management system of medical imaging. This means we need to be able to work with all types of images, from MRI to Nuclear medicine to ultrasound. In fact, we include video too and ordinary photos that clinicians take of their patients, as a dermatologist might do of a patient’s skin condition. All of it is stored in the PACS, or MACS as we like to call it, to emphasise our multimedia capability, and linked to the electronic patient record. Many hospitals have invested a lot of money in advanced scanning and imaging machinery. We’re not asking them to replace those systems; it is our job to be able to integrate with many different technologies. Some customers obviously are afraid of integration and prefer to work with a single, all encompassing solution, but that’s fine, we can’t and don’t want to address 100% of the market’s needs. I don’t believe that a single supplier is capable today of meeting all the market’s needs; we have to learn to work together.
#11 Simplify the service model
Our third key differentiator is our service model. Most suppliers sell complex licensing and servicing contracts. We sell a single package on the basis of an annual fee. The package includes everything: licenses, upgrades, service and training. Customers never have to think about upgrades or the costs of adding users, it’s all included. And it keeps us focused on delivering a great service. It is a great differentiator; in a sense we’ve disrupted the service model.
#12 Be clear about your motivations
People argue that the medical sector isn’t attractive for technology companies; the market is fragmented, budgets are tight, sales cycles are long, a DIY approach is still pretty common. That’s all true but money isn’t what motivates people in this business. Our company’s mission is to extend human life; that’s why I work at Telemis. I like movies too, perhaps I could have pursued a career in the movie business, but then I wouldn’t have that strong sense of purpose that I enjoy now. You can really make a difference to people’s lives in this sector; that’s valuable.
#13 Be honest about your entrepreneurial talent
For me, entrepreneurship is building a company that can change the world. Setting up an accounting company with three friends or developing a website that generates some advertising revenue is a lifestyle business; it isn’t entrepreneurship. Once you grow beyond 4-5 people you begin to confront very different challenges to those that independents face. You carry serious responsibilities towards investors, towards staff, towards customers. I’m in two minds about the way entrepreneurship is being pushed and promoted from different quarters these days. The assumption seems to be that lots more people should be entrepreneurs. I don’t know about that. Not everybody is suited to be an entrepreneur; should we force the issue then? I totally agree that we need to encourage more entrepreneurial attitudes among school-going kids but that’s still something else than pushing everybody to start companies. Building a company that employs 100+ people is a challenging task, it is not for everyone.
I’m also uncomfortable with the casino-like buzz in the tech scene where the exit strategy is hallowed above all. Steve Jobs said a lot of good stuff and he also commented on exit strategies. He didn’t like the term, felt it was a small ambition, instead of trying to build companies that last for decades if not centuries. I agree. If you’re going to start a company, don’t do so with an exit strategy in mind. Your goal should be to build a company that will change the world, a company that will outlive you. The only exit is your exit when you die.
#14 Seek advice; it’s available
Once you do start a company then it is imperative that you seek advice. You’ll be confronted by challenge after challenge, most of which will be totally unfamiliar to you. You can’t be an expert in everything. In that sense I’m a fan of incubation and accelerator programs–and it’s why I help out as a mentor at the Founders Institute. I mentor one company on a regular basis and I’m convinced that it is helps them, even if only as a sounding board or to help generate new ideas. Ultimately, however, it all depends on the entrepreneurs themselves. If the right team is in place, it’ll work out all right.