Med tech in focus: FundamentalVR
Sub-sector: AI & VR
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Richard Vincent is the CEO and co-founder of FundamentalVR, a virtual reality innovator, which provides medical surgeons with a high-tech training solution. After rigorous testing as a minimum viability product and 4 further years of development, FundamentalVR has become a leader in its field.
We sat down with Richard to find out about planning ahead, the advantages of a software-only service and how best to build a team…
Tell us about your journey to becoming the CEO and co-founder of FundamentalVR?
I cut my business teeth in the communications and advertising industry throughout the late '90s and the early 2000s. It taught me a lot about communications and technology, just as the online phenomena started to surface in the late '90s. Inspired by that direction, I joined my first startup in the dotcom sphere in 1999, and was part of a founding team for a business-to-business print marketplace. I learned a lot about fundraising and about the rapid growth of a business there.
After leaving that business, I stayed in the communications world, but wanted to have a technology focus. I have never learned how to code, but what I have learned over the last 20 or so years is how to figure out what code can do. You can then find great people who can actually build on those ideas and turn them into reality for you.
What was the next step?
I started my next business in 2001 with my current co-founder - we've been together 20 years now. Forming a partnership with someone you can trust, who can be there with you for the long-term, is key. My business partner and I recognised back in 2000 that there was a massive change happening around mobile. We saw that it was going to change pretty much every way that we interact with each other, so we started a business focused on mobile.
To use the old analogy, we put our boat on the water and as the tide rose and mobile started to accelerate, we enjoyed the benefits of being in that space. That was a fantastic 10 years as an organic growth business - we never took on private equity funding. We always grew it based on revenue.
We started the business in the UK, and then we took it to the US, where we really accelerated it. We ended up selling it to a large American conglomerate in 2005 but stayed with it for another five years. Once we excited that business, I kind of took a deep breath, and had a couple of years of reflecting, thinking, and doing some work back in the communication space.
What led you to virtual reality from mobile?
As we saw in 2000 with the advent of mobile, in 2013 my business partner and I recognised the potential of virtual reality. We turned our thoughts to the virtual reality space and realised it would be another game-changer for the computing industry. The question was - just as it was with mobile – where was it going to break first? Where was the acceleration going to be? That was really the foundation and formation of the business, FundamentalVR.
In 2014, we started to explore the use of virtual reality and how it could impact different industries. We built some quite fantastic applications, and at the end of a year of we had a good hard look at them and asked ourselves: which ones are game changing? Which ones are going to be business critical, and which ones are superficial?
That process was really what took us from broad VR to the medical application of VR, because we decided that of all the industries, education within medicine was the one where VR probably had the greatest chance of early success.
Was the process of elimination vital for determining business strategy?
It's certainly been our approach across both the development we did in the mobile industry, and the work we've done now in the virtual reality industry. My approach has always been to find where the market is, and then figure out how you're going to fit your technology to it.
We knew we had an amazing piece of technology in virtual reality, but how and where it was applied was a process of elimination. We created a lot of minimum viability products (MVPs) in lots of different markets, in lots of different verticals, to work out where the best fit was likely to be. Having established that, we jettisoned everything else and decided that that one MVP was where we were going to focus all of our attention. We made our bet, an educated bet, based on early testing.
What has the growth trajectory of the business been like?
At the beginning in a start up there are no straight lines. You write a business plan, and you write a financial projection, and you keep going back and looking at it, but you will never stick to it completely. No concept, once it's put in front of the real world, is going to survive for very long. It's going to have to be amended or altered, pivoted, tweaked, etc. That being said, the trajectory that we've had has been pretty solid and consistent because of the foundations that we laid.
We were able to build the MVP tech stack that makes up what FundamentalVR and Fundamental Surgery is today. Fundamental Surgery is our platform, so that's really where most of our product manifests itself. With that, we’ve been able to make the right strategic connections, the right partnerships, and create the right proof points that have allowed us to create a rapid but sustainable growth trajectory.
In the last two years, we've been in a heavy build and investment period. We’ve quadrupled the business over that period, and we would expect to see it doubling every year over the next three or four years.
Has this growth has been propelled by the connections that you've made with technology leaders, such as Microsoft?
I think it definitely is a contributing factor. Those connections and partnerships can help to fast track a business. These are great companies who are making investments that we can then build upon. One of the key things I think that has helped to fast-track our progress is that there's a whole confluence of dynamics that's happening in the market. There’s useful headset manufacturers, like Facebook with Oculus, or cloud infrastructure through organisations like Amazon and Google, and more specifically for parts of our proposition, like haptics, and the hardware that enables that.
Amazing companies that we've partnered with are investing heavily in sectors of interest to us, which allows us to stand on their shoulders and really focus on the next part of our value proposition. We don't have to invest in that deep infrastructure, because it's already there. The strategic decision that helped us most was to be ‘hardware agnostic’, and to use the best commercially available off-the-shelf hardware that's out there, rather than try and build something ourselves.
We're one of only a couple of players in the market who've made that decision. I think that will serve us well in the long-term, as it works well for us and it also works well for our customers.
Speaking of your competitors, what does FundamentalVR offer that's different? What sets you apart?
There's three things that really differentiate us. The first is simply the technology, and that's what we call our ‘haptic intelligence’. Surgery, and that's what we’ve primarily focused on, involves the teaching, understanding and testing around surgical skills and knowledge. Surgery is a multi-sensory experience; you need sight, you need cognitive awareness of your environment, and you need touch. Surgery is 50% sight and 50% touch.
Our haptic intelligence engine delivers the sense of touch. What we've done is to build a system that allows you to feel the virtual patient. You can feel the tissue, you can feel how a real patient would react; whether that’s cutting, retracting or suturing. You can pick up those elements so that you can truly learn and rehearse a surgical procedure. Our haptic intelligence is our key competitive advantage. Nobody else in the VR space in medical training has that capability.
There's two other things that really set us apart. The second is data. It's fine to train, but learning is a process. It's a long-term development cycle. Because of the environment that we've built, we can measure everything that happens in the VR space, and we can track that over time. The data that we're building up around the procedures and the user interaction we have is massive. It's hugely beneficial for the individual, because they can track and see how they've progressed. It’s also beneficial for the medical market, as you start to build up a database of ‘good’ and ‘bad’ surgical performance.
This has all sorts of future potential. In really simple terms, if you decide to go and have an operation tomorrow, the evaluation basis that you will use to decide which doctor to use is pretty simple. It's going to be recommendations on websites and the doctor’s certificates. It's not going to be much more than that.
With really solid data around surgical performance, in the future maybe you could start to actually interrogate the capabilities of the person who's going to do the procedure, specifically for the procedure that you need.
Our third factor is scalability. We've chosen ostensibly to take an off-the-shelf hardware approach, which means our customers can buy our hardware anywhere in the world. We don't have to ship it to them. Our software is delivered as a software as a service (SaaS) based product. Buying our simulator product at a hospital in Korea, or Germany, or the UK, involves no more than visiting our website, pressing a link, and starting a download. It's really removing all the friction from adoption, which I think really helps with giving us a competitive advantage.
As FundamentalVR uses off-the-shelf hardware, how do you guard against disruption in your sector?
Firstly, we don't expect to be the only people in the market long-term. That would be naïve and unrealistic. We expect to see other people coming to this space, and to guard against disruption, we use patents. We are laying down a large raft of patents to protect how we do our work. The hardware is just the hardware. Today, somebody could go and buy the haptic arms that we use, and they could create an experience, but it won't be a viable surgical rehearsal experience. The hardware doesn't come with the software capabilities that we create. We believe that, to maintain a competitive advantage, we have to make our software the best that it can be. It's all in the software, and that's really where we focus our attention.
I would go as far to say that if a major software company – a global software company - decided tomorrow to take on the surgical training environment and started to invest in software in our space, we would still have a good year on them. Because this type of progress isn't linear. As a result, you've got to work out the the questions to ask, before you can answer them. It's a complex process!
Do you think your connection to leading medical facilities is going to help protect your product even further, because you have existing connections already in place?
Yes, I think so. Our primary market actually is the US, because that's where really the simulation market is today – about 65% of the global market. Whilst we're excited about being in the UK, with the NHS starting to adopt us, it's not our sole focus. Early adoption within key locations, within key markets, is very important. The biggest foundation for us is our association with the Mayo Clinic, the number one US hospital system.
We have a long-term partnership with them; not only are they using our system in their hospitals, we are tapping into their surgical know-how to help to build our future products as well. We have a joint development agreement with them over the long-term, the Mayo Clinic adoption is a reassurance to other health systems. As other hospitals think about adopting our technology they look for where it's been placed, and when they see it’s used by the Mayo Clinic, UCLA and in the NHS they trust our product more. That’s helped us immensely.
Do you have any lessons you wish you'd learned before you started out in this industry?
I think the key focus that I've had over the last two years has been around rapid growth, team acquisition, and fundraising, so I focus my thoughts around those areas.
It doesn't matter what industry you're in, everybody will agree that the most important asset you have is the team, and it's the people within that team. Building that team effectively and fast is key. We brought on 35 people last year in a six month period, and doing that effectively, while not causing cultural fractures or hindering delivery is quite difficult.
My advice would be as a founder is find your kernel staff and make sure that you trust them, and then empower them to do their job. It's hard to let go, but it’s one of the best things that I did for our business. The first two hires that we brought in once we'd got past the MVP stage were our chief technology officer and our chief experience officer. We empowered them to build the technology team in the format that they wanted, and that helped them to achieve the objectives that we had for them. They've done that far more effectively than I would have been able to do it. Trusting them to do that is key.
On the fundraising side, someone told me a couple of years ago that as a CEO of a SaaS-based business you spend about 65% of your time in fundraising mode. The first thing is to be ready to spend a lot of time talking to people about finance. Secondly, it’s advisable to build a plan that runs over the next five years’ financials. You need to think about the structure of the board that you’ll need, and the financing that you’ll need, before you can start to pitch your VCs. You also have to expect it to take a lot longer than you might like.
I wouldn't say we necessarily navigated that perfectly ourselves, but the further into that journey you go, the more that you start to understand something that lots of VCs will say to you: that as a founder looking for backing, you've really got to interrogate the venture capitalists who are potentially going to give you money. Make sure that they've got more than enough money for you, and that the money that they're offering you is smart money. You need to be sure that they'll follow through and follow on with you as well, otherwise you can find yourself caught in a difficult position when you're at the second or third round of fundraising.
Planning ahead is the key. On the team side, enabling your kernels early to really do the job that you brought them in to do and not get in their way; and on the funding side, to make sure that you have a clear vision of what you're trying to achieve, and to be discerning about the partners you bring in during the early stages.