Being Different

By Carmichael Roberts

Featured as part of NVCA's VentureForward blog series for industry leaders to share their perspectives on why diversity and inclusion (D&I) are important for the future of VC, their firm’s activities and approach to D&I, and guidance for how we—as an industry—can drive meaningful change.

The protagonist in every story must face a struggle or a tension that will eventually come to define his or her success. For me, that tension is intrinsically woven into the color of my skin. I was born an African American male, and in my earliest years raised in public housing projects in the East New York section of Brooklyn. Poverty, gang violence and addiction were part of my daily view of the world. Fortunately, however, I received an opportunity that would forever change my life. I had the chance to attend a high school on Long Island, where a science teacher would help me discover a passion for biology and chemistry. The rest, as they say, is history.

Being different from everyone else has been a common thread throughout my career. I was one of very few African American students at Duke to major in organic chemistry and earn a PhD in chemistry. During my tenure at Harvard, I was the only African American postdoc who had received a National Science Foundation Fellowship for chemistry. While at Harvard, I worked in a world-class research lab. I became the only student in that research group – black or white – to switch from being a professor candidate to an MBA grad and serial entrepreneur. While most postdocs were pursuing the pure academic route, I went in a completely different direction. I recognized that a combined science and business background could make me stand out in the business world. When North Bridge Venture Partners recruited me years later as one of the very few African American partners in all of venture capital, let alone one with a PhD, I saw my unorthodox strategy pay off.


Standing out in a sea of sameness has proven to be my greatest strength. I have never felt the pressure to conform because I have always been different. Looking different from everyone else in the classroom or the boardroom has meant that there is almost an expectation that my voice, my ideas will also sound different. Great! That is exactly true because they were and I was different.

Here is the cool thing about “different” – it makes good business sense. The entrepreneurs and scientists who challenge the status quo are the ones responsible for the greatest innovations and the quantum leap advancements. Studies continue to show that women and minorities are wielding increasing economic power, and that high-tech companies that prioritize diversity see improved business and financial performance.

So, if we know this, why is change so slow? According to a 2016 report from the National Venture Capital Association and the Deloitte University Leadership Center for Inclusion, African Americans make up 3% of the venture capital workforce. Latinos make up 4%. Women are only in 11% of partner roles. This lack of diversity trickles down into the entrepreneur community, where we see less than 1% of venture capital dollars going to African American founders (CB Insights Report 2015).

I think change boils down to two things: results and accountability. People often ask me if I have faced racism and discrimination throughout my career. Hell yes, I have. I acknowledge that the road has been harder for me than many of my peers because of my background of being different. But one thing I have always loved about the venture capital community is that results breed respect. My strategy of investing in innovative materials was a major departure from the broader industry strategy of betting on IT, for example. While at North Bridge, my materials companies certainly stood out in the midst of the heavy deal flow in more traditional areas like software. But these companies grew and flourished, producing excellent results for the fund. Examples of “different” like this should not be concealed; they should be celebrated. The more we publish, share and revere the results of “different,” the more it will breed a culture where diversity is admired and prioritized. Sadly, the recent headlines about diversity and gender equality in venture capital are largely negative. It is important that we shed light on an issue that is plaguing our community, but it is equally important that we shine a light on the good. We must also celebrate the individuals and firms that do it right and get positive results.

Accountability is equally important. If founders demand to work with diverse firms that share their values, and if LPs prioritize diversity as part of their diligence process, perhaps we can move the needle. Actually, there is no need to reinvent the wheel here. In the 1990s, both Wall Street and the legal profession were hit with a number of sexual harassment lawsuits. As a reaction, third party auditors were hired to conduct internal reviews. Diversity & Inclusion departments were formed. Hiring managers were held to diversity metrics. More recently, 30 major law firms instituted the Mansfield Rule, which stipulates that firms must consider at least 30% women and minority candidates for any leadership position.

Today, I am raising my own fund called Material Impact Fund. In fact, it is more than just my own fund, I am starting my own firm, with friends I have known for many years. It is the culmination of a career establishing and perfecting my unique investment thesis. When it came time for me to build a team, we did not recruit against a typical venture capital mold or look to find individuals who shared our exact background and expertise. We did the opposite. We set out to find individuals who brought a voice to the table that is completely different from our own. When you look at our team, and our community of entrepreneurs, you will see that diversity – of gender, race and thought – comes together organically because it is so important to what we do.

Adam Sharkawy, Managing Partner at Material Impact.

Adam Sharkawy, Managing Partner at Material Impact.

Elyse Winer, Marketing Partner at Material Impact.

Elyse Winer, Marketing Partner at Material Impact.

Perhaps I had the courage to choose an unconventional path because I am a minority. I had no choice in some respects because I am branded different (unconventional) in US business settings based on the color of my skin. Or maybe the color of my skin really was the struggle and the tension that would come to define my success story. I never make excuses based on my ethnicity or because I started out poor in the rough and infamous Cypress Hills Houses in Brooklyn. If I am being honest (and I am!), that background made me stronger and, fortunately, my story did not end there. Today, not only do I have an opportunity and responsibility to create change in America, I also have the opportunity to build a venture fund where diversity is a formalized part of how we do business…a chance to lead by example. How cool is that?

My prescription for Medical Device Innovation in Today’s Complex Landscape: Part I: The Established Markets.

By Adam Sharkawy

I recall the days in which I was a young entrepreneur starting my career for a small private company. We were developing a class of products called balloon catheters; products which would pioneer the way most coronary artery disease patients would forever be treated without open chest surgery.  Admittedly, I was fortunate to begin my career at a time when in only 9 months, I could cross the street and meet with thought leading physicians, sketch ideas on the literal napkin (not the proverbial one), build prototypes on my lab bench, enter into animal studies, transfer to pilot manufacturing, apply for regulatory clearance, and launch into the market. Unfortunately, junior R&D engineers today won’t gain exposure to that entire gamut of activity within such a short tenure in their careers. 

increasing constraints can lead to opportunities for differentiation.

Through the proliferation of medical device technologies being commercialized in the 80s and 90s came commensurate proliferation of regulatory guidance.  More defined regulatory requirements ultimately drove the need for more structured data to support clinical safety and efficacy claims.  Product development cycles have continued to lengthen and have become more expensive.  All the while, market penetrations for those devices that do make it to market has markedly decreased in the advent of greater competition. The result: the current average cost of developing a medical device to regulatory clearance or approval is $31M while 50% of medical device exits are under $100M[1].  Venture capital investment has followed suit decreasing from 13% of total venture investment to just 4%.  Yes, I picked a fine time to transition from entrepreneur and corporate executive to a VC, 

In addition to all this, during the last 5-10 years, there have been several tectonic shifts in the medical device health economic landscape that have redefined the playing field. Regulatory clearance no longer provides a ticket for successful commercialization in medical devices.  That said, increasing constraints can lead to opportunities for differentiation.  Here are three specific factors I recommend to help bring medical device innovation to the market today.

  1. Criticality of demonstrating economic value
  2. Targeting multiple stakeholders including hospital administrators/purchasers/material review boards, and payors in addition to healthcare providers
  3. Developing customized business models to monetize your technology

Demonstrating Economic value:  Economic consciousness increased dramatically in healthcare, particularly after the 2008 recession.  At the individual level, cost of healthcare was and remains the number one cause of bankruptcy (62% of the 2 million declared bankruptcies)[2]. At the societal level, the cost of healthcare accounts for over one sixth of the GDP in the USA [3]. In addition, one of the most expensive costs to a hospital is the deployment of new diagnostics and therapies which account for over two thirds of the growth of healthcare costs[4].  All the while, in the face of increasing healthcare costs, both government and payors are continually negotiating against hospitals for the reimbursements they receive for providing healthcare. The federal agency CMS (Centers for Medicare and Medicaid Services) sets policy for reimbursement to hospitals of all medical procedures covered by Medicare / Medicaid but is often the basis of private insurers policies as well. So, within this squeeze, hospitals and clinics have had to become increasingly rigorous on optimizing value of therapies and services against cost.  Developing cost effectiveness analyses to quantify the cost efficiency of a new technology, preferably demonstrating that the overall cost savings to a hospital /clinic will be greater than their cost of the product, will be critical to successful adoption. Any way to give a company example? A startup that has done this very well?

Targeting Multiple Stakeholders:  While HCPs (health care providers) remain key to the purchasing process, medical device purchasing decisions are now made by multiple stakeholders assessing economic value in addition to safety and efficacy performance data.  Until the last 10-15 years, HCPs were focused on outcomes data of new products, either demonstrating improved efficacy or improved safety over standard of care.  Now purchasing decisions also include hospital administrators, chief value officers, VACs (Value Access Committees), and the central office for materials processing which evaluate a product’s impact to overall operations.  No longer just focused on physicians, even HCPs are including multiple stakeholders including nursing staff, hospital technicians and any others whose overall operations can be impacted by the adoption of a new technology.  So, in addition to safety and efficacy, how a new product impacts “the job to be done” is important to purchasing decisions.  Moreover, the implementation of HCAHPS (Hospital Consumer Assessment of Healthcare Providers and Systems), patients’ survey on their overall satisfaction with their hospital care, is part of the VBP (Value-Based Purchasing) program run by CMS in which up to 2% of a care facility’s reimbursement revenue is driven by the quality of their service.   Through such policy, hospitals’ reimbursement has indirectly included patients as stakeholders involved in the purchasing process.

Developing Customized Business Models: Monetizing a medical device technology or product has been focused on traditional fee for product models.  In today’s more complex landscape, with multiple ways to bring value to multiple stakeholders, it is also important to consider multiple go-to-market models.  The best place to start is to understand the customer’s high level objective.  This requires hand-in-hand work with the customer to gain a better understanding of their needs.  Analyzing the “job to be done” and the entire clinical work flow with all stakeholders involved will often yield a list of pain points that are suboptimal towards outcomes or cost efficiency.  With an understanding of this, it becomes easier to determine the best way the product can address these challenges.  For illustration, consider an overly simplistic example of a novel monitoring technology that streamlines the medication process for hospital inpatients.  While the cost of product may exceed the current standard of care, it may decrease the time and complexity to a nurse coordinator and the number of HCPs involved in the process, thereby cutting total cost, and may provide the patient with a better care experience, thereby increasing total reimbursement.  This product may be sold traditionally at a fixed cost, or it may be sold as a fee per patient treated, or in a profit sharing scheme as a proportion of costs saved.  Creativity in the business model is as key as it is in the technology behind the product.

A clear understanding of the needs of the customer are essential to an optimal design solution

In first year design courses, it is often stressed that a clear understanding of the needs of the customer are essential to an optimal design solution.  In today’s health economic landscape, understanding 1. all the players and the whole process of administration of care, 2. the cost of process, time and solution, and 3. creative means by which the value of a solution can be translated into sales are the tenets on which to commercialize medical devices in today’s market.

While the medical device playing field has changed significantly in the last 30 years since I was a young entrepreneur, information technologies and data analytics have brought a whole new dimension to understanding clinical stakeholders and their workflows. Along with increased constraints and red ocean markets, now come new opportunities and waves of blue…and a whole new exciting time to innovate in the medical device space.