TSB Case Study

TSB thought it would be interesting to present our readers with an actual case study of a start-up spine company.  TSB will call the company in question, MicroManagement, LLC. MicroManagement is four years old, and has an IP portfolio that includes three 510(K) products and a device that Micro will likely have to be developed vis-a-vis an IDE. The company was capitalized by surgeon and Angel investors.  The majority of MicroManagements sales revenues are generated by their surgeon investors.  It is estimated that the surgeon investors account for 80% of the company's revenue. During the interim, the company  launched it's flagship product in August of 2008. In January of 2011, MicroManagement received a 510(K) clearance to launch Micro's second product. The second product was due for a limited launch, yet fifteen months later MicroManagement has not commercially launched the product due to a product failure, lack of capital, marketing expertise, and a lack of inventory. From 2008 thru 2010 the company's revenue stream grew exponentially. The company generated $3.7 million in 2011, resulting in a half of million dollar loss in revenue from 2010. The composition of the executive management team is made of a CEO that has failed at two other ventures in addition to hiring a retread of a VP of Sales in hopes of increasing sales.  The flagship product's declining revenue is attributed to the product's life cycle and a change in the surgical approaches since its launch in 2008.  

MicroManagement has a technology platform that is a commodity based product that has some novelty to the design. Yet, MicroManagement is having a difficult time in raising capital which hinders them from bringing their other technologies to the marketplace.  As a side bar, the other technology would only have to go through a 510(K) submission.  MicroManagement is one quarter into fiscal 2012, once again revenue is flat and the VP of Sales has forecasted 4X growth for fiscal 2012, you can do the math. As stated, the real objective at MicroManagement is to eventually bring a device to the market that will require an Investigational Device Exemption (IDE) which will cost MicroManagement a minimum of $48-50 million dollars, which they do not have. MicroManagement's exec team does not place a premium on addressing the market trends, nor do they address their distributors needs.  In essence, there is a lack of inventory, instruments are poorly designed, even the trays are a maniacal disaster.  The greatest challenge MicroManagement has with their current system is that there is a lack of reproducibility attributed to inherent design flaws. So here's the scenario, you as the reader get the opportunity to make wholesale changes at MicroManagement, as a Board Member what do you do?  In your estimations;

Is this company making good progress after nearly four years?

Does MicroManagement have realistic revenue expectations?

If MicroManagement cannot raise the necessary capital, what alternative means does MicroManagement have with a product that in all likelihood will have to go through an IDE?

Does MicroManagement's inability to generate revenue from their existing products, hurt their future valuation?

Does a $3.7 million dollar company warrant a VP of Sales and what value does a VP of Sales bring if he himself has no contacts that generate immediate revenue?

What would you do with a CEO that is taking the company backward rather than driving growth?


TSB wants to know what's your best 30-60-90 day plan for MicroManagement and what would you do?