FEB 02, 2015 14:04 PM
Startup Advice: Howard Leonhardt Says 'Make an Impact'
By Margo McCall
Howard Leonhardt is an inventor, serial entrepreneur, patent holder, winemaker, and baseball team owner. But what's brought him the most fulfillment from his lifelong work is seeing how the cardiac products he's developed have saved human lives.
Leonhardt, a speaker at IEEE Computer Society's Startup Rock Stars, March 24 in San Francisco, holds 21 US patents for products that treat cardiovascular disease. His TALENT stent graft developed in the early 1990s holds a leading world market share for repairing aortic aneurysms without surgery.
He developed the first stem cell therapies for treating damaged hearts. The first implantable stem cell pump. The first wireless microcurrent stimulators - Star Trek like - for noninvasive regeneration of organs. His inventions have treated over 200,000 patients in 60 countries.
"Before we came along, surgeons had to open your chest, crack open your ribs, clamp your aorta and take six hours to hand-sew a graft in place," says Leonhardt. "With our invention developed in the early 1990's they were able to fix it in five minutes with a catheter based system."
In early 1999, Leonhardt founded Bioheart, Inc., a now publicly traded leader in applying adult muscle stem cells to treat heart failure. His company BioLeonhardt is developing the first implantable programmable and refillable stem cell pump and electrical stimulator.
He is founder and chairman of the California Stock Xchange, preparing to be the first U.S. social good impact stock exchange. He also heads up Cal-X Crowdfund Connect, a crowdfunding campaign building firm and Cal-X Stars Business Accelerator, Inc., a business incubator and accelerator focused on cardiovascular life sciences and social good impact innovations.
His Leonhardt Ventures angels network, founded in 1982, has raised and put to work over $145 million in 28 companies to date. Leonhardt also serves as co-leader and state spokesperson in California for the JOBS ACT and Crowdfunding for Startup California and has given over 70 speeches on the subject. He has signed a contract via Go Go Luckey Productions to co-host the upcoming CNBC TV Series CrowdFund.
Don't lose sight of the customers
Amid all the activity, it's sometimes easy to lose sight of the people that many of these activities are trying to help. Leonhardt recalls receiving a call from a doctor who was trying to save a patient with a ruptured thoracic aneurism. The patient had already lost a lot of blood, and asked Leonhardt if he would go to his lab and create a stent graft.
Leonhardt was in Miami and the patient was in Vienna. Medical personnel kept the patient alive as Leonhardt flew to Vienna with the stent graft.
"When we got it to the operating room, the patient was almost gone. But the doctor got the catheter in and the stent graft in place to seal off the aneurysm, and later the doctor took me to the waiting room to meet the family of the patient and said, 'This man is the inventor of the device and he traveled all the way from Miami to bring it here. Without that I am not sure if your father and husband would be alive today.'
The wife and the daughter of the patient simply said thank you. But Leonhardt says, "This was more than just the type of thank you said when someone passes the salt at the dinner table. This was a real THANK YOU."
Leonhardt returned to the manufacturing facility in Florida and shut down the plant with nearly 500 employees. He gathered them to pass on that big THANK YOU and the good feeling of work well done to every single person in the organization.
"When you get the real direct feeling of the importance of the impact of good work like that, it is hard to ever go down to work on anything less important. When you have an experience like that, it makes all the hard hits from critics and naysayers early on worth it. This good feeling coming from the true impact of our work drives us on to work through the hard obstacles," Leonhardt said.
Fail Fast mantra
Leonhardt follows the innovation mantras taught by Tom Peters, author if "In Search of Excellence," namely:
• Try a lot of stuff rapidly and keep what works.
• Fail forward fast.
• Use rapid prototyping.
• Do it, fix it, try it, and repeat.
• Use rapid feedback loops.
"Innovation comes from trying and failing and failing again and making adjustments to finally get it right," he says. "We try so many things and keep what works. While we’re trying to regenerate a heart we regenerate breast tissue and end up having another invention by serendipity. Breakthrough discovery so often comes in the process of doing."
Companies accepted into the Cal-Xelerator 108-day startup accelerator must first convince Leonhardt and his team that their innovation can become a viable business. After acceptance, the startups receive mentoring needed to prepare them for demos that will lead to seed funding. Competition is fierce--Cal-Xelerator only accepts a maximum of four innovations each 108 days.
"The first step is focusing on inventions in the lab," Leonhardt says. "After a few patents are secured for those inventions, the best of the best of the innovations can move onto become startupsc in the accelerator program. Four-fifths of the startups in the Cal-X accelerator program come out of our own laboratory."
After graduating from the startup accelerator, companies can be recommended for the Cal-X Stars 5-Year Business Accelerator, which prepares startups for sustainable growth and eventual exit. "We’re the only accelerator that's focused on a life term," says Leonhardt. "Most go for 12 weeks and kick people out. We have a five-year term, but we're full until 2018."
The solution to dilution
In addition to creating products that work, Leonhardt says company founders face the challenge of managing dilution when bringing in investors. Another challenge is in knowing when to leave.
"The pattern I see happening again and again with VCs is they usually fire the founder and put in a VC chosen and controlled MBA. That is exactly the experience I saw happen with my counterparts that I was able to avoid myself."
There's often a tug-of-war between technology innovators and financial backers. For example, with Apple, financial backers wanted the company to be the follow BM and generate steady profits. But Steve Jobs wanted to create breakthrough new original products and entirely new markets with an extensive R&D effort that might reduce profits in the short run but if done right could produce much higher profits long run."
We all know what happened next. "When VCs took control of Apple, the company went down, and when Steve returned, it excelled and became the most valuable company in history," says Leonhardt.
Leonhardt says there's a definite relationship between startups and technology innovation. "I love the idea that innovation and startups are linked. Innovation is the lifeblood of the economy. Startups are a lot of quick tries."
1. TALENT stent graft: Approaching $3 billion in total revenues. Merged with AVE 1998 $70 million. AVE sold to Medtronic for $4.3 billion in 1999.
2. POLY-CATH polyurethane balloon cardiovascular catheter: Over 50,000 patients treated.
3. Bioheart MyoCell: $76 million valuation IPO on NASDAQ 2008. Clinical 95.7 meters improvement over placebo in Phase II/III
4. Leonhardt Vineyards wines: Over 144,000 bottles produced and sold to date. Gold Medal won. Leading family owned Zinfandel Petite Syrah blend sold through 120 Trader Joe's stores in California. Added Chardonnay, Cabernet Sauvignon and Pinot Noir in 2011 and 2012.
5. Lucille's American Cafes: Profitable for almost every year the past 13 years. $2 million in annual sales. Exited first restaurant in chain with over 200 percent return. Still own 50 percent of holding company with all franchise rights, recipes, trademark, SOPs. Developed franchise package and food truck expansion plan.
6. Percutaneous heart valve: Acquired by Medtronic in 1999 via AVE deal. Pioneering patent in field.
7. Crowdfund! The American Dream TV show: Sold to CNBC in 2012. Contract to serve as co-host primetime and supported by Cal-X Crowdfund Connect.
8. Wine Country Baseball: Entering fifth season of Leonhardt Cup Wine Country Baseball Classis play. Owns 12 teams.
9. Pro-Cell patented stem cell delivery catheter: Sold to Medtronic via AVE deal.
10. California Stock Xchange: The first conscious capitalism stock exchange.
11. Cal-X Crowdfund Connect: Leader in crowdfunding space.
12. World Biotech Fund: One hundred percent owned by Leonhardt Ventures. Founded in 2000. Highly profitable return.
13. Development of first biological pacemaker: BioPace.
14. Development of first wireless noninvasive energy system for directing stem cell therapies: STEMERGY and AORTACELL.
15. Development of first implantable stem cell pump and electrical stimulator combination: BIOLEONHARDT and STEM CELL PUMP.
Margo McCall is Editorial Content Manager for the Computing Now destination site. Have an idea for an article or wish to contribute? Email Margo at firstname.lastname@example.org.
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