11 min reading time

As originally asked by Giovanni Lauricella.

Having worked with numerous startup medical device companies, I have come across companies that have the executive team all remotely located, all centralized, or a blend.

Furthermore, I have run into company cultures that are generally relaxed on where their team is located as long as they meet their goals and other companies that are extremely strict that the whole team be located in the same geographical spot.

When building a team within a small organization, how important is it that the team be located underneath the same roof? Why? Thoughts?

I look forward to connecting www.LinkedIn.com/in/GiovanniLauricella

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Robert Stathopulos
R&D Project Manager — Medical Device and Drug-Device Combination Products
As I understand it, many start-ups begin as virtual organizations with key team members located at various locations. Though email and skype-type communications tools can provide some realtime interactions, there is no more effective communications that the informal chats that are possible with co-location. I remember working at a small division of a multinational corporation, where the R&D group was on the 1st floor and the Marketing group was on the 2nd floor, and the only way to overcome that chasm was for the R&D project team member to run upstairs to the Marketing project team member, or vice versa, several times a day.

I am probably old-fashioned in my thinking here, but face-to-face communication and one-on-one communication are incredibly critical to the success of any technical or business venture. Just because we can communicate with key team members across the globe does not mean it works as effectively and efficiently as we need. It is still true that business operates at the speed of light, and the ability to interact with team members at a moment’s notice is the most prudent way to operate any business. In addition, day-to-day contact builds relationships and relationships build cooperation.

For a highly sensitive enterprise like a start-up, sitting side-by-side can make all of the difference between survive and thrive.

Sayed Mohammad Ahmad
Chief Technology Officer (CTO) & Consultant
As far as my experience is concerned. I can say that for R&D projects which require physical handling of device should be at the same place, whereas if research can be coordinated through internet etc. then of course you can utilize best of the talent across the world at lower cost. On the other hand if sales is concerned it is better to have geographically distributed teams. It will not only increase your presence but will also helps in brand building, after sales support, so on and so forth

Helen Gerhard
Quality Consultant at Helen B Gerhard LLC
If companies choose to manufacturer an actual physical product utilizing contract manufacturers then that changes the dynamic and being in separate locations is not an issue. In that case, the production/quality/regulatory/financial systems needs to have a high level of verified trust between all involved organizations (which requires significant oversight.) Using the tools described earlier, there is no reason why a flexibly staffed organization cannot work. If this path is chosen, however, the systems need to be set up such that when face-to-face interactions are necessary, there is the ability to make it happen in the time frame necessary.

Charalambos Anastassiou
Marie Curie Research Fellow at University of Cyprus
I think that if the company will produce and manufacture an actual physical product such as a handpiece etc, it will be very difficult if people are not in the same location. If it is software then it could be done remotely.

David Anthony Pearce
EMEA Manager, Distribution Sales & Support Cook Medical – Vascular Division
Both can be proven, if you are working in a enviroment such as a big Company it does remain important to have a chat with X-Unit individuals while being on your way from a to b. in my expierence you cover up small items that can impact in important ways.
With a start up Company in todays world it also a questions of spending Expenses to move people from a to b.
Nevertheless in big or a start up company it is the most important thing that the dream and vision ends in the expected result. Success will prove at that time anyhow, so we all should think twice as nothing remains black or white, for me it is a shade of grey.

Dennis King
President and CEO, STATKING Clinical Services
We are a CRO that has worked with over 50 emerging medical device companies on regulatory approval trials for medical devices. We see almost no difference in running clinical trials with a centralized versus a regionalized group of company executives. It is a cost efficient way to operate and we and our clients have proved that you can get 510K and PMA approvals even operating in a virtual business model.

Helen Gerhard
Quality Consultant at Helen B Gerhard LLC
Do not forget the intermountain area (e.g. Colorado, Utah, New Mexico) for Medical Device talent as well. For instance, I live in Colorado and have over 10 years in Medical Devices with experience in facility set up, design controls, regulatory concerns (domestic and foreign), quality systems (both 21 CFR 820 and ISO13485), operations, logistics, audit, interfacing with contract manufacturers, and other. Some of this work has been for startups and some for more mature organizations. I currently have been doing contract work through either my LLC or through other organizations (and thus either traveling or doing virtual work based on the clients needs) and should organizations (start ups or even mature companies for projects or direct hire,) I’m willing to be flexible in where and how I do my work I know there are others with experience in Medical Device that live in the intermountain area and many have the same flexibility I have.

The key is to define one’s strategy and laying out what’s needed to effect it. Like I’ve said before, it’s the quality of the work (and yes, that means the individual’s ability to perform that work) that’s critical. Certainly there are issues that address the legal constructs, the NDA’s, IP, regulatory, and other concerns as to who one uses and where they are located but had been the case for many years. It’s part of setting up one’s strategy to get from point A to point B. All things that can affect that strategy do need to be taken into consideration or they will often bite an organization when least expected and often most damaging.

Doug Daniels
CEO at Stroma Medical Corporation
I have now worked with both large and small centralized teams and virtual companies. When starting a company having it under one roof for extended periods of time is not a luxury that most true start ups can afford. The lack of VC or angel funding for start-ups has forced us all to look at creative ways to get done what we need to define and achieve the program tasks, but without the overhead costs and extended employment. NDA/IP/Consulting contracts are all essential and good business practice for all members of the team.

There are some huge advantages that we have found with the new world order and the virtual pool. We have found some incredible people and specialized talent that we could never afford long term that want to be their own bosses and like the freedom of free lancing. Defined projects with good direction, solid follow-up and regular communication can be a big part of the medical device eco-system and be a great way to start or expand your business or opportunity.

There are tremendous pools of talent in the Boston, No. NJ, Minneapolis, Austin, Miami, Orange County, San Diego and SF areas and an incredible infrastructure of people that are entrepreneurs at heart and really talented and experienced people. Look for virtual companies and developing better ways to do it in the future as a key driver to get and sustain business growth in the medical device market.

Joerg Schulze-Clewing
Electronics Design Consultant
Bo, my former boss once said it very succinctly: An agreement is only as good as the intentions of the participants to stick to it. The jurisdiction is of lesser concern to me because most of the time there will be no meaningful financial recourse anyway, the damages of a leak can easily be beyond repair. And when you are dealing with engineers like myself, they are not millionaires anyhow so what could you possibly win? In our LLC there is absolutely no doubt about the integrity of any of the owners, and for me this was very important. This is also why we did hold one initial face-to-face meeting. Where you have a beer together and also talk about personal stuff.

I do work internationally and never had any problems. Knocking on wood.

Gordon Millar
Owner.
Burrell: The NDA/IP issues are straightforward enough. If you have selected a good team and the client is reputable, you just agree the legal jurisdiction. For obvious reasons, I normally use English Law as it is the basis of most legal systems and is about as reasoned as you can get. I see that you are based in California which has a specific and often quite draconian legal system which for some reason assumes ((unilaterally) worldwide authority. Apart from the so called “emerging” countries which in reality have already come out in full with the exception as you rightly say of their interpretation of ethics and lack of observance of NDA/IP issues, I’m happy to do business with most countries where it is practical.

Burrell (Bo) Clawson
I research patents & design products to get a patented competitive position: Over 30 patents.
Joerg, good advice.

The other key issue is what do you do with NDA and IP agreements with team members? What happens if you use a member in another country that has different laws? Are the agreements valid if signed in different countries? Can & will a person agree to resolve differences in “your country” if he does not live here in your country?

I have had the situation of people in other countries simply copying & publicly releasing project information, in spite of a “Non-Disclosure Agreement”. There was no way I was going to waste time suing in a foreign country for damages. I don’t do work with people in foreign countries as a result. Life is too short.

Joerg Schulze-Clewing
Electronics Design Consultant
Patrick, I fully agree, what you describe will be the future. I essentially have worked like that during all my self-employment time since 1989, and that was the majority of that time frame. Back then CompuServe and fax machines made it all possible.

Bo, the key is to never give anyone (other than the original founders) their percentages upfront. Ever. It has to be tied to milestones. This is how it works in the med devices LLC we founded in January.

Patrick Lynch
Commercial Operations/Business Development at EdgeOne Medical Inventor/Entrepreneur
my take is that it will be the future, no matter what we would prefer. The next generation of functional teams will likely be spread across multiple continents, working in a virtual environment, and probably moving themselves from continent to continent several times in the lifetime.

I have often been involved in cross functional multi-continent projects with remote based individuals, and it almost always comes down to the individual. No technology can overcome work ethic, and innovative spirit.

Helen Gerhard
Quality Consultant at Helen B Gerhard LLC
I’ve worked virtually, semi-virtually, TDY, centralized and hybrids of all of these. I believe the commitment of the team is key and as always, respect for each others abilities and time commitments is a premium consideration regardless of location.

If the commitment is there, sometimes working in a centralized location is a drain on productivity. That is, if it doesn’t matter where the work is done, why expect the person to spend valuable time in traffic/travel when they could be more productive to the organization/project/etc. by working at home. After all, it’s the quality of the work that is ultimately important not the number of hours spent at a facility. Certainly face to face interaction is important but often what happens is people arrive at the central location and either 1) have more ‘visiting’ time or 2) hole up in their office or cubicle to get the work done.

Communication today can take many forms. Face to face, emails, text, fax or scans, Skype, web meetings, conference calls, collaborative software, team rooms, VPN’s etc. can all be part of successful working dynamics. The question really is, where are you, where do you want to be, and are all persons on the journey ready to make sure you get there together. How you do it is really a matter of what works for the team.

Burrell (Bo) Clawson
I research patents & design products to get a patented competitive position: Over 30 patents.
One singular item has never been broached in this long discussion!

Can you guess what it is? It is extremely important to YOUR long term success, yet not one single person has brought it up………………Why?

Ownership of the stock and the legal format the company was set up with is CRITICAL.

After doing “Inc” in early companies, almost everything I’ve seen is now LLC and those friends are creating are also LLCs because of the freedom to make up owners and managers as specifically different entities and separate clauses for how profits are shared and when & HOW a member or manager exits and with what if anything.

Ownership may be one or two people who sweat away in their shop creating the concepts and patent applications and that person or two may setup the company, but what about key people added to ensure successful management, implementation and sales? Typically the later key people come in and get stock options exercisable upon certain conditions (highly variable) &/or upon mandatory successful sale of the business.

Since many startups will need external funding to take it to market, you can loose 1/2 to 3/4 or more of your stock in the funding process, so giving stock to other members that come in late can cause significant dilution to the founders. I’ve had several VCs that wanted 80% to fund an operation while others that know my business want ≈40%. I’ve seen lots of people who say they can be CEO and bring in the funding “for only 30%” who in the end, do not have a clue how to do it efficiently. They always want their “%” upfront.

Think these things through with a corporate attorney who you can work with over time to keep you on the straight and narrow. A small % of stock to a great corporate attorney might be a terrific insurance policy over the long run. It is difficult to know everything required as times and laws change.

You do NOT want to take in a permanent shareholder who might not stay stable (how can you predict the future) or not contribute for the long run and if you do you want to be able to get rid of him or he can take down the team.

Once you get your killer idea, get a ‘killer’ corporate attorney before you get additional “partners” to keep all the bits and pieces aligned to the end goal.

Gary Rosensteel
Business Therapist, NuCoPro
There have been many thoughtful comments in this thread arguing the, Yes/No/Maybe points. I’ve come to the conclusion that ‘It Depends’ is the best response. It Depends on: What is to be accomplished; The dedication level of the various team members; and, Is the person leading the team adept at managing a dispersed team.

If you are looking to create some ‘new thing’ from only a rough concept, then a virtual team may not work, but if you have the concept nailed down, that roadblock is removed.

If you don’t have ‘buy-in’ from all the team members (they share in the excitement of achieving the objective), then a virtual team could be a problem, but if everyone shares in the vision, it really doesn’t matter where people are located.

The team leadership has to understand that virtual teams have a different dynamic than in-place ones. No matter how ‘committed’ the team members are, managing this activity WILL require more direct leadership involvement.

It also is a great assist to physically assemble the virtual team members once every few months. This helps to sustain the team ‘spirit’ and fosters better on-going communications.

Russ Pizzuto
Lead Design Quality Consultant at Menarini Silicon Biosystems
Virtual teams need strong effective leadership. Clear goals and ongoing communication is of the utmost importance in addition to having strong team members. The project leader needs to foster teamwork and insure that communication is open and robust to compensate for the lack of face to face communication and informal communication that naturally takes place with a collocated team. The team leader must communicate clear consistent goals and frequently review progress with the team – that helps the team build trust, collaborate and align, as well as facilitate decision making and timely planning adjustments. Without a strong leader, virtual teams has a difficultly delivering their objectives.

Kevin Smith
SIMPLY DONE – Home Maintenance and Repair
@ Laser Tool & Plastics we have helped many start-ups over the years with the Prototype and manufacturing stages. Since we can’t move our facility…it has become a necessity to use virtual meetings to communicate with our customers as well as their other vendors to coordinate the projects smooth completion.
I would agree that the team is the most important factor, a face to face now and then helps keep the momentum and focus, but each team member being in their own environment is important also.

Burrell (Bo) Clawson
I research patents & design products to get a patented competitive position: Over 30 patents.
Andy: Great summary.

Andy Carter
Chief Technology Officer at TheraCell, Inc
The conclusion that can be drawn from the many comments on this topic is that it is not the most important factor driving success. In my opinion, and from my experience, a good team is the most important thing. All things being equal having the team together would be best, failing that a good team will beat colocation every time.