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STARTUP

How a Tragic Oversight Led These Two 20-Somethings to Build a Lifesaving Tech Startup

Stasis Labs found its first market overseas. What’s its best next move?

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BY Leigh Buchanan - 04 Jan 2018

PHOTO CREDIT: Getty Images

In 2012, Dinesh Seemakurty was studying biomedical engineering as a prelude to medical school when his career plans jackknifed. Seemakurty, then a student at USC, was visiting relatives in India when his grandfather fell ill and checked into the hospital. But there was no medical supervision there, beyond nurses looking in every six hours, and no one noticed that his grandfather's condition had destabilized until it was too late.

As a former emergency medical technician, Seemakurty knew that lives often depend on the information medical workers get about a patient and how quickly they get it. "In these emerging countries--and even in impoverished areas of the U.S.--you don't have that access to patient information," says Seemakurty. "When you don't know, you can't conduct treatment."

In 2015, Seemakurty, then 21, and his classmate Michael Maylahn, then 23, launched Stasis Labs in Los Angeles. The company makes systems that monitor vital signs and deliver data to clinicians' smartphones. Stasis expects to offer products in the United States. But it first went where it was most needed--far from home.

The right features

U.S. companies that spy opportunities in developing markets often strip down products to make versions that can be produced cheaply enough to sell there, and Seemakurty and Maylahn thought they could succeed with an inexpensive, bare-bones machine. To make sure, Seemakurty asked the physicians he met in India a question. The top manufacturers of vitals monitoring devices are GE and Philips, whose products cost as much as $10,000. "We said, 'If we gave you a Philips monitor for $500 rather than $10,000, would you buy it?'" says Seemakurty.

The answer, surprisingly, was no.

The problem, physicians explained, wasn't price. It was manpower. Vitals monitors track things like pulse rate, temperature, and blood pressure. That data means nothing unless someone sees it. In India and other developing countries, hospitals are often severely understaffed--so a patient's condition can deteriorate for hours before a nurse takes note.

"In emerging countries--and impoverished areas of the U.S.--you don't have access to patient information."

Seemakurty and Maylahn stopped pruning features that didn't matter and doubled down on features that did. They developed a cloud-based system to deliver patient data directly to doctors' and nurses' smartphones.

Price still mattered--and would matter more should Stasis decide to expand into places like Africa. So the two looked for costs to cut. One idea: making monitors for use outside of intensive care units. Inside an ICU, a patient's condition can change in seconds, so real-time data is critical. But for other patients, providing data in five-minute intervals is adequate, and costs significantly less. Also, the founders opted to charge hospitals an annual fee per device that includes all hardware, software, and connectivity. "It creates a partnership," says Seemakurty. "We are incentivized to make sure this product is up and running."

A tale of two headquarters

At first, Seemakurty and Maylahn thought they could manage everything from California. But after Seemakurty spent 35 days visiting 33 hospitals across India to show off a prototype, he realized launching there required living there. A distributor or partner might succeed with a finished, proven product. But a product as new as Stasis Labs' monitor "is very much driven by the market," says Seemakurty. "Being in the hospitals, doing installations, training nurses, talking to doctors--that influences not just the design but the way your team thinks."

They also learned that founders on two continents can scout money in both. Stasis raised $5 million in a seed round for U.S. investors. But Indian venture capitalists also anted up. "We were two kids coming out of college and tackling incumbents," says Seemakurty. "Having Indian investors was a sign that validated us with U.S. investors."

Seven Stasis employees, including Maylahn, work in California; 18 are in India. Sales and business development reside in Bengaluru, because India is where the customers are. The founders divided engineering staff between the locations to maintain a 24-hour development cycle. They could have based technical staff in India, where programmers are cheaper, but did not like the message that sent. "Outsourcing is pretty common, but that is not the kind of organization we want to build," says Seemakurty. "We want to be one cohesive company."

Stasis expects to focus on India through 2018. Its size and relatively sophisticated tech infrastructure make it an ideal first market, says Seemakurty. And, he adds, most hospitals are small: Eighty-four percent have just 50 to 100 beds. That means less bureaucracy and faster buying decisions--critical for any startup.

Seemakurty and Maylahn are still mulling ways to expand. Now that they have a finished product, they expect to sell through local distributors in new markets. They also expect to sell it online.

The road back home

Potential next markets include Africa, other parts of Southeast Asia, and the Middle East. Also: the U.S. With money in the bank and a solid track record, the company expects U.S. regulations will be easier to surmount.

"Each market has its own requirements and regulations," says Seemakurty. "If it turns out the product we have makes more sense in emerging markets, that's where we will expand. But if the product also has what is required for the full global market, there is no reason we can't do developed and developing countries at the same time."

The founders believe price will make it popular in poorer regions, and hope design will make it popular elsewhere. Indian doctors offered a key insight: Competing machines have complex interfaces with flashing screens, which may frighten and confuse patients. So Stasis designed a streamlined black box with six simple icons, each representing a vital sign. If the icon is green, all is well. If it's yellow, something's wrong. (Data delivered to clinicians' phones is more detailed.)

That simple, nonthreatening device could serve a domestic niche unfilled by the company's huge competitors. "Stasis was not built just for emerging markets," says Seemakurty. "It was built to reinvent how you monitor patients everywhere."

What the Experts Say

Vijay Govindarajan, distinguished professor at Tuck School of Business at Dartmouth College

The cost of R&D can probably be recovered in India, at which point it may be possible to reduce the price for even poorer markets. Stasis may also be able to reduce the price further in some markets by delivering data every 20 or 30 minutes instead of five. That's still an improvement in countries where they don't monitor at all.

I would recommend that before trying the U.S., Stasis go to other developing economies. Some hospitals in India have opened branches in Africa. Once you sell the product in India, that would be a natural way to migrate. Coming to the U.S. is going to be tough. There are going to be a lot of regulatory approvals. Another option is to partner with GE and Philips and use their distribution channels to get products into the U.S.

Laura Sampath, vice president of programs at VentureWell, a nonprofit that supports innovators creating socially conscious businesses

If you are not willing to relocate to the target market, then your likelihood of failure is much higher. Anytime I see an innovator who says, "I am just going to stay at home and do it from a distance," I get really worried about the person's commitment and ability to be successful. Dinesh understands that there are too many pieces of company building that he cannot manage overseas.

One reason Stasis has been successful is it's working through the private hospital systems in India, which are much more open to innovations and new technologies. What does that strategy look like as the company moves into markets like Africa and the Middle East? In some countries, you have to work with the public sector, because there is not a developed private sector.

Jane Chen, co-founder of Embrace Innovations, a San Francisco-based business that makes blanket-like incubators for developing markets

If Stasis brought down the price by offering its monitor for a yearly fee as opposed to customers' paying a lot more up front, then that is a really smart model for the Indian market. One of the most effective strategies in India is selling products like shampoo or soap in small packages. It is actually more expensive per ounce. But people consume less of it, so they feel like they are paying less. That makes it more palatable, and people are willing to try it.

The sales process is more challenging than you might think. And if Stasis hasn't hired someone to oversee its regulatory affairs, it should do so soon. We did it fairly early, but we could have done it even earlier. It is something you should build into the organization from the beginning.

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