Though initially surprised by Medtronic’s move to buy Covidien, Stacy Enxing Seng says she immediately saw the wisdom of the deal and recognized the opportunity for a fresh start. In an interview, Enxing Seng explains why she left, what she’s been doing, and how her new role at Lightstone Ventures fits her vision for Medtech’s future.
10 Top Topics in this Medtech Talk Podcast:
- Insights on your upcoming interview with Geoff Martha of Medtronic?
- How is Medtronic’s Total Solutions strategy seen by Medtech?
- What did you think when first heard of the acquisition?
- “I did believe, then immediately you thought to yourself this makes unbelievably perfect sense.”
- Did you have an opportunity to remain at the company?
- Do you prefer working in start-ups or larger companies?
- Why did you join Lightstone Ventures?
- What will your duties be? Will you look for early-stage deals?
- What does the population of early stage investors look like?
- “We actually think it’s a great time to be in Medtech.”
Stacy Enxing Seng
Stacy currently serves as a Venture Partner with Lightstone Ventures as well as an Independent Director for both public and venture-backed private companies. Prior to Venture/Independent Director work, Stacy spent the last 25 years in medtech, most recently serving as the President of Covidien’s $1.7B Vascular business.
Tom Salemi: All right, well, Stacy Enxing Seng, welcome to the Podcast.
Stacy Seng: Thank you so much. It’s nice to be talking with you, Tom.
TS: It’s nice to have you here, and we’re very grateful to have you involved in the Medtech Conference. You’re actually going to be our lead off hitter at the conference. We’ve got you lined up to do a great interview with Geoff Martha from Medtronic. Any insights on what that conversation might include at this point?
SS: Well, I certainly think it could cover a lot of topics because Medtronic has done such an outstanding job kind of covering both technology and the changing healthcare landscape. But what I’m hoping to get from Geoff is really his talk about Medtronic’s drive into the global services. They’ve made a tremendous number of acquisitions in 2015, what they kind of see as their acquisition appetite, and perhaps some of the innovation models that they’re applying. And really in his role now, heading restorative therapies, he’s running really 4 of the major divisions central to Medtronic’s growth rate. How he’s finding this operational leadership role in Medtronic, and how he’s seen his business transformed as Medtronic is transforming. So I think it’ll be a really terrific discussion. He’s a great guy, and he just has, I think, a terrific personality and demeanor. And I think he’s going to be really open, and I’m hoping we’re going to have a terrific conversation.
TS: How do you view that push of Medtronic’s? And how do other people in medtech view it? It’s very real. They’re obviously doing something different. But is there a feeling amongst some who just feel like well, it’s just sort of putting some dressing on medtech? Or do you think it really represents a seismic shift in how medtech is done?
SS: No, I do think it represents seismic possibility. I guess I would phrase it that way. And I am positively biased toward them for many reasons. One, I think that Omar Ishrak is an extremely refreshing CEO. I think he’s very transparent. He is clearly bullish and passionate about technology, but I think as a medtech CEO he’s done a great job of seeing the positive side of medtech helping to influence the broader needs in healthcare, which is of course very much in line with this value conversation. And I think he’s importantly asking his team and asking of entrepreneurs and technologists to not only give us technology that’s going to positively impact patient care, but demonstrate how it can lower the cost of care and improve the quality of care. And that has to at least start with a vision and an idea in mind for us all to be able to get there. And I think they’ve done a great job of that. I think they have messaged it well. I think they have been demonstrating through some of their acquisitions and some of their innovation service models. I think they’ve brought the needs of many of the global underdeveloped markets in which healthcare is so essential to the forefront, and have been in alignment with this concept, at least, of if we can innovate and serve, if you will, population health, we can also backward innovate into developed health. And so there’s a lot to be really positive about. And probably the only great debate that I’ve heard with Medtronic was when it came to the Covidien acquisition and this concept of the moving into an Irish company. And what that was doing to the fabric of US healthcare. And you know what, I think they’ve met all the commitments that they made, which was this was clearly a strategic deal, and I think they’ve demonstrated how strategic it was, and that they would take that cash that was trapped overseas and use it to invest in research and development and grow jobs and grow acquisitions. And you know what, they’ve held up their level of commitment, and I think in the process they’re creating a stronger company. So you probably could talk to somebody out there that maybe would have some dings in the armor that they would try and explore, but from my perspective, I think they’re starting with the right vision and they’re putting their money where their mouth is. And I think they have a talented portfolio of technology to help change healthcare. And I do think there are some things in healthcare that need to change.
TS: For sure. So you mentioned the deal. I think if we don’t remember where we were when we heard it, we certainly remember what we thought when we thought when we heard of the deal between Medtronic and Covidien. Was this something that you had anticipated? Or did it kind of catch you out of the blue? You at the time, of course, were the President of Peripheral Vascular at Covidien.
SS: Yes, I was President of Vascular for Covidien, so it was peripheral and neurovascular. And I was not aware of the conversations that were in process. So I think what I was most surprised about was in our mind, or at least I’ll make it specific to me, in my mind, the benefit of Covidien is we were, if you will, the acquirer. That was our mindset. That was my mindset in growing vascular. And so the biggest surprise was oh, my gosh, we’re the acquiree, not the acquirer. And so from that perspective, that were some surprise. I will tell you instantaneously I thought it made perfect sense. I loved the concept of it. And mostly, it was because sitting in my shoes running peripheral and neurovascular, I really felt long term, despite the tremendous success we had had, and despite the success that had been created by Covidien’s acquisition of ev3 and then Covidien plowing money and acquisitions into the legacy ev3 business, I did not think we would be able to be a leader in the space over time in vascular if we did not have the benefit of the cardiovascular portfolio. And so from my mindset, immediately when I heard about this I thought to myself, Wow, this is fantastic because we can enable the Medtronic portfolio on the peripheral vascular and neurovascular side, and obviously they’re bringing a gorilla to the game with their cardiovascular portfolio. On top of that, Medtronic obviously did not have the other assets that Covidien had on the surgical side. And so instantaneously, if you kind of look at the power of strategic mass, which I’ve always been positively inclined toward, and you believe that healthcare systems would prefer high quality portfolios from a single partner, if they can, which I did believe, then immediately you thought to yourself this makes unbelievably perfect sense. And then to back it up, as I said, I think Medtronic’s just been consistently a great player across the healthcare space. So it was a high quality team, and I thought so much of Covidien. And that was probably the perhaps side that everybody had a little bit of sorrow about. I think I heard Brian Hanson say something like, We were in the fourth quarter of the game in this business that we created. And I think all of the executive team felt that way. We were doing a great job. Joe Almeida is an unbelievable CEO. There was just such talent resident in Covidien, and such appetite and ambition. So it was a little strange all of a sudden to think uh-oh, we’re given that up, if you will, and moving into another organization. But I think it’s been done very seamlessly, at least with what I can see. And it’s been generally all positive.
TS: And they really had just cleared the trees in terms of taking off and removing themselves from the whole Tyco situation. But it had taken a few years for Covidien to become a real force in medtech. And as a writer who wants to write about deals, it was a bit sad to see one of the two big buyers disappear. And you guys were making a lot of news there at the time.
SS: We definitely were. And I do recognize the impact of that. But I go back to I think Medtronic has done an outstanding job. They’ve been obviously one of the leaders, if not the leader, in this last year as it relates to acquisitions. So it may be less than if Covidien and Medtronic were stand alone, but it’s robust. I mean they’re obviously looking at acquisition strategy as a big part of their growth strategy.
TS: Did you have an opportunity to remain at the company?
SS: Well, I would expect I would have. Everyone was so gracious and interested in talking about how I could continue to grow my career. But I was at perhaps a little bit of a different point, and independent of the Medtronic acquisition, had already had some discussions with Joe Almeida about how can I effectively transition myself out. I love what I’m doing, but what I’m looking to do at this point, because of the success of the ev3 business, and I had felt like we had fully integrated into Covidien, and done the work that we set out to do, at that stage in my life I was looking to stay very engaged in driving strategy and building value, but without the day to day leadership demands. And that remained central to me because I have a middle schooler, and I just felt at this point in my life I wanted to be a little bit more available to my family, reduce some of my travel time, while still figuring out how to stay pretty involved. And the path that I saw at that point was board of director work. And so I had discussions with Medtronic, but I knew in my heart that I didn’t want to sign up for another call it 5 year operational leadership spent. And this has just kind of been my own rule when I sign up for something, I want to know that I can see myself doing that and driving that and being all in on the commitment for a good, call it 5 to 7 years. And I think I’ve demonstrated that in my career. Everything I’ve gone to do has been pretty long term. So I didn’t feel like I could make that level of commitment in good faith to Medtronic. But what I could do is move into this board of director work, which was really the transition that I took, and I feel so grateful to Covidien because they allowed me to start that process while I was at Covidien.
TS: That’s interesting. And yeah, I would have to think that as those two companies are coming together, you really would have to work twice as hard to sort of not only find your place in that company, but to sort of build the infrastructure around you to succeed. It’d be a real challenge, I’d guess.
SS: Yeah. And I don’t know that it would be about working twice as hard, but it’s about honoring your commitment and being all in. That’s the way that I kind of think about it. And I have felt so fortunate because all the organizations that I’ve worked with from American Hospital Supply to Baxter, Symed, Boston Scientific, ev3, Covidien, I have worked with executive teams that I think have been incredibly inspirational and accountable and all in on the responsibility of leadership. And it has been the greatest joy of my career, but it also requires a lot. And so I felt you know, this is going to be a great opportunity for me, especially now at this transition point where Medtronic is acquiring Covidien, to step out and try some new things that can leverage some new skills and keep me very involved, but not in a day to day way.
TS: Do you have – your career has a nice blend of big company and small company with ev3 for I think 9 years, sort of helping that build out. Do you have a favorite time in your career, working small company or big company? Or do you find joys in both?
SS: I have definitely found joys in both. And I think in all of the experiences I’ve had, the great joy kind of comes from getting through that – maybe it’s a little dramatic to call it the valley of death, but in all of those, whether they’re small companies or big companies, you have those moments where you are just slogging through problems. But you’re doing it with a team that feel like family. And you come out the other side and you’re standing on top of that mountain feeling success. I mean those are the great joys, and that’s what I think makes it worth it. And when you’re in a small company or a large company, there are those moments. And to me it’s always been about the people that you’re on the journey with. And I’ve had the great fortune to experience that in both. I would say the biggest difference I’ve found is that in the more small entrepreneurial organization, it is easier, if you will, to be more aligned as a team. And when you do get into a larger organization, I think as a leader you have to have more leadership patience and challenge yourself to have some leadership patience to make sure that everybody is coming along on that journey. It’s easier, I think, in larger organizations to get distracted by what we would kind of call the useful many versus the vital few. And how to keep everybody aligned really around the vital few strategies. I think when you’re in a smaller organization, that tends to – it’s not that the task is any more easy, if you will, but it’s easier to keep people on board and in alignment. So it’s sometimes I think more fun to be in an entrepreneurial company because you can just be on your bombing run a little bit more cleanly and clearly as the leader. But I’ve really been – I’ve had great experiences at both.
TS: And now let’s get into your next chapter. This is the first time, I believe, you’ve worked for a venture firm. You’re now a venture partner at Lightstone Ventures. How did that come about?
SS: Yeah. So it probably was more than a jump into venture. It was, as I said earlier, initially more about jumping out of full time leadership. So I had crafted doing the board work. Right now I’m working with four different companies, two public and two private, on their boards. And during my time at ev3 and Covidien, I was really very involved with basically venture backed startup companies. And I could see that the VCs were so essential into being a farm team, if you will, for the strategics. And they were absolutely essential in growing the top line growth rate as well as R&D. Specifically Lightstone, I felt like they hit on all fronts. You know, the people at Lightstone, I mentioned how important people are to me. I mean I just was wholly impressed with Hank Plain and Mike Carusi, Jason Littmann, Hanson Gifford and Mark Deem. Those guys I saw in action from a far, I saw in action when we were putting together the Fire1 deal with Covidien Ventures. And I remember thinking to myself, you know, if I ever find myself with a chance to work with that group, I am definitely doing it. So one thing led to another, and I thought to myself, I would love to work in venture because I do love creating and building companies. I would love to be on the front end of that and contributing my experiences over 25 years, but also learning from an incredible group of individuals. And I like their focus on breakthrough, disruptive plays where you can move the needle in a big way across healthcare. I liked the fact that their portfolio, they really welcome the strategics in on the investments. I think right now 4 out of 5 of their medtech investments have strategics in series A. I liked the fact that they would back serial entrepreneurs. I mean so many great names: Fred Khosravi and Dennis Wahr, Andrew Cleeland, I mean the list goes on. And I just thought what a great group to be part of to continue to try and grow this incredible medtech space. And so right now I’m only 7 weeks in, but I’m really enjoying it very much. And they’re an amazing team to be working with.
TS: What – venture partner comes with many different duties or different duties depending on the firm. What is your function at Lightstone? What will you be doing? Will you be sourcing deals, working with portfolio companies, all of the above?
SS: All the above. We have talked about it kind of with a blank canvas. I am being – right now I’m getting involved in all the deal sourcing that’s coming across the bow and being able to contribute some of my ideas. I’m talking with individuals to try and source ideas into the company for the right opportunity. I clearly would make room for taking a director role on behalf of Lightstone and helping to work and grow the companies that they invest in. That’s another thing that I really liked about Lightstone is that they get very involved with the companies that they invest in. And I think that’s important because you want a strong network when you’re building a company. And it’s certainly very important for the investors to be behind you. And I like and have seen how they’ve done that first hand. So I certainly an amenable and open to all of that, and fortunately with their personalities, they’ve been extremely welcoming of that as well.
TS: They are a terrific group. Just final question: looking at early stage medtech, obviously there are fewer venture firms investing in that area. But there are investments being made. Is the population of investors in medtech, is it just different? You mentioned the corporates are making earlier investments, certainly seeing individuals and other groups stepping up. What does the population of early stage investors look like to you as now a member of a VC firm?
SS: Yeah. Well, I think to your point, and I’m not expert in this, but there’s been a lot of medtech VCs that have gone by the wayside. And you know, so the top line stories have been there’s been less series A, there’s less companies being started, there’s less venture capitalists. And it would be easy potentially to take a pessimistic view. But we don’t take that view. We actually think it’s a great time to be in medtech, and there’s a little bit of call it the econ 101 concept in place, which is the large medtechs, they still require growth, innovation, and M&A. And so I think there’s a nice match between the VCs that are still in the space looking and being willing to fund the right ideas. I think the ideas that are getting funded, they’re tending to get to earlier exits because they’re – if they’ve gone through the gauntlet, they’re more robust ideas. And so there’s kind of this nice match of supply and demand. And if we pick well, we think that there’s going to be the right exit. And I think the other VCs that are still in the space would say that about medtech. And it’s been interesting just when you look at the data from 2014-2015. It is perhaps not as much total money in as there has been in the past, but the exits have been continuous. They’ve been stable to very strong. And I think they have the promise of, back to our earliest discussion, helping to solve some of healthcare’s big problems. So we’re very positive about it at Lightstone, and I just think there’s a lot of opportunity, even if it’s more selective.
TS: Terrific. We’ll talk a lot about that at the Medtech Conference. And again, we’re very grateful to have you play such a key role in that event.
SS: Oh, it’s my pleasure. And thank you for putting that conference together, because I think it’s an outstanding discussion.
TS: Excellent. Well, we’ll see you in Minneapolis.
SS: Sounds awesome. Thanks so much, Tom.