That Used to Be Us_ How America Fell Behind in thted and How We Can Come Back - Friedman, Thomas L. & Mandelbaum, Michael [37]
From St. Louis to New Delhi
But so, too, do the little guys in this world! Every year now it takes less money to start a more ambitious company with greater reach and higher aspirations. Consider two companies: one founded by Americans in St. Louis that operates virtually to make a medical device, and the other in a garage in South Delhi that provides banking services to India’s poor. Their stories tell you about the vast new opportunities every American entrepreneur has in this new world—and also the powerful new competitors those Americans will have in this world.
You’ve heard the saying “As goes General Motors, so goes America.” Fortunately, that is no longer true. We wish the new GM well, but thanks to the hyper-connecting of the world our economic future is no longer tied to its fate. The days of the single factory providing 10,000 jobs for one town are fast disappearing. What we need are start-ups of every variety, size, and shape. That is why our motto is “As EndoStim goes, so goes America.”
EndoStim is a St. Louis, Missouri, company that is developing a proprietary implantable medical device to treat acid reflux. We have no idea whether the product will make it to the marketplace, but we were fascinated by how EndoStim was formed and does business. It is the epitome of the new kind of start-up that can propel the American economy: new immigrants using old money to innovate in a flatter world. EndoStim was inspired by Cuban and Indian immigrants to America and funded by St. Louis venture capitalists. Its device is being manufactured in Uruguay, with the help of Israeli engineers and with constant feedback from doctors in India, the United States, Europe, and Chile. Oh, and the CEO is a South African, who was educated at the Sorbonne but lives in Missouri and California. His head office is an iPad. While rescuing General Motors will save some old jobs, only by spawning thousands of EndoStims—and we do mean thousands—will we generate the good new jobs we need to keep raising the country’s standard of living.
EndoStim started up by accident. Dr. Raul Perez, an obstetrician and gynecologist, immigrated to America from Cuba in the 1960s and came to St. Louis, where he met Dan Burkhardt, a local investor. “Raul had a real nose for medical investing and what could be profitable in a clinical environment,” Burkhardt recalled. “So we started investing together.” In 1997, they created a medical venture fund, Oakwood Medical Investors. Perez had a problem with acid reflux and went for treatment to the Mayo Clinic in Arizona, where he was helped by an Indian American doctor, Virender K. Sharma. During his follow-ups, Dr. Sharma said the four words every venture capitalist wants to hear: “I have an idea”—to use a pacemaker-like device to control the muscle that would choke off acid reflux. Burkhardt, Perez, and Sharma were joined by Bevil Hogg (a South African and a founder of the Trek Bicycle Corporation), who became the CEO, to raise the initial funds to develop the technology. Two Israelis, Shai Policker, a medical engineer, and Dr. Edy Soffer, a prominent gastroenterologist, joined a Seattle-based engineering team (led by an Australian) to help with the design. A company in Uruguay specializing in pacemakers built the prototype.
This is the latest in venture investing: a lean start-up whose principals are rarely in the same place at the same time and which takes advantage of all the tools of the connected world—teleconferencing, e-mail, the Internet, Facebook, Twitter, and faxes—to make use of the best expertise and low-cost, high-quality manufacturing. We’ve described cloud computing. This is cloud manufacturing.