Online Trading Academy is a financial education academy for learning to trade and invest. Based in Irvine, California, Online Trading Academy has 30 centers nationwide and internationally and has taught more than 150,000 traders and investors. Ken Beckrich is owner of Online Trading Academy Phoenix.
Not realizing there is always randomness in the market.
While I was working for a large medical-device company, a technology was brought to our attention and we sought to acquire it. It was designed to keep people from developing bed sores on the operating table during long surgeries.
The patent for the technology was obtained, [and] I brought in one of the engineers from my group and we spent several years in development. We raised about $10 million. A key component in the technology was produced by a single company and we had a lifetime deal with them. We could buy as much as we wanted at a ridiculously low price.
One of the things our product could be used on was operating tables and we had an exclusive arrangement with the largest operating room table company in the world.
We had to do another round of fundraising, which we always expected. We also did clinical trials, which showed that we were more effective than any other product on the market. Our product was about 10 percent of the cost of any of the competitive products out there and we could make a boatload of money based on that.
This was radical, change-the-world kind of stuff in a multibillion-dollar industry.
It’s kind of like war, where it’s said that the enemy gets a vote or, as Mike Tyson said, “Everybody’s got a plan until they get punched in the face.” We started getting punched in the face.
It started becoming incredibly difficult to raise money because all the money was going into the internet at that time. When we would pitch to the venture capital people, even the ones that had already given us money, the question they always asked was, “What’s the exit strategy?” There wasn’t one because the markets had turned around and there was no way to get out. So, people wouldn’t give us money.
There are so many factors that have to come together to make something work.
I met with my congressman, who was on the healthcare finance oversight committee. He got us a meeting with the guy who bought these sort of products for Medicare and the VA. The guy said, “Do you have any idea of the political power you’re up against?”
We realized that it didn’t matter how good the technology was or how cheap it was. It didn’t matter if we were ahead of schedule or had done everything that we’d told your investors we were going to do. There were factors beyond our control that blew up the whole thing.
We went from 30 employees to three employees in a day. We hung around for a year, waiting for the market to change, but it never did. We ended up giving the technology away. We were supposed to get royalties, but the product was never commercialized and it will never see the light of day. It was devastating and heartbreaking.
The big lesson that I took away was technology is not enough — even money is not enough. There are so many factors that have to come together to make something work that there are no sure things. There is always randomness in the market. There is always going to be a certain amount of uncertainty.
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Photo courtesy of Ken Beckrich