A Nose for Business
At some point in an entrepreneur's career, a unique challenge may arise: the need to balance multiple businesses. Serial entrepreneurs are no doubt familiar with this blessing (or curse, depending on the outcome) of success. A pair of New York City doctors, Scott Gold and Robert Pincus, are currently facing the situation. They founded a thriving medical practice, the New York Sinus Center, more than 10 years ago and then developed a product aimed at clearing their patients' nasal passages. That product, SaltAire Sinus Relief, has recently been introduced into 3,350 Rite Aid (RAD) stores. Drs. Gold and Pincus spoke recently with Smart Answers columnist Karen E. Klein about how they juggle patient appointments with research and development, marketing, and the other demands of entrepreneurship. Edited excerpts of their conversation follow:
How long have you two known each other and worked together?
Gold: We trained together as ear, nose, and throat specialists at Mt. Sinai Medical Center. Bob was in academic medicine for 10 years while I started a private practice at a nearby hospital. I'd bump into him occasionally, and I always asked him when he was going to leave teaching and join me in my practice. In 1993, he finally did it. We started a two-physician group focusing on sinus treatment, and now we have nine physicians in four locations. So I guess we've always been entrepreneurial types.
How did you go from doctors to makers of a medical product?
Pincus: We have always tried to think outside the box. We see these patients who are on zillions of antibiotics and drugs, and we started reading the [medical] literature and speaking to patients and we found that using a saline nose wash can be very effective for getting rid of molds and bacteria. This product goes back centuries, to people using ocean water, and it works. We tried to get our patients to make it up at their homes and the one in 10 who would actually bother to do it would come back and say, "This is great!"
Gold: We wanted to make it user-friendly and available so more of our patients would use it.
So you sort of stumbled into entrepreneurship?
Pincus: Oh, we had no intention of starting a business. But we saw that the patients who made up this generic concoction did great. We started trying to perfect a formula, and then we developed a delivery system that we patented. We took a sort of gross experience and turned it into a very easy, daily, hygiene routine. And patients loved it.
Gold: More and more patients heard about it and started asking for it, so we started having bottles filled for patients.
Pincus: The problem was, we were giving away a bottle that was costing us $2.50, and we figured out that if only one out of 10 patients used it, it was costing us $25 per cured patient. It seemed like there had to be a better way to do this.
Gold: A local pharmacy started carrying it, but the real turning point for us came in 2000, at an international rhinologists' conference called Nose 2000.
Gold: Yeah, that's really what it's called. We introduced the solution and our patented dispenser bottle, and it got a lot of attention. That's when this morphed into a real business.
Why become entrepreneurs yourselves? Why not just license the formula and the dispenser to a pharmaceutical or medical-products company?
Gold: I think it was partly our personalities, and partly because we wanted to have it available for our patients. We were afraid if we gave up control, we wouldn't be able to get it to our patients. Also, we had a sense that we had a unique perspective on the situation. As sinus specialists, we understood what this product could do for patients and how people related to it.
Pincus: The bottom line is, we fell in love with the product and we wanted to develop it ourselves. And what's been great is that we have thousands and thousands of sinus sufferers who are more than happy to give us their input on it. So, we do R&D every day in our offices. For instance, at first we put paper labels on the bottles, but people told us they were using it in the shower and the paper label was no good.
But you eventually had to hire consultants and people with business training to help.
Pincus: Yes. We hired research pharmacists to help us with the medical formulation, we hired scientists to do testing for us, and we got business consultants to work with us. We were fortunate, I think, because though we hit a lot of pitfalls, we seem to have steered clear of the really bad ones. I think the team we've assembled is exceptional.
How did you fund all this business activity?
Gold: We have a busy and successful practice, so we funded it using $800,000 of our own money and money we got from friends and relatives.
Pincus: It didn't come down to an issue of changing our lifestyles either way. We have invested a lot of personal money in this, but we wrote off a lot of it, too.
How tough is it to keep the sinus practice going and also start a small business simultaneously?
Pincus: We work a lot of nights and weekends. Without the Internet, which enabled us to use our time efficiently and productively, I don't know how we could have done it. Also, what helped us was the shared information we found online.
How different is making a product from operating a sinus clinic, and how long will you continue to do both?
Pincus: It's huge. I'd never seen a business plan in my life when we started. Neither of us had. And we made mistakes because we didn't have the expertise that we would have if we'd taken business courses.
Gold: The two businesses are not mutually exclusive, so we're not giving up either one anytime soon. We practice medicine because we love it, and we also want to take care of our patients and our families. Maybe I'll take a little more time off, if SaltAire continues on this current trajectory, but I'm not looking to knock off of practicing medicine.
Pincus: Keeping the two businesses separate has been difficult, like keeping track of what money goes where.
Have you thought about bringing in professional business management for SaltAire?
Gold: We think about it all the time. But we've had people come in, and they want big salaries and a piece of the company, and none of them have really impressed us. Sometimes I think you have to wait until the stars line up before you take that next step. But as this business really expands, there will come a time when we need complete professional management and we know that.
What's in the future for the company?
Gold: The product is in a lot of independent pharmacies in New York City, and we've just signed a deal with Rite Aid to go into their stores nationwide, so right now we're in about 6,500 stores.
Pincus: We initially wanted to limit the sales to the New York metro area, because we were afraid of trying to support a nationwide campaign, but we were forced into it when we found out that the local and regional chains are gone. If you decide to go further than your local area, you almost have to go national.
Gold: We hope to go into 15,000 stores within a year. And then the second distribution tier is supermarkets. Over the past five months, we've raised more money and hired more professionals to work on this. We have the feeling that our timing is right, and it's exciting.