Wednesday, April 26, 2017
Interview with Eugene Cho, Echo
Story by Benjamin F. Kuo
Eugene Cho is CEO of San Diego-based Echo (www.discover-echo.com), a startup which is developing a new kind of microscope. The startup is backed by the Tech Coast Angels and Dolby Ventures. Eugene tells us about how his long experience in sales in the microscope industry really enabled the company to get traction quickly, and how that traction--and particularly, sales and market knowledge--was the key to finding funding for its efforts, changing the conversation from "what's this widget about" to "how much capital do you need to fund more sales growth?"
Explain what's special about Echo's microscopes, and what's your background?
Eugene Cho: We have developed the first and only hybrid microscope. There are typically two types of microscopes. One, is an upright, traditional looking microscopes, where you look at glass slides. Those are what you're used to if you used them in elementary or high school. The second, is for life science applications, where you want to look at a petri dish at live cells or tissue. In order to view those cells and tissue, you want an inverted microscope. Those are mostly used in lifescience and health care. My background is I was a sales rep in this industry for fourteen years, with Nikon. The first thing you are trained on, is to qualify customers and figure out if they need upright or inverted microscopes. While the two systems use similar optical components, you have to choose A or B. We've created an alternative, a hybrid microscope for the price of one. The way we did this, is we got rid of the traditional eyepieces, and instead let users use a tablet to view and capture images, and share them wirelessly. By doing this, we eliminated hard to use eyepieces, and took advantage of the Retina display on the tablet, which also gives us the flexibility to rotate the microscope. The reason that hadn't been done before, was because that eyepiece was impeding. So, to recap, we got rid of the eye piece, substituted an iPad, and created the only hybrid microscope.
How did you start the company?
Eugene Cho: I saw this market opportunity when I realized that the larger microscope companies, like Nikon, Olympus, and so on were really only focusing their efforts on high end systems, which cost $200,000 plus. I saw the market opportunity, and after being in the industry for fourteen years, thought: what can we do next? We basically built a few prototypes, sold a few, and saw that there was really a market need there. So, we quit our jobs and started working full time on the company.
Talk about how the company is backed?
Eugene Cho: We had a seed round for less than $3M, and we did a note round with the Tech Coast Angels for $2M after we won their Quick Pitch competition, over about 150 other companies. We got first place in that competition, and they followed up with a $2M investment in the form of a convertible note. It's the largest investment the TCA has had in terms of a first round in their history. After that, we had a $7.5 million Series A, co-led by the Tech Coast Angels, and which also included Dolby Ventures. We've now raised a total of $12.5M.
It's unusual to see investors investing in scientific hardware—what do you think was the key to getting investors interested?,p> Eugene Cho: I think everyone understands the basic concept of a microscope, because it's highly visual. However, once we start talking about things like fluorescence, I think we quickly lose about 95 percent of the audience... Maybe that's even 99 percent. What really separated us, was not the microscope, but how we very quickly sold out of our first three production runs of our microscope. We had a lot of meetings with investors about our forecasts, but it ended up we blew through our year one forecast. We got a very large international order, and we found the demand on this was exceptional, not only here in the U.S., but internationally. So we had to raise capital to meet orders. I think when you are talking about sales numbers, scientific instrument or not, it's no longer we have Widget A or Widget B, it's a much more convincing presentation.
So how was it you were able to ramp up sales so quickly?
Eugene Cho: The core of our team is based around sales experience in this industry, and we really understood the market need. When we saw this market opportunity, we were able to pull together a great engineering team, which built a great product. Once we started to showcase it, it was a very easy value proposition. It's similar to the copier, scanner, and fax machine, when they merged into one device. Instead of having to buy two pieces of equipment, a copier, scanner, and fax machine, you just have one piece of equipment. Because we understood the marketplace and the product proposition, it was fairly easy to show our customers the product, and for that reason we were able to get rapid market penetration.
Do you think the sales focus has been valuable to you as an entrepreneur?
Eugene Cho: I think for most entrepreneurs, you think first on how you are going to develop a product. Of course, it has to be an outstanding product, otherwise you have a very tough road ahead of you. But often they ignore the other element, how to commercialize the product. You have to have a real, keen understanding of the commercialization, on if the product is commercially viable, and have a commercialization strategy.
What's next for you?
Eugene Cho: We're moving into a bigger facility, and we're growing the team to support our growth in sales. We've also partnered with VWR, which is a huge, laboratory supply distributor in North America. Another use of capital, is we're developing two, really, really cool follow up products, also microscopes, to address the higher end market and student and education, and hospital marketplace.