Picture yourself as a successful Houston dentist with over 400 patients in the process of getting their teeth aligned, and your product provider stops manufacturing. Suddenly you no longer have access to the necessary materials to complete the alignment. Necessity was indeed the mother of invention for Dr. Willis Pumphrey, who began ClearCorrect, a Houston based manufacturer of clear aligners.
Pumphrey started using clear align therapy with his patients in 2001. “From 2001 to 2005, I was probably the number one provider of Invisalign and produced more trays than any other doctor on the planet,” chuckled Dr. Pumphrey.
In May 2005, a competitor to Invisalign came to market – OrthoClear. With the price of the product half the cost of Invisalign, Pumphrey felt compelled to make the switch. “I’m a business man, like any other business man,” explained Dr. Pumphrey, “and if you can get the product cheaper, then I’m going to go for it – especially if I can bring the cost down and service more patients.”
The other major difference between Invisalign and OrthoClear was how each company manufactured the series of trays used to move a patient’s teeth. Invisalign made all 32 trays up front, while OrthoClear only made two trays at a time, a better process according to Pumphrey. “Clear align therapy isn’t an exact science and one of the weak points is patient compliance, so if the patient doesn’t wear them exactly the way they are supposed to, or the teeth don’t move the way they are supposed to, you have to take new impressions and start over from that particular point.”
Dr. Pumphrey’s preference for OrthoClear came to a screeching halt, though not by choice. After a lawsuit, OrthoClear and Invisalign came to an agreement in October, 2006 in which OrthoClear agreed to stop all production of clear aligner trays.
“There were 36,000 patients OrthoClear had in treatment and 400 of them were mine,” said Dr. Pumphrey, “so I had 400 patients that needed trays, and that was the necessity that made me come up with a way to make my own trays.”
ClearCorrect began in late 2006.
There were three barriers to getting ClearCorrect started. “This area of dentistry has been rather litigious over the years, so I knew there was a legal barrier. I also knew there was a manufacturing barrier, because we would never be able to service a whole bunch of doctors building trays by hand. And the third, of course, was financing,” said Pumphrey.
Initially, Pumphrey financed ClearCorrect through his dental practice, and spent between $60,000 and $80,000 in legal fees. “I knew doctors wouldn’t want to use the product if we weren’t sound legally,” said Dr. Pumphrey. “So from the research we did, we were able to find an opening.” Even today, ClearCorrect is legally cautious and consults their legal team, to make sure they don’t violate any of their competitors’ intellectual property.
Dr. Pumphrey credits the addition of his son Jarrett Pumphrey, whose background is in mobile technology, as the biggest reason for their success. Laughing jovially, Pumphrey said: “I kind of kidnapped him. He’s been the key in bringing in strong executives as well as helping us run the company tight financially and position us to grow. The growth has been phenomenal.”
Phenomenal, indeed. In their first full year of operation, 2007, ClearCorrect took in $176,000; for the year just ended, revenue is in the millions of dollars.
As a former OrthoClear trainer, Pumphrey had a potential customer base from all the doctors he had trained. And, it was one of those doctors who put him in touch with ClearCorrect’s Chief Technical Officer, Paul Dinh, who knew how to manufacture clear aligner trays. “Working in concert was the key,” said Dr. Pumphrey. “My office became a clear aligner laboratory where we came up with different manufacturing protocols which were actually better than what was available in the marketplace.”
As for financing, ClearCorrect got off the ground the same time the bottom fell out of the finance sector. “There was no money to be found. We even tried bringing on a small investment banker, but he was having difficulty gaining access to capital,” said Dr. Pumphrey. Fortunately, Dr. Pumphrey had a healthy dental practice, family, friends and even patients who helped get him launched financially.
ClearCorrect now boasts a very active research and development department, said Pumphrey. “This enables us to put out a product at a good price that helps keep the cost down for doctors. That makes us a little different.”
Another aspect that sets ClearCorrect apart from other companies is how they approach selling their product. Early on they tried using a traditional medical sales force, where reps in the field call on doctors, but the Pumphreys learned it wasn’t the way to go. “Jarrett gave our sales reps cell phones, and told them to turn on the GPS on a certain day, but we turned it on a day earlier.”
By flipping the GPS switch a day early, unbeknownst to the sales reps, the Pumphreys experienced first-hand a common problem in the sales business; after the morning sales meeting, none of the reps were making sales calls on new doctors. This didn’t align with Dr. Pumphrey’s mission. “That’s a really expensive model, which actually adds more to the price,” he said. “Again, I was trying to create a product that was more affordable, which is why I now train the doctors to understand the product and how to use it.” ClearCorrect no longer has a traditional sales force, instead they have an inside sales operation and bring the dentists in and conduct workshops; each workshop has an average attendance of 55 doctors.
“I think the key to the product a doctor uses is educating the doctor,” said Dr. Pumphrey. “I’m not saying the consumer won’t need to be educated, but if a doctor is comfortable with the product and he really understands how it works, then he’ll be able to present it to a patient.”
What lessons does Dr. Pumphrey have to share with other bootstrappers? Having a sound legal strategy not only protects your intellectual property and the possibility of future litigious lawsuits, but it can also help carve out a niche for a fledgling start-up to flourish, even in the toughest of times.
Links to accompanying bootstrapping articles:
Mar 13, 2017 Comments Off on Building Innovation