Alumni Spotlight: Ken Dau Schmidt, MDI '16

You could argue that the smartest thing Ken Dau Schmidt (MDI ‘16) ever did was to mess up an assignment for class during his master’s program. It set him on a path to founding his own successful company, one that has carved out a successful niche in the eyecare industry. We talked to Ken about his background, his lucky mistake, and what it’s like running a fast-growing startup.

Q: Ken, tell us a little about where you were born, and where you grew up.
I grew up in Winona, Minnesota, kind of a college town with a population of about 20,000. I have three older brothers and sisters – triplets. As the youngest, I was left to my own devices a lot, but also had 5 people to provide unsolicited critiques. 

Q: Where did you go to school?
A: I came up to the University of Minnesota for my undergraduate degree and was pretty unsure about what I wanted to go into. I started in engineering, went undecided for a little bit and then ended up in biology and pre-med. I really enjoyed the biological processes, those types of things, and gravitated towards the medical side of things.

Q: Were you thinking of a career as a doctor?
A: Yes, that was the plan. Then during college I sold glasses at the local eye care shop, so I learned sales, how to interact with people and that sort of thing. And I learned a little bit about eye care. So after graduation I started working at Minnesota Eye Consultants to try to figure out what I wanted my career path to be, whether that was medical school, optometry school, or something else.

Q: It sounds like optometry really appealed to you.
A: Definitely. I was working with doctors in a clinic, got a little bit more involved with the research department, and that's when I really gravitated towards the device side of things. So I really got into some of the research stuff, particularly the sorts of devices that would assist the surgeons with their eye surgeries, and I really became infatuated with how those worked. We got to use all of the groundbreaking or cutting edge technologies while I was at Minnesota Eye Consultants. And so I really gravitated towards that side of things. I really thought about what I wanted my career to be, and I realized the devices were speaking to me more than the day-to-day patient care.

Q: It sounds like you were thinking like an engineer, thinking up solutions to problems. How did that lead you to TLI?
A: The funny thing was I’d based my whole career up to that point on becoming a doctor, but now I wasn't sure I wanted to be one. I went to the University of Minnesota's website and typed in “Master's programs” and I literally just scrolled the list and waited for something to speak to me. 

And just so happens that Medical Device Innovation popped up. I also contemplated an MBA, and also going back into the engineering side of things. And what I really found was that the MDI program was a good marriage of the two. There are a lot of engineers in the program, there’s a lot of analytical thinking, but it was also more business focused – trying to figure out the best way to use your skills in the business world.
 

Q: What was it like coming into the program? Were there any surprises?
A: Yeah, it was surprising to me, the broad knowledge that all of the professors brought and how applicable it was. Each of the professors had real world experience, which is something I didn't necessarily have during my time as an undergraduate. Back then it was, “Hey, study this, we're going to test you on it later”.

The MDI program was much more applicable to real world situations, with case studies, how companies navigated things like an FDA audit, those types of things. And that really spoke to me. To be honest, I wasn't the greatest student when I was doing my undergraduate degree, but once I got into the master's program, that really spoke to me and I was really able to apply the learnings into real world case studies and projects. So that was a big change.

Q: Were there any instructors or any experiences in the MDI program you were there that really spoke to you, or really stand out in your memory?

A: I have to give a shout-out to Kirk Froggat. He was our professor for one of our core leadership classes. He gave us a semester-long project to apply leadership skills in order to solve a problem within the organization that we were in. 

But I already knew I wanted to change what I was doing. So I had a hard time figuring out what I was going to base my project on – I didn't necessarily want to progress where I currently was. I eventually wound up designing a new product and creating a business plan; that made sense to me as a leadership activity, even though it wasn’t really what we’d been assigned to do.

When I turned it in, instead of just giving me a poor grade on it, Kirk called me and gave me a chance to do it again and turn it in, which was nice of him. But he also told me, “I'm involved in a startup program that's a collaboration between TLI and Carlson, and if you're serious about this business plan, I can refer you over there and we can see how it’s received.” The idea I had, the business plan I wrote, was the basis of Tear Restore.

So it's funny how doing an assignment wrong, and a professor understanding what I really wanted and the capabilities of what we could do, set us on the path that we are right now.

Q: How did you arrive at Tear Restore as the product you wanted to pursue?

A: A lot of what TLI taught me was identifying a need within a market and calculating how big that market is. Who are the competitors in that market, what are they doing that's not solving that specific need? I found that I had a real-world way to apply some of these needs, finding things where I'm talking to patients every day and I can see what the pain points are, what's not
working for them, those types of things. Tear Restore treats dry eye syndrome, and the primary cause of that are the oil glands in the eyelids breaking down. And so I saw that there were in-office procedures that were warming and squeezing these glands to the right temperature and very scientifically based, but at home a lot of the doctors are recommending rice in a sock that you microwave for however long they want to.

Seeing that disconnect was really what set off the idea to come up with a better solution for the patients in an at-home setting that the doctors can support. And so those needs-finding experiences and teachings from TLI allowed me to bring those questions in and ask the doctors, as well as the patients what their current experience is, what's not meeting their needs, those types of things.

Q: What was the biggest issue Tear Restore set out to solve?

A: We had asked a number of patients what they do not like about the current product. And then from the internal side of things, we asked ourselves how we could solve those problems. There were issues like heat retention, not needing a microwave. But the biggest thing from both a doctor and patient standpoint was compliance. People don't want to lay blindfolded for 15 minutes every single day. So an important question was, how do we not blindfold people for 15 minutes a day, but still deliver an effective eye treatment?That led us down the path of what if we do an open eye warm compress because the lids can actually stay open while you're warming them. And then also there's some anatomical benefits that they're blinking and pumping those oil glands. And so finding that need of, all right, we need to find something that people don't have to be blindfolded for, led us to the idea of making it open eye. We went to doctors and asked if this would work, and if so, how would it work.

Since then, we've been awarded patents for that product, and those patents came directly from the needs-finding, of understanding what people wanted.

Q: Is this product available now? How can patients access it?

A: That’s another interesting journey that we've been on. When we started the company, we got National Science Foundation grants. That was through the ICORP program, which is a subsidiary of the MNCorps program, which was directly led by that entrepreneurial course that I took, the one that I was referred to by Kirk.

Our original idea was to sell through doctor's offices. But within two to three months, we understood that this wasn't going to be a long-term solution. There were market forces that were pushing doctors away from in-office sales, our product was too expensive, those types of things.

We had to quickly pivot towards a direct-to-consumer model with physicians as our liaison or referral source for our products to get to the patients. So today we are 90% direct-to consumer. Our products are available at Target, they're available at Walmart, they're available through Amazon, and through our e-commerce website as well.
 

Q: How have things been going since you launched the direct-to-consumer model?

A: We officially launched our first product at the end of 2020, in the middle of the pandemic -- nice year to launch a new company. And to be honest,the pandemic might have moved us a little more quickly to the direct to consumer model. We pivoted in Q1 of 2021.

Since then we've launched multiple products into the market that are more consumable based and those are doing really well on subscriptions and we just continue to expand our portfolio. Currently we're still playing in a very small part of the market – everything except for eyedrops is essentially what we do right now. But eyedrops are 90% of the market. So we're in partnership talks with larger pharmaceutical companies to potentially expand the market to the mainstream as well.

We're still a very small team, so we get interns from the university on a regular basis. We’re always looking for entrepreneurial-minded people to come join our team and wear a bunch of hats. But the core company is just me and a co-founder. I guess I didn't mention him yet, but early on in the process I had to understand that there were things I'm good at and things I'm not good at. And so who would be a good person to fill those gaps for what I'm not so good at? The first person that came to mind was actually my roommate during my undergraduate degree, Joe Hendrickson, and he was at Medtronic working his way up through corporate America, and I told him that it'd be a lot more fun to come join me in this startup.

Q: How do you navigate being a small fish in the very large pond of direct-to-consumer medical device sales? Are larger companies trying to buy you out? It seems like that would be a challenge.

A: It is a challenge. There are calls, but you never know how serious they are until they really come to fruition. So as of now, we're really focused on just growing our team as it is and growng our portfolio of products. We've got two new product launches coming up in the next six months that we're really excited about. But that being said, if we talk six months from now, things can change very quickly. So we'll see.

Q: How do you decide what you should patent, and when? That seems like something that would be very intimidating for a new business.

A: To be honest, I was a bit overwhelmed by it when I first started as well. I think the MDI program was really helpful in giving you that broad knowledge, and just enough confidence to take that first step and to start figuring it out yourself.

When you don't know anything about it, it can be intimidating. But once you have a little bit of a broad knowledge about how the FDA operates, what a Class One device is, what a Class Two device is, and so on, then you can narrow it down to what do I need to understand in order to get this product to market?

The same is true with patents. We had a course about what prior art searches are. Even Google has a great patent search system, and that’s very helpful in identifying the patents that are similar to what you're trying to do, figuring out if there's a white space there that you can fill. And we've hired some of the best patent attorneys to assist us along that journey. We try to do as much of the work as we can ourselves, but they really are invaluable when it comes to naviga ing and speaking with the patent office and getting it actually pushed through. We worked as an internal team and drew up a provisional patent ourselves, but when it was time to turn it into a formal patent, that's when we needed some funding to help us pay for very good patent attorneys.

Q: Looking ahead with Tear Restore, what do you have planned for the next five years?

A: I think we've really built a great base – physician support, profitable company, great distribution, all those types of things. Now we’re waiting for that gasoline on the fire to really get into the mainstream of the larger market items such as the eye drops, even pharmaceut-cals. I anticipate very fast growth in the next five or 10 years, but who knows, maybe we will start over and build something new. For now we're really excited about the next five years with Tear Restore.

Q: If you were going to talk to somebody today who is thinking about going into the MDI program, how would you tell them about it?

A: I'd say it's amazing for people who have a technical base and are motivated. I really took off during the MDI program because it was something new, I was unhappy with just being asked to study something out of a book. I wanted to know how it applies to real life situations. If som one's looking for something like that, I think that's a great opportunity for them. I do think a master's program is what you put into it, so you do have to be motivated, you do have to network, you do have to be willing to submit the wrong assignments if that's what you are really passionate about.  

It's great if you want to move up the corporate ranks and become a manager. I have a lot of colleagues that have done that, but I also have others that are now running a VC firm. And then there's obviously the entrepreneur track as well. So I think it is a little bit what you make of it, but it'll give you the baseline to be able to do what you're passionate about.
 

Q: As a professional in the eye care industry, do you have any advice for maintaining our eye health?
A: We're on screens all day every day, and what that exposure does is it decreases your blink rate by half. When you're blinking less, you're expressing those oil glands less, which leads to the chronic breakdown of those glands on a faster timeline than it used to. So I'd say go visit your eye doctor, tell 'em Tear Restore sent you, and really take your eye health seriously, the most important sense we have. And so be proactive with maintaining your eye health..