Exclusive: Erik Halvorsen out at TMC Innovation Institute. Reports are that he was fired

For months, I have been hearing that Erik Halvorsen, director of the Innovation Institute and the accelerator program at the Texas Medical Center, was on thin ice. People felt he wasn’t the best fit at TMCx, partly because of his apparent hot temper and partly because he wasn’t particularly helpful to the startups that he was shepherding at the accelerator. But sometimes leaders don’t take action until the problem can no longer be ignored.

News broke in local Houston media outlets and Xconomy last week that Halvorsen was out as director. No reason was offered. Lance Black is now the interim director of the Institute and TMCx.

TMC and TMCx have a pretty robust public relations operation. An amicable resignation from a prominent role such as Halvorsen’s would surely have prompted a news release along with kudos from leadership attesting to a job well done. That has been notably absent.

Also gone without a mention is Gwynneth Ballentine, digital health innovation lead at TMCx, who worked with Halvorsen. Her profile page on the Institute’s website has been taken down.

So what happened? Here’s how much I can share with a fair degree of confidence though it is important to note that my sources didn’t witness any of the events that they report. All but one spoke on condition of anonymity for fear of angering the behemoth that is the Texas Medical Center.

The sources say that Ballentine was “gunning for Halvorsen’s job” and was actively asking startups to review Halvorsen negatively and to complain about him. In effect, she was “staging a coup” they say. But it backfired and she was apparently let go for poor performance, among other reasons. Reached via text, Ballentine declined to comment on the record about her departure.

A source close to TMC pointed to one reason that may have contributed to her ousting.

“One person I talked to … told me that she was often taking off work randomly even with a full day of meetings and so all those meetings would get canceled,” he said in a phone interview. “There was a very strong significant decline in her performance and whenever a person in that position is not really stepping up for the company, the value of TMCx goes down dramatically.”

Of course the bigger news is Halvorsen being forced out although allowed to appear as if he is resigning.

His hiring was announced in November 2015 and he has been the face of the accelerator and the Institute ever since. [Full disclosure here — Halvorsen enthusiastically participated in the 2017 MedCity INVEST conference as a Pitch Perfect judge and speaker, where he also sat for an interview. He has helped to secure speakers for another of our conferences. In 2017, Ballentine and another TMCx team member helped MedCity screen candidates for a pitch contest at our ENGAGE conference. TMC has also been a MedCity advertiser in the past.]

As mentioned above, I had been hearing for months that Halvorsen may be let go. Turns out that Nov. 14 — the last Demo Day featuring medical device startups from the most recent cohort — is when things got dicey. Halvorsen, sources say, had lots to drink and lost his temper very publicly. His ire apparently was directed at a couple of startup entrepreneurs at whom he swore. Again, I have not been able to confirm the reason prompting the flare-up, but it apparently led to a grossly uncomfortable situation, especially at an institution that prizes its reputation and image.

“Imagine being in a celebratory mood and then being screamed at so publicly,” said the second source close to TMC. “That was an act of belligerence that forced TMC’s hand to fire him and re-evaluate the program. That’s what led to Black being named as interim director and Gwynn’s performance being scrutinized.”

Halvorsen and Ballentine apparently also received negative reviews from the recent end-of-cohort survey — as well as in the past — so that taken together with the outburst at Demo Day after-party appears to have sealed the fate for Halvorsen.

An emailed request for comment to William McKeon, CEO of the Texas Medical Center, was not returned. Ryan Holeywell, TMC communications director, did not respond to calls and an email for comment. Halvorsen did not respond to a text and a call to his mobile number.

A TMCx alumnus who participated in a cohort at the accelerator previously was glad that Halvorsen no longer leads TMCx.

“He is not the right person to help entrepreneurs,” the alumnus and startup CEO said. “My biggest gripe about Erik is that he likes to talk about how he was critical in starting a number of companies in Boston — yet has never personally helped us in any way (intros to investors, partners, collaborators).”

The same person noted feeling appalled when Halvorsen said that he sometimes will take on advisory roles for a certain amount of equity and then not really do that much work.

“That’s the most terrible thing you can tell an entrepreneur,” the alumnus said.

A West Coast digital health entrepreneur who was selected in an earlier cohort and had a good experience at TMCx overall said that he had witnessed some unprofessional behavior from Halvorsen.

“I have seen the anger before during an event in which alcohol was involved and it was inappropriate, but it didn’t happen very often,” he said in a phone interview. “I would say that in general Erik was a very good face of the organization.”

However, he added that the facts and figures that TMCx used to attract startups to the program were inflated.

“Some of the numbers, it’s a lot of fluff — the number of sales, the [amount] of money raised and deals done was certainly blown out of proportion. It’s just not true,” he alleged. “When they say that an agreement was struck with a hospital or sales at a hospital — it was actually a meeting. They counted a meeting as being a sale.”

He added that he has been hearing for a while that Halvorsen would be fired. If that is indeed true, why did it take this long especially if some of the surveys in the past were negative?

There is no clear answer. The second source close to TMC said that the accelerator has attracted high-quality startups and that may have been the reason that Halvorsen still retained his role despite past negative feedback.

The first source noted that the senior leadership is focused on other projects —such as the TMC3 project — and so Halvorsen was left to run TMCx. He also said previous surveys may not have been uniformly negative given that entrepreneurs eager to win investment from TMC held back thinking that they would be hurting their chances if they portrayed Halvorsen too negatively.

“The dirty secret about TMC is that it is very relationship-based and the diligence process and all of that is very kind dubious and frankly amateur and non-existent in many cases,” he said.

All interviewed for the story acknowledged that the TMCx program has strong potential. Nate Pagel, CEO of Medifies based in San Francisco, who was part of the digital health cohort in the past, said that he had a great experience at TMCx especially because he was a newbie to healthcare having been in the software industry before. The program immersed him in the healthcare world as he learned from healthcare executives and as well as from doctors who were running their own startups.

“Those people individually come in and do both advisory sessions but also teach classes around certain subject matters,” he said, which were “perfect for me.” Specifically, he credited the program as unique compared to other healthcare accelerators he has been part of.

“TMCx got me from zero to 100 in healthcare faster than I could have in any other possible way,” he said.

But Pagel noted that the program lacks business chops.

“So teaching marketing and sales, sort of business school 101 stuff that you would learn through an MBA, is not what they do best because it’s not what they are about. It’s not their DNA.” Pagel said. “There are MDs that join the program. They would probably get less out of it because they already know the subject matter and need the help on the business side. For me it was the opposite.”

When the Innovation Institute and the accelerator were launched in October 2014 at TMC, they were part of an overall vision of its former CEO Robert Robbins.  The goal was for “TMC to become a leader in turning academic research into a pharmaceutical, medical device and digital health engine on par with that of Houston’s oil and gas industry,” according to a Houston Chronicle article at the time.

The Texas Medical Center comprises 54 institutions including 21 hospitals boasting marquee names like the the University of Texas MD Anderson Cancer Center, Texas Children’s Hospital and the Baylor College of Medicine. A second Houston Chronicle article explained how TMCx and Innovation Institute would be the engines that would translated McKeon’s and Robbins’ vision to make Houston a “life science commercialization center to rival those in the Boston, San Francisco and San Diego areas.”

It was a goal that many could get behind.

“If you look at the early companies that came to TMCx, I think they came because they truly thought there was a potential for Houston to add a lot of value to what they were doing. The vision was tantalizing to a lot of people because they imagined what could be possible if you brought together all these raw materials that are in Houston,” said the first source close to TMC. “I think Erik came in hoping he could be the person that did all this.”

Meanwhile the TMC alumnus feels that given the fact that Halvorsen’s firing hasn’t exactly been confirmed officially, it means that he will land on his feet.

“TMC invested a lot in PR and Erik’s visibility continues to increase. I bet there won’t be any repercussions on him and he’ll land a big role somewhere,” the alumnus said.

On Monday, the Innovation Institute was advertising one job opening: