#38 - Intelligent surgery and the future of orthopedics with the Peter Verrillo, the CEO of enhatch (53 mins)

Brought to you by Tiger Buford.

Welcome back to Inside Orthopedics. This is Tiger, your orthopedic industry insider and retained recruiter for early-stage orthopedic companies. This is episode number 38. Titled Intelligent Surgery and the Future of Orthopedics with InHatch CEO Peter Verillo. As you know, I've written that software is slowly eating orthopedics, and InHatch is exhibit one. They are a pure software player, but they're not actually eating orthopedics so much as they're making orthopedic hardware such as implants, instruments, and robots better. InHatch is a fast, nimble startup, and when COVID hit, they created a brand new tool called RepVision that enables remote rep support in the operating room using any standard iPad. InHatch is truly a forward-thinking startup in orthopedics. You will enjoy this discussion with Peter. So we are live with Peter Verrillo, CEO of NHATCH. Peter and I have known each other for a while, but I've actually been following NHATCH for about 8 years, I guess it was. I'm really excited to talk to you. Welcome to the podcast, Peter.

Well, thank you, Tiger. I appreciate it. I really enjoy everything we talk about when we do jump on the phone and catch up. So it's nice to finally do a podcast about it.

Yeah, yeah, it's— I love the InHatch story. It's one of the real few pure software companies in orthopedics, and there are very few of them. And you guys have a great story. So let's just jump in. Tell us, how did InHatch kind of come to be? And I always wondered, what does InHatch mean? So you can throw that in too.

Yeah, no, a lot of people ask that, so I'll definitely answer that one. You know, we were finishing up a company we had started and sold and, you know, successfully integrated, and we're trying to think about what we wanted to do next. So I had the good fortune of working at Stryker in the early days. I did a startup in around 2000, 2001, went back to Stryker, and in 2005 started a company that HealthPoint Capital initially acquired, merged us with Nexa Orthopedics, then acquired by Tournier, which was a Warburg Pincus buyout. And it was just this great journey during that timeframe. And we deployed a product that's done really well. After doing that, we kept seeing the same thing happening with every product launch we made. And, you know, we had some really big product launches at Stryker. So I was involved with the initial Scorpio knee.

Yeah.

I was later involved with the Scorpio NRG, which was the follow-up, high range of motion, focused on the Asian market. We built that for Stryker Japan at the time. And, you know, literally millions of patients have gotten these implants through the years.

Yeah.

When we were doing it, every time we go to supply chain and think they had some magic equation how to launch a product, and no one ever did. You know, all this data on usage of sizes and no one ever leveraged that. And, and then when I was at Tournier, saw some very similar things where it's hard to really understand the size usage in patient population. So we launched, you know, 20 sets or 50 sets. But I also remember those conversations with the CEO, Doug Coors, asking him for more and more money every time, and with a straight face. Hey, we're growing fast. We need more instruments. We need more implants. And it's a tough thing to do in a fast-growing company. And the other thing we saw, we were really fortunate because we were in the shoulder space. So all of our designers, surgeons, docs, they all had masks. They all had iPhones. They got iPads. They were all doing preoperative planning. And on their advanced cases, the hard shoulder cases, to understand, you know, version, to understand size. And this just kind of like opened up this potential for what the world could be and could everyone access the technology. And that's kind of how Enhatch came about, was our lives living through multiple deployments through the years. It always was painful. You know, we did 250 cadavers, something like 30 different labs at Tournier to get the Ascend shoulder launched. And it was such an iterative process. So we're like, technology can really be used to solve these problems we had. And they can. So that's what it is.

And what does InHatch mean?

So it was kind of funny because originally we had this concept and for a period of time it didn't make sense and then it made sense again, right? Like, so the original concept which still holds true today was this idea of a platform that would allow you to envision a concept, an idea, a product, whatever it was, and then to be able to create it and hatch it. So it was something that we had thought about after many, many months of trying to come up with good names. We had some horrible names in there, but, you know, and Hash was a nice short one, easy to remember, and, you know, a nice domain that we could own. Worked out pretty well in the end.

Interesting.

Yeah.

So it's almost like an incubator name kind of for ideas.

Yeah, and it's really expanded to more of like a broader concept. So every time we want to solve some problem that our customers are having, it really comes back to how are we— how can we do that and how can we leverage technology to do that? And that's what's been a guiding light to our development, our progress, everything we've done over the past 8 years.

Interesting. And so how are you What year did you start and kind of how did you get funded along the way?

Yeah, so 2012 was our official kickoff. We had some consulting going on before that in a different company, and we were trying to find a time to kick that off, and January 1st, 2012 became that point. With, you know, kind of had our first customers pretty soon. Got our first revenue early in that year. Deploying some simple technology but very effective and useful for our customers. And initially bootstrapped by myself, my co-founders, we all kind of, you know, lived ramen noodle style in the beginning. I was fortunate enough to have a previous exit to be able to fund the part of the company in the beginning. But eventually we started taking on some outside capital, brought in some insurgent investors in the early days that You know, worked with us for years before that, and then brought on some venture capital in 2016.

Okay. What were those first products that were you very— were they surgical planning tools?

No, it's funny. So we started in something very straightforward, and it was around the idea of marketing content that goes on. So it was actually a pain point that I felt so many times where Sales reps would call me and ask for the brochure and ask for the technique and ask for the DVD, and I'd already sent it to them 4 times. And there I was again, sending it again. And sometimes I would purposely go back and find the last time they sent it and send it again from that email months ago. But, you know, I wanted a solution that any company could deploy quickly and easily. And it really became like, you got to start somewhere. It's so important to have an idea to solve a problem for a customer. And then you can't get hung up on that idea and you have to see where it takes you. So what it took us was that, you know, people put their PDFs and their videos and their even 3D models in that initial product line. And, you know, we have— we still have customers using it every day, you know, probably a few thousand users at least on a daily basis. And what we find is that it led us to this next step, which was the form. Our customers are like, I really want to be able to do forms on this app. Okay, that makes sense. You want to fill out a, you know, customer complaint form or Whatever it is. No, they wanted to fill out a sales order, and that's what they ultimately wanted. They wanted to be able to do the order right there from the OR. That led us to the, the next part of it, where as I got deeper and deeper and people were doing that more, we, we realized, well, we need a whole backend to support what they're actually trying to do, which is get paid faster, and kind of led us to our next opportunity in front of us, and that was acquiring Surgisoft.

Yeah, yeah. So what year was Surgisoft?

So we, we closed the deal in 2015, but I met them maybe about 18 to 20 months earlier, and I was super impressed with what they were doing and who their— some of their customers were, how they were leveraging the technology, how dependent they were on the company. And they had a really good foundation. So it worked out really well for us in the end because they brought a team over that's become just a critical part of our growth and our depth. You know, I now have people on the team with, you know, almost 25 years of experience in orthopedic inventory management on the web and on mobile devices. So it's hard to find folks, you know, 3 guys in particular that have a ton of experience. And it's been critical to our growth of the company.

Yeah. Did that, did that change the focus of NHATS? Did it—

So it led us to the next— it kept— everything kept leading to the next thing. So we— our customers need it, and we kept listening to our customers, right? What did they need? What did they want to— Have a problem? What kind of problem do they have, and how do they want to solve it? So it where led us to 2016. We raised our funding. Our initial funding was out of some great investors out of the Valley. The lead investor was Floodgate, and Ann Mirko still sits on our board today. She she sat us down with a few other folks from the firm, Mike Maples, Arjun. And basically, we all talked about the future of Enhatch, and they said, all right, you've got this solid platform that solves this problem for your customer, and this is really important, but, you know, we invest in thunder lizards, you know, and their whole conversation around thunder lizards is great, this idea of radioactive eggs that evolve into Godzillas and just, you know, disrupt industries.

Yeah.

So how are you going to disrupt your industry? In 2016, it was actually on Labor Day, we kind of mapped out this path that we could do that, where if we could leverage some early tech we had worked on around understanding patient anatomy, you know, bony anatomy.

Mm-hmm.

If we could leverage that and we could interpret any radiographic image, you know, CT, MRI, but of course it had to be X-ray too, we could plan every single case. We would know it within Fractions of a millimeter, and we could predict a perfect placement, so to speak. You know, where does that knee need to be placed? What does the shape even need to be, right? It doesn't even need to be a traditional shape. And that's what it really evolved into over the past 4 years since then.

Wow. So, and, but you guys don't provide surgical tools, right? It's just the The planning cuts?

Well, it's interesting. So we've— we go as deep as we can go with our customers, right? So while I have some core AI around how it works, how you want to apply that AI is specific to every single company. So I have this one chart I show our investors where here's all the different ways people use us, and here's our customers, and this is the matrix of how each customer uses us. And it's rare that we even find 2 companies using us with the exact same modules. And that's really because every company's at a different stage, different product they're launching, and different needs. So, for some companies, we've leveraged our technology to help them refine their shapes and sizing of the implants.

Okay.

So, you know, one of the biggest hurdles I had, like I said, when we designed the Ascend was, was to, you know, what size did we need? Well, I looked at—

Right.

I looked at Boileau and Walsh's work. I looked at Iannotti's work. I looked at, like, everyone's work, right? And I had all these spreadsheets with everyone's numbers. And, you know, those are just numbers. And, you know, they're just some simple dimension we're measuring in a much more complicated anatomy. And so, we ended up using CT data at Fournier, and we were one of the first companies to really I think in the shoulder space, leveraged that to create the geometry. But we didn't know how to use the CT data. We were analyzing it in Excel and using Pro/Engineer and CAD to dissect the geometries. And the problem is our puny human brains just cannot process that much data simultaneously.

Right.

But you can have really smart human brains program software that That'll do all that simultaneously. So, so now a company could come to us and develop an implant off of the anatomy based upon the needs their surgeons want and desire, and we can give them and deploy them a system that has the right sizes in the right size range and really have the correct amount of inventory. So, if you want 1-millimeter gaps in spacing, you can get 1-millimeter gaps in If you want to end like— to have 1.5 on the large and a half on the small, whatever you need. It can really tailor the full anatomy scheme and understand if you need, you know, 20 sizes or 50 sizes or 5,000 sizes. And it's really tapered to what the companies want to do with their products and what we can deliver for them. So, so now the software is being used for implant development. It's being used for instrument development too. So we have several companies deploying patient-specific instrumentation using the ENHAT system. They're all in different phases of regulatory release, you know, getting their approvals. And for what I'm really focused on at this point is where else can we go? And I don't know if you saw the— I know you talked to the folks from Augmetics. You talked to the CEO, Nisam, right? Not too long ago.

Yeah, yeah, great.

Yeah, great technology.

Great guy.

Yeah, it was a good one too. I like that podcast. So, you know, here we are. We're now using augmented reality in spine, right? Yeah. And like, this is exactly where we want to be, right? This is exactly where our technology is going to be valuable, is that the pre-op plan for those cases, right, they could be automatic and done, you know, instantly. And And that can be into any AR system. So there's all this new technology. There's always really smart people working on really hard problems in the hardware space. And our idea is to keep working with those companies, finding those companies, engaging with them, and trying to help them empower their workflows as well.

Yeah, interesting. We talked about this a while back, so It's hard to get your arms around Enhance because you're in the background of everything. So, you know, one of the things I remember saying was, we, you know, we don't make robots at Enhance, we make the robots better. We don't design implants, we make the implant design better. We don't design instruments, we make— you know, it's— you just—

Great line. I love that. I use that too, by the way.

Yeah, it's true. It's true. It's the secret sauce behind Lots of what companies are doing. Fascinating. It reminds me way back— I'm older than you— way back at Smith Wesson, we were designing a total knee system and we— there was 2D x-rays. And every time one of our surgeons cut— did the proximal cut for tibia, we sent them a sterile piece of aluminum foil and they would wrap it around the tibia and then they would cut it out and mail it back to us. And I mean, that's— that was our— that was our sizing, uh, project.

Yeah, you know, and you had to be creative in those days. So one of the biggest mistakes I made was a sizing change we made. I won't say when and where, but it was on a product line that we made a sizing change based upon anecdotal data, and, uh, they said Hey, we need it 1 millimeter wider, and they said where they wanted it, but it's not really where they wanted it, right?

Hmm.

So, you know, it changed the fit and function of that product, and, you know, it stuck in my head for years. Like, really good clinical results, except for, like, early rehab in some patients was slower. They had to go through, like, a different protocol than they would usually. follow. And that's always sat on my brain, where how could we, you know, not have those struggles? How can we make sure we're actually replacing exactly what was played?

Yeah, yeah, interesting. I love that. And so you sort of define a space called intelligent surgery, and tell us what that is.

Yeah, for some time we've been searching for a term for a category that we could, we could start to build a story around as to how it all comes together. And it really became the term that just made most sense. And some people pushed back on us on it saying, well, are we doing non-intelligent surgery now? I'm like, no, there's actually some like brilliant surgeons out there that are doing just incredible things and The things they don't even realize that they do, right? That's what I love about surgery. It's such a— as much of a science as an art and a skill that you can't even try to comprehend what the surgeons are doing sometimes. You know, before we had all these instruments, I've been in surgeries with docs that'll do this freehand.

Mm-hmm.

And it's amazing how well it'll actually fit freehand if you've got the eye and the skill. feel and the touch, right? Because you're ultimately trying to replicate a 3D model onto a 3D model and visually.

Yeah.

So, there's all this intelligence, but it's in our brains, and sometimes even the most brilliant surgeons that are doing it don't even understand what they're doing. Like, they couldn't articulate it into XYZ coordinates, 6 degrees of freedom, right? They— but they have it. It's in their brains, and They do it over and over and over, 500, 600 times a year, and it's amazing. Yeah, yeah.

And it's from pattern recognition. It's just pattern recognition of over and over again every anatomy. But with software, you can have millions of reps instead of thousands.

Yeah, that's the idea. You can have millions of those surgeries compiled. And the other part of this is that we have You know, surgeons that have been there from the beginning, you know, still practicing, right? You know, very early days of orthopedics, and they've just got, you know, 10,000, 20,000, 30,000 cases under their belt. It's just incredible to think about that level of understanding and knowledge. And, you know, how do we learn from them before they retire? How can we get better at it? Like, we always have these processes with fellowships, and the surgeons will follow, and it's a really rigorous thing. for a certain incredible training program that they go through, but you're never inside of the head. You're never in the palm of their hand when you're making the cut. So I think it all ties— when we look at intelligent surgery, there's these phases that'll happen over the next several years where we still need to put technology in the hands of the surgeon so we can learn what they're truly doing. We need to learn how they move things. Why they do things. And some of the early robots that are out there could have that capability. They don't today, from what we understand. They could be learning from all those surgeries, but they're not.

They're not.

And that's where intelligent surgery really became the kind of founding term. And excitingly, Intuitive Surgical thinks it's a good idea too. So, they're using the term as well. So, we're in good company. With some folks who know a thing or two about a thing or two.

Yeah, yeah, they've been out there the longest.

Um, let's—

so how big is your team right now? What does it look like? And you're in Hoboken?

Yeah, yeah, we're in Hoboken, New Jersey, in a normal world. Uh, today we're all scattered across the United States. So, uh, and you know, we were always a remote team, like from the very early days. Uh, we had folks in, in different areas and When we acquired Surgisoft, you know, they had a couple folks in Dallas and a couple folks in Florida. Now one's in LA. We have a guy in Toronto. So we've— what we've learned is that, you know, before we had to be really communicative on the messaging platform we use, which is Slack. And now the whole team's remote. We don't have those long We had the luxury of having 15 people in one office and the rest scattered around. Now it's around like what other tools are out there to help us collaborate and communicate and make it feel more in person even though we're all scattered and working from, you know, I'm working from my attic these days, nice little finished attic. I got a good view of New York City when I want to go take a look at it, but I don't have to go there.

Yeah.

Yeah, interesting. Other people are at kitchen tables, other people are in their offices, like in their home office. So it's been exciting. So we're just about 20 people right now.

Okay. And you're probably more virtual than most companies.

Yeah, you know, a lot of developers. So developers have a very, very good relationship. You're familiar with the engineering world, so a mechanical engineer, biomechanical engineer, they have a lot of common traits to developers, software developers, where you want to get into a problem, you want to solve that problem, and then you can talk, right?

Yeah.

But while I'm solving this problem, while I'm in the middle of this 3D assembly with 18 different parts and tolerances, leave me alone, and I want to get this done.

Yeah, and bring me more Red Bull.

Yeah, there you go. Yeah, I, uh, I used to have this, uh, the superpower of being able to zoom into the computer monitor and not see anything else. Uh, when I worked at Stryker, I would just stare into this monitor. People would come up to me, I think they'd ask me questions, I wouldn't even know. I'd just keep going. And, and you need to have that focus to be able to do it. So, uh, so we have a, we messaging tools that allow them to ignore, you know, anything that comes in, and then they have a break, they need to like stretch, then they can jump on that, that question we might have for them. So we really evolved as an organization to let people, you know, have their time to focus and do things. And then for the folks that aren't on the— there's not that many people outside of engineering these days, but there's a few folks that are dedicated to customer deployments and conversations and integrations. So we're definitely the more extrovert, need to talk to each other, need to look at each other. And we're using a variety of great tools right now to do that.

Yeah, Slack's a great tool. I really like Slack. It's— yeah. All right.

I'm going to give you another one. Ready? This is what I think— this is the Slack disruptor during COVID And they're a small company. They just raised their seed round, but they're growing quick. Check it out, Pragli, P-R-A-G-L-I, and it's very similar to Slack, but it's visual, so you can have avatars. I go live with video all day long, so people can stare at me whenever they want to stare at me, and, you know, jump into rooms like you do in an office, like, oh, you know, Kevin and Mike are in an office, let me jump in over there and see what they're talking about.

Oh, cool.

And it's really, it's much more, I feel like we're using Slack Slack less and less because of it. And we're still using Slack like off hours. We still use Slack as the foundational messaging tool, but I think there's some really great technologies that are coming to market soon that are going to let us feel more at home during remote work.

I like that. I'll check that out for sure. It's a— yeah, it's another layer. You feel like you're actually in a room with some other avatar employees. That's interesting.

I love that. And, you know, the folks, they change their avatars. Uh, you know, everyone's kind of like— one of the guys today put on a monocle on his avatar. It's just, it's hilarious. And then, you know, the avatar actually moves around with you, so that's, that's cool. So it follows you. Uh, but I, I'm still old school, and I get on the call, I'm like, no, let's turn our faces on and let's look at each other. Uh, and, uh, you know, you can really tell when what people are, are thinking when you see their face. So I do like that face-to-face human interaction that it has. Interesting.

All right, so let's— there's a— since COVID happened, obviously, um, surgery support has completely turned upside down. A lot of reps were kicked out of hospitals. Um, so we got to get into Rep Vision now. So, uh, tell Tell us, what is RepVision? How does it work? And how did Inhops get into that?

Yeah, absolutely. So it's actually something that we've had on the roadmap for some time because— and it's actually something we had in one of the earliest versions of our product, which is really interesting. And, you know, I always like to give credit where credit is due. One of our early customers was Paradigm Spine before the acquisition. This was years ago. Mark Piscogliosi, who's a great leader at that company, brought them to a successful exit. And Mark had this idea of connecting surgeons to engineers, to whoever had questions, like surgeons and marketers. And we had this early version of this product where we were allowed to do that.

Hmm.

And, you know, it didn't really work out. It was a little too early. This was probably 2013, '14. So before everyone had a cell phone that was absolutely, you know, incredible at FaceTime and all these other technologies. So still right when the iPad first had a camera. So fast forward, when we started doing the preoperative planning, as you can imagine, preop planning not always done on the easy cases, right?

Yeah.

They need them for the most complex cases. So, the most complex cases aren't always done in a vacuum, right? This is not the simple thing that you're just going to be like, oh, yeah, that's it. So, there needs to be this collaboration. A lot of companies that do this type of technology, they actually don't— interact with the surgeon in a face-to-face way. They do it by email because the surgeons are very busy.

Yeah.

Some of them try to schedule Zoom calls, and they were struggling with that because you're trying to, like, manage calendars and scheduling. So a number of our customers said they wanted a way to just really quickly have them, like, call anyone and say, hey, I just need to talk to someone. So imagine pinging multiple people people on the engineering team. It could be your sales rep. And you can have this live conversation. Now, if they're not there, you can actually leave a message. Like, we have this voice recording, screen drawing on the screen kind of thing. So, we had all this technology ready, and we were already building it into the pre-op planning part of our product. It was in the roadmap. We were working on it. But when COVID happened, we started showing it to more people in really early versions. And they were like, we need this in case we can't get into the OR.

Mm-hmm.

And we started working on it. I heard what was going on with our customers over in Europe, a little bit ahead of the curve, and couldn't believe how bad it was. So it became a really important thing for us. I wanted to, you know, I can't go make masks and I can't go make face shields or gowns or any of these other things like the manufacturers could. A lot of people were, you know, helping and chipping in in that way. I figured if we could develop a product that would allow for any sales rep, any engineer, any marketing person that was supposed to be in surgery to attend surgery, and it's much more dynamic than a Zoom call, right? Because I—

Yeah.

I mean, I'm on Zoom all day long. You look at my calendar, it feels like I go from my Zoom to somebody else's Zoom to another, sometimes to Microsoft Teams, Right. But the reality is, is that they're all structured for this laptop or desktop, you know, and a mouse and a computer and a presentation. And that's not surgery. So we knew it wasn't surgery. We've been in enough of them. It's like, where am I going to put this? So, so we're like, okay, there's a number of great products on the market. A couple weeks ago, we shared some of those with people. I looked and we found like 6, 7 companies really quickly that were able to deploy their technology for this use, but so often they require expensive hardware.

Yeah.

And what's nice about RepVision is the iPad Air today is $250 at Best Buy. You can go there, get the latest generation. It's like a 10-inch screen, super lightweight. Get a case for it, that'll cost you $50.

Very portable.

Yeah, very portable. The camera on it is incredible. The processor, if you want to geek out for a little bit, the processor in that thing is better than anything I designed the original Scorpio on, the Silicon Graphics machines we had, which were like $5,000 apiece.

Wow.

So, there's just the processing power of these graphics units are just incredible. So, this iPad Air, $250, you get That's why you can use that for lots of reasons. Very portable. I can have 10 of them next to each other, and they're easy to carry around. So, if you needed to support multiple hospitals multiple ways, you're not— you have this possibility. And that was really the architecture we thought was the best way to build it off of. Through the years, we've played around with every type of mobile device. We've supported a number of different Androids. And they just don't have the same security. They don't have the same capabilities and functionalities. There are so many fake Androids on the market. If you're buying them from sometimes even reputable places, you might not be getting original equipment.

Hmm.

It's a really hard platform to build off of, so we really focus on Apple, the iPad, the iPhone, and it's really where we're going to keep emphasizing. We'll have some web options. for folks too who want to sit in front of the computer and have a few of these sessions open at once. But early days, it's in the OR. It's this really super cost-effective device.

Yeah, so how does it work? So somebody in the OR has an iPad and then the rep has got an iPad somewhere?

Yeah, so, you know, a lot of these times the reps are not too They're just not allowed in the OR. So, in those situations, they're just passing off one of their own iPads, and they're on the other one from wherever they want to be, in the hospital or wherever they can get a connection. And the key thing that we've done differently is that this is a concept of remote control. And I'm still refining how I explain it, and it feels like every single call I take, about it. I'm trying to explain it to people. So, when I'm in the OR and I'm in sterile field, I'm not going to be fiddling around with iPads. So, the idea of the iPads on a— in a case and on an IV stand that's portable, and the nurse that's in the room could move it around, right?

Okay.

Put it over here. That's a good position. Near the sterile field, but not directly, and in a position that gives me a view, the best view I can get of the scrub tech and the instrument trays. And ideally, if they can get an angle with what's going on in surgery.

Yeah.

And because we've got this remote control, I'm able to zoom in on, like, from outside the OR, I'm able to zoom in very easily, just like you would normally zoom on a picture. Which you can't do in these other web conferencing systems. Use that high-powered camera and zoom in on what the surgeon is doing, then pan over to the scrub tech, draw on the screen real quick, and point to the next instrument. So just like you would do with the laser pointer, you're watching the surgeon. Okay, they're about to do X. Okay, we need Y. Get this ready. And trying to recreate that, that same feeling of being in the OR. And then, you know, obviously after now several months of testing and now we're ready to bring on more folks and do a deeper launch with more sales reps, we found that there's other technologies we can tie into this. So, some folks are really interested in us tying into some cameras that are on, like, eyeglasses. You know, like safety glasses.

Mm-hmm.

So, not any kind of AR glasses, but some very low-cost glasses that may be $120 retail that will give you visibility into what the surgeon sees. And then, the way our app is set up is that that's just Bluetooth right into the device, and you can switch that camera instantly. So, we've really made it easy for the rep to now jump in to see what the surgeon And zoom in there and see what's going on there.

That's a view they don't— nobody gets.

Exactly. That's the view I've been dying for for years. I mean, I thought about going back to medical school or at least getting my— I was thinking about going to get a— becoming an assistant, like one of the surgical techs that assist, for, you know, years ago, because I just wanted to get into surgery and Maybe this will help me get a little bit closer.

Wow, that is really cool. So what's, what's the business model? What, what do hospitals pay for and what do device companies pay for? How do they get access?

Yeah, good question. And honestly, we didn't deploy it with that all worked out, right? So it doesn't sound very wise, but we were really focused on getting a technology solution that would work fast and simple and put it in their hands, see if they get benefit from it. You know, we knew we needed it anyway for our own pre-op and intra-op meetings with surgeons. So, hey, let's give it out to the world and see how they could use it. And what we're finding, and we're kind of evolving our thought process around, is how it could be helpful. So, there are some— distributors that have approached us with the potential for them repping it in different areas, right, and helping get traction in different ways. At the same time, you know, our approach has always been to sell into medical device companies. So we're structuring deals with medical device companies where this is not going to be just one rep by itself in the, in the world. You're going to have access to what's going on. There's a number of other things we can start to do with the technology, with our technology around the AI, once we have these videos of surgeries. And that's where it starts to get exciting. So, you know, encrypted recording of the surgery is a possibility, and, you know, we can charge more for that. Now we can analyze that video, give you an approximation of how long every instrument was used. used and which instruments weren't used. So, you know, how did the setup of the OR look? There's all these things that could be used to help the company understand how customers use their product. And there's a graphic I drew 100 years ago, probably more like, you know, 2012, and that graphic shows like I really was trying to do within Hashgraph was to understand what was happening in the OR every single time. Because I wanted to know, like, how were they using my product? And was it good for them? Was it like having trouble with this instrument? And it looks like we're on our way to getting there. Where in the future, not too distant future, that technology is going to be at our fingertips so we can really understand our customers better. Yeah, that's—

well, that is a missing ingredient. Uh, I always found it frustrating as an engineer that products would get used and the feedback would be filtered from the sales rep, if you got it at all.

Yeah, it's really true. Sometimes they wouldn't want to offend me, you know, and I was always open to the criticism because I could make it better the next time. And, uh, but, you know, the sales reps felt like If we said something, then we wouldn't come by and visit them and see their doctors. But, you know, that's where I personally thrived on, that feedback. And, you know, because we don't know everything. We just know— and the other challenge is how often were we developing products with doctors that had, you know, 15, 20 years' experience and thousands of cases under their belt? And we design instrument systems ultimately for surgeons that are sometimes doing it for the first time.

Yeah.

And that disconnect was so challenging as an engineer. Like, how do you, how do you design an instrument for someone who's really trying to learn it for the first time versus the experts that you could give them a chisel and a hammer and a saw and they're going to figure it out?

Yeah, I used to say that we were designing Cessna airplanes and we were using fighter pilot pilots to help us design the Cessnas. And so they— one, first of all, they can make anything work in the operating room in their hands. And the second thing is they just don't know how the rookies really think and the guidance they need. And they tend to make things overly complicated.

It's probably a general theme. Yeah, I mean, it's— sometimes we built those systems for, you know, folks who had the idea of what it used to be when they weren't experts, but it was so far removed, you know. But they— we came out with some great products through the years, the doctors, and there were some tweaks made along the way. That's the beauty of instrumentation, and they always put more engineers and add some improvements. And I think, you know, that's the evolution of every orthopedic system, but I kind of feel everything's going to be moving away from instruments anyway. You know, we bring it up.

Yeah.

I really feel like it's going to be able to be done with much more custom instruments, more patient-specific instrumentation, more robotics sensors. There are things that just we haven't even gotten to yet, and that's what just gets me excited about the future.

Yeah, I agree. It's patient-specific or robot. I think we're going to robot— I've written about this. We're going to robots 2.0 where there's not going to be a giant refrigerator in the corner of the operating room anymore that does one thing. There's going to be tiny little sensors here and there that you don't even see that are guiding the surgery. Yeah.

It really can be. I don't know if you remember the movie Big Hero 6.

Yeah.

I don't know if you saw that one.

No.

So it's kind of a cartoon, but they've got these microbots, these nanobots that all form and do crazy things. And you just start to think about like, this is, you know, this is not too far off that we could have much smaller structures doing some of the work that we're not even seeing. And, you know, I'm not a mechanical— I'm not like a hardware guy where I've built all these things in the past, but I'd say that I've, over the past several years, have invested a lot of time and energy and education into understanding what's possible with robotics, and we're still in the early innings.

Yeah.

Like you said, we're in generation 1, and you and I should collaborate on an article because I got this idea of like how many different generations of robots there are going to be before the surgeon can sit there and drink a cappuccino and just watch. I think it'd be a fun exercise.

Yeah. And then there's the remote surgery. It's fascinating to me because once we have 5G, you can do a surgery from across the world without any latency. That's going to be a lot of fun. Can't wait for that one.

Yeah, I think it's all going to be just like— this is the golden era. of technology in orthopedics, and I feel like we're still in the early ages of it, but it's just going to keep getting better and better.

Yeah, yeah. So let's talk about AI specifically. You're using AI. What are the other opportunities in orthopedic surgery for, you know, basically to make people smarter?

Good question. So I want to start off with like defining AI, its basest way of thinking about it, because I think a lot of people sometimes think it can be much more. So artificial intelligence is really when anytime that a machine makes an interpretation, a decision that a human could make. So we use AI in ways that the AI predicts the CT segmentation, where the edge of the bone is, just like you would do if you're using Osiris or one of these software systems that do the manual segmentation. So there's also other ways to look at AI, right? You can build an algorithm that will run an optimization of how does the knee fit onto the femur, right? That's also an intelligent piece of software. Now, you know, people could argue that Oh, you could do that in Pro/Engineer if you set up the right optimizations and the right, you know, variables. And I know we used to do it, and it used to take like days and days and days to run one analysis. You know, it was like painful how, how hard it was, right? So the things aren't scalable. And, uh, but yeah, you know, if you go back in time, you know, optical character recognition, OCR, how we interpret a PDF scan of our phone and it converts it into the text. That's artificial intelligence. It just— there's this also idea of artificial intelligence creep where we're just so used to it, we don't realize that it is. It feels like normal everyday life.

Right.

Like when your iPhone tells you that you are 24 minutes away from your next meeting and you need to start leaving, right? These little things creep into our lives and we start to not realize even those simple things are using different levels of AI. So where it's going to go is just everywhere, right? So we have to predict— obviously, we have to— we need better imaging technologies and capabilities. That's going to happen. It's going to be able to predict better understanding of the anatomy, and not just the outside and the cortical layer, but the cancellous layer. Like, you know, we, we could never truly understand a humeral density until we cut it open. And you push your finger on it or you put an instrument in there and you feel how much pressure you have. You know, sometimes it's mush after you cut up the humerus.

Right.

Sometimes it's super dense. You can never get anything through it, right? It's painful to try. And those internal areas are areas of opportunity that we'll pursue over the next few years so we can predict that better. But then also beyond imaging and what we're doing in that space, understanding what's going on with the procedure, helping the sales reps, helping the surgeon, this idea of if there's some data point, some information they don't know. I always used to get asked when I worked at Tournier, I was sitting in the Qualis case, which was the shoulder that they had originally designed, that anatomic shoulder that kind of grew really quickly in the US market. They would always ask me, what's the medial offset of this stem? And it's of the size 6 stem. It's actually like a— it doesn't stay in one place. It's a variable angle neck. So the medial offset varies. That's the actual answer. But the answer that had always gone around was 6 millimeters, right? So you ask any sales rep, they say 6 millimeters. That just sounds good. Depends on what head size they use, right? But I'm, I'm thinking as an engineer, yeah, it's not fixed, right? It goes all over the place. It goes from 6, it goes to 12. It's what— it's configurable to whatever you need. And that was the beauty of that system. So, you know, the reality is when there's a need for the question to get the right answer. And, you know, this is taking all that data that we have in our design history files, in our, you know, surgical techniques, and dumping that into an intelligent system to produce those answers quickly. So you have the right information at your fingertips. You know, what head does this glenoid interchange with properly?

Yeah.

What's the mismatch of that? You know, it's hard to hold that in your head as a sales rep. And hold it all correctly, especially if you're carrying, you know, multiple product lines.

And you could put that in an Alexa app too in the operating room.

That would be kind of cool. Yeah.

The other thing I always thought is that the— an AI should know where all the inventory is. They should know where every single implant is in the hospital physically and what's not in the hospital, and then every instrument in the hospital, not in the hospital. And yeah, because I, you know, you've been— you and I have been in enough cases where there's a missing— there's something missing and they're, you know, the reps scurrying around all over the place trying to find a backup or another one. Um, that should never happen. Everybody should know— the system should know where everything is. Yeah, just like FedEx knows where every package in the world is.

Absolutely. But so that's where We have more challenges than FedEx, but that's where also the advancements in sensor technology is going to really play in. And, you know, better sensors in lots of different ways, but in particular around the knowing where a particular part is. Today you still need a big battery and tracking sensor, and there's all these other technologies that are coming about, like we're getting closer and closer. They're not yet there 100%. And there's some interesting approaches out there to that. But yeah, it'll be solved. It's not going to be this year, but in the next few years, we'll definitely know where every single piece of inventory is.

Yeah, interesting. So I want to be— I want to be thoughtful of your time.

So tell us, where do you see NHATS going in the next few years? So we've really spent our time over the past few months thinking about who do we serve best. And we continue to talk to a lot of the big companies and have really interesting conversations going on around what we can do with the big companies. But where I think the next few years it's around dominating a lot of small, mid-sized companies. Yeah.

Hmm.

Profitable companies making $20 to $200, $300 million in revenue. There's hundreds of these companies in orthopedics. You've got your list, some other folks have some lists, and you start to look at these companies and they all struggle the same way I struggled at Tournier. We were about $75, $100 million at that point, and, you know, $1 million of buying more inventory was not a simple thing to to do, right? That was a meaningful purchase for the company.

Yeah.

And while the big companies are really excited about what we're doing, as are we with what they want to do with us, I feel like I can just help the me's that were in those companies, starting them and growing them and getting them to that next phase. And that's what excites me about where we're going, is that we'll keep developing more and more technology, that gives them access to things that they could have never imagined were possible. And that's, that's what EnHatch's purpose will be over the next decade. Cool, cool. Helping the little guys.

It's really hard for the little guys to grow the cash flow and building new inventory all the time. It just kills—

it sucks up so much cash. Yeah. And they've gotten into There's so much innovation at the small companies. I love your articles about getting into a startup because you really do tackle everything in a medical device startup, orthopedic startup. You learn so many different parts of the business that you can't learn because there's people who have those job titles at those big companies. Yep.

I mean, I'm pro-startup. I wish I had done it earlier in my career. So I encourage people to jump into startups earlier. Well, that's great. Wow, thanks, Peter. So yeah, tell the listeners where they can find out more. I'm sure a lot of people are going to be really intrigued. Where can they find out more about NHatch and your solutions?

Yeah, just, you know, I like LinkedIn as our platform. You can come to my website and fill out a form, of course, you know, nhatch.com. Just jump on LinkedIn, connect with me, send a note, say you heard the podcast and want to talk about whatever you want to talk about, or just connect in. I accept almost any connection in orthopedics because you're the folks that we're building this for. Perfect.

Well, thanks for your time, Peter. Great stuff.

Hey, thanks.

Yeah, we'll be watching Rep Vision and we can't wait to see what's coming next.

Awesome. Thanks so much, Tiger. Thanks, Peter. Take care now.

Bye-bye.