BoneChat #44 - Finally! a better microfracture method with Smart Shot @ Marrow Access Technologies

Hello.

Okay, welcome to Bone Chat Discussion 44. It's great to have Joseph Saladino here, founder and CEO of Marrow Access Technologies. Um, most of us know microfracture has been around a really long time, started in the '50s. Surgeons poking holes in subchondral bone to stimulate marrow. And for decades there hasn't been any innovation until Joseph and his team created SmartShot. And I, I love startups that take a, a standard of care that everybody's used to and then they improve it and nobody saw it coming. So it's, it's gonna be fun. Hand the mic over to Joseph.

Awesome. Thanks, Tiger. I'll go ahead and share my screen. Great meeting everyone. Just a quick introduction to me. I've been in orthopedics and spine for a little over 25 years now. Started out at Ortho Development Company, Ortho Development Corporation, and then CenterPulse until they were, were acquired by Zimmer. Headed up knee and hip product development at Arthrex. Spent 11 years in Medtronic's spinal division, eventually as GM of their enabling technologies. Headed up marketing at SI joint fusion startup, Zyga, before going back to Medtronic, heading up global commercialization for their AFib business, and then running as fast as I could back to orthopedics to, uh, start up Marrow Access Technologies. So we started Marrow Access Technologies in early 2017, uh, classic garage project between a couple of engineers, entrepreneurs, and an orthopedic surgeon. Uh, founded the company with serial entrepreneur Dan Fisher as well as Dr. Jason Ko out of North Shore University Health System. And Trevor Laughlin, a really creative young engineer. And, you know, as Tiger mentioned, we were addressing a therapy that surgeons had been doing for decades with very established and known flaws. And, you know, basically a headline came across my desk of an NBA player who had a failed microfracture. I had been out of sports medicine for a while and was curious what, you know, wow, they're still doing microfracture. I, when I saw this therapy in the early 2000s, I figured that somebody would come up with something better than a mallet and a pick. So we started investigating that, realized that we could solve that problem through design. And I worked with Dr. Ko, essentially asked the question, is this a problem worth solving? His answer, it's worth solving and I want to be part of it. So we founded the company, got to a working prototype. At that point, I left Medtronic, raised money, and prepared for commercialization of the SmartShot device. We pulled together a great team. Kevin Foley has been instrumental in our innovation and IP development. Paul Varastro's commercialization expert, Dan Fisher, serial entrepreneur, and Jim Klore has been an orthopedic industry leader and, and veteran for, for decades. The purpose of the company that we establish is to heal painful joint injuries by empowering surgeons with a cost-effective regenerative solution. And the problem that we're addressing are cartilage injuries, and in particular, small cartilage injuries. And these affect a lot of people. I mean, we're, we're looking at nearly a million just in the US alone experiencing cartilage injuries. And I'm not talking about osteoarthritis. I'm talking about potholes, scratches, damage to the cartilage that can degrade over time and get worse. In any given knee arthroscopy, arthroscopy, they're going to discover cartilage injuries in 60% of those. And the vast majority of those are going to be small cartilage defects. And those have a real impact on patient lifestyle. What we found in investigating the treatment continuum for cartilage injuries is that a lot of surgeons will see small cartilage injuries and try to treat them conservatively. The risk there is that they can degrade both the surrounding cartilage as well as the subchondral bone, leading to a cascade that brings them to earlier osteoarthritis and eventual arthroplasty. When we get into the cost-effective solution of marrow stimulation for these small cartilage defects, and when I say marrow stimulation, if you're not familiar with it, it's really simple. The surgeon is poking a hole or drilling a hole in the bone to get blood or bone marrow to passively flow out of it. And it creates a natural healing reaction that regenerates cartilage. And as Tiger mentioned, that's been observed and performed for decades, made popular by Richard Steadman. In the late '90s. And then like any new therapy, it had its period of overexuberance where they said, oh, well, this regrows cartilage. Let's use it in large cartilage defects. And then they had a series of failures, inconsistencies, and a lot of surgeons went away from it. They found that overall, the results of marrow stimulation were often painful for patients, and the results weren't consistent. On the flip side of that, we saw other cartilage therapies developed over time. And long-term, this may end up being the solution. Things like autologous chondrocyte implantation, multiple-stage surgeries that can be very costly and are often not covered by reimbursement. Usually these therapies are a little more invasive. Or more costly. So if we look at, for instance, an osteochondral autograft transplant, where they'll take a core of bone and cartilage from another place and, and use it to, to fill that cartilage defect. Usually that's done in slightly bigger cartilage defects than what we're addressing. And it can cause some donor site morbidity and pain. So we essentially developed SmartShot to give surgeons a cost-effective, reliable way to treat these small cartilage defects. The device is very simple. It's a single-use spring-loaded gun that shoots a 1mm needle 8mm deep into bone. By using a spring, we're able to control that force, so it's strong enough to penetrate dense cortical bone. But that force is not so strong as to ever overwhelm the tip of the needle, making it really easy to use, really reliable. The main selling point for these tiny holes, as opposed to the rough holes that a pick and a mallet will create, is that it's less disruptive to the bone. That subchondral bone feeds cartilage, gives it its nutrients, and by keeping it less disrupted and healthier, uh, you get a better cartilage fill. And we've proven that out in an animal model that our small needle puncture works better than drilling or microfracture. In addition, the unique way that the device is designed gives them better access to cartilage defects that they can't otherwise reach with a mallet or a K-wire. It's consistent, and it's super easy to use. We can train a surgeon to use SmartShot in a matter of about 2 minutes.

Joseph, does it go through a cannula, or—

It sometimes does go through a cannula. It depends on the procedure.

Okay, uh, it's minimally invasive in general, I guess.

It is minimally invasive. It can fit down about an 8.5mm cannula. So the— this is what we're up against, uh, a mallet and a pick or a powered drill. And these power drills come in different forms, but usually they, they essentially look and act like a K-wire. Uh, they can generate heat they can break, and they don't go as deep as what SmartShot goes. And we've got a little animation that shows the difference both in the impact that it has on the underlying bone as well as the result. So I'll go ahead and play that. So, as the video shows, by not compacting or crushing that underlying cancellous bone, we see more flow of marrow and blood out of the channels that we create, even though they're smaller and less disruptive. In large animal models, we've also seen significantly improved healing of that subchondral bone and cartilage compared to the these legacy techniques. The device is indicated for all of the joints in the body. And we find that its usage is primarily in the knee as well as the ankle. In fact, just in the last two quarters, applications in the ankle surpassed that of the knee, which was the original market that we designed it for. Which has been just a lot of fun to be wrong on which application would be the most popular and also pivot to the foot and ankle segment, which I have to say, guys, is a lot more fun right now than spine, knees, shoulders, or anything else I've worked in, in orthopedics. So here's where we're at today. We've got a differentiated technology. We've hit milestones of several really strong issued patents and published evidence of improved results. In limited distribution, we're now close to 3,000 procedures just in a few cities. We've demonstrated strong growth potential by going to a couple of cities first and really supporting those 1099 reps, guaranteeing account expansion and new customer acquisition. And we've seen even in a city where The product's been available for 3 years now, continued high growth rate, uh, even after we became the number 1 marrow stimulation technology in that metro area. And what COVID allowed us was to, to really focus on developing and maintaining a high-quality, dependable, US-based supply chain, uh, which I, I have to say, going into this, I, I underestimated the importance of. So we're in a situation now where we've, we've essentially done the, what I consider the early stage important things of establishing that product market fit and demonstrating the product works, really refining the product's function. And now we're to the point where we're about to complete a raise and start expanding sales. And so the question that's weighing on my mind is what are the most important hires and what's the best way to build this organization as a commercial organization now transitioning from one that was running super lean and quietly performing this limited release. You know, I've read a couple of Tiger's articles looking at the future of startup organizations, and I laughed and said, oh, I wonder if he knows that that's what we're doing. So when, uh, uh, just interesting backstory, we raised enough money to commercialize. We're in the middle of, uh, of another raise to, to essentially hit the market hard and fast in 2020. We had investors lined up. We did our first surgery the Friday before COVID shut the world down. Uh, the investment round fell apart and we essentially went into survival mode. And so, you know, a lot of times it's situations like that, that, you know, force you to be very innovative in how you do things. And we essentially looked at it and said, what do we need for this organization to survive this uncertain period of time, uh, reduce our burn rate, and still be effective in moving towards these milestones. So, and I'll talk a little bit about how we set up our organization and some of the decision-making that we went through for that. And then I'll ask your thoughts and advice. But, you know, a lot of times we see startups like ours come out of the gates and, you know, quickly raise $10 million, sometimes $20 or $30 million. And build out a full organization of all of the usual characters. You're, you know, build out the— go ahead and rent the warehouse space, have live customer service, order fulfillment, accounting, finance, clinical, chief commercial officer, VP of marketing, all of that on staff. It's expensive.. And depending on what stage you're in, you know, some of those positions might not be very busy yet. Now the downside of hiring too much too early is obviously you're going to spend more money, which is going to result in shareholder dilution. But it also has some other downsides like losing focus and, you know, reducing your runway. Which has become a more important topic as fundraising has become harder than it used to be in the last couple of years. So what's the, what's the right organization? And, you know, aside from running my own startup, I also advise a few startups. And in fact, I named my, my side consulting firm Endgame MedTech because we always start with the endgame. What are we trying to do? What's the goal? Are we trying to set up an innovation machine, a long-term organization? Do we want this to be the next NuVasive, Globus, Paragon 28 that's going to crank out a full portfolio of products in a segment? And, and if so, that's great. Raise a significant amount of money and bring together a full team to go do that. Or are we trying to execute on a single idea? And then by executing on that single idea, you may get acquired or you may then decide to branch out and expand into other areas. You know, the, the one that comes to mind right away is, uh, Kaifon as they were pivoting from just the balloon kyphoplasty into, you know, their acquisition of St. Francis and several, several other ongoing projects that they had when they were acquired by their nemesis. And then, you know, the stages and milestones that you're in, you know, what are your immediate needs? And then not to be too lean, you've got to prepare for the next stage. And a lot of orthopedic startups are founded by sales reps, engineers, or surgeons who undervalue the importance of bringing in marketing early to start planning for those commercial launches. So, you know, 3 important considerations, and I thought it was— I thought it'd be fun this morning to just run through this exercise myself of where are we and what's important to us based on cost, workload, and focus. And I don't think any of these necessarily mean you don't make that hire. Let's say, for instance, an area was a high focus for you, but the workload wasn't a 9 or a 10. That's fine. You might hire that person because you want full control. You want their dedication. You want them on staff. You know, what stands out for us is, you know, we need sales management right now pretty badly. Chief Medical Officer, very important role. But on the other hand, most of us in orthopedic startups can have a staff of surgeons or a chief medical officer that we call on when we need them rather than hiring somebody full-time. Some of these depends on, on the individual people that you're bringing in. If you've got a CEO with a strong sales background, then you might be able to skip the VP of sales and go straight to some sales managers instead if, if that CEO wants to control sales strategy. Same for marketing, just depending on what their background is. And I've seen effective startups do that in sales, engineering, and marketing. Say, I can be that VP of engineering, I just need somebody to do the work, and they bring them in. So at our stage, you know, as I mentioned, these are, are what I consider our critical areas. This is what our org chart looks like. Right now, we have fractional everything except engineering, and even our engineering is boosted by contract manufacturing engineering and other contract design and analysis firms when we need them. And then our plan is to bring on sales leadership. We've had a lot of success with fractional finance, accounting, legal. Chief medical officer, marketing agencies, social media management, order fulfillment, customer service, accounts receivable. We've just been able to find really good vendors to handle these. That being said, there are going to be drawbacks to working with Contract Everything and running a virtual startup. You know, when, when you've only got 2 people and no office space, you even with 2 people, you run the risk of losing alignment, losing motivation, losing focus. There's a culture cost to having a bunch of people who are working on your project less than half of their, their day. It might limit your growth and speed. Would we have grown revenue faster had we gone out and hired 5 sales managers in 2021? Absolutely. That being said, we would have spent a lot of— a lot more money in a very uncertain time. So it's really just a trade-off of what it is you're trying to do and what do you need to get to that next milestone. So that being said, and this, this is really my last slide to tee up the discussion and I'll tee it up by, by going into that specific situation that we are moving from me managing about a dozen 1099 distributorships, sales agents, which frankly is overwhelming and not my particular expertise or where I enjoy spending my time, to be frank, into a period where we want to go out and rapidly add US distributors. What's the best way to do that? Is it going to be to bring in that, that, that one superstar VP of sales, or is it going to be to bring in a couple of clinical product experts that are on the road nonstop?

Um, well, that was a great overview.

It was very honest and open. I love it. So let me ask one question before we get into sales and distribution. How do, how do you find customers today? How does, how do you find a new customer in a new city? What's, what's the process?

Uh, we have a couple of different routes, and, and, uh, first of all, we've been very fortunate that we've gathered, uh, a core group of influential orthopedic surgeons that are also, uh, very excited about the product to the point where they will reach out to their colleagues, whether it's residents, fellows, friends, and recommend the product. And then very often when they make that introduction, I'll talk to that physician one-on-one. Even being CEO of a, of a very small startup, there's a lot of appreciation from our physician customers in talking to the CEO and really understanding the, the heart, direction, mindset of the organization. So I'll make that, that first introduction and then ask them who they like to work with. It's been a really good way to find distributors, you know, who are very good service distributors. I have encountered a couple of situations where those distributors end up being duds for us. And And I'll give you the flip side of some of the distributors that the surgeons like. They like them because they're really nice guys who are very good at showing up to the cases and supporting them. They're not necessarily the aggressive pain-in-the-ass reps that we need. So there's a, you know, I still do it, but just know that there's a limitation. That might be that doctor's rep, but he might not be the one that goes and you know, turns all of Chicago or Los Angeles onto your product. Yeah. Because he's showing up for work in scrubs every day supporting that one doctor.

Yeah.

Farmers versus hunters.

Yeah.

Yes.

And speaking of which, when we're active on LinkedIn, I think that that's the best, most cost-effective marketing tool that we have available to us. Orthopedic surgeons are on LinkedIn. They're not on Twitter as much. They're not on Instagram or Facebook as much. At least when they are, they're trying to talk to patients, not necessarily hear from us. But sales reps are on there too. And so I get a lot of distributors who reach out to me, and I do have a series of questions that I ask to try to separate the hunters from the farmers. You know, there's there's a learning process that every orthopedic startup will go through on what is the perfect profile of distributor for their technology. It's not the same formula for each and every one of us. And then even when you meet that formula and you feel like you're onboarding for that distributor is well refined, your incentive, uh, plan for new sales reps is is attractive enough to get them to pay attention, you still might not work out. It's a timing thing sometimes. If, you know, if they're busy with other technologies, a lot of times their core technologies are taking all of their, their business. I have a fantastic distributor in a large city right now. I'm very excited because of all the surge in interest. That I handed to them and that they've also been able to gather. But they've been slow getting hospital approvals because they're prioritizing their main product line in those facilities. So I mean, there's, there's not a magic, a magic bullet to this.

Well, let's open it up to the group. What you heard, Joseph, he's got a product that works. It, it's got, he's got a surgeon evangelist behind it, but he's got a lot of holes in the country. What does he do?

Mark?

No, I know Joseph. Hey, Joseph.

Hey, Mark, don't take that personally. I wasn't talking about you being the crappy distributor.

We are a crappy distributor. We're actually— it's interesting, as we, you know, we wear a couple of— I wear 3 or 4 hats, okay? We run a compliance company, but we also have a small orthopedic business and we sold most of our sales force to Treece. So we're rebuilding and we're introducing a whole new sports medicine line. We have a lot of balls in the air. I love what he— I love his product, but we're one of those distributors that is pretty distracted by some other burdens at the moment. But what I wanted to say was I did refer him to a Canadian company that has a super good cartilage repair which goes right in. It's a good dovetail fit for him. And I know that they're having some kind of symbiotic relationships. But really, truly, you know, as a guy who's built a few sales forces and made some markets, I've never heard a company say we have too much sales. And I've never heard— I've never heard a CEO or the board bitch that they can't keep up. I'm sure it happens, you know, in production-driven companies, uh, but I'm a firm believer in sales leadership. I take a real militaristic view about it. Uh, to me, being VP of Sales, easiest job I ever had, because I would just go in You know, I have goals. If they didn't make it, I would fire them, fire somebody else, and sales always went up. It's just a— it's a whole lot harder being a distributor because they become like family and they go to your Little League games and they go to the same church, and you can't fire them like you used to just as a more impersonal VP of Sales or a Director of Sales. Uh, so it's a whole different game. But so anyway, to me, I would I would— the tip of the spear to me is sales and doctors selling doctors. So you certainly got that going for you. That's all I got.

Do you give it— do you give the surgeons any tools, uh, Joseph, to like to find referrals? You give them, uh, I don't know, links, websites, materials where they can get their colleagues interested?

You know, I, I, uh, we, we did. We didn't find that we were effective in getting them to actually use it. And so it's kind of interesting with, with both these champion surgeons who were excited about the product, but maybe for different reasons than what maybe our core message was. Or different reasons from each other, maintaining that consistency in messaging to have surgeons do your selling is tough. And so I do think it's important to arm them when we realize that not only with our surgeons but also with our 1099s, that controlling the messaging is really difficult. That's when we saw, okay, we need to, we need to actually go out and do that animation. Give them that thing that they can just say, here, it's this. You know, if I normally start out my sales training by just trying to really hammer in, you know, please don't walk in and tell a surgeon that this is a microfracture gun. Please, whatever you do, don't say that. Because no matter what sales training I would do, that's what they would want to say, and the doctor would shut them down, is I don't like microfracture. And so, even that didn't always work, even trying to hammer that in. So, getting into the— Joe, is that on your marketing information at all? Really?

What's that?

Taking that angle, this is not a microfracture tool. What you're holding is not. It's, it's, uh, it's, it's very— it's getting there. It's getting there. It's, it's a, uh, it's a fine line between standing on the shoulders of the therapy that you're also kicking in the head.

Well said. It's a, it's a marrow gun.

Yeah.

Yeah. Uh, Kyle's got a comment and then Cope. Kyle, you're still muted.

Yeah, sorry, Joe. What would you say is this— is the typical surgical case volume annually for a product like this?

Per surgeon?

Per surgeon. Now maybe you're— maybe you're— you're big hitters, they do 200, but what's your— what's your typical guy? Is that 10, 20, 75?

It's a, it's a real range in that, yeah, big, a big hitter is going to want to do marrow stimulation on their rotator cuff repairs, their cartilage meniscal root repairs. They're going to do 12 to 15 of these a month. Average guy who's got the indication narrowed down to a very well-defined 1 centimeter to 0.5 to half a centimeter cartilage defect, they're going to do 1 to 2 a month. So it really depends. And it— and that's where the messaging comes in. You know, that's why we call ourselves Marrow Access. We talk about it as a Marrow Access device because we, we really want them to maximize the applications for it.

Got it.

So the reason I asked that question is when I've been around smaller companies that are trying to engage sales reps and capture their attention, you know, the guys that are generally going to be open to taking on a product like this, they might have 5 other companies they're working with that fall into the same sort of category and everybody wants them to give them all their time. But the moment they find out that they're only going to do 3 cases a year, it doesn't matter if you're giving them 30 or 40% commission, 40% of $8,000 over the course of a calendar year, they don't really care about. So if your story, if your story is pretty robust around the possibility for case volume and expansion over time. And if you can speckle 2 or 3 surgeons into your territory and you can tell a story around, hey, you wanna give yourself a $60,000 a year raise for not a lot of effort, then I think you can catch a lot of attention there. Is that the sort of messaging that you've been trying to put together?

It is the, and there are 2 sides to that message, right? There's the juice and the squeeze. Yeah, so what we also do is communicate that we, we make the squeeze as easy as possible on the rep in that they go through a very short training. Uh, we work with them or, or even do all of the VAC approval work. We just need them to do the on-the-ground leg work. Uh, I personally engage as many of the new surgeons as I can, to create that stickiness. But their job is to get us that access. So it's, you know, the fortunate thing about it and, and what's— I think what's helped us with a lot of those reps is they don't have to attend the cases. So a successful distributor is going to use this as a door opener to get into competitive doctors offices or competitive procedures. But once it's selling, it's a stocking product for the facility and they're just restocking. Uh, and in our test market, 70% of, of the revenue is coming from hospitals just reordering. So that's, that's the flip side of the, of the, uh, revenue opportunity for the sales reps is that we're not asking them to do a lot.

Got it.

Thanks.

Good. Co—

uh, first of all, Joseph, that was a great presentation, and, uh, uh, congrats on getting 0 to 3,000. Like, that's incredible and so difficult, and so congratulations on that. Um, Kyle hit on a bunch of the important points which is, um, if, if you're really singing for your 1099's attention every day, right? And you win it by, um, getting it used quickly, making it easy, and paying them whatever it is. And I've often been surprised when I've— you don't strike me as one— where I've talked to leaders of companies and they're just saying, saying like, yeah, this, well, this guy could do one or two a month and That's an extra $600. And I'm like, yeah, but if they go spend the same half an hour on their flagship, it's an extra $40,000. Like, what, what would you do? You know? And, uh, so my personal bias, having done a couple of these things, and I was a Globus guy early on, um, is I would be careful with short training sessions, 1099s. And your message being lost. Um, I, I think the more you deliver the message, or whoever works for you who lives and gets up every day and says, how do we move more of these products? How do we do this better? I want those people in front of surgeons. And, um, more than anything, because you'll spend so— you run the risk of spending so much time training so many distributor reps who, 80% of whom don't work out, that I sometimes wonder, it feels Sisyphean, right? Like it feels like one of those things. And I think you, whatever you've done to get to 3,000 is probably what you're going, how do we do more of this? How, what, what did we do here? And I'll bet your team was involved with 2,500 of them, right? Maybe. I don't know what the number is. And it's tough. It's a, it's a sticky wicket. And I almost think, uh, it's my own biases from my own experience is that if it's not easy, and by the way, I've been 1099 and I've been running like, hey, I thought this was going to be easier. Um, I'm like, whatever. If a layup falls in my pocket, I'm going to take it and I'm going to, and then the minute Joseph calls me and says he wants my territory back, I'm going to whine and complain. Because I'm hoping we get broad adoption the rest of the country. Now my job gets easier and I own this territory. That's sort of in the mindset of some of these folks. And I just think the more you can control it, the more you can, then it's delivered the best way, you know. And I just, I urge you to keep doing that. And I think the LinkedIn marketing is great. I think that video, I would show that video to every single human being because everybody sort of looks at that and gets it. But I would just be cautious about planting flags and saying we have Oregon covered by this distributor, and then you look up 6 and you spend all this time training them, and then you're 6 months later, you're like, we've sold 7.

Yeah, yeah.

You know, like, we've all seen it so many times.

Admittedly, I've, I've totally done that.

Um, we all have, by the way.

I brought on the, the top, you know, Zimmer distributor in whatever state, and they, they've got the, oh, we, we know everybody, we've got this covered. They, they really didn't even want to be trained. They were almost insulted that, you know, I wanted to train them, and then they produced nothing.

This thing's your baby. Yeah, right. You wouldn't leave your baby with the Zimmer distributorship in, uh, Wisconsin who says, I don't, I don't even, I've never even had a kid. I'm good. No way. No, you know, and that's kind of what this thing is, right?

By the way, how'd you know it was those guys?

Seriously? That was a middle American guess.

I don't know.

That's, I swear to God, that was a guess. Um, but yeah, that's, it's, it's your, it's your baby. And I would want people who live, eat, sleep, and breathe the success of that and your company. Delivering 80% of the message because at some point people are going to— you're going to make it so you're going to see how easy it is to replicate. And that's when everybody's going to say, we need that product. As opposed to you trying to convince them that they need to pay attention to you. Right. You know, and I don't know what your economics are like, but I'd be— it's hard. I'm not saying that Maloney and me and I know Doug Hawkins is on here and he's probably got good inputs on this. Like, we don't have it figured out. It's more the cautionary tales of the things we've done. But you've done something really well. And, um, and I admire that because it's very difficult. And if I can help in any way, I picked you there on LinkedIn too. I followed you on LinkedIn and your company because that helps. It does help you. It's a great way to help sell your product.

Awesome. Appreciate that.

It's— I mean, Mark's made a great point there. So since you're lean, you don't want to invest in training of a 1099 where nothing happens. Can you take the training online? Can you create a link on your website where here's step— this is how you sell the product, step 1, 2, 3, and you just— that way, you know, it's virtual training for the reps.

We, we absolutely could do that. Do you, do you think 1099 reps would, would do it, though?

Well, what I heard from both Marks is it's got to be easy. It's got to be a layup and it's got a, you know, very little amount of their time and adding to their revenue.

Yep.

So I don't know if it's I think they would.

I think they would look at it 5 minutes before they talk to the doc.

Which, by the way, is perfect.

It's fine.

You know, and Mark, I think when I took your group through training, I probably said this, which is I've worked into it now, is I know you're going to forget a lot of this. Give me a call on the way to your first doctor meeting. I'll give you the 5-minute refresher. Yeah, I think, I think from a scalability standpoint, Tiger, you're, you're spot on that having them be able to go to that recording whenever they want, play that in the car would be helpful.

Yeah, it's, yeah, you're, you're running out into the court and you need a little pep talk. Yep. Yeah. Go ahead. Cope's got his hand up again.

Yeah, I was just gonna ask Kyle, like, it's funny, or Kyle's points were well made, and I was gonna say, Joseph, if it's, if the training's so short and they don't need to cover cases, I'm gonna say something blasphemous to Maloney and me and Lap, and look at him, look, he's already shaking his head. Do you really need salespeople?

I tried it. I, I always try to get rid of those bastards. That's the, uh, you know, that's the corporate, uh, marketing in me. We always try to go repless, and it unfortunately never works. You know, I think to Kyle's point, one thing that I've tried to do to somewhat game that, in that this isn't a product that a single rep is going to make hundreds of thousands of dollars off of. And so, but on the other hand, as I mentioned, it becomes a mailbox money stocking order type product over time, but they've got to do a lot of work up front.

Front.

And so the way that I try to game that is to offer special incentives in the first couple of months. And, and I'm experimenting in a couple of different territories of, do we just do a straight-up ridiculous commission in the first 3 months, or for the first 6 months of sales, or do we just, uh, put out, you know, bonuses for each, uh, first order approval from a new facility. And so that bonus becomes more tangible. Like, you know, here's a couple thousand dollars, way higher than, you know, their commission would have been for that box of 4 products. But a couple thousand dollars feels much more real than getting a few hundred dollars. I don't know, that's— I'll let you guys know how that experiment works out, but that's, that's how I'm trying to solve that problem.

I never had a bonus program produce results unless the number was at least $1,000, because most of the guys I'm trying to tempt already make six figures, right? And you talk about a $250 gift card or $500 gift card, you know, they're just going to shrug that. And they look at every product annually. I know that In the time that, you know, I've met you and in the last year, we have built a sports medicine bag here of an ACL, a meniscal suture device, you know, a bone marrow aspirate, PRP, Lipogems. So we got— we now have an extremely competitive bag to go up against Arthrex and Smith Nephew. And they look at each product as an annual number, and most of those products hit six figures annually. So that's kind of all what you're up against to a certain extent. But I like the idea of— I, I love the idea of being a door opener to otherwise an impenetrable account. That's a good approach.

Yeah, when you, when you've got the big company reps, let's, you know, Let's stick with Smith Nephew where they've got 30 to 40% share depending on the city. They're sitting in a lot of cases, which gives them a lot of opportunity to sell this product. What they don't have out of their big company is a lot of innovation and new products coming out. Yeah. You know, those poor guys, they spent 15 years waiting for the second version of FastFix. And so to, to just put something new in their hands that they can at least, you know, take on Arthrex with, uh, a lot of times that's their motivation.

Kyle?

Yeah, so what's interesting, Joe, is you bring up like a sales incentive or a promotional phase, which I think is, and Mark may have alluded to it, I think it, if you have a product that requires coverage or requires a bunch of effort kind of into perpetuity, if it always has to be babysat, is, is really asking for trouble. Because they get used to that bonus and then the moment it dries up, they move on to the next thing hoping for the next bonus. But if what your incentive is, is you're trying to get them to say some case count, like if they get a doc to number 8, then it starts to be on cruise control. Yeah. Then I think maybe a sales incentive has some potential there.

And if you've got— that's exactly, that's exactly what we're going for is there's this— I don't know the exact number yet. It's somewhere in the 5 to 10 range when the doctor just keeps using it. Yeah.

And so the story for you then is if you cover cases, the first 5, you get them to number 10, here's your bonus incentive for that, because at that point it should then be on cruise control.

Right.

That's a really interesting story. But if you don't have all that package, to put together, you might be asking for more trouble than it's worth with a, with a bonus upfront because there's two other things. And certainly anybody else, Cope, anybody correct me if I'm wrong, but my experience is sales reps like to carry products for two reasons. The first reason is will it make them a bunch of money? But they'll still carry other products that maybe don't make them a bunch of money if it makes them feel like a badass, right? If what they're offering their doctor separates them from their competition that then allows them to make a bunch of money on their other products, then okay, you're in. So I guess it's just something to think about.

Yeah, that's a really good point. You know, the other, the other thing that I've found to be effective, depending on how distributorships are set up, some of them will set up a, a young specialist rep where they'll say, we're going to take this 25-year-old and we're going to let him run around or let her run around and sell Smart Shot. And support Smart Shot. We're going to put a number on her for that. And then that younger person is very influenced by a couple hundred bucks here and there.

Um, I was actually going to bring that up to you, Joseph. Like, what you see is a lot of times when you come to a distributorship, you got the old grizzled veterans, they're like, I can sell a ton of this. And then they're like, yeah, but it's like $6,000.

Eh.

And they hand it to their associate rep and say, you go run with this. And I think like you've probably seen that in a couple of them, but those aren't crazy people to spend time and money on because they kind of buy in and they see the impact. And it's, and Kyle and Mark can probably know this. Like we were all young once. And when you sold something like that, that you could say. I sold that. There was like this, not just above and beyond the money, and you probably have one or two of those in every one of those distributors who was like, man, I really like this product, I don't want to lose this. I do think sometimes they can be worth your time and effort, and you just don't really worry about anybody else for a little while. Um, yeah, formally or informally, but yeah, it does. I have seen it work. Kyle's right. Like sometimes you just wanna be like the dude with the cool thing in the, in the bag, you know, like, and then some, the rest of the time you wanna make money.

Yeah. I wanna come back to what Mark Maloney said, something about partnership. So if you could find a complimentary cartilage repair company that's doing the same thing you are, early stage, and maybe 1 1 3, where you could bundle your 2 products or 3 products together. I mean, does anybody come to mind?

Yes. Okay. So, yeah, I mean, just so you know, like, I love that idea. And we've got 2 ways of collaboration, and we could spend another hour talking about the second one. But the first, The first is there are a couple of cartilage scaffolds that are available in other countries that pair with microfracture where we would significantly benefit them. They would significantly benefit us. It's just so— such a natural fit. And we're definitely exploring that. The other is there are a number of orthopedic startups in the sports medicine space who don't compete with each other, who are all running around fighting the same battles, dealing with the same knucklehead distributors, trying to get surgeons' attention. And together there's a threshold that can be reached. And so we recently pulled together 10 of them. Wow. Uh, at the AOSSM meeting, kind of had a first roundtable introduction and like, you know, it's like a therapy session sharing you know, what we're, what we're going through. And immediately there was everybody wants to work together. The challenge is tactically you got some personalities involved, right? You got CEOs who like to— I believe marketing and marketing events should be done like this, and I believe it should be done like— and so I— this all is just coming together. What I think is going to happen between those 10 companies is you're going to find 2 or 3 here and there that sort of pay her off and go do things together. But where we have been successful the last couple of years is when I ask my distributors to have an event and bring in a couple of their other companies. And we split the cost 3 ways. We triple the exposure. We give the surgeons more reason to show up. Less risk, more impact. And, you know, for us, the companies that we've shared those with, we don't have a ton of synergy with them technically, but from a customer and sales standpoint, it's worked beautifully. I mean, we've done, uh, just to name a few of those companies, like Restore3D, Catalyst, you know, shoulder replacement, um, selling biosciences, like, you know, companies where we don't really keep in touch or know each other very well, but These events have gone great.

Hmm, that's a good idea. I want to introduce one last piece of heresy, and that is that, uh, I remember what building up Orthologic from $2 million to $30 million and a couple of other startups, very similar numbers, uh, the philosophy that I always use is one that I kind of took from the Army, and that is I gave 80% of my resources to the top 20%, and my attitudes towards the rest of them were screw them. If you want your share of the pie, you better get to that 20%. And I remember fighting with this with, you know, other people on the board and so forth and so on, but it works. And that, you know, feed the leaders, starve the followers— that was my mantra. And I kind of still do that. And I don't know whether that's good or bad, to be honest with you. It's kind of controversial.

So, you know, Mark, for us, that, that has been our approach. But for a slightly different reason, it was more so that, you know, for us to raise money, we had to, we had to show a couple of success stories. Yeah, we had to show a couple of cities that we can hold up and say, look, if we go do this 10 more times, We're going to be doing $10 million a year, $20 million a year. Like, so for me, it was— we added— we started with 2 cities, and I dove deep into those cities, was traveling to them fairly frequently. And then one fell off for, for reasons that had nothing to do with us, which damaged sales overall. And then I realized, okay, there's a risk mitigation aspect to it where I've got to diversify into more than just two. You're right, you got to go— otherwise you could wake up one day and your business is gone. Uh, but I still— what I did learn from that was going deep really mattered. And I, I do think there's, there's going to be a combination of adding a bunch and then realizing the ones that are gonna be the, the players, you, you do dive in and support them with 80% of your resources.

Yeah, that, that's not heresy. That's just good business, I think. And the leaders.

Yeah.

Yeah, we did that right with the guys that were doing knees and hips got more trays and the guys that were doing less.

Got—

we took trays away from them.

Yep. Interesting.

Well, guys, I, I appreciate the advice. I hope nobody sends me an invoice.

No, no, no, this is bone chat. We're all helping each other. So, and it's— and like somebody said, we're all in the same boat. It's like a 12-step program I've got a great product that works, but I don't, I don't have any 1099s that are showing my product.

It's like therapy. Yeah.

Thanks a lot. Thanks, Tiger Buford.

Yeah.

Good stuff. Yeah.

Thanks.

All right.

Great.

Yeah.

Really well done next week. Yeah. Very well done.

Thanks.