BoneChat #74 - How investors or buyers make quick first impressions and how to change your pitch.

All right, this is Bone Chat Discussion 74 with Joe Combs. Uh, Joe's going to be discussing how, uh, investors and potential buyers form first impressions within the first 10 minutes of, uh, looking at your pitch and financials Joe and Colleen work with early-stage companies, both as fractional leaders and advisors. I'm just turning the mic over to Joe. It's all yours. No slides. We're just going to jump right in.

Yeah, so definitely great, great to be here with everybody. I think the kind of the biggest and quickest snap judgment that a lot of investors have is within that first, I would say, 10 to 15 minutes. And that essentially is, it brings them to the conclusion of, do I want to learn more or no? And a lot of times the stories don't quite hit the right way. Maybe you have good data, maybe you have a good product or service, but the story isn't right. And so with that, what I've tried to figure out is kind of the top 3 or so issues that come into play. So with that, I'll just get right into it. It's essentially, there's two things to, to kind of take into effect. You got to know your path that you're on. If you're trying to raise money, you know, potential investors are going to be looking at you to sell the future. So they want to see, you know, large growing market, signs of early commercial traction, uh, high, high margin model, clear execution plan, and things like that. But if you're trying to sell your business they're looking at what's already working and how they can fold that into the mix. So they're looking at predictable revenue, recurring revenue, if it's something like, you know, clean operational setup, a product that fits their portfolio or go-to-market strategy. And a lot of the founders that I've seen in the past, their biggest mistake is trying to speak to both groups at once. So I know a lot of people are raising money, but people are also trying to sell their business. So I think You can't be a growth stage bet and a plug and play acquisition in the same pitch. So you essentially have to ask yourself at the start kind of which path you're on and does your pitch reflect that? So once you know your goal, whether it's fundraise or exit, the next thing is to figure out how to tell your story. And that's, I think, where Tiger and I were previously talking. The stories can hit or miss very quickly based off of what's in it. So the biggest things that we're seeing that investors are asking are, do you understand your business at a strategic level? Can you explain it clearly without relying on slides or some other type of technical jargon where it just gets lost in the sauce? After that, the biggest question that they're going to ask is, are you in control of those levers or are you just reacting to them? So with tariffs, are you reacting to tariffs? Are you basically in control of it saying, Hey, tariffs don't really matter to us because we've got a solid plan and strategy to kind of react to that or, or, or plan ahead for that. So a good— I'd say a good fundable story is something like, we're in a growing market, we've landed 10, 12 hospitals, their reorder rates are rising, we're raising to build a more focused, maybe commercial team that can drive regional expansion. A sellable story could be something like we've built kind of a stable and high margin device business with strong usage as well as, you know, contract-backed orders. You've got clean operational structure that's ready to scale without any existing sales channels. So I think the best story there is making the complexity very simple, not by dumbing it down, but by making that big picture easy to follow. So when you show clarity, control, and momentum, people usually will listen very differently. After you've got the story kind of down, the key metrics that we've seen are kind of in 3 core areas. So the first one being around probably I would say commercial traction. So with that, they're asking, are you in pilots? Are you fully paid accounts? Are hospitals reordering? Is usage growing? Like I said previously, essentially a strong example would be, hey, we're in X number of hospitals, certain number of percent have reordered more than twice in the last 90 days, reorder volume is growing up by X percent quarter over quarter. And that's not just traction, that's repeatability and it's investible. After that, they're looking at gross margins. So gross margins are, that'll give you a fast view of the business health. You don't need to have perfect numbers, but you need to be very clear with that path to improvement. So a lot of people ask, hey, what's your current gross margin? What's driving costs? How will those margins improve with scale? So with that, you could answer, you know, a good answer would be something like you're at X% blended margin today. The whatever product it is, is higher. The disposables are lower with the scale and better vendor terms. They project, you know, 10, 15, 20% within the next 12 months. So you're, you're telling a story that can actually impact change in your business. And even if those margins are tight, owning that explanation builds that trust. Outside of that, the biggest thing that we've seen recently, especially in today's day and age, is capital efficiency. Whether you're raising money or trying to sell, capital efficiency is the biggest thing that they're— one of the biggest things that people are looking at. Not to say that raising money is bad, but knowing what it accomplishes is. So they want to see what you've raised today, what did it achieve, and what's the next round going to be. So something like that, you could have raised $5 million and that increased your, your regulatory clearance, or you've got your first 10 to 15 hospitals that are paying. Now we're raising another $5 to $10 million to expand distribution. And to, to the investors, that's going to show, hey, you actually know how to use your money. So with that, it shows a lot of efficiency. It shows, hey, if I— if this investor puts in $10,000 or $100,000, $1 million today, where's that money going to go? And do I trust this person that's going to use it? So all of that said, I think kind of coming full circle do a test almost before your next meeting. You got to ask yourself, can you explain your traction clearly? Do you know how it's growing? Can you walk through a margin structure, explain what drives it? Can you confidently describe your capital history and what does the next round unlock for you? And if you can do all that within 5 minutes or less without slides, you've done a really good job. So that's what the most investors, and I would say buyers, are silently kind of testing in that first meeting. And that'll very quickly give them the answer of saying, hey, yeah, I want to know more, or, you know, thanks but no thanks type of thing. So all that said, happy to make this very, you know, interactive. If people have questions, happy to kind of talk through what everybody's maybe experiencing right now, everybody's current situations, what you're seeing as far as roadblocks and things like that. So happy to open up the floor to you all and see, to see what's going on.

Elizabeth got a hand up.

Yeah, hi.

So I just, as you were saying that you want to show the investors, you know, how to use their money, the thought occurred to me, I wonder what 1 or 2 yellow or red flags would be for the investors that the person is not capable of managing.

Yeah, yeah, I would say a lack of ROI is probably going to be the biggest thing. So they're going to see If you got $1 million and you said that you were gonna increase your sales pipeline or sales process, you invested in the sales process, but revenue didn't increase, they're gonna wanna know why. It's not necessarily a red flag for the, the kind of first knee-jerk reaction, but it's kind of that answer as to why it didn't go up and what you're going to do to fix it is kind of the biggest thing for them. And if you have no straight answer, that's going to be a big flag because that just shows you're not able to figure out how to use money efficiently.

I also, if I could add on to that, next round funding, we're seeing a lot of investors go back and say, well, hey, you borrowed $500,000 or whatever it is. How did you say you were going to use it and show us what you did with it? Where did that money go? And that just, you know, past behavior is a great predictor of future behavior. So sometimes that'll kill a deal right there because there was not control over the first round.

Yep, absolutely.

Um, Joe, talk about— we talked to— you use the words, uh, and they're loosely words, uh, smart money and dumb money. Yeah, talk about, talk about where we are now with, with that.

Yeah, so I think the market is more strict with how they're spending money, and so I would say maybe 3 to 4, maybe 5 years pre-COVID it was very easy to raise money. You could have one or two conversations, it may be as informal as just a quick phone call, maybe a face-to-face meeting over a cup of coffee or something like that, and people would be more than willing to write a check off of ideas for $500,000, $1 million, $10 million, whatever it may be. Whereas now, with a lot of the, I guess, concerns in the marketplace, as well as a lot of the fear of the unknown, there's a lot of investors that are looking to do more of that diligence, go more into the details, have more thought-provoking conversations about the future. You know, what is this dollar going to mean to me in the next 3 to 5 years versus the next 10, 20, 30 years? So I think it's, it's moved from more— maybe not dumb money, but more, uh, more, uh, loose free money. Loose money. Yeah, loose money is probably the best way to explain it. And now it's a little bit more stricter and it takes, you know, it used to take maybe a couple weeks to, to close something from term sheet to actual money in the bank, to now maybe takes 3 to 6 to 9 months minimum. Um, and I think it just shows, like I said, what's going on with the marketplace. A lot of people are holding back the purse strings. Especially in today's marketplace. There's a lot of unknowns with tariffs, there's a lot of unknowns with what's going to happen on a political or medical technology standpoint. So there's a lot of unknowns that I think people are starting to hold back their money and wait for that one diamond in the rough, as they say, to put all their money in.

You know, I think, Joe, you said something that was really important, and I just— so just Joe and— so Joe and his partner lead the finance end of an all-fractional advisory end of Peak Fractional. And he and his partner are just a force. And Stuart was in PE. He's a PE. And Joe has spent his life in finance. And I am just so happy to have them in the Peak team. But one thing that you said there, so just to give people context of where Joe spends most of his time, but they get a lot of companies ready for that sale. And, and funding. But you did say something that I've actually heard this week twice already, and it was about how is this business responding to the tariffs. And they haven't said it in that, in that, correctly way, but it's been more about what's their emotional intelligence in rough seas. And I thought that was really a great call out, Joe.

Yeah. And I think that stability, and I know we've got a question from Mark, but I think Having stable hands in a very fluctuating market just shows how smart you are with your money and your funds and how you're thinking critically about your business can definitely pay dividends in the future. Mark?

Yeah. So I work with a couple of European companies. I have a call tomorrow morning with a French company. And, um, now that you mentioned tariffs, the big question is what's going to happen, you know, to the medical device, medical products, medical implants coming in from Europe, Germany and France especially. Um, and actually that wasn't my original question, but you kind of prompted that one because I know that's going to pop up. But my, my real question was, what are people investing in?

Easily? Easily?

Nothing.

There, there's no easy investment in today's day and age, but that's not the— that's not to dissuade people from raising money. I think the biggest thing is they're investing in smart ideas, products, or services. So that's where if you have the next big thing in medical device technology or, you know, any other service or industry As long as you have a very solid story and a problem that you can clearly fix, that's going to be the easiest way to, to win, uh, an investment. And it's not to say that, you know, there's a lot of people investing in alcoholic beverages or real estate or anything like that. I think it's, it's all pretty much, I would say, a level playing field with where everybody's putting their money. It's just a matter of how much do they put in and where do they spend the most of their time. And it's just, it's different based off family office, PE firm, things like that. So there's definitely a lot of, a lot of interesting things going on in the market.

Yeah, I think too there's more focus on solving the problem. So if there's already a solution out there, a better solution isn't being invested in today. Now, I haven't seen it, like, in conversations I've had the last few weeks, but if you have a solution to something that hasn't been solved, they're still writing checks.

Speaking of that, Christina is solving a problem.

Yeah.

I am solving a problem. Like, so I have one point and then one question afterwards. So Reach Orthopedics is based in Canada, so I don't know how it is for other countries throughout the world, but through speaking with some trade advisors that we have here in Canada, there typically aren't tariffs that are placed on medical devices. Now there would be tariffs placed on the, you know, the raw materials. Yeah, the materials that go into making those medical devices. But the tariffs themselves are not on medical devices. Exactly what sort of list comes out as to what tariffs will go on obviously is still to be seen to a certain extent. But I know that for myself, uh, I've basically been told like it should be okay so long as we're not using stainless steel, which we clearly are not, um, as an implantable device. Um, my question though for you is, um, I find at least with different funds and VCs that I've spoken to, they're quite often looking for a unicorn. So something that has a potential billion-dollar exit. Not everything is going to have a billion-dollar exit. So how do you kind of— what's the best strategy with perhaps getting around that? I mean, just even looking at the comparables that we have at Reach Orthopedics, there would be some biologics companies that exist. So they're you know, around $250 million. It sort of is what that sort of exit goal would be for us to be acquired by one of the strategics. Yeah. Um, but again, even, even in terms of, uh, seed VCs, they, they still want to know that there is that potential for a billion-dollar exit. So what's the best way to do it?

Yeah, I mean, that's where I think the The, the dumb money is coming into strict money, I guess, where everybody does want to look for that unicorn. But I think the biggest thing to focus in on is like that high growth scalability, and the market dominance seems to be the predominating decision maker. That's not to say that, you know, every single person you're going to invest in or every single business you're going to invest in is going to be a unicorn, because there are people where you know, I think we have about 5 or 6 family offices that they focus heavily on, not necessarily the next Uber or the next, um, uh, WeWork or anything like that where they're just going to be a billion-dollar business. They're looking for something that's going to scale and grow, and if they get in now, they can see their, their return on investment, and they have a minimum threshold to, to basically put in money. So I think it's trying to find the right fit with a strategic or some other type of angel or seed investor that fits the build of where you want to go.

Yeah. Sorry, if I could just throw in, add on to that a little bit. I think it's also about the story that you tell. Yeah, exactly. That's where that branding and that story. So if you can build a compelling story about, hey, J&J is missing this in their assortment, I know they desperately want it, and here we are. And what I'd like to do is get proof of concept, get out there, sell enough so we can, so we can exit to J&J or one of their competitors. We have a compelling solution that nobody else has. And so I think you have to be really, really tight with your story and, and your branding and where you see yourself going. You're not going to have a billion dollar— I mean, maybe you will. I don't know, reach that well, but we'll have a billion dollar exit. But I think what if I, if I, most medical device we're looking at, is it the next Artelon or, you know, something.

Yeah. Another thing, let me add, Christina's a one product company right now, but if you have a pipeline of the second and the third and the fourth product, then you can maybe get to a billion dollar, you know, at least market size, you know, not, not exit, but that, that you can put more meat on the bone with with a steady, you know, steady flow of products.

And I've heard in medical device in particular, I had a private equity firm who only does medical device say to me that you have to have 4 items coming out every year. So you have to have that pipeline. So when you think about building this today, what is the pipeline for that big money? Now, this doesn't mean that you're not going to get funding, but it just means that If you're one product, you have to think about who your investor is a little different. Goes back again to who's the story and who's your audience, to Joe's point.

That's good. Yeah, exactly.

Thank you. Okay, Ryan, and then what— who dropped off? Ryan's up next.

Yeah, thank you.

So, I just wanted to go back to a previous question, I guess, just to relay my experience when they asked what is being invested in. I'm seeing just from conversations that I'm having, I'm seeing a lot of, and you know, that I guess, you know, I don't know, you just call it easy investment or just something that's more similar to what we saw pre-COVID. Anything that's AI related is, you know, is kind of seems like it's in that bucket right now. You know, medical devices are certainly slow right now, at least, you know, as far as, you know, what we're experiencing and my, you know, all of our colleagues, people that I'm talking with. Um, my question was, you know, for that, you know, kind of, um, you know, let's say $200, $250 million projected exit number, what makes more sense for somebody our size? Is it, you know, is it family office or VC?

I have a strong preference against VCs, um, and more towards like some family offices because they're, they're more founder-friendly. There are some VCs that are founder-friendly and they do grow with the businesses. But there's a lot of, I would say, uh, unscrupulous or anything like that, because I don't want to sound— make it sound too bad. But, but I prefer working with family offices because there are some out there that are really good. Where, you know, we've got this one that they make sure that when they invest, they're partners and not just the overlords. Where sometimes the VC route can get a little bit too overbearing, which is not to say it's a bad thing, but I think there's, there's a time and a place, and it just kind of depends on what you're looking for. If you're looking for somebody who's going to invest in now and walk away and just kind of, you know, collect their checks whenever you sell, if you're looking for a partner, it just kind of depends on what you're looking for. Um, but I've got a preference with, with family offices and specific private equity firms. Thank you. Okay, Mark.

I get a call a week, and my, uh, business partner Michael Kleinpeter gets a call a week or an email a week from Capital This or Capital That.

We—

and then when we talk to them, they always kind of say the same thing. They want to put their own CEO in, they want to bring money in, they want to scale it up. Blah, blah, blah. And then when they find out that we're less than $2 million in revenue and nobody really works it full-time, they lose interest, which is so stupid. But it's our fault, I guess, for not being more full-time.

Yeah.

And, um, who are those guys? They're not VCs. They're family offices.

There are some people where they're intermediaries, like they're trying to be brokers, where I mean, to be fair, we're, I guess, in a way a broker, but we're also one of those people that will install directly with the management team. We're not taking over jobs. We're not going to say, hey, we're going to, you know, you have to use a CEO that we work with. We work alongside a lot of teams, but I think for them, they're more so looking for some type of commission. So if they come in and help you, you know, find $2 million, they're going to want a board seat. They're going to want to install a CEO, CFO, COO, whatever it may be. And I don't know where they came from. It just kind of out of the cracks that started to come up. And I'm even getting— I'm feeling similar calls where people are saying, hey, we want to invest in your business. And I'm like, do you understand what I do? Like, we're, we're not looking for investment. We're looking to help people find investment.

We have a guy on our team, Matthew Champigny, who— that's all he has done his entire career is work for PE firms as a CEO that goes in He, he's brilliant. And he just, he wanted to step back because he felt like he keeps going in there, like cleaning house, streamlining it. And the only one getting rich here is the PE and somebody's kind of has lost their business because he's there. And we really wanted to take this leadership first. Let's, let's help, let's help preserve the role of CEO, the passion of the, of the company that that was built on their backs, right? The team built this company on their backs. And sometimes not all money that you bring into your organization is good money to bring in. And so we've been trying to transform the conversation with a lot of private equity guys saying— I love that somebody said, hey, oh, I get your role with PEs, Colleen. You're cleaners. But you're leadership first cleaners, and that differentiates you from everybody else because they sign, you know, they invested in you because of you and because of who you are, and they like you as a leader. If they want to sell at the highest multiple, they need to protect the culture that you've created and the people who built that company and understand the nuances. But yeah, it's really, it's a, it's with some people, and I'm really happy to say nobody that we're dealing with, the, um, there's, there's some money you don't want. And it sounds like you're getting calls from people who are representing some of those people. But yeah, to knock out a leadership team or a CEO is really, really common. So that's part of your contractual— I mean, we have an attorney on our team and that's what he focuses on, right? It's like, hey, let's make sure when you go for money or when you're building your company, one, that you have the right people around you, but two, you have the right contract when you go to negotiate here. So you're not ousted in a year with nothing but a seat on the board or, you know, a million bucks.

Yeah.

Got it.

Colleen Gray. So I would share my experience that You know, in a tough capital market like we have right now, it's sometimes hard to be too picky about the money you take. And I get that. But I think that if there's a way you can, you know, not jump at that type of money, you're really better off. I know I've been there. I've actually done it and really felt that it was a mistake. But, you know, I used to get a lot of those calls as well, and they generally were from small family offices who had a member of the family that wanted to come and be a CEO. And I thought, well, how stupid to call the existing CEO and say, you know, hey, you know, I want to run a company. And, you know, I don't— I think they were looking for closely held companies because as soon as I told them that we had institutional investors, they, oh, thank you very much and hung up, basically. So they're really looking to see if they can't gain an advantage by talking with companies that are in need of capital that don't have, you know, the large or even small institutional backers in their cap table. Yeah.

You know, that's— I meant when I left GLW and started Peak, my phone started ringing with— from these guys. It's amazing that they're calling and they see people who are out there or leaving a job or starting something new and they reach out to you and say, hey, listen, if you find a business for me, we'll give you— you bring them to me and we'll give you a role in that company and you'll get a finder's fee. And so all of a sudden they're taking advantage of this economy. I— Colleen, that's a great point. They're taking advantage of this economy right now. They're like sharks out there, but they're, they're creating sharks. And I wonder if that's what we're seeing as well.

Ambulance chasers. Yeah, yeah, I wrote, I wrote about also there's a lot of really shady funding capital firms that are charging you just to look at your deck or charging you to do due diligence and then they have no intention of ever— a lot of people have been caught up in those.

Yeah, yeah, we've seen that a lot where there's people who are, I guess the, the, the strategy is acquire to consult. Is, I guess, the right way to say it, or invest to consult. Because there's a lot of different people out there nowadays that will come in and say, hey, we'll invest, like you all are saying, a million dollars, but install us as the CEO or CFO, or, you know, install us as an advisor and pay us $10,000, $15,000 a month, whatever it may be. And it's very much like that leech mentality of they're trying to find somebody who needs capital right now and almost take absolute advantage of the situation because everybody needs money nowadays. Um, and I think it's just another way to kind of get their claws into it and then hopefully pick it apart from the inside out.

There's so many people on this call, like, like, it's really easy to get romanced when you really need money. And I would just say there's so many people on this call. This is a great group of people to really say Hey, am I going after the right thing? If you find somebody, just, you know, you just— they are— there are a lot of sharks out there. Just make sure that you do your homework before you sit down with them.

That's, that's where Tiger Buford, maybe that dating app for investors and businesses might come into play with that type of swipe right. Yeah.

So, hey, I want to bring up some things that Joe talked about with me this morning. Um, I really love this idea of Um, even before you have a mature business, you have to show proof of market validation. I, I love that. Proof of distribution, even before you build a sales and distribution, but you know how to do it. And proof of basically execution of the money. You, you talked about that. Um, but you have to prove to the investors you know how to do these things before you do them. And that, that can be very challenging.

Yeah, especially in like a bootstrap mentality where you've got maybe a few pennies that you're trying to make into gold. And I think showing what you can do with a little will prove wisely when you will ask for more money. And it almost shows that you can take a little, turn it into something else, just based off the idea of the process. Maybe you have good partnerships. Things like that, I think, are going to go a long way in today's day and age because I know various businesses that have raised $15, $20 million, but they're still at significant losses because they're putting their money not, not into good things and investing in the wrong people and everything like that. So I think just making sure that that efficiency is realized is going to be key.

Hey, Jeff, I want to put you on the spot. What did— what was your last raise at Artelon?

Yeah. So the last raise about $24 million was our, was our Series B and that was the last money in. And I think the— but you're great conversation here. I think the point that comes back to me throughout is you don't want to be in a position where you desperately need money. And it's like that. It's like the most obvious thing. But yeah, all these problems and bad situations are like where you're, man, I got to make payroll and Yeah, I think when I've been fortunate to have, you know, when you always have 12, 18 months of runway, it just, you know, you're in such a stronger position of strength. And yeah, it's good to do big rounds when the time's right.

What year, what year was the $24 million?

So it was about 14 months before exit. So that would have been 2023. So it was like spring of '23. It was right after the whole SVB stuff. That's right.

That's a strong raise, obviously. But you guys had sales traction. I mean, you were doubling sales every year, right? Yeah.

I think, yeah, at that point, yeah, we were, we were sort of in, in that 5, 5, 10 sort of revenue traction range. I think we'd just done 10, you know, we were, we were, yeah, we were sort of confidently on around 10 trillion, 12 months at that point. And I think, yeah, big, big discussion we had was around, you know, Oh, like, do we really need it? We really, really want to raise this much? And I think that's always a good— that's, you know, when the time's right, you raise, raise a lot, is my, my perspective.

Yeah, fascinating.

I know everybody's thinking—

I'm just thinking that there's hardly anything more addictive than running out of runway and finally getting liftoff. That's a great feeling.

Yeah, that's an aviator speaking.

Yeah, it's also, to your point, a dangerous place to be because a friend of mine's company right now, after 6 hard years, he's running out of runway and he can't raise any more money. Now he's at that point where he's looking for a merger, you know. Or some, some way to rescue where he is. That's a bad place.

Does he have a scalable product or service, or what type of business is it?

Uh, he does. Uh, I think, uh, he's— if you go to your doctor and ask for your medical images And 9 times out of 10, they'll hand you a CD, charge you $25, and then you take that CD, and if you're, you know, a certain age, you say, what is this? And even if you're not that certain age, who has a CD reader? Doctor that you're going to see next to need your images, he probably doesn't, or she doesn't. And so they've got a a SaaS that makes, you know, image sharing super easy, super cheap. You know, they got a deal with CVS. Just— it's just— it's one of those things that is a universal problem for the patient, but the doctors don't care. So just— that's kind of where the scale of the heel scalability hiccup is?

It's the adoption is basically—

doctors don't have a problem. The patients have a problem, but the doctors don't kind of have a problem because they don't care. It's not, you know, patient's problem.

Mark, they might want to talk to, uh, there's a company out there called eVariant. Have you ever heard of that?

Who?

eVariant. They were bought— they just, um, were bought by a big company, but I think there's a space there where they're They are working to try to unify across all hospitals, across communication, that wherever you go, you have access to the records that you need and in a touch of a button. It's a big tech move. So eVariant started it and I can't remember off the top of my head, but I still think that division goes by eVariant. I could be wrong.

But they might be— Mercury Healthcare?

It might be.

It might be. Or Healthgrades.

Uh, Healthgrades. I think it was Healthgrades that acquired them, I believe. Hmm. But they, I mean, that it was, they, they could probably use something like that. It was, it's a tech play in the hospitals and it combined marketing with communication, like making sure every hospital could access your records and films and stuff like that.

This is called Evariant, you think, or Evariant?

Is it? So I, Joe, am I— you have this up on your screen already.

You've already— yeah, it looks like they— oh no, their website isn't working anymore, but it says eVariant. Let me type it out just because there's no— looks like it says eVariant, a Healthgrades company.

Yeah, it's Healthgrades.

Same thing.

Yeah. Yeah, that's something you might want to just reach out to them and see if there's a play in there.

You know anybody?

I might, I might, Mark.

Let's talk.

I'll shoot you an email. Yeah, I'd like to help. I'd like to help this guy out. I'm not invested in what he's got, but he's a good friend.

Yeah, I know somebody who used to be in the company, but I can, I can probably get somebody that's in that company. I know somebody who exited.

Cool.

Thanks.

So I was talking to a struggling startup this morning. I'm not gonna, I'm gonna keep it anonymous, but I, you know, I suggested there's a couple other companies that have complementary products. There are 2 or 3 companies are all struggling. Is that a strategy to sort of merge with, you know, dog plus dog might equal horse, you know, if you get enough?

Yeah, I mean, it kind of depends on complementary services. Is there any type of efficiency that can be recognized? Because the biggest thing, if they're all struggling, there's a reason why they're struggling. And if it's because they got over-bloated or, or, uh, you know, excess operating spend, maybe there's some efficiency. And I, I would hate to have people like lose jobs from a merger, but maybe if there's kind of the concepts, the processes, procedures can kind of commingle in a way to find efficiency, there could be value add there. It just depends on how flexible that is because you could have a business that, you know, maybe it's somewhat complementary, but they do a process that's very different. Um, and it just, it ends up being more investment that they have to spend and they just don't have the money to do it. So it honestly depends on the situation. But a lot of times, and I think honestly what's going to happen even in, in my world, for example, there's a lot of fractional CFOs, strategic advisors who have quit their jobs and started their own firms. I would almost imagine that market's going to contract at some point and everybody's going to merge and we're going to have more, you know, top 100 accounting firms or finance firms. So there's ways that I think could be valuable, but I definitely think it's— you got to be smart about it. So you don't sit there and you're wasting money and time and effort for everybody.

Yeah, the general problem that these little companies have, they have great products. And they have nice healthy margins. The problem is just access to the customer. They, they can't, they don't have money to build a sales force and they, they, they get blocked out of contracts and, you know, VAT committees spin their wheels for 18 months. And so the idea is if you get 2 or 3 of these together, maybe you could cobble together a sales force that represents all 3.

I don't know. Yeah.

Yeah.

And that's where I think The sales side of any industry, especially med tech, is one of those things where it's a hard nut to crack purely because there's so much, not necessarily red tape, but there's a lot of bureaucracy in it. And I think it's a little bit harder to get into it and find that vein that you can actually start selling and seeing some growth. It's a recurring problem that I think is gonna happen time and time again in this industry for sure.

Interesting. Yeah, there's, um, so I don't know all the details. Um, actually, Jeff, it was your old sales guy that told me about it. Um, but Vox, just, um, are you guys following Vox? It's a venture-backed company that is, it's kind of doing the same thing Innovate Ortho is doing. They're kind of pulling together, um, sales reps all over and creating a ready-made sales force that kind of goes out there. This one happens— I think it's Box— happens to be, um, it happens to be like PE-backed or funded. I have to look into it. I just heard about it the other day.

Like, like Victor Oscar?

I believe so.

Box Telehealth, maybe?

Yeah, let me get, uh, let me send a message. I'll follow up next week and give you a better answer on that because I I just heard it. I don't— I'm traveling, so I don't have my notes with me.

So, Joe, you mentioned you don't have to have slides. So, which I think is great if you focus on the person, not reading the slides, which there's benefits.

I think slides can be helpful, but limiting the text and limiting the stuff that can be a distraction are going to be key. So focusing on maybe if it's, you know, a piece of technology that you have or some type of device that you're selling, maybe have a picture of that, explain it high level, show your financials, show kind of what you're needing or what you're asking for and how you're gonna— is— and this is all specifically if you're raising money, but have just a few bare minimum slides. That way they can have something tangible that they can walk away from that conversation and if they're starting to think about it more and more. Oh wait, you know, they needed $5 million. Was that all for marketing? Was that all for R&D? Was that whatever it may be for? And they can kind of refer back to it. But I think the overall pitch should kind of just be face-to-face initially, kind of talking through the idea, talking through the story, talking through the financials, where you found success, where you found failures but came back from it and fixed the problem if there was one. But I think, you know, it's kind of a necessary evil at some point where you do need to have slides once you get further into the process. But I think those initial conversations, it's better if you just talk to people through it because that's going to, you know, make or break the conversation and figure out if they're interested to learn more or not.

Wow. Tiger, I got a slide versus no slide story. Far away. So we rented a restaurant in Scottsdale for this, for the biggest orthopedic practice in Scottsdale, or in, in Phoenix, who was getting ready to make a million-dollar decision on, on their digital imaging system. And there were two companies there, me and the competition, and but only one slide projector. This is back in slide— this is like 2001. Carousels. I let them go first with— and it was my slide projector, and they broke it on the last slide. So now I had to get up in front of 20 or 25 physicians in this restaurant with no slides, and I don't even remember what I said. But must have worked because we got the deal.

You won the business.

Yeah, that's awesome.

But I just remember, I just remember saying, I don't have any slides, instead I'm going to paint word pictures in the air. And that's how I started. Sometimes that's when I hear people talk about slides versus no slides, I always think of that story. And that was our first million-dollar deal, and it made our— it really made our year. So I, I believe you, Joe.

Yeah. And I mean, I will say I have seen it where people have gotten too bogged down in the weeds with slides and it takes like a week to create a slide deck and then it's sent out and they maybe glance at it for a second like, okay, there's pretty pictures there and don't think about it. And they're like, okay, just, just tell me what What are you selling? Or what's your business? And that's more valuable than the actual slides. Like, the slides are just like, okay, they sent something great. Um, and depending on who you're working with, slides could be valuable, it could not be. But I think predominantly what we try to preach is take away the slides for the initial conversation, have it one-on-one, focus on who you are, what you do, you know, why you do what you do, what the problem is, and how you're going to scale and how you're going to be successful. And I think that that can beat any slide deck any day.

That brings up a, a thought. So there's more and more cold selling being done by video. So I just, I talked to a SaaS company yesterday. I'm buying their software and the guy, the sales guy sent me a one-on-one video. He used Loom. I don't know if everybody's familiar with Loom. Um, but it just looks right at you, says your name, you know, speaks to exactly your interest, and, you know, it's like 60 seconds. And those are really powerful. I'm wondering if that could be the new pitch rather than emailing slides.

Yeah, yeah. I mean, in today's day and age, you're probably getting 50 to 60 emails a day on random stuff where it's AI-generated cold campaigns and yeah, that can be successful, but it's also one of those things where it's not personable. So I agree, having a Loom where it's maybe I get on here and I have a quick, you know, few-minute pitch to Colleen Gray about, hey, here's how I can help your business. And the only reason I'm picking on Colleen is because I can see her first. But that personal touch, I think, can add a lot of value. And it, it calls out like, hey, I see you're a family office, you're interested in med tech devices, whatever it may be, here's what we are. And it almost calls them out and says, hey, I know you like this stuff, here's what we do and here's how we're successful. And that could be, you know, that could be hugely valuable, um, just because it's not just some email like, hey, how's it going, here's what this business is, here's slides. And it almost adds that personal touch to it.

Well, and you're guaranteed to open the email and click the link because it's, you know, there's a thumbnail, you know, you can't help, you can't not click on that video.

I mean, hopefully people don't have spam filters on that'll assume that that's a spam email. But yeah, I think that that can definitely be a value add in my opinion.

Tiger, they're using that in your space now. That's part of the application process, Loom.

Yeah. Yeah. Well, when I actually had a client, I had a client who, when we pitched, they were taking in, I think like 15, 20 pitches a day and I had to get on a Loom and explain exactly what we do and how we do it and stuff like that because they essentially wanted to weed out anybody that one didn't want to do it, two were just robots. So It's, it's getting prevalent more and more today.

I think it's the new way to communicate. Um, I do this with recruiting. If it's a really high-level candidate, VP or C-level, I always have the candidate do a personal video message to the CEO, and they always open it. They, they don't even look at the resume. They just watch the video.

Interesting.

All right, we got 10 minutes left. What, what burning questions do we have? Is it going to get easier or harder? And then this later this year, um, I mean, these, these are good on their wallets, but their family offices are, are available.

Yeah, I think it'll get easier once there's some type of stability in the marketplace. And not to say, like, not to get into the politics of it, but once you start to see where everything is going to go in the marketplace, people will start to get settled in and ready to invest more and more. Um, I think right now it's just that unknown of what's going to happen next. Um, are the raw materials— um, I forget who mentioned it, but the raw— I think it was Christina— where it's like the raw materials may have a tariff, but what happens next if it's an end product? Is it they're not going to be tariffed because they're medical devices. What is that going to do to my business? What's that going to do to the investment? So I think it'll get stronger. It's just we need a little bit more stability in, in, uh, the economy.

And how— what would be the, the best answer for the tariff question? So, you know, we don't know where the tariffs are going. They could be, you know, high, low, or zero, but You know, say you're using raw materials overseas and then maybe the second case you're actually importing finished product from overseas. What would be— what, Joe, what's the best answer?

I think it's hold fast. It's, it's one of those things where you can't really plan for something that we don't know exactly how it's going to sway. Um, so I think it's just holding fast, making sure that you're stable in what you're doing. You've got the right plans, you've got the right procedures and everything like that. So I think it's— I don't want to sound generic, but I think it's just hold fast. Let's see what's going to happen first.

Well, look at— if you look at, um, uh, Walmart, Target, and Home Depot all met with Trump last week or a few days ago, right? And they have canceled all of their their imports and them on hold and waiting to see what happens. If some of the biggest retailers out there are doing it, I think—

Christina, then Mark.

Thanks. There's also— this is just another example I do have is, and in this case they were existing companies, customers. But for instance, a Canadian company has U.S. customers, and honestly, it's something that the U.S. customers, they're just willing to eat it. They, they don't mind because it's a product that they need and no one else is making it, right? So there's nowhere else they can go for this product. And I think, you know, is in any industry beyond even medical devices, you know, you want to be able to make a product that people are willing to kind of eat those costs for. Um, so I mean, there is that in a lot of cases especially, but the biggest issue is really no one knows where to pay those tariffs. So things are getting caught at the border and no one knows who you're supposed to be paying or how you're supposed to be paying them. Um, and that's, that's the biggest issue I think that, um, companies that I'm familiar with are having at the moment.

Yeah.

So this is mostly an ortho crowd. Earlier today I interviewed a candidate to be an intern this summer, and she's graduating this month, and she asked me a question at the end. I said, what, so what are your questions? She said, is the medical device orthopedic industry a good place for a female my age? And my number one rep actually on my orthopedic side is female. But I told her, I said, I said this, you're gonna run into a lot of elbows. This is a, it's kind of a bromance business in a lot of ways, but I don't think there's ever been a better time for an ambitious young woman to get into our business. Um, and I'm speaking as a guy with 5 sisters, so, you know, I'm pretty empathetic. But I, I also wanted to be honest with her. It's, you know, it can be tough, and, um I said, do you have any experience with that? She said, well, I interviewed with Stryker and I failed their personality test.

Thanks to Mark.

Well, I said, I may have actually brought that to them, but still, I think you dodged a bullet. I said, that's— I don't think that's where you need to go. But I'm just curious, you know, we have— we lost Colleen, but it's a good— it's a good, smart, experienced crowd. Uh, what would you have told her?

So I went to this women's leadership group at one of the last conferences. I don't know if any of you have gone to that, but it's a really cool group of women and it's mostly surgeons. And, um, and they are just as tough. And it was interesting because they didn't know me. I was new, like, going back a few years actually, my first time, they didn't know me. And, you know, no one would speak to me because I was a woman. They thought I was just a sales rep. It was really hard to get in the door. And, and I'm a pretty decent networker. And then once I did, I was in. But it was really interesting. And then we, we kind of laughed about that after, and we kind of talked about how it's been evolving over the last— even I just was at a dinner not too long ago with Helen Johnson. We were just talking about This is, it's evolving, you know, like, this is here, women are coming, this is a good time. But in hospitals, right, I think it's still like, there's less than 15% women in the orthopedic space still right now. And if you're at 15%, that's really good. John Hopkins, I think, has the highest number of women in, in orthopedics in the country right now. And I think it was at 15 or 16%.

You know, I will say that over the years I've been heartened to see an increase in the number of studies in the ortho literature discussing, you know, really taking a close look at what are the factors interfering with more females in the field. And, you know, I know I've talked to at least one orthopedic surgeon who was way up in, I think it was NAS, and, you know, he said, this is, I wanna change this, I wanna change. I think there's a lot of willpower, but maybe it's not that organized or whatnot to bring more women into the field. Field. Um, but sales reps, I imagine females— is that pretty equal to males?

Oh no.

No, I just—

no, but they're killing it too. I know, like, I brought on 3 in the last, I don't know, 2 years I was with, with GLW, and they're killing it. They're outperforming everyone.

I think, I think there's advantages and disadvantages. Um, go ahead, Christina.

Sorry, sorry. I just don't— I do know two female recruiters that are, you know, work very heavily in the orthopedic industry. And I mean, they get unsolicited messages on LinkedIn from men that are completely disparaging. So it's one of those things where it's awful, but you kind of Unfortunately, women in a lot of industries that are male-dominated are forced to like develop this tough skin, which we shouldn't have to do either. I think generally speaking, one of the benefits of having women on teams is that, again, this is very, um, generalization, but women tend to have more empathy in a lot of ways. And I think that's what makes teams more dynamic and better, and better in terms of patient care as well.

Yeah, here, here. I think women have certain advantages for sure, but there are a lot of disadvantages. It's a double-edged sword. And, you know, women are— there's more women college graduates Women, I think below 30 or 35 earn more money than men below 30, 35. I mean, it's, I think Colleen said it, it's turning quickly. You know, most guys are idiots until they're at least 35.

You know, so I started a business way too long ago, but I was one of 500 when I started. We were all leading these $50 million businesses. I was one woman out of 500. Men. And I just think you look at that now and it's so much more even, like, 25, 30 years later. Somebody's got to be the pioneer. Somebody's got to go in there and break up the boys club. And why not let it be your friend?

I was doing a Zoom call with her, and so I told her, I said, we never met personally, but I'm just going to ask you one question. How tall are you? And she said, why? I told her, I said, you know, just anecdotally and observationally, I said, most of the 6-figure earners that I've known that were in the orthopedic sales business, female, were at least 5'7", 5'8".

It's funny that you said that. You know, my mom owned a real estate agency. When I turned 16, I had to go work for her, and she had all these agents. I think she's like 20, 25 agents at the time. And it was mandatory that I wore high heels. And I was like, why do I have to wear high heels? Because if you want to command respect in business, you have to wear high heels. She really believed that taller women— like, yeah, isn't that funny? That's funny that you just thought that.

I just, you know, I just think it's kind of the way people— humans are wired sometimes. But who knows? Anyway, I'm just curious. I thought I'd throw it out there.

That's a great subject. Yeah, Mark talked about this a few weeks ago where he thinks if you could, if you could look at all your sales people's IQs, you could predict the top seller. And I thought that was fascinating. And probably women probably have more higher IQs anyway, so it's another advantage.

Yeah, I didn't even mention—

fascinating.

Yeah, definitely higher EQs and probably higher IQs.

Interesting.

Um, Hey Joe, we, we're kind of running out of time, but, oh yeah, no problem. Yeah, Colleen Gray made a really good point a few weeks ago about a lot of technical founders should, they should actually ask their sales and marketing person to do the pitch.

Yes, 100%, especially I think the biggest thing is the personality. So from what we've seen, you can have the most the most technically savvy person in the room pitch it, and then the most creative person pitch it, and you're gonna get two different outcomes, two different types of thought-provoking conversations where if you're getting too granular, it could scare people away, or not necessarily scare 'em away, but it could just bore them where they're just like, okay, great, you know, there's a new x-ray technology that we're working on. That's great, but like, what is that gonna do for me? So I think having that sales-focused person or somebody who can be more emotional and more engaging, I think is the word I'm trying to look for, to the conversation, the better, because you're going to start to have more of a one-on-one conversation on, hey, here's what we're doing, here's why it's important to you, versus, hey, here's the technology, here's what it does. We just got FDA approval. We're doing this, we're doing that. And all those things, you can get lost in the sauce. And I think that's where once you get down into the diligence, that can be where that comes out. But the initial conversations, you want to have it as focused in sales mentality as possible.

So bring your sales and marketing person along and no slides on your first pitch. I like that. We've gone overtime, so we better cut it here. Great stuff, Joe. Yeah.

Yeah, I appreciate it.

Really nice to be here.