BoneChat #98 - Ortho business strategies, innovation, and the future landscape of the industry.

Hey Kyle.

Hello Tiger, how are you?

Good, good.

Good to hear.

It's maybe a light day because, uh, we have no topic, but we'll see what happens. How are things at Priority?

Good, good. Lots going on.

Yeah, I bet.

Yeah. What's new in your world? New in your world?

Uh, got a lot of things going on. I don't want to talk about me, but, um, I started this thing called, um, the, the Bone Factory, and we're, we're formalizing it now. We're trying to raise $2 or $3 million to help surgeons develop their ideas faster, better. And then I've got this new thing going on called Hold the Knife, which is a patient consultation business to help patients avoid knee surgery. So Little different. We don't want to— Hey, Mark, Lauren, Raymond.

Hey, Tiger.

Hey, Mauricio.

How are you? Good, good.

Everyone, I say sharpen the knife, don't hold the knife.

Tiger, how do you find time to do all that? Oh, well, write something for every day.

Every day. Yeah, the writing is easy because I just do it every morning when I wake up. I've been doing it for 20 years. Yeah. And, um, but anyway, it's— and my, my philosophy is I try things fast and cheap, and you know, it's the whole fail fast thing. So Hold the Knife, I've got $500 in it so far. I've got a website, Facebook page, YouTube channel, and I've got, um a partner that's throwing up social media every day. And we're trying to— you go check it out, holdtheknife.com. But this is a, this is an open discussion day. So any— let's talk about what's, uh, anybody that's got a problem you're trying to solve this month we can help you with, or any, you know, orthopedic Division spinouts, uh, OTAs going on.

Yeah, so that, that happened the other day, and I was driving to Warsaw when I saw that news come through. Somebody sent an article, and I responded before reading to it— reading it— and I responded to our team with a joke and said they're probably going to call it Depew. And of course, that's actually accurate. Like, everything— you've— Tiger, I've heard you say this before exactly— like, everything comes full circle in this business. Everything.

It does.

I was wondering if it was, if that's what they were going to call it. I guess there's too much equity in the name, but they worked pretty hard to get rid of it for a while. They did.

I just hope they kept the sign.

That's very funny because like 3 weeks ago in American Academy of Oral and Maxillofacial Surgery, I was talking to the Johnson people. I was like, oh, it's a shame you guys got rid of the DepuSinti's name. It carries a lot of equity. And they're like, it might be making a comeback soon.

That is crazy.

Yeah, that's, well, Depew, as Kyle did, showed us in his posting, Depew was the first orthopedic company in the US anyway. And it's got cachet. It's 130 years old or something.

Almost 150.

150. There you go.

'Cause there was, they were, they were making splints post-Civil War for Civil War injuries for elbow fractures from, gunshots, falls, bayonets, all that terrible stuff. And just like everything else since then, big advancements in medicine have come at time of war.

They were active in World War I, right? Yes, very.

Yeah.

Yeah, very. Bandages, wraps, antiseptics, you know, thinking about— there's a lot that happened in that late 18th century where you had like the first total joint replacement was a shoulder for tuberculosis. Jules Peyronne. It was actually made of leather, blown glass. Yeah, a lot of that stuff predated— sorry, a lot of that stuff predated anesthetic. So, that's how terrible that was.

Oh, yeah!

And, as the lore goes, the very first hip fracture treatment was essentially used a railroad tie. Oh, wow. Like a metal rod that they used to hold railroads down. And, uh, soldier had a fractured hip. They thought, all right, we're trying to save his leg, stick a piece of metal down there. I'm sure it ended in infection and amputation, but probably learned some things.

Or, yeah, war's advanced trauma for sure. And they sometimes advance joints too.

Yeah.

Oh, go ahead.

Tetanus must have been an issue, like tying those railroad ties, putting those railroad ties into people.

That thing gets rusty I think there's probably a bunch of items like that where the sample size is 1 or 2 before they figured they had to move to something else.

But proof of concept, right? You got to start somewhere with something, you know, that's kind of straight and substantial enough not to bend, right? So I mean, it kind of makes sense.

Well, you know, Elizarov started with bicycle parts. You know, he would take the bicycle spokes and created the first X-fix. And, I think that was in the '40s or '50s. And then, and then he was trying to compress the fracture. And so, he found out some patients were turning the, the nuts the wrong way and actually was—

Oh my gosh, boy.

Yeah, they, it, it would come back and they would be lengthened by a centimeter. And he would say, wow, I've discovered, you know, whatever you call it. Yeah. Osteogenesis distraction. Yeah. But there was—

calitasis.

Calitasis.

Yeah. So yeah, Ilizarov, that's, he used all, that's all he had was wire.

Yeah.

Which is why he used it. It was during that time you had De Bastiani, Wagner, Kuntur. All of these people basically, they made things out of the products that they had. The küncher story was really interesting. The, some of the World War II aviators that were repatriated, the POWs, they were wondering if they'd been tortured because they had this metal rod in their femur where they had gotten the first küncher rod, right?

Yeah, küncher nail.

Yeah, country nail. Yeah, interesting. Yeah, it was, uh, marketed in the United States by another old orthopedic company called Orthopedic Equipment Company, OEC. Wow. Purchased by Dane Miller and to build up Biomet. Yeah. Wow.

Yeah, there's so much great history.

It's pretty interesting, the thing what Kyle was talking about, about how the advances have been in war. Just amazing. Yeah. Like my grandfather was a DePew customer of World War I. Wow. I just realized that.

Thanks, DePew. You mean J&J MedTech? No, no, back, back to DePew.

Yeah.

Another reason to keep the name. So what's going on? Any, what's, what's going on with everybody? Anybody have a burning problem? Go ahead, Mark.

All right, so, uh, this is the same problem I've had my entire adult life. Um, I'm insatiably curious, read too much, take on too many projects. My overwhelming constant quest is to find a way to keep all of the plates spinning, all of the notes where I can find them. I want to wake up in the morning and have an AI angel tell me what'll move the needle that day, um, where the needles are, which ones are the most important today. I'm constantly, through the years, trying new systems. I started using a CRM in 1987. Wow. And I hate them. I still hate them. I just, I, I just, um, you know, I don't— I, I have a circulatory mental process, not an analytical mental process. I'm— I tend to be more intuitive than I am truly analytical, um, which is— so I'm just started using a new, new one called Notion. I'm not sure if anybody's ever heard of it anyway. Yeah, no, so that's— so you ask, you know, what am I, what am I, what am I struggling with? For whatever reason, especially this week, I'm struggling with that, but it's been going on for 40 years, 50 years.

So, so, Mark, I would highly recommend you get a virtual assistant. So somebody that you trust that you can just give access to everything, and he or she can just tell you basically give you a newspaper in the morning and this is what you're supposed to do, this is what's hot. But virtual assistants pay for themselves many times over. I, I use one for BoneChat. You guys may have talked to Anne at some point. Um, man, it's just, just organizes your life for— it saves you time.

Well, the one I had was in Kyiv and Unfortunately, she was overtaken by the war.

Really? She passed away, or, or—

no, she was just— had to move and kept losing power and electricity and get water, and, and I've kind of lost track with her the last couple of months.

Well, just pick a more peaceful country. My administrative assistant is in the UAE, which is a safe place with great internet.

So good tip.

I think we had explored maybe the Philippines at one point. It's been a few years ago, but having some help for a startup out of the Philippines. So I don't know if that's still viable.

Philippines, I had an assistant from the Philippines 10 years ago, and she didn't speak great English. And then her power was going out. Like Mark said, every time it rained, the internet went out. And, and then you're in the monsoon season and she was like out of pocket for 3 months. Oh, wow. Didn't work.

Yeah.

That may not be the best.

Yeah. I have one in Colombia. It's hard to get people who speak good English, but if you find them, it's perfect. It's the same time zone. I wake up, I have a 20-minute huddle with her every morning. Go through my day, sets my schedule, has access to my email, responds to the basic stuff, handles like reporting, does a lot of the boring day-to-day stuff. I, I love it.

There we go.

Great. Uh, also, after 9 months, finally got my first medical practice to agree to do a pilot program to use an AI agent for their front office.

Wow, that's the one, that's the one that you shared with us.

Yeah, yeah, it gets, it gets, I mean, it gets better every week. These things they learn, they, I mean, it's amazing really. And she, this particular doctor, she's a surgeon, solo practice, uh, older than younger, former president of the Medical Association of Georgia. I couldn't have picked a better Wow.

Candidate. Wow.

We just have to basically not let anybody die on the vine.

That's interesting. Wow. Well, here, I've got a, I've got an ask for the group. So, you know, I'm starting this, I started this little trial business. It's patient consultations for knee surgery. And it's called Hold the Knife. We, we, I've got the, it's holdtheknife.com and it's a Facebook page is Hold the Knife and the YouTube channel is Hold the Knife. And we're trying to, there's, the premise is there's way too much total knee surgery going on in the US. Every time somebody walks in, you're bone on bone, you know, it's not gonna get better. You need a total knee. And, but, you know, I'm in the startup world that I talk to people every week. There's like, there's 50 options now. There's injections and therapies and there's vibration tools. There's, there's things you can wear. I mean, there, there's 50 alternatives to, if you have a little medial osteoarthritis, there's so many things you can do now. And so I'm, anyway, I've started it. I've got, social media going out every day. The thing I don't have is a, I need an MD or a nurse or physician's assistant that can do the consultations. And does anybody know somebody that's passionate about patient care that, that could help people avoid surgery or walk them through options? They may not be doing surgery anymore. Anyway, just throwing that out. If you know a knee, maybe a former knee surgeon or a, or a PA or that, well, you know, wants to basically, they'll get paid $500, $750 for a 1-hour video chat with a patient at their at their convenience.

Man.

I think the challenge with orthopedic surgeons is they want to do surgery, right?

Exactly.

Yeah.

Yeah.

So I wonder if you need someone not in the orthopedics realm, if you maybe need someone more rheumatology or someone more sports medicine side.

How about a podiatrist who is actually a pretty good guy? But he's on the exclusion list and he can't operate because he got caught with Medicare fraud through no fault of his own.

Uh, yeah, that's— I'd do that.

Yeah. Oh yeah, his name— yeah, he lives in Columbus, Georgia. He really is a normal good guy, and the reason he, uh, got on the exclusion list is that he got involved with some consulting payments Like, that's pretty rare, right?

You know.

Yeah. And he got swept up in the compounding. And when the DOJ contacted him, he said, I didn't do anything wrong. He learned the hard way that they don't take you to trial unless they know they can convict you.

Show me the person, I'll find you the crime.

Yep. Yeah. Yeah. Yeah. So I got another idea for you too.

Yeah. Don't tell me his name. We'll do it offline, but okay.

Okay. I won't. But I got another idea for you. What if, so the patient, what if the patient calls in and, you, you know, you, you, you or whomever it takes the call talks to them and they basically work it like a patient encounter. What's your problem? How long you been having it? Is it left knee, right knee? Tell me about your symptoms, blah, blah, blah. And now all that is being fed into a very smart AI scribe that can literally write down the diagnostic, diagnostic codes, give you background information, write a patient summary that's in plain English, all of that. I could do a demo on that for you literally as we're speaking right now.

Yeah. That's interesting. I, that's really interesting. I would probably have two different prices, one personal touch, you know, a real person, and one with the AI report. But I like that idea.

Yeah. So hang on a second.

Tiger, I have a, I have a question in that business model. Why not target primary care physicians even before people get the referral to ortho?

Yeah, I can't throw a wide enough net out for that. I don't think it's, but that's a great idea. So here's the ideal patient. They're very wealthy. They're probably between 40 and 60. They go in and see their doctor. My knee's killing me. You've got early arthritis. We need, you know, you need to start thinking about a uni or a total knee. And they're going, wait, I'm not gonna, you know, I'm not taking that for an answer. And so they get online and they start looking around. And they somehow find Hold the Knife and they buy a consultation. That's, that's the ideal patient.

Hmm.

You know, the premise is there's so much wealth in the US, you know, the top few percentage of people have so much money that they'll buy a concierge service just to skip the line or get better information.

Cool. Well, you want to take 3 minutes and do a test?

Yeah, it's okay. We'll talk. Well, you're, you're doing that in the background and we'll keep talking.

No, no, I'm—

yeah, you— oh, you're gonna do it live?

You, you be the— you be the patient and you call me and I'll say that I'm just like a health coach. And we'll— and you can tell me your problem and so forth. We'll just, you know, what— whatever your knee problem is, we'll just do it for like 2 or 3 minutes and then we'll see what happens.

Okay? Okay.

So, um, Mr. Jones, what brings you to the call today?

Yeah, so, you know, I've gained some weight recently and I notice when I'm walking up hills, my— the inside of my leg hurts. Around my knee, and I'm not sure what to do about that.

Hmm. So which knee is it?

It's my left knee.

Yeah. How old are you? 65. What do you weigh?

170.

Okay. That's not bad. And, uh, have you been to see a doctor about this problem in the past? I mean, you basically, you know what we do here at Hold the Knife. We try to give you alternatives to surgery and kind of advise you, you know, in a non-medical version or non-physician version. We're like your avoid surgery coach.

Yeah, I went to see an orthopedic specialist and they showed me an X-ray and they said bone on bone and I probably am going to need a total knee pretty soon. But that kind of scared me, so I'm looking for alternatives.

Wow. Well, you know, a friend of mine recently, uh, she actually is the same age as you and was playing pickleball and felt a pop in her knee and turned out to be probably a meniscal tear. She went to see a doctor and, uh, the doctor was female. She recommended a total knee replacement. So she went to see a different doctor, went in and got a partial meniscectomy and repair. She's back playing pickleball, no total knee. So it's good to look around a little bit. Is this inhibiting your activity?

Yeah, yeah, I can't, you know, can't really play with my grandkids like I used to, or, and I can't play pickleball anymore.

Okay, so do you have it? You have your, you have digital images or X-ray images or an MRI or anything?

Yeah, I can get the, I can get the X-rays from my doctor.

Okay, we'll see what you can gather on that. We've got physician on our staff that'll take a look at it and give you alternative advice and all that from the comfort of your office. So it looks like you're still working.

Yeah, BoneChat's full-time.

Okay. All right, good. Well, let's, let's get all that. Maybe we talk again in say a week.

Sounds, sounds great.

Okay, thanks.

So you're, you're loading that into an AI and it's gonna That's interesting.

Yeah. Give it, give it 3 or 4 minutes to mull it over, see how much to bill you.

Thanks, Kyle. Should I, should I call Dan directly and use your name?

You can if you want.

Okay.

I don't know him well. I know him enough to know that he might be intrigued in something like this.

Good. All right.

Thanks. I have, I have a question for you, for all of you, I guess. General finger in the wind of where things are going. I'm trying to keep a general pulse on all things going on in the main orthopedic marketplaces, not necessarily biologics. I tend to have an affinity more for the metals and plastics, and I continue to be blown away by the just preponderance of one product companies where they stay one product companies and they try and build an entire system around it.. And companies like X-Bolt and Ortho-XL, CurvaFix come to mind. They seem like they're doing really cool things and they've neat technologies and they seem to have great people. But man, you look and some of these companies have a roster of 15, 25, 35 people with one product line that fits into a small market segment. I've been in that world myself before and it's really complicated to try and build a business at scale. It's really hard to have the infrastructure and sales pathway for that to generate a revenue that gets you any sort of momentum towards being cash flow positive or puts you in a position to where you can be acquired and it not just be a washout for everybody. So I'm wondering if we think that that will continue because some of these companies continue to get funding. I forget who it was. Somebody just brought in $70 million on a product line that didn't make sense to me at all. They don't need a product line like a single product. So it continues to work somewhere if you find the right investor, but I'm curious to know what you guys think as far as how that'll look into the future.

I mean, I've written about this. The, the, the biggest, uh, Mauricio's got a good comment, I'm sure, but the biggest culprit is spine. 'Cause all you need is you need like 2 or 3 surgeon KOLs to start putting in your spine fusion thing. And then you get to $5 million really easy. And then you hit the wall, you can't expand. So I've written about it's way too easy to do a one-product company, and it's way too hard to expand a one-product company. Mauricio?

Yeah, I, I mean, that is, that is true. On the other hand, if, if your goal is to be acquired, it becomes very tricky because if you start becoming too broad, you start competing with your acquirer. On some segments and then they will, when they're calculating your value, they'll discount the value of whatever competes with them unless you're way better than them on where they compete. So the, it's, there's, there's always a push to like grow and sell more and build a broader portfolio. Or, and also just like staying within the lines of what, you know, big ortho is going to be looking for in 5 years. So it's, it's always a discussion because if you're really like shoehorn yourself into the right place, you can get a ton of value. But then it— but because if not, they will just start slashing. When they started having the acquisition discussion, they'll say, oh, this is interesting, but we already have it, slash, slash, slash. And then your price just shrinks to the, to the size of what's interesting to them.

So, so we, we largely did this at Ellipse Technologies. We had, we had Magic Rods for spine And then we had the Precise Nail for limb lengthening, both remote control. But it was the, the company was mainly a magic rod company. We had the only remote control growing rod for early onset scoliosis, and we got acquired for 10x. And the, the reason we did was there was zero competition. Zero. We had our margins were ridiculous. We were $18,000 per rod. And it cost us $1,000 to make it. And so you can do it if you, if you're super specialized and you have no competition, but you can't do it if you're me too. If it's another SI Fusion thing, I just don't think you can do it. You, you gotta, and that, and we've, we've talked about this, but you gotta create a new category. You have to own your own category and have zero competition.. And I think that's the biggest problem for startups. They try to— they swim in the pond with an existing product area. And we're, hey, we're another SI fusion device. Well, there's 50 of them out there. You know, you're not creating a new category. So you got to— it's got to be differentiated, Kyle. It's just got to be super differentiated.

So I guess I'm not necessarily asking for my own prognosticating into my own company, though I do have that certainly always top of mind. But I guess the formula you're talking about is a formula that dozens or hundreds of companies in our space are currently violating everything you just said, and they're still getting investor money and big dollars sometimes. And I find that to be interesting because there are what appear to be better technologies on the horizon that struggle. And I've been in this plug-and-play ecosystem, you know, meeting with those companies as a mentor at times, or having a chance to see early-stage stuff where it's— I mean, there is, there is an intriguing story to be told about something that does fit into the category of a new market or an expanded market or something with little competition, or, you know, something that is plowing the road and it gets nowhere. But, you know, somebody makes a new patella And they're getting money thrown at it left and right.

Like, interesting.

You ever hear the expression, we always fight the last war? No. That's what the United States Army has always done. Basically, we go into World War II with World War I weapons and technology. We go into Vietnam with World War II stuff. The same thing I think happens with funding. I think We're funding the last company. We're funding the last decade's company sometimes. These are institutional thinkers, and I don't necessarily think that their capacity to see that far ahead is very good. I mean, it's really hard. The news you were referring to earlier about Depew and other companies and what Tiger wrote about, about how innovation is kind of dead. You know, just this week I wrote a letter to a French sports medicine company, introducing them to someone. And they, they have a very complete line. They basically compete against Arthrex, theoretically. And I said, you're, you're not going to penetrate the US market the old-fashioned way, doctor by doctor, distributor by distributor. It's not gonna work for you. You, you, and what my friend can do is go right to the Cignas and right to the payers and right to the big net, you know, from the top down. It's a whole different way of doing business, which tells you that that space is pretty high on the bell curve of innovation. And I think it's a great discussion, single product companies versus multi, you know, product companies.

But I really do believe that it's exactly, Tiger, what you wrote about, the innovation having— and I haven't been in a big company in 5 years, but you You know, I, it was a struggle the last 10 years that I was with one of the top, you know, 4 orthopedic companies to get anything through. You know, the, the hurdle rate was so high and you're like, there's just no way that we're going to ever develop anything, excuse me, organically. We're never going to. You've got all these hurdles and I think if you let these little companies sort of de-risk you know, kind of the next thing. I mean, I do agree with what, you know, what you guys were just saying about it needs to be innovative. It really does need to be innovative. It can't just be me too. It can't be another Patella. You know, it's got to do something different. But at the same time, if you can do something different and you can, you know, get the money to prove it, get it through the FDA and start, you know, getting it into clinical use and you can demonstrate that you've you've got something that's really better, then I think the strategics will pick it up in a heartbeat. And I think you've seen, you know, companies, and maybe, maybe these don't exactly fit what Kyle is saying about a one product, but you've got the Ardalans, you've got the Entebones, you know, you've got companies that have a little bigger portfolio, not just one product, but a little bit bigger portfolio that are getting snapped up. And they're, you know, I think that's how innovation is going to happen for the, for the big companies anymore. I don't know.

I think that's—

I agree with that.

I think there's a lot of evidence to support that in a lot of different ways. You gave two examples that, while reasonable for this discussion, are completely unreproducible. Ardalan was this thing that existed for 30 years, and then they struck fire by having this kind of new strategy. So it's almost like you throw away the first 28 years and take the last two to build a— a strategy here. The Intobones thing is, I think, at least to some degree, a matter of luck. CONMED decided to get into the foot and ankle game. They had a range of products. It was snap your fingers and we can start to compete to some degree in this space. That's kind of what Inovis has tried to piece together with their foot and ankle division of grabbing Trilliant and NovaStep and MedShape and all of that. So that's, I guess, that maybe is an answer to my question, is that In one category, if you think about up-and-comers, you've got a technology that has a way to distinguish against everything because it glows in the dark, it talks to you at night, it has a readout, it sends a message to your phone, or it helps you dunk a basketball. Or you've got these space void fillers of portfolios that have also some technology as well, but fill a need that the big companies are just never going to get to on their own. That's the sort of thing that I kick around all the time that I just want to start a shoulder company. I've got such a history in shoulders and I know that I've got 100 other ideas waiting for me. But I don't know where's it going to land. Maybe I get there before Globus makes their own and they need to snatch it up because then they can play in the shoulder market. But man, that's a hell of a bet to go after trying to put that sort of effort and money behind some sort of space where you could just find it. You know what, actually it's saturated. There's 35 shoulders on the North American marketplace and every big player's got one and you don't have something good enough to convince one of the players to buy yours as the next generation.

Yeah.

So I don't know.

Yeah. But how do you, that's really good. That's well said. How do you explain shoulder innovations? I mean, all they have is this inset glenoid and they're going public for $100 million.

So, they don't just have an insect glenoid.

Yeah, educate me.

So, I actually have known Shoulder Innovations going back 16 years. I met them before Gunther did anything else with them. It's actually through Mike DeVries is how I got synced up with Sonoma back in the day. So, I think they've done a nice job of expanding their portfolio and creating the sort of thing that has some appeal, but they're also paying their way to play. I mean, they've raised tons of money, they're hiring salespeople, they've got consultants everywhere, and I think they're doing some good stuff. But, Again, that's something else that's pretty hard to replicate as well. In between their IPO and their Series through D and debt vehicles, they've raised $225 million.

You know, they're still upside down. Yeah. Even with that, even with the IPO.

Yeah. So I guess maybe that is a blueprint for me that there is a space to do something in shoulders, just maybe not exactly the way that they do it. Yeah, fascinating.

I don't know if you guys read, but I— my stuff— but I wrote an article today called What's the Ideal Ortho Business for Scaling? And it's— I'm basically— what the premise is, don't do an implant, don't do instruments, don't do inventory, you know, do, do data plays like what Laura Land's doing, you know, do, do things that are, um, more SaaS plays that can scale. You guys saw Implant Identifier on a couple weeks ago. That, I mean, no inventory, you know, I mean, just that can scale really fast. No, no regulatory. You guys saw Intellijoint Surgical, I think that was last week, you know, very little instruments. It's a, it's a service play. I think that's— I think those are the ones that are going to scale. I think it's really, really hard to do implants nowadays. If you're talking about implants, inventory, instruments, and a sales force and a regulatory path for each product, it's an uphill battle.

I need a different way to categorize what's difficult too, because I think you're right, it's really hard to design an implant, put it in the marketplace, get sales reimbursement, grow it, and then expand from there, or have someone acquire it. There's a lot to get there, but it's also hard to— it's also hard to get everything started in the first place between people and infrastructure and what draws you. Like, there's just What I like— the idea of whether it's software or hardware or data has its own challenges. For me, one, I'm not an expert at any of those. So that's a tough area for me to think about how could I hone in on an opportunity like that. But also, there is a need. Every company has their own competitive advantages and disadvantages. Otherwise, we wouldn't be seeing acquisitions happening all the time, whether they're good deals, bad deals, whether the investors made any money, whether it's something that gets offloaded in 5 years because it was a terrible acquisition, it becomes a divestiture. There's a lot of moving targets with all of this and nobody has a recipe for the right sort of startup, I don't think.

I think it's like hunting. So, if you have 5 animals, you don't shoot randomly in the middle and see which one you hit. Like what, what, what you're gonna, what you're gonna bring home for supper and you, and your target. So it's one way is like build something that can scale very quickly, very easily, and it's adjacent to the, to the existing business model, and that can be a very good standalone business. You can, you can find an indication that is up and coming, or it's something where there's not a lot, and focus there and build a very defensible moat there. You can also even find an indication that's not so sexy, but there's one of the big players that has a gap and the others the others have filled it and you see that there's an opportunity there and you can, and you can still try to play, but it's, it's more like, what, how do you see, how do you see your endgame almost since the beginning? In Techfit, we, we made the mistake of starting with indications that were too me too. And we had a lot of trouble and we had a lot of trouble finding early traction and we were very lucky. We found a larger player that had a gap in their portfolio, exactly the size of our offering. And we, sort of threaded the needle and got some early traction there. Um, but it's, it's very important. If I were to do everything again, I would start by like knowing what, what's the, what's the hole in the future that I'm going to fill and try to, try to be very focused in filling that hole.

Like the magic word, magic word was traction, Mauricio. Yeah. Early traction. Tiger, you want to see that note real quick?

Oh yeah, see what we— see what we created in 5 minutes.

Been ready for a while. Let me show it to you real quick. So this is a— this is, uh, my buddy Tim— my buddy Kishore's Tim Pita. Okay, so this is what came out.

Wow.

He gave the complaint, the history. I'll send it to you, but it's quite detailed. I don't know what the—

they have grandchildren, so you must have children. If you, uh, how would you get grandchildren if you don't have children?

There's some human trafficking going on.

Exactly.

I bought them.

I bought them. That's so funny. So you can also do this. You can run macros, CPT, build— you can make as many macros as you want., and you just, you can put them in plain language if you're the doctor, then you process it and it'll give me the CPT codes, which is not relevant in this case, but it'll also give me, a patient sort of summary in plain language that I can email or give to the patient or the, the caller immediately. Here it is right here. He came in today, blah, blah, blah. So it may help you guys.

Yeah, over the counter. Yeah, it's some good early stuff here. Yeah, that's amazing.

Thanks. I went to an EMT visit yesterday. The guy was using Epic and there he was using their Copilot DAX. And I said, hey, listen, before you start the encounter, I'm going to turn on my Scribe AI and we'll compare. And we did. So he was a young guy and I emailed it to him after he came back last night and said, wow. He said, that's so much better. Wow. So it was kind of, you know, nothing. He's an employee, right? He's like 70% of all the doctors now. He has no, no vote.

No vote on products choice. Nothing. So yeah, I just shared a company in the chat called that called Icarus Medical Innovations. So this is, you know, Kyle got me thinking. So, I love these guys. I met them about 7 years ago, maybe. Engineers that came out of the University of Virginia, and one guy was a snowboarder, and he couldn't snowboard anymore because he had arthritis underneath his patella. And he went out and bought a bunch of braces and nothing worked. And so he kind of Frankensteined his own braces together, and it outta all these pieces in his garage until he, he came up with a unloading patella mechanism brace. And now he's back to snowboarding. And so he said, I bet other people have this problem. I'm gonna start a company. And so he started Icarus Medical. I need one. What's that, Laura?

I need one.

I need one of these.

There you go.

I've gotta, I mean, I love these guys. I'm, I, I talked to 'em 7 years ago. They were making, They were doing $200,000 a month out of their garage in, in sales, and they were profitable immediately. Had 3, 3 engineers. And it's a Mauricio, it's a custom business. So that, you know, like yours, it's a little harder, but they sell, they do prescriptions with, with physical therapy people. They sell directly to consumers and they also have a relationship with Hanger. And the, the, one of the keys is they let patients scan their own knee. And with an iPhone, they've got an iPhone app and they can, they can help them customize the brace. But these guys are killing it. I don't know. I don't know what they're doing now. They're probably doing $10 million a year. You know, easily, easily. And it's all profit. But that's, that's an old, old business, right? Don Joy and Greg, and they found a niche, and I'm sure they'll probably get acquired.

I was gonna say earlier, you know, I wore, because I, I started off outside of hips and knees in my first 10 years, 12 years in orthopedics. I started outside of hips and knees, and I wore like a badge of courage, you know, that I had never touched a hip or a knee. And then I found, found myself leading a knee marketing same team. And you know what I came to find out in the, you know, 15 years that I did that was that there's still a lot of innovation out there. There's still a lot of innovation even in these big old joints, hips and knees that have been around forever and ever and ever. So there still are aspects of innovation. And I do think that these little companies probably can innovate and iterate and get stuff done a lot more quickly than— and this Ikarus Medical is a great case in point. You know, a brace, they've been around forever. All of the orthopedic companies started embracing, right? All of the orthopedic companies divested of their soft goods business along the way, or a lot of them did, maybe not all. But so I think there's innovation out there. You just got to look for it. You just got to look for it. There is a lot of innovation still to be had. You know, there's still 15 to 20% of total knees that don't have high patient satisfaction. And there's things to do that can help that. And maybe it's data, you know, maybe it's looking at all the different kinds of people, putting all the body types together and doing different things. But I think there's— anyway, I'll step off of my high horse, but I think innovation rules. And I think, you know, if you can find something innovative in any space, it's going to be successful.

Yeah, the Icarus was scratch your own itch. That's, you know, if you have— solve your own problem is a great way to, to do a startup.

I think some of the startup companies have physicians who are doing that.

I'm sorry, maybe I should be raising my hand. Some of the, you know, the surgeon, a surgeon idea generated, an idea generated by a surgeon who has seen a problem that he doesn't have a solution in his toolkit for. You know, I think those are some really potentially successful ideas if you can hook him up with the right people, because a surgeon is not a good businessman. He's not a good development engineer. He's not a good— a lot of things other than surgeon.

So, yep.

I was just gonna say that I think Lauren's got a really good point. And the, you know, innovation can come in many different forms. And anytime you think innovation is dead, you're dead.

Yep.

But going back to Kyle's original thing, if I were gonna start a business today, it would— it wouldn't have implants.

No, I wouldn't do nothing.

Yeah, we're going to have Laura Lynn on, um, in the future, hopefully.

Yeah, a couple of weeks, I think, early November.

You're on the docket.

I'm on the docket.

Patrick, you're quiet. What's going on?

Yeah, sorry, just, uh, listening in while, while doing a handful of other things at the same time today.

How's the fight?

It's a, it's a, uh, it's a fight. I was thinking more about what Kyle was saying about the one company versus multi-company thing. Um, so much of that I think comes down to— I mean, it comes— we see like the products that are in the market and we see the companies sort of talking about the products. We can do our own research or kind of ask around a little bit on like who the investors are, but like I think who the investors are matters so much in that decision because oftentimes with one company products, either they don't have enough money. So like, you know, they raise just enough to get the one product on the market and therefore like, you know, they almost like have to be self-funding at that point, which is a real struggle with like a first product or if, or it's the investor saying like, no, no, no, no, no, no. I'm like, we're not in for more money until you can prove that you can sell this thing first. And I think it's really hard to be a single product. Um, um, a single product— I mean, if the market is big enough, I guess so. But like, the, the opportunities that are just like out there that are, they're so big that you can survive as a single product that like Zimmer and J&J and, and Stryker, that they're like voluntarily just not seeing because they know what the opportunities are that are, that are out there. It's just a matter of they don't want to do them or it's not cost effective for them to do them. There's not some billion dollar market that Striker and J&J are just voluntarily not participating in. But oftentimes there's these huge promises that get made to investors. The market opportunity goes up like 5x when you're raising money sometimes. It shouldn't, but it oftentimes does. And it's the investor saying, well, wait a minute. No, no, no. I gave you money 3 years ago on the promise that this thing that's now out there was so amazing. So go sell some of this. And then they can't raise money until they do that. And it is really hard though to sell single products because sometimes you need to just be able to talk about other things too with customers. They might be like kind of interested in what you have, but like really interested in what you, you know, some version of what you have or what the sort of next generation of what you could have.

Right. Well, if they like you, if you built the relationship, say, as a sales rep or somebody in the team, they have no opportunity to give you more business. Only, only the number of the certain patients or category that comes in. So to restate that in a different way, if you're a single product company, you've chosen the most expensive way to do everything.

Totally.

You got to have executive leadership for just that one product. You got to have a sales channel for just that one product. You got to pay, you got to pay a commission enough to entice your sales force. For just that one product for you to give them the attention on and on and on. So it's just, it's a shocking system, I think, when I see it nowadays that someone has gotten to the point of being in the market and they're trying to scale it by just bringing in vast sums of money to then just continue to push that one product.

Yeah, we still have this, like, there's this, you know, it's not a cliché. I mean, it is a cliché, but it's like also true, I think, like Orthopedic businesses are not at like the cutting edge of business practices. And oftentimes like business practices that are happening in orthopedics are things that happened in other industries 5 years ago, 10 years ago. And 10 years ago there was just this like throw, you know, this like let's throw as much money as we can. It doesn't matter if we're losing, like basically just customer accumulation was all that mattered. And if you just threw enough money at anything, then it was just like that was all you needed to do was just show traction, show revenue traction. And like the markets don't want that anymore. But I think there are still like those, those, those habits have not completely like they've died out of other industries, but they have not died out of this industry yet. And there's still that mindset out there incorrectly in my mind. But that mindset is still, is still out there because you're right, you are doing with a single product, you are doing everything as expensive as possible. It's a matter of then like leadership going to investors or boards, whomever, to say, listen, we can spend X amount of money to grow this product to a certain level. But it's up to the leaders to say, well, there's real opportunity cost in doing that. And if we spend all this money to sell this one random thing, here's what we're not spending the money on. And it's usually like product 2, 3, 4 and those types of things. And it really does come down to like getting the investors on board with like, you know, hey, there's this product, it's on the market, it's cleared, presumably there's reimbursement, whatever. Like there's nothing stopping us from going and selling this. It's just a matter of like selling it almost responsibly is the first word that comes to mind. I don't think that's the most— I don't think that's the best word, but like selling it at the right pace with the right amount of resources, knowing that if you put— if you overdo it, yes, you can like raise your revenue above zero, you know, like you can you can raise your revenues higher than they would be today, but it's gonna come at a big opportunity cost down the road.

It's a really good point about economies of scale with one product. That's a really good point.

Yeah.

I mean, the, the poster child is Kyphon, right? So, here, let me put this. So look at the chat. I mean, Kyphon created a brand new category and they went from nowhere to, you know, $4 billion in a decade. I mean, zero competition. But, but if you ask Medtronic, could you have ever invented Kyphon, they would say no, we could have never done that. We just, we had to see it. We had to watch the horse win the race, and then we bought the horse.

Yeah. And one thing, uh, when you mention like, oh, those guys haven't seen the opportunities, I think they haven't some opportunities. There's some opportunities that they undervalue They, they look at them, they're, oh, this market is small. There's, there's nothing here. And then all of a sudden somebody comes in and proves that the market is bigger, that the need is bigger, that you can get a higher ASP than everybody was targeting. And then all of a sudden, uh, you, you have a Lapiplasty and I know they're struggling now, but it's, they built a billion-dollar business in one indication that everybody thought was saturated, which was bunion, just because of they had a different marketing approach.

Yeah, that would— they created, you know, like it or not, they created a new category. They would never say the word bunion. And that was really smart. It was just brilliant marketing.

Yeah, there's a lot that went into that. There was exclusivity of having been trained. There was, you know, a messaging element. There was a— everybody's doing something different. You can do this new age version. There's a lot that went right there for sure. It's a bit of a unicorn.

A largely underserved customer base too, or largely like kind of neglected customer base historically in podiatrists, especially in podiatry. I mean, foot and ankle in general, but podiatrists especially.

For sure.

For sure. Yeah, like they did so well, they got Paragon bought for over $1 billion.

So yeah, so I mean, the whole foot and ankle, there's a lot of industry, a lot of subsegments in orthopedics that have been historically, you know, just they've been using whatever the trauma guy wanted and have, you know, have emerged as their own, you know, kind of separate area, foot and ankle especially, that, that was a, you know, they just used whatever was around for so many years and finally they, you know, they got their, their needs, you know, it's been a proven strategy in orthopedics time and time again to find like a segment of customers or a category of customers and sort of just put your arm around them and say, like, we love you more than, than the big companies do. That we've seen that many, many times.

Interesting. Happened in shoulders 15 years ago, started ankle 10 years ago. What's next?

Well, I mean, um, whatever they can. I'm sure OncoSurgical will go public, um, in oncology. That's, you know, that's a segment that always just got sort of ignored and lumped in with everybody. I mean, almost every company, if you look at the leader, if you think of like how surgeons choose to categorize themselves, basically like what fellowships can they go down and how they sort of lump themselves together, the company that either is the market leader now or was the market leader at the time they got acquired was one of these like we love you more companies. Look at Synthes, that was almost exclusively like a trauma company. You know, they look at, you know, you mentioned all the shoulder companies. There's many foot and ankle companies. For a long time, it's not true anymore, but for many years, the leading spine companies were exclusively spine companies. They didn't have other orthopedic businesses. Think of Medtronic had just a spine business, or even Globus was just a spine business forever. You have to get bigger at some point. I get that. But the way to get big oftentimes initially is to pick the customers and message just to the customer, sort of like love the customers harder. Than the other, than the big companies can, can love anybody.

Here, look at, look at this. I wrote this a long time ago, but I think every orthopedic space has got its golden age.

So trauma, Arthrex, of course. I meant, I forgot to mention, I mean, you know, like that was a, yeah, that's probably the biggest example.

Yeah. So I think we're in, I think we're exiting extremities right now as the golden period and we're entering sports medicine. And it's just— and then I think imaging navigation is next.

I think you've probably— you probably could put an MIS inflection point 5 or 10 years after each of those to have like a different wave. But I follow you.

That's a great idea. That's a really good point. There's a secondary effect. MIS, everything gets MISed. Yep, I like that.

Yeah, innovation follows like a normal curve but cumulative, so it just— it's an S, it's an inflection point, and then it tapers down, and then you have to come up with something new to like re-trigger it. So that's the MIS.

Well said. Interesting.

I think it was in 2013 that Wright Medical invested $5 million in a Foot and Ankle Company. And I remember it caught my eye because at the time everything was spine, spine, spine, and you know the rest of that story.

Yeah, speaking of Therese. Yeah, I think Therese is a— I think the thing people don't understand about Therese is it's a marketing genius. Company. And that's the first thing. The second thing is they never raise money. They just, they self-funded the board. I think all, I don't know exactly, but I think each board member put in a million or a few million, and that's, that's all I needed to get started.

That's all?

Yeah, that's it. Yeah, just a few. Yeah, just a, just a two common number from individuals.

That's a cool million.

Well, the board is, you know, I need some new friends. Jim Trees, uh, Rich Mott, the guy that, you know, one of the founders of Kaifon. I mean, they had Barry Bays. I mean, they, the, the, it's a who's who of board. Yeah. So I think imaging navigation is next. I think that's the next one. And because they're going to make Those companies are agnostic. They make everybody's procedure better, but they don't, you know, they don't tie you, they don't lock you into an implant.

Yeah, but we gotta have a better word for that 'cause it's not gonna be a big C-arm and it's not gonna be you're standing in front of radiation and it projects onto a screen. It's not. It's internal imaging and navigation, but with new toys. And that's where the AR, VR, you know, that stuff is— it's— that is a gigantic category, I guess, is my point. Um, I could picture, you know, what was the phrase in Austin Powers? You know, sharks with laser beams on their freaking forehead. Like, that's, that's what we're talking about here.

That's hilarious.

Tiger, I gotta go.

Enjoy. Thanks, Mark. Yeah. Thanks for your AI.

Yeah, so last, I guess, as we wrap up here, question for you guys. If I were to go into any ChatGPT— my favorite's Copilot— and I were to just pick a category and I were to say, you know what, I want to create innovations in the elbow fracture space, do a rundown of the top 20 orthopedic companies and tell me whether or not they have a radial head replacement device, an olecranon fracture device, and plates and screws to fix the distal humerus. And bang, I would know— I'd have a breakdown of who has it and who doesn't. And I say, okay, now I want to understand what's the market size for those. Give me a breakdown of units sold, blah. And now none of that's going to be perfect, but you're going to have an output. And I could go, all right, now take all that information and then scour the USPTO, Google Patents, and everything else online for where there is intellectual property white space in those categories. It's going to spit out something. Now, that's— I've invested 15 minutes in it to prompt, and I'm going to have a laundry list of stuff I could do where I could land on new things that are portfolio expansion devices that might have a market that I then could go innovate in and try and take to a company to fund, try and take to investors to invest in, you know, work on designs, on and on down the line. So I think given that, given that Summary, is anybody doing anything like that? I don't think that's the way that anybody is organizing their thoughts. I think what instead is happening is an idea is coming out and it's finding a place to land, and then people are building a company around it instead of trying to harvest where there's opportunity and fulfill a need, which is just— it's bottom-up versus top-down business planning. And I'm fascinated at the opportunity to do it the way that I described.

You gotta start with the clinical need. Go ahead, Mauricio.

I do a ton. ChatGPT has this deep research feature. I swear by that thing for like high-level market stuff. Right now I'm obsessed with the stem cells and exosomes and how to build something in that space. I've interacted with a few companies and I have built a whole roadmap of stuff I need to do on ChatGPT's deep research to find like, regulatory pathways, market opportunities, who to sell it to, what, what the size of the markets are, what products are there that compete with what we would build. And then we don't even have a product yet. We're just building a pathway based on the need.

I think that's awesome, Kyle, the way that you— it's cool— the way that you described it. Like, you gotta— then Tiger's right, you got to get it. Like, but then to be able to just go to, you know, your 3 most trusted clinical sources, whoever they are, and say, hey, listen, this is an imperfect list, but directionally, do you think I'm on with, with, with, with these types of, of things? And, you know, that's where they'll be like, actually, idea 2 is perfect, except it's like 10 degrees different from how it's listed on this, this, this paper here. And that's like, even just like the, when you said like, you know, scour the US Patent Office and those types, I mean, that's like so many thousands of dollars that you would typically run through, like a patent attorney from, and how many, like, so many bad market research reports that you would have to buy along the way, that, you know, if for no other reason, it's thousands and tens of thousands of dollars of just cost that's wiped out immediately.

Yeah. And once you have the idea, you can also tell it, this is my idea, come up with an FTO. And I've compared it to attorneys' FTOs, and it's pretty damn close. I mean, I wouldn't take it to court, but yeah, it's pretty good. It's very good.

Or even then, if you just run it by an attorney at that point, you're not asking them to do like document creation, all these things that really run up the hours. If it's just review my existing contract and add some commas, so that's, that's a much, much lower expense than, um, yeah.

That goes back to one of the first things we said today was a fast fail. Like these, these are tools that allow you to figure out if you're doing something stupid real quick.

Yeah, exactly.

Which is why I like them. I'm stupid quickly, often.

All right, so just be— if you can, you know, even be— even if you can be stupid at volume, you'll get a good idea at some point.

I'm gonna put that on a t-shirt.

I'm stupid at volume. I'm stupid. I'm scaled stupid.

Nice.

Awesome.

It's been fun, you guys.

Thanks, guys. Been fun.