BoneChat Call #2 Marc Viscogliosi - lessons learned building ortho companies

I'm afraid, I'm afraid this is gonna go 2 weeks if, uh, because there's so much material and there's gonna be a lot of questions.

Well, next time you'll invite someone who knows less than Mark, and then we won't have a problem.

Yes, Alessa.

I already see some friends.

Alessa is at a conference. Oh, she's made it.

I knew she would.

Oh, Joe has so much faith.

I do in you.

Hi, Tiger.

Hi, Mark.

Great to see you. Alyssa, good to see you. Thank you. I remember our brief run in the elevator at one of the conferences. First time we met.

Yeah. Yeah.

You know what she's working on these days? Alyssa, tell them what you're working on. And others can listen in unless it's, unless you're not comfortable doing that, of course.

No, we're submitting to the FDA next month. So therapeutic hardware. So breaking stem cells inside the hardware. Andrea actually did our patent searches.

Great. Great. I'd love to hear about that. Awesome. You know, I, as, as you know, I'm a big believer in, in biological medical metal convergence. Um, and I, you know, I just think more of that's gonna happen than we can imagine.

Couldn't agree with you more. Bridging the gap and then, and finding what— there's Colleen.

Hello, Lisa.

Hi, good morning everyone, or good afternoon.

Hi. Apologies to folks that I have invited more than once to join. I see you decline, but you decline over there on that screen while I'm doing it over here on this screen, so I miss it. I'm not trying to be a pest.

Okay, how many— let's see, we've got—

there are 23 on the call at the moment.

23. Okay, wow.

We're gonna have—

again, you suggest, as your administrative friend, that others will figure it out and they'll join us as we go. As you mentioned, we have well in excess of an hour's worth of conversation ahead, so let's— Tiger, it's your show.

Yeah, let's jump in. So, okay, BoneChat members, this is, uh, this is a real treat this week as Mark's going to share his Lessons Learned in Building Startups. And kind of Mark wants to share all of his knowledge, which aligns perfectly with kind of the spirit of BoneChat. We're trying to create a community where we all help each other and share knowledge. It's— this is, this is gold. So this is really good. So the procedure is everybody just stay on mute. This is a Q&A. So just raise your hand if You have a question and Mark will answer it. And there's no introduction needed. So I'm going to just hand the mic over to Mark.

Tiger and Joe, thank you for setting this up. And as kind of a little bit of inspiration for our conversation last week, I really embrace this idea of being able to engage and support each other with our networks, our experiences, our insights, our wisdom. And so, you know, to the extent that I can be helpful in any of those things, I really want to be, you know, as I, as I've thought over the last couple of decades and have developed the scar tissue of different experiences over time. It's interesting because a lot of those lessons still are applicable today to a lot of different types of opportunities that I see. The technologies may change, the market sectors may change, but a lot of the principles of, you know, how to think about financing, how to think about building your teams, how to think about regulatory and clinical strategy, a lot of those principles still apply. So to the extent that I can be helpful, I would love to be, and I hope to be. And I'm happy to take this conversation wherever any of the BONE CHAT members want to go. So I'll turn it over to you and be able to be available to navigate this as you'd like to see fit.

Okay, well, why don't you kick it off kind of broadly with, you know, lessons learned? Like, what are some of the mistakes? We'll start with the hair and the moles first.

Yeah. Well, Tiger, you said something last week, which is, you know, you said my brothers and I don't make, don't make mistakes. And, uh, there's probably nothing farther from the truth than that. Um, we make mistakes all the time. And I think one of the things that, um, kind of starts off when I think about the framework of starting a company or building what we're trying to do. A couple of things that I try to really focus on. First of all, generally speaking, there are a hell of a lot more nos than there are yeses in everything. So when we're thinking about raising capital, when we're thinking about the companies that we want to form or the companies we want to invest in, it's literally hundreds of nos to get to the one yes or the two yeses. And a lot of what inspires that discipline is the recognition of how hard this really is that all of us do on a day-in, day-out basis. It's not easy. And so when you think about diving in headfirst, a couple of things have become important to us as guiding principles over the years. One is whatever we do, we're really active and deeply involved and engaged. We don't try to do 20 or 30 things. We do 5. And the reason is, is because there's so much energy that's brought to each of those circumstances that it really has to be compelling from an opportunity cost to walk away from everything else, so to make sure that we're deeply dedicated to, to, and committed to whatever it is that we want to pursue. Whenever we've been passive investors or whenever we've been not actively involved in the day-to-day aspects of the business, generally speaking, those almost uniformly underperform the situations where we are very actively involved and very deeply engaged. So that's kind of an important kind of philosophical painful lesson to, to learn over the years. The second, the second one, and that's tangentially connected to that one, is if you don't have the capital to fight with the staying power all the way to the end, you better develop that because there are so many investors that move in and out of situations that even though they might have deep pockets of capital, they don't actually control it. They have investment committees, they have LPs, they have other partners that they answer to. So if you're relying on somebody to be there, I would say never stop that capital search. Always look for capital partners through every step of the way. And to me, there's There's kind of a big difference between VCs, growth equity, private equity, and structured lending or debt. We can talk through all of those, but always make sure that the pockets that you have around the table, you just don't stop there. You keep going. And then probably the hardest lesson that I've learned over the years, the most painful mistakes that I've made are probably around people. You know, it's something I think we always try to get better at, but it's hard. And what I've tried to get better at about that now, as opposed to years ago, is trying to make sure I have the right people at the right time for whatever the mission is. For that next chapter. I've kind of learned to accept that some people are really good at some things at moments in time or in certain chapters of a story, but they may not be good in other chapters. So, you know, you might hear that colloquially as, you know, don't try to put a square peg in a round hole. It's a little bit like that, but it's much more around the, the attitude, the growth in mindset, the curiosity, the, um, cultural traits that they can contribute over time to the organization. And that's much more than just skills. That's much more than, than filling a job requirement. Or a SPAC or something like that. That really gets to, you know, the craftsmanship of execution, if you will, and making sure that the team that you have around you that you partnered with to do that is contributing to that craftsmanship of execution. So a lot of lessons there. A lot of lessons about how to build, you know, the right ecosystem of lawyers and advisors and accountants from a legal structure standpoint, a compliance risk management standpoint, and, you know, how you set up a business through its several chapters of growth. And development and scale. Happy to talk about any of those.

Yeah, so let's talk timing. When do you set up the ecosystem? So you have— let's just, let's walk through a fictitious startup. You've got an idea, you've got a clinician, you've got a little seed money, you want to reach a concept phase. But you don't have to build all the systems on day one.

Right. And I never do. Now, if my brothers were part of this conversation, there would probably be an argument right about now because my oldest brother is a big proponent of process-driven execution, right? You go through the checklist of all the different things you need legally from advisors, from you know, the patent diligence, the regulatory diligence, what's the clinical pathway, what are the engineering support resources that are needed, what are the machine shop support capabilities. And he kind of goes through that. I tend to approach it a little bit differently. My approach would be, what is the— and I'm a big believer in kind of John Doerr's OKR system, Objectives Key Results, uh, system, where what I really want to make sure we're doing is defining what the key objectives are for that moment and what are the going to be the key results and build it one step at a time. That way I try to delay for as long as I can the infrastructure cash burn so that I can drive as high as I can the value inflection. And I try to do that with as little relative dollars as I can to get there. You know, Tiger, you said last week, um, this idea of doing trials in faraway lands, you know, from a risk standpoint, There's also a cost of capital standpoint that can be a difference maker there. And so it's a matter of working through what those other elements are to define a value proposition. Now, I'll share a little secret there. Generally, I don't really like napkin ideas. There is so much innovation out there of existing products, materials, components, other pieces together that you can put together, um, fund what I would characterize as fundamentally sound scientific or clinical products if they don't already exist, and build from that foundation in a cost-effective, capital-efficient way. And I'd love to see those ideas also, because it's not necessarily creating a new risk, it's defining a manageable risk. And that always becomes, I think, a pretty interesting intellectual exercise.

Interesting.

Let's take— Let's take Alyssa's idea that she just heard, you know, mentioned a couple of minutes ago of combining stem cells with existing metal products or probably carriers. Alyssa, tell us a little bit about that.

So what we do is we analyze what works, what actually surgeons will do, and what currently exists within the OR, and it just stays on the shelf. So we look at it from a cost standpoint. A lot of hospitals do not want to pay for coded implants. Coded implants also have to be special ordered, um, and there's just not enough room right now in the DRG reimbursement schedules, and physicians are getting paid less and less every year. So, um, if you're raising the ASP on a product, is not necessarily the best route to do it. So what we did is we took the trabecular pattern of bone which is significantly different in the spine, and it has high failure rates. So anywhere where there's high failure rates, we take the trabecular pattern of bone, we additively manufacture it. We have the exact same surgical technique, implantation, same postoperative, preoperative care, and we just call it basically the highest-end cooking pot that you could possibly use when you're making a recipe. And we allow the surgeons to make the recipe of what would be best diagnostically for the patient. So if you have a patient that's in their 40s and you want some long-term hardware structural bone mineral density, you want to improve it, but the surgeons don't want to take 30 minutes to spin down the bone marrow, you implant the hardware, you screw it in, you collect autograft within the hardware itself, and then you draw bone marrow inside the hardware. Takes 30 seconds, uh, then you have the highest, um, what they use in the inner body. We have the highest standard of gold evidence, gold, gold clinical, gold standard clinical evidence within our hardware. Now, if you have a patient that, um, is diabetic, there's, um, calcium sulfate that's right on the shelf. It's about $100. Um, mix it with antibiotics, already FDA cleared, inject it through the hardware, and now you're protecting the hardware, uh, from infection in diabetic patients. So the The surgeon, it's what the hardware is a hardware. It does help with backout because of the trabecular pattern, but there's so many, it gives the surgeon the opportunity to diagnose what the patient needs.

See, one of the things that I really like about what I just heard, Alyssa, is, you know, there is so much friction when you introduce innovation in the marketplace that most people don't think about reducing that friction. Meaning, how do you simplify the adoption process of things that are already there, already existing, and work within that framework? That's a hard thing to do, but the faster and better you do that, the easier you are able to drive pragmatic adoption in the market. That's pretty cool.

And the, the real fun part is, is because we've, We are commercialization experts. That's what our team does well is we know how to get on, how to work around the contract. So even if you have a 95% exclusivity agreement with a hospital with Medtronic, there's still exclusions within revision. That is our focus. That is our niche. That's where we can do the most global good as well. The revision rates are so high. So this is a little unknown secret that a lot of industry doesn't recognize is the revision market is so profound and you keep— your pricing is very high in those. I think traditionally it's about 17% off list. So if we are acquired, if and when we get acquired, if our list price is high, it could stabilize the overall market for— it can stabilize the market, the pricing market.

Alyssa, how many are on your team now?

We have about 15 total. Wow.

I'd like to make a prediction today, and that is that Tiger's going to help you recruit some talent in the not too distant future.

We've already talked, actually. Yeah.

How much have you raised so far?

So that's the fun part. We've only raised about $1.2 million. We just signed with US Capital Global, our first. And thanks to Colleen. Colleen provided some great feedback on them. We were having tough— it was challenging to raise money in the States. And so we have 2 investors over in India, and they're manufacturing manufacturers, so they will run, and they're also OEM, so they'll run India. We have— we're in talks with Australia, and then we will commercialize here in the US as well with our US manufacturers.

Lisa, you just raised your hand. Did you have something?

Yes, I wanted to ask a question regarding the people and the team in general. So my question was about how to keep the team motivated if we would explain, or I mean, you don't have to explain this to team, but everyone would understand if you would keep the approach that certain person is useful at just certain moment of the company. So how do you educate and keep your team so they would be motivated and they would not treat you as a job, but treat you as a startup and a part of your personal journey?

Yeah, there's a lot, there's a lot of experience here around this call and of everybody on that probably has a perspective on this. Um, so a few things here. One is, I think you always have to hire for attitude first. So you've got to hire for people that are, that would self-select for this kind of opportunity. Not necessarily looking for a job, but what they're doing and what you're doing is creating an opportunity for them to feel fulfillment, enrichment, that kind of thing. I think that that's a very important part of, of the mindset of somebody willing to take a startup risk, take the activity on that goes with that because they want to embrace that level of uncomfortableness. So you have to first make sure you're getting the right people around the table that have that kind of thing. Once you have that, I think, and you've got professionals, I think you, you've got to treat them as they're professionals. You've got to trust them for their judgment, trust them for their experience, and welcome their commitment and involvement in the startup and in the business. And what I will tell you, in, in my humble experience, that usually changes in two time points, right around 35 people and then right around 70 people. At those two number of employee groups, you have kind of a sea change in how you communicate and engage with people on grabbing a beer, having a casual conversation, going out for a cup of coffee, having dinner, that kind of thing. And then at about 70 and a little bit beyond, it gets, it gets to another level of difficulty. And then I think the next big one is around a couple hundred people. And I think the goal there is to really create— when you get to that level of scale, it's really about the communication hierarchy, always that cultural flow of information always being consistent through the organization. It gets harder because not everybody is an A-player. Not everybody is an effective communicator. So you get to those level of challenges that you have to then be more conscious of minding and managing. But Lisa, when you're really in the early stages, those first few critical hires will drive the mindset and the culture of the team. For months, if not years, and they become the lifeblood of the DNA. Even at 35 and 70 and 200 people, that DNA is still felt. So I would say that's where you really want to invest in and make sure you get the right people, you know, right there. Tiger, you probably have a hell of a lot more experience.

Yeah, a couple comments. So, you know, I talk to people every day and 95% or more are not, are not cut out for startups and they never will be. There's probably 3, 4% that, that are. And what I hear more and more nowadays is people are looking for meaning. You know, they're not trying to make a zillion dollars. They don't, they don't care about the hours. They don't even care where they, where they live. They want meaning, they want to build something, build something new and make a difference. I hear that all the time now. And so, and you want those evangelists inside your company because they're gonna push everybody else. Another thing you said is A-players. So people in a startup will only work as hard as the lowest common denominator. So once you have, yeah, Mark's nodding. Once you start hiring B people, everybody sees that the level goes down and it affects the performance everywhere. You have to get rid of the B people and the C people as fast as possible. And you've gotta upgrade, um, you know, if they, if somebody's getting away with, you know, 40 hours a week and they just don't care, that affects the whole organization. You can't have that.

I, you know, I try to tell people it's okay to have high expectations, but you can't be a jerk. Okay, that there's a difference there. We expect a lot of each other. We demand a lot of each other. We want to commit, but there's no place for assholes. And so you've got to also make sure that that really, because I mean, part of the challenge is so much of our industry has super intelligent people that have a lot of experience, but sometimes that comes with a chip on the shoulder or an edge, and you've got to either sharpen that edge out, knock that chip off, or get that person out of the boat. Because that is— that can be destructive to culture just as much as a B player.

Mauricio, I encourage you to share with the class. You've been sending notes around.

Yeah, I'm sorry. I thought it was easier. So I have two things. First, I wanted to share— I think Alyssa's market strategy— I don't know if you have read Nassim Taleb, but for me, the best way to grow a business is to look for long-tail market opportunities and grow from there. 'Cause those are the ones with the least friction. So if you find a niche where you can be strong and dominate it, it's always better. And I think what you said is just that. So I just wanted to, and also in terms of team, I mean, for my past years as a founder, it's all about leading by example. If the founder is not a AAA player, you can't expect AAA players. You can't leave early and expect your team to work late. So it's very important to, and you have, if you want your team to manage the details, you have to manage the details yourself.

Mark, I'd like to ask you, uh, I can only fathom how many opportunities are presented to you annually, and you've correctly identified humans as being the critical factor. How can you reasonably size up somebody's character and potential and the opportunities in a timely enough way, or, or to just given the volume with which you deal? How deeply can you get to know someone before you say, "No, you're worth my money"?

Yeah, you know, that's a great discussion path, Joe. I would say, so of the roughly 400 opportunities we look at every year, generally speaking, we do a deeper dive in probably 80 of them. Now that first screen of that is really, does it capture our imagination? To this point, Tiger, you made about meaning, Mauricio, Alyssa, you talked about this long tail. Does it, is it a different thought process and why? And that's what I use to frame capturing our imagination, right? Um, and then from there, generally speaking, I will always have at least one or two meaningful conversations. To get to know the people, the team, the opportunity, and understand how they think. I will tell you that what I look for are probably 3 main things. One is I really want to see a team that is intensely curious and that doesn't— that admits that they don't have all the answers, but they know what they're— they know what they're targeting. They know where they want to go. So it's this idea of we know what the problem is, they framed it, they know what they want to potentially solve, but they know that there are a bunch of open questions along the way that they want to get to, and they'll figure out how to navigate there. Now what I like about that is, is because it's not really intuitive, but there might be pivots and little answers in there that they are open to adapting to. And I see that happen a lot more frequently where people are, as they're on that journey, they have enough open questions that they're discovering something to pursue there. So they jump on that as potentially a better answer, better solution, whatever. That I really look for, that curiosity, um, with that combined focus. The other thing that I really look for is, are they chasing a product or a market, or have they figured out the market timing dynamic? Tiger, you really nailed this last week. A lot of people missed this. There are a lot of great market opportunity— opportunities out there, but there, it may not be the right time for whatever reason. And there are a lot of reasons. And generally it's complex. So I'm really looking for good alignment around the market timing factors. You know, does it appear that the clinicians recognize the unmet need? A lot of times they don't. A lot of times it might be so subversive that they've accepted whatever they're doing clinically and don't even see it. Okay, so what does that mean from an adoption and commercial model perspective? Sometimes, you know, market opportunities are big. What's it going to be to overtake the payers? What is the market? What are the market access considerations there? What are the health system considerations there? So we'll, we'll do a deep dive in trying to understand that. And then probably the other thing I'll look for is what I'll characterize as a humbleness in the team to know enough that they're not gonna compete and win. Against J&J, Stryker, Medtronic. But what they are going to do is create their unique competitive advantage, however they define it. And by the way, in my view, that's not IP. That's something else. And so a team that acknowledges that, understands it, and uses that to their advantage, which is usually speed, regulatory differentiation, market positioning, that, you know, all those nuances working together, that really can create an insightful dynamic. And if the team and the opportunity have a mix of all those factors to get beyond the initial couple conversations, then it gets very deep into alignment on, okay, what can we do together over what period of time and why?

And Mark is my go-to IP lawyer. I want to call on him. What did you hear from Mark and do you agree?

You know, um, competitive advantage is, is, is not just— I agree with, with, with Mark. I don't think competitive advantage is strictly one thing. It's not just your regulatory pathway, it's not just your IP, it's not anything. IP can help supplement all of those things that you decide. Um, but the, the clients that I've worked with that, that I've seen be successful and get through Series X It's, it's a mix of, of, of a lot of what has been described. Um, and depending on the, the, the risk and the scale, there'd be some commensurate investment in IP to establish that. So it's not always a one-size-fits-all, but, um, I tell some, uh, some physicians, some new inventors, you know, a patent isn't a business plan.

Nope.

Yeah, it's not. It's part of one. It can be helpful, but it's not a business plan in and of itself. You know, some people will laugh and be like, yeah, I got it, you know. And some people will kind of look, huh, you know. That's a filter, you know, in and of itself too, in some respects.

Craig, couldn't agree with you more, Greg.

What's that?

Sorry, couldn't agree with you more, Greg.

Are any questions, or should we just kind of go on? So Mark sent some talking points earlier. One is don't bet on the technology, bet on the market. Uh, you want to talk about size of the market, timing, how to create barriers?

Yeah, what your question is. Unless there's something pressing you want to add, Mark.

Well, the, the only thing about the 'don't bet on the technology, bet on the market' being a little provocative in the sense that if you believe enough in the conviction of the market, you'd want to invest in not just your own product, but you'd want to invest in your competitors. That's how you know you're on to something. And, and My brothers and I often will do that. We'll make multiple investments in the same market because the idea is not picking a horse to win the race, it's betting on the right race. And we know that that is— it's almost like a little bit of an interesting litmus test. If you're willing to invest in not only your business but your competitors, you really pressure tested, that you're not quote unquote in love with your idea just because it's your idea.

Interesting. So along those lines, where, where do you see the market going? I mean, it's a, it's an open question, but, you know, we're, we're seeing there's spine motion that's starting to happen for, for the first time ever. There's, uh There's navigation, imaging technology just everywhere. There's— everybody is talking about AI. Very few people are doing AI. I mean, where are things going?

I mean, there's a lot of emphasis around the concept of enabling technologies and this idea of more procedural or holistic solutions around that. Honestly, I'm not sure I believe that. What I tend to really look for and what I like is thinking about where things are going to be 5 years from now. And when I'm there, ideas like Canary Medical seem really interesting. Because they really have the opportunity to change the algorithm of care based on really well-informed data sets. Now, um, when I look at this idea of brain-computer interface, imagine applying those types of concepts to orthopedic principles. Not smart implants, something beyond that, something where you're actually able to change a patient's biomechanical or physiological response to something, not just support it or augment it or send data out to the cloud to interpret, but where you're actually correcting real-time, um, you know, sagittal alignment in the spine or gait pattern in the knee or ankle, you know, tibia interaction. I mean, I think that's— and it's— this sounds all hokey, but I really think that that's, that's where we're going to be talking 5 years from now.

Alissa, I called on you first. Do you want to share what you had in mind?

So this is a question about valuation. So I had spoken with a few CEOs and they said, whatever you do, do not become profitable because the second you become profitable, your valuation is going to be based on that. And what are your—

That's great. I've never heard that before. That's really Funny and smart.

Yeah, I mean, I've heard conflicting, but I mean, this was kind of an overall overarching, from the big, big guys.

Yeah, I mean, I have two— I have a conflict on that statement. The first thing I'll say is it depends on the market and the product and what you're trying to do from a business value standpoint. I understand that thinking, but I think it's absolutely nuts in the sense that at the end of the day, you have to be able to prove whatever business model you're trying to create. And that ultimately, you know, there's two factors there that drive value expectations in medical technology. One is revenue growth percentage. You know, what is the rate of change of revenue growth and is it accelerating? And number two is what is your gross margin? Now, the reason why those two things become important is because Stryker and J&J and Medtronic and all these big companies, they're going to add in, they're going to wipe out your infrastructure and assume their own EBITDA contribution margin. And if your gross margin is 80% or higher and your revenue growth is is 30% or higher and they can take those two things to scale, that you're going to get a premium value for that. So I understand that. But at the end of the day, we're living through a financing environment extinction event right now. There are not a lot of companies that are going to survive this. And so this idea of, well, just fund until the wheels come off, and do that. I, you know, I can't do that. Maybe others can. I just feel some moral sense of obligation to do the best that I can for the investors in a way that, that makes sense. But look, I'll be the first one to admit Spine Biopharma, this company that I'm running, we're in Phase 3 clinical trials right now. We're not selling a product. So all we are is pure cash burn. But I'm trying to do everything that I can to be appropriate to that cash burn. Right. So that's where, that's where the tension is.

Mark, maybe I missed it. What did you say was a financial extinction event?

All the capital markets right now for venture finance startups is right now a capital markets extinction.

Well, I know it's precarious, but why? What makes you say that this is the beginning of Armageddon?

Oh, I think we're deep in it right now and we don't— a lot of people don't see it. If you look at the cash that's on the balance sheets, the ability for liquidity to free up the investment cycle horizons of these VC funds, A lot of these historical VC funds are late in their vintage investment cycle and their LPs are telling them that they're not going to pony up again. So if they run out of capital, the secondary markets dry up. It becomes really painful, really fast. And the problem with right now is there's a lot of smoke and a lot of cloud cover. You will not see the cliff. It will come fast.

Just look at, yeah, look at Avail MedSystems last week.

Yeah.

They raised $200 million. They were, you know, they were a darling of COVID and they just literally evaporated out of thin air because there's, there's no money. I mean, the VCs have got other, they have other properties to fund. They, they backed out.

Yeah, I think, I think you have two things converging. I think the VCs have gotten less risky, less risk positive, if you will, in the early stages of capital. I think the structured credit has become too expensive for them to lever their balance sheets. And then in the middle, you've got growth equity and private equity. Growth equity only wants to fund revenue-generating startups with an EBITDA horizon that is targeted and manageable. Private equity is only EBITDA positive. The two investors that you don't want to have leverage on you are growth equity and private equity. Because of their business philosophies of how they do things.

About let's see the revenue now or as soon as possible.

I mean, well, you've got to get to— if you're a Class 2 company selling, you've got to get to profitability just to survive probably the next 18 months. You know, it's a survival tactic. You can control your destiny if you can just get to break even right now.

Totally agree. I'm sorry, I don't mean to be the bearer of bad news, and I could be entirely wrong about this, but I think if you are not actively looking at cash runway right now, you're in trouble.

You've got to be the bearer of honesty and insight. Whether it's good or bad. Before I ask Lisa to share, I couldn't help but look her up on LinkedIn, and I'm hitting send here, um, in chat. This is her website. Um, I, I'd like to know a little bit about it, but also, as a marketer, I have to congratulate you or whomever put the site together, because when I scroll down and I see these testimonials, the way they're laid out They just add so much credibility right away. Of course, I've not watched them, but could you tell us just a little bit, Lisa, about your company and then your question?

Oh yeah, sure. So, um, my co-founder, um, probably is, uh, well, if I know correctly, Mark's story is that, uh, you were inspired by tragic accident that happened a long time ago. So, uh, my co-founder was also recovering after the trauma, and that's how he came up with this idea. And so we started this company together 3 years ago, like as a startup.

And what is the value proposition?

Um, so we're doing, um, smart adjustment to crutches that helps people to follow weight-bearing protocols. And we conducted 3 clinical trials already and going through extra clinical trial now to prove that we can save money on non-union, which in a couple of diagnoses is up to 12%. So in 12%, the bone doesn't get together, in simple words, and it would cause up to $85,000 loss to the insurance company. So now we're negotiating with two major insurances to do this pilot to prove that actually we would reduce this cost. Because theoretically we can, but practically we have to prove it with our devices. Meanwhile, we made pilots with Hospital of Special Surgery and NYU Langone to prove that our device actually helps people to follow partial weight-bearing protocols. Because usually how it goes, like, after traumas, PT says, okay, um, imagine stepping on an egg without cracking it. Or better, like, okay, now you have to load your leg 20% of your body weight. How much is that? So they said, okay, just buy a scale, step to it, remember how painful it is, and walk like this. So, um, in our experience, we noticed that some surgeons are just prioritizing the security of the construction over the speed of the recovery or quality of the recovery. And just prescribe non-weight-bearing for like 6 weeks or 8 weeks while it is possible to walk already and it's possible to speed up the recovery. Uh, but my question is like, I was listening to these 3 factors. So the team, which is constantly curious, I think, I think we comply with that. I also think that, uh, because we started talking to a couple of companies like Medtronic— not Medtronic, but Invasive and Lima— saying that, okay, now insurance companies are moving to bundle packages, so we can help you to sell because our product would secure your work and there would be no need to reoperation in case you partner with us. But my question is about market dynamic, I guess, because what we notice is when we are talking to top-tier hospitals they're super curious and they're very open to launch a pilot because they just have an ambition to be the best in the industry. However, when we're trying to scale it, when we go to some, let's say, not so popular hospitals and trying to sell to them, we noticed that even though they say that they're very interested in the solution, they just don't care enough to implement this unless they have some pressure from the insurance company. Um, does it mean that the market like is not ready yet, or that we just should really push through market leaders to affect the opinion of this like secondary hospitals?

Well, Lisa, I would, I would ask you this question as a, as a, as another way to frame it. The way you've described it, you framed your customer as the physician and the patient. Where do you think the workers' comp payer is in this dynamic, or the employer-funded plan is in this dynamic? Because if you really think about the expense and the burden of a non-union, Lisa, who is the real customer there? It's the payer who doesn't want to pay for the risk of that becoming a non-union. That could be a workers' comp claim, or it could be an employer-funded plan that, for example, the United Auto Workers Union or some other large payer where the activity level of a non-union really becomes destructive to the workforce. Baggage claim handlers at DFW Airport, for example. So I would say, Lisa, when you think about market timing and market readiness, don't look at scale at the customer level. Look at scale at the access level. That's where I would see there could be some real opportunity.

Thank you, that makes sense. Yes, we were, uh, targeting workers' compensation, but, uh, more with the idea of, um, decreasing the time for rehabilitation rather than preventing non-union, because other half of non-unions happens due to infection, which we have nothing to to do is like, we cannot help.

Um, because I think, I think what'll happen is if workers' comp gets on board with this, or employer-funded plans get on board with this, the second-tier trauma centers that you're talking about will automatically— because they're, they're resistant because they don't— the friction is on the access side, not on the treatment side. So you, you remove that restriction on the access side and you've created a path to scale, I think, at the customer level because they will be easy for them to adopt. I'm sorry, I don't mean to hog the conversation here, but just some thoughts for you, Lisa, to consider. Thank you.

Mark, with your permission, I'll share your email address with those on the call.

Absolutely.

Yeah. Um, I bet at a minimum, uh, Alyssa has some updates versus when you last spoke with her, and, uh, I'd love to make connections wherever possible. Please. So there's that.

So this— Joe has received zero remuneration for anything.

Oh no, no, I fully expect to have 10% of your future earnings for any and all introductions I facilitate. If that was unclear, let me correct that now.

I, I think The walk sign just illuminated at the right time right behind you, Joe.

You know what? Was it you last week who said, why is it don't walk?

No, no, I wasn't ready.

Somebody did. And I never opened it before. And I opened it and I saw, well, this bulb was dimmer than that bulb. And I just didn't want any confusion. So I unscrewed the good bulb and put it in the walk. So I—

There we go.

—perceived as a positive person as opposed to who I really am.

So let me, let's, I want to revisit friction because this has come up a few times where to be successful you have to reduce friction downstream. I talk to a lot of startups and they're great at the technology side and the regulatory approval and they get their first few surgeons and then they hit the wall where they've, how do I, how do I sell across the country? They don't, They underestimate how much money and time it takes to build a sales force for an entire country. And the second thing is they try to compete against the big guys in the same game. They try to literally just, you know, I've got one rep in Atlanta and Stryker's got 20 reps. They have no chance. So they have to think about the, I think, the distribution and sales differently. But they don't. It's an afterthought.

Look, to me, the hardest thing in the world is to get beyond your initial core customer base of early adopters, early innovators, that kind of thing, and get to the early majority. You cross that chasm, and crossing that chasm to me has really two things that drive that? Are you aligned with the practice pattern of the day-to-day customer? And that looks at everything. That looks at how does that physician schedule their cases? How do they work through the reimbursement dynamics with the payer? What are the reimbursement dynamics? What are the payment rates? What are all those sorts of things? And that unfortunately happens regionally and locally, not nationally. Florida is different than California and it's different than Texas and it's different than Chicago. So you've got to understand those nuances. And to me, if you can't make that simple, you will always struggle. So this idea of trying to, um, align with the practice pattern and keep it simple as you're going, um, that's the real art of great sales teams. Really great sales teams know how to do that well, and the sales leaders have a lot of experience. They've seen that ball get fumbled all the time, and they're able to understand how to use that and shape it going forward from where they want, wherever your business or product strategy is. I think that's— I would say you have to look for that trait. I'm sorry, Alyssa, please go ahead.

No, I think that that's a really good point because a lot of times I see a lot of technology out there But what the biggest miss is, is the person, the lowest person on the totem pole within the office or the OR can catastrophically make a failure. And so, for example, when we first launched custom navigation cutting blocks, the techs hated it and they made it so miserable for the physician that they only did it on the worst of the worst cases. And that's, and that's what's, what I think gets lost in translation and the amount of time it takes all this IT stuff to get implemented into a hospital, 2 years minimum. That's from the moment you start talking about it. And is it reimbursable? No, none of it is for a majority of the rule. None of it's reimbursable. So you're looking at a capital expense with no reimbursement and it's just marketing. So all this money that's just going into computer navigation and AI, we might see something back in a decade, maybe.

Alyssa, I couldn't agree with you more. I, it used to be fun because if a doctor or a surgeon loved the product, you were going to get utilization. Now there's 15 people in that doctor's ecosystem that matter to whether or not that doctor ultimately adopts it. And there's all these other business parameters that matter in terms of the referral pattern, the integration pattern, all these other things. If you have not mapped that out, you're doing yourself a disservice because that's where the real gem of scale execution happens.

I think I know I speak for Tiger. Um, when I say I'm really grateful that all of you joined, uh, for perspective, last week we had 11 on the call, this week 30. Um, so if you are a person of a certain age, you may remember the Fabergé organic shampoo where I told 2 friends and they told 2 friends and so on and so on and so on. Please invite your networks to join us. 2 is We invite you to contact Tiger directly if you would like to recommend a talk topic or perhaps nominate yourselves as a future featured guest and help us lead a conversation. It can be of anything that's relevant, or perhaps a functional expertise like Greg and Andrea. I'd love for you to at some point team up on a patent detective slash IP presentation and Of course, we have some mutual friends over in MDG Premium that we can call on as well. And last, just a reminder that this is a paid subscription service, and we ask that for those of you who have not yet begun your free month with us to go ahead and do that. If you have any questions about that, or we can send out an email to you again with that proper link. Tiger, bring us home.

Oh, perfect. This has been a great topic, and, um, I got a feeling we'll do part 2 in the future at some point. But, uh, yeah, thanks for everybody. And this is, uh, I'd like to close by saying this is our community, and so this is not mine, this is ours. So if anybody has needs or suggestions, just, you know, email me. I'm the easiest person to find in the world. Send me a note and we'll try to change the network so it's more valuable for everybody. All right, this time next week, this same time next week, every week. See you then, everyone.

Thanks for getting to know us.

All right, thanks, Mark. Thanks, Mark.

Thank you, gentlemen and ladies.