Leading Innovation into the Future: A Fireside Chat with Paul LaViolette - Transcript

[Bryan Gilpin] 12:03:49
For those who are new to MassMEDIC, um. MassMEDIC is the largest regional medtech organization.

[Bryan Gilpin] 12:03:54
Uh, connecting large strategic startup investors and the many partners who make this ecosystem thrive.

[Bryan Gilpin] 12:04:00
And for those who don't know, Suntra MedTech Solutions.

[Bryan Gilpin] 12:04:03
We're a company that provides consulting, engineering, and innovation services to many of the pioneers in our industry.

[Bryan Gilpin] 12:04:11
And then on to… Paul. Uh, Paul, You don't need an introduction, but… I'm gonna do it anyway. Uh, so Paul is someone who has truly helped shape the med tech industry. He's the CEO and co-.

[Bryan Gilpin] 12:04:25
co-chairman of Pulse Biosciences. managing partner at SV Health Investors.

[Bryan Gilpin] 12:04:31
and former Chief Operating Officer at Boston Scientific. And Paul, if you don't mind, for those who don't know you, it is worthwhile for me just to read through your bio, because you cover so much ground.

[Bryan Gilpin] 12:04:43
Um, and so much of our world. Um, so, Paul's been at SV since 2009.

[Bryan Gilpin] 12:04:50
Um, and prior to SV, Paul built and ran medical device businesses for 29 years.

[Bryan Gilpin] 12:04:56
And most recently, um, was the COO of Boston Scientific.

[Bryan Gilpin] 12:05:01
Um, that's where he and I, uh, met. Um, during his 15 years at Boston Scientific, Paul served as the Chief Operating Officer.

[Bryan Gilpin] 12:05:09
Group president, endo-surgery and president, um, I'm sorry, uh, group president and cardiovascular.

[Bryan Gilpin] 12:05:16
president of cardiology, group president in the Surgery, and president international.

[Bryan Gilpin] 12:05:21
Paul integrated two dozen acquisitions and led extensive product development, manufacturing, and worldwide commercial organizations.

[Bryan Gilpin] 12:05:30
Previously, Paul held marketing and general management positions at CR Bard and various marketing roles at Kendall.

[Bryan Gilpin] 12:05:36
Which is now part of Medtronic. And outside of SV, Paul does a lot in our.

[Bryan Gilpin] 12:05:42
community as well. He serves on the board of Edwards Life Sciences.

[Bryan Gilpin] 12:05:47
Um, and also the medical device manufacturers Association. and is chairman of the Innovation Growth Board at the Mass General Brigham Health System.

[Bryan Gilpin] 12:05:56
And in addition, Paul serves on the board of Vibrato Medical as a director, and he also served on the board of Advamed for 10 years.

[Bryan Gilpin] 12:06:04
And many of you know him from his very speaking and conference engagements as well.

[Bryan Gilpin] 12:06:09
So, Paul, I don't know how you do it.

[Bryan Gilpin] 12:06:12
Um.

[Paul Laviolette] 12:06:13
just fear of failure, Brian. Just keep showing up, man.

[Bryan Gilpin] 12:06:18
I appreciate that, and I'll add that I'm personally thrilled, Paul, to be here with you.

[Bryan Gilpin] 12:06:23
Um, we spent some days at Boston Scientific. You're an inspiration to me and so many of the others.

[Bryan Gilpin] 12:06:29
Um, and I'm grateful to have you here today, and that you're able to join us.

[Paul Laviolette] 12:06:33
Well, I'm honored to be here. MassMEDIC's obviously core to so much that's going on for decades here. Where I sit at an innovative company in Massachusetts, so… Yeah, I'm thrilled to be a part of this.

[Bryan Gilpin] 12:06:47
Great. Okay, so, uh, over the next 45 minutes or so, so, uh, we'll focus the conversation on a topic.

[Bryan Gilpin] 12:06:54
Paul, that I know you know very well, MedTech Innovation.

[Bryan Gilpin] 12:06:58
And we'll dive into a whole realm of innovation, where it's headed, how it happens inside different organizations.

[Bryan Gilpin] 12:07:05
of how investors are thinking about things like emerging technologies.

[Bryan Gilpin] 12:07:09
And then what leadership lessons, um, can stand the test of time that you've seen throughout your career?

[Bryan Gilpin] 12:07:16
Um, and again, we'll try to leave a little bit of time for Q&A at the end.

[Bryan Gilpin] 12:07:19
All right? So, let's dive in. Um, alright, so Paul, I want to start by… going back to your time as COO at Boston Scientific.

[Bryan Gilpin] 12:07:30
Um, you and I were there during a period of tremendous growth and transformation for the company.

[Bryan Gilpin] 12:07:35
Between the years of 1994 and 2008. The company grew revenue over 20 times.

[Bryan Gilpin] 12:07:42
It was, uh, just a gangbusters… gangbuster years. Um, and it was achieved through a combination of organic growth.

[Bryan Gilpin] 12:07:50
International expansion, and lots of acquisitions. Um, now, what's interesting there, so, being in that environment, looking back, a lot of companies are investing heavily in.

[Bryan Gilpin] 12:08:01
minimally invasive surgery. Boston Scientific wasn't the only one.

[Bryan Gilpin] 12:08:06
And a lot of the other companies can make the same acquisitions that Boston Scientific made.

[Bryan Gilpin] 12:08:12
Um, but what was it that you see that made Boston Scientific uniquely successful?

[Bryan Gilpin] 12:08:18
What did Boston Scientific do that the other companies did not?

[Paul Laviolette] 12:08:22
Yeah, it's a great question. There were some great companies, and many companies actually back in those days, and I think back to those days, Medtronic was established.

[Paul Laviolette] 12:08:32
But bigger. Uh, guidance was… just a baby. We had St. Jude Medical, Stryker. There were a lot of companies.

[Paul Laviolette] 12:08:39
I would say in the same, uh, stage of growth.

[Paul Laviolette] 12:08:43
And so, the difference was Boston was actually younger. Boston was a relatively new company brought together by, as you know, John Abley and Pete Nicholas.

[Paul Laviolette] 12:08:52
Um, and they were… they really were focused exclusively on minimally invasive procedures, and we think today about cardiovascular kind of leading the world.

[Paul Laviolette] 12:09:03
Back in those days, really, Boston did not have a cardiology franchise to speak of, and so if I think about the innovative patterns that Boston was following.

[Paul Laviolette] 12:09:12
It was really in the endoscopy business, the urology business, the peripheral, vascular, and interventional radiology businesses.

[Paul Laviolette] 12:09:19
Where Boston really did innovate almost everything from scratch.

[Paul Laviolette] 12:09:24
and created the whole concept of just taking catheter or device or cannula.

[Paul Laviolette] 12:09:32
uh, based interventional technologies and driving the potential for new therapies. So.

[Paul Laviolette] 12:09:39
It was really the minimally invasive approach, it was really catheter-based.

[Paul Laviolette] 12:09:43
And trying to find a way to, uh, innovate with.

[Paul Laviolette] 12:09:48
Um, miniaturization with new materials, with micro-machining. Technologies today, frankly, that we would look at and think they were, you know, quite unsophisticated.

[Paul Laviolette] 12:09:58
Um, I'd say the second thing was that Boston was never about.

[Paul Laviolette] 12:10:05
Um, selfishness or about not invented here. A lot of companies struggle.

[Paul Laviolette] 12:10:10
with the balance between internal and external innovation. Because they get good at something, and they want to drive that, and then they become possessive of their own sense of worth, if you will, built on, well, this is how we do things.

[Paul Laviolette] 12:10:27
Boston was never that way. Boston was always willing to embrace the idea.

[Paul Laviolette] 12:10:32
that someone else may have a better answer than we do. We should be totally open.

[Paul Laviolette] 12:10:38
We… we don't have all the good ideas. And so, if somebody else has something that makes sense, and we can add to it, and we can speed it up, and we can put it in our commercial channel.

[Paul Laviolette] 12:10:49
And we can add synergies and take that idea of an innovation and move it across our platforms.

[Paul Laviolette] 12:10:55
then let's go ahead and buy it, and let's build it.

[Paul Laviolette] 12:10:59
build it into our fabric. And I think Boston uniquely did that.

[Paul Laviolette] 12:11:04
Uh, in a selfless way. uh, better than its peers at that time.

[Bryan Gilpin] 12:11:11
Yeah, fantastic. And it was interesting during that time, I think from a lot of outsiders, uh.

[Bryan Gilpin] 12:11:18
If you looked at the growth as being so acquisition.

[Bryan Gilpin] 12:11:21
focused. Um, how did you think about innovation. during that period, would you say it was primarily focused on acquisition, or… Did we continue that internal development? Was it some combination? How did you think about that?

[Paul Laviolette] 12:11:39
Well, it was a combination, and I would say, just as I mentioned, when you think about.

[Paul Laviolette] 12:11:44
the endo-surgery businesses, you think about, let's say, the cardiology business. As I mentioned, we didn't really have a cardiology business.

[Paul Laviolette] 12:11:52
Um, we had a tiny, uh, I'll call it franchise, uh.

[Paul Laviolette] 12:11:57
called Mansfield, which had one balloon catheter. That was about it, and an early, believe it or not.

[Paul Laviolette] 12:12:03
Back in the early 1990s, we also had an interventional imaging platform.

[Paul Laviolette] 12:12:10
one of the earliest IVIS platforms. That was about it.

[Paul Laviolette] 12:12:13
Um, so if you look and say, well, were we, uh, just doing M&A.

[Paul Laviolette] 12:12:19
The answer is no. Actually, there were no… there were no urology companies to buy, there were no endoscopy companies to buy.

[Paul Laviolette] 12:12:25
And you look at the power of that GI franchise today.

[Paul Laviolette] 12:12:29
That was vastly created through internal, continuous innovation. And that, I think, demonstrates Boston Scientific's absolute, undeniable capacity to innovate.

[Paul Laviolette] 12:12:40
At the same time, cardiology was an emerging, uh, fast-growth area, and Boston really didn't have a franchise, so… Uh, in some ways, it's almost, um… It's almost an understatement to say.

[Paul Laviolette] 12:12:55
Uh, you know, that we acquired, because the first, the seminal acquisition, uh, in that period was the SciMed deal.

[Paul Laviolette] 12:13:03
Uh, which was done in 1995, and SciMed was nearly the same size as Boston. SciMed was all cardiology.

[Paul Laviolette] 12:13:12
had elegant catheter systems, a great management team. And, uh, that was effectively a merger of equals.

[Paul Laviolette] 12:13:21
Not exactly equal, but kind of, you know, 60-40 combination. And then that company.

[Paul Laviolette] 12:13:28
Uh, as a combined entity really exploded in growth.

[Paul Laviolette] 12:13:31
And so, I think what people have to realize is Boston wasn't just doing tuck-in deals to add a product.

[Paul Laviolette] 12:13:39
It was really transforming itself. It was really bedding the ranch on the need to scale.

[Paul Laviolette] 12:13:45
the need to expand, uh, technologies and management capabilities.

[Paul Laviolette] 12:13:49
And, uh, the boldness of those moves, if you think about it on a relative basis.

[Paul Laviolette] 12:13:55
Uh, for a company to acquire another company that was equal to.

[Paul Laviolette] 12:14:02
Uh, 60% its size. how many things can go wrong? How often do that… do companies bet that boldly?

[Paul Laviolette] 12:14:09
It puts it in perspective that this is not a Boston buying an Axonics, this is not a Boston buying a Nalu.

[Paul Laviolette] 12:14:14
This was… this was a Bet the Farm, reconstruct Yourself, put yourself into entirely new markets.

[Paul Laviolette] 12:14:23
remake the whole management team. Um, and go with the best of breed. And I think that… I think Boston deserves credit for having really… We've been much bigger at risk-taking than you see.

[Paul Laviolette] 12:14:35
Today, in any… in any capacity.

[Bryan Gilpin] 12:14:38
Yeah, so I, uh, I like that a lot.

[Bryan Gilpin] 12:14:42
brings me back to some of the things that we're doing at the time.

[Bryan Gilpin] 12:14:45
very bold. Um, and they felt that way. It was exciting, for sure.

[Bryan Gilpin] 12:14:49
In your role, you had the unenviable task of trying to balance the boldness and the risk-taking, while also trying to scale an operation and scaling distribution and sales and so forth.

[Bryan Gilpin] 12:15:02
How did you balance the boldness, the risk-taking, with the operational discipline?

[Bryan Gilpin] 12:15:07
that was needed.

[Paul Laviolette] 12:15:09
Well, it's a great… it's a great question, and the first thing I would say is, listen, there were a lot of fantastic people at the company.

[Paul Laviolette] 12:15:16
Pete and John were there, Pete was, of course, the CEO. We had a management team, especially after the merger with, um.

[Paul Laviolette] 12:15:25
SciMed that included people like. Mike Berman and Jim Corbett, Dan Cole.

[Paul Laviolette] 12:15:30
Uh, so, when that team came together, it… we had a number of, I think, skilled operators.

[Paul Laviolette] 12:15:36
And, um, you know, something really important to observe. Boston was a couple hundred million dollar company.

[Paul Laviolette] 12:15:44
SciMed was a couple hundred million dollar company. We started to do tuck-in acquisitions after that.

[Paul Laviolette] 12:15:49
of, uh, specialty franchises that we thought would give us an important phrase.

[Paul Laviolette] 12:15:55
uh, strategic mass. in, uh, in building out, uh, our product, uh, portfolio. Larry Best was the CFO, and really the architect of the M&A.

[Paul Laviolette] 12:16:07
strategy. And so, we realized at that time. that this was not a $5 billion company adding.

[Paul Laviolette] 12:16:16
$50 million franchises. There was no infrastructure. We did not have a global.

[Paul Laviolette] 12:16:22
ERP system, or an operating system. We did not have a global quality system.

[Paul Laviolette] 12:16:27
We were really small companies coming together. Absent a core. And we were trying, at that point, to build a core.

[Paul Laviolette] 12:16:38
a chassis to build the company onto. that did not exist, right? Because Boston was early in its, uh, growth, it was scaling rapidly.

[Paul Laviolette] 12:16:47
It had not had a chance at that point to really build out all of the business processes and the operating systems necessary.

[Paul Laviolette] 12:16:56
Upon which today you would do bolt-ons. Well, you can't… what are you bolting on to?

[Paul Laviolette] 12:17:01
Um, and so, it was a combination of, uh, exactly what you described. Move as quickly as possible to add.

[Paul Laviolette] 12:17:09
new technologies and add market leadership capability in our, um.

[Paul Laviolette] 12:17:14
described, you know, market segments. But at the same time, build the company out.

[Paul Laviolette] 12:17:19
So I was very consciously done. Uh, of course, it was fits and starts. We didn't always get it right. Sometimes we realized we were really lagging behind.

[Paul Laviolette] 12:17:29
How do you merge customer systems? How do you, you know, today we drive by the Quincy facility.

[Paul Laviolette] 12:17:35
Uh, which is, of course, the very large distribution center. Well, that didn't exist. We didn't have global distribution, global customer service.

[Paul Laviolette] 12:17:43
Um, global order entry. We didn't have any of those things.

[Paul Laviolette] 12:17:46
And so all of those had to be built in parallel.

[Paul Laviolette] 12:17:50
while we were doing M&A and adding new technology companies that themselves were brand new to the business.

[Paul Laviolette] 12:17:57
And we're coming in. And it's a question of, well, what are they coming into? Do we have.

[Paul Laviolette] 12:18:02
Do we have the receivers on the receiving end? And we had to build out all of those receivers in real time.

[Bryan Gilpin] 12:18:09
Yeah, that's good. And good to look back. I love the Quincy reference, because whenever I drive.

[Bryan Gilpin] 12:18:17
buy on Route 93, and… and drive by that building, and look over fondly at the big Boston scientific name on the sign of a very shiny building.

[Bryan Gilpin] 12:18:25
Boy, that's not the way it was.

[Paul Laviolette] 12:18:25
Well, it used to be if… when we bought it, it was a furniture warehouse, just to put it in perspective, and we bought it because it was so close to the airport.

[Paul Laviolette] 12:18:34
And what we really were trying to drive was the ability to ship customers in California overnight.

[Paul Laviolette] 12:18:40
And in order to ship… take an order on the phone, right, you didn't have electronic ordering.

[Paul Laviolette] 12:18:45
In order to take an order on the phone from California as late as possible in the day on the East Coast.

[Paul Laviolette] 12:18:50
Load that product in the warehouse and put it on a plane and get it to California overnight so that.

[Paul Laviolette] 12:18:56
customer could have a product, uh, on the shelf by 10 o'clock the next morning.

[Paul Laviolette] 12:19:01
We had to have the ability to pick and pack and ship product.

[Paul Laviolette] 12:19:05
as close to the airport as possible, and so the Quincy Warehouse location gave us that proximity and allowed us to keep our.

[Paul Laviolette] 12:19:12
customer service line open until 6 p.m. Pacific. 9 p.m. Eastern, get that product picked. If a customer ordered the product at.

[Paul Laviolette] 12:19:22
One minute before 9 o'clock. We could still get it on a FedEx plane, and to them by the next morning, and that's why the… that's how the whole, uh, distribution system was designed.

[Bryan Gilpin] 12:19:34
That's great. And it worked, uh, fantastically. I can't tell you the number of people who said.

[Bryan Gilpin] 12:19:40
what the hell are you doing with the distribution center in Boston?

[Bryan Gilpin] 12:19:43
should be in Memphis. Right, right.

[Paul Laviolette] 12:19:44
Well, that was when we had a lot of manufacturing in Boston as well, and so as you distribute your plant network around the country and around the world.

[Paul Laviolette] 12:19:52
having a global hub in Boston is not necessarily the end design, but at that time.

[Paul Laviolette] 12:20:00
It was a great way to aggregate. uh, supply chains flowing from our plants into one hub and adjacent to… not immediately, but close to headquarters.

[Paul Laviolette] 12:20:11
Um, and then, again, with that overnight capability. So that served a great purpose, but.

[Paul Laviolette] 12:20:16
As in so many things, the sophistication and scale of the business has.

[Paul Laviolette] 12:20:20
has outgrown that core strategy, but I understand it's still an important part of their supply chain.

[Bryan Gilpin] 12:20:27
So, Paul, looking back, um, if you were building Boston Scientific today.

[Bryan Gilpin] 12:20:32
Anything you would do differently?

[Paul Laviolette] 12:20:35
Well, first of all, the team running Boston Scientific today has done so magnificently well that it would be impossible to say they should do anything else.

[Paul Laviolette] 12:20:43
Um, listen, hindsight is, uh, is, is clear. Um, I would say, yeah, there are a million things.

[Paul Laviolette] 12:20:51
people always say, well, have no regrets. I regret every, uh, thing that wasn't done perfectly, or every opportunity that was missed, and so… Do I look at a technology that could have been acquired, um, and it's the same thing as a venture capitalist. You look at the deals that you pass on.

[Paul Laviolette] 12:21:10
someone else does them 5 years later, they become a winner, and you ask yourself, what did I miss at that time?

[Paul Laviolette] 12:21:16
The same thing is true on the other end of the spectrum. You do a deal that you think was going to work out, and then it runs into a risk and ends up not working out, and you say, geez, what could I have done differently? So, I think all of us.

[Paul Laviolette] 12:21:29
should always, uh, and every day we wake up and we should ask that very same question, Brian, what should we have done differently? What could we have done differently?

[Paul Laviolette] 12:21:38
Could Boston Scientific… where would Boston Scientific be today in the cath lab if they had bought Shockwave? Well, they could have bought Shockwave, you know, maybe 5 years ago.

[Paul Laviolette] 12:21:46
You could say the same thing about many things, but… But how can you look at their performance and say that it's been anything other than spectacular? And nobody can hit on everything, so… In… I have two answers. Um, you know, as an operator, yes, there are 100 things I regret, and that falls halfway into those things.

[Paul Laviolette] 12:22:05
that we should have done, that we did not, and those things that we shouldn't have done, uh, that we did.

[Paul Laviolette] 12:22:11
At the same time, at the 30,000 foot level, you look at it and say, hey, listen, you can't complain, you can't get everything right, you built a fantastic business, you've had extraordinary.

[Paul Laviolette] 12:22:20
shareholder returns, and um… And it's not a straight trajectory, right? There's lumpiness, there are things that go wrong along the way, but in the aggregate, that team has done a brilliant job, and as I look at, you know, when I left in 2008.

[Paul Laviolette] 12:22:35
Uh, it was also a spectacular run, so no regrets.

[Bryan Gilpin] 12:22:40
Yeah, good. Okay. Uh, let's shift to your role at SV Health Investors.

[Bryan Gilpin] 12:22:45
So you went from operating. on the inside, one of the biggest med tech companies, um.

[Bryan Gilpin] 12:22:52
to funding and guiding the next generation of innovators.

[Bryan Gilpin] 12:22:55
Um, and in this role, you've led the… the firm, or been a part of the leadership of the firm through the recessions in 2008 and through COVID, and into today's kind of unusual environment.

[Bryan Gilpin] 12:23:08
Um, how have you seen the role, approach, and strategy of venture capital evolve?

[Bryan Gilpin] 12:23:13
During that time.

[Paul Laviolette] 12:23:15
Well, it's evolved a lot. Venture… you know, if you think about venture capital, venture capital as a… as a financial sector, as a practice.

[Paul Laviolette] 12:23:25
Um, is not that old, so if you then say, how has it changed over a 20-year period.

[Paul Laviolette] 12:23:31
Well, 20 years might be half the life. of the field of venture capital, so it's changed a lot.

[Paul Laviolette] 12:23:37
Um, SV is exclusively a healthcare investor. Medtech is part of.

[Paul Laviolette] 12:23:43
what's invested, but we also invest in biotechnology and in healthcare services.

[Paul Laviolette] 12:23:48
I think that's a really important distinction, because med tech.

[Paul Laviolette] 12:23:51
has its own patterns as a venture and investment field.

[Paul Laviolette] 12:23:56
And then when you layer in the comment you made about either the 2008 recession or.

[Paul Laviolette] 12:24:01
you know, the financial collapse, really. or the, uh, aftermath of the pandemic.

[Paul Laviolette] 12:24:08
Those are difficult times that… that stress investment. themes and investment vehicles.

[Paul Laviolette] 12:24:16
And so, then you have to step back and say, okay, well, how do you get through those? So, first of all, MedTech.

[Paul Laviolette] 12:24:21
has been in favor some years, and not in favor in other years, as a function of, is the IPO market open or closed?

[Paul Laviolette] 12:24:30
Um, has there been strategic consolidation? When a Boston acquires a guidant, you lose a buyer.

[Paul Laviolette] 12:24:37
When, um, a… an abbot buys a St. Jude, you lose a buyer. When a Becton… Atkinson buys a barred, you lose a buyer. And so, we've seen macro consolidation in our space that's reduced the number of buyers, there aren't that many buyers.

[Paul Laviolette] 12:24:52
In med tech relative to. What we see, let's say, in biotech. And when you compound that with the opening or the closing of the IPO window for our sector.

[Paul Laviolette] 12:25:03
you end up with, uh… periods where you can have dry spells.

[Paul Laviolette] 12:25:08
Uh, for exit activity. And that creates, uh, an upstream problem, right? Because you have investors who look at that and say, well, how do I… if I put my money in in 2010, how do I get my money out by 2000…

[Paul Laviolette] 12:25:23
15 or 17, and if you see consolidation of buyers, if you see.

[Paul Laviolette] 12:25:28
Limited IPO opportunities. it becomes a more challenging thesis.

[Paul Laviolette] 12:25:34
Compounded by regulatory, payment, and clinical and commercial risk.

[Paul Laviolette] 12:25:41
So, it's a harder, uh, formula to support. But, uh, it continues to be a thriving industry. Medtech Strategically growing.

[Paul Laviolette] 12:25:52
in spectacular form, double-digit growth for many. Uh, we know, we all know intrinsically, if we've been a part of the innovation, um.

[Paul Laviolette] 12:26:01
process in med tech that… the, uh, we were part of the solution. We're bringing.

[Paul Laviolette] 12:26:08
clinical economic value propositions to healthcare delivery. So, it's a great space to be.

[Paul Laviolette] 12:26:13
It's not a pure winner every time on the investment side, just because of some of those difficulties.

[Paul Laviolette] 12:26:18
And the last thing I'll say is that if you go back to 2008, or the period after that.

[Paul Laviolette] 12:26:24
Uh, where you have liquidity crunches, and where you have.

[Paul Laviolette] 12:26:27
literally, uh, investment firms that. had agreements to draw capital.

[Paul Laviolette] 12:26:33
from investors, and those investors no longer had the capital, right? That changes everything. So there was a Darwinian effect on the market.

[Paul Laviolette] 12:26:42
that was unanticipated, unprecedented, and not fair, uh, in a lot of ways. You could have had a perfectly good.

[Paul Laviolette] 12:26:51
portfolio, uh, with, uh, prescribed investment requirements for each of your companies, and then all of a sudden, you run… You say, I have 2 years of capital plan, but now you need to stretch that for 4 years. Well, that may or may not be possible, right? You have 12 mouths to feed in your portfolio, and now you realize.

[Paul Laviolette] 12:27:11
You only have capital reserves to feed. 6. The same thing happened.

[Paul Laviolette] 12:27:16
in the aftermath of the pandemic, fundamental structural. uh, disruption in the availability of capital to fund companies.

[Paul Laviolette] 12:27:26
Some firms didn't survive that. Um, could have been just timing, could have been just, uh… misfortune, uh, and others survived it because they had enough reserves and enough time.

[Paul Laviolette] 12:27:39
And enough, uh… uh, portfolio, uh, diversity so that they could make some difficult calls.

[Paul Laviolette] 12:27:47
defund some companies, save their reserves, and pour them into others. So, it was a very difficult time for all.

[Paul Laviolette] 12:27:54
firms in that, in that time, but… Uh, some of the companies that… and firms that didn't do well or didn't survive through that.

[Paul Laviolette] 12:28:04
Uh, one could easily argue it was not anything they could have done differently.

[Paul Laviolette] 12:28:09
Because, um, it's like… it's like building a house, uh, now and these days, and say, well, it was, it's… It's in a 100-year flood plain. Well, come to find out, now we get floods every 5 years.

[Paul Laviolette] 12:28:22
Like, well, that's not the way it's supposed to be, that's not how we planned it. And I think that's… that's what happens in the investing world sometimes as well.

[Bryan Gilpin] 12:28:30
Yeah. I mean, it seems like it's just… disruption is the norm. Change is the norm. It seems like we've always… in this world, always have to be ready for… I mean, we don't know what's gonna happen.

[Paul Laviolette] 12:28:42
We don't know, and to your point, you have to… you have to bank more on that disruptive, uh.

[Paul Laviolette] 12:28:49
reality, then you might have done 10 and 15 years ago. That's just the nature of where we are.

[Bryan Gilpin] 12:28:54
So for all the, uh, innovators and entrepreneurs out there.

[Bryan Gilpin] 12:29:00
Any advice you would give them to… to weather whatever storm, whatever conditions we're facing currently.

[Bryan Gilpin] 12:29:06
what would you tell them?

[Paul Laviolette] 12:29:07
Well, uh, if you have the opportunity, um. You know, we always used to balance, uh.

[Paul Laviolette] 12:29:14
capital raises between dilution and, uh, runway, how much capital should you take at what price?

[Paul Laviolette] 12:29:20
I think that has fundamentally shifted, right? If you have an opportunity to raise capital.

[Paul Laviolette] 12:29:24
Uh, in many ways, you take it, and you don't think twice about relative valuation.

[Paul Laviolette] 12:29:31
relative optimization. Sure, some companies will… that happen to be in the right place at the right time with their… with their… with their value proposition may be able to raise and be highly selective, but for the typical.

[Paul Laviolette] 12:29:46
great med tech, uh, early-stage company. Uh, capital is king, and take what you can when you can get it.

[Paul Laviolette] 12:29:54
Because of the disruptive dynamic that you described, you don't know when your next opportunity will come along. So that is certainly a lesson. I think, listen, the world has become much more… connected in a much more sophisticated. There are pools of capital around the world.

[Paul Laviolette] 12:30:09
Uh, that can be tapped. There are, um, fewer, perhaps, active early-stage medtech investors in the U.S.

[Paul Laviolette] 12:30:15
Strategics are becoming more active. In some ways, moving, uh, earlier stage and filling some of that void.

[Paul Laviolette] 12:30:23
It used to be that a board would look at a strategic investor early in their.

[Paul Laviolette] 12:30:28
Capitalization and say, we don't want to take in… Capital from a strategic, it's too restrictive, or it's… Um, it might cap our returns potential. I think those are the kinds of decisions that you look at today, and you say, you know what, if you've got capital available from a strategic.

[Paul Laviolette] 12:30:45
And in theory, it might… cap a future exit, or it might scare away a different buyer, but in practice, it's a very positive development. They want to fund the company, and.

[Paul Laviolette] 12:30:58
And you have a good… you have a good pathway there, you say, hey, you know, you may not have the alternative, so you have to… I think balance, um, some of those alternative strategies more openly.

[Paul Laviolette] 12:31:12
than you might have done 5 years ago, because you have to assume that you may not have as many shots on goal. And so I think just more open-mindedness.

[Paul Laviolette] 12:31:23
is really the key.

[Bryan Gilpin] 12:31:25
Yeah. Yeah. Seems like if you're an entrepreneur, it's kind of a mixed… mixed coin, right? So being able to have those different paths.

[Bryan Gilpin] 12:31:34
For… for financing for money is great, so internationally, strategics.

[Bryan Gilpin] 12:31:38
From the venture source. Um, but at the same time, um, you hear a lot of entrepreneurs that are struggling.

[Bryan Gilpin] 12:31:45
in… in getting funding right now. Um, some companies are doing very well and closing some very good rounds, and um… Do you think… actually, let me say it a little different.

[Bryan Gilpin] 12:31:56
What advice would you give to those entrepreneurs that are trying to get close around now?

[Bryan Gilpin] 12:32:01
today, at this point in time.

[Paul Laviolette] 12:32:02
Well, of course, every company is different, but having done this a number of times… first of all, you can't start.

[Paul Laviolette] 12:32:09
socializing your story too early. Right? You want to give investors a real, uh, advanced notice, um, about what you have.

[Paul Laviolette] 12:32:18
why it's going to be interesting for them. Make sure they are thinking about you, even if your financing is in mid-26.

[Paul Laviolette] 12:32:27
you should be on their radar screen today. They should know you're coming. They should know what you're working on.

[Paul Laviolette] 12:32:33
They should know what your milestones are, and that gives you the opportunity, um, when you.

[Paul Laviolette] 12:32:40
launch a formal financing, let's say, in Q2. It gives you an opportunity to say, um, you knew we were coming.

[Paul Laviolette] 12:32:47
Uh, we told you last year, this is what we were going to do.

[Paul Laviolette] 12:32:50
everything we told you we would do, we have done.

[Paul Laviolette] 12:32:53
We have, uh, made our value proposition more concrete, we're a safer bet than ever.

[Paul Laviolette] 12:32:59
Number one. Number two, I would say, whatever timeframe you have.

[Paul Laviolette] 12:33:04
for planning to start and close a financing, you should extend that time frame. It takes longer.

[Paul Laviolette] 12:33:11
when you have financial uncertainty in the markets, investors are less inclined to make quick decisions. And so, if you planned on launching a financing and closing it.

[Paul Laviolette] 12:33:23
Five months later, you should double that time frame, um, and you should be thinking about.

[Paul Laviolette] 12:33:29
the, uh, just the fact that hurdles exist. on the investor side that are atypical, and that generally speaking, whatever form those hurdles exist in.

[Paul Laviolette] 12:33:41
They will simply add time to the process it's going to take for you to complete a financing.

[Bryan Gilpin] 12:33:46
Got it, okay. Good. Okay. But I'm gonna have you put on yet another Paul hat.

[Bryan Gilpin] 12:33:52
And in addition to your role at SD, um, you're the CEO, um, and co-chair of a commercial stage publicly traded company.

[Bryan Gilpin] 12:34:01
Pulse Biosciences. And in that role, you lead a high-growth company that is expanding a technology platform.

[Bryan Gilpin] 12:34:09
Specifically, in nanoseconds PFA. It's applicable across multiple therapeutic uses.

[Bryan Gilpin] 12:34:16
So, how do you think about innovation in a company like Pulse, and are the challenges.

[Bryan Gilpin] 12:34:23
different than what you see in the early-stage company, or at the big company.

[Bryan Gilpin] 12:34:28
Boston Scientific. kind of stage?

[Paul Laviolette] 12:34:31
Well, uh, I think it's a composite company, right? It's an early-stage company in the sense of one platform going commercial, brand new, basically first revenues in Q3.

[Paul Laviolette] 12:34:42
Um, and then multiple IDE programs, right? So it's, it's, uh, it's more than… it's a platform company, and so therefore, it's not a single program focused.

[Paul Laviolette] 12:34:53
Where everybody is focused on one thing, just do that thing. We're focused on multiple things. Number one.

[Paul Laviolette] 12:35:00
Number two, it is… the world… there is no one in med tech that doesn't know about PFA and how dynamic a disruptive force that has become in multiple markets.

[Paul Laviolette] 12:35:14
So it's actually spectacular to have the ability to focus on one.

[Paul Laviolette] 12:35:19
Uh, very potent. a very proprietary platform.

[Paul Laviolette] 12:35:24
So we don't have to, unlike a Boston Scientific, we don't have to jump around from one.

[Paul Laviolette] 12:35:30
platform to another, but we are, unlike a small focus company.

[Paul Laviolette] 12:35:34
moving from more than one market to another. So we do one thing in the form of optimizing the delivery of a nanosecond PFA.

[Paul Laviolette] 12:35:44
But we do it across different delivery systems, different indications.

[Paul Laviolette] 12:35:49
different, uh, uh… clinical specialties and channels, and so building out the company that way, I think, is unique. It's a lot of fun.

[Paul Laviolette] 12:35:59
Uh, we have the same innovation challenges that all early-stage companies have. We've got a.

[Paul Laviolette] 12:36:05
innovate technology, uh, and iterate. Um, delivery systems, as I mentioned. We have to drive preclinical research, we have to drive clinical research, we have to drive regulatory processes.

[Paul Laviolette] 12:36:16
When we get regulatory approvals, we have to decide what our go-to-market strategy is.

[Paul Laviolette] 12:36:21
Of course, we don't do… we don't wait to the end for that, but we have to decide about the exact clinical claims and market. We have to decide about.

[Paul Laviolette] 12:36:32
and described the channel, uh, the reimbursement strategy, uh, and importantly for us, whether we're going to do that directly by building our own business unit.

[Paul Laviolette] 12:36:41
or through partnerships, uh, based on the dynamics and competitiveness of a given market, where our technology can be highly disruptive.

[Paul Laviolette] 12:36:50
But where the capital efficiency of entering that market may be.

[Paul Laviolette] 12:36:54
may disfavor a direct strategy.

[Bryan Gilpin] 12:36:58
So would you say are your biggest challenges in that kind of environment?

[Paul Laviolette] 12:37:02
I think our challenges are the same as everyone's. We're a public company. We announced our earnings just yesterday. We have $95 million in the bank.

[Paul Laviolette] 12:37:12
There are a lot of things… we have multiple FDA approvals, uh, already granted. We have breakthrough designation. There are a lot of things that we have that are going.

[Paul Laviolette] 12:37:20
incredibly well, but we also have to deal with.

[Paul Laviolette] 12:37:23
Uh, getting IDE approvals. We have a government shutdown. Uh, we have to deal with, uh, CPT code progression. We have to generate a continuous flow of clinical.

[Paul Laviolette] 12:37:35
evidence that satisfies. Uh, our physician, uh, uh, customers satisfy regulators for approval.

[Paul Laviolette] 12:37:42
Um, and then ultimately move payers to believe that this is, uh, something that is worth, uh.

[Paul Laviolette] 12:37:49
funding worth, uh, paying for, and in our case, worth a premium. So, we have the full suite.

[Paul Laviolette] 12:37:56
of innovation and commercialization challenges. Um, but we have the… we have the benefits of a tailwind from PFA.

[Paul Laviolette] 12:38:05
And a micro tailwind, if you will, that is focused on our exclusive technology, because it is unique. We think it's superior, we think it demonstrates superior clinical outcomes in a number of fields.

[Paul Laviolette] 12:38:19
And so our job is to execute on. proving that out, and uh… and then delivering on very specific.

[Paul Laviolette] 12:38:28
commercialization and launch strategies for each of our respective businesses.

[Bryan Gilpin] 12:38:33
Great, okay. Yeah, thank you for that. And then, uh, so now I'd like to maybe tie it all together.

[Bryan Gilpin] 12:38:39
So, Paul, you've had a front-row seat to the whole… evolution of med tech. Um… from the explosive growth years at Boston Scientific to the venture world you're in today.

[Bryan Gilpin] 12:38:52
Um, you've watched, uh, MedTech evolve from… you talked about the catheter-based and cannula-based type of solutions.

[Bryan Gilpin] 12:38:59
Um, to now, it's a lot of software, robotics, even artificial intelligence, dare I say.

[Bryan Gilpin] 12:39:05
Um, what this evolution has surprised you the most?

[Bryan Gilpin] 12:39:10
Um, and then if you can comment on anything on where you see things maybe going.

[Paul Laviolette] 12:39:15
Well, um, first of all. I entered the medical device space in 1980.

[Paul Laviolette] 12:39:23
Um, and so if we… if we roll the clock back 45 years.

[Paul Laviolette] 12:39:28
What surprises me, I would say, and it's something that can only be appreciated over the arc of time.

[Paul Laviolette] 12:39:35
The scale and sophistication of the med tech industry today is spectacularly beyond.

[Paul Laviolette] 12:39:43
Where one could have imagined it, uh… that time ago, 30, 40 years ago. Um, I was involved in the very first coronary angioplasty system, right? First, if you think about coronary angioplasty.

[Paul Laviolette] 12:39:56
uh, creating, uh, PCI, the interventional cardiology world that we know.

[Paul Laviolette] 12:40:02
today, and how that has spawned the structural heart market that we know. It's like, all of that goes back to the very first time.

[Paul Laviolette] 12:40:08
A balloon was blown up in a coronary artery in, you know, the late 1970s.

[Paul Laviolette] 12:40:13
So, it has grown so much, we take for granted today.

[Paul Laviolette] 12:40:17
the dissemination of knowledge, the conversion of markets. the training of new techniques.

[Paul Laviolette] 12:40:26
It's a remarkable, uh, day today. So, what I see today is a much more.

[Paul Laviolette] 12:40:33
complex world, a much more sophisticated world, a much faster-moving world.

[Paul Laviolette] 12:40:38
Um, a much larger scale. world than we've seen in the past.

[Paul Laviolette] 12:40:43
And then, to your comment about software, AI, robotics.

[Paul Laviolette] 12:40:48
the pace is only… increasing. And so, when we think about the pace of change.

[Paul Laviolette] 12:40:55
Um, uh, and how to accommodate that in our companies, in our innovation strategies, in our… capital planning world.

[Paul Laviolette] 12:41:04
Uh, that, that pace of change is… is moving so much faster.

[Paul Laviolette] 12:41:09
Um, and you just have to accommodate that in your thinking, in your management of your company.

[Paul Laviolette] 12:41:16
Uh, so I think that's… that's a real key. When you think about.

[Paul Laviolette] 12:41:20
AI, and I think specifically about AI, and I think about the FDA.

[Paul Laviolette] 12:41:25
And FDA is very proud of leaning into AI, trying to… and approving AI, and trying to figure out how to use.

[Paul Laviolette] 12:41:32
AI in its own review system, and how to better accommodate AI-based innovation in devices.

[Paul Laviolette] 12:41:40
Um, that… that is going to just be an accelerant on top of all the base technologies, because.

[Paul Laviolette] 12:41:47
Other than a product that simply is not connected or does not have software, AI is going to penetrate into everything in some way, shape, or form.

[Paul Laviolette] 12:41:55
And even for those devices that are not connected and generating data themselves.

[Paul Laviolette] 12:42:00
They can be monitored, trends can be monitored, learning can be had at an accelerated rate because of AI overlays.

[Paul Laviolette] 12:42:09
So, I do think that is a revolution that is going to be upon us. It is going to accelerate.

[Paul Laviolette] 12:42:17
It's going to be held back a little bit because we're in a regulated environment, but the regulators are trying to find ways to allow for AI to move.

[Paul Laviolette] 12:42:28
Uh, at a fast pace, and not try to hold it back. So, I just think… The thing that surprises me most is the… the speed with which we now move.

[Paul Laviolette] 12:42:39
And the rate at which innovation can drive change.

[Paul Laviolette] 12:42:43
Um, and that's… I think that's very favorable for innovators. You can introduce new concepts.

[Paul Laviolette] 12:42:49
You can advance their development. You can simulate their clinical performance, move through the clinical and regulatory processes in many ways faster.

[Paul Laviolette] 12:42:59
truncate, uh, collapse that time required from idea to.

[Paul Laviolette] 12:43:05
approval. And, um… And that's very, very promising, but if you're not capable of working at that pace.

[Paul Laviolette] 12:43:14
you're going to be run over.

[Bryan Gilpin] 12:43:17
Yeah. Um, for me, it's very exciting. Um, I mean, I love the pace of the change, and I agree with you, it's increasing.

[Bryan Gilpin] 12:43:26
Um, and, uh, I think in a very exciting way, and the things that I see companies like what you're doing at Pulse, and some of the other investments I know you've made, and building out those platforms, and the speed at which.

[Bryan Gilpin] 12:43:38
You know, just even in the last few years, you can see how much it's increasing.

[Bryan Gilpin] 12:43:41
is significant. Um, so Paul, any lessons from… They're going back in your, uh, kind of the older days.

[Bryan Gilpin] 12:43:50
that are applicable to the innovators today, that you would say?

[Paul Laviolette] 12:43:56
Well, the lessons are, um… I think they're much more fundamental. It's all about just… Hard work, and I think about being impatient.

[Paul Laviolette] 12:44:09
Um, having passion for your technology. Uh, I think linking, you know, if I think today about the sophistication as an example of a Stanford biodesign program.

[Paul Laviolette] 12:44:21
You think, okay, there's a whole program that exists solely for the purpose of perfecting and teaching.

[Paul Laviolette] 12:44:28
how to optimize innovation in med tech. That is… that is spectacular. That wasn't known, like, they've taken that.

[Paul Laviolette] 12:44:36
Uh, out of the raw material, if you will, of innovation over time, and they're beginning to really perfect that. If you think about that, that is spectacular. That's amazing.

[Paul Laviolette] 12:44:47
Those are lessons learned. But if you think about… uh, the underlying principles there, it's about connecting.

[Paul Laviolette] 12:44:56
uh, physician… practices with unmet patient needs.

[Paul Laviolette] 12:45:03
And with novel technology and very clear. Um, uh, identification of product and user.

[Paul Laviolette] 12:45:12
performance and needs. If you… if you think about… that's all we do.

[Paul Laviolette] 12:45:17
If we do that well. Um, and what does it require? It requires talking to physicians. It requires looking at data and analyzing.

[Paul Laviolette] 12:45:26
And asking good questions, and coming up with clear answers, and never… stopping the process of challenging yourself to make sure your formula, your outcome, your solution.

[Paul Laviolette] 12:45:38
is the right one. Don't… don't stop challenging yourself to make sure your solution is right.

[Paul Laviolette] 12:45:46
And always continuously pressure test it with more physician input, more analysis of the market opportunity and of the economic value proposition.

[Paul Laviolette] 12:45:54
If you do that, and we see it with companies today, you can still create unicorns, and you can still.

[Paul Laviolette] 12:46:02
have, uh, transformative. launches the way we've seen, uh, technologies move in and disrupt, and right around here.

[Paul Laviolette] 12:46:11
Uh, in Massachusetts, whether it's the Abiomeds of the world or the Boston Scientific, uh.

[Paul Laviolette] 12:46:17
solutions, or, you know, Medtronic now running with Aferra. There are so many things happening right here, right now.

[Paul Laviolette] 12:46:25
that exemplify that innovation process, and it's happening in real time, uh, right around us.

[Bryan Gilpin] 12:46:31
Yeah, and I love that it comes down to exactly why I'm in this, a lot of us are in this, that connection to the physician, the patient needs.

[Bryan Gilpin] 12:46:40
that having something novel that can really improve. the experience, the care, the outcomes, and being able to show it.

[Bryan Gilpin] 12:46:49
Um, so that's the constant, right?

[Paul Laviolette] 12:46:50
It's out there, it's happening in real time. That's our… I think that's our message. It's… it's happening right before our eyes.

[Bryan Gilpin] 12:46:57
Terrific. Okay, so Paul, we're almost at time to turn it over to Q&A, but I want to do a quick, uh.

[Bryan Gilpin] 12:47:05
Rapid fire with you. Um, okay, so I got… I got 4 questions for you.

[Paul Laviolette] 12:47:06
Okay?

[Bryan Gilpin] 12:47:10
Um, so, uh, what's one technology or scientific area.

[Bryan Gilpin] 12:47:15
Aside from PFA. you're personally most excited about right now?

[Paul Laviolette] 12:47:22
Well, broadly speaking, I would say neuromodulation. Just the idea of introducing.

[Paul Laviolette] 12:47:28
uh, stimulations, either that target the brain or the end organs.

[Paul Laviolette] 12:47:34
And that change… uh, chronic conditions, that is a field that is.

[Paul Laviolette] 12:47:40
It's… it's vibrant today, but it's just really beginning, and I think the broader field of neuromodulation is going to continue to evolve, and.

[Paul Laviolette] 12:47:51
and unleash many, many new, very important clinical breakthroughs.

[Bryan Gilpin] 12:47:54
Love it. Um, artificial intelligence in med tech. Is it a game changer now, or… Let's wait and see.

[Paul Laviolette] 12:48:03
If you wait and see, you're gonna be, uh, 6 feet under.

[Bryan Gilpin] 12:48:08
Perfect. Um, what's the best piece of leadership advice you've ever received?

[Paul Laviolette] 12:48:18
You know, uh… I don't, uh, I don't know. I would just say.

[Paul Laviolette] 12:48:22
Lead from the front. You know, leadership is, uh, it's about passion. People… people want to be led.

[Paul Laviolette] 12:48:30
Um, it's easy to lead if you just show your true self, be your true self.

[Paul Laviolette] 12:48:36
and care about what you're doing, and care about the people that are around you, it's very, very simple.

[Paul Laviolette] 12:48:43
Uh, but it's, you know, a lot of people struggle to do it well. Um, but just… just really care about people, listen.

[Paul Laviolette] 12:48:51
Uh, and… and uh, and expose yourself, right? Take risks.

[Paul Laviolette] 12:48:56
And, uh, put yourself into positions of, uh, where you can fail.

[Paul Laviolette] 12:49:01
And then just don't let that happen.

[Bryan Gilpin] 12:49:04
Okay, last one before we go over to Q&A. And then one word or phrase, what gives you optimism about the optimism about the future of MedTech?

[Paul Laviolette] 12:49:15
Uh, we are a big part of the solution.

[Bryan Gilpin] 12:49:19
Amen. Absolutely. Okay, good. Paul, thank you. Um, so now I'll open it up to anyone who has questions.

[Bryan Gilpin] 12:49:29
So let me see if I can get the QA… sorted out here without having to… pull Rachel in.

[Bryan Gilpin] 12:49:36
Okay, so first question is… I wonder if Paul views the current status of MedTech as more or less turbulent than biotech pharma.

[Bryan Gilpin] 12:49:45
Biotech and pharma always lured with its higher salaries, but the current state of biotech looks less enticing with so many layoffs happening, companies closing.

[Bryan Gilpin] 12:49:55
I think that's it. So I guess the question is, more med tech, more or less turbulent than biotech pharma? Any comparisons and OSVs involved in… in… all those categories. Any thoughts?

[Paul Laviolette] 12:50:06
I think… I think, um, MedTech is more turbulent, and I say that because biotech does have turbulence, as has been alluded to by the questioner.

[Paul Laviolette] 12:50:16
That, you know, it's not a… Um, a unilateral growth engine.

[Paul Laviolette] 12:50:24
producing billion-dollar winners every day. Um, but biotech.

[Paul Laviolette] 12:50:30
slash pharma, biopharma is still so much bigger, there are so many companies, so many shots on goal.

[Paul Laviolette] 12:50:37
Um, and so much bigger a market to go into when you think about a strategic acquirers.

[Paul Laviolette] 12:50:45
or IPOs, um, that the, uh, the likelihood, uh, that a biotech can just.

[Paul Laviolette] 12:50:54
predictably land on its feet. is high.

[Paul Laviolette] 12:50:59
And MedTech is… MedTech is an innovation ecosystem. is more fragile. It's more fragile for sources of capital, for lack of early-stage venture. As I mentioned before, more fragile with the closing of an IPO window, or.

[Paul Laviolette] 12:51:16
the, uh, limited number of strategic acquirers. So, I do think.

[Paul Laviolette] 12:51:21
I don't want to be negative toward MedTech, but I do think in comparison to biotech.

[Paul Laviolette] 12:51:26
MedTech is more fragile. and more susceptible to volatility, so that if each category undergoes volatility, biotech has.

[Paul Laviolette] 12:51:36
The inherent ability to weather it. more smoothly, and MedTech has the potential to be thrown more off-kilter.

[Bryan Gilpin] 12:51:44
Yeah, sounds good. Um… And it does seem like med tech is turbulent and fragile right now, for sure.

[Bryan Gilpin] 12:51:51
Next question we have, Paul, is, um. What is a piece of advice that you do not recommend following?

[Paul Laviolette] 12:51:59
Well, don't do… don't do anything stupid. Listen, who knows? I, um… I think some of the things I mentioned before, you know, when you think about trying to be too.

[Paul Laviolette] 12:52:12
Fine. Too cute by half, if you will, in financing strategies.

[Paul Laviolette] 12:52:17
in, um… boards, advising management teams to… you know, to hold out for this, or… Uh, anything that involves.

[Paul Laviolette] 12:52:28
a lack of humility. I think we have to be humble as we build companies.

[Paul Laviolette] 12:52:33
That doesn't mean you're not bold in your vision. It doesn't mean you're unwavering in your passion. You are those things.

[Paul Laviolette] 12:52:39
But when you look externally and say, alright, I have to capitalize this, or, alright, I need to, um… you know, be mindful of risks in regulatory or in reimbursement.

[Paul Laviolette] 12:52:52
Be humble, and therefore, when you hear advice. that has you stretch beyond the realm of reason.

[Paul Laviolette] 12:53:03
That doesn't mean you're not passionate. It doesn't mean you're not pursuing.

[Paul Laviolette] 12:53:07
with incredible vigor, your vision. But, lace that with humility.

[Paul Laviolette] 12:53:13
Um, so don't follow advice that you think has an element of hubris in it.

[Paul Laviolette] 12:53:20
Where you're not listening to reality. or you're not up to… On market, uh, facts, because that can get you in trouble.

[Bryan Gilpin] 12:53:30
Yeah, sounds good. Okay, uh, Rich, we do have one more question that came in from the side here.

[Bryan Gilpin] 12:53:39
Um, so it's… Why don't you go first?

[Rachel Robinson] 12:53:39
I also have one, too, when you're done.

[Rachel Robinson] 12:53:44
Well, if we talk about the turbulence, Paul, I would… or the fragility, um.

[Rachel Robinson] 12:53:49
I would be curious, two things. Do you think there's a way that MedTech could become less fragile, or that we could, uh.

[Rachel Robinson] 12:53:58
manage the perception of fragility, right? Because it's really that perception in the market.

[Rachel Robinson] 12:54:03
that leads to a bit of a struggle for funding and for excitement. So do you think there's a way to.

[Rachel Robinson] 12:54:13
manage the perception of that fragility, or even the fragility itself?

[Paul Laviolette] 12:54:16
I think the answer is yes, and I think it comes in two forms. One is.

[Paul Laviolette] 12:54:21
When you think about… you want to match. what you're trying to build with that relative fragility. If you match.

[Paul Laviolette] 12:54:29
With what's available in that market. you can have a good outcome, even if the.

[Paul Laviolette] 12:54:36
overall market has some fragility in it, so… Then you say, well, how… what's making it fragile? Well, maybe it's harder to do.

[Paul Laviolette] 12:54:45
$50 million financings, or maybe it's harder to do a billion-dollar exit after you've.

[Paul Laviolette] 12:54:51
raised money on a, you know, a $400 million pre or post.

[Paul Laviolette] 12:54:56
And now you can't get your desired, uh, exit multiple. So.

[Paul Laviolette] 12:55:01
if you say, okay, well, what is the market willing to tolerate?

[Paul Laviolette] 12:55:05
And then you back up from that and say, well, they're willing to tolerate.

[Paul Laviolette] 12:55:10
uh, companies that have $50 million of invested capital, but they're much less tolerant to companies that have $200 million of invested capital. You say, okay, well then, what company am I building.

[Paul Laviolette] 12:55:20
How many… how many shots on goal do I have? How much, uh, clinical, uh.

[Paul Laviolette] 12:55:26
trial demand, will I have to fund? You say, can I do it? Can I fit my… business-building process into a, um, a less bold.

[Paul Laviolette] 12:55:37
structure so that by the time I get to the end.

[Paul Laviolette] 12:55:40
I'm not dependent upon. a situation, a scenario, to exit.

[Paul Laviolette] 12:55:46
where the odds are just stacked against me. So, again, it's just a little bit of environmental scanning.

[Paul Laviolette] 12:55:53
Now, that… that doesn't mean… listen, if you're already way down the path.

[Paul Laviolette] 12:55:57
And you've built for a very big exit. there may be no going back, but if you're starting with enough of a clean sheet where you can.

[Paul Laviolette] 12:56:05
You can customize how you build it. If strategics… if most exits in MedTech happen at the $200 million level or less, then build companies for that.

[Paul Laviolette] 12:56:16
Uh, because if you're building for a $750 million exit, and that represents only 2% of all MedTech exits.

[Paul Laviolette] 12:56:25
then how likely is it that your company is going to be in the 2%?

[Paul Laviolette] 12:56:29
Uh, if you want to take that chance, go ahead.

[Paul Laviolette] 12:56:31
But when you think about fragility or volatility, you think about what's really happening is there's a mismatch.

[Paul Laviolette] 12:56:38
between where the capital is and where the exits are. Okay, well then better align that, and you can have a much higher batting average.

[Bryan Gilpin] 12:56:51
Makes sense. Um, so, Paul, this is a mathematic event.

[Bryan Gilpin] 12:56:59
Great, I'll ask the question that I thought maybe you were going to ask.

[Bryan Gilpin] 12:57:02
Um, so… and you, you, you deal, um, West Coast.

[Bryan Gilpin] 12:57:07
Midwest, of course, East Coast. Um, all over the world.

[Bryan Gilpin] 12:57:12
How would you contrast the Boston area ecosystem versus other med tech ecosystems?

[Bryan Gilpin] 12:57:19
And what could we do to be better?

[Paul Laviolette] 12:57:24
Uh, well, it's funny, I gave a talk to an Orange County group just a few days ago, and they were asking the same question, trying to build, you know, the Orange County MedTech ecosystem.

[Paul Laviolette] 12:57:36
And, of course, we all know about Medical Alley, and there's a lot of strength in the Bay Area.

[Paul Laviolette] 12:57:41
I mentioned Stanford Biodesign. So, listen, I think Boston is a really strong ecosystem in general. I'm sitting in a.

[Paul Laviolette] 12:57:48
portfolio company as we speak. Um, and this company is thriving, and it's in, uh, the Boston suburbs, and it's been built here.

[Paul Laviolette] 12:57:57
So you think about technology, where technology comes from, you think about technologists, you think about access to talent and management.

[Paul Laviolette] 12:58:04
Um, and, uh, capital, uh, all available in the Boston area. So, Boston is very strong.

[Paul Laviolette] 12:58:13
Uh, Boston doesn't, uh, you know, as a, as, as a metaphor, you think about the Boston Globe as our principal, you know, newspaper, and the Boston Globe likes to attack its institutions, right?

[Paul Laviolette] 12:58:28
If you go to Med… if you go to Minnesota, you spend a lot of time in Minnesota. Actually, Minnesota institutions don't attack each other. Like, the.

[Paul Laviolette] 12:58:36
The Star Tribune does not attack the University of Minnesota and say, you know, let's talk about all the things that are wrong here.

[Paul Laviolette] 12:58:43
I do think we have, um… the challenge of a little bit less cohesive.

[Paul Laviolette] 12:58:50
ecosystem, um, where we don't necessarily align. all of our academic, uh, financial.

[Paul Laviolette] 12:59:00
an entrepreneurial activities into one. MassMEDIC is a very strong institution.

[Paul Laviolette] 12:59:06
Uh, but it deals with raw material that's a little bit less organized, because we don't wake up in the morning and think about, oh, how nice would it be to have a great article in the business section of the Boston Globe about.

[Paul Laviolette] 12:59:19
you know, all these innovative companies. They would much rather talk about a company that's struggled, or a CEO that did something wrong.

[Paul Laviolette] 12:59:27
That's just kind of the nature of the really critical environment that I think we live in in Boston. So.

[Paul Laviolette] 12:59:33
We have to overcome that. I'd like to see us be a little bit more… organized, um, in… in bringing together all of those influences.

[Paul Laviolette] 12:59:42
that enable, uh, entrepreneurial success. Uh, because we do have fantastic.

[Paul Laviolette] 12:59:49
corporations, we have fantastic, uh. uh, medical centers and academic institutions.

[Paul Laviolette] 12:59:56
really the best in the world. And we should… and we have a thriving med tech, um, ecosystem here, but I do think it could… if it performs on… you know, five cylinders, I'd like it to…

[Paul Laviolette] 13:00:09
I'd like to see it hit on all eight cylinders.

[Bryan Gilpin] 13:00:12
Makes sense.

[Rachel Robinson] 13:00:13
Excellent question, and I don't think I could have answered that any better, and that could be a whole other webinar, Paul, for another time, because I could get on a big soapbox to agree with you on so many points right there. Um, but I know we are right up on time, um, and everyone's got a very busy schedule, so if you'll allow me, I'll just say thank you, Paul and Brian. Thank you so much for an excellent conversation.

[Rachel Robinson] 13:00:33
There were a lot of key takeaways, I think, and a lot of things I was not jotting down, nodding along in the background, and saying, ooh, I actually didn't even think about that one.

[Rachel Robinson] 13:00:42
Very well done, and thank you so much for sharing both of your perspectives with the audience.

[Paul Laviolette] 13:00:45
Thank you, Rachel.

[Bryan Gilpin] 13:00:46
You're welcome, and thank you, Paul, and really good to