Medsider: Learn from Medtech and Healthtech Founders and CEOs - A Stage-Appropriate Framework for Startups: Interview with Cherish CEO Sumit Nagpal

Episode Date: July 24, 2024

In this episode of Medsider Radio, we had an interesting chat with Sumit Nagpal, founder and CEO of Cherish Health, a company developing radar-based health and safety monitoring devices. Over the past three decades, serial entrepreneur and digital health veteran Sumit has co-founded and grown five companies that have tackled some of the boldest challenges faced by the healthcare economy. He also serves on the board of HIMSS and chairs the Nominating Committee.In this interview, Sumit shares his take on the importance of being stage-appropriate—both mentally and business-wise—and how to recognize patterns in the market by simply listening. Oh - and constantly learn from others because, as Steve Jobs paraphrasing Picasso put it, “great artists steal.”Before we dive into the discussion, I wanted to mention a few things:First, if you’re into learning from medical device and health technology founders and CEOs, and want to know when new interviews are live, head over to Medsider.com and sign up for our free newsletter.Second, if you want to peek behind the curtain of the world's most successful startups, you should consider a Medsider premium membership. You’ll learn the strategies and tactics that founders and CEOs use to build and grow companies like Silk Road Medical, AliveCor, Shockwave Medical, and hundreds more!We recently introduced some fantastic additions exclusively for Medsider premium members, including playbooks, which are curated collections of our top Medsider interviews on key topics like capital fundraising and risk mitigation, and a curated investor database to help you discover your next medical device or health technology investor!In addition to the entire back catalog of Medsider interviews over the past decade, premium members also get a copy of every volume of Medsider Mentors at no additional cost, including the latest Medsider Mentors Volume VI. If you’re interested, go to medsider.com/subscribe to learn more.Lastly, if you'd rather read than listen, here's a link to the full interview with Sumit Nagpal.

There's got to be stage appropriate funding is really my belief now. There's going to be stage appropriate strategy. There's got to be stage appropriate boards. There's got to be stage appropriate. And it changes with every stage. You evolve. Once you actually achieve a certain target goal, great. Now you need to pivot to what's next.

And that will require its own way of capitalization and it will have its own set of priorities. Welcome to Medsider, where you can learn from the brightest founders, and CEOs in medical devices and health technology. Join tens of thousands of ambitious doers as we unpack the insights, tactics, and secrets behind the most successful life science startups in the world. Now, here's your host, Scott Nelson. Hey everyone, it's Scott with MetSider. Over the past three decades, serial entrepreneur Sumit Nagpile has co-founded and grown

five companies that have tackled some of the boldest challenges the healthcare economy is facing. Today, Sumit is the chair of the Hymns Nominated Committee and the founder and CEO of Cherish Health, a company developing radar-based health and safety monitoring devices. Here for you the key things that we discussed in this conversation. First, steal like an artist. Draw inspiration from the successes and failures of other adjacent industries. Try to see the reoccurring patterns and simplify them to see if they translate to your domain. To nurture this framework, foster a collaborative environment where ideas are openly shared and feedback is actively sought.

Second, each phase of your business, from invention to scaling requirements, different resources and priorities. Be clear about what the moment needs and adapt your strategy and mindset accordingly. Set clear and stage appropriate goals, raise the necessary amount of capital without access, and meet those milestones. When complete, adapt your mindset and strategy for the next stage. Third, cultivate an inquisitive mindset and make listening an integral part of your company culture. Gather input from diverse sources to see patterns and make an informed roadmap. Choose partners authentically and invest time in those relationships to build trust, understand their goals and support each other along the way.

Before we jump into this episode, I wanted to let you know that the latest edition of MedSider Mentors is now live. We just published Volume 6, which summarizes the key learnings from the most popular interviews over the last several months with incredible entrepreneurs like Dan Rose, former CEO of Limfloe, Dr. Stephen Michelson, founder of Ferrapulse, and current CEO of Field Medical, and other leaders of some of the hottest startups in the space. Look, it's tough to listen or read every Medsider interview that comes out, even the best ones. But there are so many valuable lessons you can pick up from the founders and CEOs that

join our program. So that's why we decided to create Medsider Mentors. It's the easiest way for you to learn from the world's best medical device and health technology entrepreneurs in one central place. To check out the latest volume, head over to MedsiderRadio.com forward slash mentors. Premium members get free access to all past and future volumes. And if you're not a premium member yet, you should definitely consider signing up. In addition to every volume of Medsider mentors, you'll get full access to the entire library of interviews dating back to 2010. You'll also be able to see all of our playbooks, which are thematically handpicked collections of the most insightful interviews covering topics like capital fundraising, early stage development, regulatory challenges, reimbursement, M&A, and much more. And last, considering that fundraising could be one of the most daunting tasks for any startup, we curated a database of over 700 VC funds, private equity firms, angel groups, and more, all eager to invest in medical device and health technology startups.

access to this database is a premium member exclusive, so don't miss out. Learn more about Medsider Mentors and our premium memberships by visiting MedsiderRadio.com forward slash mentors. All right, without further ado, let's jump right into the interview. All right, so many, welcome to Metzider Radio. Appreciate you coming on, covering out a little bit of time to tell us a little bit about your personal journey as well, what you're building at Cherish. With that said, I recorded a very brief bio at the outset of this episode. But I usually like to start here.

If you can give us an elevator pitch, maybe in a couple minutes or less, of the kind of captures your professional career leading up to confounding company. Let's do that. The best way to describe what I've been up to is marching to the beat of my own drummer, serial entrepreneur. I've built now five companies over the past 30 years, all of which have been in what we now call digital health. It all began free that when I worked with Max and with Steve Jobs.

And I got the bug to be an entrepreneur because of that. I learned from Steve how to take very complex. ideas and make them boil them down through their essence. That has been reflecting everything I've done ever since. And really, the theme has been with every company coming in and looking to solve some grand problems, some big problems with increasing insights, increasing scale, and Sharish happens to just be the max, we've taken it to the next level here. Yeah, that's great. You're being fumble with your background. It's certainly accomplished it. You've got a lot of swings at the plate. I'm sure a lot of wins it looks like to probably a lot of lessons learned along the way.

But you mentioned Cherish and the Serenity technology that you're building. Give us a high level understanding of kind of that that major problem that you referenced that you're trying to solve for. Give us a sense of kind of what you're doing and where the company's at. We started thinking about what became Cherish Serenity during what I now call my thematical. It was a break between these four and five. It was I was recruited by Accenture to be their global lead for digital talent, which is a huge job. And I got to work with some of the biggest companies in the world, the most awesome innovators in the world. And we focused on how a huge problem that remains to this day, which is how do big tech, big telco, big retail companies that are attracted by 18% of GDP make a difference without running away screaming in the cycle that seems to happen every four years.

You just heard, probably remember what happened last week with Walmart. Long story short, those ideas led us to a thesis, which was all about finding those adjacencies, finding those things that were one or two degrees off from what these companies are already great as, and having them become the means to either massively take out cost or massively reduce searching. All of that led to us thinking about how do you reduce cost, how do you reduce it? And one of the key areas that we realized where cost happens is when people wind up in ambulances, in emergency rooms, in hospitalizations, when those are working. Where are they before that? They're at home. And at home, when they don't know what's happening, bad things happen. So how can we detect and predict that things are starting to go so? That they will, in fact, have an event or they've had an event. And if we can intervene and respond quickly,

perhaps the acuity of that event can be diminished. Every one of these companies had some kind of answer to how do you detect rising risk or an emergency in the home, and it involved some wearable, some gadget that a person had to use all the time. And that's where the big innovation, the big aha happened. The big aha was where we said, look, the reason that these things don't really work out at scale is people fatigue, they forget to wear things, they choose to not wear them, they forget to charge them,

and when the novelty wears off from one of these gadgets, they wind up in the usual places in our drawers, and all that impact at scale to take out costs or hardship goes away. It just never, you never realized that the grid you're counting on people changing behavior, even though the technologies are pretty magical. And Apple Watch, it's that there's more compute on our wrist, now than the Apollo Moon machines. And so it's not about the technology as much as relying on people to change behavior.

And that's really when we said, what if we could learn from other industries like home security and the way we detect fires and smoke in homes, passive, ambient sensing, what if we could take that idea and turn it on its head and make it about identifying risk for people rather than their property? That's really how Cherish started. Fast forward four years after I founded Cherish, this was when I left Accenture, started from zero

because we knew we had to invent some brand new technology to go solve this. Cameras were a bridge too far in the home, infrared cameras still had a lens, LiDAR was too expensive. It was just very obvious that the technology solution here that would wind up in people's homes

needed to begin with trust, needed to begin with respecting their privacy. And so when we started this journey at Cherish in January of 2020, we really had only those requirements in place, but really know a clue about how we were going to follow them. In fact, somebody told me, somebody very well positioned in the cellular industry, can thank him for the existence of cell towers today. He told me that people have been trying to do what I was dreaming up with radar for 40 years,

what makes the thing we can pull it all. Four years later, we've launched our product at CES. We've launched it in collaboration with some of the largest companies in the world, the largest home security firm in the U.S., a major telco. And with their partnership, we are bringing this into people's homes later this year. With sensing technology that sits in the corner of the home, looks into the home, feeds through walls, and the tax rising risk identifies falls and picks up key biometrics

without people having to remember that the device is even there. So you can imagine its impact, the potential impact. The impact applies from pediatric asthma to people living with all forms of dementia and Alzheimer's. And so it's a very, the platform that has tremendous impact potential. we're just scratching the circle for what they can do. That's cool. I love the digital context behind the Orson's Story of Cherish. And if you're listening and don't get a chance to get to the full write-up on Medsider,

it's CherishHealth.com, just as it sounds is the website. You can learn a little bit more and get a, it's a really nice website, get an idea of kind of what the team is building. It's cherishhealth.com. But one of the things that you mentioned when you first started to begin to think about addressing this problem is you looked at other verticals, right? the fire alarm kind of space, security space, et cetera. And I mentioned this book several times on this podcast, but it's one of my favorites is

steal like an artist by a very straight for principle, right? Which is you just mentioned. Yes. Looking at other verticals, trying to glean insights, right? And apply them to what you're doing. It sounds like you guys did that. And it certainly led you to where you're at with Cherish today. We use that phrase, real artist steal.

One of Steve Jobses's phrases all the time, not because we steal things. We learn from other people, the experience and ideas. And really, the breakthrough tier happened with that out of the box. Let's look elsewhere thinking. What have people already solved before we even showed up that we can learn from? Yeah, no doubt. That's awesome. And then we're recording this in Q2 of 24.

It sounds like you're actually going to effectively commercialize your devices later this year. Then that's the plan. Okay, awesome. Awesome. Rodman is in manufacturing now. That's great. That's great. Let's ask the station for the rest of the conversation.

The next maybe 30 minutes. will go through some of the key functions, right, that any entrepreneur or any founder, CEO is going to take or get experience in building product to kind of address various regulatory constraints, then eventual commercialization. But I want to start with this concept at Joygers because it's something that we noticed doing some research leading after this interview. And this idea of on your website, you're allowing people to basically opt in to experience the technology before it's released. And I'm sure that's getting that sort of real-world feedback from customers in this sense very early on has helped in a number of different areas,

but I think especially probably with the product, right, the design of development of the product. So when you think about the last four years at Cherish and where you're at now, are there a couple things that like really stand out in terms of being able to iterate on a product, right, especially with like first principles thinking, which seems like you very much have adopted throughout your career. What do you, in essence, what do you think is most important, right, for other founders and CEOs that are in the throes of trying to quickly iterate on their product, but doing it in most cases with pretty limited resources.

Yeah, especially when we talk about resources, sometimes too much money or too much resources is a bad thing. And so one of the biggest lessons we've learned is the power of doing more with less that allows you to focus on what matters. Really remaining incredibly focused on the thing that differentiates us rather than all the other things that everyone else can do. that's been a key part of how we've gotten where we are.

Another really incredible lesson learned through this journey is the power of iteration that one of my closest mentors, advisors, colleague, investors, investors at Cherish sent me a link to an HBR article about two years ago where he said, I have now figured out what you're doing because our plan kept changing. changing all the time. And it was really all about we were learning every day and we were discarding things that weren't working and we were exploring things that could be alternatives constantly. I think that's been one of the biggest reasons why we've gotten where we are. And lastly, to tie it all together, back to the earlier point about real artists, we outsource our ideas.

We reach into our investor and advisory board and other extended family, literally all the time every day, asking questions, asking for ideas, asking for opinions. And we build feces and derive conclusions, not by listening to our own echo chamber, but by really bringing in lots and lots of input into decisions big and small. I think that's been just really fascination for how this company has reached where it has. And it's also been awesome for our culture because our culture is really all about now. Hey, pride of ownership is really in achieving a better result and awesome outcome rather than, hey, that was my idea. It's really how do you get to an awesome idea rather than pride of ownership of, hey, that was mine. Yeah. And I think one of the trends that's going to emerge from the rest of this conversation is this culture of really like tapping into a community, right?

And your community could be various stakeholders. But the feedback and the insights and the information and the details that you've probably been able to glean to this culture of really community first. I think it's very unique, right? I think in life sciences and healthcare in general. But I'm personally a huge proponent of it, right? Because the notion is always, of course, you've got to be as close to customers as possible. And most, I think the traditional approach is I'm going to conduct this traditional VOC exercise, right? I'm going to go to a conference and sit down with five people or whatever.

But there's other ways to do that. And I would say other ways to more effectively do that where you can kill multiple birds with one stone, if you will. And this kind of joy or joys or concept that you've been undertaking is a great example of like how you can begin to not only foster relationships within users, but get a lot of feedback to inform your design and narration and a lot of intelligence. of what people are truly looking for or wanting for, right? And you talked about Steve Jobs already. He's famous for not, what's that Henry Ford quote about not asking, if you ask people what they wanted next, it would be a fast divorce, right? Instead of a new car.

Exactly. You're going to pick up on those types of insights by being in the mix with your luxury. Exactly. That's exactly it. Listening. I gave another interview recently where we're talking to young entrepreneurs. And one of the most important things is just listening.

And that is a constant activity. It's not something that you do at a conference or once a quarter. It's something that you do every minute of every day. It becomes the lifeblood of a company and becomes a culture of a company. And that's really what we built here at Paris. It's a true listening organization. We're just constantly inhaling input. Yeah, I'm so glad you mentioned that because it's so true.

Like this idea of getting customer feedback or listening, right? As you mentioned, it's not just a one or two time. or three time for your activity, it should really be constant and always on, right? That button should be always on, right? The signal should be always on looking for additional feedback, right, that where you can be in the exact, connect the dots, right? And eventually that will probably elaborate to a little bit more of a formal roadmap, if you will. But ultimately, you want to have those a lot of signals and they should always be on. I want to talk a little bit about fundraising because it's a nice, a nice segue, but the other point that you mentioned about scarcity,

it reminds me of I had a conversation I had with Dr. Stephen Michelson. He was on the program late last year. I think we published it over this year. He's a cardiologist founder of Fairer Pulse, which Boston Scientific acquired is doing quite well with. But he mentioned that very same thing. He's now maybe he's in a little bit of a different position to raise more capital, right, than he was 10 years ago

when he was first getting started. He's, but that doesn't necessarily mean that I want to, right? Because scarcity can be really powerful. And it's amazing. I think his word, his phrase was like, it's amazing how much capital you can burn through and not really accomplished much. And the flip side is true is you can sometimes do a lot more with less capital, much more than you would ever expect. It sounds like maybe you've had similar thought of thoughts around this concept.

I could go long on this topic, very long, just based on my experience across five companies and with others where I've been an advisor, a consultant into the organizations, sometimes having too much money means you wind up doing things that you just don't need to at that moment. entire department's entire exunctions spring up that aren't really necessary for that evolutionary stage of an entity of an organization but they will spring up if there's money for them and they will consume the money and then you'll have to go raise more it's bad for everybody across the board until you get to that there's got to be staged appropriate funding is really my belief now there's going to be stage appropriate strategy there's got to be stage appropriate boards

There's got to be stage appropriate. And it changes with every stage. You evolve. Once you actually achieve a certain target, net goal, right? Now you need to pivot to what's next. And that will require its own way of capitalization, and it will have its own set of priorities.

I think being super disciplined about the capital you raise, how much you raise, when you raise it, is great to keep you focused on the one hand. And on the other, it's really awesome for your investors because now you're not diluting unnecessarily. You're not raising more capital just to burn it. And so it all really adds up. We've been just, we've been super diligent, meticulous in how we have been so careful

in what we spent capital on. It's been about the invention. It's been about actually making it work. Then it's been about how do we build it? many spend about how do we scale that and take cost out. It's stage appropriate stuff. Yeah. I love that phrase, stage appropriate, everything, right?

Because it's not just applicable to fundraising. It's appropriate to the strategy. It's the, it's possible of the initiatives ahead. And I always, not to say that you don't want to be thinking two or three years out, but I always have a little, there's always an aspect, me personally, roughly a little bit when I hear, whether there's investors or other stakeholders, I want to see the three-year roadmap. Well, I get the question, but like any startup is going to evolve quite quickly.

And it's not like you don't have an idea of where you're going, but if you're optimizing for something that's at three years, it's like there's likely going to be a lot of change along the way. And that's operating in this expectation that a startup is linear. I mean, in reality, it's like up and down. Hopefully you're going to get, you're going to get there. But it's a lot of, it's a lot of iteration and a lot of evolving. Especially if you're inventing things because you just don't know when those conventions will work. You just don't know how they will work. You just don't know what you will discover along the way.

And yes, I think roadmaps are great for vision setting. They're great for goal setting. But that's about their role. Everything else is the reality that you deal with every day and iterate. Learn from and iterate. By the time you're done, revision might be bigger or smaller. By the time you're done, you might have actually pivoted something entirely different because you discovered a better business along the way or a better technology.

along the way. You just never know. That's what makes this so much fun. And we're minting every day. We're getting to wake up every morning and do something we really care about and create new things. It's awesome. Let's say I'm especially excited to talk about fundraising now coming off this first part of the conversation. Because you've been pretty, I would say, vocal, right? On LinkedIn, etc. We'll certainly, you know, mention your LinkedIn profile, but about just a different approach to fundraising. And I'm just with your, the fact that you've built numerous companies already, you have a lot of connections, right? You probably could have, you probably could have raised capital in a more traditional sense for chairs, but you've decided not to you by, by intention.

So I'd love to get this kind of two-part question, right, is this approach to trunches of capital, right, that's not maybe not all coming classic series A or a traditional CIP. I'd love to get your experiences from my classic pros and cons to that approach. And then maybe I'd like to maybe segue into if someone else is in the same boat, which I think is going to be true, that those are listening to is like, I like this conversation. I like where this is going. How do I effectively start? Like, how do I see doing this? So maybe we can get to that here in a second. But I'd love to learn a little bit more about kind of your experiences with this kind of atypical fundraising strategy. Yeah. So I think one of the themes that has really become very obvious appearance

in our journey it cherishes, not just the stage of appropriate funding, but also just a very purpose-driven design of everything. And so we designed our capital raising strategy around the reality of building a hardware device. One of the lessons I learned in previous companies is that folks who build hardware are up against an even deeper capital raising curve then folks build software. Software just requires bodies and an idea. Hardware requires, well, hardware, and you don't know whether it's going to work.

And it requires leaps of faith in the creation of something that doesn't have any scale, any economies of scale, until it actually works, and then you can math-produce it. But until then, you just don't know if it's going to pan out. Software at least can feel how it's going to get there because it's been done so many times before by so many teams around the world, that you can invest in an idea around software and have a sense of risk. The hard way that sense of risk is just, that measure of risk is very, very hard to end down.

And then you take something like what we have done, which is go and invent a way of using radar to sense these things when, as I said, at the very beginning, I was told, this is impossible. you're not going to get there. People have been trying it for 40 years. There was no way to capitalize that from traditional funding sources

with any meaningful valuation. And it's just not going to happen. And yet, we started with the approach we took in raising capital. We started with a fairly high cap on a safe, and we've never looked back ever since. Every step of the way our valuation has gone up because of the folks have invested. and then because of the milestones we've achieved,

and then because the folks who've invested in those, and then because the milestones we've achieved, right? So that builds upon itself. I think hardware, especially hardware that requires invention, because we didn't just assemble things that existed, we literally have to start from zero and imagine how to solve this problem, then invent it, and seven hardware iterations later were entering market.

And by that time, the typical hardware team has done a proof of concept. They've exhausted whatever capital they had, and they've managed to get bought by somebody who's going to scale them. That's usually the story. And we said our vision is so huge that this deserves something, this is a very different outcome. And so we took this completely unorthodox approach to capital raising out of necessity. and also out of recognizing that we were, the value of what we're building would not be recognized

until it worked. So we had to capitalize ourselves until that. And I don't want to make light of the phone follows function very much. Hey there, it's Scott. And thanks for listening in so far. The rest of this conversation is only available via our private podcast for MedSider premium members. If you're not a premium member yet, you should definitely consider signing up. You'll get full access to the entire library of interviews dating back to 2010. This includes conversations with experts like Renee Ryan, CEO of Cala Health, Nadine Miarid, CEO of CVRX, and so many others.

As a premium member, you'll get to join live interviews with these incredible medical device and health technology entrepreneurs. In addition, you'll get a copy of every volume of MedSider mentors at no additional cost. To learn more, head over to MedsiderRadio.com forward slash premium. Again, that's MedsiderRadio.com forward slash premium. You know,