Medsider: Learn from Medtech and Healthtech Founders and CEOs - After Selling 2 Cardiovascular Companies for Over $1 Billion, Duke Rohlen is Now Hoping to do the Same with Spirox and Advanced Cardiac Therapeutics

Episode Date: May 31, 2016

Jack Dorsey received quite a bit of attention when he was recently announced as CEO of Twitter.  Why?  Because that made him CEO of 2 of the most rapidly-growing tech. companies in Silicon Valley at the same – Twitter and Square. Well, medtech’s version of Jack Dorsey might be Duke Rohlen.  Duke led FoxHollow Technologies...[read more]Related StoriesWhy Intersect ENT is an Example of Hope for the Medtech IndustryAre Medical Device Models the Key to Building a Lean Medtech Startup?Substantial and Sustainable – 2 Words That Medtech Companies Should Get Used To 

Welcome to Medsider, where you can learn from experienced medical device and med tech experts through uncut and unedited interviews. Now, here's your host, Scott Nelson. Hey there, ladies and gents, just a few quick messages before we get started with this interview. First, if you're a fan of this podcast and have enjoyed listening to the episodes over the past five or six years, please do me a favor and go to the app store and write a short review. It's a relatively simple thing to do, but it helps. a ton in terms of increasing the visibility of the Medsider podcast. Please do me a favor and do that when you get a chance. Second item on the list is in regards to podcast players. Now, if you're listening

to this podcast on the native app on your iPhone, I would definitely encourage you to check out a different player. There's quite a few available. I personally am a fan of Overcast for a number of different reasons, but allows me to listen to podcasts at various speeds along with a lot of other features. Now, Overcast is a paid app, but it's well worth it, believe me. So check out Overcast. or any of the podcast players that are currently available. Third item, before we get started, is in regards to the audio quality. Now, this upcoming interview is with Duke Rowling,

and it's really, really good. Duke is a fantastic med tech entrepreneur, and he's got a ton of valuable insights to share. But the first 20 minutes or so, we ran into some slight audio difficulties. So just bear with us while we get into the conversation, it'll be well worth it. Now, in regards to that,

here are some of the topics or questions that Duke and I are going to cover. First, how Duke and his team at CV-Enguity celebrated after selling to Covidian for approximately $300 million. Why the CV-Enginuity team pursued a U.S. only strategy, which is contrary to what most early-stage med-tech companies do these days. Duke's previous relationships with the leadership at EV3, which is now part of Medtronic, and why those relationships were critical to closing the CV-Enginuity deal with COVIDian. How Duke secured a really unique $300 million collaboration with Merck while serving as president of Fox Hollow

technologies and the major lessons Duke has learned raising money for four different early stage medical device companies. There's a host of other things that we get into during this conversation, but again, bear with us through the first maybe 20 minutes or so. It will be well worth it. All right. So without further ado, here's Duke. Hello, everyone. It's Scott Nelson and welcome to another edition of MedSider, the place where I interview proven med tech thought leaders and other healthcare industry experts. And on today's program, we've got Duke Rowling. And before we get into the conversation, conversation with Duke, let me provide a little bit of information in regards to his background.

Currently, Duke serves as the chairman and CEO of Spyrox, as well as chairman and CEO of Advanced Cardiac Therapeutics. So he's running both companies, which we'll certainly get into later on in the conversation here. But prior to Spyrox and Advanced Cardiac Therapeutics, Duke served as the founder and CEO of CV Ingenuity, which he sold to Cavidian, which is now Medtronic, back in 2013, for approximately $300 million. Before founding CV ingenuity, he spent some time at Fox Hollow Technologies, eventually becoming president,

took that company through an IPO, and eventually sold it to EV3, which is also now part of Medtronic as well, for roughly about $800 million, and that was back in 2008. Duke received his MBA from Harvard and his BA from Stanford University, so he's got perspective from both coasts.

Without further ado, Duke, welcome to the program. I appreciate you coming on. Thank you very much. Thanks for having me. Let's start with a couple of your past exits with CB Ingenuity and then Fox Hollow. And then we'll kind of fast forward to the present with Spyrox and Advanced Cardiac Therapeutics. But with CV ingenuity, I mentioned in the intro here that you sold it to Cavidian back in 2013 for roughly about $300 million.

Raised about $30 million in venture capital. So a huge win from anyone's perspective. And so if you think about when you got that deal done, you know, all the due diligence was finished, board and investors have signed off. Do you remember how you celebrated that win with your team? It was sort of a bittersweet moment for a bunch of employees that were really committed to growing this company for the long run. And the engine was there. So I think the people were actually surprised that we had decided to pull the trigger, even though the exit value was high and the return on equity was high. I think there was, like I said, a bittersweet moment where this family that we had created and it was a small family that had worked exceedingly.

which is how we were able to move the company forward with such small amount of capital. That family was, I think, going through excitement at the concept of monetizing an asset quickly, but also a little bit of trepidation about what happens next and potentially the separation anxiety associated with the stinger standing. We did have that meeting at the company, and then we went out and we celebrated with a bunch of bottles of duckhorn, is the wine that Cavidian used as the code name for our deal. So it ended up being great, obviously, but there was a lot of concernation amongst the employees as well. That's cool. I love the story about Duckhorn. I think in my time at Cavitean,

I do believe I remember hearing that name and did not realize what it was for. So that's a good story. Before we get into some of the strategies that you guys employed in that successful exit, But I want to ask you a question about the kind of that bittersweet moment. Is that something that you see more often than not in your experience in early stage med tech companies? Yeah, I think mixed emotions come from just being galvanized, the whole engine being galvanized around doing something big and lofty and creating something that has real meaning. And these companies that get sold are sold because the acquires see that there is tremendous

opportunity not only with the technology but with the team. so they want both. But when you do that, when you've created this engine of feeling, you know, of confidence and capability, there's worry about, you know, turning it over, there's to somebody else and letting them affect the outcome of that company. There's concerns about, you know, the way that the senior management of my company's run up versus the senior management of some other company. There's an unknown there that's concerning. And there's, you know, just inherent to transition, there's fear, right? And so these people end up feeling like, gosh, I really liked what we had going with this small

company. Am I going to still like that when I'm part of a bigger company when this deal transaction is closed? So there definitely is. And I think that nobody, part of a great company, feels great. No matter what the price tag that you're getting for the company is, nobody feels totally great about turning it over to somebody else. That's an interesting point. And I was just going to ask you about that.

I almost wonder if it's a sign of a really great culture and a lot of really good progress if everyone kind of on the team describes their feelings as sort of bittersweet. So, yeah, interesting that you made that comment. I think that, you know, the way that families work or the way that friends work, the way the company's work is through transparency. And as a company gets bigger, a lot of times transparency gets shut down because bureaucracy starts infiltrating an organization necessarily, right? We need to basically have the right amount of bureaucracy in order for a big company to scale.

But the companies that I've run have had incredible transparency where everybody knows what we're doing. Everybody feels bought into a vision. And so when you start thinking about going to another company that's not going to have that, I think that there's a lot of concern. Transparency to me is our culture. Culture is the people. And that starts with me, obviously, and that goes to everybody. think that there's transparency and that makes people feel good about the great things and also

collectively unified around solving the problems of the challenging things, right? People enjoy being empowered and that's what culture to me represents. It's concerned about that going away with big companies. It seems like you read so much about culture, especially within, you know, startups these days. I mean, you're in the heart of Silicon Valley there. So easy to read, you know, and maybe understand at a high level, but much more difficult to sort of ingrain within a culture and a company. So that's cool that clearly, obviously, you've been able to do that with the companies that you've led. So I appreciate you mentioning that. Let's get on to some of the strategies that you employed because, like I said before, you know,

you raised, you know, a pretty light amount of capital and eventually sold CV ingenuity for roughly $300 million to Kividian. You know, that wasn't just luck, you know, luck of the draw or maybe good timing, you know, certainly maybe some of that. But is there a few strategies that you can think about that really, you know, maybe propelled you to another level faster? And maybe one of those that I'm thinking of is, you know, doing research for our interview now is that you really focused on a U.S. only strategy from the very beginning versus an EU-only strategy, a Europe-only strategy, which I think is unique, especially for the era, the METSEC era that we're in right now.

It all comes down to making the vector towards value creation as straight and focused as possible. And, you know, so from inception, you have to say, okay, is the market big enough the company can actually be a company, or are you building this thing to have huge opportunities in their single products, and there's an ability to go after those products to be a standalone company? I would say NebRO is an example of that. And then there are other companies where the market is smaller. With CV ingenuity, we recognized that there was an enormous need for a drug coat of balloon by all of these big companies, and we recognized that we weren't going to be first.

So, okay, what is the value-driving capability of the technology, and we realized it wasn't the balloon. So we decided to go on the Evercross loop from COVID. We realized that it wasn't European sales or European approval. So we decided to forego any effort in Europe, aside from clinical work that we did in Europe with Germany and Germany. And we decided that the biggest play with the lowest hanging fruit in our host of the coronary space. So we completely alienated any efforts that could have compromised our vector and went straight

after the peripheral market in the U.S. without any focus on anything outside of just the chemistry for the drug, obviously, using the ever-crossball. So we were very, very tight. What that did is allowed us to be very, very lean as a team. So we had a core group of people that were exceptional. I think Philippe Marca, who was the chief operating officer of that company, is best in class in terms of his ability to do what he needed to do in terms of getting

approvals, coming up with clinical strategy, regular story strategy, enrollment, et cetera, incredible. And then we worked really, really hard with that small group of people toward those endpoints. That'll enable us to be very focused, as I said, but then also focus saves a lot of money because you're not spending things on distraction. So focus and cost savings helped us raise very little money. And then when you raise a little bit of money, you have a lot of room for arbitrage, right? and you can go and sell for $300 million, or you could still get an incredible return on equity for, you know, $150 million, which opens up the buyer universe.

By opening up the buyer universe, you end up with more offers, which just by virtue of the fact that you have more people interested, even though some are at a lower price and some or higher price, you know, inflates the value of the company. That framework that you utilize really focusing in on that one vector, I think, is really beneficial and probably is a key learning point. On that note, did you feel like by ignoring the coronary market, by kind of ignoring other regions, you know, Europe included, and just focusing on the peripheral market in the U.S., did you feel like that was a risk?

How did you overcome, you know, balancing the fact that you wanted to just focus on that versus maybe some alternative paths that could have potentially worked out? We didn't have robust clinical data, and yet we had a very, very revolutionary technology with Silverhawk and aporectomy. My whole mindset was towards clinical data. And I looked at the peripheral market and I said, gosh, look what happened with drug-coated stents in the coronary market.

There was an enormous uptick based on clinical data that demonstrated utility within nine months. You have 80% of the, you know, the 80% of the balloon angioplasty market, right? So my feeling was that the peripheral market it, you know, and this is back in 2008, 2009, there was a lot of data that was still made to drive utilization.

And yet, I felt if you had that data set, you'd be able to get in command significant market share. So, no, I never viewed it as a risk. I viewed it as a trade-off for sure. But I was very confident that with clinical data, you could go after, you know, a billion-dollar peripheral market and make a huge inroads. And I felt it was more of a race to be within a certain time frame of the leader, which was Mutonics, and to show demonstrably better data.

And I felt that was the risk not going after an isolated peripheral market. I want to ask you a little bit about when the deal with COVIDian came to fruition. But before we go there, I remember reading about the fact that you basically manage your clinical trials internally versus maybe the more common approach is working with an outside. CRO. Can you talk to us a little bit about that and why you made that decision and whether or not it was effective? Yeah, I mean, I think it turned out to be incredibly effective. There was, you know, just like I was talking about the beginning of this conversation, transparency is important. And transparency establishes trust and trusts. What we did is we said, let's go get very, very good high-rolling

physicians that trust us and they're going to go the extra mile because not only are they getting paid well, but more importantly, we nurtured and engendered trial. And then once we started the trial, we were able to actually end uprovenous velocity in terms of the moment. Why were we able to do that? We were able to do that because it was us who's actually dealing with not only the physicians, but the clinical staff. Some of the accountability and some of the personal loyalty goes away when that's outsourced. So even when you get to doing a bigger clinical study, I think it's imperative that the principles of normalization. are actively involved in recruiting sites, are actively involved in managing not only the

physicians working with those physicians, but also working with the clinical staff, because the clinical staff is obviously as important to have buy-in as the physicians. It requires more work, but my whole philosophy and my ethos about running these companies is people like to be part of success, and they're not afraid of hard work, more than they like to be underutilized. if you push these people, if they're doing more than they possibly can, they feel great. And as do I, or as the physicians. It's the lack of momentum.

It's the lack of tension and aligncoming timing standpoint that I think causes some of these things to break down. And so we focused on doing it ourselves, and I think it paid off in space. To be candid, I wouldn't have expected you to answer that question in that way. after hearing you explain it, it makes a lot of sense, especially in regards to, you know, sort of empowering your sites, your trial sites, to sort of get involved and feel like they're involved in what you're trying to accomplish as a team and as a company. So that's very interesting. Yeah, I mean, everybody wants to feel important, right? And everybody is important if they're treated their right way. And I do believe that these relationships with the sites,

when you think about the most important thing for CBI was a positive clinical study. So given that the most important thing was that positive clinical study, you know, study, I felt that the, you know, it was the best use of my time and Philippe's time to make sure that that study rolled quickly and perfectly, you know, and I would never have outsourced that to anybody, no matter how good or good they were from a CRO perspective. It's just too important for the mentality of the company. Before we get into the timing around the deal that you did with Cividion, because I want to ask you about how your past relationships impacted that, Anything else that you want to mention in regards to how much you and your team were able to get done in four years?

Any other strategies or tactics that you employ that would be valuable for the audience to know about? One of the things I think challenges small companies is the lack of focus, right? And the lack of focus a lot of times comes from answering to a lot of different opinions. Someone will say, okay, I think you should be going into Europe, or someone will say, I think you should be doing this or going to the coronaries. And I think that what we did is we raised our money. We raised the money from NIA. We raised the money from our individual investors before NIA with a very targeted approach. And that targeted approach allowed for buy-in, which took away a lot of questions or strategic discussion at the board level on a going forward basis.

We knew when we were going. Everybody was galvanized around that mission. And everybody worked incredibly hard to make sure it was realized without. distraction. I think that's a critical piece of any small company. And if you look at the companies that spend a lot of money, look at companies in the spine, right? They've tried this, they've tried that, they've gone to Europe, they've started commercializing Europe. These things, you know, they all go back to a fundamental initiative, which is, are you building this to sell? Are you building this to be a standalone company? And what is the fastest way to get there and the most

cost-effective way to get there? But that alignment up front is critical, in my opinion, to be cost effective. That's a good little anecdote that you pursued investment money with that purpose in mind. That's great. You mentioned NEA, and I know I remember reading an article by I think Justin Klein, who led some of those rounds of investment with NEA. But he made a comment about how, you know, you've done a fantastic job in building relationships at former companies and how that helped to sort of not only get the deal done, but, you know, get it done in a way that was a win for everyone. So can you speak about that and how some of those past relationships that you forged at EV3 and at Cavidian led to the eventual sale of CBI?

Companies are bought strategically, not opportunistically. Meaning you don't go develop a company in a black hole and then hope to sell it to somebody when you have approval. What happens is you have a lot of dialogue, you have a lot of strategic discussions with a lot of companies and let them know what you're doing and when you're doing it, and then they can monitor how you do it, right? Are you effective at doing what you said you're going to do? When we sold Fox Hollow, that was how we did it.

I actually sat down with their CEO, who was Jim Corbett at the time. And from those initial discussions with Jim Corbett, I got to know Stacey, and I got to know the other people that were involved, including Borberg over in E.3. So then when we sold that company, it was never expected that I would stay at that company in my mind, and I was very clear about it that I was going to go and do something else. So I started to see the ingenuity, you know, during the deal. phase of the Fox Hollow deal. Remember when we talked about that drug code of blue?

Well, I'm actually building a team that can go and create that, and I'd love for you to follow us. Because we were close at that point, because we have engaged in a lot of dialogues about where the peripheral vascular market was potentially the disruption that could come from drug code of balloons, she was very interested in understanding what I was doing. I also think she had some confidence in my team that we could pull off something as audacious as developing a drug code of balloon. So, you know, our series A, our seed investment included money from, from CVIDIA. That was all driven by, it was actually EV3 at the time

before they merged in the committee. That was all driven by relationships that we had formed as I was exiting Fox Hollow. So relationships are key, and I think one of the critical pieces, just like, you know, the CEO or the person who's driving strategy, these companies, has to be involved in the high value initiatives for CBI, it was the clinical enrollment. They also have to make it a priority to know personally the buyers, to get to know them, to understand what they're thinking about, and to be there?

Yeah, I'm here. And to engage them proactively, right? I probably met with COVID. or EV3 25 times. I'm not kidding. Wow. Maybe 20 times before we actually did the transaction. And Covidian knew what my end point was.

They knew that I was going to sell the company at IDE approval. And so they had a lot of time to do diligence on the company, understand what the opportunity was. And so when I said, listen, I want to sell the company and we're going to do it. and you could be competitively advantaged if you go and move quickly, they responded immediately. They also knew that optionality is what I completely subscribe to. You have to have options. And they know that.

I was very transparent with, hey, listen, if you don't want to buy it, we're going to go sell to somebody else, and there are a bunch of buyers that would want it. So either step up and step in at a big level or step out. There was a lot of confidence in my ability to communicate that. The mantra of people buy from people, I mean, that applies, you know, even in this type of situation, right? They trusted you. They knew your experience. You'd built a relationship over years. Well, clearly, it impacted your success in making that deal happen.

That's right. It also impacts, you know, Ryan Durant, who funded, Ryan and Justin funded CV ingenuity. And Ryan and I had gone to Stanford together and didn't know each other very well at Stanford. And then, you know, Ryan had been involved and seen how we operated our companies at Fox Hollow. And he was a partner, right? Ryan was an investor and Justin wasn't an investor. They were true partners in CV, ingenuity, incredibly value-added guys who are great investors, in my opinion. And great because they buy in and great because they add value. You know, they buy into the strategic direction because I think it makes sense.

And then they add value on a going-in-four basis. but that relationship doesn't happen overnight either. You've got to nurture that along so that they're ready to pull the trigger on investing when it makes sense for them to do so. That's a great perspective. I think the takeaway is just like in all relationships, don't burn any bridges and really try to foster and take advantage of everyone you cross paths with as time goes along. Mettex a small circle.

That's right. It is, a very small world. As I mentioned in the intro, you spent quite a bit of time at Fox Hollow, led that company through an IPO, and then eventually, sold it to EV3, as you mentioned earlier, you know, participated in a lot of interesting things, you know, partnership with Merck that I think was, I can't remember exactly the deal size in that partnership with Merck that was, I think, fairly unique. You took that company through an IPO. You know, when you think about some of those deals that you participated in and led at Fox Hollow,

do a couple of those, you know, come to mind and any, any takeaways that were valuable for you now or valuable for your time at CVI or CV ingenuity? One of the things that I take a lot of pride in is the deal we did with Merck. That was a deal that was unprecedented at the time, which is that we were taking out this plaque and we thought we could figure out a way to use the plaque to help understand disease process after influenced by medicine. And so the concept was that you could get a baseline of disease in one leg when you do ad-directing on one leg by taking that plaque out and doing analysis on that plaque, you could put a patient on medicine.

And then when you go back and treat the diseased leg on the other side because, you know, almost all patients have bilateral disease, you could see if the medicine actually influence the disease process. So it was a really novel idea, and it was very – it was just a big idea, right? And so what I learned about that is it just takes a lot of knocking on doors. You know, I sort of with one other person, a woman, Angel Soida, who was in charge. of regulatory company. We just started talking to companies and trying to sell them of this vision because I felt

that the vision made sense. And, you know, and then we ended up doing this deal with Merck, and that deal became a, you know, multi-hundred million-dollar deal with Merck ending up and buying, you know, buying, you know, 10% of our company. And so what are the takeaways from me about that deal? I had complete conviction that there was value that was, that could be realized from this transaction. So as I was flying all the way around the world a lot of times and selling this concept, I knew I knew somebody should buy it. Somebody should engage in that. Again, it goes back to

knowing with confidence that there's a value-added proposition associated with the efforts you're doing and then being very, very tight about who could benefit from it and then going after that we ended up finding you know a group in Merck that was that had a very visionary approach to drug development and engaged in a big way the takeaway for me from that was hey listen you got to you got to work pretty hard and you got to be pretty clear about the value proposition associated with working hard in order for you to get anything to happen and it took a year it took a lot of knocking on doors and a lot of failed ideas and potential meetings for that to happen but it could it continued to before we ended getting that deal done.

That was one. The second one was, I look at the sell of the company. We were at this collection point as a company where we either needed to become an aggregate or company by buying other companies. We had looked at the lifestepht. We looked at Indyc out of Italy. And the feeling was we either need to leverage our distribution channel

or we need to sell to some other company. We were at the size where it was hard to sell a company because, you know, we had a lot of money in the company at that point. And I think the lesson for me was if you're going to be a single product company and if you're going to be public, you better have a pipeline. And that revenue line better be stable. I think that we found a great buyer in EV3. And I think actually EV3's ultimate acquisition by Kividian was, you know,

in large part attributed to the industrial logic of having atherectomy with their ballooning scent lines. So I think that the ultimate vision of having a multi-product company that leverages and infrastructure was realized, I would say that I think Fox Hollow could have done it if we had thought about being an agro meter company. But we weren't organized as an organization to be that kind of company from inception, which I think is the company. You have to be able to do that. that well if you're going to become a standalone company.

Back to your example with Merck real quick, if I understand that, right, I presume you got a lot of nose as you were pitching that that proposition, but the underlying, as you mentioned, the underlying conviction that there was true value, there was true clinical value for, at the core of that concept, sort of led you to keep knocking on those doors despite the nose. Is that fair to say? That's absolutely right. So I was working with some great scientists, a guy named Tom Catarramos over at Stanford, for the guy named Hugh and Ashley over at Stanford.

And we knew that there was a lot of rich data in the plaque, you know. And we knew that plaque should be influenced by drug. And if we could basically measure that influence or not, it would have tremendous value for companies that are spending hundreds of millions of dollars trying to get an outcomes-based study complete, right? So if you can know it's going to influence positively a disease process early, which is what we were trying to demonstrate, wow, it's worth an enormous amount of money. And that's where, you know, that's where I felt very confident when we structured that $300 million deal with Merck. I felt very confident in saying, hey, listen, this is worth $300 million, even though we were basically selling them the stuff that we were taking out of the bodies to throw away.

So it was that confidence that gave me the ability to negotiate a strong deal. Let's fast forward at the present time. So you're currently, I'm not sure if this will resonate with our audience. I consider you as the Jack Dorsey of MedTech. You know, you're running two companies at the same time. Jack is running square and in Twitter for those that are listening and aren't familiar with him. But I'm not sure if that's a fair description, but I'll leave it at that. Let's fast forward and talk a little bit about your experiences at Spirox as well as ACT, advanced cardiac therapeutics.

So you recently raised a series C for SpyRox. So congrats on that. I think I read around $45 million series C. So congrats on that. When you think about your experiences, and I want to contrast that with, I believe you also structured a deal with Abbott for ACT back in, I think, 2014. That was more of a corporate venture collaboration where they, I'll leave it for you to describe that. But maybe compare and contrast the two in regards to your experience is raising money for early stage companies. Well, I think that they're very different. So Firehawk is a technology for the ear, nose, and throat space. You're right. We did raise money from our insiders. So we had Venrock. We had

Aperture involved. We had WTI involved. And then we brought in Aesling and KKR. And so we have a very strong syndicate. Unlike most medical device companies, we have about $60 million in the bank. So we've spent about $10 million to get where we are and have a lot of money in the bank. And we're, you know, we're approved to start selling the profits. It's a very different paradigm is a different world right now where capital risk is a significant risk for companies. And so I thought, let's just take out that capital risk by bringing in the money that we need to get to, you know, 100 plus million dollar revenue company and bring in a group like KKR and the other syndicates that are involved in the deal that give us flexibility to make moves.

Make moves to either buy a company or to build a company the right way without have to worry about short-term, you know, short-term response. And so it's, to me, optionality in reducing capital risk is a critical part of being a MedTech CEO. The Abbott deal was the same thing. Advanced Cardiacarticeputics was a company that I've known and followed for a long time. They had gone sort of run out of business. They've run out of money, and we're looking at shutting down the company.

I call it Justin, who's a friend of mine, and said, let's go and recapitalize that company because I think there's a lot of interesting room. to grow that company and we get it. And so we took advantage of a lot of good work that had been done and raised $7 million. And it just so happened that Abbott was putting together this sort of this consolation of companies that was going to be the basis of their EP franchise. And they looked at Topir and they looked at Petronus and looked at ACT.

And so it made sense for us to not take venture money from them, but to give it. them the opportunity to buy the company so they they they put you know less than 30 million dollars into the company without any equity rights they basically just got the option to acquire the company and and and the acquisition trigger point became C E mark so what that did was effectively gave us a straight vector to what the value creation inflection point was and for us it was okay build this to C E mark approval and show that it works in humans, and then you get paid.

So we took out all market risk, we took out of capital risk with them, and made it a straight shot execution play. And then I was able to build an incredibly good engine to do that. Spyrox has an incredibly good engine, too. It's a different play, right? So we have big investors that have a lot of money, and so we are going for a big company there. But the differences in the model allow for me to actually manage effectively both companies.

You know, Spirox has got a great team. ACT's got a great team, but ACT is focused on Sigi Mark and Sell, whereas Spirox is focused on growing a company that can hopefully be a publicly traded company that has multiple products in the next three to four years. That's two completely, almost completely different paths. So that's very interesting. And I can see why you'd say that it allows you to kind of effectively manage both because of the clear shot to the goal, I guess, with ACT versus what you're trying to do with

Spirox. So before we end our conversation with a couple rapid fire questions, what is your general advice for those early stage founders or folks that are at early stage companies that are raising money or either need to raise money and maybe don't have the reputation that you have? Do you have any advice in regards to raising it with traditional venture capital investors or corporate, corporate venture arms? I look at companies as three parts equally important. I look at a technology part as being a third. You have to have a technology that addresses an unmet. need that has reimbursement, that can get clinical data and can come to market in a time frame and with a cost allocation, the cost to get it to market, that makes sense, right? If it takes you 20 years to develop something, the market's going to move beyond you.

So there needs to be like a period of time that that works. That's complemented. That technology is complemented by two things. A team, and what is the team? The team is not just... just the technology people that build it. The team is the people that are required to build, to develop on a business plan, right? So that could be the venture guys, that could be a private equity group, that could be, you know,

advisors, that could be if you're going into a highly political industry, it could be people that represent political persuasion. But the third piece has to be that business model. And so you have to have a business model. model that says not that we're going to be able to sell this amount of product to get this amount of revenue. You have to be able to say this is how we're going to get equity returns for the investors. So when you look at it as this whole, you have three contributing factors. You have a business model, which has to be sound and clear, right? Are you building a product

to sell or are you building a company to last? Two, you have to have a great technology that facilitates that. And three, you have to have a team that's all comprehensive. oriented to around you know to that business model I think a lot of mistakes are made when people just focus on the technology right we're going to build this technology because and there's not a lot of business strategy around that so that's that's the thing the second thing is that you have to be capital efficient you know you just look at all of the road kill that's on the side of of the roads from the last 10 years of medical device investing it's given this space an incredibly bad name and it's

because you're it's because they've spent a lot of money and they've they don't have a lot to show for it. And it's not because of anything other than, I think, changed business plan. And so I think you have to be incredibly capital efficient. Capital efficiency requires tradeoffs and tradeoffs allow you to, you know, tradeoffs are based on creativity. So you have to be creative and capital efficient with early money in order to be able to track later stage money. And then a third thing I was going to say is you have to have an ace in the whole. And the ACE in the Whole for me is somebody who knows without question everything about that technology, everything about that space and can give you competitive advantage over somebody else who doesn't.

And every one of my companies has at least one employee, if not two or three, that are what I call ACE in the Whole. So I work with the best and the brightest in order to make sure that we're nailing what we want to do. But I think if you nail those three things, you have a chance, right? And then things have to break your way in order for it to work out. Three really, really good takeaways in regards to, you know, raising money for early-stage companies. So let's real quick, before we run out of time, get to the last three questions, which is sometimes my favorite part of these conversations. So first, Duke, what's your favorite nonfiction business book?

So I have two. I have a book. I love Stephen Covey's book. I think that seven habits of highly effective people. I know every one of those habits. I've read those books maybe 20. times. I think they're phenomenal. I have them on tape, et cetera. I think that's the best nonfiction business book I know. And you can actually characterize all other books and what

these business guys have done into those habits if they've been successful. And it's really true. I also read a book about five years ago. It's about this guy, Peter Barton, who founded Liberty Media. He ended up dying of cancer. But his book was Don't Fade Away. And it's an incredible book about his life and lessons and balancing family work. and career aspirations and those are my two favorite books. So is there another CEO or business leader that you're following right now? My favorite CEO is Bezos from Amazon. He basically lives by the philosophy of attack, attack, attack, you know, let's keep going,

keep going, let's keep going. He thinks big, he invest the right amount of money. He's grown a company that's profitable and that's just taking over the world. He's not in the med tech sector, but he's a guy that I think is extraordinarily bright and has combined beautiful strategy and vision with unbelievable execution. And then lastly, when you think about the course of your med tech career, if you could rewind the clock a little bit and give some advice to your 30-year-old self, what would that be?

So one time I was at Fox Hollow, a board member who I don't know if he liked me or didn't like me, but he told me I was impetuous but honest, competitive but convivial. And I didn't really understand what most of those words meant at the time. But I wrote it down because I thought it was really interesting. I knew it was not a positive thing. And I rejected it once I went and looked up those words. When I thought he was dead wrong, I think he was dead right, which is, you know, I think you have to be impetuous, you have to be honest.

I think you have to be competitive, but you also have to be friendly, and you have to do it in a way that makes people want to continue to work with you because it is based on relationships. At the end of the day, you got your integrity and you have your relationships, and those will attract people that allow you to be successful. You've got to be competitive. You've got to push hard and you've got to attack, attack, attack. So I would advise myself to continue to be aggressive as my 30-year-old self.

Very good. That's good stuff. So I know you've got to get going to, but thanks again for your willingness to do this interview. Hey, thank you, Scott, and look forward to being in touch.