Medsider: Learn from Medtech and Healthtech Founders and CEOs - Changing Physician Workflows Requires More Than Clinical Evidence: Interview with Sonex Health CEO Bob Paulson

Episode Date: July 20, 2026

In this episode of Medsider Radio, we sat down with Bob Paulson, President and CEO of Sonex Health. Sonex’s UltraGuideCTR device is a minimally invasive technology that enables ultrasound-guided carpal tunnel release procedures to be performed outside the surgical suite using local anesthesia, expanding patient access and reducing the cost of care.Before joining Sonex, Bob led multiple venture-backed medical device companies through commercialization, including NxThera, acquired by Boston Scientific, Restore Medical, acquired by Medtronic, and VentureMed Group. Earlier in his career, he held senior leadership roles at Medtronic, Advanced Bionics, and Endocardial Solutions, which was acquired by St. Jude Medical.In this interview, Bob explains how to build a reimbursement strategy before your first clinical study, drive physician adoption when introducing a new care pathway, and raise capital aligned with value inflection points. Before we dive into the discussion, I wanted to mention a few things:First, if you’re into learning from medical device founders and CEOs and want to know when new interviews are live, head over to Medsider.com and sign up for our free newsletter.And if you’re ready to level up your medtech game, you should check out Medsider Courses — 8-week masterclasses covering topics like fundraising, M&A and exit planning, design and development, clinical and regulatory strategy, and commercialization.These courses, featuring hard-earned lessons from elite medtech CEOs, can be purchased individually or come free with our All-Access Pass.If you'd rather read than listen, here's a link to the full interview with Bob Paulson, which includes a link to ScottBot — an AI version of host Scott Nelson trained on every Medsider interview and playbook. Feel free to ask ScottBot any questions you'd like!KEY MOMENTS FROM THE INTERVIEW(03:19) - Bob's path from Medtronic to multiple medtech exits before joining Sonex (05:38) - Why 80% of eligible carpal tunnel patients avoid surgery — and how Sonex is changing that (11:11) - The reimbursement challenge that reshaped Sonex's clinical evidence strategy (19:07) - Reimbursement is a three-leg process: FDA, CPT, and payer coverage (22:07) - Reverse engineering your company from the exit you're trying to achieve (29:35) - How Sonex helped surgeons move carpal tunnel procedures out of the OR (39:06) - Sonex’s "pitcher-catcher" approach to physician and patient adoption (41:59) - Bob's framework for choosing investors who can finance the entire journey, not just the next round

And so the only way to develop a CPT or a procedure code that will allow doctors get paid in the office was to go get a new code. And we at the time didn't have the clinical data to meet the requirements either for coding or coverage. That's the thing that you always have to keep in mind is it's one thing to have enough data for either FDA clearance or getting a CPT code, but then you have to have enough data. support coverage. And so we started this process back in 2022 of developing the portfolio that would satisfy all three of those. 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, in this episode of MedSider, we sat down with Bob Paulson, president and CEO of Sonics Health. Sonics's ultra-guide CTR device is a minimally invasive technology that enables ultrasound-guided carpal tunnel release procedures to be performed outside the surgical suite using local anesthesia. Before joining Sonics, Bob led multiple venture-backed medical-devil device companies through commercialization, including Next Thera, acquired by Boston Scientific, restore medical acquired by Medtron,

and VentureMed Group. Earlier in his career, he held senior leadership roles at Medtronic, advanced bionics, and endocardial solutions, which was acquired by St. Jude Medical. Here are a few topics we explored in this conversation. First, what it really takes to establish reimbursement for a new medical technology. Second, how to drive adoption when your therapy requires physicians to change how they practice. Third, evaluating investors beyond the term sheet. And last, how does your most likely exit path shape the company you build from day one? Before we dive into the full episode. If you're a MedTech founder or CEO preparing to raise capital, you should check out the MedSiter fundraising cohort. This four-week live workshop combines small group sessions with

real-time feedback to help you sharpen your investor story, build a targeted investor pipeline, and run a focused fundraising sprint instead of a never-ending slog. Over the month, you'll walk away with an investor-ready narrative in deck, outreach scripts that actually get responses, a refreshed LinkedIn profile, a simple content plan that keeps you on investors' radar, and a repeatable system for running your raise. You can join the waitlist at medsider.com forward slash fundraising cohort. Again, that's medsider.com forward slash fundraising cohort. All right, let's get to the interview. All right, Bob, welcome back to Medsider Radio. Thank you, Scott. Good to be here. I know we were chatting about this before I hit the record, but it's been almost like half a decade,

right? It's, you know, showing our age, both of our ages. Exactly. A lot of water under the bridge. No doubt. A lot of lessons learned, too. But this time around, we're focusing mostly on Sonics, the company that you've been focused on for several years now. And so before we get there, though, for those that didn't listen to our previous interview and are maybe loosely familiar with your name, but don't know a lot about your background, let's start there. Give us like the one to two minute kind of elevator style, you know, bio on your experience in the device space over the past couple decades. Good. Well, so I started my career actually at General Mills doing consumer package good stuff. Then had to scratch the edge to go to law school, went back to law school,

practice corporate law for several years, went back to General Mills. And then in the early 90s, got the opportunity to go over to Metronic just after Bill George became CEO. So I spent about seven years at Metronic doing corporate development, corporate strategy. We did, Metronic did a bunch of acquisitions back in the late 90s. One of them was Soft Organic, Spine Company, and I had the chance to do that deal, leave the integration, and then we're outrun the surgical navigation business out in Boulder. And did that for two or two or two. three years and just never lost the urge to step over to the other side and do the work for venture back startup. So first went to advanced biotics in Valencia and then from there to

endocardial solutions here in the Twin Cities and then did a company called Restore Medical, which was in the E&T space. And after we sold that to Metronic, that was followed by Nextera, which was at a vapor ablation technology to treat prostate conditions beginning with BPA. We sold that to Boston Scientific in 2018. I helped a friend with a vascular company for a couple of years and then joined Sonic's Health back in late 2021. I'd one of the founders for quite a while, and it was the investor who had come in was looking for and experienced somebody who'd been there done it a few times to come in and help grow the company. And we actually had already, Darrell had already hired our commercial team leadership from NXera. to come over here to Sonics because it was another office-based disruptive technology

taking a procedure out of an OR suite moving into the office. So kind of put the band back together here at Sonics, and we've been making great progress here in the last four and a half years. Yeah, and we're reporting this in, let's call it mid, let's call it mid-2020. You've been at it for almost five years now. It looks like based on your LinkedIn profile in front of me here, and we'll definitely link to that in the full write-up on Medsider. But for those that aren't familiar with Sonics, you know, we're at July 4th get together,

and I know very little about this company. Like, what is it? What's the technology? Like, if I'm a patient, how do I get access to it? Like, tell me more about it. So Sonic's Health was founded by two male physicians, both of whom were sports med docs, PMNR, who had a lot of expertise in ultrasound, and they were seeing a lot of patients in their clinic post-carpal tonal procedures.

So upper extremity, extremity, neuropathies and entrapments, where the traditional, additional approach to relieve the impingement is to make a surgical incision to a cut down to wherever the impingement's occurring, cut the impingement, and then stitch the patients back up. And the biggest challenge with all these procedures is the wound healing and the difficulty patients experience. And because of where the location is, it impedes your ability to return activities and work. So of all of those various impingements that are out there, carpal tunnel syndrome is the largest of those markets. And the focus of the company was to develop a device that could be utilized in conjunction with ultrasound to take procedures out of the OR, move it into

a procedure room, whether that's an office, an ASC, or a hospital procedure room, but doing it in a percutaneous or mentally invasive approach that allows the patients to return to activities in days versus weeks or months. And so we're now at the first commercial procedures with our device was done in 2018, and we now have to feed over 55,000 patients. So in summary, the opportunity is that 80% of the patient is diagnosed with carpal tunnel been told it's severe enough you need a procedure, you need surgery, are choosing to avoid surgery because they can't afford to be out of work for weeks or months while they recover. And so the opportunity here is in performing this middle-invasive approach that's used as only local anesthesia. You close it with a pressure bandage

or a stare strip, no need for sutures and a very small, four to six millimeter incision in the wrist. And patients are backed activities in two to three days, back to work in three to five days, as opposed to several weeks or months. That's common following the surgical carpal tunnel procedure. Never sees it to amaze me like some of these like massive problems, right? Carpal tunnel, I think almost everyone that's listening to this has either maybe has experience a mild form of it or some sort of like something adjacent to it. The CEO has had the a simultaneous bilateral procedure. There you go. Yeah.

It's so it's terrible. I mean, right? Like, I don't know. Yeah, it's horrible. And everyone I think is probably nodding their head. Like this is awful.

But yet not a lot of great solutions until something like Sonics comes along. In terms of the technology itself, like what's actually happening? So it's obviously incredibly minimally invasive. It sounds like the recovery is pretty quick. but like what's what's the physician actually doing but tell me more a little bit about the science so the device that that we developed is a device that's optimized for ultrasound and for the anatomy for ultrasound for a local a procedure that can be done with local anesthesia so the device is actually it's a very like most it's complex but yeah it's very simple right so it's got so four to six

millimeter incision the wrist the doctor's holding an ultrasound transducer in one hand so they can visualize the entirety of the anatomy, and then the device is inserted through that four to six millimeter incision in the wrist. So you're staying away from the palm in the hand, which is where a lot of the difficulty comes if you do a surgical approach. And navigating under real-time visualization, the device through the carpal tunnel. And under ultrasound, you can see all the in it. You see bones, you see ligaments, tissues, nerve. Most importantly, you see the nerves, right? And that's the biggest thing you need to avoid the critical. anatomy in the carpal tunnel is the median nerve on one hand, or one part of the hand and the

only artery that's coming down from the upper arm and the other part. And both of those converge in the carpal tunnel. And so the device has integrated into the shaft of the device are two balloons that are inflated with saline. You can visualize that under ultrasound as well as the fact that as those balloons are inflated, it creates additional safe space in the in the carpal tunnel. There is a recess blade in the tip of the device that within the safety mechanisms of the design cannot be deployed until the balloons are inflated. So that way you know you've got, say, if the doctor can both visualize the placement of the shaft, they can see the balloons, they're ecogenic, and then the blades deployed and you're distal

to where the transverse carpal ligament. The issue is the transverse carpal ligaments are rubbing on the median nerve and entrapping it. That's what causing the pain. and so once you're underneath the TCL, you can visualize that on ultrasound, the blade's deployed. And then with an actuator, a thumb actuator on the device, the blade is pulled back along a track in the device and cuts the TCL. The doctor can then both visually and tactically confirm that they have a complete release. Device is removed, stary strips applied, pressure bandage, and a patient walks out and drives himself home if they want to. Okay. That's too. And I'm on the website now. There's, there's like a really, there's some really

helpful videos if you're listening to this and curious to learn a little bit more about kind of what's actually happening during the, during the procedure. But like you mentioned earlier, it's like it's simple to the patient, but pretty complex in terms of like how you've engineered the device, it sounds like. Yeah. Yeah. You mentioned over 50,000 procedures now performed. Kind of give us a high level over here where the company's at. I mean, is it full on like global commercialization or the geographies that you prioritize? Like, where, where's the company at? So we're U.S. only by design. So we're commercial. As I said, we've done 55,000 procedures to date, and that's been accelerating over the past several years. The biggest challenge the company faced

when I joined the company was that physicians were billing the procedure using an existing carpal tunnel release code, which the descriptor actually fits, but it doesn't, it's a surgical approach, and it doesn't pay in an office setting. And these are, both the endoscopic and the open codes have been around for 30 years. And so there was a little interest on the part of the society in modifying the existing code. And so the only way to develop a CPT or a procedure code that will allow doctors get paid in the office was to go get a new code. And we at the time didn't have the clinical data to meet the requirements either for coding or coverage. And that's the...

The thing that you always have to keep in mind is it's one thing to have enough data for either FDA clearance or getting a CPT code, but then you have to have enough data to support coverage. And so we started this process back in 2022 of developing the portfolio that would satisfy all three of those in the course of the last couple of years. I guess it was last year we actually introduced a second generation device where we made some significant improvements both in terms of taking or making the, device even more user-friendly. So form factor things that you'd learn over. We've learned over the first 45,000 procedures. The device worked exceptionally well, but as always, it was a first-generation device, and there's opportunities to improve. And then we also took a significant, by being able to be much more specific, we took significant costs out of the device. So cut about 40% of the cost of goods, reduced cost goods by about 40%, which gave us now a very nice, attractive gross margin.

for the product. So the last four years has been, and again, one of the requirements, as you know, Scott, for a new CPT code is widespread adoption. So you have to be commercializing in order to hit that somewhat arbitrary threshold that's decided on a case-by-case basis. And so we kept the commercial organization flat through over the three years. So 23, 24, 25 kept the organization flat at about between 8 and 10 territories. And as the new code was approved in the fall of 24, it went through the rec process in 25, and it went into effect in January 26.

So concurrent with that, we've now had the first expansion of the sales force with the new code and are going through the process of ensuring that the coverage is kind of consistent across the country and beginning to ramp adoption utilization. You certainly climb the reimbursement mountain, the coverage and reimbursement mountain. We've climbed and now we have to make sure that we can stay on top of it, right? It's a process that is opaque through everything.

I mean, it's opaque going through the CBT process and the Ruck process, and it's opaque from a payer standpoint as you have to be able to track claims or claims being paid. You know, a lot of doctors with a new code, their inclination based on experience is to treat a few patients and see if they get paid, but that's a three to four month process typically between the time you do procedure claims submitted and the payment comes in the door. We needed to accelerate that. We're very confident Medicare patients would get paid, but Medicare is probably, depending on the state, 30 to 40 percent of patients. This is a condition that affects a lot of working age people. So we needed to make sure that the docs,

would continue to treat patients commercially and submit claims because that's the only way you know if the payers are paying. And so we put together some creative risk sharing programs to incentivize docs to file claims through a third party reimbursement group that we're working with who can submit the claims and then appeal the claims if there's a denials. And knock on wood so far, if the industry average is 25 to 30 percent of approvals in the first year of a new Category 1 code, we're running, we're in the high 80s, six months in, but knock on wood. I mean, there's no guarantees, obviously, but way better than the other end of the scale. Right.

So we're cautiously optimistic. And, and again, in large part because, you know, the reason payers deny claims typically is either it's patient selection, right? It only works for certain patients and not others, and that selection criteria is not clear. it's because you don't have enough clinical data to support the new procedure and or it's more expensive, right? Those are the three primary reasons why new procedures, new codes don't get paid. And for us, this is carpal tunnel. It's the exact same. All three, both surgical approaches and our approach are all doing the same thing. You're transecting the transverse carpal ligament to alleviate

the impingement. And there's no patient selection criteria involved. If you've got carpal tunnel, that carpal tunnel, you have to have the TCO cut. Secondly, in terms of clinical data, we're now sitting at 21 peer-reviewed publications on 2,300 patients and 2,800 hands. And why that's important is that because of this approach that's so middle invasive, it can be done with local anesthesia, it enables bilateral, simultaneous bilateral procedures. And bilateral carpal tunnel is highly prevalent over 50% of patients. suffer in both risks, the condition. So that's great on the patient selection, the data to support

the patients. And then lastly, because this can be done as an office procedure, it's done in the lowest cost site of care. So it's, the health economics are, are positive compared to surgical procedure. You're not using an OR suite. You're not using anesthesia. You're not using a PACU post-procedure, and you're not using rehab services post-procedure for rehabilitating a deep incision. So we're on the right side of the clinical equation. We're on the right side of the cost equation. And, you know, that was the intention back four years ago to get there. But it's a long, it's a big investment to do all those studies.

We just completed an enrollment of the largest carpal tunnel, comparative carpal tunnel study ever done in the United States. It was over 1,400 patients. There are three arms. One was a ultrasound guided arm, and then there were two comparator arms, one open surgical procedure, one endoscopic, and we'll end up with probably six or seven publications out of that. But the first bowl is the data, two comparator arms studies, and then the ultrasound guided arm is out. The Medicare age patients is coming. The site of service paper's coming and then we've got a health economics paper that will be coming all four those will be coming in the back half of the year. Yeah, see a lot of that, a lot of that work over the past,

I call it a handful of years, really, you know, kind of now servicing coming to fruition. That's such a, I mean, huge congrats to your team. I mean, it's such a huge lift, you know, not just in terms of capital, but just the sheer amounts of work that goes into establishing a new CPT code. When you think about that, and maybe we'll get into this a little bit more detail. But if I'm new to this world, right, like say, for example, I've worked in with technologies that mostly utilize an existing code, general framework for other founders, CEOs that are maybe facing the same thing that you did when you first came into Sonics. Is it five years? Is that kind of a rough number? Is it three to five years, something like that?

You know, it used to be you could get a 510K through commercialized and get to 35 or 40 million in revenue on 40 to 50 million of invested capital. three to five years. And it's just really hard to do that now because if you think about the process of getting, if you have to get a new CPT code, so obviously, I mean, you start at the beginning and one of your first questions has to be, you know, you size the market, right? What's the NMETT? What's the accessible market? Blah, blah, blah. But then the next question needs to be, okay, does this fit within an existing code? And if so, that's one criteria. But if it doesn't, and you're going to need a new code, then you really need to flesh out what's required to get FDA clearance, how much of that is leverageable

and or what's going to be required to get a new CAP-1 code. And then once that code is issued, what data is going to be required for payers to pay. So it's really a three-leg process. You need to design to the extent that you can, those early studies, where the data not only meets the FDA requirements, but it meets what's going to be required for CBT and what's going to be required for pairs. And that adds complexity of the study, right? Because a lot of things that and understand if there's going to be comparative data, is that mean it's if you don't have to do an RCT for a randomized control trial for the, for FDA, are you going to have to do one or

you're going to have to do some other kind of comparative study to get the CAT one code, which has a requirement for a level one or a level two-a study. So, and that's going to go to how much capital you're going to need, how much time it's going to take, what kind of follow-up. You know, if you're in a situation where FDA is going to require one-year follow-up, then, you know, presumably whatever development time it takes you to start that study, that's typically a minimum of 18 to 24 months for the time you start the study when you get one-year data published. And then assuming you can develop an argument that meets widespread use without commercializing, first, then the process of getting a CPT code, and the year that the code is approved,

the following year is the Ruck process, and it doesn't go into effect until January of the year after. So if you have to get a new code, it's going to be probably five to seven years. Yeah, okay. Yeah, this is a good framework for those that are kind of staring down, maybe something similar. So I want to use the next half hour to kind of get into some functional topics and really kind of try to glean some key lessons learned that you've picked up on, you know, of the past couple decades running a fair number of startups. But again, for everyone listening, we'll link to it in the full write-up on MedSider, but it's Sonics Health is the website, S-O-N-E-X-Health, just as it kind of sounds,

sonicshealth.com. I would encourage everyone to kind of check out the technology if you're certainly a provider, but also if you're patient or know someone that's suffering from carpal title, like this is definitely something that you should consider. So, Bob, first question I have for you is kind of zooming out and thinking about all of the startups that you've been involved with, right, for quite some time now. multiple kind of exits under your belt as well. Are there like a couple key things that you've,

you know, you've really focused on integrating into Sonics over the past handful of years, you know, whether that's, you know, previous mistakes or things that you, you know, you did right over the last years that you really kind of really tried to instill and integrate into Sonics? You know, I think you always start with making sure you understand

what your investors' expectations are, what their time horizons are going to be, right? So where they are in their fund life, so you have a business plan and you lay that out, it's going to take X number of years. If it's a 10-year fund life, where are they in their fun life? You've laid out your capital requirements. Do you start with one investor? Do you need to put a syndicate together in the beginning that can take you all the way

through the process? And then in parallel with that, understand, you know, what the market requirements are in terms of how strategic you're looking at this market. If you have a, what's a good example of past few years, right? If you had another taver design, then you knew it was a, it was an arms race on IP. And so therefore, if you could prove that it worked, let me think about six that Metronic acquired. They acquired it on, you know, patient data of less than 10 patients, right? So they just had to prove that it worked. And because of where the IP was, that was enough to get a, strategic to move. That's the exception. Normally, you know, there are only a handful of companies that

will acquire early stage tuck in. So if you have a product that that will fit in somebody else's bag, then through discussions, whether it's with bankers or folks at the companies that are interested in the market opportunity, what do they need to see to be able to tuck that in? And how does that fit with your investor's interest? Or if their expectations are, are a higher return, then you probably have to go through commercial expansion. And then it's typically, you know, it needs to be non-dilutive inside of a strategic within a year, maybe two years, depending on the market opportunity. And then you have to go put it in reverse and figure out what's it going to take to get there to achieve those value inflection points

that will either bring in additional capital. You can't count on an acquisition. Companies get bought. They don't get sold. So you've got to be able to. to say here's a value inflection point and we'll be able to do a market check here. And if not, then we need to bring in additional capital that's going to take us through the next stage and the next value influxion to get to the next value inflection point. So that's probably the biggest lesson. And we had that long reimbursement discussion. That's part of it because bigger companies tend not to be,

they tend to be good at helping facilitate codes. But if they have to start from scratch, that's oftentimes. that's an overwhelming. That means they're not going to be able to generate the revenue internally until that predictable payment is there, or at least at the end of the tunnel is there. And so that's just going to be a factor. Yeah. Yeah. I'm not sure if you know, Dan Rose. Yeah. See a Limflow and E2 now, running E2 now. We were chatting about this the other day. Like, it sounds cliche, but like thinking about all the, all the things that need to come together for a successful liquidity event, rather that's, in most cases, an exit in our space to a strategic,

In some cases, maybe it's an IPO. There's like so many things that have to have to go right. And in your case, you know, you're, I think you're building even in a more challenging environment because you've got to have, you know, you've had to do all the work that, you know, leads up to a CPT, a CAT1 CPT code. And so the comment that you made earlier, like, I guess out of the gate was just alignment early on, right? Thinking through like, is this a, is this a tuck in play, right? Is this a play where I need to go generate a CPT code, right, to and commercialize this fairly extensively? I mean, just having, like, being able to kind of see five to ten years down the road so so crucial, even in those early years. Hey, everyone, let's take a quick break to catch you up on Medsider courses.

These eight-week courses are designed to help you learn winning formulas from world-class CEOs. Medsider courses cover topics like fundraising, device design and development, clinical and regulatory strategy, commercialization, and M&A. Each course covers the hard-earned lessons shared by the MedTech founders and CEOs who join our program. Medsider courses can be purchased individually or they're included at no additional cost with the Medsider all access pass. You can explore Medsider courses at Medsider.com forward slash courses. Again, that's medsider.com forward slash courses. Okay, let's get back to the conversation. 100%. Because, I mean, look at the public equity markets haven't been available for early stage med tech for years. It used to be a very viable option. That hasn't been the case for,

I can't remember since how long since early stage companies. There are a couple of windows, but now we're in a situation where, you know, you've got companies with $100, $200 million and revenue are stacked up waiting for the markets to open. So you have to assume that's not going to be a viable exit strategy in the next two to three years at least, right? And then the other challenge has been, if you go back to 2008, when the markets crashed in 2008, one of the challenges. So the IPO market's dried up, obviously, and the large MedTech, large caps to grow, they had to do so by acquisition, right? And so you had first, the, you know, the big guys pretty much acquired all of the midcaps, the two to $500 million companies. And then

you started to see the merger between the large caps. And now there's just a handful of large cap companies that that are still in the M&A and there's only a couple, Stryker and Boston, that have kind of systematically roaned by acquisition over the last few years. And they do do tuck in deals, right? Not to say it doesn't happen elsewhere, but it's it's kind of a one z-to-z market-specific kind of thing. So depending on the market that you're in and recognizing that, you know, to get inside of a large company now and get them to be a lot of, acquire means you have to be on the strat plan. You think about an annual strat planning process that concludes inside of a company in August.

It rolls up to the boards in September and October. Operating plans are finalized for the next year. If you're not on the strat plan, if your technology or your market is not in the strat plan, you're not there as a company, it's going to be another year typically before, you know, it's going to be considered. So, again, those are just considerations. so you need to be, use your contacts inside of the individual business units within big companies. And look, they're all fighting for capital too, right?

I mean, it's a capital allocation game inside of every large med tech company. And so there's just lots of factors that need to be considered as you map out your path. Lots of things that seem like I'm nodding my head as I hear you kind of explaining a lot of this stuff. But it's like until you've kind of been through the mix, it's hard to really kind of truly understand, you know, some of these topics. But on that note, I want to do, I want to circle back around to something you mentioned earlier talking about about reimbursement and the, and the, and the, and the, and the, and the, and the, and the, and the, and the, and the, and the, and the, you've for for sonics over the past handful of years. When you think about balancing the data that's, that's needed to generate or to convince a physician, right, to begin to accept to adopt this

technology, use it on their patients versus something that a payer is going to get behind, right? And you're even, you've been able to kind of get over even a higher hurdle because your mix of patients is, is largely private payers, right? It's not necessarily. CMS. And so there's, you've got to go out and convince all of these, all of these payers to, like, cover the technology too. So when you think about that balance, right, what's needed for physicians versus what's needed for patients, how are you kind of thinking about that as it pertains to kind of designing some of this, some of this clinical work? So you go back to the condition, right? So this isn't, what's a good example? It's not like I've got the next pain stimulation

technology for the spine, right? And so to be able to differentiate, so I'm stimulating this nerve versus that nerve, and here's the data to demonstrate that the efficacy is equal to better than safer, more effective, whatever. In this case, in our case, it's fortunately more simple. Everybody does the same thing. They cut the, or they transect the transverse carpal ligament. So the clinical data required for clinical adoption was and is less of an issue than moving surgery. So our biggest challenge has been hand surgeons are not trained in ultrasound, right? They cut. They open up.

They look. They visualize. They do whatever they're going to do. So whether it's nerve procedures or repairing broken bones, you do it through an incision, you visualize. They all know the anatomy, but we have to teach, we have to teach them ultrasound. How do you recognize the anatomy you already know in 2D black and white? Now you get 3D by doing the short.

view and long view with a transducer, but now you're interpolating that in your head. And what's been fascinating is you see the older, more experienced surgeons struggle with that, whereas the young surgeons who grew up on video games and gaming, I mean, using two hands to, it's, they pick it, I mean, right there. You show a residence that's going, oh, okay, boom, boom, boom, that's easy, right? They're not going to do a procedure for two or three years because they're a residency, but there's a learning curve. So education and training has been a key part of what we have to do.

And then back to reimbursement, funny thing, if docs don't get paid, they don't want to do the procedure, right? So to be able to convince them to put the time in to train on ultrasound and do this procedure, they have to know they're going to get paid because the first part of our company, the majority, over 70% of procedures were done in hospital procedure room. settings, that means you had to go through vac committees, right? And so that adds time to the, so no surgeon is going to say, okay, yeah, I want to spend the, I'll invest the time to learn ultrasound until I know that the vac is going to approve this as a new product or procedure. And so

it's more than just a little bit of chicken and the egg because how hard are they going to advocate if they haven't really done the procedure yet, right? To say this is better for the patient, they get it and it happens, but it made the timeline between I'm interested and I'm doing commercial procedures much longer than is viable long term, right? So now that there's predictable payment, the biggest time challenge has been now convincing surgeons who have done almost all their procedures in hospital or ASC settings, surgical suites, now getting comfortable doing it in the office. Now, a lot of other specialties have done this, and our team has done it in E&T. We did it in urology.

So it's not cut and paste, but it's, you know what needs to be done. But then it's getting first the physician comfortable and then getting their staff comfortable that they can do these procedures in a office procedure room. And it means they have to change their normal flow. It means they have to change how they schedule. And so this is really practiced development. It's not just a matter of, hey, do this in the office. They don't know how to do it.

They don't know how to set up the supplies required for this are minimal. You still have to package it. You have no OR suite. I mean, if you're in the OR, somebody takes care of all that, right? By doing it this way, we're taking over 80% of the waste in terms of sterile sheets and sterile drapes and this and that. And the other thing, we're taking all that out of the equation. and it works really, really well, but you have to teach them.

And it just takes time. So that means your field organization has to be able to be there to support and get the staff comfortable in using ultrasound. And if you're in an office that we're going to practice where there's staff turnover or there's not staff dedicated to a physician. And that's something else that they have to do is because now you're teaching a PA or a mid-level how to run the dials on an ultrasound machine. The doc has a device in one hand, a transducer in the other. Someone still has to take the picture for the patient record on the file. And it's just so it's just training. It's not, again, it's not rocket science, but it's a consideration.

Yeah. Just hearing you kind of riff on this topic, the technology has to be compelling enough, right? It has to be super compelling enough to convince all of these kind of downstream things to put all of these downstream kind of things together, right? And so, you know, hearing you explain the technology at the outset of this episode, it's like, It seems like a no-brainer, right? It's like kind of same underlying thing that you're trying to do as a physician, but like way more minimally invasive, way faster, with pretty easy recovery.

Now they get paid to do it, et cetera. Should be no-brainer, right? But then thinking through like all of these workflow related, you know, challenges too. It's like you've really got to have a compelling technology that gets people to lean in to willing to kind of change a lot of these. You really need, you really need, I mean, you hit on a really key topic, Scott, because you need motivated physicians. Right. So part of what our team has to do is we can't afford tire kickers. I mean, the time it takes to get through training,

the amount of time that we have to invest in terms of multiple visits to a site to help the doc get up to speed, make sure they're there. We can't do it. Doc said, well, let me treat three to five patients and see how they do. No. I mean, that's going to be someone to say, thank you. Glad you're interested. We'll come back when you're more interested because we have to be willing to

invest in the process to be able to do it. And 100% of the time, if you go to a high volume surgical carpal tunnel release surgeon and say, you know, here's this middle and base approach and all my patients all do just fine. Okay. And they say that because they never see the patients back, right? They do the surgery in the patient. And when the patient has to come back a week, 10 days later, to have their sutures removed, Doc doesn't see them, usually. The mid-level or the PA season, right? takes the sutures out, and then the patient's, oh, I'm having all this pain. And, okay, well, here's the, here's a physical therapy appointment. So then you go to weeks of physical therapy, and you're only going to see a doc again if there really is an issue. And the complication rate

is not that high with the surgical procedures. So it's really, it's a patient-driven, it's a patient-driven matter, and payers don't care, right? The fact that the patients are back to activities in three to five days, back to working activities in three- five days. They don't care about that. All they care about is the cost. So you have to appeal, the you appeal to the doctor is, first of all, that your patients are going to do a lot better. And they're going to be a lot happier. So when they have to come back and have an elbow or shoulder, or if you're an integrated practice, a hip and knee done, my God, I got back to my activities in two to three days. This is the practice to go to. And then they have to be able to wrap their

heads around the economics of they can in fact generate more net revenue by doing this in the office than going over to an ASC or a hospital outpatient where they're just being paid on their work RVUs. And so that's the third leg of complexity for our sales team is you've got to understand how that docs complicated. And as more and more practices are being acquired by PE firms and hospital systems. Now you have a hospital system-based employee. You need to figure out, are they flat salary? So Kaiser, as an example, they're paid a flat salary. They have no incentive to do more or less. All they're incentivized to do is do what's in the best interest to patients. And so the fact that they can make more money doing the office, they don't care. Yeah.

That's not part of what, right? Now, if you're in a hospital-based employee and you get paid based on work RVUs, then you're going to be adding up. Now, is that your base or is that just your incentive or is that their next year? And so you've got to kind of craft the story. You need to understand the economics of the doc and the practice and then shape your rationale or your advocacy about why they should invest the time to do this and how it's going to impact their compensation. Is there like a direct-to-patient kind of aspect of this? Or are you primarily relying on these high-volume clinics in a local geography to kind of do a lot of that? Kind of take the baton and and become, you know, they want to already be down for like the most patient-friendly practice?

It always starts with, what's a good thing? Think about it, inspire. It always starts first with the docs, right? And until you, it's a pitcher-catcher situation, until you've got the catcher set up in a market so that if you go direct to patient on a broad basis, you advertise that if the patient walks into the office, they're going to get an ultrasound guided procedure, right? The last thing you want to do is pay money to draw patients or to drive patients. It's like any kind of advertising.

If you advertise Cheerios and you go to the grocery store and the Cheerios are on the shelf, you're going to buy something else, right? You go into a practice that maybe one doc's doing the procedure, but the other three hand surgeons are not. Patient comes in, gets assigned to whichever doc has an opening and they don't offer it. So it's a timing issue. That said, where we do have practices that are set up, If the market opportunity is the fact that 80% of patients who need a surgical carpal tunnel release procedure sitting on the sidelines,

Doc, that means 80% of your patients that you could do this on. And they always say, oh, no, no, that's not. My patients all are to do fine. And then you show them the data. We show them acute EMD data that shows that they had, here are all the referrals that came into them from carpal tunnel. And here's the number of procedures they did. And so where did all those other patients go, Doc? And so the answer is they're waiting for a procedure.

They're not willing to do a surgical procedure. So then we can help them with, we have a number of programs where we'll do direct to patient within their practice. And the response rates of these things have been absolutely amazing. We'll have is not at all unusual to have 50 to 75 patients show up for a physician education seminar, right? Why? Because they're already diagnosed.

They already know they have carpal tunnel, right? And of those patients that show up, it's very common to see 50 to 75% sign up for a procedure that night. So they'll commit to go on a schedule and the doc then is just set up depending on how many days a week they're doing this. They've just filled their pipeline for the next two, three, four weeks. Yeah, it's one of the nice things I guess about solving such a glaring need, right, in carpal tunnel. It's like if you have it, it's so terrible and it's so painful. It's like pretty much do anything that's to solve for that, right? Especially if it's like, you know, something pretty novel and way, you know,

requires way less recovery time, et cetera. So, yeah, that's a good explanation. I like the picture catcher analogy that you use too because that's so so crucial. If you've got, if you're working on a technology, that does have this kind of direct-to-patient element. I know we don't have a ton of time left, but I want to get your take on capital strategy, right? Because you've raised a lot of capital over your career. Seen a lot of the ebb and flow, right?

and you touched on some of this earlier from like the, you know, how the market has changed, kind of post-2008 timeframe, et cetera. So if you're trying to coach up a newer CEO on how to how to go from kind of maybe some pre-seed money to now raising from institutional investors in their series A or series B and beyond, are there a few things that you typically kind of advise other, other newer, younger CEOs? Yeah. I mean, first of all, back to your business plan, you have to be realistic about, I mean,

people will say, you know, this will be $100 million business. years, you're going to instantly lose credibility because very few of those animals exist anymore. And so being able to map out through regulatory, clinical, commercial milestones, what are going to be the milestones, the events that will really move the needle from a valuation standpoint, and realistically, what's the capital going to be required to get there? And then, you know, make sure that you're asking when you're meeting with an investor, what's the size of their fund, how many, how many portfolio companies are in their fund, what's their normal bite size, what are they willing to invest in total initially?

And then that gives you an idea of, am I going to have to put together a syndicate because of both the amount of capital that's going to be required for each step or what's going to be required over the course of the next three to five years. I mean, I think three to five years is a realistic timeline to be looking at. at for capital and then and then making sure that you to the I mean you can't be beggars can't be choosers sometimes you have to take the investors that are interested but you know understanding your investors the culture talk to talk to their other portfolio company CEOs what's work what hasn't worked what do they like what don't they like again it's not a one size fits all situation but

you want your investors to be your partners in the journey right and and do they have are they on their eighth fund or is their first fund? If they're a $100 million fund, that means they're only going to be able to invest smaller amounts. And maybe that's okay depending on where you are early stage, series A. But you're starting to see more, you know, for a while, the bigger funds were moving away from A and B investing. They want to invest late stage. Everybody wants, everybody wants a completely de-risk company, right? The VCs are acting like PE firms.

Yeah. But more and more you're starting to see because of the impact, the downward pressure and valuation in later rounds that's become the norm, you see more and more investors wind to put together a syndicate up front where they can protect themselves from themselves, right? And so as you move out into the later stages, you've got the capital around the table. And I guess the other thing, advice that you give is keep your valuation expectations realistic in terms of what it's going to take. No one ever died from dilution.

If you're a founder, you die because you don't get capital. And so an expectation that your company's worth $30 million when you don't have any clinical data, probably not realistic. So just be realistic up front. And it's always a tradeoff, right? There's no right or wrong. It's a situation by situation deal, but be realistic. Yeah, there's no doubt. And I think for like newer founders or, you know, that are maybe taken on the CEO role for the first time, understanding that dilution isn't isn't the enemy here, right?

I mean, it's like a necessary. It's, I mean, it's necessary evil. But like understanding that your investors need to win here too, right? I mean, like with any relationship, there's got to be, there's got to be a win on both sides. And if they're not, they're not winning, that probably isn't, like, you're probably not setting yourself up for for success. And so, yeah, I like your idea. Dilution is, doesn't mean, no one died from dilution, right? Doesn't mean death, right?

Maybe some expensive water. If you need some water to survive, maybe kind of expensive. But, you know, it's just, it's part of the game. So I know we've only got a few minutes left. I want to get to the rapid fire portion of this interview. But again, for everyone listening, sonicshealth.com is a website. We'll link to it in the full write-up on Medsider. But S-O-N-E-X, Sonic'shealth.com.

Highly encourage you to check out the technology and the company. It's really cool stuff, really cool space, especially with something so obviously needed, right, for carpal tunnel, as we've kind of chatted about throughout the last hour here. So with that said, Bob, rapid fire portion in the interview here, feel free to kind of answer a rapid fire portion if you want to expand a little bit. That's totally fine too. But when you think about, take us out to kind of mid-202027 a year from now, what are you

most excited about? Demonstrating adoption and utilization, but adoption. I mean, to get to the growth levels that this needs to get to, we've got to accelerate docks through the training pipeline and increase the number of physicians doing the procedures. And that's going to come with predictable payment. We've got the other things that they would worry about in terms of clinical data and outcomes are there. And so now it's just driving adoption and making sure that the payments consistent.

Yeah. Yeah. So much work over the past handful of years to get to this point. So it would be fun to kind of watch your team execute over the next year. Let's say we're in maybe Minneapolis, we're, you know, just finished up a dinner near Lake Minnetonka or something like that, right? What's the one lesson that you want every, you think every MedTech entrepreneur should really understand? Networking, making sure that you're building a support network of because as a young entrepreneur, you're not going to know. You're not going to, you won't have the ability to look around the corners because you haven't been in the corners yet.

And so surround yourself with people who can be colleagues and mentors within different areas of expertise and reach out for, reach out for help. There's no such thing as a dumb question. People want to help the next generation to be successful and use that, build it and use that network. Yeah. You're a good example of that, right? Willing this to kind of come on the program two times now, right? And share a lot of super helpful lessons learned.

All right. last question. Anything that you'd whisper in the ears of the younger Bob Paulson, if you could go back in time. Don't be afraid to make mistakes. I mean, there's no such, I mean, a mistake. If you keep making the same mistake again and again, that you're not learning your lesson, but know that whatever you think is going to happen in the next six months is going to change, whatever expectations you have, and just be prepared for that. And when something doesn't work, you know, fail fast. Be prepared to to pivot and have a plan B already kind of thought out. If this doesn't work, what am I going to do?

And surround yourself with build teams of people who are culturally aligned, who have the same vision and values, but that are smarter than you. There's no such thing as you need really talented, experience people who also have a risk profile that fits the business that we've chose to get into, which is full of uncertainty. No doubt.

No doubt. It's a good way to sum it up. And I couldn't agree more with finding not only alignment in terms of finding smart people, right, but also those that are willing to kind of take a little bit of risk alongside you. So, Bob, I can't think enough for coming on the program twice now. This has been fun to catch up, especially to learn a little bit more about Sonic's health too. Well, thanks, Scott. Appreciate the opportunity.

Great to see you. Yeah, great to see you again. I'll have you hold in the line here. But for everyone listening, you made it this far. appreciate your attention as always. Again, sonicshealth.com is the website. We'll link to the full write-up on Medsider. If you want to read a lot of these key critical lessons learned that Bob shared throughout the last hour, those full write-ups on MedSider allow you to kind of capture, or typically do a decent job of capturing a lot of this

in kind of the written form. So thanks everyone for your attention, as always, until the next episode of Medsider goes live. Everyone, take care. Hey, it's Scott again. One quick thing before you go. You see, I love bringing you insightful conversations with the best founders and CEOs of medical device and health technology startups. But here's the thing. I'd be super grateful if you could help me reach even more ambitious doers who share our passion. So if you found value in this podcast, if you found yourself nodding your head while listening, or if you simply enjoy what we're doing with Medsider, please take a moment to leave us a review.

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