Medsider: Learn from Medtech and Healthtech Founders and CEOs - Crowdfunding and IPOs for Medtech Startups: Interview with Monogram Orthopedics CEO Benjamin Sexson

Episode Date: March 13, 2024

In this episode of Medsider Radio, we had a fun and insightful conversation with Benjamin Sexson, co-founder and CEO of Monogram Orthopedics. At Monogram, Ben and his team are developing a fully autonomous robotic system for knee replacement surgery.  Benjamin's tenure at Pro-Dex, one of the world's top manufacturers of orthopedic robotic components, eventually brought him to lead the development and launch of Monogram’s flagship product mBôs. Ben has authored multiple patents and previously founded Brides & Hairpins, a successful B2B retail brand. He holds a bachelor’s degree in mechanical engineering with honors from Caltech and is a CFA charterholder.In this interview, Ben talks about the importance of a good team and a liberating company culture as well as the importance of believing in what you’re doing and openly reassessing its validity regularly. He also elaborates on Monogram’s daring strategies for validating its technology and walks us through the pros and cons of crowdfunding and going public.Before we dive into the discussion, I wanted to mention a few things:First, if you’re into learning from medical device and health technology founders and CEOs, and want to know when new interviews are live, head over to Medsider.com and sign up for our free newsletter.Second, if you want to peek behind the curtain of the world's most successful startups, you should consider a Medsider premium membership. You’ll learn the strategies and tactics that founders and CEOs use to build and grow companies like Silk Road Medical, AliveCor, Shockwave Medical, and hundreds more!We recently introduced some fantastic additions exclusively for Medsider premium members, including playbooks, which are curated collections of our top Medsider interviews on key topics like capital fundraising and risk mitigation, and a curated investor database to help you discover your next medical device or health technology investor!In addition to the entire back catalog of Medsider interviews over the past decade, premium members also get a copy of every volume of Medsider Mentors at no additional cost, including the latest Medsider Mentors Volume V. If you’re interested, go to medsider.com/subscribe to learn more.Lastly, if you'd rather read than listen, here's a link to the full interview with Benjamin Sexson.

But what I like to do in those moments is expunge myself of any bias with respect to money that's been spent and just try and make a decision with fresh eyes. How much capital do we have and what are the decisions with the information we have right now? Irrespective of capital that's already been spent. That's how we make a lot of our critical decisions because sometimes the right thing to do is to pursue a path that maybe is suboptimal from a product perspective, but you want to do that unbiased by some cost fallacy, right? You don't want to be constrained by, I made a mistake, and now I'm going to do this because I want to cover up my mistake. Welcome to Medsider, where you can learn from the brightest founders and CEOs in medical devices and health technology. Join tens of

thousands of ambitious doers as we unpack the insights, tactics, and secrets behind the most successful life science startups in the world. Now here's your host, Scott Nelson. Hey everyone, it's Scott. In this episode of MetSider, I sat down with Benjamin Sexton, president and CEO of Monogram Orthopedics. Ben is a mechanical engineer from Caltech and a CFA charter holder, and at Monogram, him and his team are developing a fully autonomous robotic system for knee replacement surgery. Here for you the key things that we discussed in this

conversation. First, avoid the sunk cost fallacy. Don't let past investments cloud your judgment about a project's present viability. Regularly assess the viability of your idea based on current conditions, not past investments. Be willing to pivot towards a better solution even if it's difficult. Maintaining a steadfast belief in your work is crucial and without it, your ability to overcome challenges and effectively communicate your vision and will be compromised. Second, finding the right funding source is tricky, especially for early stage startups. Consider alternative routes like crowdfunding or IPOs. Be aware that both options have challenges. Crowdfunding requires a strong marketing push and IPOs can create administrative

headaches. Thoroughly evaluate your specific needs, but don't be afraid to iterate as you move forward. Third, MedTech is a team sport. A strong support system and an A-plus team are a must. Find talented people who are willing to shoulder responsibility with you through the tough times and who are able to set aside their egos. Maintain a company culture where everyone is heard and there's no punishment in raising one's opinion even if it proves out to be wrong. All right, before we jump into this episode, I wanted to let you know that the latest edition of Medsider Mentors is now live. We just published Volume 5, which summarizes the key learnings from the most popular

medsider interviews over the last several months with incredible entrepreneurs like Gabriel Jones, CEO of Proprio, Kirsten Carroll, CEO of Can Do Health, Dr. David Alpert, founder of AliveCorp, Greg Bowington, CEO of Magnolia Medical, and other leaders of some of the hottest startups in our space. Look, it's tough to listen or read every interview that comes out, even the best ones. but there are so many valuable lessons you can pick up from the founders and CEOs that join our program. So that's why we decided to create Medsider Mentors. It's the easiest way for you to learn from the world's best medical device and health technology entrepreneurs in one central place.

To check out the latest volume, head over to MedsiderRadio.com forward slash mentors. Premium members get free access to all past and future volumes. If you're not a premium member yet, you should definitely consider signing up. In addition to every volume of Medsider mentors, you'll get full access to the entire, library of interviews dating back to 2010. You'll also be able to see all of our playbooks, which are handpicked collections of the most insightful interviews with the brightest founders and CEOs that join a program. Whether you're looking to master capital fundraising, navigate early stage development, tackle regulatory challenges, understand reimbursement or positioning

your venture for a meaningful exit, MedSider Playbooks have you covered. And last, considering that fundraising can be one of the most daunting tasks for any startup, we created a meticulous database of investors right at your fingertips. Explore a wealth of VC funds, private equity firms, angel groups, and more, all eager to invest in medical device and health technology startups. Access to this database is a premium member exclusive, so don't miss out. Learn more about MedSider mentors and our premium memberships by visiting MedsiderRadio.com forward slash mentors. All right, without further ado, let's jump into the interview. All right, Ben, welcome to Medsider Radio. I appreciate you coming on, man.

Scott, great to be here. Thank you for having me. Yeah, yeah, looking forward to the conversation, have been like loosely, loosely kind of following your story with Monogram, you know, over the past several years. So excited to kind of dive a little bit deeper to learn not only about your background, but your journey building the company so far. So with that said, let's spend the first, you know, five or ten minutes of the conversation talking a little bit about yourself kind of leading up to Monogram. And then we'll touch on maybe your technology at a high level before we, you know,

you know, kind of go back in time and learn a little bit more about kind of your experiences across kind of some cross-functional areas. So let's start first, though. I recorded, you know, a very brief bio at the outset of this episode like I typically do. But I, you know, let's hear from kind of the horse's mouth, so to speak. If you can, give us sort of an elevator-style pitch of your background before taking on the CEO role at Monogram. That'd be great. Sure. So next again for the opportunity. So my background is pretty tech-heavy. I'm a, I'm an engineer by background. Pretty nerdy.

I would describe myself as kind of a Moses-style leader, a reluctant leader. My first love is building products. This is kind of a little bit of a, has become a passion project at this point. Going into it, I wouldn't have called myself an orthopedic expert. I had a lot of passion for robotics, for innovative manufacturing methods like 3D printing, and meeting Dr. Eunice, who is our founder, he's a practicing orthopedic surgeon. I would say that I started to have some understanding what he was trying to do and why it was compelling. But honestly, it probably wasn't until about three to four years into building,

seeing me after me after me that I really started to understand why this was a must-have product. I would say that we started out with what seemed to be a very intuitive value proposition. combining 3D printum and printing in custom implants with robotics, which is kind of a no-brainer innovation that anybody would sort of understand and think makes sense. As I've gotten more and more into the weeds, I've started to realize that where we are with robotics today is not where we need to be. I've been in operating rooms now. I've seen surgeries. I've seen surgeries that have not gone well. and I've come to understand that surgeons really do need to be using robotics. Just generally, it's not only just robotic, with implants, but robotics themselves. And now it's become really my life's mission.

This has to get to the operating room. We need this technology to be used in the operating room. It's going in my strong opinion, obviously, this is not validated with clinical data, but I've seen enough in the cadaver lab to say, I think this is going to make a difference for patients. And so, you know, my background is engineering. You know, I have to give credit where credits do. I know there might be some startup founders listening.

The company wouldn't exist without my wife, who's been an important part of this. You know, without help, Monogram wouldn't have existed. So there was a period for about two years where she was basically funding our lifestyle, which was not very extravagant while I was not getting paid to do this. So for anybody listening, just want to encourage you, you know, try and find a partner or somebody who you're working with who will help support what you're trying to do. So I would say that in some ways where a partnership, you know, Dr. Unis, who's not on this,

is also been really instrumental to the step of this. And now we've built a team of 27 full-time employees who are also really critical to this mission. So I would be reluctant to just kind of point in myself and say, what special about me? I think where I've been helpful for the company is to help keep things focused on the mission, help focus on the product, making sure the product is actually meeting an acute pain point. and then helping to kind of pull together a team that has a culture of building and not a culture of dividing. I've got a lot of directions there, Scott. Sorry for, I opened up a lot of rabbit holes, which I tend to do.

No, it's all good. Yeah, no, I appreciate you calling out your wife especially. I mean, it's one of the things that oftentimes goes underappreciated right with in the kind of a startup story where, you know, your partner, whether married, spouse, you know, except. play such an instrumental role, you know what I mean? Massive role. Yeah. If things aren't smooth on the home front, things will typically not be very smooth on the professional front, you know what I mean?

So yeah, I just like to say that because a lot of times it's like, you know, founders, it's like, oh, it's all about me, but almost every time I've met an entrepreneur, there has been some help whether or not they recognize it or not. Yeah. And some good fortune along the way. And we've had a lot of that with our company. And so just have to call that out. You know, we've had people that I think joined Monogram.

They could have worked at a lot of places. We have some of the most talented engineers, I think, in the world. And these are experts where, if you were looking for an expert, for example, in, you know, robotics, like these are not pools of candidates with thousands of people. These are pools of candidates with, you know, tens of people. And we've been able to recruit some very, very smart people who are dedicated to the mission. So I have to shout out to all of those guys. Yeah, I like it. And I'm, that I'm looking at the website now, which is monogram orthopedics.com. If you're listening and don't

get to the full write-up on MedSider, it's Monogram, M-O-N-O-G-R-A-M-O-R-A-M-O-O-Pathed. Very cool website, by the way. And get, I'm looking at the emboss platform specifically. And, you know, for those listening that, you know, maybe I've heard of monogram or maybe even haven't heard the company at all. whether they're loosely familiar or not familiar at all, give us like a high level overview of kind of how your technology is, is, you know, differentiated, you know, versus other orthopedic options or robotics, robotics in general. Where does monogram fit kind of in the broader, you know, MedTech landscape? Sure. So I'll start with like kind of the elephant in the room, which is our biggest criticism when people want to kind of hate on monogram. the biggest thing people say is, well, this has already been done. You guys relate to the party.

You know, this is just another kind of Me Too robot. And what's tough, Scott, is that you really have to start to drill into the details of the surgery to really understand what's actually different here. So we're not just taking a OEM Kuka arm and, you know, doing robotic surgery with it. it. We've really thought about it from a different perspective, which is what are the biggest pain points that matter to surgeons and patients? And I'll just give you kind of one example of those. We're working in a paper right now that's going to be a comparative head-to-head study looking at the planned tension, black city. Apologies if there's a little technical, but of other systems on the market versus our system. So we're focusing on what's, we're focusing on

let's say accuracy where it actually matters and where it actually matters is is my plan matching the outcome. And most robots today aren't thinking about that, aren't thinking about the surgery as a soft tissue surgery. They're thinking about it as a bone cutting surgery, which is really fundamentally flawed. So our system is designed to be incredibly accurate where it actually matters. Our system is fully autonomous. So there are, isn't really any robot on the market today that's widely adopted, that's autonomous. And what does that mean? It means that the surgeon isn't actually moving the arm around or doing a lot of work. Really, what we think is that ultimately this is going to be creative destruction.

We think that knee replacements should not really be a bottleneck for surgeons. Surgeons who, let's say, are really skilled and really smart. We don't think they should be spending their time worrying about knee replacements 10 years from now. This is a solved problem, and let's get those creative people out of knee replacements and put them into other places in the economy where they can be more productive. Maybe they should be worrying about spine or something else where there's a problem. So our robot is really commoditizing the industry. Where the problem has been for robotics is that robotics to date have not solved the economic problem. So MAKO has addressed a lot of clinical needs, and that's why they have 90% market share in orthopedic robotics.

But it's an incremental cost, basically to everybody in the system. It takes more time for the surgeon to use the MACO robot. It adds incremental cost for the hospital. There's more consumables. You need a CT scan. There's all of these extra things. And when you think about robotics, robotics are supposed to kind of commoditize things. They're supposed to increase throughput at lower cost.

And so nobody's actually figured out how to do that. And that's our mission. The mission is to solve a clinical problem, but also make the operating room, at least starting with knee replacements, commoditized, where there's really low to no skill required and throughput is increased dramatically, and incremental cost goes down. That's our vision. And I think we're on a trajectory that will allow us to execute that. mission. Got it. That's that's really helpful. And I, and I, um, I'm looking at kind of some recent news

kind of within the, the, yeah, the monogram ecosystem, uh, per se. And I think I, I saw that your first, first sale to a major, uh, a major global distributor, uh, kind of occurred, sort of the, the tail end of of, of, of 2023, uh, last year. So give us the sense. Is, are you actively kind of commercializing the emboss system now? Give us a kind of a high level overview of where you're at in the life cycle of the company. Sure. So, you know, our, our focus market has always been the U.S. It's by far the lion's share of where the money is right now in orthopedics. But there's also a very significant opportunity overseas. And from a clinical perspective, I would say the opportunity might even be more acute than it is here in the U.S.

you have not enough surgeons and, you know, in the U.S., one of the things that we, I think, have done a really good job of is kind of really thinking about what the best way to do a new replacement is, and we have really solid training and so forth. And I think in some markets there's just not enough surgeons to meet the demand. So we think outside the U.S. is a very attractive opportunity from a clinical standpoint, and also from a regulatory standpoint. So, you know, for good reason, the FDA is pretty tough. They certainly can make it difficult to get products to market.

I would say that we have had a really, really positive actually interactions with the agency. Our most recent discussion with them occurred in December. And it was very helpful and it related to strategies around, you know, know, what we need to do to get to market here in the U.S. And so our goal is kind of twofold. One is if there's opportunities overseas, we want to go after them. And then secondly, if there's opportunities to get clinical data overseas, we want to pursue those.

And we want to try and leverage that with our communications with the FDA. And hopefully we think that that could be helpful for those discussions. you know, at the end of the day, the FDA's biggest concern is, you know, is your system, once you can approve equivalence, is it actually safe? And so we were thinking of ways to show them that our system is safe, potentially leveraging overseas data. Very good. I want to definitely kind of double click into that regulatory topic here in a few minutes. But first, let's spend the next, you know, 20 or 30 minutes. kind of running through some of these different kind of functional areas because I'd love to get kind of your, not only your input, but maybe, you know, talk about some of the lessons you learned

or insights that you've gleaned, you know, over the last five or six years building, building monogram. The first guy, I guess the first question on the list is typically where I like to start is kind of design and development, right? I'm sure that the platform, the system looks a lot different now versus, you know, back in, you know, whatever, 2017, 18, when you, when you started working on the project or the company. So when you think about kind of how you've moved through kind of design and development from, you know, concepts to alpha to beta, et cetera, have there been a few kind of key things that you've learned along the way? Because this is often, you know, one of the most challenging things early on for startups, you know, especially when you're typically

pretty capital constrained, right? How do you make it? How do you make compelling progress with limited funds right on your your way through that to that development life cycle. I absolutely love this question. One of my management philosophies is never look back. And what I mean by that is don't make decisions based on like a sunk cost policy where let's say you put capital into something and you realize it's not going to be a good product. it's not going to work for whatever reasons. And now there's a critical decision that needs to be made, which is, you know, do we continue on this path and do something that we no longer believe in?

Or do we stop and say we're always going to do the right thing, even if it hurts? And this is a very tough thing to do, but what I like to do in those moments is expunge myself of any bias with respect to money. that's been spent and just try and make a decision with fresh eyes. How much capital do we have and what are the decisions with the information we have right now, irrespective of capital that's already been spent. And that's how we make a lot of our critical decisions because sometimes the right thing to do is to pursue a path that maybe is suboptimal from a product perspective. but you want to do that unbiased by some cost fallacy, right?

You don't want to be constrained by, I made a mistake, and now I'm going to do this because I want to cover up my mistake. Better to always be honest, own your mistakes. That's part of R&D. Part of R&D is to figure out what doesn't work and always move forward with what does work. So I'll give you the perfect example of this because we had to make a very critical decision

we started out using a rotary tool and a vector. And actually the first company that has an autonomous system and things surgical uses a rotary tool. And what we realized over time is that there's actually like physics constraints to how fast you can cut with a rotary tool. So one of the problems you have with a rotary tool, just as one example, is that because the burr is spinning to so fast, it heats up the bone. And so you have constraints on what the feed rate can actually be

before you start basically cooking the bone, which is really bad for the patient. And so we, you know, these are things that you've kind of only learned as you're, as you're doing R&D, and you kind of, they're non-issues, but then you start trying to push the envelope and they become issues. And so you can start going down rabbit holes of, you know, maybe we mess with the bird geometry, maybe we do this, and it becomes, you get to a point where you're like, what is the optimized end case for this? Is that a good product? And the answer is no.

And then you have a decision where it's like, do I do what's right for investors where I really, you know, whatever I'm selling I want to believe in? Or do I want to just try and get something out the door to say I have 510K approval? You get to these points where you kind of know the truth. And so at that point, we had to make a decision. What do we do? We don't have a product we believe in. Like fundamentally, if we're not faster than, or at least competitive with Mako,

we don't have a product. We can believe it. So we looked at all of the options. And one of the options we'd always kind of thrown around was can we use this actual saw instead of a rotary tool. And we had talked to a number of robotic experts who had told us that it was impossible for a number of complicated. reasons. And we really dug into like what is it about that that's impossible and what would it

take to pivot to a whole different cutting system. And we ultimately made a decision to pivot. And it was very risky. It took us a lot of effort to make it work. Basically, a lot of what have been developed on the rotary tool and effector, we just had to kind of say, well, this was R&D. And now we have a system. It's got it brushes. I mean, we haven't done a public release, but we're now actively cutting without external fixation

in phenomenal cut times that can be even further optimized. Like we actually have something that we all believe is the best robot in the world. We actually believe it. Whereas before we would have been pushing something we didn't believe in. and I am fully happy to accept that mistake. We made the best decision we had with the information we had, and then we got new information, and we realized that all of our kind of presupposition,

some of them were wrong in light of the new information, and now we needed to make a decision with the new information. So the way I think about it is almost like owning a stock. I'll tell you what a lot of people kind of do wrong when they own a stock, right? A lot of times I think about things in terms of like an investing mindset. Let's say you own a stock and it has a dividend yield today. It's paying a dividend of whatever, $1 and it's a $20 stock. So you have a 5% dividend yield.

And that stock, let's say it doubles to $40. A lot of what people will do in their mind is they'll still think that they have a 5% dividend yield. No, now you have a stock that's yielding 2.5%. And you need to think about it with fresh eyes of, is this worth owning? Don't think about what you had right now today. What you have is it, it's changed. Fundamentally, you could sell that and put that into something else that's yielding 5%. Right.

So you kind of have to think about everything in terms of where am I right now? What's all the information I have right now and what's the best decision right now? Not what happened. what and that's how we kind of try and run things one of the entrepreneurs that I really look up to the Amoski there's a pretty interesting story that he has at SpaceX where they were trying

some like novel manufacturing method for developing what the nose cone I think was and they put some astronomical amount of money into this and they were just struggling and he was just like no pivot we're going to the next

thing and that's R&D we're not going to sit and cry over the money that's been spent because every time we spend money, we're trying to do the ethical thing. As long as you are ethical with the money you're spending and you're always trying to do the right thing, then that's R&D. And so that's how I think about it, and that's how I think we have a huge advantage over our competitors because it's very difficult for large companies to do this. When a large company has too many cooks in the kitchen and they have 20,000 steak,

holders and all of these different divisions, it takes a very, very special manager to say, I'm going to make all of you upset and say the decision that was made here was the wrong one and this money that we spent trying to push this product that's no good. A lot of companies are really friendly trying to push turns and they're like, no, this is great. They're trying to make everybody believe it's great. And a big reason is they've spent too much money and they're unwilling to say, we're wrong, and we're going to do what's right.

Yeah. Because if they do, their career is, not a career, but definitely their job is on the line, right? Yeah. They're not likely going to be promoted after that. Yeah. And we'll be kind of silenced. Their opinion is going to matter very little, like moving forward. And that ultimately spells for most people kind of a need to kind of move on, right?

And so to stare that down is really hard. Yeah. I'm really glad you brought this up, Ben, because it's actually, I'm trying to remember the last time maybe someone, another founder, And maybe it's because of your engineering background kind of combined with your finance experience, you know, that allows you to kind of think with a fresh lens. But that decision that you made, like even the example that you shared, it's easy to kind of look back and think, yeah, that was a difficult decision. But I can't imagine, like in the moment, like how difficult that really was.

Because it was, yes. I mean, we had a lot of problems. Let me take, like, but. Hey there, it's Scott. And thanks for listening in so far. The rest of this conversation is only available via our private podcast for MedSider Premium members. If you're not a premium member yet, you should definitely consider signing up.

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