Medsider: Learn from Medtech and Healthtech Founders and CEOs - The Importance of Having Investors as Customers: Interview with Eric Stone, CEO of Velano Vascular

Episode Date: March 16, 2017

Eric Stone cofounded Velano Vascular with Dr. Pitou Devgon, an internal medicine physician. Velano’s first device, PIVO, enables needle-free blood draws directly from peripheral IV catheters. Velano Vascular is backed by a series of well-respected investment firms, leading U.S. health systems, and dozens of health industry veterans. Before starting Velano Vascular, Stone most recently served...[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 

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forge slash medsider. Again, that's reachfiredigital.com, forge slash medsider. Grab that blueprint. Okay, on to the episode. On today's program, we have Eric Stone, who co-founded Villanovascular with Dr. Pichu Devgon, an internal medicine physician. Villano's first device, Pivo, enables needle-free blood draws directly from peripheral IV catheters. Villanovascular is backed by a series of well-respected investment firms, leading U.S. health systems, and dozens of health industry veterans. Before starting Volonovascular. Eric most recently served as VP of sales and marketing for molecular health. Prior to that, he helped launch the world's first bio-absorbable stent for Abbott while working out of their California and Belgium offices. He was also a founding member of Model Inn's Life Sciences Division

and began his career in software marketing with trilogy. Eric also holds advanced degrees in business administration and education from both the Wharton School and Harvard University. He earned a BA degree in English and Psychology from the University of Pennsylvania. Here are a few of the things we're going to learn in this interview with Eric Stone. Why Eric has been referred to as the Steve Jobs of Drawing Blood. What brought Eric into healthcare after starting his career in software marketing? Why he pursued both an MBA and master's in education and how both degrees have benefited him both personally and professionally. The biggest lessons Eric learned while launching the first bio-absorable stint with Abbott, how Eric first connected with Dr. Davgon and the origin story for

the Pivo device. The four milestones Eric and his team accomplished in taking the Pivot device from initial idea to commercial prototype, Eric's approach to garnering financial support from healthcare systems and raising money for volonovascular, and how the PIVO device fits into the value-based healthcare equation. And lastly, Eric's favorite business book, The CEO he admires most and what he tell his 25-year-old self. So without further ado, let's get to the conversation with Eric Stone. Eric, welcome to the Medsider program. Appreciate you coming on. Thank you for having me, Scott. All right. So let's dig right in. You know, you co-founded your current company, volonovascular back in early 2012.

So just, I guess that's been about four years now ago, maybe a little bit over four years as we're recording this in late 2016. But, you know, you've won, you and your team have kind of racked up the rewards, or the awards, I should say, you know, from the Frost and Sullivan 2016 New Product Innovation Award. I think it was a Forbes piece. I can't remember exactly the publication. You were referred to as the Steve's Jobs of Drawing Blood.

And so those are some cool. sort of descriptions as well as awards. And so, you know, when you think about your, you know, your time there over the last, you know, four and a half years or so in what you and your team have accomplished, what sort of immediately comes to mind? Well, it's undoubtedly been a journey. And I would consider it a journey of exceptional people and this overarching commitment to a vision that is human-centered at its core. The company was started by a patient and a physician, and it was based on a question asked by a patient to our physician inventor. And since the early days, we've remained true to this unwavering effort to do the right thing

and to do the right thing with clinical integrity and with cutting-edge technical innovation and through the lens of human-centered design. And I think a lot of times when we talk about human-centered design in healthcare, we talk about patients, which is an important and essential stakeholder. But from our perspective, it's both the patients and the practitioners whose interest we have in mind with all the technologies that we are and will continue to develop. I liken the folks that we work with to an extended family of like-minded and open-minded hospital partners and clinical collaborators to our investors, our advisors, our employees. I see and view.

every one of those individuals and institutions as taking a bit of a risk, personally, with respect to their role in their organization and in association with Villano, by respectfully challenging the status quo of an extremely entrenched practice. That practice where our first technology is related to drawing blood from hospital inpatient, and you hear jokes of references of blood drawing going back centuries to bloodletting. And while it seems comical in nature and easy to dismiss, if you live the life of a patient who's in a hospital repeatedly during the course of any given short period of time in the hospital for multiple days and nights, three, four, five, ten, twenty, thirty days. And the blood draw is a fundamental aspect of clinical care.

70% of decisions are based on the data that comes from this blood draw. Yet they're done at 4 a.m. and 5 a.m. when we're supposed to be sleeping and thus healing. And so what we've done with our technologies and our company is to respectfully challenge that status quo for how hospitals are drawing blood today. My team has taken very limited resources, financial and human and otherwise, and thoughtfully deployed them. You asked about what we've accomplished, thoughtfully deployed them over the course of the last five years or so towards receiving two FDA clearances, a European approval or CE mark. We've conducted tens of thousands of blood draws on hospital patients with our first marketed product, PIVO. and we've done this with some of the leading hospitals in the United States and soon to be overseas. We've identified a whole host of opportunities for enhancement and innovation in the hospital,

all patient-centered and practitioner-centered in nature, and all related to the vascular access domain, which I would posit has been a pretty underappreciated space, which is a bit ironic because our patients are becoming, increasingly diva in nature, if you will, a comical reference, but not meant to be, difficult Venus access, if you're familiar. We're talking about obese patients. We're talking about the growing elderly population. We're talking about patients like myself that suffer from chronic illness and experience repeat hospitalizations. We're talking about diabetic population. These are all the fastest growing in patients in a hospital, an estimated 30% of hospital

inpatient at any given time. And so while we've brought this initial technology to market, I do firmly feel that we've done it consistently and without falter putting people first. And our small company that's attempting to make a significant difference has followed with core values around impact of integrity. making a difference, being passionate about our work and accountable while being compassionate and doing everything that we do with tenacity. So I look back over the last five years and at times it feels like it's been a 20-year journey and at times it seems like it's happened to the blink of an

eye, but I'm very, very proud of everything that we've accomplished. I bet. On that note, speaking of this PIVO device, you mentioned that, you know, blood drawing has been sort of, there hasn't been a lot of emphasis from an innovation standpoint over, you know, I was going to say over the last 20, 30 years, but it dates back much longer than that. So can you sort of help us better understand how your device is different than the way blood is currently drawn for patients in a hospital setting? And then once we have a better understanding of how that works, we'll go back in time and learn a little bit more about your background and then how volonovascular came to be.

So we're talking about arguably the most common invasive medical procedure that we do in a hospital every day, the act of drawing blood. Yet, at least from our experience over the last five years, my experience is a patient over the last 25 years, it's overwhelmingly underappreciated by hospital administration and even in many respects by clinicians or practitioners. So any given hospital could conduct hundreds of thousands of inpatient blood draws in a given year. Some of our larger hospital partners that have multiple hospitals in their network conduct upwards of one million inpatient blood draws in a calendar year. So take a step back for a second and absent taking vital signs, what else do you imagine a hospital is doing a million times in a year? Yeah, that's a really good point.

It's pretty astounding. But the amount of resource that has gone to innovation, to your point, it's been 20, 30 years since we've had very modest or moderate innovation in the space is negligible. And so this is where we feel we've developed a really exciting opportunity to have an impact. Around the world, we're probably talking about well north of a billion inpatient blood draws every year. in the United States, three, four, five hundred million alone. And you can get to those numbers from a very simple bottoms up perspective of understanding how many inpatient stays there are a year. The average length of stay.

So you're talking about 4.8 days times 36, 38 million stays and estimate how many blood draws patients are having on a given day. One blood draw, two blood draws. If you're in a critical care setting, three, four, five blood draws, it's an astounding number. So how do we do what we do? How do we draw blood without sticking patients repeatedly with needles? And it comes down to a technology that has been around for quite some time that nearly every hospital inpatient has in their hand or their arm called a peripheral IV catheter. These are short, roughly one inch pieces of plastic. They're placed into the body over a needle upon admission to the hospital or entrance to the emergency room. And these short peripheral IV catheters are placed primarily for introduction of fluid into the body to infuse drugs, nutrients, saline.

The clinicians refer to this as access, and it's used in emergency situations for rapid infusion of fluids, but it's also used for daily antibiotics, saline introduction, whatever it may be. Those IV catheters are extremely effective for infusion of fluid, their primary purpose. when you first place them, it's arguable. You may be able to draw blood directly off of them, but most hospitals have policies not to do that because those IVs lose their integrity for aspiration of non-hemalized lab quality samples very, very quickly. And so they become one-way conduits to the vessel, but if you try to pull blood back off of them, it's either difficult to get blood back or if a practitioner is able to get blood back,

oftentimes it's hemoized. The red blood cells are torn. or sheared, and the laboratory will then kick the sample back to the floor or to the ER and ask the practitioner to redraw. You can imagine that it's difficult for the practitioner, it's difficult for the patient, it's delays care, delays treatment, delays decision-making, et cetera. So take that short peripheral IV catheter that most in patients have in their body and utilize our single-use disposable device called PIVO, which very simply and elegantly is a tube and a tube concept. So our device attaches to the peripheral IV catheter. On the back of it, you attach either an evacuated

tube holder or a syringe, depending on what your preferred mechanism is for drawing blood. Syringes are more commonly used in pediatrics in kids, evacuated tube holders more commonly in adults, and advance our device pushing a very small, soft, flexible tube. Soxible tubes, the IV catheter. As that tube is going through the IV catheter, it's overcoming the reasons why IVs fail to aspirate non-hemelized lab samples back over time. The first is kinking or collapse of the IV when you suck back and our tube goes through and unkinks or uncollapses the IV. The second is that you'll get debris at the end of your IV catheters, particularly if they're not frequently and well maintained by flushing with saline. And so our tube goes past the end of the IV, the

past any debris into the vein or the vessel. And the third is you may be up against a vein wall or a vessel wall or up against some type of anatomical structure that precludes you from pulling blood back. Well, our device can be adjusted, pushed forward, pulled back, turned left, turned right, so that if you are abutting a valve, a vein wall, what have you, you can get flow. Got it. Oh, go ahead.

Sorry. You see, the practitioner very simply draws the number of tubes that he or she requires for that blood draw and then retracts our device back, unattaches it, flushes the line, and moves on to going about their day. It seems, I mean, some of those stats you mentioned earlier just about the incidents, right? The number of times blood is drawn in a hospital setting and sort of the problematic nature of traditional blood drawing, you know, I think everyone knows either themselves have experienced. transistor knows someone that, you know, ends up with, you know, bruises all over there on the medial side of their elbow or something or their forearm or something like that from bad, bad attempts at blood drawing. And then hearing you describe your device and the simplicity of it,

it's just, you know, kind of forced you to ask the question, you know, why isn't, why isn't this done before? So, and we'll certainly get to that. We'll try to answer that question, you know, in learning a little bit more about, you know, how you went from idea and you and your co-founder went from idea to prototype to commercialization. But let's use this time to actually go back, go back and learn a little bit more about your background and what led you up to starting volonovascular and you graduated from from up in the late 90s and then spent a bit of time initially at trilogy and then at model and so what brought you eric into the healthcare space originally so in part it was a bit by chance and i think and and believe deep down it was in part by my personal experience as a crone's patient

and diagnosed with this chronic illness in phlegicrobial disease 25 years ago as a teenager And so in my very first role out of school, I was interested in marketing, and there was a large, privately held enterprise software company down in Austin, Texas, Cultrilogy that recruited on campus at my university. And I was very much enamored by the company and its approach to marketing, and very fortunate to join the organization, moved down to Austin, Texas, where I knew almost no one, except for a few classmates. of mine from school and to serve in an extremely entrepreneurial culture in a particularly entrepreneurial role where I learned a great deal about marketing and a great deal about building a business. I would argue that some of the brightest and hardest working folks I've ever encountered, as well as some of the most innovative professionals, were at Trilogy.

And it was an exciting time. It was the late 90s. It was the tech boom. There was unfettered opportunity, unfettered innovation. And I was in Austin, Texas. I think they called it Silicon Hills at the time, surrounded by folks that had big aspirations for building businesses and for impact.

And so during the course of that time, I was fortunate enough to work for the leadership team down there on a number of initiatives and recognized that I truly was at heart a marketer. A colleague of mine from Trilogy left and moved to the Bay Area to go work for an Excel KKR funded company called Model N. I followed him out to the Bay Area upon an introduction and a phenomenal, exciting interview process with the Model N team, not knowing much about the platform technology space and the platform

technologies that they were developing. I wanted to be in the Bay Area, in part for personal reasons, and was quite enamored. with the leadership team at Model N, serial successful entrepreneurs and exceptional backers with Excel partners and Kolberg Kroberts-R, Kolberg Kravitz-R-R-K-Ravits-Rabits Roberts getting together. And during the course of my years with Model N was really able to learn from a group that I would call true rock stars. It's now a public company and they've done exceptional work for some of the largest medical

device and pharmaceutical companies out there around the world. At the time that I joined, the company was remaking itself. It was a platform technology company and they were providing solutions in the construction industry and in the beef, pork, and poultry industry, two spaces that I knew nothing about. And to be honest, I wasn't particularly interested in working in. And was fortunate enough to be placed on a project by our CEO to assess the life sciences market. The life sciences market, and actually, as I think back, the utilities market, those were the two spaces that I was charged with putting together a assessment of the market opportunity over a few month period.

So, a member of eventually a Skunkwark's team coming out of that market assessment of 10 to 12 industries that was designated to develop a life sciences business and specifically software applications for life sciences companies. That was really all that those of us on the team knew of our charge and we were set forth with time and resources to conquer. And so I served as the head of marketing and business development and alongside our head of products and our head of sales and our general manager for the business. The four of us went out and built aspirational solutions and sold to our very first customer, a division of Johnson and Johnson, called Orthoclinical Diagnostics. During the course of my years with Model N, I had the opportunity

to meet exceptional folks from companies like Boston Scientific and Johnson and Johnson, and Medtronic to structure very important partnerships for the business with Accenture and Deloitte consulting and other system integrator firms. And so now I look back 15 years later and a number of my early investors in Villano were colleagues at Model N and Delo and our customers, the large device companies and it's those relationships that have helped me to learn and grow and grow my interest in the space over the course of the last decade and a half. So I somewhat fell into the space with the intersection of software and healthcare. I've always been passionate and motivated to find a way to give back and to participate in healthcare as a patient and feel really fortunate

and how it's all worked out. Fortunately, I've had a chance to interview a lot of med tech and healthcare leaders like yourself, Eric, and a lot of them have similar stories where early on in their career based on, you know, sort of the projects or the companies they were at, they were able to forge relationships with other folks and which eventually, you know, maybe it didn't happen immediately, but eight, 10, 12 years down the road, you know, some of those same people are either helping them, you know, found other companies or investing in early stage, early stage startups. So interesting to hear that you've had similar experiences.

And I guess the old adage of, you know, don't burn bridges certainly proves itself true in your scenario as well. 100%. And I do believe that change and impact and innovation, it's really all based on people. And so we wouldn't be able to do what we're doing without those folks that took a risk and a bet on me 15 plus years ago and are doing it again today. It's really a pretty exciting opportunity to show those individuals. who you look up to that, you know what, I too am able to achieve something that's significant just as you have in some respects following your path. That's great.

I want to ask you a few questions about your time at Abbott Vascular because you were involved in a very interesting product launch with their bio-absorable coronary stint, which actually just recently launched here in the United States. But before we go there, you've got both your MBA from Wharton as well as your master's in education from from Harvard and I you know I think most people would understand the MBA from Wharton but the master's in education that that's definitely an interesting sort of stat you know interesting finding or fact you know when someone looks at looks at your background so so why the decision to pursue both degrees help us understand that your thought process around both

well my path has been anything but straight and this is yet another fork in the road that happened in part by chance and by intellectual curiosity in some respects It goes back to my first roll out of school at Trilogy when I worked for the CEO of the company, and he had a professional coach, University of Michigan professor named Noel Tishy. Noel was the coach to a number of very large company, well-known CEOs. And in working on a project with Noel, I became enamored with the world of organizational psychology, the intersection of business and psychology, all coming back to human behavior. behavior. And so I very much considered getting a PhD or a doctorate in organizational behavior,

organizational psychology, and I remember a phone conversation with Noel when I was at Model N, where he suggested to me, before you jump into five, six years of academic research, working in a silo and a laborious process of fighting for tenure on a business school or university faculty, maybe you should try this out from the perspective of all masters. And Harvard, which is unique in that it has two human development departments, and its human development department and the School of Education dates back to when Eric Erickson taught there, and subsequently has been staffed by just unbelievable experts in the domain of psychology and human development.

The program enabled me to fashion my own master's program in human development and leadership studies. So while I certainly learned about the education domain from my classmates, I was actually studying human development and leadership in the education school in the Business School, in the Kennedy School of Government, and the School of Arts and Sciences. And from that experience, I was exposed to really unique approaches to thinking about building and sustaining organizations. I contemplated the doctorate, applied, deferred, and then recognized that, you know what, I would not make a very good academic and probably would be extremely ineffective at even making my way through the doctorate program. So with that said, professionally, that experience, those studies, those professors helped provide me with some of the frameworks for critical thinking as a business in a business steeped in attempting to affect positive change that I use today. I look to my master's degree in education, and my MBA is kind of building blocks upon which we're working in this melting pot of functions, ranging from finance to marketing, operations, to developing products, to selling.

And, of course, the human behavior side of it. Everything really does come back to people, team members, customers, partners, partners, investors. And so some of the perspective from my time at Harvard has very much followed through to what we do today. And even, yeah, even my experience in my MBA program very much has carried forth a lot of the value that we're creating at Volano today. Got it. And that led up to your time at Abbott vascular. And I mentioned that you were, I think you spent about four or five years there from 2011 to about 2007 to about 2011. But we're involved in their launch of the bio-absorable coronary stint.

I would have to imagine was a pretty cool project to work on. So, you know, when you think about your time there at Abbott, you know, this is post-your MBA from Wharton, do you recall a couple challenges or even like some of the biggest lessons that you learn during your, you know, your four or five years at Abbott, which eventually led up to the eventual formation of Villano? Well, from a challenge perspective, definitely working on the biozorovall scaffold or stent program presented many of them. It presented opportunities and a real air of excitement. At the same time, there was a lot of skepticism around, is this product truly differentiated? Is this product truly valuable and necessary?

And is there a true market need? And I think that the verdict is still out on that product portfolio, but it very much caused us on a daily basis to think through our commercialization, planning, and strategy. Spent a lot of time during the course of that time in Europe with the teams helping the local market or geography teams think through how would they go about selling this and how would think go about selling it in some respects against the company's own drug alluding stent pipeline or no pipeline but portfolio from a lesson's perspective probably the most eye-opening experience was living overseas with Abbott in Europe for a year and leading along with our head of

international marketing our next generation drug looting stent product launch and I think during the course of those 12 months, I traveled to Asia probably 10 times and traveled across Europe just about every week that I was not in the U.S. or in Asia. And it was a remarkable experience in understanding that not only is every country around the world quite unique in how they deliver health care, but even to the level of the hospital, there was a whole host of distinctions, one size definitely does not fit all. Yet, when you're launching a product, building a large business, building a small business that aspires to be a large business, you don't have the resources to customize your offering to every country and every hospital.

And so to this day, I and my colleagues here and at other companies which I'm involved struggle with how do you bring that level of personalization and customization to an extremely fragmented, approach to delivering health care. Question. I think a lot of folks have and one that probably doesn't have a definitive answer for anyone. But maybe the lesson learned is just to be cognizant of that, you know, as, you know, whether you're in the prototyping stage or planning for eventual commercialization is that,

you know, keeping in mind that each country does have truly its own unique needs and challenges, you know, within their health care ecosystem. So, yeah, your point about the absorb stent, the bioabsorable scaffolding, it has been interesting to see that that launch here, at least in the U.S., and that the concept is definitely very disruptive in nature specific to that arena, but yet the clinical data hasn't necessarily followed, hasn't necessarily been there to justify the use of that stand. It seems like, anyway, based on my, based on some of my early analysis. But let's transition up to volonovascular and learn a little bit more about the PIVO device. You had spent some time at molecular health,

and then you'd gotten to know, Dr. I'm going to not pronounce his name correctly, correctly, Petal Devgon. Devgon. Devgon. Is that how it's pronounced? Exactly. Got it. So how did you connect and take us back to that time when, you know, before the when the PIVO device was really just maybe an idea on a napkin? So I left Abbott and I left Abbott with the support of an unbelievable group of leaders at the company. Actually, four retired Abbott corporate officers are investors in Villano

and helped us to get this started. And I left to start a company and to take a technology to market. And during the course of roughly a three-month period, I pursued an approach to founder dating. That's how I refer to that period in my life, where I met with inventors and ideators all over the country, all of whom were introduced through personal network or personal network once removed and was looking for an idea that resonated personally with me and that I felt could truly have an impact and be a success in touching lives. And so during the course of that time, I certainly was moved by the ideas of a number of these individuals, joined a few different companies as a board member. and as an investor, but I think back to that first meeting with P2 in a bar in Philadelphia, where he took out a prototype that he had fashioned in his kitchen from products from the hospital where he

worked. And right away, listening to him, talk through the unmet need and the genesis for his idea, it dawned on me that this truly was a game changer. And not only would this be a great medical device, but this would eventually touch the lives of every human being on the planet. And talk about impact, I believed it then, and I now know it will in fact be the case, because we will all spend time in a hospital in our life, and we will all need our blood drawn. And whether the product is called PIVA or it's called something else, the new standard of care, even just five years from now, we'll be doing exactly what we have developed and are the first to develop on the market. But so, excuse me, going back to that period and how we were introduced,

so P2 had gone through the Wharton Healthcare MBA program after me. We didn't overlap, but as I was out pursuing this process of founder dating, I think three distinct friends and classmates of mine suggested that I reach out to this physician who, after business school, was practicing medicine and also working in healthcare venture capital. And I wasn't exactly certain what to expect in meeting with him. I knew he had an idea that was in the vascular access domain, but was relatively under wraps in our phone conversations and emails ahead of meeting. And not only was I impressed and moved by the concept, but also by P2's intellectual curiosity and this unrelenting ability that he had and has to tug at the thread of statements and perceived fact,

which really at the end of the day is folklore, made by clinicians, made by patients, made by industry in a large medical device manufacturers. And that intellectual curiosity and that unrelenting desire to challenge the status quo, along with his creativity, was the foundation for now, a company. five years later, that has one commercial product and many more vascular access products waiting in the wings to be brought to the market in the years ahead. So I'm confident that that first meeting in a bar in Philadelphia, five plus years ago, is going to result in a new standard of care, a better standard of care nationally and globally. And I do believe we're going to touch every single one of us on the planet. That's such a cool story. And if you, I want to get inside your head a little bit when you, you know, dating back to that, that early time with Pichu and when you were learning a little bit more about the challenge, the market, you know, what this device potentially could, could address. You know, I think everyone that is bent towards, you know, has that sort of entrepreneurial streak in them has a dozen ideas, you know, that are circling in their heads. But, but you took an idea that you're excited about and, you know, executed on it, you know, flawlessly. And I want to ask you some, some questions about that process. But, you know, this early prototype that

you developed, you know, in his kitchen. How did you take it through the process to where it eventually became a product that, you know, is used or was used early on in an actual patient? Well, the approach was a little bit anti-establishmentarianist. I guess you could call it that. Just going back to your question and statement, though, I appreciate the reference to flawless execution. I aspire to get there and there's certainly been bumped along the way. And we don't have a standard of care created just yet, but I think we're close. So thank you. But the back You've done a lot in a very short amount of time. So I think I could be fair.

You're being humble. I think, you know, if not flawless, very, very good on your execution for sure. But go ahead. The team is working hard and we've had great supporters. And, of course, there's a little bit of luck along the way as well. But back to the process that was potentially a little bit different. So for two years, my co-founder and I had day jobs. And at the start of that two-year period, the genesis of the company itself,

we raised $150,000 from 10 individuals. Any one of those 10 individuals, I'm quite confident, could have written the entirety of the check, but it was a purposeful fundraising strategy and a very cautionary or cautious, I should say, strategy of a crawl-walk run philosophy that today, to this day, we still follow. And those individuals almost exclusively have backgrounds in the healthcare domain. from a interventional radiologist who ran a device company, to an executive at Metronic, to a senior executive at Boston Scientific, to an executive at Abbott, to a healthcare venture capitalist, to a healthcare banker.

And every single one of those individuals back then and to this day provided extensive amounts of guidance and counsel that far outweighs the relatively de minimis dollar figure or investment they made at the business. And during the course of those two years, we set forth to accomplish four milestones to determine if there really was a there there, as folks say. The first was to prove technical feasibility. Could we build prototypes that worked in a bench setting to draw blood through a peripheral IV catheter? And we found a third-party prototyping firm and worked quite aggressively with them on fast cycle time iterations. In some respects, an approach we took when I was in the software world of iterating and iterating rapidly to get to a point where we felt that from a bench setting perspective, we had accomplished feasibility. The second was around preclinical functionality.

Could we draw blood off a peripheral IV catheter through our device, not through the IV, but our device that was non-humanized in nature where the lab analyte results were at parity to blood-drawn? out of a needle, one of today's standards of care. And we did that. And we were very thoughtful about our work in the animal lab. And we showed results from eventual prototypes that accomplished this milestone. The third was around intellectual property. And as someone who comes from the medical device industry, I'm sure you're well aware that that really is the foundation for any sustainable business. And based initially on PTE's invention, we had the seminal patent in the space issued and then moved on in quite aggressive fashion to develop additional intellectual property.

And that has been a fundamental pillar upon which our business is built. The fourth milestone is an area that I've seen a lot of inventors and founders and entrepreneurs miss the boat on, which is market assessment and market development. If we build it, will they come? I think there's a lot of great medical technologies that have been developed that are laying in a barren desert right now because there wasn't a market for them, or the founders underappreciated the uphill battle to move towards regular use and reorders, if you will, to simplify it. And so during those two years, we spoke nights and weekends with hundreds of

stakeholders, some patients to nurses, to hospital administrators. And we built a long, long, long list of reasons not to believe where the hurdles would be and an equally lengthy list of reasons that we should do this. During the course of those two years, the validation was so great that if you could make this work technically and clinically, that yes, if you build it, we will come. And that's what gave us the confidence along with those other three milestones to leave our day jobs and raise a series A and go out and build a business and establish a standard of care.

Yeah, those four milestones that you just described, I think, are worthy of someone rewinding and listening to those over again. I mean, that's a great overview of kind of how you went about going from, you know, idea to prototype to eventual commercialization. I mean, we could have probably separate conversations on each of those milestones, but nonetheless, it's a great, it's a great sort of framework to think about. On that note about raising a series A, Eric, I think you raised another round of financing in earlier this calendar year, I believe. But when I look at your, you know, the individuals and institutions that have invested in volonovascular, I noticed quite a few healthcare systems.

So can you help us understand a little bit more about your approach to raising money and sort of the, you know, how you went about, you know, coalescing that, group of investors that you've got this far? Well, our approach to finance and the business is not that dissimilar to our approach to identifying hospital partners to identifying the right employees, advisors, and more. It's really about looking through the lens of the reasons to believe as opposed to folks who are looking for reasons not to believe. And of course, there needs to be an element of realism to this, right?

It can't be an encumbered aspiration and hope. But we almost fell into this concept of customers as investors or hospitals as investors and partners. And the first two hospitals that invested, the Children's Hospital of Philadelphia and Griffin Hospital, resulted from conversations with two very visionary CEOs of each of those institutions who unsolicited said, this is interesting, this has an immense opportunity for impact, we would like to be a part of this and can we invest? Those are not hospitals that have venture or investment arms, like many of the larger health systems increasingly we're seeing now, are creating as of late, but just visionary individuals who saw the opportunity for impact and wanted to help us make it a reality.

Now, we've systemized that effort or systematize that effort more significantly since that time and just a few weeks ago announced that Sutter Health, the 24 hospital system based here in Sacramento and California, is also one of our investors. And there really is an unparalleled alignment with hospitals and investors. And I feel very fortunate to have fallen into this what has now become fundamental strategy for our business. Because while their investment may not make or break the business

from the perspective of the size of the investment, And while a potential return on their investment may not determine the future of that hospital or hospital system, there is an unbelievable alignment behind the mission orientation of what we're doing, which is they want this product for their patients and their practitioners. They want to be able to deliver less painful, more humane blood draws in a way that doesn't put a provider in the face of drawing blood, stay from an HIV patient with a needle and thus can be safer for that practitioner in a way that the hospital can benefit financially and otherwise through a more efficient, less costly procedure. So again, better to be lucky than smart. We started out with hospital investors because

of visionary CEOs. And I really think as we look at where the med tech funding markets are now, it's certainly challenging. And we do have traditional med tech investors. like Safeguard Scientific's, but we really have gained quite a bit from the relationship with these hospitals and over three dozen angel investors who have run large companies like Abbott and Boston Scientific, who have run insurance companies who have run hospitals because as I mentioned earlier with our initial angels, the money is important, but the advice and the council is priceless. Yeah, no doubt. I got to think that's it. That would be a huge benefit to any early stage company that can round up, you know, and build out, you know, a group of healthcare systems that

want to invest in their company. Only does it, does it help fund the company for, you know, future clinical trials and commercialization? But it's, you know, it's an open door, you know, to the healthcare system in and of itself. So cool to hear, get your thoughts on that. So I know we're running a little bit short on time here. I did want to, before we get to the last three rapid-fire questions, I wanted to ask you about, you know, your thoughts on value-based health care because it does seem that, you know, Pivo sort of sits at that classic intersection. of improving the patient experience while also helping healthcare systems, you know, achieve a certain amount of financial stability or profitability. And so, you know, how do you think PIVO fits into

that equation and maybe just your, you know, your brief thoughts on value-based healthcare overall, considering we only got a few minutes left, kind of a loaded question for a few minutes, but nonetheless I need your thoughts on it. And there's a sea change, right, with the value-based purchasing and the democratization of information more competition amongst hospitals. Patients have more choice now with their insurance plans, and they have the internet, which gives them information. And I think it's why in part you see hospitals increasingly marketing

and why you see billboards that suggest ER wait times in a city or a community that has more than one hospital. I think it's hospitals that are vying in many respects for their own survival. And so to have a technology and a series of technologies that is better for the patient, we believe enhances patient experience where we know there are direct dollars from value-based purchasing associated with that patient experience and patient loyalty. And a procedure that can be safer for the practitioner by removing the needle from the equation that can potentially be safer for the patient if we touch central lines and large. catheters that are surgically placed and are extremely effective for drying blood off of but we run the risk of a clavsy central and bloodstream infection every time we touch them there truly is direct and indirect dollars and

sense there's of course the efficiency argument which in that Diva patient a practitioner can spend 30 minutes to an hour trying to get blood out of and sometimes multiple practitioners and so when you look at those different domains, you look at the occupational health impact for providing an ideally safer experience by removing that needle for the practitioner. And we come back to that 30% of inpatients that are divas, not to mention the waste of materials and time in drawing blood across a procedure that we may do one million times in a hospital. The dollars and cents quickly add up. We've been having a lot of fun working with our hospital partners and our customers because the very first thing we do when we

engage with them is we access every inpatient blood draw that they did in a given calendar year. We slice it, we dice it, and we come back and we tell them how many they did, what percentage were between the hours of 2 a.m. and 7 a.m. What percentage of their patients had 2, 3 or more blood draws in a given day? And I think the insights irrespective of our innovations are quite profound. You see hospital CNOs and CMOs and CFOs looking at one another almost in shock. and it's really gratifying to be able to help them recognize what's happening in our hospital, and then very quickly provide them a solution to some of those opportunities. So a technology, a procedure, a practice change, it will not fly if the dollars and cents don't add up.

We're doing that work with our hospital partners now, and I'm quite confident that what we're going to provide is going to be better for everyone, including the hospital, and there will be significant dollar savings behind it. No doubt. Such a great story. It's been fun to have a conversation. and learn a little bit more about your background, Eric, as well as the, you know, the Volano Vascular story. It'll be fun to watch your progress.

And I'll certainly link up to it in the show notes. But I would encourage everyone to go to Volano Vascular. Their website's fantastic. And learn a little bit more about the device and what they're doing. So very good. Let's go and conclude the conversation with the last three rapid fire questions. Try to be brief here considering our limit of time. But Eric, what's your favorite business book?

Undoubtedly on becoming a leader by my late mentor, Warren Bennett. Great. And is there a CEO that you're following or one that's inspired you in the past? So a CEO that's inspired me in the past and inspires me today, Michael Oso, he's the CEO of the Crohn's and Colitis Foundation of America, the healthcare nonprofit that I'm a national board member of and is affecting the lives of the 1.6 million Americans that have Crohn's or Colitis. Very cool. And the last question for you, Eric, is if you could rewind the clock and give your 25-year-old self some advice, what would it be? That's a tough one. So probably be patient, be patient personally, professionally, and even from perspective of having impact. Good things will come. Good stuff.

Good stuff. We'll go ahead and wrap. We'll go ahead and call it good on that note. So thanks, Eric. I'll have you hold on the line. But for everyone listening, thanks for your attention over the last 45 minutes or so. And until the next episode of Medsider, everyone, take care. Thanks again, ladies and gents for listening.

This episode has been brought to you from the WCG Studios here in Minneapolis. and don't forget to grab your panoptic stacking blueprint by visiting reachfiredigital.com for slash medsider again that's reachfiredigital.com forward slash medsider okay bye for now