Aberdare School Board

Transcription

The day's been running on time and we're going to try to do the same. My name is Paul Yak. I'd like to welcome you and this is the last spring in the afternoon. So, we've got a great panel put together. We're going to focus on Med Tech. And as you can tell we have some innovators who are of a vintage that they're out there doing this in the first years after launching from Stanford. And what we want to hear is kind of their perspective. Things are changing so radically as you all know, as we've been hearing about today. And we' re going to get some in the trenches perspectives about what's going on. The bios of our panelists are in your programs, but I want to just briefly introduce each of them. So, on the far left is Darren Hide who's a principal from [inaudible] Darren has an MBA from Stanford, his AB from Princeton, did medical school training, worked for Med Tronic for a number of years. Next to him is Moe [inaudible] who's recently taken a new job as Executive vice President/Chief Strategy Officer for West Wireless Technologies. He'll tell us about that, but a new initiative down in San Diego focusing on technology advance and cost savings through wireless technologies. Next to him is Darren [inaudible] who's CEO and Founder of Hourglass Technologies Company in the obesity space. Darren's an Engineer Economist from Duke who also got his MBA from Stanford. And to my left is Udai Kumar. Udai did his undergraduate and his M.D. at Harvard, residency at Columbia, Cardiology Fellowship at UCSF, was a Bio Design fellow and he founded Eye Rhythm Technologies where he is still the Chief Medical Officer. He's also active with the Bio Design Program as a Global Fellowship Director. So, we would really love to have your questions and input. What I'd like to do to kind of prime the pump is to find out from each of these folks kind of the one key thing-the most important thing they've experienced that they didn't anticipate at all coming out of their training program. And they may need to tell us a little bit more about the context of their company to answer this. But Udai, let me start with you and we're going to go rapid fire. So, your responsibility is to set the pace of going quickly with this answer. Sure. Thanks, Paul. Thanks to everyone for staying through the afternoon to hear us. So, I think I'll just give you a brief background on the company so you know the space. I'm a cardiologist/cardio physiologist by training. So, I deal with abnormal heart rhythms. As a by design fellow we focus on the field of electrophysiology and arrhythmia care to try to understand what are met needs. Long story short, we realized that there was an unmet need in diagnosing people not by specialists, but at the primary care/emergency room level. You've heard a lot about that today. We could have anticipated it, but we were thinking ACO models even before there was one. But the long and short of it is that we started the idea of a simple, single use long-term disposable cardiac monitor that could be placed in those settings so that with one test the patient could get diagnosed. And one of our requirements was really driving the cost down so it was really at the cost of a blood test. So, I decided to take the company forward after I finished the Bio Design fellowship, really spent a lot of time learning about what it means to be able to articulate a value Proposition and really understand why this need. I really wanted to have the idea killed if I could because I was giving up being a practicing physician, so I really wanted to see that this was going to go somewhere. And you'll see at the end of what I'm going to say why all these elements are important. Four years now fast forward, we're 130 employees. We're selling our product widely across the U.S. We should hit our 10,000th device at the end of this month and hopefully do 20,000-30,000 this year. And what we're really seeing is Todd and other people that you've heard today have really seen what's a different type of model in terms of trying to focus on not just the unmet need, but unmet need in a business innovation/business model sense. We realized that specialists oftentimes see patients they don't need to see and oftentimes getting to a specialist is a problem. Really focusing on getting devices down to primary care level, but understanding how primary care and emergency room physicians practice and the cost constraints on the healthcare system has really, really been important in the sense that when we're down in the low $100 range for a device that records for a long period of time that's easy for patients to use we use cloud computing to do all our algorithm analysis so we're really scalable. And more importantly, from the government standpoint we've done this all in the U.S. So, we've created 130 U.S. jobs. When you put all that together you can see that value and innovation don't necessarily go, are not apathetical to one another. They can actually survive, coexist and represent solutions to good opportunities. So, that's just a high level background and I left a lot of things out in the interest of time. But three things I think are important for anybody thinking about starting a company. 1. Know your limitations. Know what you're good at and what you're not good at. I'm a physician. I think I'm reasonably smart, but I don't know everything. Putting CEO after my name would make no sense to an investor. Understanding the unmet need, understanding clinical, understanding how to develop something from a research standpoint and clinical standpoint? Yes. So, when I started out one of the first things I did was try and understand, "This is what I can do, this is what I can't do. But can I attract people that can fill in those gaps? 2. Understand the risk of your project. And a lot of fellows have heard me say this. People always think that developing a prototype's the most important. Sometimes it is, sometimes it's not. In my case, I don't think anybody didn't think we could develop the device. It was really how do you change a paradigm of delivering healthcare to the U.S. That's business execution. So, if you understand the limitations and you understand what the risk is, my risk was, "How do you secure some IP?" And more importantly to protect what we're going to do. But also more importantly, "How do I attract someone with industry experience who can help fill in that void?" So, my first hire or the person who came on board when I started the company is the CEO who's still the CEO, who had multiple years experience in cardiac rhythm monitoring at different companies, so understood that landscape. 3. Understand macroeconomic trends. You've heard it around all day today about the issues of business model innovation that value's now going to become a requirement. It's not just nice to have. It's not just develop a new technology and then later on figure out how to pay for it. You actually have to think about how you're going to get paid for it from the beginning. So, we didn't talk about the regulatory risk because in our case it wasn't as big a risk. But understanding these factors of where healthcare was going, obviously when Obama was elected we couldn't have predicted the Affordable Care Act. But there were trends already going in that direction. So, having as a requirement lowering the cost of healthcare and fundamentally solving the need was really important. So, if you take those things-understand the big picture so that your need really is going to be supportable by what investors are looking at, understand your risks so you know what things you can address and what you can't, and then understanding yourself to understand, "Can you meet those challenges?" And if they don't all align it doesn't mean it' s not a good idea, it doesn't mean it's not a good deed. It just may not be the right time for you to solve that problem. So, those are the kinds of things I've learned so far. That's great, Udai. And I'm going to ask you to keep track if you have a question for the specific speaker. We're going to go through these kind of preliminary comments first and then open it up. And Darren, in some sense it must make you cringe to hear that regulatory is not a particular issue from Udai. But tell us about... We have other solutions for that. Yeah. So, Hourglass Technologies, we're developing a medical device in the obesity space. Currently, the only effective treatments for patients who are morbidly obese-over 100 lbs overweight-are invasive surgeries like gastric bypass and gastric banding surgeries. They're very effective, but of course they're invasive. They take place in an expensive operating room and they carry multiple complications. So, what we're doing at Hourglass Technologies is we're making these procedures much less invasive. We've converted them to a fully Trans oral procedure so there are absolutely no incisions. So, it's an incision free procedure that will dramatically reduce the complication rates and also make it a much more cost effective procedure which we've heard throughout the day is very much on the minds of every country in the world and it's coming to the U.S. as well. So, just a little bit about the company itself. We're a 15 person company. As Paul was eluding to, this is a Class 3 PMA change the world kind of device and that brings up a lot of regulatory hurdles along the way. We've raised $11 million to date and we've been able to partner with great partners including Johnson & Johnson, Maverick Capital, and Exceed Capital. And that will kind of tie into kind of my learning's along the way. So, a big learning for me early on was I had no idea how difficult it was going to be to raise funding. I thought, " Here you are-obesity. You can look at the cover of Time Magazine. You can look anywhere. It's a really big issue in healthcare." Now, it was an extremely crowded space before I walked into it. So, there are lots of great entrepreneurs and great companies working there. And what Udai eluded to, you have to understand the risk that you're getting into. And for us what we realized is we needed to really separate the risks out. And it wasn't about, okay, just getting a device that would work in patients. It was going much more fundamental and saying, "Well, what are the issues that people are having?" And it was the biology. It was the fact that the stomach is an incredible organ, but it's very difficult to actually control the stomach. And so, we were able to split our whole system into parts and instead of coming up with a full-fledged prototype we were able to literally build a small device for $10 on my kitchen table, and implant that in some pre-clinical models, and show that, "Look, this has a lot of promise" and use that as the leverage point to raise the capital to move the company forward. But it really took division of risk to be able to move the needle with investors. Another area that I never anticipated was the type of funding sources. Obesity and because it's a Class 3 PMA device it's going to take a lot of capital to get this project to market. Some of our competitors have spent almost $90 million and still never quite made it to market. And so, it's forced us to look at alternative funding sources. So, rather than going a very traditional VC route, we've partnered with strategic's, with hedge funds, and really had to look at this in a very different way much because traditional venture has been shying away from really early stage, pre-clinical, Class 3, high regulatory class devices. So, just keeping the company alive to make sure we can help treat our first patients has certainly been an eye opening experience. But it's been a very rewarding experience and we can't wait to treat our first patient here very soon. Sort of an interesting juxtaposition here of two different models. Something where you wound up Udai, in really a cost saving, a little bit of a new space and aligned with what we're hearing about today. Darren, in some sense you're a classic strategy of taking an invasive procedure and making it less invasive-in your case considerably less invasive. But different funding strategies. You had to invent your different funding strategies and I suspect we'll want to circle back on that in a minute. But Moe, you're coming at this from a really different perspective. And Moe, I didn't mention-you'll see in the bio-spent time at the FCC looking at kind of macro issues of cost, and connectedness, and value. So, tell us where you're at and how you got there. Sure. So, M.D. background, then dabbled a bit in venture capital devices, IT services, as well as biotech, and policy background way back in the day, and then decided to jump on the whole reform wagon and build the first healthcare team of the FCC. And I think Tom [inaudible] summed it up very well this morning that health reform's a lot more than just adding 30 million more people in the system. It's actually how do we change the delivery mechanism, the incentive mechanism, and then how does technology empower this? And then I ended up at the [inaudible] Health Institute. We're essentially a startup-an 18 month old institute based in LaHoya. We have a couple of different functions. We have an investment fund. We have now around 25 engineers. We incubate technologies, we spin them out, and we do a range of policy issues as well. And they're all around the cost reduction thesis, so they're not too dissimilar to some of the things Udai was saying. And I was asked to talk about some of my shared experiences or learning's. I think the main thing I've learned, I've had most success in my career when I focused on-and I've been lucky in some respects focusing on-high growth areas and being an early person within that space. And I'll give you some stories around that. At one point I was looking at opportunities around medical device startups. Although I haven't practiced in a long time clinically and I'd done business school-I had business experience-I was told I was still a clinical person and had to focus on junior clinical roles. My friend in the front row is laughing at me. And then the week after I was interviewing in an executive position within an online healthcare delivery platform. So, I think the law of supply and demand also apply to how you think about your career. The first guys that worked for Google there was no internet company for you to get experience in. Medical devices bio pharm to an extent is a 20 year old industry. So, the skill sets and the experiences always increase as time goes on. First M.D.'s working at Genentech had just an M.D., now it's an M.D., Ph.D., residency. So, I think that's the thing I've learned the most. By trying to pick high growth areas and being an early person to help shape it, has helped me in better stead. Darren, so you're responsible for funding all of these people out here. So, your perspectives? Yeah. So, I work at Aberdeen Adventures fresh out of Dr. Yak's Bio Design class and the GSB here. We do early stage device investing, biotech investing, wireless health investing hopefully here in the near future. And I would just say that in my five years already I feel like I've seen a lot because things were working great when I came in 2006. Everything's on the path. Your product's working, you're hiring good people, things are looking great and then all the sudden things that are completely out of your control when you make the investment might have a really big impact on how things go. So, the thing I learned the most is you can do all the upfront work, and figure out where the risks are going to be, and vet everything you can. That might not have really that much of an impact on what happens down the line. So, what we've tried to do is stay out in front like Moe said and I think that area he's landed in is really interesting. And then find great people like Darren and Udai down here who are able to be nimble in difficult times and be resourceful like Darren has been in difficult times that find their way to success even when things are harder than they might have seemed at the beginning. So, let's do start getting questions and let me focus you too. I see a fair number of young people-if I may say so-in the audience and if you have career oriented questions-the other things we're going to go on and talk about. I'm really curious to hear what each of these folks is doing with a global strategy. I want to get to that. And then in the spirit of the day from each of their perspectives kind of where things are going, how they're seeing around the corners. But anything career wise, [Informal Talk] So, questions-Moe, I'm going to pick on you, okay? I'm going to ask you if you wouldn't mind going to the mike. So, Moe as many of you know also could well be up here as one of the Founder/CEO's of a really rocking company. But if we put you on the spot, what didn't you know about getting into the career when you were here as an MBA? What kind of piece of advice would you give? I guess the area with regards to which I was most na?ve is that I thought with respect to all the government interaction is being right and making sense would be sufficient. So, our value proposition was quite similar to that. We basically looked at something which was one of the largest VME or medical equipment spent items for the agency and said we could eliminate almost half of this cost immediately. And we thought that would suffice. And three years later it's clearly not sufficient and that's an area where I feel especially someone early on needs to enhance its understanding on what it would really take to galvanize a government agency into an action. Even if the action is beneficial to it, it often requires more reasoning or rationale. Yeah, Udai? Again, I was just going to say I think one of the things Moe just hit on is an important thing to think about in terms of when you lay out your plan. Is the cost it really takes to understand reimbursement having both he and I here on the same page in terms of one of the biggest problems with the healthcare system innovation today is that you can go through the entire FDA process and have a device that's deemed safe by the U.S. government. But payers-particularly CMS and then private payers-will wait for you to underwrite usage of a device, clinically show adoption, show trials to then pay you even though at the end of the day particularly- again in my case-if you take into account the value that could benefit them it's not a justifiable marketplace at all and there's no risk sharing. So, I think one of the other things you asked, Paul about a global sense of what we do on the India and Singapore side- it's clear that today other countries can develop products just as good as ones that have been developed here. But they've been doing so with an eye towards lower cost. So, at some point healthcare payers or healthcare entities, if I have a stint from India that's just as good, and it's just as safe, and it's a stint from [inaudible] Scientific or Medtronic here I have to make and one's half the price but effective I know which one I'm going to pick because it's a rational decision. So, if the U.S. government wants to think about innovating jobs they have to address questions that both Moe and I have provided them. How do you risk share with us? I mean, if we meet milestones just like VC's want us to meet milestones for regulatory, why can't there be reimbursement milestones that we'll prove to you in the next year we'll cost share for this. If you hit it we pay some more, you hit it we pay some more until some are agreed upon and if we don't we haven't proved that we're of superior outcome. Maybe we don' t deserve to be in the marketplace. So, that's something that companies will have to do. Do they really want to do that? And it goes back to the kind of things that Dr. Manuel said yesterday. If you really have a much better technology don't worry about it and the payment will come if you really are going to deliver better outcomes. But I think this whole issue of innovative small companies raising tens and tens of millions of dollars after developing a working product that's regulated and cleared is somewhat crazy and is definitely an issue with the spurring innovation. You need to think about that because that's still going to be a reality for the next few years. So, let's try to drill down in this a little bit. Ted Park in one of the lunch breakout sessions was saying, "Look, it' s clear you have to go to the emerging accountable care organizations and sell your new technology to them, okay? So, you're out there trying to do this. Is there any there to go to? Surprisingly big payers today-United and others-are seeing that they need to embrace it. So, while there are still some conservative private payers who don't recognize the value a lot of other ones are trying to take a look, and trying to look at data, and trying to figure out how do we promote this to our beneficiaries. But again, we're at the front edge of this and what really happens-and again, you saw Todd. He's as enthusiastic as you'll get except for [inaudible] Those two guys are really trying to figure out ways of doing something. But again, they're working with the government and one thing I like saying is the speed of a startup is not the speed of government. They'll never match each other and an unfortunate thing for us is that means [inaudible] So, what does it look like though? I'm trying to get a sense as much as you can tell us... Sure. ...for you. Oh sure. Are you getting penetration? Yes. So, for instance we're kind of in a hybrid mode because we can exist. One of our requirements is we want to go out into the marketplace at least accessible to some code. It's much less than what we want, but something. And we design to that, so we're okay. And obviously as we're proving value, we have Palo Alto Vista is our third biggest customer in the country and they're paying the price of the value of the test cause it's much less than what they were doing before. And they're seeing the value. They're seeing their own payer. So, when we go to payers who are also integrated systems- payer and provider-they get it. They get where we're coming at. They're not comparing it. We're dealing with the legacy fee for service system and one of the unfortunate things even though I'm a physician is that every physician we talk to-which is probably the same in Moe's case-"This is a better technology. I see the value. I see the data. You have 10,000 patients. I get it. But I have this equipment. It's the worst test, but I'm going to pay for it because the more I do of them I got to pay for my small business". Yeah. That's the reality that everybody agrees is broken. And one other thing I think I mentioned that you have to understand, a lot of practices are being bought by hospitals. That's because I think physicians as a whole are saying, "I went to medicine to see patients, not to run a business" and that's what increasingly running a business is being a practicing physician. So, they'd rather be salaried, focus on the patient and let someone else handle all the admin, get the economies of scale of a big organization. But that's an important thing to think about as you're thinking about your ideas because even the type of coding going from CPT's, to APC codes, to in-patient, to ERG stays depending on how practices merge or get acquired are also things you have to think about. So, I think everyone approaches reimbursement. There's no way to know it until you really get into it and you realize what a [inaudible 00:24:50] it is. So, hybrid model running, trying to keep the electricity down with current sales, but trying to penetrate these organizations. Oh yeah. Target these high value customers. Yeah. You see the value, use them to bring the herd. Okay, good. Darren? Yeah. I put out a different type of hybrid model. So, obviously obesity is incredibly a very consumer driven space. I was very surprised to hear the statistic that prior to the recession 1/3 of patients who were getting a lap band-a gastric band for morbid obesity-were actually paying out of their own pocket. And so, another model that may be a way of doing a hybrid approach and getting through the valley of reimbursement is turning to consumers when the technology lends itself to that as one approach. And frankly, the FDA is probably our bigger hurdle even before we get to reimbursement. And looking to Europe, looking to other geographies as a good launch point I know most obesity companies that are starting to bring their companies online are actually going to the U. K. And it's like, "Whoa!" Almost no medical devices typically start out going up against in the U.K. healthcare system where there's a lot of cost effectiveness measures. But there's a private pay system there and there's a consumer willingness to pay. So, there may be an option for technologies that even when they have large regulatory hurdles and there's reimbursement afterwards to target consumers has a way of getting up the curve and getting through that valley of reimbursement. So, we'll go back to Europe and global in a little bit. But let me ask you specifically, is it part of your strategy? Are you in any way practically speaking looking at existing ACO's or how fast is this going to happen and what piece of your strategy is that? So, being a startup of our size it's all about focus. And right now that's beyond the regulatory. Yeah. That's beyond European. And it's in such a state of flux at this point that it'll be three or four years till we're there. The only thing we're sure about is that the landscape's going to look completely different than it does now. So, we're going to give that a little time to cook and then wait to strategize once it's more solid. Okay. Well, that's clear. Moe, I'm going to skip you for a sec and ask other Darren. So, what are you seeing as successful early stage models with these issues that we're talking about? And do you have anybody coming to you? I'm kind of fixated on this transition to ACO and whether you're seeing anything like that? I think nobody's really doing that right now. And I wonder if you see anything? We haven't. We haven't seen anything. I have. He has. [overlapping] I think it was actually from Moe. Right. So, he should probably answer that part. What we are seeing though is companies with commercialization plans elsewhere first. And we've seen more that aren't in Europe first. We've seen more that are in Asia first. Yeah. In fact, we just spent two or so weeks in China. And on the other Darren's consumer pay point, that's how they're paying for their healthcare-especially a lap band type or obesity type procedure right now. And there are many, many millions of pairs out there. So, we're seeing stuff from that angle not really from the ACO angle. I'm going to hold you for one more minute and I'm going to ask is there anybody in the audience that's with a startup or other entity where you have a proactive strategy of saying, "Look, healthcare reform is coming. It's going to look like these ACO's and we are actively planning for that. This is what we're doing" Anybody? Moe? What do you want to hear? First of all, what is an ACO? I don' think I've heard a clear answer on that. But by definition we have ACO's already around greater healthcare systems. It's just the thesis around why don't we provide quality outcomes? Let's link product solutions interventions to cost and quality outcomes vs. the old age adage of medical devices which is, "Lets drive volume, let's have high margin, let's ring up D.C. for a code and once we're okay let's just run the system". Would I bet my 30 year career on that thesis? No way. But the people I've seen more interested in the ACL model unfortunately in the medical device world is more from the healthcare IT and services world cause again to enable many of these ACO's it's really about data. Yeah. So, how do we understand decomposition of disease before patients feel symptomatic which the wider health world is pushing forward. How do we coordinate care? How do we give technology to care coordinators to improve those outcomes at a fraction of the cost? That's what we're seeing in the landscape. Well, what's an example or two of that? So, again talking to the entrepreneurs in the audience I think it's going to be hard to bet everything on an ACO without knowing what an ACO is. So, let's start earlier and go for some of the binary changes. So, at the end of the year 30 day readmission rules for CHF, pneumonia and MI are going to change. If that patient comes back within a 30 day period the hospital will not be paid again. In the classic fee for service system they did, so it was actually good for that patient to keep on coming back. Again, it shows how asinine the reimbursement system is. Their senses are so misaligned. So, we've seen a lot of activity around that rule change and hospitals are getting very interested in solutions that solve that particular problem. As time goes on you have bundle payments for other conditions. The ACO, I can predict what I think will happen when it does kick off, but I believe the biggest change will be the distribution channel that these guys are going to have to go through. Again, the thesis of, "I'm going to have to sell to a physician and show him or her good data, and they're going to make a lot of money off that device. I think those days are also going to go. [inaudible] physicians are hiring them as they said. The ACO's are going to be more centralized in purchasing, so essentially what Kaiser are doing already. So, I think the biggest flux out of this will be the channel to sell stuff and the mechanism one has to do that. Maybe I can... Yeah go ahead. ...talk about the ACL model and pick up on what you said about data. Yeah. I used Ireland as an example. So, if any of you feel lightheaded or dizzy and you go to Stanford emergency room they'll put on our patch. They'll put it on you if they can' t figure out what's going on. You'll go home and that's an emergency room physician taking care of a potential disease state possibly due to an abnormal heart rhythm. If you go home, go about your business, maybe you had whatever you had on day seven, or 10, or whatever. It gets recorded, you mail this back to us, we process the report. That report goes back to Stanford's cardiologists who are reading these reports on a day to day rotation. They'll look at it. They' ll see that you had your system, they'll see that you had a normal heart rhythm. They'll call you and say, "Okay". Now it's a different physician managing information that started with a different physician at the beginning. They'll look at that and say, "Okay. You need to come visit us." They'll see you and say, "This is treatable. Come see an electro physiologist .like me and you'll get treated." Once you see me and you get treated I might put another one of these on to see if what I did actually had the desired effect. That's an ACO with what we do in a sense that we're managing a disease state enabling by a device that's really centralized about information movement and management. I mean, I almost think of our company as really an IT company enabled by a MedTech device. Every one of these things over 14 days collects a million heartbeats and I know everything that happened with those million heartbeats. I know which physician prescribed it, I know what they find. So, there's a lot of business intelligence, but again I think it's the idea of leveraging information which is really not expensive vs. leveraging things and moving patients which is expensive, is where things are going. So, on a high level that's kind of a high pitch and everyone gets it because that's much more rationale. Now, we'll just see how that gets implemented. Yeah. Can I add one more thing to that? Yeah. [inaudible] very well. So, the classic device experience I had was, "Here's the product and we will sell it". That's changing as Udai said more of a technology or a service with the device. It's again linked to specific outcomes that you' re trying to achieve. And that's the big shift that I see. So, Udai's company is a good example of this. Can you brainstorm? And Moe, you're seeing this. I mean, there's got to be a wider zone than just wireless parameters of heartbeat digestion, breathing... Yeah. So, we can see those. But where else are we going? So, the way that we're dividing the universe-so devices are just the mechanism to capture data. But that by itself is nothing apart from if you can really capture novel data. So, if you can pick decomposition of CHF two years in advance that no one can do, great. But a necessity in actually most devices are more simple. So, that means you have to think about how that data is transmitted. So, that's the wireless world. How is data stored? What are the analytics that you apply to data to get the information? That's the healthcare IT world. And then how do you present that information at the right time to the right person in a new user interface? And that's a convergence of 3-4 different industries which no one's really figured out yet. So, there's some early players who are essentially making the competence around data. I firmly believe there's a Google to be built within healthcare who can really understand this data coming from multisource whether it's genomics, devices, clinical data and then really turn it into something meaningful. And if you push me to where I think the biggest opportunity is post healthcare reform- and I was talking to Darren about this-providers are now at risk. And I've heard through the grapevine some pairs actually want to get out of the classic insurance business. They don't want to be reinsurers to the ACL model who will be at risk. And I think that's a really interesting concept. And you can see that on the landscape. My caveat is this is all timing. How long will it take for this to all settle down? And I think it's more years rather than months which makes it very difficult as an entrepreneur in terms of your business model. What do you want to build your company for? But I'll go back to the basic fundamentals and the statistics around healthcare spending are terrible as you know. 2065 we'll spend 100% of GDP on healthcare. That's not going to happen. Things will fail way before then. So, if we really focus on product solutions that can help reduce the cost which will get enumerated in the business models emerging I think that's a good bet to place. So, I smell a contrarian situation here which is every time I hear value based innovation talked about it has to do with the interface with information technology and it's just the classic example. Sure. You're the classic example. And then you see something like [inaudible], right? Sure. So, is anybody familiar enough with [inaudible] to tell the story? Darren do you know that one well enough? I won't pick on you. Okay. So, basically this is a local company that just sold very attractively to Medtronic that came up with a catheter based solution for hypertension. And it's kind of based on some classic physiologic studies that were done years ago where surgeons would actually cut the nerves that go to the kidney. The kidney as you know is involved in regulating blood pressure. So, as a last ditch procedure if you cut those nerves you could drop the blood pressure. Company The Foundry, picked up on that, developed a catheter based strategy for doing this. And the cost implications of that are absolutely phenomenal, right? So, they have three year good data on reducing blood pressure. And so, the contrarian play that I was talking about is that I absolutely feel it in my water that there are great technologies-simple technologies-that have not been invented, that are cost saving. And Darren, you may have one of those, right? Absolutely. So... But I think you can think about it different ways. I mean, we talked about it and I think one of the things I think at the government level-and this goes back to my comment about payers- what I gave and what Darren, and what Moe and I were talking about made me happy with diagnostics and particularly information management. So, again if you're thinking of an ACL model in terms of outcomes I break things down to four big buckets. You have an acute diagnostic that is changing. You can change like what I do-changing when something is diagnosed. If it obviates multiple tests, multiple visits, repeat tests to get to the same outcome, that's cost saving. You can have acute therapies. So, it's like an [inaudible] You have a onetime therapy, but to really value it's outcome you have to look across the disease state of the patient which means not only treating them now what'd it prevent, but also what'd it increase in terms of their productivity-in terms of their ability to work, not be on time, etc. Then on the chronic you have things like chronic therapeutics-taking a pill every day, getting dialysis three times a week. You have to look at what are the outcome effects on the disease state to get to the outcome model and then there's-well, we talked about chronic therapy. Those are kind of the buckets that you can think about-acute point in time, chronic point in time. It's like putting in a defibrillator-one time shot. People say it's very expensive. But we know we're agreed as a U.S.-and Stephanie will tell us this-that we agree to $50,000 a year of dialysis to get quality of life care going forward. Defibrillators-20,000- 30,000 saves lives, but how is that measured? Yeah. On an annual budget cycle it's not a worthwhile thing. Yeah. But over the course of several years it is. And I think that guidelines support that ACC doesn't recommend putting it where someone's happier to live. So, I do think there are outcomes that are not information only that tie to outcomes based ACO's. It's just that we have to define them better particular to technology. Yeah. Good. We had a question in the front and I got blinded by the light. I'm sorry about that. That's okay. I'm [inaudible] I'm a physician from India and a student at Stanford. So, this is for the physicians out there. Just in terms of the opportunity cost, how valuable would you say has the advanced medical training been vs. just the four years of med school being in the industry in terms of giving you... Do you want to start? Yeah, I'll start. ...a leverage there? Some people thought it was useless. I think it really depends on fit. So, if someone's looking for a clinical person they'll find you. But the hardest issue I find in transition is being a clinical person and trying to enter into the business world again because of supply/demand preconceptions. And again, that was in the classic MedTech world and then as soon as I just sort of serendipitously stepped sort of sideways to an industry which was growing and evolving that didn't have a huge supply of physicians I got a lot more traction. I mean, I think for me I took a year off after med school to see if I really liked device development. I realized at the end of the day going to med school you learn something. Taking care of people, and coding them at 5:00 in the morning when no one else is around in an 18 bed CCU? That's being a physician. So, they're two different things and I think if you really want to understand unmet medical needs in your field and you want to focus more on understanding the needs, figuring out how to solve those problems it is helpful. The flip side of that is it's a long road. And again, being able to practice and do all these things is a balancing act. But I think it really depends on as Moe said, the right fit. I mean, if you're really going to transition more to the business side maybe it's not as important. But if you really want to be more from the clinical insight and again, what we talk a lot about is the design experience. I mean, we've tried to do a lot with the user experience for the patient, the physician. But I know that because I've been there, not on the physician side. But it's really, really important to understand and empathize with those things because that's where you see some of those insights and unless you've been there quite a few times it's sometimes hard. So, I don't think there's a right answer. I really thing, " Are you going to go more business oriented, or perhaps stay a little bit more medically focused and keep doing the clinical invention side. I'll give that one a shot too... Yeah? ...cause I was in medical school and left. So... He's the smartest one of us all. Yeah. He's a venture capitalist by the way. So... So, another statistic. Yeah, go ahead. So, I think it just really comes down to if you like being in medical school stay in medical school. I mean, honest to God. And with the years you're spending in medical school and you're probably paying a lot of money. You're working really, really hard and you're in the library by yourself with a book at 2:00 in the morning, If that's driving you and you want to take care of patients, stay in medical school. If you don't we should talk more afterwards. But if you don't, do you need it? No. I don't think you need an M.D. I don't think you need it. It helps. You get called a doctor. You get respect. You've earned the respect. You don't need it though. But it depends. You've got to like what you're doing at that time. So, from the perspective of you want to have the patients running new devices, I'm going to try to get it more towards probably Moe and Dr. [inaudible] Would you do it again? Oh yeah, definitely. I mean, I think it's I would say less about inventing devices, but really understanding where the needs of healthcare are. I mean, unless you've like I said taken care of patients, understood all the craziness that happens in a hospital, or in a clinic, or seeing patients come from far away with their loved ones, or having to give someone bad news, that's where you see needs. You don't have to be a physician, but you can see needs from the physician perspective. You can still see needs in a very important way. If you're not a physician no question, from a business perspective and engineering perspective. But again, in trying to understand, "What do you like doing? " At the end of the day, I mean, when you're in your late 20's, early 30's that should have narrowed down somewhat to what fits with your personality and what you like doing. The world is not always like the Art of Choosing that we heard this morning. You have to make a choice. Thank you. So, I heard a statistic earlier this week that there are about 100 medical students at Stanford and 27 want business degrees. So, I think that may be a referendum on healthcare reform. I'm not sure. But Darren, you were going to say something else? [Overlapping] I think the question of what do we really want to do with our lives is one for all of us. And there's a lot of talk amongst colleagues here about, "Why are you spending your life doing a Class 3 PMA device? A product? I mean, this is something that doesn't fly around in the air." And when it comes down to it this is a medical need... Yeah. ...that I thought was incredibly worthwhile. I had veterans in the industry that had worked at obesity startups telling me, "Don't do it". They were like, "You may waste five years, you may waste a decade of your life" because that's just a feeling that they had working at their companies. And at the end of the day you look out there. You're like, ' There are 20 million Americans-not even looking at the rest of the world, just Americans-that are eligible for bariatric surgery for these weight loss procedures. And less than 2% of them actually get it." And you talk to the patients who are making these gut wrenching decisions about you. "Do they really want to go under the knife? Do they not? What's this going to mean for their families?" This is really an area that needs to be changed. And it's worthwhile. Thankfully I was able to convince some investors it was also worthwhile. And it's going to be leading up to helping patients now. Yeah. Can I just add something? So, if you don't feel that passion about what you're talking about with healthcare I wouldn't do it. It's pretty timely now. Our friends from Facebook are all retiring and buying lofts in New York. And healthcare is so fragmented and regulated that you're not going to get those same type of opportunities. Compared to tech, you really have to be passionate about this space which I think we all are. I think one of the things I would ask Darren, I think none of us would disagree with is that at the end of the day if none of our companies had succeeded, I wouldn't have traded the experience for anything in terms of what I've learned. And I think that's really important. You really have to go into it thinking about, "What am I going to learn from this experience?" And give yourself some reasonable time limits. I mean, don't say, "I'm going to do this for 20 years." But really focus and say, "When I started the company I gave myself 6-12 months to get funded. If I couldn't get funded maybe it wasn't the right time." You really have to set limits. But if you do, and you keep going, and going, and you're seeing progress, at the end of the day that's invaluable. And from a company standpoint experience means more than anything in terms of who we hire. Yes? Hi. My name's Edith. I'm a Ph.D. student in Engineering here and I also have another career related question. At Stanford it's so entrepreneurial. It seems like there's this baseline assumption of, "Of course everyone wants to start a company" . And we call it Google-itess. Yeah, exactly. But starting a company vs. maybe tackling some of those problems that you're passionate about as employee #10 or as part of a larger organization, very different situations and a lot of tradeoffs, and I was wondering if you could talk about the decision process to decide, "To do what I want to do I have to start a company" and how you weighed some of those tradeoffs for your personal situation. Somebody want to lead? Yeah. I started my career at Medtronic, not a small company by any stretch of the imagination. And I found that it was a fantastic environment. And even though I was in a 30,000 person organization I found myself gravitating towards looking at challenging problems that I thought just needed to be solved. So, I ended up doing entrepreneurship inside of Medtronic which is a wonderful place to start because here you have all this infrastructure, all this money and all these incredible people that can help you bring something to fruition. But there's pros and cons to that. At the time I was 22 years old trying to work inside of a very large bureaucracy and getting buy-in that the President of the organization that, "Yeah. You should give me $6 million and 50 people to help bring this new product to market". And that process took 6-9 months. It wasn't like actually fundraising. That's a big chunk of change. Yeah. And so, that brought the product to market. It was a fantastic opportunity. But what I learned from that entrepreneurial experience is what would it be like to do the entrepreneurship experience? I remember we spent $250,000 on five lines of code because there were some programmers in Lafayette that were the only people that could do this in the world. Then I'd look at what I did with the first $250,000 at Hourglass and it's night and day. We kind of starting proving in some pre- clinical models that this could be a brand new therapy for patients. So, large companies definitely provide a great, great learning experience. But there's nothing quite like starting something from scratch and something that the world's never seen before. We shouldn't also underestimate that all of this is a huge element of luck. It's a lot of being in the right place at the right time. So, I think it's more about creating the opportunities for you to be in the right place at the right time. It goes back to what I was saying earlier. Everyone can be an entrepreneur and there's a lot of really good ideas. But there's not as many successful companies. And a lot of that has to do with things which are outside of your control. So, I think it's more about getting the right experience that makes you passionate about whatever you're doing and hopefully that'll lead to providing the opportunities and experiences that will then afford a higher likelihood of getting that entrepreneurial experience if that's what you seek. So, let's shift gears. Did you have a comment? No, just one quick thing on that is you're always better off when you surround yourself with good people-people who care about you, people who have done it. Whether you're starting your own company and they're advising you or whether you're in a big company and working for somebody as long as they know you're there, care about you, and want to help you you' re always going to be better off I think. So, I want to move to talking about global strategies. I'm going to ask you each to think about what you've done in your own businesses and I want to invite people in the audience too. We have some experienced folks and if you want to contribute to this discussion please do. But let me start. Moe, I actually don't know what you would say about global strategies. So, let's start with you. We actually have a product that we're about to spin out. I' ll give you our thesis first. So, you may have heard some of the other speakers this morning, but there are actually more mobile phones in the world than shoes. And people have access to phones easier than clean water. Countries in Africa and India are building their healthcare systems from the ground up without ever going to have the number of physicians that we have here or these technologies. So, it's an interesting place to see what's going on and something we want to capitalize on. So, I think the thesis of high volume/low margin devices and solutions vs. what we see here in the U.S. is a real opportunity. So, we have a low cost maternal health solution that we're still prototyping and at a certain point that will be spun out. It's going live in Mexico first and then India and Brazil. And essentially it's not rocket science. It's very simple, frugal innovation. The gold standard right now in a hospital is a cardiotocogram between $5,000-10,000. We have a couple hundred dollars version which is blue tooth enabled. You don't need a physician at the point of care. A nurse can carry that around. The data goes to a centralized place and we're bundling that with blood glucose, blood pressure and urine dipsticks. So again, not rocket science stuff, but will have a huge impact in maternal health and mortality we hope. Darren hi, so companies coming to you. What percentage have a Europe only strategy and how are you assessing that? None have a Europe only strategy. We did a thing recently where we looked at the companies we currently invested in and every one of them on the device side was somewhere else in the world other than the United States either selling, or manufacturing, or testing, or every single one was somewhere. I think that we've actually looked at some of the things that Moe was talking about. I don't know if we're good at knowing what's good there yet, but we're focusing there because of the constraints here that these guys know way better than I do. But yeah, I think every company should be thinking that way. But we're not seeing it in every company because sometimes we see it in a guy like Darren with a good idea and that's okay for the time being too. So, you have companies coming to you with medical devices that are saying, "We're doing $5,000-10,000, we're doing PMA in the U.S. and just kind of a standard..." Yeah. Yeah. Okay. And like you said earlier, there's still some things to be created in the good, old fashioned medical device industry too. Are you funding them? Yeah. We actually are. [Informal Talk] So, PMA devices go to other ventures and Darren will [inaudible] Darren, so both your strategy if you can tell us and your perspective. Yeah. So, I look at this no different than I look at the funding for the company because this is just kind of the next level of funding for the company and creativity is going to need to be involved for devices that are Class 3 PMA devices because the FDA is not an easy place to get through nowadays. So, I'm really focusing the company outside of the United States and saying, "We need to be able to build to pay sustainable business in Europe and in other geographies. And we'll wait to see what's going to be happening with the FDA, but I'm not going to bet the entire company on that. It's just too uncertain." So, we like a lot of the opportunities outside. And so, we' re going to be gearing up for that kind of a structure. And on a personal level it kills me because there are a lot of patients I meet-I meet on planes, I go out and actively interview-and this is a therapy that I'm really excited to bring to patients here in our own country. And it's going to be a long time. So, are you talking about Europe really practically speaking? I mean, that's where you'll get traction? Yeah. Yeah. Europe, Australia. And these are just areas that unfortunately obesity is a global epidemic. So, we can go almost anywhere. But as Darren was saying, there are some very interesting countries like China and India where there' s more of a consumer pay event and that's a great start for us. What are you expecting to run into as a difficulty? What's your white hot risk with that strategy? People. People. So, it's just getting the right people aligned around the table that on one side are not myopically focused on the U.S and really not look at the other geographies not as owe U.S., but like as, "This can be the main entr?e". So, our biggest risk there is really going to be recruiting the right people to help us deliver on that strategy. But as far as, "Are the patients there?" "Is there money there?" That's not the issue for us. To what extent are you influenced? So, a common thing we hear is, "Gee, the big strategic's-the big companies-have all this offshore money that they don't want to repatriate, so great exit strategy to come up in Europe." Is that discussed around your board room? We're not too worried about repatriating money yet because we just want to make money. But I mean, let's be real. [inaudible] was a stunning success and we would love to follow that model of showing something that has tremendous clinical value in patients and then working with a large strategic to help make that a standard of care. And that was kind of what I learned at my time at Medtronic. There were a lot of other innovative things happening elsewhere in the medical world, but Medtronic was fantastic at distribution and truly making things a standard of care. And a big success for Hourglass is ensuring that our device gets to as many patients as possible. And so, we'll go through whatever channels are necessary to achieve that. Udai, your strategy? Oh yeah. Ours is a little different in a different way because we didn't have as much regulatory risk as the $5, 000-10,000. We focused on the U.S. from the beginning. We talked a little bit about the reimbursement which is a moderate risk. But I think the other thing we wanted to think about is our device and our approach is very, very low cost. And we want to keep driving that cost lower. So, I think the biggest opportunities for us are in the [inaudible] in China eventually. But I think we can drive the cost of this product and our service even lower with volume. So, as we get volume in the U.S. that can help us drive manufacturing costs down. We can go to Canada. We can go to NHS as a system and say, "We can provide this device at far lower cost than anything you have right now" because we will have been able to deliver the cost reductions because of the volume we're seeing in the U.S. The other thing is from a strategic standpoint is at the end of the day I'm a Molecular Physiologist. So, I want to treat people who have arrhythmias because we can treat them. Big companies like Medtronics, St. Jude-St. Jude's an investor in our company along with Boston Scientific. They make products-very expensive products, but very efficacious products-for people who have certain arrhythmias. Emerging markets are a big focus for them now. So, at the end of the day it's very difficult to penetrate India with a $10,000-20,000 defibrillator and price it lower to get into the market or do what you have to. But to get a device that's $50-100 or whatever it might be broadly to diagnose people who may otherwise be left undiagnosed with vague symptoms, much easier value proposition to then convince some of them that, "Look, you have this big, huge pause where you don't have a heartbeat for six seconds. Maybe you do need a pacemaker." And with a device that they were able to buy like, "I'll do it", that's a selling point. So, our strategy is more from a strategic sales strategy in the use of the gold market cause I definitely think there's a bigger market for our product elsewhere. But right now the U.S. will prove it out for us to go all U.S. And again, the most important reason is we continue to export. I don't want to import. MedTech is a big... What's your protection in India and China? Well, from our PCT applications when we've started we've gone into Canada, UE, Japan, but not much in China because really it's still a wild west. So, I think we'll eventually get there, but we'll keep moving east to Europe until we get there. Hopefully some of the things we've seen on the Stanford India side, some of the more regulations and protects will be in place years from now. At the end of the day, finding more arrhythmias-if it floats everybody's boat in terms of devices-they have almost no penetration there. So, they're starting from scratch with an unpenetrated population of a billion plus. So, I don't know if that's going to be too much of a worry. Yeah. Moe, you're the fifth man on the panel. I'm going to ask you about your global strategy too if you would. But I also want to ask, anybody else in the audience who is primarily focusing on a developing nation strategy? Can you tell us about that quickly? [Informal talk] My name's Peter [inaudible] I'm a family physician. I developed a smart system for the neonatal space that actually Moe, kind of mirrors your product. We're going for low cost. The barriers here in the U.S. were just formidable. We're trying to push a device for risk reduction and lowering cost and we just don't find that VC's were open to that yet. So, India seems to be a place with open arms. And it's at low cost, very different market strategy than the U.S. Our cost point would be $20,000 here. We're going to try to bring it in to developing countries for $800 and using a three tier market where you get it out to the poor for free, and some of your [inaudible] care hospitals you have a premium price-a multi- tiered marketing strategy. And are you Geo funded? Is it for profit? What's your model? What's my...? The business model? We're still in very early startup. We just have our working prototype and we'll be pitching for different foundations here. Cool. So, towards July. Neat. Bon voyage. Other people who've done developing? Yeah, please. Hi, so I'm not with a small company, Verna Rodriguez with Boston Scientific. Hi Paul. I've heard of that. Yes. So, Boston Scientific has an emerging market initiative. So, from a large company perspective with all the changing healthcare and Boston Scientific historically being very myopically U.S. focused I think is waking up and saying, "Oh. We need to sort of change what we want to do in the world in terms of selling products and not be so U.S. focused." So, we're doing things like we already have some manufacturing in countries like Ireland and also Costa Rica. And we're expanding more in Costa Rica. But also, we have a small group of folks in China that's a Boston Scientific based company. And so, we're looking not only into those markets by actually manufacturing in those countries to reduce cost, but also to be able to have a presence in those markets so that we can invent and innovate devices that are for those markets, not with a U.S. focus. So, that's what Boston Scientific's doing. So, that's why I'm here. Yeah. Thank you. Stunning. I heard John [inaudible] remarks this morning about the shifts that they' re anticipating in five years time. It's just extraordinary. So Moe, tell us about your strategy. So, we mainly looked at diversifying reimbursement risk. And before going global one can think first creatively about alternative viewer spare. So, one system we like is the V8 Medical System that dispenses about $78 million of healthcare spent each year. It's a relatively more straightforward process to get on the federal supply schedule and that's a way to basically diversify or mitigate a bit of the reimbursement risk, and something that we have implemented quite effectively. On the VA medical system with a product like ours, one may start thinking creatively about FEMA and all those disaster relief organizations. They're stalking those... Do you want to tell us about your product just quick because... Yeah. So, our product is basically a single use negative use therapy device for treatment of chronic wounds and it can help treat acute wounds as well. Once homeostasis has been achieved, negative pressure wound therapy which is the application of controlled suction to wounds through a formal gauze interface is the eighth largest VME category that Medicare spent. In the U.S. product sales are about $1.5 billion and the category has grown over 600% in five years in terms of Medicare payment. And my frustrations even though we brought them we can probably just eliminate half of these cost just out of the box. That wasn't sufficient. But it's therapy that basically has brought application to a lot of soft issue defects. And our experience in the aftermath of the earthquake in Haiti where we sent one of our cofounders-a clinician-with a lot of products as part of an initiative with the University of Miami. We've seen that we were able to very effectively help folks in the aftermath of an earthquake especially when there are blackouts and all the electrical, capital equipment type devices just weren't able to be effective and they were treating folks in hospital tents. So, that kind of brought us the idea. "Well gee, we should be approaching FEMA and approaching DOD more to understand what are their criteria so that they would stock such a product as part of a relief or disaster effort." That could be one stocking or they could be probably our revenue projections for next year. Another one is of course the VA medical system. In terms of all U.S. we are implementing those very, very aggressively. So, one of the methods we use to stay capital efficient in our operations and be able to penetrate markets quickly is to really seek partners that would help us penetrate for example the European market. And that also ties a bit to our exit strategy. It's kind of, "Let's dance before we get married" kind of thing. So, there's some strategic rational with the choice of distributor we go with. And beyond that we've launched a regulatory process in Japan. We also flew a partner that invested in us. But I think all these OUS commercialization endeavors need to build on a bedrock of FDA clearance. For example, in Bedrock what's left after that is the [inaudible] and a fairly straightforward process to get clearance. If you don't have FDA clearance in the U.S. it's a different story. Same holds for Japan, although the process is more... Your FDA pathway was? Our FDA pathway was not a $5,000-10,000. It was a noble process, but took 18 months, something that I thought would take less than that. [Overlapping] This may be an irritating question, but it seems to me you must be worried about people reengineering your device... Yeah. ...especially in Asia. So, do you have a strategy about that? Yeah. Yeah. Our strategy may sound funny to you guys. It's get a partner who's dad is really senior in the Communist party so nobody will copy your device. So, what we're working on [Overlapping] identify guys who are really entwined in the political apparatus and those are usually the joint ventures and the operations that end up with their IP rights protected. So, that's really our strategy. By the way, we have submitted national phase applications hosting China and Japan. But I'm just looking at the date. Until early this year there hasn't been a single foreign company that has won a trial case in Japan in respective of the rights and the contracts that were signed. So, we're doing that but... But you haven't seen devices emerging yet that are competitive. We haven't seen devices emerging yet that are competitive. We have seen interesting ideas coming from academia and from students working in [inaudible] That's our area of concern. Good. Thanks. Sure. So Moe, you have a clear developing world strategy and that makes great sense. Darren, for the high end medical devices is there a developing world strategy? Is that even on your radar screen? To be honest it really isn't as much on our radar screen. Well, I guess I should ask which geographies you're referring to? Just riff on it, whatever you want to say. So, it's hard to even think about whether Brazil, and China, and India are developing or whether they're way ahead of the United States at this point. So, depending how you look at it... Right. But... Advanced developing. That's it, yeah. But no, I mean I was just talking to some surgeons in Brazil this past weekend at a large medical conference and I look at the infrastructure they have down there. It's really exciting! Our technology would dovetail beautifully into that because even at the heart of it what we're doing is we' re taking a very invasive technology and making it basically a conscious evasion outpatient procedure. It's moving from expensive OR to a much less expensive endoscopy suite. And that's a model that could work very well in regions where capital costs could be a huge barrier to offer procedures for patients. So, we definitely see there's plenty of opportunity there. It's incredible actually how much the procedure volumes were growing in Brazil. So, that's a market we're going to be monitoring very closely. So, we're going to get in just a minute to asking you guys to look around the corner. And again, I'd welcome any questions about that from the audience. But sort of to prime the pump for that, one thing that I'm hearing a lot anyway from young innovators, young companies is that really the name of the game now is to figure out what the strategics want to do right away, if possible have that discussion and get funding at a seed stage or Series A. What do you see or what do you think about that? Maybe I'll start with Darren [inaudible] again on that. On what specifically? On the idea being that you need to know because it's so tough now to go through a series-A...B...C...D that you really need a partnership worked out with a strategic early on and the best thing to do is to really start right away with that kind of partnership discussion. I don't know if that's the best thing to do to start that way actually. I think the places where we've succeeded in dealing with bigger companies is usually to have a technology that scares them a little bit, that takes their mind share of their key physicians or you can go to Europe let's say and have their highest user physician start to use your product and then tell his friends, then get them to start using the product, and then all the sudden they really want to be your partner. Before then it hasn't really happened as much for us. Moe, in your world? I don't think I'm doing anything that big MedTech would be interested in because I'm so different. I'm actually getting more interest from the strategic's like Intel and Cisco. Sure. How about you, Darren? I mean, this has been our model. We were in a garage when Johnson & Johnson invested in us. I don't know if they knew we were in a garage at the time. Looking at the capital requirements for a Class 3 device and I wanted to make sure that there would be a tremendous amount of alignment. And I know that there was a tremendous amount of controversy when I talked to advisors and mentors about, "Do you bring a strategic in early?" "What are the pros and cons there?" "Do they put handcuffs on you?" And it's all how you structure a deal. You can make it so that it works great for the company. And Johnson & Johnson has been a tremendous partner and has been extremely helpful. So, if I were to do it all over again I would certainly jump into bed early with a strategic. I think they provide profound insights on what the market's doing right now. Well, what does that look like? What is your actual interface with the company? I mean, what kinds of people are helping you? Obviously Johnson & Johnson's a very large company. Ethicon Endo surgery is the segment that focuses on bariatric surgery as well as all surgical type devices and it gives us the ability to interface with experts from reimbursement- clinical, regulatory, marketing. It really brings tremendous amounts of resources to bear that frankly we could never afford as a startup company. Udai, you have a relationship with St. Jude? Yeah. So, St. Jude invested in us in our "B" round after we had clearance and were really starting to market our product. And I think that's more typical. They want to see a little bit later stage where there's going to perhaps be an impact that some of the regulatory or other risks have been taken off the table. While I think that all the strategic's are thinking they'd like to invest earlier I think the reality is you might be the exception that it doesn't really happen because it's still too different from their DNA at the moment. So, I don't know how often that's happened. The other thing I would say is when you do make a deal with a strategic, if you have multiple potential strategic exit partners there's a plus and minus of having one of those as your partner. So, our deal leaves the backend open. It's just that they're an investor and we have a cool marketing relationship. So, they help market our products, but that's where it ends. So, I do think it's very important to make sure that when you structure those deals if possible you think about the pros and cons, and what that means downstream because if they're getting everything they want from you and you're locked into them, that could be a tough situation for you whereas if you're not, that could be actually to your advantage. Yes. So, we have seen some deals with people trying to lock up our companies. "We'll invest early, but if you're ever anything we'll own you" and that's a bad position to be in. for sure. Anybody with experience in the audience? Are you in companies that have a close strategic partner? Anybody here? A few of the venture people are seeing these I'm sure at this point. But Minnow, any comment about this from your standpoint? So, if you don't know Minnow, Minnow's one of the very experienced serial CEO's in MedTech in the valley. Thanks Paul. I think everything that is not general rules and as we can see on the panel here the gentleman has a terrific relationship with J & J. I'm sure he put together a deal that he can get out of it and actually would be more attractive to potential other buyers knowing that J & J has interest in his deal. That's right. And I think that we need to be very open to learn and find out where the opportunities are whether we're doing a global deal or maybe the best opportunities in the U.S. What are you trying to accomplish? Are you trying to prove the product works? How can you prove it? Maybe you don't have to go through FDA approval. Maybe you can do basically a FIM in the U.S. and that will trigger a nice deal for you. So, I would recommend that basically the market and the needs are continuously changing. It's like a pendulum. We're talking about healthcare reform where my big success was in 1995 when Hillary Clinton tried to introduce healthcare reform and cost was everything that everybody talked about. And I had a product that basically I didn't even know what it was good for. And then I did a clinical study to prove its clinical value and I found out that it can cut significantly the number of angioplasties in the U.S. It happened to be at that time health care reform cost savings capitation was the big buzz. The cardiologist obviously didn't like it. Those are my customers. But the financial community loved it and I was able to take the company public. But then after a year and a half or two healthcare reform didn't work. Then I rushed to sell it. Alright. So, let's bring this around. Alright [Informal talk] My name is [inaudible] I have a long history with Guidant and a few other companies. I'm a venture capitalist and I'm learning a lot. I'm really happy to hear that people are thinking now about countries like Germany, and Holland which is the Netherlands by the way. And so, I have a couple of things that I really want to point out. It's nothing. There's a lot of advice that you said you think we should make up our own minds about things. First, about dealing with large companies I think it's in your best interest as a CEO to start early having conversations with strategic's-and there only about 10- because you're going to learn a lot. You're going to learn how they think and when the moment is right you can kind of step in. You're right. There are lots of ways of structuring this. And so I don't think it hurts to speak with them and even to get an investment because all of the large companies have now stepped in where VC's have now stepped out. And so, they are actually very attractive potential investors because they are taking more risks because in the P & L it doesn't mean a hell of a lot. And particularly where they are talking about the white spaces I think it can be really interesting. But also, large companies are doing two things. They want to feed the distribution system or they want to fill the white spaces. And so, you've got to kind of understand where you're going to fit. And while I have the microphone Paul... Please. Europe doesn't exist in healthcare. You should really understand that very well. Every country you can only get a CE mark and that's just about it. And the problem is most of your boards don't understand that either and there's a lot of talk about this. But once you have a CE mark every country will have more clinical data and will particularly want what is called now health technology assessments. So, they will want to establish in their particular country if this is of value. In Europe, we have the system as thought about value and in the cost of the system doctors get educated in thinking about the cost when they prescribe a therapy. So, every country is different on how they reimburse the system. Some countries don't really have a reimbursement system, but they have hospital budgets. So, my point is you want to really focus on one of two countries and go deep in a few centers because you're going to waste a tremendous amount of money. And you have to understand why you're going outside of those countries. There's two reasons basically why you want to do it is if you have a BMA you want to understand better how your therapy works and adjust it as you go. So, once you file for an IND then you know you have a very high probability that you're actually going to be successful and you're going to get BMA approval. And I think that's what [inaudible] did. They established very well the therapy. Now, we understand this therapy actually works and before the company has actually an IND just like [inaudible] they monetize their investments. [inaudible] existed for more than 10 years and [inaudible] was only 10 years. Back to your point, if it's big therapy, it doesn't have to be IT. So, the second thing why you would want to go there is basically to prove particularly to the large companies is that you actually have adaption. People meeting doctors will prescribe you therapy and hospitals will actually pay for it. And so, because then they think, "Alright. This is something very worthwhile, I can integrate this in my distribution system." Sorry. Well, thank you. It's great to have experts like this. And speaking of that, Anne we'll have to keep this short because we need to wrap, but please. Yeah. From an Asian perspective, first I have to agree with [inaudible] as a good Belgium. Europe is a whole bunch of different countries that happen to be on the same continent. Right. But from an Asian point of view anything we see that's a point of that, we punt except we've made exceptions and the one we invested in is company that's a small amount of capital. The [inaudible] product and market adoption and we usually do that by going to Europe. When we talk to the big corporation what they're telling us to say, "We want to redo the PMA and the ID our way anyway because we don't think you know how to do quality control. So, don't spend a lot of money there. Just show me this market adaption with a few key centers and that will buy you out." And these other deals are being funded. The other comment I wanted to make was early on the global we have a [inaudible] company. These companies are in India. They have great traction and they've got government to pass a law to say, "You have to do it". The problem is getting them funded for B & C because venture capitalists in the U.S. and they' re still not comfortable even investing in American corporation where the market is overseas. So, we have a problem scaling these models. Yeah, good points. Thanks. And this does bring us to final thoughts. And we have less than a minute each, but let me ask you to think about suppose that you all got bought out tomorrow at tremendous success. What's your next thing? What direction and what piece of advice do you have? And we'll just go down the line, a succinct piece of advice, Udai? Well, that would be I think I'd take a vacation and I think what I would do is I think is the only thing that's valuable in life is time. Money can only buy time. I have two little kids. I spend a lot of time with them, I spend more time with them. Okay. Darren? Well, my first little one's on the way. So, I'm sure I'll learn that lesson very quickly. What has been really excited about Hourglass that I want to continue is the focus on consumers-patients as consumers. And I think I may shift more towards devices that patients can actually just buy and pay for themselves and that when they really see the value, then I think it's a great medical device. So, I'm looking for more consumer centric technology. Great. I'm a big believer when there's big regulatory change there's big opportunities at the tail end of that So, I would keep a close eye on health reform and just think of, again the fundamental statistics. Healthcare costs are going up. We're getting more elderly people in the population. They have more chronic disease which drives more cost and we now have less physicians because Stanford kids are retiring and going to business school. So, technology and solutions can help solve or mitigate some of those problems. So, it's a good place to think through. Yeah. I would just start by saying I think it's a really exciting time to be doing what we're doing. I think that there's a lot of change happening. And I think a lot of good will come out of it, and a lot of opportunity will come out of it. I like the fact that convergence of other industries outside of healthcare finally getting into healthcare. That' s happened in Finance and not so much in Education but it's on its way there too. So, I would focus on how mobile devices-internet, IT, cloud computing-can actually get into healthcare and make meaningful change to healthcare. So, I'm optimistic. Well, I'm sure the panelists will stick around for a little bit after we wind up. This really brings us to the end of the summit. I see some of the organizers in the audience. Congratulations on a terrific day. Thank you and [inaudible]