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FITM: The Full Conversation with Robert Cohen · AHF Podcast

0:27
Robert Cohen: My name is Robert Cohen and I am a mechanical engineer that have worked in the med tech industry for over four decades, and I presently am the Vice President of innovation and technology for the Orthopedic Group at Stryker
0:43
Joseph M. Schwab: You mentioned your four decades worth and your career arc, if someone were to look at it on a piece of paper, is, seems pretty extraordinary as you've been involved in not just joint replacement, but spinal implants, biomaterials robotics, 3D printing.
0:59
Joseph M. Schwab: Was there a single moment or invention or technology that convinced you that the future of orthopedics was not just in the device, but in enabling technology?
1:14
Robert Cohen: Yeah, it's, it's a great question too, as, as technical folks need to, need to think about all the aspects, but it really goes back down to addressing clinical concerns, adverse events, um, improving outcomes, improving the quality of care.
1:29
Joseph M. Schwab: You've also experienced innovation, we'll, we'll say from multiple angles.
1:33
Joseph M. Schwab: So starting maybe working inside a young, fast moving company like Pipeline Biomedical, and now you evaluate major acquisitions at a global scale.
1:45
Joseph M. Schwab: Is there some sort of psychological shift that you have to make when you move from.
1:51
Joseph M. Schwab: Say, believing in a founder's dream to determining a global corporation's next billion dollar investment.
1:58
Robert Cohen: Yeah, it is a little bit of change because when you're trying to sell a company, you're on one side of it, and when you're trying to buy a company, you're on the other side of it.
2:05
Robert Cohen: So I have this compassion for both sides, and I'm not sure I'm the best negotiator, but from a technical standpoint, I think I've learned a lot.
2:12
Robert Cohen: I left in 92 to start a company, um, Implex trabecular metal, uh, which I wound up selling off to the Zimmer.
2:19
Robert Cohen: Porous Metals to help resolve fixation.
2:21
Robert Cohen: Um, so Zimmer acquired that.
2:23
Robert Cohen: Then I started another company on 3D printing and was making a lot of implants for Mako Surgical.
2:28
Robert Cohen: And then Mako Surgical is a robot company.
2:30
Robert Cohen: That was sort of my answer for smart tools, if you will, to put the implants in, right.
2:36
Robert Cohen: So I was helping them, that they acquired my company.
2:38
Robert Cohen: I got to help on Mako.
2:39
Robert Cohen: And then 23 years after I left my Stryker job, I got my Stryker job back.
2:43
Robert Cohen: And just so you know, uh, this week is the 12th anniversary of the.
2:48
Robert Cohen: Stryker acquisition of Mako Uh, so I'm celebrating my 12th anniversary being back.
2:53
Robert Cohen: And when you look at.
2:55
Robert Cohen: Technologies and you look at things, you know, it's, it's very different for Stryker.
2:59
Robert Cohen: Stryker will pay for a company that has a validated product and some form of regulatory acceptance.
3:06
Robert Cohen: And if it has intellectual property protection, all the better.
3:09
Robert Cohen: It sort of de-risks it.
3:11
Robert Cohen: Um, but Stryker does a really, really good job.
3:14
Robert Cohen: Of taking adjacency things, looking at, uh, implants are more sizes, more iterations, learning from its past.
3:22
Robert Cohen: Uh, robotics was too much of a, a jump for Stryker to go into with some confidence and FDA acceptance on enabling technology for indications, um, and how to get acceptances, uh, and what validation protocols are, what clinical data is very complicated.
3:39
Robert Cohen: So Stryker, at this point said, okay.
3:41
Robert Cohen: We wanna get into robotics, we're gonna require a robotic company that's gonna make our time to market faster.
3:47
Robert Cohen: Uh, comes along with some experience, tried and true.
3:50
Robert Cohen: And now we could take a technology which has a, a technical wherewithal that is, is known now and now how do you make it go to scale?
3:59
Robert Cohen: How do you take that?
4:00
Robert Cohen: So I think in one sense of it, I was a small company guy with Mako, but helping them get the technology and proof of concept and in the Stryker, Stryker expects to see that proof of concept de-risked.
4:13
Robert Cohen: But is it something that could be expanded and grow to drive revenue?
4:17
Robert Cohen: And I think, you know, that's okay.
4:19
Robert Cohen: And, and that's it.
4:20
Robert Cohen: It's worked out well.
4:22
Robert Cohen: Um, 12 years since the acquisition and, uh, the Mako Surgical has turned out to be one of the best acquisitions strikes ever.
4:29
Joseph M. Schwab: So when you're thinking about it from your big company, Stryker point of view.
4:34
Joseph M. Schwab: You're looking at, uh, companies that are providing technical innovation or, or say you were looking back at Mako, how do you assess whether that technical innovation is, we'll say good enough, um, versus something that may be a bit
4:48
Robert Cohen: made
4:49
Joseph M. Schwab: for market?
4:49
Joseph M. Schwab: Are there metrics or signals that kind of help, you know, this is a technology worth investing in?
4:56
Robert Cohen: Yeah, I think you're a nice guy.
4:57
Robert Cohen: The way you ask the question over, over, over engineered or over towards a market is, uh, you know, 15 years ago, 10 years ago, people would pay for certain things that they just want.
5:09
Robert Cohen: Sometimes before it's proven out, we are living in a world right now.
5:13
Robert Cohen: If it's the United States and you look at CMS and Medicare reimbursement, you're not gonna get paid more necessarily for this.
5:19
Robert Cohen: You have to work really hard to do that, so you have to assume you're getting value or greater value for the same money.
5:24
Robert Cohen: And you have to describe it.
5:25
Robert Cohen: We can go to socialized medicine countries, we could go look at what's talking about reimbursement.
5:30
Robert Cohen: We could look at registries in Australia and the uk.
5:32
Robert Cohen: So the world from reimbursement is very hard to get more money for something.
5:38
Robert Cohen: So therefore do you add more value?
5:41
Robert Cohen: And that's where you go back to again.
5:42
Robert Cohen: So when we assess it, we assess a technology to say, okay, is there proven clinical outcome improvement out of this?
5:53
Robert Cohen: Yes or no?
5:54
Robert Cohen: And I don't mean just the general PROMs It has to be something that's meaningful to something, right?
5:59
Robert Cohen: Implant survivorship longer term is looking pretty good.
6:01
Robert Cohen: It's the short term, right?
6:03
Robert Cohen: Uh, uh, somebody's, uh, quality of life return, uh, less time in physical therapy.
6:09
Robert Cohen: Earlier.
6:09
Robert Cohen: Return to work.
6:10
Robert Cohen: Earlier.
6:10
Robert Cohen: Return to flexion.
6:11
Robert Cohen: Right?
6:12
Robert Cohen: Reduce pain.
6:13
Robert Cohen: Um, is it a procedure now that's more safe in an ASC outpatient surgery center versus three days in the hospital?
6:19
Robert Cohen: Right?
6:19
Robert Cohen: There's a, there's a benefit there.
6:20
Robert Cohen: Okay.
6:21
Robert Cohen: So that's one category and improved benefit.
6:23
Robert Cohen: The other category is on quality of care, which, by the way, a Mako surgical robot helps out improved the outcomes as well as quality care.
6:31
Robert Cohen: 'cause everybody's not the same.
6:32
Robert Cohen: Everybody doesn't have the same experience level.
6:35
Robert Cohen: Everyone doesn't have the same exp skillset, right?
6:38
Robert Cohen: And now how do we get all physicians to be able to enjoy technology and data on a patient and maybe elevate the quality of care and consistency of care throughout a hospital system.
6:50
Robert Cohen: So there's value to that and there's expectations.
6:53
Robert Cohen: Stryker delivers that.
6:55
Robert Cohen: Then there's patient safety.
6:56
Robert Cohen: Um, patient fall risk.
6:58
Robert Cohen: If we think of a hospital bed, if we think about that, is someone falling out?
7:01
Robert Cohen: Is someone not walking right?
7:03
Robert Cohen: Um, is some complication potential in surgery that you hit a nerve, an artery or, or some muscle or tendon when you're not supposed to?
7:10
Robert Cohen: It's a safety value to it that we look at safety matters and there's the economics inefficiency component to it.
7:18
Robert Cohen: And in economics, inefficiency depends on who the customer is.
7:21
Robert Cohen: So if you're the patient economics and efficiently, okay, I'd love to get a value outta my dollars'cause I'm spending more on my deductible.
7:29
Robert Cohen: Different story.
7:30
Robert Cohen: Now, if it's to the hospital, hospital would like, uh, if you get a quicker time of procedure, uh, is my perioperative nursing team gonna be able to handle this procedure?
7:41
Robert Cohen: Is it too complex?
7:42
Robert Cohen: Is the workflow too onerous and I gotta dedicate too much of an operating room time or the time between take down and clean up in the operating room is taking me too long.
7:52
Robert Cohen: This training gonna be too onerous.
7:54
Robert Cohen: Is the learning curve too great?
7:56
Robert Cohen: Is your equipment gonna add more time to the procedure?
7:58
Robert Cohen: So if you can help out from the economic efficiency of the hospital, in other words, that hospital can figure out a way to get one more procedure per day.
8:08
Robert Cohen: In a procedure where Stryker equipment's utilized, that is one more procedure a day that drives revenue under the same fixed cost.
8:14
Robert Cohen: There's a value component to that and the expectation of Stryker.
8:18
Robert Cohen: And then it could be also that the economic benefit is also to maybe the physician's office to be able to use digital or AI with some of this equipment to plan better, plan easier.
8:29
Robert Cohen: And then lastly, economic efficiency to Stryker And that matters.
8:32
Robert Cohen: When we look at companies, can we manage inventory better?
8:36
Robert Cohen: Do we just need to take the right size of implants in at the right time and can reduce inventory as cash on a shelf.
8:42
Robert Cohen: And if you could reduce your inventory burden out, that's more cash that can be deployed for R&D to generate a new thing.
8:49
Robert Cohen: So depending on who your customer is, the hospital, the patient, the physician, the ASC the buying group, uh, or us.
8:55
Robert Cohen: So I, I say break it down into those categories.
8:57
Robert Cohen: So we, we kinda look, is it an outcome?
9:00
Robert Cohen: Is it gonna be a.
9:02
Robert Cohen: A quality of care, safety, economic efficiency, and is it something that we just tuck in to our existing portfolio and our sales teams can look at it?
9:11
Robert Cohen: Or does this take us into a new area maybe we're somewhat familiar with, but a new area within that market segment that we don't have experience at?
9:20
Robert Cohen: So it's relatively complex answer, but, and the good news is Stryker looks at everything and tries to look at it in a way where it's either driving revenue.
9:30
Robert Cohen: Or driving uh, bottom line and with the patient always in mind.
9:35
Joseph M. Schwab: And when you're evaluating one of these med tech startups, is there a single question that you ask yourself that.
9:43
Joseph M. Schwab: Um, might immediately signal a, let's say, a viability concern of that med tech startup.
9:50
Robert Cohen: Yeah.
9:50
Robert Cohen: It depends on the stage of the startup, right?
9:52
Robert Cohen: So one thing you say is startup, right?
9:53
Robert Cohen: All startups are not the same, right?
9:55
Robert Cohen: And, and, you know.
9:57
Robert Cohen: You can have a conversation with one person and they have a proof of concept on one paper and have a provisional patent application that's submitted, that's a startup, and they're going through the first phase of funding.
10:06
Robert Cohen: You have some startups that are late stage funding, um, have a, a pretty good review already of an IP submission.
10:14
Robert Cohen: Uh, they may already have some clinicals.
10:17
Robert Cohen: Where they have three or four different clinical center sites and they have surgeons that can speak to the benefit of the clinical performance of something, if it's something with clinical performance.
10:27
Robert Cohen: Uh, or they can also speak to any adverse events.
10:30
Robert Cohen: So that's very different.
10:31
Robert Cohen: 'cause it goes into de-risking, right?
10:32
Robert Cohen: It's a reward value kind of ratio.
10:35
Robert Cohen: So you look at that, but then also it depends, right?
10:39
Robert Cohen: Is it, is it something that is transformational to a point?
10:44
Robert Cohen: Where the risk reward is different and hey, maybe Stryker wants to really pay attention to this'cause this is so compelling and is addressing a market or a clinical need in an unbelievable way?
10:54
Robert Cohen: Or is this something that makes our existing product lines better?
10:57
Robert Cohen: Well, for that case, we want to prove it before you buy it.
11:01
Robert Cohen: In the other case, that's a little more speculative, but has the potential, we'll assess the potential, see if we agree with the founder's premise and whatever data they have to support.
11:10
Robert Cohen: Their belief at this juncture and then possibly move on it.
11:13
Robert Cohen: But you know, we are talking about implants, but implants, enabling tech is enabling tech's.
11:18
Robert Cohen: A little bit different story with its power tool, whether it's a robot, whether it's navigation, whether it's something that looks at blood loss.
11:24
Robert Cohen: And then there's the other part when we have more and more companies coming to us that are digital or AI enabled companies, right.
11:32
Robert Cohen: It's taking electronic health records and the patient room matters for us.
11:35
Robert Cohen: Remember, we're one of the hospital bed leaders.
11:38
Robert Cohen: We just invested in ambient intelligence cameras on the wall, uh, Vocera communication to, to clinicians, uh, around patients.
11:45
Robert Cohen: And all this data-driven part is important.
11:49
Robert Cohen: Um, but the best of the best, if you have a data-driven part that ties into some enabling tech.
11:55
Robert Cohen: On some Stryker procedures where Stryker equipment's already deployed at the hospital.
11:59
Robert Cohen: And by connectivity we actually get another added value with the digital AI overlayer.
12:05
Robert Cohen: Oh, that's, that's got our attention.
12:06
Robert Cohen: Um, we're living in that era, as you know.
12:09
Robert Cohen: Um, but that gets our attention too.
12:11
Joseph M. Schwab: I want to go back to something you said, um, kind of in regards to patient expectations, because a lot of patients wanna return now to high impact activities, golf, tennis, as soon as possible, and as as highly functioning as possible.
12:25
Joseph M. Schwab: It's not just be comfortable sitting in a chair anymore.
12:28
Joseph M. Schwab: How does this level of rising patient expectation set the bar for engineering, whether it's engineering a new implant or a new technology so that those products aren't obsolete even before they launch.
12:44
Robert Cohen: Yeah, it matters a lot.
12:45
Robert Cohen: It really matters a lot.
12:47
Robert Cohen: Patient's expectations.
12:49
Robert Cohen: Um, in many cases is what drives, because we're talking about short term patient expectations, right?
12:56
Robert Cohen: Um, as I talked about, when someone could return to work, can they do outpatient surgery procedure?
13:00
Robert Cohen: When can they go back to physical activity?
13:01
Robert Cohen: Can they have expectations?
13:03
Robert Cohen: And as we have a global population that's living longer, um, and governments, even in socialized medicine, countries want that population to stay healthy and active because then you don't have other health complications.
13:14
Robert Cohen: Um, it's super important.
13:16
Robert Cohen: You know, I often talk to, um.
13:18
Robert Cohen: Residents and fellows, and I remind them in the eighties as an engineer, I'll go back to hips again.
13:23
Robert Cohen: The engineer is just don't have your implant break in five years, right?
13:28
Robert Cohen: As long as you can get off a bed, pain free to a table to eat and maybe walk a little bit in supermarket, uh, golden, right?
13:36
Robert Cohen: And then in the nineties, patients' expectations changed.
13:39
Robert Cohen: And the nineties, now people wanted to play golf.
13:42
Robert Cohen: I even know many people didn't play golf before that, but they wanted to play golf.
13:45
Robert Cohen: And then the expectation was a little more exercise, um, remaining at work.
13:51
Robert Cohen: And then we get into the early two thousands and people really wanted to know that they're not gonna implant's not gonna fail, but they wanted 30 plus year survivorship out of it while they were active.
14:02
Robert Cohen: Now we're living in a world.
14:04
Robert Cohen: Someone doesn't even wanna know.
14:05
Robert Cohen: They have a knee implant in them.
14:07
Robert Cohen: They want to be able to get off the floor.
14:09
Robert Cohen: Unaided not holding onto anything.
14:12
Robert Cohen: They want to implant that last a their lifetime and like, you know, six hours after surgery, they wanna be pain free magically, whatever.
14:19
Robert Cohen: But so the, there's more earlier.
14:22
Robert Cohen: Um.
14:23
Robert Cohen: Earlier of characteristics that are expected on fixation of an implant and mobility to make a person feel better.
14:30
Robert Cohen: That's a combination of enabling tech and implant development, where now get a great implant that has long-term stability fixation, provides range of motion, yet at the same time, put it in the right spot.
14:41
Robert Cohen: So all muscles and everything else is, is leg length.
14:44
Robert Cohen: Everything's balanced, right?
14:46
Robert Cohen: Which we need.
14:47
Robert Cohen: Something of enabling tech to be able to help drive that consistently.
14:51
Robert Cohen: I will say what I've seen in my experience is remarkable.
14:55
Robert Cohen: It's actually a remarkable point in time we are at right now, where the evolution of implants and the evolution of enabling tech is coming together and the patient has measurable benefits because of it.
15:10
Robert Cohen: The future of that combination and evolution combined with digital and AI will even take us even further.
15:17
Joseph M. Schwab: So many startups, uh, maybe struggle or fail'cause they don't prepare for scaling.
15:23
Joseph M. Schwab: You've advised in the past founders to sort of proactively adopt C corporation structure, specifically if they're seeking institutional capital.
15:34
Joseph M. Schwab: From your perspective, why is this legal structure a non-negotiable step that signals business maturity and maybe readiness for a bigger investment?
15:44
Robert Cohen: So my very first company I did, um, I did it as an LLC to save cost, save on accounting dollars.
15:51
Robert Cohen: Um, there was some tax benefits associated with it, uh, and when a large company, in this case it was Zimmer, but when other companies ended, the banker represented me.
16:01
Robert Cohen: They're like.
16:02
Robert Cohen: You have to have full compliance.
16:04
Robert Cohen: There's no public company that's gonna take a risk and pay you, you know, a hundred millions of dollars plus and not have you being bonafide as a C corp.
16:14
Robert Cohen: Where therefore you're following under structures that the SEC on the acquisition will look at and you de-risk it to shareholders.
16:22
Robert Cohen: You're not gonna have a little hiccup where financially there was something wrong and the way you did the books financially was something wrong.
16:28
Robert Cohen: And the way you fill your valuation of company, and we could talk about bank accounts and things like that.
16:32
Robert Cohen: So I got dinged on it the first time.
16:34
Robert Cohen: And then when my company got more mature and I had more people in the supply chain, I was paying and I was looking at inventory as I accepted money certain ways.
16:42
Robert Cohen: I didn't necessarily have the corporate audits, annual audits and compliance that was expected by the big companies.
16:48
Robert Cohen: Yeah, it was a little bit more money, but it was really discipline and I deprioritized it, if I'm honest with you.
16:53
Robert Cohen: And it wound up costing me a lot of money, uh, to convert to a C corp later on.
16:57
Robert Cohen: A lot of money.
16:58
Robert Cohen: Um, I wish I could get that money back.
17:01
Robert Cohen: And then when I started the second company, um, I just did it from a C corp from day one, which then it didn't cost that much money, had the discipline and we were just acting and behaving like that.
17:10
Robert Cohen: And we're getting annual corporate audits.
17:12
Robert Cohen: It just shows a discipline, um, uh, and a financial acumen that's expected nowadays because you can have the world's greatest product, but if financially, uh, your books aren't right, you have to go back and prove something.
17:24
Robert Cohen: You can either extend the length of time, uh, for your acquisition.
17:29
Robert Cohen: And put a lot of your own cash into it, which you may not have at that time, you know, versus doing it right, making it seamless, and you have a clo uh, earlier close, uh, timeframe.
17:43
Joseph M. Schwab: also identified that egos are the biggest problem in business.
17:48
Joseph M. Schwab: And so when you vet a founder, um, what are the subtle cues or maybe the patterns that you look for to confirm that that founder has, we'll say the data-driven humility required to make hard choices and potentially bring in outside management.
18:06
Robert Cohen: Well, I could give you an example.
18:07
Robert Cohen: I'll give myself as an example.
18:09
Robert Cohen: So my first company, I had pretty big ego, uh, still a pretty big ego right now, but I'm, I'm, I'm, I'm trained not to show it.
18:15
Robert Cohen: Um, but in my first company, if you told me there was something wrong with what I showed you, even if you're a potential acquirer, it's like, I'm from New Jersey.
18:23
Robert Cohen: Let's take this personally, right?
18:24
Robert Cohen: You just insulted me and not just my product.
18:26
Robert Cohen: And now, now this is personal.
18:28
Robert Cohen: So forget about the acquisition.
18:29
Robert Cohen: Let's go outside.
18:30
Robert Cohen: Um, and what I really wasn't hearing was the way they valued it was not the way I valued it.
18:38
Robert Cohen: And maybe I had an education in the process.
18:42
Robert Cohen: Maybe I wasn't a good listener, maybe I wasn't open-minded enough.
18:46
Robert Cohen: Um, and what I realized I was taking it too personally and I realized it's okay to show vulnerability and it's okay to say I don't know, or it's okay to say I'm not perfect.
18:59
Robert Cohen: Um, my second company, um, I learned through that process, uh, but I also learned to show humility.
19:06
Robert Cohen: But I also learned that it's okay to say I don't know everything about finance.
19:11
Robert Cohen: It's okay to say I don't know everything about the business model.
19:14
Robert Cohen: It's okay.
19:15
Robert Cohen: I don't understand everything.
19:16
Robert Cohen: The way you company would bring it to market and the way you valid validate it.
19:21
Robert Cohen: I come to realize you've come to the company and you're talking to me because you like my invention and you like my technology.
19:28
Robert Cohen: You like the way I did a workflow and you like my surgical technique and you like the outcome that's under the technology umbrella.
19:35
Robert Cohen: So then I realized I don't have to be an expert in all things, and it's okay to be passionate about your concept.
19:43
Robert Cohen: I just let loose a little bit less passion related to how I believe it's gonna change the world and change the market.
19:50
Robert Cohen: 'cause I don't have the credibility and I guess I wasn't listening.
19:54
Robert Cohen: So I still to this day, by the way, and I, I've had some very good mentors in life, um, stay true to your design.
20:00
Robert Cohen: If you design a good product and you design it for good reasons, people will want it.
20:05
Robert Cohen: Robert that's all you need to think about, let others that are smart.
20:09
Robert Cohen: Let others people that know, finance and know marketing, sales, and know business plans.
20:13
Robert Cohen: Let them lead you.
20:14
Robert Cohen: You don't have to own everything.
20:15
Robert Cohen: You don't have to be perfect.
20:16
Robert Cohen: in Everything.
20:17
Robert Cohen: You don't have to be the smartest person in the room.
20:19
Robert Cohen: Be a good listener and stick to your competency and sticking to my competency are words to live by
20:25
Joseph M. Schwab: So how does that inform your vantage point now being part of the large company, looking at maybe the top attributes in a target startup?
20:36
Robert Cohen: Yeah.
20:36
Robert Cohen: So when we look at a target startup now because of that, by the way, um, Stryker has proven itself that if it's a small to medium sized company, um, you know, the sales force is important.
20:48
Robert Cohen: What they've done.
20:48
Robert Cohen: Obviously, if Stryker's looking at it is remarkable, uh, but it is a technology that's being acquired'cause it's not coming with a huge market share and it may not be coming with a lot of revenue.
20:59
Robert Cohen: So therefore it's the technology play.
21:01
Robert Cohen: Right?
21:01
Robert Cohen: It's a value on technology.
21:03
Robert Cohen: So now I, I've learned looking the other way back.
21:08
Robert Cohen: Okay, let's make sure the chief technology officer.
21:12
Robert Cohen: Or the president, if they're, if they're a technical background, let's talk to them about their innovation.
21:16
Robert Cohen: Let's understand from them why they thought this was differentiated, why it makes a societal different benefit, why they believe this technology addresses an unmet need.
21:27
Robert Cohen: And when you listen to them just with that and maybe that filter, which narrows the question.
21:32
Robert Cohen: Now you see the true brilliance of these startup founders.
21:38
Robert Cohen: The, the startup founders and the way they believe and the way they talk about their product, that's something that Stryker you should listen to.
21:46
Robert Cohen: It doesn't matter whether you're a big company, these people know what they're talking about.
21:51
Robert Cohen: The big company should listen to the founders, their belief on why they developed the technology that a company was built around.
21:59
Robert Cohen: Isolate the conversation to that.
22:02
Robert Cohen: Then as you listen to that, you say, okay, do you support that?
22:06
Robert Cohen: Is there enough evidence now, ego or not on technology?
22:11
Robert Cohen: Is there enough evidence to support either with some fact-based findings or even anecdotal that offer proof points to support?
22:19
Robert Cohen: The position the founders or inventors is taking.
22:22
Robert Cohen: And then you can get into the other business, which is cost of goods, time to market, manufacturing, regulatory.
22:29
Robert Cohen: But if you don't like that first cart, you're not going to the second part of the conversation, understanding the technology and asking founders, even with a big ego, stay true.
22:40
Robert Cohen: You're passionate about this invention for a reason.
22:44
Robert Cohen: You're passionate around this market segment.
22:47
Robert Cohen: Learn to explain why, why it's a benefit to the clinician, why it's a benefit to the patient, why you believe this is a differentiator product.
22:58
Robert Cohen: And just stop there.
22:59
Robert Cohen: And if you take your passion and your ego and your energy and get a big company like Stryker to accept it, then the rest of the conversations are easier.
23:07
Robert Cohen: And we find often people tie it all together too much, all at one time, and they're, they're not, they're not very succinct.
23:15
Robert Cohen: They don't land a good message and sometimes it confuses the company.
23:19
Robert Cohen: That's one piece of it.
23:21
Robert Cohen: The other piece, when we still look at egos aside, when we acquire a company, we also acquire talent.
23:25
Robert Cohen: A lot of that past couple Stryker acquisitions, small company and big, very big.
23:29
Robert Cohen: We look at the technical talent and we want the technical talent and we want the technical talent to stay with the product.
23:34
Robert Cohen: We've done very, very good and I'm very proud of Stryker for this.
23:37
Robert Cohen: Very, very good at retention of technical talent, which is not easy, and they stay true to the product and those are the people that know the product and big companies have to learn.
23:46
Robert Cohen: How to integrate these kind of folks.
23:48
Robert Cohen: And I think we stryker's learned over the period of time, uh, and it's made Stryker better.
23:53
Robert Cohen: So you look at the talent, the technical talent, you look at the quality of the invention, the protection of the invention, and what the invention solves.
24:03
Robert Cohen: Start there.
24:04
Robert Cohen: Work your way out after.
24:06
Joseph M. Schwab: Let's talk about that post-acquisition integration, because as you sort of alluded to, it can go very well.
24:14
Joseph M. Schwab: It can sometimes kill the value of the product.
24:17
Joseph M. Schwab: From your experience, are there big mistakes that you've seen or are there things that you would advise companies to do to avoid those post-acquisition integration pitfalls?
24:30
Robert Cohen: So I could talk to you for so long, you have no idea about being acquired.
24:35
Robert Cohen: 'cause I was acquired into the two big companies.
24:38
Robert Cohen: And then I could talk to you about being the acquirer in the two big companies, acquiring other companies.
24:44
Robert Cohen: Um, at Zimmer, I was, I was, uh, with the Center Pulse integration team, which you should, you know, be familiar with.
24:52
Robert Cohen: And then, um, I was on the other side of the Mako, uh, into the Stryker.
24:57
Robert Cohen: And then now Stryker, I've helped integrate other companies, um, that I can help participate acquiring, and, you know, it's tough.
25:04
Robert Cohen: Um.
25:05
Robert Cohen: Which way you wanna look at it.
25:06
Robert Cohen: If you wanna look at it from the talent, that strong talent that was independent minded, that may not have had as many processes.
25:13
Robert Cohen: Or procedures and were able to move a little fast.
25:15
Robert Cohen: Um, I learned through over the years, um, that it's okay and I was able to keep the teams together, and I think we did okay.
25:23
Robert Cohen: As long as the team's heard that the product roadmaps were gonna stay robust, that people are gonna invest still in the technology evolving.
25:30
Robert Cohen: Um, I think that was good on the integration from the big companies.
25:34
Robert Cohen: Sometimes you have to build a market that didn't exist.
25:36
Robert Cohen: Sometimes you have to get your sales force excited about it, otherwise they're not gonna talk about it.
25:41
Robert Cohen: I think Stryker's done a really good job.
25:43
Robert Cohen: Um.
25:44
Robert Cohen: Uh, recently of adopting and in integrating, but also showing that there's not only an appreciation for the company's products, but appreciation for the company's people.
25:54
Robert Cohen: Um, and we're not better than now, and the non invented here thing doesn't stick.
25:59
Robert Cohen: So really, really important point.
26:02
Robert Cohen: But integrations are hard.
26:04
Robert Cohen: Stryker now, like a lot of many other companies, by the way, has an integration office just because you don't get the value or you'll lose value potential.
26:13
Robert Cohen: Of your acquisition if you don't do this right.
26:16
Robert Cohen: And I think the appreciation now to get it right, you get it right, you get it right faster, your first year goes well, but you set up your second and third year for success.
26:24
Robert Cohen: You get it wrong.
26:25
Robert Cohen: You sort of run in place for a while until you get it back.
26:29
Robert Cohen: And then you also have a retention problem of key talent.
26:32
Robert Cohen: Um, and these are all value drivers and these deals right now.
26:35
Robert Cohen: So you wanted to do as best you can, um, but.
26:39
Robert Cohen: Industry was not good at integrations.
26:42
Robert Cohen: You know, 20 years ago, for sure, even 10 years ago.
26:44
Robert Cohen: I think med tech industry, by itself has done a much better job figuring out these acquisitions.
26:50
Joseph M. Schwab: Hmm.
26:51
Joseph M. Schwab: So for a startup that's aiming to be acquisition ready, um, is there something you would recommend?
26:57
Joseph M. Schwab: It's one to three year roadmap look differently than a company that's just aiming for independent growth?
27:04
Robert Cohen: Sure.
27:05
Robert Cohen: If you wanna set up here for an acquisition, there's different things for, versus a cash generator to keep it going.
27:10
Robert Cohen: Um, but I'll also tell you, let's, let's first it's, it's a great time for small, mid-size companies, right?
27:15
Robert Cohen: Because, um, you know, stock market's a little more robust, but hey, you know, go look at these large companies.
27:21
Robert Cohen: So you're gonna find a med tech industry that is more hungry for acquisitions.
27:25
Robert Cohen: This is good.
27:26
Robert Cohen: So now what are they looking for in an acquisition versus a company that wants to watch their cash and go maybe a little slower and generate, they wanna see the invention.
27:36
Robert Cohen: They wanna see the invention through the regulatory process.
27:39
Robert Cohen: They wanna see the invention through the intellectual property process.
27:42
Robert Cohen: They wanna see how it's gonna behave around the globe, and they wanna see either clinical results or market adoption first.
27:50
Robert Cohen: It doesn't have to be fully revenue generated.
27:53
Robert Cohen: By the way, show me a couple key prestigious institutions are using it because they think it's the best and have them be.
28:01
Robert Cohen: Capable interviewers, advocates of this technology.
28:04
Robert Cohen: So work on the advocates of the technology, work on the data.
28:08
Robert Cohen: So many people don't invest in robust clinical data.
28:12
Robert Cohen: If it's clinical data or proper follow ups in the interest that they put, and they build way too much inventory.
28:18
Robert Cohen: Instead of going to 25 sites, ask.
28:21
Robert Cohen: I just went to 10 sites.
28:23
Robert Cohen: Save some of that money on inventory, save some of that money on IRBs for clinical research studies, and actually put it in getting more out of the 10 sites.
28:33
Robert Cohen: You may not need 10,000 patients, 250 patients may show what you need.
28:38
Robert Cohen: So figure out the very first point.
28:40
Robert Cohen: What does it did?
28:41
Robert Cohen: What is it that proves to go to the next level?
28:44
Robert Cohen: That your product's validated, that your product's good and a company can grab it and run with it and bring it to scale.
28:51
Robert Cohen: You don't have to pay to bring it to scale.
28:53
Robert Cohen: Let the company bring it to scale.
28:55
Robert Cohen: Prove the technology.
28:57
Robert Cohen: Prove that it's ready to be to marketed and get through all the burdens.
29:01
Robert Cohen: So as soon as the acquisition, other than building up the supply chain, you can go to market right away.
29:08
Joseph M. Schwab: So talking a little bit about Makos journey, um, to Stryker acquisition, what was the single biggest challenge you faced and how did you overcome it?
29:18
Joseph M. Schwab: Or, or did you?
29:20
Robert Cohen: Uh, another great question.
29:22
Robert Cohen: So when you, you look at Mako Surgical, you have to think of Mako Surgical, but you have to think of robotics, right?
29:27
Robert Cohen: Orthopedic, musculoskeletal, heart tissue.
29:29
Robert Cohen: Robotics was not a market though.
29:31
Robert Cohen: Mako Surgical was around.
29:33
Robert Cohen: Mako Surgical was not doing all that much.
29:35
Robert Cohen: Right.
29:35
Robert Cohen: You were probably not use that Mako robot robot at the time.
29:37
Robert Cohen: Right?
29:37
Robert Cohen: Why you, you know?
29:39
Robert Cohen: And then you, you had a, um, so the time that acquisition, the world wasn't looking for a robot, it was not right.
29:48
Robert Cohen: And the world was not necessarily looking for something to change the workflow in the operating room.
29:53
Robert Cohen: I can't tell you how many surgeons got mad at me, my friends.
29:56
Robert Cohen: Say, I'm taking away their hands and I'm taking away everything that makes medicine great and I'm making this automated and I'm an evil person.
30:05
Robert Cohen: Right?
30:05
Robert Cohen: Um, then I remind people of calculators and things like that.
30:09
Robert Cohen: So the people, people, people evolve in the thought.
30:12
Robert Cohen: But so what happened though is way we started, made our conversation.
30:19
Robert Cohen: People may not fully.
30:22
Robert Cohen: Fully understand the breadth of what robotics could done unless you understood the need you were satisfying.
30:27
Robert Cohen: And this goes back to even the small companies.
30:30
Robert Cohen: You have to establish a need for something.
30:32
Robert Cohen: Even though if they may not understand what your solution was, you first have to understand the need.
30:36
Robert Cohen: If you don't understand the need, you're not gonna be able to present the solution and people readily adopt it.
30:42
Robert Cohen: So in the case of robotics, what I learned with Stryker, I went over all around the podium, all over the world to say, okay, as an engineer.
30:50
Robert Cohen: What's gonna make the nest appreciable difference is personalized, individualized medicine.
30:53
Robert Cohen: And that doesn't mean custom prosthesis.
30:56
Robert Cohen: We have a instrument where we look at a femur and a hip and then it haslum, and then we hope after we put it all together, it made sense.
31:03
Robert Cohen: And maybe on a trial we move a bearing head and we go plus five or plus six.
31:07
Robert Cohen: And that was it.
31:08
Robert Cohen: We're using two dimensional x-rays in orthopedics.
31:10
Robert Cohen: I mean, I'm back.
31:11
Robert Cohen: It's like, this is like craziness, right?
31:13
Robert Cohen: It's a three dimensional problem.
31:15
Robert Cohen: Then on a total knee, you're looking at an AP X-ray and ML X-ray.
31:18
Robert Cohen: Okay, where exactly is the joint line?
31:20
Robert Cohen: Where's the trochlear group?
31:21
Robert Cohen: Where's the epicondial axis?
31:22
Robert Cohen: All these features, we knew we can get off imaging, and we knew if we put the implant in that person.
31:29
Robert Cohen: To balance collaterals, balance, PCL get rolled back exactly the same to the various baus slope of a knee to the center of rotation of the of the hip.
31:39
Robert Cohen: Look at where the leer tr can is and all these other kind of things.
31:42
Robert Cohen: We could benefit by getting these implants that have shown survivorship, but now put the implant in the right spot that improve satisfaction and improve daily living activities.
31:51
Robert Cohen: And then go even more to more extremes where you're talking about sports or you're talking about loading, unloading, things like that.
31:57
Robert Cohen: And.
31:58
Robert Cohen: It took a while, but people made a mistake prior and just showed a robot and expected people to say, oh yeah, I got it.
32:05
Robert Cohen: I needed it.
32:06
Robert Cohen: So you talk about the change.
32:08
Robert Cohen: Very few people said, okay, well, why do I need a robot?
32:11
Robert Cohen: Very few people in Stryker said, why do we need a robot?
32:15
Robert Cohen: We're very fortunate.
32:16
Robert Cohen: We're at CEO, who was more passionate about it probably than anyone else in the company.
32:20
Robert Cohen: And the CEO believed this was the next step towards personalized precision.
32:24
Robert Cohen: And it took a while to get a company that's used to selling metal and plastic in a box to adopt that this is gonna be a better instrumentation.
32:32
Robert Cohen: Right?
32:32
Robert Cohen: So it took a while internally, but it's just cultural transformation of, I'm giving up something, it's now a robot doing it.
32:38
Robert Cohen: It's, you know, all that.
32:40
Robert Cohen: But the lesson learned is you gotta establish clinical need and if you can't support your clinical need with facts.
32:47
Robert Cohen: You should question the value proposition of your invention.
32:53
Joseph M. Schwab: Thinking back, as far as lessons that you've learned, were there lessons you learned during this process about both team dynamics or, or leadership that you really wish you would've known earlier?
33:04
Joseph M. Schwab: Mm-hmm.
33:06
Robert Cohen: I, I, yeah.
33:07
Robert Cohen: So if we look at it from the, the Mako surgical side, Mako Surgical was trying to place so many robots because they thought the more robots you place, then it'll become, everyone has one.
33:18
Robert Cohen: Let's keep going at it.
33:20
Robert Cohen: If you place robots and no one's using it at that time, what good is that?
33:23
Robert Cohen: And by the same token, it was burning cash.
33:26
Robert Cohen: It was just totally burning cash.
33:28
Robert Cohen: And then another Stryker big acquisition, Mako, Hey, now Stryker, big orthopedic companies into robotics.
33:34
Robert Cohen: The stock one down because everyone thought, Hey, we're into robotics.
33:39
Robert Cohen: Isn't that cool?
33:39
Robert Cohen: I have a robot now.
33:41
Robert Cohen: But it wasn't so cool to a lot of people, nor did they understand, and they thought it was a waste of money.
33:46
Robert Cohen: They thought you were now totally taking all that money to keep this.
33:49
Robert Cohen: That was money that could have went to new hip and knee implant designs or shoulders or sock trauma or spine, and now you've changed the direction of your company.
33:58
Robert Cohen: So the messaging we could have done better with establishing the clinical need.
34:03
Robert Cohen: We could have done better with.
34:05
Robert Cohen: Understanding the market potential was not gonna be overnight in one year.
34:08
Robert Cohen: Everyone's gonna use a robot.
34:09
Robert Cohen: The expectation was that we were gonna accelerate it so fast, and then you only set yourself up for disappointment.
34:15
Robert Cohen: So be realistic.
34:18
Robert Cohen: Look longer term, deal with facts, understand the market conditions, and if you got something that improves the quality of care, if you got something that improves in patient outcomes.
34:31
Robert Cohen: People will adopt it.
34:32
Robert Cohen: I'm absolutely convinced I've lived my life that way.
34:36
Joseph M. Schwab: So you mentioned this kind of really early on, but looking forward, you see this sort of accelerated convergence of materials, new fabrication methods, robotic surgery.
34:48
Joseph M. Schwab: If you were mentoring a founder today.
34:51
Joseph M. Schwab: And they had$10 million to invest.
34:54
Joseph M. Schwab: Where's the highest probability, highest impact innovation space that they should target within the next five years?
35:04
Robert Cohen: I think it's, well, it's gonna be digital ai, but in combination with enabling tech.
35:09
Robert Cohen: The, you know, AI is a tool by itself, digital enabling tech and, and then how you could add AI into that.
35:15
Robert Cohen: And you could look at these procedures.
35:17
Robert Cohen: So where the money needs to go is you need to look at the continuum of care in a certain procedure.
35:23
Robert Cohen: So if you look at the money and you look at where things are going, um.
35:28
Robert Cohen: There is what's going on in the operating room.
35:31
Robert Cohen: And if a patient could get a, if a surgeon acting on a patient could get access to more information for clinical insights such as population health data, such as, uh, if you look at what the imaging companies are doing, imaging companies are now putting imaging intraoperatively, but with AI software.
35:47
Robert Cohen: So AI immediately could look for any abnormality, abnormalities on the image, such as a small tumor that may not have been caught, or what is the best surgical approach on the center line to get something that's less soft tissue disruption.
36:00
Robert Cohen: That is value.
36:02
Robert Cohen: Uh, so workflow matters now and workflow.
36:04
Robert Cohen: We never had a conversation about that making ASCs efficient, and we never had a conversation about that.
36:11
Robert Cohen: Looking at reducing complications in the short term.
36:14
Robert Cohen: So reducing readmission reoperation rates, that's important.
36:18
Robert Cohen: But if we look at population health data, if you save time of a surgical procedure.
36:23
Robert Cohen: If you make more insights coming off of Stryker equipment like endoscopy, computer vision, there's so many different things that could be done, I think.
36:31
Robert Cohen: I think if I had$10 million, I would maybe look at what clinical issues or what efficiencies in the hospital can be done.
36:38
Robert Cohen: But if we're just talking in med tech and we're talking our sector, let's not also, you know, sometimes inventions you can't categorize but where you put your money, right?
36:46
Robert Cohen: Sometimes people come up with great ideas.
36:49
Robert Cohen: Let's remember where we're living today.
36:52
Robert Cohen: It's the most exciting time of technology you have the combination of 3D printing, robotics, ai, cloud, computing edge devices, direct patient access through applications.
37:09
Robert Cohen: It's the combination of all of those things together that really hasn't seen as few pot full potential to innovate a surgical procedure on how to put something in possibly.
37:21
Robert Cohen: A methodology with a device on how to put something together, something they uses electronic health records like we've never seen before on the individual.
37:30
Robert Cohen: Something that can, you know, maybe we should do implants and they shouldn't be flat anymore.
37:34
Robert Cohen: The need should be concave, curved surfaces on our implants.
37:38
Robert Cohen: Maybe we should look at a different approach to a head.
37:40
Robert Cohen: Maybe it should be shorter stabs.
37:42
Robert Cohen: Maybe we should bring back surface replacements again.
37:45
Robert Cohen: But why is the technology gonna enable something that's gonna de-risk and add a clinical benefit?
37:50
Robert Cohen: I would say first before the technology word, put 10 million, go after something that really makes a difference.
37:57
Robert Cohen: In the short term, you increase patient satisfaction, reduce complications, reduce emissions, reduce reoperations, and increase efficiencies and better workflows.
38:08
Robert Cohen: That's a home run.
38:09
Robert Cohen: That's what all of us companies are looking for, and that's the expectation of all these great technologies coming together at the same time.
38:17
Joseph M. Schwab: What would be the single most important in your mind, piece of advice you could give to engineers and clinicians who are listening or watching today and about moving their, what they think is a game changing idea from a lab bench or an operating room to a patient's operating room.
38:37
Robert Cohen: Depends on if somebody wants to create the company themselves or they wanna start talking to a company.
38:42
Robert Cohen: I think talking to companies, if your IP is protected, we get people talking to companies all the time, but you gotta come in and if, what's the piece of advice?
38:51
Robert Cohen: If, if you have 15 minutes and a 15 minute pitch, the first five minutes is what problems you're solving and why the market may be ready for this.
39:01
Robert Cohen: The next five minutes should be about what the device is and why the invention is so good.
39:06
Robert Cohen: And the last five minutes of what it takes to get to market.
39:09
Robert Cohen: Is there huge regulatory hurdles where it needs clinical data supported?
39:14
Robert Cohen: Can it get a five 10 K class, two designation in the United States relatively quickly?
39:19
Robert Cohen: Um, international NIP.
39:21
Robert Cohen: And if you get that done in 15, 20 minutes, whether you're talking to an investor or you're talking to a big company, that's key.
39:26
Robert Cohen: If you can't.
39:28
Robert Cohen: It takes a little more convoluted.
39:29
Robert Cohen: You may have to work harder and a little bit longer before you pitch it to the company.
39:33
Robert Cohen: And you know, most people's attention spans in the 15 minutes.
39:36
Robert Cohen: 15 minutes is a long time to explain.
39:38
Robert Cohen: If it's just the concept, you have to do your p and l.
39:41
Robert Cohen: You don't have to tell me about your cashflow.
39:43
Robert Cohen: I don't even have to get necessarily into your supply chain.
39:46
Robert Cohen: Just focus on that focus, focus, focus, and you will have our attention.
39:51
Joseph M. Schwab: Uh, I just wanna close with one kind of single thought.
39:55
Joseph M. Schwab: If you could finish this sentence for me.
39:57
Joseph M. Schwab: Innovation in orthopedics means, what would you say?
40:02
Robert Cohen: Innovation in orthopedics means improved outcomes, improving the quality of care, improving patient safety, and improving economics and efficiency.
40:12
Joseph M. Schwab: I do wanna give you an opportunity if there's anything we didn't talk about, if there's anything you want to add, if there's anything you want to go back to, um, and you wanna share with us, I, it was something I would add on to the end.
40:23
Robert Cohen: We are really living in this world.
40:25
Robert Cohen: That's exciting for innovation and sometimes the cost of innovation or the complexity of the innovation or thinking about an exit, um, I get it.
40:36
Robert Cohen: It's, it's not sometimes very straightforward and you go with certain unknowns.
40:41
Robert Cohen: But I will say though.
40:43
Robert Cohen: If you really think about it, five years ago, we weren't talking about digital.
40:47
Robert Cohen: Three years ago, we weren't talking about ai.
40:49
Robert Cohen: 10 years.
40:50
Robert Cohen: I started 12 years at Mako.
40:51
Robert Cohen: We weren't talking about robotics.
40:53
Robert Cohen: Now, robotics has become the standard of care in the Stryker world for primary joints.
40:58
Robert Cohen: As we think through that, think of all the things that can add to the existing technologies.
41:02
Robert Cohen: Think of all the things.
41:03
Robert Cohen: All these things can combined, can do it.
41:07
Robert Cohen: The potential is so powerful.
41:10
Robert Cohen: When you combine digital with enabling tech, we have not seen the full unleashing of that potential, and we're in a really good place right now in the world of med tech, especially musculoskeletal orthopedics.
41:22
Robert Cohen: But our future will even be a better one.
41:25
Joseph M. Schwab: So I actually have, I.
41:28
Joseph M. Schwab: raised this question in my mind because you, you, I think rightfully identify innovation nowadays as.
41:35
Joseph M. Schwab: Um, being of greater complexity.
41:38
Joseph M. Schwab: The question I would ask, since you've been at this for four decades, is the relative complexity, meaning the complexity of the innovation relative to the market or relative to, uh, society, is the relative complexity more complex?
41:53
Joseph M. Schwab: Or, uh, is, is that staying relatively even with the complexity of society?
41:58
Joseph M. Schwab: Does that question make sense?
41:59
Joseph M. Schwab: Yeah.
42:00
Robert Cohen: Well, it does make sense, but it's, I'm not gonna give you necessarily a technical answer because the biggest complexity right now, if you really think about it on, on some of these great things is, is.
42:11
Robert Cohen: Over four decades.
42:12
Robert Cohen: I've watched, you know, 20 years ago you can get a lot more money for a new device'cause someone wanted it and you can't do that now, right?
42:21
Robert Cohen: So you have limitations, you have, uh, Medicare reimbursement changes decreasing.
42:26
Robert Cohen: You have different countries around the world that are cutting as well from government subsidies.
42:32
Robert Cohen: So the challenges now is the reimbursement.
42:35
Robert Cohen: You're not gonna impede a lot more or for a clinical benefit or anymore for a clinical benefit.
42:41
Robert Cohen: So that's number one.
42:41
Robert Cohen: And then the regulatory process is rather onerous.
42:46
Robert Cohen: And the regulatory process on some great inventions is more difficult now to get through and just quantify it as a class two.
42:55
Robert Cohen: Than you had in the years past and you had the opportunity to talk and things like that.
42:59
Robert Cohen: Now you have to go through breakthrough designations, but you may not get reimbursement for it.
43:03
Robert Cohen: You're familiar with the, you're familiar with term, the Valley of Death and Innovation in Med Tech.
43:08
Robert Cohen: Right.
43:08
Robert Cohen: So that's happening to me to a lot.
43:10
Robert Cohen: I see happening a lot of startups where you get the regulatory approval but you have no reimbursement of.
43:16
Robert Cohen: So someone thought clinical benefit, but there's no reimbursement.
43:18
Robert Cohen: So those challenges exist now in ways that we just never saw before.
43:24
Robert Cohen: So people paying for something and then the regulatory process adds a complexity.
43:30
Robert Cohen: And in fact, in many cases we may choose what product to do internally just because we know the regulatory path and time to market where there's too many unknowns in something, which may be a great project.