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From Idea to Market: Ep 4 - Choosing the Vehicle · AHF Podcast

0:22
Joseph M. Schwab: Hello and welcome to the AHF Podcast.
0:25
Joseph M. Schwab: I'm your host, Joe Schwab.
0:28
Joseph M. Schwab: From Idea to Market is a series about how medical innovation actually happens, not as a straight line, but really as a sequence of high stakes decisions.
0:39
Joseph M. Schwab: If you're just joining us, I highly recommend going back to previous episodes.
0:44
Joseph M. Schwab: In our last chapter, we focused on proof of concept.
0:48
Joseph M. Schwab: The stage where ideas are tested against real constraints and only some assumptions survived.
0:56
Joseph M. Schwab: But here's the reality, the timing of when you build a company is just as strategic as how you say build the device.
1:06
Joseph M. Schwab: Some innovators wait for a verified prototype before they ever file for an LLC.
1:13
Joseph M. Schwab: Others incorporate on day one in order to secure things like intellectual property and raise capital, or assemble the team that will do the proof of concept work.
1:25
Joseph M. Schwab: But in many cases, ideas don't become companies at all, at least not right away.
1:31
Joseph M. Schwab: They may move forward through partnerships or licensing agreements or internal development inside existing organizations.
1:40
Joseph M. Schwab: This episode is about that transition.
1:44
Joseph M. Schwab: It's about the moment when an idea at whatever stage of development needs a formal structure to carry it forward.
1:52
Joseph M. Schwab: And that structure might be a company, it might be a partnership, it might be something else entirely.
2:15
Joseph M. Schwab: In this episode, you're going to hear from people who have made very different structural choices, some built companies, some partnered early, and some moved between roles.
2:27
Joseph M. Schwab: As their ideas evolved.
2:29
Joseph M. Schwab: Rather than introducing them one by one, we want you to hear them first in their own words.
2:35
Jared Foran: I'm Jared Foran.
2:37
Jared Foran: I'm an orthopedic surgeon in Denver, Colorado.
2:39
Jared Foran: I'm a hip and knee arthroplasty specialist.
2:42
Jared Foran: I'm the Chief Scientific Officer of Forcast Orthopedics, and I'm one of the co-founders.
2:48
Peter Noymer: Hi, my name is Peter Noymer.
2:49
Peter Noymer: I'm the CEO of ForCast Orthopedics.
2:52
Peter Noymer: I'm also a PhD in mechanical engineering.
2:53
Peter Noymer: I've spent nearly 30 years, developing novel drug delivery systems for improving treatments across a number of different therapeutic areas.
3:02
Leo Whiteside: Oh, I'm Leo Whiteside.
3:03
Leo Whiteside: I'm an orthopedic surgeon.
3:05
Leo Whiteside: Just, uh, retired last January.
3:08
Leo Whiteside: Uh, engaged in hip and knee replacement, uh, sort of subspecializing and.
3:14
Leo Whiteside: Uh, infected arthroplasty.
3:16
Marie-Isabelle Batthyány: My name is Marie-Isabelle Batthyány I'm an board certified anesthesiologist specializing in orthopedic anesthesia and I'm also the founder and CEO of XRSynergies.
3:28
Charles Lawrie: I'm Dr.
3:29
Charles Lawrie: Charles Lawrie.
3:30
Charles Lawrie: I'm the co-founder and chief medical officer of FIOS Health.
3:34
Charles Lawrie: I'm also a high volume, anterior approach hip replacement and robotic knee surgeon in Miami, Florida, and, uh, current president of the Anterior Hip Foundation.
3:43
Charlie DeCook: My name is Charlie DeCook.
3:44
Charlie DeCook: I'm the president of Total Joint Specialists, a 17 surgeon group here in Atlanta, Georgia.
3:50
Alexander Sah: My name is Alex Sah and I'm a hip and knee surgeon in private practice as medical co-director of the Institute for Joint Restoration in Fremont, California.
3:57
Alexander Sah: I was past president of the Anterior Hip Foundation and currently serve as Chief Medical Officer at Think! Surgical and Chief Innovation Officer at Ospitek.
4:06
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.
4:20
Emily Ast: Hi, I am Emily Ast.
4:22
Emily Ast: I am an attorney and my own law firm Ast Physician Contracts.
4:26
Emily Ast: I focus on contract review and negotiation for physicians, typically employment contracts and industry consulting agreements, as well as related shareholder agreements, ambulatory surgery center operating agreements, and those sorts of corporate documents.
4:41
Simon Mifsud: Hello, my name is Simon Mifsud and I'm a co-founder and the CEO of Garland Surgical Limited based in the UK.
4:49
Simon Mifsud: And we're developing a novel hip replacement system called the Malta Hip.
4:53
Joseph M. Schwab: Together.
4:54
Joseph M. Schwab: Their stories help us see that choosing a structure isn't administrative burden, it's strategy.
5:01
Joseph M. Schwab: In this episode, we explore three questions that define this transition.
5:07
Joseph M. Schwab: First, what determines the structure and idea ultimately inhabits.
5:13
Joseph M. Schwab: Second, how do organizational choices constrain or enable future options?
5:19
Joseph M. Schwab: And third, when does flexibility matter more than control?
5:25
Joseph M. Schwab: This is where ownership incentives and legal choices shape what an innovation can realistically become.
5:39
Joseph M. Schwab: In the early days of a spark, the idea is free.
5:42
Joseph M. Schwab: It's a sketch on a napkin or a, a conversation over coffee.
5:47
Joseph M. Schwab: But as soon as you decide to move forward, you have to decide what suit the idea is going to wear.
5:54
Joseph M. Schwab: Does it need the agility of a startup to survive the so-called.
5:59
Joseph M. Schwab: Valley of death.
6:00
Joseph M. Schwab: We first heard that term in chapter three, and we'll learn more about it in chapter six.
6:06
Joseph M. Schwab: Or does it need heavy armor like a major corporation to navigate a global market?
6:12
Joseph M. Schwab: Well, the answer isn't always obvious, and as we're just about to hear the timing of that choice is often a reaction to the environment around the idea.
6:23
Joseph M. Schwab: So let's start there.
6:25
Joseph M. Schwab: What determines the structure and idea ultimately inhabits.
6:35
Joseph M. Schwab: When you move from a concept to a business, you aren't just filing paperwork, but you're choosing a path.
6:42
Joseph M. Schwab: Research from MIT and other innovation scholars suggests that MedTech innovators face a fundamental strategic decision early on, whether to collaborate with existing players or compete by building something entirely new.
6:59
Joseph M. Schwab: Some teams focus on intellectual property and look for partners to handle commercialization while others build full organizations.
7:09
Joseph M. Schwab: Designed to carry a product all the way to market.
7:12
Joseph M. Schwab: For Simon Mifsud, that choice was driven by a very specific goal.
7:18
Simon Mifsud: Our ultimate aim, and I think the quickest way to get this device out to market is to de-risk it to a certain level, get the regulatory clearance, um, done.
7:29
Simon Mifsud: We controlling the IP as well.
7:31
Simon Mifsud: And then license it out to a larger orthopedic organization with existing sales channels, existing customer base, um, so that we can start to generate clinical data, um, in the quick fashion, but the safest fashion.
7:45
Joseph M. Schwab: Simon's decision wasn't about whether the device worked, it was about who should carry the risk next.
7:52
Joseph M. Schwab: Licensing wasn't a shortcut.
7:54
Joseph M. Schwab: It was a deliberate choice to trade control for reach and exposure for speed.
8:02
Joseph M. Schwab: But sometimes the vehicle has to be a startup because no one else is driving in that direction.
8:09
Joseph M. Schwab: For Marie, the structure emerged differently.
8:13
Marie-Isabelle Batthyány: So docs aren't worried about legal implications and we all work so hard.
8:19
Marie-Isabelle Batthyány: And what do we want?
8:20
Marie-Isabelle Batthyány: We don't want to think about possible lawsuits or unhappy patients.
8:25
Marie-Isabelle Batthyány: That situation with, this, lady patient, it, it came back, um, many times to me.
8:32
Marie-Isabelle Batthyány: And, uh, it resulted in the end, during my MBA, which I did in 2018, I came to a point where I had talked to so many different people from different fields, providing me with information what else is out there in the world.
8:49
Marie-Isabelle Batthyány: actually taking a first peak into, into the tech world.
8:53
Marie-Isabelle Batthyány: So I thought, how could I combine this?
8:56
Marie-Isabelle Batthyány: With solving problems we are facing every day in our clinical lives.
9:01
Marie-Isabelle Batthyány: And I actually did think, yes, this could be me because there was no one else around doing it.
9:09
Joseph M. Schwab: Here, structure followed.
9:11
Joseph M. Schwab: Commitment, not a business plan.
9:13
Joseph M. Schwab: The decision wasn't should I start a company, it was if this is going to move forward, who's going to own the work?
9:23
Joseph M. Schwab: Well, for Jared Foran, that transition happened when he stopped just talking to colleagues and started putting the vision on paper.
9:32
Joseph M. Schwab: That letter to potential investors was the moment the vehicle actually left the garage.
9:40
Jared Foran: I actually started talking to some people about it.
9:42
Jared Foran: Some of my colleagues were like, that's a great idea.
9:44
Jared Foran: Yeah, do it.
9:46
Jared Foran: And then I sent out this letter like kinda looking for investors and it was overwhelmingly positive, way more than I thought it would.
9:52
Jared Foran: And so we started going down this road.
9:54
Joseph M. Schwab: Across these three stories, the pattern is still consistent.
9:59
Joseph M. Schwab: Structure isn't a reward for having a good idea.
10:02
Joseph M. Schwab: It's a response to pressure, pressure from risk, from timelines, from the need to move an idea out of conversation, and into action.
10:15
Joseph M. Schwab: So here's our first answer.
10:17
Joseph M. Schwab: An idea structure is determined by how its innovators believe it can most responsibly move forward given the risks and the resources and the system it needs to survive in.
10:30
Joseph M. Schwab: And sometimes that vehicle is a company, sometimes it's a license, sometimes it's a partnership, and sometimes it changes over time.
10:41
Joseph M. Schwab: But choosing a vehicle is only the first step.
10:44
Joseph M. Schwab: Once you've picked your path, you have to actually build the engine.
10:49
Joseph M. Schwab: That's where things get complicated because the decisions you make in the early days, who owns what and how you protect the idea are the tracks that your vehicle will run on for the next 10 years.
11:03
Joseph M. Schwab: So let's move on to the second question.
11:05
Joseph M. Schwab: How do early organizational choices constrain or enable future options?
11:17
Joseph M. Schwab: This is where many innovators encounter a hard reality.
11:21
Joseph M. Schwab: Early decisions often feel temporary, but many just aren't.
11:25
Joseph M. Schwab: Industry postmortems consistently show that a large percentage of medical device startups fail and not because the science was flawed.
11:36
Joseph M. Schwab: They fail because of what some founders describe as structural debt.
11:42
Joseph M. Schwab: Early legal ownership or team decisions that lock a company into paths that become really hard to change.
11:51
Joseph M. Schwab: Emily asked, explains why slowing down early is often the difference between leverage and regret.
11:59
Emily Ast: People need to understand that companies are large and structured and their objective may not align with yours.
12:05
Emily Ast: It's important to slow down a little bit.
12:08
Emily Ast: Have that NDA in place and start with very strategic conversations.
12:13
Emily Ast: You don't wanna go too far down the road of sharing your ideas.
12:17
Emily Ast: You know, you're, you think it's a slam dunk with this particular company and you're gonna work together to develop something only to, once it gets through maybe the upper levels and channels of a company and their compliance department and their legal department, and then maybe they're not able to do as good of an arrangement for you as you thought.
12:37
Joseph M. Schwab: Emily isn't warning against collaboration.
12:40
Joseph M. Schwab: She's pointing out that structure creates leverage, whether you intended or not.
12:46
Joseph M. Schwab: Once ideas are shared, records are created, and expectations form and unwinding those relationships later can be difficult or.
12:56
Joseph M. Schwab: Impossible, Charles lawrie pointed out that as you grow, you aren't just hiring people, you're filling gaps in a survival system.
13:06
Charles Lawrie: From there, you know, it's really about team building.
13:09
Charles Lawrie: Identifying the gaps and the expertise.
13:11
Charles Lawrie: Um, and as the company grows, you know, finding ways to both keep it, keep it tight, keep it lean.
13:17
Charles Lawrie: Of course, we're a startup, uh, but also really leverage the expertise of each individual party to make the company successful.
13:23
Charles Lawrie: You know, it's a bit like putting a jigsaw puzzle together, you know, For anyone who wanting to start a company, I think it's very important to understand where your expertise is, understand where your gaps are, and then work with someone who's very complimentary in their skillset.
13:38
Joseph M. Schwab: Organizational research clearly backs this up.
13:41
Joseph M. Schwab: Teams with clearly defined roles and complimentary skills tend to adapt better under stress.
13:48
Joseph M. Schwab: Especially in regulated environments like healthcare, Alex Sah describes how involvement often happens in stages.
13:57
Alexander Sah: There are many different roles when working with industry and new company, and really I started as a surgeon evaluator.
14:02
Alexander Sah: That lets you generate relationships and then with experience, opportunities can become available to serve as an advisor.
14:09
Alexander Sah: And with those connections and showing interest, you then may be approached by industry or peers to collaborate on a design and development of a product.
14:17
Alexander Sah: So I think it's a stepwise fashion of being involved
14:19
Joseph M. Schwab: This kind of gradual engagement allows people to test fit before committing fully.
14:27
Joseph M. Schwab: Charlie DeCook describes how recognizing his role became a real advantage.
14:33
Charlie DeCook: The first one, um, really wasn't my idea.
14:36
Charlie DeCook: So They came to me with this idea that they had been working on for about six years already.
14:42
Charlie DeCook: And, uh, really I just helped along the way.
14:46
Charlie DeCook: Um, I, I found out that I was pretty good at storytelling and, uh, that storytelling really helped us sell the product.
14:55
Joseph M. Schwab: In each case structure didn't just assign ownership.
14:59
Joseph M. Schwab: It shaped learning and decision making and adaptability.
15:04
Joseph M. Schwab: So here's our second answer.
15:06
Joseph M. Schwab: Early organizational choices become the tracks your vehicle runs on.
15:11
Joseph M. Schwab: If the legal and social foundation is brittle.
15:15
Joseph M. Schwab: The company can't scale When opportunity finally arrives well, as the team forms and legal protections are set, a new tension begins to pull at the innovator control versus speed.
15:31
Joseph M. Schwab: In the beginning, you own everything.
15:33
Joseph M. Schwab: You're the engineer, the CEO, the salesman.
15:37
Joseph M. Schwab: But as the vehicle picks up speed, you realize that if you don't let others take the wheel, you'll eventually drive the project into the ground.
15:47
Joseph M. Schwab: Which brings up the third question, when does flexibility matter more than control?
15:58
Joseph M. Schwab: In many innovation stories, progress slows not because the idea is weak, but because control becomes too centralized.
16:07
Joseph M. Schwab: Leadership research, most notably Noam Wasserman study on the founder's dilemma shows that a founder's desire for total control is often the single greatest threat to a company's growth.
16:21
Joseph M. Schwab: The data is clear.
16:22
Joseph M. Schwab: Teams move faster and scale more efficiently when founders deliberately distribute authority.
16:30
Joseph M. Schwab: Robert Cohen has spent a career seeing this play out, and he argues that true leadership begins with the humility to step back.
16:41
Robert Cohen: um, stay true to your design.
16:42
Robert Cohen: If you design a good product and you design it for good reasons, people will want it.
16:47
Robert Cohen: That's all you need to think about, let others that are smart.
16:50
Robert Cohen: Let others people that know, finance and know marketing, sales, and know business plans.
16:55
Robert Cohen: Let them lead you.
16:56
Robert Cohen: You don't have to own everything.
16:57
Robert Cohen: You don't have to be perfect.
16:58
Robert Cohen: in Everything.
16:59
Robert Cohen: You don't have to be the smartest person in the room.
17:01
Robert Cohen: Be a good listener and stick to your competency and sticking to my competency are words to live by
17:07
Joseph M. Schwab: Flexibility begins with knowing what not to own personally.
17:12
Joseph M. Schwab: It also begins with discipline around the value proposition itself.
17:17
Joseph M. Schwab: Multiple healthcare innovation studies suggest that many startups fail, not because the technology is weak, but because clinical utility is never proven clearly enough.
17:29
Joseph M. Schwab: And Robert Cohen learned that if you can't prove the need with hard data, the innovation won't survive the market.
17:37
Robert Cohen: But the lesson learned is you gotta establish clinical need and if you can't support your clinical need with facts.
17:45
Robert Cohen: You should question the value proposition of your invention.
17:49
Joseph M. Schwab: For others, flexibility means structuring the company around real world constraints early.
17:56
Joseph M. Schwab: This is what industry experts call design for market access.
18:01
Joseph M. Schwab: It's the realization that a perfect device is useless if the system can't absorb it.
18:07
Joseph M. Schwab: Here's what Peter Noymer has to say about that.
18:10
Peter Noymer: you've gotta come up.
18:11
Peter Noymer: With a technology that's got a good product market fit.
18:14
Peter Noymer: Right.
18:14
Peter Noymer: You know, great idea, but not usable isn't gonna fly.
18:18
Peter Noymer: Right?
18:18
Joseph M. Schwab: Evidence from healthcare innovation studies show that early alignment between clinical value and economic reality is one of the strongest predictors of whether companies survive.
18:30
Joseph M. Schwab: This is known as the economic proof of concept.
18:33
Joseph M. Schwab: It's not enough to show that a device works.
18:36
Joseph M. Schwab: You have to show that there's a business case for its existence.
18:40
Joseph M. Schwab: Peter describes how confronting that complexity early became a strategic necessity.
18:47
Peter Noymer: getting some early traction with the FDA, like we've done with our Orphan and QIDP designations, um, and then doing the ROI analysis, the return on investment analysis, right?
18:56
Peter Noymer: And kind of showing that there is, there is a business model here.
18:59
Joseph M. Schwab: In practice, flexibility often shows up in how a solution fits into the system around it, how it's used or paid for, and managed.
19:09
Joseph M. Schwab: According to a MedTech strategist report, 70% of venture-backed failures are now attributed to reimbursement friction.
19:19
Joseph M. Schwab: Rather than technical failure, you can have the best tool in the world, but if the back office can't figure out how to bill for it, it stays on the shelf.
19:28
Joseph M. Schwab: Peter Noymer describes how he used a reimbursement landscape to navigate this maze.
19:35
Peter Noymer: Yeah, so I think, you know, one of the, one of the bigger challenges relates to, um, the reimbursement pathway, or I'll call it reimbursement pathways, right?
19:44
Peter Noymer: Because this is multifaceted, right?
19:47
Peter Noymer: We have, you know, we're addressing, uh, an issue with a drug and a device and a surgical procedure, right?
19:52
Peter Noymer: So there's kind of part A, part B, part D all mixed in there.
19:56
Peter Noymer: Um, and that that can make it complicated, as Leo said.
20:00
Peter Noymer: So there's the kit to make it easy for the surgeon.
20:02
Peter Noymer: We also wanna make it easy for the, you know, for the back office stuff to make sure that everybody kind of gets what they need.
20:10
Peter Noymer: We decided early on to try to get a better read on this.
20:13
Peter Noymer: Um, so even, um, even before we completed our series, Aras, actually even before we started to talk to people about the series Aras, um, we did a, a sort of a reimbursement landscaping escaping exercise.
20:26
Peter Noymer: We engaged a third party consultancy that does this stuff all day long.
20:31
Joseph M. Schwab: As ideas move closer to real use, design decisions start to matter in a different way.
20:37
Joseph M. Schwab: This is the field of human factors engineering.
20:42
Joseph M. Schwab: Decades of research show that surgeons aren't just looking for tools, they're looking for workflow efficiency.
20:49
Joseph M. Schwab: If a device requires too much fiddling, it becomes a liability in the high pressure environment in the or.
20:57
Joseph M. Schwab: Leo Whiteside explains why the most flexible solutions are the ones that simply let the surgeon be a surgeon.
21:05
Leo Whiteside: If you, if if the surgeon doesn't feel real comfortable with it and doesn't have a lot of little fiddling to do, uh, you'll, you'll be much better off if, if they can work out, walk out of the operating room feeling like, well, I, I solved the problem.
21:21
Leo Whiteside: And then turn most of the other management over to somebody else,
21:25
Joseph M. Schwab: In the end, flexibility is what allows innovation to move through the system without braking.
21:31
Joseph M. Schwab: It's the ability to adapt the vehicle to fit the road, whether the road is paved with clinical data or reimbursement codes or surgical workflow.
21:47
Joseph M. Schwab: As we look back at the ground we've covered in this chapter, it's clear that choosing the vehicle isn't a one-time administrative event.
21:57
Joseph M. Schwab: It's a continuous strategic negotiation.
22:01
Joseph M. Schwab: Let's review what we've learned.
22:04
Joseph M. Schwab: First, structure follows strategy.
22:08
Joseph M. Schwab: As we heard from Simon and Marie, your vehicle must match your destination.
22:13
Joseph M. Schwab: Whether you're building an agile startup to disrupt the field, or a specialized r and d engine designed to be licensed by a giant, the structure is what allows the idea to navigate the commercialization gap.
22:27
Joseph M. Schwab: Second, early choices can be permanent tracks.
22:32
Joseph M. Schwab: The higher failure rate we discussed isn't just a number, it's a warning.
22:37
Joseph M. Schwab: As Emily and Charles pointed out, structural debt is the silent killer of innovation.
22:43
Joseph M. Schwab: The legal and social foundations you laid today, the ip, the NDAs, the trust, are the only things that will keep your vehicle from rattling apart.
22:54
Joseph M. Schwab: When the pressure of the market hits.
22:58
Joseph M. Schwab: And third, the payer is the not so silent partner.
23:03
Joseph M. Schwab: As Robert and Peter and Leo taught us, clinical success is not commercial success.
23:10
Joseph M. Schwab: If you're too rigid to adapt to the economic reality, to the reimbursement codes, and to surgical workflows, your innovation will become a ghost.
23:20
Joseph M. Schwab: A great idea that exists but can't ever really be used.
23:26
Joseph M. Schwab: Well, if there's one thing I hope you take away from this episode, it's this, the company is the vessel, not the innovation.
23:35
Joseph M. Schwab: Don't fall in love with the structure.
23:37
Joseph M. Schwab: Fall in love with the problem you're solving.
23:41
Joseph M. Schwab: Build a structure that's sturdy enough to protect the clinical integrity of your spark, but humble enough to let experts take the wheel when the path starts getting narrow and treacherous.
23:54
Joseph M. Schwab: Because in this industry, a failure of structure is a failure of service.
24:01
Joseph M. Schwab: But even with the perfect vehicle, a brilliant team, and an ironclad strategy, you still have no momentum.
24:10
Joseph M. Schwab: Because to move an idea out of the lab and into the operating room, you need the one thing that can both accelerate your vision and if you aren't careful, strip you of all your control.
24:24
Joseph M. Schwab: You need fuel.
24:32
Joseph M. Schwab: In our next episode, we're diving into the world of capital.
24:36
Joseph M. Schwab: We'll explore the differences between smart money and fast money, and how the source of your funding can ultimately change the DNA of your invention.
24:47
I.
24:48
Joseph M. Schwab: Starting next week, we'll begin releasing the complete extended interviews that served as the foundation for this series.
24:57
Joseph M. Schwab: A new extended interview will be released every Tuesday, starting on March 24th.
25:02
Joseph M. Schwab: I highly recommend you check these out to get the full context of what each of our guest companies had to say, and we're kicking things off with forecast, orthopedics, and trust me.
25:14
Joseph M. Schwab: You won't wanna miss it.