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: Welcome back once again to the outcomes rocket podcast where we chat with today’s most successful and inspiring health leaders. I have an amazing guest for you today. His name is Bill Gruber, he’s the president and CEO at Solace Therapeutics. They are startup company in the female urinary incontinence field. Bill is the president and CEO of interlace medical. While at Interlace, he raised over 20 million dollars in venture capital for the development and launch of devices for the treatment of abnormal uterine bleeding caused by fibroids. The company was purchased by whole logic in 2011. Great milestone for them and Bill has had extensive experience in venture capital fund raising organizational development product development and commercialization for rapid growth businesses. His mind is where the puck is going and it’s a pleasure to have Bill on the podcast today because he definitely comes with that medical device angle that many of you all are interested in. And so it’s going to be a pleasure to walk through some of these hot topics with Bill. I want to give Bill a warm welcome to the podcast. Welcome my friend.
: Thanks Saul. Great to speak with you finally. And thanks very much for having me. I greatly appreciate it.
: Absolutely my friend. So Bill anything that I left out of your intro that you wanted the listeners to know about you?
: Yeah there’s a lot of scar tissue that comes with all of those all accomplishments. It’s all rosy. It’s not all rosy. There’s a really tough sessions there.
: Hey man and we have a section here in the podcast where we will jump into some of the setbacks and excited to dive into that bill. But why did you decide to get into the medical sector to begin with?
: Well after college I got a job with Procter Gamble and was selling everything from soap to diapers. And after five years doing that I wanted a change to an industry where with something the more cerebral and also something where I might be able to have a larger impact on people’s lives. So Boston Scientific at the time was recruiting heavily on the consumer products and ultimately that’s where I went and I was up to Boston Scientific for just about 10 years.
: Wonderful. Bill we share that I actually also started with a Cincinnati based company sent to us and I was selling soap and floor mats. And I know the feeling right. That feeling that hey you know I’m doing a great job here but I want to do more. I want to have impact.
: Exactly exactly.
: Totally feel you there man. So what would you say Bill you’ve had some success in the corporate world. You’ve gone into startups and have had success, some good exits there. What’s the hot topic that needs to be on leaders agendas today and how are you approaching them?
: From my situation, I’m more I’ve shifted from big company to small companies so much more entrepreneurial and I think there are three things that really have us focused everyday and that’s regulatory reimbursement and fundraising hurdles so as we try to build these companies and get products to market the new normal is that you’ve got to get through regulatory a huge huge bar and then immediately thereafter its reimbursement. But none of those happen unless we can fundraise from venture capitalists or family funds or private equity or anybody else who can give us capital to do that.
: What a great raw response folks it’s a lot of people go into business and want it to just work. They have an idea it’s going to work but Bill definitely takes us through some things that are super important you want to dive a little bit deeper here on some of those Bill and your recommendations to people that are wanting to start- advice the company.
: You know I think first of all the tough part here is to think about the exit before you even begin is first, right. I think one of the big issues is that people start with a great technology and then jump right in. And they haven’t thought through the whole problem yet. And I think before you start a company you have to really recognize what are all the risks right regulatory risk reimbursement risk you have biologic risk biologic risk. If that does your when you actually help a patient right then ultimately you have marketing risk competitive risk. Are there competitors out there that you’re going to have to unseat. And in the end do you have exit risk to somebody want to actually buy you or does everybody already have a device and you’re going to have to go this alone and compete with big companies like Medtronic or others. And so I think understanding all those risks and having a plan to mitigate all those risks is super important when you’re starting out a project like we do.
: It’s a great call out Bill. I’m a big fan of thinking time I learned this from Keith Cunningham and I schedule a couple of times a week an hour to just think through risks, opportunities. And it really helps. You know I feel like we spend a lot of time being reactive in business and if you do some schedule thinking time and are really differentiate you from others out there what are your thoughts on that though?
: I agree, that’s my treadmill time right. My workout the morning I get all of my work thoughts done right. And so that’s why I can’t miss a workout because otherwise I don’t get my thinking time. So that’s really important to me.
: I love that man. I love that you’ve connected it with your physical well-being. Great idea. Can you give us an example bill of a time when you guys improved outcomes and created results by doing and thinking things differently?
: I think everyone understands that with medical device companies we have to deliver new products that are less invasive less expensive and safer. You have to have all three of them. I don’t think you’re going to get by today’s world without having those three you use to be able just to come out with some new widget. The doctors would buy it and everything’s fine. But I think the world’s changed. Historically in the companies I’ve worked for we believe that the new normal for product development is to have a core competency and conducted clinical trials. And I think that’s new over the last probably 10 years or so we’ve got to prove to the world that what we built works. There’s two ways to do it you can do that with commercial success you could just launch it and hope it works and then the world all says this is fine or you do clinical trials and show with data. I think if you fail at the commercial success it’s tough to get a second chance. You end up with a bad birthmark on your device and then selling it again after you’ve fixed it is really hard. I think that if you start with clinical trials it’s a safer strategy. At interlace medical as well as therapeutics we focused on conducting clinical trials to release new products without doing these adequately I think just set ourselves up for failure. So and I think we have three constituents all that want that data right so those are the patient the doctor and the payer. Right. So with the patient, the doctor and the pair we’ve got to really attract those folks. And the problem is as startup company is the clinical trials take money time and talent. And so that’s tough because it made more money across the board for us. We just have to raise more, expect to raise more capital. Expect to take more time which uses capital so that goes back to fundraising, right. So I think that if we get the data the clinical data overcoming the hurdles of regulatory reimbursement and fundraising because the fundraising or the people I get money from are going to want to see that same data that those three things are made much easier. So I think we just have to develop a core competency of getting data and that wasn’t something that was apparent to me early on 25 years ago when I jumped into this business. But it’s definitely the way of the future in my opinion.
: Yeah Bill that’s a great call out in today’s market. We’re looking at a lot of different options. We’re looking at a lot of shifts, right. We’re dealing with digital therapeutics we’re dealing with digital technologies and the appetite for venture capital to get into a device company has really decreased. Can you talk to that and your thoughts around that bill?
: So let me just rephrase your question so you’re saying that’s the change in healthcare the hurdles have changed?
: Not the hurdles but what has changed is the appetite for venture firms to invest into medical device companies because of the time frame that it takes to see a return?
: I totally agree with that and I would say that not only have we watch many many medical device venture firms go under over the last 12 really since 2008. We’ve seen a real shift in where everybody’s getting cash and so that shift now has gone to fewer and fewer venture firms. We’re now seeing more family funds coming and participate which is a surprise. We’ve seen private equity firms that would traditionally only invest in public companies. Those folks are now doing earlier and earlier things because they’re not finding the valuations in the public markets that they want to because a lot of the stuff is overpriced and then that’s critical to the new market which is strategics. So big companies like Medtronic Boston Scientific and others are actually realizing that in order to see more new innovation come from startup companies they’re having to participate at earlier and earlier stages by moving some of their R and D cash to do more venture investments. So I think in those three areas we certainly see that.
: That’s super interesting Bill and yeah I mean when you get into a large company like Boston or Medtronic, it really becomes more difficult to have that agility that a small company like Solace has to innovate and why not shift funds to a company like yours to form a partnership. So listeners think about that, as you build your company if you’re into the device space. Think about what Bill just said. These are pearls that you’re not going to want to forget because in his triad that he talked to you about research and reimbursement and the money, you’re going to want to keep that in mind. Bill maybe we should level set with the listeners about Solace, right. I gave a little blurb about it but maybe you could help finish that idea. What does Solace do? What problem do they solve? Who do they solve it for?
: So the current company is focused on devices for helping women who are incontinent when they laugh, lift something or cough or sneeze. And so the problem there is that it happens to men as well but as we get older our bladders are less elastic. And when we have a insult to the top of the bladder with high pressure that our research can’t withhold the urine and we leak and the company long before I got here because this was a bit of a restart when I joined but the company had come up with a device to help attenuate pressure. And what we’re doing is simply adding an air filled balloon to the bladder with 30 cc’s of air it floats top of the bladder. And every time you laugh cough or sneeze the balloon acts as a shock absorber and it reduces the intra bladder pressure to a point below which is readthrough can now hold it back. So it just looks passively there. Right. And it works incidentally it’s placed in the doctor’s office and the patients come back on an annual basis and have the old balloon taking out a new balloon dropped off. So it’s it’s quick and simple and easy and it’s reversible. So that adds to the safety component. So we go back and look at it. Is it less invasive? Yes. Is it safer? Yes. And is it cost effective.? Yes. So we’re trying to check all three of those boxes.
: Got it, very cool very cool. And as we think about the reimbursement piece is this something that insurance pays for is this a procedure that is considered more than you pay for it on your own?
: It’s a great question and I think that’s a huge issue is probably a separate podcast actually that the issue is that we’ll have to go out and get a category 1 code for the Medicare Medicaid population. We had a vision the whole procedure to be approximately fifteen hundred dollars. That’s with doctor fee and everything else included into that. But what we’re seeing in the MARPAT we’re seeing in the marketplace more recently even in the last five years is all these patients are now in high deductible plans right. I mean 2000 3000 4000 dollar deductibles we have for example a 4000 deductible here but the company pays into a health savings account. Two thousand dollars a year.
: That’s generous.
: So the problem here is that if we come out any of us come out with a procedure that’s a 50 100 dollar procedure. We’re never touching insurance money anyway. It’s all out of pocket till we get to that 2000 dollar 3000 dollar deductible. So for us we’ll go up the Category 1 code for the Medicare Medicaid patient and we’ll see if we could get a hickpick’s code for those also who may need it. But at the same time we expect that we’re going to be patient pay initially. Right. And so we’ll have to go to high aesthetic markets, right. We’ll be going to markets in Southern California, Arizona the Texas markets end up in Chicago and Atlanta. So you know I think there’s people out there with high disposable incomes who have quality of life impact from this condition and so we’re going to go there first. And I think we’ll see some good results.
: Yeah I think that’s really interesting Bill and as we think through this segment, I don’t know the thing that kind of pops into my mind is like the vasectomy model. Right. Like insurance doesn’t pay but you want to impact the quality of your life in a certain way. It’s reversible and you’re targeting a market that can actually pay for it.
: And I think the other thing it goes right back to outcomes right. So now that we’re all beforehand insurance paid for it. So we weren’t as engaged in the efficacy for cash, right. But now since it’s all coming out of pocket people are patients are shopping for health care much more aggressively and their expectations for efficacy are much different than they used to be when they didn’t have to pay theoretically it was all running through an insurance company. So it’s life’s different now people have higher expectations a shot for what they want. They want to see the data before they write the check. Now the reason for more data so again as we have watched the evolution of health care and healthcare delivery I think you know we have a new constituency not just going out and selling catheters to doctors anymore. The patients a big portion on this.
: Such a great call Bill definitely a great call out that we all need to be very aware of. Tell us a time when you had a setback. Bill you alluded to this at the beginning. What did you learn from that setback?
: So you know I’ve read a lot of setbacks and I’ve learned a ton I think I was vice president of sales and marketing at a company called core tech which was Aspinal products company after I left Boston Scientific we are making a peak implant for lumbar spine fusions and a group of us join the company after that undergone numerous organizational issues and some cash issues run out of money and the product was a terrific idea. However the investors were pretty tired within the investment. They had that for a long time and they were focused on trying to get the company sold and they thought the best way to do this was to generate sales as fast as possible but this product wouldn’t approve. It needed a PMA trial and so the company shifted its approach away from developing that implant into something that they knew they could sell which was sourcing cadaver bone implants for spinal fusions. We shifted the company over to focusing on coming out with instrumentation and sourcing the cadaveric bone for these implants and we spent years developing the business we’ve grown the sales from anywhere 6 million and then ultimately close to 10 million bucks. And the company sold but it’s sold for a fraction of what the investors had in it. They get hindsight we should have never taken our eye off the ball right. They should have mopped up the company or are really focused on getting that product out because that was the big value creator was that. So I think what happens is if you start chasing revenue in hopes of just getting an exit you haven’t solved the problem, you haven’t improved outcomes right you’ve jumped into the same kind of market that everybody else is in and if you really advanced anything. And so that was great learning for us. You’ve got to pay attention to the problem you’re trying to solve and not just the revenue.
: That’s really interesting and thinking through it. The distinction made here listeners will highlight something very important rather than chase the revenue chase the outcomes and it just very much in line with why we’re talking here is if you’re after just dollars more than likely it’s going to be tough to get an exit. But if you’re after outcomes and you’re improving them for less money, smaller incisions less time you’re more likely to have that exit success. What a great lesson. BELL Thank you for sharing.
: Yeah, I totally agree with your comments.
: So what’s one of your proudest medical leadership experiences today?
: Actually the work we did at interlace medical. This is a company that developed the device for moving fibroids from inside the uterus and women who had abnormal uterine bleeding and we basically just started it with a thought that we looked at six different areas within women’s health. When I am just started talking to doctors which is the most vexing problem you have made and started asking them if you had a device to remove fibroids, tell us kind of what what it should do.? How long should it take? How big should it be, how long should it be? Can we use energy? Right. Can we use cautery? What is it that we can do and we just kept asking and asking I would go to urology and gynecology meetings asking doctors you know about this and in the end they helped me write a product’s back right. It must have all these things must be able to move or a fibroid of three to five centimeters in ten minutes or less. You know they just basically wrote what the spec was and I had come from the vascular world. I had no no information on women’s health and so I had to learn it myself. And so once they gave this spec to us we went out and hired three independent design firms and said here’s the spec, come up with as many ideas as you can that achieve the specifications and they gave us back 60 ideas and so we put in a provisional patent on 60 ideas and that create a barbed wire around the space that we wanted to operate in and then we hired we hired an engineering team but only after each of these groups gave us a prototype of the one they liked the best. The idea they like the best and then the engineering team or internal guys took those three prototypes and then started working from there. And then the key for us was as soon as we had a working prototype we went in and did clinical trials and when I say clinical trials we did six patients and we were humbled because the thing did not work the way we expected we would just get our head handed to us and then we go back and spend a month just grinding through all the problems and then immediately we go back do four or five more patients again. And it was only after we did this four or five times that we really had nailed the product design and it was a super symptomatic device. Ultimately, whole logic came running and they took what was a 1 million dollar and trailing 12 month revenue for us and they drove it to where it is today probably around 200 million dollars a year it’s become the standard of care.
: Amazing what a great story. Congratulations on that win Bill.
: And the thing that I take away from this and I think listen you got to think about this too. There’s no secret sauce. You know you just got to do the work you got to, you know Bill got out there. He listened to the customer and he tweaked and tweaked and tweaked and stayed in the game until it worked. And I feel like a lot of people either don’t listen to the customer and they fall in love with their ideas or they tweak tweak and give up. And you’ve got to do both. You got listening you get a tweak and stay in the game. What would you say right now Bill you know at Solace is one of the most exciting projects or focus that you’re working on today?
: I think our focus right now is to get the get our existing product through FDA. And so you know we’re a one product company with 18 people here. We’re all focused on getting this through a new clinical trial and getting FDA clearance and getting it into the market once we can get it in the market, we’ll work on expanding indications and going from there. But right now that’s our big effort. We are seriously focused on regulatory reimbursement and fundraising. That’s my world very simple.
: Bill, I admire your tenacity and your focus. A lot of people just want to have it now. And the thing that I admire about you is just that you see you see where it could be and you’re working with your team to get there. So I just want to encourage you to keep doing this because the product definitely solves a problem that a lot of people are starting to have.
: Yes. And in fact it goes after those people over the age of 50 primarily and that’s a huge population bubble that’s growing quickly.
: Absolutely. So let’s pretend Bill you and I are building a medical leadership course and what it takes to be successful in the business of med device today. It’s the 101 of Bill Gruber and so we’ve got four questions lightning round style followed by a book and a podcast that you recommend to the listeners. You ready?
: Awesome. What’s the best way to improve healthcare outcomes?
: I would say spend as much time as possible defining the problem. Once you think you have a solution, test it to failure as much as you can on a benchtop in clinical trials long before you go out to market with it. Clinical trials help you figure out whether it’s actually going to work, whether you go back to the drawing board test, fail, test, fail.
: Love that. What’s the biggest mistake or pitfall to avoid, Bill?
: People who start with the technology and run around looking for a problem to solve. Somebody gives them this great plasma energy and then they say let’s look where in the body we can cook something or cut something or do something else. They haven’t started with a problem they started with a solution and then my friend.
: Amen. How do you stay relevant as an organization despite all the change?
: I think companies have to stay nimble. I also think that we ought to keep our egos in check. For us here we seek failure to learn what we need to do to be successful. You always have to be willing to change as fast or fashion and the market is changing. As I say to my kids you’ve got to get comfortable being uncomfortable.
: And finally what’s one area of focus that should drive everything in a health care organization?
: We love bad news early when we love to fail here we love to fail fast. I think if people are always trying to give you the good news that things are rosy, when they’re not, it’s a huge disservice when you cannot cover problems early you’re going to win. If problems wait and nobody tells you about them until the end you usually have fewer options and the options you do have are really expensive.
: Bill if I were to ever decide to climb up Mount Kilimanjaro you’re somebody that I had tapped to join me.
: Thank you.
: Because it’s life on the line you know and that’s what it is with a startup company. And good news early is an amazing thing that I’m taking away from this conversation and sharing with my team, listeners. Hope you do the same. Though what book would you recommend to the listeners?
: So the book I would recommend comes from more of an entrepreneurial side which is Negotiating with Giants. By Peter Johnston and I think it’s for us, we’re a small company and yet we negotiate with huge vendors we negotiate our exits with huge medical device companies and that’s just a great great book because it gives you terrific perspective as all the things you need to be doing to give yourself better leverage with the big guys.
: Well Pearl would you say you took out of that book that you want to share with the listeners.
: I think it’s developing a network within all the people that you want to work with and negotiating with a big company, you don’t just have one person there you need to build a group of people in there that you have good relationships with and good trust with. People buy from people in the end right and they aren’t going to do it overnight and they aren’t going to do it when they’re pressured to do it. So to think that you’re going to walk in and sell a company to Medtronic tomorrow isn’t going to happen. You’re going to need you know it your two worth of developing relationships and them watching you have success and be having candid conversations.
: Love that. It’s the saying build your well before you’re thirsty.
: Ah I like that.
: Bill, this has been fun. I always leave these conversations with the feeling that man I wish I had more time. Where here to the end. But I’d love if you could just share a closing thought with the listeners and then the best place where they could get in touch with you or follow you.
: Yeah I think the big push for us always is know what problem we’re trying to solve. You know with all these devices there’s always scope creep. Right? And so come back and really revisit the problem you solve and don’t get group-think-going stir the pot with your tame pushback. Somebody should always be playing the devil’s advocate to make sure the groups going in the right direction and we don’t have a bunch of yes men because that just doesn’t fly. So best way to reach me probably LinkedIn. I do get all my LinkedIn requests. And I do my best to try to make sure that I’m growing my linked in group and that’s how I reach out to a lot of other folks are pretty it’s linked to user.
: Fantastic. Bill this has been a ton of fun listeners if you want to get the show notes the transcript the links to Bill’s company as well as the links to the resources that he’s recommended. Just go to outcomesrocket.health/solace, S O L A C E and you’ll be able to find all that there. Bill, just a big thanks to you again for spending time with us.
: Great thanks for having me on it really appreciate. It’s great to speak with you.
Thanks tuning in to the outcomes rocket podcast. If you want the show notes, inspiration, transcripts, and everything that we talked about on this episode just go to outcomesrocket.health. And again don’t forget to check out the amazing healthcare thinkathon where we could get together to form the blueprint for the future of healthcare. You can find more information on that and how to get involved in our theme which is implementation is innovation. Just go to outcomesrocket.health/conference that’s outcomesrocket.health/conference and be one of the 200 that will participate. Looking forward to seeing you there.
Best Way to Contact Bill: