Albert Huang - Allotrope Medical - Texas Medical Center Innovation

[00:00:00] Giovanni Lauricella: Is it a bittersweet situation, even though the acquisition is going smooth six months later and life is good?

[00:00:11] Albert Huang: It was not what I thought. There's few people you can talk to about it, right?

[00:00:14] When you're going through the actual thing, it's a really lonely spot because there's no pity from anybody outside.

[00:00:23] You're on the edge of your seat the entire time while trying to pull documents together while still doing a myriad of negotiations and in parallel, your entire company can't really know about that because that's going to impact their morale, if things don't go well, your sales team is going to quit the next day . So you, you actually have to purposefully shield the team and then you have to, as a single individual, like manage the day to day of the company, but then also all those negotiations.

[00:00:54] Your legal counsel becomes your therapist. Because they're the only ones that actually know what's happening. There was a couple of moments I would call them up and I'd be like, I don't even want this anymore, right?

[00:01:03] ​

[00:01:03] Giovanni Lauricella: This is the MedTech Startup Podcast, and I am incredibly excited about telling and getting the story of the first start to finish in terms of starting a company in MedTech, exiting a company in MedTech, out of Houston by the founder who started it.

[00:01:28] And we have it by this gentleman right here, Albert Huang. Thank you so much for joining us.

[00:01:32] Albert Huang: A pleasure.

[00:01:33] Giovanni Lauricella: So the purpose of this is to talk about entrepreneurship, to talk about your story from start to finish. I want to start from bare basics for those who might not know, and certainly for all those who will be watching this around the world. Albert Huang, tell us who you are where did you come from? How did you build your life? And then ultimately, how did you lead yourself up to following or finding Allotrope Medical?

[00:01:57] Albert Huang: Sure.

[00:01:57] To start off. So, I've always loved to build. I always love to tinker. As a little kid, I worked on making guitar effects pedals and things like that. And having lived all over the United States because we followed my dad around in his work, like Tenacity, need to learn something new, always being comfortable in the uncomfortable was always inherent to me as I thought back to that.

[00:02:17] And then fast forward to going through regular education, I always wanted to be someone that worked with my hands and what's more noble a profession than going to medical school and becoming a surgeon, right? And so that was my natural pathway. Through all of this as I did things on the side like, continue tinkering. That evolved into working on like vintage motorcycles or old sound systems things like that. Trying to figure out why are things done the way they are like, how do you fix something, right? And so, as I was going through after medical school into residency, this mindset is what I always had as I was in the OR.The story I would tell for the genesis that became Allotrope is late one night in the operating room at this point now, probably eight years ago was working with a senior surgeon on a very sick patient to take out their colon.

[00:03:06] And then as we're dissecting, bloody field, stress levels are going up. We got down to three stringy tissues running across the field of view. And one of those things was a structure that we needed to preserve called the ureter that we were definitely not supposed to cut. And then the other two we could. But we couldn't tell what was what because everything looked the same. And then we ended up spending a ton of time doing a whole bunch of dissection, slowed the case way down, increased the stress levels way up, and then, as we're doing all this dissection, I looked at the head of the bed and saw the anesthesiologist using a little cheek stimulator. And I remembered back to the medical school days and said, oh, that's right, electricity makes different parts of the body move because that's how nerves interact and that's how muscles move. If I could capture that signal, different things move different ways, and if I had that signal, then I could make the structure move that I want to see, the ureter, and the other things, because there's just things you can cut, wouldn't move at all, and I could just move on with the case.

[00:04:04] That stuck with me, and then because I like to tinker after that case, I on one of my rare days off, I went to Radio Shack, I went onto eBay, and essentially hacked together an initial prototype of this device and started doing testing at Houston Methodist, piggybacking on other people's large animal labs.

[00:04:20] And then this became something that could be possible, right? And I threw caution in the wind and started Allotrope, and was part of one of the very early cohorts, actually right here at Texas Medical Center's Accelerator. When they were at that time separating medical device companies and startups from digital health.

[00:04:39] Andthis was the stage that I did my very first pitches for Allotrope. And then it built from there into what it is today.

[00:04:47] Giovanni Lauricella: That full circle closed loop of pitching here and then not telling your exit story. Yes. So what I wanted to frame is you were a physician who jumped right into entrepreneurship.

[00:05:00] With really not much stops in between or if any.

[00:05:04] Albert Huang: Yeah. And you don't just completely throw caution in the wind. So as I was making that transition, you think about. plan B, plan C, just like when you're running a startup, right? Leaving the clinical world, you have slightly awkward conversations with the chair of the department, but I always, to the credit of people like Barbara Bass, that led the department at that time, who became the president of the American College of Surgeons, understood, like, why I wanted to do that, understood my motivations, and understood that it wasn't just, I'm looking to quit.

[00:05:34] It was, hey, I understand that Albert has... This other way that he can contribute to health care and contribute to medicine and contribute to patient care. I'm not going to stand in his way to do that, right? And so taking time away and always making sure that there was an opportunity to potentially come back should I need to.

[00:05:50] I always wanted to make sure I walked that line.

[00:05:53] Giovanni Lauricella: And then tell that very human story. Yes. That you literally just one day you were. You were a resident, and the next day you were a complete founder, right?

[00:06:02] Albert Huang: Yeah, this was essentially June 1st, or July 1st, 2016. I started the LLC in May. By going online and clicking some buttons like we all did with our LLCs.

[00:06:13] And then essentially swiped out at Methodist where you, and you basically turn in your badge and I was like, this is it. I'm all in. And then came here, started doing the, all the startup bootcamp components, started meeting folks, started meeting investors. Rob Tucci's out there right now. He's, organization that it was called Houston Health Ventures, were the very first people that invested in us and believed in me.

[00:06:37] That's a guy with a 3D printed little stick on a table and a pitch deck that it's very embarrassing to look at now, we all have to start somewhere and, credit to folks like them and other people in the Houston ecosystem and beyond that saw promise in that. And, we're the ones that helped get me to that next phase of the company.

[00:06:57] Giovanni Lauricella: So I have to ask, do you believe that physicians have a competitive advantage when it comes to designing and building medical devices that other styles of founders just don't have access to

[00:07:09] Albert Huang: I think the physician taken into isolation has that deeper knowledge of the clinical needs and maybe even some of the human factors components, right?

[00:07:16] Because they understand the workflow in the operating room. They understand ergonomics a little bit more than an engineer that would have to reference other folks, right? But I think a lot of that knowledge stops where the engineer really needs to pick up. It's okay, I... I know what feels good, but I don't know how to design that necessarily for most stocks, right?

[00:07:35] I think the reason that medtech has always resonated with me is I like design. I like aesthetics. I like thinking about all these other pieces and looking at them as challenges. And having spent my younger years in the engineering space too, it's like I bridged both of those worlds inherently as a mindset.

[00:07:51] And then at the same time I was hopefully smart enough to know that I didn't know everything and then bolt up and bring in people that could help. Meet you when it was time to formalize a lot of these ideas that I had.

[00:08:02] Giovanni Lauricella: Then going from being a physician to now this founder and building a technology and more importantly, building a company around this technology, nothing prepares you in medical school for business or running a company.

[00:08:17] So talk about and highlight that entrepreneurial journey of being a physician and then being thrown in the fire of the back end of a business, building a team and leadership IP.

[00:08:31] Albert Huang: The School of Hard Knocks, right? Literally.

[00:08:33] I was very fortunate enough to have folks that were founders themselves, physicians that were dear friends that ultimately sat on my board of directors that gave me that mentorship. They had gone through some of these early components before. One of the people that's a dear friend that sat on my board is Don Gonzalez, an ear, nose and throat doctor. sold three companies. I met him when he had just closed the series A on his first company and he disclosed to me. " I'm not sure what to do next". And then all these years later, like his last company exited to Stryker for half a billion dollars, right? With an idea that he had in his mind.

[00:09:06] And so having people like that provides you the guidance. And then very quickly after I started the company, my first hire was somebody that I was older than me and was more experienced in the med tech space than me, and we worked together as a team to move it forward, right? At no point. In the company. Did I ever say I know more than this person that I hired or this other consultant or things like that. My goal and my style was I just want to surround myself with people that do their job and do it really well because I can't do that job, right? I can. I have a broader vision of what the technology should look like, how it should work and the clinical application feeding on the clinician side of me. But all the FDA documentation, all the human factors, engineering studies, like all the formal things like that. I brought in the people that I knew are going to do that better than I ever could, right?

[00:09:58] Giovanni Lauricella: One of the hardest parts about entrepreneurship in general, but certainly with medical devices and especially all of us can attest to what happened for the past year. How did you even start and learn about the fundraising game? Where did you even learn when you had to go out and think about external capital for the first time and that process of pitching and decks and angels versus safe notes versus convertible versus Vc's.

[00:10:22]

[00:10:22] Albert Huang: Anytime I heard some new term or some new phrase or some new investment vehicle, I went and read about it.

[00:10:28] Talked with other startup founders that it may be raised some money even before I had met them and asked them about all these different things and then just continue and constantly be learning about the process. That was really it, right? And learning from everybody else that maybe was a few steps ahead of me and their company to be like, hey, think about this type of investment vehicle instead of this, because if you're doing grants, then you can't have debt on your books, so you need to have safes and not do convertible notes, like things that you're learning from their horror stories and their their scars so that you don't have to have as many, right?

[00:11:06] And I always did that, right? Very much focused on asking other people, what have you done and why? And that's how I go about life. I never say I know it all. It's I've learned it from all these other people and little bits and pieces from everybody else.

[00:11:19] Giovanni Lauricella: Would you say it's a game of trial and error?

[00:11:22] Albert Huang: To a certain extent, and it always will be but I think the goal is, and what would keep me up late night is that I'm trying to minimize the errors at every one of these steps, or if I did make an error that it was not going to be a catastrophic one, and that it's one I can come back from and I can learn from it. I think just like life, it is a game of trial and error, but your goal is to always minimize those and always have a plan B, plan C, and maybe even a plan D in place.

[00:11:45] Giovanni Lauricella: Tell the learning lesson of raising capital, that seven year stretch, starting in 2016, exiting in 2023,

[00:11:54] That's seven years. What was the, this, the raising capital story leading into that? Was it a seed, a series A. How did that look and feel?

[00:12:00]

[00:12:00] Albert Huang: That first round was 350, 000 dollars and it was the hardest earned 350, 000 dollars I've ever made in the company. And that was all from, really predominantly like local folks, Houston Health Ventures leading that round, having those discussions.

[00:12:14] And then because it was just me and I wasn't taking any salary, I was like, this is going to stretch us quite a long time. It's nice early on because it doesn't get expensive until later. And then knowing that. You started need to think about inflection points to use for raising, right? Because the money comes in and then it only goes out, right?

[00:12:34] That, it just continues on a downward decline until you take more capital in. And so I needed to think about internal and external inflection points on how to bring money in. So I always had a backbone of government grants for a while that would help give us little chunks to keep us going.

[00:12:48] But then thinking about, okay, what's the next design I can do, or what's the next de risking step. And some of the de risking steps that I did early on was building a higher fidelity prototype, showing how it works in animal labs, showing that I can create a prototype that works with the DaVinci robot.

[00:13:06] And then, those were internal things I could do. But then, bigger inflection points were, I said, okay if I apply it, if I get into Y Combinator, like we did, then that's an external de risking step. That I could use to bring in a little bit more capital as like a bridge round, right? Leading into YC, which would also bring in some money.

[00:13:24] I could raise money leading up to that because there will be investors that say, Hey. I wasn't sure about it before, but if they believe in you, then I'll throw some money at it, right? And then, so using that to raise money, and then post YC, of course, with their demo day, raising money there. Probably the mid stretch of that was a lot of, different types of bridge rounds, and even a brief period of time of doing convertible notes as we were nearing deeper discussions with strategics, another de risking step until we got to the point where FDA clearance was on the horizon.

[00:13:53] And then that's a major de risking step. And so that's what was used to galvanize a series A, knowing that larger amount of funding was going to be used for commercialization. And then so raise that amount was able to hire the best of the best for sales reps, for commercial leadership, and then really accelerated over the next two years to get to the point of that acquisition inflection.

[00:14:14] Giovanni Lauricella: This building phase that you went through.

[00:14:15] And I want, you mentioned Y Combinator, so I want to jump into the accelerator awareness.

[00:14:20] You started here at TMC. Y Combinator. And then you also graduated from MedTech Innovator. Talk about what each of those gave you in its own components, and why would you recommend early stage or first time entrepreneurs to heavily consider accelerators?

[00:14:36] Albert Huang: I wanted to think about every move being purposeful, right? And of course, the initial obvious landing spot to even know that this had some level of credence was to go through Texas Medical Center's accelerator. So that provided me the foundation. of knowledge, put me around other startups so I can understand what is this new world that I'm now entering into.

[00:14:58] What should I be doing? What should I be thinking about? What does that kind of near term, 6 to 12 month runway look like? And then start putting me in the mindset of building out Excel spreadsheets for design and things like that. Then, I took a step back at that point and thought about, okay what are the things that are needed to get a small startup that nobody knows about a level of awareness on a national level, right to advance the company for in a meaningful way.

[00:15:23] And there's two things, right? Your acquirers need to know you exist. So industry needs to know you exist. And then you also are always going to need money. And so in those two buckets, MedTech Innovator is the best way and at zero equity, right? For you to fast track into the most visible way for all the major medical device companies or even minor ones to know who you are.

[00:15:47] So I aggressively pursued that and was fortunate enough to be in that program, get to the finals, get second place, raise a lot of the visibility that led to a lot of discussions with a lot of the strategics that way and onwards, right? So it shows that you're a serious player, even at a very early stage.

[00:16:03] So I did that one. And then Y Combinator was... A vehicle and a tool to help you build a very strong Bay Area network, but also to help you raise funding. YC is great at helping give you investor awareness. Their demo day, can help you raise a lot of money leading up to it can raise a lot of money.

[00:16:21] And then afterwards, some of the really big checks that we had actually were people that we met during demo day and continue to follow us along and invested and reinvested in us. So I picked those programs for those reasons. I know that it can get tempting to get into accelerator churn, right?

[00:16:40] It's oh, I got into this one. Then I got into that one. But if they don't actually help you advance your company and maybe just give you like a 20, 000 check and then consume its honey or time, it's actually not really helpful, right? Then you never graduate from that world. And so after those, I didn't do any more.

[00:16:55] Because I was like I. Everything else we just need to do internally in the company. So that's how I thought about those in a very strategic way.

[00:17:03] Giovanni Lauricella: You talked about raising capital. You talked about hiring a stellar team. I don't know how big your team was, you can let us know, but I'm assuming there was a lot of industry partners, even these accelerators that helped you out along the way, hit these milestones. How much of that can you attribute to what Houston and Texas can offer other medtech entrepreneurs that they gave you?

[00:17:26] Albert Huang: So I think very early on, it gave me a lot, right? It gave me the foundation to know how to set up everything in the company, right? And give me awareness through the accelerator program as it used to be here. All the different pieces and parts, right? It's hey, this is what they want to see in a pitch deck.

[00:17:43] Here's what a pitch deck story arc even looks like, right? Like yours doesn't have that, now it did. And then here's what like a template for budgeting looks like, right? And then here are some of the folks we can put you in touch with from a network perspective on regulatory strategy and consultants and things like that.

[00:17:58] They as an entity and Houston as a whole helped me lay that foundation. And then, of course, the Texas Medical Center that I had come from. There is a very easy access to a huge pool of clinicians that can continue to give me feedback. Senior doctors that I'm like, Hey, I have this hypothesis on the design, but I can do human factor studies here, right?

[00:18:17] I didn't have to go anywhere else to do the human factors engineering work for the FDA. I did it all here, right? So that all that was really attributed to physically being in this location. As the company got more complex. Then I think naturally you need to reach beyond the city's boundaries because if you're looking for the best of the best, like some live here, but not everybody does right?

[00:18:38] And a lot of us are dispersed throughout the U. S. And in the world these days. And so I never let myself be geographically isolated, like the chief of operations, lived in Denver, the whole time, right? My chief commercial or my VP of sales for when we exited, lived in Florida and then our sales team needed to necessarily be everywhere.

[00:18:57] So actually after the first couple of years of the company, like I was like the only person in Houston. But you can run these companies virtually these days, right? So I saw the value of being in Houston and having that company headquartered in Houston being part of the ecosystem.

[00:19:11] But the rest of the team did not need to be here or come from here for us, for it to all work.

[00:19:17] Giovanni Lauricella: By the time it was acquired, how big was the team?

[00:19:19] Albert Huang: Oh, yeah. So the team at acquisition was a whopping seven people. Of which five people were all on the sales side, right? There was myself, my chief of operations, and the VP of sales. And then we had we had four sales reps of different calibers across the United States.

[00:19:33] Giovanni Lauricella: So then educating a pool of entrepreneurs that are thinking about building their own startup company and they haven't raised capital before, etc. An acquisition that occurred with seven full time people, most of those commercial, like you mentioned, which I'm assuming came later in the life of the company.

[00:19:50] Albert Huang: Yes.

[00:19:51] Giovanni Lauricella: How important is selection of good industry partners for a startup?

[00:19:55] Albert Huang: I think it, it always helps, right? Because you're always looking to build your network and increase your visibility. So I think network industry or just within the life science or startup community is always helpful. Cause that's even how I found my chief of operations.

[00:20:07] It was actually my board member talking to somebody else. And then that other person happened to run into the guy at a just a networking event, right? Yeah, without network, I wouldn't have met any of the people. Even my VP of sales was the VP of sales for my friend's company. And when they exited, she called me and said, Hey, this guy is available.

[00:20:26] I've gone through five of these folks before, and he's the real deal. And then so it's pieces like that, that you always just have to have an ear out for and to think about who do you want to bring in.

[00:20:38] Giovanni Lauricella: So going back to Houston and then greater Texas, telling that Texas innovation story. Seven years ago when you started versus today versus where this ecosystem is going, talk about Houston and Texas and what's the good, the bad and the beautiful about being here and what the state and also the city can offer.

[00:21:00] Albert Huang: I've always been, once I started here and seeing the trajectory that everything in the medical center is doing and things that I know that are happening in places like Austin, I've always been all in on Houston and the promise and what it has to offer, right?

[00:21:11] Texas Medical Center has built this, they doubled out on this, they're doing TMC3, they're building. There's the Ion now, right? These places did not exist six years ago. I've seen a lot of these things change now, and these are all big ships that need steering, right? So you see, in the past, all the different hospitals were all truly just frenemies isolated from each other, not talking to each other. But then building things like TMC3, you see them now starting to interact and starting to share startups and companies and opportunities to work with different partners. And that more and more with that. Also with here places like the Ion, right? Even Houston Methodist is now putting a facility and individuals and part of their employees there because they're wanting to reach outwards and engage with the community and be present where all the other startups are that wasn't there six years ago, right?

[00:22:02] In part because maybe nobody wanted to be the first and you needed an external entity like the TMC, like corporate entity to be Switzerland and offer like an even playing field for everybody and those just take time, right? So I think it's as exciting time as ever now for Houston to be a hub for all of that.

[00:22:21] And most of the time, what. All the other startup founders that I talk about is like fundraising and money, and I think it's slowly starting to come in, right? And even the local folks that have the capability to open up big checkbooks, they need to see more of these wins, right? The more Allotropes there are, the more like Volumetrics there are, things like that then it's gonna be de risked in their mind and they're gonna feel like, okay, like this is another thing that I can put, some opportunities into instead of, buying another car, maybe. It's things like that.

[00:22:53] Giovanni Lauricella: Given the fact that you started and took it to the end, R&D clinical stages, commercial stages, what's the most challenging?

[00:23:01] Albert Huang: Just cause it's also most recently my commercial was a completely different beast, right? I like it, and I think it's also in life where hindsight's always Oh, I didn't realize how good I had it back then, I didn't realize how good I had it back then.

[00:23:15] When we're doing early phase R& D into even first in human, things like that. Everything is all internal, right? You don't need to share anything with anybody else. There's no other metric external. It's I just need to build this thing and get it to work. Different ways of getting it to work, right?

[00:23:30] And then all you're ever thinking about for medical devices is regulatory clearance. From day one of you starting a company that's the big, that's the summit of Everest as you saw it there, right? But then, once you get there, the clouds part, and you realize there's a much higher, much more complicated peak that is commercialization, and now all your metrics are external.

[00:23:51] One of my board members, Don, he told me as I was getting close to there, he said, once you get there, it's going to change because up until then, when it's R&D, you share what you want to share with the strategics or with investors and things like that, right? You meet with them once every six months at a conference, maybe like you share what you want.

[00:24:10] So the moment you're commercial, people are going to judge you every single day. And that was never more real than when we went commercial, right? Every single case, a physician's judging you based on the performance, based on the perception of the technology. The hospitals are judging you because they, decided to let you run a trial.

[00:24:28] And then anybody that's potentially looking at you for acquisition is looking at your traction. And traction's... At that early point is measured day to day, week to week, month to month. And everybody expects to see some insane hockey stick. And so commercialization was the most and still remains the most challenging because it never stops, right?

[00:24:48] There's no perfect recipe. That's just a static recipe. You apply. Even now, as we have been acquired, like we're still constantly thinking about,the strategy towards sales and refinement of messaging. It never ends right. And And that part's the most expensive too, because we had talked about earlier, you know, five people were hired on the last two years of the company and yeah, that gets really expensive.

[00:25:11] And then also for me, the learning of how to manage people, right? Because now it's people that maybe not necessarily are. Used to the startup life, right? They have families, they have careers, they expect a 401k. They want health insurance. I was like, we didn't have health insurance until then. It was a completely different ballgame in all aspects of the company.

[00:25:32] Cause it wasn't about does the thing, can I get this thing to work anymore? Now it works. Now we got to sell it. And that was a totally different mindset shift. So traveled a lot and slept even less.

[00:25:43] Giovanni Lauricella: So the one liner of the Houston story of starting and exiting a medical device startup here by the founder, that's the one liner, this journey of first time entrepreneurship, and then, like you said, the challenge of commercialization, but it's no longer this passion project of an idea that you had in the shower or whatever it may be, and you literally took it and continued building it and going through these accelerators and hiring teams, hitting regulatory milestones, other additional milestones. And then this daunting commercialization, not many first time entrepreneurs, let alone other special, specialized executives actually go the full way.

[00:26:25] Albert Huang: Yeah.

[00:26:27] Giovanni Lauricella: There's a lot of times that we talk about engineering founders or other physician founders who make this inflection point at some journey along the way. That they decide to bring in somebody else.

[00:26:40] Albert Huang: Yeah.

[00:26:41] Giovanni Lauricella: What deterred you from doing that?

[00:26:43] Albert Huang: I was always self aware from day one, right? The way I thought about it as well, if I start the company and it's just me, I'm de facto CEO, it was never about the title. I didn't really care, but if I'm the one that's always on stage, I'm the one that's always reaching out to everybody I got to remain CEO, at least for a period of time.

[00:26:59] And the idea was mostly in my mind, not somebody else's. I took it all the way because. Other people, like my board members, my friends were the ones that said, I think you could take it all the way. And these are folks that have done their own companies, but even they have never been in the driver's seat the whole time.

[00:27:18] But they said Albert, I think you could actually do this. And by having people that believe in you and having those cheerleaders, my mindset was always. I can figure this out as I move forward, but always I had this check, self checking mechanism in my mind saying, if at any time I am slowing down the company and jeopardizing company success, like I don't need the role.

[00:27:41] I don't need the title, right? I'll cede control from that leadership position and do something where I'm still providing clinical benefit or whatnot. I actually, my thought was that. And I knew that probably the last step and last place that I could actually be valuable to the company as the CEO was probably only through early commercialization.

[00:28:04] If we had to go do a series B and do a growth round where really the focus is just how far can we push this on a commercial and do commercial traction. I, even at that time, we were talking to early investors. I was like. I won't be that person, right? I will actually hurt the company at that phase and because I don't know how to do that.

[00:28:23] I don't even know how to do where we are now, but I can work us through all that. But I knew at that point if we had needed to do that, that I would actually I would have advocated to bring on a professional CEO. Or an operator CEO to do those roles because that would have been a role that somebody would have done like for a good portion of their career.

[00:28:40] So I was always thinking about that, right? Definitely R&D and whatnot, because it's an idea that I came up with. It made sense for me to lead a lot of those components and then selfishly, yes, I wanted to learn about this, right? Because there's no school that teaches it, so you're learning by experience as well.

[00:28:56] So I did want to do that, but I always wanted to make sure it was never at a detriment to the company.

[00:29:02] Giovanni Lauricella: Making that decision and then getting the exit. Everything that preceded that, is it luck or effort building a medical device company?

[00:29:10] Albert Huang: Both. As, as it probably should be, right? You and I always think about what can I control, right?

[00:29:16] I can control aspects of R&D I can control aspects of our cash burn. I can control when and how I engage with strategics or potential acquirers or things like that. What I can't control is certain aspects of timing, right? The stock market, it goes a little sideways and then now publicly traded companies like, Hey, we're putting all M&A discussion on hold.

[00:29:38] I have no control over that. And so you learn some hard lessons that way where like you think it's going one direction and then in five seconds or five minute zoom calls, something completely vaporize. You just have to keep moving forward and understand in your mind like that, that you always have to have that plan B plan C and that's why I think most founders don't sleep very much because you have to be a little bit neurotic. And distrustful of a process, like the entire time until it's done.

[00:30:05] Giovanni Lauricella: So then the actual story itself, the story of an exit, and there's a one liner that we may have heard at other conferences and they say, companies are not sold, they're bought, but you have an acquisition story. And once again, going back to this first time entrepreneurship, building the device, building teams, building a backend of a company.

[00:30:32] And then you ultimately ended up selling it. But, did you have that North Star? Did you build into the abyss? What is that actual exit story?

[00:30:41] Albert Huang: From the beginning of the company, the idea was always for it to be a tuck in acquisition. I was always striving for that. My board understood that they agreed with that.

[00:30:51] This was always a product that was not going to be like this giant thing that was going to IPO. It didn't make any sense, right? I always had this goal. This is an M& A. And that's what it needed. And so the build and the building, of course, up to FDA clearance was like, that's a de risking step. That's a very easy one, very linear path.

[00:31:07] But then when we got to the commercialization portion, all the discussions that we had been having since day zero of the company with all the different strategics. Was leading to that moment, right? All eyes were on, okay you've de risked all these other things. You align with us with a lot of the other products that we have.

[00:31:25] Now I want to see if people are going to actually pay for it. And how does it work? And so my mindset was, I just raised a series a, I have a very rough, pretty narrow, golden window where I'm not going to be tagged to multipliers of revenue. I'm going to be tagged on and based on the potential of the technology.

[00:31:49] But once I'm outside of this two to three year window, then the expectation is going to be revenue driven. And then that's what I'm going to need to raise a series B and then it's going to push any acquisition out much further because you're going to want to have multipliers or whatever that revenue is going to look like.

[00:32:02] So I drove super hard during those first two years to figure out the right strategy. to show, Hey, if we put a sales rep in this city, this is what that one rep can do. Like they're not going to generate millions in revenue. It's going to pay for the company, make it profitable, anything like that. But to show that I can replicate that.

[00:32:22] And I have a playbook that says, this is how you train a rep. And if you put them in the city in this duration of time, they have the potential to reach X. And then we have a team of four sales reps. They can't even with four keep the lights on for the whole company. We're still operating at a loss.

[00:32:38] But, oh, bigger company, you have 15, you have 100, you have 200 reps, then you can do the math, you can see why this is a potential, and then let's have that conversation, right? And so I knew I needed to set it up for that, and then at the same time, I'm faced with either raising a series B and pushing out the timeline for a potential acquisition much later, or do I drive for something now?

[00:33:01] And then as a small company, I realized like we don't have a lot of levers, right? It's you can tell a big company, whatever you want and be like, Hey, I got a lot of interest. They'll be like, yeah, whatever. Like they don't care. Until it's push come to shove. And so as a small company, you don't have many of those levers.

[00:33:15] So I knew that I needed to use something or somebody bigger than me. And that's why we brought on an investment bank. So I use an investment bank as the tool to first sift out all the tire kicking companies of which like there's a lot. They'll tell you whatever they want, but like a lot fall away. The moment it's actually a big bank coming in and saying, there's a lot of interest in Allotrope so they engage us, they want to formalize the process and here's the timeline.

[00:33:44] If it's a bank telling them that, and the bank probably already sold companies to them, like they know you're not wasting time. right And so it was a big, it was a big play, right? Cause it's going to work or it's not right. And if it doesn't work, then you definitely like. Are needing to raise more money. You're not gonna be in a great place, but there's no in between, right?

[00:34:01] And so I work with the bank and we essentially ran a formal competitive process, right? We're doing meetings with all the different companies. A lot of them fell off right away. They're like, Oh, yeah, it's not like it actually wasn't in alignment, and that's actually good, right? Yeah, They were going to waste your time the entire time and some of them had been talking to us for years and I thought they were going to be, oh, yeah, this is going to be who we were going to go with. Right? And then but then by using the investment bank, it shows that you're serious and actually can accelerate some of the things. And then companies like NTI ultimately acquired us. Stepped up and said, Hey yeah, yeah, yeah we told you we were interested. We actually really are, let's have that deeper discussion.

[00:34:40] And then here's our offer. And then, so we actually get the right people to put forth the real effort and we see who's actually not wasting time and truly wants to see synergy. And then, so working with the bank, we drove that process, and then in the midst of that process, I get to see what all the different offers look like.

[00:34:56] We get to meet the potential acquirers, talk to the companies, and then you actually get a chance to choose who do you want to engage with and move forward with it, ultimately NTI culturally. Product fit messaging, everything aligned really well. And I knew that not just for the company and not just from an M&A standpoint, but the, my entire team was going to have a new home with this company too, right?

[00:35:20] These people trusted me with their salaries, their livelihood their 401ks, right? It can't just be like, Oh, yeah we sold the company, whatever you guys find another job, right? It's no you risk your career, your time to join me. It's my responsibility to make sure you have a good landing.

[00:35:37] And so for all of them, part of the negotiation was it was a flat transfer. Like they basically didn't see any difference, aside from getting a payout from their component of equity, which I also made sure everybody had in the company as a rule that they all still work for this other company and they all like it and they just do exactly what they are already going to do or what they have been doing for the last two years.

[00:36:00] Giovanni Lauricella: So all these companies that are gearing towards or hoping for what you've done, there's this balancing act that you clearly figured out with timing and a lot of risk and I'm sure a lot of sleepless nights, this idea of courtship with corporate strategics and once again, we understand that this was all a new learning lesson for you because every step of the way was how did you manage that balancing act with the corporate strategic and what is some of the behind the scenes things that people should be aware of how delicate it is with these relationships with corporates?

[00:36:36] Albert Huang: Yeah. I, a lot of it, like I started to, earn some, maybe at this point I'll have a bachelor's degree in like psychology or human psychology and motivation. I realize it really comes down to a lot of that, especially if you're working up through the chain, right? First of all at a baseline, table stakes, the companies need to know you even exist, right?

[00:36:56] Hence doing things like MedTech Innovator or whatever, or being at the conferences, so you are building that relationship or starting that with the business development person. So they even know you exist, right? Nobody's that they found yesterday. It's going to be year plus and then a ton of diligence before that's even possible.

[00:37:13] And I think the biggest realization I had in the midst of is that for that to work through that nebulous internal process and even more so as a bigger company is that each person needs to sell this up the chain and they need to, it needs to make sense for them, right? It's actually a higher risk for somebody on the business development side to push.

[00:37:37] And promote a company up the chain because there's just like everything else. There's a higher probability that acquisition may not go well, right? Or be mediocre. And then it's going to, the perception is going to fall on that where they're consciously or unconsciously Oh yeah, Albert wasn't one that brought that in and like it tanked and failed, right?

[00:37:54] You're actually disincentivized to bring in new technology sometimes for some of these companies. And so that's why it behooves you to build that relationship as early as you can with all the companies, because. Especially when the company is one person or two person, it's the product of the products, you, so they got to believe in you and then you need to establish that level of trust that, hey, every six months when I see him at that conference, he told me last time he was going to do this and now he did it.

[00:38:19] And then he says, I'm going to see you in six months and I'm going to do this. And then he did it or he exceeded it over and over again with every one of these companies. And that's the only way it works, right? Even when we met with NTI, we met at a. surgical conference. We were already on the market, but we shared what the technology did, where it was going to go and what were we doing.

[00:38:37] And then over time we met. And we would have intermittent meetings at conferences at their offices showing here's what's coming next, even in the short term, and we achieve it and we achieve it and we achieve it and then that gives them the confidence in actually saying, yeah, this is something that we want to take in.

[00:38:55] Giovanni Lauricella: So you told us that story leading up to the time that you could say that Allotrope was acquired. We're coming up on almost six months later. That story of building to the acquisition is one piece. It's a huge piece, but also with also the story of going through an acquisition and now you're the chief medical officer for NTI.

[00:39:14] So what's that after party story?

[00:39:16] Albert Huang: Yeah, it's it's interesting because I've never worked a corporate job in my life, right? And NTI is not gigantic, so it's not super corporate. There was a lot of adjustment, probably more for me than for my team. The sales team, most of them had worked for big medical device companies, so that's what they did.

[00:39:30] So they're like, it's just another day for them. For me, it was getting trying to figure out where I fit in all honesty. Like the NTI never had a chief commercial officer before. And so to their credit, they're like, Hey, we want to use this title and we're going to try to see like where you fit in.

[00:39:46] So I would say the first three months were just trying to figure out what was my voice in the company, right? Cause before, not like I made any unilateral decisions, but like I steered the ship right now, I was very used to doing that. It's we should do this. And I'm going to provide the board the reason why, but we're going to do it.

[00:40:03] And now it's oh STEM site's like mine, and they're asking me about stuff, but they also have a commercial lead that's like doing these things, and oh, they have a marketing department that's like doing these like pushes online, or doing the conferences. So trying to figure out where I fit in to all that is, is, was What's the next kind of learning for me?

[00:40:22] And I still continue to do that. But to their credit, like they enter the whole, like engages with me. They didn't ask me to move because they also see the value in Houston. They're like, we're keeping the office here. We're not asking you to move to the outskirts of Chicago. And then, and here's all the conferences that like we want you to stay engaged with and talk to them and leverage your network too.

[00:40:43] So it's now settling in a little bit more. I would say like the nice thing is that it's a. It's a little bit more of a relief because now all of the fundraising investor management and and thinking of thinking about runway, all that stuff fell away literally the night that we signed the paper, right?

[00:41:00] Then it's no longer a company that I'm responsible for. That's been really relieving because now I can focus on the whole reason I did it right, which is create a clinical product that can help people. And I can see it now scale from my four people to 15 across the United States.

[00:41:15] And then now I go and bolt up to them and help support them as they talk to more and more docs and see the technology used in more and more cities. I can sit here and have a conversation with you, right? That's that was the fundamental dream and it just happened to require building a startup around it to do that.

[00:41:30] Giovanni Lauricella: So we talked about the full loop of you first pitching Allotrope on this stage, telling the acquisition story on this stage, full circle, but you also had mentioned to me that you started the concept or the idea of Allotropes technology at Methodist. And one of the more proudful things that you have in your life right now is the fact that it's actually being used there.

[00:41:52] So talk about a full circle and loop.

[00:41:54] Albert Huang: From the beginning because the medical center is so big and because there's so many opportunities here and because there's so many research facilities and then at that time, an early stage med tech kind of community that continued to build to what it is today, I saw that I was not alone.

[00:42:11] I saw that there was this potential to do the full circle here, right? In many ways, like maybe sure funding had to come externally and maybe had to do YC because their Bay Area more established. But all roads ultimately kept leading back to Houston, right? And then, so once we got commercial and then even a lot of our animal labs were done here because there's so many opportunities and facilities, like there's no reason to go somewhere else.

[00:42:35] One of the obvious potential customers was going to be Methodist, right? Being a big hospital system, them Herman or the two bigger ones. And so when we had our sales rep here, that's. Some of the places that we went to first, right? And indeed, once we got the purchase order, installed the device, and we're doing first cases, and it's like I'm walking in and I'm actually the outside person.

[00:42:59] I'm the rep wearing the red like scrub cap and like the paper gown, which I hate, but but being that and then talking to somebody who's wearing the Methodist badge that I used to wear, more than half a decade ago was a little surreal, right? Okay, now it's literally back in the ORs.

[00:43:15] Under the same hospital umbrella that like I came up with the idea like that I guess for me in many ways like Completed the story that I wanted to tell just even for my own benefit from when I launched it.

[00:43:30] Giovanni Lauricella: The psychology of entrepreneurship. It's a funny thing And you have this huge adrenaline rush of starting a company, the ups and downs of building a company.

[00:43:40] And everyone wants to be an entrepreneur, likely until they're an entrepreneur, and then they decide to either continue or hand it off. But this whole Netflix idea and celebration of, companies and I want to exit for a hundred million dollars and three hundred million dollars or whatever it may be.

[00:43:54] But this whole idea of exiting and just building a company and exiting. You did that. Psychologically, is it a bittersweet situation, even though the acquisition is going smooth six months later and life is good? Is it what you thought?

[00:44:09] Albert Huang: It was not what I thought. That moment is actually and there's few, and there's few people you can talk to about it, right?

[00:44:15] That, because everybody, like you said, says, Oh, you're going through an M& A. That's awesome. I need it. They think what they think on the other end. And those may be true, right? You're like, yes, there's going to be like a component of a financial windfall, whatever. But when you're going through the actual thing, it's a really lonely spot because there's no pity from anybody outside.

[00:44:36] Because they're like, I'm envious of your position. Like rightfully but in that moment, everything that you have to deal with and the fact that it is still so fragile there's nothing that keeps the company from saying, Nope, I changed my mind or we're going a different direction at any stage, right?

[00:44:52] They could do that. So you're on the edge of your seat the entire time while trying to pull documents together while still doing a myriad of negotiations and in parallel, your entire company can't really know about that because that's going to impact. Their morale, if things don't go well, right? If it doesn't go well and everybody expected it to, like your sales team is going to quit the next day and then you're in an even worse position, right?

[00:45:18] So you, you actually have to purposefully shield the team so they can do why, what you hired them for and so they can do well and not have to worry about that. And then you have to, as almost a single, actually as a single individual, like manage. The day to day of the company, but then also all those negotiations that and the pieces that come within, right?

[00:45:38] And that part, I remember like you and like other people that have gone through and told me the same thing. They said your your legal counsel becomes your therapist. Because they're the only ones that actually know what's happening and are helping you with that. And do it, pretty objectively. But yeah, like there was a couple of moments and during like tense discussions. Or I would call them up and I'd be like, I don't even want this anymore, right? You never would think that you would be there in hindsight, you're like, yeah, it's just, but there's just moments where you just don't know how it's all going together.

[00:46:11] And I can only imagine for a more complex company, right? Like ours was obviously relatively simple, yet the mechanics and the documentation, the negotiations and the wait times of oh, here's the contractor, here's the thing, we redline and we send it back. And they could. On certain things. If they didn't want to move like we couldn't move on it.

[00:46:29] And then so what could we reach an impasse? Could they say no? Could they just hold on to it for weeks at a time? There were so many things not in your control, even though you're objectively at the cusp of completing it, right? These like the stuff, even with both sides working towards the common goal, it was right up until the very last moment that we both.

[00:46:53] And there was crazy things that the world would throw into the mix of this. We bank with Silicon Valley Bank, right? Our bank goes under in the middle of the transaction as they're, like, going through financial diligence, right? There was internal leadership and team changes with our investment bank in the middle of our transaction.

[00:47:09] So the team that started the process... Was not there from our investment bank partway through the process as well. And then at the very end there was actually random IT issues that were keeping the company from making, from having their legal team sign the document when they were supposed to.

[00:47:25] I'm like, I don't even know are you telling me the real thing? Is this a really IT thing or is it like a big problem? You have no idea until finally this email just pops in and you're like, and the doc, and then the documents show up and then the lawyer's it's done. That is the most like anticlimactic thing but yeah, it's it's all of those things.

[00:47:40] And the whole time you're just a total nervous wreck. But on the outside, when you have the team calls, you're like, everything's going well. And then everybody on your side is asking you because they are excited, right? As they should be. But you're like, I want to answer your call and I want to tell you, but I got to do it too.

[00:47:56] And yeah, that, that is not a nine to five job. Even though startups are not like this was definitely not it was it was a very Stressful situation. I probably don't want to go through again for a while.

[00:48:07] Giovanni Lauricella: So you've accomplished something that very few do and many try and it takes a village for success. Mentors that have helped you along your life your physician career your entrepreneurial career where you are now who do you want to give a shout out to?

[00:48:26] Albert Huang: I mentioned him earlier, but again, like Don Gonzales, one of the most giving smartest people that I know that I happen to meet because we lived in apartments right next to each other. And he set me on this pathway as a physician entrepreneur himself. He was the first person on my board of directors.

[00:48:45] He was a perpetual cheerleader through the whole process, helped every way that he possibly could also invest in the company and help bring funds in all because he believed in me before he believed in the technology, right? Ultimately they had, they aligned, but Don was number one. And then my second board member Mira Sani, who is now a higher up at Medtronic, but I met her through Don, but she was also somebody that always provided objective, clear, Input and opinions, but both these people believed in me and then the technology and the company came with that, right?

[00:49:22] And I always have these people that were pushing me and saying, even in moments where I was questioning myself or saying, no, you could do this. You got this. Here's the next step. You can't see where the next pathway is. Let me tell you what I think it should be. And then you make that decision, right?

[00:49:39] And I'll give you feedback. And so those two people, I would not. Be here if it wasn't for them.

[00:49:44] Giovanni Lauricella: So for all those of you who are here watching, this is the Medtech Startup Podcast where we just listened to the mind the heart and the gut of Houston's medtech entrepreneur who successfully sold off And got acquired Allotrope Medical in April of this year.

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[00:50:04] Giovanni Lauricella: And everyone, please give a round of applause for the Houston story. Thanks so let me jump off stage.

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