Caitlin Morse - Brainspace

[00:00:00] Caitlin Morse: And really for the first five, there was one reason or another where we went, no. Or Hey, it's gonna take VC level dollars, but it's not gonna do a VC level return. Right? So finding something that really was that goldilocks that checked all the boxes, took a while. And actually along the way the consultancy grew to the point that it made it harder and harder to leave because now I'd built this thing successfully and, you know, business was going well, but that was exactly what we needed because it meant that we didn't prematurely take an idea just because it was an idea we had to really take stock of am I willing to blow up what is now a successful business to build a bigger one.

[00:00:37] And so that's really, BrainSpace was the first one where we said, okay. This, this I believe is actually worth it.

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[00:00:47] Giovanni Lauricella: We are here with Caitlin Morse and this is the Med Tech Startup podcast. We were about to get inside of her head, her heart, and her guts.

[00:00:55] We actually just finished up an amazing panel called the MedTech Startup Equation, which Caitlin was on.

[00:01:00] We talked about how startups are driving their companies to hit milestones, or I should say entrepreneurs hitting those milestones. And Caitlin did a phenomenal job. So we are here today to learn about Caitlin. We're here to learn about her company, BrainSpace and that story. And then a lot about what it means to be an early stage company and start up in med tech, hit those milestones that she's achieved in her three years of being an entrepreneur in addition to all the thoughts and information and experience that she's gathered that is really leading us to what MedTech entrepreneurship looks like now and into the future.

[00:01:31] So Caitlin, yeah, thanks for making this happen

[00:01:35] Caitlin Morse: Absolutely. Thanks for having me. Fun to get to see TMC and be in Houston. This is great.

[00:01:39] Giovanni Lauricella: I want to, um uh, start with learning about more who you are, tell your story.

[00:01:45] Then we'll learn about BrainSpace and then we're gonna talk about some big topics that you have in mind about how you've built your company and just the industry that we play in. So tell us about who you are.

[00:01:53] Caitlin Morse: Yeah, absolutely. So I grew up moving around a lot. Lived in many different locations in a few different countries and that really gave me a global perspective at a young age.

[00:02:04] So I had, when we were living in England, friends from church who were in the middle of civil war, moving back people who had moved from different countries around the world. And so really was aware of the scale and nature of some of the world's biggest problems as a child. And I was somebody who we now have a word for, it's called high agency - did not know that as a kid.

[00:02:24] But I was somebody who was like, Hey, there's a problem that needs to be solved. I'll go solve it. And so that might have been, you know, two kids arguing on the playground. I go try and figure it out. That might be, you know, Hey, we're missing paper, let's go find some. But I was just always the one who's like, we're not gonna sit around and wait for somebody else to solve this.

[00:02:37] We can figure this out. And so that combination of being aware of these really big problems and caring to solve them, along with feeling like, well, if somebody's gonna do it, it might as well be me. I did not have the capital to do so. And so actually my first foray into entrepreneurship was a babysitting company because I figured out I wanted to have an impact.

[00:02:59] I wanted to be able to fund nets in Somalia and goats in Kenya. And I had all these visions of like, what this could be. Uh, but I didn't have the capital to do it. So I actually, at 11 years old, was on my bike. I kept track of everybody who moved into the neighborhood and when their moving vans came in and brought them a little flyer and got this whole thing started basically to be able to build the funds to then, uh, invest in emerging markets. So, um. Bootstrapping from the beginning, caring about people, but also looking at it at the system level. So what can be done, um, for systemic change and what are the, what are all the pieces of the ecosystem?

[00:03:35] And so when I come and look at a problem, it's both how do we make a difference for the people, but also what are the broader factors that come into play for solving those problems. So, fast forward, I started my career in nonprofits and made everybody crazy because I wanted to do more innovative solutions and push the boundaries a little more than what, you know, most grants are not set up for that.

[00:03:56] Even the ones that say they are, they really want their, the primary focus is making sure that money is not wasted. And so that concept of, leaving opportunity on the table is not really a factor in the equation. So you really need to be able to show something's already been significantly de-risked before a grant's gonna come in on it.

[00:04:13] Hmm. And so when I was looking at, Hey, I think there's a different way we could do this, there's a problem we could solve, it was like, well, if the data's not there to know for sure it's gonna work, then it's a lot harder to bring those grants in. And then I also really wanted to build the flywheel effect.

[00:04:26] You know, if you're in a for-profit and you build something that's successful, well now you have profit that you can reinvest to do the next thing. In the non-profit side, when you're successful, you then have to go get more money, right? So there's this endless cycle on the grant side and I just really felt like, you know, there's, these problems are big enough - they deserve the full breadth of resources, not just what was available in the nonprofit dollars. I was, was kind of feeling like, okay, maybe this is not the right fit, but I still really cared about impact. I am not willing to put in the crazy long days and the blood, sweat, and tears just to build another widget.

[00:05:02] Like it. I have to feel like if we succeed, this is gonna be really big and it's gonna really make a difference for people and it's really gonna solve a meaningful problem in a, in a real way. And so I started off in Med Tech actually just as a transition to the, for-profit world. It was, uh, I could parlay some of my project management experience and when I got here, found, I loved it.

[00:05:23] For me, it was this perfect combination of using the levers of business, calculating ROIs, using all of those business skills while at the same time really being able to say, yeah, there's an opportunity to make an impact here.

[00:05:35] Giovanni Lauricella: And then I wanna learn more about BrainSpace, but now that we know how you got into med tech.

[00:05:39] Mm-Hmm. How did you found create? BrainSpace.

[00:05:43] Caitlin Morse: Yeah. So I actually went from, so I was working at one of the world's largest contract manufacturers, 200,000 person company, around the world. And the group that I was a part of grew from 70 to 300 over four years. So very fast, very high growth. I had a lot of opportunities in that environment, and one of them was looking at about 200 products a year to say, okay: hack together, prototype, what does it take to get to scaled production? And I had a team of subject matter experts and that experience really was incredibly, valuable in terms of being able to really train the same way that investors look at pattern recognition, right? You start to see, okay, here's the common problems that come up. Here's what you see. But it was in such a big package, right? You'd have this team of three or four, entrepreneurs founding team come in and there'd be 15 of us and they're like, okay, who are all of you and how much is this costing me per hour? And so I found that there was really an opportunity to package that expertise in a more startup friendly package.

[00:06:36] So we wanted my co-founder and I wanted to start a company long term. But again, that whole, you don't have the funds to do it. How do you bootstrap your way there? So we started the consultancy, and then nights and weekends we're working on basically built our own little incubators. So BrainSpace was actually the sixth product that we said, okay, we hear from doctors or we heard from patients, there's a problem here.

[00:06:56] We'd go investigate. Uh, from a technical standpoint, is this even feasible? Right? How - how long is this road gonna take? But then also from the standpoint of the business model and the unit economics and the, the clinical context and the regulatory pathways and all of this, we did this full kind of, I was the first one to do diligence on each one of these.

[00:07:15] And really for the first five, there was one reason or another where we went, no. Or Hey, it's gonna take VC level dollars, but it's not gonna do a VC level return. Right? So finding something that really was that goldilocks that checked all the boxes, um, took a while. And actually along the way the consultancy grew to the point that it made it harder and harder to leave because now I'd built this thing successfully and, you know, business was going well, but that was exactly what we needed because it meant that we didn't prematurely take an idea just because it was an idea we had to really take stock of am I willing to blow up what is now a successful business to build a bigger one.

[00:07:48] And so that's really, BrainSpace was the first one where we said, okay. This, this I believe is actually worth it.

[00:07:55] Early 2021 officially opened the doors of BrainSpace and built our first prototypes in my basement and tested them in our wet lab, AKA guest bathroom during Covid. And, off we went.

[00:08:07] Giovanni Lauricella: So. Now in early 2024, you're officially three years old. You've been an entrepreneur, a med tech, CEO for three years.

[00:08:14] Mm-Hmm. Tell us about what BrainSpace is, a little bit about the status of the company and what you've been able to accomplish in three years. Yeah. And then we'll dig into some of that entrepreneurialness that you've learned along the way and some of your thoughts.

[00:08:27] Caitlin Morse: Yeah, yeah, absolutely. BrainSpace is managing intercranial pressure to avoid long-term brain damage is product one. Long-term what we're doing is transforming the way that we approach neuro. So there is, in neurocritical care, still a lot of more analog devices. And so people are trying to do research, but you're in an ICU, right? You can't do randomized clinical trials.

[00:08:50] You're in an environment that is incredibly high stakes. And clinicians need to have the best tools to be able to avoid what for many people is another 20 or 30 years of living with incredibly debilitating situation. And so our first device is really replacing what is a string level based, drain. So they literally take a bubble level on a string, hold it up from the tragus of your ear over to the IV pole, and go, okay, now don't move for seven to 14 days.

[00:09:17] When people said, oh, it's this string level based system, I was like, okay, I'm sure that's just because your hospital is not buying the better tech, right?

[00:09:24] I didn't, I was very skeptical. But the reality is that you can't put a pump on the brain. Most neurosurgeons won't do it. And so having a gravity based approach to draining fluid while still having the precision and accuracy that's needed is a challenge. And so our device, is a wearable that sits at the ear and a little bedside unit that regulates pressure and drains cerebral spinal fluid.

[00:09:47] And that allows for improved nursing utilization. It, we expect will free up ICU beds. We expect long term that it will actually reduce brain damage. Um, but all of that is still yet to be proven.

[00:09:59] So we're in our final testing now. So V and V for those of you who are familiar with the lingo, and are gonna be submitting to the FDA, via 510k. And so that, that gets us in solving what is a very real clinical workflow problem day one.

[00:10:14] And then it also gives us novel access to data and novel access to cerebral spinal fluid. So if you think about everything from TBI stroke, dementia, there's a number of different situations where all of these patients end up on this drain for this seven to 14 days. And so being able to create a number of different opportunities within that. We have more than a dozen products that are in the pipeline in the patent pipeline in terms of how we leverage that unique access.

[00:10:40] Giovanni Lauricella: So you've, you've. Told us why you went from non-profit to profit. You've told us bootstrapping how you created this consulting company, which led you to doing BrainSpace. Uh, cash is obviously a constraint in a lot of this story. And you figured it out. And so there's now a, a capital raising story that you have had over these past three years that

[00:11:02] You and I have actually discussed before, and it's, it's fascinating and I want to, I wanna talk about it here now, but to lead into that financing story is from the background that you shared I didn't hear one time about you being this Master Professional capital raiser long before you founded BrainSpace.

[00:11:19] So there had to have been this time where you're like, I need external money. I don't even know where to start. And this concept of being a first time med tech entrepreneur. Who then has to learn how all those processes actually start. Like, who do I talk to? When do I talk to them?

[00:11:34] Why do I talk to them? Who do I avoid? Maybe that's an even more important question. But I wanna learn how you even handle that spark moment of like, I'm an entrepreneur now I gotta figure raising capital out in addition to solving a clinical issue. And then I wanna learn about what you've done over the past few years and we'll pull that back.

[00:11:51] Caitlin Morse: Yeah, absolutely. So I did have a little bit of experience with nonprofit fundraising in the early days. So grant writing, very different world from, um, vc, VC and angel investing. And frankly, because of that experience, I was like, Ugh, okay, here we go again. That was, that was the part I was not looking forward to.

[00:12:08] But what I will say is I have enjoyed this journey way more than I expected to. So in the, in the very early days, I actually said. You know what? I think we can build this faster than I can fundraise to go pay somebody else to build it. And so the very first thing we did is we talked with some of the local angel groups and their expectations relative to ours were just so misaligned that I said, okay, we're gonna go build a prototype and we're gonna come back and show you that we can do what we're saying we're gonna do because I didn't have the pedigree, I didn't have the the logos. And so I said, look, we're just gonna prove it. And so we went and for nine months we're unpaid and built and built a device and went out and fundraised with a device in hand saying, look. Now of course it's not one we're gonna put on people, right?

[00:12:53] But it showed them, here's what we're capable of and here's what we're building, and make that vision a reality in a way that really made it a lot easier to fundraise. So I will say that for us, right? Everybody has their own background, their own skills to leverage, and I think that's one of the really important things as an entrepreneur is to say, okay.

[00:13:11] What's in my hands? What do I have to work with? And for some people, that's a network. For some people that's a sales background. For some people that's being able to build product, right? And so you have to kinda look at what is my unique advantage that I can use in those very early days where everything is still very high risk and very nebulous.

[00:13:29] And so the other thing that really worked to our advantage was when we were looking at doing all this, it was 2020, the world was shut down. And I was in Seattle, so my kids were actually out of school for a full year. So depending on where you were living, you may have experienced lockdown differently, but a lot of investors were also stuck at home.

[00:13:47] And so I actually got on Twitter in 2020, which I had avoided for 15 years because I knew I would get sucked into random, interesting conversations that would destroy my productivity. So I flat out refused to have a Twitter account, but I got on in 2020. And there were a lot of investors on there who weren't going to events, who weren't speaking at conferences, who weren't in person meetings who were explaining a lot of how things worked. So, uh, Elizabeth Yin is very well known now with Hustle Fund and, and all of that. But at that point she was tweeting every day something about, here's what you should know, here's how investing works. I was explaining trenching models, all of this.

[00:14:27] I went and bought Venture Deals, um, classic book, right? And I just, my approach was I'm gonna learn everything I can about how this system works right back to that system thinking. Part of it, it's, I wanna know how the ecosystem is built and who the players are and what the strategies are. When I had consulted for Seed and Series A startups, I had seen a little bit of that.

[00:14:47] I hadn't been involved in any of the fundraisers, but I'd kind of seen them walk through that process and I'd seen, uh, a little bit of what it took to really make it happen. And so I did come in knowing, okay, I gotta gear up for this. But having those, you know, we are in Seattle, there, there is an ecosystem, but it's a lot smaller than the Bay Area.

[00:15:04] And so being able to kind of tap into that through, through social networks actually, uh, was, was a big resource. And then really you run into this challenge, especially in MedTech where the SEC doesn't let you talk about the future of your company, but they're fine with you talking about your product.

[00:15:22] The FDA is fine with you talking about the future of your company, but isn't fine with you talking about the future of your product. And so you walk this tightrope of going, what can I even say? Right? Because the FDA won't let me talk about this and the SEC won't let me talk about that. So where do I, how do I walk this tie rope?

[00:15:37] And for us, part of what really worked for that was actually some of these competitions, angel groups, things like that. So I couldn't talk about what I was building or what my future opportunities were, but I could say I'm a quarter finalist in the Seattle Angel Conference. I'm a semi-finalist in Seattle Angel Conference, right?

[00:15:52] And so we actually found that that was a way that I could talk about the fact and everyone goes, oh, you're talking to Angels. You must be raising money, but you're not out there saying, Hey, I'm raising and this is what I, this is the deal terms and come talk. So that really helped and then really when we won the Seattle Angel Conference in fall of 2021 was really when we started to capitalize on that momentum. So that they put in little over 200k but it gave us, Hey, you won the Seattle Angel Conference, right? So you gotta, you gotta use whatever you can get. And there were a number of other conversations that had been happening alongside that.

[00:16:31] And then, we won Flywheel, which is a Washington statewide competition and that was another 150 K . But it gave us access to a network that we didn't already have. So after Flywheel, actually, they pulled together an SPV, which is a special purpose vehicle. For anyone who's not familiar, it's essentially a one-time fund that just invest in one company at one stage. And so a bunch of people who'd put in the 5 or 10k checks before they knew who the winner would be, once they found out it was us, actually came in with bigger checks. And so we ended up raising almost 500k from that 150k competition.

[00:17:05] So having some of these, and this is all equity based, I mean, none of this is, is free money, but it give, it's a platform. It's an opportunity to tell your story to people who you were not gonna find with a Google search. And so both of those then allowed us to expand our investor networks. And actually, one of the members of one of those was part of a family office who then made an intro to a different family office who then made an intro to a VC who ended up leading our seed.

[00:17:31] And so. It's, you know, showing up over a period of time, building those relationships and talking to people who maybe right now they're not the person who can do that, but you never know who somebody knows who somebody went to high school with, who somebody has as an accountant. You know, it's just, it's crazy the way that some of those, can come together.

[00:17:50] And one of the big things that I had to learn was I liked being able to target my communication to each person. This is what you care about. So this is the version of the story you're gonna hear and all the, all, it's all the same story, but which parts you highlight what you talk about. And what I realized is one of the really important things in fundraising is equipping people to talk about you behind your back.

[00:18:09] And I am somebody who never wanted people talking about you behind my back. That just sounded awful. But what I realized was actually I have to equip them to be able to tell my story when I'm not in the room to get in the room. And so being able to distill that story down, so we're not talking about intercranial hypertension, and we're not talking about all these 25 different indications.

[00:18:28] We're talking about protecting the brain and helping it heal after injury surgery and neurodegeneration. And that was something people could get their heads around, even if they weren't in med-tech. It was something that they felt confident speaking to. It was something that they were then willing to talk to other people in their network about.

[00:18:44] Uh, and it also, you know, ruffled some feathers. So we had one former ICU nurse who was part of one of these groups who came in and was like, there's no way that's what they were using 30 years ago. This is outdated information that can't possibly be what's true. And was very negative. And I was like, oh, I would tell me more.

[00:19:01] I'd love to hear what you, what's replaced it. She goes, I wanna go talk. I said, yeah, I'm happy to talk to whoever you want. Let's get on a call. She comes back the next week and she goes. We're investing in BrainSpace. This is ridiculous. I talked to all of my ICU nursing colleagues and this is still what they're depending on and this should have been replaced 20 years ago.

[00:19:18] And absolutely there's a huge need here. And so actually she had been one of our most vocal opponents, actually ended up being a huge advocate. Wow. because I was like, yeah, let's go, let's go have those clinical conversations. And I think knowing that you're solving a clinical problem, knowing you've talked to many clinicians across multiple institutions and you know that this is worth solving, just makes those conversations so much easier.

[00:19:39] 'cause you're not worried about what if they find out, you're like, okay, great. Let's go find out together. So it, that definitely helped in, in those very early days.

[00:19:49] Giovanni Lauricella: Phenomenal background. Um, before I actually get into some of the, the specific metrics, Mm-Hmm. You mentioned a few things and it sounded a lot like serendipity.

[00:19:57] Being in the right place at the right time, uh, you never know who is gonna know another person. Right now we're at Texas Medical Center of Innovation. Okay. In Houston, we just came off of an amazing panel that you obviously amazingly contributed to. And we had Dennis McWilliams of of Sante on there.

[00:20:12] Mm-Hmm. And when I asked him one of the questions about as an investor, how he's able to help out his entrepreneurs From a psychological counseling aspect of just being there for support. Mm-Hmm. Because being a CEO EO is a very lonely job. You know, one of his one-liners was, there's this aspect that because you're a CEO, you're supposed to know or have this perception of knowing everything.

[00:20:31] And the reality is you don't know everything and you shouldn't know everything. And so when I hear you talk about showing up to this room, or how do you get inside the room or you don't know where that's gonna lead to, I have to ask you, three years into entrepreneurship, is it luck or effort? A combination of both.

[00:20:49] Or how have you successfully been able to just keep on moving on? Because we know you work hard. Mm-Hmm. We know you put in the effort. Mm-Hmm. But as an entrepreneur now, do you believe in luck?

[00:20:58] Caitlin Morse: Uh, so I think: there is serendipity. I think there's also favor. Building rapport makes a big difference.

[00:21:10] Growing up, I wanted it to all be merit-based. I was like, here's the rubric, here's how you succeed. And anybody who had a warm intro as it's called in our industry, was like cheating. It was like you cut to the front of the line, you didn't work hard enough to get there. And what I have learned in this journey is people work with people and it doesn't matter if you check every box on the list, if you are not somebody that people are excited to work with, it's not gonna happen.

[00:21:38] And I think that's especially true in venture because you're taking incredible risks. None of the companies you invest in pre-market, can you pencil it out and say, this is a sure bet. You always have to say, okay, of the options available, I think this is a good one and this is something that is worth investing in or these are people I wanna work with or whatever else. And so I think the real challenge is you have to work incredibly hard. There's just no way around that. You have to work incredibly hard, but you also have to regulate your emotional rollercoaster. So you have to, you may have just gotten something you thought was a sure deal and it crashes and burns, and you have to walk into that next conversation just as enthusiastic that this is gonna be the one, even though this person just strung you along, or you have to deal with the fact that you just lost a supplier and you don't have an another option for 28 weeks.

[00:22:27] And then you walk in and sit on a panel and say, yep, here's how great everything is. Right. So that ability to continue to show up is so important. And you know, I have been working on building the Seattle ecosystem and I did a little bit of angel investing and one of, one of the companies we invested in, we've not been hearing anything from.

[00:22:44] And I said, look, even if it's not all roses, we don't expect it to be, but you have to, you can't just disappear. Yeah. Right. And so I think one of the most important things is doing the hard work, building the company so you have something to say, right? You have to actually keep making progress on the company while you're out there fundraising.

[00:23:01] But it's also continuously showing up because you don't know which of those are gonna, now, of course, you can't spend every day at a networking event, and maybe if you live in somewhere like the Bay Area or Boston, you have too many, there aren't that many in Seattle. So I can show up without it taking up too much of my time.

[00:23:16] But really deciding you're gonna be present and deciding you're gonna build those longer term relationships so people have a chance to get to know you, has really been a big part of my journey because I wanted to get everything, all my ducks in a row and then go, look, I got it all done. And that's just not, that's just not this world.

[00:23:34] So it is a lot of showing up. It is a lot of, uh, giving somebody a reason to care. Because the reality is most of us have somebody in our rolodex who could be helpful. Mm-Hmm. But you have to decide who you're gonna make that intro for. And so helping people understand what we're about. I think med tech has a huge advantage in that regard because when I was in nonprofits, most nonprofit donors would've loved the deal they're getting in Med tech.

[00:24:01] Like, impact is happening and you might get a great return. Was is like an easy sell to that group. The typical tech was like, okay, well we think we're gonna have this amazing return, but can you just not do evil in the process? Right. It was like can it just not be bad? That's enough. And so I think in med tech we have this amazing opportunity to pull from both sides and say, here's how this can be a great return.

[00:24:23] And here how this can also be transformational for people. And when people believe that and when people believe that you are gonna work hard enough to do everything you can for that, there're a lot more willing to, to make your luck, to introduce those opportunities, to build those connections. Um, and, and you know, being able to regulate that on a personal level is, is I think a big part of it.

[00:24:45] The more that you can not ride the highs and lows quite, quite to that extreme, um, is, is a big part of it.

[00:24:51] Giovanni Lauricella: Yes. And not overly celebrate the champagne moments. Mm-hmm. And also realize that failure is not final. Yeah. Winston Churchill.

[00:24:59] Caitlin Morse: Yeah. And not count your chickens before they're hatch is a big part of that for me.

[00:25:02] Yeah. So when somebody says they wanna invest, I'm like, great. Let's go to the next step, but I don't go tell the team. Okay, we've got the check. I'm like, paperwork can be signed and I'm still going. When the money is in the bank account, then we'll celebrate that win and then we'll get back to work on what we're supposed to do with it.

[00:25:16] Uh, but I think if you prematurely attach on to what seems like the solution, it hurts a lot worse when it doesn't come through.

[00:25:24] Giovanni Lauricella: I want to ask you some pinpointed questions because from the information we'll pull out some longer ones. Yeah. The financial journey of BrainSpace. Mm-Hmm. So you mentioned 150,000, 500,000.

[00:25:34] So just walk us through so the audience can understand from that first round, like where are you now? Yeah. So like this, this, this, how much, how much, how much? And then let's talk about the style of investors that you've actually been successful with. Sure. Yeah. What does that look like?

[00:25:48] Caitlin Morse: So we raised 150k pre-seed in 2021. And that basically was covering legal fees, you know, patent filings and corporate structures and, and some of those fixed costs, some of our early prototyping expenses. That's where our friends and family got us. So, uh, most of our network was not accredited investors.

[00:26:06] And so that was, that was a short list. Uh, and, and that really because those fixed costs were covered, then we were like, okay, we can cover, we had saved up from the consultancy. We can cover our own expenses to go build this first thing. Then we raised, a 3 million seed. We did that in two tranches, so we did the first million.

[00:26:25] And one of the real challenges as an entrepreneur is you are always more pressed for time than the people writing checks. Oh yeah. So creating FOMO is, is actually a required skill. It's just that a lot of people did it badly. So there was a lot of this, especially in 2021, just total nonsense of like, oh, it's closing on Friday and if you don't send me my your check tomorrow before you've even done diligence, you're gonna miss out on the best deal of the century.

[00:26:52] That's not my style. I don't think it works. And I do feel a little bit vindicated now because a lot of those people, it did not. Here we are a few years later, but at the time there were a lot of people who were like, this is the game you gotta play. I wasn't interested in playing that game, but I did realize there has to be some impetus, some call to action that is time dependent because I can't sit around indefinitely.

[00:27:15] Yeah. Also, most investors wanna be the last check-in. Most investors wanna know you've got 80, 90% of it there before they wanna come in. So if somebody's writing a 50k check and you're trying to raise 3 million, it feels like this is a drop in the bucket. Where is this going? So having those tranches really helped.

[00:27:32] So we were raising 1 million, we had 200 K of that from the Seattle Angel Conference that we won then we basically said, when we get a lead for the seed or when we get to a million this closes and the price goes up.

[00:27:47] So it wasn't a time dependent thing, but it was, Hey look, we're offering a great deal that is below market valuation right now because we know you're taking a risk on us by being one of the first checks in. But once we've raised a million, we now have the runway we need. So now that changes the equation.

[00:28:02] So we did that first, we did that first million, and then in parallel looking for a lead for the seed. And that was because in 2021. Valuations were ridiculous and all over the place. And a lot of people were just going, just get the highest valuation you can. But we all know this is a long game, right?

[00:28:21] And if you get the highest valuation you can on your very first raise, you don't have any room to go from there. And especially because that optionality for exits along the way is a huge part of what makes sense in MedTech. So if it takes you too much capital to get to an inflection point, all of those options are off the table.

[00:28:39] And I hope that we get to keep building all the way and build all 10 products in the platform and the pipeline and everything else. But the best way to succeed is to always have the option for an exit makes sense relative to the value you've built to the capital you've spent to get there. And so it was important to me that we kept that cadence going.

[00:28:55] I also bought my first house a month before the market crashed in 2008. So I have lived the experience, had the scars of things don't always go up That's not how the economy works. And so I was watching this and going, at some point the music's gonna stop, and when it does, I don't wanna have to renegotiate.

[00:29:16] If I'm on a cap, I'm not on a price round then all the conversations go Oh, that was 21, so we're gonna reprice everything. And if you're reasonable on the price, then it's a little bit more like, okay, that's a reasonable price and it's already done deal. You're not constantly re-trading on that negotiation.

[00:29:34] So even though it's more, much more expensive to do a seed as a priced, I felt like doing a price seed given what I believed was the changing landscape in 2022, I wanted to lock in at what was a very reasonable rational, you know, using the last five to 10 years of data and what are we seeing in trends and looking at multiples and everything else.

[00:29:53] But I wanted to have that as an established line in the sand so that we weren't constantly redoing this. So that was, Integrated VC who's focused on all things neuro. So they do everything from virtual experiences to simulate psychedelics to, biotech, to med tech and consumer products.

[00:30:11] But it's all neuro and they led our seed and, really brought together both converting everybody up until that point as well as, we had a couple other VCs that came in. So 11 Tribes, for example, is very focused on healthy founders, build healthy companies. And, you know, the, the runway and the conversations of all of that is really around is the founder sustaining those things?

[00:30:34] And so that's really kind of how they focus. We had a couple that came in that had venture partners that were former hospital leadership, so it was a generalist fund, but they had venture partners who were very familiar with their space. So it was a mix of some of these smaller VCs, larger angels, and then family offices.

[00:30:48] And so we kind of brought all, all three of those together. And so that 3 million seed was in 2022. And then, last summer, we were looking at what had really slowed down in the market in terms of series A conversations, right? So not only were fewer people writing checks, but they were taking a lot longer to get to the point of writing those checks.

[00:31:07] And so I went back to our investors and said, you know, I can go out and raise a series A now, but I think we're gonna be in a much better negotiating position and we're gonna get much better deal terms and this is all gonna go better for all of you existing investors if we're able to bring in basically that first tranche of the A on a convertible and then wait to go find that series a lead when we're further along in the FDA clearance.

[00:31:30] And so that was a really interesting situation as well, because if you think about it from the investor's perspective, at some point bigger players come in and there really isn't room for small checks, right?

[00:31:41] And at the time most of my smaller investors didn't have any kind of prorata rights of any kind. And so I basically went to them and I said, look, this is my last chance to be the one to say who's in or who's out, because when I bring on that lead, there's only so much I can do.

[00:31:58] I'm gonna walk away if it's unethical, but if it's just simply we don't want a bunch of small checks, there's not really a whole lot I can do about that. So I had that conversation. I said, look, I think this is gonna better position us for the A in the future, but also this is the last chance where I can hold you a seat at the table.

[00:32:12] Yeah. And so, we had a couple of our existing investors who made a ton of introductions to other angels and family offices and, a couple of small VCs in their network that had been hearing about us for the last year and a half. And we actually raised 2.2 million in six weeks in the summer of 2023, which as you just heard, it took us almost a year to raise that first three. So to raise another two in six weeks was, was incredible. And that was in huge part one of the family offices is very involved in Mountaineer Capital and um, they just, they rolled up their sleeves and they were like, we think we can get this done.

[00:32:48] And I said, I can't spend the next six months raising this. Like, that doesn't work. The whole point is we need to do this quick and get back to building. And they were, they were amazing at making intros. The, the people I've ended up with on our cap table, you know, a lot of entrepreneurs it's kind of hold your nose and take the money or grin and bear it.

[00:33:07] I would happily sit and have dinner with my cap table. I just, there are a bunch of really great people who have built businesses themselves who know what they're good at and offer that and know what they're not good at and don't try and be something they're not. And yeah, just genuinely fantastic people.

[00:33:24] So it's, the process has ended up being way more fun than I expected it to be. And I love getting to talk to people. I love the Q&A. So I normally will do like a five or 10 minute pitch and then I'll be like, okay, what do you wanna know? And we sit and have great conversations and I've really moved away from here's how you get an A to here's how you make new friends, or here's how you find a spouse.

[00:33:47] Right. And that people said that, that it's like dating, but I don't think I really internalized it for a while. And when I really made that change of, I'm not trying to convince you that this is logical or rational. I'm laying out my case. And if that resonates with you, we should keep talking. And if it doesn't, you should find somebody you resonate with better.

[00:34:06] And that transition has really helped it be a lot more, a lot more enjoyable along the way.

[00:34:11] Giovanni Lauricella: You mentioned not too long ago that you didn't expect it to be this much fun. And I would say after talking to a lot of entrepreneurs, a lot of investors. Fun and raising capital is not often used in the exact same sentence.

[00:34:24] So, and, and also the strategy that you just laid out and everything that you just shared was remarkable. It was really, really fascinating even just to listen to that. I just wanna recap on this one. So you've raised upwards of 5 million right now? Yep. A little bit more than 5 million at this point.

[00:34:37] Mm-Hmm. You've raised from family and friends, from accelerators, from Angels and Families and

[00:34:42] Caitlin Morse: Yes. We haven't done any accelerators. Okay. But we've done, yeah. So the, the, so those competitions were just a bunch of angels that just got together. Understood. Yeah.

[00:34:49] Giovanni Lauricella: So competitions not accelerators. Yeah. Um, so you've, you've raised from Angels, you've family offices, you've raised from small VCs.

[00:34:56] Mm-Hmm. And family and friends. Mm-Hmm. And so I just wanna spend two more quick micro questions here. Yeah. And then we'll move on. But, um, I know that you're passionate about family offices Mm-Hmm. And why they actually are great for med tech. The other question that I, before we get there is I talk to a lot of entrepreneurs who are raising for med tech. And so there, there's, they waste a lot of time sometimes because they think really early on and it's not some of the good advice of, hey, like we heard today on the panel for example, where it's like, Hey, if you wanna reach out to VCs or go to conferences that are VC rich Mm-Hmm.

[00:35:30] Um, where you don't have to raise right now, but you wanna raise for the future. And this is just a relationship building. And, and once again, like we heard from the panel today, you know, if you wanna build relationships and then come to me contextually in a year from now, or six months or two years from now, that's how you build relationships.

[00:35:45] But

[00:35:46] Caitlin Morse: I think that's tricky. Is it? I, so as an investor, I totally understand why an investor would give you that answer. Okay. As a founder, I think it's a little more nuanced. Of course. So no matter how much they say, oh, we wanna see it as early as possible, the reality is you have made a first impression.

[00:36:02] So I actually got introduced to an investor recently because they invested in a product 20 years ago that tried to do something that is on our product pipeline. And so when I heard about this, I was like, oh, I'd love to hear what worked, what didn't. Like, I'm always looking for the, tell me the stories to learn from.

[00:36:18] So they made the intro, but when I jumped on the call, the first thing he said was, so we have you in our database. My associate already heard you and I don't think you're a fit for us. And I was like, I've never pitched your associate. And I went back and there was a conference we had both attended. We had talked in the hallway for like five minutes.

[00:36:37] Oh, wow. But I had ended up in their database based on, so anyway, end of the hour conversation, he's like, we should definitely stay in touch. I love what you're doing. Wanna talk more. Right? So it, it, those things are never final, but you are making an impression every interaction you have, whether or not you're aware of it.

[00:36:52] And so I think going out, yes, you there needs to be rapport building, but just be careful that if you're trying to pitch too early or without really understanding who you're talking to, you can, that bad impression can be hard to get rid of. The other thing I would say is investors say all the time, oh, send us your, all your updates.

[00:37:12] Like, we wanna keep updated on what you're doing. But if you see someone you haven't seen in six months. Oh, how are things going? Oh, we did this, we did this, we did this, we this. Wow, you're making so much progress. If I've heard from you every two weeks, it's kind of like your own kids versus seeing your cousins kids you haven't seen in five years.

[00:37:28] Right. You're like, look how much you've grown. Versus like, well, yeah, of course this, you want to have the look how much you've grown reaction as a entrepreneur. And so there is a balance. Yes, you need to build those relationships and be active in the ecosystem, but you also need to be aware that you have already made that first impression and you're gonna have to either build on it or overcome it later.

[00:37:50] Giovanni Lauricella: That's phenomenal advice and, and the point of size of funds I'm sure plays into that. So, yeah. You know, when you're talk, when you're a seed stage company or even going into your series A Depending on what that series a size could be. I wanna hear your feedback on this. Yeah. Because when you go out and talk to these a hundred million plus, 250 million plus funds for a seed or even an early series A. Are you spinning your wheels and there are these up and coming or smaller VC funds, of which you've already mentioned that you successfully raised from. So I want your thoughts on that dynamic of the big marquee names in MedTech investors who have these a hundred to 250 plus million dollars funds

[00:38:27] versus the $40 million fund, $75 million fund. Talk about those nuances and how they act differently in the ecosystem, especially for early stage companies.

[00:38:35] Caitlin Morse: Yeah. So I think one of the challenges, again, coming back to how well do you know yourself, right? And I feel like I said this a lot in the panel earlier, but knowing what you bring to the table and what you're hoping to get from the relationships.

[00:38:46] So in our case, so like for example for Series A, we're gonna be going out, we're gonna be selling to hospitals. It's gonna be really helpful to have some med tech VCs who've been down that road 50 times who have a bunch of doctors from previous companies that were, they were really happy with who can make those introductions, who understand this is what selling into a hospital ecosystem looks like and are prepared for that.

[00:39:07] But those people are also getting pitched constantly. And so the just fatigue of hearing pitches all day long, it can be really hard to stand out with some of these smaller funds because they don't have as much public, the PR isn't as great, right? They're looking for a particular type of entrepreneur, but they're just as much out there looking as they are being inundated with all the pitches.

[00:39:37] So I think if you can get an introduction to somebody who is well respected by that marquee name, absolutely there's huge benefits to doing that. But if you spend all day banging your head against that wall and you don't look over here at all these other things that are going on, I think you really miss an opportunity to continue to build and grow.

[00:39:56] And the reality is there are some things, it does make easier having a big name, but also: are you the little fish in the big pond at that point? Right? There is something to be said for being the highest flyer among a smaller funds portfolio versus being one of many in a bigger funds portfolio.

[00:40:18] And so when you're the most promising in somebody's portfolio, that's helpful for their network in a way that you may not get. So there's, I think there's trade offs to both approaches. I think it's important to not underestimate how valuable it can be having a smaller fund involved. And I think also being real with what your exit potential looks like.

[00:40:39] Right. So when most VCs are looking, they're expecting to have a path to a 100x at a, at a seed stage. So if it's a $250 million fund, they're looking for each investment to be able to return that fund. If it's a $50 million fund, they're also looking for each investment to be able to return that fund, right?

[00:41:03] And so the, the expectations on a super early stage company, especially in med tech, where they're, where the exits are more frequently around that a hundred million mark than that 500 million mark, it actually is a much easier conversation to have. Here's what you're trying to get to. Oh yeah, here's an easier explanation of how we get there.

[00:41:23] So I think as you grow and as you build and as you demonstrate, now you can say, and look how with product three and four, we end up in this, you know, a hundred billion dollars. Okay, great. But in the very earliest days, you don't yet have a credible, credible path to that story. And so having those early relationships can be helpful and you get a little more attention from them.

[00:41:43]

[00:41:43] Giovanni Lauricella: I hope all your early stage companies are listening to this. This is, this is gold right now. Um, I, I want to talk on a passion topic for you. You've expressed, I don't wanna call it a, a passion or an obsession, but you, you definitely hold them in high regard for med tech. Why are family offices such a great option for med tech?

[00:42:00] Caitlin Morse: Yeah, so I will start by saying I have learned a lot, but there's still a lot to learn from the way I understand it. There are basically three different flavors of family office. So you have the VC, that's a one LP family office, right? And you had. Unorthodox on here recently. Correct. So they're an example of that where it's a VC fund that has a single LP and that LP is a family office.

[00:42:23] Right? Yeah. Broadview is another example of that, where there's a single LP run like a VC firm. Then you have the family office, which is essentially somebody acting as a large angel investor, but they happen to do it through their family office and maybe they have some backend support, but they're essentially operating similarly to what you would expect an angel to act like.

[00:42:39] And then there's the multi-generational giant family office that is run, you know, they may also be running their real estate portfolio and they may also be running their hedge fund investments and whatever else. They are the financial team responsible for the family's wealth. So, I should clarify that what I'm talking about is much more those first two categories. I don't have very much experience with the multi-generational, but what's been really interesting for me to see is the number of smaller, so most of the family offices that have been involved with us are first generation. So they built a company and when they sold that company, started a family office and are now investing, right?

[00:43:17] They have that operational experience. Maybe it's not in my space, maybe it's not as a startup, maybe it's something they bootstrapped or consultancy or whatever, but they have that experience of building and growing a business to a successful exit. So that is very helpful, but they make their own decisions.

[00:43:34] So when you think about a venture capital firm, they have a particular commitment they've made. They have a particular thesis that they've sold all their LPs on invest in this, and this is what we're gonna go do with it. They have a particular fund size and profile of the companies they invest in. They have a particular cadence.

[00:43:50] So we do this many million at this time and this many million at this time. They have generally a seven to 10 year horizon on when they need to return that capital. And so if you're meeting them in year three, well then that's only five to seven years, right? There's a lot more structure to it in a way that family offices generally still expect the same return profile, but they don't necessarily have the same timeline constraints and they don't necessarily have the same check size, timing, constraints.

[00:44:18] What I found is that if it's something that they really care about and they go, okay. This could make a difference. This could really be a big deal for the patients. And we believe it's credible that this could be a good ROI, that is a more open conversation that can be had. And so I think med tech kind of really sits in that sweet spot between what they may do through DAF on their philanthropy side and what they might do in their, you know, index fund.

[00:44:47] And kind of looking at that, recognizing it's only two or 3% of their total portfolio. So they're not gonna be a huge check writer, by number of checks. But, we've actually found it to be a great group to talk with. They're really difficult to find. That's, that's the real challenge is how do you find them?

[00:45:03] But when you do, um, they've been a great group to collaborate with and, and just some really fantastic humans. I think the other thing that comes into that is their ability to say. Uh, the opportunistic, Hey, we could go after this other thing. Like I said, Hey, we can do better on our series A if we do this extension.

[00:45:20] That wasn't something that I think a lot of VCs wouldn't have been able to have that as part of their thesis, but in this case, they were like, yeah, we've been thinking about that. I also have really learned to raise money from people where whatever amount you're asking for is just not that big of a deal to them really.

[00:45:39] So the people who were writing their first angel check, right, and 5 or 10k was like, okay, I'm taking this money. I could go do these things with, and I'm putting it in, was more stressful then for them. Then, you know, we had somebody on this 2.2 who joined the Zoom call, didn't come on camera, didn't ask a single question, texted our investor after the fact and said, I'm in for however much you are in for, and I was like.

[00:46:06] No questions, no diligence? And he goes, well, I've known this guy for 20 years. I trust him. If he says that you're one of his favorite founders and loves what you're doing, and I got to hear from you, I got to hear your Q&A, I'm good.

[00:46:17] Send the paperwork. And I was like, what is going on here? And my investor tells me, oh, he's working on a $50 million deal right now. Him spending any time on diligence is a waste of his time. Oh, okay. And it made me realize, if you and I are sitting here talking about some great founder we know, and somebody goes, Hey, everybody put in a hundred bucks.

[00:46:39] We're gonna get them the equipment they need to build their first prototype. We go, great. Let's sure. Yeah. Okay. You love them. You know them a hundred bucks. Okay. I could do that for somebody that I'm friends with and believe in. I can't do that for 250k, but that's the equivalent for them. Right. And so finding that spot where it's something that resonates with people, but also where the risk of the company fits, the risk of the capital allocation is important.

[00:47:07] And so where people feel like it's a high risk and they can't really afford to lose the money, that's not a great spot to be in.

[00:47:15] Giovanni Lauricella: I definitely want to start picking your brain on a much bigger topic. And we know that med tech is changing. The landscape's changing. 10 years ago, 30 years ago for sure.

[00:47:25] Mechanical versus now system. And certainly a lot of more software integration in there. AI is a buzzword. It's been a buzzword that everyone loved, and sometimes now it's big skepticism. Machine learning. What is that? Some people don't even know what that means still.

[00:47:38] Um, but there's a lot of change going on in a regulated industry that we are a part of. We, your technology's a part of that. What's your thoughts on that? Comments, questions? Where are we going?

[00:47:48] Caitlin Morse: Yeah. Yeah. No, I think it's a really interesting time for med tech. I really believe that this is a pivotal moment that we as an industry have to step up to the plate.

[00:47:59] So if you look at what it meant to be a medical device engineer 20, 30 years ago, it was primarily mechanical and electrical. Occasionally some chemical material science coming in there. And the number of people who were in software, firmware, anything was very small. Now the number of devices that are in some way connected that in some way have a GUI, some sort of interface that have some sort of data collection, some sort of sensors has grown exponentially.

[00:48:30] And I think we're just getting started. And so one of the things that I've looked at is how does that changing nature of the product influence the industry and the ecosystem we're building? And so part of that comes into the fact that, from my perspective, one of the huge things that has shifted in the last 10 to 15 years is this idea of, I believe computers should be talking to computers, and humans should be talking to humans.

[00:48:58] And what I mean by that is for people who are familiar with natural language processing, it's essentially a method of looking at what is the text that's written from a human to human and a computer interpreting what's going on, right? And. Early on, languages was part of what I studied and if you looked at Google Translate, in the early two thousands, your Spanish teacher was gonna have no problem knowing you cheated on your homework.

[00:49:23] It was not gonna make any sense. And what Google actually did was they fed these algorithms, entire novels, the classic works of art, classic literature. And when you get entire stories and paragraphs and chapters, not just a sentence, you start getting a lot better at context. And so a lot of people said, well, we can do this with EHRs and we're gonna feed in nursing notes.

[00:49:45] Nursing notes don't have syntax. They don't have the same sentence structures. They don't have the same rules of grammar. It's a bunch of numbers and letters, and so it doesn't work to have that kind of machine learning approaches applied to something like an EHR. But the problem is more fundamental than that.

[00:50:01] The problem is a device captured information, a nurse, when, and put that information into the EHR software is now trying to read what was written by that human and spit it back out into some other form that can be used for whether it's machine learning as one of one of many approaches within the AI umbrella to then derive a new computer decision to then communicate back to a human.

[00:50:24] And what that does is you've now got a game of telephone at every stage along the way. It's incredibly inefficient and you lose a lot of the richness of what's possible. And so where I believe med tech really has the opportunity to go is to say, okay, we have sensors in our device. They don't need to then be interpreted by a nurse who puts in notes, who then... no, the sensors build the data set, we have an integrated annotated data set so we're able to say, this is exactly what happened when it happened. Here's how these different parameters influence each other so that multimodal physiological parameters are then built into a cohesive story. And so then that is communicated back directly into the decision making of the device.

[00:51:03] That's communicated back in directly into training sets for, for machine learning models. And so we're not now having to translate between humans and computers. Meanwhile, that human to human communication, we have data visualization and so we're saying, here's what the device did, here's what happened.

[00:51:19] Nurse who's at the bedside and doctor who's, who knows where are looking at that same visual representation. They're not having to say, well, I saw this, it looked weird. Okay, come look. Let me see what's going on. So facilitating that, improved communication between humans and between computers rather than this circuitous path that exists today is where I believe med tech has the opportunity to go.

[00:51:39] And if we do that right, we become a pivotal opportunity to not only improve diagnostics and therapeutics, but to completely change the way we approach clinical trials, a different approach to science, to medicine, to really advancing our human understanding of how the body works and how we help it heal.

[00:51:57] And I think that really comes down to passively collecting all of this data in a very clean, usable way where insights are a lot easier to derive because we've done it from that architecture in the beginning. Instead of trying to dump everything in a data lake and hope one day, that will pull something out of it.

[00:52:14] Giovanni Lauricella: So then being an entrepreneur who has to deal with this internally. And even externally with the vendors that you're choosing, et cetera. With where Med Tech came from and now where we're going with everything that you just mentioned, what does that do? And put pressure on building the teams that properly end up keeping those internal tribal knowledge

[00:52:36] to actually make sure that these devices that are getting more and more complex Like, how are you tasked with that challenge?

[00:52:41] Caitlin Morse: Yeah. And I think that's a huge challenge because the reality is that building software in a regulated environment is very different than building it for an app you're gonna throw up over the weekend.

[00:52:52] And so that process requires a level of patience, requires a level of rigor, and requires, you know, commenting out your code, things that is actually best practice in the biggest companies. If you talk to people at Apple, Microsoft, et cetera, they're all gonna tell you like what we do in medical is not some, you know, dark art;

[00:53:13] it really is best practice. But instead of it being just best practice is actually required in the medical space. And so people who are good at that and good at thinking through architectural complexities of software in a medical context are few and far between. There just are not that many people who've been doing this for 30 years because there weren't that many people needed to do it 30 years ago.

[00:53:35] And so you have to think strategically about which are the pieces of that need to be internal, where you need to either figure out a way to do it fractionally, figure out a way to allocate enough budget to bring that person in, give them enough equity, whatever it needs to be, but figure out a way to get that person and which pieces

[00:53:53] it has to get done, but it's a pretty bread and butter thing to do. Anybody could come in and read what's there and build on it, and those are the areas where it can make sense to use, whether it's a third party partner or whether it's a consultant, that contractor, whatever, where it's just kind of, once it's done, it's very obvious what's going on versus some of the core behavior of the system really getting that architecture right in the first place is so important that you have to be really picky about who you entrust that process to.

[00:54:21] And I think there are places now where I say, okay. There's a company that does this and it, you know, like Galen data was talking earlier about the IOT side of things, right?

[00:54:30] Where it's like, okay, there are a few companies out there like them who provide a particular piece of this that is that where we are providing novel value? And my answer would be, in the future, yes, but on product one probably not. So what can I do to streamline as much of those things as possible? Be inventive and creative where you add value and be vanilla everywhere else and find those things that are really value add for you and not try and reinvent the wheel on everything.

[00:55:01] I think the software, and data science is a huge challenge because the reality is so for a while when everything moved to the cloud, we got all of the embedded software engineers from Tech came over to Med Tech. They're like, you still want embedded, people love us. They came and joined Med Tech and then self-driving cars, VR headsets, um.

[00:55:24] Drones, like all of these things came back, which all now have embedded, and all those people went running back to their tech salaries. And so I do think it's a challenge to find people who really understand that full embedded to cloud architecture who want to commit to being in med tech. And you have to find those people who are passionate about that and, and want to leverage their resources there.

[00:55:48] But I mean, this is what you live every day. How do you, how do you think about the fact that the demand for software and data science far outstrips supply right now and is likely to only get worse over the next decade?

[00:56:03] Giovanni Lauricella: So we've seen a spectrum of companies have to deal with this problem. The short and sweet answer is it's a leadership challenge, and so spend the money properly on a top down strategy.

[00:56:17] I, I've come into companies where they've existed for three, five. Crazily enough, seven years after being MIT thesis Mm-Hmm. That turned into companies. Mm-Hmm. And there's no med tech background. Hmm. So all of a sudden there's this flip that you have to add a regulatory component and then have engineers do documentation,

[00:56:36] Caitlin Morse: Design controls, Yeah.

[00:56:37] Giovanni Lauricella: Which they hate. And then people who code, who have never had to adhere to documentation before or lived in a regulatory environment or regulated environment. Um, and it just doesn't work when you start having that head of software engineering or head of systems that never worked in a regulated environment happen to be in the company, was never replaced or moved to possibly a better place for them at the time.

[00:56:58] Um, but if you have a head of that can speak the language, who can set the strategy and then get the more managerial or individual contributors, or it should still be a blend. Like this is a pure example. If there's a. Software team. Or systems team. Let's just stick with software that is seven people.

[00:57:16] If the head of software has the regulatory and the regulated knowledge driving that top, that top down strategy Where the rest of the six on that team and minimally two have a medical device background that understand what that means. That whole understanding of great. You're an excellent coder.

[00:57:35] You can come in here and then just letting you know you do work and live in a different environment. And then now the rules and regulations are being driven top down. And we also have some compadres living right next to us who also speak this language. It starts embedding itself, no pun intended, into the actual culture.

[00:57:49] Caitlin Morse: Right!

[00:57:49] And at that point, you have somebody who's translating, right? You don't have a regulatory person saying, are you compliant with 62304? And somebody going, what's that? You have somebody saying, Hey. These are coding standards, just like you've had in every other company. Here are the particular coding standards that we have to adhere to here.

[00:58:03] And they go, yeah, okay, got it. So having somebody who can really translate that for the team allows you to bring in a broader range of skills and experience.

[00:58:11] We've also talked to a few people who started their careers as mechanical or electrical and went, oh, this is fun. This is cool. You know, my co-founder actually is a mechanical engineer by training who did his, internship in Japan, working on the very first version of the Prius battery. Learning how to hand solder inside this giant chamber.

[00:58:30] And then he taught himself enough code that he wrote the first version of our system in arduino. And so I think there are also people like that who are going, okay, the tools have gotten easier, right? It's kind of like building a website now. Was nothing like building a website in 2008 and, being able to say, okay, what you see is what you get.

[00:58:46] Widgets make website building a lot easier. I think we're seeing that in, you know, if you can look up something in a forum and get some snippets of code and you can build it together, people start getting more comfortable with that. But I really encourage, engineers who are entrepreneurial, but start it out on the hardware side.

[00:59:02] Get at least a little bit of software here. I understand a little bit, I've built a few, no-code, low-code apps and I think it even just helps you understand how to think. You know, what is, what are the questions? What is the logic that's gonna be required? how do you write your product requirements?

[00:59:17] All of it. Being able to translate between, what has traditionally been the world of tech and the world of med tech. And I think the future is really leveraging that expertise for the good of humanity.

[00:59:29] Giovanni Lauricella: I have loved every second of this conversation that has been absolutely insightful from a very powerful three year into it entrepreneur who, who's discovered that BrainSpace was the project that she wanted to run with after creating six projects to do so. Um, I do wanna sign off with a quick snippet here. It was a question that we talked on the panel today, but this is what I want you to sign off with. You came up with this idea and this question that we talked about today called concept to company.

[00:59:53] And for all those listening in, 'cause truly the audience should be here on these people who have ideas or these early stage entrepreneurs who want to take the leap of faith. The engineer at Medtronic that just doesn't know if it's for them or not, and you've done that, right? So there's a lot of mistakes about.

[01:00:07] These shower ideas of trying to change the world of, of health and, and through medical devices. And you have this amazing idea, but an idea translated into a company is two completely different things.

[01:00:18] Caitlin Morse: Oh, absolutely.

[01:00:18] Giovanni Lauricella: I just want you to sign off and, and let the world know of like if you have an idea.

[01:00:22] There is a huge difference between coming up with a concept And turning into a company. And those entrepreneurial challenges that you have to endure to get there, sign off with that. Just speak to the world of want to be entrepreneurs of what they're gonna get involved in.

[01:00:35] Caitlin Morse: Yeah, absolutely. So when I was working in big company, looking at, you know, hundreds of products a year, we'd get a lot of these of people coming in, going, I have this idea. When I was running the consultancy, we'd have doctors come to us, nurses come to us, engineers come to us and go, Hey, I got a, I got an idea for a product.

[01:00:50] And I think there are a few main things to consider. One is the fact that what you see as the cost is MSRP is nothing like cost of materials, cost of goods. And so sometimes people come at it and they go, I can do this cheaper. I can do this easier. Really understanding that full stack of what it really means for what that total cost looks like is a huge part of it that I see,

[01:01:15] especially engineers often miss as they think I have a better, cheaper solution that's actually neither. On the clinician side, I often see this would make my process 10% better, 20% better. That's great, but it's unlikely that that is gonna build enough of a business model, enough of a market size, enough of a long-term value for the capital it's gonna take to bring that new product to market.

[01:01:41] So I'll give you an example. One of the ones that we looked at that we ended up not going with, was an invention that a doctor came to us and said, somebody needs to solve this. And they talked it through and we agreed. We did the initial analysis, we looked at some of the tech, and then I started asking really important questions about what was wrong with the existing technology.

[01:02:01] And I figured out we could go through this whole process to create this aftermarket, kind of add-on device. But if the major company with the original equipment updated their software, it would solve his problem. And so I was like, you can't do that. If a software update puts you out of business, you probably can't, that's not a venture backed will business. Now that's not to say, you know, there's classic, what if Google builds this? That's not what I'm talking about. But I'm talking about they've solved 95% of it. And there's one piece. I think the other thing people underestimate a lot is if a doctor says to you they want this new feature, it is inherent in their request that you have to also do everything that existing product does.

[01:02:40] And that's not true for consumers. Consumers will sometimes say, I'm willing to give up all those things so I can have this great feature. It doesn't work like that in med tech. So you have to be able to deliver a me too product on everything that's already there, plus your novel technology. And so I think sometimes people underestimate how much work it is to actually get back to the starting line for some of those, especially more mature technologies.

[01:03:02] And then the other question that people I've just seen so many times is people will have a clinician co-founder that they will completely rely on and depend on for their clinical input. And those are amazing to have. I'm not like, they are fantastic and can really expedite things, but you cannot bring a product to market that is tailored to that doctor, surgeon, et cetera. Because that may be exactly what she needs or exactly what he needs, but it's not necessarily what the market needs.

[01:03:29] And so I've seen companies develop products, ta-da, and everyone's like, oh, why'd you do it that way? That doesn't fit our clinical workflows. So it was really important to us. We talked to more than 200 doctors and nurses across more than a hundred institutions over a period of two years. Put the device in their hands, said:

[01:03:46] how would you use this? Does this fit your workflow? Really making sure you're getting that rich feedback from your users across a variety of situations and environments. So are you solving a real problem? Does your, is your solution technically feasible for the amount of investment that goes into it relative to what the market can bear?

[01:04:03] Do you have an ROI case that makes sense? Do you have some level of experience in something about this that you can start showing and demonstrating some traction before you raise money? Because they need to see there's something there, whether it's on the product or on the clinical insight or on the science, whatever it is, you gotta have something to be able to point to.

[01:04:19] And then do you have a business case at reimbursement, at pricing at gross margins? You're not gonna have all those answers, but you need to have some sort of answer that you feel like, yes, there's a feasible path here. And then, is this something you wanna talk about for the next 10 years?

[01:04:37] Because at the end of the day, it doesn't matter how great your insight is, if this is not something you can passionately talk about every day for the next 10 years, don't start a company in that, because this will be what you talk about, what you eat, sleep, and breathe, what you read clinical papers on what you have conversations about, what you think about when you're driving or wherever.

[01:04:56] This is what you live and breathe. And so you've gotta also make sure it's something that you're interested in living and breathing for a decade.

[01:05:04]

[01:05:04] Giovanni Lauricella: Caitlin, um, I have literally enjoyed every second of this whole story session that we've had. And, um, I love your energy. I love your ness. I wish you all the best in success with everything that you're doing with BrainSpace.

[01:05:16] Everyone listening in, I'm sure that you learned something new here today, and we just got inside the head, the heart, and the guts of this incredible med tech entrepreneur here on The Med Tech Startup Podcast. Thank you all for tuning in, and thank you very much Caitlin Morse.

[01:05:30] Caitlin Morse: Absolutely. Thank you so much for having me.

[01:05:32] ​

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