Fireside Chat: The Next Generation of Founders | LSI USA ‘23

Transcription

Kwame Ulmer  0:07  

Well, thank you to all the early risers, the athletes, the folks that chose to get up for this talk. I'm fortunate enough to serve as the executive director of Medtech Color. And what's of note is our mission and program that I'll highlight. Our mission is to advance the representation of overlooked ethnic minorities in the med tech ecosystem. And to date, we're fortunate enough to have invested in 30 companies with $850,000 in capital in kind services. And this is a conversation with two of those innovators, those fearless founders that we've been able to meet over the years, they're going to talk about their companies. And we have a conversation we're going to have for the next few minutes. And Scott, I promise we'll be done at 750 So y'all can be prepared for your next talk. We're so delighted to be here. And to start it off. I'll start with you. Derek, can you share a little bit about your company? And then how feasible do the same?

Dr. Derek Baynard  1:13  

Sure. Good morning. I'm Derek Banyard. I am a recovering plastic surgeon and I founded Sayenza Biosciences. We're building a medical device that processes liposuction, fat for fat grafting, and stem cell therapeutics at the point of care.

Kwame Ulmer  1:32  

That was, to the point. As beautiful, we got a little time so we can embellish a little bit Hafeezah.

Hafeezah Muhammad  1:38  

Hi, everyone, I'm Hafeezah, I consider myself a corporate dropout. I'm the founder of Youme Healthcare. We are a pediatric mental health company that focuses on children and families that have Medicaid.

Kwame Ulmer  1:55  

And you're in revenue. And I'm

Hafeezah Muhammad  1:57  

And I'm revenue revenue positive from day one,

Kwame Ulmer  2:00  

right. So these are the first questions for you I have a cheat sheet. Why did you choose to tackle this particular mental health problem in this particular population?

Hafeezah Muhammad  2:15  

So I'll, I'll take myself back a little bit to give you some context. So how I got to this point, I started off at Verizon when it was a $1 billion revenue company. When I left it was $100 billion. So I like to say a startup on steroids. I missed the startup life and I was headhunted for a mental health company that just raise a Series A, I was their first non clinical hire. And I'm going to take you back to yesterday morning in the keynote speaker, when he talked about data, they had 14 years of data, there was no business intelligence. So I brought in business intelligence to be able to analyze that data, and to be able to see how we can make better business decisions as an organization. While I would like when I was looking at that data, I would like to say tragedy, and serendipity collided in October of 2020, my son who was six at the time, came to me and said, Mommy, I feel like I want to kill myself. As a mom, I felt like a failure. But even though I had more than 2000 therapists around me, I could not find care for my son, because of his disability. He had Medicaid. So I took a look at the data. And I noticed that over the past 14 years, there were more than 200,000 families on Medicaid that called looking for care. And they were turned away. And, you know, I said I never want another parent to go through what I what I was going through and I felt it was that moment where a capitalist with a capital C that I found my why, like I can be able to deliver revenue deliver care to those who need it most. And that's my why about why I started me healthcare.

Kwame Ulmer  4:03  

And so in some ways, and we're going to talk about it, your background is non traditional, but there's some really commonalities that we see. And most founders, they have a really compelling origin story and a background in understanding processes from working in corporate America. That's that's a really interesting touch point. Derek, I want to ask you a question about your why, specifically, Derek, why fat?

Dr. Derek Baynard  4:35  

Why not fat? I can't say I was inspired by the movie Fight Club. But it was pretty remarkable when Brad Pitt was trying to convince Ed Norton like why not take fat that has been thrown away and turn into soap and sell it back to the same woman who had it removed. But when I was in my research fellowship at UC Irvine, it was discovered that fat fat is the largest source of stem cells, adult stem cells in the body. And stem cells have almost unlimited potential in terms of regenerative potential and the different ailments in medicine, human medicine, and plastic surgeons are essentially at ground zero when it comes to fat. But they aren't putting it to use or harnessing its potential. And so it became, you know, pretty early mission of mine to figure out there's got to be a better way as I always say. But yeah,

Kwame Ulmer  5:44  

it's, it was born out of your experience as a clinician in plastic surgery. And if you could share a little bit more about your roadmap, you're not just starting with one indication, I think you have a journey that you see for your for your company.

Dr. Derek Baynard  6:00  

Yeah, so one of our earliest research projects was looking at the use of adipose derived stem cells for the treatment of diabetic foot ulcers, we received a grant from the NIH, and we uncovered that our novel process of unlocking these stem cells also enriches a specific subtype that is specific to the healing of diabetic foot ulcers. However, it's very difficult to go to market with a patient population that is not necessarily, you know, your first choice in terms of a candidate for surgical intervention. But also we have to create a market for this platform. And so, you know, we plant into the market and esthetics, we have to convince plastic surgeons first and foremost, about the potential of adipose derived stem cells and the extensive uses, but plastic surgeons are also at the forefront of regenerative surgery. They are involved in bone reconstruction, nerve regeneration, and all kinds of soft tissue regeneration. But also, it's important to note that there are two companies and phase three clinical trials treating knee osteoarthritis with fat stem cells. And this is really just the beginning of the applications of this technology. But ultimately, we see it as a very low cost, low morbidity solution that can be deployed and under resourced environments, like, you know, countries that don't have the resources that we have.

Kwame Ulmer  7:38  

So that's exciting. And I'm going to turn to you Hafeezah. The connection I see between both of you is you're thinking about outcomes in your solutions, very different solutions. But you actually have some early data to show improved outcomes for your solution in the good old state of I'm going to pronounce it how they say it in Maryland, Maryland.

Hafeezah Muhammad  7:58  

Yes, Maryland. So if you don't think every state has an accent, I'm from the Virgin Islands. And I picked up on the Merlyn accent like my first year there. So hopefully, you might hear it Kwame. So I wanted to ensure that the solution that we were developing, really impacted I was making a difference. I know a lot of us have heard the reports about the crisis that's escalating amongst adolescents, young children in the US to the point that the surgeon general stated that you know, we are in a crisis. So initially, I wanted to ensure that how do we quickly be able to help children start to become themselves. Our motto is that happiness can't wait. So how we can make them become happier. So initially, our gad seven results, we have seen a 78% reduction in anxiety markins, we've seen a 72% reduction in their depression scale. And also, more than 80% of our children have seen improvement by their fourth session. So the work that we do to include the entire family unit, the one on one sessions is something that's been working well. And also, most people see us as well, we're a service company, but in the background, we've been beta testing technology called bibliotherapy. How do you use books in amongst therapy to help do work in between sessions to help improve those outcomes? I'm excited to say that or clinical trial is moving well, and we will be looking to spin out that product later this year to be able to market it and be able to share it with other individuals so that they can know that wow, this really does work.

Kwame Ulmer  9:40  

And just to level set the audience roughly how many teams have you reached and how much revenue Have you generated?

Hafeezah Muhammad  9:48  

So when I started looking at the Medicaid population, most people say you're not going to make money in Medicaid, why Medicaid? And I'm like, why not? X covers 100% of that. care, I don't have to worry about copays. When you look at unit economics, you see that, but at times someone pays a copay for mental health treatment, or a deductible, you're comparing it to a most what we're getting a top line for Medicaid without having to spend additionally for resources. So when we started, we have done more than 7000 sessions in less than two years. And we're on track for 960,000 in annual recurring revenue.

Kwame Ulmer  10:27  

So that's exciting. That deserves a clap, too. You know, particularly in light of what we see going on with Para Therapeutics, I, I will say that there's an opportunity for solutions to dramatically impact mental health and drive outcomes, despite what's going on with Para therapeutics. Derek, I'm gonna go back to you and ask you, what most excites you about the technology you're building right now, at this point in your journey.

Dr. Derek Baynard  11:01  

I would say we are a science first company. Well, there aren't a ton of competitors in the space, it's it's quickly being filled, like the gaps are quickly being filled. We just published this past January in public and reconstructive surgery, which is the largest journal for plastic surgery. Outcomes that demonstrate that the stem cells that are produced by our platform are far more enriched, and exhibit increased regenerative capacity in the form of gene transcription, and the secretome. Literally, every platform out there right now, the stem cells, that if they do demonstrate any, like scientific data related to those stem cells, they compare them to the standard which is either enzymes or basic mechanical processing. And they are able to demonstrate that they have an equivalent stem cell to that standard. No one has published any data related to an improved enrichment, and specifically what we're targeting, which is mechanical transduction. And mechanics transaction is the concept where you the physical manipulation of the cells induces, you know, a transformation. During COVID, they were throwing everything at at the screen and see what sticks. And interestingly, adipose domes, adipose derived stem cells demonstrated efficacy in the healing of of lung tissue. But that's just one example of where, you know, individuals, countries, entities are looking for that low hanging fruit. And the fact that our platform is being developed so that it's truly low cost, it's mechanical based. So essentially, you just need the platform and our disposable cartridge, there's no need for, you know, chemical enzymes or anything of that nature, it can really be deployed in under restore under resource settings. One group recently demonstrated that they took adipose derived stem cells that were processed by enzyme and injected them in day laborers with who are amputation candidates, they had very advanced diabetes and lower limb ischemia. And within six months and a single treatment, over 85% of patients had complete wound healing. And so it really demonstrates the potential of this platform. And I think that the way we are approaching it and engineering, it will enable us to really, truly deploy it in those settings. Without you know, the the extensive needs of again, enzymes or special technicians to be able to, to deploy it and in those settings.

Kwame Ulmer  14:05  

So this is wonderful to learn about all the work that you've done as a clinician researcher and publishing in this space. Can you say a little bit about the role of kale wells and other members of the team that maybe helped you with the science and even selling? Because I feel like there's an important element of that, that that you've built in your team?

Dr. Derek Baynard  14:28  

Yeah. No, surgeons are notoriously slow to adopt new technology. It usually takes decades. And and that is that is demonstrated by the technology when you go into the operating room. A lot of that technology is 10 20 30 years old. I have the advantage of having, you know, been on many podiums. I sit on the regenerative medicine subcommittee of the American Society of Plastic Surgeons and I I'm honored that I'm considered peers with some of the thought leaders in the space. Just recently, actually, yesterday, we secured a KOL, who happens to be the former team doctor for the Boston Celtics. And he does 95% orthobiologics. So 95% of his practice is injecting stem cells and joints, as well as IV for the healing. So it just demonstrates the wave that's about to come. And, you know, individuals don't want surgery, they don't want to be down, they don't want six months of downtime or sick, extensive rehab, and, you know, kind of this preventative and actually precision approach to treatment of what eventually we'll all get, which is osteoarthritis, I think it's going to be the wave of the future.

Kwame Ulmer  15:49  

Yeah, that's, that's really great to know, Hafeezah. You've really done well in the state of Maryland, any unique insights to date that you want to share. But

Hafeezah Muhammad  16:04  

so being in one state, gives us the opportunity to ensure that we're able to work all the issues to be able to understand the market to be able to build a playbook that's going to be scalable. And what those what this is, of this opportunity of being in one state, kids are in Medicaid are everywhere there, more than half of the children in the US have Medicaid, that's something that was very surprising to me. And out of that there are 9 million of them that need care. And where we find them was something that was very unique in the way that direct to consumer marketing wasn't something that was going to be sustainable, also helps us lower our cost cost of acquisition, which is great, but working within the communities like the Department of Social Services, the foster care, the Department of Juvenile juvenile justice system, those are some really unique insights that I was able to find working within that state. Were working to enter additional states like DC, Virginia, and we have a few more on the map to be able to take our solution to be able to reach those kids, our initial outreach, outreach to those Department of Social Services, those Title One schools in those states has been incredible, to the point that we have a waitlist of individuals that would like to work with us so that we can help their children have a happy and successful life.

Kwame Ulmer  17:28  

And this question is for both of you, you know, I like to say in the 90s and the aughts, a traditional med tech CEO was an MD or a PhD who had worked at Medtronic for five to 10 years and they found a problem they thought had a unique solution. They rounded up some money from radiologists or others with disposable income got a friends and family round going and they were building their medical technology. That's not either your stories. So what can traditional med tech CEOs learn from your your journey?

Dr. Derek Baynard  18:05  

I guess I'll go first, I had the privilege. So I'm a I'm a COVID startup. I left my training during the pandemic and was honored to be a finalist in the first Medtech Color cohort. So Kwame, and all involved I thank you so much for what you've done, because it's been truly transformational. I have to say that my, my my pitch deck, my approach changed dramatically just in the boot camp, that was part of leading up to that inaugural pitch event. During my research leading up to my training, I had a conversation with a renowned plastic surgeon in the UK. And he said, Derek, you need to need to be the three A's which is available, affable and able, and those first two are free. Right? You can always show up and be approachable. And I think that's that's done me, you know, miles of service because people want to work with people that are enjoyable to work with. medtech color has helped me and in turn, I try to help others and I try to be present and and just available if I've got the time, why not help. But the last part is able and that and that's where the grit and the work has to take place. And you know, as as a surgeon and during my med school years, they say you got to be you know, the first the first one there and the last one to leave and that doesn't change much from the med tech industry as well. 

Hafeezah Muhammad  19:49  

well I'm definitely the most non traditional. I growing up I was great in math went to great schools but horrible at science. And I feel that what we can learn from each other is that being a non traditional medtech CEO is being able to bring the business, being able to think about our investors, and how that what we do translate to our investors because they are our shareholders, and they're making a big bet on us to be able to help them be able to have returns. The second thing is that I've been able to have the ability to build a strong team, not knowing where my opportunities are, I'm great with business. But clinically, I'm a zero on a scale from one to 10. So I bring the best clinical team so that we're able to collaborate and be able to work with each other. And finally, if you want to be able to take a company from point A to an exit, we have to think about what it takes to build a strong culture. I tell everyone that culture eats strategy for breakfast. And one thing what we can learn from each other as a non traditional medtech CEO is not focused on the culture, what your team, because there's a lot of work to be done. The inventions that we're making, what we're creating is incredible, but we need each other, we need to build each other up, build a team that's gonna follow you, and only hire individuals that can replace you, as a leader. Only hire your replacements. And I think having that mindset makes me being like being a non traditional CEO, is what's going to help propel you me to the next level, but also to be able to bring those along to that have this message today. Build your culture, understand your weaknesses, you don't have to develop them, but higher your weakness.

Kwame Ulmer  21:34  

I almost feel like we should just boom, stop.

Hafeezah Muhammad  21:38  

Mic drop. But we won't Oh, okay. Okay, Kwame I was ready to go. I have like my mic drop. I'm ready to go. I had breakfast. I'm tired now.

Kwame Ulmer  21:50  

Just two more questions, because I think everyone's bellies are full and ready to start the continue to Scott experience. Question number one, you've both been a part of accelerators. Talk about the role of accelerators, I think you have an announcement about an accelerator that you chose to participate in. And then we can close that with final thoughts from you all. Derek, let's start with you the role of accelerators.

Dr. Derek Baynard  22:18  

So I may have an MBA behind my name, but that is a theoretical degree that is like 10 years removed from any experience that I have. When I left my surgical training, you know, it's like drinking from the firehose in terms of like, where to start, and what to do. And so, you know, there's your traditional accelerators, where you apply and you give up equity, and they hopefully, you know, put you through, you know, the necessary steps to get to that next milestone. And then there's the pitch competition accelerators like Medtech Color, which they don't take equity, they give you money, which is obviously a good thing. But I found that every advisor that I've been exposed to, in these types of environments have been there, people who are just truly invested in you and truly invested in your success. And even, you know, two months removed from the Excel or I can still call up those advisors and ask for their advice, their expertise, and they're more than willing to help and, and help me see what I might be missing. And so, we continue to apply for accelerators, because we are still pre revenue. We just we're closing our pre seed round this week. But we still have a long way to go. And there's a lot that I can learn. So, you know, Medtech Color was one, we are participating in the med tech innovator roadshow in Baltimore next week. So wish us luck. But, you know, we're gonna take all the help and all the support we can get a FISA.

Hafeezah Muhammad  24:02  

So I'm very grateful to have gone through accelerators. So even though I have an MBA, to be able to communicate with investors, I would tell you initially, it's a different language, it's a different world. So being able to go to accelerators to understand how investors think, to be able to relay that information to them to instill confidence that this is a company that we can build that we can grow. And something that relates to them was really something that I drew myself to, even though at times you gave up equity, grateful for med tech color to have one free cash so that was great, but it really helps you propel to the next level. And also to because I have a lot of individuals that are junior within my team. It gives an opportunity for me to recognize them. That doesn't cost me money out of pocket because you know, we try to run a lean operation that they can go in my place as well too, that they can Learn about how to start a business, how to run a business, how to understand, you know what investors look for. Because if we ensure that all the runs within our organization is strong, then we always going to remember our replacements are going to be strong. And it takes that ability to give them that knowledge should those accelerators, and I will continue to apply for accelerators, even if I make an exit and sell this company, because like lifelong learning is something that's incredible. And you can never know too much information.

Kwame Ulmer  25:32  

So this is great. So the wonderful part about this program is everyone's bellies are full, they're fully caffeinated. They're ready to hear your last comments. They're primed. So we'll start with you, Derek. What's the final thought for the group? 

Dr. Derek Baynard  25:50  

I didn't expect that one.

Kwame Ulmer  25:53  

No pressure at all. Don't worry.

Dr. Derek Baynard  25:56  

I mean, I just want to come in to Kwame. I do want to plug a nonprofit that I run, which is the Arthur L. Garn Society. You know, we live in a society where there's a lot of commentary in terms of, you know, efforts that need to be made, but the data is the data, plastic surgeons. You know, African Americans represent three roughly percent of plastic surgeons even though we represent 12% of the population. There's data that demonstrates that when the doctor looks like the patient, the patient is much more likely to follow those treatment recommendations. There's data that shows when a researcher who's conducting a clinical study looks like the patient enrolled that clinical study, the patient is much more likely to be adherent to the recommendations. And there's no doubt that, you know, minorities have poor outcomes, and reduce life expectancy and increase infant mortality. And the only way we can truly level the playing field is by increasing the pipeline of minorities where we are underrepresented because it truly makes a difference. So I thank you for what you do at Medtech Color, support, meta color support, the Arthur L Garn society in a society that's trying to reduce disparities in health care.

Kwame Ulmer  27:15  

checks in the mail. Thank you so much, Derek, for Hafeezah. What do you want the audience to know?

Hafeezah Muhammad  27:23  

A year ago, I was wondering how was I going to be able to make my next month's payroll. And a year later, I might LSI on a stage as a panelist because of Kwame and a team that believes in our mission and the work that we do. And I want to share something of positivity because there are a lot of funders that are in this building that are CEO's. And I just want to tell you that never give up. It's hard. It's very lonely. And in the end, we will win because we're making a difference for lives of people that we don't know, that we haven't encountered yet. And making noise every day that you're making that difference. You wake up every morning and you smile. And you said you know what, I'm gonna fight another day. Because in a year from now, you might be at the White House helping us. Right, so you just never know what your journey is gonna turn. And you know, I want to thank everyone for coming today. And in the end of the day, never give up and be fearless and be ruthless. And always pay attention to data. Data matters.

Kwame Ulmer  28:40  

Oh, we have uh oh, Feezah, we're so grateful for your time this morning. And we didn't necessarily budget time for questions from the audience. But I know you all will be here. And we just thank you all for your time as we continue on this wonderful Scott LSI experience. Thanks again. Have a great remainder your conference