Fireside Chat: The Viscogliosi Brothers Journey, and What's Next? | LSI USA '25

John J. Viscogliosi  0:00  
So first, I'd like to thank Scott and the whole LSI team. First time here, spent most of my time, unfortunately, up in the room working on a transaction, but the time that I did get to spend down here was incredible. I think that this is the premier med tech conference, the best one I've been to or saw. So because I didn't get to engage as much as I would like, but the number of people, the number of requests that I had for meetings, and the quality of those companies. So I'd like to apologize to those 70 ish plus people who asked for meetings that I couldn't get to. But if you could contact visco LSI brothers watermark, that is our investment company that we now flow our investments through, so please reach out to them, and they will process everything for me, plus I'll send all of my requests to them, for them to be in touch with you. But again, I think we owe Scott and the LSI team a good round of applause. Wild Dobbs

and the VBW team will be here next year, because I won't let them go to JP Morgan, gonna send them here so,

Brandon Bendes  1:48  
So real quick, show of hands in the room. How many people here have grown up with at least one sibling during their childhood, and now, hopefully, okay, that's almost 90% of the room. How many of you that do or did grow up with a sibling would ever consider going into business with them?

Very few.

John J. Viscogliosi  2:22  
I don't know what that says, Hello, by the way.

Brandon Bendes  2:29  
So it's it's a privilege to be up on a stage with John. I've now known John for the past 15 years, and John is one of those individuals who grew up with siblings, and then went into business with those siblings. And in fact, over 25 years ago, he started his firm with his siblings, and in the past 25 years, that firm specialized in investing, specifically in neuro musculoskeletal companies. They've built over 45 businesses. They've exited more than 20 of them successfully, and they have returned almost $3 billion to their shareholders. Now some of you may know John and his brothers from their incredible track record in this in this space, others may have just become familiar with a name after seeing it in the news over the past few months for acquiring the fourth largest spine company in the world From Stryker. But there are probably three things you absolutely don't know about them, regardless of what you do know. Number one is that John here is a award winning barbecue pit master.

John J. Viscogliosi  3:56  
Hence the fire tattoos.

Brandon Bendes  4:02  
The second is that John's knowledge of animals and animal habitats is absolutely unmatched, and he could probably tell you the habitual rituals of animals from all over the entire corner of the globe. And my favorite, which is number three, even if you know them well, I will be willing to bet 99% of you cannot pronounce the name of the company or his last name. So for the record, it is visco LSI, and this is John viscolozzi, and it's a pleasure to be here on stage with him. He's going to share a little bit of insight about his journey VBS rise some of the interesting tidbits they have of how they built these successful companies, so entrepreneurs like myself can copy that and do the same thing. And then also the state of Medtech investments and how he and his brothers and VB are kind of leading that charge into the future.

John J. Viscogliosi  5:00  
Thank you Brandon, so welcome everybody. Thank you for showing up to listen to a relatively boring story that for me, the journey started 56 years ago. And yes, I tell people, it's not the age, it's a mileage for the gray hair. So we had born and raised in Detroit, got a degree in criminal justice in the 90s. When I graduated, there were no jobs with the federal government or really municipalities. So I decided to work with real criminals and went to Wall Street. It so happened that my brother Tony was there as an analyst. We brought Marc there to work with us as child labor at the ripe age of 14 years old, and worked them like a dog, but Tony and Marc became the leading analysts on Wall Street for the neuromusculoskeletal industry and also dentistry actually anything to do with the human body. We decided, long ago, 30 plus years ago, to follow the mesenchymal stem cell, and we still hold true to that. And by being endless, I was on the sales trading side, and then Asset Management and my first job on Wall Street, I was an assistant to an assistant in institutional sales, and within a year, I was running the Department of sales, trading and institutional sales. So I learned quickly, because that was not my background, but it was very interesting to me. On Wall Street when we started, there were 70 there was seven publicly traded companies in the neuromuscular skeletal industry. When we formed VB in 1999 there were 72 and we participated because of Tony and Marc's writing prowess, we participated in every public offering that was done in all the debt that was done publicly in a 10 year time frame, or 12 year time frame. They wrote more than 7000 pages of investment research. So they were prolific, plus we traveled extensively to conferences for surgeons, and sat in the presentations to teach ourselves a science. And the reason why I go through this is our fundamental principle of when we started VB, and still goes today, and what we learned on Wall Street, and how can we differentiate ourselves, and how myself and my brothers did that on Wall Street was three simple things more better. First, so Brandon has heard that over 15 years. David Nichols, who's out in the audience, who's been with us in a couple of our companies, has heard that a lot, too, and we still hold true to that. And it's very simple, so more better First, know more information. Know it better than anyone else and be first. So lots of challenges there in doing that, but our journey was a lot of self education, because also my brothers did not have a medical background, and really why neuromusculoskeletal health care truly an accident? Because when Tony was it was 14 or 15 years old riding his bike at 6am in the morning from our house to the Dearborn Country Club to go caddy, he was hit by a drunk driver and had significant injuries. Had he survived and at that time. So with that complexity, it wasn't so easy to survive. So you know, when he decided to go on Wall Street and he wanted to do health care, and there was this company in Michigan called Stryker that did orthopedics, and then there were these other companies and close in Indiana that did orthopedics, and he had all this trauma and needed orthopedic surgery, cranial maxillofacial surgery, all those products were used in those companies. And when he looked he said, What's my value of being an analyst, if I'm at that time, the 35th or 40th analyst covering a cardiovascular company? Nothing, but there's these seven companies that no one's covering, no one's paying attention to, and I want to be a leader, and so I will cover these companies be the leader in this area. And we did further research altogether and found out that 100% of the worldwide population will suffer neuromuscular skeletal injury in their lifetime. Ah, pretty interesting market, right? 100% of the population worldwide. So we thought, okay, this is small. No one's paying attention. There's an opportunity to grow, educate, and as evolution comes forward of products, technologies and better health care, this area will grow. So that's why neuro musculoskeletal, but we also do today, other devices and some technology.

Brandon Bendes  12:16  
So not didn't have it going well, didn't have the scientific air full

John J. Viscogliosi  12:22  
on, did not have a scientific background. So how I learned it is in the or sitting in those presentations, educating ourselves, reading, consuming everything that we could, speaking with everyone that we could. And during the career, we had our opportunity in 1999 to acquire a product called the charity disc, and we worked with link for many years, for about eight months, nine months to acquire that. And actually Marc and I quit our jobs on Wall Street, started VB to acquire the SB Shari Tay, and we had a little bit of money from Wall Street, and it all got paid to lawyers to do the transaction. And very close to the time where we were getting to the transaction, about two months, I turned to my brothers, Tony was still working, actually, at Stiefel, because he was making the most money. He had the highest salary so he could support us, as the three of us were living in, you know, a 600 square foot studio apartment in New York, sleeping in, you know, two of us sleeping in the same bed. I said, Guys, this isn't going to happen. And someone had the idea, and that was Marc saying, Hey, I know this thing called pro disc. So we reached out to escuela, who owned it, said we'd like spin on pro discs. And they said, Sure. So literally, at the signing to acquire the ESPY Shari Tay, we had the acquisition documents for pro disc and for Shari Tay, and we walked into the room, and one of the people who was working for link at that time was in the room, and we walked in, I'm like, turned to my brothers. I said, I told you this isn't going to happen. And all the contracts were there, right? Right in the middle of the table, opened up to signature pages. Helmut walked in, sat down, stood up, reached across the table, grabbed the contracts, pulled them back, said, I can't give up my baby. And Tony looked him square in the eye and said, helmet, we completely understand, but we'll be your number one competitor. And he laughed at us. True story. Laughed at us. Good. Give me Give me more fire. Give me more fuel. We close the produce acquisition. Produce is now the number one revenue total artificial disc in the world. SB, Charita has been off the market for years. Another interesting story, J and J owned produce after they acquired synthase. Synthase bought it from us in 24 months, or 36 months from when we launched the company. David was there. David Nichols, who's in the audience, was there with us running R and D did a fabulous job with the cervical nine months, nine months from when we said we wanted a cervical product til it was implanted in the first human so J and J centes bought it from us for $350 million Wow, we owned a massive portion of the company. We could have retired. We didn't. We use that to go out and do other things. Jay and Jay had it, unfortunately, could not execute, because it was just a small product in a monolithic organization, and they offered to give it back to us, or wait sell it. But I call it give it back for what we got it for. It was doing $18 million in revenue worldwide, giving up 10% negative growth every year. I was CEO of Sentinel, and we bought it within year one. Flip that to a 20% grower, executed over the time frame on all the things that need to be done. And now it will do about $135 million so from 18 million to 135 this year, that was at the end of 2000 that was in 2018 that we got it back. So have some experience in being CEO, running strategy. Here's here's another interesting tidbit that people don't know about. So we leave Wall Street. Hey, we wrote 7000 pages of investment research. We know this industry better, so let's start a fund. Well, everybody we went to about starting a fund said, Well, okay, you guys know the industry is endless, but you aren't necessarily investors, and you need to bring in operators, you know who, if you make investment, will sit on the board and operate the company, because you have no operating experience. I said, But wait, I used to run my parents pub in Michigan. It's the same thing. You have product. You gotta sell it. You have customers. You got to service them. Money comes in. There's a profit. Here we go. Know how to do this. There's no difference from running a small pub in Michigan than running any other organization. It's just size. You have customers. You have to service people you have to satisfy. You have to keep your employees happy, so they keep the people who spend the money happy. You have to provide them a high level of service and a good product. So what's the difference? And I'm still trying to figure that out, by the way, so because essentially, it's, it's always been the same thing. So okay, I digress. Let me pull back so no one would give us money to run a fund. We said, you know, did we start VB to be a true merchant bank, or did we start VB to be a money management firm? And we said we started it to be a true merchant bank, where we provide all services to an industry an area, and do everything within that area or that industry. So we said, Fine, we'll do a fun later. So how are we going to get operational experience? Ah, we're going to run the companies. And we did and ran most of them, and I think we did okay. Now, are we the best operators in the world? No. Are we difficult to work with? Is is under us? Yes. I'm sure if you ask David out there, he'll say, Yes, Drew will find out soon, but, but yes, we are and what makes us difficult is a drive. So the challenge that we've had is how hard we push. Never ask someone to do more than what you do. Never ask someone to work harder than we had so driving people working because we work hard. I mean, when, when Brandon started with us. We were right there at four in the morning getting stuff done together to make sure to have it ready for the presentation at 7am and go all night. And we still do so it's a drive. So I'm talking to investors, I'm talking to entrepreneurs, I'm talking to, you know, a whole wide variety of people. So it all comes down to, how are you successful? And I've been thinking about this for a while, while I've been here, and what can I tell or say about how were you successful? And I think it boils down to, what are you willing to pay, okay, not in monetary so we all see the NCAA started today, March Madness, and we all watch sports, or most of us watch sports, and you look at the people who are at the pinnacle and those athletes, what have they paid personally? What have they sacrificed personally? What are you willing to sacrifice personally. What are you willing to pay? So when I'm looking at making an investment in a company, I look at that. I look at the person, because investing, we all have technology or products here, okay? And some are successful, some won't be successful, and it comes down to that person who's leaving it and driving it and how they view it and what they're willing to give up to make sure that that happens. My brothers and I have given up a lot the people who've worked with us know that because they see it. A lot of people ask, What's your secret sauce? And there could be a lot of different answers, but one answer for sure is not the desire to make money. Shawn. Talking to everybody, right? Someone comes to me says they're doing this because they want to make money, or the first thing they talk about is their exit value, or what they think that they can make switch off. That's the other thing. If we're if we put in $1 into a company, we're willing to own 100% of that company. So we're either all in or where or we don't participate. 

So in investing. You all who are out there trying to raise money, look for investors who are committed, who have I'm not sure there's a lot of investors who have that exact same situation mindset, that if you own one share, you want to own all of it, 100% of it, because we don't invest or do things to manage a portfolio for return. We do things to change the world. Some of you who have known us for many, many years and seen presentations that we've given, we always ended with a picture of the the globe with the sun and a quote from Mahatma Gandhi. If you want to be that change, I'm sorry, if you want to change the world, be that change, and for I think Tony still uses that. I don't really do a lot of presentations anymore, but Tony still uses that. That's always been our closing slide. And when we look at technologies, and we look at what we want to do or invest in or participate, it comes down to the people, and how we identify those people is, why are they doing what they're doing? Same way we work with doctors who've invented products, and we're relatively well known, I think, in the industry of bringing new products and developing market. And the fundamental thesis there is when the doctors come to us, and I learned this from Dr marnet, who invented the pro disc. And it comes down to in many long discussions. I mean, day, weeks, months of discussion comes down to design philosophy, design principle. What are you trying to achieve? What is the goal of this product? What clinical unmet need. What is the design rationale of this product or this technology? So then you take it to an entrepreneur or company people, and they have to be able to communicate. Why are they doing this? What are they doing? Why are they doing this? What do they see? Because all the years on Wall Street we see today because of of the scoliosi brothers watermark, we see close to 500 companies come to us, asking us for money over the 25 years at VB, we probably average 200 250 companies a year for many years, we did zero, and for aggressive years, we did one or two. And it came down to, what are you trying to achieve? What are the people involved and what I've. What I look at is or and have seen is you can have an A plus technology and a C management team, and you get a C result. You get an A plus management team and a plus entrepreneur and a plus team with this C technology, and you'll get a B plus A minus result. Now, once you marry that a team with an A technology, you get magic. And if you go back and look at the history of our exits, we have generally the highest multiples paid. Now I don't know how many of you were in the room when Spencer styles, from Stryker talked yesterday, and he talked about acquisitions, what they look for in the acquisitions, and why they will pay the multiples. He didn't talk much about technology. Yes, the technology has to be there, and yes, the technology has to work. But what's differentiating is all of the things that support that. Do you have good compliance? Do you have a quality system? Do you have all of these other support things? And Stryker has bought multiple businesses from us about small bone innovation from us, which helped them create their platform of extremity businesses and trauma businesses, they bought Alliance healthcare solutions that created their sustainability. We created when we sold, when we sold spine solutions to to synthase. We created a company called Micra MCRA, which, when was it? Mid last year, IQVIA decided that they had to own it more than we needed to keep it. So now they're part of IQVIA, but we built that as our own in house organization to do clinical regulatory, reimbursement and quality. So what we've historically done at VB, because we know that we're in this industry is create our own ecosystem and spend our own dollars to create support organizations. So in early, in early April, there'll be the isas meeting, the 25th anniversary of isas huh, VB has been around for for 26 years. They're having their anniversary 25 years. That's because we knew a direction for Karen, the future for patients was going to be motion preservation technologies in spine. So actually, this was actually a business trip. Just so happened to be in Martinique, but it was the former fellow in residence meeting of of Dr wa Camille, the the gentleman from France who actually invented the pedicle screw. Okay, so I was there with Dr marnet, and we were thinking about, okay, how do we promote this area or category that we know will continue to grow and evolve? Well, let's create an educational society for the surgeons to help promote this. So VB funded it for the first five years, completely out of our pocket. We brought in the leading doctor for all the competitive products of produce at that time, put them on the board so that they would then go to those companies and. Get this push in this education. We then decided, because of the prolific writing in the history that my brothers have had, decided to write what has turned out to be the definitive book, even though, now it's years ago, on motion preservation, we paid for that out of our own pocket. When we did those, those books cost us $25 each to make, because we'd ship them around to different conferences, and for any of you who are in the industry at that time, we would just hand them out. That's how we built the brand of VB. That's how we built the knowledge in sustainability. So reprocessing single use and single use

medical devices. We created an organization to push that. We hired lobbyists to the government to change the laws to create that so when we do something, we also do a lot of peripheral activities that help promote the category or the segment that that we're doing. So a lot of different things to to the secret sauce of how we do things. But I think it boils down to those three words that I started with, with more better, first and then persistence, meaning, you know what, what, what personally are you willing to pay to achieve what you want to achieve? And money is a short term motivator, so unless you have a passion, a conviction that you want to change something or be successful. The many people that I've seen who doing it for money is relatively easy to fair it out now, after all these years and all this gray hair, generally, don't do as well. Sometimes lightning can strike in the bot in a bottle. But usually we try and stay away from from those types of investments when they're already talking about returns. You know, Brandon was planning on asking me some questions, and I want to hit on one is, oh, we only have a minute and 30, unless Scott allows me to go a little bit longer. Thank you so and there's probably more wine outside. So how things have changed over the years, the med tech industry and funding of the med tech industry in our careers of 35 years, I think, is the absolutely hardest, most difficult, challenging time to raise money now today, because so many of the historical healthcare investors, venture investors, venture funds are no longer around because that model has proved out not to be effective and work. Why? That's another long story. I'll keep you guys here to like midnight, but so now it's how many of you have gone to venture capitalists. And they say, well, I need you to be doing $20 million dollars in revenue before I invest in you, right? So or I need this. And really, what that was, when I had dark hair, was a growth investor. Mm. So today, there's really no true venture type investor some are popping up here and there, but they're small. Family Offices has has filled that gap, and friends and family have filled that gap. I mean, even in our investment company at V, b, w, it, since it's an investment company, we have a structure of venture growth, private equity and debt. So we we go across all platforms, and we allocate to those platforms and say, Okay, this percent here and this percent there, so I feel your pain. We actually go out and raise money too. We raise money for our other company, companion spine for woven for for spine bio pharma, all of our companies that we're growing, we're out there raising money so we understand, you know, the pain and suffering that that everybody is going through to get there, but you have to persevere and and work through it. Now. It's an incredibly exciting time, too. In med tech, actually, probably in the last 15 years now is the most exciting time, and I think it's going to actually get even more exciting, because evolution is occurring where you're marrying different materials with technology. And how do we marry those together to address a lot of address problems in patients that can't be addressed effectively now, how do we enhance that patient journey? You know, with technology, with new materials, with better visualization during surgery, assisting the surgeons to be more effective and less disruptive. So it's a it's a truly interesting time of how to do that and what will evolve. So I'm very excited about and that's one of the reasons why I fired myself as CEO of Sentinel and focused on on V, b, w, because of all of this going on, and in spending my time re learning versus just kind of running a company and doing the same thing. Okay, set the strategy there. They're executing it. Still involved, help guiding it, but now I get to look at all these other companies, or I should say I got to look because I got a phone call from my brothers one night at like 1030 and they said, Do you want to buy Stryker spy? And I said, Well, I'm semi retired, you know, I'm running this I'm getting to learn all this news, new stuff, all these changes. But absolutely, are you kidding me? I'm now going to get, we are now going to get the fourth largest spine company in the world with a direct sales force. Do you know how many nights, you know, I dreamt of that and what I can do with that. So we're very excited about that. It's going to be an incredible journey. It will be called VB spine. So if you can imagine, there's only one other business that has our name on it, and that's the family office. That's our business. So this will be there into perpetuity, and that's the other thing. And. And I'll, I don't know how far off time, but if I have one more so, here's another thing that I look at. And when we make an investment, or when we go very large into a company, we want to own it forever. Okay, it's just so happened that multiple times people have wanted to own it more than we wanted to at a certain point, because the numbers just you can say no, because we've never, we've we've never actually put a company up for sale. Every company is been approached to us to purchase. So we've never we've never auctioned our company or had a strategy of exit, because every company we get into and every company we build, remember when I talked about, like, an hour ago, sorry about speaking with founders and people running companies who are raising money and they start talking about the exit valuations. Okay, not interested because, and I've learned this a hard way, and we've learned this a hard way in making investments early on. Everything that we do we want to own forever. Now that's a mindset that makes you think about doing the right thing, because you're making decisions that should impact 20 to 25 years from now, if you want to own something forever, so you do it more of the right way, with that vision of owning it forever and it being a valuable stand alone, long term entity. That's also why we've gotten our values, of our prices, because all of the companies that we've sold, everything that we promised, the buyers they've received. Okay. They've received. Synthase did exceedingly well with the pro disc. It was just after it was sold to Jay and Jay that it fell apart. But at synthase, they crushed it so so that mentality of owning something forever, making those tough decisions, taking the high road, because I've seen far too often where Okay, we have a three year plan. So you start getting into this decision making process of, what do I do in this three years so I can sell the company? Oh, shit, I didn't. Sorry. I didn't sell the company. So what do I need to do now so I can sell the company next year? And you get into these your thesis of decision making is fundamentally flawed because you're trying to chase a number and so that's why I'm not also huge fans of of outside investors and CO investors, because we've suffered through that where they come in and Here's a spreadsheet, okay, what's your this? And it's like, no, let's talk about the business. Let's talk about the business challenges. You know, what's going on? How do we address it? And let's be collaborative versus okay, what's, what's my return that if you take an extra year to execute on something that's going to affect my IRR. And now I can't raise my next Fund, and by the way, I have four other companies that went bankrupt, and so I need you to perform. Yeah, so we gotta, we gotta spiff this up and sell the company. Heard that a few times too, but I'll finish with a long term vision, and I'll give you an example. So as a kid on Wall Street about to get married or just got married. Christmas, the company decides it was poorly run, we're going out of business. 

Ah, well, that's a small problem. Being 22 years old, just move your new wife literally two months previously to, to Manhattan, from from Detroit. Oh, I'm gonna get fired. Well, you're not gonna get fired. If you resign, we might think about hiring you back. Yeah, no. Now I can't get now I can't get unemployment. And right? So Christmas comes out. Wouldn't do it because I gave up control of the decision. Said, No, I understand the decision that I'm making. I'll take the hit. So fortunate because of that, I got hired into a training program to be a retail broker at a bucket shop in New York. So you all have seen these movies, right? Of of you know, Stratton, Oakmont, boiler room, boiler room, all that, yeah, I was there, not at those firms, but very similar. But it taught me a few things. I entered the training program, newly married New York, right? 200 bucks a week in the training program to work through to get educated how to do this. Yes, once I got through the training program, 300 dials a day, done in Brad street cards, flipping regular. It wasn't all automated like it is. Now make cold calls, literally cold calling. 300 calls a day. Gives me 10 leads, 10 leads each each day, 50 that will end up being one client. So going through that process. But here's the point, I'll end and and the the fine young lady's probably coming, I'm saying get the hook on them and get them out of here. So why do I bring up this story? How do I tie it to long term? What did I learn there? I learned a lot, a lot, but it also did something. So that gentleman that trained us in training class, he had us put down our goals, okay, for when you turn 50 years old, what do You want to achieve? What are those five goals that you want to achieve. And it wasn't just, hey, write this up and hand it in. Some people did that. I actually spent a lot of time thinking about that and addressing it, and I wrote them down. They said, I don't want you guys to look at it for a while. So actually folded it up, put it in an envelope, sealed it. Still have it and didn't open it up, but knew how I thought about the process, what I wanted, where I wanted to be, how I wanted to be, didn't look at it. So I was 23 when I did that, all subconscious, all in back of mine, right for this 27 year journey. I'm not very good at math, so this 27 year journey, and I opened it back up when I turned 50. I achieved them all. So that goes back to having a vision, an idea where you want to go, the path is never straight, but the where you find this success, and in building your companies and going forward, We've never taken a right turn or left turn. We've never had a I heard some people up here talking, what's your contingency plan when they're talking about when they talk to investors or companies that they've invested in. Well, I can tell you if invest, if a company has come to me and they say, This is my plan, a but here's my contingency. No way. It's when you have a contingency plan, you will always revert back to it as soon as it gets hard. So it's about, that's a beach. We're hitting that beach. We're burning the boats. We're going to go forward. And, and Brandon has heard this a lot too, and I'm sure David out there remembers hearing this from my older brother, and may walk into a minefield. I may come out with missing a leg, missing an arm, missing some portion, but I'm coming out, so I'll leave you all with that. Thank you so there you can get.