Dr. Michael Hodgkins – The Case for Physicians to Lead Innovation

Dr. Michael Hodgkins has more than 25 years in health services, clinical connectivity, and in e-business solutions. As the Chief Medical Information Officer of the American Medical Association (AMA), he provides leadership and expertise in developing new products and services, as well as the AMA’s strategy for digital health, medicine, and IT policy.

We were honored to host Dr. Hodgkins at the Alpha Conference in January of 2018. In his talk, he focused on the importance of the physician having a seat at the innovation table. While this might seem obvious at first, his reasoning should give you a number of subjects to consider.

Including physicians in the discussions, or in some cases even having them lead the talk, accomplishes fouor significant goals:

  • Maintaining the value of the patient/physician relationship
  • Managing physician burnout
  • Avoiding “digital snake oil”
  • Managing chronic disease in the wild

His entire talk is worth a listen, but pay special attention to the four questions that every physician should ask when discussing innovation. These are points that we aim to solve with AngelMD, and having a core of physicians in our network enables this to happen.

Read more about evidence-based investing through AngelMD.

The subject of this talk in your pamphlet is, the physician’s seat at the innovation table. Who here in this room does not think that physicians need to have a seat at the innovation table? Raise your hands if you’re brave enough. Okay, well my job here is done thank you very much.

In the AMA, our focus has been primarily in the digital health, digital medicine, connected health, M health, whatever name you want to apply to it. It has not been in the device or pharma phase, but as my colleague from the American College of Cardiology mentioned earlier, the lines are blurring between the device space, the pharma space and the so-called digital health space. In pharma, they like to talk about surrounding the pill, you probably have heard that phrase. Sometimes that’s just content, educational content, but increasingly, they want to surround the pill with apps and information exchange and sharing between the consumer and the pharma company, as well as with the physician.

We’re seeing a merging of these two areas, but each has their purpose and value. At the AMA, without the benefit of slides, some of the themes that we’re focused on when we talk about involving the physician at the innovation table, especially in the digital health space, are few.

One that was mentioned by Dr. Lynn, is the physician patient relationship. There is a therapeutic value to the physician patient relationship. It may not be more than 10 or 15 percent of the ultimate contribution to outcomes for patients, but I think most physicians would acknowledge that there is a therapeutic benefit to that relationship. That relationship is not gonna be displace by your smart phone. You’re not going to declare your smart phone your primary care provide anytime soon, and hopefully never.

Another area that we’re very focused on when we think about bringing physicians in the discussion, is the question of physician burn out. That’s something I’ll elaborate on more as we go forward.

A third area is digital snake oil. Some people probably recall about two years ago, Jim Madara, our CEO used the phrase, “the digital snake oil of the 21st century”. He was using that reference because one of the first things the AMA did back in the 1800’s was to root out the snake oil business and people who were peddling themselves a healthcare professionals, if you will, at that time, who had no business doing that. Jim was terribly misquoted, taken out of context, because he prefaced his comments up to the point of talking about digital snake oil by talking about all the fantastic things that were happening in the device space, radiation therapy, robotics, biologics and so forth. What he simply said is, look there’s also a lot of junk out there that has no scientific basis, there’s no evidence, there’s no proof of value. All it does is cause confusion and distraction and wastes people’s time. That’s when he concluded, by saying it was the digital snake oil of the 21st century.

We’re getting any slides or not?

The last areas where we’re focused, is on an issue that I brought up during the panel, and that is the predicate that I believe very strongly in, but I’d be curious if anyone would argue the point, that in an age of chronic disease, the notion that you’re gonna manage the patient’s care through the clinic alone is ridiculous.

I’m an internist by training, so interns see a lot of hypertension patients. I would diligently bring back my patients with hypertension after I thought I stabilized them on medication, depending on what other co-morbidities they had, I might see them every couple of months, few months, six months, whatever. They’d come to the clinic, they’d get one blood pressure measurement by an MA or a nurse. I was also someone who wanted to measure the blood pressure myself, so that was two measurements at different times of the day, in different circumstances for the patient, who knows what happened to them leading up to their arrival in the clinic.

On the basis of that, I’d make treatment decision. I’d adjust medication, I’d add medication. I’d remove medication. Who was I kidding? That’s why 50% or more of the patients with known hypertension who are under treatment aren’t managed successfully. Because, what happens to the patient out in the real world with a chronic disease is more important than what happens in the 15 minutes that they’re in the clinic.

We know that this digital health landscape is very complicated. This is an illustration of that, but we put the doctor and the patient at the middle of the conversation, in terms of, how do we make that work in this digital world, in this virtual world.
These are the themes that I was talking about earlier, somewhat more illustrative perhaps, in terms of talking about burnout. The picture on your far left, I think was from the New York Times, “No, you cannot declare your smartphone to be your primary care provider for the health plan.”

Moving beyond these themes, if you’re gonna bring the physician to the table and make them part of the discussion, you ought to listen to what they have to say and see where they are currently in their thinking. What attracts them to the use of these tools and what are their expectations and requirements? This is one of those glass half empty or glass half full slides, it just depends on your temperament.

What we found that drove physicians interest in these tool, and we surveyed them in terms of several modalities that you see listed here, was that they thought they could do a better job of taking care of their patients. That was the most compelling reason for their interest. I think related contributions, their interest was, they thought they might be able to do it more efficiently and effectively than they’re doing it today, especially with their EHR’s.

As you can see, we’re talking about a level of enthusiasm of about … approaching 50%. Is the glass half empty or glass half filled? I think the more important thing is the level of adoption. If you’re looking at consumer portals, which to me are sort of ho-hum, the levels of adoption there are pretty high, but nobody really thinks that they contribute that much value. If you look down on the left though, in terms of virtual visits, remote monitoring and so forth, the things that we really expect to have a true impact on the care that we deliver and the cost of care going forward, levels of adoption are still pretty low. We haven’t crossed the chasm in regard to those tools.

What did physicians want to know, or what did they expect in order to adopt these tools? There are really four questions that came forward. One, does it work? Is it evidence based? Is there any science that demonstrates the value of this tool? A reasonable thing to ask and a thing that most physicians would be concerned about.

Second question was, will I get paid? Reimbursement is an issue. We’re still living in a fee for service world and even in a value based world, you have to decide on, is there gonna be an economic benefit to the use of these tools versus traditional practice.

Will I get sued? This wasn’t just medical malpractice, this is concerns about HIPPA privacy rules and the like, data breeches and what have you. Are these digital tools gonna expose me to more liability in regard to the current work environment?

Lastly, most importantly is, yes there’s good science, yes I’ll get paid, no I won’t get sued, but will it work in my practice? Will it actually fit into the work flow that I have with my team in my practice? Let’s remember that most physicians, about 50% of physicians still operate in configurations of 12 or fewer physician FT’s. Everyone looks at the enterprise, the big hospital systems and what have you, you think you can solve it there then you can easily solve it here. Well you can’t, because there’s no leverage. You don’t have the resources in a 10 or 12 physician practice that you do in a large enterprise. Work flow is a huge issue, and a number of people brought that up through out the conference.

The last thing that came through in this survey, which was published in September of 2016, if you want to access the full survey data you can go to the AMA website, was that physicians wanted to be part of the decision process. They wanted to be heard. Frankly, they thought that they hadn’t been heard for many years, especially with the implementation of the electronic health record.
What’s getting in the way? Earlier on the panel we talked about the regulatory environment, we talked about legal issues, we talked about payment issues, but for the moment, what I’d like to emphasize is the issue of physician burnout. Has anybody not heard of the term burnout? Anybody not heard that? Okay.

Let’s talk about it. Physicians, by a number of recent studies, are spending twice as much time working in their EHR and on other desk work as they are in patient care. Even when they’re with their patient, they’re spending more time looking at a computer screen than they are interacting with their patient. Then you have the issue of what people call pajama time. The physicians are spending almost 40 hours a week, after clinic, playing in their EHRs to catch up with documentation. This increase in physician burn out, somebody actually did the math, between 2011, 2014, led to a 1% reduction in productivity, was equivalent to the loss of the graduating classes of seven medical schools.

Just think about that. We have a huge problem with availability of physicians and access, the whole workforce issue, and yet look at what we’re doing to physicians, and reducing their productivity.

Now, the shift in value based care, a lot of people say that’ll take care of the problem. Maybe it will, but I think we still have fee for service in about 67% of care delivery today, so I don’t know that we can wait on that solution.
This is an interesting chart too, that shows, if you can see by specialty, the increase in physicians reporting symptoms of burnout between 2011, 2014. More than half of physicians in this country today are reporting some aspect of burnout, more than half. Compare that to the general population. The general population statistics around burnout are only about 24%. For physicians, symptoms of burnout are twice as much as the general population.

Who cares? We’re physician’s we’re tough. We work hard, we know we work hard, we’ve got a challenging job, so what? So what is, there’s about a dozen CEO’s of prominent healthcare systems in this country who got together last spring at the AMA to talk about this issue. Afterwards, they wrote a blog that they all put their names on, and the blog began by describing burnout as a public health crisis. Why? Why a public health crisis? Because burnout is associate with bad outcomes, with patient safety issues, with deterioration in the workforce. These CEO’s actually said that they believed that a physician leaving practice because of burnout, cost them 500 thousand to 750 thousand dollars, just in terms of replacement cost and issues associated with that physician leaving as a result of burn out. That’s why it’s important.

Then you have the proliferation of mobile health apps. 200 thousand is now probably well shy of what’s out there. Even if you whittle away the wellness health apps and narrow it down to the 30 or 40 thousand apps that are actually supposed to help patients better manage chronic diseases in conjunction with their healthcare team, how do you navigate that? How do you know what’s good, what’s not good? Then there’s the fear of a tsunami of new data.

Physicians already feel like they’re awash in the data in their EHRs, Dr. Lynn said, can’t make any sense out of it anyway. Can you imagine somebody monitoring their blood pressure and somehow transmitting thousands of blood pressure measurements to you? What do you do with that information? Obviously you can’t absorb that, you don’t want to absorb that. That’s not the right thing. Somebody has to be intelligent enough to process this information before it gets to you, so that it’s actionable. Especially given the experience with EHR, if physicians aren’t in the forefront discussing these issues with the entrepreneurs who are developing these solutions, then we’re gonna repeat history.

This was the snake oil versus useful tools in patient care. There’s actually increasing evidence that things like remote monitoring are gonna make important contributions to the care of patients. What’s been missing from the equation though, is any kind of metric analysis. We still haven’t caught up with understanding what the cost and value associated with these things are, what the return on investment will be? Are they really better than standard care?

Let’s keep in mind what happens when physicians are not involved in the process. There’s two apps that are referenced here, the one on my right, your left, was the top selling blood pressure app in the Apple store. It was downloaded over 100 thousand times. It purported to allow a patient to measure their blood pressure by holding the microphone up to their chest … I think you had to put your finger on the camera … this is real. There was actually a study published in JAMA to evaluate the accuracy of this app. Eight out of ten times it was wrong, and most often it told patients with hypertension that they had normal blood pressure. That app stayed in the store until the Federal Trade Commission got involved and made them removed it because they were making false claims.

The other app was Dr. Mull. Dr. Mull said you could take a picture with your smartphone of a skin lesion, and it would tell you if you had cancer. Didn’t work. Also, ultimately the FTC intervened, said they were making false claims and have it removed. Those are just two apps out of tens of thousands. How many people here think that’s an anomaly? I don’t. I think it’s just the tip of the iceberg in terms of safety and effectiveness for patients.
What are some of things that we’re doing to get physician’s more involved? One of the main things that we’re doing is something called a physician innovation network. The physician innovation network was actually largely in beta through most of 2017, but it was launched in version 2.0 in October of last year. Before the end of the year, we’d amassed over two thousand users, more than 14 hundred of them physicians. There were a thousand connection requests between physicians and entrepreneurs, number of saved opportunities. We’ve been working very closely with a number of accelerators and the Society for Physician Entrepreneurs to gain interest.
What is Physician Innovation Network? It’s match.com for physicians and entrepreneurs. It doesn’t cost anything for an entrepreneur to register on the site, doesn’t cost anything for a physician to register on the site. You create a profile of your background, your interests. As the entrepreneur, what kind of physician’s you’re looking for by specialty, by age, by practice type, whatever it maybe, and we match you up and you take it from there in terms of having conversations that are gonna be meaningful to you as an entrepreneur.

For the Angel MD folks in the room, you’ve got a platform that does some similar things, so there’s actually some interest on both our parts in exploring that further.

We’ve had tremendous reaction to this in the trade journals since it’s inception, lot of excitement’s been generated. This year, we really hope to scale that tremendously. Our goal is to have ten thousand physicians from a variety of practice types and specialties and age groups and what have you, enrolled in this in the coming couple of years, and a large number of entrepreneurs. Again, we’re not trying to make any money off of this, we just want to make it possible for physicians to interact with entrepreneurs without having to think of making the binary choice of, I stay in practice I ignore what’s happening in the technology space, or I leave practice and join a start up. That shouldn’t be the only decisions that physicians can make.

Then lastly, to further involve physicians in the conversation with entrepreneurs and innovators, we’ve developed a number of other relationships. I mentioned Smart Health, earlier on the panel. We actually participate in their board helping provide physician perspective. The Sequoia project is the evolution of the E Heath exchange. It represents the largest information exchange network in the country today. I sit on their board, the AMA is an active participant and founder. Exertia was something that we announced last year. It’s a new non-profit that the AMA is a founder of, along with three other organizations, Hins, being one of them, the American Heart Association being another.

Exertia is actually publishing guidelines for what constitutes good mobile health applications, not only in terms of privacy and security and [intereoperability 00:20:03] but in terms of clinical evidence and usability in clinical practice.

I also mentioned earlier today, Health 2047, our innovation lab in Silicon Valley, which the AMA works very closely with, even though it’s an independent organization. That’s all I had to say, but I think I’ve got time for maybe one or two questions if anybody has any.

Yes sir.

Speaker 2: You referenced the statistics where doctors are spending more and more time with a computer. There was a time there weren’t computers, they were writing on charts.

Dr. Hodgkins: Sure.

Speaker 2: So, two part question, one is, how does that compare with when we had paper charts versus EHRs. And, are doctors now seeing more patients per work day or per unit of time, and as a result spending more time documenting?

Dr. Hodgkins: The statistics show that physicians are seeing fewer patients with the electronic record, per day, than they did with paper records. That can change over time, but it can take six months to a year to return to a similar level of productivity. In some cases it extends beyond that. I think the difference in the paper record was something that was mentioned earlier today by our colleague from DARPA, and that is, what did you do in a paper chart? You weren’t checking a lot of boxes, you weren’t pulling down a lot of menus to code and what have you. The EHR really is enslaved to the billing process. The way we use the paper record was to capture a narrative. That narrative could be just a paragraph, but it communicated a lot of value, especially to another physician who might have to see that patient that had no familiarity with them. In today’s electronic health record, trying to reassemble the equivalent of that narrative is virtually impossible.

Any other questions?

Speaker 2: Could you tell us about the … get this right … another initiative … oh thank. Another initiative is the integrated health model initiative from the AMA, could you tell us about that please?

Dr. Hodgkins: Well, we don’t have a lot of time for that, but we just announced this towards the end of last year. The integrated health model initiative is an effort on the part of the AMA to create a master coding data model, or a specification for a data model that takes existing coding systems, like ICD, CPT, [Snowbed 00:22:47] and others, aligns them, but fills in the gaps. Where are the gaps? Somebody mentioned this earlier today.

All of our coding systems today are about, how do you capture a profile of a sick patient? None of our coding systems today help you capture a profile of a well patient. It’s confusing to me that, if you don’t have a baseline of wellness to compare to, how do you know what you’ve done for the patient, that sick patient? Have you returned them to a state that they previously enjoyed, that they are interested in or not?

My colleague often brings up the example of people who have cataract surgery. The cataract surgeon measure success in terms of the visual acuity achieved at the end of surgery. The patient may measure success in terms of whether they can drive at night any more. But we don’t capture that information. This whole idea of patient contributed information, it’s a wonderful idea, we all talk about it, but we have no standard vocabulary for capturing that information. The integrated health model initiative is an attempt to develop that. You’re welcome.

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Dr. Arjun “JJ” Desai – Human Connections in Startups and Investing

Dr. Arjun “JJ” Desai is the Chief Operations Officer at JLABS and the Center for Device Innovation at the Texas Medical Center. We had the pleasure of hosting JJ during AngelMD’s Alpha Conference in January of 2018. Rather than focusing on a single area for his talk, JJ chose to cover a few different topics, but then show how they all related to the power of human connection with relation to investing and startups.

For JJ, the power of human connection starts with three critical qualities that any startup or investor should have:

  • An appetite for failure
  • A desire for human betterment
  • A higher calling

JJ Desai: Well, I just want to say thank you very much AngelMD, Tobin, Dan, and everybody involved with this for putting together such a dynamic group of both speakers and the audience to spend a really interesting morning, and I hope that we can add to that. I have 20 minutes to speak to you today, so I’m assuming this is my clicker here.

So I wanted to kind of be very focused for this audience. The three lenses I want to look through, and if you want to be interactive, I always encourage it. Our one early stage. So whether it’s investment or technology development, early stage is a bit of an enigma, and it’s something that’s been drained a little bit … We connect, and just get to know you guys a little bit, and hopefully by doing that, we can all have a future together.

And so I’m just going to share a little bit about myself, and I tell my, actually had this conversation with my five year old last night, that every day you should try to do two things. You should try to educate yourself, and you should try to make connections. Because that’s really what life is, and that’s what I think AngelMD is, right? It’s a form for education and connection.

And, this is somewhat anecdotal, but I think it’s an understatement. 75% of investments, especially into early stage investments, are made through what? Through teams, through technologies, tech transfer, universities? What do you guy think? What’s the number one thing that most people invest off of?

Speaker 2: Network relationships.

JJ Desai: Relationships, right? Oh hey, I got a guy that’s really smart, I knew him from my last company right? Or I know this gal, she’s a brilliant PhD and I think she’s on to something. 75% I tell you I think I’m undercutting that. So on top of that, a social economist once told me, if you can learn three genuine things about a person, there’s a statistically significant chance you will interact with that person at some time in your life.

So here are my three genuine things, and I hope that all of us have a chance in some way or another to interact, to better understand early stage. So the first one is a growing yet infallible appetite for failure. So every great success that I’ve had, has been predicated by multiple failures. And as a physician, we’re taught not to fail. We’re taught that failure is the worst, right, failure means you can’t be a dermatologist, failure means you can’t be an orthopedic surgeon. I think it now means you can’t be an anesthesiologist, which is pretty cool.

But you know, that is the exact opposite mentality that you need to have going into investment and or development. You have to fail through every single mechanism possible to understand what success looks like. And so this picture, it was one of my favorite days of my life. This was with Avenger actually, you’ve heard a little bit about Avenger today. And we got to this point where we were launching our clinical trial.

And this was a massive undertaking, massive clinical trial, with a revolutionary catheter, and we had all the bright minds in the room right. Every single top vascular physician that, if they say yea or nay, really drives the market and adoption of this technology. And as we were getting around, and we had human cadaver legs, we had C arms, we had all of our OTC imaging, we were in this beautiful facility, everybody had flown in, we’d done this pre-didactic, and we’re getting ready to put the catheters in the body, and show everybody right.

Everybody’s huddled around, spotlights on, it’s kind of hot, and the catheter fails. Right. But, thankfully, we dealt with failed catheters before hundreds of times. So rather than say holy crap, we have a failed catheter, this is going to be complete misery, we pulled it out, we said oh we forgot to show you the coolest part about the catheter, and we held it up to them as we were swapping out the bad catheter, and as everybody’s looking at it like this, it’s like Billy Cone’s magic tricks right.

Everyone’s looking over here, and then finally, when you come back over here, boom, you have this beautiful catheter image, and we blew it away, we knocked it out of the park. And subsequently enrolled one of the fastest and most successful from a safety and efficacy trial, in the world.

And so, had I approached that without having had sort of the tutelage and the mentorship coming through, and failing as many times as possible in the wet lab, and in every other proto typing, we would not have come out as successful from that day as we had. So, an indelible appetite for failure is something you have to have to, for sure to invest in this business, and also to be early alongside the technology.

The second one is human betterment. And so this is something that I did recently, and it came at a point in my life where I kind of realized, man I’ve been doing the same thing for 10 years, I’ve been doing the same like four minutes of plank, you know, some sit ups, go for a swim, but I have been evolving as a person. And so I had to think about it. Now I have three kids, I’m traveling all the time, how do I just spend a few days to better myself?

And so believe it or not, I actually found the time to take three days away from work, from kids, from family, got to go with a dear friend of mine, and we showed up to this things with Laird Hamilton. I don’t know if you guys know who Laird Hamilton is, but he is a beast. And Laird Hamilton has surfed the biggest waves in the world. He has constantly redefined what is imaginable, and he’s married to Gabby Reese, who’s a professional volleyball player.

And the two of them put this clinic on, and it’s about doing everything you do, but underwater. And essentially holding your breath to do it. So I swam, I worked out, I do all these things, so they’re like, yeah let’s just do all of our weight workouts underwater.

I kid you not, within the first 45 minutes, we’re sitting on this pool deck, we’re laying down, we’re on these mats, and we’re doing these breathing exercises. I’ve swam my entire life, played water polo, I’ve never held my breath for more than a minute, and I’ve tried. And we’re doing these breathing exercises, and we’re getting in our zone, and I’m focusing on my third eye, and all of a sudden, he says okay, now go ahead, now all you have to do is just hold.

And he’s kind of talking us through this, and I feel good you know, we’re on this ethereal layer, and all of a sudden he goes, okay, you’re now approaching three minutes. If you want to start exhaling, feel free to do that, if not, go ahead and continue to hold your breath. And I’m like, meanwhile I’m like holy crap I just held my breath for three minutes, but I’m trying to like keep cool because I want to go more than three minutes.

But it was a reminder to me in the first 45 minutes of this three day excursion, that I just broke a bound I’d never even thought possible before. And so, for the next two and a half days we continued to do this, and now, I don’t get to do this every day, but every day I do some small part of this, whether it’s breathing on an airplane or when I wake up in the morning I focus a little bit.

So don’t forget yourself in this, because it’s probably one of the most critical elements of anything we do, and we neglect it. It’s the first thing as physicians, if you’re sick, you show up to work, right? You get no sleep, you eat like crap, it’s just all of these things, don’t forget yourself. And the last one for me is I have a higher calling.

So every day I’m either on the phone or FaceTime or home with this circus of my family, and I think it’s important for people around you to know that you bring your energy back to your family, right, whether it’s good or bad. They feel it, they’re a sponge for you, and they’re going to be reflective of the same nature. So, I have three kids under five who are hilarious, and my wife is way smarter than me, but these are my three genuine points.

So I’m just hoping if at any point we can connect, that you can use these, and we can make something meaningful together moving forward. I would be remiss if on this day and in this room I didn’t talk to you about sort of mentorship.

So for me mentorship has been everything, and I happen to have two of my biggest, if not the biggest mentors in my life in the room at the same time. I remember looking at the agenda and being like, I can’t believe this, that both Billy and John are on this agenda together. So John Simpson and Billy Cone, you know, I’ve had the fortune, there’s no sort of script that I wrote to get in front of these two individuals, it was serendipitous at both points.

But I knew, these are things you know in the first 10 seconds, that you really want to work with these people and you just latch on, seriously. I think at both points, John was kind of like, why are you still here? And Billy at the same time is like, hey, you know, who are you again? So, once you find the right people, latch on, and just try to learn as much from them as you can, because if you’re not constantly surrounding yourself by people way smarter than you, you’re just not trying hard enough. So thank you very much to both John and Billy, because it’s a phenomenal thing you’ve given me.

So, I just want to take two seconds for you to focus on this slide. That, the pace of change will never be as slow as it is today. And this is a critical thought process for early companies, and early investors. Literally, between today and tomorrow, millions of people will join the internet. I’m still not on Instagram yet, which I get a lot of flak for, but probably by tomorrow I will be.

And so you just can’t underestimate the power of this and how different it is now than it was 10 years ago. And this leads to my favorite slide in all of innovation, all of investing, is how you have to understand when to bring a product to market. And when having a conversation earlier is that, you know, in early stage investing, people are always talking about the science, and they’re always talking about everything else, but you know, how often are you thinking about how well your commercial product is going to do in the marketplace?

And the one thing I will say is that it’s not the wheelhouse of a lot of early stage scientists or inventors, and it probably shouldn’t be. You should probably really be working on getting everything nailed down to your product. You should be relying on other people to help you understand this, but you can’t neglect it. The wrong thing is to neglect it.
And so, I want to look at the value as the number one takeaway here for you, and this is the difference between a differentiated product and market expectations. And market expectations are always getting harder, right, people always want more, they want it faster, they want it cheaper, they want it better, they want it quicker.

And if your product is at that point, from day one, the decay of your product starts. Because if you’re not constantly thinking about how the market is evolving as you’re building your product, or as an investor supporting that company to get there, then you’re behind the game. And I’ll give you a real world example of this, which is phenomenal to me.

Hepatitis C, right, so, 10 years ago Hepatitis C, we didn’t think it could be cure. We’re almost at a cure for Hepatitis C, it’s a cocktail of medications, and at J&J, we basically got to a point where we could cure 99% of Hepatitis C. The current cure rate is in the low to mid 90s, which is cool, but 99% is way better.

But at that point, several competitors had gained advantage in investing in some commodity products that they were able to bring in the cocktail that dropped the price dramatically where we could never actually foundationally get a program off the ground to get to that 99%. So I think very fortuitously, some of our deliners said, well we can’t do it, so let’s not just keep out heads in the sand and move forward with this product and bring it to market and fail, let’s figure out better ways in the future, scrap it now, and see if we can get to 99% in a different way.

So you have to think about failure at the right time, is a good thing for investing. These are some dynamics I just want to focus on, so not obvious if I don’t have labels on these, but something that’s moving forward right. So something to an investor, or something to physicians in the audience, so 2012, 2016, and then just focusing in on, this is essentially the hospital owned physician groups, right.

So physicians, and I think this is a lot of early innovators that were physicians got to dominate what was being purchased in hospitals, what technologies we could try, how technology is getting brought to patients, that is not the case anymore, right. The conversations gone from the physician saying, I’m just going to take my patient somewhere else, to the physician in a service line saying, okay, well, we’ll own this, to now the CFO and you know, large purchasing groups saying, well we want the cheapest, yet most evidence based product out there. Which is like sort of an enigma in itself. But that’s how people are purchasing now.

So that’s market expectations, and you have to be very cognizant of that. And so, this shifts, essentially, how you bring data to market, right. It used to just be clinical trial comes in new tech and everyone would buy it regardless of the price, then it was, well, can you make my patient grow with the profitable services, now it’s how are you going to increase my contribution margins and cost reductions?

So you have to understand as you’re developing data for these things that you have to speak to all of these, and I put this up here, not to harp on anybody, and I feel as a faculty member at Stanford, I can do this, but this blew my mind. So this came out, and this was a communication from the new president of Stanford Healthcare, and essentially said I jus want to thank everybody you know, for this massive thing that we reduced our ongoing operating expenses.

Like, when did the messaging from Stanford go from best in class service for patients, and the most prolific healthcare system on the world, to great job everyone, you brought down operating costs? It shows you what’s important, and if everybody here is driving the innovation, sort of agenda, we’re missing out. So it’s up to us, and it’s up to you to drive the innovation agenda, hence optimism, stay really encouraged by what’s going on.

So, I want to give you some examples that we can all get behind. Fred Moll, I think a lot of people in this audience probably know Fred or have heard of him, the public had no idea of the extent of difference between top surgeons and bad ones. Robots are good at getting where they are supposed to, remembering where they are, and stopping when required. Right, so who thought robots would be outside of Star Trek, would be such a big deal in surgery?

Well Fred obviously did a long time ago, and he thought because of this. And I remember this in med school, the first day of med school, they said, the great part about going to med school and finishing, is that you know, everybody in med school is aiming for the top quartile of the normal distribution curve, right. Everyone wants to be at the top of their class.

But he said, I know there’s a couple of you out there, I don’t know who you are yet, but I will, that are going to be in the bottom quartile. But he said, you know what’s cool for you? You too are also going to be a doctor, right. So I think this is the reality, is that not all doctors are created equally, right. That’s not a good thing or a bad thing, but that there are different skill sets. So it’s the great democratization of how do we make sure that everybody is getting the best service possible?

And thinking about robots is the case. So cheaper, faster, better, right? This is the mantra that every investor or CFO, hospital, wants to do it cheaper. You know, they went through and did all these things and they said, okay, well robots actually cost more, so let’s think about it in a different, gynecological surgeries. They also cost more in these surgeries, so not cheaper.

And then they said, okay, we’ll work faster for sure. And then they published some endoscopic surgeries, actually, you’re about an hour and 10 minutes longer, and they said, okay, so we’re not faster. Well for sure we’re better, right? For sure. And they said actually if you look at outcomes, there’s no significant difference in what’s going on. And so, they said, okay, we’re not better.

And so, okay, so I want you to think about this, this is where you can compare the evolution of medical devices to the platypus. Who has seen a platypus in real life? Okay, right? A couple of people. Now platypuses are a little interesting, right. So they have the tail of a beaver, they have the beak of a duck, they have webbed feet, and they’re kind of like an evolutionary mystery. But they’re wicked fast underwater, and they’re one of the most toxic animals, they can hunt and they’re predators.

But, they just never had a good marketing campaign. So, they’re not in zoos, right, you don’t see them. You’re not hanging out, they’re not in your home, you’re not showing off your platypus. But they’re out there, right. So the robot could’ve been a platypus, it was very close to being a platypus. But, this came out and this was from one of the analysts of Northrod Capital.

Our extensive field checks highlighted a story where aggressive marketing drives the message and true clinical utility seems secondary in nature. Which is mind blowing, but this is reality right. So, what happened? They started putting up billboards. Transforming lives, ladies, we’re on your tea, I’m famous, you should come use my robot, right. And this worked. This worked. Right.

People said, okay, well it’s not faster, it’s not cheaper, it’s not better, but we want to use it. And so they started looking at this and it was a $4 billion market in 2015, with a 20% cap over the next eight years, and I can tell you it’s only going to be bigger. The crazy fact, if you’re an early investor in this company, or if you were looking at the early part of this company and you had cold feet, 75% of the early intuitive workforce had turned over by 2014, 75%.

So failures, there’s a lot of failures that went into this. Even crazier fact, Fred Moll had already started three new robotics companies by 2014, having left Intuitive in 2002, and I can tell you what Fred’s doing is going to probably maybe eclipse what Intuitive’s doing. And so, I just want, you got to look at the first or the second half of this story.

So, the market cap of Intuitive is only half the story, it was founded in 1995, right. So it took 10 years of technological adoption, healthcare investors have to have patience, and they have to be able to ride the wave of the downs to get to the ups. But you need advice and you need to know how to get there. And then in 20 years, it’s going to take market saturation right.
This isn’t investing, you know, in a picture that dissolves after 10 seconds, that you can text to somebody. It’s investing in real solutions for healthcare. And now it’s like you can’t get away from Intuitive, you know, in one market they have 14 different robots, and they’re all across the street from each other.

So, business realities rotate, and you have to be aware of this. And so through corporate strategic partnering, I just want to give you an early entrée into a toolbox you can use, and it’s no longer a scary toolbox. We’re not coming after your IP, we’re not trying to strong arm you, we literally need you. The big large corporates need everybody in external communities to service their pipeline, they can’t do it themselves, and they don’t have the wherewithal to do it.

But we also are evolving. So I like to take the example of Medtronic. Medtronic was dominating a lot of the early cath lab procedures in large part to many of the things they acquired through Dr. John Simpson, but they keenly realized that there’s a lot going on there that are driving down market pressures and understanding the cost of restructures.

And so they said, hey, not only are we going to sell you a lot of stuff, but we’re going to come in and run all of it for you, we’re going to run your cath lab, we’re going to make you efficient, we’re going to streamline your services and products, and the hospitals were more than willing to say, thanks, we’ll go ahead and do that.

Now, Medtronic’s in a really good position to be able to sit there and pick what they want to, based on this. I’m not sure that’s going to be sustainable for the long run, but it’s an evolution that’s actually served them very well. And you see all of these businesses, you know you hear the largest taxi cab company in the world doesn’t own any taxis, the largest hotel company in the world doesn’t own any hotels. These are things that impact healthcare as well.

And so J&J, a while ago, eight years ago said, man, we have this global organization that’s massive, how do we help people? How do we use all of this, all over the world, all of these things we do, and help people? And so, we put together a toolbox. And I’d like to speak outside of this with people, but you know, we represent JLABS, which is an incubator, it’s literally to get companies through the first two to three years of the valley of death.

I think investors are starting to see the tremendous value in this. And, the one thing that I think is most valuable is no strings attached, in the sense that there is no capped upside. So you can come in, and the best teams in the world never want a capped upside. Investors or entrepreneurs. And so if you come in you only get services and benefits, you get to use what and how much you want.

Now you have to be good, you have to pass a pretty rigorous selection committee, but you get the exposure to all of this, you get to use it, consume it, make sure they’re looking at all of these changing dynamics while you’re focusing on the product, and then you guys can mature together. And so, through a lot of other JJDC, our corporate venture arm, our innovation centers, we’ve put together this massive toolbox where we can research, collaborate, we can license, we can buy, we can invest. All of these things that never were an offering eight years ago when J&J said we can just do everything ourselves.

That is no longer the case. There is an entire optimism within J&J on how do we make earlier, smaller, you know, more hands off bets, just to help people get to the point where they can actually offer a product that we want to buy or get to? So I’m going to spend the next two minutes, or maybe one minute, just talking about, so what’s come of this? What’s actually come in the last five years?

Okay, five years ago we opened up these incubators, we started dropping them around the North America, we just announced one in China that we’ll be opening up next year. And, we said, what if we just let people come here and benefit from our expertise? And see how that progresses.

So after five years we took a look, and I’m happy to say now we have 330 companies just two months after we published this report, but we think that’s a pretty strong number of companies coming across our desk. I would say this is about a fifth of all companies that actually apply to us, so there’s a screen.

And they come from all over the world, right. They want to come to areas where there are investors co-located with area expertise, co-located with a market that is willing to accept their technology. So what does that afford us? It affords us the ability to do things J&J has never done.

So Who Box. There’s a pretty big Houston crew here right, which is amazing. I think Houston is going to be, if not already the powerhouse in medical devices in the future, Who Box is from a little town north of Sao Paolo in Brazil. And J&J got together with 100 open startups, and just asked how are we going to help the aging population? Simple question, how are we going to help the aging population?

And Who Box, PhD in a lab, said, okay, I’ve been working on this really cool technology where I can actually tell people to move their face, and I’ve overlaid a software, and I can move an entire wheelchair like that. So you don’t have to move anything, you don’t have to touch, you don’t have to speak, you can just look left, you can look right, you can raise your eyebrows, you can smile, and everything moves together. And it blew everyone away, right.

Who Box would never have gotten in front of J&J, they would have never had the connection right, none of the three sort of genuine relationships with anybody to get that, but they showed up, which is the number one thing that you have to do as an early stage is just show up. So they showed up, they won this award, and they now have migrated from Sao Paolo to the Texas Medical Center, and to JLABS in Houston, and now they have the entrée to both J&J and all of the facilities in the Texas Medical Center to advance their technology, which is astronomical if you think about that access.

We have brought together a tremendous amount of people, right, so we’re really focused on the network. So 848 networking events, 33 different cities around the world, half a million people show up, 1,260 investor meetings with our companies. Companies just don’t get this kind of access. And this isn’t just like hey you’re an investor, you’re a company, this is hey you’re an investor, you have a tailored thesis, you’re looking at this stage, we have a company that fits in that at that stage, why don’t you guys get together?

And I think it takes that relationships to make that happen. We are really strong in diversity, so we think a diversified portfolio makes a lot of sense, diversified you know, investors and early stage start ups make a lot of sense too, it’s just that many different perceptions and shots on goal.

So whereas the industry is less than 1% women led and 8%, we have a very healthy portfolio of all sorts of folks running companies within JLABS. Typically, they start just where every early stage starts, right. 30% with less than a million, 45% come in with one to two people, so on this, I want to focus on one of my favorite companies, and maybe just a little bit of bias in being an anesthesiologist here, but. David Zaple, the guy in the middle here, is the son of Warren Zaple.

Warren Zaple is one of the early pioneers and founder of nitric oxide. So nitric oxide, you know, it’s used essentially in pediatrics, but has been worldwide use for pulmonary hypertension, right. And so, nitric oxide, you have to have big trucks that ship in all of this, you know, and it’s piped into OR’s, and they use it, and it’s this massive infrastructure play, and Warren said that’s really cool, but we’ve been doing that for 10, 15, 20 years, I think there’s a better way of doing that.

And so they put together this little box right, this platypus. And they put it together, and they said, what if we could take air, we could bring it in a tube, we can electrically convert it into nitric oxide, and in the same box we could exit it? And that’s what they did, which is mind blowing. So this box right here takes air in and pushes out nitric oxide, and you can wear it around your neck as a necklace and walk around in sub Saharan Africa and treat kids with pulmonary hypertension.

I mean, mind blowing stuff, right. So, that necessarily doesn’t get off the ground, but they went into open pitch startup, they went into M2D2, one of our sponsorship labs in Boston, just outside of Boston, and that picture on the right is David Zaple sitting with his box, talking to the world wide head of research and development for Acteleon, which is one of the largest therapeutic makers and inventors of pulmonary hypertension therapies.

And so, it’s just J&J being like hey, why don’t we put these people together without any vested interest, and see where things happen. I think that’s the magic of what we are looking to do. $10 billion has been raised by our companies in five years, we think that’s pretty impressive. And J&J just naturally, we’re not doing it just, you know, complete beneficiate, we think that if we get the best people in the area, and we just get to work with them, that all of a sudden, we’ll start to see things earlier than we ever have.

And so, as a virtue of this about 20% of the companies we’ve gone into confidential partnerships with. This is the biggest number. So usually it’s a low teen number of companies that are in survival after five year. And a heavy portion of our portfolio is therapeutics, and that device and tech and everything we’re growing, about a third to about half in total. But 80% are alive and thriving, and being invested in it, and hitting milestones.

I think this is just because it’s the simple formula of letting a lot of other really smart people just watch out for you while you’re sitting there focused on making sure that you’re getting these things done, these critical milestones advanced in the two to three years that make the most sense for you as an inventor, and your investors to retain their values, so you’re not getting drowned out in series D, E, F right, as you’re going along the way.

Our companies grow, right, they start out low, they come up high. And, just as an example, it’s changed J&J, so this isn’t going away. Every strategic is going to have a plan like this. But, these are companies literally that came off the street, we brought them in and we just hung out with them, we tried to give them good advice, we thought wow this is really interesting, and they’re pivotal platforms for J&J now moving forward right. Investing a lot of money into them.

So with that, I would just like to say thank you very much AngelMD, and everyone here, and I look forward to following up with all of you in the room. Thank you very much.

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Saying Yes to Innovation – Geoffrey Ling, MD

Geoffrey Ling, M.D., Ph.D., is a medical doctor who retired from the United States Army as a Colonel. He served as the Director of the Defense Advanced Research Projects Agency (DARPA) Biological Technologies Office from 2014 until 2016. He is considered the “US Army’s premier subject matter expert on traumatic brain injury (TBI)“, and was for years the only neuro-intensive care specialist in the US military.

In this talk, held at AngelMD’s Alpha Conference in Napa, California, Dr. Ling discusses the changes and work required to prevent innovation from being stifled. Among the innovation that Dr. Ling helped to invent is prosthetic limbs that are controlled by the mind and not through muscles.

The thesis of Dr. Ling’s talk is that saying no is easy, because it prevents you from having to do any work. Saying yes will always lead to more work, but could also lead to amazing innovation, even when the idea seems crazy. Through his talk, he demonstrates how military technology is used in consumer products, and how yesterday’s crazy ideas became today’s example of innovation.

Geoffrey Ling: Thanks a lot everybody. I know I’m standing between you and the wine train, so I will try to get out of the way. Alright, so, as you heard, I came from an agency called DARPA, and many of you have probably never heard of DARPA. Some of you may have. DARPA is the Defense Advanced Research Projects Agency, and DARPA was started at a very critical time in US history. It was a time when America felt very vulnerable, and it was a time when the Russians were our biggest adversary, and what the Russians did was, they sent a satellite up into space called Sputnik and Sputnik beat the US into space, and that really infuriated the President at the time, who was President Eisenhower.

President Eisenhower said, how could it be the Russians, whose economy is one-tenth of ours, whose scientific prowess is one-100th of ours, beat us into space, and he felt it was because, what a surprise, we had become bureaucratic and too conservative in our thinking, and that was just wrong. So, one of the things that he implemented was this agency called DARPA to go ahead and meet that challenge and then prevent this from ever happening again, and so, DARPA has, since then, has risen to meet that challenge, and we’ll talk about that.

But, it is not dissimilar to what you do. What you do is you try to find the best and the brightest, the most extraordinary ideas, bring them together, cultivate them so that it can then blossom into a capability. At the end of the day, it is a capability. I know, you guys want to make money. I get it, but along the way, you want to build a capability. Right? That’s really what it is. It’s not about the science. It’s not about the number of papers they publish. It’s not about any of that junk. It’s about building a capability, and that’s in fact what DARPA does.

So, I don’t have a clicker. Could you click to the next slide, please, and go to the next one, cause I don’t want to slow down … I want to keep going, alright. So, DARPA’s mission is to maintain US tech superiority. Four words, easy. Maintain US technological superiority. That’s the only goal of DARPA. That’s it, but it is really, to fund science, not for science’s sake, but to build capability.

So, to do that, like yourselves, we try to develop an approach that would, one, mitigate risk, yet at the same time, not stifle innovation. So, when I was at DARPA, and I was there for 12 years, and I had the privilege of founding DARPA’s biotech office, the first new office they had in 25 years. The previous office was in 1990 and was called the Micro-Processing Office. That was in 1990, and you saw what had happened.

A lot of the technology, early technology, in investments was made by DARPA are legendary in that field. In fact, your own cellphone, 80% of the components came out of DARPA programs. That thing that makes your screen turn, that was a DARPA program. Siri? That was a DARPA program. So, it gives you a flavor … Titanium, any of you guys play golf? Titanium steel? That’s a DARPA program. So, on and on it goes. The docks in here? Fast scanning for the belly? That was a DARPA program. The neat part was, it wasn’t designed for those purposes.

The screen was designed so that jet fighter pilots, with the heads up display, as they’re doing their maneuvers, their screen will always be upright. Yes, it goes into your cellphone. Cool, but that’s really what it was designed for. The fast can used for abdominal, to locate free blood, that was actually developed as a portable ultra-sound machine that the mechanics could use on airplane tires to find discontinuities to determine when they have to switch out an airplane tire. Last thing you want is a flat tire when you’re landing. Okay, that’s what it was designed for.

So, dual uses is very common in this. So, what I did when I was at DARPA, and as I moved my way up through middle management as it were, I talked to my PMs, and I said to them, it is key, where we sit in US government, is we’re spending money that’s not ours, and we don’t have an ROI like the folks do. Right. ROI is to make something great to get a company going so that we can tax the living hell out of ’em, and so they can hire a lot of American workers and we can tax the hell out of them too. So, that is our governmental goal, and so it is perfect.

We don’t want your IP. We don’t want to have equity. We don’t want any of that stuff. We want you to go on and build your company so we can tax you. So, really cool. We understand each other, and everybody’s happy.

And, I told them, when you go out, you’re going hear crazy ideas. You’re going hear unusual idea. You’re going hear ideas that you believe violate about four laws of physics. Alright, but you’re obligated to listen to it. You’re obligated to listen to, because, what you should ask yourself, if this thing works, if this maniac comes up with this cool idea, and it really works, is it cool? And, if it is, go for it. Find a way to say yes. Any asshole can say no. Go to DMV and tell you need your license renewed today, and you already got the answer. Saying no is the easiest thing in the world, because saying no obviates you from having to do anything.

Saying yes is hard because it means you have to do something. So, I say them, if this is … A guy comes in and says, I got a flying carpet. It’s absolutely the coolest thing in the world, and you’re going, man, you’re out of your fricking mind. I’m going throw you out of here. Before you do that, make sure that he is not out of his mind. I told them this, because if any of you guys miss … If I hear that you turned them down and they come out and they succeed, and they really create that magic carpet, I’m going fire your ass. No, seriously. You are out the door, because it means you did not do due diligence. You did not look. You did not try to figure it how to make it work, because it was really cool, because that’s how the Russians beat us into space.

A lot of people said, aw, can’t be done, and they did it. If the Russians can do and we didn’t, there’s something seriously wrong. So, I said, look for ways to say yes. Now, granted, you’ll find out that you can’t, and if you can’t, you can’t, but if you don’t go into the mindset that you’re going say yes, you’re easy default is to say no.

Second, whatever it is, if you think it is cool, and you think really is going to work, never under-resource that innovator, because then you damned them to failure. Resource them, resource them, resource them. Make sure they have enough, and that doesn’t mean money, by the way, and I’m going come back to that in a moment. It also means technical support, governmental support, regulatory support, all that stuff, because you want them to succeed.

Third, this is not a gift. DAPRA is never a gift. DARPA does not give out grants. It’s not the NIH. We give out contracts. There’s contracts to perform. There’s timelines. There’s milestones to meet. You work with the innovator to make sure we all agree on these timelines and these milestones, but at the end of the day, you’re going hold them to it, because there’s something called the DARPA clause, same clause you have, is that anytime for any reason, without prior notice, the US government may terminate this contract with giving notice. We can pull the money at any time. Keeps everybody awake.

We also believe fail early, fail fast. Yeah, buddy you can make this wild carpet, I’m going resource the living daylights out of you, but the moment I figure out you cannot do it, boom, we’re outta here. Fail early, fail fast. Why? Because we take the money and use it elsewhere. At the end of the day, it’s not our money. It’s the taxpayer’s money.

And, third, close … the last point, is really key. It’s close management. When we gave money. It wasn’t go forth and do. We became part of the team. We became part of the team. We have what they call SETAs, Science and Engineering Technical Advisors, and every week, every single week, we met with the performing team. Thursday morning, 9 o’clock, you’re going get a call from us, and I want to hear the PI. I want to hear what you did, and I want to hear how you’re doing on your milestones, every single week, because we are managing the taxpayer’s dollars. This is not NIH. We are not giving you a grant and going hope you come up with something a year from now. We’re going be in your shorts, but, when we find that you may be stalling up on a problem.

Let’s pretend it is … you’re building a pump, and so there’s a mechanical engineer component, there’s an electrical engineer component, and you’re hung out. The control mechanism is not working. We’re not going sit there and torch you about it. I’m going send one of my SETAs down there and they’re going help you figure this out. The goal is for you to succeed. So, we try to help them figure out. I may get a call back and say, “Hey. There’s running into problems. They need a controller, a different kind of controller. It’s going cost another $10,000 dollars.” I’m going give them the $10,000. Why would I not do that? Right, because at the end of the day, I want the capability, so I will give them the $10,000, and we’re off the races, however, there will be a point, and there maybe a point, and there often is a point, where it’s a bridge too far, and we got it, we give up, and we all walk away not angry with each other, and, remember, failure is not … doesn’t mean you haven’t learned something. In fact, if you fail properly, you will have learned. We all know this. In our lives, we’ve learned the most from our failures, and I think we all accept that. You have to have acceptance of failure, when you play this game.

And, so we actually had an 80% failure rate. I expected the PMs to have an 80% failure rate, because otherwise not pushing the ragged limit. We should have a higher failure rate than you, because we had a different penal system basically. I mean, when we lose the money, it’s embarrassment. When you lose the money, someone doesn’t eat at home. So, we understood that’s what our job was. Our job was to go with early stage technology, find out the best technology, push it, push it, push it hard, fail, then come back and try again. It’s all good. It’s all good, but one of the key things that we do that a lot of you don’t do, is we make doggone sure that we met with the teams every fricking week, cause wanted them to succeed.

And, so, we put a lot of effort into helping with the regulatory problems, helping them with the government issues, and most of all, helping with their tech. I mean, I had PhDs working for me in chemical engineering, and electrical engineering, and mechanical engineering, in microbiology, in neuroscience, and on it goes, and I will send them down there to help, and I will send them right away. I would know that last week they were doing fine, and this week they’re not, it’s not a big fix. That’s not going be a big fix, but if I waited six months, it’s a big fix, and I’ve lost money and time, and that’s a bad thing.

So, that’s in fact how we did it, and you would say, well geez [Geoff 00:10:49], that’s a lot of words. Did you really do anything? Who came up with stealth technology? We did, and we did it in 1978. 1978. We were flying stealth planes over Kosovo, and they had no fricking idea we’re doing … Why did we do it, because the goal was, and this is it, whatever you do, remember I said if it really works, it’s cool. Don’t do stuff that’s not cool. No, seriously, if you’re telling me you’re going come up with a better shoe, or a better pair of eyeglasses, the NIH is located on 390 Wisconsin Avenue in [inaudible 00:11:21], but what we want to do is, you’re going do something dramatic. So, stealth was I’m going make an airplane invisible. That’s cool. That’s cool. That’s cool. Alright.

Anybody here hear the name J.C. Linkletter? Who here’s heard of J.C. Linkletter. Ah. Some fine folks. Is J.C. Linkletter a smart guy? A pretty smart guy. You know who J.C. Linkletter is? He invented the internet. Seriously. No, joke.

Speaker 2: I thought it was Trump.

Geoffrey Ling: No. No. No. You thought it was … Who was the Vice President … Yeah. Yeah. Yeah. Gore. Gore worked for J.C. No. J.C. Linkletter, in 1963, conceived of the idea of how can we get computers to talk to each other, and he funded it. He got IBM to work on it. He got Stanford to work on it, and a couple other people, and in fact, 1969, they created something called the ARPANET. The Advanced Research Project Agency Network. Google history of the internet and you’ll see J.C. Linkletter up there and he was a DARPA program manager, and he’s the guy considered to be the father of the internet, and you tell me that you know of anything else not as pervasive in our society. That’s big.
And, you know why he wanted to do that? You know why? What was his concept? It wasn’t to sell Amazon toys. It was because he wanted to have a secure way for government scientists to use a core computation facility. It’s cloud computing, and he thought of it in 1963. So, that was pretty good. I think that’s pretty good.

UAV’s, we already had those. We had drones already built in the ’90s. They’re a big deal now, but we’re the guys who did it. Night vision googles. I want my soldiers to see at night. Think about that. That’s cool, and we came up with it, and in Iraq and Afghanistan, if you look at it, most of our combat operations are at night. Do you know why? The US Army owns the night, and nothing better than to kick down the door of bad guy and point a gun in his face at 3 o’clock in the morning, but it is. You can see at night. That’s cool. That’s cool.

So, those are the things that give you a flavor of what DARPA does, but to get there, because you want to see in the night. You want your airplanes to be invisible. You want all those things. It’s not about just giving the cash. It’s also adequately managing that money, and adequately managing the performing teams. You want to mitigate risks, not just because you think they’re smart, but because you’re going give them all that support. You’re going get in there and understand their tech. You’re going understand their tech as well as they do, and that’s how you do it.
So, what are some things. As I said, don’t be limited by the probable or the doable, instead go after what you really want. So, I always told my PMs, what do you really, really, really want. Alright, here’s something that’s super, super simple. Now, remember, I’m a soldier. I fought in Afghanistan. I fought in Iraq. I did six combat tours. So, that’s why I think the way I do. When you take a look at those two guys up there in the corners, they’re [inaudible 00:14:11] medics, what are they doing while they are doing that? What are they not doing? What are they not doing when they’re doing this, doing mouth-to-mouth resuscitation on somebody?. I have one medic for 30 combat soldiers, and they’re engaged in a firefight in Fallujah, bang, bang, bang. Three guys go down. One guy’s not breathing. He’s mouth-to-mouthing. What is he not doing?

He’s not helping anybody else. So, what does he need? He needs something to breath for that patient, either that or let him die. All he needed was a simple ventilator. Everybody knows what a ventilator looks like. You wheel it into the doggone room. You want one the size of a Harry Potter book, and that’s it. So, we did a program. We build a Harry Potter book-sized ventilator, and it cost $3,000. I don’t have a lot time. I’m going cut to the chase. That sucker, we had the performing team that did it, they built it … the first prototype took them six months to build it. We had a final design review in three more months. At nine month times we put it before the FDA. The FDA approved it in 72 hours.

Crowd: Wow.

Geoffrey Ling: Do you know why? Because we’re standing right in the doorstop going, it’s going out to combat soldiers who are being killed in Afghanistan right now, and if you want your name on the front page of the Washington Post, you just stand in the fricking way. So, they went ahead and did it. Then the army says, look these two guys, they didn’t have the wherewithal to build a factory, so we gave them an interest-free 30 year loan to build a factory. It’s called [ManTech 00:15:24], it’s a different source of funding opportunity, nobody knows about it except we do. We helped them with it. They got the loan. They built a company in [Grapevine 00:15:38], Texas, and they’re making the thing, and every US combat helicopter, not just the medevacs, combat, is carrying one of those things. Alright. It was in the field in less than two years, after idea start, because we are all about how do you get it out there.

So, [automedics 00:15:55], that’s the company. You can buy one for yourself. Sometimes it can be mundane. Sometimes it gets really mundane. Can you build a logistics capability, oh yuck, to help a social problem, cool. So, this came from me. THat’s me in the lower right hand corner. That’s my combat support hospital, the 452nd Combat Support in Afghanistan. My first combat tour in 2003, tent city. You can see it. You see the pharmacy, that’s that thing that’s behind that [connex 00:16:19] with the big windows. The connex with the big windows, by the way, is our bathroom, but that’s the pharmacy.

That is not the pharmacy you see on the left hand side, which is your classic hospital pharmacy, and so, I’m sitting there, going like, I got this young solider, bang, hit in the head, super bad brain trauma, he’s under my care because I’m a neuro-intensive care doc, but I got sent as an intensivist, so I was just running the ICU, but I am a neuro-intensive care doctor, and I’m look at this kid, and I said, I need bromocriptine. He’s having [inaudible 00:16:45], his blood pressure is all over the place, his heart rate is all over the place. I cannot put him on a 21 hour airplane flight to Landstuhl, Germany. I cannot do it, so I need bromocriptine. I got no bromocriptine. I’m just furious. Bromocriptine is a generic drug. It’s over … it’s cheap. I can run down to the CVS here and buy probably a box of it for $50.

My PhD is in medicinal chemistry, and I said, all I need is a chemistry set, and I can go ahead and manufacture this myself, if I had a stinking chemistry set, so it was like totally messed up that I don’t have bromo and I don’t have a way to make it, so I said, we got to change this and so what do you do? Build a machine that can make drugs, and so that machine that you’re looking at right now, is built. It will make 14 different drug classes. It can make a 1,000,000 doses of atropine per day. It can make 5,000 dose of Cipro per day. The idea is, push a button, and make a drug. It ain’t that hard. It ain’t that hard. Right? It ain’t that hard. What? Thank you. Thank you.

And so, it makes 14 different drug classes. Right now, it’s on track to go to the company spun out. And, you would ask, who would make it for you, Geoff? That seems like … I want to make a machine and all that. It’s easy. I got two friends to make it for me, Klavs Jensen, Chairman of Chemical Engineering at MIT, and I got Tim Jamison to be the chemist, Chairman of Chemistry at MIT, so I got two good, smart guys to go build this thing. That’s the machine that was built. You see it. It will make 14 different drug classes. It will make it in volume, just push buttons, and out comes your drug. It will come out as a pill or as an injectable. Right?

What about … Can you do it for large molecules, such as [inaudible 00:18:12]. The answer is yes. That’s the machine. You see it right there. It fits inside that pelican case. It’ll make about a gram in 16 hours of Erythropoietin for example. It can also make Streptokinase, human growth hormone, Interferon, and seven more coming online. It can make the protein-based drugs. This one is further away from FDA approval because this is making bio-similars, whereas the other thing is making bio-identicals. So, that is what that is, but I think that it can actually help the civilians, because, yes, I want it at my combat support hospitals, yes, I want it with my special forces teams. Yes, I want it in a submarine, but, can it help the civilian world, you would ask?

I think so, because look, these are all the drug shortages that are current in the US everyday, alright, and look at that. That’s 2016 data. That’s not old data, and that shortages are jacking up the prices of drugs, Look at the cost of Doxycycline. That’s tetracycline, boys and girls. It used to cost $20 for 500 pills at the bulk rate. Now it costs $1829. Valproate, an old drug for epilepsy. Kids use it, used to cost $31 at bulk rate for 80 pills. Now it’s $234. Look at Isoproterenol. That’s a heart drug. $916 for 25 vials. $4500, and the beat goes on, in fact the average price of generic medication’s gone up 33% in the last 4 years. Up. Should be going down. Why is it not going down? Easy.

They are being made in India and China, and a little bit in Israel. They don’t give a rats ass about our economy, so they’re just going try to squeeze the dollars as they can. So, the easiest thing to do is, screw you, I’m make it myself. Right?

And, then you have these assholes. Look. Right? I mean, this guy, don’t you want to punch him in the face? Don’t you just want to go out and punch him in the face? But, what you don’t see is that Daraprim, which is the therapy for toxoplasmosis that effects primarily HIV patients and cancer patients is, yes, that will cost $13.50. He bought the company. The very next day, he jacked up to $750 a pill. Oh, Hillary Clinton went after him. Congress had all these things on him. They put him in jail for another reason. Blah. Blah. Blah. How much do you think Daraprim cost per day? Right now? Today? After all that? $750 a pill.
And then this young lady over here has EpiPens and she jacked the price up to $600 and her daddy, the US senator, is going make doggone sure that nothing is going happen to them. So, the answer is not maleficence. The answer is, we got to change the model, so I think that are army base model can in fact actually help the civilian sector, and that’s a good thing. Alright.
Sometimes, our goals overlap. I need my soldiers to be a 100% warfighter operational ready at all times, but you want a healthy civilian workforce. So, my world is on the left. My airborne troops, my submarines, my special forces teams, they can’t afford to have people get sick. Worse, you can imagine, if I have a Trident submarine, which is what you’re looking at right now, that when you button them up and send them out to sea, they stay underwater for nine months. They do not surface. A submarine on the surface is a target. A submarine under the sea is a weapon.
The Tridents carry 24 nuclear ballistic missiles. By the way, Kim Jong Un should be very happy cause he’s got a bunch of those sitting off his coast right now. Those guys, if there’s one guy that has the flu, when you button up the hatch, you know what that means, and in fact, there was a time, during the H1N1 crisis, a sailor did get sick, and a Fast Attack had to come back in, because he infected the entire crew. Alright, so that’s a bad thing.
So, we said to ourselves, we don’t want, like that, these containment wards back in World War One from Spanish influenza, so we said to ourselves, if we accept that we believe that illness, I don’t care what illness you have, it may be cardiovascular disease, it may be oncological disease, I don’t care what it is, but let’s say infectious diseases begin at the cellular level. You get infected, you change at the cellular level, and it takes a couple days. The thing blossoms, or a couple of years if it’s like a cancer, and it blossoms, and you have symptoms, and once you have symptoms, you are now sick. You are now sick.
Wouldn’t it be better to redefine sick as when your cellular mechanisms are starting to break down. Right? Wouldn’t it be much better, and the answer is, can you do it? The answer is yes. This is the work of Dr. Geoff Ginsburg down at Duke. He’s the head of the Genomics Institute, and he came up with this really cool idea. He says, we can measure biomarkers, [inaudible 00:22:56] does, but more important is the mathematics.
It’s a predictive mathematics, and so, Duke, as you know has the computation core facility there, and so they came up with this remarkable algorithm, and I just don’t have time to go over it with you, but we’ll just say it’s [inaudible 00:23:12], and he’s able to dump a bunch of the biomarker data, churn through it, and what he found was, he found if he did a study where he purposely infected people with a virus, and he chose H1N1 Brisbane, RSV, H3N2, and a couple of others, and he purposefully infected them, they’re some who are going get sick and some not. Right?
I mean, you get coughed in your face, some people fight it off and others don’t. He was able to determine that if, oh [soops 00:23:38], if they had the markers on the right hand big box, they were going get sick. Even better, if they had any of the markers on the left hand, he could classify what they got sick of without knowing. It’s a very specific response, so that’s cool. You would say, that’s really cool.

And, in fact, how cool is it, is that if you say, at T is when symptoms appear, and .1 T is a tenth of the way in the incubation period, he had 80% to 90% positive predicative value in terms of determining who would ultimately become sick. Remember, they look fine. They just got infected, but they look fine. He could tell with 90% certainty who would get sick and who would not, and when he was at .8 T, which is like a couple of days before symptom manifestation, he was at 100%, before, and then what’s cool is this.

He said if I give everybody the flu, H1N1 Brisbane, please, not Swine, and H1N1, and they had positive markers for impending illness, that they had that signaler, I’m going get sick, and I treat them with a single dose of Tamiflu, when it is time they should be sick, none of them got sick. Why? Cause the viral load is so low that he was able to wipe it out.

If they were marker positive, and he gave them placebo, 100% of them got sick, and if they’re marker negative and he gave them placebo, they were healthy. So, clearly shows that not only could do this, but wouldn’t it be cool to cure disease before you get it? Wouldn’t it be cool to know your pancreatic cancer and cure it before you actually got it. Wouldn’t it be cool to know that you had critical stenosis or [arthroscopic 00:25:10] stenosis and you were able to cure it before they got sick. That’s the point. Who wants to get sick?

And, sometimes we can do something really hard, and I got to go through this quick, is that, this was my toughest program. So, one of the things I had when I was … I don’t have my picture there. Too bad. When I was in Afghanistan, there was not a single day went by that I didn’t have a little kid missing a limb come to us. We were the only level one trauma center in the whole stinking country, and of course, American soldiers being who they are, when they come across a kid whose been injured by a Russian landmine, and that’s how they all got hurt, missing a hand, missing an arm, they call for a medevac, the helicopter brings them to us.

So, there wasn’t a single day in my first combat tour that I did not see a kid without missing a limb, and missing an arm in that part of the world is a death sentence. You will never survive. You will never survive. So, when you think about it, you say to yourself, oh my god, wouldn’t it be great if we could come up with a cheaper prostetic arm. You see that arm over there? And, you look at that arm and you go, like, it’s pretty functional. You can scratch your head with it. You can pick your nose with it. Maybe you can feed yourself with a spoon, but, you know, first of all, it’s ugly as sin, and second of all, it’s not that function.

I mean, people say it’s functional, but it’s not that functional. I mean, look at that thing. Could you imagine if that was your arm and you woke up in the morning and you had to go to the bathroom, you know, take care of your business, and you know, next thing you know, you see my friend Bill [Horoda 00:26:26], proctologist to get some care. You know, because that won’t do. So, instead, you say to yourself, let’s reword this question. Let’s go back to what we said, not what’s probable, not what’s possible, but what you really want.

And, would you know what you really want? You want an arm like Luke Skywalker’s got. You want an arm like Detective Del Spooner, hell you want Detective Del Spooner. I want to look like Detective Del Spooner, you know, but that’s what you want. And, how do you get from the left side to the right side. Simple. You got to go away from this idea of using peripheral control and going to brain control, cause how do you control your arm? You think about moving your arm, and your arm moves. So, you got to go to brain control, and so, we said, let’s do it. Let’s do it. Let’s do it. Came back home, said we got to do something. We got to change this whole paradigm. Let’s do it.

First things first, can we show that we can tap into the brain and decode the signals enough that we can actually get the arm to run? You know? Can you actually decode? The answer is, the brain works on electrical signals, right? That’s what it does. The brain works electrically, and if you think about it, if the brain works electrically, and sending electric signals to give a signal to do something, let’s say move the arm up, down, left or right, or whatever. That’s a code, isn’t it?

Shoot. I’m from the US Army. I got tons of codebreakers. So went ahead and married up a group of codebreakers with some really brilliant neuroscientists, Miguel Nicolelis down at Duke, who had electrodes into the monkeys, and real quick, he taught monkeys how to play a pong game, so they’re working their arms, and they’re playing a pong game, and he was measuring electrical signals the whole way. They decoded it. They decoded it. They knew when the monkey was thinking, well, go up, down, left or right. They knew it. So good that when Miguel disconnected the joystick, and it was a dead joystick, and the monkey’s playing with the dead joystick, he’s still able to play his game because a computer’s reading his brain and moving the cursor for him.

And, even better, when he took away the joystick, the monkey sitting there, looking at this thing, starts thinking about, geez, if I had my joystick. I’d play my game, and all a sudden he sees the dot moving, he starts to run the whole thing by just using his brain. It was really cool. Miguel, by the way, was a 2012 Nobel Symposium speaker, so we’re hoping he gets the prize.

So, then you say to yourself, who cares about that, can you actually run an arm. Go ahead and play this video and I asked Andy Schwartz to use that whole thing and see if this monkey can control this robot arm just by using thought, and the answer is yes. So, the computer is reading his mind, going through all the things, and he’s feeding himself. Notice how he’s not shoving the zucchini up his nose, cramming it into his ears. He’s actually sticking in his mouth. Alright. The point was, we knew he could do it. By the way, this research? Using the technology, the approach I told you about, two years from idea to that. Two years. Two years.

So, Geoff joins DARPA right after he comes back from Afghanistan. They sent him back to Iraq for a year, but we won’t talk about that, so when I came back, this was all done. My team had done it, cause I was in Iraq. They didn’t need me. They did it themselves, so when I came back, I said, cool, let’s go. Now, let’s build a real robot arm for people, and that’s in fact what we did. We said in two years, we’ll build the robot arm, and in another two years, we’ll get it into people, and that’s what in fact we did. Quite a lot of some engineering stuff.

I’m not going through this, but the end of the day is, here’s the robot arm, go ahead and click that video, and in fact, you can see Chuck right now, and he just put it on and started to move it. Now, who built this robot arm you would ask? DEKA, Dean Kamen’s guys. The guys who invented the Segway, alright, so you notice that arm, when he turns, it turns. When he learns forward it goes out, it comes back, they’re handing it off. It’s modular, so if you’re missing an elbow, below the elbow, you get that, if you’re missing the whole arm you get that ,cause Randy has a full arm, Chuck in the green shirt has a half an arm, but you can see they’re handing off, see there, it looks very natural doesn’t it. Pouring water, you know. Doing real great.

I would love to show you the whole video, but I’m running out of time. I’m standing between you and the wine train so we’ll do that. He was picking up a grape by the way. So, that gives you an idea of the dexterity that he has.

But, then we said, the whole idea is going to the brain. Can you actually get in the brain of a patient, really implant it in the brain. So, here, go ahead and play this video. You’ll see Tim, he’s a high quad. He’s kind of like Christopher Reeve, and he can’t move anything, but he hooked his brain directly up to the robot arm, and he’s controlling the arm. All we ask him to do is up, down, left, right.

Computer: Up.

Geoffrey Ling: The computer said go up, and you can see, he was able to push the arm straight up. Now, this is the first time, we actually did this. What I asked the investigators do is, we hooked him up. I said, get a video camera going, because we flip the switch on, either his head was going burst into fire, which would make a cool YouTube video, or the thing would work, and we got it to work. Alright?

Speaker 5: Nice.

Speaker 6: There you go.

Speaker 5: Yeah.

Geoffrey Ling: So, naturally, they broke script.

Speaker 6: That’s nice.

Geoffrey Ling: He high fived his investigator, and this is really cool. Katie, his girlfriend …

Katie: Aw, baby.

Geoffrey Ling: Incredible emotional, and she called it his arm. It’s not his arm.

Katie: Sorry.

Geoffrey Ling: I mean, that arm is hanging on the side of a rail, but it’s the way he’s interacting with it, I think. So, you say, that’s pretty cool, but that looks really [cludgy 00:32:04] doesn’t it? Really cludgy. Now, I would say this to investors, I said, I get it. It’s cludgy. It looks cludgy, but if you were standing at the base of Kill Devil Hill in 1903, and you watch two knuckleheads from Dayton, Ohio, bicycle guys, right, bicycle guys, are going fly an airplane, right, they’re going fly an airplane. That’s why I said, don’t always laugh at everybody, and those two suckers shoved this thing off, and you’re like, whoa, that thing flew for eight seconds. Flyer flew for eight seconds.

Right? And you’re staying down there, going like, would you say, what the heck, eight lousy seconds. Let’s go home and get something to eat, or, would say, oh wow. They did it. They did it. 3,000 years of mankind been trying to get this thing going and these two knuckleheads from Dayton did it. I’m going go like invest in them. I’m going like [voss 00:32:51] them. We say to ourselves, which are we? Which are we, and that’s why I was telling my PM’s, don’t throw anybody out. Here what they have to say, then throw them out, but then you say to yourself, look at the rate of progress of air travel.

1903 was pretty cool, but what were airplanes like in 1915, which was the dawn of the first World War. That’s just 12 years later. What were airplanes like 33 years after 1903, which is 1936, which is the dawn of World War 2, what were airplanes like then? They’re pretty doggone good. Right, and what were airplanes like in 1966 … No, I mean, 66 years after, 1969, Neil Armstrong walks on the moon. 66 years after the Wright Brothers flew. 66 years. That’s nothing. Nothing. Let me show you what happens 7 months after showing this. Go ahead and click that. This seven months later.

Speaker 8: [inaudible 00:33:47] up and straight down, then left and right and diagonally. I can close it and open it, and I can go forward and back.

Speaker 9: That is just the most astounding thing I’ve seen. Can we shake hands?

Speaker 8: Sure.

Speaker 9: No, really.

Geoffrey Ling: Seven months.

Speaker 8: Yeah.

Geoffrey Ling: We went from this.

Speaker 9: Come right over here?

Speaker 8: Yes, you come over there.

Speaker 9: Okay.

Speaker 8: Let me grasp your hand. There we go.

Speaker 9: Oh my goodness. Wow.

Speaker 8: And, I can do a fist bump, if you’d like.

Speaker 9: That’s amazing.

Geoffrey Ling: Yeah, it is. Isn’t it. That’s really is amazing, but you say to yourself, Geoff, so what? You’re running a robot arm. That’s cool. It helps only a handful of patients, I would never invest in that. Really? You would never invest in that? Take a look at this. Take a look at this. Same technology, going to the next … Oh, sorry. Go and click this. I want you to take a look at this patient. He’s asked to use one of those little child toys. I want you to look at this.

Speaker 10: Like the one I made was pretty strange.

Geoffrey Ling: Did you see what he did? See what he did? You saw it. Roberta saw it. He turned his hand the wrong way. Why did he turn his hand the wrong way? Cause he could. Cause he could.

Speaker 10: [crosstalk 00:35:06]

Geoffrey Ling: What do you think we found the monkeys were doing? Okay you can shut it off. One thing we found that the monkeys were doing was that … We didn’t cut off any monkey’s arm, so I don’t want to hear from PETA, so the whole idea was, as the monkey would reach out, grab the zucchini with the robot arm, but what did he do with his good arm? We had restrained it, so it wouldn’t get in the way. We saw that within a couple of days, the monkeys, like when you patch a kid’s eye, the monkeys learned how to try to get at the machine with his other arm, he’s reaching around for the zucchini with his robot arm, and he’s trying to get out of his restraint with his native arm. He learnt how to use three arms, learnt how to use three arms, so come back to this.

You looking at Geoff, you’re going, what a stupid thing, right? Well, I tell you what, what it does is, if you can get direct brain out, so the way we drive, the way we fly airplanes, is brain to hand, hand to controller, controller to ailerons, and you fly your airplane. Bypass that whole thing. Bypass that whole thing. Can you do it? Well, yeah. So, this is that lady on 60 minutes. Never flew an airplane in her life. We hooked her up to a flight simulator. Go ahead and click that, and what you’ll see, she gets level flight immediately. Immediately.

Why? Cause she’s thinking about not working the stick and all this stuff. She’s thinking about I’m flying. I want to go left. It was so good we sped it up 8 times and said fly through the Grand Canyon, and so she does, remember, never had a flight lesson in her life. Then, we put her in the F22 Joint Strike Fighter, and yes, it looks kludgy, that’s a damn difficult airplane to fly, but, look at that, she has level flight. She can climb. She can dive, and she’s not crashing.

So, at the end of the day, this technology isn’t about running an arm. This technology is about running the world around you, that if in fact you can go and get these signals out, now you know where they are. Think about what you could do. The internet was cool. Look what it became. I think this is cool, and look what it will become. So, now I spun out a company, now that I’m out of the government, and we got all the IP to signaling and all that, because in the end of the day, I think this is the next step for mankind.

If [inaudible 00:37:23] can liberate you from your bodies, think what you can do, so at the end of the day, I run out of time, I’m going shut up. I just want to say, it’s about what we want, not settling for what we can have. That’s number one. Number two is, resourcing the innovator, the geniuses out there is more than just giving them cash and hoping they succeed. It’s really get in there with them, help them, because at the end of the day, we want them to succeed, because if they succeed, we succeed. Thank you.

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