FITM: The Full Conversation with Robert Cohen

Robert Cohen has spent four decades on both sides of the MedTech table — founding companies, selling them, and now evaluating billion-dollar acquisitions as Stryker's VP of Innovation and Technology for Orthopedics. In this conversation, he shares exactly what a global company looks for when it decides whether a startup's technology is worth acquiring.

Cohen's career reads like a timeline of modern orthopedic innovation. He co-founded Implex, the company behind trabecular metal, which was acquired by Zimmer. He then built a 3D printing company that worked closely with Mako Surgical, and when Stryker acquired Mako in what became one of its most successful acquisitions, Cohen came with it — returning to Stryker 23 years after he'd originally left. That rare vantage point, having been the founder pitching and the executive evaluating, shapes every insight in this episode.

From the reimbursement pressures reshaping which innovations get funded, to why founder ego can quietly kill an acquisition, to the 15-minute pitch structure that actually gets a company's attention, this is a conversation for anyone building a medical device and wondering what happens when a big company comes knocking. Cohen also looks ahead at where he'd put $10 million today and why the convergence of digital, AI, and enabling technology makes this the most exciting era in orthopedic innovation.

⏱️ Chapters:
00:00 Four decades of MedTech innovation at Stryker
01:29 From startup founder to global acquisition leader
04:29 How Stryker evaluates technology for acquisition
05:38 Reimbursement challenges in medical device innovation
09:35 Assessing MedTech startups at different stages
12:11 Rising patient expectations and implant engineering
15:18 Why C corporation structure matters for startups
17:44 How founder ego affects acquisition negotiations
20:25 What large companies look for in acquisition targets
24:07 Post-acquisition integration and retaining talent
29:08 How Mako changed orthopedic robotics at Stryker
34:36 Where to invest $10 million in MedTech today
38:17 The 15-minute pitch that gets a company's attention

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This podcast is intended for educational and informational purposes only.

The content discussed does not constitute medical advice and should not be used as a substitute for professional judgment. Clinicians should rely on their own training, experience, and clinical decision-making when applying information from this discussion.

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Transcript

Robert Cohen 0:27

My name is Robert Cohen and I am a mechanical engineer that have worked in the med tech industry for over four decades, and I presently am the Vice President of innovation and technology for the Orthopedic Group at Stryker

Joseph M. Schwab 0:43

You mentioned your four decades worth and your career arc, if someone were to look at it on a piece of paper, is, seems pretty extraordinary as you've been involved in not just joint replacement, but spinal implants, biomaterials robotics, 3D printing. Was there a single moment or invention or technology that convinced you that the future of orthopedics was not just in the device, but in enabling technology?

Robert Cohen 1:14

Yeah, it's, it's a great question too, as, as technical folks need to, need to think about all the aspects, but it really goes back down to addressing clinical concerns, adverse events, um, improving outcomes, improving the quality of care.

Joseph M. Schwab 1:29

You've also experienced innovation, we'll, we'll say from multiple angles. So starting maybe working inside a young, fast moving company like Pipeline Biomedical, and now you evaluate major acquisitions at a global scale. Is there some sort of psychological shift that you have to make when you move from. Say, believing in a founder's dream to determining a global corporation's next billion dollar investment.

Robert Cohen 1:58

Yeah, it is a little bit of change because when you're trying to sell a company, you're on one side of it, and when you're trying to buy a company, you're on the other side of it. So I have this compassion for both sides, and I'm not sure I'm the best negotiator, but from a technical standpoint, I think I've learned a lot. I left in 92 to start a company, um, Implex trabecular metal, uh, which I wound up selling off to the Zimmer. Porous Metals to help resolve fixation. Um, so Zimmer acquired that. Then I started another company on 3D printing and was making a lot of implants for Mako Surgical. And then Mako Surgical is a robot company. That was sort of my answer for smart tools, if you will, to put the implants in, right. So I was helping them, that they acquired my company. I got to help on Mako. And then 23 years after I left my Stryker job, I got my Stryker job back. And just so you know, uh, this week is the 12th anniversary of the. Stryker acquisition of Mako Uh, so I'm celebrating my 12th anniversary being back. And when you look at. Technologies and you look at things, you know, it's, it's very different for Stryker. Stryker will pay for a company that has a validated product and some form of regulatory acceptance. And if it has intellectual property protection, all the better. It sort of de-risks it. Um, but Stryker does a really, really good job. Of taking adjacency things, looking at, uh, implants are more sizes, more iterations, learning from its past. Uh, robotics was too much of a, a jump for Stryker to go into with some confidence and FDA acceptance on enabling technology for indications, um, and how to get acceptances, uh, and what validation protocols are, what clinical data is very complicated. So Stryker, at this point said, okay. We wanna get into robotics, we're gonna require a robotic company that's gonna make our time to market faster. Uh, comes along with some experience, tried and true. And now we could take a technology which has a, a technical wherewithal that is, is known now and now how do you make it go to scale? How do you take that? So I think in one sense of it, I was a small company guy with Mako, but helping them get the technology and proof of concept and in the Stryker, Stryker expects to see that proof of concept de-risked. But is it something that could be expanded and grow to drive revenue? And I think, you know, that's okay. And, and that's it. It's worked out well. Um, 12 years since the acquisition and, uh, the Mako Surgical has turned out to be one of the best acquisitions strikes ever.

Joseph M. Schwab 4:29

So when you're thinking about it from your big company, Stryker point of view. You're looking at, uh, companies that are providing technical innovation or, or say you were looking back at Mako, how do you assess whether that technical innovation is, we'll say good enough, um, versus something that may be a bit

Robert Cohen 4:48

made

Joseph M. Schwab 4:49

for market? Are there metrics or signals that kind of help, you know, this is a technology worth investing in?

Robert Cohen 4:56

Yeah, I think you're a nice guy. The way you ask the question over, over, over engineered or over towards a market is, uh, you know, 15 years ago, 10 years ago, people would pay for certain things that they just want. Sometimes before it's proven out, we are living in a world right now. If it's the United States and you look at CMS and Medicare reimbursement, you're not gonna get paid more necessarily for this. You have to work really hard to do that, so you have to assume you're getting value or greater value for the same money. And you have to describe it. We can go to socialized medicine countries, we could go look at what's talking about reimbursement. We could look at registries in Australia and the uk. So the world from reimbursement is very hard to get more money for something. So therefore do you add more value? And that's where you go back to again. So when we assess it, we assess a technology to say, okay, is there proven clinical outcome improvement out of this? Yes or no? And I don't mean just the general PROMs It has to be something that's meaningful to something, right? Implant survivorship longer term is looking pretty good. It's the short term, right? Uh, uh, somebody's, uh, quality of life return, uh, less time in physical therapy. Earlier. Return to work. Earlier. Return to flexion. Right? Reduce pain. Um, is it a procedure now that's more safe in an ASC outpatient surgery center versus three days in the hospital? Right? There's a, there's a benefit there. Okay. So that's one category and improved benefit. The other category is on quality of care, which, by the way, a Mako surgical robot helps out improved the outcomes as well as quality care.'cause everybody's not the same. Everybody doesn't have the same experience level. Everyone doesn't have the same exp skillset, right? And now how do we get all physicians to be able to enjoy technology and data on a patient and maybe elevate the quality of care and consistency of care throughout a hospital system. So there's value to that and there's expectations. Stryker delivers that. Then there's patient safety. Um, patient fall risk. If we think of a hospital bed, if we think about that, is someone falling out? Is someone not walking right? Um, is some complication potential in surgery that you hit a nerve, an artery or, or some muscle or tendon when you're not supposed to? It's a safety value to it that we look at safety matters and there's the economics inefficiency component to it. And in economics, inefficiency depends on who the customer is. So if you're the patient economics and efficiently, okay, I'd love to get a value outta my dollars'cause I'm spending more on my deductible. Different story. Now, if it's to the hospital, hospital would like, uh, if you get a quicker time of procedure, uh, is my perioperative nursing team gonna be able to handle this procedure? Is it too complex? Is the workflow too onerous and I gotta dedicate too much of an operating room time or the time between take down and clean up in the operating room is taking me too long. This training gonna be too onerous. Is the learning curve too great? Is your equipment gonna add more time to the procedure? So if you can help out from the economic efficiency of the hospital, in other words, that hospital can figure out a way to get one more procedure per day. In a procedure where Stryker equipment's utilized, that is one more procedure a day that drives revenue under the same fixed cost. There's a value component to that and the expectation of Stryker. And then it could be also that the economic benefit is also to maybe the physician's office to be able to use digital or AI with some of this equipment to plan better, plan easier. And then lastly, economic efficiency to Stryker And that matters. When we look at companies, can we manage inventory better? Do we just need to take the right size of implants in at the right time and can reduce inventory as cash on a shelf. And if you could reduce your inventory burden out, that's more cash that can be deployed for R&D to generate a new thing. So depending on who your customer is, the hospital, the patient, the physician, the ASC the buying group, uh, or us. So I, I say break it down into those categories. So we, we kinda look, is it an outcome? Is it gonna be a. A quality of care, safety, economic efficiency, and is it something that we just tuck in to our existing portfolio and our sales teams can look at it? Or does this take us into a new area maybe we're somewhat familiar with, but a new area within that market segment that we don't have experience at? So it's relatively complex answer, but, and the good news is Stryker looks at everything and tries to look at it in a way where it's either driving revenue. Or driving uh, bottom line and with the patient always in mind.

Joseph M. Schwab 9:35

And when you're evaluating one of these med tech startups, is there a single question that you ask yourself that. Um, might immediately signal a, let's say, a viability concern of that med tech startup.

Robert Cohen 9:50

Yeah. It depends on the stage of the startup, right? So one thing you say is startup, right? All startups are not the same, right? And, and, you know. You can have a conversation with one person and they have a proof of concept on one paper and have a provisional patent application that's submitted, that's a startup, and they're going through the first phase of funding. You have some startups that are late stage funding, um, have a, a pretty good review already of an IP submission. Uh, they may already have some clinicals. Where they have three or four different clinical center sites and they have surgeons that can speak to the benefit of the clinical performance of something, if it's something with clinical performance. Uh, or they can also speak to any adverse events. So that's very different.'cause it goes into de-risking, right? It's a reward value kind of ratio. So you look at that, but then also it depends, right? Is it, is it something that is transformational to a point? Where the risk reward is different and hey, maybe Stryker wants to really pay attention to this'cause this is so compelling and is addressing a market or a clinical need in an unbelievable way? Or is this something that makes our existing product lines better? Well, for that case, we want to prove it before you buy it. In the other case, that's a little more speculative, but has the potential, we'll assess the potential, see if we agree with the founder's premise and whatever data they have to support. Their belief at this juncture and then possibly move on it. But you know, we are talking about implants, but implants, enabling tech is enabling tech's. A little bit different story with its power tool, whether it's a robot, whether it's navigation, whether it's something that looks at blood loss. And then there's the other part when we have more and more companies coming to us that are digital or AI enabled companies, right. It's taking electronic health records and the patient room matters for us. Remember, we're one of the hospital bed leaders. We just invested in ambient intelligence cameras on the wall, uh, Vocera communication to, to clinicians, uh, around patients. And all this data-driven part is important. Um, but the best of the best, if you have a data-driven part that ties into some enabling tech. On some Stryker procedures where Stryker equipment's already deployed at the hospital. And by connectivity we actually get another added value with the digital AI overlayer. Oh, that's, that's got our attention. Um, we're living in that era, as you know. Um, but that gets our attention too.

Joseph M. Schwab 12:11

I want to go back to something you said, um, kind of in regards to patient expectations, because a lot of patients wanna return now to high impact activities, golf, tennis, as soon as possible, and as as highly functioning as possible. It's not just be comfortable sitting in a chair anymore. How does this level of rising patient expectation set the bar for engineering, whether it's engineering a new implant or a new technology so that those products aren't obsolete even before they launch.

Robert Cohen 12:44

Yeah, it matters a lot. It really matters a lot. Patient's expectations. Um, in many cases is what drives, because we're talking about short term patient expectations, right? Um, as I talked about, when someone could return to work, can they do outpatient surgery procedure? When can they go back to physical activity? Can they have expectations? And as we have a global population that's living longer, um, and governments, even in socialized medicine, countries want that population to stay healthy and active because then you don't have other health complications. Um, it's super important. You know, I often talk to, um. Residents and fellows, and I remind them in the eighties as an engineer, I'll go back to hips again. The engineer is just don't have your implant break in five years, right? As long as you can get off a bed, pain free to a table to eat and maybe walk a little bit in supermarket, uh, golden, right? And then in the nineties, patients' expectations changed. And the nineties, now people wanted to play golf. I even know many people didn't play golf before that, but they wanted to play golf. And then the expectation was a little more exercise, um, remaining at work. And then we get into the early two thousands and people really wanted to know that they're not gonna implant's not gonna fail, but they wanted 30 plus year survivorship out of it while they were active. Now we're living in a world. Someone doesn't even wanna know. They have a knee implant in them. They want to be able to get off the floor. Unaided not holding onto anything. They want to implant that last a their lifetime and like, you know, six hours after surgery, they wanna be pain free magically, whatever. But so the, there's more earlier. Um. Earlier of characteristics that are expected on fixation of an implant and mobility to make a person feel better. That's a combination of enabling tech and implant development, where now get a great implant that has long-term stability fixation, provides range of motion, yet at the same time, put it in the right spot. So all muscles and everything else is, is leg length. Everything's balanced, right? Which we need. Something of enabling tech to be able to help drive that consistently. I will say what I've seen in my experience is remarkable. It's actually a remarkable point in time we are at right now, where the evolution of implants and the evolution of enabling tech is coming together and the patient has measurable benefits because of it. The future of that combination and evolution combined with digital and AI will even take us even further.

Joseph M. Schwab 15:17

So many startups, uh, maybe struggle or fail'cause they don't prepare for scaling. You've advised in the past founders to sort of proactively adopt C corporation structure, specifically if they're seeking institutional capital. From your perspective, why is this legal structure a non-negotiable step that signals business maturity and maybe readiness for a bigger investment?

Robert Cohen 15:44

So my very first company I did, um, I did it as an LLC to save cost, save on accounting dollars. Um, there was some tax benefits associated with it, uh, and when a large company, in this case it was Zimmer, but when other companies ended, the banker represented me. They're like. You have to have full compliance. There's no public company that's gonna take a risk and pay you, you know, a hundred millions of dollars plus and not have you being bonafide as a C corp. Where therefore you're following under structures that the SEC on the acquisition will look at and you de-risk it to shareholders. You're not gonna have a little hiccup where financially there was something wrong and the way you did the books financially was something wrong. And the way you fill your valuation of company, and we could talk about bank accounts and things like that. So I got dinged on it the first time. And then when my company got more mature and I had more people in the supply chain, I was paying and I was looking at inventory as I accepted money certain ways. I didn't necessarily have the corporate audits, annual audits and compliance that was expected by the big companies. Yeah, it was a little bit more money, but it was really discipline and I deprioritized it, if I'm honest with you. And it wound up costing me a lot of money, uh, to convert to a C corp later on. A lot of money. Um, I wish I could get that money back. And then when I started the second company, um, I just did it from a C corp from day one, which then it didn't cost that much money, had the discipline and we were just acting and behaving like that. And we're getting annual corporate audits. It just shows a discipline, um, uh, and a financial acumen that's expected nowadays because you can have the world's greatest product, but if financially, uh, your books aren't right, you have to go back and prove something. You can either extend the length of time, uh, for your acquisition. And put a lot of your own cash into it, which you may not have at that time, you know, versus doing it right, making it seamless, and you have a clo uh, earlier close, uh, timeframe.

Joseph M. Schwab 17:43

also identified that egos are the biggest problem in business. And so when you vet a founder, um, what are the subtle cues or maybe the patterns that you look for to confirm that that founder has, we'll say the data-driven humility required to make hard choices and potentially bring in outside management.

Robert Cohen 18:06

Well, I could give you an example. I'll give myself as an example. So my first company, I had pretty big ego, uh, still a pretty big ego right now, but I'm, I'm, I'm, I'm trained not to show it. Um, but in my first company, if you told me there was something wrong with what I showed you, even if you're a potential acquirer, it's like, I'm from New Jersey. Let's take this personally, right? You just insulted me and not just my product. And now, now this is personal. So forget about the acquisition. Let's go outside. Um, and what I really wasn't hearing was the way they valued it was not the way I valued it. And maybe I had an education in the process. Maybe I wasn't a good listener, maybe I wasn't open-minded enough. Um, and what I realized I was taking it too personally and I realized it's okay to show vulnerability and it's okay to say I don't know, or it's okay to say I'm not perfect. Um, my second company, um, I learned through that process, uh, but I also learned to show humility. But I also learned that it's okay to say I don't know everything about finance. It's okay to say I don't know everything about the business model. It's okay. I don't understand everything. The way you company would bring it to market and the way you valid validate it. I come to realize you've come to the company and you're talking to me because you like my invention and you like my technology. You like the way I did a workflow and you like my surgical technique and you like the outcome that's under the technology umbrella. So then I realized I don't have to be an expert in all things, and it's okay to be passionate about your concept. I just let loose a little bit less passion related to how I believe it's gonna change the world and change the market.'cause I don't have the credibility and I guess I wasn't listening. So I still to this day, by the way, and I, I've had some very good mentors in life, um, stay true to your design. If you design a good product and you design it for good reasons, people will want it. Robert that's all you need to think about, let others that are smart. Let others people that know, finance and know marketing, sales, and know business plans. Let them lead you. You don't have to own everything. You don't have to be perfect. in Everything. You don't have to be the smartest person in the room. Be a good listener and stick to your competency and sticking to my competency are words to live by

Joseph M. Schwab 20:25

So how does that inform your vantage point now being part of the large company, looking at maybe the top attributes in a target startup?

Robert Cohen 20:36

Yeah. So when we look at a target startup now because of that, by the way, um, Stryker has proven itself that if it's a small to medium sized company, um, you know, the sales force is important. What they've done. Obviously, if Stryker's looking at it is remarkable, uh, but it is a technology that's being acquired'cause it's not coming with a huge market share and it may not be coming with a lot of revenue. So therefore it's the technology play. Right? It's a value on technology. So now I, I've learned looking the other way back. Okay, let's make sure the chief technology officer. Or the president, if they're, if they're a technical background, let's talk to them about their innovation. Let's understand from them why they thought this was differentiated, why it makes a societal different benefit, why they believe this technology addresses an unmet need. And when you listen to them just with that and maybe that filter, which narrows the question. Now you see the true brilliance of these startup founders. The, the startup founders and the way they believe and the way they talk about their product, that's something that Stryker you should listen to. It doesn't matter whether you're a big company, these people know what they're talking about. The big company should listen to the founders, their belief on why they developed the technology that a company was built around. Isolate the conversation to that. Then as you listen to that, you say, okay, do you support that? Is there enough evidence now, ego or not on technology? Is there enough evidence to support either with some fact-based findings or even anecdotal that offer proof points to support? The position the founders or inventors is taking. And then you can get into the other business, which is cost of goods, time to market, manufacturing, regulatory. But if you don't like that first cart, you're not going to the second part of the conversation, understanding the technology and asking founders, even with a big ego, stay true. You're passionate about this invention for a reason. You're passionate around this market segment. Learn to explain why, why it's a benefit to the clinician, why it's a benefit to the patient, why you believe this is a differentiator product. And just stop there. And if you take your passion and your ego and your energy and get a big company like Stryker to accept it, then the rest of the conversations are easier. And we find often people tie it all together too much, all at one time, and they're, they're not, they're not very succinct. They don't land a good message and sometimes it confuses the company. That's one piece of it. The other piece, when we still look at egos aside, when we acquire a company, we also acquire talent. A lot of that past couple Stryker acquisitions, small company and big, very big. We look at the technical talent and we want the technical talent and we want the technical talent to stay with the product. We've done very, very good and I'm very proud of Stryker for this. Very, very good at retention of technical talent, which is not easy, and they stay true to the product and those are the people that know the product and big companies have to learn. How to integrate these kind of folks. And I think we stryker's learned over the period of time, uh, and it's made Stryker better. So you look at the talent, the technical talent, you look at the quality of the invention, the protection of the invention, and what the invention solves. Start there. Work your way out after.

Joseph M. Schwab 24:06

Let's talk about that post-acquisition integration, because as you sort of alluded to, it can go very well. It can sometimes kill the value of the product. From your experience, are there big mistakes that you've seen or are there things that you would advise companies to do to avoid those post-acquisition integration pitfalls?

Robert Cohen 24:30

So I could talk to you for so long, you have no idea about being acquired.'cause I was acquired into the two big companies. And then I could talk to you about being the acquirer in the two big companies, acquiring other companies. Um, at Zimmer, I was, I was, uh, with the Center Pulse integration team, which you should, you know, be familiar with. And then, um, I was on the other side of the Mako, uh, into the Stryker. And then now Stryker, I've helped integrate other companies, um, that I can help participate acquiring, and, you know, it's tough. Um. Which way you wanna look at it. If you wanna look at it from the talent, that strong talent that was independent minded, that may not have had as many processes. Or procedures and were able to move a little fast. Um, I learned through over the years, um, that it's okay and I was able to keep the teams together, and I think we did okay. As long as the team's heard that the product roadmaps were gonna stay robust, that people are gonna invest still in the technology evolving. Um, I think that was good on the integration from the big companies. Sometimes you have to build a market that didn't exist. Sometimes you have to get your sales force excited about it, otherwise they're not gonna talk about it. I think Stryker's done a really good job. Um. Uh, recently of adopting and in integrating, but also showing that there's not only an appreciation for the company's products, but appreciation for the company's people. Um, and we're not better than now, and the non invented here thing doesn't stick. So really, really important point. But integrations are hard. Stryker now, like a lot of many other companies, by the way, has an integration office just because you don't get the value or you'll lose value potential. Of your acquisition if you don't do this right. And I think the appreciation now to get it right, you get it right, you get it right faster, your first year goes well, but you set up your second and third year for success. You get it wrong. You sort of run in place for a while until you get it back. And then you also have a retention problem of key talent. Um, and these are all value drivers and these deals right now. So you wanted to do as best you can, um, but. Industry was not good at integrations. You know, 20 years ago, for sure, even 10 years ago. I think med tech industry, by itself has done a much better job figuring out these acquisitions.

Joseph M. Schwab 26:50

Hmm. So for a startup that's aiming to be acquisition ready, um, is there something you would recommend? It's one to three year roadmap look differently than a company that's just aiming for independent growth?

Robert Cohen 27:04

Sure. If you wanna set up here for an acquisition, there's different things for, versus a cash generator to keep it going. Um, but I'll also tell you, let's, let's first it's, it's a great time for small, mid-size companies, right? Because, um, you know, stock market's a little more robust, but hey, you know, go look at these large companies. So you're gonna find a med tech industry that is more hungry for acquisitions. This is good. So now what are they looking for in an acquisition versus a company that wants to watch their cash and go maybe a little slower and generate, they wanna see the invention. They wanna see the invention through the regulatory process. They wanna see the invention through the intellectual property process. They wanna see how it's gonna behave around the globe, and they wanna see either clinical results or market adoption first. It doesn't have to be fully revenue generated. By the way, show me a couple key prestigious institutions are using it because they think it's the best and have them be. Capable interviewers, advocates of this technology. So work on the advocates of the technology, work on the data. So many people don't invest in robust clinical data. If it's clinical data or proper follow ups in the interest that they put, and they build way too much inventory. Instead of going to 25 sites, ask. I just went to 10 sites. Save some of that money on inventory, save some of that money on IRBs for clinical research studies, and actually put it in getting more out of the 10 sites. You may not need 10,000 patients, 250 patients may show what you need. So figure out the very first point. What does it did? What is it that proves to go to the next level? That your product's validated, that your product's good and a company can grab it and run with it and bring it to scale. You don't have to pay to bring it to scale. Let the company bring it to scale. Prove the technology. Prove that it's ready to be to marketed and get through all the burdens. So as soon as the acquisition, other than building up the supply chain, you can go to market right away.

Joseph M. Schwab 29:08

So talking a little bit about Makos journey, um, to Stryker acquisition, what was the single biggest challenge you faced and how did you overcome it? Or, or did you?

Robert Cohen 29:20

Uh, another great question. So when you, you look at Mako Surgical, you have to think of Mako Surgical, but you have to think of robotics, right? Orthopedic, musculoskeletal, heart tissue. Robotics was not a market though. Mako Surgical was around. Mako Surgical was not doing all that much. Right. You were probably not use that Mako robot robot at the time. Right? Why you, you know? And then you, you had a, um, so the time that acquisition, the world wasn't looking for a robot, it was not right. And the world was not necessarily looking for something to change the workflow in the operating room. I can't tell you how many surgeons got mad at me, my friends. Say, I'm taking away their hands and I'm taking away everything that makes medicine great and I'm making this automated and I'm an evil person. Right? Um, then I remind people of calculators and things like that. So the people, people, people evolve in the thought. But so what happened though is way we started, made our conversation. People may not fully. Fully understand the breadth of what robotics could done unless you understood the need you were satisfying. And this goes back to even the small companies. You have to establish a need for something. Even though if they may not understand what your solution was, you first have to understand the need. If you don't understand the need, you're not gonna be able to present the solution and people readily adopt it. So in the case of robotics, what I learned with Stryker, I went over all around the podium, all over the world to say, okay, as an engineer. What's gonna make the nest appreciable difference is personalized, individualized medicine. And that doesn't mean custom prosthesis. We have a instrument where we look at a femur and a hip and then it haslum, and then we hope after we put it all together, it made sense. And maybe on a trial we move a bearing head and we go plus five or plus six. And that was it. We're using two dimensional x-rays in orthopedics. I mean, I'm back. It's like, this is like craziness, right? It's a three dimensional problem. Then on a total knee, you're looking at an AP X-ray and ML X-ray. Okay, where exactly is the joint line? Where's the trochlear group? Where's the epicondial axis? All these features, we knew we can get off imaging, and we knew if we put the implant in that person. To balance collaterals, balance, PCL get rolled back exactly the same to the various baus slope of a knee to the center of rotation of the of the hip. Look at where the leer tr can is and all these other kind of things. We could benefit by getting these implants that have shown survivorship, but now put the implant in the right spot that improve satisfaction and improve daily living activities. And then go even more to more extremes where you're talking about sports or you're talking about loading, unloading, things like that. And. It took a while, but people made a mistake prior and just showed a robot and expected people to say, oh yeah, I got it. I needed it. So you talk about the change. Very few people said, okay, well, why do I need a robot? Very few people in Stryker said, why do we need a robot? We're very fortunate. We're at CEO, who was more passionate about it probably than anyone else in the company. And the CEO believed this was the next step towards personalized precision. And it took a while to get a company that's used to selling metal and plastic in a box to adopt that this is gonna be a better instrumentation. Right? So it took a while internally, but it's just cultural transformation of, I'm giving up something, it's now a robot doing it. It's, you know, all that. But the lesson learned is you gotta establish clinical need and if you can't support your clinical need with facts. You should question the value proposition of your invention.

Joseph M. Schwab 32:53

Thinking back, as far as lessons that you've learned, were there lessons you learned during this process about both team dynamics or, or leadership that you really wish you would've known earlier? Mm-hmm.

Robert Cohen 33:06

I, I, yeah. So if we look at it from the, the Mako surgical side, Mako Surgical was trying to place so many robots because they thought the more robots you place, then it'll become, everyone has one. Let's keep going at it. If you place robots and no one's using it at that time, what good is that? And by the same token, it was burning cash. It was just totally burning cash. And then another Stryker big acquisition, Mako, Hey, now Stryker, big orthopedic companies into robotics. The stock one down because everyone thought, Hey, we're into robotics. Isn't that cool? I have a robot now. But it wasn't so cool to a lot of people, nor did they understand, and they thought it was a waste of money. They thought you were now totally taking all that money to keep this. That was money that could have went to new hip and knee implant designs or shoulders or sock trauma or spine, and now you've changed the direction of your company. So the messaging we could have done better with establishing the clinical need. We could have done better with. Understanding the market potential was not gonna be overnight in one year. Everyone's gonna use a robot. The expectation was that we were gonna accelerate it so fast, and then you only set yourself up for disappointment. So be realistic. Look longer term, deal with facts, understand the market conditions, and if you got something that improves the quality of care, if you got something that improves in patient outcomes. People will adopt it. I'm absolutely convinced I've lived my life that way.

Joseph M. Schwab 34:36

So you mentioned this kind of really early on, but looking forward, you see this sort of accelerated convergence of materials, new fabrication methods, robotic surgery. If you were mentoring a founder today. And they had$10 million to invest. Where's the highest probability, highest impact innovation space that they should target within the next five years?

Robert Cohen 35:04

I think it's, well, it's gonna be digital ai, but in combination with enabling tech. The, you know, AI is a tool by itself, digital enabling tech and, and then how you could add AI into that. And you could look at these procedures. So where the money needs to go is you need to look at the continuum of care in a certain procedure. So if you look at the money and you look at where things are going, um. There is what's going on in the operating room. And if a patient could get a, if a surgeon acting on a patient could get access to more information for clinical insights such as population health data, such as, uh, if you look at what the imaging companies are doing, imaging companies are now putting imaging intraoperatively, but with AI software. So AI immediately could look for any abnormality, abnormalities on the image, such as a small tumor that may not have been caught, or what is the best surgical approach on the center line to get something that's less soft tissue disruption. That is value. Uh, so workflow matters now and workflow. We never had a conversation about that making ASCs efficient, and we never had a conversation about that. Looking at reducing complications in the short term. So reducing readmission reoperation rates, that's important. But if we look at population health data, if you save time of a surgical procedure. If you make more insights coming off of Stryker equipment like endoscopy, computer vision, there's so many different things that could be done, I think. I think if I had$10 million, I would maybe look at what clinical issues or what efficiencies in the hospital can be done. But if we're just talking in med tech and we're talking our sector, let's not also, you know, sometimes inventions you can't categorize but where you put your money, right? Sometimes people come up with great ideas. Let's remember where we're living today. It's the most exciting time of technology you have the combination of 3D printing, robotics, ai, cloud, computing edge devices, direct patient access through applications. It's the combination of all of those things together that really hasn't seen as few pot full potential to innovate a surgical procedure on how to put something in possibly. A methodology with a device on how to put something together, something they uses electronic health records like we've never seen before on the individual. Something that can, you know, maybe we should do implants and they shouldn't be flat anymore. The need should be concave, curved surfaces on our implants. Maybe we should look at a different approach to a head. Maybe it should be shorter stabs. Maybe we should bring back surface replacements again. But why is the technology gonna enable something that's gonna de-risk and add a clinical benefit? I would say first before the technology word, put 10 million, go after something that really makes a difference. In the short term, you increase patient satisfaction, reduce complications, reduce emissions, reduce reoperations, and increase efficiencies and better workflows. That's a home run. That's what all of us companies are looking for, and that's the expectation of all these great technologies coming together at the same time.

Joseph M. Schwab 38:17

What would be the single most important in your mind, piece of advice you could give to engineers and clinicians who are listening or watching today and about moving their, what they think is a game changing idea from a lab bench or an operating room to a patient's operating room.

Robert Cohen 38:37

Depends on if somebody wants to create the company themselves or they wanna start talking to a company. I think talking to companies, if your IP is protected, we get people talking to companies all the time, but you gotta come in and if, what's the piece of advice? If, if you have 15 minutes and a 15 minute pitch, the first five minutes is what problems you're solving and why the market may be ready for this. The next five minutes should be about what the device is and why the invention is so good. And the last five minutes of what it takes to get to market. Is there huge regulatory hurdles where it needs clinical data supported? Can it get a five 10 K class, two designation in the United States relatively quickly? Um, international NIP. And if you get that done in 15, 20 minutes, whether you're talking to an investor or you're talking to a big company, that's key. If you can't. It takes a little more convoluted. You may have to work harder and a little bit longer before you pitch it to the company. And you know, most people's attention spans in the 15 minutes. 15 minutes is a long time to explain. If it's just the concept, you have to do your p and l. You don't have to tell me about your cashflow. I don't even have to get necessarily into your supply chain. Just focus on that focus, focus, focus, and you will have our attention.

Joseph M. Schwab 39:51

Uh, I just wanna close with one kind of single thought. If you could finish this sentence for me. Innovation in orthopedics means, what would you say?

Robert Cohen 40:02

Innovation in orthopedics means improved outcomes, improving the quality of care, improving patient safety, and improving economics and efficiency.

Joseph M. Schwab 40:12

I do wanna give you an opportunity if there's anything we didn't talk about, if there's anything you want to add, if there's anything you want to go back to, um, and you wanna share with us, I, it was something I would add on to the end.

Robert Cohen 40:23

We are really living in this world. That's exciting for innovation and sometimes the cost of innovation or the complexity of the innovation or thinking about an exit, um, I get it. It's, it's not sometimes very straightforward and you go with certain unknowns. But I will say though. If you really think about it, five years ago, we weren't talking about digital. Three years ago, we weren't talking about ai. 10 years. I started 12 years at Mako. We weren't talking about robotics. Now, robotics has become the standard of care in the Stryker world for primary joints. As we think through that, think of all the things that can add to the existing technologies. Think of all the things. All these things can combined, can do it. The potential is so powerful. When you combine digital with enabling tech, we have not seen the full unleashing of that potential, and we're in a really good place right now in the world of med tech, especially musculoskeletal orthopedics. But our future will even be a better one.

Joseph M. Schwab 41:25

So I actually have, I. raised this question in my mind because you, you, I think rightfully identify innovation nowadays as. Um, being of greater complexity. The question I would ask, since you've been at this for four decades, is the relative complexity, meaning the complexity of the innovation relative to the market or relative to, uh, society, is the relative complexity more complex? Or, uh, is, is that staying relatively even with the complexity of society? Does that question make sense? Yeah.

Robert Cohen 42:00

Well, it does make sense, but it's, I'm not gonna give you necessarily a technical answer because the biggest complexity right now, if you really think about it on, on some of these great things is, is. Over four decades. I've watched, you know, 20 years ago you can get a lot more money for a new device'cause someone wanted it and you can't do that now, right? So you have limitations, you have, uh, Medicare reimbursement changes decreasing. You have different countries around the world that are cutting as well from government subsidies. So the challenges now is the reimbursement. You're not gonna impede a lot more or for a clinical benefit or anymore for a clinical benefit. So that's number one. And then the regulatory process is rather onerous. And the regulatory process on some great inventions is more difficult now to get through and just quantify it as a class two. Than you had in the years past and you had the opportunity to talk and things like that. Now you have to go through breakthrough designations, but you may not get reimbursement for it. You're familiar with the, you're familiar with term, the Valley of Death and Innovation in Med Tech. Right. So that's happening to me to a lot. I see happening a lot of startups where you get the regulatory approval but you have no reimbursement of. So someone thought clinical benefit, but there's no reimbursement. So those challenges exist now in ways that we just never saw before. So people paying for something and then the regulatory process adds a complexity. And in fact, in many cases we may choose what product to do internally just because we know the regulatory path and time to market where there's too many unknowns in something, which may be a great project.