Where Are They Now? Episode 2

Where Are They Now? Episode 2

Episode 2: ExplORer Surgical

April 22, 2021

Jennifer Fried started her MBA at Chicago Booth with dreams of a career in venture capital. By the time she graduated, she had launched a healthcare tech company that helps ensure surgical procedures go smoothly — and today her product is becoming a must-have in operating rooms.

Fried, MBA ’15, took second place in the Edward L. Kaplan, ’71, New Venture Challenge (NVC) with ExplORer Surgical, a digital playbook that helps surgical teams coordinate and communicate during procedures.

The Chicago-based company recently closed a $2.5 million round, bringing its total funding to $11 million.

In a conversation with Steve Kaplan, her former Booth professor and co-founder of the New Venture Challenge, Fried discusses how she went from having no medical experience to being a healthcare entrepreneur, and how the NVC helped steer her toward a viable concept.

“We got destroyed in our pitch presentations,” Fried recalled. “The judges just ripped apart everything we did, and it made us so much stronger as a company to push on our business model and think through the problem and what evidence did we have to show and how could we validate it.”

Fried, who left her “dream job” at a VC firm to run the company, reveals the sweat that went into finding the right investors, the challenge of making sales and the hardest part of being the boss. She describes how the company found a foothold by partnering with medical device reps and how the COVID-19 pandemic catapulted her business as hospitals sought ways to go virtual.

“I think 2020 was the inflection point for us where we went from, candidly, I think, a nice-to-have product that might’ve been a little bit ahead of its time to being a must-have product that the entire medical device industry needs and is looking for,” Fried said.

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Transcript

Jennifer Fried:

I recognized this as a huge problem. And I became fully convinced that a technology like ExplORer was needed and it was something that I would want to have in the room if I was the one on the table, in the operating room, or my mom or my son was the person on the table. I felt like surgical teams needed a digital technology to candidly provide the best patient care.

Colin Keeley:

Hello and welcome to the Polsky Center’s, Where Are They Now Podcast. I’m Colin Keeley, and we catch up with founders from Chicago Booth’s New Venture Challenge on this show. Join us as we dive into their entrepreneurial journeys and get a look at the stories and struggles behind their success. This week, we have Jen Fried interviewed by Steve Kaplan. Jen is the co-founder and CEO of ExplORer Surgical, which is the leading digital playbook for the operating room and procedure suites. ExplORer Surgical was founded at the University of Chicago in 2015 in the Department of Surgery. Steve Kaplan is the faculty director at the Polsky Center and professor at Chicago Booth. Steve also co-founded the entrepreneurship program at Booth, and with the students, helped start the New Venture Challenge 25 years ago. Without further ado, here’s Jen Fried and Steve Kaplan.

Steve Kaplan:

Okay. So it is my pleasure to be here with Jennifer Fried. I’m Steve Kaplan, and I’m the faculty director of the Polsky Center. Jen is the founder and CEO of ExplORer Surgical, the only platform that puts your experts in the ears of your physicians, hospital teams, and reps, allowing them to see everything in the procedural  suite and share best practices live during any case. And I’m particularly excited about this podcast because Jen was a student of mine in entrepreneurial finance in the fall of 2014. And then she took ExplORer through the new venture challenge in 2015. And the goal of this podcast is to tell Jen’s story from the beginning of her journey to today. So here it goes. Welcome Jen. Great to see you.

Jennifer Fried:

Thank you for having me.

Steve Kaplan:

So let’s get started. How did ExplORer start?

Jennifer Fried:

ExplORer started at the Polsky Collaboratorium in the fall of 2013. So this was before the Collaboratorium was that very large program that it is today. And the way that it was structured then, and still a great program along the time, but the structure and format has evolved a lot over the last eight years. The structure in 2013 was that faculty members across the university could sign up to talk to a number of business school students about their research, their ideas and their projects. And coming into Booth, I knew that I wanted to be involved in the healthcare startup ecosystem, although I originally went to Booth with the intention of focusing on a career in finance and investing. But I signed up for as many of the Collaboratorium programs as I could, that were focused on healthcare. So I signed up for a program where Alex Langerman, who was a head and neck surgeon and operating room researcher gave a talk.

Jennifer Fried:

I think it was actually at Booth in one of the small rooms in Polsky Center, and it was myself and eight or 10 other students. Alex started talking about all of the problems that he faced as a surgeon every day. So issues around variability of his team and not having the right instruments, when they were needed, having delays and disruptions during his case. And I was fascinated to hear the problems that he described. And to be honest, they didn’t seem real to me when I heard him talk about this. So I had never been in an operating room before. And when he described the magnitude of some of the problems…

Steve Kaplan:

What’s a problem? You leave a sponge inside somebody or something?

Jennifer Fried:

That is a problem. And there are a lot of great technologies that are out there to address it. One of them is actually a SurgiCount where I know the founder very well, but when you think about surgery, at the end of the day, just like anything else, that’s a team of people that are working together to do something. So you have your surgeon, your anesthesia team, your circulating nurse, your scrub, and you also work with a number of medical device reps and vendors that are there to lend support for the products that you’re using in the room. And so just like anything else, if you’re working with the same team and doing the same things over and over again, it’s really smooth, it’s clockwork. Everybody knows exactly what’s happening next and what to do. But anytime that you introduce somebody new, you’re going to have a learning curve that’s associated.

Jennifer Fried:

So, we see really high turnover with a lot of the support staff in surgery, it’s often upwards of 30% per year. You have a lot of new medical device reps, but also a lot of new products and procedures that you’re supporting as well as high variability and what those procedures are that you’re doing in an academic setting. And so what would happen is Alex would be doing a procedure, he’s looking down at the patient, he’s got his microscope on. He’d reach out his hand, anticipating that somebody would hand him the next instrument that he needed and nothing would happen. So he’d then look up, outside of the microscope, look over at the team and find that there was actually a shift change while he was doing surgery. There was somebody new that was there and they didn’t actually what was needed. And to complicate things, sometimes that instrument wouldn’t even be in the room.

Jennifer Fried:

And then you’re picking up the phone, calling sterile processing and saying, “Hey, can I get this tray or can I get a new set delivered to the room?” So all the while the team is kind of twiddling their thumbs and waiting for five or 10 minutes, while you have the patient open on the table. When Alex first described this to me, I just said, “There’s no way. There’s no way this is actually happening. That sounds completely crazy. How could you have issues like this for something that is seemingly simple?” Organizing what you need; What are the steps of the procedure; What do you have available; How do you follow these steps. And Alex invited me into the OR to watch procedures for myself. So I was in business school. I had the time. I don’t like getting up early, but I did. So I started getting up at 5:30 in the morning and going over to the hospital and, and watching procedures with Alex before I went to class.

Steve Kaplan:

And what did you do before business school? I take it you were not in the OR either.

Jennifer Fried:

Yeah. I worked at Bain. So definitely not in the OR.

Steve Kaplan:

You worked at Bain, so you were a consultant. About as far away as you can be.

Jennifer Fried:

Yeah. Fun story. The first day I went into the OR, I thought I was ready, but I was not and I got lightheaded. It’s really overwhelming to be in that type of setting when you don’t have clinical training. So Alex had to take me out of the room, send me down on the chair. And there was a cabinet in the hallway where they kept juice and crackers and I felt like a child. He’s sitting there giving it to me saying, “Eat this. Wait five or 10 minutes, take a couple breaths and then go back into the room.” And I got over that, but there is a shock factor if you’re not a healthcare practitioner going in and watching surgery.

Steve Kaplan:

Very interesting. So you went in there and he convinced you that, “Gee, this is a problem.” And so then you like decided to do this or what happened?

Jennifer Fried:

It definitely wasn’t an overnight thing. So starting by going into the OR, I recognize this was a huge problem. And I became fully convinced that a technology like ExplORer was needed. And it was something that I would want to have in the room if I was the one on the table, in the operating room, or my mom or my son was the person on the table. I felt like surgical teams needed a digital technology to candidly provide the best patient care. So Alex had secured a small grant from the Department of Surgery, I think it was around $10,000. And we had a computer science student, a master’s in computer science student, who worked with us to create a very, very rudimentary product. And so we had taken that product and worked on it together and we’re actually wheeling in these big computer screens that displayed what candidly looked like a really complicated org chart in some ways on a PowerPoint presentation, where we were mapping out the steps of a procedure and able to zoom in and out and show different steps to the team.

Jennifer Fried:

So Alex had already gotten that grant and we had that very, very early alpha version. But the next step for me was, “Hey, we need to really validate how big of a problem this is.” So is this something that is just going on in this one institution? Or is this really a big enough problem nationally or globally that it’s worth solving and investing in and building all of this? And so we went through the National Science Foundation I-Corps Program, which Polsky had told us about, and we got a small grant, I think it was $2,500, to go and do customer discovery. And so we used that money to attend some conferences, send out some surveys and get hundreds of data points from surgeons, anesthesiologists, OR managers, and all of the different stakeholders that were part of a surgical team to understand what their pain point was. And that helps us validate this is a major problem and this is something that we should invest in solving.

Steve Kaplan:

And so you said, okay, this is a problem. It’s real. We have sort of this alpha version. And what was this, winter of 2015?

Jennifer Fried:

This was first quarter of 2014.

Steve Kaplan:

Oh, okay. So it was fall of 2014. Okay, very good. And then, did you build it then? Or what did you do?

Jennifer Fried:

So we knew it was a problem. We knew surgical teams wanted this, but that very original prototype was just, candidly, too ugly to work. And maybe ugly isn’t isn’t the right word.

Steve Kaplan:

It sounds clunky.

Jennifer Fried:

Exactly. And so what we wanted to do was really have a professional user interface. And we knew that building a product would be a large investment, but for us, we said, “Nothing’s going to get adopted in healthcare unless it’s easy to use. And that requires a really beautiful design.” And so we wanted to hire a design firm to help us figure out what is the right look and feel for something that could easily be adopted in the operating room. And that’s when we went to the Innovation Fund in the spring of 2014 and applied for another grant so that we could hire professional designers to help us build out the product. And so that’s where we very fortunately received a $65,000 grant. And over the summer, we hired and worked with a local design firm to build out, it was really a website, it was a landing page.

Jennifer Fried:

But that’s what helped us figure out what is the right look and feel for somebody to interact with. So it only worked for one procedure. Any changes we wanted to make to the procedure, we had to learn how to code in JSON to be able to make changes to the website. So it was really just a landing page, but that’s what we needed to then be able to bring something else into the OR. And I think that was so important to us, was every step along the way, having a product that we were bringing live into the room and getting feedback from the team to help us understand: What was needed; What did they like; What did they hate; What was going to make this product work. And so that was our next step that we took kind of throughout 2014 to build, design and iterate on that.

Steve Kaplan:

Okay. So I got my dates wrong. So it was winter 2014, you did I-Corps, then in the rest of 2014, you got the Innovation Fund. You figured out the design and then were coming into the fall of 2014 and into 2015. Okay. Very good.

Jennifer Fried:

So fall of 2014, I took new venture strategy with Professor Schrager. And at the time I was really busy. I was also working at a venture fund. I was working with Alex on this and I was full-time in school. And Steve, you know that I prided myself on being a good student and wanted to get good grades. So I took business school very seriously.

Steve Kaplan:

You did. I can vouch for that in my class. You did very well.

Jennifer Fried:

So I remember going to Professor Schrager and asking for permission to use ExplORer as my project in the class of New Venture Strategy. So I said, “Great, I can combine this and I can keep doing my work on ExplORer, but it also has overlap with my coursework.” And I did that with several of my classmates and worked on a couple of strategic things that we had been thinking about for the company and professor-

Jennifer Fried:

Things that we been thinking about for the company and Professor Shrager was the one who pulled me aside after class and said, “Jen you need to the New Venture Challenge.” And I pushed back and said, “Nah it’s such a scientific company. It’s healthcare company. I don’t really know if this is something that is right for the New Venture Challenge.” And he said, “No, trust me, you need to…” He said, “Just apply. See what happens. And you should do the New Venture Challenge. This would be great for your company.” So we applied and we also worked with the Polsky Center to also apply for a larger grant from the National Science Foundation. This was winter quarter of 2015. So in spring quarter, we were really fortunate-

Steve Kaplan:

You got it. You got in.

Jennifer Fried:

We did get in. We got in to the New Venture Challenge, and it was just a phenomenal experience for our team.

Steve Kaplan:

And you were in Ellen’s section, right? You weren’t in my section, sadly.

Jennifer Fried:

Yes. Well, Ellen was one of the people that I was told to reach out to. I can’t remember who told me to reach out to her. Steve, it might’ve been you.

Steve Kaplan:

Yeah. I might have.

Jennifer Fried:

Yeah.

Steve Kaplan:

She knows healthcare much better than just about anybody.

Jennifer Fried:

I think it was you that told me, we talked about it you said you need to talk to Ellen. And I was really nervous to reach out to her because I had never met her. And I sent her this cold email and said, “I’d love to get coffee and tell you about our idea.” And she was so wonderful and welcoming and just provided a ton of great advice and support. And we got into the class and NVC was definitely, it was a turning point for us as a company. And we got destroyed in our pitch presentations. So the judges just ripped apart everything that we did. And it made us so much stronger as a company to really push on our business model and think through the problem. And what evidence did we have and what were we going to show? And how can we validate it? NVC turned out really great for us. So we came in second.

Steve Kaplan:

Were there any judges that you particularly remember who were particularly negative but constructive?

Jennifer Fried:

So Steve Gould was pretty hard on us.

Steve Kaplan:

Oh, interesting. Interesting.

Jennifer Fried:

And he had been the chief… I can’t remember if he was the chief of the entire surgery department or if it was specifically his surgical specialty. I should know this, but I can’t remember at the time. But I remember him saying, “Well, I never had these issues in my OR. And I don’t believe that this is a problem because this wasn’t an issue for me.” And I had to go to him after and sit down and say, “Of course it wasn’t an issue for you. You were the chief, you always got your favorite techs, your favorite nurses, your reps always made sure that they were there. You never ran into this because the entire hospital was working around you.” And he then called several other people that he worked with and Steve ended up investing in the company. So I changed his mind.

Steve Kaplan:

That is great. So, okay. So you came in second, you got some money and then you like went straight out and did it, right?

Jennifer Fried:

No.

Steve Kaplan:

What?

Jennifer Fried:

So we had a big week for us, the week of New Venture Challenge in 2015 because we came in second but the same week, we also received a quarter million dollar grant from the National Science Foundation. So we had applied for an SBIR grant to continue to build out our product, but also to actually put it in to procedures at the University of Chicago and to do a real study. So to capture data on what procedures looked like without ExplORer, and then capturing it on what procedures looks like with ExplORer and to have the research funding to hire the right people and invest in the product to be able to do this. So we went from, “Hey, this is a really fun concept and this has been a fun side project for business school,” to, “Wow, we have over $300,000 in funding to actually go do it.”

Jennifer Fried:

And I had a lot of people around me saying, “Hey, this is so awesome. You should go for it.” But I had already accepted a full-time job that Steve actually made the introduction for a year prior at a west coast healthcare focused venture fund, which had been my dream coming into business school saying, this is what I want to go do. And I had been really persistent in going after it and getting different internships and getting different experiences, kind of a long spectrum of investing. And Steve very kindly made a great introduction for me my first year, before I even took his class to funds that had extended me a full-time offer. And so I just said, “Hey, this is great, but we’ll eventually hire in a CEO. We’ll work on this for a while. It’ll be a research phase, but I’m going to go to Silicon Valley and be a VC. And this is what I planned on doing the whole time.”

Steve Kaplan:

So you did that and you’re sort of working on the company and you were building it out? Is that what was happening in parallel with your being a VC?

Jennifer Fried:

So we were doing our research at University of Chicago for about a year and the managing partner of my venture fund actually was a judge at the New Venture Challenge and has a lot of connections to University of Chicago. So he was very supportive of everything we were doing. And after graduating from business school, had actually promised me, “Hey, I’ll give you the flexibility to keep working on this. And this is still very early. You need to do the research, need to get the data. This is going to make you a better VC to have this experience. So I’ll give you the flexibility to keep working on this and get this to the next stage. And then at the right time, I’ll help you hire in a CEO and it’ll be great experience for you to have gotten this off the ground, but then you can get back to being a VC.” So that was the plan.

Steve Kaplan:

That was the plan. And so when did the plan change and why did the plan change?

Jennifer Fried:

So one year after graduating from business school in the summer of ‘16, we had burned through all of the money at that point. So we had spent some money on taking the products to kind of that next level. We had spent it on the research, on the grant. And if we wanted to continue the business we needed to a fundraise, it was still going to be awhile before the product was commercial. So we needed to bring in some outside capital in order to build the business. And so I started talking to early stage investors about investing in our company. And the feedback was pretty clear that, “Hey, we think this is an interesting idea, but nobody’s interested in investing in a part time founder. And so this company gets a lot more interesting, Jen, if you are the full-time CEO.”

Jennifer Fried:

And we actually had some VC’s that called my boss at the venture fund and said, “If Jen leaves, we’ll fund her, but if she doesn’t leave then we’re really not interested.” And it led to a really tough decision for me and sitting down with my managing partner at the venture fund. And I still remember sitting down in a hotel in Chicago and having a heart to heart conversation about it, where he really encouraged me to go after this and build the business. And I had so much loyalty to the firm that I’ve been working with at that point for several years that I think it would have been hard for me to feel like I was leaving them if I didn’t have the support. And so I ended up making that decision to focus on the company full-time in summer of 2016 and then setting about to raise kind of our first round of a friends and family and a seed investment round to start to build a commercial version of the technology that we could take to the market.

Steve Kaplan:

Okay. And so how much did you raise?

Jennifer Fried:

Yeah, we raised $970,000.

Steve Kaplan:

And that was largely, it was family, friends, Steve Gould and various other people, and it was not institutional. And then you took that money and you did what?

Jennifer Fried:

That’s when we started building the commercial version of our product. So at that point, we actually brought in a chief technology officer already, but needed to continue to build out the product and get it placed in more hospitals so that it could get tested with our goal of selling it into hospitals. And it was tough. I mean, candidly, we needed more than $1 million to really do this correctly. And I thought fundraising was going to be a lot easier than it was. And I had so many conversations and Steve and I talk about this every fall in your class, but I raised every penny that I could. I mean, there was no stone that was left unturned in that fundraising process where I really felt like we needed $2 million to $3 million, but we ended up with $970,000. And so we did everything that we could with that money to get the company started.

Jennifer Fried:

However, six months after raising it was really clear that, hey, we’re going to need to raise again. So I barely had any time to operate the business and start building out the team. And I was doing all of the selling myself. So I was flying to meet with surgical services directors around the country to try and find our initial hospital sites that would want to try this and be our first set of customers. I think we closed it in September and I think by February, I was in fundraising mode for our Series A.

Steve Kaplan:

So let me just be clear. So what you had at that time, it’s basically, it’s like a bunch of iPads that have all the steps of the surgery mapped out for everybody. That’s what you were building. And it was a lot less clunky than the original version, but it wasn’t quite there and you were selling it basically to the surgeons or the hospitals, the OR’s, and the surgeons. And did you have any sales at that point?

Jennifer Fried:

No, we had no sales. So from 2015 to 2016, we hired in a chief technology officer who worked with an offshore team to start building out a more commercial version of the product. So, remember, prior to that, it was really just a landing page as a website that had a really nice design, but definitely not something that could easily be used on mobile devices or adapted for multiple types of surgical procedures. And so we worked on building that in 2015 and 2016 and felt like we had a more commercial alpha, although there was still certainly a lot of work to do. And so our focus was then let’s get this into more hospitals and start to get a lot more feedback. We now have this great data from doing our research at University of Chicago.

Jennifer Fried:

So we know that using this product can generate all of the results that we thought that it could in terms of reduced waste, reduced wasted time during procedures, and getting great feedback on the product from all of the people in the room. So now it was time to say, okay, we got to go beyond University of Chicago. We need to get this into other sites. We need to do it for other types of surgical procedures and start to really get this implemented in other hospital settings. Ideally we wanted to start selling it too, but also we knew that we had to have more than just University of Chicago as the data site. And so we got it into, I think, five other institutions relatively quickly, but that was from me personally going around and calling out all of these different OR directors around the country.

Steve Kaplan:

And was Alex helpful at all? Was he working on it or was he sort of took a back seat, what was he doing?

Jennifer Fried:

Alex at that time had gone down to Vanderbilt. So he was actually no longer at University of Chicago and had taken a different role which obviously is a challenge not working together in the same location every day. Although we both got used to that in the last year, that’s definitely changed. But Alex has always been much more involved in kind of the research and development and product side of our business. He’s never really been one to lean into the commercialization of the product.

Steve Kaplan:

Okay. So, okay. So you have these tests sites, but you don’t have revenues and then you decide to raise more money.

Jennifer Fried:

We needed to raise more money. I think that’s the reality of building a new company is you need resources to get it started. And in B2B, especially healthcare, it’s not like you can get revenue the next day. And so I wanted to give us more runway with that initial round, but like I said you do everything that you can and you take the money that you’re able to raise and you maximize it and try to stretch it as far as you can. But I knew that it wasn’t going to get us very far. So hence that February I’m back out in the market trying to find the right investors this time going for more institutional investors to create a funding around.

Steve Kaplan:

And how many investors did you talk to?

Jennifer Fried:

Oh, over a hundred.

Steve Kaplan:

And how much were you looking to raise?

Jennifer Fried:

We were thinking about two to $3 million round at the time. We actually had thought about it as more of a post-seed round or a seed-plus round, if you will, since we were still pre-revenue and very early on.

Steve Kaplan:

And so you went and talked to over a hundred investors. And what was that like?

Jennifer Fried:

I mean, a lot of alcohol was consumed throughout that process. It’s really hard, it’s really stressful. You have a small team, and so I was trying to operate the company. I wanted to be in the OR as much as I could. I wanted to be trying to get new customers and new hospital sites as much as I could, but I really had to throw myself into fund raising. And so it’s hard to find the right set of investors, but it’s really hard as an entrepreneur to go out and… I had just quit my job. I went back to graduate school specifically saying, I want to get this job. This is my dream job. I got that dream job and then I left to focus on building this company. And then you have all of these investors that shoot you down and say, this is never going to work, and basically calling your baby ugly. It’s really, really hard and really stressful, but you persevere and a lot of it is a numbers game.

Jennifer Fried:

You have to talk to a lot of investors to find the exact right investor who is interested in your sector, that is comfortable investing in your stage, that is at the right point in their fund where you’re going to fit their thesis and size investment that they’re looking for. And so you do have to talk to a lot of investors to be able to find the right ones for your company.

Steve Kaplan:

And so you did that and what ended up happening? You actually raised money.

Jennifer Fried:

Yeah. So we found a fantastic Series A lead investor, Aphelion Capital. They are a West Coast fund that focuses on early stage healthcare, a lot in medical devices, but also a fair amount in IT and services. And ironically, one of the reasons I was attracted to them is they had been the first institutional money in SurgiCount, which is a sponge tracking technology. So this fund just has a phenomenal track record of success in early stage healthcare. And that’s what I was looking for as an entrepreneur, is, I wanted to work with the VC fund that was comfortable investing in our sector, at our stage and that had experience working with companies like ours, taking them all the way through a successful exit. And so we found a really great partner in Ned who’s the lead partner that we’ve been working with at Aphelion Capital who led our Series A.

Steve Kaplan:

Very cool. And then you got the money and you just were off to the races, right? Just went exactly as planned.

Jennifer Fried:

Never goes exactly as planned.

Steve Kaplan:

So what happened?

Jennifer Fried:

So we raised a little over $3 million. It’s so hard to get a lead investor, but once you do, the other pieces seem to all come together really nicely. So we actually oversubscribed very quickly in that Series A and we plan to use the money to really commercialize, hire some people to be on our commercial team and just focus on selling into hospitals. And so we did that. We were selling into hospitals. We were getting great results every time we implemented our product into a new hospital, but we saw a lot of challenges with the sales model and the go to market. So namely selling into hospitals is generally a two year-plus sales cycle, so it’s extraordinarily slow. But the other thing that we saw was once we were in a hospital, they tended to treat my team like they did medical device reps, meaning that they wanted somebody from my team to show up in the OR every day and be there to support the software, which is really not my goal of building a software company.

Jennifer Fried:

I wanted it to be something that we could train the team on how to use, but then they’d be able to use it independently and it would be a SAAS model. So we started learning all of this as we were selling and as we were getting hospitals to implement. And ironically, also through a Booth connection, somebody from one of the largest medical device companies in the world heard about what we were doing and they came to us and said, “We see everything that you’re doing. We think it’s fantastic. There’s such a need for a tool like this. Would you ever work with a company like us to build out this workflow and best practices content for one of our implants, and then our team could actually bring it in to the procedure room in the hospital and we could be the ones that use it in services and train the team on how to use it?”

Jennifer Fried:

So I was really intrigued by this and we signed our first contract with them in four months. So night and day versus what we were seeing with the hospital.

Steve Kaplan:

A little quicker, yeah. Uh-huh (affirmative).

Jennifer Fried:

And six months into working with this particular company, I looked up, my team looked up and we looked at each other and said, “Why would we do anything else, right?” This is going so well. We think we can acquire more medical device customers with a more reasonable sales cycle. We can be profitable right away instead of losing money on actually servicing our customers. And we think this is the right way to go in terms of growing the business for the future. And so this was going on in 2018. I also found out in the spring that I was pregnant and expecting my first child, which was really, really wonderful news, but also is a little scary as a female startup leader because there are still very few women running venture backed companies or very few women in venture capital and I was worried about how the market would perceive this.

Jennifer Fried:

So we knew that we needed to raise again. I had been planning on going to JP Morgan, which is the really big healthcare conference every January. So in January of 2019, and launching the process for raising our next round, but that wasn’t going to work because I was expecting in January. So I wasn’t going to be traveling and going to San Francisco for this conference to go meet with investors. And so our existing investors saw the potential. They saw that we were getting great results with the hospitals that we were working with, but that the business model just wasn’t quite working in terms of something that could scale, but saw all the promise in working with med device companies. And so we ended up raising a Series A2. So we did a follow-on round led by the same investors in the first quarter of 2019 to allow us to keep growing our business, but with a focus on selling to the medical device companies, as opposed to hospitals.

Steve Kaplan:

So you started, you did that. You had your baby and that all went well, so I’ll ask you a little bit about that later. And then the pandemic hit.

Jennifer Fried:

Yeah. Oh. So I’d say, 2019 was an OK year for us. We had completely pivoted in terms of our commercial model, our materials, who we were talking to, our approach, but I think we were still seeing that it was roughly, I’d say, a 12- to 13- month sales cycle in terms of getting a new medical device company to adopt our technology. So not fast, but certainly much better than selling to hospitals. And so I went into 2020 really saying, OK, this is going to be our make or break it year, either all of the work that we put in in 2019 and targeting all these companies and reaching out to them is going to pay off because we’ll see them go through the sales process and successfully onboard and adopt, or we’re not going to see the growth that we want to see. So 2020 started off great. We landed two of the top 10 medical device company logos.

Jennifer Fried:

We were jumping up and down, we were so excited in the office. And then in, I think was the second half of February, we started to see hints of everything that was going on with COVID. And so a lot of our customers do international collaboration. So one of the first projects that we had signed with one of these med device companies, the first step in working together was a group of Japanese KOL physicians who were going to fly to Minnesota for this training event. And we were all going to be a part of it and started to script out the procedural steps and work together. And they were supposed to fly over at the end of February. Well, that got canceled because of COVID and then COVID blew up and that whole project actually still to this day has not taken off because it requires people working together in person.

Jennifer Fried:

But we saw all of our existing customers basically fall off because there were no elective procedures. Everybody in our pipeline dropped out because there were no elective procedures and we were terrified. We didn’t know what was going to happen to our business. But then we started getting some really interesting calls and a lot of the same calls. So some of the reps that were using our software called me and said, “I can get into the hospital because they need me to come to drop off my sets. So I can get into the orthopedic hallway, but they’re not letting me be in the room for the procedure because they’re not going to give me any PPE to use.” And so what they kept asking was, “Can I go into the room, can I set up ExplORer, can I set up the iPad and set up the big board, and then can I watch from the hallway and look through the little window in the door and hit “next step,” so that I can still provide value to the team, even though I’m not physically in the room?”

Jennifer Fried:

And we got enough calls like this where I said, “We need to add in video conferencing to what we’re doing.” And so it’s ironic because we had actually been spending all of our technology resources on an offline mode of our software where we said nobody’s going to want offline mode ever again. So we scrapped that. We added in video conferencing to our system as a way for the medical device reps to still deliver all of the value and the content and the support they provide during procedures, but they didn’t have to physically be there. And this in conjunction with hospitals starting to ban reps and clinical specialist as much as they could because you can’t physical distance in the OR, and oh, by the way, hospitals are where all the COVID patients are, led our business to just completely skyrocket. So we have this really scary dip for a couple months, no procedures, and then in May, we just started exploding.

Jennifer Fried:

So every medical device company realized we’re not going to go back to the way were before.

Steve Kaplan:

So you think it’s never going back, you think this is the future?

Jennifer Fried:

It’s never going back.

Steve Kaplan:

And will the reps be able to do it from home or the office, or they’ll be there a little bit, but they’ll be there less?

Jennifer Fried:

You’re still going to have a lot of in-person presence from the med device companies. So it’s definitely not everything going virtual, but I think it’s kind of like how people think about the office where I think most large corporations are saying, “We’re not going to go back to five days in-person, but we’re not going to be five days remote.” It’s moving toward a hybrid model. And I think we see the same for how med device companies are thinking about interacting with providers. There are certain instances and relationships that are built by being there in person, but there are lots of other situations where you can still provide the same value of case support, of training and so forth while being remote. And it’s not only great for the people, because at the end of the day, the clinical specialists that are flying around the country, they are people too.

Jennifer Fried:

And if they can do their job from home and eat dinner with their spouse and put their kids to bed, they’re happier. So it’s not only better for people, but it also reduces cost and is much more efficient for these companies to be able to say, well, we used to fly 10 physicians around the world to go watch one person in India do a procedure. That doesn’t make sense. I don’t think we’re ever going to go back to doing that. Nobody wants to go back to doing that now that you’ve realized that you can use digital and virtual tools to still get the same results.

Steve Kaplan:

Very cool. So they all came and you’re busy, and so what’s going to happen in the future? Where are you going?

Jennifer Fried:

So I think 2020 was the inflection point for us where we went from, candidly, I think, a nice-to-have products that might’ve been a little bit ahead of its time to being a must-have product that the entire medical device industry needs and is looking for and so forth. And so we are onboarding customers like crazy. We are about to onboard our 10th customer this quarter, which is just huge for us as a team and as a company. Now we’re also seeing companies really make this the norm.

Jennifer Fried:

One of our new customers that went onboard in Q4 of last year, and this will be public soon, they’ve now shared, “We’re going to make this nationwide. It’s not just a specific set of our team that’s going to be using this, but we are going to make this the norm. This is going to be used for every procedure, by every rep, every site.” I think we’re going to see a number of med device companies follow suit.

Jennifer Fried:

I think, 2020, it was, “We need this right now. This is a big problem.” In 2021, the industry is saying, “This is actually the new normal. We need to embrace this type of technology in order to provide the most value to our customers and keep up with what’s happening in the industry.”

Jennifer Fried:

We grew 6X in 2020 over 2019. This year I think we’re going to be somewhere between 3 and 4X, but we’re really focused on rapid growth, more customers, growing our existing customers, and driving as much impact as we can.

Steve Kaplan:

Five or ten years out, just more of the same? Or do you have a vision for it, or is this one year at a time?

Jennifer Fried:

I think I stopped trying to predict five or ten years out, especially when I look back now at my New Venture Challenge presentation in 2015 and say, “What did I think then about where we were going to be in 2021?” I think healthcare is always a little harder and takes longer than you think, but we’re so excited about this inflection point. We’re just focused on growing the business right now in a healthy way, keeping our customers really delighted. We know that if we can keep growing the business and providing value to our customers, and that we have a healthy business model with good margins, we think only good things are to come.

Steve Kaplan:

Good. Okay. I’m going to switch now to some general questions, if you still have the time.

Jennifer Fried:

Yeah.

Steve Kaplan:

Good. What’s the toughest part of your job?

Jennifer Fried:

The toughest part of my job is firing people. It still makes me sick to my stomach when I have to let somebody go, even though I’ve now had to do this more times than I can count. One of the most powerful things about being an entrepreneur is being able to create new jobs. Especially in a tough economy like this, it’s incredibly hard but important that if somebody isn’t a fit for your company, or the stage, or their role, that you find the right person that is.

Jennifer Fried:

We’re operating a business with limited resources. We have to move quickly. We have specific timelines that we need to meet. I’m not afforded the luxury of big companies where, if somebody isn’t meeting expectations, that you say, “Great. I can put you on a six-month performance improvement plan. Let’s work on this,” or, “Let’s find you a different role.” I don’t have those options. It’s really hard on me personally to do it.

Steve Kaplan:

Okay. What’s the best part of the job?

Jennifer Fried:

Best part of … Oh, gosh. I have a lot of best parts of the job. It still just makes me so excited when I get to go into the OR and see our products being used, and seeing physicians or team members that are delighted. That is the most rewarding and fulfilling thing for me. Having had this be something that we took from a whiteboard idea at the hospital to now actually having it be a product that is impacting hundreds of lives every month, that’s pretty incredible for me to see.

Steve Kaplan:

Very cool. One thing you mentioned earlier about being a woman founder … How has that been? Has that been a help, a hindrance? Do you have any thoughts about that?

Jennifer Fried:

I think there’s a lot of data out there that suggests that women entrepreneurs have a harder time raising capital than male entrepreneurs. I think it surprised me in some ways. I never felt different at Booth being a woman versus a man. I never felt-

Steve Kaplan:

That’s terrific to hear.

Jennifer Fried:

I did. It’s a very gender-equal program. I never even really thought about it when I was at school, but it’s definitely something that I’ve become more aware of. I think a lot of the stories that you read and the data that you see, it’s all true and it’s all real. I think it’s getting better, but definitely not at the pace that it needs to be.

Jennifer Fried:

I think the most important thing to do is, for women who are in these types of roles, whether you’re the CEO of the company, or an investor on the board, or in a key political role, that you put yourself out there to create examples for the next generation to be able to see. Because if you’re somebody that has a dream or has a vision, but you don’t see people that look like you that are doing that, it’s hard.

Steve Kaplan:

You are a terrific example. That is great. So will this podcast. Excellent.

Steve Kaplan:

A couple more. You decided to stay in Chicago and not go to the West Coast, which I assume you could have. Why did you stay in Chicago? Was that a good decision?

Jennifer Fried:

Yeah. The primary reason for staying in Chicago … It was personal. My mom grew up in Chicago. My extended family’s in Chicago. My husband grew up in Chicago. My life is in Chicago. It’s where I wanted to be for my personal life. At the end of the day, my company is a huge part of my life, but it’s not my entire life.

Jennifer Fried:

Also I think healthcare is a really great … Chicago’s a great place to run a company from. You can get a direct flight anywhere from O’Hare, which is huge. I could get anywhere in the country and back in a day trip. West Coast is a little rough, but it’s still doable. You just get home at 2:00 AM. But that is really powerful in terms of being able to access your customers and being able to access any person in the ecosystem that you need to interact with.

Jennifer Fried:

Chicago is also a really great place for healthcare. Almost every kind of healthcare society and association is actually headquartered in Chicago. It’s very easy to access other parts of the industry. Then if you think about who the major people we’re interacting with, the vast majority of medical device companies are headquartered in the Minneapolis area. It’s way easier for me to get there from Chicago than it would be from San Francisco or from the East Coast. Then also all the big group purchasing organizations and HCA are in Nashville. There’s really no better place to be than Chicago.

Steve Kaplan:

Very interesting. Are you involved at all with the ecosystem in any other ways here?

Jennifer Fried:

Yeah. Our company is a MATTER company. MATTER is the healthcare equivalent of 1871, for anybody that’s not familiar with it. If you want to build a healthcare company in Chicago, you should go to MATTER and know all about it.

Steve Kaplan:

Okay. Two last questions. 25th NVC. What advice do you give to current teams?

Jennifer Fried:

Wow. It’s crazy because everything’s remote this year, right?

Steve Kaplan:

There will be a couple in class, dual modality, but, yeah, it’s largely remote.

Jennifer Fried:

Yeah. I would encourage everybody to really get to know the judges. There’s just a wealth of experience that’s brought to the table in the judges that are brought to the classroom. My example of Steve Gould, I think, is a great one, where you should really get to know the judges that are the toughest on your business.

Jennifer Fried:

Oftentimes people have strong opinions because they do know the industry and they do know the space. You should get all of the constructive feedback that you can and apply it into your business and your business model, and how you think about growing it. I would also say you should get to know Steve and get to know Ellen, and get to know the professors. Even though it seems scary, go to office hours and get to know them.

Steve Kaplan:

Yes. I’m told I’m very scary. I don’t understand why.

Jennifer Fried:

Scary’s not the right word. I’d say it can feel intimidating to reach out to one of the professors that’s running it. But it’s so important, and there’s so much that you can learn from the professors and the judges.

Steve Kaplan:

That’s very kind. Last question. Somebody wants to be in your shoes, What do you recommend, or what advice would you give?

Jennifer Fried:

If you want to be the CEO of a startup, I think you can be the idea person. You may come in, like David, the founder of Tovala, who I’m very good friends with. We were at NVC the same year. He came to business school with a very specific idea, and he was focused on executing it. That is one path, and that’s great.

Jennifer Fried:

I get asked a lot, “What do you do if you don’t have a great idea?” I would say, “Go to the Collaboratorium,” because there’s no shortage of ideas at University of Chicago, and having such a great interdisciplinary set of programming. You can be the CEO of a company even if it wasn’t your original idea. There’s so much that’s done between coming up with the idea and then executing and actually building the business. I wouldn’t let that prevent you from following that path, if that’s your goal.

Steve Kaplan:

Terrific. Thank you. This was wonderful. Thank you for spending the time with us. We look forward now that you’ve got product market fit and you clearly have something that people want. We look forward to see the business continue to soar. Thank you and good luck.

Jennifer Fried:

Thanks for having me.

Colin Keeley:

All right. That is it for this episode. If you could do me a huge favor really quick, please go to your favorite podcasting app, often Apple Podcasts, and rate and review our show. This gets the show recommended to more folks, and it also helps us get bigger and better guests for you to listen to. Take care.

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