Entrepreneur Rx_Casey Grage: Audio automatically transcribed by Sonix

Entrepreneur Rx_Casey Grage: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

John Shufeldt:
Hello everybody, and welcome to another edition of Entrepreneur Rx, where we help healthcare professionals own their future.

John Shufeldt:
Hey everybody! Welcome back to another episode of Entrepreneur Rx. Today, I'm really excited to be chatting with Casey Grage. Casey is somebody I was introduced to, not all that long ago, but was super impressed about her and what she is doing with her product. Casey, great to see you.

Casey Grage:
Yeah, great to see you again, too.

John Shufeldt:
So you have a really good, probably never forget our, the first meeting where you came in and demoed the product, we'll go into a little bit but, was super impressive.

Casey Grage:
I'll probably never forget it either, but thank you.

John Shufeldt:
Yeah, and I didn't bleed, so that's good. Hey, give us a little bit of your background because it's a pretty cool background.

Casey Grage:
Sure, so I kind of come from the neuroscience and engineering world. I started off deciding that I wanted to be a neurodegenerative disease researcher, and that's because I've had a lot of family members who have had Alzheimer's and Parkinson's diseases, like many. And so I knew from a pretty early age that I wanted to go not necessarily into medicine because I, my skill set was more in building stuff and researching, and so instead I knew I wanted to go into some kind of neurological device or therapeutic development. And so when I was in undergrad, I was studying neuroscience and engineering, I worked in a lab for several years, and eventually, I crossed paths with a neurosurgeon at Northwestern Hospital in an MBA class in MedTech Entrepreneurship. And so this neurosurgeon and I came together over our shared interest in neurology, and he was the one who said, Hey, I use this hand-crank drill every single day and I hate it, there's got to be a better way to drill holes into people's skulls in this country, in 2017, was the year at the time, but, you know, in the 21st century, and I wholeheartedly agreed with him. I've been aware of the procedure vaguely from my grandparents' experiences, mostly because I knew that, I came from a perspective of my family had elected not to have deep brain stimulation via Parkinson's because of the complication rates of the procedure. And then I had this neurosurgeon coming in telling me, hey, we're using really antiquated technology, which could be a huge part of the problem as to why this procedure throwing holes into the skull is so dangerous. So he and I decided to make better tools, make a non-hand-crank drill.

John Shufeldt:
Now, so you started that business, and at the same time, you're going back and getting your master's at Hopkins in Computational and Applied Mathematics.

Casey Grage:
Yep, yeah, it's one class at a time, nights and weekends, I realized, so I don't have kids or anything, I realized like a year into being full-time on this company, that I had absolutely no life outside of this company and I needed a hobby, and so I enrolled in a math course.

John Shufeldt:
So instead of taking up tennis, with Applied and Computational Mathematics, you know, that little unknown school called Johns Hopkins.

Casey Grage:
Yeah, huge freaking nerd.

John Shufeldt:
That is classic. Well, as a person who's A, used one of those drills, and B has had one of those drills used on me, I'm probably in this rare subset of people who, I think I understand what you're trying to do. And just to give people context, Casey and her partner came in with the drill with a fake skull to demo and showed me how to work its electric drill, and I'll let her go into the science ... because it was really cool. And the baseline as I understand it is, it stops before it hits the brain, is that a good summary?

Casey Grage:
Yep.

John Shufeldt:
So, which I did not know, and I'm glad I didn't know this a few years ago, I knew it when I was drilling my one and only burr hole in the emergency department is you don't want to drill into the brain that much I got. And so I said, okay, I'm going to drill through the skull and my finger underneath the hole I'm drilling, and if I get draw blood on my finger, we are not investing. And so to her credit, she was like, okay, and so sure enough, I drilled through the skull and that, right is the tip of the drill, just touched my finger, turned off immediately, and I was sold, that was very cool.

Casey Grage:
That was very cool for me too, I have to say. I mean, so I would drill over my finger because I've seen this thing work a million times, but you're the first person who has just met me, actually, you're the first person who's not on our team who's ever drilled to your finger, so, congratulations.

John Shufeldt:
Thanks, I had total faith in you. Okay, so what's the science behind this? Because I was, first off, give us a background of why this is so important.

Casey Grage:
Sure, so drilling a hole into the skull is the most common neurosurgical procedure because it is the precursor for any time a physician needs to access the brain for some reason. So in emergencies, that's because you typically are trying to relieve excess fluid and pressure in the brain, and that can be caused from a whole host of reasons: traumatic brain injury, or ruptured aneurysm, or a chronic condition. That's typically why you'd be using the hand-crank drill, but also there are elective procedures such as deep brain stimulation for Parkinson's, like I mentioned, where you would need a hole in your head.

John Shufeldt:
...

Casey Grage:
Exactly. Large companies have developed very fancy drills for the operating room, they don't stop automatically. The drills that they have developed, which stop automatically are called Perforators and they are based on pressure sensing to detect when there's a pressure differential, and that's how they know when to stop. The problem is they don't work all the time, they don't work very well at all, and so they're only allowed to be used in the operating room, and even then, a lot of time physicians opt not to use them. And so what we've done, and the hand-crank drill is the only option for use in emergencies outside of the operating room. So what we realized, we were trying to figure out why don't these perforators work, and after trying to come up with our own method of auto stop that works better, both inside the operating room and is able to be used outside, we figured out that the problem is actually that underlying mechanism of pressure sensing, that's, you might be familiar with like table saws at Home Depot, you can get tools at your home good store and they stop automatically and they work really well. But the problem is that's because they are drilling through a very consistent material, you're typically sawing through wood, which has a pretty consistent pressure, whereas the skull has three different layers to it, which have vastly different pressures, and so when you're drilling through it and the drill is looking for that pressure, it either accounts for that difference, well, it either doesn't account for that difference and it stops early or it does account for it, and then it doesn't stop at all, hence the problem with the Perforator.

John Shufeldt:
And what did you say was the, let me, I'm sorry to interrupt you. What did you say was the fail rate? It blew me away.

Casey Grage:
Like 1%.

John Shufeldt:
So, but was it?

Casey Grage:
So it's 15%.

John Shufeldt:
Right, that stops too.

Casey Grage:
Stops early and you can't restart it.

John Shufeldt:
And then 1%, you're drilling into their dura or their brain.

Casey Grage:
Yes.

John Shufeldt:
Which is 1% too many. And, you know, I said the one time I did the barrel, I would do like one hand crank, take it off, look.

Casey Grage:
Well, and that's 1% for the perforator, which is supposed to work. If you're using a hand crank, the rate is much higher.

John Shufeldt:
Oh, is it really? Wow, I was so scared when I was doing it, I literally would like one turn and stop and look.

Casey Grage:
Yeah, I mean, let's smart. It's better to go slow than to into.

John Shufeldt:
Okay, so keep going.

Casey Grage:
So we decided that it was actually the pressure sensing that was the problem, and so we moved away from pressure sensing and rely instead on monitoring the resistance and the current through the drill bit as you're drilling, and that is what lets the drill know when to stop, and it turns out it works way better than the drills they have out there.

John Shufeldt:
That's what saved my finger. So it's really impressive that one, you made the connection, an undergrad and a grad student who is a neurosurgeon, probably a neurosurgery residency, and then came up with this. I mean, it's really impressive, then came up with this idea and you have the literally perfect background to do this.

Casey Grage:
Kind of, my background is not in mechanical engineering, which would have been perfect, but because of that, we hired my amazing CTO, Tyler, who is a medical device, mechanical engineer. So he's the one who took our fledgling idea and actually built it into the drill that saved your finger today.

John Shufeldt:
Amen, what has been the most difficult part of this? Because, you know, from outside looking in, and we're investors in this, I'm super biased, but from outside looking in, it looks like you've had a relatively, out of all the entrepreneurs I've seen, you've had a relatively easy path, and I know this hasn't been easy at all, but it sure looks like, man, you guys have just had product market fit right out of the gate, came up with a solution that worked and now you have a lot of.

Casey Grage:
Revenue product market fit. Yeah, I would say, I mean the hardest time was, so okay, so I went full-time on this company in December 2019. I immediately raised a pretty tiny, friends and family, around like $300,000, and then hired my CTO in February, he actually started March 1st, 2020, and then I said, You know, you're going to be part-time for now, and then I'm going to raise this big round in May and you're going to go full-time and everything's going to be great. Covid hit, we decided to delay our pre-seed raise, with uncertain times, but people weren't investing the first two months of the pandemic. And so that was a little rough because we weren't really sure where we were going to get our money from, so Tyler and I were working basically for free, and then we were just kind of bootstrapping to prototype and get the drill together, and Tyler, thankfully has had a lot of startup experience, so that's, he's kind of used to that. But what really kind of hit us was toward the end of 2020, we still, I started, I said, okay, now it's, I think it was like October of 2020. I said, okay, it's been long enough, people are starting to invest again, we need money. And so I went out there and I tried to fundraise and I lined up like 50 investor meetings for myself over the course of like three weeks, and I did my 50 investor meetings in a row, and number three wanted to write a 25K check, number six wanted to write a 25K check, and then I got 44 no's in a row. And at that point I, it's not like I consciously made the decision to give up fundraising, I just genuinely had run out of people to talk to. I had exhausted my Rolodex, that was done. So I just totally failed to fundraise, we had no money. And so I went back and I, I mean, of course, I had already asked everyone who said no, why did you say no? They all said, Oh, timing's not right, on certain times, whatever, but I went back and I was like, okay, I actually don't have any money, you have nothing to lose. I really need to know what is your actual reason for not investing. And the overwhelming answer was that our costs were too high, our cost of goods to make the drill were around $500 at the time. And so in order to make that make sense, with a 75% margin, we'd have to price the drill at $2000, which was way more expensive than the hand crank. And so they said, you know, we just think that your price point is too high and your margin is too low for this to really be a commercially viable business. And so Tyler and I really took that to heart and said. Okay, let's reinvent this drill. I mean, we have to lower our costs at all costs, no pun intended. And so I really give all credit to Tyler at this point, because from November of 2020 to February of 2021, he basically just totally started over, redid the entire design of the drill, figure out a slightly different mechanism of doing the auto stop and he just totally reinvented the drill, and he got the cost down to $100 instead of $500, which all of a sudden gave us a ton of wiggle room with our price. I went back to all of those investors and I said, hey, we took your advice, and here's our new drill, here's our new bill of materials, and then a ton of them invested.

John Shufeldt:
Wow, it's funny, a lot of folks I don't think would have had the temerity to go back and ask because, you know, for a lot of us, I don't really want to know why they didn't invest because it may be a reflection on me, so that that takes a lot of guts, it takes a lot of guts. Do you think, you know, as a young founder, first time, do you think that played into people's calculus as well?

Casey Grage:
Oh, definitely. I mean, I don't blame them for it because I totally understand that they're taking a chance but, and I don't have any, as I just explained, I didn't have any, I had some connections, but, you know, not from any kind of previous business. So, yeah, no, that definitely factored into it. And some people just told me point blank, they said, I don't invest in first-time founders. I was like, okay, well.

John Shufeldt:
Interesting, they would have missed jobs in Zuckerberg and Bezos for that matter, but oh, well.

Casey Grage:
They would have missed a lot, but they probably all, yeah.

John Shufeldt:
Yeah, yeah, they're probably, their risk parameter is a lot, nothing against them, it wasn't being obnoxious about it, but the risk parameters are probably a little different than mine. Obviously, you've also done some angel investing. What do you look for?

Casey Grage:
A little bit. Yeah, I mean, with med-devices, it's pretty easy. Honestly, I feel, so I haven't, I haven't gotten any returns, so I shouldn't say like, I'm, I mean, it's easy, I have an easy process for med devices. It's IP, reimbursement, solving a real problem, market size, I feel like I'm missing one.

John Shufeldt:
Or probably the who the principals are, the founder. I mean, that for me is probably the top one. I mean, you're right.

Casey Grage:
Yeah, and I've done some investing in people that I'm more or less friends with, people that I have worked with or I've been in an accelerator with, and so I know them, I know they're a good person, and I know they're solving something that they're passionate about, and they have all the other elements that you need, so.

John Shufeldt:
Right, they have integrity.

Casey Grage:
Yeah, so, I mean, in my mind, I only invest people where I could lose everything and then it's, I'm like, okay, well, I'm so glad I supported that mission and that team.

John Shufeldt:
Right, I mean, I work, I think we talked about this a little bit, we're bet on the rider or not on the horse. And in some people like you, I think you've got a, you're obviously a great jockey, and also I think you've got a great horse to bet on as well. What's the next step for you? So I saw your email, and by the way, I mean, Casey sent out this really thoughtful end-of-year kind of summary, probably one of the best ones I've seen for the companies that have invested in, so great job on that. What's the plan?

Casey Grage:
Well, we are waiting on FDA clearance, hopefully, knock on wood, we get that in Q2. So right now we're just prepping for a go-to-market. We want to make sure that we hit the ground running. So let's say we get FDA clearance Q2, like planned, and then right away, we're going to launch into our hospitals that are on our waitlist, so we have about 30 on there right now. So we'll contact all of those physicians at those hospitals and say, hey, we're cleared, it's time for, your time to shine. If you want to pitch us to your procurement committee, start going through that process, and then we'll engage with probably geographic regional distributors to have an intentional geographic rollout.

John Shufeldt:
The, what, it seems to me, because I'm involved in another investment, another company that sells to neurosurgeons, it seems like they're a no pun intended, a tough nut to crack. Because they're used to doing things, they trained to do it this way and they've done it this way for years, and one of the things you said to me really struck me, when Casey was pitching to one of the neurosurgeons, she basically said, look, you know, I'm well past the point of having to drill my own holes and skulls, that's for the residents to do. Like, don't even bother, don't even waste my time with this stuff. How did you crack that nut?

Casey Grage:
Um, you know, so that that woman who said that to me, that was before I had a drill to show. That was when I had just been attending a conference in actually, I was February of 2020. So I just went attending a conference just to learn. I was just chatting with people and I got that feedback a lot where people said, you know, honestly, the hand-crank drill, I don't really care about it, it's below my pay grade. Once I had our drill and our fake little model skull and I started showing up to these conferences, I now just let the product speak for itself. If I, if I'm talking to a surgeon and I say I'm working on this product, whatever, and they're kind of like, Yeah, okay. I go, Oh, do you want to drill a hole? Of course, they say, yes, because who doesn't want to drill a hole? You can relate, and then I don't say anything because they hate, like all of us, they hate being sold, you know.

John Shufeldt:
They hate being pitched.

Casey Grage:
I hate being pitched, which is totally relatable. So yeah, I just hand them the drill, they drill a hole, and honestly, a lot of times they go, Wow, that's really nice, and then they start asking me questions about it. What is it used for? Is it, my favorite questions are, how much does it cost? Is it to market yet? But yeah, so it's been much easier since Tyler made the best product ever.

John Shufeldt:
Yeah, it's very cool. So he got the cost down to a, from $500 to $100, that is remarkable, to say the least. What is the cost of, so is the hand-crank a one-time-only use as well?

Casey Grage:
Yes, single-use disposable, to make the hand crank? I mean I'm sure it costs.

John Shufeldt:
Two bucks, yeah.

Casey Grage:
But it's sold for $300, typically with the kit.

John Shufeldt:
Wow, I mean, I remember when I got the thing, I started drilling, I was, I felt like I was right out of the dark ages. I mean, that's like, I can't thank God that I didn't have any other thing because God only knows what I would have done to this poor lady, but I thought, this is so antiquated, totally. And then what does a pressure-sensing drill cost? And is that one-time use only as well?

Casey Grage:
That, so it's a, the cranial perforator is a drill bit that you put inside a normal drill. So the drill is reusable, the drill bit is single-use disposable. So the reusable drill is thousands and thousands of dollars, the drill bit itself is also like $300 to $500, expensive drill bit.

John Shufeldt:
One expensive drill bit, you're right. And then, is it the drill bit that causes it to stop, or is it actually the drill itself that knows the stop and the pressure? It's the bit? Interesting.

Casey Grage:
Yeah.

John Shufeldt:
And can you make your device more than a one-time use or is it just it's really easier to make it one time only?

Casey Grage:
Yeah, I mean, there's no technical reason why our device isn't reusable, and then with a single-use disposable drill bit, the reason we've made it single-use is because it was important to us that it's able to be used outside of the operating room to replace the hand-crank drill. And in the US, I guess in the developed world, but we're focused on the US, any kind of drill or any kind of tool that's coming into contact with the patient needs to be single-use disposable by, outside of the operating room, needs to be single-use disposable by hospital rules.

John Shufeldt:
I did not know that. Is it a once or, is it a one-size-fits-all for the drill bits? Or like, for example, when you're doing a burr hole, and I don't know this because I was, I just, I cranked what they gave me. Is it just one size typically?

Casey Grage:
There, no, there's many sizes. They range from like two-millimeter diameter to 14 millimeter, typically. The most common size is like 5 to 7, which is for ventriculostomy, so that's the size that we're going off with. But because our drill is single-use disposable, we can offer, after we have the correct regulatory clearances, we can offer any kind of specifically-sized diameter drillbit and you just throw it away after it and get a new drill that's labeled as the diameter you want.

John Shufeldt:
So the drill bit will come in the drill and you'll have, so it's kind of cool because you force people to order a bunch of different drills with a bunch of different-sized bits in them. Is that right?

Casey Grage:
Exactly.

John Shufeldt:
It's kind of genius marketing. Even though it wasn't sure intent.

Casey Grage:
Yeah, yeah, it is. It's nice, we get revenue each time. We are thinking about, because it does seem like a huge source of medical waste that you're throwing away this perfectly good drill, there are kind of like recycling buyback programs that you can do where you tell the hospital, hey, if you save your leftover drills in like a separate bucket, and then you give it to us, we can give you ten bucks towards your next purchase or whatever, 100 bucks, whatever it is. And then we could either use those drills as like demo drills, at conferences for sales and things like that, or we could just totally recycle the equipment like, you know, take it apart and use.

John Shufeldt:
Yeah, yeah, refurbish them. And I wonder, this will sound odd, but I wonder if you could use refurbished drills in less developed countries who will, that would otherwise never have access to this technology?

Casey Grage:
Totally possible.

John Shufeldt:
Yeah, even if you gave them away to those folks, because they would never, you know, they can do so much better for patients with that technology.

Casey Grage:
Yeah.

John Shufeldt:
I can't recall.

Casey Grage:
Right.

John Shufeldt:
Casey is your, is it a once, is your drill bit, is your drill like the pressure-sensitive drill that once it stops, it stops for good, or can you restart it?

Casey Grage:
You can restart it.

John Shufeldt:
That's cool.

Casey Grage:
Yeah, no, that was also very important, and that's one of the main questions that surgeons ask us. They try once and then they're like, Yeah, but the perforator does this and you can't restart it. And we're like, okay, go take your finger on the trigger and redo it.

John Shufeldt:
Yeah, restart it, that's really cool. So it sounds like, if you're so, I think the way this works is, for example, if you're doing a craniotomy, you're drilling four holes, right? Because you, then you put the saw between the holes, so then you have to use four drills?

Casey Grage:
If they're doing with the hand, so when they're doing multiple holes, they typically just take the patient to the OR, and then they use a non-auto stopping drill.

John Shufeldt:
Oh.

Casey Grage:
Because it's a pain to get four different drills.

John Shufeldt:
Yeah, I was going to say, and expensive as hell.

Casey Grage:
Yeah, so that's actually, so the more holes they drill, the more our drill is needed for that procedure. Because if you're doing it over and over again, your hand gets tired, you're probably also you're just increasing the odds that one of them is going to slip.

John Shufeldt:
Yeah, yeah, it was, it's interesting to think that this is the resident's problem, not mine, they suffered, I suffered so, too can they. But I really like your, I really like the fact that it's, it doesn't stop after a one-time only use.

Casey Grage:
Mm-hmm, yeah, so I have to clarify that it's single-use per procedure, but you control as many holes as you want in that patient, yes.

John Shufeldt:
I like that, that could be your tagline: Drill as many holes in any patient as you want. Drill away. Final question for you, What has been, what's been your biggest learning through all this? What has been your biggest aha moment?

Casey Grage:
My biggest aha moment? Hmm, well, I mean. I'm a first-time founder and I started this out of undergrad so, or like after I graduated from undergrad, but, so all of it has been very new to me and I've learned a lot, but, hmm, biggest aha moment.

John Shufeldt:
I'm trying to surprise you out of left, out of left field, like I can say pretty much every day, Wow, I never saw that one coming. Now, I'm not in applied mathematics, so maybe my scope is just much more narrow where you see everything coming.

Casey Grage:
No, I'm trying to think of what's fun. I mean, honestly, the hand-crank drill is the most shocking part of, even though that's the very first thing that I learned before starting this company, that's still the daily. I don't know, I feel like what it is, is just every time I see this procedure done in patients, not with my drill yet, but with the hand-crank drill, it's just so incredibly archaic, like every part of it where, I saw a resident doing this procedure for the first time in her life, and she's just drilling away into this patient skull. And she's like, she's like asking the attending with her, she's like, How do I know? And he's like, Just, you just do. And she's like, I don't know that I do know the stop. And he's like, Oh, okay, just keep going, you're not there yet. She's like, How do you know? And he's like, I just know. Which I'm sure he knows, but he's not the one drilling.

John Shufeldt:
Yeah, he's not the one putting a hole in her head. I think what's surprising, I think what startled me the most, about this whole need is that, so I work in a very high-end neurosurgical place, and it's considered one of the best, if not the best in the world, so I know all the crazy things they do. I mean, just way off the charts advanced, and yet, they're hand-cranking drills. That, I think you found this weird, I hope, it's this weird niche that is not like anything else in medicine that you're solving, because like that female neurosurgeon said, below my pay grade, I'm not going to invent this because I don't have to do it anymore, so I don't care. It just strikes me you just, you found this needle-in-a-haystack opportunity, which is, I mean, genius coming out of undergrad.

Casey Grage:
Well, that was the resident. That was Ahmed, the neurosurgeon who noticed the need. I guess I was just right place, right time.

John Shufeldt:
And kind of the right background, I mean, maybe not a mechanical engineer, but you're an engineer and you have an interest in neuroscience. I mean, it literally was kind of a match made in heaven moment.

Casey Grage:
Yeah, I guess so. I guess the one thing I did was say, wow, this is probably, if we do something about this, it'll probably take off.

John Shufeldt:
Change the world. Yeah, very cool. Well, you're impressed the hell out of me on a number of levels. So I loved having you on the podcast. This will, it'll be very inspirational for people who say they want to be you when they grow up.

Casey Grage:
Well, thank you.

John Shufeldt:
Pleasure. Well, folks, thank you very much, another episode of Entrepreneur Rx is wrapped, and we'll look forward to seeing you next time. Until then, stay safe.

John Shufeldt:
Thanks for listening to another great edition of Entrepreneur Rx. To find out how to start a business and help secure your future, go to JohnShufeldtMD.com. Thanks for listening.

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