Rick Barnett, founder of Rep-Lite, joins longtime Stryker colleague Kevin McLeod to talk about all things entrepreneurship, modern medical sales, and how the pandemic brought success and hope to startup C2Dx Inc.
Rick Barnett: Well, hello, everyone. Rick Barnett, founder of Rep-Lite. Today, we’re doing a joint interview today with Kevin McLeod, who is the CEO and founder of C2Dx Inc., with hopes that this conversation will be beneficial to you and your business strategy going forward. Kevin and I really didn’t know each other a long time ago, but we actually spent a lot of time together at Stryker and we’ve partnered on several initiatives in the last couple of years; therefore, I thought it’d be really nice to share some insight today. Welcome, Kevin. Kevin McLeod: Thanks for having me Rick, our paths crossed back during our Stryker days. I started my career at Stryker, spent the better part of 17 years there in different roles. Being head of global marketing for our CranialMaxillofacial Group, the last one had a great career there, and in 2010, I decided that it was time to go out and do some new things. Part of what I learned that I love was the attraction of the entrepreneurial gig, if you will, and going out and starting businesses. What I was good at with Stryker was finding products that fit our portfolio, and at this opportunity, I could create companies around them, and that’s what I started in 2010. This is the sixth company I’m involved with, having run one other one just in the recent years, but this one is back near and dear to my heart with a product that we bought from Stryker, so it’s a great opportunity and sort of ties into everything I’ve done in one place. Rick Barnett: That’s really cool. I was thinking back this morning and it’s crazy, there are so many people who either started their career or spent time at Stryker and we all seemed to come back together in some other fashion years down the road. It’s really interesting. So let’s talk about setbacks. Obviously, I know a lot about it simply because I’m close to it and we work on some things together. But tell us about the business. Tell us about your products and kind of walk us through. I mean, I think you set the stage up really nicely to talk about it. You’re bringing products into a portfolio in which you know kind of how to interact with those products and how to get those products to market. Give us a 30,000-foot view of C2Dx Inc. and your products and what’s currently happening there. Kevin McLeod: Middle of 2018, I was actually approached by Jamie Kemler, another Stryker name, whose role now is the head of intellectual property for Stryker. He’s in charge of finding products at Stryker that are not currently being optimized and that they can potentially get some revenue out of by divesting it. Jamie called in and told me about an opportunity, which was a product that’s actually the stick model for compartment pressure diagnosis. I happened to be the product manager for that product back in the mid-’90s, which he did not know and it really is one of those brands that is everlasting in orthopedics. It’s the gold standard, it has been for 30 years, and it was a really unique opportunity. So that’s what started it, to the extent that I partnered with Plymouth Growth Partners out of Ann Arbor, as well as three of our original executives. The four of us all put money in and we bought the product from Stryker, and that closed in January 2019. We shipped our first product in January 2019, and we have shipped the product ever since. Our strategy from day one has been to look for these divestiture opportunities and plug them into a group that’s very seasoned, coupled with some newer faces to the medical device world. Having that balance of new and old can actually start training our future leaders, quite frankly, and build a culture that’s very inclusive and very forward-thinking. We’ve been fortunate so far to close our first deal in January 2019 on Stryker product that closed our second deal in 2021. It’s our second product for divestiture from Stryker orthopedic, so those ties that bind continue to pay dividends for us from Stryker days. Rick Barnett: I think it’s a great story, and I think you’re the products that you are bringing in. Well, a couple of things, it’s got to be great patient care. It’s got to be the thing that you would want a family member to have the opportunity to be healed with or to be diagnosed with or monitored with whatever the treatment modality is. And I see you continue to do that. You know, one of the things that I’ve done is, we’re in the people business, we really don’t have a product. Just so the audience knows, a lot of times when people come to me with the product, I’ll funnel those things to folks like Kevin, because they’ve got an engine that understands the commercialization piece. Obviously, 2020 was a disastrous year on many fronts. You know, for us as a business rep, like we really had a great year. But tell me, you know, March 2020, now to August 21, how has C2Dx come through this? And then I think the second part of that question is, what are you seeing now? Industry-specific as to how we’re rebounding out of this awful pandemic? Kevin McLeod: On day one, we said this organization up to be as remote as possible. Interestingly enough, 2018—we had talent, two in Chicago, one in Ann Arbor, a couple of us in Kalamazoo—but we knew that we would be attracting candidates from all over the country, if not the world. We set everything up in the cloud, even our quality-management systems, our cloud base, day one. March 2020 comes around and, fortunately, we were prepared and we also had not over-hired. Quite frankly, I mean, we were running pretty tight. As we all learned back in our Stryker days, do more with less. So, Rick, what that included was your organization, right. Making sure that we’re hiring the right people in the right manner and keeping our overhead manageable. March 2020 hits, we hit pause for about 45 days, slowed everything down but, fortunately for us, it didn’t last. The lack of revenue did not last long and the need for diagnosis and compartment syndrome continued through the pandemic. We were fortunate to be able to continue to drive revenue through that and had a great 2020. What that allowed us to do is look at some other opportunities that came out of COVID and came out of the EU as part of this whole thing. So when companies like Stryker are looking at their portfolio, they’re going to start looking at things they don’t want to spend time and money on, which led us to our second divestiture from Stryker. But it was exactly because of the times that we were able to take advantage of its acquisition. Then, we also partnered with a company called Quinn out of Detroit, which is a telehealth platform, which has some unique capabilities to be able to actually see inside a scope or see a live view from a navigation system all on your cell phone. It’s a unique technology where a doctor, instead of calling a doc from the room next to them to get an opinion, a second opinion, can literally tap an app on a phone and get it. Of course, COVID and the pandemic situation led telehealth to a prominent place now in medical and health care and I think it will continue. Rick Barnett: We saw a lot of our clients and our potential clients throw the brakes on, which is understandable because, you know, March 15, 2020, you didn’t know what was happening. Then, we kind of started seeing a lot of our current clients—that first month or two months here—we had a lot of clients that called us and said, “Hey, man, we need help, you know, because we don’t have revenue coming in.” You’ve given us good people, but we spent a considerable amount of time and effort, and resources trying to help our partners just navigate that first time period. It was scary for all of us, but I think we’re really blessed that things came back and then we strengthened those partnerships. What we’re starting to see now is that 2020 stifled so much growth in the space, whether it’s private or public companies, that now in 2021, everyone’s trying to come back with a vengeance even with this new barrier. Even with the delta variant, I think it’s a different mentality. You’re trying to figure out how you can be futuristic with your product, so I think that, in my opinion, and I would love to get yours, you and I both spent a lot of time researching the industry. Right? I mean, that’s kind of our jobs, leading our organizations, and I’m seeing a completely different take on the pandemic in the last six months that I’ve seen in 18 COLLECTIVELY. Are you seeing the same? Kevin McLeod: I couldn’t agree more. We literally had no idea what the next day was going to bring us today. I think now we do understand what it’s going to bring and, clearly, there’s still a lot of concern; there’s still a need for people to act responsibly in dealing with the pandemic. But it’s not that fear of the unknown anymore. Last year, 2020, was also just our second year in existence, and as a startup, that could do a lot, And, because of the steps we made early on, when you’re a startup, that is starting with a product that has a revenue day one. You know, pulling this out gives us a unique advantage, but it also has a lot of potential pitfalls. I mean, you have to be able to have your supply chain, your distribution store, everything clicking on day one because there’s an expectation and, especially with a product that if you don’t get something shipped overnight by 8 a.m., someone can lose a limb, literally. So that’s why we’re in this business. We love that responsibility and 2020 gave us that opportunity to start looking at it. I would also say not only the pandemic but, you know, the Black Lives Matter movements, all of these things were very trying for any company trying to create an identity. Our group really thrived during it; we accepted a lot and we looked introspectively and we’re able to look at opportunities to grow. Having new opportunities to go in and really get on the therapeutic side versus the diagnostic side, and it’s allowed us to take advantage of our relationship with Rep-Lite. You helped us and we turned around and hired five more people 12 months later. That’s how this is supposed to work, and we were fortunate as a young company to have been very cautious early on in not bringing in too much money and not spending too much money. Rick Barnett: I think especially for the young entrepreneurs out there, there are some lessons therein that you give them, some pearls. As you were talking about your response to all the things, the pandemic, all the unrest in the country, one of the things that are kind of in my business or in our business, what’s kind of reared its head is I’m seeing these resumes as we’re going through and we’re talking to these young professionals about potential careers. There are these gaps in these resumes that we’ve never seen before. It’s interesting how people are responding to it. You’ll see a piece that’s going to come out on LinkedIn soon that I actually take and address these gaps on resumes because, back when we were young, you didn’t want to have a day gap on your resume and you wanted to, you know, August 2020 to August 2021 going forward. I remember I was taught I had two interviews back with those gaps in interviews or on the resumes. One was a person who was laid off when COVID hit, and then the second was a mother or a lady who had, you know, have had a couple of kids and there was time omitted on the resume. What I kind of counseled or tried to coach these folks is, you know, if you take time off to have kids, raise a family, whatever it is, put that on your resume, put it smack on there! The person’s like, well, you know, I don’t want that to be held against me, and my comment back was if a company is going to ding you for raising a family, do you really want to work for them? Kevin McLeod: That’s great. Rick Barnett: If you sit back and think about it if I’m a woman that starts a family and I spend the first three or four years getting my kid(s) through infancy and somebody doesn’t want to hire me because of that, it’s not a place I’d want to be long-term. The reason I bring all that up is that I think the pandemic and all the unrest created a lot of things and vice versa, along with the first person who got furloughed, laid off, or COVID, as you know, it’s perfectly okay to put on your resume. I mean, that’s not a fault of yours. It’s the dichotomy that has changed and how even, you know, someone in the talent business like we are, how it’s changed. Rounding out the conversation around the business, please tell me what’s on the horizon for you guys. I know you look at a lot of products and a lot of that has to stay behind the curtain until it’s time. But expansion? Growth? Anything exciting coming up that we don’t know about yet? Kevin McLeod: Let me step back because you brought something up that’s very important, Rick. I think, you know firsthand what it was like at Stryker, it was regimented—we did work hard. We wore ties in the office at 6 a.m and we learned our lessons there and we’ve learned our lessons all along. Today, our DSO right now is world-class, under 30. All my accounts receivable, the two women who are running accounts receivable, both are just now returning to the workforce. One was an engineer in the auto industry, with a Purdue engineering degree. The other one had a very similar background in engineering as well in the auto industry, both friends, both mothers for the last 15 to 20 years. They’re so happy to be collecting for us! They think it’s the best thing they’ve ever done in years, other than, of course, being a mother, which is the most important. And then, of course, you know Beth, who you placed with us, she’s phenomenal and another mother who’s returning. We have to look at things differently and take advantage of that now, and I commend you for bringing that up. For us, I couldn’t be more excited if we came through a tough year. We learned a lot about ourselves, we learned about the diverse nature that is our individuals—both at work and in their personal lives—and we were able to embrace opportunities. We’re really excited about Quintree and we actually were able to just hire someone who’s running that business for us, who’s just incredibly talented and excited to get things rolling. We look forward to that growth for the rest of this year, along with the t/pump, which we’ve had just six months now. We’re starting to get a feel for that, but it’s a unique product that gives the heating and cooling capabilities where there’s a lot of hospitals that are still using warm blankets and ice packs, which work but they’re not ideal. They’re not efficient for the staff, so we have a product that kind of has this little niche. We’re excited about it, but we’re also looking at other things and we’re getting them from all over. I think we’re there, as you mentioned, you’ve brought us something that we’re still, by the way, we’re still talking to. “Our strategy is to build a culture that really defines growth—both personally and professionally—and we will bring that growth through divested products that have some legroom and then also have our eyes on a growth product next.” We really would love to find something that we can sort of move in the hockey stick direction. The first couple of products we’ve actually seen great growth, both ultimately going to be seeing double-digit growth. We know that they’re not going to be raising a lot of eyebrows. It’ll be methodic. But that was the plan all along. As we’re tight with how we spend money, our eBid looks great and it’ll continue to grow. So we’re excited about that. Rick Barnett: Three years ago, we started talking about what you’re doing and I think we spent a fair amount of time on the first conversation around culture. I think that’s because we were born at Stryker; you know, they believe in culture wholeheartedly. I can’t speak for them in the last 10 years, but I know when I was there, culture was extremely important. One of the things that when we’re prospecting new candidates that I always bring up tells me about what a day in the life was like there and what do the people feel like. Is it every patient is treated like their mother, father, brother, sister, is that the mentality? Because we’ll always want to find people that marry up to a culture that is just like you said. You know, people want to be there. We never want people to have to go to work—we want them to want to go to work. I don’t know where the phrase came from, but I heard it years ago that if you love what you do, you’ll never work another day. And that’s what we want the folks that we place with our clients to be. The last question: Let’s assume that I’m a brand-new entrepreneur and I want to get into the medical device space, give me the single best tip! Kevin McLeod: Don’t do it. Just kidding. First and foremost, understand the quality and regulatory side of your business and all the rest. I know lots of people who could sell, Rick. I know lots of people to market and a lot of people can operate, accounting, I know all of that. But it is a different field, and most medical device entrepreneurs usually come from the industry so they recognize it. We had a world-class quality system in place, the actual three-day one, and that was the best thing we did. We’ve over-hired in positions because of things like that, so my advice is just to make sure whatever you’re starting you understand that path very well. IP goes with any company and any product, but the quality and regulations in the medical device space are unique. Rick Barnett: Kevin, listen, it’s always great to speak with you and I have a great appreciation for what you are doing at C2Dx Inc. I think the products are good medicine, which, in my opinion, is critically important. Certainly appreciate you and your leadership and leadership team as a whole. Really brought some world-class people in there and I am excited for you because I just don’t see anything but a bright future for C2Dx Inc. I want to thank you for spending time with me. Kevin McLeod: My pleasure. I appreciate everything you guys are doing and your services are valued. Those who understand what you’re doing can take advantage of that; it goes a long way with any size company, but, certainly, one that’s trying to manage their net income. Thanks, Rick. About Rep-Lite: Quality medical sales talent on a de-risked contractual basis to medical companies saving costs and increasing productivity. www.rep-lite.com About C2Dx Inc.: Medical device company based in Kalamazoo, Michigan, that invests in and refines the delivery of valuable niche products to propel their growth and accessibility worldwide. www.c2dx.co