Founder Casey Grage has a better device for drilling into human skulls. Hear how her personal story led to the founding of Hubly Surgical. A truly compelling narrative.
Highlights:
Sal Daher Introduces Casey Grage
What Problem is Hubly Surgical Solving?
How Casey Came to Hubly
Testing the Drill
Studies on the Hubly Drill Vs. Hand-Cranked Drill
"... We want to know when we're going through the finance committees and hospitals, what kind of questions do they ask? What data do they need? Then we want to intimately know the users of our very first customers, and we want to be able to interview them after they use the drill..."
Casey's Entrepreneurial Journey
Casey's Entrepreneurial Inspiration
Failure Builds Success
Advice to the Audience
ANGEL INVEST BOSTON IS SPONSORED BY:
Transcript of “Hubly Surgical”
Guest: Founder Casey Grage
Sal Daher: I'm really proud to say that the Angel Invest Boston Podcast is sponsored by Purdue University Entrepreneurship and Peter Fasse, patent attorney at Fish & Richardson. Purdue is exceptional in its support of its faculty of its top five engineering school in helping them get their technology from the lab out to the market, out to industry, out to the clinic.
Peter Fasse is also a great support to entrepreneurs. He is a patent attorney specializing in microfluidics and has been tremendously helpful to some of the startups, which I'm involved, including a startup, came out of Purdue, Savran technologies. I'm proud to have these two sponsors for my podcast.
Welcome to Angel Invest Boston, conversations with Boston's most interesting angels and founders. I am Sal Daher, an angel investor who's very curious to figure out how to best build exciting technology companies, particularly in the life sciences. Today, I'm very excited to be talking with Casey Grage, founder of Hubly Surgical. Welcome, Casey.
Sal Daher Introduces Casey Grage
Casey Grage: Hello. Thank you for having me.
Sal Daher: Hubly Surgical is creating a new type of drill for drilling into skulls.
Casey Grage: That's correct.
Sal Daher: By the way, I had a very adventurous weekend in Miami, and Casey had a very adventurous weekend in Miami. We'll go into that in the second-
Casey Grage: [chuckles]
Sal Daher: -half, but it was very fun but in very, very different ways.
Casey Grage: [chuckles] Yes.
Sal Daher: Anyway, Casey, tell our audience of founders of Angel Investors and people who work in startups, what problem Hubly Surgical is solving?
What Problem is Hubly Surgical Solving?
Casey Grage: Sure. The most common neurosurgical procedure today is the drilling of a hole through the skull and in emergencies, this procedure is performed outside of the operating room, either in the ICU or in the emergency department. The current standard of care for that is this. I'm holding up a hand crank drill that has absolutely no features really at all for ease of use or safety.
It's an incredibly antiquated device, reminiscent of the Middle Ages, and it's pretty universally hated by everyone who uses it. As you can imagine, it's a hand crank drill. It's wobbly. There's nothing to prevent it from drilling too far and into brain tissue, and it's just-
Sal Daher: Whoa.
Casey Grage: -cumbersome.
Sal Daher: Not good. Actually when we do the video, have the hand crank drill and the Hubly drill handy, and you can show that during the video, or we can have an unboxing video.
Casey Grage: I have an unboxed one.
Sal Daher: Oh, wow. Cool.
Casey Grage: Here it is.
Sal Daher: That's contrast. Yes, yes, yes, that's awesome. Great. How did you stumble on this opportunity?
How Casey Came to Hubly
Casey Grage: My background is in neuroscience and software engineering. I've always been interested in neurological device and therapeutic innovation, because I've had a lot of family members who have had Parkinson's and Alzheimer's diseases. I've always been interested in the impact part of this industry, but then I am an engineer at heart. I love building stuff, and so it made more sense for me to go into the innovation side of things part of the industry. When I was an undergrad at Northwestern, I enrolled.
I basically begged an MBA professor to let me take this class in Medtech entrepreneurship. It was in that class that I met my co-founder, Dr. Amit Ayer. He was working full-time at Northwestern Hospital during the day, getting his MBA at night. He was the one who came to me and showed me the hand crank drill and said, "Hey, I use this thing every single day, and it's horrible to use. In the worst cases, it can be really dangerous when in inexperienced hands."
He said, "There's got to be a better way," and I agreed. I observed him in the hospital. This brought me back to when my grandfather first got diagnosed with Parkinson's disease. We were deciding whether or not to pursue deep brain stimulation as a potential therapy, and we ultimately decided not to do that therapy because of the risk of complications of the surgery. I hadn't known about the hand crank drill at the time, but there was that personal connection of the need to make neurosurgery as safe as it can possibly be.
Anyway, I met Amit five years ago now, and together we went through early customer discovery process. We interviewed a ton of surgeons. We started to build out our solution, which is an improved cranial drill. We figured out that the major features that we needed were, of course, cordless power, battery power for ease of use, and auto stop so that the drill automatically stops once it punctures through the skull before it hits brain tissue. That's what we did.
Sal Daher: That is amazing. It's not rocket science. It's brain surgery.
Casey Grage: Exactly.
Sal Daher: [laughs]
Casey Grage: Trust me, I love saying that. [laughs]
Sal Daher: Casey, would you please spell out your co-founder's name?
Casey Grage: Of course, it's A-M-I-T A-Y-E-R, Amit Ayer.
Sal Daher: Fantastic, so you had this interest. How did you get the funding?
Casey Grage: At the very beginning, we started off by just going through pitch competitions. I had a huge learning curve personally. I'm a first-time founder and so it first started off. I applied to a bunch of pitch competitions, got rejected from all of them. Then I asked for feedback, refined my applications, started getting into them, went to them, lost all of them. Met with the judges for feedback, did them again, and then started winning them. That was some of our initial funding. Our very first grant was from Venture.
Well, which is out of Boston area. That was really, really crucial to our very early prototyping and patent filing and incorporation. In December of 2019, two years after we had originally come up with the idea. I got into Alchemist Accelerator in the Bay Area, and that was our first significant investment. That was really important for me because their whole value add is that they teach you how to be a full-time CEO, which I felt I needed.
Sal Daher: That to me is very exciting, seeing, usually academics, but someone from another profession, retooling as a CEO in the life sciences is really, really essential. For the simple reason that there are going to be a thousand interesting startups started and there are just not a thousand experienced CEOs out there who are going to work at startups. They may not even have the right skill set because a startup CEO founder is a very different skillset from being someone running a company that's operating.
Casey Grage: Yes, you're absolutely right. After I graduated from school, I was working as a software engineer, so that also is very different from neuroscience lab research, very different from being a CEO. In December 2019, I took the plunge and went full-time, and it's been an awesome [chuckles] ride the last few years.
Sal Daher: Very good. Can you describe a little bit how the new device is better? Let's do this. We had a conversation Friday. We're recording on a Monday. On Thursday, I told Casey I was heading down to Miami, and she says, "Oh, I'm going to Miami too." I told her I'm going for a Quinceanera party down there, and she says, "Oh, I'm going down to drill into some skulls with some cadavers."
Casey Grage: [laughs]
Sal Daher: My Quinceanera party was a whole series of parties, a football game. It was a tremendous weekend. Tell me about your weekend?
Testing the Drill
Casey Grage: Well, I don't know. Mine might compare. Sure, so we were doing a study with some neurosurgeons down there where we're comparing our Hubly drill to current standards of care. We've already done a study where we're comparing the Hubly drill with the hand crank. Now what we were doing in Miami is seeing how we would do an expanded markets in the operating room for these elective procedures.
Sal Daher: Let me just, slow this down a little bit and just explain. The existing hand drill is for emergency use only. There is perhaps a heavier, bigger piece of equipment that is for elective procedures, right?
Casey Grage: They use the hand crank drill in elective procedures as well, but there's also other options in the operating room.
Sal Daher: Okay. In the operating room with electric procedures, there's a bigger set of other possibilities.
Casey Grage: Absolutely.
Sal Daher: In emergency situations, there is not. It's just the hand drill. Please continue.
Casey Grage: Sure, so in the operating room, the standard for creating bur holes are the Medtronic, Midas, the Stryker Pi Drive, and the J and J ANSPACH. These drills have incredible ease-of-use features. They have really high satisfaction rates, but they don't have auto-stop. They don't stop automatically when they break through the skull, which is the feature you would most expect there to be in medical drilling. In fact, really the only option for auto stop even in the operating room is something called a cranial perforator, and it's sold by multiple companies. The problem with the cranial perforator is that it stops too early, about 15% of the time, and it doesn't stop at all about 1% of the time. When it stops too early, it cannot be restarted. Then the surgeon, the user just has to get a different drill, a hand crank, or one that does an auto stop and it defeats the whole purpose.
After seeing the initial data of the Hubly drill versus the hand crank, we decided that we think that there's a huge market for our technology in the operating room space for both orthopedics and cranial as well. That's what we were doing in Miami. We were drilling holes into cadavers, comparing the functionality of the Hubly drill with that of the perforator. I personally was pretty thrilled with the results of our product.
Sal Daher: That is tremendous.
Casey Grage: Thanks.
Sal Daher: You had a profitable weekend compared very favorably to both the hand-cranked device and the other devices.
Casey Grage: I think we have a pretty massive opportunity on our hands. Expanding into orthopedics, it makes our market size 10 times what it would be, if not more. Orthopedics is a huge, huge opportunity for us. Actually, they don't even use the perforator in orthopedics. The perforator is only for cranial. It's a pretty exciting market.
Sal Daher: What is the regulatory landscape like for a device of this time?
Casey Grage: We are what's called a Class 2 510(k) by the FDA. That essentially means that we have identified a predicate device. We've identified a drill that is similar to ours with fewer safety features. If we can prove to the FDA and make the case that we're just like this thing that's already on the market but better or no more harmful than, then we get an expedited regulatory pathway. That means we don't have to do clinical trials. We instead do cadaver studies, live sheep studies and then the standard like endotoxin testing for the drill bit.
Sal Daher: Wow.
Casey Grage: I just used a lot of words.
Sal Daher: No, this is interesting. Basically, because you are lapping an existing device that does basically what you do except your device does it better.
Casey Grage: We're not FDA cleared to say that, but that is the goal.
Sal Daher: But that's the theory, that's the working theory.
Casey Grage: Yes.
Sal Daher: Is that you are going to prove to the FDA.
Casey Grage: Right now we're actually just proving substantial equivalency. The first step is no less safe. Once we get clinical data, we hope to show that we are safer.
Sal Daher: Ah, okay. You're basically trying to show you're no less safe than the existing device and then as the device gets used in the clinic, information will come out that you hope will prove that your device is far superior to the existing ones and then you are--
Casey Grage: Exactly.
Sal Daher: That will drive adoption. Very interesting. You mentioned studies, you said there was a prior study?
Studies on the Hubly Drill Vs. Hand-Cranked Drill
Casey Grage: Yes. We also did a prior study comparing the Hubly drill to the hand-cranked drill. Of course, the hand-cranked drill doesn't auto stop. In our case we are comparing plunge depth. We did that out in New York. Confidential until we are published but basically that study established a statistically significant reduction in plunge depth with the Hubly drill, versus the current standard even when performed by experts.
Sal Daher: Are you at liberty to say that publicly?
Casey Grage: That I can say publicly. What I cannot say publicly is the hospital we are working with.
Sal Daher: That is extremely exciting. Just give me an idea how many of these drills that you expect to sell if things go right.
Casey Grage: Sure. Well, we're single use disposable. We could sell one per procedure that's performed in the US. Right now there are about 210,000 craniotomies performed in the US per year. That's our market size. Then once we go into orthopedics, that's millions and millions of procedures.
Sal Daher: Wow. How frequently do you expect your drill to actually break through to the brain? Do you have any idea how safe that is? Not that you're going to claim this but just ballpark.
Casey Grage: Sure. I can talk about our data so far. In all the studies that we've done, the auto stop has worked 100% of the time. As in the auto stop has detected at some point, yes, we have broken through bone and it stops drilling. It doesn't damage the patient, if the user breaks through the dura, that's just skin essentially. It's not brain tissue but it's better if you don't drill through it.
Sal Daher: Dura is?
Casey Grage: I apologize. I need to define my terms. Dura is the skin above the brain.
Sal Daher: You leave the surgeon to cut through the dura with a scalpel.
Casey Grage: Exactly or a needle or something else.
Sal Daher: The device that has auto stop, how frequently does that break through the dura?
Casey Grage: About 1% of the time.
Sal Daher: 1% of the time.
Casey Grage: Not clear data. I think some studies show 0.5%, others show 1%, and then very frequently that other device stops too early and then can't be restarted. Then they just get a different drill that doesn't auto stop.
Sal Daher: It's extremely promising. The early results you have hint at a very, very promising performance going forward.
Casey Grage: We will know much more once we are cleared and can actually gather clinical data because of course, all of these right now are in cadavers or live sheeps, not live humans. It's as close as we can get without being the real thing.
Sal Daher: Okay. Once again, the predicate device is the hand-cranked drill.
Casey Grage: Actually, no. I'm glad you asked. The predicate device is a drill that is battery powered for use in emergency craniotomy but it does not have auto stop. It's cleared, it is not currently the standard of care but it does have FDA clearance. That made a lot of sense to compare ours too because we say, "Look, we're also battery powered, handheld, but ours stops, and I didn't even mention this feature. We have an LED on the back of the drill which goes from green to red.
That tells the user basically how much force they're applying and if they're applying the correct amount of force. That just adds an extra level of control.
Sal Daher: Oh, Casey, this looks promising as if you would likely end up with a better user interface.
Casey Grage: Again, that's the goal. That is the goal.
Sal Daher: Awesome. Keep in mind, Casey is constrained. She cannot make claims about her device without FDA clearance.
Casey Grage: That's correct.
Sal Daher: This is extremely promising. Is there anything else that you'd like to say about the company and about where you are and where you're going because what I want to do is I want to do a brief promo, and then I want to go in the second half and talk about your journey as founder.
Casey Grage: We should talk about where we are in the FDA clearance process.
Sal Daher: Please do.
Casey Grage: Sure. We submitted our application to the FDA on August 5th. That means that we had completed all of our testing. We had written up hundreds of pages of documentation, many hundreds if not a thousand pages of all of our supplier information and the supply chain process and everything else. We have received our substantive review back from the FDA right on time, which is basically that's their initial review and their questions. I'll just say we were very happy with it.
It was one of the shortest substantive reviews possible, which is really, really good news for us. It looks like we're on track for the very standard 510(k) timeline, which is three to six months post submission. We submitted August 5th but I would say we're on track for November to February clearance.
Sal Daher: Far out.
Casey Grage: Yes. Pretty soon. Very soon and then we can sell. As the second we're cleared, this drill can be used in humans in the US. We're good to go. In the meantime, we've had-- this probably isn't surprising when you look at the hand crank but we've had an unprecedented amount of physician and hospital interest. We've even had inbound emails of hospital systems finding us, asking us if they can buy, which is really, really cool.
Of course we are not allowed to send out quotes, we're not allowed to talk about pricing, we're not allowed to do any of that but we have been collecting a wait list of folks who are interested, very interested, who will be first in line to get in on our limited launch.
Sal Daher: Now ahead of this, are you doing any work on the supply chain side so that in the likely event that you get your FDA clearance in January, you are ready to go. Then you can have a handful of devices on hand already packaged and ready to send out to the people who lined up and then, so really crank it up. Have you been working on that?
Casey Grage: We have. We're starting off with a limited market release because my head of sales and myself, we want to understand the whole sales process in and out. It's just going to be two of us doing sales for the first few months. We're starting off, we are going to have 500 units, 500 drills ready to go, 500 drills and kits. The kit has tweezers, sutures, things like that. Everything you need for the procedure, we'll have 500 of them ready to go when we're cleared and we'll work on selling those. In the meantime we have placed pre-orders for a lot of drills.
"... We want to know when we're going through the finance committees and hospitals, what kind of questions do they ask? What data do they need? Then we want to intimately know the users of our very first customers, and we want to be able to interview them after they use the drill..."
Sal Daher: Okay. No need to reveal any secrets but just what you feel comfortable revealing. You have a plan for having an adequate supply after your limited release when you're ironing out kinks and so forth, because it's a different thing to have a few trials here and there and actually have it in the hands of customers using it every day. You're going to learn tons.
Casey Grage: Right and I think the main thing for us is that we just want to collect as much data as possible in all aspects of that sales cycle. We want to know when we're going through the finance committees and hospitals, what kind of questions do they ask? What data do they need? Then we want to intimately know the users of our very first customers, and we want to be able to interview them after they use the drill.
"What did you like about it? What did you not like about it? Please confirm that it worked" and we want to be able to do that with all of our early customers. That's part of what we're vetting out when we decide who is on our wait list, is how willing is this institution to work with us to help us grow as a company.
Sal Daher: Is there any type of data that you could collect from the use of the device? Just monitor the use of the device?
Casey Grage: Absolutely, there's data we can collect with and without an IRB, that's an international review board. That is approval that you get in order to basically collect anonymized patient data. Without an IRB, we can interview the physician user and that's about it. We can ask the user like, did the drill work? The questions I just said. Did you like it? What did you like about it? If we have an IRB in place, then we can collect some of the patient demographic information such as their indication, age, sex.
We might be able to collect pre and postop MRI scans to see how successful the procedure was and compare patient outcomes and patient length of stay in the ICU, as opposed to the hand cranked drill standard of care. Those more intensive clinical trials are going to be really important when it comes to making additional claims with the FDA and being able to make those claims that we are safer.
Sal Daher: Okay. How about the performance of the device itself? Does it record how it behaved when it was utilized? Is there any way for you to keep track of that?
Casey Grage: No, the drill does not record data. We just need to ask the users how it behaved, and users also have a responsibility to report any problems with any device to the FDA. Actually, the user has the responsibility to report it to us, and then we have a federal responsibility to report that to the FDA.
Sal Daher: Tremendous. This is so exciting, so Casey, let's do this. Let's make a plan when you get your FDA clearance, get back on the podcast and we'll talk about that next stage. Then you'll be much freer to talk.
Casey Grage: Yes, that's true. I know I'm having to couch all of my phrasing.
Sal Daher: Your boundless optimism can be unbound.
Casey Grage: Exactly.
Sal Daher: Excellent. If there's nothing else you want to touch on, let me just do a brief promo for the podcast and then we're going to get you into your entrepreneurial journey.
Casey Grage: Sure.
Sal Daher: Okay. The Angel Invest Podcast is created as a learning exercise. It's a learning exercise for angel investors. It's a learning tool for founders, for people who are thinking of founding companies. It's like people learn or guess that they may be want to do something like this, but from hearing stories.
What we try to get here is we try to get stories about how people founded companies, what happened when they founded companies, so that the experience that these tremendously talented founders, these highly experienced angels have, can be shared for many thousands, tens of thousands, hundreds of thousands of people. If you, particularly like a podcast episode that you've heard, I urge you then to help spread the word. Go to Apple Podcasts and leave a rating, we hope a five side rating, and also a written review.
It doesn't have to be much, but just something, a few lines that expresses what you liked about it. A written review is important because the algorithm on the Google Play store, and Apple Podcasts, privileges reviews that have writing. Also subscribe to the podcast because we will have a continuing stream of very, very interesting founders and angels coming onto the Angel Invest Boston podcast, including Casey, who we hope in the new year will come back on and tell us how things went with the FDA. Casey, tell me, where are you from?
Casey's Entrepreneurial Journey
Casey Grage: I am from Virginia, right outside DC.
Sal Daher: Okay. What got you into engineering in the first place? How did you decide to become an engineer?
Casey Grage: I'm not really an engineer.
Sal Daher: Oh, neuroscience. Okay, I'm sorry.
Casey: I Studied software development. [laughs] No, I've called myself an engineer before because I, basically, I'm not an engineer by training. I was thrown into it because I wanted to make a drill and I just figured out how to do it with a lot of help along the way.
Sal Daher: Right, so you studied neuroscience and you study computational-- and computer science.
Casey Grage: Yes. Applied math.
Sal Daher: You're an engineer.
[laughter]
Casey Grage: Oh, if you say so.
Sal Daher: As someone who has three engineering degrees and never did any engineering, I confer upon you a title of engineer.
Casey Grage: Thank you.
Sal Daher: I have the degrees. You actually have done the work.
Casey Grage: I have some patents.
Sal Daher: I have patents. Okay, so together, then the right that I had to be called an engineer, I confer upon you, kind of like in the Wizard of Oz.
Casey Grage: Yes, I feel like I've been knighted.
Sal Daher: [laughs] You've been engineered. Ok, but how did you decide to go into neuroscience? Your choice of majors in college?
Casey Grage: I think when I was really young so I actually-- it's funny you should ask this because I visited my parents recently and my mom had me go through a bunch of old stuff, old junk that was in my childhood bedroom. I found this report that I had done for school when I was 10 years old. It was like, what do you want to be when you grow up thing. I said, "Hi, my name's Casey Grage and when I grow up, I want to be a neurologist. I want to study the brain and I want to act in Broadway plays during the summers."
[laughter]
Casey Grage: I think, I said lots of things. I said, I want to be a neurologist study neuroscience act in Broadway plays during the summer and write books throughout the year.
Sal Daher: well, you may eventually get to do that, perhaps serially.
Casey Grage: Maybe not the Broadway musical path, but the other two juries still out.
Sal Daher: Yes, off Broadway.
Casey Grage: Yes, there you go but anyway. Ever since a really young age, I've been super interested in the brain. Again, part of that is because I've had a lot of family members, basically every single person on my mom's side, has ended up being diagnosed with Alzheimer's or Parkinson's disease in their old age. Like many families, it's incredibly common, but I saw very intimately how that affected someone and how that affected the family so there was that impact lens for me.
Then I also just thought science was really cool. I always was very interested in that space, and then I decided to go at it from the engineering side rather than the physician angle because I love building stuff. I love discovering new things. I love innovation and that just made more sense with my skillset.
Sal Daher: Tremendous, so you got your masters in Computer science at Johns Hopkins.
Casey Grage: Okay, so here's my timeline. Basically, I studied at Northwestern, I did neuroscience.
Sal Daher: Oh, this is like an internship or something.
Casey Grage: Yes, NASA was just like a high school internship job thing I did.
Sal Daher: Okay.
Casey Grage: I'm from Virginia, so that was at NASA Langley but anyway.
Sal Daher: You dug under the fence and you got in.
Casey Grage: Exactly, so I studied neuroscience with a computational focus in undergrad. When I graduated I worked at JP Morgan as a software engineer for a bit before I went full time on Hubly. After the first year of Hubly, I decided to enroll in this master's in Applied and Computational math at Hopkins in their engineering for professionals program. It's for people who work full time, most of them have kids and it's one class at a time, nights and weekends. I'm in that program right now, I'm actually almost done with it, I have like two classes left.
Basically, I decided to do that master's because I realized after the first year working on Hubly, that I had absolutely no life or hobbies outside of my company and that was maybe not so healthy. Me being a huge nerd, I decided that I needed a hobby, and I decided that hobby should be taking a math class. I figured, if I'm taking a math class, I might as well get a degree out of it.
Then Hopkins happens to be arguably the number one hospital for neurosurgery in the world so it's also great, because we ended up doing a lot of work with neurosurgeons there now that I have that connection.
Sal Daher: Awesome, so it was basically a networking tool. [laughs] These hybrid professions that you're describing, you are going to be a neurosurgeon and then in the summers, you're going to be on Broadway. My younger daughter, actually, she is a singer and she has a great voice. She wanted to be a dentist who sang opera.
Casey Gage: Oh my God, that's exactly my 10 year old dream.
Sal Daher: Yes, she is about that age. Very interesting. Do you have like a model for entrepreneurship in your family, or if you figured that you have to create a company in order to pursue your goal?
Casey's Entrepreneurial Inspiration
Casey Gage: I do. Actually, my father is a serial entrepreneur, he's done a ton of companies throughout his time. Most recently, the one that's the most fun to talk about is that he owns the DC professional ultimate Frisbee team.
Sal Daher: [laughs] Wow.
Casey Gage: Yes. He became a majority owner when I was like 14, I think. I grew up with him starting up this brand new league, and this team and that was pretty fun but he's done multiple companies in data analytics, and software development as well as in sports. That was always kind of a model for me. Also, my dad's mom, my grandmother, she also started her own accounting practice.
At the time, she was a woman, a single mother, that was really-- she broke down a lot of barriers, I think to do that, and ended up with a very successful practice that she later sold when she retired. That was also a very cool model for me to work off of.
Sal Daher: You had your dad and your grandmother both had an entrepreneurial bent. This is really fascinating Casey. This is extremely promising, a very, very simple device.
Casey Gage: I think so but I'm also biased. I would hope I think it's promising.
Sal Daher: That is tremendous. Casey, I understand you've had some experiences where things didn't work out the way you expected. Where perhaps you might have considered that you failed, and then perhaps you found a different direction and that helped you. Do you want to tell that story?
Failure Builds Success
Casey Gage: Yes, I love telling the story because it's the only thing I get out of I think failure, other than learning, it's being able to talk about how-- help others maybe learn from former mistakes. I mentioned that I went full time on Hubly in December of 2019 and when I went full time, we had a proof of concept of the Hubly drill, it auto stopped, it was battery powered. It looks similar to the one you see today but the inner mechanisms of how it did that auto stop, were very different.
In early 2020, I hired my CTO part-time, and the plan was he was going to go full-time when I raised our first round. I plan to raise that round in May of 2020. He started at the end of February 2020, two weeks later, pandemic was declared. I decided times are pretty weird right now, basically, all investments shut down for a couple months because people weren't sure what was happening. I said, okay, Tyler, hang tight, just work part-time on making the MVP.
I'm going to apply for grants in the meantime, and I'll plan to raise money in September of 2020, maybe once things settle down. We did that. By September of 2020 he had an awesome beta product of the Hubly drill, we were ready to start doing, finalizing it and do FDA testing. I was gonna raise all this money, we were gonna hire this whole team of engineers and regulatory people. I lined up, I got all the warm intros I could. I lined up 50 investor meetings over the course of three-ish weeks or a month or something like that.
I got 25k from investor number three, I got 25k from investor number six, and then I got 44 "no's" in a row. At the end of those 50 meetings, it wasn't that I made a conscious decision to give up fundraising, it was that, I had run out of warm introductions. I didn't have anyone else that I knew who was in my rolodex to reach out to. I went back to the 48 investors who have said no, and of course, I had asked them before, why are you not investing?
They all say, oh, it's not the right time, COVID, but I went back and I said, okay, I really need constructive criticism. If you're not allowed to give me that answer. If you have to give me negative feedback about the company, what would it be? Across the board, all of them said, it's your COGS, your cost of goods, you are way too high, your price is too high compared to a competitor, your margins are too low. I will say I think that that was especially an issue, because of COVID, hospital started caring a lot more about their bottom line, but they were right.
They were absolutely right, that it wasn't-- again, I think it maybe could have made sense the business model in maybe a different environment, maybe not, I have no way to know but they were absolutely right, given the circumstances. My CTO Tyler and I made the very difficult decision to completely scrap the product that we had spent the last years, many years, well, Tyler spent a year building it and I had spent a couple of years before that building it.
We scrapped it, we went back to the drawing board and we said, it is not possible to lower these COGS anymore and therefore we need to figure out a different way of building this drill. I give all the credit to Tyler because he is a beast. He is a fantastic medical device engineer, he's done this with over 20 different products, brought them from idea to launch, and in three months he-
Sal Daher: Let's give him his full name.
Casey Gage: Tyler Panian. T-Y-L-E-R. His last name is P-A-N-I-A-N.
Sal Daher: Very good. Please continue.
Casey Daher: Yes. In three months, from October to January of 2020, Tyler managed to reduce the COGS by 85%. He just blew the assignment, the task at the water. In early 2021, I went back to those all of the investors that had said no, and I got our first major investment. I don't want to say it's been easy to raise money since then but it's been doable, we've raised like $2 million since then.
Sal Daher: Phenomenal. That is an excellent, excellent story of a pivot not in the market, but in the cost of your manufacturing of the cost of goods sold.
Casey Daher: Absolutely.
Sal Daher: That is interesting. That means that you're really paying attention to the supply side of this so that when the FDA clearance comes through, you're going to be ready to have a profitable product in your hand.
Advice to the Audience
Casey Grage: Exactly. I guess I'd say lessons learned from this is that I would have-- of all the things you have to pay attention to when starting a company is making sure you're solving a real problem with medical devices, making sure you're covered by reimbursement, making sure that you can have this nice predicate regulatory pathway, you have to include in their manufacturing, designing for manufacturability. I would talk to experts if I do it all over again.
I would talk to hospital customers, buyers, payers, not just the users and say, do these COGS make sense? I would have done that way earlier and I would have started over on the idea probably eight months earlier.
Sal Daher: Well, no, but I think you get credit for going back to these 48 people who said no, and actually getting them to open up and to tell you exactly. This is very important for angels. This is a really, really important lesson for angels. When you say no to a founder, if you're saying no for reason, other than just because you're not in a position to be writing checks, for example, in my situation, make sure that if you're turning the founder down because you think there's something deficient in the plan that she's presenting, that you express that. Don't spare the founders feelings, because you're not helping her by just being nice and sparing her feelings. These are grownups and if you tell them the truth, maybe there's a good chance, because founders are very resourceful people, that they begin to hear that over and over again and they will take that into account.
Casey Grage: Absolutely. Actually one of those angels of the 48 that said no, when I went back to him, his name is Nathan Childress, spelled, C-H-I-L-D-R-E-S-S. He ended up being one of our earliest investors, he put in a ton of money. The reason why is he said, "I love that you actually listen to feedback. I told you a problem, you fixed it, I'm in." He put in more money in our bridge around. He's a previous Medtech founder with exits. He has been a great advisor to me. I think he likes advising me because I actually pay attention.
[laughter]
Sal Daher: Coachable, the term is coachable. What angels look for is a founder who's coachable. [music]] Casey Grage, this has been just awesome, electrifying interview. I thank you very much. I look forward to a follow-up in the new year, in 2023 when you tells us with your FDA experience, okay?
Casey Grage: Sounds great. Thank you so, so much for having me. This has been a lot of fun.
Sal Daher: Listeners, thank you for listening to my conversation with Casey Grage, founder of Hubly Surgical. More to come in the new year about this amazing adventure of a startup that is creating a new way to drill holes in the skulls that stop just before it gets to the brain, to the skin that covers the brain, the dura. I'm Sal Daher. This is Angel Invest Boston. Thanks for listening.
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