Steven G Arless is a Canadian entrepreneur in the biomedical technology industry. He was the CEO of several medical device companies, including CryoCath Technologies, CardioInsight and Resonant Medical.
In 1971, Arless took a position with Smith & Nephew, a British medical equipment company, staying there for 17 years. He was CEO of the North American operations from 1986-1990.
Arless started his career path as a Medtech startup entrepreneur in 1996 when he started and built over 10 years CryoCath Technologies Inc, a cryoablation catheter balloon technology for AF (atrial fibrillation), which is now considered a clinical gold standard globally.
Arless relocated to Cleveland, Ohio in 2009 to become CEO of CardioInsight, a company marketing and advancing research in cardiovascular technology. Arless stepped down from his position at CardioInsight in 2012.
Arless co-founded medical device company, Soundbite Medical Solutions, which fabricated wire devices to treat occlusions caused by coronary and peripheral artery disease with shockwaves. Arless stepped down as CEO in 2017.
Arless is a Professor of Practice at McGill University.
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Scott Phillips Hi there. My name is Scott Phillips. I’m the host of a new video series covering the careers and lives of medical device entrepreneurial pioneers. And my guest today is Steve Arless. Steve is a real icon in the medical technology scene in Canada. He’s had a couple of big exits for hundreds of millions of dollars to strategic companies. He started his career in an unusual way for entrepreneurs as a big corporate guy. And he’s now on his third startup that I know of. I’m really fascinated to have a chance to talk to you Steve.
Steve Arless It’s good to be here and I look forward to the interview.
Scott Phillips You started your career in kind of an unusual way, but let’s actually take it back to your childhood growing up in Montreal. Was there any indication of your entrepreneurial future when you grew up?
Steve Arless Yes, going back to the age of 12. I came from a large Lebanese family and one of my uncles was a superb entrepreneur and a pioneer in his own field. I was fascinated by what he was doing and I would, even at the age of 12, pepper him with a lot of questions. I decided at the ripe old age of 12 that one day I was going to replicate Uncle Ramsay’s pioneering efforts in the medical field.
Scott Phillips No kidding. In medical? You already decided at 12?
Steve Arless Oh yeah. I knew medical was my my stick. And the reason for that is that my father was an extremely ill person throughout his life. And it hurt me to death to see someone I love struggle through life. It brought out the empathy in me and the desire to someday develop new technologies to help people like my father.
Scott Phillips That’s amazing. OK, so then when you went to school, you chose engineering? How did you choose that?
Steve Arless I chose that because my mother said that I was going to be an engineer and I didn’t want to disappoint her. At the time, I felt that engineering could be as good as anything else. Getting into the industry, and as I did a little bit of research back then, I started to realize that certainly in the United States a lot of the technical development team were engineers.
Scott Phillips So what was your career thought when you graduated from university?
Steve Arless Get into sales. Start to make some money. My Uncle Ramsey mentored me and he said, “The best way for you to really develop yourself as a businessman is to work in the trenches, to work with customers, to develop a process of listening to their needs, and translating them into solutions. So I started that way and I have no regrets about it.
Scott Phillips You went to engineering school, but even when you were studying engineering, you didn’t really have an idea you would do engineering per se.
Steve Arless No.
Scott Phillips That was sort of a good background to be a sales guy.
Steve Arless Correct. I wanted to be a business man. I want to be an entrepreneur. But back in those days, getting a technical base in your education didn’t seem to be a bad idea.
Scott Phillips Now you’ve got a fairly meteoric rise through Smith and Nephew. Can you talk a little bit about that part of your career?
Steve Arless Well it’s interesting. I mean the first 17 years of my business life was with Smith and Nephew. It’s kind of rare that you see somebody start a career and spend 17 years with one company. But interestingly, every two years when I got restless, the company promoted me. And then all of a sudden, five promotions later, I was the CEO at the ripe age of 35.
Scott Phillips Thirty-five?
Steve Arless Yeah. So that certainly put hair on my chest and wisdom in my head, because to survive in a large multinational with all the politics and the competition, certainly sharpened my skills as a business person.
Scott Phillips Any highlights of those years that were formative for you?
Steve Arless I think that what I discovered during my rise through the multinational ranks is that I wasn’t afraid to challenge status quo. I wasn’t afraid to challenge a pricing strategy or a new product. And oddly enough, most of the time I ended up being right. Perhaps that contributed to my rise to the top. The fact that when I did intervene, and when I did challenge, and when I did try to lead new thinking, it happened to be right most of the time.
Scott Phillips That’s remarkable. Now was there an R&D aspect at Smith and Nephew?
Steve Arless Not much, but I was in Montreal at the time. I was V.P. of Sales and Marketing in Canada but they asked me to lead a global team of R&D for advanced wound care. That was my first taste of innovation and research and development and interacting with researchers and doctors and translating their unmet needs into true value propositions. I really, really liked that process and I decided then (at about 31 or 32 at the time) that someday I wanted to do this on my own.
Scott Phillips Was this before Smith and Nephew went up against KCI?
Steve Arless Yes.
Scott Phillips So that whole battle came after that I know you were out of there.
Steve Arless I was there for the major acquisition of Richards Medical Company of Memphis, Tennessee. And certainly I was about 34 at the time and on this acquisition team buying a billion dollar plus business in the United States. That was really eye opening and a tremendous learning experience at a young age.
Scott Phillips That’s remarkable that kind of experience you can gain working. The research that I’ve done shows that really successful entrepreneurs in medtech tend to have corporate careers. Typically, not becoming the CEO, but maybe getting to a product manager level or something, and then go branch out into successful entrepreneurship.
Steve Arless I have to tell you something interesting. I was involved in five acquisitions in the States when Smith and Nephew went on an acquisition binge in the 80s. And what I started to realize is that when I was negotiating and doing due diligence with the CEOs of the acquirees, I kind of really envied them to be in that situation. And to be wanted by a multinational and to be at the receiving end of millions of dollars. Recognition for the hard work and the vision that they demonstrated over the years. I said “Well, I think I like this. I think I want to be on the other side someday.”
Scott Phillips That was really my next question. Here you are you’re having a meteoric career, you’re widely admired and respected.
Steve Arless Making good money.
Scott Phillips Making good money, having good security. And how did you know, what would compel you, to go take a bunch of risk and jump into a startup where you have none of that.
Steve Arless After five years as the CEO in Montreal, the company expected me to relocate to the head office in London in the U.K. I had to make probably one of the toughest decisions in my life. Do I go and stay and follow the corporate path (which was going pretty well) or do I make a tough decision and start to become an entrepreneur? Even though there was a ton that I still needed to learn. And I made it. I made the decision that this was an appropriate moment in time to make a pivotal change in my and my career. I was 40 years old at the time.
Scott Phillips Which is sort of it’s a great time. You’ve developed a lot of knowledge and experience and capability, maybe credibility with the big people who would be investing in entrepreneurial ventures. So let’s talk a little bit about the CryoCath transition and how you got involved in that.
Steve Arless Well it wasn’t directly transitioning from Smith and Nephew to CryoCath because sometimes these great opportunities just are not sitting there at your doorstep. So I got into strategic planning with an entrepreneurial strategic planning company in Montreal called ISO group. They were pharmaceutical strategic planning consultants and I knew that I had a network in medtech, which was a new up and upcoming field. We made a deal that I could use all the models, they would train me to be a stragic planning person, and that I would give them 10 percent off the top. That worked really well and I ended up getting Canadian strategic planning mandates, then some in the states, and ultimately a global planning mandate for a medical device company out of Sweden.
And at four years into that, the partners came to me because all of a sudden I was making more money than the partners. They said, “Okay, Steve, we think you’re ready to be a partner.” Coincidentally, right at that time, a headhunter from Boston approached me saying “Steve, we like your background. There’s a great new opportunity on the technology coming out of Harvard that’s moving up to Montreal. They’re looking for a CEO. That company, called CardiaCanada at that time, ended up being CryoCath, was another real tricky and difficult decision making point in my time. I was making more money than I could imagine as a strategic planning leader around the world, and now this startup, high risk salary cut (but a chunk of the company) faced me. That was another really big. The only way I could muster up the courage to make this difficult decision was to go back to my thoughts about Uncle Ramsey. when I was 12.
He had a huge impact on my life. Go back to my thoughts when we were acquiring Richards. And I said “Remember, Steve. You really wanted to be on the other side. Here’s your chance”.
Scott Phillips So you’ve had repeated times in your career when you’ve come to the edge and it’s a big, irreversible decision. And you jumped.
Steve Arless Jumped with my eyes closed, my fingers crossed, and my heart palpitating.
I have to tell you an interesting story. I took the jump with CryoCath and it was into cardiovascular, which I was new to. I was mostly an orthopedics and advanced wound care kind of guy. Three weeks into the new job. A big international conference in the states on cardiac electrophysiology was happening in Seattle. So I grabbed the prototype catheter. I got on a plane and flew to Seattle to seek a new life, a new venture. So I’ve managed to corner two key opinion leaders (KOLs), two Americans, with this new technology. I sat down with one of them and after I explained the technology to him, he put his hand on my shoulder, and he said “Son. It’ll never happen. You’ll never be able to do it. It’s like trying to build a snowball in hell.”
I didn’t feel very good after that session. I went back to the hotel wondering whether I made the biggest mistake of my life. Thankfully the next day I had another KOL luncheon with the chief of electrophysiology at Massachusetts General, Dr. Jeremy Ruskin, who ended up being my partner through the whole process at CryoCath. A real thought leader guru out of Mass General and Harvard. So I gave him the same spiel, a little bit different this time. I learned from the one the day before. And at the end of it he put his hand on my shoulder. And I thought “Oh my God, here it comes. I can’t handle two in a row.” And he said, “Son, we’ve been waiting for this for a long time. We need a safer, better way of ablating endocardinal tissue for arrhythmias. It ended up where when we got our first PMA approval, who was sitting beside me at the panel review in Washington, but Jeremy Ruskin.
And that was the first time that you’d ever had a conversation with him?
Steve Arless Yep. I didn’t know him. He didn’t know me. And it was I guess love at first sight. So to speak. One day when I was in Boston strategizing with him, he actually bought me a tie a silk tie. Usually industry buys. The direction of gifts goes the other way. So I was very honored by that.
Scott Phillips So you got em. So tell me a little bit about the state of the company when you got there and the strategic direction it had and maybe a few of the adventures along the way.
Steve Arless It had no strategic direction it had just been formed. There were three engineers. Graduates. They were making prototype catheters with Krazy Glue from Canadian Tire.
Scott Phillips This is a balloon. And you’re putting gas…
Steve Arless In the first place it wasn’t a balloon. It was just a straight, point ablation catheter. The balloon catheter, which ultimately was the exit rationale, would have been impossible to envision at that point in time. Impossible.
Scott Phillips But they had a way to cool the tip.? They were running liquid nitrogen or something?
Steve Arless Compressed nitrous oxide. And if you compress it to 14 atmospheres pressure, it goes down to the end of the catheter in liquid form through an injection tube. And then when it’s released into a vacuum at the tip, it immediately, through the pressure drop, changes phases from liquid to gas. And that principle is called the Joule-Thomson principle, which creates very cold temperatures.
Scott Phillips So you basically push it through a tiny orifice at the end.
Steve Arless You’re basically creating a little mini refrigerator in the tip of the catheter.
Scott Phillips So then you have it return path for the gas inside.
Steve Arless One of the challenges was trying to develop enough data and design verification validation data to ensure the FDA that injecting refrigerant at 14 atmospheres pressure into the left side of a beating heart was going to be safe.
Scott Phillips No big deal. I can imagine that took some doing.
Steve Arless I told the team I was smart enough to listen to a couple of the KOLs and I told the team, three months in, I said “By the time we’re finished the development process, I don’t want a doctor anywhere in the world to sit there and worry whether his catheter was going to blow up.”
Steve Arless And we succeeded to this day. People use thousands and thousands of products per week. And there’s not even a thought about the fact that you’re injecting high pressured refrigerants down flexible catheters.
Scott Phillips So let’s talk a little bit about the clinical strategy. I know that there were some challenges. How did how did you get into your clinical trials and what were you trying to prove?
Steve Arless The first step, the first clinical trial was just with a straight catheter. No balloons, no fancy things at the tip, just with a solid metal tip to freeze tissue rather than burning it, which is what the radio frequency ablation catheters would do.
Scott Phillips So you’re trying to find a pulmonary?
Steve Arless No, no. At the time, pulmonary vein isolation was unknown. That only came out as a way of ablating atrial fibrillation (AF) two years after the company was started. We weren’t even going to be in an AF company. It was going to be point ablation of arrhythmias around the atrial ventricular node. And the benefit of cryo there is that you could do something called Cryo mapping where you could take the temperature of the tissue down. Not to the supreme cold, but down far enough to see whether the electrical effect you were creating was the right one or not. And if you didn’t, you could move the catheter. And that was called cryo mapping.
So that was our niche and that was our value proposition. Now to do cryo mapping we were very concerned about controlling temperature and everything. But to our dismay, halfway through a multimillion dollar clinical trial, after I think 90 patients out of a cohort of 225 had been treated, we got some interim data that suggested that the design wasn’t creating enough cooling power at the tip inside a beating heart. Again the concept of Snowballs in hell. Because the beating heart, and the hot blood in there, is an extreme challenge when you are trying to freeze tissue versus burning it.
Scott Phillips So 90 patients and you’ve already spent 10 million dollars or so on this trial.
Steve Arless Millions for sure. And so I had to make another gut wrenching decision to stop the trial. And I think my salvation at the time is that I was totally transparent with the board of directors. I merely called an emergency meeting of the board. I was extremely transparent of the problem, the issue, and the way we were going to correct it with a specialized task force. I was bringing in experts from outside to help me and the team solve this as quickly as possible.
Steve Arless It took about a year to solve it. We put the trial on hold. The board was gracious and understanding and bought my plan. And it worked out.
Scott Phillips Did you have enough runway to be able to work through all that?
Steve Arless Yes we did. We did a Series A fairly quickly after I joined. There was not very much money in the bank from a seed round. Basically I did a Series A that was unheard of at the time. Which was seven different VCs, three American, one European and three Canadian.
Scott Phillips That’s a lot of work.
Steve Arless When you get seven lawyers and seven VCs in one room trying to agree on one term sheet. I didn’t know what I was getting into. We end up closing that round on Christmas Eve.
Scott Phillips Nothing like a deadline.
Steve Arless A deadline like it’s Christmas Eve. Hey, guys, we have other things to worry about. So we closed it on Christmas Eve at nine o’clock. My wife (and at the time I had no kids, I was rather young) was at a Reveillon, a French Canadian celebration on Christmas Eve. I told her to go there without me and I might see her there later. So we closed. And the funny story is that I ended up, I put seven checks in my pocket totaling 12.5 million dollars. And I went to the part of the party and I was showing them, “But look at the checks even”. I was the head of the party.
Scott Phillips I hope so. I think you said you had another clinical trial that gave you some challenges as well.
Steve Arless Yes, but we were able to identify the challenge and respond to it earlier and faster. Let me get philosophical and wise for a moment. The key that I’ve learned from my days as an entrepreneur is that you have to create an organization that anticipates. Any organization in a startup that assumes you’re going to have a problem-free development life cycle is mistaken. So the key is to not sit and wait for a problem to happen, because you know what’s going to happen. You anticipate the problems and you have potential strategies to deal with these anticipated issues if and when they surface. One of my themes now throughout the rest of my career in startups is creating an anticipating organization, not a trusting one.
Scott Phillip Let’s talk a little bit about the relationship with strategics. At some point you started a dialogue. Was your strategy?
Steve Arless Get them involved in what you’re doing as early as possible.
Scott Phillips How did that happen in this case with CryoCath?
Steve Arless It was a combination of a number of things, but through the KOL network that I had surrounded myself with, the scientific advisory board members who knew all the big strategics, and through the some of the American VCs on the board who knew the strategics. You just network and set up meetings, and then you keep them regularly appraised. You certainly make them know behind the scenes that you’re not just talking to them. A little bit of competition never hurts anybody.
Scott Phillips And so you were in dialogue with two or three.
Steve Arless Um, four or five.
Scott Phillips At the time there would have been four or five influential intervential cardiologists.
Steve Arless Four or five typical leaders in the field. Boston Scientific, Medtronic, St. Jude J&J, Biosense Webster. The typical cast.
Scott Phillips Tell me the story of how you got from your point catheter to a balloon.
Steve Arless That’s a great question. It was an iterative process of two iterations. When Michel Haissaguerre, probably the world’s most famous cardiac electrophysiologist out of Bordeaux France, when he published a landmark paper in the New England Journal of Medicine in November of 1998 I remember very well. I could probably recite it to by my memory because it was a a game changer for the industry. He said “Hey guys, we figured out what causes atrial fibrillation.”
And it was a very an unlikely etiology. There were actually electrical triggers originating in the pulmonary veins that migrated into the atrium that caused atrial fibrillation. We were always looking for triggers inside the heart. But in this case the triggers were outside the heart in the veins. So the theory was if you could electrically isolate, by creating a ring of non-conducting tissue at each of the orifices of the four pulmonary veins going into the left atrium, then you could stop the triggers and cure arrhythmias.
And lo and behold that was the case. Unlike radio frequency energy where you can drag and burn, drag and burn, drag and burn. Cryo sticks like a tongue on a railing in the wintertime. We couldn’t drag it. So making a ring of frozen tissue was too time consuming and too painful. We actually created a long, linear freezings tip ramp that had nitinol in it and had memory. You inserted it through a sheath into the heart, but it had memory in it, so that when you opened it up in the heart, it looked like a pigtail. You could take the pigtail in, place it in each orifice, and turn on the cold. And the theory was that you would create, through one ablation, the desired effect. The first case, which was in London, Ontario with Dr. George Klein, was an unbelievable success. I left the cath lab with my feet not touching the ground. Unfortunately, the next nine cases were failures. And then when we sat with our advisory board and understood it, we realized that all the blood going through the middle of the pigtail as the heart was beating, was offsetting the cooling effect. We were not really creating a ring of non-conducting tissue was only superficially being created. There it is – a snowball in hell again.
So that’s when we said “Well how do we deal with this hot blood?”. At a brainstorming session one day with the engineers, and the advisers, and the KOLs, we said “Why don’t we stick a balloon inside the pigtail? Stop the blood flow temporarily and let the pigtail work.” And that concept started our thinking, which ultimately ended up in a balloon. But the technical challenges of inserting a balloon that expanded to 30 millimeters, then retracting it out of that same sheath and creating a safe balloon environment in the left atrium was probably the biggest technical challenge that I’ve ever had to be part of.
Scott Phillips But then you started having good clinical results.
Steve Arless Good clinical results. We started to gain momentum. During the whole process the word got out that we were probably on the verge of the next solution for atrial fibrillation in the world. And that’s when our bankers approached us to say now is the time to go for an IPO. I must say that one of the most exciting and enjoyable experiences, exhausting but enjoyable and exciting, was the IPO we did in 2000.
Scott Phillips Which exchange did you go public on?
Steve Arless The Toronto Stock Exchange. It ended up being very successful. Oversubscribed. And we raised, for a Canadian medtech startup, nearly 50 million – which was pretty big at the time.
Scott Phillips I know that company ultimately was sold Medtronic. So how did that all happen?
Steve Arless I mean we got lucky. We were able to get approval of the balloon catheter in Europe pretty quickly at the time. We organized 20 German sites. We forgot about the United States. My goal was to get 20 German sites buying the product in an organized, post-marketing study, joining the data, and then publishing that and giving it at one of the Heart Rhythm Society meetings. That was done in 2009. And within six months of the Germans publishing that data, we were acquired.
Scott Phillips Oh my goodness.
Steve Arless There was a bidding challenge between a number of the strategics at the time. So that’s the story of CryoCath – a great, great experience.
Scott Phillips And to this day CryoCath is still in Montreal and it is sort of a legacy that you built.
Steve Arless It employs almost 750 people in Montreal producing 3000 to 4000 balloon catheters a week. That brings me so much joy to think that we can build something up, create good quality jobs in Canada, and be distributing this technology and curing people of AF around the world, including China.
Scott Phillips Let’s talk about your next venture. I know you’ve had a few and what are the circumstances that got you involved in that company?
Steve Arless After the CryoCath sale, I was sort of known as an arterial physiology leader. And there was an AF mapping company in Ohio at the Cleveland Clinic that was in trouble. The venture capitalists called me up, and invited me in, and basically say “help”. I could see that it was really in trouble. There was no cash left. So I negotiated a deal. There was one V.C. out of Pittsburgh driving it. Negotiate a deal for some bridge financing. I would participate because I could now. Within three years, basically turned that around.
Scott Phillips Was the strategy obvious? How did you figure out?
Steve Arless It was figured out with my KOLs again. Because it was in the same field as my previous company, electrophysiology, I already had the world class network of key opinion leaders. So I quickly brought them together when I was parachuted in. I realized that we were going down the wrong path.
Scott Phillips What was the path?
Steve Arless They were going to find a better way to map biventricular pacing for congestive heart failure. I knew that the real hot and sexy space right now was atrial fibrillation and I decided we were going to become a one stop, non-invasive bi lateral mapping system to map atrial fibrillation which had never been done before.
Scott Phillips Sort of beginning with the end in mind idea, you knew what the acquirers would be interested in. So you pivoted the company to where the market was.
Steve Arless Yeah. And with the help of the KOLs who also talk with the strategics. I always say that the fastest way to a strategics’ heart is through their KOLs.
Scott Phillips Right. Yes, that’s very true.
Steve Arless] Because these big infrastructure companies really rely on their key opinion leader network to decide where is the new technology, where are we heading, and what’s the right thing to buy.
Scott Phillips So now this was a wearable like a vest?
Steve Arless A wearable, disposable 250 electrode vest that you could put on. You could actually even map the patient the day before in their room before the procedure. Tthe map would show regions where the triggers of persistent atrial fibrillation were occurring and they would develop their ablation strategy. And you would go in and boom within an hour and a half, the patient was treated.
Because mapping was so poor at the time, the success rates for persistent atrial fibrillation ablation, which is different than paroxsymol, which is what we dealt with at CryCath, the rates were about 40 to 50 percent best success rate. With our technology, which we were able to prove in a ten site multi-center study in Europe that the ablation rates and success rates went up to 75 to 80 percent. Literally doubling them with a non-invasive, preplanning mapping technology.
Scott Phillips Did you have the change the technology too? Or was it more market?
Steve Arless We had to change it completely, including all the software and the single processing capabilities, because we had to pick up P-waves on the body surface that were extremely weak and we had to go through loops to get the ability to map on the body surface to that level of precision on the heart.
Scott Phillips I can see why your engineering background allowed you to become successful. You’re talking so comfortably about all the technical challenges.
Steve Arless Didn’t hurt. The minute that we were able to prove this, Medtronic again ended up being the acquirer of that technology and I was very happy about that. I think of all the strategics in the world in the cardiovascular space, the most professional of them all is Medtronic. So I’m very happy and proud that my first two technologies ended up in the hands of the most competent polished and professional strategic in the world.
Scott Phillips And, what was the point you had to get it to to be able to establish the value for them?
Steve Arless That you could show in a multi -center study, in a post marketing multi-center study where they’re willing to pay for the product, they’re showing adoption. Because one of the key things that differentiates clinical studies, you know preclinical or clinical studies before regulatory approval, from post marketing studies is that in a post marketing study you can still get the same quality of data, but you’ve taken the validity of your initiative beyond the clinical acceptance phase into a quasi-commercial situation where you can demonstrate adoption at a certain price point. Those are the things that the strategics look at when they’re making a determination of whether this is worth acquiring or not.
Scott Phillips You’re on the market. But you weren’t pushing sales too hard.
Steve Arless Nope. We’re only concentrating on those 10 to 20 strategics.
Scott Phillips You had a CE Mark. You were allowed to sell in Europe. But you were really just using that as a way to be able to do customer studies.
Steve Arless Yeah. I call it strategic commercialization. It’s what I teach at Centech, the accelerator where I’m an entrepreneur in residence now, which I’m loving. But the days of I call it “spray and pray, you know get sales wherever you can.” Those days are over. It’s too costly and it doesn’t impress the strategics, which are ultimately your exit opportunity.
Scott Phillips Right. They know they’ve got good salespeople.
Steve Arless They don’t need you to show them that you can sell it. They need to see that the KOLs are adopting it in a quasi-commercial setting.
Scott Phillips I know that was also a good exit for hundreds of millions of dollars. That was the second company that you sold for hundreds of millions to a strategic. So it’s remarkable.
Steve Arless In a lot less time too.
Scott Phillips What was the total time?
Steve Arless Five years.
Scott Phillips OK, so there you are a king of the world, you’re in Montreal just had two great exits.
Steve Arless I came back and started thinking about starting a medtech fund myself. I saw the need for a dedicated venture fund in Canada for medtech. I thought I had the credibility and the experience to maybe pull it off. But the market really wasn’t ready for it yet. The Canadian market still didn’t believe that medtech was a big enough opportunity on its own right. I was approached at that point by the University of Sherbrooke, and some early stage venture capitalists there, to look at an interesting technology there called the shockwave technology which could be generated in a very elegant, controllable fashion. I went in there as an advisor, consultant to evaluate things. And they said “What do you think? We can make with our technology a smaller, cheaper lithotripsy device.”
“Smaller, cheaper” is not in my vocabulary – my entrepreneurial vocabulary. Not enough to drive it into the market and to be acquired by a strategic. So I said “let me have a look at this.” I went back to my network again, cardiologists and cardiac surgeons. And I talked to some urologists too about this and they go “Well yeah, interesting – smaller, cheaper – but what am I going to do with my million dollar machine that I just bought?” That’s not a good thing. I saw that there was this growing awareness, an opportunity for better management of calcium in the cardiovascular system and that the interventional world was starting to realize that the real problem is calcium not plaque.
And shock waves and calcium go hand-in-hand just like they did with lithotripsy and kidney stones. So I went back to the professor and his two PhD students. I said “If you could convert the technology, figure out a way to deliver it down guide wires and micro catheters, and go through in a proof of concept – some kind of a human plaque – we have something.” And they tried and tried and I wouldn’t give up. I wouldn’t compromise.
And finally 18 months later, Martin Brouillette, my co-founder, called me up and said “We got it.” So I went there in the bowels of the engineering labs at University of Sherbrooke. They had set up an ex vivo artery full of calcium from an amputated leg of a diabetic. And they showed me with a crude prototype system that they could get through it like a hot knife through butter right. So I go “That’s it. Take a video of this.
Next month, there’s a big CTO (chronic total occlusion) conference led by Marty Leon in New York – a famous cardiologist. He knew me. So we got an audience with him. Showed him the video and the rest is history. Four years later and 40 million dollars and two series financings, we’re well on track to having a very successful new technology.
Scott Phillips Once again you pivoted the whole company in a direction that…
Steve Arless Well it wasn’t even a company. I pivoted a professor and to PhD students. It’s hard to pivot three academics without having the clout of being the CEO and having money and capitalists. But they were smart enough to listen and go after it and you know 18 months later…
Scott Phillips Do you have any sort of broader insight you’d like to talk about? Advice that you give to entrepreneurs?
Steve Arless Yes. Obviously as the entrepreneur in residence at Centech, which is the accelerator that I lead in medtech in Montreal. There’s a couple of things that I preach. Number one is don’t rush to sales. Don’t succumb to pressures of less than smart investors who only think that sales are a validation of your technology. Which is totally wrong.
The second point is that I’ve actually had to save one company that rushed their alpha product into the market and sold 20 systems to the first 20 guys that showed up. They weren’t ready. The technology wasn’t ready. And it was a mess. So I was parachuted in to clean it up. I don’t want to ever see that happen to one of my companies. Don’t rush the sales. Think strategically when you do get into sales. And don’t cut corners.
Scott Phillips Right. Any parting words you’d like to share with our audience?
Steve Arless No, I just want to compliment you on the fact that you’re doing these series. I think it’s great for the Canadian medtech industry and for the medtech industry as a whole.
Scott Phillips Thank you. Thanks so much. It’s been a pleasure.
Steve Arless Thank you.