Preparing to Compete in a New Digital Marketplace
Scott Carson is the Founder and CEO of MRP, a new kind of marketplace for medical products. Scott has been involved in several ventures that have innovated and developed new distribution models. He was part of the team that built the eBay Healthcare Marketplace strategy and structure, and was the Founder of US Medical, the first internet distributor of new and pre-owned capital medical equipment to the healthcare industry. In this episode Scott shares why early attempts to apply the internet to healthcare failed, how to build a successful marketplace, why the solo practitioner is at a disadvantage when purchasing medical products, the evolving role of salespeople, why marketing is becoming more important, and what people within the industry need to do to prepare for potential disruption.
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Episode Transcript
This transcript was generated using an automated transcription service and is minimally edited. Please forgive the mistakes contained within it.
Patrick Kothe 00:31
Welcome! Do you think the people at Blockbuster did a good job preparing for disruption in their market? What about yellow taxis? Or what about your local mall? On the other hand, when you hear about Netflix, Uber or Amazon, you know that they've really become household names. Every time there's disruption, there's going to be winners, and there's going to be losers. Sometimes what separates them is their openness to listening, learning and adapting. Are we in line for some some more disruption within the medical device market. My guest today is Scott Carson, the founder and CEO of MRP, a new kind of marketplace for medical products. Scott's been involved in several ventures that have innovated within the the distribution model. He was part of the team that built the eBay healthcare marketplace, both strategy and structure, and was the founder of US medical, the first internet distributor of new and pre owned capital medical equipment to the healthcare industry. In our conversation, today, we discuss why early attempts to apply the internet to the healthcare field failed, how to build a successful marketplace. Why the solo practitioner is at a disadvantage when purchasing medical products, the evolving role of salespeople why marketing is becoming more important, and what people within the industry all of us need to do to prepare for potential disruption. Here's our conversation. Scott, you've been involved in disrupting the marketplace for a couple of decades. Now, I'd like to have you take us back to the mid 1990s. priority is to you founding US medical, and kind of explain to our listeners, what was going on in the marketplace at that point in time and why you thought it was open for some disruption.
Scott Carson 02:45
So Pat, you've taken me back a long way. And but some of this is still very vivid. And I remember, we were so excited back then about fax back, which was a technology where a customer might see direct mail piece or a journal ad or handout at a trade show. And it might have a series of products that you can get information on by calling a number and then you would pick whatever product or service you were looking for and put in your fax number. And then you get this long fax of the information kind of on demand. And about the same time there was these rumblings and rumors about this thing called the internet. So we kind of started to investigate a little bit. And we found out the entire world was kind of pivoting towards this place that was not much unlike the metaverse or crypto that we look at or hear about today, where it's very foreign and unique and exciting. And lots of things are happening. And we all kind of started moving there. And the world kind of just changed overnight for healthcare. There was this belief that healthcare was going to change instantaneously. And efficiency would be created everywhere within hospitals, and with clinicians and with equipment and services and EMRs. And because the internet was this amazing, incredible thing. And it was just going to take over our lives. And I was actually telling somebody about this yesterday as it relates to fundraising. There was so much enthusiasm, excitement, and even people that were working for other companies were trying to find a way to get themselves involved in this kind of euphoric change in the way we were going to do anything in our lives. And in health care. At the time, you mentioned US medical, we were able to attract the previous CFO of Baxter. We were able to attract the current Chairman and Chief Executive Officer of Blue Cross Blue Shield to be our operating officer and chairman and a number of other big name leaders came on board in this wasn't just With Us medical, it was with a lot of different companies, many people remember Nia forma and medi buy. But all of these companies just came out of nowhere with no revenue, and no real strategy, just this idea that the internet was going to change everything and healthcare. And when I referenced a moment ago about fundraising, money was just pouring in for these businesses. And I remember we went on a fundraising trip to Europe, and we went to Paris and Geneva, and Zurich and London. And we would be in these meetings and just mentioning that we had an idea on a napkin, and it was in healthcare and the internet, and the investments would just flow in and you would focus your on hiring people for this imminent, and instantaneous change that was going to take place. And interestingly, actually didn't happen. It just all fell apart. And none of the companies not a single one, actually made it out. Because there was just massive and infrastructure, and no real business plan and no idea how you're going to make this change from traditional health care to the internet health care.
Patrick Kothe 06:11
Yeah, and the thing about health care, I think we all recognize is, things don't change rapidly until there's a real precipitating event that occurs. And then it does. So there's a long time between something changing and then it changes fairly rapidly. So as you described, you know, the euphoria going on in the mid 90s, for all things Internet, and somehow we're going to do something in the medical space with this with this internet thing. What what has evolved, specific to the marketplace, from the mid 90s. Till now,
Scott Carson 06:50
if you look at it, just from the kind of just do the math, if you think about when I speak about the digital, or the digitally native clinician, or the digitally enabled or native administrator, the people today that are coming into practice that are starting to run departments or start their own clinics or being given a department head role, are in their mid 30s. And these are people that were grown grew up with immersed in technology when they were very young. And even someone just five years older, wasn't really, for the most part a digitally native individual. And so now, the people that are the clinicians and administrators are starting to run running healthcare. This is really what they know. And this is how they interact. Now many of us like me, and you, Pat, we've adopted it, we've got very good at Amazon, and very good at Uber, and very good at resetting things as it comes to computers crashing and all the things we do. And we now know how to go to, you know, the MAC store and get help and things like that at the Apple Store. But these people that I'm speaking about really grew up with this being part of their lives. And this is I think, one of the big differences between what happened, what's happening today, or what could happen today. And what started to happen 2025 years
Patrick Kothe 08:10
ago, I think 2025 years ago, you mentioned it, it's you know, what was the strategy? What were you trying to do? It's kind of like, Hey, I've got this new tool, we're gonna we're gonna build something. But what's the problem? You know, what was the problem that was being solved? And how are you going to do that? And and I think that when you look at the traditional medical model, and kind of how we've, we've been behaving as an industry for a while, it's, you have people that are providing technology, they take that through the hospital, through the supply chain, people have got sales people, direct sales, people, distributors, that are walking product through exposing people to, to technologies, educating, selling to clinicians, and then we've had the IDN revolution and the buying group evolution. You mentioned Baxter earlier, and about around 2005 of the big companies formed their own global healthcare exchange, to to be able to market products a little bit better from a supply chain standpoint. So we got all of these historical forces within the medical device industry, and that becomes kind of the marketplace that we've we've been working in, but you've got some other thinking about how that supply chain in essence can be compacted. So can you explain to me a little bit about what you're thinking about when when I say digitization or a new marketplace? For medical device?
Scott Carson 09:57
I sure can and I want to go back to just something Then you said at the beginning of, of kind of presenting the question, which was this idea of what problem overs were resolving. You know what, there wasn't any discussion about the problem you were solving anywhere in fundraising and strategy sessions. In go to market, none of the things that you would think about today, if you were trying to drive greater customer experience, or drive additional profits, or, you know, greater supply chain efficiency, none of these things actually came up, it was just, we knew there was a change. We knew we needed health care and technology leadership. And we just had to get there. And I think that was one of the big problems is no one actually thought about what we were going to solve. And you talked about this exchange between Baxter and some of the other companies. That actually was I think it was called GH, GH x, if I remember correctly, and that actually one of the companies that came out, and this will give people some perspective, I think, when it went public, it was the only company that went public, it was called Nia forma. And Nia forma had $1 million in top line revenue. And I could have this wrong, because it's been a while. But I remember it went public for like two or $3 billion on a million in revenue, to even say that out loud, is just not not net income, not income, just gross revenue. And the idea that that kind of valuation really shows the kind of level of insanity regarding people jumping in the space without any idea of what problem we are going to solve. So as we look at the market, today, we are looking specifically at solving problems. And I think it's not just limited to me, I think you're seeing all kinds of emerging companies are really on the fringe, of breaking through and starting to become very aware to the conditions and administrators that are making purchasing, purchasing decisions of products and services. And what I mean by that is, we all have this kind of innate expectation now, of information being delivered to us for anything that we buy, or engage with in our personal or consumer lives, of how that information is going to be delivered. For example, when we go to Zillow, to look for a home, we have a certain experience, and we have a certain expectation, and that experience and expectation almost improves daily. This is true of Yelp, this is true of Amazon, look at the way that Amazon almost reads our mind based on the data that it's pulling from us on our searches to deliver what it is that we might be looking for, to almost get ahead of our decision process. So we have all of these expectations in our consumer lives, and also in our business lives as it relates to the it that we use to interact like you and I are right now. And yet in healthcare, we don't have a lot of that especially in healthcare purchasing of products and services. So I think these tech stacks that we've now experienced Are we are we utilize and experience every day, there is an expectation that this needs to occur in healthcare. And so I think this is the change that's occurring is we're going to see a rapid delivery of content and that content is going to be peer to peer reviews rather than to rep to clinician reviews or administrative reviews. We're gonna see flat rate pricing across the board, we're gonna see good, better best pricing, we're gonna see less manufacturer centric companies and more, and ultimately nothing but customer centric companies, manufacturers and service providers, service server serving clinicians and administrators, we're going to see uptime, service ability costs, downtime, all of this information being presented in an open format, where clinicians and administrators can make the best decision based on the practice or hospital needs.
Patrick Kothe 14:00
So let's talk about your experience in creating companies that are disrupting marketplaces. Let's talk a little bit about that.
Scott Carson 14:11
Sure. I'll be the one that that people would have the greatest familiarity with is eBay marketplaces, eBay marketplaces started out and I love telling the story about Pez dispensers and Beanie Babies. And eBay started out really doing a certain amount of silliness and probably closer to Etsy than it was the kind of practical and collectible marketplace that it's become today, as well as motors and tractors and so many other things. eBay started out, getting a lot of traction growing very quickly. We became aware of it very similarly the way we did Amazon almost overnight. This goes back to the beginning of our conversation, just how certain markets just exploded. And we expected that this would universally happen. In a lot of markets didn't explode. But eBay did take off. And eBay had a lot of Moxie back then they just felt like, well, we can jump into any market, it doesn't matter what it is. And they jumped into real estate and really didn't do that. Well, they jumped into live jewelry auctions and wasn't necessarily the market that they thought it was. They jumped into health care, they jumped into sneakers, they jumped into tractors, as I mentioned, there was all kinds of ways that eBay was trying to find ways to grow their business beyond the beanie babies and Pez dispensers. And eBay reached out to me, given my experience with companies like us medical and said, Hey, could you come on and come to the E Bay and San Jose and the West Coast and help us create the categorization and the pricing and the structure and the experience, I went there, and it was just a great experience over several years and kind of creating that, that platform, which we know is eBay healthcare, which never really fulfilled the promise that we initially designed. And I'll give you a market that did take off that was really a fundamental change, that revolutionized the way that we buy automotive motor models and parts and services. In that sector. eBay Motors started out as just a dream, it was initially a picture of a car. In some HTML code, you actually couldn't type in your description, you actually had to code it in. That's how I knew it was. And eBay Motors was competing with autotrader. It was competing with a company called Auto buy, tell another digital kind of platform was competing with local newspapers. And it was doing okay, but it was really just doing okay on a regional basis, meaning if somebody was in San Francisco, and there was a car posted in San Francisco, meaning a buyer and a seller, a consumer and a producer is what they're defined by Clay Christensen is they were right there and they could go look at the car they could meet, just as we did, we would if we bought it on autotrader or, or founded auto trader, or we found it in the newspaper. But where this became challenging is if you were in Denver, and the car was in San Francisco, you probably unless it was some kind of plastic car, we're not going to fly to go look at it, it was really cost prohibitive, didn't make a lot of sense. You weren't going to drive it back. And so he Bay started to realize this, that they were never going to get velocity unless they started to create trust. And we defined these trust enablers as enablers, what is going to enable a consumer to interact with a producer in this case, a person selling a car in a way that would create velocity. And these became known as things like transportation, once they put transportation in place that made it easy for somebody to to buy a car in another state or another city. They put in finance. And so instead of having to go to your bank that might have been reluctant to finance a car that was in another state, they found finance companies that had an appetite for that. And you have to manage the risk on that. They needed things like inspection and so they set up networks where cars could be inspected. They did Carfax ultimately, when Carfax came along, and today, if you go to an eBay, motors, template or a listing, it's filled with information. Some of them even have virtual demonstrations. And when eBay started, it was selling just a handful of cars E bay motor started. And since its inception, it's sold over 5 million cars. People don't really understand that eBay was really the genesis of the entire online automotive experience that we have today. And the difference between healthcare Pat and automotives is we were ready for that we it was a little less restrictive. from a regulatory standpoint, it was a little bit easier. It was consumer driven. There was a real need to see you know, if we can get the right car, the right color, the right miles right model would be willing to take a little more risk. So kind of hit it at the right time but exploded. And now getting back specifically to your question about where this kind of came from as we looked at eBay, healthcare, a lot like eBay Motors, and we tried to kind of mimic or copy a lot of the successes early on. But what eBay realized is, is it really is a practical and collectible marketplace, and it's not a healthcare marketplace. And so they ran into two barriers, one of them was, is that customers wouldn't really go there with a serious eye of capital medical equipment or non capital such as autoclaves and other things. And the other thing is manufacturers and clinicians didn't want to put their products on eBay because it really didn't have kind of the health care legitimacy that I think a marketplace in our space needs to have. So there was really two big barriers and then that ended up being capped. I think today it's about 600 million, which as you know, is such an In significant amount of sales annually of any, you know, in any sector of healthcare,
Patrick Kothe 20:07
and it's kind of interesting too, is you can go on to Amazon right now. And you can buy certain categories of medical devices on there, but not all categories of medical devices, probably because it's a more general, a general marketplace. Let's talk a little bit about MRP. What you guys are doing and how you are creating a different marketplace in a finite area. You know,
Scott Carson 20:35
I'll just spend just a minute and thanks for asking, but I'm going to go back to Amazon for a minute, you know, Amazon could very much be a major player in the healthcare, equipment and services space. And obviously, you can never not take Amazon seriously, they surely have broken into a lot of markets that nobody ever would, you know, thought they could look at, you know, Amazon Video, they have stepped into markets that no one thought they can be competitive. And so, you know, we have to appreciate the power. And really the scalability of what Amazon could do in any sector. But people again, no, Amazon is a consumer marketplace. And also, Amazon doesn't necessarily have the regulatory experience to appreciate or understand. And even if they were to potentially acquire it, there is a level of understanding of what clinicians and administrators and hospitals need, that consumer marketplace may not be able to address, even if they were to acquire it. And again, this is one of the big barriers that I think some of these existing marketplaces will bump into. And then the last thing I'll say on that is, we started to see the segmentation of marketplaces, meaning we don't go to Amazon, if we're looking for a rental, we go to Airbnb, if we're looking for some form of home good or custom, good, we don't go to eBay, we go to Etsy. So we're starting to see now segmentation of specialized marketplaces that are serving specifically what's the consumer and the producer or the non producer and the non consumer, these people that are new to the market generally start to thrive in markets that are specialized.
Patrick Kothe 22:23
So as far as specialization goes to come back to the question before, and the question before is, what's the problem? What is what is the problem? Why would you create a marketplace, within a specialty or a certain type of product category? What drives that customer need? And what drives you to form a company around that customer need?
Scott Carson 22:48
Well, as we looked at, as we looked at the problem, going back to something we talked about a little bit ago, when we looked at, you know, what is the problem, we see the clinicians, physicians, dentists, nurse practitioners, the list is med spas. And I'm not purposely leaving anybody out the list is gigantic of the conditions that we see on a daily basis is, as a community, I mean, I go to a dentist and as a physician, much more frequently, fortunately, than I do a hospital and most of us do. And so the largest part of the delivery of care that we all experience is the clinicians that see 10 to 100 patients a day, depending on what their specialty is, and that customer that that base of conditions, is still paying pretty much retail or over retail. For every product and service, there's no competitive process to get the lowest price and the best quality product and to actually find out what the you know what the industry or other clinicians are saying about it. It's really fascinating to me that the largest part of delivery of care has the least amount of efficiency, versus the smaller part of delivery care, which is hospitals has really the most efficiency.
Patrick Kothe 24:11
So what you're what you're doing is you're segmenting the market to say the hospital is a separate thing. We've we've identified a need within the solo practitioner or group practitioners that don't have the efficiencies, the buying power of the large, large hospital chains, large IDs,
Scott Carson 24:33
exactly. They continue to see, you know, it's not uncommon for a clinician to have a list of reps that are coming through the door that's greater than the list of patients. And there is so much inefficiency, and you would really never find that in a hospital system. The efficiencies have been created there are pretty astounding, and how we've compressed costs in that sector. So absolutely. We think clinicians don't really have The ability to experience the kind of data delivery that we do in our consumer lives. And they surely don't have what the hospitals do.
Patrick Kothe 25:07
Let's focus in on your business right now, leave the hospital side for another discussion. But let's just focus in on, on how you define your customer and what value you're creating for them.
Scott Carson 25:20
Well, the biggest value that we're creating, and this is really taking pages out of the experience of some of the companies I've been involved with an eBay is, is that there's this concept I mentioned a few times about non producers and non consumers. And this is not my idea. This is formulated, as I mentioned, by Clay Christensen. And it's been heavily written and discussed over the last few years. And if you think about Airbnb, Airbnb is taking a non producer, somebody that has a couch, and a non consumer, somebody wants a couch. And those are defined as people that are that don't know each other. And there's no way that we're going to know each other. How would we ever know that if you had a couch and I needed a couch, or you had a room to rent and I needed a Roomba? How would we ever find each other. So this idea of a disruptive, managed marketplace was really done very well at Airbnb, where Airbnb found a way to create that. And so they took people that weren't participating in a market and created value. And that's why Airbnb is, valuation really in one day went from 50 billion to 100 billion, because the market recognized that they were doing something quite unique. And we see that within the physician marketplace. And we started, really in preload, where there are physicians and clinicians all over the US and for that matter, all over the globe, that have pent up assets that they bought, could be expired goods, it could be short, dated, it could be capital, it could be non capital, such as autoclaves, and monitors, just less expensive capital assets that they bought, maybe that a physician lead, maybe they consolidated practice, maybe they acquired a practice, maybe there could be endless reasons why there's excess assets. And there's clinicians that are looking to save money, create efficiencies, or practice, maybe need a backup, but they can't find each other. And as I mentioned, going back to eBay, eBay is a relatively small marketplace within healthcare. And we believe that there is massive pent up assets, both non consumers, non producers, that are waiting to find each other. And so we set out to kind of test that thesis.
Patrick Kothe 27:29
So are you primarily focused on used equipment or new equipment? What's What's the makeup of the marketplace?
Scott Carson 27:37
Well, right now the focus is, is pre owned, and we're pivoting to new right now over the last year, year and a half. And let me explain where a lot of the missteps and marketplaces healthcare have had, everybody continued on this thesis, as I talked about in the beginning of this internet craze, of you know, if we just build it, they will come if we just build a place where the products and services are, we're gonna see adoption. And that just didn't happen. And here's why. Because at the same time, they were building, you know, the baseball field for everybody to show up, they kept doing the same baseball games in the same places. So they kept sending in large reps, or creating large rep organizations, they kept providing lunches and doughnuts, they kept going to trade shows and putting people on the podium. So they didn't change anything that they were doing. And at the same time, they were creating these places for people to go or conditions to go buy anything. The problem is, is that there was no incentive for the condition to go or the administrator in a group to go anyplace else, because the people coming into the office could actually get better deals on the internet could. So there was no reason to go there. So marketplaces, if you think about them, come from this idea of deals. eBay was created on a function of deals, Etsy deals or hard to find goods or Airbnb, just there's not Overstock, the list of marketplaces that we experience. Look at Amazon, Amazon didn't start with just the same prices that you could get other. It started with discounts. And in both buying look at Costco, even Costco is migration to or Walmart's to the internet. This is based on on deals, not just access. So we really had to focus our initial on a targeted market, and also focusing on deals and deals in our market or pre owned parts, peripherals expired. All kinds of things in which would drive people to a marketplace. And then, as you're having those great experiences and you're creating trust, you can then start to bring in other products and services that maybe these conditions aren't familiar of because there isn't a large rep organization delivering those. And these are typically the ones that are less expensive, higher quality than some of the major manufacturers that have large rep organizations. So We're making that pivot now to to new goods, new products and services.
Patrick Kothe 30:04
Who is your target market.
Scott Carson 30:07
Our target market is the single practitioner or small group practitioner that is looking for efficiency and lower cost, looking for those reviews that they can trust, and to ultimately eliminate the sales reps that are coming into their practice, which provides tremendous amount of distraction and inefficiency, and really doesn't serve a lot of value. If you have the technology delivering the information to the clinician, you got to keep in mind, Pat, these are very, very smart people, they've gone to school for a very long time, they're very good at analyzing data and making, you know, good critical decisions. And if they had the data, they could make the best choice for their practice. The problem is they don't have it.
Patrick Kothe 30:52
Any specialty that is more of your target market than than others.
Scott Carson 30:57
Well, you know, we started out in esthetics simply because it really made the most sense to us from standpoint of, you know, it's it's a cash based marketplace and healthcare for the most part, it's growing 10 to 15%, year over year. And it also has a lot of emotion about it, you know, there's not a lot of emotion, when you buy an IV pump, there's a lot of emotion when you buy a laser or an injectable. So we'd like those components to to, to marketplace to start. But we see the same opportunity in vision, and ASCs and small surgical suites. I mean, even within dental that are highly efficient. When you think about companies out there that serve the needs of dentists that have consolidated and rolled up, they still have large sales rep organizations that are very expensive, which adds to the cost of these products and services, which I think ultimately, if we could eliminate the SGMA associated with sales costs and marketing, by using technology to deliver that information, you can see a decrease in product cost between 10 and 40%, which is a massive amount of savings. Maybe the single biggest savings in healthcare that we've seen in decades, or ever, just by eliminating that inefficient delivery of the information.
Patrick Kothe 32:16
Let's talk about a specific customer. And you mentioned that you got people who have have needs, we have people who have supplies. Let's walk through a scenario where a clinician needs some some piece of equipment, you pick the piece of equipment, and how do how do they interface with you guys, and what exactly is their customer experience?
Scott Carson 32:41
Okay, so let's let's use our space specifically, because it's one that we interface with every day. But this could really apply across the board. Now, I recognize that there are some markets within the space I'm speaking of that are speaking to that have created some efficiency. And some of what I'm describing has been done to some extent. And so this is not a universal theme. But let's speak about energy based devices. Specifically, we could say a photorejuvenation laser, for pigment and vascular, if you're a clinician and I spoke to one several hours ago that would like to purchase one of these devices, their current option is to maybe reach out to seven or eight different sales reps, seven or eight different companies to start to investigate what the best product would be in that sector for them. And they start now with sending a request for information that lead is given to sales leadership, and they distill it down into the rap and that rep is all over that doctor. And now they've got seven reps that are highly paid all over these conditions. And if you think about a patent, not one of them has the second best product, even they all have the very best product, there isn't one that has number two, and all of them do what everybody else is does but better, which we know fundamentally isn't the case. And so these physicians get to a point where they they're like, what I really want to do is compare these products and really make the best decision. But now they're like, there's no way I'm going to let seven reps, you know, run all over my practice for the next three months. So I'll probably pick the two and I'm going to guess and maybe I'll talk to a couple of colleagues. And they did the same thing. So maybe they made the right decision. Maybe they didn't. And so now they start this process and they just get exhausted. There's variable pricing, the rep started like 250,000 when everybody else is paying 100,000 It's interesting, at least in our space, that the more you trust, the more you pay. The less you trust, the less you pay. That is the most ridiculous concept in For me, that exists in our space. And so it ends up being a very painful, expensive, arduous, exhaustive process for a clinician to buy one thing, let alone, the many things that a clinician would have to purchase from injectables, to supplies to marketing to the list is endless. What we're trying to do is something quite a bit differently. When a clinician interfaces with us, we really want to drill down and find out what the problem is. And, for example, today, we had a clinician call us and they wanted a Q switch laser. But through discovery and investigation, we were able to determine that that's not what they needed, they did something else. We had another one today that was under the belief they needed to sell a bunch of equipment and get new equipment when really what they needed was training. So what a marketplace does, ultimately through artificial intelligence, and all types of other technology is really take the the problem, the physician clinician has tried to distill that down and deliver solutions to them, and then give them that information in a way that's completely quantitative, that they can make a decision that will best serve their practice. And I think that's a completely different experience than pretty much any clinicians experience today when it comes to anything other than table paper.
Patrick Kothe 36:22
So do they go to the website? Do they make a phone call? What do they do?
Scott Carson 36:26
They do a little bit of everything. You know, sometimes they reach out to the internet, which they know the best or through chat or they make a phone call, you know, we've tried really on to maybe find efficient ways for physicians, clinicians to communicate but Pat you, you just reminded me that they sure like the phone the best. This, and that's that conversion, the digitally native clinicians like email and chat and text, the the non digitally still still like the phone. So we're kind of got one foot in both.
Patrick Kothe 36:56
As you're doing this, there's two ways I think it can be done. One is like a car lot. You know, they accept the cars on the car lot. They buy the cars, and then they sell the cars and other places, there's brokers. So they're not taking ownership of the product. They're just brokering a deal between two individuals. How do you guys operate
Scott Carson 37:21
early on. And right now we pretty much just in our marketplace allow our products, our premium products to be sold. And now we're adding you know, quality pre screened manufacturers and the good better best category with non variable pricing, typically the best pricing that's available. And we're putting them you know, putting that on the site, we will be opening it up this quarter where dealers and brokers and clinicians themselves can start to put things on the platform and sell them. Part of the reason we're going to allow that is there's now the infrastructure of enablers to allow those transactions to take place with a lot of trust. And in this case, its inspection and warranty and ongoing service and parts of their ability and training. All of those things now in our specific space are in place, which we spent the last six, seven years creating. So we would create a great customer trusted experience. And now we're going to start focusing on velocity. But I think your specific question is how do we maintain a level of integrity, and typically a market that doesn't have a lot of integrity. And this is through the same thing that we all experience through ratings and really governance. If you misbehave on any platform, whether it's Amazon or eBay or Etsy, you're removed from that platform, the kind of the adoption right now and the advance of FinTech, financial technologies and the footprints that we're able to see, in traditional financial markets such as Visa, MasterCard, moving on to blockchain, we have a lot more control over the bad players and bad actors that exist in these spaces. So I think we'll see that there'll be some challenges early on and how we protect the clinician. But I think it'll it'll move pretty quick to make sure the marketplace is a safe place.
Patrick Kothe 39:09
So somebody has some somebody has an ultrasound machine that they it's accessed access to them, they bought it three years ago and it's access. They come to you and say, Hey, I've got this machine. What can you give me for it?
Scott Carson 39:22
That's the current model. We don't do ultrasounds right now. But there are companies out there that do ultrasounds, you got you got an ultrasound, Sydney, a clinicians office. One option is to do nothing, just let it sit there as a sit there for the last five years. The manufacturer didn't take it on, didn't take it on trade when you bought the new one or the clinician left or whatever the reason is, the other option is to call a dealer or reseller ultrasounds and sell it to them and they'll pay you and they'll come pick it up and you know, spot as is typically and you've severed your liability stream and you've collected some money and it's moved on out of your life. The other option is you could put it on either Pay yourself or some marketplace, which most clinicians really wouldn't do. There is some risk in that path that clinicians typically don't think about. Right now we live in a very litigious environment where plaintiff attorneys not only look to sue the manufacturer, if there's a problem, but they look to sue, and litigate against the successor of the owners and succession of the owner, they go back and say, Okay, who owned that device? And did they service it properly? Did they maintain it properly? Was there any error codes? Did they disclose it, the sale even if it was sold as is, there is some risk in that, that you could be tagged to conditions is, you know, have large liability insurance policies, which makes them pretty big targets for for litigators. And so, clinicians, typically, Pat won't do that, because they don't want the risk associated with the downstream effects of something going wrong, even if it's something minor. So they typically won't do that. But let's say they did do that. They don't know who's buying it. They don't know who's being trained on it. They don't know if it's being serviced properly, if it's installed properly shipped properly. So it's basically just throwing your ultrasound into a black hole. And we don't think that that's that hasn't succeeded on eBay. So we think the idea of a managed experience is really what clinicians are looking for. So in the case of the ultrasound, and world will evolve to ultimately an ultrasound is that clinician will have somebody come to the office and inspect it, when they go to sell it themselves. Somebody specialized to transport on the other end, there'll be another technician to install it, there'll be able to get proper training through a certified trainer, and then get service not only from the manufacturer, potentially, but also from the regional service providers that are there. Now why does that matter so much, the difference is, as they sell it to the dealer that specializes in just buying ultrasounds, they may get 5%, of what they paid, maybe 10 At best, but if they sell it themselves, they may be able to recover 50% of what they paid, because now they're selling it at a retail price. And they'll pay a small percentage and these enablers, the transportation, the inspection, the reinstallation in the ongoing service is really paid by the next owner. So the most important component of the marketplace, which we believe clinicians will embrace is the fact they'll gain some of their equity back on devices they bought, they no longer need or bought the wrong thing or whatever it might be. And this is where we think these non producers will really jump into the market along with non consumers and really find one another.
Patrick Kothe 42:32
So as you're purchasing those, as an owner of a marketplace, you're purchasing those, you're stepping into some liability risk and some liability costs in there. So that needs to be reflected in the purchase price that you're getting getting in there as well. From a from a manufacturer standpoint, there's all always traceability of products, and their liability, their warranties, and changing from one place to another and who's servicing that product. So there's some there's some issues from the manufacturers side as well, it's a little bit different than the car marketplace, but it's kind of similar to the car marketplace, too. But there's some specific medical device regulatory issues that need to be sorted out, as well, and the liability of the warranties and as well, as you know, as you said that, you know, the legal liabilities with that, too. So explain to me a little bit about how manufacturers are viewing this and how you guys are helping to mitigate your own risk.
Scott Carson 43:44
Well, in the aesthetic side, we have the largest prion processing center in the world with more techs, technicians, factory trained technicians, and most manufacturers have on site, we have some of the most advanced control procedures that I think in many, many respects, far exceed that of the manufacturers. And this goes back to something we talked about early on about the differences between a practical and collectible marketplace or a home goods marketplace or consumer marketplaces is that we are specializing and understand the regulatory environment in which we operate and live. And to that end, one of the things that we began actually next month is will become full, FDA compliant as a manufacturer, even though we're not manufacturing anything and fully ISO certified. And the reason that's so important is to let people know, and our partners know that we're following the same kind of protocols and regulations that even the most highest tier manufacturers in this space do and that we can go both downstream and upstream to the product lifecycle and make sure that we're maintaining that integrity, all the way through from traceability from their adverse events, whatever it might be. And The other thing that I think is really important is, and really, this is why the timing is right now is because if you think about the digital footprint today versus the digital footprint from 25 to 50, or 2520 to 25 years ago, our ability to track and trace information and technology is like never before, our ability to track a device from its initial manufacturing, to where it ultimately ends up and how it's being serviced, is going to absolutely explode, it already is much different than it was a year ago. And so this kind of combination that we're going to create the environment in which there is clear, safe, kind of safe processes that are mimicking that of New, and then also this digitization of everything everywhere. And the traceability of those things is really the intersection that we're looking to exploit.
Patrick Kothe 46:01
When you say marketplaces means a lot of things, different things to different people. It could be just the broker, you put it up here, it goes there. It's like the newspaper, you put the ad in here and it goes there, yours completely different in that you are taking things and you are servicing them. And you are you have some type of a guarantee as it goes goes out as well. Absolutely.
Scott Carson 46:28
Market marketplaces. And this is true. Going back to what I was saying about eBay Motors, eBay Motors never would have had success without eBay guarantees. And even they took that in that process and why eBay became so successful as many years ago now it's probably 10 or 15 years ago, they went to a buyer centric model. And I'll just explain that marketplaces typically were neutral in the beginning, meaning that we protected sellers and buyers, consumers and producers, but marketplaces have evolved. And Amazon really taught us this, that they are buyer centric, and meaning that marketplaces are here to serve at the protection to the buyer. And manufacturers have to turn especially in our space path. Manufacturers are really looking upstream, they look at stakeholders and shareholders and leadership. And we want to see that pivot around to where manufacturers are solely focused on the customer. And we think marketplaces provide that really customer centric experience. And that is probably the most important thing, where we're gonna see trust and then velocity.
Patrick Kothe 47:33
Scott, you're coming at this from a capital, or you're entering into this from a capital standpoint, and the capital market, capital sales are a little bit different than consumable sales in the medical device space, but you're you're going to be starting to offer more and more on the consumable side. So is are the benefits different on capital than they are on consumables,
Scott Carson 47:59
every subset of products and services capital or pharma, or med surge? All of them have many different kind of components to it that are individual to that sector, and in many cases, to the product category. But we believe that just as we do with our Amazon app, if you think about it this way, Pat is, you know, Amazon was not the dominant player in consumer goods, it was Walmart, and yet, and Walmart had every opportunity to become Amazon. And it didn't. And why is it today that we use our Amazon app or our desktop or our, our tablet? Why do we go to Amazon and not Walmart? Why do we go to Amazon and not Costco. And there's a lot of reasons for that. But ultimately, we think that conditions, and especially conditions, physicians, these individual are smaller practices, or even some larger group practices, they want a portal where all of this can be delivered to them in a single place where they know that they have trust, where their financial interests are protected, where it's buyer centric, they're not going to go to multiple marketplaces, they're going to go to one. And we believe that we have a very good chance of becoming that the trusted player, well, they'll go for all of their products. And as it relates to pharma, and in that search, this is still a market that physicians are buying for their own account. There is no collective bargaining or purchasing in any way for commissions. They've tried to come together as groups and even if you're, let's say, a private equity using this as an example, dermatology group with 500 physicians, and 150 locations, and I'm speaking about one specifically, you don't really have enough buying power to get the same discounts that a hospital system did. But if you took 1000 conditions and you aggregated them, you're now going to be able to get some of the So pricing of pharma and med search. And that's really the objective we're after is if we create a place where we can aggregate physician buying power, we're going to be able to go right to the ultimate supplier, or get the best possible pricing from some of these larger distributors, to the aggregated customer. So we don't think this is limited to capital.
Patrick Kothe 50:23
It's interesting, the reason why I'm asking about the different benefits to different people is becomes to me and on the sales side of things you talked about one of the one of the challenges and buying a new technology is you're going to be inundated with a lot of salespeople coming in. So a marketplace has the ability to reduce the number of salespeople or the need for salespeople. And it may be appropriate on one side for it may be much more applicable on the capital side than it is on a consumable side. Because sales reps do different things. Sometimes, it's awareness, it's, it's selling, it's introducing new things, it's also top of mind awareness. So they're doing different things, as opposed to just doing a one time sale, which you would see more and more in a capital A capital market. So kind of laying that down, our sales reps are going to be endangered.
Scott Carson 51:24
Well, I believe they are, I believe sales reps are going to end up in the same place as taxi cabs. Wherever taxi cabs ended up, they're gonna end up there. I don't know where that is, but But you bring up a really good point. And and I was somewhat making a joke when I said that, but I think you're gonna see a conversion over time from the traditional sales rep, which is focusing on features and benefits, and changing to really creating great experiences for that product or service with a condition. So it'll be less about, hey, let's, you know, I have the greatest product. And now that you've chosen the product based on the analytics, that you've that's been presented to you this data that that you now have, and then you've made the decision, I think that there's going to be a whole sea of these experience reps that now come in, and make sure the products being trained on correctly, it's being deployed correctly, that it's interfacing with patients correctly, that is really doing what the manufacturer intended it to do. And this is something where I think this is really important. In the focus groups that we've had with manufacturers, manufacturers really would like to get closer to their customers. And right now, they're interfacing through a rep organization that at these organizations, sales and marketing, specifically, sales has a lot of power. And CEOs and leadership has to be careful with that, because they control the revenue steam stream, and you surely don't want to step on the hose of revenue. And that's where that experience rep will come in and really create a much better clinical endpoint for the patient, which is what I think manufacturers are after.
Patrick Kothe 53:01
As you're explaining a phone call that you that you receive from someone and walk through what they truly need, what they don't need, and what what solution that you provide. That's what a that's what a good sales representative does is they help to analyze, and the really good sales representatives not only analyze that for their own product, but they're analyzing it for the practice. And they're also helping to bring other good practices that they've learned from other clinicians that are out there, the best sales reps go beyond their product, they go beyond and they start to look at it from from their clinicians from the customer's viewpoint. And, and it is something you know, providing solutions that are outside of their own interest. It's really getting into into that clinicians interest. So I understand when we say we're gonna collapse things down, but at the same time, it's not for all products. In my estimation, it's not for all products. And the function may change a little bit because when you look at it from from a company standpoint, you know, there are there are hunters and gatherers, okay? There are their products as you're early on in the product, introduction phase, you need those hunters out there, you need to go find them in and having people come to a marketplace when they don't even know that your product exists. That's a tough, that's a tough deal. So in my estimation, you're still going to need your hunters to be able to do that. The gather pieces kind of an interesting piece from collapse collapsing, the number of number of sales reps, because what truly are they doing? What benefit are they bringing the clinician, that's where I would see a little bit of a difference from kind of what you explained.
Scott Carson 55:00
Pat, you and I are we both kind of I think probably started out in the same same way in healthcare, I started out as a rep, you know, evolved to where we are, you know where I am now with. And somewhere in that experience, I switched over to the digital side, I would first do this, I would first agree with you that I'm not speaking universally about every sales rep. And I'm surely not speaking about every sector within healthcare, capital or med surge or Pharma. But I think I am speaking quite vividly to your audience about there needs to be change. And there needs to be rep behavioral change. And I surely don't need to minimize these great sales representatives that are doing amazing work throughout healthcare, clinical products and services, by no means. But I do know that, at least in our space, and I know many other spaces, where the reps are not focused, as you described, on the commission, they are focused on winning awards. And I see this now every year, this time of year on LinkedIn. And that's been the worst this year, the amount of words that are given away to sales reps for selling the most stuff,
Patrick Kothe 56:16
and the amount of bragging that goes on on LinkedIn. Yeah, I agree with you.
Scott Carson 56:20
I, this needs to stop. And, you know, whether it's esthetics or outside of aesthetics, the fact that we're getting awards related anyway, to patients suffering is just abominable. And so I think the industry, you know, needs to change. The other thing I would say is, when you're talking about hunters and gatherers, you know, you're you're right, to some extent, but I think the hunters are changing. And if I would have told you, you know, three years ago, there was this thing called tick tock that was going to deliver information and content, you would have said, tick, what, and, you know, we now and it's not just the digitally native or the use tick tock and platforms like tick tock, and we now know them as Twitter and Instagram, and so many others are coming on board and delivering information in radically new ways, and creating awareness to products and services that will drive them to a marketplace and create awareness. And really, the the underdog, right now has the best chance the underdog has the best chance of toppling over the gulyas in this space, because of this digital revolution, that we're just at the dawn of. And so I, I do agree that hunters and gatherers will play a role, I just think the hunters and gatherers are going to take a slightly different form than what we experienced in the past.
Patrick Kothe 57:48
I agree with you 100%. And and as you said, there are people that are in it for me, and there's people that are in it for we and that's really what we're you where you need to need to be focusing on how you can help your customer not exactly how you can help yourself. You mentioned earlier that sales has an outside outsized influence within a company. And I've, I've noticed that in many, many organized organizations, it's like sales is the king marketing is upon in many instances, and especially over the last couple of years, when access was so limited to so many people, people started to really understand that marketing has a can have a much bigger role within an organization and sales can recede. And I think that that that is a sea change that's happening within our industry, too. So it's the marketplace, but it's it's how a companies are approaching the marketplace. As you said tick tock is out there. There's other there's other ways of getting messaging out, that have not historically been implemented within medical device that I believe are going to be much more in vogue, and seals taking a little bit lesser role.
Scott Carson 59:12
I couldn't agree more, I think this, this change is rapidly happening faster than, you know, year for value, and I'll speak and we'll look back and it'll be radically different than it'll be what you just described, marketing is going to take a lead role in creating messaging that directly connects to the customer, in this case the clinician much more effectively than a sales rep can. And really, this pandemic is really neutralize sales reps in the clinical environment. You know, physicians, clinicians are always looking for a reason to not have reps come in their office and the pandemic really gave them permission. And I think it's going to be much harder for reps to to get access in the future. And I think it's going to be taken over Through digitalization of information in the media as you were speaking of.
Patrick Kothe 1:00:05
So most of our listeners are within the medical device industry and work for a lot of different companies. So what advice would you give people within industry that are going through the same thing that they've been through for years and years and years in terms of the marketplace? What would you tell them to help prepare them for a disruption in a marketplace? Like what you're doing?
Scott Carson 1:00:30
That that is? That is a great question. And I have never been presented with that question before, you know, I'm gonna go back to something you said a moment ago. For those reps that are clearly customer centric, and focused on clinical outcomes, and do not put themselves first and do not put their company first. Those are the threats, the reps that will thrive, because they already are the experience reps that I was speaking of. And if you're not one of those reps, you quickly need to become one of those reps. Because if you're not, you're going to be displaced rarely, quickly. Also, I think reps need to be prepared, that the salaries that many of these markets have been used to are going to start to retract, I think healthcare in many respects is can be sales representatives can be overpaid in some of these roles in comparison to other sectors outside of healthcare, and that's partly because of the control that they have. And granted, we're seeing that salaries and, and commissions rise all over the place, given what's happened over the last couple of years. But I think you're gonna see some retracting of that, and what you just said a moment ago, about the movement to marketing, I think you're gonna see budgets switch, and move away from sales. You know, you'll see some sales rep attraction. And you'll see some increase on the marketing and digital side, and information delivery side. So I think the simple answer is focused on that great customer care.
Patrick Kothe 1:02:05
Scott's given us something to think about. Some of us are familiar with this marketplace idea, and already participate in some way. However, some of us don't. And we can either put our heads in the sand, or begin to think about it. A few of my takeaways. First, look at things from your customers perspective. What is your sales process? Are you one of the one of the seven companies that he talked about with clogging the the physician's office? And are you one of also one of those people that you've got the best product and nobody else has anything that's worthwhile? Are you a consultative seller? Are you just a seller of your of your product? Are you are you in it for you? Are you in it for your customer? The second thing is on the marketing side reexamining how you market to your customers. Are you stuck in the old way? Is it just you have the sales rep go in and deliver the message? Or are you meeting meeting them where they are? And they may not? It may not be in their office? It could be how they're how they're gathering information on the internet, on on tick tock on on Facebook, and where are they getting their information from? And how are you delivering content that's palatable to them in the medium that they're on? And then what do you know, what do you think that they want to know? Versus what do they really want to know and what's going to motivate them to buy? The final thing is, we all when we go through strategic planning we do a SWOT analysis, strengths, weaknesses, opportunity, Opportunities, and Threats. What we talked about today was a disruption in the distribution model in the sales model. And this can be viewed in that SWOT analysis as an opportunity as a threat. Or it's both how you think about this in your own marketplace with your own products really can be an opportunity or if you're not thinking about it can really be a threat. So give it consideration when you're doing that strategic planning and make sure that you understand what's happening in the marketplace and what potentially could happen to you and your products. If you don't see something that's on the horizon. Thank you for listening. Make sure you get episodes downloaded to your device automatically by liking or subscribing to the mastering medical device podcast wherever you get your podcasts. Also, please spread the word and tell a friend or two to listen to the mastering medical device podcast, as interviews like today's can help him become a more effective medical device leader. Work Hard be kind
