Aaron Crookes - Co-Founder & CEO of Apricity Robotics: Picking the Right Product for Your Market, Balancing Product Development vs. Business Building, and Strategic vs. Generalist Investors

Aaron Crookes 00:00
We just put up, here’s all our rocks, here’s all the things we need to accomplish in 90 days and in one year, and they're not assigned to any people. And we just say, okay, from a leadership team perspective, who has the best skill set to take on each one of these? And we ignore titles, and we ignore what all that looks like to say, take on what's going to be best suited for you. That way, we make sure that Jamie isn't doing something that I should be doing, because it's like, okay, this drains my time, and Jamie's activated by this, and he can do it 10 times as quickly and 100 times as well.

Callan Harrington 00:33
You're listening to "That Worked," a show that breaks down the careers of top founders and executives and pulls out those key items that led to their success. I'm your host, Callan Harrington, founder of Flashgrowth, and I couldn't be more excited that you're here. Welcome back, everyone, to another episode of "That Worked." This week, I'm joined by Aaron Crookes. Aaron is the co-founder and CEO of Apricity Robotics, a startup that's focused on developing semi-autonomous robots to aid and assist both patients and healthcare staff. Their main goal is to automate simple tasks so healthcare staff can be fully dedicated to critical patient needs. Prior to founding Apricity Robotics, Aaron worked in R&D for autonomous robots and devices at Procter & Gamble. I really enjoyed this conversation. Aaron provided many really thoughtful answers, and we got into the details on a number of subjects.

We discussed how Aaron balances his time developing the product first and building the business. This is always a challenge in the earliest stages of a founder, one because you're pulled in so many different ways, but it's how do you continue to progress the vision versus how much time you're focused on that current product? And I really liked hearing how Aaron handles this. We also discussed the importance of finding strategic industry investors when introducing a brand new product. Aaron's in the healthcare space, which, in my opinion, amplifies the importance of this pretty dramatically because it's both very nuanced and it's very R&D heavy. It was also great to hear about the flip side of this and when to bring generalist investors in to help better scale the company.

Now, with all that being said, my favorite part of the conversation was talking about the importance of understanding the financial realities of your customer, and in particular, how to fine-tune your product to those realities. To break that down a little bit, when selling an enterprise-level product, it's easy to build a really cool product that is difficult for a company to justify buying. Aaron shared his process of starting with a product people liked but wouldn’t pay for to ultimately landing on a product that shows a meaningful ROI for their customers. I think the story he shared was a great example of how to pull this off. It is a great listen for anybody that's either launching a new product or is founding a company and starting that product from scratch. So with that, let’s get to the show. Aaron, you have a really unique business. Your background isn’t necessarily in the area where your business is. What inspired this? How did you decide that this was the type of business that you wanted to create?

Aaron Crookes 03:30
I think less around a business that I wanted to create and a solution for a problem that we started seeing come about organically, and it was early into the COVID pandemic. I saw some family and friends who were in the hospital for non-COVID-related medical conditions, and as a result, there were staffing shortages popping up throughout the COVID pandemic and a lot of restricted workloads and PPE and all the isolation rooms. And what we really noticed is that you have these patients that have low patient-to-nurse ratios, so they're pressing a call button because their water bottle is empty, and it may take hours for someone to show up, and that's because patients are coding elsewhere in those floors, and so nurses are obviously dealing with some pretty high-stress situations.

So there was a lot of creature comfort, patient comfort, "Hey, I’ve got to go to the bathroom, and I can’t get to the bathroom because I’m not allowed to walk without assistance, so I wet myself in the bed," and now they have to change the bed, and it’s kind of like, you don’t really want to be in the hospital because you’re not going to get kind of that ancillary care that you're looking for, for the comfort. And at the time, I’ve got a background in robotics, and my degree is in biomedical engineering, so I knew some medical device. I’d worked on med devices before, and we said, well, how can we use technology, seeing how other industries are using this to kind of tackle their workforce shortages? How can we use robotics and technology in this instance to help these patients so that when a patient says, "My water bottle is empty," and I press a call button, I don't have to wait and kind of tie up a nurse who's, in theory, helping a patient that's way more urgent and pressing to actually come and grab that water for that patient.

So let’s say, oh, now you have a robot that can come in and replace your water. And can we have the robot change your bedpan? And can we have a robot help you move to the toilet and actually do some of those ergonomic assists, fall prevention tasks? And it wasn't necessarily looking to create a business. It was, we see these one-off needs, and let's start applying technology to it and prototyping and building and see like, hey, can we put a robot into somebody’s hospital room, and when they press this call button, can it actually grab the water bottle for them? I would...

Callan Harrington 05:26
...have never thought about the perspective of just getting your water filled during that nursing shortage. Could take two hours before you get that filled.

Aaron Crookes 05:33
Exactly. And really, it was a "How can we keep the nurses doing what the nurses are trained to do, and the LPNs and the medical assistants, right?" They're helping the patients who actually need the critical care. And so it’s not like they're sitting around, right? If you have nine patients to one nurse, and every single patient's pressing their call button, we gotta triage like, "Okay, this person's actually a medical condition. We have to go make sure that they're stable, and everybody else is gonna then kind of fall to that back end." So...

Callan Harrington 05:59
I wanna talk about where you ultimately arrived. Before we go there, I'd love to pull this back a little bit. So you were at Procter & Gamble, and as I understand it, you were part of the founding robotics team there.

Aaron Crookes 06:11
Yeah, we had a number of really cool robotics initiatives going on inside of P&G. And so some of them were from the manufacturing engineering side of the scope, but then the other half of that was, is there an opportunity to actually put robotics into consumers' homes? And so I was part of the group that was the inception of that concept as well.

Callan Harrington 06:29
Within that group, were you guys sort of operating as a startup within a very large company?

Aaron Crookes 06:34
Absolutely, absolutely. And it was a question of, okay, what's going to be our funding? What's our budget? What's the team size? What are the scope of the projects that we're working on? And how do we prove traction? Because it's introducing a new concept into the market. And so it was okay, we want to do something brand new that hasn't been done before, but you also then need to find product-market fit. And just because you have the brand label of, I don’t know, Tide or Swiffer or Mr. Clean behind whatever you're building doesn't necessarily mean a consumer is going to be delighted by it or they’re going to purchase it. And so a lot of the concept testing that we did as well was really good to prepare you for, okay, let's start a company and figure out how to do A/B testing and what somebody willing to pay for this, and what does it take to convert a consumer from their normal status quo habits into purchasing technology to actually change the way that they want to go about their life. So you're in this position. You're in a startup within a very large company, a very well-respected company. You have the safety of a very large company. Was it that you just had to start a business? It was really the problem, I think, that kicked it off to say there is a real need and some actually low-hanging fruit from the technology standpoint that we couldn't find anybody implementing. When we said, "Okay, let’s find a solution to this," there was nothing out there that we saw of, like, why is nobody actually applying technology that exists to this problem? We were deploying this technology elsewhere, within automation and kind of all over different aspects of household automation, but industrial automation and self-driving cars. So I think there's all these aspects of, let’s pull these concepts and do something. I never dreamed of starting a company. I never wanted to start a company, necessarily. We actually fell into starting the company based off of an NSF grant.

Callan Harrington 08:36
What does that mean, specifically? Walk us through that.

Aaron Crookes 08:40
So that's the National Science Foundation federal grant. They actually have small business grants for research and development, and we put in a proposal, and they’re looking for things that are specifically novel, new, high-risk—specifically too high-risk for venture funding or angel funding.

Callan Harrington 08:53
Did the risk even bother you on starting the company and leaving, like, a very secure position?

Aaron Crookes 08:57
No, not necessarily. My wife and I were transparent in a good financial position. We’d saved up quite a bit of money from our careers so far. And so from a financial risk perspective, we didn't really see it as something that was overly risky. We figured, okay, at best, this could go off and really become something, but at worst, it’s, what, it's going to be a couple of years of us getting a little bit of NSF grant money, so that actually brought in a little bit of money for a salary. Like, ah, we'll see if this goes anywhere, and if it doesn't, no harm, no foul. Let’s either return back to P&G, or let’s find another career doing something else. I think the risk more was like, "What the heck am I gonna do?" Starting to find, like, "Okay, do I form an LLC or a C-Corp," and then trying to understand everything else outside of actually solving this problem was more the like, starting to call up some friends to say, like, "Am I crazy? Is this even feasible? How do you start a company?" A lot of Googling, a lot of YouTube videos, and really that was more the new learning opportunity of like, if there was going to be something that went wrong, I didn't feel that it was going to be in the product. I felt it was going to be in my like, how did I start up the company? Did I unintentionally break some, like, treaty law that I didn't know about? And be like, well, now I got a wanted symbol on my name. Like, I have no idea.

Callan Harrington 09:57
It makes sense. I know I remember the first startup that I did, you know, I was an insurance agent, financial advisor with a big company, and then I left to start my own agency, a digital insurance agency, and I was like, "I have to get my own licenses now, and I've got to do these in multiple states." I really appreciated everything that I had at the previous company. When doing that, I'm curious, what were the biggest differences when you're like, "Okay, now I’m on my own"? What were those, like, punch-you-in-the-face type of moments?

Aaron Crookes 10:23
There's plenty. My face is, yeah, well-bruised, I would say. But I think a lot of it is, there’s really not somebody you can just flip an email off to, to say, like, "Hey, this came up. Can you please handle it?" I mean, one key example, which was an early learning for us: we started out as an Ohio-based LLC, because we're located in Columbus, Ohio, based off of the advice of other businesspeople that weren’t in startups. So we weren’t even in a startup community. It was like local business owners of, like, "How do you start a business?" And like, "Well, create an LLC and do these things." And that was great and dandy, until we said, "Okay, now we need some money." We start talking to investors. And everybody says, "Well, are you a Delaware-based C-Corp?" And I was like, "Well, no, we’re an LLC, because that’s what we were told to do." So said, "Okay, you have to convert to the C-Corp." And with the grant financing on the back, we had to keep our EIN. It was this whole thing of, like, six months of work trying to get Ohio and Delaware to coordinate to not start a new company. And it was a headache that, like, if I started another company, I’d just do it as a C-Corp.

Callan Harrington 11:21
How do you balance your time focused on those types of items versus items that are going towards the great vision of the business?

Aaron Crookes 11:29
It’s tough. It kind of comes day by day of what our priorities are going to be. And I find myself wearing kind of three hats right now, which is probably not sustainable, but a little bit of this is the startup grind of, "Okay, like we have to keep pushing through, and let's make progress." So one of them is from a tech individual contributor, right? We're growing our tech team. We have an awesome team now, so that's becoming a little bit less, but really owning the CTO cap of, what's our engineering vision? What's our go-to-market strategy? From a design for manufacturing, what does it look to scale software? But then also, I'm wearing a manager hat of, okay, everyone right now reports into me. Right? We're a very linear organization. Of, let’s make sure everyone's got a clear vision. Let's make sure everyone's working towards what they need to be working on, and everyone is comfortable in their job and all the things that come with just managing people. But then there's also that CEO, kind of visionary. How do we make sure that we have strategically aligned, and we're communicating that externally, and that all of our investors are up to date? We're holding board meetings and in compliance with all of that. It ebbs and flows. There are some days when it’s pretty tech-heavy. There are other days when it’s, okay, we have these other kind of competing priorities. One thing we run as a team, and I’m not an expert at this, but it’s called the EOS or Entrepreneurial Operating System. Following this traction book of, "Okay, every week we have an L10 meeting as a leadership team, hash out here are all the issues that we have this week, and then it’s kind of like, how do we gonna solve those issues?" And let's do our project planning together. And then we hold Vision Traction Organizer meetings, VTO meetings once a quarter, and really what I found is getting everyone else aligned strategically with, why are we doing this? What are we doing this for? Trying not to make it like this is not Aaron’s startup, right? I don’t want people to think that, like, "Oh, we're working for Aaron." It’s a team mindset to push a solution out there that’s really going to be meaningful. And the goal of that, then, is to hopefully take my time and be able to spend less time on certain aspects and more time on others. Make sure it’s almost like being able to run without me, with traction.

Callan Harrington 13:28
In particular, or EOS in particular, I should say. Traction was the book. It comes up all the time, whether it’s EOS, OKRs, or Rockefeller Habits. Is that self-implemented, or are you using an EOS implementer for that?

Aaron Crookes 13:41
No, we can’t afford an EOS implementer. No, it’s, we are lean and scrappy, so it’s self-implemented, but we know other people that use EOS, and so we're able to bounce ideas and concepts off of them.

Callan Harrington 13:54
It is one of those ones that you can definitely run on your own. Did you guys run that from the beginning, or was there a certain point where, like, okay, we need to do something different here?

Aaron Crookes 14:03
Yeah, not from the very beginning. From the very beginning, it was chaos, I would say, like, we were not organized like a business, and it was organized like a high school project trying to, like, kick something out the door with some grant accounting and oversight, I would say. As we started to grow in the maturity of our team, and then bringing in team members that had some business sense, we’ve got a hospital CEO now as our COO. He's run huge organizations and kind of understanding, okay, what does it actually look like to run a cohesive, collaborative team? And we had a great team at P&G as well to kind of build that backbone on. But when everything is on fire constantly, it’s tough to be able to kind of pause and say, hey, what is our mission? What's our vision, what are our values? How do we think through our core focus? Instead, it’s like, whoa. Like, this thing’s on fire, our bank account's empty. We gotta do all these things. And so it’s like really taking a time to almost pause and say, okay, let’s really get aligned so that we're set up for sustainable quality in the long run, and not like just hair on fire every single day. It was a big shift in our mindset.

Callan Harrington 15:05
So, you brought on a COO. How recent was that?

Aaron Crookes 15:15
About four months ago.

Callan Harrington 15:16
So pretty early to bring on a COO. I'm curious, what was the driving factor on that?

Aaron Crookes 15:20
I think it was kind of when we think about the buckets of needs, there's the vision, strategic place of it. But I also wanted somebody with some experience in that realm and that mindset. So can we get some coaching and advice on how to strategically run an organization and make sure that the team is aligned. But we also have a big need, because we’re in healthcare, of managing clinical relationships. And how do we also make sure that we have all these hospital pilots, and how do we connect with all of them? And each hospital ecosystem that we're working with is really complex, and so it’s like, okay, you can’t just call up the same title in each place to get the same answer, because it’s like, "Oh, you gotta go through this person, and they give you this person, and they all have different buying thresholds and purchasing cycles and preferences." It was a time sink of, like, okay, we are constantly communicating. And what was happening is, okay, we’re catering to all of their needs and requests, and we’re not actually building a product. And so that started to be the shift in, like, "Okay, can we bring in somebody with experience to help manage these relationships and then manage us running?" Like, what are we gonna launch into them? What's our go-to-market strategy? How are we going to then actually execute and make sure we're meeting the needs of the customers? And so he kind of touches on that. It's a little bit, as a startup, you wear all hats, right? So it’s kind of like Chief Commercial Officer plus, COO, plus, like, I don’t know, therapist would be the other hat. And so it was kind of a, what's the skill set we need? We’ll throw a title on him, but titles are, I would say, nebulous in a startup of like, you do everything with our VTOs. We always do a like, right person in the right seat. We just put up, here’s all our rocks, here’s all the things we need to accomplish in 90 days and in one year, and they’re not assigned to any people. And we just say, okay, from a leadership team perspective, who has the best skill set to take on each one of these, and we ignore titles, and we ignore what all that looks like to say, take on what's going to be best suited for you. That way, we make sure that Jamie isn't doing something that I should be doing, because it’s like, okay, this drains my time. And Jamie’s activated by this, and he can do it 10 times as quickly and 100 times as well. And so may as well have him do that, even if it’s not under, like, a COO label.

Callan Harrington 17:23
Yeah, I think that makes a ton of sense. It's something that I've come around to a lot more. We had a guest, Justin Anken, that talked about this, and he talked about how important it was for him to hire somebody with deep experience early. And traditionally, I've looked at it the opposite. And in certain roles, I think having stage fits critical, like a VP of sales, for example, if you get somebody with a ton of experience at a really big company, oftentimes they don't translate well to the early stages. But I've changed my tune so much on this that I've started to do this in my own business, and I gotta say, it has made a huge difference for me. It’s just the ability to have the confidence to say, no, actually, you're gonna run this 100 times better than I will. I'm gonna step back and, like you said, focus on what activates me, that zone of genius, and it’s made a huge improvement. I’m curious, what impact did this role have on you as the CEO?

Aaron Crookes 18:12
It’s had a number of impacts. The first impact was legitimacy of what we're doing. And we met up with Jamie, actually, through, he was an EIR for a venture fund. And so we came across their table, and he called me up and he said, "I'm in. I want to work for you. You're solving a problem that we couldn't solve when I ran hospitals." And he says, "I think you're onto something." So he said, "Whenever you're hiring your next role and my skill set fits, give me a call." And so that was like, whoa, this may be something. So we love, like, hearing those little nuggets of product-market fit, kind of coming along the way of, "Hey, this is somebody that would be a potential customer if he were still running hospitals." He retired from that. But we can then say, "Okay, here's kind of an additional note of product-market fit, that this person was so serious that this was going to go somewhere that he said, ‘I'm in. Let me join your team, and let’s push this together,’ because he said, ‘I see a clear path for how can we actually make this thing do what you want it to do?’" So bringing somebody like that in was a big boost of confidence, because we're a pretty young team. We’re scrappy. We’re not cutting our teeth necessarily in healthcare administration, right? Because we're changing workflows, and we're trying to push commercial equipment into hospitals. A lot of my time was kind of spent on the background of, like, writing in spreadsheets and trying to figure this stuff out on the side and really stressing about a lot of the skill sets that Jamie brought into our company to say, "No, like, I know how to do this. Let me take the wheel and let’s drive this path forward." And so I said, "That’s great. Now I don’t even have to think about it." It’s been just a whole big risk that's been reduced now to a low risk. He brought a lot of culture perspective too, of touchpoints with different people on our team, and how do we make sure that people are driving towards the same goals? And, hey, here’s our mission, and how do we extend the reach in healthcare and pushing towards that objective? And so it’s been good for me to realize like, okay, his strengths and my strengths are complementary.

Callan Harrington 19:59
It’s interesting. Is it almost like you can move 100 times faster once you have that? I think that piece that you mentioned in particular, of the confidence to know that we're in good hands. It just gives you all the confidence in the world to sell it.

Aaron Crookes 20:12
For sure, big time. And I find that I’m somebody that can kind of lean into risk, but then I’m also paralyzed by risk. And so it’s like, okay, we're gonna lean into doing this startup. And I think about it, "Okay, here are all the risks, here’s how we're going to fail, here’s how somebody's gonna beat us to market, here's how we're not gonna have market adoption." And then when we know that we're pushing the product. But I see these other risks in my mind hanging out, and I'm like, ah, the product isn’t as big of a risk in my mind, because we have the competence and the skill and the team to deliver that, then I find it's tougher to be focused in on, okay, let’s deliver this thing, because then it’s, oh, well, I’m gonna take a couple hours and work on these other risks, and take a couple hours and work on these other risks, but I find that that’s kind of a self-inflicted speed bump, I would say, in delivering as fast as possible. When we deliver, I don’t want to build this thing and then find out after the fact that it’s not going to work, right? And so it’s that pivot early mindset and bringing in people then to help understand, "Okay, are we on the right path? Do we have to pivot early?" Let’s go talk to customers and engage with our consumer base on this really, then gives us the authority to say, "Let’s put the pedal to the metal and go, right." We don’t have to, like, wait, look across, and kind of, like, wait for the right information to come, because he's getting us the information to say, full steam ahead, let’s start going.

Callan Harrington 21:25
So you mentioned product-market fit a couple times. At the speed at which you found product-market fit, what’s the story? How did you get to that point?

Aaron Crookes 21:34
So actually, once we started down this kind of nurse assistant concept, there was somebody that we knew in a hospital venture innovation group who I actually talked to when I was at P&G. We got in touch when he saw on LinkedIn that I, like, got this NSF grant and was starting this company. And he said, "Hey, if you ever want to come down and see our hospital and pressure test what you're working on, let me know." So I said, like, absolutely I do. I have no idea what I’m doing, so let’s do this as quickly as possible. So we went down and started testing this kind of nursing robot concept, and struck out left and right. Everyone was like, "Yeah, this would be great, but it’s gotta do all these things." And now we’re building this robot that could get really expensive. And they're like, "Turn patients in their bed for me." So now we’re looking at, like, can we hang robots from the ceilings, and can we do all these crazy things of, like, million-dollar capital equipment just for, like, a bed sore kind of solve? And really, what we learned quickly was there wasn’t really a financial incentive for the purchasing groups of the hospital to really push HCAP scores—that’s kind of the quality of life score. So, like, a patient leaves the hospital and they fill out a survey of, like, how good was your care? If you get good results, then CMS and Medicare/Medicaid will give you higher reimbursements on your medical cost, but it’s really to the tune of just, like, a couple $100,000 a year for a hospital system. So if you're saying, "Oh, well, I've got $500,000 fleet of these robots," they're gonna look at that and they're gonna say, "Well, maybe that’s gonna change HCAP, but, like, you're not gonna give me a full multi $100,000 bump just from, like, refilling someone's water." So they said, "No, we’re good, but we have all these other problems. If you can solve one of them, come back." And it was actually one of the final interviews that we had with an internal medicine physician at the system. We're talking with him, and he was like, "What keeps me up right now is that it’s taking multiple days for my patients to get a discharge echocardiogram." And so that’s the heart ultrasound, where they take an ultrasound probe and move it across your chest to get different views of your heart. I didn’t know that at the time. I googled that quickly after that conversation, like, "What is an echocardiogram?" But he said, "Right now, when you have a stroke or you're in the hospital and you're waiting to be discharged for other reasons, and you've been laying there for a while, a lot of times, they want to check to make sure, okay, is your heart okay, or do you have something that could induce, like, a heart attack when you start moving and are physically active?" So they call them, like, discharge echocardiograms, of, like, we can’t send this patient home until we look at your heart just to make sure. And it’s pretty standard protocol for a lot of different patients that are inpatient settings. He’s like, "I call for an echo, and it could be days before a tech shows up, and we...

Callan Harrington 23:59
They can’t be discharged this entire time, right?

Aaron Crookes 24:01
Right.

Callan Harrington 24:02
Interesting. Yeah, there's a huge cost to their waiting in bed, right?

Aaron Crookes 24:05
Yeah. And you have all these patients waiting two days for the echo tech to show up to actually acquire the image and then be able to discharge that patient. So he said, "If you can somehow make that faster," and there's a shortage of sonographers as well, which we didn’t realize. And then said, "Okay, let’s start figuring this out," because I think that was like a pretty clear need to us, of like, I think this is the right way to go. And started investigating, can we do this with a robot? What kind of AI does this take? Let’s figure this out. And then went back under an NSF, like I-Corps grant that set us back for customer discovery, and talked to their heart and vascular leadership. And luckily, the venture team was in that meeting too, and the leadership said, like, "Yeah, we would buy 60 of these tomorrow." And so that really then kicked off this spin out of reaching out to cardiologists on LinkedIn. And we had almost 100% response rate from cardiologists cold calls on LinkedIn of like, "Hey, we’re building something to make echoes faster. Do you want to talk to us?" So we talked to cardiologists all over the country. Okay? About 100 of them all heard from them, like, "Yeah, it’s a wait time issue. It’s an access issue. We don’t have a solution for this." There are other ways that are trying to, like, tangentially solve this in the market, but nothing is directly taking on, like, full TTE protocols in the way that they've seen.

Callan Harrington 25:26
How have you turned that into customers?

Aaron Crookes 25:28
We're still early, right? And so we're getting these clinical pilots set up. And so from a clinical pilot perspective, it's been, you've got to start with your clinical champion. So you’ve got to find a clinician that is excited about what you're doing. Because if you approach a hospital system without an excited clinician, they’re going to look at you and be like, "Hey, yeah. Like, we don’t have time for you. Good luck." But if you say, "Oh, I’ve been talking to Dr. So-and-So," the first thing that person is going to do is call Dr. So-and-So. So if you can get a good conversation from them, then all of a sudden you’re starting to get a little bit of traction. That says, "Yeah, we might want to see this robot. Can you bring it in?" And so then it’s, "Okay, let’s try to figure out, how do we get them a demo? Or can we bring them to Columbus, if they're close and local? Or can we basically put it in the back of my Hyundai Tucson and drive it up to whatever hospital system and try to get a demo, so they can get people’s hands on it and start to feel what this looks like?" And then for us, right now, the next step is clinical pilots of "Let's do something under an IRB study," so we’re not actually having people pay for it, but we’re placing it under a research scope to prove that it’s efficacy, to prove that we're capturing images that are diagnostically relevant, and this starts to get out of the rabbit hole of medical pushing things to market, but it’s a pretty scripted pathway you have to follow of buying clinical evidence. The FDA then. So we're pre-FDA and working towards that FDA approval. And then once we're FDA-approved, we can actually make money off of what we're selling.

Callan Harrington 26:36
How do you raise capital in that you essentially have this ambiguous timeframe on when you can turn this into revenue?

Aaron Crookes 26:45
The best way to do it is having investors that know this world. Because what you can hear from a general investor is, "Well, why isn’t this happening yet?" or "What's the delay with this?" or "When can we make money off of this?" And it’s like, we’re pushing, but, like, we have these things that we have to do to actually get into place. And hospital purchasing cycles are 18 months. And so, like, the time that we actually put a robot in, we’ve got to have enough capital to make sure that we can actually get paid and not be out of business by the time the revenue cycle is going to start to hit. And so our preference is getting investors that are knowledgeable about the space, what it takes from a regulatory aspect. A lot of actually using kind of, like, strategic investors has been our seed round led by Orlando Health Ventures out of Florida, which is actually associated with a hospital system. And it’s their fund that the hospital system helps fund that says, "We have these problems. Go find startups that are solving these problems for our system." And they do a few deals a year of, like, okay, what are the most pressing problems for the hospital, and what are the startups that are solving these problems? And so if you can find alignment with, "Okay, our problem is pressing, and they have seed capital, but they also have follow-on capital to then continue to help fund us and getting a few hospital systems on your cap table," then it says, okay, they're gonna actually push you through the journey, right? If you hit a snag because you can't find a clinical partner for putting your IRB robot into a hospital while your hospital’s on your cap table, you just call them up and say, "Hey, I need to put my robot in your hospital." And they say, "Great, here’s one of our echo rooms." And so it actually makes that pathway a lot easier for us. And then starting with that base, then you can sell that to other investors when they say, "Oh, well, it's so long since you're going to have revenue, and no hospital is going to sign an LOI, and nobody's going to do pre-purchase orders if you're not FDA-approved." There's all these things like, "Good luck if, as a startup, you’re not going to get a purchase order from a hospital pre-FDA, unless you're really close to FDA clearance." We've got to prove to our other investors that are still medical but aren’t hospital-associated to say, "Well, show me you have customer traction." And we can say, "Well, look, like, we are too early for people to give us money for the robot, but they gave us money to develop this robot because they think this is going to be a solution for them." And so it’s kind of our way of getting an LOI is getting investment from those hospitals to do this.

Callan Harrington 28:54
At some point, will you have to get more generalist investors? And I guess another way of asking that is, I may have my own opinions on this, but I’d love to hear from your perspective, what are the downsides of that, of having mostly strategic investors versus your traditional institutional investors?

Aaron Crookes 29:10
We’ll find out. I think this is my first startup. So the next key step, right, is when we think about what’s the purpose of seed capital, and what's the purpose of pre-seed or seed? And it’s kind of, okay. We are betting on an experiment to be successful. And so, in our mind, we are de-risking the product at this point. And it's going to be from a tech standpoint. It's going to be from commercial adoption. It's going to be from "Will sonographers even feel comfortable using a robot to scan?" And I think when you have a generalist investor working within that early-stage medical market for, like, "Okay, this could take a couple of years to figure all this out," just because of the bureaucracy and how we’re working with FDA timelines and research studies. Then when we think about our Series A, that’s really going to be that growth-stage capital, so it’s going to say we have proven all the medical stuff out. And so, yeah, we have long purchasing cycles, but that could be the same in other industries, any of those.

Callan Harrington 30:24
Yeah, exactly. Right?

Aaron Crookes 30:25
And so then we can start to bring in more of the generalist investors to say, okay, great, we’ve cleared a lot of that very specific medical stuff, and now we’re working still within hospital systems and group purchasing organizations, and pushing this in different ways, and maybe selling into other OEM strategics to then distribute. But now we're a business that's scaling, and that's, I think, a more like, let’s bring them in for that kind of conversation, because now we just have to scale and scale inside of healthcare. But still, it's a scaling less of a like, "How do you push innovation inside of medicine conversation?"

Callan Harrington 30:34
How do you think about and how do you stay on top of what you need to do personally to lead the company at that stage?

Aaron Crookes 30:41
I don't know how much I've thought about that yet. We’ll see if I'm the person leading the company at that stage too, right? Like, I expect they'll be involved, but I might not be the scaling person. We’ll find out. I just have never done it, and so I'm happy to try. I think we’re building contacts. I'm trying to build a network around us so that when we get time to scale, like, we're not building relationships. We have them now. So it's, "Okay, how can we start to talk to these different groups and build these relationships and lean on other people to help us that are outside of a pre-seed." But I also expect at that point, like, we might need to bring in somebody that is proficient at scaling startups. And how do we work within these groups? And if they come in as a Chief Commercial Officer, if they come in as a CEO, that may be the best thing for the startup. And in my mind, at least personally and mentally, yeah, it'll be great to have a good payday, right? We have fiduciary obligations to investors. Like, we need to do what's best to make sure that there's returns on investment. But the reason we started this startup is not to make money, right? It’s to really, how can we get this robot out there and solve this problem? And there's other ways to make money. A startup is not necessarily it. If you're a founder, you actually lose quite a bit of money up front and take a significant pay cut. So really, anything that we do, my goal would be, let's put the startup first, and not me first. And so wherever I have to sit to make sure that that happens. I'm comfortable taking that role. Now, when the rubber meets the road, we'll see actually what happens. And can we get the right person in? And do we all feel comfortable with the vision, the mission aren't changing, but as of now, the mindset is right person in the right seat.

Callan Harrington 32:14
If they need a title, that’s my title right now, slapped to them, like, great, like, they can have the title.

Aaron Crookes 32:19
Exactly.

Callan Harrington 32:21
Which is likely why it's nine times out of 10 going to be you. Exactly what you just said. We'll see. What I've heard is, like, you're looking at this as two-fold, and correct me if I'm wrong on this, but you're looking at this as a shareholder in what's going to put the company in the best position to be successful, and then more importantly than that, what's going to be the right structure and whatever really is the one on the ladder of solving this problem, you'll support either way. Is that right?

Aaron Crookes 32:47
Yeah. I mean, as long as there's not going to be, like, tanking the financials of the company, because then that also doesn’t solve this problem. If we’re not making money in revenue, and we're not sustainable, then that also would mean we can't solve this problem, you know? And so I think the two are coupled together. If we solve this problem really well, it’s going to be a good payout, because it’s a problem that needs to be solved. We have customer traction. We know that people are willing to pay for this. So if we can solve it, the rest will come. I just don’t want to put the rest will come before the, "Let’s solve it." Yeah, in our mind of, like, why are we doing this? And it’s, like, not to make a billion dollars; it’s to solve this problem.

Callan Harrington 33:20
Yeah, you're looking at it from a very missionary perspective as opposed to a mercenary perspective, right?

Aaron Crookes 33:27
Yeah.

Callan Harrington 33:28
I love it. Aaron, last question I have for you is, if you can have a conversation with your younger self, age totally up to you, what would that conversation be? What advice would you give them?

Aaron Crookes 33:36
It’s probably one that, when I met my wife in college, she lived by this mantra: "Seek excellence, not perfection." We joke that I’m a recovering perfectionist, where everything had to be perfect, and excellence wasn't good enough. And so really, it’s, how can you do something that's, "Hey, this is good enough. Move on." Like, don't stress about it. Don’t stay up all night trying to get this one little, tiny thing absolutely perfect, and miss out on other things because of that. Because in the end, like, no one really cares between excellence and perfection, and in the end, like, perfection is generally gonna slow you down. And so if there are things to really go after, it’s, "Do something with excellence." That’s been the biggest change with the startup as well, in my mind, that as a startup, if we’re seeking perfection, we will never get off the ground, we will never launch a product, we will never raise money, we will never pitch because our pitch deck's not perfect. And so it’s like, great, the pitch deck’s excellent, it’s not perfect. And, like, I could spend another eight weeks diving into every little colored box on the pitch deck. But like, no one cares. It’s fine. And so I think really making sure that, like, okay, like, we're good enough, let’s move on, is a big thing for me.

Callan Harrington 34:44
I did the exact same thing. I read a book called "Paradox of Choice." I don't know if you've ever read it, but they talk about satisficers and maximizers. And a maximizer is exactly you just described: if I don’t have the absolute best, I’m not going forward, or whatever that might be, yeah. And a satisficer is, once that standard's met, you go. And I was very much a maximizer. I love that example. Aaron, this has been great. I really appreciate you coming on today.

Aaron Crookes 35:06
Thanks for having me. This was fun.

Callan Harrington 35:10
I hope you enjoyed Aaron and I’s conversation. I love talking through Aaron's story of finding the right product offering and how it often takes a few iterations before you land on that right offering. If you want to learn more about Aaron, you can find him on LinkedIn in the show notes. Also, if you liked this episode, you could find me on LinkedIn to let me know. And if you really want to support the show, a review on Apple Podcasts or Spotify is very much appreciated. Thanks for listening, everybody, and I'll see you next week.