Wisdom from Eric Stone, CEO of Velano Vascular Adapted from an interview by Scott Nelson
Eric Stone, co-founder (with Dr. Pitou Devgon) of Velano Vascular, has been referred to as “the Steve Jobs of drawing blood.” Velano’s first device, PIVO, enables needle-free blood draws directly from peripheral IV catheters. Velano Vascular is backed by a series of well-respected investment firms, leading U.S. health systems, and dozens of health industry veterans.
Before starting Velano Vascular, Stone served as VP of Sales and Marketing for MolecularHealth. Prior to that, he helped launch the world’s first bioabsorable stent for Abbott while working out of their California and Belgium offices. He was also a founding member of Model N’s Life Sciences division and began his career in software marketing with Trilogy.
Eric has accomplished an amazing amount in his still relatively young life. We interviewed him to discover what drives his success and what insights he might offer to others.
He and Dr. Devgon founded Velano early in 2012 and have since racked up a series of accolades, including the Frost and Sullivan 2016 New Product Innovation Award. He modestly describes the experience as “a journey of exceptional people and this overarching commitment to a vision that is human-centered at its core.” Velano grew out of questions asked by a patient to Dr. Devgon.
It has stayed true to its goal of human-centered design, with both the patients’ and the practitioners’ interests in mind.
The “family” at Velano includes hospital partners and clinical collaborators, investors, advisers, and employees. Eric says “I see and view every one of those individuals and institutions as taking a bit of a risk, personally, with respect to their role and their organization and association with Velano by respectfully challenging the status quo of an extremely entrenched practice.”
MILLIONS OF PROCEDURES, LITTLE INNOVATION
Their first technology is related to drawing blood from hospital inpatients, a fundamental aspect of clinical care. Seventy percent of medical decisions are based on the data that comes from this blood draw, yet Eric points out that they’re done at four AM and five AM when everyone is supposed to be sleeping and healing.
Velano set out to respectfully challenge that status quo for how hospitals are drawing blood. With limited human and financial resources, it has received three FDA clearances and a European approval, or CE mark. They’ve conducted tens of thousands of blood draws on hospital patients with their first marketed product, PIVO, at some of the leading hospitals in the United States. They’ve identified a host of opportunities for enhancement and innovation in the hospital, all patient-centered and practitioner-centered in nature and all related to the vascular access domain, which has been, in Eric’s words, “a pretty under-appreciated space. Which is a bit ironic because our patients are becoming increasingly ‘DIVA’ meaning difficult venous access.”
In a typical hospital network, there are perhaps a million blood draws a year. What else do you imagine a hospital is doing a million times a year?
This includes obese patients, the elderly, diabetic populations, and even patients like Eric who suffer from chronic illness and experience repeat hospitalizations. These are one of the fastest-growing coteries of inpatients in the hospital, an estimated 30% of hospital inpatients.
The blood draw is arguably the most common invasive medical procedure conducted in a hospital every day. Yet, in Eric’s experience as a Crohn’s patient over the last 25 years, and his observation of the medical field, it’s “overwhelmingly under-appreciated by hospital administration and even in many respects by clinicians or practitioners.” In a typical hospital network, there are perhaps a million of these procedures a year. “What else do you imagine a hospital is doing a million times in a year?” Eric asks. An average patient may have one or two blood draws a day, and in a critical care setting, three, four, or five. Yet the innovation in this area has been negligible—until Velano was founded.
How does Velano draw blood without sticking patients repeatedly with needles? “It comes down to the technology that has been around for quite some time that nearly every hospital inpatient has in their hand or their arm called the peripheral IV catheter,” says Eric. These are short, roughly one-inch pieces of plastic, they’re placed into the body over a needle upon admission to the hospital or entrance to the emergency room, primarily for introduction of fluid into the body to infuse drugs, nutrients, and saline.
The clinicians refer to this as “access” and it’s used in emergency situations for rapid infusion of fluids, but it’s also used for daily antibiotics, saline introduction, etc. Those IV catheters are extremely effective for infusion of fluid, their primary purpose. It’s possible to used them for blood draw, but “most hospitals have policies not to do that because those IV’s lose their integrity for aspiration of nonhemolyzed lab quality samples very quickly,” Eric points out.
“So they become a one-way conduit to the vessel, but if you try to pull blood back off of them, it’s either difficult to get blood back or, if a practitioner is able to get blood back, often times it’s hemolyzed. The red blood cells are torn, or sheered, and the laboratory will then kick the sample back to the floor, or to the ER and ask the practitioner to redraw. You can imagine that it’s difficult for the practitioner, it’s difficult for the patient, it delays care, delays treatment, delays decision making, etc.”
Velano came up with the idea of utilizing a single-use disposable device called PIVO, which very simply is a tube in a tube. It attaches to the peripheral IV catheter. On the back of it, you attach either an evacuated tube holder or a syringe, depending on what your preferred mechanism is for drawing blood and advance the PIVO, pushing a very small soft, flexible tube through the IV catheter.
It overcomes the reasons why IV’s fail to aspirate nonhemolyzed lab samples back over time. “The first is kinking, or collapse of the IV, when you suck back and our tube goes through and unkinks or uncollapses the IV,” Eric says. “The second is that you’ll get debris at the end of your IV catheters. Particularly if they’re not frequently and well maintained by flushing with saline. Our tube goes past the end of the IV past any debris into the vein or the vessel. The third is you may be up against the vein wall, or the vessel wall, or up against some type of anatomical structure that precludes you from pulling blood back. With PIVO, the practitioner very simply draws the number of tubes required for that blood draw and then retracts our device back, un-attaches it, flushes the line and moves on to going about their day.”
PATIENT, PROFESSIONAL, MARKETER, ENTREPRENEUR
Eric’s background as both a patient and professional explains a lot. He was diagnosed with Inflammatory Bowel Disease (IBD) 25 years ago as a teenager. Right out of school, he got into marketing with a software company in Austin, Texas called Trilogy. He describes his luck “to serve in an extremely entrepreneurial culture in a particularly entrepreneurial role where I learned a great deal about marketing and a great deal about building a business.”
It was there that he became acquainted with a University of Michigan professor, Noel Tishi, who coached the Trilogy CEO, among many other prominent executives. “I became enamored with the world of organizational psychology; the intersection of business and psychology, all coming back to human behavior. Studying human development at Harvard enabled me to fashion my own master’s program in human development and leadership studies. From that experience, I was exposed to really unique approaches to thinking about building and sustaining organizations. That experience, those studies, those professors helped provide me with some of the frameworks for critical thinking that I use today.”
These became the building blocks for Eric’s success in “this melting pot of functions ranging from finance to marketing, to operations, to developing products, to selling, and of course, the human behavior side of it. Everything really does come back to people, team members, customers, partners, investors. It has carried forth a lot of the value that we’re creating at Velano today.”
After Trilogy, Eric followed a colleague of his to the Bay Area to work for an Accel-Kohlberg Kravis Roberts (KKR) funded company called Model N added to Eric’s education. “I was quite enamored with the leadership team at Model N. Serial, successful entrepreneurs and exceptional backers. I was really able to learn from a group that I would call true rock stars.”
Model N was a platform technology company providing solutions to the construction industry and the beef, pork and poultry industries, two spaces Eric knew nothing about. But “I was fortunate enough to be placed on a project by our CEO to assess the life sciences market and the utilities market. I was charged with putting together an assessment of the market opportunity over a few months’ period.”
His team was designated to develop a life sciences business, specifically software applications for life science companies. He served as the head of marketing and business development alongside the head of products, and head of sales, and the general manager. “The four of us went out and built aspirational solutions and sold to our very first customer, a division of Johnson & Johnson called Ortho Clinical Diagnostics.”
“It’s really a pretty exciting opportunity to show those individuals you look up to that, ‘You know what? I too am able to achieve something that’s significant, just as you have.’”
The investors and clients from those years became relationships that helped Eric advance his career. “I fell into the space at the intersection of software and healthcare. I’ve always been passionate and motivated to find a way to give back and to participate in healthcare as a patient and do feel really fortunate how it’s all worked out. I do believe that change and impact and innovation, it’s really all based on people. We wouldn’t be able to do what we’re doing without those folks that took a risk and a bet on me 15 plus years ago and are doing it again today. It’s really a pretty exciting opportunity to show those individuals who you look up to that, ‘You know what? I too am able to achieve something that’s significant just as you have.’”
His next move was to Abbott Vascular, from 2007 to 2011, being involved in their launch of the bioabsorbable coronary stent. “It presented many opportunities and a real air of excitement. At the same time, there was a lot skepticism around whether the product was truly differentiated. Is this product truly viable and necessary, and is there a true market need? I think that the verdict is still out, but it very much forced us on a daily basis to think through our commercialization, planning, and strategy.” During his Abbott stint, he lived in Europe for a year and traveled throughout Asia, giving him valuable perspective on a global scale. “It was a remarkable experience in understanding that not only is every country around the world quite unique in how they deliver healthcare, but even to the level of the hospital, there was a whole host of distinctions. One size definitely does not fit all.”
It influences him to this day. Building a growing business, with limited resources, Eric and his colleagues struggle with bringing the personal relationship and customization to their approach in delivering healthcare.
THE CO-FOUNDERS MEET AND CONNECT
At Molecular Health he met Dr. Pitou Devgon, and thus began the relationship that led to Velano’s founding. Eric knew he had an idea that was in the vascular access domain but was relatively under wraps. “I think back to that first meeting with Pitou in a bar in Philadelphia where he took out a prototype that he had fashioned in his kitchen from products from the hospital where he worked.
“Right away in listening to him talk through the unmet need and the genesis for his idea, it dawned on me that this truly was a game changer. And not only would this be a great medical device, but this would eventually touch the lives of every human being on the planet— talk about impact. I believe it then and I now know it will in fact be the case.”
Eric was impressed by the concept, but also by Dr. Devgon’s intellectual curiosity and his ability to “tug at the thread of statements and perceived facts, which really at the end of the day is folklore made by clinicians, made by patients, made by industry and the large medical device manufacturers. That intellectual curiosity and that unrelenting desire to challenge the status quo, along with his creativity, was the foundation for our company.”
Eric is confident that that first meeting in a bar in Philadelphia is going to result in a better standard of care nationally and globally, one that will touch every single person on the planet. We will all spend time in a hospital in our lives and we will all need our blood drawn. “And whether the product is called PIVO or it’s called something else, the new standard of care even just five years from now will be doing exactly what we have developed.”
Then, of course, came the challenge of getting funding for their company. Four retired Abbott corporate officers became investors in Velano. “During the course of roughly a three-month period, I pursued an approach to founder dating. That’s how I refer to that period in my life where I met with inventors and ideators all over the country, all of whom were introduced through my personal network.”
“I think back to that first meeting with Pitou in a bar in Philadelphia where he took out a prototype that he had fashioned in his kitchen from products from the hospital where he worked. Right away in listening to him talk through the unmet need and the genesis for his idea, it dawned on me that this truly was a game changer.”
It was a long journey. Over two years, the founders had day jobs and raised only $150,000 from 10 individuals. “But it was a purposeful fundraising strategy and a very cautious strategy of a crawl, walk, run, fly, and to this day we still follow that model,” says Eric. “Those individuals almost exclusively had backgrounds in the healthcare domain, from an interventional radiologist to a device company, to an executive at Medtronic, to a senior executive at Boston Scientific, to an executive at Abbott, to a healthcare venture capitalist, to a healthcare banker. Every single one of those individuals back then, and to this day, provided extensive amounts of guidance and counsel that far outweighs the relatively minimalist dollar figure investment they made in the business.
During the course of those two years, they set forth to accomplish four milestones to determine if there really was a “there there.” “The first was to prove technical feasibility. Could we build prototypes that could work in a bench setting to draw blood through a peripheral IV catheter? We found a third party prototyping firm and worked quite aggressively with them on fast cycle time iterations. In some respects, an approach we took when I was in the software world of iterating, and iterating rapidly, to get to a point where we felt that from a bench setting perspective, we had accomplished feasibility.
“The second was around preclinical functionality. Could we draw blood off of a peripheral IV catheter through our device, not through the IV, but our device that was non-hemolyzed in nature, where the lab analysis results were at parity with blood drawn out of a needle—today’s standards of care? We did that, and we were very thoughtful about our work in the animal lab, and we showed results from prototypes that accomplished this milestone.
“The third was around intellectual property. This really is the foundation for any sustainable business. Based initially on Pitou’s invention, we had a similar patent in the space issued and then moved on in an aggressive fashion to develop additional intellectual property, and that has been a fundamental pillar upon which our business has been built.
“The fourth milestone…is market assessment and market development. If we build it, will they come? A lot of great medical technologies have been developed that are laying in a barren desert right now because there wasn’t a market for them, or the founder under-appreciated the uphill battle to move towards regular use and reorders.”
During those two years when they still had day jobs, they spent nights and weekends with hundreds of stakeholders, from patients to nurses to hospital administrators, and built a list of reasons to do it— and not to do it. “The validation was so great that if you could make this work technically and clinically, that yes, if you build it, they will come. And that’s what gave us the confidence along with these other three milestones to leave our day jobs and raise a series A, and go out and build the business and establish a standard of care.”
Their approach to financing the business was similar to their approach to identifying hospital partners, the right employees, advisers and more. Eric says it’s about looking through the lens of the reasons to believe as opposed reasons not to believe. The first two hospitals that invested, The Children’s Hospital of Philadelphia and Griffin Hospital, resulted from conversations with two visionary CEOs of those institutions who both said that “This is interesting, this has an immense opportunity for impact, we would like to be a part of this and can we invest?”
Eric explains that “Those are not hospitals that have venture or investment arms like many of the larger health systems. But just visionary individuals who saw the opportunity for impact and wanted to help us make it a reality.”
Since then, they have gained the support of larger institutions like Sutter Health, a 24-hospital system in California. “While the investments may not make or break the business from the perspective of the size of the investment, and while a potential return on their investment may not determine the future of that hospital or hospital systems, there is an unbelievable alignment behind the mission orientation of what we’re doing. Which is that they want this product for the patients and practitioners. They want to be able to deliver less painful, safer human blood draws in a way that the hospital can benefit financially, become more efficient, less costly, etc.”
Eric believes that their diversity of investors has been crucial. There are traditional medtech investors like Safeguard Scientifics, the hospitals and angel investors who have run large companies like Abbott and Boston Scientific, and insurance companies. “Their advice and counsel is priceless.”
PIVO sits at that classic intersection of improving the patient experience, while also helping our healthcare systems achieve a certain amount of financial profitability. So how does Eric think PIVO fits into that equation?
“We tell [our hospital partners] how many [blood draws] they did, what percentage were between the hours of two AM and seven AM, what percentage of their patients had two, three, or more in a given day. The insights… are quite profound. Hospital CMO’s and CFO’s look at one another almost in shock. It’s really gratifying to be able to help them recognize what’s happening… and provide them a solution.”
“There is a sea-change for value-based purchasing and the democratization of information, more competition amongst hospitals. Patients have more choice now with their insurance plans and they have the internet, which gives them more information. And I think that’s why in part you see hospitals increasingly marketing themselves, and why you see billboards that suggest ER wait times in a city or a community that has more than one hospital. I think it is hospitals that are vying, in many respects, for their own survival. That’s why it’s valuable to have a technology that is better for the patient, that enhances patient experiences where we know there are direct dollars from value-based purchasing associated with that patient experience and patient loyalty. A procedure that can be safer for the practitioner, by removing the needle from the equation, that can potentially be safer for the patient, there truly is direct and indirect dollars and cents.”
factor, particularly with respect to the “DIVA” patient. A practitioner, or more than one, can spend 30 minutes to an hour trying to get a proper blood draw. Considering that 30% of inpatients are DIVAs, and the potential million blood draws in a hospital system, the dollars and cents quickly add up. “The first thing we do with our hospital partners, and our customers, is access every inpatient blood draw that they did in a given calendar year. We slice it, we dice it and we come back, and we tell them how many they did, what percentage were between the hours of two AM and seven AM. What percentage of their patients had two, three, or more blood draws in a given day. I think the insights, irrespective of our innovation, are quite profound. You see hospital CMO’s and CFO’s looking at one another almost in shock. It’s really gratifying to be able to help them recognize what’s happening in their hospital, and then very quickly provide them a solution to some of those opportunities.”
As a final thought, we asked Eric what advice he might give his 25 year-old self. His answer: “Probably be patient. Be patient personally, professionally and even from the perspective of having an impact. Good things will come.”
Scott Nelson is a self-described medtech enthusiast. He cofounded Joovv in 2015, a fast-growing photobiomodulation startup, and currently leads all of their commercialization efforts. Prior to Joovv, Scott held sales and marketing leadership positions for some of the largest medical device companies in the world, including Medtronic, Covidien, Boston Scientific, and C.R. Bard. In addition, Scott is the founder of Medsider, which helps ambitious doers learn from proven medtech thought leaders. His work with Medsider has been featured in publications like Forbes, Mass Device, MedCity News, and MD+DI. Scott is also an advisor to the Medical Devices Group, which includes over 300,000 members worldwide.