DTW - Think you know what Penumbra may look like in five years? CEO Elsesser’s vision might surprise

Hey everybody, this is Tom. Welcome back to the Device Talks Weekly Podcast. It's great to have you here. We're going to have an excellent interview I did with Adam Elsesser. He is the CEO of Penumbra. Adam has an interesting path into medtech, and Penumbra is a fascinating company, one that sort of keeps reinventing itself. Adam has some intriguing visions. Adam and the management team at Penumbra have some intriguing visions for the future of the company, so I know you'll enjoy that conversation. Chris Newmarker and I will run through the Newmarkers Newsmakers. Those are coming up. We'll also take a quick look back into Q1. Before we begin, I want to remind you that Device Talks Boston happens on May 10th and 11th. You can register at devicetalks.com. We'll talk about the program a little bit throughout. We'll also talk a little bit about Device Talks Minnesota, which is happening on June 6th and 7th. You can register for both at devicetalks.com, and you can use the same code for both, DTW25, and you'll save 25% off the price of registration. And finally, before we get into this episode of the Device Talks Weekly Podcast, I want to let you know that our sponsor of this episode, TE Connectivity, is hosting a Device Talks Tuesday on April 26. It starts at 4 PM Eastern. The title is 'Advanced Catheter Designs: Optimizing for Precision and Profile.' It features Bernard McDermott, an Engineering Fellow at TE Connectivity. Bernard was part of our TE Connectivity Device Talks Tuesday last August and remains one of our most popular, if not our most popular, episode. So it is sure to be a great show. You can do two things to register: you can go to devicetalks.com, you can also scan the QR code on the graphic of this podcast, and that'll take you right to the registration site. Again, it's 4 o'clock on Tuesday, April 26th. It's free. You can watch it live, you can watch it on demand, but make sure you watch it. Go to devicetalks.com for more information. And a little later in the podcast, we'll hear from Brendan Marinin. He is Product Manager of Metals at TE Connectivity. We'll learn more about TE Connectivity and how it works with medtech companies. All right, you ready for this?

Happy Friday, happy Friday, Tom. How you doing, man? Doing this on Friday again. Doing this on Friday. Got the coffee. We got so many emails, comments from last week saying people really enjoyed the Friday call. No one emailed, Chris. No one cares whether we do it on Thursday or Friday. But we do if we have an entertaining podcast. And no one noticed that wasn't entertaining. Say they like us. Let's see. Everybody show us how much you love us by sharing this podcast on LinkedIn. Anyway, all right, we'll save that for the end. I'm just gonna stick with the belief that we're entertaining, that people love us. Inside, I do believe. Good enough. We're smart enough. Dug on it. Great. Might think people like our podcast, gosh darn it. So I think last week I suggested we'd have a special guest this week because we had a reschedule last week because of my tum tum. Unfortunately, the guest couldn't make it this week, so you will have her on a future episode very soon. I hope not next week, but soon after. I'm optimistic. But that's why it's just me and you. But I hope we'll do okay, man. I hope we'll do okay. It's gonna be great. So we're gonna take a few minutes to kind of look back at the top stories of Q1. But before we do, just a little bit of housekeeping. We do have Device Talks Boston coming up May 10th and 11th. I bring it up now just because it's coming up fast. So folks, please do register. Please do use the code DTW25. I will be there. Chris will be there. Associate Editor Sean Whooley will be there. Our Senior Editor Daniel Kirsche will be there. Seeing a lot of people I actually haven't seen since the pandemic started. It's wild. It would be great to, for the first time, get folks who are listening to this podcast in the same building. And if you are attending, please, if you see Chris and/or myself, stop us and say hi and tell us you listen to the podcast. We'd love to meet you. Yeah, we'll be doing a Newmarkers Newsmakers in front of the crowd. I think we could do that. I got to build that into the schedule. You up for that? I'm up for it. I mean, hopefully the people are up for it. Like, wow, I didn't know it was that crazy. Gee, I don't know. I'm never listening to that podcast again. That was awful. Those guys just shut up. We definitely will do a little something on the stage there. And again, if you do see us there, please do say hello. All right, well, now speaking of the world's famous Newmarkers Newsmakers, let us roll into number five. What's the number five story of the week this week, Chris?

We have Sensonics launching the Cionic Next Generation 180-day Eversense CGM in the United States. This is an interesting business partnership. Sensonics has created the technology, they're the maker of the CGM, and Ascensia is doing all the marketing and selling of this device. It just got FDA approval in February, and now it's launched here in the US. So the first patient, really exciting news. It's interesting too because we were talking about how this is like the end of the first quarter, and interestingly enough, the most read story on MassDevice from the first quarter actually is a story that our associate editor Sean Whooley did in January with Sensonics' Chief Medical Officer, Dr. Fran Kaufman. That interview also ran on this podcast. It did. He actually interviewed her for the podcast and then turned it into an article. It's got thousands of hits, and just a really nice dive into this technology, this 180-day sensor that is implanted inside you. It was neat too. He closed off the article with a quote from her talking about how they're looking to get this, like, wouldn't it be amazing if we got a plan that would just last a year inside of you? So if you need to check your blood glucose, you can just kind of forget that there's this device inside of you that's measuring it, and you can just check your blood glucose whenever you need to. Pretty exciting. For those folks who have been managing their diabetes, this is an exciting time, and it's become easier and easier to see that day may come when you have an implant that could protect you for a year and help you manage your disease for a year. I can't imagine that folks would not be looking forward to that day.

Well, you know, I've got some relatives with diabetes, and probably you do too. It's everywhere. It takes a lot of time. It's a really time-consuming disease. The idea that you could have an implantable CGM, or Dexcom's G7 which is out, that was another really big story early this year. This is almost like the year of diabetes devices. Insulet with their new insulin pump. But the G7 has a much smaller profile. The less intrusive it can be in your life, the better really with this technology. And it bears repeating, we'll have Shacey Petrovic, the CEO of Insulet Corp, at Device Talks Boston. She'll be opening up day two on May 11th. She'll be our opening keynote. It'll be outstanding. I hope folks will really look forward to that. We'll see you there. So all right, well, good stuff. And that podcast, which was very popular as well, one of our more popular, it went out on February 11th. But folks, you can find that on your podcast apps or on devicetalks.com if you want to hear directly from Dr. Fran Kaufman. She's the CMO of Sensonics, and Sean Whooley interviewed her. Kevin Sayer, CEO of Dexcom, and Jeffrey Brewer, CEO of Bigfoot Biomedical. The question now is who in the diabetes space is not talking to Sean? It's pretty awesome. Let us roll on to number four.

Number four on the list, we've got GE Healthcare and Amica, I'll go with Amica, they're going to collaborate on brain MRI technology. The collaboration involves GE Healthcare taking its BrainWave Advanced Diffusion Processing package, and they're going to integrate this with Amica's non-invasive neuroimaging technology. So hopefully this is a nice partnership that'll help up the game with MRI analysis of the brain. Fantastic. It's just really exciting to see. GE Healthcare is going to be a standalone company soon, one of the largest medtech companies out there, and they're working on more innovation. So that's great. It would be nice to have them an active part of the landscape for sure, and to have them out there growing and acquiring and really contributing to medtech. Absolutely. Good news indeed. Hey, and talking about partnerships, number three on the list, we've got Olympus entering an exclusive US distribution agreement with EndoClot Plus. EndoClot Plus develops technologies in the hemostasis space, including their EndoClot PHS. It's a non-thermal, non-traumatic method for achieving hemostasis with GI bleeds. It's designed to help stop these types of bleeds rapidly and reliably. So this looks like an exciting distribution partnership where Olympus is going to get this technology out more to people. Olympus has become a large player in the Boston medical device space, and they've got a huge new plant out west of 495 in central Massachusetts. We will have them at Device Talks Boston. They'll be part of our single-use endoscopes panel along with Ambu and Boston Scientific. Important player. They've got a good presence here in Minneapolis too. And now let's hear a quick message from our sponsor, TE Connectivity.

I am here with Brendan Marinin. He is Product Manager of Metals at TE Connectivity. Brendan, tell us about TE Connectivity. Thanks, Tom. TE Connectivity is a global leader in sensor and connectivity solutions across several industries such as automotive, industrial equipment, aerospace, and medical. We are one of those companies that as a consumer you may not know, but we are the manufacturer of components in products you use every day. In particular, our medical business is built upon a legacy of leading and acquired brands: Creganna Medical, a leading partner for minimally invasive catheter-based technologies; MicrGroup, a precision engineering partner for advanced surgical metal tubing and components; and Precision Wire, a specialist wire solutions manufacturer, and a number of other entities that many of your listeners will have come across. We have over 4,500 employees within our medical business worldwide, with over 450 of those very talented and experienced engineers at our heart. We are an engineering company empowering engineers to solve the toughest challenges of our medical device customers.

That's great. We'll hear more from Brendan a little later in the podcast. If you need more information about TE Connectivity, go to te.com. Roll on to number two. Number two on the list, more spin-off news. When I really started covering this industry a little over a decade ago, it was all about mergers. We had so much M&A. And now it looks like we're in this trend of companies doing spin-offs. Some of these big companies are breaking up. One of the things we covered this week that was really big was that DJO's parent company, Colfax, changed their name to Enovis, and they took the fabrication technology business that they also had and spun that off as a company called ESAB. Now following that split, Enovis is a standalone orthopedic device company, arguably one of the 10 largest in the world. It's going to be run out of Maryland. So just another example of a company splitting up, and now we've got this standalone orthopedic device company that includes DJO. It's a fascinating time for orthopedics. But spin-offs, you're right. And you actually had an interesting article this week. Sean Whooley wrote that one up. The analysts were sort of speculating about the spin-out opportunities at Medtronic, identifying spine and diabetes as two principal possibilities for spin-outs. Obviously they're speculating on whether it makes sense. I think their take was it would be sort of a wash, that wouldn't be necessarily a windfall. But it's going to be interesting to see if Medtronic decides to shed some of those areas that perhaps it doesn't consider critical. But they've made some investments in the space. Certainly we had on the Medtronic Talks podcast recently a discussion about their use of AI tools and about customized spinal rods. So they're investing in this space. It's not like they're paring back at all. And they've just appointed a new head of diabetes. And they have that arrangement with Blackstone. So there's certainly a lot going on there. Diabetes, the top management at Medtronic has had some real challenges over there, including FDA challenges. But the top management at Medtronic has said in the past that they want to stick with it, this area where they really want to compete. So we'll see. But maybe it comes down to just because a bunch of other people are doing something doesn't mean you should do it. So we'll see. We got a bunch of big companies that are splitting off or spinning off businesses that they're arguing could be better off if they were on their own. But we'll see what Medtronic does. Absolutely. And that was again written this week by Sean Whooley, and definitely you can find that on MassDevice. Definitely some good questions. In the article that Sean wrote up from the Needham report, it quotes Jeff Martha saying, 'Our new operating model is giving us a line of sight into what is required to compete and win over the long term in each of our businesses.' Then he went on to say, 'As a result, we're looking at our portfolio with a more critical eye, with a focus on growth and creating shareholder value. I'd be surprised if there weren't changes over the coming fiscal year, but I don't know yet if they will be smaller or more significant.' So sounds like something's coming. Change is coming. What is the number one Newmarkers Newsmakers of the week?

Oh, the number one Newmarkers Newsmakers of the week is FDA approving Abbott's leadless pacemaker for patients with slow heart rhythms. This is their single-chamber leadless pacemaker. This has been one of the more exciting spaces, and actually Medtronic has been a leader in the space with their Micra leadless pacemakers. But now we got Abbott up in the game looking to compete more in this space. They've got some arguments for why the advantages that they have with their technology. I would very much like to see them come on this podcast. Absolutely. Really cool to hear them talk about it. We have reached out. We'll definitely be working with them in some regard to get this story told. But Abbott has been bringing it with structural heart and now with this, they're definitely moving into some huge areas, going right at Medtronic. We will have Abbott well represented at Device Talks Boston and Device Talks Minnesota, and certainly will have them on the podcast as well. I know Sean is going to be talking with Nick West, who's been on a few times. He'll be talking with him again in a couple of weeks. I generally think it's really good when you see more competition. You can't go wrong having more competition. It encourages everybody to up their game and hopefully innovate and get some more cool technologies out there to help people. So let's bring it on.

Absolutely. And I think competition is something that's being fed by the other big news of the quarter. The other most talked about topic in competition, along with the diabetes tech news, another story that really got a lot of page views on MassDevice so far this year was Medtronic's plans to acquire a cardiac arrhythmia treatment developer called Affera. Based in Newton, Massachusetts, like your neck of the woods. They designed cardiac mapping and navigation systems as well as a catheter-based cardiac ablation platform for treating atrial fibrillation. That's a really big space. Even Martha said during a Q3 call in February that this helps plug competitive gaps in Medtronic's portfolio. So a really good acquisition for them. As we were saying, more competition in the space, and they're laying down nearly a billion dollars to strengthen their cardiac ablation platform as competition increases. Really cool. This will help them in pulsed field ablation. We will actually be having a panel on pulsed field ablation at Device Talks Boston. We already have folks from Boston Scientific and Acutus on there. Both have been on the podcast before. Ken Stein from Boston Scientific and Steve Mickelson from Acutus. And I'm this close to having someone from Medtronic on there as well. So it'll be a great conversation. That'll be one of the first panels on May 10th. So outstanding. Lots of cool stuff. And I'm glad I have to go to this show. I mean, you gotta be there. I want to be there. I should go. I will go. I'll be there. We'll be there. You want to go to your own show? I think I have to. Well, luckily, if you look at the agenda, there's some really good stuff going on here. If I didn't work here, I would still want to go. So go. That's what I say too. This looks good. All right, well, a great list, Chris Newmarker. Good to look back on Q1. We'll do this again from time to time and take a look back. It's good to be reminded of all the cool stuff that's happening in medtech. It's really exciting. I just love the space. It's almost like a week doesn't go by where there isn't something just really fascinating or awesome going on.

Well, Adam Elsesser, welcome to the podcast. Yeah, thank you, Tom. Appreciate it. Glad to be here. We were just recounting before I push record, it's been about four years since we last talked. A lot's happened to Penumbra and to Device Talks and the world. It's going to be great to catch up. I'd love to understand, or if you could remind me about your path into medtech. It was interesting because you were an attorney to start, correct? Yeah, how'd you move into medtech and exactly running a medtech company? It's not a typical story, and it was not planned. As you said, I was a commercial real estate lawyer with a practice out here in the Bay Area in California. I had represented a bunch of tech companies—Yahoo, Google, Oracle, Adobe—in their real estate needs. I was a partner in my law firm. I had a great plan ahead of me that this was sort of my life. My best friend from college became a physician and focused on being a neurointerventionalist, the kind of doctor who does catheter work in the brain. Back in 1998, we happened to have a social dinner in New York just to catch up. He mentioned ideas he had for devices. In order to get him to stop talking about it, I said something to the effect of, 'We'll just start a company.' I wasn't obviously serious. The next day he called and asked if we could get together—or I shouldn't say asked, he insisted that we get together to start the company that I promised him, his best friend, that we would start together. And here we are. So there was nothing planned about it. It was pure happenstance. Sometimes the best things in life are like that. And that's literally the story.

That's awesome. That's as good a reason as any. And that company was Smart Therapeutics, correct? Yeah, that first company was called Smart Therapeutics. We made the first stent ever to go into the brain. We came upon that through processing nitinol thinner than other people had been able to do to make the physical product. We sold that to Boston Scientific. We stayed for a little bit, and a couple years later we started Penumbra. Penumbra had a very different mindset. The first one we felt just lucky to get a product made and through the FDA process. We didn't really know a lot more than that. But with Penumbra, we had spent a little more time, we had a little more understanding, and we thought we could do this in more areas than one. We could take our time to go after areas that might not be as quick to develop. So acute stroke, which was our first area of focus for Penumbra, was going to be a really long challenge. Because when we started with Penumbra, there were really three giant hurdles for us. One, none of our potential customers—neurosurgeons or neurointerventionalists, with a few exceptions and they're wonderful pioneers—many of them didn't really think about treating stroke. That wasn't in their mindset. They were like, 'It's not really going to happen. What are you talking about?' There was no reimbursement for a product at all. And there was nothing that we were working on that was patentable. So when you looked at those three barriers, we thought that was the perfect setup for success. Of course. So it was a little bit crazy, obviously. But here we are. One of the benefits of the way we did it is we never took formal venture capital money. Not a statement about that at all, other than we were lucky that from my law practice and life, we knew a lot of people with means. With our first company, we were able to raise money privately, just friends. With Penumbra, we were able to do the same. With Penumbra, I basically told the investors that were friends of mine, 'You can call me as a friend anytime because we're friends, but you cannot call me as an investor for at least 20 years, because what we're doing might take 20 years. It's that hard, that long. And you just have to accept that.' There are certain things in our space that take time. They need to be done. When you step back and say, 'I have a blood clot that's causing an acute stroke that is going to leave me either dead or impaired for the rest of my life, or I can try to get it out and have a much better shot at being closer to normal functioning,' every like, why wouldn't you try to get it out? But that wasn't the mindset at the time. So we knew that the products had to get better and better. It was really hard to make these products that did that. The first one wasn't going to be perfect. Here we are on our 10th or 11th version. We're still improving them, and we still have improvements to come. It was that journey that sometimes the more traditional venture capital model isn't really suited for. So we didn't need that. We were lucky enough, and we could build a different mindset. That's been true in our peripheral business. We're changing mindsets there around blood clots in your legs or your heart or your lungs. When we started, people didn't think that was likely possible. Here we are in the early innings of really fundamentally changing that, and probably another decade of growth to get everyone, as the products get better and better, to think about just removing blood clots and making it more democratic, if you will. So time sometimes doesn't line up with the more traditional model.

You identified three significant barriers there that could have steered you into another direction, but you decided to head down that track anyway. Which did you address first? You try to—I imagine you develop the device first and then try to use that to change the minds of physicians, and then the payers are going to come last regardless. Well, actually, the payers came. We were very lucky that CMS, I think, was very proactive. If you look at the cost to Medicare and the healthcare system in general of having a stroke and post-stroke care, it's one of the most expensive drags on our system. It's billions and billions and billions. So they were relatively proactive, and without an awful lot of data, they opened up a reimbursement pathway. But that came second. The devices came first. Again, they were good enough to start the game. You have to really care. There were some incredible pioneers in this field who really took on the challenge, physicians working with the companies and getting the products to perform and get better and better. Then reimbursement. And then the patent stuff. That's a funny thing. We are going into a trial soon on a product called Thunderbolt for stroke, back to our first. That has patents. That's the first real substantive patents that have mattered for us, and we've been around for 17 or 18 years as a company. So we went public. We built our entire business really, initially in stroke, with no patents focused on any of those products. It was a question that lots of investors had when we went public. We just said, 'The field's early. Innovation is still ripe. We're just going to keep out-innovating.' It turned out we did, and that was enough to keep us ahead. Now, as we get a little more mature, 17 or 18 years into it, we were fortunate to come up with an amazing innovation again called Thunderbolt that does have issued patents. But here we are. It's taking a long time.

Why take that route? It seems like people these days will patent a doorknob. They'll patent anything they can. Were you just confident in your abilities to compete without that sort of barrier to entry? A little bit. I developed some confidence. I won't tell you we don't think about competitors all the time. We're not—I never take anything for granted. We have a fair amount of thought around that so that we can make sure that we constantly stay ahead. But we also know the field pretty well. We know that unfortunately, for the field, a lot of people try to copy what other people have done. That's a part of the medical device field. When you have a lot to do and you know that you're not perfect, you can likely stay ahead of that. You gotta always try to stay ahead of that. Sometimes you get caught short by a month or two or a quarter, and that's never fun. But it's also not important in the scheme of the innovation that we're talking about.

Interesting. Well, let's talk about innovation. All right, we're back with Brendan Marinin, Product Manager of Metals at TE Connectivity. Brendan, how does TE Connectivity work with medical device companies? Our vision is to become the industry partner of choice for the design and manufacture of medical device solutions for our OEM customers. We estimate that 120 patients are treated every minute with a medical device containing our TE technology. So in that regard, we partner with both the world's largest medical device companies and the most innovative startups. We have sites in all the leading medical device hubs worldwide, serving our customers at their point of need. We can assist them with the design and development of the most critical metal components right through to ramping in an efficient and quality-driven manner for volume. We can support that volume manufactured through our locations globally, from our low-cost locations in Costa Rica, Mexico, and China, to our automated solutions across all our plant network in Europe, US, and Asia. And finally, we'll be talking a lot about neurovascular technologies. I understand TE Connectivity has a lot of work in the space. Tell us what are your offerings in the neurovascular space. Yes, absolutely. Neurovascular, no more than some of the other areas, we see continued growth and advancement and innovations in that area. In parallel to that, we're continuing to invest in our advanced engineering solutions for neurovascular. We have ongoing investments in the next generation of laser cutting, welding, and cleaning systems for small diameter shafts. We are developing modular solutions to help customers get to market faster and more efficiently across our metal-based solutions and our wire solutions. We're also about to launch our new Propel Prototyping Center offering, where we can offer quick turnaround support for customers in our metal shaft and wire product development efforts. This, in conjunction with the simulation efforts and engineers we have on board, will really help our customers and players in this market deliver improved solutions, the most advanced solutions in what is a very exciting neurovascular market today. Thank you, Brendan Marinin, for joining us on this episode of the Device Talks Weekly Podcast. And thank you, TE Connectivity, for sponsoring this podcast and for holding our Device Talks Tuesday on April 26 at 4 PM. Once again, if you want to register, the title is 'Advanced Catheter Designs: Optimizing for Precision and Profile,' featuring Bernard McDermott. He is the Engineering Fellow at TE Connectivity. Brendan says he's one of the more experienced metal shaft professionals out there, so you definitely want to catch this presentation. Go to devicetalks.com to register. You can also scan the QR code on the podcast graphic you'll see on the Device Talks website, or you can just click a few links and you'll be taken there as well. So lots of ways to register. You can watch it live or on demand, but make sure you watch it. Go to devicetalks.com.

Well, let's talk about innovation. I referenced the interview we did back in 2018. You appeared at a conference that I had helped organize, and on stage and also in an interview, you had stated that one of your approaches to remaining innovative and ahead of things is you like to—or at least you seek out—hiring younger engineers because they come at it with a newer and fresher perspective. Number one, am I remembering that correctly? Number two, is that still a philosophy you employ? Yeah, we have been really fortunate. We've been able to attract and hire just an extraordinary group of engineers. Unlike some folks or companies who might seek out somebody with a lot of experience—and don't get me wrong, we value people's experience—but if you think about the kind of work that we're known for, we're doing things that have never been done. If you're hiring someone that has been doing that for a long time, again, no disrespect intended to any experienced engineer, we have them and need them, but the odds of somebody sort of waking up on a random Tuesday and saying, 'Oh my God, after five years of working in this field, I figured it out today,' may be different than somebody who hasn't been doing that work. It might not just be chronological age; it might just be experience in that field. Fresh perspectives really help. The ability to look at problems from a fresh eye and say, 'What is it that we're stuck on? What aren't we yet at a point where the product is close to perfect? What do we need to do that seems to be more effective with people who have that ability?' Sometimes that's age, sometimes it's just a mindset. But traditional thinking doesn't help you do things that have never been done. If your motto as a company is to get another version of a category of product out there, then those people who have already done it become really important because they know how to do it. That's not how we think about our innovation. We traditionally don't like to just make products that are different versions of other products that are out there.

That's understandable. Looking again at your workforce, another thing I remember you talking about four years ago was you made a point of stating the diversity of your workforce. At the time, you said the majority of your employees were women, 80% of your employees were non-white. This was in 2018. Obviously, diversity was something we talked about back then, but it became an even greater focus in 2020 for a variety of reasons, including the killing of George Floyd. Has anything changed for Penumbra in terms of your approach to diversity? It seems like you were doing great prior to that. How did you look at the industry's renewed focus on that, and how are you approaching things going forward? I think it's a really great question. There's a lot of layers to that. We'll start with the most fundamental: who are we hiring? Are we hiring enough people of color, enough women? We have done, as you cited, really, really well. We didn't go backwards from those numbers since we last talked in 2018. So from the most basic level, that's not because we do anything unique. We don't have some program. We literally are just trying to find the best people for the jobs. In the case of gender, the population is women, and therefore it's not surprising that half of those people that fill those jobs are women. That's also true in our engineering ranks. About half of our engineers are women. That doesn't surprise us given the workforce that's out there. There might be groups within there that we could do better, and we're slightly underrepresented. But as a general rule, the company has done extraordinarily well. What we really tried to focus on in addition to that going forward in 2020 was something a little more subtle and a little harder to tease out. That is, how do we act as a company, the people within our company, around each other? Do we understand our unconscious biases as we interact with people that are different from us? We actually went out and sought stories, particularly in 2020, from some of our Black employees about what they experienced at Penumbra, again a company that prides itself in bringing in a diverse workforce. We put together a whole training around unconscious bias. I understand there's a lot of political anxiety and concerns around some of this stuff. It's nonsense. We all have biases. We all don't understand them sometimes. There's no one who's affirmatively, with a few exceptions maybe, acting as bad actors. It's bringing awareness to how our behavior impacts other people and creating an environment that really matters and is as supportive and open to a broad range of people. If you do that, it's not a political statement; it's a human statement. You're going to have a much better experience with people, and frankly, you're going to have a much better business because you bring in different perspectives, which means you're going to be more successful. That training, I think, is pretty cutting edge. Some of the stories are pretty poignant about people's experiences. I was incredibly proud of the folks who shared their stories with us so we could do that. We've been able to start that journey of, we again have done well, but really looking internally and saying, 'How do we keep doing this better and better so that we can get to the point where it is an environment that everyone can thrive in?' So I think it's continued. I'm personally very proud of it, and it shows in the diversity of our workforce.

And the final area I wanted to hit upon was your Real Immersive System, your VR system. I think initially, as I saw on the website, it was more of a stroke rehabilitation tool. Now I'm seeing additional applications for mental health and other uses. Talk about the system, but how does a VR system fit into a clot-clearing device company? It's a great question. Let me address that question first, and then I can describe the product. We have always viewed ourselves as a healthcare company. We don't put those limits on us, like by the customers or the type of material we use or the clinical area that we go into. If we did that, we would have stayed a neuro company focusing on one product. Obviously, since we talked, where neuro was the biggest part of our business, now our vascular side is much bigger than neuro. That change happened since we last talked in 2018. So we wouldn't have been able to do that if we saw ourselves that way. In fact, when we went public in 2015, I shared with investors that in five or six years, if we do three things—hire the best people, constantly innovate, and execute well—that our vascular business would be bigger than our neuro business in five or six years. We have done that. We had an investor day last September to talk about Immersive Healthcare. I reminded everyone that I had said that, and here we are. Our vascular business is now bigger than neuro because we did all those things. I then said that if we continue to hire the best people, innovate well, and execute, that Immersive Healthcare will be the biggest part of our business in the next five or six years. Wow. I said five to six years. You gotta give me a little wiggle. We still have to do that work. It's a brand new area. But it's so clear to the folks who have paid attention to it and done work in it that the need is there. The idea of using the tool of virtual reality across a large spectrum of mental health conditions and physical conditions and so on are there. The science behind it, the understanding around it, and a lot of it just comes down to friction of delivery of the tool and the product. So we've pivoted to really think about this as building a platform of technology where we're investing heavily in the hardware side as well as the software side and building the channels so that we can not only have our content but have third-party content on the system. Think about it like the Sony PlayStation model. In fact, we hired one of the most senior executives at Sony Interactive Entertainment, which is Sony PlayStation, who had been there from the beginning to help us do that, who understands all the mistakes that have been made and the ways to make sure we don't do them, and really lead our third-party developer effort. So that's the goal. For us, the fit is perfect. There are people who need help, and we have a really good solution that might help them. That's exactly our core mission. It's that simple. So for us, it fits in exactly with everything else we've done. It just happens to be a different customer base, different conditions, but it is exactly the mission that we've set out to do. A lot of the people in the field want us to do this. That's the most satisfying part and the most validating part. There are many companies, over a hundred mostly smaller organizations, that are working on great content. They're not more than a software company per se, and we can help them get that content out there on the platform. So rather than look at this as one person wins, there's an opportunity to harness the extraordinary effort of so many people and accelerate that out there as fast as possible. So it seems like an obvious fit. Again, we have to continue to hire the best people, which so far we've done; innovate, which so far we've done; and execution, that's always the hard part, but we're on our way.

Are you developing content and the software part of it only, or are you also developing the system itself? Yeah, we're working on all of it: the hardware as well as the software. There are two types of software. There's the software that runs the platform, which is different than the experiences within the experiences. Our own studios, three different studios now inside Penumbra, working on content, and again reaching out to lots and lots of different people who are working on content and getting them to develop it well and be on our platform. So lots of work over the next 12 months to make that a reality. But as that develops, so far I'm pretty optimistic. The reception has been amazing.

And does that put you up against an Oculus of Facebook? I mean, are you competing for that sort of market? Are you gonna have your own metaverse that you're gonna sell real estate in? Yeah, that's a great question. I don't think we compete against them. They're social media companies. They tend to be involved in entertainment. There's nothing entertainment about this. This is serious, real work necessary to help people get better. The metaverse is—I've seen videos and all that. We don't want to live in the metaverse. We want to live in the real world. Our product is called the Real System for a reason. We want to be involved in bringing people back to the most healthy state. So I think we're in different places, different worlds. I don't think we compete with those companies at all. It's just a different thing. I don't think social media companies want to be regulated by the FDA and everything else that goes with it. That doesn't strike me as an area that we're going to have to worry about. No, they don't tend to encourage regulation. And I see enormous opportunity with learning disabilities and other things as well, for sure.

So you gave the six-year window for this becoming a bigger part of your business. Is this the next phase, the only next phase for Penumbra? And this is my final question. Or are there some other bold predictions you've made to analysts that you could share as to what the company might look like half a decade from now? Not publicly. You want to do that here, or are you good right now? Probably not a good idea. Well, I'm just curious, how do you balance the very different businesses—the software content side and the metal device side? How do you keep everybody moving on the same train, moving in the same direction? Hire really good people and communicate a lot. It works. But yeah, they are operated differently. There's a different process. Again, I think we know enough about how to navigate in the healthcare arena to trade off that experience. We have an extraordinary team. The folks leading that effort are some of the best in the business. There's a lot of excitement about it. So it's pretty easy when you see the successes and hear the patient stories to keep motivated and to keep focused on it.

That's great. Well, I'll put in my calendar to check back with you another four to five years, and we can check your progress, see how good we went. Well, Adam, thank you for the time and for joining us on the podcast. Of course, my pleasure. Thank you. All right, Chris Newmarker. Well, it's good to talk to you on Friday, and it's gonna be great to put this podcast out. And how can folks find you out there in the land of social media, out in the social universe? I don't know why the social media multiverse. How can—I am now pure data. Oh, they can find me on LinkedIn: Chris Newmarker, just like Newmarker. You can find me on Twitter as well at @Newmarker. Always happy to talk about new things. Absolutely. And I am on Twitter at @MedTechTom, on LinkedIn: Tom something. Chris Newmarker, we want people to watch. You gotta like, follow, subscribe. There you go. Like, follow, and subscribe to this podcast channel. The Device Talks Podcast Channel features Device Talks Weekly, Stryker Talks which will come out on Monday, got a new second episode coming out on Monday, and Intuitive Talks which will come out later this month. So subscribe to that one channel, you get all this medtech content sent straight to you. And then while you're at it, follow Medtronic Talks, their own podcast channel, and you'll get the latest on Medtronic. So lots going on over there as well. We're back to our twice a month schedule with Medtronic Talks. So it's awesome. This podcast four times a month, Stryker Talks once a month, Intuitive Talks once a month, Medtronic Talks twice a month. That's a lot of podcasting. A whole heap. So please, you feel like a podcast empire builder, Tom? You feel like—I definitely want to be a mogul. I'd like to podcast mogul. Yeah, I want to sit in my office and smoke a pipe and squish the little man. That'd be fun. I think right. You know, you're going to run for the Senate then? Or I have Newsies in my head as I talk about that. I want to drive these evil—I was getting this evil senator thing, like bourbon in the corner. Just think Newsies. That's me. I'm gonna be in the wood-paneled podcast studio. Wood panel needs to come back. Would you do oak? Would it be oak paneling, or go for a nice walnut? What do you think? I don't know. We'll have to get some swatches and see what looks good. Yeah, there you go. I'll pay someone to get swatches because I'll be podcast rich and famous by that point. You're a mogul, Tom. Going to Home Depot? You send somebody else to Home Depot. Come on. Absolutely, absolutely. All right, we are way off track, but it's Friday and we're happy. All right, folks, thanks for tuning into this episode of the Device Talks Weekly Podcast. Please do share this episode of the podcast on your social media channels. Please tag Chris and/or myself. Don't forget to go to devicetalks.com to listen to all these great podcasts. If you don't subscribe, and while you're there, register for Device Talks Boston and Device Talks Minnesota. Use the code DTW25 to save 25%. And check out our roster of Device Talks Tuesdays while you're on there. There's so much medtech content, it's crazy. So go to devicetalks.com. All right, Chris, that's it. Take care, everybody. Enjoy the spring.