This is a great turnout. Thank you all for coming. And Elvis is in the building, so I'll try to be short. I just wanted to start by saying, what is Mayo Clinic doing at a med device meeting? What are we here for? Well, we have a team of about a dozen people here because we want to be top of mind as you think about how to partner with health systems. And I want to break out of the old idea that Mayo Clinic is just a customer or just a site for a clinical trial. And I think we could be a partner for co-development for new ideas, sometimes a strategic investor. And I think along the whole continuum from idea to product to deployment to scale, there's a role for Mayo Clinic. And we're really excited to build the future of healthcare. And we know that we can't do it alone. It's going to be with all of you. So that's why we're here. That's why our team is in meeting with you all this week. There's probably no better example for how we've partnered with strategics and startups than our 30-year history with Boston Scientific. If we can pull up, there's a slide. I only have one slide, but when I was preparing for this, we looked, we actually have a 30-year arc of interaction with Boston Scientific. And a lot of what we do in cardiology, I'm a cardiac electrophysiologist, is anchored on the technology that Boston has been able to bring to bear. So if you go back to the 90s, we were developing endovascular stents and cutting balloons. David Holmes and others had a lot to do with the development of left atrial appendage occlusion which became Watchman. We've had a master service agreement in place since 2012 and that has yielded 17 collaborative agreements and lots of licenses. Our CEO John Rico Fuja and Mike got together in 2019 and started an incubator together in the Discovery Square place in Rochester and that's yielded some technologies in device-based oncology care structural heart. Paul Friedman and others developed a band-aid electrode that became Preventis and later BodyGuardian for Boston Scientific. And we're really excited about work we're doing in the AI space. Mayo has hired a bunch of AI engineers to work within cardiology and that's helped us look at data in new ways, look at clinical problems in entirely new ways and we formed a portfolio company called Anumana and that's applying AI to various cardiac tests like the ECG and then electrophysiology workflow and Boston Scientific has a strategic relationship there and we look forward to seeing how that all scales. For full disclosure, that was part of my research before I got in this job as in business development. So I have some intellectual property that's licensed through Mayo Clinic to Anumana. But anyway, that's just to say we're really excited to create the future of medicine together. Think of Mayo Clinic as wanting to be at the leading edge of this and partner with all of you. So without any further ado, I'll welcome Mike Mahoney to the stage.
Thank you. Nice job. Thanks.
So I will say one thing as a practicing electrophysiologist our field has completely changed in the past couple years with the advent of pulse field electroporation. It's changed our outcomes. It's changed our patient selection and our workflows entirely and that's just another example of technology that you brought to the market. So you know thank you for that.
You're welcome. I didn't do much of it but I'm glad it's working out so amazingly well.
Maybe we'll just start by zooming way back and say how did you get involved in this space? What drew you to this? You know what's the origin story of Mike Mahoney if you...
It's not very... we have a lot of BSC people who are sick of this but I'll make it really quick because it's not that interesting. There's without a doubt who do you think did better in organic chem or Peter here? I was so I wanted to be a doctor like you wasn't quite good at... got my C minus in organic chem and I'm like I'm going to business school. And so the truth is I wanted to be in healthcare. My grandfather was a cardiac surgeon, pediatric cardiac surgeon. I was always fantasized. I always was so impressed with what he used to do and I was always think about like if you could come down again and see how it's changed.
They replace the valves in one hour. Anyway, so I wanted to be in healthcare. I was a well-rounded student. And so my first job, I had five jobs. I'll just tell you really quickly. My first job is one that I was the toughest job I ever had. I sold cash registers door-to-door, 30 cold calls a day in northern Indiana to restaurant owners and bars. And lots of closed doors and I think our startup leaders will understand this. So, you build a lot of resiliency. And every 90 days, I called up GE Healthcare because I wanted to get a job with them, but they wouldn't hire me because I wasn't an engineer and I didn't have sales experience. So, I eventually worked hard enough to get GE Healthcare to hire me. I was at GE Healthcare for nine years back in the heyday of GE. Many of you weren't born when Jack Welch was running it. And it was a very, very competitive company, very high performance. You delivered or you left at the time. But I was there for nine years. In my second career, I started a startup. That's why I have so much respect for all the startups here because it is very very hard. And I started a company called Global Healthcare Exchange, GHX, which is a kind of a automated supply chain software company that's actually done very very well in the dotcom era. And there I learned a lot about how to survive when you're a founder. And you worry about cash flow and balance sheet, something that big companies think less about because it's always the operating the income statement and how to build a team and make that company through grit and creativity and a good team survive from employee number one to left when we maybe 250 employees. So then J&J recruited me and I always tell our people Johnson & Johnson recruited me to run their global orthopedic business and I had no medtech experience, no ortho experience and no global experience and Bill Weldon and Alex Gorski took a risk and I was outside of the company. So very unusual to do that but I took the job and I always tell our people you have to take risk on talent and we always want people to go from this job to this job this job this job rather than take a bigger risk on people but that's what they did and I was fortunate to help lead the ortho business for about four or five years and then I ran a medtech for all the J&J for about 18 months and then the Boston Scientific job came up.
So that's kind of the... So I had a lot of experience in different companies. I tell people at our company, you don't have to leave Boston. You can get different experiences within the company, big divisions, small divisions. In one division, you'll feel like you're a completely different division, the other one. But I took different routes and had a lot of learnings that way that helped me get to Boston.
There's a lot there to unpack because you're talking about the sort of financial diligence that you learned in a constrained environment within a startup, the concept of innovation, how to operate within a big company. And I'd like to sort of pull on all those strings over the course of the conversation. But let's start with innovation. I think if there's anything that marks Boston Scientific, it's your approach to innovation. I wonder if you can just take us through how you look at that.
Yeah, we're always works in progress. We think we're pretty good at it, but we're not great at it because you can never be perfect at it. Otherwise, you're not taking enough risk. And we have so many of our people here in the audience that are responsible for this. I just kind of help talk about it, I guess. But when we... I think innovation you have to... in my role in medtech you have to know at least I know the most important thing you can do is have incredibly good people who are very committed and they're playing a team sport and you have to be obsessed with portfolio innovation. And I think for me if you're not making those two things your priority then you get lost in all the other things you could be doing in the job and innovation becomes yeah it's important but it's not like the main... it's everything. Because as soon as you stop innovating, you stop growing differentially, you stop investing, you stop hiring, you just kind of become an average company, which we don't want to be. So innovation, I think you have to fundamentally believe and see it every day that it's the lifeblood of medtech in addition to your great people. And so when we think about innovation, we... not... it sounds common to many companies, but we do what many companies do. We spend about 10% internally on R&D. So about $2 billion or so, $2.2 billion this year. And we lead the league for better for worse in clinical science. We spend about 35% of that in clinical studies. And we have two of the late breakers at ACC coming up six days from now. And we really try to push the field. So about a third of that. So most of our internal... and so then the other two components of it is our venture portfolio which is the largest in medtech and we've invested over like $2.2 billion in it since 2013. And we have about 48 venture companies today and about a third of the companies that we've acquired have come from the venture portfolio and then we do M&A. And a couple of people are here we've acquired companies of many of you in the room here so it's really those three things and we really look at them all the time. With myself and our business unit presidents and our business development team and R&D teams we're constantly looking at all three of those aspects to help put together a portfolio with one of our divisions where we have clear category leadership. So we want to have... we focus on certain call points like electrophysiology. So we want to be well-rounded and to treat atrial fibrillation. We don't want to have just a point solution there. And so we look at all three of those aspects of our innovation ecosystem and typically not all the time but typically the internal R&D is more inch-up or improvements to current devices. But we've also done smartly is our oftentimes the R&D teams will kind of want to protect things because they want to work on exciting things. But we've also in collaboration with R&D teams encouraged them to spin things out. So when you have your rack and stack of your priorities if these two are in the bottom but they're really exciting if you keep it internally it's going to take 20 years you'll never get the funding for it. Let's spin it out create a new company we'll invest in it and we'll bring it back. And they know now through experience when they do that they actually get that product back when they can work on it again rather than protect things. So we try culturally to... because oftentimes in R&D they think venture or M&A is bad because that means we don't get to do it. So they've seen that we can bring it back in and they can work on the next gen next gen and then for the venture portfolio that's typically more of our moonshot. If they work, they could be great. Many of them don't work, but we take greater risk on those. And we're kind of agnostic as to how early we invest or not. And then we do our traditional BD with companies that are more established that fit our portfolio.
Yeah. Those three components. I see. So you're not... it's not a portfolio of potential tuck-ins, but these are a way to externalize some of that risk, get a look at future markets that are sort of orthogonal to what you're already doing. Is that what... within the venture?
Somebody help me with orthogonal. What?
That's an awesome word. I got to use that today.
Was that like a J? What does that mean?
They're sort of... Yeah, you I think you said bigger bets. We'll go with bigger bets.
Yeah, bigger bet. Thank you. I went to Iowa.
Yeah, they're shots from downtown.
Okay. Got it. Gotcha. Right. Anyway, like your six-year-old.
The... I guess another thing that seems to mark you guys is that it's not just one thing that carries the day for you at any given time. You seem to always have a couple. And is it because of that long bench of technologies that you're able to bring and keep them at a level of maturity that at the end of the day you're not solely dependent in one category? Yeah, they're vastly different than where you were when you took over.
So we have eight divisions. I won't go through every one of them. And I don't know if the... It's frustrating because we've had a hard time with our stock price lately because I'm convinced that there's long-term investors, but I don't know if anybody really is a long-term investor anymore. It's kind of the quarter. But anyway, we honestly think of how to make the company deliver high performance like now in the first quarter of 2026, but how do we make the company special five years from now. And we really have that mindset because if you don't have that longer term mindset, it's so easy to not do these riskier VC bets because some of the companies don't work out and you have to write it off and take dilution in the quarter and the CFO hates it. That's why a lot of companies don't do venture because some of them don't work and you have to take the loss in the quarter and everybody hates that. So we really truly want to make the company differentiator for many many years and to do that you have to have... and as the company gets bigger you need even bigger more bets that will come through three years from now given the size of the company and so I think our team understands that really well and with that long-term goal in mind it forces you to have just a cadence almost like that funnel of cadence of product launches and bets that you need and so you know what's coming. You can't sneak up on anybody with the clinical trials and all that stuff. So you just want to continue to layer in enhanced portfolio capabilities over that term, right? And you need to have some really big bets because as companies get larger and larger buying a company with 25 million revenue is nice, but it doesn't move the needle as much. So you need those to help shore up the short term, but you need to have big bets like Farapulse, like Watchman, and the biggest bets we see. Most of them are in the venture portfolio that could be Watchman-like or Farapulse-like, right? So you have to have those, we think, to maintain a growth rate that we hope will be double digits for many years to come.
I could imagine that as a company grows as rapidly and as it reaches a certain size the risk tolerance could go down and the focus could be to tend to the garden and let your winner play to what's working. But it's interesting I think that you've been able to sustain that over a decade in a company that looks very different in 2011 than it looks like today. Can you talk a little bit about how you maintain that essentially that risk tolerance and culture of innovation in a company that's scaling rapidly?
That's probably the thing I'm worried the most about because the company's significantly larger now than it was when I started and it'll be much larger three years from now. And like it's like gravity. Gravity is inevitable and bureaucracy and slowness and risk aversion just builds as things get larger. And so we really try to fight against that. I think the first thing you have to understand is that if we're not proactively trying to be aggressive, proactively trying to make the company more agile... and we have work to do. We're not a 10 for sure. But unless you recognize that and guard against that with forcing changes and forcing tougher decisions, then it just creeps in. It just does like gravity because you get larger and there's more finance people, there's more legal people, there's more analysis, there's more models, there's more layers, and the decision-making gets slower. So, we really try to do a good job of having our global business presidents be leaders and run their business around the world. And they have the decision on R&D portfolio. They have their capabilities for SG&A deployment whether you want to put 30 more people in Shanghai and take them out of somewhere else. So we give the decision rights to them as much as we can because that empowers them as leaders and leaders like to be able to be empowered to make decisions, right? And so that's the first thing we do. Then we have a very talented business development team and a venture team. And I think what's unique about them is they know the divisions really well. And so we have those capabilities within the divisions. So these aren't just... and bankers are super important. They're not just a banker within every division. They really understand the clinical aspects of that division. We have chief medical officers everywhere and we're pushing them to find new innovation. And so I think one we have the skills in the divisions that are very clinically oriented. And then I think we have a pretty good process to review venture opportunities, business development opportunities to try to be a little quicker or maybe a little when appropriate more aggressive than our peers. Not all the time and we made many mistakes but we try to see things quicker if we can and try to make move on decisions more quickly. I see because otherwise I've been around where it just takes forever to make decisions and that kind of permeates. So we really try to fight against that.
So you're essentially taking the big organization and shrinking it and giving autonomy to the teams and giving them sort of unique identities. That seems like it could be at odds with the concept of creating a unified culture and especially now that you've grown to have a presence in over 100 countries and over 50,000 employees. How do you do that? Shrink the organization still make cultures a dream.
Yeah. We have our just like you do at Mayo, we have our advancing science for life. We have all our values. It's in every wall in every building all over the world, but the culture and we know that we talk about what's important to us and you know winning spirit and meaningful innovation and being nice to people and but competing and winning. So they understand that but the culture is what happens always locally. It's your manager sets the culture. You know, you're in where pick your country, you're in quality, your manager that you report to tends to set the culture and the culture is also a bit different by division. So, we definitely have our overall values and we communicate to our employees a lot, but culture is so much local and we hope that those leaders share the same values and vision that we do. But I don't think we can take for granted just because we say it at headquarters as the culture of the company. It's what happens in small pods all over the world.
Right. I think you personally are somewhat responsible for some of that in that you know you come to Mayo Clinic and meet with frontline clinicians and docs and you do that I think almost on an annual basis and I understand other places around the country and you tend to not show up that day.
