#26 Dynofit

I’m Josh Muccio and from Gimlet Media, this is The Pitch, where real entrepreneurs pitch to real investors.

Daniel: Hello!

Phil: Hi.

Jillian: Hi. There we go.

Maria: I’m Maria Schneider.

Phil: Hi. Phil Nadel. Nice to meet you.

Today in the pitch room is Maria Schneider. Who is here to raise $500K from investors for Dynofit — a company she built on the idea of taking physical therapy out of the clinic...

Maria: we can make physical therapy more effective by partnering with the physical therapist, and having the feedback and the oversight at home.

At home. This is where companies are targeting consumers these days — “Bring the gym into your home with Peloton” and “Get your groceries delivered to you with Amazon Prime.” The idea at the heart of many of these businesses is extreme. But bringing physical therapy to your home—that feels less about convenience and more about easing a serious burden. 

But Maria will have to convince investors that Dynofit is the solution patients—and doctors—have been waiting for.

Daniel Gulati is here from Comcast Ventures. He’s joined by Phil Nadel with Forefront Venture Partners and Jillian Manus with Structure Capital. Finally, on today’s episode is angel investor James Altucher. 

For those wondering if we have any updates on James — stay tuned til after episode.

Now, it’s all up to Maria Schneider who’s standing in front of our investors, ready to give her pitch.

Maria: Dynofit is our company. I’m CEO and one of the co-founders. And I started this company for my son. My son is 11 years old. He has cerebral palsy. And [00:09:00] we’ve been going to physical therapy with him since he was 3 years old. So I remember a day about 3 and a half years ago when I was sitting watching my son do some very, very simple exercises with the physical therapist thinking, this is the fourth time we’ve been here this week. They’re billing out $2 - 400 this session. I’m spending a significant portion of my life here watching these sessions. Why am I not doing this at home? 

Traditionally there’s only one option if you want to do physical therapy in the home. Hire an in-home physical therapist. Which as you can imagine, costs a pretty penny.

Maria: So I’m sitting there thinking, okay, how do we overcome these obstacles so that I can actually get him to do this at home. And I’m a biomedical engineer. [00:10:01] So I said, okay, we can figure this out. 

Don’t ever underestimate a mother’s willpower. Especially a mother with a biomedical engineering degree. 

Maria first created her company, Dynofit, and then she spent the next 3 ½ years developing a product that could replicate the experience of physical therapy inside the home.

Maria: And the product is the Flexdot 

Daniel: What have you got there. There’s an unboxing going on.

Maria: Okay, so who is the most…

Maria pulls out a small cardboard box that contains the Flexdot.

Maria: Who is the most capable?

Daniel: That would be me. That would be me. I’m the most capable.

Maria: This is a more simple question. Who actually is willing to expose their forearm for me?

Jillian: Oh, go for it.

Jillian’s volunteering to be Maria’s guinea pig, and so Maria takes the Flexdot, which is a small, white, plastic square, and affixes it to Jillian’s forearm. Then Maria pulls out her phone and fires up the Flexdot app. 

Maria: So as your muscle flexes, I can read that and what’s on that graph is what your arm muscle has been doing while you’re holding your coffee.

Jillian: So it measures the muscle contractions, is that it?

Maria: It actually measures the muscle activation. 

Daniel: So are you saying Jillian can think to contract her muscle, and we’ll see it on the app?

Jillian: No.

Maria: Yes.

Daniel: Let’s see it.

Daniel wants the app to show him that Jillian is moving a muscle — which might sound kind of silly. He could just look at her and see if she is raising her arm or flexing it or whatever. But a lot of times what happens in PT is that someone is rehabbing a muscle that isn’t actually working, so their arm might not move, or if it does move, it might be because the surrounding muscles are compensating for the injury. This is where the Flexdot steps in to show you if you’re sending a signal to the correct muscle. 

Daniel: Oh, I see, a few little, a few bumps there. Think harder. That's incredible. 

Jillian: I was paralyzed from my waist down about five years ago. I fell down a flight of stairs, and they didn't think I was going to be able to walk. And so I was at Stanford Hospital for a long time, and then I was in the spinal cord rehab center, rehab at Santa Clara. And the long and the short of it, and there’s a long story around this But I really do understand the correlation between this, and that the smallest, tiniest movement is such a huge sign of growth. 

Yeah, you heard that right: Jillian just casually mentioned how she was paralyzed from the waist down a few years ago. Lucky for her, she recovered. But the fact that she had that experience means she knows how hard it is to maintain hope, when you show up every day for physical therapy and you don’t see progress, and you don’t see progress. And you’re left wondering if you’ll ever be back to your former self. 

Daniel: You know the old saying, what gets measured gets done? It’s one of those ones, right? Where if you see progress visually, through an app like that, I feel like that makes you want to do more of what you should be doing, and makes it trackable, right? Makes progress trackable.

When you can see progress, even if it’s just a little progress. Then you know you’re beginning to heal.

Daniel: You're giving your physiotherapist, and you're giving the patient this transparency into how their muscles are working and which muscles are contracting and which aren't. And the physiotherapist is able to then tailor the care based on that data. Is that kind of the right summary?

Maria: Exactly. 

Phil: I'm a little confused about something. Because I thought you started off by saying that the product was designed to enable someone at home, like a parent, to basically take the place of a physical therapist and do the same kinds of exercises and treatments at home. But you're selling it to physical therapists, not to in-home...

Maria: Yes. So we do not want to get rid of physical therapists. They're the ones with the knowledge of what you need to do and what your problem is. So if people are going to use physical therapy, which is the most effective muscular skeletal intervention in the world, and it's cheap and it's easy, if you're not spending all your time in front of a physical therapist. So we can change, we can make physical therapy more effective by partnering with the physical therapist, and having the feedback and the oversight at home. 

In other words, the Flexdot is not entirely taking the place of physical therapists. It’s just allowing patients to do their PT exercises at home and send the data from their sessions back to their physical therapist.

Daniel: How do you sell to therapists? What's the pitch? When you walk into a therapist, how are you selling? 

Maria: You said how do we sell it to physical therapists? Physical therapists get it. We didn't invent electromyography. And we have two patents pending, by the way, on this. We invented a different form factor. Electromyography is typically used with a large computer, a lot of wires, electrodes, the systems tend to cost over $10,000. So this is just a completely new packaging of a well-researched, well-understood technology. 

Basically, what Maria is saying is if they can get it on the market, the Flexdot should sell itself. It’s a simpler and cheaper form of a technology therapists already use. Plus patients would way rather do their PT at home if they can. 

But Maria actually sees a bigger opportunity than selling directly to physical therapists.

Maria: so we're in conversation with the top three joint implant manufacturers right now. Joint implants are a huge deal. Between hips and knees there's a million a year, going up to 3.5 million in the next 13 years or so. All over the world, apparently, we're eventually all going to have knee implants from what I can tell. That's what the numbers say.

Daniel: That's not depressing at all.

Maria: No, you're young, you might have two. So it's really important to recover from those. And it's the third largest cost center for Medicare. So there's a lot of interesting things going on, one of which is bundled payments. So, knee surgery, as of this year, Medicare has put that into a bundle payment environment. So now we're really focusing on knee surgeries. We want to move this up the chain and actually bundle this with the implant.

Phil: So just to be clear, what we're talking about with bundle payments is that the therapist is going to get a fixed amount of payment, regardless of the amount of service that they provide. So if you can reduce the amount of time and service that they provide to each patient, they're going to make more money.

Maria: Exactly 

Daniel: Can you talk more about the patent protection? Because we think about defensibility here over the long term.

Maria: Sure. Absolutely. We can't patent EMG. It's been around for a long time. So what we have patented is what we have applied for. They're not issued yet. They've been published but not issued. Is the use case for remote patient monitoring, which is huge. It's not being used anywhere for remote patient monitoring, and that is a booming industry that's going to play a really big role in medical coming up shortly.

Jillian: So do you have software product that goes with this, that tracks, monitors, all the information?

Maria: We do not. And the reason for that is even from very, very early on we had remote patient monitoring platforms, which I think is what you're talking about, contacting us saying, hey, can we connect the Flexdot to our platform. And what we realized is it has to connect on the other end into potentially the electronic medical records, etc, and that would be building that big single purpose app which we decided not to do. So we're actually about to integrate with a group called Pt Pal so that they can take our data, and integrate it with their physical therapy remote patient monitoring platform.

For right now, Maria wants to stay in her lane and only focus on the Flexdot device itself. All of the data it gathers on patients gets sent to a third party software company. But is this a missed opportunity?

Jillian: The big revenue generator is the software, okay, it’s not the device. The device is purchased or licensed, but it’s really the software and the data that is the true value. So because you have not created your own software, and because you’re integrating to others right now, I just want to understand, are they selling this? Are they packaging this? What’s the integration time? And really, is there a rev share on this if in fact you’re actually partnering? Or are you just integrating into their system? They own all the data? Correct? Now that’s a lost... For me… 

Maria: These are really good questions. And the data thing is something that I am not entirely certain how to monetize that data at the moment. You’re getting data back...

Jillian: Well that’s where you would hire someone to talk to you about that. Because the data here is really critical to I think the value. Otherwise this is a sensor. And not to discount it, it’s actually, it’s valuable, but it’s really, I think the scale of this, is the value of the software plus the device. 

Jillian: You don’t have a software. She doesn’t have the software right now to be able to collect the data. So the data is being collected by these partners right now, which is Pt Pal, right.

Maria: But the opportunity is there. Because in order to, currently we collect data on the phone. And we have a replay app. We’ve already got a logger on the phone. So we could have that data stream go to their server for whatever app is utilizing it, and go to our server as well and carve out the rights to aggregate and anonymize [01:02:00] and sell that data. 

James: It seems like eventually you need a CEO or a COO, however you describe it, who really can kind of navigate through all these revenue streams and figure these things out and so on. There's a lot of moving parts, it feels like, to make this a huge success.

Daniel: Is that you? Is that CEO you?

Maria: Maybe not. And I'm okay with that. But for right now, that CEO probably is me because that doesn't all happen in a day. We need to, we just came to market, we need to get a foothold, we need to get some of these studies done.

It’s one thing when investors are grilling you about your product. But this has taken a turn—they’ve moved away from asking Maria about the company to asking whether she should even be leading the company. 

Phil: Do you personally have the sales and marketing skills to get the company to that point where you could bring in a more experienced CEO? 

[silence]

Maria: I don't know.

Daniel: Here's why I asked you that question. I think that CEO is you. And I don't think you should back down from the fact that just because you haven't done this 20 times before that you can't learn it and do it. And so actually when you, I think you mentioned it earlier in the pitch, that I can do this for the next year or two and then we can find the right CEO, I would just challenge you to think through, okay, how do I scale with this business? And what are my weak spots? And blind spots? And [01:04:00] either learn those blind spots, or hire the right people. No CEOs are perfect. No CEOs are 100% expert in all of the things that a CEO needs to do or all of the things that a business needs to do. So, I don't know whether you're not, I wouldn't jump to the conclusion that just because you haven't done sales and marketing before that you can't learn it and do it and be great at it. I actually think you know a ton about it.

Phil: I think she'd be a great CEO. I was asking the question to see what she was thinking.

Daniel: What's why I was asking.

Maria: And you know, I evolve as well. But one thing I know about myself is I have a three-year head start in thinking about this product, this market, how it can be used, talking to people about it, and getting feedback on it that even a really experienced CEO coming in to today right now wouldn't have. Not to mention the fact that I can't afford that person. So, you know, the way things are looking, I want $500,000 right now so that I can do the things that are in front of me that are low hanging fruit, that I know that I can do.

Jillian: Which is?

Maria: Well, go out and sell to actual physical therapists. You've got to have feet on the ground to do that.

Jillian: I think that you, I would love to invest in you. I think you are the real deal. You are brilliant, clearly. You are driven, purposeful. And I read a book about grit that I've mentioned a couple of times; well, grit is where purpose and perseverance connect. They intersect. You really have that. I'd like this to be a bigger product, I'd like it to have the software component and the data and all the bells and whistles. I think you're giving away a lot. And I want to understand more about your integration with these other platforms. I want to understand a bit more. So I'm going to say I'm going to pass for now. Because I have invested in medical devices. And they're, and this one seems, even though it's first as you're saying, it seems it would be easy to replicate. Which is why I wanted the software component to it. [01:08:00] Not only does it add to the additional revenue, recurring revenue, but it also creates some defensibility around this and a bigger scale. And the value of the data, which I noted. And it's for that reason that I'm going to have to pass. Okay.

So Jillian thinks Maria has grit, but she’s not willing to put her dollars behind that grit. What about Daniel?

Daniel: I'm... Loving the product. And I think that the product you put out is truly disruptive. I'm certainly not a med devices expert. I've never invested in a medical devices company. But I just get the sense that this is a massive - between the therapy and the licensing opportunities that are in front of you - I just think that this a massive market opportunity here. And I think you're going after something really interesting. And to Jillian's point, I think the founder opportunity fit here couldn't be better. And so that's why I was pushing you on, why can't you grow with the business? And why can't you be the CEO here long term? Because I think you've got a great background for it, and I think that the business seems like it's on a great trajectory.

Maria: Ask me in a year. And I appreciate your kind words. I mean, I might be the perfect person in a year. Or not. I'm the perfect person now, I know that.

Daniel: So here's the but. And there's a big but for me. Which is, I'm just not a med devices investor. So this is going to sound like the it's-not-you-it's me. But I rarely give this reason for passing. In fact, I can count on one hand the number of times I've given this reason [01:13:00] for passing. But between the sort of B2B go-to-market here and the med devices category, I just feel like I'm a little bit blind here. And so for that reason, I just don't think I'd be a great investor for you. I think you probably don't want to fill a slot on your cap table with someone like me. And so I'm here and willing to be supportive. And if there's anyone I can connect you with, founder or VC or anyone that you're trying to get in front of, if I happen to know them I'd love to find an opportunity to provide value outside of funding. But definitely think you're building something awesome, and wish you all the best.

Maria: Thank you.

So Daniel says it’s not you, it’s me. But either way, he’s out. Here’s Phil. 

Phil: Yeah, I agree with you about the product, how disruptive it is, and about you. I think you're the real deal. And if anyone can make this happen I think it's you. And I do encourage you to try to, as Daniel put it, scale with the business on a personal level, and remain as the CEO if that's doable. Um... I like the product a lot. The challenge I'm having is for me I think it's just a little too early. I want to see some more positive feedback and some traction in that regard. I think I'd be very, very interested in the next round when you have that traction. I just don't think in this round, and I know I'm missing out on the lower valuation of this round obviously, but I just feel like for me it's not quite de-risked enough for me to be comfortable. So... I'm really on the fence about this once. But I'm going to have to pass on this round. And I really mean it when I say for the next round, let's keep in touch

Phil’s out for now. Last up is James. 

James: I also, as these two gentlemen have mentioned, I have no knowledge of the medical devices space. That said, that doesn't stop me from investing in something. But I do need someone smarter than me in the space investing. Given that there's no professionals yet, who are from the space in the round, I would be happy to be in if somebody else was in who knows how to do the due diligence on the space, because I would have no clue. If Jillian was going in and her group was doing due diligence, I would say, please let me go in. But I don’t know how to go in otherwise.

Maria: Well, actually, that's entirely reasonable, because medical is its own crazy world. So I completely get that. Although I have to say I’m disappointed. Because I was really hoping, I like you guys and you seem to really get the product. 

Phil: As I said before, once you flex your sales muscle, then I'm a little bit, then I'm definitely more interested.

Maria: Okay. That sounds good.

Phil: Nothing? You didn't pick up on that? Flex your sales muscle?

Jillian: Oh seriously? Okay.

Maria: Goodness. We're all being so serious.

Daniel: That's a wrap. That's a wrap.

Jillian: That's a wrap. Oh goodness.

Phil: Gosh I try...

Maria leaves the room, and the investors explain why this pitch in particular was such a difficult one to decide on.

Phil: I was really on the fence with that one. I have to say, that was a tough one for me to decide on. But I really liked her, really liked the product.

Daniel: She’s really compelling.

[cross talk]

James: The problem is you would have to do the due diligence, and that's hard.

Phil: I agree. I'm just, I don't know the space well enough. I agree 100%. If they had a lead in this round or even for me in the next round that knows this space, and I don't know that angels are really going to make me feel comfortable, but if it's a VC who has a specialty in this space, I'd be like yeah.

Jillian: I need to know the competitive landscape, for one.

Phil: There’s a lot of potential here. A lot of different directions she could go.

Jillian: There’s a lot of potential.

After the break—we find out if Maria has been able to capitalize on all that potential.

[break]

Welcome back! It’s been six months since Maria pitched the investors.

Josh: what do you remember from the actual conversation they were having with you. What sticks out in your mind? 

Maria: Um. I think in part feeling like I didn't, I didn't have a smooth flow, probably because of the timing and the rapid fire conversation. there was, there was a surprising amount of conversation about whether I would be the right, you know CEO to take this company into a hockey, growth period and I appreciated the general consensus from the judges that yes, I am the right person 

Josh: Yeah

Maria: So, that was nice. Um, before that, I just, pretty much recall that it was, it was a, I thought, a, a good conversation that gave some good context.

Josh: So, um, so, talking about the CEO thing, um, it was interesting how open you were to advice and it seemed like you assumed that you needed to bring in other people to fill that CEO role. And, of course the investors were like, why couldn't that be you, why not you? What was that like in that moment hearing that feedback from them? 

Maria: Well, it was nice feedback that even in the very short time that we exposed it felt like I would be qualified to do that. And I don't necessarily to expect to have myself replaced as a CEO. I think that conversation started with the recognition that sometimes that happens as a condition of larger venture capital funding and I would be okay with that. And I, I am really open to coaching because you know all of this especially when you've got a new technology in a changing industry, it's kind of a brand new world. So, you know, people that have a different perspective, I may take their advice, I may not, but I want to hear it.

Josh: Yeah, that’s good and you should do that. umm… so you were raising 500 K on our show. Um, you obviously weren't able to raise that here in the room. Um, what, so then what, what happened next? 

Maria: Well, you know, the value of a company is really a lot about where it's at, and we're just in a different place now. We had just, like, barely launched on the market when we, when we first came to you guys. We had some research partners going, um, nothing had been published yet

Maria: We, we didn't have a lot of early customers out there trying our product. So, we finished up our seed round and we got, um, some more investors that came on board in the fall, in the interim. 

Josh: So you were able to raise the 500K from other investors? 

Maria: We're not quite done with it yet, we have a couple of other investors that have asked to potentially be included in our seed round, so we're leaving it open

Josh: So, okay. So, Phil had expressed interest in future rounds. but have you stayed in touch with Phil, anything on the horizon, any sense for like, whether he's still interested? 

Maria: I haven't talked to him recently, but I will definitely be circling back around to him, so, um, yeah. Something I need to do. 

Maria: So Phil if you're listening, I will be calling you

Josh: He is listening. Guarantee it. So how much of the 500K have you been able to close so far? 

Maria: Um, we've gotten about 30 percent of that

Josh: 30 per cent? 

Maria: Yeah 

Josh: Right, yeah. Um. I mean, has the, that doesn't sound like it's been tons of progress since, since we last talked. Like it sounds, how's the fundraising process gone for you? 

Maria: Um, from a fundraising point of view, I would tend to agree with you. It's not exceeding my expectations, that's for sure. 

Maria: And this, this year, you know, we came to market last, you know, towards, towards the end of last year so

Josh: Okay

Maria: So this is the year where we're starting to do a lot of customer acquisition

Maria: But we also realized that the medical market is a little bit of a different animal. Because this is not just a matter of, okay, you know, you throw enough salespeople of any variety, it's all going to work out. I mean, this is big. The healthcare industry is changing, and one of the things that I'm really excited about is that we've come into it at a time where we can really participate in that change, I don't even remember if we talked about this in the pitch but this whole, well, not so much that, but this whole shift in the culture to going back to understanding that we need to be part of our taking care of our own health, it's not all about going in and getting a pill or going in and getting a surgery. It's, it, it comes back on us, we have to participate and we have to actually partner with our care providers and our hospitals and et cetera, because that's not what happens right now. Right now, we have outsourced it. They get to fix it, and if they're lucky, we'll cooperate. I mean, that's kinda what it boils down to. They tell us what doctor to go to, what they'll pay for, you know, what we need to do. And the result of that in our culture is that patient compliance in terms of the normal average person doing what they need to do is startling low. Even for somebody that's literally going to die, have a heart condition if they don't take their pills, a lot of them don't take their pills

Josh: Yeah

Maria: That's where we're at. And so, part of what excites me about our product, is that we are handing back a certain amount of control and responsibility to the patient by just being able to see what they're actually doing you know, we're a tiny piece of that, but there's a whole industry that's shifting in that way, to give people back some control and at the same time some responsibility for their own health. 

Hearing Maria talk about how important it is to be part of this shift in healthcare underscores for me exactly what the the investors were feeling: that she is the CEO to lead Dynofit. And as far as the pitch went — I feel a little like someone who set up two of their friends on a blind date, and they liked each other fine, but it just didn’t happen. 

But who knows, maybe when Maria circles back around to Phil in the next round, it will be the right time.

One of the things that struck me about this pitch is how Maria was so open to the idea of stepping down as CEO if that’s what the investors thought was best. Would you be okay with letting someone else step in and take the reins of your company? I’ll be honest, I’m not sure I’d be okay with that. When I start a company, that thing is my baby. 

Let me know what you think, head on over to thepitch.show/discuss

Finally—for those who have asked us if we ever heard back from James Altucher, the answer is no. We never heard back from him and, to our knowledge, neither have any of the founders who pitched him on our show. We’re bummed about it, but it is what it is. This will be the final pitch we air that we recorded with him. C’est la vie.

We’ll be back with a brand new episode next week. 

Our show is produced by me, Josh Muccio, Molly Donahue, and Kareem Maddox. We are edited by Devon Taylor.

We are mixed by Enoch Kim. Original music composed by The Muse Maker. Our Theme Music is by Breakmaster Cylinder.

Lisa Muccio plans our recording events and thanks to Asthaa Chaturvedi for her reporting on this episode. For introducing us to Dynofit, we have Loren Bolton and the team at Health Wildcatters to thank

And as a reminder, no offer to invest is being made to or solicited from the listening audience on today’s show.

Jillian: I thought that was my ringing.

Maria: It was you! It was your arm calling me.

Jillian: My arm ringing.

Daniel: Stand down R2D2, calm down.