Intermedics
There were several years prior to my joining Intermedics that could justifiably be called “the years the locusts ate”. This narrative, not being a confessional, will simply state that my marriage was on the rocks, ended in divorce and my career was at a standstill. Intermedics was a cathartic and dramatically changed my life.
Albert P Beutel, II, was born into a wealthy environment. His grandfather, Albert P (Dutch) Beutel was an executive with Dow Chemical Company and was responsible for developing the huge Dow manfacturing complex along the Gulf Coast between Galveston and Lake Jackson, Texas. Albert’s father, Philip, had considerable funds and Albert was raised in relative comfort. He floundered around in several universities, received a liberal arts degree and left academia. He worked with his father for awhile and then was hired by Medtronics as a pacemaker detail man.
He and I got to be very friendly and we spent hours in my office talking pacemakers. He complained that no one would listen to his ideas and one day said to me “Damn it, I'm going to form a company and build a pacemaker myself.” I didn’t pay much attention to the comment but as weeks went by he kept repeating it and one day said to me “My father is going to put up the money, I have a friend in California who is an engineering genius and I am going to form a company, build the best pacemaker the world ever saw and I need someone with a medical background. Will you help me?”
I didn’t give the idea much credibility but at the time; I had nothing to lose so I said I would do it.
Albert was bubbling with excitement, left the office and told me he would call me in a few weeks. Less than a week later he called me to tell me there was an airplane ticket for me to fly to Lake Jackson, Texas to meet with his father, Philip Beutel and Arch Marez. He said that Intermedics was incoorporated, (1973, but did not begin operations till February '74), that Philip would provide the initial seed money to get started and he would run the company as CEO. He said that Arch, a gifted Stanford engineering graduate, had sketched out a preliminary design for a new concept in pacemakers.
I was excited, single and had nothing better to do so I went to Texas for the weekend.
The design that I saw was astonishing, far in advance of anything we were using at the time. The best pacemakers manufactured by Medtronics or Cordis were large and bulky, electronics encased in epoxy, powered by five or more mercury zinc batteries and had a functioning life expectancy of 12 months or less. The electronic package that Arch put together used CMOS circuitry, (complementary metal oxide semiconductor, developed for NASA and the space program). Electronics were packaged in a little metal container, embedded in epoxy and powered by four mercury zinc batteries with a functioning lifetime expectancy of 18 months. The entire unit was 25% smaller, lighter and less bulky than anything the competition had to offer. It was christened CMOS 1. I was impressed. It looked great on paper but we needed to make a few and test them.
That weekend started a flurry of activity in Lake Jackson. Intermedics, Inc. was born; Philip, Albert and Arch, as Chairman, President, and Chief Engineer respectively held stock certificates number 1, 2 and 3 . I was designated Medical Director and was given stock certificate number four. Space was rented, people hired, a small machine shop was outfitted. I took a two-week leave from my practice in Ormond Beach and went to Texas when the first six pacemakers were manufactured. We put four of them into a test tank that simulated the function of the pacemaker in a human being. Pacemakers at that time were fixed rate output pulse generators. The rate was set nominally at 72 and the four tests pacers performed perfectly.
A bit of background here: this was in the early 70s and the devices regulation act had not yet been enacted. The FDA, at that time, had no control over implantable devices. We could literally design something on a Monday, manufacture it on Tuesday, sterilize it on Wednesday and implant it before the week was over. It sounds kooky but that’s the way it was.
We watched the test units for two weeks and decided they were functioning without a flaw. We had manufactured a pacemaker but we had no capability to manufacture the leads required to connect it to the heart. We bought several dozen leads from Medtronics because the connector on our newly minted pacemaker was designed to accept a Medtronics lead. On the second weekend we sterilized a pair of pacers and leads, packaged them with an Intermedics logo and I took one of them with me back to Florida.
Ten days later I had a suitable patient for pacer implant. I sat with the patient and the family and methodically detailed the fact that this was a new and experimental device but I had ultimate faith in its ability to do the job. The family evidently had enough faith in me and I scheduled the patient for implant the next day. The procedure went without a hitch, the lead was well-placed in the right ventricle and the device was pulsing rhythmically at 72 beats per minute. In 1974. I implanted the first pacemaker of what was to become a long and impressive line of Intermedics cardiac pacemakers.
One pacemaker implant does not a company make. There were enormous obstacles to be overcome in a short period of time. We needed a suitable manufacturing facility, personnel, materials and most of all, a sales force to peddle the product.
Albert Beutel was a consummate salesman. His pitch was precise, prepared with passion and delivered with assurance. His flashing blue eyes and smiling face took the tension out of the situation and put his customer at ease. His enthusiasm was infectious and he rarely failed to close a deal. Albert knew all the doctors in his territory. His first attempt was to contact some of the implanting physicians from his old territory but to a man they told him he was crazy to try to enter a market dominated by well entrenched companies.
The following is what we heard from physicians we interviewed: “Your company is a month old, no one knows you, you have no background, no credibility, you’ve only implanted one pacemaker and you want me to risk my patient’s life and my reputation by switching from a reputable company like Medtronics and use your product instead?” Looking at it from their point of view, it’s hard to refute the argument.
Albert knew many pacemaker salesmen working at Medtronics and those working at most of the other companies. His next pitch was to try to get them to come on board with us. No one was willing to give up a position with a major company and come to work for a start up. Two months after the first implant we had an inventory of three dozen pacemakers and didn’t know what to do with him. The lifeblood of any company is sales. Research and development, marketing, personnel, manufacturing facility and everything else that goes into a company fails without sales.
I remember the meeting well; Albert, Philip and I were in a pizza joint for lunch and Albert said “We have to use the carrot on a stick principle”. I knew what he meant and I asked him how big a carrot, who do we dangle it in front of and who carries the stick. Without a moment’s hesitation he replied “I’ll take it to the MD’s and you take it to the DO’s”.
It sounded like a plan but there were several hitches in it. The only MDs with whom Albert was acquainted were in his territory while he was detailing for Medtronics. To a man, they had already pooh-poohed the idea of him starting a pacemaker company and they were not enthusiastic about using our product. Compounding the problem was the fact that there were only a handful of DO’s in the country doing cardiac pacing.
Now back to the carrot; what could we offer as an incentive? It’s quite simple when you look at it realistically; money talks and everything else walks. The question was how to present an incentive to a group of ethical (and notoriously hypocritical) physicians without crossing the line and making it blatantly obvious. Frankly, I never solved that conundrum and as time passed I didn’t have to; most physicians were easy. During the first year of operations the carrot was to make physicians paid clinical consultants. We would credit ech physician with $600 for each CMOS-I pacemaker he implanted if he agreed to write and publish a paper about the product. We paid the consultants in cash or stock.
In the early days, stock certificates came out of the treasury like Kleenex out of a box. I don’t recall any papers written but it was never an issue with us. The issue was sales. A half a dozen of my DO colleagues were responsible for 98% of the pacemakers that were implanted during the first eight months Intermedics was in business. Two of Albert’s MD friends used our product, and then, sparingly. The carrot whetted some appetites and my colleagues stemmed the financial hemorrhaging on the manufacturing side of the business and provided a healthy transfusion of much-needed sales dollars.
Dear reader, dont be shocked; it was done in every company and I dare say it is still being done today.
A much more important issue is CMOS-I;
it proved to be a superb pacer with zero
complications. It functioned flawlessly.
An impressive achievement for a start up company.
Albert turned his attention to competition salesmen and was holding out a variety of carrots to them. He was extremely successful in his effort and our first full-time salesman was plucked from Medtronics. His territory was somewhere in Pennsylvania but Albert offered him jurisdiction over the entire state, no quotas, a signing bonus of Intermedics stock and a commission equal to 25% of sales. At that time, Medtronics salesman were making a reasonable salary and a fraction of a percent of sales over their quota. The first month our man was onboard he sold six pacemakers. We were charging $1400 per unit but the salesman got credit for $1200 because we had to buy the leads. The first month after he left Medtronics, he took home an $1800 paycheck which was twice what he ever made during his best month at Medtronics.
The word spread like wildfire among salesman working for the competition. Within a year, with Albert offering whatever size carrot it took, our sales force consisted of most of the best men in the best territories along the eastern seaboard.
Albert P Beutel, II, was born into a wealthy environment. His grandfather, Albert P (Dutch) Beutel was an executive with Dow Chemical Company and was responsible for developing the huge Dow manfacturing complex along the Gulf Coast between Galveston and Lake Jackson, Texas. Albert’s father, Philip, had considerable funds and Albert was raised in relative comfort. He floundered around in several universities, received a liberal arts degree and left academia. He worked with his father for awhile and then was hired by Medtronics as a pacemaker detail man.
He and I got to be very friendly and we spent hours in my office talking pacemakers. He complained that no one would listen to his ideas and one day said to me “Damn it, I'm going to form a company and build a pacemaker myself.” I didn’t pay much attention to the comment but as weeks went by he kept repeating it and one day said to me “My father is going to put up the money, I have a friend in California who is an engineering genius and I am going to form a company, build the best pacemaker the world ever saw and I need someone with a medical background. Will you help me?”
I didn’t give the idea much credibility but at the time; I had nothing to lose so I said I would do it.
Albert was bubbling with excitement, left the office and told me he would call me in a few weeks. Less than a week later he called me to tell me there was an airplane ticket for me to fly to Lake Jackson, Texas to meet with his father, Philip Beutel and Arch Marez. He said that Intermedics was incoorporated, (1973, but did not begin operations till February '74), that Philip would provide the initial seed money to get started and he would run the company as CEO. He said that Arch, a gifted Stanford engineering graduate, had sketched out a preliminary design for a new concept in pacemakers.
I was excited, single and had nothing better to do so I went to Texas for the weekend.
The design that I saw was astonishing, far in advance of anything we were using at the time. The best pacemakers manufactured by Medtronics or Cordis were large and bulky, electronics encased in epoxy, powered by five or more mercury zinc batteries and had a functioning life expectancy of 12 months or less. The electronic package that Arch put together used CMOS circuitry, (complementary metal oxide semiconductor, developed for NASA and the space program). Electronics were packaged in a little metal container, embedded in epoxy and powered by four mercury zinc batteries with a functioning lifetime expectancy of 18 months. The entire unit was 25% smaller, lighter and less bulky than anything the competition had to offer. It was christened CMOS 1. I was impressed. It looked great on paper but we needed to make a few and test them.
That weekend started a flurry of activity in Lake Jackson. Intermedics, Inc. was born; Philip, Albert and Arch, as Chairman, President, and Chief Engineer respectively held stock certificates number 1, 2 and 3 . I was designated Medical Director and was given stock certificate number four. Space was rented, people hired, a small machine shop was outfitted. I took a two-week leave from my practice in Ormond Beach and went to Texas when the first six pacemakers were manufactured. We put four of them into a test tank that simulated the function of the pacemaker in a human being. Pacemakers at that time were fixed rate output pulse generators. The rate was set nominally at 72 and the four tests pacers performed perfectly.
A bit of background here: this was in the early 70s and the devices regulation act had not yet been enacted. The FDA, at that time, had no control over implantable devices. We could literally design something on a Monday, manufacture it on Tuesday, sterilize it on Wednesday and implant it before the week was over. It sounds kooky but that’s the way it was.
We watched the test units for two weeks and decided they were functioning without a flaw. We had manufactured a pacemaker but we had no capability to manufacture the leads required to connect it to the heart. We bought several dozen leads from Medtronics because the connector on our newly minted pacemaker was designed to accept a Medtronics lead. On the second weekend we sterilized a pair of pacers and leads, packaged them with an Intermedics logo and I took one of them with me back to Florida.
Ten days later I had a suitable patient for pacer implant. I sat with the patient and the family and methodically detailed the fact that this was a new and experimental device but I had ultimate faith in its ability to do the job. The family evidently had enough faith in me and I scheduled the patient for implant the next day. The procedure went without a hitch, the lead was well-placed in the right ventricle and the device was pulsing rhythmically at 72 beats per minute. In 1974. I implanted the first pacemaker of what was to become a long and impressive line of Intermedics cardiac pacemakers.
One pacemaker implant does not a company make. There were enormous obstacles to be overcome in a short period of time. We needed a suitable manufacturing facility, personnel, materials and most of all, a sales force to peddle the product.
Albert Beutel was a consummate salesman. His pitch was precise, prepared with passion and delivered with assurance. His flashing blue eyes and smiling face took the tension out of the situation and put his customer at ease. His enthusiasm was infectious and he rarely failed to close a deal. Albert knew all the doctors in his territory. His first attempt was to contact some of the implanting physicians from his old territory but to a man they told him he was crazy to try to enter a market dominated by well entrenched companies.
The following is what we heard from physicians we interviewed: “Your company is a month old, no one knows you, you have no background, no credibility, you’ve only implanted one pacemaker and you want me to risk my patient’s life and my reputation by switching from a reputable company like Medtronics and use your product instead?” Looking at it from their point of view, it’s hard to refute the argument.
Albert knew many pacemaker salesmen working at Medtronics and those working at most of the other companies. His next pitch was to try to get them to come on board with us. No one was willing to give up a position with a major company and come to work for a start up. Two months after the first implant we had an inventory of three dozen pacemakers and didn’t know what to do with him. The lifeblood of any company is sales. Research and development, marketing, personnel, manufacturing facility and everything else that goes into a company fails without sales.
I remember the meeting well; Albert, Philip and I were in a pizza joint for lunch and Albert said “We have to use the carrot on a stick principle”. I knew what he meant and I asked him how big a carrot, who do we dangle it in front of and who carries the stick. Without a moment’s hesitation he replied “I’ll take it to the MD’s and you take it to the DO’s”.
It sounded like a plan but there were several hitches in it. The only MDs with whom Albert was acquainted were in his territory while he was detailing for Medtronics. To a man, they had already pooh-poohed the idea of him starting a pacemaker company and they were not enthusiastic about using our product. Compounding the problem was the fact that there were only a handful of DO’s in the country doing cardiac pacing.
Now back to the carrot; what could we offer as an incentive? It’s quite simple when you look at it realistically; money talks and everything else walks. The question was how to present an incentive to a group of ethical (and notoriously hypocritical) physicians without crossing the line and making it blatantly obvious. Frankly, I never solved that conundrum and as time passed I didn’t have to; most physicians were easy. During the first year of operations the carrot was to make physicians paid clinical consultants. We would credit ech physician with $600 for each CMOS-I pacemaker he implanted if he agreed to write and publish a paper about the product. We paid the consultants in cash or stock.
In the early days, stock certificates came out of the treasury like Kleenex out of a box. I don’t recall any papers written but it was never an issue with us. The issue was sales. A half a dozen of my DO colleagues were responsible for 98% of the pacemakers that were implanted during the first eight months Intermedics was in business. Two of Albert’s MD friends used our product, and then, sparingly. The carrot whetted some appetites and my colleagues stemmed the financial hemorrhaging on the manufacturing side of the business and provided a healthy transfusion of much-needed sales dollars.
Dear reader, dont be shocked; it was done in every company and I dare say it is still being done today.
A much more important issue is CMOS-I;
it proved to be a superb pacer with zero
complications. It functioned flawlessly.
An impressive achievement for a start up company.
Albert turned his attention to competition salesmen and was holding out a variety of carrots to them. He was extremely successful in his effort and our first full-time salesman was plucked from Medtronics. His territory was somewhere in Pennsylvania but Albert offered him jurisdiction over the entire state, no quotas, a signing bonus of Intermedics stock and a commission equal to 25% of sales. At that time, Medtronics salesman were making a reasonable salary and a fraction of a percent of sales over their quota. The first month our man was onboard he sold six pacemakers. We were charging $1400 per unit but the salesman got credit for $1200 because we had to buy the leads. The first month after he left Medtronics, he took home an $1800 paycheck which was twice what he ever made during his best month at Medtronics.
The word spread like wildfire among salesman working for the competition. Within a year, with Albert offering whatever size carrot it took, our sales force consisted of most of the best men in the best territories along the eastern seaboard.
