#70: Eugene Malinskiy (Lazurite)

Eugene Malinskiy (Lazurite) [00:00:00]:

It's been 7 years, and I will finally get to see Arthur Free be in that operating room, Be used by our surgeons. And I'm gonna see it start to provide those benefits that I saw the need for 7 years ago, that's that is just an indescribable feeling.

Jeffrey Stern [00:00:25]:

Let's discover the Cleveland entrepreneurial ecosystem. We are telling the stories of its entrepreneurs and those supporting them. Welcome to the Lay of the Land podcast where we are exploring what people are building in Cleveland. I am your host, Jeffrey Stern. And today, I had the absolute pleasure of speaking with Eugene Malinski about the future of health care and Of the operating room. Eugene is the cofounder and CEO of Lazarite, which got its start back in 2015. And to date, Eugene has led Lazarite Through 3 rounds of funding raising more than $18,000,000 for the company. As you'll hear in his incredible recounting of the experience firsthand, Eugene founded Lazarite after identifying the need for a wireless arthroscope while working at his prior venture, Dragon ID, When he witnessed a trip and fall accident in a minimally invasive operating room where a staff member was injured as the result of her Tripping over surgical camera wires and the surgery itself was canceled.

Jeffrey Stern [00:01:31]:

This incident left a lasting impression on Eugene and inspired the arthro free wireless Durgical camera system, which will be Lazarite's 1st product to market. Prior to Lazarite, Eugene founded and served as CEO of DragonID, A health care innovation and engineering consultancy specializing in medical devices for the fields of cardiology and orthopedics. While at DragonID, Eugene not only incubated the idea behind Lazarite, but he also earned a number of accolades including being named to Forbes 30 Under 30. Even before his time with DragonID, Eugene began his entrepreneurship journey when he founded and ran Dragon Intellinet Development, An information technology company that was ultimately acquired, a leading company in the SMB computing segment from 2000 to 2008. This was truly an incredible recounting of Lazarite's journey, of Eugene's first principles' systematic approach to solving Seemingly impossible problems and what the operating room of the future will look like. So please enjoy my conversation with Eugene Well, Eugene, thank you so much for for coming on today. Really appreciate your time and and looking forward to diving in here to the work you're doing with with Lazarite off the The bat of of quite a series of public and and and really exciting developments. So very much looking forward to this.

Jeffrey Stern [00:03:03]:

Thank you.

Eugene Malinskiy (Lazurite) [00:03:04]:

Thank you for having me. Your show's awesome. I've been a big supporter, and it's in my podcast directory. And I absolutely love all the conversations that you have. So thank you very much for having me.

Jeffrey Stern [00:03:19]:

Thank you. Well, hopefully, you'll enjoy this This one as much. Well, I'd love to start and we'll, you know, work our way towards the present day here. But, you know, just with an overview of the The arc of your career, your your personal background, and and what drew you to the the world of of entrepreneurship?

Eugene Malinskiy (Lazurite) [00:03:37]:

Yeah. Fantastic. The long arc of my life is actually more like a couple different arcs that I was very happy to be able to join together about a decade ago. So I've always had this, Let's call it entrepreneurship streak in me. A large part of that actually comes from my dad, who Used to have his own company, actually a number of his own company. So I've always sort of learned that entrepreneurship is the sort of exciting You can almost say 3rd way of being in the world, working in the world, and being able to, make an impact on it. So I've actually had my first company when I was Sixteen. So in high school, then had another company in college.

Eugene Malinskiy (Lazurite) [00:04:28]:

Then had a third company that And then ultimately, 2 medical, device companies, this being the 2nd. So I've I've always had this sort of entrepreneurship stricken me. I love the ability to sort of make your own path, make your own way, And and to do it in a way that isn't necessarily how everybody else loves it. So I've I've always loved being being able to do that. So that's sort of arc one of my life. Arc two of my life has always been this Science, technology, we could just come out and say that I'm a giant nerd.

Jeffrey Stern [00:05:13]:

Put it on the table.

Eugene Malinskiy (Lazurite) [00:05:14]:

Hey. Look. Here's the truth. But it's it's actually been right. Like, I'm fascinated by The natural world by the technical world. And I've always sort of my educational pursuits largely have ended up in chemistry, biochem, engineering, Did a little bit of work in pharma. So all sorts of sort of chemistry technology, that's sort of on the boundary. So right.

Eugene Malinskiy (Lazurite) [00:05:47]:

So my so my favorite subjects were the biochemistry or, right. I'm actually I have a BME degree from TSU, and that's another interdisciplinary degree as well. So I've always been fascinated by that side of the world. And then I've had a passion for medicine. And so that's been the 3rd sort of arc of my life is I love patient care. I am very excited about being able to help the patient, being able to help the physician and the staff. I was an EMT at one point in time. I did work at the Cleveland Clinic.

Eugene Malinskiy (Lazurite) [00:06:31]:

I I've sort of volunteered when I could. So I have this medical side. And for large portions of my early career, I could only ever really combine 1 or 2 of those. So I had a couple I t companies and obviously that combines my love for the Technology that combines my love for entrepreneurship. I wasn't able to sort of combine my love for medicine in that that sort of was its own separate job, which I still love, but it was his own separate thing. Or I would do something only matter I only do something in a technology space. And then following my BME degree, I sort of had this moment where I saw that I could Finally combine the medicine, the technology and engineering and the science and the entrepreneurship. And so that that was sort of the it's it's it's crazy to say that right because I'm This is I'm not even 30 yet.

Eugene Malinskiy (Lazurite) [00:07:43]:

I'm like, that's the culmination of sort of the 3 paths of my life. I don't know where I'll end up in 10 or 20 or 50 years. But at least at that point, that was Sort of a wonderful place for me to be because I finally felt like I had found this niche where my Interests and my passion and my education all combined. And and that was that was just awesome. It was awesome feeling, and it was really sort of led to a lot of passionate, good work and happy to do the good work that sort of, I can't say, expect it out of me, but happy to do the sort of good work that I wanna do, that I wanna have a good successful project or a product. I I wanna make sure I still also call out. So since this is very much a Cleveland podcast, I want to make sure I call out my Other alma mater, which is, Jack Carroll, where I'll I'll JCU set The sort of, I'd say, foundations for everything that came later. The sort of liberal arts the true liberal arts education, the ability to pick and choose and Do the things that interested me, like, for example, philosophy minor.

Eugene Malinskiy (Lazurite) [00:09:14]:

Nothing to do with what I was actually doing, but sort of allowed me to expand my mind and let me think and taught me to think in new and novel ways. So I wanna make sure I call that out. And then, obviously, CSU, I already said, was, one of the schools I went to for my post bacc.

Jeffrey Stern [00:09:33]:

Always good to to ground it back here in in Cleveland. Maybe if you could take us through, you know, at the convergence Of those 3 areas, you know, what was the the epiphany that you had? What talk us through that moment.

Eugene Malinskiy (Lazurite) [00:09:47]:

So I'm sort of finishing up my Biomedical engineering degree at CSU, and I'm spinning up yet another company called DragonID because I sort of See this market need. Like, doctors are saying, hey. Wouldn't it be great if there was a device that blah blah blah. Or there was some talk because, there was a collaboration between CSU and, Clean Clinic Innovations, and there was celebration there. And so I heard a lot of discussions on, hey, wouldn't a brigade of, x y z device existed in order to help the surgeons and help the patients. And that sort of that was sort of the 1st sort of sparkle of, you know, there might be something there. This combination of of devices. So started up, DragonID, moved into LaunchHouse.

Eugene Malinskiy (Lazurite) [00:10:42]:

Now this is old LaunchHouse. Not OC not OC launch house with, that was that was, around for, like, the 6 months. This is Launch House on Lee Road. So the 2nd iteration of it. Mhmm. Fantastic group of people there. That was a lot of fun. Moved into Launch House, sort of put a little shingle out, and then used connections and introductions in order to start, in essence, soliciting business, gained a little notoriety, if you wanna call it that, both regionally as well as nationally.

Eugene Malinskiy (Lazurite) [00:11:22]:

Ended up working on some very cool projects and products. And that sort of was the big moment, which is I Finally get to and this this actually this was a cardiac project. So I can I can mention that? Like, this was a cardiac project and there was this very find need, and there's no easy solution. And to get to the solution required a lot of Hard engineering work. A lot of hard thought from the science side, But also you needed to know medicine. You needed to know the how the patient journey took the patient to where they needed this potential future device. You needed to know the physician's journey. Like, what did the physician do? How did the disease progress? So It was this sort of, like, amazing, like, oh my god.

Eugene Malinskiy (Lazurite) [00:12:20]:

I get to say, like, I get to use my medical knowledge, my medical know how. I get to be in that operating room, and then I get to do the the good science, the good engineering, And I get to combine that both of those finally with entrepreneurship, sort of running your own ship, trying to Go somewhere where you wanna go. And that was that was sort of the the the big epiphany, and that was wonderful. That early success and then sort of start generating a lot of, friends and Folks in the industry who liked the work we were doing, who saw the potential in the company and myself personally, We were nominated or I was nominated for the Forbes 30 Under 30 in manufacturing for, again, a cardiac project. Ended up winning it. That put us more solidly on the map. Tremendous fun after that because all of a sudden now I had to, like, field phone calls and answer all sorts of weird, interesting questions like, hey, can you do this thing for me, I'm like, who are you? What are you doing? But but I really but that led to this very interesting sort of process where and we and I'm gonna sort of keep coming back to process probably a lot during this conversation where This is sort of the 1st time I'm putting together this repeatable process for how do you really make a new medical device, right? Because what would start happening is we would have a physician or surgeon or nurse or staff come to us or he reach out to me personally and they'd be like, I have this brilliant idea. I think I know how to fix it, and all I need you to do is a couple of more minor things, and then and then we can go and make a whole lot of money.

Eugene Malinskiy (Lazurite) [00:14:33]:

The reality was obviously far more complicated than that.

Jeffrey Stern [00:14:38]:

Not quite so small, not quite so minor.

Eugene Malinskiy (Lazurite) [00:14:41]:

Not quite so small, not quite so minor, not quite so fast, but it it was actually very interesting because of what what that led to is This sort of process where a surgeon would have an idea. And either they would call me or the institution would call me or a big company would call me, and they'd they'd say, look. We think there's we think there's an idea here. Can you explore it? Then I'd say, absolutely. But then I put the idea to the side. I I'd actually almost forcibly ignore it. And I'd go and I'd talk to the surgeon, and I'd say, that so and so, Tell me what your problem is. Please do your best to explain to me where where you see They are being in need.

Eugene Malinskiy (Lazurite) [00:15:33]:

And then I'd say, okay. So after the next question, show me. And that would very frequently lead to them taking me to the operating room. And I'd say, okay, show me the procedure, walk me through the procedure, and then do it again and then do it again in order to sort of understand what problems they're having. Then I'd say, okay. I think I'm starting to see your problem. Let me put this aside. And then I'd call up another doc, maybe 1 I had call worked with before, maybe 1 I had not.

Eugene Malinskiy (Lazurite) [00:16:02]:

And I'd say, Doc, there's this interesting conversation. I don't wanna reveal anything for obvious reasons. Is it okay if I come in and I Just shadow your surgery for a couple days. I wanna see you perform this particular surgery, this particular cardiac surgery or this particular orthopedic procedure or or this sort of intervention. And Generally speaking, they'd say yes. They'd be very excited to have somebody in the room who they can just talk to and unload and listen to them. So generally, the answer is always yes. It was but which by the way, led to fantastic future connections, which I was, then able to use.

Eugene Malinskiy (Lazurite) [00:16:47]:

But it's it was it was kind of great because people love telling you what they're doing, how they're doing it. And then I would sort of listen to that procedure, listen to that process. And, I'll be honest. About 50% of the time, if not more, What I discovered after doing a couple of these observations with multiple docs is that The original problem isn't what the original doc thought the problem is. It was something Else, as in they maybe misidentify the problem. Unfortunately, sometimes it's because they're actually not doing something right, which happened a few times. Those were difficult conversations to have, But sometimes they would be on to something. And and that would sort of be the okay.

Eugene Malinskiy (Lazurite) [00:17:44]:

This is wonderful. This sparked, a conversation to spark the discussion. Now let's take whatever it is that you have now now that we're past the stage of, I think this is a problem. Let's look at your proposed solution. And we will sort of work on the proposed solution and say, you know, Oh, maybe that's quite solving the problem, and this was sort of a repeatable process. And then we would actually go and try to solve the problem. And if we could show that the problem was solvable by a very quick prototype or by modifications of it, we would then try to transition that back to the surgeon or the institution and say, look. I think there's something here.

Eugene Malinskiy (Lazurite) [00:18:26]:

Here's like, feel free to take this now to the next step. And sometimes they come back to us and they say, well, can you can you guys do the next step? So all of that is wonderful. However, if you notice, there's a key element in all of this missing, which is that none of this was actually owned by us. Mhmm. Right? So we were doing good work for other people. And so because it's a consulting company. Right? So DragonID was a consulting company. And, ultimately, that is not where I wanted to go.

Eugene Malinskiy (Lazurite) [00:19:12]:

That's not where I wanted to end up. Could have continued growing that very well compensated world. Lots of companies in that space. Lots of sort of unique niches that can be occupied in that space. But ultimately, it's doing others other people's work. And and you never sort of really got to see the whole process. You never really got to put your name on it. And and I wanted sort of to to be part of the whole lifecycle, which is a very different sort of company.

Eugene Malinskiy (Lazurite) [00:19:50]:

And and the opportunity so as I'm sort of thinking this, which lays leads to The sort of the next step which is what became Lazarite. I'm in an operating room. Orthopedic operating room. For something completely different I'm there observing an orthopedic case. A minimally invasive arthroscopy case in fact. For the listeners here who don't know what that is. The very sort of simple explanation is They make a couple small incisions in your knee or your shoulder. And they, stick a camera into one of those incisions.

Eugene Malinskiy (Lazurite) [00:20:30]:

They stick a tool into another one of those incisions, and they do whatever it is that they need to do in order to make your joint feel better. Mhmm.

Jeffrey Stern [00:20:40]:

I was going to ask, so thank you.

Eugene Malinskiy (Lazurite) [00:20:42]:

No. Absolutely. Yeah. So arthroscopy is, is one of the class is part of the class of the larger world of endoscopy procedure. So minimally invasive Procedures which are only growing, right? This is a huge market. It's only getting bigger as we move more and more Procedures that used to be number 1 in the hospital. Number 2, sort of big open procedures where we are cracking you open, and then you're taking a long time to recover into these minimally invasive, minimal portal procedures. And arthroscopy is is in that category.

Eugene Malinskiy (Lazurite) [00:21:24]:

And arthroscopy happens to be an orthopedic version of the endoscopy. So and by, if anybody I'll sort of say 1 more thing. If you hear like an athlete had, like, an ACL tear or they did a, peak in their, shoulder or their knee or their elbow, chances are they used some sort of a minimally invasive procedure to do that. And and in order to do that, you need a a camera and you need a a light because, obviously, the inside of the body is dark. FYI. So Makes sense. In order to See, in order to do any procedure, right, in order to do any minimum use procedure, right, you need fundamentally 2 things. You need a light into the body, and need video out of the body.

Eugene Malinskiy (Lazurite) [00:22:19]:

And so I'll talk more about sort of the background of arthroscopy later, but That's sort of a good guidepost. So I was in this procedure in this operating room. They were set up for a procedure. There was a patient on the table. Patient was intubated. They were virtually seconds from starting the procedure And, PA, a physician's assistant, walked by the surgical table and tripped and fell. It took a really hard fall Mhmm. In the operating room because of the cables that connect that video camera and that light back to The this big surgical tower that's in the room.

Eugene Malinskiy (Lazurite) [00:23:10]:

So so imagine imagine this right like this picture. You're an observer in this OR. You're about getting ready to see a surgery start, And all of a sudden, what is supposed to be this never event happens where A member of the surgical staff, unintentionally trips and falls, hurts themselves on these cables that are laying across the patient and that are sort of hanging down and sort of the world freezes. And you're like, what did I just see? I mean, this is this is Not supposed to happen. This is supposed to be another event. And then the engineering side turns on, and you're like, okay. This can't be happening. Right? So this is, for the context, 2014, 2015.

Eugene Malinskiy (Lazurite) [00:24:12]:

Right? Like, wireless is everywhere. Right? Cell phones are everywhere. We've solved the wireless problem, Wi Fi, Bluetooth, your cell phones, your your home phone is cordless now. Your grandma is calling you on the cell phone. So so, like like, there's cameras in our pockets that are cordless, wireless with a battery. How is this still a thing? And that's sort of the world snaps back. The PA is laying very injured. The surgery is canceled.

Eugene Malinskiy (Lazurite) [00:24:53]:

The patients wheeled back. It's just disaster. And then you're sort of, like, just Standing in the salt water, you look around and you're just like, I just did a count. There's like 20, 40 wires on the floor, on the ceiling, across the patient. Like, why hasn't anybody said anything? Like, is this a problem? Was this something that was a one off? And it turns out that it's not. Mhmm. That this is fundamentally a problem. And that led to what eventually became Arthur Free, which I'm very happy to report that as of a few weeks ago received its FDA approval.

Eugene Malinskiy (Lazurite) [00:25:42]:

And it is the 1st, product in what we expect to be a whole family of products that solve this problem and other problems in the operating room.

Jeffrey Stern [00:25:54]:

Wow. What an incredible founding insight story. I mean

Eugene Malinskiy (Lazurite) [00:26:00]:

Dramatic enough?

Jeffrey Stern [00:26:02]:

Yeah. Fantastic. I mean, it it no. It's it's really incredible. Maybe kind of take us through, like, Had no one asked this question before? It, you know, it it turns out this is a real problem that that people are aware of, but maybe not talking about. Is it just The consequence of this is the way that we have done it and this is you know, it it works well enough. What what what's going on there?

Eugene Malinskiy (Lazurite) [00:26:24]:

Yeah. So that's almost exactly what it was. The little side commentary I'll give here is which I think Your listeners have heard before. Had I only known how hard it was going to be, I would have probably still still done it. So let let let's walk through this. So day 1 of the ideation here is Let me take out a a a back of the napkin. Let me run the actual math. Right? This is the engineering brain turning on.

Eugene Malinskiy (Lazurite) [00:27:01]:

Let me run the actual math on, is this possible? Can I transmit wireless video in a safe way across an operating room in order to achieve the video quality I wanna achieve? Yes. Chuck. Okay. So nothing physics stopping you there. Can I do that with lighting? Interesting numbers came up, but let's pretend for a second that the answer is yes. Can I power this off of a battery? Interesting numbers come up, but the answer does seem to be yes. So there doesn't seem to be anything in physics that's wrong, that's stopping this from happening. Then I go and I start asking physicians, and I'm like so I kinda come back to this process, right, that I have now established.

Jeffrey Stern [00:27:51]:

Right.

Eugene Malinskiy (Lazurite) [00:27:51]:

And I start asking physicians. So this is they do. Hey. Is this is this a thing? Is this a problem? And the very, very small circle of people? And the answer is virtually, universally. Oh my god. Yes. I've been talking about this for the last 15 years or 20 years. I've I've told that this is a problem that needs to be Solve to all of the large companies, and I'm I'm not getting anywhere.

Eugene Malinskiy (Lazurite) [00:28:23]:

I hope you can solve it, but it may be impossible or or I'm I'm happy that you're even talking about it. So that's That sort of okay. So there's a check mark there. This is something that is needed. So a product market very early product market fit. So what's next in in the process that, Hyatt now developed and defined is we we have a problem. We have And let's actually make the prototype. Things get dicey here really quickly because because you really start getting into you start getting into, Like, well, this is where I start understanding why it's hard.

Eugene Malinskiy (Lazurite) [00:29:03]:

So the first fundamental problem that we had to solve was the light. So I mentioned earlier the light. To put this in context right now, in order to get enough light into the body, you have right. To do this minimum based procedure I I don't care if it's orthopedics, if it's whatever, endoscopy, GYN, urology. Regardless of what it is, if it's a minimus procedure, right, you need that light into the body. The way that they do it right now is there's a box that sort of sits on a table or on a shelf, and it's a pretty large box. It's a 2, 3, 400 watt LED or xenon bulb or multiple fatalities. It's multiple bulbs that is then connected to this really thick, very long Fiber optic bundle, if you can imagine that it's like it's thicker than your thumb.

Eugene Malinskiy (Lazurite) [00:30:08]:

And this, fiber optic bundle then goes across the surgical site and into the actual bit that's gonna go into the body. And so it's kind of like hanging over the floor, it's laying on top of the patient. And this thing causes operating room fires, Like, 6 to 800 recorded operating room fires per year because of The inefficiency in the system because of how hot it gets. There's a whole lot of other problems with the current light sources, But I'm I'm sort of come back to sort of engineering. I'm up against the fact that I have this giant box that that is bright enough where it can literally set a, drape on fire or it can, like, burn a patient, and it does subject some fires and it does burn patients, I need to be able to produce that much light in a tiny space. Because this is this is a box. Like, this is, the size of I don't know. Like, your old for for anybody here, like, your old VCR box.

Eugene Malinskiy (Lazurite) [00:31:26]:

Like, that's the size of this light box. I have to box. Yeah. It's it's it's like the Xbox or PlayStation. It's hefty. You need to be able to take that amount of light, Trink it into something much smaller without burning a patient and without draining power because I'm trying to make something wireless. And so I try to do this with LEDs and I go and I try even the most sort of high end, like, Automotive grade or, industrial grade LEDs that have all of these features. And I run into this problem where if it's bright enough.

Eugene Malinskiy (Lazurite) [00:32:08]:

It's drawing too much of my battery, and it's also potentially so hot that I'm back to the problem of it burning a patient. And so I sort of this was sort of the big Potential failure because I could have easily just given up and be like, okay. This is a not solvable problem because I can't actually produce enough light into the body. But I don't stop. I solve the problem. I solve the problem in a very Unique and innovative way where we make our own non LED light source. And this actually leads to our first Major patent publication because it is so novel. It is so original.

Eugene Malinskiy (Lazurite) [00:32:54]:

Nobody's done this. We were able to combine a laser and a volumetric remote phosphor system in order to produce light in essence more efficiently than the equivalent LED, and we are able to do it in a way that was cold so that there's no chance of burning the the surgeon or the patient or the drape. And it also did not draw so much power. To put it in even more context, I said 400 watts. Right? 400 watts is your current LED or z non light source. Ours is under 4 watts. Two orders of magnitude, less power in our light, in order for it to produce the amount of light needed to look inside that joint or that cavity.

Jeffrey Stern [00:33:52]:

So That's incredible. Again

Eugene Malinskiy (Lazurite) [00:33:55]:

Pretty, pretty cool. Pretty, pretty cool. Next, so I literally had a prototype, and there's pictures of this floating around. I literally had a prototype of just the light, took it to Cleveland Clinic with, doctor James Williams, who at that time was the head of Euclid Hospital Orthopedics. He was the team doc for, at the time, the Indians, the Guardians. Yep. Yep. Also, but also a number of other professional sports teams here in town.

Eugene Malinskiy (Lazurite) [00:34:27]:

Incredibly well respected, minimally invasive surgeon with a deep connection pool, here locally, but also because he had so many fellows who work through his program nationally. Had him in an operating room with a cadaver. Tried our light source, and as soon as we were able to see inside the joint, Doctor Williams goes, you have just probably solved this problem that we And at this point, right, he hasn't he we told him what we're doing. He's like, you have probably solved the problem that we have all been talking about for the past 15 years. I am So happy to to have seen this. And then he asked, can I be a part of sort of the story? I wanna help. I wanna help on design. I wanna help on anything I can help on because I love the team.

Eugene Malinskiy (Lazurite) [00:35:28]:

I love the vision. This is absolutely something that needs to happen, and I would be sad if I wasn't part of that story? And we said, yes. Of course. And and that was, And that was the first of sort of this journey that I then took across the country. Again, going back to the fact that I had, these physician connections. I had these other sort of Industry connections who put me in touch with other physicians. I had a very early prototype. I had this light source, and I had this idea.

Eugene Malinskiy (Lazurite) [00:36:07]:

Right? This vision of a wireless minimum base camera system. I went and I sold this idea, And the docs who all saw it said this is wonderful. I came back. I worked on it a little bit more. I went out again and that is actually how I was able to raise my initial money. So the vast majority of our initial fundraise actually came from minimally invasive orthopedic surgeons coast to coast. Some here in town, but mostly on the East Coast and West Coast who saw what we were doing, Understood that vision. Wanted that have been wanting something like this for a long time.

Eugene Malinskiy (Lazurite) [00:36:56]:

And I'm showing them, at least at this point, a very early vision with some very, very rough prototypes, very rough prototypes That this is achievable, that this is possible. And we were able to raise some money. We then use that to go ahead and solve some additional problems. So won't spend too much time on it. But, for example, the battery and powering our device was difficult because we are using a battery. We needed a safe way to power our device that could be sterilized. And we actually turned to, magnet and NASA here in town, and we were part of a competition. We, won that competition.

Eugene Malinskiy (Lazurite) [00:37:41]:

We earned some time with NASA here in Cleveland, And they were wonderful enough where they in essence said, look, here are the batteries we use on satellites. Here's how we have protection circuitry put around them. If you do this, you are pretty much gonna be okay for an operating room. And so we were able to take their know how and their expertise. Again, going back coming back to the Clio connection, and we're able to Take all of that and really combine that with the light, and now we have a battery. The wireless bet was a 3rd significant technical challenge. And this took us on and off Probably around 4 out of the 7 years to solve. So first, we had to solve the fact that the regulatory body.

Eugene Malinskiy (Lazurite) [00:38:34]:

So in our case, the FDA doesn't necessarily like Wi Fi. So we had to solve and use a non Wi Fi system. So we end up using a military based system, UWB. I'm not gonna spend too much time there, but suffice it to say, we had to solve a lot of problems on Both the implementation of that wireless as well as the security as well as things like latency. Right? The doctor when they hold this camera this wireless camera in their hand, they are not looking down at the patient. There's nothing to see there. What they're doing is they're looking at a screen that's opposite them and that's giving them the live image from inside the patient. If when the physician or the surgeon is moving their hand and there's too much latency between that hand movement and what they see on the screen, they're not gonna accept the technology.

Eugene Malinskiy (Lazurite) [00:39:40]:

So we had to solve a lot of that. So the combination of The light, the battery, the wireless, individually, was very difficult. Combining them with more difficult still. We've been blessed with very with a fantastic team that we've been able to build on that helped us do that. And also our investors on being patient with us. And then so beyond the initial round, we then raised, series a. Again, some local money, unfortunately, fortunately for us, but unfortunately for Cleveland, most of the money did come from the coasts. And then we finished our Series B about this time last year, actually.

Eugene Malinskiy (Lazurite) [00:40:26]:

And that was the largest funding to date. And that, that was wonderful. Again, most of our original investors keep coming back because they see the vision, they want the vision, They've been very happy with us. So we've been very fortunate to have our like, even our original physicians come back throughout the growth of the company.

Jeffrey Stern [00:40:49]:

Yeah. I mean, it's it's an incredible journey from from product discovery, you know, Poor PA tripping in the room to figuring out first principles physically as possible to to to figuring it out along the way and getting Buy in and and really painting the the vision for what it sounds like the future of of operating rooms is gonna look like.

Eugene Malinskiy (Lazurite) [00:41:12]:

Yeah. No. That's we very much expect that this is gonna be the future of the operating room. And that's how fast forward 7 years. Honestly, it took a little bit longer than we expected, cost a little more money than we expected. These things tend to do that, unfortunately but we I I mentioned this earlier, but we, received just received our, five ten k, FDA. And to put this into sort of as a congratulatory note to our regulatory team and sort of the the External partners we work with, generally speaking, between sort of FDA submission, FDA approval, there is 4, 5, 6 more months that that happened. We got our approval in exactly 90 days.

Jeffrey Stern [00:42:06]:

Wow.

Eugene Malinskiy (Lazurite) [00:42:07]:

And that just sort of goes to the fact that throughout this entire process, we've had sort of the regulatory side. So I keep talking about engineering, but in order to create a medical device, you have to have a very in-depth regulatory says you have to have paperwork coming out of the wazoo, unfortunately. Sure. And You you it has to it has to be perfect. And so every step of the way we've had our regulatory team Make sure that we've been on the right track. So when we were ready to finally submit to the FDA after all of our testing, after all of our development. The process through the FDA while nail biting was incredibly fast and incredibly smooth.

Jeffrey Stern [00:43:04]:

So you have now something with approval, With buy in, with, you know, momentum, what what happens now? You you can now take this to market. You can you can start selling it?

Eugene Malinskiy (Lazurite) [00:43:16]:

Yeah. And so we've actually we've actually started doing that. Right? You're you're not allowed to do that until you have FDA clearance. So so we've been very fortunate now to do about the clearance. So we are building up our internal team. So we're gonna have a relatively small internal sales team. We're gonna have an external distribution team, And we are as I sort of mentioned, we are very fortunate to have a tremendous amount of Surgeons here at Cleveland Clinic and from around Ohio but also around the country who have been our champions and our partners and and our supporters who now are saying, look, we've been sort of behind you this whole way. We would love to be your first locations that Arthur free is installed in.

Eugene Malinskiy (Lazurite) [00:44:19]:

So we're starting to set that up. And then beyond that, We're starting to go through, a relatively accelerated sort of sales process and, showcase process, we are going to be doing, we've already done some let's call it example, trials, which we are, gonna have data off of. So we're gonna be showing data. None of this was required for the FDA, but we are nonetheless doing some data collection showing that the industry, that the Surgeons want our device that it is. Hopefully, we're going to collect enough data showing that It really fits into their workflow and and all sorts of other things. So as we sort of expand our reach and as we start putting Arthur Free into facilities. We're also gonna be doing a lot of data collection in order to show that this is Very much a surgeon driven product. The surgeons want this.

Eugene Malinskiy (Lazurite) [00:45:25]:

We put it in their hand. They say, I've been waiting this my whole life, But I also wanna be able to showcase that to the nurses and the facility and the purchasing folks that Beyond just a surgeon saying that they want this, there is an economic benefit. There is It's a safety benefit. There's all of these other things that by us eliminating these cables, We have also solved these other fundamental problems that you currently have in the operating room and that we are, Hopefully, at the end of the day, something that is safer, potentially cheaper, potentially even faster than what you have right now.

Jeffrey Stern [00:46:10]:

Wow. Yeah. That's very exciting. Congratulations.

Eugene Malinskiy (Lazurite) [00:46:14]:

Thank you.

Jeffrey Stern [00:46:15]:

So as you think about, You know, where you are now, the the journey that it's taken to get here, what are you kind of most excited about looking forward over the next year? And, You know, how are you thinking about what what comes next?

Eugene Malinskiy (Lazurite) [00:46:30]:

Yeah. So I am so I'm most excited about a few things. So One is we are in the process of building These partnerships and relationships. And we actually announced, one of the first, a few weeks ago. And that's actually with university What else? Yet another local shout out, Ventures has been, fantastic to work with. They've been great partners. We are really looking to build on that relationship. Some of the trials that I mentioned earlier, we're looking to work with them to conduct some of those.

Eugene Malinskiy (Lazurite) [00:47:16]:

But it's we're looking at this as sort of a long term relationship. So we have a couple others that are sort of in the pipeline. So developing these relationships is Incredibly both important to me, but also exciting because it just it just helps It just it helps our vision, but it also helps the institutions. It's it's really sort of a win win for everybody involved. So that's 1. Number 2, obviously, the the market entry, the sales. Everybody's looking for that hockey stick. We we hope to get there as well.

Eugene Malinskiy (Lazurite) [00:47:55]:

But we're honestly right. So for myself, right, as the original Persons are behind all of this. It's it's sort of hard to relay how excited. It's it's been 7 years, and I will Finally get to see Arthur Free be in that operating room. Be used by our surgeons. And I'm gonna see it start to provide those benefits that I saw the need for 7 years ago, that's that is just an indescribable feeling. So so so that that's that's another thing I'm obviously very excited about. And then then 3 is we have a pipeline we've developed.

Eugene Malinskiy (Lazurite) [00:48:41]:

So with the, light engine, which by the way, we call the Meridian light engine, That is a fundamental technology. We have a product portfolio that is going to incorporate a lot of that technology. We have some other things we're working on, and I'm just very excited to sort of See where we end up with our product portfolio, and, we're gonna look for the next products to enter the market not too long from now.

Jeffrey Stern [00:49:13]:

Yeah. Well, I I'm excited to see what impossible things you figure out how to make possible as well. An incredible story, really, In retrospect, and I think you've you've kinda spoken to this a little bit already, but to just kinda bookend the the whole journey here. What is kind of the the impact that that you hope to have looking back?

Eugene Malinskiy (Lazurite) [00:49:34]:

Right. Absolutely. So I So we have a we have sort of a a corporate company impact where, Right. We want to have this impact of of a 1000000 lives. Right. We wanna be impacting patients. We wanna impact surgeons, staff. We really want to fundamentally sort as a company, Do good for the world and and provide the tools that can help The surgeons and the staff treat their patients better and for the patients, you have better outcomes.

Eugene Malinskiy (Lazurite) [00:50:18]:

So so that's That's the one side of that impact. And I think that kind of all the other stuff kind of is under that, right? So I wanna see safety improve. I want to not have, operating room fires. I don't wanna see another PA trip and fall in an OR, because of a cable. Right? Like, it just shouldn't happen. And this is this is sort of exciting. Right? Like, Whenever we show Arthur Free to up and coming docs or or residents or interns. Right? They they sort of they get it.

Eugene Malinskiy (Lazurite) [00:51:00]:

Mhmm. We don't even have to tell it to them. Like, They look at it. They're like, oh, yeah. It's wireless. Of course, it's wireless. Why wouldn't it be without knowing that there's, like, 30 years worth of it not being wireless. And and so I'm I'm very excited about that impact of the and that we are slowly but surely going to change the paradigm in the operating room.

Eugene Malinskiy (Lazurite) [00:51:25]:

This is the first of, of what we should all expect is gonna be multiple things that sort of move us away from technology that was great technology in 1985, but we can do a lot better now.

Jeffrey Stern [00:51:43]:

Yeah. Well, I'm I'm looking forward to to seeing what what y'all come up with. We'll close it out here with our closing question that that we ask everyone on the on podcast, Which is not necessarily for your favorite thing here in Cleveland, but for a hidden gem, something that other Folks may not necessarily know about.

Eugene Malinskiy (Lazurite) [00:52:03]:

Oh, absolutely. So I have 2. So one is the public library. So for those folks who have never visited, Please visit your local branch. But better yet, go visit the downtown branch. You would probably be surprised by the Technological know how and sophistication of what we actually have in our public library system, which I think has won numerous awards over the years. But for example, there's a 3 d print shop downtown. You can check out things that not just books but all sorts of materials that you wouldn't normally think about.

Eugene Malinskiy (Lazurite) [00:52:54]:

I I think it's been it's a nice retreat, and it's a fantastic, fantastic public Free sort of facility that we have or or or, a service or it's it's beyond the both of those things. They really are A key anchor institution in the region. That's 1. And then another one, if you are a nerd in At at all who likes to do things with their hands, I very much recommend the Case Western, I believe, officially, is the Case Western Sears ThingBox. But, the ThingBox is an amazing Creator space on the case campus just down the just down the hill from, like, literally, which has everything from really incredibly sophisticated 3 d printers to, Full on machine shop with more tools than you probably would think they do. And then they have Chambers and all sorts of fun toys that you can play with. So anyways, it's kind of a little bit of a hidden gem. Unless you're kind of in the know, you don't tend to know about it.

Eugene Malinskiy (Lazurite) [00:54:14]:

I highly recommend googling it and making a little pilgrimage. The space itself is awesome, but just the amount of tools that they have for all sorts of makers, right? Not just folks who are doing 3 d stuff. Like, I believe they have resources for, like, knitting and sewing and and all sorts of stuff. So Please make a pilgrimage. They're absolutely wonderful. And the vast majority of it is either free or incredibly cheap.

Jeffrey Stern [00:54:48]:

Both excellent hidden gems there. Well, Eugene, thank you so much for coming on and and for for sharing, really, the the incredible story And journey that you've been on?

Eugene Malinskiy (Lazurite) [00:54:58]:

No. Thank you for having me. Off the cuff there. Sorry for it being so long. We got we all worked up.

Jeffrey Stern [00:55:05]:

I I this level of depth and and, getting into the weeds and and how you've just thought about this problem, really fascinating. So I appreciate it. I I imagine other people will as well.

Eugene Malinskiy (Lazurite) [00:55:17]:

Maybe not someone. So we'll see.

Jeffrey Stern [00:55:21]:

Well, if if folks have anything they would want to follow-up with with you about, what would be the the best way for them to do so?

Eugene Malinskiy (Lazurite) [00:55:27]:

Yeah. So Reach out to me on LinkedIn. That that's always an easy favorite. Another one is if it's a official sort of Company communication. Please use the, email contact@lazurit dot c0. That is lazurite.c0. If you wanna reach out to me directly, it is Eugene, euge@e@lazarai.c0.

Jeffrey Stern [00:55:56]:

Awesome. Well, thank you again.

Eugene Malinskiy (Lazurite) [00:55:58]:

Thank you.

Jeffrey Stern [00:56:01]:

That's all for this week. Thank you for listening. We'd love to hear your thoughts on today's show. So if you have any feedback, please send over an Mail to Jeffrey at lay of the land dotfm or find us on Twitter at podlay of the land or at sternjefe, j e f e. If you or someone you know would make a good guest for our show, please reach out as well and let us know. And if you enjoy the podcast, please subscribe and leave a review on tunes or on your preferred podcast player. Your support goes a long way to help us spread the word and continue to bring the Cleveland founders and builders we love having on the show. We'll be here next week at the same time to map more of the land.