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Dentistry Uncensored with Howard Farran

Dentistry Uncensored with Howard Farran

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How to perform dentistry faster, easier, higher in quality and lower in cost.

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184 Business Sustainability with Mike Cataldo : Dentistry Uncensored with Howard Farran
184 Business Sustainability with Mike Cataldo : Dentistry Uncensored with Howard Farran
10/9/2015 2:00:00 AM   |   Comments: 0   |   Views: 260
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AUDIO - HSP #184 - Mike Cataldo



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VIDEO - HSP #184 - Mike Cataldo



When Mike Cataldo, CEO of Convergent Dental, first started building the company, the industry was skeptical about their product. He explains the must-haves in building a real, credible, and lasting business, and how Convergent's product has been so rapidly adopted, despite initial doubt.

 

 

Seasoned entrepreneur/CEO. 

Founded, funded, built and sold MediVation Inc. to McKesson Corp. in 2000. 

Served as an investor, advisor and/or board member in several healthcare-oriented startups. 

Over 30 years of experience in healthcare technology companies.

 

 

ConvergentDental.com

info@convergentdental.com




Howard: It is a huge honor today to be interviewing Mike Cataldo. Who, I am depressed, we are the same age and you are sitting there looking all fancy with all of that hair. I look like I could be your grandpa. Before I start talking to you, this is a rare interview because you are the CEO of a company. I just want to explain to my listeners that I have no financial relationship with any of my pod cast interviewers. I actually sought out you. The reason that I sought you out was, you did something very interesting. You had the first CO2 dental laser cleared by the FDA for hard and soft tissue. That is why I want to talk to you. I want to make everyone abundantly clear with DentalTown because it is a media company. If you go to DentalTown.com, editorial and sales are in two separate rooms. They are actually divided by a wall and a door. A lot of times companies will say "Oh Howard, if you print this article we will buy an ad." We don't work that way. 

Our editorial is completely unique. We have an editorial board, like Tom Jacobi, Dr Howard Goldstein all kinds of people. When I am bringing you someone that is not a dentist, who is not a "Townee", in fact you are not even a "Townee" you aren't even a registered member of DentalTown. I go looking for you and I am never trying to sell you anything. I am just a dentist myself, 28 years. I am just damn curious, and I want to thank you for taking some time out today to explain to my listeners. How did you get the first FDA approval for hard and soft tissue? For CO2? For someone that is not really laser literate. Educate us...

Mike Catalto: I am laser literate now Howard, but four years ago I wasn't. If the question is specifically about, I am assuming there is a little more to the question. Not just how did we get the first CO2 laser approved by the FDA. Are you also asking, kind of what is behind that? The idea about the company and how it got to that point, or would you like me to answer the FDA question specifically?

Howard: No, not the FDA legal specific. I gotta tell you my biased towards lasers. In all seriousness. You know what? I am just an honest guy. Do you know what my interest in lasers was going back all the way to when I graduated in 1987? I had a podiatrist friend. My friend said that lasers are about marketing. I don't mean to me disrespectful to you in any sense. He said all podiatrists use a scalpel. We lay a flap, we remove the burr, we reduce the bone. But when I started getting on the internet saying that I am a laser podiatrist, man my new patients exploded. 

So, there is a portion of dentists that are interested in laser just because it gives you a unique selling proposition. You have to be a cosmetic dentist, or a headache dentist or a sleep dentist. You just can't be a commodity. You can't be "yeah all 150,000 dentists are the same come to me to dental.com." So lasers had a huge marketing deal. Lasers from 1987 to 2015, they have really come a long way. They are massively different than they were when I got out of school in 1987. When it was a Indy agg laser. 

Mike Catalto: It is a totally different ballgame. I am actually really glad that you brought up that podiatrist story because, It is sort of, from what I understand, long before we got involved in lasers and dentistry. It was the same way in dentistry. It was primarily a marketing tool. You say I am a laser dentist, you bring in new patients as a result. You treat some of them with the laser. So, if you fast forward to today, what our dentists are telling us is that they treat all of their patients with the laser because it actually makes a difference. It is not just about, marketing and practice growth and patient referral. Sure that is it, but now more than that it is actually about efficiency. That is the big difference that comes from CO2 and what we have been able to do. Really it is the wave length of 9.2 microns more than the CO2 as a medium. 

If you go all the way back, and we talk a little bit about how we got here. When we first started this business, we started it from scratch. I don't have a dental background, my background is startups, it is software companies. I actually got involved with this company because I was doing some due diligence as part of a venture firm that I am involved with for my now partner Nathan Monty who, came to us with the idea. I loved the idea so much, here I am today I am the CEO, the business half and he is the technical half. When we first started actually raising the money to build this company, our investors asked us a very interesting question. We talked about how, anesthesia free it could be using the right laser. They asked, will the dentists get any efficiencies from not having to numb up patients? Of course, we went talked to dentists and they said no. "Won't save us any time we go do hygiene checks, we do other things while we are waiting for patients to get numb, it won't make any difference at all on efficiency." 

It turns out that is not true, when we found out that when we first started to market the laser, our first six months we pitched practice growth, better patient experience, more patients. It is a little over simplified but that was it. About six months into it, our dentists came to us and they said, first of all this is amazingly anesthesia free where 95-98% free and that is not just for pits and fishers. It is for any cavity prep that they do. Anything. 

So that was great, first they talked about the patient experience of course, then one day one of our dentists called me up and said... "Mike, my business is way up.." I said, oh great more patient referrals.. he said "No, no. I am getting some patient referrals, but I am doing more procedures per day." I asked how many, and of course I am still new in dentistry at the time. He said eight, eight in an average of $250 a procedure. I said, lets talk about that, where is it coming from? And that is where we learned that it is not just about marketing yourself as a laser dentist. 

It is about, when you are not numbing up patients, first of all you save the time it takes to give the patient the injection, which involves a little psychiatry sometimes right? So we are not taking the time to inject the patient we are not taking the time to wait for the patient to get numb. And by the way, I don't care how good you are it is more efficient to just sit down and go to work in one spot, than it is to go from this room to that room. So, no injection, no waiting to get numb, four quadrant dentistry turns out to be gigantic...You have a patient with problems in all four quadrants... one visit. So that is one time you clean the operatory, much more efficient. 

The other big thing that we didn't see coming was, on the soft tissue side. No bleeding...you know it is not NO bleeding but it is a vast majority of the time there is no bleeding or very little bleeding. Which not only saves time but it opens the door for a dentist to treat things like polyps and fibromas that they would have referred out before because, you gotta inject the patient, use the scalpel, put in stitches...all of that goes away. So as a result, they will take on those procedure that they would have referred out. It all adds up, that is how you get to more procedures per day. 

It was interesting because it did start out like the podiatry story where, it was "I want to market myself as a laser dentist." We have actually had dentists that have bought the laser, went to training and "Oh my God, the thing works." They actually bought the thing as a marketing tool and found out, "oh I really can do all of this anesthesia free" which was really kind of funny. It has come a long way...

Howard: Do you know what my first laser was in 1987? 

Mike Catalto: I can't even guess...

Howard: Are you hearing me okay?

Mike Catalto: I am hearing you fine, I was just talking while you were talking for a second.

Howard: Actually, back when you had no computers you know... we had prescription pads, I made a prescription pad called "getting to yes." I know your background is economics, I have my MBA from Arizona State University. I tracked every time a customer asked us for something and we didn't have it. Like, "can he put me to sleep?" I tracked that... Then I solved that by having a dentist anesthesiologist come into the office. We started getting people saying, "does he have a laser?" 

I didn't have a laser and you know I wanted to solve it right then and now. I ran over to Radio Shack, I had four operatories, and bought four laser pointers, that is a helium laser... Just so I could initially start saying, "does he have a laser?" He has a laser in every operatory. He has four lasers. And all I had was four laser pointers. Then I was off to all the CE courses to see what kind of laser you can get in to. 

We had a podcast just a few days ago with a pediatric dentist, who says that the value of not having to numb up these kids was so amazingly huge it was just a complete game changer. I was wondering, you have a degree in economics, have you ever seen any stats on what percent our population has anxiety towards the dentist specifically towards the shot? Have you ever seen a number?

Mike Catalto: Oh yeah, you see them all the time. Lets put it this way, everybody hates the needle and I have seen, actually I have heard dentists talk to me about studies that show the dentists blood pressure increases more than the patient when they are about to give an injection. Then, of course there has been a lot of stuff published about patients not going to the dentist until it is absolutely too late. The Wall Street Journal published something a few years ago, saying that 25-30% of the U.S. population avoids the dentist until they have an emergency. It is a lot. 

I think that what you are talking about with the kids, besides all of the other benefits the idea of not instilling fear or traumatizing these kids early, you know setting them up for being afraid of the dentist when they are adults. I assume that is where you are going with that line.

Howard: Yeah, you know social animals like humans are hard wired for empathy. If you don't have empathy you are actually a sociopath. I just saw the neatest study on a sociopath where they figured out that when a normal person sees another person yawning, whether it is on a movie or a screen...

Mike Catalto: Right..

Howard: You yawn, and they realize that sociopaths do not yawn when someone else is yawning because they are miss-wired. They are abnormal, and I can not tell you how many dental offices I have been into, and I see dentists when they get done giving a shot will stand up and they come out of the room and exhale for the first time. They were literally holding their breathe during the whole injection. 

Over the years I got very intuitive, when I am sitting there working on a patient or whatever and I start to feel my heartbeat go up, there stress is communicating with me. I think my brain is focused on a root canal, but I am intuitive enough to realize that "wait a minute you are starting to feel stress." Which to me means, that the patient is starting to feel stressed. You know, you put your hand on their shoulder, ask them if they want Nitrous Oxide or do they need a break. 

A lot of dentists have told me that everything that they have done to make the patient more at ease, the karma has made their jobs so much more stressful. If you hate giving shots, maybe a laser is something that you should be doing. Working on a patient that is really uncomfortable, maybe that is a sign that you should have a dentist anesthesiologist come in. Anything that you can do to make your patient more at ease is going to make you and your system more at ease and you are not going to be so exhausted at the end of the day. 

Mike Catalto: That is absolutely right, you know I am glad you are saying that too. We actually, early on...I actually have the benefit and I do think that it is a benefit of coming in outside of dentistry so... all of the people that I have talked to as we built this company would kind of start me at ground zero with this. One of the dentists that I was working with told me, "listen, we go to dental school but we really need to get trained as psychiatrists because we spend half of our time practicing psychiatry." That goes to what you are talking about the stress. It is patient and dentist stress as well. I do think that if you put our customers under the truth lamp and said, really what is it all about? What is your favorite part? Maybe they don't like to talk about it but they say "yeah, I feel better at the end of the day because I am not stressed out as much as a result of my patient feeling stressed." I think that it lifts a gigantic burden.

Howard: I first told you my history with lasers was the patients asking for it, buying laser pointers, seeing a marketing spend. You know what my advise has been consistently to dentists regarding lasers first and primary, when I have been asked for it. I have lectured, fifteen hundred times in fifty countries. People come up and say, "do you think I should get a laser?" I look at it from thirty thousand feet, you know a dentist has a high burnout rate. They have had high suicide rates. 18% of them will go to inpatient rehab throughout their career. 

Which isn't bad considering anesthesiologists are 38%. So, we are 18% which is the same as the general public. With the burnout, the disease, the depression. I always first ask, "what do you think about a laser?" If they say, "you know I just think it will be really cool." I always think of my four boys. That are now 20,22,24,26 years old. When you put them the sandbox with not toys, they would be out in five minutes, but when you put them in the bathtub with ten toys or in the sandbox with then toys, like Tonka trucks, they would play forever. I always tell dentists, if you think a laser would be really, really cool you can't afford not to have one.  

What if that saved you from burnout, and wanting to retire at 50 or 60 years old? Some of the richest dentists I know are still practicing at 80 years old. They never even touched their 401k they are still contributing. They love dentistry. I always tell people that the most important thing is, if there are 168 hours in a week and you are going to be asleep 56 of them, and your going to be in the office 32 hours. Why is your home five thousand square foot and your office a thousand? Why do you have all these toys at home and no toys in the office? If you think that a laser would make you run twenty red lights on the way to work, and you just think it would be really cool, and you would be Dr. Dentist Darth Vader in there with all your laser toys you can not afford not to have one. If you think that doing dentistry is cool, man... that is 80% of the game. 

Everything else is just technical...

Mike Catalto: Well, you know I am not going to argue with you on that. By the way, I can tell you story after story, after story about that. It does seem to be somewhat age independent. So, Ron Goldstein is actually our oldest user of people. I hope he won't get mad, I think people know he is 82 years old and he uses Solea and he tells me he has fun with it. We just sold one to a guy named Ed Swderski who happens to be the president of the Mass Dental Society. He was telling me, "I am 62 years old, I have been working my butt off. I want to something that is fun." He was having fun demo'ing the laser. He said "I got ten years left, I want to have fun." 

It is exactly what he said, this tool is going to be fun. We have Ron Platca up here on the north shore, he is 72 years old. He actually had Solea at number two, so he has had it for a while and he still texting me pictures of the preps. He is like a kid. Every week we texts from Ron Platca "look what I did today." For those guys, and everybody has their own motivation it is just like anything else in life right. 

If it is going to make it fun, do it. Why not. If that is the reason, then that's the reason. So, we do see that a lot of our dentists just say it is cool and fun to practice dentistry with. 

Howard: Yeah, I was watching an NFL game a couple of weeks ago at the bar with one of my dental buddies and he was basically sharing... he is Catholic he was sharing Catholic, Christian guilt that he is referring out these thousand dollar root canals to an endodontist. He feels bad and guilty about that because he knows how much more revenue it would be for his office. However he just hates endo. I was explaining to him that he is actually making money by not doing the endo and referring thousands of dollar root canals to endodontists because he hates them. You can not afford to do something that you hate for money because in the end it is going to cause the burnout, depression, the want to retire and sell the practice. 

I told him that it is an investment to send to the endodontist and that he should be spending his money, on just making his environment cool where he wants to play and right now he is fifty and I want him still playing when he is 60 and 70 and 80 years old. That is the badda bing badda bing, just loving what you do. Everybody who ever gets good any anything loves what they do. I have never for a day thought in dentristy that I was trading time for money. I have always thought it was damn cool. 

I told a couple of friends that I was interviewing you today, and one of the most interesting questions was where did Solea come from what does that even mean? Solea? 

Mike Catalto: Laughs...

Howard: By the way that is the name of your laser. The Solea Laser. Is that the name of your cat? Or is that an economic term? Is that quensey in economics? Where did that term come from?

Mike Catalto: Well, do you mind if I answer your question with a question? I know that is terrible but, let me ask you... How does the name sound to you? When you hear the name Solea what does it bring up? What do you think? What does it make you fee?

Howard: Well honestly?

Mike Catalto: Yeah

Howard: Some beautiful woman in Paris France. With a glass of wine in her hand. Solea, it sounds like a beautiful French woman. 

Mike Catalto: Well... there you have it. 

Howard: Laughs...

Mike Catalto: So, once upon a time a long time ago I had this girlfriend...No. That is not how I came up with the name...

Howard: Laughs...

Mike Catalto: The name is, we actually worked at coming up with a name, actually having a female sound to it was part of the criteria. We worked with an agency, we think hard about this stuff. We could have had names like... its kind of funny we could have had names like... let me see if I can remember the name of it like ONELAZ because it is one laser that does everything, things like that. However we actually came to the conclusion that we wanted the name to mean something to the patients and not just the dentists. We wanted it to sound non threatening and comfortable. Like a beautiful woman in Paris, if that is what it feels good that is what feels good. 

Just, not threatening, and comfort was really the key. There is actually a little story with that. When we started working with the agency to name the product. I have named a lot of different products before and a lot of times you want the name to be very.... you know you want to identify with the product and what it does. So, you know, ONELAZ. One laser that does everything but dentists might get that but... I said listen, we are selling to dentists this is technology for dentists not patients. The dentist is the customer. They kind of looked at me a little squirrely, and said Mike, "Lasik". I said oh my god you are right." Lasik is a household name, everybody associates Lasik to laser eye surgery even though there are systems marketed by other companies than Lasik. 

They convinced me, they said the name has to resonate with the patients, so we actually put a lot of thought into that. Into making sure that it did just that. The name is what it is, and our dentists actually talk about Solea by name. They put it on their websites. They put the logo on their websites. "I am a Solea Dentist!" So, there is actually a lot more to that, how we came up with the name. Maybe than you might have thought. We want people, patients to once again all the way back to the beginning of the discussion about kids going to the dentist and not developing that fear early. We want to, in fact our vision is to forever change what it means to go to the dentist. So, take that fear out of it. The name is actually part of that process. 

Howard: You are an economist. You said Lasik so I will follow the Lasik path. Why do you think it is with the five thousand ophthalmologists in the United States, that 5% of the ophthalmologists do 95% of the laser eye surgery? I wonder if that number is the same in dentistry. There are one hundred fifty thousand dentists in the United states thirty thousand are specialists, a thousand are general dentists. What percent of the general dentists have a laser right now? 

Mike Catalto: Oh wow that is hard to guess...

Howard: Well, what would you guess? Do you think it is like ophthalmology? Do you think that it is a parallel market? Maybe 5% or do you think it has more penetration than that?

Mike Catalto: Well, lets talk about marketing and more marketing than economics and market development. Pretty much all technology, I don't care what it is follows a technology adoption cycle that starts with innovators, goes to early adopters. Early adopters, to more mainstream what we call the early market. Then the late majority etc. During the early phases of technology adoption it is always a small percentage of the market. So, Lasik has been around long enough that it has gone through a full cycle. Lasers, Solea certainly... and by the way it is not just the product category like lasers. 

It is the particular paradigm. We introduced a new paradigm with CO2 and 9.3 microns so it really early days for this. For this particular product, obviously the percentage of the market that has the laser is tiny, right? It is a couple of hundred dentists going to a thousand pretty shortly. But it is small. When you talk about hard tissue lasers as a category across all products. The real question is how many people actually use them in their practice everyday. It is hard to say, because so many of the old ones ended up as coat hooks. It is a few thousand in the US. It is not a gigantic number. There is a whole set of reasons for that. Primarily because until 9.3 microns came out and cut fast enough, and anesthesia free enough, you know the tool didn't do enough to warrant the kind of full market adoption. 

Now that, like I said in the beginning our dentists are telling us, every patient every day. We expect that adoption to be pretty significant. I want to say another thing about the small percentage of ophthalmologists that use Lasik. I think that goes to something you said earlier as well. Of course there is always going to be specialties within a specialty. Just like there are the categories of all dentists, there are endo, and pros, and perio and pedio, and that sort of thing. But also, certain dentists like to do certain things and they don't like to do others. So, you know you think that lasers are a blast. You know Ronnie Platca thinks that lasers are a blast and all the other guys I mentioned. Some guys are not going to think that lasers are a blast. They are going to think, "I just like to use my drill and that is just the way I like to practice dentistry."  Well, they won't buy a laser and that is fine. 

Howard: That is because they like the smell of burning tooth. 

Mike Catalto: Laughs...

Howard: Maybe you could make a channel number 6 perfume, where you spray it on your mask so it smells like burning tooth while you are using the laser. 

Mike Catalto: There you go, maybe smells like money... laughs... 

The other thing that I was going to say that is important. We, have dentists who take this approach "I do x set of procedures every day." They are quote "drill and fill" dentists. They love to do cavity preps. That is what they do. They do a few crowns and a ton of cavities and that is it. A lot of those guys just do a ton of cavities with Solea. They are perfectly happy. Then there are some other guys who say, "no,no,no. I do cavities, I do crowns, I do soft tissue work, I want to do crown lengthenings I want to do apicoectomies, I want to do every perio procedure in the book with the laser."  For some dentists it is about having more fun doing what they do, for some dentists it is doing more of the same because they are more efficient because that can be a big income boost. And for some dentists it is about broadening the breathe of procedures they perform. They like that diversity and they can generate more income from that too.

To each his own is the way we look at It. We really care about, at the end of the day the dentists says "whatever my goal was, in terms of integrating this laser into my practice, I accomplished it." That is it. We help them identify the possibilities and they use the tools they see fit. It probably falls into four buckets in terms of what are our users objectives are with the laser. That is fine. 

Howard: One of the biggest trends, you know what is really neat about having have lived half a century on earth is you start to see patterns. You really don't know what is right and what is wrong so much as you just see patterns. One of the patterns I have always seen with dentists is that as they get older and older... you know I have drilled, filled and billed on patients for 28 years. Is you tend to grow towards minimally invasive. You tend to realize that the more you touch a tooth, the more you drill it down, the more you peel off enamel. The tooth doesn't like to have all of its enamel stripped off and anything you can do to be minimally invasive and all of the older dentists that I know that are in their 50s and 60s they all, if I say "what kind of dentist are you." They all take a breathe and say you know I try to be mostly minimally invasive. 

I think that is why you have a lot of upside to your product line. Lasers are more minimally invasive than when you are spinning a bur half million rpms with sharp cutting edges, hitting that glass enamel and you are fracturing the hell out of that tooth. Do you think that lasers are more minimally invasive?

Mike Catalto: Oh they are absolutely more minimally invasive and there are lots of reasons for it. One of the things that make Solea unique is that we laid down different size patterns on the tooth. For the job at hand. In other words, inside the hand piece called galvos. That move little mirrors at ten thousand times per second. They are the exact same motors and mirrors that are used to create laser light shows, if you have seen where they draw all sorts of shapes on the ceiling of a planetarium. What we are doing is we are pulsing that laser into different size patterns, depending on the job that is being performed. They range from a millimeter and a half pattern if you are doing gross reduction to a quarter millimeter which is just the native beam pulsing actually up to ten thousand times a second. When you are down to a quarter of a millimeter and you are going to trace out a fisher, right? Do a fisherotomy with that beam, number one you can see what is going on. With a bur no matter what the bur is on top of your work. With laser you can see when you have removed what you need to remove and you stop. 

By its nature it is going to be less invasive or more minimally invasive. Take your pick. We hear that all the time from our dentists. You see when you are done, stop....

Howard: I think that... go ahead...

Mike Catalto: I think that it is important to know that this wave length... and there are studies going back to thirty years performed at UCSF dental school, around this wave length. Ours is 9.3 microns they work with 9.3-9.6 it is essentially the same. They talk to the fact that not only is it minimally invasive but it prevents cavities as well. There have been a lot of studies around this, it actually removes carbonate from hydroxy apatite. So when you hear John Featherstone, the Dean of UCSF speak about anything, early on he makes these dentists raise their hands he says "what makes up most of enamel?" Everyone raises their hands and says, hydroxy apatite, and he says "wrong." It is carbonated hydroxy apatite. 

Carbonate is the weak point in the chain. It is the molecule that allows acids to penetrate and cavities to form. Turns out that at low power settings at this wave length, we can remove the carbonate without ablating the enamel. So it leaves behind tooth structure that is significantly more carriage resistant than what we started with and actually you will see more published on that from UCSF, with Solea in the near future. So, not only is it minimally invasive, but it leaves behind more carriage tooth structure than what nature gave us. 

Howard: You know this podcasting thing is interesting it is so interesting that at 53 years old, when I got out of school there were no cell phones. I had never touched a computer. It seems like now my life is so impacted by my iPhone and my computer, all these things that I didn't have when I graduated. The interesting thing about podcasting is that it is a multitasking behavior. My fans of my show are always saying that they are listening to me in their car, on their hour commute to work or their hour commute home. That is why we do two a day. One for the hour into work and one for the hour home. 

In 2004, because I live in Phoenix and I saw University of Phoenix online up the street and I just copied their idea. We started online CE. Then from 2004-2015 we put up three hundred fifty courses, they have been viewed half a million times. What is the chance you could get the guy from UCSF John to build us an online CE course on lasers? You have any arm twisting power with that guy?

Mike Catalto: Oh I don't think I would have to twist his arm too hard.

Howard: I would love that...

Mike Catalto: He does online courses, you know I promise you that I will ask him today about that. I will tell you that I took an online course at UCSF dental school, on CAMBRA, you know carries management by risk assessment. John Featherstone taught the course, actually it is tremendous course, I would recommend it to everybody. I took it online, I forget how many hours it was. It was great. So I know he does online courses. Could we get him to do one? I can ask...

Howard: Tell him we like his CAMBRA course, cause what I feel most proud about is we have two hundred and two thousand members on DentalTown.com and, I have been in several dental schools in Africa and Asia where the dental school says their entire curriculum is DentalTown.com and those courses. In fact when I walked into a dental school in Kathmandu the dean when she saw that it was me, she couldn't hold back the tears. She was telling me that her dental school before DentalTown had all these old Chinese books and old French books. Her students didn't know Mandarin Chinese and they didn't speak French. They spoke Nepalize. The internet is so amazing, there are two million dentists around the world and we are disseminating so much information and the one thing that I have noticed in 28 years.. All the dentists that were so successful one thing they all had in common is that they always took a hundred to three hundred of CE a year. 

So, by making this CE like what we are doing, easy, free, on their iPhone. I am kind of tricking these kids by listening to my podcast they can pick up one hundred to three hundred hours of CE a year just by driving to work. That will trick them into being successful. They don't realize what they are learning. So, tell John that the CAMBRA course or any course that he wants to put on DentalTown.com because the difference in online CE, there are a bunch of dentists who will only take it if they get AGE or ADA credit so there in there taking it because they are trying to get their state licensing requirement. Or maybe they are trying to get their FAGD or MAGD or whatever. So, it is actually my podcast listeners and online CE don't overlap that much. 

Tell him I would like to podcast interview him for that part of the podcast market and any online CE courses not only will it be for DentalTown.com he will be educating dentists on CAMBRA in Africa, Asia and Latin America while he sleeping in his bed. 

Mike Catalto: Well, I will absolutely make the request, I will make it today. I promise you that. By the way we are huge believers in online too. In fact we have for Solea now we have sixteen separate courses, with sixty eight individual modules. So we actually augment our classroom training, our basic Solea training with a whole long list of online interactive courses as well. It is the way to go. In fact...

Howard: Now, is that all on convergentdental.com? 

Mike Catalto: It is actually on Soleadoctors.com, so it is accessible, you have to be...

Howard: Spell Solea for me. S-O-L-E-A... Doctors.com? Just curious, why did you put it on Soleadoctors.com as opposed to convergentdental.com?

Mike Catalto: Because Soleadoctors.com is specific for Solea doctors. It has all the educational materials, it has...

Howard: So that is an after market website, once you bought the laser then you become a member of Soleadoctors.com?

Mike Catalto: That's right and there are forums and you can track and post cases. Share ideas, announcements. Remember a lot of what happens with Solea like I talked about those computer controlled motors, we put new software updates out every quarter that you know have faster cutting patterns, smoother cutting patterns. More analgesic patterns. All that stuff lives out there so our dentists can access it as they need it. Whether it is a software update, education or to connect with other Solea dentists. It just becomes this really valuable easy to get at resource for our customers, so they can get as proficient as they need to be in whatever they want to be proficient at. 

All available online, so that you made me think about it when you talk about online courses and how valuable they can be, because they make things so accessible it is not a text book written forty years ago in Chinese. It happened today, and you can interact with it online and that makes it so much easier to ramp up. 

Howard: So, I am sure many dentists are wondering. Specifics, how much does the Solea laser cost? Is there financing? If there is financing how many years? What is the monthly payment. In economics you, in economics when you take a test 80% of all the answers are price. The other 20%...price effects economics immensely. Price elasticity, price sensitivity. So how much does this thing cost?

Mike Catalto: The package that most dentists buy is just under $117,000 when I say the package, that most dentists buy, I like to talk about everything that is in there. The laser itself is about $95,000. Then what most of our customers do is they buy an internal compressor, that is a few thousand dollars. 

Howard: What is an internal compressor?

Mike Catalto: Meaning, the system uses air to generate an air water mist. We can plug right into office air and use that. But some dentists like an internal compressor so that they don't have to unplug and plug in a hose. So it will generate its own compressed air for its own mist flow. The other thing that most all the dentists get is, it comes with a one year full bumper to bumper any thing breaks, labor, travel... we fix it. Software updates, everything that comes with the system. Most dentists say I want a total of five years, so they buy an additional four years of service at $5,000.00 a year. It is that same bumper to bumper all the updates coverage. 

That is another $20,000.00 so when you put in all the options, and pretty much everybody buys all the options. 90% of our dentists buy the complete package. It comes out to about $120,000.00. 

Howard: What percent of the dentists actually write a check for the $117,000.00? Vs how many finance it? My motto on DentalTown is that no dentist should have to practice solo again, and my job as an interviewee is trying to predict what seven thousand different dentists might be thinking when they are driving to work. Some of them might be thinking, "well I don't have $117,000.00. So I am going to ask you what percent actually write you a check for $117,000.00. How many of them finance it? If they do how many years is it usually and do you know what that payment is?

Mike Catalto: I do. Lets see if I remember all of the questions. We will try to answer all of them. 

Howard: I am efficient questioner aren't I?

Mike Catalto: Listen, that is why you do what you do. That is why you are good at podcasts. 

Howard: I get four questions for the price of one. 

Mike Catalto: All right, good well. Lets see how I do. So the vast majority of the dentists finance. It was probably 80% at this point its hard to say exactly but lets say between 60-80% finance it. The finance packages kind of split between five and seven year packages. The payment comes out to about $2200 a month all in. 

Howard: On the five or the seven?

Mike Catalto: I believe that is on the five... yeah, that is on the five so on the seven you can go a little lower. It depends on the interest rate at the time. So, if you ask me today. By the way you know the bank... we don't finance them ourselves we work with several different financial institutions. Like in the month of September they came to us and said we will do $99.00 a month for the first twelve months for anybody that wants to buy it. So, then it is $99 a month for the first twelve months and $2400 a month after that if you just flat financed it the whole way. The way I like everybody to look at it, if you finance it it is going to cost you $2200 a month. That is how every dentist thinks about that I can tell, and they all ask themselves the same question and that is "how quickly can I generate enough incremental revenue to beat that monthly payment. 

Whether it is the $99 or the $2200.00 a month. That is the economics. When we talked about earlier about the efficiencies, about being able to do four quadrant dentistry. Saving time, being able to do soft tissue procedures you didn't do before. Popping a patient out of the hygiene chair cause you are not going to have to numb them up. Doing that cavity you discovered today instead of burning another appointment over it. For all those reasons.  Our typical dentist is somewhere between four to eight additional procedures a day. Well about $250.00 per procedure we are working four days a week you know sixteen days a month. One additional procedure per day more than beats that $2200.00 a month payment. That is all you need to do to make the econimics work and everybody is pretty much well beyond that. 

So that is the way, when you ask about the payment and how our dentists think about it, that is the vast majority of it. If I can do one additional procedure per day I am there. Everybody, pretty much everybody is well beyond that. 

Howard: If you did one additional procedure a day for $250 then it is a cash cow. You know I have always said that lasers remind me the most of tattoos. Do you know what lasers and tattoos have in common?

Mike Catalto: I hope you are not going to say what I am thinking but go ahead. 

Howard: No body ever has just one, I mean...everybody I know that buys a laser they come back. Like we had a podcast a couple of weeks ago and it is a husband and wife team and he bought a laser, and their biggest argument was that she would come in and steal his laser so they got another laser. It is the same thing with tattoos. If someone gets one tattoo I swear to God they have another one. In ten years they have three. I mean they just keep adding them and I think that people that have lasers are raving fans. I mean, once they get into it they never own just one. 

I have eight operatories, they get tired of moving it around so they add other ones. So that has got to speak volumes to your product when a category people don't want just one. 

Mike Catalto: That by the way is absolutely true. We have a lot of dentists that buy more than one out of the gate. Or they start with one and get two. We have all of those stories... "I was fighting with my associate over the laser." First of all the laser works, it works patients get excited about it, they come in expecting it. If you say to them the laser isn't available because my associate is using it or my partner is using it. Guess what they say? "I will come back when the laser is available." You just have to have that happen a couple of times and you go "oh my God, how much revenue could I have if I had two of these lasers?" Then they buy two. 

Howard: You know what my job, I just want to help my homies. I think what my advise to you even though you aren't asking for it, in a humble way. Go out of the B to B dental market go to the B to C dental market. Largest thing an American will ever own is their house. One of the wisest decisions grandma can do is, instead of living in poverty and giving her house to her kids when she dies is to sell her house to reverse annuity, they just call her up they get the value of the house, they figure on women. Believe it or not on women than men, they just figure that she is going live eleven months longer than her mother. Then they figure out a payment and etc. 

You can't explain that in a one min ad on television so they dis-intermediate the sales process, and the whole tv ad is to pitch the idea. Look just call this number, listen to the CD, nobody is going to call you. You know they dis-intermediate the whole sales process and then the whole CD is just like until you call Mike Cataldo and he sees where your house is you don't even know what payment you are talking about. 

I think that if you have all those courses on Soleadoctors.com. People that are listening to this podcast, the next step for the people that are listening on DentalTown.com you take some of that training that you already have and you put more of the training up there so they can see more of the training process. I think that would dis-intermediate. I know my homies are thinking, damn I graduated with $250,000.00 of student loans. This is half my student loans.

Anything over $100,000.00 it is going to start putting up mental and emotional road blocks. So you might want to dis-intermediate that you are education, so that instead of having all education after purchase and dis-intermediate that up front and put it online. That is just a thought...

Mike Catalto: Listen Howard, that is a great thought. I will tell you we just started doing.. I have to be careful my VP of Sales might kill me here because it is just an experiment but it is going very well. We just started running some courses, where dentists can come and they pay $500. They take the whole course, hands on. Online they can do all the stuff, the classroom stuff. Hands on, they just get themselves through the course and at the end, if they decide to buy a Solea within a certain amount of time of course the $500 goes toward the purchase of the Solea. 

So it is kind of a try before you buy kind of thing. If they say at the end of the course, hey I loved the product but it is not for me I am not a laser dentist. You know what did they burn? $500 and a trip to somewhere to go to a course. So that is the idea not just the online stuff but the whole kit and caboodle so they can get a full exposure to it before they jump into it with both feet. 

I am in agreement with you, so I will talk to my marketing people about putting some of that on DentalTown. That might be interesting. 

Howard: You know, there are two hundred and two thousand members from two hundred and six countries. I am wondering are lasers more popular in some countries less in others or is the United States most into lasers or is it Canada or Germany? Or any other countries?

Mike Catalto: Most of the laser users are in the US. Solea right now is only sold in the US. We will be moving into Europe and potentially Asia in 2016. That is coming, there is no question about it. We just want to make sure that we really had our act together before we go international. One of the reasons that it is going so well here is that we work particularly hard to make sure we are completely ready before we roll anything out. When we have the job perfect at home, then we will expand abroad. So, the answer is... more laser users in the US than anywhere else, coming soon to the rest of the world. We are going to be at a conference in Germany in November, to kind of test the waters. That is coming.  

Can I go backwards one little bit?

Howard: Absolutely...

Mike Catalto: To the idea of the dentists coming out of school with a certain amount of debt. I think what you were speaking to there is, the perception of risk. It is a big investment. I hear the story about the monthly payment, I understand one additional procedure a day would get me there. You are saying, let people take the course so they will get some exposure before they jump in, I am all for that. The other thing that we do do in that category is we say to our customers, look use it for 90 days. We want you to commit, we want you to take it seriously. It is not a tire kicking experience but in that 90 day period if you don't like that laser, return it. You pay a small restocking fee of a couple thousand dollars. It is not like it is 25% or something stupid like that. It is just an amount to say, to make sure that everyone is serious when they take the laser into their office. 

But, that is another important very philosophical thing that you actually touched on. Which is, I never want to stick a dentist with a product that they don't want. Even if it works exactly as we promised, exactly as they expected. If they come back and they say you know what Mike I actually love the laser, but I just... I am a drill dentist, I just can't get comfortable with it. I don't want to do laser.  Mike I don't like the color of the logo on the side of the box. Really? Okay so give it back. Why would we want to stick people with something they are not comfortable with. 

Howard: That's it. So you, have a return policy up to 90 days?

Mike Catalto: Yeah, og absolutley. 

Howard: With a restocking fee of a couple thousand?

Mike Catalto: Yeah, $2000.00 

Howard: So on a $117,000.00 package, having a return policy at 90 days for $2000.00 is pretty rare and unheard of.

Mike Catalto: Yeah, well....

Howard: I mean when you buy a car at a dealer they won't even take it back an hour later. 

Mike Catalto: That's right.

Howard: Ask me how I know.

Mike Catalto: Laughs. How do you know?

Howard: I know. 

Mike Catalto: Laughs.

Howard: So kuddos to you. I have only got you for eight more minutes so I want to ask you, two things. I asked you where the name Solea came from and I can't remember if you said it was a french or Persian woman...

Mike Catalto: You said it was a French woman...

Howard: I am just teasing. Where did the name Convergent come from is that the Convergent of hard and soft? Is that where it came from?

Mike Catalto: Well you know we could do the same thing that we did with Solea. All sorts of things converged to make this company happen. You know we have the convergence of hard and soft and now ociosis. Really it is the convergence of beams of light. So it is a play on the beams of laser light. Convergent light. 

Howard: I still remember what that stands for from physics class in 1980. Light amplification stimulation of radiation.

Mike Catalto: Very good!

Howard: You also have a very impressive board. I was looking online at your board, you have Richard Lozarra the co founder of bio met 3i. You have Kelsey Worth co founder of Aligiant Technology. How did you run into those people? That is a pretty amazing board you have there. 

Mike Catalto: Well thank you. They are a great board. You meet them through, I met them through connections. Actually one of the first people that I talked to was Dr. Gary Riser, he is a periodontist up here at Perico PC in the North Shore Massachusetts. Practice was founded by Jerry Kramer and you know Rich is a good friend of his and he said you gotta talk to Rich he might have some good advise. I talked to Rich and he was like a fountain of knowledge, from everything from dental startups to dentistry itself. I have multiple connections into Kelsey Worth, one day I pinged her. She lives right in Cambridge we had coffee and we talked. She loved the idea. Once again having started a very successful dental technology company she is a great match. She agreed to come on the board. It is really a matter, like anything else. 

I would love to tell you some super complicated thing but it is just simple. You have a good idea, you pitch it to good people, they will jump in. Whether they are dentists that buy, board members who come onboard, the phenomenal employees we have here it is ridiculous how good this team is. It is all the same thing just, come up with a good idea and be straight about it for Gods sake. That is how it works. 

Howard: It is funny because at the end of the day, every business just comes down to do you have good people. I hear every day dentists say to me, I wish I could tell my dental assistant that but I don't know how to tell her. Or I am afraid of my hygienist or I am afraid if I share this with my hygienist she will get mad at me. I am just like, that is so crazy. 

It is the same thing when you go to CE courses. 2/3 of the dentists come alone, and the other 1/3 come and they bring all their staff, and guess who makes twice as much money? The ones who bring their staff. I know! All the dentist that come alone think they are saving money and I tell them they just don't get it. I can't help but ask you on your board, Richard Lazarra, any relation to the Lazarra that started Orthodontic centers of America back in the day?

Mike Catalto: I don't know about his family tree, I guess you would have to ask him. 

Howard: There was an orthodontist in New Orleans names Lazarra who started Orthodontics Center of America and made it all the way to the New York Stock Exchange it was huge company, I was just wondering if there was a relation there. 

Mike Catalto: I don't know.

Howard: I only have you for three more minutes, what is your close?

Mike Catalto: My close?

Howard: Yeah what is your close?

Mike Catalto: Wow I wasn't planning on closing anything. But the most important thing that I think we got to today and talked about was this idea of building a product that just works right? So many dentists have been disappointed by hard tissue laser technology and I actually think that it was a good medium for what it does right, but it was just so hard to get reliable anesthesia free performance out of it. So, the thing that is making Solea the number one selling all tissue laser is that it just works. Dentists buy the product, we train them well. It has by physics and technology it delivers reliably anesthesia free performance which gets you the efficiency which generates the return on investment. 

So like I was saying a minute ago, develop a product that just works, sell it honestly, stand behind it and be proud of it. That is why we say if you don't like it give it back. It is our job to make it work for you. Right? Then great things happen, right? Do the right thing, business will come the money will come. Customers will be happy, that is the most important thing I think to know about convergent dental. 

Howard: I should have asked you this earlier before your close so now we are going into overtime questions. 

A lot of dentists are asking, some of the dentists are using lasers to clean out a tooth endodontically. After they get done, going into the tooth cleaning it out. You know we have been cleaning it with , debriding it with bleach, you know sodium hypo-chloride, periodex, chlorhexidine gluconate .12%. Do you see in the near future that people will be buying and using lasers to sterilize canals before we obdurate them during root canals?

Mike Catalto: No question, no question about it. In fact we are working on a fiber tip right now for Solea it is tiny. It is a 200 micron fiber you can take a length of it between your fingers, squeeze it will make a loop like this, it won't break. Right? And that is one of the applications for that fiber. The nice thing about that just like the hallow wave light that we just came up with for perio applications is it is just another hand piece that fits right on your Solea. You bought Solea, you have the foundation just add it on. So, it is absolutely coming. 

Howard: Do you know any endodontists that are on the forefront of this that I could talk to? Podcast about that?

Mike Catalto: Well, not yet. But when the time comes I promise to make the introduction. 

Howard: It is funny, when you have been a dentist for a long time you will see some of the worst looking root canals where they didn't even get 3-4 millimeters from the bottom, and it worked. And then you see some of the best root canals ever done fail and you realize that, as much as we look at dentistry they always have their mechanical engineering hat but at the end of the day we play a game of biology. If that tooth is cleaned out, you could do the worst root canal in the world and if there is no bugs in there it is good. That is why we like implants, because you can build the nicest filling in the world or the nicest crown in the world. But if they don't brush or floss the termites are going to come back and eat the wooden barn. That is all we did our whole lives, we built wooden barns and told everybody to brush, floss and use Listerine. They don't and the termites come back and what I love about implants is that mutants can't eat titanium...

Mike Catalto: That is a good point.

Howard: Believe it or not they are biology majors, at the end of the day we just fight biology. 

Mike Catalto: Well, I will tell you when the time comes I will connect you with a few endodontists in the meantime, you know what I should do is connect you with some of the periodontists who are using this new ultra guide hollow guide wave tip because there are some really interesting revolutionary procedures being developed right now with Solea in the world of perio. With this new...

Howard: I want to learn it, cause when you are a dentist, me for 28 years some people have no home care and no perio and I have actually a patient who is a hygienist and she has the worlds most perfect home care and she is still getting her butt kicked from periodontal disease and advancing pockets. So, that is a topic every dentist is interested in. So, if you have a perio person that we could podcast interview or that will build us an online CE course on lasers and perio I would love that. My last question is all about me. My fantasy is to someday run the Boston Marathon. But I will never, I will be honest. You are a Boston guy, are you friends with Marky Marc or do you have any free passes? 

Is there a charity ticket? You know how I actually got into my first Iron man race? There was a charity and they were raising money. Whoever raised the most money got the Iron man ticket. So I had my assistant call her and say how much can Howard give you right now for the ticket? She said five grand. We said DONE! We will drive you over the check. If you ever see a Boston Marathon charity ticket I will buy it. I have always wanted to run that race but when you are 53, 5'7" and 210lbs you are never going to make the 3.5 hour time trial. My goal is to be the last person to cross the finish line at the marathon. 

Mike Catalto: I will tell you what, you give me five thousand bucks I can guarantee that one for you. 

Howard: Alright we are on, we are absolutely on. 

Mike Catalto: In the meantime, the closest I can get you is Paul Whalberg is a friend of mine. I live a couple of miles from Whalburgers and every once in a while when I go diving I bring him back a bag of scallops. Ill get some scallops you come to Boston we will go say hi to Paul and sit at Whalburgers or Alma-nova his other restaurant there and have a beer. 

Howard: You know how dentists look at a marathon the wrong way, everybody talks about marathons it is always going to be some 5'7" 120lb guy from Kenya that wins, and one of the reasons they win is that they were born looking like gazelles, they train. There whole country is 6,000 feet above sea level. So they have more red blood cells than Lance Armstrong after doping and then they come down to sea level and they win the race. But the way I look at a marathon is like, that Saturday...you know you can walk a marathon. 

Most humans walk 4 miles an hour that is a 15 minute miles. You don't have to have a good iron man time, that day what was the alternative sitting there watching college football all day? Snacking food and just to get out, when I do a marathon I go buy a Starbucks coffee deal and I want to take a ten minute break. So I am moving for six hours. My time might only be 5 hours but it is healthy it is fun. We are already way too anal about dentistry the last thing that I want to do is gte anal during golf or a marathon. You know, my hobbies are all Les et fare just have fun. Because dentistry is so serious, I don't want and serious hobbies. 

I want all my other hobbies to be just going out and having a rocking good day. I had a rocking good hour with you. Thank you so much OI know that you are a busy man. For spending an hour with me and my homies on Howard Speaks I think they all learned a lot of lessens, thank you for all that you do for dentistry. And thank you for spending an hour with me. 

Mike Catalto: Howard, thank you and you are entirely welcome. Hi to all of the homies and hopefully I will see everyone of you sometime soon with a Solea in your office. 

Howard: Right on, have a rocking good day. 

Mike Catalto: You too Howard, Thank you.


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