How A Nonprofit For Children In Poverty Turned Into A $500k/Year Biomedical Startup

$42K
revenue/mo
1
Founders
9
Employees
ActivArmor
from Pueblo, Colorado, USA
started October 2014
$42,000
revenue/mo
1
Founders
9
Employees
868K
alexa rank
1.72K
followers
164
followers
65
subs
market size
$443B
avg revenue (monthly)
$116K
starting costs
$45.2K
gross margin
20%
time to build
12 months
average product price
$150
growth channels
Direct sales
business model
E-Commerce
best tools
Google Drive, MailChimp, Zoho
time investment
Side project
pros & cons
38 Pros & Cons
tips
6 Tips
Discover what tools Diana reccommends to grow your business!
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Start A Medical Device Company

Hello! Who are you and what business did you start?

I’m Diana Hall, the founder of ActivArmor. We make 3D printed casts and splints out of waterproof plastic that is custom designed for each patient’s unique healing needs and lifestyle.

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Our mission is to improve people’s quality of life while they are healing. Our casts allow patients to do all the things they can’t do with a traditional cast on - sweating, swimming, showering - from basic hygiene practices to wet and dirty activities and sports.

We sell our casts directly to people that need splints for things like carpal tunnel, as well as to those with fractures, with a prescription. We also sell to doctors and hospitals as a wholesaler.

Today we have partnering doctors and hospitals across the United States as well as international partnerships in Canada, South Africa, Europe, Australia, and the Middle East.

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What's your backstory and how did you come up with the idea?

I am a chemical engineer and have worked in software for Fortune 500 companies. When I took some time off to have my daughter, I finished up my MBA and, in 2013, started a mentoring program for children in poverty in my hometown.

One important thing I’ve learned is that “what you need controls you.” So limit what/who you need, or are dependent on.

The kids would often have substandard living conditions, and injuries from domestic violence, as well as from just playing like normal kids. But they would often come in with traditional fiberglass casts that would get filthy, smelly, and soggy. The kids couldn’t even wash their hands to have a snack!

The practice was archaic - putting material on your hand that you can’t wash for 3-12 weeks is simply unhygienic, not to mention expecting kids to put their cast in a bag outside the shower, and not get it dirty on the playground.

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One little girl had bed bugs under her cast, and one little boy was only in 1st grade and living with his elderly and disabled grandparents. He couldn’t keep his cast dry in a bag to shower and ended up getting it wet. He didn’t want to tell, or he’d get in trouble, and they didn’t have transportation to get it replaced, so he wore it wet for weeks and ended up with permanent scarring on his arm!

Since I knew quite a bit about materials science and 3D printing, I made a little plastic cast for him on my 3D printer and told him to take it to his doctor and ask if he could wear that one instead. His doctor asked me if I could make some more of them for his patients, and that’s how it all started!

I then partnered with some of the most innovative orthopedic surgeons and sports medicine providers in the country to develop the ideal designs for healing and efficacy. We’ve been helping people needing immobilization to improve their quality of life and healing outcomes for 6 years now, and couldn’t be more inspired by our mission.

I’d have to say that my “aha” moment was when I realized this was a serious problem and need, but also when I saw that everything in my life had been preparing me for this mission.

You see, my brother died of Cystic Fibrosis. So growing up, we spent quite a bit of time in Children’s Hospital, where I saw kids having to adapt to medical devices instead of the other way around. I am naturally engineering-minded, and thrived at Colorado School of Mines, and love to solve real-life problems with technology. I now have the honor of helping people with medical needs to live full lives, and I know I am doing what I was made to do. There is nothing more satisfying than that!

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This is why I would do this for free and HAVE. I quit my safe engineering job and dumped my entire life savings into building this company. I have lived on around $30,000/year for the last 6 years and work 18 hour days - while being the best mom I can, through work-life integration and spending time with my daughter. I put every penny we earn back into growing the business.

There have been a few times over the years where I was literally in tears, thinking I’d have to shut the company down because I couldn’t fund the next phase, but it was simply meant to be and has found a way. I now have investor partners that believe in our mission as much as I do, and together we are making it happen by facing one challenge at a time.

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Take us through the process of designing, prototyping, and manufacturing your first product.

My very first cast was made by measuring the little guy’s arm with calipers and using CAD design software to recreate his arm model, and then design a breathable cast onto it that I sliced and printed in biocompatible ABS plastic. There are so many things to consider in developing a viable medical device product, including regulatory and test requirements, and I dove in head first!

I partnered with a 3D printing expert at University of MD’s Robert Fischell Medical Device Institute and learned about testing for mechanical properties, biocompatibility, microporosity, and finite element analysis. This forced the product to evolve - in materials, manufacturing practices, and testing. And we never stop doing this! We are constantly on the lookout for ways to improve our product and process to further improve patient comfort and healing outcomes.

Being self-funded at the start, the 3D imaging equipment was expensive. Then we needed to have printers, staff, and manufacturing space. We got a grant from the city to lease some empty building space to get started.

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But the biggest expenses were not for fun things like equipment.

They were: legal (getting contracts with hospitals and suppliers and sales reps set up and getting the patents written and issued), insurance for medical device liability, and regulatory costs, like materials testing and FDA registration fees.

It’s really hard to invest tens of thousands of dollars into these things before even seeing if the product is viable in the market! It seems like an insane idea for a person like myself to try to compete in the medical device space against behemoth pharmaceutical companies! But I’ve been called worse than insane, and I’m comfortable with it, lol.

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Describe the process of launching the business.

Because we are a medical device, our launch involved a lot of clinical testing.

We had to figure out how we needed to be classified, what our insurance codes were, and how to sell to hospitals and doctors. We were just starting to scale with our sales model to partnering clinics when Covid-19 hit and our 12 clinics slated to open in 2020 did not open. It was then that we had to re-think our delivery method and developed an iPhone scanning app and remote ortho-tech scanning and fitting support via the telehealth model. This has allowed us to be available to any provider in the country with an iPhone. We are still working on refining the marketing and sales strategies to bring this disruptor technology into the well-established casting market.

If you don’t do this marketing insights work, you’ll waste a lot of time and money finding out what you THINK will work, but doesn’t.

We’ve tried to grass-roots as much of our marketing and sales as we could, since we were self-funded, as well as variable-cost options like sales reps paid on commission. After my initial cash investment of my 401k, I applied for grants and awards, totaling over $600,000. We were in a weird funding space - past friends/family (I didn’t have any rich ones anyway!) and still too early/risky for VC.

So my investments to date have been individual accredited investors - high wealth individuals who wanted to invest cash for membership stake in my company. I have raised almost $1.5M from non-prescribing physicians and business people who see the potential in the product and who just plain believe in us.

Two of our investors are pictured below;

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Since launch, what has worked to attract and retain customers?

To attract customers, we have to identify them fully, go where they are, and show them how our product meets their needs in the way they like to see it. Our first lesson learned was that doctors are the gatekeepers in medical devices. Marketing direct to the end-user (patients with fractures) will never be effective if they need a prescription to get it, and doctors haven’t heard of it or bought in.

So our real marketing target has to be the providers. Then to find out what demographic of providers to target, what message are you delivering, and in what format on what platforms. If you don’t do this marketing insights work, you’ll waste a lot of time and money finding out what you THINK will work, but doesn’t.

And some might even backfire! (Yes, I’ve done this, lol.) For example, an athlete using the device in a high-impact scenario might tell a risk-averse orthopedic surgeon that the product encourages unsafe and non-compliant behaviors to put their healing in jeopardy. But it might appeal to end-users and a university team sports medicine physician, whose goal is to get his players back on the field.

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Another thing is the sales method - do you do direct sales or go wholesale through distributors? Can you even do this in a mass customization scenario where there’s no inventory? With the imaging and custom design, it’s more of a product/service hybrid. We are still tweaking how this works - training sales reps and developing sales channels. Bringing new technology into an old-school market is an expensive and time-consuming challenge, but worth it if you can find ways around each roadblock you face, one at a time. It’s a constant effort in persistence and determination!

To retain customers, I would say to just make sure of 2 things:

  1. Your quality is consistent and high. Have quality control check procedures in place and make sure you’re keeping an eye on it and listening to customer feedback.
  2. Have great customer service. Invest in the right staff to make that happen. Initial customer word-of-mouth and reviews are critical. Even if you have issues at first (and you will so expect that), as long as your customer service resolves the problems quickly, the customers can still have a positive experience with the company!

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As for ads and keywords, some of the best advice I’ve gotten is to reach out to your customers where they are before they need you. For example, I don’t just tag #waterproofcast, I tag #motocross.

In addition, I play to and tag the INFLUENCERS to the buyers.

For example #athletictrainer and #orthopedictechnician.

I also encourage customers to market for us, by arming them with tools - sharing photos on social media, giving them a flier to take to their provider, and wearing our logo on their cast.

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We also do trending things like memes and TikTok videos. (Check out @ActivArmor and #ActivArmor on Facebook, Instagram, Twitter, YouTube, LinkedIn, and TikTok.)

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How are you doing today and what does the future look like?

With a manufactured-on-demand product with a quick turnaround time required, you have to staff for the demand peaks. This means your costs will be higher when you’re not at max capacity. And with high-tech products, your labor must be trained and highly skilled, so you can’t afford a lot of staffing turnover. So you need to make sure your margins are high enough to sustain that kind of business model.

In our case, equipment costs are high, material costs are low, and labor costs are high. So you want to maximize the time efficiency of labor and equipment, even if it means wasting some material. (It is recyclable!)

We have moved a bunch - started in a tiny 97 square foot office, then to a 250 square foot office, then to six rooms in a downtown building, then to a 6,000-foot warehouse, and now to an industrial park. We have nine full-time employees and try to keep as many folks on hourly contracts as possible for demand variations - especially our sales reps and unskilled laborers.

We developed a business model for international sales that is completely different from what we’re doing here in the U.S. We were very concerned about I.P. being secure, so keep our custom design services in-house and automate as much as possible.

We frequently do ad tests (A/B testing), and then find out what gets clicks and how many of those clicks are converted into sales. As you can see with this test, we got a 12.5% click rate, which is over four times the industry average, which is fantastic! But then we found that we were losing customers before the sale when they’d have to request a prescription from their doctor. So we are working more on that pain point in the sales process.

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Short-term, we’d like to increase our number of partnering physicians and clinics and get more brand awareness, boost our sales and market penetration, and prove scalability. Long-term, we’d like to have a Series A round or be acquired by a major medical device company.

Through starting the business, have you learned anything particularly helpful or advantageous?

I would say that one of the most valuable skills I have learned is how to be comfortable with being uncomfortable. To identify problems and enjoy the painful process of drilling them down to precision and exposing the rawness so that you can work on fixing it.

I also see challenges as opportunities to improve our competitive advantage!

I tell my staff all the time, “Yeah, nobody else is doing it because they haven’t figured out how to. That doesn’t mean it can’t be done. And when we DO figure it out, we’ll make the art into a standard procedure for us, that’s hard for them to duplicate. That’s why we sell, and that’s how we get bought. That’s how we win.”

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To be honest, the best decisions I made were to not partner too soon. You outgrow skills and experience, so never bring in other founders unless you have to. Instead, hire what you need, and outsource what you can to keep startup costs down.

When the pandemic hit, we had to be ready to pivot, but the horror of the pandemic to people’s health and businesses could only be countered by companies like ours coming to the forefront to solve these critical problems quickly - like enabling people to be able to wash and sanitize their hands during the day in the middle of a global pandemic.

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One important thing I’ve learned is that “what you need controls you.” So limit what/who you need, or are dependent on. This doesn’t mean you can’t trust people and have a team and delegate, but it means that you don’t want a knife to your throat in decision-making. So don’t limit yourself and your options - diversify. And be choosy based on logic, not on feelings - bright, shiny objects are fun but often not sustainable, so think of your time as an investment and don’t waste any of it.

I like to take calculated and managed risks. I like to hire people on contract and see how they fit - what their drive and creativity is, what level of motivation and initiative they have, how they fit in our culture, then we bring them into the family if it’s a good match on both sides. I don’t make people earn responsibility - I give them all the responsibility they can handle, and see what they do with it… then we can refine it as we go. I don’t want anyone working for me that feels like it’s a 9-5 drone job for a paycheck… I want them to be doing what they love and are inspired to do, because of the underlying mission.

We frequently do honest internal SWOT analyses of ourselves! What am I good at and what do I suck at? What do I love to do and hate to do? What do I want to learn, and what do I want to avoid? This analysis helps us maximize our effectiveness as a team, identify and fill strength gaps, and improves job satisfaction.

What platform/tools do you use for your business?

What have been the most influential books, podcasts, or other resources?

Zero to One by Peter Theil talks about breaking the mold with total innovation and not just adding a feature to something existing.

Crossing the Chasm by Geoffrey Mooretalks about entering an old-school market with a new tech product and scaling it. Building a Story Brand by Donald Miller talks about how to successfully market your brand and build great content.

Anything by Malcolm Gladwell is insightful. Always books and podcasts on emotional intelligence and leadership to develop yourself personally - I’m personally a huge fan of Jordan Peterson and 12 Rules for Life and his other publications.

Advice for other entrepreneurs who want to get started or are just starting?

My best advice is to not partner too soon, if at all, to meet obstacles as challenges, to do what you’re good at and love to do (don’t try to force a square peg into a round hole), utilize your team where they are most effective, and constantly revisit internal and external SWOT analyses and make changes.

Are you looking to hire for certain positions right now?

Absolutely! We are looking for talent in marketing, salespeople with orthopedic experience and contacts, and social media influencers. We have flexibility in work location (the above jobs can be done remotely) and commissions-based work will increase the potential for high returns based on the effectiveness of their efforts.

Anyone interested in working with us can contact us at [email protected]

Where can we go to learn more?

If you have any questions or comments, drop a comment below!

-  
Diana Hall,   Founder of ActivArmor
Pat Walls,  Founder of Starter Story

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