CEO Podcast: Jim Adox, HistoSonics

Paul Krutko: Welcome to Ann Arbor SPARK’s CEO Podcast…Conversations on Economic Opportunity. My name is Paul Krutko, and I’m the President and CEO of Ann Arbor SPARK.

Today, I’m pleased to welcome Jim Adox, Board Chair of HistoSonics, a company at the forefront of non-invasive cancer treatment technology using histotripsy. Jim brings over 20 years of experience in venture capital, leading investments in early-stage healthcare and life sciences companies as Managing Director at Venture Investors. He has played a pivotal role in guiding HistoSonics’ growth from its innovative beginnings at the University of Michigan to commercial success. Jim has strong ties to U of M, including advisory roles with the University’s Venture Center and College of Engineering, with me on the National Advisory Board to Innovation Partnerships, and has been instrumental in advancing university-led innovations. His leadership has made a lasting impact on both HistoSonics and the broader Ann Arbor startup ecosystem.

Jim, welcome to the podcast!

Jim Adox:  Hi Paul. Thanks for having me.

Paul: Great. Well, let’s kick this off. Can you share a bit about your journey in venture capital and technology centers? What initially drew you to the world of startups and commercialization?

Jim: Sure. Well, I started out life as an engineer and actually came to University of Michigan to become an engineer, and for the first part of my career was a four-wheel drive systems engineer at Jeep, and always found myself looking at the intersection of engineering and finance, and then that caused me to go get my MBA at the University of Michigan. And when I did that, I learned about venture capital. I took David Brophy’s venture capital classes and was really excited by it. And when I graduated, there weren’t many jobs in venture capital, so I took a traditional role at a company doing business development marketing and m & a and kept looking at venture capital. Then I got my break in 1997 where I joined the venture fund here in Ann Arbor called EDF Ventures and did my first university spin out, which is the first company I ever invested in there, from University of Michigan, a year later in 1998 and 99. Also did a handy lab and then midway through there I joined Venture Investors. They were looking to open up an office in Ann Arbor and I was looking to launch my own venture fund and Credit Suisse was managing a program for the state of Michigan to invest a hundred million dollars in funds, and they suggested that we both get together and join forces invested in us. And really that program brought us together, launched the Venture Investors here in Ann Arbor. As they say now, the rest is history. I now lead Venture Investors.

Paul: So that was at a period of time, which we’re hoping to resurrect, where the state is aggressive about providing sort of the fund-to-funds model to generate more venture capital investment here. And we’ve had a lot of great success with that, so it’s something we’re pushing for now. Well, HistoSonics is a prime example of a successful university spin out, particularly from the University of Michigan’s Innovation Partnerships. Can you speak to how this collaboration started and evolved over the years?

Jim: Sure, yeah. It all started walking the halls of engineering and really seeing what was exciting there. And I learned about this stuff called Histotripsy and one of the labs there up on North campus, and I had a good relationship with the folks at Innovation Partnerships and talked to them and started talking to lots of people there. And I looked at the project three times and turned them down each time. And what was really good was each time I gave them feedback about why, and they went back and working with Innovation Partnerships, working with the Coulter Foundation and even with the MVCA that had a program that funded mentors, executives and residents that we had Christine Gibbons. And each time they’d answer my questions and then finally they answered ’em all. I said, all right, well let’s invest and away we went.

Paul: Take a step back, describe what the technology is in a very basic way that Histr\osonics is involved with.

Jim: Sure. So HistoSonics uses something called hipsotripsy that was invented at the University of Michigan. And what that is is a sound wave technology that, so think of it like a speaker, but you have a transducer or a speaker about this size and you can hold it up to your body and it just has to touch it and be what we call coupled to your body and it’s ultrasound. But instead of using ultrasound to see stuff inside, like if you go to have a prenatal ultrasound, what HistoSonics developed was this special ultrasound that could treat and is called therapeutic ultrasound. So their sound waves go through the body causing no damages, go through any sound waves would go through, but then right where they all meet at the focal point, it creates really high positive and negative energy and it can destroy cancer cells instantly. And then they move that around robotically in the cancer tumor, destroy the cancer tumor, patient goes home. Many of our patients, when we interview ’em, they say, I felt nothing and I was so happy I could go home and have dinner with my family. I think you saw some of those videos at the HistoSonics ribbon cutting.

Yeah, it’s amazing technology. It’s completely noninvasive and you don’t feel anything. It’s nontoxic, noninvasive.

Paul: So you talked a little bit about how you got assistance through the university’s Innovation Partnerships in accelerating the growth. Talk a little bit about in a broader scope, why that program and what it does is important to companies like yours.

Jim: Sure. There’s thousands, probably tens of thousands of technologies at the university and other universities, but those technologies are just really the first step in the journey to becoming a successful startup in commercializing products. And so what the innovation partnerships programs do is they take the technology, turn it into a project, and then help turn it into a company that makes it fundable for someone like me to then invest in. And it’s stuff like IP, looking at markets, figuring out business models, and helping start the initial team. So building teams, they’re helpful in attracting business people in addition to typically the scientific or medical researchers that are behind the years of research. You need a business team with them to take it forward and form a startup.

Paul: One of the questions we had on our list that we were going to ask you about is at a certain point last year, the research team was named the Distinguished University Innovator of the Year in 2023. What did that recognition mean to the company and to the researchers involved in the early development of this new technology? And maybe you could explain, in this case, is this a situation where those initial researchers are still involved with you and the company.

Jim: Yeah, so I’ll start with your last question. So what’s really been great is the original researchers are still involved and they’re still doing the cutting edge research inside the university. Many companies, even big ones, do very little true research anymore. It’s all product development or they buy something that then they commercialize. So it’s really great that we still have that partnership with the researchers and some of that is facilitated by Innovation Partnerships because of how we structured the license to the technology together to make it really like a living license that we’re all on the same side. We’re working together to advance HistoSonics both commercially outside the university, but also inside the university. So that’s on the researchers and our ongoing relationship with them. 

As far as the Distinguished Researcher Award, that was amazing, and it’s primarily for the faculty and researchers inside the university. I was there on a panel with Jen, one of the researchers, and I think I saw 10 people from HistoSonics that were all in the audience too. So they were really proud of that. So I think it is really a nice team building event. And for the faculty, it’s a big deal. University of Michigan is a massive place. There’s about 8,000 faculty and researchers, and to be amongst four or five that win something, my math is right, that’s like 0.05% that they’re not even the top 1% and it’s like a fraction of that. So that’s huge. And the recognition was big. President Ono was there giving the award. Many faculty never get to meet the president of the university, and so to get an award from him and shake his hand and have his presence there, it shows how much the university cares about this, and I think really cares about getting the research out of the university and into the real world where it can help patients.

Paul: Yeah, I think that’s one of the things that’s interesting about the model that’s been developed over time here at the University of Michigan. I think it’s meeting the researchers where they are and many are just, ‘I have this great idea, I’ve come up with this scientific discovery and I want it to benefit the world. I want it to get out there.’ Some do want to be a part of companies and continue that way, but there is that sort of peer academic recognition of your work that’s equally important to them. I think as well as the commercialization. And as I’m speaking of commercialization, commercialization of innovations is really crucial and it’s challenging. What are some of the key milestones in the commercialization process that HistoSonics has gone through over time, and maybe you end with where we were all at maybe four weeks ago at a very great event?

Jim: So the first few years was just getting the technology to work in a clinical setting. So when I first invested, they had a prototype that took up an entire small lab in the university, and it took a PhD and an MD, both at separate computers, talking to each other, okay, you do this. Okay, I did it. Now you do that to control the system. And so it took a bunch of years to get that all into one system and to shrink the size of it, probably over 10 times smaller so you could wheel it in and out of hospital rooms. And so that was really the big technical hurdle that took a bunch of years to get over. 

Then I think once we had that, really the next big milestone was building the team to take the company to the next level. And that all started with Mike Blue. When I recruited Mike Blue to the company over eight years ago now, he had been working at one of our other companies that had a nice exit, and Mike did a great job on that company. So I talked to him about taking over HistoSonics, obviously, he agreed, and then Mike went on to build a strong team to take it out of the research realm into development and then into clinical regulatory and now commercial. A little over a year ago, we got our first FDA clearance to use this and sell this in the US to treat liver tumors. And that was, at the time, the biggest milestone in the company’s 10-plus years, because then it was real. And we spent over five years working with the FDA. It started first educating the FDA, getting ’em comfortable with our technology, with the team, and then we had to do a big clinical study. And the clinical study went great. It was very safe, it was effective. And then we got our clearance, and since then, the systems have been selling fantastically. So those are really the big milestones.

And then with all that success, we were able to continue raising money and continue reinvesting, and that’s where we come back to Ann Arbor. We invested $5 million in a brand new state of the art R&D center here in Ann Arbor to continue the research and development on hipsotripsy. And we wanted it here in Ann Arbor because we had the great people here, but we also wanted to be close to the university. We hire a lot of the university students. We want the key faculty at the university to be able to come over very easily and work with us collaboratively and for us to go to their labs. So that was a big deal. We’re probably taking that up to 30, 40 jobs here in Ann Arbor and growing that core research in histotripsy. That’s really, there’s nowhere else in the world like this, and it’s here in Ann Arbor, Michigan. 

Paul: Yeah, I mean, one of the things, you often use this phrase, people use this phrase of something being the poster child for what we’re trying to accomplish here at SPARK, but this company and the other R&D companies that have developed facilities here in the near recent past, I mean in the last maybe two to three years, are indicative of the kind of economy we’re building here. Companies across the broad spectrum of technologies and products see the university and say, we want to be close to the university to help us not only grow our technology, but because of the talent that you’ve described that’s here. So we’re really, really pleased about HistoSonics making the choice to have their R&D facility here because it really fits with what we’ve been trying to accomplish for a long time. 

So in that vein, we are home to a growing number of tech and biotech startups. What do you think HistoSonics’ success says about the region’s ability to foster innovation and taking an next step as the ecosystem continues to grow, what areas do you think need to be improved to better support startups like HistoSonics? And not only from us here locally, but maybe from the state and beyond?

Jim: Sure. Well, I think HistoSonics shows that it’s possible to create a true world-class company out of University of Michigan research and build it and keep it in Ann Arbor. But it’s hard. It takes experienced people that can lead these projects and these companies. We have a growing group of those people as companies like Duo and even back to Esperion and HandyLab, they all branch out more talent. And one company after it has its exit turns into 2, 3, 4, 5 new companies. And we need to grow that group. And as much as it’s grown, it’s still really small in Ann Arbor. We just need more of that. We need more talent and we need more investors. I was thinking about, including Venture Investors, we have four, maybe five funds in Michigan that invest in healthcare that experience and have reasonable size funds, and we just need more of ’em. We need more funds, bigger funds, and we need much more support for those funds. When we’re out fundraising, one of the first questions we get is, well, who in Michigan is invested in you, is it the university or the big companies or the foundations? Because when you’re going outside of the state for money, they want to look at, well, who are the people that are close to you and know you and are they investing? It really helps if they are. 

But back to talent, because I just can’t emphasize that enough. Since 2000, Michigan has ranked 50th in population growth in the country, and that’s not good. We need a growing economy because that’s what supports the entrepreneurial system. We need people to come into the state, younger talent, people in the middle of their careers that have had that key experience, and to be able to attract them because it’s all about having great jobs. When we announced the HistoSonics’ R&D facility opening, and there’s a nice article in Crain’s, I’ve gotten a half dozen people asking me if they’re hiring. So they see that, and people actually do want to come to Michigan and Ann Arbor, southeast of Michigan, because there’s a high quality of life here. And I think we need that. We need excellent public education, strong human rights, and I think Michigan has the start of all that, but we need more. We need to grow it. Coincidentally, I was reading an article, maybe you saw this yesterday in the Washington Post. It was about real estate investment and climate change, and there was a group of investors is talking about, they came up with this index called Community Resilience, ranking where climate change and real estate kind of come together in good and bad ways. So for example, places like Naples, Florida, Miami are all ranked really low because they’re at sea level. As the seas rise, storms get bigger. We’ve just seen a couple of hurricanes. Those are very risky, very expensive places to live. But you know what? One of the highest places was right here. Ann Arbor, Michigan – in the Washington Post, not a local newspaper, the Washington Post. And so that’s amazing. So we need to build on that. We need to get the word out, but then we need to be able to back it all up with those other great jobs, strong human rights education, and I think we can do it!

Paul: Yeah, I think that you’re absolutely right. One of the phrases I use all the time is that this ecosystem, as you’ve described it, that’s evolved over the last maybe 20 to 25 years, is a tremendous garden for growing from the University, had over 600 disclosures. You and I heard that in a meeting just recently, which leads the country and invention disclosures and those turned into companies. So if you use the garden analogy, we’ve started them, they’re seeded and they’re growing. But the key thing is we don’t want to be the garden for the rest of the country. We need to do things that take those growing companies at that early stage and keep them here. The other thing in your point, I just want to give our audience who listens in a little bit of a preview, at next year’s annual meeting, we are bringing an author from the New York Times, Abrahm Lustgarten, to be the keynote. He wrote a book called On the Move, and what it is about is migration within the United States due to climate change. And his charts and graphs say the same thing, Jim, we are going to be a climate haven, if you will, for a variety of reasons. And so we need to prepare for that. We need to prepare for that to really push that out to people so they understand the opportunity that’s here. 

Jim: I think this is really important because like we say with startup companies, it’s hard to be bigger than your market. You just can’t be. And I think that’s the case here with the entrepreneurial ecosystem. We’re limited and frankly, we’re being kind of outmaneuvered and out-invested by the neighboring states, Ohio, Pennsylvania, Indiana, Illinois, all invest orders of magnitude more than the State of Michigan invests in the entrepreneurial economy. And the other important thing is they’ve done it consistently year after year. Where in Michigan, we’ve had some good programs like the one that helped keep me here and brings Venture Investors here.

Paul: Exactly.

Jim: But you know what happened? They did the program and then they didn’t renew it. So all the funds that got started, four out of five left, there was no reinvestment. They’re like, well, if you’re not going to reinvest, we need local investors. So they all left.

Paul: Well, we think working with partner organizations like Invest Detroit, like Michigan Rise, Michigan State, obviously everybody in Innovation Partnerships as the University here, we are actively collectively communicating that message. We really think that as we move forward with the State’s economic development strategy, this needs to be more of a focus than it has been in the past. This is a real opportunity. I think the statistics are very clear about this, about where new job formation comes in the United States. It comes from new early companies. It doesn’t come from the old line companies that are important, and we’re glad that they’re providing employment, but growth in jobs is going to come from that. So what you’re speaking to, also reference for the audience, the Citizens Research Council here in Michigan came out with a report that does compare us to the adjacent states, and it is very telling that exactly what you said is what that data shows. Illinois, Minnesota, Ohio, in particular, are doing a much better job at supporting their companies as they’re growing and attracting companies from other states. And that is also the other risk in this. 

Well, as we close out this great conversation, maybe use a hat as somebody who’s been doing this for a long time, what advice would you give to other entrepreneurs and startups working with university research teams looking to bring their innovations to market, particularly in the healthcare biotech space that you’ve been so intimately involved in?

Jim: I think first is have a clear view of who your customer is and what problem you’re solving. It has to be crystal clear, it can’t be ambiguous, and you have to be solving an actual problem that they know they have. And second, I would say, be a great storyteller and communicator because you’re going to have to sell it internally at the university. You’re going to have to sell it to investors, and every day you’re selling either the company or the product to new investors, to employees to get them to come and join you. So that’s the second one. And then the third one that I hit on a few times in some of your earlier questions, is form a great team. The technology is the start, but it’s only one piece. You need a great team and then you need the funding to kind of make all that hum.

And it’s all because of the team. HistoSonics has hit many bumps in the road, but when we had the great team, they could get over the bumps and take it up to the next level. When we, with the FDA, the first couple of times with the FDA, they said, Nope, do not pass Go, do not collect $200, go back to the start. But with the great team, we redid it, we listened to ’em, we went back and we got it. So the great team is so important, and the sooner you start on a great team, the better you are.

Paul: And then you have a team with the commitment and passion to move it forward. I mean, I think that’s what I’ve been impressed by the companies here that have moved on to success is you can be talented and you can have a lot of different skills, but the companies that seem to be successful have a mission mindset and are passionate and committed to what they’re trying to accomplish and don’t see no’s as no’s, sees them as yes-buts and try to move that forward. 

Well, Jim, thank you for taking time to talk with us today.

Jim: Great. Well, thanks a lot, Paul. It’s my pleasure.

Paul: nd I want to thank our audience for listening and learning more about those leaders and organizations working hard to create the Ann Arbor Region’s economic future. These conversations are brought to you by Ann Arbor SPARK. For more information about Ann Arbor SPARK, you can find us on the web@annarborusa.org. We’re also on Facebook, Instagram, and LinkedIn. 

And Jim, is there a place where anybody who’s interested in learning about HistoSonics can go to

Jim: They have a website, histosonics.com, and I’m sure now LinkedIn, and they’re getting a lot of great press.

Paul: Yeah. Well, I think part of what’s important about this technology, and I’m just extending our conversation a bit here, is how it’s changing people’s lives. So it’s not only people that might just be interested in learning about the technology, it’s people that can potentially be helped by it. So we want to make sure that they know that they can connect and find out more about where these treatments are being offered, what hospitals are buying the equipment and so forth. So I think that’s an important message as well.

Jim: All of that for patients is on the HistoSonics website. They actually have a hospital lookup where you can find the nearest HistoSonics systems. And the University of Michigan has two one here in Ann Arbor and one out at the New West Michigan facility in Grand Rapids.

Paul: Well, that’s great. So again, thanks a lot, Jim. Take care. We’ll check in with you later. Maybe there are other companies that you’re engaged in that we’re going to want to talk about. So good talking to you.

Jim: Thanks Paul.