AppliedVR’s Playbook: How to Build Credibility Before Scale in Regulated Markets
Most startup advice centers on moving fast and breaking things. But in regulated markets like healthcare, that approach can be fatal. In a recent Category Visionaries episode, AppliedVR founder Matthew Stoudt revealed a different playbook – one that prioritizes evidence and institutional trust over rapid scaling.
The Evidence-First Mandate
From day one, AppliedVR took an unconventional approach to growth. “One of our early mantras is that we wanted to build an unparalleled body of evidence to demonstrate this,” Matthew explains. “Because anytime you’re going to bring something novel into the marketplace, there’s always going to be a lot of questions around it.”
This wasn’t just about scientific validation – it was about building the foundation for commercial success. Virtual reality’s potential for pain management had been proven in research settings since the 1990s, but as Matthew notes, “The challenge you had in this case was the technology weighed 50 pounds, cost $50,000, and so it was confined to the laboratory, to the world of isn’t that interesting?”
Strategic Hospital Partnerships
Rather than targeting the broader market immediately, AppliedVR started by focusing on the top 20 hospitals in America. This strategic beachhead served multiple purposes:
- Building credibility with key opinion leaders
- Gathering real-world evidence
- Understanding implementation challenges
- Refining their product based on institutional feedback
The approach helped them develop what Matthew calls “the three E’s of design” – ease of use, engagement, and efficacy. “I don’t care how efficacious it is, I don’t care how engaging it is, if it is complicated, if it is hard to use, if there’s friction in the equation, the patient’s never going to use it,” he emphasizes.
Learning Through Implementation
Their methodical approach led to crucial insights that shaped their product development. An early attempt to use pulse oximeters for biometric feedback proved technically impressive but practically problematic. “In a laboratory, that is awesome,” Matthew recalls, “but you send that into a home to a 55-year-old male, female, whatever, and they got to put a pulse – what? On their finger? I don’t have blue teeth. What are you talking about? Right? It’s going to fail.”
Finding the Right Entry Point
This evidence-based approach ultimately led them to identify the VA as their ideal entry point for broader commercialization. “When I think about what your product market fit is, the VA for the world of this idea of immersive therapeutics or immersive medicine, I couldn’t think of a better entry channel for us,” Matthew explains.
The numbers supported this strategy: “There’s about 6 million vets that are suffering from some form of pain. 1.5 million of them are deemed to be moderate to severe pain sufferers.” Moreover, the VA had already demonstrated openness to VR technology, with “over 100 and 2170 facilities that are actually using some form of VR as medicine.”
The Long Game
While this methodical approach might seem slow, it’s enabled AppliedVR to achieve something rare – becoming the first and only FDA-approved VR treatment for chronic pain. Their vision now extends to making VR “a healthcare hub in the home,” though Matthew acknowledges this is “probably more in the eight to ten year time frame.”
For founders building in regulated markets, AppliedVR’s journey offers a powerful alternative to the “move fast and break things” mindset. Sometimes the fastest path to scale isn’t about moving quickly – it’s about methodically building the evidence and credibility that enable transformative change.