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How AppliedVR Built a New Category of Medicine by Starting with Evidence, Not Scale

When most founders talk about revolutionizing healthcare, they focus on moving fast and disrupting existing systems. But in a recent Category Visionaries episode, AppliedVR founder Matthew Stoudt shared a different playbook: spending years methodically building evidence and credibility before attempting to scale.

The stakes couldn’t be higher. As Matthew explains, “In the US, there are about 100 million sufferers of chronic pain, about 1.5 billion around the world. And in the US, we spend about $650,000,000,000 a year trying to address it.” Even more striking is his observation that chronic pain is “bigger than the combination of diabetes, cancer and heart disease.”

But rather than rushing to market with a minimum viable product, AppliedVR took a deliberately measured approach. “One of our early mantras is that we wanted to build an unparalleled body of evidence to demonstrate this,” Matthew shares. “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 methodical strategy was shaped by a clear understanding of their market dynamics. While VR’s potential for pain management had been studied since the 1990s, the technology had remained confined to research labs due to cost and complexity. 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?”

Their GTM journey started not with scaling to consumers, but by targeting the top 20 hospitals in America. This wasn’t just about sales – it was about building credibility, gathering evidence, and refining what Matthew calls “the three E’s of design” – ease of use, engagement, and efficacy.

The importance of this approach became clear when they attempted to incorporate biometric feedback. “We actually started with this idea of being able to use a pulse oximeter attached to your finger, connected to Bluetooth,” Matthew recalls. “In a laboratory, that is awesome… 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.”

This focus on real-world usability over theoretical capability has guided their entire GTM strategy. Rather than trying to boil the ocean, they’ve focused initially on the VA as their entry channel. As Matthew explains, “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.”

The numbers support 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.” Even more importantly, the VA has been an early adopter of VR technology, with “over 100 and 2170 facilities that are actually using some form of VR as medicine.”

Looking ahead, Matthew envisions VR becoming “a healthcare hub in the home” – but he’s realistic about the timeline, noting this is “probably more in the eight to ten year time frame.” The goal isn’t just adoption, but transformation: “This idea that VR immersive therapeutics is now a part of standard of care… where this becomes one of the first things that a doctor prescribes versus one of the last things.”

For founders building novel solutions in regulated markets, Matthew’s methodical approach offers valuable lessons. Sometimes the fastest path to category creation isn’t about moving fast and breaking things – it’s about methodically building evidence, credibility, and real-world validation. As he puts it, “We always believe that start from what is the least invasive that you can do, and this is probably the least invasive that you can do that can actually make an impact.”