The a16z Show - a16z Podcast: Breaking Into Bio

Starting point is 00:00:00 The content here is for informational purposes only, should not be taken as legal business, tax, or investment advice, or be used to evaluate any investment or security and is not directed at any investors or potential investors in any A16Z fund. For more details, please see A16Z.com slash disclosures. Hi, and welcome to the A16Z podcast. Whether you're an academic seeking to move out of research and into industry or simply interested in working at a bio startup, this episode of the podcast is for you, from how to build a brand in the space when you don't have one, to identifying what the problems that really need solving are and how to build a company around it. This episode of the

Starting point is 00:00:39 podcast is based on an event held at Andreessen Horowitz with Atul Butte, a distinguished professor and director of the Institute for Computational Health Sciences at UCSF, Daphne Kohler, founder and CEO of InCitro, formerly professor at Stanford and co-founder of Coursera, and is moderated by A16Z bio-general partner, Vijay. So first I want to talk about, for those thinking about founding your own startup, you know, how do you connect the dots from going from academia to a company? A lot of times people have really amazingly interesting technology, but there's this big gap between technology to a product and product to a company. What criteria would you be advising people look at to say, you know, this is something where I really think I should turn into a startup. Like, how do you reach that bar?

Starting point is 00:01:23 So it's tempting to start companies, right? The thing is, though, that especially in bio and medicine, we see so many superficial companies. One of the harder things, compared to just generic machine learning, AI types of platform companies, in this field, you have to go deeper. And it means learning vocabulary. It means really spending time with the folks to truly learn what the pain points are, right? You think you've solved a problem that's a pain point, but you don't really know what the pain point is. So, for example, we have a lot of apps that you can take pictures of skin and do something with, deep learning,

Starting point is 00:01:54 or moles, cancer, because that seems like a very intuitive kind of problem. But that's an easy one. We have many, many harder problems at biology medicine, but they take time to learn. So you have to be patient. Some of that time is spending coursework and hanging out labs and rotations and PhDs and stuff like that. But it's worth it because without that right pain point, it's tough to really start an effective company that's really going to solve something that people actually need solved.

Starting point is 00:02:19 One of the things that you really need to do in this space is connect with your target customers and figure out what problem it is that they really need help with. And I think it's easy to underestimate in this field the complexities and the barriers that prevent adoption, even for something that seems like it's a no-brainer. It obviously makes things better. But there's so many obstacles in terms of the bureaucracies and the approvals, not only government regulations and so on, which are much more significant in the space than in many other applications of tech, but also just in terms of we've always done things this way. We really always have. And we, and it It turns out that in many of those cases, even really simple methods actually work much better than the current standard of care, state of the art. And the barrier to adopting those things hasn't been that people haven't recognized that those are better methods. It's been that the system is really complex.

Starting point is 00:03:15 So you really need to take time to understand not only what your technology can do, but also how it fits into the larger ecosystem. And to what extent you can circumvent the other obstacles to adoption. it's not really about the machine learning inside the box. It's about how do you get it so that the physician doesn't even have to think about how to use your system. It just happens naturally as they're doing their rounds. They write on little sheets of paper. And that's the problem, not the machine learning.

Starting point is 00:03:45 When I think about medicine, it's literally this dot matrix printer fax machine kind of land. And we're not talking about DNNs versus logistic regression at that point. And so the challenge then becomes, if you're sort of coming out of an academic lab, how do you even just know what the problems are? I mean, you may have guesses, but unless you spent time in a hospital system or payers or providers, and you know, the go-to-market for healthcare in general is probably the hardest go-to-market. So how does one even gain that knowledge? And it's crowded, too, right?

Starting point is 00:04:13 So a lot of us have passed around this CB Insights logo, like the tree, 108 companies with deep learning, machine learning. That's already like three years old, right? I mean, it's probably like five times that number now. It takes time. It takes patience. It takes experience to go deeper to get to more interesting problems. I think there are other kind of silly things that companies do sometimes that are unnecessary.

Starting point is 00:04:35 Like, say things like physicians are going away, right? With AI and deep learning. Yeah, the greatest way to make us not want to accept your product, right? That kind of happens within microseconds. And that one is both naive and like just. Plain stupid, right? Yeah, exactly. But I think it's really important to realize that this.

Starting point is 00:04:53 This is not your typical, you know, you have three people sitting in a garage, writing a web app in the cloud, and it goes on everyone's phone and it goes viral. That is not this space. This space is you have to deal with a lot of different stakeholders. They have a lot of history, a lot of entrenched interests, and you're not going to be able to just break in by having an app that goes viral. Yeah, it's also a very conservative space, right? When we graduate, you know, we are reciting oats that are 1,000-plus years old that include phrases like, do no harm, right? And then you're asking us to try something new, right? So,

Starting point is 00:05:27 it's a very conservative space. And you have to learn what a BAA is, what an IRB is, what HIPAA is. You cannot just walk in and not know what those are. One thing I tell a lot of folks, you know, how to get started with the startup. So here's the problem. You're surrounded with Stanford and UCF, which are like the best of the best here, right? So you're thinking this will be an easy sale, but you're talking to two of the best in the country. It's a tough first customer to have, right? There are other hospitals around you, medical systems and practices that are not Stanford and UCSF, and that's the first account you should try to get, not Stanford to UCSF. I always send to El Camino Hospital in Mountain. That's a great little hospital. They're

Starting point is 00:06:06 partnered with neither of the two, but they're a tech-oriented hospital. But if you can get something to work there and get a white paper out of it and there are your reference account, we'll answer the door if you knock then. You really need to either spend serious time in either a hospital or a company, an existing company, that actually has that as a market, or you get a co-founder who's had that. Because for someone who comes in from a technology background, and you have this cool, shiny new technology that you want to apply, but you don't understand the problems and you don't understand the path forward,

Starting point is 00:06:37 I think it's a very, very tough trajectory to follow. One way to handle the crazy go-to-market that is healthcare is to get a co-founder. You know, when you're thinking about starting a company and you think you, you have the pieces that sort of reach that level, you know, how do you pick the co-founder? To me, picking the co-founder is probably one of the most important things that you do. It's the thing where changing co-founders later is probably one of the most painful things you do. And so how do you find that right magic? How do you find the right person?

Starting point is 00:07:04 So first of all, as it relates to, in general, picking co-founders as well as picking some of your earliest employees, which is the next step beyond that, you need to be really, really honest, brutally honest with yourself about what you do not know. about the parts of this world that you're completely unfamiliar with, and then be willing to go out and get people who complement you. And that, by the way, is not just technical knowledge. So, for instance, if you're more on the medical side and only lightweight in machine learning,

Starting point is 00:07:33 you want to get a machine learning person and vice versa, but it's also on all those other things, like the go-to-market, understanding the space. And then even beyond that, the management skills. All of these things are things you can learn, but it's a lot easier if there's someone at your company who's been there, done that. These things, none of them is rocket science,

Starting point is 00:07:54 but figuring out all of them at the very beginning while you're also trying to get your business model and your business partners and the technology off the ground is just really hard. So at the beginning, build a team and think about how to get someone who has experience that complement your own. To put it in terms of kind of formulaic kind of way to describe it,

Starting point is 00:08:15 the co-founder has got to have skills you don't have, right? A major skill could be going after, They know how to make a story and make a pitch, especially if you don't have that skill. Their determination should be greater than or equal to your determination, okay? If it's less, there could be issues down the road, I think. And their risk tolerance should be greater than or equal to your risk tolerance. But what if they're using that criteria with you? With me?

Starting point is 00:08:39 This does have a solution. This does have an equilibrium. You're bringing something, right, to the table, right? You're absolutely right. I mean, so there's a greater than or equal to. And at least you got perceived that, right? That they're willing to go all the way with you. Because everything, in the medical world, we talk about survivor bias, right?

Starting point is 00:08:55 So we write stories and glorify all the survivors of cancer, right? We certainly have a survivor bias with companies in the Bay Area, right? You see every day, all the survivors, we never hear about all the ones that don't work, right? And that's the majority still, right? And so it is hard. And just, you know, a Bayesian prior would tell you you're going to fail. So you had to beat those odds here. And that takes a lot of luck, skill determination, and patience, especially in biomed.

Starting point is 00:09:22 I think some of the hardest things are the unknowns, which you don't even know to ask. You know, what are the counterintuitive things or unknown unknowns that you don't think we got to, that you think people in the room should know about if they want to be a founder of a company? The most frustrating one is really competition. We surround ourselves with the kind of bubble filter here in the Bay Area. We think if we don't see someone on our campus that doesn't have a company like ours, we're free and clear, you know, freedom to operate, whatever. Competition will come from anywhere and everywhere.

Starting point is 00:09:49 There are smart people in many campuses in many countries now. And it's super frustrating and you will just get beaten down when you see the competitor getting 10 times the funding that you thought you were going to try to get, and they just close them around. And then you're kind of narrowing and narrowing what you do. Learn what others are doing, not to kind of steer around, but just be aware, like what is the pace you're going to have to keep up with,

Starting point is 00:10:13 what are the milestones you're going to have to get to? because it is getting, especially in the computer and AI and machine learning world, there are many people getting trained now, and they all have ideas of companies in what started, there are going to be collisions of these. As you think about founding a company, one of the questions is where to seek funding. A lot of people select funders based on who's going to give them the most money

Starting point is 00:10:37 at the highest valuation, because they think about their percentage of the pie. What you really want to think about is not your percentage of the pie, but the total value of what you get, and I think to me, even more importantly, of what you build. So I would much rather have a smaller piece of a larger pie that even if it's financially neutral, you've built something greater, you've impacted more people, you've changed more lives. So as you think about who you bring on board and the dilution you take from that, who you get funding from and the dilution you take from that,

Starting point is 00:11:11 think about who's going to help you make your pie the biggest and most successful. successful that it is. And there are the ones that will often tell you the unknown unknowns, whether it's your co-founders, your early employees, or investors who've seen dozens of these companies, those are people who can really save you for making very bad mistakes and can tell you about those unknown unknowns. I think a lot of people make a big deal over shares and options and things like that. And I think it's important to pay attention to some of those things. But if it's successful, it's going to be successful. If it's not, it's not. I think in general, What I've seen is if you're going all out to be involved with the founding team of one company,

Starting point is 00:11:49 you're probably going to do more than one. And I think having one under your belt, the second one is the one that people always kind of glorify in some weird way. I don't know how to explain that well, but you know, get a base hit for the first one. You'll get a home run on the next one, right? There's a lot you learn to. Don't freak out about the first one. Yeah, yeah, yeah. It's like pancakes.

Starting point is 00:12:07 Yeah. Like pancakes. It's a good analogy. So some people may decide that they don't want to be a founder of, a startup, but they may want to join. Yes, yes. Yeah, or yes. Yeah, yeah, yeah, and then immediately be a founder. That's actually an excellent point.

Starting point is 00:12:20 But they may want to immediately go into joining a startup. Joining a startup is still a very sort of opaque process. You know, how do you find the right startup? How do you network? So let's start off with, like, how do you pick the company? Like, how do you develop the criteria and understand, like, this is the company you want to join? Especially when it's so early, it's not like joining Facebook or Google or something like that

Starting point is 00:12:41 where there's an obvious track record. If you're new into this space and you've never been at a company before, the amount that you have to learn, both about running your own company and about, you know, go-to-market strategy and all those challenges that we talked about earlier, it's really hard to do it at the very start. And so a path to founding your own startup, even if that's where you're headed, could well be first spending a few years at somebody else's. And so I think that's just something to think about, even if you're really entrepreneurial in nature. Do you really want to do it right now, right out of school, or do you want to do it in five years? And when will you be most successful now or later? In terms of picking a startup, I would say pick the one that you wish you had thought about. Pick the one that you was like, wow, this is such a cool idea, and I'm so excited to be part of that.

Starting point is 00:13:32 And then at the same time, think of this as do I really want to spend time working with the founder or founders of this company? because you're going to be spending a lot of time with this person or these people. And it's going to be tough times because this is not Google. Most startups are not money printing machines. And you will have times when you think you're about to hit bottom and go deeper than bottom. And you need to be willing to stick with that person and trust them that they will be able to get you out of whatever mess it is that the company has dug itself into. And I guarantee you this will happen at every startup. There will be moments when you think you're hitting bottom.

Starting point is 00:14:16 So you have to go in with that realization, and you have to go in with the trust that the person that or people who are leading this company are there for the long haul, are going to be willing to do hard things to get the company on the right footing. And you have to really believe in the vision because it's going to be really hard if you don't. To me, if I had to pick a company, it would be one that goes after an important problem. I think there are many important problems that need solving in the world. I think that's probably a high criteria.

Starting point is 00:14:44 And then that if this company solves it, it's going to be super significant for the world, right? That's a kind of amplifying effect. When you're in the beginning of a company, it's pretty clear you're at the beginning. They don't even have a table or desk or nothing for you. So I think that in some ways, a lot of that comes down to your own risk tolerance. Not everyone has the same level of risk tolerance. And we shouldn't all think everything is equal there and don't feel pressured or threatened or threatened or anything that you should be doing something

Starting point is 00:15:09 if someone else is doing because everyone's risk tolerance is different. I'll say something which may be inflammatory, but it's generally my observation is that a lot of people go to grad school because they're actually not very risk tolerant. Yeah. You know, that grad school is a comfortable thing to be on. It's something that there has to be this shift

Starting point is 00:15:26 from sort of doing something which was a safe thing to do from something that sounds crazy. For me and like my parents, for me to say like, oh, I'm going to like ditch going to like MIT grad school because I'm going to do a startup. They were like, what? But yet, like, looking back on my life, that's like the time to do it. So I don't know. The risk tolerance is a great topic, I think. I mean, like, how do people

Starting point is 00:15:46 even choose the risk tolerance or what advice would you give them? I was asked today, what advice would you give to your, you know, 21-year-old self who started PhD at Stanford? And the advice that I would give is really, this is a time and a place of amazing opportunities. The opportunities are boundless. Think big. Be willing to do something really. significant, really impactful. Because at the end of your life, when you look back, that's the thing. I don't know very many people who regret having tried for something big even if it fail, but I know a lot of people who regret never having tried.

Starting point is 00:16:22 And so I would go ahead and do it. And honestly, I'm going to disagree here. Your risk is not that high. As in, you have an amazing skill set of machine learning today. That skill set's not going to go obsolete anytime soon. So if you go and do the startup thing and three years later the startup fails, sure, there was an opportunity cost for those three years that you could have spent maybe doing something that had more remuneration, more success. But I think the opportunity cost of not trying to do something that you think is really meaningful is much, much larger. Definitely.

Starting point is 00:16:56 It's a point which I commonly tell people in career advice is that I even see in my own career said, I feel like my biggest mistakes were not trying for more. And like 80%, 50% of amazing is much better than 99% of good. Fantastic. So let's talk a little bit about machine learning in biology, something where I think a lot of us share interests. And, you know, I heard this rumor that apparently there was machine learning before deep learning. No, that's not true. I don't know. I mean, I definitely, have you heard this rumor?

Starting point is 00:17:25 I mean, just thick news. Take news. Yeah. No, I mean, yes, I was doing machine learning back in the mid-90s before there was this thing called deep learning. I mean, there were neural networks. At the time that I was teaching machine learning back in those days, we used to say that neural networks are the second best way to do just about anything. But that's actually, that's a deep statement, actually. Because to do anything.

Starting point is 00:17:52 Yeah. And I think, you know, to some extent that was true. It was sort of if you had to take something out of the box and not think about it very hard and not really engineer your model, then you could throw a neural network at it and would do decently well. Over time, we got to the point that lots of other things would do equally decently well, like kernel machines and random forests and so on and so forth, would probably do about the same. And then we hit a saturation point. And the reason we hit a saturation point in terms of how well machine learning models were doing wasn't because there weren't smart people. around thinking about new innovative things was really because we hit a plateau

Starting point is 00:18:31 in terms of the amount of available data. And there's only so much you can do if you have a thousand samples. You can innovate and innovate and innovate, but there's only so much performance that you can eke out of that. When I started Coursera back in 2011, 2011, 2012, a big data set was a couple hundred samples.

Starting point is 00:18:50 That was really big. Now we're in a world where big data in biology is actually, a reality, data that is being collected in large human cohorts, as well as data that one can produce in laboratory settings that allow us to, we can now engineer, perturb and measure model systems in an amazing range of different ways that really allow us to uncover new science using machine learning in ways that we just couldn't do before, because you could generate millions of samples in a matter of a few weeks as opposed to a matter of years. And what has happened

Starting point is 00:19:25 in so many of those fields where machine learning is now transforming entire sectors, images, text, speech, video, is that the amount of data is now almost limitless. And that allows different models to now start differentiating from each other. Now you can have a model that is really much better than anything else, because if you think about how to capture the right structure and all of a sudden you have enough data to really refine that. So I think that's a really important thing. And we are hitting that era in biology and health. We're not there yet.

Starting point is 00:20:04 Our data sets are still way smaller than the ones that you see in images and text and so on. And isn't that the problem, though? It's a lot harder to deal with less data. So this is a more challenging space, you all. You're going to have to be more creative in some ways than a lot of the people who are lucky enough to be working in recommender systems for advertising where there's unbelievable amounts of data.

Starting point is 00:20:29 And so this is an interesting point for us. There is enough data that machine learning models can really start differentiating and some are going to do much better than others. But we're still not in the large, large data regime

Starting point is 00:20:44 where, you know, blind architectures that don't exploit structure of the problem can just work out of the box. So you really have to understand your problem in the domain and figure out how to exploit the structure that you have in these biological or medical data sets to eke out those percentage points of improvements that's going to make your system stand out relative to everybody else's. Yeah, so I'll go even further for the distant past.

Starting point is 00:21:10 There was AI before machine learning, right? I mean, so Stanford, Ted Shortlift, early 1970s, came up with mycin, which was a recommender system. This was all rules-based stuff. There were literally New England Journal of Medicine perspectives in the mid-1970 saying computers and AI were going to just really revolutionize medicine. And replace doctors. Right. And so it's very instructive to realize, though, that there was that big cliff and a desert. And right now in the middle of this, we can't imagine how could that have been and how could we have another one of those.

Starting point is 00:21:40 But there was incredible over-promising and still things didn't catch up. Lack of data, lack of integrated data could be one of those that could slow things down a lot. And when Daphne says being creative, I'm going to take that further, you have to be creative to convince people with data to share and collect and aggregate. I think one of the big risks that we run as a machine learning community is the incredible amount of hyperbole that's going on right now where it's like we're going to have general intelligence right around the corner. We're not.

Starting point is 00:22:12 Okay, we really aren't as you start your own company. Do not overpromise. It's much better to under promise and over-dromise. delivered than the other way around. That's right. We haven't done this before. It's very experimental. We think we could try and make headway on this problem,

Starting point is 00:22:27 but we don't know we're going to achieve this level of performance. Be really, really careful because this desert is not a theoretical possibility. Let me push back on that, because when you're a tool boot or definitely calling you're going to say, I'm going to try, you can like sort of soft sell it and people will have some optimism. You know, for if you don't have that brand, you know, I think it's a tricky balance. A lot of companies in this space really ignore the importance of branding. Branding equals trust. You're going to sign, for example, a BAA, business associates agreement where we're going to give you some data, for example, imaging data or whatever.

Starting point is 00:23:06 And yes, it's a legality to that, but the paper doesn't do much. We have to trust you. And so why should this be a trustable company? Super important point. Don't ignore that important aspect in a startup. answer the specifics of how do you build that brand, you want to be really rigorous and scientific in every claim that you make. So publications might seem like a dispensable thing now that you're no longer in school. Publications are your way to get the stamp of approval by trusted peers,

Starting point is 00:23:39 and we all know that the peer review process has its issues, but it's certainly better than not. So invest the time in doing rigorous science, being really key. careful about your controls, being careful about how you generate and present your data. And again, not without hyperbole, publish it in strong peer-reviewed venues. And then the other way to get branding is to go and talk to experts in the field and get their stamp of approval by having them be on your scientific advisory board or whatever, or even just tell their friends that you can be trusted. Do not underinvest in this and be sure that your foundations are sound.

Starting point is 00:24:15 I mean, we all know Theranos. that's an extreme example. But the fact that they never had a peer-reviewed publication, they never presented their data in any way. They kept even potential customers from looking at the raw data. I mean, those are all really bad things for a company to do, even if you're not there on us. So what should people expect in terms of real life sort of in a startup machine learning?

Starting point is 00:24:42 You know, when you're in academia, you want to try to develop a beautiful new method. Whenever I use this reference, I think about, In Rogers' Lost Ark, where Indies is, like, dealing with the guys, and the guys are, you know, doing the swordsmanship and he just shoots them. You know, it's usually it's not the elegant, gorgeous thing that is the best. It's the thing that gets the job done. And so it seems at odds with a lot of the way we train people in academia. So what is real-life machine learning like in a startup? I tend to run my lab like a startup.

Starting point is 00:25:09 And sometimes, especially the CS folks I run into, are so concerned about accuracy and F-scores and sensitivity and specificity. You enter these competitions every year to try to. to boost point one or point two. I'll tell you one funny thing, and maybe this will get me criticism. I forbid anyone in my lab to enter those competitions. Because that's playing someone else's game. The game player is the one who, the game runner, they're the ones who win at those games. Because they got you like answering their questions.

Starting point is 00:25:35 There's so many unsolved problems out there. The hardest part in everything we do is figuring out what is the question to ask? What is the pain point that you realize this is askable and answerable? is modelable now, right? Five years ago we didn't have the data, now we do. That's way more important than the accuracy, sensitivity, specificity. If you figure that out and can defend your advantage in some way, that's the way to go. The single most important thing is what is the question that you're asking? After that, the first thing that you should do is to try the simplest possible thing that you think has a chance of addressing it. And I will share an anecdote that I

Starting point is 00:26:14 heard from a colleague at the NIPS board meeting just recently of someone who came into interviews an intern and she posed him a problem and asked, what would you do to solve this? I was like, well, there's an LSTM and then LSTM feeds into the recurrent neural network, and then there's three convolutional layers and it's like, okay, no, what is the simplest thing you can do? Well, we could take out the LSTM. And then I'd be like, well, how about just a plain neural network? is like, uh, you can do that? Really?

Starting point is 00:26:48 So try the simplest thing and then figure out what is the metric of performance that you actually care about? The area under the ROC curve is rarely the thing that you actually care about. That was devised for radars back in the 50s, okay? Receiver operator curve, that's the name that it comes from. What you might care about is specificity as a given sensitivity, depends on your application. So think about what it is that you actually care about and then ask yourself

Starting point is 00:27:19 whether when you go from your logistic regression, which is, by the way, a single layer neural network, so you go from that to the next level beyond that, does it improve the metric that you actually care about?

Starting point is 00:27:35 It's going to make a difference to practitioners, not to some competition, not to the graphs that you present in the paper, but will say, someone care about the fact that you brought this number up from this much to this much, will it make a difference in clinical practice? Maybe just end with two last quick things.

Starting point is 00:27:52 Let's say you're a computer scientist doing machine learning and you're excited about the biology space. What advice would you give to them to break in? If you're a machine learning person, I would say look for a company where you have that continuum of skills, which allows you to kind of move and learn more of the biology without needing to necessarily come in and know it all at the very beginning because the biology is a very, very steep learning curve. There is an infinite amount of stuff to know. I've been doing this for about 18 years now and I still feel like a novice in terms of the amount of biology that I still

Starting point is 00:28:31 don't know. So find a place where there is people around you who are this far out from you in terms of being closer to the biology, but not just that far out because those people, over there probably will not understand you and you will not understand them. So you need people in the middle that can sort of bridge those gaps and help these people communicate better. One thing I think, especially CS students, never take advantage of, is the fact that we have these academic medical centers right on the same campuses. So if the hardest part, if you've just heard that the hardest part is figuring out what the pain point is, what's the unsolved question, they have this amazing concept at academic medical centers called Grand Rounds. And they bring in an expert.

Starting point is 00:29:11 So they talk about a disease, and it's maybe 30 minutes of everything you know about the disease. The last 10 minutes is this is everything we still need in this disease. We don't have a this, and we need a this, and we suck at this. Go to Grand Rounds, right? Go to the academic medical centers, see the seminars. There are a long list of seminars. Join those mailing lists. Learn the lingual, learn the vocabulary.

Starting point is 00:29:32 And a lot of the vocabulary isn't necessarily the hands-on skills. It's more what the thought process is. I spent one year in a wet biology lab during medical school. And so I used to go to seminars, and one biologist would be trying to convince another biologist. And one biologist will say, you know, here I've shown that this protein interacts with this other protein. And the second biologist will call bullshit, I don't believe you, right? How do you know? And then the first biologist would say, I did a co-imminopreciprecipitation.

Starting point is 00:30:00 Note to self, right? When this biologist is trying to convince that biologist, they did something called a co-immina precipitation, right? I don't know how to do one, but I know if that's what you're trying to prove, that's what you do. You want to know, how does one biologist convince another? How does one physician convince another, right? What are the levels of proof and evidence they use in that field? And even if you don't know how to get there, you can at least learn what you should be aspiring to. And don't be afraid to ask really stupid questions. One of the things is if you're working at the boundary between two disciplines, you need to go with a confidence that you are an expert in your domain. and it's okay for you to appear like a complete idiot in the other one

Starting point is 00:30:40 because if you're not going to ask those questions, you will never know the answers. So ask what is co-immuno precipitation? I want to add one quick thing on that, right? We have this Silicon Valley Hutzpah. Let's learn some Silicon Valley humility, though, to ask those questions, okay? We have so many folks that come in and say, oh, you guys don't know anything in medicine, we know everything. Don't go in that way, right?

Starting point is 00:31:00 Have some humility when you're asking that question. We'd love to answer them. That's an awesome place to send it. And I think we have a little bit of time if people have questions. So we've talked about exciting questions that startups should ask. If you have two startups that are asking the same question, how do you judge between the two of them? You mean for funding, let's say, right? Or if you're trying to join one.

Starting point is 00:31:20 Coursera or Udacity? I don't know. Should I join? So Cresor and Udacity is an interesting example because these are two companies that started out asking the same question and ended up going in very different directions. So I think part of the answer is they likely won't end up at the same place. But I think ultimately most of the success of a company by far is not about the quality of the idea. It's about the quality of the execution. Absolutely.

Starting point is 00:31:50 Yes, absolutely. And I've seen companies with ideas that are fairly mundane, seem fairly mundane, but they executed the hell out of it. And they will generally thrive much more than the people who have like, completely awesome out of the box and they just totally flubbed it and, you know, they lost focus. Oftentimes, sadly, creativity is anti-correlated with focus. Ultimately, you want to make the judgment not just between two companies that have equivalent ideas, but companies that have ideas that are equally exciting to you, I would look very closely at the quality of the team and the quality

Starting point is 00:32:30 of the execution you expect from them. Yeah, I think that's a great point. Also, it would affect the enjoyment of being there. There's just a fundamental difference being around A plus people versus A minus versus B plus and down. It just changes the experience dramatically. I think one distinction between the biomedical space and let's say the vision or NLP space is if you're finishing up your degree or earlier on your career, if you're an NLP or vision, you can get the data pretty easily to do a problem that you're interested in. Daphne said earlier on how, as opposed to when she started her academic career, there's way more data that's out there for biology. The thing is, it's behind.

Starting point is 00:33:05 this massive wall in a lot of places at big companies. So what's your recommendation if you don't have the brand of a Daphne Collar or Tool Abute? Are we really at the stage where we can found companies and get the data or does one really need to work with more established people to do that? The easy way to break in is go after smaller hospitals, whether it's El Camino or the East Bay hospitals

Starting point is 00:33:26 in our area or the like. But I think one thing that a lot of companies do, and a lot of folks do, actually in the Bay Area, is to not pick the partners well. Okay. U.S. healthcare system is a $3.2 trillion a year system, 3.2 trillion. And so we look at this as engineers. Boy, this is such an old, creaky, inefficient system, and they're gears, and they're so rusted. If I add oil in the right place, the gears will go smoother and they will save money. Friction is the wrong model for what needs to get fixed in the health care system. It's resistance. Somebody makes every dollar. in the $3.2 trillion economy here. They like making that. They like making that money.

Starting point is 00:34:10 I see a lot of companies that come and say, yeah, we're working with payers, and now we'd like to work with you as providers. Oh, my gosh, why would I want my data to go to the payer, right? You have to understand the dynamic, that there are competitive natures here, and just learn what they are, and don't be naive about that. So pick a partner.

Starting point is 00:34:27 Either you're going to go after providers or payers. You're rarely going to do both as a startup. My kind of worldview of the system now You've got pharma and devices in one corner, you've got providers in one corner, and payers in the other corner. It's strangely missing our businesses and patients, right? And we can talk about patients. They're the least powered in the system.

Starting point is 00:34:44 And any one moment, two of them are ganging up on the third, right? So pick your players well, what your first one, two, three, N customers are going to be. It will not be a mix of these, right? If you think you're going to mix of these, something's wrong with the model. It's not going to happen that way. Because the minute I see that logo of another player, I'm not going to put my local on your site either. So be super careful about that.

Starting point is 00:35:07 Get experience and get an idea of how competitive the spirit is. Going into the space is a long-haul game. This is not a game you're going to win in two to three years. And so you want to be patient in how you approach this. So right now you might not have the credibility to go to a large hospital or a large pharmacombollah say, hey, give me all your data.

Starting point is 00:35:28 Sorry, but you might not have that brand. But if you go in with humility and say, well, I'm willing to work as a consultant for six months. And I'm going to do it on your side. I'm just giving that as one trajectory, not the only one. And say, I'm going to solve a problem for you. Tell me what problems you have. I'm going to come in. I'm not going to require that, you know, a huge valuation or whatever.

Starting point is 00:35:51 You gain experience. You figure out what the problems really are, which are usually not the things that you thought going in. you develop a case study. One thing I would ask as you go into these relationships is less about how much they're going to pay you and more about will they let you use the results as a proof of concept when you go try and pitch this to other customers. Think about the long term, not the short term.

Starting point is 00:36:15 And so over time, you build a better understanding of the space, you build more credibility, you build customer success stories that you can go provide to someone else. And then you go and pitch your company and build it around that more. much a deeper level of knowledge. So the more track record you build both via that type of customer interaction and via scientific publications that people can read and respect that are peer-reviewed, that's

Starting point is 00:36:40 what gets you that credibility. I mean, that's, I think, some of the best advice I think one could give and also not incompatible with what you could do while in academia in terms of industrial collaborations. You mentioned that in terms of data sharing with companies, you typically don't want to share data from like if somebody's gone to Stanford, then you're probably not going to want to share your data with them, right? But what if it's something that's very disease specifically? You're working with one provider to get info on like diabetes patients versus working with someone on like COPD? That's easy. For example, an easy model might be an app that

Starting point is 00:37:11 gives advice, data-driven advice, to chronic disease management. Something like that, you could possibly get data out of multiple different systems. You'd find the right kind of clinician that clinician is willing to go through their food chain to get permissions to give out the data. there might be some shares involved or some license involved. You know, that's only money and paperwork. But in the end, you could get multiple competing institutions to give you data. Where it gets harder is sensitive subjects, like how much we charge, how much do we get remunerated, you know, quality of care, right?

Starting point is 00:37:42 Things like that. We're super sensitive about that. What kind of talent do you see is, like, in shortage? Say, like, is it the most difficult to hire people with biology background but also has, like, machine learning and computational expertise? or like the other way around with computer science, you know, experts, but you know what they know biology, or is it like the product managers,

Starting point is 00:38:02 or like the clinical experts, domain experts? My unicorn here would be the intersection of two fields. And my critical one is AI machine learning, even analytics, and knowing something about medicine. So for example, you know, a straight CS graduate student could run amazing cancer data set, and up on the top is some amazing gene, and they have no idea what to do next,

Starting point is 00:38:21 no idea what that means, or they're looking through all my lab test data. There's major important lab test shows up there and they don't realize they don't have that insight. That's painful to me, right? I need them to have that insight too. So those are my unicorns. They don't have to be the very best at CS,

Starting point is 00:38:36 but they should be really good at two fields. I would say that biologists who know how to program their way out of a paper bag are also really scarce on the ground. And actually, there's more of them than you might think, but the demand for them is, unbelievably high. Every pharma, every academic lab knows that they need people like that.

Starting point is 00:38:58 So while there might be more of those than the unicorns that Atul was talking about, the demand for them is exceptionally high. Absolutely right. And maybe I would just add, what happens if you don't have this? And you try to substitute this with an A plus computer scientist joined with another person who's an A plus biologist.

Starting point is 00:39:14 The problem there is they just do not know what the other one doesn't know. And unless they're like telepathic, this is not going to be nearly as good as the one person that is, let's say, it's hard to do. It's hard to do. And they can't communicate. They speak different languages. Their mindsets are different. It's like people speaking, they might be both well-intentioned, super collaborative, and they might as well be speaking time Swahili to each other.

Starting point is 00:39:36 I just had one probably naive question, which is, it seems like a big challenge of starting a company in healthcare is getting around the bureaucracy in the United States. What are your thoughts on starting elsewhere? Like Estonia's a blockchain for medical records, I think. We went so far without mentioning blockchain. Shoot. Look, I mean, so other countries have solved a lot, but they're tiny countries, right?

Starting point is 00:40:03 I mean, you know, okay, so you could, they're simpler kind of subsets in the U.S. The VA health systems, 8 million, single EMR system, more or less consistent rules. We have 15 million University of California. We have a total of 15 million patients that we have raw EHR data on. That's every drug, every dose, every vital sign, every lab test result for 15 million people. So that's about 5% of the U.S. population gets some care in University of California. So if you're trying to go after data, that's a pretty big data set. If merely filling out these forms gets you to what you need to get to, my God, that's kind of easy if you think about it, right?

Starting point is 00:40:38 I mean, so it's not that hard. Yeah, you could go to Estonia and Denmark and all these great places that have great data sets, but they're also small. And for impact, they may not have the same impact as it would have in our great. easy healthcare non-system here. I mean, that's the, that's a potential. And let me just add that those countries don't necessarily want to ship their data over to the United States and that there's often a lot of subtleties and working in a particular culture and a particular system that tend to diminish the further way you move from that and it all seems nice and simple. Grass is always greener. And as you get closer, there's a lot of complexities that are very

Starting point is 00:41:18 hard to appreciate from the outside that are multiplied a thousandfold by the fact that you don't necessarily speak the language, you don't understand the culture, you don't have any network of connections. Maybe you'd do in Estonia, but I don't. And I think it's a lot harder than you think. And in fact, the very last A16B podcast I listened to was on the GDPR, right? I mean, they have a lot more privacy rules. You know, I now have to count how many patients we have from Europe in the University of California. I mean, just because they're smaller and they seem easier to deal with it, they have their own set of rules. Yeah. Well, with that, let's Close the session and thank our speakers today.

Starting point is 00:41:49 Thank you guys.

The a16z Show - a16z Podcast: Breaking Into Bio

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