Well, hello everyone. Good afternoon. I hope everyone’s had a cup of coffee and you’re all wide awake and bright eyed and bushy tailed and ready for our event here. So thanks for joining us. I think we might be one of the last events of the afternoon, so we’ll try to wake you up and keep you enthralled with some controversial discussion, and hopefully some interesting points that come out of it. Let me start by just jumping right in, because we’re limited on time and I want to cover a lot of material today. Ursheet, tell us a little bit about building a company and when you have to decide when you’re going to build it for an acquisition versus an IPO.
Well, I think no success is accidental. And so if you’re doing a built to last company, it’s pretty much decided from the foundation in the first year or two. It’s the culture, the values, whether you have the stakeholders that are in it for the long haul, whether you have the focus on getting products to market. And so, yeah, it’s hard to kind of figure out a built to last company if you didn’t plan for it in the first couple of years, and got the right co-founders, investors etc to be with you on that journey.
So Ford motors. Built to last, not built to sell? Trevor, tell us a little bit about your thoughts on research. You know, you founded Mammoth Biosciences, of course, and that was built on cutting edge research. So tell us a little bit about how companies can use research to leapfrog the competition and stay ahead of it.
Yeah, no, I think it’s actually an interesting tension in companies where you’re founded on this innovative research, and then a huge amount of your value is taking that research and actually translating it towards patients, or products, or whatever it is. And I think that one of the things we’ve done at Mammoth is really embraced that tension. And one of the things we’ve decided is similar to this idea of built to last vs or built to sell. If you’re doing built to sell, race towards product and sell products, right.
But if you’re really doing built to last, you need to keep that innovation. And one way of doing that is going back to universities and licensing. And that’s really important. But a key part of it is, do you really keep investing in that research even as you continue going towards the product? And you kind of both stay at the cutting edge of research and the cutting edge of getting close to patients. And that can require additional capital. And it means you really are building to last because those aren’t things an acquirer will necessarily want you to do. And that’s something that we’ve embraced. But it’s a very conscious choice, for sure.
Yeah. And I mean, taking off of that point, Arvind, companies ultimately got to build product and they got to deliver product. At the end of the day, it’s great to get funded and it’s great to hire a lot of people and it’s great to have some great science. But you’ve got to build a product and you’ve got to deliver it. And so how do you keep a company’s mission to market instead of mission to science?
Yeah, I think it comes back to founders that want to create change in the world. And to create change, you actually have to change people’s lives. And that’s through giving them something that does that, or the product. Furthermore, there’s a business model that needs to be figured out that can best bring that value back to the company from that exchange. It comes from the founders, really, and what they want to build. And kind of like what Ursheet was saying, are you built to last or are you built to sell? And built to sell is, oh, we’ll do as much as we can and see if we could flip this company, versus I actually want to change people’s lives.
And Ursheet, you’ve invested in a lot of companies and built a lot of companies in your day, including your own. How do you feel about the mission to market versus mission to science tension?
So I think it comes back to the mission of the founders. Because nine times out of ten, when your company gets acquired, it doesn’t realize its mission. So if you’re really true to the mission – which is why you started the company – do you really want to go ahead and make that impact? Then you want to control your destiny. And a lot of that is then having products and a business model that allows you to go ahead and realize that. So to me, it almost comes down to, even if you want to further science and you want to have the infinite resources to advance science, the most sustainable way of doing that is to actually go ahead and create a sustainable company. And so I look at a lot of global challenges, and it’s primarily entrepreneurs who are going to go ahead and fix them.
You know, it’s like, you look at what are the most valuable companies in the world, or like, at Tesla, you look at sort of the planet health category of problems. And even a small dent on it creates currently the richest person in the world. And I’ve come full circle, because I used to think about a lot of these problems as maybe it’s for nonprofits and foundations and the legacy work. And after serving on a few non-profit boards, I came to realize that government and non-profits are not going to solve these problems. It’s going to be many of you in the room, and folks in this ecosystem, who will support and make things happen in this journey. So I’m just very, very excited when I look at the entrepreneurial energy, the innovation, and just the relentless zeal to make that impact.
Yeah, that’s great. And Trevor, I’d love to get your thoughts too. I mean, companies are built with certain attributes that lead to specific outcomes, ultimately. Both long and short term. And we’ve talked a lot about long term and built to last. And we’ve talked a little bit about what it takes to do that. But it really comes back to what are those attributes that you ultimately embed in the company yourself to have that specific outcome?
Yeah, I mean, I think a lot of it comes down to the original vision for the company. And that means you’re going to attract people that want that. And it goes back to this idea of build to last versus build to sell. And I say that not to denigrate one or the other – companies are appropriate for both in all honesty. It really is just a question of what you are trying to achieve. And I think when it comes to platform companies, for example, that’s where I think it’s like an abdication of your responsibility to build to sell. Because there’s so much potential. And I think when companies are acquired, often that potential isn’t realized.
So if you really think you have a platform that could tackle a thousand things, there’s a couple of things you have to do. You have to build it so that you really are focused on the patient, right? Because if you just do research forever, you’re not going to actually create value for the people it could help. But you also need to make sure that you’re building it with this idea that it is a long journey, and it’s a riskier journey than just going down a single product. You’re going to spend a lot of money building out the platform and doing things that are going to pay off 10 years from now, but won’t pay off tomorrow. It’s a conscious choice and you really have to actually sit down with your co-founders and with the early team and say, this is how we’re going to do this. And we’re all really excited to do it or not. And then you’ll start to hire people like that. And you’ll start to work with partners that think about that. And you’ll attract investors that think like that. And I think it all just comes from those initial early decisions that really do snowball throughout the company.
Yeah, that’s absolutely an important part of building a great company over a longer term period of time. I think a lot of people get lost in the sort of short run outcomes that they’re seeking. The benefit of selling a company for a certain amount or building a company to sell. And they get lost between that and really building a company that, regardless of whether or not they sell it, will have a long term future ahead of it. And so you don’t want to reach a cliff if you will, is what you’re really kind of getting at.
I want to delve in a little bit into the platform comment that you were getting into. And Ursheet, maybe we can start with you. And I’d love to come back to you, Arvind and Trevor. There’s an inherent tension in companies when they start between building a platform or building a product. And that inherent tension causes a lot of issues in how you fund the company, how you hire the company, how you go to market, how you build a sales team. All of those things are somewhat intertwined with this fundamental or strategic decision that occurs very early in the company. Yet you don’t know at the early stage, whether or not the company is going to be a platform or not, and whether it should be a platform. And so, I’d love to get your thoughts, Ursheet, on that as you’ve built a lot of companies. And so tell us what you think.
So I’ve had the privilege of working with a lot of amazing entrepreneurs, as well as learning from a lot of amazing entrepreneurs who we had not backed, who just build those companies independently. And what kind of comes back is at the end, people buy products. So the core of this turns out to be that you may have a platform, but you know, at the end of the day, the platform in and of itself is not useful. It’s the output of the platform, which is the products. And so not having a set of products in mind that you’re building to bring to market makes for a very difficult-to-build platform because then the platform becomes more and more generic over time.
And so innately, it starts with, you want to do 10 things. You can do 10 things in 10 years by doing them one at a time, one a year kind of thing. And so it starts with picking a few key focal points that give you the design parameters for products and the market. And that then helps bring focus on the platform development side of the house. Then as you build more products, the platform naturally expands along the way. And so at the end of the day, the companies are going to deliver value with the products that those platforms enabled. And investors will value that. And they buy into the platform primarily because it’s sustained value over the long haul. It’s not just one egg, that kind of thing.
And so the key tension is that this can’t get retrofitted into a plan. If you have investors who are coming in with a three to five year exit horizon, it’s really hard to go in and then have them sort of think about why they should do something for 7, 8, 10 years. And in deep science, deep technology, it does take, it’s… The best business of all time is the software business, where you can basically move electrons on your PC, move them out across the internet, and money in with other electrons comes into your bank account. But here, we are moving atoms. And any business where it’s moving atoms is just going to have inherently a greater degree of friction.
I’m checking the electrons in my bank account right now. Arvind, what do you think about this platform versus product tension and how you get there? I think, is it the rule that Ursheet’s talking about? Or is it sort of the nature of the beast in the way that it ultimately unfolds? Is that the way you approach every company? Or do you let it unfold that way and you ultimately find that’s the way that it ultimately gets there, but doesn’t really start there.
So I’ve always said platforms aren’t products, products are products. It’s pretty simple. But I think it helps to elucidate the question of what do you actually sell? You sell products. That’s what a business does. The platform produces that in a way that either lowers the marginal cost consistently or increases the marginal likelihood of success in some way. And so the go to market for a platform company is to demonstrate those two things through product. And how you get there is dependent on the industry and all that kind of stuff. But that’s the fundamental outline.
That’s well said. Trevor, you had to deal with this at Mammoth. How did you make the decision? And what were the circumstances under which you made the decision? And exactly when in the company’s history did you make the decision?
Yeah. So I agree with everything that was said, and that you prove the platform with the product. I think something people get really hung up on early on – and this is just my opinion, feel free to disagree – is people really think they have to have the perfect product for the platform from day one. They’re like, oh my God, I’m so scared to tell people what the product is until it’s perfect. And they do all this work and they’re scared to show people oh, it’s this or this other thing. I’ll tell you, our first product on our platform was going to be detecting fish fraud. That was not what we ended up doing. But the whole point is, you go through the exercise and you go through the thought process. And maybe you’re wrong, maybe you’re right.
And you can even be a little bit wrong at the beginning. Because many of the things you’re going to do early on in the company are for the platform anyway. It’s like you’re focused on a product, but you’re so early that you’re really building the platform with a product in mind. It’s later that you have to be really considerate, right? As you continue to go down the product path, it becomes less about the platform and more about that specific thing. But you have time early on. And it’s really more about building that mentality of, what is the product, and how is what I’m doing investing in the platform and the product at the same time? And making considered choices of when it’s not, usually at a later stage in the company when you are more confident. Then, oh, okay, this is actually something that I want to build and that people will want.
Right.
But I think it’s more just adopting that mentality and being less concerned about being so right about the product that is a pre-seed company with a platform.
I think that’s kind of very well said. And if there’s one attribute I’d really highlight, and I’ve come to sort of respect and appreciate, it’s the strategic thinking in terms of you don’t necessarily build the perfect product, right? Like when you have cutting edge technology, you have to realize the limitations of it and the readiness for it. And then there’s typically a customer or market segment for it.
And so as you kind of go down the development path of the technology, earlier versions of it may have smaller segments that will still value it. And you do want to go ahead and keep yourself honest by testing it out. Not necessarily always going into those businesses, but having a sense of what it takes. And at times, a lot of those sort of revenue things actually do validate the platform, and the partnerships, and the ecosystem. And so I’ve always been amazed at how you’ve sort of been able to kind of go ahead and keep that focus as you’ve gone from pre-seed to where you are now.
Yeah.
Okay. That’s great. So now you know it. Platform versus product, and how they work. Let’s talk about some more exciting stuff. Let’s talk funding. We’ve got some investors on board, we’ve got a CEO who’s gone through some rounds of funding. That’s the stuff. Now we know about unicorns, we know about decacorns, and there’s a lot of funding going on. It’s been a frenzied environment over the past few years and not sure if there’s even a standard for funding these days.
We’ve had companies with revenue, companies without revenue, companies with product, companies without product, companies with IP, with some IP, questionable IP, but getting funded. And getting funded at all sorts of different valuations with all sorts of different metrics. And all sorts of different applications of what they think as investors and CEOs are the right metrics. And so having said that, Arvind, you talk a lot about the coffin corner, which is an aerodynamics concept, and I’m very much a supporter of the idea and the thought. And I think I agree that companies can find themselves in the coffin corner. Can you tell everybody about the coffin corner and what that is, and how companies can end up there?
Sure. So the coffin corner is a term that denotes the speed at which an airplane stalls and has its wings ripped off, and goes too fast and has its swing ripped off. And that coffin corner is when those two speeds are the same. And so I use it all the time, in terms of startups that are coming and raising money, and they’ve raised enough money where they’ve gotten traction and speed. But they’re out stripping what they’ve de-risked, and so they’re getting into thin air where if things don’t go perfectly in the round, they’re not going to be able to raise the next one. And you’re going to go from a very high valuation to zero very quickly. And that is something that is also dependent on the environment.
And it’s not just on the execution side and this is what makes it dangerous. The funding environment can change, and that all of a sudden throws all your math out of whack. And so I think that’s where I always talk about raising rounds with cushion, buffer, and really looking at de-risking events that prove your TAM. Because we talk about platforms. Why do platforms matter? Because they increase TAM, total addressable market. And so if you’re thinking about how to go about structuring your next round, think about what is the most basic thing that needs to be de-risked that actually increases the surface area of what you could de-risk. That’s really, there’s a lot more to the coffin corner. That’s the one minute version.
Absolutely. And we’ve seen a lot of well funded companies kind of blow up like that.
We’re going to see more unfortunately. And I hope, I hope not. And it’s always sad for me to see. But I think what happens in a low interest rate environment is the money has to go somewhere, and then it creates these issues. And so, the best thing founders can do is know that there can be too much capital.
So prudent fundraising, as opposed to extravagant fundraising, is-
Having a plan and knowing what it does. So that way, when you get to the other side that you’ve, de-risked something that allows the next investor to understand what they’re investing in.
That’s great. I’ve got just another minute and a half left. So I’m going to switch over to a couple rapid fire questions. So here’s the rules. You only get one sentence to respond to this. And so hopefully you guys will come up with a great sentence that shoots the tagline. Let’s start with you, Trevor. How do you trust a VC?
It’s a conscious choice. And it’s a choice you make. And that’s just your gut feeling honestly.
Great. And, Ursheet, I’m going to ask you the same question. How do you trust another VC?
You know, aligned to the mission of the founder, and economic interests are aligned.
And Arvind, how do you trust a founder?
How do I trust a founder? I get to know them and understand what drives them to do what they do. Because doing a startup, especially in our field, is so incredibly difficult.
More than one sentence. I got to cut you off.
Oh, shoot. Sorry.
I’m so sorry.
No, no, no. I didn’t hear that part. One sentence. Dammit.
So sorry. The rules are the rules. I’ve got to play by the rules.
Fair enough. Fair enough. I wasn’t listening.
Ursheet, what does it really mean to be a founder with a mission?
You know, it’s the life, the company life, it all kind of blends into one, and then the mission becomes a platform that you bring people along with you on that end.
Okay. That was one sentence. That was a Herman Melville sentence. But it was a good sentence. Trevor, what does it mean to be a founder with a mission?
I think it really means that you wake up every day excited to work on that, and to recruit other people, importantly, to work on that as well. Because if it’s just you, you’re only going to get so far.
Excellent. And then now the last question for all three of you. One word, not one sentence, is all you get. Over the next three years, what’s the new upcoming sector that everybody is going to invest in? Let’s start with you, Trevor. No bias.
No pressure.
I think urban, and I will say human and planet health.
Arvind.
Yeah. Biology and reversing climate change and curing disease. Yeah. That’s more than one word.
We have a rebel here amongst us. Well, thank you very much everyone. And I hope we made it fun for you guys. And we kind of gave you some of the insights into what our esteemed panel brings to the table here with their experience and their backgrounds. And so thank you and really appreciate your attention late in the afternoon.
Thank you. Thank you all for having us.
