Cyriac Roeding - Part 3: From Shopkick to AI-Driven Drug Development & Clinical Trials

Intro - 00:00:01: Welcome to The Biotech Startups Podcast by Excedr. Join us as we speak with first-time founders, serial entrepreneurs, and experienced investors about the challenges and triumphs of running a biotech startup from pre-seed to IPO with your host, Jon Chee. In our last episode, we learned how Cyriac's move to Japan became a transformative reset button, and how his journey from high school robotics to strategy consulting at McKinsey led to the co-founding of a mobile marketing company during the dot-com boom. If you missed it, be sure to go back and listen to part two. In part three, Cyriac recounts founding Shopkick during the 2008 financial crisis. He shares the strategic insights that helped secure partnerships with Best Buy and Target, and reflects on the challenges of breaking into competitive industries. He also discusses how his entrepreneurial journey ultimately led him to life sciences and biotechnology.

Cyriac  - 00:01:09: We ended up renting a house that was much cheaper than all other places because it was up for sale. And every Sunday was open house. And I can only recommend it, Jon, because it makes you really keep your house tidy. Every Sunday, you got to leave and your house is perfect. So it was a good forcing device. And then I got very lucky and Kleiner Perkins took me in, the venture capital firm, as an entrepreneur in residence. And I was, of course. Sort of in heaven because I don't know if you remember this in the story, but 10 years prior, exactly 10 years prior, I'd been sitting in that meeting room. And I had said, I want to work here. Now I was working there. Here's the problem. I started on Monday morning, September 15th of 2008. And if you recall what happened on that day.

Jon - 00:02:03: Yeah.

Cyriac  - 00:02:05: Lehman Brothers went belly up. It was the depth of the financial crisis. And in that week... All funding froze to a halt in Silicon Valley. And that was my first day as an entrepreneur in residence at Kleiner Perkins, which essentially means here's an office, sit in it and come out when you have an idea that we can potentially fund. But there was no funding. So I expected to get fired any day. So then I came home that day and I had figured out one more thing that's important. Kleiner Perkins. Was at the time the center of mobile innovation for startups. Why? Because John Doerr was not only on the board of Google and therefore Android. But also closest friends with Steve Jobs. And the iPhone had come out one year earlier. And four months before I'd showed up there, the App Store had opened. And Kleiner Perkins and Steve Jobs, John Doerr had publicly announced on stage to the world that Kleiner Perkins would create... A $200 million venture fund called the iFund, only for mobile ideas. So you had both operating systems represented in one place. It was the incredible nexus of everything. And then Matt Murphy, actually the person for mobile at Kleiner Perkins, who was leading the iFund, became my partner that I worked with at Kleiner Perkins. The only problem was they had already received 5,000 applications at the time for funding. I think five of them got approved. And then the financial crisis hit. And no one got approved anymore. And then I joined. So I came home to Angel and I said, okay, I've looked at what they're funding. It's extraordinarily hard to get funded there, even harder than I thought. But unfortunately now nothing gets funded. So what do I do? And I made a decision. I said, okay, look, it's taken me 10 years to come here. This is my dream. I had to go through LA. I had to get a visa. I had to build a network. I had to get in here. I had to move to Silicon Valley. This is my shot. This is my shot. This is my one time. I have to make this work. There's no alternative. So, I got to work. And I tried to find ideas that could work. That made unique sense for the mobile phone. And my number one test for mobile phone ideas. Was does this idea, this business idea, work without a mobile phone? And if yes, I would scrap it. Because it would mean that it's not truly mobile.

Jon - 00:04:54: Makes sense.

Cyriac  - 00:04:55: And that took care of 98% of all ideas. 

Jon - 00:04:58: Yeah. That's a really good litmus test. Like, is there an alternative? Yeah. 

Cyriac  - 00:05:04: So then you're left with like the remaining 2%. And then the next question is. Is there money to be made? So one day I started realizing that. If you look at how Google made its money. Mostly at the time it did not make money by selling things It made money by referring things. In other words, when you click on something online, On a search ad. You are expressing interest, but you haven't bought yet, correct?

Jon - 00:05:37: Correct.

Cyriac  - 00:05:38: What is the equivalent in the physical world of that click? And it suddenly dawned on me that the physical world equivalent of an online click is the act of entering a store. With your feet. You are interested, otherwise you wouldn't be there. But you haven't bought anything yet. Now here's the difference. When you click on a link online, there is a 0.5 to 3% chance you're going to end up buying. If you enter a physical store. There is a 20 to 95% chance of you buying when you're there. It's about 20% in fashion. They think they're terrible at conversion. It's about a 50% chance at consumer electronics. And it's about 95% at McDonald's or Starbucks because you don't walk into Starbucks and figure out you don't like coffee. Or you don't go to McDonald's and figure out you're not hungry.

Jon - 00:06:34: Yeah.

Cyriac  - 00:06:35: So in other words, if you can only get them into the store, you stand a very good chance of making a sale. So that led to the following idea. What if? You could reward people simply for walking into a store without having to buy anything there. And that became Shopkick. Shopkick became the first app on a mobile phone where you get rewarded simply for being present without having to buy anything at a store. And this is the physical world meeting the digital world. It is the atom meeting the bit. So now. That digital overlay became an obsession. But Kleiner Perkins said, okay, look, this is super interesting. However, you need a retailer to start this business, right? Obviously. Otherwise, there is no business. So if you bring us a retailer that wants to do this, we may consider funding you.

Jon - 00:07:31: Yeah. 

Cyriac  - 00:07:32: Now it's the winner, the dark winner of 2008. And imagine me driving around in a tiny little rental car from retailer to retailer in the Midwest at 25 degrees Fahrenheit in Minneapolis, Minnesota, showing up at Best Buy and walking into Best Buy and telling them who had probably just let half of their marketing staff go the prior week, you should really invest into the future. It's called mobile. 

Jon - 00:07:58: Mobile apps. Yeah, yeah. 

Cyriac  - 00:08:01: They had just signed up their first Facebook fan page and thought they were already in the future with that. So then they pushed me through about 30 meetings with 40 executives. And each one had the potential to kill the deal. And it got so close to getting killed because they had a loyalty program already. I said, what if you could reward people for walking in? And they said, well, that's great. We have a loyalty program. It's got 15 million people in it. I said, well, this is a different loyalty program. It goes across retailers. You can earn points at one and bring it to the other. And they said, that's even worse. 

Jon - 00:08:39: Yeah, they're like, we want to keep it in our ecosystem.

Cyriac  - 00:08:42: That's right. And I said, no, think about it. These are less committed people. You're bringing them from other places to your place. You're adding new customers that otherwise you couldn't get. And the person who ran the loyalty program, to her credit to this day, I got her to have a dinner with me. And we literally drew this out on a napkin, like in a movie. And after the end of that dinner, I knew this was going to work. This was going to happen. And she said yes. They said yes. To a letter of intent, Kleiner Perkins said yes. And then the whole thing got funded. And six years later, it was a hard road. We got Best Buy, Macy's, Target, and that was the big breakthrough, and many other retailers. And then we got brands like Procter & Gamble on board, the biggest players in the world, Unilever, all these big players. And the company turned profitable. It ended up having over 20 million users, and it got acquired for $250 million by SK Telecom from South Korea, which produced an 11x return for the lead investor, Kleiner Perkins. Reid Hoffman was a very dear friend of mine for five years. And when we started the company, I asked him whether he would be willing to support it. And he joined the board as a representative of the founders on the board. And the next financing round, he actually turned tables and led the financing with Greylock. Stayed with the whole thing until acquisition. It was an amazing experience with him. So then I stayed for another year and then I left.

Jon - 00:10:22: That is really interesting. I'm like piecing together. There's a couple aspects. That I'm seeing as like kind of a recurrent theme. But I think one, when you first landed at KP and it was almost like a reset moment, kind of like when you were flying to Japan, I have nothing to lose. I have everything to gain. And I was actually just having a conversation with a colleague of mine about this. That aspect of like... Having nothing to lose and everything to gain is kind of like the, it's just like a asymmetric bet. It's just like an asymmetric bet that you need if you find it. And if you can channel that, you need to lean into it. Not to say that that bet is going to be painless. It will be most likely very, very painful. But when you see it, you should seize that opportunity and take it because those don't come that often. And I guess a question I noticed, like when you were doing mobile advertising in your first company and you're working with these big brands. When it comes to getting those big brands as customers, is it a thing where you have to like. Secure the first logo. And then that next logo opens up the door for. Subsequent future brands? Like how, in retrospect, you're probably like, oh, you know, you just kind of moved along. How the hell do you do it? Like, how do you convince McDonald's and Coca-Cola and B&G, here's the future. Let's do this. How does that even happen?

Cyriac  - 00:11:47: Yeah, I wish I could tell you that after the first one, it gets really easy.

Jon - 00:11:51: Okay, so it is not the case. 

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Cyriac  - 00:11:54: So that depends on the type of player. In retail, the answer is absolutely not. Okay. And it's really kind of unfortunate, to be honest, because I think. So many retailers would have a much better shot if they were more innovative and tried more and were more open to new things. Some retailers completely stood out. Best Buy stood out. No, hands down, along with Macy's and Target. They were the big standouts and American Eagle. Those were our first four retailers. They took a bet on something when it didn't exist. And also, I should mention, not even the technology was proven. You probably assumed that GPS was going to tell us where you were.

Jon - 00:12:34: Okay, it's not that.

Cyriac  - 00:12:35: You cannot know whether somebody is in front of your store or inside your store by using GPS. No retailer wants to pay you for being in the parking lot.

Jon - 00:12:46: Yeah.

Cyriac  - 00:12:47:Or even worse, for being at their competitor's store next door in a mall.

Jon - 00:12:51: Yeah. 

Cyriac  - 00:12:52: That means you have to be exceptionally accurate and know exactly they're inside your store. How do you do that? When we started the company and got funded and Best Buy made the call to do this, there was no technical solution to this problem. We ended up using ultrasound devices. To install them in the store. And have the microphone of the phone pick up the signal that was unique to each store to know exactly which store you're at. And because it's a sound wave, it ends right at the door. It doesn't go out. And that gives you the accuracy you need, which means we needed to produce the technology, make it, design it, manufacture it, distribute it, and install it at all the retailers in thousands of locations. It reminds 

Jon - 00:13:40: me of when you were working on the clock. You're like, we need this hardware solution that's just going to, GPS is not going to do it for us. Yeah. 

Cyriac  - 00:13:48: My co-founder, Aaron Emigh, was brilliant and came up with the solution. So now to your question, on the brand side of things, like the P&Gs and the Unilever of this world, absolutely it became easier. And we have the right people on board. One of our people, Alexis Rask, she's brilliant. She was one of the best people ever in this field. And she had previously been at LinkedIn working with Reed. So it's all a small world. But that became easier for sure. But the retailers never did really. And that was one of the problems. Because otherwise, I think this could have been a multi-billion dollar business. Because the retailers, they're very difficult to move. Their economics are tough. And at the time, at least, they weren't used to all the latest news technologies. The brands were much more open to it. So it depends on which players you're talking about. But it was always a very high-level strategic sale, either at the chief marketing officer or even at the CEO level. 

Jon - 00:14:48: Oh, man. 

Cyriac  - 00:14:50: Which means as a tiny startup, you got to reach these people first.

Jon - 00:14:53: Yeah, yeah, yeah, yeah. That is... I would imagine is a incredibly hard task. And, and, you know, I think about like folks who are. Who are on this journey, like early entrepreneurial journey. And especially in life sciences, sometimes you're trying to bag a partnership or collaboration with insert top 10 pharma company. It's a similar fashion where you're like a startup and you're like, all right, I need to go win McDonald's or I need to go win Best Buy.

Cyriac  - 00:15:22: And then in the next industry, you got to win J&J, Novartis, Lilly, Gilead, you name it, the big brands, AstraZeneca. It's very large players again. 

Jon - 00:15:35: And I guess, you know, this is kind of a good a dovetail. After Shopkick, you had a successful exit there. What was it that? Sparked your interest to go into life science. Like, you know, that seems to be a world that you, at least up to this point, didn't like serendipitously run into or didn't run into in your career. 

Cyriac  - 00:15:59: Yeah, I needed another reset button.

Jon - 00:16:01: Yeah, it was time. It was too comfortable. 

Cyriac  - 00:16:05: Yeah. First off, I didn't know what I wanted to do. I started with a blank sheet of paper. And honestly, Jon, I was yearning for input. I was drinking like a thirsty child from the firehose of new information. Because when you are an entrepreneur, you need to give, give, give, give, give. Output, output, output, output, right? And after several years of that, Personally, at least I have the need to rebuild and get up to date. I want to see everything in the world. I want to understand what's happening next. So the first thing we did was Angel and I packed up our little micro children. Who were one and three at the time, and went to Beijing and set up shop in a hotel room in Beijing for four weeks. What could go wrong? 

Jon - 00:16:57: Yeah, yeah, yeah.

Cyriac  - 00:16:59: And then the goal was to meet as many Chinese startup entrepreneurs as possible. And understand the Chinese startup system. Why? Because it was 2016. And I was very intrigued by how the Chinese entrepreneurs did things. And I wanted to learn. And I found fascinating insights there. I started with meeting an entrepreneur who's famous there, who started Meituan. At the time a $20 billion business already. Which is now I think over a hundred billion dollars. And he and I had breakfast on a Saturday morning, and I found him very impressive. And then I went to earlier and earlier and earlier stage entrepreneurs, all the way to entrepreneurs sitting in a coffee shop trying to find their next idea. They didn't have one yet. And I talked to all these people and I, you know, unpacked my journalism background and I had all these interesting conversations. One guy literally showed me a new electric engine for cars that was like 75% less weight. And he was fascinated by it. He took me with him into the parking garage. And I thought either he's going to kill me or he's going to show me. It was a little awkward, but yes. So I saw all kinds of interesting things. I was fascinated with their work attitude. And I felt that Silicon Valley is what I would call perked out. It needs to go back to its roots, especially then. I think it's gotten better since, to be honest. Where at the time the discussion was, let's not place our energy on trying to find 0.1% more clicks on an ad. And put the best brains on that. Why don't we put the best brains on solving the world's biggest problems from fusion? To vertical transportation vehicles. To quantum computing. To biotechnology. And to robotics. And green technology, the things that are actually going to make a difference for all of us in the future, right? And so I made an important decision, Jon. This was six months in. It was all fascinating and fun for a while. And then I started becoming very unhappy. I felt really useless. And I should explain, I am a devoted father. I think being a father is the most important job I have. It's the hardest and the best job of all. I've got three little ones now. Yet at the same time, I realized when I didn't have an official job and I was sort of retired, I did investing, but I thought I was going to be an investor. So I went to Demo Day by Combinator and I went to all these events. And I think I invested in over 12 startups in one year. But I felt strangely empty. And one morning, I remember this very vividly, I was in our house and it was all quiet. The kids were at preschool, nothing was going on, and I was emptying the dishwasher. And I thought, what am I doing? I'm here. Just waiting for the next thing to happen somewhere else and I'm emptying the dishwasher. I mean, emptying the dishwasher doesn't bother me, but only emptying the dishwasher? That does bother me. That doesn't fill me out. And so I decided. I don't think I'm going to retire again. Maybe never. I might start slowing down one day, but I'm not going to actually officially retire. I think retirement is vastly overrated.

Jon - 00:20:26: I think so too. It's-

Cyriac  - 00:20:28: It's makes me worried.

Jon - 00:20:28: Yeah.

Cyriac  - 00:20:30: So then I decided to follow my heart and not my mind in terms of what I was going to do next. And that quickly led me to science. I'm not a scientist, as you pointed out. I'm an engineer and businessperson by background. But I love science. I always loved science. And I happen to believe that science is one of the two things that can move the world forward sustainably. Over long stretches of time. The other one, besides science, is societal change. Example, gay marriage. An unthinkable thing 20 years ago. Weekly, you cannot imagine having a majority for that voting for it, right? 20 years ago, just 20 years ago. Now it's the law of the land and it's standard that you can love anybody you want. Well, it seems kind of duh, in hindsight, but not at the time. These things really move the world forward. But I personally cannot really affect those changes very much. But I can help bring science to the world. So that seemed to be the biggest lever I would have. And so I jumped on it. And I thought, okay. So what am I really interested in? So I basically stepped out of my body for a bit and observed what I was doing when nobody was watching. What was I reading? What was I thinking about? What was I actually interested in and curious about with having no obligations at all, right?

Jon - 00:21:55: Yeah, yeah.

Cyriac  - 00:21:55: It turned out there were three things that I was really excited about. One was... Consumer robots. I'm still fascinated by them. And I'm thinking about humanoid robots that actually have an attitude. Not just a plain tool. It has to have a personality, an attitude, and that makes it interesting. But that was way too early at the time. Probably not now, but then. And then I looked at brain to machine interfaces. I think that's gonna be a massive change. And I ended up helping some guy sitting in a dilapidated building in Berkeley who was shooting microwaves at his own head, trying to decipher his own thoughts. 

Jon - 00:22:34: Oh my God. That also sounds very Berkeley.

Cyriac  - 00:22:36: It was very interesting, actually, but also way too early. And then I was interested in biology meets engineering and software. And on the intersection of those three worlds, I believe we're going to see some of the most fundamental changes and impacts to humanity. Why am I saying that? Two reasons. One is... Normally, the biggest ideas happen on the intersections of worlds that previously haven't collided yet. And number two, if you look at biology, We've made major strides, right? We know there's a genome, we know the alphabet, and so on. But at the same time, we are in the earliest days of really biology breakthroughs. Why am I saying this? Now think about it. We know, for example, the alphabet of life, right? We know that it has four letters. We also know how to change the letters called CRISPR. But we have no idea what the language of life is. We don't know the words or the vocabulary. Now, imagine over time, we are going to run lots of experiments and one change in a genome is going to happen to produce this output and another one, this output. And then this output. And it's really slow progress. And then there's artificial intelligence sucking up all this information. And at some point, we're probably gonna start deciphering the first word. And maybe the first sentence, and maybe the first grammar structure. And how you actually create sentences and paragraphs and maybe chapters. And one day, all of a sudden, it will go exponentially faster. The more we know, the better AI gets, the faster we will finally know what the language of life is. And once we know that... We will not only be able to read the book of life, we will be able to write the book of life. And actually create entirely new life forms. Now, all of that might sound very scary. And to some extent, it also is. But. We have always gone into new areas that are completely scary. If you don't think it was scary to have a, what's called an automobile, right down the street where everybody was using a horse, then think again, right? It was scary. The only difference between all these innovations in the past and today's innovations and future innovations is that the stakes keep getting higher and higher with each iteration. So that means we need to be very careful how we do things. That doesn't mean we shouldn't do them at all we should embrace them we should do them right So now. Back to biology. One more thing that's interesting. Back in the 40s, 50s of the 20th century. We experienced computer chips for the first time and the power of them. But in order to program them, we had to understand every single chip. And each chip was different, right? We abstracted a little bit more and we were able to use what's called machine code, like assembler languages. And then we went from there to slightly more abstract languages, like BASIC, Pascal and all these things and COBOL and whatever popped up. Well, now we've reached artificial intelligence where we can talk to a computer like a normal person and it responds. Guess where we are in biology? The unbundling of hardware and software. Where someone could write code without understanding exactly what happens in the cell. And somebody else works on the cell or something, is not there yet. We're just starting to see earliest incarnations of that, for example, at MIT. Very interesting stuff going on. So we are at the cusp. Of this unbundling. Guess where that led to? In software. There was a company that made computer PCs and it was an amazing device. And then there was a guy who said, you know, I can do the software for you. Don't worry about it. I can take that over. And the company said, fine, go ahead and do that. It's not that interesting to us. And one is IBM and the other one became Microsoft. And so you saw the unbundling of these two worlds happening. And we're going to see a similar unbundling. In biology. And when that happens, Sean, imagine a world now. Let's fast forward a little bit, okay? Let's say 10 years, 15 years, 20 years. Imagine one day we could overcome the biggest bottleneck for all new drugs. What do you think that is?

Jon - 00:27:16: I mean, there's like the pure data analysis probably.

Cyriac  - 00:27:18: Why does it cost over a billion dollars to create a new drug? Why do so many drugs fail in reality? Why? Because of the clinical trials.

Jon - 00:27:29: Clinical trials, yep.

Cyriac  - 00:27:30: They are incredibly expensive. And super slow. And it's an overload of all the clinics with all these trials that are supposed to happen. They all have problems enrolling patients. Sometimes you wait for a year to enroll patients. Now, imagine this world that I'm going to picture for you in a moment. Imagine we could have a digital representation of the entire human body. Every cell and how it functions in cooperation with other cells. It's this most complex system that ever created probably, right? Your human body. Imagine if we could digitally mirror a human body. And now we press a button and the AI generates like 5 million of these people with slightly different mutations and different setups and genetics and races and ages and genders and whatever else you're asking for. And prior conditions. And now you want to run a clinical trial. With a new drug. You're not gonna run it in humans. You're gonna press the button. You select 10,000 people that are digitally created. They're all different. And after 20 seconds, your clinical phase three trial is over. And then you get the result. The result is not good. You get a detailed report what didn't work. You're now taking that input. You're altering your drug. You try it again. You do that 20 times in a row. Now it's three weeks later, you've run 20 clinical trials, phase three trials. That would have cost 150 million each. After three weeks, you're done. Your results show that it should be working. Now you go into real human beings. And the results are, let's imagine this world for a moment. Okay, let's just be optimistic for a second to make the point. Now 98% of all trials are working out versus perhaps today. It's 5% or 10% that make it through phase three, if that. And all of a sudden, not only are you saving massive amounts of money, even more important, you're saving massive amounts of time. The innovation is gonna explode. And that's precisely that moment in time we're in in biology. Where all of these technologies are coming together. And that's why I'm on this intersection. Does that answer your question? 

Jon - 00:29:42: It does. It does. And I think I'm coming from the bench. I'm like a preclinical guy. So like I've always thought about like we're, and obviously the goal is to get into the clinic and we just hear the staggering amount of money that just in time that goes into it and just gets worse every year. But as much of that is daunting, it is also just like, there's a lot of work to be done and a lot of opportunity to fix these problems. And I think life science is just kind of like. Has moved slower than I'd like it to. And we're starting to see that acceleration, which is really, really exciting versus like, I always felt like life science was like a decade or two behind. And we're now starting to see these rapid gains, which is incredible to see and incredibly excited to be a part of. And when you found this spark, like, all right, biology is it. The other two still interests, but like, you're not, I'm going to dedicate my time to biology.

Outro - 00:30:41: That's all for this episode of The Biotech Startups Podcast. We hope you enjoyed our discussion with Cyriac Roeding. Tune in to part four of our discussion to learn more about his groundbreaking work in biotechnology and cancer detection. If you enjoyed this episode, please subscribe, leave us a review and share it with your friends. Thanks for listening and we look forward to having you join us again on The Biotech Startups Podcast for part four of Cyriac's story. The Biotech Startups Podcast is produced by Excedr. Don't want to miss an episode? Search for The Biotech Startups Podcast wherever you get your podcasts and click subscribe. Excedr provides research labs with equipment leases on founder-friendly terms to support paths to exceptional outcomes. To learn more, visit our website, www.excedr.com. On behalf of the team here at Excedr, thanks for listening. The Biotech Startups Podcast provides general insights into the life science sector through the experiences of its guests. The use of information on this podcast or materials linked from the podcast is at the user's own risk. The views expressed by the participants are their own and are not the views of Excedr or sponsors. No reference to any product, service or company in the podcast is an endorsement by Excedr or its guests.