James Evans - PhenoVista Biosciences - Part 2

Intro - 00:00:00: Welcome to The Biotech Startups Podcast by Excedr. Join us as we speak with first-time founders, experienced scientists, serial entrepreneurs, and biotech investors about the challenges and triumphs of running a biotech startup. Gain actionable insight into navigating the life sciences industry in each episode as we explore the business of science from precedent to IPO with your host, Jon Chee.  

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Recap - 00:01:10: In our last episode, we spoke with James Evans about his childhood and the lessons he drew from it, his Belgian Lab experience, and his move to the US to pursue his passion for imaging research. If you missed it, be sure to go back and give it a listen. Today, we're excited to continue our conversation, diving into James' time at MIT's Whitehead Institute, finding the quickest way to the most effective data, his path to entrepreneurship with PhenoVista, and the culture shock of leaving academia for the private sector. So sit back, relax, and let's get started.

Jon - 00:01:44: After your time at MIT and working in Paul's Lab and getting all this experience, did you just wake up one day and you chose entrepreneurship and decided to leave this gig? Like, you know, that gig sounds awesome. I would imagine something lit a fire. What did that for you?

James - 00:02:00: Yeah. Well, so Paul made the decision to move to Singapore. There was a lot of collaboration that was great to be a part of between MIT and Singapore the last few years that was at MIT. Yeah. So Paul had the opportunity to move to Singapore and head up the biology department there and I helped with the transition, but I'd already made my move from the UK to the US and frankly speaking, Singapore is extremely humid and my hair gets really, really, really frowy. I couldn't afford the hair gel that I would need to survive there. So I thought honestly, like it was time for me to go out on my own. I had, you know, a great opportunity working with Paul and, and like I said, a really prestigious, incredible environment for 10 years. I looked around and saw other people who had stayed in that environment. I was like, I can either choose and just stay in this environment for the rest of my career or go out on my own. And I decided to go out on my own and dude, it was hard. Like I remember just walking the streets, like literally walking the streets, thinking, how am I going to pay rent? And just trying to get little gigs with this company and that company. And then a friend of mine introduced me to a, to a VC funded Biotech Company who was looking for help with high content. That became like half my paycheck a month. And I ended up working for them for a couple of years and helping them get high content up and running and helping them interpret the data. That was really good because it helped me pay my rent, but also it helped for sort of the education to sort of how science is done in that environment. And I worked alongside a lot of scientists there. And then there was a particular senior guy who we used to work with, who ran the group and he was like, you know, an industry veteran and he was in the best way possible, a total bastard. You would present data and he would be like just tearing it apart and you'd be like, I hate you. But it would make you like have to make it ironclad because you get into this and then like the next time you'd be okay, well, how is this guy going to like take it apart? So you'd start defending your data, making it impenetrable to criticism. And it's just great. It just makes you stronger. And again, that's another thing that translates now is that it's like we're presenting data to the client. You're like, well, what's the client going to say about this? Is they going to have questions about this weird trend there? And so like, let's explain it. If we can't, then we can't. But like put yourself in that position. So that was great. For a time there, I lived in Manhattan. I had a client down in Manhattan one day a week and then I would drive up to Boston and there was always a Tuesday morning meeting at 9 a.m. And so I'd have to leave Manhattan at like 5 or 6 a.m. to drive up. So by the time I got to this like 9 a.m. meeting to review data with this very particular director. I'd be like sleep deprived and grouchy from driving. So I was just like fired up and ready for a fight. So it was always pretty funny.

Jon - 00:04:46: The baptism of fire, it sounds like.

James - 00:04:48: Yeah. Yeah. I mean, it's good. And I made lots of friends that I've kept in touch with over the years. I mean, yeah, I was working for a bunch of different companies. One of my clients was based there in San Diego and had just been awarded a contract with the EPA to this ToxCast screening. I needed somebody to build up that capability and execute on that contract. So within a week, I'd moved to San Diego. And I like surfing. I've been surfing for 20 years or something now. Mostly, you know, started surfing on the East Coast and going out of Puerto Rico in the winter and doing that with friends at MIT. And so I used to come out to San Diego whenever I could. So it was a good opportunity. And yeah, I moved out here and worked on that contract, built up a team. And it was again, really good experience. And that's where I met Tony, who was the co-founder of PhenoVista. He was in my group. And we saw an opportunity to start our own company with our own rules and sort of focus and everything. And yeah, so Tony and I started PhenoVista end of 2014. There's just the two of us, you know, both of our significant others had proper jobs. So they agreed to let us go back to sort of post-stock level earning and try and write some grants and see if we can get some momentum going. And I built the first website. We signed a lease in October, November. We moved in the end of November. We had no clients. We had been talking to a couple of people, but we had no paying clients at that point. And we just had a runway. We were like, Okay, we're going to pay ourselves X per month. We got our rent to cover. We have like a year of runway. Maybe. And then we started making money in January. When I say making money, we were making like a couple thousand dollars. You know, it was like enough to cover our rent maybe. But by March, by the springtime, we were cash flow positive. We were paying ourselves and paying the rent and gathering the money. We didn't have time to write grants. We were paying customers. And then we ended up hiring a first full time employee within a year. So October 2015, we hired Erika Martin, who is still with the PhenoVista thankfully. She's our number one employee. She's our senior director of Lab operations. So she was a High School Intern at the Imaging Core Facility at the Whitehead. So she had gone through from ground up, you know, microscopy training. And she's just been, you know, a huge part of the culture of PhenoVista and trains and managing. I mean, she does so much. And yeah. So for about two years, it was Tony, me and Erika. And one of the funniest things was just like, when it was Tony and me, we had this, you know, shared office and I would do the music and I would do all the biz development marketing, you would do all the Lab work. I'm bothered even Spotify, cause I wasn't aware of like Pandora or whatever it was on. And we'd have like bands that we both hated. So whenever one of these bands would come on, we'd add it to the post-it note on the back of the door. It would be like, no fly lists. This cannot come on. I forget. And we had this like tissue culture room in the back of the Lab. Cause we had like this basement and found these hoods that we thought, oh, there's no way these are going to work. They're going to need like maintenance and stuff. But we're going for like 500 bucks each and they worked. But we had three of them crammed in this like little closet. And so in the summer, it was super hot in there. So Tony's going in there doing tissue culture and he's like stripping off the light, you know, you know, he's work appropriate. But yeah, it's the way you can do it. Other than that, you just come out like dripping in sweat. Oh my God, he's gross. So then when we got Erika, that was our first kind of like, okay, well, we're going to have to get a little bit more professional, but still, you know, it was still pretty friendly. But you know, what was really crazy just from an organizational perspective was miscommunication. Because when it was Tony and me, there was one line of communication. If you're not doing it, the other guy's doing it. You know, there's nowhere to hide. When there's three of you, you suddenly go from one line of communication to three lines of communication. And the rate of error is way higher. And we would drop balls, then we would get mad at each other and there'd be tears and gnashing of teeth. And so that was really the start of like, okay, well, we need to put together a system. We need to have like process development. And we used to have these big whiteboards of truth. We'd have like the two massive whiteboards with like all the projects that were going on and what's happening each day. And that was really the start of what we've developed at PhenoVista, which is a lot of internal processes to make sure we don't screw up and we don't make a mistake in terms of the details or forget to do something or completely forget about a project, which back in the day, it happened. I remember going, hey, how's that project going? And he's like, what project? And we're like, it's supposed to be, you know. So it is definitely a multifaceted problem running a scientific business for sure.

Jon - 00:09:19: Totally. And I have so many directions I want to go with and pull on the string. So like I'm thinking about this chronologically, you know, you're at MIT, which is academic, has one type of Lab work environment and processes there. And then you go into a venture backed company for profit, which has a bunch of different processes there, clearly with one of the managers who has his own process. And then you go from Boston, then you go to Manhattan, and then you go to San Diego, and you end up starting your own business and fulfilling the grant, moving from academia to this venture backed startup. Obviously, defending your work was one aspect. What were some other hard lessons learned or like key takeaways when you made that transition?

James - 00:09:59: So I was working alongside a lot of really talented scientists and this VC backed company would obviously have changes in direction or priorities or funding or whatever, but you would just see some restructuring that went on and it just seems so unfair having not been used to it, right? You could be like, but these scientists are really good and they work really hard and you're just canning them all. And now fast forward, you just realize like, it's not about how hard you're working, we just have a change in priorities. And, you know, sure enough, these people went and got jobs elsewhere, you know, pretty quickly. It's traumatic, but it was kind of like, oh, wow, this is different, you know, because in academia that just really doesn't happen. People are only like go if they did something really terrible or really bad. So, yeah, but this is much more based on the company's need for talent and sort of changing that to the changing needs. That was probably the biggest cultural or sort of organizational difference that happened for me.

Jon - 00:10:58: Absolutely. And I had a similar experience too. It's just like a shock to the system coming from academia and then going into private sector. Obviously there's like a weather difference and, you know, San Diego surf is great when you went to the West Coast. What was your experience moving from East coast to West Coast and working on the Lab on the West Coast? What was that like?

James - 00:11:15: It's funny, I mean, I think. There is a stereotype of West Coast folks tend to be maybe a bit more upbeat and sort of positive. And I guess it's hard because there is a lot of fluidity and a lot of people move back and forth and everything. But for work now, I travel back to Boston pretty frequently to meet with clients. And I should say all our clients are lovely. But there is a sort of a hard edge. And I think California tends to be a little bit more sort of like, let's look at the Cup Half-FALL a little bit more in general. But I think even within PhenoVista, I'm really proud of how diverse our company is, both sort of culturally, but also in terms of the type of people and their personalities. So, you know, we don't have just a bunch of people thinking the same way. You know, you definitely have people with different perspectives. And I think that's really important. And then I can see that being important across the industry too, with companies having East Coast, West Coast sites and so on. But definitely, it's a lot easier to balance, you know, doing 10 years in Boston and then having spent 10 years in California since I'm older and got family now in California. I didn't have that back when I was a postdoc. It was all just about the Lab grind. So, you know, that worked out well for me because I could really sort of pull myself into Lab life during my sort of 20s and 30s. And then now, although I still work long hours, it's a lot easier to immediately switch from work mode to spending time with the family, get run down to the beach after work or something. You know, it's a lot more

Jon - 00:12:44: Yeah, I completely agree. My wife is from Southern California and we actually just came back from a trip. Can't say I'm a surfer, but I can appreciate beaches. And something that really resonated with me that you mentioned earlier was your wife and helping with, you know, the original grant writing and having the real job. And Chloë, my wife has had a similar impact for us in Excedr and just how important it is to have someone who is supportive of it. Cause I don't think it would be, at least Excedr, be possible if Chloë wasn't there, especially in the early days when, you know, like exactly what you said, like before you have a client, it's so difficult.

James - 00:13:18: Yeah, it sounds a bit cliche, but I wouldn't have started thinking of this if it wasn't for my wife. Like she's the one who believed in me and gave me the support. And then I get a lot of free advice from things she brings home from her day to day job. So that's been really helpful from a sort of an organizational perspective too. But yeah, I mean, running a business is incredibly hard. I mean, it's the hardest thing. I mean, it's like grad school hard. You know, we were talking earlier on about like solving problems. You solve a problem and then the problem evolves and you got to solve it again. It's a little bit more like for me, having small kids, like you do sleep training and you're like, oh yeah, kids are sleep trained, done and done. Then they grow out of it and you got to do it again. And then it's the next thing. And it's a lot like a business in terms of the problems you solved when your company was six or eight or 10 people. Doesn't work when your company is 25 people. And you know, I haven't got to 50 plus, 300 plus. Like I only imagine like for me, the biggest problems are the science and the imaging, the computational aspects, all those things. You know, that's my wheelhouse. Like, and then we have lots of scientists who can tackle those. It's not easy, but we have the skill set. The tricky things are where we work with people like yourself as getting access to capital to get the instrumentation we need to like managing HR benefits and stock options and like, you know, dealing with their HR issues and, you know, this kind of stuff. That's horrendous. Yeah. Having support for that. Yeah.

Jon - 00:14:41: Again, it's like no one tells you about all of these things beforehand and before you decide to embark on it.

James - 00:14:47: You wouldn't listen if they did. I mean, like, because you wouldn't know that this is the classic is like, if the science is good, everything else would be fine. Yeah, I mean, the science does need to be good, but it's probably 10 or 20% of the problem. Like science does have to be absolutely good. So does the accounting, so does the marketing. So do all these other things, which you never even thought about, you know, until you start doing it. Insurance, you know, crap like that. It's uh...

Jon - 00:15:13: Yeah. That’s exactly the same feeling I felt too, and I still continue to feel. And I guess, you know, the problem solving what you're describing is exactly how I feel about it too. It's like multi-variable and the thing mutates. And I was playing the new Zelda with my wife and there's a lot of like these temples and shrines where you go in. It's a problem that yes, there are variables, but there's not a growing amount of variables. You can solve this thing and then move on. But with business, there's emotions involved, you know, time pressure. And when you're trying to focus on the science and then you have to learn, like you said, insurance, it's like feel like very disparate things. So I completely, you know, I'm getting like PTSD thinking about it. When you were just starting PhenoVista, I'm zooming out. What was the big driving force for you and your co-founder? Was it an instance where you saw a huge underserved market where you thought we can be the ones to fill this need? Or was it something where it's like, well, the current options are subpar and we can do it better. And, you know, I don't want to put words in your mouth, but like, what were you thinking when founding PhenoVista?

James - 00:16:19: It was a combination of those things, to be honest. I mean, I think the big thing looking back on it now and having some perspective on it, this is like almost 10 years ago now, IPS-derived technology was still relatively new. And we were using IPS-derived neurons back when we were doing this work for the EPA. Fujifilm was really the only provider of those cells at the time, but people in biotech and pharma jury was still out on sort of whether these were good model systems. And so when Tony and I started PhenoVista, we were like, okay, well, Tony's really got great hands in the Lab and he can make cells jump through hoops. So when we first started, we were doing a lot of like bake-offs between human IPS-derived neurons and like rat primary cultures and things like that. People were like really wanting to see how the data stacked up and we don't do that anymore. Like people are like, okay, yeah, IPS all the way, let's do co-cultured astrocytes, let's do tricultured microglia, let's put in some disease phenotypes, let's do it in 3D and make it fun. People are like way more pushing the envelope now and sort of the marketing speak was the democratized access to phenotypic screening. And yeah, it worked out to be pretty good timing. We started off with Neurons and working with Fujifilm and we looked for other providers and that there are more providers now that are available, but Fujifilm has a really good quality product. And so we definitely still work a lot with Fujifilm.

Jon - 00:17:40: Awesome. And when you and Tony were just starting, like when you were conceptualizing the business model, were you drawing upon a lot of like your core facility, Grad School experience in Vala and then modifying it and doing it the PhenoVista way.

James - 00:17:53: I mean, honestly, it's a funny joke that business model and business plan, we never wrote one. Just did it. Just mapped out, like, okay, look, this is what we're going to pay ourselves. This is the rent. This is how much time we've got to earn X, Y, and Z. And we had to be really opportunistic, because we didn't know whether this was going to work. And we weren't in a position to turn down any work. So we took any job for any money we could in the first six months for like, we'll do whatever. And I think that's the difference between being bootstrapped versus sort of venture backed or something like that, where you have a mission and you stick to it, whereas like bootstrapped, you're kind of like, let's see where this takes us and go. And so what we ended up with five years after that is a business model that's forged in the real world, right? It's market validated. Like, people ask us, so you cash flow positive. You're like, yeah, because if we're not, we're not a business. That's where you've got to be. So that's how we ran the business. Very sort of capital efficient.

Jon - 00:18:55: And what compelled you to build it in the bootstrap path versus your previous role had a venture backed experience? Was there a impetus or a choice, a cognizant choice that you made?

James - 00:19:06: Well, you see the companies I worked at previously that had venture back, I wasn't involved in any of that fundraising, right? So I had no skillset or network. So it was really necessity. I was like, well, you're going to do it the old fashioned way. And because that's all I know. And I didn't have like a year to go out and raise money and I didn't have a track record. I mean, maybe I did, but I didn't feel like I could go and do a road show and raise funds and to be honest, like a lot of companies had previously tried to do high content screening or asset services and not been able to make it work. So it would be a hard sell. So, you know, it was really just sort of set the bar really low in terms of like, okay, what are we going to try and do and then just build on it? And that's what we did. We just managed to sort of get cash for a positive in the first year, hire some people and then just grow organically, get some business development help in Boston after a couple of years. And yeah, I know that started to really sort of grow our revenue and then took on some outside investment in the last couple of years and helped us scaling the growth. And that's where we're at right now is really keep the growth accelerating and start working on things that we never even thought of really. I mean, I guess we did the video thinking about, you know, margins and EBITDA, all these kinds of things and getting a lot of the support that we never had in the first few years, you know, like having financial professionals full time on the staff to work on cost accounting and forecasts and things like that. So it's almost like a real company.

‍Outro - 00:20:35: That's all for today's episode of The Biotech Startups Podcast. We hope you enjoyed our insightful conversation with James Evans, covering his experience at the Whitehead Institute, his move to San Diego, his roller coaster journey towards entrepreneurship, and the joy of building a culture at PhenoVista that respects work-life balance. To learn more about James' journey, be sure to tune in to our next episode. 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 three of James' journey, where we will cover his take on solving the growing pains of a startup, what it is like working as a bootstrapped company, and the differences between working with small companies and large corporations. The Biotech Startups Podcast is brought to you by Excedr. Don't want to miss an episode? Make sure to search for Biotech Startups Podcast in Apple podcasts, Spotify and Google podcasts, or wherever you get your podcasts and click subscribe. To learn more about our leasing program, visit our website www.excedr.com We provide research labs with equipment leases on founder-friendly terms to support a path to exceptional outcomes. On behalf of the team here at Excedr, thanks for listening