Mark Kotter - bit.bio - Part 3

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 spoke with Mark Kotter about his transition from his PhD studies at Cambridge to the Medical University of Vienna, where he became a resident in neurosurgery and ran his own research group. We also touched on his experience at the Max Planck Institute for Experimental Medicine, his return to Cambridge, combining clinical practice with research, and his shift from academia to entrepreneurship, which led to the founding of his first biotech startup. If you missed it, be sure to go back and give part two a listen. In part three, we dive deeper into Mark Kotter's journey from academia to founding BitBio, discussing the challenges and breakthroughs he faced transitioning into entrepreneurship, as well as the pivotal collaboration with the Stem Cell Institute and its impact on BitBio. We'll also touch on the contrasting demands of academia and entrepreneurship, and the impact of bridging scientific discovery with Entrepreneurial action in the life sciences industry.

Mark - 00:01:27:

In some ways is similar, in other ways is completely the opposite. It's really that technology that we developed together with other groups in the Stem Cell Institute, which rendered the generation of new cell types in pre-abortive stem cells deterministic. Now, deterministic is a big word, and I actually do mean it, i.e. What we've learned and confirmed in BitBio is that we have deterministic control of a cell identity using this paradigm. So the base technology really is using the special properties of genomic safe harborsites to control gene expression in eukaryote, especially human cell systems. And what we found was if you have exquisite deterministic control over gene expression, which is very difficult. In human pre-abortive stem cells, that translates. To having complete control of the cell identity. So it's a huge leap that was completely unexpected. We didn't expect that by improving gene expression, we could end up in such a paradigm. And the academic lab validated this across two different genetic backgrounds, peripheral stem cell backgrounds. And in three different cell types. And at the beginning, we were totally skeptical. And at the end of that journey, we really felt we had something. The way that was extremely painful because we nearly ran out of money. It always took longer. We didn't know where to go. People were thinking, this is crazy. What are you doing? The then new head of the Stem Cell Institute said, you're not doing stem cell research. You shouldn't be part of the Stem Cell Institute, which I found very offensive. But now I think he's probably right. I still think it's not stem cell biology, but we should still be part of that. So at the end of that period, which really was, again, a life or death experience in some ways of the academic lab, we had this thing. And we tried to communicate to the outside world how to publish it. And the first journal didn't accept it for publication. And the back channel from the editor was, we just don't believe you. So I knew that. It was true because we saw it on a daily basis. I know the moment when we discovered it, but the outside world wasn't ready for it. So then I basically, for example, internally as well, we went to the translation office in the university and said, look, we've got this thing. We think that's kind of cool. Could help manufacture cells. And they evaluated it for 18 months. And then they said, no, they don't want to patent it. And then I said, well, I'm going to do it. And that was the first step. And then it was very quickly became clear that there was no licensing opportunity because nobody understood this technology. And then one of our earliest angel investors who still is on the board with Bio, Wesley Janeway, said, look, you know, you might want to think of spinning out a company. So went off to Toronto, came back, joined the Cambridge Business School Accelerator Program. And again, you know, that led to a complete reprogramming of my whole bio internal landscape. So back to your question. It's still a science endeavor, especially at the early stage. Science is the big thing that needs to solve. But the way you go about it is completely different. In academia, it's about individual focus. You do the work. You trust nobody because you need to figure out and be satisfied yourself. If you do that in a company, you're toast, essentially. You have to collaborate. You have to delegate. You have to. Enable others to do the work or verify or falsify the work. So that's a huge difference. In academia, you know, you are often extremely conservative. In fact, you can only jump as a junior PI to do something outrageous by, you know, using funds in a way that they weren't purposed to. So I had some slush funds that allowed me to start that project. It was without ties. All the other funds were for projects where I already completed two thirds and had the data to show that I can complete this. So nobody wanted to fund this either. In the startup world, if you hit the right VC, you can raise funds based on a concept. Maybe even you could call it a dream. Need some data, of course. So that's completely different. In academia, you have this forcing function in a lab, which is called science. So you've got multiple characters often, and they can be adults, which is either or not. You try and keep your lab together and recruit so that people fit together. But I've seen labs where that is not the case, and they can still be very successful. In a company, you do that, you're toast. It goes down very quickly. I made a mistake at the very early moment in time. I said, I'm going to be the scientist. I'm going to get someone who helps with the business. Yeah, great, you've done it before, let's go on the journey together. And then it hit me six, nine months later with realizing that the perspectives were completely different. I was long-term perspective. They had a shorter-term perspective. That leads to incredible tension because the objective of what you're building is very different and what you're building is very different. So that ended up in tears. I had to remortgage the house, buy back the company before we then went on to the next investment stage. So the rules of the game are very different. People... . Are incredibly important. If you think about what is a company, it's a bunch of people. And if you don't realize that, then things go awfully wrong. And then on the journey, I would say the problem set also changes. You know, at the beginning, you're solving a scientific puzzle. And now in BitBio, I would say the science has proven them out. It's no longer, there's no question around it. Now you are solving the problem of financial markets through strategy. We have built an organization that is extremely sophisticated in terms of the way it's managed. But at the same time, it continues to have this drive. Bitbio, if you enter the building, you'll see it's a movement. People are very communicative. They share their opinions. That's not for the faint of heart. In some ways, it's connected. But in some other ways, you have to change everything again in order to make that transition.

Jon - 00:08:42:

Absolutely. And I think for me, it's rare to have these conversations. And for everyone who's listening, Mark is still, you know, doing, he's like still a professor. So like, there's a world of everything you described, you know, seems very different. They're kind of almost opposites in a lot of ways and treating it as such, because I think you get into hot water, like you said, you're toast if you treat it exactly the same. And something that stood out to me that you mentioned, too, I think and just not talked enough about is, you know, also plastic academia, but is particularly important on the entrepreneurial side, is the co founder alignment, you learn it the hard way, like when there isn't the alignment.

Mark - 00:09:25:

Yeah, it wasn't nice. Yeah.

Jon - 00:09:27:

It's not pleasant. And it's not pleasant. And I think sometimes when people are so excited to bring this new technology to market, or at least to bring it out of the academic realm, that you might rush, it's like, time is of the essence. And not to say that you just can't get done quickly. But you need to have that introspection to make sure that there is that alignment, or else it can tear you up from the inside out. And something to is, is like, you know, remortgaging your house is, again, not trivial. And it's scary. It's like very scary. And so for any founder coming from academia or not, they're this thing where you just like take your time and just take your time.

Mark - 00:10:07:

I wouldn't say don't do it. You know, avoid some of the mistakes. I think that would be a good choice.

Jon - 00:10:12:

Yeah, yeah, yeah, exactly.

Mark - 00:10:14:

Yeah, I think you've got to be very explicit. You need to think about the technology, of course, if you're a scientific founder. What's the potential? And is this something that you develop and sell? Or is this something that you develop to build? And that's foundationally different in terms of the timelines that you need to think about. And there's impact on how you build the company. So there are a few things that you really need to think very hard about when you transition from science into creating a company. Obviously, you need to know the science and you need to understand its boundaries. And then you need to decide what's the purpose of this. So you create maybe a mission statement. And that's super hard. I mean, you read these mission statements, but actually it's a process. It never ends. And you articulate something and that shapes the company. And as the company takes form, the mission might have to be changed or adapted. And sometimes in my case, I didn't understand what I said. And over time only, I realized what I've created and how richer that is than I initially thought it would be. So this purpose is a question that you always have to and continuously ask. The second question is the objective. Are you building something to sell it off? Or are you building something that potentially has a chance of standing on its own legs? And that creates very different perspectives and strategies. If you sell something off, you want to go as fast as you can to create that moment where what you've done is attractive. If you're building something to stay, you have to go, I would say, a lot deeper. Deeper into the technology, broader, but you also have to approach company building very differently. So I think culture becomes the most important aspect in that context. And so a value system. Again, people say, okay, these values on paper. No, but you need to create them and the company needs to follow them. If you just put something up on a dashboard or something like that, and you don't implement it, you don't have a culture. That's an exercise that's completely in vain. But if you have built a real culture, some interesting things happen. People recognize this very strongly and it creates its own dynamic. And the organism grows having that at the center. And it spits out the people that don't fit. It's a self-regulating system. And it gets much bigger than you thought it's going to get. It becomes much more important. So you're sort of breathing some sort of life, some sort of soul in the organization. And you have to make sure to maintain it. So that's another strange thing. And then, of course, this triggers into alignment. As you grow, the noise gets louder. You have to align people, et cetera, et cetera. And I must say, I'm not a very good manager. I think my talent is a little bit more on the leadership side. So you have to understand where your gaps are and then find the individuals that are able to complement you. So I've got a rockstar CEO and president. She is on top of everything. In some ways, we're the complete opposite. I'm not saying that I'm sort of not on top of everything, but I'm sort of more looking at the three-month to 10-year horizon. And she's very much in the sort of today to end of year horizon. And that makes a completely different way of looking at the world and operating. But knowing that you can complement each other, create some really magical things. And just one thing to consider. I mean, so many facets, isn't there, building a company?

Jon - 00:14:23:

Absolutely. And there are so many directions I want to go with this. And the first thing that comes to mind is about the culture and how critically important it is. And I think a lot of the time people talk about culture in the abstract, and it almost feels floofy and almost just like not really firmed up. But I agree with you completely. And it's like, no, it is very, very real. And it's not just about stating it, but it's like living it. You have to live it. And this is my opinion now. I don't think there's a right culture. There's just a right culture for you and your organization, whatever that may be.

Mark - 00:15:01:

Exactly. But if you don't have one, there's a void. And then something goes wrong with your strategy and things frizzle out. I mean, who said culture eats strategy for breakfast? I think it's totally true. I mean, you can pull through incredibly deep times of darkness if the culture is right. And of course, every company will have their ups and their downs and their terrifying moments and their... Hopefully more exhilarating moments. Everything, of course, is amplified if you build a company. But the red thread for all of that is culture.

Jon - 00:15:43:

Totally and something that also stood out to me is about your comment about like the culture keeps those like the believers in but spits the non-believers out. And I think that's really important too. And the spitting out motion is not to say that there's any with those individuals. It's more of like, hey, it just doesn't fit with our culture. But there's a fit elsewhere, I'm certain, at another company or organization, just not here. And I would even extend the idea of culture for an organization to not just like internally for your team, but also for investors too, where whoever the investor is has to understand what are the cultural values of the organization. Because I think a lot of people in, you know, maybe again, kind of like a shotgun wedding, you pick the investor too quickly. But there wasn't an alignment on the culture and exactly what you said, the objective of are we in this two for 10 years, maybe longer, 40 years, 50 years, And if there's an investor who says no, no, no, no, or I mean, maybe it's not even spoken, but you don't know that the investor is like I need to have an exit in five. That's a conversation you probably don't want to have.

Mark - 00:16:51:

That's cripples companies. Yeah. I mean investors become very much part of the company. It gets a bit maybe easier in terms of the time horizon when you approach our stage. We're not too far away from a potential IPO. So I think those timelines become a lot more tangible for generalists. But you have to find investors that sort of see what you see to really enable the company to grow the way you see it growing. Now, I don't want to say that founders have the only right perspective on their company. And I think certainly there are certain types of investors that think other. They think, you know, professionalize management as soon as possible. But the data suggests that the large companies are built by founders. And when you look at the outcomes, founder-led companies, in many ways, especially in tech, in biotech, it's not that frequent, have better outcomes. And I put this down to the amount of pain that you are happy to take as a founder, which is different to when you recruit. And as a founder, sometimes you know you have to stand up even if an investor wants you to go left. And you know that the company needs to go right, or you have a sense. Rarely, I would say professional management will do that. It needs enormous amounts of guts to do this. And I think those scenarios are where the big outcomes are possible. So the relentless focus on the mission and the purpose of the company. And that then creates flywheels. At least that's one perspective.

Jon - 00:18:48:

Yeah, yeah. No, no, exactly. Exactly. And look, you know, as a disclaimer for everyone, our opinions are our opinions. And like there are a million ways to make a million bucks. They're just different. I'm on the same wavelength as you. The reason why I keep going back to your comment about remortgaging your house to do a share buyback of your co-founder, it's that level of seriousness that founders have that is hard to replicate. It's not for the faint of heart.

Mark - 00:19:13:

You need a lot of resilience.

Jon - 00:19:15:

Yeah. And the reason why that comes back to me is it really resonates with me because the earliest days of Excedr, the first piece of equipment that we bought was with my life savings and just went all in. But again, when you think about there's a tolerance for pain and a tolerance for risk, and that is just really, really hard to replicate. Not to say that outsiders don't have the ability to do that, but it's just different. And finding people who have a similar, again, you kind of talk about the culture within BitBio, you'd go in and you're just like, oh, BitBio is a very special place and very unique. It's probably because it stems from the DNA in which BitBio was founded. It's this level of commitment and this level of tolerance for risk and pain that permeates through the organization.

Mark - 00:20:05:

This incredible excitement about what this technology enables. You know, it's fuel. If you come from a STEMCET background where most of the time things don't work and you suddenly see a technology where it works every time. It's mind-blowing. And then not only that, we talked about being able to create cell types from scratch. What does that actually mean? So we've created a large-scale... Functional transcription factor screening platform where we can perturb transcription factors at industrial scale essentially and that spins out enormous amounts of data so we had to build a data engine that captures that data and then helps us interpret that data so it's an engine that creates these new cell types it's a process of of going about discovery. It's not research where individuals have opinions. It's a very sophisticated machine that is constantly upgraded and fine-tuned. So the platforms that underpin the discovery platform are constantly upgraded. And so in some ways, we're all part of this amazing thing that ultimately reads out what I would call the operating system of life. So if you think about the ground facts, transcription factors regulate genes. So what we need to learn in order to find the right transcription factors for a cell type is the cause-effect relationship between individual combinations of transcription factors on the transcriptomic state. And that is the operating system of a cell. It's the information that's stored, activated to create certain outputs. So we're learning the operating system of human cells, and it's incredibly exciting. And once we understand certain relationships. We immediately have a product. So the most basic question, which is, what makes a seller sell? What's the identity? How is it defined? What's the structure of that identity? Then leads to this tangible output, a neuron, that you can use for your studies of Alzheimer's. A immune cell that can phagocytose tumors when equipped with a car. We've put neurons together to create neural networks that you can train to play Pong. I mean, these things are just so mind-blowing that being part of that creates this special atmosphere that drives and helps fuel. Strong culture can also, of course, exist in a purely commercial play. Amazon, for example. But the advantage of life science is that you know why you're doing it. At the end of that is either knowledge or a patient, ideally both. And that's incredibly inspiring.

Jon - 00:23:13:

100%. I talk about it internally. It gives you an immense amount of inspiration and drive to get out of bed. And I jump out of bed to do what we do and being in the life sciences. And I feel incredibly grateful and super lucky to have that as well and it's not something that I take for granted because, you know, there are plenty of folks who are looking for that. And it's just feel so lucky to have found it.

Outro - 00:23:40:

That's all for this episode of the Biotech Startups Podcast. We hope you enjoyed our conversation with Mark kotter. Tune in to part four of our conversation to learn more about his journey. 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 Mark'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. Co-referenced any product, service or company in the podcast is an endorsement by Excedr or its guests.