Physician, Investor and Entrepreneur - Sohaib Siddiqui (Medly Therapeutics and Kettlebeck Ventures)
It was a pleasure speaking with Dr. Sohaib Siddiqui, he was very forthcoming with sharing several great insights from his experiences as an entrepreneur and investor.
We talk about -
His journey to running a family office fund
What he looks for in GPs
What he looks for in founders
Upcoming tailwinds in healthcare investing
Charm vs aptitude in predicting founder success
Can outsiders innovate in healthcare
His contrarian opinion in healthcare
Transcript
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Hi everyone. I'm really excited to bring you this podcast with Dr. Soheb Siddiqui. Soheb
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is the managing partner at Healthcare Ventures for Kettlebuck Family Office, which is his
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own family office. He's also an Innovation Fellow for Women's College. He's on the Advisory
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Board of GE Healthcare. He's an entrepreneur in residence at the Faculty of Medicine and
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University of Toronto. He's an executive in residence at the Toronto Innovation Acceleration
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Partners and he's the chief executive officer of Medley Therapeutics. We had an amazing
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discussion and we talked about what he looks for in general partners and funds, what he
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looks for in founders, upcoming tailwinds in healthcare investing, is charm or aptitude
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a better predictor of success in founders and outsiders innovate in healthcare, his
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contrarian opinion in healthcare and much more. I hope you enjoy this conversation as
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much as I did. Thank you.
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Hi Soheb, it's great to have you here today. Thanks for joining me.
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Thanks for having me. I really appreciate it.
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To get started, I'd love for you to talk about your childhood. Our childhood defines us in
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some ways. There are some things we learn from our childhood which help us and there
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are some things at times we have to unlearn from our childhood. Talk to me about your
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childhood and talk to me about how it has shaped you into who you are today.
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Sure. Thank you. So, my childhood, I would say, I think I was blessed to have an overall
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good childhood, but having said that I think I saw quite a bit of adversity over time.
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So I was born in Baxan originally, spent a few months there. So I don't really recall
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much of it to be honest. My family moved a couple of times. My dad was in some of the
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banking industry and had a few moves. So I lived in Egypt for a couple of years. I lived
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in England for a couple of years. All kind of in my very, very early days. So I only
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have a few fleeting moments of kind of recollection of any one of those places. Apparently Arabic
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was one of the first languages I began to acquire as a toddler. I don't remember any
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of it anymore really, but then we came to Canada in the early 90s. And, you know, it
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was kind of a serendipitous move for my parents. You know, they applied for immigration to
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a few countries and Canada was kind of the first one that came up. And very typical to
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the immigrant story where, you know, didn't have a lot of money, parents looking for a
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better life. You know, they really struggled. They really sacrificed. You know, just in
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the first few months of moving into Canada, we moved in a very, very cold environment
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that we weren't used to as a family. That's a shock to the system. My dad, three months,
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four months into working a job, actually one evening, got t boned by a drunk driver, had
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a fairly, you know, pretty extensive accident. A couple months later, my grandfather passed
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away. I was sick. I needed surgery. So like the first year in Canada was kind of just
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this concept of when it rains, it pours. And really, my parents struggled. Many, many years,
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I, you know, I witnessed my family struggle a lot. And, you know, it was a big reset for
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our family. But having said that, looking back at it, I don't think I appreciated the
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struggle at that time. I don't think I, you know, I was never felt, you know, my childhood,
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I guess, was in a way that I don't think I felt, you know, poor or lacking of kind of
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support and resources. I think my parents were really good. I think they made the best
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of, they could. So, you know, they gave me the best they could afford. They sent me to
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a good school. You know, my wishes as a kid growing up, they fulfilled to the best of
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their ability now. And, you know, it does shape you, right? It's sort of appreciating
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the fortitude and the kind of focus and diligence of my parents working around the clock to
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make the next generation better. And that's kind of something that I aspire to with my
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kids. I've got two young daughters now. I would say their upbringing is better than
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my upbringing. And I think every subsequent generation, I think everyone hopes that the
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next generation is just that much more privileged. So, and I think that kind of is what kind
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of drives me in my career, right? It's like, you know, I want intellectual stimulation,
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but I want to be able to spend time with my family. I want to provide a good life for
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my family. So I think the goals are pretty common, right? I think it's appreciating the
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struggle and how it shapes you for the good times. So, unconsciously does really drive
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a lot of the push and drive that I have to do the best that I can for myself.
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It's a common theme I find in people I speak with is they have moved a lot in their childhood
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and they have been through hardship. It's something I think about a lot. And I have
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two young daughters as well, as I want to give them a very comfortable life. Do you
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think it's necessary to have hardship in life? And do you think the degree of hardship correlates
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with the degree of perseverance and grit you develop later on?
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I mean, look, like people's lives are relative. The word hardship is a relative concept. You
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know, I would view many things in my life as a hardship, but in a relative sense, I'm
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very privileged. But my struggles are different than other people's struggles. I mean, you
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and I were both clinicians. I mean, I would argue being a clinician is a hardship. But
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to the other person, their dream was to become a clinician. You know, and that may not have
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transpired for many people. They always wanted to be a doctor. They wanted to be a nurse.
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And for whatever reason, you know, it couldn't happen. So hardship, I think, is a relative
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concept. Having said that, I do think hardship is a necessary part of one's journey. I do
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think, you know, we're all tested in every way. You know, I think it's unfair to compare
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yourselves to others, but I think it is a human trait, perhaps a human flaw. You do
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compare yourselves to friends, peers, and how are they doing? And you may notice, hey,
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you know, that other person, the grass is greener on the other side. But if you take
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it a deep down analysis, like, yeah, they might be better off in certain ways, but they
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may have hardships in a way that you may never even begin to kind of appreciate. So I think
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we're all kind of in our own journey, in our own ways we're blessed and other ways we're
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tested. But I think the testing is important. You know, does more hardship lead to more
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perseverance, more grit? I don't know. I think over the years, I've kind of tried to look
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at it where I think I want to. I'm not saying that I do a good job at it, but I certainly
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aspire to appreciate people's achievements in the relative context of their environment.
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So if they started out with very humble beginnings, you know, are they going to be the unicorn
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tech star founder? Maybe, maybe not. But maybe getting a regular job is a fantastic achievement.
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Maybe getting an undergrad degree is an exceptional achievement. Maybe the first one in their
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family to achieve that. I think that's a fantastic achievement. For other people, the bar maybe
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is different. Maybe, you know, being a tenured professor at Harvard is the trap. But if you
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come from a family of tenured professors, like the delta in which you have to achieve
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is different. So I really do try to view it in terms of like, what were the substrates
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that you were given? What did you do with it? How far did you achieve? So I think the
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objective comparison between people I think is kind of unfair. But, you know, I do try
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to look at it. And it does come into the entrepreneurship world too. You know, you will get into it
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in a little bit. But, you know, comparing different founders, what they had, what they
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made of it, what indication were they going at? You know, some founders are very blessed.
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They don't have to raise money because they've got really wealthy family and friends and
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others who like, you know, refinance mortgages, had divorces to kind of keep their things
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afloat. So it's, I think it's relative. But I do think the perseverance part is important.
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And it certainly is from the entrepreneurial side of it. And I actually think the perseverance
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part is a, we'll get into this as well. I think it's an important part of the EQ of
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evaluating companies and founders. Can they kind of, you know, survive the marathon that
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this whole journey is, right?
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Another common theme I find is entrepreneurship is innate. People who are founders were always
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entrepreneurial and they would say, this is just how I am. This is how I'm programmed
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to be. Do you think entrepreneurship is innate and what was your first entrepreneurial venture?
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Yeah, I think, look, I think entrepreneurship is a, is a byproduct of your environment,
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regardless of what your career path or job path has been. I mean, I think many of us
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work jobs and kind of at some point reach a point where we're like, why is my job functioning
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the way it is? Why am I struggling in this aspect? Or why is this particular procedure
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failing at 5%? You know, I think there's certain people are like, yeah, I'm happy with that
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and I'm happy with the status quo and there's nothing wrong with it. I do think perhaps
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there's a subset that says, hey, it likes to ask five more questions and being like,
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why is it inefficient? Why doesn't it work? If you're a clinician, why are certain patients
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getting more sick than others? If you're in the food industry, why are certain things,
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why is food more expensive here than other places? You know, so I think, you know, entrepreneurship
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is really a byproduct of the environment that you're in and I think it forces you to think
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creatively being like, look, the status quo has been like this, but if I, you know, take
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the algorithm and change it upside down, I can do something with it. Like take clinicians,
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right? Like we are very trained to follow algorithms. That's what we have been kind
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of trained to do. We've memorized algorithms, we publish algorithms, we read other people's
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algorithms. In fact, when we fall outside of the algorithm is when we get slapped on
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the wrist or get sued or, you know, go up in front of a disciplinary board. But the entrepreneurship
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world is actually quite the opposite. Like let's take this algorithm, let's tear it up.
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Let's understand why the algorithm, what's the blind spot in the algorithm and can I
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insert a medical device, a technology, an algorithm, a therapeutic to kind of solve
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that delta in that algorithm and can I make an impact? Can I make money? Can I scale it?
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Can I, you know, improve outcomes? So it's, I think it's, yes, it's not for everyone,
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but I do think many of us fall onto it by serendipity. I wouldn't have expected to be
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in the career that I'm in now. It's kind of just a random assemblance of steps and ideas
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that have happened to get me here.
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Talk to me about your first entrepreneurial venture.
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The first one really started out as our own kind of family business. I think my dad took
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a similar path in his own life where he worked in a particular industry. This happened to
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be banking for many years and, you know, over many years, you know, realized, hey, I have
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good bosses, I have bad bosses. I have departments that work really well. I have departments
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that don't work very well. And, you know, whether it's a pioneering mindset or a bit
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of arrogance, perhaps a bit of both, you know, at one point my dad had reached a point like
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I can do this job better than my boss. And then I can do this job better than this bank.
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So actually his first entrepreneurial venture, which became the kind of the focus of our
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family office, was starting an Islamic bank because that was a kind of a gap in the market
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that he identified. He's like, okay, there's other banks out there trying to develop, you
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know, banking practices in line with sort of Islamic teaching principles. They're not
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doing a good job at it or they're kind of falling the ball, kind of do it. So that was
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a learning process. Did it go well in certain ways? It did. It was kind of, it was the first
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in Canada. Did it go smoothly? By no means it didn't go smoothly. But I think, you know,
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that really changed the whole formula for my family and myself kind of taking a backseat
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in it. And I too kind of had that kind of exposure saying, hey, you know, do a career
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where I learn the foundational principles, be good at that career. But then at some point,
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sooner or later, transition to, you know, can I look and contribute in that career at
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the 30,000 perspective? Can I build something of my own? And that's how I kind of started
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to build my own fund within the family office, you know, trying to change status quo, albeit
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in a very small way. I don't want to overinflate what we've tried to achieve, but it's, can
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we do things on our own? Can we own a little piece of the pie for our own? And I think
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that ownership and that kind of piece is, you know, it's kind of springboarded me into
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a lot of the other stuff that I do.
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In some ways, we're all born entrepreneurs. We hear about children endlessly asking why,
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and it sounds like we educate them out of entrepreneurship in some ways. I'd love for
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you to comment on that. And then if you can go deeper into the thesis of your fund, what
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are you investing in? What stage?
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Yeah, no, I think, you know, for many years, I think standard education really does teach
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you to follow a very predictable path, right? High school, go to undergrad, maybe you do
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a master's, you do some advanced degree, maybe you go do an MBA, grad school, PhD, like it's
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a very linear path. And job opportunities kind of follow that. Like if you want X number
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of dollars, you get an undergrad degree. If you want a little bit more and more responsibility,
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you go to a master's degree. I think that was the case maybe 20, 30, 40 years ago. I
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think the job market and expectation is very, very different now. And, you know, growing
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up, maybe I asked, you know, those kinds of questions and I was told, no, no, don't think
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too creatively, fall in line, because that's the predictable piece. I think once again,
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going back to my upbringing, because we were immigrants, because we struggled, I think
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a lot of the kind of emphasis on the career path was more driven out of insecurity. Like,
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hey, I want you to have a stable career. So pick a stable path. In our culture, it's often
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a doctor, it's a lawyer, it's an engineer, it's an accountant. These are predictable,
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stable paths. Doing anything deviating from that is kind of seemed as too risky, unpredictable.
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You know, how are you going to, so it's really, you know, not for many nefarious intent, but
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it's, it's, I think, a byproduct or the crush that you develop from, you know, insecurity
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of financial instability that we're kind of taught to, you know, don't ask too many questions,
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put your head down, study, get good grades, get good marks, and like move on to the next
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thing. And I think it's been a big career shift. Even when I did it. It's been about
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six, seven years now. In the beginning, a lot of my colleagues who, you know, are positions
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or in sort of the life science PhDs, they're all like, Hey, what's going on? Everything
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okay at home? Like, you know, what, why did you study so hard and kind of leave that all
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aside to do what you're doing now? Like, I don't think they understood. Now, I think
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it's much more common for folks to have a couple of different career changes in their
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life. It's very rare now that you find people, I worked at one job nine to five, you know,
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for 55 years, like get that back and what else kind of, you know, so, so it's changing,
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right? And then going to your second question on kind of the portfolio construction. So
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I split my time across a few different funds. You know, one is kind of private equity, family
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funds, the other is kind of an organization called Toronto Innovation Acceleration Partners.
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That works with academic institutions and spending out IP from those institutions. And
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then I advise a few kind of traditional venture funds that, you know, you're kind of bread
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and butter ones. They're all in sort of the healthcare space. That is kind of my, you
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know, I don't know a lot of things, but healthcare is one where I think I, you know, can at least
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take a crack at it just with my background. With all those funds, it's typically, well,
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I run the gamut. I think a good chunk of my time is spent on very early stage companies.
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I would say some of them aren't even companies or ideas, but part of my job, especially at
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TAP, is to take IP. So forget revenue, forget regulatory reimbursement. It's someone has
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a molecule, someone has an algorithm, a device, a prototype, and they're like, what can I
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do with this? And it's my job to say, okay, does this make sense? What a doctor, nurse,
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you know, physiotherapist use this? Would they pay for it? You know, is this reimbursable?
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Is this going to be regulated? Who's the right CEO to bring into the fold? Are investors
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going to get interested in it? So it's really company creation from its foundation. Like,
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you know, it's very challenging. There's no formula to it. Once again, there's no company
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is like the next company, you know, that's really kind of the creative part to it. So
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I like that part of it, because I think, you know, building companies gives you an appreciation
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for existing companies, understanding how to create companies. I think when you look
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at well run companies, you can dissect them a little bit better. And you can say, hey,
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I know how to build companies like you. And these were the 12 steps I took. Did you take
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these 12 steps? Did you take nine steps? Or did you take 15 steps? Did you do three more
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things I never thought you should do? So I like to spend my time in like the very early
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sandbox thing, because it's intellectually stimulating. It's incredibly difficult. But
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it I think gives you good didactic knowledge on how to build companies. And then the rest
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of my time, I'd say 50% of my time, the remainder 50 is probably spent in sort of your typical
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seed series a kind of things. I think for me, when I look at venture funding, I like to spend time
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in companies where I think I can add value intellectually. If there's a company that's
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kind of gone public, or they've raised 300 million bucks, you know, they're much smarter
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than me, not that I'm very smart, but I feel my value intellectually, just declines with time.
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And I'm happy to do that. Like if I'm of no value to a company, I think I've done my job because
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you know, they have much better brighter, smarter, you know, bigger pockets of checks to kind of
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chase after. That's why I like the early stage because you know, founders like, Hey, like,
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should I build this for the OR or should it be built for the emergency department? And that kind
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of, you know, objective and creative exercise is what really kind of stimulates me. If race 300
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million bucks, we're not in, we're not asking those questions, right? We have a wholly different set
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of problems. So yeah, so that's a long answer to your question. But yeah, definitely spend,
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you know, I would say series a and before is, you know, kind of my expertise and really getting a
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company lined up for series a financing, like just getting the house in order to make sure that
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they're going to be financed for series a because I really view series a is like the real first
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grown up inflection point for a company. It certainly isn't the end of the story, but for
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most companies, I think that is like a major fork in the road. Can you make it to that point?
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Because that really signals that people are really bought into your idea, right? And now we're
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buying it on mass. It sounds like you're investing from pre-C to series A.
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And yeah, the evidence backs your experience as well. There's a 12% chance of success
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or of an IPO post series A, which is a considerable percent. I find diligence in
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the founding team, specifically, diligence in how committed they are to this idea incredibly
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difficult at the pre-C stage. Talk to me about some patterns you recognize in successful and
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unsuccessful founders. And then what is your framework or what is your process in
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diligence in founders specifically at the pre-C stage? Yeah, no, it's a good question. I
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wouldn't say I've cracked the code on it because I have made some good bets and I've made some
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terrible bets. And I think frankly, at some point, it's just a temporal thing. Like you're
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going to see your answer over time. Time is going to be the only thing that's going to actually
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tell you what's right or wrong. But there are certain things that I think patterns, once again,
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Rashad, if we wanted to talk on that, I think technical expertise is the starting point. I don't
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think technical expertise is the wow differentiating factor, the novelty. You're going to meet
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fantastic software developers, engineers, physicians, clinicians, thoracic surgeons.
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Technical expertise, I think, is what gets you in the door because that gives you subject domain
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expertise to say, hey, I am an expert in this space and I am saying that this is a problem.
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And this is a problem that I face. And it's a problem big enough that myself or my hospital
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want to buy it. Therefore, I want to build the company. So technical expertise is kind of just
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check, okay, great. You can come to the table and have a conversation. So versus many founders,
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I think that's where they begin and they stop. They say, because I'm the technical expert,
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this is the beginning and end of the story. At my point, I think technical expertise is just
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the beginning. Now what needs to be added on top of that? I think that's the differentiator
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between okay teams and great teams is when they realize where their competency ends and
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the delta where they need to fill in. So they are really good at one particular specialty.
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Can they understand the business? Can they understand regulatory? Can they understand
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reimbursement? Humans, factors, engineering, software development. Very rarely are you going
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to meet a person who's going to be the sort of da Vinci individual who can kind of be the painter,
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the sculptor, the mathematician, the astronomer. Some doctors, we think we are, but we don't
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know doctors. We think we are because we're God's gift to the world, but it's very, very rare that
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one person has all these attributes. So I think it's having the insight of your limitations and
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being candid and honest with it. And often for doctors, it's easy to pick on. They don't
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typically make great business decisions because why should they? They have never really been
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good businessmen. They've been trained to be good clinicians. I'm expecting you to do something that
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is completely contrary to what you innately kind of been trained to. So I think it's having insight
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of where your limitations are. And I think most importantly is having good emotional intelligence,
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how to regulate yourself in rooms and conversations, keeping a tempered mannerism when things get
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heated, when things become difficult as they will. And I think being able, once again, that EQ,
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being able to engage with, how do you interact with a clinician versus an investor versus a
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patient advocacy group that you would be dealing with versus a hospital and strategic? You cannot
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be the same person to these people. So it's having the EQ to kind of navigate that. Because in the
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beginning, that's all you have, right? I don't know where the product is going to be because
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it's pre-seed. It's really the team and their potential ability to adapt to the adversity that
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they're going to face. That is a big chunk of the pre-seed diligence. But the technology will change,
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it'll come, it'll fail. But I think that's kind of how I approach it. So team is number one.
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Sorry, Yonvi.
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Do you think you need subject matter expertise to be a founder in a healthcare startup? Or is this
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a field where outsiders can come in and that naivety is almost superpower?
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Yeah, I don't think there's, I mean, it might sound like a non-committal answer. I don't think
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there is a right answer to this. I do feel at the end of the day, you need both.
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On the team, now, whether that's the founder or the advisory board or the chief medical officer
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or the CEO, like does the CEO need to be everything? No, by no means. If I had to take a pick for the
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CEO, would I want the technical competence or like more worldly knowledge? I would say worldly
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knowledge. Because you can always fill in technical competency specifically. But having someone who can
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fill in that sort of 30,000 foot perspective, that strategic vision, the aligning stakeholders,
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it's not a competency that's kind of taught as a by-product of a certification or degree,
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you know what I mean? But if you're a thoracic, if I need a thoracic surgeon, well, who's done
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residency and fellowship in that space, they should be good enough to give you an answer in
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that space, right? I know exactly where to go to. But I think that's the key.
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I know exactly where to go to. But I do think we kind of, in healthcare, we do have a bit of a clique
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mentality where we will value the opinion of another clinician. If you're talking doctor to
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doctor, it really is going to be like, okay, you're a colleague, you've kind of been in the
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trenches with me, I'm going to value your opinion more over maybe someone who doesn't understand
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healthcare, comes in with a naive perspective and is very bright-eyed and doe-eyed and going to
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change the world but doesn't understand the realities. So you need a bit of both because
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I think we can also, clinicians can get stagnated in our ways. And we need that gentle nudge.
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We need the gentle nudge from folks from other industries to be like, hey,
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let's incorporate AI, let's not be too scared of it. In banking, we're doing it. In defense,
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we're doing it. Insurance, we're doing it. Other risk-averse industries, we're much further ahead
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in incorporating AI. Why can't you do this in healthcare? What is so inherently difficult
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and different? It's a different problem but incorporated. So yeah, you need both, I think.
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I don't think it's a one or the other.
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If you had to pick between a founder who is exceptionally charming but with average
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aptitude versus a founder who has exceptional aptitude, 12.1% in their field, but average
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charm, who would you pick? Yeah, I would pick the charm piece.
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And I would say because, at least in my opinion, I think aptitude is something that can be learned
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over time. I think charm is perhaps more innate. Some people have it or you don't.
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I think charm is much more difficult to coach into someone. And once again, technical aptitude,
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I hate to say it, but technical aptitude can be outsourced. If I have a specific problem,
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I need to build a medical device that has such and such dimensions, I can hire technical aptitude.
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If I need a neurosurgeon who also has a histopathology background, I can find that
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someone. But charm, and really charm, I think, when I think of charm, I really think once again of EQ
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is not just about being nice, but someone who can rally different stakeholders, understand the needs
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of different stakeholders, be empathetic, understand what does the scientific founding team mean,
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what does the hospital need, what does a large med device strategic need, and being able to kind
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of connect those bridges. That's the charming piece. That's the creative part where there is
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no formula. There is no formal degree to do that. Now you can learn that over time. And I think
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people do because they've had two or three startups, they've failed a few times, they've
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struggled a bit. You can perhaps, maybe it's not innate, but you can get better at it. But
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definitely I think charm is what it is. Because ultimately it is your relationship,
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it is your personality that is going to kind of carry you through the tough times.
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And with that charm, you can hire the right people with the technical aptitude to compensate for your
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inherent flaws or limitations. But you can't hire charm. I don't think so.
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This is something I've changed my mind on. And I hesitate, but I agree.
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Charm is more important than aptitude. And we want to think that charm has no
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influence on your success, but I think that couldn't be furthest from the truth.
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If you could go back in time 10 years and talk to your 25-year-old self,
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what would you say to him? And would you change anything you've done in the past 10 years, if you
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could change one decision without it affecting other decisions? Yeah, that's a tough question.
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I think I would tell myself to, once again, push the boundary a little bit more. I too kind of
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fell into the pattern of just sequentially focus on the standard, the status quo, focus,
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get the degree, do as well in degree as possible. I didn't think creatively. I had no concept of
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thinking creatively, to be honest. It was just very singularly focused. While I enjoyed that time,
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I do think everyone needs some baseline technical competency in whatever field of thing that you're
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doing. I don't think no education is the answer to the world's problems, but some foundational
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education and whatever it may be, I think you need some grounding. But I think pushing the limits,
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I do it now more often because I think my career and space is more forgiving and allows me to do
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that. But before, I really didn't. It was just very linearly focused. Could it have changed the
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outcome? Could I have been better or more successful or more impactful in my career by now?
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Probably, maybe. Or maybe it was just a function of time. I don't know. I don't have that crystal
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ball. But I think certainly the career that I have now took a while for me to get comfortable in,
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even just speaking to people. As clinicians, yeah, we speak to doctors, we speak to patients, but
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going into a boardroom with people, interrogating you, criticizing you, getting out there, making
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that pitch speech, dealing with confrontation happens a lot in the business world. In the
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beginning, it would really stress me out. It would really cause a lot of angst and anxiety.
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Now, I don't think I'm perfect, but it doesn't bother me anymore because I know it's part of
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the course. I face it like any other problem that comes towards me. So yeah, I think if I'd done
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it earlier, I would be better than I am today. And ultimately, you just want to be better,
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continuously striving to be better in your career. So more time in practice would have made me better
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than I am today. One of the biggest learnings I have from my startup is to have a structured,
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slow process for hiring and a fast process for firing. Do you agree with that? And does
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that resonate with your experience? It goes both ways, right? I think hiring is a...
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Like in this whole business, I think the hardest part is the people, the technology, the algorithms,
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the pipettes into the receptors and molecule. That stuff is hard, but it's not as hard as the
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people. People are infinitely more complex. Figuring out a team that jives with each other,
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that works together, that supports each other, chemistry is aligning just from my interpersonal
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piece. That's really important. And one or two toxic kind of relationships, one or two toxic
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interactions really do derail a company. Or not even derail, it just doesn't... We don't progress
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to the level that the organization can. Having said that, I do think there is merit. Sure,
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but if you don't fit, let's fire you quickly. That's the easy solution. Having said that,
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we're all kind of learning. We're all in that process. I'm sure if I went to another
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organization and people like, hey, this guy doesn't know 10 of these things, he's not useful in this
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role. Let's get rid of him. He's not effective. But I've been given many chances over my life.
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I've been given many opportunities and I've had patient people put up with my mistakes or inadequate
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practices. If no one gave me a chance, I'd be unemployed many years after. I do think there's
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a balance of like, okay, are they... The limitations that that person has, is that a fundamental flaw
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to their character or their EQ or their lack charm? Or is this something that is solvable?
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Is this a solvable problem? If there's once again, aptitude or competencies that they don't know
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today, let's say they don't know Excel today. Let's say they don't know how to use chat GPT
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today. Is this something that they can be taught over time? Yes or no. If you can teach it, fine.
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Are you willing to invest in that person over three months, five months, six months a year,
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but they're still on the ball. They still show up. They're still working hard all day long.
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I think there is a balance. I think, yes, getting rid of folks that don't fit the culture or the
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chemistry, I think that is unteachable. I think if you don't work, nothing that varies. If you
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just don't work together, you don't work together. But I think competencies can be alleviated and
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kind of ironed out over time. We do have to make an investment in people. You're not going to get
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fully baked individuals at a time. But yeah, I think there is a cultural difference, I think,
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in America and the US. I think, sorry, Canada and the US, I think Americans are, they fail fast.
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And even employment is kind of like that too. And in Canada, maybe we're a little bit too nice
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and hold on to folks that maybe aren't the right fit, which can be stifling innovation too. So
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it goes both ways. Yeah. Scaling a service-based business, a people-based business is
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exponentially harder than scaling software, which is why I find VCs and investors and both me and you,
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we tend to deviate more towards the software businesses. Talk to me about your contrarian
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opinion in healthcare investing. Mine is that I think AI should replace physicians. And I speak,
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say that as a physician myself, the goal of healthcare should be to provide excellent quality
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healthcare everywhere. The Harvard Mayo Clinic healthcare should be ubiquitous and cheaply
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accessible. You cannot do that if humans are involved, especially humans who need 10 years
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of schooling and $300,000 in their education. The only way to do that is a software and AI,
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00:37:19,920 --> 00:37:26,960
which completely replaces us. So that's my contrarian opinion and I'm working to make that
383
00:37:26,960 --> 00:37:33,280
happen. It makes my colleagues upset at times. What is your contrarian opinion in healthcare?
384
00:37:33,280 --> 00:37:38,000
Yeah, no, it's an interesting opinion. And in your opinion, I think like,
385
00:37:39,520 --> 00:37:43,680
I don't think, I don't feel we'll get replaced, but I do think the nature of our job will
386
00:37:43,680 --> 00:37:50,160
significantly change. And I think what's expected of us will significantly change as it does every
387
00:37:50,160 --> 00:37:55,920
year in medical school training. I mean, you know, even med school training, I know schools that are
388
00:37:55,920 --> 00:38:00,880
beginning to teach financial literacy, they're beginning to teach software development because
389
00:38:00,880 --> 00:38:06,160
it's almost becoming an expectation. Like 10, 15 years ago, teaching research methods in medical
390
00:38:06,160 --> 00:38:12,160
school was like a groundbreaking idea. Now the expectation of physicians to also be researchers
391
00:38:12,160 --> 00:38:17,200
is kind of like, you should be, you should be contributing, you should be a deliverer of
392
00:38:17,200 --> 00:38:22,640
medicine and you should be the one doing the research too. So it's different. So I think my view,
393
00:38:22,640 --> 00:38:31,520
I, ironically, I don't like technology that's too innovative. I don't like to invest in technology
394
00:38:31,520 --> 00:38:38,480
that is breaking the sand barrier. And maybe that's my conservative approach, but when I come back to
395
00:38:38,480 --> 00:38:46,000
making business decisions, making recurrent returns in a fund, I in fact don't want to invest,
396
00:38:46,000 --> 00:38:50,320
ironically, even though I invested in innovation, I don't like innovative ideas that are too
397
00:38:50,320 --> 00:38:55,600
innovative because I know innovative ideas are going to take longer. They're going to be the ones
398
00:38:55,600 --> 00:39:00,640
that have to fight and create the codes with reimbursement for the first time. They'll be the
399
00:39:00,640 --> 00:39:05,840
ones having to negotiate with the FDA and justifying the whole class of their technology.
400
00:39:06,880 --> 00:39:10,720
And yeah, it does make for good headlines. Maybe you can get a little bit of a
401
00:39:10,720 --> 00:39:17,680
blurb in time. Maybe you can get a little blurb on beta kit about this new tool that is revolutionizing
402
00:39:17,680 --> 00:39:23,840
healthcare. And we do need some of those kind of ideas. People often take Elon, whether you like
403
00:39:23,840 --> 00:39:29,760
him or not, but he's got some crazy ideas, but some of them are really interesting ideas. Now are they
404
00:39:29,760 --> 00:39:34,480
all going to work? No, many of them are going to fail, but some of them, yeah, I mean, I think
405
00:39:34,480 --> 00:39:40,320
he's got some crazy ideas, but some of them are really interesting ideas. Now are they all going
406
00:39:40,320 --> 00:39:47,680
to fail? No, many of them are going to fail. I think the concept of plugging a car in 20 years ago
407
00:39:47,680 --> 00:39:55,680
was just something you'd see on TV, but now it's growing slowly. So if I take it to healthcare,
408
00:39:55,680 --> 00:40:00,640
I'd rather invest in companies that are solving important issues. It has to be an important issue,
409
00:40:01,760 --> 00:40:06,160
but it might not be the one where it's transplanting a brain from one person to the next,
410
00:40:06,160 --> 00:40:14,000
doing things in space. I like things that are boring, unsexy problems, because day to day life
411
00:40:14,000 --> 00:40:22,160
is repetitive, it can be mundane, but these are the problems you face every day. How do I schedule
412
00:40:22,800 --> 00:40:29,520
shifts in the OR effectively? How do I make sure that the x-ray at one hospital can be efficiently
413
00:40:29,520 --> 00:40:34,480
transferred over to the other hospital? How do I make sure that I don't have a data breach? How do
414
00:40:34,480 --> 00:40:42,800
I make sure that if I have to sterilize a surgical tool, how do I do that in a cost effective way?
415
00:40:42,800 --> 00:40:47,760
I'm not spending too much time. Many of these things aren't going to make headlines,
416
00:40:48,320 --> 00:40:52,480
but these are day to day problems if you're living in the clinical world that you're facing
417
00:40:53,280 --> 00:40:59,360
and someone solves it for you. Yeah, it's a small piece, but it saved you $10 here. It saved
418
00:40:59,360 --> 00:41:08,080
your infection rates. It saved potential morbidity or mortality in a patient. In the Ventriclum land,
419
00:41:08,080 --> 00:41:15,840
I can quantify the value proposition of something boring and mundane and predictable, because I know
420
00:41:15,840 --> 00:41:22,160
what that means. If I'm trying to be like Elon and really changing the face of the earth,
421
00:41:22,720 --> 00:41:28,320
maybe I'm not ambitious enough, and maybe there's other people out there who can better tackle,
422
00:41:28,320 --> 00:41:34,000
you need the Elans, but you need the boring folks. So hey, to kind of tackle the recurrent problems,
423
00:41:34,000 --> 00:41:39,840
because as a fund, I know that, hey, if I get a two or three or four x return on five boring
424
00:41:39,840 --> 00:41:47,280
problems, I'd rather have five or six decent returns on five boring problems than one fantastic
425
00:41:47,280 --> 00:41:53,680
return on the next thing launching to Mars. And that kind of leads into portfolio composition
426
00:41:53,680 --> 00:42:00,000
as well. Do you want to have a portfolio that's comprised of 10 potential unicorns,
427
00:42:00,000 --> 00:42:06,400
or do you want to say to your LPs, 75% of the time, I'm going to return you two or three x on
428
00:42:06,400 --> 00:42:11,760
your money? Or do you want to say, hey, one in 20 of my bets is going to give you a 20x or 100x?
429
00:42:14,160 --> 00:42:20,800
That's the portfolio composition angle you have to kind of weigh out. And you'll attract different
430
00:42:20,800 --> 00:42:28,640
investors, right? Venture investing is typically a risky asset class. I think people treat it as such.
431
00:42:30,000 --> 00:42:36,960
But I do think there's a way to improve incrementally your returns across it. And
432
00:42:36,960 --> 00:42:45,120
I think in a portfolio, if you've got 20 companies, maybe 10% can be ultra risky. And other things are
433
00:42:45,120 --> 00:42:49,920
a little bit more stable, more predictable. Some are early stage bets, some are later stage bets.
434
00:42:49,920 --> 00:42:56,800
So I kind of think it ties back into my kind of portfolio composition angle as well. I like
435
00:42:56,800 --> 00:43:02,880
safer bets. And I do think you need technical, once again, technical expertise to be able to
436
00:43:05,360 --> 00:43:11,760
vet some of the unsexy kind of ideas. You need deep market expertise to know
437
00:43:13,280 --> 00:43:16,640
what's the price when people are willing to pay for a simple tool.
438
00:43:16,640 --> 00:43:21,840
I don't know if they're just going to use this at the end of the day. Are they going to use it?
439
00:43:24,560 --> 00:43:29,600
We've talked about patterns in founders. What are some patterns you've seen in successful
440
00:43:29,600 --> 00:43:32,880
and unsuccessful fund managers or VCs over your time?
441
00:43:34,960 --> 00:43:44,400
Yeah, I think I would break it down in two ways. One is their investing mindset. And I would
442
00:43:44,400 --> 00:43:49,520
bring that's one topic. And then the other topic would be kind of their fundraising perspective as
443
00:43:49,520 --> 00:43:53,920
well, how they feel about fundraising. It's like the startups, the fund managers also have to
444
00:43:53,920 --> 00:43:59,280
fundraise, right? So I think there's a degree of empathy that the funds kind of establish,
445
00:43:59,280 --> 00:44:03,600
because they also go through a fundraising piece. I think in terms of investing too, I think
446
00:44:06,480 --> 00:44:12,640
if you don't have the subject matter expertise, it's very easy to chase the new shiny,
447
00:44:12,640 --> 00:44:23,360
glamorous thing. I think sometimes venture funds, once again, going after the thing that Elon Musk
448
00:44:23,360 --> 00:44:28,160
is investing in, I'm not against Elon Musk and his investment thesis by no means, I keep picking
449
00:44:28,160 --> 00:44:32,400
on him. But I think going after the new shiny thing and where healthcare is going to go,
450
00:44:33,120 --> 00:44:39,360
healthcare doesn't move in that rate. Healthcare is a very slow moving, gradual piece. It doesn't
451
00:44:39,360 --> 00:44:45,840
like to change. If you push the boundaries too much, you're not going to see the returns in the
452
00:44:45,840 --> 00:44:51,200
timeline that's going to be conducive to your fund. If you've got a 10-year life cycle, if you're
453
00:44:51,200 --> 00:44:56,000
pushing the envelope, if you're breaking the sound barrier, you're not going to see that thing built,
454
00:44:56,000 --> 00:45:00,960
scaled and returned to you within 10 years. And that's going to affect your ultimate returns.
455
00:45:01,760 --> 00:45:08,880
So I think that's why you got to go, once again, for fund managers, figure out, and I'm biased
456
00:45:08,880 --> 00:45:15,360
because I think this way I could be wrong, figure out the boring but problem, nagging problems,
457
00:45:15,360 --> 00:45:22,560
boring nagging problems that healthcare has that A, they feel it and B, they have a budget to support.
458
00:45:23,200 --> 00:45:28,880
Many times you and I see technologies that are really, really cool, but do the hospitals have
459
00:45:28,880 --> 00:45:34,400
the budget and the support to actually support that kind of technique? Because otherwise you're
460
00:45:34,400 --> 00:45:40,080
going uphill, right? Yeah, it can be a great technology. Yes, I can use my smartphone to
461
00:45:40,080 --> 00:45:47,280
detect cancer, detect murmurs, to detect signs of depression, but is there going to be reimbursement
462
00:45:47,280 --> 00:45:52,160
and payment for it? I think that's the tricky part. I think the other piece that I think venture
463
00:45:52,160 --> 00:46:00,240
funds get too caught up on, and partly because it's kind of market size on certain products.
464
00:46:00,240 --> 00:46:04,720
I've seen so many times where companies have overlooked because they don't see the billion
465
00:46:04,720 --> 00:46:13,520
dollar market of that problem. I view that as a very myopic way of thinking. No company or very
466
00:46:13,520 --> 00:46:18,480
few companies reach that billion dollar market capture. You don't. I mean, most companies are
467
00:46:18,480 --> 00:46:24,400
sold at a, if you go well, you get 100, 200, $300 million exit. Very few companies are going to go
468
00:46:24,400 --> 00:46:31,360
up to the billion dollar size. I know when you're evaluating companies, you want to have a
469
00:46:31,360 --> 00:46:35,520
standard process to evaluate it. You want to make sure there's enough meat on the bone, but
470
00:46:36,320 --> 00:46:41,440
insisting that the company has got to hit a billion dollar market size, I think is like,
471
00:46:41,440 --> 00:46:46,640
what's the difference between a $2 billion market size and a $100 billion market size? Really,
472
00:46:47,120 --> 00:46:53,680
I see Pitchdex proposing such astronomical figures on their little widget and app, and they have
473
00:46:53,680 --> 00:46:58,080
like $2,000 a month, they're recurring revenue and they're pitching a pipe dream of like a trillion
474
00:46:58,080 --> 00:47:05,040
dollars. Let's get down to basics. Let's do some bottom up calculations. How many hospitals do you
475
00:47:05,040 --> 00:47:10,560
have? How many hospitals can you tangibly get in the next six to 12 months? How much money are you
476
00:47:10,560 --> 00:47:14,000
going to get from each hospital? Is it going to be $1,000? Is it going to be $100,000? Is it going to
477
00:47:14,000 --> 00:47:20,720
be $100 million? And how many users are you going to be able to get? And let's work with that. And
478
00:47:20,720 --> 00:47:26,720
what can you do meaningfully with three to five years and maybe a couple million dollars of capital?
479
00:47:26,720 --> 00:47:32,160
And is that, you know, with that, you've done a bit of a study, a pilot, if you could do that,
480
00:47:32,160 --> 00:47:38,320
and what can you return? So that's the, I think, myopic thinking of fund management.
481
00:47:41,600 --> 00:47:46,640
They're pushed to get returns. And then they're also getting pushing themselves to find the new
482
00:47:46,640 --> 00:47:51,760
shiny thing in hopes that LPs are going to gravitate. Like, oh, we've got the coolest deal.
483
00:47:51,760 --> 00:47:56,800
Well, we got into this very interesting deal. Returns are the only thing that matter.
484
00:47:58,720 --> 00:48:02,400
Yeah. How much money will you give me and how much money will I return?
485
00:48:02,400 --> 00:48:08,480
Everything else is noise and signals, either positive or negative. It's not a red flag,
486
00:48:08,480 --> 00:48:13,840
but it's almost a yellow flag when a founder tells me if I get 10% of this market, this is how big my
487
00:48:13,840 --> 00:48:19,120
company will be. And I think this is one piece of advice to founders. Do a bottom's approach,
488
00:48:19,120 --> 00:48:25,680
do not do a top-down approach for market sizing. You're almost setting yourself up for failure
489
00:48:25,680 --> 00:48:33,360
because I have basically never seen a company hit their target forecast. Like it just never happens.
490
00:48:34,080 --> 00:48:39,360
So investors on this side, I think we become jaded. When you say that, I think it actually
491
00:48:39,360 --> 00:48:44,160
lowers your credibility or lowers your competency, even though you're very competent. Like,
492
00:48:45,040 --> 00:48:50,800
give me that bottoms up calculation. And that's something I can actually hold you to.
493
00:48:51,120 --> 00:48:55,840
And I can help you assist and say, Hey, I've got five hospitals. I need to get to 10 more.
494
00:48:55,840 --> 00:49:01,840
That's a tangible goal in a year that you as a founder and me as a fund can help you achieve.
495
00:49:01,840 --> 00:49:07,680
I can introduce it to five hospitals, 10 hospitals. I can't get 10% of the market share for you.
496
00:49:07,680 --> 00:49:15,840
Like that's just not, we got to take baby steps first. So I think investors are just
497
00:49:19,120 --> 00:49:21,760
jaded by that altogether. No one's impressed.
498
00:49:23,760 --> 00:49:26,560
What's one thing you've changed your mind on in the past 12 months?
499
00:49:28,640 --> 00:49:36,800
Yeah, I think historically I would really expect companies to have a really long runway
500
00:49:36,800 --> 00:49:43,920
of funding. This concept of like, you need 18, 24, 36 months of funding.
501
00:49:45,440 --> 00:49:50,800
Venture funds typically like to see that. Venture funds are an interesting base because they
502
00:49:51,680 --> 00:49:59,040
expect companies to have the traction and scale of like a series D company. And they want the
503
00:49:59,040 --> 00:50:03,920
valuation of like a pre-seed company. They want the world and want to give you nothing in return
504
00:50:03,920 --> 00:50:11,440
for it. Yes, in an ideal world, you have all your ducks in a row and you're served things on a
505
00:50:11,440 --> 00:50:17,040
silver platter. I think that's what venture funding typically is actually expecting. This
506
00:50:17,040 --> 00:50:21,840
is the disconnect between founders and venture funds. Venture funds are often expecting the
507
00:50:21,840 --> 00:50:25,680
world, are all the problems to be solved and all they're really thinking to do is I'm going to
508
00:50:25,680 --> 00:50:31,520
inject some capital and it's going to grow. Sometimes that is what happens and a couple
509
00:50:31,520 --> 00:50:37,520
million or 10 million bucks solves the problem. But that's assuming that money is the only problem
510
00:50:37,520 --> 00:50:43,760
that you have. And very few companies, particularly healthcare, money is just the tip of the iceberg
511
00:50:43,760 --> 00:50:50,080
of what the company needs. So yes, I can tell them to have 18 months runway or 19 months, but
512
00:50:51,200 --> 00:50:56,960
without that MVP, without that pilot, without that data, without US data, they're not going to get
513
00:50:56,960 --> 00:51:03,840
the traction to get that of them. So yeah, I'm not expecting that they can survive with one or two
514
00:51:03,840 --> 00:51:08,400
months of runway, but I think as fund managers, you have to be a little bit more realistic, be a
515
00:51:08,400 --> 00:51:16,320
little bit more empathetic. You are going to have to roll up your sleeves alongside the company and
516
00:51:16,320 --> 00:51:22,240
actually contribute in getting them to that endpoint. It's not going to be a passive exercise
517
00:51:22,240 --> 00:51:26,800
where you expect them to just solve these things in five years. Now you're going to get
518
00:51:26,800 --> 00:51:32,560
lovely exits. You also have to be in the trenches with them. And when I speak to founders, I think
519
00:51:32,560 --> 00:51:37,200
that's what founders should be betting. Founders should be betting the funds that are investing in
520
00:51:37,200 --> 00:51:45,200
them. What are you going to provide beyond capital into my company? And if they can't do that, then
521
00:51:45,200 --> 00:51:49,920
yes, the money is great, but I think you are setting yourselves up for failure. It's like
522
00:51:50,480 --> 00:51:53,920
money is the only thing you're getting from your investors because then you still have to find
523
00:51:53,920 --> 00:51:59,360
that Rolodex, that connection, the chief operating officer is going to help you build that company.
524
00:51:59,360 --> 00:52:08,960
So I think it's just investors being a little bit more realistic in what they expect of
525
00:52:08,960 --> 00:52:15,120
founders. And especially the last two, three years has not been kind to the market in general,
526
00:52:15,120 --> 00:52:22,080
especially companies. Many companies have gone under and I think some of that needed to happen.
527
00:52:22,080 --> 00:52:26,640
Some of it could have been prevented if supported in the right way.
528
00:52:28,240 --> 00:52:32,320
Thank you, sir. This was amazing. Is there anything else you want to share with our audience?
529
00:52:33,840 --> 00:52:38,640
No, I think this is good. Thank you for having me. Really appreciate it.
530
00:52:39,200 --> 00:52:44,480
Yeah. Anything you said you want me to take off?
531
00:52:44,480 --> 00:52:53,440
No, I probably ramble a lot if you need to shorten my answers. No, I think that was
532
00:52:56,000 --> 00:53:00,880
good. That was really good. I've done quite a few of these and this is, I'd say,
533
00:53:00,880 --> 00:53:03,680
top quartile for sure. And maybe even top 10%.
534
00:53:03,680 --> 00:53:06,640
Good, I'm glad. Next time, top 1%.
535
00:53:06,640 --> 00:53:14,400
Yeah. Well, I haven't done 100. But I think you shared a lot and I love that.
