Infecting Healthcare with an Entrepreneurial Ethos

ZenChuAs Healthcare Entrepreneur-In-Residence at MIT, Zen Chu co-directs the MIT/HST Healthcare Ventures graduate course and oversees MIT’s Hacking Medicine initiatives. He also runs Accelerated Medical Ventures, where he serves as cofounder and first investor for several medical and software companies. Earlier in his career, Chu co-founded and served as CEO for 3D-Matrix Medical Inc., a venture-backed MIT regenerative medicine company that had a successful IPO in 2011. He has also managed and led new ventures for Harvard Medical School, Wyss Institute, NetVentures, and Hewlett-Packard.

TEDMED: What’s the most remarkable innovation you are seeing in health tech or medicine, and what is driving it?

Chu: It’s the digital transformation of healthcare that’s enabling scalable medicine.

Our Healthcare Ventures course and the Hacking Medicine ethos at MIT define scalable medicine as “impacting and improving access and quality while reducing costs.” Most of that happens not through increasing the number of doctors and health professionals, but by moving it down the skill curve, all the way to getting patients engaged in their own care. That’s how you scale medicine, not just in the U.S. but globally.

What’s driving this is that we’re taking what’s been pioneered in Silicon Valley—sensors and technologies and software and the services enabled by them—and rolling that out with a different business model. We teach that even a nonprofit with a medical mission needs to be intentional about its business model and how it is sustainable.

TEDMED: What’s the most important factor for entrepreneurial success in health tech—and is that different from your own key to success?

Chu: Health tech is more complex than IT or other traditional entrepreneurial verticals. You’ve got so many stakeholders, third-party payment, and all of the incentives and disincentives therein. So, the key profile for successful entrepreneurs is resilience side by side with a mission. Healthcare is complex enough to frustrate even the most skilled and experienced teams. If you don’t believe in your particular mission, at some point it’s easier to walk away from the startup than continue on. The only thing that keeps teams together during those lows is resilience and the mission.

That’s no different from my own key to success. I have co-founded three companies, collaborated on many more, served on boards, and been an investor in others. Those are the skills that you look for.

I believe that entrepreneurship is what is going to save healthcare. To overcome the challenges we’re facing, we need that combination of creativity not just from clinicians and researchers, but from entrepreneurs and healthcare designers.

TEDMED: For entrepreneurs with needle-moving ideas in global health, what are the keys to finding collaborators and supporters across specialties, industries, and geographies?

Chu: Many entrepreneurs and clinicians who want to do good in global health don’t realize that it’s not enough to be cheap. Oftentimes you have to offer a very different solution for the developing world. You can’t just transplant a therapy or a protocol from the developed world. The realities on the ground in these hospitals or local clinics are meaningful. The key to really impacting a country outside of the developed world is in targeting your solution to the local resources and culture and capabilities.

More generally, the key to navigating the healthcare challenge of complexity is to have a clear user and a clear job to be done. A lot of entrepreneurial teams will have a mission, but it’s too broad. Often they’re trying to make win-win-wins for the patient, insurer, provider, and supplier. They end up compromising and not focusing on a single user, whether it’s the patient or the provider or the supply chain manager. Narrowing it to a single user and job to be done makes everything else go much faster with less money.

For instance, Covidien is a company that rolled out surgical tools in China. Their cholecystectomy kit cost $300 in the U.S., and China has a huge market for gallbladder removal surgery. But the average reimbursement for that procedure is around $10 in China, so the math doesn’t work there. It’s not enough to offer a solution that’s well accepted here. You actually need a completely different solution there.

Or, with regard to culture, consider that cardiologists in the top hospitals in China and India see 100 – 150 patients per day. In the U.S., they complain if they have more than 20 patients in a day. The way doctors in the U.S. listen to and assess a patient to arrive at a definitive diagnosis is completely unrealistic in China and India. Your clinical algorithm completely changes because of patient volumes and the organization of hospitals there. Patients who go back for treatment of the same problem don’t even see the same doctor. So doctors think of everyone they send away as cured; they don’t even have that learning feedback loop.

Those are the fundamental differences in global health that you don’t really appreciate until you’re on the ground. There is no substitute for being on the ground and localizing your solution to that geography and system and culture.

TEDMED: In 2020, you’re asked to give a TEDMED talk about the biggest transformation you helped bring about in your field. What is it?

Chu: I’ve done multiple companies, but there’s a limit to the impact that any one company can have. What’s exciting to me is that I get to teach at MIT and in the Boston medical community. We’ve also been asked by BIO to host a Healthcare Hackathon for biotech and pharma company executives to try to inject a new level of innovation by teaching them how to apply new technologies and digital transformation around their pills and therapies. We’ll try to teach them design processes from Silicon Valley, agile product design, and user-centric design combined with healthcare business model frameworks. That’s what hasn’t really been taught well, not just to clinicians, but to entrepreneurs.

One of the best ways we pull ideas out of groups at hospitals and at conferences is to have them start talking about the terrible experiences in healthcare. There are so many of them. Whether you’re a physician, patient, supply chain manager, or back office nurse, there are terrible experiences in healthcare because we fundamentally underinvested in technology for decades compared to other industries. That’s the opportunity for entrepreneurs. The bar is so low.

Teaching those methods for business models in healthcare and medicine so that we can go beyond the reach of physicians, to what is much more scalable … that’s what’s rewarding. I think of what I’m doing as giving out openly and hoping to infect as many people with that ethos for entrepreneurship impacting healthcare around the world.

Match Great Science Minds with Passionate Managers

RegisRegis Kelly is the Director of QB3, the only one of the four California Institutes for Science and Innovation devoted exclusively to biology and the life sciences. He oversees an innovation center comprised of more than 200 quantitative biologists at three northern California campuses (UCB, UCSC & UCSF) who are converting discoveries into practical benefits for society.

Previously, Kelly was Executive Vice Chancellor at the University of California in San Francisco, responsible for the new Mission Bay campus, which is the center of academic planning for a 300-acre public/private biomedical research park in San Francisco. He also served as Chair of the Department of Biochemistry and Biophysics at UCSF; was the Director of UCSF’s Cell Biology Graduate Program; and was the Director of the Hormone Research Institute at UCSF. Today he remains Chairman Emeritus of the Bay Area Scientific Innovation Consortium (BASIC), is on the Malaysian Prime Minister’s Biotechnology Advisory Panel, and is a General Partner of Mission Bay Capital venture fund.

TEDMED: What’s the most remarkable innovation you are seeing in health tech or medicine, and what is driving it?

Kelly: Longevity research. You’ve probably heard about Calico, founded by Google, to stop or reverse the aging process. It’s a very exciting area with a surprising amount of progress being made.

We’re looking at cases where we medically accelerate the aging process, as measured by cognitive loss. For instance, elderly patients who undergo hip surgery or knee surgery are liable to suffer a severe cognitive loss. Radiation therapy on the brain, a traumatic brain injury, or a severe infection can also lead to cognitive loss. In the cases we’ve measured, the cognitive loss is caused by the way the immune system affects your hippocampus. And the mechanisms involved in medically accelerated cognitive loss are, as well as we can tell, identical to the normal process of aging in the brain. If we could slow down accelerated cognitive loss, I’m very confident those therapies would be beneficial for long-term cognitive loss, such as in Alzheimer’s.

This is not pie-in-the-sky stuff. At QB3 we have potential therapies in the pipeline and a pathway we can see getting into humans to test longevity. We’re talking about how we can get very close to an IND for phase 1 trials.

What is driving this is bringing together fields that hadn’t previously interacted. Normally, if you’re a neurobiologist then you spend your life in the neurobiology community; if you’re an immunologist, you do the same; and if you’re an imaging person or a physicist, you hardly talk to anyone else. Now, a marvelous synthesis among immunology, neurobiology, and imaging is producing spectacular results.

TEDMED: What’s the most important factor for entrepreneurial success in health tech—and is that different from your own key to success?

Kelly: We have 100 companies in the QB3 incubator right now, and we look at lots of companies that apply to our venture fund. We are always more responsive and excited about a company when there is clear passion from the founder or entrepreneur. If you come up with a great idea and you don’t have passion, then when something goes wrong you won’t fight through it to the end. People have to be prepared to pivot and change and adapt. It’s really about people with a commitment to making it happen.

The other thing necessary to successful entrepreneurship is people skills. Someone can’t start a company if they can’t build and work with other people. If they have ego problems and it’s all about them, it’s doesn’t work. People who can really build teams and teams that clearly love the leader work well. That’s a prognosticator that the company is going to succeed.

Of course, you’ve got to have an idea; almost everyone has a new idea in a new market. But the things that impress us are passion and people skills as well as the idea.

Is that different from my own key to success? Yes, on my good days, those are probably the keys to my success.

TEDMED: For entrepreneurs with needle-moving ideas in global health, what are the keys to finding collaborators and supporters across specialties, industries, and geographies?

Kelly: This is entrepreneurship 101, but you must identify your customers and know that your product is what they want and will pay for. Selling life sciences products is not like selling iPhones. You must be careful about working on your reimbursement mechanisms and find out: is this really needed, by how many people, and who is going to pay for it?

In digital health people will often say, “Well, I hired a doctor,” or “I have a doctor friend,” or “I have a doctor on my panel and he’s going to tell me how to do it.” That doesn’t work. You need to talk to many doctors. The Lean Launch Pad insists, for instance, that you talk to 100 customers before they go ahead with your company.

Finding collaborators in other specialties is really important, and is a huge challenge. Trying to match someone with brilliant scientific insights or access to a new disruptive technology with someone who understands how to run a business is what we call “the Boyer-Swanson problem.” The fortuitous thing that made it possible for Herb Boyer, a scientist who was in my department at UCSF, to start Genentech was that he ran into the young entrepreneur Robert Swanson, who knew nothing about molecular biology, but knew about starting companies. The two of them together got Genentech off the ground. Very few scientists have business acumen; 90 percent of the time, you need a Boyer-Swanson match, and finding that is hard.

The Swansons—the people with managerial and organizational skills—are people who just like starting small companies. They love the excitement of starting something from nothing and seeing something with 30 percent probability of success coming to an exit in 5 years. They like the whole process and being surrounded by other people with that passion. They’re serial entrepreneurs; you’ve got to get them between companies. It’s like getting to people between marriages.

TEDMED: In 2020, you’re asked to give a TEDMED talk about the biggest transformation you helped bring about in your field. What is it?

Kelly: I’d love to be talking about how we put together this consortium that’s producing drugs that are reducing cognitive loss and affecting longevity. In six years we’re not going to have those in the clinic, but we certainly could have them clinical in trials.

Also, I’m excited about helping to transform American research universities to work better with the private sector. I’d like the boundary between universities and early startups in the incubator space to be so porous as to be nonexistent. Not only would we be feeding people into these entrepreneurial incubators, but also we would be hearing back from them what academics should be studying.

This is what QB3 is trying to do. If we could say that this QB3-type idea has spread so that 50 percent of universities in America are doing something like this, then that would be a major contribution to society.

The Hive 2014: The Next 10 Startups

As promised, today we’re announcing 10 more breakthrough startups that will join the TEDMED Hive 2014. This September 10-12 in Washington, DC and San Francisco, each will share their products and ideas for progress in health and medicine with our Delegates. Visit TEDMED.com for fascinating background info on these newly announced entrepreneurs, and to revisit the 10 startups announced last week.

Screen Shot 2014-06-12 at 3.55.54 PMScreen Shot 2014-06-12 at 3.56.09 PMScreen Shot 2014-06-12 at 3.56.22 PMToday, we’re also getting to know Hive Curator Sumbal Desai, Associate Chief Medical Officer for Strategy and Innovation at Stanford Hospital and Clinics, via our weekly Q&A blog series. She shares insights on how healthcare is reshaping itself to fit consumers’ digital expectations.

We’ll release more Hive startups next week.  Until then, follow the latest news @TEDMED.