In the most recent episode of the SynBioBeta podcast, SynBioBeta CEO John Cumbers spoke with Mayfield Partner Ursheet Parikh about the state of the synthetic biology market and what startups can do to survive and thrive in this turbulent economy. Listen to the episode now or read the transcript below:
John Cumbers:
Welcome to the SynBioBeta podcast, conversations with synthetic biology’s leading thinkers on building a better world with biology. I’m your host, John Cumbers, the founder and the CEO of SynBioBeta, where tech meets bio and bio meets tech. This week on the SynBioBeta podcast, after a four-year hiatus since our last discussion on the podcast, I’m talking once again with my good friend, Ursheet Parikh. Ursheet is a general partner at Mayfield Fund, an early-stage global venture capital firm based here in Silicon Valley with a people-first philosophy and a 50-plus year history of investing and partnering with founders.
Starting at the inception stage, Mayfield helps build iconic enterprise companies centered around AI, deep tech, human and planetary health. Mayfield has invested in over 550 companies with roughly $3 billion under management, resulting in 120 IPOs on over 225 acquisitions. In today’s episode, Ursheet and I are going to discuss the state of synthetic biology, the market, the investment climate, the macroeconomic conditions, AI, and why every company needs an AI strategy and what you as a startup can do to survive and thrive in this turbulent economy. So stay tuned.
John Cumbers:
Hi again, this is John Cumbers, the founder and the CEO of SynBioBeta. This week on the SynBioBeta podcast, I’m joined by Ursheet Parikh, a general partner at Mayfield Fund where he’s been investing in both human and planetary health companies since 2013. Ursheet’s investments include companies such as Mammoth Biosciences, which has a focus on discovering novel CRISPR systems; Mission Bio, who’s looking to apply single cell sequencing to oncology; Qventus, which is blazing a trail in healthcare AI; and Endpoint Health, which is reshaping the precision immuno-oncology space, just to name a few. Ursheet holds an MBA from the Wharton School and a bachelor’s in computer science from the Indian Institute of Technology in Mumbai. He’s passionate about accelerating healthcare innovation and transforming college education where his family foundation is focused. Welcome to the show, Ursheet.
Ursheet Parikh:
Delighted to be here, John. It’s been a while, but I’m glad we are doing this again.
John Cumbers:
I’m glad that we’re doing it again, too. We are not on video today, but I am honored to have been invited to your beautiful condo here in San Francisco, and it is the most beautiful October day. We’re having somewhat of an Indian summer here in San Francisco, and it is just a glorious day. Thank you for having me, and thank you for providing us the studio for today.
Ursheet Parikh:
Always happy to do that and always happy to host folks here.
John Cumbers:
So we’ve got a number of topics that we’re going to discuss. We’ve been talking just before the show about the headwinds and the tailwinds for the industry and the investment market broadly. But before we get into that, you think quite deeply about sustainability. You think about planetary health, you think about human health. Oftentimes, we like to think about the ethics of investment, particularly in a field like synthetic biology where there’s a lot of ethical considerations to come. Often, the ethical considerations are pushed to the back of the conversation. It’s the business first, it’s the technology first, it’s the investment first. And I don’t want to do that anymore, I want to bring it right to the front, and I want to put it front and center. Because a lot of the things that you invest in or a lot of things that you choose to invest in have significant ethical implications. Let me just start there. When you think about investing in synthetic biology, when you’re meeting with a founder, when you’re thinking about a technology, what framework do you think about in terms of these ethical concerns?
Ursheet Parikh:
I think there are two big drivers in the way I think about the ethical concerns. The first is I think it’s imperative for humanity that we make synthetic biology work and scale. This is at the core of improving human and planet health. The manufacturing and production technologies of the previous few centuries just won’t work for us if we have to really help billions of people improve their quality of lives. And there’s billions of people on the planet who do want to have a better quality of life and will need more goods, more products, more services, more food, more proteins, you name it, and better health. That biology as a technology to build, sell as a workhorse to build, what we need is at the core. And so for us, the first part about it is we are doing this because if we don’t do this, we just will destroy the planet, on the planet health side.
On the human health side, we came through a pandemic, and to a large extent, a lot of the advances in engineering and scaling biology came to our rescue out around that end. So the first thing that I’m fundamentally trying to understand is how is the founder really true to the mission of making impact versus for lack of a rhythm, the mission of science or scientific discovery? That is great, but that is not what goes ahead and creates impact. Entrepreneurs do change the world, on the whole, generally, for the positive. What we are trying to understand is, in this people-first mindset, are we aligned on the values? For us, a lot of it starts with: founders build products and companies, but is the culture right? Do they think and recognize it as a team? Do they get their diversity? Companies are fundamentally limited by the learning ability and agility of the founders; the founders think of the company as their baby.
That is challenging because if you really want a baby, have a baby, don’t think of the company as a baby. Think about it as how you’re making a movement where you’re going to go ahead and get other amazing people to the movement, how you’re going to go learn and grow. You need people, you need ecosystem partners, you need investors to make that kind of impact. The first part is: are they really going to go achieve that? The counter-side to it is if there was ever a time that we had to worry about… It’s been a few years since the pandemic, but we can talk about it. Even if there’s a 5% possibility that this was a lab accident, it behooves us to go ahead and really be mindful and thoughtful.
And this comes back to the culture, the intellectual honesty. There is, you want to succeed, but are you truly getting into tunnel vision? Are you cutting corners? If you want to build a company right for the long haul, it has to be done right. You have to have deep trust between management team members, between management team members and your board members. You have to be able to, because what I’ve seen is every missed opportunity or every company destroying situation, it’s what you’re reading tea leaves, the board’s probably helping separate the forest from the trees. But people have to be able to have those conversations.
John Cumbers:
So you think there’s an ethical imperative to use these technologies to both fix the planet and to fix human health?
Ursheet Parikh:
Absolutely. Because the other part is how are we going to go ahead and democratize access to the next generation of genomic medicines? So if you were to ask me what is the biggest opportunity as well as my biggest concern with the state of the synthetic biology business at a technical level, is that we are still not demonstrating scale, and at the level of the traditional technologies. This just goes to be it the cost of cell-based meats to the cost of genomic medicine. And I feel that if synthetic biology is truly going to make impact at the scale that we need, we do have to go ahead and get the biomanufacturing. And there’s a lot of technical issues. There’s a lot… I think we finally have a policy environment, which is really great around it and thanks to you, John, for bringing together a lot of the conversation and a lot of the people around that.
But I do feel that as an ecosystem, and this is where also I think a lot of emerging companies can partner with a lot of the big ecosystem companies as well, out on that end. But that to me, it’s like if we don’t scale, we just don’t deliver on what I think… It’s like this notion of, with great power comes great responsibility, it is very much like that, right? That this is a powerful technology and we have the responsibility to do it right and make the impact with it on the positive, but not go ahead and forget that it could get misused and have the guardrails and have the ability to talk about that.
John Cumbers:
Let’s talk about the areas of misuse. Where do you think we need to apply an ethical framework? What things have you come across that you’ve said, “No, I don’t want to go there”? Maybe you don’t want to give examples, but maybe give broad categories.
Ursheet Parikh:
I’ll give an example actually. So I’ve seen some really very, very smart people come and say, “Oh, my goal with this thing, and this is with AI in this, is to go and replace so many people.” And I personally just don’t buy into that kind of mindset. And I think…let me explain on two fronts why, I think the business argument is pretty straightforward about it. And it goes as follows: If you are trying to build a product that is going to go ahead and replace people, it’s a much harder product to build, and it’s a much harder product to sell. Because inherently that product that is replacing people won’t exist in isolation. It will still have to interact with other people. It’ll have to be sold into an organization, and it’ll have to be better than people almost all the time.
Versus if you in converse take what we call stock AI, IA, the intelligent augmentation mindset, it very much is about how am I going ahead and helping somebody really become more successful at their job? And when that happens, how am I going ahead and making that business more successful? And when you have that as an emerging company, you actually have a product that’s easier to sell because you have a customer who’s championing your product within their organization. Now it’s pretty clear that if you become super successful, you can end up getting to a certain edge and you have to go work through that, but you have to be able to go and talk through that set of things. Another one is just that we won’t want to rethink data; privacy is a human right. I think people are at the center of any of these things. So earlier in the past we had seen some social media companies where bullying was front and center to the usage and we did and some of those companies went on to raise lots of money and eventually they’d fizzle out. So our view is-
John Cumbers:
Did you say bullying?
Ursheet Parikh:
Yeah, right. There was a company called Yik Yak, which sounds like TikTok, but for a while was valued very highly. And for us it was just simply that. And so we feel that the ethical and the long-term investment returns imperative is just aligned. There have been more and more times when we just came through this crazy world where you could not have anything and get an IPO or get an exit or you could have a coin offering before without doing any work. And you always have to use this cover of The New York Times or The Wall Street Journal test where five, seven years from now somebody wrote the story. Are you going to think it’s… And we’ve seen the innovation ecosystem fall prey to that kind of dynamic over and over again. And so you can see that, for me, it’s a near and dear topic out on that end, which is anytime people think that building a company or changing or making impact is an easy thing or it’s a get-rich-quick mindset.
John Cumbers:
So what’s the test? Sorry. If you appear on the front page of The New York Times.
Ursheet Parikh:
Oh, the point is are you going to be ashamed? Are your parents going to be ashamed of you? It is this point of it. It doesn’t matter whether it’s illegal or not. At a certain point in time, if you are trying to set up, do the things right for the long haul, you just don’t take shortcuts, right? So the simplest part is just figuring out right from wrong is not that hard.
John Cumbers:
Yeah. What about if your parents appear in court with you? We are right in the midst of the Sam Bankman-Fried trial right now. So that was a topical joke there. Let’s talk about, you invest a lot in automation in AI, so let’s talk about humanoid robots. That seems to be squarely something that’s going to decimate human labor. Do you want a robotic maid that’s going to come in and clean your house?
Ursheet Parikh:
The short answer is I really worry about that. So do I worry about our ability to not build up, rebuild the manufacturing base in the US fast enough because we can’t have enough people? So when I’m looking at companies or where am I advising and working through that is, I’m looking at places where we just can’t hire or train people fast enough. Look at wildfires right now. And that’s an interesting place where we suddenly now are going to need a lot more people to look at all kinds of distribution power lines. And yes, there’s satellite imaging and cellular imaging and drones that’ll help, but then there’s a lot of the stuff that needs and just isn’t an easy way to go do that. And is that a natural place to go and use robotics? Yes. Right.
There are other places where it has gone and augmented people. So I’ll give an example, which is that, if you look at e-commerce, e-commerce is actually one of the most aggressive users of robotic technology, if you look at Amazon warehouses and things like that. I think on the whole it has gone ahead and augmented people in that. So where I’ve come to realize is when these technology waves come, there’s an adaptation phase that you have to get through. My belief is that we won’t have a robotic maid that can do a good enough job as most people, men or women who can clean their own homes at least for the next 20 years, 25 years.
There’s other places where technology which are narrower tasks will probably get applied, like will we have more robots that can go in and deliver equipment to nurses or medicines to nurses, versus the current robotic systems, which are very hard, very expensive, don’t always work. Will we have more robots that can help scientists do high throughput screening faster to find that next specific molecule that then we can go optimize and grow and things like that? So that’s the way I’m thinking and working through these kind of questions on a day-to-day basis.
John Cumbers:
I think it’s really important to think about the human labor aspect of it, but I predict that in just a couple of years we’re going to have humanoid robots that can do 80% of what my cleaner does, which is really picking things up and putting them back in the place that they belong. As you know, I have a 9-year-old and an 11-year-old, so that’s a lot of what I spend my time doing. And we’ve already got a Roomba that can pick up the dust or mop the floor. So I’m going to be surprised… And that robotic humanoid maid can spend 30 minutes at my house and then go to my neighbor’s house, and our neighborhood could share one. So I have a different view on it about how quickly it’s going to come. I don’t think it’s going to take 20 years, but we shall see. I want to dive into the ethics of-
Ursheet Parikh:
Well, let’s have a friendly bet on that because there is other places where I know things will happen faster. But a lot of the physical and online world interactions I think will take a while, unless and until you can dumb the task down to as simple as driving, which is not a simple task, but the augmenting to prevent accidents and all of that has truly reduced. There’s a reason why the Tesla cars are still on the road despite all the high-profile news that we see on the accidents because the data from Tesla just shows that on the whole those cars are, as a thing, running much safer. So I think there is going to be an adjustment for us as a society. I think the US is better set up to have a much stronger social fabric to work through the transition. I think it’s going to be much harder in other countries which don’t have such a social fabric.
John Cumbers:
Well, let’s meet again in three years time, and we’ll see whether we’ve got a humanoid robot that can pick up my clothes after my kids.
Ursheet Parikh:
Oh, I don’t doubt you’ll have one that’ll be a demo. The question is, will it be practical, feasible, and as affordable as what people think people can do?
John Cumbers:
So let’s talk about biology. We had Martine Rothblatt and Craig Venter at the conference this year at SynBioBeta. And just three weeks ago, one of their pig gene edited pig hearts was in a brain dead patient for 30 days, which I think is phenomenal. This idea that we could have spare organs that have your genetic code grown in a pig so that if you are one of the unlucky people who’s on a transplant wait list—which I believe is 300,000 people in the US but maybe it’s more than that—that you can have a new heart. We are getting there. It’s going to come much faster now. I was chatting with one of my colleagues, Fiona Mischel here at SynBioBeta, and she was really against this. She’s a vegetarian and for reasons of animal welfare and she didn’t see at all why a pig should suffer to give a human a heart. And I don’t subscribe to that, but maybe I should. What are your thoughts? Let’s take that as a specific ethical example, which is valuing animal life less than human life.
Ursheet Parikh:
So first let me talk, so I’ll touch up on two points over here. The first is, talking off how animal products have saved lives. I think it goes back a long way, but specifically in the context of porcine tissue, really. So actually this tissue from porcine intestines has shown remarkable regenerative capabilities. There’s a company called Cook Biotech in Indiana. I think they’ve done some amazing work for decades, so much so that they’ve powered an ecosystem of companies. One of them is a company called Axogen, which actually sells you the nerve grafts. And it actually comes with that, the decellularized matrixes with their exosomes, which actually ends up generating much better into nerves. And that same approach has ended up working to creating hearts that actually grow.
So regenerative… Sorry, not heart. Regenerative heart valves. So this what I’m talking of is already there in case of Axogen. They’ve been a public company and with thousands and thousands of patients, but even on regenerative heart valves, thousands of patients have gone ahead and received that. And so that to me, it comes down to… I think, to me the logical part is, I’ve just value human life above a specific animal’s life. Do I not value animal life? No, it’s the other way around. It’s going out of the way, right? I’d rather go ahead and have us do cell-based meats, meat without the animal much faster. We had the plant-based meats as the meat substitute, but that didn’t bring enough people along. I think it’s going to be faster for us to create engineered cell products that save more animal lives than just go ahead and tell people that they have to do that.
We’ll never be able to go ahead and win an election or win a regulation that truly bans that part of it out, and to that effect. And then not only that, when we do that, we’ll actually have better meat because that meat will be engineered to be healthier. You can just choose what type of fat content you want. You can choose flavor. How do you get somebody to stop eating steak? Well, wagyu tastes better. And so if people get used to it, so you can engineer that. And so we have a company called Prolific Machines. That is an investment that my colleague Arvind has been involved with from the very early days to be able to go ahead and engineer and deliver that.
John Cumbers:
This is Arvind Gupta.
Ursheet Parikh:
Arvind Gupta. Correct. And so when I’m looking at one of these things, I’m just trying to think about, there’s no easy black-and-white answers, but the question is, it’s not too hard to know what is the right thing to do for the long haul, right? If we put that long-term mindset into perspective, I do think we will be able to address concerns on both sides of this very particular question.
John Cumbers:
Let’s pick another example. Omri Drory has the company that he’s temporarily the CEO of that’s making synthetic embryos. What are your thoughts about that?
Ursheet Parikh:
I think there are people who have a really hard time having kids. So first I think I see a different version of this debate and I’m really delighted to be working with founders and a founding team that is very serious and front and center on the ethical conversation about this, which is in the CRISPR space with Jennifer Dow, Trevor Martin, Janice Shannon and Lucas Harrington.
John Cumbers:
So this is Mammoth Biosciences.
Ursheet Parikh:
This is Mammoth Biosciences, right. And so I think any use of that type of technology should get discussed, debated as a society, and that has to be done front and center. For what it’s worth, we can see what happened to the people who try to do CRISPR babies without the official sanction and the dynamics that it came out with. So I can see reasons why that is going to be needed and then over time, if you can go… It is a really hard question to truly figure out where does consciousness happen or how does it emerge? And so in some sense, when I’m also dealing with some of those situations like that, often I start saying, wherever science stops, religion starts. I’m glad you are bringing up a range of these questions. And while I don’t have easy or simple answers to a range of these things, I do want to be in a world where we can truly talk about these things. And even if we disagree, it’s okay to disagree without being disagreeable.
John Cumbers:
We have a whole track coming up at the conference next year on biosecurity and bioethics. It’s a brand new track starting. Who do you think are the leading lights in this area? Who do you think talks about this, thinks about this? Who puts it front and center of the conversation, rather than putting it at the end? Which we see, I think too many people doing.
Ursheet Parikh:
Well, I’m glad you’re doing it. So I think that’s there. Here is what I wish happened more when I saw the biosecurity or the bioethics panels. And this is not just in this area, but this is also in the regulation and things like that. And I tend to be very mindful of this when, say, I’m on the board of a company, it’s much easier for me to ask questions, critique or say no. It’s much harder for people to do stuff. And so to me, I feel that, as a society, if we don’t reward, encourage, support creators and makers and try and add more questions or regulations, we create a society then that just basically regresses to the incumbents.
And we have big problems on the planet today, not because the incumbents don’t have the resources. The organizational dynamics are not set up for them to go solve those problems. So what I would say is it would be good if those conversations are curated to first just highlight doers, who’ve actually done things with a high degree of clarity and impact on that, along with policymakers who are going ahead and not just thinking about it as what is going. And, yes, lawmakers have to go in their elections as well. So there’s that holistic view and dynamic outer on that end. But I think Emily Leproust has always been at front and center in terms of talking about it and how they did set up Twist.
John Cumbers:
Yeah, the CEO of Twist.
Ursheet Parikh:
So that’s an example of a profile that I think works well in both of those things.
John Cumbers:
You talked about biomanufacturing and the cost of biomanufacturing. You talked about infrastructure, onshoring of manufacturing and supply chains here in the USA. You are a supporter of Ro Khanna, the Silicon Valley congressman. Ro has talked about the need for reinvestment in infrastructure and manufacturing here in the US. In particular, he’s talked about steel manufacturing. Can you talk a little bit about what it would take to move the needle on policy around biomanufacturing? In particular, you talked about the cost of biomanufacturing. Can you separate… are you talking about drugs? Are you talking about chemicals and materials? And what ideas do you have that we can see planetary health riding on this bandwagon of bringing back manufacturing to the US and at close relationship with a congressman here in Silicon Valley, who really believes in the bioeconomy but also believes in the need for investment in infrastructure?
Ursheet Parikh:
So what I like about Congressman Ro Khanna is he does try to take more interest, more pragmatic conversation while being realistic about the realities of the world as they stand. This is not now, but even long before he won any of the elections, he did come from middle America and wanted to ensure that Silicon Valley did not isolate itself in a bubble. And when I met him for the first time and he asked for my support, I was happy to give him support. This is going back a long, long time ago. Well, more than a decade or closer to 15 years, it was like, “Hey, you can’t give up and lose because it’s pretty easy to become partisan in either direction and go through that.” And so I really applaud and appreciate his effort through that. And actually it was a lot of that centrist view that he had that helped him really bring an ecosystem and a conversation together to support the innovation ecosystem through the banking crisis that happened earlier in the year.
John Cumbers:
Yeah, he was a big supporter of bailing out Silicon Valley, which-
Ursheet Parikh:
Well, let me technically be clear. It was about ensuring that the investors and the banks went away. It simply was to verify and make sure that a dollar that is in your hand, which is protected by the US Bank and by the Federal Reserve, the US Federal Reserve’s, protection of that dollar doesn’t go away when you deposit that dollar in a bank account. So what the Fed organized and rescued was, if you have a dollar in the banking system, it is a dollar that is protected. The employees and the shareholders of those banks who went through their behaviors. And you could argue whether the regulation was right or wrong to have defined a set of qualifying mortgages. So I think the ability to have a certain nuance conversation, bring people together, they help. But in terms of what, not to digress on that, the takeaway I say is I think, the centrist approach is clearly the right one.
Because while it’s easy to, on social media or on any media, sell more ads by pandering to people and their bubbles and the extremism on either side; it’s hard to solve problems or be in the center. I think specifically with regards to what would go ahead and bring jobs back into America. So I personally think that we have reasonably good support around biomanufacturing. I do think the mindset on building to last, building to scale, is something that the entire bioeconomy can do better on. We see a disproportionately high number of companies in human health really on a mission of research in the ecosystem. Oh, I’m just trying to get that next stage of data and then sell the asset. Well, thank God for Stephane Bancel and his desire to ensure that Moderna would not be a company that was going to be a biotech flip and to build a company for the long haul, because that is what… So I’d rather see more of that mindset in the entrepreneur and the investor ecosystem. And when you have that kind of mindset, then you do things differently.
You do things for a different level of scale and working through that. On the other side, I think it’s very easy to see, regulations are immortal and it’s easy to pile them on, and it’s easy to slow down doers. And then you just have to see what policies are working. And despite, there’s a lot of people, you just see where a lot more of the younger people graduating from college are going, or you see a lot of the people, where are the factories moving? And it does move to more business-friendly areas. And so we need to have the right balance on protections, but at a certain time have to ask about why should the same thing in housing cost five times as much somewhere, where all the cost of construction ends up being so much higher than not, and things like that.
So the two ideas I would specifically say is having this build-to-last mindset, and that starts at the inception on the companies because if you have an investor with a three-year mindset and an investor with a seven- or eight-year mindset inception, you’ve already built a lot of stress into the system. If you’re trying to optimize for an exit versus building a company out of the long haul, you just make decisions very differently. And it goes back to me, why do I want to be associated with people who want to make impact and to make impact or to bring products and scale their availability? Whether you like or don’t like Elon Musk, it’s hard to argue that his impact on electrification of the automotive system, it’s just disproportionate. And a lot of it starts with his long-term mindset that he’s published in part one, part two, part three of the master plan that he’s going to call out on that.
And so that’s one. And I think the second is just being mindful of… It’s important to have a lot of the conversations, but it’s also important to be mindful of overregulating, because if we go ahead and do that, you start having things go to… And then it creates a really bad incentive to grossly underregulate out on that end because there’s a lot of people who want to do the right things. It takes a lot of activation energy for companies to move headquarters and staff and go to entirely different states and things like that. But if that’s what is driving growth, then you’ll have those stewards go ahead and make it really hard for states which are trying to do the right thing.
John Cumbers:
Ro has talked about… As you know it may not be Ro directly, but certainly other folks in Congress have talked about a chips and science act for biology. This is what we need is a big investment and Ro calls it productive investment, investment that’s going to see a big return on investment in terms of technology. But at the same time, the national debt has ballooned and that’s what’s now driving a lot of these macroeconomic conversations. So how do you square the need for productive investment in bringing back manufacturing with this giant national debt that we have here in the US?
Ursheet Parikh:
And I may be in the minority for this opinion, but I think the highest return on investment that the US gets on its dollars is investment in organizations like BARDA, DARPA and National Science Foundation, Scientific Grants, Basic Research, way more than anything else. I saw the Inflation Reduction Act and the biggest recipients and beneficiaries of the Inflation Reduction Act ostensibly to… Well, first it was called the Inflation Reduction Act, but it clearly had a lot of policies in trying to reduce greenhouse gasses and things like that. The biggest recipients of those are a lot of oil and gas companies, and for some of them, it’s really questionable whether they’re truly reducing oil and gas. And so if I look at the trillion-plus dollar cost of that act relative to what happens when you add NSF funding and increasing that with 5, 10, 20, 30 billion dollars, it’s in a very different league. It’s in a very different zone.
So much of that has driven so much innovation. And so to me, I would probably be a little mindful of that attribute and dynamic. And then I’m not saying that the large companies don’t have a part of the solution, but in effect, I think they will do that when their customers ask for it, there’s enough customers that are… By now, it has become pretty clear, green is just an attribute of a better product. And so I think where I come and advocate is, let’s not lose our edge in the cutting edge of where it matters, synthetic biology, AI, manufacturing, scaling… Where the policymakers can go and do things. This conversation’s too short to go and start getting very prescriptive about the details. Is that inherently a set of things that can be done to kickstart and accelerate bio-based production?
Yeah, I mean, I think even for drugs and a range of things like that, I think the specifics of it, I don’t have direct recommendations for it, other than basic research. NSF is at the core, and if I had to pick the next part after that, it’s really education, and education going back to preschool and college. I think there’s just no reason why college should be so expensive. For example, there’s a move in California to get community colleges to full degree granting colleges. To me, it’s no-brainer. Most of our community colleges in California are far better than most universities in India or China, just in terms of facilities, teaching abilities, all of that stuff like that. And so to me, I think that investing in your people and investing in basic research carries exponentially compounding dividends over the long haul.
John Cumbers:
Is that what your family office is working on?
Ursheet Parikh:
It’s tiny. It’s early. But yes, that was one of the things that the pandemic got me to really look at that in earnest and focus on trying to go ahead and in this case, help start a university with a bioengineering undergrad that could be as great as any in the world, in India. And it’s at a university called Plaksha University, and I think we’ll know how that strategy and mindset has gone 10, 15 years from now, but there’s a lot of other great people doing that kind of work at a global level.
John Cumbers:
I haven’t heard of this move to make community colleges four-year degree colleges. Who is pushing that? Who’s advocating for it?
Ursheet Parikh:
I don’t know the specific legislatures that are doing that, but I do believe that, I think the first two did get an exception or limited approval to go ahead and do that. And I look at California community colleges and the outcomes that they deliver, or for that matter, even overall, the UC system. I’d love to highlight the UC system as, and not just the UC. Actually, a lot of the public colleges, UC, UT, University of Illinois, University of Michigan, University of Washington, I think they’re doing amazingly well servicing our country because they’re just not… For the dollar of input that goes into it. The dollar you get out of these colleges relative to most of the Ivy League colleges, it is very different. Most of the Ivy League colleges have kept their enrollment pretty much to the same level or within 10-20% of where it was 20, 25 years ago.
These public universities have significantly expanded enrollment at the same time. So it’s not like trying to ensure that I’m just being a Gucci or a Prada degree, but I’m really expanding, trying to expand opportunity. And that is happening clearly in response to, because a lot of these universities to some extent, get funding from the state and hence are responsible, some level accountable, to their citizens. But college education is the primary driver of social mobility in America. And we do need, I mean, you look at this thing where yes, we are. It’s a little challenging when we are seeing some layoffs happening in the bioeconomy. But on the other hand, you still see very, very large number of jobs that are going unfulfilled in so many other places in our economy, and that we do have to be able to go ahead and help people uplevel their skills and work in this new world with AI. People have to be able to control robots, otherwise robots will control people. So you have to help people really get better.
John Cumbers:
We’re talking with Ursheet Parikh, a general partner at the Mayfield Fund. We’re going to take a short break for this message and we’ll be right back.
John Cumbers:
Welcome back. This is John Cumbers, the founder and the CEO of SynBioBeta, and I’m talking today with Ursheet Parikh, general partner at Mayfield Fund. I want to move on to some of the key challenges, but before that, let’s just touch on AI. Can you talk about some of the practical applications of AI that you have seen or even applications that you’re using AI in your workflow as an investor right now?
Ursheet Parikh:
So I’ll give an example of Qventus. Qventus is an investment that we made seven, eight years ago. It was one of the leading companies even back then in AI application into healthcare and hospital operations. And it’s done and then it continues to build and work through that. For example, I have to give them a serious call off when COVID happened. The whole team there, nobody took a day off. They sat and worked, like Mudit, the founder, CEO, his son was in the same healthcare… Sorry, was even in the first COVID lockdown, was going to daycare as they were creating COVID command centers for hospitals to be able to go work through the needs from the population, the patient flow, the dashboards, all of that kind of stuff like that.
But that was an example of everybody having an assistant in the health system that tells people what they may need to do the moment they need to do that, such that patients have less wait time. The care providers don’t feel stretched and pulled and can naturally prioritize. And the health system does better because you have just more patient flow through the system coming as a result. And so there are major health systems that have basically been able to add capacity equivalent of hundreds of millions to a billion-dollar-plus into their health system, while going ahead and helping out patients and doctors. So that to me is an example of something that would just not have been practical or possible without AI.
John Cumbers:
Just through efficiency gains.
Ursheet Parikh:
Just through efficiency gains, but in a way where it’s truly helping people do their jobs better as caregivers and for the operations, just reducing. So it is the net effect on why customers pay for it is efficiency gains, but if it is just efficiency, it wouldn’t sell because at a certain level, people have to feel it helps them do their jobs better. So there’s got to be that emotional aspect. And this was a learning in the company, that if they did not focus enough on the NPS score of the people, it would just never produce the outcomes. People would not use the products and you would never get the outcomes.
John Cumbers:
That’s the net promoter scores. So that’s the survey of benefit. So just give me a practical example, then, of something directly to the patient that would change.
Ursheet Parikh:
So for the patient, what fundamentally changed is wait times right out the get-go. I’m ready to be discharged, but I’m just waiting in my room for three hours and it’s uncomfortable; I want to go home. Or I’m sitting in an ER and I’m just not being seen or I don’t know if I’m even acknowledged. And so just the ability to prompt somebody to say, “Hey, this person’s been here, can you go talk to them?” That would then work for that. So that’s on the patient side, but on the care provider side, there are times when somebody gets recommended to do something and it’s a little bit extra on what they were on top of, what they were doing. But if they don’t get the big context on why they’re doing it and they’re wondering, “Oh, these are just the administrators adding more things for us.” And so that is an example of something where the people who are to use the product, they have to see the bigger impact.
There’s a communication aspect, there is an organizational reward aspect. There is a learning that comes out of it in terms of recommendation to the customers, that if you’re going to be successful with adopting these technologies, you have to align incentives such that you’re just not making people do more work without them seeing a commiserate impact or benefit. Some of what people need to understand is just the context on what or why, and why it helps. So those are, as I said, I think AI without a human touch just doesn’t cut it. It’s at the core. If you go to the Mayfield website and you see our views on AI and it’s people are at the center… it’s a core values thing you have to do. I mean, for us, the ethics of it are front and center.
John Cumbers:
And practically speaking, for things like ChatGPT, are you using that in your day-to-day workflow?
Ursheet Parikh:
So I’m not having as much use on it directly, but I know indirectly I’m using it because a lot of what you see as the auto complete when you use Microsoft Office products is clearly coming and powered by that. You’re beginning to see… The place where I see the biggest use of it right now is in software development. And this is across the board-
John Cumbers:
So Copilot from GitLab.
Ursheet Parikh:
Yeah, the GitHub Copilot along with the ability to just separately use ChatGPT for code snippets versus a developer having to spend hours going through Stack Overflow, a bunch of Google Docs and ads and things like that. So there’s clearly that. We have companies in our portfolio where people in sales and marketing are able to go and use that quite effectively. But those are places… I mean, I’m just amazed at the number of creative users I see of people being able to go do that.
John Cumbers:
If we think about the macroeconomy and we think about some of the headwinds that the industry’s facing, some of the key challenges, from your perspective, which of those do you think are the most pressing that, specifically startups in the SynBio sector face today, and how do you think they can overcome them?
Ursheet Parikh:
So I think the world has changed in a very, very significant way. And it’s a pretty dull sort of metric, but I think it’s an important one to keep in mind, which is the interest rate on their tenure treasury. And it used to be sub 2%, now it’s somewhere between four and a half and 5%. You are seeing this kind of impact, the innovations ecosystem at every level. For companies that are public or near public, it has showed up with a strong emphasis on earnings and profitability. It is because if you were investing a lot of money and using a lot of cash for eventual profits, the discounted value of those profits are worth a lot less because the cost of money has gone up a lot. And so it’s pretty clear that in the past where people would say, “I’m just trying to build the product and scale up revenues,” you have to start showing operating leverage pretty early in the life of it. And there is a lot of method to what may be perceived as insanity in the public markets. And this is happening.
So the public markets are using companies in most sectors with the same yardstick. It doesn’t matter whether it is a synthetic biology company, a healthcare company, a manufacturing company, a regular traditional industry, food company or an IT company, you are basically having to show a healthy balance of growth and profits. If you are basically burning a bunch of cash, that’s great if you’re growing super fast. Or if you’re not growing fast, are you showing a certain degree of profitability? The only place where you see some anomalies may potentially be an AI. But the irony is the big AI stocks, which seem to be… If you remove the big AI stocks, you can see the public markets aren’t necessarily doing as well. You have to just look at the small cap biotech index in XBI and to get a feel for it. And so for public companies, you clearly have… So you don’t want to rush to profitability. Where a few years ago you could be a public company with a great story and maybe not very profitable or very far from profitability, so that changes.
But early on in the innovations. But what has also changed is the valuation multiples changed dramatically as a result. Now why that tenure treasury number is important is because if you see where does most venture money come from. And a lot of it comes from institutional investors. These are endowments, pensions, retirement, government funds, sovereign wealth funds. And yes, clearly there’s a bunch of other high net worth individuals, banks and others involved as well. But generally what happens is a lot of the investments when the 10-year treasury, the risk-free rate is 2%, and the obligations of these big institutional investors are at 78%. They make up the gap by investing in risk assets. When that long-term rate is 4, 5, 6%, the amount of money that comes into risk asset goes down.
So the pool of capital that is there, there’s still plenty of capital that’s out there, but the pool of capital that is there has to first deliver a higher return. There’s less of that that’s available. And so for you as an entrepreneur, you have to adapt your financing strategy on where and how you’ll invest. So for example, if you are at the earliest stages, the feeling may be, “Maybe I should raise less.” Well, you clearly have to be more capital free. That’s a given. But even if the valuations may be low, you may need to raise more because the threshold to unlock the next round of financing has changed dramatically.
And so you have to be mindful of that and go ahead and raise for that. You have to go ahead and think about the syndicate and the quality of the syndicate and are they going to have the stomach for the sausage making that’s ahead? Are they holding enough in resource? Versus who’s just giving the highest valuation at that point in time? It’s less about a negotiation dynamic and it’s more about once people have invested, everybody’s on the same boat. So it’s to ensure that you are having that right long-term mindset to go ahead and raise. And this, you can see this, right? There’s a lot of data out there on how many venture funds are finding it harder to raise venture rounds in the current environment. I mean raise their own funds in the current.
John Cumbers:
So you’re saying just to summarize, the investment capital that comes into VCs as the LPs that invest in your fund and many other funds, it’s coming from these large institutions like university endowments or pension funds. And traditionally they’ve expected or they are expected in order to pay out their endowment or in order to pay pensions, a return of seven 8% as the floor moves up of the core interest rate, they have less available to invest in riskier assets like VC.
Ursheet Parikh:
Yeah. Different funds have different returns and targets and things like that. But for example, in pensions like… Well, Social Security are just for inflation, a lot of the pensions don’t. And so a lot of it will often run on absolute terms. Generally, I think, and so what this has meant is that the bar has just changed dramatically on what it takes to build deep tech companies. And that means that you need to have more complete teams early on. When you’re pitching for a fundraise, the ability to say, “Give me 50 or hundred million and then I’ll go hire the leaders who are going to go spend it,” Becomes harder to get fund big forward than saying, “These are the best people to build those organizations that aren’t really on the team and they can defend the plan as it’s there.”
On the positive side, you will see only true believers in the entrepreneurial and the innovation ecosystem because the opportunity cost will be high to be in this ecosystem. But I think these are tougher times. But I was an entrepreneur in ’09, and I can say that you do come out pretty strong when you go through these times. Especially in the early stage ecosystem because it sets you up to really succeed for the-
John Cumbers:
We talked before the break about how investors are looking for complete teams when companies come to pitch you, you don’t just want them to turn up. You give them the money and then they go off and hire them. You want to de-risk that investment because you want to increase the chance of success. There have been a lot of biotech layoffs lately, particularly here in the Bay Area. So I presume that that’s actually much easier for companies to come with really good teams together and pitch you. Is that happening?
Ursheet Parikh:
I think we are definitely seeing just a greater completeness in the teams that’s come together. I think some of it is just necessitated by the market as… We went through an incredible phase in 2021, where there was this little bit of euphoria of coming onto the other side of the pandemic and a lot of low cost money in the system, along with Zoom where we did end up seeing a pretty… If you were to look at the raw stats for the biotech companies that went public between 2020 and 2021, over 90% of them are trading today at stock prices, which are greater than 50% below their IPO price, not even their listing price. The number of IPOs that happened in 2022 was 90% below than 2021, and the first half of 2023 was a further 40% below the 2022 number. So you just have a very different financing environment.
Some of that has translated into investors clearly asking more questions in some sense. But if you are to, just from a first principles perspective, if you’re going to raise 50 million or a hundred million, clearly a company doesn’t grow faster than its founders. And we’ve seen a lot of amazing deep partnerships with founders who are first time founders in many of the companies that we work with. But we also see them do an exceptionally good job in balancing that out with experience that hopefully the company makes new mistakes and not the ones that have been made before.
And so I think from an investor perspective, you can definitely put yourself in a better stead by having a core leadership team that is on board, that has experience bringing products to market or actually using that capital wisely. Because then your plans just appear more credible. If you really think about fundraising, it’s a confidence building exercise. It’s a little bit like a sales job where it’s also a confidence building exercise. People have to believe what you’re going to go ahead and say and when you have credibility off the teams that you’ve assembled. So I think anytime market corrections happen, you do see investors frankly doing more of what they should have always been doing and companies also being more open and eager to do that versus not getting asked. And then thinking about the financing itself as validation.
John Cumbers:
Let’s talk a little bit more about the human side of this and the way that you work with startups. Once you’ve decided to invest in a startup, how do you then ensure that that relationship between you at Mayfield and the startup remains a collaborative operation, one that’s beneficial to both parties?
Ursheet Parikh:
So I think at the core, we are very much a value to an investor, and if you really think about what values are, go on the Mayfield website and the beliefs, you’ll see eight values listed. They’re not just values by how we operate, but they’re informed by what has worked well in working with founders to build amazing companies across decades. To me, we’re loyal to a fault, but we also don’t beat around the bush. These are actually two values over there. And so let me explain how that comes in. So a big part of the alpha creation of Mayfield’s venture returns, is a deep trust relationship that has to form between the founders and us as significant investors and partners to the founders. In some sense, I’m like a coach to the founders, which means that I have to recognize their strengths and I have to adapt my style to them.
When such a deep trust relationship exists, I can clearly highlight and talk about good things that are working right. But if I feel something is not going right, I want to be able to have a conversation. And if that trust doesn’t exist, the odds that conversation can happen and can be constructive ends up being much lower out along on that end. And so we think of this, as I said, it’s people first, it’s a people business and you have to be… And this is also where, as a fund, we think our time’s a lot more limited than the capital that is available to us.
But in the early stages, a lot has to go right in aligning all the stakeholders, the strategy, building this trust, how you think about your goals, the growth path for the founders, the coaches to other key executives that have to be brought on board. And it doesn’t matter. We have founders who start companies fresh out of college. We have founders who have already done companies that have gone to a billion in revenue and have been $10 billion-plus exits. Who’s going to come back with… The common thing that aligns us with them is the values and this growth mindset.
John Cumbers:
We’re coming to the end of our time. I want to end on a positive note about the future of the industry. You’ve been a big advocate for thinking and helping companies think through their AI strategy. Help me understand the kind of advice that you’re giving of your startups who are looking at generative AI and what’s happened over the last nine months and they’re trying to reposition themselves strategically. What kind of advice are you giving them right now?
Ursheet Parikh:
So I think the short is, every decade or every couple of decades or so, you come across this innovation moment. And whether you are directly in that business or not, it impacts you. Like the PC was one of those, the internet was one of those, the mobile phone was one of those. And we think the current incarnation of AI with generative AI is one of those. I think there are people in synthetic biology or in the deep tech ecosystem that have leveraged different forms of AI, different forms of deep learning to build their products or run their businesses. Fundamentally, what is different is that in the past year, tens of millions of people have been able to experience and have been able to be powered by the technology recognized the possibilities. It’s not just an esoteric few who got excited about the power of crypto.
And so we see that to be a fundamental trend. So much so that for example, you have The Wall Street Journal and the economists publish how companies’ returns are correlated to how well they’re adopting AI. Boards are talking about it, CEOs are talking about it. Leaders are asking for it. And so for example, if you’re selling a product, you have to recognize that customers are going to go prioritize things with AI more than not. You have to recognize your customers have their own priorities, so you want to be aligned out on that end. Clearly, if you can look at every process or operation in your business and see does it get better with AI. You’ve spoken about Mammoth. Mammoth did use high throughput screening across a big landscape of information to be able to find and discover and deliver better CRISPR systems much faster and AI was a big part of that innovation engine over there.
And so you have to then recognize everything that you’re doing, does it actually get better? You also have to recognize that if you’re raising capital, if investors think that that is that next big wave, and you are a significant beneficiary of that wave, that that is communicated and understood, and the relative attractiveness of your equity versus others comes in. So it’s almost like there’s an entrepreneur, an amazing entrepreneur who’s no longer with us. His name is Andy Grove. He wrote a book in the ’90s called Only the Paranoid Survive. He was one of the founders of Intel and he created… And for me, that was a seminal book when I was in college in the ’90s, where he explains that every once in a while you have one of these 10X waves.
And if that wave is one of those 10X waves, if you don’t recognize it as coming and prepare your organization to leverage it or adapt, you are going to get washed over out on that end. And this is just touching every aspect. It will be a fundamental technology. I do think the US is very well poised to actually deploy it in the right way, with the right communication and regulatory constructs. That will happen. No one’s avoiding those topics. But yeah, I think every synbio, every deep tech company needs an AI strategy.
John Cumbers:
I’m actually using ChatGPT on a daily basis now to help me plan out projects. Particularly, project plans, new ideas. I give it the outline, I ask it then to ask me questions until it has a good understanding of what I’m doing and then I ask it to write me a plan. And then after I write it, ask it to do the plan. I’m like, “Oh, now do me a website. Now do me an email to this person asking for this.” And it’s an amazing tool that’s impacting me as an entrepreneur.
Ursheet Parikh:
Well, that’s a great tactic. That’s a takeaway for me, which is that, ask it to ask you questions.
John Cumbers:
Exactly.
Ursheet Parikh:
And see how that develops. And yeah, I think we are going to be in a world where, for example, in healthcare, there used to be a nurse assistant role that just went away as the cost of healthcare went up and that overloaded the nurses. And so I’m actually a big believer of the fact that in a lot of roles, people will get assistance that’ll help them do their jobs better. Will offload them. And I think how disruptive this is for society will be the pace of not technology innovation, but the pace of adoption. And I think in the end, all these new technologies will have to coexist in a world with people. And if you don’t have that human first mindset, people first mindset, I think the technology will just get a foreign object immune reaction.
John Cumbers:
We had a number of AI companies speaking at the conference this year. Sean MacLeod from Absci was doing a Phy-sci chat with me, and we’ve got a number of speakers who are going to be speaking next year. I just invited Aviv Regev from Genentech to come speak. And we have a whole track at SynBioBeta next year on AI and digital biology. So it’s definitely something that we’re keenly aware of. We’re seeing the intersection between bio and AI. I long for a lot of these tools about genetic design to integrate with AI. So you can just type into a computer, the enzyme that you want or the genome that you want. And to me, that’s now coming and it’s probably, it’s not a decade away anymore, whereas it was always a few decades away before.
So I’m very excited. I’m also excited about how practically my business, the media and the connections business can use AI. I have an AI, I have just an intelligence, I guess a biological intelligence in my head that makes recommendations for who in the community should speak to each other. Well, now powering that by AI, I’m just very excited for the power of connection and being able to integrate live events with AI and how we’re going to be able to use this in the future. I’m not sure where it’s going to begin, and I’m not sure where it’s going to end, but I know that there’s some really amazing things that we’re going to be able to do with that technology coming up in the future.
Ursheet Parikh:
Yeah, I think it’s going to go ahead and augment. For me, autopilot on Tesla has been a life-changing technology. I’ve driven more than a hundred thousand miles on it, and it has just allowed me to be a lot more refreshed and productive when I’m around people. It’s taken the pain out of that. And this to me, if it was to say, what am I most optimistic about in the future? I think it is the fact that in the last 15 years or so, the US productivity growth had slowed down, stagnated significantly. And that then takes down the quality of life.
And I think AI will be one of those first technologies that will rekindle that productivity growth. And it’ll allow us to do a lot of things that we hadn’t done. And we have our friendly bet that we had at the beginning of this, like three year versus 20 year on when do we have domestic robots for all general purpose home tasks. I think it’s going to take a while, but along the way, it’s going to give us a lot of time to adapt. And I think it’s going to, the productivity improvement will truly bring jobs back and improve lives.
John Cumbers:
Ursheet, it’s always a pleasure to have you join us for the podcast. Really appreciate you giving us your advice, but also this balance of practical advice with visionary future. So thanks again for joining us and look forward to seeing you again soon.
Ursheet Parikh:
Well, thank you, John. This has been a pleasure and thank you all for listening.
John Cumbers:
I, again, want to thank Ursheet Parikh for joining us today. And also thank you, the listeners, for tuning in. I welcome your feedback and I want to hear from you about which speakers you want to listen to, what topics you’re interested in. So if you’ve enjoyed the podcast, leave us a review, or more importantly, share the SynBioBeta podcast with a friend. I look forward to seeing you in May next year, sixth through ninth at the San Jose Convention Center for the Global Synthetic Biology Conference. This is John Cumbers signing off, hoping that all your DNA dreams come true.