Scientist CEOs

Helping elite scientists become elite startup founders

Idea: Scientists should run their own companies.

• I believe that scientist CEOs should be as celebrated as hacker CEOs are now.
  • This is good for both scientists and investors:
    • Scientists benefit by keeping control of their startups’ equity, products, and vision.
    • Investors benefit by backing scientist-led startups that generate the biggest returns.
• Paul Graham founded YC in 2005 to prove that “Young hackers can start viable companies.”
  • Before Y Combinator, technical founders rarely kept control past Series A.
    • Now YC’s top companies Stripe, Airbnb, Doordash, Coinbase, and Dropbox are all still run by their founding CEO.
  • We need to bring the YC funding model to biotech.
    • This will lead to hundreds of new startups led by scientist CEOs.
      • Scientists are already proving they can be great CEOs.
      • Now more investors need to back scientist CEOs at the earliest stages.

Trend: Silicon Valley now celebrates the technical founder CEO.

• The VC stereotype used to be that young hackers need to partner with experienced CEOs.
  • Think Marc Andreessen (CTO) and Jim Barksdale (CEO) at Netscape.
• Mark Zuckerberg and The Social Network mainstreamed the idea of the hacker CEO.
  • Now we expect the tech founders to stay CEO of their companies for as long as they want.

Why: Founder/CEOs chase bigger missions.

• The best founders start companies to change the world, not just get rich. So they don’t sell out at the first big offer.
  • “In 2006, when Yahoo wanted to buy our company (for $1 billion), I probably would’ve been fired, and we would have sold the company. We wouldn’t even be here if I didn’t have control.” — Mark Zuckerberg
• Apple and Google both famously replaced their founders with professional CEOs, only to each return to their original leaders a decade later.
  • Steve Jobs was fired from Apple in 1985 and returned as CEO in 1997.
  • Larry Page stepped down as CEO of Google in 2001 and returned as CEO in 2011.

Myth: Most VCs still think that scientists can’t be good CEOs.

• This stereotype is as lazy as the old stereotype that hackers couldn’t be good CEOs.
  • Hacker CEOs are successful because they deeply understand their products.
    • Why shouldn’t scientist CEOs be the same?
• Truth: Not every scientist can become a great CEO. But a great scientist CEO can come from anywhere.
  • Paraphrased from Anton Ego’s speech (Ratatouille)

Fact: Most of the top biotech startups now are still run by their scientist founder/CEOs.

• Jason Kelly (Ginkgo): Ginkgo Bioworks was founded in 2008 by five scientists from MIT. Co-founder Jason Kelly (Ph.D. in Biological Engineering) is still CEO after a $15B IPO.
• Emily Leproust (TWIST): Twist Biosciences created a synthetic DNA manufacturing process used for applications from insulin to silk. Emily Leproust (PhD in Organic Chemistry) has been CEO and co-founder from inception to a $10B+ value.
• Chris Gibson (Recursion): Recursion Pharmaceuticals was spun out of Chris Gibson’s MD/PhD work at the University of Utah in the lab of Co-Founder Dr. Dean Li. Chris is still Recursion CEO ten years later (including two as a public company).
• Gaurab Chakrabarti (Solugen): Guarab launched Solugen in 2016 while completing his MD & PhD in Cancer Biology and Enzymology at the University of Texas. He’s since raised $600M+ for Solugen as CEO to chase a mission to decarbonize the chemicals industry.

Problem: Many scientist founders are losing control of their startups too early.

• VCs own the majority of biotech startups at Series A.
  • Average: 52%; Median: 57%
• Example: Moderna
  • The mRNA breakthrough that led to Moderna was based on discoveries in Derrick Rossi’s lab at the Harvard Stem Cell Institute. Rossi recruited co-founders Kenneth Chien and Robert Langer at Harvard to create Moderna based on his research. But early VC Noubar Afeyan ended up with the most equity in Moderna (and still serves as Chairman) while Rossi was out of his own company four years later.

Solution: Bring the Y Combinator funding model to biotech.

• Key: Founders should raise smaller amounts more frequently.
  • This allows scientist founders to keep control of their startups for longer.
  • This also forces startups to achieve smaller, more frequent milestones, which imposes a discipline that improves their chances for success.
• This requires many more angel and pre-seed investors to focus on biotech.
  • A huge part of YC’s value is in the hundreds of top investors it attracts to each Demo Day.
  • YC helped create an angel → pre-seed → seed ecosystem in tech.
    • We need to create this early-stage funding ecosystem in biotech now.

How: Be the first investor and advisor for startups led by scientist CEOs. 

1. Find scientists with moonshot scientific ideas.
2. Assist with spin-outs and startup formation.
3. Invest the first $50K-250K at incorporation.
4. Connect founders to the best angels and seed funds.
5. Optimize YC applications and interviews.

Opportunity: Elevating scientist CEOs is good for everyone.

• Founders: Scientists want control over their inventions. They don’t want them sold to the first pharma company that offers a good exit to their VCs. Scientist CEOs can block these early acquisitions and chase their true vision.
• Investors: Founder-led companies outperform others on valuations, growth, patents, etc. Backing founders first is just good business.
• Employees: A founder CEO vs. a hired CEO is like the difference between a biological parent and a step parent. It’s possible that the latter is better, but the former gets more trust by default.
• Customers: A classic sign that a company has been run by professional managers for too long is quality fade. Founders fight to maintain the original vision for their products.

Now: Calling all scientist CEOs:

• Apply for funding from Utopic!
  • We aim to invest in ~10 biotech startups per year run by scientist CEOs.
  • Our ideal investment is where a scientist founder/CEO has a breakthrough idea and is looking for the first $50K-250K to start up.
• Join the Scientist CEO Club!
  • We’ve created a community of 100+ scientists who run their own companies!
  • Sign up here to get invited to upcoming meetups with other scientist CEOs.

This idea is a work-in-progress. If you’d like to riff on it, hit me up @neilthanedar on Twitter!

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This is Part 3 in a series of essays comparing the new biotech revolution to the current tech revolution.

• Part 1 is titled “It’s 1994 Again”, explaining how we are now in the dot-com era for biotech.
• Part 2 is titled “YC for Biotech”, on bringing the original Y Combinator model to biotech.
• Part 4 is titled “Biotech 2.0”, on how to build and fund the future of biotech.
• Part 5 will be titled “The Next Genentech”, on the search for the next great biotech company.

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