The Future of Biotech Entrepreneurs - A Conversation with Michael Schrader - The Futurist Society

What are the biggest barriers for entrepreneurs looking to innovate in the biotech space?

Join Dr. Awesome as he sits down with Michael Schrader, an entrepreneur and co-founder of Vaxess, to learn more about the evolving startup landscape.

Michael discusses the challenges of securing funding, navigating regulatory hurdles, and building a capable team. Highlighting the evolving startup landscape, the importance of understanding the problem at hand, and the role of visionary leadership in driving innovation. Michael also reflects on the impact of AI and the future of food, emphasizing the need for honesty and perseverance in entrepreneurship.

Don’t miss this deep into the journey of bringing groundbreaking biotech innovations to market!

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The Future of Biotech Entrepreneurs – A Conversation with Michael Schrader

Hey, everybody. Welcome back to The Futurist Society, where we are talking in the present, but talking about the future. Today I have a really special guest. We have Michael Schrader, who was the founder and former CEO of a company called Vaxess and is really an expert in bringing cutting edge technology to market. As you know, I’m very interested in this topic because I feel like this is something that I want to do in the future.

Thank you so much for joining us, Michael, and giving us your insights. Tell us a little bit about your journey and what you’re doing now.

Thanks so much for having me. I love this theme of talking about these things 10, 20, 30 years into the future, so excited about that.

Just a quick background on me. I was a mechanical engineer originally. Loved the auto industry, designed cars. Went back to business school with the goal of starting a company. While there, came across an interesting problem that I got excited about solving, which is the fact that roughly 2.5 million people around the world are dying from diseases for which we have good vaccines. So how can we do a better job getting vaccines to the people who want them and need access to them?

Roughly 2.5 million people around the world are dying from diseases for which we have good vaccines.

So I spent the last 12 years building Vaxess. The name comes from a combination of vaccine and access. We really sourced a couple of different technologies over the years to pull it in, ultimately landing on essentially a nicotine patch like device that patients can self apply in the comfort of their own home to self vaccinate.

Realities of Having a Startup

So you have this idea and you want to bring it to market. How does that happen?

I feel like that’s kind of the gray area. Everybody thinks, “Oh, I have this great idea. I want to start a company.” Like, what is step one?

Yeah. So, you know, it’s a grind, right? I think everybody jokingly talks about the movie The Social Network where it’s like this amazing inspiration that hits and there’s like 30 minutes of that, and then there’s like 10 seconds of the hard work in the middle of building and then boom, billionaire. Right? And all the investors are all over you. I think that 10 seconds in the middle is the hard part that gets overlooked every single time.

In our case, it was again deeply understanding the problem. What is it that is preventing vaccines from getting to remote corners of the world and even here in the United States? What is it that hinders uptake and access? So really, really digging into the problem.

I was lucky at that point to have three others that came from different backgrounds. We were all excited about this problem together. So spending time as a team, really trying to understand the nuts and bolts of the problem.

We zeroed in on 3 or 4 different things in that early discovery process. And it was everything from some political or kind of cultural issues that were stopping people – we realized we couldn’t solve those. The cold chain, you know, having to ship vaccines cold was a huge problem. So once we had identified that as a problem, we really went on the search for technologies that could help us overcome that. So that was kind of the first step in the journey. And then we identified several other problems and had to go find technologies we could bring in to help overcome them. So really understanding the problem is step one.

Michael Schrader is an inspiring biotech entrepreneur who is driven by a desire to take on the seemingly impossible challenges to make the world a better place.

That team element is so important. Really getting to know your teammates, building trust amongst your teammates. I think that element is, in my opinion, far underappreciated in those early days. How important it is, not just to find great teammates, but to really build this bond between the team.

Then there’s all the logistical elements of actually incorporating the business. Licensing the IP, splitting equity, figuring out how do we ensure the company, how do we do basic financials. The beautiful thing about most ecosystems now is that there are a lot of great consultants, lawyers, and external counsel that can come in and help with those things. And in many cases they’ll do it at low or no cost for early stage startups in hopes that you will eventually grow and be successful.

So I think those are the primary activities within that first year to really get this up and off the ground.

Yeah, I want to also talk about just the culture of having a startup. I think that it’s kind of changed society. You know, I don’t remember that happening so much in the 1980s when I grew up and now I feel like it’s very much idealized or idolized. You have shows like Silicon Valley and all of these other things that are really promoting this idea of entrepreneurship.

You’re kind of starting in that environment. Do you feel like it’s changing right now? Do you feel like it favors these larger organizations? Or is there still a really good opportunity for people who are single or even a small group, like you said, that are trying to start up their own company?

Yeah, so the landscape has definitely evolved. When I first started Vaxess and started working on vaccines in 2011, all of my peers were working on software based technologies. That’s really where the focus was in this ecosystem. So everybody was trying to launch mobile apps. Everybody was looking at different next generation social media, different chat type apps. Groupon was a big deal at that point, so people were looking at Groupon clones.

The beauty of these software based startups is that it was relatively easy for 1 or 2 great software engineers to really sit down, crank on some code, and get like an early product concept.

I think the space has evolved to the point now where, 10 or 12 years later, I’m seeing far more interest in just flat out harder fields. So, you know, AI is obviously an area that a lot of folks are working on right now. AI takes a lot of effort to get something up and running.

Now, if you’re building on like a ChatGPT backbone and you can leverage a lot of what’s been done previously, yeah, you can do it a little bit easier. But I think it takes more than 1 or 2 sophomore engineers and six months of cranking on something to get an early product concept.

You’re also seeing a lot of money flowing into the areas that I get excited about, which are tough technologies. So if you look here in the Boston area, you have companies working on nuclear fusion, you have companies working on operating systems for quantum computing platforms, you have companies working on a host of different technologies to capture carbon dioxide emissions and actually turn them into something useful. You’ve got complex biotech companies doing gene editing and things like that.

These companies take a lot more effort, energy, team, drive to really get up and off the ground. So it’s not 1 or 2 people anymore. It’s a host of people with different backgrounds coming together.

The good news is we’ve also got an investment ecosystem that I think has grown up around these. Where you’ve got investors that are ready to come in early and help companies and founders kind of build these companies in parallel. So that ecosystem around tough tech and hard tech and biotech has really grown up in parallel.

So I think it’s a great time to start a company today. I just think the focus is shifted away from, “Hey, I’m going to go crank out a mobile app and have this thing online in three months.” to, “Hey, I’m going to go on a ten year journey to try and launch some technology that moves the world forward.”

Just to summarize, would you say it was, in like the early 2000s, a little bit more focused on software and now it’s a much more diverse ecosystem?

I think that’s it. And I still think, particularly with all the AI innovations, software is going to be a key part of this. But these are going to be tougher companies to build.

I mean, ChatGPT from day one brought in hundreds of millions if not billions of dollars. And although the initial team, I think was only 5 or 6 people, they got big really, really quickly to build what we know as ChatGPT today. You obviously compare that to Facebook, which was the big deal back in the early 2000s, it was Zuckerberg and a couple other guys cranking in a house in Silicon Valley.

So I think even the software innovations now are requiring bigger teams, have more complexity, to really get to those kind of critical scales that we’re looking at.

I always hear about biotech because I live in Kendall Square. It’s like the center of biotech, you know? And I know it’s blowing up in a whole bunch of different avenues.
I feel like if I was a founder, though, it’s a little bit intimidating because the fields are so difficult.

You’re coming from a mechanical engineering background and then you transitioned into more of a business background. I’ve always thought of it as just like you said, like you devote your whole life to this one area and it’s a coin flip if it’s actually going to turn out to be profitable for society or not. What is your view on it? Because I feel like, you know, the biotech industry is known for really long trajectories, a lot of loss of income for the company for a long time before it becomes profitable. That’s as an outsider looking in.

But give us what you have known and seen with Vaxess and all the other technologies that you’ve kind of helped bring to the market.

I think just start with the realization, that every entrepreneur has to have, is that this is a really bad decision from an economic standpoint. If my goal in life is to maximize my net worth, starting companies is the absolute worst way to do it. I mean, statistically speaking, we know that the majority of people who choose this path are going to end up not succeeding.

That doesn’t mean you can’t make some money along the way, but ultimately, you’re not going to have the multibillion dollar exits. But there is that glimmer of hope for those narrow few that they do find those things and get through. Right?

So it’s a bad economic decision as a starting point. And I know a lot of brilliant engineers and scientists who have spent 30 or 40 years in this field and have zero products on the market to show for it. Which I think would be a pretty demoralizing place to be to this late in your career. So those are just kind of the realizations that you have coming into it.

If my goal in life is to maximize my net worth, starting companies is the absolute worst way to do it.

At the end of the day, it comes back to really what motivates you. I know a lot of people in this field where their kind of happiness and joy comes from a feeling of daily productivity. I accomplished X, Y, and Z today.

That was never me. For me, it was always this aspirational goal. And knowing that I’m chipping away at getting towards that aspirational goal. And so for me, it’s really what’s that ten-year vision? What’s that 15-year vision? How different could the world look at that point? And do I feel like I’m working on something that could move the world in that direction? So those are the things that excite me and motivate me.

Gene Therapy

Coming back to the biotech world, we’re seeing things right now in… you know, let’s talk about gene therapy. Gene therapy is a little bit of a rut right now. But this concept that we can actually go in and genetically modify patients to eliminate diseases like diabetes, that’s amazing right?

Somebody’s going to figure this out and it’s going to make the world better for millions of diabetes patients around the world. That’s a big, amazing goal to work towards. And if there are 50 companies working on that, maybe only 3 or 4 actually get through. But I’d love to be a part of the group that’s striving for it.

Internal Motivations

So I think it really comes down to internal motivations.

Is it, you know, kind of seeing day to day output and seeing your bank balance grow. Entrepreneurship is not for you.

If it’s knowing that, hey, I’m part of a team shooting for something bigger. That’s the motivation that drives me.

It’s interesting to hear your perspective because I’m from a very different mindset. I’m very conservative and I want to make sure I’m not losing any money or anything like that. And you know it always seems like you have to be really brave to enter into this field.

Brave or naive and foolish, right? I think that’s also the fun of it.

You know, I still remember the first meeting when we were working with Vaxess, we went into a pharma company and my co-founding team… I was an auto engineer and had gone back to business school. I had a chemist who had done her PhD focused on surface chemistry, so not anything vaccine related. We had an economist who had worked for the United Nations. And I had a lawyer, who had been a physics undergrad. So the four of us go into this big pharma company, and I just remember the person on the other side of the table saying, so you got an auto engineer, a lawyer, an economist and a chemist, and you guys think you can come in here and do vaccine development better than we can with the team we’ve got of experts around the table. And we all kind of looked at each other and we’re like, okay, yeah, that does actually sound pretty crazy when you think of it in that light.

There was just this naivete. We saw a need. And in our case, what we were really excited about was this concept of could we create a nicotine patch that we could mail directly to patients homes. They wear the patch for five minutes, take it off and throw it away. And they’ve gotten their flu vaccine. And that concept, that dream, that vision, we didn’t know how to do it. We didn’t understand all the regulatory challenges that were to come. But we knew that that would be a far better product in the market and that it was worth spending the next ten years striving for it.

So I think sometimes that naivete of entering a new field can be really, really helpful in the early days. And then, of course, you’ve got to bring on experts over the course of time who understand the regulatory complexities, who understand process development and manufacturing. Who understand these things and can help fill in those gaps. But I think that naivete is a beautiful thing at the start of a lot of these companies, as long as that vision is strong and worth pursuing.

Hurdles to Bringing an Idea to Market

What are the regulatory hurdles or just the hurdles in general that you had in bringing an idea like that to market?

I feel like the FDA is one that everybody always talks about. My background is in medicine and if I were to start a company, it would be biotech. And, you know, the FDA is something that’s like this big boogeyman. It’s like, if you have an idea, you’ve got to get it cleared with the FDA.

What does that process look like for someone that may be listening to this and just starting on their own journey?

Well, this is where the naivete is a beautiful thing. So what we didn’t realize when we first started is that we had chosen, in my opinion, the single hardest regulatory pathway there is. We had what’s called a drug device combination product, which means we’re not regulated by just one agency at the FDA, the group that regulates vaccines called CBER, we’re also regulated by the group that regulates devices. So we now have to get approval from two different agencies within the FDA. So an incredibly high bar.

Couple that with the group that regulates vaccines which, in my opinion again, is the single most stringent group within the FDA because we’re suggesting giving these products to healthy patients. We’re not going to patients who have stage four cancer, where maybe you’re willing to take on a little bit of safety risk if you could save some of these lives. We’re going into healthy patients. So we’ve got to make sure that that product is as safe as possible. So incredibly high bar.

Had I known that from day one, had I understood that products like the shingles vaccine that GSK just launched had an 80,000 patient clinical trial. Had I known some of these things, we might have said, hey, let’s not go do vaccines. Let’s go after, you know, stage four cancer or something like that. So there was some naivete early on, that I think was a good thing.

Eventually what you realize is there are so many people in this ecosystem that have done it. Whether they’re sitting in big pharma companies, whether they have gone from small company to small company, you can bring these people on to really help drive that journey over time. But again, it all ties back to the vision. Is what you’re going after big enough to justify all the hassle?

When we were working on this flu vaccine concept, our assessment was that this was a $2-3 billion per year product just in the United States. That’s how big this opportunity was. It was going to cost us somewhere in the range of $4 to $600 million to get it to market.

Those economics work. So even though those regulatory burdens were very high, even those clinical trial costs were very high, the massive upside on the back end justified it. And for us personally as a team, you know, the impact that would follow that justified spending ten years pursuing it.

It all ties back to the vision. Is what you’re going after big enough to justify all the hassle?

So you had this hurdle. What were some other hurdles that, specifically in the technology sector, that you would say would be difficult? Outside of the FDA because I feel like the FDA is really limited to biotech, food and that kind of stuff.

For anybody that’s trying to build the future, anybody that’s trying to start a company, what are some things, in your own experience, that were very difficult for you and that you were able to overcome?

Because I agree with you. That’s a great dream, and I want other people who are dreaming out there to say, I can do it too. So what were some other hurdles that you went through and you were able to overcome?

Startup Funding

Getting funding in any capacity is just a brutally hard thing to do. Especially, again our team was not qualified, so we go pitch a venture capital firm and they’re laughing us out of their offices. Like there’s no way these four inexperienced people can pull this off. So it took us a long, long time and a really creative financing strategy.

A lot of our early funding came from business plan competitions. We knew how to tell the story. We knew how to tell the vision. So we raised, I think, $200-$250,000 through those early competitions. That got us just enough traction to get our first pharma deal.

It was a $60,000 pharma deal. So it was not transformational in any way, but it was validation from at least one external pharma partner that what we’re doing is meaningful. Those things came together and allowed us to raise a little bit of venture capital financing. Like trivial amounts.

We took all that and then we went to the granting agencies, the federal government. And we have money from the NIH and NSF and NASA and DARPA, DoD, I’m probably forgetting a couple of others that came along and funded us.

We had to basically piece together grants from all of those to slowly move the science forward a little bit, to bring on a few more people. That gave us more credibility, that allowed us to get bigger pharma partnerships, that allowed us to get more VC.

So you really have to get creative with financing these companies. Particularly because a traditional venture capital fund has what’s called a ten year fund life cycle. So they’re looking to basically bring in money from their investors, their LPs, distribute it within the first 3 or 4 years. And then, within roughly eight years of giving this money to companies, they’re trying to get their money back. So a long term venture like ours doesn’t fit a traditional venture model.

So you’ve got to get really scrappy and creative. We have money from the Gates Foundation. They care about the problem we’re solving. We have money from the NIH, NSF, all these other agencies that care about the problem. So financing a business like this, you’ve got to get really creative. It’s not simply show up and say, give me a cheque, support me for the next five years. It doesn’t work like that.

Technology Challenges

On the technology side, the issue that we faced is… the way that our patch worked, to oversimplify, if you think of a nicotine patch, we took a nicotine patch and put an array of microscopic dissolving needles on the underside. So these are absolutely microscopic, you could barely see them with the naked eye. When you put them on the patient’s skin, these needles just barely entered the patient’s skin, and then they actually dissolved to deliver the drug into your skin directly.

Nobody had ever done this before. There were no contract manufacturers that could make this. So we had to hire a team of people inside to figure out how we actually make this. And then we had to build a facility. We built it north of Boston that could actually make these patches for human use.

There were very good vaccine development engineers, they didn’t know how to do device development. There were very good device development engineers, they didn’t know how to do vaccine development. So finding people that had the ability to kind of crossover and live in both worlds was an interesting challenge.

There were a couple of individuals. We had a brilliant vaccine developer who came on. We had a brilliant device developer that came on. And those two were really the key to helping us figure out how to make this patch with a vaccine in a way that’s safe and acceptable to the FDA.

So it comes down to, at the end of the day, getting brilliant people around the table to solve these technological challenges. They’re out there, and a lot of them will be really excited to take on these big challenges.

That’s so interesting. I feel like it’s like you’re building the plane as you’re flying it, you know.

There’s no doubt. And nobody’s done this before. Right? It might not work.

Yeah.

But I think that the takeaway after 12 years of Vaxess is that if you give good engineers a very clear problem statement and you give them enough time and money, they’re going to solve just about every problem you put in front of them, right? Where you typically run into problems is when they run out of time and money or the problem statement is ambiguous or changes over time, and you’re asking them to kind of chase their tails in many ways.

The Importance of Openness and Honesty

I think a lot about Theranos. Most people are familiar with the Theranos story, right? Elizabeth Holmes. Huge valuation, had this dream of blood testing with microscopic volumes.

One of the constant debates I have with people is, was Elizabeth Holmes a fraudster? She was a liar. She endangered patients in ways completely unacceptable. But I actually think her vision for the future, we’re going to see come true. We are going to see very low volume blood collection. And I think everybody is aligned around that.

The issue she ran into is she was willing to lie. She, I think, lacked values in many ways. And she did not give her team the kind of clear guidance, funding and timing to actually figure out and solve these problems.

I think that’s such an interesting use case to me, because in many ways, I think Elizabeth Holmes was a visionary. She told the story incredibly well. She saw the future. If she would have had, you know, better folks around her helping in these other areas. I think Theranos could very well be a $20 or $30 billion company today. And she would not be sitting in jail.

It’s just interesting to to hear that take on Theranos because I feel like there’s two kinds of people out there, myself included.

I’m in the former camp where I look at that and it seems like such a roller coaster. I’m more of the type of person that I want to see a steady paycheck coming in so I can pay my bills, pay my rent, all that kind of stuff. So that’s like one scary aspect of it. But then there’s also like the scary aspect of, you could go all the way that Theranos did and now it’s like a house of cards and anything could make it all go away.

So, like, you could be like Elizabeth Holmes, very wealthy for a certain amount of time. Like she got the funding necessary to pay all of her bills, but the science wasn’t there. And so it was just like this house of cards.

You really have to know your science, I think, too. I’m getting that message from what you’re saying.

That’s it. You’ve got to know your science and surround yourself with other people who know the science. And honestly, you’ve just got to tell the truth throughout the journey.

You’ve got to tell the truth to patients. You’ve got to tell the truth to investors. You’ve got to tell the truth to employees, partners. I think that’s the other element where they strayed, they felt like they could kind of lie their way far enough that eventually they would figure it out. And I think that’s when you put yourself in danger.

The reality is there’s a lot of people in this ecosystem. If you’re truthful with them, you’re candid with them. You talk about, you know, the things you really know and understand today and the things you’re not sure how you’re going to solve. There are people who get excited about that and are going to hop on and join that journey. I think that’s the fundamental flaw, that was the mistake she made.

Coming from the auto industry, Nikola, the company that was trying to do electric powered semis. They got caught with basically trucks they claimed were functional trucks, and instead they were rolling them down hills in all their videos. So again, that’s just flat out fraud.

Is the concept of an electric semi going to come to pass. Yeah, I think it is. So they had a vision for the future. If they would have just been more honest and transparent and said here’s what we’ve got today and here’s what we need to solve and figure out. Again, I think there’s a lot of people that would have come on and joined that journey.

As an entrepreneur and founder, once you lose that credibility with your investors, customers, whatever, you’re never going to get it back. So that’s the important element of this. Realize there’s a lot of people that will come on the journey, even if you don’t have all the answers today.

Current Funding Environment

Yeah. I know that you’re very much a serial entrepreneur and you’re looking right now for the next big technology that’s out there. I want to just ask, you know, let’s say you come across it. What is the funding environment looking like right now?

You’ve been in the industry long enough to understand the different ebbs and flows of just the societal pressures and, you know, the economics of it.

When I think about the 90s and the dotcom bubble, everybody was flush with cash for any website that had a dotcom on it. And, you know, the same thing happened like in the 2000s with software. Now we’re looking at AI as being like this big thing.

Is it just that funding chooses winners and losers based on trends? Or is it based on economics? As somebody from the outside looking in, if I’m somebody that wants to start up a company… I think you did it in a very kind of different, roundabout way… What does it look like today though?

The macroeconomic landscape, and I’m not an economist by any means, but to oversimplify, you can get 5.5% back on your money as an investor today with zero risk. That looks really different than it did 3 or 4 years ago when you could get 1 to 2% back. And so that has just pulled a lot of money out of this ecosystem and put a lot of money in much, much safer investment scenarios. So that has hurt the ecosystem overall, for sure.

I think there are still a lot of venture funds that raise money. You know, 2 or 3 years ago when things were really, really good for venture funds, that still have a lot of dry powder to deploy. And you really see, from my perspective, two different approaches that venture funds are taking.

So one is you’ve got groups like Sequoia, for example. Sequoia has made very clear that their future is in AI. They believe that AI is the future. Every single investment they make is going to be in that area. And if you want to talk to Sequoia, you’re wasting your time if you don’t have an AI heavy component to what you’re doing.

Then you’ve got others, like we took money from the MIT Engine. What I love about the MIT Engine is they are very supportive of companies in a host of different areas. So they’ve got some core, you know, hypotheses. One being, you know, energy is probably the single biggest issue for the next 20 years. So they’ve got a core hypothesis there. But they don’t care if you’re focused on serving energy or storing energy in batteries or producing energy with next generation fusion technologies. They’ll come and look across a pretty broad spectrum.

So I think there’s ultimately money out there for whatever you’re trying to do. The challenge simply becomes really finding the right investors, the right funds, who share kind of your vision, who have alignment around your timeline. Quite frankly, there’s just a likeability. Am I going to be excited to work with this investor for the next five, six, eight years? You’re signing yourself up for a really long term commitment in many cases. But the money’s definitely out there if you’ve got something that has enough upside.

That’s always the thing that I think folks don’t spend enough time thinking about. The venture capital model is built on kind of low likelihood of success but massive upside if you do succeed. And so, you know, incremental innovations are simply not going to fly.

There’s ultimately money out there for whatever you’re trying to do. The challenge simply becomes really finding the right investors, the right funds, who share kind of your vision, who have alignment around your timeline.

Venture funds for the most part, want to see things that are high risk, but if they succeed will be massive and transformational. And so as long as you keep that in the back of your head and you’ve got something that can be a multi-billion dollar opportunity or a multi-billion dollar company, I think the money’s out there. If you can build a story around that.

It’s certainly an interesting time to be alive as a human. Like for the majority of our history, this kind of funding for projects really didn’t exist. You know,it was not available in like the 1950s, unless you were in the government space, right?

Right.

The Role of Academia and Private Industry

And so nowadays, it’s just interesting to see private industry doing all this stuff. You know, I come from the academic setting and I, growing up, always thought that that was where the change happened. You know, like when I thought of how I was going to affect the world. I thought of people like the Nobel Prize winners and stuff like that.

But now I feel like it’s much more a private industry that’s moving society forward. Would you agree with that?

Yeah, I agree with that. I love working with academics because I think there’s a level of just creativity and brilliance, and, really for me, inspiration that I think is in many cases the fuel for this whole innovation ecosystem. I love talking with professors.

When I first started working in this space, I would look to the professors for an invention – What’s your new invention? I think now I look to them for inspiration, because I think a lot of the world’s best professors are still so good at seeing the future. You’re trying to anticipate the future, and they’re working things on that. So, you know, I look to somebody like George Church who is spending a lot of effort in his lab focused on aging. How do we combat aging? How do we focus on aging? Aging really interests me as a field. I think it interests a lot of people.

I’m not convinced today that George Church has cured aging in his lab. But I love reading papers out of his lab that talk about different approaches to combating aging or different ways of looking at or measuring aging. And there’s a lot of inspiration you can draw from those.

I’m not familiar with his work. Can you just describe it to me?

So I think there are a lot of different approaches to combating aging. But the fundamental question… the best statement that inspired me in this is (and I’m going to misquote the numbers on this) I heard a talk from somebody at Harvard that essentially said, if we cured all forms of cancer tomorrow, we would extend the human lifespan by roughly two years. So that’s it. So ultimately, as we age, whether it’s cancer, whether it’s heart disease, whether it’s Alzheimer’s or some neurological condition, aging is the fundamental root cause for every single disease out there. And so this particular individual, who works in aging, his line was, if you are spending time working on anything other than aging, you’re wasting your time.

It was one of the most inspirational, interesting talks that I’ve heard. But the challenge that every anti-aging company has run into is… you know, there are groups out there that are showing an ability to extend the lifespan of mice from a year, which is kind of a standard lifespan, to 2 or 3 years. We know we can help mice live to ridiculous ages. And it’s not just length of life, but it’s quality of life. Nobody’s figured out how to build a human-based company around that. And the fundamental challenge is it’s going to take a 20 year clinical trial.

How do you fund a 20 year clinical trial? Traditional venture funds are not built for that. Government agencies may be able to fund certain portions of it. So what does that look like? So either you’ve got to get really creative in finding age-based biomarkers that you feel confident are actually showing you aging in patients. And you can kind of say, in five years, yes, we haven’t shown that we can help them live to 120, but we know that these biomarkers that correlate with aging are all looking much better with our drug, and they’re not aging.

So you’ve got to find a creative approach like that, or you’ve got to find a creative approach where… you know, there’s a company called Rejuvenate Bio that has launched products first targeting animals. So if they can extend your dog’s lifespan from ten years to 20 years, well, not only have they shown that their technology works, but a lot of the preclinical work we do for any drug is in animals, right? So now they’ve got this full suite of preclinical data. So we’ve got to find some creative approaches.

I think what the Church lab is doing is both looking at the mechanisms of aging to figure out where we can target these things, but also trying to figure out some creative strategies for getting these drugs out of the clinic and actually eventually into patients.

That’s awesome. I like how you break down the science, but one of the things I just wanted to double click on is this idea of, you feel like professors are where they’re able to see the future. You know, being in the academic setting myself, I agree with that. I think that they have a fundamental understanding that most people don’t have that are in private industry. But private industry is able to take what they know and bring it to the masses to actually effect the change.

I feel like we’re just so siloed. There’s such a big divide. Like Elon Musk always talks about private industry being how you actually get things done and academics is just like, you know, this ivory tower that really just kind of, participates in intellectual debate. How do you feel about it?

I think you’re exactly right. So look to them for inspiration. Look at the fields that they’re investigating. Look at the areas they’re looking in. Draw inspiration from that. But what private industry can build is what’s the practical path to getting this product to market to really impact patients lives or customers lives.

The Tesla story to me, having grown up in the auto industry, is just amazing. First off, Elon Musk didn’t found Tesla. You had two kind of brilliant scientists, engineers who had founded Tesla. They couldn’t necessarily figure out the pathway to actually build Tesla into a viable company. Elon Musk came in and that was the brilliance that he brought to this.

It’s not that he was the first one to think about electric cars being better. People knew that there were benefits of electric cars, but he did a couple of things that were transformational. So the first thing is he said, I’m not going to go out and start a car company and do everything from day one because cars are very complex. So he partnered with Lotus. He basically took a Lotus chassis. They made some modifications to it, but largely took a Lotus car, took out the gas engine, dropped in an electric engine and that was the Tesla Roadster.

So it was the simplest, quickest way to get electric vehicles on the roads. The minute people, myself included, drove a Tesla Roadster we said, wow, this is unlike anything I’ve ever seen. And that started a spark. It got investors fired up. It got customers fired up enough that Elon could go out and raise some money to go and begin building the model S.

And then the other part of the Tesla story that was remarkable is… having worked at Honda, every single automaker was concerned about the lack of electric vehicle charging infrastructure. It doesn’t exist today. Because of that, people will never buy electric cars. Elon was the only one who had the guts to say, fine, then we’ll build the charging infrastructure. At any other car company this was an inconceivable idea, for Elon it was just obvious. And it’s going to cost us a lot to build. But once we have it, we now have a massive competitive edge and mode, right?

And so that’s really what Elon did. He broke through, not necessarily on the technological side, but the implementation side of taking these technologies and getting them into customers hands.

I think the story of Tesla is a model that every company should look to. These are the kind of innovations that I think private industry can be so good at bringing. If you’ve got, you know, again, a leader like Elon who can be a visionary like that.

Do you think that the landscape has changed also for academics and bringing cutting edge technology to market? Because now I see a lot of universities making these startup incubators and stuff like that which I don’t remember that being the case like ten years ago. So has the mindset shifted?

I think there are more opportunities for professors, but I think it takes a special type of professor to embrace those and love those. You know, I will say, one of the professors we work with at Tufts, who I think the world of, is a professor named Doctor Fiorenzo Omenetto. He loves seeing his work translated out of his lab. He will spend a lot of time on that. He will spend a lot of time finding entrepreneurs. He will spend a lot of time finding creative ways to get things out of his lab. And I’ve worked with plenty of other academics who are simply focused on publishing research and getting research dollars into their lab.

So I think there’s a mentality difference. You know, a spectrum, I guess, of mentalities across the academic sector. For the folks who have that desire to commercialize, I think the opportunities now are exponentially higher.

We were actually the first company… I know this will be debated, sorry Philo team.. but we were the first company in the Harvard I Lab, so we took full advantage of that when that first opened. And again, you saw certain professors that would actually come over and spend time in the I Lab and hang out with their teams and were in that incubator ecosystem and love being there. You saw others that had no interest whatsoever. Their only question was, is this going to get more dollars into my lab so I can hire more PhDs and postdocs? And that’s all they cared about. So opportunities there depend on the professor mentality if they’re interested in taking advantage of it.

Source of Inspiration

Wow. Really interesting. I feel like I could talk to you for another hour, but we’re getting close to the end of our time. And I want to ask you the same questions that I ask everybody, because it is important for all of us to know, generally, what brought you into this field, what brought you into the narrative that you’re presenting here today.

The first one is, where do you gain your inspiration from?

A lot of inspiration for me is from science fiction. Like, I look at these utopian visions of science fiction, Star Trek, you know, any of these other paradise in the sky type of places that we could actually end up. I look at that as something that I hope to live in one day. Like, I can’t wait until I have a robot butler like in The Jetsons. Right? And so that’s something that I look to for inspiration when it comes to my field. I’m always trying to make things better and incorporate something that I see in science fiction into my everyday life. What about yourself? What do you gain your inspiration from?

Yeah. So first off, I was a huge Star Trek The Next Generation fan. So I’m right there with you, right? So many of those things have now come to fruition and come to pass. It’s really cool.

And it taught you ethics and morality.

Could not agree more. You know, the interesting thing is, I left Vaxess in February and so much of the journey that I’ve been inspired by over the past six months has been hearing people say, “You know, we don’t think this is ever going to work.” I love hearing people say, we don’t think this is ever going to work. And again, I don’t know a lot about Elon, but I have to believe that’s part of what triggers things for him.

This field of aging, there’s a lot of breakthrough science. It’s struggling to get traction because of this 20 year clinical trial problem. So I think for me, I love hearing people say, we know that this has a lot of potential, we know this is going to lead to a better world, but we don’t think it’s ever going to work. Man, I love that.

It was the same thing when we started Vaxess. We would walk into big pharma companies, vaccine companies and we’d say we’re going to mail vaccines directly to patients. And we would just see eyes roll, we would see heads shake. There’s no way, the FDA will never allow it. You can’t trust patients to do this without screwing it up. There were just all these things. And that fueled my fire more than anything else. So I think that there’s one element for me, which is just problems that people believe are intractable.

Again, I’ll go back to the electric car issue. Every single automaker said this will never work because there’s no charging infrastructure. Build a charging infrastructure. So those kind of problems just excite me.

I love hearing people say, we know that this has a lot of potential, we know this is going to lead to a better world, but we don’t think it’s ever going to work. Man, I love that.

The other thing for me, I have a 13 year old son, and when I left Vaxess, he came to me and said, “What are you going to do?” I said, “I don’t know.” And he said, “Dad, you have to do something about climate change.” He said, “Honestly, it’s the biggest issue the world faces. Nothing else really matters. We don’t know for sure what the future of this looks like, we don’t know what the trajectory is, but if it goes badly nothing else is really fundamentally going to matter.”

So having four kids, climate has become a much bigger issue for me. A much more sensitive issue for me. Something that I’d love to go, you know, potentially play a role in. And I think there’s a lot of cool technologies in the climate space that people have struggled to figure out, for whatever reason, how to get them over the hump. So those have been the inspirations for me and the journey over the last six months.

The Evolving Entrepreneurship Ecosystem

Where do you see the entrepreneurship ecosystem in ten years? Do you think it’s going to be more flush with cash? Do you think that because of all of the breakthroughs, it’s going to be easier to bring a company to market? Or is it going to be, let’s say, much more concentrated and large companies just bringing in acquisitions. What do you feel like it’s going to look like?

So I think there’s a different answer. Right now I really worry about the biotech and life science innovation ecosystem. And, you know, there are groups in Boston in particular, like Flagship and Third Rock and Atlas, who have been very successful in launching companies. Obviously, Flagship launched Moderna. They’ve moved away from backing entrepreneurs, and they’ve moved towards a model of incubating in-house and spinning companies out.

It works today because most of these funds were founded by successful past entrepreneurs. What’s dying there, in my opinion, really struggling in the Boston ecosystem is funds that just truly back novel entrepreneurial teams. So I don’t think we’re creating the next generation of biotech entrepreneurs.

I think those folks at Flagship and Atlas and Third Rock, as long as they’re there and they’re continuing to support these companies, they’re going to be successful. But they’re not allowing entrepreneurs to kind of fail and iterate and learn on their own. So I really worry about the future of the biotech ecosystem because of this venture creation model, which has largely taken over.

So that’s my pessimism or cynicism, and I’d love to see more entrepreneurs backing or more venture funds truly backing entrepreneurs and life sciences.

From a broader perspective the impact of AI, I think, cannot be overstated. Right now I’m looking at 5 or 6 different technologies that I want to start companies around. You know, my ability to go from, I know nothing about this field… I’m looking at ocean wave based energy creation as an example, a field that’s been stagnant for 40 years… so I know nothing about this field. But to me, there’s a ton of energy in ocean waves. So, why haven’t we cracked this? When I would explore a new field ten years ago, I would sit on Wikipedia. Wikipedia was great at the time. The pace at which I can learn with ChatGPT and some of these other things to kind of really, truly do a deep dive and understand a new field. The pace of which I can build a pitch deck to help tell my story more effectively. The pace at which I can dream up concepts of what an ocean wave based generation electrical system looks like thanks to some of these image generation technologies. It’s just amazing for me.

So the barriers to entry, you know, came down massively in the software ecosystem 15 – 20 years ago, I think they’re coming down again because of AI. My ability to get from kind of 0 to 1, I think is going to be exponentially quicker regardless of the field. So that’s the exciting thing for me and kind of going through this journey today versus ten years ago. AI is out there man. It’s powerful.

Have there been any successful branch offs from these startup incubators? My wife is in the business field and she has some experience with that. And, I was able to go to a lot of these dinners and stuff like that. And for me, I felt like it wasn’t as impressive. No offense to them. But I go to some of these pitch conferences like Delta V or anything like that, and like those are the people that are like doing amazing things, right? So I feel like there’s a stark difference. Have you noticed that too?

I have and I think it’s just become diluted. Back in the day, Y Combinator was N of one, and then Techstars came along and you really had two incubators that were the prestigious brands everybody wanted to get into. Very selective, challenging to get into. And now there are 200 different Y Combinator clones, right? So I do think the whole ecosystem has become diluted.

Even, you know, the Harvard I Lab, which was near and dear to us. I think when we started there, there were 40 to 50 companies and we had a ton of success stories come out of there. So WHOOP, they sat next to us on one side. Philo was a company sitting next to us on the other side. They’re kind of like.. I won’t say a Netflix competitor… but they were trying to do like fuboTV. I think they’ve had success in college campuses. They’ve been very successful. There was a company called Rally Point, which was LinkedIn for military folks. That’s gone on to be very successful. Handy, which is a company to help you kind of find contractors and stuff. So, I can name at least 10 to 15 companies that came out of that ecosystem and raised real amounts of money. Many of them are very successful today.

Part of it was that the I Lab was very selective in those early days about who they let in. Every company that was in there was serious, committed, dedicated to what they were doing. So you saw great progress.

Now there are incubators at every single university. Everybody’s trying to spin these out. So instead of having, you know, maybe 30 to 50 great companies at the Harvard I Lab in the Boston ecosystem, we now have 500 companies at various incubators. And so I just think you’ve diluted it.

I also think the damage there is, you get false positives for a lot of entrepreneurs. You get into some incubator and you think, oh, we’ve got it figured out. I’m not going to say you don’t work as hard, but you think you’ve gotten there. And then when you get out in the real world and you’re competing for venture dollars, you realize, oh, crud, I’m going up against this three-time serial entrepreneur who has built multiple billion dollar companies. All of a sudden, my student project doesn’t look nearly as compelling and impressive.

I think that those incubators are nice in providing broader opportunities to a lot of people. But I think it’s still important to realize that there’s got to be some natural selection, if you will. And kind of whittling this down to ultimately push forward the startups that are going to succeed.

So, you know, I think you’re right. I don’t know how we fix that because I think it’s great to have more opportunity for more people. I do think it’s diluted the quality.

Yeah. Interesting. So the last question which I ask all my guests is, other than the stuff that we talked about today, what is some stuff that maybe you’re not going to be pursuing a business in, but you can’t get enough of? Like, you read the paper and are like, “Oh my God, they’re doing that.”

You know, for me it’s nuclear fusion, which you kind of alluded to. I have no interest in going into nuclear fusion. Like it’s not something that I even really understand, to be quite honest with you. But every time I’m reading something about it, I’m like, oh, my God, that’s so interesting, you know? What about for yourself? What’s coming out in the paper these days that you really just like you can’t get enough of?

You know, it’s an interesting thing. I think this is a field that had a lot of hype here four years ago and has kind of died down. I’m intrigued about the future of food. And so I actually spent a fair amount of time looking into opportunities in this space.

You know, we think of companies like Beyond Burger, right, who are kind of doing artificial meat. I’m intrigued by that. But I think there are even broader opportunities here. So one of the technologies that I was intrigued by, there’s some researchers that had found a certain type of red seaweed that if we feed it to cattle, reduces methane emissions by 95% by changing the fermentation process. And instead of releasing methane from the cattle, the cattle are now consuming the methane or using the methane, so they’re growing more quickly. So it’s kind of next generation agriculture. There’s a lot of work to be done on that to figure out how that could actually work. But it’s both a climate issue that they’re helping to solve but also providing more food to billions of people around the world. So I’m intrigued by things like that.

There was a lab in South Korea that just published a paper where they had genetically modified rice so that it actually contains beef protein. So you’ve got billions of people around the world who have rice as the kind of primary ingredient in their diet. They’re not getting enough protein to grow healthy. Can we produce genetically modified strains of rice that could actually provide protein to people?

So I think Beyond Meat is an interesting start. You’re seeing some other folks trying to do that with fish and other things now. But I also think that there’s just a lot of interesting elements to make agriculture more efficient.

We’ve got 7 billion people on this planet. It’s a growing number. We’ve got to figure out how to feed them, and we’ve got to figure out how to feed them without creating massive detrimental impacts on the climate. So, I’m intrigued to see how that progresses. Probably not something I’m going to spend some time on.

Yeah. That’s interesting. I actually ordered one of those, not genetically modified, but they were hydroponically grown strawberries that are like the sweetest strawberries. It was like 20 bucks for four of them. And it was amazing. It was like eating candy that was grown organically. So interesting technology that’s out there. And I’m also interested to see what comes from that field as well.

So thank you so much for being with us. I feel like we covered a huge gamut of different topics, but really all focused on the business aspect of it, which I think is how we effect change. And so I really hope, not only the best for you, but also for all those entrepreneurs that are listening to this that are actually trying to change the future for the better.

Thank you so much to all of our subscribers, please like and subscribe at the bottom. And for those of you guys who are listening on a regular basis, we will see you in the future. Thanks everybody. Have a great day.

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About Michael Schrader

Michael Schrader is the founder and former CEO of Vaxess, a clinical-stage company bringing healthcare out of the clinic and into patients’ lives with the MIMIX patch platform. Vaxess is building a pipeline of transformational home-based products, including a recently announced mRNA partnership with Astra Zeneca. The company has raised more than $90M in grant and VC funding from groups such as RA Capital, The MIT Engine, BARDA, NIH, and The Gates Foundation. Michael has served as an advisor to several startups including Bytesense, Ally Therapeutics and Adeo Health Sciences. He also serves as an Expert-In-Residence at the Harvard Office of Technology Development and as a Key Advisory Board Member for the Harvard Blavatnik Fellowship program. Prior to Vaxess, Michael spent time at Google and Honda where he helped bring a range of products to market and earned more than fifteen patents. Michael received his B.S. in Mechanical Engineering from Purdue University and his M.B.A. from Harvard.

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