People Over Place: A Lesson in Career Success | Caleb Appleton (Part 2/4)

Intro - 00:00:06: Welcome to the Biotech Startups Podcast by Excedr. Join us as we speak with first-time founders, serial entrepreneurs, and experienced investors about the challenges and triumphs of running a biotech startup from pre-seed to IPO with your host, Jon Chee.

In our last episode, Caleb shared stories from College Station, his undergraduate research that made him question pursuing a PhD, and how discovering engineering can't solve problems with undefined constraints changed his career trajectory. If you missed it, check out Part One.

In Part Two, Caleb talks about joining Bain despite having no knowledge of consulting, becoming an expert in case interviews by reading one book in seven days, and why the firm's exceptional talent made every project feel like working with people who all pulled their weight. He shares why he left Bain after realizing he'd spent his career as an advisor and needed to prove he could operate, and how Stanford Business School's pandemic pivot to Zoom couldn't deliver the interpersonal connections he wanted. He also recounts nearly starting his own healthcare services company, getting to the term sheet stage, and walking away because he couldn't commit seven to ten years to something that wasn't venture-scale.

Jon Chee - 00:01:36: Sounds like a stellar undergrad lab experience. I would imagine at that point in time, you were like, "Maybe it's time for a PhD." Or were you like, "Actually, no"?

Caleb Appleton - 00:01:45: Yeah, I think I mentioned earlier, my ambition going into school was that that was the next step. I talked about how I viewed academics as the cream of the crop at the top of the career ladder. So, undergraduate research was a stepping stone to doing that.

What I probably didn't consider, but ended up being true, was that it was also a way to pressure-test that hypothesis to say, "Hey, is this work I actually really enjoy doing?" And one of the things about working in a biology lab specifically—especially one focused on nanotechnology and genome editing—is that everything is measured in microliters. A lot of what you're doing is just measuring the abstraction. Right?

You can't see the way CRISPR works in a cell. You don't know what the E. coli is actually doing to produce this protein. You do it, you run a gel, and you see a band show up somewhere. Maybe you send something out for sequencing, maybe you put it through cell sorting, and you're like, "Oh, there's a bunch of red cells. That's what we wanted to see." But I actually really struggled with that. It was spending a lot of my time at the microliter scale. Things would work one day and not the next, and you didn't really know why.

Jon Chee - 00:02:58: Classic. Yep. Yep.

Caleb Appleton - 00:02:59: Just a biology issue. It's very common. And I said, "Okay, maybe a tissue-focused cell culture lab is not where I want to dedicate four, five, or six years of my life." So I said, "Okay, I think I still want to do research. Let me try some other things out."

I spent my summers doing research elsewhere. One summer, I had a research role working with a vet school. We were doing very early versions of what you would call computer vision or machine learning, where I was trying to build an algorithm that took an MRI of a horse. Which is kind of a crazy thing—seeing a horse get an MRI.

Jon Chee - 00:03:48: Yeah. Same as a human, right?

Caleb Appleton - 00:03:50: Exactly. We would identify—we being myself and the PI, who was a radiologist—a region of interest. Then I was trying to build an algorithm that could propagate that region of interest to the other slices of the MRI and try to quantify something like the size of an injury or the size of a tumor. That was cool, and that was all in code, essentially. I think in MATLAB—you know, the world's best coding toolkit.

Jon Chee - 00:04:12: Did you just teach yourself that on the fly?

Caleb Appleton - 00:04:15: I had taken a class in MATLAB, and then the PI gave me this book at the beginning of the summer. I remember I would just spend my time, because there wasn't really a lab I needed to go to, going to a coffee shop in town, trying some stuff, and seeing if I could make it work. It was one of those really cool experiences. I was like, "Okay, this is slightly more interesting."

Another summer, I said, "Okay, let me try to combine what I'm passionate about outside of school and academia with something that I have educational knowledge in." At that point in time, I was very passionate about triathlons at a pretty elite level. So with that—triathlon, swim, bike, run—cycling was a big part.

There was this magazine called Bicycling Magazine. I'm not sure if it still exists anymore—it's probably a website, but not a physical magazine. I bought one at a Hudson News in an airport, and the cover article for that month was around these bicycle helmets that were supposed to reduce concussion risk, talking about the research going on there.

So I read the article, went on Google, and found the two people mentioned in the article who were doing this research. I emailed both of them directly. I said, "Hey, here's who I am. Here's my resume. I've done a bunch of research, but not in biomechanics. I think I might want to get a PhD. Would you let me work in your lab this summer? I think this is really interesting, and it's related to what I'm passionate about."

Both responded. One company they were founding was a group called MIPS, based in Stockholm, Sweden. He was basically like, "You can come, but just so you're aware, we don't really work in August." Basically saying, "Hey, it's probably going to be a fun experience, but you're not going to get that much experience as it relates to the lab."

The other was a group in Portland, Oregon. It was a research lab but at a health system, a large chain of hospitals called the Legacy Health System. They were also commercializing this into a company. That investigator said, "Yeah, come and join us."

So I spent that summer working on novel bicycle helmet designs to reduce concussion risk. The way bicycle helmets today are designed and regulated is that they essentially prevent you from having a catastrophic injury to your head. The goal is—I won't remember exactly, I think it's like 300 Gs, maybe I'm off by an order of magnitude—but basically, prevent this amount of force from impacting the skull, which is known to be the force at which the skull cracks.

Jon Chee - 00:06:54: Yeah.

Caleb Appleton - 00:06:54: Which is good. You're not going to die, hopefully, if you're wearing a helmet. But concussions are a much more nuanced thing if you think about it. You can get a concussion from a single massive impact, but then you also think about football, right? Most of those concussions are from repetitive, slow, small impacts that a lineman might take over the course of a game or a season.

They were trying to figure out how to design helmets specifically for cycling, where it is these large impact events, to reduce concussion risk. So I joined, and it was fun. We had this basement—again, mostly basement labs—and we had all these cool torture devices. They said, "How do you drop a human head form from a specific height onto an anvil that simulates this type of crash?" There was another one that was a cart that would accelerate and hit a wall. We were designing different inserts for helmets that prevented concussion risk.

I went into this super excited. It was perfect. It's what I'm learning academically, it's what I'm passionate about. Honestly, I left that summer pretty disenchanted.

I remember for my final research presentation, we had made all these different designs, tested them, and collected a bunch of data. We then went to the literature and found these risk plots that basically said, "Okay, at this angular momentum and impact force, this is the likelihood of a concussion." We plotted all the data on one, and it was like, "Okay, the likelihood of a concussion is 90%." That's not good. So we went to a different risk plot and plotted on that, and the risk of a concussion was 1%. So we went with the 1% one.

I think this is true of a lot of emergent research—you pick the tools that tell the story the way you want to tell it. What I left feeling was, "Hey, we actually have no idea what causes concussions, as evidenced by these massively different predictions of concussion risk." In engineering, how can you design a solution if the constraints of the problem are completely unknown?

So I left that summer like, "Well, crap. I was hoping this was going to be the thing where I'd get a PhD." I left thinking, "I'm not sure I want to do academic research."

Jon Chee - 00:09:34: Yeah. It can be disappointing because you thought that might have been your path, but it's equally, if not more, important that you had that experience.

Caleb Appleton - 00:09:44: Yeah. It was way better to figure it out then than two and a half years into a PhD.

Jon Chee - 00:09:49: Yeah, for sure. Which happens a lot.

Caleb Appleton - 00:09:51: A lot. I frequently talk to PhD students that are just counting down the days until the end of their program and end up pursuing careers completely unrelated to what they spent their thesis time investigating. So it was very good, in retrospect, that I figured it out at that point in time, but it also left me scrambling a bit. August of my senior year.

Jon Chee - 00:10:19: I felt the same way, by the way. I had that same moment. I was doing a bunch of research at Berkeley, and I was just like, "I don't think I can do this forever." I had this identity crisis for a moment. I've always been interested in business, and the whole impetus to start Excedr was to support researchers rather than be the researcher.

But when I proposed Excedr to the PIs I was affiliated with, they couldn't care less. They were like, "This sounds like a business thing. Doesn't actually tie to my research." I'm like, "I'm trying to help your research! I want to still stay involved." But goddamnit, I could viscerally feel that deflation. Like, "Oh man, what do I do now? This is hard. I thought this path was in front of me, but it's clearly not the path I want to go down." So now you're scrambling.

Caleb Appleton - 00:11:20: One of my takeaways from that summer was I actually really loved living in Portland, Oregon.

Jon Chee - 00:11:24: Cool. Hell yeah. I love the Pacific Northwest. I love it up there.

Caleb Appleton - 00:11:27: Yeah. It's amazing. I could go on these amazing hikes. The cycling was just incredible. Having spent my entire life in the South or Southeast, the fact that it wasn't 105 degrees in 90% humidity in the summer was mind-blowing to me. I think the house I lived in didn't have air conditioning, which was just mind-blowing.

Jon Chee - 00:11:45: Woah. Yeah, yeah.

Caleb Appleton - 00:11:47: So one of my edicts at that point was, "I want a job that functionally allows me to live anywhere in the world I choose to live." That actually eliminated quite a bit. A lot of the canonical biomedical engineering jobs at that time—which were very device-focused—were your Medtronics, Strykers, J&Js of the world. Largely Midwestern companies and not the most exciting of locales.

So I said, "Okay, what's a job that's omnipresent and still draws from my background and has an impact?" My first reaction was, "Okay, I'm going to go to med school." That's what biomedical engineers do. I actually prided myself on not being pre-med, so I needed to take the MCAT and there were one or two prereqs I hadn't taken because they weren't required in the curriculum. I was like, "Okay, probably I can't go directly out of undergrad, or I would need to take a gap year."

I signed up for an MCAT prep class with Kaplan. Then I was like, "Okay, I probably need to figure out what I'm going to do for that year. Should make some money or at least..."

Jon Chee - 00:13:04: Got some bills to pay.

Caleb Appleton - 00:13:06: Like, I'm going to have rent.

Jon Chee - 00:13:08: Yeah.

Caleb Appleton - 00:13:08: So it is career season on campus, and a bunch of different companies are recruiting. I'm talking to someone—I don't even remember who—and saying, "Hey, I'm having this kind of crisis. I know I need a job. What do you think I should do?"

Someone's like, "Oh, you're really smart. You should think about the big consulting firms." One: I don't know what consulting is really, other than the definition of the word. Two: I have no idea who the "Big Three" are. So I go home, Google it, and it's Bain, BCG, and McKinsey.

I go to Georgia Tech's career website to see if any are coming to campus and what their deadlines are. I think only Bain was still accepting resumes. So I went to one of those info sessions, shook a bunch of hands, tried to make an impression. I was lucky enough to get a first-round interview. And for those that don't know, the consulting interview process is a very specific one.

Jon Chee - 00:14:15: Did you read Case in Point?

Caleb Appleton - 00:14:16: Yeah. I truly stayed up all night one night reading this book called Case in Point, which everyone tells you to read.

Jon Chee - 00:14:23: Yeah.

Caleb Appleton - 00:14:23: It's basically these little business thought exercises that involve some mental math, some strategy frameworks, etc. I became an expert at this in a seven or ten-day period in advance of my interview.

Jon Chee - 00:14:37: Yeah.

Caleb Appleton - 00:14:37: I think, again, got a little bit lucky. I did well on that day. I resonated with the person who did my first-round interview—actually, I'm still close friends with them. Then in the final round, I ended up doing well again.

These are jobs that heavily recruit from the top academic institutions. At the time, the acceptance rate was something like 1% or 2%. I think they hired three people from Georgia Tech total that year. So the stars could have fallen in line. It wasn't just luck—I was prepared, smart, and motivated—but it wasn't this thing I spent all four years of undergrad preparing for.

Once you get your offer to a place like this, they go into sell mode very hard.

Jon Chee - 00:15:26: Very quick.

Caleb Appleton - 00:15:27: They really want you to take that offer.

Jon Chee - 00:15:29: Yeah.

Caleb Appleton - 00:15:29: They're introducing you to all these people, inviting you to dinners. One of the things that Bain and I imagine the other consulting firms are really good at is recognizing that these are human capital businesses. Fundamentally, what they are selling is talent. And as a result, they had exceptional talent. It was talent that was really bright from a mental perspective, but also incredibly sociable.

I quickly found that, hey, these are people I really like. It was like being in a group project in undergrad, but every person on the team was yourself. They were all good, all willing to do the extra work. No one was leaving the slack. So I ended up taking that job. I honestly had a ton of imposter syndrome—like, I have no idea why I should be in the CEO's office of a Fortune 500 company.

Jon Chee - 00:16:20: Yeah. They just airdrop you. They're just like, "Alright."

Caleb Appleton - 00:16:22: Yeah. They're like, "You're gonna be fine. We'll make sure you're successful in this job." So I took my little $5,000 signing bonus, took a trip to Europe that summer backpacking, came back a week before the job, and said, "Okay, let's go."

Jon Chee - 00:16:36: Sick. Very cool. As you start to settle in at Bain, talk about that experience. What was it like for you? I imagine you had to travel a ton.

Caleb Appleton - 00:16:50: Yeah. Fundamentally, Bain and these other consulting firms are hired to help companies make very consequential decisions. At that point, it was very focused on company strategy. You ended up working with largely very well-established businesses—your Coca-Colas, Ford Motor Companies, etc. Household names, but they were facing some sort of existential moment. Like Coca-Cola: "People aren't drinking soda the way they used to." Ford: "Electric vehicles are coming."

You were tasked with parachuting in, trying to learn as much as you could about the industry and the specifics of that company as quickly as possible, and then formulating that into some framework that allowed the leaders of those businesses to make decisions more effectively.

Practically, what that looked like as a first-year Associate Consultant was getting on a flight Monday morning to wherever our client was based. We'd show up and sit in these team rooms where they cloistered us.

Jon Chee - 00:18:02: Yeah.

Caleb Appleton - 00:18:03: At the beginning, they don't really put you in front of the client. They're like, "Okay, Caleb, you're doing the work." You're doing the data analysis, running a survey, building slides, or building a model. You're given these open-ended problems and a lot of resources—people and patchwork you can draw from—but it just says, "Hey, we need to build a model that projects this. Here's some data. Go."

I found that both terrifying because I'd never done it before, but also really cool that you could parachute into these amorphous, complex situations that didn't have a closed-form solution, break them down into their individual pieces, and drive to some sort of answer.

What you get very good at in that job is: How do you quickly get to the best answer with the quickest possible path? That's a skill that continues to serve me. It serves you in any career, particularly in my current job in venture capital, where a lot of the job is how you very quickly get to conviction, either positively or negatively. Bain gave me the toolkit to come into a situation I literally knew nothing about, create structure, and get to an answer.

So that was really fun. It meant I worked a lot. I was working 70, 80, 90 hours a week. I made some mistakes. I had a model where I fat-fingered a specific cell. It was a 30-tab Excel model, and I had accidentally hard-coded a single cell and forgot to change it back. That meant the answer was wrong, and we didn't figure it out until the last moment. There was this huge amount of panic. I thought I was going to get fired. So there's definitely some of that, but mostly it was an incredible learning experience with really smart people around the table.

Jon Chee - 00:19:51: Very cool. Was there anyone in particular that took you under their wing there, or were you just figuring it out yourself on the fly?

Caleb Appleton - 00:19:58: I think on each project, there was an individual person that had a massive impact on me. Many of those I remain close with today. I worked on a project in the aerospace sector, and my manager on that project was a guy named Paul. Paul's now an operating partner at a private equity firm. He has a great blog for those that are interested in that kind of stuff called Hello Operator that talks about operational challenges that are universally true across businesses.

He gave me a ton of advice that's ended up being helpful to me in my career, and he's still a person I call anytime I'm making a consequential decision—negotiating comp, deciding whether or not to pursue a new opportunity.

There's certainly a number of others. I actually just had a diligence where I called on one of the partners from one of those cases. I said, "Hey, you've done a lot of work in this specific industry. Would you be willing to meet this founder and provide me your read on what they're building?" Again, it's ten years after I worked with that guy, and he's willing to pick up the phone, do me a favor, and played a useful role in us getting to a decision on that company.

Jon Chee - 00:21:12: Very cool. A lot of friends of mine and family friends are a "Bain family." Kids went to Bain, father was a career Bain person. I love hearing that experience because you're surrounded by wicked smart people—crazy wicked smart and hardworking too. I've never worked in management consulting, but there's a framework that you get. You can just tell when you've gone through the paces of something like that. There's just a level of excellence that I found from folks who are ex-Bain.

Caleb Appleton - 00:21:44: Yeah. The on-the-job training is exceptional. It's a really hard job.

Jon Chee - 00:21:50: Oh, it's hella hard. It's not easy.

Caleb Appleton - 00:21:51: Yeah. And I think in a vacuum, it would be a terrible job. If you just looked at the stats—what you're asked to do, how much you're working—it's extremely stressful with long hours. But the people component really mattered. That's the one thing I have found to be true universally throughout my career: People outweigh challenging environments. A great environment cannot outweigh challenging people.

I'd much rather always invest in a team I really want to work with and lean in on getting conviction around a person or a team, as well as surrounding myself with colleagues in that manner, than I would convince myself of some incredible opportunity where I didn't have conviction in the team. Bain really taught me that one can solve all problems, but the other is insurmountable.

Jon Chee - 00:22:45: Yep. Absolutely. And as you were wrapping up your time at Bain, when did you know it was time to leave?

Caleb Appleton - 00:22:51: I actually wasn't planning on leaving. I was doing quite well. As I mentioned, I really liked the people I was around. You get a pretty significant promotion basically at the end of your second year, where your comp goes up a meaningful amount for someone two years out of college. So I thought I was going to do that.

About that same time, I got an email from a recruiter saying, "Hey, got an interesting role in venture capital. Would you be open to chatting about it?" When you're at one of these name-brand firms, you get a lot of these emails. The recruiting agencies and headhunters just buy the email list or create a scraper. So you just get plastered. Typically, you ignore them. Every now and then one might sound interesting, so you'll take a call, and they'll be like, "We're recruiting for a venture capitalist to join the corporate venture arm of CVS Pharmacy." And you're like, "Okay, that's not actually interesting."

This one was different. A couple of things happened to align. One, I think I was having a particularly challenging week when I got the email, so I was more willing to give it the time of day. Two, it was in San Francisco. I knew I wanted to be out West eventually. I was still living in Atlanta at the time. And three, I got on the phone call and they said, "Hey, we're recruiting for an associate to join the team at a fund called Innovation Endeavors. That fund is anchored by Eric Schmidt, the longtime Google CEO, and they're looking for someone that has a combination of business skills and training in biotech."

I said, "Yeah, sure, I'll have this chat." I did the first-round interview, and I guess it went well enough. Then the second-round interview, which was a case study where I had to create investment memos on companies I thought were interesting for the firm, I did from a family vacation in Vienna, Austria. I had to find the right way to explain to my parents that I needed to do this thing and not be present on parts of the vacation.

Then I came back, took a red-eye to San Francisco, and did the in-person interview. From zero to getting the offer was a ten-day period. Now I had this really big decision to make. Stay in this environment that I was excelling at, doing quite well, with a support structure around me? I'd been in Atlanta for seven-ish years, had a community, and really loved that city. And I had this promotion directly in front of me. Or do this thing that's much more unknown, much scarier?

Again, I didn't really know that much about what venture capital was. Similarly to Case in Point, there's a book people have you read called Venture Deals by Brad Feld.

Jon Chee - 00:25:59: Yeah. You got ready for it.

Caleb Appleton - 00:26:00: I said, "I don't know how often these opportunities will come along." There are more venture capital firms today than there were ten years ago, but there's still not that many. There's just not that many people that will hire. Many of them only want to hire ex-founders.

So it was an opportunity to do that. And I said, "Worst case, I completely fall on my face, but I'm living in San Francisco in a beautiful place with wonderful cycling, access to the mountains, and great coffee and beer." So I said, "I should just do it." I wasn't in a relationship, I didn't have a dog. There was no reason that I couldn't. So I got on an airplane and moved to San Francisco. Basically, the only time I'd ever been to San Francisco was that interview—and not really San Francisco, I landed at the airport and took an Uber to Palo Alto.

Jon Chee - 00:26:59: Yeah, yeah.

Caleb Appleton - 00:27:00: I just said, "I'll make it work." And it ended up being a really exceptional decision for me career-wise. But yeah, it was not planned. I didn't say, "Okay, I'm going to leave and go find the best possible thing." This opportunity presented itself, and I said, "Wow, that sounds cool. Let's do it."

Jon Chee - 00:27:17: I mean, it goes back to embracing serendipity. The Bay Area, as well, has a lot of personal boxes checked for you. You're like, "I'm gonna be in a good area. If this doesn't work out, I will be in the Bay Area. There's clearly going to be more opportunities if this doesn't shake out." I love that. I can imagine it's also scary to just completely uproot yourself and do it.

Caleb Appleton - 00:27:47: Well, I will say my rent tripled overnight.

Jon Chee - 00:27:50: Yeah.

Caleb Appleton - 00:27:50: That was a little scary. I went from having my own bathroom and a massive walk-in closet—like the size of the office I'm in right now—paying $700 a month, to moving to the Castro in San Francisco and paying $2,100 a month for a tiny bedroom. I could barely fit a desk in for work-from-home, and I shared it with the other room, which was actually a couple. There were three of us living in this house.

Jon Chee - 00:28:20: Yeah, yeah.

Caleb Appleton - 00:28:21: But I had a view of the ocean from my house.

Jon Chee - 00:28:23: Oh, hell yeah. Hell yeah.

Outro - 00:28:28: That's all for this episode of the Biotech Startups Podcast featuring Caleb Appleton. Join us next time for Part Three, where Caleb recounts joining Innovation Endeavors during its spin-out from Eric Schmidt's family office, being thrust into sourcing, diligence, and thesis building with minimal structure, and how his first investment became a pathway to partnership. He'll also unpack how a cold email led to a multi-billion dollar investment in Eikon Therapeutics and joining TuneIn during the pandemic to lead a turnaround when sports leagues canceled and gutted the business model.

If you enjoy the show, please subscribe, leave a review, or share it with a friend. Thanks for listening, and see you next time.

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The Biotech Startups Podcast provides general insights into the life science sector through the experiences of its guests. The use of information on this podcast or materials linked from the podcast is at the user's own risk. The views expressed by the participants are their own and are not the views of Excedr or sponsors. No reference to any product, service, or company in the podcast is an endorsement by Excedr or its guests.