The Science of Persistence: Why Biotech Founders Can’t Quit | Richard Yu (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, Richard shared stories from Ohio and New Jersey, discovering biophysics at Berkeley, and spending five years at Yale modeling membrane fusion proteins. If you missed it, check out part one. In part two, Richard talks about co-founding Green Pacific Biologicals to engineer algae cells for biofuel production, pitching VCs with two slides that were all science and no business model, and realizing the first pitch made him feel energized in a way that academic talks never did. He shares raising NSF SBIR funding to prove the concept, shutting down the company in 2013 after learning that proving scientific feasibility means nothing without understanding commercialization, and joining QB3's incubator where he met hundreds of therapeutics companies and realized this was work worth waking up for.

Richard Yu - 00:01:34: So, yeah, we worked together, and then from there, I wanted to do something a little bit more applied. So in 2007, 2008, there's, you know, a lot of excitement around alternative energy. ARPA-E, I guess, had just started. Obama, right, had, um, kind of initiative energy initiatives, uh, for sort of next-generation energies. I was like, oh, biofuel. And we we had thought about this idea of, like, oh, we can sort of mix and match parts to address a problem in the algae biofuel space, which is the cost of production. Right? I'm like, hey. If we can cause the cells to secrete the oils that they naturally accumulate instead of needing to spin down the cells and, like, extract them chemically or physically, then you can milk the cow

Jon Chee - 00:02:17: instead of killing the cow

Richard Yu - 00:02:17: for every cow. Cow. Yeah. Yeah. Yeah. Yeah. So, uh, it's a lot cheaper that way. Right? Yeah. So we were like, let's do that. And we, like, wrote a a pitch, and, like, uh, we met up with some, uh, of Goose's, um, um, Argentinian connections. We made our way to a a guy who was at the MIT Sloan at the time, uh, Juan de Retcher, who's now, uh, doing a whole bunch of other stuff in in the biotech space. And then also Ian is another one of the people there. We all pitched together. We're like, alright. Let's just do this. And then this is 2008.

Jon Chee - 00:02:46: And this was like you were, like, a PI running your own, like, lab, and you're like, I'm ready to—there's a co-PI.

Richard Yu - 00:02:52: There's a co—and we had an R01 yeah at that time. So people were like, dude,

Jon Chee - 00:02:56: you got it set. Like, oh,

Richard Yu - 00:02:57: I'll get it. How how how how do I say? Yeah. You have a Nature paper and an R01. Like, dude, like

Jon Chee - 00:03:02: Sounds like a sweet gig. Like, what do you think?

Richard Yu - 00:03:05: Yeah. But I think the thing what sold it to me was, like, the first pitch that I did, trying to remember who it was to, to the DFJ or something. It was like a super friendly pitch. It was like, oh, my friend knows someone at DFJ. Don't call me on that. I I'm trying to remember, uh, doc, but, yeah, I I'm pretty sure it's DFJ. It's one of those, like, cringey boys looking back. It was, like, two slides, and it was, like, all science. Right? Like, cell biology. You know? Right? Yeah. Yeah. We're gonna make biofuel, and this is how we're gonna do it. Not even a clue of any of the downstream stuff. Right? And they were—bless their souls—very, very kind about it, and they're like, oh, this is a really interesting idea. You should think about this or that. You know, it's very much like a coffee talk thing, but they're pre-Zoom. Right? So we, like, drove down to Sand Hill Road. That's right. Yeah. It's like classic Sand Hill Road.

Jon Chee - 00:03:45: Yeah. Classic.

Richard Yu - 00:03:46: Going for the previous five years in 1995 to 2000 to the beamline at SLAC, right, to, like, take X-ray data. So I was like, oh my god. There's, like, all these weird, like, ski-chalet-like buildings here. What's the odds? Like, oh, yeah. There are a bunch of billionaires here.

Jon Chee - 00:04:00: That's the exact, like, when I first drove down there, I'd never heard of it, like, described as a ski chalet, but that's exactly the—I was like, this is weird. Yeah.

Richard Yu - 00:04:09: I feel like I'm, like, in Tahoe or Vermont or something. I'm like—

Jon Chee - 00:04:12: Yeah. It's like, these are billionaires? But it's, like, sorta crappy.

Richard Yu - 00:04:15: So we started this algae biofuel thing. We ended up getting some money from, uh, South American Fund. And, uh, yeah, we just took our swing, man. And we, uh, this is 2008. Uh, otherwise, I was starting to say, I think QB3 may have had, like, a startup-in-a-box-type program, but it was not, like, the cool thing to do out of a postdoc. Right? Like, I didn't know anyone who had started a company. I just did it because I was like, I'm not sure I want a PI. Right? That first pitch, like, I felt good. Like, I had never felt giving an academic talk. Right? I mean, it's somewhat embarrassing to admit that I was, like, chose my career path based on avoiding my insecurities, but I started to follow but felt good in that sense. Right?

Jon Chee - 00:04:55: I think that's very human. Right?

Richard Yu - 00:04:58: If anything comes out of the talk, I'm I'm a very human.

Jon Chee - 00:05:01: Yeah. Right? Like, we were talking before we hit recorders, like, you know, the robots are taking over, but, like, at—

Richard Yu - 00:05:06: that's right. Yeah. No AI would be this, uh, complex.

Jon Chee - 00:05:10: But I feel that because, like, I think having that kind of comparison, like, an academic talk versus the pitch and feeling that kind of, like, jolt of energy is not something you shouldn't just ignore for, like—you know, you kinda gotta listen.

Richard Yu - 00:05:24: Yeah. Yeah. It really is. It was something very deep down. I was like, this feels like good. So, yeah, that was, uh, again, another form of experience. So, yeah, I mean, we we took our shot. We got some grant. I think they had, like, a I think it was an NSF phase one SBIR. Shout out to the SBIR programs. Yeah. So it was, uh, can we do this? Can we—and the idea was, like, okay. Let's sort of hijack some of the mammalian mammary milk fat secretion machinery into algae cells and see if we can get them to, like, wrap around a little bit of the droplets and and spit them out. And we actually did get some proof of concept data, like, hey, we can measure, like, a little bit of oil outside the cells. Like, this is good, but, um, you know, that was, like, definitely a first learning experience for the entrepreneurial path. It's like, we had no clue about, like, 99% of the way the rest of the way to the market. Right? Like—

Jon Chee - 00:06:11: Yeah.

Richard Yu - 00:06:12: And it's so fascinating too because, like, over the past few years, it's it's been sort of rough in biotech for pitching. And it's like in a curious way, that vision-driven project of algae biofuels. Like, it's it's so clean of a story. Like, there's this huge problem, global warming. We're gonna recycle CO2, so we don't need to add any more into the atmosphere. Like, it's just like a sort of like a very you can explain to your grandma. Like a YC project. You hear—play it to your grandma at Thanksgiving dinner, you know, like, super easily. Right? As long as it you have—you don't have to get over the hurdle of the, like, do you believe in climate change or whatever. Right? So that was, uh, again, a huge learning experience about, like, first of all, scoping out and understanding downstream risks and, like, what is the overall project? It's not just the science at the beginning. Right? I mean, there's this whole idea of, like, ideas are cheap, and it's all about the execution. But, like, in the sort of analogous way, it's like for a project, certainly a biotech project, science is like, sure. It's it's necessary, but wholly not sufficient to, like, take—get to anywhere near value creation step. Right?

Jon Chee - 00:07:13: It's refreshing to hear that because I think sometimes as scientists, we can become very precious about the science that we're working on. And you're like, well, everything else doesn't matter. Like—but this, you know, it will work itself out. And then you realize how complex and multivariate this whole thing is. Like, there's so much good science that, you know, just like—because of, like—there's, like, economics, like, on the other side of it too. And that's why whenever I think about anything that goes all the way, I'm like, it is like a little miracle.

Richard Yu - 00:07:47: Like, unbelievable.

Jon Chee - 00:07:48: So many stars, like, are aligning.

Richard Yu - 00:07:52: Yeah. Yeah. And then, like, it's so fractal. Right? Because, like, there's so many ways in which that's true. Like, certainly in, like, therapeutics too. Right? I mean, like, I'm, like, constantly amazed that any drug works at all. Right? Like— Yeah.

Jon Chee - 00:08:04: And when you see people who've done it multiple times—

Richard Yu - 00:08:06: Yeah. Yeah. It's like you're—I mean, it's like What? Yeah. It's like multiple lotto tickets. Right? I mean, there's so many ways it can go wrong. So many. Right? It's like we all go into it knowing how complex the biology is. Like, it's it's like a miracle any of these things work. So we learned a lot on that. We did have to shut that down in, I think, it's, like, 2013. And then I sorta, like, kinda licked my wound for a bit and, like, bumped around, helped out some friends, just put in a a little bit of time at at some friends' biotech companies around the area. Uh, but then I I ended up in—oh, shout out to Jeff Cannon and and—oh, shout out to Jeff. Radio Genomics. Yeah. Yeah. They— Shouts out to Jeff. The wing for a little bit, and I was like—

Jon Chee - 00:08:43: were you working in his basement at the time?

Richard Yu - 00:08:45: No. No. I was, uh, I think they just moved over to the 5858 Horton Building, the Melrose Place of the biotech as I call it. Like, somehow we've all been there. We've all known someone there. You know? We've all, like, basically dated someone there.

Jon Chee - 00:08:59: Yeah. So funny. Because, yeah, I remember him talking about how, like, it was, like, for a moment, just, like, in his basement, like, of his loft, like, on shadow. No.

Richard Yu - 00:09:06: I do remember the—it's so funny. I do remember going—he was, like, somewhere in the West Berkeley, uh, going to space and, like, in his, like, beautiful loft and, like, it was, like, deli cases and, like, just like the huge in there.

Jon Chee - 00:09:19: Yeah. Yeah. You're awesome.

Richard Yu - 00:09:20: I mean, so it does not get more more romantic than that. I mean, come on.

Jon Chee - 00:09:23: Yeah. Yeah. Yeah. Yeah.

Richard Yu - 00:09:24: I I live for that stuff.

Jon Chee - 00:09:25: Like I love that.

Richard Yu - 00:09:27: Probably to our detriment. Certainly Yeah. It caused some spousal friction. But, uh,

Jon Chee - 00:09:32: so funny. I love that though.

Richard Yu - 00:09:34: Yeah. Yeah. So awesome. But then, yeah, I got a job on the sorta other side of the lease and term sheet working with Doug Crawford and and Brad Kelly at QB3. So helped set up and run their first incubator called QB3 953 in Dogpatch on Indiana Ave, uh, now called MBC BioLabs, one of the many, many buildings in the MBC BioLabs ecosystem. But that was, uh, amazing. I mean, that was another, like, super formative experience. Right? Like, certainly coming off the heels of algae biofuel thing. It's like, A, just seeing so many therapeutics companies is like, oh, actually, there's, like, room. It's not just boring working for the Bayer, you know, assembly line, like, watching aspirin pills come off a conveyor belt or something. Right? It's like, oh, there's actually, like, really cool mobilization of, like, novel science into these these cool projects. Anything that, like, directly reduces human suffering, like, it's pretty easy to get behind that. Right? Exactly. Yeah. Yeah. Yeah. Yeah. I can wake up in the morning doing this without a problem.

Jon Chee - 00:10:28: I guess question, how did you get connected into the QB3 ecosystem? Which is by virtue of being on kind of the Berkeley ecosystem.

Richard Yu - 00:10:36: I think it was one of the team members in the algae biofuel company who had gone on to something else, Kim. She passed along the the job application to that. So I was like, I could really use a job. You know, going from, like, grad school to postdoc to startup, you know, at some point, it's like, I I could rough it out for just—I I just, like, actually need income now. Yeah. Yeah. I

Jon Chee - 00:10:56: could build some

Richard Yu - 00:10:58: things. Yeah. Yeah. In the Bay Area. Right? Yeah. You know, kid or two kids. So I I applied, and it was fantastic because it was, like, again, like a startup. Right? I mean, we were, like, in there setting up a—it was, like, perfect job for me at the time. Like, Doug is awesome. He's, like, one of the smartest dudes I've ever met. I mean, we're, like, mutually into and, like, addicted to coffee. He he also just dives in and works with his hands. Like, I mean, there would be multiple days where I'd come in, and he he would literally be in the dumpster, like, crushing the cardboard boxes down to get more room because he was too cheap to, like, get another dumpster to pick up, you know, during the week. Right? It's, like, awesome. Like, totally my kind of person. Right? And it's just, like, everything I'd learned, like, wrenching on motorcycles and, like, working at my house. And, again, mostly because I'm, like, too cheap to hire someone. But I've just, like, learned all these skills, and, I mean, at this point, I just, like, very much enjoy working with my hands. Yeah. It was, like, the perfect job. Right? And then to have that sort of mixed in and intersected—to keep using that word—with, like, all the science and the companies and just meeting so many so many cool people.

Jon Chee - 00:11:57: I was gonna say just, like, about this time because I was, like, bumping into, like, QB3 at that time, like, in the early—yeah. In the early day. Yeah. Yeah. People forget that, like, now, you know, MBC, QB3 are just, like, kind of, like, there's many spaces and all the—it was super, like, startup energy. Like—

Richard Yu - 00:12:12: Totally. It totally was. Yeah. Super startup energy. Like, it was, like, you know, very much punk rock.

Jon Chee - 00:12:17: Totally. People think that when these companies, like, started up, like, incubators were everywhere. Hell no. You're signing up big leases. Like, if you're gonna start a company, you're signing for a massive lease and then just, like, betting. Like—so this—like, what you guys were doing was, like, quite punk rock and, like, I was—it was actually one of the inspirations for Excedr.

Richard Yu - 00:12:42: Oh, really? Okay. Yeah. Yeah. I can totally see that, though. You know, it makes sense. Yeah. The translation is pretty clear. Yeah. Because I was like—

Jon Chee - 00:12:47: I saw what you guys were doing on the real estate side, breaking it down and making it more modular and actually, like, have to work for, like, a a startup. And then I was like, for me, at Berkeley, I was like, I had to run up to Stanley and just to reuse the the FlowCore back when, like, Tolman Hall used to be a thing until they, like—it was, like, knocked over because it was not seismically retrofit. I was like, literally, I was in that lab, and you're telling me it's not earthquake safe? Yeah.

Richard Yu - 00:13:12: Yeah. But, anyway, I—

Jon Chee - 00:13:13: was at the very bottom running up to Stanley to go use the FlowCore, and I was like, can I get a flow cytometer? And they're like, do you know how much that is? I think too, like, during that time, it was like when Uber and Zipcar were, like, the sharing kind of mindset became—

Richard Yu - 00:13:28: capacity. Like, let's make use of this. Yeah.

Jon Chee - 00:13:30: Yeah. Exactly. So I don't know. It's interesting you describing this time because now, like, it's kind of like anyone who has, like, a an idea for—insert, you know, life science entrepreneurial venture. So, yeah, let me go get, like, a shared bench at—insert, you know, incubator. And it's like, that did not need to exist.

Richard Yu - 00:13:46: And most people don't realize that was not, like, you know, some heavily subsidized thing. Right? Like, that thing had to survive on its own. Right? It had to pay its own way. Right? Obviously, having the UCSF QB3 name, you know, helped a lot. Right? But it was like a separate business entity. Like, it had to, like, actually work. And I remember, like, coming in and this is, again, like, this set me up so perfectly for later entrepreneurial set, which I did not do for the algae biofuel thing because I was the CSO in that company. And I did some models, like, techno-economic models, but, like, now it was, like, to the next level. Like, suddenly, I found myself, like, working at, like, real estate pro formas and stuff. Right? Like, it's like you just dive in and figure the shit out. Right? Like, it was super interesting. Yeah. What an amazing experience. I also was able to contribute as a principal with Mission Bay Capital, so I was able to sit in a lot of pitches. Right? So that was really helpful too just to see what worked and what didn't work. Amazing experience. Forever grateful to Doug and and Reg for that—for that opportunity. But, yeah, at some point, I was just, like, getting the issue to do something myself again, I decree.

Jon Chee - 00:14:50: You're, like, hearing the pitches, and you're, like, maybe I wanna—I wanna get back to that energy of, like, of doing the pitch.

Richard Yu - 00:14:55: Totally. Yeah. I could be doing that. So, yeah, Gustavo had been jumping around at some jobs, and I introduced him to another friend, Bernie Suter, who had started a a service company called Next Interactions. They're doing protein interaction mapping using two-hybrid based methods. So I I joined there as a COO. I believe it was my position there. Um, but the idea is, like, we have this, uh, equipment base, and we have incubator spaces is up in the joint incubator up in Richmond, but we can use those revenues to try to fund this seed idea that we had for the therapeutics company. Right? And it, like, it's like all these threads from history just, like, came back perfectly. Right? Because, like, this—this idea of, like, using yeast as a—essentially, a high-throughput functional assay tool for antibodies against GPCR targets. Right? It's like we were working on GPCR signaling, had, like, very deep knowledge about the quantitative aspect of the signaling, the regulation of that, and it's like, uh, we should be able to do this. Right? And we saw papers about people using yeast and humanizing that, you know, I.E. putting in human GPCR targets and doing small molecule drugs. But I'm like, that's sort of weird because, like, it doesn't take advantage of the power of the usage of the genetics. Right? So if you could, like, bring the scale genetics and library scale stuff, right, That would be interesting. Right? And then if you could, like, hook that up to, you know, what nature does best, like selection. In this case, engineer, not natural selection. But, like, let nature tell you what works. Right? Like, it's already working. Like, you—you just gotta get out of the way. Right? Just, like, get out of the way of the signal. You know? So, yeah, that was the idea behind Abalone. And, uh, we did—this is, I guess, 2017, 2018. We formally incorporated. And then, again, we are funding—it's very much like a revenue-driven proof-of-concept experiments. Got a—again, another NSF grant. Shout out to the NSF SBIR program that helped us get the data to show that this idea of using, like, autocrine signaling to sort of map out or or interrogate antibodies at that, uh, for function at large scale. We're able to do that in one or two—those one or two experiments and presented that to Y Combinator, and then we got in.

Jon Chee - 00:17:01: And was this, like, during the Next Interactions phase?

Richard Yu - 00:17:05: Yeah. Yeah. So that's where Bernie was, like, interested in doing more of the revenue-driven business of it, and—and we were, like, doing those sort of moonshot, like, therapeutics thing. Not single-asset risk, but still platform, but definitely more of a riskier thing. And, you know, we partitioned things appropriately and transfer IP.

Jon Chee - 00:17:22: Yeah. And I guess a question for that, like, I'm always fascinated by and also the interplay with kind of your experience at QB3 and Mission Bio for Capital. Like, your first startup experience, it seemed to be a really, like, formative one. Your first pitch, your first fundraise, raising your first capital. Your second go—one, you've been on the other side. You've been on the capital side. And I'm going to imagine running QB3 MBC gave you a lot of, like, hands-on kind of, like, maybe not necessarily, like, the bench experience, but you're, like, all the other aspects of, like, running a business. You're talking about making pro formas, which is, like, another aspect of business. We're talking about how, like, your first enterprise was, like, focused on the science, but there's all these other downstream things. It seems like you had accumulated kind of these other downstream things of, like, building a business. And then Next Interactions is like, okay. It sounded like a different way of funding the business. Can you talk a little bit—that dynamic? Was it like you're just like, okay. We're—we're gonna generate these services revenue and just, like, fund pipeline or, like, kind of, like, internal R&D. What was that interaction like? And talk a little bit about that model.

Richard Yu - 00:18:26: Yeah. It was perhaps out of necessity more than anything else. It was what we had. We did have at least one profitable—quite profitable contract, which allowed us to drive a lot of the internal development, hire people, and—and work on—on our—our own project.

Jon Chee - 00:18:42: Did you guys raise anything?

Richard Yu - 00:18:43: I think we had—there's some friends and family money there, but no sort of round until we got to Y Combinator. That was when we raised our first seed round. It was a revenue-driven platform business in a—in a way. It's a little bit different than what we're doing now and what so many other companies are doing, which is much more directly. Like, we are an antibody drug discovery company. We are working with groups like Pfizer or whoever it is at one pharma to—to find high-value molecules together. So it's very aligned with our core mission. This was like, we have some contracts doing, you know, some yeast engineering somewhere. But, I mean, the basic model is there. Right? Like, we make money the old-fashioned way. We earn it. You know? I don't know if that's like—I'm totally dating myself, but there's some commercial from, like, the seventies that—yeah.

Jon Chee - 00:19:28: But I was gonna say, like, especially, you were mentioning how, like, the past few years have been, you know, turbulent, but it's kind of things like that. Because sometimes when I talk to people about the possibilities of doing something like that, it's just like, no way. I'm like, no. Like, people do do it the old-fashioned ways, and you can make it work. So I'm always really curious about that.

Richard Yu - 00:19:48: Yeah. Like I said, I—I wish I could say it's part of a grand master plan, and I was turning down term sheets left and right. You know, that's not the case. Right? Of course, in retrospect and having heard of experiences of friends and colleagues who have experienced the downside of taking money, it was the path that we took. It was what we had ahead of us. And, you know, I—I had my formative years in the sort of 2008 financial crisis with the algae company. Right? So, like, it is never, like, a basket of plenty for me ever. Right? So, like, I'm very comfortable. Like, the last few years, like, it's been stressful for some people. Sure. And, like, you know, the belly of the plant is scrape the treetops a few times, but I actually don't find it too stressful. It's like it's almost weirdly counter-stressful, like, when there are all these people raising, you know, going IPOing on preclinical data. I'm like, is there something wrong with me? Like, it's not happening here. Like Yeah. Yeah.

Jon Chee - 00:20:44: Yeah. Yeah.

Richard Yu - 00:20:45: Yeah. You know what I mean?

Jon Chee - 00:20:46: Like Yeah. For—for sure. I'm

Richard Yu - 00:20:47: just sorta, like, bumping along trying to, you know, do stuff and, you know, do good science and show data and create value and stuff. And, oh, yeah. It's like—it's like a whole other world of fundraising and and company creation and company growth. Yeah. So that was the path that we took with that. So then from YC, again, like, churn. Right? Like, our demo day was—I think it was, like, March 19 or something. And, like, 03/19/2020. Well, in February 2020, there's this, like, little thing going on. Like, people were starting to freak out about it. Yeah.

Jon Chee - 00:21:19: That's pretty unsaving.

Richard Yu - 00:21:20: Right? I swear, like, I've joked many times now. It's like, every time I start a company, I'm going to, like, massively short the market. Because, like, the first time I started was, like, a financial crisis, 2008. This is it, coronavirus. Right? We actually did pretty well off of the seed race there. It was a interesting experience because I was really trying to map out, you know, in terms of, like, the investor space, like, what would we appeal to. We were sort of in an awkward sort of middle ground. Right? Because, like, I think tech bio, I guess, hadn't really risen, but it was right around that time where they—they sort of exploded. But we were sort of, like, a little too bio for that.

Jon Chee - 00:21:56: And then YC too, I would imagine, doesn't get as much life science kind of when it comes to the investors that are looking at it. They're probably more used to, like, a software play.

Richard Yu - 00:22:08: Yeah.

Jon Chee - 00:22:08: For sure. For sure. Yeah.

Richard Yu - 00:22:10: Back then, the stories that resonated with those types of investors were very much like, you know, we're gonna take over the world in—in this sector. Right? And I—I would be like, look, dude. You know, the average selling price of these drugs, like antibody drug top 10 drugs, it's like $8,000,000,000 a year, man, like a pretty good revenue. You don't need that many. You know? It's like scale. I gotta think of scale in a different way, you know? Yeah. But somewhat of a different mindset. So, yeah, we had some of those investors, and we have awesome seed investors. They're very supportive. They've been through thick and thin with us. But we're also, like, too early and not quite the right fit for the sort of standard Boston-based investors. Right? Didn't have a prominent academic and—

Jon Chee - 00:22:49: Pause there. What is appealing or what are the prominent Boston-based investors typically looking for? I'm not quite sure. I've just always been in the Bay Area. So I kind of like—I—I know what, like, Khosla is looking for.

Richard Yu - 00:22:59: Yeah. Right. Right. Right. Yeah. I mean, that is, of course, painting very broad caricature. Yeah. But I think—I think in general, it'd be, you know, later-stage projects. I mean, this is—I'm carving out not the company creation where they actually, like, literally create their own companies, but, yeah, funding later-stage projects, more like sort of single-asset driven. There was some platform work. I mean, there was a—a bump of platform excitement, actually, right around QB3 times. But then that sort of retrenched into platforms again. We—and I—I'm now old enough to have seen a couple of these cycles. Like, I can't believe it, but, like, I used to hear people say that. But, like, now I'm like, oh, shit. I actually have experienced a couple of these cycles, like, even in my own field. Yeah. I think it's just different concepts about, like, valuations and ownership as well. Right? This is sort of, like, more the tech thing of, like, you know, for every round, you should be giving up, like, 10 to 25% of your company. It's like, no, dude. Like, therapeutics are so expensive. Like, you're not getting out with, like, Mark Zuckerberg and, you know, 50% voting rights or, you know, the Sergei and then all that. Yeah.

Jon Chee - 00:24:01: It's just like it's not gonna happen.

Richard Yu - 00:24:03: I mean, there were some spots where that probably did that have happened in—in bio, but it's few and far between. It has been so fascinating over the last five years just sort of living through this tech bio thing. And then now with AI, just, like, seeing some similar threads there. Yeah. It's like history, you know, it's like they're echoes, so I—I think over and over again. Yeah. It's not the same story, but it's sometimes it's—it's pretty close. Right? So, yeah, the hype cycles there. Yeah. Really fascinating, that whole dichotomy. But, you know, we were able to fund it. There's, like, that Venn diagram of, like, you know, tech bio people. Like, I'm gonna do AI for proteins, and I'm gonna, like, predict every possible antibody for every possible protein or whatever. Right? And then there's, like, I'm gonna make a drug for disease at X. And there's, like, that thin overlap to that diagram. So, like, we did find some investors in that—in that area, and we're interested in—in that sort of intersection. And I think to be much more charitable, I think, you know, everything's sort of coming together. Right? I mean, I—I think particularly in the tech pilot side, people know that the main value is in the products themselves and, you know, you—you have to have pipeline, you know, driven or at least a—a strong thread of a pillar of pipeline in your overall value for therapeutics for therapeutics, at least.

Jon Chee - 00:25:14: And did your YC experience—due to COVID, were you right at the point where, like, your YC experience was vastly different than other every YC batch?

Richard Yu - 00:25:23: That's what I'd heard. I mean, I don't have my experience, but, certainly, when I was talking to friends who'd gotten in who—who've, like, vouched from my application stuff, how they related their experience, that was different. Vastly different? Yeah. Yeah. Vastly different. No handshake deals in the bathrooms.

Jon Chee - 00:25:36: Yeah. Yeah.

Richard Yu - 00:25:37: No, like, rich Texans coming in and, like, offering you a $4,000,000 SAFE note on the spot. Like, that was not my experience.

Jon Chee - 00:25:44: Got it. Got it. Okay. Okay. Yeah. Yeah. I was imagining, like, right at that point, like, things were getting a bit weird.

Richard Yu - 00:25:50: It was March 19, and then they were like, we're gonna move it up to March 9. It's not even gonna be live. You're gonna present one slide. Like, the world's maybe falling apart. Like, get whatever you can at whatever valuation you can now because we have no idea what's going to happen. No one expected the boom or the mini—mini bubble in biotech. Yeah. Yeah. Yeah.

Jon Chee - 00:26:12: I remember, like, I was like, oh, shit. All the labs are gonna be shut. We're cooked. And then, like, just, like, soon after, it's like, oh, no. Like, we're going in the opposite direction. And, like, had that same moment where just, like, you're just like, do whatever—

Richard Yu - 00:26:27: whatever you can. Yeah. And, I mean, there's YC already had that sort of, like, baked into its DNA in terms of, like, always do the most urgent thing, and, like, you know, the—the single experiment, do that. Like, you know, relentlessly, like, sort of focusing in on that, like, what is the most important thing to do today? And do it like as fast as you can, you know, like, that sort of mentality, which often doesn't work so well for biology and then all that. But, again, it's like a—it's not another sexting app or whatever. Right? Like, you can't just ship. So we did that. And then, you know, COVID was, uh, another formative era. Right? So we moved out of our incubator into this space in Emeryville. We moved into the old Pixar sound studio, one of the suites here at this business park, if you wanna call it that. And, uh, it had a lot of, like, individual sound rooms that because I had worked in an incubator, I'm like, oh, I can turn this into a lab. That's actually not that hard. So we did that, and, yeah, it worked out really well because we had all these individual rooms where scientists could work independently. Right? And so we—we could actually sort of pour John, uh, during—during the whole corona thing. Yeah. So the—gosh. So that was, like, what, 2020? And then we're at 2026. Right?

Jon Chee - 00:27:37: And I guess this is, like, right at kind of, like, you spun out of Next Interactions. You did YC, and I'm assuming that was, like, your kind of, like, first money in.

Richard Yu - 00:27:46: Yeah. Yeah. Except for some, like, a—a little bit of seed money and the NSF money. Yeah. That was the first, like, investor money.

Intro - 00:27:53: That's all for this episode of the Biotech Startups Podcast featuring Richard Yu. Join us next time for part three where Richard recounts sitting in on hundreds of pitch meetings while running QB3's incubator, reconnecting with 20-year friend Gustavo Martinez about GPCR agonist antibodies, and applying to Y Combinator with a platform that tested functional activity instead of just binding affinity. If you enjoy the show, subscribe, leave a review, or share it with a friend. Thanks for listening, and see you next time. The Biotech Startups Podcast is produced by Excedr. Don't want to miss an episode? Search for the Biotech Startups Podcast wherever you get your podcasts, and click subscribe. Excedr provides research labs with equipment leases on founder-friendly terms to support paths to exceptional outcomes. To learn more, visit our website, www.excedr.com. On behalf of the team here at Excedr, thanks for listening. 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.