Ep 11: Network Effects In TechBio (NFX Masterclass)

Biology is the most advanced technology on earth. It’s a nanotechnology that actually works, and it scales. The rest of the world will benefit when there are more TechBio founders and investors in the space and this sector has never been more central to shaping a better future. The next significant phase of human progress is going to be led by these Scientist-Founders who build TechBio companies capable of unlocking that future. In this episode, general partner Omri Drory explores how network effects are helping TechBio companies cure diseases, fight climate change, and tackle some of the biggest issues facing humanity today.

Episode Transcript

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You're listening to episode 11 on networkeffects and tech bio, which is the final

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episode from the network effects master classPete on the InFX podcast.
Biology is the most advanced technology onEarth.
And in this episode, general partner, AmarOmri, explains how network effects are helping
tech bio companies, secure diseases, fightclimate change, and tackles some of the biggest
issues facing humanity today.
If you enjoyed the audio version of the NFXMasterclass on network effects, be sure to
share with other founders and friends and watchthe videos for full experience at

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nfx.com/masterclass.
Hello.
My name is Umree.
I'm a general partner at NFX.
My background is very scientific.
I'm one of the initial scientist founders.
I did my PhD in Beller Aviv University studyinghard callback chemistry.
I got the 4 by 4 by fellowship went to Stanfordfor my postdoc, I started a company called

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Genum Compalo that NFX invested in 1 of theinitial tech bio companies, ran it for five and
a half years until we got acquired by Twist sciSciences, a platform company creating synthetic
DNA.
I was ahead of corporate development for Twistfor two and a half years until the the IPO ed.
Then I left to start a small fund called techbio, a $10,000,000 Pete seed fund, and then an

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effect that invested my company, invested myfund, We did Mamu's Bala census together when I
was a twist.
Invite me to join them initially as a venturepartner for fund 2, but now a general partner
for fund 3.
At InnFX Bio, we like to say biology is themost advanced technology on earth.
Sometimes it reminds me like a alien spaceshipthat crash landed on earth we're trying to

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figure out how this Gizmo work.
It's pretty amazing technology.
But there is one technology that is even moreadvanced in biology, and it's very human.
It's entrepreneurship.
Because entrepreneurs can imagine the worldthat it should be, and then I'll just annoyed
that the world today is not as a world thatthey imagine and just using their passion and

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the grit.
They can reap a whole new universe and drag allof us kicking and screaming to the new
universe.
They imagine.
And they're going and trying to solve some ofthe biggest problems that we have.
So our companies are trying to cure diseasesare trying to solve climate change.
Trying to produce renewable chemicals andmaterials.

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So our civilization will not be dependent onfossil fuels, but will be more sustainable.
So That gives you just extra motivation andjust joy of, finding supporting, just helping
companies grow in this space.
For the past hours, you've been hearing a lotabout network effects.

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So let's take network effects into bio.
Attend effects, we love to support Sandy'sfounders.
And Mammoth is a great example for a companywhere all three founders were scientists they
are obviously brilliant, right?
But one way we can help them is to level uptheir thinking around business and
defensibility.
All our platform companies are you know, theyhave the vertical platform, but they also have

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the products.
So we have the platform and the products Belleron top of the of the platform.
So Mammoth platform technology is based onnovel CRISPR system that you can use to detect
any DNA RNA sequence.
And other system that they discover a smallcost system that you can use to kill any
genetic disease.
The great thing about the company is they haveunlimited amount of indication and products

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they can create using that platform so they canpartner some of those indications or they can
develop some of those indications.
And the more product they create, the more datathey have, the easier it is to create new
partnership with our pharma companies, and thebigger the ecosystem becomes.
So I I met Trevor, at Stanford when I was stillworking at Twist Biosciences.

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And I got really excited about what he wastrying to achieve.
So I introduced him to my partners at NFX, andhe and his cofoundals who are one of the
initial Beller group.
Then later on, when the paper came out of theJennifer DondesLab where they used CRISPR for
diagnostic, the ability to detect any DNA orRNA sequence, I got extremely excited and I

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told Trevor, hey, this is a better IP.
This is a better technology to solve theproblem you are trying to solve.
And he was lucky enough to be able to get theIP out of uh-uh Jennifer's lab.
And later on, 2 of Jennifer's style students,Lucas and Janice discovered Morgan system and
wanted to start a company.
So we brought all of them together and startedMammoth Biosciences to tackle not just a

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diagnostic part, but also the therapeutic side.
Unlike software where it's very easy to copyFacebook, but it's it's very hard to copy
5,000,000,000 users.
In biology, it starts with basic scienceresearch and IP.
You need to own the IP, the freedom to operatein the area you're trying to develop.
That's how you start.
Once you have that, the more products youdevelop, the more data you have, the easier it

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is for you to develop new products.
You already learned about the platform networkeffect small toward the middle of the map,
which make it stronger than others.
So we Beller the founders to realize the powerof network effects and how they naturally fit
in.
So in Mammoth's case, they are developing theirown diagnostic and their own drugs, but they

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also, as a platform, collaborating with manydifferent companies to help them build on top
of the platforms, either diagnostic alltherapeutics.
And again, because the platform is so wide andyou can create so many different therapeutics
and so many different diagnostic, one companycannot do it all.
That's a power of the platform and especiallyMao's platform.
Right?

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You can collaborate and get a lot of upfrontrevenues from collaborating with companies for
specific products.
And then he can use this revenue and all theplatform and all the robotics and people and
capabilities that you are building in house todevelop your own products and go all the way to
the market.
Traditionally in bio, a lot of the traditionalpharma plays are finding 1 small molecule that

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can go after one indication.
And it's very binary.
It's either work or it doesn't work.
You just flip a card to see if it works ordoesn't work.
The transition from biotech to tech bio, where,again, Beller is getting digitized, where
because it's digital, you can use machineryautomation to make sense of the data and moving

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from, you know, people pipetting the in the labto high throughput automation, allow you to
speed the cycle of design build test learn andcreate products faster.
It means that one company with a platformtechnology like Moderna and the RNA, technology
or Mammoth and the, crisper technology cancreate huge amount of products by themselves

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and collaborate with many other companies tocreate many different products for them.
And traditionally, you couldn't do that.
A unique bio defensibility is regulation.
Regulation is used to be looked like as a badLike, you have to cross regulation.
You have to wait a long time until you get tomarket.

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But if you cross that barrier, then othercompanies would like to build on top of your
technologies because it's already approved.
Less risk.
It's already been tested.
Right?
Because if you went through and jump all thehurdles to get FDA approvals, then why would
anybody else use anything other than yourplatform?
It's already approved, regulated, tried, andtested so the risk are way lower.

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As investor, you very quickly realize that youknow, the outcomes of companies are not a nice
distribution where some companies are doingwell and some are doing not that great and most
are in the middle.
But it's a very sharp power law where most ofyour companies will not Pete the capital
invested, and a few of the companies will bemassive successes.
So the entire game around VC is to Flint thosecompanies, find the hits, find the special

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unique companies that will return the fund andcreate massive impact.
So how do you Flint these unique companies?
Well, we ask 3 questions.
We ask, can it be big enough?
2nd, you have to have defensible magic, reallyunique technology that nobody can copy that can
solve this big problem.
And third, you have to be the right people toexecute on this amazing IP in this huge market

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to be successful because that's what we arelooking Morgan lot of people that come from
tech asked me, you know, can I be part of thisnew revolution, what we call tech bio or
technology and biology?
And I tell them yes because 80% of studying acompany is the same no matter what the company

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is, sales, marketing, support, etcetera.
And then if you come from tech and you're goingto tech bio, then the 10% of tech, you already
know.
And then you just need the 10% bio founder orby a co founder to support you.
So I definitely encourage, tech entrepreneursto come into this space.
So we would like to encourage you to use theworld's most advanced technologies,

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entrepreneurship, and biology to solve theworld's biggest challenges and we will be there
to support you.
You can also watch this entire master classonline atnfx.com slash master class, where you
can log in, track your progress, and watch fullvideos, retranscripts, and find other related
material.
Thanks for to the NFX podcast.