Carter Williams went from building fighter jets to building technology startups. A mind-expanding conversation with a VC who grapples with big ideas. Topics range from the future of food to how to get more people into the innovation economy.
Highlights:
Sal Daher Introduces Carter Williams, Aerospace Engineer Turned VC
Portfolio Company Benson Hill Aims to Make Plant-Based Meats Affordable
Portfolio Company Kula Bio Harnesses Micro-Organisms to Increase Nitrogen Fixation in Soil
Gathering Scattered Data to Create Synthetic Control Arms for Clinical Trials
Healthjump’s Role in the COVID Research Data Base
How Carter Williams Went from Engineer to VC
Carter Williams Greatly Respects the Risk Taking of Founders
Savran’s Enabling Technology
New Models of Startup Creation
“I want to build the AWS of precision fermentation.”
Carter Williams on Getting Capital Off the Sidelines and Into Innovation
ANGEL INVEST BOSTON IS SPONSORED BY:
Transcript of “The Future of Food”
Guest: Carter Williams, Aerospace Engineer Turned VC
Sal Daher: I'm really proud to say that the Angel Invest Boston podcast is sponsored by Purdue University entrepreneurship and Peter Fasse, patent attorney at Fish & Richardson. Purdue is exceptional in its support of its faculty, faculty of its top five engineering school in helping them get their technology from the lab out to the market, out to industry, out to the clinic.
Peter Fasse is also a great support to entrepreneurs. He is a patent attorney, specializing in microfluidics, and has been tremendously helpful to some of the startups in which I'm involved, including a startup that came out of Purdue Savran Technologies. I'm proud to have these two sponsors for my podcast.
Sal Daher Introduces Carter Williams, Aerospace Engineer Turned VC
Welcome to Angel Invest Boston, conversations with Boston's most interesting angels and founders. I am Sal Daher, an angel investor who is tremendously curious to figure out how to best build interesting early-stage companies. Today, I'm really excited to be speaking with a gentleman who has a really interesting path in this career. He's a venture capitalist today, but he has done some pretty impressive things, such as starting the in-house venture group at Boeing aircraft. He's very knowledgeable about that area, but now, he is the CEO and managing director of iSelect Fund. He's been doing that for eight years, based in St. Louis. Welcome, Carter Williams.
Carter Williams: Yes, thank you. Good to be talking to somebody from Boston.
Sal Daher: [laughs] It's a beautiful day here.
Carter Williams: Is it?
Sal Daher: Californians would envy a day like this.
Carter Williams: Yes, I miss it from my spending some time up in the Cambridge area.
Sal Daher: Oh, yes. Cambridge just really nice, that I walk to the market and walk back, and it's wonderful. Anyway, Carter, what type of startups does iSelect Fund look to invest in?
Carter Williams: We invest in an area that we call Food is Health. We typically originate our investments at a seed or an A stage. We will invest all the way out to IPO. What we mean by Food is Health is we spend about 1.7 trillion a year in the United States on food, we spend 1.9 trillion on the healthcare costs related to poor nutrition, so we see that as a 3.6 trillion market in which functional medicine and better nutrition in the food system, and lowering its cost and making it more available can avoid diabetes, cardiovascular disease, and reshape the healthcare system.
We pay a lot of attention to ingredients. The soil up to the materials that would be processed through Cargill. Then we pay attention to the data and assays and some therapeutics on the healthcare side that target metabolic conditions and inform the patient better about what would be a better choice for them in terms of managing their overall health.
Sal Daher: Very good. Would you care to talk about some specific startups that instantiate your approach to investing?
Portfolio Company Benson Hill Aims to Make Plant-Based Meats Affordable
Carter Williams: Yes, and this has evolved. We started investing in '14 when nobody was really doing AgTech in particular, and so the world has evolved. One of the first companies we invested in, Benson Hill, just went public. What Benson does is they focus on crop genetics. If you look back through what Monsanto did, Monsanto really boosted yield. That was good, but when we boosted yield, we've reduced nutritional quality and we fiddled with taste. Today's tomatoes don't taste as good as a nice, fresh tomato.
Sal Daher: You're touching a very sore topic for me. Tomatoes and peaches, that's where we've had the biggest losses in flavor.
Carter Williams: Yes, they had to make them so they last longer in the store. They took all the sugar out, so that when it goes to the supply chain, sugar causes the food to rot, and so it was done to optimize supply chains. What Benson does, first and foremost, is they're super good at the genetics. They have taken the process of crop optimization, which was typically a nine-month, year processing a breed. I might do some genetic modification, I'm going to go test it in the field, I'm going to plant, I'm going to crossbreed. A very long process that normally took about nine years to bring something new to market.
What Benson has been able to do is they're focused on yield taste nutrition, not just yield, and they understand the genetics and are using a lot of AWS cycles to take a lot of that front-end process that used to be done in greenhouses and squish it down, so they can more predictively find the targets and optimize them, and really shorten that entire cycle by to three or four years.
Sal Daher: Okay.
Carter Williams: Cool thing about this on a big side is while we get frustrated about what's working on the economy, the world's getting better every year and Asia, more people are moving to the middle class. When they move into the middle class, they start eating more protein in the form of animals. There's not enough farmland to create enough protein, to feed all the animals, to feed all the people. When we talk about things like plant-based meat, people are like, "Oh, we're all going to become vegans." No, what we're going to do is two nights a week, we're going to start eating plant-based meats, not seven.
Just that shift alone will less tax the system and the overall demand for protein, so that the macro level, many of us in our field are concentrating across the board on how to get more protein delivered efficiently. The next thing on at Benson Hill, which they're doing now, which is they're focused on delivery of that protein for plant-based meats. It's how do we take the cost of plant-based meats and make them cheaper than animal-based meats?
While many people are sort of saying, beyond and impossible, and this could be this premium product, and only the vegans are going to eat it, the real interesting market opportunity to us is how do you make a quality nutritious, protein-based product that's attractive to all economic profiles? How do we lower the cost below animal-based meat? Can I make a burger-like that's half the cost of a burger that we eat today? Benson's--
Sal Daher: Hopefully with a lower content of saturated fats and other things that are not that good for you that are present in the natural burger.
Carter Williams: Yes. It's a fascinating shift of technology. If you think about it, Monsanto and others spent 40 years improving crop yield, and they did it in corn and soy, which had already gone through 40,000 years of breeding optimization. That next part is tough, and that was just to deliver food. What Benson is getting to is they're looking at how can I improve the quality of the protein in this, while also optimizing production, while reducing footprint? They're looking not at just protein content, but what's the absorb level of protein in the body. When we talk about health, this is new stuff, but we don't think of health as what's the nutrition on the label. We think of health in its impact in terms of its metabolic effect on the person. What gets absorbed in the person.
Sal Daher: Yes, how the nutrient is metabolized, is absorbed into the body-
Carter Williams: Correct.
Sal Daher: -but certainly effective.
Carter Williams: We all know that everything's not absorbed because every couple days, we have to get rid of it. [chuckles]
Sal Daher: [laughs]
Carter Williams: That waste factor is really symbolic of the fact that you're not absorbing all that nutrition. We're looking end to end, and that affects many of the other companies that we're looking at.
Sal Daher: What is the business model for Benson Hill?
Carter Williams: They deliver protein ingredients to Kellogg's. Let's build on that. The classic business model of this industry is, I make seed, and I sell it to a farmer, and the farmer figures all that out. Benson takes their enhanced seed, their formulations, their agronomy recipe, they go to Kellogg's, and they say, "We're going to give you a higher quality protein, go invent new products with it." We, Benson Hill will work with the farmers and the growers to produce that.
Sal Daher: Up to the standards that they have.
Carter Williams: Yes.
Sal Daher: Okay.
Carter Williams: It's referred to often as the decommoditization. If you think about other business, it's not uncommon that you, if you decommoditize a commodity, there's a lot of arbitrage value in that. People think of corn and soy as being commodities that are just pushed through Bunge and Cargill. What we're starting to see is we often refer to it as the verticalization of the industry, where we're connecting the dots, and the person reading the label wants to now know the micronutrients, it's the, what are the amino acids in it? Customers are going to be more demanding. All of our portfolio is focused around this verticalization of the different information streams that help the consumer. As venture capitalists, we're always paying attention to what's the unmet need in the marketplace? What's the latent demand for something new? We're trying to connect that back into all the way back to the soil.
Sal Daher: Would you care to talk about another company that exemplifies your focus?
Carter Williams: Yes. Another interesting one still on the Ag side is Kula Bio, which you may have seen mentioned in The Wall Street Journal recently.
Sal Daher: The name again, please.
Carter Williams: Kula Bio.
Portfolio Company Kula Bio Harnesses Micro-Organisms to Increase Nitrogen Fixation in Soil
Sal Daher: Oh, Kula. Kula Bio.
Carter Williams: Yes, they're up in-- I think they're in Cambridge. I guess I should know that.
Sal Daher: Oh, I think they are a portfolio company of Pillar VC.
Carter Williams: Maybe, I lose track. What Kula does, there was an article two weeks ago in The Wall Street Journal about this, so fertilizer is getting expensive. Now, we invested in this some time ago, but with Ukraine and the issues there and various issues in fertilizer, what Kula does is it uses the biologic to enhance what's referred to as nitrogen fixation. Really, what you do is if you get more nitrogen, then you can grow certain crops better.
Nitrogen comes from the air typically. You can put fertilizer down to get nitrogen in, but this nitrogen fixation can also trigger the soil so it sucks more nitrogen out of the air. That's what Kula does. It's not a chemical, it's a biologic. It's very effective, and it looks like it'll be lower cost than fertilizer, and would be used probably with a little fertilizer in Kula in practice, but this is a big idea. If you look at fertilizer, wars have been been fought over access to fertilizer.
Carter Williams: [chuckles] Yes. Yes. Yes.
Sal Daher: There was a great book about the Bosch cycle on its invention. We used to fight wars in South America to get access to bat guano to act for fertilizer, and then the Bosch cycle was invented.
Sal Daher: [laughs]
Carter Williams: You got more fertilizer, you could make more food. If you got more food, you got happy, you avoid-- The King ends up living instead of getting his head chopped off.
Sal Daher: South America doesn't take much to start a war. A soccer game gone wrong, can start a war.
[laughter]
I was born in Brazil-
Carter Williams: Oh, you were? Okay.
Sal Daher: -so I can tell you, it's a continent where sports can lead to war. A lot of things can lead to war very, very easily. Anyway, it's very interesting. Kula Bio, yes, I had run into them because I'd had Russ Wilcox of Pillar VC on the podcast. I think he mentioned that as well. Would you like to talk a little bit about the anticipated business model for Kula?
Carter Williams: I think in that case, they would still move forward with selling through distributors. Bringing innovation forward in this market is really tough because a lot the distribution is owned by the chemical companies. It's a very tough channel. We're not invested in it, but Farmers Business Network is an example of a new entrant on the distribution side.
We would expect probably Kula would be carried both by those sorts of distributors and such. The model would still be very similar, I think, to a fertilizer, is I'm buying a certain amount, I'm planting. The shift may occur that we see somebody like a Benson Hill say, "Hey, here's the best recipe. Kula, we're going to plant 400,000 acres, and Kula and Benson will collaborate on that pricing and that deployment, and do it on behalf of their farmers."
That combination of those recipes where Kula and its current business model is, "I'm going to send you so many gallons of this stuff, you're going to spread it out, and you're going to send me a bill." What we're starting to see across the board with all these inputs is payment for performance, so, "Hey, I'm going to charge you X, but if you get higher yield, I'm going to get a little bit of a bonus." Kula is not currently planning to do that, that I know of, but those kinds of models are starting to come in into the system. Then there's also this closed-loop model that's starting to show up in inputs where everybody's going to be working more in a collaborative way to make sure the system works.
Sal Daher: Very interesting. Yes.
Carter Williams: We're talking about a big industry, [laughs] food is. Everybody has to eat. [chuckles]
Sal Daher: It is also a highly-perfected industry, highly-specialized. How do I put this? A very mature industry. What you were talking about before with Benson Hill, this process of verticalization, you can see that in the coffee business, you're a young guy, but if you go back to the 1960s, coffee in America was something that came in a can. You were a fancy person if you brewed your own coffee and you didn't use Nescafe or whatever.
Then, this guy Peet's in California and later on, George Howell here in Boston, had this crazy idea of roasting their beans and so forth, and they've created this whole high-value coffee business. They're going up the value chain. Blue Bottle Coffee owned by Nestlé has even higher standards and so on. There's potential for that in a lot of spaces. I would love to see that going on in the fruit space, creation of highly-premium fruit that is really tasty.
Carter Williams: You may have seen some of that coming forward with some of the indoor farming activity because they're a little bit closer. For example, AeroFarms is focused very much on building really high-quality strawberries. We have a company Harvest Crew, which is an automated strawberry picker, which at some level, you're like, "Okay, labor, shift to labor," but here's the other thing, in Japan, if you get a little baby strawberry, they'll pay like $30 for it.
Sal Daher: Wow.
Carter Williams: If you can pick, in that case, the business model changes. You could send this thing through and it can selectively pick what is a premium price product in some markets, drop it in FedEx, and get it there in no time at all. There are those kinds of differentiations that are starting to show up. From that, we're going to learn, so we're going to tailor the crops and--
Sal Daher: At $30 of strawberry, I can imagine that it might someday become efficient, if you have one of these AeroFarms units inside an airplane. It flies over you and it is picked at the time that it lands. [laughs]
Carter Williams: It's interesting. In crops, I think that there are basically considered to be 70 edible crops in the world that are really known and used. There are only eight that have had serious genetic work done on them. All the rest have been bred a little bit. There's a lot of opportunity to strengthen nutritional quality. Food is medicine, we're looking at, we haven't made these investments yet, but we're looking at, are there food supplements that will reduce cancer or are important in reducing the feed to the cancer. Reduce your sugar levels, which can drive cancer, but other things. Which it's creating a big complexity that we haven't quite figured out is, you go through all this trouble to approve a drug, going through an RCT [randomized controlled trial] as a therapeutic. If food is medicine, are you going to do the same thing? You're not getting $100,000 a dose.
Gathering Scattered Data to Create Synthetic Control Arms for Clinical Trials
Sal Daher: No, no. The effects are long term for food. Doing a clinical trial and proving it, is extremely-- If it's difficult to prove out a vaccine at scale, I cannot imagine how difficult it would be to prove out the benefit of lower cancer rates from certain types of this. You'd have to have this population isolated and eating something like that for a decade. Something like the Framingham Heart Study would have to be done, decades long. Or the Harvard Men's Study that started in 1938 when only men went to Harvard, and they have a lot of data. Something like that would be necessary.
Carter Williams: I think that's what we got to do.
Sal Daher: Makes me wonder how that could be made investable.
Carter Williams: We have an example of that. We're doing a couple things in that space. One, when you look at longitudinal data, it tells you a lot. We certainly have started to see, and we saw this on combination therapy. When you do an RCT on a combination therapy, it's very hard to get a control because a lot of ethics. Okay, give me this drug, and I have to take you off this other drug that's part of the combination. That started driving the synthetic control arm, digital twin conversation, which is, can we find a representative data set that can act as a control? As we've looked at that, we've then said, "How do we take all this biobank data or how do we take longitudinal data?" One example of that is a company we've got called Flywheel. When you take PET scan, CAT scan, MRI data--
Sal Daher: Just one second, to unpack all the RCT?
Carter Williams: By randomized controlled trial.
Sal Daher: Okay, yes. You take a scan.
Carter Williams: If you take a CAT scan, or PET scan, or an MRI, so the raw data is sampled at a certain rate, you bring it up, it gets post-processed, and it gets manipulated there are artifacts in it, and now it goes up to something else. Then, you take an ML, machine learning algorithms stick on top, well, they'll start getting the data wrong because of artifacts inserted in the data in between.
What Flywheel did was for researchers that needed to do longitudinal image studies, they took the raw data off the scanning devices, and then properly normalized it so that you could, with less error, go through an ML, and that they would register the imagery across multiple pieces of equipment in a more consistent way so that researchers could use it. That's an example of business just taking off. That's an example of, in this path, the better longitudinal data. That's a thing that people need to solve right now that's working. Somebody we're looking at--
Sal Daher: Is Flywheel a portfolio company of yours or--?
Carter Williams: Yes, it's a portfolio company of ours. Been in the portfolio about three years, and it's really moving along nicely.
Sal Daher: They are a contract research?
Carter Williams: They are a software company that, for the most part, clinical people doing clinical studies would use their software to orchestrate the datasets that they're either getting directly from the clinical study, or if you go to somebody like Mass General, they've got years and decades of imagery that they might want to retrieve. If you're trying to build a control group, you might want to go reach into that data and normalize it to act it as a training set for a control group on AI.
That process is just annoyingly error-prone because even metadata, so I've got this image and somebody said they were a male instead of a female. It screws up that machine learning. Them cleaning up that data, normalize-- It's not unlike-- Oh, what was the company that came at MIT, started by Jonathan Bush? Athena.
Sal Daher: Oh, Athena. Athena Health, yes.
Carter Williams: Athena used to take all the Medicare data and clean it up. Originally, they were cleaning up the DRG codes. In a sense, that's what Flywheel is doing. The thing we're really interested in next is, and we've got a group down in Texas that may do this, is can we create trial groups? There's a firm that does a lot of blood work for about 300,000 patients, all female, for female clinic standard Texas area. Now that they've got the profiles on all their patients, they've started signing them up for trials for non-cancer trials.
What they're able to do is offer up a population, not unlike the Framington thing you were talking about.
Sal Daher: Oh, the Framingham study, yes.
Carter Williams: The Framingham. Can we offer up a community of people? One of the things I'd like to do on the bad word side is could we-- HIPAA is in the way of all this stuff, is a business model I'd love to find is one, I've been talking to some people in Congress about, "Could we come up with a waiver for HIPAA? Like people can just donate their data to science, and just--?"
Sal Daher: [laughs] I can donate my organs, but I can't donate my data.
Carter Williams: Yes, it's very hard. Can I just say, "Yes, you can use my data. I'm not worried about you having my data, so can we do that?" There's a lot of conversation going on that, that I'd love some help on. Then the other is, can we come up with a business model that lets us go to Mass General, and Wash U, and John Hopkins. and say, "You have all this historical data, and there's failed trial data on Alzheimer's and there's failed-- Can we take all of that data and somehow get it back into a common data model that everybody can contribute into it and take out, like--?" Remember the early days of MP3?
Sal Daher: [laughs] Yes.
Carter Williams: Everybody was entering in the label information, and then they would get label information out? [chuckles]
Sal Daher: Right. MP3 for everybody should know is the file protocol that's used for podcasts, a podcast MP3 files.
Carter Williams: Sounds really good.
Sal Daher: You've been using him like the-- Who was it? The Bourgeois Gentilhomme, who had been speaking prose his whole life and didn't know about it? You've been using MP3 files for years and you didn't know about it.
Carter Williams: I don't think anybody remembers this. There was one guy who hacked the database that everybody started contributing to, and then he would re-push out the data. I think he sold that for like $100 million. It was--
Sal Daher: Wow.
Carter Williams: We're talking like, it was probably like 2000 or something like that maybe or 2001. Anyway, could we do that? I'd love to figure out if anybody-- If anybody's listening and doing this, I want to invest in it is, can we grab this data out of the major centers, and grab the data at a personal data? People's Garmin watches, people--
I just saw a startup that's looking at wanting two-lead EKG data in deriving your health, not just your heart health.
Sal Daher: Interesting.
Carter Williams: By looking at how your heart is behaving, it can diagnose whether you have the flu.
Healthjump’s Role in the COVID Research Data Base
Sal Daher: Ah, okay. Carter, I am an investor in a company called Healthjump, and what they've been doing since 2013, is figuring out ways to make data that's in electronic health records usable. A big part of it is deidentifying the data so that it can be used in research. They contributed 35 million records to the COVID Research Database, which an amazing collaboration because it brought together data from electronic health records, Munich Re brought in data from all the actuarial stuff they have from their life insurance, and a bunch of other contributors. It's a very, very rich data set to really understand who's at risk with COVID.
What's interesting, The Economist magazine hired a data scientist and used that database to come up with a very interesting article, one of their really interesting surveys. It was based on this database. Part of this is being done with anonymization of data. Martin Aboitiz, who's my brother-in-law, he's the founder of the company and--
Carter Williams: I'd love to talk to him. Is he based in the Boston area?
Sal Daher: No, he's based in Colorado. He's everywhere. Right now, he's in San Sebastian visiting-- My mother-in-law is 103, so my in-laws, and my brothers and sisters-in-law, and my wife take turns visiting her very frequently. Yes, I think he could be somebody interesting for you to talk to [crosstalk] from your focus on data because I think it has something like 80 million records total that are available for research. It's basically making the data usable. It's a data lake, so the data is alive, but it's deidentified, it's anonymized, so it can be used in very interesting ways for research. Very good. Is there any other startup that you want to mention?
Carter Williams: Oh, yes, 55 of them. I can talk to you all day long.
Sal Daher: No. [laughs] No, but the thought here is to bring up the kind of company that you want to come in the door, that you want to be funding, the company that exemplifies that. What's the next check that you want to write? What does that look like? What's the kind of company look like?
Carter Williams: Areas that we're looking at are certainly more of this longitudinal data. Then, we have several companies in the microbiome space that flipped back and forth between a food or a health effect, and we'd like to find more in those companies, especially with a leader who's worked their way into that ambiguity with the FDA because I think being able to help the FDA understand, is this a drug or is this a food, and walk through that is good. The first one that can open up that market is really going to help out a lot.
We've been looking in around that space. We've invested in several companies that have come out of George Church's lab and some of [unintelligible 00:29:51] up there. We're also looking a little bit on the Ag side right now and some investment shortly that is focused on-- There's a lot of interest in buying agricultural real estate.
Sal Daher: [laughs]
Carter Williams: Managing it. We think that from a capital formation standpoint, if a farmer is really effective at what they're doing, do we want them investing in new technology or land? The reality is, a really productive farmer really should be investing in technology and not the land. It is folklore of, "We got to own the land. I'm the fifth-generation farmer." I think what is starting to happen is certain younger folks that are really applying technology are saying, "Hey, if Blackstone wants to own the land and I operate across 100,000 acres--
Sal Daher: Oh, absolutely. Yes.
Carter Williams: We've been looking a lot at, and we're about to announce something on that, but we're looking a lot really at the evolution of that market. There's several companies moving in that space, so I think there are 950 million farmland acres in the United States, so there's more than enough opportunity. Some of these REIT [real estate investment trust] models around agriculture, I think all told is maybe 1.5 million square feet. Or about 1.5 million acres, so there's a lot of this market that could shift as an asset class.
Sal Daher: Your interest is in the REIT?
Carter Williams: No, if Blackstone owns the land now, how are they going to lease it, manage it, take care of it over time? Property management, asset management, and tech that would make it so that the investors are comfortable, that it's being managed correctly and productively. There are certain things you need to do in farmland that you need to pay attention to over the years to keep it productive. That's the tech part.
Sal Daher: Very good. Carter, let's switch gears a little bit and let's talk about how you came by becoming a venture capitalist. You started the venture capital group at Boeing. Tell us a little bit about that.
How Carter Williams Went from Engineer to VC
Carter Williams: My arc at Boeing is McDonnell Douglas and Boeing. I originally moved to St. Louis with the idea that I'd go for a couple years, go to business school, and then go work for McKinsey or something. I got to St. Louis, I got really involved, I was here five years. Then I went to business school, got married, and ended up back in St. Louis. I started out as an engineer on the shop floor, building fighter aircraft. Was very involved and was taught Lean Six Sigma by Bill Smith who invented it at Motorola before anybody really knew what it was, and was very involved in all the design from manufacturing, and really radicalizing how we built the aircraft, and helped save a great deal of money on the F18 E and F.
That led to me getting over time, the job of managing all the technology strategy, investment strategy for Boeing once Boeing and McDonnell Douglas merged. The CTO was like, "Okay, we spend 2.5 billion overall and 300 million that gets repurposed each year, where should we spend our R&D to protect the company for the next 20 years?" My job was to try to pull that together across the enterprise, 70 business units and such.
In that process, we realized that we had some shortfalls. It was also around the 2000 time periods, so we were losing employees, at that time, the bubble in Silicon Valley, and so I proposed that we create the ventures group to take things that were not directly on target and put them into other markets and, and opened that up. We focused on underwater vehicles, hydrogen reformers. We took out some software that we had that we were underutilizing. We started a border security business. A bunch of different businesses that were created. That's now gone on to-- It's still around today and it's grown in various ways and it's now investing in flying taxis and such.
Sal Daher: [laughs]
Carter Williams: It's a fascinating effort. I was young at the time, so it was sort of nice. I had a nice trajectory inside Boeing, and it was fun. I worked inside Phantom Works, which is where we both did our advanced work and our secret work. There are things that we worked on there that still aren't fully public now, so that it was just a cool place to be. I was working for the CTO, he retired. Boeing's the kind of place where it's good to have mentors. If the CTO retired, there's not a whole lot of mentors above that.
Sal Daher: [laughs]
Carter Williams: My wife had done well with a business, and so I decided to leave. Within about a year, I joined a company named Gridlogics. As the president in Gridlogics and '04 was developing an IoT framework. No one knew what IoT was at the time, but we would- we built a web services framework that would integrate with existing building control systems. We used to say, "Make them speak." Meaning, we could take legacy protocols and make that data available to analytics engines.
We were able to go into large enterprises with 2,000 buildings, hook up all of the building control systems and basically say, "You're wasting energy because of this or that." It is surprising inside those buildings that things like the thermostat that controls the heating unit is in the wrong room.
Sal Daher: [laughs]
Carter Williams: That's a thing, and so the poor thing is sitting there putting on cool, and it can't ever get there, and it's running 24 by 7. Or, we had a building that it's normally annual energy use was like 250 a square foot. It was like 12. There was a broken steam pipe that had been broken for 12 years. You can talk about solar panels and all that, but we reduced 20% of the energy use just by--
Sal Daher: Low-hanging fruit.
Sal Daher: Low-hanging fruit
Carter Williams: Low-hanging fruit We sold that to Johnson Controls in the fall of '08 for cash. If you recall, fall of '08 was not a great market, so-
Sal Daher: [chuckles] No.
Carter Williams: All the assets were underpriced at that point, then I had cash, so I had been working a lot and bought a boat and bought a house vacation home and slowed down for a little bit, but as things progressed-- When I graduated from MIT, Ken Morse was my Elabs, Ken Morse, John Preston.
Sal Daher: Yes, I know Ken.
Carter Williams: Or, my professors in E lab and they said, "Okay, you're graduating now. Not many people get into MIT, you have duty to make sure that you leverage this to help other people. I was just getting to the point that it was fun not doing a lot. I'd done some part-time president stuff and working with some companies, but a great experience in a whole bunch of different technologies. My brain was always there, and so we found an opportunity to, with some of the crowdfunding things coming out and some changes and that I had a St. Louis framework and had been involved in trying to boost venture capital in St. Louis. We started iSelect. iSelect is really two things.
iSelect in the first case is striving to be a top performer in the Food is Health space. We're a good VC in that space, that's that's thing one. Thing two is we're a FinTech startup and there are $65 trillion of high-net worth assets in the United States. There's about 750 billion, I think, right now allocated to venture. That's nothing, hedge funds are like 4 trillion. My general attitude, and there's a lot of work that's come out of system dynamics group at MIT. Really look at GDP growth. The real growth in GDP. I think 50 basis points of GDP over the last 30 years is from fracking.
Sal Daher: Wow. [chuckles]
Carter Williams: Nobody pays attention. That's amazing innovation.
Sal Daher: Yes. It is. It is a huge innovation. Much underappreciated.
Carter Williams: Yes. People might be frustrated about it, but when you're a Boeing and you're designing an aircraft and spending 5 billion to do it and it takes off, okay, you can do big things. Thing two for us is can we change venture capital in a way to attract this other capital? We don't go to endowments and it drives everybody nuts because they're like, "Can we please go to people that are easier to raise money from. "No, [chuckles] we're going to go to those crowd over here that wants to allocate per year or wants to allocate through an institutional SMA, or wants to have a sub-advisor on their crossover fund. We, we're struggling and challenging ourselves to go find capital that-- What we discovered was of the people that do not invest, of $60 trillion not invested in venture. It was less about risk and it was more about access. They didn't like closed-end fund structures. They had caveats on having to perform a top managers and all these little things that really is blocking capital.
Sal Daher: Too much handling. It's not the risk. It's the burden, the due diligence burden.
Carter Williams: We are working on that. It is frankly the hardest thing I've ever done oddly. That includes figuring out how to get a JDAM to drop down a smoke stack.
Sal Daher: No. [chuckles]
Carter Williams: This is harder. We're breaking the standard [crosstalk]
Sal Daher: The JDAM's precision munition.
Carter Williams: Yes. Here's a odd business model that people don't know about that. That guy who invented the first JDAM, which was really stick a GPS on the back of a fin for a dumb bomb, $25,000, when he first came forward at McDonnell Douglass, people were like, "No, we sell things for a million dollars not 25." [laughs] He had headwind. I think people tried to kill him for seven years. Here's the thing they all miss, once JDAM was made effective, it made it so B-52, B-1, all these old vehicles now could play in a modern world.
Sal Daher: These are strategic bombers.
Carter Williams: Yes. B-52 is going to operate for a 100 years I think. By making a low-cost smart technology, and then Boeing got sustainability contracts that represented about $7 billion to keep the B-52 alive and such. The thing about that is, now when you talk to the strategy people at Boeing, they're like, "oh, yes, we knew that all along." They did.
Carter Williams Greatly Appreciates the Risk Taking of Founders
I've lived an entrepreneur's life. I've been on the venture side. When I think about this as a VC, I have incredible respect that we turn away, look at a thousand companies and we invest in 20. One of the hardest things, you sit here and here's a person making a presentation to you. They've spent two years of their life. They go home every night telling their spouse, "It'll work."
We see 50 of them come in and pitch the same thing. With this advantage of, this guy's a lot stronger than that guy, but we learned something from everybody that comes and visits us. That informs us some other things. It's just to think that people are willing to work that hard against such odds to try to uncover this challenge in the marketplace.
Hayek wrote in a paper back in like '45 that he said, "What an entrepreneur really is, is somebody who can wander around customers and pick out little things that they're saying and they can't quite figure out how to put it together, and the entrepreneur is able to put it together in a way that nobody else has thought about. They just have an ear for that." It's been cool there's just all this potential, are we ever going to run out of innovation?
Sal Daher: Well, I highly doubt that. Friedrich Hayek, the Austrian Economist, one of his brilliant observations is the fact that really valuable information is spread all around. What's the process that you're describing about the entrepreneur discovering this particular information; pain points. What we talked about in the startup world, we talk about the pain points, figuring out a pain point and addressing it. I don't think we will ever run out of room for innovation.
Carter Williams: When I see this $65 trillion in the US market that could potentially be allocated to this, my question is this, everybody in the United States should be allocate 3% of their net worth to innovation and benefit from it. They're going to benefit it in their portfolio and they're going to benefit it in society from the positive externalities.
Our attitude, the big idea behind what we're doing on the FinTech side, is how do we make it so anybody in the United States can allocate 3% of their portfolio, no matter who they are, to innovation and the amount of capital we could bring to bear and the positive externalities for that would make it so that we don't have to have a fight about social welfare systems? We just would never fight about it because it wouldn't be a thing to worry about.
Sal Daher: Edward Conard, a management consultant wrote a book talking about the future of innovation and so forth. One of the things he points out is that, exactly what you're addressing is the problem is risk aversion. You have this massive amount of capital that doesn't go anywhere. It just sits in cash or very, very low-risk instruments. What he identifies as the bottleneck is the lack of risk-taking entrepreneurs. People who are willing to put their sweat equity and their own capital at work. He actually advocates as a way to really jet propel the growth of the United States to start allowing like three million people a year who are likely to be entrepreneurs to come start companies in America.
Basically, create an entrepreneur visa. If you're going to start a company, it doesn't matter in what business if you're going to start a company. The entrepreneur himself or herself doesn't know what that business is going to be, but if they're willing to put a little capital to work and they have some background where it looks like it's for real. Those people should come here.
We would see growth like we wouldn't believe, because otherwise we wouldn't be able to pay for all the commitments that we have in terms of social programs and so forth with the great population and so on.
Carter, I just wanted to pick your brain a little bit, because the bone that I'm gnawing on is the bone of angel scale early-stage biotech. I've been an angel investor since the early '90s and some years ago, I began to notice that the life science companies that I've invested in were taking over my portfolio. I've got a sample of about 70 startups that I've invested in.
Some of these companies, one thing is that the life science companies tended to not fail as much as the software companies, the wet lab companies had a higher success rate. A few years ago, I interviewed someone for a podcast and he now sits on a board that I'm on as well of one of these early-stage biotech companies. He was at that time the CEO of one of these companies that eventually got acquired and very successful acquisition, but he was never able to raise VC money.
There is an explosion in the very early stage...Think of it as an academic founder and a bunch of IP from her university or his university and they need help. They need to help setting up a lab, help getting the IP out of the university into a startup, and then help navigating the whole process. Pharma is very risk averse. VC is a very risk averse and VCs are now no longer in that business. If you are an early-stage founder like that, big VCs are not taking pictures.
There are seed stage VCs. Those guys, let me tell you, they are so swamped that you can't get them on the phone. I just had somebody ping me, "What do you think of this XYZ VC?" I said, "Oh, they're tremendous people if you can get their attention." [laughs] They're so overwhelmed.
There is an unbelievable number of these early-stage companies where $5 million and a little bit of sweat equity and some handholding over three or four years could result in their being acquired for 50, 60, a 100, sometimes 500 million depending or doing partnerships. They're too small to be attractive to VCs, but they are perfect for angel investors.
I'm banging my head trying to figure out how do I help angels come to this, because angel investing has grown around software since Marc Andreessen's famous editorial in the Wall Street Journal about Software Eating The World back in 2011. When you say angel investor, means somebody who's been investing in software companies. When you talk about life science. MEGO mine eyes gloss over, they can't understand.
The reality is that there is a lot-- it is very interesting life science companies that are going to be developing. Furthermore, their number is going to multiply, it's going to explode. We're in a Cambrian explosion right now of technologies that don't take a $100 million to develop and you don't have management talent.
Now, Pillar VC, we talked about Pillar VC. They're onto this. They're one of the people playing in this space. They are overwhelmed. One of the problems is that there is no management. You can't hire management for a biotech company because biotech managers are too expensive and it might not be the right fit for a startup.
Carter Williams: There seems to be empty suits.
Sal Daher: Well, specialized, too specialized. In an early-stage biotech, what the professor knows how to do is 80% of what needs to be done. She needs help with that extra 20%, which is just like getting the lab, the business side, a little bit of business savvy, some help, and also a little bit of strategic thinking, figuring out what areas. Now the target for these, okay, you're not going to go into an IPO. The screen that I have for these companies, I'm looking for companies that are going to be, have enabling technologies for some strategic players.
Carter Williams: Do you have a specific example?
Savran’s Enabling Technology
Sal Daher: Okay, a couple, that a company that I'm on the board of, Savran Technologies. Their technology is capturing extremely rare cells in serum. Let's say blood, for example, a tube, a 10-milliliter tube of blood from a blood draw has maybe a billion cells and there might be 5 or 6 or 10 cells of interest. They will find, if there are five, they will find four or five of those cells in that billion cells. It is an astonishing technology and it doesn't take days. It's a matter of hours.
Carter Williams: They don't have a lot of regulatory risks.
Sal Daher: Well, this is for research right now, but the place that they found interest and they are looking at very closely is in the non-invasive prenatal testing space because they are capable of finding the fetal cells in maternal blood. The current state of science in that is finding cell-free DNA, strands of DNA that could be from the fetus, it could be from the mother, and so those tests are very limited. There's a lot of number crunching goes on, but they are, and there are a lot of false positives. It's a mess. They have the potential to provide a proprietary technology that can capture fetal cells in maternal blood. Then you can sequence that fetal cell and you know everything about the fetus.
Carter Williams: You're not seeing the VCs jump in on that?
Sal Daher: No, VCs are not interested. It's too small. This is a company that's raised a few million dollars. The strategics are all over them, but it's just when you're raising a million, two million a round, they don't have magnifying lenses strong enough to see that. It's just too small. There are a lot of other companies like that. It's too early for the VCs, as I said, the VCS wants to do Modernas, the big players. This is why I call them angel scale, these are angel players that have to come in, and that's what I'm working on.
Carter Williams: They might exit at like 200 or 300, not a billion?
Sal Daher: Unlikely to exit at a billion.
Carter Williams: it bugs me when I think about what I call thing two, which is how do we make innovation an asset class? I was involved in, when I was doing Boeing technology planning, the decisions that we made, we used to say when the number was put up on the wall about what it would take to invest in something, we'd say, are those Ks Ms or Bs [thousands, millions or billion]?
Because in the same conversation, we'd be talking to the CTO, it might be a billion-dollar investment or it was a $50,000 investment. We had some things where a $200,000 investment helped us win a $5 billion program. We were all over the map in terms of input-output. It's certainly the case. One of my problems with closed-end funds is you can buy a Tesla on the management fee and then you buy your house in Malibu off the carry.
The model really incentivizes going for bigger and bigger deals. I'm trying to figure out-- the thing that's on my brain is not how to do venture capital, we're trying to redefine what we do as how we make innovation and asset class. Now, this is different from your question a little bit, but Sequoia saying, "Hey, we're going to hold stuff long for two years and put in a permanent fund," that's one example. It's like, "Hey, to get the real value out, that's like--"
Sal Daher: Yes, That's a move in a good direction. Yes.
New Models of Startup Creation
Carter Williams: The other side that you're talking about is, look, there's a lot of evidence from Y-Combinator and 500 startups, that broad deployment early on with low levels of diligence. Not no diligence, but the CTO at Boeing used to turn to me, this is the guy who when Gemini reentered and missed by a hundred miles at age 24, he had the project with a slide rule to figure out what--
Sal Daher: Gemini, the Gemini space capsule. This is what we're talking about here. If you don't know about this, go and watch Apollo 10 and a half. To bone up on this, the Gemini capsule would.
Carter Williams: It was missed by a lot and people were like, why? Dave Swain was the CTO. He had the job at 25 or 26 or 27 to pull out his fly rule and find out the mass balance that caused the reentry to be wrong. He's a smart guy. We'd sit there on some of these projects and he'd say, "I have no damn idea what to do. Can somebody help me?" There was early work at MIT around real options analysis that basically concluded it.
There's no visibility until you get, in this case, in pharma when they did it with Merck back in the '80s, that you don't get a signal value until you get past a certain point. We changed our allocate capital, allocation process at Boeing to basically say, as long as it's got a heartbeat and the guy sounds reasonably like he's got a brain, he gets $200,000.
We're not going to have Dave like magically decide whether you're smart or not, goes back to the Hayek thing. It's like these people are observing stuff that, well, I'm not seeing. Dave knows how to get to this other thing. One, we broke that domain knowledge thing and really changed the risk model using real options theory, and Y-Combinator has demonstrated that, maybe not in pharma. I don't know the answer there. Maybe someone can answer that.
If you broadly deploy a portfolio at an angel level greater than 50, you're going to see a 20% IRR. Cool. That's the money allocation. The next part for the next set of money is I can't do it yet, but I want to do it. I got to think through how we would treat the growth differently. We see what's wrong. We're really interested in precision fermentation and we're really interested in microfluidics and clinical development.
Sometimes I think the way we should be managing our portfolio is, one, what's the most important thing for a startup to have? Customers. We went out and we do a lot of agriculture. We found farmers we're best friends with that control four million acres of farmland. Whenever we look at anything, we go to them. One, if you build a network out there of those people that can really give you that feedback.
Then two, when your portfolio management, when you're coming in, you say, this is an incremental investment. I don't mean it in a pejorative way. This is an incremental opportunity from the standpoint that it's going to solve a known problem in the current workflow and create value. It's not going to be like a radical change to a business model that--
Sal Daher: It's not going to create a new category. It is going to enhance an existing business.
Carter Williams: Yes
Sal Daher: That's adjacent to what I'm talking about in enabling technology. This company that I'm talking about Savran is a microfluidics company. It is an enabling technology. Another company I recently had on the podcast is Quad Technologies. That was a hydrogel company, and then they had this polymer. It was initially a way to-- you know these little magnetic tags they put on cells so they can capture them and separate them and all that stuff? Well, they created a technology to allow those magnetic tags to be extracted, because those things can be toxic if there are enough of them. They had a way that you could coat those magnetic beads with their polymer and then they could extract that. Then they got bought by BioTechne, but not for the beads.
They ended up doing just the little gobs of polymer to stimulate growth of CAR T-cells, cells that are used for cell therapy to help them multiply. Once you engineer the cell, you have these cells that are engineered. You want to have a lot of the same cells over and over so you can use it as a therapy, and so that technology grew into that. They're enabling the production of CAR T-cells on a large scale. That was a very successful exit for the angels in three years and not a huge amount of capital, so it's capital efficient. I think what you're saying here, figuring out ways to help the academic founder understand where her technology can have this outsized effect, or if it can.
Carter Williams: We've thought about it a little bit. I'm not quite ready to do this yet because we got to get a couple of milestones done, but what one leverage the 500 startups random walk on one side. The other is what does every startup need? They need customers. We see that microfluidics can improve productivity in lab works, call that the customer base. Now go out and hang out with those people. We the VC does that. In a sense, we know that customer domain, we know their product roadmaps, and we synthesize that data at some level, not perfectly, but at some level. Now, a company comes along. They're a junior Bob Langer or some, I don't know, [laughs] but they they've got the capability to think through problems, but maybe they're not fantastic at some of the components of it. It is a little bit of a studio type of approach.
If we have the databases and the information and the relationships with those people on the customer side, it becomes a lot easier for us to do the due diligence. If we know that the cycles could be like a three-year cycle, I think we can figure it out. I mean it, and we definitely see it. It's in our interest to do it because we have capital. We can wait for the big blockbuster thing, but those only come along at a certain pace. Why not just fill them in the middle with these incrementals.
Sal Daher: Yes, doubles and triples.
Carter Williams: It does require-- I think this is maybe why I haven't done it yet. It does require a slightly different disposition on the team in terms of how it works. I think it would require that us as a VC own part of that domain. I don't think we could be like a 500 startups doing it.
Sal Daher: No. I think, what, maybe some kind of an accelerator model, it wouldn't be the 500 startups, it might be the 50 startups. They might be focusing hydrogel, maybe microbiome, microfluidics, a couple of other things, transfection, because transfection means also microfluidics because it's now the cutting edge of transfection is with microfluidics, and maybe looking for companies in that discipline. You mentioned microfluidics, there's also the picks and shovels aspect of microfluidics, making the design of the chips easier, production easier and so forth.
Carter Williams: Precision fermentation there too. I mean, I've got this--
Sal Daher: Yes, exactly. The fermentation.
“I want to build the AWS of precision fermentation.”
Carter Williams: I want to build the AWS of precision fermentation. I've got this dream, it's like you got to have a bunch of microfluidic FBGAs that do mini batch processes and it turns into a continuous process. You don't have to worry about any scaling issues with biologics.
Sal Daher: Lots of possibilities. Lots of possibilities there. This is extremely a very, very interesting podcast. Mind expanding. Let me just make a suggestion for you. Someone who's working on improving results from scientific experimentation, have you run across the stuff that Patrick Collison of Stripe is doing on that side of things?
Carter Williams: Oh, I pay attention to a lot of the stuff he says. Patrick, Tyler Cowan, the progress movement. They're like-- I hang around and I love. I've never met him. I'd love to meet him someday, but he just-- he and his brother are just awesome.
Meenta and Curesology: New Supports for Scientific Research
Sal Daher: Amazing. Just amazing. I invested in a startup called MEENTA, M-E-E-N-T-A.io. They're solving one little tiny portion of the problem that Patrick has pointed to, the inefficiency of the whole process of scientific discovery. They're creating basically a marketplace for every test, every reagent, every-- a lab, making labs accessible. If you want to run a highly specialized sequencing at the Broad Institute, you can book a time on the Broad's machine.
Carter Williams: That's MEENTA.io?
Sal Daher: M-E-E-N-T-A.io. They had a very good COVID. They exploded because they were-- they had tests and they have an interesting initiative called Curesology, because they have a lot of scientists who come to them to use their platform to book time on expensive machines. What they're doing is they are creating a way to help someone who wants to push research in a particular gene that causes a particular cancer, so forth. They want to contribute to that effort. They're using the work of another startup, which I'm going to be interviewing in the near future, a company called Givinga which is basically to figure out a way. If you're interested in this pathway, if you're interested in this gene and researching this gene, there is a researcher here who's doing this stuff, and we can allow you to put money into that, in the project of that researcher.
Carter Williams: On a grant kind of basis?
Sal Daher: Contribution. Yes, grant. I mean, a micro grant.
Carter Williams: Not in recourse, you can just throw some--
Sal Daher: Throw money at a researcher because they're doing, you have a kid with a particular disease or whatever, you just want to throw some money at that. It's a software platform that allows that to happen because they have the scientists coming to them. For them it's nonprofit that they're not making money from this, but it does help them because it creates more traffic on their site, more researchers and researchers get funded, fast.
Carter Williams: What's the name of that?
Sal Daher: It's called Curesology. It's in Meenta. If you go to MEENTA.io, M-E-E-N-T-A.
Carter Williams: Component of them?
Sal Daher: It's a baby of one of the co-founders, Stephan Smith.
Carter Williams: It's also acting like Emergent Ventures does? You're familiar with Emergent that Tyler's running down at GMU [George Mason University]?
Sal Daher: I am not.
Carter Williams: Patrick is an investor. He goes--
Sal Daher: I need to listen to more-- I listen to Tyler's podcast, but unfortunately I also own apartment buildings [laughs] and my time sucked up by those buildings.
Carter Williams: He created something called Emergent Ventures, which Patrick's behind and Peter Thiel's behind, I think. Basically, you can submit a grant and they will approve it in five hours. I mean, they don't screw around. I'll find the article. I'll send you about it, but they--
Sal Daher: I'm sure Stephan knows about it, but Stephan's thing is that it's going directly to the scientist. It's the donor directly to the scientists and low burden, low cost or no cost.
Carter Williams: Yes. I'd love to know more about that. I'm starting to look at what data systems can we put in place. Hayek Knowledge in Societies. There're two fundamental things, three fundamental things that affect my thinking long term. Hayek's paper on knowledge in society from the '40s, Claude Shannon's book on information theory and Kurzweil's article on law of accelerating return.
What I think that Hayek said was there's information out in the marketplace and the entrepreneur gathers it up. Well, today, we've got technology that maybe can gather that at scale, maybe. Is there a way for us to go grab this data and know the second after somebody has an idea that we know it's coming? That's the extreme test case. What technology would I need to capture that? What Claude Shannon said was things to have a semantic structure, and innovation has a semantic structure. Sentences should be formed up in some way. If they're missing a point of that semantic structure, that means it's probably there. You just haven't found it yet. Go look.
What Kurzweil said is in the short term, technology is disappointing, in the long term it exponentially over performs. That's a diffusion model. I can build a system dynamics model of that. That's a word, communication education diffusion model. We have a whole bunch of technology today to collapse that. To me, that's like a Wheatstone Bridge. It's an impedance match. I can transmit at a certain rate. I can receive at a certain rate. If I can match that bandwidth, I should be able to take Kurzweil's law of accelerating return and shorten it. If I'm in a realm of a creative destruction, in which a creative destruction almost in the way that Clay Christensen talks about it, that the Yes.-axis is changing.
I used to care about fast processors. Now, I care about low power processors. In that particular realm where you've got a-- the new guy coming in is going to, at some point, take out the old guy. That's going to happen. It may take 20 years. It may take 10 years. To me, that's an information diffusion problem. We have the technology to solve that.
Carter Williams on Getting Capital Off the Sidelines and Into Innovation
When I think about where we want to go, if we want to bring $60 trillion of more capital or some portion of that into the market, if I could get to $2 trillion of venture in the United States, that would be awesome. I think that there's this-- there are little 1% improvements around information flow that when you, the problem that you're explaining is-- somebody's not seeing that arbitrage clearly. It strikes me the systematic answer is being able to get that information flow and then have smart people in Hayek's case that you have certain people that have the ability to look at that pattern and say, "Oh, wait a second. I know what that is." Then they can jump in.
I'm really intrigued. If you can see that grant flow, it's going to tell you a lot. It's going to give you control against all the other cases you're looking at. There are 50 people fiddling with this thing.
Sal Daher: Yes. Well, talk to Stephan.
Carter Williams: I'd love to.
Sal Daher: He's trying to build that out. Meenta will make no money from that. They make money from the tests and other stuff, but what that will help them with is it'll attract the young researchers who don't easily get funded.
Carter Williams: Oh, like the lady behind mRNA.
Sal Daher: Yes. [laughs] Katalin Karikó. She was about to lose her post at the University of Pennsylvania.
Carter Williams: Suddenly walked into Bob Langer's lab.
Sal Daher: That was years later.
Carter Williams: Yes.
Sal Daher: She wrote a paper. The paper sat around. Okay?
Carter Williams: She started in '89?
Sal Daher: Derrick Rossi at Harvard picked up the paper four years after it was written and he started creating these induced pluripotent cells, these stem cells. Reprograming cells into stem cells, body cells, somatic cells into stem cells using this mRNA technology. He wanted to show that to Bob Langer, and from there came Moderna.
By the way, there's a great podcast that was put together by the first podcaster. It's a guy named Christopher Lydon, a very Boston name. Okay? It happens at the first podcast that was ever recorded. It was recorded a few blocks down the street from where I live in Cambridge by Christopher Lydon. Open Source Radio or Radio Open Source is the name of his podcast, and listen to his podcast on the mRNA vaccine. He interviews Derrick Rossi, interviews other people, and the whole story. Katalin Karikó's role there, Derrick Rossi's role, he was the first founder of Moderna. It's a fascinating story.
Carter Williams: Yes.
Sal Daher: You should listen to that one.
Carter Williams: It's like the guy who did ulcers, bacteria causes ulcers.
Sal Daher: Oh, the crazy Greek guy in 1958 who had this idea that maybe bacteria causes ulcers. It wasn't until 1990 that the CDC ultimately made public this idea that ulcers are caused by bacteria, by H. Pylori.
Carter Williams: Yes, and it took forever for people, the diffusion of the acceptance and how many times this technology just almost get the message out and then stumble?
Sal Daher: Yes. The H. pylori is a chicken poop bacteria.
Carter Williams: No, you point on that though, this is interesting because it gets to the information diffusion issue. I brought that up with someone who's a gastroenterologists, who's also a historian, and he said he researched it. He has papers back to the early 1800s in which people thought-- Not even knowing what bacteria was, they were making assignment of, that he said was essentially the observation that H. pylori caused. When you have these people--
Sal Daher: Imagine all the pepperoni pizzas that were not eaten because of this fact. People thought that it's eating pepperoni pizza that caused ulcers. It turns out it's this chicken poop bacteria that a course of antibiotics and a little bit of sucralfate will cure.
Carter Williams: The one I saw was Andrew Lo ran a meeting, Andrew Lo from MIT ran a meeting at Washington University.
Sal Daher: He does computational investing.
Carter Williams: He had the idea to maybe we create this mega fund that would help accelerate technology out of this cure cancer. He gathered 90 of the top cancer researchers at WashU because for some reason, he couldn't do it at MIT. I don't know why. I happened to be in the room, and basically the 90 top cancer researchers in the room.
Laura Esserman, who runs the breast cancer group at UCSF, she's brilliant. She says, "Well, what we need--" We're talking about something to speed stuff up. She says, "We need synthetic control arms." The other 90 people in the room who are the top people in the field are like, "What the hell is a synthetic control arm?" It was digital twins. She blurts us out, I'm in the room where it happened. This is the moment. You're hearing one top researcher communicate with 90 other top researchers a new thought about how to do trials.
Sal Daher: Carter, we are human beings. We are operating with 8K working memory, okay? We know tons, but at any given moment, we can only have 8K in front of us. We need to collaborate. Do you want to know something? To close this out, because it's going to be a long podcast.
Carter Williams: [laughs] Sorry about that.
Sal Daher: No, no, no, but just to close this out. Do you know that in the middle of COVID or the year 2020, there was discovered a new salivary gland in the head? It was thought originally that we had four glands that produce saliva in the head and then discovered a fifth one that's above the palate somewhere. Anatomy is the oldest part of medicine. They've been dissecting cadavers, stealing bodies out of graves, and dissecting them.
Carter Williams: We still don't have it all.
Sal Daher: We still didn't know that there was a fifth salivary gland in the head until the middle of COVID, man. We're discovering new types of lung cells. It's just there's so much to do. With our 8K working memory, we need to collaborate with a lot of people, talk to a lot of people, and to try accelerate this change. This has been a fascinating conversation. Carter Williams, thank you for making time.
Carter Williams: I appreciate it. Thank you for making time and having me.
Sal Daher: This is tremendous. I had so much fun. I thank our listeners for sticking it out because I think you will find that this is really a worthwhile podcast. Your mind will expand with this conversation, because if you go back and unpack a little bit of the things that Carter said, I think you will discover some very interesting concepts that might bear fruit in the future. Thanks again, Carter. This is Angel Invest Boston, I'm Sal Daher.
[music]
Sal Daher: I'm glad you were able to join us. Our engineer is Raul Rosa. Our theme was composed by John McKusick. Our graphic design is by Katherine Woodman-Maynard. Our host is coached by Greystar.