Welcome to COIQ where you learn how health innovators maximize their success. I'm your host, Dr. Roxie, founder of Legacy-DNA and international bestselling author of ‘How Health Innovators Maximize Market Success.’ Through candid conversations with health innovators, early adopters and influencers, you'll learn how to bring your innovation from idea to startups to market domination. And now let's jump into the latest episode of COIQ. [00:36.1]
Roxie: Welcome back COIQ listeners on today's episode, I have Jo Bhakdi with me. He is the CEO and founder of Quantgene. Welcome to the show, Jo.
Jo: Thanks for having me, Dr. Roxie. It's a pleasure.
Roxie: Thank you. So, for our listeners, let's get started by having you tell them a little bit about your background and what you do.
Jo: So yeah, I founded Quantgene in 2015 and we are a premium preventative care company with a hot biotech angle. So, what we do is we bring advanced medical technologies to our members. It's a self-care system. Based on our observation, you know, for a very long time that you have all these amazing medical advancements that don't come to patients or that comes to patients finally late like a decade or longer delayed after they have been invented. And after there is sufficient clinical evidence in our opinion that they can truly move the needle.
Roxie: Yeah. [01:32]
Jo: No pun intended. And the main obstacle is not clinical evidence to get these technologies to you. It's the payer system that insurance and Medicare and other people say, well yeah it works. It might save people; it might protect you better. We need more evidence that it actually also not just save life, saves lives, but saves money. And we always thought that's wrong for many reasons. And basically, combined the concierge and premium care element with telemedicine, which is very, you know, what we need nowadays.
Roxie: Yeah.
Jo: But also given access to these advanced technologies that are already clinically proven to an extent that is overly clear, our opinion and our physician's opinion that they can help people and then get rid of the payer issue by saying, well, you can pay yourself and be try to make it as affordable as possible obviously. [02:23]
Roxie: Okay. Very interesting. So, let's say that like many of my guests lately we're having kind of two conversations. One is kind of like who you were and what you were doing prior to COVID and then kind of who you are and what you're going to do going forward. So, imagine we were talking in February, you know, what was your market strategy then and where were you in the innovation process? [02:49]
Jo: Yeah, we had this great strategy time that I laid out that we bring preventative care that is telemedicine based, it was pre COVID, right?
Roxie: Yeah.
Jo: So, you take your credit card, you buy a specific protection package around a certain disease. We start with cancer. So, in February we were all about cancer protection and providing advanced cancer detection technologies, specifically deep genomics and AI was a blood test, but also going beyond that plus advice around cancer around your risk exposure and profiling cancer. That was what we were in February, basically you said. Well Cancer is a tremendous problem by the way, much bigger than COVID, but getting overruled a little bit right now.
Roxie: That's another show.
Jo: That’s another show. So, what we build is the first product that basically tells you if you want to be protected, have maximum protection against bad outcomes in cancer. Especially as a preventative measure when you are not yet diagnosed. You want to have the best possible protection and care especially preventative and early detection.
Roxie: Hmm…hmm. [04:27]
Jo: And we just offer that in one package. You become a member, you'll get expert physician advice, expert genetic counseling, but also advanced technologies that you know, are normally not yet available. And then is what Quantgene was back then. And since then a lot of things happened, a lot of things validated the telemedicine approach for example, now it's all over the place and we were like first with that.
Roxie: Hmm…hmm.
Jo: In this cancer space. And of course, now we are adding COVID testing, that's kind of a no brainer so.
Roxie: Yeah.
Jo: And in COVID testing our basic premise of Quantgene, that there are medical technologies that are available, but get to you too late. It's true with COVID on steroids.
Roxie: Hmm…hmm. [04:48]
Jo: Right, so they might be available now, but you have to wait another six months before you can actually get tested. Right. And you know, good luck trying to get tested.
Roxie: Right.
Jo: Like if you does say, you know, I don't have symptoms but I just don't trust those situations. Let's get tested with a PCR test that tells me if I currently have it and with an antibody test that tells me if I had it and might have immunity. I mean, good luck, you don't go to CVS, try to get it or call your doctor. And so, we saw that need and we are now deploying probably in the next week a solution that allows our members to just get tested. They just, you know, pay a certain price, not going to be too crazy. We are still figuring the details out of we send a nurse to your home and do a nasal swab and a finger prick for a blood drop. [05:38]
And we test you actually comprehensively both on the PCR current on a expression side and the blood and on antibodies. So you know, if you had it, and you know if you have it, and I think that reflects very much a positioning that you know that this stuff is available in theory, these tests exist, they're validated, but you can't get them and your physician can get them. [06:04]
Roxie: Hmm…hmm.
Jo: Because some payer says, well, I don't know if we want to pay. Our lab say like, yeah, we have them, you know, no one knows when to order them and how to pay them. And sometimes the government moves in and blocks a bunch of them because they want to give them to a specific hospitals, you know, and the patient should not be exposed to all this, you know, problems in the healthcare system.
Roxie: Right.
Jo: The patient would be able to say, you know what, I pay 300 bucks, send me the nurse and test me for everything and I get peace of mind and your specialists take care of me. That’s the whole idea. [06:36]
Roxie: So the one thing that comes to mind when I hear you describing this is concierge medicine where you have a subset of the consumer population who maybe have the resources to invest in these types of preventative and proactive measures and out of pocket as opposed to having it go through their health system because they don't want to be limited like you're describing. You know, I don't want to be limited. I don't want my care and my wellbeing to be limited by what the payer can pay. I want to be able to have access to the care that I want or that I need. [07:11]
Jo: Absolutely. And that's that's exactly what we are all about. We always describe ourselves as at the intersection of three very important things.
Roxie: Okay.
Jo: Concierge and premium care.
Roxie: Yeah.
Jo: Is one thing, but then you combine this with telemedicine, right? So, you can access this anywhere, any time. And advanced medical technologies which concierge care normally doesn't have.
Roxie: Right.
Jo: So, it is this combination of them, we have a very deep biotech background. We have our own labs and we actually lead the world in next generation sequencing precision in specific in specific applications at least. We have a very extensive AI artificial intelligence team. So that is very unique Of course we are, we are far beyond what a normal concierge practice can do. But we have great respect for concierge physicians and we work together with them. We have our own network that does certain things. And so it's all about that intersection where the patient is the center, the patient is not interested if you have labs or not. The patient is interested in getting their problem solved. [08:20]
Roxie: Hmm…hmm.
Jo: Or they are protection ready.
Roxie: Hmm…hmm.
Jo: And so that's how we build that solution. Concierge care mindset, deep biotech expertise, medical device and AI expertise and a telemedicine platform that makes us a lean, easy approach.
Roxie: So, and then it sounds like you also described a subscription-based business model. [08:41]
Jo: Yes, exactly. So, we have we have a membership-based system and then you become basically an annual member and then you can purchase different packages or products, what concerns you most, you can also purchase them all of course. And yeah, get your cancer protection goals met. That's how we describe it. Everyone has a specific, you know, fear or, or real evidence for, for cancer risk and doesn't know exactly how to handle it. So, we have you there. And then we add additional you know, urgent categories like COVID.
Roxie: Hmm…hmm. [09:19]
Jo: If the need arises because we have a, we have a very strong you know, bioinformatics bio intelligence team with, you know, bio PhDs in Germany and in, in, in the US and California. And they help us understand new situations very quickly, including COVID, the underlying technologies very quickly. What is the difference between the different antibody tests? What PCR tests do we have? What is a validation level? What's the clinical evidence? Everything's a little complex in medicine, right? You can just say, if you test for antibodies, like for what are these Corona viruses?
Roxie: Yeah.
Jo: Is it COVID-19?
Roxie: Right.
Jo: Or is it SARS…like you know, and the answer is in most cases with COVID people don't know. Is it like, well, it's, in COVID-19, that doesn't, it's expressed on the surface of COVID-19 infected cells but is it also on the surface of other corona viruses? So how specific is that test? All these things need to be figured out and in an emergency situation right now, it has to be figured out fast because of the fear in nine months maybe that's not interesting. [10:26]
Roxie: Right, right, yeah. There's definitely a sense of timeliness and urgency and being able to meet a new market need that's kind of developed really just in the last 30 days. Right.
Jo: Yes, and the, the interesting thing is these are very complicated medicine, especially if you add deep technology to it.
Roxie: Hmm…hmm.
Jo: The whole idea is talking about the membership. If you are a serenity member, it's Quantgene Serenity, it’s the product chooseserenity.com is the website if you want to. What we offer the patients very different from other testing companies, for example, which we don't view ourselves. Here a concierge solution that solves your problem or meets your goals. Normally you go on these websites and say, Oh, do you want to get CA 125 testing or do you want to have testosterone tested? It’s like, who the hell knows? I'm not.
Roxie: I know, I was gonna say I don’t know.
Jo: What you don’t know? It’s like asking you, Oh, do you want to grab that protein or antibody tested or that one is, I don't know. I don't want to die of COVID. [11:31]
Roxie: Right. Yeah.
Jo: And so our job is to translate that and tell our members, if you are a member, you know, we do everything we can to keep you safe by providing you the medical advice and the underlying technologies and if...
Roxie: Yeah.
Jo: Necessary, also the coordination of care in cancer. If something happens, we give you second opinions so you can sleep well at night and okay, whatever happens and whatever complexity I have to face I have a partner here that helps me through this.
Roxie: Hmm…hmm.
Jo: And I can rely on that partner to not just be one random physician but to be a, you know, a highly connected and professionalized research organization that scans the globe for the latest and advanced medical technologies, customizes around my case and makes sure I get it. [12:20]
Roxie: Yeah. Well, and you know, having spent you know, a lot of time in the pharmaceutical industry and specialty pharmacy oncology you know, I know that, you know, when we're looking at the drug pipeline that there is a lot of oncology products that are coming through, right, that are up for a FDA approval and so forth, you know, like hundreds of them. And so, it's so difficult for an oncologist to stay on top of that and. [12:48]
Jo: Absolutely. And it's absolutely right for a patient, it's already impossible.
Roxie: Hmm.
Jo: Yeah, how would you know that, you know, here in Pasadena, there is a new imaging technology developed, right? That is for breast cancer screenings, for example.
Roxie: Yep.
Jo: It's vastly superior to memo mammograms and MRIs.
Roxie: Yeah.
Jo: No one knows about it. It takes another 10 years before that goes anywhere.
Roxie: Yeah.
Jo: But you should really have access to it if you need it because it's a low risk, you know, huge added level of protection against breast cancer.
Roxie: Yeah.
Jo: And just because some payer says, Oh, I can't decide if I can pay 400 bucks for that or you know, I would pay 200 but for us it’s too match, that they negotiated for 10 years. The same is true for drugs. The same is true,we have now a case with a center, I can't tell you which one, but very important center in Germany that used our data to actually develop a cancer vaccine for a kind of terminal or late stage pancreatic cancer patient that was part of our study.
Roxie: Hmm…hmm. [13:43]
Jo: So, we have also played in, you know, very deep genomics and oncology fields. You know, most people don't even know that this is possible, that you can develop custom cancer vaccines that are targeting specific change proteins for specific patients just based on liquid biopsy results. All that is totally possible if you have the right experts. But it's kind of experimental, right? Of course, you don't have a lot of evidence.
Roxie: Right.
Jo: For technologies that are new. But if you know your stuff about proteins and how cancer behaves, it's always a, there is a benefit to it. And you know, that's the question are willing to take that risk if you have terminal cancer?
Roxie: Sure.
Jo: You should be able to take it. And so that's kind of, our thinking and I think you, you're absolutely right. The patient can't know that and the physician and the oncologist doesn't have the time to do that. We have a team of over 20 people doing nothing else than global intelligence, so. [14:48]
Roxie: Yeah.
Jo: And these are physicians, but they are Bio PhDs. They're also machine learning PhDs. So, we have, you know, you need a comprehensive team that just gets the job done. Like is there something out there that we need to know about? Can we assess the clinical utility and the frequency of that new technology? And can we quickly evolve that into something better by adding AI layers, by combining it with other technologies. For example, combining advanced imaging for cancer detection with deep genomics blood tests that look for cancer mutations in the blood.
Roxie: Hmm…hmmm.
Jo: Adding these different technologies that both are not available to standard of care. It just gets you right into the future of medicine. But you can do this today and the only difference is, you know, our members for example, for Serenity Protect the deep genomics and the AI test, they've cost you $200 a month, so 2,400 per year for one test and then a year long, like basic concierge consultation. [15:50]
Roxie: Hmm…hmm.
Jo: So, it's not crazy, but if you go with that to Medicare, they're just laughing at you. There it’s like, wooow…you can save a million people we don't care for 2,400 a year.
Roxie: Right.
Jo: You can compare it when it's 40 bucks. And that's just, you know, wrong. So, I'm not going to say Medicare does something wrong. I'm just saying from my perspective as a patient, I don't want to hear that.
Roxie: Right, right. So, I hear you talking a lot about the role of technology and I think health innovators like you have had a vision for the role that technology could play in healthcare for a long time. You know, describe your point of view on how you think things are. How do you think that the market awareness and understanding of technology's role in care is not necessarily changed? I would say changing because of COVID. [16:47]
Jo: Yeah, I think that's a very good point. So, it's my favorite topic obviously, that's why I started the company. I think if you want to bring disruptive innovation that is driven by technology, it's driven by hardware innovations, chemistry, innovations, like sequencing, certain PCR things, medical devices, but it's also vastly driven by data technology and AI software, internet. If you want to develop innovation that's truly saving lives and it's truly effective, pretty effective in any sector, even outside healthcare. This is not trivial and you have your work cut out for yourself because you want to engineer something that is unknown by definition.
Roxie: Yeah, yeah
Jo: You want to engineer the unknown. So that takes resources. It takes grit determination a lot of things, right?
Roxie: A little bit crazy.
Jo: A little bit crazy, you need some visionaries. You need all kinds of things.
Roxie: Yeah. [17:45]
Jo: So, and you need capital like venture, right? That’s risky. So, my point is bringing innovation from a vision to actually make it like into the world to make it work is a hard, complicated thing that we all loving to do. But it's hard and complicated. Okay? That's the first thing. If you build Tesla or something or rockets or software, you have a hard time? You have to do this; you have to invent it. You have to find the business model, how you get, you know, expensive stuff out first that pays for the development and then scale it down like Tesla did it and so on and so forth.
Roxie: Yeah.
Jo: We know that and that's very important to understand. The problem in healthcare, why does it stalling massively? Why in his case you have a massive data between what's possible and innovation and what's being done is because an additional layer of complexity is added to the soul game that is extremely distractive. And that additional layer is not regulation it is not the FDA, it's not even medical regulations. It is the payout system. [18:54]
Roxie: Hmm…hmm.
Jo: Because in healthcare what people, nearly everyone I know with the except of Quantgene, a very few other companies says, if you don't get reimbursed and if you don't have a clear reimbursement code and pathway to that code, you innovation is not going to happen. It's going to die in the basement.
Roxie: Yeah.
Jo: And we're not going to raise money and we're not going to give you money and you're dead. The problem is given the complexity of innovation, if you add that level of additional complexity, right, if you would have torn Tesla, you cannot launch your Roadster and you cannot launch a model ‘X’ and not your model ‘S’. You have to come out with a car that is perfect cheaper than internal combustion engines and that can be immediately sold to 10 million people in one year. Otherwise you can start.
Roxie: Right. [19:44]
Jo: No one would have ever invented Tesla or any other innovation. And that is exactly happening in healthcare. And that's why we have a massive, massive gap between what is possible and what is being done.
Roxie: Hmm…hmm.
Jo: And the tragedy is, that in healthcare, it's the one area where there's the opposite should happen. We should save lives and people, including ourselves, right. It's a very altruistic thing.
Roxie: Right.
Jo: But it's also about.
Roxie: Yeah.
Jo: It's just not acceptable that the one sector, when you massively fail in delivering that disruptive potential is healthcare where we want to protect, ourselves, our loved ones and everyone else. And so our approach is you can only solve that problem if you reduce that equation and make it simpler and kick out the payer problem.
Roxie: Yeah.
Jo: And you take it out by saying, well, we assume there are people out there, who are willing to pay to have their lives protected, which is not a Steve thesis, I think proven to be true. [20:48]
Roxie: So I think that what you're describing is, is something it's like a crossroad that many health innovators find themselves. And, and you know, correct me if I'm wrong, but what I hear you saying is there's this one path where it may not be easier. I mean, might not be easy, but it could be perceived as easier as if I pick a current CPT code because then that gives my potential...
Jo: Exactly.
Roxie: Investor pool more greater confidence and the viability and sustainability or growth of my company but at the same time it is extremely limiting. And I might.
Jo: Absolutely it is. And you're absolutely right, that's exactly how the vast majority of deep health tech investors and biotech investors think.
Roxie: Hmm…hmm.
Jo: And what we learned is to say, you know, what you're doing is great, we are not interested. Goodbye. That because that code centric thinking.
Roxie: Yeah. [21:43]
Jo: That is extremely prevalent in biotech investing and as deep health tech investing is toxic and you can, it's toxic to innovation and it's toxic to progress. And I can tell you very simple examples. The two examples I told you, one is our own deep technology. We have, we have the world's first mighty cancer detection capability with a deep genomics test. Okay. What is the code for that? There is no code because right now it cannot be done.
Roxie: Hmm...hmm
Jo: We are the first ones who can do this while there are some others who are also good in, you know, in making progress, but there is no code. So, what do you do? You have to negotiate a new code and to do that, it's just a ridiculous process because then you have to, it's not just new code, it's also the entire economic system around it doesn't exist.
Roxie: Right. [22:31]
Jo: The entire outcome calculation doesn't exist. You have to come up with the entire thing. So instead of just showing this works, it can save lives and we can provide it at that price and finding patients who can pay for it and then scale it and then bring the price down and bring it to more and more people. You know, people just get stuck and they can't raise the money and it never happens.
Roxie: Hmm…hmm. Hmm…hmm.
Jo: And another example is imaging like what I told you about like superior imaging technologies.
Roxie: Yeah.
Jo: Okay. Now you have a code, it's very clear what it does but then the thing costs twice as much. And then the insurance said, ‘You're crazy, we're not going to pay twice as much’, and then you say, ‘But look, the outcomes, they are 50% better’ and then they say, ‘Are you crazy? 50% better but twice as much as it's not going to work for us.’ [23:21]
Roxie: Yeah.
Jo: The patient then says like on the other side that says the opposite, ‘Are you killing me? You keep me 50% safer for like a hundred bucks more because I pay 200 instead of 100. Yes, give it to me.’ So, the incentives are just wrong.
Roxie: Yeah.
Jo: The nation would decide immediately f course I pay you 50% more, twice as much, a hundred bucks more to keep 50% safer from, you know, missing out on breast cancer detection. But insurance says no thank you. [23:51]
Hey, it's Dr. Roxie here with a quick break from the conversations. Are you trying to figure out what moves you need to make to survive and thrive in the new COVID economy? I want every health innovator to find their most viable and profitable pivot strategy, which is why I created the COVID proof your business pivot kit. The pivot kit is a step by step framework that helps you find your best pivot strategy. It walks you through six categories you need to examine for a 360-degree view of your business. I call them the six critical pivot lenses. As you make your way through this comprehensive kit, you'll be armed with the tools, tips, and strategies you need to make sure you can pivot with speed, without missing out on critical details and opportunities. Learn more at Legacy-DNA.com/kit [24:38]
Roxie: So one of the other things that I hear you saying is really interesting is as we're kind of looking at these choices and these decisions that health innovators are making, is that, you know, one way I may be looking at, okay, if I get a CPT code, it may allow me to be able to market to a much larger market, right? My total addressable market might be much larger if I can align with a CPT code and more of like a B2B approach. And so, I hear innovators talk all the time. I just need 1% of that market. Like you know the, the, the Tam is, you know, a hundred billion and I just need 1% so surely this is going to work without considering all of the years and the obstacles down that path. And what I hear you saying is that, you know, it's wise for health innovators to consider, I might have a smaller addressable market but I'm going to be able to get to market faster and I might have a much more viable business and.
Jo: Yeah, absolutely. [25:40]
Roxie: I might want to get 20% of the market, but 20% of a smaller market can be much more powerful than 1% you know, of a larger market.
Jo: Exactly. And like sometimes it depends like what’s the total addressable market versus what's the real addressable market and all these things.
Roxie: Yeah.
Jo: And I like to view it a little differently. I think, you know, you want to have something where you say, well in general basically everyone needs this thing. So, in our case, who needs to be protected from cancer statistically? The answer is everyone over 40 or over probably over 20.
Roxie: Yeah.
Jo: Over 45 exponentially more. So that is our total addressable market. It's limitless and it's everyone, there's always a good starting point. And then you say, what's our real market? And then they'll say, our read market is what we can actually sell today.
Roxie: Yeah. [26:36]
Jo: And so, I am, I have a different perspective. I want an unlimited Tam and I want the real market where I always have a hundred percent because it's whatever I do right now because there's no competition. And then I want to grow that real market as much as I can bottom up. So, I'm a little critical of this. Oh, we have a 10 billion Tam and 1% like who the hell cares? You should have a much bigger than $10 billion market and you should, you know, just see, can you get a hundred customers in the door today and you can get 200 in the door next week, next month, and then you're good.
Roxie: Yeah. What I've seen is that historically investors, when they hear that instead of being impressed, they run. [27:14]
Jo: Yeah. I think I mean investors it's a whole different story. I think we have a lot of experience. I was actually on the other side for some time. I wasn't M&A so I think and I did a lot of, you know, work and quantitative venture capital and built my own system there. So, I have a, I'm very aware that investors, in the US you probably have, you know, 50 million investors so to say, Oh investors is already a mistake.
Roxie: Yeah.
Jo: You're talking about massively complex heterogeneous market and especially in angel and early stage and what we are doing now, we are in the process of raising another round. What we really learned is to develop this pattern matching ability that we just avoid; we don't even take calls from certain investors.
Roxie: Sure. [28:09]
Jo: So, if you’re a deep biotech fund, we just say, ‘Good, we're like just pitch that before you even take the call, just write in an email why you think you're a match. Like because you're probably not and we don't want to waste our time with that stuff.
Roxie: Yeah.
Jo: And…but if someone is like an experience consumer facing healthcare venture capital, early stage fund with experiences both in deep tech and in consumer facing sells their products, then you're very hard for us. And we say, well do you understand what we are doing? And we understand how you think now it's worth having a conversation.
Roxie: So, I, I mean I think that that's a really valuable lesson for our listeners as well of just being being specific and kind of having some some idea of who's going to be a best match from an investor standpoint and, and not wasting time. Like you said, not wasting valuable time pitching someone who's not going to be a good fit anyway. [29:09]
Jo: Yeah. And that sounds of course, I know that some entrepreneurs think that I got annoyed by that I think like, yeah, you have easy talking if you raised like 13 million hours anymore, whatever, I didn't raise anything. I know it's hard. I have to talk to everyone and I think the truth is in between you have to figure out for your own company your own pitch. What exactly is it that that you do and what exactly is your competitive space?
Roxie: Yeah.
Jo: Which is very important.
Roxie: Yeah.
Jo: So, I can just give you some insights behind the scenes here, I think that's interesting for your listeners probably who are entrepreneurs, the way we go about investors right now. I think investors, they are like three things, a triangle you have to figure out who are you and what is your product.
Roxie: Yeah.
Jo: Who are your peers and peers are not competitors, they are companies like you.
Roxie: Hmm.
Jo: At the core.
Roxie: Hmm…hmm.
Jo: And what is the investor universe that has invested in these peers?
Roxie: Okay. [30:10]
Jo: Right. So there's the triangle you have to get right.
Roxie: I like that.
Jo: And we need this through their extensive list and research. And to give you an example for us, our peers are not liquid biopsy companies. They are not like other companies that try to detect cancer early stage in the blood because they are mostly slaves to the code right there, CPT slaves. So, they've literally nothing to do with us.
Roxie: Yeah.
Jo: They’ll never get us to market. They will never have anything in the next five or seven years. So why would I, and if they ever do, they have to do totally different things from us.
Roxie: Oh, so completely different belief system.
Jo: Yes.
Roxie: Hmm…hmm.
Jo: So, it’s even though the tech in one respect is similar to our one part of our core tech, it's just not who we are. Whereas someone who has a premium primary care provider, even without taking us closer to us, they have telemedicine, they have to recruit their patients, they have to convince them about membership plans.
Roxie: Yeah. [31:04]
Jo: And so once you understand that as a company, as us, okay, now we understand our peers even better peers are people who combine consumer facing health care services with some kind of deep tech, even if it has nothing to do with, you know, preventative or concierge or cancer. But something when you sell, I don’t know prescription drugs direct to consumer somehow.
Roxie: Yeah.
Jo: With cool interface but also to have steals with pharma companies or something.
Roxie: Yeah.
Jo: You have a universe and then all you do is you go and crunch phase or something and then figure out who invested in them and then you go to these VCs and look up. Okay, what else did they invest in? Was this a one off or do they have more of them?
Roxie: Hmm.
Jo: And then the next question is your round size. If you are at seed stage, you want to raise a million. You need to find investors who are willing and able, and have a track record of writing $250,000 checks.
Roxie: Yeah. [31:58]
Jo: You know if they say, ‘Oh, we invest 10 to a hundred million in our private equity fund’, which is stupid. And I mean it's just a complete mismatch. So, I think, you know, and, and then you learn over time if you are pre series B or C smaller investors that are highly specialized are just so much better partners.
Roxie: Hmm.
Jo: Than you know, Vanguard or something.
Roxie: Right.
Jo: And then..
Roxie: Right, right. So, you know, I just say of, everybody that's listening, you know, be discerning and get clear on this triangle. I think that that is a very clear and beautiful investor strategy for all of our listeners to kind of take you to, yeah. Thanks for sharing that. So [32:40]
Jo: Yeah, that was definitely, that definitely helped us. And also, like investors, you know, once you have something that's really hot, which we actually have on the deep tech side, all investors are going to take some time and talk to you and do due diligence.
Roxie: Hmm…hmm.
Jo: It's just not going to help you. So, it's actually bad, they're just going to waste your time, they're going to take out your technology. And that happened to us last year, like all these biotech investors were like ‘Oh yeah sure let's talk. Oh, let's get the data removed. Very impressive technology.’ And at some point, we just realized they will never invest because when it comes to like how do you make money? They say not through a CPT code, it is a complete tech.
Roxie: Yeah, right.
Jo: So, and they said, Oh, but you take so hard, you have the best liquid biopsy tech. You know the numbers are very impressive.
Roxie: Yeah.
Jo: You should totally be, we're very interested in doing this if you pivot to a single cancer test, CPT, colorectal cancer only. And then we said no, that's the dumbest thing we've ever heard. [33:36]
Roxie: Yeah. And you know, and sometimes that you need to be bold enough to say that and have courage to just say no.
Jo: Yeah.
Roxie: You know, and I think that it's good for us to continue to have that conversation to empower other investors to say like, this is what we're doing, this is what’s successful. And I said, no, and you can say no too.
Jo: Yeah.
Roxie: Yeah.
Jo: That's why, I'm always a big fan of raise a little more than you need and spend much less than you wanted because then you use the ability to say no, say, well we don't have a lot of money in the bank, but we also have a very low burn rate. So, whatever, go home, if you don't want us.
Roxie: You’re not desperate, you're not. Right.
Jo: Exactly.
Roxie: You're not in a desperate situation. Okay. So that was a perfect segue into my next question talking about raise more than you need and reduce your burn rate. And so, my question is how is COVID impacting your business? [34:31]
Jo: So, in our specific case, I think the bottom line is it was tremendously positive. Looking back so far.
Roxie: Yes.
Jo: It was surprising. Number one killer work and remote work turned out to be highly effective. Everyone just gets so much more effective because there is no BS thing. It's like, okay, you have to deliver your stuff. I don't even see you. So next time I see you we can just discuss if we have that stuff.
Roxie: Yeah.
Jo: So that was very awesome. People, well the teams are, I think it's different. Some people become more productive at home and some less.
Roxie: Hmm.
Jo: And so, it's important to keep up the spirit and motivation, but also the people who are very good in that situation, just leave them, let them run and do their stuff.
Roxie: Yeah.
Jo: I mean I'm also violating the rules a little bit and I hang out in the office as you see it.
Roxie: Nooooo I didn't know you were going to tell everyone that. [35:25]
Jo: There’s few people but totally distanced. It's like, you know, a 50-person office with three.
Roxie: Yeah.
Jo: People in there.
Roxie: Yeah, yeah. Six feet apart.
Jo: And so, there's also the saying that tough times accelerate innovation.
Roxie: Hmm…hmm.
Jo: I think that's absolutely true. You look at the stock market and you look at Amazon and Netflix, they are higher, they have historic highs.
Roxie: Yeah.
Jo: Because they run. Oh, you know, and, and I think it, it's so most of the things that are positive, like there are three things I would look at.
Roxie: Okay.
Jo: For Quantgene and COVID. Number one, productivity is up, clearly up, that's good. Product and innovation speed definitely, totally up because it gave us a new perspective. We actually added two more products.
Roxie: Hmm…hmm.
Jo: That were very easy to add that we didn't see before.
Roxie: Yeah.
Jo: But COVID testing obviously. So, product development and innovation, speed is up, general productivity is up, fundraising is a bit down that took a hit. [36:30]
Roxie: Hmm…hmm.
Jo: I think it's turning around a little bit and now since we are now a COVID company, that's actually very helpful again, telemedicine and COVID without like making it fake news. I mean it's actually matches our, our profile. [36:45]
Roxie: Right. It's not a stretch. It's still who you are.
Jo: Yes.
Roxie: Yeah.
Jo: But not everything is, you know, rainbows and unicorns and COVID times. I mean a lot of investors are clearly very much holding back.
Roxie: Yeah.
Jo: We see this not so much, but family offices because some took hits but worse than taking hits that, they are swamped by opportunity. That is a big problem for us.
Roxie: Yeah.
Jo: I just talked to family, all of them, they said, you know, we can buy AAA rated bonds at 80 cents on the dollar right now. So, we get free money with no risk. Why would we do any VC investments right now? [37:28]
Roxie: Yeah.
Jo: So, I hope stock market recovers and fund markets recover and then I think they will return back to VC investments. And I think we shouldn't go too crazy, my, in my prediction with COVID, is its definitely dimming down. I think it was a little overhyped. It's always of course tragic to have any kind of pandemic and people dying that normally wouldn't have died. That's terrible.
Roxie: Hmm…hmm.
Jo: But I think the scale of it is a little overblown.
Roxie: Yeah.
Jo: Can be seen now.
Roxie: So, let's talk about some of the pivots that you've done because I've, I've, I almost kind of think of it like little Easter eggs in our conversation. You know, I've kind of heard you talk about kind of like a product pivot and maybe a positioning pivot. Probably your value proposition has changed.
Jo: Yes.
Roxie: Certainly every, I would say across the board, everyone's sales strategy has been pivoted because we're, we're not meeting face to face anymore. But help us understand what that process was like for you to kind of evaluate your pre-COVID market strategy and then analyze the different paths that you could take and what was going to make the most sense for you and some of the decisions that you made. [38:39]
Jo: I mean, the funny thing is we were on a trajectory of change before COVID that was just completely accelerated to COVID. So, it was not something that was, changing our strategy, was just accelerating. And the history of Quantgene is a history where we started as a liquid biopsy company, we, I basically saw this specific technology opportunity.
Roxie: Hmm.
Jo: Then I figured out a way to detect multiple cancers at early stages in the blood.
Roxie: Yeah.
Jo: And with very high efficiency to some very deep innovations. And what we found out over the last five years developing this deep tech. So, we started super deep, you know, revolutionized the next generation sequencing, build massive new software infrastructure for signal processing and then an AI system to recognize cancer patterns. So, it's like hardcore stuff. That was a lot of fun and also completely changed the, you know, behind the scenes what's happening in the industry. Of course, we were a little naive about it and thought like, well, all you have to do is to take cancer early stage. I mean, what else is there to say, right? We know… [39:53]
Roxie: Yeah.
Jo: What that you can save 400,000 American lives a year. So why that cannot be hard to sell, to invest, isn’t it? Right. We know, you can save anyone because no one is going to pay for it. And then, you know, this dichotomy started like, what do you mean? No one is going to pay for saving 400,000 American lives a year?
Roxie: Yeah.
Jo: Well, in theory it sounds good, but what's the exact CPT plan?
Roxie: Yup.
Jo: It's like, well, we need a new code for multi cancer detection test. And then everyone says, this is just literally not possible. Like, it's just not possible.
Roxie: Hmm…hmm.
Jo: Regardless of what you show.
Roxie: Right.
Jo: And then I realized this is just madness, but these are people that agree with me it works. It agrees. They agree we can save more American lives per year than America lost in the second world war in total. And everyone says, eh, not a big deal. We just can't pay for it. We don't, we can't figure out the code. So, and then it dawned on me, okay, this is just complete madness here. [40:48]
Roxie: Yeah.
Jo: And then later the pivot, okay, we need to figure out how we unlock the sales payer market, sales directly to patients. Then build so much evidence and also psychological evidence that you basically saved a hundred thousand people that the insurance just can't, or Medicare, they can't stop it anymore, that’s our strategy. And so, doing that led us down this path from being a hardcore medical technology company to okay, we need concierge care.
Roxie: Hmm.
Jo: We need to also, we need to bring this to patients, we have to be nice to them. We have to be, you know, service oriented, have the best physicians and the best genetic counselors.
Roxie: Yeah.
Jo: That are significantly better than your, your normal physician ideally. And then we, we came into like how are we as a startup going to roll that out nationwide?
Roxie: Hmm.
Jo: You know, are we going to build a, you know, 10,000 retail outlets? Like probably not. And then then as to telemedicine, and so we started building the telemedicine infrastructure and the physician infrastructure to deploy this deep tech and then all happened last year and the beginning of this year. Right. [41:58]
And then, and telemedicine was more an afterthought. It was like, okay we can't build retail so let's just try telemedicine. I know people don't really like it. It's not that great. It's better to have retail but whatever.
Roxie: Yeah.
Jo: And then COVID hit and then first we thought, Ooh there's this like a little irritating now, we have all these problem with our problems. But then it became very easy. Well it's an absolute boost to our approach cause you don't, telemedicine went to like a step child to the preferred option.
Roxie: Yeah. I just said someone on the show a couple of weeks ago that's been working and advocating for telemedicine for 27 years and finally, and it took a global pandemic. [42:43]
Jo: Yeah, telemedicine it's a little bit like the, you know, climate change. The guy said, Oh, I say, Oh we have to stop climate change and Oh here we burn too much and no one listens to him as I get whatever. And then COVID hits and suddenly you meet your CO2 goals in one month that you want to
Roxie: Right, right.
Jo: So, it’s kind of a.
Roxie: It is. And I couldn't agree with you more. I mean I think that the complete global shutdown of the world and having to go to technology and remote and virtual has been a convergence of many positive market conditions and kind of forcing change that's, that's culminating into this beautiful recipe that is going to accelerate adoption of these tools that innovators like yourself have been kind of banging their head up against the market for years, trying to get adoption and all of a sudden, you know, those growth curves are going to just skyrocket. And it, you know, it might not be in the next 30 days, but you know, at some point we'll flip the switch, turn the dial. And I don't think, I mean we'll never look back. [43:54]
Jo: Exactly. I think that's important. It's not a one-off thing that people are going to say, Oh, now it's over. Let's just go back to our retail things.
Roxie: Right.
Jo: Like Amazon like once you order everything through, you're forced and everything just gets delivered all the time and cheaper and better. It's like, why would I even stop that? And in telemedicine, Oh yeah, these premium services and then you can just go on the screen. You get a better nicer physician because they can be better trained and more focused on your problem.
Roxie: And they show up on time. [44:22]
Jo: Yes, and I also think innovators get a boost because we were already on this trajectory of direct, direct primary care, right?
Roxie: Yeah.
Jo: So that people use, Oh, maybe I pay 99 a month and then I get actually access to a physician. I think now a lot more people are being incentivized to just take out their credit card and start paying for their health. Very reasonable amounts, like a bunch of cappuccinos a month or something.
Roxie: Right, right, right.
Jo: And then realize, wait a moment, I'm paying like 500 for my car. I'm paying 2000 mortgage; I'm paying a hundred for cappuccinos. Maybe I should pay a hundred for keeping me alive.
Roxie: Completely.
Jo: And everything.
Roxie: Yeah.
Jo: I should, Ooh, this is actually pretty good. It's finally, I can have intelligent conversations with a physician who's actually trained and knew addressing my issues, or even better as genetic counselors and really the deep experts.
Roxie: Hmm…hmm. [45:17]
Jo: It's what we offer. We have busy physicians you can talk to, but also genetic counselors. And maybe most importantly in this context, tech experts that you can actually ask questions about how does this tech actually work? Which physicians normally don't know, obviously. So, you know, you can actually investigate exactly, okay, what mutations are you looking at? Well, how does this AI work? You know, what are the basics that it did, is it random for us. It was a basic layer over and you will be surprised, you always assume, Oh, the patient is, are all these like basis real assumption in medicine Paternalistic medicine, right? Every patient's like little dumb with an IQ of 70 and don't know anything. And you will be surprised that all these, you know, venture capital, fund partners and take entrepreneurs and, you know AI specialists or you know, people who are in podcasts and you know, are writers in medicine, they are all patients. [46:12]
Roxie: Right. Wouldn’t they care?
Jo: They are not really dumb they are smarter. They probably no more than the many physicians. And you know, this is our also our clientele. We are used to people who you know, know their stuff, who are used to making very complex decisions based on very complex, imperfect information in their everyday lives. Why even like thinkers and researchers. So, they definitely understand what we are saying and they want to know the details.
Roxie: So, as we wrap up here, what lessons learned or advice do you have for your fellow entrepreneurs who are in the trenches like you trying to figure out how they're going to survive or thrive in this new COVID economy? [46:54]
Jo: Well, I think in healthcare as an entrepreneur, I can just encourage everyone to really think like a business person and really think about, okay, what is the value I'm actually generating? Who's my actual customer, including my investors, like who, who are the people who I want money from, who I promise to deliver value to.
Roxie: Yeah.
Jo: Who exactly is that and what is that value? And if that doesn't work right now because there's some COVID thing going on, is there something that is close or it's, it's based on the same principle that I'm promising that I can pivot to? And for example, we were all about cancer protection, which we still are. And this will still remain vastly more important than COVID. [47:41]
Roxie: Right.
Jo: Like in rational terms not in a panic terms and, but we saw if our promises while we provide premium preventative care through telemedicine solutions to you by bringing advanced medical technologies to bear to protect you. If you take that and apply to COVID I mean, it's pretty clear what you have to do, you know, offer a product with specialized consultation that tends antibodies and the current state of RNA. So do you have it and did you have it? And, and allow access to that where you just pay and you get it.
Roxie: Yeah.
Jo: And that is exactly what we did in cancer where we say, well, you can wait 10 years and then you get that maybe or you can just come to us and get it now with better actual advice. The same is true for COVID but only that, you know, with COVID you don't have to wait 10 years, you probably have to wait one year to get it. But that's still insufficient. And so, the exact same paradigm, that you did apply to cancer technology and protection we can apply to COVID. [48:50]
It took us some time to realize that because I was first against it, I thought like this is all stupid panic and it's over done. And then slowly I realized, well it doesn't even matter about the medical effects are, this is definitely happening.
Roxie: Yeah.
Jo: And people are definitely scared and they definitely want to know that.
Roxie: Yeah.
Jo: And then we kind of pivot or added that to the portfolio. So, I can just, that will be my advice just you can't put enough time into business model and economic understanding of what you actually do. Like what is the value? [49:20]
Roxie: Yeah and you know, it reminds me that there are quite a few health innovators that I think if they pause during this time and they evaluate their pre-COVID market strategy and their new options that they could take, right? Whether it be another customer segment tweaking their product or maybe their business model, they might even find that their new pivot strategy could actually have a better product market fit than what they originally even had to begin with.
Jo: Yeah.
Roxie: Right, where you talk about innovation and creativity that can be derived from chaos. I think that we'll have a lot of success stories when we come out of this. [50:01]
Jo: Absolutely. And I think chaos is just positive for innovators because it pulls you out of whatever silo you're in. And we are a great example. We, we literally spend 95% of the money we spend at attention, everything we spent over the last five years was in deep genomics and cancer detection. And then it took us four weeks to realize there is a hereditary test we could offer and then later the COVID test that literally would, you know, add to our revenue like 30 or 50%. So maybe with 1% of the effort of the entire original tests that we added, you know, 50% to our entire business by just having that, it's like, why don't we just also plug in clinical grade hereditary testing and COVID testing. It's super easy. Like it was ridiculously easy compared to what we did before.
Roxie: Right.
Jo: That’s another core, but from a consumer point of view, we just look three times more awesome. [50:59]
Roxie: Right, right. Yeah. Huge. Well, it's been a very delightful and valuable conversation. Thank you so much for sharing your wisdom with our listeners. So Joe, how can folks get a hold of you if someone wants to learn more about your solution or just really powwow with you about you know what it's like being in a health innovator today.
Jo: Yeah, I think basically it always to either reach out on Twitter @jobhakdi that's my Twitter Quantgene.com that's the website. I'm also able to get emails, jb@quantgene.com and these are the best ways to do it and chooseserenity.com of course.
Roxie: Awesome. Thank you so much.
Jo: Thanks a lot, Dr. Roxie, it was a pleasure. [51:41]
Thank you so much for listening. I know you're busy working to bring your life changing innovation to market, and I value your time and your attention. To save time and get the latest episodes on your mobile device automatically subscribe to the show on your favorite podcast app like Apple podcasts, Spotify and Stitcher. Thank you for listening and I appreciate everyone who's been sharing the show with friends and colleagues. See you on the next episode of COIQ. [52:10]
