Physician, Investor and Entrepreneur - Sohaib Siddiqui (Medly Therapeutics and Kettlebeck Ventures)

0:00 Hi everyone, I'm really excited to bring you this podcast with Dr. Sohaib Siddiqui. Sohaib is the Managing Partner at Healthcare Ventures for Kettlebuck Family Office, which is his own family office. He's also an Innovation Fellow for Women's College. He's on the advisory board of GE Healthcare. He's an entrepreneur in residence at the Faculty of Medicine and University of Toronto. He's an executive in residence at the Toronto Innovation Acceleration Partners and he's the chief executive officer of Medley Therapeutics. We had an amazing discussion and we talked about what he looks for in general partners and funds, what he looks for in founders, upcoming tailwinds in healthcare investing. Is charm or aptitude a better predictor of success and founders and outsiders innovate in healthcare? Is contrary an opinion in healthcare and much more. I hope you enjoy this conversation as much as I did.

0:52 Thank you. Hi, it was great to have you here today. Thanks for joining me. Thanks for having me. I really appreciate it. To get started, I'd love for you to talk about your childhood. Our childhood defines us in some ways. There are some things we learn from our childhood which help us, and there are some things at times we have to unlearn from our childhood. Talk to me about your childhood and talk to me about how it has shaped you into who you are today. Sure. No, thank you. So, my childhood, I would say, I think I was blessed to have an overall good childhood. But having said that, I think I saw quite a bit of adversity over time. So, I was born in Boksan originally. I spent a few months there. So I don't really recall much of it, to be honest. My family moved a couple of times.

1:44 My dad was in some of the banking industry and had a few moves. So I lived in Egypt for a couple of years. I lived in England for a couple of years, all kind of in my very, very early days. So I only have a few fleeting moments of kind of recollection of any one of those places. Apparently Arabic was one of the... first languages I began to acquire as a toddler. I don't remember any of it anymore really, but then we came to Canada in the early 90s and you know it was kind of a serendipitous move for my parents. You know they applied for immigration in a few countries and Canada was kind of the first one that came up and very typical to the immigrant story where you know didn't have a lot of money. uh parents looking for a better life you know they really struggled they really sacrificed um you know just in the first few months of moving into canada we moved in a very very cold environment that we weren't used to as a family that's a shock to the system um my dad three months four months into working a job actually one evening got t -boned by a drunk driver uh had a fairly you know pretty extensive accident a couple months later my grandfather passed away I was sick, I needed surgery. So like the first year in Canada was kind of just this concept of when it rains it pours. And really, my parents struggled. Many, many years, I, you know, I witnessed my family struggle a lot. And, you know, it was a big reset for our family. But having said that, looking

3:17 back at it, I don't think I appreciated the struggle at that time. I don't think I, you know, I was never felt, you know, my childhood, I guess, was in a way that I don't think I felt, you know, poor or lacking of kind of support and resources. I think my parents were really good. I think they made the best of, they could. So, you know, they gave me the best they could afford. They sent me to a good school. You know, my wishes as a kid growing up, they fulfilled to the best of their ability now. And, you know, it does shape you, right? It sort of appreciating the fortitude and the kind of focus and diligence of my parents working around the clock to make the next generation better. And that's kind of something that I aspire to with my kids. I've got two young daughters now. I would say their upbringing is better than my upbringing. And I think every subsequent generation, I think everyone hopes that the next generation is just...

4:17 that much more privilege. So, and I think that kind of is what kind of drives me in my career, right? It's like, you know, I want intellectual stimulation, but I want to be able to spend time with my family. I want to provide a good life for my family. So I think the goals are pretty common, right? I think it's appreciating the struggle on how it shapes you for the good time. So unconsciously does really drive a lot of the push and drive that I have to do the best that I can. for myself. It's a common theme I find in people I speak with is they have moved a lot in their childhood and they have been through hardship. It's something I think about a lot and I have two young daughters as well as I want to give them a very comfortable life. Do you think it's necessary to have hardship in life and do you think the degree of hardship correlates with the degree of perseverance and grit you develop later on? I mean, look, like people's lives are relative. The word hardship is a relative concept. You know, I would view many things in my life as a hardship, but in a relative sense, I'm very privileged. But my struggles are different than other people's struggles. I mean, you and I, we're both clinicians. I mean, I would argue being a clinician is a hardship. But to the other

5:47 person, their dream was to become a clinician. And that may not have transpired for many people. They always wanted to be a doctor. They wanted to be a nurse. And for whatever reason, it couldn't happen. So hardship, I think, is a relative concept. Having said that, I do think hardship is a necessary part of one's journey. I do think we're all tested in every way. I think it's unfair to compare yourselves to others, but I think it is a human trait and perhaps a human flaw. You do compare yourselves to friends, peers, and how are they doing? And you may notice, hey, that other person, the grass is greener on the other side, but if you take it a deep down analysis, like, yeah, they might be better off in certain ways, but they may have hardships in a way that you may never even begin to kind of appreciate. So I think we're all kind of in our own journey, in our own ways we're blessed and other ways we're tested. But I think the testing is important.

6:46 Does more hardship lead to more perseverance, more grit? I don't know. I think over the years, I've kind of tried to look at it where I think I want to. I'm not saying that I do a good job at it, but I certainly aspire to appreciate people's achievements. in the relative context of their environment. So if they started out with very humble beginnings, are they going to be the unicorn tech star founder? Maybe, maybe not. But maybe getting a regular job is a fantastic achievement. Maybe getting an undergrad degree is an exceptional achievement. Maybe the first one in their family to achieve that. I think that's a fantastic achievement.

7:32 For other people, the bar maybe is different. you know, being a tenured professor at Harvard is the trap. But if you come from a family of tenured professors, like your, you know, the delta in which you have to achieve is different. So I really do try to view it in terms of like, what were the substrate that you were given? What did you do with it? How far did you achieve? So I think the objective comparison between people I think is kind of unfair. but I do try to look at it. And it does come into the entrepreneurship world too. We'll get into it in a little bit, but comparing different founders, what they had, what they made of it, what indication were they going at? Some founders are very blessed. They don't have to raise money because they've got really wealthy family and friends and others who refinance mortgages, had divorces to keep their things afloat. So I think it's relative, but I do think the perseverance part. is important and it certainly is from the entrepreneurial side of it. And I actually think the perseverance part will get into this as well. I think it's an important part of the EQ of evaluating companies and founders. Can they kind of survive the marathon that this whole journey is, right? Another common theme I find is entrepreneurship is innate. people who are founders were always entrepreneurial

9:03 and they would say this is just how I am, this is how I'm programmed to be. Do you think entrepreneurship is innate and what was your first entrepreneurial venture? Yeah, I think, look, I think entrepreneurship is a is a byproduct of your environment, regardless of what your career path or job path has been. I mean, I think many of us work jobs and kind of at some point reach a point where like, why is my job functioning the way it is? Why am I struggling in this aspect? Or why is this particular procedure failing at 5 %? You know, I think there's certain people are like, yeah, I'm happy with that. And I'm happy with the status quo. And there's nothing wrong with it. I do think perhaps there's a subset that says, hey, ask likes to ask five more questions and be like, why is it inefficient? Why doesn't it work? If you're a clinician, why are certain patients getting more sick than others? If you're in the food industry, why are certain things, why is food more expensive here than other places? So I think entrepreneurship is really a byproduct of the environment that you're in. And I think it forces you to think creatively, being like, look, the status quo has been like this. But if I... you know, take the algorithm and change it upside down, I can do something with it. Like take clinicians, right?

10:27 Like we are very trained to follow algorithms. Like that's what we have been kind of trained to do. We've memorized algorithms, we publish algorithms, we read other people's algorithms. In fact, when we fall outside of the algorithm is when we get slapped on the wrist or get sued or, you know, go up in front of a disciplinary board. But the entrepreneurship world is actually quite the opposite. Like, let's take this algorithm. Let's tear it up. Let's understand why the algorithm, what's the blind spot in the algorithm. And can I insert a medical device, a technology, an algorithm, a therapeutic to kind of solve that delta in that algorithm? And can I make an impact? Can I make money? Can I scale it? Can I improve outcomes?

11:11 So I guess it's not for everyone. but I do think many of us fall onto it by serendipity. I wouldn't have expected to be in the career that I'm in now. It's kind of just a random assemblance of steps and ideas that have happened to get me here. Talk to me about your first entrepreneurial venture. The first one really started out as our own kind of family business. I think my dad took a similar path in his own life where He worked in a particular industry. This happened to be banking for many years. And over many years, realized, hey, I have good bosses. I have bad bosses. I have departments that work really well.

11:57 I have departments that don't work very well. And whether it's a pioneering mindset or a bit of arrogance, perhaps a bit of both, at one point my dad had reached a point like, I can do this job better than my boss. And then I can do this job better than this bank. So actually his first entrepreneurial venture, which became the kind of the focus of our family office, was starting an Islamic bank, because that was a kind of a gap in the market that he identified. He's like, okay, there's other banks out there trying to develop, you know, banking practices in line with sort of Islamic teaching principles. They're not doing a good job at it, or they're kind of on the ball kind of do it. So that was a learning process. Did it go well? In certain ways it did.

12:47 It was kind of, it was the first in Canada. Did it go smoothly? By no means it didn't go smoothly. But I think, you know, that really changed the whole formula for my family and myself kind of taking a back seat in it. And I, and I, and I too kind of had that kind of exposure saying, Hey, I, you know, do a career where I learn the foundational principles, be good at that career. But then at some point, sooner or later, transition to, can I look and contribute in that career at the 30 ,000 perspective? Can I build something on my own? And that's how I kind of started to build my own fund within the family office, trying to change status quo, albeit in a very small way. I don't want to overinflate what we've tried to achieve, but can we do things on our own?

13:37 Can we own a little piece of the pie? for our own and I think that that ownership and that kind of piece is you know it's it's kind of springboarded me into a lot of the other stuff that I do. In some ways we're all born entrepreneurs we hear about children endlessly asking why and it sounds like we educate them out of entrepreneurship in some ways. I'd love for you to comment on that and then if you can go deeper into the thesis of your fund? What are you investing in? What stage? Yeah, no, I think, you know, for many years, I think standard education really does teach you to follow a very predictable path, right? High school, go to undergrad, maybe you do a master's, you do some advanced degree. Maybe you go do an MBA, grad school, PhD, like it's a very linear path and job opportunities kind of follow that. Like if you want X number of dollars, you get an undergrad degree. If you want a little bit more and more responsibilities, you go to a master's degree. I think that was the case maybe 20, 30, 40 years ago. I think the job market and expectation is very, very different now. And, you know, growing up, maybe I asked, you know, those kinds of questions and I was told, no, no, don't think too creatively.

15:04 fall in line because that's the predictable piece. I think, once again, going back to my upbringing, because we were immigrants, because we struggled, I think a lot of the kind of emphasis on the career path was more driven out of insecurity. Like, hey, I want you to have a stable career, so pick a stable path. In our culture, it's often a doctor, it's a lawyer, it's an engineer, it's an accountant. These are predictable, stable paths. Doing anything deviating from that is kind of seemed as too risky, unpredictable. you know, how are you going to, so it's really, you know, not for many nefarious intent, but it's, it's, I think, a byproduct or the crush that you develop from, you know, insecurity of financial instability that were kind of taught to, you know, don't ask too many questions, put your head down, study, get good grades, get good marks, and like move on to the next thing. And I think it's been a big career shift, even when I did it. It's been about six, seven years now. In the beginning, a lot of my colleagues who are positions or in sort of the life science PhDs, they're all like, hey, what's going on? Is everything okay at home? Why did you study so hard and kind of leave that all aside to do what you're doing now? I don't think they understood. Now, I think it's much more common for folks to have a couple of different career changes in their life. It's very rare now that you find people I've worked at one job nine to five for 55 years. So it's

16:36 changing. And then going to your second question on kind of the portfolio construction. So I split my time across a few different funds. One is kind of private equity family office. The other is kind of an organization called Toronto Innovation Acceleration Partners. that works with academic institutions and spinning out IP from those institutions. And then I advise a few kind of traditional venture funds that you're kind of bread and butter ones. They're all in sort of the healthcare space that is kind of my, I don't know a lot of things, but healthcare is one where I think I can at least take a crack at it just with my background.

17:18 With all those funds, it's typically, well, I run the gamut. I think a good chunk of my time is spent on very early stage companies. I would say some of them aren't even companies, they're ideas. But part of my job, especially at TIAP, is to take IP. So forget revenue, forget regulatory reimbursements. Someone has a molecule, someone has an algorithm, a device, a prototype, and they're like, what can I do with this? And it's my job to say, okay, does this make sense? would a doctor, nurse, physiotherapist use this? Would they pay for it? Is this reimbursable? Is this going to be regulated? Who's the right CEO to bring into the fold? Are investors going to get interested in it? So it's really company creation from its foundation. It's very challenging. There's no formula to it, once again. No company is like the next company. It's really kind of the creative part to it. So I like that part of it because I think building companies gives you an appreciation for existing companies, understanding how to create companies. I think when you look at well -run companies, you can dissect them a little bit better and you can say, hey, I know how to build companies like you. And these were the 12 steps I took. Did you take these 12 steps?

18:38 Did you take nine steps? Or did you take 15 steps? Did you do three more things I never thought you should do? So I like to spend my time in like the very early sandbox thing because it's intellectually stimulating, it's incredibly difficult, but I think it gives you good didactic knowledge on how to build companies. And then the rest of my time, I'd say 50 % of my time, the remainder of 50 is probably spent in sort of your typical seed series A kind of things. I think for me, When I look at venture funding, I like to spend time in companies where I think I can add value intellectually. If there's a company that's kind of gone public or they've raised 300 million bucks, they're much smarter than me. Not that I'm very smart, but I feel my value intellectually just declines with time. And I'm happy to do that. If I'm of no value to a company, I think I've done my job because they have much better, brighter, smarter... you know, bigger pockets of checks to kind of chase after. That's why I like the early stage, because, you know, a founder is like, Hey, like, should I build this for the OR or should it be built for the emergency department? And that kind of, you know, objective and creative exercises is what really kind of simulates me. It raised 300 million bucks. We're not in, we're not asking those questions, right?

19:57 We have a fully different set of problems. So, um, yeah, so, so that's a long answer to your question, but yeah, definitely spend, uh, you know, I would say Series A and before is kind of my expertise. And really getting a company lined up for Series A financing, just getting the house in order to make sure that they're going to be financing Series A. Because I really view Series A as like the real first grown up inflection point for a company. It certainly isn't the end of the story. But for most companies, I think that is like a major fork in the road. Can you make it to that point? Because that really signals that people are really bought into your idea, right? And now we're buying it on mass.

20:43 It sounds like you're investing from pre -C to series A. And yeah, the evidence backs your experience as well. There's a 12 % chance of success or of an IPO post -series A, which is a considerable percent. I find diligence in the founding team specifically Diligencing how committed they are to this idea incredibly difficult at the pre -seed stage. Talk to me about some patterns you recognize in successful and unsuccessful founders. And then what is your framework or what is your process in diligencing founders specifically at the pre -seed stage? Yeah, no, it's a good question. I wouldn't say I've cracked the code on it because I have made some good bets and I've made some terrible bets and I think frankly, at some point it's just a temporal thing. Like you're going to see, you're going to see your answer over time. Time is going to be the only thing that's going to actually tell you what's right or wrong. But there are certain things that I think, you know, patterns, you know, once again, if Rashad, if we wanted to kind of talk on that, you know, I think technical expertise is the starting point. I don't think technical expertise is the, you know, wow, differentiating factor and the novelty. Like you are going to meet fantastic software developers, engineers, physicians, clinicians, you know, thoracic surgeons.

22:11 Technical expertise, I think is what gets you in the door. Cause that gives you subject domain expertise to say, Hey, I am an expert in this space. And I am saying that this is a problem and this is a problem that I face. And it's a problem big enough that myself or my hospital would want to buy it. Therefore I want to build a company. So technical expertise is kind of just check. Okay, great. you can come to the table and have a conversation. So versus many founders, I think that's where they begin and they stop. They say, because I'm the technical expert, this is the beginning and end of the story. At my point, I think technical expertise is just the beginning. Now what needs to be added on top of that, right? I think that's the differentiator between okay teams and great teams is when they realize where their competency ends and the Delta where they need to fill in. So they are really good at one particular specialty. Can they understand the business? Can they understand regulatory?

23:09 Can they understand reimbursement? Humans, factors, engineering, software development. Very rarely are you going to meet a person who's going to be the sort of da Vinci individual who can kind of be the painter, the sculptor, the mathematician, the astronomer. Some doctors, we think we are because we're God's gift to the world, but it's very, very rare that one person has all these attributes. So I think it's having the insight of your limitations and being candid and honest with it. And often for doctors, it's easy to pick on. They don't typically make great business decisions because why should they? They have never really been trained to be good businessmen.

23:54 They've been trained to be good clinicians. I'm expecting you to do something that is completely contrary to what you innately kind of been trained to. So I think it's having insight of where your limitations are. And I think most importantly is having good emotional intelligence, how to regulate yourself in rooms and conversations, keeping a temper mannerism when things get heated, when things become difficult as they will. And I think once again, that EQ, being able to engage with how do you interact with a clinician versus an investor versus a patient advocacy group that you would be dealing with versus a hospital and strategic, you cannot be the same person to these people. So it's having the EQ to navigate that.

24:44 Because in the beginning, that's all you have. I don't know where the product is going to be because it's pre -seed. It's really the team and their potential ability to adapt to the adversity that they're going to face. That is a big chunk of the precede diligence. But the technology will change, it'll come, it'll fail, you know, but, you know, I think that's kind of how I approach it. So team is number one. Sorry, Yandhi. Do you think you need subject matter expertise? to be a founder and a healthcare startup? Or is this a field where outsiders can come in and that naivety is almost superpower? Yeah, I don't think there's, I mean, it might sound like a non -committal answer. I don't think there is a right answer to this. I do feel at the end of the day, you need both on the team. Now, whether that's the founder or the advisory board or the chief medical officer or the CEO, like, does the CEO need to be everything? No, by no means.

25:53 If I had to take a pick for the CEO, would I want them technical competence or like more worldly knowledge? I would say worldly knowledge. Because you can always fill in technical competency specifically. But having someone who can fill in that sort of 30 ,000 foot perspective, that strategic vision, the, you know, aligning stakeholders, it's not a competency that's kind of taught as a by -part of a certification or degree, you know what I mean? Like that's not a, you know, but if you're a thoracic, if I need a thoracic surgeon, well, who's done residency and fellowship in that space, they should be good enough to give you an answer in that space, right? Like I know exactly where to go to. But, you know, I do think, I do think we kind of, in healthcare, we do have a bit of a clique mentality where we will value the opinion of another clinician. If you're talking doctor to doctor, it really is going to be like, okay, you're a colleague, you've kind of been in the trenches with me, I'm going to value your opinion more over maybe someone who doesn't understand healthcare, comes in with a naive perspective and is very bright -eyed and doe -eyed and going to change the world but doesn't understand the realities. So you need a bit of both because I think we can also, clinicians can get stagnated in our ways. And we need that gentle nudge. We need the gentle nudge from folks from other industries to be like, hey, let's incorporate AI. Let's

27:24 not be too scared of it. In banking, we're doing it. In defense, we're doing it. In insurance, we're doing it. Other risk adverse industries, we're much further ahead in incorporating AI. Why can't you do this in health care? What is so inherently difficult and different? It's a different problem, but incorporate it. Yeah, you need both, I think. I don't think it's one or the other. If you had to pick between a founder who is exceptionally charming, but with average aptitude, versus a founder who has exceptional aptitude, 12 .1 % in their field, but average charm, who would you pick? Yeah, I would pick the charm piece. And I would say because at least in my opinion. I think aptitude is something that can be learned over time. I think charm is perhaps more innate. You know, some people have it or you don't. I think charm is much more difficult to coach into someone. And once again, technical aptitude, I hate to say it, but technical aptitude can be outsourced. If I have a specific problem, I need to build a medical device that has such and such dimensions, I can hire technical aptitude. If I need a neurosurgeon who also has a histopathology background, I can find that someone. But charm, and really charm, I think,

28:54 I mean, when I think of charm, I really think once again of EQ is not just about being nice, but someone who can rally different stakeholders. Understand the needs of different stakeholders. Be empathetic, right? Understand what does the scientific founding team mean? What does the hospital need? What does a large med device strategic need? And being able to kind of connect those bridges. That's the charming piece. That's the creative part where there is no formula. There is no formal degree to do that. Now you can learn that over time. And I think people do because they've had two or three startups. They've failed a few times. They've struggled a bit. you can perhaps, maybe it's not innate, but you can get better at it. But definitely I think charm is what it is. Because ultimately it is your relationship.

29:42 It is your personality that is going to kind of carry you through the tough times. And with that charm, you can hire the right people with the technical aptitude to compensate for your inherent flaws or limitations. But you can't hire charm. I don't think so. This is something I've changed my mind on, and I hesitate, but I agree. Charm is more important than aptitude. And we want to think that charm has no influence on your success, but I think that couldn't be further from the truth. If you could go back in time 10 years and talk to your 25 -year -old self. What would you say to him? And would you change anything you've done in the past 10 years if you could change one decision without it affecting other decisions? Yeah, that's a tough question.

30:42 I think I would tell myself to, once again, push the boundary a little bit more. I, too, kind of fell into the pattern of just sequentially focus on the standard, the status quo, focus, get the degree, do as well in degree as possible. I didn't think creatively. I had no concept of thinking creatively, to be honest. It was just very singularly focused. While I enjoyed that time, I do think everyone needs some baseline technical competency in whatever field of thing that you're doing. I don't think no education is the answer to the world's problems. some foundational education and whatever it may be, I think you need some grounding. But I think pushing the limits, I do it now more often because I think my career and space is more forgiving and allows me to do that. But before really didn't, it was just very linearly focused and could it have changed the outcome? Could I have been better or more successful or more impactful in my career by now? probably, maybe, or maybe it was just a function of time. I don't know, I don't have that crystal ball, but I think certainly the career that I have now took a while for me to get comfortable in, even just speaking to people.

32:10 As clinicians, yeah, we speak to doctors, we speak to patients, but going into a boardroom with people, interrogating you, criticizing you, getting up there, making that pitch speech, dealing with confrontation. happens a lot in the business world. In the beginning would really stress me out, would really cause a lot of angst and anxiety. Now I think I, I don't think I'm perfect, but you know, it doesn't, it doesn't bother me anymore. Cause I know it's kind of part of the course. It's like, I face it like any other problem that kind of comes towards me. So, so yeah, I think if I had done it earlier, I would be better than I am today. And ultimately you just want to be better. continuously striving to be better in your career, right? So more time in practice would have made me better than I am today. One of the biggest learnings I have from my startup is to have a structured, slow process for hiring and a fast process for firing. Do you agree with that? And does that resonate with your experience?

33:18 It goes both ways, right? I think hiring is a, like in this whole business, I think the hardest part is the people. The technology, the algorithms, the pipettes into the receptors and molecule, that stuff is hard, but it's not as hard as the people. People are infinitely more complex. Figuring out a team that jives with each other, that works together, that supports each other, chemistry is aligning just from an interpersonal piece, that's really important. and one or two toxic kind of relationships, one or two toxic interactions really do derail, you know, a company. Or not even derail, it just doesn't, you know, we don't progress to the level that the organization can.

34:05 Having said that, you know, I do think there is merit, sure, but if you know, if you don't fit, let's fire you quickly. That's the easiest solution. Having said that, you know, we're all kind of learning. We're all in that process. I'm sure if I went to another organization, people are like, hey, this guy doesn't know 10 of these things. He's not useful in this world. Let's get rid of him. He's not effective. But I've been given many chances over my life. I've been given many opportunities. And I've had patient people put up with my mistakes or inadequacies. If no one gave me a chance, I'd be unemployed many years after. So I do think there's a balance of, OK, Like the limitations that that person has, is that a fundamental flaw to their character or their EQ or they lack charm? Or is this something that is solvable? Is this a solvable problem?

34:59 So if there's, once again, aptitude or competencies that they don't know today, let's say they don't know Excel today. Let's say they don't know how to use chat GPT today. Is this something that they can be taught over time? Yes or no. If you can teach it. fine, are you willing to invest in that person over three months, five months, six months a year? But they're still on the ball. They still show up. They're still working hard all day long. So I think there is a balance. I think, yes, getting rid of folks that don't fit the culture or the chemistry, I think that is unteachable. I think we're, you know, if you're just, if you don't work, nothing that varies.

35:43 If you just don't work together, you don't work together. But I think competencies can be, you know, alleviated and kind of ironed out over time. So we do have to make an investment in people, right? You're not going to get fully baked, you know, individuals at a time. But, but yeah, I think there is a cultural difference, I think, in America and the US, I think, sorry, Canada and the US. I think Americans are, they fail fast and even employment is kind of like that too. And in Canada, we know maybe we're a little bit too nice and hold on to folks that maybe aren't the right fit. So, which can be, you know, stifling innovation too. So, it goes both ways. Yeah, scaling a service -based business, a people -based business is exponentially harder than scaling software, which is why I find VCs and investors and both me and you, we tend to deviate more towards the software businesses.

36:48 Talk to me about your contrarian opinion in healthcare investing. Mine is that I think AI should replace physicians, and I speak to saying that as a physician myself. The goal of healthcare should be to provide excellent quality healthcare everywhere. The Harvard Mayo Clinic healthcare should be ubiquitous and cheaply accessible. You cannot do that if humans are involved, especially humans who need 10 years of schooling and $300 ,000 in their education. The only way to do that is a software and AI which completely replaces us. So that's my contrarian opinion and I am working to make that happen. It makes my colleagues upset at times. What is your contrarian opinion in healthcare?

37:35 Yeah, no, it's an interesting opinion. And you know, in your opinion, I think like, I don't think, I don't feel we'll get replaced. But I do think the nature of our job will significantly change. And I think what's expected of us will significantly change, as it does every year in medical school training. I mean, you know, even med school training. I know schools that are beginning to teach financial literacy, they're beginning to teach software development, because it's almost becoming an expectation like, 10, 15 years ago, teaching research methods in medical school was like a groundbreaking idea. Now the expectation of physicians to also be researchers is kind of like, you should be. You should be contributing. You should be a deliverer of medicine and you should be the one doing the research too. So it's different. So I think my view, ironically, I don't like technology. that's too innovative.

38:35 I don't like to invest in technology that is breaking the sand barrier. And maybe that's my conservative approach. But when I come back to making business decisions, making recurrent returns in a fund, I in fact don't want to invest. Ironically, even though I invest in innovation, I don't like innovative ideas that are too innovative. Because I know innovative ideas are going to take longer. They're going to be the ones that have to fight and create the codes with reimbursement for the first time. They'll be the ones having to negotiate with the FDA and justifying the whole class of their technology. And yeah, it does make for good headlines. Maybe you can get a little blurb in time. Maybe you can get a little blurb on BetaKit about this new tool that is revolutionizing health care. And we do need some of those kind of ideas. People often take Elon, whether you like him or not, but he's got some crazy ideas, but some of them are really interesting ideas.

39:35 Now are they all going to work? No, many of them are going to fail. But some of them, yeah, like, I mean, I think he has, you know, commoditized electric cars in the last 10, 15 years. I think the concept of plugging a car in 20 years ago was just, you know, something you'd see on TV, but now, you know, it's growing slowly. So if I take it to healthcare, I rather invest in companies that are solving important issues. It has to be an important issue. But it might not be the one where it's transplanting a brain from one person to the next, you know, doing, you know, things in space. I like things that are boring, unsexy problems, because day to day life is, you know, repetitive, it can be mundane. But these are the problems you face every day, right?

40:20 Like, you know, how do I schedule, you know, shifts in the OR effectively? How do I make sure that the the x -ray at one hospital can be efficiently transferred over to the other hospital? How do I make sure that I don't have a data breach? How do I make sure that if I have to sterilize a surgical tool, how do I do that in a cost -effective way? I'm not spending too much time. Many of these things aren't going to make headlines, but these are day -to -day problems if you're living in the clinical world that you're facing. and if someone solves it for you, yeah, it's a small piece, but it saved you $10 here, it saved infection rates, it saved potential morbidity or mortality in a patient. And sort of in the venture fund land, I can quantify the value proposition of something boring and mundane and predictable, because I know what that means. If I'm kind of trying to be like Elon and really changing the face of the earth, And maybe I'm not ambitious enough, and maybe there's other people out there who can better tackle. You need the Elans, but you need the boring folks like Zohaib to kind of tackle the recurrent problems. Because as a fund, I know that, hey, if I get a two or three or four X return on five boring problems, I'd rather have five or six decent returns on five boring problems than one fantastic return on the next thing launching to Mars. Um, and that

41:52 kind of leads into portfolio composition as well, right? You know, do you want to have a portfolio that's comprised of 10 potential unicorns or do you want to say to your LPs like, you know, 75 % of the time I'm going to return you two or three X on, on your money. Or do you want to say, Hey, one in 20 of my bets is going to give you a 20 X or a hundred X. Um, that's the, that's the portfolio composition angle you have to kind of, you know, way out. And you'll attract different investors, right? Venture investing is typically a risky asset class. I think people treat it as such. But I do think there's a way to improve incrementally your returns across.

42:36 And I think in a portfolio, if you've got 20 companies, maybe 10 % can be ultra for risky. And, you know, other things are a little bit more stable, more predictable. Some are early stage bets, some are later stage bets. So, you know, I kind of think it ties back into my kind of portfolio composition angle as well, right? You know, I like safer bets. And I do think you need technical, once again, technical expertise to be able to vet, you know, some of the unsexy kind of ideas. You need deep market expertise to know. you know, what's the price point people are willing to pay for a simple tool? Are nurses going to, you know, use this at the end of the day? Are they going to like use it? We've talked about patterns in founders. What are some patterns you've seen in successful and unsuccessful fund managers or VCs over your time? Yeah, I think, you know, it's and I would break it down in two ways. One is their investing mindset. And I would bring like that's one topic. And then the other topic would be kind of their fundraising perspective as well, how they feel about fundraising is like the startups, the fund managers also have to fundraise, right? So, you know, I think there's a degree of empathy that the funds kind of established because they also go through a fundraising piece.

44:01 I think in terms of investing too, I think, you know, I think if you don't have the subject matter expertise, it's very easy to chase the new shiny, glamorous thing. I think sometimes venture funds, once again, going after the thing that Elon Musk is investing in. I'm not against Elon Musk and his investment thesis by no means. I keep picking on him. But I think going after the new shiny thing and where healthcare is going to go, healthcare doesn't move in that rate. Healthcare is a very slow moving gradual piece. It doesn't like to change. If you push the boundaries too much, you're not going to see the returns in the timeline that's going to be conducive to your fund. If you've got a 10 -year lifecycle, if you're pushing the envelope, if you're breaking the sound barrier, you're not going to see that thing built, scaled, and returned to you within 10 years. And that's going to affect your ultimate returns. So I think that's why you got to go, once again, for fund managers, figure out and I'm biased because I think this way I could be wrong, figure out the boring but problem, nagging problems, boring nagging problems that healthcare has that A, they feel it and B, they have a budget to support.

45:23 Many times you and I see technologies that are really, really cool, but do the hospitals have the budget and the support to actually support that kind of technology? Because otherwise you're going uphill, right? Yeah, it can be a great technology. Yes, I can use my smartphone to detect cancer, detect murmurs, detect signs of depression, but is there going to be reimbursement and payment for it? I think that's the tricky part. I think the other piece that I think venture funds get too caught up on, and partly because it's kind of market size on certain products. I've seen so many times where companies have overlooked because they don't see the billion dollar market of that problem. I view that as a very myopic way of thinking. You know, no company or very few companies reach that billion dollar market capture. You know, you don't. I mean, most companies are sold at, you know, if you go well, you get 100, 200, $300 million exit. Very few companies are going to go up to the billion dollar size.

46:28 you know, and I know when you're evaluating companies, you want to have a standard process to evaluate it. You want to make sure there's enough meat on the bone, but insisting, you know, that the company has got to hit a billion dollar market size, I think is like, what's the difference between a $2 billion market size and $100 billion market size? Like, really, like, I see pitch decks proposing such astronomical figures on their little widget and gap. And they have like $2 ,000 a month, they recurring revenue, and they're pitching a pipe dream of like, a trillion dollars. Let's get down to basics. Let's do some bottom -up calculations. How many hospitals do you have? How many hospitals can you tangibly get in the next six to 12 months? How much money are you going to get from each hospital? Is it going to be $1 ,000? Is it going to be $100 ,000?

47:13 Is it going to be $100 million? And how many users are you going to be able to get? And let's work with that. And what can you do meaningfully with three to five years and maybe a couple million dollars of capital? And is that, you know, with that, you've done a bit of a study, a pilot, if you could do that, and what can you return? So that's the, I think, myopic thinking and funding. They're, they're pushed to get returns. And then they're also getting pushing themselves to find the new shiny thing in hopes that LPs are going to gravitate like, oh, we've got the coolest deal. Well, we got into this very interesting deal. Returns are the only thing that matter.

47:58 Yeah. How much money will you give me and how much money will I return? Everything else is noise and signals, either positive or negative. It's not a red flag, but it's almost a yellow flag when a founder tells me if I get 10 % of this market, this is how big my company will be. And I think this is one piece of advice to founders. Do a bottoms up approach. Do not do a top down approach for market sizing. You're almost setting yourself up for failure because I have basically never seen a company hit their target forecast. It just never happens. So investors on this side, I think we become jaded. When you say that, I think it actually lowers your credibility or lowers your competency, even though you're very competent. Give me that bottoms up calculation.

48:48 And that's something I can actually hold you to. and I can help you assist and say, hey, I've got five hospitals, I need to get to 10 more. That's a tangible goal in the year that you as a founder and me as a fund can help you achieve. I can introduce it to five hospitals, 10 hospitals. I can't get 10 % of the market share for you. We got to take baby steps first. So I think investors are just kind of... jaded by that altogether. No one's impressed. What's one thing you've changed your mind on in the past 12 months? Yeah, I think historically, I would really expect companies to have a really long runway of funding. You know, this concept of like, you know, you need 18, 24, 36 months of funding. You know, venture funds typically like to see that. You know, venture funds are an interesting base because they expect companies to have the traction and scale of like a series D company. And they want the valuation of like a pre -seed company, right? They want like the world and want to give you nothing in return for it. You know, yes, in an ideal world, you have all your ducks in a row and you're served things on a, on a silver platter. I think that's what venture funding typically is actually expecting, this is the disconnect between founders and venture

50:19 funds. Venture funds are often expecting the world, are all the problems to be solved and all they're really thinking to do is I'm gonna inject some capital and it's gonna grow. Sometimes that is what happens and a couple million or 10 million bucks solves the problem. But that's assuming that money is the only problem that you have. And very few companies, particularly healthcare, money is just the tip of the iceberg of of what the company needs. So yes, I can tell them to have 18 months of runway or 19 months, but without that MVP, without that pilot, without that data, without US data, they're not going to get the traction to kind of get that of them.

51:01 So yeah, I'm not expecting that they can survive with one or two months of runway, but I think as fund managers, you have to be a little bit more realistic, be a little bit more empathetic on you are going to have to roll up your sleeves. with alongside the company and, you know, actually contribute and getting them to that end point. It's not going to be a passive exercise where you expect them to just kind of, you know, solve these things in five years. Now you're going to get lovely exits. Like you also have to be in the trenches with them. And that's when I, when I speak to founders, I think that's what founders should be vetting. Founders should be vetting the funds that are investing in them. Like what are you going to provide beyond capital into, into my company? And if they can't do that, then yes, the money's great. But I think you are setting yourselves up for failure if like, money's the only thing you're getting from your investors. Because then you still have to find that Rolodex, that connection, the chief operating officer is gonna help you build that company, right? So it's, yeah, I think it's just investors being a little bit more realistic in what they expect of the others. And especially the last two, three years has not been kind to the market in general, especially companies. Many companies have gone under. And I think some of that needed to happen. Some of it could have been prevented if supported in the right way. Thank you, sir.

52:29 This was amazing. Is there anything else you want to share with our audience? No, I think this is good. Thank you for having me. I really appreciate it.