A Conversation About Startups

"My role is to ensure entrepreneurs understand what’s needed to build a company and maximize their opportunity to succeed. The commercial world is a mystery to people who spend their lives in a lab or hospital – I can demystify it."

Stephanie Marrus, the Managing Director, Entrepreneurship

Sean Karlin, the brand and communications leader at UCSF Innovation Ventures, sat down with Stephanie Marrus, the Managing Director, Entrepreneurship, and Senior Lecturer at the University of California, San Francisco (UCSF). In her twelve-year tenure, following a career in the private sector, Marrus has built a robust entrepreneurial ecosystem that revolves around education. In response to the COVID-19 pandemic which shut down in-person classes, she pivoted her popular UCSF Startup 101 class to an online course for professionals. This 10-week startup business course with guest lectures by Silicon Valley practitioners is embedded in the UCSF Innovation Ventures department, which supports the transition of UCSF healthcare technologies out of the lab and into the marketplace.

We sat down with Stephanie to ask her about the importance of having an entrepreneurial mindset in a scientific and medical academic system like UCSF. Here are the highlights of our conversation:

Sean Karlin: Tell me about UCSF Entrepreneurship and how your program fits into Innovation Ventures’ work.

Stephanie Marrus: Innovation Ventures is an outward-facing organization focused on Industry, either by facilitating the creation of startup companies, licensing technology, or developing a research alliance with a Biopharma company. My part is to help entrepreneurially minded people learn the business requirements of startups. Scientists believe that hot science is all that’s required to start a company but that’s only the beginning. You need much more to succeed – an understanding of the market, a credible team, a business plan, and investors who want to fund. Most scientists and physicians don’t know that business considerations drive investment in our sector. We open their eyes.

SK: Before you came to UCSF, what was your experience with entrepreneurship?

SM: I’m trained in business and my background is in the private sector, where I held management roles in public and private companies. These companies were once startups in tech and biotech although they were much farther along than our startups. Most had initial traction but lost their way, making serious mistakes such as not understanding how their market had changed or what customer needs were. They made poorly considered investments such as long real estate leases and misguided intellectual property strategies.  I learned a lot as a member of these management teams, lessons I’ve carried with me.  Now at UCSF, where we are creating nascent companies, the opportunity is different.  How can we translate the science or technology out of academia into the commercial world? I work with accomplished scientists and clinicians who have deep expertise but are not exposed to the business world. Helping them understand how their idea might someday become a viable company has been both exciting and a challenge.

SK: What were you hoping to achieve through teaching entrepreneurship at UCSF?

SM: I get great energy from guiding our community to start companies that may result in changing the trajectory of human health. The potential impact is great. My role is to ensure entrepreneurs understand what’s needed to build a company and maximize their opportunity to succeed. We need to open their eyes to the roadmap, which is through business. The commercial world is a mystery to people who spend their lives in a lab or hospital – I can demystify it.

UCSF is top-tier in science and medicine. When I first arrived here, I felt we should be able to spin out more companies than we were, and that by building an Entrepreneurship Program we could provide the education, events, and resources that brought like-minded people together, not just from UCSF, but from Silicon Valley too. This offers our people a better sense of what’s involved in starting a company and helps them build an essential business network. We achieved that. We created a “collider” where people met cofounders, investors, mentors, built networks, and learned from workshops and courses.

SK: How did the pandemic change your course?

SM: Covid destroyed our momentum. We had been teaching a ‘Startup 101’ course that exposed students to key topics required to launch a life sciences/healthcare startup. The course was taught on Campus and gave rise to some successful startups. It followed the Silicon Valley training model. You recruited a team to work on your idea, were assigned a mentor, developed a business plan, and presented it at a ‘pitch night,’ with investors judging the pitches and providing feedback. We couldn't do any of that with the Covid lockdown. The choice was to do nothing while we waited for COVID-19 to end or to create a model for the lockdown environment. My entrepreneurial spirit took over and I came up with the idea to create a live, online course.   

Next, I did market research to test the concept. I spoke with people in my global network and asked them, “What if we had an online entrepreneurship class that taught startup business basics for life sciences/healthcare professionals, expanded the audience from UCSF to everyone in the world and brought them the expertise of Silicon Valley practitioners”? The answer I kept hearing was ‘yes.’ In September 2020, we experimentally launched the course and from the very beginning, it was a great success. In the first cohort, we enrolled 112 professional participants from 13 countries, and five cohorts later, we have over 500 alumni from 37 countries and 6 continents.

SK: As far as course content is concerned, how would you differentiate your ‘Startup 101” from the Global Entrepreneurship course? What would you say is the big difference?

SM: Well, the key topics didn’t change. Opportunity assessment. Business models. IP. FDA, investors, etc. But the audience and mode of delivery are different. Startup 101 was targeted at UCSF PhD students and postdocs. Their level of experience is limited to the lab.  Smart and motivated but naïve about business. The Global Class is targeted to a diverse set of professionals. They are entrepreneurs, pharmaceutical executives, tech transfer managers, ecosystem directors, academics, practicing physicians, investors, and others. They have a broader experience base but are still fairly uninformed about how to start a life sciences company.

Another difference is that we moved from an in-person to an online mode of delivery, creating a completely different dynamic. We all have gotten accustomed to virtual sessions but in 2020 no one had done it. We broke new ground by kicking off our course that September.  It was challenging, not only was the audience global but we couldn’t interact with them in person. I used to pace the room in Mission Hall where I taught, getting close to different students and looking into their eyes. Now we had only a screen of boxes to relate to, and to make it worse, a number of them had their cameras turned off. It’s a different relationship than in person and it took a little while to get used to. But at this point after 4 years of practice, online is the new norm. We’re comfortable with the different types of interaction and find the impact of global reach significant. Where else can you reach professionals in Singapore, in the Netherlands, and Argentina all on one platform?  I’m struck by how similar we are, despite our different cultures and geographies.

One night 6 of us stayed after class to chat, with people from Europe, Australia, and the US on the call.  We were all entrepreneurs and that was our bond. We thought alike although we’d never before chatted. We had the same issues. It was pretty revealing. 

The entrepreneurial culture is what makes Silicon Valley such a successful hub. It's different than the culture in almost every other place in the world. Through this class, we've been able to get people to understand what it's like to be in the Valley, viscerally. So if you ask about differentiating the two courses, I believe we are the only live, virtual, worldwide, open entrepreneurship class for life sciences and healthcare.

SK: You mentioned bringing the Silicon Valley culture to a global audience. What is unique about Silicon Valley that you don't find in France, Ukraine, or Australia? Or some of the other places I know you've experienced?

SM: We have a different mindset in Silicon Valley. We are open and collaborative, unlike many other cultures that believe they must be secretive to protect their ideas. Failure isn’t a social disaster; it’s seen as an opportunity to learn, encouraging creativity and risk-taking. We move fast and are flexible when we encounter barriers, then we test out a different approach. Investors are willing to take bets on new technologies if the right team is in place. And we have great universities innovating and spinning out companies.

Another thing, we can swiftly pivot. In fact, it happens all the time in the Valley. Something changes and it's no longer viable to stay on the path you’ve set. So, you figure out another plan and execute on that. We also move fast and that's something that's very difficult for people outside Silicon Valley – and for academics – to understand. Imagine, you’re using other people's money to try and hit a technological milestone, but there are competitors working on similar projects, and your funding is finite. You must stay ahead. 

There’s a "grants" culture in many places. Grants are a great way to start out but if you live off them for years, you can lose sight that you’re trying to build a commercial company.  You lose focus, the discipline of timelines, and setting a commercial standard. Our companies may start with a government grant or two but soon raise private capital to be able to move faster.

And we have a long history of entrepreneurship that has created a cadre of experienced executives who will mentor new entrepreneurs. Mentorship is critical for startup success and we have a plethora of serial entrepreneurs and investors who want to help. I’m always wowed by the quality of mentors who join my program to pay it forward.

SK: What do the students of entrepreneurship value most from your course?

SM: Learning that success is defined by business considerations, not just cool science. Uniquely in our industry, the user isn’t the decision maker or payer. This is a tough concept to get across. It doesn’t much matter if doctors love it or patients love it, if you can't get insurers or hospitals to pay you don't have a business. That’s a shock to many students.

They value understanding the importance of networking. Most scientists are by nature introverts, happy to stay in the lab doing experiments. But the world doesn’t work that way.  Things happen through a network of relationships. The network is where you go to find a team member, a cofounder, a corporate partner, an investor, a consultant, or a job. It's the network that supplies you with what you need. We model this in our global class, giving them networking opportunities with their cohort.

SK: What do you miss about the in-person classes?

SM: We see an incredible diversity of professional students in the global class who have different career paths, geographies, cultures, and sophistication. That makes for a really rich class. So that's been a tremendous benefit of doing a class online – having this global reach. But I miss the student teams that we had at UCSF when classes were in person. We created a mini startup laboratory, requiring students to organize into teams around an idea, assigning them a mentor and following their progress over ten weeks, ending with an investor pitch. That’s the format for a traditional Silicon Valley course and it gives people the experience of what it might be like to launch a startup. I miss that dynamic, but I wouldn’t want to give up the impact of our current global reach. I wish I could do both!

SK: What's your best advice for a budding entrepreneur?

SM: Don't fall in love with your technology, it alone isn’t enough. Understand the importance of business or you won’t have a viable company. There are decisions that you will have to make early on that have great consequences down the road, like ensuring you own the intellectual property, or structuring for the optimal clinical path, or being attractive for insurance reimbursement. If you don't understand the choices you're making now, and how they will impact you downstream, you're going to miss out on opportunities, and you might put your company at risk.

SK: What impressed you most about the students you taught in the last few cohorts?

SM: Many things. We have students from distant time zones, who attend the class live at 2 a.m. because they just don't want to miss the opportunity to ask questions. They know everything is recorded but still want to be there in person. One cohort had a dedicated Irishman who never missed class; another was an ecosystem director in Hong Kong who took a nap at 11 pm her time and came to class at 1 am in Hong Kong. I'm impressed by their dedication.

We’ve really built a community. I learned this from my students, who informed me that this is more than a class. We have built an interactive community that goes way beyond the lectures. I’m impressed by how they perceived the value we created without my labeling it.

They are using the course to explore doing something completely different. They may have an academic teaching job and be thinking about spinning out a company, or they may be considering leaving a corporate job.  We have one student from Myanmar who escaped the political chaos, still runs two companies there remotely, and is figuring out his next steps.   

SK: You co-authored an article in Nature. Tell me about the article and what were you trying to communicate.

SM: Let me explain the background for our thesis. There's a national program run by the National Science Foundation (NSF) and the National Institute of Health (NIH) called ‘I-Corps,’ which means Innovation Corps, to help university scientists and students learn entrepreneurial skills that enable them to take their research beyond the laboratory and discover its commercial potential. I Corps started at the NSF in 2012 and has been very successful, adopted by 1,000 universities around the United States. I piloted the life sciences version of I-Corps at UCSF in 2013 which has been adopted by NIH. So back to your question. My co-author, John Blaho from City University New York, and I asked what happens to the top teams after the 10-week program. As on any bell curve, some teams will give up, most will be in a middle ground and there will be a few outstanding teams. Those of us who have taught in the I Corps program, as John and I have, recognize those outstanding teams. Shouldn’t we create an accelerator program to work with the very top tier of these teams and put them through additional training that gets them closer to being a commercial entity? That is the thesis of our Nature paper. We were pleased to see NSF has recently decided to pilot an accelerator, a validation of our thesis.

SK: With the NSF adopting the same sort of platform that you recommend, what do you think the outcome is going to be in say five or 10 years from now? How do you see the landscape changing?

SM: Data shows that companies who have been in accelerators do better. We’ll have curated new technologies from I-Corps that may be getting overlooked and increase our startup productivity. They should be more able to raise investment with a viable business plan. In 5-10 years, some number of them will hopefully be winners.

SK: What is the dropout rate of an idea trying to get to market? What percentage actually end up succeeding?

SM: Failure rates are generally cited as 90 to 95 percent. The long and complex road in life sciences/healthcare puts us at the high end of this statistic. So when I see tech transfer offices arguing over the last .5% of equity for a license, holding up company creation when we know most companies will fail, I marvel at the lack of a big-picture strategy. We should do everything we can to facilitate startups by making it easy for entrepreneurs to license IP and get started.

SK: Would you say the high failure rate is true about all businesses or do you find that to be more so in life sciences?

SM: The thing about life sciences is that treatments look very promising in rats. Great.  We’ve solved cancer in mice thousands of times. But mice aren’t people and don’t approximate human biology. As you progress through clinical trials, Phase 1, phase 2 phase 3… there are dropouts at every stage. Then, even if you get approval, you may not have a commercial strategy that works. If we were tech and something doesn’t work, you tell the engineers to revise and try again. You can't do that in life sciences. But you know, if you have a winner – like some of these new weight-loss drugs – it's worth billions of dollars. So thankfully there are companies that still see an economic reason to play in this extremely complex industry. We have to be certain not to destroy the economy or we won’t have new drugs.

SK: That weight loss drug, Ozempic, was originally aimed at diabetes, and then they realized that the side effects were more valuable than the primary target they created it for. They pivoted very quickly.

SM: That's called ‘repurposing.’ and it happens a lot in our business. BioNtech’s Covid drug was being developed for cancer treatment. Then they realized their mRNA technology could be applicable to COVID-19, pivoted, and had huge success, saving millions of lives. There’s a similar story for AZT, the HIV drug that was originally developed for cancer.  Repurposing is a well well-known strategy in life sciences.

SK: Is it easier to pivot when you're a big company than it is when you're a small company?

SM: I think it might actually be the opposite because when you're small you still control all the levers of business. In a big company, you have committees and bureaucracy. People you don’t know. It's much more difficult. Whereas in a small company – and I've been in small companies – the management team, which could be just 3 to 6 people, can sit around the table and decide. So, much simpler. That also makes it more of a strategic decision than one about how to protect the infrastructure you've built up.

SK: Who are some of the startups that you're rooting for right now in your portfolio?

SM: GenEdit began in my Startup 101 class. Kunwoo Lee was a graduate of the UCSF/Berkeley joint bioengineering program and was working on targeted delivery of genetic medicines.  He started my class as soon as he got his PhD. GenEdit has gone from a team of six scientists working in a lab at Berkeley to a facility within Eli Lilly's incubator in South San Francisco and announced a deal this year with Genentech for $644 million. The cofounder and my student, Kunwoo Lee, is still the CEO. I personally mentored Kunwoo and am proud of what he’s accomplished.

Phyla/Phi Therapeutics is also on my favorites list. The company emerged from Startup 101 and after years of the roller coaster, has emerged as a winner in the skincare category. Their product is based on microbiome science and works against acne.  Shiseido’s new venture fund has taken a stake and guaranteed Phyla's distribution through retailer Sephora.

And then ViAn Therapeutics was founded by a University of Mexico postdoc who had some promising science but wasn’t in a startup ecosystem. The Global Class gave him the confidence and connections to start a company. He incorporated with a major Silicon Valley law firm and was accepted into an SF-based accelerator program. He’s back in Mexico conducting a Phase 1 clinical trial for a drug to treat macular degeneration that may be orally available rather than injected. This could be very exciting and I'm rooting for them.   

SK: I know you’re involved in many activities nationally and internationally, raising the profile of UCSF and having a broad impact. Can you tell us about them?

SM: I enjoy having a global stage to promote entrepreneurship. I was recently appointed to the Innovation and Growth Board in the Republic of Bulgaria. The new Minister of Innovation and Growth is one of my students and she wants to bring more Silicon Valley energy to her country. I’m on the Fulbright roster to help organizations around the world with entrepreneurship programming. I sit on the Investor Forum and Tech Transfer committees for BIO, the Biotechnology Innovation Organization, which is the world’s largest biotechnology trade association. I am a member of the US State Department’s International Speaker Program and have taught in Singapore and Uzbekistan.  I was a keynote speaker at the Global Entrepreneurship Conference in Australia last fall and in the opening plenary at BioEurope in Spain this spring. I love being able to bring my passion and knowledge of entrepreneurship to many forums, both in the US and globally.

SK: Are you going to do another cohort in 2024?

SM: Absolutely! We completed the Cohort 6 brochure and are starting to let people know that the class is starting in October. The course is an absolute highlight of my year.   

In addition, I hold events to prime the ecosystem. We started an Entrepreneur/Innovator Hangout last summer as a networking forum and attract UCSF PhDs, postdocs, and faculty. I’ve run other events, provided opportunities for our startups to meet investors, and mentored several founders. I’m lucky to be in such an interesting position in the world’s top entrepreneurial ecosystem, Silicon Valley.