Reshma Shetty Speaks at Y Combinator's Female Founders Conference 2016

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Hello everyone, um so first off I'd like to uh thank both Jessica and Susan for inviting me to be here today. It's a real privilege and honor to speak to such a talented amazing group of women here.

Um so, so as Cat said, my name is RMA, I'm a co-founder um of Geno Bioworks, for a biotech company based in Boston. Uh so not from Silicon Valley. Um, uh I wanted to first start by asking you a question.

Um does anybody know what the most complicated piece of technology on this desk is? You're right, it's the plant, right? Uh so if you think about it, right, this plant is capable of self-replicating, it's capable of self-repairing, can self-assemble, right? It makes its own shape itself, um and it can assemble structures with about a nanometer degree of precision.

Right, these are all traits uh that other engineering disciplines can only dream of, but biology has it all inherently and this is what makes me so in love with Biology, right? Is that it's capable of all these things. Um so in my mind, biology is the most powerful manufacturing platform on the planet, um and it's what I want to be able to use to build stuff, right?

Um and so for us at Genko, what we're excited about is that this next century is going to be uh the place where we learn how to design biology, right? Where we learn how to program DNA, program biological systems. And so we think the next generation of designers are going to be designing biology and that's what we're all about.

Um just a few quick facts on Genko. Uh we were founded in 2008, so we're about 8 years old now, we're based in Boston, we're around 75 people or so and basically what we do is design microbes, design organisms to spec. Um and I basically what I do today is just give you a little bit of our backstory, how do we come to be where we are today in case you might find it interesting.

Okay, so uh Genko started um officially 8 years ago, but I think it really has its roots quite a little bit longer ago. Um, uh I grew up in Utah, um my house is like just actually off to the side of this picture. Uh I went to the University of Utah and I studied computer science there. Um but at the same time, I also um worked in a biology lab.

Um and it was a really interesting experience because I on one hand would study um uh programming computer science, you know, operating systems and so on in class at the same time I was working in a research lab um learning biology on the Fly.

Um and the reason I did this was quite frankly I found biology classes boring, right? They were filled with Premed students who just wanted to memorize stuff and and I was much more interested in in sort of engineering and hacking. And so working in a biology research lab and studying computer science was a nice mix for me.

Um and so then I decided to try to actually merge the two uh halves of my life uh when I went to grad school. Um and I went to grad school at MIT and that's where I met this uh person here on the slide. This is Tom Knight.

Um Tom is a very interesting guy. Um Tom basically um has a legit claim to inventing the internet, right? Um he was involved in the early days of the ARPANET. Um this uh this is him on the left there standing next to a Lisp machine. Um you can see from the pants that it kind of dates back to the 70s or so.

And then about 20 years ago or so, Tom said, you know what? This computer stuff's getting a little boring, you know, there's a lot of people involved in it now, I don't need to really think about it um so much anymore. I'm going to start studying something else.

And he decided to basically go back to school for all intents and purposes. He would take biology undergrad classes and and and and pair up with the freshmen in in freshman biology labs and learn how to pipet and do biological research, right?

Um but Tom brought a very interesting perspective when he uh went to biology. He brought an engineer's perspective, a hacker's perspective. He thought about, well how can I take biology and simplify it? How can I design it? How can I program it? How can I can introduce ideas like standardization and and and abstraction, all sorts of concepts that we take for granted in engineering but apply them to biology?

So I met Tom pretty early on when I got to MIT um and and being a a young naive uh graduate student at the time I said, you know what? This makes sense, we should be designing biology, right?

We use the substrate of chemistry as the basis of chemical engineering, we use the substrate of physics as the basis to design all our computers, why can't we use biology as a substrate for engineering?

Um and so, uh I was fortunate uh at MIT to meet not only Tom um but these folks over here. Um so uh this is Barry, Jason, and Austin um and they were also fellow graduate students with me at MIT.

Um and we all basically fell in love with this idea of, you know, engineering plus biology. Um we actually this is a photo from uh about 2006 where we um engineered some bacteria to smell like bananas and wintergreen.

Had no actual purpose whatsoever except that it was cool and fun. Um and it was actually a team of undergrads uh who did all the work here. But it it was cool because it was our sort of first experience saying, "Hey, let's go design an organism souped nuts and have it actually work."

And so we ran a live demo um of the system and this and this is a photo taken on that day. Uh so it was an interesting experience in MIT because I basically found my calling, right? I, I was felt in love with um the idea of engineering biology, knew I wanted to keep working on this and so the only question was how, right?

Um and when if uh any of you out there uh have are either graduate students or have have done a PhD, you know that you kind of come up at the end of your PhD and and the way you know that you're ready to graduate is because you can't stand the sight of your thesis work anymore.

Um but uh but you also kind of go through this crisis of, what am I going to do next, right? Um and so for us the question was, you know, hey you know what? We think there's just so much potential here when it comes to engineering biology, how are we going to go make this happen for real, right?

Because we were incredibly frustrated by the fact that we had all these ideas for organisms we wanted to engineer, systems we wanted to build, but we were limited by the tools and Technologies we had available to us, right?

The complexity of the systems I could engineer was limited to how well I could clone basically. Um and so we wanted to go make this happen. Um and the typical path and the obvious path for us um would have been to go um become a professor, do a postdoc, become a professor, and in fact that's usually how things are presented to PhD students, you know, your options are Academia or industry, right?

Um and I think that's really a a a false way of looking at things. Um right really what I think is a better way to think about is what is the problem you want to solve and then go figure out the best way to solve it, alright?

And so for us, we knew that this is the problem we wanted to solve, how are we going to make this whole engineering biology thing happen, right?

And you know we had toyed with the idea of starting a company, um you know Jason in particular had been interested in this for a couple of years. We even tried to enter the MIT 100K competition, it's a startup competition that MIT runs every year. We never made it past the first round, right? They would always kick us out immediately.

Um and so we're like, okay this is probably not going to work. Um but then we had a conversation with this fellow here, um this is Saul Griffith. Um Saul was a graduate student a few years ahead of us at the MIT Media Lab.

Um and when he and his buddies graduated they basically started a company, right? They were like we have a lot of ideas for different cool Technologies and they just started a little incubator and basically um got some Consulting gigs on the side to pay the bills as they sort of worked on their company.

Right? And the most useful piece of advice that Saul gave us at the time was, you know, when you're a graduate student or even a student coming out of undergrad you have the most amazing skill set for starting a company which is that you know how to live cheap, right?

Uh this is the thing that can best qualify you for starting a company is if you can live on small amounts of money, right? Um because it means that by just bringing in those little bit of Revenue or a little bit of money from whatever Source you can sort of pay your bills and keep going, right?

Um and so what Sal said really resonated with us. We had a lot of ideas of stuff we wanted to work on, things we wanted to do, um and we knew how to live cheap and we were willing to continue living on the cheap.

And so uh that was really the thing that clicked for us, believe it or not. Um and that made us start Genko was we said, you know what? We think a startup might be the best way to go tackle this problem so we're going to start a company and we're going to give ourselves a year to try to get it off the ground.

Um I think starting a company, um the hardest thing is like figuring out how you start, right? I think um, uh a lot of people think that maybe you need to come up with some idea or have or invent some technology, that's certainly the common wisdom around MIT that you need to invent a technology, you license it from MIT and then you go raise Venture money and that's the only way to start a company.

Um others say, oh no, you should build a prototype, right? It's cheap these days to build a prototype and then you know, you get some traction and go from there. Others think the first thing you need to do is raise some money and I'm here to tell you that these are none of these things are the first step in starting a company in my opinion, uh they're all wrong.

I actually think the most important thing you should think about if you're going to start a company is what is your mission, right? And believe it or not we actually got this from a Harvard Business School case called Building Your Company's Vision.

Um and basically what it talked about is how all the great technology companies, um all the ones that really changed the world had a mission statement, right? They had a core thing that that that company was trying to do that no matter what changed in the world, no matter how their business might change, that mission always stayed the same, right?

Um it's basically your compass for for how you go forward. And so we decided after reading this that, you know, what we felt the same way, we should have a mission for Genko.

Um and so we sat around at this uh in a conference room in the STA Center at MIT, this funky Geary building over there, and we talked about what our mission should be, right?

And we had lots of ideas about what our mission should be because you know we were excited about engineering biology and so you know maybe we want to democratize access to biotechnology, make it sure make sure everyone has access to it. Maybe we just want to buy, you know, maybe we want to solve The World's energy problems, maybe we want to do this, maybe we want to do that.

And we brainstormed what our mission should be for for several hours, um and where we finally landed um was that Genko's mission was going to be to make biology easier to engineer, right?

Now, the important thing to understand about this mission is this is not what our business model is, this is not how we're going to make money, this is not a product we could sell, this is what defined us as a company, right?

Um and we had to be clear, we had no product, we had no technology, we had no Revenue, we had no customers, but we had this Mission. And we we said this is what's going to be at the core of Genko and then we're going to go figure out everything else after that.

And I, I truly believe that this is the most important thing to do when you're starting your company for the first time because starting a company's hard, like I would actually never recommend that somebody become a Founder 'cause it's really hard.

The only reason to start a company is if there's a problem that you're passionate about that you want to solve, you have a mission you want to go accomplish and if then you decide that starting a company is the best way to go achieve that mission, then you should become a Founder, right?

Because it's that mission, it's that larger goal that gets you through the ups and downs of starting a company. So for the first year we were basically virtual, um uh in 2008 we actually sort of squatted uh at MIT for the first year as we were just sort of trying to bring in enough money to just pay ourselves a mere grad student stipend.

Um and during that time it was actually pretty convenient because it was 2008, it was the financial crisis. So it turned out that a lot of Biotech companies were going out of business, right? It was a horrible time to raise money, uh and we didn't even try to go talk to investors to give us money.

Um but even if we had, I'm, I'm sure that they they would have said no, uh because we had no product and no idea what our product should be.

Um uh but what we knew is that we wanted to work on this mission to make biology easier to engineer and we had ideas about what was going to be necessary to achieve it, right?

We had ideas about what were the important Technologies to go develop and so during that year of of basically being a virtual company we would go dumpster diving. So any time a biotech company would go out of business we'd go by and and try to buy up their equipment um for 10 cents on the dollar.

Um you know anything they were getting rid of we'd pick up and and so this is our picture, a picture of our first uh biology lab. We basically put together the whole thing for about $150,000 or so give or take.

Literally everything you see in this picture was secondhand, you know, even the trash cans we like picked up for free from from a company that was going out of business because we didn't want to spend money on trash cans.

Um MIT Labs were would were packing up and moving and so we'd go by and pick up their glassware and and and whatnot.

Um and S like when people heard that we had done this they were dumbfounded, right? Because the conventional wisdom certainly around um at the time was that creating a biology lab of this kind cost at least a few million dollars, right?

So the fact that we did it for an order of magnitude less was like crazy, um but it was how, you know, we did what we had had to do with the money we had available to us, right?

Um and so, so this is how we got started and for the next few years we basically just looked for product Market fit, right? We tried to make something that people wanted and and the basic approach we took was for all intents of purposes using the scientific method.

We'd come up with a hypothesis about what our business model should be. It would have to be a business model that was aligned with our mission to make biology easier to engineer and then we'd go talk to customers and see if they would actually like buy something from us.

And we went through hypothesis after hypotheses to be honest this this took us about five years, okay? Where of just, you know, we'd bring in like government grants and contracts to pay help pay the bills so that we could build out the technology platform.

We made that platform sufficiently General that we knew it would apply to a lot of different um problem areas and and markets and then we we um we basically followed all the steps in Steve Blank's book um for how to figure out a repeatable business model.

And so it wasn't really until uh we signed our first customer in I think 2012 and then we started seeing multiple customers in in in 2013 uh that we really felt that hey maybe we actually have something here.

Um and what we basically figured out was that um there was a market um around what we now call cultured ingredients. So cultured ingredients are ingredients that are normally produced from plants, plant extracts, right?

So they're things like rose fragrance or vitamins or uh flavors or sweeteners and whatnot. These are all ingredients that show up in common household goods, right? Um uh things you buy on the supermarket shelves, they're normally extracted from Plants but we could instead make them from yeast.

We could basically brew them in a process not dissimilar from brewing beer, and it turned out much to our shock because we had no idea this Market even existed when we started, right?

That this turns out to be a pretty decent Market of about $3.5 billion in plant extracts just in the raw materials alone and we basically figured out that, hey, there's an opportunity to replace those plant extracts which normally take, you know, a multi-year growing cycle and have all sorts of supply chain issues with a 5-day fermentation process using yeast.

And so this was our business model, right? Um and we started getting customers and we basically proved to ourselves we thought there was that there was actually a market there.

And so on the back of that we said for the first time after being in existence for about five years that we actually raised money because we never really wanted to raise Venture money before that because we didn't know what our business model would be, right?

Um and I think sometimes you hear about stories of you know investors um and and Founders at odds with each other um over the future of the company and I think a lot of that strife and tension can often come from the fact that you're sometimes you don't, when you pitch an investor and you raise money, you don't necessarily know what your actual product should be, you might haven't yet achieved that product Market fit.

And so you have to change course and the investor may or may not agree with how you're changing course, right? Um and so we we very deliberately waited until we felt we had a very clear picture of where we're going, what our Market was, what our customers looked like and even had traction with customers.

And that's how then in in uh 2014 we joined YC and then coming out of YC we were able to raise about a $9 million Series A and then more recently a $45 million Series B.

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Ah okay so that's sort of our story in a nutshell. Um I wanted to take the last few minutes to talk about um a slightly related topic that I've been thinking about a lot and that's one of diversity.

Um this has come up recently for us because we've basically been doing a lot of hiring, right? Since our Series B, um so we were about 35 people or so when we closed our Series B and um have have roughly doubled or so since that time.

Um and it's interesting because this wasn't a topic I explicitly thought about a lot prior to the prior to just recently. Um in some sense it's it's a tough one to think about in as a female founder because in some sense I'm already breaking the mold, right?

I'm a female founder, most technology companies uh aren't uh don't have uh necessarily much female representation.

Um but I think it's also one that's very important to talk about um because if you look at our stats, um we actually have pretty similar pathetic stats when it comes to female representation as to most technology companies, right?

We're right around 27% um pre-2015 and actually we found when we when we finally looked at this just recently in the past few months that um after we raised our Series B and started hiring people our our percentage actually went down when it came to job offers, right?

So once we started ramping up our hiring we were actually seeing a drop off. Um and honestly when I saw this I was like kind of ashamed, right?

Um you know, what am I doing here? Um and it's an interesting tension, right? Because on one hand you know Genko as, excuse me, uh Genko is uh not yet a sustainable business I'll confess, right?

We still have a long road ahead of us, um but um and so our top priority has to be making Genko into a sustainable business. But at the same time if we actually succeed and and do what we want, if we actually become the Intel of biology like I want for us, if we look like just every other technology company with a pathetic representation of women and underrepresented minorities and and other underrepresented groups, that would kind of suck, uh to be honest.

Um and so it's it's one that I I'll confess folks in our team actually um raised in the past few months um and so we started just talking about it internally at Genko, you know, what should a diversity initiative look like, what was realistic for a company of our size, right?

Because usually this is not something you talk about until you're much much bigger than us. Um and so it's been a hard one for me to wrap my head around to be honest because I care about this, um I want want Genko to have a diverse Workforce.

I believe that we will be stronger for it, um but at the same time I'm very cognizant of the fact that we have a lot of work to do in terms of turning Genko into a sustainable business.

And what I finally how how I finally sort of reconciled all these conflicting thoughts in my head is uh is actually inspired somewhat by this movie.

So my husband Barry, who's also one of my co-founders made me watch this movie, um Moneyball. And Moneyball is basically about um uh the Oakland A's and how uh they were able to build a baseball team that did quite well with a like a crazy low um spend on their team, right?

And so what they basically did is systematically looked for people who were um for baseball players who were being undervalued, right? This is saber metrics, right? Um that that uh that they applied and and then they would recruit those folks and they built a pretty awesome baseball team um out of these folks who are being systematically undervalued by the by by baseball teams in general.

And it seems to me that this might be a way to be thinking about diversity, um and a way to reconcile my twin goals of wanting to build a sustainable company but also ensure that Genko has a diverse Workforce, um uh in the long run.

Which is that frankly speaking, the very fact that there is such a significant underrepresentation of women and and various minority groups in technology, in biotechnology suggests to me that they're probably being systematically undervalued, right?

By the marketplace and systematically undervalued by other companies. Um so if we can make Genko a place where these folks want to work then that's a competitive edge relative to um other companies, right?

And so I don't have much more for you than this except that it's something that I think is an interesting thing to think about. It's something that most companies wait to think about until they're much bigger than we are.

Um but we're hoping that by thinking about it early, um when we're when frankly just a small number of hires can radically change our stats maybe we can do something about this um uh now rather than later and maybe it'll even give us a competitive edge.

Um one thing that's been a little promising to me is even just since we've started having the conversation over the last, you know, uh three to six months our our numbers have improved a little bit, um but I don't yet know if this is real or if this is just a you know law of small numbers issue but we'll see.

Um and so I, I just wanted to raise this as something to think about as you all go off and and and start your own companies.

[Applause]