It is still a bit early to give Theranos last ritesthe company still has five self-owned storefrontsbut … as go the customers, so goes the business. Though perhaps not the business model. Theranos got a lot of peoplephysicians includedexcited about the prospect of their tests. In economics, they call that a market. And where there’s a market, you better believe there are hundreds of hungry entrepreneurs scheming over how to take their bite.
The question is not whether some companycan get the science right. They also have to check all the boxes with the feds.
Some pundits (here, and elsewhere) have argued the slow, uncertain pace of medical innovation is fundamentally mismatched with startup culture’s move-fast-and-break-things ethos. But some Silicon Valley experts argue that a disruptive diagnostic biotech company can succeedso long as itpaces itself.
Startups, a Few Suggestions
“Can it be done? I think it is done,” says Stephanie Eberle, director of Stanford Medicine’s careers center. She points to companies like Genentech, which began as a venture capital-funded startup in the 1970s. Sure, they were doing recombinant DNA, not blood tests. But that doesn’t mean their scientific challenges were any easier. “Science isn’t perfect and it isn’t fast, and getting it right can’t happen without a lot of money, time, testing, and retesting,” she says.
So step number one: any successful biotech needs tohave an internal culture amenable to scienceplodding, but sedulous. And because this is medical science, regulations are part of the process. The governmentas an extension of your customerswants to make sure your productis both safe and effective.
Obviously, sticking to both of those prioritiestakes money. “For one, you’re paying for the scientists, the equipment, the lab space, and also all the attorneys throughout the process,” says Eberle.
All the while, you are racing the clock. Your investors are going to set benchmarks. Hopefully the ones who fund you are fluent in biotech’s tempo, or else they could have very unreasonable expectations for when they’ll begin seeing a return on their investment.
And then a whole slew of other factorspressure from the media, rumors about competition, legal challengescan get inside your leadership’s heads and pressure them to move faster, faster, faster.“Things like that can have a big effect on decision making by executives,” says Hayagreeva Rao, a professor of organizational behavior at Stanford Graduate School of Business.So you have to build in enough time for development—or come up with waysto keep the time crunch from crinklingthe science.
Putting on the Brakes
Oneantidote is doubt. That’s right. Rao says companies in the midst of scaling up need to have healthy skepticism at every levelfrom the board of directors, to the executives, to the lab technicians working on test validation. This skepticism should be applied like a brake on a race car. The point is not to stop the driver from winning the race, but to keep her from careening off the track.
Rao offered up some advice to startups looking to inject a little healthy doubt into their culture. “Do something called a pre-mortem,” he says. Take five random people picked from every level of your organization and give them a disaster scenariosay, one year from now your promising startup has been the subject of a scathing newspaper investigation that uncovered professional misconduct and doubts in your core technology. “Then have them all write a one page story: How did our company today unspool into a failure?” says Rao. (For balance, have another five employees imagine a timeline leading to spectacular success a year from now.)
An exercise like this will let you see any problems your employees seelapsed lab protocols, shaky science, out of control spending. Hopefully before your company becomes front page news of the wrong kind.
