Health Rhythms: AI Mental Health, Founder Burnout & Scaling HealthTech | Paul Gilbert | Deconstructed VC

how do you become a multi-billion dollar company while helping you know everyone in the world we've raised $40 million and we sold $100 million of contracts in the first 24 months and another 100 million in the next 8 months Glassdoor rating was 98% which is amazing you have to believe in the mission of your Enterprise but I haven't yet met a Founder who would be happy I reframed what risk was and I think a lot of entrepreneurs need to do this it's okay to fail but it's not okay not to believe in yourself I really believe in this Mission I love it hi we're Marina and Nick Davidovs we're co-founders and GPS of a venture capital firm investing on early stage in Founders revolutionizing the world with AI we started this podcast to deconstruct businesses and try to help ourselves and you guys understand how they work how they're built how they evolve over time and we also would like to learn their personal takeaways from their journe and learn with them follow us for more content like this like and share welcome and thank you so much for joining us in deconstructed VC podcast the goal of today is to deconstruct your business you know like deconstructed Cuisine where you take a burger and put it like all of the ingredients side by side so you can see what what's it made of we want to understand what's health rythms is about really who works in this business how you come up with this how it's evolving and the idea is that for you maybe you'll be able to find really good talent using that because we have an amazing audience and for our audience it's going to be two goals first is

to understand how startup are actually built that it's not an idea that comes in somebody's mind and then it's just becomes a company but it's a process and it's something that always evolves and is and pretty complex living and breathing organism and the second goal is to understand which moving Parts there are involved and maybe people can help with those and become your employees maybe they can become your partners maybe they can so the idea is we want to connect people by explaining how things work but I think before we can go deeper into the details how how everything constructed I think it's important to learn a little bit a little bit about yourself because it it's nothing about your journey and your journey is very inspiring you have both experience in corporate world and then you move to startups and actually right now successful repeat founder and under that other side you have this academic career you have both like MBA from Harvard and then Stanford Fellowship which maybe help you or maybe not we we'll learn today and what I'm very excited about to learn more is how like I'm inspired by the fact that you your businesses you really make difference in people's life and in in the world which is very important so Morena focuses more on the human side of things because people build businesses I focus more on the technology side already figured this out I'm more like you because everything is about the person okay that's why she's the boss okay very smart yeah like we she can do a deal without asking me I cannot do a deal without asking her that's good well yeah to it's anyway it's two parts but okay yeah good so yeah

maybe we can start how your journey started maybe from your childhood anything you think it's help you to shape the way at this point we we're usually hearing stories of like I was sending the signals of imminent greatness from the age of five I started my first business at seven was was this about you no I had no such signals of greatness just the opposite I started so far behind the class that I couldn't even see the back of the class from where I was I was born with severe dyslexia I had attention deficit disorder and I was hyperactive oh wow so a triple whammy and going into sixth grade I was excused from the school it was a top school in in New York and had to go to a different school to start over again so I learned early in life that at least for me the formula was hard work just going to outwork outwork everyone and that earned me my way through dyslexia to where I graduated at the top of the class in high school and then went off to college and and then later to Harvard Business School but I think the formula for me was just grit just bear down and work hard and that lesson was for me the key success factor for entrepreneurship which is you just need to you just need to survive by working working working and create the largest surface area of opportunity for good things to happen there are more key success factors but that to me is an essential one the hard work is necessary grit is a superpower obsession is a superpower but don't you get burnt out from just working and trying to constantly outwork everyone yes Nick that

actually is very important no matter how driven you are behind the mission of your Enterprise and you have to believe in the mission of your Enterprise or you can't sustain that intensity but I'm now four years into the health rhythms Mission the first two years were 80 and 100 hour weeks and then of on the other side of that a a very difficult 9month series a fundraise and I did burn out and it's ironic because 10 years ago when I was finishing the MedAvante journey I also was burnt out but I thought this time I was Stronger timately you have to recognize you have to invest in your own health your mental health your relationships there's more to life than the mission however important a mission is the people that you have in your life are the magic of life and you need to attend to that because in doing so you attend to your own resilience needs this is a a great answer I think the burnout it's it's a the topic is very important because recently we did a webinar for our portfolio Founders and our friend with neuroscientists trying to help them like to understand their state and there was a test whether these Founders are burned out or not and like 100% actually burn out so I think this is the state for most of entrepreneurs on early stage how did you cope with it this is my second entrepreneurial Mission Health rhythms the first one at MedAvante I had done the first 10 years at a full Sprint because I felt so driven by the mission which was also mental health Centric it was facing Pharma to enable better mental health treatments to come through pharmaceutical drug development out

into the real world where they could affect the lives of potentially millions of people for the better and we were going up and down San Hill Road to exit the company and Pharma gave up on psychiat drug development because they had spent too many billions with so little to show for it and they redeployed that Capital into Alzheimer's and into oncology and we lost 80% of our orders our our bookings in that calendar year and I was so exhausted the idea of having to start over again after a 10year Sprint was inconceivable but fortunately I had a co-founder who had more emotional resilience because it was never her ex existential purpose in life to do that mission so the fact that we went over the cliff it's like okay we went over the cliff you know now what we'll we'll figure it out whereas I went over the cliff and it was like okay I put 10 years of my life at risk the purpose of my life other than being a good dad so it it we were able to engineer an extraordinary pivot it's now MedAvante case study is taught at the Stanford Business School in one of their core Innovation courses formation of new Ventures because of the explosive velocity of the pivot which we could talk about but I was so exhausted that even in this explosion High Velocity rocket I didn't enjoy it I was I was too too far gone and and burnout to to appreciate what was what was happening was just like I just got to survive this and get the investors the exit that they that they need this time around I when I've had burnout in my fourth year this is not an answer for

everyone but we were talking about this before that I've had really life affirming experiences with psychedelics with psilocybin in particular and that is very healing it allows you to gain a deeper understanding of what you're doing and why you're doing it and to reenter oneself and also to understand that as important as a mission may be in bringing better mental health to ultimately hopefully society as important as that is there are other things in life that are sustaining being a parent being a partner being a friend being a brother and through psilocybin I it helped me to heal and get back to Center again that is I think a very promising Trend that more and more research is done in that more and more Utah just approved I think MDMA treatment we saw news about the first FDA approved LSD treatment recently and psychedelics are really catching a really good Tailwind right now and hopefully big farmers is not going to try to screw it the way they did it in in the 60s where all of these became schedule one substances that are basically on PO with Heroin which by the way did not prevent the opioid crisis in the US but our mental health is still at not not in a great spot let's talk a little bit more about the mavan journey how did you build the company in the beginning was what was the idea and how did it evolve over the first few years and actually what pushed you to leave your I would say safe corporate career and start with risky and certain startup work yeah life without the medical insurance I love this question Marina so this was 2002 and for a year I had been meeting with

nine or 10 entrepreneurs every weekend where we would brainstorm how the interet could enable new business models and it was really an intellectual Journey we weren't intending to do anything with this so we were meeting every weekend for about a year and we came up with a about 11 ideas I had an interest in mental health because bipolar is in my family genan pool my dad who had been a very successful CEO he since past had bipolar disorder so I grew up in a bipolar household wouldn't wish that really on too many people my uncle a successful pediatric surgeon most his life to depression so there is enough mental illness in my family gene pool that as a dad I said God forbid I'm a carrier of this bipolar Gene what if I passed it on to either one of my two daughters young at the time the loves of my life I can't be a scientist I can't be a drug developer I can't be I can be an entrepreneur I can bring great people together to solve really hard problems and that's what interests me psychiatric a better ways to solve the Mental Health crisis in the US which I didn't know how we would approach at the time but I thought where are problems denominated in B for a billion Pharma okay so what's related to mental health and Pharma well the problem that my co-founder Amy and I discovered is that half the time Pharma was testing drugs that they know work that are FDA approved they couldn't show work any better than Placebo so we know these drugs are effective the testing was broken that half the time they failed to show they're better than placebo for psychiatric needs and

we said okay that's the mission that we're going to focus on now how did I get the confidence to leave safe Corporate America to do this so I reframed what risk was and I think a lot of entrepreneurs need to do this the risk is coming to the end of your life and in your last breath saying I never really leapt out into the unknown and taken that chance just to believe that the universe is good and that I'll figure it out or that will'll figure it out with if you have a co-founder which I strongly recommend and I was sitting in my car my daughter was in Princeton New Jersey I was outside this little church graveyard while my daughter was in a a class inside and I was looking at these gravestones and I had one of those rare life epiphanies which is oh my God one day we're all going to be under the ground we're all going to have a last breath and no one's going to know whether we succeeded or failed that's not the right question whether we succeeded or failed the right question is do we go for it at least once it's okay to fail but it's not okay not to believe in yourself you have to LEAP out into the unknown once and see what it's like and that's when I committed to being an entrepreneur I said okay I'm going to take this concept this that became medavante and if my co-founder Amy is willing to do it I'm going to go on this journey and take this risk this is such a moving story I should so I I teach emba course for corporate Executives I am now taking this with your permission I'll

Implement that into the course I'll put everybody on the bus and I'll drive them on into a graveyard I think this this should be a very impactful like guys you all will end up here you know what Nick I I think that would be actually a very powerful experience to realize the risk isn't winning are losing because no one's going to know one day the risk is not pursuing the journeys that you want to pursue and giving yourself the belief of of a chance that is very strong you mentioned the pivot and well as a venture capitalist we know that like especially when we invest in early stage we definitely know that we investing first of all in people not in in the idea just because lots of them will go through this pivot stage the idea will be mod modified a lot they will have to try a lot of hypotheses until they will find this product Market fit but it's still very like people when like Founders go for the for this journey they still experiencing a lot of like doubt like that they kind of fail in the process that's why they do this pivot could you please tell us a little bit your experience sure entrepreneurship is all about living with some measure of Doubt at every step of the way because if you have conviction in your rightness the risk is that you become an ideologue because you know the answer and if you know the answer you've locked your steering wheel at some point the road is going to turn something is going to merge that's different than you expected and if you're an ideal log you risk locking your steering wheel going over the off the road you

won't be listening to the soft Circ soft signals that emerge from the marketplace that say you need to make these adjustments for us at medavante the pivot was forced upon us because Pharma gave up on psychiatric drug development and redeployed those billions into Alzheimer's and into at the time oncology it's funny every time batches of people join medavante would meet with them in the first couple weeks to talk about our culture which I hope we can talk about at some point because culture is Destiny for a team but one thing I shared each time is don't allow yourself to become an ideologue even though we think we have the answer to how we're going to unleash much better drug development psychiatric indications we have to be open-minded there are better ways to approach this and it's interesting I became the ideologue I was so sure our approach which was to centralize the assessments so instead of local clinicians doing the assessments with a lot of variability and bias in how they were doing it we were centralizing it the assessments with our own PhD over over two-way video conferencing and we brought objectivity where there was bias and standardization where there was variability we brought bring clean signal to whether a drug is working or not in a patient and I became ideologically committed to that solution so when we went over the cliff and it was clear that we weren't going to be able to do psychiatric drug development for a while because Pharma wasn't doing it it was actually my co-founder Amy who recognized that not only did we need to Pivot which was obvious but how to do the pivot we were going to take a a digital platform that Goldman Sach

had funded for us to enable us to globalize we were in 40 countries at that point we were going to take that digital platform and industrialize it and point it to Pharma for them to enable their Global Alzheimer's CL iCal trials and we we had to let a third of the organization go which was very difficult because these were fantastic colleagues so I actually want to go back after like we talk about layoffs because it's a very interesting topic for people like how do you cuz people usually they can relate more to people being laid off because it's an easier thing to recognize they rarely understand how hard and daunting it is to to look at all of your family and say hey we're going to let you and you and you go and then you need to come up with a reason and sometimes the reason is you know it's hard to hard to put it in words okay let me let me ask like another question that can cover yours so going through the pivot actually you have to communicate it to your investors and employees what was the reaction in your company about that there was Rec recognition across all of the stakeholders that we were at a profound fork in the road very few companies can come back from losing 80% of your annual bookings that's a cliff that's very almost impossible to climb back up I think looking back what's so extraordinary is that even though we had to unfortunately let a third of the organiz ation of 200 plus go no one left after that I was so certain that the company would unwind that I had started taking my stuff home because there was no way the rest

of organization was going to hold and give us time to Pivot and yet with the single exception of the then recently appointed head of HR no one left even today I can't I can't believe that and I think it was because because we knew that we had a very special culture not only did we have a mission to relieve suffering at scale by enabling better drug development but we had a culture that was so firmly embedded with respect and dignity at the very center of it it was very non-h hierarchical there was a lot of transparency there was a a sense of there's no jobs there are no employees there's Mission and co-architect co-owners and we all respect and care about one another and I think people realized that that was unusual enough that they were going to stay and give my co-founder and I the chance to do the pivot and most of them had Advanced graduate degrees they could have gone wherever they wanted to at the sign of of trouble so because they were able to stay because of this culture we were able to Pivot the organization so we pivoted from Psychiatry to alzheimer's from a tech enabled service which is C ized expert ratings to this digital platform so it was essentially two shifts in one and we sold 100 million do of contracts in the first 24 months and another 100 million in the next eight months so it hit a real an extraordinary pivot which is I think why the case is taught at the Stanford Business School because no one comes back from an abyss like that but you just have to believe in one another and believe the universe is good and the truth of your

mission and as you said before the interview Nick there's no one right where a to roam there's no single path there are many ways to roam you just need to be able to think non- ideologically about what you're trying to accomplish what are the jobs to be done and other approaches to doing it there are always alternate ways the hard part is finding them because you need to unlock your thinking and say this is not the only way to do it yeah I've seen that your U the Glassdoor rating was 98% which is amazing I think this reflects your culate culture a lot I'm actually showing you as a leader well I think it's because I never made it about myself I thought I'm here to make sure that we recruit outstanding people and my number one role is to ensure that they have the resources to know what to to be able to execute what they need to and that they could look to their right and left and see outstanding Talent so was my role it was to make sure that they were being served so the big question is is usually people are able to relate to people being laid off but for entrepreneurs I don't think it's easier looking at this 100 people or 100% of people which are now effectively your family as you said your Co Architects and co-owners of this Mission how do you you pick who's who's staying and who's going and how do you explain this yeah it's an important question and a hard question so we had 200 we knew that we had to reduce the headcount by a third in order to get the runway to facilitate a pivot and yet we knew

if we cut as deep as a third we'd probably lose the rest of the organization most of them had Advanced graduate degrees and could go elsewhere where their prospects would be better so again culture held the team together to enable the pivot but in terms of the the determination who to let go I think you have to trust your functional leaders to make these decisions I certainly wasn't going down the org chart nor my co-founder the president going down the org chart making those determinations but we said okay we're pivoting in this direction we're not really going to be a tech enabled service we're going to be a digital platform so there's going to be change in the skill sets that we need some like the centralized Raiders were not going to need nearly as much of and based on the understanding of where we were going as I said before the colleagues are empowered so they were empowered to make their determination but it was brutal to see people who no fault of their own had to go given pharma's decision to exit psychiatry so let's let's try to deconstruct I I think I I think it's very interesting what is the actually what is the actual difference between a tech enabled service and a digital platform we hear those words a lot what do they mean yeah good I'm glad you asked the question so a tech enabled service in the context of what MedAvante my last company was doing is that we had centralized phds people who over two-way video conferencing the technology we're delivering a service which is clean expert ratings for Pharma psych studies so Tech enabled service essentially is as simple as a technology enables people to do things

that they wouldn't otherwise be capable of doing which in our case was centralizing the ratings instead of local clinicians doing it for us a digital platform what we pivoted to was just that a digital platform funded by Goldman Sachs so this was something that we built for our to enable ourselves to globalize to these 40 countries so essentially it was a form factor of an iPad when it was new and it would have all of the paper rating scales digitized with clinical guidance built in so instead of having to put our operations people and our clinicians clinicians together country by country which would have been unaffordable we were able to recruit clinicians country by country and push and pull the rating scales with the clinicians digitally so it made perfect sense that's a website essentially with the forms that they have to fill and you give it in the hands of clinicians yes and then they use the standardized approach that basically you get the ratings from it exactly right and clinical guidance to make sure that as they go through these very complicated rating skills with branching logic and conditionality that they were filling it out completely and as standardized a fashion as possible so effectively at this at this point in in the in the history of metavant you have this product that is some number of lines of codes that basically makes this website work with all of the branching logic you have the sales channel in order to reach these clinicians and give the product in their hands and you have the relationships with Pharma companies that get that information and use it how many people did you need to service that 120 of the 200 and what would these people

do so the digital platform also recorded the assessment between a local clinician that Pharma would hire and the patient and stream those video calls back to a centralized location where we had experts reviewing the assessments to to make sure the clinicians were doing these Assessments in a standardized expert manner so essentially we were the rear seat drivers we the local clinicians were the drivers and we sat in the back and we gave them guidance how to become expert clinicians like our own clinicians so Pharma was able to get some of the power of centralized ratings which was this digital platform in the hands of their local clinicians around the world so Pharma would get feedback loop basically information in order to improve their drugs develop new drugs patients would get better treatment what would clinicians get for that for a clinician their ability to alter the world is somewhat limited it's limited to how many appointments they're able to sustain a day so the way we were able to recruit great clinicians is to say if we're able to bring forward these better treatments for mental health and later for Alzheimer's you will affect the lives of tens of thousands hundreds of thousands and potentially millions of people you will for samplify yourself in ways that are unimaginable by enabling better treatments to get to patients faster and that was very motivating as was our culture so you're offering them to scale their efforts yes to a much larger thing nice so going back to 120 people so some of them are right code enabling the product to work and I guess it's always changing there are new drugs like new stuff so how many people would do that approximately 60 to 70 of the

120 okay so mostly engineering and product and and okay what would what would be the Hat count of people talking to clinicians and finding new ones so if you mean if you mean the recruiting function so there might be four or five there was a lot of operations folks they were the ones that were pushing and pulling the the ratings forms ensuring that they were completed correctly ensuring that the right oversight was being conducted to review the quality of the assessment and what would the the others do be the back office function yes there was a commercial function there was the the engineers of course operations that we spoke about we had an R&D function we called it the MedAvante research institute where as we developed data in these clinical trials we would publish findings about the appropriateness of our our ratings methodologies mhm on a scale of 1 to 10 how would you yourself rate how successful metavant got post pivot that is a surprisingly difficult question because we had this extraordinary pivot 124 months another 100 million in the next 8 months but the private Equity guys were tired by that point they had been in the investment a long time and had to see through this pivot so they sold prematurely we asked for the exit because we needed Capital to keep up with this growth it was explosive it's like if you're in the center of a cyclone the wheels are coming off the bus so we needed more Capital we weren't designed to scale at that level and they weren't ready to put more capital in so we said we need New Capital sources we need to have an exit but effectively it it caused us to exit prematurely it

would have been our interest to maintain that intensity and ride it all the way but it was it was not possible we needed the capital then so you sold the company the company became a part of something bigger how how did you feel that that moment like the moment you signed the papers the company was no longer yours I was very sad I was actually choked up when in the final call there were like 12 lawyers on the different stakeholder groups and I was I was sad I came to change the way psychiatric drug development was done and wanted to do the original Innovation which was to centralize the ratings that was so Monumental saying instead of saying the World is Flat and we need to have local clinicians interview patients locally with all of the problems that were causing half the trials to be inconclusive even on drugs we know to be successful I believe that the world was round and centralized ratings can do these in a much more effective way and make clear definitive decisions which drugs worked and didn't work so that Capital could be deployed more effectively and bring these better drugs to patients first faster so this second Innovation was not as revolutionary at all but it was ironically much faster and its adoption so I had very mixed feelings about that I had never been there for the economic I was there for the mission and I wanted to know that I'd left the world in a little bit better place because of the quality of the people I was able to bring together and I wasn't sure that I could say that I as important as Alzheimer's was that wasn't my mission my mission for family reasons

was to bring forward better psychiatric drug treatment so I was conflicted while the rest of organization was very happy 10 for you six six okay it's funny how every founder we talk to in the beginning they think of how they going to build this thing and how they inevitably will either go public or have an exit and everybody's looking forward to it but I haven't yet met a Founder who would be happy or would rank anything like high than maybe seven for getting an exit it's interesting the path of Entrepreneurship is that we hear so much mythology about happiness and ecstatic outcomes and great outcomes in you don't hear so much about the failures and there far more failures and successes but the reality is it's emotionally it's a very complicated Journey it depends you know on so many different factors for for me it was bringing better mental health drugs to patients faster and while we had enormous success on the second Innovation it wasn't related to my primary mission was it a success financially though yes the investors were exstatic all of them had written this off we had an extraordinary investor base before we brought on institutional funding starting with Goldman Sachs I wanted to create the largest surface area of opportunity so we started with six organizational leaders like the former CEO of glaco those six in the initial seed round saw that we were consultative we treated them as co-owners we sought their Council they brought on more of their colleagues ultimately we did three rounds of mostly individuals who are organizational leaders of Pharma and Wall Street and we had 90 of them so when Goldman Sachs came around they had never seen such a goldplated in investor list

but we use them they were a source of competitive Advantage there was so much domain expertise and door opening power and that investor base which I sought to replicate it health rhythms my current Mission yeah I have a question so after this emotional roller coaster and not as satisfying experience as as you want what what make you to step on this Founders Journey again to start a new company I love your questions so after we had the exit we discovered my co-founder and I that the acquiring organization despite words to the opposite really weren't going to honor our culture which is dignity and respect at the center and I didn't want to stay a part of an organization that was going to not honor that code which was so important to me we invested so much in culture and we knew it it's privacy and acquiring organization didn't thought transactionally about people so we felt that we had to leave and I was exhausted that was a 15-year Mission at that point and we were fortunate enough both of us to be accepted into a very special program at Stanford where they take 35 fellows it's called the DC program and you could study whatever you want across the university for two years and I use that time to Development Career Institute or distinguished career career instit let's cut that from the tape because it's sort of an embarrassing thing but at any rate you're with extraordinary people and I was able to build a West Coast Network since I come from the east coast and toward the end when I was reenergized and I thought okay I don't know what I'm going to do next so why don't I just go meet interesting people

and I said okay I'll go meet do six coffees I'll find entrepreneurs you know Founders VCS and talk to them about what they're working on and I so enjoyed that I did another six and enjoyed that too and ultimately I did 202 coffees not one person said no which I can't believe and from that I built a West Coast Network that I could pull from for investors for board directors for advisers how did you come across Health rhythms from the coffees I found eight startup opportunities either that had already been founded or ideas that could be founded it was through our chief scientific adviser of MedAvante that I was introduced to health rhythms I said what I'm really looking to do as the next Frontier a behavioral health measurement which is the application of AI to mental health and he is one of the preeminent key opinion leaders in the world for psychiat drug development schizophrenia particularly and he had been advising a startup team of four world-class co-founder scientists so I met with them and I spent 30 hours doing due diligence and ultimately I walked away I said these guys have spent four and a half years working on this and if they haven't commercialized I don't know how we're going to be able to raise Capital like Elite capital and after two weeks I joined another company as the CEO but it was an area that wasn't really my passion and after two weeks I called up one of the co-founders and I said if you'll have me back I want to come back and I'll give you everything I've got I really believe in this Mission I thought it had a 5% probability of success but if it works it is

so important that we're able to bring the power of AI and behavioral sensing and a supercomputer that we all carry in our pocket to to bring to bear on the problems that we have in mental health can you give me one one sentence explanation of what is health rhythms yes two sentences okay until now mental health is the one field of medicine that lacks objective measurement what passes for measurement in mental health is a patient with mental illness episodically at best self-reporting on how they're doing and it's very hard to make good clinical decisions when you don't have good CL iCal information so what health rhythms is doing is combining AI behavioral sensing and this supercomputer in our pocket to be able to measure mental health in a continuous objective passive manner simply by you're walking around going about your life with your phone on or about you we can measure your mental health so if if I if I can summarize it and and try to put it in so this in a little bit more technical way this is an SDK software developer kit that enables app developers to access information on from the phone of how people use the phone from their accelerometer right from the what they do on the phone whatever Apple allows to see and then you put this all into a neural network that is trained to understand what this all means about People's Health right yes there is an SDK but the primary go to market right now is that we're integrated into the electronic health record of the health system and then the patient downloads an app it could be embedded into the health systems patient experience and then the patient is therefore instrumented the phone

is so intimately interwoven into all of our daily lives whereas they wearable may lose its novelty and end up in a DH drawer after a couple months but the phone is staying with us so the instrument is continuously integrated into our lives and I think there's such a huge number of things you can look at we can probably detect Doom scrawling right well we're privacy first so yes of course that we could do that what we're doing is that we're capturing the behaviors as it relates to sleep wake intensity duration of activity the regularity of a patient's patterns through the day so for example a standardized wakeup time throughout the week is very predictive of good mental health and social engagement but in a privacy first way so for social engagement we'll use AI to determine what's the primary home how much time is spent there how many unique locations a patient goes to how many are novel how many are routine so to we over simplify if you're depressed you might go from home to work to supermarket to home whereas if you're escalating into manic State you might go from home to a profusion of Novel locations and then we look across those four behavioral domains and we're able to extract this continuous objective signal of mental health when when you say you you mean the AI yes yes so just to be clear nobody's looking at where you are yes it's just F into a large number of new neurons that are taking this as a mathematical input this is super cool and by I think it's also a continuation of the mission you're standardizing the feedback loop for people trying to do something with mental health Nick this is exactly right

so if MedAvante was devoted to Bringing clear signal more precise measurement for Global mental health clinical trials this is the next Frontier which is outside of clinical trials in the world that we all are a part of there's so much suffering and if there is a way for us to measure mental health so that Health Systems can allocate resources based on the urgency of need rather than you go to a mental health therapist once a week and I go I might need to go two or three times a week and you might need to go once a month so if we can allocate our resources more effectively we can take the limited resources that we have that can't meet the tsunami of need in a CO postco world and we can allocate it to where it's needed most and then we can measure the effectiveness of the treatment so that the provider can make adjustments to the treatment we've never been able to do these things before I think this is super important we are now in a very exciting time for mental health because finally there are good new treatments getting approved there are people are finally talking about mental health and we're recognizing as a society that depression is number one contributing factor for people not being able to work for disability and I think being at the core of this being able to say hey we are the barometer we can tell you how much this person is suffering compared to their Baseline or how much anxiety they're experiencing right because you're you're following both depression and anxiety are these two the opposite by the way no anxiety is highly comorbid with depression okay okay but they're not different polars of of

the same no okay that that is that is a good explanation so let me ask a question so I would say as I see it that half rthm is probably even heavier on Research that pante how do you work with that do you publish your findings are you working with like other institutions together to like research some some things so what attracted me to joining is that there were as I mentioned four world-class co-founder scientists at the center of this one of them had been developing the science behind this Ellen Frank Ellen Frank for over 30 years and between all four of these scientists there were something like 962 peer reviewed Journal articles so this was extracted from that there was a strong scientific Foundation underneath this but they weren't able to commercialize after four years and for me that was ultimately a non-starter which is how are we going to raise Capital if you haven't commercialized but they did have one thing that was when I thought about it after I had left astonishing which is they had a well-controlled well-designed clinical trial that showed that they were able to improve mood two times more than high quality drug and talk therapy alone that was astonishing there's nothing like that in the literature so imagine there are four billion supercomputers in Pockets around the world that could be a platform to distribute mental health as a human right so not only are we able to measure mental health but we are able to digitally intervene in it again using AI we're able to identify the most appropriate behavioral nudge for a patient we're able then to assess its Effectiveness and based on that assessment determine what's the next best nudge so it's a very

highly personalized progression of nudges and when we tested that in a clinical trial we saw this extraordinary res or they did a 2X Improvement in mood I said okay that is a GameChanger so even though we all know that with academics there's a very very low success rate this is different and I can bring the right business people around this to help commercialize this and use them as the engine since they were extraordinary scientists this is super powerful and we were investors in a company called Head oh sorry we're investors in a company called Sayana before that got acquired by headspace and this was effectively a chadbad psychotherapist based on cognitive behavioral therapy and it was doing pretty well it was a great technology even before chbt now a lot of people use chbt for this kind of stuff but it lacks what you guys have because it requires users to go and talk to to the chat bot to start this journaling and people who are in a changed mental state they are usually unaware and unwilling to go and and deal with this this is when at least when this happens to me and I'm pyic whenever I'm down I don't have energy for even talking to somebody or whenever I have the high anxiety episodes I'm I'm too anxious to even realize that I'm too anxious what you have is this this powerful tool of being able to as you said nudge people at the exact time when they need it the most and then that can be a variety of treatments right might can it can it can be a chatbot based therapy it can be an actual therapist it can be some medication that people need this just gives this

all of the world working on Mental Health ability to address and administer treatment at the exact time when people need it my hope our Collective hope as a team is that one day when we have a very strong commercial Foundation that we can give this away so wherever again there's a phone a lot of people can't afford access to to good mental health but if they have a phone they have access to our ability to deliver to them the ability to measure their mental health and based on that measurement determine what is the next best behavioral nudge that we could give them so for example I talked about regularity of patterns as behavioral patterns is very important to mental health so if for example you have a daily daily wake time of 700 a.m. during the week but on weekends it's very erratic that actually is associated with higher levels of depression so one nudge might be Marina we see that every day you wake up at 7 but on weekends your wakeup time is erratic would you consider waking up at 7:00 a.m.

also on the weekend and go out and get exposure to early morning sunlight and reset your circadian clock so these are the types of very light nudges that have proven to be so efficacious I love it yeah or maybe Marina in your case you can try going to bed before 2: a.m. yeah but you know it does for me it doesn't matter when I'm going to bed I'm still waking up at 6:00 a.m. even on on the weekend yeah but going to bed earlier with help would help you a lot cool I I think we can we can also talk a little bit more about the vision so we're or maybe about let's let's maybe deconstruct Health Rhythms right now so you have this app and SDK for other apps that can include it that is able to so this is a technological product so that gives me an idea that you probably have Engineers you probably have product managers you have probably how how many how many you got we have a team of 42 right now so we're early it is a superb team There are 16 Engineers five in product six in data science so and now you're an experienced repeat founder and I assume that now you know how to do it right you have better instincts but there's no knowing the right formula because there really isn't a formula there are certain guiding principles to me the two that I believe are primary are building the right culture and again I believe there should be no jobs no employees I hate the word employee because it means someone's waiting around to told what to do I believe in Mission and finding co-architect co-owners people that you can Empower they're telling

you what they need to set themselves up for success and you're making sure you deliver that to them so I believe in that and I believe in recruiting really outstanding talent and the big difference versus MedAvante is that we we built the talent earlier at MedAvante because it was a long incubation period we weren't able to attract the level of talent out of the gate over time we built it but here there was so much promise and based on other signifiers the the worldclass nature of the initial $1 million seed round for world-class co-founder scientists and the initial team where able to recruit strong really out of the gate so we've brought on out of the last 44 offers 41 were accepted wow that is that is a good rate given that you're a small company still right how much money have you raised we've raised $40 million we've raised seven from the National Institute of Mental Health then one of the co-founders Ellen Frank the chief scientific officer and I went out for what was to be a million and a half dollar seed round we raised $1 million it was multiple times oversubscribed the our lead investors Brook buyers was considered the Godfather of Life Sciences investing at the time he said it was the most powerful networked investor group that he had seen buyers as in Kleiner Perkins kpcb buyers yes so he is our lead investor an extraordinary individual very very thoughtful unbelievably experienced and and very calm and that's so important in an investor because when you're building a new to world Innovation there are going to be ups and downs and being with Partners who are calm and as it as it's difficult going forward is just essential but

that was as observation of the quality of the seed round and then we went out and did an a round we went out for eight we closed on 22 it was very difficult the average a that closed last April was six so was a very successful round that way we brought on strategics University of Colorado Health System doubled down their investment based on the first 100 patients they saw atsuka which is a $8 billion Global Pharma they had looked at 500 mental health startups at the time and invested in the first in initial three we were one of those three and then we brought on more organizational leaders so we have about 60 Health Tech and health leaders and domain experts that's a pretty extraordinary group and then you have our 120 engineers and we were thrilled Nick and Marina when you guys came in oh thank you we're we feel privileged so you talked that this initial group of Founders despite being absolutely phenomenal scientifically and technically they lacked commercialization how did you build the commercial part how did you get into the health systems who does this and the company now and how do you see developing this function yes so when you're recruiting when you don't have any Capital we had no Capital at the time we talked about storytelling before you have to do a lot of Storytelling so we needed a chief medical la officer and I met someone who I thought was extraordinary and he was debating whether to join one of the top tech companies here reporting to the head of health so they were offering him an enormous package and probably N9 to5 work whereas we could offer him nothing in terms of Financial renumeration and seven

days a week and we you know I had at least 15 conversations with him talking about values what he wanted to accomplish in his life how this mapped to what he he was looking to do in terms of values and I started treating him like our chief medical officer before he accepted I said okay you're the CMO if what would you do and over time he forgot that he wasn't the CMO self-identified as a CMO and he worked with us for four or five months before we were able to give him a contract so that was pretty extraordinary so there were a lot of stories like that hypn involved did you spike his drink or her drink no if you're just authentic to what you're trying to accomplish and people believe you that you're really it's it's not about you it's about them and finding like-minded missionaries who want to do something that really can change the world of mental health people respond to that and they also know when you're authentic like that you really do believe in the cultural values that you're speaking about I hear this idea that if Founders are unable to sell their their product then no matter who they hire the product won't get sold did you did you get the first customers the first channel Partners in yourself before getting the chief medical officer or was it a joint effort I'm a big believer in team so I'm not comfortable ever saying I so it was a team effort so our first launch partner University of Colorado Health System they have about 2 and a half million Pat s UC see Health they according to them had been looking for this Innovation for a couple years and our

co-founder scientists knew one of the principles there so that there were early conversations and then I came into the conversation and then we were able to move because they had been looking for this in a really fast way three months from first touch to aign scope of work and an initial term sheet they were giving us I think a thousand patients at the end of a 100 patients they called us back in and said they were stopping the trial because the results the preliminary results seem so strong and they doubled their investment and they put their Chief Innovation officer on our board so that couldn't have been done with one person yes of course I was a principal in it but there were other people involved and you win through teams team team team that's incredible so you have this large health system as a customer now are you looking to get more are you looking to go and work with every health system in the country are you going to go International ultimately yes to fulfill our mission to have a societal effect this will have to be International ultimately Global if we earn our way there so our first order of business is to make sure we exquisitly well serve our launch partner UC Health they've already made important introductions including Landing our second Health System Ohio State University another multi-billion dollar health system and they were instrumental in helping us close the a round by giving 45 minute references on us so they've been tremendous Partners anything you would want to tell in in the podcast oh I like the question can I reflect on that just for a second sure I brought these Reflections on what I think are the key

success factors unal key success factors of of Entrepreneurship maybe I could just go through and think of a sure couple that might be worth sharing absolutely and maybe like any anything that you can say to aspiring found found any anything that they like your takeaways from your journey that you think important for them to hear I think these points are kind of covering that too so yeah so I have a a a list that I made for myself of 14 what I think are Universal truths about entrepreneurship and I'd love to share the first four with your viewership especially for those who are going to be firsttime entrepreneurs the first one is you want to for samplify yourself with at least one co-founder ideally two co-founders I think it's important to index on EQ you guys are going to go through a very difficult process no matter how successful the journey should be and people with higher EQ tend to be more stable under the duress the ongoing duress of a of a startup because they're thoughtful about themselves and how they relate to others so you want High EQ Partners hopefully those that have complimentary skill sets to yours you have to believe in the fundamental truth of your Innovation again you keep hearing and you know from your own experiences it requires grit and resilience it is hard hard hard so you have to believe in the truth of what you're trying to do you won't have the energy to sustain it the the the belief in the truth is your sword and your shield for the fight I think if you have 10 units of time ideally you would spend seven on understanding the unmet need as Clayton Christensen says the jobs

to be done that you're solving for so seven of the 10 units of time rather than over indexing on what the solution could be because if you really deeply understand the nature of the problem sometimes the solution can reveal itself to to you can can we dive into this one how do you do that how do you like if so seven units of time spent on understanding the need can you can can you elaborate which units go where I think the way that one does that is to go on a listening campaign so what I learned from medavante is talk to as many smart people in the space as you can because then you understand what conventional knowledge is you understand you're you're going to get signals on some really Edge case potential Solutions and you're going to get smart on what the right questions to ask it's less important to have an answer it's far more important to be able to ask good questions that reveal the truth of the problem that you're trying to solve so when I started when I joined Health rhythms these four scientists and a couple Engineers the first thing that we did was go on a 40 Health leader listening tour so I invited ID's former head of Health to lead that tour and we went and talked to leaders in with payers those were the insurance companies Pharma Health Systems and digital Health companies to understand what are the challenges in mental health as it relates to measurement so there is deep rich learning there whatever idea that you get on the field with it just needs to be good enough to get on the field and start so you can start talking to interesting people there's

no line of sight between where you start and where you're going to go no matter how high your conviction is that that you know where True North is but by talking to people you're going to figure out what the right questions are and you're going to find yourself to the better the bigger opportunity how do you get meetings with people to talk about this problem you want to solve well being a second time entrepreneur it's much easier because I have a track record and it made me more credible it's my belief that coffees are the way that you create a large surface area of opportunity I would like to believe the universe is generally good and if you call up people and say I'd just like to come and talk to you about some of the ideas that you're working on and get your counsel this is especially for younger entrepreneurs I absolutely believe that repeat Founders and entrepreneurs do want to help they absolutely want to help you will get the coffees again I got 202 without anyone's saying no and and they'll make introductions to you and show them respect follow up thank them be personal about it and try and keep them in your network as you build your network because that's where you're going to draw your initial investors your initial board members and advisers that's a good advice that's a really good advice and then there we we we went through three there was one more right yes well the fourth was getting on the field with just a good enough idea because what whatever it is is not going to be ultimately your true north but you just get on the field and you start talking to people and

you will figure out what the right questions are and you'll find your way to really what the really big idea is so with MedAvante we started off with an initial idea and after a year we realized it was just attacking the symptom of the problem so then we said okay we were asking the wrong question how to get more patients into trials faster the right question there was why do mental health trials require so many patients in the first place and we realized if we centralized the ratings and got cleaner signal you would need all of those patients to determine whether the drug works or not so it was by talking to people that we figured out what the right questions were this is super cool yeah I think it was amazing so right now you work with a pretty large Health System and you're getting data from their patients their getting value out of this what is the vision for the future how do you become a multibillion company while helping you know everyone in the world there's a a commercial vision and there's a humanitarian Vision the commercial vision is that we become Intel inside we're a signals company so wherever providers need to understand the Journey of their patients and mental health we're able to tell them we're able to rest stratify them the urgency of need and help them determine whether the treatment is working or not so that they can make adjustments that means that we want to be embedded in electronic health records and companion apps and clinical dashboards weight washers n wherever the patient is experiencing a journey so that is the commercial vision for us the humanitarian vision is to use these 4 billion smartphones working Walking

In Pockets around the world as a platform to distribute mental health as a human right that's very motivating for for all of us most of the company most of the team have seen someone they love suffer or even lose their life so we're here for that mission that is incredible really hope that that you can do this I think it's very well we wish you lots of luck on this journey thank you for being on this journey with us and it was a pleasure our role is very small but we're happy to be I we privileged to work with you and thank you so much for joining our podcast a great pleasure thank you thanks