Venture Voice – interviews with entrepreneurs

Entertaining Entrepreneurship

Fred Turner of Curative

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Fred Turner was only 16 when he built his first PCR machine, a tool used to amplify small segments of DNA or RNA. He was interested in sequencing his own genome, but he soon discovered there were others who had a need for these kinds of cheaper, faster testing capabilities. When English pedigree farmers came calling, he pivoted his attention to agriculture, but soon found himself in need of funding to be able to scale to meet demand. That led him to the US, where he went through Y Combinator, which ultimately funded his first startup, Shield Diagnostics. Fred’s focus would return to human diagnostics, first with an STD testing business, where he learned, among other things, “The US healthcare system is just a bit of a mess.”

What he couldn’t have predicted at age 16 when he first built that PCR machine is that less than a decade later, a global pandemic would bring the world to a halt, and PCR-based testing would play a critical role in getting people tested quickly and helping prevent the spread of COVID-19. Fred had been working on a sepsis testing business when COVID-19 hit. Once again, he pivoted. His company Curative, which now employs 5,000 people across the country, has administered 18 million tests (including one to me) in the past year, which at $100 per test implies $1.8 billion in revenue! In addition, they’re providing vaccinations and other essential health services. It sounds like an overnight success story, but as you’ll hear, there have been plenty of ups and downs, including one seriously low point following an unsuccessful Series B round that effectively shut down the STD testing business. Now that he’s running a business whose mission, he says, is “to put ourselves out of business,” Fred will be looking at the next pivot he can take in healthcare, drawing on the infrastructure and institutional knowledge he’s put in place to provide a better, more integrated patient experience at every touchpoint. It’s going to be fascinating to see where he goes next.

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Highlights from this episode:

“No one in the UK would let me in their lab at the age of sixteen, which was probably fair, so I decided the only way to do it would be to build the equipment.”

“The very initial interest came from reading Craig Venter’s autobiography…after that, I really wanted to sequence my own genome, but I didn’t have any of the tools. I couldn’t afford to pay some company to do it.”

“I wanted to try and get more of an understanding of my own genome, and this was the only way I could figure it out.”

“I won this engineering competition in the UK…and got a little bit of local press.”

“The first couple of tubes of cow blood showed up, and I think my parents were a little bit shocked about keeping them in the fridge in the basement, but you know.”

“I tried to raise some money in England and that didn’t go very well…Certainly for investing in, like, a dropout founder — dropout young founder — doing something in agriculture, I couldn’t even get meetings with investors, never mind actually getting any money.”

“Getting into YC was the enabling step for moving to the US.”

“I basically did all of the second year of what is a four year course. But most of what I was working on was the business, and so I would spend like four days a week up in Leeds, working on the company, and then one day a week in Oxford, and it seemed like, basically, I couldn’t do both things.”

“I could have gone back [to college] if it had all gone horribly wrong.”

“We kind of became much more of like a deep technology company, and less of an actually selling-things-to-farmers company. And I think that was, I mean, that was probably the biggest reason why ultimately it didn’t work out. We just didn’t have the funding to actually build that new technology past really a prototype stage, and the agricultural market wasn’t big enough for us to really raise the funding required to develop that technology for that market.”

“We pivoted out of agriculture and tried to apply that technology we were working on to human diagnostics.”

“It grew to about 20 people by the time we transitioned into human diagnostics.”

“I still think there’s a big untapped opportunity in agriculture.”

The Y Combinator process: “It’s three months and then at the end of the three months, you pitch a couple of hundred VCs, all in one go, you get about two minutes.”

“It was instrumental in getting basically all the early funding that that company received.”

“It was pretty crazy. I’d never seen that much money before.”

“It was kind of like shifting gears from trying to figure out fundraising to figuring out, like, how to run a company. That was around the same time as well, I think, we passed about 12-13 people, and that’s like the time in a company where everything breaks, or the first time that everything breaks.”

“It’s a shift when you’re used to just, like, working on building things yourself.”

“We started looking at, okay, well, can we use this and other applications that would make this a bigger opportunity.”

“We got to a couple of million annual revenue on the STD testing business.” 

“There were a lot of challenges with STD testing. The US healthcare system is just a bit of a mess in some places.”

“You’re then kind of left with two buckets where no one really wants pay. And so even if the test is useful and doctors use it, you can end up doing a lot of tests and you just don’t actually get paid.”

“In healthcare, everything has to cost 100 times as much and take a long time.”

“It was a challenging thing to grow quickly.”

“There’s a lot of pivoting here.”

“We actually, we passed the technical diligence as it was written, and then the term sheet, we actually exceeded what was written in the term sheet, and they decided to pull out, mostly for strategic reasons…it got killed by their COO.”

“The optics is, well, this domain investor pulled out, so there must be something wrong.”

“January 2nd, we threw in the towel.”

“I think at the time I was mostly angry because I felt like, you know, the company that had given us a term sheet kind of led us on, and you know if we hadn’t signed the term sheet, maybe we could have gotten a term sheet from a different investor.”

“The founding idea behind Curative was between Vlad Isaac and I, who had all worked at Shield, was okay, let’s try and let’s not do a diagnostic, let’s actually come up with a better model for, basically, integrating data from medical records and sensors with better care standards, and a kind of clever way of billing insurance, such that you could improve the standard of care for these sepsis patients and actually get a better outcome.”

“The low hanging fruit is to actually manage these patients in a better way.”

“We could spend all this time making a fancy test. But if the test isn’t actually going to improve the outcome for patients then what’s the point…I was also very frustrated with diagnostics at that point.”

“I didn’t stay out of diagnostics for very long.”

“We couldn’t really move forward with the sepsis stuff at all because all these hospitals were locking down [due to COVID].”

“The initial move into COVID testing was partly driven by, okay, well we raised about a million of seed money, and we’re going to need to go raise more money, but we actually can’t make any progress on this so what do we do in the meantime, because everything is closed.”

“All of the problems I had seen in Shield with launching the STD testing kind of highlighted a lot of systemic problems with diagnostic testing in the US. And it was very clear that because of those problems, scaling existing testing capacity was going to be exceptionally difficult.”

“We just basically took something off the shelf that already worked, which was the CDC test, made a couple of minor modifications to improve the efficiency, and then we just got really good at doing it scale.”

“It went from zero to…we’re coming up on 18 million tests, total, completed, and about 5,000 employees across the country in just over a year.”

“COVID obviously created like a very exceptional environment to do this in, to do scaling up that and it’s kind of like an experiment and if you have unlimited demand, like how fast can you actually scale something. What is the upper physical limit.”

“We set up all the logistics and like a bunch of software for tracking all of that and really focusing on, like, end-to-end experience for the patient, including staffing. A lot of the testing sites, we have thousands of employees in the field who actually staff and run these sites. And I think that let us scale much faster.”

“We only ended up raising about 10 in total. The entire beginning phase raised about a million dollars. Most of it was funded off selling tests. Certainly in the beginning, most of the contracts were cash pay and people would pay up front. And that really allowed us to scale the lab.”

“We didn’t actually have to raise much money at the beginning, or really, ever…it was really funded more by cash flows.”

“I think the combination of US military background, combined with a bunch of good scientists, is to take a really powerful mix.”

“A lot of it is insurance pay now. And the collection cycle on billing insurance is many months after having done the test.”

“We said from the very beginning that our mission is to put ourselves out of business.”

“We’re already investing pretty heavily in a number of new projects, kind of all on this theme of integrated healthcare.”

“[We’re focused on] trying to actually provide an integrated system where, from a patient standpoint, you have one integrated experience and we can actually focus on providing a better experience for that patient at every touchpoint.”

His job now: “It’s kind of a mix of like, firefighter and chief, and like, future stuff…how can we utilize everything we built for COVID in a post-COVID world to improve other areas of healthcare.”

“I think there are so many opportunities with the infrastructure we’ve built, but they’re going to take some time to scale up, and they’re going to operate on real world timelines and not COVID time.”

“I prefer the bigger scale, as you can just get so much more done.”

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