How First-Time Founders Can Avoid Mistakes | Pelu Tran, Ferrum Health

Intro

00:00Idealist techie, you know, Stanford grad student in the garage saying, we're going to make outcomes better. Those companies all fail. Most early stage founders go to partners and say, hey, what is it that you need? Tell me and I'll just deliver it for you.

00:13If you're looking to them just to give you the answers. They don't know what's possible technologically. Oftentimes, they're not sure how the market trends are moving. They're not going to be able to tell you what the answer is. What they're really, really good at is telling you what the problems are.

00:27My name is Pelu Tran. I'm the CEO and co-founder of Ferrum Health. Ferrum health is a company that is trying to make clinical AI tools accessible to the doctors and patients that need it. We just closed a $16 million series A round. We've raised a total of $31 million.

00:44Our success is going to occur by enabling Big tech, big healthcare, governments, AI developers, by enabling everyone in the market to be able to collaborate and deploy AI the way it needs to be deployed.

Quitting Stanford Med Months Before Graduation

01:00I was months away from graduating Stanford Medical School when I actually decided to go on leave to start my first company as a medical student. Kudos goes to Stanford Med for allowing us to be extremely flexible with our time. So I was one of those students who kind of had my hand in all sorts of different pies where I was doing like device work.

01:18I was working on side projects with friends from the business school and the medical school, and Augmedix was really at the beginning, just one of those side projects. As a medical student, I was working in the county hospital here in the Bay area.

01:30That was a nightmare. I was there while they were transitioning from paper records to electronic records, where doctors were losing track of patients. No one could figure out where medications were. People were burning out and spending three four times as much of their day on documentation as they were before.

01:47And actually back in the day, this was when Google Glass was still emerging onto the scene. Everyone thought that it was going to be the advent of the wearable era, and that emerging technology intersecting with the real pain points that I was seeing in my day to day life as a medical student.

02:03We founded Augmedix because we wanted to. Doctors spend their day taking care of patients rather than documenting patient records. Augmedix and Google Glass allow a scribe located off site to securely see and hear what the doctor sees and hears during an exam, in a real time video.

02:20We showed pretty early on that writing the notes for the doctors actually allows them to deliver better care as well. 2 or 3 years into my first company, I was still considering going back and still thinking about hey, I what point do I maybe leave the company, go back to medical school, become a doctor?

02:35But once we saw our technology being used to deliver care to thousands of additional patients a month, I realized, wow, like I have already had more of an impact on healthcare than I would have had in my entire career as a doctor. And we went to Sand Hill Road and to the venture capital firms there, and we were able to raise a round of funding off of that idea, and we spent a few years trying to build out the company and prove out the idea, and ultimately continued to stay on leave from medical school as the company grew.

03:05So a few years into the journey, I think the whole world started to realize that Google Glass probably wasn't going to be a thing. And so we had to figure out, what are we going to do with this company and with this mission if Google Glass isn't going to be a thing, and if our company's brand has been built off of that so far, because we had that really clear mission because we knew, hey, you know, it's not about the Google Glass.

03:27It's about what we believed the glasses could solve for healthcare, that we were able to pivot and pretty rapidly launch tablet and phone based versions of our software that instead of sitting in the doctor's face, they would bring around either cart around as a tablet or bring it around in their pocket.

03:41That still did the same thing. I think what that taught me is that if you go into a new technology looking for a problem, you're probably going to get pretty far, but ultimately fail. And I think the difference between augmedix, which we were able to continue to grow over time, and a lot of these companies, is that we started off as a technology looking for a problem, but we just happened to find a really, really big and important problem.

04:08And so that allowed us to stay alive. Moving forward from that, I have become really, really careful around new technology trends. Even I the new wave of AI, telemedicine through Covid, all of those boom and bust cycles, they all occur around emerging technologies.

04:27They never occur around endemic pain points. And so j'en ai today. Yes it's promising. Yes, it's going to change the world. Is it going to change the world to the scale that everyone is saying it will at the timeline that everyone is saying it will like?

04:39Guaranteed? Not. And it's because we always tend to overestimate these technologies in the near term. Over the long term, they will have an impact, but that that long term is longer time frame than any one startup is able to weather.

Staying the Course When Everyone Says You're Wrong

04:59During that journey, I actually had an uncle pass away from a late stage lung cancer that was missed by his doctors and it was a really frustrating experience for myself and my family because I already was a successful entrepreneur in the digital health space.

05:12When we were providing care for him and talking to his doctors, he was receiving the best care in the world. He was going regularly for his screenings. He did everything right. But because his doctors weren't using the most modern of tools, a lot of these AI diagnostic tools around lung cancer that have been launched over the past decade, he wasn't able to actually have his cancer caught in time.

05:32In fact, it was missed for almost five years. He would have benefited so much from technology, from AI tools. His doctors wanted to use those tools, but hospitals not being able to actually adopt AI themselves directly, like at some point someone was going to solve it.

05:46The question was how long will it take to solve? What we realized was, if we don't start this company, it is extremely unlikely that someone else will and succeed. Ferrum health is our attempt at trying to solve this disconnect between the technology that's out there, the need for a platform that allows for the consolidation of AI vendors into a single point Back when we first started the company, I was really skeptical about how good these AI tools actually were.

06:13Some patients and some hospitals that we worked with in Asia that we launched our pilot product initially, and that was an open source lung nodule tool, something that was made available online for public use. And we ran it for three days across their scans, and we basically looked to see how many patients did this model find that the doctors didn't find.

06:35And three days later we're like, oh, wow. Like, there are almost 50 patients here who have very significant findings. It makes the mission of the company just so urgent. We happen to have a tailwind of AI hype that maybe it lasts one more year, maybe it lasts three more years.

06:53But like hype cycles come and go. And so there's going to be a time when that hype no longer is there. But for us, like we solve a real problem that endure over time, at some point you have to be solving a really important problem, or you will never be able to claw your way out of that experimentation.

07:09Early stage. Most early stage founders, first time founders that I meet, are overly focused on building a really good technology product, and not enough focus on identifying the exact pain point and problem they're solving. Figuring out what matters.

07:24What are the risks that I need to de-risk and proving that out even manually, right? Like just by doing it with an Excel spreadsheet or with a human being in the background, rather than having to launch the whole product and spending all that money before you've tested out those initial assumptions.

07:41Covid was brutal, and this is not a super exciting kind of thing to bring up. But Covid was absolutely brutal. It was especially brutal because the general perspective was, wow, if you're a healthcare company, you should be doing great. But the actual reality was like most healthcare companies were dying because no one was able to sell unless you were very specifically solving a Covid problem.

08:05Really, honestly. Like we don't have that much to do with global pandemics. So we're solving an AI deployment issue for health systems. And that just was not a priority. So keeping the team motivated, keeping our investors and stakeholders and customers aligned and engaged and excited about this problem when nobody cared about it for years and years and years was really difficult.

08:28More patients died due to delay in care than died from Covid. We're gonna keep focusing on what we're gonna focus on, and we're going to try to build the best business we can around this and survive until everyone else kind of gets there. I think that easily could have led to the company collapse, but I think what that has allowed us to do now that AI is hot, now that hospitals are looking at platforms now that can all of our original theses, when we founded the company have come to bear, and we've stayed focused on that problem for the past five years,

08:57is that we are just, again, incredibly well positioned, and we've got such a head start on the broader market. In order to actually succeed as a founder, you've got to be really comfortable with everyone thinking you're wrong for a really, really long time.

09:09I still have not seen one example of a massive, iconic company where everyone didn't think that they were completely out of their mind for the first few years. A human being, you usually look for societal approval as founders like, you kind of have to be comfortable not just not having that, but being able to convince people who otherwise didn't see it the same way you did that you were right.

09:36And you do have to just be used to everyone, either not knowing what you're talking about or thinking you're wrong and just comfortable with just over and over and over, convincing them of why what you're doing is the right approach and why it's important.

Overcoming the Downsides of Starting Young

09:54A lot of my classmates are now, you know, super high powered, specialized doctors that are making a ton of money. And so it's easy to look at, hey, like, if I just stayed as a doctor, I would be some, you know, badass surgeon doing XYZ thing.

10:08And especially as my friends all have now, saving a ton of lives day to day. Like it's an incredibly rewarding profession that I never had the chance to actually go into. But that's probably one of the sacrifices and trade offs that I had to make.

10:21And I just have to look the hundreds and thousands of patients that are technology saving and say like, listen, like, fine, like I'm not going to do it directly, but we're still going to be able to deliver a lot of impact in society, and that's enough for us.

10:33You kind of have to start companies at a young age because your risk appetite goes down as you get older. The downside of starting a company when you're young is the lack of industry knowledge, the lack of industry connections. I think it is much easier to solve those problems just by being diligent, and by networking and connecting with people and being open minded.

10:52You can solve those problems. As a young person for first time founders, it is really, really easy to just go to hospitals, go to partners and say, hey, like, what is it that you need? Like, tell me and I'll just deliver it for you. But the real challenge is like, these are problems that health systems oftentimes don't know how to solve.

11:07And so if you're looking to them just to give you the answers. They don't know what's possible technologically. Oftentimes, they're not sure how the market trends are moving. And so they're not going to be able to tell you what the answer is.

11:19What they're really, really good at is telling you what the problems are. And so when we go in and we work with hospitals, we always make sure to align around, hey, what are the problems they're trying to solve? And it's different depending on the hospital.

11:30Some hospitals really care about delivering the best care possible to the patients, and they want to use these AI tools for that. Many others care a lot about productivity by being really clear up front about, hey, we solve the security problem, we solve the patient safety problem.

11:45And if those are problems that you have, let us help you. And if they aren't great, you are not the right partner for us. We're going to go focus our time elsewhere. And that's tough for startups to do because, you know, if you're looking at revenue and you otherwise don't have it, that can be a really difficult decision to make.

12:00But as a result, you know, every one of our customers really love the fact that we solve a problem that they really care about. So I think that's been pivotal to us being able to have this trusted advisor relationship with all of our hospital executives, and Ferrum is not going to be able to be the one platform that everyone, everywhere in the world uses for everything.

12:19Our success is going to occur by enabling Big tech, big healthcare, governments, AI developers, by enabling everyone in the market to be able to collaborate and deploy AI the way it needs to be deployed. And so I don't think of Ferrum as this kind of search bar for the internet or as Uber for taxis.

12:38I don't think we're going to be this dominant kind of front force. I think that we are building the pipelines, we're building the tooling, the picks and shovels that ideally everyone everywhere is using. And if you can make AI truly fungible, truly liquid, truly zero cost to adopt, then you end up with that future state that I talked about, which is a fundamentally transformed healthcare system.