We’re back live and in Paris with our next guest, Johannes Fruehauf. We talk about reinventing the co-working labs for biotech startups, profitability in biotech, and much more. 

Johannes is the President, CEO, and founder of BioLabs, the biggest “incubator”, or as they like to call it “co-working laboratory”, platform for biotech startups in the world. Today they have over 14 locations, including 3 in Europe (2 in Paris and 1 in Heidelberg). He is also the founder of LabCentral and a general partner at Mission BioCapital. 

I’ve known Johannes for over a decade and almost worked for him when I lived in Boston. It’s been great to catch up and see where he’s at now.

Transcript

Johannes Fruehauf: In Europe it’s a little bit different in that the market is so much more nascent and there’s so much less overall volume going on. I mean, if you look at the numbers of venture capital funding that happens, I know the numbers for Germany, all of the venture funding for biotech companies in Germany combined is less than, like, if you look at any year.

Since 2016 is less than all the companies at LabCentral raised, like in one building of ours in, in Kendall. It’s crazy when you’re talking two, 3 billion a year. And in Germany, you, you raise a few hundred million in aggregate, right? So. So that’s sad. And we want to help that.

[00:00:49] Welcome

Philip Hemme: Hey, Philip here.

Welcome to the fifth episode of the Flot.Bio show, where I interview the best Europeans in biotech to help you be inspired and grow. And today I’m in Paris to talk with Johannes Fruehauf, the CEO of BioLabs. And I’m not just anywhere in Paris, I’m literally In front of Notre Dame and I’m going there where you have the BioLabs Hôtel Nieux, which is in the former hospital.

And I’m amazed that there is 10, 000 square meters of labs and offices here on the island in the hyper center of Paris. Quick words about Johannes. I’ve known him for almost a decade. I actually almost worked for him when I was living in Boston. And… Johannes is a German MD who then went on to found a biotech company after his postdoc at Harvard.

Then he co founded BioLabs and the sister non profit LabCentral. And he’s also a general partner in a seed fund. And today, Biolabs is the biggest networking or co working labs slash incubators in the world. Has over 14 locations in 10 different geographies, including 3 in Europe, so actually this one, another one in Paris, and one in Heidelberg.

 And today we will talk about Reinventing co working laboratories for biotech startups, like about money and profitability, and much more. So, let’s head inside and talk to Johannes. 

[00:02:19] How & why reinvent biotech incubators

Philip Hemme: So, Johannes, welcome to the show. 

Johannes Fruehauf: Good morning, Philipp, nice to see you and thanks for having me. Yeah, you’re welcome.

Philip Hemme: Great to, great to be here. It’s yeah. I mean, from the intro, people can, can see the, the, where, where we are. It’s amazing to be in front of Notre Dame. 

Johannes Fruehauf: They look like they have a great location. 

Philip Hemme: That’s unbelievable. Absolutely. I think, yeah, let’s, let’s actually talk about, I mean, start, start with this, not just Notre Dame, but talk about maybe from the zooming out a bit on how, how and why you managed to basically reinvent co working labs, co working space slash incubators for, for biotechs.

Yeah. Yeah, let’s, let’s start thinking. 

Johannes Fruehauf: Yeah, happy to talk about that. So this, this goes back to. Really the financial crisis or eight or nine and the aftermath of, of this we, I had co founded a company previously that we sold in, in 2010 and that was done still in like the traditional format, right?

Like you raise a bunch of money and then you try to find a place where to do your science work. This all happens in Boston at the time. And so, yeah, we had, we, we were scientists, we had a good, I think, good piece of technology. There were some investors who put a bunch of money towards it, but it took us about a year, nine months, 10 months before we could actually do the first experiments because I had to go out, find lab space, get an architect to build a lab and get the permits to do the construction and then find the workers, et cetera, right?

Like all things that. are tedious. We are not experts, right? I make mistakes. I’m a scientist. I’m, I’m, I’m not a real estate person. And so we learned the hard way that it’s not a great use of time for scientists to be doing real estate. And then, so, but that company we saw, the company called Sequent Pharmaceuticals.

 We sold it in 2010 and I was looking what to do next. I had a, and a startup with a French friend of mine Philippe Langella, he’s at INRA here in outside of Paris. We had a cool concept. Microbiome, you remember that? Yes, yeah. By Thera doing, you know, engineered microbes for, for gut health and for inflammatory bowel disease and things like that.

 But it was very hard for us to raise money at the time. So what do you do? You have an idea. We had people, we had a small lab, and we had costs, but we had very little ways of raising money. We got a little bit of money from Johnson Johnson at the time. But this is now, we’re talking 2010 time frame. It was still very hard for people to raise money.

I think… It was comparable to the times we are facing now, you know, in the U. S. at least startups are having a very hard time right now. So we… We looked to, to supplement our income somehow and we, we did CRO type services for VCs and for other people on the side while we were advancing our own agenda and in the process, we worked with many founders and startups out of the venture funds, ended up needing space.

And so eventually we sold them to yours, use our existing mass. 

Philip Hemme: So you realized that the problem you had in your first. Thought that other entrepreneurs found or VCs had the similar problem. 

Johannes Fruehauf: Yeah, well, it wasn’t a conscious problem because that’s the way you did things, right? It’s only sort of really in reflection that you say, Oh, this was a really bad way of doing it.

 And, and now, so, so while we were doing this, this work as sort of a CRO, and we were working a lot with the local VC firms, with all the big firms in Boston, They sent us things that they wanted a little bit of biology work done, a PCR, a QPCR assay an ELISA, some, some other like biomarker work. And mostly this was to validate academic concepts before they were going to make an investment.

 You know, 

Philip Hemme: We could use a few data if it’s, we could use, 

Johannes Fruehauf: absolutely, before you put the big money. Yeah. Right. There, there is this crisis of, of science where. A lot of stuff gets published that’s not real, right, or that’s not reproducible. Maybe it’s not outright fraud, but it’s so complicated that it can’t really be reproduced outside of the specific conditions.

So that’s what we were tasked with. And many projects that we tested and gave a green light for became companies. They got funding and then became companies and then they needed some space. And in, in the initial stages, they only needed like a bench or two and we had that in our lab. So we, we taught the newly hired scientists for this project how to do things and they, they grew in our lab.

And before you know it, you have five or six such other projects in your lab. They were all friends and clients at the same time. And then I started getting inbound calls from people who said, Oh, I hear you’re renting lab space. I didn’t know I was writing graphs. I knew I was doing like a service shop for the VCs and our colleagues.

And, but then over time, it became clear that that was actually a pretty good business and that there was a strong demand. Certainly, you know, we started in Kendall Square, which is sort of the hotbed. 

Philip Hemme: And 2010 was all on Kenneth Square was already pretty sizable. 

Johannes Fruehauf: Yeah, yeah. Correct. 

Philip Hemme: As around, you know, the MIT was already there. Context and stuff. 

Johannes Fruehauf: Yeah. The so, and, and, and we caught a period where it was hard to raise money or it was not impossible, but difficult to raise money. So companies and founders needed to be very capital efficient, right? So after a crisis, I think in a crisis moment, that’s when new things gets invented, new, new models get established, right?

Like people would have continued to do it the old and inefficient way, I think. But here there was a crisis and a challenge and we happened to have a solution for it. We didn’t like magically or you didn’t know the market. No, it’s just like the market came to us and showed us this thing and we were able to grasp it and grow it quickly.

Right. And so we were then adding more space than we needed ourselves to just build it out for our friends and then clients. And so the idea also what set us apart from other people is that We had, of course, the labs built for our own needs. So it was very close to the needs of our colleagues as well.

So fully equipped labs. We had the permits. We did the purchasing of our own chemicals and they could use our suppliers and everything. So it was very convenient for them because they could come in and do science on day one. That’s what we, what we scaled. That program is, is what we scaled. Like every three or four months we added more space and eventually we saw that this is the real thing and we had some very successful companies come through that raised hundreds of millions of dollars.

And so I was able to then take that to the state of Massachusetts and they gave us this grant that created LabCentral. That’s why we have these two entities, BioLabs as well as LabCentral. 

Philip Hemme: That’s right. And then. I didn’t even know it is a super early, early days, actually, because I, I, I, I, I, I was living in Boston.

We met in that central open that we have some, we did an interview there and I mean, that’s really amazing space. And I mean, I was really, I had, I had never seen something like this, really this. And I think what says also quite a part is, I mean, yes, there’s, there’s a very functional aspect of capital efficiency, but also there’s just an energy.

And the community that is really vibrant, there’s, there’s something, 

Johannes Fruehauf: yeah, so we, we now understand that. The community, the placemaking and the kind of connections that we are able to help create are as important as the space as the lab functionality. So I use this sentence when I, when I tell my people what they should do is we, we do two things.

We reduce friction and we increase collisions. So you reduce friction by building nice spaces. I mean, it will be functional labs, right? Like hopefully. We have all the lab tools and toys that you need to do your science and hopefully we build labs that are safe and we build labs that have the right corridor width and the right height of the tables and things, right and all the equipment that you require that’s reducing friction and then we increase collisions that’s not, not hopefully people carrying chemicals, but people meeting in our cafes and meeting at our events.

Thanks. And making more opportunity for this serendipitous connection between an investor and a founder raising money or between a scientist looking for work and a startup hiring a new team, right? And all of these, we don’t, we are unable to predict what and who’s going to meet, but we create the opportunity for it.

And we are actually fairly deliberate about it. Yeah. We have. Develop very stringent design rules about how we build our spaces. Use a lot of glass use a lot of common and open space. Sometimes it’s even intimidating for people who are not used to this because there’s not a lot of privacy in our space, right?

Like every conference room, every office you can look into. And that’s by design. Many of our colleagues are more introverted types, that’s why we go into science, not politics or sales, and so we can help them with with, with some of the way that we design the spaces after a, an initial period of shock and hesitation.

Most people love it and what you see if you go to any one of our labs, even here, which is the one of the youngest places now, there’s a strong buzz in the cafe, there’s people connecting and they talk about science, they talk about finance, but they also talk about private things like where they go on the weekend and that’s a wonderful way to make connections.

It’s a wonderful way to make connections. 

Philip Hemme: In the space, I was talking to him, meeting him like in the last year, and he’s just there. It’s 

Johannes Fruehauf: silly, right? It’s a really cool thing, this community of people, because we are pulling together the like minded people. So the scientists and engineers who have an interest in entrepreneurship, right now in Paris with this facility, we’re creating a place for that community.

Of course, this is still small and interim, but it’s got this big vision of the What will be the largest biotech incubator in Europe, right, in a few years when we build out the western wing of this. 

Philip Hemme: Yes, 2028, we’re opening two, two things. I’m saying in a few years. In a few years, another thing will open.

Johannes Fruehauf: The years is so far out that I don’t even know how to think in four years. But like in a few years, that’s crazy. 

[00:14:14] The competitors

Philip Hemme: And so I get what was missing. What I also curious as in today, I mean the community space, I get it, but then I’m curious also from in Boston, I mean, it’s a bit different formats compared to Europe as well, but from how, how do you like, what are your competitors today or what’s, I mean, I think a lot of starters artists would, would still have a lab space at the academic, at the academic lab and continue to do some experiment until they’re like big enough to rent a space at one of the hospitals here in Paris or whatever, some more like science parks or something.

Yeah, just curious of, is it the same, yeah, where, where do you, where do you place yourself there? Or like how does it compare? 

Johannes Fruehauf: Well, it I think we have to take each market by itself, right? In Boston, we were the first place to build this type of co working for labs. There had been incubators before typically done by universities or by real estate people and many didn’t really meet the needs of this community.

That’s why we grew fastest and that’s why we, our brand is still sort of a very well regarded brand in the, in the space because we are scientists and we are entrepreneurs and we build spaces for ourselves and that’s what people want. So if. You compare that with the pre previously existing incubators.

They typically did not produce very strong companies. They produced mediocre or weak companies. And so that’s like completely different in our case, I believe that has to do with who we are as a group, as, as a founding team and our own experience that sort of lived in the space and built on this. Now, that gave us an opportunity to be the first such group in Boston and in many other cities in the United States where we quickly expanded.

We are now in like eight states and 14 cities, I think, and we’re building more, but there are now people who see this concept and who do this themselves, right? It’s a little bit like, of course, my team sometimes is very upset when there’s a new competitor coming up to the market and I tell them, look.

It’s sort of like you invent the idea of a hotel, right? Okay, we, we did invent the idea of the hotel for scientists, but you cannot patent that. You shouldn’t be upset if other people see that this is a good model of information. Right. And so it’s a challenge for us. We have to provide better community, better service, better value for the entrepreneurs, and then they’ll continue to work with us.

 There are a number of groups I’m not gonna. Highlight them some are better than others none are better than us. But there’s also a, a lot of hype going on in lab real estate now. And just because it’s a cop and an asset class in commercial real estate. And so that means there’s huge money behind it.

And some people are trying to use our model or say that they have something similar to bio labs, but. It’s hard. Like if you’re a real estate person, it’s very hard to really learn the needs of the scientists, right? Or live the life of a scientist. 

[00:17:41] Entrepreneurship in Europe

Johannes Fruehauf: So we’re not so worried about that in Europe. It’s a little bit, so this is all in the United States in Europe.

It’s a little bit different in that the market is so much more nascent and there’s so much less overall volume going on. I mean, if you look at the numbers of venture capital funding that happens. I know the numbers for Germany, all of the venture funding for biotech companies in Germany combined is less than like if you look at any year since 2016 is less than all the companies at LabCentral raised, like in one building of ours in Kendall.

It’s crazy when you’re talking two or three billion dollars a year and in Germany, you, you raise a few hundred million in aggregate, right? So, so that’s sad and we want to help that and I don’t know the numbers in, in France, but it’s, it’s similar. It’s probably similar order of magnitude. I actually think that, I mean, we come off of a great event yesterday night where we opened this first phase of our hotel view incubator here.

 Bio labs. I think there’s a lot of good energy in France and I give the national government a lot of credit for changing the spirit in the mood. And we work very well with different levels of government. I’m still learning about them. It’s city perfect to or region and the national government, but they’re all very interested in this theme of innovation and enabling them.

Entrepreneurship and enabling a young generation of people. So that’s good and that’s very hopeful, I think. And France is on a good trajectory and they are performing much better than their reputation. Certainly in the U. S., France has a reputation as being socialist and terrible to employ people.

Strike, strike. But they’re really having really good policies, relatively rapid decision making and we’re quite happy with the way that it goes here. So, we are, I think, the first program of this kind in Paris now. And as you know, we have three locations around Paris. A site at Hotel Dieu, which is just currently office and some conference rooms and meeting spaces.

I don’t know if you will do a tour with your guests with your video. 

Philip Hemme: No, I took some shots. 

Johannes Fruehauf: Okay. Okay. And then we have a lab space, which is in different hospital of the APHP group. In the 14th district at Obit. , yeah. That’s small, but we hope to grow it quickly. It’s about two thirds full right now.

 Eventually we will be building a, a 10,000 square meters incubator in the Western wing of hotel. You Yeah. And that will be very big and massive, but we need to, that’s a lot of life. A few years odd. And we have an bio labs at CLE with the, the French Pharmaceutical Company survey. It’s on the Plateau de Saclay, and that’s brand new.

And this Paris 

Philip Hemme: Saclay is this huge campus build, yeah? It’s also a university where they group all the universities, a lot of big corporate research centers, and make this like massive. 

Johannes Fruehauf: Greenfield development in a way, I think used to be agricultural area. Yeah. And it will be a very big hub. There are many really brand name universities there and pharmaceutical companies.

And once they have the public transport going, it will be good. Right now, there’s only a shuttle, right, in a few years. It will, the, the tramway was promised to be completed in 2022 and then 2024. And I think now it’s still a few years, but the Metro 

is probably 

I’ve seen it too far. It will be, it will be good.

And, and so if some of your listeners are in the, in the force region, they should check out our bio labs at SACLI. It’s a, it’s a beautiful building. It is, it is accepting new applications from startups and you have the opportunity to be very closely. interfacing with the scientists of CERV E if you’re interested.

So if they want to have a research collaboration, if they maybe want to explore a program of, of joint venture of funding with CERV E, that’s a good opportunity for them. 

[00:22:11] Difficulties of Europe

Philip Hemme: We, we, we touch base on, on quite a lot of things. It’s, it’s interesting. Maybe some of the questions I had were kind of already answered or we can, we can take it further.

 One thing I had, which you touch, On it’s, on, on the difficulty, or like, let’s say on the specificity slash the difficulty to open in Europe, which was different. Yeah. I remember we talked for many years and you were working on opening something in Europe and, and you even told me, okay, it’s, it’s attitude, something like, I have a lot of respect for people doing business in Europe.

Johannes Fruehauf: Oh yeah. I

Philip Hemme: mean, I like that you have this view of like being, being German, doing business on both sides of the Atlantic was basically the similar product in a similar environment. And so. So what, basically, why, like, why was it more difficult? 

Johannes Fruehauf: Yeah, so I, I mean, as background, right? I’m a medical doctor. I’m not a trained business person.

I’m a, I’m a learned business person through, as I say, the school of hard knocks. And I, I developed all of what I know about biotech and, and venture capital. By practicing it in the United States. So even though I’m German and I studied in France for a while, I’m not as familiar with the system here.

And so then for me it was quite a shock to arrive here again and to try and do what I learned to do over there with a model that works and then to be facing obstacles that are not business obstacles, but bureaucratic obstacles. And… What I perceive to be unnecessary friction, right? The exact same thing that we’re trying to reduce for our entrepreneurs is what I experience here.

Bureaucracy, permits, delays, wait times, and mediocre administration proceedings that help nobody. I understand. That you need to have some regulation. I, it’s, we’re building labs after all. I understand you need to have safety rules, et cetera. I respect all of that. But if you have people enabled to put roadblocks in the path of an entrepreneur who wants to build something that add no value for anybody.

It doesn’t add safety. It doesn’t even really add revenue for this, for the government. It’s not, I’m not even complaining about the taxes. I’m complaining about the process load, right? That is really bad and Europe needs to get a handle on that. I, this is specifically true in my home country and yours, Germany.

 Here in France, it’s also there, there are also administrative obstacles and we are, we talked about some of them at the event yesterday. Even politicians are there to help us overcome them. Now, what’s interesting is that often you do have buy-in from. Like the strategic decision makers, but then it gets ground to a, to a halt in the bellies of the administration layer that is in between.

And so that’s something I’m, I’m a European. I want this place to thrive. I want this. I want our, our societies to develop better and, and to have economic dynamism. And I think we need to get a handle on this as Europeans, as, as Germans, as French. Yeah. Not, not everything is great in America, right? Like we know that.

 But certainly for entrepreneurship, America has a good formula, which is to a priori not think it’s a bad thing if people want to try something new, right? And so to, to let them go do it first, right? Until they screw up in a way, right? It’s just faster. People get employed fast. Of course they can get let go, but that eventually creates this, Economic dynamism that, that is, is very helpful.

I, I do have big hopes. I think I’m, I’m optimistic with the things I see in France now. And I’m optimistic when I speak with these young entrepreneurs that you met in the café now, right? They all are very well trained. They have a strong basis. The people that I interface with are all scientists or engineers, right?

There’s very good science going on, very good training. And now for the last five or ten years, they want to also do something with it. They want to become entrepreneurs and build their own ideas out. And that is, I think, a new development from several years ago where they all wanted to work for the Peugeot or for the government or for the big companies, right?

So it’s now cool in France. To want to pursue a startup idea, right? That’s a really hopeful sign. 

Philip Hemme: Yeah, you put it really well. I think it’s one thing that at least, I, French government has played a big part, big role, but I think also more so of the whole startup success stories. Right. I give credit to women, but there’s probably also a big, like there’s a societal slow shift, societal 

Johannes Fruehauf: shift and 100% I think, yeah.

Who did the government create? Probably not. Probably the societal shift was then the government was able to somehow catalyze it or, or accelerate it. Yeah. And another I wish that in Germany we had. Sort of a dedicated effort to help startups more, right? It, it doesn’t seem to be as deliberate.

There are individual initiatives for sure. I’m still missing in Germany the initiatives that are focusing on biotechnology startups. And the fact that Germany had the success of Biontech. Should rather motivate them to do more than to say, oh look, we have BioNTech. Isn’t that great? Right. Like bte, Germany had BioNTech because of sheer luck, I wanna say.

Right. The, the science on the basis in the universities, in the research hospitals is phenomenally good. Right. And we are in Germany punching way below our weight in terms of translating that into products. Companies and jobs and economic wealth. 

Philip Hemme: Right. I mean, and I would say, yeah, I mean, basically if you take Germany, this is pretty much the same across Europe and UK usually has some trends, a bit different, but they’re pretty good in translation.

They’re a bit more business friendly with that year and the fourth opening thing. But yeah, no, I think, well, I mean, it’s, it’s a very complex problem, but it’s great that you guys managed to open the space in Heidelberg and to space here, I mean, two or two and a half spaces, and that you’re actually helping really bring that dynamism and helping entrepreneurs.

I mean, at least having tools and having more facility to start, I mean, I think. Yeah, it’s, it’s already, I mean, 

Johannes Fruehauf: when are you going to air this 

Philip Hemme: next week? 

Johannes Fruehauf: So, okay. Then we cannot yet make the new announcement. We have a new announcement, stay tuned for Germany but next week we can’t. Okay.

[00:29:37] People make it happen

Philip Hemme: Now that’s great. And just so, and also I was touched, I mean, I think you mentioned the people as in a special component, but this is really the team and the people at Veloz. I think that’s a big factor. And maybe we can talk a bit about people in general, people inside companies, people inside startups.

And actually, also in BioLabs, you have, even in the US team, you have a lot of Europeans in the team as well. I don’t know if that’s a success factor or not, but that’s at least a fact. But I think one thing that makes Biolabs so really special is, is coming from not just you, but even on the, on the top, on the top team is you can really feel this like authenticity and you came from the problem and, and, and there’s this relevance and you’re running it and, and, and, and, and can you, but can you touch a bit on this on, I mean, on, on Biolabs, but on

Johannes Fruehauf: Yeah. So I think people are the, the beginning and the end of a, of a startup, right? And you can, if you had, you even have your, even if you have a genial piece of science and technology and you don’t have a good team to develop it, it will go no way. Right. But if you have a strong team. Even if they have a bad piece of technology, they will make a success of it because they will recognize it and they will improve it or pivot or bring in another solution.

Right. So I am a strong believer of primacy of team over technology. So people, people, people. People, people, people. And, and that’s the same is true. So we can talk a little bit about BioLabs, but the same is true on, on our venture side, as you know, I’m, I’m also a founder and a partner in a venture capital fund called Mission Bio Capital.

And they are the same thing is true. We, because we are early stage investors, we value the team and the coherence of the team and the professionalism of the team and the character of the team more than we do the, the technology that they have, of course, that needs to be interesting, et cetera, but. If, if there’s any doubt about the reliability of the team or the capability or the, the, or the dedication, it’s not going to be funded by funding.

So let’s talk about biolabs and lab centrals. 

Philip Hemme: Just for that, if you, if you have to rate it. If you need to put the percentage of the, on the team, you put like, whatever, like 75, 25, something like this. 

Johannes Fruehauf: Something like that. 

Philip Hemme: So really significantly. 

Johannes Fruehauf: Significantly. More. Because, because as, as VCs, so we are VCs that also, that, that invest and sometimes we, we, we want to be very active investors.

Don’t to be there, there are other firms like third rock and flagship that basically build all their companies in house, right? We don’t do that. We want to bet on the team. We think the team is, is, are the best expert in their field. And they also have the 110% commitment to their idea, right? So who’s better to develop it than, than them.

And so that’s our thesis. But that means we need to be convinced by the team first and foremost. And then, of course, we need to believe in the solution, et cetera. 

Philip Hemme: I guess you apply that also to Biolabs, as in when you select for tenants. 

Johannes Fruehauf: So in Biolabs, it’s, it’s, it’s like a hospitality business in a way, right?

It’s a little bit, we need people who can work with a customer, right? A lot of what we do is problem solving for the entrepreneurs. And so I’m, I’m very proud of the teams I have been able to build and and retain at LabCentral and at, at Biolabs as well, because it, it requires a certain skill set and sometimes it’s a little bit quirky people, right?

It’s not sort of the straight line people. It’s, it’s sometimes people who have done. Some, you know, some retail and they’ve tried to be an entrepreneur and, and failed in that, but they learned a lot of things, right? And so now they can connect much better with the other entrepreneurs that we have because they’ve got that background or they’ve been in entertainment or they, maybe they’ve been a bench scientist before.

So we try to build very diverse teams. And as you said, yeah, I tend to see value in having. Diverse experience, having worked in different countries is certainly a plus having worked, having immersed yourself in different cultures is certainly a plus if you apply with me for a job, right? Because I’ve done that and I think it’s hugely valuable to have lived In a bunch of different countries and worked in different cultures because it gives you a little bit of humility.

It gives you a little bit of perspective. What, what you grew up with is not what everybody grows up with. And it’s not the right thing or the wrong thing. It’s just different. Right? And so. So after living in, in multiple countries, you get to see that, okay, there are certain things that are constant between people and that are not directly culturally dependent.

 And then there are other assumptions where you think, Oh, but that’s not what I used to. That’s not what I grew up with. Well, that doesn’t matter. That doesn’t mean it’s good or it’s bad. Right. And so I, I like to encourage that in our people. Why? Because our user base is also very diverse. So if you, if you look at the companies that we work with in Boston they are 72% founded by immigrants to America or co founded, right?

Like the founding team or co founding team in 72. 9%. When we, we did a study on this, there was this big, you know, during the dark years in the last Trump years we had, There was a lot of pushback against immigration in America, and so we did this study to demonstrate how immigration actually contributes to the economy.

And so we had 73% of companies had an immigrant founder or co founder. And so it’s important for my team to be able to work with that group of people, right? So… If I hire Americans, I want Americans with a passport who have at least traveled abroad once or twice, right? And, and abroad is not Florida. I should go from Boston.

 So that’s an important mindset. 

Philip Hemme: So interesting that you apply both directions. I, I’m laughing a bit about this, like, I mean, at least me know about the people and, and what’s constant or not. I mean, now. I’m more exposed to the Chinese culture through my wife and it’s another like level of constant, but still, I mean, very different, but you’re still, you can observe really some stuff are really constant in human culture slash human psychology behavior.

Yeah. And it’s actually funny when you see something that looks so, so different and you don’t understand any of the rest of it. But when you see that some core things are still very constant, it’s actually interesting to see. Yeah. 

[00:36:51] BioLabs in Asia

Philip Hemme: And this makes me doubt on like how, basically, what about Asia for Violas, is it?

Johannes Fruehauf: Yeah, I’m In a few 

years? I’m very interested in, in flying our model in East Asia, I guess, in general. So I, you know, I have a Japanese wife. And so I live between these cultures too. And I, we’ve traveled to Japan many times. And so I, I think Japan will benefit from our model greatly. We now have a very small…

BioLabs outside of Tokyo in Kawasaki. It’s a suburb of Tokyo. Okay. Yeah, for about 12 months. It’s been open. Okay It’s a collaboration with a local academic institute called ICON M. It’s an institute for nanomedicine. Yeah, they have a beautiful building which is just, if you ever fly to Tokyo, you may fly into Haneda Airport, so go by and take a look, meet with our team.

 It’s just like you can see the airport from the building and vice versa. It’s like literally across the river, like this. And we have a small number of companies there. Japan is a great study case for what Biolabs can do. Because… You have undoubtedly world class science, right, and excellent basic research and result.

I mean, they invented the iPSC technology that is now revolutionizing medicine, right? And yet you’re doing that in a culture that is as traditionalist and as hierarchical as they get, right? And where risk, you cannot take risk because if you fail, you’re done. You will not recover. So it is, I think, even harder by orders of magnitude compared with Germany or France for a young scientist to, to become an entrepreneur.

 There is a small and resilient community of entrepreneurs against all odds in Japan. I love these people, right? Amazing. And we, we gather with them and they have their own internal gatherings. We are invited to meet them every now and then. And it’s like a… Certainly less than a hundred people build that community, but it’s growing fast and there’s support, there’s strong support now from the government, the Kishida government.

 They have understood this to be a problem and they have a good initiative. At least they have a good political desire. To make progress, they have made available a program that’s equivalent of eight billion U. S. dollars. To support venture venture capital formation, to support startup infrastructure building and training programs.

And I think those are all the right. Now the question is, how is it translated into programs and reality and what’s the timeframe? I think in Japan, you will need a societal and cultural shift to allow for young people to take more risk and then develop a risk tolerance that also says, and, and a faith tolerance of failure where.

If you go out and you build your first startup, and of course it’s going to not be a great success, right? Like 90% chance of failure. Exactly. And it’s okay. Why? Because it’s sort of an experiment. A startup for me is like an experiment in, in business. Like we do experiments in the lab all the time. If they fail, it’s fine.

We learn something. But in startups, it’s sort of an experiment in business and you learn something and hopefully you’re successful the first time. Good for Mark Zuckerberg, right? In many cases, 0. 001 vaccine. So people shouldn’t expect that, right? People should expect that. Okay, you go try something. And in the path of trying, you’re going to learn a lot of things.

I like to invest in entrepreneurs who have failed once or twice because I’ve learned their lesson, right? But in, in Japan, that will be one of the biggest challenges for them to overcome, but they know it. To, to accept and, and even see as a learning the case of a failed company so that they can build on that experience.

Philip Hemme: And do you, yeah, it’s interesting looping by connecting it to what’s universal or what’s shared. Do you think that you think that the higher tolerance to risk is a good thing across the ball? 

Johannes Fruehauf: I think so. 

Philip Hemme: Or is it your bias from vc slash biotech and 

Johannes Fruehauf: of course everywhere. Each of us is 

Philip Hemme: because you have downsides, you know, 

[00:41:46] US culture

Johannes Fruehauf: I, I have I was not a big fan of America before I came there.

We went there not because of my choice. We went there because my wife had her postdoc and I wasn’t gonna be away from her for many years, right? So, I followed her. And I wasn’t a big U. S. fan. In fact, I was one of these typical intellectual Europeans that hated on the U. S. before. I now really respect the model and I really like the model that the United States has built.

It’s a very young country. It’s not an old country like this or 

Philip Hemme: almost younger than the Beatles, right? 

Johannes Fruehauf: And so there are still things that America has to and will improve. But certainly 

Philip Hemme: I’m wondering if it’s, if it’s like, if you can share it because I mean, I think one thing that. What struck me, I say it’s pretty difficult.

I mean, obviously me also as entrepreneur going to Boston, I mean, I loved it. And I learned a lot from that. And I incorporated some part of this like increased risk and, and, and different culture, but also one thing that is very tricky with, with the U S culture with Boston is that you have to also understand the bigger contexts and, and usually it, it, it connects in different levels and it works.

Because of, of the rest versus if you take just risk of error and you translate it, maybe it’s, it’s different, but that’s, yeah, that’s a bit where my question is coming. Like, is it, is it more like a fundamental thing that can work universally? Or is it depending on other societal? 

Johannes Fruehauf: So, so it’s very interesting to think about where is, where does this risk tolerance come from, right?

I think America is built by immigrants, right? Because the native population has been wiped out in a way, right? So all of what America is, is, is built by people who came, most came from Europe, right? And they didn’t have much to lose in Europe. That’s why they left. The aristocrats didn’t leave, right? They kept the bank.

Industrials in the 1970s, 100s, they didn’t leave. They had it good in Weimar and in Paris and in Lyon, right? They didn’t leave. It’s the people who had nothing to lose who left. And so those people, after they arrive, they had to build things with their hands. They had to build their, stake their land, build their cabin, and hopefully they made it.

Sometimes they failed, sometimes they were successful, but that I think that selected for a spirit of, okay, we have to try anyway, we have nothing to lose, we have to go forward, we cannot look back, we cannot rest, and it, it may be sort of glorifying the history of this, but I think that is still how the economic dynamism, as I call it, is, is preserved there, of course, in, also in America, there’s now layers of bureaucracy layered on top of this, and Rules and regulations, et cetera.

But I think the overall approach is a little bit different from where you, where this is coming from. And I, I think that’s why we see many immigrants in America still. There’s proportionally way more businesses founded by recent immigrants from. From India, from Asia, from China, from other places, Pakistan, they found businesses.

And why? Because maybe they don’t have a job that is the right fit for them. And they don’t have much to lose if they, if they start a company or if they start a little business of their own, right? And then some of them are successful and grow that. How is that? That is, I think, very specific in the U. S. So you cannot translate these things one to one. What I like to try to do when, when we open new sites is to see sort of what are the key learnings that Biolabs can bring to this community and then look at what is the given ground in that, in that place. What is, what is the culture, what’s the habit, what are the types of interaction that people have and, and see other learnings that are specific to our industry.

That because we have so much volume in the US because we have so much data now of what works and what doesn’t work that we can bring to Europe, for example, right? And just accelerate that so that we don’t need 10 years of trial and error, but that we can say, okay, these are the five things or seven, six, seven things that you have to do because they are known to work, right?

But of course you have to build it in the greater context of, of what’s here. 

[00:46:34] Does higher risk tolerance work?

Philip Hemme: So still going to back to my question, you, I mean, from, at least from your learning, the higher risk tolerance is known to work, at least in, in your case, in biotech startups, I think it’s, it’s something that’s house entrepreneurs and in general, and can be helpful anywhere.

I am challenging you, I bring the 

Johannes Fruehauf: venture, you have to, you have to have a risk tolerance you. So, of course, we build companies that have no revenue, they, it’s not like you have a product that’s already there and you have to sell it in a different city and you can predict how much you have to pay the salesperson to go to the different city and then sell more volume.

No, you have a thing that may work or it may not work. It, and it’s quite likely that it doesn’t work because otherwise someone would have invented that before. So you are trying to push the boundaries of what’s possible. But you have to believe that if it does work, it’ll be such a big paradigm shift or such a big market that it’s worth taking the risk at the front end.

And so all of what you do in venture or, or in startups of our type has to be built on a big tolerance of the likelihood of failure. Yeah. 

Philip Hemme: And I think, I mean, for the listeners who are not just enthusiast or not like specific in biotech, I mean. What you just said also is, I mean, to appreciate how much risk there is, I mean, you talk always about software startups versus deep tech, but biotech in the category of deep tech is probably one of the highest risks possible.

I mean, you get a bootstrap with your biotech company. 

Johannes Fruehauf: Very hard. 

[00:48:22] Real estate can be profitable and exciting

Philip Hemme: Very hard. Especially on the therapeutic side. Yeah. No, that’s, that’s great. Yeah. On the switching of a topic on the, on the money slash profitability, you touch base a bit on it, that real estate is a big business, especially, I mean, probably it’s not anywhere in the world, but I guess in the U S there is also this like, Oh, biotech need a lot of lab space and we can make, make money there.

And I think you, you told me something like that real estate is boring or not the most exciting, but it’s very profitable. I mean. I would not call it, it was not the exact words, but somewhere in there, but I think what, I mean, you make it also really exciting, at least as, as a space, because it can be very dry, it’s like, you know, when it’s square meters, and I charge you.

The highest amount I can charge you versus here, it’s really, really different. So can you touch base a bit there on like, just, yeah, what’s how you see it, how, yeah. How, how you look back on it after 10 years. Yeah. 

Johannes Fruehauf: That’s yeah. So we. I, I said that and I still believe it that real estate is a really good way to make a lot of money if, if money is your sort of driver.

Enlightened real estate can also change people’s lives. You can build new areas of a city, you can redevelop buildings and that’s, that’s contributing a lot of value to to society. Real estate, if you look at the large fortunes in America that are made today, a lot of it is done. Of course, there’s the people that make a lot of money with tech, like you have Musk and these guys, a lot of large fortunes are made in real estate.

And that’s because you have the multiplier effect. If you have a big building, you know, the, the multiplier effect is very strong. And, and in most Certainly in America, but it’s also true in Europe that there are a lot of incentives from government that give you tax abatements, et cetera, to build real estate because you’re building infrastructure.

Now I also say that it’s a fairly simple business and it’s less tricky than science. Of course, there are layers of, of sophistication and specialization. I don’t want to discount that, but it’s. It’s a relatively small number of basic elements that drive real estate. I, I find it fascinating, the, the power to, to leverage capital and to build big projects is, is a fascinating thing I’m getting into and I’m learning about.

I don’t want to, though, become just a real estate person. I think. The innovation part is much more fun and it’s more fascinating and it’s where, where I’m home and where I come from. And so for us, we are bridging these two worlds of innovation and real estate and we’re building real estate to enable innovation.

Right. We have to get the balance right. It needs to pay for itself at least. It can’t lose money. But this way we, we are hoping to maximize our impact ourselves. So just, and 

[00:51:48] If you don’t have to, don’t take the money

Philip Hemme: the, yeah, that’s, but you, because I mean, Biolabs has been profitable from the beginning. I mean, you have never raised money. 

Johannes Fruehauf: We have not raised money.

Philip Hemme: You still haven’t closed the round at all. 

Johannes Fruehauf: We have not raised any external capital. Correct. We. It’s very liberating to be a profitable company. So it’s interesting because on the one hand I’m a venture capitalist and I want to invest in your company or in an entrepreneur’s company and buy their equity.

But if I have a choice, I will not take other people’s money if I don’t have to, right? And if you’re able, so a piece of public service announcement for any, any entrepreneur who’s listening. If you don’t have to take money, don’t take money, right? Or 

Philip Hemme: take the least amount possible. 

Johannes Fruehauf: To get you there. If you’re able to build a profitable company on your own, that’s a good way to do it.

Because then you have the decision making. Then you can pursue what you want to do. And, and sort of make sure that you have profits. Because if, as long as you have profits, You can rule your business and you can rule your life. And as soon as you lose money, things look very different. And as soon as you’re out of money, you have to shut the door.

 So it’s a, it’s a careful balance, right? And it’s not, it’s not a bad thing to take other partners into your business to provide capital, as long as. They, as long as you have a good arrangement with these providers of capital about like who does what who has what level of control, what are you going to use the capital for?

Are you using it to grow your revenues? Are you using it to conduct a piece of research and development, which will lead you to an, an increase in valuation and milestone? Are you looking to bring in capital that’s smart capital? That’s another big piece of like money is. Not the same from like the same dollar is not worth the same if you have an investor that brings in talent or connections or they can other non monetary value that can be very important and instrumental for your company.

Philip Hemme: Okay. Yeah, 

I like that. I like that. I mean, I’m with Struck bio now, really trying to bootstrapping it and yeah, making profit all versus lab where we raised money and we mm-hmm. took us a long time to be profitable. I mean, even though it was on the small scale, not hundreds of millions, but 

Johannes Fruehauf: it’s a mechanics, the 

Philip Hemme: mechanics similar. Yeah. Yeah. I have to say, yeah, it’s 

Johannes Fruehauf: sometimes it’s, sometimes it’s the same struggles. It may be easier to raise more money. Yeah. Then, so it’s, it’s the same, I mean, the overall, the same mechanics work, right? As soon as you have external investors in your company, they’ll want to say in where you take your company.

That’s only fair. Right. And 

Philip Hemme: it’s like a marriage. Yeah. Absolutely. For a long time. Absolutely. You cannot kick out the investor. 

Johannes Fruehauf: So it is important also for you, the entrepreneur to look very closely at who are the potential investors in my company. Hopefully you have a choice. Yeah. Absolutely.

Unfortunately, in many cases, our entrepreneurs have no choice. They have to take the money from the first and only one that offers them. But if you do have a choice, use it and, and be very careful about like, who do you allow to be on your board of directors? Who do you allow to have a blocking vote on, on your shareholder agreements?

Look into the head, don’t just say, Oh, I need the five million. I’ll take it from anybody. Be very careful, because it is like a marriage, it’s a relationship. Every day you’ll be having to run decisions by these people. And hopefully they will be supportive of your, of your decisions. Hopefully they’ll add value, but sometimes they don’t.

Sometimes they’re driven by other interests. 

Philip Hemme: Oh, it’s misaligned. Yeah. 

Johannes Fruehauf: You have sometimes the, the time horizon for the investment doesn’t align with your interests. Right. And, and then you’re in trouble. They, they make you sell the company, even though you, you want to build it further. 

Philip Hemme: I like what you’re saying.

I can, I can double on this. I mean, my experience was, it was laboratory tech, but it was definitely a big. Focus on people on who we let in. But I like your point a lot. I’m like, what are your options at the moment? And even for us, we didn’t have that many options, but we did say no to a few investors. Where we just didn’t feel like it.

And, and in hindsight was the right decision. Good. And especially, I think it’s especially tricky with at the beginnings. I mean, you see it probably

Johannes Fruehauf: in your, in Yeah, it’s definitely been two years. It’s like, two months. 

Philip Hemme: It’s hotter in Boston. Everything is faster. But once you get to like, challenging parts of like, a bridge, down valuation, or then a forced exit, or even just an exit. I mean, for me, one big reason was, once you have money on the table, people act very differently.

And it’s the same people. But once, yeah, it’s, it’s, and that’s where having selected the right people. And it’s not the right for everyone. It’s also really a fit makes a big difference. 

Johannes Fruehauf: And, and relationships, again, relationships matter. That’s where having been through this once or twice, relationships and experience do matter, right?

Sound like an old person now, but it’s, it’s, it’s helpful to have been through this once or twice. Because now you’re looking at the potential investor very differently because you, you know. What’s going to happen during the time of the building of the business. You, you know, what can happen during the exit of the business.

And some of these events can be pretty nasty, right? And at the same time, it’s hugely valuable to invest in relationships, to build a trusted partners like that. And if you find that group, you could invest with them, or you could have them invest in your ideas. In a serial fashion and they come back for the next idea, whether you make the money or not.

 It’s also as part of your, if you’re, if you’re an entrepreneur and there’s an investor that comes to look at your business, you should also do diligence on them. Right. And you should try to find the other entrepreneurs that this guy invested in previously, call them, find out what they have to say, especially with the ones that didn’t work and that didn’t work very well.

Right. Like what happened? Did they change management? Did they fire the founder? How did they deal with adversity? How did they deal with with trouble? And did they add value beyond the dollars? It’s very important. And it’s, I, I see the mistake often by young teams first time teams, that they, Grab the first money that’s on the table, and that’s not always smart.

Philip Hemme: I guess, yeah. No, that’s a good point. But I think it comes a bit with experience. But at the same time, you have also trade off on the experience, where you were like, look for the perfect person and already know, but that sometimes you also need to… It’s the hard part of look too much and look too few.

[00:59:15] Synergies between real estate and investing

Philip Hemme: Yeah. Maybe on the… No, that’s great. One, one thing I want to talk about synergies and one thing I like a lot was, was, Oh, and you touched a bit on it, but was by labs and that’s, you are here. We need to help entrepreneurs and you’re helping them with, with, with space, but you’re also helping them with capital which but also for you as an individual brings you your, your interest of helping on the real estate side, but also in investing in entrepreneurs, but also from a business point of view.

It also allows you to, let’s say, monetize or, monetize is probably not the right word, but You have, you are exposed to opportunities through the, through the labs, through the space. And this gives you access to, to people and opportunities. And if you can deploy capital there, you can also make big return or bigger return.

Yeah. So can you, I mean, that’s, and that’s it there. That’s, that’s already great. Can you talk a bit more there on like, I don’t know on the synergies on, on how you make it work, how did you get started? Was it obvious or not? I mean, like, 

Johannes Fruehauf: I’m happy to, to talk about it. There’s not a master plan. It’s really observation.

We started, so on the investment side, 

Philip Hemme: and you have 500 million in the management, 

Johannes Fruehauf: across five funds, 

Philip Hemme: just to give context as well. 

Johannes Fruehauf: So we have a venture capital firm that’s called Mission Bio Capital. We are currently investing from Fund 5. It is a 275 million vehicle that’s mostly investing in the United States, mostly investing in companies and entrepreneurs that we connect with and meet through our lab network.

Thank you. But it has made a few investments now in Europe and we’re growing our network in Europe as well. The investment, so the, the firm is founded by one of my mentors and myself and a few other people. Peter Parker, he was my first investor in our first company, Sequin. We mentioned it earlier.

And so since then, we’ve been working together. You’ve met him, right? He’s a very experienced venture capitalist. He had like 25, 30 years of experience in venture before we met and he. You know, when we built BioLabs and then when we built LabCentral, we saw, we saw many companies. And so he had that skill set of a VC with a very credible track record before.

And so we went out and, and use that and raised our first fund together. And so we found that the platform that we have is very unique from other VCs. There’s really no other VC firm that has this type of platform. VCs, they invest because they get a deck or they get an introduction and then they meet the entrepreneur and they look at a presentation.

But we do that differently. We meet entrepreneurs typically when they apply for space to come into one of our labs. And so during the admissions process, every company has to pitch Heidelberg or Durham. Our, my, myself, my partners, or some of our fund people will always sit on that selection committee alongside with a local team.

And so we get a first view, an impression of the team and the founders and their ideas and their ambitions. We ask them for key things like, what’s the idea, what’s the science, what are you, how are you going to make a business out of this piece of science? Who’s on the team? What have they done before and how will they execute this business plan and have they raised any money?

from a third party, or is this just an idea stage thing? That gives us a very good first initial overview that allows us to assess the company for a, if they are a good fit for the labs. Also, will they be good stewards of our, or citizens of our community? And, and then the, the bar is not that high to get into the labs.

Yeah. Depending on the fill rate, really. In, in some cases, we have very lower. Admission rate, like in Boston, we typically had one out of four, one out of five only accepted. And then in other places, admittedly, when the space is empty, we feel be a little bit more lenient to fill the space up. But that’s how we meet companies and entrepreneurs first.

And, and then if they need money, if they are raising now, we already know them and we can have a discussion about it. We have no rights to invest and we get no preferred terms to invest. They don’t ever have to talk to us on the venture side. We have a lot of companies and entrepreneurs that come with preformed venture syndicates from other places.

 And that’s totally fine. They can come into the labs. But we will have a relationship with them that way. And so, even though we are a relatively young firm, we’ve been able to build a strong network now of relationships and Also syndicate colleagues. We’ve, we’ve co invested with the very best venture funds and venture funds that are 20, 30, 50 years old.

And. We’ve quickly been able to make a good reputation also on the venture capital side. So I’m, I’m excited about finding opportunities in Europe now. I think they will need a slightly different profile for us to invest in. I think the science is really equally as good as what we find in Boston or Philadelphia.

 What is lacking in, in Europe and that’s true both in Germany and in France. Those are the only two countries that we currently have a is that the. The growth capital is lacking and that the management to take companies to the next step is lacking. And so we I think we can actually help with that.

We can bring. Connections with experienced managers, some of them are experts from Europe who want to come back and who’ve sort of built a career in the United States who can come back and apply this and they’d be happy to move to Paris or to Munich or to, to Berlin to work here and, and we can help with capital connections because we have our strong network, we can help take companies public in the United States if they want to.

 So that is a good opportunity that we will, build more of that strategy goes. 

Philip Hemme: I like that on the, on the synergies part, you, you are looking at the potential upsides, but you are not like you don’t bring any constraint as in like no strings attached or anything. 

Johannes Fruehauf: So for the labs, no. 

Philip Hemme: Yeah, I mean, but you could, I mean, that’s where the, I mean, some synergies also where you can rapidly have downsides.

I mean, if you If Biolabs was very tight to, to mission by capital, it was like, then maybe other VCs would look at it as, well, whatever, more competition or startups would not apply because then they could not get money from other VCs. So, but you get it very like neutral and it’s only if they want to that’s actually.

Johannes Fruehauf: Yeah, it’s another way, like. They don’t, I mean, beyond the selection committee, they wouldn’t ever have to talk to me. Right? We’re just here to offer support. Like, if they want an introduction with the head of, or with the chief scientist of Pfizer, I can introduce them because I know the guy was here on my panel yesterday, right?

And if they want an introduction with Novartis Venture Capital Fund, we can introduce them. If they want to talk to us about… Is this term sheet reasonable that they’re getting from another venture fund? I’m going to be happy to give them advice, unbiased advice, or if they need another syndicate member, we’ll look at it.

Philip Hemme: The most unbiased possible. 

Johannes Fruehauf: Yeah. And, and we, you know, for the most part also, we don’t, I mean, we have on the platform today about 400 startups that use our lab today, right? And we’ve only out of the last fund, we’ve only invested in 20 of them. So it’s a very, very small subset. So most of the time it won’t be a good fit.

It’s maybe too much money or too little money. It’s a technology we don’t like, whatever. But so we are there as a resource. And, and I want to emphasize this again. Many venture capital funds have their companies in our network. I, I met the founder or I, I knew him before, but I saw him yesterday of AdBio.

 French fund. They have like seven companies already in Biolabs. Yeah, I’ll tell you. Seven companies out of like 15 or 16 companies. So they, they love this program and, and Sofinova has a few. And so we don’t even, we have one company that we have equity invested in. So of course we are looking to bring on the, the best companies from anybody.

And eventually we’ll make an investment or two. But that’s not a condition. And, and so that’s another, I think some, you mentioned earlier, competitors to biolabs. Some venture funds are embarking on this model where they build their own incubators. But then that sort of. The incubator to the companies that are in that VC fund, right?

And we want to be the Switzerland, the open shop, right? Like you come to us because you need space. You come to us because you want to meet a cool community. That’s also true on the pharma side. I don’t know if you mentioned that, but, but we have a lot of pharmaceutical partners that we 

Philip Hemme: Pfizer. Was like just announced 

Johannes Fruehauf: Pfizer is our ING sponsor. They joined recently. Yeah. And we had their French c e o here and yesterday and, and Schoenbach their CS o And we are super grateful for Pfizer’s support, right? Like their, their c e o Albert Bola is an overall c o He made a big commitment to r and d in France. Pfizer and I, I think this is already a demonstration of that commitment to France.

Is, is that they’re helping. To grow biolabs in Paris. We also have as founding sponsors, Ibsen, French company and Sanofi. These are two companies that we had worked with very well already in, in the U. S. Yeah. And then we also have Novo and Amgen and many others. 

[01:09:52] What’s in it for the residents?

Philip Hemme: Each time with these farmer partners, it’s, there’s no strings reattached for the residents.

Johannes Fruehauf: It’s only benefit attached for the residents. 

Philip Hemme: Yeah. Yeah. And they, and they get what, I mean, what’s in for them, they get exposure. 

Johannes Fruehauf: Yeah. So what’s in it for them? Let’s, let’s, let’s try to untie that. So one, the, the sponsors are sponsors because they pay money to BioLabs. And that allows us to pay the rent and to pay this and to not charge the startups a huge price, right?

The startups are paying. A price that is subsidized by the revenue that we are able to create from the sponsorship. Yeah. So it’s a good deal, right? 

Philip Hemme: So as is the state, all the pharma companies. Yeah. 

Johannes Fruehauf: So, so it’s being, in a way it’s being subsidized, right? Like if you, if you get, and that’s why we can be selective, right?

Because what you get here is, is more value than you have to pay for, because other people are also paying for this, right? So, and, and so that’s a big part of the value that the pharma companies provide to the startups indirectly. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. Then there’s also very direct benefit because they have office hours where they can come in and they can meet the head of development or the head of business development or other people who are scouts for technology and, and make their programs visible to the big pharmaceutical companies.

There is a strong symbiotic relationship between the startup world and the big pharma nowadays. Most of the drugs that big pharma brings to market today. are developed through collaboration, partnership, or acquisition of smaller companies. And they’re not really internally developed or not internally invented.

Maybe they’re later developed if they take them over at phase one or phase two. So the pharma companies have a big interest in connecting with this innovative community of people because they, they need to feed the beast in a way, right? They have stuff that’s coming off patent and they need to fill the pipeline all the time.

So it’s a mutually beneficial relationship that we are in the middle of and we can help broker. Pharma companies, all of our pharma sponsors also have the ability to sponsor what we call golden tickets. So that’s a sort of a ticket, an entry ticket to BioLabs that Pfizer can give out a golden ticket.

And then they can give that to Philip his, your startup, and you can come into Biolabs, you don’t have to pay us, right? Because Pfizer will already have prepaid the year of residency for you. That’s the golden ticket. And in that case, the Pfizer or Novo Nordisk or Amgen, they can run their own competition.

They’ll do it outside and they will select the company that they like most. That has the best fit with their strategy. And then that company can come into biolabs for a full year of free lab space, 

Philip Hemme: which is equivalent to 

Johannes Fruehauf: 50, 000. This is proxy. And, and so for for the startup, this golden ticket process is very beneficial because one, they get to pitch two, they get to put the name of the sponsor on their website.

You know, these are typically very early stage company and they, they would go to the business plan competitions. They would go to hello tomorrow, they’d go to manage challenge and to Y Combinator and, and for them, they are still collecting labels in a way and endorsements. This is a big endorsement if you’re getting a big pharma.

 To give you a golden ticket, they only have one golden ticket per year to give out. So you win that comp, that’s a big piece, a big sign of endorsement. And then of course it, it’s up to the company to start up and the pharma sponsor if they want to make more of that. In some cases we’ve had strong relationships developed during that year of golden ticket and they ended up in licensing or collaborating or, or, or even M& A.

In other cases, they give you the golden ticket and then there’s no more contact. But that’s really… To the you, the entrepreneur and, and the sponsoring a company. That’s crazy. 

[01:14:01] Get a business coach

Philip Hemme: That’s crazy. On the maybe on the, on to finish on the, on the more personal note or more personal development note. I remember once when we met in Boston, you talked about business coach and And you were saying, yeah, it took you quite, I mean, quite a while to get the business coach and you recommended quite strongly to a lot of your portfolio companies and it’s pretty hard to convince them.

And that’s at the time when I was starting to work with a business coach as well. Can you, yeah, maybe a bit elaborate there or did you change your mind since, so what’s like, what’s your view there? I think especially in the biotech, the biocontext, I mean, general entrepreneurship, but biocontext. 

Johannes Fruehauf: I can only really comment in the bio context, but I think it’s probably true in every context is that we all need feedback, right?

 You maybe get feedback from your spouse on your daily behavior, but they cannot probably give you a lot of feedback on your business things because they don’t see it and they Don’t understand it. Maybe they’re in a different world. They may or may not understand it. And so. In a way, a coach can be a therapist, a partner, a mentor, and a teacher of things, right?

And I deal with a lot of employees or a lot of entrepreneurs who are not trained business people and who are not trained entrepreneurs. So they’re very good at science. They’re very good at a cancer pathway. Or they’re very good at engineering a certain electronic circuit, but they’re not very good managers, or they’re not very good salespeople of their pitch.

 Or they’re not very good understanders of their own self and how they come across to other people. And so that’s where having a business coach that’s on your side that helps you think through issues and maybe even practice is so valuable. So I’ve sent many of, of my. promising employees when they were scientists or engineers to basic business training where they learn things and this is even you can take sort of a course, right?

Like where you do things like how to talk with a difficult employee, how to have a difficult discussion with an employee, right? How Like all of these many things that, that you need to learn to become a manager, because no one teaches that to a medical student. No one teaches that when you’re, when you’re taking a PhD in biology.

The MBA part of, but not really, and it’s not really practical. Yeah. So, so the one is the, the management and leadership piece. And then there’s of course then there’s of course the sounding board for negotiation, how to, how to set this up. And then there’s, oh, it’s. The piece of personal interaction and, you know, business is nothing else, but, but also personal relationships now it’s about money, but the personal relationships that people have with their clients, with their investors, with their employees, they’re very real and they form their behavior leading to either success or failure.

In many cases, that’s independent of the business case, right? Just because people start hating each other and not trusting each other. Or they, maybe, maybe they’re too trustful, all of that happens, right? And so that’s where I have greatly benefited from the, I’ve had various people as coaches, formal coaches and informal over the years.

I’ve been part of groups of CEO roundtables. Also a very helpful setup where you sit with, we, we, we, you meet once a month or so with other leaders of business that may be in very different industries. And then you find out that the challenges that you have are oftentimes very much the same, right? I was with a guy who had an electric business.

Another guy was an air conditioning entrepreneur, big time. The other one had an, an ultrasound business or a healthcare consulting investment banker. We all face the same trouble, right? Like these employees that fit or they don’t fit the co investors or the business partners where we butt heads with.

Philip Hemme: At least on the general business are very similar. 

Johannes Fruehauf: Yeah, I can only recommend that. And we, in some cases we know that entrepreneurs in our spaces have self organized to form those groups. That’s really awesome because then you don’t, sometimes it’s very expensive. You have to pay a moderator. But it’s completely worth it.

If you have the money in the company, it’s completely worth investing in yourself. A little bit of that by, by hiring a coach paying for some of that or joining one of these groups. 

Philip Hemme: I mean, and we call it business coach, but it’s not just for the business topics. It’s, I mean, it’s a professional coach, but can be on any kind of topics.

 But I find that maybe, but I find that not in, in the biotech context, I find that quite a lot of coaching, of course, that can be on general topics, but also on a, let’s say day to day, it rapidly goes into also strategic slash the management of employee has had, it has a bio or topical context. So I found it for info or my coach has a background in bio.

Okay. Okay. I’m not background in tech, which is very rare to find both an entrepreneur and multi producer. But it’s definitely very helpful, even just to understand the product you’re building, even though he might not help you on the product, but it might, it gives the feedback and think just more. So have you seen this or what’s like.

Johannes Fruehauf: So I, none of my coaches had been entrepreneurs in my space, directly. And so for me, it wasn’t mostly always the discussion about sort of the general business general and relationship and management things. But I’ve had these mentors that are expert repeat serial entrepreneurs or investors on my boards or as, as partners now in the Venture Capital Fund.

 And so I think it’s very useful for entrepreneurs to seek out these. People that they can trust, right? And, and build a relationship. You don’t go and say, will you be my mentor? But you, you build that trusted relationship and you get feedback and you check in with them on a somewhat regular basis. And, and that’s, that’s very helpful.

And it’s also important to pass that on, right? And I mean you’re doing that with your podcast, right? Like you, you enable people to hear from other people’s perspective. Which is very useful. And maybe what, what, what’s, what’s the one thing you’re, you’re working on at the moment of a personal development?

 I try to be somewhat patient in the face of headwinds and not freak out when the numbers don’t look as good. So we are currently facing some headwinds in the United States. As you may know, the funding is tough for our startups that translates immediately into worse. Year for us than previous years, right?

Because our clients don’t have money, so they can’t have as much space with us. And they can’t order as many goods and things and services with us. So I see this as a challenge to also improve our business. It’s always, I think really in times of headwinds and even crisis that you see, you know, is a business built well, solidly.

Or or not, and it gives you opportunity to maybe trim some fat around the edges and concentrate on, you know, are you building unit costs that are sustainable? And, and are you building a team and a culture that will also carry you through the, the tough times? It’s very easy to build a company in up years because if you build inefficiencies and you have growth, you won’t even see them, right?

Because the growth may be bigger than the inefficiency. But it’s in the flat years or in the down years where this comes from, 

Philip Hemme: just the fundamentals and the 400%. 

Johannes Fruehauf: 100%. 

Philip Hemme: How do you, how do you work on your patients in Chris? 

Johannes Fruehauf: I don’t know. I take walks. I work out. Those are the simple things. 

Philip Hemme: I mean, it’s, cuz it’s interesting.

I mean, patience always like, oh yeah, you need to be more patient. But when it comes to the how to develop, 

Johannes Fruehauf: I think it’s, it’s, first of all, it’s reflecting and not being too overly impulsive in your decision making. And yeah, so I, I know that you need to have a good balance with your physical situation.

Philip Hemme: Mind and body. 

Johannes Fruehauf: Totally, right? Like if you feel bad because your back is painful or you haven’t slept or… Then you, you aren’t your full self and you’re not going to perform very well, and maybe you make stupid decisions, right? I’m not perfect in that, but I try to, like, at least stretch and work out in the morning or go for a run.

And that’s very helpful. I have much better days when I have a workout in the morning than when I rush to my first meeting because I… I didn’t plan in for the time. 

Philip Hemme: I think we, yeah, we could discuss long on. 

Johannes Fruehauf: I know you did a lot on that yourself, right? 

Philip Hemme: Yeah, I, I, I experiment quite a lot. Huh. But for him on patience is very interesting on that.

I mean, first it’s multifactorial, but We did the how to work on it is, is, is, is tricky and to know, I mean, patience also is, has the two sides, usually, and any kind of quality has also upside downsides, 

Johannes Fruehauf: I’m not talking about complacency, right? Right. 

Philip Hemme: It can be complacency. It can be make you slower, slower decision making.

So it’s also like, and it conflicts with other values. So that’s why I’m also curious on like. But it sounds for you patients more so from the, you know, energy management overall of being more balanced and taking that decision 

Johannes Fruehauf: and not freaking out in in when bad news comes. Take a step back and put it in perspective.

[01:24:39] Follow Johannes

Philip Hemme: Maybe to wrap through, if you, if you, if people want to learn more about you or follow you, I think you’re quite active on Twitter. 

Johannes Fruehauf: Yeah, I, I used to love Twitter. Twitter is going path, path. I may need to look for a new platform, but it’s so convenient. 

Philip Hemme: You have Twitter and, and LinkedIn. You have, we have LinkedIn.

Johannes Fruehauf: LinkedIn, yeah. And that’s it so far. I, I read that there’s new platforms and I’m, I need to learn about that 

Philip Hemme: step by step. Yeah. Not great then, but Pete, 

Johannes Fruehauf: I’m, I’m happy. So if any one of your listeners show up, In Boston or there in Boston, they will always be welcome. They can, they can say that, you know, they looked at our podcast, they can come to LabCentral, any of our BioLabs locations.

They can easily link, find me on LinkedIn and say that they want to connect and we’ll have a chat. Typically, I like to meet people. in person first before I link with them. But so I’m, I’m fairly accessible in Boston. 

Philip Hemme: Yeah. So basically reach out reach out to Johannes. Great. Thanks a lot for your time.

Great conversation. 

Johannes Fruehauf: Great to chat with you as always. 

[01:25:52] Thanks for listening

Philip Hemme: Me again, I hope you enjoyed the conversation and thanks a lot for listening to the end. If you’re keen, please hit the follow button somewhere maybe, or the like, review, share button, share it with some connections, it would help us a lot, especially this early in the show.

 And before telling you more. What’s behind the show. I would say a big kudos and thanks to the team here and web development testing and marketing, Marianne logistics, Wayne editing, they did an amazing job and there was a lot of hard work put into, into, into the show. So now what’s behind. So slot bio as a company was founded in March, 2022, I’m.

One of the founder and previously I’ve founded labiotic. eu, and we started the company building a marketplace for the biotech industry. But we didn’t have enough product market fit, so we decided to pivot to a content business. With the first product being, being the podcast. We don’t want to create, you know, yet another podcast.

There’s already a lot of them around. But we believe Europe needs a high quality, long form podcast to help most professionals and biotech enthusiasts be better informed, grow, and just be better at what, at what they’re doing. And so that’s why we are. Creating that podcast, we are selecting the best ups in biotech we can find.

And we are interviewing mostly actually offline. So we can have really the highest quality, both technical aspect, but most importantly on the dance and the content and the flow of the, of the content. We, we, these. One episode, around one episode per month on all the major platforms. Money wise, we are financed by our own private investments.

 And our business model is based on advertisement, so it’s the sponsored messages, slots that you see in each episode. And we are sponsored by financial support for individuals and corporate. So anyway, I will not make it longer if you are, I hope you share our vision and if you’re keen to hear more or you want to reach out or you want to share some feedback, please send or shoot us an email, hi at flut.

bio. Again, thanks for listening and see you in the next episode. Bye.