Todd Merrill:

Hi, welcome to Tales from the SkyLounge. It’s a podcast about business, consulting, and venture investing. We get out there in the world, we talk to people who are making it happen, and we get their stories. And if you could like and subscribe, it makes our producer, James, super happy.

Today’s guest in the SkyLounge, Niral Shah. Hi, Niral.

Niral Shah:

Thank you for having me, Todd. We’ve gotten a chance to meet up in various meetings and happy hours, but it’s always fun to see you and interact with you, this time virtually.

Todd Merrill:

Very excited to spend a little time with you. So, Niral, who are you and what are you working on?

Niral Shah:

Great. So, I’m a physician entrepreneur. I’ve had a couple of startups. I am a trauma surgeon by trade. Now I am going to put a little asterisk on the physician entrepreneur, which one comes first. It first depends on the day that you may see me, and more importantly, over the last 25 years of my career, shall we say.

Todd Merrill:

Yeah. So, I mean, you’ve had a really cool arc through your career, as most people in the SkyLounge here have. Let’s talk about your early career. How’d you get started? And maybe bonus points for talking about your mother.

Niral Shah:

Perfect. You know, I actually have a very circuitous background. I started med school when I was 19. I’d always had a keen interest in entrepreneurship. I come from a business family background. I was a micro entrepreneur as a child. Always had that thirst of thinking about things a little bit differently, but I loved biology. I loved life sciences. I liked the, you know, aspects of healthcare with the betterment of society, and so I went to medical school pretty early on.

I then decided to take a sabbatical to do my own startup, much to the chagrin of my Indian mother. My friends and I had an idea for a search engine. If you remember at that time, search engines were governed just by keywords. So, my mother had breast cancer. If you looked up things for breast cancer, often pornography pages showed up, and we were like, hey, there has to be a better way. And so we started working on it. We moved up to Silicon Valley, ultimately got hooked up with an incubator, got some funding, and did a reverse takeover. And I know we’re going to go into that a little bit more, but I took some time back, and I said, “Hey, you know what? What still drives me?” I went back to medical school. I loved surgery. I became a trauma surgeon. And then in 2018, I realized, hey, healthcare is really going to have a reckoning, and it’s better for me to get a seat at that table, especially because I can speak both languages. And more importantly, thinking about how I can make an impact and, as Steve Jobs would say, make a dent in the universe. And that was sort of what drove me to go back to business school. And since then, I’ve been helping science companies, startups. And my favorite role is an ad hoc entrepreneur in residence.

Todd Merrill:

Wow! Yeah. Very cool. Well, let’s kind of pick that apart. I mean, that’s a heck of an arc. So, you’re a born entrepreneur, like a lot of people. So, on this show, not like a lot of people, but like what was your, like, you know, I babysat people’s pets when they went on vacation. That was probably my first gainful employment from somebody else. What was yours? What was your first kind of scrappy job when you were a kid?

Niral Shah:

My first scrappy job actually was in 4th and 5th grade. I would lend out pencils to people who would forget their pencils for maybe 5 cents or 10 cents or something like that. And it was a rental business, right? At some basic level.

Todd Merrill:

Ha ha ha. Okay.

Niral Shah:

And then, you know, we could sell little things like candy if I had some or whatever. And so those were the first tidbits of entrepreneurism. Then I worked at my father’s convenience stores. We had three, and so I worked at all three. And, you know, when you’re down in the trenches like that, sometimes you learn about human factors and things like that. And so that was all the way through high school. And I ended up working at a Blimpies and all sorts of things, even during medical school.

Todd Merrill:

Okay

Niral Shah:

Those are our first sets. I will gladly concede that when we started the company, I had no formal founder experience or anything like that, and I think there are some real advantages to that.

Todd Merrill:

Well, okay, so slow down for a second. So, we skipped college there. So, you went from high school to medical school?

Niral Shah:

Yeah

Todd Merrill:

Is that like a Doogie Howser kind of thing?

Niral Shah:

No, I was in a direct medical program, where I had a slot in the medical school. I had a lot of credits coming in from both AP classes in high school, as well as Harvard summer school and various schools that I’d gone to around our area.

Todd Merrill:

Wow!

Niral Shah:

So, I had a lot of credits going in.

Todd Merrill:

Okay

Niral Shah:

And then I looked at it, and it’s like, well, actually, I’m just going to need to start, you know?

Todd Merrill:

Okay, so you told your mom, hey, good news. I’m in med school.

Niral Shah:

Yeah 

Todd Merrill:

You start med school. And then you said, at what point did you guys move to Silicon Valley? Before or after?

Niral Shah:

So, halfway through my second year… So, I started medical school in 1998. Around 1999, 2000 was when really the dot-com boom was taking hold. More importantly, you probably had some foundational changes that were occurring. You had search engines being democratized, whether it was via AltaVista. And if you’ll remember, this is well before the times of Google. Most people talk about their internet age being … What search engine did you start off using it? Mine was AltaVista. So, I was in the age of AltaVista, by the way.

Todd Merrill:

Okay. Okay. And what was the name of your search engine? Is this something we would have heard of?

Niral Shah:

So, you would not have heard of it. We did not really make it out of the starting blocks, you know, full on. We had done some things, and it really took a step back to think about what exactly our value proposition was. We started off as a company called NetGopher, right?

Todd Merrill:

Gopher, like gopher hole?

Niral Shah:

Yes. And if you remember, Gopher was actually one of the first sets of software that was used to mine, you know, emails and forums and things like that. And so that’s where it came from.

Todd Merrill:

Yeah. Like, academic papers and that kind of thing. Before there was HTML, you had to do a Gopher hole. Okay. And then so you did this in Silicon Valley during the dot-com boom. Like, what a great time to be alive.

Niral Shah:

And I will also say it was probably at the tail end of it before the liquidity crunch in the 2001, 2002 crisis. But there were so many transitional things happening that you almost need to be in the eye of the storm in order for things to occur. Silicon Valley was where it’s at… It is often still now. And so we decided to get up and move and go there.

Todd Merrill:

Wow! Okay. So, now you’re in Silicon Valley, you got a search engine startup, which is hot stuff, right? And then did you fall into an incubator of some sort or…

Niral Shah:

… yeah

Todd Merrill:

Or did you get some help along the way, or what would that look like?

Niral Shah:

Let me actually slow it down for a lot of your listeners, because I think there are a couple of good takeaways. One, when you first start somewhere, it’s not like everyone is beating the door down to your office. It’s almost like you’re actually going and making very small, deliberate steps in order to get something forward. And many times, you’re just kind of sitting there like, well, what did I accomplish today? And sometimes there’s really not a whole lot to do. During that time, you start to recognize, hey, there’s a lot of potential loss. Two of the co-founders actually left. Both went back to medical school, and I’m the last man standing, which stands alone, right?

Todd Merrill:

Oh, Wow!

Niral Shah:

And many times, you have those doubts like, hey, am I even like, what if this doesn’t work? I mean, I’m leaving a great-paying job, all these other things. But I had gotten hooked into a meeting with an incubator that was affiliated with NASA Ames. And from there on, that was sort of that inflection point. 

Todd Merrill:

Okay. So, you’re in Silicon Valley during the dot-com boom, working with NASA.

Niral Shah:

A scrappy 21-year-old trying to make something happen. So, trying to rub two sticks together, make fire. You don’t really know. Clearly not a software guy or anything like that, but I’d like to thank Cogent, Articulate, these other things. And sometimes you just are beating your head against a wall.

Todd Merrill:

That is awesome.

Niral Shah:

But then I got presented to this incubator, the Enterprise Network, and that was probably the watershed moment where the director, his name was Gopal. I came in to do my interview and said, “Hey, I’d love to be a portfolio company. Here’s what we’re thinking about doing. This is what we’re looking at.” And we had gone through, did the tour, looked at a few things. And he said, “Oh, by the way, we have two companies presenting to Nokia Ventures. Why don’t we just sit in on it so that you can see it?” We sat down. I listened to their presentations. At the end of the second one, Gopal stood up and said, “We have one more treat for you. We have another new portfolio company.” And he’s not good at it.

Todd Merrill:

I guess you passed.

Niral Shah:

Yeah. And later on, he told me that he knew you were in. They were going to take a stake in the company. So, it was fait accompli from their standpoint, but what he wanted me to do was I had to present, not knowing that I was going to present to Nokia Ventures, which at that time, in 2000, Nokia was a big deal, like that would be an 800-pound gorilla.

Todd Merrill:

Yeah. During the telecom boom, right?

Niral Shah:

In the telecom boom, you know, and this is well before mobile as we know it today, and so on. And my aim was to pitch without a deck, without being told and preparing for who I was going to pitch to. And I realized right then that sometimes you need to be able to see bigger. And the reason I say that is because I didn’t have those crutches of the slide deck. I was able to think about, hey, what’s going to resonate with my audience? What may resonate? And so I started talking about how an improved search engine, getting users to the right page in a mobile world, was going to be the right thing. Before that, I hadn’t even thought about mobile. It was all desktop, all, you know, trying to figure out what the hyperlinks were going to do, all sorts of other things like that. And so Gopal made a fantastic point, which is, I wanted to see what you were going to be able to do without having crutches that you put yourself in.

Todd Merrill:

That’s awesome. Wow! And so did they invest, or did you get money?

Niral Shah:

Yeah

Todd Merrill:

No way.

Niral Shah:

So, we went to a few other meetings. They invested via the incubator. And, you know, so it’s a … I guess.

Todd Merrill:

So, how did that work? So, explain that I’ve been looking at a lot of different incubators and ways to get stuff started. What kind of deal did they give you? Or what was the structure of that particular, like, you apply to be a part of this thing, and they give you a little bit of money, or how does it?

Niral Shah:

So, what mostly you got were the infrastructure standpoints. Again, at that time, a T1 line was like the greatest thing that had ever happened in life. So, you got access to internet. You got access to different, you know, just sort of overhead things. You got access to in-kind services. Remember, freedom to operate legal are things that founders, especially technical founders, don’t think about. We had access to a CFO that, you know, kind of helped you run the books. All other things that technical founders often don’t think about. And so we had that, and they took a $25,000 stake, and they were getting them. So, the Enterprise Network itself got money from various institutions, and their core edict was to create an engine in Silicon Valley.

Todd Merrill:

And then so did you have to pay for this, like the fractional CFO or the controller?

Niral Shah:

No, these are all in-kind services. And so they took, you know, equity in the, you gave equity to the incubator. And in return, you got in-kind services. And services, quite frankly, that we wouldn’t have been able to afford. So, for example, Wilson Sonsini, which is a well-known legal firm in Silicon Valley, was our initial leading team, right?

Todd Merrill:

Wow! Yeah.

Niral Shah:

They wouldn’t have taken us on. I wouldn’t have been able to get through that door without saying, oh, I’m a portfolio company of, and here’s what’s happening.

Todd Merrill:

Yeah, Wow! That’s really cool. Do you remember what percentage they took back then?

Niral Shah:

Yeah, it was 4%.

Todd Merrill:

Four? That’s a screaming deal.

Niral Shah:

Yeah. Now, again, at that time, most people didn’t understand how to make it all work out, like the economics of it. You’re still getting the Amazons. You still had the oddball valuations with pets.com, webvan, broadcast.com. And so you did have some overhyping, quite frankly. And sometimes history doesn’t repeat, but it certainly rhymes, and we may be getting a little bit of that now. And so it was 4%.

Todd Merrill:

Well, okay, you said my favorite phrase, you know, history doesn’t repeat, but it does rhyme. And we’re getting some of that now, right? So, you know, compare and contrast back then, which is pretty frothy in retrospect, with kind of what we’re seeing today. What do you see today that kind of gets you going? Hey, wait a second. I’ve seen this movie, or at least the prequel.

Niral Shah:

Yeah, I saw something just like it. This happens to be a dubbed version. And there are things where everything moves in one direction, where the pendulum swings. So, for example, at that time, everyone was talking about dot-com, dot-com. And things and metrics that were well-known, for example, it wasn’t price-to-earnings. It was called price to eyeballs.

Todd Merrill:

Yeah

Niral Shah:

I don’t know if you remember that. That was a thing. And that was being written about in Businessweek, or MarketWatch, or all these things, right? And that’s just ridiculous, looking back at it. You have, you know, really, really big legacy companies trying to just get on this AI movement. And I will say, even I’m going to take AI out of it, there were probably three or four smaller blips along the way.

So, there was a time when, in 2004, 2005, everything was like peer-to-peer, right? This is the Napster, everything like that, and everything turned peer-to-peer. Then everything turned like blockchain for a little bit, like Web 2.0, 3.0, you know, NFTs, like all these other things, right? When things get out of hand, and everybody is trying to clamber in, then it’s a trade that probably is too crowded, and you’re going to see a reversion to the mean. And so I do see elements from the AI. So, I do think it’s a foundational technology change, just like, you know, you have streaming. But Broadcast.com should not have gone for $5.3 billion in 2000, like it did.

Todd Merrill:

Right

Niral Shah:

And so, yes, the underlying and the underpinnings are there. However, there needs to be some clear moderation in what can be done. And people are asking for things that are pie in the sky, and that clearly aren’t deliverable.

Todd Merrill:

Yeah. Well, and then, you know, we’re seeing an explosion in capabilities, but we’re also seeing a gap in reality and a gap in absorption, right? So those are two kinds of interesting dynamics. We’ll see how that all plays out.

Niral Shah:

And it’s saturated. Once there’s too much saturation, there’s no more absorption left. And I think we may be past that point a little bit.

Todd Merrill:

Well, how does, you know, so if we rewind history into the dot-com era, a bunch of stuff crashed. There were reasons that had something to do with somebody that nobody understood in the banking system or something. And it kind of all went down, and a bunch of stuff, the way they call it, the tide goes out, you figure out who’s swimming naked.

Niral Shah:

That’s right.

Todd Merrill:

There are a lot of naked swimmers.

Niral Shah:

Yeah

Todd Merrill:

But there are solid businesses that emerged from that. There are big names today, still, right? So, consolidation, energization, you know, a couple of big winners. Is that what we expect to come out of this?

Niral Shah:

I would argue that certain business models will have taken hold. So, Webvan is one example that comes to mind, right? They were doing grocery delivery, which just didn’t work based on the infrastructure that was there. But now you have everything that’s being delivered to your home potentially within an hour, depending on your region, right? They are Webvan 2 or 3.0. So, even I would argue that businesses that didn’t succeed, some of their business models were probably just a bit too early. They didn’t think it through well. And it wasn’t an iterative stepwise process, but rather they just jumped right in and realized, hey, there’s no water in the pool after they were there.

Todd Merrill:

But then we see the people figure it out and it takes a while, right? And then so the rise of Amazon wasn’t really a part of it. Amazon Compute wasn’t a part of the dot-com. I mean, maybe the books might have been. You know, at some point, decades later, overnight success, here we are, they’re delivering half the stuff that comes to your house. They figured it out. And then now there’s not, you know, Kmart and Sears and like all these old, you know, all the malls are, you know, rotting, and it’s just a different world. So, kind of transposing that, like, is how do we think about what’s going to succeed? What’s going to fail? What are you looking for as emerging technologies? That if we apply that to the AI wave, you know, a lot of things are getting washed out that are silly. A lot of stuff that’s important is going to persist. And then what is that going to do a decade from now?

Niral Shah:

So, I’m going to put my investor hat on, and I’m going to talk specifically within healthcare because that’s the life that I come from.

Todd Merrill:

Absolutely

Niral Shah:

One, I think people have misunderstood the essence of economies of scale. So, for example, you see a tremendous number of wrappers around ChatGPT, whichever model that you have, that’s going to be a linear cost basis, right? There’s a certain amount of compute power, at some basic level, a certain number of electrons that are going to be required for that question or query. No matter how many customers you have, you’re never going to reach economies of scale. And so that’s a fundamentally winning list strategy and business model. If you can’t even think that through. So, even within healthcare, healthcare is the second largest sector by GDP. It’s growing well past inflation. And more importantly, if you look at the U.S. healthcare sector, it comprises 18 to 21% of our GDP, depending on what you include in there.

The next OECD country is clocking in at about 10%. We have no better outcomes. We have a lifespan that’s about equivalent to Albania. We have a human development index that’s lower than that of Chile. At some point, there’s going to be a reversion to the mean when you’re so far off the curve. I bring that up because people are trying to throw money at a problem that can’t be done in wrappers or little things. Oh, by just putting AI at the end of your name, all of a sudden…

Todd Merrill:

Yeah. Don’t do that. Yeah.

Niral Shah:

People aren’t thinking about the workflows. People aren’t thinking about it. And you may end up, especially in healthcare, certain areas within life, like, you know, the legal system or healthcare, you can’t have hallucinations and incorrect answers. Like, that’s going to cause some real detriment. And so you can’t be at the 2 standard deviation mark. You probably need to be right 3 to 4 standard deviations.

Todd Merrill:

Right. Yeah. I do think we’re going to figure a lot of that stuff out. I think there’s going to be ever-increasing compute costs, which kind of scares me a little bit. You know, something’s got to, we’ve got to have the George Moore of this generation, you know?

Niral Shah:

Yeah

Todd Merrill:

Moore’s law, you know, everything from Intel doubles every 18 months, but we got to have a cost. Something’s got to happen where we have to have some more breakthroughs to make this stuff cheaper or more efficient. I don’t know what that is yet, but I’m sure somebody’s out there working on it.

Niral Shah:

And we don’t really know, but I think there are probably pattern recognition things, you know, clearly AI, whether you look at it from machine learning, you know, generative AI, what have you, they’re finding things that humans weren’t able to do, probably because of our own cognitive biases and things like that. There’s probably value in that. But as you know, it is also beholden to hallucinations, which are going to be really, really problematic.

Todd Merrill:

Well, like in medicine, I like the idea of ground, you know, I think there are new systems, you don’t just kind of say, hey, make up whatever crap. I think you have to ground it in reality with, and there’s ways to do that now with RAG or MCP or a variety of things where you can do the heavy lift of the research from a known universe, like all of PubMed, for example, or something, and then say, here’s all the scholarly articles that I could find that I think might be relevant. And there’s probably three or four really good ones in there, and there might be one or two that are not so great, and it kind of came in because of some weird phrase in there.

Niral Shah:

Again, those patterns are useful. But I do think in a lot of ways, especially when I’m taking care of patients, so I still like being boots on the ground. I consider myself an armchair general. I like getting back into the clinical world. So, I spend about three to five days a month helping friends who need, you know, someone to kind of help cover or whatever. And I do enjoy that part of it. I will say what I have used it for is I can see the pattern, but how is my patient different from the pattern being recognized by AI, potentially? Or is this going to be trying to fit a round peg in a square hole? And that’s going to be a different problem. And so I can be that sort of checkpoint.

Todd Merrill:

Well, certainly you want the physician or the clinician being the last point, you know, it’s anything we do to help the clinician have more information is valuable. I think I like the business of healthcare for is right for disruption. For example, insurance companies have been using AI to auto-deny.

Niral Shah:

Yeah

Todd Merrill:

You got it here. We’re going to deny. And then they just kind of put so much work on you that, you know, so talk about like pajama time. We talked to oncologists, you know, one of my venture things. They have 20, 30 patients at a time. And they get denied because they’re using some drug for some weird thing that’s off-label, but it’s probably pretty good because research paper X said, you know, showed some promise. How do you explain that to the insurance company when it’s not on any decision tree? It’s a tertiary thing at best, and then they have to pick the 1 out of 20 they’re going to advocate for in their one-hour pajama time that they can do research, you know, stuff like that.

Niral Shah:

Yeah

Todd Merrill:

Maybe talk about what that’s like as a clinician.

Niral Shah:

So, I will tell you again, I’m going to put my entrepreneur hat on and investor on. So, in the compendium of things that I get to do, I get to be an entrepreneur in residence for a lot of companies, you know, VC firms and IB firms. And also, I go out and invest on my own as well. Now I’m going to put those two hats on. And one of the areas where healthcare is fundamentally different than many other sectors is that the end user is not the buyer. And I’ll give you a great example, okay?

Cardiac stents, you go in, you’ve got a coronary blockage, you’re the end user, and a doctor decides which stent to put into you. But even the doctor who’s not the end user isn’t the buyer of the stent. So, those steps remove the economic buyer from the end user. And you know, the further away you go, the less you kind of care about what the end user experience may be, right?

So, healthcare is one of those sectors fraught with that disability where many investors and, quite frankly, entrepreneurs themselves don’t understand this problem of who’s my customer, who’s the end user, and conflating the two.

Todd Merrill:

It’s super complex, right? And then it’s like the old Milton, I think it’s Milton Friedman, one of the economists, you know, it’s like there’s a layer of if I’m spending my money, it’s like I am going to scrutinize the heck out of that. If I’m spending your money, you know, I’m going to be less concerned, but I’m going to hear about it. If we’re both buying and selling with somebody else’s money that somebody else pays for, you know, like nobody cares, right? And then that’s government. How does this all resolve?

Niral Shah:

It actually leads to probably fat in the system that can be cut out. And that’s where I actually do see that reversion to the mean from 18% to 10% of our GDP, which represents, by the way, trillions, right? With a T, and that’s crazy.

It’s amazing to me. And that’s why in 2018, I was like, hey, I’m seeing the writing on the wall, the reckoning. Like, there’s going to be a time when healthcare as we know is catalyzed. And I can’t tell if we’re kind of like travel agents in 1990 or 1996, but 2000 came along, and travel agents just didn’t exist anymore.

Todd Merrill:

Okay, well, let’s talk about that. So, you know, you talk about there’s like trillions of dollars, and doctors are busier than they’ve ever been, broker than they’ve ever been. Not making as much.

Niral Shah:

Sure

Todd Merrill:

Patients are like, you know, tearing their hair out because I don’t know how to pay for this, and lots of bankruptcies, you know, hospitals are all broke, apparently. And then like, there’s trillions of dollars, where does it go? And then how do we kind of squeeze, something’s gotten squeezed the wrong way. How do we squeeze it back the other way? Or what’s got to change? Or where’s the kind of roadblock here?

Niral Shah:

So, I think what healthcare has done, and pun definitely intended, which is we’ve just put Band-Aid after Band-Aid, and hope that the dam doesn’t break. That’s it.

Todd Merrill:

Okay. Well, it’s not good.

Niral Shah:

What’s that?

Todd Merrill:

That’s not good, right?

Niral Shah:

It’s not good at all. And so I’m going to talk as a surgeon. You know, sometimes you just need to buck up. You need to put some stitches in, and that’s the only way you’re going to stop the bleeding. And so up until now, those Band-Aids have kind of worked. And at some point, that dam is going to break. I don’t know what will be the powder cake that goes off, but I do think it’s going to happen sooner rather than later. 

And before people in the U.S., we were just throwing money at the problem. Now there’s no political will to throw money at the problem.

I am a physician. I also have health insurance, and I’ve navigated it for my family and I don’t understand it. And if I’m in the system and I don’t understand it, then something’s gone wrong. There are probably a few ways that changes are going to be impacted.

One is different business models. So, you’re already starting to see little bits of this with either concierge medicine or direct-to-consumer medicine. You know, a subscription that lets you go see your doctor, and the doctor only has, you know, you’re cutting the insurance, the pharmacy benefits provider, everyone out of the loop. So, that’s one. That’s a different kind of business model. And I will say…

Todd Merrill:

… sorry. Slow down, explain that one. So, is that like you’d pay dues to an Urgent Care facility?

Niral Shah:

Yeah

Todd Merrill:

You know, they tackle the boo-boos and the sprains and?

Niral Shah:

Exactly. So, you pay $99 a month, let’s say, to a family practice provider or a generalist, you are allocated two healthy visits. You get, any sick visit is at a lower rate of, let’s say, $59, you know, and then pricing changes, and there are all different models to it. And included is also one set of yearly labs. And for example, if you break your foot, many times you can actually just get the x-ray done separately from the radiologist and everything like that. And he can, you know, the provider can very quickly tell if you have a fracture or not, because there’s an interpretation that’s right there. And so you’re mediating and decoupling the entire customer journey.

Todd Merrill:

So, you’re buying from the provider, and you’re the payer in this cash and it’s easy, right?

Niral Shah:

Exactly. And so what’s happening is, you know, all the little pieces in the puzzle, in the transactional costs are just taken out. And I’ll be honest, there are actually bigger companies that are doing this, too. And the example I’ll give you is CVS. Okay? CVS went out and bought the pharmacy benefits provider. Okay, then they went out and bought Aetna. So, now what do you characterize that? Is that a retailer? Is that a pharmacy or is that an insurance? And I would humbly submit to you that that’s actually a healthcare delivery system, right?

Todd Merrill:

Yeah. Well, is that better or worse?

Niral Shah:

Well, that’s just a different business model. I don’t know. If the goal is to cut costs, then they have the opportunity to do that. So, those transactional costs that were occurring at each layer are going down. Is that going to affect outcomes? Again, I don’t know. And this has just happened in the last couple of years. And healthcare is one of those things that is a long tail phenomenon. You’re not going to see the results of what you’ve done until 15, 20, 30 years down the line.

Todd Merrill:

So, where do you see innovation? Or like if there are young entrepreneurs wanting to help healthcare, like, where would you point them right now? Where’s the fertile ground for new business innovation?

Niral Shah:

So, what I have been investing in and advising in, I do a lot of advising, both for equity as well as for just helping new college students. That’s one of my core missions. I love helping new students and new entrepreneurs think about things a little bit differently.

One is trying to de-skill things that cut out providers from the group, from the journey. So, for example, there was a company that I continue to advise. I met them through a university project that you and I had worked on together. And it was a cervical cancer screening tool meant to be done at home. So, we worked with them. I think you were the judge for that.

Todd Merrill:

Yeah

Todd Merrill:

Georgina, I think is the name of that. Yeah. It’s like a Cologuard for pap smears or something.

Niral Shah:

Exactly. So, that was last year. I’ve continued to mentor them. They won the Georgia Tech Invention Prize. They’re going to be going for the final round in a month or so. Now, I’m going to talk about them just as an example, because in that scenario, when it’s done at home, you don’t need to go to your provider, right? You don’t have to worry about that insurer payer problem. You just get it done. You send it back in, and there’s a certain reagent cost, and the CODs are clearly well-defined. And so someone without insurance can actually get that service. So, that’s one. Anytime you can disintermediate groups in that journey, that’s one.

The other is more entrenched positions. And you talked about it a little bit, where you have this huge compendium of data. And PubMed, as you’ll remember, has only the statistically significant studies. But there’s a whole iceberg of literature underneath, which didn’t get statistical significance. So, it didn’t make it out into the evidence-based papers. But if you were to crunch those numbers and think about, hey, we have these incomplete data sets. How can we make a change?

Todd Merrill:

Okay

Niral Shah:

You know, that’s a huge boon, because what previously wasn’t powered to show a change will all of a sudden be able to show a change. I am working on a project through one of the incubators that I advise, and I’m leading it more like an entrepreneur in residence, and helping through, is a multi-omic drug discovery/thinking about aging as a treatable condition, just like you would think about arthritis as a treatable condition. Can we make that happen with cell senescence, biomarkers, and such?

Todd Merrill:

Oh, wow!

Niral Shah:

And what that relies on is getting access to data sets that haven’t really been crunched well, that haven’t been thought through. And looking directly at the pathways of, you know, I don’t want to get too into the weeds of the mitochondrial damage or the cellular matrix and the signaling pathways that occur. Those are huge, huge data sets that are often incomplete, so it never goes to PubMed. But when you have a company that can be working on it, they can say, hey, Todd, you know what? Work with this algorithm of five or six biomarkers and some, you know, assays. We can give you an actual score that is actionable, and here are the things that you need to do. And it can go all the way down to, you know, GLP1 efficacy. It can go out to what’s your likelihood of a cardiovascular event with what you’re seeing. And so there are lots of problems that can probably be attacked. So, that’s tranche number two.

The third tranche is really leaning on digital heavy/ubiquitous and real-time changes. And I’ll give you a really small example that’s already out here is atrial fibrillation is well-known. Health uses their Apple Watch that can figure out, oh, you’re in atrial fibrillation right now. But if you think about it to the next step and say, hey, you know what? I know Todd has these precursors; their genomic data is this. They’re coming in with some chest pain, and actually, I don’t think they’re having a heart attack. It’s probably just, you know, gastric reflux/acid reflux.

Todd Merrill:

Yeah

Niral Shah:

But that’s a real-time evaluation that’s occurring because, just as an example. It’s taking the data that you’ve had on your watch, Fitbit, whatever, as you’re walking into the hospital with near-field communications, it’s taking that back, making guesses. And that’s where the matrices, which are the underpinnings of generative AI, right, because it’s all tokenized and everything. Now you’re looking at something very interesting, where it can move you through the system really, really fast. So, that’s a huge problem. But I tell startups, attack a very, very small piece of that whole problem.

Todd Merrill:

So, portable health records, you know, it’s a little creepy, given it all to Apple. Everybody hates the big firms, who shall not be named, that have all the health records. You know, I think that’s right for disruption. If you can figure out a way, you know, your phone just kind of goes, Hey, here’s Todd. Here’s this, you know, last, you know, two years’ worth of interesting things. And you just plug it right in and go, and then you hand it right back to the patient. Why hasn’t that really taken off, do you think? I mean, that’s a bureaucratic nightmare trying to connect up to all these systems. It seems like it should be easier or more open. Do you think you see any movement on that?

Niral Shah:

I think there are a couple of things that make it very difficult. One is the regulatory burden that’s put on the companies to make sure it’s HIPAA compliant, secure data, you know, all these other things.

Two, everyone is trying to do a siloed version in a walled garden, right? Because from the company standpoint, that’s what’s best for the company, because I want you to play in my garden, never leave. And that’s it.

Todd Merrill:

Right

Niral Shah:

That’s not necessarily the best thing for the user. You are seeing some jumps. So, you’re already starting to see people put, you know, entire medical records or lab values in whatever, you know, AI agent that they’re using to say, tell me what’s wrong. Tell me my diagnosis. What are the next steps?

Now, this is where you get back to the hallucination problem. If you don’t have someone in the loop that’s watching that is clearly ensconced in these issues, then all of a sudden, that’s when things can run amok, and you get people getting very bad outcomes. And that may be what stops a lot of these companies from going forward within the health field.

Todd Merrill:

So, human in the loop, I think human in the loop has got to be there forever.

Niral Shah:

A 100%. Someone is at least checking or, you know, is like, hey, does that pass the sniff test? Sometimes it doesn’t pass the sniff test. One of my favorite academics to follow is Terence Tao. I love math. And Terence Tao is, you know, arguably the best mathematician for a while. He talks about how AI is, you know, just using probabilities to tell you what it thinks is the right answer, but will never admit that I don’t know the answer, right? Because he will never tell you.

Todd Merrill:

Oh, yeah. It’s goal-seeking. It seeks a goal, and there’s going to be an answer.

Niral Shah:

And it’s just using probabilities to get to what it’s getting to, which is what I’m doing as well, at some basic level in my head. However, it’s fundamentally different when looking at narcolepsy in all of humanity and saying, hey, what’s a narcolepsy look like for this patient? That’s a tracker. Now, ChatGPT may or may not pick up on that nuance. Right? But my first thing is like, oh, my God, like, we definitely can’t have a narcoleptic tracker. Like, that’s just not going to fly.

Todd Merrill:

Right. Right. But it might fly.

Niral Shah:

No matter what the data shows on narcolepsy and drugs and whatnot, that’s just not going to work.

Todd Merrill:

Right. We have concerns.

Niral Shah:

Yeah

Todd Merrill:

Yeah. You know, I was laughing. You’re talking about all the papers. I think that’s intriguing to go find all these old underappreciated papers and collect them somewhere. And then, you know, I was kind of giggling because, like going back to your search days, gopher holes is where those things would have been. And some university professors, you know, what amounts to a Dropbox. 

Niral Shah:

Yeah

Todd Merrill:

You know, so how do you find all those? Or are you back in the search business?

Niral Shah:

In a very realistic way, we are. And many times, we have to go to key opinion leaders and say, hey, look, we will have a bilateral sharing agreement, give us stuff, and we will let you get access to data in order to, you know, because we’re both in the business of empowering humanity and bringing human healthcare to the next level. And so if that goal, then we will teach you what we learn, but you have to give us data also. So, hey, let’s get that. And so is it becoming a clearinghouse? I’m not sure. The company that I’m most recently and heavily involved in, that’s really the end goal is trying to take disparate pieces, put them all together, find the patterns, figure out what’s actionable, and then bring that back out.

Todd Merrill:

Are you, you know, you mentioned biomarkers just tangentially…

Niral Shah:

… yeah, yeah.

Todd Merrill:

Like, you know, HER2. I’m fascinated with HER2 is a breast cancer thing. Oh, by the way, it’s also prostate or something else, and they can indicate that this one thing, is a biomarker that showed up on one particular disease state that is applicable for a lot of things. And then are you able to, like, is that a way forward? Right? I think it is. And then are we able to go back? Is there a way to kind of go back to these old studies and go, oh, you know what? They were probably talking about HER2 or, you know, we could probably impute biomarkers if they give us enough hints. Or is there a way to do that?

Niral Shah:

Yeah. I think there probably is. And again, I’m not a biostatistician. I’m not a data scientist. But I think that’s probably what’s missing. If you were to go back 30, 40 years, you’ll often find papers saying we don’t understand the pathogenesis of why this is occurring, but this is occurring. And, you know…

Todd Merrill:

… 3 out of 6 patients.

Niral Shah:

You know that this causes this. Like, we don’t understand the full mechanism and the pathway of it. The problem with that is that when you don’t understand the full pathway, you’re treating something which probably has knock-on effects. So, for example, Vioxx was a great example of, yeah, it treats the pathway, but it also causes bleeding, which is also related to the same pathway of pain inhibition.

Todd Merrill:

Okay

Niral Shah:

Look, that’s why it got pulled off the market, just as an example. We are readily willing to take as a population, oh, this anticoagulant works for 85%, but we don’t know which 15% it doesn’t work for. And we don’t quite understand why. So, getting down to those singular pathway systems, the smaller you can bring it down, the better it becomes. And likely that’s where the next passage, you know, if we’re going to go past this plateau, that’s where it’s going to be. So, when you say, hey, what was 30 or 40 years ago, it’s more likely going to be. Yeah, now we kind of understand why that’s occurring. And this is what was occurring. And all the other crud around it is going to be swept away.

Todd Merrill:

Okay, and is there like valuable data that we can now pull forward because of stuff like that?

Niral Shah:

Yeah, because, again, that’s in the record, so to speak. So, you have access to it. You probably have incomplete data sets that you can probably pull forward and say, oh, this is what those expert opinions said. Oh, now it kind of makes sense. And so if this is really true, that axiom is now true and proven true. Now you can go and prove other things that are happening.

Todd Merrill:

Interestingly, field research. I want to kind of go back. You know what you were talking about with your old company with the search engine. I think you had a kind of interesting outcome there. Not a 100% positive, right? So, what happened to that company?

Niral Shah:

Yes. One of the things that I tell people all the time, even investors as well as founders, is, hey, focus on failures. I think a lot of people focus on winning. Now, when we got our company, let me kind of go through the arc of NetGopher just so you get an idea. We recognize that we couldn’t really make money as a search engine. We tried. It doesn’t work. We had to really dig deep and say, what is it that we’re providing? And what we’re providing is the right information at the right time. Like, ultimately, that’s what a search engine is doing. But then we transitioned it into enterprise software. And we were doing something called dynamic predictive caching. So, again, at that time, video was a huge constraint. And so if we could prefetch data and bring it onto the internet, that was a huge boon for the enterprises. That’s fundamentally the same thing that we were doing before, except now we’re doing it from a different customer. That being said, we did our raise. We went forward. We grew our headcount. And ultimately, you know, one, I was a biology guy. And you become less and less of a value add. I mean, I’m a great chief cheerleader, which is what I ended up becoming.  But then it’s time for me to step away. We realize that. I recognize that, hey, this is what’s right for the company. So, we did a reverse takeover. I still held the lion’s share of the stock in the new company. And, you know, I really sat for like two or three months, didn’t do anything for that summer except eat Lucky Charms and watch Price is Right. And then I decided to go back to business or medical school.

Todd Merrill:

Ha ha ha. Okay.

Niral Shah:

About eight months after that, the writing was clearly on the wall, where there’s a liquidity crunch. We were not going to get to the next round or make it to the next level. We still had money in the bank. And we had a come-hither talk with the investors amongst all the employees. And we decided to do Chapter 7. And I’m really, really proud of that, actually. So, one option is that we already have money in the bank. We’re under no obligation to give it back. But if you do something called Chapter 7, you can unwind it and say, hey, let’s give money back to the creditors. You know, the investors are creditors at some level. And we’re going to give it back.

We had some spirited discussions about it. And I knew it was the right thing to do because I thought about it as a fiduciary to my shareholders. That was where I needed to be. So, nothing came of it. But what I did get was all of the learning. These are all things that you’ll notice I never learned anywhere else before. And they were very formative. The second big part was that one of our lead investors wrote a letter of intent that said, if Niral is attached to a company, I will invest $100,000. That’s it. 

Todd Merrill:

Wow! Did you ever cash that in?

Niral Shah:

No, no, I didn’t do that. I think I went back to business or medical school. And I wish you were still around. Maybe I, you know, would use that at some point.

Todd Merrill:

Yeah, right.

Niral Shah:

But that was a really, really big vote of confidence for me because I probably did the right thing. I recognize that in retrospect. And sometimes just thinking about things and saying, hey, what’s going to be good for the world? I would liken it to organ donation, right? That company was going to die no matter what. Why don’t we give some of those organs, i.e. the money that we had back to the investor so they could put it in something that was going to potentially change the world?

Todd Merrill:

Right. Right.

Niral Shah:

And that’s the way I thought about it. And that’s been a decision that’s been great for me just from a mental standpoint.

Todd Merrill:

Yeah, it’s easy to sleep on. You said this isn’t going to work. Let’s just stop.

Niral Shah:

Let’s stop and even…

Todd Merrill:

… and salvage what we can. Yeah.

Niral Shah:

And for the employees, they would have gotten a few more months of salaries, but they were really all talented. So, they were able to go to another place and get jobs anyway. So, it wasn’t a problem.

Todd Merrill:

Yeah. I bet you some of them had a great story on the outcome. I don’t know if you’ve kept up with any of them, but that’d be interesting.

Niral Shah:

Yeah. So, actually, very quick aside, one of the folks that I worked with went and started his own thing within the telecom business. And so one of his early investors was Sky Dayton of Earthlink fame, which…

Todd Merrill:

Wow!

Niral Shah:

And so actually, one of the folks that I worked with called me and said, “Hey, Niral, you should come join us,” etc. And I was like, “No, you know, let me think about it.” And being a startup founder really is trying. It’s just very taxing. And I was like, well, this is going further and further away from what I really love in healthcare, biology, life sciences, things like that. And so I said no. And actually, Sky Dayton called me and was like, “Hey, man, is something wrong with this company? Why aren’t you joining?” Like, “Tell me about it.” And he was urging me to jump back in.

Todd Merrill:

The gang’s getting back together.

Niral Shah:

Yeah. Yeah. And that happens a lot, as you know.

Todd Merrill:

Yeah

Niral Shah:

And you bet on the team. Many times, you’re betting on the team, and it’s a team that worked well before. Just there were a variety of external reasons that it didn’t work, and that’s okay.

Todd Merrill:

Yeah. And then a better idea, different circumstances, different year.

Niral Shah:

Right

Todd Merrill:

Yeah. How awesome is that? So, the team kept going. Everybody’s buddies. You still talk to your investors.

Niral Shah:

Yeah. I still talk to them. I can look at them in the face. I know it was the right thing to do. But also, you have that entrepreneurial spirit in you, and you don’t have that sort of negative aura about you as you go forward, even for yourself, right?

Todd Merrill:

Yeah

Niral Shah:

And so that’s been really cool.

Todd Merrill:

Yeah. Well, good on you for that. You said something earlier that I thought was interesting. You said being a CEO or a founder is like Neo in the Matrix.

Niral Shah:

Yeah

Todd Merrill:

You want to kind of explain that?

Niral Shah:

Sure. So, that was the first company. I know we’ve taken the majority of time talking about that, but I’ve also worked on four other companies since then in various roles and whatnot. Some are just straight CEO, drop-in CEO type things. Others are, hey, can you help with a strategy? They just need someone else to really kind of help guide this team.

What people get wrong is that they think that it’s about pushing through some barrier. I would argue it’s like being Neo, where you’re just dodging bullets. Remember that scene? And those are existential death nails that are going to be coming your way for the startup. And so you’re better off thinking like Neo, how do I dodge this bullet? How do I dodge that bullet? There’s a famous algebraist. His name was Carl Jacobi, and his line was invert, always invert. I think founders think, oh, I need to take risks. I’m going to argue that the biggest risk you should take is saying, yes, I’m going to start this company and move out to California without any source of revenue, income, whatever. But then every subsequent thing that you do is try to de-risk it. You can de-risk it by getting patent protection. You can de-risk it by getting network effects. You can get it de-risked. And so founders have it wrong where they’re trying to run through something. But in fact, what you’re doing is just dodging bullets left and right.

Todd Merrill:

Be like water, Bruce Lee, right?

Niral Shah:

Yeah

Todd Merrill:

Go around it. Well, Niral, it’s all about travel and getting out there in the world and making things happen. You got any great travel stories you want to share with us?

Niral Shah:

Yeah, so I just got back from Cambodia and Thailand. My favorite travel story, I was the course lead for trauma surgery on behalf of the Harvard Humanitarian Initiative in Ukraine. So, we went to Moldova, then traveled to Ukraine via van.

Todd Merrill:

Wow!

Niral Shah:

I do remember we were told to hide all your medical signage. There was a small undercarriage and things like that. And, you know, there was a van that stopped on the other side. And I saw the two drivers kind of talk, and they looked like they were passing something. And in my head, I was like, am I being trafficked? Because I feel like this is what being trafficked would feel like.

Todd Merrill:

Oh, God.

Niral Shah:

But it was all for our security. It was great. So, that was my one time where I got to be like Jack Reacher.

Todd Merrill:

Okay. That was during the war?

Niral Shah:

Yeah, it was in 2023.

Todd Merrill:

No kidding. Wow! Trauma surgery.

Niral Shah:

You know, I still love doing those humanitarian things. I just got back from India, where I was helping with a vision group that was looking at doing some different things. And that would also combine some… they were thinking about creating micro entrepreneurs in small villages, which then uses a different part of my brain as well.

Todd Merrill:

Well, that’s awesome. Is that a TiE thing or something else? TiE.

Niral Shah:

Yeah. So, that’s through TiE Atlanta and Paul Lopez, who we both know.

Todd Merrill:

Yeah, yeah.

Niral Shah:

And he got me involved. I’m always thankful to TiE. So, now that you’ve mentioned their name. It was a TiE member who was a lead investor in NetGopher. And that’s the reason that anytime I … I’m a part of TiE Atlanta now, and if they need something, I always raise my hand.

Todd Merrill:

Heck yeah.

Niral Shah:

Happy to volunteer back because they were so influential in my first go around that, you know, now it’s time for me to do the same for the next group.

Todd Merrill:

Yeah, that’s awesome. And do you want to tell a story about your wife’s favorite SkyLounge?

Niral Shah:

Yeah. So, this is all about sky lounges. I don’t know if you can see in the back. I’m an aviation geek.

Todd Merrill:

Okay

Niral Shah:

That’s actually a map with all the worldwide route maps for airlines. My favorite sky lounge is the F gates in the Atlanta concourse. I like it because there’s a shower and an outdoor terrace where you can watch wide bodies if you’re an aviation geek. My wife and I were going to Korea, and she’s like, oh, let’s just go to a restaurant and get something to eat before the flight. I was like, well, let’s go to the lounge. And she’d never experienced a lounge before. She’s like, no, no, no. I want something really, you know, good to eat. Get in there. Her eyes pop open. She loved the food. She loved what was there.

So, we were in Korea, and we were on a layover on the way back. And for 10 hours, instead of going into Korea like we had previously planned, she’s like, I’m just going to stay in the lounge. I didn’t realize lounges were like…

Todd Merrill:

Oh, men, yeah.

Niral Shah:

Like, girl, you were going to sit here for another 14 hours on a flight home. Are you sure you don’t want to go out and stretch, girl? She said, no, it’s fine. Like, I have everything I want in this lounge. It was like a self-sufficient place to hang out for her.

Todd Merrill:

Yeah, that is awesome. Well, Niral, it’s been awesome spending time with you today. If people want to follow up with you after this on the internet, what’s a great way to get in contact with you?

Niral Shah:

You can find me on LinkedIn. I don’t have any other social media. But I’m always happy to chat with people who are energetic, smart, have integrity, and happy to help all stages, you know. And I’m always happy to take coffee chats because most of the time, I end up learning something new, even if I’m not going to be able to help. And that’s always a really fun intellectual exercise.

Todd Merrill:

I’m hanging out at TiE Atlanta tomorrow.

Niral Shah:

So tomorrow, every month, you know.

Todd Merrill:

All right. Well, it’s been great having you, Niral.

Niral Shah:

Thank you, Todd.

Todd Merrill:

Thanks

Niral Shah:

All right, have a great day.