Interview of Lou Pambianco - Chairman and CEO of Startup Sandbox and Managing Director of Corporate Development Partners

0:01 This is Silicon Valley Tech, Behind The Scenes, a podcast hosted by Shawn Flynn and Sunil S Ranka. Here's where we talk to the real heroes to find out how decisions are made and how they're executed to create the thriving businesses of tomorrow. You know, there's an unintended consequence of COVID-19, and that is that the world's eye now is on bioscience. Think about that. Prior to COVID-19, bioscience wasn't in the paper. But there's been times over the last 12 weeks when an RNA-based company, Moderna, has actually driven the stock market because they are doing an RNA- based vaccine. So the attention of the world's on bioscience. And that is Lou Pambianco, who's the chairman and CEO at Startup Sandbox, which is the designated affiliate incubator of the University of California, Santa Cruz. The mission of the Sandbox is to help those early-stage companies transform their research and ideas into commercial successes. And in a short time, 47% of Sandbox companies have launched as independent commercial enterprises. On today's show, we talk about what are the sorts of problems companies are tackling at Startup Sandbox?

1:16 What is the bioscience and the biotech revolution of today and what's happening? And much, much more. So let's get right in this interview with Lou. All right. Enjoy. Lou, thank you for taking the time today to be on the Silicon Valley Tech Podcast with Sunil Ranka and myself. Now, Lou, you've had this amazing history in the 70s, the 80s, the 90s in digital technology, working with companies in Silicon Valley. Can you give us a little bit of background up to this point? Certainly. And it's a pleasure to be here. Thank you for inviting me. You know, Silicon Valley, as we know, went through so many changes. I grew up in the Valley. And in the late 60s into the early 70s, I grew up on Silicon Valley. I grew up off of Silicon Valley. I grew up with Silicon Valley. I grew up from Silicon Valley. I grew up through Silicon Valley. I grew up into Silicon Valley. In the early 70s, the Valley transitioned from this magnificent Del Monte-based, orchard-based Valley. And over a period of time, that shifted very quickly into companies, starting with Fairchild and then spawning so many companies that became the digital revolution. I was fortunate at the time to be able to work with some of those early-stage companies. And I formed a consulting company. In the early 80s, I formed Corporate Development Partners.

2:34 And that was in partnership with David Richards. I met David at what at that time was the fastest-growing company in the Valley. And David was doing architectural CAD design. And he basically said, gee, Lou, you know, I came out of McKinsey, and I'd like to do a consulting company. Why don't we form one? So together with Dave and our third partner, Ken Marino, we formed Corporate Development Partners. And that became the most wonderful ride and experience of my lifetime. We had a 10-10 rule when we started Corporate Development partners. Any company had to be 10 minutes or 10 miles from Corporate Development Partners. And we were on the corner of Great America Expressway and Patrick Henry. Every company that was going to be a tremendous company someday was within reach. And we had the opportunity to work with. Most of those companies worked with Intel during that period of time when they were transitioning from DRAM to microprocessor, $4.25 a share, and everyone was shorting them. Of course, the rest is history. We worked with, later in the 80s, Conor Peripherals. Conor Periferals became the fastest-growing company in American business history.

3:51 Grew from zero to a billion dollars in revenue in four and a half years. They were Fortune Company of the Year. And we built what was called the... We looked at what are the success factors that enable a company to grow rapidly in Silicon Valley. And Finest Conor was the CEO of Conor Peripherals. And we said, look, why don't we go out and talk to three of your customers? Sun, Apple, and Compaq. They've all grown to a billion dollars in revenue in under 10 years. Let's figure out what they did right. And then let's look at how we incorporate that into a growth model for Conor. So we did that. And we put together a research package that was... It's probably a good 24 inches thick. We met with the executive teams in all three of those companies. We met with The Original Investors. We met with folks that covered them on Wall Street. And we interviewed the staff, the executive team, and down through the organization and across the organization to find out, what's it like here? How do you achieve what you achieve so rapidly? And then we put together what we called the Exceptional Growth Study. We shared it with Conor. And then we built the roadmap. We also shared it with each one of the companies that we had interviewed. Beautiful. So you talked about the early stage.

5:08 People were shorting, but those were the company came up. You talked about getting into a methodical way of addressing how the companies need to grow. Based on your work in Silicon Valley throughout the digital revolution, what brought you to Santa Cruz and your involvement with bioscience and biotech today? Sunil, that's a wonderful question. And first of all, I'm an ocean racer. I have a sailboat in Santa Cruz, and we've always had a home on the coast. We lived in Saratoga during the day, but I looked at the digital revolution, the last half of the 20th century. And then I began just doing pro bono work at University of California, Santa Cruz. And I had the privilege of being introduced to David Hausler, David, Director of the Genomics Institute at the University of California Santa Cruz. And he and his team were the first to assemble the human genome. So in working with David early on, and this goes back over a decade, I began to look at this and say, wow, on the foundation of the digital revolution, there's now a bioscience revolution that's defining the first half of the of the 21st century. So let's now focus on bioscience. So that became a passion for me. So you talked about a transition from growth and I keep hearing from you three domains and just correct me if I'm wrong.

6:30 Speed to market, speed to profit, and speed to, so you're all about speed. Speed to revenue, speed to profit. Speed to revenue. And now I own the URL speed to commercialization. Speed to commercialization, so you have seen everything from technology to bioscience, but what's uniqueness in Santa Cruz? Why Santa Cruz? And why made you choose Santa Cruz and invest your time and effort into start? Well, you need to look at the history of the University of California at Santa Cruz. In 1978, Provost Sinsheimer met with a group of the professors at the university and said, we are going to be the preeminent research university in the country. And by the way, your task is to map the human genome. That was 1978. Today, the University of California at Santa Cruz is in the top five universities in total applied research. They have over 150 million research grants, over $150 million a year in research grants, they're number one in the world in publications cited, so the research that's being done at the University of California, Santa Cruz is deep, wide, and incredibly rich with that in mind, when I was asked with my business partner, Judy Ohn, in March of 2017, would we start an incubator, I said, you want us to do what, you know, I'm gardening, I'm saline, I'm, you know what, I'm going to start an incubation.

8:01 And I said, I'm not going to do that. I'm going to start an incubator. And I said, I'm not going to do that. I'm going to start an incubator. And I said to my boat, I still have clients in the valley, why would I start an incubater? Well, we did the due diligence, and it became very apparent, the University of California, Santa Cruz leads the world in areas of genomics, bioinformatics, chemistry, biochemistry, the Molecular Biology Center for RNA, and nanopore technology. These are fundamental to bioscience. So we did that due diligence from March until April, and on April 17th, we incorporated as a nonprofit. This is incredible, because being in the valley, and we all know that there are seven UCs around Silicon Valley, and most of them are prominent names are UC Berkeley, UC Santa Barbara, but this was phenomenal to know that UC Santa Cruz leads in most of the research, especially in case of bioscience. It's incredible. Yes. So, Lou, with that, though, can you talk to us about maybe some of the startups in Startup Sandbox? And kind of what they're working on? I'm really interested to hear, because it sounds like there's this undiscovered talent that's in Santa Cruz that we're learning about for the first time, and I'm sure there's some startups in your facility that are the exact same way. There are. And let me begin by saying that what I've done specifically at the incubator is to provide business commercial services to each one of our member companies.

9:27 And what does that mean? Well, capitalizing on the lessons we learned. In the Exceptional Growth Summit study in the valley, we're applying those lessons to these companies, these young entrepreneurs, and some of them are seasoned entrepreneurs, and really focusing with them on how do they grow an enterprise? How do they move quickly to the commercial markets? So, in under 18 months, we graduated six companies into the commercial markets. Let me tell you a little bit about those companies to answer your question. CruiseFoam is a company. It's actually making biodegradable foam out of shrimp shell waste, chitin. And they're now in the packaging market. So, they're providing biodegradible packaging. They'll be able to partner with the automotive industry and be able to put biodegrad able foam into automobiles. So, this is a marvelous company. We have a company that came out of the research that Nader Parman, professor at the University of California at Santa Cruz, has done. And that's nanopore technology. David Deamer, professor emeritus at the University of California, Santa Cruz, invented the nanopore technology. He licensed that technology to Oxford Nanopore out of London.

10:45 And there's just a tremendous amount of capability at the university in nanopore technologies. So Pinpoint Sciences was created, and Lisa Diamond is the CEO, and we worked with them to partner with Analog Devices to create this technology. A chipset that would power this wonderful medical handheld device through which you could take a saliva or other particle, and you literally could bring one molecule through a opening at a time, excite it with an electrical charge, and it would determine whether that was, in this case, SARS-CoV-2 within 30 seconds with a 98% positive rate. So, this is fantastic. Thank you. Thank you. Thank you. That's phenomenal, and we're working with them right now on funding. We have a company currently in the lab with a senior scientist, Mary Noe, who is synthesizing DNA. Well, low-cost synthesization of DNA has many, many applications. One application that is critical, and you know it as well as I do, we're running out of storage space. So imagine you can now store data in DNA.

12:01 So that's what she's working on. And making tremendous progress. I could go on and on, but let me stop there. From everything what you've seen, you talked about companies trying to store data on DNA, COVID testing. We had Deb talk about nanopore technology, where on a pen drive kind of a device, you can do a genome sequencing. It's phenomenal. I mean, these are cutting-edge technologies. Now, you have seen so much. Last 12 weeks have changed the world upside down. What are you seeing for the future? What are you seeing for the future of bioscience, especially now in the age of COVID? There's an unintended consequence of COVID-19, and that is that the world's eye now is on bioscience. Think about that. Prior to COVID-19 bioscience wasn't in the paper, but there's been times over the last 12 weeks when an RNA-based company, Moderna, has actually driven the stock market because they are doing an RNA- based vaccine. Yeah. So, the attention of the world's on bioscience. At the Sandbox today, I'm getting inquiries, multiple inquiries a week by companies that want to come to Startup Sandbox. Why? A couple of reasons. One, bioscience meets quality of life in Santa Cruz.

13:19 This is a wonderful place to be. Two, proximity to the university and the treasure trove expertise that's resident at University of California, Santa Cruz, is something people want to be there for. They want to engage with those professors, and we make that possible. And then three, think about what drives your creativity. Creativity is driven by proximity to areas where you can have a vision of what's possible. Well, think about being in Santa Cruz, particularly at the campus, and looking out from the Redwoods over the Vista of Monterey Bay. It really does spark the creative juices. Yeah. I mean, the people that come to the Sandbox, they work 24-7. They're in our lab. They're in a BSL-1 or a BSL 2 lab at an incubator, and they can take a break, and they walk down Natural Bridges Drive, through the Butterfly Sanctuary, and onto Natural Bridges Beach. Some of them will even surf down there. They'll come back, take a shower, and they're back at the lab. So it's a very creative environment. Okay. I want to go on vacation right now. That sounds too great. So going to the evolution of Silicon Valley. The evolution of Silicon Valley and the digital revolution that happened in the past.

14:35 How do you see the future in Silicon Valley with the bioscience revolution that's happening now? Well, as I said, the bioscience evolution is taking place on the foundation of the digital revolution. So if we did not have all of the digital components from computer technology, from the ability of the software programs that have been developed. You wouldn't have a bioscience revolution today. So digitization makes possible bioscience. David Houser, for instance, at the Genomics Institute, has the bioinformatics labs, and they're processing massive data in order to look for pattern recognition. So how does that apply? BRCA is a component of breast cancer, and to be able to have the genomic profile of women who've been diagnosed with breast cancer, and be able to do the bioinformatics on that database, you begin to see patterns, and they've already identified patterns of precision medicine treatment that in fact would alleviate, for many women who have that particular profile, their threat of breast cancer. This is the kind of work that's being done at the University of California.

15:53 This is incredible. I mean, as Sean said, it feels like going on vacation, but at the same time, we practically live 45 minutes away from San Francisco. Yeah. It feels like we're in Santa Cruz. But we never knew. All we knew was boardwalk, all we knew was a place where you cannot find parking because bitches are so popular. But from your perspective, what you brought today, world-class research institution, center of bioscience revolution, and you are heading that from the front by means of Startup Sandbox. Just curious, the company that grow beyond the boundaries of Sandbox, what part they usually take? How does Startup Sand box help those company? And if I'm a bioscience company, what do I do? Yeah. If I were a bioscience company, why would I come to Startup Sandbox? So if you were a biosciences company, you would want to run to Startup Sandbox for the reasons I previously gave, the proximity to the university and the knowledge base that's there, but also for the ability to be mentored by top individuals. We have created what we call the Founders Circle. This is a group of people out of our network from the Valley who have exited San Francisco, California. They cover companies from a quarter of a billion and beyond in exit. They cover everything from the role of a CEO, to marketing, to finance.

17:12 And we partner these individuals with our Sandbox members. Our Sandbox members know the science. We know the business. So when I say speed to commercialization, our intention is to work with every company that comes to the Sandbox and speed them to commercialization as rapidly as we can. People have said, that's a go-out-of-business strategy because you're losing revenue, rent money. We say no, because the word is traveling, and we're getting more and more folks that want to be a part of Startup Sandbox because of the success. I hope that helps. So then what's next then for Startup Sand box? What lies in the future? We've kicked off the Sandbox Venture Fund this year, and Laura Oliphant, who was 15 years with Intel Capital, is the GP. She's the CEO of the fund. We have, yesterday, kicked off the initial phase of that fund, which is a $5 to $10 million phase. And we're working with the university to coalesce a group of investors that will be first in as LPs into that fund. And the fund is very unique in that every member that I vet that we admit is a member to the Sandbox will get an automatic infusion of funding.

18:31 That's a good thing. And that will be from $50,000 to $100,000, and that's a get started, with follow-on rights up to and including the A round. So this is a powerful venture fund for the companies that become members of Startup Sandbox. So that's what's happening right now. In addition to that, we're finding that the companies that come to Santa Cruz to be part of Startup sandbox want to stay in Santa Cruz. So we're on the cusp now, really creating bioscience commercials. And that's what we're trying to do. We're trying to make sure that the companies who come to Santa cruz to be part of Startup Sandbox are part of the bioscience commercial center in Santa Cruz. So we're partnering with the city, the university, to create a Santa Cruz bioscience and manufacturing commercial center, so that now these companies that graduate from the Sandbox can move right into a center that is fully stocked and equipped to handle both bioscience in terms of lab work and manufacturing. Coupled with that, Chancellor Reeve at the University of California, Santa Cruz, has dedicated property directly across the street from our incubator as the Westside Research Park. And that's where David Houser and his team are, bioinformatics, robotics, automation for automobiles.

19:46 This is a marvelous thing because now those postdocs and graduate students who are a part of those labs can begin to formulate ideas and bring them into the Sandbox, simply walk across the street. This is incredible. So we just did the full circle. You started your career as somebody who wanted to learn from others and put a growth package together. Did a successful exit, led the innovation from the front, bioscience, private race experience, full circle coming back by serving the community by building a StartupSandbox.org. If people want to know a little bit more about you, or maybe more and more about you and Startup Sandbox, what are the best way to reach out to you? Well, you can reach me at Lou at StartupSandbox.org, and I'll get right back to you. You can also visit our website, www.StartupSand box.org. And you can look at Corporate Development Partners website, CorpDevPar.com. And that gives you a full exposure to my background and what we're doing. Lou, this has been a thrill. Thank you for your time today on the Silicon Valley Tech Podcast. Now for all listeners at home. Please like and share and distribute this to all your contacts.

21:05 And once again, if you're in the Bay Area and you have the opportunity to go to Startup Sandbox in Santa Cruz, we highly recommend you doing it. So once again, Lou, thank you for your time today on the Silicon Valley Tech Podcast. Thank you. It's a pleasure to be here. Thank you for listening to Silicon Valley Tech Behind the Scenes. To find out more, contact the team, or to be a guest on the show, visit our website at SiliconValleyTechPodcast.com. We look forward to hearing from you. Thank you. Thank you. And remember to support the show by leaving a review to encourage us to keep creating great content like this.