When the Titanic Goes Down, All Ships Sink
This week I am talking to Julien Pham, MD, Managing Partner of Third Culture Capital, an immigrant-founded, physician-led, seed-stage VC firm focused on emerging health tech and techbio companies that are revolutionizing modern care delivery while optimizing and reshaping the experience of care for both patients and providers.
Julien and I share a common thread in our past, both of us being third-culture kids (raised in a culture other than their parents or the culture of their country of nationality, and also living in a different environment during a significant part of their childhood development years). Julien was born in Vietnam and raised in Paris, France and became a nephrologist, but later discovered his inner entrepreneur and launched two companies in digital health and biotech, both of which had exits. He decided to become a venture capitalist to help other early-stage entrepreneurs. His fund, Third Culture Capital, backs founders who don’t fit the mold and have had unusual journeys. They focus on improving outcomes for patients, decreasing the cost of care delivery, and improving the experience of care for patients and providers.
We discuss the impact of Silicon Valley Bank’s collapse and how it affected entrepreneurs and investors. The bank was known for its early support of innovation and entrepreneurship, and it helped immigrants without social security numbers to open accounts. The collapse of the bank caused contagion in the banking system, and it made entrepreneurs realize that they could not rely on banks as much as they thought. As we all know the government eventually stepped in to prevent further collapse and the risk of a “run-on banks”
Listen in to hear our conversation on the importance of relationship building and support from smaller banks, the need for entrepreneurs to rethink their banking strategies and how he developed that resilience, and how you can too.
Listen live at 4:00 AM, 12:00 Noon, or 8:00 PM ET, Monday through Friday for the next week at HealthcareNOW Radio. After that, you can listen on demand (See podcast information below.) Join the conversation on Twitter at #TheIncrementalist.
Listen along on HealthcareNowRadio or on SoundCloud
Raw Transcript
Nick van Terheyden
Today I’m delighted to be joined by Julian Pham. He is the founder and Managing Partner for Third Culture capital, Julian, thanks for joining me today.
Julien Pham
Hey, Nick, seeing Nice seeing you again.
Nick van Terheyden
So I’ve had you on other shows we’ve talked extensively. But I think it’s important always to get a little bit of context, you’ve got an unusual background, we’re going to dive in in a second. But if you would share a little bit of your journey to this point in time if you weren’t
Julien Pham
sure. It’s always a complicated question to answer. But it’s nice to be with a fellow Third Culture kids. So I’ll tell you the long version of this. So the name of my phone is called Third Culture capital, because we back founders who don’t fit the mold, who have had unusual journeys. And my journey kind of started in Vietnam, where I was born. And as refugees, we ended up in Paris, France, where I spent my formative years. And then from there, I came to the US to study English initially lived in a host family, it was a teenager, and I’ve been in the US for 30 years. From a academic slash professional standpoint, I went down a path that was somewhat designed for me, growing up, so I went into medicine to follow my father’s footsteps in a way I really kind of loved and really found the vocation in that. But unbeknownst to me, I’m really an entrepreneur inside. And so spent 15 years as a clinician was a nephrologist, stumbled upon entrepreneurship, while I was training in Boston, and launched two companies. One in digital health, one biotech both with exits and decided, what’s the next step in my journey that kind of feels right for me, and it feels like supporting other early stage entrepreneurs, helping them scale and figure out, you know, what the next steps are in order to, to reach, you know, the potential there of the ideas and accompanies, it just made sense for me to become a VC. So I’m a cross cultural, cross disciplinary person. And as the thesis of my fund is, we also back cross cultural cross disciplinary people. So they can improve outcomes for patients, decrease the cost of care, delivery, and improve the experience of care for patients and providers.
Nick van Terheyden
So before we dive into a little bit of that, it’s worth spending some time because I think, you know, that third culture experience really has a big impact on your behavior. And there’s a couple of things that you said that sort of strike me as this. So first of all, I think, you know, there’s a part of me that says, all physicians are entrepreneurs at heart, because we sort of strive to survive in what is a very uncertain environment, but find these innovative solutions. And you know, sometimes it’s just small things of finding the right therapy for that patient that’s in front of you. So there’s a part of me that thinks most people are like that. But as you think back to your childhood, and some of those experiences, obviously, that’s impacted your fund, and the way that you’ve structured it, because you’ve seen that, you know, particularly underserved group of individuals that marketplace, but how much has that influenced all of your activity? I mean, how does it contribute anything,
Julien Pham
I would say it has fully contributed to what I do write, I feel so lucky that I’m able to build an organization of fund a franchise that really reflects my ideals, you know, the vision that we have, and, and purpose. And, you know, I feel even more blessed that the people who are backing us also believe in that purpose, right? It takes a risk to, to back a first time fund. So a lot of these people came in because they believed in me and believed in what we’re trying to accomplish. More often than not, I meet entrepreneurs who relate so much to the notion of their culture that they want to be part of this fund, not so much because they’re seeking capital, I’m sure And sure, there’s always that component, right? They’re raising money. It’s like, oh, you know, it’d be nice to get funding from a fund. But you know, I think more often than not, they really appreciate and value that we’re backing. founders who usually don’t get access to capital is a very important part of of what we do and in our mission.
Nick van Terheyden
So for the benefit of the lessons, I think it’s important to understand what that means because not everybody understands Third Culture kid. It’s a very specific term and you and I are both that Um, and it, it’s the mixing of not just two cultures, because you know, many families to parents, you know, they come from different, you know, sometimes different states in the US or different countries, you know, that’s two cultures. But here, it’s a third culture that contributes, and that’s the country that you’re brought up. And that is not the same as the two parents that you’re contributing to. And what that does is makes an even larger mixing pot, certainly, in my experience, I mean, I’m natively African by some elements. I’m Scottish, you know. And the good news for the World Cup is I can support lots of different countries and feel very comfortable about that, you probably, you’re hedging your bets. I’m always hedging my bets. And cloud of it. And it’s interesting, even though my children are probably not quite well, maybe they are Third Culture, somewhat, but they’ve they’ve adopted the same particularly with the football, I’ll say, just, you know, we’re we’re optimising all instances until everybody’s out of the competition. So it brings us huge experience. And, you know, overarch has everything certainly for me, and I’m not surprised to hear for you, you’ve set up this fund, I think, probably, I imagine quite the struggle to do so because it’s, you know, against many of the sort of institutions the standard, the dogma that exists. And then here we are at this point in time, and we have this massive bank, Silicon Valley Bank, and I’m gonna say it collapsed. I don’t think I have any other terms. Is that a fair assessment? Yep. How’s that impacted? You?
Julien Pham
Yeah. Well, so first of all, I think we need to have another podcast talking about soccer, football, in general, maybe over a beer? How did the SVB situation affect our lives, how it’s affected the ecosystem? So I mean, that I think there’s several ways to answer that I can give you a general answer, which I will, but I’ll also also maybe share some kind of very kind of personal stash, you know, realistic, concrete answers as to how we dealt, how we help help support our portfolio companies, and you know, the kind of communications we had to give to our LPs, etc, etc. But, I mean, listen, I think what makes America America is the ability to reach for your dreams, right. And I think immigrants in particular, come here, because they’re willing to work harder, and they’re willing to take bigger risks, so that they can build a legacy. And, and now, when it comes to innovation, and entrepreneurship, SVB, provided that they were the bank with a brand, first of all, Silicon Valley Bank. And I think in the early days, and I mean, I wasn’t there, but from what I’ve known, and read and talk, you know, talking to folks who have been in the innovation economy for for a long time, you know, they were the ones who got to build these relationships and extended support and help these immigrants who didn’t have social screen numbers, for example, to open accounts when all the other banks would not do that. And it takes, you know, it takes a certain degree of, of risk taking to do that. And, as we all know, and it became a lot more apparent after the SBB collapsing the contagion amongst the banking system that, you know, when you try to do things at a larger institution, it’s it’s like, you know, moving large ships, right, it doesn’t move. And, and for us, for example, when we tried to open an account at one of the top banks, like, they wouldn’t even allow us to do that, or consider us, because now one of the answers I got is that, you know, we’d love to help but you’re too small fund, and it was a one liner. Right? It wasn’t like, a nice explanation. Wow. And so I called her the banks and they’re like, Yeah, you know, we empathize with what’s happening, you know, this is terrible. You know, let me try let me bring the whole team together, we’ll schedule something to do a demo for you about you know, to show us what our dashboard looks like etc, etc. So I think there’s certain degrees of relationship building and support that you get from a kind of smaller bank or bank that is pro entrepreneur and is supporting that and, and so it was kind of a big spirit, like hit to the spirit when a bank like SBB collapsed and and then know when the other banks signature collapse as well. I think it became very worrisome. Not scary. And so you know, the first thing we did at three CC is we reached out to entrepreneurs making sure that, you know, they didn’t have exposure, you know, and like important accounts in at SBB. And luckily here about nine portfolio companies only two had, and they assured me that everything was okay. And it was important to know, because number one, like I wanted to help in any way I can, but there’s not much I can do. Right, this was on the Friday. And, and, you know, it was really about getting advice from other VCs involved with these companies like what they should do, whether they should try to get, you know, $250,000 out whether you should try to immediately open an account, but when 1000s of companies are trying to do the same thing at same time, there’s just like, it’s just overwhelming, right? So a lot of stress over that weekend. And then the government stepped in, and I just couldn’t see any other outcome. Because, I mean, when you think about American competitiveness, like what does it say to the world when there’s a bank run, and like a large bank collapses, we don’t billions of dollars, right? And companies, large and small, cannot make payroll and some will disappear. So like, something had to be done. So the government stepped in, which I believe was kind of the right way. I don’t know, I’m not an economist. So I don’t know what’s going to happen next. But there was a degree of contagion. So the first email I sent out to my, to my LPs to provide, you know, a balanced view of things was to say, Okay, we’re not exposed, we ourselves as a fund were not exposed at SBB, we are with another bank. And so far, everything looks good. Two days later, the stock of that bank were like, like, took a huge nosedive. I was like, crap. And so it took us, you know, about a week, two weeks or so to find, have conversations with and open accounts and another bank and, and we’re doing this to kind of create the duplicated processes and kind of, you know, quote, unquote, diversify a little bit and make sure that we don’t get caught with our pants down. Like, it’s happened, but kind of stepping back from all this, it’s a little crazy, right? That and I know, you know, 2008, something similar happened with Washington Mutual, but it’s, it’s crazy to think that in my my career as an entrepreneur started 10 years ago, it never did, I think that I could not rely on the bank. Now, like, for me, it was just like, an automatic thing, it was just stable, it was just foundational, just create a company, you open an account, it’s there. And then what you do is you shop around, try to optimize your payroll and, and all these types of things, all types of services and vendors and and fintech solutions to try to do the rest, but it’s kind of a wrapper around the bank. And then also in when that bank crumbles. It’s like, Oh, my God, like, what do you do next? And so it’s definitely a shock to the system to the whole innovation economy. So now, I recommend companies to kind of rethink that. And I think a lot of people are rethinking that people have pooled money. Now, we’ll see what happens in the next couple of months. But I think, ultimately, what’s, what’s going to come out of this is that now there’s a loss of trust, to the banking system in a way that we haven’t felt for for some time. And people are going to be a lot smarter about what they do. So what has this whole era of the pandemic taught us and for myself as a intrapreneurial, VC who launched the fund. Now, I launched the fund, in the midst of a pandemic, in the midst of an economic downturn in the midst of a bank run, and, you know, this situation with SBB, and the banking system. And on top of that I had a child so. So I think I think what this has taught us is, we need to be cautious and smart about what we do. We need to build like entrepreneurs need to build businesses that will be sustainable, right. So I think this is a wonderful opportunity to kind of reset things and put, like smart money into smart companies that are going to be very successful. I think all the fluffy stuff, the overvalued stuff like it’s going to be less than less. They’re just they’re just not going to survive. So I’m really enthusiastic and optimistic about the future that we have. I mean, it’s, it’s hard right now and it’s hard for everyone. People are losing jobs. There’s a lot of instability, but I think Once we pick back up, and the American spirit of entrepreneurship is going to help us really, some great things and when it comes to health care, that’s going to create really important impact us.
Nick van Terheyden
So for those of you just joining, I’m Dr. Nick, the incrementalist I’m talking with Julian Pham, he is the founder and Managing Partner for Third Culture capital, he was just sharing his multitude of life events that we know in medicine, and I’m just going to say that you need to up your meditation to at least counteract some of that, because that’s a lot of stuff go just add in a marriage in there, and you know, you’d be in great shape. Clearly, you know, huge impact. And obviously, a lot of I think, disproportionate impact on those groups, you know, in the immigrant community that I think even more so. But in some respects, a little bit of a shakedown of you know, some of the over hyped content solutions. You know, I always pick on this, it was belty, if you remember, belty, the belt that measured your waist, that enormous valuations and I’m looking at this going, I’m sorry, and I’m just gonna say that’s a Silicon Valley Bank moment for me it just, you know, I don’t know how that survived. But, you know, I think that’s good. What I get out of this, and as you’re describing it, so there’s, you know, there’s aspects to this forming companies in difficult times, tend to be some of the best companies some of the most successful, it’s, you know, that resilience that you sort of incorporate, but one of the things that I think about is, do you have to incorporate some spread? Do you now start to say, I’ve got, I’m going to have more than one bank account, because I need to spread that risk? Is that something that we need to think about? You know, I don’t see this as a permanent mark on banking, but it is a permanent mark, in my mind that says, I’m not sure that I want to trust in one institution for the rest of my
Julien Pham
life. Yeah. And that’s a shame when you think about it, because that’s kind of what you want, right? Like, in a way, if you come to a hospital, and you wish you could trust one doctor who can do everything for you, but it’s just not how it works. And sometimes, depending on your location, you may not have the hospital that have that particular specialty for that particular ailment that you just got diagnosed with so and you think the same of any large industries or sectors like it, wouldn’t it be nice if you could just have a one to like, one size fits all type of solution where you go to the bank, and everything was provided for you, but But I think, I think it’s making us rethink for sure. And I think you’re, what you’re saying about spreading risk makes a lot of sense. I think we just need to be a little bit more sophisticated and smarter about what we do.
Nick van Terheyden
And you bring up healthcare, and obviously, you know, that’s your focus, that was your historical training. But, you know, one of the things that I read about Silicon Valley Bank, and it gave me pause, and you know, you’re right, we can’t let the banking system fail. But I feel that ought to be true about healthcare, but I’m not sure that I always see the same intent in terms of delivering all of the care that is necessary that all to be delivered. We don’t, it’s not an equitable sort of comparison, you know, we could let some thing you know, hospitals are allowed to fail, particularly in rural communities, which hurt, you know, some of the most vulnerable populations that need that. Maybe we need to bring a little bit of that into the healthcare world, not to support things that aren’t working, but things that are central and, you know, for me, rural health is as an example,
Julien Pham
I think we have an opportunity with, with innovation to do that. You know, I don’t want to compare healthcare, to banking or finance, because I’m, obviously going to be very biased. You know, like, I think we talked about life, but sure, like some people, like, money’s important to them. And so, yes, if we were to know for the sake of this discussion, compare both industries, they’re both highly regulated, right? But there’s been a lot of innovation I feel that’s happened in, in the banking industry, to help make things disappear, kind of like a light switch and away, right, like, you just flip a switch. You don’t need to know you need to be an electrician or an electrical engineer to know what’s going to happen and your lights gonna turn on, right. It just happens. Like I would love to see a little bit more of that in here. Healthcare, where a lot happens behind the scene in a very high quality, reliable way. But all you need to do as a patient or as a clinician is to kind of flip the switch. And I think technology and innovation can bring that, you know, check GPT, like, whatever, we were years, if not decades away from that, but I think there’s an opportunity to, to get to that point. So that’s kind of my very high level, somewhat, you know, unfair comparison of,
Nick van Terheyden
let’s be clear, we all come to this with bias. I mean, I’ve got a multitude. And, you know, in part that’s through our earlier conversation of those cultures that bring some of this and, you know, that’s okay. We just, it’s part of the discussion. So
Julien Pham
and let me let me make a point, I want to react to what you said about kind of how thinking about Third Culture kind of helps us going to work, better solutions. I think part of that for us, when when I think about my fun is this notion of intersectionality. So being at the intersection of, and I think that, as you say, culturally speaking, if you think of culture as kind of where you lived, and you know, your family, your friends, and your communities, etc. Like, the more you have experienced that the more attuned you are, to people and what they do. And I think it kind of makes you a more empathetic person, perhaps. But it’s really kind of because you live at the intersection intersection of the sculptures, that when you think of disciplines, and being at the intersection of disciplines, I think this is the richness of what we could do us people utilizing technology and innovation, right to bring unusual concepts in computer science to care delivery, I think can really improve and enhance how we deliver care and make life for our patients better. So I think this, this notion of being at the intersection of is is very important to us as a fund.
Nick van Terheyden
So you highlight one of the points that for me as a point of passion, I wish more people had had the opportunities that I’ve had of travel specifically, and I know travel is not totally immersion. But you know, at least longer experiences of other cultures, you know, to understand both the similarities, and there’s an awful lot of those and the differences. I think if more people got the opportunity, I think we would have better just sort of general getting on I mean, I need to spend time, certainly in the US I need to go to the Midwest, I the only thing I understand about that is from the TV, which is insufficient. And I think that brings that sort of intersection. As you look back over the course of you know, the last experiences, what would you say you learnt? What were some of the things that made the difference that helped you survive through that what contributed to your capacity to sort of emerge from this? Because not everybody did? I mean, I think it’s been a challenge for everybody.
Julien Pham
I mean, obviously, resilience, right? And I think it’s, it’s hardwired in us as their culture individuals. You know, I would say also, the work ethics. And this is speaking for myself, like, you know, being an immigrant twice over and child of immigrants, I think you get inspired by that. And so kind of working harder in order to get things done is something that has helped us and really, it’s being connected with people. For me, I think of venture capital as a people business. Sure, we manage money, and we invest, and we want innovation, and we have certain expectations and all this stuff. But at the end of the day, it’s people. It’s my LPs. It’s my advisors, it’s portfolio companies, it’s the partners and vendors and people that we work with, and we try to get to walk that same journey, and going forward. And I think the more experience you have of touching people in a way, and I say that in a broader sense, and being able to empathize with them, connect with them, I think it just makes the journey more enjoyable and hopefully you can more successful as well.
Nick van Terheyden
People resilience and focusing on the humanity. I think, you know, for me summarizes all of that, unfortunately, as we do each and every week. We’ve run out of time, so just remains for me to thank you for joining me on the show. As always great pleasure, Julian. Thanks for joining me.
Thanks, Nick.
