The following interview is a conversation we had with Kourosh Davarpanah, Co-Founder and CEO of Inato, on our podcast Category Visionaries. You can view the full episode here: Over $35 Million Raised to Build the Future of Clinical Trials

Kourosh Davarpanah
Thanks for having me. 

Brett
So, to kick things off, can we maybe just start with a quick summary of who you are and a bit more about your background? 

Kourosh Davarpanah
Sure. So I come from a family where virtually everyone has been in the medical field for ages, either as a doctor, a pharmacist, a lab scientist. If you think about even my siblings, I’m the only one of all of them who decided not to go to medical school. Some part of it was that I’m a little bit geeky, very passionate about maths and physics, and anyhow, I would faint whenever I would see blood as a kid, so not a great quality for a doctor. I was basically out of the family business at this point, and I ended up pursuing an engineering degree, which was absolutely fascinating to me. Out of college. The only thing I knew is I wanted to build something from scratch, but didn’t really have any idea of what. 

Kourosh Davarpanah
I mean, you come out of college, you don’t really know anything about any industry. I definitely knew I didn’t want to go into b to c, so I ended up building a startup that was in the trucking industry. It never really took off, but it was super interesting to me in terms of knowing what I enjoy and what I’m not interested in. It was very clear to me coming out of this that I need a mission that I’m really passionate about, and logistics definitely wasn’t it. I had piles of supply chain magazine on my beddress, and for the life of me, I couldn’t open a single one. And I wanted to build something outside of France. There’s this sense when you’re in France, it’s an amazing country to live in, but it’s a very small market. 

Kourosh Davarpanah
So this is how I ended up starting Inato, even though I knew literally nothing about clinical research at the time. But I was really excited about the idea of serving patients, about the idea of doing something for the greater good. And I love the fact that research overall is very global, and it was a perfect opportunity for us to build something global from day one. 

Brett
Your early story sounds very similar to another Founder I had on and their whole family. They were doctors. He went to Harvard Medical School. He dropped out, ended up starting a health tech company that’s now worth about $3 billion. And he said to this day, his family still doesn’t understand what he does. They’re still kind of disappointed that he didn’t pursue this career as a doctor, even though he’s built this multibillion dollar company. Did you have something similar with your family? Did they get the route that you went down? Did they understand the idea of a tech startup and how that’s just an exciting career path as opposed to going down the more traditional paths? 

Kourosh Davarpanah
Yeah, I think they’re starting to initial probably four or five years. They were very supportive, but I feel like they were very worried. They really didn’t understand what I was doing at all. And I feel like now that we’ve gotten better traction, it’s getting better. But it’s funny because it’s a track record that I see everywhere around me. Maybe one out of three people that end up joining Inato have a very similar story of coming from a family of doctors and being super interested and passionate about the field, but being a doctor or a nurse not being the right fit for them. 

Brett
Who would you say has inspired you in terms of founders and entrepreneurs? Where does that inspiration come from? 

Kourosh Davarpanah
So I’m a really big fan of what the Airbnb founders have built for a couple of reasons. The first one is I really admire founders that have built generational companies without any obvious tailwinds. If you think about Google, for example, it feels like if they hadn’t existed, there would have been another Google, like probably around the same period, which obviously doesn’t take anything away from how exceptional they were in terms of execution. But to some degree, it feels like amazing companies were destined to exist in those fields at that time. On the contrary, if you think about Airbnb or to some degree, Tesla, it feels like if they hadn’t existed, the hospitality industry, the electric car industry probably would not have changed significantly for like a decade or so. 

Kourosh Davarpanah
And to me, that really resonates, because when you’re in the healthcare industry, when you’re in the pharma industry, it feels like things have not been moving for ages. It’s hard to identify precisely what is the huge tailwind that is going to be at the origin of the next great generation of tech companies in the field? And the second piece I really love about Airbnb is I find marketplaces really fascinating. And to me, they’re probably the greatest marketplace that was ever built in terms of the size and the significance of the supply that they unlocked in terms of the brand they built, in terms of the user experience. That is just beautiful. And unlike, for example, an Uber, it’s such a complex transaction. 

Kourosh Davarpanah
Before they built it, the idea of having someone stay at your home in terms of trust building on the Internet was just insane. So, yeah. Really amazed by everything they achieved. 

Brett
Yeah. It’s funny when you think about what they pulled off. They managed to make it so that were okay with sleeping in strangers houses and okay with getting in strangers cars. Two of the things that your parents taught you when you’re a little kid, don’t do that under any means. But they somehow convinced the world to do it. So that’s been pretty fascinating to see. 

Kourosh Davarpanah
Yeah, exactly. And now it’s a no brainer. Like, you’re going to travel, you’re going to look at both Airbnb and hotels the same way. 

Brett
Yep, absolutely. What about books? The way we like to frame this comes from an author named Ryan Holliday. He calls them quickbooks. So a quickbook is a book that rocks you to your core, really influences how you think about the world and how you approach life. Do any quickbooks come to mind for you? Yeah. 

Kourosh Davarpanah
So there’s a book called complexity by Mitchell Waldrop that is a really fascinating book that’s about the history of science and how after the very beginning of the 20th century, basically no one was ever again an expert in their field. And early 1970s, 1980s, scientists started getting together to think about how can we solve problems like the stock market, the human immune system, the spread of epidemis, and no single discipline was really able to tackle this. So the whole book is about the birth of the Santa Fe Institute and how they brought scientists that would never talk together. And what to me was super interesting is it’s a really great tale of collaboration, which for us in the healthcare industry is something that you cannot succeed without. 

Kourosh Davarpanah
I think Silicon Valley often has this notion of tech outsiders that come in and single handedly revolutionize a sector. And I think clearly in the healthcare industry, this is something that never works. 

Brett
Super interesting. I haven’t read that book, but I’ll add it to the Amazon cart here right after this interview. Let’s switch gears now and let’s dive a bit deeper into the company. So how we like to start this portion of the interview is really talking about the problem. So at a very high level, what problem are you solving? 

Kourosh Davarpanah
The problem we’re solving is a problem that really hasn’t changed for the past probably 25 years, which is that less than 5% of patients have access to trials. And of those patients who have access to trials, a very small minority are diverse. And this has been not only a huge problem in terms of equity, of access to treatments, but it’s also the main driver behind why it takes 15 years and $2 billion to get a drug to market. And increasingly, people have realized that it’s a huge issue in terms of the validity of the drug working and not working on all populations. The example that always strikes me, and I find horrible, is there was a retrospective study on a drug that came to market for breast cancer. 

Kourosh Davarpanah
And out of the about 8000 patients that were in the different trials, only three patients were african american, and the disease that predominantly affects African Americans. So when you’re in that type of situation, you don’t even know if the drug that comes to market really works on African Americans. So this is the problem we’ve been tackling. And the way we tackle it is, as you said, we’ve built this marketplace. So a two sided marketplace with hospitals one end and the pharma companies on the other. And the idea behind this marketplace is to make it super easy for hospitals all around the world to offer the right trials to their patients. So it’s a little bit like the same way Airbnb helps you find the perfect place to stay. We help hospitals find the right trials for their patients. 

Brett
What’s the root cause of this problem? Why does this. 

Kourosh Davarpanah
So what’s super interesting is the root cause is actually not well known at all. So if you talk to pharma folks, typically everyone will agree that this is the number one problem of the industry. When you start to dig in a bit to understand what’s the root cause, it’s a lot less obvious. And it actually took us close to four years to really figure out what we believe is the root cause. When we initially started the business, we started as a SaaS for pharma that was view it as a CRM, where they could identify what are the hospitals with clinical research experience, and they could select those hospitals in a way that was more data driven and less relationship based. And what we realized was that no matter the amount of data that you would provide to pharma companies. 

Kourosh Davarpanah
They would still go to the same super large academic hospitals that do the majority of the research. And so the root cause actually is that if you look at historical data, the 5% top hospitals in the world run about 70 plus percent of trials. So if as a patient, you’re not treated in one of those hospitals, chances are that you have no way of participating to a trial. 

Brett
Wow, those are staggering numbers. How come the pharma industry and healthcare as a whole is not freaking out? Because this sounds like a big problem. These numbers are insane. How come people aren’t panicking over this? Because it sounds really bad. 

Kourosh Davarpanah
I think they’re realizing how big of a problem it is. What is difficult as a pharma company is, obviously, you need to solve those problems that are not only ethical problems, but problems even in terms of the overall ROI of research. The issue is because the industry is super regulated, and for very good reasons, they tend to be very concerned about the idea of trying out new approaches that not only might not make a dent in terms of the speed of patients enrolled in the study, but might actually put them in a really bad position if the study is not conducted in a way that is ethically proper, et cetera. 

Brett
This show is brought to you by Front Lines Media, a podcast production studio that helps B2B founders launch, manage, and grow their own podcast. Now, if you’re a Founder, you may be thinking, I don’t have time to host a podcast. I’ve got a company to build. Well, that’s exactly what we’ve built our service to do. You show up and host, and we handle literally everything else. To set up a call to discuss launching your own podcast, visit frontlines.io podcast. Now back today’s episode. Now, if I remember right around in the middle of COVID as the vaccine started to roll out, this became a very big conversation. And diversity of the clinical trials for the drugs, that was a big conversation. Did that impact your business in a positive way? Did that validate thesis that you had about the company and the problem? 

Kourosh Davarpanah
Yes, very much so. And actually, the FDA ended up moving with now mandates for pharma companies to enroll diverse patients in their trials. And I think what has really helped us with COVID wasn’t necessarily a direct effect, but something that came after in the sense that initially in pharma companies during COVID were thinking, okay, so we can’t even go to hospitals anymore. At least most patients can’t go to hospitals. Can we find a way of going to the patients directly. So you had this whole trove of companies that tried to actually bring trials to patients. And as you would imagine, if you’re in complex diseases like in cancer, it’s virtually impossible to really be treating patients in their homes. 

Kourosh Davarpanah
So what ended up happening is the industry as a whole somewhat came back from this idea of treating patients in their homes, but they also realized that they can’t completely go back to the old way of doing things. So now they’re looking for something that is in between, where they can actually reach patients, where they live, but in a way that is not maybe as exotic as going to the patient’s home. And this is kind of the neat middle ground where we sit, where we reach patients where they are, but we reach them through their community hospital, not directly in their homes. 

Brett
I’ve interviewed a lot of founders with the marketplace business model. I’m a huge fan of that business model, but all of them have told me that there’s this constant challenge in the early days of the chicken and the egg problem of which do you recruit first or which do you focus on first? So for you, what did you focus on first? Was it hospitals or patients, or did you just go at both of them at the same time? 

Kourosh Davarpanah
Yeah, it’s a really tricky one. And I remember being always a bit frustrated when I was talking to vcs, and they would be asking the question of, okay, so are you site first? Are you pharma first? And after a few years, I feel like the answer is always more complex than one or the other, and it’s maybe going to be the hospitals for three months, and then it’s going to be the pharma companies for three months. So initially went to sites with the promise of, we’re going to get you access to more trials. And we used this initial, say, pool of a few hundred sites to go to pharma companies and say, look, we have those sites, they’re amazing, they’re super motivated. If you have trials, we can get them to their patients. And this got us the first few trials. 

Kourosh Davarpanah
And then what we’ve seen since then is the more trials we have on the platform, the more obvious it becomes in terms of value proposition for hospitals. So we now have about 100 new trials every year. And this has really been driving the growth of the number of sites on the platform. 

Brett
Do you share any numbers that just highlight the growth that you’re seeing today? 

Kourosh Davarpanah
Yeah, so we work with a bit over half of the top pharma companies, so over 20 pharma companies and we work with about 3500 sites in over 50 countries. And if you think about what it means in terms of revenue over the past year, we’ve about grown by 600%. And even though we’re pretty happy about those numbers, what is really exciting to me is that, to your point on marketplaces, it’s only starting to feel like the flywheel is starting to accelerate. 

Brett
What do you attribute to that growth? I’m sure any Founder listening in is thinking, yes, I want that. I want to grow at 600% this year. What do you think you’ve gotten right? 

Kourosh Davarpanah
I think what we’ve gotten right is we’ve been able to create a model, really from first principles in the market that is super crowded. But went from people virtually not understanding what we’re doing to now pharma companies really starting to get it and feel like if they want this model, we’re the only one in the market that is offering this. 

Brett
How did you go about building trust and credibility early on? Because we’re not just talking about like an ecommerce tool that they can just add to their website and have a chat bot. This is serious stuff. It’s health related, it’s a serious business and a serious problem. How did you build trust and credibility as a startup to get these big pharma companies to really trust in you and believe that you can help them solve their problems? 

Kourosh Davarpanah
So I think there’s a couple of elements to this. The first one that is non product related is you need to have experts internally that the pharma are going to trust. And so initially, because as you would expect, we didn’t have a super mature product, we had an amazing customer success team with dozens of years of pharma experience that was taking the pharma companies through the process that was partly product and partly still human based. And this took us through the first batch of, say, five to ten trials. And along the way we really started to understand what does the pharma company want to see? What data points do they need to really create, to your point, distrust with sites. And this has been our focus probably for the last three years exclusively. 

Kourosh Davarpanah
So if you think about all the different bricks that marketplaces build, I think what was quite unique to us is we ended up focusing on the discovery piece, on the matching piece for a really long period of time. We’re only now, after about three years, starting to expand to support everything you would expect in terms of the admin work, the legal work, the pricing, the payment, et cetera. But the trust point was so complex that we ended up spending all of our time for the first few years. 

Brett
And you’re about eight years into this journey. At what point did you really start to feel like you were gaining traction and felt like, hey, yeah, there’s something here, there’s definitely a business here. 

Kourosh Davarpanah
So the first few years were tough because were on the first model until 2020. So we pivoted after four years. And when I say pivoted, it was a hard pivot. We went back to no clients, no revenue, no product, nothing. So we had to start back from scratch in 2020 after a few years, which was, as you would expect, pretty difficult on the team. And since then we’ve started feeling the traction very rapidly. I think the new model was resonating enough that we did more revenue on year two with the new model than we did on year four of the previous one. 

Brett
Super interesting. What about your market category? How do you think about it? Is it a clinical trial marketplace? Is it a clinical trial diversity platform? What is that market category? 

Kourosh Davarpanah
We thought about it a lot and we tested a lot of different names. We ended up landing on marketplace, which initially was something that was terribly misleading to pharma. When we talked to them about marketplaces, they were basically thinking stock market. They weren’t really getting the concept, but at the same time, nothing really worked much better. So we ended up going with marketplace and trying to educate them on what it means. What is a marketplace drawing comparison with Airbnb with what they know? And I think we’re only at the beginning of really creating this category, and we thought quite a bit about should we try to fit it to an existing category. But this felt not only more counterproductive, but it felt even harder than trying to create our own. 

Brett
As I mentioned there in the intro, you’ve raised over 35 million to date. What have you learned about fundraising throughout this journey? 

Kourosh Davarpanah
So I think what I’ve learned about fundraising is that we often say you need to educate vcs, but I think you can only go so far in terms of education. I think it’s actually often impossible to get a vc excited if you’re in a really complex industry that they’re not passionate about. And obviously I think we could have done a better job of telling a better story. But I think at the end of the day, you need to find the investors that have done their homework, the investors that really thought about the problem space from a first principle basis. Otherwise you end up with either vcs that are following trends or you end up with vcs that even though they tell you what you’re building sounds amazing. 

Kourosh Davarpanah
You’re never going to be able to get them from not knowing anything about this space to being passionate enough about it to invest. 

Brett
And did you find investors locally there or did you have to pull from Silicon Valley and US investors? 

Kourosh Davarpanah
So we did our seed round in Europe and we did our a round in the US. And to the point I was making just previously, we raised with obvious ventures in the US. And it was a really amazing raise for us because we found someone there who had thought about the space so much that they actually ended up pitching us what were building. He had been working on the space for a really long time and he started pitching this idea of a marketplace. And after five minutes I told him, well, great, this is what we’re building. And we ended up signing after a week or so without ever meeting. So we ended up meeting a year or so after we raised. 

Brett
Let’s imagine you were starting the company again today from scratch. Based on everything you’ve learned so far, what would be the number one piece of advice you’d give to yourself? 

Kourosh Davarpanah
I think the number one piece of advice would be partnering with enough clients so that you’re not overfitting to begin with. I think what is really tricky with enterprise is obviously you need partners and you can’t start with ten different partners. But at the same time, what we ended up doing was we focused so much on a single one that we ended up building something that was super customized to them, which was a blessing and a curse because we ended up getting early traction, but we ended up doing 90% of our revenue with them and we actually then had to backtrack a ton to be able to understand what is completely specific to this pharma company and how can we actually build a product that fits a need in the market and not just for a single customer? 

Brett
Final question for you before we wrap, let’s zoom out three to five years into the future. What’s the big picture vision that you’re building here? 

Kourosh Davarpanah
So the big picture for us is making it as easy for any hospital in the world to offer trials to their patients as it is to book a place on Airbnb. If you think about where we are today as an industry, we really couldn’t be any further from this in the sense that beyond the discovery, the matching problem that we discussed, once a pharma company and a hospital have decided that they want to work together, it basically takes six months before all the paperwork is done and the doctor can actually offer the trial to their patients. So our perspective on this is if you really want to increase patient access by, say, an order of magnitude, you really need to completely reinvent the collaboration model between pharma and hospitals. 

Kourosh Davarpanah
And I think this is where marketplaces are an amazing solution, where you can build the whole user experience in a way where, from discovery all the way to the partnership being sealed, this takes a week and not a year. 

Brett
Amazing. I love the vision. All right, we are up on time, so we’ll have to wrap here. Before we do, if there’s any founders that are listening in and want to follow along with your journey, where should. 

Kourosh Davarpanah
They go so they can find me on LinkedIn? The name is Kuroj Davapana. I’m probably the only one, so it shouldn’t be too difficult. 

Brett
And we’ll make sure to have that name spelled out and we’ll link to your LinkedIn as well at the end. 

Kourosh Davarpanah
Exactly. 

Brett
Thank you so much for taking the time to chat. This has been a blast. I’ve really enjoyed the conversation and I know it’s going to be a hit with the audience, so really appreciate it and wish you and the team the best of luck in executing on this amazing vision. 

Kourosh Davarpanah
Thank you so much. 

Brett
All right, keep in touch. This episode of Category Visionaries is brought to you by Front Lines Media, Silicon Valley’s leading podcast production studio. If you’re a B2B Founder looking for help launching and growing, own your own podcast, visit frontlines.io podcast. And for the latest episode, search for Category Visionaries on your podcast platform of choice. Thanks for listening, and we’ll catch you on the next episode.