How to Turn Deep Tech Innovations Into Unicorn Businesses that Improve Humanity
/Interview with Martin Varsavsky, Chairman at Inception (formerly Prelude Fertility) & Gameto; CEO at Overture & Goggo Network
Martín Varsavsky is an extremely successful serial entrepreneur, professor and investor who has founded 8 companies (3 with unicorn status) in the US and Europe in the last 30 years. Today, he is focused on revolutionizing fertility as the founder and CEO of Overture Life, an automated embryology company; as well as the Founder and Chairman of Prelude/Inception Fertility, the largest chain of fertility clinics in the US. He is passionate about autonomous driving as CEO of Goggo Network. He is also Chairman of Gameto. He invests via his family office Jazzya, VAS Ventures and MVB Fund. We are thrilled to co-invest with Martin in Synthesia; LDV led their seed financing.
Martin spoke with LDV Capital General Partner, Evan Nisselson, about his experiences turning technological innovations into billion-dollar companies that can have a significant impact on humanity and build significant value.
If you missed our 8th Annual LDV Vision Summit, this is your chance to watch this interview. You might also want to check out our 5-question interview with Varsavsky that was published leading up to the Summit.
Evan: These are difficult times – first COVID, now the war in Ukraine. I think your family is still headed to the border to help the locals there. Tell us a bit about what you're going to do there, just for context and then let's get into some of your background and what you're working on today.
Martin: I have seven children. My youngest one is five years old and I never thought he would have such a hard first five years of his life. He doesn't remember a world without a mask at school and now there's war. It's a bad state of affairs compared to what we had to live through. Now the nineties look amazing!
Even when we think of 9/11, COVID was giving us like 9/11 deaths per day and now Ukraine is giving us 9/11 images every day. How do we deal with that stress, the sorrow, the worrying? Combine that with activities such as building great companies and doing well for yourself and society. I continue to do both. I was involved with COVID helping – the government here in Madrid appointed me the co-head of the digital strategy to fight COVID and I worked at that.
Now with Ukraine, it's more personal initiatives. It happens that out of my four grandparents, three are Ukrainian Jews. I lost touch with my family in Ukraine, except for one person. I feel close to this, I feel identified, but you don't need to be Ukrainian, you don't need to be Jewish. I think everybody who loves democracy and our way of life is identified.
I've started hiring Ukrainian refugees, also hosting them at home, and having dinners. We had dinner last night. Today, we hired our first refugee. Europe has done an incredible thing: the moment they cross the border, they have a European equivalent of a green card and so you can hire them right away. You can work with Ukrainians right away, which is not the issue let's say when people flee violence in Nicaragua and enter the United States.
We're about to go to the border with a plan that's called “Finansova”, which means “financial literacy” in Ukrainian. We plan to train newly arrived Ukrainians in some financial literacy in the European Union, teach them how to download and use the amazing FinTechs we have in Europe, like N26, Revolut, Wise and so on and deposit the first hundred euros in their accounts and then have friends and people we know to send money directly to them, but also to recruit CDs and try to get jobs for them. It's a combination of financial literacy and hiring.
Evan: These initiatives are a drop in the bucket, but every drop is important and it's fantastic that you're doing that Martin! The reason I wanted to start with that is that it's all about this balance of business and improving humanity as well as the balance of life and work. A lot of people struggled with this for a long time. One of the things we like to do during these fireside chats is talk about experiences in the past and what you've learned either from successes or failures and how these lessons could help other people succeed and do better in balancing their goals. Let's take a step back to your earlier days as an entrepreneur. In our pre-summit interview, you mentioned that you failed as a medical student and your real estate business was challenging.
Martin: My life had a rocky start: I had to flee Argentina as a refugee when I was 17. Senator Moynihan gave us refugee visas into the States. But before that, even in high school, the military government took over to the point that they appointed a military Colonel to run my high school. I grew so defiant of authority that when I got to NYU, I kept on that defiance. At job interviews, people would ask, “how do you see yourself in five years?” and I would say, “at least as your boss”. That didn't get me far. It certainly didn't get me the best grades at premed. I didn't make the cut to enter medical school, even though I loved medicine and now I work a lot with medicine and I manage many doctors. But at that point, I was unable to become one.
My father died when he was only 49 and I was left in a fragile financial situation. I had to cope with it, I would say, with tremendous adversity before the age of 20-25. My dad died when I was 22. What doesn't kill you makes you stronger. Then after such a tough upbringing, later on in life when people said, “but how do you take such extraordinary risks?” I was like, this is nothing compared to growing up in Buenos Aires and seeing a building being bombed across my house, in the middle of the night, which I saw. It's all relative.
If you survive a tough upbringing, you can do great things later on.
Evan: The challenge I've learned the most from my mistakes (and I've made many of them!) is being on the edge. When I was an entrepreneur for 18 years, I was asked, “why do you take such risks?”. I said, “Well, this is normal to me and it doesn't feel like a risk.” I believe in solving a big problem and hopefully helping people. One of the companies you later founded is Viatel in 1990, give us a couple of sentences about why did you start that? You put 200,000 into it and then 9 years later, it was a 1.2 billion business. It must have had times where it almost failed many times, or was it always a rocket ship and it took off?
Martin: No, it was not a rocket ship, it had a lot of ups and downs. We started by inventing something that in the 90s was called “callback”, which was a way of routing international phone calls through the United States, taking advantage of the liberalized nature of the US telecom market, compared to the markets in Asia, Latin America, Europe, and so on. That grew nicely, but then other countries started getting liberalized. Then I pivoted the strategy. I saw liberalization was coming in Europe at the infrastructure level. George Soros was my first investor and I'm grateful to George Soros for having given me a tremendous breakthrough in life to build the first Pan-European fiber optic network.
We went through a lot of difficulty getting the permits, the European telecom operators didn't want to comply with the regulatory changes. They loved the monopolies they had, and they almost drove us to bankruptcy. Then the company finally made it and we sold it when it was worth 1.2 billion. Then I built fiber optic networks all over Spain fighting Telephonica and had the same difficulties. I sold my shares when it was worth around a billion, but now today, even 20 years later, the company is worth around 10 billion. It's a large operator in Spain. Those were difficult times getting started.
Evan: Tell us about the scariest times. You and I both know from being entrepreneurs and investors, the majority of companies fail and there are always these moments of “I can't go further” or “I can't get past my most recent mistakes”, but I think many people then do, they find that energy. Are there certain tricks or ways that in the past you've surpassed impossible obstacles and how do you emotionally deal with that?
Martin: When you said I built three unicorns, I wanted to add that I actually built four and a half, maybe five, depending if you index for inflation or not. In each one of those, I had moments of total agony and was close to failing.
In the case of telecom and the case of renewable energy, it was many times related to some monopoly that felt threatened and did everything they could to make our life miserable and many times succeeded. For example, they wouldn't give us interconnect so we would have a lot of customers and they couldn't terminate the calls. Then the internet saved us because the internet came with a plugged-in interconnect.
We also had problems at the management level. I'm a better visionary than I'm a manager. I have better ideas about where the world is going. Later in life, I started ”firing myself early in the ventures”. For example, Prelude now is such a success – it's the largest fertility group in the States. I'm the founder, but a lot of credit belongs to TJ Farnsworth who took it to tremendous growth and runs it now. I don't try to be what I cannot be, which is an organized, methodical person.
In 2016, Martin Varsavsky was featured on the cover of Forbes magazine. In the second picture, you see one of Martin’s kids holding the magazine.
Evan: Everybody's looking for co-founders, partners, or people to transition, people that are smarter than us to do things better. What are the most important personality traits of those people that you want to transition to?
Martin: I wouldn't agree with what you said, that we are all looking for such people. In fact, it certainly took me time to understand that I had strengths and serious weaknesses. I'm not sure that people have that level of self-observance. Now that I'm more familiar with my weaknesses, I try to find in other people what I don't have. I tend to work with co-founders or I hire CEOs to follow me who are great go-to-market CEOs.
I'm always working on moonshots. Even though they don't look like moonshots now. Wind and solar energy were moonshots in 05 or fiber optics were moonshots in 99, and the consumer internet was a moonshot also at that time, especially in Spain when we built Ya.com that we invested 38 million euro and we sold it for 550 million euros, which was like $700 million at that time. People didn't even believe in the internet, they thought it was a fad.
In 2016, I said that sex was great, but not to make babies. I raised $100 million on the idea that sex was failing us as a strategy to become parents. A lot of people didn't believe that, a lot of people said, “no, sex is great to make babies” and I was trying to explain that we were experiencing the highest failure rates in the history of having babies through sex because we were starting too late. This idea of starting late was incompatible with success.
I am good at the first part of the company, which is to come up with a radical idea and make it palatable to investors, but I am not great at the next stage, which is the go-to-market stage.
For example, you mentioned Gameto. Gameto wants to deal with premature ovarian aging, which gives women infertility and menopause. I was the CEO of that company for the shortest time. I found an amazing CEO and she's doing a terrific job. I've now gotten even better at removing myself to chairman work with Dina these days and the great team she's putting together.
It's about realizing what you can do well and what you cannot do well, and letting yourself go.
Evan: That's helpful and I agree with you. Looking back at your career, it looks like there's been a couple of companies in telecom, and recently there's Prelude/Inception, Overture Life, Gameto. Do you feel like you find new veins or new kinds of sectors and then you go deeper into them or is it part of your impact, as you mentioned earlier? How does your mind work as far as what interests you? There's only so much time in the day, Martin. Sometimes I'm amazed at how much you do!
Martin: I never thought, “oh, I'm going to build a company, let's think what kind of company am I going to build”. The companies called me.
Let’s say, I'm waiting at the IVF clinic and I'm working on my fifth child and I'm struggling with the way the clinic works. I'm struggling with the use of certain things, like in one case – fax machines, that was in 2016. I believe this is poorly managed. My first reaction is always to get upset, which is the reaction of most people when they see things that are poorly managed. There's nothing original about that.
Maybe the part that’s more original is that then I start getting this calling. I have to build something better. It cannot be that fertility is such a cottage industry throughout the United States. Then I say, let's build the technology stack and put it next to these clinics. Let’s make these clinics work much better. The Prelude network of clinics works better, they produce less sorrow and more babies. That communicates better with the people.
I start companies in the most unusual situations and generally, it's about some frustrating experience that drives me to want to fix this situation.
Then you could ask, “Well, why are you so into women's health, being a man?” Some people have asked me that. Many times, actually.
I'm the only man at a women's health conference, I'm a misfit in gender and also in age but I do have frustration about how women have not been treated well by the medical profession. I believe that the medical profession has traditionally been men. The result is that women have been disregarded in medical issues that only relate to women. I also believe, of course, that there truly is a pink tax, that things are sold for more money to women. I made this a theme and I built Prelude, then Overture, then Gameto.
Now I'm working on something else that I can't announce yet, but it’s also related to women's health because I believe women's health is society's health and women's health is everyone's health.
It doesn't have to be about me. It has to be something that I find a deep flaw in society, something that's broken, something that's wrong. Even though parenting is about both men and women.
Here at LDV Capital, we invest in people building businesses powered by visual technologies.
Visual technologies leveraging computer vision, machine learning and artificial intelligence are emerging every month and our visual technology market is poised for exponential growth.
Our annual LDV Vision Summit is a premier global gathering for people in the visual tech sector. Join us on March 28, 2023 to discuss the latest trends and cutting-edge technologies revolutionizing businesses and society.
Evan: At least two of your companies leverage visual tech: Prelude (now Inception) and Goggo Network. Share a bit more details. What is exciting you about visual tech these days, if anything?
Martin: I am obsessed with machines analyzing images and machines understanding images. When you have an embryology lab and you have an embryo for six days that's been growing in culture media, humans cannot pay the level of attention that machines can to these embryos. When you change from a lab setting to a machine setting and you have machines like this, and you have biochips and everything happens in a biochip and when you have optics in the biochip, you can know much more about what's happening to these embryos.
The same is true when people say, “well, you're working on automating the embryology lab and you're working on automating food deliveries, what does that have in common?” It is machine vision, and it is the combination of sensors and it's not just cameras. A lot of people think of cameras, but it's cameras, radars, LiDARs, and audio sensors too.
There are a lot of sensors. I think these sensors emerged a lot out of the smartphone revolution. A lot of these sensors became affordable and available. You can sort of deconstruct smartphone technology and use it in many other things. You can also deconstruct the technology that is being used in autonomous driving and use it in other things. For example, a lot of the work that was done in autonomous driving led to the recognition and labeling of objects that then can be used in other fields.
I'm interested in how to apply technologies that are being successfully applied in a certain field to other fields.
Evan: What gets you most excited on the investing side? Are there certain personalities you're driven by and certain projects you're passionate about?
Martin: Well, because I'm mainly an entrepreneur, even though I manage around 600 million of venture money, I tend to invest in startups which I have a little envy. I see the startup and I'm like, “oh fuck, I wish I did this thing!”.
There has to be a level of envy for me to want to invest. I invest in people I admire or secretly envy. I invest in entrepreneurs that I feel are doing phenomenal work in fields that I couldn't do or get involved in, but at the same time, they may be common in my life.
For example, I'm an investor in CookUnity from the first round, which is this app that gets you quality food from chefs in New York and in all over the states. Mateo put together a superb company that has done well. I'm never going to build a company that delivers quality food throughout the United States, but I'm certainly a consumer. I admire the way he put it together. Every detail is thought through.
Evan: That's great! If you look at entrepreneurs as an investor, what is that one personality trait that excites you the most? And what's your least favorite trait?
Martin: What excites me the most is their tenacity when I see that they will never give up, that there are people that will bite and not let go. There's something close to the tenacity that can be equally harmful, which is stubbornness or inability to see change or inability to see something that your tenacity may drive you off a cliff.
It's a fine line between being tenacious and being stubborn. I admire one and I reject the other.
Evan: Mine is the passion for what they're doing. And the least favorite is being selfish and not being a team player, it's the one that can tell you it's all about the one individual, rather than the team's impact on the world. On that note, Martin, I wanted to thank you again for sharing your thoughts and your stories and your wisdom! I look forward to hopefully finding more co-investments and more importantly, seeing you in person soon. It's been too long!
Martin: Same here. Thanks for inviting me!
