From Fintech to Pharma: How to Turn a Crazy Idea into an Unbeatable Business with Jim McKelvey

[applause]

Welcome to the stage: former chair of the Federal Reserve Bank of St. Louis, acclaimed artist, and the co-founder of Block — Jim McKelvey.

Hey, good morning! It is great to be here. I love doing this. Mexico, it's so much fun, it's beautiful. Thank you for — this is at 11 o'clock, this is the morning session. This is the hangover special. And I'm so happy to be here. I'm so glad you guys got up early, came to the presentation.

[laughter]

So let's talk about death. And I'd like to begin with a death quiz. Does anyone know where the deadliest place in the world is? Now by deadliest place, I mean most things that can kill you per square unit of area.

So this is in fact the Amazon. But this is the natural world. So if we're talking about the natural world, the Amazon is the deadliest place to be. If we're talking about the business world, well, the answer is the same.

And a horrible thing happened to me when Block was only a three-year-old company. We were still a startup and we were attacked by Amazon. Now let me give you the math of an attack by Amazon. When Amazon decides they want to take over your entire market, which is what they did, they copy your product, they undercut your price by 30%, they add the Amazon brand name — which is instantly wired into, you know, all of — you guys are all — we are all Amazon customers, right? And then they watch you die.

And this is successful 100% of the time. There has never been an example of a startup going against Amazon and surviving. And I was trying to think of an appropriate analogy for describing what it felt like to be attacked by Amazon. And it's just terrifying, because it's an asymmetric battle. You have no resources. They have every resource. You can't lose money. Your competitor has effectively an infinite amount of money. So what do you do?

And this was the thing that happened at Square, three years in. We had a pretty good little business. Amazon decides they're going to copy it. They released a product, and everyone expected us to die — including some of the people on our team. So we looked at our options. There weren't a lot of options. And finally we came up with this: that was our response to Amazon. We didn't know what to do. Like, we would love to be their size, we would love to have their balance sheet, we'd love to have their teams of excellent people, we would love to have anything that they had. But it was such an asymmetric fight, we couldn't do anything. So we did nothing.

And it worked.

[laughter]

And this was fantastic. I was so happy for about a day. And then this question started nagging: why? What the hell just happened? Because when Amazon attacked us, I looked for any other company that had survived an attack by Amazon, and I couldn't find any. There were no examples. So what was so special about us? Why had it worked?

This problem bothered me for three years. And I spent three years trying to answer the question of what allowed us to survive an attack by Amazon when statistically that would be impossible. And I actually discovered that there was an answer. And it was, I thought, an answer of something we did. But it turns out a little bit different. It was actually something that we couldn't do.

The power that we discovered, the power that we sort of lucked into, was not a thing. It was the lack of a thing. It was in fact the lack of something that I believe is one of the most powerful forces in the world. And I tried to describe this to people, I tried to explain what was happening. And I discovered that in fact there is no word in English to describe the process that we lived through. English, the English language, is missing a word.

We use the word "entrepreneur" these days in a different context than it was originally conceived. But if we think of entrepreneurs not like people who start businesses, which is the current vernacular, but we think of entrepreneurs in the original sense — the economist Joseph Schumpeter, who coined the term and popularized it, meant something different. And the thing that unites all entrepreneurs in the classic definition, in the original definition, was something that actually unites everybody in this room. And not just everybody in this room — not just us, everything in this room. This slide clicker, this glass of water.

What is common about everything in this room? If you've read my book, please don't answer, because that'll mess it up. But anyone want to guess?

We are all copies. Everything in this room, every person, every chair, is unoriginal. Okay, so you're all sitting in chairs right now, and whoever built those chairs didn't invent the chair. They didn't figure out the proper seat height. They didn't figure out the cushion. Whoever made the material copied that from somebody else.

We are all copies. Successful copies of thousands or millions — depending on what you believe — generations of successful copies. The most powerful force in the world is copying. If you think about the chances of success, if you think about doing something truly new, your odds of success are infinitesimal. So it is intelligent, it is rational, and it is basically wired into our DNA that we become excellent copiers. As a matter of fact, one of the things that humans depend on for survival is our synchronicity with the rest of the herd, so that if you start doing something a little bit differently, you feel uncomfortable. And that is a good feeling. You should listen to that feeling, because if you try to do something for the first time, you're likely to fail.

So what happens when you can't copy?

One of the ways that we sell products is this idea of originality. And I used to have people say this in rooms where I can actually see the audience, and I'd get people going, "Well, I'm original, I try to be very original." And if you trace the sorts of originality back, like, this is something that we actually were taught by Madison Avenue. The idea of being original is this thing that is supposed to sell product.

So what I had here was a really sexy ad trying to sell a product that nobody needs. And then things got PC, and I wasn't actually sure that Trump was going to win, so I had to put the slides in beforehand, so I deleted the ad. So I want you to imagine the sexiest ad that you can, just dripping with sensuality, just trying to get you to buy this thing. And ask yourself, what strings are those Madison Avenue bastards pulling on to get you to make that decision to be "original"? And the answer is your urge to copy yourself. The sexual urge — that is a copy urge. I was actually told to go copy myself recently.

[laughter]

But what if you can't copy? Like, what if you're in a situation where copying is impossible for whatever reason? This powerful thing — there's no YouTube video, there's no seminar, there's no expert. You are forced to solve a problem, but you don't have a formula for it. What the hell happens then?

And that's what happened to Square. I call it Square — we now call it Block — but at the time it was Square. And at the time, it was just Jack and me trying to fix a problem that I had. Because my problem was, I was an artist. And that really is a problem. Artists sell stuff that nobody needs.

And I lost a sale because I couldn't take an American Express card. And I was very pissed off because it was an expensive piece of glass. And I lost the sale, got upset. Jack had already been kicked out of Twitter the first time, and he called me up and he said, "Jim, I want to start another company with you." I was like, cool, what do you want to do? He was like, I don't know, what do you want to do?

So we're kicking around ideas. We'd already decided to start a company. And I lost this sale and I was so pissed off. And so we built Square, basically because I wanted to get paid. That was the genesis of it. But it was — and this is a completely true story — I was not the target audience for my product. My target audience was another glass blower by the name of Bob.

A friend of mine named Bob. I would normally show you a photo of Bob. Instead, I'm going to show you a photo of Bob's car. Because it reveals more. This is the 1992 Chevy Corsica. It is not Bob's Corsica. If it was Bob's Corsica, it would have a critical aftermarket item here, which would be a yellow bungee cord — which you hook under the front wheel panel and you pull it over the hood, because the 1992 Chevy Corsica is such a piece of junk that if you don't have a yellow bungee cord and you drive in St. Louis, Missouri, where we salt the roads during the winter, bad things happen.

And a bad thing happened to my friend Bob. As he was coming to the studio one night, he was driving over the Mississippi River in the rain at night, and the bungee cord let go. And at this moment, a lot of things happened very quickly. The wind catches the hood, the hood flips back over the windshield, completely obscuring his view of the road. Most people would pull over. This is not what my friend Bob did.

[laughter]

He leaned out the window in a way that would be familiar to pet owners. But he was getting pelted in the face with rain. At this point, every sane person would pull over to the side of the road. This is not what my friend Bob did. He drove 17 miles at night in the rain looking out this gap.

This is actually Bob's Corsica. This is actually Bob here. Here's the yellow bungee cord. And this is a 4-inch gap between the dashboard and the hood, which you see it over his car. That is a St. Louis Cardinals cap — go Cardinals. Go Bob.

And this is the guy I built Square for. Now, what do we know about Bob from this one example? There are many — I can give you hundreds of examples. But what do we know about Bob? Well, at the very least, this is a man who doesn't give up easily. Like, parents wish their kids had the tenacity of a guy like Bob. When the road disappears, he doesn't pull over. He keeps going. He's going to get to his destination even if he can't see.

And I show you the Corsica for two reasons. One, it reveals something about Bob's tenacity. But secondly, when things have been tough for my friend Bob, he has had to live in the back of this Chevy Corsica. And I never understood this, because Bob and I are both glass blowers. Yeah, I was a professional glass blower — I made my money selling stuff nobody needs. So did Bob.

But there was only one difference that was significant. First of all, let me also say, Bob's a better glass blower than I am. He's stronger than I am. His designs are more creative. Like, Bob's stuff is just objectively better than my stuff in all criteria, except one. And that is, I made a lot more money selling my stuff than he could. And part of this is because Bob has got kind of a spotty record. He doesn't get along too well with authority. He doesn't get along with banks. He can't take credit cards. He can't get paid the way normal people get paid.

So we set out, when we started Square, this was the photo that was on my desk. And we started with the idea that we would build something that would solve the needs of my friend Bob. And we didn't know what the hell we were doing, because I've got a degree in economics and computer science — I know nothing about payments. Jack, at the time, was licensed as a massage therapist in the state of Missouri. That was our professional credentials. We knew nothing about payments.

And what we didn't realize was, what we wanted to do was considered impossible. And the payment system had evolved in such a way that there was no way to use existing tools. So we had to invent everything ourselves. We were forced to build something new.

And I talk about this in The Innovation Stack, and I got a whole hour presentation on this. But you're not going to hear that today because I want to just cut to the chase on why I wrote the book. And even if you don't read the book, I will give you the central idea. And that is this: we are all copy machines. You are wired to copy. You feel comfortable when you are in the herd. And that is good. That is the way you should solve most problems.

But there will be a moment in your life, possibly, where you run up against the edge of what humanity knows how to do. And at that moment, if you choose to step into that void where we don't know the solution, where you have to experiment, where you're going to deal with a whole different world — every cell of your body is going to tell you to stop. And most people stop.

And the reason I hear — and the dedication of the book is to somebody who I know who is extremely qualified to do wonderful things — but every time she gets to that edge where she feels unqualified, she hesitates and says, "Well, I'm not qualified to do this." And she's right. She is not qualified.

So think about flying an airplane. The Wright Brothers flipped a coin to see who would be the first pilot. Were either of them qualified? Could you be qualified? Now, if you want to fly a plane today, go get trained, go take a course with the FAA, you can get a certification. But at the time Wilbur and Orville flipped that coin, the only thing we knew was that the first pilot would not be qualified. Nobody is an expert when they do something the first time.

And I think I've met so many people who come up to this problem that is unsolved for the world — the world doesn't know how to do this — and they have the potential to do it. And they say, "Oh wait, I'm not qualified." And then they hesitate, and we never get that solution. And that breaks my heart, because I want to see problems solved in this world. I want to see you — well, I can't see you, but assuming you're out there in this black void — I want you to feel permission to step across that line.

And I spend 300 pages talking about what it's like, and what the tools are, and how it's different on the other side of the line. But then someone asked me to do something crazy. They said, well, why don't you talk about something you're doing — using an actual application of all this ignorance? The progress that can be made only by people who are unqualified.

So I'd now like to talk about, well, frankly, more death.

[laughter]

Moving the needle, in this case. Actually, this is the wrong needle. I should have used this. But there's a phrase, "moving the needle." I thought it was a great phrase. I have a whole talk called "Moving the Needle." But again, I like to start my talks with quizzes.

So here's another quiz. I was in Vienna, Austria, and I'm sorry it's not a very good picture because I was in a car at the time, and we were driving by this place, and I was able to snap a photo of this store. Who can tell me what's wrong with this photo?

What's wrong? They misspelled "aging." Okay, what else? What is missing from this photo? Evidence. Yeah, that's true. There are no people.

No, seriously. Seriously, think about this. This is a store who, despite their spelling, puts the word "Reverse Aging" — that's their — that's why you go into the store. It's to reverse the terror of time. They will sell you that solution inside the store.

Where's the line? Seriously, I mean, Tim Cook puts a third camera in the iPhone and we queue up for a day. You camp overnight because, oh, 50 megapixels, come on. What — this, if they could do anything to reverse aging, I would be waiting for weeks. And I don't care — it doesn't have to be my whole body. I would take new knees. Reverse my eye damage a little bit. How about — forget the eyes, I'd take new eyebrows. I'd pay for that. I'd wait a week for better eyebrows. You know how hard it is to look skeptical with these things?

[laughter]

There's no line here. There's no people here. Because we fundamentally get it that this doesn't work. Nothing in that store works. It's all sugar pills and crap. Right? That's why there's no line.

And in fact, the promise of sort of anti-aging sounds like science fiction. Like, if you look at what they're claiming now — I mean, these are three things I pulled from recent articles: we can reprogram our DNA, we can transfuse blood and reverse aging, there are some proteins that will actually slow down the aging process. And it sounds like science fiction. But it's actually interesting. It's actually not science fiction. It's science and fiction.

Turns out, you actually can do this. This is tested. This is clinically validated. This is true, to the extent that we can determine truth through experimentation. You can do this. Those work on rats.

Now, you can try to — I mean, you could become a rat. I mean, we are in Mexico, right? You come down here and get pumped up with anything you want. But neither of those work in humans. They don't work provably. So the question is, how should we think about science fiction in the world of health?

And it's going to be a dark presentation. But I will give you some good news to start. There is some good news, and actually there's a ton of good news. There's a mountain of good news. It's in every area of biology and discovery, and all this AI, protein, AlphaFold — I mean, all this stuff is amazing. We are experiencing the same sort of geometric improvement in the discovery of new cures at a rate that is going to save all of us from everything. These are tremendous.

And by the way, Moore's Law — if you're actually a scientist, Moore's Law is this curve. See that slope right there? Moore's Law goes like that. We've beaten Moore's Law. This is tremendous good news. Anything that ails you, there is a cure today. It works. There is only one problem.

And I'm not making this up. There is Eroom's Law. Has anyone heard of Eroom's Law? You should. "Eroom" is "Moore" spelled backwards. I didn't make that up. That is what the life scientists, the people who actually live in this world, cynically coined the term Eroom's Law to explain the fact that despite all this tremendous growth in discovery, we actually get fewer drugs today than we have ever before.

And when I say drugs, I mean stuff that we know works. My mother died 36 years ago from a disease that if she was alive today would be cured with one pill. Now, when mom died, there was nothing we could do. Do you want to know how long it takes on average — this is a scientific study — on average, how long does it take before a discovery in the lab becomes something you can safely take, i.e., has gone through FDA approval? In years. Anyone want to guess?

36 years. My mother has been dead for 36 years. But that is the amount of time we have to wait for that eureka moment in the lab to be something that saves a loved one. What the —

So I was writing this presentation, I had this screen up, and my daughter comes in, and she's six, and she's like, "Daddy, what does WTF mean?" And I'm like, "Honey — What To Fix."

[laughter]

Could we fix this? Is it possible to do this? Well, we have to think of health and drugs as sort of two different systems. We've got two systems: we've got discovery — discovery's working great — and then we couple that with delivery, that's what you can actually take. And in the middle, there are all these problems.

But if you think of it like I do — because I'm an economist, I think, well, what's the money? Let's follow the money and see if the money leads us to some sort of answer. And the money sort of looks like this: if you have a discovery — one of these circles might save a life here — and you want to see if it works. And I don't mean anecdotally. I don't mean fund your company, hire a marketing department, shove some sugar pills in a black plastic bottle, and start pedaling them on the internet. I mean, you want to test it. You want to do controlled, double-blind, randomized testing — what we consider the standard of good practice. It's about $100 million to take that shot.

So you've made a great discovery, but if you want to actually test it, now you need to stop being a scientist, stop being a researcher, stop being a pharmacist, and you have to go out and pitch, start a company, raise $100 million. Oh, and by the way, that $100 million just gets you a test. It doesn't get you a completed drug. On average, you have to do this nine times before you get one that actually works. So that's actually a billion dollars.

So the problem here, if you think of it just like an economist, is because it is so incredibly expensive, we're not taking enough shots on goal as a society. And this is part of what's driving Eroom's Law. It's one of the economic problems — it's just too expensive to take a shot. So maybe we could fix this.

But there's a problem: too many idiots. And in the world of healthcare, we are all idiots.

Does anyone recognize — say it — Michael Jackson. Do you know what he's in? A hyperbaric chamber. Yeah. Oh God, I forgot who I'm — forget the audience here, you guys probably have these at home.

[laughter]

Oh yeah, it's dark. I don't mean to make fun of the dead. But Michael Jackson was a smart man. He blazed trails. He was the greatest superstar in human history. Tremendous work ethic. Wanted to be healthy. Was rich. Hired a team of the best physicians to advise him, to tell him what to do, because he thought, well, I'm rich, I can do this. And what did they tell him? Sleep in this.

And you know who killed him? His doctor. His doctor prescribed propofol. Killed the guy. That was a medical professional. And you think you're smarter than Michael Jackson?

Recognize this guy? There's another health idiot I deeply, deeply respect: Steve Jobs. Do you recognize this photo? This was his Stanford commencement address. We've all heard the address where he revealed to the world that he had pancreatic cancer. But if you listen to the address, Steve tells us that he beat it. He was cured.

Now, why does a guy as intelligent as Steve Jobs, who has the best physicians in the world, believe that he has cured his cancer? Well, turns out, if you're really rich and you show up with a bunch of money, you pay a bunch of doctors, they will tell you whatever you want to hear. Okay, Steve, keep drinking the carrot juice, you're fine.

And he actually believed it. And this is the problem in healthcare. Because none of us are anything but idiots when it comes to healthcare. Because healthcare is so wildly complex that even if you're rich and very intelligent and well-meaning and have been successful beyond human norms, you're still an idiot when it comes to your own health. And this is one of the problems. How are we going to fix this? How are we going to turn the fact that we are all idiots into something that we could possibly use?

Fortunately, the idiots have a tool. And I got to credit this — this is totally stolen from Elon Musk. But there is something called the Idiot Index. Who knows about the Idiot Index? A couple people in the back. Come on, it's a great thing.

All right, so what is the Idiot Index? The Idiot Index is Elon's way of assessing the actual cost of an item. So if he's going to buy something — like, a part for his rocket — he prices the item. And if he doesn't like the price, he prices the components of the item.

I don't want to talk about rocket engines. It's still morning. Let's talk about coffee. Because we all drink coffee. And what does coffee cost? Well, if you live in a major city, coffee is about five bucks. I know you guys pay more, but I'm from St. Louis — I can get a cup of coffee for five bucks.

Now, if you actually take the cost of the beans — now, we're talking about Arabica beans, not robusta, not going to do that to you — but Arabica beans, spot price, that is a commodity. You can buy it, you can grind it up. And if you do the math, you find that the material cost of a cup of coffee is about 10 cents. So we sell it for five bucks, which means that the Idiot Index is 50.

Now, let's imagine a world where for some reason we wanted to lower the cost of a cup of coffee, and we wanted to radically lower it. We wanted to lower it by 90%. Could you do that? Would it be possible to sell a profitable cup of coffee for 50 cents and still make a profit? The Idiot Index tells us yes.

But that's just coffee. If you actually look at what it costs to do drug testing and development, the Idiot Indices go through the ceiling. And I've got a couple examples here, but anything with an Idiot Index above 10 is an area where there's a potential cost savings which could be realized.

But how are we going to do this? How could we possibly cut 90% of the cost out of drug discovery? And the answer is, I don't know. I don't know. But I believe it is possible. And I believe that the result of doing this would be that we would get more shots on goal. We would get more drugs if the hurdle was only $10 million to test something. I mean, $10 million is still a lot of money, but there's probably a dude in this room that'll write you that check.

So I started working on this problem because — well, I don't like to admit this — but I'm an idiot. I am an absolute idiot, especially when it comes to health. And I can prove it.

This is my medicine cabinet in St. Louis, Missouri. This is an actual photo from my medicine cabinet. Does anyone recognize this?

[laughter]

Oh yes, I knew this group would be a safe place. I hope they're not sponsoring the event.

But let me tell you about this stuff. So they've got four Nobel scientists on their board, and they did some study, and this molecule sort of makes your cells happier and younger and it reverses aging. And I thought, oh cool, I'm rich, I can subscribe to this. It's like $100 a month. So I subscribed to this and I started gulping it down.

And I actually happened to be in a meeting with the number two medical school in the United States. It's Washington University Medical School, my alma mater. We have the number two medical school by NIH funding, which is kind of how you rank med schools. UCSF is number one, we're number two.

And I was talking to the dean, and he was talking about some research they were doing actually on these molecules. And I very proudly said, "Oh, well, I take Basis." He's like, "You do what?" I'm like, "I take this stuff, costs $100 a month, and it's making me younger." And he's like, "Jim, you're an idiot. We have a lab here that can prove that this stuff doesn't work. Not on humans. Like, it works on that little lab study that they published. But if you look at the science, which we do because we're scientists, it doesn't work. It absolutely doesn't work. And I can prove that."

And if anyone wants to bet me an arbitrary amount of money — it should be more than a million dollars, just to make it interesting — but I will take anyone. And I know this is being recorded. The bet's on: doesn't work.

But this led me to this crisis of, well, who can I trust? Because I want to be healthy, I want to do good things in the world, but I also want to stay alive for my kids. And as a guy with a lot of money, I'm no better than Steve or Michael Jackson or anybody who's trying to solve a problem. The money corrupts the problem. Throwing money at a problem tends to attract people who are attracted to money.

So I'm just another idiot. And I thought, well, who can I trust? And I finally came up with an answer. And the answer was, there's nobody. But there is a "what" that I can trust. The "what" is a process. And the process is science.

We have a process. We have a way. And I know you may disagree with some of the FDA decisions — you and your marketing degree, or maybe you and your MD. It doesn't really matter. The FDA pisses us all off the way the FAA pisses off every pilot. But our planes are generally safe. And our drugs are generally safe. Because we have a process that is scientific. And if we respect that process, then it will lead us to answers, which is what we want. There are some great discoveries in the world. We want an answer. We want it to be tested scientifically.

And when I originally put this presentation together, I was actually trying to raise money. I thought, I'll throw $100 million in, I'll get a couple other rich guys to throw $100 million in, we'll sit there with a billion dollars, we'll run a bunch of tests, we'll sort of speed up the process.

So originally when Jeff invited me down here, he was like, "Oh, they're rich guys at Summit, come on down and pitch." So I had these two slides. I've decided that that's really stupid. Because money is not the problem. As a matter of fact, money — well, it is not the problem. It is the problem. Lack of money is not the problem.

The problem, as I've come to see right now, is that at least in the world of drug testing, there's just too much money in the system that tests drugs. If you run the Idiot Index through the entirety of the drug certification process — the Phase 1, Phase 2, Phase 3 studies, the preclinical studies that you have to do — you find Idiot Indices of a thousand. You find so much money in the process that I have to believe it is possible to work around this.

Now, I do not know what I'm doing. But I am right now putting together a small team — and I mean small, probably no more than four or five people — who are going to use our work and our complete lack of understanding of the existing system to try to do something new.

So I do have an ask for you. It's not money. It's talent. We are looking to put a team on the field of people who feel like change is possible. And this is really tough to do. I find that when I hire an early team — actually, the way I started working with Jack Dorsey, I hired Jack when he was 15. And he did wonderful work for me at my first company. And we became a pretty good pair.

But when you hire a 15-year-old, they don't come in thinking stuff's impossible. So anyone over 15 is welcome to contact me. I will give you my email address at the end, because I think this is a problem that we could solve. I think that humanity deserves answers, and we certainly need them faster.

So I'm doing this because I think, well, I just want to save somebody's mother, or perhaps save myself, or perhaps feel like less of an idiot.

I know this has been dark. Death is not a fun subject. It's something we always try to avoid. But this is the needle I'm trying to move. I am trying to get us to the point where we have known cures, because they exist today, but ones that we can trust because they have been tested. And right now, our testing system is horribly broken.

So if you know somebody who would be willing to work in person, 12 hours a day, for a below-market rate, please give them to me. And this is how you reach me. Thank you.

[applause]

I think I've saved 10 minutes. If we have a couple of questions — the guy back there first, and loud.

Thank you. My question: with so much backup of promising compounds that can't get through, how easy is it for scientists to just go to another country where the Idiot Index is lower?

Very good question. Why don't we just route around the FDA and go to other countries? And the answer, unfortunately, is that the FDA is the standard that the world uses. And the other countries don't do good science. The FDA is interesting — the FDA will actually let you do this. One of my teammates is over in Eastern Europe right now, recruiting other countries who have cheaper systems to work with us.

So that is possible, and that is legal. The problem is, when the FDA imposes their rigorous standards, these countries in some cases don't adhere to them. And in that case, you can't trust the science. So that's the problem — you can route around the FDA, but the solution is not going to come from some country that doesn't respect science. So it's not really a possible solution in my mind.

And look, again, I want to really emphasize: rules help us. I mean, I've got an entire talk on crypto. Block does a ton of work in Bitcoin. We have the world's best Bitcoin mining rigs right now. We got the only three-nanometer stuff, it's amazing. But I was a Fed regulator. I believe in regulated financial systems. I believe in regulated — I'm a pilot, I believe in regulated airplanes, even though they're wildly expensive and difficult to maintain. And I believe in regulated drugs.

And the FDA, unfortunately, is the best standard we've got in the world. But they're open. They're open to international input. It just has to meet their standards. And we want them to keep those standards high. This is the other thing — I'm not talking about — well, I guess we ought to talk about this now. We won't get into politics. The FDA should maintain its role as the world leader in what works and what doesn't in our bodies. Yeah.

Okay, next question. Yes, sir.

Given what you presented and what you believe to be true, and with the access that you have right now, if you're going to take what you believe would be best probability of — will affect most people — what's the first big win you want to pursue and achieve?

First big win. Yes, absolutely. Very good question. So what we are doing is, we are looking for a drug compound that is somewhere stuck in the approval process. Which means it's been discovered — one of those circles — and it has now been probably through Phase 1.

So look, three stages of testing, typically in an FDA approval: Phase 1 — is it safe in humans? Phase 2 — does it work? Phase 3 — does it work at scale? So we're looking for something that's been through Phase 1, because it turns out Phase 1 does not have a very high Idiot Index. Phase 1 is fairly efficient. It's not great — it's probably got an Idiot Index of 20. But the other areas have an index of 300. So we're thinking of attacking a substance that's a little bit down the line.

And the way it's going to work is really simple. Because nobody trusts us — because we've never done it — what we're going to do is take a bunch of my money and just license the thing. So if there's a molecule — and there are thousands of these things, a lot of them are owned by drug companies — we're just going to license the molecule so that we take the risk. And then we're going to run a study using whatever sort of new — I say new, we're going to do the same thing that they've always done, but we're not going to necessarily do it the same way.

You do have to have a clinician supervise. You do have to have good recordkeeping. You do have to have something called GMP, Good Manufacturing Practice. You have to adhere to all those standards. What you don't necessarily have to do is pay some CRO — contract research organization — $40,000 a name for a person in the test pool. So we think we can route around that.

But the economic model that we're doing is to find a substance, license it, test it. And then if it works — well, actually, there are two levels of success. The first level of success would be just to do the science correctly. So if we do the science correctly, even if the drug turns out to not work, as long as the FDA and the scientists say, yeah, you did it right, you didn't cut any corners, you didn't go to Serbia and use a bunch of prisoners and their guards as the administrators — as long as we do the science correctly, that's a win.

The big win would be if we do the science correctly and the drug actually works, in which case we'll probably just sell it and pay the team members a bunch of money, because they're not going to be working for much if they're on my team.

[laughter]

Yeah, still want to work with me? Yeah. Pretty easy. There's two people here at Summit that'll make your dream come true. I'll introduce you right after this. Oh yes, I'll raise a coconut to that.

So the idea of reformulation — very interesting. I've been at this for a year. And when you say reformulation — basically, there are ways to sort of end-run the FDA and get FDA approval, but it's FDA approval with an asterisk by it. Which is to say, if you have an approved substance that is either off-patent or on a different indication, you can sort of skip some of the steps, and the FDA will lower the standards for sort of re-approvals. They'll actually lower the standards that you have to adhere to for approval, because if you have a terminal condition and people are not — drug companies are not working on those conditions, then they rationally say, well, we got nothing, so you might as well try.

We are not doing that. We're not trying to lower the standards. We're actually trying to go the opposite way. Our goal is to concentrate on conditions that affect at least 10% or more of the population. So something that everybody in this room has.

So I'll give you an example of a product that we're considering. There's a substance that regrows cartilage in your knee. And I saw you guys at the yoga class, right? Some of you guys could use it. And so, you know, at least 10% of the people in here could totally use some new cartilage. This may work, it may not work. But that's a drug that right now we're considering.

Another drug that we're considering is a very good solution for — there's a UTI problem. I mean, not at Summit. But at scale, there's some drug-resistant UTI infections right now, and we've got a potential candidate for that.

So we're looking for things where the FDA will hold us to the highest standard, because that's what we want to be able to do. And again, I don't quite know how we're going to do this. But the cool thing is that a lot of the people who have been hearing me talk about this are showing up. And especially after the election last week, there have even been some people who are inside the regulatory system that have raised their hand and said, we want to help.

So, fingers crossed. But we're going to hold ourselves to a very, very high standard, because we have to.

I think one more and then we're done. And I'll just point in this direction. Yes, sir or ma'am.

The N-of-one FDA — so the N-of-one. I've met a couple of these people. I have deep respect for their guts. It takes a tremendous amount of courage or craziness to be an uncontrolled experiment.

Even before the FDA will let you put any substance into a human just for Phase 1, they make you go through a very rigorous process with every technique that we have — up through mice and rats and ferrets and monkeys. You know those monkeys that escape? Guess why.

[laughter]

They require us to adhere to a very high level of safety because we don't want to hurt people. But then you have people with conditions, and they're not getting the treatment, and they're frustrated. And they know there's a cure out there somewhere, and they meet some dude who says, well, I can solve that. And they try it.

The tragedy is that we're not collecting the data well. Like, I hear anecdotally of these people all the time. And I'm actually going to go to the biohacking thing later today — if you guys, you know, look for the dude in the striped shirt. But I wish they would do the experiments with a scientific process monitoring. Because they're taking a risk, and if it doesn't work, we might be able to learn something. And if it does work, we might be able to learn something. And we as a society should benefit from their boldness.

So I applaud them, but I don't want to be one.

There you go. Thank you. I'm done.

[applause]