Passing the Baton

Teresa Chahine: Welcome to Impact & Innovation. I’m Teresa Chahine, and I’m inviting you inside my classroom at Yale School of Management as we grapple with questions on social entrepreneurship and impact. Welcome back, everyone. I’m here again with Song Kim, who visited us a year ago to talk about her startup at the time, KovaDx. She’s going to share the story with us today about how KovaDx shut down and what she’s doing today and how she made sure that what might be perceived as failure in terms of a company closing down, how she wanted to fail successfully and how you approached failure. So, thank you, Song, for coming back a year later to talk to us about your journey. I’m so grateful to have you here with us today.

Song Kim: Yeah, thank you so much for having me and for allowing me to share the ebbs and flow of our story, because I think it’s a story that isn’t terribly uncommon, but I think it’s really not spoken about enough. I’m really grateful that you’ve provided a space for this to be spoken about and it to be destigmatized and all of those good things.

Teresa Chahine: Yeah, my students were so happy to have you in class today and were asking so many questions after class. I was thinking to myself, it’s rare that people get trained in entrepreneurship, but even if they are a little bit, they’re almost never trained in failure. Failure is the most common outcome of entrepreneurship or any form of attempting social change. You have to try and try and try and fail and fail and fail until something succeeds.

So, why don’t we talk more about failure and also reframe what we mean by “failure”? A company shutting down might mean that that specific company did not succeed, but if you’re working on creating long-term changes that just need decades to take place, then what does success look like? That’s what we’re going to dive into today.

Song Kim: I love it.

Teresa Chahine: So for those who didn’t hear your first episode, tell us about what Kova was founded to do and what it means, what it works on, also why the name “Kova.”

Song Kim: Sure. So, KovaDx was founded... actually, I have two co-founders, and the two of them started before I joined, and the idea was to have a low-cost diagnostic tool for sickle cell disease. One of my co-founders, he was a physician in Ghana, and so he’s treated sickle cell patients. He himself was a carrier of the trait, and he’s lost family members to sickle cell. So he had this burning fire for sickle cell. So, he brought Tim [Adamson] and myself on board with the mission, and sickle cell is not something I knew much about. I think now there’s a lot of talk about sickle cell. Everyone knows what sickle cell is because of the gene therapies and new gene therapies that have been FDA-approved. So, there’s a lot of buzz and excitement around sickle cell.

But back when we founded the company in 2020, that wasn’t the case. I think it still is and was a disease area that people look at as almost like a charity case rather than recognizing the really important need there is and the gap in access to care in the sickle cell community and things like that. When we talk about sickle cell, I always like to frame it as, sickle cell isn’t just a genetic disorder that just happens to predominantly affect the Black population, but for me, I see it as a human superpower that developed in response to malaria, which is the number-one killer of mankind ever in the history of mankind.

So, for me, I think it’s a superpower that was developed in areas where there is a lot of malaria, but we don’t recognize it as such. Now, because of systemic barriers to healthcare for folks with sickle cell and because they tend to be from Black and Brown communities, the access to care, the therapies and research that is available is very, very behind, again with the caveat about the new gene therapies that have recently come to light.

Teresa Chahine: So what does Kova do or Kova did?

Song Kim: Yeah, initially, we were founded to be a low-cost diagnostic tool for sickle cell in Sub-Saharan Africa. But we’ve had many pivots along the way, both because of a result of circumstances of it being COVID and therefore governments in Sub-Saharan Africa that we had relationships with just not having the bandwidth or the resources to actually work on anything other than COVID at the time. We were also building deep technology with hardware, expensive hardware, and that wasn’t the right fit to be a low-cost diagnostic. I think with the biases that the three of us had as founders, we weren’t able to see that immediately when we started the company, but it became increasingly clear to me that this wasn’t the right market or this wasn’t the right time for this market right now.

In fact, there was not a more urgent, but there was an equally urgent issue in our own backyard in the United States of increasing access to care and better therapies and improving the quality of life for people with sickle cell here in the U.S. So we pivoted to focusing on how to improve care for sickle cell patients in the U.S. with our technology by being used in a clinical setting and then eventually in the home. So, in the same way that patients with diabetes use a glucose monitor so that they can monitor their health at home, so that they don’t have these big emergency crises that happen because of insulin spikes, we want to do the same thing for patients with sickle cell so that they can monitor their health in real time and see when an acute crisis is coming so that they can take steps to prevent it so that they can take care of themselves and manage their care at home and be empowered with information about their own health rather than having to go to the emergency room, where the experience is incredibly traumatic for them just from the standpoint of that interaction with the healthcare system, but also really traumatic for their bodies. So, yeah, that’s what we were looking at on the clinical side, and then we again had a slight pivot. We found a more immediate market that had more, I guess, opportunities for immediate revenue before we have to do all of this research to get to the clinical piece of it in working with pharmaceutical companies that were developing therapies for sickle cell and other rare diseases.

Teresa Chahine: That was where you found product market fit in terms of, okay, we have someone who’s willing to pay for this device and to use it to help patients.

Song Kim: Absolutely.

Teresa Chahine: In clinical trials, they would be able to monitor red blood cell morphology—

Song Kim: Absolutely.

Teresa Chahine: ... to better serve sickle cell patients.

Song Kim: Absolutely. So, in sickle cell, going back to this point about how there’s been so little funding and so little research for sickle cell because of the population that it affects, until 2019, there was just one drug on the market that was a repurposed cancer drug that was for sickle cell. Before 2019, that was it. There was nothing else. Then in 2019, several more drugs were FDA-approved, so there’s a little bit more choice now, but there’s still an access issue. There are lots of companies working on novel therapies that address different pieces of sickle cell, but they’re having a really hard time getting through the FDA for a number of reasons.

One large part of it is that they’re not able to get really good quality data from their clinical trials because they don’t have a point of care tool, because it is a rare disease and it’s sometimes challenging to get patients into the hospital and to monitor their vitals and monitor what’s happening with their blood in real time.

Teresa Chahine: So it sounds like you had to pivot a few times, which is a normal part of a startup experience, and then you landed on something that could succeed. So it wasn’t the idea or the product market fit or anything like that that was inherently a failure. My interpretation of it was that it was really the team. So, before we get to that, I want to share that one thing that really stood out to me in class that you were saying today is that you’re not an expert in sickle cell disease or medical devices or startups or anything, but what you did was you talked to as many people as you could to learn about where the gaps were.

That’s how you got from the initial idea about how this device could be used to the product market fit of this is where the gaps are, this is where the opportunities are, and this is our pathway to helping an under-served population. So that’s one really important thing that stood out to me is just talking to as many people as possible to learn about the gaps. You had initially been recruited by the two founders that you shared to be the COO, because the person with the initial idea was the CEO and then the co-founder was the Chief Science Officer. So you were the COO, but you were the one that was having all those conversations. So, I remember that when you were here a year ago, our conversation before we filmed was, “Song, you really need to be CEO.”

That’s what we were focusing on the podcast a year ago. So that happened, and you somehow navigated it, but then the team dynamics still failed. It’s not that you could pull it through on your own. I think that what I understood from your journey is that a turning point was that you had a key partner, which was a university that developed a technology that could make this idea work, that you had developed a partnership with. They were licensing your technology, and they were almost going to pull out of the deal because of the lack of communication from the original CEO with them.

When you finally were able to transition into the CEO role, they were like, “Oh, thank God. Maybe this will work and we can stay.” So if I understand correctly, that it was that partnership that someone reached out and identified those team dynamics that they were worried about. So, tell us a little bit about that, the transition to CEO, and then what was the issue that you got stuck on that eventually led to the failure of this specific team?

Song Kim: I really appreciate the question because again, before I lived it myself, this was something that I had heard from different people like this is the reason why most startups fail, and it’s founder dynamics. I never thought it would happen to me, but then it did. So, a little bit of context, throughout these different pivots, initially, we were going forward with the original CEO’s vision for doing low-cost diagnostics in Sub-Saharan Africa, but for a number of reasons, it just wasn’t going to work, and that wasn’t going to be the right fit. For me, coming from a background of doing civil rights work here and doing social entrepreneurship in the nonprofit context, I knew that there were issues locally here in the U.S. pertaining to sickle cell that we had the potential to completely transform.

So I always had a heart for bringing our technology here to the U.S. from Sub-Saharan Africa. So I, as you mentioned, talked to as many people as I could. So, I talked to patients, I talked to clinicians, I talked to patient advocacy organizations, I talked to pharmaceutical companies, I talked to everybody who had a stake in sickle cell to learn as much as I possibly can. It became really, really clear to me that there was a huge glaring need for our technology here in the U.S. So, as the person that was just curious and having these conversations, I sort of held those relationships.

As we were talking to investors, so that we could gain a little bit of resources to push this thing forward and to do the work that we wanted to do in the U.S., I think everyone assumed, even though I was technically the COO, that I was the CEO because I was the one pitching and talking about the company. I was the one out there on the day-to-day, getting feedback and building those relationships and maintaining that connection with the company, but I wasn’t the CEO, right? So that was a real barrier in us moving some of these partnerships and relationships and deals forward. So, there came a point where it became just like the writing was on the wall that this change needed to happen.

So, yeah, I took over as a CEO and my first order of business, because I knew how important relationships were, was to tell all of our major stakeholders. Our most important stakeholder at that time was the university that you are alluding to because they developed a core piece of our technology. At that time in our company, without that core piece of technology, we didn’t have a company. All of the research that we were trying to push forward with these clinicians and major institutions, none of that we could do without that piece of technology. So I reached out to them and I told them that I took over as CEO, we now have this new strategic vision, and this is how we were going to implement it. Here’s the month-to-month. Here are our milestones and here our revenue projections. I made the pitch to the inventor, and his response was, like you said, “Oh, thank God. I was this close to pulling support for your company because I couldn’t see a path forward. The revenues didn’t make sense to me. I wasn’t hearing anything from your CEO before about what was happening with the company. So, I was about to pull my support, but now that I have heard your vision, I’m completely on board, and I want you to make this pitch to the other stakeholders in the university.”

So I did that and everybody was on board, but then I got a call a few weeks later and the director of the innovation program at the university, he called me and he said, “Song, I really love the pitch and we’re ready and willing to do whatever it takes to support you, but before we do that, I need to see your cap table.” So I sent him the cap table, and as soon as he opened his email, he called me back and he said, “This is what I feared.”

Teresa Chahine: So for those listeners who don’t know, can you just explain real quick what a cap table is?

Song Kim: Oh, yes, sorry. So, a cap table is essentially, it’s what delineates who has what equity in the company.

Teresa Chahine: Who owns what percent of the company.

Song Kim: Exactly. That can be founders, that can be your investors, that could be advisors who have a small stake in the company. Our cap table at that time had me of the three co-founders as having the least amount of equity, even though I was a CEO and working full-time. Then the then-CEO has having the most amount of equity, even though now he was just in charge of a very small piece of the work, which was the research, and he had started his PhD by that point. So, he was working part-time.

And this director, he said to me, “I’ve been doing this work for many, many decades, seeing dozens of companies come and go, and I’ve seen this cap table many, many times. Every single one of those companies have failed. And it wasn’t because they had a bad technology. It wasn’t because they had a broken business model. Even with everything in place, even if they somehow managed to raise money, it failed and it failed because of the cap table. So, fix it and come back to us. If you can’t fix it, I would rather you shut down the company, and we’ll help you establish a new one. We’ll give you all the resources. We will set up the corporate entity for you. We will give you a team if you can’t redo the cap table just, but essentially, try to figure it out.”

In that first conversation, I actually remember I was advocating for my team. I said, “No, actually, they do more than you’re giving them credit for this and that.” I think he had already read between the lines, though, and made the determination himself also from conversations with the inventor that in fact not everybody was pulling their weight. So, I took that conversation, just the important bits back to my team and suggested that we redo our cap table, because otherwise, we wouldn’t be able to move forward.

Teresa Chahine: So you skipped over something a while back. When you started to tell this part of the story, you were like, “So I became the CEO.” So I’m just going to ask you to rewind. How do you become the CEO? Tell us real quick the process of transitioning from COO to CEO and then connect that to my next question, which was what was the process of then redoing the cap table? So this became a turning point of, if you’re going to succeed in your new plan to work with pharma, to work with this university, to license the technology, you need to redo the cap table so that you all own equal equity or something like that where there’s some form of fairness. So, what did that process look like?

Song Kim: Yeah, so I think one of the questions I was asked in the past is how did your role change from when you were COO to CEO? The actual answer is my role, the things that I did on the day-to-day did not change at all because I was already—

Teresa Chahine: You were already doing that role.

Song Kim: ...doing the work of the CEO, which is for a very early-stage company, it’s about the relationships. It’s about talking about your company and getting support for it through partnerships, through investors, whatever have you. That was what I was doing. So, I think it was something that everyone who interfaced with us as a company assumed that I was a CEO, as I mentioned. I think all three of us as co-founders felt that this was a change that needed to be made, but we were in denial about it. I think all three of us were in denial about it until it came time for us to have to fundraise. By that point, we went to a few meetings, and I would do the pitch.

I would talk about the company. I would answer all of the strategy questions, and there would be some times when the co-founder didn’t show up to the meetings with investors. They would wonder, “Why isn’t your CEO here? If he’s not taking this seriously, we can’t invest in your company.” So yeah, when those things kept repeating itself, I think all of us felt like we needed to realign on how to make this push forward. So, before I had the conversation with my team, I had conversations with all of our advisors, with the other member of my co-founding team to get his thoughts. So that it’s not just coming from me as a power grab, but to make sure that there was alignment and that we were coming as a team and coming to this decision for what was best for the company. So, after all of those alignment conversations we had, then I called for a meeting among all three of us and we discussed the change and agreed that that would be the best way forward.

Teresa Chahine: So that sounds like a process where you were able to make that transition, and yet you then seemed stuck on making the transition from evening out the equity table. So, what did that look like?

Song Kim: Yeah.

Teresa Chahine: Because that ultimately was what made the company close down. You weren’t able to make the change that your key stakeholder was asking you to make and then you had to consider your options from there.

Song Kim: Yeah, absolutely. I think now knowing what I know about what can go wrong in startups, I think one major learning from this is you just never know what really motivates people or what is really incentivizing people. You don’t actually know what values they hold unless you’re thrust into situations. In the beginning, I joined my two co-founders because I felt like we were values-aligned. I think in the big picture of wanting to work towards health equity and to make sure that we were using our collective skillset and our privilege to do something that was meaningful is the thing that we were aligned on, but then there were other things that came up once we were pressure-tested as a team because we were asked to redo our cap table that came up that we wouldn’t have been able to anticipate.

So, I think on hindsight, baking into the beginning an agreement about when we would revisit these things, under what circumstances would we shift roles or shift our cap table, those kinds of things, I think I would’ve baked in earlier on to prevent the mess that it became later on. So, when I brought to my team what our university partner had said about us needing to redo our cap table, otherwise it can’t give us the license, the team member who wasn’t CEO, he took it well. He understood that logically, yes, that is a thing that we needed to do, but the former CEO who had recently lost his title to me, is I think the way that he saw it, I think for him, it wasn’t okay for us to redo our cap table.

I think for him, it felt like he would be relinquishing power and control of the company fully to me by giving me more equity. So yeah, he refused. No matter what argument I used, no matter what data and evidence from researchers on startups, whatever have you that I brought in, none of those things mattered at the end. For about a year, we tried to—

Teresa Chahine: Wow, that’s a long time.

Song Kim: ... redo our cap table, and it did not work. So, I think it’s a real shame because we had developed some really amazing partnerships with leading clinical institutions. We had done a successful pilot program with a pharmaceutical company. We had all of this traction. We had investment offers from strategic investors. But before I accepted those investment offers, I really wanted to make sure that we were aligned in that. I trusted my team to be able to implement what we said we would, and I didn’t have that trust. So, yeah, I ended up declining all of those investment offers and then revisiting with the team like, “Okay, are we really going to keep working on this? If so, what are the things that need to change?”

So yeah, it was a really challenging time for me, I think, mentally, emotionally, physically trying to navigate what was happening, the disconnect with my team, with what was happening outside of the company and all of the things that were going right, the things that were going wrong. Grappling with all of that was quite challenging.

Teresa Chahine: So that brings us into the third and final leg of the journey, where you had to figure out, okay, this is clearly not going to happen. It’s taking its toll on your health, on just spending a year trying to revise a cap table and it’s not working. Clearly, there is no choice but to shut this company down. Then from there, that’s when the hard part really begins of what does that look like? Someone offered you to, like, “You can just start your new company and we’ll work with you,” in terms of the university that licensed the technology.

I think one thing you mentioned to me in the past is that you really wanted to just do right by your stakeholders and all the people that had supported you until that day, including the university investors, advisors, et cetera. So, tell us a little bit about what that journey looked like for you in terms of deciding what to do next, what you ultimately chose and why, in terms of what the priorities were.

Song Kim: Yeah, absolutely. So, some of the major stakeholders that we had were obviously the university. We had a few initial investors who gave us our startup funding. There were the clinicians that we had started working on grant proposals with for some really innovative research for sickle cell. We had all of the patients that we had been speaking to who were so excited about our product and just waiting for us to bring it to market and the way that they’ve supported us. For me, it didn’t really matter to me if this company went on under different leadership.

For me, I didn’t necessarily think about myself, and maybe I should have a little bit more at that point, but I really was thinking about all of the stakeholders who had believed in us and who had supported us and what would be the best decision that would do the most right by all of those stakeholders. So, I think the most important thing for me during that time was to make sure that I was in close communication with everybody again, who had supported us or who had a stake in the company in different ways, making sure that I was giving them updates, both good and bad, about the things that were happening with the company at that time. I think the most obvious answer or the thing that everyone calls success for startups is an acquisition.

I thought, “Okay, with an acquisition, maybe all of these stakeholders would be taken care of, and that’s going to be the best way forward.” So I reached out to one of the companies that had reached out to us for an acquisition actually a few months before that. I said, “Hey—transparency—here’s where we are. Here’s what we have lined up. Here’s what we don’t have. But I can take the pieces of the company that we do actually own. The pieces of the company that we don’t because we couldn’t get that license, I will just personally broker the deal between the two of you, so that you can have the tech and all of the broader intellectual property that resides in the company. Are you interested? Are you still interested?”

The CEO’s response to me was, “Sure, we’ll look at the tech again. It’s in a line with our strategic vision and our strategic plan, but really more importantly than the company, what are you doing after you leave the company?” I said, “I haven’t had the bandwidth to think about that at all.” This company had actually been looking to acquire us because the thing that they wanted to do, which is to support clinical care for sickle cell patients and to keep them out of the hospital and also to work with pharma to help them accelerate therapies, but their product was a digital product that was essentially a patient ecosystem that develops real-world evidence in real time. So, our vision and our mission was exactly aligned, and that’s why they were looking at our technology.

So, they said, “Okay, we are doing so well right now in the U.K. that we are actually thinking about growing and expanding and launching in the U.S. Would you be interested in joining us to lead that effort?” Yeah. For me, again, thinking about my stakeholders, I said, “I think so. I think that is a thing that I would like to do, but I need to figure out what to do with this company, because again, I have all of these stakeholders that I want to make sure I’m doing right by.” So we started going through an acqui-hire process so that they would hire me and also take our technology and all of that.

But as we were going through that process, and by this point, again, mental health was bad, physical health was not great, and I was constantly stressed and anxious on the day to day, but I don’t think I had the bandwidth to even step back from that and realize what was happening with me. There was a series of events that happened that really woke me up, and one of them being that I spoke with a mentor who had built many, many companies.

He led a major pharmaceutical company in the U.S., and he said, “Song, this sounds to me like you are looking out for everyone else’s interests but your own. You keep talking about all of these other stakeholders. Going through this acquisition is the best outcome for your co-founders because they get an acquisition on their resume, your investors because they’re getting a return, but what do you have to gain from it? You will be saddled with dealing with this company and this acquisition for the next foreseeable future for many, many years ahead. Is that the kind of stress that you want to put on yourself right now? Because let’s face it, if you do go through with this acquisition, this will continue to be your responsibility.”

So, yeah, after hearing that sage advice, and again, some other events that happened in my life, I made the call and told my co-founders about the fact that I think we should actually just close the company down cleanly.

Teresa Chahine: Disband.

Song Kim: Yeah.

Teresa Chahine: Disband.

Song Kim: Yeah, I love that word for it. Meanwhile, again, I was in very close contact with our investors and with our advisors, making sure that they agreed with the decision that I wasn’t making this decision on just behalf of myself but that this was actually the right outcome. I think the benefits of working on something that was more working on an issue that requires someone who’s really passionate about it is the fact that our investors, they tended to be more strategic investors. They were either clinicians themselves or folks who had a vested interest in seeing something like this come through for sickle cell. So, for them, it mattered less whether the company succeeded or failed, actually. For them, it mattered more that eventually, there is something that will move the needle forward for improving care for patients with sickle cell. So, even our investors were incredibly supportive of this decision for me to just go work for this new company, Sanius Health, and bring their tool here to the U.S. to do exactly what we wanted to do with Kova.

Teresa Chahine: So at the end of the day, it sounds like the failure was a technical failure of one small part of the journey, which was the team. This company, Kova, as it was structured, as it was founded, did not need to be the unit or the vehicle that took this work forward, but rather I think it was a sage decision, to use your word, to shut it down and find other ways to proceed with this work. So, that’s what I was referring to at the beginning of the episode when I was thinking about, “What does it look like to fail successfully?” Yeah, the company shut down, it failed, but the way I look at it, failing successfully means that you prioritize the relationships in terms of thinking about the different stakeholders that supported you along the way because this work is not about you. It’s about the social challenge that you’re trying to tackle.

Prioritizing your mental health, I think a mistake a lot of entrepreneurs make is just burning out and sacrificing their own physical, emotional, and mental health. So, my advice to changemakers is to see yourself as a resource and spend that resource wisely. These problems are so much bigger than us. Don’t make it about you. Make it about the problem and about how it’s going to take a lot of different people and organizations and stakeholders to tackle this challenge over a very long time. Again, talk to as many people as possible to learn the gaps and make it about the relationships, build relationships, make it about the relationships. Don’t make it about you.

I think failing successfully means getting support through partnerships, listening to others, putting your ego at the door, and most importantly, passing the baton, right? It’s not going to be you or Kova or even Sanius Health that solves this. It’s going to be a lot of people working over a very long time. I think this is so relevant for what’s going on today around the country and around the world with campuses. People doing short bursts to try to make big social change, I think that’s how you catalyze a conversation and then you have to think about “How am I going to keep this conversation going? How am I going to listen to as many different stakeholders as possible and try to build momentum around bringing people together, but not necessarily holding the baton in my own hand?,” like your co-founder was trying to do.

But rather, thinking about a very long-term collective movement to see the changes we finally want to see. So, the way I’ve interpreted this part of your journey is like we know that innovation and change-making, innovation aside, requires you to try many times and fail many times before you succeed. So, actually, we shouldn’t be just focusing on the final end result of success in terms of the social change we’re trying to create, but on the process of failing over and over and over again until that happens. I’m very grateful to you for talking about failure and what it means to fail successfully, because it’s really the process that you go through and your attempts to create social change.

That matters as much, if not more than the outcome, because you probably won’t own the outcome like some other generation after you will, but you can own the process. So, thank you for inspiring my students and me in your process and in your approach to fail successfully.

Song Kim: Thank you so much, Teresa.

Teresa Chahine: Thank you, Song. I am Teresa Chahine, and you’ve been listening to Impact & Innovation. Subscribe to stay tuned and follow us @TeresaChahine and SOM Ventures. Special thanks to the broadcast center at Yale School of Management.