tv The David Rubenstein Show Peer to Peer Conversations Bloomberg August 22, 2021 2:00pm-2:30pm EDT
♪ david: this is my kitchen table and also my filing system. over much of the past three decades, i have been an investor. the highest calling of mankind i have often thought was private equity, and then i started interviewing. i had to watch your interview to learn how to do an interview. i have learned from doing my interviews how leaders make it to the top. >> i asked him how much he wanted, he said 250, and i did not negotiate with him. i did my due diligence. david: i have something i would like to sell you. you do not feel inadequate not because you are only the second wealthiest man in the world, is that right?
noubar afeyan is an incredible entrepreneur. a parallel entrepreneur. he started many companies in the biotech area at the same time. one of those companies is moderna, a company famous for having created the vaccine that dealt with the coronavirus pandemic. i sat down with noubar to hear more about the success of moderna and what he plans to do in the future in other biotech areas. when you came up with the idea of moderna, did you ever think it would change the world the way it has? noubar: absolutely not. what we had thought of was that we might well have the next generation of biotechnology and something that had never been even dreamt before, the body's own ability to make its own drugs, whatever it needed. the notion was we would introduce a molecule that would code for a drug we want. the body would in turn translate and make the drug that it needs. that was the basic idea, which
was itself a fantasy at the beginning. in other words, an act of imagination with relatively little proof. that platform would go on to create 20 different products that were being tested in the clinic. when this pandemic hit, it was something we could envision. the pandemic itself and the ability for the technology to be used overnight to fight against this nasty virus, that we did not imagine. david: when you come up with an idea for a company like moderna, do you get somebody to be the ceo, to be the board? how does it work when you start a company? noubar: our process of starting companies, which is what my company flagship pioneering does professionally, institutionally, if you will, we don't start with the idea for the company. we start with a range of things we could pursue of which we try to find which one gains advantage. moderna followed the same process. we ask questions that start with "what if?" in this case it was, what if we
could make a code molecule that could make any medicine we wanted when introduced to the body? how do you do that? is there a way to do that? what has been tried? what gets in the way? how reliable? there are all these questions. we don't start the company based on the question. we start an exploration. which is what we did. in the summer of 2010, we began to explore these issues, is it even possible? i likened it to an archaeological dig, except of the future, not of the past. you pick up pieces, is there value here? we started doing experiments. as we went forward, we started realizing there was actually a path we could at least point to forward to make this mrna molecule. once we got to a stage where it became clear there was intellectual property, that is when we say, ok, how are we going to create a team to lead it and what is the leadership structure with a ceo? david: the company has a market value greater than merck. a market cap of about $190 plus billion dollars.
when you first invested, how much money did you put into moderna? noubar: we capitalized to start the business so altogether my firm deployed about $11 million to stand up the company over a period of a couple years. david: and that $11 million has had a return of an infinite amount, practically. noubar: well north of 1000 fold, yes. david: when moderna was moving forward, coming up with this vaccine that has helped with the pandemic, what did the ceo say? did he say, i think i have found a way to cure the pandemic? or what did you say to him? noubar: when the beginnings of the pandemic were beginning to show themselves back in january 2020, we had a discussion about the possibility of starting a program just to be in a position in case this got serious. interestingly, the reason was not because it was a pandemic. it was not a pandemic at that time. it was because we thought we would have an opportunity to demonstrate one of the hidden
advantages of our platform, the speed of execution and design. in the traditional pharmaceutical and biotech world, speed is never an advantage because things take such a long time in being approved and regulated that going even faster does not result in much of a gain. whereas in a pandemic, or epidemic, speed becomes life or death. that is what attracted us at first. of course, the situation caused us to put a lot of efforts into this. david: moderna was a relatively small company. very few people had heard of it. you go to the government of the united states and say, guess what, forget merck, forget pfizer, forget these other companies. give us some money. did they laugh at you and say we never heard of you? or were they so interested in anything that they give you the money you needed? noubar: it was more the second, but we were well known in all circles of the government. from the beginning of this effort, we partnered with nih. the nih was testing are vaccine in humans 40 days after we
actually started our process. it was not that they laughed at us -- of course they were worried how could a company we don't know withstand this type of capital/importance, if you will. how can it scale up quickly? a lot of unknowns. good news for us, starting with the team, there were all-stars from all the major pharma companies. david: did people call you up all the time and say, can you get me some of the moderna? or did you unlist your number? noubar: i did get calls i never thought i would get anymore from many countries and leaders. david: what did they say? noubar: the reality was i could not do anything. nobody could do anything. legally, the entire supply was in the possession of the u.s. government. the ones we were making in the u.s. it had not been authorized for any other use other than emergency. any supply under the table, if you will, would be illegal. i fact told many people i would
more readily get an assault rifle here than i could a vaccine. it was completely illegal to do anything with it. it was very difficult for people to understand because they viewed it as an innovation. surely you have some lying around. people don't realize how carefully governed this whole thing was done. in a way it made it easier for us to do because, had we been able to do this, the demand was in the hundreds of thousands, not one or two. david: the efficacy is around 93% so you have a pretty good chance of not getting the virus. noubar: that's right. david: now the delta variant has come along. presumably there will be other variants. is the moderna vaccine working against that or do you have something for the delta variant? noubar: we are as technology develops preparing for any eventuality. including our baseline vaccine, two doses and what it does, the data we have is very robust. we have not seen any deterioration of our protection. that is first.
against the delta virus, we have strong protection and we expect that will continue. the problem is we don't know how long. you find out when your guard is down, after your guard is down. so in order to prepare for that eventuality, we have begun to make variant vaccines, vaccines that have different sequences that, if needed, we could accelerate so we can actually use that. we are going to work closely with regulators. fda, cdc and the europeans, for an arsenal of -- the beauty about mrna technology is we can do this response versus conventional biotechnology that takes years and years. david: to get to the heart of the problem, my own situation, i got two moderna shots. do i need a booster? noubar: i think that the best advice so far is that people after a certain age and i cannot tell you right now what that cut off will be, because that will
be set by the government, are most likely going to need a booster to be well protected against the variant. and over time, public health officials have to decide whether everyone should get a booster shot. my guss is that, given enough time, we may end up in a situation where we have yearly at a minimum vaccinations just like the flu. david: anthony fauci has said we should use the example of the coronavirus to prepare for other potential viruses down the road, and that companies like yours will do that. are you working on that already? noubar: absolutely. a very big part of moderna's future will be in being the leading vaccine developer with mrna technology, but also additional new technology we are considering to augment that capability. i should also say within the broader pioneering context, we have multiple projects as well looking to expand the security net for future pandemics. ♪
♪ david: as we talk today we are in boston and it is probably not a surprise many people would say people from m.i.t. or harvard were involved in moderna. but your background is different than many people at m.i.t. and harvard. you did not grow up in this country, is that correct? noubar: that's right. i was born in beirut, lebanon of armenian parents. lived there until the civil war in 1975, and ended up escaping the civil war and growing up in montreal, canada. david: you were a teenager when you went to canada. noubar: i was extremely fortunate. my family, they took us as political refugees. david: you went to mcgill university. what did you major in?
noubar: chemical engineering. which was an interesting field at the time, because that is the field that first got drawn into biotechnology when that industry started. david: after you graduated you went to m.i.t.? noubar: yes. i was the first graduate from what was called the bio process engineering center. it was the first time engineers were being trained to do advanced work in biology. the notion was this industry was being born so you need engineers to come up with how to make the products. that's how i got involved. david: were there a lot of armenians? noubar: [laughter] i don't think there had been armenians at m.i.t. for many years. some, but i was not surrounded by familiar faces. david: when you got your phd, were you going to go teach? which is what sometimes people do. did you want to go into the industry? what did you decide? noubar: it was an interesting time. i reflected on it quite a bit. because this was a new field, i have since realized this is how advanced education systems work, the most prestigious thing would have been for me to teach and
here was a field which did not exist, biochemical engineering. so i could go teach anywhere. i mean, they needed people who were proficient in this. i did not really seriously think about that. personality wise, what i saw a lot of the professors doing, i just thought this was not my temperament, basically. by the way, i have since because i have taught at m.i.t. and harvard business school, i have realized education has changed so much you can be an entrepreneur and a teacher at the same time. back in 1985 or 1983, that was not the case. that was not something i pursued. the choices were, join a large pharmaceutical company beginning to hire engineers in this field, and then what i ended up doing by a chance encounter i had with somebody, was to start a company, which was extremely rare in the mid-to-late 1980's, let alone for a 24-year-old immigrant with zero experience. david: did your family say get a real job?
don't start a company? noubar: absolutely. even though my father was an entrepreneur in the more trade, import-export type of entrepreneur, but definitely the risk was throwing away the education and the brand. david: you started a company when you were 24 years old? noubar: yes. david: and how did the company do? noubar: the company failed to fail and succeeded eventually in becoming the largest instrument company in the biotech field at the time, which was the 1995 to late 1997 timeframe. we invented a number of new technologies that could be used to study and create equipment. about 900 other people. it was a public company for a number of years. lots of ups and downs. for the period, it was ultimately a successful venture. david: you sold it to perkinelmer? noubar: yes. david: you cashed out, got a lot of money for a young person. did you say, i'm going to retire now or just go teach?
or just relax, what did you decide to do? noubar: it was complicated because along the way i had cofounded, co-started a number of other companies. between 1994 and 1997, four other companies. each of them went public, three of them got sold. it was worse than just doing one thing and calling it a day. because i had also sampled doing multiple things, and instead -- so i did not consider retiring. but one thing i did realize was doing yet another company did not accomplish much. i was not drawn into this notion of being a serial entrepreneur. so that is kind of when i started thinking about ideas that have led me to do what i do now. in the mid-1990's, i got enamored with parallel entrepreneurship. at the time that was not even a thing. it probably now isn't. the notion of parallel entrepreneurship was why can't you simultaneously think deeply about major new innovations and organizing companies at the same time? i was doing it individually by
partnering with different folks. and that led to institutional versions. david: the norm would be serial entrepreneur, where you start a company, finish it, go on to the next one. you are doing several at the same time. noubar: yes. david: not unlike elon musk. noubar: 20, 30 years later, yes. david: when did you start raising funds where people could give you money to invest and you would then invest in various biotech ventures? when did you start doing that? noubar: since 2000 we have operated a series of funds, some of which has been my capital, increasingly so in the larger ones. the reason we did it that way was very interesting, our idea was to employ the funds exclusively for companies we can see create the science which we generate. as opposed to the typical investment deal flow, diligence, select the winners, etc., we don't have any of that. whatever projects make it through our system, they get capital. david: if i had been lucky to know you in 2000 when you had your first fund and i put $1 million in, how much would i
have made? noubar: i don't have a simple answer. i would say it is safe to say over the last 15 years we have operated north of 30% across everything we have done. david: so recently you went out and raised a new fund, $3.4 billion. and that money came from individuals all over the world. who begged you to come in and did you turn people away? noubar: we did have to turn some folks away, but we were pleased with the interest we got. much of the capital came from investors we have had well over a decade. some of it was also new. these are endowments, large, large pension funds. in this country i am happy to say, we probably represent the best investment multiple states have made. it makes me proud as an immigrant. it does make me proud to have a state in someplace actually feel good about what we generate for their own people. david: you have had great achievement with moderna. do you think you can do anything
as great as that in the future? noubar: we say we can generate an engine that will produce companies that will be a moderna or 1/10 of a moderna. ♪ david: traditionally, public companies worry about their shareholders and now they say you should worry about stakeholders and not just shareholders. do you have a view on the obligation? noubar: public or private leadership obligation of any leader is shareholders. i am unaware of too many shareholders that technically penalize you for that. i think what people do societally is invest in the license to operate, and that is a fickle license because a lot
of corporations, when they learn a lot of capital, lose that license to operate. if you take the employee base, suppliers, environment, every aspect of what makes that our ecosystem, i grew up in a world where everything is nature driven. there is a biology ecology around companies. if you lose your ecology, you lose the company, your lifeblood. david: some say it is important for ceos to speak out on public issues like voting rights and stuff like that. you have a view on whether ceos and public company should do, or should they stay out of issues like that? noubar: for immigration, i spoke out quite vociferously. no companies would have existed and there are hundreds of thousands of cases. if i did not do that, it was an
act of omission that i was being complicit with that thought process. in other areas, i don't know that i need to speak out as strongly because other people may have something to add. i think we should be open-minded to it. ♪ david: a lot of companies in silicon valley and boston as well are started by immigrants. maybe they are hard-working or trying to prove something. have you observed that? noubar: factually they are. i have been involved in various discussions certainly a few years ago when the political environment was quite against immigration even of talent, but indeed, it is the case that a lot of immigrants who tend to get to the cutting edge or frontiers of things, whether it
is because there are things to prove or by nature they are taking very little for granted, and therefore they are comfortable with the discomfort. if you change countries, let alone forcibly, you really do not have much time to say what is owed to me and how come i got disadvantaged? i mean, these are privileges of rooted people. you need roots to feel entitled. a completely connected concept. david: sometimes when you have a great success in life in whatever area it might be, it is hard to do it a second time. it is rare someone has a second great achievement. you have had a great achievement with moderna which did incredible things to save the world from the pandemic. do you think you can do anything as great as that in the future? noubar: david, what matters more to me is actually create, and that is what it is all about. that is what flagship is about. we are an experiment of whether you can institutionally make a huge impact regardless of what
field we are in and create companies who can realize that impact. if we could do that systematically over and over again, that is such a defiant thought to conventional wisdom that says rare things only happen rarely. we are saying we can generate an engine that can produce companies that might be a moderna or 10 times a moderna or 1/10 of a moderna. moderna was not our design goal. moderna was the result of a process that we had already operated. it was called ls18 when it was born. it was the 18th such project we have done. david: sometimes people say, i don't like to see people be too successful. can you make people feel better by saying you failed at something? have any of your companies not worked out? you said, this did not work and just write it off, did that ever happen? noubar: many of them. in our case, quite a bit differently than, it is an investment and i write it off.
i cannot write it off. we own the entire entity. we cannot wash ourselves from a particular company. look, maybe i will step back and say it very quickly, what we are about, the reason we use the word "pioneering," is we leap into things that are not yet known to be viable and try to make them real. inevitably, you leap to places where there is no value. david: going forward, leave vaccines out for a moment. what are the one or two or three things you are most interested in trying to do in biotech that's going to make my life better, other people's life better? anything to make me live longer? live healthier, avoid cancer, anything like that? noubar: one major theme that inspires us is what we call preemptive medicine or health security. what we mean by that is we observe that what we call today health care is really a euphemism for sick care. the way you know that is because you have to get sick to get any of it.
other than that, there is fitness and living a good life, but we know scientifically the beginnings of disease go way before we know we have a disease. and if we could intervene at that time and delay or completely deter the disease, we have a very different health care cost challenge, let alone lifestyle. currently, there is no way of developing products for that field. the fda does not regulate it. they will not let you do it. insurance will not reimburse it. they need a good disease, let alone a very advanced one, to do their thing. we have to change that mindset. how can flagship contribute to this? and we are doing this, we started five different platform companies that attack that, whether it is creating new vaccines that protect the floor there is a threat, all those things are trying to create an environment where governments and other corporations start to doing that. david: today, i would say, the average person's lifespan is in the mid 80's or something like that.
do you think it is possible through things you might develop to live to 100, 110, 120? is that a good or bad thing? noubar: it is possible, i'm not sure it is a good thing. let alone on a planet that is dying. we have to think about our existence not only as individuals any more than our hepatocytes in our liver think of whether we are going to live. if we don't start thinking about whether our planet is going to live, it is a moot point whether we as individuals live to 110. there is a reckoning, we have to create an environment within which it is worth living. david: did your parents live to see your success? noubar: my parents -- i lost my parents in the late 1990's and early 2000's. they saw a far greater success than they would have ever imagined or wanted. they did not see the most recent few years, let alone the last 12 months, but i know they felt the decisions they made on behalf of their children, particularly moving us to north america, and
giving us the opportunity this country gave us as having been more than validated. david: what keeps you motivated? you are wealthy by any normal human standard. you could retire tomorrow and be famous for what you did with moderna among other things. what keeps you motivated to keep working so hard and doing these things and not spending your money on lavish toys rich people like to buy? noubar: i really do think we have seen the beginnings of a startup industry in this country that has revolutionized the world. i think the next few decades, that institution will become professionalized, institutionalized, and will do in the creativity world what institutional investors did in the financial world. and i am drawn to being one of the pioneers of that. if i can show one way of doing it, organizationally, kind of just methodologically, and that leads to companies that do this for a living, that interests me as a lasting impact. of course, the fact that every single thing we work on has societal impact.
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