I’m excited today to be talking with my old friend, Vic Gatto, CEO and founder of Jumpstart in Nashville, Tennessee. Vic, thanks for joining. We go back a ways. You and I both started and ventured about the same time, both about the same age, the same time we met when you were at Massey Burch, and I was at Blue Chip.
“Right. I think we both did it the right way, which is learning from other people … it’s really an apprenticeship business, so it’s hard to get a degree in venture unless you go to Blue Chip or a Massey who have done it for decades, and then learn from other people and build your own style.”
Vic discussed his background and Jumpstart, which has been a significant and growing organization. “Well, I was an entrepreneur in the ’90s, and then traded teams over to be in venture.”
But before that, you were on a healthcare track, right? Premed?
“I was premed … and I loved that, [but] it’s kind of the same thing over and over and over again.” In short, Vic got out of school pretty well qualified for a career that he didn’t want anymore. “My dad was not super happy about that. He literally said, ‘I paid for your education. You have two weeks to get the hell out of my house.’”
So Vic got out and joined a FinTech startup in Boston. Fast forward to his start with Massey Burch, where he worked for 14 years, followed by another spinoff fund where he was made partner. During this time, Vic explains, “I always looked at the world from an entrepreneurial kind of mindset, meaning I questioned things … why did we do it this way?”
Many of the answers Vic got to this question just weren’t satisfying, so that’s when he started playing and experimenting with new approaches. This experimentation led him to strike out on his own in 2014, partnering with Marcus Whitney to create Jumpstart: “[There were] two primary things we wanted to do at Jumpstart, which is be stage agnostic and invest in health across stages and really focus on that industry segment.”
He added: “I feel like that’s an important industry segment that needs innovation. Then the other piece was to really try to get the incentives aligned and get better outcomes. Typically, it’s a one in four kind of hits business, and I wanted to shift that to much more likely to get to success. Because the entrepreneurs, of course, don’t have the portfolio where their risk is offset with lots of assets. All of their eggs are in one basket. So, it just felt like we could set up things to get the odds better.”
Through this podcast, we really want to explore some of the challenges and myths of doing venture outside of Silicon Valley in the Northeast. So, can you give us more of a flavor of size and scope and focus of Jumpstart?
“Yeah, so we are building a stage agnostic health investment platform. The way that I think that works is you can’t sort of boil the ocean and do it all at one moment. The way Marcus and I set it up is almost like building an assembly line. You have to start with the first part of what a car needs to look like. So, we started in the seed stage with the idea that we can go, and we’ll compete with [a] rich doctor or an angel group, but the seed stage doesn’t have a lot of highly organized funds because it’s too small. … So, we will go innovate there and then sort of grow up with the portfolio.”
What have been some of the main obstacles to doing venture outside of Silicon Valley?
“I think the barriers are really around how porous the corporations are. What I mean by that is, in Silicon Valley, it’s a competitive advantage to engage with the entrepreneurial startup world because Oracle and Cisco and Apple and Google are all hyper-competitive, and they want any edge they can get. It’s an open marketplace, and access to talent and ideas is how Oracle would stay strong, or it’s how they lose power.
“Their view is we need to be understanding of what’s coming up because usually, they rose up and took someone else down. In middle America, that’s not how corporations typically behave. They are large and insulated from the messy entrepreneurial community.”
How do you navigate that challenge when it comes to helping the startups ultimately find an exit or a home?
“If you really understand the user, then sometimes you can bring a better solution,” Vic says, before using Uber as an example, where the company “really got to know people and knew that they didn’t love the experience with taxi cabs, and then they sort of rethought that entire value chain and just picked it up and replaced it completely. That works.”
But according to Vic, that’s not always easy to do, especially in the realm of healthcare. “In healthcare, things are highly regulated … about 60% of the money comes through the federal government, [so] It’s hard to do that same thing… You don’t charge the patient; you have to charge the third party insurance company. The value networks are so intertwined that if you don’t understand the industry and how it all works, it’s much more that you build the wrong thing.”
Vic and his partner saw what many would see as an overwhelming obstacle as a challenge instead. They also felt their unique situation offered them a competitive advantage: [We knew we were] never going to compete with big Silicon Valley folks [with 40 times the capital and a much better network on the West coast], but [we could] compete against them in this very intertwined industry that needs innovation, but it has to fit with what they want.”
He added: “That’s an advantage in middle America that I can capitalize on. I’ll go head to head with any Silicon Valley firm around health innovations, because we have this huge embedded advantage that they don’t have, being in Nashville, being in middle America.”
If you want to hear more of this exciting conversation, check out the full podcast where Vic shares some real-world collaborations that illustrate the advantage he sees in not being located in Silicon Valley. You can also hear his insights on how he (a white man) and his co-founder Marcus (who is black), are working together amid this unprecedented time to bring their different backgrounds and perspectives to the table and tackle systemic racism in the startup world, in healthcare, and beyond.
