Welcome to startuprad.io your podcast and youtube blog covering the german startup scene with news interviews and live events. Music. Hello and welcome everybody this is joe from startuprad.io your startup podcast and youtube blog from Germany. Today, I bring you another interesting interview.
Imagine starting your career under the supervision of a Nobel laureate, diving deep into groundbreaking research and then making the bold leap into entrepreneurship, only to build a company that will become a global biotech powerhouse.
Today, we're talking to Professor Detlef Reisner, a scientist turned entrepreneur who started his academic journey at Heinrich Heine University and Technical University Darmstadt, spent time at Princeton's Institute for Advanced Studies, and then took an even bigger leap, trying to turn cutting-edge science into a business.
But it wasn't easy. Imagine hurdles of launching a biotech startup in Germany in the 1980s, before venture capital was even a thing there, against all odds, co-founding Kia Gehen, which became the first ever German company to list on Nasdaq in 1996. And as if that wasn't enough, he later led the company as chair of the supervisory board, bringing into DAX 40 Germany's elite stock index.
What does it take to bridge science and business, to push through failures and to build a global biotech leader? That's what we'll find out today. Stay tuned. Professor Riesner, welcome to StartupRaid.io. Thank you. I'm happy to answer your questions. Yes, and I do have a lot here for you. At first, would you consider yourself to be an example other entrepreneurs could follow in what you've learned? To a particular extent, yes.
If I speak to younger people, then I say the main point is that you have a good idea. You have not to do the market to estimate the market situation.
If you can estimate the market situation then your idea is not innovative, when your idea is innovative then there is no market you have to build a new market that is an innovation that is the first point whether I have seen that at that time I don't know I do not remember but that is from the retrospective what I would say, and so today I would say yeah, it's important you have a good idea. People will sometimes use it. Mostly if you are working in academia, other academicians will use it.
And that is already okay. If other academicians will use it to the normal market, it goes later anyway. Therefore, that's the point. And the second is, yeah, If you have an academic position, you have to agree that it is a lot of additional work. And as a professor alone, you cannot do that. That is clear. So you have either to good students or to good co-operators or to very good colleagues so that you can work in a team. From the beginning on, we worked always in a team.
And I fulfilled also in future always my academic position, but I was, so to speak, the link to the science, which I could always then bring to the company, and, but the link to the science, where as the younger people had to do the link to the market, to build on the link to the market, that was not my job. And so, what you need is a lot of endurance.
And what I see and those things sometimes I saw that later, you have to have the capability, the mental capability, particularly the capability of your mindset, of your character, that you can divide success. Some people I met, they said, oh, the main point is that I have more than 50%, so I can say what to do. Nonsense. Bullshit, I would say. What to do is always the opinion of the people who give the money, and whether you have over 50 or less than 50, doesn't matter anyway.
The people who give the money they have an extremely important word for the company and we had to see that too yeah so that's the point i think and then if you have in the next seeding round you have to give up shares it's completely clear but i remember the word of mosher alafi who was one of our investors. Moshe Alaafi was a very successful Silicon Valley investor and he told us.
He said as boys, he normally called us boys, if you have 50% of a company which doesn't work well, all you have are sleepless nights.
If you have 2% of a well-running company, you are rich people that is the difference between 50 and two percent okay so that is probably the first what i have to say i don't know it did answer your question, to some extent at least yes and we may also add that is still today you are pretty active and involved i i've seen you at the larger business angel talk in november in minds we didn't get the opportunity to talk there, but they've been kind enough to help me organize this interview here.
Big thank to the organization team there. Could you share the key experiences during your time at Princeton and University of California, San Francisco that influenced the trajectory of your research? Yes, in Princeton, I worked mainly on nucleic acids and nucleic acid protein interactions. And that was important for the research when I was back. But when I have to say in Princeton, I was a postdoc and I were interested in my academic career.
I wrote already a patent, but this patent never brought any money, so it was too theoretical. So the Princeton experience was a very good personal experience and scientific experience. The impact to the company was probably not so big. And the UCSF experience, that was at the time when I had to say, oh, I set up a company, I was involved in setting up the company as a professor. I have to start now new things, yeah.
The company is running, but as a professor, I have to start new things, new scientific things, yeah. And that was the reason why I went to Stanley Prusiner for postdocs before I worked on infectious nucleic acids. And then I heard, I had a lot of contact with Stanley Prusiner, he said, there are infectious proteins. Oh, I said, how interesting. Let me go into that field now. The nucleic acids are well taken by the company already.
So the company was already working when I had my sabbatical in San Francisco. I see. Your work on virals and prions has been pioneering. What initially drew you to study these infectious agents and what were some of the challenges you faced in this research. Yeah, this question comes to the point of the company, yeah. Viroids were infectious nucleic acids. And I heard from a German colleague there that those things exist. A lot of people thought it doesn't exist at all, yeah.
A small nucleic acid cannot be worked like a complete virus. But viroids, which is probably 1% in the size, 1% of a complete virus, and viruses were thought to be the smallest infectious entities, but viroids, only a nucleic acid, 350 nucleotides, has the same phenomenology. That means it's infectious and it's pathological.
And I said oh that is extremely interesting for a physical researcher like me I have now a molecule in hand which I can handle and I can study it is simple enough, to study with physical methods if the biological system is too big at that time it was in the 70s you could not really study with physical methods, you could study with X-ray proteins. But these steroids were a complete
biological system. That was so interesting. And then we said, but…, First, we had a few micrograms from the viroid and that is very cumbersome to work with that. And we thought, okay, we have to purify. We have to develop methods to purify the viroids for our research. And then I had a very good student who was a chemist who said, okay, I will do that in my PhD work that was made in Kolpan.
I developed a chromatographer. So, we discussed a lot how this chromatography should be, and then, one or two years later. He could present really a chromatographic column which purified virals, and now we had probably suddenly milligrams of virals in our hands. And I reported that on conferences and the people said, oh, how nice, but who is interested in viroids? This is such an esoteric effect. We don't know whether it even exists. Yeah.
But for example, what people are interested, can you purify plasmids? That would be interesting. And we put plasmids on the column and it came out pure. Pure. and that was the reason why we started to work on plasmids. And then really I think that was about the time when we started about the company, what we could do with the company, purification of nucleic acid and diagnosis of nucleic acid.
For example, at that time, PCR was not developed, so one had all these hybridization methods to find mutations and those things. But then we heard back, yeah, if you have an infectious agent and plasmid is in particular cases also an infectious agent, but only in a particular sense. And you put one plasmid on a column and then the next plasmid, the columns have a memory effect. And therefore, we said, OK, the column is not the right instrument.
We have to use small kits, use it once and throw it away. And then you have no cross-contamination. And that was really the main invention of Chiagen. At that point, Diagen first and then Chiagen, that's not interesting right now. When Chiagen could sell a kit for a plasmid and the user takes the kit. He purifies his plasmid, and next day another one, or next hour another one, and there never cause contamination because he uses everything in U-column.
And that was when Kyagen started to sell worldwide the kits. And I was still involved in the company and we discussed a lot, but at that time I was already looking for the infectious protein which is a new phenomenon yeah so now you have a little bit the idea how i came to the purification to the kids together with my co-operators i i never was alone the company colpania and carsten hank and jĂĽrgen schumacher we were together four of us.
We had several ideas, but the idea of the plasmid kit, use it once and throw it away. That is a good idea for microbiology. And suddenly, and then I have to say, medical doctors could suddenly work in molecular biology because they could purify their plasmids before you have to use plasmids to do microbiology. And before, purify the plasmid took nearly two days. And the medical doctor has no time, he has patients. And he does science in the evening with students.
And therefore, with plasmid purification, there was no time left for that. And suddenly we gave him the tool at hand, so now you can work with plasmids. It fits your time scale. And then I think to describe the success of Chiragin is Chiragin brought the molecular biology to medicine. Before it was only in specialized laboratories, but then it could be done worldwide.
We'll definitely get into the key again story but before that i have one more question because you have been the share of biophysics at heinrich heine university in dĂĽsseldorf from 1980 to 2007 that's 27 years that's quite a long time and an achievement but how could you just basically balance the the responsibilities you had from all the positions your research key again and so on and so forth. Did you develop special methodologies? At first, it was an outcome of our university research.
So we did not research on the sideline. It was our main research. Viroids and to purify viroids. So nothing to do next to it, or we didn't, other things. And suddenly, and when this worked, Then we went out into the company, and then I could say, okay, I have all my lectures, everything in my institute, but this part is now taken over by the company. We had a lot of discussions, but we had it well separated. So the economic part was well separated from the university part.
And I kept this up to the day of my retirement. In my head, of course, it was always combined. But the money and what was spent and the co-workers and so on, they were working either there or there. And if there was a combination, then it was declared and everything went fine, yeah. And you have to say in Germany, when we started the company, we had no Arbeitnehmer-Erfinder-Gesetz. Yes.
Yeah. And that was very good. I told my chancellor, you see, I have to, I will set up a company next, is there any problem? He said, a company, you can do that on Saturday, and professor, you have from Monday to Friday. So I don't see any problem. And as long as you don't want to have money from me, anything is fine. But today, the universities would like to have a lot of money when you said have a company that is an enormous hurdle for small startups, I have to say.
I'm working on that, that this situation has to improve. That's the law you're referring to is basically a law that regulates if one of your employees develops an invention during work, how do you process with it? What's the legal process to assign all the benefits. Before we get, and by the way, what you've been talking about, like having certain times for your research, for your institute, and certain times for your entrepreneurial work, I think that is a technique called today time boxing.
You have certain times allocated to special duties, and you use them to the best of your abilities. Before we dive into the KIAGEN story, I'd love to hear from our audience if you could ask a biotech pioneer like Professor Riesner one question. What would it be? Drop your thoughts down here in the comments. In 1984, you co-founded KIAGEN with the doctoral students.
What motivated you to the transitions from academia to entrepreneurship and how did your academic background influence the company's direction? I mean, we already know it is a application of your research, but I do believe you applied a few more things from your academic background into the company, right? Okay, I have to say that is a little bit in my personal mindset. I never, I studied physics, atomic physics and biophysics, yeah?
And then later on in my PhD work, I went more to biophysics or to pure biophysics. But I had always in mind, oh. Academic career is only one possibility for me. I can work with a company and anything else. I would always like to work scientifically, not only to sell things. This is only a good profession to sell things. But I think I have to work in science, in research. But whether I will do that my life in academia or in a company, I was not fixed.
That means I worked already on a patent before KayaGen, this patent was not very successful, that doesn't matter, but therefore I had always a look into that direction. And then there were these three students coming with me from Darmstadt Institute of Technology. We went together to Dusseldorf, and we discussed a lot, what could we do? And these younger people, they were, of course, not fixed to academia.
I was at that time already a little bit more fixed to academia, but we discussed what can we do else? And where is our research good for? And so these ideas were generated. And there were no particular time boxes or so. You cannot box your brain into different sections. But you have to control that the obligations to the university have to be fulfilled, 100%. And I never skipped a lecture for a discussion with the company, also not later, never.
The company had to take care of my time box, not the other way around, which always worked pretty well, I have to say. And okay, what was next? Yeah, how I could separate that pretty well, yeah. And I think this came from the beginning, I say, for the company, I'm advisor, but I never went to the management. And that was the main point. My three students, they established the management. I was on the advisory board, advisory job, yeah. And therefore, we had a clear separation.
And I would tell all the younger people, do this separation as soon as you can do it. Otherwise, you have only trouble. And therefore, I never had trouble with the university because everything was fulfilled. And the other point is, there were not only the three students.
As a university professor if you like to do research you never can do it alone you can do it only with the best of the students, and therefore I had to give very good lectures I feel maybe I'm a little bit superstitious but I think I gave good lectures to attract good students and then you can do good research at the university if you say I do research and lectures are a little bit, take a lot, too much time, wrong, completely wrong, yeah?
The other way around. Good lectures bring you the best students and with them you can do good research. And this went through my whole 26 years on the University of DĂĽsseldorf, yeah? It started in Darmstadt, it started in Darmstadt, I have to say. And for everybody who doesn't have an academic biotech background, I'll link a lot of Wikipedia articles, prions, plasmid, virons, and so on and so forth.
Of course, TU Darmstadt as well as the Heinrich Heine University, of course, so everybody can learn a little bit more there. We already talked about Kiagen. There was like a different name in the beginning. That's why you're talking about Kiagen and Kiagen. But the entity, that was a spin-off, one of the first biotech spin-offs from a German university. As you said, there was not the law that regulates what happens if one of your employees invent something.
But I'm sure you also encountered different hurdles. Plus, there was a very interesting story you have in your book. By the way, you wrote a book about your experiences. unfortunately it's already sold out but I do have, one physical example here from you thank you very much for that for people who are really interested in the book I have a lot of issues at home if they write to me I send them an issue.
Ok and my question would be what hurdles did you face there because I remember from the book you came to Dusseldorf they said ok what are you going to bring to us And then you said, OK, we do already have an idea for a company. And I do remember that the Sparkasse, the thrift organization of DĂĽsseldorf, was quite helpful there. Can you talk about a few other hurdles and, of course, the story of DĂĽsseldorf?
Because when I remember this correctly, there was a great investment for the local organization. Yeah, they were not alone. First, we had another, the owner of another company who was interested in the technology. Later on, we had a lot of problems with him. And the Sparkasse, there was a particular opinion in the Sparkasse. What can we do with the university together to improve the economy in DĂĽsseldorf? And there we had a discussion.
And the discussion was in that way, it's okay, we have to talk, but not much will come out. And then suddenly I said to the president of the Sparkasse, yeah, we have the plans for a company in the desk. And he said, what do you need? We said, 10 million. And he said, right away, I work on that to get the money. That we will get the money. So that was in a minute, this decision. And that, okay, if we have that support, then we can start.
And then with the Sparkasse, when you have such an inventor, investor, he did not give 10 millions. Over the time, he gave 6 millions over the time. But he got back 240 millions later, to tell you the relationship. But then there was another venture capitalist, TVN in Munich, they got involved and I think then the government, the North Rhein-Westphalian government said, okay, we can support that. Let's see what's coming out.
It's new that we support the start-up from the university. And then by recommendation of Charles Weisman from ZĂĽrich, there was Moshe Alafi got interested. In California, he had, for example, started Applied Biosystems, a very successful company. And we met with him and we told him what we are doing and so on. And he took a sheet of paper and wrote down one million investment. So this was really decisions on the point, I have to say. Yeah.
And he and Moshalafi, I have to say, he looked to the young people in the company, not to me, to the young people. What do they do? Is there fire in these people? And he had the right judgment and therefore he gave the money. And so these hurdles were so then we had the money to start. And then the problem was a laboratory. I have to say in there is always an intermediate time where the laboratory is still in the university, but as soon as possible out of the university.
Have your own laboratories, yeah. Then it's a clear cut. And this took some time. And later on there was a company, Henkel in DĂĽsseldorf, who had. A level in a building with empty laboratories, which we could rebuild for our work, yeah. And so we started there, and later on, of course, it was too small, and we had to build our own, and so on, and so on, yeah. But these were the hurdles a little bit. The money first, one has to have good connections to get the money, yeah.
And then the laboratory space So what was no hurdle, what was our starting capital, so the idea and the people and the mood of the people, yeah. That was our capital and the money and the laboratory space we had to acquire, to say that. As we said, with KIA again, the kickoff, as you already mentioned, was a two-part single-use plastic system for nucleate acid extraction. That was a game changer, obviously.
You already talked about the innovation process behind this product, and you said normal doctors became part or could do biological research with that. I also remember that you have been hired in terms of the woods in Germany, Dyeing, Waldstäben, to also do some research there where you apply to your research. Yeah, the Waldsterben, that was the funny thing, I have to say, even people thought, oh, in two years there is no single tree in Germany.
If you listen to the press, yeah, then there was meaning in two years there is no single tree in Germany. We never thought that it was so serious, but we developed tests and we used again our methodological and our knowledge on RNA aid technology. And then we developed those tests and we published it. And of course, it was interesting even for investors, but this was not really part of the business. It was besides the business. It was good for our technology training, I have to say.
And for example, it was very good at that time, one could get good grants for Waldsterben. And that was good for my laboratory, I could buy new instruments, and these instruments were of course used for other experiments, not only for Waldsterben. Yeah. And therefore, and you know, Waldsterben in Germany stopped at a particular date. And on one day, Waldsterben stopped. Do you know that?
No no but but i vividly remember when i was a small kid i remembered coverage everywhere in the press in the news bald stem the woods are dying in germany due to um um, and then there probably came the catastrophe of the atomic mile in chernobyl and on the day of the press moved to Chernobyl and Waldsterben was forgotten it was, funny I say that was the end of the Waldsterben in Germany, the catastrophe of Chernobyl but naja so we have not to discuss further Waldsterben
Waldsterben was an episode it was a scientific interesting episode when I later met somebody from the minister who gave us money.
And I asked him what is the outcome of the Waldsterben and he said there is a lot of outcome because the Waldsterben gave the money and now we have forest science before we had in universities only forest economy and since the time of Waldsterben we have a forest science in good universities so I did not look at that because we did not believe then forest science But that was an outcome which one should not estimate too small, that we have in Germany now a good forest science. Yeah.
Okay. So far to Waldstern. Jumping forward a few years in 1996, you were the first company to be listed on Nasdaq. As we've already discussed, you were co-founder, you were advisor. Have you been at this time on the supervisory board of Kia Gin? Yeah, but I was not the chairman of the supervisory board. The chairman was at that time a very well-known banker, Carsten Peter Clausen. And he was with the beginning. He helped us a lot with financial difficulty
situation, yeah, situations. And then we were happy. He really guided the tour to the NASDAQ. Together with Goldman Sachs. Anyway I think the best underwriter you could get at that time.
And later on, when Professor Clausen reached his age of 72, he had to leave the board and i followed him as a chairman yeah i would be interested you've been there the first company before we get to that how because i do understand there are two people that helped you to get listed on nasdaq but i was i was wondering what went through your mind when you met at the company and at the first time somebody said oh guys uh you're here in germany but let's go over to new york
city and list your nasdaq what were your first thought about that, now yeah we had a good people who were good consultants yeah the and our our investors, they knew how to do those things and nasdaq they said the nasdaq is america and there's the most money which they will buy shares and the share price can then increase. In Germany, we had only the normal Börse, but we were too small to go to the German Börse and the small Börse came later in Germany.
And therefore, we had to set over the company of KayaGen in holding, in Namen Lose Vernotschap, that was a Dutch holding of the company, and we went to the Nasdaq with the Namen Lose Vernotschap. And they knew how to work with Nasdaq. In German, the German companies, they could not go to Nasdaq at that time, yeah? Whether there were fiscal improvements, that was not my business in the company, yeah?
But we knew with the Namenloser Vernotchapp and with it being public, we could collect more money. That is, yeah. And we could grow in Hilden, near DĂĽsseldorf, because we had no money, more money, and then we started the whole diagnostic part of the company. Before, we were really the purification company, and then we had the purification technology and the nucleic ethic diagnostic part. And that was only with the money of the IPO.
I see. And the Namlose Vermotrapp is basically the key again N.V. Many people would have come by a Dutch company called N.V. Also there that is just a legal form. So basically you moved your entity to the Netherlands and there you could so you could list on Nasdaq. Yeah, but entity, the whole thing, that means in later time, we were 50 people in the Netherlands, but 1,500 in DĂĽsseldorf, yeah. That is the ratio about. I see. Have you any story about being the first company to be listed on Nasdaq?
How were you perceived in Germany and in the US? I could imagine in the US it was no news. But how did people react here in Germany about your listing? Oh, this is hard to remember how they react. You see, during the first years when we had the company, my colleagues were always friendly, I have to say that. Sometimes they were friendly to me, but in the backyard of their brain, they thought that it will not take long and he will come down again.
But they never said to me. They were only friendly to me. And then, of course, there was really, I have to say, then probably there was admiration. When we said we could develop the company, now we are on IPO and the company is very close to several hundred million value. Yeah, then there was a say, then a lot of people said, okay, that is really a success. And some colleagues told me, you know, for molecular biology,
I know much more than you, Detlef Riesner, but you did it. And I was afraid to do it. So there was this open admiration. They said, you did it. And therefore you were successful. And then after IPO, the stock went up and then went down and went up and down. That is normal. And then the biotechnology bubble was bursting in the beginning of 2000. But the company, of course, the company went on and they earned money already.
These are two independent things. The revenues of the company and the value as a stock market. Sometimes they are completely decoupled. Thanks, Scott. They are decoupled. And Kia again went on and, of course, recovered from the low stock price. Hey, guys. This is Joe from startup.io. At the time when I'm reviewing my interview with Professor Reisner, I have noticed that's almost 1 hour and 20 minutes since we try to keep our content to a certain length.
This is now the point where we'll cut this a little bit and go into episode number two published tomorrow. That's all, folks. Find more news, streams, events, and interviews at www.startuprad.io. Remember, sharing is caring. Music.