Watershed: Jonathan Wang (CEO) & Mark Kalinich (CSO)
“What excites me about working at Watershed is tackling an extremely difficult problem that most people think can’t be solved.”
Generating data in biology is easier than ever. Technological advances in sequencing have lowered costs, and enabled bench scientists to create large datasets with unprecedented speed. Recent, tour de force efforts mapping the complete human genome, will further fuel computational discovery in the coming decades.
Speaking to his time as a graduate student, Dr. Mark Kalinich, CSO of Watershed Informatics, says: “I realized the rate-limiting step had really changed from making data to analyzing and interpreting it.” Watershed aims to be the first end-to-end bioinformatics solution for scientists working with big data in biology, starting with “multi-omics” datasets. Their full stack Cloud Data Lab has several components: i) managed Watershed Clusters to import, store and access data ii) Jobs Dashboard to easily run computationally intensive jobs in parallel and track their status iii) No-code/low-code Notebooks that allow biologists to perform analysis and data visualization quickly and intuitively. Watershed’s mission is to abolish slow turnaround times for data analysis, facilitate communication between “wet” and “dry” lab scientists, and ultimately promote more insightful science. We are in the midst of a digital revolution in the life sciences—Watershed aims to be a key part of the computational infrastructure enabling this transformation.
Founded in 2019, Watershed is the vision of Jonathan Wang (CEO) and Dr. Mark Kalinich (CSO). Jonathan and Mark met as undergraduates at MIT, and remained close friends after graduation. Jonathan, an expert in computer architecture and software optimization, previously founded a quantitative hedge fund where he developed an integrative, low-code platform to empower coworker collaboration. Mark earned his MD-PhD from Harvard Medical School, where he realized that the bottleneck in his cancer research lab was not data availability, but rather the specialized programming knowledge required for making sense of large datasets. Uniquely suited to tackle this problem, Jonathan and Mark teamed up to found Watershed. Currently a team of 10, the Boston-based venture raised a seed round with Bessemer Venture Partners in 2021. With dozens of customers across academia and industry, Watershed is steadily growing its platform’s capabilities.
Below is an interview with Jonathan Wang (CEO) and Mark Kalinich (CSO) of Watershed from July 2022:
1. Briefly describe your background, and the moment you decided to jump from academia or finance into starting Watershed?
Jonathan: After I graduated from MIT undergrad, I founded Domeyard, a high frequency trading firm. HFT is essentially very high-powered computing combined with very high-powered machine learning models. Through my friendship with Mark, I got to hear about his individual experience: even at a top-tier research institution that was very well funded he was still facing issues [lack of quick access to high-powered data analysis tools].
Part [of HFT] is having data and computational firepower, but the other part is being able to turn around research in a very short amount of time—think hours, not weeks or months. Part of my role in building up the [HFT] company was managing the entire tech stack—implementing low latency trading engines and also building the platform that supported the machine learning research team. So, coming from this background, Mark and I saw huge opportunity to create something new here [in biology] and revolutionize this space. As an engineer, developer, and entrepreneur, [Watershed] was such a compelling opportunity for me. We still have such high conviction that this platform will really catalyze this space. It was a pretty easy decision to switch over [from finance] and start Watershed.
Mark: Three years ago, I was wrapping up my PhD and waiting to get some data, which was slowing down my [dissertation] defense. It was at that point that I realized the rate-limiting step for me, and the rest of the field, had really changed from making data to analyzing and interpreting it. This analysis bottleneck ultimately slows down the process of making better drugs faster and putting them into the people who will benefit the most from them. After I went through third year [of medical school] I reflected on why I started this physician-scientist track in the first place, which was to figure out how to make people better and build better drugs and diagnostics faster. As I finished med school, I became more and more convinced that the best way I could do that is to make a company like Watershed. One that enables the entire biotech and biopharma ecosystem to 10x their analytic capabilities—to abstract away all the problems they were facing.
[Mark earned his MD-PhD from Harvard Medical School in 2021, working in the labs of Mehmet Toner, Daniel Haber and Shyamala Maheswaran on circulating tumor cell detection and clinical application.]
2. What is one book that has influenced the way you think, which you would recommend to fellow scientists or entrepreneurs?
Mark: For someone who is a scientist thinking of going into entrepreneurship, I would definitely recommend Disciplined Entrepreneurship by Bill Aulet. It is a color by numbers guide to building a successful innovation driven startup from zero to IPO. He [Aulet] is an MIT Professor of Innovation. What the book is really good at, is taking people who are highly technical scientists and forcing them to stop fixating on how cool their tech is, and instead figure out how to turn it into a complete product that you can deliver at scale—to a sufficiently large market to make it a successful venture.
Jonathan: Same book as well. One of the most important lessons is that there are concrete things you can do regardless of your background, technical or non-technical, business, or non-business education. This is often the most important thing that founders don’t get—they think that building a company entails hiring very specialized people to do every single thing. One of the lessons [from the book] is that when you really break it down there are 24 high level but concrete steps you can do – being a founder is not just about having a vision. Seeing these concrete steps helps us as co-founders stay grounded in day-to-day activities that we need to do in running a business.
3. What is the elevator pitch for Watershed? What is the company’s vision and has this changed over time?
Jonathan: Our larger vision has been consistent since we founded the company: to become the dominant biocomputing platform for the world’s scientists. We have always seen the potential of data storage and compute in this industry.
[Though our vision has not changed] We have refined it as we have gone along—the checklist of things, such as scientific analysis workflows, that we can deliver to certain beachhead customers that will make Watershed their go-to. And then: how do we go from that beachhead market to the next market? We have broken it down into fine grain steps—there is a responsibility for founders to carefully craft tangible mission statements for each point in the process.
[Watershed has two white papers, which can be downloaded on their website]
4. Briefly what is the company's current stage and size?
Mark: We have a team of ten, split evenly between bioinformatics and software engineers. This reflects our vision and philosophy that Watershed is at the interface of computer science, software and biology. We are post-seed stage and raised a round with Bessemer venture partners in early 2021. We have been really pleased with the exponential growth we have seen over the last two quarters—based on both the number of clients as well as absolute revenue trends.
5. What excites you most about working at Watershed? Briefly, what is the magic sauce or competitive advantage?
Mark: Why did I even go into medicine? To make people better, and to build better drugs and diagnostics for people. Watching our clients, these R&D teams, take Watershed and be able to get the insights they need in an afternoon rather than a month is really exciting. In terms of things that are similar to my training in science and medicine, it is a lot of the same algorithms and analysis—such as alignment tools or pathway enrichment analysis. However, the speed at which industry moves—going from 0 to a half million-dollar engagement in a couple months—is different. Also, candidly the quality of the bioinformatics analysis is different. We [at Watershed] are fanatical about quality control. It is absolutely unacceptable to have the platform generate a subpar analysis for a customer, in a way that you might not necessarily see in academia, especially for more exploratory, bespoke analyses.
Jonathan: The team is one of our strengths. What excites me about working at Watershed is tackling an extremely difficult problem that most people think can’t be solved. I don’t even just mean the technology, but user experience and commercialization as well. We have hired very strong thinkers, very strong problem solvers. People who don’t bin themselves into one role or another and aren’t afraid to dig into something completely outside of their domain. That is the culture we have—people excited by tough problems. People who are willing to say: ‘let me try working on this bioinformatics API, even though I am not a bioinformatician by training’ or ‘as a bioinformatician, let me think about high performance computing even though it is something I didn’t learn in school.’ This [culture] is really one of our biggest competitive advantages over everyone else.
6. What are you currently working hardest on at Watershed? What are the upcoming milestones you are using to keep motivated?
Mark: Top of mind for us as founders is commercialization of the product we have built. We have a product, it is in clients’ hands, and they pay well for it. Now we need to go from having a couple dozen to a couple hundred clients. This is the area we have the least pre-existing expertise: I am a physician-scientist, Jonathan is a quantitative trader. We are able to do basic marketing, but for the next 18-24 months the focus of our organization will be to build out the required commercialization machinery. The key hires going forward will be commercialization professionals who can drive the product into customers’ hands.
7. What is another biotech (public or private) that you think serves as a paragon of an impactful company? What are the key learnings from this case study?
Mark: On my side, from a biotech perspective, I am really inspired and impressed with what Genentech was able to do. it all started with one scientist, Herbert Boyer, and one investor Bob Swanson, who had this crazy idea: maybe we can use these newfangled restriction enzymes to make synthetic DNA and synthetic insulin—thinking forward maybe we can make a synthetic anything. Everyone thought they were insane. They stayed laser focused on building out the data to prove their hypothesis—once they had it, they birthed an entire industry: biotechnology. Since then, they have become what everyone knows as Genentech, and are still today on the cutting-edge of innovation. For example, they bring in people like Aviv Regev whom we have a huge amount of respect for. If she happens to be reading – we’d love to chat! By finding a contrarian truth and really acting on it, they [Genentech] built a whole industry.
8. As a new entrepreneur, what are some of the issues you have faced? Did you have any mentors that helped you make the transition to industry?
Mark: The standard issue is that hiring is tough, but this is not specific to entrepreneurship. A founder related issue is that raising money is grueling. We talked to 47 different VC firms before we ended up getting a term sheet for the seed raise—what I wish I would have known is that this is expected in the industry. You are going to need to talk to a bunch of VCs, somewhere between 40-80, and it will take up most of your time for several months. But eventually it can pay off, and in our case we are extremely lucky to have brought in Bessemer Venture Partners who has been a fantastic partner over the past several years.
On the topic of academic supporters, one person who has been a consistent help, for me and half of Boston biotech, is Bob Langer. I was an undergrad in his group, and he was fantastic when we were first getting spun up—around giving us some startup advice and helping to think through a few strategic questions. I can’t say enough good things about Bob. My thesis advisors have also been incredibly supportive—they clearly saw this problem in the lab and how solving it would take a venture scale business. Daniel Haber specifically has provided invaluable feedback about the product and strategic advice for unmet needs in biopharma.
9. In today’s climate what is one short piece of advice you would give to prospective biotech entrepreneurs?
Mark: For me, the thing that I learned was the importance of building a culture and establishing the values that your company has. I didn’t realize how critical [as a co-founder] it is to build the culture -- the DNA of an organization—it is both something that attracts and attains the right people, but also repel candidates who are not the right hires for your organization. Our vision and culture puts boundaries on the actions of the organization. So that everyone understands: here are the corporate values and core values we have. These serve as roadmap towards achieving Watershed’s vision.
10. What has most impressed you about any experienced or thoughtful investors with which you have interacted?
Jonathan: We have had really good experiences with investors who are willing to get their hands dirty, and really dig deeply into tough problems, such as Andrew Hedin and John Capodilupo. Not necessarily just operators who have become investors, but people who are really willing to do their own research, think about problems, and talk to customers on their own [for internal diligence]. Investors who really become experts—in a lot of ways it echoes how we feel about bringing people onto the Watershed team.
11. Any recent announcements?
Mark: we are very actively looking for senior commercialization executives, specifically a head of sales and head of marketing. If those people have previous experience in B2B SaaS, ideally with a flavor of Bio or Bio-IT, even better. We are always looking for talented software engineers or bioinformaticians.
Anyone that wants to solve these problems—we are very happy to chat with you!