Steve Chapman of Natera: Five Things You Need To Create A Highly Successful Startup

An Interview With Paul Moss

Relentless focus on the customer. At Natera, we focus on having highly accurate testing, but also having an amazing customer experience. Traditional diagnostic companies have not focused as much on the patient and physician experience. We tried to upend that dynamic and make the Natera experience more like that of a tech company — we now offer mobile blood draw options, online sample tracking, and give patients same day access to speak with board certified genetic counselors. This relentless focus on the customer has been one of the keys to our success.

Startups have such a glamorous reputation. Companies like Facebook, Instagram, Youtube, Uber, and Airbnb once started as scrappy startups with huge dreams and huge obstacles.

Yet we of course know that most startups don’t end up as success stories. What does a founder or a founding team need to know to create a highly successful startup?

In this series, called “Five Things You Need To Create A Highly Successful Startup” we are talking to experienced and successful founders and business leaders who can share stories from their experience about what it takes to create a highly successful startup.

I had the pleasure of interviewing Steve Chapman.

Steve Chapman is Natera’s Chief Executive Officer and serves on the company’s board of directors. Mr. Chapman joined Natera in 2010 as Vice President of Sales, later becoming Chief Commercial Officer and then Chief Operating Officer. Mr. Chapman was appointed CEO in January 2019 and has been instrumental in extending Natera’s core technology to address new organ health and oncology markets, achieving rapid commercial growth for the Prospera™ transplant assessment test and establishing Natera’s leadership in molecular residual disease testing with Signatera.™

Thank you so much for joining us in this interview series! Before we dive in, our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?

I completed my degree in human genetics at UCLA, and then worked as a researcher in the laboratory. In the early 2000s, I took a business position with an early genetic diagnostic company. I was on the front lines working to implement the first generation of genetic tests into routine clinical care, while building a multi-million-dollar business.

In 2010, I joined Natera as one of its first employees. Over the years, I’ve held various roles including Chief Commercial Officer, Chief Operating Officer, and now Chief Executive Officer. Since 2010, we’ve experienced incredible growth — going from zero to performing more than 1 million tests in our laboratory per year. We are now widely recognized as the market leader in the rapidly growing field of cell-free DNA technology (cfDNA), where we have developed and launched tests across women’s health, oncology, and organ health. In women’s health, our Panorama non-invasive prenatal test (NIPT) can identify severe genetic disorders as early as 9 weeks in pregnancy, from a simple blood draw. In oncology, our Signatera personalized minimal residual disease (MRD) test can accurately detect cancer recurrence up to two years in advance of imaging. In organ health, our Prospera test can help determine whether a transplanted organ is rejecting, from a simple blood draw.

What was the “Aha Moment” that led to the idea for your current company? Can you share that story with us?

Natera was started because of a personal ‘aha’ moment that our founder Matt Rabinowitz experienced. In 2004, Matt’s sister gave birth to a son with a severe genetic disorder, who passed away six days after birth. It was a devastating experience for his family. He founded Natera on the principle that all families deserve access to technologies that offer early detection of genetic disease. As one of the earliest employees of Natera, I was able to help turn Matt’s personal inspiration into a successful company, developing and commercializing highly accurate blood tests that are now helping millions of people.

Was there somebody in your life who inspired or helped you to start your journey with your business? Can you share a story with us?

The personal stories of our employees, physician partners, and patients have inspired me to take things to the next level, with the goal of enabling access to our tests for as many patients as possible.

What do you think makes your company stand out? Can you share a story?

What’s unique about Natera is the impact our products make on people around the world. When someone sends a test to our lab, it’s one of the most important moments of their life: the health of their baby, the success of their organ transplant, or learning the status of their cancer. There’s a person behind each sample that we process, and that’s an easy purpose for us to rally around. I’d like to share an example from our oncology business unit, and our product Signatera.

Signatera is a personalized cancer test that uses each patient’s unique tumor to create an individual diagnostic test — just for the patient — that can detect cancer recurrence up to two years earlier than imaging. Signatera has now been studied in 12 peer reviewed publications across 25 different tumor types, including colorectal, breast, lung, bladder, melanoma, and ovarian cancers. Signatera has been approved by Medicare for use in Stage II and III colorectal cancers and was just awarded the coveted Advanced Diagnostic Laboratory Test (ADLT) designation — a designation reserved for one-of-a-kind diagnostic tests.

When we launched Signatera, I was contacted by one of my best friends from early childhood who had recently been diagnosed with colorectal cancer. He had heard about Signatera on the news and contacted me for more information. His doctor was able to order Signatera for him, and he is now using it quarterly to track for disease recurrence — which in colorectal cancer we can detect with 93% sensitivity on average 8 months before imaging. We hear these types of personal stories all the time, and its very motivating to know that what we do everyday helps people in such as significant way.

How have you used your success to bring goodness to the world?

We think it’s important for everyone to have access to high-quality testing. We have spent millions of dollars investing in clinical trials to generate the evidence necessary to expand access to our testing services. When we launched our non-invasive prenatal test (NIPT) Panorama in 2013, it was not covered by any insurance companies thus limiting access for many patients. We invested heavily in generating clinical evidence, including funding the largest prospective, multi-site trial ever done in the field of NIPT, the SMART study. Now, we have more than 25 peer-reviewed NIPT publications and have studied more than 1 million subjects. Natera’s investment into data generation was the foundation for expanding access to more patients, and in late 2020 the American Congress of Obstetrics and Gynecology recommended NIPT’s like Panorama be offered to all pregnant women. Today, we are testing roughly 25% of all pregnancies in the U.S. and growing rapidly.

Similarly, we wanted to help cancer patients with our Signatera test. We’ve now shown that we can detect colorectal cancer recurrence on average about 8 months before imaging, with 93% sensitivity. After investing to generate the required peer-reviewed evidence, Medicare has now approved the test for stage II and III colorectal patients. We are expecting to gain coverage for Stage IV colorectal cancer patients, along with many other tumor types in the near future.

You are a successful business leader. Which three character traits do you think were most instrumental to your success? Can you please share a story or example for each?

• It’s important to capitalize on opportunities as they arise. We developed the Signatera test to detect cancer recurrence earlier than traditional methods. We identified cancer recurrence monitoring as a key unmet clinical need that wasn’t being served by other liquid biopsy technologies, and the use case was also a perfect match for our core platform technology. We saw the opportunity to make an impact on cancer care and committed ourselves to making it happen.
• Its important to trust your instincts. There will be many times where you as the leader must make a decision, sometimes against the consensus and most times with imperfect data. That can be difficult to do, but you need to have the confidence to believe in your decisions and act on them quickly.
• It’s important to learn from others. There are some smart people and great companies out there who have different experiences or approaches than you do. It’s also important that you recognize where you are personally strong, and where you are weak. You need to hire people around you who can augment your strengths and fill in for your weaknesses, and proactively work on improving yourself. Do not think that your above doing the hard work to improve. I still make note cards and study things I need to touch up on.
• It’s important to stay connected to the customer and understand what’s going on at the ground level. I frequently meet with customers and our employees to stay connected. Some of our best ideas, and many of our strategic shifts have come from simply getting out and talking to employees and customers.

Often leaders are asked to share the best advice they received. But let’s reverse the question. Can you share a story about advice you’ve received that you now wish you never followed?

The old paradigm of expecting employees to blindly follow leadership directives no longer applies. It’s important to explain why decisions are being made and give context. This results in a stronger commitment by your team to getting the job done.

Can you tell us a story about the hard times that you faced when you first started your journey?

Non-invasive prenatal testing was first developed and launched in the US in 2011. At that time, Natera had an amazing technology, but we were not ready to put Panorama on the market. It was heart breaking to see competitors launch their own NIPT’s, while we sat on the sidelines. When we launched Panorama in 2013, we were the 4th to market, and there was a lot of uncertainty about how we would do. Today, I’m proud to say we are by far the market leader, testing roughly 25% of all pregnancies in the U.S. and growing rapidly.

Where did you get the drive to continue even though things were so hard? What strategies or techniques did you use to help overcome those challenges?

It’s important to set both short- and long-term goals for yourself and for the company. Achieving key milestones can be highly motivating, even if they are just steppingstones toward the ultimate goal.

The journey of an entrepreneur is never easy, and is filled with challenges, failures, setbacks, as well as joys, thrills and celebrations. Can you share a few ideas or stories from your experience about how to successfully ride the emotional highs & lows of being a founder”?

One of the most difficult times at Natera was in the first few years after our IPO. After the initial excitement of going public at over $1 billion dollars, we saw our valuation drop significantly. Employee morale was down because our efforts were not being recognized. We were expanding our core platform technology to organ health and oncology, but we had not yet launched Signatera or Prospera. The tides turned in our favor as we hit significant milestones in oncology and organ health while continuing to execute in the women’s health business. We stayed the course and are now able to help millions of cancer and transplant patients around the world. Our achievements have been recognized broadly across the industry, and our employees are feeling very proud of what we’ve accomplished.

Let’s imagine that a young founder comes to you and asks your advice about whether venture capital or bootstrapping is best for them? What would you advise them? Can you kindly share a few things a founder should look at to determine if fundraising or bootstrapping is the right choice?

We have worked with some great venture capital partners, their wisdom and support in helping us scale and grow was a very valuable.

Ok super. Here is the main question of our interview. Many startups are not successful, and some are very successful. From your experience or perspective, what are the main factors that distinguish successful startups from unsuccessful ones? What are your “Five Things You Need To Create A Highly Successful Startup”? If you can, please share a story or an example for each.

• Do something you love. This stage of your life will be dedicated to making your start up successful. If you don’t love it, you won’t have the drive or commitment to see it through.
• Have a clear long-term vision that the company and investors can get behind, but don’t forget to set short term goals and milestones to track your performance.
• Hire amazing talent. The team you hire will determine the success of your company.
• Relentless focus on the customer. At Natera, we focus on having highly accurate testing, but also having an amazing customer experience. Traditional diagnostic companies have not focused as much on the patient and physician experience. We tried to upend that dynamic and make the Natera experience more like that of a tech company — we now offer mobile blood draw options, online sample tracking, and give patients same day access to speak with board certified genetic counselors. This relentless focus on the customer has been one of the keys to our success.
• Stay paranoid about competition. Once you’re on the market this is one of the most important factors of success. My default position is that our competition is ahead of us, and we just don’t know it yet. You cannot get complacent, or you will be left behind.

What are the most common mistakes you have seen CEOs & founders make when they start a business? What can be done to avoid those errors?

Don’t get discouraged because someone beats you to market or there’s a competitor already on the market. Being first to market can be helpful, but it’s not the only factor to success.

Don’t assume the customers are going to love your product just because you have a great technology — you need to also have amazing customer experience, and a strong commercial strategy.

Don’t get too stuck on one path for your company. We started out focusing on the infertility testing market — but now focus on women’s health, oncology and organ health. Go where the opportunity is!

Startup founders often work extremely long hours and it’s easy to burn the candle at both ends. What would you recommend to founders about how to best take care of their physical and mental wellness when starting a company?

I try to stay off email certain times of the day. For example, I rarely check my email immediately when I wake up, or right before bed. It’s important to recognize when you’re not being productive and shut it off for a while until you refresh.

I also don’t try to clear my inbox, which itself can be stressful. What helps me is keeping a list of the most important things I need to accomplish. As new emails come in, I flag the ones that are important and either respond immediately or add the item to my hot list.

You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)

In the future, I think everyone is going to have genetic testing to improve their overall health. In the last 15 years we’ve seen genetic testing become common in prenatal and oncology care. These sectors cover large portions of the U.S. population. As the clinical utility in other sectors becomes evident, testing will continue to expand to more and more people. Overtime, it will probably make more sense do a whole genome sequence on everyone, rather than going indication by indication.

We are blessed that some very prominent names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US with whom you would love to have a private breakfast or lunch, and why? He or she might just see this if we tag them.

I’ve recently taken up tennis, so I’d love to meet Novak Djokovic. The intensity and consistency at which he competes is incredible. The ability to stay on top year after year despite the significant competition is inspiring.

How can our readers further follow your work online?

We invite physicians and patients to visit www.natera.com for information about genetic testing, the tests that we have available and the many innovations we’ve brought to light to deliver improved patient care around the world.

This was very inspiring. Thank you so much for the time you spent with this. We wish you continued success and good health!