AI transcript
0:00:01 (upbeat music)
0:00:03 Here are some facts for you.
0:00:06 Half of medications that are prescribed are never taken.
0:00:10 88% of Americans are metabolically unhealthy.
0:00:11 It’s 20% of our GDP,
0:00:14 which is like double that of any other developed country.
0:00:17 Perhaps none of this is a surprise to you.
0:00:19 In fact, we’ve done several episodes on this topic,
0:00:21 which we’ll link in the show notes.
0:00:23 But what we haven’t quite touched on
0:00:25 is why it’s time for technologists
0:00:26 to step into the healthcare ring
0:00:29 because solving medicine is not enough.
0:00:30 If you cure all cancer,
0:00:33 you extend Americans lifespan by three years.
0:00:35 So in today’s episode, we explore why,
0:00:37 perhaps counterintuitively,
0:00:40 we need technologists to be solving the equally real problem
0:00:44 of making healthcare a delightful consumer-focused industry.
0:00:46 And indeed, we are seeing that trend
0:00:48 with founders from companies like Spotify
0:00:50 and Coinbase taking their aim.
0:00:53 But are these the right people for the job?
0:00:54 And can they really disentangle
0:00:56 the regulated and complex industry?
0:00:58 Listen in to find out as we explore
0:01:02 with A16Z Bio and Health General Partner Vijay Pandey
0:01:04 and investing partner Daisy Wolf.
0:01:06 So, Tech, what do you say?
0:01:07 Are you ready to build in healthcare?
0:01:11 As a reminder, the content here
0:01:13 is for informational purposes only.
0:01:15 Should not be taken as legal, business, tax,
0:01:16 or investment advice,
0:01:19 or be used to evaluate any investment or security
0:01:20 and is not directed at any investors
0:01:23 or potential investors in any A16Z fund.
0:01:25 Please note that A16Z and its affiliates
0:01:27 may also maintain investments
0:01:29 in the companies discussed in this podcast.
0:01:32 For more details, including a link to our investments,
0:01:35 please see A16Z.com/disclosures.
0:01:42 You too predicted in 2022
0:01:44 that the biggest company in the world
0:01:46 will be a consumer health tech company.
0:01:47 That’s quite the prediction.
0:01:50 So I’d love to just start out by setting the tone.
0:01:51 Where are we today?
0:01:53 Where do we sit in terms of that prediction?
0:01:54 – I think when we wrote the piece,
0:01:56 we had hot conviction.
0:01:58 But Venture is kind of a humbling business
0:02:00 where you can have great ideas
0:02:02 and the market will tell you what the market tells you.
0:02:04 I think the parts that have been exciting for me
0:02:07 is that we’ve had a huge influx of excitement
0:02:08 about that thesis.
0:02:09 So far so good.
0:02:10 And I think we’ve seen a lot of companies
0:02:12 that are I think very much vying to be
0:02:15 that trillion dollar biggest company in the world.
0:02:16 But obviously we’re not there yet.
0:02:18 This is just early stages.
0:02:19 – Yeah, and maybe it’d be helpful
0:02:22 to actually clarify what you mean by a consumer company.
0:02:23 Because when I think consumer company,
0:02:25 I might think Snapchat.
0:02:26 I might think a sneaker company.
0:02:29 – Yes, oftentimes when people think consumer health,
0:02:31 they think of these large consumer health companies
0:02:35 like Rowe or Hymns that often prescribe drugs
0:02:37 or provide telemedicine on the internet.
0:02:39 And when we talk about consumer health,
0:02:41 we actually mean something much broader.
0:02:43 We think a consumer health company
0:02:44 doesn’t have to be direct to consumer.
0:02:46 It can be distributed through B2B.
0:02:48 It doesn’t have to be cash pay.
0:02:50 It could be something that’s free for consumers
0:02:52 because it’s totally covered by insurance.
0:02:55 And it doesn’t even have to be a services company.
0:02:58 So like providing doctors appointments
0:02:59 or prescribing of medication.
0:03:01 It could be pure technology.
0:03:03 But we think what defines a consumer health company
0:03:07 is the ability to have amazing consumer experiences,
0:03:09 which is something traditional healthcare
0:03:11 has done a very bad job of.
0:03:12 – Totally.
0:03:13 And in fact, most healthcare companies today
0:03:15 are the opposite of that.
0:03:17 And actually some people might describe healthcare today
0:03:20 as intimidating, regulated and complex.
0:03:22 And in fact, you two both have referred to it
0:03:24 somewhat in that fashion.
0:03:28 And so what do you think the tech industry in particular
0:03:31 is set to do in a way that others haven’t in the past
0:03:33 to address this unique combination?
0:03:34 – Yeah.
0:03:37 People often say healthcare is intimidating,
0:03:41 which is often a euphemism for healthcare is really big,
0:03:43 which is in venture a good thing.
0:03:45 It’s great to go after big markets.
0:03:47 US healthcare is five times the size
0:03:50 of the global advertising industry,
0:03:53 which is what companies like Meta and Google
0:03:54 make all of their money from.
0:03:55 And it’s highly regulated,
0:03:58 but tons of huge companies have been built
0:04:00 in highly regulated markets.
0:04:02 You know, if you look at Airbnb or Lyft
0:04:03 or even companies that have been built
0:04:05 in unregulated markets,
0:04:08 like Google and Facebook eventually become regulated.
0:04:10 So we think regulation is kind of a marker of success.
0:04:12 And you run into it regardless.
0:04:13 And it’s a good thing in healthcare.
0:04:15 And healthcare is complex,
0:04:17 but every industry is complex
0:04:19 when you dig under the surface of things.
0:04:23 And everyone thinks healthcare, don’t I need a PhD?
0:04:24 I don’t know how to cure cancer.
0:04:27 And the PhDs who are working to cure cancer
0:04:29 are doing extremely important work.
0:04:32 But the reality is if you cure all cancer,
0:04:35 you extend Americans lifespan by three years.
0:04:39 And we’re still lagging behind other developed countries.
0:04:42 And so you need technologists to come and do two things.
0:04:45 One is like healthcare is a logistics
0:04:47 of data and operations problem.
0:04:49 And technologists are very good at that.
0:04:51 And then the second is healthcare
0:04:53 is really a consumer engagement problem.
0:04:55 Even for really highly motivated people,
0:04:58 it’s super hard to navigate the healthcare system.
0:05:00 If you’re trying your best and want all the testing,
0:05:02 it’s really hard to know how to do it.
0:05:04 And then we need people to help us
0:05:05 kind of change our behaviors.
0:05:08 88% of Americans are metabolically unhealthy.
0:05:10 Half of people don’t go to the PCP,
0:05:13 half of medications that are prescribed or never taken.
0:05:15 And so people might look at that
0:05:17 and say we have a societal problem,
0:05:21 but the best companies change the behaviors
0:05:22 of billions of people.
0:05:24 And there’s no reason to think
0:05:25 that couldn’t occur in healthcare.
0:05:27 – I wanna get into maybe some of the pushback
0:05:29 because I feel like for some listeners,
0:05:31 they might be thinking, all that makes sense, Daisy,
0:05:34 but actually technologists are not the people we need.
0:05:36 But interestingly, whether people believe
0:05:38 they’re the right people to provide a solution,
0:05:41 we are seeing them start to take part.
0:05:43 And in fact, both of you wrote another article
0:05:45 that said, hey, Tech, it’s time to build in healthcare.
0:05:47 And we’re seeing founders from Instacart, Spotify,
0:05:50 and Coinbase, probably among many others,
0:05:52 that have started to build healthcare companies.
0:05:53 So why do you think that is,
0:05:56 what’s the why now of these people participating?
0:05:58 – Yeah, I think there are a couple of different elements.
0:06:00 But one of the primary ones is that
0:06:01 much of healthcare and life sciences
0:06:04 is starting to become much more of an engineering discipline.
0:06:06 I think that’s what really attracts us to tech.
0:06:07 I mean, the thing about computer science
0:06:10 is that it’s almost like the ultimate engineering discipline.
0:06:12 And software is just easy to engineer.
0:06:14 But I think as we can engineer these other areas,
0:06:15 it attracts that mindset.
0:06:17 But also, I think they see the huge tam
0:06:19 that Daisy was just talking about.
0:06:21 But then finally, I think it’s more than just
0:06:23 the means and the money.
0:06:26 I think the mission actually also is very appealing.
0:06:28 – And Daisy, you shared this article,
0:06:31 which was again, a call to technologists to participate.
0:06:33 And there was, I think you guys shared it in several places,
0:06:36 but just one of the posts had over 3,000 likes,
0:06:38 over 250 comments.
0:06:40 So clearly people cared, right?
0:06:42 That at the very least was clear.
0:06:43 Just would love to get your personal take.
0:06:46 Why do you think there was such a response,
0:06:47 both good and bad?
0:06:51 – I think part of it is, it was controversial.
0:06:54 We work in an industry, venture capital,
0:06:56 where a lot of firms have written off healthcare.
0:07:00 And they’ve said, look, people have tried and failed.
0:07:02 But the reality is,
0:07:05 of the 100 largest public software companies,
0:07:08 one is a healthcare and life science company.
0:07:13 And as consumers, we feel the pain of that every day.
0:07:15 Every time we go to the doctor’s office
0:07:16 and are asked to fill out forms,
0:07:20 we’ve filled out 150 times in the course of our lives.
0:07:23 Every time we have a loved one that dies
0:07:25 because of something we could have cut,
0:07:27 but our system wasn’t set up correctly.
0:07:30 And so I think one, the take was controversial,
0:07:31 that this is the next frontier,
0:07:34 because a lot of people in our industry have written this off.
0:07:35 But I also think it’s something
0:07:37 that everyone can identify with.
0:07:38 There’s no American out there
0:07:41 who is like, we have a great healthcare system.
0:07:43 We spend, it’s 20% of our GDP,
0:07:45 which is like double that of any other developed country.
0:07:49 And we have worse outcomes and we’re all suffering.
0:07:51 – Let’s talk about some of that pushback.
0:07:53 I would love to hear your direct response
0:07:54 to some of these people,
0:07:56 who by the way, I think have the same goals
0:07:58 as the three of us sitting here, just to share a few.
0:08:02 So Tom says, he still sees that there are flurry of issues
0:08:04 from entrenched vendors, integrations,
0:08:06 backroom deals and funding.
0:08:08 – Yeah, I mean, the healthcare system is huge, right.
0:08:09 So I think part of it,
0:08:12 you’re not gonna fix the whole thing in one go.
0:08:14 And so there’s a couple of different approaches you can take.
0:08:16 One approach is to work, let’s say,
0:08:18 in rebuilding something full stack.
0:08:21 And so companies like Devoted Health do that
0:08:23 by being a Medicare Advantage company
0:08:26 and building payer and provider, basically doing everything.
0:08:28 So that’s really hard to do.
0:08:29 But actually, if you can do that,
0:08:31 you can address those issues directly
0:08:33 because you’re not a sort of victim to any of those issues
0:08:35 because you are the full system.
0:08:37 Working within the system is a lot harder.
0:08:39 And that takes a really special person,
0:08:43 somebody that knows tech and knows, let’s say AI
0:08:44 and knows all that stuff very deeply
0:08:46 but also knows the healthcare system deeply.
0:08:47 There aren’t too many people like that,
0:08:49 but actually the number is growing very rapidly.
0:08:50 – Absolutely.
0:08:51 Let’s talk about another piece of pushback.
0:08:54 So if you kind of touched on this issue
0:08:58 of the unique incentives that exist in the United States.
0:09:02 So Dave, for example, is saying he’s still not seeing
0:09:03 the killer argument for why now.
0:09:06 Susan has said that tech has been addressing healthcare
0:09:08 for quite some time and we are seeing technology
0:09:10 evolve in something like an MRI,
0:09:12 but when it comes to more of the system,
0:09:13 it’s still breaking down.
0:09:16 And then I’ll just read out Dave’s comment directly.
0:09:18 He says, “The US is an outlier in terms of health spend
0:09:20 “as a percentage of GDP.
0:09:22 “In terms of a measure of that service,
0:09:24 “life expectancy in the US is worse.
0:09:26 “What technology has the rest of the world
0:09:27 “kept from the US?
0:09:29 “Why is technology necessary?”
0:09:30 – So let’s take that in two parts.
0:09:32 So in terms of technology,
0:09:33 I think there is technology in healthcare,
0:09:36 but it’s largely in a user interface.
0:09:40 So like MRI is really the same MRI from like the 50s,
0:09:42 just now on a computer display.
0:09:44 And so that’s not really tech.
0:09:45 I would call it the absence of tech.
0:09:47 And a lot of the tech that doctors use
0:09:50 are things like electronic medical records,
0:09:51 which again, it’s a record keeper.
0:09:53 It’s not sort of the high technology
0:09:54 that we’re talking about right now.
0:09:57 We have this huge revolution in our official intelligence
0:09:59 that actually can do amazing things with data
0:10:02 that actually we could never really even dream about.
0:10:04 And so that’s a huge difference in terms of why now.
0:10:06 Now, in terms of what’s actually different
0:10:07 about the rest of the world,
0:10:09 is while those non-US healthcare systems
0:10:11 don’t have to deal with Americans.
0:10:13 And American culture is different, right?
0:10:15 So it’s apples and oranges to say,
0:10:18 well, we have country A’s healthcare system
0:10:20 dealing with country B’s people.
0:10:22 And so the issues Americans have are different.
0:10:24 And we have issues in terms of diet,
0:10:25 in terms of lifestyle.
0:10:28 And those things are independent of technology or not.
0:10:29 We actually love doing clinical trials.
0:10:31 The real thing to do would be to apply one system
0:10:33 to another for sure you can’t do that.
0:10:36 I think the reality is that what makes technology
0:10:37 really powerful is the ability
0:10:40 to actually affect behavioral change.
0:10:41 And that’s the thing that’s really where tech
0:10:44 maybe have some of the quickest impacts in America.
0:10:46 – I think one thing that makes the American system
0:10:49 relatively unique is that most Americans
0:10:51 get healthcare through their employer,
0:10:55 which means they change healthcare insurance companies
0:10:56 every two and a half years.
0:10:59 I think that’s on average how long people stay in a job.
0:11:03 And what that’s meant in effect is insurance companies
0:11:07 don’t feel incentivized to cover preventative care
0:11:09 because they think some other insurance company
0:11:10 will reap the benefits of that
0:11:13 when you switch jobs in two and a half years,
0:11:15 which is a really unfortunate situation.
0:11:17 But I think a few things are happening.
0:11:21 One is there has been a rise of high deductible health plans,
0:11:23 which means your health insurance doesn’t kick in
0:11:27 until you’ve already spent X amount of dollars of your own
0:11:29 before insurance will cover a dime,
0:11:31 which is a relatively unfortunate trend,
0:11:34 but the silver lining of that is you start to see
0:11:36 some more free market dynamics in healthcare
0:11:38 when people are paying for their healthcare
0:11:39 out of their own dollars,
0:11:42 they start thinking about quality and shopping
0:11:45 and what they really wanna understand about their bodies.
0:11:48 And the other kind of why now thing that’s emerged
0:11:51 is I think Vigil probably agree with me
0:11:54 that we wrote this article two years ago
0:11:58 and the last year something has started to change
0:12:01 and it’s partially driven by like a lot of amazing founders
0:12:04 who are building these oftentimes diagnostic companies
0:12:07 that are offering hundreds of blood tests
0:12:09 and full body MRIs and there’s just been this wave
0:12:11 of consumers who really wanna understand
0:12:13 what’s happening in their body.
0:12:16 And it’s not just bio hackers and people in the Bay Area,
0:12:18 it’s people who have chronic health issues,
0:12:20 who have gone to five doctors
0:12:21 who can’t figure out what’s going on,
0:12:25 but there’s been this real movement toward wanting
0:12:27 to understand what’s happening in your body.
0:12:30 And I think it’s kind of a delayed thing
0:12:31 that has come out of COVID.
0:12:35 Where COVID reminded everyone of their own mortality,
0:12:38 we all realize that like health is the foundation
0:12:41 on which you can build a really happy fulfilling life.
0:12:44 And if you don’t have your health, it’s a whole lot harder.
0:12:48 And it just feels like we’re seeing this real consumer shift.
0:12:50 – Yeah, I have a strong gut feeling it’s COVID as well.
0:12:53 And I think it’s not just an understanding our body
0:12:55 but having real agency with it.
0:12:56 What can I do?
0:12:58 And I think COVID put that on the forefront of our minds,
0:13:01 like what actions can I take for myself and my family
0:13:02 and so on?
0:13:04 And now the question is what data do I have
0:13:05 to make those actions?
0:13:07 And that leads to I think this whole new crop of companies.
0:13:09 – Yeah, so what I’m hearing is basically
0:13:11 the system is so entrenched and the incentives
0:13:14 that exist between the provider and the insurer
0:13:16 historically has not been there
0:13:19 to actually create this consumer incentive.
0:13:21 And now you’re saying that things have changed.
0:13:22 There’s almost like this groundswell of people
0:13:24 who are raising their hand and are saying,
0:13:28 I want to improve my health and I want to have a part in this
0:13:30 and that itself is creating a market.
0:13:33 So on that note, you basically said that the most impactful
0:13:36 thing that we can do to fix healthcare
0:13:37 is to improve the consumer experience.
0:13:39 So I’d love to just hear your take on
0:13:41 where you would even start there
0:13:44 and maybe elaborate on what that means.
0:13:45 – Yeah, so I think first and foremost,
0:13:47 you have to imagine like you’re using the product
0:13:50 or that your parents or grandparents are using the product.
0:13:53 And so I want something that is frictionless
0:13:56 where what is so exciting about using an E-Tech product
0:13:58 is that I don’t have to click like a thousand different
0:14:01 buttons or wait two days or something happens quickly.
0:14:02 So I’d love it to be frictionless.
0:14:05 I’d love it to be something where it’s actionable,
0:14:07 where it gives me that level of agency.
0:14:09 And then finally, I think as funny as it is,
0:14:12 I want it to actually have just a great experience.
0:14:14 So why do people buy Apple products or Google UI?
0:14:18 It has that whole experience as something that is seamless.
0:14:20 And it ships it from this burden to like,
0:14:22 “Oh, I got to sit in the line at the DMV
0:14:23 to get healthcare done too.”
0:14:25 This is actually something that is streamlined
0:14:28 and really designed to make my life easier
0:14:30 rather than to make someone else’s life easier,
0:14:31 whether it be the payer or the provider.
0:14:35 – One question Vijay posed to me a couple of years ago now,
0:14:37 and we’ve been debating ever since,
0:14:40 is what does healthcare look like 30 years from now?
0:14:41 And what about 20 years from now?
0:14:43 And what about 10 years from now?
0:14:46 Because our job as vendor capitalists is predict the future
0:14:49 and try to invest in the future we think should exist.
0:14:52 And we think healthcare probably looks like
0:14:54 you have wearable devices
0:14:57 that are monitoring your health at all times.
0:14:59 Some of them are like the wearable devices we know today,
0:15:01 some are some little things that penetrate your skin
0:15:04 that are monitoring all sorts of things
0:15:06 that are happening in your blood.
0:15:09 And these wearable devices are gonna predict
0:15:10 that you’re getting sick
0:15:13 before you even start feeling symptoms and you know.
0:15:14 – Some rings already do this.
0:15:16 – Exactly, we saw this during COVID,
0:15:17 a lot of these devices could predict.
0:15:18 – One ring, eight sleep.
0:15:20 – Exactly, COVID coming on.
0:15:23 And all of your data is going to be in one place,
0:15:25 every health record you’ve ever had.
0:15:27 It’s crazy, we don’t have this today yet by the way.
0:15:29 But all of the data from these wearable devices
0:15:31 is going to be married with all of your health records
0:15:33 from every doctor you’ve ever seen.
0:15:36 And 90% of healthcare is gonna be delivered
0:15:38 probably from your phone and in your home.
0:15:40 So you’re gonna be able to chat on your phone
0:15:42 with a world-class AI doctor,
0:15:44 the best cardiologist in the world
0:15:47 or human doctor if it escalates to that.
0:15:50 And we’ll have at home blood collection devices,
0:15:53 we’ll have at home delivery of medication.
0:15:54 And then you’ll probably go to hospitals
0:15:56 for a few surgeries.
0:15:59 But that’s kind of the forward version
0:16:02 of what we think healthcare will look like in 30 years.
0:16:04 And that’s the amazing consumer experience.
0:16:06 And then what we’re trying to do is predict,
0:16:08 okay, what do we have to invest in now
0:16:10 to start making this a reality?
0:16:12 – Well, also I think this is a bit of a mindset shift
0:16:14 because that really also makes healthcare
0:16:16 a logistics problem as well.
0:16:18 And that’s something that we think about tech all the time.
0:16:21 We think about Amazon doesn’t really sell things.
0:16:23 It’s a logistics company that makes it possible
0:16:25 for all the stuff to get to us and same from Walmart.
0:16:27 And healthcare is really the right care
0:16:28 at the right place at the right time.
0:16:30 And doing that, actually,
0:16:32 we need all the information that you talked about,
0:16:34 but then we need it to be able to be actionable.
0:16:36 With that together, it’ll feel like all the other experiences
0:16:38 that we sort of love in our life
0:16:39 that we have right now from technology.
0:16:42 – Yeah, and maybe one follow-up question there
0:16:44 in that future that you just painted,
0:16:46 all those devices or those trackers
0:16:49 that we’re seeing the early emergence of now,
0:16:53 today those options are very consumer-driven, right?
0:16:56 I’m buying my Aidsleep, I’m buying my OroRing.
0:16:58 Do you think that all of those devices,
0:17:01 the holistic healthcare system outside of maybe the hospital
0:17:02 where you get your serious surgery,
0:17:05 are those all consumer-driven where I’m purchasing those?
0:17:08 Or how do you see the overall large incumbent model
0:17:10 evolve to that picture?
0:17:12 – Yeah, so one thing I think that’s helpful
0:17:13 is actually healthcare is a term
0:17:15 that’s applied to a lot of different things.
0:17:19 And so in the most extreme cases, I need surgery
0:17:21 because I hit my head and my brain is hemorrhaging
0:17:22 or something like that.
0:17:24 That’s like this extreme kind of thing.
0:17:25 That’s not what we’re talking about.
0:17:27 Then the second one is, oh, I’ve gotten ill with something
0:17:29 and I need some sort of treatment.
0:17:31 In both of those cases, those are examples of sick care
0:17:34 where those are procedures that just have to be done.
0:17:37 There’s a third area that actually isn’t always associated
0:17:39 with healthcare, which is the preventative side.
0:17:41 And that’s something that technology has a very natural role.
0:17:44 With preventative, you can avoid getting into that second
0:17:45 or to that third bucket.
0:17:48 And when you start to think of healthcare that way,
0:17:50 just even from a financial point of view,
0:17:52 the most extreme thing is kind of like if you were a car,
0:17:54 that’s collision insurance or something like that.
0:17:56 And then the middle bucket is, well,
0:17:59 I’m gonna just do routine maintenance and stuff like that.
0:18:01 But the first bucket is, I’m not gonna be a crazy driver.
0:18:03 I’m not gonna slam into things,
0:18:05 I’m not gonna go super fast, I’m gonna do all that stuff.
0:18:07 And I think healthcare is gonna be that combination
0:18:10 of all those three, but people basically ignore
0:18:12 that first bucket and how we think about payment
0:18:14 of these things will reflect those.
0:18:15 – And I think to answer your question head on,
0:18:19 today most of these products are consumer purchased.
0:18:20 And I think there’s totally a world
0:18:25 where insurance starts to cover a lot of wearable devices
0:18:27 and things today that we think of as consumer products.
0:18:29 And we definitely see that.
0:18:32 It’s funny when we look at these consumer health companies,
0:18:35 we’ve invested and see a whole bucket of them
0:18:37 that are trying to rebuild the healthcare system
0:18:39 from the ground up and are basically saying,
0:18:41 like what you have over there, that’s crap,
0:18:43 we’re starting over.
0:18:45 And then we’re seeing a ton that are trying to plug
0:18:46 into the healthcare system.
0:18:49 And a key way they plug in is they say,
0:18:51 traditional healthcare has the worst consumer experience
0:18:53 in the world of any industry.
0:18:54 And that really affects them.
0:18:57 They can’t get their customers to change their behaviors.
0:18:59 And so they’re building these consumer companies
0:19:01 that layer on top of traditional healthcare
0:19:03 and make the experience better.
0:19:06 And you can envision a world where wearable devices
0:19:08 start to play in that territory.
0:19:12 Behind every successful business is a story.
0:19:14 And some of them might surprise you,
0:19:17 like how gamer Emmett Shearer turned a 24-hour livestream
0:19:21 of his friend into the billion-dollar gaming platform Twitch,
0:19:23 or how Chibani’s first yogurt factory
0:19:26 was discovered on a piece of junk mail.
0:19:28 Well, on the podcast “How I Built This,”
0:19:31 host Guy Raz interviews the innovators, entrepreneurs,
0:19:34 and idealists behind the biggest companies,
0:19:36 giving you a front row seat to how they’ve built them
0:19:39 and the crazy stories along the way.
0:19:41 These great conversations are all about thinking big,
0:19:44 taking risk, and navigating crises in life and work,
0:19:46 from the people who, quite frankly,
0:19:49 have done all of that and more.
0:19:51 Follow “How I Built This” on the Wondery app
0:19:53 or wherever you get your podcasts.
0:19:55 You can also listen to episodes early
0:19:57 and ad-free right now on Wondery Plus.
0:20:04 Yeah, and maybe to address something you said earlier, Vijay,
0:20:07 about the kind of experience that we can imagine, right?
0:20:11 Why haven’t we had good UX
0:20:13 or this delightful experience in healthcare?
0:20:15 One thing that comes to mind for me
0:20:18 is if I go to the app store on my phone,
0:20:20 I have infinite possibilities,
0:20:24 and again, it’s consumer choice among those possibilities.
0:20:25 When I think of my healthcare options,
0:20:28 it’s through my employer, and I have two options,
0:20:30 maybe even from the same company,
0:20:33 high deductible plan or not, right?
0:20:36 So do you see that changing as well,
0:20:39 ’cause I’m just thinking again from that place of incentives.
0:20:40 I think it’s incentives,
0:20:41 and I think it also helps to see
0:20:43 who actually is gonna pay for it.
0:20:44 So if someone’s paying out of pocket,
0:20:46 then it feels like a consumer app,
0:20:48 and that’s something where you probably see it first.
0:20:50 And then those types of businesses
0:20:53 may start to compete with the ones you’re talking about.
0:20:54 And then in competition, I think,
0:20:56 you’ll see that the incumbents
0:20:58 feel like they have to move in that direction.
0:20:59 We’ve seen this in other businesses.
0:21:01 Yeah, and just to layer on there,
0:21:03 I think a key reason consumer experience
0:21:05 has been so horrible in healthcare
0:21:09 is health providers, so hospital systems, doctors’ offices,
0:21:12 don’t really see patients as their own customers
0:21:15 because patients generally aren’t paying for their care
0:21:16 the insurance company is.
0:21:18 And so they’re optimizing for the insurance company
0:21:21 instead of the patient, which is a really sad existence.
0:21:24 But what we think everyone has gotten wrong
0:21:28 is that if you have amazing patient and consumer experiences,
0:21:32 you can actually start to encourage behavior change,
0:21:34 getting people to show up to the doctor
0:21:35 if it’s less of a horrible experience,
0:21:37 filling their medication if it’s easier,
0:21:39 taking their medication if it’s easier,
0:21:42 affording the doctors if there’s a financing option.
0:21:44 And so we think everyone’s gotten that wrong historically,
0:21:47 and there is a ton of opportunity.
0:21:48 But part of it might be too,
0:21:51 like who needs to come into action with the right mentality?
0:21:53 So with Motorola have created the iPhone
0:21:55 or something like that, probably not, right?
0:21:58 It takes someone that has a very different mindset.
0:21:59 You know, when you look at companies
0:22:01 that really change industries,
0:22:03 often these are companies that come from the outside
0:22:04 that work with the inside.
0:22:07 So like in streaming music, it’s something like Spotify.
0:22:09 And they didn’t create new artists and create new labels,
0:22:11 but they worked with artists and labels,
0:22:13 but they also came from outside the music system.
0:22:15 – And I think that brings up the point
0:22:16 around these technologists and it’s like,
0:22:19 what are technologies uniquely good at?
0:22:21 And I’m thinking about some of these consumer
0:22:24 engagement strategies like retention or gamification.
0:22:26 So I’d love to hear from both of you.
0:22:29 Where do you see some of these engagement strategies
0:22:32 that maybe tech has previously flourished
0:22:34 being applied to healthcare that seems
0:22:36 like an obvious potential fit?
0:22:37 – I think it’s gonna be all of it.
0:22:38 I mean, you mentioned two in terms
0:22:39 of retention and gamification.
0:22:42 I think it starts with just even there’s the product
0:22:45 and that’s the gamification and other types of things.
0:22:47 And then there’s the mindset for how to run the business.
0:22:51 Often to Daisy’s earlier point, when we’re not paying,
0:22:53 people don’t worry about retention, right?
0:22:54 They don’t worry about because you want your healthcare
0:22:56 or don’t want your healthcare, right?
0:22:58 I think those are not really choices.
0:23:00 And so when you actually have choices,
0:23:02 then people actually have to worry about retention
0:23:03 and that will actually feed into product.
0:23:06 So it’s that whole ecosystem shifting
0:23:08 where we are much more in the driver’s seat
0:23:11 in terms of choice will lead to better products
0:23:12 as we’ve seen in many cases.
0:23:16 – Yeah, the best consumer talent in the world
0:23:17 work in technology.
0:23:22 It’s crazy that today we all use apps for hours a day
0:23:25 that didn’t exist 10 or 15 years ago.
0:23:27 And they’ve been so good at getting our attention
0:23:29 and changing our behavior and changing the way
0:23:31 we go about the world.
0:23:32 If you go to a concert now, everyone’s filming.
0:23:34 So everyone can post it on Instagram.
0:23:36 – And your ticket was probably on an app.
0:23:37 – Exactly.
0:23:39 And so the talent in tech
0:23:41 for building amazing consumer experiences
0:23:44 that change the way we go about our lives is insane.
0:23:48 And that talent just doesn’t exist at all in healthcare.
0:23:50 And it’s partially because what we were talking about
0:23:53 earlier, no one sees consumers as the end customer
0:23:54 and therefore it doesn’t optimize
0:23:56 and no one has bred that talent in the industry.
0:23:58 But I think when you marry people who understand healthcare
0:24:01 and people who understand consumer tech,
0:24:02 really magical things can happen.
0:24:05 – And in your article that we referenced
0:24:07 at the very outset, this idea of becoming
0:24:08 the biggest company in the world,
0:24:10 especially when you’re addressing an industry
0:24:13 that feels so lofty and there’s so many incumbents,
0:24:15 I’d love to just hear your take on how
0:24:16 that might actually happen.
0:24:19 Like how does a technologist potentially come
0:24:22 into this huge industry?
0:24:23 Is there really a path there?
0:24:25 – Yeah, we mentioned at the beginning
0:24:26 this was kind of a controversial take
0:24:28 because the consumer health companies
0:24:31 in the public markets today are relatively small.
0:24:32 But I said, if you think about it
0:24:34 from a first principles perspective,
0:24:37 healthcare is 20% of the American economy.
0:24:38 There’s no reason this can’t exist.
0:24:40 And we basically laid out two ways
0:24:42 we think a company could get to be the biggest company
0:24:44 in the world via consumer health.
0:24:46 The first is becoming a pay vider.
0:24:50 And pay vider basically is an industry shorthand term
0:24:52 for being both the insurance company
0:24:54 and the provider of care.
0:24:56 And United Health Group is that.
0:24:58 It’s United Health Care, which is the insurance company
0:25:01 and Optum, which is their services company.
0:25:04 They employ doctors who then provide care.
0:25:06 And they’re one of the biggest companies in the world.
0:25:07 I think at the time we wrote the article,
0:25:10 they were eight and I think they’ve come down
0:25:14 a bit since as AI companies have surpassed them.
0:25:16 But they are one of the biggest companies in the world
0:25:19 with a really crappy consumer experience.
0:25:20 Their NPS is four.
0:25:22 And so we ventured to say,
0:25:24 what if you had that business model
0:25:26 married with the consumer experience of Apple,
0:25:30 that would obviously be the biggest company in the world.
0:25:33 Every employee would demand that their employer
0:25:35 offer that health plan.
0:25:36 And when you get to Medicare
0:25:38 and you get to choose your plan after you’re 65,
0:25:42 every senior citizen would choose that plan.
0:25:44 And the competition would fall by the wayside.
0:25:47 And so that was the first path we laid out.
0:25:49 That’s a vertical integration strategy.
0:25:52 And the second was a horizontal strategy.
0:25:55 And we’d said either you can become a consumer marketplace.
0:25:57 So the Amazon of healthcare,
0:26:01 the place everyone goes to find their healthcare provider,
0:26:03 to pick their healthcare insurance,
0:26:05 to find the cheapest cost drug.
0:26:09 And if you get a normal 20% take rate,
0:26:10 which is what most marketplaces get,
0:26:11 that gets you the revenue
0:26:13 to be the biggest company in the world.
0:26:14 And then the second path we laid out
0:26:17 was a financial infrastructure layer.
0:26:19 So what if you came the visa of healthcare?
0:26:22 – Healthcare payments, I won’t go into this
0:26:23 ’cause I think probably the general audience
0:26:25 is it’s a little dry.
0:26:27 But healthcare payments are stuck in the 1980s.
0:26:29 We do a whole lot of faxing of forms,
0:26:32 mailing of gift cards, mailing of checks.
0:26:34 And if you could build the financial infrastructure
0:26:35 to service healthcare,
0:26:37 we think that would easily be the biggest company
0:26:38 in the world as well.
0:26:39 – Yeah, I think in the fullness of time,
0:26:42 this won’t be even viewed as all that controversial.
0:26:44 I think there’s just a lot of building that has to be done.
0:26:46 The one thing that I think people really tend to forget
0:26:48 is just how huge healthcare is
0:26:51 and how much it plays in all of our lives.
0:26:52 And you think about what you’d pay for a phone
0:26:54 versus what you’d pay out of pocket
0:26:56 to have healthcare be a little better.
0:26:57 – Oh my God.
0:26:59 – So it just needs to be built.
0:27:00 – Absolutely.
0:27:03 And maybe taking both of those paths on their own,
0:27:06 what would you say the biggest obstacle is for each
0:27:08 and actually making that a reality?
0:27:09 – Yeah, I can take the first one.
0:27:10 So in terms of the full stack,
0:27:11 there’s a lot to build
0:27:14 if you’re gonna build a full stack company from scratch.
0:27:17 You have to build out a provider and a payer
0:27:19 and have technology throughout all of it.
0:27:20 And that’s something that takes a huge amount of capital
0:27:21 and a huge amount of time
0:27:24 and then to scale that into multiple geographies.
0:27:26 So there are companies working to do that.
0:27:27 And that’s something that just,
0:27:29 we can have examples of that in flight,
0:27:31 but it will take time to build.
0:27:33 – I think on the second one is you have to build your way
0:27:35 into the traditional healthcare system.
0:27:38 If you’re gonna be the Amazon of healthcare,
0:27:41 you’ve got to onboard every provider in America.
0:27:43 You have to onboard every insurance company.
0:27:46 You’ve got to work with the pharmacy benefit managers.
0:27:50 And so it’s just gonna take time to infiltrate the industry.
0:27:52 And so probably plugging into the system
0:27:53 is the most challenging part.
0:27:54 – I think one of the founders
0:27:56 that we think a lot about today is like Jensen Wong,
0:27:58 who’s done amazing things,
0:28:00 but NVIDIA is an overnight success,
0:28:01 what, three years of the making?
0:28:02 – That’s what I was gonna say.
0:28:03 Not quite.
0:28:07 – So he’s been making very thoughtful strategic decisions
0:28:09 over multiple decades to build this company
0:28:10 and get it at that point.
0:28:12 It started a few decades ago.
0:28:14 I think, I hope that maybe in 10 years
0:28:15 we’ll have similar conversations
0:28:17 with the Jensen Wongs of healthcare.
0:28:19 – And obviously we hope, or almost expect,
0:28:21 that this may come from startups, right?
0:28:22 And not the incumbents.
0:28:25 But also, is there the possibility?
0:28:28 I mean, you talked about maybe the apple of healthcare,
0:28:29 or you talked about payments
0:28:30 and kind of replicating in some way
0:28:32 what Visa has been able to achieve.
0:28:35 So why wouldn’t it come from them, right?
0:28:36 We actually have heard that quite a few
0:28:38 of these large, fang-like companies
0:28:41 are trying to enter healthcare
0:28:43 because it is such a big market to your point.
0:28:45 So could it come from them?
0:28:47 – It could, but I think this is the traditional innovators
0:28:50 dilemma and that it’s really hard for incumbents.
0:28:52 I think occasionally incumbents can disrupt themselves,
0:28:53 which is pretty rare.
0:28:56 And I think this is a case that would be particularly hard to
0:28:58 because it’s just so technical and difficult.
0:28:59 And I think if you’re an incumbent,
0:29:02 your temptation is to stay away from healthcare.
0:29:04 If you can be this massive, horizontal,
0:29:05 we probably want to do everything
0:29:08 except the hard clinical AI stuff.
0:29:09 You leave that to something else
0:29:11 because that’s a whole different beast.
0:29:13 And so I suspect that for those reasons,
0:29:16 it’s something that the big tech companies will try.
0:29:19 And we’ve seen Apple and Amazon and Google all dabble.
0:29:22 But I think those experiments probably won’t fit
0:29:23 the way they want to build their company.
0:29:25 And so I think they’ll stay as experiments.
0:29:28 – Yeah, they’ve dabbled a lot over the years.
0:29:30 They’ve all seen the size of the industry.
0:29:35 And so I think they look at healthcare and they see dollars,
0:29:36 but they’re not healthcare native.
0:29:39 And so they’ve tried to make these little plays
0:29:41 to grab healthcare dollars
0:29:44 without really investing in healthcare
0:29:47 and changing our clinical outcomes
0:29:49 and the kinds of really hard things you need to do.
0:29:51 And so I think we’ll see acquisitions on the margins
0:29:53 like we saw with Amazon buying one medical
0:29:56 and the Apple’s products are always kind of verging
0:30:01 on health almost, they’re going to count your steps for you.
0:30:03 But we’ve been talking about this for a long time
0:30:06 and we haven’t really seen anyone pull it off.
0:30:08 – It’s like, you know, will the electric car come
0:30:09 from Detroit?
0:30:10 Maybe not at first.
0:30:11 – Yeah.
0:30:12 – Maybe with the fullness of time.
0:30:13 – Right.
0:30:14 – But I think it’ll take an outsider.
0:30:16 – And the flip side of that question is,
0:30:17 might United healthcare just get really good
0:30:19 at consumer experience?
0:30:20 – Right.
0:30:21 – Which I don’t think either.
0:30:22 – Which doesn’t sound like either.
0:30:23 – You’re holding your breath.
0:30:24 Maybe just to round that out,
0:30:26 perhaps there’s a case study or a learning, right?
0:30:28 We have seen to your point, huge industry,
0:30:29 lots of opportunity.
0:30:31 In some cases you might argue,
0:30:32 oh, well, Apple is the wearable.
0:30:35 You already have on you, so they have all the data.
0:30:37 But then you also see interesting cases
0:30:38 like dollar generals getting into healthcare
0:30:41 ’cause they just have so many locations.
0:30:42 Or you see Walmart try,
0:30:44 but then they’re closing their clinics.
0:30:46 So is there maybe an example that comes to mind
0:30:49 of some of these companies with maybe some
0:30:52 of the right assets just approaching it incorrectly?
0:30:54 – Another version of that question is,
0:30:56 which incumbents do you think are closest with their assets?
0:30:58 – Is there one that you think might be actually
0:31:00 taking the right approach?
0:31:01 – Good question.
0:31:03 Amazon’s interesting ’cause they’ve bought one medical,
0:31:05 but that feels like a toe.
0:31:07 Dipping rather than going all the way in.
0:31:09 They’d have to buy a lot more.
0:31:11 And then you start to look like a PE roll-up.
0:31:12 The question is, can they integrate
0:31:14 in what they do really well?
0:31:16 And so that becomes an interesting choice.
0:31:17 But as Daisy was saying,
0:31:19 they all have done small experiments.
0:31:22 So this is something that you can’t build this huge horizontal
0:31:24 or the full stack vertical with a small experiment.
0:31:25 – Right. – Yeah.
0:31:26 There are great people who work
0:31:28 at all these companies and so we don’t want
0:31:29 to disparage them in any way.
0:31:31 But it feels like with the Walmart health of the world,
0:31:34 it was almost a play to get you to stay in Walmart
0:31:36 a little longer and spend a little bit more money.
0:31:38 But without really investing in building
0:31:40 world-class healthcare,
0:31:42 you’re never gonna win in the industry.
0:31:44 And I think that’s what we’ve seen happen over and over
0:31:46 with kind of big tech.
0:31:48 – So almost coming back to that idea
0:31:49 of you have to give a better experience.
0:31:53 And maybe some of the experiments have not focused on that.
0:31:56 So we’ve talked a lot about technologists participating
0:31:58 in healthcare, but that’s a really broad brush.
0:32:00 And we’ve maybe touched on like consumer,
0:32:01 but that’s also a broad brush.
0:32:04 So we all know there’s a few technologies
0:32:06 that seem to really matter AI.
0:32:08 Some people are looking at augmented reality
0:32:11 as another potential interesting entry into healthcare.
0:32:14 What is catching your eye in terms of the kind of technologies
0:32:16 that can really move the needle?
0:32:19 – I love to talk about AI and I think it’s natural.
0:32:20 I think there’s two sides of the coin
0:32:21 that’s really interesting.
0:32:24 One is that you could argue healthcare really needs AI.
0:32:27 In that the cost of healthcare is rising exponentially.
0:32:29 There’s a huge amount of data.
0:32:30 There’s all of these services
0:32:32 that could maybe become compute.
0:32:34 And so I’m going to start with like brain surgery.
0:32:35 It’s going to start with the simple
0:32:37 sort of maybe subclinical things first.
0:32:41 And we’ve seen AI for nurses and AI for maybe therapists
0:32:42 and other things like that.
0:32:44 And that’s going to be a huge change in the cost curve.
0:32:46 The amazing thing about technology
0:32:48 is that we’ll all get the best.
0:32:50 We’ll all get the best nurse, the best therapist.
0:32:52 Kind of like the Spotify in my pocket,
0:32:54 it’s the same Spotify Elon Musk has,
0:32:55 the same Spotify billionaires have.
0:32:58 Technology is a great democratizer.
0:32:59 I think the things that people don’t realize
0:33:00 is there’s a flip.
0:33:03 I was talking about why healthcare needs AI.
0:33:05 I would make an argument that AI needs healthcare.
0:33:07 And the argument there is that actually
0:33:11 where is a place that AI could be applied to
0:33:13 where the cost is so high that justified
0:33:14 the cost of AI right now.
0:33:16 ‘Cause AI is really expensive.
0:33:17 These models cost billions of dollars.
0:33:19 There’s lots of computer hardware.
0:33:22 And to replace that with cat pictures is nice.
0:33:24 And I love cat pictures, don’t get me wrong.
0:33:27 But that’s not where we’re spending huge fraction of GDP.
0:33:29 So I would say AI needs healthcare
0:33:31 because that’s a place that’s very data rich.
0:33:34 And it’s a place where actually the cost is so high now
0:33:36 and increasing exponentially
0:33:38 that it actually could have a huge impact.
0:33:42 – AI has far worse margins than traditional software.
0:33:46 But it has way better margins than human services.
0:33:48 It’s way cheaper to use a large language model
0:33:50 than it is to employ a human.
0:33:53 And healthcare is a $4 trillion industry in America
0:33:56 that’s like probably 90% human services.
0:33:59 And so we talked about how there might be
0:34:01 this leapfrog moment where, you know,
0:34:04 I mentioned traditional technology software
0:34:06 has really not penetrated healthcare.
0:34:08 We have one of the 100 largest public software companies
0:34:10 as a healthcare company, we all feel that.
0:34:12 But just like in the developing world
0:34:15 where you went straight from cash to mobile payments
0:34:17 and leapfrog over credit cards,
0:34:21 we think we’re about to have a similar moment in healthcare
0:34:23 where we’re gonna leapfrog over traditional software
0:34:26 and we’re gonna go straight from human services to AI.
0:34:29 And so you don’t have to go to these IT departments
0:34:31 and hospitals who have no budget
0:34:34 and everyone is overtired and try to convince them
0:34:36 to buy software that they’re gonna have
0:34:38 to train their whole workforce on.
0:34:40 You can say, everyone’s burned out.
0:34:43 We’re gonna hand you AI, quote unquote, humans.
0:34:45 And by the way, large language models
0:34:46 and multimodal models are really good
0:34:49 at doing what low level service humans do today
0:34:51 in healthcare and healthcare is the only industry
0:34:54 that has call centers of thousands of people
0:34:57 who are scheduling appointments, faxing forms,
0:34:59 handling prior authorization.
0:35:02 We’re just really behind and we’ve seen that.
0:35:04 We’ve seen in venture healthcare
0:35:07 has been a traditionally under invested category.
0:35:10 And that’s definitely changed with AI.
0:35:12 I saw a stat that 20% of AI dollars
0:35:14 have gone toward healthcare.
0:35:15 And there’s a reason for that.
0:35:19 We have very clear problems that can be solved with AI
0:35:21 that other industries don’t have.
0:35:23 I mean, the world needs more creative tools and all,
0:35:25 but we have life or death issues
0:35:27 and AI is gonna be able to make a huge difference.
0:35:30 And healthcare is increasingly data science
0:35:33 and doctors are not data scientists.
0:35:35 And so they need these kind of co-pilot tools
0:35:37 to help them catch things they’re missing.
0:35:39 – I just wanna call out something you said earlier,
0:35:42 which is that even if we cure all cancer,
0:35:45 Erkin’s lifespans are only going to increase by three years.
0:35:46 Do you guys have any other just,
0:35:48 whether it’s stats or thoughts around
0:35:51 if we really are able to deploy AI
0:35:52 in the ways that you’re describing,
0:35:54 what does that really change in real outcomes?
0:35:58 Whether it’s for patients or Americans at large.
0:35:59 – Yeah, I think in that spirit,
0:36:02 I think the so-called social determinants of healthcare
0:36:04 that are outside of the traditional healthcare system
0:36:07 is actually a large fraction of what leads to mortality
0:36:08 and morbidity.
0:36:10 And so AI being able to do behavioral changes
0:36:12 is such an easy one.
0:36:14 – No one’s been able to pull off behavior change
0:36:15 in healthcare to date,
0:36:17 but it really does feel like we have this why now moment.
0:36:20 There’s regulatory change that are enabling consumers
0:36:22 to get access to all of their health records
0:36:24 or grant that access to an app.
0:36:26 There are these diagnostic companies
0:36:28 that are running every customer a son
0:36:30 and tracking changes over time.
0:36:32 There’s more penetration of wearable devices
0:36:33 than ever before.
0:36:36 And if you marry all of those things,
0:36:39 we’re gonna have these companions very soon
0:36:43 that are providing actually helpful health tips
0:36:44 and monitoring us and telling us
0:36:45 when something might go wrong,
0:36:47 far before we know something’s going wrong
0:36:50 or far before a doctor can diagnose us.
0:36:52 And that’s gonna be a big step change for human health.
0:36:53 – Well, I challenge you.
0:36:56 So actually this came up on our podcast with Tom from ORA.
0:36:57 And you mentioned how actually all your friends
0:37:00 after getting the order ring end up drinking less alcohol.
0:37:01 – It’s true.
0:37:02 – Yeah, it’s just so it’s why you said it.
0:37:04 So I get the order ring for Christmas
0:37:06 and I’m like, well, Daisy’s friends are gonna drink
0:37:07 less alcohol, but that’s, I mean,
0:37:09 I’m already pretty good shape,
0:37:10 but I end up drinking less alcohol.
0:37:12 And then at like dinner the other night,
0:37:14 people at the table were talking about
0:37:16 their sleep score and stuff like that.
0:37:18 That’s real behavior change.
0:37:20 – And that actually is medically significant
0:37:21 behavioral change.
0:37:21 – You’re totally right.
0:37:22 I’m wrong.
0:37:23 The tech is real big.
0:37:25 – It’s one example and I think we can come up
0:37:26 with a handful more,
0:37:28 but I think maybe original points,
0:37:29 there’s a lot more to do.
0:37:30 – Totally, there’s a lot more to do.
0:37:32 And if anyone solves the problem of alcohol
0:37:34 disrupting your sleep, please come find us.
0:37:36 – I know, I’d love to continue on this.
0:37:39 – Solution of drink less alcohol, but yeah.
0:37:40 – Talking about consumer change,
0:37:42 I was at a wedding recently
0:37:45 and people are gonna grill me for this,
0:37:47 but everyone had an eight sleep.
0:37:49 Every single person at the wedding table,
0:37:52 the couples, there was maybe six or so of them.
0:37:54 They all had eight sleeps and they were all like,
0:37:55 what’s your temperature?
0:37:57 That is a social phenomena.
0:37:58 And you’re going around and you’re like,
0:38:00 oh, I’m the hot one, I’m the cold one.
0:38:01 And now that you mentioned the aura,
0:38:03 kind of social phenomena,
0:38:05 I feel like we’re seeing it with other devices as well.
0:38:07 – I think the social phenomena is a real thing.
0:38:09 And social is obviously a real thing in tech.
0:38:10 And I think there’s a movement again,
0:38:13 maybe post COVID towards health,
0:38:16 where I think people are drinking a lot less alcohol,
0:38:17 they’re working out a lot more.
0:38:20 And it helps, that’s a social contagion, of course,
0:38:22 that it’s sort of cool to do that.
0:38:24 And I think we all want to improve our health
0:38:25 and it helps when we’re all doing it.
0:38:28 So tech is an amplifier of that,
0:38:29 whether we’re talking about social networks,
0:38:31 but also it’s not just the social networks.
0:38:32 You need the number, you need the result,
0:38:33 or you need the score.
0:38:34 It’s the beginning.
0:38:36 I think there’s a lot more to go from there.
0:38:37 – A similar thing, we invested in a company
0:38:39 called Function Health that runs every blood test
0:38:41 under the sun on you and explains what’s happening
0:38:43 in your body system by system.
0:38:46 And they provide you with something called biological age.
0:38:48 And the number of texts I’ve now gotten
0:38:50 that are saying, what’s your biological age?
0:38:52 And people are comparing their biological ages
0:38:55 and having biological age birthday parties.
0:38:56 – I love that.
0:38:57 – Things are changing.
0:38:59 And you can change it, you can lower it.
0:39:00 – Yeah.
0:39:02 And you talked about how sometimes
0:39:04 just the right number of things have to come together.
0:39:06 And so I think about AI,
0:39:08 talk about how if we didn’t use alt tags back in the day
0:39:10 and we weren’t labeling all these pictures,
0:39:13 like where would we be in terms of the data sets
0:39:15 that we have today, at least for imagery, right?
0:39:17 And so it feels like some of the things
0:39:18 you’re both bringing up is, okay,
0:39:20 so we’re starting to get the data,
0:39:22 we’re starting to get the consumer buy in,
0:39:23 some of the incentives are changing
0:39:26 and all of that coming together does feel like, oh, I know.
0:39:29 So maybe closing things out, if there are people
0:39:31 who maybe are still a little doubtful,
0:39:32 they’re hearing this and they’re like, yes,
0:39:34 I agree that I want this to change,
0:39:36 but maybe I don’t necessarily agree
0:39:39 that technologists are the people right now
0:39:41 who are gonna be able to make this shift.
0:39:42 What would you say to those people?
0:39:45 And also maybe what would you say to the technologists
0:39:46 who maybe are on the fence?
0:39:48 – I think part of it is that
0:39:49 if you’re a medical professional,
0:39:51 I think the key thing is all these technologists
0:39:54 are not necessarily complete outsiders.
0:39:55 There are people that also know
0:39:56 the healthcare system in and out.
0:39:58 ‘Cause it does feel a little odd
0:40:00 that like some person who just graduates
0:40:02 with an undergrad CS degree is gonna solve all the healthcare.
0:40:03 That’s probably not the case.
0:40:07 These people are deeply rooted in the medical system,
0:40:09 but are also technologists.
0:40:11 And that’s something that just didn’t exist before
0:40:12 and that’s kind of another why now.
0:40:15 – Yeah, I’d say startups are really hard,
0:40:18 but with a limited number of days and hours
0:40:20 we all have on this planet,
0:40:23 wouldn’t it be amazing to be working on something
0:40:25 that really matters?
0:40:27 And you don’t have to cure cancer.
0:40:29 You don’t need a PhD to save lives.
0:40:32 Like a company that detects medical errors
0:40:34 or helps people afford healthcare
0:40:36 can save countless lives.
0:40:39 And we would love to welcome you into our industry.
0:40:40 So the water’s warm, come on in.
0:40:41 – Absolutely.
0:40:43 I think about there’s websites
0:40:44 where you can look at the very earliest versions
0:40:47 of a Google or a Twitter.
0:40:49 And you’re like, wow, they started there.
0:40:51 And so hopefully there’s some sort of healthcare equivalent
0:40:53 there, right, where there’s gonna be an early version
0:40:55 where it’s, oh, you were just like
0:40:57 providing one blood test for a consumer
0:40:59 or even a subset of consumers.
0:41:00 And then I wonder how that spirals.
0:41:01 I hope we have some examples of that.
0:41:03 – Yeah, like there’s that internet bookstore
0:41:05 that became more than that over time.
0:41:06 That should become Amazon.
0:41:08 – Amazon, exactly.
0:41:09 – Which bought one medical, right?
0:41:11 So I mean, you see how it spirals.
0:41:12 Well, this was great.
0:41:14 Thank you so much, BJ and Daisy.
0:41:16 I really hope that 10 years from now to your point
0:41:17 we can sit down and look back and think,
0:41:19 oh, that was quite obvious.
0:41:20 – I’m looking forward to it.
0:41:21 – Thanks for having us.
0:41:22 – Yeah, thank you.
0:41:24 (upbeat music)
0:41:26 – All right, that is all for today.
0:41:29 If you did make it this far, first of all, thank you.
0:41:31 We put a lot of thought into each of these episodes,
0:41:33 whether it’s guests, the calendar tetris,
0:41:35 cycles with our amazing editor Tommy
0:41:37 until the music is just right.
0:41:39 So if you’d like what we put together,
0:41:43 consider dropping us online at ratethespodcast.com/a16z.
0:41:45 And let us know what your favorite episode is.
0:41:48 It’ll make my day, and I’m sure Tommy’s too.
0:41:50 We’ll catch you on the flip side.
0:41:53 (upbeat music)
0:41:56 (upbeat music)
0:42:06 [BLANK_AUDIO]
0:00:03 Here are some facts for you.
0:00:06 Half of medications that are prescribed are never taken.
0:00:10 88% of Americans are metabolically unhealthy.
0:00:11 It’s 20% of our GDP,
0:00:14 which is like double that of any other developed country.
0:00:17 Perhaps none of this is a surprise to you.
0:00:19 In fact, we’ve done several episodes on this topic,
0:00:21 which we’ll link in the show notes.
0:00:23 But what we haven’t quite touched on
0:00:25 is why it’s time for technologists
0:00:26 to step into the healthcare ring
0:00:29 because solving medicine is not enough.
0:00:30 If you cure all cancer,
0:00:33 you extend Americans lifespan by three years.
0:00:35 So in today’s episode, we explore why,
0:00:37 perhaps counterintuitively,
0:00:40 we need technologists to be solving the equally real problem
0:00:44 of making healthcare a delightful consumer-focused industry.
0:00:46 And indeed, we are seeing that trend
0:00:48 with founders from companies like Spotify
0:00:50 and Coinbase taking their aim.
0:00:53 But are these the right people for the job?
0:00:54 And can they really disentangle
0:00:56 the regulated and complex industry?
0:00:58 Listen in to find out as we explore
0:01:02 with A16Z Bio and Health General Partner Vijay Pandey
0:01:04 and investing partner Daisy Wolf.
0:01:06 So, Tech, what do you say?
0:01:07 Are you ready to build in healthcare?
0:01:11 As a reminder, the content here
0:01:13 is for informational purposes only.
0:01:15 Should not be taken as legal, business, tax,
0:01:16 or investment advice,
0:01:19 or be used to evaluate any investment or security
0:01:20 and is not directed at any investors
0:01:23 or potential investors in any A16Z fund.
0:01:25 Please note that A16Z and its affiliates
0:01:27 may also maintain investments
0:01:29 in the companies discussed in this podcast.
0:01:32 For more details, including a link to our investments,
0:01:35 please see A16Z.com/disclosures.
0:01:42 You too predicted in 2022
0:01:44 that the biggest company in the world
0:01:46 will be a consumer health tech company.
0:01:47 That’s quite the prediction.
0:01:50 So I’d love to just start out by setting the tone.
0:01:51 Where are we today?
0:01:53 Where do we sit in terms of that prediction?
0:01:54 – I think when we wrote the piece,
0:01:56 we had hot conviction.
0:01:58 But Venture is kind of a humbling business
0:02:00 where you can have great ideas
0:02:02 and the market will tell you what the market tells you.
0:02:04 I think the parts that have been exciting for me
0:02:07 is that we’ve had a huge influx of excitement
0:02:08 about that thesis.
0:02:09 So far so good.
0:02:10 And I think we’ve seen a lot of companies
0:02:12 that are I think very much vying to be
0:02:15 that trillion dollar biggest company in the world.
0:02:16 But obviously we’re not there yet.
0:02:18 This is just early stages.
0:02:19 – Yeah, and maybe it’d be helpful
0:02:22 to actually clarify what you mean by a consumer company.
0:02:23 Because when I think consumer company,
0:02:25 I might think Snapchat.
0:02:26 I might think a sneaker company.
0:02:29 – Yes, oftentimes when people think consumer health,
0:02:31 they think of these large consumer health companies
0:02:35 like Rowe or Hymns that often prescribe drugs
0:02:37 or provide telemedicine on the internet.
0:02:39 And when we talk about consumer health,
0:02:41 we actually mean something much broader.
0:02:43 We think a consumer health company
0:02:44 doesn’t have to be direct to consumer.
0:02:46 It can be distributed through B2B.
0:02:48 It doesn’t have to be cash pay.
0:02:50 It could be something that’s free for consumers
0:02:52 because it’s totally covered by insurance.
0:02:55 And it doesn’t even have to be a services company.
0:02:58 So like providing doctors appointments
0:02:59 or prescribing of medication.
0:03:01 It could be pure technology.
0:03:03 But we think what defines a consumer health company
0:03:07 is the ability to have amazing consumer experiences,
0:03:09 which is something traditional healthcare
0:03:11 has done a very bad job of.
0:03:12 – Totally.
0:03:13 And in fact, most healthcare companies today
0:03:15 are the opposite of that.
0:03:17 And actually some people might describe healthcare today
0:03:20 as intimidating, regulated and complex.
0:03:22 And in fact, you two both have referred to it
0:03:24 somewhat in that fashion.
0:03:28 And so what do you think the tech industry in particular
0:03:31 is set to do in a way that others haven’t in the past
0:03:33 to address this unique combination?
0:03:34 – Yeah.
0:03:37 People often say healthcare is intimidating,
0:03:41 which is often a euphemism for healthcare is really big,
0:03:43 which is in venture a good thing.
0:03:45 It’s great to go after big markets.
0:03:47 US healthcare is five times the size
0:03:50 of the global advertising industry,
0:03:53 which is what companies like Meta and Google
0:03:54 make all of their money from.
0:03:55 And it’s highly regulated,
0:03:58 but tons of huge companies have been built
0:04:00 in highly regulated markets.
0:04:02 You know, if you look at Airbnb or Lyft
0:04:03 or even companies that have been built
0:04:05 in unregulated markets,
0:04:08 like Google and Facebook eventually become regulated.
0:04:10 So we think regulation is kind of a marker of success.
0:04:12 And you run into it regardless.
0:04:13 And it’s a good thing in healthcare.
0:04:15 And healthcare is complex,
0:04:17 but every industry is complex
0:04:19 when you dig under the surface of things.
0:04:23 And everyone thinks healthcare, don’t I need a PhD?
0:04:24 I don’t know how to cure cancer.
0:04:27 And the PhDs who are working to cure cancer
0:04:29 are doing extremely important work.
0:04:32 But the reality is if you cure all cancer,
0:04:35 you extend Americans lifespan by three years.
0:04:39 And we’re still lagging behind other developed countries.
0:04:42 And so you need technologists to come and do two things.
0:04:45 One is like healthcare is a logistics
0:04:47 of data and operations problem.
0:04:49 And technologists are very good at that.
0:04:51 And then the second is healthcare
0:04:53 is really a consumer engagement problem.
0:04:55 Even for really highly motivated people,
0:04:58 it’s super hard to navigate the healthcare system.
0:05:00 If you’re trying your best and want all the testing,
0:05:02 it’s really hard to know how to do it.
0:05:04 And then we need people to help us
0:05:05 kind of change our behaviors.
0:05:08 88% of Americans are metabolically unhealthy.
0:05:10 Half of people don’t go to the PCP,
0:05:13 half of medications that are prescribed or never taken.
0:05:15 And so people might look at that
0:05:17 and say we have a societal problem,
0:05:21 but the best companies change the behaviors
0:05:22 of billions of people.
0:05:24 And there’s no reason to think
0:05:25 that couldn’t occur in healthcare.
0:05:27 – I wanna get into maybe some of the pushback
0:05:29 because I feel like for some listeners,
0:05:31 they might be thinking, all that makes sense, Daisy,
0:05:34 but actually technologists are not the people we need.
0:05:36 But interestingly, whether people believe
0:05:38 they’re the right people to provide a solution,
0:05:41 we are seeing them start to take part.
0:05:43 And in fact, both of you wrote another article
0:05:45 that said, hey, Tech, it’s time to build in healthcare.
0:05:47 And we’re seeing founders from Instacart, Spotify,
0:05:50 and Coinbase, probably among many others,
0:05:52 that have started to build healthcare companies.
0:05:53 So why do you think that is,
0:05:56 what’s the why now of these people participating?
0:05:58 – Yeah, I think there are a couple of different elements.
0:06:00 But one of the primary ones is that
0:06:01 much of healthcare and life sciences
0:06:04 is starting to become much more of an engineering discipline.
0:06:06 I think that’s what really attracts us to tech.
0:06:07 I mean, the thing about computer science
0:06:10 is that it’s almost like the ultimate engineering discipline.
0:06:12 And software is just easy to engineer.
0:06:14 But I think as we can engineer these other areas,
0:06:15 it attracts that mindset.
0:06:17 But also, I think they see the huge tam
0:06:19 that Daisy was just talking about.
0:06:21 But then finally, I think it’s more than just
0:06:23 the means and the money.
0:06:26 I think the mission actually also is very appealing.
0:06:28 – And Daisy, you shared this article,
0:06:31 which was again, a call to technologists to participate.
0:06:33 And there was, I think you guys shared it in several places,
0:06:36 but just one of the posts had over 3,000 likes,
0:06:38 over 250 comments.
0:06:40 So clearly people cared, right?
0:06:42 That at the very least was clear.
0:06:43 Just would love to get your personal take.
0:06:46 Why do you think there was such a response,
0:06:47 both good and bad?
0:06:51 – I think part of it is, it was controversial.
0:06:54 We work in an industry, venture capital,
0:06:56 where a lot of firms have written off healthcare.
0:07:00 And they’ve said, look, people have tried and failed.
0:07:02 But the reality is,
0:07:05 of the 100 largest public software companies,
0:07:08 one is a healthcare and life science company.
0:07:13 And as consumers, we feel the pain of that every day.
0:07:15 Every time we go to the doctor’s office
0:07:16 and are asked to fill out forms,
0:07:20 we’ve filled out 150 times in the course of our lives.
0:07:23 Every time we have a loved one that dies
0:07:25 because of something we could have cut,
0:07:27 but our system wasn’t set up correctly.
0:07:30 And so I think one, the take was controversial,
0:07:31 that this is the next frontier,
0:07:34 because a lot of people in our industry have written this off.
0:07:35 But I also think it’s something
0:07:37 that everyone can identify with.
0:07:38 There’s no American out there
0:07:41 who is like, we have a great healthcare system.
0:07:43 We spend, it’s 20% of our GDP,
0:07:45 which is like double that of any other developed country.
0:07:49 And we have worse outcomes and we’re all suffering.
0:07:51 – Let’s talk about some of that pushback.
0:07:53 I would love to hear your direct response
0:07:54 to some of these people,
0:07:56 who by the way, I think have the same goals
0:07:58 as the three of us sitting here, just to share a few.
0:08:02 So Tom says, he still sees that there are flurry of issues
0:08:04 from entrenched vendors, integrations,
0:08:06 backroom deals and funding.
0:08:08 – Yeah, I mean, the healthcare system is huge, right.
0:08:09 So I think part of it,
0:08:12 you’re not gonna fix the whole thing in one go.
0:08:14 And so there’s a couple of different approaches you can take.
0:08:16 One approach is to work, let’s say,
0:08:18 in rebuilding something full stack.
0:08:21 And so companies like Devoted Health do that
0:08:23 by being a Medicare Advantage company
0:08:26 and building payer and provider, basically doing everything.
0:08:28 So that’s really hard to do.
0:08:29 But actually, if you can do that,
0:08:31 you can address those issues directly
0:08:33 because you’re not a sort of victim to any of those issues
0:08:35 because you are the full system.
0:08:37 Working within the system is a lot harder.
0:08:39 And that takes a really special person,
0:08:43 somebody that knows tech and knows, let’s say AI
0:08:44 and knows all that stuff very deeply
0:08:46 but also knows the healthcare system deeply.
0:08:47 There aren’t too many people like that,
0:08:49 but actually the number is growing very rapidly.
0:08:50 – Absolutely.
0:08:51 Let’s talk about another piece of pushback.
0:08:54 So if you kind of touched on this issue
0:08:58 of the unique incentives that exist in the United States.
0:09:02 So Dave, for example, is saying he’s still not seeing
0:09:03 the killer argument for why now.
0:09:06 Susan has said that tech has been addressing healthcare
0:09:08 for quite some time and we are seeing technology
0:09:10 evolve in something like an MRI,
0:09:12 but when it comes to more of the system,
0:09:13 it’s still breaking down.
0:09:16 And then I’ll just read out Dave’s comment directly.
0:09:18 He says, “The US is an outlier in terms of health spend
0:09:20 “as a percentage of GDP.
0:09:22 “In terms of a measure of that service,
0:09:24 “life expectancy in the US is worse.
0:09:26 “What technology has the rest of the world
0:09:27 “kept from the US?
0:09:29 “Why is technology necessary?”
0:09:30 – So let’s take that in two parts.
0:09:32 So in terms of technology,
0:09:33 I think there is technology in healthcare,
0:09:36 but it’s largely in a user interface.
0:09:40 So like MRI is really the same MRI from like the 50s,
0:09:42 just now on a computer display.
0:09:44 And so that’s not really tech.
0:09:45 I would call it the absence of tech.
0:09:47 And a lot of the tech that doctors use
0:09:50 are things like electronic medical records,
0:09:51 which again, it’s a record keeper.
0:09:53 It’s not sort of the high technology
0:09:54 that we’re talking about right now.
0:09:57 We have this huge revolution in our official intelligence
0:09:59 that actually can do amazing things with data
0:10:02 that actually we could never really even dream about.
0:10:04 And so that’s a huge difference in terms of why now.
0:10:06 Now, in terms of what’s actually different
0:10:07 about the rest of the world,
0:10:09 is while those non-US healthcare systems
0:10:11 don’t have to deal with Americans.
0:10:13 And American culture is different, right?
0:10:15 So it’s apples and oranges to say,
0:10:18 well, we have country A’s healthcare system
0:10:20 dealing with country B’s people.
0:10:22 And so the issues Americans have are different.
0:10:24 And we have issues in terms of diet,
0:10:25 in terms of lifestyle.
0:10:28 And those things are independent of technology or not.
0:10:29 We actually love doing clinical trials.
0:10:31 The real thing to do would be to apply one system
0:10:33 to another for sure you can’t do that.
0:10:36 I think the reality is that what makes technology
0:10:37 really powerful is the ability
0:10:40 to actually affect behavioral change.
0:10:41 And that’s the thing that’s really where tech
0:10:44 maybe have some of the quickest impacts in America.
0:10:46 – I think one thing that makes the American system
0:10:49 relatively unique is that most Americans
0:10:51 get healthcare through their employer,
0:10:55 which means they change healthcare insurance companies
0:10:56 every two and a half years.
0:10:59 I think that’s on average how long people stay in a job.
0:11:03 And what that’s meant in effect is insurance companies
0:11:07 don’t feel incentivized to cover preventative care
0:11:09 because they think some other insurance company
0:11:10 will reap the benefits of that
0:11:13 when you switch jobs in two and a half years,
0:11:15 which is a really unfortunate situation.
0:11:17 But I think a few things are happening.
0:11:21 One is there has been a rise of high deductible health plans,
0:11:23 which means your health insurance doesn’t kick in
0:11:27 until you’ve already spent X amount of dollars of your own
0:11:29 before insurance will cover a dime,
0:11:31 which is a relatively unfortunate trend,
0:11:34 but the silver lining of that is you start to see
0:11:36 some more free market dynamics in healthcare
0:11:38 when people are paying for their healthcare
0:11:39 out of their own dollars,
0:11:42 they start thinking about quality and shopping
0:11:45 and what they really wanna understand about their bodies.
0:11:48 And the other kind of why now thing that’s emerged
0:11:51 is I think Vigil probably agree with me
0:11:54 that we wrote this article two years ago
0:11:58 and the last year something has started to change
0:12:01 and it’s partially driven by like a lot of amazing founders
0:12:04 who are building these oftentimes diagnostic companies
0:12:07 that are offering hundreds of blood tests
0:12:09 and full body MRIs and there’s just been this wave
0:12:11 of consumers who really wanna understand
0:12:13 what’s happening in their body.
0:12:16 And it’s not just bio hackers and people in the Bay Area,
0:12:18 it’s people who have chronic health issues,
0:12:20 who have gone to five doctors
0:12:21 who can’t figure out what’s going on,
0:12:25 but there’s been this real movement toward wanting
0:12:27 to understand what’s happening in your body.
0:12:30 And I think it’s kind of a delayed thing
0:12:31 that has come out of COVID.
0:12:35 Where COVID reminded everyone of their own mortality,
0:12:38 we all realize that like health is the foundation
0:12:41 on which you can build a really happy fulfilling life.
0:12:44 And if you don’t have your health, it’s a whole lot harder.
0:12:48 And it just feels like we’re seeing this real consumer shift.
0:12:50 – Yeah, I have a strong gut feeling it’s COVID as well.
0:12:53 And I think it’s not just an understanding our body
0:12:55 but having real agency with it.
0:12:56 What can I do?
0:12:58 And I think COVID put that on the forefront of our minds,
0:13:01 like what actions can I take for myself and my family
0:13:02 and so on?
0:13:04 And now the question is what data do I have
0:13:05 to make those actions?
0:13:07 And that leads to I think this whole new crop of companies.
0:13:09 – Yeah, so what I’m hearing is basically
0:13:11 the system is so entrenched and the incentives
0:13:14 that exist between the provider and the insurer
0:13:16 historically has not been there
0:13:19 to actually create this consumer incentive.
0:13:21 And now you’re saying that things have changed.
0:13:22 There’s almost like this groundswell of people
0:13:24 who are raising their hand and are saying,
0:13:28 I want to improve my health and I want to have a part in this
0:13:30 and that itself is creating a market.
0:13:33 So on that note, you basically said that the most impactful
0:13:36 thing that we can do to fix healthcare
0:13:37 is to improve the consumer experience.
0:13:39 So I’d love to just hear your take on
0:13:41 where you would even start there
0:13:44 and maybe elaborate on what that means.
0:13:45 – Yeah, so I think first and foremost,
0:13:47 you have to imagine like you’re using the product
0:13:50 or that your parents or grandparents are using the product.
0:13:53 And so I want something that is frictionless
0:13:56 where what is so exciting about using an E-Tech product
0:13:58 is that I don’t have to click like a thousand different
0:14:01 buttons or wait two days or something happens quickly.
0:14:02 So I’d love it to be frictionless.
0:14:05 I’d love it to be something where it’s actionable,
0:14:07 where it gives me that level of agency.
0:14:09 And then finally, I think as funny as it is,
0:14:12 I want it to actually have just a great experience.
0:14:14 So why do people buy Apple products or Google UI?
0:14:18 It has that whole experience as something that is seamless.
0:14:20 And it ships it from this burden to like,
0:14:22 “Oh, I got to sit in the line at the DMV
0:14:23 to get healthcare done too.”
0:14:25 This is actually something that is streamlined
0:14:28 and really designed to make my life easier
0:14:30 rather than to make someone else’s life easier,
0:14:31 whether it be the payer or the provider.
0:14:35 – One question Vijay posed to me a couple of years ago now,
0:14:37 and we’ve been debating ever since,
0:14:40 is what does healthcare look like 30 years from now?
0:14:41 And what about 20 years from now?
0:14:43 And what about 10 years from now?
0:14:46 Because our job as vendor capitalists is predict the future
0:14:49 and try to invest in the future we think should exist.
0:14:52 And we think healthcare probably looks like
0:14:54 you have wearable devices
0:14:57 that are monitoring your health at all times.
0:14:59 Some of them are like the wearable devices we know today,
0:15:01 some are some little things that penetrate your skin
0:15:04 that are monitoring all sorts of things
0:15:06 that are happening in your blood.
0:15:09 And these wearable devices are gonna predict
0:15:10 that you’re getting sick
0:15:13 before you even start feeling symptoms and you know.
0:15:14 – Some rings already do this.
0:15:16 – Exactly, we saw this during COVID,
0:15:17 a lot of these devices could predict.
0:15:18 – One ring, eight sleep.
0:15:20 – Exactly, COVID coming on.
0:15:23 And all of your data is going to be in one place,
0:15:25 every health record you’ve ever had.
0:15:27 It’s crazy, we don’t have this today yet by the way.
0:15:29 But all of the data from these wearable devices
0:15:31 is going to be married with all of your health records
0:15:33 from every doctor you’ve ever seen.
0:15:36 And 90% of healthcare is gonna be delivered
0:15:38 probably from your phone and in your home.
0:15:40 So you’re gonna be able to chat on your phone
0:15:42 with a world-class AI doctor,
0:15:44 the best cardiologist in the world
0:15:47 or human doctor if it escalates to that.
0:15:50 And we’ll have at home blood collection devices,
0:15:53 we’ll have at home delivery of medication.
0:15:54 And then you’ll probably go to hospitals
0:15:56 for a few surgeries.
0:15:59 But that’s kind of the forward version
0:16:02 of what we think healthcare will look like in 30 years.
0:16:04 And that’s the amazing consumer experience.
0:16:06 And then what we’re trying to do is predict,
0:16:08 okay, what do we have to invest in now
0:16:10 to start making this a reality?
0:16:12 – Well, also I think this is a bit of a mindset shift
0:16:14 because that really also makes healthcare
0:16:16 a logistics problem as well.
0:16:18 And that’s something that we think about tech all the time.
0:16:21 We think about Amazon doesn’t really sell things.
0:16:23 It’s a logistics company that makes it possible
0:16:25 for all the stuff to get to us and same from Walmart.
0:16:27 And healthcare is really the right care
0:16:28 at the right place at the right time.
0:16:30 And doing that, actually,
0:16:32 we need all the information that you talked about,
0:16:34 but then we need it to be able to be actionable.
0:16:36 With that together, it’ll feel like all the other experiences
0:16:38 that we sort of love in our life
0:16:39 that we have right now from technology.
0:16:42 – Yeah, and maybe one follow-up question there
0:16:44 in that future that you just painted,
0:16:46 all those devices or those trackers
0:16:49 that we’re seeing the early emergence of now,
0:16:53 today those options are very consumer-driven, right?
0:16:56 I’m buying my Aidsleep, I’m buying my OroRing.
0:16:58 Do you think that all of those devices,
0:17:01 the holistic healthcare system outside of maybe the hospital
0:17:02 where you get your serious surgery,
0:17:05 are those all consumer-driven where I’m purchasing those?
0:17:08 Or how do you see the overall large incumbent model
0:17:10 evolve to that picture?
0:17:12 – Yeah, so one thing I think that’s helpful
0:17:13 is actually healthcare is a term
0:17:15 that’s applied to a lot of different things.
0:17:19 And so in the most extreme cases, I need surgery
0:17:21 because I hit my head and my brain is hemorrhaging
0:17:22 or something like that.
0:17:24 That’s like this extreme kind of thing.
0:17:25 That’s not what we’re talking about.
0:17:27 Then the second one is, oh, I’ve gotten ill with something
0:17:29 and I need some sort of treatment.
0:17:31 In both of those cases, those are examples of sick care
0:17:34 where those are procedures that just have to be done.
0:17:37 There’s a third area that actually isn’t always associated
0:17:39 with healthcare, which is the preventative side.
0:17:41 And that’s something that technology has a very natural role.
0:17:44 With preventative, you can avoid getting into that second
0:17:45 or to that third bucket.
0:17:48 And when you start to think of healthcare that way,
0:17:50 just even from a financial point of view,
0:17:52 the most extreme thing is kind of like if you were a car,
0:17:54 that’s collision insurance or something like that.
0:17:56 And then the middle bucket is, well,
0:17:59 I’m gonna just do routine maintenance and stuff like that.
0:18:01 But the first bucket is, I’m not gonna be a crazy driver.
0:18:03 I’m not gonna slam into things,
0:18:05 I’m not gonna go super fast, I’m gonna do all that stuff.
0:18:07 And I think healthcare is gonna be that combination
0:18:10 of all those three, but people basically ignore
0:18:12 that first bucket and how we think about payment
0:18:14 of these things will reflect those.
0:18:15 – And I think to answer your question head on,
0:18:19 today most of these products are consumer purchased.
0:18:20 And I think there’s totally a world
0:18:25 where insurance starts to cover a lot of wearable devices
0:18:27 and things today that we think of as consumer products.
0:18:29 And we definitely see that.
0:18:32 It’s funny when we look at these consumer health companies,
0:18:35 we’ve invested and see a whole bucket of them
0:18:37 that are trying to rebuild the healthcare system
0:18:39 from the ground up and are basically saying,
0:18:41 like what you have over there, that’s crap,
0:18:43 we’re starting over.
0:18:45 And then we’re seeing a ton that are trying to plug
0:18:46 into the healthcare system.
0:18:49 And a key way they plug in is they say,
0:18:51 traditional healthcare has the worst consumer experience
0:18:53 in the world of any industry.
0:18:54 And that really affects them.
0:18:57 They can’t get their customers to change their behaviors.
0:18:59 And so they’re building these consumer companies
0:19:01 that layer on top of traditional healthcare
0:19:03 and make the experience better.
0:19:06 And you can envision a world where wearable devices
0:19:08 start to play in that territory.
0:19:12 Behind every successful business is a story.
0:19:14 And some of them might surprise you,
0:19:17 like how gamer Emmett Shearer turned a 24-hour livestream
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0:19:23 or how Chibani’s first yogurt factory
0:19:26 was discovered on a piece of junk mail.
0:19:28 Well, on the podcast “How I Built This,”
0:19:31 host Guy Raz interviews the innovators, entrepreneurs,
0:19:34 and idealists behind the biggest companies,
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0:19:41 These great conversations are all about thinking big,
0:19:44 taking risk, and navigating crises in life and work,
0:19:46 from the people who, quite frankly,
0:19:49 have done all of that and more.
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0:19:53 or wherever you get your podcasts.
0:19:55 You can also listen to episodes early
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0:20:04 Yeah, and maybe to address something you said earlier, Vijay,
0:20:07 about the kind of experience that we can imagine, right?
0:20:11 Why haven’t we had good UX
0:20:13 or this delightful experience in healthcare?
0:20:15 One thing that comes to mind for me
0:20:18 is if I go to the app store on my phone,
0:20:20 I have infinite possibilities,
0:20:24 and again, it’s consumer choice among those possibilities.
0:20:25 When I think of my healthcare options,
0:20:28 it’s through my employer, and I have two options,
0:20:30 maybe even from the same company,
0:20:33 high deductible plan or not, right?
0:20:36 So do you see that changing as well,
0:20:39 ’cause I’m just thinking again from that place of incentives.
0:20:40 I think it’s incentives,
0:20:41 and I think it also helps to see
0:20:43 who actually is gonna pay for it.
0:20:44 So if someone’s paying out of pocket,
0:20:46 then it feels like a consumer app,
0:20:48 and that’s something where you probably see it first.
0:20:50 And then those types of businesses
0:20:53 may start to compete with the ones you’re talking about.
0:20:54 And then in competition, I think,
0:20:56 you’ll see that the incumbents
0:20:58 feel like they have to move in that direction.
0:20:59 We’ve seen this in other businesses.
0:21:01 Yeah, and just to layer on there,
0:21:03 I think a key reason consumer experience
0:21:05 has been so horrible in healthcare
0:21:09 is health providers, so hospital systems, doctors’ offices,
0:21:12 don’t really see patients as their own customers
0:21:15 because patients generally aren’t paying for their care
0:21:16 the insurance company is.
0:21:18 And so they’re optimizing for the insurance company
0:21:21 instead of the patient, which is a really sad existence.
0:21:24 But what we think everyone has gotten wrong
0:21:28 is that if you have amazing patient and consumer experiences,
0:21:32 you can actually start to encourage behavior change,
0:21:34 getting people to show up to the doctor
0:21:35 if it’s less of a horrible experience,
0:21:37 filling their medication if it’s easier,
0:21:39 taking their medication if it’s easier,
0:21:42 affording the doctors if there’s a financing option.
0:21:44 And so we think everyone’s gotten that wrong historically,
0:21:47 and there is a ton of opportunity.
0:21:48 But part of it might be too,
0:21:51 like who needs to come into action with the right mentality?
0:21:53 So with Motorola have created the iPhone
0:21:55 or something like that, probably not, right?
0:21:58 It takes someone that has a very different mindset.
0:21:59 You know, when you look at companies
0:22:01 that really change industries,
0:22:03 often these are companies that come from the outside
0:22:04 that work with the inside.
0:22:07 So like in streaming music, it’s something like Spotify.
0:22:09 And they didn’t create new artists and create new labels,
0:22:11 but they worked with artists and labels,
0:22:13 but they also came from outside the music system.
0:22:15 – And I think that brings up the point
0:22:16 around these technologists and it’s like,
0:22:19 what are technologies uniquely good at?
0:22:21 And I’m thinking about some of these consumer
0:22:24 engagement strategies like retention or gamification.
0:22:26 So I’d love to hear from both of you.
0:22:29 Where do you see some of these engagement strategies
0:22:32 that maybe tech has previously flourished
0:22:34 being applied to healthcare that seems
0:22:36 like an obvious potential fit?
0:22:37 – I think it’s gonna be all of it.
0:22:38 I mean, you mentioned two in terms
0:22:39 of retention and gamification.
0:22:42 I think it starts with just even there’s the product
0:22:45 and that’s the gamification and other types of things.
0:22:47 And then there’s the mindset for how to run the business.
0:22:51 Often to Daisy’s earlier point, when we’re not paying,
0:22:53 people don’t worry about retention, right?
0:22:54 They don’t worry about because you want your healthcare
0:22:56 or don’t want your healthcare, right?
0:22:58 I think those are not really choices.
0:23:00 And so when you actually have choices,
0:23:02 then people actually have to worry about retention
0:23:03 and that will actually feed into product.
0:23:06 So it’s that whole ecosystem shifting
0:23:08 where we are much more in the driver’s seat
0:23:11 in terms of choice will lead to better products
0:23:12 as we’ve seen in many cases.
0:23:16 – Yeah, the best consumer talent in the world
0:23:17 work in technology.
0:23:22 It’s crazy that today we all use apps for hours a day
0:23:25 that didn’t exist 10 or 15 years ago.
0:23:27 And they’ve been so good at getting our attention
0:23:29 and changing our behavior and changing the way
0:23:31 we go about the world.
0:23:32 If you go to a concert now, everyone’s filming.
0:23:34 So everyone can post it on Instagram.
0:23:36 – And your ticket was probably on an app.
0:23:37 – Exactly.
0:23:39 And so the talent in tech
0:23:41 for building amazing consumer experiences
0:23:44 that change the way we go about our lives is insane.
0:23:48 And that talent just doesn’t exist at all in healthcare.
0:23:50 And it’s partially because what we were talking about
0:23:53 earlier, no one sees consumers as the end customer
0:23:54 and therefore it doesn’t optimize
0:23:56 and no one has bred that talent in the industry.
0:23:58 But I think when you marry people who understand healthcare
0:24:01 and people who understand consumer tech,
0:24:02 really magical things can happen.
0:24:05 – And in your article that we referenced
0:24:07 at the very outset, this idea of becoming
0:24:08 the biggest company in the world,
0:24:10 especially when you’re addressing an industry
0:24:13 that feels so lofty and there’s so many incumbents,
0:24:15 I’d love to just hear your take on how
0:24:16 that might actually happen.
0:24:19 Like how does a technologist potentially come
0:24:22 into this huge industry?
0:24:23 Is there really a path there?
0:24:25 – Yeah, we mentioned at the beginning
0:24:26 this was kind of a controversial take
0:24:28 because the consumer health companies
0:24:31 in the public markets today are relatively small.
0:24:32 But I said, if you think about it
0:24:34 from a first principles perspective,
0:24:37 healthcare is 20% of the American economy.
0:24:38 There’s no reason this can’t exist.
0:24:40 And we basically laid out two ways
0:24:42 we think a company could get to be the biggest company
0:24:44 in the world via consumer health.
0:24:46 The first is becoming a pay vider.
0:24:50 And pay vider basically is an industry shorthand term
0:24:52 for being both the insurance company
0:24:54 and the provider of care.
0:24:56 And United Health Group is that.
0:24:58 It’s United Health Care, which is the insurance company
0:25:01 and Optum, which is their services company.
0:25:04 They employ doctors who then provide care.
0:25:06 And they’re one of the biggest companies in the world.
0:25:07 I think at the time we wrote the article,
0:25:10 they were eight and I think they’ve come down
0:25:14 a bit since as AI companies have surpassed them.
0:25:16 But they are one of the biggest companies in the world
0:25:19 with a really crappy consumer experience.
0:25:20 Their NPS is four.
0:25:22 And so we ventured to say,
0:25:24 what if you had that business model
0:25:26 married with the consumer experience of Apple,
0:25:30 that would obviously be the biggest company in the world.
0:25:33 Every employee would demand that their employer
0:25:35 offer that health plan.
0:25:36 And when you get to Medicare
0:25:38 and you get to choose your plan after you’re 65,
0:25:42 every senior citizen would choose that plan.
0:25:44 And the competition would fall by the wayside.
0:25:47 And so that was the first path we laid out.
0:25:49 That’s a vertical integration strategy.
0:25:52 And the second was a horizontal strategy.
0:25:55 And we’d said either you can become a consumer marketplace.
0:25:57 So the Amazon of healthcare,
0:26:01 the place everyone goes to find their healthcare provider,
0:26:03 to pick their healthcare insurance,
0:26:05 to find the cheapest cost drug.
0:26:09 And if you get a normal 20% take rate,
0:26:10 which is what most marketplaces get,
0:26:11 that gets you the revenue
0:26:13 to be the biggest company in the world.
0:26:14 And then the second path we laid out
0:26:17 was a financial infrastructure layer.
0:26:19 So what if you came the visa of healthcare?
0:26:22 – Healthcare payments, I won’t go into this
0:26:23 ’cause I think probably the general audience
0:26:25 is it’s a little dry.
0:26:27 But healthcare payments are stuck in the 1980s.
0:26:29 We do a whole lot of faxing of forms,
0:26:32 mailing of gift cards, mailing of checks.
0:26:34 And if you could build the financial infrastructure
0:26:35 to service healthcare,
0:26:37 we think that would easily be the biggest company
0:26:38 in the world as well.
0:26:39 – Yeah, I think in the fullness of time,
0:26:42 this won’t be even viewed as all that controversial.
0:26:44 I think there’s just a lot of building that has to be done.
0:26:46 The one thing that I think people really tend to forget
0:26:48 is just how huge healthcare is
0:26:51 and how much it plays in all of our lives.
0:26:52 And you think about what you’d pay for a phone
0:26:54 versus what you’d pay out of pocket
0:26:56 to have healthcare be a little better.
0:26:57 – Oh my God.
0:26:59 – So it just needs to be built.
0:27:00 – Absolutely.
0:27:03 And maybe taking both of those paths on their own,
0:27:06 what would you say the biggest obstacle is for each
0:27:08 and actually making that a reality?
0:27:09 – Yeah, I can take the first one.
0:27:10 So in terms of the full stack,
0:27:11 there’s a lot to build
0:27:14 if you’re gonna build a full stack company from scratch.
0:27:17 You have to build out a provider and a payer
0:27:19 and have technology throughout all of it.
0:27:20 And that’s something that takes a huge amount of capital
0:27:21 and a huge amount of time
0:27:24 and then to scale that into multiple geographies.
0:27:26 So there are companies working to do that.
0:27:27 And that’s something that just,
0:27:29 we can have examples of that in flight,
0:27:31 but it will take time to build.
0:27:33 – I think on the second one is you have to build your way
0:27:35 into the traditional healthcare system.
0:27:38 If you’re gonna be the Amazon of healthcare,
0:27:41 you’ve got to onboard every provider in America.
0:27:43 You have to onboard every insurance company.
0:27:46 You’ve got to work with the pharmacy benefit managers.
0:27:50 And so it’s just gonna take time to infiltrate the industry.
0:27:52 And so probably plugging into the system
0:27:53 is the most challenging part.
0:27:54 – I think one of the founders
0:27:56 that we think a lot about today is like Jensen Wong,
0:27:58 who’s done amazing things,
0:28:00 but NVIDIA is an overnight success,
0:28:01 what, three years of the making?
0:28:02 – That’s what I was gonna say.
0:28:03 Not quite.
0:28:07 – So he’s been making very thoughtful strategic decisions
0:28:09 over multiple decades to build this company
0:28:10 and get it at that point.
0:28:12 It started a few decades ago.
0:28:14 I think, I hope that maybe in 10 years
0:28:15 we’ll have similar conversations
0:28:17 with the Jensen Wongs of healthcare.
0:28:19 – And obviously we hope, or almost expect,
0:28:21 that this may come from startups, right?
0:28:22 And not the incumbents.
0:28:25 But also, is there the possibility?
0:28:28 I mean, you talked about maybe the apple of healthcare,
0:28:29 or you talked about payments
0:28:30 and kind of replicating in some way
0:28:32 what Visa has been able to achieve.
0:28:35 So why wouldn’t it come from them, right?
0:28:36 We actually have heard that quite a few
0:28:38 of these large, fang-like companies
0:28:41 are trying to enter healthcare
0:28:43 because it is such a big market to your point.
0:28:45 So could it come from them?
0:28:47 – It could, but I think this is the traditional innovators
0:28:50 dilemma and that it’s really hard for incumbents.
0:28:52 I think occasionally incumbents can disrupt themselves,
0:28:53 which is pretty rare.
0:28:56 And I think this is a case that would be particularly hard to
0:28:58 because it’s just so technical and difficult.
0:28:59 And I think if you’re an incumbent,
0:29:02 your temptation is to stay away from healthcare.
0:29:04 If you can be this massive, horizontal,
0:29:05 we probably want to do everything
0:29:08 except the hard clinical AI stuff.
0:29:09 You leave that to something else
0:29:11 because that’s a whole different beast.
0:29:13 And so I suspect that for those reasons,
0:29:16 it’s something that the big tech companies will try.
0:29:19 And we’ve seen Apple and Amazon and Google all dabble.
0:29:22 But I think those experiments probably won’t fit
0:29:23 the way they want to build their company.
0:29:25 And so I think they’ll stay as experiments.
0:29:28 – Yeah, they’ve dabbled a lot over the years.
0:29:30 They’ve all seen the size of the industry.
0:29:35 And so I think they look at healthcare and they see dollars,
0:29:36 but they’re not healthcare native.
0:29:39 And so they’ve tried to make these little plays
0:29:41 to grab healthcare dollars
0:29:44 without really investing in healthcare
0:29:47 and changing our clinical outcomes
0:29:49 and the kinds of really hard things you need to do.
0:29:51 And so I think we’ll see acquisitions on the margins
0:29:53 like we saw with Amazon buying one medical
0:29:56 and the Apple’s products are always kind of verging
0:30:01 on health almost, they’re going to count your steps for you.
0:30:03 But we’ve been talking about this for a long time
0:30:06 and we haven’t really seen anyone pull it off.
0:30:08 – It’s like, you know, will the electric car come
0:30:09 from Detroit?
0:30:10 Maybe not at first.
0:30:11 – Yeah.
0:30:12 – Maybe with the fullness of time.
0:30:13 – Right.
0:30:14 – But I think it’ll take an outsider.
0:30:16 – And the flip side of that question is,
0:30:17 might United healthcare just get really good
0:30:19 at consumer experience?
0:30:20 – Right.
0:30:21 – Which I don’t think either.
0:30:22 – Which doesn’t sound like either.
0:30:23 – You’re holding your breath.
0:30:24 Maybe just to round that out,
0:30:26 perhaps there’s a case study or a learning, right?
0:30:28 We have seen to your point, huge industry,
0:30:29 lots of opportunity.
0:30:31 In some cases you might argue,
0:30:32 oh, well, Apple is the wearable.
0:30:35 You already have on you, so they have all the data.
0:30:37 But then you also see interesting cases
0:30:38 like dollar generals getting into healthcare
0:30:41 ’cause they just have so many locations.
0:30:42 Or you see Walmart try,
0:30:44 but then they’re closing their clinics.
0:30:46 So is there maybe an example that comes to mind
0:30:49 of some of these companies with maybe some
0:30:52 of the right assets just approaching it incorrectly?
0:30:54 – Another version of that question is,
0:30:56 which incumbents do you think are closest with their assets?
0:30:58 – Is there one that you think might be actually
0:31:00 taking the right approach?
0:31:01 – Good question.
0:31:03 Amazon’s interesting ’cause they’ve bought one medical,
0:31:05 but that feels like a toe.
0:31:07 Dipping rather than going all the way in.
0:31:09 They’d have to buy a lot more.
0:31:11 And then you start to look like a PE roll-up.
0:31:12 The question is, can they integrate
0:31:14 in what they do really well?
0:31:16 And so that becomes an interesting choice.
0:31:17 But as Daisy was saying,
0:31:19 they all have done small experiments.
0:31:22 So this is something that you can’t build this huge horizontal
0:31:24 or the full stack vertical with a small experiment.
0:31:25 – Right. – Yeah.
0:31:26 There are great people who work
0:31:28 at all these companies and so we don’t want
0:31:29 to disparage them in any way.
0:31:31 But it feels like with the Walmart health of the world,
0:31:34 it was almost a play to get you to stay in Walmart
0:31:36 a little longer and spend a little bit more money.
0:31:38 But without really investing in building
0:31:40 world-class healthcare,
0:31:42 you’re never gonna win in the industry.
0:31:44 And I think that’s what we’ve seen happen over and over
0:31:46 with kind of big tech.
0:31:48 – So almost coming back to that idea
0:31:49 of you have to give a better experience.
0:31:53 And maybe some of the experiments have not focused on that.
0:31:56 So we’ve talked a lot about technologists participating
0:31:58 in healthcare, but that’s a really broad brush.
0:32:00 And we’ve maybe touched on like consumer,
0:32:01 but that’s also a broad brush.
0:32:04 So we all know there’s a few technologies
0:32:06 that seem to really matter AI.
0:32:08 Some people are looking at augmented reality
0:32:11 as another potential interesting entry into healthcare.
0:32:14 What is catching your eye in terms of the kind of technologies
0:32:16 that can really move the needle?
0:32:19 – I love to talk about AI and I think it’s natural.
0:32:20 I think there’s two sides of the coin
0:32:21 that’s really interesting.
0:32:24 One is that you could argue healthcare really needs AI.
0:32:27 In that the cost of healthcare is rising exponentially.
0:32:29 There’s a huge amount of data.
0:32:30 There’s all of these services
0:32:32 that could maybe become compute.
0:32:34 And so I’m going to start with like brain surgery.
0:32:35 It’s going to start with the simple
0:32:37 sort of maybe subclinical things first.
0:32:41 And we’ve seen AI for nurses and AI for maybe therapists
0:32:42 and other things like that.
0:32:44 And that’s going to be a huge change in the cost curve.
0:32:46 The amazing thing about technology
0:32:48 is that we’ll all get the best.
0:32:50 We’ll all get the best nurse, the best therapist.
0:32:52 Kind of like the Spotify in my pocket,
0:32:54 it’s the same Spotify Elon Musk has,
0:32:55 the same Spotify billionaires have.
0:32:58 Technology is a great democratizer.
0:32:59 I think the things that people don’t realize
0:33:00 is there’s a flip.
0:33:03 I was talking about why healthcare needs AI.
0:33:05 I would make an argument that AI needs healthcare.
0:33:07 And the argument there is that actually
0:33:11 where is a place that AI could be applied to
0:33:13 where the cost is so high that justified
0:33:14 the cost of AI right now.
0:33:16 ‘Cause AI is really expensive.
0:33:17 These models cost billions of dollars.
0:33:19 There’s lots of computer hardware.
0:33:22 And to replace that with cat pictures is nice.
0:33:24 And I love cat pictures, don’t get me wrong.
0:33:27 But that’s not where we’re spending huge fraction of GDP.
0:33:29 So I would say AI needs healthcare
0:33:31 because that’s a place that’s very data rich.
0:33:34 And it’s a place where actually the cost is so high now
0:33:36 and increasing exponentially
0:33:38 that it actually could have a huge impact.
0:33:42 – AI has far worse margins than traditional software.
0:33:46 But it has way better margins than human services.
0:33:48 It’s way cheaper to use a large language model
0:33:50 than it is to employ a human.
0:33:53 And healthcare is a $4 trillion industry in America
0:33:56 that’s like probably 90% human services.
0:33:59 And so we talked about how there might be
0:34:01 this leapfrog moment where, you know,
0:34:04 I mentioned traditional technology software
0:34:06 has really not penetrated healthcare.
0:34:08 We have one of the 100 largest public software companies
0:34:10 as a healthcare company, we all feel that.
0:34:12 But just like in the developing world
0:34:15 where you went straight from cash to mobile payments
0:34:17 and leapfrog over credit cards,
0:34:21 we think we’re about to have a similar moment in healthcare
0:34:23 where we’re gonna leapfrog over traditional software
0:34:26 and we’re gonna go straight from human services to AI.
0:34:29 And so you don’t have to go to these IT departments
0:34:31 and hospitals who have no budget
0:34:34 and everyone is overtired and try to convince them
0:34:36 to buy software that they’re gonna have
0:34:38 to train their whole workforce on.
0:34:40 You can say, everyone’s burned out.
0:34:43 We’re gonna hand you AI, quote unquote, humans.
0:34:45 And by the way, large language models
0:34:46 and multimodal models are really good
0:34:49 at doing what low level service humans do today
0:34:51 in healthcare and healthcare is the only industry
0:34:54 that has call centers of thousands of people
0:34:57 who are scheduling appointments, faxing forms,
0:34:59 handling prior authorization.
0:35:02 We’re just really behind and we’ve seen that.
0:35:04 We’ve seen in venture healthcare
0:35:07 has been a traditionally under invested category.
0:35:10 And that’s definitely changed with AI.
0:35:12 I saw a stat that 20% of AI dollars
0:35:14 have gone toward healthcare.
0:35:15 And there’s a reason for that.
0:35:19 We have very clear problems that can be solved with AI
0:35:21 that other industries don’t have.
0:35:23 I mean, the world needs more creative tools and all,
0:35:25 but we have life or death issues
0:35:27 and AI is gonna be able to make a huge difference.
0:35:30 And healthcare is increasingly data science
0:35:33 and doctors are not data scientists.
0:35:35 And so they need these kind of co-pilot tools
0:35:37 to help them catch things they’re missing.
0:35:39 – I just wanna call out something you said earlier,
0:35:42 which is that even if we cure all cancer,
0:35:45 Erkin’s lifespans are only going to increase by three years.
0:35:46 Do you guys have any other just,
0:35:48 whether it’s stats or thoughts around
0:35:51 if we really are able to deploy AI
0:35:52 in the ways that you’re describing,
0:35:54 what does that really change in real outcomes?
0:35:58 Whether it’s for patients or Americans at large.
0:35:59 – Yeah, I think in that spirit,
0:36:02 I think the so-called social determinants of healthcare
0:36:04 that are outside of the traditional healthcare system
0:36:07 is actually a large fraction of what leads to mortality
0:36:08 and morbidity.
0:36:10 And so AI being able to do behavioral changes
0:36:12 is such an easy one.
0:36:14 – No one’s been able to pull off behavior change
0:36:15 in healthcare to date,
0:36:17 but it really does feel like we have this why now moment.
0:36:20 There’s regulatory change that are enabling consumers
0:36:22 to get access to all of their health records
0:36:24 or grant that access to an app.
0:36:26 There are these diagnostic companies
0:36:28 that are running every customer a son
0:36:30 and tracking changes over time.
0:36:32 There’s more penetration of wearable devices
0:36:33 than ever before.
0:36:36 And if you marry all of those things,
0:36:39 we’re gonna have these companions very soon
0:36:43 that are providing actually helpful health tips
0:36:44 and monitoring us and telling us
0:36:45 when something might go wrong,
0:36:47 far before we know something’s going wrong
0:36:50 or far before a doctor can diagnose us.
0:36:52 And that’s gonna be a big step change for human health.
0:36:53 – Well, I challenge you.
0:36:56 So actually this came up on our podcast with Tom from ORA.
0:36:57 And you mentioned how actually all your friends
0:37:00 after getting the order ring end up drinking less alcohol.
0:37:01 – It’s true.
0:37:02 – Yeah, it’s just so it’s why you said it.
0:37:04 So I get the order ring for Christmas
0:37:06 and I’m like, well, Daisy’s friends are gonna drink
0:37:07 less alcohol, but that’s, I mean,
0:37:09 I’m already pretty good shape,
0:37:10 but I end up drinking less alcohol.
0:37:12 And then at like dinner the other night,
0:37:14 people at the table were talking about
0:37:16 their sleep score and stuff like that.
0:37:18 That’s real behavior change.
0:37:20 – And that actually is medically significant
0:37:21 behavioral change.
0:37:21 – You’re totally right.
0:37:22 I’m wrong.
0:37:23 The tech is real big.
0:37:25 – It’s one example and I think we can come up
0:37:26 with a handful more,
0:37:28 but I think maybe original points,
0:37:29 there’s a lot more to do.
0:37:30 – Totally, there’s a lot more to do.
0:37:32 And if anyone solves the problem of alcohol
0:37:34 disrupting your sleep, please come find us.
0:37:36 – I know, I’d love to continue on this.
0:37:39 – Solution of drink less alcohol, but yeah.
0:37:40 – Talking about consumer change,
0:37:42 I was at a wedding recently
0:37:45 and people are gonna grill me for this,
0:37:47 but everyone had an eight sleep.
0:37:49 Every single person at the wedding table,
0:37:52 the couples, there was maybe six or so of them.
0:37:54 They all had eight sleeps and they were all like,
0:37:55 what’s your temperature?
0:37:57 That is a social phenomena.
0:37:58 And you’re going around and you’re like,
0:38:00 oh, I’m the hot one, I’m the cold one.
0:38:01 And now that you mentioned the aura,
0:38:03 kind of social phenomena,
0:38:05 I feel like we’re seeing it with other devices as well.
0:38:07 – I think the social phenomena is a real thing.
0:38:09 And social is obviously a real thing in tech.
0:38:10 And I think there’s a movement again,
0:38:13 maybe post COVID towards health,
0:38:16 where I think people are drinking a lot less alcohol,
0:38:17 they’re working out a lot more.
0:38:20 And it helps, that’s a social contagion, of course,
0:38:22 that it’s sort of cool to do that.
0:38:24 And I think we all want to improve our health
0:38:25 and it helps when we’re all doing it.
0:38:28 So tech is an amplifier of that,
0:38:29 whether we’re talking about social networks,
0:38:31 but also it’s not just the social networks.
0:38:32 You need the number, you need the result,
0:38:33 or you need the score.
0:38:34 It’s the beginning.
0:38:36 I think there’s a lot more to go from there.
0:38:37 – A similar thing, we invested in a company
0:38:39 called Function Health that runs every blood test
0:38:41 under the sun on you and explains what’s happening
0:38:43 in your body system by system.
0:38:46 And they provide you with something called biological age.
0:38:48 And the number of texts I’ve now gotten
0:38:50 that are saying, what’s your biological age?
0:38:52 And people are comparing their biological ages
0:38:55 and having biological age birthday parties.
0:38:56 – I love that.
0:38:57 – Things are changing.
0:38:59 And you can change it, you can lower it.
0:39:00 – Yeah.
0:39:02 And you talked about how sometimes
0:39:04 just the right number of things have to come together.
0:39:06 And so I think about AI,
0:39:08 talk about how if we didn’t use alt tags back in the day
0:39:10 and we weren’t labeling all these pictures,
0:39:13 like where would we be in terms of the data sets
0:39:15 that we have today, at least for imagery, right?
0:39:17 And so it feels like some of the things
0:39:18 you’re both bringing up is, okay,
0:39:20 so we’re starting to get the data,
0:39:22 we’re starting to get the consumer buy in,
0:39:23 some of the incentives are changing
0:39:26 and all of that coming together does feel like, oh, I know.
0:39:29 So maybe closing things out, if there are people
0:39:31 who maybe are still a little doubtful,
0:39:32 they’re hearing this and they’re like, yes,
0:39:34 I agree that I want this to change,
0:39:36 but maybe I don’t necessarily agree
0:39:39 that technologists are the people right now
0:39:41 who are gonna be able to make this shift.
0:39:42 What would you say to those people?
0:39:45 And also maybe what would you say to the technologists
0:39:46 who maybe are on the fence?
0:39:48 – I think part of it is that
0:39:49 if you’re a medical professional,
0:39:51 I think the key thing is all these technologists
0:39:54 are not necessarily complete outsiders.
0:39:55 There are people that also know
0:39:56 the healthcare system in and out.
0:39:58 ‘Cause it does feel a little odd
0:40:00 that like some person who just graduates
0:40:02 with an undergrad CS degree is gonna solve all the healthcare.
0:40:03 That’s probably not the case.
0:40:07 These people are deeply rooted in the medical system,
0:40:09 but are also technologists.
0:40:11 And that’s something that just didn’t exist before
0:40:12 and that’s kind of another why now.
0:40:15 – Yeah, I’d say startups are really hard,
0:40:18 but with a limited number of days and hours
0:40:20 we all have on this planet,
0:40:23 wouldn’t it be amazing to be working on something
0:40:25 that really matters?
0:40:27 And you don’t have to cure cancer.
0:40:29 You don’t need a PhD to save lives.
0:40:32 Like a company that detects medical errors
0:40:34 or helps people afford healthcare
0:40:36 can save countless lives.
0:40:39 And we would love to welcome you into our industry.
0:40:40 So the water’s warm, come on in.
0:40:41 – Absolutely.
0:40:43 I think about there’s websites
0:40:44 where you can look at the very earliest versions
0:40:47 of a Google or a Twitter.
0:40:49 And you’re like, wow, they started there.
0:40:51 And so hopefully there’s some sort of healthcare equivalent
0:40:53 there, right, where there’s gonna be an early version
0:40:55 where it’s, oh, you were just like
0:40:57 providing one blood test for a consumer
0:40:59 or even a subset of consumers.
0:41:00 And then I wonder how that spirals.
0:41:01 I hope we have some examples of that.
0:41:03 – Yeah, like there’s that internet bookstore
0:41:05 that became more than that over time.
0:41:06 That should become Amazon.
0:41:08 – Amazon, exactly.
0:41:09 – Which bought one medical, right?
0:41:11 So I mean, you see how it spirals.
0:41:12 Well, this was great.
0:41:14 Thank you so much, BJ and Daisy.
0:41:16 I really hope that 10 years from now to your point
0:41:17 we can sit down and look back and think,
0:41:19 oh, that was quite obvious.
0:41:20 – I’m looking forward to it.
0:41:21 – Thanks for having us.
0:41:22 – Yeah, thank you.
0:41:24 (upbeat music)
0:41:26 – All right, that is all for today.
0:41:29 If you did make it this far, first of all, thank you.
0:41:31 We put a lot of thought into each of these episodes,
0:41:33 whether it’s guests, the calendar tetris,
0:41:35 cycles with our amazing editor Tommy
0:41:37 until the music is just right.
0:41:39 So if you’d like what we put together,
0:41:43 consider dropping us online at ratethespodcast.com/a16z.
0:41:45 And let us know what your favorite episode is.
0:41:48 It’ll make my day, and I’m sure Tommy’s too.
0:41:50 We’ll catch you on the flip side.
0:41:53 (upbeat music)
0:41:56 (upbeat music)
0:42:06 [BLANK_AUDIO]
Half of prescribed medications are never taken, and 88% of Americans are metabolically unhealthy. Despite spending 20% of our GDP on healthcare—twice that of any other developed nation—our outcomes still lag behind.
In this episode, we explore why technologists must step into the healthcare ring. Solving medicine isn’t enough; we need to make healthcare a consumer-focused industry. a16z’s Vijay Pandey and Daisy Wolf discuss the rise of tech founders in healthcare, the potential of AI to transform patient care, and how this shift could lead to the next trillion-dollar company.
Can tech truly disrupt this complex, regulated industry?
Resources:
Read the article ‘It’s Time to Build in Healthcare’: https://a16z.com/hey-tech-its-time-to-build-in-healthcare/
Find Vijay on Twitter: https://x.com/vijaypande
Find Daisy on Twitter: https://x.com/daisydwolf
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Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures.