Pod Insights a16z Podcast Hey Tech, Come to Healthcare About this episode In this episode, Vijay Pande and Daisy Wolf of a16z Bio + Health make a provocative case for why technologists—not just medical professionals—are key to reinventing healthcare. They argue that to transform a sector representing 20% of U. S. GDP, innovation must move beyond curing diseases toward tackling healthcare’s broken systems.
By likening the healthcare industry to a logistics challenge, Vijay and Daisy outline how technologists can leverage their expertise in consumer engagement, operational efficiency, and AI to drive the next frontier of health innovation. They also explore high-impact opportunities like improving patient experiences and deploying AI for behavioral change at scale.
If you’re ready to explore new paths in healthcare, this episode is essential listening for understanding the powerful role technologists can play in shaping its future.
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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.
Transcript 0:14 Speaker 2 VJ, Daisy, welcome. So you two predicted in 2022, so two years ago, that the biggest company in the world will be a consumer health tech company. That's quite the prediction. So I'd love to just start out by setting the tone. Where are we today? Where do we sit in terms of that prediction? Aaron Ross Powell
0:30 Speaker 1 Yeah, you know, I think when we wrote the piece, we had high conviction. But you know, venture is kind of humbly business where you can have great ideas and the market would tell you what the market tells you. I think the parts have been exciting for me is that we've had a huge influx of excitement about that thesis. So far so good. And I think we've seen a lot of companies that are, I think, very much vying to be that uh trillion dollar biggest company in the world. But obviously we're not there yet. This is just early stages.
0:56 Speaker 2 Yeah, and maybe for folks listening, it'd be helpful to actually clarify what you mean by a consumer company. Because when I think consumer company, I might think Snapchat, I might think a sneaker company, we're just talking about shoes. So what do you actually mean when you're referring to a consumer health tech company?
1:12 Speaker 0 Yes, oftentimes when people think consumer health, they think of these large consumer health companies like Roe or HIMS that often prescribe drugs or provide telemedicine on the internet. And when we talk about tele um consumer health, we actually mean something much broader. We think a consumer health company doesn't have to be direct to consumer. It can be distributed through it just through B2B. Um it doesn't have to be cash pay. It could be something that's free for consumers because it's totally covered by insurance. And it doesn't even have to be a services company. So like providing doctors' appointments or prescribing of medication. It could be pure technology. But we think what describes uh what defines a consumer health company is the ability to have amazing consumer experiences, which is something traditional healthcare has done a very bad job of.
2:00 Speaker 0 Totally. And in fact,
2:02 Speaker 2 most healthcare companies today are the opposite of that. And actually some people might describe healthcare today as intimidating, regulated, and complex. And in fact, you two both have referred to it somewhat in that fashion. And so what do you think the tech industry in particular is set to do in a way that you know others haven't in the past to address this unique combination?
2:24 Speaker 0 Yeah. I think I'll address those things head-on, which is people often say healthcare is intimidating, which is often a euphemism for health care is really big, which is in venture a good thing. It's great to go after big markets. Healthcare, U.S. healthcare is five times the size of the global advertising industry, which is like what companies like you know, Meta and Google make all of their money from. Um it's highly regulated, but tons of huge companies have been built in highly regulated markets. Um, you know, if you look at Airbnb or Lyft, or even companies that have been built in unregulated markets like Google and Facebook eventually become regulated. So we think regulation is kind of a marker of success, and you run into it regardless, then it's a good thing in healthcare.
3:10 Speaker 0 Um and healthcare is complex, but every industry is complex when you dig under the surface of things. And we think you really need technologists to solve healthcare problems. Everyone thinks like, you know, healthcare, don't I need a PhD? Um, you know, I don't know how to cure cancer. And the PhDs who are working to cure cancer are doing extremely important work. But the reality is if you cure all cancer, you extend Americans' lifespan by three years. And we're still lagging behind other developed countries. And so you need technologists to come and do two things. One is like healthcare is a logistics, a data, an operations problem, and technologists are very good at that. And then the second is healthcare is really a consumer engagement problem. Even for really highly motivated people, it's super hard to navigate the healthcare system.
3:59 Speaker 0 If you're trying your best and want all the testing, it's really hard to know how to do it. And then we need people to help us kind of change our behaviors. 88% of Americans are metabolically unhealthy. Half of people don't go to the PCP, half of medications that are prescribed are never taken. And so people might look at that and say, like, we have a societal problem, but the best companies change the behaviors of billions of people, and there's no reason to think that couldn't occur in healthcare.
4:29 Speaker 2 Yeah, absolutely. And I want to get into maybe some of the pushback because I feel like for some listeners, they might be thinking, actually, all that makes sense, Daisy, but actually technologists are not the people we need. But interestingly, whether people believe they're the right uh solution or the right people to to provide a solution, um, we are seeing them start to come and and take part. And in fact, both of you wrote another article that said, hey Tech, it's time to build in healthcare, and we're seeing founders from Instacart, Spotify, and Coinbase, probably among many others that have started to build healthcare companies. So why do you think that is? What's the why now of these people participating? Aaron Powell
5:06 Speaker 1 Yeah, I think there are a couple different elements, but one of the primary ones is that much of healthcare and life sciences is starting to become much more of an engineering discipline. I think that's what really attracts us to tech. I mean, think about computer science is that it's almost like the ultimate engineering discipline. And software is just easy to engineer. But I think as we can engineer these other areas, it attracts that mindset. But also I I think they they see the huge TAM that uh Daisy was just talking about. But then finally, I think it's more than just the means and and the the money. I think the the mission actually also is is very, very appealing. And the fact that you can actually change the world's health care, uh it that itself draws a ton as well.
5:43 Speaker 2 Absolutely. And maybe we can talk about some of that pushback. But first, Daisy, you shared this article, which was again a call to technologist to participate. And there was, I think you guys shared it in several places, but just one of the posts had over 3,000 likes, over 250 comments. So clearly people cared, right? That at the very least was clear. Just would love to get your personal take. Why do you think there was such a response, both good and bad? And again, we'll get into the good and bad in a second, but what's your take on that?
6:10 Speaker 0 Yeah. I think part of it is it was controversial. Um a lot of we work in an industry where in venture capital, where a lot of firms have written off healthcare and they've said, like, look, people have tried and failed. But the reality is, like, of the hundred largest public software companies, one is a healthcare and life science company. And as consumers, like we feel the pain of that every day. Every time we go to the doctor's office and are asked to fill out forms we've filled out 150 times in the course of our lives. Every time we have a loved one that dies because of you know something we could have caught, but our system wasn't set up correctly. And so I think like one, the take was controversial that this is the next frontier because a lot of people in our industry have written this off.
6:59 Speaker 0 But I also think it's something that everyone can identify with. Like there's no American out there who is like, we have a great healthcare system. We spend, you know, it's 20% of our GDP, which is like double that of any other developing country, and we uh developed country, and we have worse outcomes and we're all suffering. And so I think it resonated. Absolutely.
7:21 Speaker 2 Let's talk about some of that pushback. I would love to hear your direct um response to some of these people who, by the way, I think have the same goals as as the three of us sitting here. Um just to share a few. So Tom says, you know, he still sees that there are a flurry of issues from entrenched and uh entrenched vendors, integrations, backroom deals, and funding. So what would you say to him in terms of, you know, what maybe that has been true, but there's there's some sort of opening here. Aaron Ross Powell
7:47 Speaker 1 Yeah, I mean the healthcare system is huge, right? So I think part of it that you're not going to fix the whole thing in in one go. And so there's a couple different approaches you can take. One approach is to work, let's say, in rebuilding something uh full stack. And so companies like devoted health do that by being a Medicare Advantage company and building payer and provider, basically doing everything. So that's really hard to do. But actually, if you can do that, you can address those issues directly because you're you're not a sort of uh a victim to any of those issues because you are the full system. Uh and then we see other companies basically taking similar approaches to try to sort of be much more full stack. Working within the system is a lot harder. And there you actually also then if you're going to do that and there's plenty to do there, then actually you also just have to be aware about how the system works. And that takes a really special person, somebody that knows tech and knows, let's say, AI and knows all that stuff very deeply, but also knows a healthcare system deeply.
8:39 Speaker 1 There aren't too many people like that, but actually the number is growing very rapidly. Aaron Powell
8:44 Speaker 2 Absolutely. Let's talk about another piece of pushback. So if you kind of touched on this issue of the maybe unique incentives that exist in the United States. So Dave, for example, is saying, you know, he's still not seeing the killer argument for why now. Um Susan has saying has said that you know, tech has been addressing health care for quite some time, and we are seeing you know technology evolve in something like an MRI, but when it comes to more of the system, it's still breaking down. And then I'll just read out Dave's uh comment directly. Um he says the US is an outlier in terms of health spend as a percentage of GDP in terms of a measure of that service, life expectancy in the US is worse. What technology has the rest of the world kept from the US? Why is technology necessary? Aaron Ross Powell
9:28 Speaker 1 Yeah. So let's take that in two parts. So in terms of technology, I think there is technology in healthcare, but it's largely in a user interface. So like MRI is really the same MRI from like the 50s just now with on a computer display. And so that's not really tech. Uh that's actually I would call that the absence of tech. And a lot of the tech that doctors use are things like electronic medical records, which again is kind of a it's a record keeper. It's not sort of the Thai technology that we're talking about right now. And so what is different today is that we have this huge revolution in ourficial Intelligence that actually can do amazing things with data that actually we could never really even dream about. And so that's a huge difference in terms of why now. Now, in terms of what's actually different about the rest of the world is well, those um non-U.S. healthcare systems don't have to deal with Americans.
10:16 Speaker 1 And American culture is different, right? So it's apples and oranges to say, well, we have a country A's uh healthcare system dealing with country B's people. And so the issues Americans have are different. And we have issues in terms of diet, in terms of lifestyle, and those things are independent of technology or not. Actually, you could imagine what uh and so you know, we actually love doing clinical trials. The real thing to do would be to apply one system to another. Unfortunately we can't do that. Uh I think the reality is that what makes lifestyle and these cultural things uh so impactful is behavioral change. And so I think where technology becomes interesting and where we've always seen it become powerful is to uh in uh to create that technology. What makes technology really powerful is its ability to create that change in in and mindset and change that behavior change.
11:02 Speaker 1 So one last time. What makes technology really powerful is the ability to actually uh affect behavioral change. And that's the thing that's really uh where tech could maybe have some of the quickest impacts in America. Aaron Powell
11:14 Speaker 0 And I'll just add on to that. I think one thing that makes the American system relatively unique is that most Americans get health care through their employer, which means they change health care insurance companies every two and a half years. I think that's on average how long people stay in a job. And what that's meant in effect is insurance companies don't feel incentivized to cover preventative care because they think some other insurance company will reap the benefits of that when you switch jobs in two and a half years, which is a really unfortunate situation. But there are a few, I think to I'm forgetting, was it Tom's question about why now?
11:52 Speaker 2 A few lots of breakout points made. Yeah, I know.
11:55 Speaker 0 Um I I love all the commenters. Um but I think a few things are happening. One is there has been uh rise of high deductible health plans, which means your health insurance doesn't kick in until you've already spent X amount of dollars of your own before insurance will cover a dime, which is a relatively unfortunate trend. But the silver lining of that is you start to see some more free market dynamics in healthcare. When people are paying for their health care out of their own dollars, they start thinking about quality and shopping and what they really want to understand about their bodies. And the other kind of why now thing that's emerged is I I think VG will probably agree with me that we wrote this article two years ago. In the last year, something has started to change.
12:41 Speaker 0 And it's partially driven by like a lot of amazing founders who are building these oftentimes diagnostic companies that are offering hundreds of blood tests and full body MRIs, and there's just been this wave of consumers who really want to understand what's happening in their body. And it's it's not just biohackers and people in the Bay Area. It's people who have chronic health issues, who have been gone to you know, five doctors who can't figure out what's going on, but there's been this real movement toward wanting to understand what's happening in your body. And I think it's kind of a delayed thing that has come out of COVID. Where COVID reminded everyone of their own mortality, we all realize that like health is the foundation on which you can build a really happy, fulfilling life, and if you don't have your health, it's a whole lot harder.
13:31 Speaker 0 And it just feels like we're seeing this real consumer shift. Trevor Burrus, Jr.:
13:36 Speaker 1 I have a strong gut feeling it's COVID as well. And I think it's not just understanding our body, but having real agency with it. Like what can I do? And I think COVID put that in the forefront of our minds, like what actions can I take for myself and my family and so on. And now the question is what data do I have to make those actions? And that leads to, I think, this whole new crop of companies.
13:56 Speaker 2 Yeah. So what I'm hearing is basically uh some of the pushback from some of these commenters is basically like the system is so entrenched and the incentives that exist between like the provider and the insurer is is not typically or historically has not been there to actually create this consumer incentive. Um and now you're saying that things have changed. There's almost like this groundswell of people who are raising their hand who are saying um I want to improve my health and I want to have a a part in this, and that in itself is creating a market. Um that note, healthcare consumers are you basically said that the most impactful thing that we can do to fix health care is to improve the consumer experience. So I'd love to just hear your take on where you would even start there and maybe elaborate on what that means.
14:44 Speaker 1 Okay, did I take that one or you take that?
14:45 Speaker 2 Yeah. That's further along. I'm gonna come back up just because we're talking touching on consumers. Okay, I can take that one. Yeah,
14:50 Speaker 1 go. Yeah, so I think first and foremost, you know, uh you have to imagine like you're using the product uh or that you're you're your parents, uh your grandparents are using the product. And so I want something that is frictionless, where you know what what is so exciting about using an ATEC product is that I don't have to click like a thousand different buttons or or or wait two days or something like it's happens quickly. So I would love it to be frictionless. I'd love it to be something where it's actionable, where that it gives me that that level of agency. And then finally, I think as as funny as it is, I want it to actually have just a great experience. So like, you know, why do people buy Apple products or like you know, Google UI? It has that that um that whole experience is something that is seamless and and that it shifts it from this burden to like, oh, I gotta sit in the line of the DMV to get healthcare done to like this is actually something that is uh streamlined and really designed to make my life easier rather than to make someone else's life easier, whether it be the payer or the provider.
15:47 Speaker 0 Yeah. Yeah. I was gonna add on to that. One question Vijay posed to me a couple years ago now, and we've been debating ever since, is what is healthcare look like 30 years from now? And what about 20 years from now? And what about 10 years from now? Because our job as vendor capitalists is to prevent, you know, predict the future and try to invest in the future we think should exist. And we think healthcare probably looks like you are you have wearable devices that are monitoring your health at all times. Some of them are like the wearable devices we know today, sub or some subcutaneous, like you know, little things that penetrate your skin that are monitoring all sorts of things that are happening in your blood. And these wearable devices are gonna predict that you're getting sick before you even start feeling symptoms and no.
16:37 Speaker 1 Some rings already do this. Exactly. We
16:38 Speaker 0 saw this during COVID. A lot of these devices could
16:40 Speaker 2 predict
16:42 Speaker 0 sleep. Exactly, COVID coming on. And all of your data is going to be in one place, every health record you've ever had. It's crazy we don't have this today yet, by the way. But all of the data from these wearable devices is going to be married with all of your health records from every doctor you've ever seen. And 90% of health care is going to be delivered probably from your phone in your home. So you're going to be able to chat on your phone with a world-class AI doctor, the best you know cardiologist in the world or human doctor if it escalates to that. And you're going to have, you know, we'll have at-home blood collection devices, we'll have at-home delivery of medication, and then you'll probably go to hospitals for you know a f a few surgeries. Um that's kind of the forward ver version of what we think healthcare will look like in 30 years, and that's the amazing consumer experience.
17:29 Speaker 0 And then what we're trying to do is predict, okay, like what do we have to invest in now to start making this a reality? Aaron Powell
17:37 Speaker 1 Well, also I think this is a bit of a mindset shift because that really also makes healthcare a logistics problem as well. And that that's something that we think about tech all the time. You think about Amazon doesn't really sell things. It's a logistics company that makes it possible for all this stuff to get to us, and same from Walmart. And healthcare is really the right care at the right place at the right time. And doing that actually um we need all the information Daisy talked about, but then we need it to be able to be actionable with that together. It'll feel like all the other experiences that we sort of love in our life that we have right now from technology. Aaron Powell
18:07 Speaker 2 Yeah. And maybe one follow-up question there in that future that you just painted, those all those devices or those um trackers that you know we're seeing the early emergence of now. Today those options are very consumer-driven, right? I'm buying my AIDS sleep, I'm buying my aura ring. Do you think that all of those devices, the holistic health care system outside of maybe the hospital where you get your serious surgery? Are those all consumer-driven where I'm purchasing those? Or how do you see the overall like large incumbent model evolve to that picture? Does that make sense?
18:40 Speaker 1 So yeah, I can take it for I can start and then we can. Yeah, so one thing is I think that's helpful is actually healthcare is a term that's applied to a lot of different things. And so in the most extreme case, it's like, you know, I need surgery because I uh uh I hit my head and my brain is hemorrhaging or something like that. That's like this extreme kind of thing. That's uh hospitals, that's you know, that's not what we're talking about. Then uh then the second one is like, oh, I've gotten ill with something and I need some sort of treatment. In both of those cases, those are examples of sick care, where it's something that um those are procedures that just have to be done. There's a third area that actually isn't always associated with healthcare, which is the preventative side. And that's something that technology has a very natural role. With preventative, you can avoid getting into that second or to that third bucket. And when you start to think of healthcare that way, just even from a financial point of view, the the most extreme thing is kind of like if you are a car, that's like um collision insurance or something like that.
19:34 Speaker 1 And then the middle bucket is, well, I'm gonna like uh help just do routine maintenance and stuff like that. But the first bucket is I'm not gonna be a crazy driver. You know, I'm not gonna slam into things, I'm not gonna go super fast, I'm gonna do all that stuff. And I I think healthcare is going to be that combination of all those three. But people basically ignore that first bucket. And how we think about payment of these things will reflect those.
19:56 Speaker 0 And I think to answer your question head on, today most of these products are. Consumer purchased. And I think there's totally a world where insurance starts to cover a lot of wearable devices and things today that we think of as consumer products. And we we definitely see that. It's funny when we look at these consumer health companies. We've invested and see a whole bucket of them that are trying to rebuild the healthcare system from the ground up and are basically saying, like what you have over there, that's crap. We're starting over. And then we're seeing a ton that are trying to plug into the healthcare system. And a key way they plug in is they say traditional healthcare has the worst consumer experience in the world of any industry. And that really affects them. They can't get their customers to change their behaviors. And so they're building these consumer companies that layer on top of traditional healthcare and make the experience better.
20:47 Speaker 0 And you you can envision a world where wearable devices start to play in in that territory.
20:52 Speaker 2 Yeah. And maybe to address something you said earlier, Vijay, about you know, the kind of experience that we can imagine, right? Like, why haven't we had good UX, right? Or why haven't we been able to have this like delightful experience in healthcare? One thing that comes to mind for me is, you know, if I go to the app store on my phone, I have infinite possibilities. And again, it's consumer choice among those possibilities. When I think of my healthcare options, it's you know, through my employer and I have you know, like two options, maybe even from the same company, high deductible plan or not, right? So do you see that changing as well? Because I'm just thinking again from that place of incentives, it being kind of like the these large incumbents haven't had the incentive where they've needed to.
21:40 Speaker 1 I think it's incentives, and I think it also helps to see who actually is gonna pay for it. So if someone's paying out of pocket, uh then it feels like a consumer app, and that's something where you probably see it first. And then those uh types of businesses may start to compete with the ones you're talking about. And then in competition, I think you'll see that the incumbents feel like they have to move in that direction. We've seen this in other businesses. Aaron Powell
22:01 Speaker 0 I yeah, and and just to layer on there, I think a key reason consumer experience has been so horrible in healthcare is health health providers, so hospital systems, doctors' offices don't really see patients as their end customers because patients generally aren't paying for their care. The insurance company is. And so they're optimizing for the insurance company instead of the patient, which is a really sad existence. But what we think everyone has gotten wrong is that if you have amazing patient and consumer experiences, you can actually start to encourage behavior change, getting people to show up to the doctor if it's less of a horrible experience, fill filling their medication if it's easier, taking their medication if it's easier, affording the doctors a visit if there's a financing option. Um we think everyone's gotten that wrong historically, and there is a ton of opportunity in realizing that and and we're starting to see it happen.
22:53 Speaker 0 Aaron Powell
22:54 Speaker 1 But part of it might be too like who needs to come in to actually with the right mentality. So like would like Motorola have created the iPhone or something like that. Um probably not, right? It takes someone that that has a very different mindset. You know, when you look at companies that really change industries, often these are companies that come from the outside that work with the inside. So like in streaming music, it's something like Spotify. And they didn't create new artists and create new labels, but they work with artists and labels, but they also came from outside the music system. Aaron Powell
23:21 Speaker 2 Absolutely. And I think that you know brings up the point around these technologists, and it's like what are technologies uniquely good at? And I'm thinking about some of these consumer engagement strategies like you know, retention or like um gamification. So I'd love to hear from both of you. Where do you see some of these engagement strategies that maybe tech has previously flourished being applied to healthcare? That seems like an obvious potential fit.
23:47 Speaker 1 I think it's gonna be all of it. I mean, you mentioned two in terms of uh retention gamification. I think it starts with just even uh there's the product, and that's the gamification and other types of things, and then there's the mindset for how to run the business. And like often uh to Daisy's earlier point when we're not paying, we're uh people don't worry about retention, right? They don't worry about because you want your healthcare or don't want you don't want your healthcare, right? I think those are not really choices. And so when you actually have choices, then people actually have to worry about retention, and that will actually feed into product. So it's that whole ecosystem shifting where we are much more in the driver's seat in terms of choice will lead to better products, and as we've seen in many cases.
24:27 Speaker 0 Yeah. The best consumer talent in the world work in technology. Like there are it's crazy that today we use we all use apps for hours a day that didn't exist 10 or 15 years ago, and they've been so good at getting our attention and changing our behavior and changing the way you know we we go about the world. Like if you go to a concert now, everyone's filming, so everyone can post it on Instagram.
24:51 Speaker 1 And your ticket was probably on an app.
24:53 Speaker 0 Exactly. And so the tech, the talent in tech for building amazing consumer experiences that change the way we go about our lives is insane. And that talent just doesn't exist at all in healthcare. And it's partially because what we were talking about earlier, help you know, no one sees consumers as the end customer and therefore doesn't optimize, and no one has bred that talent in the industry. But I think when you marry people who understand healthcare and people who understand consumer tech, like really magical things can happen. Aaron Powell
25:21 Speaker 2 Absolutely. And in your article that we referenced at the very outset, this idea of becoming the biggest company in the world, um, especially when you're addressing an industry that feels so lofty and there's so many incumbents. I'd love to just hear your take on how that might actually happen. Like, how does a technologist potentially come into this huge industry and actually you know become hypothetically like the you know biggest company in the world? Is there really a path there?
25:48 Speaker 0 Yeah. We've I we mentioned at the beginning this was kind of a controversial take because the consumer health companies in the public markets today are are relatively small. Um but I said if you think about it from a first principles perspective, healthcare is 20% of the American economy, which is five times the size of the global advertising industry that sustains you know Google and Facebook and these other massive companies. And so from a first principles perspective, there's no reason this can't exist. And we basically laid out two ways we think a company could get to be the biggest company in the world via consumer health. The first is if you look it is becoming a pay wider. And pay viter basically is an industry shorthand term for being both the insurance company and the provider of care.
26:35 Speaker 0 And United Health Group is that.
26:43 Speaker 0 They employ doctors who then provide care. Um they're one of the biggest companies in the world. I think at the time we wrote the article, they were eight, and I think they've come down a bit since as AI companies have surpassed them. Um but they are one of the biggest companies in the world with a really crappy consumer experience. Their NPS is four. And so we ventured to say, what if you had that business model married with the consumer experience of Apple? Like that would obviously be the biggest company in the world. Every employee would demand that their employer offer that health plan. And the, you know, when you get to Medicare and you get to choose your plan after you're 65, every you know, senior citizen would choose that plan. And you know, the competition would would fall by the wayside.
27:30 Speaker 0 And so that was the first path we um laid out. I need
27:33 Speaker 2 to read the second path. Remind me.
27:35 Speaker 0 Sorry, it's been two years since we wrote this article. Yes. Um the second, the second play to becoming the biggest company in the world, we said was a horizontal. So that's a vertical integration strategy. And the second was a horizontal strategy. And we'd said either you can become a consumer marketplace, so the Amazon of healthcare, the place everyone goes to find their healthcare provider, to pick their healthcare insurance to you know, find the cheapest cost drug. And if you get a normal 20% take rate, which is what most marketplaces get, that gets you the revenue to be the biggest company in the world. Um and then the second path we laid out was um a financial infrastructure layer. So what if you became the visa of healthcare? Um healthcare payments, I won't go into this because I think probably the the general audience is it's a little dry, but healthcare payments are stuck in the 1980s.
28:26 Speaker 0 We do a whole lot of faxing of forms, mailing of gift cards, mailing of checks. Um if you could build the financial infrastructure to service healthcare, we think that would easily be the biggest company in the world as well.
28:40 Speaker 1 Yeah, I I think in the fullness of time, this won't be even viewed as all that controversial. Uh I think there's just a lot of building that has to be done. I mean, the one thing that I think people really tend to forget is just how huge healthcare is and how much it plays in all of our lives. And you think about what you'd pay for a phone versus what you'd pay out of pocket to have healthcare be a little better.
28:59 Speaker 2 Oh my god.
28:59 Speaker 1 Yeah. So it's it's it's it's it's it just needs to be built. Aaron
29:02 Speaker 2 Powell Absolutely. And you know, maybe taking both of those paths on their own, what would you say the biggest obstacle is for each and actually making that a reality? Aaron Powell
29:12 Speaker 1 Yeah, well, I can take the first one. So in terms of the full stack, there's a lot to build if you're gonna build a full stack company from scratch and you have to build out a provider and a payer and have technology throughout all of it. And and that's something that takes a huge amount of capital and a huge amount of time, and then to scale down into multiple geographies. So there are companies working to do that, and that's something that um uh just it's it it's we can have examples of that in flight, but it will take time to build. Um I don't know if you want to take the second one. Aaron
29:39 Speaker 0 Powell I think on the second one is you have to build your way into the traditional healthcare system. Like if you're gonna be the Amazon of healthcare, you've got to onboard every provider in America, you have to onboard every insurance company, you've got to work with you know the pharmacy benefit managers, and so it's just gonna take time to infiltrate the in the industry. Um and so probably plugging into the system is the most challenging part. Trevor Burrus
30:02 Speaker 1 Yeah. I mean I think in terms of founders like I think one of the founders that we think a lot about today is like Jensen Wong, you know, who's done amazing things. But NVIDIA is you know an overnight success, what, three years of the making I was going to say not clear so he's been making very thoughtful uh decisions, strategic decisions over multiple decades to build this company and get it to that point. He did that started a few decades ago. I think you know I I hope that maybe in in 10 years we'll have uh you know similar conversations with uh Jensen Wongs of healthcare
30:33 Speaker 2 absolutely and and obviously we hope in some way that or almost expect that this may come from startups, right, and not the incumbents. But also is there the possibility I mean you've you talked about maybe like the Apple of healthcare or you talked about payments and you know kind of replicating in some way what Visa has been able to achieve. So why wouldn't it come from them, right? We we actually have heard that quite a few of these large Fang like companies are trying to enter healthcare because it is such a big market to your point. So could it come from them?
31:04 Speaker 1 It could, but I think this is the traditional innovators dilemma dilemma, right? And that it's really hard for incumbents. I think occasionally incumbents can disrupt themselves, which is pretty rare. And I think this is a case it would be particularly hard to because it's just so technical and difficult. And I think if you're an incumbent your tech your temptation is to stay away from healthcare. You know like you if you can be this massive horizontal in AI you probably want to do everything except the hard clinical AI stuff. And you leave that to something else because that's a whole different beast. And so I suspect that uh for those reasons it's something that the big tech companies will try and we've seen Apple and Amazon and Google all dabble. But I think those experiments probably won't fit uh the way they want to build their company and so I think they'll stay as experiments.
31:48 Speaker 0 Yeah they've they've dabbled a lot over the years. They've all seen the size of the industry and so I think they look at healthcare and they see dollars but they're not healthcare native. And so they've tried to make these little plays to grab healthcare dollars without really investing in healthcare and you know changing our clinical outcomes and the kinds of really hard things you need to do. And so I think we'll see acquisitions on the margins like we saw with Amazon buying one medical and you know Apple Apple's products are always kind of verging on health almost almost they're going to count your steps for you. But we've been talking about this for a long time and we haven't really seen anyone pull it off.
32:34 Speaker 0 Aaron Ross
32:34 Speaker 1 Powell's like you know will the electric car come from Detroit maybe not at first. Yeah. Maybe with some uh in the fullness of time.
32:41 Speaker 0 Right. Yeah. Right. But I
32:42 Speaker 1 think it'll take an outsider. Trevor Burrus
32:43 Speaker 0 And the flip side of that question is you know might United healthcare just get really good at consumer experience
32:49 Speaker 2 right to which I don't sound like either anywhere holding your breath maybe just to round that out perhaps there's a case study or learning right we have seen to your point huge industry lots of opportunity in some cases you might argue oh well Apple is the wearable you already have on you so they have all the data. But then you also see interesting cases like Dollar Generals getting into healthcare because they just have so many locations or you see Walmart try, but then they're closing their clinics. So is there maybe an example that comes to mind of some of these companies with maybe some of the right assets just approaching it incorrectly
33:26 Speaker 1 another version of that question is which incumbents do you think are closest with their asset
33:30 Speaker 2 is there one that you think might be actually taking the right approach.
33:33 Speaker 1 Good question I don't know what would you say I think Amazon's interesting because they've bought one medical they've got they could but they those are that feels like a tote dipping rather than going all the way in that they'd have to buy a lot more and then you start to look like a PE roll-up the question is can they integrate in what they do really well? And so that becomes an interesting choice. But as Daisy was saying there's just they're all have done small experiments and this is something that you can't you can't build this huge horizontal or the full stack vertical with a small experiment.
34:05 Speaker 0 Right. Yeah I mean I there are great people who work at all these companies and so we don't want to disparage them in any way. But it it feels like with the Walmart health of the world it it was almost a play to get you to stay in Walmart a little longer and spend a little bit more money but without really investing in building world class healthcare you're never going to win in the industry and I think that's what we've seen happen over and over with kind of big tech.
34:28 Speaker 2 So
34:28 Speaker 0 almost coming back to that idea of you have to give a
34:30 Speaker 2 better experience and maybe some of the approaches or as you're saying dabble experiments have not focused on that. Before we close out both of you is there anything you want to cover just kind of positing because we're so we're we've got 15 minutes in theory left but I think we've covered a lot of ground I think so I think it would be good just um with
34:50 Speaker 0 our goal of getting people to build in healthcare to ask us a question about like why AI and healthcare and we can talk about the opportunity you know why we think this is
34:58 Speaker 2 really big.
34:58 Speaker 1 Yeah
34:59 Speaker 2 okay great um so we've talked a lot about technologists participating in healthcare but that's a really broad brush and we've maybe touched on like consumer but that's also a broad brush so we all know there's a few technologies that seem to really matter AI. Some people are looking at like augmented reality is another potential interesting entry into healthcare what is catching your eye um in terms of the kind of technologies that can really move the needle.
35:24 Speaker 1 I think you get off you know I love to talk about AI and I think that's a natural one. I think there's two sides of the coin that's really interesting. One is that um you could argue healthcare really needs AI in that the cost of healthcare is rising exponentially there's a huge amount of data there's all of these services that could maybe become compute and it's not going to start with like brain surgery. It's going to start with the simple sort of maybe subclinical things first. And we've seen AI for nurses and AI for maybe therapists and other things like that. And that's going to be a huge change in the cost curve. And the funny thing about or the amazing thing about technology is that what AI will do is by making this technology we'll all get the best. We'll all get the best nurse, the best therapist. Kind of like the Spotify in my pockets, the same Spotify um Elon Musk has you know the same Spotify billionaires have technology is a great democratizer.
36:13 Speaker 1 So we'll see that I think the things that people don't realize though is there's a flip I was talking about why healthcare needs AI. I would make an argument that AI needs healthcare. And the argument there is that actually where is a place that AI could be applied to where the cost is so high that justify the cost of AI right now. Because AI is really expensive. These models cost you know billions of dollars is lots of computer hardware and to replace that with you know cat pictures is nice but like and I love cat pictures uh don't get me wrong but like that's not where we're spending huge fraction of GDP. So the the the the question is I would say is that AI needs healthcare because that's a place that's very data rich and it's a place where actually the cost is so high now and increasing exponentially that it it actually could have a huge impact. Aaron
36:57 Speaker 0 Ross Powell Yeah we've talked about this a lot but AI has far worse margins than traditional software but it has way better margins than human services. It's way cheaper than to use a healthcare uh a large language model than it is to employ a human and healthcare is a four trillion dollar industry in America that's like probably 90% human services. And so we've talked about how there might be this leapfrog moment where you know I mentioned traditional technology software has really not penetrated healthcare we have one of the hundred largest public software companies as a healthcare company we all feel that just like in the developing world where you went straight from cash to mobile payments and leapfrogged over credit cards we think we're about to have a similar moment in healthcare where we're gonna leapfrog over traditional software and we're gonna go straight from human services to AI.
37:51 Speaker 0 And so you don't have to you know go to these IT departments and hospitals and who have no budget and everyone is overtired and try to convince them to buy software that they're gonna have to train their whole workforce on. You can say everyone's burned out we're gonna hand you AI quote unquote humans. And by the way large language models and multimodal models are really good at doing what low-level you know service humans do today in healthcare and healthcare is the only industry that has you know call centers of thousands of people who are scheduling appointments, faxing forms, handling prior authorization. We're just really behind and we've seen that we've seen in venture healthcare has been a tra traditionally underinvested category and that's definitely changed with AI.
38:38 Speaker 0 I saw SAT that 20% of AI dollars have gone toward healthcare and there's a reason for it. It's like we have very clear problems that can be solved with AI that other industries don't have like I mean the world needs more creative tools and and all but we have life or death issues and AI is it's gonna be able to make a huge difference and healthcare is we talk about this too healthcare is increasingly data scientist and doctors are not data scientists. And so they need these kind of co-pilot tools to help them catch things they're missing.
39:11 Speaker 2 Absolutely and I mean I just want to call out something you said earlier which is that even if we cure all cancer Americans' lifespans are only going to increase by three years. Do you guys have any other just like whether it's stats or thoughts around if we really are able to deploy AI in the ways that you're describing like what does that really change and real outcomes whether it's for patients or you know Americans at large.
39:34 Speaker 1 Yeah I think in that spirit I think these so called social determinants of healthcare that are outside of the traditional healthcare system is actually a large fraction of what leads to to mortality and and morbidity. And so AI being able to do behavioral change is such an easy one. But then actually you could lean into uh AI into deeper into healthcare as well terms of that stat though that's a good stat.
39:56 Speaker 0 Yeah. We were talking about this earlier today is No one's been able to pull off behavior change in healthcare to date, but it really does feel like we have this why now moment. Like there's regulatory change that are enabling consumers to get access to all of their health records or grant that access to an app. There are these diagnostic companies that are running every cuss under a sun and tracking changes over time. There's more penetration of wearable devices than ever before. And if you marry all of those things, like we're gonna have these companions very soon that are providing actually helpful health tips and monitoring us and telling us when something might go wrong far before we know something's going wrong or far before a doctor can diagnose us, and and that's gonna be a big step change for human health.
40:41 Speaker 0 Well,
40:41 Speaker 1 I'd challenge you, like let me give you even a simple example. So like actually this came up on our podcast with Tom from Aura. You mentioned how actually all your friends after getting the ordering end up drinking less alcohol. Yeah, yes. So it's funny you say this. So I get the ordering for for Christmas. And like I'm like, well, Daisy's friends are gonna drink less alcohol, but that's I mean, I'm already pretty good shape. But I end up drinking less alcohol. And then at like dinner the other night, you know, people at the table were talking about their s their sleep score and stuff like that. That's real behavior change. And that actually is medically significant behavioral change.
41:13 Speaker 0 You're totally right. I'm wrong. That is chang is real behavior.
41:19 Speaker 1 But I think maybe your original point is like there's a lot more to do.
41:22 Speaker 0 Totally. There's a lot more to do. And if anyone solves um the problem of alcohol disrupting your sleep, please come find us. We would
41:28 Speaker 1 like
41:29 Speaker 2 to invest in the case. Talking about um consumer change. I was at a wedding recently, and people are gonna grill me for this, but everyone had an eight sleep. Every single person at the wedding table, um, the couples, there was maybe six or so of them. They all had eight sleeps, and they were all like, what's your temperature? That is like a social phenomena. And you're going around and you're like, oh, I'm the hot one, I'm the cold one. And it was actually like now that you mentioned the aura kind of social phenomena. Um I feel like we're seeing it with other devices as well.
42:03 Speaker 1 I think the social phenomena is a real thing, and social is obviously a real thing in tech. And I think there is a movement again, maybe post-COVID, towards health, where I think uh people are drinking a lot less alcohol, they're working out a lot more, and it helps that that's a social contagion of source. That it's it's it's it's sort of cool to do that. And I think we all want to improve our health and it helps when we're all doing it. So tech is an amplifier of that. Whether we're talking about social networks, but also it's not just a social networks, you you need the number, or you need the result, or you need the score. It's it's the beginning with I think there's a lot more to go from there.
42:36 Speaker 0 A similar thing, we invested in a company called function health that runs every blood test into the sun on you and explains what's happening into your in your body system by system, and they provide you with something called biological age. And the number of texts I've now gotten that are saying what's your biological age, and people are comparing their biological ages and having biological age birthday parties, like
42:56 Speaker 2 things things are changing. And you can
42:58 Speaker 0 change it, you can lower it. So
43:01 Speaker 2 you talked about how you know sometimes just the right number of things have to come together. And so I think about like AI. Talk about how if we didn't use alt tags back in the day and we weren't labeling all these pictures, like where would we be in terms of the data sets that we have today, at least for imagery, right? Um and so it feels like some of the things you're both bringing up is like, okay, so we have we're starting to get the data, we're starting to get the consumer buy-in, some of the incentives are changing and all of that coming together. Does feel like, you know, talk about Dave feels like a why now. Um so maybe closing things out, if there are people who maybe are still a little doubtful, they're hearing this and they're like, yes, yes, yes, I agree that I want this to change, but maybe I don't necessarily agree that technologists are the people right now who are gonna be able to make this shift. Um I guess what would you what would you say to those people and also maybe what would you say to the technologists who maybe are on the fence who are thinking of participating?
43:53 Speaker 2 Aaron Powell
43:54 Speaker 1 Let me take the first one. So uh so in terms of technologists I think part of it is that if you're a medical professional, I think the key thing is all these technologists are not necessarily complete outsiders. You know, they're people that also know the healthcare system in and out. And uh a lot of our founders, I think in the are in that category. So they're both. And so this is something where it's it's it's because it does feel a little odd that like some person who just graduates from an undergrad degree with a uh undergrad CS degree is gonna solve all the healthcare. That's probably not the case. Uh and and especially you have to understand all of it. But I think part of it is, I mean, the first thing I'd tell them is that these people are um are f deeply rooted in the medical system, but are also technologists. And that's something that just didn't exist before, and that's kind of uh another why now.
44:39 Speaker 0 Yeah, I'd say startups are really hard. Um, but you know, with the limited number of days and hours we all have on this planet, like wouldn't it be amazing to be working on something that really matters and you don't have to cure cancer, you don't need a PhD to save lives, like a company that detects medical errors or helps people afford health care can save countless lives. And um we would we would love to welcome you into our industry. So the water's warm, come on in.
45:10 Speaker 2 Absolutely. I think about you know, if you look at there's websites where you can look at the very earliest versions of a Google or a Twitter and you're like, wow, they started there. And so hopefully there's some sort of health care equivalent there, right? Where like there's gonna be an early version where it's like, oh, you were just like you know, providing one blood test for for a consumer. Um then, or even a subset of consumers, and then I wonder, you know, how that spirals. I hope we have some examples of it.
45:33 Speaker 1 Yeah, like there's this that internet bookstore that that became more than that, you know, over time. You know, to become an MS. Amazon,
45:40 Speaker 2 yeah. Yes. Exactly. Which bought one medical, right? So I mean, you see how it spirals. Well, this was great. Thank you so much, uh, VJ and Daisy. I really hope that you know, 10 years from now, to your point, we can sit down and look back and think, oh, that was quite obvious.
45:53 Speaker 1 Looking forward to it.
45:54 Speaker 2 Thanks for having us.
45:55 Speaker 1 Thank you.
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