Episode 14: Annie Lamont - Co-Founder and Managing Partner of Oak HC/FT

0:00This week, I have the honor of speaking with none other than Annie Lamont, arguably the most influential female venture capitalist in the world and the first lady of the state of Connecticut. As the co-founder and managing partner of Oak HCFT, she's built one of the leading venture firms focused on both healthcare and fintech, managing over$14 billion in assets total since its inception. Throughout her career, she's helped back and scale industry-defining companies such as Athena Health, One Medical, Village MD, and Netspen. Annie has been recognized on the Forbes Midas list multiple times. Modern Healthcare's 100 Most Influential People, and Institutional Investors' FinTech's Finance 40, cementing her status as one of the most respected figures in venture capital.

0:46Beyond her investing success, she has played a pivotal role in healthcare and fintech landscapes, helping companies lower costs, improve outcomes, and drive innovation. Annie and I spoke about her start in venture capital, her investments, Oak HCFT, her thoughts on the future of healthcare and fintech, and her advice to the younger generation. I hope you enjoyed this episode, and it was very fun to make. Thank you for joining me, Annie. I really appreciate it. Happy to be here with you. My daughter was a granite chai. Love granite chai. Look at that. So I want to start your early career and your education.

1:26So can you tell me a little bit about your childhood, what your upbringing was like, and how you ultimately ended up at Stanford? I grew up in Whitefish Bay, Wisconsin. It's a small suburb of Milwaukee, Wisconsin. I have an idyllic childhood. I'm the youngest of six, so it was great. My parents paid no attention to me. I got in all sorts of trouble, and as long as I had good grades, no problem. And I, you know, I ended up at Stanford in part. I just wanted to go to a good school, warm weather, apply to UVA and Stanford, and those were the days when you could just apply to two schools and you know it's fine um and i'd never been to california so i got myself out to california went to stanford um it just happened to be the most amazing time to be there because it was right as steve jobs was creating you know the first uh apple and um it was just a super exciting time because silicon valley surrounded by stanford and in part inspired by stanford ended up being, it was really the early days of the formation of the tech world.

2:34And after that, you ended up at Hamburg and Quist. And there you went on the Apple IPO roadshow. You worked with Genentech. What was that environment like? What did it teach you? Yeah, I thought, you know, it's funny because people, I would say after college, they were like, oh my gosh, you go into finance. And it's, you know, I think people have this vision of it's, you know, it's all numbers. I am a math person, but, you know, it's all numbers and it is not creative. And I think I think what was really cool about it was one, you know, we were actually working with young tech companies. And the first three months I was there, we, you know, I got to know Bob Swanson, Genentech, for those who don't know, was the very first biotech company to go public.

3:21and to that out of my first three months out of school and working with with him and then I carry Steve Jobs bags on the Apple IPO Roadshow so I was just hooked like these were amazing you know people to work with so I got the benefit of getting exposure to young you know entrepreneurs but also learning a lot about the financial system and and all these different companies And I think that is it's a little bit like consulting and the finance because you just learn about all these industry sectors and management teams and the financial world and how it works. And so it was an incredible two year education.

4:00Yeah. And at one point, I think about one and a half years in, you decided you wanted to be a venture capitalist. And there's a very interesting story of how you essentially ended up at Oak. So how did you end up at Oak? And how was it different than other firms at the time, other than the fact that it was on the East Coast? Yeah. Yeah, I'd say, you know, this is as you're thinking about your careers. Like, you can't always plan everything. I thought I was going to be a lawyer. And then I realized that was probably not the best career, you know, for me. And I would say this is where you just kind of have to go with your instincts about what you love and like and people you like.

4:39And I really did decide I had to work with entrepreneurs and I wasn't the entrepreneur, but I could be the editor supporter. And, you know, life just is funny this way. I literally the elevator opened in my building. Somebody I had, you know, known at Stanford, an acquaintance, not a close friend, but acquaintance was in the elevator. He had to work for a venture capital firm in the building. We went out for just had a drink. I told him I wanted to be a VC like him. the next day he ends up he was working on this victoria secrets magazine you know catalog deal um and he called oak and dust and partners that was in westport connecticut and said hey you know this is do you want to invest in this catalog company with me victoria secrets um and they said no we don't do that we just invest in technology that we're looking for a research associate and he volunteered my name and one week later the the partner the lead partner at oak in Wisconsin was in San Francisco.

5:37He revered Hamburg to quiz the firm I worked with. Um, and we met and he hired me. And three weeks later I moved to Westport, Connecticut. And it was just, you know, one of those like life literally, you know, one minute later, and I wouldn't have run into Mike and I never would have been introduced to Oakland Westport. And these things are just, I, you know, I truly believe in fate and just following, um you know you're hard on these things and so and i you know people say well you're like my friends were like wait a minute you're leaving san francisco for a suburb of connecticut like you're never going to get married well you know within a week of being in westboro connecticut i met my husband ned lamont and he happened to you know through friends he just moved there to start up cable vision of connecticut so it just it just all worked out that's why i love connecticut so much.

6:29And when you started at Oak Investment Partners, what was the first kind of sector you were involved in in terms of investing and how have the sectors you've been involved with changed throughout your career? Because if I remember correctly, you were in life sciences first, now it's healthcare and fintech. What kind of sectors have you been involved in? Yeah, you know, I actually started the very first was software, but there was only one public software company then. There were very few software companies to invest in, but they were starting to be built. And I love that area. But what I realized was that I needed to create my own niche that was sort of unique within Oak.

7:06There were some engineers, it was a tech-oriented group. And I wanted to just be differentiated, honestly. And I want to do something that I could get excited about. And I could get excited about life sciences and biotech. And it was the early, early days. So there wasn't much competition. You know, I hired a PhD to work with me. And we just, you know, we said, let's look at neurology, you know, and then identified two individuals that were trying to start neurology biotech companies, one in ALS, which was near and dear to my heart, a friend was dying from it. And, you know, and the other one in, you know, dealing with memory and other neurological diseases.

7:50And they both ended up being quite successful. Alcarum is encephalon. One was sold for$7 billion. One is still in existence in a multi-billion dollar public company. And it was just, you know, it is good to be somewhere before other people are. You don't have to be as good, honestly. And so I owned for that niche within Oak for 10, 15 years in 99 with the advent of the internet, 99, 2000, there were 5 ,000 biotech companies, 4 ,000 of them were public, and there were literally five approved drugs, which meant that it was a lot harder to actually get drugs to work and get through the FDA than people thought originally.

8:35And I just decided it was going to be a rough decade. And I think it was really excited having worked in the healthcare system that I just wanted to focus on lowering costs and improving quality and outcomes for individuals. And I just felt like with the advent of the internet, you could have cloud-based software invested in the first cloud-based software company, Athena Health, which is now other than Epic, the leading ambulatory electronic health record company, as well as RCM company out there. And so just pivoted to another area, which I think is a critical piece of my success and longevity in the business is constantly striving to figure out what's the next great thing and getting there before others and investing in it and working and not being afraid to like redefine yourself, repot yourself.

9:29And in the pursuit of finding the next great thing, And you're always going into new industries. You're always going into new sectors. And although you've made the point many times about you focus a lot on the CEO, you focus a lot on the person, and you just said you hire a PhD and you hire people to look into the intricacies of the business, you still have to know a little bit about the business itself and how the industry works. So when you're going into a new industry, healthcare, life sciences, fintech, how do you learn about the industry? How do you understand everything you can possibly?

10:00well i'll tell you it's a lot easier now with gen ai and the internet uh it's you know it's absolutely amazing how much information you can get i mean i i love it you can learn about things so quickly um you know i would say it really you know even back then it was it obviously with the the internet did exist it wasn't you know as um comprehensive as it is now when i first started and work focusing on healthcare software and life sciences. You know, it's literally getting to experts in the industry, talking to people, networking, going to conferences. You know, it's just, it is really primary research, which I really love because you get to know companies.

10:44And once you, like we, you know, I've built up a bolus. I've invested in over a hundred companies in these spaces. You just know you are like a participant in the industry. you are almost like the entrepreneur because you know so much about the connectivity of all these different elements within the healthcare industry. You get to know the, you know, like the customers, the buyers, the buyers of the companies. And, you know, healthcare is 20 % of the economy, FinTech, depending on how you define it is, you know, 30. And, you know, and yet the people actually run and power these industries are, there's probably 300 people you need to know.

11:24At the end of the day. So that's it. It does end up being a small world when you've been in a long time. And it's ultimately the end of people business. But. Yeah. So you went from Oak Investment Partners, which is now folded to Oak Healthcare and FinTech. What were the biggest turning points that led to you going off on your own with Oak HCFT and the big turning points? yeah yeah i think we what well i think there are two issues one cultural andrea adams my partner who worked with me in healthcare and fintech at or condescent partners uh and i worked very collaboratively very partner-based team-based intellectually honest if you cannot solve problems if you don't highlight problems and work through them together you you always want to be questioning you know yourself um and it's good to have you know somebody to bounce off of and i would say there was a cultural piece with the technology group.

12:26We were just very separate. They were investing in certain areas. We were investing in very different areas. There really was no benefit to being together. And the way they worked was like the old fashioned Jedi Knights, like we're all just out here doing our own thing. We don't need a talent team. We don't need marketing. We don't need anything. We don't need associates. We're just going to have good judgment and make investments. And the reality is they didn't reinvent themselves. They didn't repot themselves. They just kept doing the same thing over and over again. And it wasn't successful.

12:58They were in the end, not making, not making money. And I think just culturally different and had a view. We had a view of like, we want to be the best going forward. You know, like we want to just keep pushing ourselves and adding to the team in ways that are substantially better. And so we decided to split off, create Oak HCFT. As you said, Oak Investment Partner sort of died after that. We created Oak HCFT, which I'll call Oak, because it's a lot easier to say than the other. And it's been super fun. It's like our own startup. You know, they're now almost 50 people. We've got these two practices.

13:38We've built literally the best health, the best talent team of five people in the business focused on specifically healthcare and specifically fintech. And we've got an amazing marketing team. We've got groups, we've just hired the chief product officer from a company called Oscar Health, who's going to, you know, is full-time, is going to be helping all of our companies like embed AI in what they're doing and think about that in different ways. So, you know, we've hired a product person from Square and Stripe, who's also, you know, working on the tech side with our companies. So it's just, it's really fun, exciting.

14:15And we just have a sort of team-based, like it's sports culture, you know, it's just team-based. We all want to win together. We want to be individual stars, but we really have to succeed as a team. We have to care about the enterprise ultimately and care about our entrepreneurs more than anything. And high level, what are the main principles that shape your investing in Oak?

14:39so what am the what in terms of as we think about an investment which are one of the most important factors or is that what you're asking yeah yeah yeah i mean it starts you mentioned before i mean it starts with the ceo on the team um just particularly the founders and that is that is everything to us um because you can't really predict like what's gonna happen especially an early stage business may look quite different than what you originally thought. And, you know, you've got to have the market right. You've got to have a certain level of product market fit. But you have to be working where the tailwinds are right.

15:20And you have to recognize if a business model isn't working, how do you pivot to get it to work? And I'd say, you know, it's really the CEO has to be a pied piper. People have to want to follow them. they have to be like when they come in i want to when i'm talking to them i'm going to feel like that person knows more about this problem than anybody in the world like they have studied this problem they understand that they understand the customers so well um and they're just you know like the intensity has to be there right i'm just like they are going to you know maybe not elon musk intensity off the charts you know i mean he's an amazing entrepreneur i'll give him that but you know that level of intensity and somebody who's so intellectually curious and so confident but not arrogant that they will ask a million questions and they're you know they'll ask but they're the then they're able to decide they're not paralyzed by all this input they're like okay I've asked the questions I need to ask I'm going to decide and move forward and then correct you know course correct along the way but that takes confidence again without arrogance because it's sort of like you're so confident you don't mind ask every dumb question.

16:33Yeah and over the last 20 years what are a couple of the companies that you believe have had the most impact on the way people live today that you've invested in and what was the story behind investing in them? Yeah no it's a great question so you know it's interesting because I invested in the first for-profit hospice company years ago and then 20 years 25 years later 30 years later I invested in the most successful palliative care model and I think you know if you think about end of life I think anybody's experienced that hospice is a beautiful thing and an incredible support for a family it's also if you look at palliative care which hospice is true end of life care, like, you know, supposed to be like the last six months, three months.

17:24Palliative care is that journey, you know, where you can somewhat predict in the next year, year and a half, whether somebody is going to pass with pretty great certainty. You know, when this company Aspire created algorithms around it, connectivity to people's primary care doc, and they could look at a payer data and say, this person is probably likely to die in the next year. And I, and I think something like that, where you are, you know, that the patient and the caregiver in the home is struggling. Like they're, you know, you know, they're probably going to the hospital multiple times, you know, that emergency rooms multiple times.

17:59I mean, I've experienced it. I had one year seven times where my in-laws and my parents were in the hospital and they shouldn't have been there. Like that just wasn't the right answer, but people, you know, ended up, there's a, you know, a crisis and we're going to go to the ER, but there's really nothing they can do for them. And so I think that the right palliative care model, like Aspire, ended up having a more sane last year for the patient, the caregiver, giving them virtual support and comfort and then lower the cost for the system dramatically because so much is spent in the last year of a person's life in America that ends up being wasted, really.

18:44It's not good for the patient. It's not good for the system. And I think that is like the win-win-win where, and it's, you know, it's good for the payer. They're saving money. It's good for the system. They're saving money. But most importantly, it's good for the patient and the caregiver in terms of the kind of care and the family. So, you know, that's certainly, I would say one example of an area that's just like hugely impactful. For sure. Sure. And looking back over the last 20 years, what are a couple of things you have seen, the biggest changes you've seen in the venture capital industry?

19:19And you have said you will always try to be ahead of things. So what do you see? What are the couple of things you see shaping the industry over the next 10 years? Yeah. So I think that, you know, if you think the pivots in the past, I mean, we talked about some pivot and, you know, like why in biotech? And then, you know, literally biotech came back years later. But it took about a decade. You know, the advent of the Internet, obviously, that was the biggest change. But like, then how do you play that in your industry? FinTech, you know, FinTech, nobody knew what FinTech was, you know, in 2002.

19:56It wasn't really a term, you know, and yet you had established financial services, principally banks, some credit, you know, facilities. facilities. But there wasn't anything consumer friendly, you know, in the, you know, truly consumer friendly experience. Credit cards was as modern as it got. And so we certainly recognized that, took advantage of it, invested in it. You know, I think fast forward to today, there almost cannot be too much hype about Gen AI. It is moving so fast. And it will, I mean, Like this will be, you know, my life's work in the last 20 years has been about lowering cost and improving quality and patient experience in health care.

20:44And it has been a slog. And I would say, you know, we have done, we have certainly improved software, we've improved some care delivering services. But this will be the moment. I am the most excited about the next 10 years because this is the moment where with Gen AI, you can literally leverage healthcare professionals such that primary care docs and specialists, which are needed but in shortage, can be leveraged so that a much less trained individual can be using Gen AI and want to get the diagnosis and treatment recommendations that today are as good as a person. good or better than doctors and some of the best specialists out there.

21:29And so I do think that you're going to augment, you're not going to, you know, like replace all these doctors. You are going to augment what they're doing and have them focused on the most complex and difficult problems and be able to spend more time with the patients that really need them because we are going to be able to leverage them with lower level resources that can use these tools that are going to dramatically lower the cost of the system. And administratively, just to, you know, we spend five hundred billion dollars a year on revenue cycle management, basically claims and billing in health care.

22:04Five hundred billion. It's like it's insane. You know, I mean, that can be completely streamlined. mind. So, you know, when Doge is looking for savings, I mean, I do think that if we get it right, there's going to be a lot of savings in healthcare and we have to make sure that the American public actually benefits from that, you know, that we lower the cost for everyone. So that I am truly excited about higher quality care given more broadly. I mean, just think about it. If you're in a, you know, if you have cancer and you're not within 90 miles of a major healthcare system or go to one you are not going to have 90 of the treatments that are out there i have them there's just no way an oncologist in rural america can actually know everything that's going on but now with virtual you know like virtual care given by oncologists you know msk or others along with ai you can one advantage the oncologist that's local to know so much more and two leverage the skills and capabilities of those that live in major metropolitan areas around some of these major cancer centers.

23:16So you're going to, you are going to up-level the quality of the care for patients across America and the world. And over the last, you guys focused both on fintech and healthcare, and over the last 10 years, fintech and healthcare have had an increased overlap. How has your approach to investing in both of these been changed or and influence by the increased overlap. Yeah, it's interesting. So, you know, in fintech, I would say what it has been, it's interesting. It's the first time healthcare is actually using JNI more often. It's more incrementally valuable in healthcare, but it's going to be very certainly valuable in fintech also, because everything should be built, right?

23:57And the reality in developing software, in developing websites and marketing, companies are going to be built much more efficiently than they were before because of using these tools. And I would say what's happened in, you know, if you just think it's been a slow process because of the compliance issues of change of behavior in FinTech when people's, you know, with their money, you know, it's your generation that's going to be so much more comfortable with everything virtual, like never going to, you know, like a bank. I mean, it's already happening, but you know the reality is there have been there have been barriers even in the state of Connecticut I mean it's crazy because we got lawyers in the legislature they don't want to lose on a thousand dollar fee and a mortgage you know closing but right now you can do a digital closing there where that legal work is literally done the underwriting so in the in the app and would save everybody a thousand dollars but you do have people preserving their jobs and their incomes which I totally appreciate, you know, not allowing that.

25:01So there's just this friction along the way when it comes to people's incomes. And we cannot obviously displace people. We need to augment them and not displace an entire workforce. But I think there's just is, you know, there's resistance with anything that takes away income from anyone. So we're getting there. I would say right now we're finding more opportunity in LATAM. Crypto, stablecoins, and LATAM in general is building the digital infrastructure that we now have in America. And so our last four deals were all in LATAM and FinTech. Yeah. I think this era is a very interesting time for me and my generation to live in because you see the emergence of AI, you see blockchain, you see all this stuff.

25:49It's the start of what looks like the kind of the next era of technology and everything. It's 100%. Now your generation is coming into the most incredible, incredibly exciting time. I mean, just behavior change is going to be unlike anything we've seen because you're going to take away so much friction in so many things. You're not going to have to. All you have to do is, you know, not do things you didn't want to do, you know. Exactly. And I want to shift a little bit to some of your insights and advice you give to the younger generation. But first, who are the best entrepreneurs you've ever met or invested in?

26:24And why are they the best entrepreneurs you've ever met or invested in? Well, certainly the first two, a few jobs. But I would say, so in our world of healthcare and fintech, I would say, I think it also was founded by Jonathan Bush and the Park Brothers. Todd Park went on to found Cashlight. And then Eddie and Todd founded Devoted. And Devoted is a company that's, I'm not going to go into a long description, but it's Medicare Advantage brand, completely re-engineered from bottom up. And it has a provider group also, essentially virtual and primary care docs that are being leveraged. And so it's basically a health plan and doctors.

27:11It's like Kaiser people, you know, you've heard of that. it's Kaiser all virtual. Um, and it's sort of the combination of doctors taking risk, uh, on your healthcare and with measured by outcomes. Um, and so it is exactly the alignment we should have in our system where it's not fee for service. It's somebody incentive to do the right thing so that you have better care and better outcomes and you're paid, you know, you save money doing it. um and that that's what they've done and they've created a multi-billion dollar amazing company it's run eddie's actually a computer science guy uh and so it's very like left brain right brain healthcare and tech have not in the past it's now merging because you know like younger generations are so tech savvy that you almost can't not be when you commit to healthcare you actually understand tech too that was not always the case um but they've they've created an amazing company and the Park Brothers are truly incredible individuals that are always doing the right thing.

28:14So to me in healthcare, and I would say this is about Brad Smith too, who created the Paleo of Care Company. Aspire has created CareBridge, which is focused on value-based care in Medicaid. We've just sold my company. And the two, I would say, the similarities between those entrepreneurs is that their belief and care about improving people's lives, that they're in healthcare as a mission. And what they're going to do is lower costs for the system and improve healthcare outcomes. And they truly care about that. And you can make a lot of money as a byproduct of doing it as opposed to like, yeah, let's go into healthcare to make a lot of money.

28:56No, it's really hard. Healthcare is really hard to change. So go do something else. and so I think they care about it deeply they're intensely focused they're they care about the humans that work for them they are exactly what I described before incredibly confident but not arrogant ask a million questions people want to work with them and for them they're winners they are just winners you know people want to follow what they're doing and they make them believe in the mission. And I think that's incredibly important for really any company. They've got different missions. Elon was about creating SpaceX and going to space and creating the best EV car.

29:41So people do have to care about what they're doing and believe in you and that you're going to be successful. And so that is all part of it. And I love your point about they have their mission and they're making money as a byproduct. And I also think a lot of people, especially in today's world and in my generation, think of a lot of investors. Well, there's many different areas in investing, but they think of many people as making a lot of money and taking advantage of the average person. But I think you're a perfect example of someone who you're focused on improving quality and lowering costs for people.