From Deus Ex Medicina: Vinod Khosla, Bob Kocher & Annie Lamont

0:00Hey, welcome to the Newcomer podcast. It's Eric Newcomer here. I'm fresh off Deus ex medicina. I think I'm literally wearing the same sweater I wore today, Sex Medicine. I promise I changed my clothes, but you get attached to a sweater and then I wear it to death. Anyway, yeah, it was a great event. This was our inaugural AI Health and Longevity Summit. We brought together some 200 people in San Francisco, heavy mix of founders, investors, members of the media, other health insiders to talk about three big themes rising in health right now. One, obviously, foundation models and the rise of generative artificial intelligence, which is powering companies like Abridge, which is doing doctor note taking and open evidence, which is helping doctors diagnose patients.

0:47Both companies had their co-founders speak at Deus Ex Medicina. Second, we had the longevity trend with GLP-1s, you know, suddenly making everybody commits. Oh, helping healthy people. There's a lot of money to be made there, a lot of value to be created for patients. We had the co-founder of Noom, Seju, whose company is doing, I think, microdosing GLP-1s. We had Celine, the co-founder and CEO of Loyal, who is helping dogs live longer. And always very thoughtful. I speak our longevity, so we had that longevity theme. And then third, there's all the insanity with Maha, you know, make America healthy again, RFK and the Trump administration's changes to healthcare.

1:32So how is that sort of an inflection point for good and bad? And there was definitely some soul searching of whether, you know, the traditional Republicans were helping Medicare Advantage as much as some investors had thought Democrats like to beat up on Medicare Advantage. And now Trump hasn't come in and saved the day either. And that's obviously been an exciting area of investment. So those are three big themes. Other themes, you know, took us by surprise. Chai's ability to do drug trials much more effectively than U.S. certainly stood out. And then I think the final theme I'd flag before kicking this over would just be, you know, continued hopes that patients will be buyers of health care sort of directly.

2:11And, you know, we had the CEO of Function Health Speak who's selling diagnostic tests to consumers. And we had some healthy debate over whether consumers would prefer only to use their insurance company or not. Anyway, those are my high level takes. We picked two of our favorite panels to share here in the podcast feed. First, my conversation with Bob Kosher at Fenrock and Annie Lamont at Oak HTFT, two of the top health investors. And then the second is me with Naima Raza, who I co-hosted, Deus Ex Medicina. We interviewed the ever spicy Vinod Khosla. And I wanted to share the investor conversations because I do think they zoom out the farthest.

2:55You get the greatest scope of what we really covered in the day. We're going to post a lot, if not all of the other talks on our YouTube channel. So go check out Newcomer Media's YouTube channel. You can always go to the substack, newcomer.co to get routed to our stuff. So go watch the videos there. But I think this conversation with Bob and Annie and then my conversation with Naima and Vinod really helps sum up some of the big questions of the day. So without further ado, give them a listen.

3:26Investors that I really trust both in terms of having a good sense on policy and having good values and then being very serious about like the businesses you invest in. So excited to talk about it all. And obviously, this is still a technology business at the end of the day. So the changes in technology will power everything you're doing. I just wanted to start off, you know, we're talking about healthy businesses. What are some startups, earlier stage businesses where you think this is not like a long bet on like the technology coming together? You feel like they've got a great business model.

3:58Like where are areas right now you're excited about like business model types in startups? Annie, you want to go first? Sure. so look it doesn't matter if it's healthcare fintech technology i mean the best business model out there is sass right i mean it works over and over again i thought software is dead it was offering back you know i mean i think that's what's really interesting so i two parts to this question right uh and the answer is that sass software anytime anywhere you know if i can find that and we we were both in Athena way back and that's a version that's like a 70 percent because it's SAS software enabled service really but SAS if you can get 80 90 percent margins you know like great and I feel like we're back there in terms of being able to sell software to providers and health systems where you know EHR has effectively scooped up all of those dollars for the last 20 years, and now they're open for business.

5:00But I think the other part is impact, and I think Bob and I are both in this for impact. Right. And so I think you just had Prashant from Akito, one of our companies, and that's impact. You know, like embedding AI within care delivery, you know, like see the impact, you know, love that. We just sold a company called CareBridge, And, you know, if you actually looked at that model, that was dual eligibles, LTSS in the home where you were taking risk on them. But the first part of the business was the wedge. And that was they became the standard for evaluating what kind of caregiver should be in your home and for how many hours.

5:42And if you can believe it, there's literally no standard in America for that. And so they created a standard and algorithms around it and support. And that's really what health plans first bought. And then I took that wedge into taking risk on all of those patients. So, you know, to me, impact matters. Bob, you have businesses that are making you salivate right now? Absolutely. But first, thank you, Eric and Aima, for bringing us together. This is super cool. And I love that you taught us some Latin. Appreciate that. I checked it. I actually did. I have a, you know, my wonkiest friend from college.

6:14She was like a classics professor. I did call him up and made sure that it was like somewhat coherent as a name. So it was a, it was blessed. I'm glad that you took, like I took linguistics. It's a good thing. And I'm a zoologist. First to any, yeah, impact matters. That's why we do this job. We could be SaaS investors and that would suck. Helping do eligible people live better is, is like what we have to want to do. I think three things to find a good business model. and once it's happened to me. The first one is get paid up front a lot of money. Most healthcare businesses that I'm involved with and see don't get paid a lot up front.

6:51They get paid later and not enough. And then you're like hoping to make it up on value later. And then cash is king and having it first is really good. Number one. Number two is software. Software has a lot better margins and you can do a lot more when you have more margin. Then number three is have very long contracts, which is hard to do in the US. but the best business I'm involved with from a business model perspective is one called need. I knew you were going to say that. I was like, yeah, I do work there. And it's a company we started in Korea. In Korea, people buy 20-year insurance policies and they can't get out of them.

7:25And so we're attached on day one and in 20 years, they need you. And so you get paid for 19 years before they need the service. And so that gets you all the cash up front and then you do the thing in a supposed software. And so one thing we should do in the US to really improve preventative care and make everybody's life easier is have multi-year insurance models. The idea that you can switch every year means that you can't have no time for ROI. And so I hope that that's something that comes out is a multi-year policy because then you can do a bunch of the stuff that we all want to do and have an ROI period that works.

7:53Yeah, we couldn't have a sort of AI-oriented event without asking about the investability of like foundation model startups. Like what is your view on, you know, wrapper companies, companies that are competing directly against open AI and Anthropic, how much have you been enticed to invest in businesses that are spending a lot of energy building their own models and how much have you been wary or not of businesses that rely on open AI and others? It's a big question. I can make him go first. You had to go first on the first one. I think competing with open against the foundation models is crazy.

8:30Don't do it. And I wouldn't do it. All of our companies are using AI inside to make the product better, the margins higher. and the last panel talked about the need to have multiple models and switching across them. I think the multiple models work awesome and you can switch across them and it seems like you can train them pretty quickly to do almost everything you want to do. And so I wouldn't want to compete against that. I think about AI making my ideas to serve patients just a lot more scalable, a lot more profitable, a lot more effective. I mean, you can listen to elderly people who are lonely and make them feel better.

9:01You can do every language now. You can tailor the care model or the dietary recommendations to any kind of diet so it it makes everything better you just you agree with that i i agree with that and i think the reality is it's a it's a safer place just to to play yeah yeah uh in the sense that they're not going to do the last mile i mean they might do it if you think about drug discovery i actually think they're going to be working on models that'll be that will you know effectively compete with those that are working in drug drug discovery companies but I also think they will partner with pharma and with biotech companies and and and but they will be closer to the product creation and probably in a way of royalties and you know some of the classic companies right now they're doing drugs just drug discovery but I think in you know healthcare service it's just hard you know like I mean if you if you actually looked at the volumes at open AI I mean the reality is is it's the tools right developer tools off the chart you're using it and then then you do have the ambiences that are bridges in healthcare that have got real volumes, and then everything else falls off.

10:11I think the reality, and drug discovery actually doesn't create much traffic. Right. So I think the reality is that that last mile is really hard. Right. They're not going to want to do it from a go-to-market motion, from actually understanding the edge cases. I mean, they can... this is the risk you're saying the reason opening i might not fully embrace it is just like the guard the guard rails here they're sort of a no it's just like yeah how quickly you can like scale these things yeah right like when you have so you have coding coming at you it's like oh this is great like let's do that yeah let's do that what i want to ask the audience honestly just straightforward ai in health overhyped underhyped just like let's i let's get the pulse on the road overhyped underhyped ai and o all right who is overhyped wow we've got okay this is the most optimistic crowd ever they're not dated or skeptical underhyped yeah it's like a fast looking great yeah everyone is still a true believer no one has gotten it off they can't yeah yeah it's good the reality is both things can be true yeah right i mean i think the reality is there are 800 companies that have been funded the last three years doing AI and healthcare.

11:31And the reality is that some subset of those, just like Google and Amazon came out of 2000 and a mania there. I mean, this is a mania. And valuations are going to be way beyond for every company, probably what they should be. Except for that top 5%. We bet in a bunch of businesses and then some of them are. Exactly. It's the nature of venture business. I think that I think it's such an extraordinary moment. Like I've never seen a moment in my 30 years in healthcare where we're actually going to make a difference. We're actually getting, we are actually going to lower our costs. We are actually going to make providers and clinicians lives better and patients lives better.

12:06So I think it's worth it. And I also think it's, you know, you're going to have the top 5 % of companies are going to be amazing, you know, and then you're going to have probably, well, probably, we'll probably get lucky in some like points, point solution companies that, you know, we sell them, you know, There'll probably be, I don't know, a couple hundred companies sold. And then, you know, they're going to be the other 600 of the thousand that have been created, you know, walking dead, like usual. Moving on to sort of a new, some companies die in startups, spoiler alert. The, Bob, the GLP ones and just sort of like change the longevity conversation.

12:43Like, you know, this idea like treating longevity means a lot of things to different people. It's obviously sort of an amorphous word. I mean, some of it has been like, oh, let's think outside the medical system. Some of it to people I think is like individualized care. Some of it's treating healthy people. But like what to you has been the lesson from GLP ones and like how are you using it to change with startups you're looking at? I mean, they're the greatest medicines I've ever seen, I think, except for cancer drugs. Yeah. As a doctor, there's so many patients I've spoken to about, you know, how to be healthier, lose weight, change their diets.

13:18and for some people no matter what they try it doesn't work and then you give them a glp1 and it works awesome and everything gets better their cardiovascular risk their cancer risk their energy that have two diabetes goes away and the prices for these drugs are falling to the point that they're going to become widely accessible to people and orals are coming soon and so this is a revolution i think in health for people on earth and i hope that they're more accessible to more people faster at the end of the day i think carrying it with lifestyle changes and an aura ring and sleep and stuff makes them better.

13:46So I hope people do that too. And don't just take them and then like eat McDonald's. But I think that we're at the beginning of a lot of biological insights around how to live longer, healthier and better. But the key thing is years of like health that you can do things where you're alive and well. And I'm very hopeful that we're going to have a bunch of improvements in our joints and in our weight and in our metabolic health and in our cancer care to help us live longer. And I think the next 10 years is going to be actually kind of like there'll be a wave of longevity type things that really work.

14:17And I think about this from the Medicare managed insurance. Annie and I are together at Devoted Health and we think about, we're devoted, how do we improve the lifespan and health of our patients and do it cost effectively? And GLP ones are now becoming part of a cost effective approach to doing that. Yeah. But it goes back to you're actually saying you need to actually own, as an insurer, you need to own the life long enough to actually have to pay for it. Like at Devoted, we keep them up for more than five years. And so we can do a lot of things about their health and well-being that you can't do in a commercial plan where they switch every year for sure.

14:47Yeah. Have they changed your philosophy on investing at all or the success of GLP ones? No, not really. I think the reality is I think there's some telehealth. I mean, we're in Noom. That's certainly part of their offering. And I think it absolutely makes an impact on people's health and make it more available through compounded drugs. But I think the whole area of longevity, other than, frankly, GLP-1s, that is overhyped. If that isn't, I mean, you may have Function Health speaking today, and I think the reality is 90 % of the tests that they do can be reimbursed if you go to your doctor. Oh, good.

15:30Well, I'm dialing there. But on GLP-1s, I think the big idea, and there's data from a couple companies, Amada and Virta being the two that I've seen the most data on, Virta were investors in, is that you can get people off of them and keep the weight off. So what I love about GLP-1s is that anybody who takes them will lose weight. And then that's the moment that you say, let's change your diet because you're not hungry when you're on GLP-1s. So I can then change your diet around. I can teach you how to eat a healthier, lower carbohydrate diet that makes you feel good. And then get you off of the medicine and keep the weight off.

16:01He is keeping the weight off and not bouncing back and not taking it forever. Because we're not sure actually taking him forever at the doses of GLP-1 weight loss doses is a good idea. But for sure for a year to get you to where you should be, it's a great idea. And if you keep the weight off, then that's the best thing. And so you can see a lot of people doing that. And then it's very cost-effective. Right. You know, like cutting edge medicine, I guess, you know, or like, you know, I'm taking Wagovi. My wife did a BRCA cancer screening. but those are still like medical establishment provided things.

16:33Do you think there are things that like the Silicon Valley connected type is doing in terms of like buying their own tests that you're like, yeah. Oh my God. When your rich friends call you, you're like, you're a doctor. You know, everybody. My rich friends call me. I say, what the fuck are you doing? You're like, go to a doctor. You're like, don't ingest this stuff. Or is there anything you're like, oh, there, that's a good one. You should, you should do that. Oh my God. you're asking for non-evidence-based things that are a good idea to say in public yeah a lot of people metformin probably is a good idea for most people let's say if it's effective and it makes you live longer maybe erythromycin is good for your joints I don't know but there's a bunch of people who think it is maybe and then we get down the path of supplements I don't know people feel better on magnesium so that's probably good but I don't know but you're wary I don't know lithium I mean yeah they came out a study on lithium this week, where it improves your memory and may reduce dementia.

17:28Injuice. Locked plaque. I'm like, okay, you can go to the CVS and get that right in her. Moving on to sort of the policy conversation. I mean, both of you, I think, were excited. You know, a potential upside of a Republican administration was that they would embrace Medicare Advantage. Have you seen that? What you read specifically on Medicare Advantage? And then I'll ask more broadly what your reaction to sort of the Trump health policy has been. All right, Annie, you're up. You're up. You're up. OK, so, you know, like we're lead. Both Trump administrations have had a number of my CEOs actually involved.

18:04And they've been, I would say, much more constructive than the Biden administration, unfortunately, in health care. So I would say there are two things. I mean, obviously, Medicaid is actually, you know, the one that people are most worried about. in the, obviously, the subsidization of the exchanges. My biggest fear is actually the exchanges go away because you don't do the subsidies. People, then the cost of the exchange, being on the exchange goes up so much that people just, the healthy people just get off it. They're not going to pay. Basically, Medicaid funding has been cut because of worker tests.

18:39Yes, worker testing. And then if they don't have that money flowing in, it can be changes. But also - Wait about the changes, because there's still all the people under the ACA who will be subsidized on the exchange. We're going to get about 2 million people from the subsidies expiration. The 22 million will stay. So there's enough healthy people there. Why does, you know, I can only talk from one state, but we're down to like one insurer willing to be in that. Well, that's the question. Is it exciting for insurance companies? Yeah. Does it make sense for insurers? Because you're going to, I think, the risk of that population, you have a less healthy population in those exchanges.

19:13And on the MA side, I think it's interesting because I think Republicans and Democrats, obviously, as one of my CEOs said, Republicans have now become Democrats, or at least the base that's supporting it. The base that was supporting Democrats is now supporting Republicans. Republicans are now supporting Democrats. So what does that mean for our policies? and I would say that on MA, they're going to be friendlier, but we'll see how friendly at the end of the day because if you actually looked at the legislature, they see that the citizens don't like health plans. They blame everything on the health plan.

19:49So therefore MA is, and you've got not-for-profit health systems also blaming the MA. So you've got like two groups that are now like dumping on MA and it'll be interesting to see where it all comes out. I think when Dr. Oz waves up in the morning after he takes whatever supplements he takes, he thinks to himself, how can I grow the MA business for the world? And so I think that they're going to make stars easier, more plans will be in, more plus star plans. I think they're going to like, besides UnitedHealthcare, like in general, put more money into the system and want it to grow. I think they're going to pay for food as medicine because that's a RFK Jr.

20:25idea. And I think that at the end of this, their Medicare advantage will be quite a bit bigger than - It will be bigger. Yeah. You're optimistic on that. Well, I just wake up in the morning thinking that every Republican is wearing a T-shirt that says, I heart MA. Because they like privatization of Medicare. And they would like Zafra to be bigger. And so while they're making... But Annie is saying that, like, the voter base, it doesn't square anymore, that they would continue... I know that's the confusing part because everything's diffusing. But I think that at the end of the day, like, Republicans love MA.

20:52And that's just one of those things that is, like, it's a dogmatic statement. and I think they don't like the administrative burden of the current STARS program, of all the complexity that we put in it as a difficult to make it bigger. So I think they're going to let it grow with the asterisk being in out of healthcare concerns and because of their coding practices and they're going to get a bunch of scrutiny. And the vaccine step, like what's your reaction to that? Like how damaging or not do you think it will be?

21:21I think it's, well, I think it's actually very damaging, but I do think, for example, we're actually in a vaccine administration company that's doing very well. But last year when you had states like Texas and Oklahoma, you had several, I would say, towns that did not embrace vaccines and those towns ended up getting the measles and then more children went to the hospital. You had a couple of kids die. Our vaccines administration for measles went up 50 % last year. So I think that that's all it takes. And I do think you mostly have rational physicians. I think physicians are, you know, say that vaccines are good in general, you know, and most of the list is there, obviously, but our pediatrician won't even recommend a non-vaccine providing doctor.

22:12All right. You don't want to take vaccine, like good luck. Vaccines are the safest intervention that exists in healthcare on the earth, period. They work. You should get them. You should recommend them. I give them to people. And I think that most people actually believe that and we'll get them. Yeah. I think it's sad that we're making them harder to get. I think it's sad that now they won't always be covered so you don't have to pay out of pocket. But my 84-year-old aunt just sent me a picture from this morning from Safeway where she was getting her COVID shot and then she bought herself a donut and it was a good day for her.

22:42And so I'm happy about that. Great. Bob and Annie, thank you very much. Thanks for having me, Karen.

22:51here's a conversation with venture capitalist vinod khosla i sat down with naima raza my deus ex medicina co-host to talk with vinod about all the major themes in health you've been making predictions about health care since i think longer than we've been alive you know the last long-term prediction i did was in 2016 about 10 years ago And I would say we are well ahead of the schedule. I predicted three-year cycles of innovation. So I had assumed three-year cycles of significant innovation. That's 25 years. So I figured 2040, but I think things are happening much faster than I ever imagined. One of the things you've said is that innovation and AI is not going to come from the giants.

23:45It's going to come from startups. You've held strong to that. So when you look at it, who do you see as the kind of Tesla? You're famously, you know, you're a big fan of what Elon Musk has done in electric vehicles. Who do you see as the Tesla of AI and then the Tesla of healthcare? Well, I don't think the Tesla of AI has emerged. Okay. But it will emerge. So if you look at healthcare companies today, and I speak to all of them, I speak to their boards and executives, they are looking at things incrementally. And so, yes, and I'm very glad they'll all introduce a bridge, one of our companies. So great.

24:27But that's taking current system and incrementally adding AI to it and automating. There was a board I was speaking to recently that said, clearly do that. And you can take costs out and improve efficiency. In fact, just like a bridge does, we have a company in the UK called Tortoise. And they just announced a major study with the NHS where doctors adapting their system. And this is pretty stunning. Got 25 % more actual face time with patients. And so my tweet was, so suddenly they've increased the doctor supply in all of the UK by 25%. That's a pretty big deal. It would have taken them two decades to do that any other way.

25:27But that's not the key question. The key question is if you believe all healthcare expertise, it doesn't matter whether you're talking about primary care doc, a mental health therapist, a psychiatrist, an oncologist, a gastroenterologist, a physical therapist, a health coach. All of it was free. how would you design a healthcare system? That's a very different system than today's system. But how did venture capitalists have been throwing themselves against those rocks for decades? It was sort of like... There are constraints. Now, there were constraints in automotive too. Lots of regulations, lots of standards.