Inside General Catalyst’s $1B+ Bet on Fixing Healthcare (Hemant Taneja, CEO & Managing Partner)

26:33And that we had to take seriously. And there were, in some ways, endless markets. Our business wasn't really equipped to support those. The capital bases aren't there. The governance mindset isn't there. The experience isn't there. The responsibility quotient wasn't there. So I was like, well, how is this all going to shake out? So it sort of felt like just an inflection point of like this industry has to change because the ideas just became so much bigger because we're really building a digital society and we're going to build it with Moore's Law and Metcalfe's Law behind us, which is going to be a lot faster than the last industrial revolution, which was, you know, 100 years.

27:09And so that was one thing. I think the second thing was you always look at the founder market fit, right? And I was like, well, why me? and I started to feel like, okay, you know, I was kind of not that great in my investing when I was in Boston. I was learning. I came here at the right time. I got exposed to these amazing people and I was like, I think I'm going to be good at this. I sort of had internal conviction. I didn't want to come across as arrogant. So I was very timid in the way I said that to my partners, but I was like, I think I'm going to be good at this and I want to really maximize my own potential in this and the third was that's around when i had started uh writing my book on ai which i published in 2018 so i'd written this paper in hbr around economies of unscale yeah what was happening with data and uh just led me down the path of like how is the world really gonna unfold from there and like what does it all mean and and uh so it just it just so much was going on, it just pulled me to where it's think from first principles and be unconstrained.

28:12I didn't want to be constrained with the accordion of state sector and geography that venture capital innovation is, that bubbles happen and all those things. Your funds get bigger in all those dimensions and the bubbles contract and people stop that and then do that again. I was like, I got to break out of this and think about what these companies need. Wow, super interesting. From those maybe early conversations in 2014, Were there any things that have happened today that you would have been able to sort of predict? You were like, you know, these are the areas that even back then we were very crisp on.

28:46And, you know, sort of the other side, I'd be curious which parts maybe have surprised you the most over the years. You know, Unscaled, when I wrote it in 28, I think we published in like January, February of 18, the whole idea was mass personalization, right? So last century was mass production, economies of scale, and this is mass personalization. and that you could see big data go to machine learning and then all this sort of premise of, hey, that's going to invoke AI. So it was a continuum, right? I mean, it sort of all happened in a continuum. I had said at that time, it's a 30-year cycle.

29:19Started in 07, when we started really building this digital society with Facebook, Connect, AWS, iPhone. And all that kind of came around within 12 months. and that it's going to accelerate when AI actually happens as well, because it's just going to sort of push. There was AI, but then all these other technologies. You think about all the innovations in biology, CRISPR and stuff happening. And you had, you know, this whole idea of blockchain was starting to take hold. I was like, wow, you put all these things together. There's just so many technology forces that are going to push that are sort of economy-wide, that are not specific to any industry, that this will hyper-accelerate.

29:59But I had no idea what that meant. You couldn't, obviously, just like you couldn't envision Uber in 06, couldn't envision, you know, ChatGPT at that time. And so the acceleration is just stunning to me. Because every time I think about an idea over the last couple of years, when I think, oh, these pieces are getting built and they're going to do this someday, it happens, you know, in a matter of months where I thought it'd be years. So that acceleration has surprised me. And so I just keep telling our team, we have to completely rethink what excellence means in terms of company building in this next phase from what we're used to.

30:38We got to unlearn all that. All that's out of the window. All these old benchmarks and thresholds and things like that. We're going to produce terrible returns if that's how we think. The world's changed. So, you know, so anyway, so that acceleration curve is a lot faster. And so it puts a lot more pressure from a responsibility perspective as well. And so just understanding what that means, it changes. Understanding what an excellent entrepreneur is changes from what it was seven years ago. So it's all changing. We have to like rethink our business in a lot of ways, how we invest. That's really interesting.

31:10You think that the composition of great entrepreneurs look different today than 10 years ago? What are the differences there? I do. I think the previous cycle, version of the cycle with the cloud and mobile is all about creating great customer experiences. so the hacker, the product market fit, the simplest thing possible to go do and then take hold was the mindset. That's what we're looking for, right? We're looking for these hackers. If you look at what's happening now, technologies are changing fast. Geopolitics changes fast. AI is a transformation opportunity, not really, I mean, it's innovation, but the value accrues to companies that have customers and data and the courage to change, I would say.

31:56so um so that's going to be bespoke i don't think you're going to have as much of the bottom-up plg product market fit it's going to be the iterative founders that just know you know how to move keep moving forward in the middle of the hurricane everything is shifting around you how do you keep moving forward and keep making progress it's a very different mindset i actually am a very iterative human being myself i don't get anything right the first time so but but I love it right now because it's like complete ambiguity and stuff just changing. And I was like, well, let's just keep iterating towards our true north and tolerate the ambiguity.

32:36So you need founders to be, to have a lot more grit in the context of how they handle ambiguity right now. Interesting. Yeah, that's, I was talking to an AI entrepreneur and they talked about the fog of AI and how it's very, very hard to see even a few months ahead. Yeah, that makes total sense to me. Healthcare has been one of these areas that you've spent a lot of time on. You talked about COVID as this catalyzing influence. How did you decide Hatco, Health Assurance Transformation Company, this initiative was the right way to start to play this? And then maybe we can actually dig in a little bit deeper from there, but let's start there.

33:17Look, healthcare, I'm 20 years into it. I mean, the first company I incubated in healthcare was in 2005, 2006, when some folks from a Boston hospital, I was in Boston at that time, the health system called me and said, hey, we have all this data, electronic medical record data. We're trying to figure out what to do with it. Do you want to meet us? And I was like, my first question was, what's electronic medical record data? So I had to go learn about it. And it just took me down a rabbit hole. We built a company. We sold it successfully, but it was small, a couple hundred million. And then I learned from that around a lot of the, you know, in a nutshell, I just feel like we didn't really build the right technology for this industry for a variety of reasons we can go into.

33:59The intentions were great. The outcomes weren't. And then, you know, I built this company called Livongo, which gave me a sensibility for how do you actually build true culture at the intersection of technology and industry, healthcare in this case. And so that led me to starting Commure in 2016, 2017 to say, I'm just going to go work with some systems and solve this technology problem for them. Build a software company that is doing it the right way for this industry. Now I started three companies. So by 2019, I was actually finishing a book on healthcare saying, hey, we figured it out because Livongo had a big outcome.

34:37And wow, I think we can build great consumer experiences in this industry. So I gave a presentation with a partnership saying 2020 is a decade of healthcare. This is in fall of 19. And we should put 20 % of our capital into that. And that's now in hindsight, an over-imagined less than what I was thinking. But then COVID happened. So I launched a book right when COVID was starting. I actually edited the book a little bit to show the impact of COVID and how the system was breaking. It was called Unhealthcare. and uh and then you could it was just incredible because you could see all problems insurance companies were minting money because no one's getting procedures hospitals were looking for bailouts workforce was exhausted there was no you know public health system to actually take care of a population at a societal level nothing existed right so yeah we sort of leaned in and said if we're not going to do it now when are we going to do it like we have a prepared mind we've been building companies.

35:37We started doing partnerships with health systems. I was like, let's go make them successful in their communities as like the country and insight as opposed to following the money. And I sort of followed the need. And that's the journey we went on. And it became clear that we could come up with a model to drive their transformation. And that's what led to creating Hackco. Before we go deeper into Hackco, you said some of these early efforts showed you what was needed from a cultural perspective when you think about healthcare and innovation. What were the deep lessons there that maybe were not obvious from the outside?

36:19So at that time, Slyvango was the largest digital health outcome when it went public and sold. and before that I was just seeing a very clear pattern. It was either somebody out of the healthcare, a physician or administrator who's just like tired of technology not working and coming up with some incremental solution or it was some really smart technologist in the valley saying they want to start a healthcare company because they want to know how it's impacted the world. They made some money and they want to do something bigger who goes and then hires you know but goes with the belief that their technology will solve all problems.

36:56And so the technology people underestimated that this is not a market. It's got complexity. And the people from inside the industry never understood what technology is actually capable of. What we ended up doing was we bridged the world. When I convinced Glenn to sort of jump in and do this with me full time, move to the Valley and build a Vongos, like, hey, I'll build a tech team. Do you know how to navigate this? And the reason it happened, by the way, it was really interesting. I forgot about this. I invited him to the Valley and I had him meet eight founders, 30 minutes each. And then we had dinner.

37:32And Glenn's this really polite Midwestern, like, you know, one of the all-time greats in healthcare. And we're sitting down and he's like, hey, man, I don't know how to tell you this, but these companies are not going to work. They don't understand the market. I was like, exactly what you do. But I can put a team like this together. So let's team up. And so, you know, he bought into that, him and his longtime partner, Lee Shapiro. So we kind of built the business. And that became a playbook of can you actually culturally respect the importance of technology and the importance of having empathy for what's in healthcare at the same time versus one being subservient to the other.

38:06And that was the unlock for us to get it done. Fascinating. This episode is brought to you by Brex. Fred Adler, the influential venture capitalist of the 1970s, was known for displaying decorative pillows in his office that featured a signature business philosophy, corporate happiness is positive cash flow. In today's post-SERP environment, Adler's wisdom feels particularly relevant as founders need to make every dollar work harder. That's exactly what Brex delivers. Their modern finance platform was built specifically for startups like yours and designed to help extend your runway when capital efficiency matters most.

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39:28Join them at brex.com slash Mario. Okay, and so with Hack Co., you ended up buying Summa. How did that come about? Like, why was that the right target? How did you think about like even that type of purchase? You know, we have been working with about 15 % of the healthcare system in the US now. We're working with their seed suites on their transformation, helping them out, bringing our companies in. And we're making progress. And they're happy to some extent. Our companies are happy because it gets them, you know, access to the market a lot more efficiently. But it was not going to change the game.

40:08So for us, it was like, well, we should just go purchase one and really do this end to end. And buying a health system is a terrible investment to do our funds. That's actually because we don't want to maximize the profits. There's like a community we're taking care of. That's what we actually decided. We'll buy from balance sheet. We'll buy it ourselves. And we'll hold it for a long term and do this. So then the question is, what do you go buy? You wanted it to be a representation of the country, not the elite coast, because the problems are different. You don't want to be an academic medical center.

40:40You wanted to have an insurance company as well as a health system. You want it to be, it's got the challenges of addressing issues like Medicare, Medicaid, so a safety net environment. You want like the hardest problem and the greatest representation of the microcosm. Because if you could do it, others will follow. We have a lot of interest. You'll see some announcements where others want to work with us on this and be along for the journey, even though they're not systems that we own. And so, you know, it's going to be a really interesting few years where hopefully we can create the playbook that needs to get replicated everywhere.

41:17Wow, fascinating. So I hadn't understood that, actually. Hackco started more in this advisory sort of connection capacity of connecting these different health systems with the tech world more directly, and then sort of became, hey, we actually need to do something much bigger, and we need to buy this. We need to buy a hospital, to put it simply. Yes. And, you know, it's a complicated process because it was a nonprofit, which is most of the hospital systems are. To convince the community leaders, our intentions are right. Obviously, the team and the board, we have a great relationship with the leadership of the system and the community leaders.

41:54They spent a lot of time on the ground there. And the attorney general, you know, it's a little bit of converting it to for profit. Like the process, it's a little bit of what OpenAI is going through. So we went through that at a much smaller scale. Elon's not trying to thwart you. Well, this has been done before. That's, you know, opening is just an unprecedented everything. Yes, indeed. So hopefully that'll sort out. So it was complicated, but, you know, recently we got approval from the attorney general, and we're now in the middle of, you know, taking over the system. It's very exciting. Our team's very excited, and our founders are very excited, and the team at Sumo is very excited to, you know, get going.

42:33in. We have a lot of work mapped out that we want to do. And I'm pretty deeply engaged in it myself as well. It's been, I think, about a year since the announcement. Have you gotten to start on any of the big projects? Or has it really been getting these foundations right and making sure this transformation from nonprofit to for-profit happens first before you can start to take the steps you're most excited about? So we have done all the pre-work on what to do over the next couple of years, but we didn't want to start if the AG wasn't getting its approval. We didn't want to start creating this location that they have to then deal with.

43:12But that pre-work is very detailed. We have 120 projects mapped out of things we want to do. So it'll be, you know, we're getting everybody together actually in a couple of weeks. And a lot of the health systems that are partners and a lot of our founders, we do this once a year. It's a gathering and we're going to do some demos and stuff there too. It's very cool. Some sense of that Commir and Epocratic and Sword and AI Doc and these companies are doing it. These are remarkable founders. And if you can unleash sort of a common creativity and a common objective, I do believe that's what it's going to take to take on a gnarly problem like healthcare.

43:48What are a few of the things on that 120 project list that you're particularly excited about? You'll be surprised how arcane these systems are. It starts with actually just giving people visibility so they can make smart decisions. Yeah. There's a lot about using AI. These workforces are eviscerated. So a slight digression. When ChatGPT happened, I thought healthcare would be the slowest industry to adopt AI. People's lives, regulations, whatnot. But it has, in hindsight, ended up being one of the fastest. We're actually doing the largest implementation of Scribe technology with Commure at HCA right now, for example, largest in the world.

44:34And the reason for that is because this workforce is so depleted because of COVID. They're so short-staffed. They're like, give us any help you can. And that's what happened. And so one of the things with AI is, you know, our team can barely do 80 % of the work that they need to at Suma. And so can we give them the leverage so they can actually treat more patients, which makes the business better, right? You can take care of more people, better for business and better for the community. So just give them these sort of superhuman capabilities. That's where a lot of the initial projects are. Fascinating.

45:10How do you think of what success hopefully looks like here? Obviously, there's sort of the experience angle of it. But from an investment perspective, do you have sort of benchmarks in your head or is that really not how you even think about this initiative? Look, step one, what's really important is that we take care of the community because these businesses are a very important purpose. So can we expand our capabilities in the way that we serve the community, not shrink, which is what happens when these are maximized for profit? That's one. Second is, can we take care of the workforce? We'll be the largest employer in Akron.

45:43And so how do we take care of that? How do we help prepare this workforce for the AI world? What does that really look like? Yeah. And then the third is, if you do all that and you say, while doing all this, the profit and purpose comment, while doing all that, can you run with best in class metrics? The best health systems are not 20 % EBITDA. The community hospitals and the nonprofits run at low single digits. Can we meet somewhere in the middle because we ran more effectively and could serve more and whatnot as well? So I think this is a 10-year project for me. We have to take it slow. We have to be deliberate.

46:25We take care of the people. And we have to create this model, then we can give it to others to go do it. We're talking a little bit about AI's obviously transformative effect in healthcare. And you've been, I think, pretty vocal about the need for us to develop this technology responsibly. You sort of founded Responsible Innovation Labs in 2023. as you you know look at where we are two years later how do you feel about the way that ai is being developed today do we need you know new safeguards that aren't there yet are we getting more safe less safe yeah so i think i think first of all we did this uh uh this response innovation protocol through self-governance protocol and it was like widely misunderstood because i feel like people don't really read on on twitter they just want to say provocative things the ambition was not to slow down progress.

47:18The ambition was, hey, if we can be thoughtful about how we use this technology and how we accelerate the use of this technology, it'll give our regulators time to regulate. If we start being irresponsible with it, they'll be forced to regulate, which will slow us down. That's sort of the point. So I think to me it's about building trust between policy and technology. And, you know, everything is, to me, in transition. I actually like a lot of the things that, you know, the folks are doing in D.C., you know, Shriram and others, the way they're thinking about it. And my view is, you know, every region needs to work as fast as possible to become leaders in AI infrastructure, because that's going to be important to capturing.

48:01Labor is going to melt into productivity. and if you don't have your own infrastructure and the best, your productivity is going to hollow out the economy and go to somebody else. That's the challenge for every part of the world today with AI. And so we have to take care of that. Take care of that in America, Europe has to do it, India, everybody has to do it. So that to me is like move fast. But then there is how does that infrastructure get applied into healthcare or financial services, education, all these places. There, I think we need to move intentionally, move responsibly because it's people's lives.

48:34And can you build the right set of governing principles and how you build those companies? So I think to me, it's sort of nuanced answer. The world's not black or white, which is how we do these debates. The world's always gray. And so we have to sort of think about where to move fast and where to be more intentional. When you think about the need for every region to move fast, because otherwise you're sort of losing the battle of the century, let's say, for your own sovereign power and so on. Is that a realistic goal for some of these regions? You know, you talk about Europe, for example, obviously a lot of talent in Europe.

49:10I'm based in London now, have had a chance to see some more of this ecosystem. You know, in many ways, Europe is just like at least an order of magnitude behind in terms of the capital and talent from the U.S. Is it realistic for Europe to say, hey, we really think we can be an AI leader on par with the US? Or are there sort of comparative advantages you have to develop that are a little bit different? So let's just focus on Europe in particular, because we do have a heavy focus there. Jeanette, who runs Europe for us, is focused on this problem pretty deeply. I would say, think about what happened to Europe in its manufacturing industry the last 20 years.

49:50I mean, they outsourced to China. And now the auto industry, for example, is in a very precarious position because the Chinese cars are better and they're cheaper. And the market for European companies is in China. So you can't really tariff your way out of that problem. So like, what are you going to do? It gets sort of hollowed out. Same thing is going to happen on AI now to the services sector. So if your lawyer salary turns into a cloud workload for a company in the US, you're going to hollow that out. So they have to have a great sense of urgency on solving it. One of the reasons they are in this position is because they missed the boat on cloud.

50:33It's the US clouds there. And so do they need to build sovereign clouds? Do they need to get behind sovereign AI? It's actually one of the reasons we built a, we believe Europe will. I mean, they have to. And so it doesn't mean their company is going to be, you know, larger than the ones getting built in the US. But Europe's a big market. And with AI, you can actually serve across the entire region because languages and regulations can all be handled by AI seamlessly. That market, from an entrepreneur perspective, can actually operate as a single market much more now than before. If you believe that, then there is a good local market.

51:06and if the right founders, some of them might be the folks that should move from here to go back and solve these problems for Europe, can build enduring companies that can do this in Europe. Our job is to back the best founders everywhere and let them build enduring companies. Our thesis is that, and I wrote about this with Fareed Zakaria in my articulation of global resilience, that you've seen re-globalization and in critical industries like AI or defense or others like that, healthcare, you're going to create local supply chains on the strategic parts and then have global supply chains on the commodity parts.

51:41That's the reglobalization happening. So that actually gives you a bit of a moat to build in these regions for those founders. So naturally, I think the right founder is going to step in and take advantage of that opportunity, and we're trying to support them all. In the long term, as you see these market leaders emerge in these different regions, then at some point the pendulum will spank, will be globalized again, and they can all compete for, you know, let capitalism do its thing. Let them compete for who can build the best, you know, global companies. That to me is the cycle we're in right now.

52:13And I think Europe has that opportunity. Capital needs to mobilize. And then I think talent needs to be inspired to go take on that problem. Like Helsing is a good example. Then Mistral is a good example of that. Harlow is a good example. I mean, they're like, there's a bunch of companies now, you know, Lagora is another one. That are like Europe native, that are like scaling fast and have a good chance, you know, to be valuable technology companies. Definitely. I think the concern is that a lot of those companies end up either in whole or in part sort of moving back to the U.S. because of that, those access to capital and talent.

52:51And so, you know, I couldn't say from which of those, I think maybe the Gora. I actually think a lot of them move back because of access to market. So what happens is when a company started in Europe. It starts in some country, not Europe. It creates some success there. And it says, okay, where do I go next? And the U.S. is always the answer because it's like, you know, 50X bigger than any other country, right? So that's why it was happening. What I'm saying is with AI, that can actually change because you can support all the languages and the nuances in many of these industries now. So I'm not talking about like core data infrastructure.

53:27Yes, maybe you want to come this way because it's where the biggest customers are, But like if you're doing stuff in legal or health or energy, like those local markets can operate a certain way. And so I do think there's going to be more of important companies getting built there than there was. That's why we made this bet over two years ago when we brought on the La Familia team because we knew this pendulum was going to spin. And then we've invested in some incredible companies like Helsing, Lagora, Mistral, Parloa. These are like, you know, incredible. business. They're doing really well. Yeah, I'm definitely optimistic about that in general.

54:05I think, I don't know, I would like to see another wave come up behind some of these companies like Mistral and Helsing. And I think there's still very much too few of them still, and we need another 30. But yeah, hopefully we'll see that in the next few years. On the AI theme a little bit more, one of the sort of areas that you've been spending time on is with this sort of like AI roll-up idea and how to renovate more traditional industries. How has that come together a little bit and what are the guiding theses there? With AI, if you want to change an enterprise with AI, you have to do three things at the same time.

54:43That's why most enterprises are stuck with pilots and not real deployments. You need to change the data infrastructure. You need models for that industry. And you need to change the workforce because you have humans doing work differently and you have agents doing work that are AI. And so all that has to come together. So unless all three of those things happen, it doesn't work. So the question is, how do you reduce the dimensionality of that to lead to success? So the insight we had, back to what I was saying, was that find parts of the enterprise where those businesses already decided to outsource those for labor arbitrage.

55:17Ah, interesting. So like everywhere there was labor arbitrage, Why don't we go and say, hey, we will turn those into AI agents versus Indian agents or, you know, Philippines agents. And so that's where this was born out of. We said, so for every department in the enterprise, let's go figure out how to go do that. And the fastest way to do that was, you know, incubate a great team and then just go buy these companies that are declining assets. Because everybody knows these labor arbitrage companies are going to go away. So to me, the roll up is just customer acquisition. We buy them and then we transform them into AI.

55:49My contrarian comment in that meeting was some of the best IPOs 10 years from now are going to be transformation of the companies that are the worst value today. These labor art businesses will become high margin AI services companies. So if you believe that transition, there's a huge amount of transformation that's going to happen there. So that's a lot of, and I give Mark Bargwell a lot of credit. And he has really executed incredibly out of creation to go do that for us. And I think we have amazing teams. We just hosted them last week, all these companies together, so they can learn from each other.

56:30And I was blown away. So it's a lot of confidence that this will yield pretty important transformations. Really interesting. The idea of it being sort of roll-up based versus like larger buyouts, Why is that the right way to play it? Because I think I've seen people sort of talk about it from the other angle, and I could sort of imagine, I could argue almost either side of it. First of all, I met a lot of senior folks from large private equity firms that are trying to figure out how to do this. The problem is, I think there's a sweet spot of size after which injecting innovation, the physics of it kind of gets in the way.

57:07Because what are we doing? Our creation business is, in some ways, the antithesis of the private equity business. Private equity business is you buy a business and you optimize it for costs, do financial arbitrage. Creation, that what we do, we buy a business, we actually increase costs. We raise, you know, we invest technology into it. We improve them. And then over time, you know, you can create financial leverage as well. But it's very innovation first mindset. Very different. Injecting innovation in a company that's, you know, a few thousand people is one thing. Tens of thousands gets a lot harder.

57:39How do you really do that? So, yeah, and I think we eventually will be able to do it. We're kind of on this journey of let's start with really small ones. They get to midsize ones. So we're going to scale the capital to be able to do this. And over time, we will be we'll learn how to do bigger ones, maybe department where department or like opportunities will arise. But I think that's that's got ways to go, in my opinion. How do you stage the process? Yes. Do these teams sort of do a bunch of fact finding, build the software and the sort of internal tooling first, and then, you know, sort of get the first target on board and the next one and the next one?

58:14Or is it more sort of running those two things in parallel path where you're saying, actually, we're going to take, you know, we're going to make our first acquisition at the same time as we're figuring it out because it's valuable for us to see it from the inside and figure out what needs to be automated. It's a great question. But when we start one of these companies, we immediately start saying, let's build a product and we can go get some organic customers to prove it out and start looking for targets. And then you somehow sort of converge those into, okay, now we have the technology validated and we can actually organically go build this as well, but we'll also go acquire these customers and move fast.

58:48And that's kind of crescendo and a bunch of the, you know, Julia, there were some amazing companies getting built right now. They're doing this out of our creation portfolio. Yeah. And the creation portfolios is these incubations for more common parlance, let's say. Have you found that there are certain places where this works best? You've tried now a few of these roll ups. Are there nuances within that higher level thesis that you're discovering where there's really the biggest leverage? Yeah, so I think first thing is as technology gets better on the AI model side, it unlocks how much more sophisticated work can you do.

59:28Like the closer you get to reasoning working really well, you're able to take more and more complex tasks that are done this way, right? So that's one. So it's got its own continuum. And I feel like, you know, customer support got unlocked and then legal got unlocked. And, you know, like the insurance underwriting is getting unlocked from a risk perspective. So I think there's like more, every time we make more progress with the models, I have this visual of there's a certain additional number of applications in the world that just became ready to be turned on with AI, right? So like this curve.

59:58And so I think that's the thing that I would say, you know, is important. And then the other is, it comes down to how technology aware is the company you're buying, and then how courageous are the people that are leading it? Because if you don't have buy-in from those companies saying, we want to come be a part of it, we're not selling out and giving you something. We're going to come and help do this and do the cultural transformation and create a culture that can embrace a services team and, you know, hardcore AI engineers. Like, go back to what I said with Livongo. Can you actually infuse that kind of culture at the beginning?

1:00:31That has a lot to do with it. You know, one of the companies, Long Lake, that, you know, Zach Franklin and Alex Taubman are building. It's amazing. I mean, they are doing this at an incredibly rapid pace and they're creating a blueprint for this whole industry for us. But it comes down to can you really embrace the cultural orientation of these two teams and like put together. Can you remind me what Long Lake is doing? I think it's maybe insurance. I will look at it as all the small businesses that need to be transformed with AI in the U.S. They're going and putting them together and building these platforms.

1:01:02It's like, is it Constellation of Opera? Is it Danaher? Like sort of, it's a, it's a sort of its own category defining company, like really impressive what they're building. Wow. How interesting. Have, have you found that the caliber of entrepreneur that you can get to do an incubation project is different than the ones that you find on the outside? Like in some ways, I imagine it's harder to attract a true N of one, you know, top one basis point outlier style person to come sort of in-house into this structure and do things. Is that true or is it different sort of just different archetypes? First of all, look, if I look at our last 15, 20 years, we did Kayak, we did Demandware, we did Circle, we did Livongo.

1:01:47We've done a few companies that have been in their own categories and have been multiplying our outcome. So to me, it comes down to, is there this really elite person that already has an idea that they should just kind of go run with and let's get behind them versus sometimes it's sort of here's an elite person maybe haven't done something before maybe don't have an idea but have the ingredients maybe isn't even a full package i don't know how to be ceo but we can we can train them but they spike and they can be fast builders and and uh you know are willing to co-create something with us they kind of go this way but you know if we do our job Albright, I think we'll build, we haven't yet proven this, our largest internal incubation was 18 billion.

1:02:31Can we build 100 billion in our company this way? I think we have some things in our portfolio now that, like, you know, Commure, for example, or Hippocratic and others, where I do think that kind of potential is there. And, you know, we want to keep honing in. How can we be good partners for these folks? They can be true outliers as well. That's part of the creation journey. Yeah. And we have a few of these companies now that we're trying to prove. But if you already have an idea, we don't want to disrupt that. We don't want to tell you, come be part of this. This, to me, is much more creative figure so far from ground floor.

1:03:03It's earlier than seed, right? We've made a lot of investment in making sure General Catalyst can be the best or one of the best seed firms, that part of our business in the world. That's what, you know, Jeanette and Yuri, who joined us, who built Wayfinder and Neeraj from Venture Highway. You know, that's what they're working on. But creation is actually in some ways even earlier. It's a person trying to figure out what to do. We have ideas. They have ideas. Hey, this is our, it's like our studio, right? Yes. And we'll build something with first principles, you know. Now that you've been doing this for long enough, have you ever sort of mapped how the hit rate changes for sort of creation inception or sort of incubation companies versus outside investments?

1:03:44Because in a way, I imagine you could tolerate a lower success rate on your incubations given, you know, usually there's a different ownership dynamic there. You know, you could calibrate a hit in different ways, but, you know, at some kind of positive threshold, I wonder, I'm curious, have you seen a difference there? It's actually, our hit rate on creation is a lot higher. That's really interesting. like 20 to 25 companies in a fund, very concentrated because we've done the thinking. We're building together. We'll get through the first and the venture would be sort of a couple, three rounds ourselves to make sure we've validated the business and they will invite others to participate as well versus seed embraces a lot more ambiguity.

1:04:27I think ideas in creation some ways are like more obvious. We're not doing accidental innovations in creation. We're looking at like, here's a problem that needs to be solved. and so those are in some ways more execution heavy and can lean on our network and we can sort of build together. So it's actually the other way and our performance in that business is, you know, over 20 years is incredible because we own a lot. Ownership drives that. And so, you know, like, you know, we've invested in Stripe from the beginning and we, you know, we're one of the largest shareholders there, but we don't own nearly as much as we would own a Long Lake or Camus or Hippocratic company.

1:05:07So I think that's what ends up driving an even more elite return in the end. Fascinating. Let's talk a little bit about the seed practice. And you mentioned Jeanette and Neeraj and some of the team members there. One of the ways that you've sort of bolstered that practice is through these sort of firm acquisitions, La Familia, Venture Highway in India. you almost never see acquisitions in VC super unusual uh how did you guys think about like that as a viable strategy when is it the right time or you know the right circumstances for for that to happen for GC yeah I'd love to I'd love to explore that I have to say I don't think we were intentionally going on that path I just you know I just thought um and every one of them has had its own journey.

1:05:59Like Neeraj and I started talking about potentially doing this together maybe five years ago. And it's because we actually grew up in the next town or in Delhi. I'm a few years older, but like, so we're like, we both care a lot about building important companies in India, making a difference. But to me, five years for him to sort of be convinced to say, hey, it's better to be an entrepreneur here on the GC platform than doing this on his own. He can tackle problems much bigger. India is really ready for prime time and he needs that capital and scale and then uh with uh with Jeanette it was actually much faster she had invited me to come speak at her conference that she was called why now and I saw uh you know the her community that was there it was like 100 people large group and tech CEOs so the most important people from Silicon Valley all brainstorming and I asked her like what are you trying to do and she said like I want to transform Europe.

1:06:53I was like, well, you can't do that with a couple hundred million dollars of seed capital. You need a real platform. And what if we could accelerate you by a decade? So I think these are folks that I knew for years. So I knew it was a cultural fit. I'll come to Yuri in a second. And they had their own sense of purpose in the markets that we wanted to lean into. And they were doing this in a very creative way. And they were both very successful. I actually think, you know, we'll see in a few years that, you know, they are two of the best investors in the ecosystem. If you look at their portfolios, it's really, really remarkable.

1:07:29And then same for Yuri. Yuri was introduced to me by Gary Tan. And, you know, I met him. I was like, oh, my God, like, how come I don't even know this person? And he's got one of the most interesting portfolios in the Valley. He just quietly does this and, you know, and is in all the right companies. And, you know, we were lucky. I think he saw how happy Jeanette and Neeraj were and the fact that they didn't feel like they were getting consumed in this large vortex and they could actually have their platforms. And that had a lot to convincing him to come here. And the three of them are, I mean, they own our seed effort and they're the stewards of the early stage of our business now.

1:08:10And I have a lot of confidence that we can protect that because if we don't protect that, then we'll become irrelevant after a few years. And I feel like our core is secure and we can now have the license to do a lot of these other things that we're doing. So it's been all I can say is this is pure luck, man. Like this is not a strategy. It just happened. And then and then this team works really well together. And, you know, I just feel lucky that we ended up we all feel lucky that we ended up together and doing this. So that's amazing. It sounds like the acquisition was really like almost a talent acquisition.

1:08:41Like you could maybe, you know, GC could have said, hey, we're going to pull together an India team and we're going to pull together a Europe team. and this is how we're going to sort of take on these markets, but it would have been difficult maybe to get the style of person, the connectedness of that person, the sort of sophistication of that person with regard to those markets. Is that sort of like the way that you've thought about it? For me, it was important that the people that come into the partnership are going to make the partnership stronger. So that's just a very important consideration.

1:09:09Now, you know, Neurage and Jeanette had built teams, so we got those teams as part of that as well. So that gave us an ecosystem and a workflow and their portfolios that we can invest further in where it makes sense. Yuri was a one-man band. He's like a one-man show. But we already had a team here. So that gave us a leader that we were just missing to help us really drive that. So I think it all came together. But it was very much about the whole package. They are entrepreneurs that we're building. But they would have built large firms 10 years from now. Yeah. So I think they had the infrastructure, they had the team, they had the goodwill and the relationships in the ecosystem and understanding of how to play those markets.

1:09:52So I think we got we got a lot. And but if if they weren't going to be a good fit as leaders in the in the business, then it wouldn't work. So as this is, I do not advise it. I think it was more of an intuitive step, but it's it's I feel very fortunate where we ended up. And now that these sort of platforms are part of GC, do they sort of still operate as... That's one team. One team. So they'll talk across, talk between each other. They talk every day. We call them seed decisions together. Yeah, one team, one dream. I'm very focused on, you know, we can innovate on products, but alignment, as I mentioned earlier, that's like really important.

1:10:34We need to all have the same set of values, economic alignment, purpose. Were there like cultural issues that you had to work through there? Or was it just sort of like, hey, actually, we found the right people and it was relatively straightforward? I always think of, you know, so many acquisitions end up being failures in a traditional corporate environment. And usually that's down to some cultural mismatch. Integrations were painful because I think you have different ways of looking at businesses. You know, you have all these teams that are all coming together. And we already had a team in Europe.

1:11:06India was easier. We didn't have anybody there. And so integrations were a little difficult. India's got its own challenge because like, you know, so far away, we want to make sure they feel everybody part of the team as our other location. So, but we're working through it. I think it comes down to if these leaders have the right mindset, it works. And that to me is where I'm saying we just got really lucky. I think it's almost like three of them had worked together for like 20 years, the way they behave. Amazing. Pretty fortunate. That's really cool. So, well, I'd love to wrap up with sort of our traditional ending questions.

1:11:39These are on the more philosophical and abstract side. The first one is, if you had unlimited resources and no operational constraints, what experiment would you like to run? The experiment I would like to run is around funding proactive care with health. So the way our insurance system works is nobody invests in people's health because it all funds when people get sick. But if you could actually redirect some of the dollars towards funding longevity and health and ensure it so it really becomes pervasive versus only those who can afford it, it'll have downstream effects. But it's going to take a few years to prove that.

1:12:16So we need the courage and the capital and the time to be able to do that. I think that if I could do one thing that I don't think this is easy to do, that I know will just really ensure the success of our healthcare work, that would be it. Hmm. Are there any longevity efforts that you found particularly interesting in recent years? I think there's a lot of underlying innovation happening around longevity. We funded some science companies like Altos, but then there's, you know, consumer phenomenon like Roe Health, which is a company we seeded in like 16, I think. That has become an incredible business around GLPs and GLPs are a proxy for longevity as well.

1:12:55So like there is a lot of that happening, I think. And so I would, my belief is that somebody needs to come and pull this together into a platform for longevity. But there's like little experiments. People are paying for it. Yeah. Technology is showing promise. It's like all the technology before the iPhone came about. And then, you know, Steve Jobs comes and pull it all together and this amazing experience in the industry takes off. I think that's going to happen with longevity. Somebody's going to do that. Amazing. What's a tradition or practice from either another culture or era that you think should be more widely adopted?

1:13:25So one tradition that I think a lot about, which I think could be good for Western society around this whole notion of not fighting death. I want to go back to healthcare. If you look at America, half of our healthcare costs go to how do we sort of protect that last six months of life, which is a horrible experience for everybody in bankrupt society. And it sort of comes down to this short-term mentality in some ways. in India, you learn about, okay, there's reincarnation. I don't know if it's real or not, but there's this idea of a soul and enduring mindset. And I think the Eastern philosophy around that sort of infusing that more in how we build businesses is something that's interesting.

1:14:05I actually just announced that I'm releasing a new book. It's called The Transformation Principles, and I talk a little bit about that in there. I think that might be one thing that I'm thinking can be better embraced in the ethos of how we build companies here. Huh. How does that apply to the company building in your view, knowing when a company is sort of not working and it's time to sort of let it go? Well, or when you're building a company that you want it to endure, it's going to outlast you and it needs multiple acts and it needs to have a culture that can persist. Like, how do you really think about those things with like that kind of an arc and not be rushed to how do I maximize in the short term?

1:14:45Fascinating. I'll look forward to reading that. Okay, final question. If you had the power to assign a book to everyone on Earth to read and understand, what would you like to assign? Look, we're in a really turbulent time because of all the geopolitics. So one book I'd mentioned, I think like a 2015 book is Prindlers of Geography, Marshall. It helps you understand why different regions behave the way they do, what their constraints are. And I think having empathy for, and I think that sort of talks about like these 10 different regions. And, you know, empathy for that could then help you think about how to build, you know, businesses and economic value to take care of the people there as well.

1:15:29Because, you know, one of our core values is inclusive prosperity. And I think a lot about and we're obviously doing this contrary and think of going global is can we have that empathy for what these different regions are concerned like and build with that intention for, you know, what's best for them? Amazing. That sounds like a great book. Thank you so much for taking the time. I really enjoyed this conversation and I learned so much. Thanks for having me. That was really fun.

1:16:17See you next time as we continue to explore the future.