Posts from hacking healthcare

Last year, I ended 2014 with What Just Happened and started 2015 with What Is Going To Happen.

I’ll do the same tomorrow and friday, but today I’d like to talk about What Didn’t Happen, specifically which of my predictions in What Is Going To Happen did not come to be.

1. I said that the big companies that were started in the second half of the last decade (Uber, Airbnb, Dropbox, etc) would start going public in 2015. That did not happen. Not one of them has even filed confidentially (to my knowledge). This is personally disappointing to me. I realize that every company should decide how and when and if they want to go public. But I believe the entire startup sector would benefit a lot from seeing where these big companies will trade as public companies. The VC backed companies that were started in the latter half of that last decade that did go public in 2015, like Square, Box, and Etsy (where I am on the board) trade at 2.5x to 5x revenues, a far cry from what companies get financed at in the late stage private markets. As long as the biggest venture backed companies stay private, this dichotomy in valuations may well persist and that’s unfortunate in my view.
2. I said that we would see the big Chinese consumer electronics company Xiaomi come to the US. That also did not happen, although Xiaomi has expanded its business outside of China and I think they will enter the US at some point. I have a Xiaomi TV in my home office and it is a really good product.
3. I predicted that asian messengers like WeChat and Line would make strong gains in the US messenger market. That most certainly did not happen. The only third party messengers (not texting apps) that seem to have taken off in the US are Facebook Messenger, WhatsApp and our portfolio company Kik. Here’s a shot of the app store a couple days after the kids got new phones for Christmas.
4. I said that the Republicans and Democrats would find common ground on challenging issues that impact the tech/startup sector like immigration and net neutrality. That most certainly did not happen and the two parties are as far apart as ever and now we are in an election year where nothing will get done.

So I got four out of eleven dead wrong.

Here’s what I got right:

1. VR has hit headwinds. Oculus still has not shipped the Rift (which I predicted) and I think we will see less consumer adoption than many think when it does ship. I’m not long term bearish on VR but I think the early implementations will disappoint.
2. The Apple Watch was a flop. This is the one I took the most heat on. So I feel a bit vindicated on this point. Interestingly another device you wear on your wrist, the Fitbit, was the real story in wearables in 2015. In full disclosure own a lot of Fitbit stock via my friends at Foundry.
3. Enterprise and Security were hot in 2015. They will continue to be hot in 2016 and as far as this eye can see.
4. There was a flight to safety in 2015 and big tech (Google, Apple, Facebook, Amazon) are the new blue chips. Amazon was up ~125% in 2015. Google (which I own a lot of) was up ~50% in 2015. Facebook was up ~30% in 2015.  Only Apple among the big four was down in 2015 and barely so. Oil on the other hand, was down something like 30% in 2015 and gold was down something like 15-20% in 2015.

Here’s what is less clear:

1. Bitcoin had a big comeback in 2015. If you look at the price of Bitcoin as one measure, it was up almost 40% in 2015. However, we still have not see the “real decentralized applications” of Bitcoin and its blockchain emerge, as I predicted a year ago, so I’m not entirely sure what to make of this one. And to make matters worse, we now seem to be in a phase where investors believe you can have blockchain without Bitcoin, which to my mind is nonsense.
2. Healthcare is, slowly, emerging as the next big sector to be disrupted by tech. The “trifecta” I predict will usher in an entirely new healthcare system (smartphone becomes the EMR, p2p medicine, and a market economy in healthcare) has not yet arrived in full force. But it will. It’s only a matter and question of when.

So, I feel like I hit .500 for the year. Not bad, but not particularly impressive either. But when you are investing, batting .500 is great because you can double down on your winners and stop out your losers. That’s why it is important to have a point of view, ideally one that is not shared by others, and to put money where your mouth is.

Last week, our newest portfolio company Clue announced that it had raised a Series A round from USV and Mosaic. Co-Founder and CEO Ida Tin‘s blog post is here. My partner Albert’s post on why we invested in Clue is here.

There’s an interesting backstory here and I thought it might be useful to tell it.

A few years ago our oldest daughter told the Gotham Gal that she was using this mobile app called Clue to track her cycle and related health data and she loved it. She recommended it to her.  So the Gotham Gal took notice and ended up participating in Clue’s angel round. So our family has been a user (first) and then an investor in Clue for a few years now.

I got wind of this sometime later and asked the Gotham Gal why she picked Clue in a field with a number of strong competitors. She responded “in this market I’m backing a woman and Ida is exactly they kind of person who should be running a company like this.” That shut me up and ever since then I’ve been rooting for Clue.

Earlier this year USV did a roundup of all the interesting things we’ve seen in health care apps and Clue was on the list. I was mindful of my conflict of interest but did mention that I thought Clue would be raising a Series A this summer. Albert jumped on that and the result was our investment in Clue’s Series A.

If you believe, as I do and as USV does, that the mobile phone is the new EMR, then I can’t think of any better example of that than Clue. Women use it to track their cycle and their fertility and a whole lot more. I have not yet met a woman who uses Clue that doesn’t love it.

Ida says it best in her post:

Millions of people across all cultures are using Clue. With every single data point a user enters, we are moving the world toward an educated, informed and empowered future – for our users and their partners and families, for mothers and daughters and sisters, for doctors and patients.

I am super excited that USV and that our family are investors in (and users of) Clue. It’s a great app and a great company.

At USV, we are big believers in being public about our investment thesis and the work we do to arrive at them. We are also big believers in working with like minded VCs on our investments. A few years we decided to merge the two. My partners Albert and Andy started collaborating with Boris Wertz at Version Ventures on developing investment theses in the digital healthcare sector. They roped in two analysts, Zander and Angela and off they went. When Zander’s two year stint at USV ended, Jonathan replaced him on the effort.

For several years, this group has shared investment opportunities, research, and insights with each other. They have a shared database of startup companies and a shared market map. They have collaborated on one investment, Figure1, and thought seriously about a bunch more.

Yesterday, they started to share their learnings and, more importantly, their questions and concerns. It is called OnDigitalHealthCare and as it is currently conceived, it is a six part series on what they have learned and where they are going with all of those learnings. They are two parts into it right now.

I hope they don’t limit this to six parts and would love to see them continue to update this blog from time to time with additional learnings, questions, concerns, and insights. I think most everyone realizes that a computer in everyone’s pocket (and possibly elsewhere on their bodies) is going to massively impact healthcare over time. But how, when, and why is a lot less obvious to us, and I suspect everyone else. So we are trying to figure it out and sharing that process publicly in the belief that the more eyes and ears on our process the better outcomes for us and everyone else.

Last week I wrote the Dentist Office Software Story and the top comment on that post was this from LIAD:

….along comes Sevin Kystrom, he only cares about looking at photos of teeth. he unbundles photos from denstry.com by creating a standalone app called teethagram. users love it. he sells it back to dentistry.com for $1bn

I kind of flipped out when I saw that comment because it describes our most recent investment, Figure1, which my partner Andy blogged about at usv.com yesterday. We had closed but had not yet announced the Figure1 investment when LIAD made that comment.

Figure1 is “instagram for doctors.” It’s not for dentists, as LIAD’s fictional company teethagram is, but other than that, and the sale for $1bn, the story is pretty much the same.

We have believed that simple, easy to use, photo centric apps on mobile have the potential to become very large businesses for a host of reasons. First and foremost, as Brian Watson taught me, photos are the atomic unit of mobile. It’s easier to snap a photo and post it/send it, than it is to do anything else, including write something. And, as the old adage explains, a picture tells a thousand words.

A doctor can say “I’ve got a patient with a very rapid A-fib” or she can send this to her colleagues:

There’s a hell of a lot more info in that EKG than a doctor could type into a text message or email.

But the even better thing is the conversations that instantly develop around these images, like this one:

I think it’s rapid a-fib. I think the ischemic changes are due to the rate. Give them some #Amiodarone and see what happens when the rate sloes down.

Instagram is a powerful product. And most people know how to use it and the value of the interactions around photos that it produces. Like our portfolio company Edmodo, which took the Facebook UI and applied it to teachers and students in K-12 education, Figure1 takes a popular and effective UI and applies it to an industry in desperate need of change.

I’m super excited about the value Figure1 provides to doctors and their patients and I am really pleased that the Figure1 team agreed to work with USV as they build their business.

News is leaking out of Apple that iOS8’s primary feature will be health and fitness data. Rumors are that there will be a new app called Healthbook that will track a plethora of health and fitness data that iPhones and related devices (iWatch?) will be able to collect on the person carrying the devices.

This is interesting to me on a number of levels. We have been looking at this sector for a while and one of the things that has kept us (USV) from making investments in this space is the sense that all of this data capture is soon going to happen in the phone itself.

Once that happens, things can change pretty rapidly. The key will be APIs. And my big question is whether Apple will give its users an open API to send their health and fitness data to third parties they authorize.

I can see a button that says “auth with Healthbook” in my doctor’s office, my gym’s mobile app, my health insurers’s web app, and a host of other places.

So to my mind, the big question is not what Healthbook will look like but whether Apple will make it easy to get our data out of it. If they do, this will be a massive game changer for the quantified self, health, and wellness markets.