Okay, it has only been three weeks. But it’s love nevertheless.
Based in San Francisco (my home for nearly a decade), I joined Oak HC/FT to help immerse the firm even deeper in the west coast entrepreneurial community. All day long, I get to think and talk about innovative ways to improve the wellbeing of millions of Americans. Sure, like in any job, there are frustrations and fatigue. But what fundamentally gets me out of bed every day is that I’m constantly learning. Learning about new technology, about new business models, and about new approaches to solving problems that truly matter – it’s a really fun way to earn a living.
As I begin my new role at Oak HC/FT, I wanted to share some of my own perspectives on the healthcare market and what I expect we may see in the coming year.
Companies being created today will save healthcare in the United States. We all know the reality that the US spends far more on healthcare than any other high-income country while providing consumers with a materially worse level of care. Meanwhile, it is crystal clear that the federal government is too dysfunctional to be counted on to help solve these intractable problems. Fortunately for all of us, entrepreneurs are stepping up and attacking every nook and cranny of the healthcare ecosystem to improve quality and lower cost. It might be dramatic, but it’s not an understatement to say that our future depends on their success.
The capital raising environment may become a bit more circumspect than it has been in the past. Despite record levels of venture capital fundraising and sky high asset prices, I have recently had multiple conversations with entrepreneurs who have begun to appreciate the risks associated with maxing out valuation in early funding rounds. While a big valuation reduces dilution and creates sexy headlines, it also increases the risk of down rounds if execution isn’t perfect (terrible for morale), makes attracting top talent difficult (limited equity upside), and makes exits more challenging to achieve (impossible to generate a satisfactory return). As an investor, I’ll admit it behooves me to highlight this, but I personally know of several unicorn companies that regret raising at peak valuations and I expect entrepreneurs to increasingly put less emphasis on headline price.
Tax reform is already beginning to impact behavior. Strategics – both traditional healthcare players and pureplay tech companies – are going to be flush with cash in 2018 thanks to corporate tax cuts. This isn’t breaking news of course, but I am surprised to hear the degree to which senior HR executives have told me the purse strings on their 2018 budgets had been loosened. As a result, I expect innovative healthcare solutions selling to large employers to see an uptick in adoption as their customers look to put dollars to work. Furthermore, M&A coiffeurs will grow and fuel more deal activity, particularly large transactions that move the needle.
Speaking of regulation and reform, the future of ACA remains as uncertain as ever. After the failure of “repeal and replace,” the Trump administration has embarked on a death-by-a-thousand-cuts strategy against the ACA, the deepest of which was the repeal of the individual mandate via last month’s tax bill. While enrollment for 2018 only declined slightly from the prior year, the longer-term sustainability of Obamacare is totally unclear and won’t be for several months. Predicting what will happen has become so difficult that the topic rarely even comes up in conversation, largely because there isn’t much more you can do than shrug your shoulders.
Nevertheless, this lack of clarity does not appear to be doing anything to stifle innovation and enthusiasm in the sector. There is so much we don’t know about what will happen in 2018. Will the ACA survive? Will blockchain find a sustainable use case? How will this week’s partnership announcement by J.P. Morgan, Amazon, and Berkshire Hathaway play out (and will other large tech companies follow with big bets of their own)? The answers to these and a host of other questions are unknown, but it is encouraging that this uncertainty has not deterred entrepreneurs from searching for big ideas. The amount of ingenuity our team witnessed at the J.P. Morgan Healthcare Conference last month was almost overwhelming – and incredibly exciting! At the end of the day, disruption in a market is a great thing for both entrepreneurs and investors. And let me reiterate that Oak HC/FT cannot wait to partner with the companies that see clarity through this confusion.
With that in mind, let me issue an invitation: if you find yourself in San Francisco (or LA, Phoenix, Seattle, Portland, Denver, Salt Lake, Austin, or anywhere else west of the Mississippi!), please do drop me a note. I look forward to learning from you!
We are thrilled to announce that Billy Deitch will be joining the Oak HC/FT Healthcare team as Principal. Billy will be based in San Francisco and help us continue to identify and invest in winning tech-enabled healthcare companies that are positioned for accelerated growth.
“We are excited to welcome Billy to the team and look forward to leveraging his broad transaction experience across the technology ecosystem,” says Andrew Adams, Co-Founder & General Partner at Oak HC/FT. “His focus on partnering with growing, innovative companies and entrepreneurs in digital health is completely aligned with our mission at Oak HC/FT.”
Billy joins Oak HC/FT from Francisco Partners where he was a Vice President, responsible for all aspects of investment identification, evaluation, diligence, execution, and portfolio monitoring, with a focus on tech-enabled healthcare companies. At Francisco Partners, he served as a board member of QGenda, Nextech, Dynamo Software, PayLease and Plex as well as a board observer of Source Photonics. Previously, Billy was an investor at TPG Growth and UBS Investment Bank.
Billy’s appointment follows recent exciting Oak HC/FT announcements, including Dan Petrozzo, who has joined as a Venture Partner, Andrew Robinson, who joined late last year as Oak HC/FT’s first Executive in Residence, and the launch of Oak HC/FT’s office in Boston.
Oak HC/FT’s FinTech team is excited to welcome our newest Venture Partner, Dan Petrozzo, who will help us expand our track record of investing in fintech companies that are positioned for accelerated growth.
Dan brings two decades of experience in capital markets and asset management, with a specific focus on infrastructure and technology. His experience as an entrepreneur, operator and investor, combined with his institutional knowledge of capital markets, IT and infrastructure, make him a great addition to Oak HC/FT as we deploy our second fund.
“Since launching Oak HC/FT in 2014, we have continued to expand the firm by bringing on industry leaders and executives to join our team,” said Tricia Kemp, Co-founder and General Partner of Oak HC/FT. “Dan is a world-class entrepreneur and executive whose startup and financial services expertise complement our group ideally.”
Dan Petrozzo added, “I am passionate about tackling complex problems in Financial Services, and I now look forward to this opportunity to work with the terrific team at Oak HC/FT. We will deploy our collective skills to address important issues in the multi-trillion-dollar Financial Services market, including by leveraging technology to improve quality, reduce inefficiencies, enhance customer experiences.”
Prior to joining Oak HC/FT, Dan was Senior Vice President at Intralinks where he was responsible for customer success and technology operations. Dan joined Intralinks from Verilume, a cloud computing company he co-founded, which was sold to Intralinks in 2016.
Dan is a former Partner and was Global Head of Technology for investment management at Goldman Sachs. He was Chief Information Officer at Fidelity Investments, and former Co-Chief Information Officer at Morgan Stanley, and Global Head of Equity Prime Services Technology for Deutsche Bank AG.
Dan’s appointment follows other recent additions to the Oak HC/FT team, including Andrew Robinson, who joined as an Oak HC/FT Executive in Residence, as well as Brigitte Tondreau, a newly appointed analyst with the fintech team.
What role does artificial intelligence (AI) play in Feedzai’s business?
Despite the fact that AI has been around for 50 years, our customers continually tell us that they need AI, but that it is too hard or expensive to wire on and takes too long to start working.
But, we at Feedzai, know AI. AI is our business, in fact, it is in our name. We use this technology to help make sense of commerce omni-data to identify trends and patterns that help predict – in real time – whether a transaction is good or bad, fraudulent or not. With AI, we have creating the world’s most robust risk management platforms, that solve our customers’ most challenging problems.
How do you see AI affecting the financial services industry in the short term?
We’re witnessing AI, this “cognitive revolution,” sweep through every sector, and taking financial services by storm. What is happening at Money20/20 this year with AI Deep Dive is indicative of the effects of AI and the potential it provides for companies across financial services to modernize and create remarkable customer experiences.
Let’s put it this way. Every one of the AI Deep Dive speakers – from the “bare-metal” leaders at Stripe, Square, Intel, Amazon, HSBC, and others, as well as technology visionaries like Steve Wozniak, Ray Kurzweil and Dr. Michio Kaku – are presenting on how important AI is in financial services now. This shows how critically important it is to be strategizing towards AI now, for your business to be effective in the years to come.
And in the long term? Do you think there are any areas of banking or financial services that can be completely replaced with AI?
Rather than thinking in terms of “AI replacing humans,” we think of AI as an important tool to augment humans and make their work more powerful and intelligent. Machine learning systems being built now are only an intermediary step. Our vision is to evolve machine learning to something we call Machine Teaching – where the insights gained by the machines are not locked away in a “blackbox” but instead begin to explain and show human operators what is happening underneath, to demystify the machine logic.
At Feedzai, we do this by making machine models that do their core job — managing risk for banks and merchants — and we have secondary models that explain and teach us what the machine model is doing. Machines actually teaching people, now that’s a breakthrough!
What are your plans for Money20/20 this year?
We’ve been big supporters of all the Money20/20 events because, as the name implies, it brings together people who can see clearly “what’s next.” Feedzai was one of the first to sign up as Money20/20 expanded to Copenhagen, then Singapore, and we’ll be one of the first supporters as they move into China. But this year, we have an additional and unique focus.
We are proud to be the first of its kind partner to Money20/20 by creating an “event within an event” with the AI Deep Dive. We will serve as hosts of the event, empowering the content and conversation driven around the topic at an event with so many important leaders. We like to call it “the Davos of AI.”
Aside from the AI Deep Dive Track, which panel discussion or Money20/20 event are you most excited to attend?
The Startup Pitches and Hackathon are important for us, the next disruptors will come from here so we stay close to these events. I think Max Levchin’s talk on Reinventing Credit will be enlightening as he’s always been at the unique intersection of technology and money. Thorsten Wölfe’s Emotional E-Commerce panel is another good one, another example of the knock-on effects from rewiring of the payments ecosystem. Also inspiring is Ezequiel Szafir of Santander’s How a 20-Year-Old Bank Was Reborn promises to reveal how their use of machine learning and artificial intelligence enabled them to deliver an entirely cloud-based bank.
What do you think of your caricature this year? Who has the best caricature that you have seen?
I love the caricatures, it is such a uniquely Money20/20 thing. The caricature version of me keeps looking younger and younger, although I feel like I’ve lived a dozen lives in only the last 12 months. My favorite caricature is of course Steve Wozniak, it looks just like him!
Aspire is the nation’s largest home-based provider of care to patients facing a serious and life-limiting illness. We employ interdisciplinary teams of palliative care physicians, nurse practitioners, nurses, social workers, and chaplains who use our data-driven and technology-enabled workflows to provide 24/7 care to our patients and their families. Today, we are working with patients in 23 states across the country.
Why palliative care? How did you first recognize a need or opportunity to focus on that area of healthcare?
I was introduced to palliative care by my brother, who was studying to be a physician at Harvard. He had decided to take a year off to work with Atul Guwande and Susan Block, who was the leading palliative care physician at Dana Farber. We were home for Christmas and my brother was sharing articles about his work. I became fascinated by the research, which focused on the health implications of palliative care.
The studies demonstrated consistently high patient and family satisfaction; rates of hospitalization coming down by about 50% in the last year of life; and costs coming down by 20 to 25% for patients. I thought, “Wow, this works so well, why is it not happening everywhere?”
About six months later, my grandmother became sick and ended up going into the hospital unfortunately without the benefits of ever receiving hospice care. It was a very challenging and personal experience, and I decided there had to be a better way.
How are you leveraging data analytics and IT within your business?
Data is an important part of our operations and we use it in two main ways. First, we use it to identify patients. We work with our partner health plans to collect information from claims and clinical records, and then we project how likely patients are to pass away and have high spend in the coming months.
The second way we use data is after patients are enrolled on Aspire’s service, where we use data to help support our clinicians’ decision-making and ensuring patients get the right resources they need at the right times.
In palliative care, no two patients are the same, so there’s never a definitive right answer. For individual patients, it is more about presenting them with a set of options that they might want to consider.
In serving patients across the United States, what are some notable differences you’ve seen in the way you manage the business or work with stakeholders?
When we started the company, we suspected there would be a good chance that outcomes would be different because we serve patients in places that are so diverse.
For example, we serve patients in the Rio Grande Valley, where 90% of our patients prefer to speak Spanish. We are also in the South Side of Chicago, where many of our patients and their families experience adverse socioeconomic conditions.
But what we have been surprised to learn is, across all those different locations, the outcomes are all remarkably similar – both in terms of patient satisfaction and in terms of the reduction in hospitalizations and transition rates to hospice. I think what that speaks to is people, at the end of the day and no matter their background or socioeconomic status, really want the same thing, which is to be with family members they care about as they near those difficult times.
One big difference is how we engage with those different patients, however. Reaching out to patients in the Rio Grande Valley is very different than reaching out to patients in downtown Chicago.
You previously worked in state government. What lessons or experiences have been most valuable as an entrepreneur and CEO?
When I started the company, I had no idea if anything I had done before would be relevant. It turns out it was very helpful. For one thing, when I led nonprofits and worked in government, I had to bring together people with different perspectives to tackle a common problem. It turns out this is actually very similar to the work we are doing at Aspire.
For example, you have patients and families that really care about the kind of care they are getting. You have health plans that care a lot about cost and quality factors they are held accountable for. And you have investors who are interested in both the underlying mission as well as the financial aspects of the company. In many ways, this is like running a campaign. You need to understand divergent stakeholders and where those different groups are coming from. And, then you need to find the common ground and align all those people. This is far more like politics and leading non-profits than I ever anticipated.
Aspire is featured in Dr. Ezekiel Emanuel’s recent book, “Prescription for the Future”. How did that come about? What’s been the response?
Zeke had heard about us from various people and had reached out to us, so we arranged an opportunity for him to shadow one of our clinicians in Philadelphia for a day. Based on that experience, what he saw was a company that was really making a difference in the lives of patients and families. At the end of the day, what we do is all about serving patients and families, and it is important that stakeholders know about what we do so that we can do more of it. His book has been very helpful in raising the profile of a healthcare issue we care so much about, and highlighting the work we do.
If I weren’t a CEO I would be… running a nonprofit.
What’s on your desk right now? Nothing. I keep my desk completely clean; it makes it easier for me to concentrate that way.
What is your favorite source for news? Politico. I am fascinated by everything that is happening in DC right now.
What’s a great piece of professional advice you’ve received? The best advice I received was from Senator Bill Frist, who co-founded Aspire with me. About six years ago, I brought him two ideas to consider: one in education and one in healthcare. He knew a lot about both markets and strongly suggested we pursue the palliative care opportunity given the vast amount of patient need. Without his guidance, I may never have launched Aspire.
What one piece of advice would you offer to an entrepreneur? Focus on the biggest problems. When you’re starting out and leading a company, it’s often tempting to do the things that are easiest first. But all too often, there are only one or two things you must really figure out to make the business successful. Focusing your time on the one or two most important things is critical.