Finding Genius

by Kunal Mehta

  Privacy and control have become an everyday part of the conversation about social platforms. Facebook has been plagued by this topic for most of 2018 and beyond. TikTok is under constant scrutiny given the heavy surveillance of its Chinese app, Douyin, and has been fined for illegally storing information for its youngest users below the age of 13. Gen Z has grown up as a generation much more concerned about their online identities than those who came before them. They are accustomed to the form factor of disappearing messages and photos from Snapchat. They have finsta accounts, as I mentioned before, to control the image they portray to their parents. They are constantly culling their pictures on Instagram, as it would be tacky to have more than 25 photos posted at a given time (compared to the average millennial who has every embarrassing tagged photo from college still visible on their profile.) In short, Gen Z has become obsessed with owning their online identity.

  Enter Brud. Brud is the company behind artificial influencers like Lil Miquela and Bermuda. They have devised deep identities and dramatic story arcs for these lifelike characters, garnering millions of followers on Instagram. These characters have released pop singles with millions of streams on Spotify, they have partnered with brands like Prada and Calvin Klein, and even gotten tattoos from the hottest celebrity tattoo artists. Brud has acknowledged what much of Gen Z has already picked up on — social media today is largely real humans being fake. It is humans broadcasting their life to achieve status. Now, Brud is taking fake humans to broadcast fake lives as well. But because there is no premise of these lives actually being real, there are fewer limits to what artificial influencers can do. It is storytelling at its finest. And people are happy to buy into it.

  I believe that Brud is just the beginning. While today Brud acts as a studio, carefully crafting the stories of these specific influencers, one can imagine a day when any user on the Internet can create their own avatar or artificial character and craft their own unique story. This will give users a new level of control — an ability to choose, and create, the life they portray to the rest of the world. We are already doing it today on Instagram, picking and choosing the moments we share, spending hours getting the perfect selfie with the perfect filter to show off that perfect weekend at the beach. Avatars and artificial influencers will take this storytelling to the next level. It removes the limitations of the physical world to allow users to express themselves in a new way.

  Conclusion

  You may have noticed that in evaluating opportunities for investment across the five pillars, I spoke to all except Status. This is because Status is an inevitability with all social platforms. In some cases it may be a starting point, but in all cases it is an end point. Every successful social app will find itself a part of the Social <> Status cycle.

  The Social <> Status Cycle:

  ● A social company is born with some unique footprint across the five social pillars.

  ● As that company matures, it will seek to satisfy the natural desire of users to amass status, adjusting its feature set and thus its footprint across the social pillars.

  ● Once one’s social group on that platform becomes so large that it disincentives authentic content, that platform has tipped into status media.

  ● Once a social company tips to become a status media company, a void is left in the social landscape for more authentic interactions across the remaining four pillars.

  ● New social companies will enter the ecosystem to fill that gap and eventually provide a new platform for amassing status to rising generations.

  This is the natural evolution of social apps. It means there will always be opportunities for new social innovations — the holy grail in Silicon Valley. This is a cycle we have seen play out, and one that we will inevitably see again. It will continue because it is based on the natural human desire for community, utility, entertainment, (increasingly) privacy, and most certainly — status.

  SHEFALI BHARDWAJ

  ZS ASSOCIATES

  Healthcare is an industry that is difficult to navigate as an investor or operator given ever-changing regulation and technological advancements. Despite its complexity, it is also one of the most compelling industries for entrepreneurs or venture capitalists who want to see technology improve humanity in meaningful ways. For a chapter focused on the healthcare industry, I wanted to identify someone who had spent several years developing a focused perspective on the industry by interacting with the major players in the ecosystem. Shefali Bhardwaj, a healthcare advisor with ZS Associates, fit the bill.

  With ZS Associates, Shefali works closely with pharmaceutical companies, hospitals, and fortune 500 companies as they navigate the healthcare landscape from a commercial perspective. Prior to ZS, Shefali worked with PricewaterhouseCoopers (PwC) as a consultant to many of the large payors and beneficiaries within the healthcare ecosystem. While at PwC, Shefali authored a whitepaper on the Affordable Care Act and how it would impact American citizens and continued this focus on healthcare while earning her MBA from Columbia Business School.

  For the purpose of this chapter, Shefali focuses primarily on consumer health. As health data becomes increasingly more accessible to consumers through electronic health records, diagnostics, at-home kits, and wearables, the consumer healthcare industry has exploded with new applications through companies such as Ro, Hims, and Modern Fertility. Shefali offers her perspective through a background informed by the incumbents within this industry.

  THE DIGITAL HEALTH REVOLUTION

  Shefali Bhardwaj, ZS Associates

  A Recent History of Digital Health

  We live in one of the most transformational times in human history brought about by a digital revolution which is impacting each and every industry. Healthcare is no exception. Traditional paradigms are shifting and being redefined. Patients are now consumers, managing their healthcare experience from their own homes and personal devices. While patient centricity, and an emphasis on value, are at the heart of this transformation, much of it is propelled by digital disruption in the industry. With more than three billion people worldwide connected to the Internet, harnessing the power of digital connectivity is key to solving some of healthcare’s greatest challenges. This chapter will explore how we got to this point in the digital health revolution, what digital health really means, and what key leaders, investors, and entrepreneurs feel about the industry today and where it is headed.

  The healthcare industry has long been ripe for change. For decades, the US health industry has operated in a system of silos — hospitals, insurance companies, government institutions, pharmacies, drug makers, medical device-manufacturers, and employers. Today, healthcare operates more like an ecosystem of players all orienting themselves to compete for a consumer that is now more informed. No longer are patients playing a passive role in the process but are in control of their own data and the healthcare experience. The industry has been forced to re-evaluate strategies and align business models with consumer-driven industries like hospitality and retail.

  So why is digital health so relevant now versus 10 years ago? What has been the impetus for change?

  Mobile Phones and Wearables Empower Patients

  The rise of mobile phones has enabled a rising trend of the patient as the consumer, able to make instant decisions about their own health with the click of a button. The digital/mobile revolution has given rise to online pharmacies, health tracking applications, and secure doctor-to-patient communication platforms. These shifts have allowed for the delivery of treatment without a patient ever having to step into a doctor’s office and one major technological breakthrough has empowered the patient like never before: wearables.

  The introduction of Fitbits, Apple Watches, Garmin watches, Whoop, and a host of other wearables have allowed consumers to track health fundamentals accurately. The wearables market grows each year exponentially and only halfway through 2019, over 150 million wearable units were sold internationally generating over $30 billion in revenue. While these nu
mbers are astounding and clearly indicate high consumer adoption at the intersection of health and technology, the impact wearables can have on human health has only begun to scratch the surface. For most healthy people, mass market wearables such as the FitBit or the Apple Watch have had minimal impact on their lives, aside from tracking steps, measuring sleep patterns, and more frequently checking heart rate. These consumer products create convenience but are not essential to patients with serious health concerns. There are however a growing group of entrepreneurs focused on developing the next generation of wearables for patients with specific needs.

  For patients who suffer from chronic diseases — diabetes, heart conditions, asthma — the rise of the mobile phone and wearable devices has been transformative. It has not only improved the patient experience, but it has also enabled doctors to treat patients in a much more precise way. There are several examples of wearables feeding specific, indicative and high-impact health data to a mobile phone. These include the ‘smart bra’ that leads to early-detection of breast cancer, contact lenses that detect early signs of glaucoma for at-risk patients, and smart glasses that help people with cerebral palsy browse the Internet and perform better at their jobs. Larger players are investing heavily in the wearables market as well. IBM partnered with Pfizer to create wearables that help track the progression of Parkinson’s disease. Larger risk-bearing entities, such as health insurance companies, continue to explore ways to empower patients to monitor their own health indicators. Most recently, Aetna has partnered with Apple to allow members to purchase an Apple Watch, but then “pay it off” through healthy behavior. The hope is that improved patient outcomes will continue to reduce overall costs to the healthcare system.

  While wearables and mobile phones have provided more access to healthcare and health data, a challenge that continues to persist is privacy. In 2019, over 503 breaches compromised the health records of over 15 million people, and healthcare cybersecurity has continued to see investment from VCs. With new regulations like GDPR in place and on the horizon, we may see a reinstatement of consumer confidence in sharing their data with healthcare technology companies. Healthcare cybersecurity is a field that has grown in favor with venture capitalists looking to protect consumers as they continue to track and gain access to important and sensitive data.

  Direct to Consumer Options

  Mobile technology and wearables have also given rise to the consumerization of healthcare whereby patients are now operating as consumers of the healthcare experience. Much like other industries, healthcare consumers are seeking services through their phones, in the comfort of their own homes, or through very tailored and convenient experiences that serve their exact needs. This has put immense pressure on incumbent healthcare companies that have always viewed healthcare services as a utility. These organizations — hospitals, pharmacies, health insurance companies — have been disrupted by a new wave of digital health companies that bring the consumer focus from other industries (e.g. retail, technology, finance) to healthcare, where the consumer or patient experience is largely broken.

  In women’s health, companies such as Maven Clinic and Modern Fertility are transforming the way in which women approach fertility decisions. These companies have taken usually stressful, anxiety-driven experiences for women in their childbearing years — who either want to prevent a pregnancy or start planning for a pregnancy — and made them much more easier to navigate. Raising close to $50 million to date, Maven Clinic offers an online clinic that focuses on women’s healthcare and the family, with a larger goal of keeping more moms in the workforce. Since its founding in 2015, Maven has delivered care to almost 200,000 patients and currently has more than 1,300 health specialists in its network. Katherine Ryder, the founder and CEO of Maven said to Forbes:

  “I started talking to a lot of women, and it was really clear that…the problems really revolved around access to care and just getting better information in a sea of misinformation online. [Maven] in very nuanced ways, tries to help better the lives of working mothers and new mothers.”

  Similarly, Modern Fertility is transforming the fertility-testing space by offering a $159 at-home hormone test kit, accompanied by a consultation with a nurse, to help women make informed decisions about when to have babies. The global fertility-testing industry is a nearly $400 million market that is projected to grow to almost $600 million by 2020. Currently, most doctor-prescribed blood tests are handled by industry leaders Quest Diagnostics and LabCorp. The pitch to young women is: “if you have the tools to start monitoring your fertility the same way you should continuously monitor your credit scores — you can make more informed decisions, whether it’s freezing your eggs or trying to conceive sooner rather than later.”

  These companies, along with a host of others such as Ro, Hims and Helix are contributing to the shift of the patient as the consumer, enabling individuals to proactively make decisions about their health with information that historically has been largely unavailable or difficult to obtain. According to a McKinsey study, consumers continue to want more from the healthcare industry, with coverage ranked as most important, followed by customer service, cost, and access. The types of relationships consumers have with tech innovators such as Amazon, Google, and Apple are the types of interactions they want from healthcare organizations. With healthcare companies being so deeply embedded in consumers’ lives, they are uniquely positioned to create this experience. But there is a long way to go, and likely no perfect path or single company to get us there.

  AR/VR and AI applications in healthcare

  Alongside the rise in mobile technology, technology trends such as AR/VR and AI, are just beginning to make strides in healthcare. In the last decade, there have been thousands of investments in companies that utilize AI in healthcare. The majority of activity has occurred in the last three years, signaling that healthcare investors see promise in this space. According to an Accenture report, healthcare AI applications can potentially generate more than $150 billion in yearly savings for the US healthcare economy by 2026.

  A large proportion of these companies are deep learning startups focused on medical imaging analysis with the hope of lowering costs, improving accuracy, and saving time for doctors through enhanced detection and diagnosis. Experts predict operationalizing AI platforms across healthcare workflows would result in a 10-15% productivity gain over the next couple of years.

  Let’s take the example of breast cancer — one of the most prevalent forms of cancer. X-ray based mammography is an effective screening tool for detecting cancer, but what many women may not realize is that breast screening programs produce a high level of false positive results — meaning, women are informed that they may have cancer when in fact they don’t. Unfortunately, this is particularly the case in the US, where x-rays are generally reviewed by a single, expert radiologist (whereas in Europe, two independent radiologists read each study.) The inability to confidently rule out the possibility of cancer in complex cases frequently results in women being asked to return for further imaging or studies or even a biopsy (an invasive screening procedure.) This leads to unnecessary anxiety and has broader implications around efficiency and cost to the healthcare system. That’s where companies like Kheiron Medical Technologies are transforming breast cancer screening. Initial data from over 5,000 patients showed that AI-based analysis was as good as conventional physician interpretation.

  In addition to medical imaging, repetitive and time-consuming tasks, such as scheduling appointments, are a sweet spot for AI companies. Cleveland’s MetroHealth System had a 10-35% no-show rate at its four hospitals before bringing AI into its operational decision-making in late 2017. During a 2018 US News Healthcare of Tomorrow panel on AI, MetroHealth’s chief strategy and innovation officer Karim Botros shared that MetroHealth used AI to quantify that select patients had a high likelihood of not showing and double booked those patients in order to not waste providers’ time.

  Another example is the co
mpany Kit Check, which sells machine learning to help hospitals identify drug diverters by identifying high-risk hospital employees who may be stealing drugs. The system scores them on a range of metrics, such as physical location, documentation and timing behaviors. These technologies trickle into all parts of the healthcare system, creating the potential to reduce overall drug spend.

  Efforts to Reduce Regulatory Burdens

  Unlike other industries, the healthcare industry faces high regulatory burden. To keep pace with rapid disruption, the FDA has taken measures to pave the path for new digital health products through the Digital Health Software Pre-Certification program, which streamlines the approval process. Since the introduction of this regulation, there has been an increase in digital health companies receiving FDA Breakthrough Device designation. Earlier this year, Paige.AI, a digital pathology start-up, received the first such designation for AI in cancer diagnosis.

  A recent report by PwC found that only 42% of pharmaceutical executives said they were actively developing digital therapeutics in 2018; of those 42% said they would begin doing so in the next two years, and 58% said they are planning to in the next three to six years. Despite these trends that have enabled the rapid innovation and growth in the digital health space, not all companies have had success stories we hear about in the news such as Flatiron Health, Livongo, and 23andMe. In fact, many are questioning whether digital health is in a “bubble,” with valuations skyrocketing. Michael Greeley, a co-founder of Flare Capital, offers a different perspective:

  “The US healthcare market is over $3 trillion, which is nearly 15x the US. advertising industry. Given the enormity of the market opportunities, it feels more than large enough to absorb the amount of capital being invested today. It has taken a decade to reach the $8 billion investment pace we will see this year. I just don’t conclude we are in a bubble. When we saw bubbles created in other sectors, it was often around uncertain business models and when too much capital flooded in too quickly. We have crystal clear business models here addressing enormous market opportunities.”