Path to the Healthcare Holy Grail

Andy and I have been working on our thesis at USV around self-directed healthcare. We published it yesterday on the USV blog. The gist is that people are fed up with the existing healthcare system, and a movement has formed at the edges of the market. It consists of individuals who want to take their health in their own hands and a variety of products and services that empower them to do so.

USV has made several investments in self-directed healthcare, and Steve and I have angel-invested in several companies that fit this thesis over the past years. I grew up in a household with two doctors. I spent a good chunk of last year researching how to prevent heart disease. I have been going on a years-long personal health journey. This is a space I care about a lot.

One of the things I've noticed is that many entrepreneurs envision the same end-state. They want to be the AI advocate and doctor that is always on and personalized to everyone who uses the service. The way they plan to get there is by accumulating large datasets on customers through a variety of different mechanisms: biomarkers through bloodwork, diagnostics and scans, self-reported information, wearable and sensor data, etc. It's a very unique moment in time where a lot of founders share a similar vision but have very different approaches to get there.

I think it's important that whichever approach a founder takes, they must build a good business along the way. Not everyone is going to get to the holy grail, but a lot of people can build great companies while they try. There are likely many different viable paths, some direct to consumer, some through practitioners in the existing system, and others I can't even imagine. Each will have their own pros and cons. I don't think this is a winner takes all market. It is so large. But value will absolutely accrue to the players that accumulate the most data the fastest, successfully use that data to create experiences that drive positive and measurable results, and build trusted brands.

There are some open questions I have and some we have discussed as a group at USV about unknown dynamics:

  • Will direct-to-consumer companies need to partner with known celebrities and medical influencers to achieve scale? We have seen how credible influencers with their own distribution channel and following can help get a business off the ground rapidly: Peter Attia and Early, Sam Harris and Waking Up, Dr. Becky and Good Inside, Andrew Huberman and Athletic Greens, Tim Ferris and Momentous, Mark Hyman and Function Health, countless celebrity endorsements of wearable companies, and many more. I do not think this is a pre-requisite for success, but it certainly has proven to help jumpstart the early stages.

  • Are many solutions marketing wrappers for someone else's product? If a company is selling someone else's product or service to accumulate data on customers, what does that mean for barriers to entry? Does the wedge need to be proprietary, or can it piggyback on something else? How does one think about exclusivity and/or other dynamics with these partners?

  • If barriers are low and the movement continues to pick up steam (as I suspect it will), will D2C customer acquisition channels quickly become a race to the bottom? We saw unsustainable margin compression in most D2C companies over the past decade. Digital acquisition channels quickly get arbitraged and unit economics go upside down. Will similar dynamics be at play and if so when?

These open questions are not deterrents by any means, but they should be proactively addressed by entrepreneurs along with a convincing view of what makes their approach genuinely unique.

I am excited to see how this space unfolds and think we will see a shift in consumer behavior and participation in self-directed healthcare much more quickly than we thought possible. Most of all, I love using these products and trying new services and am eager to continue to partner with great entrepreneurs building them. The tailwinds are strong and society is embracing change. A generation of iconic companies that empower consumers to live healthier lives are getting started right now.

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