129 – Why Corporate VCs in Healthcare Might Be Your Startup’s Secret Weapon w/ Doba Parushev

If you enjoy this content, please take a moment to rate and review it. Your feedback will greatly impact our ability to reach more people. Thank you. Okay, thanks everyone for joining. We have a guest speaker today, Doba Haw from, he's the managing partner at HealthWorks, which is a part of CareFirst Doba. Thanks for doing this. Really excited to talk to you about it. Vic Marcus, thank you for having me. It's a pleasure to be here and I look forward to the conversation. Yeah, so, uh, I think most of the audience knows that Marcus and I are active venture capitalists. You are as well. Maybe give the audience a little bit of your background, kind of how you got to HealthWorks and Care first, and then we'll dive into the investment strategy and how you work. Absolutely. Very happy to, and, uh, transparently, my, my background is a series of fortunate incidents that got me here. So today I have the privilege of running the investment in innovation arm of Care first, which is a Blue Cross Blue Shield plan that mostly covers dc me in Virginia. But before that, uh, you know, as the name and the accent, give it away. I am not from around these parts. I was born in Eastern Europe and then took a long roundabout way to get here. Uh, did mechanical engineering of all things in, in college and then got tremendously looking that my first job out of that was in a venture capital firm in Latin America. I. And I was young, stupid, I'm no longer young. Right. Uh, and landed in a position that I didn't know actually existed. Right? It's a tremendously privileged job to be in venture. And then the, the, the industry and the life swept me by. So, um, since that beginning, um, I've been with McKinsey briefly as a consultant, did my master's degree as many people do in, in our industry. And then finally landed in US investment with a firm called Edison Partners. So I spent about four years. There with a wonderful team of people who transparently showed me the ropes of how to do kind of early, but also growth stage investment in the US context. Transparently, right. Uh, I was a novice to this industry at the time. I think I came about a little bit smarter about it. I mostly did enterprise software, but also a little bit of healthcare. And then in 2020 had a tremendous opportunity, uh, in that CareFirst, again, based in Baltimore and in DC was trying to structure their investment portfolio. So the company had been doing. Some LP investing, some direct investing, and fairly successfully over at that point, probably a decade plus, uh, but we're looking into a much more standardized process, bringing on a team, right, doing it, quote unquote, the right way. And, and I was lucky enough to get the mandate. So it is been five years. We've done a lot. We've built a lot. Uh, we look very different from what we did five years ago. And adventure continues. Yeah. Excellent. That's a great, that's a great summary. So I want to jump in to really help the audience understand the difference between a corporate VC like you're managing there for CareFirst at at HealthWorks compared to where you were previously, Edison partners or, or the funds that Marcus and I manage. I. I think they're pretty different. I mean, of course it's still the venture capital core industry, but, but there are some differences. How, how do you think about those differences? I, I think you're being kind. Uh, there, there are tremendous differences between the two and I, I believe in the value of both sides. Right. Um, but I think it's important to, to highlight that they're not the same. Uh, I'm gonna argue that probably the more straightforward, certainly not easier part of the industry is the traditional or institutional vc. Um, that is a kind of. What you think when you, you know, say the words vc, what, what most people's mind goes to. It is technically a group of people. A fund who goes out, collects capital for 10 plus years, right? From limited partners who, folks who are looking for financial returns takes that money, goes find promising, exciting visionaries, sometimes a little bit crazy. Companies invest in them, right? Helps them grow and expand and deliver, and eventually as those companies merge, get acquired, IPO, you know, 10 plus years down the line, returns extra capital back to their investors, right? We know that space exceptionally well. And again, there's a ton of nuances in it and how it's done. The portfolio construction, the following strategy, the thesis of different funds, what stage they invest in, but the, but the mechanism is roughly the same. On the other side of this is corporate venture capital, right? Which I'm going to argue shares only the part of investing into companies and kind of gets a lot of creativity in the other parts of, of, of, of this process. Um, one is the limited partner. So the person who provides the capital, the entity, entity that provides the capital is typically a corporation. Right in the ca, Intel capital, the capital comes from Intel, Qualcomm capital, capital comes from Qualcomm and so on, right? In the case of CareFirst, right, and HealthWorks, the capital comes from CareFirst. So that is one difference, of course, a lot of nuance, how that happens. And therefore, while we play in a similar sandbox, we go on and look for interesting, relevant, promising companies to invest in. The outcomes are not purely financial by virtue of investing on behalf of a corporation, uh, that. Viewpoint, that lens of like what you're looking for can be very different. Certainly financial returns, but maybe m and a pipeline, right? Or, uh, industry inside and competitive intelligence or ability to attract top tier talent or, you know, outsource of your product development. A lot of very different ways to think about what corporations want, and I think that is where, you know, the biggest difference between the two category lies. Yeah. Yeah. Excellent. And, um. What, what would you say the advantages either for the investor you or, or CareFirst or for someone seeking money from a venture capital firm, you could take it any direction you want. What are the advantages with a corporate VC as compared to a a traditional vc? Oh, perfectly fair. Uh, I, I think the, um, you know, the, the investor part is kind of boring. I don't like talking about myself. Right. What's probably more valuable to our audience is the folks, you know, is the, why does it matter to you if you're looking to either partner up with a corporate VC as an investor, or to receive money from them, right. As a, as a startup. Yeah. Um, and I think there's probably three big categories that are relevant here. Right. I'm thinking. Traction, like network and branding and probably insights. So traction is the most straightforward one, which is, you know, if you're partnering with a large corporate investor, right? For example, us, you probably expected like we will work on things together, maybe have a fast track to a pilot, a commercial arrangement, right? Some way of doing business, right? That flows to the bottom line and I, I. Firmly believe that a dollar of revenue is more valuable than a dollar of investment, especially early on in the company's journey, right? And working with the right corporate partner or a few of them can get you there with much, much, much less effort, right? And much more less pain, right? Compared to others. Uh, underneath that, especially in healthcare thing is very true that the network matters. Right. Being able to say we are partnering with CareFirst or with Optum or with Cigna or with CVS actually has a decent amount of signaling value and opens up networks and kind of connections and transparently a bit of a vouching validation. None of us really wanna be first right in in working with a new company. That, again, the traction and then the final piece that again, I think is. Particularly special who healthcare is opens up the black box of the industry. Right? As I, as I look back to some of the more successful folks in this space, and again, Intel Capital comes to mind, they share a lot with the healthcare industry where, you know, if you're designing semicon, right, if you are working on designing net new chips, et cetera. That's a relatively closed off industry with a lot of like black box know-how with a fairly closely kept access to the industry. Very few people like stand up and net new right company day one and not work with incumbents. And I think HealthWorks works the same way and therefore being able to navigate. What matters to people, right? Which parts of your program are most valuable? What's missing in the ecosystem, uh, makes a material difference. So those are the big three. And transparently, those are the things that we talk to, uh, with our portfolio companies as the value we add. Can you, Doba, can you talk a little bit about, um, the expectations versus the reality of what it means to partner with a corporate vc? Uh, and I'll, I'll maybe go a little bit further there. Uh, you know, you, you and I have not talked in detail about this, so, so, uh, I welcome hearing from you specifically about, um. Your experience, uh, in, in my experience in, in partnering with, uh, with different corporate VCs, you know, there's a wide variety of the amount of influence that that corporate VC actually has to advance, um, a, uh, to, to advance the portfolio company even within their own enterprise. Um, and a lot of times it has to do with sort of what the initial charter was for that corporate VC when it was set up. You know, sometimes they really are set up to be balance sheet and kind of be. The, the scout outside of the building because they think that inside of the building it'll just get killed. Sometimes it's very much, you know, the investment thesis is directly mainlined into the strategic plan for the organization, but they're not, they're not all the same. So can you talk a little bit about, uh, the expectation?'cause I think a lot of times founders will have an expectation, if I get to work with this corporate vc, it means I can just, you know, project, you know, one or $2 million of, of, of net new business kind of coming through that channel. I, I love this. And I, and I'll be, uh, perhaps less kind to my, to my colleagues and to myself. I am skeptical and suspicious of corporate VC investors, right? And I am one which makes for a very paranoid daily experience. But, you know, while I still stand by, you know, the tremendous amount of value the corporate VCs can and do, add. I think you are exactly on point. There's a, there's a couple of innate challenges, or at least unique, unique characteristic of corporate VCs that require a different approach than an institutional vc. Right. Um, to your point, I think there's a lot of heterogeneity in corporate vc, different mandates, different structures, different sources of capital, different teams, et cetera. And transparently, you know, having to understand. Why that partner is a good partner, why that corporate VC is a good partner for the company, uh, and going into detail is worth the time and transparently, each one is kind of unique. One other piece of this is going longitudinally. Corporate VCs change, right? You know, uh, you and Vic have a fund. That fund is raised. And generally for the next 10 years, that fund is kind of immutable, right? By and large, say something, how horrible happens. That fund is there to invest in and support portfolio companies. Corporate VCs are subject to the vagaries of the market and of the corporation, right? Mandates change, right? Environments change. The mission of the companies may change and so on of the corporate parent. Uh, and therefore, you know, while there's no purposeful volatility there. It ends up being a little bit more unpredictable. Uh, and to your point, right? Like to, to hit the nail on the head. That means that once you're entering into an arrangement with a traditional institutional vc, you kind of probably know what to expect, right? You still should do your diligence, run some references, do good things. Um, but by and large, you know what's happening In the case of a corporate vc one is. You know, you need to do that, right? Understand why they are in the game. Uh, and then two is transparently work with them to make sure that there is a clear exchange of value, what you want, what we want, right? And qualify in a way that survives over time. So that is my bias. Uh, I think personally we've seen both. Right. Um, especially in healthcare, I think it's very difficult to go without an incumbent, right. In a pure play disruptive fashion. By and large, it's a fragmented industry within a lot of trust. And having somebody alongside you helps at the same time. Right. You know, there's also horror stories of, you know, your partner changing their tune. Right. You know, one to three years into the relationship and, and, and leaving you by yourself. So I, I hope that. You know, answers, you know where you are going. Yeah. That, that's sort of a, that feeds into good diligence. Yeah. That, that's really helpful to, it feeds into the question I was gonna follow up with, which is, how does your spot within CareFirst, um, affect the investment strategy? So like, I, I think we've talked before. I think there is a process for HealthWorks to kind of learn about the corporate strategy at CareFirst and then. Uh, sort of incorporate that, but maybe talk about that process of how you gather needs and priorities and keep that up to date on a quarter to quarter, a year to year basis. That, that's a fantastic question. Funny, I think it's, it's a great question that companies can ask their future investors, right? Because I think we'll review a lot about how we think, how others think about this. So in our case, you know, care First is a not-for-profit payer, right? Which transparently makes my life. Fairly easy, right? We have a single stakeholder that is, you know, on top of mind for us, which is our members. And at the end of the day, you know, we have three and a half million members. We have the privilege of serving whatever I do, whatever we invest in, whatever we try to bring to bear, right? At CareFirst kind of meets that greatest good for the greatest number of people when it comes down to their healthcare. So with that, right, like there's fairly little, you know, uh, ambiguity about. Who we are there for and what we're trying to achieve. And the question just becomes how Right? And I think, you know, within that, um, I'm gonna open back the old topic of, you know, what are we optimizing for? Clearly, you know, we are investing on behalf of our members. We need to be responsible steward of capital. Financial returns do matter. But at the same time, you know, we, we ran that math with the team the other day. Even if we became a top decile fund in the US and one of the highest performers and all of our capital like did fantastically well, the financial impact for our members is minimal, right? We're talking about like a couple of dollars per member per month, which. As a member of CareFirst, I will ly take, but, but I'm not sure I would particularly be grateful for that work. Where most of the effort goes about is fixing a lot of the friction we see in our healthcare system today, right? Care, navigation, interoperability, reducing cost, et cetera. Um, and that's what we work with CareFirst. Yeah. Excellent. And then, um, as you think about creating value for the members, I think there are a couple of maybe guiding, guiding principles or, um. I think they're called pillars. Maybe talk through the, the pillars at CareFirst and, and how does that feed into your investment strategy, if it does at all? Yeah, no. Um, it, it does, right? So the, the core values of CareFirst around access to care, quality of care, equity, and affordability of care, and all of those are paramount, right? As you can imagine, you know, where we sit today in US healthcare, there's a lot to be done across all four of those. Uh. I am going to argue it. Like while we hold them all near and dear to our hearts, right, and we have acted across all of them. At the end of the day, I have a little bit of a bias, which is looking at the affordability of care in the United States. That's becoming a material problem. And ally one that very much drives the rest of them. Um, you know, we still have very good outcomes in this country, right? If I get a horrible disease, there is nowhere else in the world. I would rather be, because I think we have the professionals and the science and the resources to tackle it. But if that, if those outcomes are becoming unaffordable, it makes them less value. Right? Um, so this is probably the, the prime lens that affects the way we think about our investments. We see a lot of companies that are going to be successful in healthcare, right? They will grow, they will add value, they will sell and have good material returns, maybe even IPO. But at the end of the day, if they're not able to tackle a material chunk. Of the cost of care, they're probably not the right partners for us. Um, the reason why we feel this way is, you know, you and I both have seen the data, right? We spent, I wanna say about the double of OECD average, right? On healthcare. We are not particularly healthcare. We don't have, you know, lower disease incidents, right? We do not have a, like, something that justifies double the expenditure. And I'm an engineer by training. When I look at a system in which I put more money, and I kind of get certainly not better results, it means there's waste in the system. Like something's happening in there that's, that's not quite right. Um, and because of that, right? That's how we think about where we can most help our members. Identifying those, those sources of waste, right? Which can be both large and very visible or you know, a little bit smaller and more insidious and trying to find the right partners to, to tackle them. So that's a big part of what we do. I think that ties back to your previous question of just how does that tie to care. First, I wish I could tell you that I have a five year plan that says, you know, oh, the next five years we're going to do these seven things. The Bloom's reality is a. It doesn't change that much, right? I, I am, I'm a little bit, you know, uh, reminiscent and envious of my time at Edison Partners, right? Because one advantage of enterprise software investors is that the world actually moves, right? We have moved from. Mainframes to personal computing, to the internet, to mobile, to cloud, to now ai. Right. Uh, so you, the challenge kind of changes and, and in the times with it, in the case of healthcare, if you look back 50, 60, 80 years, it was still all interoperability. It was still value-based care. It was still chronic condition management. It was still member experience, right? Uh, the, the kind of fundamentals of what we've been trying to tackle don't really change and therefore our mandate and, and to a large extent like CareFirst. Plan tends to focus on the same things, and we opportunistically go out and talk to as many people as possible, uh, working with them, talking to them, right, exchanging ideas and hoping that something hits at the right time for us. And, and are you typically, and it may not be a typical week, but are you typically, uh, meeting with, um, stakeholders inside CareFirst in different divisions, hearing what they're struggling with or what their challenges are? And then turning to the innovators and founders and builders and looking to solve those problems or the inverse where you find a an exciting new thing and you. Go see if the corporate side wants it or is it kind of some of both? How do you think about the priority there? Yeah, it, it, it's both and I think it, it kind of has to be both. Right? Uh, now that makes the job more difficult. I, I think I would have a much easier time, you know, in my day you could just take orders and go fill em first, and go and say, we need a new partner in nutrition. Right. Um, so we've seen both in transparency, like our portfolio is kind of half and half. Right. Some of it is stuff that we know and have identified as a core need from CareFirst, right? And try to figure out who the best partners are. We often knew a lot of them, we had a few more, right? And, and try to help CareFirst find the best possible, you know, collaborator in this. I, I think a decent change has been us going out and talking to people again who are. Thoughtful and driven and have a vision of how healthcare can and should be better because transparently, very often they come up with stuff that we do not come up with from inside the house. And then our role becomes reverse. Right? Bringing them inside of care first within the broader blue family as well, uh, and helping convince others, our executives, other executives, that this is something valuable we should go after. Do. But do, do you, uh, do you invest on the administrative side or only on the medical side? So we invest on both. Right? That's a fantastic question. Right. And you know, when I say we are trying to squeeze waste out of healthcare, let's call a spade a spade, like a double digit percentage of that right. Is probably payers, right? You know, we are a decent chunk of the administrative flow of this industry. And, and, and I would be lying to you if I said like everything's perfect and about as optimiz as it can be, right? There's simply opportunity to reduce cost and provide better experience. Experience on the admin side. So we do both. And in fact, our portfolio has both. There's probably a bias towards the, you know, clinical care delivery mm-hmm. Side of the house, you know, but also virtual, like that is a lot of where we see opportunity and a lot of the spend. Uh, but I'll flag one more thing there, which is, if you think about just the core operations of a payer, um, a lot of it is, is. Plumbing is probably the, the word that comes to mind, right? And if you think about your plumber, right? You, you kind of have two modes. Either you don't really think of them because everything's going great, or you are really, really, really angry when something breaks. And therefore, I think the, the threshold to trying to innovate on the clinical side is a little bit lower, right? Whereas if we're going to try and replace a core system. Right. With a better solution. Right. But still, that's being proven out. That's being built out and so on. Not only is there more hesitation around it, but transparently like, you know, our own member's perception. Mm-hmm. Right? Is that that is not exactly the pain point. Right. And the risk of it breaking midway. Is is not something they're looking forward to. So we have certainly tried like, and we continue to operate in that space, but I'm going to argue like the bar is a little bit, you know, higher on that side to picking the right partner because again, we need to get it right. Uh, maybe, maybe just a follow up, uh, question on that. Uh, on the medical side, uh. Your, your sort of bias between, let's just say tech enabled services versus kind of a pure health it, that you could see maybe both you as the payer or maybe, uh, existing providers in your network using like what, what, what generally gets, gets more attention from you? We probably see more of the former. Just by virtue of like what's out there in, in, in the market. Yep. Um, I'm gonna say something that like, you know, I'm gonna, we wanted to like come back this five years from now and I'll feel like an idiot for at least historically, um, healthcare has been human. Like, at the end of the day, if I am interacting with the healthcare system, right. And that's not, that's more of a sick care phenomenon, but it is what it is. You know, I'm at my lowest, I need somebody to embrace me with, you know, capability. Right. With a degree of empathy and with a willingness to help me through me being sick. Right. And get me your side. And that's been a uniquely human endeavor. Right? And therefore, you know, I, I think that more, like, more than any other place, you know. Healthcare is built for tech-enabled services. At the end of the day, you know, I want the person I'm interacting with to be as, you know, tech enabled as possible, as supported, not spend their time on stuff that's little value or, you know, cause them to burn out. Like that is very, very important. But I think to a large extent, right, like I, I expect at least today that human to be a big part of, of the care delivery process, right? And I think because of that, right? Those are the models that are most. Not only comfortable to implement but like rational today. And we see a lot of them. That is not to disconnect the fact that like within all of this US healthcare is unique in that it has way too many different stakeholders. Like if you just think about how you fill a prescription, right? The, the chain between the manufacturer to the supply chain, to the retail pharmacy to the payer, and their PBM, that whole thing, right? Touches 5, 6, 7, 8 entities and, and God knows how many departments within them. And I think there are aspects there where bluntly software can play a very, very big role, and it should because those are the places where, as opposed to people shuffling paper and printing things and scanning them again and so on, right. We, we can certainly build much, much more efficiency. But on the, on the core piece, right? I am. Personally, and again, I'll eat my words in a few years. Explain it like when I show up to, you know, my primary care practitioner to my, you know, cardiologist or whoever, right? Whatever innovation is in there, it is quarterbacked by a human professional. Yeah, excellent. I, I agree with that. So we'll both either be right or look stupid in the future. Um, my past history is not in my favor. It, so, sorry, I might be on the wrong side. So, um, HealthWorks has several different ways it goes to market, so I want to, I want to have you unpack that for the audience. You have four different types of investments, I believe. There's the, um, starting at the most mature HealthWorks ventures, which is sort of series A or you know, a growing business. You have HealthWorks Accelerator, which is probably pre-seed or seed. Somewhere in that stage you have HealthWorks Studio where HealthWorks is actually co-founding in partnership with other founders, and then you, you're a limited partner. Which is another way to go to market where you're investing in funds. Talk about that portfolio of different even ways to invest and how it fits together in your mind, how it fits to sort of. Meet the mission for HealthWorks, but also the larger mission for CareFirst. Yeah, a fantastic question and I I, I'm going to say, if anything, it's very evident we're, we're function over form, right? If you ask me to design a healthcare investment vehicle, this is probably not what I would've come up with, like with a blank, blank page of paper. But there's a reason why we do all of those things, right? And that is. Going back to a previous point, I, I don't think we get to choose, right. The timing or the venue of innovation by and large, right? You know, while most of the capital is in our kind of HealthWorks ventures entity, which does series A and B type investments, you know, I am not looking for the best series A company in oncology. I'm looking, looking for the best possible solution that helps us tackle cancer. And in some cases, that one solution maybe is multiple ones spread across our LP portfolio. Maybe it's a direct investment, maybe it's something just, you know, behind the horizon and we get to catch it either through that accelerator program or through the studio. So that is how we are thinking about it today. And the reality is, you know, each one of those arms, while they work very closely together, have a slightly. The disparate mandate, slightly different, you know, way of approaching things, a slightly different audience. So that is the structure. Um, the funds and the ventures entities are probably the most classical ones. So to the extent you interact with a corporate vc, they probably have some version of that. Different ratios, right. With different, you know, history, length, et cetera. But those are not uncommon. I think the accelerator gets a little bit unique, not terribly. Right. And, and to us, that serves two purposes. One is being able to see a little bit what's coming, you know, again, from behind the horizon. Right? And that is very, very helpful. But more than anything else, a little bit of a social service, right? Um, I think it, it's born out of empathy for the fact that you've seen this. We've seen this. Early stage companies usually are driven in healthcare by a clear vision to make things better, and that gets very quickly tempered by the kind of obstinate black box that healthcare is, right? Who should be working on this? What is the right business model? What is the core value? Right? Like, are we even talking to the right people? Is that. Contract we're thinking about actually feasible. Um, and the reality is like we have seen a lot of people spend a lot of time, effort, resources, trying to answer those things and in, you know, in our estimate, like between a year and a year and a half to like navigate your way through the basics. So the accelerator is there transparently because we think we can condense it in a fairly efficient fashion. Uh, we do it together with, uh, blue Cross Blue Shield of Alabama. With Highmark Health and with LifeBridge Health in which we put 20 companies per year to a curriculum, think of it as a two year a PH light into three months that both answer some of those basic questions. Wait a second. How does credentialing work? Or you know, is value based care actually a thing? Or like, does it mean multiple different things and so on, and connects them with a bunch of folks who, you know, transparent. It can be long-term friends and mentors, especially when you hit one of those walls. I. Right. A year or two down the line, you have somebody to call and say, Hey, listen, I just, I just got this call from, I don't know, Elance, I don't, I don't know what they're actually asking me. Can, can you help me decipher it? Right. So that's the accelerator. And then the studio is perhaps the most unconventional piece of all of this, right? That I think there's very few other healthcare entities that run this model. It, it's born out of a. You know, view of a white space in healthcare. And in my mind, when I see white space in healthcare, it means somebody who needs help is not getting help, right? Um, not to measure there's opportunity to go and actually do something valuable. So that's our skunk works, right? We go after areas where we think the. Problem has been poorly defined or poorly tackled and, and try to build things de novo. It's by far the most riskier, riskiest right, uh, entity that we have. But you see a tackle kind of fundamental issues, right? Um, we have a couple of endeavors in rural health. A problem that's very far from being solved. We have something in provider burnout and job satisfaction. Massive, massive issue. We have something in, um, ironically, one, the most recent stuff that we're working on is in, uh, pediatric care for, uh, foster children. So, uh. Kids who are part of the foster care system, which transparently is a enormous problem, has kind been buried underneath, right? Our, our bigger narratives on both behavioral health, health and PCP. So these are types of stuff that we try to tackle. Then bluntly, you know, if only a couple of those hit. I think I'm happy to retire on our legacy and say we did something good for the world, but they're also ones that would take the most time to prove out. Yeah. And I'm interested in, especially with the accelerator, but maybe the studio as well, is there an opportunity to pull in some of the. Uh, corporate leadership from CareFirst and sort of almost have a two-way educational where they're teaching the up and coming startups, but they're also learning about what's capable, what's possible, what the capabilities are out there and what, what's, what's being thought of in this space. So you get kind of this double benefit for the overall organization. Now, now you're exposing this, like one of my colleagues is gonna listen to this and expose our, you know, benevolent Right. But certainly not obvious undercurrent, which is very much so right. Again, for all the good that we do at, at, at CareFirst, it is still a large and sometimes bureaucratic organization, right? It comes with the territory and I think that mutual exposure, right? Of. How you can try something, how it is okay to pivot if it doesn't work out the first 1, 2, 5 times. Right. How you can quickly test and see if it's working right. Uh, I, I think it's tremendously beneficial and transparently, you know, we have had our executives at CareFirst serve as mentors and supporters across our portfolio. Um. Very much we believe that the bulk of the value is transferred from CareFirst towards the outside, as in we're helping those companies succeed. But that, uh, you know, cultural benefit, right? Organizational benefit is certainly there. And I think it's helping us not only be more open-minded about integrating new solutions, seeking different, you know, way, ways to do things, but even in our day-to-day work, just being a little bit more agile. Yeah. Yeah. I mean, I think certainly there's a lot of value that comes from CareFirst to the entrepreneurial community, but I also think there's a lot of value in the empathy that, uh, both sides get from each other. That there are, um, many existing systems, procedures, uh, practices in the corporate care first, that there's a reason they're in place and people. There's, there's negative health benefits or dangerous things or there, you know, there are reasons that if, if the entrepreneurs can get empathy for that, they can now understand much better the challenge. And then vice versa too. The, the corporate leaders can get empathy with what these kind of crazy founders are trying to do. Um, in a way that's helpful for them too. Yeah, I, you're perfectly right. I think, again, you're pulling the curtain all the way back, which I think is perfectly fair. Right? At the end of the day, the, the current convening venues, which is usually a sales pitch right, can be a little bit standoffish, right? I, as a operator and talking to the 15th company of the day trying to sell me something, right? The company itself is trying to like explain why they're doing something good for the world and hitting a brick wall, and you know, being able to create that convening venue just like a different conversation. We can, you know, clearly understand, oh, like that's what you're actually trying to achieve. Or conversely, this is why these processes exist, because first of all, do no harm, right? Um, is, is important. So again, it's not, I'm gonna argue the core purpose of doing this, but is the very cognizant and very positive externality. Absolutely. Doba, quick, quick question about, uh, venture because you, you have a background beyond corporate vc. You worked at a great firm in, in, in Edison. Um, you, you know. The venture capital industry has certainly seen better days. Uh, the last, the last three years have been, you know, fairly tough and, and, uh, a lot of capital has been concentrated into sort of mega AI deals. Um, you know, and then even, uh, Vic and I were, were looking, um, few months back, we were looking at sort of, uh, publicly traded healthcare stocks. And, and really over the last two years, it's, it's basically been flat. So actually last year it was the worst performing sector in the s and p, um, from, from an industrial sector pers perspective. I'm just wondering, you know, with, with, uh, with, with CareFirst and, and HealthWorks having this, this primary focus on the members, I. And with the financials not necessarily, uh, being a significant part of moving the needle, but still your portfolio companies right, are almost certainly, uh, invested in by traditional venture firms. Um, how does a moment where there's been less liquidity, less exits, uh, you know, capital is harder to come by for follow on rounds, how has that impacted uh. Your work at, at HealthWorks and just, just generally speaking, does it change the strategy that HealthWorks and CareFirst has around, uh, innovation from, from the venture perspective, this will sound a little bit odd, right. And I completely recognize what you're saying. Right. And I think there's a, there's a broken to be had about the fact that, you know, in many cases we will see a number of very promising and very valuable and very impactful companies not make it, not because they did something wrong. Not because their VCs did something wrong, but because VCs still like those massive cycles. Right? And we caught one, right? And we overcapitalized a number of companies and transparently we funded way too many companies as a, you know, cohort. And when typically there would be 5, 6, 8 companies tackling the issues in, let's say maternity, right? They were now 50. Competing for the same number of pilots, same number of contract dollars and so on. And at some point of time like that, I, I, I, my heart goes out to the people who are caught in this, right? This is, you know, a bit of a macroeconomic situation where the LP capital was there, GP had to deploy it, right? And at the end of the day, as a company who believed that they're building something valuable and often were. You took it and just the, the, the, the tide swept you away. So that is one part of the answer. I think on the other side of this is I'm a little bit more cynical and I'll, I'll say something again that probably will get me in trouble, but I am not convinced that plug and play venture capital, like copy paste from technology into healthcare works. Mm-hmm. And to, to use your market example. Right. If I moved you back to the 1990s early, just before like the, the the, the.com boom, right? Like you have 35 years to come and you have full knowledge of what's going to happen, and I say, Hey, Marcus. If you wanna invest in some tech companies, you don't need to even open like your notes, right? Even know as long as you're back Apple and Microsoft and Oracle and Google, right? And like seven others, we can reset all top of our heads, right? You will be investing in groundbreaking, like staple type innovation that disrupts the market and becomes the next big, big thing, right? That has not really been the case in healthcare. Now I'm gonna carve out life sciences, right? Truly, CRISPR has made a big difference. mRNA has made a big difference and so on, right? But on the care delivery, digital health, tech enabled services side of the house, I am not convinced that we have, well, certainly we have not, and I'm not sure that we will have that type of disruption, right? It's an industry that is. You know, based on legacy incumbents, it is fundamentally built on trust. And then at the end of the day, if you want to like build something, you probably have to work with the system trying to change it as opposed to completely disrupt it. And I think this is where the two narratives come. Come head on. Um, the venture model in technology like pure play tech enterprise software depends on wholesale disruption. Go build the next multi-billion dollar business that does everything better and it just becomes the, the dominant incumbent for a while. That does not happen in healthcare and therefore I think, you know, we are better served by a mental model in which we invest in companies that. Have a more reasonable expectation of what they're doing. Yep. Work well with this ecosystem, are adding tangible value and are fully anchored in that value. Right. And don't get over their skis. Um, and you know, I'm bringing this all the way back, that this is what our portfolio has looked like for the past five years. I won't lie to you in 20 22, 20 23. It was an anxious period because we were very much contrarian to what the market was doing. Ex, you know, massive valuation. Each company was going to be a multi-billion dollar business, disrupt the status quo and so on. Today our portfolio hasn't really felt it right. You know, uh, we've had next to no down rounds in our portfolio, maybe one of, or two out of 15, most companies are up into the right, but again, because they were built on the mental value. Mm-hmm. Mm-hmm. And that is the, the, the concern I have again, that. That makes me look, you know, semis smart today, the moment the cycle picks up again, I probably won't look anywhere more smart, but I think fundamentally in, in, in healthcare, outside of life sciences again, uh, that we, we probably need to be a little bit more value oriented, right? And. Not only are we seeing the AI stuff, you know, I'm sure you've seen in your pipeline, we've seen it, you know, there's been a good few 50 x, 70 XA hundred x revenue deals in our pipeline over the past couple of years. So they haven't gone away. Um, and they still depend on massive outcomes. Yeah. Which, which would do you think, is there a difference in, uh, is it product versus process innovation That is part of what you're talking about in the difference between like traditional venture. Uh, consumer tech venture or something in healthcare, or is it different that more like is regulation and life's at stake in healthcare so it's slower? Or maybe it could be both End. Hmm. I'm, I. I'm not sure about. I think the formula is right. I haven't talked about it in that lens. Right. So I, I'll probably reflect on it. The latter certainly is true. Right? I, I think there's two big things that make healthcare investing special, right? One is the stakes are much different. Move fast and break things is a fantastic motto. If you're building a. In social network, a new database, a you know, smart toaster, right? Like I, if I get amazing morning waffles and like one out of 10 times they come out soggy, I can probably live with that until we, you know, iron out the kinks. Like that is fine. If I have to go to my cardiologist, pro ologist, whoever, right? And like one out of 10 times they make a mistake. That's my health and life on the line. And I don't think that's okay. Right? So I think you're perfectly right on, on that layer. But that also has a question of trust. And I think that that's what empowers the, the, the network of incumbents today, of which you, to be fair, CareFirst is one. You know, I'm on a CareFirst plan, right? As a member. If you gave me all the options in the world and had me choose between CareFirst and a newfangled incumbent, sorry, new fgo like, uh, upstart out of Miami, who has a great plan, but literally is just, just figuring it out. I will probably still pick CareFirst, right? You know, we're about to welcome our second daughter in a couple of weeks. She's getting delivered in a Johns Hopkins facility, which I think is great and transparently. However, if you came to me and said, Hey. We have these new startups, babies yet, but you should try it. I will be very hesitant. You put those two things together and I think that that makes it very difficult to take the tech model and reapply it here. But I, I'll think on the product aspect too, because I'm sure there's a, there's a material factor as well. Okay. Excellent. Um, do you have a, an example or a case study that could sort of pull these things together? Uh, maybe a company that. You found to address an issue that care force was looking for or, or the inverse where you found a company and, and. Matched it to, to a division there. I do. I think it's going to be a counter example in that you, you know how I mentioned that, you know, corporate VCs are very disparate, right? We're disparate inside the house as well. Right? So, so no two of our companies have actually taken the same path. Um, I'll give you. Two quick examples, right? One on each end, on, on the CareFirst needs piece, right? Starting in 2020, we were tracking the NEMT space. I think that was, you know, a number of companies founded between 2015 and 2018. Were making progress and you know, I'm, I'm remembering like round Trip and Care Car and Kaizen Inve and, and, and Safe Ride and, you know. Very much a value add space. Relatively important, especially as government programs was picking up, right? Medicaid and Medicare. Um, and something that like we thought could deliver a lot of impact to our members, but more broadly to US, healthcare, we just couldn't figure out, right? Like would the right horse is right. Whereas the differentiation, so. We actually run that scan. We didn't do anything with it. Uh, a few months later, coincidentally, CareFirst was looking for a provider in this. Uh, they had done, they had been working with circulation for a while, right? That was not meeting the needs of our growing population, right? So we came up with said, Hey, listen, like we know all the people in the space, we'll put you in front of all of them to make your decision. And we think we have some notes of like who the two, three top ones like might be. Right. So out of that, Saferight who had been talking to at this point for like probably a couple of years, right? Got a relationship with CareFirst, got a contract. We were still not certain, like we thought it would be a great service provider for us. We wanted so to be the great investment. So in, I believe October of 22, they rolled out with CareFirst and started providing services to us. And by October of 23, not only were we seeing kind of. Inside how this was working and working very well. But also the company was being to peel off in a kind, a tangential way from the competition, more infrastructure play, et cetera. Right. And at that point, we pulled the trigger. So it was almost like Canvas was looking for something. We took our time, we helped them find the right partner, and then subsequently invested, we done in reverse. So, uh, with health. We were scanning the marketplace for ways to provide more ancillary support around care delivery. Right. That's a very, very big topic. Right. And came up with the idea that, um, rdms right, as a capability, right as clinical training, as level of empathy, as ability to engage with, with members and with patients, is actually a pretty interesting way to support. Chronically ill populations. So that's why we met kina and then we thought we made a good choice and that's playing out well. We brought kina back into CareFirst, right? And tried to convince our team that this is a good bet to have. Lo and behold, about a year after our investment, not only is Kina was aggression in our network, but also they became the exclusive nutrition provider for our entire population that uses our virtual primary care platform. So if you dial into CareFirst through telemedicine. If you need nutrition, it goes to cool. So we've done it both ways. Um, not, not a singular path. And I think that's also affected, like each company kind of comes at the problem in, in, in a different, in a different way. Excellent. Uh, I might want to close with us talking through some, um, kind of advice and framed as, uh, mistakes that. Our audience could avoid. So if there are large enterprises that are considering getting into sort of corporate venture, or they wanna, they want to dip their toe in or start thinking about these, uh, these ways to do r and d in a different way, what's the biggest mistake that, that, uh, they should try to avoid? It, it's probably the same for each side, right? But like it ally for enterprises and what we, we, we've tried to avoid as a corporate institutional investor, like I imagine I'm paranoid about our own work, right? Is to try to be very clear with what we can and cannot do and like almost reach that agreement with our. Investments before we, in that page, before we say, here's the money, right. Let's do this. So there's no surprises. Right? But I think what, what corporations kind of tend to get wrong when they try to get into this is, is going into corporate venturing without a long-term plan. I. I think the easiest thing in the world is to go write a check into a startup, right? Like between us, you know, we can probably do a reasonable job in like no time. What happens afterwards, right? Why you wrote that investment? What are you in for? How are you going to support that company? Where's the capital come from? Do you have follow on resources? Yeah. How will you know if it worked like you want or not? I mean, exactly. Yeah. Right. So all, all of those are things that like, are a little bit boring, right? They're a little bit like, you know, work and thing you have to put in, in advance and often get skipped, right? And I think it doesn't come back to bite you right away, but certainly right within a couple of years you start feeling the pain. And I think that's probably been a, a big challenge and one of the reasons why corporate VCs have a little bit more of a mixed track record in terms of longevity and survivability compared to others, right? I'm gonna argue they're actually harder to execute than institutional VCs, right? None of the job is, you know, harder. I think they're both very hard jobs, but at the end of the day, right, the simplicity of like, we're just here to make sure we do appropriate capital allocation and help our companies different ways to get there. Like it, it's much more broader. So that, that is one piece, and I think a corollary to this is. Corporates overestimate, or at least don't consider their own ability to work with early stage startups. And that's like something that, like a, we were thoughtful about and I'm not sure we fully got right from the get go. So we had to optimize it, right? We can work very, very well, let's say with our ventures companies, right? They tend to be, you know. Typically around 5 million bucks plus of revenue. Right. And like a little bit more mature and all those good things. And it's, it's not a plug and play, but the, the process exists, right? Yeah. They have, they have resources, they have an operating team. There, there are people there for your team to engage with. Exactly. And, and, and kind of, you know, meet the, the, the process theatrics, they have insurance, right? There's a designated counterparty, et cetera, right? Yeah. Whereas, you know, sometimes in even those that have some early contracts, but it becomes more dicey because if it's two guys in the garage, right? We are not always well instrumented to strike a contract with them. Uh, and I think that has been one learning where, you know, many organizations jump into it because innovation is the right thing, right? It is good to talk to others and bring their ideas in house and so on. And suddenly you realize that, and I'll give a real example. You know, your corporate procurement team has a $10 million minimum cybersecurity policy. That's a problem if you are a startup, right? The vast majority of them don't have that, and suddenly you have to scramble and figure out like which way to give and how to optimize this. And it's certainly not, it's not the only thing that gets in the way. So those are two things, like one is the general purpose and structure of the investment vehicle, and then two is the, the, the corporation's redness to engage with earlier stage companies. Yeah. Okay. And then flip to the other side, if, uh, if there's an entrepreneur listening. That wants to approach a corporate vc, what's the biggest mistake that they make when, when coming to a HealthWorks or, or other corporate VCs? Uh, I, I think it's the same one. I. Right. I think it's, you know, letting the corporate VC get over their skis. Right. And I would, I would frame this less as a, as a, you know, warning, but as advice, um, understanding what that corporate entity is trying to achieve. Why they're talking to you, why they're in the game in the first place. Right. And ideally, what's the give get here. Right. What are they expecting out of, you know, us as a company and convers what we the company can give to them? Right? I think it's critical and, you know, sometimes there's just not enough time. Sometimes you don't wanna upset a prospective customer. Sometimes, you know, you just conflate institutional and corporate vc. Uh, there's a number of reasons like why those conversations don't happen. But I'll be perfectly honest, like I don't think we've ever had a bad conversation of that type, whether we've prompted it or the entrepreneur themselves have come and asked us about this.'cause it sets the stakes, right? And once you know what each party wants, you know, if this is a good idea, it's gonna work out just fine or transparently. Sometimes you just get out of dodge, right? You realize it's not gonna be a good fit and you know, move on. Excellent. Anything else you have? Uh, yeah, may, maybe one, one last question. Um, you know, I, I think that outsiders and, and even myself sometimes, uh, may be a little bit puzzled when nails see, you know, usually around the series B level, um, a whole bunch of different payer corporate VCs invested in the same deal. Uh, you know, that that happens. And, and you know, I, I would love to just sort of hear from a payer, corporate vc, uh, what's going on there, right? Like, like what, what's, what's happening when, you know, you could maybe sit down with a CVS or a United or whatever and sit at the same table and stroke a check together. What's, what's sort of the, the, the thinking there is, is, is this, is this sort of a demonstration. That this company can advance healthcare for the entire country. And so everybody wants to be in on it kind of. And I think, um, we've been seeing more of this and honestly, I don't think we're seeing enough of it. Right? I'll as in the positive and the negative, right? In the positive. The reality is that, you know, if I am Health Works representing CareFirst, and I think I'm going to discover this unique asset that only I will know about and it'll be miraculous for my members and they shouldn't work with anybody else. That is insane, right? That is like not only, you know, unfeasible, it's also deeply problematic, right? Like at the end of the day, you know, I truly care about improving, let's say, oncology outcomes. I. For the US population, like for all of our fellow citizens, not for the members of CareFirst, ideally, first for the members of CareFirst as cheaply as possible for the members of CareFirst. Right? But like, we're not trying to keep things, you know, contained. And I think to that end right? Um, while we are competitive commercially, right. With CVS and with United and with so on, right? And, and I, I'm happy, we're competitive. I very much believe in like free market competition. Um. I think on certain parts of what we do, we have to see it the same way, which is we do want our members to be healthier, right? We do want better outcome. We do want lower costs. So between you and I, I prefer that outcome. The negative version of this is we've seen the opposite. So if you remember kind of 20 21, 20 22, there was a bunch of MSK companies and every single corporate VC picked theirs. Ah, right. I don't know if that bodes well either. Now they were available, they were all good in their own right. Sure. Et cetera. Everybody was picking a winner. Right. But that creates a degree of entrenchment because everybody had the same idea. Well, I'm gonna pick this one and I'm gonna call all of my friends and other payers, providers, et cetera, and tell them how great my bet is, and it would follow onto my back. Right. And of course, that didn't exactly work out. Right. Um, and therefore I am, I'm actually happy and excited to see more collaboration on that front while maintaining very hefty, competing commercially, right. Then bluntly, you know, see entrenchment and people saying, we backed this and we believe in it, and like, come here, we're high water. We're not gonna switch to somebody who's better. Like that is I, I think that's irrational. And you know something I told my own team, which is. We love, right. And support and back our portfolio companies. They also need to perform. And at some, if at some point in time, you know, somebody overtakes them right, and delivers better value for our members, we're probably gonna have a difficult conversation. Thank, thanks. Thanks for that. That was, that was helpful. We've talked about this on the show before. Yeah. It's just helpful to sort of hear one payer cd, actual practitioner. Yeah, yeah, yeah. Perspective. So thanks. We are, we're idiosyncratic, but that was a fairly straightforward one. I'm sure there are many other things like from the outside look. Very, very, very strange. Yeah. Right. Well, and it's interesting, there's some logic behind them. I think this is right, but let me just ask it, it, it's more of a strategic goal for HealthWorks with a financial, uh, outcome as well for the CareFirst overall than like a traditional vc, which is really financial performance first. And then if I can help society, I wanna help society so that, that I think can lead to more collaboration with other. Other, uh, corporate VCs. That have similar strategic goals. I think that's right. That makes sense. I think that's, no, I, I would not pretend and say that like, you know, I have an inside track of what the mandate is of my peers. Right. As I mentioned one, one of the, you know, massive advantages to me of working for CareFirst is single mandate, right? We have to serve our members. If I also had to worry about earnings per share or like. Quarterly reports and so on, like that might add some more nuance of just Yeah, sure. How much capital you deploy, right. What returns you expect and so on. So I think in, in each and every case, that mandate is going to be a little bit different, even within the strategics. Right. Do not take, you know, do not assume there's like a, a mode that people come out from, but I think that's perfectly right. By and large, I think across the, the, the universe, and that's not just healthcare, right? Usually the, the strategic impact. Can shoot eclipse the, the economic one. Mm-hmm. Yeah. Awesome. Okay. No. Uh, where can people find more or follow you, uh, maybe on LinkedIn or website or maybe points some people to where they can go learn more about HealthWorks? I. I think they've had more than enough of HealthWorks, but if they're going for punishment, uh, you know, Googling HealthWorks will get you there. Okay. That's health. WORX. Yeah. And I'll put it in, in the show notes so people can find it easily. So, so the website is the best place to go learn more, is that right? The website is the best place to go to, and as you can imagine, we are as usual in the middle of a, you know, revamping of our visual image. So bear with us. Yeah, it'll look better tomorrow, every single day. Okay, Dober, thanks for your time. Really appreciate it. This was great James. Truly a pleasure. Thank you for having me and, and too soon. Thanks Dober. Thanks.