72 – Shocking $1 Billion Donation Erases Med School Tuition for Students

Marcus: [00:00:00] All right, man. Uh, pretty good show lineup today. We, uh, we have good economic data to talk about. Yeah. That’s positive. Um, it’s been a break from crazy presidential stuff this week, so I’m glad we don’t have to talk too much about that.

Vic: We, uh, we’ll have the Republican craziness in a couple weeks, but we have a little respite here.

Marcus: Yeah, and the Supreme Court is out of conference for, I think, three months. So we, we get a, we get a break from, uh, them undoing American customs for the last 40 years.

Vic: Maybe we can talk about healthcare stuff.

Marcus: Yeah, I think so. Maybe a little bit of venture, too. Um, anything else kind of going on before we jump in?

Vic: No, I’m going to be gone next week. Hopefully you can find, uh, someone to fill in.

Marcus: Yeah.

Vic: Yeah.

Marcus: Next week. I got Emily coming in. We were already, we’re going to have her coming into policy stuff. So she’ll co host the show with me. And then the week after that, you’re also out. Yeah. That’s right. Um, so I got to find a guest host for that.

Marcus: I’ll figure it out. No worries. Um, and, uh, not sure if it’s going live before this or after, but [00:01:00] Rick Abramson, a great guest episode.

Vic: Yeah. I think that’s going to. Be next week sometime. So this show will drop first. Okay. Yeah. We have a really good guest show about AI and radiology, Rick Abramson.

Marcus: Fantastic.

Marcus: If you’re in, if you’re interested in everything, uh, at the intersection of AI and radiology, Rick crushed it. Uh, he’s really

Vic: a global expert. That’s right. Space. Yeah, that’s

Marcus: right. Yeah. Really laid it down for both of us. So, um, I think it’s a really informative show that I think will be a reference kind of going forward for anyone who wants to really understand that space.

Marcus: All right, man. I think that kind of. Covers it. Yeah. Let’s dig in.

Marcus: All right. So CPI print, and I got to admit, I was not expecting a 0. 3 percent drop. Um, but that’s what we got.

Vic: Yeah, I agree. I was expecting it to be pretty much flat and the big move was energy [00:02:00] came down pretty dramatically. Yep. Um, but, but I, I don’t think we should split it that much. I mean, it’s good news.

Vic: The inflation is down 3 percent overall 3. 3. If you take out food and energy. And so that, you know, we’re getting closer. Keep getting closer.

Marcus: Yeah. Look, I feel like when you hit 3%, two doesn’t sound that crazy anymore. You know what I mean? It’s kind of like, huh? I don’t know. Maybe time can heal this, this wound.

Marcus: Right. Um, so. Yeah, I think, um,

Vic: everything I’m hearing is people are starting to be more nervous about the downside than they are the economy overheating deflation. Yeah, yeah, yeah,

Marcus: yeah. So, yeah, I guess the stock markets response to this was

Vic: really surprising to me. So I don’t know that I have a great analysis, but yeah.

Vic: It was clearly a very friendly business friendly Pretty low inflation still higher than people want but [00:03:00] lower than anyone expected, right? um the fed, uh chairman powell was In congress tuesday, I think it was pretty balanced I think where he was sort of indicating that they were certainly keeping an eye on inflation, but had pivoted to Be really considering For employment as well, which I think was a change in a Positive change for the markets, I would think for sure, but then today, pre market, the stock market was up new record highs.

Vic: It was a record yesterday. It’s been a record. I mean, it was like 30 out of the last 45 days have been records. Yeah, the

Marcus: records are boring now.

Vic: Yeah, but then after the print came out, it went, went almost straight down and the, and the most Yeah. Yeah. Inflation risk on kind of assets, NASDAQ and all the high flyers have been the most down.

Marcus: Yeah. Which, I mean, just shows how little we understand about this stuff, but like, you know, I feel like [00:04:00] between the, the joblessness, Rates that are persisting and I think that’s the next story and the decrease in inflation That should indicate that we are getting closer to the territory where it is Reasonable for the fed to make a cut right isn’t the intersection of those two things where it’s like, okay We’re no longer fighting inflation As vehemently as we were, I mean, look, if it goes down again, then it’s going to break the twos, right?

Marcus: So that’s, at that point, you got to say, hey, we’re clearly doing something right. We’re down from nine. And we’re now into the twos. And we’re having softness in the job market. So that’s, we don’t want to You know, continue to make it so hard for businesses to be able to pay for labor that people are without jobs, so we need to get the credit going.

Marcus: Yeah, right. I mean, I

Vic: was on the phone. The Fed Open Market Committee. I agree. Good for that.

Marcus: [00:05:00] Anyway, I’m just yeah, I mean, to me, this

Vic: is the this is the soft landing scenario like this. This is, I think, Yeah, right. I don’t think you could have designed it better where inflation has come down. It’s not a two But it’s come down from nine to three pretty quickly Yeah, and the jobs are getting a little softer We’ll hit on that in a minute, but but they haven’t fallen off a cliff.

Vic: They’re holding up Okay, and for whatever reason wall street didn’t let didn’t like that, but I I agree I don’t think it’s a long term thing. I think it is positive that we’re getting lower inflation and the fed now has the Opportunity to put some cuts in if they feel like they need to right But I don’t think it’s a crisis that they have to like jump into it.

Vic: So I think it’s pretty good.

Marcus: All right, let’s, let’s go ahead and shift to jobs. So unemployment rate ticked up to 4. 1%. Um, we are still seeing [00:06:00] layoffs happen in media and in tech, um, from in media, it’s because of a compression in the space and tech it’s because AI. Yeah, is replacing jobs, but are there broader trends on the job side that, you know, aren’t necessarily that headline friendly, but are driving this this increase to over 4 percent

Vic: not that I think are bad.

Vic: So, I mean, we are, it’s a, it’s a softening. It’s not as hot where you can leave your job and get a 10 percent raise every nine months. That’s probably healthy, I think. And then there’s a combination of that softening. And then some new people entering, uh, the labor force, like looking to find jobs that weren’t previously, which affects the unemployment rate, but, but is a positive thing.

Vic: Like people giving up and not looking anymore. Take some out of the labor force, which counterintuitively [00:07:00] reduces the unemployment rate. And then when they come back, because there’s start to be some jobs that it goes up. So I don’t know. I, I think these two reports that. The jobs report and the CPI were both better than expected.

Marcus: Yeah. So September’s the next FOMC meeting. Yeah.

Vic: Right. Yeah. I think, and I think the, the July CPI report is going to get up against pretty easy comps last year. Uh, so, so I think July is going to be good. Yeah. It gets really hard, um, in the fall. So I think we’re going to lose this momentum as far as CPI reductions by September year over year, year over year.

Vic: Yeah, that yeah, that’s right. That’s right. So I think we have a window of time where it’s going to be really positive. Hopefully they will cut a little bit in September. I don’t know how they’ll think about the election. Sometimes they don’t like to jump in front of election. We’ll say.

Marcus: All right. Uh, so continuing to make sure we are tracking the [00:08:00] commercial real estate issues, you found this story in the wall street journal that is talking about property fraud allegations.

Marcus: And of course this rhymes with 2009 of course, 2009 was much more about home mortgages that ended up, you know, being, uh, Very fraudulent, rolled up into credit default swaps that then got sold off and sold off and sold off until somebody was holding the bag with all these mortgages that people were not going to be able to pay for that, that should have never passed credit muster.

Marcus: So the fraud ultimately there was hidden through the repackaging and the selling of these different loans. And so this is a commercial real estate version of that, um, because we are in a space in the commercial real estate world where. We don’t even know we’re in limbo, right? We’ve certainly transitioned out of decades of stable, um, you know, high value creation in the commercial real estate space.

Marcus: If you had a business, you had an office, right? [00:09:00] And your aspirations were to grow your, your workforce. Therefore, you would want to grow your leases. You’d want long term leases, all those kinds of things. Then, uh, The pandemic comes, we have the, the introduction of remote work at scale. We all realize we can, a, we can run an economy from our homes.

Marcus: Um, gee, these leases are really expensive. And oh, by the way, my best employees don’t really want to come into the office. And so now the vow that inherently kind of destroys the whole industry, um, from a value perspective, but the, the ball hasn’t dropped yet. Right. I mean, We’ve had rates go up and people have been repricing kind of on a month to month basis as those leases, you know, come due for time to value renewals.

Marcus: It’s, we aren’t in a place where the whole thing has collapsed yet, but starting to see stories of fraud is a bad sign that we may be Inching closer [00:10:00] towards a real fundamental collapse.

Vic: Yeah, and that’s why I wanted to talk about it. I think the Wall Street Journal doing this story publishing that there is fraud going on in the in the market and us being aware of it and other people talking about it.

Vic: I think actually helps it be repaired in a way that is not so dire because it’s not totally unknown. Right? And so, yeah, I agree. We had. Sort of a generational change in the way that we utilize real estate in urban centers. Yep, and then During that the fed raised interest rates dramatically and so a lot of buildings just don’t work with the with the debt and the You know, people that have renting it right now, we all understand that.

Vic: We we’ve been talking about it. We’ve talked about it probably five or 10 different times on the show. Right. Um, [00:11:00] that is one thing. Then this story though, is brokers and building owners, and then the wall street banks that sort of, uh, finance that and package it together into bonds that institutional investors and, and retired folks purchase.

Vic: They have been. Improperly using the kind of the proforma. This is what the building could do on a revenue and earnings basis if we were fully rented up and everyone was paying their full rates. Yep. We see that adventure all the time. Like the proforma is their hopes and dreams and what they want the business to do.

Vic: It’s not the reality. No. And they decided to take the pro forma and ignore the fact that several of these building owners had given free rent for periods of time, or done tenant improvements and, and had extra [00:12:00] costs, and they took those out of the financials because they They pretended that that wasn’t going to happen again.

Vic: I guess that was a one time thing even though I don’t think it’s a one time thing No, most buildings around where we are are still offering that but it sells a lot better so so then jp morgan looked through that and packaged it up and sold it into bonds that now have Bond owners with an asset that’s not what they thought they had.

Vic: And so, it’s not a huge, I mean, it’s a trillion, multi trillion dollar market. This is a fairly small, I think it’s a five hundred million or six hundred million dollar deal. So, it’s not that I’m saying the entire market is fraudulent, but I just want to keep, you know, Mentioning these stories so that you and I pay attention to it and listeners pay attention to it.

Vic: It’s going to come home to roost Sometime in the next period less little while

Marcus: you know It’s it’s it’s such [00:13:00] an interesting dilemma because I you brought up kind of how we deal with this in venture And yeah, what this directly makes me think about is our book value Right. Our book value. So the market, and for anyone who’s listening, who doesn’t understand, you know, basically we, when we make investments in, in our portfolio, you know, we, we buy at a pre money valuation.

Marcus: We make the investment, the asset then has a post money valuation. And you kind of put that on your books as this is what this company is worth. Now, keep in mind, it’s only really worth that if someone buys it for that later on. Right. And so that’s a, that’s a paper value. That’s, you know, it’s. It’s validated by the transaction, but it’s not validated by the broader market.

Vic: educated people on each side that agreed that’s the fair value at that point in time

Marcus: and money exchanged. And so it was real then. Yeah. But as things start changing in the market, right? Um, capital availability, you know, starts to [00:14:00] dry up and things like that. Uh, it impacts what those, what those valuations actually should be.

Marcus: And I think towards the end of last year, when it was time for all the VCs to kind of come up with what are going to be their best Valuations on on their books, you know, we talked about hey, we’re just gonna take our medicine now There’s gonna you know, look we’re gonna write these things down Yeah, because then I don’t want to deal with this two three years down the line Well,

Vic: you and I have done this for a long time And if you’ve been in venture for a long time, at least my view is that The investors really care about me sending them money distributions, not interim values that are not liquid are the thing, but you have to be 20 years in before you really are comfortable saying that,

Marcus: right?

Marcus: But where I was going to go next was that let’s say you’re still trying to. In the real estate space, for example, create new finances or in the space, you’re trying to raise a new fund, right? Let’s say you’re trying to do that. [00:15:00] You know, those markdowns that you took. Honestly, they don’t look that good.

Marcus: Yeah. And people aren’t that, uh, like they’re not that understanding. Of the fact that, look, I’m just doing the thing that everyone’s going to have to do eventually. Uh, I’m just doing it proactively because I don’t want to, like, I want to do the right thing. Doesn’t make new investors excited. No, and so, and so I think the thing about this is this transition where the past information is valid because it actually happened.

Marcus: Like, I’m not giving you, I’m not, Cooking books, but I’m giving you past information that in no way can be considered reasonably relevant to what the future is going to look like. It’s going to look like, because we’ve just had this massive seed change, right? We’ve just had this change where commercial real estate was super valuable.

Marcus: And now the rates changed. Plus you have remote work and now it’s not, it’s just not that valuable, right? So I can give [00:16:00] you, Hey, this is all the data from years, uh, you know, 2015 to 2019, and that’s real information. I didn’t, I didn’t cook the books at all, but taking that and using it as a proper Baseline for an appraisal in the future is is not helpful to the buyer of the bond, you know what I mean?

Marcus: And I just think. It’s fraud, but it’s murky. Like, do you get what I’m saying there? Like, I think it’s murky because of the window of time that we’re in. Like, we’re in the window where the change is happening. And you’re not incentivized to necessarily, like, write it down yourself. You’re just not. To take that discount or take that haircut yourself.

Marcus: I’m not trying to justify it. I’m just saying why, I’m saying this is the moral dilemma that I think is going to make this a problem. Because people are going to go with what, you know, they’re going to go [00:17:00] with the market incentives in many cases, which is going to ultimately leave somebody holding a bag of trash.

Marcus: That’s, that’s what I think is going to happen.

Vic: So, I agree that it’s a difficult situation for Building owners and lenders. So yes, I agree with that that they they entered into a financial relationship where they borrowed money for the building and the lender loaned money assuming that The rental capacity and the rates would stay reasonably the same as they’d been for the last 40 years And who could have predicted a pandemic would change the entire way that we think about where to work, right?

Vic: So that’s a difficult situation. I don’t think it is Appropriate. I don’t think it’s a moral dilemma. I think you cannot mislead new investors putting money in about the financials of the building [00:18:00] because you don’t like

Marcus: what they say. Well, it’s one thing to, so I’m trying to just distinguish between cooking the books or presenting financials that are real.

Marcus: Are only applicable for a past era. And by the way, that past era was like last year, you know, you know what I’m saying? Because the rate of change, like the, the fundamentals of this industry have collapsed in 12 months. That’s, that’s, that’s kind of the point, right? So I I’m giving you all real information.

Marcus: It just is no longer valid. Because we’re in a different interest rate environment. We’re in a different environment in terms of the demand for commercial real estate. Those two things compress the value of the asset significantly. Um, but I’m not giving you false information. I’m not cooking books. I’m just giving you information that needs a steep discount because the, because the market has changed.

Marcus: So I’m not trying to let these people off the hook. I’m simply saying, I think that creates a [00:19:00] dilemma. That’s all. I mean, I

Vic: guess the. Your example is right in one way and not right in another way. So. I agree that it’s a pretty similar analogy where the market has changed, the real estate market has changed, the venture market has changed.

Vic: We made the decision to sort of take our medicine or write things down and not every VC fund did. Yeah, that’s right. And that is, I think, a judgment call and people might be criticized in the future. They might not be. Um, it will sort of depend if the market comes back in which case we will then have gains And they’ll be flat right?

Vic: Um, I think it’s pretty different when you then Go sell new investors. So like we haven’t brought in new investors to our funds on these new valuations We’re reporting to existing people. These building owners and JP Morgan [00:20:00] presented the building financials as they were bringing in new investors to buy the bonds that were backed up by these buildings.

Vic: And

Marcus: that’s not, they weren’t telling the truth. But I guess what I’m saying is I think there are funds out there that are raising new funds. That did not mark down their books from their last funds and are using these non markdown books As justification for the kind of performances they’re going to be able to deliver in the future So yeah, yeah, so that’s related but

Vic: at least the money in that case doesn’t go into those old assets Like this is literally like the asset that is Impaired point taken but yes 100 you’re right about

Marcus: that It’s a little

Vic: different when you go it is sell some little grandmother in florida.

Vic: That’s right You Um, that’s right. That’s right. Fair, fair. But it is, uh, it’s a challenge. I mean, I agree. It’s a challenge.

Marcus: Yeah, it’s a challenge.

Vic: It’s a challenge that is so big. I mean, the size of the [00:21:00] market and the size of the number of impaired buildings is so large that it’s not going to be possible just to just to let them fail.

Vic: So I don’t know what happens, but committing fraud is not the best way out. I don’t think,

Marcus: well, there’s likely going to be a lot of fraud because I actually think the point you make in distinguishing between the VC business and, and this business is a really important one. There’s always a new crop of innovation coming, right?

Marcus: This is fixed assets, man. You know what I mean? Like, ain’t like you just spin up new buildings, you know, in fact, there are less new buildings going up right now because the financing doesn’t make as much sense and we have too

Vic: much capacity.

Marcus: That’s right. So it’s much more. You’re dealing with the existing inventory, which to your point is impaired.

Marcus: So I think the only reason why we’re trying to work through this is to make sure we understand what are What are the dynamics that are going [00:22:00] to incentivize people to engage in behavior that is going to lead to somebody holding the bag? Because there’s going to be some damage here. Some real, real economic damage around this commercial real estate stuff.

Vic: city, that’s probably hyperbolic, but most cities have buildings where the landlord and the lender are extending and pretending is what it’s phrased as, which is they’re giving them extension on the, on the mortgage or the, or the loan. And they’re just pretending like the building is doing well, hoping that something will change.

Vic: And I think that is questionable, but I don’t really see many people getting hurt. That’s different than this story. Yeah. I, yeah, I agree. The extend and pretend thing, like, maybe something will come back around, it’s kind of like a VC keeping their values high, maybe it will be okay, maybe that, that bank can make another loan, and so maybe there’s [00:23:00] some negative pieces there, but it’s not that direct.

Vic: Yeah. When you extend and pretend, and then I sell the building to you, and take the money and go somewhere else, that’s a different thing. Yeah. That, that, I think, crosses the line.

Marcus: Yeah, people are going to be tempted

Vic: to do

Marcus: it. And this very much rhymes with the credit default swap scenario of 2009. I think, I think that’s the, that’s the real red flag here is this is.

Vic: And it’s just like that. It’s so big. And, uh, these bonds that are going to be collateral for something else. And so you get this. Really bad situation.

Marcus: All right. Moving out of this economy into VC. So, uh, I absolutely hate the headline of this TechCrunch story, but it is the most referenceable media story for the story.

Marcus: So, um, friends of ours here at Jumpstart, um, Toyo and his team at SayAventures, um, uh, based up in Boston, uh, they are, uh, And, and their, their, their [00:24:00] seed and series, a focused healthcare innovation fund, uh, with a real strong lens towards health equity. Um, great folks, friends of ours heading down for our LP meeting.

Marcus: Um, you know, we kind of all raised our funds together during the pandemic. These are, these are good friends of mine. Um, they acquired, uh, another fund called unseen capital and unseen capital was also founded during the pandemic. Also in that. Same cohort. That’s right. Also founded during the pandemic.

Marcus: Unfortunately, the founder of that fund and general partner, uh, Coyote Owens. Um, he passed away from cancer, uh, during the pandemic, during the launching of Unseen Capital. Um, Unseen was, was, uh, really notable because they had a really strong backer in Eli Lilly that I think it was like a 30 million starter investment that we made, uh, with them.

Marcus: And so there was a lot of. Real excitement around what Unseen Capital was going to do. And then Coyote’s life was cut short by [00:25:00] cancer, which was devastating. That

Vic: fund and almost every VC fund, our funds, there is significant. You know, single GP dying risk, I mean, almost every VC

Marcus: fund

Vic: has that. Oh,

Marcus: for sure.

Marcus: Yeah. I mean, the key partners, like, you know, you’re, you’re the number one risk is your life. Right, right, right. You know, that is the number one risk. And so, you know, it’s been incredible to watch, um, Lily and a group of other people, you know, kind of come in as, as partners and support Unseen and keep it going all the time.

Marcus: You know, for these for these many years since the other

Vic: people in the invest, the portfolio companies, they did nothing wrong. I mean, they deserve to have a chance. Yeah, that’s right. It was it was didn’t they didn’t have a leader anymore.

Marcus: Yeah, it was just it was just a terribly unfortunate situation. And so, um, you know, there has been a lot of question around, like, what is going to happen to unseen capital?

Marcus: And so, um, say, Avengers has acquired unseen capital, which is, [00:26:00] I honestly cannot think of a better outcome to this story. Like I. It’s good for everyone. Yeah, I got to know Coyote during the pandemic and it was a total shock that, you know, when he passed away, we had, I mean, it’s pretty crazy, man. We had talked like probably three weeks before he passed on Zoom and we were talking about like how we were going to collaborate, what we’re going to do together, blah, blah, blah.

Marcus: And then like, you know, I saw a story on LinkedIn and I was just like, holy. Like what, um, cancers, you know, life is crazy, man. So, um, so this, this is, you know, this is a great team, great group of people that making this acquisition makes me very, very happy to know that the unseen brand will continue on unseen as a brand is not just being absorbed in to say they’re keeping the unseen capital brand, which is great.

Marcus: That means coyotes legacy continues on. Uh, and now it’s, you know, joined forces and consolidated with the stewards of it. Fantastic. Yeah. So anyway, just shout out to Toyo and Jason and the whole state of interest team. Um, AK just a great group of people and I’m really [00:27:00] happy with, with what they’ve pulled off here.

Marcus: Next, uh, Harmony Cares, a 200 million round to expand in home value based primary care service for focused on seniors, Medicare with multiple chronic conditions. This is a Nashville story, um, Rubicon and, uh, Valtruis, which is, uh, uh, the, uh, Anna Higui and their whole, uh, Welsh Carson’s whole, uh, platform around value based care.

Marcus: So, you know, big Nashville sort of participation here. Um, and now General Catalyst and McKesson Ventures, uh, have led a new round 200 million into Harmony Cares.

Vic: Yeah, and this company’s been around for a decent amount of time, and so it’s established, it’s up, actually I’m looking at it right now, founded in 1993, so it’s been around for, but they have some new leadership that have come in, uh, maybe five years ago, and really started growing pretty quickly, and it’s a challenging space, the whole advanced primary care, older [00:28:00] folks, I mean, we have covered it before that there has been lots of people trying to innovate and kind of stitch together all the different caregivers you need with different information tools.

Vic: It’s a huge opportunity, but there’s a lot of complexity. That’s right. And so I’m excited to see how they can grow. I think the plan is to expand the geography. I think they’re mostly Southeast, uh, they’re in 15, 16 states right now. So it’ll be good to see how the hell they grow.

Marcus: Well, look, let me, let me just say, I have, uh, stitched this kind of stuff together.

Marcus: You’ve had to create

Vic: your own.

Marcus: I mean, I didn’t create the businesses that I’m partnering with. No, no, I mean,

Vic: you have to create your own care services for your dad. That’s right. That’s

Marcus: right. And There is such a need for this. There’s such a need for this. When, when you have, um, an aging loved one who has multiple, um, you know, chronic illnesses, uh, this is what you need, you know, [00:29:00] you need the whole integration of palliative care, you know, um, just 24, seven on call support, uh, you know, you need technology to sort of wrap around all of it.

Marcus: You need care managers. Like I think of all the things. You know, home aides are really important, but care managers are critical because quite frankly, if you’re the responsible child Like you are doing care management like if you don’t if you don’t know what care management is it’s It’s what you’re doing right now to try to take care of your mother or your father Okay, and you need someone who’s quite frankly better than you at that They they’re

Vic: better than you and they’re also not it’s not their parent.

Vic: That’s right, and it’s not so emotionally Charged they like so they can give you You Advice they can help you can be the child and it’s just much healthier.

Marcus: Yeah, and and they likely are an rn Yeah, there’s like actually an experience. Yeah, they likely are partnered with ots pts, etc. So yeah This, this is, it’s great to see this.

Marcus: And quite [00:30:00] frankly, there are, there’s so much opportunity in this space, so much opportunity in this space. I think what I’m interested in is understanding more about the value based nature of it, because we are talking about the Medicare population. So to me, it just feels like it’s probably just given, you know, risk assignment.

Marcus: Um, yeah, that’s the thing that I, because, because outcomes with this population, you know, That’s a, that’s a weird thing to talk about, right? Outcomes.

Vic: You’re not gonna, um, it’s gonna be hard to reverse their chronic disease at this age, at this stage of life. And, um, what I’m interested in is the, yeah, the business model.

Vic: Like, can you, can you get it financed and make money when you have a, Medicare all population. I don’t know. I mean all your dad services through medicare. You have to go on the outside

Marcus: No, no, no

Vic: It’s hard to find providers [00:31:00] Listen

Marcus: the baseline of what medicare covers when it comes to home health per my experience.

Marcus: Yeah is so wildly insufficient Yes that it’s like It’s almost like not even worth doing. Right. You know what I mean? It’s it’s, that’s how bad it is. So that’s, that’s the part where I’m, I’m constantly, you know, it’s not so much like the efforts of the innovators. It’s more of the payment model and how we actually structure this.

Vic: Yeah. Now the management team, I don’t know well, but I know we, we both know several of the investors, they know payers. All these firms are really deep in payer business models. So if anyone can figure it out, this team can. But it’s a complex and really important business model to figure out.

Marcus: Well, let me just say this.

Marcus: I think the business model gets figured out faster than the situation for the patient and the responsible child. [00:32:00] Uh, say more about that. Yeah, so, so like, they’re not, they’re going to make money. Right, and and they’re going to provide a service that is probably against what’s currently out there. Let’s just benefit it out It’s gonna be better than what’s currently out there.

Marcus: I’m not sure that’s actually sufficient Like I it’s not clear to me if it’s entirely Medicare based That I would be able to swap out Harmony Cares for what I’ve got in place for my dad right now That’s what that’s what I mean

Vic: Yeah, I don’t think that’s what I mean. I don’t think CMS pays enough money to that’s whatever the service level that you have set up That’s what I’m talking about.

Vic: Yeah, that’s what I’m talking about. And so there’s a there’s a challenge I think in providing the care Care management support all different levels of licensure care. Usually it’s a pretty big and complex [00:33:00] Situation. Yep, and CMS doesn’t have that much money that they offer. Nope So you

Marcus: and I’m not saying they should you know, whether

Vic: they should or not It is going to be difficult for Harmony Cares to bring the care that’s needed and make money.

Vic: And these are great investors and they know more about payer business models than I do, but it’s going to, that’s the. That’s the thread, the needle they have to figure out there. Agreed.

Marcus: All right. Moving on, uh, rock health, always publishers of great information when it comes to digital health funding came out with their first half of 2024 result.

Marcus: Uh, and what’s, what’s kind of the headline here?

Vic: Yeah. It’s sort of the early stages beginning to come back around, which is great. We’re seeing some exits, but they had a really good, uh, slide go down, maybe a couple more that, um, keep going. They sort of, uh, show the diff here. That’s it right there. It’s really interesting.

Vic: They show [00:34:00] what is being funded by year. Uh, so what kind of value proposition, what business models, what are we trying to solve? In 2020 versus today and then what clinical indications are going on And that was the thing that I hadn’t seen before that’s pretty interesting. Yeah, you have um, you know The number one thing in 2020 was on demand health care.

Vic: Yep, and now it’s treatment of disease, right? and Mental health has been number one the entire time and unfortunately It’s very difficult to solve. So I’m not sure we’ve made a lot of progress, but we keep, we keep working on it.

Marcus: Well, I mean, the problem is exacerbating all, all the time and, and we’re, the pandemic

Vic: made it worse.

Vic: So, and staffing,

Marcus: I mean, the fundamental issue is staffing. I don’t know how, how venture investing offsets staffing.

Vic: Yeah. It’s not even staffing people. [00:35:00] Not enough people are willing to go through the training and all the work to be licensed in mental health to do that job. Yeah. It’s, it’s, it’s, it’s more like creating, yeah, I guess it’s staffing.

Vic: It’s just creating the people.

Marcus: Yeah. That’s okay. That’s staffing. All right. So anyway, uh, we’ll put a link in, in, in the show notes. Um, rock health always does a good job, but I do think those are some, some good indicators around where money’s going today. Um, all right. The FTC is focusing on PVMs. Yeah.

Vic: They are very publicly criticizing PBMs.

Vic: This story is from, uh, Fierce Healthcare. And, um, FTC and LenaCon are saying that in their view, PBMs are a monopoly. They are harmful to free markets and competition and need to be regulated. Now, they haven’t actually taken action yet. Um, And it’s not [00:36:00] clear to me how they’re gonna attack PBMs and rectify whatever the unfair practices are, but they are not happy with the situation.

Vic: So, there’s been, um, a lot of publicity around how bad PBMs are. And, and now the FTC is, is clearly has them in their crosshairs.

Marcus: Man, uh, the drumbeat of negative stories about PBMs. How, how, how do you think that may have contributed to the FTC’s, uh, intent to focus on them? Right? We’ve been talking. over the life of the podcast around, uh, the, the different actors in the, you know, nonprofit advocacy space that are forming these, uh, these organizations.

Marcus: And then we’re seeing stories pop up nonstop in the wall street journal. Right. And

Vic: a lot, maybe five stories this week, we’re not covering them all because there’s a lot.

Marcus: So I’m just [00:37:00] wondering how much has lobbying and, and the drumbeat of, you know, Rough media Contributed to the FTC focusing on PBMs.

Marcus: What are your thoughts on that?

Vic: I mean, I’m I’m a cynic. I think that press about how expensive drug costs have gotten and how PBMs are causing all of these issues, caused the Biden administration to really focus on how much CMS is spending on drugs. And then they, they made that the centerpiece last year, and they’ve been pushing on that.

Vic: They have the 10 drugs or whatever they’re working on. Negotiation stuff. Yeah. And then, um, so that was the first thing that I think occurred. And then this is like the next thing to fall. But I, I just don’t see where the FTC gets a handhold or what they, what are they going to change? So that’s what I’m, I know that [00:38:00] they have a lot of powers and I’m glad I’m not in the crosshairs right now, but, but I don’t know what, what, what, what, what should they do to stop?

Vic: Do you think

Marcus: they can? So I’m just thinking about like, just had Chevron overturned, you know, the agencies have had a string of losing in the courts where four months out from the election, like, do you think the PBMs care what the, what the FTC says right now? No, not really. No, I, I don’t think so either.

Vic: Yeah. I mean, one of the stories this week was about how PBMs have shifted where they get their margin over the last 10 years. Okay. Yeah. Because they can, I mean, they have lots of levers to make margin. And if it usually, I think it really starts with a customer, if a large employer starts getting frustrated about some, some, uh, yeah, or rebate, usually it’s a rebate or whatever.

Vic: They just shift it to [00:39:00] another way. Um, and I, I don’t know. I think there’s several PBMs. It’s hard to say that there’s any monopoly there, even though FTC is using the word monopoly. I don’t, I don’t think there’s a monopoly.

Marcus: Yeah. But they also mentioned six large players. Yeah. So, right. There’s six players.

Marcus: So you can’t have a six

Vic: part monopoly. I

Marcus: mean, are they, are they, Saying that there’s collusion did they use that word? No, they said it was Well, that’s just that doesn’t make any sense. Yes, that doesn’t make any sense

Vic: now. I think the I I’m a free market guy I think uh, mark cuban’s thing and just that’s what i’m saying bringing solutions Show how we can have a market based solution that is More effective for patients and employers and people that want to sell drugs and and buy drugs I think that’s the better way out of this.

Vic: It

Marcus: feels to me like You I mean, we already saw OptumRx, you know, follow Mark Cuban and do the whole transparency thing. It seems to me like the market is kind of working [00:40:00] this out. So I’m not, I don’t know. Yeah,

Vic: I don’t think there’s going to be, to your point, there’s not going to be any action that happens before the election.

Vic: No. And so I don’t think the BBMs are going to do anything right now.

Marcus: Yeah, I, I just closed out that I, I think that the drumbeat of negative Press and probably some lobbying and things like that have have contributed to this statement. All right, HHS announces 27. 5 million in funding to address women’s behavioral health needs.

Marcus: You know, that really sounds like a small number. I don’t think HHS has like a big piggy bank to be doing this kind of stuff. So it’s probably relatively symbolic and Hopefully, there’s more than just the money that they’re throwing behind it. Hopefully, there’s other, um, I don’t know, policy capital or, you know, influence or I don’t know, but it’s a tiny amount

Vic: of money.

Vic: It’s a very

Marcus: small amount of money,

Vic: but I think the symbolism of HHS picking women’s health and putting money behind it is is valuable, and I think it should be. We should [00:41:00] focus some on it. You and I both have women’s health things in our portfolio. It’s been under invested in for a long time.

Marcus: So I mean, 27.

Marcus: 5 is, is nowhere close to a million dollars per state. So that, you know what I mean? So that, that’s, that’s just kind of how I, how I think about it. I’m like, I’m not sure how much you can really get done with, with that. Um, I don’t know. It’s, it’s interesting when those kinds of numbers get announced. You know, like, what’s the thinking there?

Vic: I mean, I think it is that the Biden administration got money for the American rescue plan, and they had a certain amount that they could invest in health care projects. And then they decide, okay, we have. 60 million. How are we going to use it? Right. And they only have so much and it’s a fight in Congress to get it.

Vic: So I don’t know. I think it’s worthwhile to recognize [00:42:00] that they could have invested in lots of things. Yeah, that’s right. They chose to invest in women’s behavioral health, which is important. That’s right. Um, But it’s a, it’s a small amount of money.

Marcus: More, uh, industry groups mad at CMS over the physician fee schedule proposal.

Marcus: Um, the plan is, uh, proposing to cut payment rates by 2. 8%.

Marcus: Yes. So, so this is physician fees. So, so, so first of all, Um, they released the proposed rule on Wednesday, and the proposed rule would be finalized in Q4. Is that the timing? Yeah, I don’t know that. I don’t know the calendar well enough, but yeah, it’s, um. I don’t think it’s this quarter. I don’t think it’s in Q3.

Marcus: Yeah, I don’t know. I feel like it’s October or November when they actually fully push it through. Um, so. Yeah, so they could change it. Yeah, so, [00:43:00] so, you know, we don’t need to take this, Too literally because there’s 90 days of time. Yeah, and you know the election and all but all sorts of other stuff but certainly um I mean who expects In an industry that’s already struggling again with staffing with burnout with retention with with coverage, uh with people being overworked with having You know censuses that that are too big um, who Who would think a 2.

Marcus: 8 percent increase? rate cut by and large to physicians would be palatable. I don’t. How is, how is that, how is that going to work?

Vic: I mean, CMS is, has the authority to do it, but it, it’s not going to, it’s going to discourage physicians from accepting Medicare patients. [00:44:00] And then many physicians, I think over half the physicians, are connected to a health system.

Vic: So, it’s going to be a challenge. And inflation is three, we just looked at it, three percent. So, the cost of buying stuff for your practice, and paying your support staff, has to keep up with inflation. And if you, if you cut the reimbursement by 2. 8 percent, in an environment where we have three, And maybe because it’s just three today, it’s three to four, you’re looking at a significant delta that they’re going to, they’re going to lose money in this process, but they won’t be able to keep up with their costs.

Marcus: You know, David Freebrook from the All In show, um, he’s like the one, the one issue voter. He just wants to kind of cut the deficit and he wants leadership. And to me, this is kind of what that looks like. And, you know, when you look [00:45:00] at it, you know, it sounds really good in sound bites, but then just take one agency focused on one industry making this kind of move, right?

Marcus: And you’re like, this could be devastating. You know, if 10 years of payment rate cuts in order to offset the deficit, like, you know, you’re like, okay, do we need to do work on the deficit? Yes. Okay. Here’s what that practically looks like. It practically looks like cutting payment rates to docks over the next 10 years.

Marcus: Okay. What does that actually do to our health care system? Yeah. I mean,

Vic: don’t you think it hollows it out? What I think is that doctors on the margin, not every doctor, but there will be some incremental retirements. There’ll be some doctors that decide they’re not going to accept new patients from Medicare.

Vic: There’ll be some that decide they don’t want to treat Medicare patients at [00:46:00] all. Right. And then there’ll be some that, that have a patient population that they can’t make that choice and they suffer. And none of those things are good. We, we don’t have enough doctors. I mean, people complain about doctors, but all the doctors I know work incredibly hard.

Vic: Now, they have a hard infrastructure, and they have a lot of coding, and they gotta see a lot of patients. There’s lots of things that are challenging for doctors to give empathetic care and spend time with. Me or anyone else but cutting their pay is not a solution for that

Marcus: and less people taking care of The most needy in our population.

Marcus: Yeah, it does not make sense. What are we

Vic: and

Marcus: then we’re gonna do

Vic: the uh, the political Decision. I mean if biden said he was gonna do anything to cut medicare benefits There would be an uproar right right, but his administration Is is hollowing out some [00:47:00] of the physician capabilities that actually deliver the care, which is kind of the same thing.

Vic: So, listen, we have too much debt, and I’m in favor of looking at it. We’re going to spend five trillion in health care and cutting the docs pay. I just don’t, I’m not sure that’s the place I’d start.

Marcus: I, I would be shocked if. In November, this is where we land. I would be shocked if this is where we land, but I also just feel like, gosh, don’t these industry groups have.

Marcus: Lobbying and packs and money and .

Vic: Yeah. They, they’re all mad. Yeah. They’re all coming out

Marcus: today mad. I, I’m just like, I’m not sure this is the right, I’m not sure this is the right approach. I’m not sure this is the right approach right now. Um, alright. Art and health. We’ve, we talked about, uh,

Vic: done this last week.

Vic: They priced it. Yeah. [00:48:00] Okay. This week. So, so they’re coming out, it’s gonna be, uh, an ip. They put their S one out. Uh, so they haven’t actually priced, but the, the plan is to raise 300 million at a 3 billion valuation, which would be great. Nashville, we’ve talked about this last week, but, uh, but the S1 is out and the 3 billion is, is a good valuation.

Vic: We, hopefully, It will perform well, and they’ll, they’ll oversubscribe it. Uh, but I just wanted to mention that the S1’s out now, so we know the prices. 3

Marcus: billion doesn’t seem like a crazy valuation for them.

Vic: No, I, I think it’s, I don’t think it’s crazy, I think it’s health, I think it’s a good valuation. Yeah,

Marcus: I, it, it feels like they can get a bump from that.

Vic: Yeah. You know, think, I think there’ll be a lot of demand for, for there aren’t, listen, there aren’t that many for-profit health systems.

Marcus: No, no. And art, it’s a well run system and 300 million is not a lot of money. Yeah, that’s right. That’s not a, a big raise. It’s not a big off run. No. Insiders are selling.

Marcus: Yeah.

Vic: EG [00:49:00] i’s not selling. I don’t think any of the management’s selling now. They now they, they’re locked up for six months. So they could sell later. Yeah. Yeah. But they’re not selling into the,

Marcus: yeah. Okay. Well that’s, that, that’s something we should watch for when, whenever it comes out. Yeah. Uh, we know the folks at Arden, so you know.

Marcus: Yeah, this is not investment advice, but yes, they can I might be taking a little take a little peck Yeah, if we can get access to Most Johns Hopkins medical students are about to receive free tuition after a 1 billion dollar gift from Michael Bloomberg’s Philanthropic organization, that’s a big headline.

Vic: Yeah, and it just kind of a I don’t know, a feel good story. There’s so many bad stories in the news. I was happy to see something that’s positive. Um, Bloomberg gave a billion or a billion five to the undergrads at Johns Hopkins. So undergrad already, I don’t think they have any, um, debt that you have to get.

Vic: No, [00:50:00] they do have work study and other things in undergrad. And so now for the medical school at Johns Hopkins, He’s given another billion, which is incredible for me to get my head around, but he gave a billion dollars and so No one that attends medical school if your family makes Uh under 300k. Yep.

Vic: We’ll have to pay any any tuition.

Marcus: That’s gonna be a fair fair number, which is that’s going to be a great thing Yeah, that’s going to be a fair number. That’s great. So that you know, it’s it’s interesting how Philanthropy is here to kind of offset some of these, you know You headwinds coming from the government, uh, that would detract people.

Marcus: Cause look, as, as bad as, as the conditions are for physicians, uh, it’s a lot better if you don’t have to pay for med school. Yeah. If you don’t have medical school debt, a lot better if you don’t

Vic: pay for med school, you might be able to go to primary care.

Marcus: You can go into, you can go

Vic: into whatever specialty you like.

Marcus: That’s that you may love. That’s a great point about the primary care piece because, you know, obviously primary [00:51:00] care gets, um, the short end of the stick from a selection. from a selection perspective because of the pay, especially against your debt. So,

Vic: yeah, I mean, if you’re in your second year med school, third year med school, and you’re trying to figure out where am I going to go?

Vic: There is certainly what you’re passionate about and what you’re good at. That’s right. But there’s also, well, I make four times more if I go here now, it’s pretty competitive in those specialties. I mean, but it’s, I don’t know. I think it is much better to have docs get out with no debt or, or little debt.

Vic: Right. And then they can do whatever they love.

Marcus: It’s a great story. All right. So we’re going to stop there. Let Doug share a little bit about Jumpstart Foundry. Come back and we’re going to catch up with Elon Musk. Not in real life, but, uh, his, uh, his, his latest news on Neuralink.

Marcus: All right. Elon is advancing Neuralink. He is implanting, uh, [00:52:00] the second Neuralink into a volunteer. And, uh, he, of course, used X to livestream like a 55 minute update on it. Yeah, it was like an

Vic: hour long thing. Yeah. But pretty, pretty interesting. They went through the details and they’re, they’re making changes from the first procedure to the second one.

Vic: Um, the first patient has done well. Yeah. And again, I think it’s pretty interesting. It’s great that he is proceeding. I like that it’s pretty slow. I mean, one at a time with maybe six, eight months in between. Very much. Um, but, but good. And we’ll see, I mean, we’re going to learn a lot from Neuralink.

Vic: Whether you’re a big fan of Elon or not a big fan of Elon, we’re learning a lot about brain science through watching this whole thing and getting data out of it, which is great.

Marcus: I am a huge fan of his inventiveness. Yeah. Of just the sheer breadth of, um, Engineering [00:53:00] potency, he’s injecting into the world.

Marcus: It’s, it’s phenomenal. Um, you know, Starlink, SpaceX, Tesla, I don’t think X is great. Um, Neuralink, every, every, honestly, everything but X is pretty freaking cool that he, he works on boring company. I mean, I think his engineering prowess is fantastic. So I love all this stuff and I just stay off X. That’s it.

Marcus: You know, I go on X to like learn new stuff, but, but like, I don’t, I don’t, I mean,

Vic: X is the only social media platform I go on. But I don’t engage very much, you know, twice a week or something.

Marcus: Yeah, I mean, I’ve got lists that are curated that just feed me AI information and things like that, but like, I never post on X anymore, never.

Vic: Yeah, I mean, I post the marketing stuff for the portfolio, but that doesn’t

Marcus: really count. Yeah, I don’t even do that. Um, all right, so. Continuing on. Oh, man. So this Houston story, I didn’t even really, I hate that. I hate to say that I [00:54:00] didn’t really know what was going on in Houston until my friend who lives in Houston called me to tell me he was in Austin because he had to get out of there because it’s so bad.

Marcus: Um, so my mother in law lives there. And Wendy’s from there. So she has a bunch of friends. It’s it’s rough. It’s rough in Houston right now. Holy cow, man Um, you know and and how much of this is the severity of the hurricane versus the lack of resiliency of their um electrical system Like what’s what’s I don’t I don’t have the details

Vic: on it right now.

Vic: So It’s hard to say sitting in nashville, right? But but it was a category one hurricane

Marcus: Oh,

Vic: so it’s going to get a lot worse with climate change in houston on the gulf Like this is not an outlier.

Marcus: No, they’re going

Vic: to get category one hurricanes every year

Marcus: Yeah, yeah, but it was a

Vic: category one hurricane that hit directly into houston.

Vic: Okay tons of rain Lots of flooding and there were there were high winds You [00:55:00] Houston’s maybe like one of the top five biggest cities in the country, they have to have infrastructure better than this. It’s just not,

Marcus: it’s not okay. Well look, I mean, the, these stories, uh, The Texas infrastructure is, It’s a real challenge.

Marcus: It’s a real challenge, you know, um, and, and they are susceptible to some really serious weather patterns where they’re, where they’re located. Yeah. Um, you know, both during the summer and the winter, right? I mean, this is, this is a middle of the summer hurricane. Yeah. Smack in the middle of the summer. What was

Vic: the second one?

Vic: I mean, they go in alphabetical order. This is Barrel. So it was B. So we got a long way left to go. Yeah. We’re not, like, we’re not even into September. Yes. The peak is probably late September. Yeah. We got a long way to go. But then, um, so it’s a, it’s a, it’s an overall difficult story, but then the, the hospital couldn’t discharge people because they had [00:56:00] nowhere to go.

Vic: They didn’t have power. They couldn’t get home. And if they did go home, they didn’t have air conditioning. And so they just queued up people. And then they had, they had too many people in hospital. It’s the United States should not have this going on in at all in any city, but we do.

Marcus: I mean, I’m not sure why we should be exempt from it.

Marcus: I mean, given given the nature of the change in storm patterns, you know, we certainly have not built up the kind of resiliency for where we’re headed in terms of storms. Yeah, we have not done that.

Vic: Yeah,

Marcus: we’re not done. We’re not going to go backwards. Now it’s going to the storm is gonna be worse and worse and worse.

Marcus: That’s right. That’s right. Uh, terrible story. Um, wishing everybody in the Houston area the best. Um, yeah, terrible story. All right. Uh, moving into the [00:57:00] longevity space, outliving your peers is now a competitive sport. This guy, Brian Johnson, is really starting to break through because, you know, it’s, it’s, it’s like what happens when you say something completely outlandish, like, My goal is to not die, ever, right?

Vic: And I, I, I listen to him or I pay attention more because he’s self made. I mean, he built Braintree, which was a great payment processor. Oh yeah,

Marcus: huge.

Vic: And now this is his next thing he’s focused on. And he’s running full speed into it very publicly. Um, and so he’s done this, uh, I don’t know, like competition to see who can age the slowest and they have like a leaderboard.

Vic: Um, and I think it’s great. I, I’m not so, um, serious about it. I’m trying to be [00:58:00] healthy. But some of these people are taking 30, 40 supplements a day and all kinds of stuff, but, but I’m not a leaderboard.

Marcus: I mean, look, one of the things, if you actually subscribing to him on social that you will see is he is experimenting on himself with like the most cutting edge biotechnologies.

Vic: Yeah. And cutting edge is a synonym for not yet proven, right?

Marcus: Uh, Yes, but I also would say like the things I’m seeing him do, I’m hearing about them first from him. So I think it’s more that, right? Like, look, I’m, I’m, I’m an athlete. I hear about exosomes and, you know, PRP and I hear, I hear about a million different things that people shoot to the body.

Marcus: Yeah, I hear about a million. The stuff that I see him doing, I’m like, I’ve never heard anybody talk about that. You know what I mean? So that, [00:59:00] that’s more what I mean when I say cutting edge. Like, he’s, he’s at the front end of the research. He’s not listening to Peter Ortega and saying, Oh, that sounds good.

Marcus: You know what I mean? He’s got his own research team finding the latest. And then he’s signing up first to try the stuff. That’s right. He’s signing up first to try the stuff. So. That’s what I think is really interesting about this is it’s, it’s beyond what most people think about when they think biohacking.

Marcus: Most people, when they think biohacking, they think red light therapy, cold plunge. Yeah. Get your sleep, right. You know, maybe that would be on

Vic: the edge.

Marcus: Find a prescription. That would exogenous stuff. This guy is like full on with the exogenous stuff. He’s like no limits. to where he is thinking we will go.

Marcus: From a biology mixed with technology perspective. Right.

Vic: Yeah. And [01:00:00] I love that he’s doing it and that you and I get to watch that and learn from that. I’m not sure I would do that, but it’s great that someone’s

Marcus: doing it. I mean, it has to be your whole life. You know, I listened to an episode of a podcast that he was on.

Marcus: It’s his whole life. Yeah. You know, first of all, I think in order to do this, You better have like put money behind you as like, like, you no longer need it. He sold branching for hundreds of millions of dollars. He’s good. A, he can finance this himself

Vic: and get it to work. He

Marcus: doesn’t have to work. Right. So there’s very few people who can actually do this.

Marcus: Right. And then even if you can do it, then you got to do it like, like the amount of discipline to make everything you’re doing focused on slowing your aging. Right. I’m just not that. That oriented around that. It’s not

Vic: so the chocolate donut I had this morning with that fit.

Marcus: I wish I could have a chocolate donut right now.

Marcus: Why did you even say that now? I’m hungry. Yeah. Yeah. So [01:01:00] yeah,

Vic: I sort of described it being healthy, but you know, having a little fun or a little chocolate donut once in a while.

Marcus: Yeah. Yeah. Same. All right. AI rundown time. Um, open AI startup fund and Arianna Huffington are collaborating and working on an AI health coach.

Marcus: That’s a venture for chronic conditions.

Vic: Yeah, so we maybe should go to the Time article first, they dropped, uh, so Sam Altman and Arianna Huffington co authored a pretty long article in Time talking about AI driven behavior change transforming healthcare, which is, which is great, and also Well, a little self serving for the two of them, but well written and I thought, good.

Vic: And then the next day they came out with this collaboration and startup. Okay. And so they, for people that don’t know, they both are very successful, done lots of [01:02:00] investing and also lots of founding of companies. And I think both of them are forces by themselves. And when they joined together, it’s going to be.

Vic: Gonna get a lot of tension and probably be pretty good. Um, and so that they came out in Time Magazine with this thesis that I generally subscribe to that AI could be helpful in In helping with behavior change and then the next day they came out with their, their, their solution, which is, which is an AI health, which is an AI health coach.

Vic: Yeah.

Marcus: Yeah. Okay. So, so I, I think that’s interesting. Um, so, so a couple things from this time, uh, article that they, that they co wrote just to read a couple of Lines that stand out to me. So one, yes, behavior change is hard, but through hyper personalization, it’s also something that AI is uniquely positioned to solve.

Marcus: So their, their, their position [01:03:00] here is that, um, you have to get deeply personal with somebody in order to help them to nudge. Through the behavior change process, um, tearing down old habits and building new habits is an iterative process with lots of starts and stops and, you know, and just getting to the point where you actually build the habit takes, I don’t know, different people say it’s anywhere from three to eight weeks to actually build a solid habit.

Marcus: Um, and so you kind of need daily touch points in order to do that. Um, I don’t know of a health coach that’s going to talk to you every day. Yeah, actually, and at any time of day when you actually need them when you’re in the middle of crisis, or you’re really thinking about abandoning a habit. So I think from that perspective, they are correct.

Marcus: A. I. is uniquely positioned to solve it simply by the by the merit of what it is. is required of the kind of health coach that could actually meaningfully help [01:04:00] an individual move behavior change. There has to be availability, there has to be personalization, and there has to be regular engagement. I’m talking every single day.

Marcus: There’s got to be engagement. Um, have you ever worked with a health coach?

Vic: Yeah, I did maybe six, seven years ago. What did you think of it? I did not. It’s not that great. Yeah, it didn’t go very well. It’s not that great, right? It’s okay. Yeah. I mean, I, it was useful. And then after 60 days, I was kind of done.

Marcus: Yeah. Yeah. That’s, that’s, that’s kind of how I feel about it. Like, I, I think the idea of a health coach holds tremendous promise, but my engagements so far with health coaches has been wanting. Yeah. So I’m actually pretty interested in what AI could do. In the health coach capacity. The second thing I want to call out from this article.

Marcus: They wrote, um, humans are more than medical profiles. Every aspect of our health is deeply influenced by the five [01:05:00] foundational daily behaviors of sleep, food, movement, stress management and social connection and AI by using the power of hyper personalization can significantly improve these behaviors. So I would kind of agree with that, too.

Marcus: Um, yeah,

Vic: so I have lots of Opinions about this. I agree. I agree with that. Yeah, and I think in order to help me Change my behaviors to more healthy to more what I want. Yep Even though like, um, it may not be that healthy to cheat on a diet once in a while, I may decide that’s what I want to do. Sure. Each person can set their own goals.

Vic: Yep. And I think what they’re saying is we will give you lots of little nudges. We’ll really understand what motivates the AI. We’ll understand what motivates you and help you keep that in mind and achieve it. Yep. I don’t think that works. Unless I share all my personal hopes, [01:06:00] dreams, motivations, things that are causing me to want to make this change.

Vic: Sure, sure. And that gets to the core concern I have, that I think AI will be really good at this. But I don’t know that I’m comfortable giving Sam Altman and Ariane Huffingpost a chance. All of my religious beliefs, end of life beliefs, social and moral, political beliefs, what I think about, like, why do I want to lose a little weight?

Vic: Maybe it’s about my grandkids or something else. Once, in order to actually be a health coach, you have to get very personal stuff. And then I don’t know how they’re going to navigate that.

Marcus: I think you set the bar slightly too high on the disclosure that’s required for behavior change. Um, I think you can give general [01:07:00] direction around things without disclosing things that feel too personal.

Marcus: And I think it’s probably sufficient for the AI to To support you with that, because I don’t think it needs to be using those motivations to guilt you necessarily, right? I think, in fact, I think I don’t know if the guilt would work that well. Yeah, yeah, I was about to say, in fact, guilt or shame when you fall off the wagon is like, Antithetical to actually having success in behavior change, because it’s inevitable, you will fall off the wagon, right?

Marcus: I think it’s more about, um, nudging, providing really, really clear information. You know, let me give you an example. On food, a lot of my problems with food is just I lack knowledge. Here’s a direct example. I’ve kind of recently realized that one of the big things I need to really focus on in my diet is fiber.

Marcus: Okay, and that just was kind of below the radar of like all the [01:08:00] protein and then macronutrients, right? And, and, and even microbes, you know, I’m thinking about vitamin D and these, fiber just didn’t quite hit the threshold. Why? Because I, you know, I’m not like stopped up. So I’m like, I don’t need fiber or whatever.

Marcus: Yeah. Not realizing that fibers Anytime you have sugar, you should have fiber. I should, I should have fiber all the time. Yeah, right. Because I have cholesterol issues and fiber will help transport the cholesterol. But then even further than that, there’s a difference between soluble, soluble fiber and insoluble fiber, right?

Marcus: And knowing which foods contain which of those things, like, you know, an AI could be pretty helpful with that for me, right? Helping right now. And you’re

Vic: very educated about Diet and nutrition compared to the average consumer. But

Marcus: sometimes, the thing that stalls me from making a move towards improving behavior is lack of knowledge.

Marcus: So, literally, if this thing was just great at, like, answering my questions, [01:09:00]

Vic: And it can also be really defeating when you, you pick something for lunch that you think is healthy and then, Later, you realize, Oh, gosh, it, it wasn’t water soluble fiber, so I didn’t, I shouldn’t have done that. And then you’re like, gosh, why am I even doing this?

Vic: And you

Marcus: sort

Vic: of

Marcus: fall

Vic: back.

Marcus: Here’s another one that would be interesting, right? Taking my wearable data, right? And tracking all the, the, the HRV heart rate, all that kind of stuff, right? You know, respiratory rate, comparing that with my calendar and saying, Hey, just so you know, um, during these times of day or during these meetings, your stress goes up.

Marcus: So. Maybe drink a glass of water before you have this meeting because, like, your heart rate consistently. I’ve been tracking it for three weeks, right? Like those would be like kind of cool things that that I could do that right now. I can’t track. I’m not paying attention to it, but I’ve got the data. I’ve got you have all the

Vic: records.

Vic: It just is too much to sift through. That’s right, right? That’s right. So anyway, I think it will be really [01:10:00] powerful I personally am scared of the lack of privacy. Hurt. Hurt. Hurt. But people will like it and other people will

Marcus: be made more comfortable with it. Yeah, and that’s valid. And that’s valid. But, but listen, like, I think the big point here is

Marcus: All the trends we’ve talked about say that the future of healthcare is going to require patients to take more ownership of their own health, that like, that’s the bottom line. Individuals are not going to be able to depend on a healthcare system. We can’t pay for it. There’s not enough people in it. It’s, it’s not going to work people, but like, you know, I know a lot of people don’t like this, especially I think progressive people, right?

Marcus: And I’m, I’m, I’m more left of center than right of center. So a lot of the people who I am kind of politically aligned with, I think, take real issue with saying, [01:11:00] People need to take more responsibility because they will highlight all the reasons from a socioeconomic perspective or other reasons why it’s not fair to ask people to take on more responsibility.

Marcus: And I am saying from a realism perspective, this system is just like the Houston system cannot sustain the future of where weather patterns are. The health care system cannot sustain the future of where we’re going economically, behavior, from a behavioral health perspective, people are going to have to take more responsibility for themselves.

Marcus: It’s just, it’s going to have to be that way. And in order to do that, we need better tools, you know, we need better tools. I’m someone who is throwing myself at this, at this because I can, you know, I’m in a socioeconomic situation, I don’t have any major behavioral health issues. I can throw myself at this whole problem of owning my health more, and I’m telling you, Vic, like, I don’t feel like I have the best [01:12:00] resources to do that.

Marcus: I could use better resources.

Vic: I mean, what I, what I would say is no person can navigate the health care, their own health care, and understand all the different things that they should be doing or could be doing without significant support. Thank you. And our health care system does not have enough people without incredible productivity gains to provide that support.

Vic: Yeah. And so we need something like an AI health coach or other tools that maybe would help. The health care providers or both. Um, I agree with that. And I think that, I mean, whether you’re progressive or conservative, I don’t think it really, I’m not sure it matters that much. I mean, people need to be met where they are and provided a lot of support and assistance and care so they can be able to take [01:13:00] control of their own health.

Vic: And I, I think that would start to even out health inequities. If we were able to do it at scale and meet everyone where they were Because the privileged people that have a lot of money you and me we get support we buy support I’m, not sure. It’s a Anti progressive stance you’re taking but I also don’t pay attention to the progressive side that much.

Vic: Yeah. No,

Marcus: I I’m just saying It, it is, it is a bit of a trigger position for, for progressives to say that people need to do their own thing. Yeah, yeah, yeah. That’s a little bit of a, no, no, the system should be doing more to take care of people. I’m just saying, generally speaking, that’s a little bit of kind of a trigger position to have.

Marcus: I mean,

Vic: I think there’s a difference between blaming the patients. Right, right. And then saying, we’re not blaming the patients, but the patients have to be empowered and they have to take some ownership. That’s what I think. We need to give support to them [01:14:00] so they can. That’s what I think.

Marcus: Yeah. I, I, I think it’s not about blaming.

Marcus: Patients have to be empowered and they have to have the tools, um, and they have to be given the confidence to know you can do more to, to, um, support your body. Yeah, you know, you can do more to be in tune with your body. You can do more to heal your body, right? You don’t have to always talk to some board certified clinician.

Marcus: That is not always what is necessary.

Vic: And education is sort of part and parcel with confidence. I think like you get educated, then you try something and you see some benefits. You begin to gain more confidence. Yeah.

Marcus: Yeah. All right. We’re going to skip one story. Get to the final one. I got to get to dinner.

Marcus: Okay. Microsoft quits the OpenAI board. So. Sam Altman, Sam Altman, uh, you know, open AI is, is making its moves to be its own independent company. And they had a very, very close relationship with Microsoft. I think they still do, but the Apple deal [01:15:00] definitely kind of creates a new dynamic, of course, Apple.

Marcus: Refuse to take a board seat, and now Microsoft was a was a board observer, and now they are recusing themselves from that role of board observer. So, um, I think this is a smart, proactive, strategic decision on Microsoft’s part to demonstrate it. They are not overly influential in the future of open AI as a company, especially as open AI seeks to make itself into its own for profit entity.

Marcus: Um, and it also kind of puts open AI in a position where they’re kind of free to do business with anybody that they want.

Vic: I think that I agree with all that open AI is. Progressing to hopefully be a for profit company. They I think they got out negotiated with apple, but they definitely Cut a deal with apple on their own without microsoft.

Vic: That’s right And apple’s one of microsoft’s biggest competitors and then I I sort of read it as an [01:16:00] ftc Um preemptive preemptive thing.

Marcus: Yes

Vic: as much as microsoft trying to distance themselves from open ai It’s both it’s both. It’s both. Yes.

Marcus: No question

Vic: So, I’ll, it’ll be interesting to see how, I mean, Microsoft has its own, um, AI team that’s, that’s different from OpenAI that’s also building tools.

Vic: So, it’s still a wild, highly competitive, pretty fast changing space. Um, one of the things that we didn’t get to cover, I don’t know if you saw, I, I forgot to put it in and we don’t have much time, but, um, Andreessen Horowitz is now offering, um, Nvidia chips to their portfolio companies. So like it’s going to be, there’s going to be keep new things that are coming out with innovations.

Vic: And, uh, it’s pretty interesting because you don’t need the Nvidia chips forever.

Marcus: You

Vic: can sort of run for six months, train your model, and then let another portfolio company have it. So I think there’s gonna be a lot of innovation in AI [01:17:00] and Microsoft’s playing in all the different sides. That is

Marcus: such a flex.

Marcus: That’s there are levels to this game. I think

Vic: they spent

Marcus: like. 400 million

Vic: dollars buying, buying chips.

Marcus: If

Vic: any entrepreneurs out there, I don’t have any chips.

Marcus: Nope. Me either. Me either. Don’t ask me for chips, guys. Um, all right. Good episode, Vic. Uh, I will see you in two weeks. Enjoy your trip. Yeah, I’ll be in

Vic: Alaska.

Marcus: Hopefully it’ll be

Vic: cooler

Marcus: there. I think we can bet on it being cooler there. All right, man. See you then.