When we published our 2021 survey results, vaccines had yet to be broadly released, Tiger Global was still a growth investor and SPACs were en vogue (at least the raising part…). 2021 respondents overwhelmingly correctly predicted a booster would be available before vaccine protection waned, SPACs would return to being a niche product, and that a return to office would include a hybrid approach. However, the Delta and Omicron variants threw a curveball at us and subsequently forced mask mandates back into effect. Covid continues to be unsettling with BA.2 now taking hold and resulting in Philadelphia reinstating an indoor mask mandate on April 11, 2022.
Three months into 2022, the world seems even more unpredictable. While Covid cases have fallen in most of the world from Omicron peaks, there are worrisome signs in China and a giant reservoir of unvaccinated people which could give rise to more variants. Russian aggression and hostilities understandably are top of mind given the worldwide human, economic and political ramifications. Once again, we asked our network of experts for their opinions on the latest trends in health tech, world issues, and the outlook for Covid-19.
Our commentary on the most interesting findings from this year’s survey, followed by the full results, can be found here. Thank you to the hundreds of healthcare experts who took the time to share their views and opinions with us.
For our fifth annual survey, we once again tapped our network of pundits to weigh in on the healthcare industry’s news, trends and challenges. With the global pandemic, 2020’s surveyresults offered insights into the sentiment elicited by Covid-19, as well as predictions and questions about its impact on the presidential election, return to work and vaccines. It was the first year we conducted multiple surveys, and dramatic changes in opinion were captured as the country locked down and we slowly came to understand what we were up against. We were SO, SO wrong about the stock market as it quickly recovered from March lows and soon reached new heights, and less than 50% predicted that an effective vaccine would be available by the end of 2021. But we got more right than wrong as the election did swing to Biden, the GDP dropped more than 2% for 2020, and telemedicine broke-through, emerging as a lasting component of patient care.
This year, respondents weighed in on the impact of Covid-19, vaccine rollouts and passports, how the Biden administration will shape the future of healthcare, and the outlook for health IT startups in 2021 and beyond.
Our commentary on the most interesting findings can be found here, including the full results. Thank you to the hundreds of people who took the time to share their views and opinions with us this year.
Much has changed during the past six months, but our search for great talent hasn’t stopped. We are excited to welcome two Vice Presidents to the firm, continuing our effort to help build great companies across healthcare and technology.
Mariana joins the healthcare team with experience across the entire drug development life cycle. Prior to Venrock, she was Executive Director at Celgene, where she led a broad range of preclinical and clinical stage drug programs through early human studies. She graduated from Harvard with an MBA and Ph.D. in biochemistry after earning her bachelor’s at Brown University. Her focus will be on early stage biotech companies and she was instrumental in Venrock’s recent investment in a stealth oncology antibody drug conjugate company.
Julie joins our technology team and will focus on investments in consumer, commerce enablement, and SMB tools & services. Most recently, she was an executive at Facebook, where she helped SMBs grow as Director of the global long tail ads business. Previously, she was on the founding product and sales teams at Pinterest. Before moving to the west coast, Julie was a Vice President at Goldman Sachs, where she worked closely with consumer and retail companies. Julie has dual degrees from Stanford, with a Master of Science from the School of Engineering.
Both Mariana and Julie will be based in our Palo Alto office upon reopening.
Thinking about the future of robots and autonomy is exciting; driverless cars, lights-out factories, urban air mobility, robotic surgeons available anywhere in the world. We’ve seen the building blocks come together in warehouses, retail stores, farms, and on the roads. It is now time to build robots for humans, not to replace them.
We still have a long way to go. Why? Because building robots that intend to work fully autonomously in a physical world is hard.
Humans are incredibly good at adapting to dynamic situations to achieve a goal. Robotic and autonomous systems are incredibly powerful at highly precise, responsive, multivariate operations. A new generation of companies is turning their attention to bringing the two together, building robots to work for humans, not replace them, and reinventing several industries in the process.
Innovation through limitation
New methods of ML, such as reinforcement learning and adversarial networks, have transformed both the speed and capability of robot systems.
These methods work extremely well when:
Designed for well-known tasks.
Within constrained environments and limited variable change.
Where most end states are known.
Where the probability of unforeseen situations and ‘rules’ are low, robots can work miraculously better than any human can.
An Amazon robot-powered warehouse is an excellent illustration of well-characterized tasks (goods movement), in constrained environments (warehouse), with limited diversity (structured paths), and all end states are known (limited task variability).
Robots in a complex world
What about in a less structured environment, where there are greater complexity and variability? The probability of errors and unforeseen situations is proportional to the complexity of the process.
In the physical world, what is a robot to do when it encounters a situation it has never seen before? That question conflicts with the robots’ understanding of the expected environment and has unknown end states.
The conflicted robot is precisely the challenge companies are facing when introducing robots into the physical world.
Tesla reverted from a fully robotic factory approach back to a human-machine mix, the company stating, “Automation simply can’t deal with the complexity, inconsistencies, variation and ‘things gone wrong’ that humans can.”
Yes — this complex issue will be figured out — but the situation is not solved yet.
To solve these problems in the physical world, we’ve implemented humans as technology guardrails.
Applications such as driverless cars, last-mile delivery robots, warehouse robots, robots making pizza, cleaning floors, and more, can operate in the real world thanks to ‘humans in the loop’ monitoring their operations.
Humans are acting as either remote operators, AI data trainers, and exception managers.
Human-in-the-Loop robotics
The ‘human in the loop’ has accelerated the pace of technology and opened up capabilities we didn’t think we would see in our lifetime, as the examples mentioned earlier.
At the same time, it has bounded the use cases to which we build. When we design robotic systems around commodity skill sets, the range of tasks is limited to those just those skills.
Training and operating a driverless car, delivery robot, or warehouse robot all require the same generally held skill sets.
As a result, what robots are capable of today primarily cluster around the ability to navigate and identify people/objects.
As these companies bring their solutions to market, they quickly realize two realities:
(1) Commodity tasks make it easier for others to also attempt a similar solution (as seen with the number of AV and warehouse robot companies emerging over the past few years).
(2) High labor liquidity depresses wages, thus requiring these solutions to fully replace the human, not augment, in high volumes to generate any meaningful economics. E.g., Waymo/Uber/Zoox needs to remove the driver and operate at high volumes to turn a profit eventually.
The result of the commodity approach to robotics has forced these technology developers to completely replace the human from the loop to become viable businesses.
Changing the intersection of robotics and humans
The open question is: is this the right intersection between machine and human? Is this the best we can do to leverage the precision of a robot with the creativity of a human?
Expert-in-the-Loop robotics
To accelerate what robots are capable of doing, we need to shift focus from trying to replace humans, to building solutions that put the robot and human hand-in-hand. For robots to find their way into critical workflows of our industries, we needed them to augment experts and trained technicians.
Industries such as general aviation, construction, manufacturing, retail, farming, and healthcare could be made safer, more efficient, and more profitable. Changing the human’s role of operator and technician to manager and strategist.
Helicopter pilots could free themselves from the fatiguing balance of flight and control management. Construction machine operators could focus on strategies and exceptions rather than repetitive motions.
Manufacturing facilities could free up workers to focus on throughput, workflow, and quality, rather than tiring manual labor. Retail operators could focus on customer experiences rather than trying to keep up with stocking inventory.
These industries all suffer from limited labor pools, highly variable environments, with little technology, and high cost of errors. Pairing robotic or autonomous systems that work hand in hand with the experts could invert from the set of dynamics compared to commodity use cases.
Companies could build solutions that need only to augment the operator, not replace him or her, to meaningfully change the economics of the operation.
Building for an expert-robot generation
The current generation of technology innovation is starting, with a new generation of companies using robotics and autonomy to change the operating experience across industries.
Innovative companies such as Skyryse* with complex aircraft flight controls.
Built Robotics in the construction.
Path Robotics in manufacturing.
Caterpillar in mining.
Blue River in agriculture.
Saildrone in ocean exploration.
Simbe Robotics* in retail.
Intuitive Surgical in healthcare.
Robot solutions that share many key dimensions:
Introduce advanced levels of automation or autonomy that can pair with its human operator.
Deliver at least two of the three value dimensions: safer operation, improved cost of operation, high total utilization of assets.
Shift the operators’ time to higher-value tasks; eventually to manage across multiple functions in parallel.
Primarily software-defined across both control and perception systems.
Easily retrofit into customers’ assets base at price points less than 20% of the cost of the underlying asset.
Can go to market ‘as a service’ with recurring revenue and healthy margins.
Technology has empowered humankind to be capable of the impossible.
The impossible means we can make more complex decisions at orders of magnitude more precision and speed. Yet so many industries still rely on human labor and operations over human ingenuity and authority.
As the world adapts to social distancing and remote work, it’s more important than ever to leverage technology as our proverbial exoskeletons to maximize what humans are great at, and let technology do the rest.
*Venrock is an investor in Skyryse and Simbe Robotics
As we all entered January 2020, many years into a historic bull run along (too?) many dimensions, few of us (well, maybe Stephon Marbury) had any idea what the next 4 months would bring. We have all had to adapt, finding resiliency and grace in the face of uncertainty and adversity. We have had to throw out the old playbook.
That includes our annual survey on the biggest news, trends and challenges facing the healthcare industry. We issued our survey on February 24, 2020, and over the course of the 2 week response period, the world began internalizing that COVID-19 would become a global pandemic, forever changing our everyday lives and dramatically altering the economy.
A bunch of the survey responses were “same old, same old”: Haven would not do much (who knew how right that would be); there would be more talk than action on drug prices; people are enamored of Farzad’s bow tie and epidemiology prowess… There was, however, a dramatic change in sentiment regarding COVID-19 and the economy over the course of the survey. As a result, we broke with tradition and issued two follow-up surveys in late March and April in order to track the rapidly changing sentiment elicited by COVID-19. These include timelines for a vaccine and drug treatment, stark economic predictions and questions about the virus’s impact on the upcoming presidential election and returning to work.
Our commentary on the most interesting findings can be found here, including the full results from all three surveys. Many thanks to the hundreds of people who took the time to share their views and opinions.
Todd Graham Joins with Focus on Cybersecurity and Infrastructure
For over 40 years, Venrock has been committed to diversified, early stage investing – supporting entrepreneurs who will run through walls to create new products and services, surmounting obstacles that most think impossible. The Venrock team consists of individuals with diverse backgrounds and passions, but all share a collaborative approach to investing and supporting companies with a performance driven, long-term view. Ethan Batraski, who invests in frontier tech and enterprise software, and Racquel Bracken, who invests in biotechnology and creates new companies on behalf of Venrock, reflect the firm’s unique approach. We are thrilled to announce that they have both been promoted to Partner.
Ethan joined Venrock’s technology team in 2017, after 15 years as
a product executive, founder, and angel investor, with leadership positions at
Facebook, Box, and Yahoo!. Since joining Venrock, Ethan has led our investments
across space, autonomy, and frontier technologies, including Skyryse, an
autonomy company focused on VTOL aircraft, Atom Computing, a neutral atoms
based quantum computing company, as well as three additional companies that
have not been publicly announced. He also holds 16 patents. Ethan is a
passionate early adopter, space geek, and competitive athlete.
Racquel has been a member of Venrock’s healthcare investment team
since 2016. She led the Series B round for Cyteir, an oncology start-up focused
on DNA damage repair, as well as the formation and seed funding of Federation
Bio, a microbial cell therapy company for intractable disease. Since its
founding, she has also served as the CEO of Federation Bio in addition to her
Venrock investment activities. Prior to Venrock, Racquel was one of the first employees
at Clovis Oncology and helped the company from inception through approval of its
first product, with responsibilities in business development and
commercialization over 7 years. Racquel is an avid outdoorswoman, backcountry
skier, mountain biker, and board game lover.
We are also happy to welcome Todd Graham to the technology team as a Vice President in Palo Alto. Building on Venrock’s history in the security and infrastructure space – including CloudFlare, Shape Security and CheckPoint Software –Todd is excited about the future of digital transformation, human-based cyber-threats, disruptive go-to-market, and the consumerization of the enterprise experience. Todd joins Venrock from Cisco, where he led corporate strategy for the security and collaboration businesses. Todd was also an early employee at Tablus, a Data Loss Prevention company that was acquired by EMC’s security division, RSA.
We are honored to recognize Racquel, Ethan
and Todd’s accomplishments and look forward to their continued partnership and
future successes, joining forces with early stage leaders to build substantial,
durable businesses that improve lives across the globe.
Over the last seven years, a bunch of variables – some influenced by our effort and attention, while others definitely out of our control – fell into place much more positively than usual. The result being that Cloudflare and 10X Genomics – companies in which Venrock led Series A financings – both went public this week. These are terrific, emergent businesses creating material, differentiated value in their ecosystems… with many more miles to go. Their founder leaders – Ben Hindson and Serge Saxonov at 10X, Michelle Zatlyn and Matthew Prince at Cloudflare – are inspiring learners with extreme focus on driving themselves and their organizations to durably critical positions in their industries. They, and their teams, deserve kudos for their accomplishments thus far, especially given they are sure to remain more focused on the “miles to go” than the kudos.
The VC humble brag is a particularly unattractive motif, so let’s be clear, these returns for Venrock will be great. Our initial investments, while probably at appropriate risk adjusted prices then, now look exceedingly cheap. In addition, each company had operational success in a forgiving capital environment, so our ownership positions were not overly diluted. Whenever we do crystallize these positions, each will return substantially more than the fund’s committed capital. In addition, we hope that Cloudflare and 10X’s success will help us connect, and partner, with one or two additional tenaciously driven company builders.
But none of this is the reason for actually putting pen to paper today. The important nugget, too often buried amidst companies’ successes, is reflected in the opening sentence of this piece. Each of these businesses are mid-journey on the path of 10,000 steps on a knife edge.
To the pundits and prognosticators, startups begin with a person and an idea (maybe a garage) that leads to a breakthrough, after which money falls out of the air. This narrative ignores the ongoing barrage of strategic and executional hurdles, and also the asymmetry of consequences. One wrong move or bad break can erase the gains resulting from many right calls – this is life on the knife edge. This phenomenon of disproportionately large negative repercussions has corollaries in the realm of integrity and respect – it is difficult to gain, but easy to lose. One step off the knife edge is a problem.
Successful start-ups are the result of teams making thousands of – much more often than not – good choices, but as importantly, rapidly fixing the bad choices. This is hard, lonely, and unforgiving work that isn’t for most people, especially at the formative stage. These pioneers invest themselves completely to forever change their industries.
So while – for the first time – two Venrock portfolio companies are ringing the bell at different stock exchanges on the same day, knowing these teams, I am certain that they will quickly return to their journey of asymmetric risk/reward because it is their nature. These IPO’s are one step along that knife edge, in this case to gather capital, provide liquidity and allow for maturation of the shareholder base. Congratulations to the employees of Cloudflare and 10x during this moment of success – thank you.
As an investor, I use three heuristics to evaluate healthcare startups.
Will the product or
service…
Improve dramatically a patient’s experience of care?
Materially reduce the per patient cost of healthcare?
Deliver meaningful health improvements for patients?
This is no secret — the triple aim has been
around for a while. At Venrock, we often see companies that meet one or two of
these aims, but rarely do we see all three meaningfully achieved at the same
time.
Virta Health is one
of those rare companies, and it has been an incredible privilege helping their
team grow and work towards a world where type 2 diabetes (T2D) reversal is a
treatment accessible to everyone living with this chronic disease that may not
have to be chronic anymore. With their two-year results peer-reviewed and
published in Frontiers in Endocrinology, Virta is showing
that even patients who have lived with T2D for years can improve their health
beyond their wildest imagination and safely get off of expensive medications.
Improving the Experience
of Care
One of the biggest challenges in treating T2D is that the traditional model of healthcare is at odds with the reality of living with a chronic disease. It is by definition a condition that patients live with day to day, but patients only see their physician once or twice a year.
Virta is so effective
because their clinicians engage with patients every day. This gives them
massively more data to inform clinical decisions and many feedback loops to
help patients and clinicians figure out what works. Also, Virta’s clinical team
is super specialized, unlike most endocrinologists who treat many different
diseases, and solely focused on providing medical care for T2D based off of the
daily data coming from patients.
As a result, being a
Virta patient is a drastically different experience. Not only does the
treatment result in significantly better outcomes, but the care also teaches
patients about their physiology and how to proactively manage their metabolism.
This gives patients unparalleled peace of mind and confidence.
Reducing Health Care
Costs for Type 2 Diabetes
T2D is expensive. The
long-term complications of heart attacks, kidney failure, and vascular disease
are budget busting for patients and health insurers.
Beyond these increased
health risks, certain classes of diabetes-specific medications are startlingly high
cost as well. The cost of insulin has recently been in the news for its skyrocketing price over the last 15 years. Insulin is not only
expensive, but it also engenders risks for hypoglycemia and weight gain. This
is a point that is often overlooked by providers who are conditioned to cajole
patients at every visit to carefully titrate insulin: prescription medications
often have side effects that alleviate a set of symptoms at the expense of
others.
For example, SGLT2 Inhibitors, a newer class of oral medications for T2D, have a bunch of side effects like kidney failure, hypotension, increased cholesterol levels, and increased risk of developing bladder cancer. It would be far better and more cost effective if we manage T2D without relying on these medications. With Virta, patients lower their glycated hemoglobin (HbA1c) and eliminate medications at the same time.
Amazingly, Virta trial
patients were able to discontinue 67 percent of their starting
diabetes-specific prescriptions at two years. In addition, 91 percent of
patients who began on insulin were able to reduce or eliminate their dosage,
and the average daily dosage of insulin for this group of patients went from
81.9 to 15.5 units per day. The average annual medication costs for this group
of patients on insulin dropped by more than 50 percent between baseline and two
years.
Meaningful, Long-Term
Health Improvements for Patients
When Virta’s 10 week
results published in JMIR Diabetes, I wrote about the
rapid improvements demonstrated by patients who opted into the treatment. Ninety
percent of patients who began the trial taking insulin were able to reduce or
eliminate their dosage and 48 percent of patients met the definition for
diabetes reversal.
While early
conversations with trial patients made us confident that they would be able to
stick with the treatment, it still needed to be proven that Virta could succeed
at demonstrating long-term therapeutic benefit.
With one-year results
published in Diabetes Therapyand now two-year results in Frontiers in Endocrinology, Virta proves that their initial results are lasting. The
vast majority of patients stick with it, and Virta is consistently able to
deliver long-term, clinically significant improvements in health outcomes
related to T2D, avert complications, and save thousands of dollars per patient.
Specifically, of patients who completed two years 55 percent were able to reduce their HbA1c below 6.5 percent (the threshold for T2D diagnosis) without diabetes-specific medications, and 34 percent within that subset of patients were able to achieve partial or complete diabetes remission.
With standard T2D care,
the rate of partial remission
is approximately 2.4 percent, and it is known that patients who have
had T2D longer are less likely to achieve remission. Virta crushes this metric
even with a harder to treat population. At the start of the trial, Virta
patients had lived 8.4 years on average with a T2D diagnosis. Given this
context, the fact that such a substantial percentage of patients were able to
put their disease in remission is remarkable.
In addition to T2D,
Virta patients demonstrated significant improvement in markers of related to
other chronic diseases, including cardiovascular disease risk factors as well
as markers of non-alcoholic fatty liver disease. Virta’s treatment is improving
metabolic health and the benefits of it are being felt by multiple systems in
the body.
Looking Ahead
What Virta has been able
to achieve for patients, payers, and providers is extraordinary. Virta
is giving hope and better health to thousands of patients with T2D. The Virta treatment is
scalable, safe, effective and totally personalized for all types of patients
and lifestyles. Having doctors, diabetes educators, social workers, dieticians and
coaches work with patients daily works much better than the once or twice a
year status quo. Our team could not be more excited to work with Virta, and we
look forward to continuing to help them improve the lives of patients for years
to come.
To read more about Virta’s recent two-year results, see remarks from Sami Inkininen, Co-Founder and CEO of Virta, here.
Venrock is thrilled to announce that Tom Willerer will be joining us as a partner. Tom will be helping us expand our efforts in consumer technology, looking for entrepreneurs who dare to do something that others believe is impossible. Venrock has a long history of investing in early stage, consumer startups going back to Apple in the 1970s and recent success stories including Dollar Shave Club and Nest. The consumer space continues to be exciting as new brands create products and services that delight, and out-innovate the incumbents.
Tom brings nearly two decades of experience to Venrock, having co-led product innovation at Netflix during their massively successful transition from DVDs to streaming, and more recently, built products and teams at Coursera that helped 24x quarterly revenues. Tom has developed a passion for company building, not unlike the rest of the team at Venrock, and his experience will be an asset to our portfolio companies.
But there was also something less obvious in Tom that made us want to partner with him. As we got to know him and he interacted with people in our network, the feedback was not only positive, they wanted to hire him for themselves!
We’re thrilled that Tom wanted to partner with us too and look forward to building companies together.
To learn more about Tom, you can read his post here.
