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[10/29/23] What I read this week
Taylor Swift's meteoric rise, why healthcare is hard, techno-capitalism
Taylor Swift (Acquired's Version) (Acquired Podcast)
Man, I did not know as much about Taylor Swift until I listened to this podcast. If you want to get a crash course in the business of music, listen on. I learned about how there are essentially 2 versions of copyrights—Masters (recording) rights and Publishing (writing) rights. Taylor is a master of both worlds, having experience as a singer-songwriter. Her rise was meteoric, from her debut album Taylor Swift, to Fearless, to Speak Now, all the way to Reputation and Lover.
The podcast hosts show her outspoken defense of the artists in the music industry, including her battle with Apple Music, her Wall Street Journal op-ed, and her eventual re-recording of her music as “Taylor’s Version,” inspired by a tweet from Kelly Clarkson. They also discuss how record labels are like the venture capital of music, taking risks on artists like Big Machine did on Taylor in the early 2000s.
Why don’t healthcare companies say what they do? (Nikhil Krishnan, Out of Pocket)
Boy, if I had $1 every time someone told me that healthcare is confusing, I’d be paying off my medical school without any trouble. Healthcare is confusing because (1) there’s a lot of people who are very trigger-happy in suing you if you don’t say things in the right way, and (2) jargon is the norm in healthcare, because it’s just easier to say imprecise things and assume someone else knows what you’re talking about because you are way too busy to talk to them about it.
However, I think that this piece was interesting for 2 reasons: (1) it allowed me to consider how I explain healthcare topics to someone else and try to work on making my style of communication simpler, and (2) get better at my googling skills to learn more from varied sources about a particular company’s operations.
One thing that I learned from my time in consulting is that if you want someone to understand your perspective, you have to use a “framework,” which simplifies a complex concept into a few “buckets” so that the other person can get acquainted to a topic more quickly than if they did not have that framework. Every time that I read a topic which has a very good framework, it signals to me something that wasn’t originally clear, and it leads to some good insights. I like the way that Kunle breaks down the HealthTech ecosystem into how newcomers improve how (A) they get paid, (B) their operations (and lower cost basis), (C) clinical outcomes for payors, and (D) patient acquisition (improving their unit economics)
In that same vein, I also listened to this podcast around the state of health tech in 2023, hosted by Halle Tecco, a venture capitalist who founded Rock Health. She discussed a new report out from Bessemer Venture Partners with Sofia Guerra and Steve Kraus, showing how HealthTech is in a state of reckoning, having experienced a “hype cycle.”
I generally think that this figure from the report is correct. Hard ROI is important, along with a favorable set of unit economics, to make any positive EV bets. Furthermore, one line of the report stood out to me:
While healthcare is generally thought to be more resistant to economic cycles, it appears that the real alpha in the HCX has occurred during times of regulatory change, such as the initiation of Medicare Advantage in 1995, the HITECH Act in 2008, the Affordable Care Act in 2010, and the COVID-19 pandemic in 2020.
Much of the change which drives the recession-proof economic growth of healthcare companies, I’m getting more convinced, is the idea that you can find where the political landscape is shifting towards. Or, you can see how consumer interest is bristling at the lack of change happening in Washington (i.e., DTC HealthTech startups are up 45% since May 2022).
As a physician-in-training, I’m interested in how we deal with conflicts of interests in medicine. Largely, I agree with Blake’s points here that Physician-Owned Hospitals (POHs) can serve to increase competition in areas which are massively consolidated (owing to a combination of economies of scale, referral volumes and network integrity, and cost optimization).
As shown by HealthTech, whenever there are changes in regulation, capital will flow to the underinvested opportunities. I could see a case where PE can make deals to roll-up POH with the promises of higher returns for physicians, along with the very real possibility to make greater returns with referring higher-margin patients to a POH. However, on the other hand, corporations are already engaging in this behavior, and are anti-competitive to give themselves a larger piece of the pie.
The Techno-Optimist Manifesto (Marc Andreessen, a16z)
I thought this piece was an interesting read, particularly because it had all of the heavy-hitting, punchy writing of a religious text. It had the commandments, and the persuasion. I could even imaging Andreessen at a lectern, pontificating about the possibilities of technology to an observant class. I disagree with his points that technology can lead us out of any problem, and the continual answer for human progress is only through more technology. In fact, I thought there were two interestingly rebuttals which I resonated with more (here, here).
Some honorable mentions
How creators became an economic juggernaut and the new American Dream (Washington Post)
The Kamala Harris Problem (The Atlantic)
Thiel’s Unicorn Success Is Awkward for Colleges (Bloomberg)