HackED! Developing a compelling pitch

- Yeah, but we're wrapping up our EMIX speaker series. My name's Karim, I'm one of the R4 at UCSF, and you know, we split into hardware and split for the hackathon to end our speaker series because a lot of the hackathon is actually developing a compelling pitch, that's what we thought we'd talk about on this last call. And we're really lucky to have Sherman and Andrew kind of joining us to talk about that. Both of them have, you know, lots of experience on the VC side. Starting with Andrew, he is an EM resident at Stanford. He is a fellow on the healthcare team at Pear VC. You know, he is done a lot of interviewing founders on building these successful businesses. He has an MD MBA from Penn Med/Wharton and before his medicine life was a management consultant, and has done a lot of work in digital health in VC. So we're really excited to have Andrew, as well as his co-resident Sherman who, Sherman, I know we know each other from New York days as well as UCSF. But Sherman also is a healthcare investor at 16Z, and he's a EM physician, resident physician at Stanford. He also has a lot of VC experience. He as a medical student helped launch AlleyCorp, which is a physician led VC firm. And then I met him through his founding of MD+, which is a community of physician innovators throughout the country that has grown, that has grown pretty substantially. And now he is on the west coast at Stanford. So you guys are meeting of the mind in terms of VC and clinical medicine. So happy to have you guys here.

- Thanks, I appreciate being here.

- Yeah, thanks for the generous intro, Karim. I really appreciate it. All right, Andrew, do you want to kick it off and maybe share some slides and then can-

- Yeah, let me go ahead and share it really quickly. Gimme one sec. Karim, thanks so much for the great intros. This is just reiterating Sherman and my background in venture and some of our previous work. Sherman with MD+ and for me, my research at CHIBE. And we're really excited to be talking about what makes a compelling pitch. And so I'll kick things off by defining, you know, what is a pitch? For me, I think you know, pitch is simply like a story. The story that the entrepreneur, the founder, their team, what they want to tell, it's honestly like their story. It's a story that I think that they want to communicate that should have some essential ingredients that Sherman and I will talk about in these subsequent slides. But it basically summates to, you know, what is the problem that you want to tackle? Why you are the best team equipped to solve that problem, and what is the ultimate solution that you want to be developing? And you also want to be able to know your audience really well, these angel investors, venture capital firms, early employees who wanna join your company because it helps set up the context for how you're gonna make your pitch. And you want your audience to really walk away with a couple things. I think some of the best pitches that I've been in, it makes you feel something, it makes you believe or learn about a new space that you become passionate about, that you want to help the entrepreneur out, and it ultimately wants to make you believe that they're the right team to help invest and help solve this problem. And through my podcasting and a couple of the pitches that I've heard through Pear, I think some of the best founders also incorporate a really personal story to help develop a conviction in this space from their investors. One of the founders that I'll talk about is a founder who was in the oncology space developing a cancer care navigation platform. His brother was an oncologist, his dad was an oncologist, his younger brother was an oncologist, he was a black sheep, he was the one that wasn't an oncologist, he was doing the business side of oncology. But he had a best friend that called him one day because his mother was, had a incidental finding on the CT scan of some kind of weird mass on the pancreas, but they couldn't get an appointment with an oncologist for about four weeks out. And it was so dreadful and caused a lot of fear and anxiety. So they called this founder who was working at a cancer analytics company at the time, and he actually got his dad to see the patient the next day. They ordered the PET scan the following day, and unfortunately the mother was found to have pancreatic cancer, but they started her on treatment immediately. And to this day she's still surviving. And I think that's like the power of, you know, a story that he had multiple friends and family members that would call him for this kind of cancer navigation and gave him the conviction to ultimately build this company. And I think when investors hear this kind of story, it makes them feel something, and it makes them want to join the ride along with you when you're building this company. I think another essential part about the pitch is really to emphasize this idea of founder market fit. You know, when you are pitching to venture firms and they decide to invest in you, they believe that you are the best team poised to solve this problem today and in the future regardless of whatever team comes into the picture. And you know you're in a good market when a bunch of other teams are trying to build in this space. That's kind of a validation for how good the market is. But in order to really stand out for venture firms, I think you need to flex the competencies that you have. Maybe you and your co-founders have years of industry experience. Maybe you have specializations that you wanna highlight. Maybe you've known these customers and have done customer interviews, and know the space really well. I think if you're building like an EHR company, being able to understand different EHR integrations or experience with those companies is valuable. Maybe you're a physician who have worked in this space for many, many years and know the ins and outs of a physician workflow. On the other side of things, maybe you have a nuanced understanding of the trends and insights of where the market is going. Maybe there's new financial coming out or reimbursement models that you're aware of due to your work in CMMI or CMS. Maybe you understand the regulatory workflows really well and instead of anticipating or going through regulatory risk, you can actually turn that into regulatory opportunity. We see that in a couple companies taking advantage of programmers 340B which has been around for many, many, many years, but has now recently been getting a lot of highlight in the press. And an example of demonstrating this idea of founder market fit, I wanted to highlight one of the founders in Paris Portfolio, Chris Mansi who's the co-founder of his Viz AI. He was a neurosurgeon, he trained in London, and during his residency he had a couple stints in medical education and tech companies. They didn't generate huge returns but he kind of learned about how to reach out to customers, develop websites, develop products, and iterate quickly. And then actually when he came to Stanford in the west coast and he started a biodesign program, he felt very passionate about his clinical background in helping to solve the time to care for ischemic stroke patients. He helped develop an algorithm to run through CT scans to get patients who had these ischemic strokes to better care quicker. And I think what gave him and the investors a lot of confidence in him was his clinical background in neurosurgery as well as this previous entrepreneurship experience. Another essential part about the pitch is to talk about the problem, right? And I think there's a couple aspects of the problem that you really wanna highlight. First, describing how big the problem is. Scale matters a lot in venture and if you talk about a problem that only impacts you and your department, not many firms are gonna invest in that. The bigger the problem, the larger the market, more and more venture firms would wanna participate in it because it just offers a bigger chance of a higher return. And explaining how this market is gonna evolve is really important. An example that I recently heard is a pitch in the IBD space and the founder was saying, "Hey, there's more and more patients that are getting diagnosed with IBD. There's less and less physicians that are getting trained in the IBD fellowship. And this creates a gap in care that you want to be able to solve as an entrepreneur." Another thing to really kind of talk about in the problem is really drilling down who is the problem gonna be targeting. This involves market segmentation, which Sherman will talk about, but really painting the picture of who's the person or the customer that's gonna be utilizing the solution that you're hoping to put forth. Is it a nurse that struggles with a current EHR workflows? Is it a doctor dealing with a time sensitive diagnosis, or being burdened by clinical notes late after shift? Making sure to kind of describe the typical person is really important. And the last thing is, amplifying what is wrong with the current system? Where do the current solutions fall short? Is it 'cause they're too expensive? Is it 'cause they're really hard to use and they take up a lot of time? Doesn't that really integrate into current workflows? Being able to identify this gap makes investors more likely to wanna partner with you. And the last thing that I'll talk about before I hand it off to Sherman is just talking about the market size in general. This is an amplification of the problem. Being able to tell how big the market is, is really crucial. I think a lot of pitches that I am on, I see some entrepreneurs that will Google, you know, whatever industry that they're in, and say how big the market is. So if they're in medical sales they'll typo on Google like medical sales market size, and put that in their pitch deck. And that's great, you have a number. But I think when investors really drill down on how you got that market size, if you don't know the granular aspects of it, it doesn't look that good because it matters, right? You can have an incredible product, you can have an incredible platform, but if you're not building in a really large market, it's gonna be really hard to see the returns and make it a financially feasible model. And there's many ways to calculate, you know, market size for those of you that went through business school or tried to do this through your own startup. There's different backhand ways to do it but simply put I think it's just the number of people that are willing to buy your product or service, and how much they're willing to pay for it. And you can go the enterprise route where you don't have too many customers but each contract is a really large value. Or you can go to many, many customers but charge them at a low price point. Enterprise like Epic or Cerner is kind of on one end and the consumer apps or the D2C space in healthcare is something like Hims And Hers or Ro. And maybe something in the middle like a marketplace like Zocdoc or Prosumer like the Butterfly Network where they're leveraging and utilizing ultrasound machines for physicians.

- Great. No thanks Andrew. I think that's great context and I'll harken upon a couple of things that Andrew mentioned already. 'cause I think market segmentation and problem identification really go hand in hand. But when we think about market segmentation, it's like picking, you know, one market and then deciding, you know, as any good startup founder will need to do, like picking like one place to start. So in venture land we call this like, the initial customer segments, ICP, or an initial customer population. And it's really important in figuring out, you know, how to get to zero to one and then ultimately from one to 100, whoever your first customers are. And I think as clinicians, you know, I think for those of us that are clinical on this call, a lot of it comes down to like, you know, what patient populations do we really wanna care about, and what do we think has the highest need? Kind of the, what Andrew said earlier. And you can segment that in a couple ways. Like it can be need, it can be like struggle for access, it can be different points of the patient journey that you want to tackle from a segmentation perspective. It can be different subpopulations within a patient population that have different kind of clinical needs, but really thinking about, you know, who do you wanna start with first? If you want to kind of start a mental health company for example, which kind of mental health special subspecialty would you be going after, and where in a patient journey does it make sense? What level of services do they might need to ultimately, you know, benefit from your company's solution? And so yeah, just to give example, this is an investment that we made two years ago in a company called Willow Health. A really fascinating company that actually dovetails a lot with emergence like psychiatric care from the emergency perspective. And they decided, you know, they're gonna take actually a segment of the population from each of these buckets, anxiety, depression, SMI, autism, even some subsegments of personality disorders, and really focus on the people that are having active crises that, you know, need to be managed like unsafe discharges essentially back to, you know, home in a traditional sense but not sick enough to land like, in the actual inpatient setting. And for those of us that are clinical, I think this kind of gray area is like something that we acutely understand having had to try to dispel a lot of these really tough patients. And so what Willow ended up doing is like, you know, realizing there's a huge gap and lack of inpatient, or kind of community intensive outpatient services, these intensive outpatient programs, they found a way to kind of like build this virtual intensive outpatient program that can be kind of done in conjunction with the caregiver at home or maybe kind of a boarding care facility where a patient might live. And providing a lot of these kind of virtual services that one might, you know, traditionally get through kind of a brick and mortar facility. And it ends up offloading a lot of like, you know, unsafe discharges that you might have had to keep in your ED for example, or find some sort of way to socially admit these patients. But they were, you know, unloading a lot of these patients from the emergency departments. But I think, you know, bringing back to market segmentation, they realized that they're not gonna tackle the entire segment of, you know, people with anxiety and depression for example. And also they're not gonna tackle everybody that's in a crisis. Some people truly need in-person services, wouldn't be safe in a virtual environment, but there's a small segment that actually can be really effectively treated with virtual IOP services. And that's the segment that they went after that ended up being very successful. And ended up landing a lot of really interesting ED partnerships and then ultimately landed them a lot of value-based partnerships on the payer side, which we'll get to that, you know, lands and kind of creates the kind of business model for this company. But it started with market segmentation that I think the founders did a really good job identifying where in a mental health journey can you intervene on a patient based on the services that they wanted to procure for them. And then ultimately, you know, how do we kind of get, get the product in the door at the right time. So yeah, if Andrew, you can go to the next slide. I think the next slide talks a little bit about, yeah, just like, oh this, this is actually the rubric that I think most participants will be judged on at A7. And so we wanted to kind of frame our talk around a couple of different aspects of that. And so one aspect of solution creativity in particular will scalability the judges, we'll be kind of looking at your solution and thinking about how it scales. And this gets a little bit more towards the product side, whatever you'll be demoing or thinking about how to pitch the scalability factor of your solution. I think, you know, again, we're wearing the hat of a clinician for a second. A lot of us are used to taking care of patients kind of one at a time, you know? You know, we might see the course of like 10, 15 patients, 20 patients on shift, but that's the impact that we have as peer clinicians I think. But the technology enabled service or even a hardware product that impact scales much more broadly, but you don't get the same amount of obviously direct impact. You have to think about how your impact scales, and specifically which aspect of it is scaling, right? Is it the clinical model because you're bringing on and kind of a new way of delivering care. You may be using MS practitioners, you're leveraging MDs in a virtual kind of format that frees their time to take care of more patients. There's a lot of different ways to scale from a clinical model perspective that companies have done. From a technology perspective there's a lot of interesting ways to scale. You can, you know, not only just from a virtual telemedicine perspective, but you can think a lot about like asynchronous care for example. Like the way that you kind of fire back messages back and forth between the patient. You're gonna be a lot more facile in delivering asynchronous care if it's asynchronous. And thinking about other ways that technology can help reach patients. And then also thinking about the metrics, like what are you tracking ultimately at the end of the day in terms of clinical value, in terms of financial value, in terms of operational value. Is it linked to stay? Is it like, how scalable is linked to stay? Is it time spent in the emergency department before dispo? You know, how scalable is that? And then ultimately like you know, how many patients you're impacting and what sort of the clinical impact or the revenue impact at the end of the day. And then that's different from like the ways that you know, you scale the distribution of your product. For example, Andrew mentioned like Hims and Hers for example, that's a very consumer forward company. They had to find a lot of different distribution channels to market, you know, their essential consumer product using subway ads, using like Google ads, using a lot of different kind of distribution channels. What they ultimately found pretty successful is going after, you know, kind of like subsection kind of influencers that were creating a lot of like, you know, skincare brands and partnering with those companies that kind of leverage Hims and Hers from come more a bottoms up distribution channel. But yeah, I think marketing and distribution channel kind of goes hand in hand with scalability as well. On the right is one of the companies that we actually haven't announced yet, or excuse me, but this company is really thinking about asynchronous care in a scalable way, and specifically leveraging large language models and real time physician feedback and RLHF manner to improve the language models that they were ultimately building to provide asynchronous care. But I think it's a little small on the slide, but they kind of start at like 50% operating margins essentially because they're still providing care as clinicians, but as the model gets better as a language models allow them to respond more quickly and more succinctly in a more precise precision medicine way, that performance margin kind of grows 80% of the time. And it allows them to leverage a lot of technology that way. All right, and then the next slides are about kind of like implementation and thinking about feasibility. How do you convince investors and your judges ultimately what's feasible and doable? And so I wanted to share kind of two examples given some people are at the hardware track versus software track. Ansible Health on the right is a tech-enabled hardware company that I invested in a couple years ago that goes after COPD patients. And they do actually use a lot of off the shelf hardware. There's a couple things that's like truly proprietary about how they think about data gathering and ingestion, but the Pulse Ox is not like brand new. They're not using like a brand new kind of Pulse Ox machine and a tablet interface that they're using is not super brand new. How they think about the data aggregation is, and they end up, you know, finding a lot of ways to bring kind of real time patient monitoring into the guise of value-based pulmonary medicine, value-based pulmonary medicine meaning, you know, when a patient gets discharged with COPD, maybe a new diagnosis of COPD from the hospital, a lot of these patients don't really know how to manage inhalers for their first time at home, don't know how to manage the many medications that they got started on. And so figuring out a way to use kind of objective metrics while also sticking to a care plan that the pulmonologist and the PCP have outlined together, that at the crux of what Ansible Health is doing to leverage hardware and the data that's coming out of the hardware into an ultimately a service that that becomes, you know, value generating for the payer and the provider taking care of the patient but also outcome driven and getting kind of patients better more quickly. And I think from a feasibility perspective, like how did they prove feasibility? One, they ended up doing a lot of feasibility trials at provider sites before they were kind of like arguing for payer dollars and figuring out like, oh, like is there actual return of investment financially from these products? We were first kind of proving out the clinical outcomes. Like are we like safely discharging patients into the care of these virtual pulmonologists? You know, because we can monitor their post ox at home, and doing and titrating meds appropriately, you know, in an asynchronous and virtual way. And they had to prove that that was feasible and safe, and ultimately beneficial from a clinical perspective. And then once they proved that, then they could prove the feasibility study, you know, from a operational lens. So now going to payers and saying like, "Okay, like now we've proved the clinical outcomes, let's prove the financial outcomes." And show it that, you know, a lot of this work that we're doing asynchronously ultimately saves payer dollars because these patients are less likely to come back into the ED for an exasperation, less likely to get readmitted for example, once they leave the hospital, and then there can do a lot of hospital at home like, services for these patients at home. So that's the hardware side I think, you know, ultimately proven feasibility ends up deciding like, you have to decide if you wanna become a class, like regulated class one or two kind of medical device or do you wanna follow the path of an existing product that's out there and follow them through like a five, 10K sort of pathway. And hopefully you guys have had talks on this in the past, but I think both of those avenues can be really interesting for companies. And then really quickly on the left side is like a software enabled service. I think this is where Andrew and I spend a lot of our time as clinicians working for VC companies. We end up, you know, looking at a lot of kind of like clinical services that have some amount of technology built in. Hinge Health is a really quickly growing and like essentially a digital MSK clinic. And for each of these particular verticals that they go after, like prevention, acute care, kind of chronic pain for example, and then ultimately get wraparound surgery services. They built a lot of feasibility studies in partnership with the, like health systems that prove out kind of clinical outcomes for them. It ends up meaning like on the software side, I think you don't have to have as much regulatory rigor when it goes after feasibility. A lot of the proof points is an implementation and proving to providers like, oh, this is adopted by clinicians for example. Patients actually use it, and proving kind of adoption from that perspective and usage and ultimately aligning those to clinical outcomes that the stakeholder at the provider kind of cares about. Yeah, so I think the next slide is going after implementation from like, from a milestone perspective. So on the left is one of the slides from a company that's well known in the orthopedic education space, called Osso VR. They're essentially like a VR tool for surgeons to immerse themselves in a virtual environment and kind of train, you know, what they would do for a particular case or in general if they're developing kind of new skills. So not just for residents but also attendees that wanna think about new procedures or from a surgical planning perspective. They've been able to break into that way. But I think the way that they described the plan of implementing this solution was really novel. And Andrew and I wanted to highlight that. I think in short they were able to command almost like two different types of budgets, initially going after just pure medical education, like training residents, for example training fellows and attendees on kind of new procedural techniques. But then as they grew, as they got larger, I think they started to develop a conviction and commanding separate budgets for, you know, training surgeons on new tools from the med device side. So if Stryker were to come out with a new tool, a new implant, like how do you get more comfortable with that implant before you use them the OR for the first time? And getting these companies on board to provide virtual immersive versions of their implants or devices that people can use in the OR. They basically tapped into market access kind of med device budgets at these hospitals. And that ended up being like unlocking like a new customer segment from them. But that stemmed from kind of this implementation, this kind of like stepwise approach of let's cross the med market first, get it adopted by academic health systems that had a lot of these med device partnerships, and then kind of crossover over time once we've gotten the trust, once we've gotten, you know, kind of our foot in the door from an academic perspective into more of this industry kind of med device go to market as well. And then the last segment here is really focused on impact and evaluation. I think crux to this is thinking through, you know, especially for your pitch, there's not gonna be a whole lot of quantitative measures that you guys will be able to produce in this short weekend, but there's gonna be a lot of qualitative things that you can define for your judges and people to eventually are looking at you as investors. Like what type of things do you want stakeholders to say about your product or service? How do you think about testimonials? Who would those come from? You know, like who's the most important stakeholder and when it comes to your solution and your innovation that you want to kind of gather kind of qualitative feedback from. You know, secondarily like what are your methods of getting this feedback? You know, is it asynchronous? Are you getting them to write case reports with you for example, that other people can read? Is it, are you allowing them to kind of talk about the patient side of it, not just the provider side, thinking about different kind of angles for defining kind of qualitative success. And ultimately like how are you reaching out to your end customers, improving to investors or your judges that you have demonstrable, you know, proven ways to do that. But ultimately, yeah, I think, in the real world, VCs rely on both of these, both sides, right? We're not just looking at revenue metrics, adoption, and funnel closures. We're also trying to get a sense from your customers who have worked with you, like what's the general hype or general kind of receptivity of people that you're at different points in your pipeline? When existing customer is able to renew for example, as a really positive signal for us. And then when a new customer that you just pitched is still able to say positive things about how they would fit you into the organization, that gives us a lot of confidence as VCs to get a sense for how your product's gonna get adopted. And then this next slide is just a couple of different examples of how different companies that we've been pitched have shown this to us as investors. On the top left is also VR again and they're demonstrating from, again, like from more of a, I wanna say a financial perspective, oh, from a time perspective, like how quickly Osso VR is statistically accelerating training time for each of these types of procedures and implants. And that's pretty, you know, I think interesting because a surgeon's time is worth a lot, you end up kind of fitting another kind of medical education perspectives, but you're also hopefully measuring like accuracy, quality metrics and whatnot. That's only one slice of the puzzle when it comes to impact. But that, you know, that was pretty well done. On the top right, this was a surgery wraparound company that I saw recently called Surgery Hero, that did a pretty good job of describing, like not only from a clinical perspective, like lower complications and cancellations, but if you can provide digital health solutions that wraparound pre-op and post-op patients at a ambulatory surgical center for example, you know, they can prove some really interesting outcomes both clinically and financially that can be worth it for more providers. And so yeah, I think the most attractive thing for me as a VC is just looking at, you know, how much they're decreasing length of stay. Like 33% is a pretty big deal when it comes to a lot of these capacity constrained but volume oriented ASCs. And so I think that's a pretty interesting way of showing impact. And then the bottom left is our investment in Thyme Care. I'm sorry Andrew, if you don't mind going back one slide just to hash out those that. Oh yeah, this one. Yeah, just showing you know, the 20% that might be cut off a little bit at the bottom. That's focused on I think reduction in total cost of care. 'cause a lot of their model is value-based care partnering directly with payers to reduce total cost of care. And you know, the PEPM, that's just kind of like, how they're thinking about impact from a financial perspective, like ultimately what the payer customer is paying Thyme Care. But you know, ultimately patient satisfaction 9.7 out of 10 is a really good marker for impact. It gives you a lot of, you know, both qualitative and quantitative kind of confidence that that company is really well loved. And then near and dear to our heart as EM docs is this bottom right company. I wanna spend a little bit of time talking through, but this company is called RightSite Health, I think a really interesting company that leverages essentially virtual emergency medicine docs in conjunction with paramedics in the 911 flow. And so the use cases essentially, you know, you have a patient that paramedics were called to the house for, but they have symptoms that sound pretty low acuity. You know, in a traditional 911 call paramedics are obligated to take that patient to the ED. There's no way of getting out of that unless the patient decides to not go, and you can offer them a chance to basically speak with an emergency doctor. Kind of similar to a base call, but it's the physician evaluating the patient directly with their own MD license and discharge almost like, you know, discharge AMA that patient into the care of this virtual EM doc. And so that's what they've done with a couple of these EMS agencies in a really creative way. They've been able to provide almost like point of care emergency medicine advice to both paramedics and patients while their paramedics are still in the patient's home. And it turns out, you know, for a lot of these low acuity, you know, sessions RightSite can basically claim that patient. It's like, okay, I'm gonna like obtain or own responsibility from paramedics for the disposition of this patient, and I can with my MD license on the line virtually encourages the patient to consider, like urgent care as opposed to going to the ED for their symptoms because of how benign it sounds and because of all the vital signs that the EMS has giving me and all the things that they can do because they have a physical paramedic there that's laying hands on the patient. And I think they proven their very early pilot is only like, I think 70 patients ultimately that yeah, they're 70% of patients opt in, you know, to go to the RightSite as opposed to going to the ED. And of that 70%, ultimately 60% sought urgent care that same day. They flipped 20% into like a telehealth visit with that same ED provider, and then other folks got referred back to DCP or specialist. And I think that's huge, if you can prove impact like that, that speaks like real financial dollars, real kind of clinical dollars or clinical outcomes that I think are in the best interest of everyone. So yeah, so I think these are just a couple ways that you can think about impact and evaluation and Karim that's a really great question. I'll answer that really briefly. I think it's not just cost reduction, because it's cost reduction from the payer angle. If you take the payers stakeholder, from an EMS perspective, it's like time saved, right? So rather than taking the patient round trip, they're not going to the ED and then it can go on to a new call that's maybe more high acuity that they ended. And they and they still get paid for that. So I think that's another thing that RightSite does well, like EMS still gets compensated as if they took that patient to the ED and so they still pay them for that. But the profit margin is comes from the revenue sharing of the cost savings on the payer side. So basically telling the payer like, "Hey, you would've definitely spent thousands of dollars if that patient ended up going to the ED. I can save you that visit by flipping into the virtual $100 visit. And we'll share in that, you know, cost savings of that because I've directly avoided that visit for you."

- That makes sense, yeah, that's a cool model,

- Very cool model. Yeah. And then Andrew, I forget where we were in our slides. I think we were just talking about profitability at the very last stage. Yeah.

- Yes.

- So yeah, maybe I'll let you take this last one.

- Sounds good, sorry, the computer is lagging, but thanks so much Sherman for talking about all those slides before. Can you guys still see the slides?

- Loading slow.

- [Karim] It says it's like loading, yeah.

- Okay.

- That happened last time. I think it says just a couple second lag.

- Got it, I'll just pick off of a couple things Sherman said while I'm waiting for these slides to load. I think I wanted to tag along for Sherman is, you know, really understanding those customers and getting customer testimonials is very, really an important part because I think part of the due diligence that a lot of VC firms will do is calling your customers. And I think there's a difference when firms will call your customers and it takes a long time to get them on the call versus customers that really love your solution and love your product, I think it's really easy to arrange a call with them and they rave about your product. So just wanted to give that quick little nudge about how important customer testimonials are. And the other thing too is now talking about profitability. Can you guys see my slide?

- Mm-mm.

- Wonderful. So profitability in healthcare, I think it is really hard. It doesn't happen overnight and it doesn't even happen in a couple of months to a year. Like in some industries I think it takes quite a long while as you can see with all these different companies when they started in parentheses and when they started to become profitable or really churn out a huge amount of revenue. And there's a couple things to that, right? The long sales cycle, the huge regulatory barriers, and just how hard and sticky the healthcare industry is with current incumbents. But I think profitability is something that you can never neglect as entrepreneurs and founders. It always has to be somewhere on your roadmap, because that's how you convince your investors and employees to join your company. That your business model is financially sustainable and feasible. And so there are many different ways that you can get to profitability. You can go, one revenue model as like a subscription model where you charge customers on a monthly basis, like Hims and Hers or Talkspace. You can also have a marketplace model where you earn commissions or fees based on, you know, job postings that you have or matching physicians to patients like Zocdoc does. The really cool thing about the marketplace is that there's like a network effect. The more providers that join it creates a stronger network, it encourages more patients to join and vice versa. Another business model is like you see with Aledade, Iora, a lot of these value-based care companies is sharing and shared savings contracts and sharing in the upside where they get a percentage of whatever revenue or cost savings that they generate for independent practices or healthcare organizations. That's a really great model because it creates alignment and incentives among all the different kinds of healthcare players. And other different model is like licensing. You see this with companies like Epic, where they can license and even have tiered dynamic pricing based on the number of hospital beds, and you pay for maintenance of their technology and updates. Another thing that, another model is like fee for service or pay for use. That's like a really flexible model if customers are not gonna use your product all the time, but they might have months where they use the product repeatedly. And you can have it with companies like Particle Health where you get charged for a number of uses or number of API calls. And the last one is like performance based payment where you can get paid based on achieving certain metrics. Maybe you're reducing hemoglobin A1C, maybe you're helping get more clinical trial participants enrolled or retained or timely delivery of clinical trial results like with IQVIA. But the bottom line is there are multiple ways to kind of pursue profitability, and you're not just tied to one. As your company grows and as you go through different phases of your company's journey, you might involve multiple different revenue models and business streams based on your product offering. And it's important to communicate this to your investors and employees that wanna join you about how you're approaching profitability. And in the early stages when you might not be profitable, that goes back to our previous slide, really showing the impact and evaluation of your product. Are you saving money? Are you impacting customer engagement and customer satisfaction? Are you decreasing time and increasing efficiency? Are all important metrics and I think that sums up everything for our presentation.

- Awesome Andrew.

- Awesome. Thanks so much guys. I'm gonna give, I know we have Andrew on here as a guest as well joining the crowd. I also have a couple questions for you guys but I don't know, I don't want, I didn't mean to interrupt you Sherman, if you wanted to wrap up with anything else.

- No, I think only in some, I mean Andrew covered it really well. I think at the end of the day, and I don't know how exactly participants will be judged for this competition, but at least from a venture perspective lens, when it's this early stage, it's team, team, team, like, what Andrew just started with. Team, market, and product. And in my head it's almost like 70, 20, 10, is kind of the split in my head of like how important our weigh those factors spend a lot of time thinking. We spend a lot of time diligence in founder market fit because it's the one thing that's like going to not change. When you're backing a company is like who the team is. So I think really encourage kind of teams to think through like what is our competitive advantage for why are we're gonna win in this space? And then thinking about the space, how are you gonna size it is not just, it's just one piece of the equation, but how are you like approaching the market? What's your orientation vector, your entry point, your wedge? How are you gonna scale ultimately, like thinking a lot about kind of the market in creative ways, thinking about how you can go after it and segment it in a different way I think, is really interesting way to kind of pitch to market. And then, yeah, I think the solution stuff is like that's going to change as people iterate, but having like some sense of how that's gonna scale, how that's feasible to implement, I think is always important. But that's probably like the least of our priorities when it comes to diligencing as venture investors. But yeah, team, market, product, if I can sum up this whole presentation in the three words, it's like kind of that order.

- That's awesome and it's helpful to hear that in terms of like how much emphasis to put on each of those because I think when people are starting out pitches, people like, it can be confusing and tough to know where to put, you know, where to put your emphasis there, so that's really helpful. To dovetail off of that, I think one thing that people end up getting stuck on a lot is, you know, when you think about a pitch, if anyone's like had any exposure to venture at all, I think the first thing that people think of is often the hockey stick diagram talking about, you know, when you're scaling, how you're gonna scale and how you're gonna enhance your profitability. And I know at least last year in other pitch competitions have been a part of, people always have questions, especially when it's like a hackathon early stage. You're not gonna have that much quantitative data of how much information to share if you necessarily don't have a great path to that. And the kind of steep part of that hockey stick whether you should just be vague or you should you say like, "Hey, I have this plan and I'm hoping that it ends up in this result." Or should you just focus on the team and your kind of market segmentation and kind of the earlier stage stuff.

- Yeah, no, I'm happy to give my thoughts Andrew, I'm curious for yours too, but no, I think in these early, early stages you're using a lot of comps in the market, right? So you're using kind of the examples that Andrew was saying, like what company does your, you know, company look the most like? Is it like a Zocdoc marketplace? If so, like what's the marketplace fee? And each side's gonna be a little bit different. How do you prove the demand side versus supply side sort of economics early on by discussing how you would get different size in a marketplace on board and live and engaged. If it's like the pay for performance, the value-based care play, you're thinking through like, "Okay, what are other value-based carers that have been done in other specialties, or generally in primary care?" There's a lot of data out there now on value-based primary care and how total of cost of care works for different interventions. So looking at some of those exams and be, "Oh you know, I think I can achieve 20%, you know, cost savings with this intervention because it's been done before in this way, and I could do it in this way." Right, so a lot of the companies that we look on early on are using a lot of cops to kind of benchmark what profitability could look like.

- Yeah, and I would add onto that too. I agree with Sherman completely and I would never completely neglect it, right? Even though that's like probably not as important as emphasizing your team and your product, it's still a really important part to consider, right? I'll give you an example. I think, you know, we have a lot of EHR scribe documentation companies and also like using AI to summarize the medical record, right? And, and you could use comms from different companies to help extrapolate, you know, the hockey stick growth. But then if you're going through it as a team and you're like, what if we think about a different go to market angle, maybe instead of going to clinicians and health systems, maybe you go to lawyers and talk about the lawyer market size for malpractice and use summarization of EHRs to help lawyers with malpractice cases. And now you're talking about a different market size than your competitors in this field. And if you don't think about that and if you communicate that to your investors, it shows, wow this team is, you know, not only knowledgeable about this space, but their gears are firing about how to make money. And that's at the end of the day, like, you know, team and product is important, but managers in the finance industry, it's part of private equity and you gotta be able to communicate a way to make money in this space.

- Totally, that makes a lot of sense. And then one other question that popped up for me, and I think a lot of people will wonder as well, specifically, you know, when you guys were talking about the VR example where you're starting like marketing to clinicians as an education product, and then kind of going more broadly. When that's your strategy and I think that can probably extrapolate beyond just like VR, I think there are a lot of healthcare products that initially started marketing like direct to clinician or at least to clinicians in some way. When you're pitching that initially, how much detail do you need to give the investor about how we're gonna actually pivot our marketing strategy if we're successful in that first stage? Have you guys heard pitches there, and you know, do you actually care about that or do you care, hey, why don't we just be successful up front and then we can talk about details of kind of expanding our customer base?

- Yeah, I mean Andrew feel free to chime in, but I think the iterative gonna go to market and honestly like what markets you are eventually going to conquer beyond that first market is always part of the grand vision that you're selling to investors. You know, I think also VR probably pitched a semblance of that vision even in their seed or series A decks highlighting how they would go because I think med-ed as a market, as a venture back market, is actually quite small, there's not a whole lot of guys that go health systems, so they had to prove the bigger vision and a lot of companies that we meet with, like, it's always like the target addressable market first before they get to like the total addressable market, and then you have to do a path to get there, right? So whether that's through go to market hacks, a lot of different kind of elevations is whether it's like earning the right from this one customer segment to unlock the second customer segment because there's like data, value, this exchange between the two or because they're all kind of aligned in some sort of value-based way. I think there's a lot of different ways, you know, you can grow it up, but yeah, Andrew feel free to chime in and I'll think of a, I'll try to think of a more concrete example besides also.

- Yeah, no, I completely agree and I think also like, the phases of your company and the markets that are gonna enter is definitely gonna change, right? But I think putting it out there is really important. Again, because you wanna be able to communicate this path towards profitability. And I think it also, like you mentioned like clinicians is a point of entry and, and you pitch to VC firms, you know, a lot of venture firms, even the ones that invest in healthcare may not know like clinicians intimately as well as all of us since we come from a clinical background, right? So tailoring like why clinicians are an entry point for you guys, and really like doing research as to the VC firm's familiarity in physicians as a go-to-market angle is also like important to do. 'cause if you have, you know, a 16Z that's invested in a bunch of clinician founders before they get it, maybe you don't need to do as much education versus a firm that has never invested in an offering that goes straight to clinicians as the first vertical. You probably have to do a little bit more legwork explaining why this is the point of entry that you are choosing to go to.

- Yeah, maybe there's one concrete example I, maybe this is a hot take but I think a lot of the scribing companies out there, scribing, you know, I think it's got a lot of sort of interest from the large language model sort of innovation. I think that's gonna be a total future. Like that's not gonna be a very defensible company, you know, in a couple years because a lot of that is gonna just converge to the same level of accuracy, you know? And certainly there's room right now where it's innovative and some people have like different, you know, more accurate ones than others. But ultimately you're gonna have to prove to investors that how describing translate to a much larger company from a platform perspective, either going into like more clinical ops, so thinking about like orders for example, thinking about like revenue optimization, thinking again the billing for example, and kind of like growing the company along those tracks. I think that that story has to be like a little bit more flushed out these days.

- Yeah, that makes a lot of sense. I mean I think a lot of times in early pitches, especially around hackathons, that transition is tough to think about early on, but I think it's worth spending some time on. So that's good advice. All right, we have a couple minutes left. I don't know if anyone else has any questions to chime in on for our two speakers. We'll give everybody a minute.

- [Andrew Luo] Yeah, I have a quick one. Thanks guys for the presentation. So I think all the points you brought up with the sample companies as well as what's important in a pitch are great for if I'm pitching to a VC, but for hackathon where at least my understanding is I'm being thrown into a team. I know a few of those people, probably don't know everyone, and we only have a finite amount of time. And so for the folks, like for myself and as well as for the asynchronous folks, what do you think are the like must haves in terms of the presentation, some nice to haves and things that we might wanna deprioritize for the sake of the hackathon exercise?

- Yeah, I would say, you know, I think the team market product sort of story at its biggest pieces, like, you know, really understanding and the team part should be pretty native and hopefully interesting to you guys. From the market it's like Andrew, it's like, really showing that you've thought through like how you would start with like maybe one segment, and then grow into, you know, a much larger market. I think that story, you know, should be pretty important in your hackathon pitch and very doable in of course the when you're thinking about kind of go to market. And then, you know, me personally, like I really like pitches when they can identify some way that it's gonna be, it's gonna scale or make money. Frankly, I think not a lot of people, especially clinicians, think about like how business dollars actually flow in healthcare. Like I see a lot of pitches in hackathons, "Oh, it's gonna save time, right?" But how does time actually translate to dollars? Like is that attribution line, especially in healthcare doesn't always translate, you know, we work overtime all the time, we're not getting paid off that much. Are we generating more revenue for hospitals? That's arguable too, right? So I think you have to really think about like, if you're gonna go at it from a time savings perspective, what's a quality metric, what's a payer ROI? What's like an actual financial metric that you can link your impact and intervention to that will actually lead to real dollars? I think that's like a really important final point.

- Yeah, and my thought take this with a grain of salt 'cause I've never judged hackathon competitions, but the sense that I get is I feel like VC is focused more on like the market potential and long-term growth while a hackathon I think is focused more on the innovation and technical aspects of the pitch. Because I feel like most hackathon judges are technical by background, and so I feel like if you speak their language and talk about why your innovation and the technical aspects of it, and how it plugs easily into the workflow, I think that's what they care about more from hackathons. But you know, again, take that with a grain of salt.

- Awesome. Well, thanks guys. I think that's a good spot to end on. So I think that's exactly what, you know, what our target is to try to get everyone prepared for this hackathon as well as, you know, any other ventures they might undergo as a result of this later down the road. But Andrew and Sherman, really appreciate you guys joining and lending your expertise. I think this can be really helpful for people as they prepare their pitches. And hopefully we'll get some good ones in this year. But appreciate both of you guys.

- Thanks so much, really appreciate being here.

- Yeah.

- All right. Take care everybody.