Opportunities in Healthcare: A Q&A With Julie Yoo

Julie Yoo is a General Partner at Andreessen Horowitz where she leads investments in healthcare technology, with a focus on companies that are modernizing how we access, pay for, and experience the healthcare system. 

Prior to joining a16z, Julie was the co-founder of Kyruus, a healthtech company focused on patient access. Julie was previously VP of Product at Generation Health, from its inception through acquisition by CVS Health; and a Product Manager at Knome, the world’s first whole genome sequencing service for private individuals. Julie’s tech career began as an early member of the software engineering team at Endeca Technologies, which was acquired by Oracle. Julie studied computer science and pre-medicine as an undergrad at MIT and obtained an MS in genomics from Harvard-MIT HST and an MBA from MIT Sloan. She is a Young Global Leader with the World Economic Forum and has been recognized through numerous awards and honors from Becker’s Hospital Review, Health Data Management, MedTech Boston, and Rock Health.

What are the white spaces in healthcare/life sciences that you would want entrepreneurs to be focusing on solving through technology?

In general, we’re focusing on companies transforming the way that we access healthcare, pay for it, and experience it, whether in the form of infrastructure software or full-stack tech-enabled services.

I like the way this question is specifically worded, because one of the things we’re particularly excited about is the white space that is literally at the intersection of healthcare and life sciences. These are two sectors that traditionally have been very siloed from each other, but are increasingly needing to converge on each other, as payment models transform, and therapies become more complex. The next generation of life sciences companies will need to develop competencies in reimbursement strategy, care delivery operations, and longitudinal, real-world patient monitoring, far sooner in their evolution than their historical peers. On the flip side, care delivery organizations and individual providers will have to evolve new ways to diagnose, treat, and manage the logistics around complex conditions that require novel therapeutic modalities, like gene therapy and cell therapy. We see huge opportunities for companies to be built at that nexus.

How difficult is entrepreneurship in healthcare?

All entrepreneurship is hard. Every company, no matter how amazing the outcome, has gone through its shares of highs, lows, and very lows. That said, if there is anything that is uniquely hard about entrepreneurship in healthcare, I’d say it’s some combination of the following:

There’s still so little we know about how human biology truly works, even with the huge strides that scientific and clinical research communities have made in recent decades. This creates a shroud of existential uncertainty that will always pose some degree of risk to businesses in this space, especially those developing therapeutics and other types of biological interventions.

One of the hardest things about getting startups to work is getting the humans who you serve to behave differently. Healthcare is the second most labor-heavy industry in our country (projected to be the top in the next eight years), so there are many more stakeholders, entrenched cultures, and sources of human inertia to contend with than other industries. Healthcare (especially the payor and provider segments) is one of the only industries in which increasing revenues is viewed as a bad thing—because it’s not viewed as increasing revenue, but rather increasing cost. It’s also because healthcare is one of the few areas in which higher price and spend is generally not correlated with higher value. So things that make logical economic and capitalistic sense oftentimes die on the vine once they hit the buzz saw of misaligned incentives in this industry.

What is the future of healthcare?

Your home will be the primary site of care.

To continuously measure the state of your health, the frame of your bathroom door will be a real-time imaging device that scans you every day, compares your measurements to your own personalized baseline, and alerts you via your smart mirror as to any concerns. A smart mirror will also detect any changes in your mood or demeanor, and automatically invoke the appropriate dosage of music therapy when you start your shower.

To combat diseases borne from poor diet and nutrition, everyone will have a 3D food printer in their kitchen, powered by a nationwide engineered ingredient utility that hooks right into the back of the printer. This printer will produce personalized meals on demand that take into account our real-time microbiome conditions, daily nutritional intake status, and taste preferences.

To be your longitudinal health companion, coach and first responder, the real-life Baymax (may he and Tadashi rest in peace) will be by your side, nudge you to maintain your workout regimen, keep you company to avoid social isolation, debate you during your commute to stimulate your brain, and escalate to higher-order clinical resources if high-acuity medical issues arise. At that point, the embedded telehealth service on Baymax’s belly screen will use its underlying nationwide patient-provider routing engine to match you to the right clinician based on your need and preferences, and initiate a consultation in real-time. A few minutes later, the knock on your door will be the drone delivering the drugs that were just prescribed to you (along with a replacement part for Baymax’s battery pack).

All of this will be paid for by a personalized insurance product that has been underwritten to your risk archetype. A button on Baymax’s screen will allow you to consent to automatic and fully interoperable transmission of the minimum set of measurement data from your healthcare devices that is necessary to run an automated prior authorization process for reimbursing your medical services and prescriptions.

What are some investments you’ve made or pitches you’ve heard that just ‘sparked joy’ in you?

Joy sparks for me anytime I meet a founder who has been able to achieve in months something that took us years to do at my own company. It is a testament to how far the healthtech and digital health spaces have come, in terms of market maturity, the state of interoperability (while we still have 10x to go on this front, it’s 10x better today than it was 10 years ago), and acceptance by customers and end users that digital transformation is a given – and a huge source of my optimism that this is really a unique moment to be investing in healthtech startups. It’s also been thrilling to see startups achieve growth rates and levels of scale that were unprecedented in healthtech even a few years ago, especially using moves that were previously considered untenable, like direct-to-consumer sales, products packaged as APIs, and value-based payment models.

What made you want to become an investor?

I famously declared to my previous co-founder that I would never become a venture capitalist (he was trying to recruit me out of grad school to be an investor at the VC firm where he worked at the time). Instead, I convinced him to jump to the operating side… and we ended up building two companies together. But one thing that became very clear to me while raising capital for my company was that there was a gap in the market between those investors who had backed the best-in-class healthcare companies, and those who had backed the best-in-class enterprise and consumer companies.

At the same time, I was becoming increasingly aware of the tremendous moment we were sitting in in the healthcare space, and how much it had evolved since we had started Kyruus. We find ourselves now being propelled by a number of macro tailwinds that I believe make it possible to build and scale healthtech companies in a way that wasn’t possible even a few years ago. When the a16z bio and healthcare team began to raise its most recent fund, I decided to come onboard to take a more horizontal view of all the pockets of opportunity across the industry and work with the best entrepreneurs to have an impact from “this side of the table.” And to be honest, had I chosen to not do that, I would likely be starting another company right about now.

What do you look for in an investment?

At the early stage (seed or Series A), size of vision is the first thing I listen for: how compelling is that vision? Am I convinced that the founder has the determination and grit to want to do something really, really big? Another very strong signal for me is whether the founder has seen what great looks like in some other context—for example, as a previous employee of a break-out company.

Beyond that, it becomes about whether the company is tackling a massive market, using a go-to-market vector that is tractable within a reasonable timeframe. Many healthtech companies have failed to achieve lift-off because of a) an overly narrow or shallow product, b) a non-viable go-to-market strategy, or c) a low-yield or overly lengthy user enrollment and implementation methodology. As such, I care about whether the product is scoped enough that a customer can absorb it in a pragmatic way, but also has enough heft to carry the weight of a long-term value proposition. I also ask whether the go-to-market strategy makes sense for the product: is there an alignment of incentives between the person writing the check, the person using the product, and the person benefiting from the product (potentially 3 different parties)? Is there an executable path for the market to buy this product (assuming I’m convinced that the demand is there)?

Finally, I look for a clear strategy on user enrollment and implementation methodology to convert bookings to revenue. In B2B2C businesses, the time between signing an enterprise contract and actually enrolling individual users can be extensive for a variety of reasons. In B2B, there may be a non-trivial lift to get a piece of software deployed into highly complex operational environments, where change management may be required. Whereas those issues may not surface for many years, they can often be the reason why companies stall out as they hit growth phase.

What is your advice for startup CEOs?

I’m always mindful when giving advice to people about a role I’ve never had, so with that caveat, here are a few thoughts based on having worked for 20 years with founders of tech startups (including my own).

On mindset: Remember that what you are doing is an act of defying gravity. Creating and building a startup should feel very, very hard; even when it’s going well, it will still feel like it’s getting harder (because your business will become more complex over time). Setting that expectation for yourself mentally could save you from many episodes of suffering, surprise, and dejection as you go. And don’t do it unless you are willing to embrace the full responsibility and weight of the job, for 10+ years.

That said—own it! Refrain from lamenting about how hard your job is to your team members – it’s highly unlikely that they will be able to understand what you’re going through, and it could end up demotivating or disillusioning the very people on whom you will need to rely to get you out of the rut. As Ben Horowitz wrote in his first book – “The first rule of the CEO psychological meltdown is don’t talk about the psychological meltdown.” And on that note…

Find a trusted peer group or advisor outside of your company to meet with regularly. The people who are most likely to understand what you’re going through are a) your co-founder(s); b) other founder CEOs; and c) trusted advisors who may work with other founder CEOs. Since you’re likely spending every waking hour of your days grinding it out with your co-founder(s), it’s generally productive to have peers outside of the company to vent to, share notes with, learn from, ask questions of, yell and scream and cry it out with, etc. There is nothing taboo about seeking out therapy, and peer groups or trusted advisors are one great flavor of it.

On company building: Systematize efficient decision-making. Your most important asset is time, and the biggest time sink is unresolved decisions that prevent forward progress of the team. As the company scales, this dynamic becomes magnified. Tactically, this is one of the primary reasons to have standing leadership team meetings; it creates a forum for the team to raise issues, holistically review them, and if a decision is needed, you have all the right people in the room to make it and move on. It also gives you a regular cadence of reps and sets for honing your ability to make arguments and take a position on issues and decisions. It’s worth noting that it can be uncomfortable making decisions with limited information, but the reality is that you’ll only have partial information on any decision you make. The counterpoint to this is to recognize bad decisions quickly, and have the courage to call them out and change course.

Build one business, not two (or more). At the beginning, when the world is your oyster, it’s tempting to pursue multiple go-to-market strategies with a product that can logically be sold into two or more segments (e.g. selling the same SaaS product to both payors and providers). The oft-cited rationalization for this is that it’s no “extra work” because the underlying product is the same. I have yet to experience a version of this story where this isn’t a complete underestimation of the effort needed to pursue a dual market strategy, sometimes to the point that it could kill the company before it even has a chance to take off. Not only are the sales motions typically very different by segment, but the product itself also ends up being subjected to micro-tweaks that might not seem like much individually, but in aggregate, end up leading to an overly bloated solution that doesn’t serve either market super well. Nail the first product-market combination well—in order to earn the right to pursue additional markets.

On fundraising and boards: Get to know potential investors ahead of formal fundraising. When you’re spending every ounce of your energy to make your business work, taking time out to network seems superfluous. But outside of your co-founder(s), your investors will be amongst the longest-standing and potentially most influential figures affiliated with your company for the duration of its life. So don’t you want to make sure you know what you’re signing up for, and who you want to sign up for? A couple of hours of research (including asking other entrepreneurs and your existing investor base) can yield insights into the handful of investors who have written about a thesis that aligns with your company, have relevant operating experience, have a high-performing portfolio, and strike you as people who you respect and want to work with for many years. Don’t necessarily say yes to every cold investor outreach you receive, but at least do some research on the firm and partners before categorically turning them down. Once you engage in a formal fundraising process, you’ll only have a short window to get to know the people you’re evaluating!

Leverage your board, but don’t let it run your business. Boards of directors exist to provide governance over the company and keep you out of jail (seriously). They are not your “boss” in the management sense, and they are not your operating committee. The board should bring tremendous insights based on having sat on dozens of other boards and seen the rise and fall of hundreds of other companies – so leverage those insights, but stand on your own two feet to lead the company yourself (versus relying on the board to make the hard decisions for you). Your board likely knows way less about your day-to-day operations than you think they do—and that’s probably a good thing. They entrust you as the CEO to run the ship, and make the key decisions and continuous course corrections that the company needs to grow and sustain life. While they will likely have strong opinions about what you should do, it’s your responsibility to synthesize the inputs and make the calls that you think are best for the company.

Sending all founding CEOs my best wishes as they fight the good fight!

Editor’s Note: This Q&A first appeared on Quora.