Ben Robbins, general partner at GV (Google Ventures), spoke with MobiHealthNews to discuss how multi-billion dollar venture firms are investing in digital health companies, the place of AI in healthcare, and how governments are getting involved in the space.
MobiHealthNews: How do you decide which companies to invest in? You have a background in psychiatry. Does that influence what you look at in a company?
Ben Robbins: The obvious one is teams. The way I think about teams is that they are typically able to credibly solve some of the key problems in healthcare. So from my perspective, as a former clinician and now an investor, there's a massive unmet need across healthcare.
I've been spending a lot of time in clinical services lately, and in the services world, it's a cutthroat business and you have to walk a tightrope to be able to build something that's financially sustainable but also clinically impactful, so your team needs to be people from extremely credible backgrounds.
If your first job is to start a healthcare services company, that's a challenge. They're going to take some serious mentoring, and we do that sometimes. Usually, people who start healthcare services companies have pretty deep experience in that field. We basically help them identify and start a company that meets some key needs, and then we make sure they get there.
MHN: Developing a useful digital health platform requires a lot of coaching, right? Even the most experienced people may need coaching.
ROBBINS: Yes, absolutely. Well, all of these companies require a lot of work. Nothing is easy in health care. So all of these companies require a significant amount of guidance and collaboration with experts.
MHN: What sets the services GV can offer apart from those offered by other venture capitalists?
Robbins: GV and I have a large clinician background, which means we have worked on the front lines and understand the detailed clinical needs of both healthcare professionals and patients. I think that's a big factor. Another factor is that we're very patient and know what it takes to build a healthcare services company. We're not looking for any kind of quick deal. What we're really looking for is building an impactful company, and we're willing to do whatever it takes, for whatever period of time.
MHN: Of the companies that approach you, which ones are doing it right and which ones are doing it wrong?
ROBBINS: What they do well is identify underserved populations, and then be able to articulate clearly that there are a lot of those people in the health care system, and what they're doing to better serve them. This sounds simple, but it takes a lot of skill to understand.
For example, if we think about where this key contour fits into this lock, we can unlock a lot of clinical value. We can offer something that's not available to some people yet. And it takes people who have listened to the public, who have experienced the harsh realities, who understand what it takes to start a healthcare company.
Where I see people going wrong is almost the opposite. They basically recognize that there's some kind of need. Usually it's some kind of access issue, and then they start trying to raise capital. And I love having those conversations. I love working with people like that, but it takes a pretty deep level of detail to make sense of actually launching a company, in terms of actually exploring the space. We love doing that. We love working with entrepreneurs pre-launch, in terms of actually raising venture capital.
I would argue that it's better for everyone if they understand in great detail what they're doing and who they're doing it for. We're in this weird situation where VCs are seen as a badge of honor, but that's a dangerous mindset. VCs are really just a vehicle to help someone accelerate their idea and get it to fruition. But VCs are not a good goal. They're just a tool.
MHN: Can you elaborate a bit more? Are VCs just a tool?
Robbins: VCs are a great source of both capital and expertise in the very early stages of a company's lifecycle: a group of people with access to investment capacity, who usually have a deep network of experts or are deep experts themselves, and who are willing to work with you in the early stages of building a company when things are messy and you're more likely to fail. They're willing to take risks and preferably have a lot of experience.
MHN: How has your background in psychiatry influenced the formation of your company?
ROBBINS: Psychiatry is a very unique field in a lot of ways. One of them is that practitioners tend to behave a little bit differently than in other fields of medicine. Psychiatrists and mental health practitioners, more broadly speaking, tend to move freely between more traditional medical institutions and then work independently in small groups or in private practice.
I think mental health providers think a little differently than other medical practices, so having a network of people that you can consult with to track trends, and also have experienced it yourself and really understand the provider mindset, is really helpful.
Another reason is, something I've noticed in venture capital, historically, a lot of venture capital batch companies build services or software for people who look like venture capitalists, which tend to be relatively high-end or consumer-facing. In the mental health space, a lot of the need is with people who don't look like venture capitalists, people who have experienced trauma or social upheaval, and people who are in the mix with addiction.
So I think having that frontline experience gives me deeper insight into the real value drivers, especially in the behavioral health space, where the patients are different than the entrepreneurial and venture capital crowd that you normally work with, and the clinicians themselves behave a little differently than other areas of healthcare.
MHN: As one of the leaders of GV, what have you learned so far? How are digital health companies expanding and thriving within the market?
Robbins: Honestly, what I learned is there's a huge need. I think of this as a product mindset, but this isn't a traditional kind of software product. It's a mindset of really understanding the end user and understanding their needs and their solution down to the tiniest detail. It sounds basic, but it took me years to internalize the sense that this is really important.
Who are you serving specifically? If you're talking about rural primary care, that level of detail isn't effective. What you really need is who that person is specifically. Is it the provider? Is it the patient? Is it the insurance company? What are their needs exactly? And I think it's relatively rare for someone to get into that level of detail that you can really understand. Who are the users of this service, what are their needs, explain to me in plain English. What does this help with specifically? That level of detail is really important in building something that I think is very impactful.
There are a lot of companies that go out and are relatively successful, but unless they have a deep understanding of how to extract value, they won't be very successful.
MHN: For VCs, they want that level of detail. That makes sense. But for the general public, does that detail limit the capabilities of the company?
ROBBINS: This is not so much a VC metric, it's my approach when I start a company. So I don't look at this as a rating, but as a recommended way to start a company. This is my approach, which is to really, really understand the end user.
What I've found is that especially in the early stages, if someone can really identify, like a detailed description of the end user, the overall market may seem small, but if there is a real need and you have a solution for it, the overall market is usually much larger than it appears.
If you can provide something of real value to someone in the healthcare ecosystem, it opens the door to different people, adjacencies, and what follows. But the first step is not the market as a whole, but who are you helping specifically, and how are you doing it?
When I'm starting a healthcare company, I don't put much emphasis on the total market. That can be a little misleading. A lot of times the market is hard to see, and we're building a service that doesn't exist because we're building the premise of the business. The total market is very hard to pinpoint because it's something that actually exists, the people who are currently being served.
MHN: AI has become a big part of healthcare, but some say it can be difficult to tell which companies have AI that will be valuable in the long term from those that don't. Do you take into consideration what kind of AI is being used by the companies you pitch to?
Robbins: What interests me most about AI are groups that use AI to drive fundamental value. If you really want to prove that AI can do something, automate some of the back-office functions or clinical operations.
The top of the pyramid that interests me the most is not that they're selling an AI algorithm to somebody else and deriving value somehow, but that they're powering something that provides value. It's a back-office function that they can sell to providers and payers. If the AI really makes things more efficient and reduces costs, then they're the ones who are realizing that value. I think that's more interesting.
Once you start selling AI capabilities to someone else to actually extract value, I don't think there's any conclusion.
AI is going to be big in healthcare. Will AI be big in pure AI software that you sell to someone else to extract value from? I'm not sure where that's going to go.
MHN: What are some examples of how GV is investing or looking to invest in the payer/provider space?
Robbins: We are beginning to allocate both our capital and our expert network more intensively to invest in fewer companies. GV's experts are very active in healthcare services.
Obviously, we love software solutions, but we're very comfortable with healthcare services and that's where we spend a lot of our time, because we think we're in the early stages of actually being able to provide high-quality healthcare services at a low cost.
CMS has done a great job. They've basically built the infrastructure that blends who provides care and who bears the financial risk, but we can't assume that CMS is actually driving the solutions. They're really just creating the framework. Now, I think we're just starting to see people who really understand the levers that can be pulled.
We understand that it's unreasonable to expect physicians to be paid differently than they have been paid in the past, and suddenly they're going to change the way they practice in ways that are good for them, their patients, and society as a whole. What we really need are creative solutions that allow physicians to do what they're good at while still relying on payment mechanisms and flat-fee (actually, various variations of flat-fee) and essentially help physicians deliver care in a way that maintains or improves quality and reduces costs.
MHN: It's difficult for governments alone to keep up with the pace of technological advances. Is there a need for public-private collaboration?
Robbins: I think government has a role to play with technology in terms of ensuring safety and reasonable quality, but I think a key role government plays, particularly in healthcare, is building in reimbursement flexibility.
It's a mistake to think that government will directly drive innovation. I don't think that's what government wants, and I don't think entrepreneurs want that, but I think there's common sense in waiting for CMS to develop programs that drive innovation. I don't think that's what CMS wants, and I don't think that's what we should want.
What we would like to see is for CMS to build in reimbursement flexibility and then rely on industry, academic medicine, and payers to actually build the solutions that are enabled by the reimbursement flexibility.
