Sramana Mitra: Since you’re talking about personal health as the current focus and we are in this immense public health crisis, what is your analysis? How do you process the current environment?
Mike Edelhart: At the highest level, we’re geeks. We’re data people, which means we can’t look back in history and know exactly what’s going to happen here. All we can do is look at what we can see.
What we’ve seen in our portfolio is a dramatic upshift in value. When we looked at it, it made sense. We have products that help people in their home. We have mood-related products that help people feel a little better using biomarker feedback.
People want that sense of control right now. We have things like high-end patio furniture delivered to your house. They’re viewing their house as their castle now. All these are rising.
We’re also seeing some of the clinical companies rise. Lark, which is an AI, replicates the behavior of a registered nurse dealing with a chronic condition. It qualifies for standard insurance codes in the US and has been very successful in helping hospitals and patients. It’s now being asked by the biggest hospitals in the country to take over those patients. Lark has suddenly jumped in value. You put that together and what it adds up to is that the big chunks of the future are being dragged over by COVID.
That transition from helping in care to taking over in care might have taken 5 to 10 years. McKinsey sent out a really dramatic chart this week that said, “Nine years of progress in nine weeks.”
We’ve had this very intense conflation of future. Restaurants are going to change. Shopping is going to change. Care is going to change quickly. We don’t think that the status quo will return when this is over. That’s the biggest thing we’ve seen.
Sramana Mitra: Is Lark selling internationally?
Mike Edelhart: I actually don’t think so. I should double-check, but I believe they’re focused in the US.
Sramana Mitra: I’m sure you’re tracking what’s happening internationally right now with India, Brazil, and Mexico. These are populations that are deeply troubled. Their hospital systems are not at all equipped to deal with what they’re going through. This is the moment where they could make a big difference.
Mike Edelhart: Yes, and they just raised a huge round, in part, for those purposes. We also know that startups can only do so much. It’s always tempting to want to conquer the world. Startups that get too far out can get very unstable. I’m sure the CEO, Julia, is a great entrepreneur and I’m sure she recognizes the opportunity. We’ll move quickly to seize it as greatly as we can.
Sramana Mitra: Yes, your point is well-taken in the context of startups in normal times. I would just argue that these are extraordinary times, you should help if you can help.
Mike Edelhart: I agree with that. It’s probably worth noting that we are not control-oriented investors. We never take Board seats. We never tell our companies what to do. We’re investing because we believe in the segment, in the science, and in the team.
We help them a lot. We are here for them to talk to. We’ll happily give advice if asked, but we strongly believe that the company belongs to the entrepreneur. I agree with you, but it’s Julia’s decision.
We have big challenges before COVID. I’ve been telling our team that COVID isn’t the pandemic; it’s the first pandemic. We’re going to see the new normal. It’s not the eternal new normal; it’s the next new normal. It looks like we’re in for a period of sustained and dramatic change in a lot of different aspects. Those are opportunities and challenges.
We do want to back companies that can address all of those. The question is always in what order and how fast.
Sramana Mitra: This is a fabulous conversation. I truly enjoyed it. Thank you for your time.