Sunny Kumar of GSR Ventures: 5 Things I Need To See Before Making A VC Investment

An Interview With Jason Hartman

The second factor that we look for across all our companies is a large — if not huge — market opportunity. There is some nuance to this because we would love there to be a huge market opportunity to go after on day one, but in most transformative opportunities, or some of the most exciting companies, the market may not even exist yet.

As part of our series about “5 Things I Need To See Before Making A VC Investment” I had the pleasure of interviewing Dr. Sunny Kumar.

Sunny Kumar, MD, MBA, is a Partner at GSR Ventures, where he focuses on investments in early-stage companies applying artificial intelligence and machine learning technologies to the healthcare sector. Sunny is a physician as well as a published medical researcher with a focus on applying informatics and artificial intelligence to translational medicine in the fields of neurosurgery and gene therapy. He is a serial entrepreneur and most recently founded a company to reduce readmissions for high-risk patients with chronic diseases using voice-enabled natural language processing technology. Sunny received a BS in Molecular Biology from Yale University, an MD from Stanford University School of Medicine, and an MBA from Stanford University Graduate School of Business.

Thank you so much for joining us in this interview series! Before we dig in, our readers would like to get to know you a bit. Can you please share with us the “backstory” behind what brought you to this specific career path?

I trained in molecular biology, informatics, and artificial intelligence and came out to Stanford for my medical training, where, in addition to studying medicine, continued informatics research. Supplementing my medical training with business training was also important to me because the healthcare ecosystem has many inefficiencies and there is a growing movement in the industry to find ways to help it operate better to improve outcomes, lower cost, but moreover, just improve the experience for everyone involved. At the same time, while completing my medical and MBA training, I also founded a company that used artificial intelligence and natural language processing technologies to reduce readmissions for patients with chronic conditions. It involved using smart speakers, like the Amazon Echo, to collect information from patients after they were discharged from the hospital instead of having a nurse perform those duties. We showed that we were able to reduce the cost associated with that post-discharge care by a multiple of 100. However, because smart speakers had just come out, we ended up running into a regulatory issue and would have had to redesign the solution in a way that would not deliver the same results, so it effectively shut the business down. That experience, combined with my medical and business training and informatics research, was what led me to GSR just as we were starting our healthcare technology practice.

Is there a particular book that made a significant impact on you? Can you share a story or explain why it resonated with you so much?

A book that resonated with me is When Breath Becomes Air by Paul Kalanithi, which I read during my medical training. Part of what resonated with me was that it was written by a relatively young neurosurgeon who trained at Stanford, and unfortunately, passed away from metastatic lung cancer at 37. It chronicles his journey, during his training and practicing and his struggle with that cancer. To me, as someone who came from a research background, a medical career, and now as an investor, I loved the way that he explored medicine as a career, but also as a calling. He perfectly described the opportunity we have to heal as medical professionals, but also to connect with patients to build relationships that have a meaningful impact on an individual’s life. That’s something that I personally took into my training every day of my career and still really bring to my professional life, both at the individual level but also at a transformative level at scale. What I’m truly privileged to do is to work on ideas, problems and solutions that can bring meaningful impact hopefully, to not just individuals, but ideally, tens of thousands and maybe reach even millions of lives.

Do you have a favorite “Life Lesson Quote”? Do you have a story about how that was relevant in your life or your work?

There is a quote by the Greek philosopher, Heraclitus, who said, ‘change is the only constant in life.’ That resonates with me both at the personal and professional levels. If you asked me at any point along my career, ‘did you expect to be a healthcare technology investor?’ I probably would have told you ‘no way!’ My career trajectory demonstrates that we can’t predict certain paths or opportunities before they come up, but what you can predict is that change will happen. As an investor, I still see that life lesson continue to apply as we see how healthcare is delivered, changing almost on a daily basis. COVID-19 has caused such a sea change in the way patients interact with their providers, going from the more traditional face-to-face interactions to telemedicine and other types of virtual care. Prior to COVID, only about 2% of patients received their care through a technology-delivered platform. Those numbers shot up to 40% during COVID’s first surge in the U.S. and still about 20% of care is delivered virtually today. That’s a massive change in a very short time and further demonstrates that change is the only constant in life.

How do you define “Leadership”? Can you explain what you mean or give an example?

The model of leadership I believe in is the servant-leader, where leaders strive to empower and support those around them. If I look to the leaders I most admire, I would point to Richard Lim, the founder and managing director of GSR who mentored me very closely when I joined. Richard does an incredible job in helping and mentoring the partners within GSR, but also all of the entrepreneurs that I’ve seen him work with. He not only to guides them, advises them, and supports them, but also enables them to be the best entrepreneurs and leaders that they can be, which is something that I aspire to. Being a CEO is probably one of the most challenging jobs out there and what we can do is find ways to act as a sounding board and a resource for the CEOs to work through some of their most challenging decisions. We can help them recognize that while their journey is undoubtedly a challenging one; it is not one that they have to go through alone. One of the privileges that professional investors have is that we often encounter many of the tough challenges that an entrepreneur may face, either personally or through one of the other entrepreneurs we have funded. The good news is there are commonalities across some of these challenges and by recognizing those patterns we can help inspire them and offer lessons and guidance to best rise up to those occasions.

How have you used your success to bring goodness to the world?

Bringing goodness to the world is something that I think all of us aspire to do, but few of us can ever say we’ve fully succeeded. I’m extremely fortunate to sit in a position where I can work towards that every day. One thing that we do at GSR and I do in my position is strive to look for technologies that bring efficiencies and effectiveness to the healthcare sector. Our view is that, unfortunately, while there is a lot of greatness that comes from healthcare, there is also a lot of inefficiency and waste. We believe technology can make that a lot better, and not just a little bit better, meaning 2%, 3%, or 5% better, but 2x, 3x, 5x, in some cases maybe 10x, or even 100x better than what we can do today. What we try to do is find those technologies and entrepreneurs that are working on those problems, and then do everything in our power to make them as successful as possible. Our constant focus is to help bring those technologies to market so that we can deliver healthcare 10x or 100x more efficiently and effectively than was previously possible.

Ok, thank you for that. Let’s now jump to the main part of our discussion. The United States is currently facing a very important self-reckoning about race, diversity, equality and inclusion. This is of course a huge topic. But briefly, can you share a few things that need to be done on a broader societal level to expand VC opportunities for women, minorities, and people of color?

It is a persistent and tough problem out there and all of us in venture capital and other types of investing need to find active opportunities to address it. We need to increasingly step into opportunities of mentorship, to lift groups that have historically been underrepresented in this industry, or who have not historically benefited from these opportunities, and take an active role in helping them. In the past two years where this has gotten more attention, we have seen greater engagement and willingness to create the change I alluded to in the earlier question. More importantly, though, we need to ensure that we follow up that we keep up that momentum, so the trend does continue and there is accountability. We have to see VCs spend energy, time and resources to consistently bring these underrepresented groups into these opportunities in order to drive sustainable change.

Can you share a story with us about your most successful Angel or VC investment? What was its lesson?

Our most successful VC investment to date is in a company called Medable, which is a decentralized clinical trial company. We invested in early 2020, and at the time, they had just begun to ramp up and deliver on some early traction for a tech-enabled solution for decentralized clinical trials. It just so happened that shortly after we were struck by a global pandemic. COVID-19 changed, as I mentioned, how we interacted with daily healthcare delivery, but also clinical trials. Our partnership at GSR had a very active thesis well before COVID that this decentralized clinical trial technology was likely to be going to be the future. However, it was broadly believed to be several years, three years, four years, maybe five years before widespread adoption. Of course, you know what happened next: we saw decentralized clinical trial technology go from a relatively small percentage of trials to the vast majority of clinical trials adopting at least some element of decentralized clinical trials very quickly. The main lesson from that was timing is incredibly important in this industry. Medable was perfectly positioned to win in this situation in that they have the best platform technology across all of the industry. When the market drastically swung in their direction, they were able to capitalize on that and become the ideal company to scale and grow very quickly as a result. Being prepared to take advantage of a shift in the environment can allow companies to grow at rates that are oftentimes unprecedented.

Can you share a story of an Angel or VC funding failure of yours? What was its lesson?

I would characterize my own company as a VC funding failure. My company, WaveMedix, was solving an important and well-known problem, which was too many hospital readmissions. Solutions were being developed to reduce readmissions significantly, but they were very expensive because they involved significant manual labor, having nurses follow up and check in on patients, either by visiting them or by calling patients regularly. We created a solution that used voice-enabled natural language processing to replicate what these high-cost resources were doing. The fantastic thing was we were able to replicate the questionnaire and protocol that these nurses were able to do, but within smart speakers and about 100 times less expensive than live care providers. However, the regulatory issue we ran into was that there was ambiguity at the time regarding whether these smart speakers were fully complaint with HIPAA, which is the personal healthcare data sharing law that all providers, health insurers and business associates need to follow. That ambiguity and risk made it unlikely that we had any market for our solution. Several years later, in 2019, after we had closed the company, you can now build HIPAA-compliant skills on speakers on smart speakers. One of the important lessons here is that regulation can take a while to catch up with technology in the healthcare arena. Just solving the technology issue in healthcare is not enough, you must take into account all of the different elements of the healthcare ecosystem, the regulatory environment and the business environment. A failure to plan for even just one of those can doom a company.

Can you share a story with us about a problem that one of your portfolio companies encountered and how you helped to correct the problem? We’d love to hear the details and what its lesson was.

The most common challenges we see across our early-stage portfolio companies is in determining the right go-to-market strategy. Very often, the entrepreneurs we work with excel at building transformative technologies that can solve massive problems, but as they often work in bringing these products to market, they commonly find themselves having to innovate on the business model as well. One example of this is the company, Pyrames, which has developed a novel, continuous blood pressure monitor that unlike traditional alternatives can be worn as an external strap as opposed to an invasive catheter. As we collaboratively worked through the right strategy to launch their product, the founder of the company, Xina, ultimately focused on several key questions: where was the highest unmet (medical) need, what market approach had the greatest alignment of incentives, and what regulatory pathway had the fewest barriers to market entry? As we reviewed these factors, it quickly became clear that the most effective approach for the company was to first launch a product for the neonatal population, one that has extremely high need and very few alternatives, in contrast to the adult market, which initially seemed the right path given its larger market size. This approach — focusing on a go-to-market strategy that solves greatest need, aligns incentives, and is designed to overcome logistical and regulatory hurdles — can help companies accelerate in launching and scaling their product.

Is there a company that you turned down, but now regret? Can you share the story? What lesson did you learn from that story?

A company that we met with in 2019 was called Turing, which is a remote working company. Even at the time, it was a fascinating company in that they built a technology stack to support the selection, onboarding and management of remote workers all over the world. As you might imagine, at this time, this was a relatively niche industry, but a promising one. There were a couple of things that gave us a bit of pause, one of which, as I mentioned, was that it was still a niche industry and there weren’t hundreds of millions of workers working remotely. Ultimately, we decided to pass on the opportunity. Of course, fast forward only a year later, COVID happened and that completely changed the game. Now, the nature of work has been dramatically altered and will likely continue to be significantly changed regardless of what happens with the ongoing pandemic. This, again, goes back to that key lesson I mentioned earlier that timing is critical, but so difficult to predict. It is quite possible that remote work was the trajectory that we were moving towards, but it may have been five years, or even 10 years away. COVID accelerated that significantly and that is the nature of some of these investment opportunities.

Super. Here is the main question of this interview. What are your “5 things I need to see before making a VC investment” and why. Please share a story or example for each.

1. This is by far the most important, but the number one thing we look for is a legendary team. A team that is capable, thoughtful, brilliant and able to do something that is going to be truly remarkable is by far the most important factor that probably surmounts all other factors. Medable, which I described earlier on, not only got the timing right, but what also made that company successful is that they had the best team. Their CEO, Dr. Michelle Longmire, built the right product because she recognized that the customers did not want a point solution; they wanted platform technology. When the market matured, they were able to scale quickly because of that platform, but also Dr. Longmire’s team, such as their head of sales, their CFO and the rest of the folks that she surrounded herself with that allowed them to execute in a way that the rest of the industry could not match.
2. The second factor that we look for across all our companies is a large — if not huge — market opportunity. There is some nuance to this because we would love there to be a huge market opportunity to go after on day one, but in most transformative opportunities, or some of the most exciting companies, the market may not even exist yet. An example of this is Osso VR, which is building a new modality to train surgeons better on medical devices. When this company started, VR surgical training didn’t really exist, however, they created a compelling case for why this was a better way. Not only was this more immersive and resulted in better retention, but they could demonstrate with evidence that surgeons were going to prefer it because they would get more experience using this platform. Osso VR also offered clinical validation for how surgeons were going to perform better after training in VR, meaning that they would be faster and more effective in the OR and potentially have better outcomes. They, in effect, created a huge market that did not quite exist yet.
3. The third point that we look for is truly transformative technology. As we discussed earlier, we get excited about are technologies that are going to have impacts of 5x, 10x, or even 100x. An example is a company called Alpha Medical, which is building a way to deliver a wide range of healthcare services for women through asynchronous telemedicine, meaning the patient and provider do not have to be online at the same time. You input all of your information through a web-based interface or an app interface, and because you don’t need that face-to-face conversation, the provider is now much more efficient in processing that data. By using transformative technology, Alpha Medical can deliver comprehensive, effective medical care to these women at a lower cost than any other comparative provider. Instead of paying an out-of-pocket cost of $150 to $200, Alpha can provide that same level of care for $10 or $15. That type of transformative level of care that 10x level of cost savings delivered directly to the patient.
4. The fourth thing that we look for is a strong incentive alignment and a business model that clicks across healthcare. Basically, it needs to deliver value to everyone involved. One example of a company that offers this is Deep 6 AI, which is in the clinical trial and patient recruitment space. Deep 6 uses natural language processing to identify patients in a health system’s electronic medical record who would be qualified for clinical trials, facilitates outreach and with the patient’s consent, of course, recruits them into clinical trials being run by pharmaceutical companies. Patients are supportive of this process because they are typically looking to join a clinical trial, particularly if they have a condition that is not well-managed without access to that trial. The pharmaceutical companies are always looking for more patients that could be in clinical trials and the academic medical systems generally have a mandate to conduct research and receive compensation for patients that they recruit into trials. Payers are supportive, too, as they can transition care for patients from their books to the pharmaceutical trial’s books. It’s one of those unique situations where incentives are aligned across the four P’s: patient, provider, payer and pharmaceutical companies, which is quite rare.
5. The fifth thing we look for ties across the other four, but is equally as important: It is a desire to go all the way and build something that is going to have that massive impact. The example that I love to cite here is a company called Nimble Robotics, founded by Simon Kalouche, which has developed AI-powered robots to pick, pack, and handle millions of consumer products, such as apparel, electronics, general merchandise and grocery items. We funded them at their seed stage when it was just a little bit more than an idea and a proof of concept. Even at that stage, Simon insisted that he was not only going to build a great company, but he was going to build a truly legendary company, and he would not settle for anything else than something that would change the world. That level of ambition, drive and conviction is something that we hope to see across all of our entrepreneurs. That conviction is what you need to withstand the challenging times as an entrepreneur and CEO, which will happen often. It is that pure conviction and drive that will give you the best chance of building something that is going to be truly transformative.

You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)

It’s a fun and tricky question, but if we want to have the most impact, we have to look globally. I spent some time in global public health, specifically working on neglected tropical diseases. Almost by definition, these illnesses don’t draw a tremendous amount of attention, but affect hundreds of millions, if not billions, of people. We’ve seen over the last couple of years with COVID that infectious diseases don’t respect borders and can have a massive impact. If there was something that I could do to inspire a movement, it would be to shed greater light on the impact that these lesser-discussed conditions, such as dracunculiasis, lymphatic filariasis, onchocerciasis, schistosomiasis, soil-transmitted helminths, trachoma and many others, have across the world. The ones I mentioned are incredibly treatable at relatively low cost, but tend to exist in areas that are quite underserved and lack an effective public health infrastructure. Beyond terrible and tragic suffering they cause, these diseases impact the growth of these areas and their economic attainment. If we can have an impact by just stamping out these illnesses, or at least treating them, we could do a lot of good in the world.

We are very blessed that some of the biggest names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US whom you would love to have a private breakfast or lunch with, and why? He or she might see this. :-)

There are a lot of folks who have tremendous influence, but if I had to pick one it would probably be Andrew Witty, who is the CEO of UnitedHealth Group. Looking across the healthcare ecosystem, UnitedHealth has such amazing influence as a payer, but also through Optum as a provider and increasingly as an acquirer of digital health technologies. I would love to spend time with Sir Witty [Witty was knighted by the Queen of England in 2012 for services to the economy and the United Kingdom’s pharmaceutical industry] and understand his perspective on the future of healthcare and where opportunities lie to drive that type of outsize transformative impact over the next five to 10 years.

This was really meaningful! Thank you so much for your time.

About The Interviewer: Jason Hartman is the Founder and CEO of JasonHartman.com, The Hartman Media Company and The Jason Hartman Foundation. Jason has been involved in several thousand real estate transactions and has owned income properties in 11 states and 17 cities. His company helps people achieve The American Dream of financial freedom by purchasing income property in prudent markets nationwide. Jason’s Complete Solution for Real Estate Investors™ is a comprehensive system providing real estate investors with education, research, resources and technology to deal with all areas of their income property investment needs. Through Jason’s podcasts, educational events, referrals, mentoring and software to track your investments, investors can easily locate, finance and purchase properties in these exceptional markets with confidence and peace of mind. Jason educates and assists investors in acquiring prudent investments nationwide for their portfolio. Jason’s highly sought after educational events, speaking engagements, and his ultra-hot “Creating Wealth Podcast” inspire and empower hundreds of thousands of people in 189 countries worldwide.