Julie Yoo, Andreessen Horowitz, on unfolding healthcare’s great unlock

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In this episode of The Pulse Podcast, we interview Julie Yoo, General Partner at Andreessen Horowitz (a16z), a leading venture capital firm in Silicon Valley that backs bold entrepreneurs building the future through technology. Julie Yoo leads investments in healthcare technology, with a focus on companies that are modernizing how we access, pay for, and experience the healthcare system.

We cover Julie’s journey from operator to investor, a16z bio’s investment philosophy and how they support their founders, and once in a century trends we are seeing in healthcare’s great unlock.

Julie serves on the board of several startups in the a16z healthcare portfolio, including Ribbon Health, Alpha Health, and PatientPing. Prior to joining Andreessen Horowitz, Julie was the Co-founder and Chief Product Officer of Kyruus, a health-tech company recognized as a market leader in patient access. Julie helped scale the business to reach 20M patients and over 225,000 healthcare providers. She also was previously VP of Product at Generation Health (acquired by CVS Health),was a Product Manager at Knome, and started her career as a software engineer at Endeca Technologies (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.

Julie recently published a refreshing and timely piece called Healthcare: The Great Unlock, which we dive into later in our episode. We’re also excited to share that Andreessen Horowitz recently launched their latest healthcare focused podcast called Bio Eats World, all about how “bio” — shorthand for the powerful intersection of biology, healthcare, and technology — is going to shape our future.

Bio Eats World — Andreessen Horowitz

Fun fact, when I was learning how to build a podcast, I listened to the a16z podcast for inspiration, so definitely recommend you check it out and subscribe for future releases!

Julie Yoo Podcast Recording

Start — 06:30: Julie’s background

• Early inspirations of healthcare and computer science: VC never crossed Julie’s young mind. Inspired by her parents with technical PhDs, she gravitated towards problem solving and building. With a stint of wanting to become a doctor, she ended up studying computer science during her undergraduate career at MIT.
• Path to healthcare technology: Julie joined Endeca Technologies when there were less than 25 people, spending the first couple of years writing code. She then ultimately discovered she really liked being customer facing and transitioned into roles in professional services and sales engineering. Endeca was working with innovative retail companies in the early days of eCommerce and healthcare was one of the verticals they ultimately explored as an expansion path. In the early 2000s and as part of the early “SWAT” team, she was exposed to how immature the healthcare space was before any regulatory drivers resulted in the digital transformation we are seeing in the space today. Julie was fascinated with how much opportunity there was to apply the same type of technologies that Endeca was using to transform other industries, to healthcare. She made a career switch into healthcare by way of grad school in a dual-degree program at MIT and Harvard focused on healthcare entrepreneurship.
• Path to entrepreneurship and product management leadership: Julie started working with healthcare startups in business school and met her co-founder, Graham Gardner through one of the classes she was a teaching assistant in. At the time, Graham was investing in a company that ended up being Generation Health, which was essentially the commercialization of Julie’s masters thesis on the genetic testing space. He ended up being Chief Medical Officer at Generation Health, and Julie joined as VP of Product. After Generation Health was sold to CVS, Julie and Graham went on to co-found Kyruus.

06:30–09:00 Three themes from the Kyruus journey from product market fit to scaling

• Building in an emerging industry: They learned what it was like to be early to an emerging market and have to category-create in addition to building your core business.
• Product market fit in enterprise healthcare: They learned how many stakeholders there was in healthcare, along with a lot of regulated components of the market. They traversed a very long and tumultuous steep climb to achieving product market fit in an overall high stakes business.
• Importance of being strategic about fundraising: They learned about the importance of having the right investors, raising the right amount of capital to fund the plan, and having the right mindset about valuation (in a time when the market was being built).

09:00–14:00: Transition to investing and on a16z Bio

• Transition to investing: After an eight and half year ride at Kyruus, Julie’s original plan was to take six months off and move to the West Coast to start a new company. One of the partners at a16z whom she had known in her past life caught wind of the fact that she was transitioning out west and invited her to check out a16z. When she came to learn about not just the robust platform a16z had but also the emphasis and efforts the firm had begun to lay down around healthcare, she fell in love with the value proposition to founders and ultimately was convinced to take the leap to the other side of the table.

If I had access to a16z’s platform when I was building Kyruus, I literally think I would have saved years of my life, just because of the unfair competitive advantage that we’ve ordained on our portfolio companies.

• Early vision to support first-time founders to be long-run CEOs: a16z’s vision, built 10 years ago by Marc Andreessen and Ben Horowitz, was to invest in first-time technical founders to be long run CEOs of their companies. Oftentimes these founders had very little business experience or experience building companies or teams, so a16z had to build a platform that enabled those founders to not only learn those skills, but actually get access to the types of network and expertise that would otherwise take them years to build on their own, such that they would have that unfair advantage.
• Operating platform: Of the 200+ employees, at least 125 of those people are entirely dedicated to the platform and to supporting their portfolio companies, of which over 30 are dedicated to their healthcare portfolio. The operating team helps with everything from people practices and talent acquisition, to also giving founders access to the decision makers in the provider, payer, employer, and government markets. What makes the platform special is the expertise and access to networks that are specific to the domain of the companies that they invest in, along with the fact that the vast majority of the people who work at the firm are ex-operators and ex-founders.

14:00–21:30: Healthcare trends and the great unlock

• Mass acceleration of healthcare opportunities: The main theme in the piece, “Healthcare: The Great Unlock” is that the new innovation trends we expected to play out in 10 years are now massively accelerated and happening in two or three years due to the pandemic.
• Fundamental dislocation on both supply and demand: On the supply side, providers are redefining their service mix, just like restaurants are shrinking their menus and streamlining their operations and supply chain. Large hospitals are having to double down on their core services, which leaves much of what they might consider their ancillary services up for grabs. This creates a tremendous opportunity for upstarts to come in and grab that mindshare from consumers and referring providers. On the demand side, we are seeing mass unemployment, employer cost containment and consumers who are no longer able to physically mobilize and go to their doctors. Julie believes the healthcare system has historically been optimized around the patient going to the doctor, versus the other way around — so now there is a mismatch of model for that engagement channel given the times.
• Tectonic shifts for provider relationships: Consumers are all of a sudden willing to displace their provider relationships in the name of convenience and affordability. Similarly for referral relationships — if providers cannot connect and communicate with their peers when doing referrals and rely on them for care coordination, many of these relationships are being upturned.

“If your legacy provider who you’ve been working with for 10 years is unable to service you virtually, then you’re going to be willing, especially if you have an actual healthcare need, to sever that relationship and go elsewhere and vote with your feet.”

• Innovation across the spectrum of acuity level: Julie describes the shift as a barbell effect where the x-axis is acuity level. She sees more adoption of national scale virtual care models in the lower acuity space, such as urgent care. That’s where she sees organizations tapping into national networks of physicians. Another shift is the Centers of Excellence strategy, where you have a handful of high-end facilities that perform one or two procedures exceptionally well and cost effectively. Employers are willing to send their employees to places like the Cleveland Clinic to get those procedures done, because it is ultimately more cost effective than sending them to a local provider with less experience. In the middle, you have chronic disease management where there is a need for a longitudinal relationship between patient and provider. This is where she is starting to see the second wave of healthcare models where there is a coach, or nurse or PA, who is playing a continuous relationship with the patient, instead of the MD.
• Can we replace physicians with health coaches across all spectrums? Julie shares that this only works in areas where the unit economics make sense. She believes that it’s more relevant in areas with adoption of capitation or value based payments, and where there is enough critical mass of patients to grow a durable, scalable and high growth business model around that patient population.

21:30–29:10: Examples of new emerging models of care

• Emerging care from shifts in insurance coverage: Given the unfortunate mass unemployment across our country today, many folks are no longer covered by their employers and left to figure out which services to sign up for on their own. Julie believes there will be an emergence of more options for consumers who are not under employer sponsored plans. Furthermore, in the employer sponsored world, we will start to see modularization of what has historically been monolithic health plan products. The deductible dynamic has gotten to a breaking point where it’s unsustainable to continue to shift cost to consumers.
• Emerging care for new populations: A insightful trend Julie points out is that many of the initial digital health companies have gotten to scale through the employer channel because it’s where there is clearer incentive alignment on taking risk. These populations tend to have a certain demographic or baseline of health. Where Julie sees an expansion of those types of care models is through other populations, such as senior populations through Medicare or Medicare Advantage or Medicaid, or pediatrics, which has also been an underserved segment in terms of innovation and virtual-first care models.
• Emerging payer channel: There is also opportunity by market channel. She talks about how employer channels serve as a beacon for what health plans have failed to deliver, and now health plans are coming around to say how can we carve in those types of benefits to make sure our value proposition remains attractive.

“In many ways, I view the employer channel as the beacon for what health plans have failed to deliver to their customers in a meaningful way, and therefore the employer is going to the market and saying, how do we directly contract with innovative players who are going to give us a better solution?”

• Innovation in aging in place: Julie shares there are two main ways by which you could view the investment thesis for this concept of aging in place. One is where the in place could refer to a physical location — allowing the aging population to stay in their homes through virtual care or remote monitoring technologies. The in place could also refer to your quality of life and there are also companies focused on, “how can we extend to the quality of life for longer such that you can actually traverse the world as if you’re young until the day you die?” This is referred to as squaring the curve: Instead of slowly degrading quality of life over some period of time, how do you just remain consistent and then all of a sudden die in a way that is less traumatic. Julie looks at it from both lenses at a16z, because they invest in both digital health companies and computational medicine and biotech companies.

“How can we just treat patients so that they stay healthier for longer, in addition to investing in health tech companies that are facilitating the physical version of aging in place?”

29:10–38:00: Board member 101 and investment philosophy

• Julie’s favorite part of her job — working with portfolio companies! Julie notes that all of the a16z partners have been founders or ex-operators, having been in the shoes of the folks that we work with. Julie and her firm tend to take a more operationally indexed view on how to support their founders. Julie seeks to be the sounding board and go-to advisor for ground level discussions (what’s going to kill us next week?) as well as long term product vision decisions.
• Unique investment take: Julie shares that there is never just one reason why you get conviction on making an investment, but what makes investing fun is the ability to have a nuanced approach to evaluating specific opportunities. Julie shares that she certainly indexes on the scale of vision. She shares that because the surface area of healthcare is so massive, you inherently have to have a massive vision from day one.
• Timing of the idea: Another area Julie indexes on is market tailwind. Julie shares that as Marc Andreessen likes to say that there are no bad ideas, there are just ideas that have bad timing.
• Hybrid Founder DNA: Julie shares that it’s important to see hybrid DNA in the founding team, where there’s a combination of domain expertise in healthcare and technologists who understand modern tech stacks.

“When push comes to shove, is this company going to use technology as the means to achieve 10x scale and economics?”

• What’s truly a technology-enabled company? One way Julie evaluates this is by asking whether components of their operating model are only done through technology vs. through humans? The other aspect is: are you introducing a new primary user of technology that more traditional models haven’t? The easiest example Julie shares is that typically traditional providers don’t consider patients the primary end user of their technologies, instead, they consider the primary users the provider or administrator with the patient portal as an afterthought. Now we are seeing technology-enabled service companies actually treat patients as their primary end users from day one.
• Sweet spot for investing: Julie shares that a16z is an early-stage investor in the sense that they will invest as the first institutional capital but then will also invest up to the Series B and Series C stage. a16z also has a growth fund which enables them to follow on throughout the company journey, and make new investments in growth stage companies. In terms of how they think about their sweet spot, Julie shares that Series A stage has always been their main wheelhouse. The instances in which they will do seed investing tend to be in areas where they have high conviction and a prepared mind. Furthermore, she shares that the majority of seed investments were with founders with whom they had some long standing relationships.

38:00 — End: Advice for entrepreneurial business school students

• Be intentional! Through Julie’s experience in business school, she shares the importance of getting the experiences that will help differentiate you in your career post-grad school as well as being intentional about building your networks and really cutting your teeth on something that you think will give you leverage into the career path that you want to pursue afterwards.
• Experiment! The benefit of being in grad school is the ability to do short bursts of work, and not have to necessarily commit long term. This creates a unique dynamic, where you can really experiment just like Julie did.
• Reach out and build valuable connections! There are no dumb questions, and no type of cold outreach you shouldn’t do. Her advice on cold outreaches is to demonstrate that you’ve done your homework, and show a point of view or something related to their current role to show that you have something valuable to offer.