D.A. Wallach of Time BioVentures joins Nick to discuss From Touring with Lady Gaga, Blink‑182, and Pharrell Williams to investing in Spotify, SpaceX, and Ripple… How an Artist Went from Tastemaker to Transformative Healthcare VC. In this episode we cover:
- Transition from Music to Tech Investing
- Investing in Tech and Healthcare
- Lessons from the Music Industry
- Healthcare System and Policy
- Value-Based Care and Functional Medicine
- Creative and Tech Talent
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The host of The Full Ratchet is Nick Moran of New Stack Ventures, a venture capital firm committed to investing in founders outside of the Bay Area.
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0:17
D.A. Wallach joins us from Los Angeles. He’s Co-founder and General Partner at Time BioVentures, backing breakthrough life sciences startups like Neuralink, BillionToOne, and AdvanCell. Previously, he was an early investor in Spotify, SpaceX, and The Boring Company—and before all that, he was a recording artist signed by Pharrell Williams. Ever eclectic D.A. has also appeared in La La Land and sits on several nonprofit boards. D.A., welcome to the show!
0:45
Thanks for having me. Well, in like 500 interviews across 11 years, I don’t think we’ve ever had somebody with your background. So this is pretty wild. You know, clearly we’ve established that you’re the most interesting man in the world. So so da, what? What did I miss? Here are you also DOS, equi spokesman. I wish I keep trying to get him to call me back. I, you know, I other assorted recent interests of mine are perfumery, landscape design, okay, 1960s
1:18
Italian furniture, ooh, and quant finance and quant finance. That’s my that’s my
1:26
dog. There. Wonderful. Well, I, you know, I think everyone’s got a brace for kind of an interesting episode and interesting background and a super compelling thesis on top of it. So, so da, just to kick off here, take us back a bit before tech, you know, how did you first become an artist?
1:44
I was a musician. Beginning in middle school, I started playing the drums, and I just did that, you know, in the school band, that kind of thing. When I got to high school, I got really interested in jazz drumming, and then I also had kind of a hip hop group that I started with some friends in high school, and when I got to college as an undergrad, I tried to find a band to join, to be a drummer, and that band, ultimately that wanted me, wanted me, but not as the drummer. And they said, Can you sing? And I’d never sung before, but I thought this group of guys is really cool and funny, and so I gave it a shot, and that’s how I became a singer. And so Chester French was my band. We started freshman year of college. It was me and four other guys who were all freshmen at the same time and and singing is really one thing in my life that I only became decent at through rote repetition, you know, and brute force practice. I don’t I don’t know that I had a lot of natural talent, but through the course of being in the band, I learned, you know, essentially, everything I know about music today, which is still not that much, but that was how I got going
3:06
amazing, and you ended up opening for notable acts, Lady Gaga and
3:12
others, yes, yeah, we had, like, the coolest experience in our early 20s, because, as you alluded to, we caught the eye of Pharrell, who signed us to a record deal, and then we were just sort of thrown in the deep end of the pool, touring and making albums. Our label was Interscope Records, and so Lady Gaga had just gotten signed to it, so her sort of first big tour was called the fame ball tour, and we toured and opened for her on that and then we also did a lot of touring with Pharrell and his band, N, E, R, D, and with other artists that we had gotten to know, like Blink 182 and Weezer and bunch others.
3:56
Give us. Give us like, I don’t know, something that you learned from Pharrell. Something Pharrell said that stuck with you, is there, is there any guidance or advice that, like really helped, either in your, you know, your journey as a musician, or what you do today,
4:14
I think, like a lot of things, you know, you learn the most from people by just being around them and kind of osmosis. And, I mean, Pharrell, I learned a lot from about songwriting, about fashion, about, I don’t know that I internalized it, but he is, def, definitely transmits a lot of coolness, you know? I mean, he’s sort of one of the coolest people in the world, maybe, you know. And I mean, he just embodies effortless coolness somehow. So 100 I was always curious about that. I always thought, wow, you know, I’m I don’t have that. And what if? What if? I. Could figure out how he does it, but I don’t think I, I don’t think I did
5:04
well, if you don’t have that, then I’m like 10 rungs below that. So
5:08
come on, we’re, we’re, we’re all we’re all mere plebeians.
5:13
So So walk us through the journey. So how do you go from touring with like, you know, some of the most notable acts to have done it to you know this, this journey in tech, I know you know this, there’s to meeting with, with Spotify in the journey, and others like talk us through that
5:32
I did not have any kind of a plan. And so the circuitousness of my career to date reflects that, because it’s just been totally random, in a sense. And the way that I got introduced to technology investing, I’d say there were really kind of two pivotal things. One was I had become friends with Ashton Kutcher here in LA and we connected just because we were both from Midwest, and we shared a bunch of interests, and Ashton was really a pioneer among people in Hollywood in appreciating that there was going to be this kind of progressive merging between the worlds of technology and consumer Businesses and then culture and artistry and content. And so Ashton had very wisely started going up to Silicon Valley and finding companies. And I was watching him do that, and I thought, Wow, that’s so cool that he’s straddling these worlds of being an artist and then starting to invest in and participate in the innovation economy in Silicon Valley. So that was really inspirational. And then I had this fateful meeting where I brought Jimmy Iovine, who ran our record label, up to San Francisco, to meet with Mark Zuckerberg, who I knew from college. And at that meeting, one of Mark’s colleagues, Dave Morin, told me that he could get me a Spotify account. And at the time, that was like unobtainium, because Spotify was just in Europe, and they had not yet done agreements with the record companies in the US, so if you were in the US, you couldn’t get it. And I had heard about Spotify, and I was really, really eager to get my hands on it. I’ve always been a big music collector, and that product fulfilled all of my dreams, right? This idea that I wouldn’t need to have all these disparate hard drives with tons of music on them, but I could just have my whole collection available, you know, on my phone, wherever, anytime. And so anyways, he hooked me up with the company’s leadership, and I got an account, and that was exciting enough for me. But then, as I started to get to know Daniel Eck and this guy, Shaquille Khan, who was instrumental in the company, and Martin and Sean Parker, who’s very good friend of mine, and who had had been on, he had just invested in Spotify and joined the board. And as I got to know all those guys, I thought, Man, this is really on a great trajectory, like, seems like this could work, and 10 years from now, everybody could be using Spotify, and if I’m right about that, I really want to be a part of it. And it wasn’t obvious to me how I could do that from where I stood as a musician, but progressively, I just started to help the company however I could. And then that culminated in my taking on this appointment as quote artist in residence, and that’s really where my involvement began,
8:48
unbelievable. So you knew Zuck in college, and that helped you kind of get connected with the tech ecosystem. Like, what was the background there were you guys close in school? And what was he like? You know, as he’s evolved quite a bit as a professional and a person I imagine. I
9:06
mean, I have never been super close with him, but I’ve known him since my freshman year and Facebook came out. The Facebook launched in my first year of school. He was one year older than kidding, so I was one of the first couple 1000 users, I think I was like user 2020 or something of Facebook, and at the time, all we cared about was promoting our music. So I got to know him, because we were basically asking his permission to do various types of spamming other kids on Facebook to like promote our music and and so he and I got to know each other that way. And then, you know, had just like a friendly interact set of interactions. And when, when we got this record deal. Yeah, Mark and I had stayed in touch throughout this period, and I sort of, I think, was a bit of a novelty to him, like his rock musician friend, and then being on Interscope Records, I was in this position to bring Jimmy up to meet him. And I don’t think either of them really knew what that could lead to, but I think I had a vague sense that I don’t know, maybe Facebook could partner up with the music companies in a different way to help artists build their audiences on the platform and monetize those audiences on the platform, which was something, even to this date, they haven’t really done in a serious way. And so I think we were just circling those concepts. And that was, you know, that was the basis of those interactions,
10:52
unbelievable. So, so you start, you’re this artist in residence with Spotify. How does that snowball into, you know, Elon and backing SpaceX, and ultimately, you know, launching your own firm time time bioventures. There are kind of
11:12
two phases to it. So while Spotify was going on, I had gotten a new record deal with Capitol Records, and I was making a solo record. And for several years, I was really trying to do both full time, essentially. And then throughout that period, I was just trying to find other companies that I thought had the kind of potential Spotify did. And I was investing small amounts of my own money, because I didn’t have a lot of money, and so I could only do two or three investments a year out of my own bank account. And I, as a result of that, just had a very high bar. I mean, I really could only act on the things that were obviously at the very top of the pile. And so I started to go up to San Francisco and just cold call companies that I thought were interesting, probably the best investment I ever have been a part of was ripple, which is a major cryptocurrency player now, and I met them at the seed stage. And I mean, that arose because I had read an article about Silk Road, and I thought the ideas that these crypto, early crypto, people were talking about were really weird and compelling, and that that didn’t that that felt genuinely contrarian, and so anything that had that kind of character to it, I would just reach out to the people, and I’d say it was even relative today, I was like a different era, almost, because you hadn’t really had this just flood of money into the private markets and into tech venture in particular. So you could still find things that felt weird and contrarian and they weren’t already way bid up, and there wasn’t a line of VCs beating down their door. And so just being curious and intellectually open, you know, allowed me to identify and then meet a lot of really interesting entrepreneurs and and some of those investments then, you know, did very well. And then the second chapter was I met a guy named Ron Buerkle, who’s been a great mentor and supporter of mine. Ron is a super successful investor who for a long time was based here in LA and I met Ron, and he sort of, I think, saw that I had a knack for finding these interesting companies. And so then my second phase was really Ron backing me in a series of deals, and that allowed me to kind of mature into a real, quote, unquote, professional investor. And that was the first time I had ever made investments with other people’s money. And so that was a big leap for me, sure. Then it all over a period of years, led to me getting obsessed specifically with healthcare and life sciences, and then, as you mentioned a few years ago, started a firm with my partner, Tim Wright, that is solely focused in those areas.
14:19
So clearly you had a passion for music, for creating, for touring. You also had this passion for tech and builders wit, wit, at what point in time did that tip, you know, and you decided to leave the music life behind, right? Like a mutual friend of ours, Mike, in Chicago, we were chatting before this, and he’s like, you gotta ask him, How could you make the decision to leave music when you were one of the lucky few to break out?
14:50
Well, the first thing is that one is a good career and the other is a very challenge. I mean, they’re both challenging, but being a. Being a lowly rock musician who is sort of half broken into the mainstream is challenging in its own right, and really as a business, that means touring all the time. So even my friends who are extremely successful rock stars now in their 40s or 50s with kids are having to, you know, pack their bags and go live in a bus for six months every year. So there is a glamor to that, if you love touring and performing and being in the studio, and the freedom that that affords you, because being an artist is a great lifestyle, from the standpoint of freedom of expression and an ability to indulge and cultivate your creative talents. But it’s a tough life, and I just think for my balance of interests, music is better as a hobby, and it started as a hobby. I mean, when I fell in love with it, it was a hobby in high school and in college. Frankly, when it became my job, it got less fun. And that tends to be the case with a lot of things, but it over time, just felt to me like, you know, both from a financial standpoint, the investing is a better career and a safer career, and intellectually, it satisfies a lot of the things that I care about, and gives me an opportunity to learn constantly interact with really interesting, smart people. And, you know, I still have my music gear around me. I’ve got a keyboard here and a drum set here and a piano, and I can still make music. You don’t need anyone’s permission to do that
16:41
awesome therapy over vocation. So, so I want to transition a bit, and I think a good transition point. You know, are there lessons from the music industry that have carried over to your early stage investing?
16:55
I’m not sure there are many lessons from the musician part of my career, but certainly from my experience with Spotify, I observed a lot around how you drive change in an industry where the players maybe don’t all share the same vision of the future, And so Spotify had to crack this really difficult code of getting all the music labels and all the publishing companies and everyone to work together to deliver to consumers just this radically better customer experience of music. And as I’ve moved into healthcare. I’ve always thought of that as a great example, you know, like, Wouldn’t it be great if we could do the same kind of thing in medicine and make medicine as much better as Spotify was relative to what came before it for for patients
18:01
you’ve invested in some of the world’s most iconic companies, from Spotify, SpaceX to neuralink and billion to one. Given your experience, what’s the biggest misconception about early stage investing in frontier tech? You know, like some of these biotech companies that you’ve done,
18:18
the most seductive thing probably about, quote, deep tech, or when you’re operating these spaces that have a lot of technical depth to them, is that it’s very easy to fall in love with technologies. And when your feedstock is all the coolest stuff that’s coming out of MIT and Stanford and UCLA and wherever else. At first, every one of these things sounds like it’s a great idea, because the inventors are brilliant. You know, across the board they tend to be brilliant. And so it’s like, very little is stupid, you know, it’s like, they’re very you look at other types of businesses, and it’s like, wow, that’s a dumb idea. But this stuff, it’s like, okay, this person’s invented some novel photonic system for, you know, measuring a particular blood analyte. And you go like, wow, you know, how did they think of that? It’s incredible. Is incredible from an engineering, scientific point of view, and then the tough bridge to build is always between that and a commercial use case. So over time, I’ve had to really develop that muscle and recognize that great technology is a necessary, but not sufficient characteristic of one of these startups. And then I think just you know, like all early stage investing, the team ends up being so determinative of the outcomes, and building startups is just super hard, so there are a small number of people who are good at it. Right? And it can be hard to tell who those people are, a priori, and so I don’t think there’s anything easy about it. And I think as a result of that, I mean, this is not a original insight, but particularly for true early stage investing portfolio construction is highly underestimated or underrated, everyone would like to believe that they can pick winners, and the earlier you go, I just think the more obviously true it is that it’s very hard to pick winners in advance. It’s much easier to pick losers in advance. But among the companies that you think could win. You have to have the right diversification in order to make the math work, and in order to maximize the probability that you’re gonna catch something that really takes off.
20:52
I’ve hosted this show for 11 years. I’ve interviewed 500 some odd investors. We can talk about quick ratios and net revenue retention and churn rates till we’re blue in the face, but, but one topic we’ve never spoken about is taste and and you’ve talked about and mentioned the importance of taste in investing. How does taste play a role in your investment
21:17
decisions? It’s kind of the starting point and the ending point of any diligence. So when we first see an opportunity, taste is what gives us an intuition about whether it’s worth doing a bunch of work on it. Then we do a bunch of work on it, and that’s more prescriptive and systematic. And then after that checklist of work has been completed, and hopefully we, hopefully we implement that checklist at a high level of quality. But really the idea is that moving through that diligence process is something that any smart person adhering to the skeleton of it should be able to do a good job of. And then at the end, it’s once again, taste that gives you a final yes or no. And so I’m always questioning you, how much of the middle part do you actually need to do? There are some investors that are, you know, just, it’s all vibes, man. It’s like, you know, they, they, they go on the initial instinct, and then they don’t do all that work. I think what I’ve found is, you know, as much as I’d like to believe, I have good taste, the reason you then do the the formal process is because occasionally your taste missed something. And I just think about reference calls or customer calls, talking to competitors, talking to people who’ve been in an industry for a long time, you just learn so many things that you couldn’t Intuit. There’s no way to intuit them, and that information very often is what kills an investment. And you know, we never go into a process hoping that we’re going to kill it. But I do think that if I put myself in the shoes of one of our LPs, in a way that that’s a big part of what they’re paying us for. You know, it’s to actually do the 15 hours of diligence, or whatever, through which we are likely to learn a bunch of things that are not obvious to someone approaching that opportunity in a more superficial way. Yeah, yeah, for sure,
23:41
you know, and it’s, I think it’s easy, like we spent some time here, but it’s easy to talk about your background and get carried away with the, you know, the the magic and the pageantry of like, everything that you’ve done in your background. But I’d encourage folks in the audience to read D Hayes work, because you’re very deep in your segment in healthcare, in biotech, we’ve spoken before and had a nice sort of rap session, and I could tell I was, you know, you’re quite a bit above my pay grade on it, but you know, you’ve expressed skepticism about AI’s ability to revolutionize drug discovery, and that’s a popular topic, you know, what are the limitations that you see and what advancements are necessary to overcome them?
24:28
I definitely never want to be assume, you know, I don’t want to take on the role of like the hater. And people make this point that you tend to sound smart when you’re being critical and picking on things, but I’m a super optimist about all the things that will probably come from what we’re calling AI and maybe one day AGI. But in the domains like drug discovery, we’re. Where physical experiment is still really the only way that we can probe living systems. It’s difficult for me to see how we can build computational models that can stand in for those physical experiments without enough training data to inform those models. So the early successes with AI around molecular biology have in many cases, been around protein structure prediction. That’s what alpha fold represented, a huge breakthrough in that. Alpha fold, though, is a model that was trained on, I don’t know, 30 or 40 years of experimental molecular biology that took the form of the Protein Data Bank, which was an enormous data set that basically captured the amino acid sequence that makes up a protein, and then the structure of proteins that had been experimentally ascertained. And so you had the sort of data set of the inputs, and then the data set of the outputs and the machine learning did a remarkable job with that breadth of data at finding functions that are able to capture the relationship between the two and so, huge breakthrough. Now, if we think about drug development, the costly and time consuming part of it is human clinical trials, where we find out whether drugs are safe and effective by putting them into human bodies and seeing what the results are. And we don’t have something like the Protein Data Bank for that, meaning we don’t have millions of drugs put into the same people or or even diverse groups of people, and then various phenotypic or molecular readouts on what they do. And so we are, I think it’s a data issue. I Well, I think it’s a date, yeah. I mean, I think what these models can do is they can model a functional relationship between input data and output data. They’re very good at that. And if we don’t have the data that would be needed to capture that sort of a relationship, then I don’t know how we build a model that is able to do it, and so we’re going to make progressive, you know, incremental progress towards digital biology. That’s a super exciting vector for basic science, but I think it’s a difficult place to be building companies. In particular. Da,
28:01
in your essay, modern medicine demands a universal sensor, you advocate for standardized health measurements. Is this wishful thinking to think that will standardize?
28:12
Well, just a slight correction there is that it’s about creating a universal standard of care. Oh, I see and what I what I mean by a stand, what I’m referring to is there’s a concept in medicine of the standard of care. And the idea is that when you go into a doctor’s office with a particular pattern of symptoms, the physician, you know, two physicians, should do basically the same thing, meaning there should be a standard process they go through to diagnose you, and then, depending on the diagnosis, there should be an evidence based set of standard responses to that diagnosis, interventions. Yes, and this is the entire point of medical education, it is to train doctors and nurses and other providers to know what the standard of care is, and then to be able to faithfully apply it. Because I think we all appreciate that two people anywhere in the world with the same medical condition essentially deserve the best medicine that evidence supports. You know, they should basically get the same thing unless there’s some difference between them that merits a different intervention. And so that’s where medicine aspires to go. It aspires to be a science where each patient’s unique situation generates the best evidence based response from from care providers, that is possible, but we’re a far away from that, and there’s a lot of variability in healthcare because. Because, of course, it’s being delivered by people. And as rigorous as we can make medical education, as good as some of the tools are that are meant to give physicians access to evidence in a clinical setting, you still see tremendous disparities across our system in the care that patients receive. And if you zoom out to the whole world, you see far greater disparities in the care that people get in different places. Some of that is cultural, but a lot of is just economic. Poor people get much worse medicine than rich people. So I believe that, and this essay goes into a lot of detail about the way that we can use AI, among other technologies to, for the first time in history, start to standardize medical practice in a much more deliberate and consistent way, and we can ensure that when new evidence emerges, that it is rapidly and universally deployed, deployed everywhere, you know. So we’re not waiting some great discovery happens at Stanford. Patients shouldn’t need to wait 15 years before that’s what their clinic in Ohio will do it should happen as soon as the evidence backs it. And I don’t mean to understate the complexity of medicine, there’s a there are a lot of ambiguous situations where it’s not just like there’s a template, but in many cases, medical care and the evidence that should drive that care should be relatively templatized. It should be a recipe that the physician is following.
31:50
So da, some have said that the American Health System has a fatal flaw, and that’s the employer driven healthcare model. Effectively, because employers pay and employees move jobs. No payer or insurance company is incentivized to drive long term health outcomes. They’re all just trying to pass the buck to the next health plan when people move jobs. Can this employer driven model be changed? You know, will it change, and if not, you know, are we just relegated to kind of operate in this system that will deprioritize long term
32:23
health. I have no idea if it will change, and, you know, I’d probably be the worst at forecasting what’s actually going to happen in society. On this kind of front, I will say, I think it’s a bad system. We in America have basically a system where half of health care costs are borne by employers and about half of health care costs are borne by the government, and there are a lot of nuanced and surprising ways in which those costs are shared between the two. I’ll just give you one that people don’t think about, which is insurance premium costs are tax deductible for employers, so the taxpayer is basically subsidizing a part of people’s salary, people people’s compensation, which is their health benefit. So something that looks like it’s privatized, meaning employer based healthcare is, in fact, being subsidized by tell, by taxpayers, because of the tax advantages of that compensation. So we’ve got all these screwy cross currents in terms of who’s subsidizing who. But again, suffice it to say big picture, about half is being borne by employers or employees, about half by the government, which is to say everyone. And the fundamental question is, how much of health expense in the society should be socialized? And many of the advanced industrial countries have opted to almost totally socialize it. And then some countries have a heavily socialized system, but with a premium, sort of private pay tier, where everyone gets government insurance, but then you can buy essentially supplemental private insurance, and you can access a different level of health care if you want. And I do think taking stock of it all the US would be much better if we move towards a system that has effectively a single payer. Do
34:27
you think we’ll we’ll have sort of a robust self pay option in the future? You know, some people that just want to buy their own health care and maybe add on some advantage and such. Do you think we’ll see a health plan emerge that’s sort of a premium option, kind of like, you know, you could listen to music for free on the radio, but you pay for Spotify because it’s premium. You could watch TV for free by getting an antenna, but you pay for Netflix or YouTube TV. You.
35:02
I would really like to see something like that. And I’ve written an essay called Zero toll medicine that lays out a pretty complex proposal that I’ve got for how you could do this in the United States. The basic puzzle I’m trying to solve with this essay is that, on the one hand, there are things we really like about capitalism and market incentives, for example, right now, not to date this episode, but there’s a big debate going on around drug pricing policy and whether the government under Trump is going to sort of put price controls on the pharmaceutical companies. Well, there are two things that are true. One is the United States, and therefore our citizens, or taxpayers, do bear a disproportionate share of the global costs of pharmaceutical products. So we have a small percent of the world’s population, but we’re paying the lion’s share of of total drug spending. Now the flip side of that, though, is that we get all the best drugs, and we get them first. And were we not through capitalist markets, essentially generating those profits for the pharma companies, they would develop far fewer drugs. And so not only would the rest of the world’s medical innovation be held back, but so would our own. So we’re paying a very high price, but we’re getting a very valuable outcome, which is all these innovative new medicines, albeit expensive ones, and medicines, unlike a lot of other healthcare products, tend to go generic. I mean, they’re legally required to go generic. Their patents expire, and once they do, they become free effectively for the rest of history. So they I believe pound for pound are the best place for our dollars to go in healthcare innovation, what I would love to see is an insurance model in America where we effectively socialize the cost of medicine, be it through insurance premiums or other forms of payment, but then the individual is in control of the spending. So let’s say the government is going to spend $10,000 a year on your healthcare. Nick, I would love it if you effectively got that money and then were put in the position of shopping as a discriminating consumer for the care that you need. So if does this in other doesn’t, doesn’t really exist. Okay? And this is what I think, I think crypto actually opens up a way of doing this that in the past hasn’t really been possible. How is that? Well, in the past, one of the challenges with this kind of proposal is, let’s say we go, okay, you get 10 grand for the year. Or let’s say we even tie it to a particular condition. So like, you know you have a slipped disc or something, and you think you need surgery, and the government says, okay, the average cost of fixing a slip disc is gonna be $5,000 so in the past, all we could do is we could send you a check for $5,000 and then you could go to Applebee’s, or you could go to Disneyland or whatever. How would we ensure you spent the money on the intended case, and if you didn’t, how do we know that you’re not just going to get worse and therefore end up being a more expensive problem that the rest of us need to pay for solving. So with crypto, what you could do, that’s, I think, pretty new, is you could have a wallet, and that money could be sent to you in the form of tokens whose spendability is programmable. So we can give you $5,000
38:54
only, but toward one
38:56
thing, yeah, you can only spend it on spinal surgeons or MRI clinics or, you know, services and products that are obviously related to your diagnosis, and then you are put in a position to go and find the highest value for your dollar, and maybe the government could even share in the savings that you generate with you. So give every patient in America a financial incentive to moderate their own health care spending, while at the same time socializing the total costs of American health care for a
39:36
second. Da, let’s talk about the incentives on the hospital side. So you know, a lot of people will talk about how we have a sick care system versus a health care system here in America, of course, value, value based care is all the rage and has had some success, but jury’s really out on on whether it’s it’s working, going to work long term, and hospitals are said to incentivize a. Are incentivized to keep people sick, keep people in the hospital, keep people paying right? Because fundamentally, most are paid for paid for care, not outcomes. You know what? What’s your take on sort of value based care and kind of incentive structures for hospitals?
40:16
I would start by saying that I don’t assume the worst motives in almost anybody in healthcare. So even hospital administrators, who I’m no great fan of, I think, like doctors, like nurses, most of them go into this because they want to help people. They want to be a part of taking care of other people.
40:37
And so he own one’s da,
40:39
well, it’s it’s really to your question about incentives, not about evil motives, or anyone trying to do something bad with exceptions. And I do think you’re exactly right. We’ve got terrible incentives in the system. Most medical providers primarily work on a fee for service basis, so they do have an incentive to do the most expensive things and to do them often. And as a health care investor, we see this because, sadly, we sometimes have to pass on opportunities, even if we think they’d be great for patients, but we feel they’re not going to work because they’re not going to be aligned with the financial interests of doctors. And so, you know, there are certain medical devices where you know that device is going to be an attractive thing for doctors to surgically install in patients and company like, that’s going to be more likely to succeed, that that’s then one where the procedure is going to lose doctors money, for example, even if it’s good for the patient. So that’s not obviously the right incentive structure for the system to have, be it for hospitals or companies or anyone else. And value based care, I think, is most important, just as a conceptual Northern Star, right? Obviously, we should have a system where everyone has a financial interest in taking the best care possible of people at the lowest possible cost. And so if we can get there through better insurance models, if we can get there through better regulatory structures, I’m all for it. And value based care, to date has meant a lot of different things. There have been many different types of businesses that fit into that broad term, and I’d say the jury’s still out as to which of them are going to prove to be scalable and merit being sort of generalized to our entire system.
42:41
So functional medicine, you and I have discussed this before. We have a system that’s mainly structured around organs and parts of the body, right? There’s specialties, but human bodies are interconnected, and sometimes specialists are so narrow in their discipline and in their treatment modality is that they kind of miss the big picture. What role do you see functional medicine playing in the future of healthcare?
43:08
I think functional medicine means different things to different people. That’s fair for some people. It means, I think, something very intelligent, which is that the patient needs to be looked at as one integrated system, and their health doesn’t end at the boundaries of their skin. It also extends into their lifestyle, their relationships, their psychological health, their media consumption habits, and so this more holistic view of health as encompassing someone’s entire lifestyle and their environment, I think, is really intelligent. I think that’s a step forward for medical care. What functional medicine, in many specific instances, has come to mean is Doctor, concierge doctors who prescribe a lot of supplements, and I don’t have anything a priori against supplements, but I’d say there is a bit of a boundary between what would be considered mainstream medicine, whose conventions and the standard of care is backed by gold Standard, rigorous evidence, and then more speculative medicine. But what is speculative today can become mainstream tomorrow. And really the question is, what is the level of evidence that a patient or a physician wants to see before they do? Something Now for me personally, the vast majority of nutritional supplements and so forth don’t rise to the level of evidence supporting them, meaning the types of studies have not been done that I would want to see to take them myself, I see, and that’s a personal decision everyone has to make on the basis of their risk aversion, their personal preferences and their goals. I mean, there are whole fields of traditional Chinese medicine. Yeah. I mean, that’s widely perceived as as real in China. And you know, who am I to question 1000s of years of kind of folk practice, and if people have converged on certain things that they really believe work, they may work. But there is a there is a standard that I do think we should hold the standard of care to Sure. Meaning for something to make it into the standard of care, we better be pretty damn sure that it works and that it doesn’t hurt people. And I view that as kind of a sacred domain, and yes, and the flip side of this is just to be clear, not everything that happens in mainstream medicine meets that standard either interesting. So when you hear critics of mainstream medicine from the functional medicine community, you’ve got people like Dr Prasad, who’s now at the FDA, who’s been very outspoken on Twitter and YouTube, you know, and he’s made a lot of, I think, very valid critiques of, you know, pharmaceuticals The FDA has approved and then suggested for particular usage without necessarily the sufficient level of evidence that you’d want to see to support their use. In that way,
46:49
it’s a tricky line to walk, right, because sometimes the pseudoscience, certainly not all of it, but a percentage ends up becoming, you know, sort of the canon. And I think you and I discussed once, and you gave me the historical reference that, like, doctors started as witchcraft, like at one point, right? And so often these controversial things, people adopt them, and they’re not helpful, or they’re, you know, harmful in some way, but there is that small percentage that is is going to produce the evidence that’s sufficient. To become a standard?
47:25
No, that’s right. And on this theme of medicine, starting as witchcraft, I mean, medicine has a long history of hurting and killing patients, and from its inception, it was total bullshit. So at the beginning of medicine in antiquity, anyone calling themselves a doctor, we know they knew nothing. I mean, humanity knew nothing. We didn’t have germ theory. We didn’t know what anatomy was we I mean, they were just making everything up that they did. So medicine is this unique human activity that went from being total BS to over time, gaining progressive credibility as a result of its embrace of the scientific method. So there’s still a lot of BS in medicine, and there’s a lot of BS outside of medicine. And what we should, I think, all be aspiring to is a more and more scientific medicine so that is consistent with doing rigorous science on ideas that people believe have potential that are still in the speculative realm, and it also means holding medical orthodoxy to a very rigorous examination, because we know that mainstream medicine involves a bunch of stuff that almost certainly will turn out to be a mistake in the future.
48:52
This is a perfect time to ask you, RFK, Jr, what do you think is his best idea, and what in his platform concerns you most.
49:00
I think his best idea is his insistence that chronic disease be put at the forefront of public health in the United States, because the big story of of our population’s health over the past 30 years is this incredible increase in the incidence of metabolic disease, diabetes, obesity, and those are risk factors for many other diseases, cancer, neurodegeneration and so forth. So we do, in fact, have a chronic disease crisis in America, and I do think there’s real legitimacy to RF case focus on the government devoting its resources to that, and to, in a way, rationalizing the. The way that funding from the government is allocated in proportion to the magnitude of certain different diseases public health footprints. In other words, should we be spending disproportionate amounts of public money on diseases that are afflicting small percentages of the population relative to diseases that are very widespread. So I think that’s a great idea in terms of what his worst idea is. It’s really hard to say. You know, I think any time I’ve tried to go into the vaccine stuff, it is, it’s unclear what he really believes and what he really is saying. And I think in response to his most aggressive critics, he tends to say, Well, I never said that, or I don’t believe that, or I don’t think all vaccines are bad, or things like this. I mean, now that he’s in this seat, he is needing to wrestle with actual on the ground public health challenges like the measles outbreak. And I think when it’s your problem to manage, that probably has a way of sharpening your thinking. And my hope is that he’s not a irrational zealot, as some have painted him to be, and that he rises to the occasion of his extreme role of responsibility here and does a great
51:33
job. It’s also hard to know if you know what people say is to get a response and to try and build an audience, and, you know, get coverage in papers and media outlets and such and what they actually believe. I think we’ve seen plenty of that in politics. But, you know, to kind of wrap up here, I want to do this lightning round, variety of topics in healthcare. And what I want you to do da is give me the over, under, in years, okay, that we can expect these things to happen, or if you don’t think it’s likely in our lifetime, okay? So the first on the list is patient owned and custodied medical records 10 years. Ooh. Number two is employer driven plan. It’s currently over 50% so employer driven plans and coverage drops below 25% of the American population.
52:23
No idea. Hard to say,
52:24
okay, diabetes, obesity and chronic conditions related to them are no longer a public health concern. 35 years orphan drugs account for 75% of new approvals by the FDA. Is that?
52:38
What is it today? It’s like high 50s OOF again, very hard to say, because we’d like to see a lot of orphan diseases addressed, but we’d also like to see a lot more drugs come to the market for the big, pervasive diseases.
52:54
Okay, over under on, zero toll medicine becoming a viable mass market option 30 years, okay, over, under, on an autonomous robot completing a successful spine surgery.
53:08
Ooh, 15 years, ooh. And
53:11
then finally, functional medicine takes over the PCP as the primary point of care for most Americans.
53:16
Well, again, depends what we mean by functional medicine, but I think it’s on the rise, and I think traditional primary care is sort of on the decline, because no one can figure out how to make money doing it, unfortunately. So I think we’re going to continue to see a lot more quote, unquote, functional medicine independent providers who are doing a sort of concierge style. So
53:38
to start wrapping up here, da, you’re a creator and you’re an investor. You spent time around some of the world’s greatest creative talent, talent and founder talent. And we’re starting to see this bridge. We’re starting to see like these creative fields start, you know, we’re just seeing a lot of overlap. You mentioned Ashton before. You know, he’s done a lot of investing. We see Rick Rubin is speaking at the tech conferences now. It’s pretty awesome, but, but what have you noticed that kind of separates the world class music talent or artistic talent from the world class tech talent? How are they different?
54:13
I think in a way, the greatest tech or entrepreneurial talent tends to be kind of hyper rational, very practical, and they can be sort of crazy in other ways, but generally, their plans make sense, or else they don’t work. And the most successful creative talent tends to be quite irrational, and they think with a lot of the ambiguity. You know, the ambiguity is their comfort zone, and that’s where complex emotions are able to be expressed through art. That’s where sort of vague creative visions are able to take form without driving someone crazy. Crazy. They like that. And so I think there’s a range of people on the art side or on the business side, but that’s kind of the broad spectrum I’d say.
55:10
Da, if we could feature anyone here on the show, who do you think we should interview and what topic would you like to hear them speak about?
55:16
I think a really interesting and under explored format for investing conversations is to hear what investors think about a different asset class or different sector than they work in. So I’m fascinated by how venture investors would approach the public markets, for example, or how quant investors think about venture capitalists or discretionary equity managers or fixed income managers. And I you usually hear people in these silos talk about their own thing, but the ideas tend to get stale, and then they miss the blind spots of their own area. And so it’d be fascinating to hear different types of investors talk to each other about the same investing questions.
56:10
I love that topic, and I would say the majority of my investors are market makers and traders. And to them, each one of these deals is just a trade. It’s a transaction. The the founder is, you know, kind of a afterthought, I think interesting. Da, what book, article or video would you recommend to
56:27
listeners so many but I’m a board member at a place called the Santa Fe Institute, which is a really amazing academic institution in New Mexico. And there’s a great book, two great books that are products of the Santa Fe Institute. One of them is called complexity by Melanie Mitchell, and another is called scale by Jeffrey West. And those are two great books for any general reader to dip their toe into the world of complexity science, which I think I’m biased, but I think is relevant to almost every area of human activity.
57:04
Wonderful. Have you been to 10,000 waves? Da, I have not. No, you have not. Okay, it’s in Santa Fe next time you’re out there. Da, do you have any habits, tactics or behaviors that are a force multiplier? Well,
57:18
the habit I am always trying to adhere to is working out first thing in the morning. I mean, no matter how much I prove to myself that that changes the day and makes everything easier and more fun, I still find it hard to do, but that’s the habit I’m always trying to get into. Awesome
57:39
and then finally, here da give us one of the best musical acts that no one has heard about yet.
57:47
There is a band that I really like called jock strap. Okay, it’s just a it’s a duo. I don’t know if they’re even still making stuff, but they’re not totally under the radar by any means. I mean, they toured all over the world, but when I first heard them a couple years ago, I got really excited, and that doesn’t happen that often for me, and it just felt fresh and really creative and really kind of unconstrained. And so I recommend checking them out, because I think they’re really cool.
58:18
Okay, jacks, Jack, strap it comes in here, yes, and I make good music too. Okay, he’s da Wallach. Wallach in the firm is time bioventures, da. This is, this is very thrilling. This is such a fun interview. And really appreciate the time and all the insights.
58:34
Hey man, thank you.
58:40
All right, that’ll wrap up today’s interview. If you enjoyed the episode or a previous one, let the guests know about it. Share your thoughts on social or shoot them an email. Let them know what particularly resonated with you. I can’t tell you how much I appreciate that some of the smartest folks in venture are willing to take the time and share their insights with us. If you feel the same, a compliment goes a long way. Okay, that’s a wrap for today. Until next time, remember to over, prepare, choose carefully and invest confidently. Thanks so much for listening.
