People often ask me what startups I want to fund. I hesitate to write this list because I’ve found there’s actually very little correlation between areas that I would love to fund and what I end up funding. This is because beyond business ideas, there are so many factors that make a great business.
For example, in 2018, I’ve championed and completed 7 deals at Hustle Fund. Coming into 2018, because I was/am seeing so many blockchain and health companies, I thought I would fund mostly blockchain and health companies. It turns out, I have done 0 health deals in 2018 (I did 3 in 2017), and I have done 2 blockchain deals. In other words, the majority of the deals that I have done this year are not in either category.
That being said, these are the areas or problems that I’m interested in funding, all other considerations aside:
Our medical system is a huge f***ing mess. I am looking to fund ideas that will make big changes here. In particular:
Health insurance is the biggest scam ever. Because health insurance is tied to your employer (which makes no sense from a societal perspective), you as the consumer, are at the mercy for what your company thinks is best for you. As a result, you don’t actually get to vote with your dollars which doctor you choose or which services you want done. This means you will over-visit the doctor and clog up our medical system if your employer gives you a low deductible plan (and rightly so – from an economics perspective, you should take advantage of this). It also means that you will be tied to horrible health care providers if your employer bought a cheap plan with a limited network.
So, let’s change this up. I’m most interested in funding completely new health insurance models that give power back to the consumer. Things like health savings accounts – you get to decide whether you would prefer to keep your cash as an investment or go see the doctor. I like the general direction that Lively seems to be going in. Or direct primary care plans – you should be able to decide which service providers to pay for, and they should be on the hook for drumming up their own business and serving patients well. You also shouldn’t have to get a referral from another doctor to be able to see a specialist weeks later for an issue that needs to be addressed today. Money or credits of some type should allow you to prioritize your situation when you’re in a bind. These days, it seems that connections to doctors are more important than anything else.
We have a shortage of internal medicine physicians and nurses in this country. On one hand, it’s great that we have a lot of certifications to enable our medical professionals to be properly trained, but if I’m going to be forthright, the medical system is really just a cartel. We need to increase the number of people who have some basic medical knowledge to help alleviate the strains of our bogged-down medical system. I’m interested in ideas that take advantage of geography – can you see a doctor today who is in the midwest somewhere (virtually) or even overseas somewhere, where there are more medical professionals? We are starting to see some doctors who are licensed to practice in California live abroad in Bali and partake in telemedicine – can we do more of this to help with patient loads from state to state and perhaps get more doctors certified in multiple states? Or perhaps it’s a tech-enabled service in itself – I like the direction that Carbon Health appears to be going in.
I’ve seen a lot of startups attempt to reduce medical costs. 90% of medical costs are attributed to about 10% of patients. So, even though in the US, our medical costs have really ballooned, I’m actually less concerned about optimizing the costs of the remaining 90%. There are all kinds of startups trying to address different ways to track the sick and the elderly and encourage preventative measures and reduce costs. But it’s a hard problem to solve, and I’m still looking to make a bet here because I haven’t quite found a solution that I’m bought into that I think will really solve this problem.
As a sub-category of health, I’m also really interested in startups changing women’s health. I think we still have a long way to go when it comes to contraception, fertility, and postpartum care.
This an area that I’m incredibly bullish on and yet at the same time find really difficult to fund because often solutions in these space require hardware, new devices, and FDA approval (all areas that I tend to shy away from as a small fund). There are a few trends that I think fit into this space. Women are delaying having children, which means that we as a society need to embrace new forms of contraception (not sure this is something software can solve) to improve reliability, usage, and side effects. One of our portfolio companies called The Pill Club, for example, sends women birth control right to their doors.
The flip side is that we are now also seeing a number of women go through IVF. I think we are in the first inning of what this looks like, and again, I’m doubtful that software can solve this actual problem. But, I can see how there may be opportunities to use software to increase the chances of success of IVF – perhaps through better data analysis – or help women receive the care they need through telemedicine and consultation.
On the post-child front, there are a lot of women-specific issues. Postpartum care and depression, as a result of having a child, is a real and is a serious problem. A postpartum care platform called Mahmee is tackling this by using software to help new moms get the support they need online from professionals.
Speaking of children, childcare is a topic in itself that affects all parents – not just moms. Childcare is expensive. One thing I noticed in living in an area with a high cost of living is that your expenses go up dramatically once you have a child. Even if you’re not sending your infant to the “Harvard of daycare”, your monthly expenses for 2 children under 5 years old can easily be an extra $3000 per month if not a lot higher! On the other hand, the people who need to send their children to daycare the most are people who need to work and can’t afford to stay at home. So it’s a bit of a catch 22.
I’m interested in exploring very different childcare models. For example – some wild ideas:
Daycares are a supply and demand issue – in higher cost areas,
- Is it possible to load your toddler up on a bus and bus your kid out to a daycare 2 hours away where the facilities and cost to run them are a lot cheaper? I’m sure this is fraught with all kinds of problems including obtaining necessary licenses, and heaven forbid what would happen if said bus got into an accident. But, it’s an interesting question to explore, because in the coming years, I expect transportation to get cheaper / reliable (more safe) / autonomous or semi-autonomous.
- Is there a way to increase the use of home daycares? Why are many parents reluctant to use home daycares? Because of potential negligence of the sole-provider of home daycares? Is there a way to add video technology to add checks and balances to make sure that your kid is being cared for?
- Is there a way for employers to provide loans for early childcare? I.e. for 4-5 years, parents in high cost areas shell out $10k-$40k per year just on childcare per child. And then at kindergarten, public schools are basically free for the next 13 years. Is there a way to spread this cost of say $40k-$200k across time while simultaneously improving employee retention?
I’m not sure if these ideas are any good, but I think childcare or the way to fund childcare can be completely reimagined.
The workplace is changing a LOT. In particular, I’m most interested in funding ideas that further entrepreneurship and being entrepreneurial. These days, everyone is an entrepreneur. Whether you are starting a mom and pop business or a tech startup or are getting into freelancing / consulting or are joining the gig economy, you are an entrepreneur even if you never thought of yourself as one. When I was a child, being an entrepreneur was basically limited to tech startups and restaurants and salons. These days, you see doctors and lawyers doing virtual consultations and living in Bali. You see students, immigrants – everyone really – driving cars, returning scooters, and renting out their homes to make some extra money. You see stay-at-home moms making crafts to sell on Etsy and Shopify.
With Hustle Fund, this year, I’ve backed a banking service for freelancers called Every Financial. And I’ve backed a back ops platform for freelancers called Hyke. I’m very interested in this category overall – whether it’s new ways to make money or tools to help support new entrepreneurs, this is a category I’m bullish on as a whole that is only growing.
Education is an area that is so incredibly important but is often a very tough to make money in. I’m most interested in ideas that can enable students / graduates to make a livelihood.
For example, people are changing jobs more than ever and need the skills to do this. I’m interested in new forms of education that will help people get the skills that they need to switch careers faster. For example, we have backed Kenzie Academy, which helps teach people to become developers in cities where this education is traditionally not available. But, I don’t think everyone needs to become a developer. There are lots of jobs that could use more skilled people. Can you use VR to teach new skills that require your hands? Is there a way to teach people sales online?
At younger ages, I think that there are opportunities here as well to both teach and offer compensation. In the old days, we had apprenticeship models. Could the replacement for colleges and universities look more like an apprenticeship? Instead of spending $500k on college, can you break-even for your education by working while learning? For example, as a business major, can you take classes on lead generation? Outbound sales? And also some theoretical ones on game theory and pricing? And can you intern at Salesforce to pay for your education in a co-op fashion during the year? Minerva is doing some incredibly interesting things here, and what is amazing to me is that in just a short period of time, high school students are clamoring to go to Minerva. They rank up there with the Ivy Leagues et al. And I think there can many more schools that can be established with a differentiated approach to drive the cost of education down for young people.
At an even younger age, can you do the same thing for high school summer programs?
Education in this country is broken, but I think we can start approaching this by providing better programs that center around livelihood and job placement.
Housing and commuting
Housing is an issue that is near and dear to my heart. In the San Francisco Bay Area, we have a massive problem with housing. We don’t have enough housing supply. And, we have terrible restrictions in many places in California that prevent us from building up – this is why you don’t see skyscraper apartment buildings around here unlike in NYC. This means that people’s commutes around here are really long – in some cases, people commute 2-3 hours from outside the Bay Area each way to work here. And rents are astronomical. This isn’t sustainable. I really don’t know the right way to approach this, but this is a problem I think about a lot.
Decentralized and verified data
We are funding a lot of blockchain companies attacking many different problems. Here are a couple of broader trends that I’m a big fan of.
1. Decentralized data / crowdsourcing of data / verification of data
This has mass implications everywhere. Tracking people (refugees, drug addicts, professional credentials, etc.) in order to better help them. Tracking objects (validating scarcity, validation of the creator, verification of ownership). Tracking information of the crowds.
For us as a fund, the tricky thing about this category is that the business model is a bit rough / not straightforward. But, I’m seeing interesting business models, where companies insert themselves in transactions (that involve validating things or providing services). The scope can also be tough – i.e. does your business need to aggregate massive amounts of data in order to be useful to other people?
2. Decentralized Marketplaces
I’ve written a whole blog post about this here. Basically, this makes sense where there’s a dumb middle(wo)man who takes a massive cut for doing little to no work. Or there are payment transactions that involve lots of fees today because there are cross border or cross currency payments but using cryptocurrency, this can all be avoided.
3. Tools and protocols
Blockchain is in the first inning of this baseball game. There are a lot of tools, platforms, and protocols that need to be built to make it easier for developers and startups to build companies. Much like how in the 90s, a startup would need $5m just to get a server going in a closet, blockchain also is in that same era. I am interested in funding tools and protocols to make development and spin-up of new blockchain companies easier.
These are some of the problems or opportunities I’ve been thinking about lately. But, A) they could turn out to be horrible businesses since I haven’t done the customer development on any of these, and B) as I mentioned before, the vast majority of companies I fund are not necessarily chasing any of these opportunities.