Our Next Megatrend
I think the biggest innovations of the twenty-first century will be the intersection of biology and technology. A new era is beginning.
-Steve Jobs, 2010
We at SV Angel invest in “megatrends.” We pick 4-6 investment themes and invest heavily in each one. Some of these trends include: real-time data, online-to-offline consumption, social commerce, collaborative consumption, education and the internet of things.
We believe that there is a massive opportunity in the intersection of software and biology, which we broadly define as “Health Informatics.” This term has a formal definition but we tweaked it to make our own. It is a software-first approach to solving problems in human biology, medical research and ultimately, patient care. We think the timing is right for software developers to make an impact in these areas. The ultimate goal is to use software, IT and data science to help diagnose, treat, reduce and cure disease - at the physical, mental and emotional levels. If we see a bright founder working in this area, the opportunity will move to the “top of the pile” as if it’s in one of our other preferred trends.
The catalyst of this trend is the cheap, abundant data of two types - medical and molecular data. Cheap, abundant data combined with new ways of measurement and analysis leads to technological breakthroughs. There will be a flood of medical data driven by electronic medical records and the like. For example, the recent Affordable Care Act (i.e., “Obamacare”) basically pays doctors for complying with a federal mandate to move from paper to software-based solutions. By 2024 or so, every hospital will move to electronic records. Right now, it’s estimated that only 2% of hospitals comply with this law. Thus in ten years, the amount of data will increase 50X.
On the molecular front, the costs of sequencing technology is falling almost 5x faster than Moore’s Law. (The interpretation and analysis of the data lags this trend but is improving as well.) President Obama also recently announced a major national initiative to map the human brain in the same way that human genome was mapped back in the early 1990’s. This is just another example of “offline” or analog data being digitized and accessible to coders.
Google motivated a generation of bright computer scientists to learn the ins-and-outs of the advertising industry and turn it into a software problem. The original PayPal founding team went through the schlep work of learning the norms, regulations and other vagaries of the payment industry in the early 2000’s. And they used software to help re-invent it. And most recently, Palantir went through the hard, unsexy work of understanding the intelligence and defense industries and used software to attack hard, important problems. We want to back founders who want to do the same when it comes to health informatics.
We are already working with and investors in founders and companies in this area. Those include Counsyl, Benchling, Practice Fusion, ElationEMR, DNA Nexus, Medisas, Comprehend Systems and Flatiron. Counsyl in particular is a flagship company. They were featured yesterday in TechCrunch. The founding team has a traditional computer science background. In fact, they even started the company thinking they were going to be a pure software shop. Ultimately, they built a lab using cheap, commodotized hardware - a trend that wasn’t in vogue then but is now. Ramji Srinivasan, the CEO of Counsyl, is the archetype of what we will look for. He will be an advisor to us on this effort.
Another advisor is Professor Atul Butte, a Stanford University School of Medicine professor, researcher and entrepreneur in medical bionformatics. He has been a thought leader and pioneer in the area of applying computer and data science to biomedical research. He is a sounding board and inspiration for us to pursue this trend and we’re thrilled to have him with us as we learn more about this fascinating area.
But perhaps the most critical advisors to us will be Jeremy Richman and Jennifer Hensel. They are scientists and lost their only child, Avielle, in the Newtown shooting. They courageously set up the Avielle Foundation to use science and technology to help understand why these tragedies happen. They encouraged us to think more holistically about how to reduce gun violence and how to use technology to identify and treat the root causes of these tragedies. Biomedical research, bioinformatics and brain health are all areas that need further investigation to understand the “why” as well as the “how.” Great software companies and entrepreneurs can play a fundamental role here.
On a personal front, I am a cancer survivor so I have a selfish reason to accelerate this vision. Scientists are more confident than ever that genetic mutations play a huge [role in why cancer happens]((http://healthland.time.com/2013/04/01/the-conspiracy-to-end-cancer/). I believe that great software companies in the mold of Google, PayPal and Palantir will help make cancer a chronic condition and quite possibly, cured.
To be clear, while this megatrend has philanthropic and personal benefits, this is not a philanthropic or personal venture. We believe this is a massive market opportunity for young hackers and founders. And we want to be crystal clear that this effort is consistent with our historical focus - great founders using software to address new and large markets.
Kudos to Gautam Sivakumar (Medisas), Ramji Srinivasan (Counsyl), Sajith Wickramasekara (Benchling), Jeremy Richman and Jennifer Hensel for helping me with this.