Social Capital’s Chamath Palihapitiya on The Future of Health – This Week in Startups with Jason Calacanis (Ep. 541)

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Check out the This Week in Startups Episode Page & Show Notes

Key Takeaways

  • Three really interesting companies to keep an eye out for:
    • Athos – smart clothing that gives you important data on your muscles in real-time
    • e-Nable – 3D-printed prosthetic hands given to children for free
    • AcuPebble – a tiny sensor that monitors breathing & cardiac activity
  • ~8% of companies that make up the S&P 500 are true tech companies
    • Chamath thinks that in 30 years, at least half of the S&P 500 will be made up of tech companies

Intro

  • Chamath Palihapitiya (@chamath) is the founder and CEO of Social Capital
    • He is an owner and board member of the Golden State Warriors.
  • This episode was recorded at LAUNCH Festival 2015
    • Jason and Chamath discuss the “Future of Health” and three companies specifically:
      • Athos – smart clothing that gives you important data on your muscles in real-time
      • e-Nable – 3D-printed prosthetic hands given to children for free
      • AcuPebble – a tiny sensor that monitors breathing & cardiac activity

Athos

  • Athos is building the world’s first smart clothing that can tell you exactly what your muscles are doing in real time (in addition to monitoring your heart rate)
    • The clothing doesn’t just measure this stuff, but it also gives you information/feedback so you know exactly what to do/improve upon
      • The muscle exertion is visualized in real-time on the screen. All the colors match to how much exertion is had.
    • Check out some of the videos showing how it works
  • They are able to do this using a science called electromyography
    • How does it work? – There are sensors in the clothes that are designed to pick up exactly what is going on in muscles at their respective locations
    • Before, all of this science was reserved to a lab where you had to be wired up to a big $16,000 machine. Now you can get the same information while you are working out or playing a sport.
  • Chamath is going to start testing this technology with the Golden State Warrior’s (which he is a part owner) D-League team
    • “Right now we are all working blind. You go to the gym and just have to sense how your muscles feel.”
  • Athos has already collected more muscle activation data about the human body than has ever been collected before

The Athos Business Model

  • Each piece of clothing will cost $99, and the hardware to go along with it will run you $199
    • The hardware will work interchangeably with any piece of Athos clothing
  • “In the last six months, they have raised more money than everyone but .02% of Kickstarter campaigns, and they did this on their own domain” -Chamath
    • Thousands of units have been sold, and the usual order is about $400
      • This has resulted in a little under $2 million in total sales

e-Nable

  • e-Nable makes 3-D printed prosthetic hands, all printed by volunteers
    • They are giving these hands away for free to children missing fingers or hands. The closest commercial medical equivalent of this would cost $5,000 – $10,000.
  • 1 in 2,000 children are born with some sort of upper limb abnormality
    • There are also millions more every year who suffer amputations through trauma or human-caused disaster
  • The material cost of each hand is around $30 – it takes about 20 hours to print and 3-4 hours to assemble
    • e-Nable has Boy Scout troops doing the hand assembly right now, with help from high school kids picking this up as a service project
      • e-Nable has put printed about 1,000 hands thus far in under 2 years

AcuPebble

  • The AcuPebble is a tiny device that weighs ~5 grams and incorporates novel sensing technologies (electronics and signal processing) to continuously monitor for the sounds of breathing and other cardiac processes
    • At the same time, the device is integrating those sounds and assessing relevant parameters, allowing doctors to make a remote diagnosis on a variety of respiratory conditions
      • You can then read and analyze all of that information through their app.   
      • (Your doctor can also listen to your breathing sounds remotely)
  • As a parent, it might make sense to use this device to continuously monitor the breathing of your baby
  • Depending on what you want to monitor for (cardiac, respiratory, epilepsy, etc.) the AcuPebble can recognize if something is not performing correctly in that area
    • For example:
      • Epilepsy is a condition that affects 1% of the population (or 50 million people) in the world.
      • If you have epilepsy, you’re prone to stop breathing during sleep
      • The AcuPebble can detect this and is able to alert somebody in the house
  • The AcuPebble not only monitors and notifies you of your breathing, but it also has the ability to make a diagnosis for things like chronic obstructive pulmonary disease (COPD), sleep apnea, asthma, and whooping cough
    • 100 million people worldwide are affected by sleep apnea
      • In the U.S., the cost of diagnosing people with sleep apnea each year is around $65 – $165 billion.
        • It’s so expensive because people have to go to the hospital, spend one night there, and get hooked up to all of these machines
        • The AcuPebble device can make this diagnosis much cheaper, quicker, and less invasively

The FDA Process and AcuPebble

  • Getting AcuPebble in the hands of consumers quickly and cheaply without a cease and desist from the FDA is something they are starting to explore at the moment
    • But if this qualifies as a medical device, then they’ll need to go through the FDA (which they want to avoid)
      • Jason mentions this is the same issue 23andMe had – you can build a device like this, give people all the data, but you can’t tell them if they are in a certain range that it might indicate a diagnosis
  • While the gatekeeper (the FDA) has the best of intentions, the problem is that working with them will cost millions of dollars without some kind of an end-around (like just giving the consumer information without telling them anything diagnostically)
    • You can die from sleep apnea if left untreated – but now for the cost of a $20-$30 sensor, in one day you’re able to know if you have the condition, and then the next day you can go see your general practitioner for treatment

Chamath Palihapitiya’s Interview – Intro

  • “The best companies in the world don’t need that much help”
  • Chamath says his job is to ask the non-asked questions
    • As a result, the companies he invests in tend to be a lot more nebulous, and a lot riskier, but it’s worked out so far
    • This approach has kept Chamath much more engaged because otherwise he would just be focused on making money and making more money…
    • “Making money is good to a point, but it loses its luster after a while. The more interesting thing to ask other than making money is, “What are all the things that should exist, that don’t?'”
      • “These things like new revolutionary health care sensors are the energy of life. We should be doing these things because if we don’t, nobody will.”

Healthcare Investing

  • The way Chamath and his team think about the world in healthcare falls in two buckets:
    • 1) There is a ton of really bad stuff happening that people need help with (cancer, chronic heart failure, diabetes, etc.)
      • The way to help them is not to actually build services for them, but to build services for the insurance companies and the hospitals because people, unfortunately, do not demonstrate the desire to take control of those diseases
    • 2) The second category is simple sensors that really allow you to get insight into your body
      • “Eventually you will be able to download this app, you will have a personal trainer, and that person will interpret the data coming in real-time and tell you what to do”

The Future of Tech

  • If you look at the S&P 500, about 8% of those are true tech companies
    • Chamath thinks that in 30 years, at least half of the S&P 500 will be made up of tech companies
      • The half-life of a fortune 500 company is less than 3 years, which means there is a lot of churn
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