[00:00:28] Lynne Chou O’Keefe: Well, thank you so much and welcome to another podcast of Day Zero, where we interview founders really progressing and transforming the healthcare industry. I’m Lynne Chou O’Keefe founding and managing partner of Define Ventures. We’re an early stage venture capital firm. And I’m just so welcomed to be joined with A.G. And many of you might actually even know A.G. I always say that she is someone who has almost been legendary here in healthcare for such a long time. But A.G. iS a five-time founder. The last three, she founded Humedica, sold that to Optum, was the Chief Product Officer of Optum Analytics. She then was the founding GP at Optum Ventures and invested in early stage digital health companies. And then in 2019, was the founder of Folx health, which is an LGBTQ health direct to consumer company. And like I said, that’s only three out of the five there. So A.G., I don’t even know. I can’t even keep up really with your vision and where you’re going with everything. Before we get to all of those just monumental achievements, maybe we can just start, I always like starting from the very beginning, and just talk to us about what led you to kind of, A, healthcare and maybe, B, really starting to think about doing something different and founding something because, if I remember, I mean, you were really actually classically trained as a lawyer.

[00:02:00] A.G. Breitenstein, J.D., MPH: Yeah, so, started my career as a lawyer, thought that was a great way to make change, started my career actually working in a clinic with LGBTQ kids on the streets of Boston. It was the height of the AIDS crisis. And got a firsthand look at how broken the healthcare system was and realized that being a lawyer was trying to work one brick at a time. And I had an instinct that I wanted to work at the system level, but didn’t know what that meant at all. And also felt like I wanted to build something, but didn’t know what that meant either. And really hadn’t thought about entrepreneurship. I’ll fast forward a little bit, but went to public health school and there got recruited by a couple of entrepreneurs in Boston who are working around data and analytics. And they pulled me in. And again, I had no idea what they were doing or how to do it, or what equity meant or any of those things, but really quickly got the bug, mostly because I saw how quickly we could build and how quickly we could start to have an impact in a way that just was astonishing to me coming from the perspective that I had been coming from in terms of policy and law and sort of that sort of thing. So, I was hooked. I was absolutely hooked and knew that was where I was headed.

[00:03:14] Lynne Chou O’Keefe: Wow. And so what was that first, the two founders that came to you and you were just learning the ropes and what a start-up was. What compels you to say, this is right for me at this time? Or is it the opportunity set? What goes in the mind of A.G. to say, yes, I’m going to found something here?

[00:03:35] A.G. Breitenstein, J.D., MPH: Yeah. I have kind of an obsession with learning new things and one of the things that I think is a little bit maybe strange, but I think entrepreneurs share this, is I love that uncomfortable feeling of not knowing. Some people really don’t like that uncomfortable feeling of not knowing, but I actually really get a charge out of it. And one of the things, and you and I have often spoken about this, that I think makes great entrepreneurs is, he or she who learns the fastest wins. And so being obsessive about learning and about wading into the unknown, to me, is really, I think just an absolutely non-negotiable characteristic of a great entrepreneur. And it turns out that I love the unknown and I love feeling ignorant and like I’m going to go learn something. So those first few years, like I said, I was working with a couple of entrepreneurs in Boston, one of whom was a serial entrepreneur. He had started several companies in the Bluetooth space and all kinds of stuff. So he just wandered around various industries looking for companies to start. And that to me is really exciting. I was like, oh, you can like go and have successive companies that you build and have impact in different places over reasonably short periods of time. A legal case can stretch for a decade and this guy had started three companies in the space of a decade. And they were all going concerns. And I was like, oh my God, that’s amazing. And our other co-founder was a research doctor. And same thing with him. He was like, I’m looking at spans of decades to run trials and we can run companies in short cycle. But those same characteristics, they shared those same characteristics as well, which was a love of experimentation, a love of not knowing, and really playing that game of, how can we learn the fastest? How can we learn the cheapest? You, and I have spent a lot of time talking about that and how do we sort of ask the right questions? Because the answers are always going to change, but get really, really good at asking questions.

[00:05:43] Lynne Chou O’Keefe: Yeah, it’s so interesting. What are the few questions? Or are there are a couple of things you’re always looking for that I guess it passes the A.G. smell test, that this is something that could be big that’s worth founding. Are there at least a couple things that you do look for, even though you don’t have the nth answer to the nth question, if you will?

[00:06:05] A.G. Breitenstein, J.D., MPH: Yeah. Yeah. And I have learned this the hard way. I would say that like many entrepreneurs, early on, I sort of started with the solution. I would get really interested in what data could do or the interesting things that we had skillsets in relative to extracting or making sense out of data. And the mistake was, and this is, I think, it’s people do it all the time, is starting with the solution and then going out and being like, well, we can do all this great stuff. Let’s go find people who need what we do. And that is completely the upside down way of doing it. So, so now what I get obsessed with is finding a very big problem that touches a lot of people in a moment where there is potentially a lot of money coming in from multiple sources, right? So there’s many go to markets in healthcare and so will payers pay? Will employers pay? Will individuals kick in? Is there a way of getting all the money flows lined up and does that bucket actually add up to a large bucket? Is it a large bucket for a specific and set number of people? Is it a lot of people? And how do you quantify essentially the TAM? And you and I, again, have had lots of long night conversations about like how do you really think about TAM? And I get very dogmatic about the fact that, yes, you should look at the potential impact. Everybody comes in, we’re going to prevent hospitalizations and hospitalizations cost $13 billion. That’s not necessarily your TAM. Your TAM is, how many people will buy your thing and how long is it going to take you to sell to them? Right?Because TAM also should be discounted over time and sales cycles. And that’s another thing I think people don’t think about. But, so I get really obsessed about like, starting with that because if you have a big number, if you have a large problem that a lot of people are invested in solving, you can experiment with a lot of different models and you can fail because you’re going to, right, across those different models and still have a great business. And the ideal circumstance is where you have at least two, ideally three, go to markets that you can really lock in and who are deeply aligned and invested. That doesn’t meanethey’re going to want the same solution, but they want the same problem solved, potentially from different perspectives, but they want the same problem solved. And that to me is sort of the beginning of the magic is getting excited about, wow, this is a big problem. A lot of people care about this and there’s a lot of money behind solving it.

[00:08:38] Lynne Chou O’Keefe: So now A.G. has seen this big TAM. You’ve seen potential go-to markets. And you say, I’m going to found this. Kind of like day one, what are the things, or what’s the A.G. recipe, that you start to think about that you say, okay, and name whatever, is it the first 90 days or the first six months? Like, how do you think or what are the things that you really like to tackle?

[00:09:07] A.G. Breitenstein, J.D., MPH: Yeah. Yeah. And I think I’ve become a sort of a truffle pig for who will spend money and how can we test that? So there’s a long tradition in the sort of B2B space, I think, of going and getting the sentinel client and so on. And a lot of people sort of think you’ve got to give it all away free and blah, blah, blah. And my question is always, actually, who will pay for us to help dive in and solve this problem, even in the context of a pilot? And it doesn’t have to be, obviously, I don’t think it’s usually upfront money, but will they sign a dollar contract for us to achieve a certain outcome by virtue of the problem that we solve? And that to me is really important. I think again, and it can be discounted, there can be all sorts of ways to compensate your early customers, but the willingness to pay, I think is the sentinel test. And with some sense of the scale of the dollars engaged, in solving the problem. And like I said, there’s a lot of ways of structuring those early contracts so your early customers get upside on having worked with you and taking the risk on you. But proving that willingness to pay. And then in the direct to consumer, and I think you and I love doing this, which is, how do we put up really cheap tests up to test whether or not people will actually pull their credit card out of their wallet and pay for something? And I think we’ve gotten actually quite good at that. And we’ve gotten creative in the ways of doing that, but I’m, like I said, really looking for somebody’s willingness to pull their credit card out of their wallet to me is really important. And if people are saying, yeah, you know, I, and this goes to one of my other cardinal rules. Never give anything away free in healthcare. If you’re giving things away, unless it’s to, in very few rare circumstances in some sort of freemium model, you’re probably doing something wrong and you’re probably making an assumption that’s going to prove to bite you in the butt later on. Somebody’s got to pull their wallet out and that’s really critical.

[00:11:19] Lynne Chou O’Keefe: I am. I’m curious, what are the first couple of hires you look for, because I think, absolutely, on your go to market strategy and how you’ve thought about it, and then now, again, you’re that one person in the compan. How do you think about it A.G.? And I know, it goes without saying, having been the Chief Product Officer of many companies, a kind of certain bent, right? And then what if you’re not as product oriented as you are? Let’s say some of our listeners are founders that are more commercially oriented, let’s just say that. How would you adjust that thinking and framework?

[00:11:59] A.G. Breitenstein, J.D., MPH: Yeah. So I think you put your finger on a really important point, which is figuring out what you’re not good at and finding the people around you that you need really quickly to help manage that. And again, I think it has to do with doing it in a way that is extremely cost-effective, particularly in those very earliest days. So it’s sort of about finding people that are as crazy as you are and who are willing to work for a year for peanuts in a sense and the hope of something. And so those those people that have those beliefs I think are first and foremost. Second, I think, is the skillset. So is this a deep technical build? Is this a B2B play and you really need somebody who’s got the sort of biz dev strategic partnership kind of skills that can bridge into sales? Is this a D to C play where you need somebody that’s got a little bit more of that performance marketing and I think community building aspect to their skillset? Do you need somebody that’s clinical and how can you acquire that knowledge base? So, it depends on the market. It depends very definitively on the market. With Folx, we started D2C. We did that very deliberately because we really wanted to build something that had broad appeal and could achieve and could connect with the community at a very deeply authentic level. And so it was about recruiting. Clinical marketing expertise and technical were the first three boxes that we really needed to check. And then I usually try to have somebody who’s an all star athlete in the background as well, who’s way, way better at me at organizing things because you always need somebody who is just operationally minded to start to think about basically keeping the trains running early, but also, the track that you lay early is going to determine so much of how the company either succeeds or fails. And if you screw that up or you misstep on making some assumptions structurally, you can get yourself into trouble down in your undoing pulling wiring out or pulling culture mistakes out. And that’s tough to do. It’s tough to do later on.

[00:14:13] Lynne Chou O’Keefe: You are, I believe, if not the rare, if not only, digital health founder that’s founded a B2B business from zero to exit, and then also a direct to consumer business from zero to the momentum that Folx has today. And it’s just such a, it’s such a unique perspective on kind of healthcare. What are the kind of attributes or the differences? Are there a couple of things that you’d want to tell people that, just like between those two worlds, which many do not straddle, or like, where we should be thinking about convergence, because, again, I’ve been wracking my brain on this one, A.G., but truly, I think you’re the only entrepreneur who has done this.

[00:15:02] A.G. Breitenstein, J.D., MPH: Well, I hope that doesn’t persist as being the case. B2B in healthcare is a relationship game. It’s a really actually small landscape And between the large health systems, the large payer organizations, the major self-insured employers, the major sort of anchor tenants in pharma and CROs and PBMs, to just throw all the letter soup out that we live in every day. Those are fairly well understood kind of anchor tenants in the healthcare landscape. And so being able to understand, and this is what I always say when we get like a new young entrepreneur who’s like, I’m going to solve the problem of buying drugs in the healthcare market. And you’re like, okay, do you know why, what the legacy history is of PBMs and the way purchasing happens and the way pharma interacts with payers? Like, do you understand how those relationships work and how those money flows work? And they’re like, no, but I just know they stink and you’re like, no, they do stink. Like the money flows are not efficient. We know that. But, there are big reasons for those structural inefficiencies. And what I always like to say in healthcare is one person’s inefficiency is another person’s entire revenue stream. So thinking that you’re just going to go in and kind of have a great solution is usually wrong, especially in the B2B context. So understanding and going in with an acute knowledge of where you’re going to hit a wall and understanding how you can get around that. Not that you’re not going to go break that wall down later, but as a new company, as a young company, where do you have to navigate those structural aspects of the market? And then how are you going to break that wall down once you get to scale? Because scale is the battering ram of healthcare.

[00:16:54] Lynne Chou O’Keefe: Yeah, you’re going to laugh because, of course, our analogies are incredibly similar. So I said in the past to entrepreneurs, I know you want to storm the castle, but don’t you want a map of the castle? Like understand how the castle is built. Understand the thickness of that wall, right? Understand the next gate after that gate. And then with that knowledge, let’s go storm the castle.

[00:17:21] A.G. Breitenstein, J.D., MPH: That’s right. And are you dealing with a granite block or is this a two-faced stone that we can just drill right through, right? Like, you have to understand where the deep geography and architecture of the system is. There’s no question. And that is just a lifetime of just banging your head against those rocks to know what they’re made out of. And you can acquire that. You can acquire that knowledge, but you have to be very studious about it. And you have to be respectful of the fact that those are long standing structural aspects of the system. What I will say, and you and I, I think also agree on this, is like, I have a really simple mantra in healthcare, which is, as goes the patient, so goes the money. If you could redirect patients through new flows, if you can redirect patients and engage them in new ways you can start. That is one of the biggest levers. And that is , toyour point about sort of my transition from B2B to D2C, was really driven by the recognition that if you can go directly to patients and consumers and people, and you can engage them deeply, then you can start to make change to the healthcare system based on the fact that you now have a bunch of people who are clamoring with you outside the gates, so to speak. And that’s a much more powerful force than just sort of standing outside the castle and being like, this is a stupid castle. You should blow it up. Because someone standing in a castle is going to be like, why should I blow my castle up? You are not making any sense. But if have people outside sort of saying like, no, this is actually not working for us, that is a hugely important lever. And personally, I think a lot of businesses, I won’t say all, but a lot of businesses should be thinking about the ways in which they interact directly with consumers, given that we can reach them now effectively through social media and through other platforms if you’re willing to put the time in to learn how to master those media.

[00:19:20] Lynne Chou O’Keefe: Yeah, it’s really interesting to me because I think, typically, the world sees this as like two different business models. And I think you and I have talked a long time about actually like the convergence of this. And so just to put a finer point, like, I actually believe in B2B models. We need to think about the consumer even though it’s a B2B model, right? And how do we leverage that force even in this model, right? And so I think that instead of the world seeing this as like two distinct ways and I think we’re starting to see that, right, the interlacing of these things. And so we really absolutely resonate on that, which is, I think the exciting part of healthcare for the next 5, 10 years.

[00:20:14] A.G. Breitenstein, J.D., MPH: Absolutely. And I mean, I think coming from my experience with Optum and UHG, we had unbelievably good programs and people were scratching their heads saying we have single digit engagement. And it was like, of course we have single digit engagement, like people aren’t going to be like, I’m going to go to my insurance company, ask them for a program to help my weight loss. It was like, that’s not the way people think. And we are not building healthcare still. And I think this is going to be the next, I think really interesting thing. And we’re starting to see this with the companies that I get really excited about, which is they’re building brand. They’re actually building consumer brand. And that consumer brand is a brand that people,` in their own lives, want to be associated. So again, using Folx as an analogy, we deliberately wanted to build a brand that people would feel amazing about, both in terms of packaging and the way that they thought about just the look and feel and everything, that this is a brand that represents them as people in the world. And I think as we start to think about the companies that are starting to reach people, whether it’s in mental health or whether it’s in weight loss, or whether it’s in even complex illness, cancer, others, people, I think, want to have control of their lives and healthcare is essential to that. And if we build brands that people can latch onto and think about as representing them, that to me, again, is a huge lever and it helps us think very differently about engagement. Healthcare doesn’t think about brand in that way. And I think it’s a huge opportunity.

[00:21:55] Lynne Chou O’Keefe: Yeah. I mean, I just think about so many things that you just said in terms of how you founded Folx and that evolution. And we at Define, very much, again, similarly to how you talk about it, is like authenticity of voice, right? And really focusing on like the community first, like almost before even product, right? Like what is this going to speak to who they are and how they see themselves and how the world sees them? It’s just, it’s so fundamental and so powerful. And now we see like the brand that Folx has become being named Time Most Hundred Influential Brands of the Year. Again, I don’t think we’re used to seeing digital health companies or healthcare companies being told that are one of the most influential brands.

[00:22:47] A.G. Breitenstein, J.D., MPH: If you think about the most powerful brands in the country historically, and not necessarily the biggest companies, but the most powerful brands, a lot of them touch the body, right? It’s clothing, right? It’s makeup. It’s stuff that represents our physical, the way we move through the world. And that’s the opportunity to me that healthcare hasn’t captured, is to recognize that, like, this is how people move through the world. It touches them. And also breaking down that artificial barrier between health and wellness. It is a huge opportunity to sort of say it like, wow, that touches me every single day, whereas, like, I may not interact with my bicycle every single day, right? That may not be a thing that represents me. But my body does.

[00:23:39] Lynne Chou O’Keefe: I do think it’s so important to talk about that moment with Folx, that very first moment of what inspired you, what you were seeing in the world and like to the phone call, if you will walk us through a little bit of that, because I think it’s such, again, a unique story that’s going to happen so many more times in healthcare as we walk forward over the next 10 years, as we think about this interwoven consumer experience. Talk about what was like influencing you at that time, what you were seeing and what drove you to this?

[00:24:15] A.G. Breitenstein, J.D., MPH: Yeah. Yeah. I think first was watching companies like HIMMS and Ro break down the ability for a consumer brand to, I think, really reach people on the basis, again, of that, how do I want to be represented in the world and how does healthcare interact with that? That to me was really provocative and interesting. And so I was looking at it from that perspective and what I wanted to elaborate then was to sort of say, look, if we can find, if there is a community, a single group of people who share a characteristic or share a concern, and sometimes that’s disease states, what have you, I think that gives you the ability to then have a really long relationship. And so, I was looking for something. And then I always like to tell people that I had a dope slap moment, where I sort of was like, oh my God, my own community, right, the LGBTQ community. And when I really stopped to think about that it, to me allowed an exploration, I think, of a dynamic that a lot of people interacting with healthcare experience, but don’t articulate, which is, for the LGBTQ community, there is a deep sense of alienation in terms of the healthcare system always dictating to us that we are abnormal and that we are different and that we don’t conform to the definitions, whether it’s gender identity or sexuality or how you make family or any of these things, even your mental health status. And that I think is an incredibly disempowering construct. Now let’s put aside physical assault and discrimination, which also happens at an incredibly high degree. But under that was the sense of wanting to control our bodies, wanting to control our identities and labeling those in such a way that that created alienation and disconnect. The interesting thing to me is that that’s actually, it is very acute in this population. It is not unique to this population. If you’re a female, right, if you are of a certain age, if you are of a certain weight, if you are of many different characteristics, you are labeled in lots of different ways as being abnormal. And so what that uncovered for me was this interesting question of, how do we put patients in control? Not patient-centricity, actual patient control. And what does that challenge in the healthcare system? That to me was a very deep emotional vein to mine. And then came the call to you, which was to say, okay. I think there’s a really powerful thing here that we can do for the LGBT community, but also that will resonate more generally and that becomes a model for this idea of, how do you build brands that really go to the ability for people to start to control their bodies and have healthcare be an instrument that they use for self-determination, as opposed to the opposite, which is what most often happens. If you’re diagnosed with a significant illness, cancer or others, you suddenly have this moment of being, quite frankly, on your back. And regaining that sense of self-control, regaining now having the ability to make the healthcare system an instrument for your own purposes, rather than feeling like things are just being done to you, I think is an incredibly new, different and powerful tool for us to build companies and build brands around because it really touches the heart of who we are as self determinant. And that is something that I think we can build on all day long.

[00:28:01] Lynne Chou O’Keefe: I mean, I think I can think about what you just said for many, a long, long time after this podcast. So maybe we’ll just conclude is A.G., if you’re a young entrepreneur, are there just a couple of lessons or anything, just words of advice, if you will, you have for the next generation?

[00:28:21] A.G. Breitenstein, J.D., MPH: Yeah. I mean, I think, learn really fast. Get really good at learning really, really fast, which means assume you’re wrong most of the time, or assume that if you’re, and you’ve heard me say this, I always like to say this to young entrepreneurs, on your best day, you are going to be right about 40% of the time, which means that you’re going to be wrong most of the time. And the other thing is if you don’t constantly push that horizon of understanding, you will go from 40 to 39 to 38 to 37 really fast because no knowledge actually stays true except the knowledge of change itself. But so being obsessive about that and not being afraid of that sense of ignorance. And then I think the other thing is, particularly in healthcare, is understand that landscape. Understand where those castles are and why they exist. And don’t assume that just some great solution is going to be the battering ram that’s going to knock that thing down. Chances are really good you’ve got to be inside the castle and you’ve gotta be inside the architecture to figure out how to then change it as opposed to try to just blow it up. And then, like I said, I think the third thing is, as go to the patient, so goes the money. So figure out how to engage the patient communities that you’re working with. And in particular, don’t do it at them, do it with them. That I think will always serve you unless you’re building the pure technical solution under the covers. But always regard that as you think about where you’re going.

[00:29:50] Lynne Chou O’Keefe: Well, A.G., as always, your inspiration, your experience, your just, I just have to say at your vision of everything is just so incredibly inspiring and just so honored to partner with you in so many different ways. And so thank you for your time here on this podcast. Thank you for your lessons learned and truly your energy to recreate a new healthcare system.

[00:30:18] A.G. Breitenstein, J.D., MPH: Well, Lynne, I have to thank you for this. I think I wish I’d had a podcast like this when I was trying to figure out this incredibly interesting but complicated world. And I think there cannot be a greater resource for young entrepreneurs to be thinking about healthcare in particular, because it is not a normal industry and you are just one of the best guides, if not the best guide, I know to help us navigate this incredibly complicated system, because it is just, it is not for the faint of heart. So thank you.

[00:30:50] Lynne Chou O’Keefe: Yeah, well, right back at you. Thank you so much.