By KMI BELLARD

I’ve been thinking a lot about infrastructure. In particular, what to do when it fails.

There was, of course, the tragic collapse of Baltimore’s Francis Scott Key Bridge. Watching the video – and, honestly, what were the odds there’d be video? — is like watching a disaster movie, the bridge crumbling slowly but unstoppably. The bridge had been around for almost fifty years, withstanding over 11 million vehicles crossing it each year. All it took to knock it down was one container ship.

Container ships passed under it every day of its existence; the Port of Baltimore is one of the busiest in the country. In retrospect, it seems almost inevitable that the bridge would collapse; certainly one of those ships had to hit it eventually. The thing is, it wasn’t inevitable; it was a reflection of the fact that the world the bridge was designed for is not our world.

Transportation Secretary Pete Buttigieg noted: “What we do know is a bridge like this one, completed in the 1970s, was simply not made to withstand a direct impact on a critical support pier from a vessel that weighs about 200 million pounds—orders of magnitude bigger than cargo ships that were in service in that region at the time that the bridge was first built,” 

When the bridge was designed in the early 1970’s, container ships had a capacity of around 3000 TEUs (20-foot equivalent foot units, a measure of shipping containers). The ship that hit the bridge was carrying nearly three times that amount – and there are container ships that can carry over 20,000 TEUs. The New York Times estimated that the force of the ship hitting the bridge was equivalent to a rocket launch.

“It’s at a scale of more energy than you can really get your mind around,” Ben Schafer, a professor of civil and systems engineering at Johns Hopkins, told NYT.

Nii Attoh-Okine, a professor of engineering at the University of Maryland, added: “Depending on the size of the container ship, the bridge doesn’t have any chance,” but Sherif El-Tawil, an engineering professor at the University of Michigan, disagreed, claiming: “If this bridge had been designed to current standards, it would have survived.” The key feature missing were protective systems built around the bases of the bridge, as have been installed on some other bridges.

We shouldn’t expect that this was a freak occurrence, unlikely to be repeated. An analysis by The Wall Street Journal identified at least eight similar bridges also at risk, but pointed out what is always the problem with infrastructure: “The upgrades are expensive.”

Lest anyone forget, America’s latest infrastructure report card rated our overall infrastructure a “C-,” with bridges getting a “C” (in other words, other infrastructure is even worse).

What’s the plan?

——–

Then here’s an infrastructure story that threw me even more.

The New York Times profiled the vulnerability of our satellite-based GPS system, upon which much of our modern society depends. NYT warned: “But those services are increasingly vulnerable as space is rapidly militarized and satellite signals are attacked on Earth. Yet, unlike China, the United States does not have a Plan B for civilians should those signals get knocked out in space or on land.”

Huh?

At least in Baltimore drivers can take another bridge or container ships can use another port, but if cyberattacks or satellite killers took out our GPS capabilities, well, I know many people who couldn’t get home from work. “It’s like oxygen, you don’t know that you have it until it’s gone,” Adm. Thad W. Allen, who leads a national advisory board for space-based positioning, navigation and timing, said last year.

“The Chinese did what we in America said we would do,” Dana Goward, the president of the Resilient Navigation and Timing Foundation in Virginia, told NYT. “They are resolutely on a path to be independent of space.” Still, NYT reports: “Despite recognizing the risks, the United States is years from having a reliable alternative source for time and navigation for civilian use if GPS signals are out or interrupted.”

The economic and societal impacts of such a loss are almost unfathomable.

———

And, if you assume, well, the odds of satellite killers taking out all of the GPS satellites is unlikely – Elon can just send more up! – then think about the underseas cables that carry most of the world’s internet traffic. According to Robin Chataut, writing in The Conversation, there are some 485 such cables, with over 900,000 miles of cable, and they carry 95% of internet data.

What you don’t realize, though, as Professor Cataut points out, is: “Each year, an estimated 100 to 150 undersea cables are cut, primarily accidentally by fishing equipment or anchors. However, the potential for sabotage, particularly by nation-states, is a growing concern.”

The cables, he notes, “often lie in isolated but publicly known locations, making them easy targets for hostile actions.” He recommends more use of satellites, so I guess he’s not as worried about satellite killers. 

We’ve recently seen suspicious outages in West Africa and in the Baltic Sea, and cables near Taiwan have been cut 27 times in the last five years, “which is considered a lot by global standards,” according to ABC Pacific; accordingly, “it has been happening so frequently that authorities in Taiwan have started war-gaming what it would look like to lose their communications with the outside world altogether and what it would mean for domestic security and national defence systems.”

It’s not just Taiwan that should be war-gaming about infrastructure failures.

————–

If all this seems far afield from healthcare, I have two words for you: Change Healthcare.

Until six weeks ago, most of us had never heard of Change Healthcare, and even among those who had, few realized just how much the U.S. healthcare system relied on its claims clearinghouses. With those frozen due to a cyberattack, physician practices, pharmacies, even hospitals weren’t getting paid, creating a huge crisis.

Infrastructure matters.

Think what would happen if, say, Epic went off-line everywhere.  Or have we forgotten one of the key lessons of 2020, when we realized that over half of our prescription drugs (or their active pharmaceutical ingredients – APIs) are imported?   

Healthcare, like every industry, relies on infrastructure.

Infrastructure is one of the many things Americans like to avoid thinking about, like climate change, the national deficit, or healthcare’s insane costs. I understand that we can’t fix everything at once, nor anything quickly, but at the very least we should be coming up with Plan Bs for when critical infrastructure does finally fail.

Kim is a former emarketing exec at a major Blues plan, editor of the late & lamented Tincture.io, and now regular THCB contributor

By KMI BELLARD

I’m thinking about electric vehicles (EVs)…and healthcare.

Now, mind you, I don’t own an EV. I’m not seriously thinking about getting one (although if I’m still driving in the 2030’s I expect it will be in one). To be honest, I’m not really all that interested in EVs. But I am interested in disruption, so when Robinson Meyer warned in The New York Times “China’s Electric Vehicles Are Going to Hit Detroit Like a Wrecking Ball,” he had my attention. And when on the same day I also read that Apple was cancelling its decade-long effort to build an EV, I was definitely paying attention.

Remember when 3 years ago GM’s CEO Mary Barra announced GM was planning for an “all electric future” by 2035, completely phasing out internal combustion engines? Remember how excited we were when the Inflation Reduction Act passed in August 2022 with lots of credits and incentives for EVs? EVs sure seemed like our future.

Well, as Sam Becker wrote for the BBC: “Depending on how you look at it, the state of the US EV market is flourishing – or it’s stuck in neutral.” Ford, for example, had a great February, with huge increases in its EV and hybrid sales, but 90% of its sales remain conventional vehicles. Worse, it recently had to stop shipments of its F-150 Lightning electric pickup truck due to quality concerns. Frankly, EV is a money pit for Ford, costing it $4.7b last year – over $64,000 for every EV it sells.

GM also loses money on every EV it makes, although it hopes to make modest profits on them by 2025.  Ms. Barra is still hoping GM will be all electric by 2035, but now hedges: “We will adjust based on where customer demand is. We will be led by the customer.”

In more bad news for EVs, Rivian has had more layoffs due to slow sales, and Fisker announced it is stopping work on EVs for now. Tesla, on the other hand, claims a 38% increase in deliveries for 2023, but more recently its stock has been hit by a decline in sales in China. It shouldn’t be surprising.

As Mr. Meyer points out:

The biggest threat to the Big Three comes from a new crop of Chinese automakers, especially BYD, which specialize in producing plug-in hybrid and fully electric vehicles. BYD’s growth is astounding: It sold three million electrified vehicles last year, more than any other company, and it now has enough production capacity in China to manufacture four million cars a year…A deluge of electric vehicles is coming.

He’s blunt about the threat BYD poses: “BYD’s cars deliver great value at prices that beat anything coming out of the West.”

The Biden Administration is not just sitting idly.

Last December the Administration proposed rules that would limit Inflation Reduction Act subsidies going to materials from China – it doesn’t just make cheap EVs, it makes cheap batteries – and last week warned that internet-connected Chinese vehicles, including EVs, could pose a threat to national security: “China’s policies could flood our market with its vehicles, posing risks to our national security…Connected vehicles from China could collect sensitive data about our citizens and our infrastructure and send this data back to the People’s Republic of China. These vehicles could be remotely accessed or disabled.”

And, of course, underprice American-made vehicles.

Mr. Meyer identifies the core problem for at least Ford and GM: “Specifically, Ford’s and GM’s earnings rest primarily on selling pickup trucks, S.U.V.s and crossovers to affluent North Americans…In other words, if Americans’ appetite for trucks and S.U.V.s falters, then Ford and GM will be in real trouble.”

He believes that President Biden will need to impose trade restrictions, but not blindly:

Mr. Biden must be careful not to cordon off the American car market from the rest of the world, turning the United States into an automotive backwater of bloated, expensive, gas-guzzling vehicles. The Chinese carmakers are the first real competition that the global car industry has faced in decades, and American companies must be exposed to some of that threat, for their own good. That means they must feel the chill of death on their necks and be forced to rise and face this challenge.

It’s the 1970’s all over again, when American was selling over-priced, gas-guzzling sedans while Japan and South Korea were offering cheaper, more energy-efficient, higher quality compacts. Now it is China and EVs versus our internal combustion pickups & SUVs. Look how that turned out for Detroit.

The “chill of death” indeed.

———–

When I think of the Detroit Big Three analogy for healthcare, I think of hospitals (30% of all spending), clinicians (20%), and pharmaceutical companies (9%). When I think about the affluent Americans buying the big SUVs/pickups, I think about the small percent of the population who account for most of spending: the top 1% accounts for 24% of spending, the top 5% for 51%, and the top 10% 67%. The bottom 50% of the population accounts for 3%.

The healthcare system is designed around the big spenders, and price is seemingly no object for them (although, of course, unlike the affluent and their big vehicles, we all pay for the big healthcare spenders through our premiums and taxes). If we magically made them healthy (which seems like a good thing), the healthcare system would collapse (which seems like a bad thing).

Fifteen or so years ago one might have hoped that EHRs and the digitalization of healthcare generally might be the equivalent of EVs hitting the automotive industry. That didn’t happen; as it is wont to do, healthcare just absorbed them and kept making things more expensive. Today one might hope that AI will make everything more efficient, more effective, and, goodness knows, less expensive, but I’m not holding my breath. Right now, I don’t see anything that will “deliver great value at prices that beat anything coming out of the West.”

I want the US to be a leader in EVs, and other clean energy technologies. I want us to be a leader in all the 21^st century technologies, including those, AI, quantum computing, robotics, nanotechnology, synthetic biology, and materials science, to name a few. And I want our healthcare system to be a 21^st century leader too; as I like to say, I want it to be more familiar to someone from the 22^nd century than to someone from the 20^th century, as I fear is still true today.

Unfortunately, I’m still not sure what the thing is that will give healthcare “the chill of death” and force it to be better.

BY KIM BELLARD

Earlier this year I urged that we Throw Away That Phone, arguing that the era of the smartphone should be over and that we should get on to the next big thing.  Now, I don’t have any reason to think that either Sam Altman, CEO of OpenAI, and Jony Ive, formerly and famously of Apple and now head of design firm LoveFrom, read my article but apparently they have the same idea.  

Last week The Information and then Financial Times reported that OpenAi and LoveFrom are “in advanced talks” to form a venture in order to build the “iPhone of artificial intelligence.”  Softbank may fund the venture with as much as $1b.  There have been brainstorming sessions, and discussions are said to be “serious,” but a final deal may still be months away. The new venture would draw on talent from all three firms.

Details are scare, as are comments from any of the three firms, but FT cites sources who suggest Mr. Altman sees “an opportunity to create a way of interacting with computers that is less reliant on screens.” which is a sentiment I heartily agree with.  The Verge similarly had three sources who agreed that the goal is a “more natural and intuitive user experience.”

OpenAI’s ChatGPT took the world by storm this year, and continues to wow; last week OpenAI announced that it could now “see, speak, and hear,” offering “a new, more intuitive type of interface by allowing you to have a voice conversation or show ChatGPT what you’re talking about.”  No wonder a future less reliant on screens makes sense. 

“Given Ive’s involvement, it’s most likely to be some sort of consumer device, like a reimagined phone,” write Jessica Lessin and Stephanie Palazzolo for The Information. “One possibility is OpenAI is building its own operating system… Imagine an AI-native operating system that could generate apps in real-time based on what it believes its user needs, or one that listens to nearby conversations and automatically pulls up relevant information for its user.”  

I sure hope we wouldn’t get just a “reimagined smartphone.”  Carrying around a tiny computer with a screen seems so 1990’s, or at least so 2007.  In the soon-to-be world of ambient computing and virtual displays, as I discussed before, the mobile phone will soon be an outdated concept entirely.

The New York Times speculates that the initiative may be as much about control as it is innovation, saying:

One reason Mr. Altman may be determined to develop his own device is to avoid having OpenAI depend on Apple or Google’s Android for distribution. Relying on other platforms has challenged tech giants, such as Facebook and Amazon, because Apple and Google take a cut of sales across their platform. Apple also has introduced privacy limits, which cut into advertising sales.

Several tech outlets reporting on the talks noted that there is a long list of software companies with a rather dismal record when trying to shift to hardware. Ars Technica quotes former Microsoft Windows Division President Steven Sinofsky: “”Anyone can build a phone. Watching Google and Microsoft should be good evidence that few can distribute one.”  TechCrunch says: “But hardware is a tricky business. OpenAI knows this well,” mentioning the robotics research division it shut down in 2021 due to “major technical difficulties.”  

What I’m wondering is if we really need Mr. Ive or the OpenAI team at all.  Perhaps you haven’t been paying attention to the work being done at Wharton on AI, but Wharton professors Christian Terwiesch and  Karl Ulrich, former Wharton graduate student Lennart Meincke, and Cornell Tech professor Karan Girotra ran an entrepreneurial competition between Wharton MBA students and ChatGPT – and ChatGPT won. 

“I was really blown away by the quality of the results,” Professor Terwiesch said. “I had naively believed that creative work would be the last area in which we humans would be superior at solving problems … so we set up this horse race of man versus machine.”  ChatGPT not only produced more ideas, but vastly outperformed students in ideas that were rated “exceptional.”  Quantity and quality of ideas.  

Their three takeaways are:

• First, generative AI has brought a new source of ideas to the world.
• Second, the bottleneck for the early phases of the innovation process in organizations now shifts from generating ideas to evaluating ideas.
• Finally, rather than thinking about a competition between humans and machines, we should find a way in which the two work together.

Another new study, in Scientific Reports, found that, yes, chatbots outperformed most humans when “asked to generate uncommon and creative uses for everyday objects,” but “the best human ideas still matched or exceed those of the chatbots.”  I guess we can breathe a (temporary) sigh of relief, but I have to worry about the quality of those Wharton MBA students. 

The authors of the latter study cautioned:

However, the AI technology is rapidly developing and the results may be different after half year. On basis of the present study, the clearest weakness in humans’ performance lies in the relatively high proportion of poor-quality ideas, which were absent in chatbots’ responses. 

The Wall Street Journal’s Christophe Mims warns we’re not going to be able to avoid or ignore AI, in either our personal or professional lives: “Soon, most of us will use tools like these, even if indirectly, unless we want to risk falling behind.”  Along the lines of what Messrs. Altman and Ive may be hoping, Mr. Mimms speculates: “Another way generative AI could make itself impossible to avoid: by becoming the default interface for information retrieved from the internet, and within companies.”

The moral of the story is that, if you’re looking for new ideas, and the best ideas, you better be using AI.  And soon, those ideas may come from the AI alone.

————-

 I usually try to link the topic of my articles to healthcare, however tenuously, and this one shouldn’t need much elaboration.  Healthcare may or may not need “the iPhone of artificial intelligence,” but it needs AI built into almost everything it does.  It also badly needs new ideas and serious innovation, and failing to use AI to generate those harms all of us.

AI is no longer science fiction.  It is the future, but it is now also the present – in our personal lives, in healthcare, and everywhere else.  I wish Messrs. Altman and Ive the best of luck, but what they’re doing should be the norm, not the exception. 

Kim is a former emarketing exec at a major Blues plan, editor of the late & lamented Tincture.io, and now regular THCB contributor.

BY MIKE MAGEE

In George Packer’s classic 2013 New Yorker article titled “Change the World: Silicon Valley transfers its slogans – and its money – to the realm of politics,” there is a passage worth a careful reread now a decade latter.

Packer shares an encounter with a 20-something techie critiquing his young colleagues who said, “Many see their social responsibility fulfilled by their businesses, not by social or political action. It’s remarkably convenient that they can achieve all their goals just by doing their start-up. They actually think that Facebook is going to be the panacea for many of the world’s problems. It isn’t cynicism—it’s arrogance and ignorance.”

Packer’s assessment at the time was “When financiers say that they’re doing God’s work by providing cheap credit, and oilmen claim to be patriots who are making the country energy-independent, no one takes them too seriously—it’s a given that their motivation is profit. But when technology entrepreneurs describe their lofty goals there’s no smirk or wink.”

Or, as others might say, “They believe their own bull shit.” Where many of us are currently focused on issues of values, fairness and justice, those in the shadows of Silicon Valley see the challenge to be inefficiency and incompetence, and the solution amenable to technologic engineering.

Back in 2013, a Belarusian immigrant student at Stanford named Evgeny Morozov coined the term “solutionism” for those with unshakeable confidence in hi-tech solutions.  A decade latter, Evgeny is now Visiting Scholar in Liberation Technology at Stanford, and a colleague of Larry Diamond (director of Stanford’s Center on Democracy) who coined the term, “liberation technology.” 

Stanford describes their focus this way: “The Internet, mobile phones, and other forms of ‘liberation technology’ enable citizens to express opinions, mobilize protests, and expand the horizons of freedom. Autocratic governments are also learning to master these technologies, however. Ultimately, the contest between democrats and autocrats will depend not just on technology, but on political organization and strategy.”

Evgeny naturally bridges this world of individual entrepreneurship and public policy.  His current focus is on AGI (artificial general intelligence) and its interface with his original concept of neo-liberal “solutionism.” He believes we have all been sold a bill of goods that technology is inevitable and beneficial, and that it will expand our intelligence and fix our inhumanity.

Evgeny says that it is already clear that the rise of entrepreneurial capitalism and destructive profiteering (let alone massive income inequality and segregation of tech gazillionaires) is altering representative democracy and replacing it with libertarians on steroids.

It is useful to remind ourselves that we’ve been down this road before. For example, it was none other than Margaret Thatcher who said, “There is no such thing as society.” How has that worked out in the post-Brexit period for the UK? 

Were she alive today, she would likely agree with AGI fans that private beats public, efficiency solves social troubles, and adjusting to change is a great deal quicker and easier that addressing core weaknesses in human or societal behavior.

Health tech’s recent “boom and bust” cycle laid truth to the lie that “really smart people” versus venture capitalist corporations are driving the information technology revolution. In the vast majority of cases, in health care and beyond, the “charm offensive of heavily subsidized services” is followed by “ugly retrenchment, with overdependent users and agencies shouldering the costs…”

In 2021, Health Tech managed to break all the records. The digital health market gained 43% more investors than in 2020, with $30.7 billion – a 107% rise – in venture capital. By 2022, the 85 corporations devoted to the field had collective valuations that had tripled to $73 million. 

Were these ideas category-defining? Were they sustainable? Were the investors a source of expertise or wise guidance? Were any of these products driving impactful change that would equitably change the life trajectory of the humans served? Did they lessen the populations fear and anxiety? Did they expand hopefulness and community engagement. Did they make America and Americans healthy?

Not according to Evgeny. He says, “The open agenda is, in many ways, the opposite of equality and justice. They think anything that helps you to bypass institutions is, by default, empowering or liberating. You might not be able to pay for health care or your insurance, but if you have an app on your phone that alerts you to the fact that you need to exercise more, or you aren’t eating healthily enough, they think they are solving the problem.”

Mike Magee MD is a Medical Historian and regular contributor to THCB. He is the author of CODE BLUE: Inside the Medical-Industrial Complex.

BY MIKE MAGEE

A few weeks ago New York Times columnist Tom Friedman wrote, “We Are Opening The Lid On Two Giant Pandoras Boxes.” He was referring to 1) artificial Intelligence (AI) which most agree has the potential to go horribly wrong unless carefully regulated, and 2) global warming leading to water mediated flooding, drought, and vast human and planetary destruction.

Friedman argues that we must accept the risk of pursuing one (rapid fire progress in AI) to potentially uncover a solution to the other. But positioning science as savior quite misses the point that it is human behavior (a combination of greed and willful ignorance), rather than lack of scientific acumen, that has placed our planet and her inhabitants at risk.

The short and long term effects of fossil fuels and carbonization of our environment were well understood before Al Gore took “An Inconvenient Truth” on the road in 2006. So were the confounding factors including population growth, urbanization, and surface water degradation. 

When I first published “Healthy Waters,” the global population was 6.5 billion with 49% urban, mostly situated on coastal plains. It is now 8 billion with 57% urban and slated to reach 8.5 billion by 2030 with 63% urban. 552 cities around the globe now contain populations exceeding 1 million citizens.

Under ideal circumstances, this urban migration could serve our human populations with jobs, clean air and water, transportation, housing and education, health care, safety and security. Without investment however, this could be a death trap. 

Clean, safe water is fundamental to maintaining the health and productivity of these city dwellers. Investment in water infrastructure, according to the OCED, delivers a 3 to 1 return on investment. So the money should be easy to find. But it’s not. And it’s not for a lack of science or technology. It is an issue of priorities. For example, American citizens manage to find 16 billion a year to spend on bottled water, almost always no better, and occasionally worse, than common tap water.

Robin Wall Kimmerer, in her novel “Braiding Sweetgrass,” writes:  “Among our Potawatomi people, women are the Keepers of Water. We carry the sacred water to ceremonies and act on its behalf. ‘Women have a natural bond with water, because we are both life bearers,’ my sister said. ‘We carry our babies in internal ponds and they come forth into the world on a wave of water. It is our responsibility to safeguard the water for all our relations.’”

When it comes to planetary health, that is the kind of respect, common sense, and imagination we need to yield quicker and better results than AI. Planetary health requires well ordered priorities and shifts in human behavior like the recent trend away from huge, dangerous and disruptive hydroelectric energy projects like the Three Gorges Dam in China. Humans now rely on hydroelectric projects for 16% of the world’s energy. That’s good in that it is renewable and lowers carbon emissions. But its’ effect on the environment, displacing humans and animals with dam construction, and playing a role in catastrophic disasters when dams fail, has drawn criticism.

In response, a simple solution called “pumped storage” is rapidly supplanting huge dam projects. The system is simple – two reservoirs, one high and one low. When energy use is low, water is pumped into the upper reservoir. When demand is high, water is allowed to flow into the lower reservoir through turbines that generate needed energy. Places like China, which has been all in on hydropower, has switched 80% of their future projects to “pumped storage” because it is fast, safe and effective, and can “provide a flexible backup for wind and solar.” The key insight is that the reservoir system acts as a battery, storing potential energy ready to go, on demand, without adding the additional cost of storage.

Knee-jerk over reliance on scientific inventiveness lets us all off the hook. Before we give a green light to the next batch of dot-come gazillionaires, we’d be smart to ask two questions: What makes sense? and What’s best for the health of all Americans?

In fairness to Tom Friedman, he warns about putting all our eggs in the scientific basket without tightening regulations that support “scaled sustainable values.” Yet his final words do little to encourage confidence based on past history and performance. As he puts it, “God save us if we acquire godlike powers to part the Red Sea but fail to scale the Ten Commandments.”

Mike Magee MD is a Medical Historian and author of “CODE BLUE: Inside the Medical-Industrial Complex.”

BY KIM BELLARD

I’ve been thinking about writing about Bluesky ever since I heard about the Jack Dorsey-backed Twitter alternative, and decided it is finally time, for two reasons. The first is that I’ve been seeing so many other people writing about it, so I’m getting FOMO.  The second is that I checked out Nostr, another Jack Dorsey-backed Twitter alternative, and there’s no way I’m trying to write about that (case in point: Jack’s Nostr username is: npub1sg6plzptd64u62a878hep2kev88swjh3tw00gjsfl8f237lmu63q0uf63m.  Seriously).

It’s not that I’ve come to hate Twitter, although Elon Musk is making it harder to like it, as it is that our general dissatisfaction with existing social media platforms makes it a good time to look at alternatives.  I’ve written about Mastodon and BeReal, for example, but Bluesky has some features that may make sense in the Web3 world that we may be moving into. 

And, of course, I’m looking for any lessons for healthcare.

Bluesky describes itself as a “social internet.”  It started as a Twitter project in December 2019, with the aim “to develop an open and decentralized standard for social media.”   At the time, the ostensible goal was that Twitter would be a client of the standard, but events happened, Jack Dorsey left Twitter, Elon Musk bought it, and Bluesky became an independent LLC.  It rolled out an invite-only, “private beta” for iOS (Apple) users in March 2023, followed by an Android version in mid-April (again, invite-only).  People can sign up to be on the waitlist.  There are supposedly over 40,000 current users, with some million people reportedly on the waitlist.

By all accounts, it is similar to Twitter in many ways.  You can search for and follow other users, you can create posts (please don’t call them “skeets”) of 256 characters, you can attach (some types of) media, and you get a feed of suggested posts from other users.  You can like, reply to, or reshare posts.  It doesn’t yet have all of Twitter’s features, such as DMs or hashtags. It is working on “composable moderation.”

The point isn’t how much it looks and acts like Twitter but how different the underlying platform is.  It is built on what is called the AT Protocol – Authenticated Transfer Protocol. A blog post last fall explained what makes it unique:

Account portability. A person’s online identity should not be owned by corporations with no accountability to their users. With the AT Protocol, you can move your account from one provider to another without losing any of your data or social graph.

Algorithmic choice. Algorithms dictate what we see and who we can reach. We must have control over our algorithms if we’re going to trust in our online spaces. The AT Protocol includes an open algorithms mode so users have more control over their experience.

Interoperation. The world needs a diverse market of connected services to ensure healthy competition. Interoperation needs to feel like second nature to the Web. The AT Protocol includes a schema-based interoperation framework called Lexicon to help solve coordination challenges.

Performance. A lot of novel protocols throw performance out of the window, resulting in long loading times before you can see your timeline. We don’t see performance as optional, so we’ve made it a priority to build for fast loading at large scales.

There’s a lot to unpack there – more than I’m qualified to do – but here are a couple of key takeaways.  Currently, you don’t have much, if any control, over your Twitter feed (or your other social media feeds); the platform algorithms dictate.  Bluesky promises that the AT Protocol will allow users to both know what algorithm is being used and to choose from a library of algorithms.  How users will understand the consequences of different choices is not clear.

CEO Jay Graber says: 

Our goal isn’t to create every algorithm in-house, but to enable the developer community to bring new algorithms to users swiftly and effortlessly…We want a future where you control what you see on social media. We aim to replace the conventional “master algorithm,” controlled by a single company, with an open and diverse “marketplace of algorithms.

Equally important, Bluesky’s goal is that you could port your Bluesky experience – your list of followers, your historical feed, etc. – to other platforms (presumably that are also built on the AT Protocol).  It would tear down the “walled gardens” that have been recreated with existing social media platforms.

Kade Garrett, writing in Decrypt, points out: “In essence, the AT protocol would enable the creation of not a single social network, but a federation of social networks that could interact with each other…At a technical level, this would allow you to self-host the servers of your own company, profile, or social media platform.”  

As Bluesky tweeted: “We can switch mobile carriers without losing our phone numbers. If we could switch between social apps without losing our identity or social graph, then social media would be a competitive open market again.”  It sees switching platforms are more akin to changing mobile phone providers – keeping the same number – than switching email providers, which requires a new email address.

All this is based on what Bluesky refers to as “self-authenticating protocol,” which moves authority to authenticate from the host to the user.   But I’m going to leave the explanation of how that works as an exercise for the interested reader.  Mr. Garrett explains the importance of this: “The goal of such a design is to secure user data and make the user platform experience resistant to influence from corporations, governments, and other centralized entities.”

Who wouldn’t prefer that?

————–

Social media is a mess.  Most platforms have been built on the you-are-the-product approach that has done untold damage to our privacy and to the level of our discourse. The kind of platform Bluesky seeks to be holds lots of appeal – although whether it can work, much less make a viable business, remains to be seen.

Healthcare has been a mess even longer than social media. Sure, it pays lips service to our privacy, but has failed to protect it (e.g., hospitals), and is only belatedly recognizing types of the loopholes it has (e.g., health trackers). We’re all subject to more algorithms than we realize (e.g., prior authorizations), and AI is going to exponentially increase that. It talks up interoperability and now has FHIR and TEFCA, but if you think you are now in control of your data, you’re misguided.

I don’t know how, or even if, the AT Protocol could be used in healthcare, but healthcare sure needs something like it.

Kim is a former emarketing exec at a major Blues plan, editor of the late & lamented Tincture.io, and now regular THCB contributor

BY JEFF GOLDSMITH

If you read the business press, as I do every day, It is impossible to escape the “disruption” meme. Clayton Christiansen’s 1997 Innovator’s Dilemma explored how established businesses are blindsided by lower cost competitors that undermine their core products, and eventually destroy their businesses. Classic examples were the displacement of film-based cameras by digital cameras and then cell phones, the destruction of retail shopping by Amazon and of video rental by streaming video services.

A Civic Religion

Perhaps because Christiansen’s analysis arrived at the peak of the first Internet boom, it generated a high level of anxiety in the corporate world. It did not seem to matter that Christiansen’s analysis was riddled with flaws, meticulously detailed in Harvard colleague Jill Lepore’s takedown in the New Yorker in 2014.

By then, the disruption thesis had become a cornerstone of a kind of civic religion, an article of faith and an indispensable staple of fundraising pitches in the venture and private equity worlds.   No one seemed to be asking how great a trade for the society was, say, tiny Craigslist taking down the newspaper business by drying up its classified ad revenues.   

Disrupting a $4 Trillion Health System

I believe that, twenty five years on, the notion of disruptive innovation has reached its “sell-by” date. At least in healthcare, the field of commerce I follow most closely, it is now doing more harm than good. The healthcare version of the disruption thesis was found in Christiansen’s “Innovator’s Prescription”, written with health industry maverick Dr. Jerome Grossman in 2009. Christiansen and Grossman forecast that innovations such as point-of-care testing, retail clinics, and special purpose surgical hospitals threatened to take down healthcare incumbents. 

A swarm of breathless (and reckless) healthcare disruption forecasts shortly followed. 

In 2012, Vinod Khosla wrote that 80% of physicians would be replaced by AI, memorably suggesting that medical diagnosis was less challenging than the self-driving car. In 2014, Eric Topol predicted that the cell phone and a swarm of diagnostic apps would shortly replace the physician as the patient’s principal source of diagnostic wisdom. 

We have seen waves of attempts to “disrupt” the 1950’s-esque physician office, a care site in dire need of renovation to be sure. This began with so-called concierge practices (MDVIP, which Proctor and Gamble acquired in 2007 and sold to Summit Partners in 2014), telehealth and subscription-based practices like Teladoc, American Well,  Iora and One Medical, and later, Cano, Oak Street Health  etc., and store-based retail clinics like Minute Clinic (now CVS). Fifteen years on, these “disruptive” physician models are now being rolled up by private equity firms and subsequently engulfed by mega-corporations like Amazon or CVS–few having reached actual black ink. Disruption, presumably, will follow directly. Someone surely got paid, if not the actual docs doing the dirty work. A cynic would say: “Where are the practitioners’ Gulfstreams?”

After almost two decades of hype and billions in investment, retail clinic volume appears to have reached 50 million visits nationally, compared to around 145 million hospital emergency room visits, 900 million physician office visits and 800 million hospital outpatient visits. After twenty years, retail clinic volume is still a gnat on the rump of a very large critter.

Christiansen belittled incremental product improvements as defensive “sustaining” innovations by incumbents. But sustaining innovation has had an impressive record in healthcare. Consider the stunning progress in joint replacement. When I first witnessed this procedure in the late 1970’s, it was massively invasive, required a three-week hospital stay, and a six-month rehabilitation. Hip replacement is now an ambulatory procedure, as are shoulder and knee replacements. Some 80% of heart valve replacements are now catheter-delivered. Interventional care for strokes, and nerve ablation procedures for arrhythmia, also delivered by catheter, are very short stay inpatient procedures and will likely be ambulatory in the near future. 

All these are clearly “sustaining”, not disruptive, innovations. They have unfolded over decades, as clinicians and their partners in industry refined or reinvented mature technologies, markedly reducing both cost and risk to patients. This collaboration is unglamorous “pick and shovel” work. It has gone out of fashion in an investment climate geared to unrealistic expectations of explosive growth and 100X investor returns, which reached a zenith during the 2019-21 digital health bubble.

Blindfolded Home Runs

In her 2006 Harvard Business Review article on why innovation in healthcare is so hard, Regina Herzlinger pointed to a complex regulatory environment, particularly the hurdles to obtaining FDA approval and Medicare coverage, the power of healthcare incumbents to influence the regulatory and political process, industry fragmentation, and the pivotal role of physicians in technology adoption.

The Internet-related disruptions such as those instigated by Amazon, Google and Facebook were one-in-a-thousand events, the equivalent of a blindfolded ballplayer hitting a 500-foot line drive home run over the centerfield fence. Ballplayers who swing for the fences, as opposed to consistently hitting the strategic single or double, strike out with discouraging frequency. Investor insistence that new companies disrupt a trillion dollar sector like the hospital or health insurance industries has led to continuing disappointment and poor returns on the part of venture and private equity investors and the squandering of many billions in limited partners’ capital.   

Losing Sight of the Customer

To me, the most objectionable aspect of the obsession with disruption is not that it set the bar too high for most innovations to meet. Instead, it is that the imperative to disrupt focused management and investor attention on the incumbent and how to dismantle their franchise, rather than tuning in to customer wants and desires and how to meet them.

In his enduring 1985 classic, Innovation and Entrepreneurship, Peter Drucker argued for a more multi-faceted model of innovation, which focusses on removing friction or barriers between the customer and satisfaction of their needs, but also exploits asymmetries and discontinuities in industry structure or demography. Businesses preoccupied with outsized returns often do not listen acutely enough to customers as much as to the siren song of growth. 

As Drucker says, “an entrepreneurial strategy has more chance of success the more it starts out with the users- their utilities, their values, their realities . . . the test of innovation is always what it does for the user.” Drucker’s advice is an important antidote to the burned-out disruption industry, and the key to better returns for investors and society from healthcare innovation. 

Jeff Goldsmith is President of Health Futures, Inc. & a long time THCB Contributor.

BY MICHELLE SNYDER

Unless you have been off the grid for the past few months (which frankly sounds kind of nice right now), you know that the digital health market has changed dramatically.   While not surprising to those of us who have been through the boom-and-bust cycles of the past two decades, it nevertheless has been an awakening for many investors and entrepreneurs.  

As an entrepreneur, there are some things you cannot control – the macro-economic climate, supply chain disruptions and narcissist led wars halfway around the world.  But what is entirely within your control is how you tell your company’s story and your ability to make investors want to join you on the journey.  

As a longtime storyteller for several digital health companies and a current story listener (aka investor), I’ve been thinking about this topic a lot lately.  Though the word “storyteller” can have negative connotations for some people, I value and appreciate great storytellers who engage me right off the bat, get me excited about the “why” and clearly articulate why it’s in my best interest to invest in their company.

The art of storytelling has always been important, but in the current digital health funding environment, it is quickly becoming essential for success.  Are you telling your company’s story in the most effective way?  Read on to find out.

Know Your Audience 

So simple to do – yet so often overlooked.  Before you even pitch your company to me, have you looked at my firm’s portfolio?  Have you checked to see what companies I have personally invested in?  Have you read any articles I have written or quotes in publications to give you a clue as to what excites me?  Have you shot me a quick email to ask if there is anything you want to make sure is covered in the pitch?

Even taking 30 minutes to do some research on me (or whomever you are pitching) allows you to 1) focus your pitch on things that I am most likely to be interested in, 2) get me to talk about my companies and viewpoints (investors are people too – they like to talk about themselves and their investments), and 3) make sure you don’t end the pitch without hitting on at least one topic that I really care about.

Show Me Your Passion

As an entrepreneur I know you may be tired.  You’re likely working 80-100 hours per week and haven’t had a real vacation in a long time.  I’ve been there – I get it.  But I also need to see and feel your excitement and passion.  When you tell me the story, you are telling me more than just what your company does.  You are also telling me whether I believe that you will be able to inspire and motivate your employees through both the good and bad times and whether you will be able to inspire future investors and sell your vision.  

I have had a few pitches recently with interesting companies, and I was fully bought into the future vision and business model.  The problem was I was more excited than the CEO.  As your investor, I will always be one of your biggest champions, but I can’t be the best champion.   That’s you. 

Make Me Care

When marketing a product, the customer should always be the hero.  It’s no different in fundraising.  Make the investor believe that they can be a hero too.  That they not only have the chance to make a great return but have the opportunity to be part of something that could be game changing for patients or the industry.  

Take a page from Simon Sinek and “Start with the Why”.  People (investors, customers, employees) won’t truly buy into your company, product, or service until they understand the WHY behind it.  I obviously still care about the WHAT, but I will care a lot more if I am bought into the WHY.

Forget About the Deck

I’ve been there – reworking a deck for days on end to get just the right words on the page.  Having a solid deck is important but frankly what’s more important is how you tell me the story – what you say, how you say it, and the dialogue we have during the call.  Don’t spend so much of your time perfecting the words on the page that you neglect practicing the story.  The more you practice, the easier it will be for you to go “off script” which I guarantee happens in pretty much every good meeting I have been in.

Don’t Wait To Tell Me The Punchline?

Most of my favorite books have one thing in common – I was drawn into the story early.  It’s no different when fundraising.  Don’t wait until the middle or end of the story to get to the good stuff (e.g., your rock star team, fantastic outcomes data, recently signed massive 3-year contracts).  If you draw me in upfront, I am not even tempted to check email and am listening more intently to your pitch.  Always assume you may not make it all the way through the deck – don’t save the best for last.

“Choose Your Own Adventure”

I loved reading these books with my son when he was little – the possibilities were endless.  As an investor, however, I get more confused than inspired if there are too many options in your story.   Yes, I want to believe there is significant upside in the business and know there could be multiple future customer segments that get you to “a billion dollars”.  But I also need to see prioritization and focus (now more than ever!) and feel comfortable buying into the initial path you are taking.  

How Does the Story End?

So, you showed me your passion, made me care and I can envision being part of your story.  How does the story end?  As an investor, I am always thinking about what an exit looks like and “who buys this company?”  Please don’t be the entrepreneur who says, “let me get back to you on that” or “I’m not sure, that’s a great question”.   You need to have a few ideas (right or wrong) based on who in the market would value your company’s customer base, technology, or expertise.  As an investor, I need to believe there are multiple (not one!) possible exit opportunities and a few deep pockets that would see value in what you will create.

I’m not going to lie.  The next few years will be more challenging for digital health companies looking to raise money.  The bar has been raised and there will be more scrutiny on your business.  Great storytelling is not necessarily going to help you if your business doesn’t make financial sense in the first place.  However, for those companies who are solving a real problem in a cost-efficient way, investors will always be looking for passionate entrepreneurs who can make them a hero.

Michelle Snyder is an investor at McKesson Ventures. Previously she ran marketing at Welltok and Epocrates.

By MIKE MAGEE

Dr. Linda Rosenstock has an M.D. and M.P.H. from Johns Hopkins, and was a Robert Wood Johnson Clinical Scholar. She is currently Dean Emeritus and Professor of Health Policy and Management at UCLA’s Fielding School of Public Health, but also spent years in government, and was on President Obama’s Advisory Group on Prevention, Health Promotion and Integrative and Public Health.

In the wake of the release of Justice Alito’s memo trashing Roe v. Wade, she was asked to comment about the status of abortion in America. Here is what she said:

“The broader the access to proven family planning methods, the lower the unintended pregnancy rate and the lower the abortion rate. We can’t underestimate the role of educating and empowering women – and men – about these issues.”

These are not simply the opinions or insights of a single health expert. They are backed up by the following facts:

1. Since 1981, abortion rates in U.S. women, age 15 to 44, have declined by nearly two thirds from 29.3 per 1000 to 11.4 per 1000.

2. Approximately half of all pregnancies in the U.S. are unintended.  Of those unintended, approximately 40% of the women chose to terminate the pregnancy by abortion – either procedural or chemically induced.

3.  The decline in the number of abortions has coincided with increased access to long-acting reversible contraception, including IUD’s and contraceptive implants. These options are now safe, increasingly covered by insurers, and more accessible to at-risk populations.

4. The increasing inclusion of sex education in middle school and high school curricula has been accompanied by a decline in high school sexual activity by 17% between 2009 and 2019.

5. There were 629,898 abortions recorded by the CDC in 2019. For every 1000 live births that year, there were 195 other women who chose to terminate their pregnancies. Almost half of the 1st trimester abortions are now chemically induced through Plan B-type pills.

What is clear from these figures is that knowledge and access to contraception is the best way to decrease the number of abortions in America.

We’ve known this for some time. But when push comes to shove, the actions of Right to Life advocates including conservative Catholics and Evangelical Christians, have (by their actions) revealed that a broader agenda than simply eliminating abortions is at work here. That broader agenda includes patriarchal control over women’s sexuality and birth rates in America.

Overcoming this opposition requires excellent messaging, service acquisition, information support, privacy, and short-term follow-up. These would seem to be well within the wheelhouse of health teach entrepreneurs.

That contraception is safe and effective, and reinforces women’s autonomy and entry in the workplace, is no longer debatable. The options for birth control have expanded as well. Contraceptive reversible implants are now chosen by 16%, IUDs by 21%, and operative tubal ligation by 28%.

If one looks at the track record of those leading the charge to eliminate Roe v. Wade (in and out of the Supreme Court), including De Santis level book sanctions, pedophilia fantasia, insistence that failed “abstinence-only” sex education works, and highly organize assaults on women’s services provided by Planned Parenthood, it is reasonable to assume that Alito’s assurances that overturning privacy precedents applies only to abortion are not trust worthy.

Justice Alito’s reliability should be viewed through the lens of the testimony provided by Justices Kavanaugh, Barrett, and Gorsuch, under oath, on the topic during their confirmation hearings. Alito and these co-signers on his recent draft assure that Roe v. Wade and Planned Parenthood v. Casey are different since “[a]bortion destroys . . . potential life” and “none of the other decisions cited by Roe and Casey “involve the critical moral question posed by abortion.”

But the history and performance of these five Justices, their original and current supporters, their documented religious orthodoxy, and the web of conservative schools and think tanks that nurture their well-entrenched biases all suggest “buyer beware.”

Other recently granted rights under these privacy precedents include:

• The right to interracial marriage (Loving v. Virginia),
• The right to obtain contraceptives (Griswold v. Connecticut)
• The right to engage in private, consensual sexual acts (Lawrence v. Texas)
• The right to same-sex marriage (Obergefell v. Hodges).

Paraphrasing the proverb from a book called The Court and Character of King James by Anthony Weldon, 1651,: “Fool me once, shame on you. Fool me twice, shame on me.”

Mike Magee, MD is a Medical Historian and Health Economist, and author of  “CodeBlue: Inside the Medical Industrial Complex”