Star Magnolia Capital
“High Cost” is the Mother of Innovation
Updated: Mar 29, 2020
Shinya previously participated in Technology Exchange in Shenzhen hosted by J.P. Morgan. Among many, an interview with Yonatan Adiri, founder of Healthy.io, which is Tel-Aviv based healthcare technology start-up. Today, it is not internet, but machine, which is driving innovation and we think healthcare will be most disrupted among many. The cost of healthcare has gone up significantly and stayed at high level while many other sectors are seeing massive price pressure. Uber and Airbnb fundamentally changed the car-hailing and hospitality businesses. WorkDay is also taking a lot of market shares from old elephants like Oracle and SAP. However, in the healthcare space, we haven’t seen major disrupters (there is a failed one called Theranos). The United States spends more than 15% of its GDP on healthcare, which is the highest among all countries in the world. This high cost structure will be eventually disrupted. “High Cost” is the Mother of Innovation.
We discussed our thesis on New Generation Healthcare in Nov 2015 (see our presentation). Since then, the theme is playing out more rapidly than we initially predicted. This year’s Mary Meeker’s Internet Trend had a section dedicated for Healthcare with a subtitle of “Digital Inflection Point”. The whole 355-page document is worth your attention, but let’s jump to page 288. A discovery of a new drug may cure a million people, but the new healthcare solution driven by “data” and “analytics” can save billion people. As Meeker discusses, a virtuous cycle of innovation is happening in the healthcare space and it is quite exciting.