The Exchanges

Q fan of the incredible angel portfolio you've built from WorkRamp to the incredible Atrium and Justin, many more fantastic companies. But I'm interested, what do you think are the core benefits to founders actively angel investing? Some are very proactive about kind of supporting founders from the VC perspective, and some say that it's actually detrimental to them and defocuses them. How do you think about the pros and cons?

A Yeah, I can't imagine, at least from my experience, That there are really too many cons outside of, you know, potentially losing your money, but the reason I angel invest is not because I'm hoping to make a return. I've been lucky to be in a bunch of great companies, but the truth is that the reason I angel invest is twofold. The first is to pay it forward, and I think that there's almost a moral obligation in this community to do so, right? So one of the angel investors in Wavy was Marissa Mayer. Now, Wavy was a search company, and Marissa at the time ran search at Google. And I was thinking, I was like, how absurd is this industry where the person that I would pay some obscene amount of money just to sit down with and get their advice where she gives me money and then I get to pick her brain. And I was thinking, wait, this makes no sense. Even if Wavy was the next Google, I'm not going to change Marissa's lifestyle, right? She obviously has done well herself. So then you have to start asking yourself, well, why is she doing this? What's in it for her? And you, you start to realize that She's paying it forward the same way that people helped her out. And thus the same way people helped me out when I was getting started, I should continue to help other people out. There's tons and tons of entrepreneurs out there that are still kind of getting the hang of things, maybe aren't th…

AI assessment note: “the reason I angel invest is twofold. The first is to pay it forward”

Q fan of the incredible angel portfolio you've built from WorkRamp to the incredible Atrium and Justin, many more fantastic companies. But I'm interested, what do you think are the core benefits to founders actively angel investing? Some are very proactive about kind of supporting founders from the VC perspective, and some say that it's actually detrimental to them and defocuses them. How do you think about the pros and cons?

A Yeah, I can't imagine, at least from my experience, That there are really too many cons outside of, you know, potentially losing your money, but the reason I angel invest is not because I'm hoping to make a return. I've been lucky to be in a bunch of great companies, but the truth is that the reason I angel invest is twofold. The first is to pay it forward, and I think that there's almost a moral obligation in this community to do so, right? So one of the angel investors in Wavy was Marissa Mayer. Now, Wavy was a search company, and Marissa at the time ran search at Google. And I was thinking, I was like, how absurd is this industry where the person that I would pay some obscene amount of money just to sit down with and get their advice where she gives me money and then I get to pick her brain. And I was thinking, wait, this makes no sense. Even if Wavy was the next Google, I'm not going to change Marissa's lifestyle, right? She obviously has done well herself. So then you have to start asking yourself, well, why is she doing this? What's in it for her? And you, you start to realize that She's paying it forward the same way that people helped her out. And thus the same way people helped me out when I was getting started, I should continue to help other people out. There's tons and tons of entrepreneurs out there that are still kind of getting the hang of things, maybe aren't th…

AI assessment note: “the reason I angel invest is twofold. The first is to pay it forward”

Q of the vertically integrated approach, but it then makes me question and more theorize around your next statement, which was that regulation isn't anywhere near as scary as people think. Given the extremity of which you have to prepare for, as you said, with the kind of full stack, one stop shop approach, I'm intrigued. Why do you think then that regulation isn't anywhere near as scary as people think?

A Yeah. So, you know, I, I didn't have a background in healthcare before starting forward. And so I sat there and was, you know, I had a big X on my list of things to go after when I looked at healthcare merely because of the regulatory environment. But then, you know, I started to actually look into it. I'm like, well, take a step back. There's tons of mom and pop doctor's offices. If they can do it, why can't we, what am I missing here? And what you start to do when you peel back layers of the onion is you realize that I would argue regulation falls into kind of three categories. The first category is, you know what? Nobody really understands why we're still doing this thing in this day and age. It's a tax that you pay, but you know what? Get over it. It's some paperwork. Usually it's not that bad. And of course, healthcare has got some of those things, right? There's filings we make where we're just literally shrugging our shoulders going wide. We bother, right? Then there's the second category. This is the, you know what? The regulation is there probably for a good reason, actually. So we run our own blood lab. And you know what? There's regulation around how we should run those labs. That sounds fairly reasonable to me, actually. Like, I don't think there's any part of that that seems like that's a bad idea. Maybe, again, the paperwork could have been more streamlined. Maybe…

AI assessment note: “I would argue regulation falls into kind of three categories.”

Q article actually Scott Belsky wrote, which was kind of really the rapid iteration A-B testing that's now inherent with a lot of micro consumer brands. We've spoken before about kind of A-B testing and the methodology of the lean startup, and you've posed an alternative suggestion to the theme of lean startup. Tell me, why in your mind does lean startup methodology maybe make less sense today than past years?

A First off, I should caveat and say that Eric Ries is, uh, is a friend of mine and is fantastic. And I think that the lean startup methodology makes a lot of sense for some companies and almost no sense for other companies. So let's just take a step back and look at when the internet five, 10 years ago was super, super booming. All these consumer apps are coming out. Basically, these are technology companies, typically for the sake of technology companies, right? They're creating new markets. They're existing purely in the digital sphere. And what you find is that it's incredibly cheap and incredibly easy to kind of push them out. But as Marc Andreessen says, software is eating the world, right? Well, now we're going from that kind of low hanging fruit into a whole bunch of new industries, right? Whether it's the healthcare, energy, real estate. I mean, you see tons of these companies now that are going after these highly regulated, highly difficult kind of markets. As you go into those, oftentimes this is no longer a simple consumer products question. It actually oftentimes is a systems problem, right? So when you think about healthcare, it's not just Build the better doctor's office or build the better experience. Actually, it's also figure out how to navigate the thickets or the lack of innovation that comes from having your hands tied with all this regulation or all this kin…

AI assessment note: “now we're going from that kind of low hanging fruit into a whole bunch”

Q of, the meatiness of the problem. I'm always stuck in this market sizing argument. You know, VCs always require insanely large markets, and then you have Peace Teal who, kind of, obsesses over that niche market. How do you think about, kind of, a niche enough market where you can really attack it excitingly? But then also that big enough vision to really attract the investors and present that vision.

A Yeah, so one of the problems of just focusing on the market is that oftentimes you don't know what the market size is. So instead, again, I try not to focus on what is the given market. For all I know, I'm creating an entirely new market, right? The market for phones without keyboards was shockingly small prior to the iPhone, right? So I'm not sure I would necessarily take that lens. The lens I take is How much of a problem is this? You really want to get at the core of how much value can you actually create? So in healthcare, it turns out that it's kind of this funny thing where the healthcare industry is enormous. I mean, it's just insanely, insanely large, one of the largest markets. But on the other hand, the market for doctor's offices, turns out it's not that big. I mean, the largest company you can even think about in the space is probably what, Kaiser? Well, you know, Kaiser has 11.7 million lives. That's a fraction of, you know, it's a few percent of the United States. So when you think of things that can scale to billions of users and billions of lives, you might falsely come to the conclusion that That maybe you don't want to be working on doctor's offices, but as it turns out, there's a new market getting created where the doctor's office is really the portal, the kind of front door to the new healthcare system. And so you might say, well, this market is going to ge…

AI assessment note: “The lens I take is How much of a problem is this?”

Q of the vertically integrated approach, but it then makes me question and more theorize around your next statement, which was that regulation isn't anywhere near as scary as people think. Given the extremity of which you have to prepare for, as you said, with the kind of full stack, one stop shop approach, I'm intrigued. Why do you think then that regulation isn't anywhere near as scary as people think?

A Yeah. So, you know, I, I didn't have a background in healthcare before starting forward. And so I sat there and was, you know, I had a big X on my list of things to go after when I looked at healthcare merely because of the regulatory environment. But then, you know, I started to actually look into it. I'm like, well, take a step back. There's tons of mom and pop doctor's offices. If they can do it, why can't we, what am I missing here? And what you start to do when you peel back layers of the onion is you realize that I would argue regulation falls into kind of three categories. The first category is, you know what? Nobody really understands why we're still doing this thing in this day and age. It's a tax that you pay, but you know what? Get over it. It's some paperwork. Usually it's not that bad. And of course, healthcare has got some of those things, right? There's filings we make where we're just literally shrugging our shoulders going wide. We bother, right? Then there's the second category. This is the, you know what? The regulation is there probably for a good reason, actually. So we run our own blood lab. And you know what? There's regulation around how we should run those labs. That sounds fairly reasonable to me, actually. Like, I don't think there's any part of that that seems like that's a bad idea. Maybe, again, the paperwork could have been more streamlined. Maybe…

AI assessment note: “you realize that I would argue regulation falls into kind of three categories.”

Q for me as an investor, I'm always extremely nervous investing in companies where there's this external dependence on this kind of metabody outside of Your control and Ford's control. I can buy you. I can buy Ford. But there's that kind of reliance on that meta body. Why am I wrong to be concerned by that? And how do you maybe think about that even with your investing hat on?

A Yeah, so there's no question that when you go into a regulated industry, you're also likely going into an industry which is just going to make progress slower. So there's no such thing as like a YouTube growth curve for something like Right. There's no notion that we're going to be at a billion lives in three years. It just can't happen. Right. Because at the end of the day, what we're doing is brick and mortar where, you know, it's actual healthcare, it's actual life and death matters. Right. So when you look at this, yes, they're highly correlated with regulated environments where they're going to move a little more slowly, but I wouldn't think about it merely from this notion of regulation versus not. I would just think about it from this notion of how long term is the bet that I'm making? How long term is the investment that I'm making? And some people don't want that, right? Some investors, they want to know within one or two years, this thing has taken off or this thing's gone under, and that's totally fine. But some investors are much more patient capital. Now, I don't want you to think that just because they're patient, it means that they're looking for a smaller return. They're often not. In fact, oftentimes being patient actually gives you a much larger return. But on an IRR basis, you might find that actually the investments are perfectly rational and But again, you …

AI assessment note: “I would just think about it from this notion of how long term is the bet”

Q from kind of that data observancy perspective. I am interested that you said a 150 companies there and I absolutely agree with the pay it forward. And I love that mentality. But was there a thinking for you around portfolio construction, maybe check size, consistency, pro rata rights? How did you maybe think about the more strategic mechanics of investing? When starting to build out the lines in the portfolio?

A Yeah, so because it's my own money, I'm lucky enough to not have to be super formal in that thinking. But there's a few things that I've noticed when I look back upon my portfolio. The first thing that I've noticed is that I'm incredibly bad at predicting which companies are going to do extremely well. I mean, if you had told me when I invested in Pinterest that it was going to do what it has, I would have told you you're crazy. But obviously, you know, I didn't understand that market. I still frankly don't. I invested because there's a great founder, great team, and he has a wonderful vision, and so when you look at that, you say, well, maybe as long as there's a person that I want to work with, and they're going after a problem that I think matters, maybe you just take the bet anyway, because your error bars are so large. Now, the second thing that I learned since looking There's a massive power law distribution of outcomes, right? Very, very small number of companies do incredibly well, and the rest of the companies, to be honest, you kind of don't care about the return. Whether it's a double, a triple, a single, they lost your money, it all washes out because the things that get you a thousand X or 10,000 X return are all that matter. And so given that, what you quickly realize and the conclusion you quickly come to is that you want to be able to Put as much capital. You wa…

AI assessment note: “because it's my own money, I'm lucky enough to not have to be super formal”

Q I love it. You said about dark times there. How do you deal with the shit hit the fan moments, so to speak?

A Well, let me tell you the shit hit the fan moments occur almost every day in a startup. My friend, Mike Cassidy always says the odds of anything good happening to a startup are always less than 50%. And so, you know, every day you wake up and yeah, today's going to be a good day. Oh wait, no, it's probably not. Let's just remember that. Now, the thing that I always try to remember is that innovation is messy. And by that, what I mean is when you're changing the parameters of the game, you're in uncharted territory. Of course, you're going to do plenty of things wrong. There's no roadmap. There's no guide. No one's done it before. And so on a daily basis, I'm getting things wrong. There's no question. I think the key there is to be humble. I think the key is to remember that you're here for the right reasons. Do you believe in those core actions, those core hypotheses that caused you to want to go after this in the first place? In my case, it's really important for me to remember that Because here we can help people's lives. I mean, it's not a joke. You know, I didn't start a photo sharing company because I'm not sure it's worth the pain for me, right? I'm not sure going through hellish times is worth being able to help somebody with the photo filter, but I know here that these are actual lives being helped. And so when I go through that pain, I say, yeah, you know what? This su…

AI assessment note: “I think the key is to remember that you're here for the right reasons.”

Q And speaking of worth it, tell me, what is the next five years for you and for Ford? Paint that vision.

A Yeah, so I'm going to go a little further out than five years in the vein of wanting people to look even further into the future. So my, my goal is to build the first at scale healthcare system. Now, when I think of scale in tech, I think of Google with three billion daily users, Facebook and Apple with almost two billion. That's real scale. Scale. There's only seven plus billion people on the planet. When I think of scale in healthcare, it comes back to, you know, Kaiser or the VA. These are people with, you know, order of ten million lives. The way I think about it is, if Kaiser was a tech company, you would have never heard of it, and you wouldn't have the app on your phone. So what's it going to take to really get healthcare to billions of It's going to take using technology to build a truly scalable platform to maintain quality. It's going to take building out a lot more services than we have today. We're focused on primary care, but we're working on launching dermatology, optometry, you name it, we want to go after it. And the third is it takes using things like AI or even other business models to make healthcare affordable to everyone, not just people in the United States, right? But to the people in the middle of Rwanda that are living on one or two dollars a day, if you want to make healthcare affordable to them, it has to look very, very different than it does. Over t…

AI assessment note: “Over the next five years, what are we focused on? Well, all three parts.”

Q Can I ask, having added that investor hat to your portfolio of roles, have you seen this kind of truth behind VC and kind of a lifted veil of how VCs work, how they operate, the mechanics for them? Have you seen that truth kind of revealed to you sitting on the same side of the table to them investing as well?

A Absolutely. So one of my favorite parts of getting this kind of information advantage of being inside, being an investor in all these portfolio companies, is that you actually get to see how VCs act In the good times and in the bad. And the only thing that really matters is how your VC acts in the bad times. These isn't good times. I'm not sure. I'm not sure you should focus on too much. Now, the investors that I went with in forward, people like Founders Fund or Kosla, Keith Raboy at Kosla, who I know has been on your, uh, your show. These are people that when times get tough have been good actors. And that's super important because the last thing you want is when you're on the floor having some Somebody kind of kick you. And so what I've unfortunately seen tons of is VCs that maybe aren't quite as experienced, aren't quite as mature, or frankly, aren't just good people. I've seen them when companies get into a slightly tough situation, they try and take advantage of that to their own benefit. One of the nice things that angel investors can do to help founders is to kind of give them almost a little more of a united front. It's kind of just a little check and balance on maybe a bad VC to say, hey, you can do that. You can try taking advantage of this company, but you know what? Word's going to spread. You know, me, my friends, other entrepreneurs, we're going to know that you …

AI assessment note: “you actually get to see how VCs act In the good times and in the bad”

Q article actually Scott Belsky wrote, which was kind of really the rapid iteration A-B testing that's now inherent with a lot of micro consumer brands. We've spoken before about kind of A-B testing and the methodology of the lean startup, and you've posed an alternative suggestion to the theme of lean startup. Tell me, why in your mind does lean startup methodology maybe make less sense today than past years?

A First off, I should caveat and say that Eric Ries is, uh, is a friend of mine and is fantastic. And I think that the lean startup methodology makes a lot of sense for some companies and almost no sense for other companies. So let's just take a step back and look at when the internet five, 10 years ago was super, super booming. All these consumer apps are coming out. Basically, these are technology companies, typically for the sake of technology companies, right? They're creating new markets. They're existing purely in the digital sphere. And what you find is that it's incredibly cheap and incredibly easy to kind of push them out. But as Marc Andreessen says, software is eating the world, right? Well, now we're going from that kind of low hanging fruit into a whole bunch of new industries, right? Whether it's the healthcare, energy, real estate. I mean, you see tons of these companies now that are going after these highly regulated, highly difficult kind of markets. As you go into those, oftentimes this is no longer a simple consumer products question. It actually oftentimes is a systems problem, right? So when you think about healthcare, it's not just Build the better doctor's office or build the better experience. Actually, it's also figure out how to navigate the thickets or the lack of innovation that comes from having your hands tied with all this regulation or all this kin…

AI assessment note: “we're going from that kind of low hanging fruit into a whole bunch of new industries”

Q for me as an investor, I'm always extremely nervous investing in companies where there's this external dependence on this kind of metabody outside of Your control and Ford's control. I can buy you. I can buy Ford. But there's that kind of reliance on that meta body. Why am I wrong to be concerned by that? And how do you maybe think about that even with your investing hat on?

A Yeah, so there's no question that when you go into a regulated industry, you're also likely going into an industry which is just going to make progress slower. So there's no such thing as like a YouTube growth curve for something like Right. There's no notion that we're going to be at a billion lives in three years. It just can't happen. Right. Because at the end of the day, what we're doing is brick and mortar where, you know, it's actual healthcare, it's actual life and death matters. Right. So when you look at this, yes, they're highly correlated with regulated environments where they're going to move a little more slowly, but I wouldn't think about it merely from this notion of regulation versus not. I would just think about it from this notion of how long term is the bet that I'm making? How long term is the investment that I'm making? And some people don't want that, right? Some investors, they want to know within one or two years, this thing has taken off or this thing's gone under, and that's totally fine. But some investors are much more patient capital. Now, I don't want you to think that just because they're patient, it means that they're looking for a smaller return. They're often not. In fact, oftentimes being patient actually gives you a much larger return. But on an IRR basis, you might find that actually the investments are perfectly rational and But again, you …

AI assessment note: “I would just think about it from this notion of how long term is the bet”

Q from kind of that data observancy perspective. I am interested that you said a 150 companies there and I absolutely agree with the pay it forward. And I love that mentality. But was there a thinking for you around portfolio construction, maybe check size, consistency, pro rata rights? How did you maybe think about the more strategic mechanics of investing? When starting to build out the lines in the portfolio?

A Yeah, so because it's my own money, I'm lucky enough to not have to be super formal in that thinking. But there's a few things that I've noticed when I look back upon my portfolio. The first thing that I've noticed is that I'm incredibly bad at predicting which companies are going to do extremely well. I mean, if you had told me when I invested in Pinterest that it was going to do what it has, I would have told you you're crazy. But obviously, you know, I didn't understand that market. I still frankly don't. I invested because there's a great founder, great team, and he has a wonderful vision, and so when you look at that, you say, well, maybe as long as there's a person that I want to work with, and they're going after a problem that I think matters, maybe you just take the bet anyway, because your error bars are so large. Now, the second thing that I learned since looking There's a massive power law distribution of outcomes, right? Very, very small number of companies do incredibly well, and the rest of the companies, to be honest, you kind of don't care about the return. Whether it's a double, a triple, a single, they lost your money, it all washes out because the things that get you a thousand X or 10,000 X return are all that matter. And so given that, what you quickly realize and the conclusion you quickly come to is that you want to be able to Put as much capital. You wa…

AI assessment note: “because it's my own money, I'm lucky enough to not have to be super formal”

Q Well, not at all, but I want to get the ball rolling today by discussing a little about you. So, serial entrepreneur, active angel investor, how did you make your way first into the world of startups, and then second, what was that aha moment for the founding of Forward?

A Yeah. So, you know, it's kind of interesting. I started in the world of startups almost accidentally, right? I'm just one of these kind of nerd kids who was playing around with computers and then started kind of writing my own software, just all self-taught. And then a whole bunch of other people started asking me to write software for them. And then I ended up kind of stumbling my way into starting my first company when I was 13. And you know, when you're 13, it starts as kind of a joke and nobody takes it seriously. But somehow that thing kept going until I was about 22 or so, and it kind of had a few different phases of life, but by the time I was 22, I actually sold it. After selling it, ironically, is when I started to realize that there's an entire world of startups out there, and then I was kind of hooked for life, you could say.

AI assessment note: “I started in the world of startups almost accidentally, right?”

Q Well, not at all, but I want to get the ball rolling today by discussing a little about you. So, serial entrepreneur, active angel investor, how did you make your way first into the world of startups, and then second, what was that aha moment for the founding of Forward?

A Yeah. So, you know, it's kind of interesting. I started in the world of startups almost accidentally, right? I'm just one of these kind of nerd kids who was playing around with computers and then started kind of writing my own software, just all self-taught. And then a whole bunch of other people started asking me to write software for them. And then I ended up kind of stumbling my way into starting my first company when I was 13. And you know, when you're 13, it starts as kind of a joke and nobody takes it seriously. But somehow that thing kept going until I was about 22 or so, and it kind of had a few different phases of life, but by the time I was 22, I actually sold it. After selling it, ironically, is when I started to realize that there's an entire world of startups out there, and then I was kind of hooked for life, you could say.

AI assessment note: “I started in the world of startups almost accidentally, right?”

Q of, the meatiness of the problem. I'm always stuck in this market sizing argument. You know, VCs always require insanely large markets, and then you have Peace Teal who, kind of, obsesses over that niche market. How do you think about, kind of, a niche enough market where you can really attack it excitingly? But then also that big enough vision to really attract the investors and present that vision.

A Yeah, so one of the problems of just focusing on the market is that oftentimes you don't know what the market size is. So instead, again, I try not to focus on what is the given market. For all I know, I'm creating an entirely new market, right? The market for phones without keyboards was shockingly small prior to the iPhone, right? So I'm not sure I would necessarily take that lens. The lens I take is How much of a problem is this? You really want to get at the core of how much value can you actually create? So in healthcare, it turns out that it's kind of this funny thing where the healthcare industry is enormous. I mean, it's just insanely, insanely large, one of the largest markets. But on the other hand, the market for doctor's offices, turns out it's not that big. I mean, the largest company you can even think about in the space is probably what, Kaiser? Well, you know, Kaiser has 11.7 million lives. That's a fraction of, you know, it's a few percent of the United States. So when you think of things that can scale to billions of users and billions of lives, you might falsely come to the conclusion that That maybe you don't want to be working on doctor's offices, but as it turns out, there's a new market getting created where the doctor's office is really the portal, the kind of front door to the new healthcare system. And so you might say, well, this market is going to ge…

AI assessment note: “The lens I take is How much of a problem is this?”