One of the hardest things in venture is timing. Pick the wrong time to disrupt a segment, and the result is a lot of optimism and lost investment dollars. Pick the right time to disrupt and you can build a massive company in a short period of time. Ideas are rarely bad, they are often simply at the wrong time.
A few years ago, we decided that the time had come for innovative changes in education. We followed that up with some very successful investments in companies like Lumosity, Knewton, Schoology, Straighterline, and others. Our macro thesis was pretty simple. First, it was an extremely large important market that hadn’t changed in a long time. Second, the cost curves in education had increased in multiples of inflation for decades and began coming under significant scrutiny as a result of the 2008/2009 recession. Third, the industry was supported by an array of subsidies and government regulations that was destined to change. Fourth, technology and software had the ability to dramatically reduce cost and bring an innovative value proposition “over the top” directly to the end consumers – eliminating traditional intermediaries along the way. The mix of market size, economic crisis, government changes, and technology created what we thought was the “right time”.
As we started observing other markets in a similar state of change, another one became obvious to us: healthcare. The only thing you might care about more than education is health. It’s a gigantic market. The cost curves have been increasing at an unsustainable rate. The government’s role is changing rapidly, and causing major shifts in who and how people pay. Consumers are now starting to take a much more active role on the paying side of the equation and doctors are beginning to select new technologies to power their practices (“over the top”). While different in specifics, the parallels to education are quite striking.
The exciting news is that we’ve already made a few bets in the area, and will be announcing some next week. We believe this is a tremendous opportunity to transform the sector and have a profoundly positive impact on lives. Stay tuned for more!