Dear friends,

Every week, I’m sharing an essay that relates to what we are building and learning at Alan. Those essays are fed by the article I’m lucky enough to read and capitalise on.

I’m going to try to be provocative in those essays to trigger a discussion with the community. Please answer, comment, and ping me!

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In the spotlight today is a riveting book I've just read, titled 'The Power Law: Venture Capital and the Making of the New Future’ by Sebastian Mallaby. The content of this book revolves around the biggest venture capitalists, and the history of tech incubation.

If you're interested in the struggles and triumphs of venture capital, I highly encourage you to get a copy of this book. It's a powerful tool to equip you with the necessary understanding, techniques and perspective to navigate the entrepreneurial landscape.

The Power Law - best quotes

Where great innovation comes from

Fighting Expertise

• “If I’m building a health-care company, I don’t want a health-care CEO,” Khosla says. “If I’m building a manufacturing company, I don’t want a manufacturing CEO. I want somebody really smart to rethink the assumptions from the ground up.” After all, he continues, retail innovation did not come from Walmart; it came from Amazon. Media innovation did not come from Time magazine or CBS; it came from YouTube and Twitter and Facebook. Space innovation did not come from Boeing and Lockheed; it came from Elon Musk’s SpaceX. Next-generation cars did not come from GM and Volkswagen; they came from another Musk company, Tesla. “I can’t think of a single, major innovation coming from experts in the last thirty, forty years,” Khosla exclaims.

Note:

• How to avoid the wrong expertise when building innovation

• You rarely innovate with more experts.

Be on the field

• Before Fairchild’s founding, as Noyce would reflect later, researchers wore white smocks and were locked up in the laboratory. But at Fairchild they were out talking to the customers; even before developing their first transistors, they had met potential buyers in military avionics and figured out what kind of device would sell.

Note:

• Talk to customers (to pitch & convince them) even when you develop breakthrough technology 

Do hard things

• But precisely because the technical challenges were so formidable, the barriers to entry in this business would be high, and Genentech would be able to extract fat margins if it succeeded. It was another illustration of Perkins’s law.

Note:

• As I often say: “if it wasn’t hard, others would have done it already”. That’s how you create a moat. 

Why you need to be street smart and never give up

• Perkins remained unconvinced, but Swanson put together a list of scientists with expertise in the technology. He cold-called all of them. In each conversation, he heard the same message: recombinant DNA had a commercial future, to be sure, but it was a distant one—probably decades away. Then Swanson called Herbert Boyer of the University of California, San Francisco, not fully realizing that Boyer was the co-inventor of the DNA technology. Swanson launched into his standard pitch: recombinant DNA held such promise; surely it could be commercialized in the near future! To his amazement, Boyer responded that he was probably right.

• Swanson immediately asked if he could come over. He wanted to meet Boyer. He wanted to discuss the possibilities. 

• Boyer said he was busy.

• “I really need and want to talk with you!” Swanson insisted. 

• Boyer told him he could meet for ten minutes on Friday afternoon. Not more than that.

Note:

• Never give up if you really want to meet someone

How to close candidates

• Whitman flew back for a third visit, this time with her family. To help coax her on board, Kagle invited Whitman to dinner at his house, along with her family. Whitman’s husband, an accomplished surgeon, had doubts about eBay’s prospects. Kagle did his best to reassure him.

• The couple had two sons, so Kagle had swag bags delivered to them at their hotel, ensuring there was a Stanford cap for each of them. The Whitmans wondered what life would be like on the West Coast, so Kagle sent them off with a realtor to look at some attractive neighborhoods.

Note:

• Could we do even more to close our top candidates?

Fundraising

Even great investors will discard us

• And yet when Apple set out to raise money, the stars in the venture-capital firmament failed to recognize the opportunity, proving that even the most brilliant VCs are capable of costly errors. Tom Perkins and Eugene Kleiner refused even to meet with Steve Jobs. Bill Draper of Sutter Hill sent an associate to visit Apple, and when the associate reported that Jobs and Wozniak had kept him waiting, Draper wrote them off as arrogant.

Note:

• What people think of us doesn’t define our value

Some articles I have read this week

👉 How To Democratize Healthcare: AI Gives Everyone The Very Best Doctor (Andreessen Horowitz)

• Our thesis is that new technologies can reverse the exponentially rising costs to help truly democratize healthcare

• The most important way AI’s capabilities are super human may be the fact that AI can be replicated. Trivially. And at a low cost.

👉 Opinion | Mutuelles : l’inquiétante dérive des dépenses de santé (Les Echos)

• There is a big trend in increasing health cost 

👉 Dental Insurance, Value-Based Dental, and Beam Benefits (Out-of-Pocket Health)

• Dental is one of our big claim areas. I feel we should go deep into the global dental offerings over the world and define what we want to do

• They sell smart toothbrushes & products in the shop!

• I like there is a shop including using points

• I like the 4 points:

  • 1. Offer second opinions on treatment plans and scans to make sure what you’re being told is actually necessary.

  • 2. Start incorporating oral microbiome data to figure out the role of genetics and how they impact dental outcomes.

  • 3. Start creating quality metrics scores for dental providers based on how good they are at different procedures.

  • 4. Potentially even start their own clinics. I wish someone wanted to be me as badly as every insurance company wants to be Optum.

👉 Tobi Lütke: Calm Progress - The Knowledge Project (Farnam Street)

• My vision of a roadmap should be a prototype that makes us/our members/our customers dream, and just decide in what order we build it. Align this with marketing.

• Everything depends on innovation. Let’s not forget this. We can still invent a lot. To be innovative we need to be different.

• Triage what decisions are totally distributed and the ones who need a more long-term perspective (that can be shared with context or requires involvements of people with a more long-term perspective of the company because they spend more time on this)

👉 It’s Not a Computer, It’s a Companion! (Andreessen Horowitz)

• “We expect to see this expand to live phone and video calls with avatars” :arrow_right: where we need to go with DoctorAI, and even with customer service. 

• “You can imagine a purpose-built avatar trained on millions of hours of clinical sessions that closely mimics what a human provider would say or do.”

• Interesting tools in the article.

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Let’s talk about this together on LinkedIn or on Twitter. Have a good week!