Dear friends, 

In JC’s Newsletter, I share the articles, documentaries, and books that I enjoyed the most in the last week, with some comments on how we relate to them at Alan. I do not endorse all the articles I share, they are up for debate. 

I’m doing it because a) I love reading, it is the way that I get most of my ideas, b) I’m already sharing those ideas with my team, and c) I would love to get your perspective on those. 

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💡Must-read

👉Josh Buckley (CEO of Product Hunt) - Identifying Legendary Start-ups (Join Colossus)

• Gaming in the West tends to follow gaming in the East with maybe a two- to three-year lag. And then consumer apps in the West follow gaming in the West with maybe a two-year lag.

➡️ I love spending time understanding gaming in the East. Do you have anything I should know about?

• Now I'm seeing startups all the way to enterprise SaaS actually integrate the concept of variable reward because it ultimately adds so much delight to a product, as a key way for a product to both differentiate, but also delight its users.

➡️ I’m a big fan of the variable reward notion (the book Hooked from Nir Eyal is good about it). It is interesting to think about how to apply it to our product at different levels (sometimes the reward can just be a good animation in the UI). 

• The most successful free-to-play gaming products are a mixture of maybe three different things. People don't just think of it as a game, the game is maybe 30% of it. The second layer is the community. There's both a chat room, it's a virtual world. And then the third element is a shop.

• What gaming is doing, it's really exploring and optimizing those three idea spaces to an extreme. 

➡️ How can we apply those 3 layers? It is very aligned with the super-app vision we have pushed. 

• So maybe they want to belong to a group, so they belong to a guild or a clan in that game. And they want to help their group progress, hit their goals. Maybe they want to receive a sense of status from their peers. They want to be constantly at the top of the leaderboard. It's all about providing that meaning and making sure that there is a true meaning to the player in that game.

➡️ How can we provide meaning? 

• And that's one thing that you see games like Fortnite and Roblox, etc. make. It is possible to spend. If you really love that product and want to spend a lot of money in there, first it's possible.

➡️ How do we make people that love our product have an opportunity to spend more (if they want to) for more services? 

• I would imagine the best product should win in many categories. But if you have a product that just has an LTV that much higher than the rest of the market, you can out-distribute. You can eat the market.

➡️ That is why increasing LTV per member with extra services is so important. 

• Breakthrough idea requires a radical open mind. By definition, you're believing that the future is going to be different to the past. And that's a really hard thing to do psychologically.

• Many ideas (Airbnb, Bitcoin …) looked really weird early on before they suddenly became consensus.

• Removing boundaries really requires questioning every assumption in your models and in your system, and really thinking from first principles.

➡️ That is very, very important. It is something I’m pushing a lot at Alan: avoid  “static” thinking and think about what we can do to change the future.

• Pricing: many startups, I think undervalue their software and can stand to charge a lot more for it.

➡️ It is a really good point. What is the value we bring?

• One example is a company that I have invested in called NexHealth.

• NexHealth starts off as a SaaS platform where they approached healthcare practices with a SaaS product.

• They are also integrated with the mass majority of EHR systems and continually build integrations day by day.

➡️ Should we build more integrations? Who would you like to see us integrate with?

• What that gives them is this opportunity to launch an API for developers to build healthcare products. So now, a developer can build a healthcare product that integrates with all the EHR systems out there, and has access to healthcare practices in 6 weeks instead of 18 months. So you can think of it like a Plaid for healthcare. Now, they have very large developers building healthcare products on top of NexHealth's API, and we're talking large public companies are building healthcare products. And then finally, they have the third pillar of their ecosystem.

➡️ Should we accelerate on opening to Developers? If you are a developer, would you like to build upon Alan?

• Both for crypto and NFTs, I think we'll see many business models potentially get disrupted that have historically been stapled as traditional startups.

• First, I think it will change a typical model from software as a service where software is something you come and pay for, to potentially software as something that makes you money by using it; you get paid to use it.

• Now, imagine if the next Google were launched that you actually made money because you owned a certain keyword. By using that product, you are heavily incentivized to actually make this succeed over Google. That idea can apply to every field and I think we're starting to see very, very early innings of that play out.

➡️ I love the play-to-earn opportunity (I’ll share more about it soon!).

🏯 Building a company

👉Instagram's Evolution (Stratechery)

• Mosseri cited user research showing that Instagram users use the app for entertainment, but I strongly suspect that the service is even more convinced by the way users actually use the app: Facebook knows better than anyone that, when it comes to their services, revealed preference — what users actually do — is a far more powerful indicator than stated preference — what they say they want.

➡️ I do think we have that a lot when it comes to asking people what they want for healthcare & well-being, or HRs for low-tech employees.

• The key thing to remember is that advertisers always lag users: there were millions of people using the Internet on desktops before advertisers really got on board, and then there were hundreds of millions of people using mobile before advertisers came along. In every case some analysts made the mistake of assuming that advertising would never catch up, but it eventually did, and it seems far more likely than not that the story will be the same for Stories…

➡️ That is why we should constantly try to test on the new platforms even if they are “not the target yet” “not big enough”. I remember pushing us to go on TikTok almost more than a year ago, and we didn’t test it. 

🗞In the news

📱Technology

👉Threads by Chris Cantino (PingThread)

• R&D : Brands exchange NFTs for insights on product dev: pain points, marketing claims, flavors, materials and more. Participants receive NFTs granting early access to product releases and potential profit sharing. Brands easily track and maintain these key relationships.

• Education and CX : you can receive NFTs in exchange for onboarding newbies into the community, or providing customer support.

• Content Submission : Want to collect an NFT? Submit content in exchange.rights can be programmed into the contract so that the use of your content in advertising could yield a % of future profits to you.

• Voting + Governance : Fans deserve more than just “input” on key decisions like product roadmaps or distribution strategy—let them actually vote. Make it gated to only holders of specific NFTs, or open it up and reward any participant with a proof of participation trophy.

• Community Coins : Offering communities their own currency to transact with creates financial skin in the game. Helpful to a newbie in the chat? A mod might gift you 500 coins. Want a private call with the community creator? 5000 coins.

🏥 Healthcare

👉 SoftBank Vision Fund 2 Backs Cerebral at $4.8 Billion Valuation (Bloomberg)

• Simone Biles is startup’s chief impact officer and an investor

• Provided care to more than 200,000 patients

• It has more than 2,300 clinicians

➡️ a LOT of physicians, but not that many patients. ​

• Average wait times for “instant live” visits with clinicians dropped to 5.3 minutes earlier this year from 23 minutes in January.

➡️ Being really fast makes a difference.

• The company offers medication and therapy plans to treat depression, anxiety, post-traumatic stress disorder, substance abuse, and bipolar disorder among other illnesses.

• Cerebral also plans to cater to sub-clinical patients who may be best served with self-guided tools including meditations and journaling.

• The startup will seek to launch in new European geographies.

• Winning a grant from the U.K.’s National Health Service.

➡️ Interesting that they did get a grant on the topic. 

👉How Health Data Gets Sold: Moving From Third-Party to First-Party (out of Pocket)

• 14 health systems including Tenet and Northwell have banded together to create Truveta so they can structure and sell data (which just raised $95M). Blue Health Intelligence has aggregated claims data from the different Blue Cross plans.

➡️ Should we dig deeper? Understand if it exists in Europe? I don’t think it does. On our side, we will never sell the data. 

• Epic has built Cosmos, a massive database of de-identified patient records for a wide array of planned use cases. Change Healthcare is a clearinghouse with lots of structured claims data.

• Companies like Datavant and Healthverity would be considered data brokers. Buying data at this level usually gives you the most types of data + it’s queryable + you can use the tokenization on your own internal data to connect it to matching tokens in other datasets.

• However, I think companies will want to move more towards a first-party data collection system where they get the data directly from consenting patients. 

👉 Vital Signs: Babylon Health Breakdown (Vital Signs)

• Today they serve 24 million patients.

➡️ High number of patients but low number of interactions in % of patients. 

• The app was built on Babylon’s AI tech: probabilistic modeling of the likelihood users have certain diagnoses, and what potential next actions should be taken, given the information they provide.

• Babylon was able to take its UK tool and customize the technology for new regions by tweaking models based on available data including local disease prevalence. Babylon then took their product to Rwanda via the Gates Foundation where 20% of the population has registered for their product today.

➡️ Good objective to be the solution for countries!

• Value-based contracts are projected to be 81% of Babylon’s 2021 revenue

• Babylon also classifies its GP at Hand business (providing primary care for the UK’s National Health Service) in its VBC business line as Babylon receives capitated rates from the UK government based on projected primary care spend. The company served 106,000 members in Q3 and is adding 55,000 more next year.

• AI-driven digital front door business competes with Buoy Health, K Health, HealthTap, 98point6, Ada and others.

➡️ Did you test the different solutions?

• 430% rev growth

➡️ Quite an impressive number at their scale. I think it is why we should not limit ourselves and aim at having crazy growth even at scale.

• At scale, Babylon management estimates the pure tech business can run at 90% gross margins, while fee-for-service virtual care can run at 25% and value-based care at 30%.

➡️ Interesting benchmarks.

• Babylon published a peer-reviewed study showing it had realized 15-35% cost savings for its patient population over a two-year time period compared to the North West London average. The result has limitations as patients were not randomized but rather self-selected into the tech-forward Babylon plan.

➡️ I really like the idea they pushed for a peer review study. 

• Babylon itself has already ventured into a clinic-based model through its purchase of the two California practice groups.

➡️ They now own clinics they have purchased.

• Selling software only was high margin but hard to grow into a big business. Babylon was better off when it sacrificed margin to expand the scope of what it could offer

• Babylon’s initial business integrating its software into other care providers was plagued by long sales cycles (~2 years) and integration timelines. By offering its own patient-facing telemedicine service, Babylon took its destiny into its own hands. Its fuller model is proving more attractive to payers and substantially differentiated from other front-door players.

➡️ Babylon has done some white labeling of its tech, but it did not prove to be a strong success in terms of revenue.

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