Data Ingestion Engines, The Demise of Extractors, & Endocrine Disrupting Chemicals
My Investment & Personal Themes For 2024
2023 was a year of transition. I left Accomplish Health at the end of April and spent the rest of the year recovering and rebuilding from a foundation of health, both professionally and personally. Last year I kicked up my personal wellness efforts and focused on building habits around stretching, dental hygiene, nutrition, and mental health. My success was even covered in Business Insider (link + link) and on the Tamron Hall Show. Being in front of the camera still makes me deeply uncomfortable, despite losing ~70 pounds.
The perspective I’ve gained as I recovered has influenced me to focus on the following themes for 2024.
Investment Themes
On the business side of things, I’m going to invest time and capital in businesses that better allocate resources and focus on sustainability. We currently face chaos caused by climate change, labor shortages, and multiple major wars across the globe. There’s less margin for financial innovation and popular demand for a more equitable society. In order to take advantage of this instability, businesses that figure out wedges and better direct the spoils of capitalism to value creators will create sustainable investment returns and a better world.
1. Contract and Capture
A critical investment theme this year centers around the transformation of extractive industries, notably in complex sectors like healthcare. The entrenchment of incumbents is so deep that for insurgents to win, they must dramatically improve the ROI for a key gatekeeper. At scale these businesses will contract the industries they enter while capturing more of it. Historically, these industries have disproportionately benefited shareholders and executives, often at the expense of broader stakeholder value. The easiest example is the value accruing to the largest payors and PBMs. The PBMs especially add no value but earn tons of money while making patients' lives miserable. Mark Cuban’s Cost Plus Drugs is one company deploying this model. The marketing is simple, ‘PBMs are criminals and here’s how much they’re stealing from you’.I am currently incubating another such company in the healthcare/pharmacy space. The key to disrupting and ultimately reshaping these markets lies in offerings that existing players cannot or will not provide, due to structural or bureaucratic barriers. These could be innovative solutions that directly challenge the incumbent's revenue streams or undermine core operating processes. I want to build and back companies that drive this disintermediation and capture significant market share in critical industries.
2. Equitable Ownership
As I discussed in a previous post, I'm increasingly drawn to business structures like Employee Stock Ownership Plans (ESOPs). The appeal of ESOPs lies in the inherent fiduciary duty that board members and officers owe to employees, who are also the shareholders. This model transcends the traditional focus on financial capital alone, aligning business operations with broader stakeholder interests. The quest is to identify companies whose business models genuinely prioritize sustainability and social responsibility as a feature, not marketing. A prime example of misaligned incentives is in healthcare, where MDs and other providers drive the value but extractive owners capture it. Understaffing and other safety issues wouldn’t be as problematic if executives were accountable to frontline providers as well as investors. The mantra "You are your business model" rings true, and my focus is on building and investing in companies that innovate on structure and incentive alignment across longer time horizons. I want more companies that maximize value to more stakeholders (including shareholders).
3. Data Ingestion Engines (Not AI Companies)
Since my days as a Founding Partner at MESA Ventures in 2012, I've been refining a thesis on data ingestion engines (the initial boring title was ‘Large Pools Of Interconnected Data’). These systems begin with a product or service that offers sufficient value to entice customers into sharing their most valuable data. This proprietary data then becomes the lifeblood of the product, creating formidable competitive moats. As more data is collected, product offerings improve, further encouraging usage and embedding the product in company workflows. Entry valuation matters so investing in 100x valuation foundation AI models seems like a fools errand to me. I’ve been wrong before and will be again and again, but I’m pretty sure they most will get crushed by giants like Microsoft and Google or well funded startups like OpenAI and Anthropic. My focus is on companies that craft industry specific value propositions, encouraging customers to pay and share data across six key categories: behavioral, biometric, econometric, identity, visual and sensor data. Tesla’s is a good example of a data ingestion engine. As a byproduct of building and installing solar panels & batteries, Tesla will eventually have enough scale and data to become an asset light utility (mark my words it’ll happen). As a byproduct of being a car company, they have the data sets required to build autonomy and robotic solutions no other company can. Companies that leverage AI to create industry specific workflows in single player mode can create such platforms and eventually use them for vertical and horizontal expansion.
Personal Themes
In addition to investment themes, I’ve developed some personal themes around gradually developing, sustainable healthy habits.
1. Resistance Training
After successfully integrating a consistent stretching routine and managing my weight, my next target is building lean muscle mass. So far my Tonal’s recovery mode has been my friend as I get back in shape. There’s compelling evidence showing resistance training leads to a 23% reduction in mortality risk and even efficacy on par with therapy in combating mild-to-moderate depression. I want to look good at the pool, feel happy and be strong enough to effortlessly carry around my 6-year-old Bowie.
2. Reducing Chemical Contact And Intake
Many endocrine disruptors like BPA are commonly found in beauty products. A recent study found bottled water contains 10x - 100x more plastics than previously estimated. I’m making small but consistent efforts in reducing daily interactions with chemicals including plastics. One example this plastic-free biodegradable phone case made out of Bamboo that I got on Etsy. I'm overhauling my beauty and wellness routine. My skin will continue to be dewey and soft but not at the expense of my endocrine system. I've switched to brands like Wild and Plaine Products, which not exclusively offer chemical-free options and embrace sustainable packaging. They also smell pleasant, not like patchouli. Given my history with metabolic and inflammatory issues, which have been linked to exposure to endocrine-disrupting chemicals, I want to dramatically reduce the amounts of plastics and endocrine disrupting chemicals in my environment. I bought a Rise Garden hydroponic set up to grow my own lettuce, tomatoes and other fruits and vegetables.
In line with reducing chemical interactions, I'm overhauling my beauty and wellness routine. My skin is dewey and soft but I don’t want that regiment to mess with my endocrine system or give me cancer. Many endocrine disruptors like BPA are commonly found in beauty products. I've switched to brands like Wild and Plaine Products, which not only exclusively offer clean options and embrace sustainable packaging. They also smell pleasant, not like patchouli.
Smile More - I realized I wasn’t always smiling when I was happy. I wasn’t mad or upset, I was just deep in thought. It has a negative impact on people around me and it is easy to fix. I’ve already seen an improvement in mood in my house.
Thanks so much for reading. What are your themes for 2024? I’d love to hear from any of you if you have thoughts.