In Conversation with: Annie Lamont, Co-Founder and Managing Partner of Oak HC/FT

Hey there, I'm Steve Heritage and I'm on my third career. First I was an operator as CTOVM where I helped scale a pretty small startup at the time into one of the world's fastest growing software companies. Second I was a venture capitalist, a partner at General Catalyst. I had shifted over to the other side of the table, investing in all sorts of visionary founders and interesting startups. And now I'm on my third career, mixing investor and operator roles, I'm launching companies with amazing co-founders as a partner at Jax DePose. So over the years I've navigated some pretty interesting career Jax DePositions and this podcast is all about exploring notes. Each episode I or one of my fellow partners at Jax DePose will sit down with some of the brightest minds in business and hear how they manage their own career shifts, that include some of the lessons they learned at the insights that might help you along the way as you're navigating your own career path. Our goal is to offer practical takeaways, honest reflections and inspiration so you can make your next move with confidence. Today I'm handing the mic to Jed Cairo, Jax DePose's co-founder and co-managing partner, and Ben West, also a partner at Jax DePose focused on healthcare. In this episode, Jed and Ben talked to the healthcare investing legend Annie Lamont. This is a great conversation about why healthcare is so ripe for AI disruption. The group's predictions on the biggest structural shifts and healthcare within the next decade, and how to build a great firm that can help create and support the company's driving all of this progress. We hope you enjoy it. Welcome to the next episode of Jax DePositions. It's a huge pleasure to have my friend and someone I've admired for a very long time, Annie Lamont here, as well as my partner at Ben West. We're going to spend the next 45 ministers there talking about company creation, company building, company scaling, particularly in healthcare, where Annie has an amazing track record and where Jax DePos spends some time as well. But before diving into questions, I thought we could spend a minute just sharing some background on everyone. Annie, I'm going to share a few words about you so that I can do some of the bragging on your behalf, but that would love for you to share a little bit of background, and then Ben for you to do the same as well, and then we could dive in. Does that sound good? Sounds great. Thanks for including me. Awesome. Annie, for those of you who don't know is the co-founder and managing partner of Oak HCFT, and she helped launch about 12 years ago, Oak now manages a little over $5 billion in capital with a portfolio of over 100 companies. Prior to Oak HCFT, Annie spent almost 30 years at Oak Investment Partners, leading healthcare and financial services, and she's back to some of the most legendary companies in the world, so financial services and healthcare, including Athena Health, devoted health, village MD, care bridge, one medical, the list goes on and on. She's been honored by lots and lots of organizations, including the Forbes might have dismissed multiple times. So Annie, it's a huge pleasure and honor to have you on the show. We appreciate it. Yeah. Thank you. Great to be joining you. Anything that I miss that you think, folks, would- I will just add to that because you really go over $5 billion, and then we're not measured by how much we've raised, but we did close out of those $2 billion fund in the last years. Over $7 billion. But we do everything from early to late, you know, $1 million checks to $100 million checks. We love working over the next few years at any stage, but we will definitely be doing more early in this cycle of AI, so I'm excited to talk about that. Awesome. I know Ben very well, we've been partners for almost a decade, but maybe for the audience, Ben, can you share a bit of your background as well? Annie, it's a real treat to be on the show with you. Quick background on me. I've been doing Jack's best style investing most of my career originally in a firm called Acreta in New York. We did a lot of healthcare tech and services companies. Really learned to learn up on the model at that firm. After Acreta, I left to go to business school, but then started working in the West Coast fund and led the process to start a business called HIMS with them. HIMS is a direct consumer telemedicine company. After HIMS, I worked with another creative alum and then a couple other guys who started a business called Strife Health, which is a risk-based kidney care vendor. Then after Strife joined Jack's supposed to focus mostly on healthcare, but also some financial services. Businesses like Earned Wealth, which focuses on serving physicians and Blueberry Kintz Health in a handful of other healthcare services companies, so excited to have this conversation and appreciate your time. Awesome. Well, maybe to get us started, I'd love to talk a little bit about trendiness. You mentioned AI in the age of AI, wanting to go earlier stage. I'm guessing that that has something to do with the prices that AI companies are fetching. We'll talk plenty about AI, but maybe just to start, if we zoom out a bit, venture capital is obviously a category where certain ideas or themes get momentum. That momentum can build, sometimes the pendulum can swing too far. What's your take on trendiness and venture capital and where we are in various AI cycles and healthcare cycles from that perspective? Yeah. It's interesting, because in healthcare, the reality is I started my career 15 years in biotech. It was really the very beginning. We found a genzone, a cell phone, a company, a Lexan and all those companies, and then in 2000 with the advent of the internet, flipped in to Athena Health was the first company we invested in. It was the first cloud software company. And certainly, you could say the internet, what in a wave of new companies accelerated things that were more really V2C and consumer, obviously people know Google, Amazon, etc. It didn't do that much other than cloud software, and there were only very few cloud software companies in the 2000 to 2010 period, although the position Athena Health now holds in the world. But if you think about it, not much really was transformative until maybe 2013-14 when digital health came in, but even that was it, right? I mean, the only thing that really started healthcare changing and virtualized some portion of it was COVID. So that obviously, 2000-2001 people, actually doctors and patients realized that they could actually virtually talk to their doctors and hence, hymns and virtual models were born and V2C and obviously some B2B models also added virtual as an option. And it enabled some other business models. But I would say none of that was truly transformative until AI. And I think it's really the first time, maybe though, that I am most excited about my entire investing career because AI is different. I mean, in 1999-2000, the issue was people were building the internet ahead of demand and video hadn't come into place to really consume demand, you know, consume bandwidth. Now, you can't even keep up with demand, so we're trying to build infrastructure to keep up with the demand of AI across every industry. And I will say we do healthcare in Fintech and Fintech has always led in terms of teaching us like what's the next generation of technology, software, approaches, business models that may bleed into healthcare. And it's really been the inverse here in that healthcare because I think it's so lacking, there's so much workflow that's so complex and has so much friction to it and it's so behind in terms of it's how it is deployed software in intelligent ways that I am really excited about all the things that can be in, obviously, in the provider world, healthcare system world that really didn't exist opportunities administratively and clinically that obviously the consumer market we're seeing through ChatGPT and Cloud and the use of that for the consumer. And then we can talk about, you know, life sciences and I'm back to life sciences. I may not be investing directly in therapeutics, but with companies like Chai and Drug Design, the use of AI is going to accelerate the identification of therapeutics in just an unbelievable way. So it is, like, I think it's actually not overhyped and there's no -- >> I like the boldness of the call and for what it's worth, I'd say that we are less maybe attuned to bad pendulum swinging because we're not in the capital markets in the same way, but we also feel like it's very early days to see the full impact that AI can have. And maybe Ben, you could kick us off on this next one. I think relatedly, one of the things that we think a lot about is how, what, what the winning business models and configurations within AI businesses will be long term. We, we see and hear all the time that businesses that work their bots off in 2022 or 2023 now have products that are actually quite easy to build in 2026. And I think it makes it in some ways it's easier to build and back something that will have traction in the next 12 to 24 months, but maybe a little bit harder to know what has sustained value five or 10 years from now. Maybe Ben, you could talk a little bit about how and in some of the AI businesses you've been working on, you've thought about that and then any would love your take as well. I try to think about in some of the businesses trying to apply some history lessons. And I think in the case of software, you have a set of what I would call history lessons or like principles for building valuable software businesses that are probably largely still true. I don't think we've seen like the rules change entirely. But whereas you, you may have been able to build a business with maybe that was maybe fairly marginal on certain characteristics like sources of value are usually like, oh, there's a lot of user training around your software or you're a true system of record or you have proprietary data on which to train your piece of software or that your piece of software leverages or there's certain network effects to your piece of software. I think those are all still sources of value, but a business that was perhaps marginal on some of those before is, you know, what have been valuable before, but it's probably dangerous today. I think when we think about software and particularly in venture services and healthcare, we've been a lot more focused on much more aggressive about verticalizing certain interventions and models around customer bases we believe have unique needs. So we've looked at a lot of horizontal solutions at one point. We've shifted to be much more focused on vertical solutions where we can really surround a customer with a suite of our tools. We've had the mindset of like, okay, how do we build something that's extremely, extremely sticky and durable? And here's how you've thought about this. You see a lot more different companies than we do or sort of in our maybe a bit more focused type of type of building or investing, but curious what you've seen in terms of businesses that you're more confident in or ways of applying AI, either in software businesses or in other businesses that they get more excited in this moment. It's certainly there are a couple of different models and in healthcare, the tech enabled services like if you're you have care delivery and you're embedding AI, the smartest way, I mean, certainly that is, you know, that creates some unique advantages because the director of direct delivery of care is something that's hard to displace other than, you know, if it's primary care virtual, like I do think that AI as a front end is going to be incredibly powerful and leveraging primary care and even some specialists in terms of diagnostics. But I do think the ability to integrate well into care delivery, particularly in this first inning is going to be very powerful and and protectable. If in the software world, I agree with you. Like we just think that if you're deeply embedded workflows are complicated, you have hold of the customer. I mean, there's there's a reason even at Epic, you know, has they have a beach head. It's a very strong beach head. I would really like to see that beach head go away in the next five to 10 years and hopefully it does, you know, bit by bit. But I think even with some of our companies that going in, obviously having, you know, very strong tech along with deeply embedded understanding and integration into workflows. I do think this first generation of AI companies that are getting into healthcare systems, you know, provider, provider offices, into payers, you know, well, actually for the most part have some advantages. It particularly if it's deep enough and broad enough and integrated enough versus, you know, somebody that comes along two years from now, like I do think actually it is a bit of a land crab right now for some of these opportunities. We have a company called BlueJay that is on the legal side and it is tax research. So it's used by lawyers, it's used by accountants. You know, it's it is a huge knowledge engine. There is massive advantage that they've been around for 10 years, but really AI five last couple. And I think now they have, you know, they'll have like 60 million, you know, like transactions on it in the next couple of years. And so I think that's going to be very hard to just place something that unique. Now it's not going to be the scale maybe of a Harvey or a Liga era, but I think the reality is is it's actually more protectable. So there's like huge value in that. And I think that's, you know, it's this combination of data, you know, like a Bloomberg model where they have a lot of data and they just have to be really smart about, you know, using AI embedding it and making sure that protect their flank while they're like, yeah, going moving offensively forward to what one one follow up. And he is you mentioned comparing blue J to a Harvey. And there's this this tension between Tam and the depth of product market fit. You've you've had big winners that are more that serve broad markets. You've had big winners that are more narrowly focused. When you're looking at a new opportunity, how do you determine which to prioritize? And are there any heuristics that you've developed over time? Or does it end up being more case by case? Honestly, I think it's a little bit more case by case because this is where valuation matters, obviously, with smaller markets, right? And so we're I would say that we're probably more more barbilled, not just in yes, we're going early and later, right? We're definitely, we're probably doubling the amount of early that we're doing now in a cycle of investments. But I would say that we are shooting the moon more often, like now we're looking for bigger opportunities early in the market. And we're and we're sort of willing to pay up for those. And if it's a niche opportunity, and you know, I'm sure you're seeing this too, where well, it's a wedge in. We're only we're going to own this market, but then we're going to build on top of that. We're going to this market and this market as expansion markets. And some of that will actually spend with unbelievably great entrepreneurs and some of that wall that wall, right? And so you just you got to believe the first story is actually going to give you a return. But I would say it's not you know, the three X is not going to cut it in this market. You really got to believe, you know, that these things have upside. And I think with a smaller market opportunity, we just have to have valuations that are reasonable and believe they know the capital to get there is reasonable. And so there's a heuristic. It's just like, hey, we're just not going to like it's got to, you know, somebody can't be saying, hey, I'm going to raise a hundred million dollar round, everybody else's. And it's going to be a 600 million, but your total market opportunity is a billion. Like, you know, that we're just going to get realistic about that because otherwise, we're just going to repeat 2021 again. And I'll, you know, a lot of people will be happy. So I think valuation only matters with the smaller market opportunity. And it doesn't, you know, we say it doesn't matter as much with the things that you believe can scale. And I think if we can we find opportunities, like fundamental is a large tabular model, you know, like massive opportunity in that. And so, less, less market, less valuation sense. Why don't maybe you, you mentioned this idea of the exceptional entrepreneur being able to turn turnover carne and then turnover cards, BCD and E in a way that maybe a less talented entrepreneur could. Are there, are there certain attributes that you think are higher correlation with exceptional entrepreneurship? And I'm curious if in the moment we're in, which you described as having land grab elements, if any of that changes, like does the 10x entrepreneur of 2026 look different than the 10x entrepreneur of 2016? I think that there are going to be 10x entrepreneurs that got lucky. And we've all got lucky as investors. So I'm like, you know, let's hope for a few of those, right? But I do think if, you know, every time we really win big and one big and multiple opportunities with people, they're obviously, they're incredibly smart, right? I mean, just the exceptionally smart chest playing smart. And what's exciting to me is that this is a period of time when A lot of really smart people are coming into the entrepreneurial world and also have commercial sense, right? And that doesn't always match. And I would say now younger entrepreneurs really do have that commercial sense. So it's exciting to see that convergence of brilliant tech talent as well as commercial sense converge. But I think it's really important that an entrepreneur is confident but not arrogant. And I would say, you know, the part brothers, the Brad Smiths of the world, I mean, there was people are like really comfortable on their own skin and super smart and super confident in general, but are always asking questions and always worrying. So they are chess players, they're always mapping out what could go wrong, what's the next move, somebody else, what's the next move that they should be making, and then building for the long term. And I think that's really important because they're confident in arrogant entrepreneurs. And they can just drag you right off the left, off the ground, so I don't love those. We've been there. Ben, I know that you've been building companies in a creation model for a career that worked with lots of different entrepreneurs and CEOs. I'm curious if there are any attributes that intuitively would make someone successful that you're coming to be less enamored of and maybe some things that would have been yellow flags in the past that now you're more attracted to. It's been interesting just to think about folks that I've worked with and just maybe some of the evolution in my, I think maybe what I've come to rely on more. I think the biggest thing has been a little bit of the transition from the focus on pure track record and not really trusting yourself to judge to a little bit more judgment and a little bit less pure track record. We really like to work with people that have been there and done that and at a creative we had a talent, a way of thinking about talent that tried to really isolate like key things that person needed to be able to do in a role and then went really deep on proof that they were great at those things and had done those things. I think today I feel like I lean on in transics and a willingness to evaluate in transics more than I did before. I think some of the most crucial moments in our companies and I think the places where the person in the role makes such a big difference are in these places where they're hungry to win fundamentally makes the difference. I think willingness to do what it takes, that hunger to win mindset and a level of like all this, a whole bunch of things downstream of that are super, super fundamentally important. I think that as a variable that people can prove in their track record but fundamentally you start to feel what you spend time with them has become a much more important part of my own process for getting a sense of whether someone's going to be successful and whether they're going to be somebody you want to work with for five or ten years. I had 100% agree with that. I just think it's about judging people at this point and not still. A lot of them don't have a track record. The under 30 crowd may not have been funded as much in healthcare before they actually understand it much more deeply than that unfair did ten years ago, it's fascinating. I think for the audiences benefit, Annie and I got to know each other by serving on a board together and one of the things that I was struck by in that experience was I feel like the impact per word or per minute of your time was very high and there are many venture capitalists who are very successful ones who serve on lots of boards and it becomes at times an impediment to them having impact and I felt almost the opposite when we worked together and I guess I would be curious, what do you think makes someone effective on a board and what do you think makes a board overall effective in having a positive impact on a company? As you know, most of what's important doesn't happen in the board meeting so that's not really that relevant. I would say every company needs something different, one is just figure out what your role is, what's needed at the company, what does the CEO need, what does the company need, what's been covered by other VCs so that you are complimentary to each other because I think we all play slightly in different roles in different boards depending on what's needed. And I think it's almost like entrepreneurs, I mean the reality is, I think when you have an instinct that something is not right addressing it, there is no point in a lot of people who don't like to be the bad guys, they don't like to be the bad guys or they don't want to pick it up and say maybe he's ugly or this person, this VP of marketing isn't cutting it or the CFO isn't cutting it or we just got to do things differently and it's time to pivot and I think that's hard, I think that is one thing that people like to go along and get along and it takes time to actually commit to these companies and try to make them work. And so I think a good board member is just somebody who won probably first of all doesn't get in that way, you know, like doesn't like to hear their own voice for the sake of their hearing their own voice, doesn't feel like they've got to be the smartest person in the room, they just want the company to succeed, period the end, they want the CEO to succeed, the founder to succeed, the company to succeed, like what can we do to help that along? And that's all they care about, you know, get their own eagle out of the way, get their own whatever's going on, you know, dynamic out of the way and just focus on that and then be very clear about what you can impact and what you can. And then try to constructively work with a board and CEO to contribute to those things. Andy, I'm curious how you think about the role of independence on the boards for your own needs, are there any things that independence need to do differently or places where they're particularly valuable or perhaps not valuable, just curious to say it's a little bit different than being an investor, but theoretically should be very similar. I would say independence have a tough job and eventually back to company, right? I mean, you know, in the at the end of the day, often the VCs, I mean, you either have a super strong CEO and everybody's just like following what they say for the most part happy with that or the VCs are very involved and then the question is, what's the independent doing that really makes their voice heard? And I so I think usually it's an operating person where the CEO has tremendous respect for them and feels like they can either help them with customers or management, it shouldn't be somebody that the VCs put in that they feel is, you know, another vote at the board or maybe that person helps with talent, but I think in general it just should be somebody that the CEO could really respect and learn from and also, you know, it was helpful in their marketplace. I mean, that's, you know, as we all know, it's like everything's so targeted when you're an entrepreneur, it's just like the immediacy of assistance, you know, and helping constructively help the CEO get done what he needs to get done and goes to stay out of the way. I just have seen too many independence brought in and, you know, they're like, you know, like this person, you know, we need somebody that looks like this on the board in terms of like their background or whatever and, you know, and then they feel like it's wasted time too. In general, my words are smaller these days, like, get small boards, right? Like, don't want a lot of, it's just too, you know, the intensity and what you're trying to accomplish in a early stage company is so focused that you just don't, the distraction of managing a board is, I don't know, not really that important unless, you know, they can be targeted in their health and you can often just get them from the advisor and doesn't have to be a board member. To move us in a slightly different direction, what, one of the things that I can imagine is, is interesting about your job is your, your primarily serving as a thought partner of a backer and advisor, a government source to people building companies and at the same time, you're building a company and I know that you've built an amazing business and culture and I'm curious what, what, what lessons you wish you could have given yourself. yourself, if you went back to 2014 at the outset of building your firm? You know, we always preach to our own teams that, you know, I heard the best people when it's not working out, you know, like, do the right thing for that employee and yourself, right? And people wait too long to make changes in their own management team, and particularly now that, you know, the world is moving so quickly and companies are growing so fast, they grow out into your teams and, you know, that's like an average to your lifecycle for, you know, a lot of these management teams. So I was saying, I mean, I think the thing having been in the business for a long time and seeing my last partnership, I mean, Andrew Adams and myself had a, like, wonderful partnership and still do, the rest of my partnership was a little as functional and, you know, was watching that and thinking about their, their inability to rethink what they were doing and address, you know, and just keep learning, right? I mean, I think it was exciting about what we're doing and have done is we, we've hired great people and we continue to do that. But you know, over the course of now 12 years, you know, we have a lot of people have been with us seven, eight, nine years and they invest in a special side, but we also, over time, people have gone into operating roles because actually being an investor wasn't right for them and some of that had to be coaching and then, you know, and then they completely appreciated just like when you have somebody in the wrong world or one of your companies. But it's always hard to do and you just have to, you know, get ahead of it and, and if you approach it constructively in terms of like the best thing for that employee or sociating and yourself, you know, it, it, it tends to work out. So I think culturally people just, and just keep, I would say, rethinking things constantly and I would say if there's one thing I would have done differently in our firm, it's, you know, 22 happens and it's, you know, you're, you're busy like investing in the fund, raising another, you know, like new fund and you're, we probably went a little conservative in 22, 23 and we're also, you know, we're a little different in that we don't like losing ever. And so we work our, I mean, it's really hard to try to not make that happen and honestly, I probably would have done a little bit more early sooner and I would have probably not worried as much about that element, you know, in the grand scheme of things. And I always feel loyalty to our companies and to our LPs in terms of like making sure that we have as low losses as possible, but it's really been a fetish for us to, you know, to work that side of it. And that is definitely not an issue for most VCs that are like, they move on so quickly. So maybe we have a little more balance on that for in terms of how much time they're in our versus new things. Yeah, that's interesting, I think that's something that we struggle with ourselves. Being in the company creation business and being concentrated in what we do, it does lead to almost a moral obligation feeling, which is valid and valuable, but at the same time can become disproportionately time consuming versus versus value creation. Well, and I think adventure, you always have to have a positive mindset, right? I mean, you always, you know, what, you know, it's more above and said, you know, when others are greedy, you know, when others are fearful, you get greedy, when others are greedy, you get fearful. So I don't know, we're kind of in a, like, mix right now, but most of the greedy, you know. Yeah, okay, so last one for both of you, Ben, you can know first. So if you, if you had to bet on one, one big structural shift in how healthcare companies are built over the next 10 years, and you can't say AI, what, what would your, what would you bet be? The idea that the consumer can be more in the driver's seat is something that's kind of waxed and waned in healthcare and it's one of these, it's one of these features that I think is, is going to be true for a lot of categories is just the idea that the average person can actually kind of supercharged their thinking on a given topic or a supercharged their education or become, you know, at their fingertips, they've got access to basically all the world's information. And right now people are, are learning from it and it's, I think today, just illustrating better conversations with physicians and just better, better communication with family members, things like that. But in a couple of years, once that's been true for a while, I think that consumer is going to be a much better advocate for themselves than they have in the past. And I think when that's true, we see a lot of emergent, emergent properties of that, which we are hard to predict, but I think we'll have really meaningful implications for probably use the healthcare system. When I was at a creative, I was a board observer, I come to call accolade, and I feel like that business was one of the early value-based care businesses serving employers. And there's so many random experiences I've had since then where random stuff that we learned at accolade or that we saw at accolade has shown up in different contexts. Those true for him's with using asynchronous telemedicine to gather information and make decisions. It's been true for another business I've been involved with that does a lot of advanced care planning for complex patients. There's just a bunch of powerful things that happen when you put tools in people's hands and information in people's hands. And I don't know exactly how all the ways it will manifest, but I'm excited about it at the least. Yeah, no, I agree with that, but it's also going to be interesting. We see what anthropic and open AI and others are doing, and I don't want to be competing with them either. So I think about models, but hopefully leveraging off of what they're doing. I do think it's a little bit, you sort of made this reference, but back to the future in this sense of when managed care and HLOs came in in the 90s, and if you actually look at the 90s versus the 2000s in the now period, I mean, the cost of care was actually drug cost for it exploding now, but the cost of care was inflation was very low during that decade. And I do think that everybody ever says, well, you've had a breaking point, but I actually kind of think we're hitting a bit of a breaking point. And I think two things will happen. One, I do think alternative health plans and approaches, what was their own network is now an intelligent narrow network, an intelligent, like you've just cut, you know, garners and others that are, you know, I'm sure us now united as now creating their own, signals now creating their own alternative plan, and do think that will become more popular. And I think that people will be willing once they see that these plans actually provide great care, but are, you know, and cost them the last, I just think that is going to be more in the psyche of people, and brands will hold, you know, a whole less way. So brands, I mean, like local hospital systems, et cetera. So I think I'm excited about that. And I do think that the whole drug side is, you know, from research to clinicals is going to be rethought, re-engineered, obviously China's putting pressure on that model to, I mean, in a good way, I guess, I don't want it all going to China, but I think they're lowering costs in clinical trials, and so I want that here. And I think the FDA's got to really just look at this as a crisis, like this is an existential moment, and they need to, like, get on it and reform and rethink everything they're doing. It's interesting, you say that we've been, we found ourselves attracted to the life science space, not we're not going to be developing drugs, obviously, but it feels like one of these socially important massive categories where there's going to be increasingly economic and regulatory forces that drive efficiency and new ways of thinking, and we're excited to participate in that as well. Yeah, now, I agree to meet administrative costs, and obviously exploded in the last 20 years, and there's no good reason for that so much of that. You told me I couldn't use AI, but so much of that. I keep waiting to be tired of talking excitedly about AI, and the moment hasn't come yet maybe next year, but anyway, and anything so much for joining us. This was a lot of fun, and Ben, thanks for joining as well, and hopefully we can do this again soon. I appreciate you inviting me, good to talk to you.