Sunny Kumar, Partner at GSR Ventures

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Saul Marquez:
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Saul Marquez:
Welcome back to the Outcomes Rocket, Saul Marquez is here and today I have the privilege of hosting Dr. Sunny Kumar. He is a partner at GSR Ventures where he focuses on investments in early stage companies applying artificial intelligence and machine learning technologies to the health care sector. He’s a physician as well as a published medical researcher with the focus on informatics and artificial intelligence. He’s a serial entrepreneur and most recently found that a company to reduce readmissions for high risk patients with chronic diseases using voice enabled natural language processing technology. Sunny received his bachelor’s in Science and Molecular biology from Yale and an M.D. from Stanford University School of Medicine and his MBA from the Stanford University Graduate School of Business. We’re going to be diving into artificial intelligence, machine learning and health care and some of the insights and learnings that that Kumar has made in his work. So Sunny it’s such a pleasure to have you here with us. Thanks for joining me.

Dr. Sunny Kumar:
Saul it’s an absolute pleasure to be here. Thank you for having me.

Saul Marquez:
Yes, sir. So before we dive into the really awesome and interesting work that you guys are up to at GSR, I want to better understand what moves you and what inspires your work in health care.

Dr. Sunny Kumar:
Absolutely. And, you know, I think having been trained as a physician, health care is something that’s very, very close to me. And actually, a few years ago, when I was leading my medical training, I very much intended to be a full time medical practitioner in the clinic. Taking care of patients was what I was passionate about, called to me. And honestly, there’s very little that can be as rewarding as taking care of a patient in the moment. However, what I found was that taking a step back from how health care is practiced in the US, there has been very little change, very little advancement in how health care is delivered. And when I look at the type of change that we see across every other industry and the role that technology has played in making those industries more efficient, more effective. I was surprised that we didn’t see that in health care. And given my background with some of these technologies, in particular informatics and artificial intelligence, I wanted to better understand why there was this gap between what we could do in every industry with technology and what we were doing in health care. And as I dived further into this, and this was a large focus of my business school training, I ended up discovering that the incentive alignment with health care was not set up to encourage innovation.

Dr. Sunny Kumar:
That’s not to say innovation doesn’t happen, but adoption becomes much more challenging. Being able to address other concerns when it comes to the safety take priority over effectiveness and efficiency. I saw that there was an opportunity, particularly with some of the emerging technologies that we’ve seen developed over the last four or five or six years to potentially bring about not just a small scale improvement in health care in the sense of improving efficiency by 10 percent, 20 percent, 30 percent, which is every other industries lollipop. But perhaps going even further, given the fact that technology has not had that impact on health care to drive efficiencies on the order of two x three x 10, maybe even in some cases a hundred X, meaning making a single physician able to care for a hundred as many patients as they used to be able to do and making that a reality. That just got me so excited that I found the opportunity to dive into this sector as an entrepreneur and then later as an investor, far too enticing for me to be able to ignore all of it now.

Saul Marquez:
I couldn’t agree with you more than that. Safety factor tends to be the driver. And ironically, that safety factor during the good times is what’s driving the innovation. It’s just fascinating times that we’re in. So walk us through how GSR Ventures is adding value to the health care ecosystem and maybe some examples of the companies that that you guys are working with to make health care better.

Dr. Sunny Kumar:
Yeah, absolutely. So we’ve periodically and opportunistically invested in health care throughout the entire life of GSR, which was founded in 2004. But we decided to start up a dedicated health tech practice in twenty fifteen, twenty sixteen, which was how I ended up joining GSR. And one of our core thesis with our health tech practice was that you needed to be able to uniquely bridge both the technology and the health care ecosystem. What we found when we started investing in this sector, despite there being a number of technologies that were quite interesting and looked like they had potential to drive that type of change and improvement in efficiency that I was mentioning just a few minutes ago. What we found was that entering into this ecosystem and being able to navigate it was tricky. It was not quite like other enterprise tech investments where you had strong incentive alignment. You if you had product markets that you could run with and scale up a business is and how can you deeply understand how the healthcare ecosystem or to the players were what the incentive structure is? For better or worse, it’s quite complicated in the US, so. When Richard, our managing director, put together a team at GSR, his core focus was that he wanted his investment partners to deeply understand health care, deeply understand tech, and be able to bring those together in order to uniquely add value to our portfolio companies. And that portfolio has grown significantly over the past few years. We’ve grown from just one or two companies to over 10, over 12. And our core thesis here are companies that can come into the health care infrastructure, provide a value proposition that resonates with the key stakeholders and allows them to scale efficiently and effectively.

Dr. Sunny Kumar:
I’ll give you one example of a company that we just recently invested in, a company called Metabol, which is piloting decentralized and virtual clinical trials allowing clinical trial operators like pharmaceutical companies or CROs to be able to actually conduct their trial while limiting the number of visits that the patient needs to make to the trial site in order to participate officially in the trial and a vision of actually potentially even removing those entirely. The reason why I bring that up is we have COVID that has completely been a game changer for a company like that. When it was first developing in the US in March, we weren’t sure what the effect would be on a company like Metabol, given that so much of their business is with traditional clinical trials today. But what we saw over the past three months is that as patients, as sponsors and even as physicians became hesitant to treat patients in clinical trials at the traditional clinics or health systems, there became a sense of urgency to be able to help these patients get access to the medications that they needed and they were receiving through the trials. But to do that in that safe manner, again, safety being the key component that we have to figure out and as a result, Metabol, a software platform that allowed these trial sites and these trial sponsors to conduct trials without having to bring the patient to the site nearly as often was a value proposition that became exceedingly compelling in a COVID world.

Saul Marquez:
What a great application of the work. And so that portfolio is growing quickly. Dr. Coumarin, you guys continue to make moves and investments. How do you view the way that you guys work? How is it different than what’s out there today? And just give us a little bit more about the our way so our ways to be very involved.

Dr. Sunny Kumar:
We are lead investors. So we’re currently a three billion dollar Assets Under Management Investment Fund. Our most recent fund is six hundred and fifty million between our early stage fund as well as a follow on opportunity fund. And we almost always take a lead position in the deals that we invest in that we are actually taking a board seat or the equivalent for an early stage company and actually spending quite a bit of time with the companies that we invest. Depending on the stage of the company and the makeup of the founders. What we spend time on can vary quite a bit. But fundamentally, the biggest challenges that early stage health tech companies have won have they engineer their product to have the right product market fit. And I’m happy to dive into that further. Functionally, are they selling a product to the right person where there’s enough incentive alignment such that the purchaser will want to move that forward expeditiously and to have they built out the infrastructure to support a efficient and effective sales and marketing and go to market strategy for what we’ve done is the combination of those two things are very difficult and health care, such that unfortunately we’ve seen a number of good technologies out the space that are better than what we do today. They’re more efficient. They deliver higher value. It may even improve outcomes. But the company has not gotten that go to market strategy down properly. Those technologies never take off. I can give you an example of a sector that we’ve seen this be. The case is the AI radiology space. When computer vision was developing, this was one of what was perceived to be the lowest hanging fruit in the sense that the type of work that a radiologist does when looking at an image, whether that’s an X-ray or CT scan or an MRI, is one that a computer vision algorithm can do quite well, at least in some narrow use cases.

Dr. Sunny Kumar:
So if I have a chest x ray and I want to identify a pneumonia, you can train an algorithm to do that quite effectively. The challenge with that space has been that even if the technology is just as good as the physician and there are research reports at least that show that these algorithms are not only competitive with physicians, but an algorithm and physician combo is almost universally better than a physician alone. They were not able to scale up, at least not at the pace that they were in. And in my opinion, what that fundamentally comes down to is an incentive alignment. In order to get something like that sold and scaled, you need to be able to appeal to the physician. You need to be able to appeal to the financial decision maker at a health system. And you need to make sure you have the right incentive alignment patients, payers and with every other player in the value stack. And unfortunately, those solutions, at least as I just described them, were not able to get that. Fit properly set up, and as a result, they generally, at least the industry as a whole, has seen slower adoption than what they were hoping for just a few years ago.

Saul Marquez:
Yeah, some great insights there, Sunny. And the product market fit making sure those incentives are Right. the distribution channels. I mean, all of these things are so hard to nail and ultimately they’re going to market. So let’s hone in on that for a second. And how have you seen the work that you guys do with some of these companies work, especially when it goes to product market fit and go to market strategy specifically?

Dr. Sunny Kumar:
Yeah, it’s a great question. And a part of it has to do with just understanding enterprise software in general. Most of the companies that we work with tend to be enterprise software in nature. And part of it has to be specifically understanding how your customer works, whether that’s health system, pharma payers, employers. So on the first point, what we found is that there is absolutely a sweet spot when it comes to figuring out the pricing of your product. It varies a little bit with use case to use case and specific customers, specific customer, but in general use a heuristic. We find that products that are priced anywhere between a thousand dollars to ten thousand dollars are able to be sold with a inside salesforce fairly effectively in the sense that the decision maker on the other end doesn’t necessarily need to meet you in person. Does it need to be handheld through the entire process to make sure that they’re not making a purchase that would not add the type of value that they are seeking that.

Saul Marquez:
Dr. Kumar, what was that range?

Dr. Sunny Kumar:
About a thousand dollars to ten thousand dollars for a sassed software license, roughly on an annual basis.

Saul Marquez:
Got it. Got it. Got it.

Dr. Sunny Kumar:
On the other end, you have very high touch outside Salesforce, where you’re actually meeting the client at their preferred site in order to guide them through the purchasing decision. But that only works for products that are priced appropriately, generally in the one hundred to two hundred thousand annual contract value or higher. In between there’s actually quite a challenging spot where it’s a little bit too inexpensive for you to be able to generate the margins to support a big outside salesforce. But on the other hand, it’s also a little bit too big of a purchase to justify a decision maker making that purchasing decision on a phone call. So one of the first things that we do when we work with the companies understand which of those three buckets they fall into when it comes to building out their products and pricing it, creating the right value and either the first or second bucket, meaning less than ten thousand or decently above one hundred thousand or workable. Anything in between almost always requires some sort of tweak in order to get right outside of maybe a few exceptions. So that that’s step one. Are you pressing your product? Do you have a right alignment with the buyer? And is there interest in being able to actually scale up your product?

Dr. Sunny Kumar:
Once you have that, then the question becomes how you actually execute on the opportunity in front of you. So you have a product, people want to buy it. How do you actually get to the customer? How do you position it? And a common refrain that you hear, especially with something like healthsystem sale, is if you’ve sold to a health system, you’ve sold to one health system and one helps that process by itself inherently is not repeatable in the sense that the organizational structure is different, the decision makers are different. One system may require you to get signoff off from the CFO for a few hundred thousand dollar deal. Another system can do that at the department chair level. So understanding those nuances takes time. Fortunately, what we’ve been able to do because our portfolio has sold to such a large number of health systems across the different companies is that we get to learn the lessons from how does one company sell to a health system versus how to another company like sell to a health system and use those shared learnings in order to uplift the whole portfolio.

Saul Marquez:
Now, that’s so awesome. Actually, we had Walter on the podcast a couple of years ago from Deep six. Fascinating work that they’re up to there.

Dr. Sunny Kumar:
Absolutely. They’re another one of those that’s seeing quite a bit of interest in their platform, just given that it’s so important to be able to get the right patients into clinical trials. And from my perspective, having actually tried to enroll patients in the traditional way in a world before Deep Six existed, the system is just so inefficient. Traditionally, there’s just so much value in the electronic medical record, in the patient database that these health systems have. And honestly, the patients themselves want access to these trials as well. So the question becomes, how can we actually unlock that value? And that’s something that deep six figured out very well. They’ve built a technology that allows systems to tap into the resource that already exists. They’re not generating a new resource. The data is already there. How do we unlock that data and allow everybody in the value chain to be able to create value from that? That’s what we are doing with the Deep Six and that’s what we’re so excited about when it comes to the potential.

Saul Marquez:
Yeah, the opportunity. Even at the community hospital level, I was just so shocked. Like there’s so many ways for these community hospitals to do more. With what they already have to your point.

Dr. Sunny Kumar:
And I think that increasingly, actually and covid getting a lot of pressure here as well, is that the systems recognize that they whether they’re community hospitals, even government hospitals, certainly academic medical centers, they realize that they need to come up with ways to create value for themselves as entities that are beyond just patient care and really beyond elective patient care. I’m sure you’re aware so much of the health system margin is created through those elective procedures and such, that when something like COVID happens and we have to cut back on the number of elective procedures we do, the financial situation for many of these hospitals and health systems gets flipped upside down in a quite unfavorable way. When we were in the midst of the first wave of COVID in April and May, things were looking quite bad. Fortunately, in June, it seemed like things were bouncing back, unfortunately. Now it looks like we may be returning to a world in which the financial situation of health systems will potentially be challenged for quite some time to come.

Saul Marquez:
Yeah, well, certainly an opportunity to take a look at companies like the ones in your portfolio for alternatives. What would you say is one of the biggest setbacks that you guys have experienced and what was the key learning?

Dr. Sunny Kumar:
That’s a great question. I think if I look at investing or entrepreneurship in general, when it comes particularly to building off of emerging technologies, one of the most challenging things to experience is to be entirely right about the potential, the technology, the potential of the market, the ability to fuse those two to do something great but be off about the time. And this is something that is true across every sector, across every technology, but one that I’ve seen personally a number of times now in health care when it comes to some of these emerging technologies that we’re seeing today. I mean, if you even go back to the company that you actually mentioned in your introduction that I was working on prior to joining DSR, this was a natural language processing technology using voice in order to conduct remote patient monitoring, being able to interact with the patient in the comfort of their own home, collecting the information that you needed while limiting the amount of time that a human, either a physician or a nurse, would have to spend collecting and processing that information. The challenge has been for voice based technologies in general is that there’s been a lot of excitement. We haven’t gotten it to the point where we fully build out a platform that will capture all the information you need at the right level of richness and be able to transfer that over to a charity for better or worse. My experience has been with voice is that if it works well, it is an incredibly powerful technology and that it’s just so efficient, so natural to interact with. But even a small level of error can completely change that experience. And I would say across the board, we’re still in a situation where voice, even though it’s progressed so much in the last five, six years, still has that tail end of error that we haven’t yet gotten rid of. And as a result, it’s limiting those technologies from taking off in the way that we would like.

Saul Marquez:
Yeah, and it’s hard to tell right.. I mean, that timing and just how do you know?

Dr. Sunny Kumar:
I don’t think you do. If we do it precisely, I think life would be a lot easier. But there are heuristics that look and the most efficient ones are does this actually solve a customer’s problem, potential customers problem at least? And is that customer actually engaging with the solutions such that they want to buy it? There’s a wide range of customers out there in health care, in my opinion. They tend to lean more conservative when it comes to making new buying decisions. But even among that, there’s certainly a spectrum. Certain clinical champions, certain health systems will move much faster to adopt emerging technology than others. But there is a tipping point effect. So once you see a number of reputable institutions adopting a technology, you have a large number of fast followers. And in my opinion, in health care technology, I applied to health care. We’re seeing the very, very, very beginning of that tipping point occur where there are a number of solutions that are looking like they’re creating value. And as they do so across a number of top, most reputable institutions, you’ll see others start to pay attention to them. And when that happens, the floodgates could potentially open up nice.

Saul Marquez:
And that’s a good way to look at it. So, Dr Kumar, what would you say you’re most excited about today?

Dr. Sunny Kumar:
That’s a great question, I think, of what we’ve built out in our portfolio. I’ve been a number of focused that’s across a select number of investment pieces. If I could get to that, if you’ll allow me to do that, I would say one one area that we’re very excited about is what the next generation of clinical trial and drug development looks like. I think the pharmaceutical companies have been quite innovative and thoughtful, are still conducting clinical trials the same way they did today as they did 30, 40 years ago. And that said, we now see the infrastructure being put in place to be able to conduct trials much, much, much more efficiently, much faster, and get those drugs into the patient’s hands or at least into the physician’s hands to prescribe to the patients far more effectively than is previously possible. So we’ve built a. Sector level pieces here have invested across companies at different levels of the value chain enzyme, which is a samed EQM platform, helping both startups as well as enterprise pharmaceutical companies make sure they maintain FDA compliance for software as a medical device companies, which is not something that most of these enterprise farmers are familiar with to deep six when it comes to the clinical trial, patient recruitment and companies like Medical when it comes to developing decentralized and virtual clinical trials.

Dr. Sunny Kumar:
When you put those together, you see a value chain that if a company or a single product were to progress across those companies, you’re looking at a acceleration of development time by at least two X and a drop in cost, perhaps even greater than that. The second is one that’s greatly accelerated by covid, which is looking at different ways and different touch points to have with the patient over their normal daily life. So right now, as you know, in order to see a physician, most people will actually go to the clinic and see their physician in person. Increasingly, telemedicine, especially covid, is becoming more popular, but it’s still a relative minority of the number of visits that you take and across the spectrum for the average US adult. We’re seeing the doctor four or five times a year, meaning that three hundred and sixty plus days a year. You’re not interacting with the health care system. One vision that we have is how can we change that, maybe even flip that switch that you’re actually interacting in some way with your health care provider on a almost daily basis and providing information, having that information be processed and using that information to draw insights to improve your own health.

Dr. Sunny Kumar:
I think there are a number of technologies that are enabling us to interact with the health care system in that way. Telemedicine is one. But even beyond traditional telemedicine, there’s now a synchronous telemedicine, which is probably in order of magnitude more efficient than in-person visits or traditional telemedicine. There’s increasingly remote patient monitoring technologies and importantly, a reimbursement infrastructure to support that. And we’re seeing technologies being deployed into even common household items. A company like cancer, which has created a tremendous amount of value with the emergence of COVID, has turned something as simple as a thermometer into a tool that can power a nationwide, maybe even a global infectious disease monitoring platform. And that’s something that you can contribute to just by taking your temperature and putting some of your symptoms when you’re feeling a little bit sick, that type of transition from taking a normal behavior, maybe augmenting it a little bit with a smartphone app, and then using that to power a global system that can tell us where infectious disease is spreading is something that was just simply not possible before the last few years. And we actually think that’s going to accelerate even further. Go forward.

Saul Marquez:
Man, that’s fascinating work. And certainly two key focus areas that I think with the times that we’re in, you guys are doing some stuff that’s on the right track. And so thank you. This has been such a great conversation, Sunny, and I’m excited to follow you guys and see the work that you guys continue to do in health care to transform it to a better place for all of us. So before we conclude, I love if you could just share a closing thought and then the best place where the listeners could learn more about you and the company.

Dr. Sunny Kumar:
Absolutely. I think my closing thought is that when we look at the impact of something like COVID, it’s going to cause untold amounts of human pain, human suffering. And I truly, truly wish that we didn’t have to deal with something like this. That said, we know that crises like this just create such a tremendous amount of opportunity for entrepreneurs and future founders to be able to reexamine what the potential solutions are, what the univeral solutions are. And for those of you that are planning or thinking about launching a company of your own, I would look at where has COVID changed how health care is delivered in the US. And given that it may be with us for not just the next few months, but possibly the next few years, how can you build a solution that can deliver health care services more efficiently, more effectively or safely to the patient in this environment? I’m happy to have a longer conversation with anyone who finds that line of thinking interesting. Best way to find out more information would be to check out our website www.gsrventures.com or to send me email directly at Sunny Kumar. That’s sunnykumar@gsrentures.com. Thank you so much for the time, Saul. This was a real pleasure. If there’s anything else I can do to be of help, please don’t hesitate to reach out.

Saul Marquez:
Sunny, thank you so much. This has been truly a pleasure and we’ve all gotten a lot from our discussion. So thank you for taking the time to be on here.

Dr. Sunny Kumar:
Absolutely.

Saul Marquez:
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