Investing in the Future of Healthcare: 7wire Ventures’ Lee Shapiro
As a veteran entrepreneur in life sciences, Lee Shapiro has invested in some of the most transformative technologies in modern healthcare history—developing a deep understanding of what makes for truly successful innovation.
Medidata CEO Anthony Costello sits down with Lee to discover the secret to his success. Charting his work across a variety of leading life sciences organizations, from Allscripts and Livongo, to Click Therapeutics and Medidata itself, Lee uncovers the qualities that underpin the most accomplished enterprises.
Join Lee and Anthony as they paint a powerful picture of our evolving industry and explore the disruptions shaping the future of healthcare.
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Lee Shapiro 00:00 When we came to healthcare 25 plus years ago, we realized there is enough broken process to last a lifetime. Anthony Costello 00:06 In America, well probably in the world, we really have a system of sick care. Are we treating the illness rather than focusing on the prevention? Lee Shapiro 00:18 It should be criminal, honestly, that the way in which people get information about the medications they take is you get a paper bag at the pharmacy. There's no ongoing guidance. There's no support. There’s nothing that surrounds the medication. Go in and demand that you get treatment for the cause, not just for the symptoms. Anthony Costello 00:37 How are bold ideas born, and which ones survive to eventually shake up the status quo? We'll hear straight from our industry's greatest visionaries who are making waves, and learn how they turn their dreams into disruptive reality. This is from Dreamers to Disruptors, a podcast powered by Medidata. Some disruptors dedicate their lives to a single great innovation, but very few can claim to have been a foundational force behind dozens of the most influential stories in modern digital health. Our guest today, Lee Shapiro, is a partner and co-founder at 7wire Ventures, where he focuses on building companies that tackle some of Healthcare's most fundamental challenges. His track record spans defining moments across the industry, from leading Livongo's IPO and landmark merger with TelaDoc to president of Allscripts for over a decade, serving on the board of Medidata and a dozen other companies where Lee has acted as investor advisor employee, or all three. In addition to these great ventures, Lee also commits an amazing amount of time to volunteer organizations like the American Heart Association, where he is currently the volunteer chairperson of the national board. Lee is a compassionate unifier across the healthcare ecosystem, known for bringing people together around shared goals and turning trusted connections into meaningful collaboration. Many people that know Lee call this his superpower, but for me, he's an important and rare example of how one can be a ruthlessly successful business leader and also just a great human. The disruption for him is personal, and all of his pursuits tackle noble and important corners of the healthcare universe, but he finds way to do this that focus on teams, company culture, interpersonal relationships, and shared success. In this episode, Lee reflects on his journey with multiple startup companies where he has acted as investor or advisor. We pull back the curtain on what building at scale actually demands, we talk about the wins, the decisions that define leaders long before success is guaranteed, and even the failures along the way, and we step back to ask the hard question, “What has to change for U.S. healthcare to stop reacting to illness and start investing in prevention?” Welcome to from Dreamers to Disruptors.
Anthony Costello 03:00 Welcome everyone to probably one of my more exciting episodes of from Dreamers to Disruptors. Couldn't be more happy to have you joining us today, Lee, I feel honored that you took the time out of your crazy schedule to be here. Traveled all the way to New York. You landed at Newark Airport and actually made it to Manhattan through the snow.
Lee Shapiro 03:21 And amazing. Yeah, we're, we're thrilled the reindeer, the reindeer charged 180 bucks.
Anthony Costello 03:26 That's not bad. That's not bad. You know, they have the BLADE helicopters that can just bounce you over here for slightly more than that. If your wife will let you fly in a helicopter, which mine will not. So, just to be clear about that, I've never tried BLADE, but might be worth it sometime in this kind of weather. So you have maybe one of the most “dreamy to disrupty” kind of stories we've ever seen on this podcast. And that's why I'm so excited to have you here today. I mean, first of all, you’re partner, co-founder of 7wire Ventures, and through 7wire, you've seemed to have gotten involved in some sort of omniscient way as a predictor of so many important digital health trends way before they were trendy. And you've managed to position yourself and your organization as an investor, advisor, and sometimes as an employee, of some of these companies that have really moved the healthcare market, predominantly in digital health, but not only digital, and it's unbelievable to look through your history of success and your track record. It's almost like anything you touch turns into not just something big and financially successful, but something that actually moves markets in a way that I think a lot of us spend whole careers trying to do once or twice. So I want to dig into some of these stories. You've got some great stories, and I want to dig into those as part of this podcast. But maybe just to kick us off, tell the audience, sort of, who is Lee Shapiro, and how do you do it, man, like, how does everything you touch turn to gold?
Lee Shapiro 05:10 We'll talk a little bit. We have plenty of you know, frogs that we kissed that didn't turn into princes. They stayed frogs. And so we'll talk a little bit about that as well. But I'm really fortunate to have found an opportunity with my co-founder, Glen Tullman, to be investing in things that we really love doing. And we started with this idea that you could use technology to address broken business process. And when we first started investing together, a little bit off the sides of our desks, like we were working other jobs, but we said, there's just so much kind of really interesting things going on with technology we want to get involved with. And we started in the travel industry and home shopping and helping charitable organizations manage their donor records, just finding really interesting things to work on. And when we came to healthcare, like 25 plus years ago, we realized there was enough broken process to last a lifetime. So we've been focused here since, and what we've been doing is looking for founders that have a vision of doing work that will allow them to impact the lives of a lot of people in meaningful ways, and for us to be able to support those founders in achieving their dreams is really what motivates us. Every day, you know, we wake up in a race. Anthony and I were talking a little bit about some of these lifetime countdown clocks that you know some people have, and some apps that do that for you. I'm not like that much into my own mortality, but I do wake up and realize, like the people I know in this industry, they're retiring. Like, I've got to move quick while they're still working, or I've got to meet the next generation of leaders, because there's so much still to be done, and that's what kind of keeps us going.
Anthony Costello 07:04 Yeah, and so you pivoted from other industries into healthcare, and I know, because we've known each other for a while, I know that you have a special eye for entrepreneurs, early-stage entrepreneurs in particular, that you think have what it takes to run a company or transform an industry or do something special and different. So can you talk a little bit about, you know, what are you looking for, and when it turns out to be a frog that doesn't, that doesn't become a prince, like, what? What's the difference between?
Lee Shapiro 07:37 We’ve had some frogs that can't hop, that don't know how to swim. Like so we've, we've run into a few fraudulent frogs, but.
Anthony Costello 07:45 And you cut bait on those early right?
Lee Shapiro 07:48 We used them as bait. But the the nature of, you know, the founder market fit is really important. Much of what we look for are founders who have lived experience that are dealing with the challenges that that they're addressing, and we have some great examples in the portfolio. I'll mention one of them just because they had a press release today talking about a company they acquired. This is a founder who I've known since he was in high school. He played football with my partner, Glen's son, and he went off to college. And he was a college quarterback at a D2 school, but, you know, like kind of a big man on campus kind of thing. But he started kind of running into some real significant personal issues, like having challenging visions, and wasn't sure if he was suffering from concussions or, like, what was going on. And it took a bunch of years and lots of doctors for him to realize that he had OCD and he had dropped off the team. He almost, I think he dropped out of school for a while, like, sorting out what his illness was, and he committed at that point in time to say, “I don't want anyone to go through what I went through, like really feeling like you had to hit rock bottom before you discovered what your health issues were.” People deserve better. And so he founded a company called NOCD. NOCD, he actually has enlisted personalities like Howie Mandel, who kind of famously has OCD, and and has looked at the company and does advertising for it and the like. And he literally has grown the company. My partner, Glen, gave him his first check for $50,000 and said, “You know what? Go develop a business plan.” And then we wrote a million-dollar check into the business. And now it's like $150 million in revenue. It's profitable, it's growing. They're serving not only people with OCD, but other severe mental illness. And it like, it's wonderful to see the team that he's built. Close to 1000 clinicians now work for the company, so to see that migration, but it's founder market fit, like he lived that and he was driven to make it succeed,
Anthony Costello 10:07 Yeah, and that's hard to find, right? I mean, they're saying, I think we've both worked with enough entrepreneurs to know that common advice that I'm sure you give, I certainly give to young entrepreneurs, is, don't enter an industry because you think it's a sexy industry. Enter it because you have some sort of passion and drive for that space. This sounds like the perfect founder story, someone who's literally living the disease that they're trying to help fix. We had one of our recent podcast guests was David Fajgenbaum, who's another fantastic story about sort of curing yourself through some interesting entrepreneurial instinct that you have to drive a new business model and then making it very successful down the road. But those are hard. Those are very hard to find. I mean, most of what you get are people who are smart and they want to work for themselves, and they have an entrepreneurial instinct. They might not have the actual disease. And I'm sure you've worked with a lot of people.
Lee Shapiro 11:02 Yeah, and it's not always going to be the case where the founder has kind of lived through the condition. Empathy is really important. We do a lot of work trying to assess because we invest early-stage, like every deck that we get someone's pitching us. The slides always show revenue like like this, and we know it's like this, and it curves around, and it goes up and down, and something changes. You have to pivot. And so when we're investing, oftentimes, we're trying to see if there's some product market fit, but sometimes we're so early that that's still being developed. So you have to rely on what's the founder or the founders, what are they like? And we've relied on a book from Rich Diviney called Attributes. Rich was a Navy SEAL, and then he became a recruiter for Navy SEALs, and he talks about, you know, what makes a great SEAL? It's not just the athletic prowess, and it's not just the ability to follow orders, like it's also about things that are instinctual and how you have to operate under really extreme conditions. And that's great for a member of a team, but what about a team leader? They have different attributes. So what we do is we look at the attributes of those individuals, and we try to assess a lot of it through motivational interviewing that we try to assess what are they like, and then get a perspective on whether or not we think we can be additive to that team. Are we going to be able to coach them and work with them? Are they going to accept us as part of their team? We're not the type of investor that says we'll show up every quarter and just give us a report. Like we look for founders who will tolerate us. We really get involved with their business. We help them hire people. We help them with business development. We're out there. We feel like we have to know their product well enough to be able to sell it as well, because we're going to people that we know to sell that, that offering. So we really spend a lot of time looking at the founder attributes.
Anthony Costello 13:03 Yeah, really, you're almost psychologically profiling these investment opportunities before you get involved.
Lee Shapiro 13:08 Yeah, have to.
Anthony Costello 13:10 Yeah. That's very interesting. Talk a little bit about some of your more famous successes. I mean, we'll put Medidata aside for a second because you were a board member. You and I met when my company was acquired by Medidata and you were currently on the Medidata board. And I think that's when we first came into contact.
Lee Shapiro 13:28 Yep, right after the company went public.
Anthony Costello 13:30 Right after the company went public. Yeah. So we’ll get to some Medidata stories in a second. But, you know, maybe talk a little bit about Livongo, your time at Allscripts. I mean, these are more sort of household name healthcare tech companies that have had big exits or have grown, you know, Allscripts grew dramatically under your more than 10 years leadership as president of the organization. So, you know, I think, I think the listeners would be interested to hear a little bit about how did those things go from rags to riches under your tutelage.
Lee Shapiro 14:07 We, you know. And I'll start with Allscripts, because it was earlier in the in the gestation of it, and at the time that, again, my co-founder at 7wire Glnn Tullman, went over to Allscripts, our former CFO there actually had been on the Allscripts board. Knew they were looking for someone to come in as CEO, and we invested a little bit in the company before it had gone public. And Glen got involved, joined the company, the board selected him to come in and run the operations. And I was like, working somewhere else. And he said, you know, we'd go out on runs together, and he'd say, you know, “I'm dealing with this business issue. I'm dealing with this problem. Like, can you help with that? And like, When can you come over and join?” And I was, at the time, I was running, actually a real estate company. I had nothing like, I wasn't in healthcare day-to-day. And he said, “Why don't you come with me to this meeting? We're meeting with this really interesting company, and we're trying to convince them to join us, and maybe we can acquire the business.” We get there. We’re there for two hours. And he says, “Hey, I've got to leave to, like, go to one of my kids soccer matches. Can you stay?” And 24 hours later, like, I'm there, we order in, like, Chinese food for dinner.
Anthony Costello 15:23 This was an ambush. This was a setup.
Lee Shapiro 15:25 It was absolutely a setup. And so I stayed so we can, like, enter into an agreement to buy the company, and I wasn't even on the payroll. I said, like, “What's with this? Like, you've got me working for free, you know? Yeah, I'm a shareholder. I. I'm really interested, but I'm working for free.” And then shortly after that, the company Allscripts went public. The acquisition worked out well, and I ended up joining the company right after we went public, but at the time that we were going public, you know, this was now really dating myself, like there was something called the internet that was transforming business, and we were using e-commerce to essentially get data from physician practices about medications that they were dispensing in their office to patients so they can get them started on their medications rather than writing a paper script. People used to write paper scripts and take them to their pharmacy. A lot of doctors, public health clinics and other places found that was really important to get people started on their meds, because 20% of prescriptions written were never filled. And in fact, even today, it's still pretty high in terms of the number of people who don't pick it up for a variety of reasons. They're worried about side effects. They can't afford it. They feel healthy. They don't think the medication is really going to make a difference, and so they don't get it. But if the doctor says “You're in my office, kind of take this now” it's different. So we started in a medication management business, and we were taking large vials of pills, working with large distributors, and we had a repackaging facility, and we would ship them off. We were like a large shipper for UPS, you know, out of our region in Chicago, and send them to doctor's offices all over the country. And the doctors started saying to us, and this was important in terms of knowing to listen to your customers, “You know, we'd really like to know what we have in inventory. Like we're buying certain things from you, but we've got this cabinet locked up in the front. Is there any technology we can use to do that?” And so this is before the advent of the smartphone that was a personal digital assistant, they were called something called a PalmPilot, or an HP Jornada. And these things were—
Anthony Costello 17:36 I'm older than you might think. I remember PalmPilots.
Lee Shapiro 17:40 All right, there you go. And so we had these, these devices that you could load data on, and the doctors could see what was an inventory. And once we gave them that devices, well, “What else would you like to do?” “Well, I'd love to be able to do my charge capture on here and my billing. Like to be able to dictate my notes, you know, is there a way that you can let me see, you know, lab results and other things on here?” So we kind of fell into this idea of building out an electronic health record, and we were doing this at a time before there were government subsidies that had come through from first Obama administration, and we were just building a business that was like cobbling together this stealth EMR [electronic medical records], because, like, EMR was a four-letter word to most probably still is but a four-letter word. And so we really wanted to give them tools that they could use to manage their patient relationships. And so as we started going forward, we had to do a lot of things to help change the industry in terms of allowing prescriptions to move electronically. There was a lot of pushback around that. And then when we'd send them electronically, like the pharmacies needed to have a system to be able to catch them once they were written. And so we had to work to help establish some industry bodies, like sure scripts to be able to do that. And so it became this defining event for the industry, where we were sending a few transactions at time. Now there's billions of these transactions moving. So it's really cool to see how far advanced it's become. And that was the ramp that Allscripts built on, yeah.
Anthony Costello 19:13 So, so starting, as you mentioned, in a way, listening to customers, beginning with a relatively simple idea at the time. It was new, but relatively simple idea of making some paper process electronic, again, very similar to the Medidata idea and lots of the other companies you've gotten involved in, but then smartly growing the ecosystem of add ons, kind of feature density around that core thing that you started with to to provide more opportunity to the same user base.
Lee Shapiro 19:41 Yeah and like, the disruptive element of this, you know, imagine that there was this push-pull between what was happening with regard to medical laws, state-run and pharmacy laws. Also, there's pharmacy boards and medical boards in the States, and we were coming forward and saying, like, “Doctors can write these prescriptions electronically.” At the time, there were 800 million phone calls between pharmacies and doctor's office saying, “Dr. Smith, what did you write? And did you mean to write this? The paper had no information on it.” We were able to do drug-to-drug interaction, checking dosing. “You know, is this appropriate? Why are you giving a child's dose to an adult or an adult dose to a child?” And so we were able to build a lot of information around it, but it started to tweak some of the people who would like, “Hey, that's my job as a pharmacist. Like you're moving that back upstream in the process to what the doctor's doing. And you're taking something away from me.” We had to go state by state and get the laws changed to allow electronic prescriptions to move. Anthony Costello 20:43 So just moving on to Livongo, I mean, sort of natural extension from there. I mean, famously, sold to TelaDoc, and you know, probably one of the bigger digital health transactions exits.
Lee Shapiro 20:58 It proves that you'd rather be lucky than smart.
Anthony Costello 21:01 Yeah, sure.
Lee Shapiro 21:02 And, and when we for 18 half billion but we did put ourselves in a position to be lucky and, and that was really important. So Livongo came out of, you know, an experience that we had learned through many of our health system partners that we had been providing software to at Allscripts, knew that my partner, Glen was very involved with Juvenile Diabetes Research Foundation now called Breakthrough T1D. And Glen had a niece who had been diagnosed with Type One diabetes, and he started to get involved. And then his son, Sam, was diagnosed with Type One diabetes. And talk about a massive change in family dynamics. It was a huge issue. And, and, you know, Glen, when Sam was diagnosed, and he was in the hospital, and, you know, and Sam was trying to understand what was this going to mean for him in his life, and and he said, “Well, you know, Dad, can you fix this?” And Glen teared up and said, “Yeah, we're going to fix it.” He goes, “Well, not just for me. Can you fix it for all the other kids like me that have it?” And that, like, really hit home for Glen. And he said, “Yes, Sam, we're going to fix this.” And they started through his family foundation, giving a lot to research, and we ended up meeting, actually, it was through, I think University of Massachusetts, maybe Jocelyn Diabetes Center was another that they had met an inventor who had basically in like a Frankensteinish lab had put a smartphone chip inside a glucometer. And glucometers were basically dumb devices, like you'd test your blood sugar. If you remembered to bring your glucometer with you to your doctor's appointment, you'd have four months of data, six months of data, and in your 10-minute visit, the doctor might download that to a computer and might look at it, or might scroll and see what's on there.
Anthony Costello 23:04 And might delete it accidentally.
Lee Shapiro 23:05 Yeah, you know, right. And so, you know, the availability of that data wasn't something that was being leveraged in a way that can make a difference for someone's health. And what we came to realize was that what's really important is keeping someone in range. What's normal for them? What's their normal blood sugar level? Because if you get too high or too low, too low, you can get into a coma. Too high, hyperglycemic is also dangerous, and we wanted to find ways to give everyone with diabetes a guardian angel that could take that data, and once you tested, then that data could go to the cloud, and we could monitor it and say, “Hey, what's going on? Did you take your meds yet today? What did you eat? You know, how did you sleep last night?” Like all the things that might have an impact on your condition. And then give people information at the moment, because otherwise they're just staring at a screen and it's not giving them any feedback about what they could do differently. So that company we first invested in 2013 took it public in 2019 and then the merger happened in 2020 but again, the disruptive element there was the model for business for diabetes care was a little bit of this razor blade model, even today, to some extent. So the manufacturers of glucometers will sell them really cheaply or give them away for free, because they want you to buy the strips and what we wanted was the data. We didn't want people to stop testing because they were running low on strips. And once the data started coming into the cloud, where we saw when people were testing, we could supply them with test strips so they never ran out. And that bumped into some business models that were going to feel challenged by that. And so when we were working through health plans or large self insured employers, and the employer said, Well, wait a second, our PBM is saying that if we go with you, all that strip revenue that they're getting is going to go away, and that's going to affect our rebate, and then that's going to impact our ability to subsidize the health insurance for giving to our employees. Like, how you going to address that? And we had to work through a whole process of saying, Well, we're going to help your people get healthier. We're going to save you a lot more money than that. And we demonstrated that we could deliver, you know, a three to one. You know, ROI on the investment they were making in this offering by saying, Let us provide the device to strip in the service to help manage the condition and so, and we started doing this before this was ever called digital health. And frankly, it shouldn't be called digital health. It's just health, just a way you get, you know, the health that you deserve.
Anthony Costello 25:58 Yeah, and I think you know, your conversation about Livongo kind of prompted me to remember something that you've said to me many times before, which is that in America, well, probably in the world, we really have a system of sick care, not a system of healthcare. And I think these stories fit right into that paradigm, right? Are we treating the illness rather than focusing on the prevention, or, in this case, maybe a better supply chain process that shifts the costs and the supply somewhere else, but focuses on the data, which then drives the behavior, which then drives the health part of the healthcare system. This seems like it's been a theme for you. You know, very early on in a disruption, digitizing paper processes and driving towards a disruption, not just in the innovation, but a disruption in the culture or the treatment or the approach to the healthcare problem, to steer it away from being a sick care solution to a healthcare solution. I really love that about your career. And you know, I can see it in Medidata. I can see it in Click Therapeutics, where you you are no longer on the board, but you've been you were on the board for all the early day work done by click and David Klein, which is very much a healthcare solution, rather than sick care focusing on lifestyle change and prevention these other stories you've just been through, it's really a theme for you. And is that on purpose, or did you just sort of stumble?
Lee Shapiro 27:29 It is no no. And you know this concept, and at 7, where we call our approach is helping to build better informed and connected health consumers. And what you and I want, and what the listeners want is to be healthy, like you don't want to consume healthcare, like it's not like you're saying, oh, I want to go to the movies or I want to go to this concert. No, like healthcare is something you use in a break fix situation. Something's wrong, I want to get what little amount of healthcare can possibly get, and then get on with my life. And when we were building companies like Allscripts, and before that, we'd invest in a company called enterprise systems and a few other healthcare companies we were trying to help provide healthcare inside the four walls of doctors offices and hospitals better, and we found that it was really hard to do transformative work there. A lot of what we were doing was substitutive, and we were kind of using technology to take what were paper processes and make them somewhat better, and yes, we could give them more information, but the process was still pretty much the same, because the facility and the healthcare factory kind of still operated the same way and so on. Exiting Allscripts, we said, what can we do differently? How do we move healthcare outside the walls of hospitals and doctors' offices and meet people were there, and this idea of saying, we want to give you better information so you can manage your health. We want you to be connected to your health information. So get data that comes from either wearing something or from something in your surroundings. So you can use that to help guide you, like data from a glucometer, but also data from other devices. We know that you want health not healthcare, and we also know that you're a consumer. We don't want to treat you like a patient. We're going to treat you like someone who is making decisions and having an active role, as opposed to a patient that's submissive and having something done to her or him. What we think of is as a consumer, you're making active choices and engaged in what's happening with your healthcare. And so the companies that we build and support through 7wire all have this common theme of, how do we create great consumer experiences? Because that's what drives people to keep coming back and using it. How do we demonstrably improve outcomes, objectively improve outcomes, so you have data that you're capturing to show that here's where you were now things are better. That also motivates you to keep using it, and thirdly, provides a return on investment. Because if it's something that who's ever at risk for, the cost of care is paying for, and it's minuscule improvement outcomes, but massive cost difference, that's not going to work. So you have to have that return on investment future. And all of our companies have kind of those elements woven into them in order to help meet people where they are, to improve their health.
Anthony Costello 30:30 And so you it sounds like what you would say is, let's call it the digital maybe revolution. Certainly evolution. These days, you know, I'm wearing an aura ring and an Apple Watch. Everybody's standing on a weight scale. They're measuring their sleep, they're measuring their steps, they're measuring their diet. If you're on a GLP one, you're probably religiously tied to some wearable device that gives you the metrics. I mean, Withings. David Klein and I were at a conference a few weeks ago, and Withings has now released a device that sits in your toilet and gives you a urinalysis, example every time you go to the bathroom. Right? So these things are becoming more and more capable of measuring what we do, you know, continuously, 24/7, all the time, turning that into something useful for a healthcare rather than a sick care system seems eminently doable. Now, more than ever we have the data what we could do something with it. But do you think that the momentum of the sick care system will continue to push back on that knowledge? And you know, there are reasons why it's tricky for our industry to move towards preventive disease rather than treating disease. There's a lot of money tied up in disease treatment.
Lee Shapiro 31:48 I'm never going to get political on a podcast, but I will say that what's occurred with the current administration is a tectonic shift in terms of how healthcare is going to be funded. And I believe that the current administration recognizes that things need to be shaken up, because the way we have been doing things for healthcare in the US isn't working out so well. I mean, objectively speaking, we spend a lot more and we have worse life expectancy than other countries who are spending a lot less than what we're spending. And so there's a desire to start thinking about more preventative care, about using data, about making data more interoperable, about talking about funding shifts to say, you know, we're only going to pay if you can demonstrate better results. I think some of that's needed, and there's other things I would say aren't needed so much, but some of the things that are are being said are absolutely needed and important.
Anthony Costello 32:48 Yeah. Okay, good. So, so as I'm going to sum all that up as saying, you know, you you've made a lot of great early investments driving companies towards what I think you would call better healthcare. There's also a lot of underpinning technology just in the world that supports that thesis. And you believe we're also in a political environment right now where there's at least an appetite, if not an energy and willingness and excitement to go in that direction. So agree. Okay, so we'll get you know. We always end the podcast with your predictions. We're not going there yet, but I would love to hear, I can't wait to hear your five-year prediction call to action, if it sort of synthesizes some of this and takes a shot at the future. So think about that in the back of your mind. Let's come back to Medidata for a second. It's a Medidata podcast. I'm the Medidata CEO. It sort of seems like we should touch on this for a second, but
Lee Shapiro 33:45 you started, you know, and I almost jumped into it when we were talking about the importance of healthcare, meeting people where they are, because one of the strategic directions we took when I was on the board, not mine, but certainly from Tarek and Glen, was about patient cloud and about ways in which we could understand what was happening with an individual who's participating in trial. And the notion of of saying, Yeah, we can like paper trials better, and we can get information it would be more suitable for submission to the FDA? No, it was about, how do we make trials successful? How do we collect data on what's happening with participants? Patient Cloud was really a great extension of this notion of consumerism in healthcare.
Anthony Costello 34:32 That's exactly what it was, and at a time when that was quite unpopular in our industry, there just wasn't direct to patient data capture and clinical trials in any significant way when patient cloud was started. And I know that you were part of that dream. You were on the board of Medidata. You obviously were inspired and worked closely with Glen [de Vries] and Tarek [Sherif]. And just like all the rest of us, I know Glen was near and dear to your heart, and we all miss him deeply. One of the things that I appreciate the most about Glen is that, like you, I think in many ways, he had a very early vision for where the trend is going to go, like where we can skate to where the puck is going because Glen had a way to say, look, it doesn't matter that it isn't vogue today like it's going to be, and let's work on it early and be there. And I think patient cloud is a great example of that, but Medidata broadly is as well, right? Because just as you had to start competing with. Paper prescriptions, Medidata started competing with paper charts at hospitals, and had to convince a whole industry to shift into electronic data capture. And you know, fast forward 26 years now, this whole industry has become electronic, and Medidata has many other products beyond just Rave. But can you talk a little bit about those early days, what it was like helping Glen and Tarek kind of make the pivot in an equally disruptive way to some of your other companies.
Lee Shapiro 36:07 Yeah, it's, it's a great story, and the Medidata story is again one of significant industry change and disruption in terms of what the company was able to bring forward and and changing the framework for how people think about things. Tarek reminds me that he and I met before I joined the board. He and Glen had come in to visit with us at Allscripts when we were starting to build out electronic health records, and they wanted to see, is there some way that Medidata could work with an electronic health record vendor, because there was data already being captured electronically. Could we use that and try and feed that into the system? You know, it's it's fascinating to me that you have these silos for clinical trials, and yet people are patients like they're still seeing their doctors and other things are going on like you want to get a full picture of what's happening with their health, maybe what happened before, and certainly what's happening afterwards, and and so this idea of how do we complete the picture was really important to them at the time, and then continued as the company started to go forward, what I found was really unique about Glen, and as I've described, him, comparing him to Steve Jobs. When people talk about Steve Jobs, they would talk about his reality distortion field. Glen had a reality creation field like he wasn't just about saying, Well, this is what could be like. He'd stay up for days and work on building something to say, we thought about this now, like and with a team of people, but sometimes just he would, like, craft this and and come back and say, Yeah, I'd like, I think we can really do this like and making it happen. And that was so important about his ability to translate some of that vision into something that could be a workable solution, and to be able to drive that forward. And then think about how they get scaled. Yeah, yeah.
Anthony Costello 38:09 I think our first version at Medidata of eCOA was famously coded by Glen on a flight from New York to Tokyo, and he sort of landed in Tokyo and said, I've got here it is guys, right? So I know that that's true, and that wasn't the only example of that kind of a thing. So So you joined the board. You met them through Allscripts. You helped navigate those early days, through the IPO, and then upon the show acquisition, I think you
Lee Shapiro 38:40 the board stepped off? Yeah, I joined so inside partners. Peter Sobiloff actually was an early backer of Medidata, great investors. When they went public, he stepped off the board, and so they were looking for someone to come on to the board, and that's when, that's when I came in. So it was right after the company went public, and it was, it was a great board, I mean, very aligned. And we had fantastic individuals with great experience that you know had come from, whether it was Carlos Dominguez from technology, or Neil Kurtz, who had a long pedigree in healthcare, Bob Taylor, who had significant financial support. I don't want to leave any of the directors. All of them were, like, wonderful, and it was a very collaborative group. But we had, you know, great dialog and sometimes board meetings. You may have seen them with companies you've been involved in. They're like, operations, reviews. This was never that with like, you know, Tarek and Glen would come in and say, we have these strategic considerations, and we want your advice. You know, that's the board's role, is to help us with strategy. And so we would get pretty deep into conversations. Sometimes it would start with dinner and a lot of tequila, and then it would continue, you know, the next day, you know in terms of having a more sober conversation about what's going on, but always really energizing and light bulbs would go off, you know, in terms of that, saying what the direction is and and thinking about, you know, how to kind of leverage what it was that was being done and stay a step ahead of the competition.
Anthony Costello 40:20 Yeah, yeah. And I think that, you know, if there's any entrepreneurs that are listening to this and thinking, How do I get, you know, Lee and 7wire to invest in me, I think this is the piece that they drool over, right? And I can, I can say this from being an entrepreneur of my own and also working with a lot of other startups. Ups. People long for boards like that, that operate that way and that think strategically and that really give them the insight. I know that Medidata, I know Glen and Tarek really appreciated that board, and you in particular, because when, when I joined Medidata through acquisition, and went to that first board meeting, Glen pulled me aside. This is a real story. Glen pulled me aside, and he said, You're going to love this board, but you're really going to love Lee, like you should sit. You should attach yourself to Lee, because he's, you know, he knows everybody. He's an idea guy. He's going to really understand what we're trying to do and help us. And I was coming in to work on Patient Cloud, so I think he was thinking of Patient Cloud as that reference point for me, but I really know that was, that was a special relationship for you and and for Glen and but
Lee Shapiro 41:23 also really important development for the business. You know what we've heard? I recall a chairman of a large global pharmaceutical company saying to me, every day around the world, there are 3 million people taking our medications, and we know nothing about them, and probably still true today. I think that's true a large degree, a large degree. And so the idea of being able to use technology to connect people during a trial, but then also to think about what happens after the trial, or how do you use digital tools to surround someone with an offering? And that's why you had mentioned Click a couple of times. I think it's absolutely insane. It should be criminal, honestly, that the way in which people get information about the medications they take is you get a paper bag at the pharmacy, and they give you the paper bag because they need something to staple instructions to, right? That's like, why we waste all these paper bags. And what do you do with that? You get home, you take the medication out of the paper bag, you throw everything out, but there's no ongoing guidance, there's no support. There's nothing that surrounds the medication. And what Click is doing what you think about with even the patient. Cloud type offerings is getting data, getting feedback, being able to help people navigate what's occurring with their disease. Can build a much deeper relationship for a life sciences company with that individual patient, and we have to go in that direction, because as pharma is more and more accountable for outcomes associated with the medications they're putting in market. They can't be blind in terms of what's happening. They need the data, and they should want to be able to engage better, of
Anthony Costello 43:08 course, yeah, and you're right. Click is an excellent platform for that. Click, though, also is the first real example of an FDA cleared digital medicine, right? Like an actual therapeutic that enhances the value of the drug alone. And you know, they've now, as you know, they've got multiple regulatory approvals for that pathway. Anything that you want to say about the early you were involved with Click, a long time before I was so you know, full disclosure Medidata as an investor in Click. I now sit on the close. Am I? Yeah, you're an investor in Click. You've left the board to move on to the Heart Association, which we'll come back to in a second. I joined the board. I think, I think we had two overlapping board meetings before you left. So you know, we're, we're deep. Both of us were deep in on Click and believers, but, but I am curious to know your thoughts the real world evidence, kind of follow up connection of Click is an important aspect of their technology, but the digital medicine piece of their technology is also groundbreaking, and I think speaks very much to this concept of moving from sick care to healthcare, because it really is geared towards behavioral change that can steer the course of your sick care problem in a very different direction. That's David's goal.
Lee Shapiro 44:33 And I think what is really been a unique aspect of Click, and the way they've approached this is to think about a digital therapy the same way as you would an actual molecule. The rigor of the scientific evidence that they've put together as part of their FDA submissions, but also part of what they're bringing to market shows a level of intent that goes beyond where you see a lot of I'll call run-of-the-mill digital health companies. And one of the challenges that we faced in the digital therapeutic space is the fact that some of the early offerings didn't have a lot of that rigor associated with it, and didn't work, and we're really challenged to be able to get buy in from providers. And if you're going to have something that's going to be prescribed and that people are going to have confidence in using, you need to make sure that the rigor of the science and the clinical trial that's done associated with it has the same type of underpinning as you would see for any type of pill you might in. Just and that's something that they've invested a lot in. And so a lot of the early work being done there is that takes time, that takes money, and to be able to build towards that and have patient investors who are going to support you in terms of being able to build a company that has those underpinnings, takes time now they have a machine, and I think that for too long, we've also siloed healthcare between physical health and mental health. And what Click has been able to show is that there is a behavioral component to any type of condition that you're dealing with, and it ranges from the burden associated with having the disease, as well as the behavior change. This morning, I was reading a study that was coming out of, I believe, the UK, and there's been a number of these since you mentioned GLP, ones that show once people go off within 18 months, they've gained back all the weight and more, and in some cases, are not as healthy as they were before they started the drug. And it just highlights the significant need for ongoing behavior change. It's diet, exercise, but also the mental framework to be thinking about in terms of how you're going to change your life in order to be healthier. That's what Click’s driving towards.
Anthony Costello 46:56 Yeah, exactly. And I think, you know, GLP one is probably the best example. Ironically, not a place where Click has done much work yet, yet, what? And yeah, yet, it's, it's, it's begging for it, right? Because it is the classic example of how the drug is working. Like we see evidence everywhere that the drug is working. But if the behavioral component isn't there, the the lifelong need for the for the drug changes. It that trajectory changes based on the behavioral
Lee Shapiro 47:27 Yeah, and you see reversal. You know, the initial benefits with regard to not just weight, but cardiovascular and blood sugar, diabetic kind of indications all revert back to dangerous levels if you stop taking the medication and you haven't had this more intense kind of behavior change program associated
Anthony Costello 47:47 with it? Yeah, yeah. So I think it's going to be interesting. The reason I was asking you questions earlier on, sort of this revolution of continuous data capture that's coming from all these devices is and as you know, there's a lot of synergy between the kinds of things that Click is doing and the kind of things that you know, watches and rings and weight scales are doing, because the more data that we collect that could signal a need to address a behavioral challenge or a need to go in a particular therapeutic direction, the more we should be able to do something With that information, it's it's not clear yet who owns that space, right? So your ring will tell you that you haven't slept very well. What Click, I think, wants to get to is the point where they can tell you that sleep data changes the probability that you're going to have a migraine. And since Click has a migraine treatment app, they can then change the way that app functions for you that day based on your sleep, right? And sort of connecting those dots together so that we build this universe of personal data about you, but also that the sort of direction you should take differently, the behavioral change you should make in that moment to help leverage the information that you now have, and have no,
Lee Shapiro 48:59 yeah, it's so it's so important because there's a really necessary integration layer. It's not just enough to have the data. You also have to drive the insights from the data, and then the actions that need to be it's kind of the infra action aspect of this that has to occur. And so what Click and and others, I suspect, will be doing is getting that wealth of information that's coming from your body's vital narrative and using it to be able to help direct you for the right types of behaviors.
Anthony Costello 49:32 Yeah, all right. Well, we could probably talk about Click all day, but let's, let's move on to in addition to all this other stuff, I don't know when you sleep, but in addition to all these other things that you do, you are now also the chairman, Chairperson of the American Heart Association. A new, new ish role, right? You've been working with the organization for a long time, but your incoming chair person, do I have
Lee Shapiro 49:57 that right. So my term started in July. That's why I stepped off the Click board. There was only so many boards I could be on for portfolio companies, then outside the portfolio and so I stepped off a public board and a Click board to take on the chairmanship of the Heart Association. And it's a great honor to do that. I've been involved with the organization for many, many years now, but the Heart Association does so much fantastic work, and it's around not just envisioning a world where we reduce the impact from cardiovascular disease and stroke, which is still the leading cause of death in the United States today, but envision. Running a world where we have health and hope available for everyone everywhere, and that broader vision is what's so inspiring.
Anthony Costello 50:47 That's great. So how long will that term be?
Lee Shapiro 50:51 So I'm chairperson until July 1 of 27 and then I am Chair emeritus for two years after that. Okay, so I'll be involved for a while.
Anthony Costello 51:02 Well, it's, it's an inspiring story. It's, it's been fantastic to have you here, but before I let you off the hook completely, as you know, we end this with a prediction. And you're, you've got a pretty good predictive track record, so I'm hoping that whatever you say right now on this podcast is actually going to happen. And you know, stocks will be traded based on whatever comes out of your mouth for the next two minutes. But to close this out, you know, do a couple things for me, if you will, tell us where you think the healthcare system is going and needs to go in the next, you know, three to five years. I'm not talking about a 10-year plan, but the next three to five years, realistically, where are we going? What's the most important thing we need to do? But then also, what's a call to action that you would give us? And when I say us, I mean, what would you what would you tell me to do, what would you want Medidata and all of our pharma customers to focus on? What would you want to see in the sort of Click world of direct to consumer therapeutics mean any scope in there that you want to bite off. But we need a call to action. We need, I think, people like you that are so successful and seasoned and smart about this industry giving us some marching orders as a call to action, and then we'll take those seriously.
Lee Shapiro 52:27 So you got first prediction, Chicago Cubs will win the World Series. and so and so. That's going to happen within the next five years. I think we're good on that one with regard to industry trends in the next three to five years, we know that we're faced with a significant challenge today, with healthcare expenditures in the US approaching 20% of GDP just can't be sustained. We're seeing now the burdens on individuals who are facing like health insurance premiums that are more than their mortgage payments. And so where we're going is, by of necessity, we're going to have to think a little bit, not just a little bit a lot differently about the way in which we address healthcare burden in this country, and I think that means that the focus on preventative care that we've been talking about is going to have to increase, because what we're doing is we're spending so much on downstream health impact that we have to start shifting the way we think about things earlier on. One example I'll cite is a large retailer. They have 600,000 employees every year, they lose about 200,000 employees. They just turn over. And so when you talk with them about healthcare expenditures and preventative measures, they'll say, Look, we're losing a third of our workforce every year. Like, why should we spend those dollars? Because the only one that's going to benefit is the government down the road when people turn 65 that's so we need to find ways to better align incentives, and I'm hopeful that over the course of the next five years that the pressure mounting in the market from those of us who are paying out of pocket personally, our premiums and our deductibles and our co pays for the employers who are looking at like, 18 to 25% increases in their healthcare costs for their teams, they can't pass that on to us as increases in the cost of goods, like they're absorbing that it's reducing the profitability in their ability to invest. That pressure is building up so significantly, and I think that we will see that erupt over the course of these next three to five years, that will lead to a better focus on preventative health.
Anthony Costello 54:47 All right, I like it. And so your call to action.
Lee Shapiro 54:50 My call to action is so I'll give you an example. I have a wonderful physician. She is so nice. I come in and see her, and she walks in, I don't wait too long in the exam room, and she walks in, she says, Lee, how are you? And I smile, and I say, You tell me. And you know, I'm kind of snarky, right? You know, in terms of doing that, but the idea is that if I tell her why I'm there, she's going to treat the symptom. And so I insist on getting my lab tests done before I go in. I insist on any type of diagnostic being done. I'll share the data from my Garmin watch and from my smart bed, and from, you know, all the other devices that I use like so that they can have a better grounding of insight. And now. Honestly, with the advent of some of the AI tools, I can't believe we didn't touch on AI once in this podcast. It's not too late doing it now, not too late, but with some of the AI tools that are available, you can start to look at and assess some of that data and say, What does this mean, and use it as a vehicle to be talking about with your doctor. So I think the call to action is, know your data, understand your information, you know, go in and demand that you get treatment for the cause, not just for the symptoms. To be in a position where you start looking for opportunities to push for more preventative care. I'll call it value based care, because we need to do a much better job in terms of aligning incentives between providers. They make a lot more money on procedures than they do on prevention. Sure, we need to insist on changing that dynamic and seeing that prevention becomes really paramount in terms of what it is we're doing. And if we can get there, I think we can really help improve the health trajectory of our country.
Anthony Costello 56:36 So is this a call? I want to push on this a little bit. I agree with you, but I want to ask you, maybe to just comment for one more minute on the consumer willingness piece of this so, and I'll tell you a little bit about kind of where the Medidata strategy has gone. And really, one of the big reasons we wanted to invest in Click is we see a lot of this continuous data being better known every day to consumers so that they could build a profile of themselves and share it with their doctor before the visit, exactly like you described. But there's a longing, there's sort of a requirement, for a platform that synthesizes that, and the real value driver of that platform will be the insight that it gleans so if you you know one of the things that you've probably David says a lot of quippy things that stick in my head forever. You've probably heard this one too, but one of the things that he says is, another year from now, your Nike shoes will know if your GLP one works, because every step will be a measurement of that reality, your bed will know if your GLP one works, because you'll be shrinking, and your bed will know that weight change, right? So in a world where more and more and more there's a way to measure what's happening with the patient, what we need as the next step is a way to pull those data together build what I'll call like a virtual twin of that patient's health experience, made from all these different devices, plus a medical record, plus a clinical trial, what have you, and then shared in some sort of useful way with healthcare. But that starts with the patient, consumer, and so I want to know, if you see that in the next few years, will you trust your watch, maybe to tell you how you slept? But would you put 16 of those devices in your life together into a platform that builds a profile of you and then send it over the Internet to your doctor? Or are we still a little early for that piece?
Lee Shapiro 58:33 No, I think, I think this pressure that I'm talking about this, you know, the build up that's going to lead to this kind of volcanic eruption is there where consumers are starting to see it? Because the alternative is, I'm just going to keep paying more and more for healthcare costs. Like, I can't afford a vacation, I can't afford some people can't afford to put food on the table because their healthcare costs are so high, and they have to trade between like, do I feed my kids or do I buy my medicine? That doesn't work anymore, and so if you give people a way to say, “Yeah, by wearing a smart band or by gathering this data that I'm going to be able to better, improve my health,” it's not, it's less about the means, it's about the end, right? Which is that integration layer that we were talking about earlier becomes an important way to give people the advice they need in terms of being better able to manage their health. And then people will get rewarded for doing that with lower costs in healthcare. And there will be health systems that align around this and say, Yeah, we're going to, I mean, look at what happened with regard to insurance premiums for smokers, it's one kind of example, but premiums went way up, and so a lot of people cut back on smoking. I think we're going to find similar things happening. Saying we're going to give you incentives, we're going to give you advice, integrating this data, but for you to get the benefit of the lower cost, you're going to need to take some actions. We can help you get there.
Anthony Costello 1:00:01 All right, I think that's a good place to leave it. So Lee again, thanks so much for being here. Fantastic conversation. We really appreciate it. Thanks to everyone for watching, and we'll see you next time. Thanks so much. Great to be here. Thank you for tuning in to today's conversation. If you've been enjoying this podcast, please subscribe to our YouTube channel and follow us on Spotify, Apple or wherever you get your podcasts. If you have questions for me or thoughts about the episode, drop them in the comments. I do read them. Thanks again for listening to from dreamers to disruptors, and we'll see you again. And next time.