Maveron, VC Firm and Consumer Trendspotter, Sees Growth in Healthcare for People and Pets
Maveron, the venture firm co-founded by Starbucks mogul Howard Schultz and Dan Levitan, has carved out its niche in spotting consumer trends over the past dozen years. One of the big opportunities that Maveron sees emerging now is the transformation in how healthcare is delivered and paid for.
Not just for people, but for pets, too.
This was one of the interesting themes that came up last week when I met with Maveron partner Clayton Lewis in Seattle’s Pioneer Square neighborhood. Maveron has been around in Seattle since 1998, and expanded last November with a San Francisco office headed by Amy Errett. The firm, which has $750 million under management in four funds, has a record of investing in some well-known consumer brands over the years, including eBay, drugstore.com, and Shutterfly.
Maveron’s portfolio is stocked with web-enabled consumer service businesses like Seattle-based Zulily, and for-profit higher education sites like Bellevue, WA-based LiveMocha. But Lewis is one of the people at Maveron taking a close look at how the disruption of the healthcare system is changing health-related consumption habits. Lewis has gotten some up-close perspective on this during five years on the board of Seattle’s Harborview Medical Center.
One of the big things Lewis sees is an emerging crisis in primary care. Because of relatively low pay and huge demand forcing doctors to see more and more patients each day, more than one-third of these physicians, who are really the front lines of preventive medicine and wellness, are considering leaving their jobs—and fewer than 5 percent of medical students are even considering entering primary care, Lewis says.
“Because of the doctor shortage, we’re going to see a different model for primary care,” he says.
So who will step in to fill this potential void in the health system? The baby boomers are getting older and will need more medical care, so demand is going up. Concierge care, in which people pay a monthly retainer for a doctor’s services without health insurance hassles, is generally for wealthy people and is “not scalable,” Lewis says. Maveron is therefore starting to look at companies more like Seattle-based Qliance Medical Management, which offers a low monthly fee for access to primary care medicine while allowing people to keep a lower-cost health insurance plan for catastrophic care. Another company Lewis cited, which is seeking to change how patients and doctors relate to each other, is WhiteGlove House Call Health, in Austin, TX. WhiteGlove offers primary care at home or the office that’s supposed to help reduce costly emergency room visits.
For years, people have been talking about phone and Internet consults between doctors and patients as one way to improve the efficiency of healthcare, but the trends are going to force remote communication like this to become more common if people are going to continue to have access to healthcare in a timely way, Lewis says.
“We’re seeing increasing demand, increasing cost, and fewer physicians,” Lewis says. “Something has to happen that will allow access to primary care.”
Pets are another story, though. While the tectonic plates of human healthcare take their time in shifting, Lewis sees big growth coming in relatively short order with health insurance for pets. This is the result of a cultural change, in which pets are increasingly viewed as part of people’s families. That, coupled with the increasing cost and complexity of veterinary procedures, is making for a fast-growing market.
One of Maveron’s investments that seeks to capitalize on this trend is Trupanion, a Seattle-based pet health insurance company. There are an estimated 176 million cats and dogs in the U.S., Trupanion CEO Darryl Rawlings told the Seattle Times in 2008, yet very few were paying for health insurance when Maveron led a $22 million investment in Trupanion that year. Lewis, when we talked last week, said the company has seen significant sales in Canada, yet still has tapped only about 1 percent of its potential market.
I didn’t have much time to ask him in great detail about Trupanion, but Lewis ticked off a series of factoids about growth in the pet market that makes him bullish on the company and the sector. One particularly memorable survey found that 54 percent of American pet owners buy their pet a holiday gift, Lewis says. Health insurance, to protect your pet from a costly and life-threatening situation, seems like a logical next step, he says.
“This is a market we think will explode,” Lewis says.