Cheryl Cheng Spills the Tea on Digital Health Mafia and Investing in HIT

[00:00:00] Welcome to the Hit Like a Girl podcast. This is High Tea with Grace where we spill the tea on HIT. I'm thrilled to welcome Cheryl Cheng, founder and CEO of Veeve Collective. Cheryl, thanks for joining us today. Thank you so much for having me.

[00:00:19] So tell us a little bit about the career path that brought you to Veeve Collective. Yeah, so happy to do that. My career path is very twisty and turny, which I loved.

[00:00:32] So before I started Veeve, I did digital health investing for a generalist fund called Blue Run Ventures. And Blue Run has its roots in mobility. Formerly started my partner, John Malloy, started it. He came from Nokia.

[00:00:50] And so we had a lot of insight around where was mobile going through the 90s, 2000s, et cetera. And we started to apply a lot of those learnings into fintech and then eventually into healthcare.

[00:01:05] I also sat on the board of the Ronald McDonald's house at Stanford Bay Area for six years, where I just saw so many gaps in access to healthcare and not only just healthcare the way you would think about it

[00:01:20] from a hospital standpoint, but just all different aspects of care related to health, which I can talk about how I think of that differently. And so that informed a lot of my investment thesis.

[00:01:32] And I drew upon a lot of my experience prior to venture being in new products in consumer package goods. So before going back to venture, I had done a stint at Clorox, which is here in the Bay Area, looking at new products.

[00:01:49] And they really taught me how to go into people's homes, do anthropological research on how people were using products. And so I bring all of that together when I think about healthcare investing,

[00:02:00] because at the end of the day it is about changing people's behavior, whether that is a patient, a doctor, et cetera. And I think about that behavior change and I think about that consumer behavior at the very core.

[00:02:16] So tell us a little bit more about your investment thesis. I'd love to kind of hear about that. What kind of fuels what you choose to invest in? So Veeve Collective is an investment platform that will invest in digital health and healthcare IT companies,

[00:02:35] primarily ones that have found product market fit and are getting ready to scale. So people will often ask me, what is the check size that you like to write?

[00:02:45] And I would say we're not as focused as much on check size, although we can write a check as small as $10 million. And we can go up from there. What we designed Veeve to do is to have a very flexible capital structure.

[00:03:01] So we can do minority investments, we can do majority investments, we can buy assets, we can buy companies. We really can run the entire gamut and our thesis is really around finding companies that we think can have high impact

[00:03:17] on the populations that they're going after as well as really being able to scale. I will say that we have a bias towards software oriented companies. We do sit here in Silicon Valley and so we do have a bias towards software, tech enabled services,

[00:03:36] things that can scale with data and software. That makes sense, totally does. So I recently saw on LinkedIn that you put out a survey and you found some digital health mafia companies which I thought was really hilarious but also really interesting.

[00:03:52] So tell me a little bit about how you identified that and tell us a little bit more about those companies and what made them mafia? Yeah, so first of all, one core tenant of the Veeve Collective is the collective.

[00:04:10] And so we really, really believe in building community across the ecosystem. And so we rely on that a lot when we think about how we diligent companies, how we support companies and founders, etc.

[00:04:23] So a lot of the work that we did with this piece around digital health mafia was drawing upon the collective and community that we've built over the last couple years and tapping into their network and expertise.

[00:04:36] Secondly, I have to say that digital health mafia is borrowed from the PayPal mafia, which we all know from the tech world. Oh yeah! Yeah, so Blue Run was the Series A investor in PayPal.

[00:04:52] My partner John Malloy had the insight to invest in that business many years ago and from PayPal spawned a whole bunch of companies. And I think there's actually a magazine cover with all of the PayPal mafia and all the companies that came out of it.

[00:05:11] So we actually borrowed that term from the PayPal mafia when we made this piece. And it's really around the connectivity and the common roots that these companies, these founders come out of. So we originally started thinking we would do just a LinkedIn search, right?

[00:05:31] We would figure out where founders would come from. We found that that wasn't enough, so we wanted to go to the primary source. So we sent out a survey. We asked people to nominate founders that they knew and we went back and looked up where they came from.

[00:05:46] And it turns out there were four main companies. You can find this piece on our on our on our sub-stack for Veve Collective. But we went in and we found four main companies that the most founders of young digital health companies came from.

[00:06:03] And those were Flatiron, Oscar, Babylon and Citiblock. Oh wow! All very interesting and in different niches. That was just unique too. Very different. Very, very different, right?

[00:06:16] And we then went through and we tried to figure out what were the functions that those founders had in those four companies. And was there any correlation or causation between where they came from, how long they were there,

[00:06:34] what the company you know that they came from was doing that would then spawn some insight that would make them want to be a founder of their own digital health company. So that's the first stage of the analysis that we've done so far.

[00:06:51] And soon we will release some additional insights that we found in talking to some of the founders that have come from these mafia companies on what they learned, what made them start the companies that they did,

[00:07:06] why did they leave some of these very marquee names to go start their own things. So we really want to understand what makes these founders tick and what did they learn from these high growth companies that gave them either the inspiration,

[00:07:21] the resources, etc. to start their own businesses. Interesting. So what were the main findings then that you had overall on this part of the survey? So far what we looked at in the survey was what was the function that these companies

[00:07:45] or what was the function that the founders had from the company that they came from. So the top two functions were product and operation. So product people and operations people were most likely to leave and start their own company.

[00:08:02] So that was the first insight. Then the second insight was how long did people spend at these high growth companies before they decided to leave and start their own company? So majority of those people stayed between one to two years.

[00:08:19] And so there is, I wouldn't say it's like a normal bell curve. It's probably skewed very heavily. Well, you can look at the data that we published, but skews very heavily to one to two years. And then it sort of like tapers off.

[00:08:34] So there's something in that range where people feel like they've learned a lot, they've gained insight. Maybe they've identified something else in the healthcare system that is broken and they want to go off and start something new. So from a function standpoint, product and operations,

[00:08:52] from a time standpoint, people who have been at a company for somewhere between one to two years. And what can the industry do with this information?

[00:09:02] I'm interested to like, now that you know this, is this going to kind of inform the types of founders you want to invest in? Do you think it'll inform the types of funders people should go and work for?

[00:09:12] What do you feel the information could be used to do and be? And maybe I gave you ideas. I don't know, but I'm interested to hear about that. I don't know that you could backward engineer in anything from this analysis.

[00:09:29] I do think though that there is very valuable learning that a founder can get from previously having been in a high growth company. So if you have been there when things were growing quickly,

[00:09:44] the wheels were falling off the bus while you were trying to drive down the freeway at like 80 miles an hour and you learned how to break things, build them back, break them again, like continue to iterate.

[00:09:56] There is something very valuable about that lesson that you would take into your next company. So I do think particularly in products and operations and even engineering, there is some very valuable learning from being in a high growth company.

[00:10:14] Also, when you're in a high growth company, you work for very senior people who have gone through that learning earlier in their career. So you're also learning some good best practices and management and hiring in like all of those things.

[00:10:30] And you bring all of that with you when you go and start your own company. So we do like looking for founders or working with founders who come from high growth companies or have strong operations backgrounds

[00:10:47] from another life or another career path because that experience is infinitely valuable as they're thinking about building their own company. Really interesting stuff. That's so unique. So I'm wondering how long have you been particularly in healthcare

[00:11:06] and how has the industry kind of changed and morphed as you've been in it? And do you think that these findings may have been different, you know, if you had done this when you had first started in healthcare?

[00:11:17] Well, so I've been investing in healthcare for about eight years now and like looking at it seriously for about that time. So I do think that there are some things that have changed fundamentally. So I think healthcare investing before was very services centric as it needed to be.

[00:11:41] And so those businesses evolved at a different pace and in a different way. Today with everything from mobile technology to cloud to generative AI, you know, like you just look at the rate of innovation that's happening on the technology side. You're seeing a few things, right?

[00:12:00] One, it is potentially significantly cheaper to start a company, a technology company in healthcare than it was before. The rate of adoption both from the consumer slash patient even into the younger doctors and providers is just significantly faster and the expectation of what is real time.

[00:12:29] Like we're not going to get that back, right? Like that genie is out of the bottle. And so that's pushing a lot of innovation. So you are seeing very different companies that are getting venture funded today than you would see 15, 20, 25 years ago, right?

[00:12:47] But healthcare continues to be this hill that so many people have died on trying to change, right? So whether that is from a policy perspective, from a private equity venture perspective, very smart people with loss of money have tried to change the US healthcare system.

[00:13:11] And it's been very difficult. So I think some of the same fundamental problems that we saw, you know, 10, 20 years ago, they continue to exist today. But maybe now with some of these technology tools that we've got, maybe we have a chance.

[00:13:26] But I would say that technology alone is not going to change healthcare, right? Like fundamentally, we have a consumer behavior. We have a way of doing things. We have a regulatory environment. We have to operate within all of those constraints. So true. So true.

[00:13:45] And then now, you know, in digital health funding, you know, that's kind of the digital health world. How has the digital health funding landscape evolved over the years because of what's been happening in digital health? Obviously a lot more checks, maybe bigger checks.

[00:14:01] And, you know, in terms of inclusivity, what challenges still need to be addressed in this space too? I think there's been a lot more, what I would call traditional venture dollars that has gone into digital health investing because you now see that intersectionality between technology and services, right?

[00:14:22] Before, if you were a traditional healthcare investor, you were either healthcare services or there were a group of med device investors. There was a group of therapeutic investors and everybody kind of came from a different background and stuck to their own knitting.

[00:14:37] And now you're seeing a lot of the more hybrid models and hybrid companies evolve, which has brought in generalist venture investors and private equity investors, which I think is fantastic because it adds a lot of other capabilities, both from an investment and capital perspective,

[00:14:56] but also from an operations perspective, right? You now see people who originally worked in FinTech, who now are trying to apply some of those learnings into healthcare and vice versa. So that is really exciting to see. It's always nice to see new blood come into the area.

[00:15:15] On the point around inclusivity, what do you mean by that exactly? Is that on the founder side? Yeah, I'm wondering, what is it like to be a woman founder CEO VC? I'm very interested, like is it a very male-dominated space?

[00:15:38] What is it like to be there in terms of just being a woman leader also in the space? Do you find that it's different or that there are more women coming into it than ever before? What's your experience been on that side front?

[00:15:52] So I started my career in investment banking, mergers and acquisitions. I covered analog mixed signal semiconductors. So there is probably no more male-dominated industry than mergers and acquisitions in the 90s covering semiconductors. So my bar is low because of where I came from.

[00:16:20] So I will caveat everything I say with that. I actually think that healthcare, we aren't where we want to be. Okay, so should there be more women in leadership positions? Of course. Yes. Should there be more minority representation? Absolutely.

[00:16:41] But actually in healthcare, there are more women in senior positions on boards than in other industries. Like you look at semiconductors, you look at enterprise software, you look at network storage, you look at gaming, right?

[00:17:00] Like you look across many of these other technology industries and it's actually worse. Female representation than there is in healthcare. So I'm not saying that we as a healthcare industry or we as investors should rest on our laurels, that we're doing better than others.

[00:17:21] But I actually feel encouraged by the amount of female leadership there is in the healthcare industry. Now, I will say when you get really up into the C-suite, we could definitely do better.

[00:17:38] And we could definitely do better when we think about the boardroom where a lot of policies are made, a lot of decisions are made, prioritization on strategy is done in the boardroom.

[00:17:51] And that's where I definitely think there needs to be more because women control 70 or 80% of healthcare decisions that are made in their household.

[00:18:05] So that inverse in relationship between the wallet power that women have and then the power that we have in the boardroom or on the executive panels, like that disparity needs to be bridged.

[00:18:26] The other area that I actually think particularly in the US that we need more representation is just around minorities and people of color. Because, and this is male or female, right? Like so this is a different cut of all of that.

[00:18:44] As a country, we are becoming much more diverse and even across our populations of color, we're having different generations represent different mindsets of how they want to use healthcare, what healthcare means to them. And we need to meet the customer and the patient where they are.

[00:19:07] And this is where culturally confident healthcare becomes very important. And this is more than just like, have we translated things into Spanish or Chinese or Vietnamese or whatever.

[00:19:19] It's about understanding the culture of the patient, build and trust with that patient in a way that gets them to engage with healthcare. The way that we know they need to be engaging with healthcare to generate the outcome.

[00:19:33] So that is an area that I feel like we haven't invested in as much as a country and as an asset class that I would love to see more work being done. Very interesting perspective, very interesting to hear how you see things.

[00:19:50] I'm wondering what do the women leaders that you look up to in your space do right? The women leaders that you see around you, what do you find are things that they're doing that you're like, yeah, that's great.

[00:20:02] Do that in regards to inclusivity or just in regards to success generally? I actually think that some of the women leaders that I admire the most do not dwell that much on the fact that they are women leaders. They just focus on being leaders.

[00:20:23] And I think that's very important. In some of the women that in every industry, this is not like healthcare only, that I've admired the most really think about how they can be the best leader.

[00:20:42] They understand deeply where their strengths and perhaps weaknesses are because they present as a woman. But they don't fixate on that. And they take what other people might think of as a disadvantage because they're the only woman in the room. And they leverage that to become a strength.

[00:21:10] And of course, they're wicked smart. So they're wicked, wicked smart, but they don't dwell on it as much as people might think they do. Yes, I absolutely could see that.

[00:21:24] It does seem that they're just so focused on solving the problem that they're not distracted by saying, hey, I'm a woman too.

[00:21:32] The focus is on the problem that needs to be solved or the challenge that's ahead of you instead of what they're doing if that makes sense as a woman. So I'm wondering, we're kind of to shift into your personal journey.

[00:21:49] What are things that you do from day to day that help you work your best and make a difference?

[00:21:55] Are there any lifestyle choices that you have or hobbies that keep you going and just keep you moving so that in your personal life as strong as your professional life is? So, wow, that's a tough one. So I have two children.

[00:22:15] I have two teenagers and I would say some of the things that have helped me the most in my career, honestly, I married the right guy.

[00:22:31] And I actually think that the most important decision one can make for their career is actually the selection of their spouse or life partner because my spouse has been so supportive of every single career decision that I've made.

[00:22:51] And that has been one of the things that, you know, hands down has been a huge contributing factor in my life. I do think one of the things that I do is I am always looking out on my calendar five to seven days in advance.

[00:23:09] I always have for the most part of view and like I visualize my calendar five to seven days in advance and everything has to be on the calendar.

[00:23:20] So like, you know, I'm harping on my teenagers all the time. Like I am not driving you to this if it's not on the calendar. So the family calendar is very important.

[00:23:30] I send out a every Sunday email to everybody in my family and my husband, my kids, my parents, my nanny, like everybody, like this is the weekly schedule. These are the days that like everybody needs to be here there or whatever. And they follow the schedule.

[00:23:49] So I do that because I think one of the things that no matter what does fall on women and is the cognitive load of managing your work and managing everything else. It's going to happen no matter what it seems. So you might as well have control over it.

[00:24:11] Yeah. You just have to like stay on top of that somehow. So I do do that as a way to manage all of the things so that you don't feel like you're always half a step behind or a step behind and in that that's hard, right?

[00:24:30] Like because we're all high achieving. We all want to do really well and it's difficult if you always feel like you're behind hobbies. Oh man, like I haven't had like a real hobby in so many years between working kids. So that sounds terrible.

[00:24:48] But I will tell you what I do have. I have a group of girlfriends that I rely on for feeding my soul. I love that to feed my soul. Yes. Yes.

[00:25:06] So in what I will say is that my group of girlfriends, we some of us work all in venture, which is also super helpful because when we talk about our frustrations, we deeply understand like each other.

[00:25:25] We are in a similar place in life and career and we will get together on a regular basis. And sometimes it's just event. Sometimes it's to get massages. Sometimes.

[00:25:39] So that has been a big anchoring force for me, especially in the last 10 to 15 years as you know, we've gone through both a combination of motherhood. This is the fastest growing time in our career.

[00:25:58] And then now a lot of us are kind of in that family generation where we're starting to also take care of our parents, right? And going through that with a group of women that you deeply respect and love who are not in your family actually is really healthy.

[00:26:17] So while I don't have time for a hobby, I have prioritized this group of moms and friends because I feel like they've been so much more therapeutic for me than anything I could have done as a hobby at this time in my life.

[00:26:37] Oh, I just love that, you know, I hit like a girl community. We come together and we like to build each other up. And to us, we totally understand that sentiment because it's no fun doing it alone.

[00:26:50] You got to do life with the people that are in the same boat as you and just want to lift you up and see you succeed and cheer you on.

[00:26:56] They're with you in the lows so they can really cheer you on when you're in the successes. So it's fantastic.

[00:27:01] Before we end, I'm wondering if you have any advice for women looking to become a woman founder. Do you have any advice for women looking to break into that space?

[00:27:12] Yeah, I think there are so many more resources today in such a stronger community today than there was before.

[00:27:21] I think one of the most amazing organizations is All Raise started by Aileen Lee and a group of other women in venture, which is all around everything from training, community events like all specifically around women in venture.

[00:27:39] And so I think venture is getting there. I think private equity still has a ways to go.

[00:27:47] But I think venture is getting there. And I think the biggest thing is finding a group. It doesn't matter if it's a really large fund or a smaller fund where you really have an opportunity to have some shots on goal, right?

[00:28:04] You're going to make mistakes as an investor, right? There's going to be companies that you were too early on. There were companies that you were too late on, ones that you wish you had done.

[00:28:14] But finding a place where you have a safe space to develop an investment thesis, develop an investment modality that really rings true to who you are as an investor.

[00:28:29] And finding the senior people who will bring you under their wing and develop you as an investor. And not just like the financial analysis, right?

[00:28:43] Like I mean, like you can learn that on an online course. But it's all of the softer skills of being an investor half the time.

[00:28:53] It's not the finance that you're doing. It's the interpersonal stuff with a founder, with, you know, how do you win a deal? How do you influence a board?

[00:29:02] How do you do all of these are softer skills and finding someone who will bring you under their wing to teach you that is really important.

[00:29:11] And what I would say for women who want to get into investing, you don't have to find another woman to teach you that.

[00:29:22] Some of the most amazing mentors I have had and like, you know, I attribute my investing career to my partners at Blue Run, who really took me under their wing.

[00:29:34] And both of them were men, right? And they were fantastic. And they adapted my career path for me while I was having children, while my children were really young.

[00:29:46] And as I was finding my own way into do I want to be a healthcare investor versus a fintech investor versus a consumer investor.

[00:29:55] So for women who are thinking about getting into this area, I would say just find the platform that you think will give you the most opportunity.

[00:30:09] Leverage your core skill sets the most and then give you a safe place to develop the skills that you don't have so that you can become that really well-rounded investor.

[00:30:18] And it doesn't have to be a platform that has a lot of women on it. I wouldn't make that the selection criteria, actually. So much great advice, Cheryl. Thank you so much. To finish this conversation off right, where can our listeners find you online?

[00:30:33] LinkedIn is probably the best place. I'm sadly not that active on X slash Twitter. But LinkedIn is probably the best place to reach me. That's awesome. And before I forget, did you happen to bring tea with you today? I don't. I didn't have time. I do have water.

[00:30:54] Oh, hey, water! I see it's sparkling water. Is that your drink of choice? It is. It is. That's fantastic. Well, thank you for being here. We really appreciate you sharing your insights with us. Thank you for having me. This is a great community.

[00:31:12] And thanks to you folks too for joining us. Check out the Hit Like a Girl podcast website and YouTube page for more great guests like Cheryl today. Cheers!